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There’s always something to howl about

Keith at Housing Panic is for sale . . .

Who didn’t know?

Here is Keith from Housing Panic volunteering to “go easy on me”, to “pull his punches” — essentially to “take a dive”.

Why? Because he can’t bear up to the ridicule his ridiculous behavior incites.

Responding to this post, days late, Keith sent me this email (click here for full source — provided to prevent the wanker from trying to deny it):

From: housingpanic@yahoo.com
Subject: your choice
Date: November 25, 2006 11:18:34 AM MST
To: GregSwann@BloodhoundRealty.com

I’ll give you a choice.

1) A war with the thousands of HP’ers so harsh and loud your practice and reputation in Arizona likely wouldn’t survive (beyond the damage you’re doing yourself)

2) A truce

Here’s your post that is way beyond the pale, and made you look like some unprofessional weirdo. I’d suggest this be pulled by the weekend.

Your choice

Keith

Here is the specific language Keith is objecting to:

Finally, it might be nice if everyone would chip in to buy Keith at Housing Panic some lubricant. The poor sod has been Masturbating to Armageddon for months now, to no discernible result. It’s gotta chafe…

Here is a post, one of hundreds, in which you can witness Keith Masturbating to Armageddon.

It’s easy to make jokes about him, because the man is such an outsized fool, but, in fact, he is completely beyond parody. I used to think he might be dangerous, not so much anymore. Months ago, someone asked me to write a few words about him, and this is what I came up with:

We speak of trolls casually, but the Norse idea of the troll is a much more serious thing. A troll seeks chaos, another fine word ruined by overuse. I wrote once that a troll is “a spark of hell’s fire seeking ready tinder on the earth.”

This is what Keith is, a true troll. He has the gift of finding the evil bone in men with no will to evil. He tickles it until they become their worst possible selves.

The only true capital is human capital, which is not just mental but also moral power — not just the skill but also the will to do one’s best. Keith induces lazy but decent men to do their worst — or at least fantasize about doing their worst.

He is small and pitiable troll — there have been much worse — but this is what he is. The only question I might have for him is when he will grace the earth by leaving it.

I can write a soaring praise when I am in the right frame of mind, but eviscerating criticism rolls off me like dew off a blade of grass. I think this is the best post I ever wrote about Keith and his Flying Monkeys (a joke I had to write for him):

If these men saw more value in pursuing their own affirmative values, and less in campaigning for and rejoicing in the suffering of others, each one of them — and everyone else — would be better off.

So: Take careful note, BubbleHeads. Keith at Housing Panic is for sale. The king of wild charges and fractured insults can’t take what he strives, unintelligibly, to dish out. He’d rather strike a private deal with me than have the truth of his character made public.

Well, under the circumstances, who could blame him? Would you want to live in that skin — without brains, heart, guts or a spine?

Bring it on, Keith. I’m having a great year, and you haven’t laid a glove on me yet. I’ve never pulled a post and I never will. I’ve never failed to tell the perfect truth about you — and I never will.

It’s probably bad strategy on your part to show your “followers” that you are for sale — but they’ve all known it all along anyway. They’re much better men than you are, in the main, so it’s a good chance they’ll learn something from this experience. If not, it comes to nothing — much as you will come to nothing.

Where shall I ship the lubricant…?

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81 comments

81 Comments so far

  1. mike November 25th, 2006 12:59 pm

    Keith Brand is an idiot.

  2. Reuben Moore November 25th, 2006 1:54 pm

    I can hardly wait – When nuts go to war, it’s always so entertaining!

  3. Greg Swann November 25th, 2006 2:53 pm

    > Keith Brand is an idiot.

    Finally something we can agree on! 😉

  4. Benjamin November 25th, 2006 2:53 pm

    Hey Greg
    Thanks for fighting the good fight.
    If you need backup you can enlist the whole http://www.benjaminbach.com team (me and my lovely assistant Sarah)

    Be Great
    Benjamin

  5. Joe November 25th, 2006 3:06 pm

    I’m certainly no “follower” of Keith or HP by any means, but the fact is Greg that you are not “fighting the good fight” as Benjamin says above nor are you any better than he.

    True, he’s off the deep end predicting Armageddon, but you’re no better with your sunshine and roses BS when the news out of AZ just gets worse and worse every day.

    I truly hope that no unsuspecting buyer is taken in by your deceit. To compare yourself as a good man next to someone like Keith is beyond ridiculous – you’re both clowns that will be long forgotten when this credit bubble mess (and that’s what it is, folks; it’s not a “housing” bubble per se) comes to an end.

  6. Joe November 25th, 2006 3:08 pm

    Oh, and by the way, to suggest that Keith is “for sale” but that somehow a Realtor is the pinnacle of trust and can’t be bought… give me a f**cking break.

  7. Greg Swann November 25th, 2006 3:12 pm

    > but you’re no better with your sunshine and roses BS when the news out of AZ just gets worse and worse every day.

    I track this market month-by-month and make my results public. I often get complaints that results aren’t as bad as some people expect — hope for? — but the facts are what they are. If you actually read this weblog, you know I never shrink from the facts — but I won’t let other people misrepresent them.

  8. Tyler Sookochoff November 25th, 2006 4:30 pm

    I was just reading Keith’s ‘Manifesto’. Seems like he’s rooting for massive economic collapse (which he hopes a housing bubble pop will provide) as a means to some greater end. He talks about ‘collective consciousness’, ‘common man’, and ‘cleansing of our ways and of our system.’

    Is he a communist? (I don’t have a problem if he is, just wondering..)

  9. Tyler Sookochoff November 25th, 2006 4:43 pm

    To answer my own question, Keith says he believes in the free market and small government.

  10. Joe November 25th, 2006 4:46 pm

    I don’t “hope for” bad results – I don’t live in AZ, though I might like to one day as the retirement age gets closer.

    However, it’s … “interesting”, let’s say, how your results seem to constantly run counter to the rest of the information available about the Phoenix market.

    Fine, let’s give you the benefit of the doubt. Let’s suppose that you are somehow magically seeing different numbers than any other economist or journalist not connected to the NAR somehow. That still doesn’t excuse you for using JUST YOUR DATA to condemn everyone else’s reporting as “lies” and “unsupported facts” (terms you use throughout your blog, as I casually peruse the postings).

    You’re not exactly engendering trust when you write columns like “21 reasons to bank on the Phoenix real estate market”. Anybody with a browser and access to Google has no problems turning up evidence to the contrary.

    Again, to be clear, I don’t think Phoenix needs to go live in bunkers and stock up on peanut butter and bottled water, but come on, do you actually believe this “it’s a great time to buy or sell a house” ad campaign nonsense? What’s wrong with leveling with people and saying “look folks, things are dicey in Phoenix right now, if you don’t absolutely need to buy, then maybe wait a little while”??

  11. Jay Thompson November 25th, 2006 5:20 pm

    Someone at Housing Panic better throw in the towel or Keith’s gonna get knocked senseless in this duel. I can safely proclaim it “nolo contendre” before it even starts.

    Keith attempted to wail on John Wake a few days ago. I loved John’s response so much I had to blog about it.

    Oh and “Joe”, hate to burst your bubble, but Greg isn’t using JUST HIS DATA. He’s not making this stuff up. I’m seeing exactly what he’s seeing, so is Wake, Dalton, and anyone else who cares to look at and logically analyze the available data.

  12. […] “Keith” and the Housing Panic minions vs. Greg Swann at BloodHound blog? […]

  13. mike November 25th, 2006 5:58 pm

    I track this market month-by-month and make my results public. I often get complaints that results aren’t as bad as some people expect — hope for? — but the facts are what they are. If you actually read this weblog, you know I never shrink from the facts — but I won’t let other people misrepresent them.

    We’re going to have to disagree on that. You post selective facts and with a hand wave you discount rather complete articles such as those from the New York Times.

    I shudder at “Joe’s” comparison between you and Keith. Keith’s an idiot, a moron, you’re not. But I do think that Joe is right regarding your “sunshine and roses.”

    The AZ market is current in a severe decline and getting worse. Everyone sees it but you. Or maybe you see it too, but are reluctant to admit it publicly.

  14. Greg Swann November 25th, 2006 6:08 pm

    Mike, there was nothing “rather complete” about that NY Times article. They had to go to Pinal County to slime the Maricopa County real estate market.

    > The AZ market is current in a severe decline and getting worse.

    Why isn’t this borne out in the numbers?

    Note that my own numbers are more pessimistic than Jay Butler’s, the stats used by the local media. Month-by-month we see small declines on fairly normal sales. Inventory is too high, but there is almost no fire-sale pricing. Why? We’re headed into the selling season, and my phone has been heating up lately. Means nothing, necessarily, but it’s possible we’re already on the back side of this down-turn. What then?

    All I can do is report the monthly results as soon as I trust them. You can’t test a projection, and I don’t trust anything I can’t test.

  15. Jeff Brown November 25th, 2006 6:15 pm

    Where to begin. Sometimes, when the ball is teed up so perfectly……

    DataQuick is probably the best referee for this mismatch. They (For Keith and Joe) are an information source for the industry. They take information from tax assessors showing closed sales prices, square footage, and a bunch of other pertinent info on a county’s real estate.

    San Diego, which has been hit harder by this market than most, has gone down less than 5%, Sept. to Sept. in median home price. We just had our first neighborhood show a 1.8% increase in per square foot price in October.

    Those are closed sales over an entire year. We in the business call them….wait a second, here it comes….f-a-c-t-s. Empirical facts. No emotion required.

    So bubbleheads, listen up: Besides being embarrassingly under equipped to go head to head with experts armed with actual facts, you’re showing a dangerous gray matter deficit. You don’t seem to understand you’ve come to a gunfight with water pistols.

    Besides Keith, you couldn’t beat Greg if you had the facts are your side.

    My grandma told me something I’ll pass on to Greg. She said, “Jeffrey, you need to stop and think when you get angry at someone you think is stupid. Because if you’re right, they can’t help what they said or did. Remember, they’re doing the best they can.”

    For what it’s worth Greg. 🙂

  16. Kaiser Sose November 25th, 2006 8:30 pm

    Jeff, I wouldn’t be tooting your horn just yet. And, what on earth gives you the false presumption that you are an expert? Because you got a RE liscense at Emily Griffith Opportunity School?

    I think a lot of the people on Keiths site take extremes and talk a lot of BS, just like you all do here with your rosy predictions and arrogant claims of being know-it-alls.

    Also Jeff, what makes you think those price declines have stopped? Because ONE neighborhood showed a very modest increase in PPSF? Bubble markets don’t just explode overnight. Even the Nasdaq, the biggest bubble in recent history, took 15 months to fall from its peak to reach its lows. And stocks are much more liquid and treadeable than RE.

    This unwinding of the credit bubble is going to take years and, yes, there will be a few ups, but mostly downs. So, don’t hurt yourself patting yourself on the back. This mess has just begun and it is far too soon for you to be claiming victory, or claiming anything at all.

    Perhaps you gentlemen can share your academic backgrounds to justify your macroeconomic predictions so that we can decide if you really are “experts.

  17. mike November 25th, 2006 8:45 pm

    The AZ market is current in a severe decline and getting worse.

    Why isn’t this borne out in the numbers?

    It is! Look at inventory and prices.

  18. mike November 25th, 2006 8:51 pm

    San Diego, which has been hit harder by this market than most, has gone down less than 5%, Sept. to Sept. in median home price.

    Just 6 mos. ago you would be explaining how even San Diego hasn’t fallen. But here we are, just 6 mos later and it’s down 5% from 1005. And all signs point to further acceleration.

    By this time next year you’ll be explaining how it’s only down 15% from 2005.

    Here’s a little test for you … in your opinion, was there ever in the last 50 years a bad time to buy a house? And if so, why was it a bad time?

  19. Kaiser Sose November 25th, 2006 9:07 pm

    Greg said: “All I can do is report the monthly results as soon as I trust them. You can’t test a projection, and I don’t trust anything I can’t test.”

    There it is folks. Greg makes no projections based upon any relevant forecasted data. He merely looks at current data and guesses as to what the future may bring.

    How reassuring.

  20. sam November 25th, 2006 9:26 pm

    I’ve never pulled a post and I never will. I’ve never failed to tell the perfect truth about you — and I never will.
    +++++++++++++
    Yea, well you pull comments that do not agree with your SPIN SPIN SPIN, because I have had my past comments deleted, and they were RE opinions, professionally presented, and you censored them Greg.

  21. mike November 25th, 2006 9:29 pm

    Mike, there was nothing “rather complete” about that NY Times article. They had to go to Pinal County to slime the Maricopa County real estate market.

    Ok, let’s not argue whether it was complete or not, perhaps you would address the following points from the article (http://tinyurl.com/yg72ex:

    o Today, the number of unsold homes in the area has soared to almost 46,000 from just a few thousand in early 2005.

    o Sales cancellations among big builders, not just here but around the country, are running as high as 40 percent, double the rate a year ago.

    o Across the nation, new-home sales are down by more than 20 percent from their peak last year. Prices fell almost 10 percent in September from a year ago. And that reported drop does not take into account the extras that builders are throwing in free or at steep discounts to lure buyers, which means that effective prices are even lower.

    o Wages rose, too, but not nearly as fast as home prices. In Maricopa County, which includes Phoenix and Scottsdale, median home values — half the homes are worth more, half are worth less — increased 64 percent, to $212,700, from 2001 to 2005, while the typical household’s income rose just 5 percent, to $48,711, according to the Census Bureau.

    And, by the way, the next day, the NY Times corrected the mistake (a trivial one, IMO) you spotted:

    Correction: November 8, 2006, Wednesday A front-page article yesterday about a slowdown in the housing market in the Phoenix area misstated the location of Hunt Highway, where a number of new housing developments are located. It is around Queen Creek, Ariz. — not Tempe.

  22. Greg Swann November 25th, 2006 9:51 pm

    > Yea, well you pull comments that do not agree with your SPIN SPIN SPIN, because I have had my past comments deleted, and they were RE opinions, professionally presented, and you censored them Greg.

    This is untrue. I have killed comments for plagiarism and extreme profanity, and I have banned one commenter for extreme profanity. That’s it. I have never deleted a comment for disagreeing with me — most of them do that.

    FWIW, as nearly as I can tell, you have seven comments on this weblog under four different fake names and three different fake email addresses.

  23. sam November 25th, 2006 9:53 pm

    yea, well you are lying about my comments now.

  24. Greg Swann November 25th, 2006 9:57 pm

    > yea, well you are lying about my comments now.

    I don’t lie. This would imply that you are lying. Who could guess that of someone who uses fake names and fake email addresses?

  25. […] Greg Swan wrote about the extremely nutty Keith at Housing Panic and I laughed out loud when I read it. Greg – in a different post – wrote about Ace Reporter, Catherine Reagor – protesting her lack of relevant data analysis. He closed that post with: […]

  26. Jeff Brown November 25th, 2006 10:20 pm

    Kaiser Sose – It seems the loudest commenters usually come into blogs using fake names, not many facts, and much emotion. The problem with emotion-based rhetoric is that is sounds like a kid at recess screaming “Oh yeah?!”

    If quoting one of the most respected sources of recorded real estate info in the country is tooting my horn, than Greg and I have been playing a pretty cool duet, haven’t we?

    As far as the personal insults go, the real estate school I attended was in the basement of the local Arthur Murray Studio, so I got a great discount.

    I’ve not yet said the slide has stopped or will stop. I quoted what DQ reported, and they used closed, recorded sales over a 12 month (not six) period, for a very large county, with a 3 Million population. I don’t get where I wrote anything about it having stopped. It may have, or it may continue.

    I’ve been in the business 37 years, a designated broker for 30. I suppose you could call me an expert, but my policy is to let others decide that. I just do my job.

    My job however has produced many multi-millionaires, investors who have retired early, a few before 40, and the satisfaction that comes with it. Following my advise had something to do with their successes.

    In a free enterprise capitalistic economy, one of the ways you can measure expertise is by earning power, and in real estate investments, by the results obtained by following a particular investment advisor. I’ve already mentioned my clients’ successes.

    I’d venture I’ve avoided paying more taxes in the last six months than you’ve earned gross in the last two years.

    You can scam folks for a few years, and fake your way in the real estate investment world for a short time, but you can’t do it for over three decades.

    Frankly, Kaiser, on your best day you couldn’t carry my jock. And if you’d listened to me five years ago, you’d be on some island sipping a cool one with a pink umbrella in it, with the smile of a man who’s made it on his own, and uses his real name.

  27. […] BloodhoundRealty.com Home Page There’s always something to howl about « Keith at Housing Panic is for sale . . . […]

  28. Jeff Brown November 25th, 2006 10:43 pm

    Mike – I may indeed be talking about a 15% drop in prices down the road, I don’t know. That’s an opinion, and one with which I disagree. But it’s certainly just as valid as mine. It’s still just an opinion based on? Not much. But since both our crystal balls are cracked, we’ll have to wait and see.

    Have I ever seen a time when it was bad to buy? You bet! The summer of ’79, the end of ’89, and the summer of ’05. The common denominator you’ve no doubt discerned is they’re all at the end of pretty impressive run-ups.

    If you bought at those times, you were at the top just before a cooling off period. The early ’90’s was the worst because it involved not only the normal down business cycle, but the S & L crisis hit at the same time. In San Diego it was even worse, as simultaneously we lost two of our largest employers to another state. It was terrible.

    The price decreases made this year look like a growth year with no exaggeration. San Diego pretty much tanked like I’d never seen before, probably averaging double digit declines in median values.

    That market brought out all the dire bubble headlines too. It was pounded by the media for four years running. Then the S & L crisis was stablized, the economy righted itself, and the bubble talk disappeared like steam in the air.

    Mike, this market is child’s play to that one, and yes, I agree with you that credit has a real part in this. But not as big a part as it did in the early ’90’s when there was lender fraud committed on a level unheard of before then.

    You and I can disagree on the next 12 months, but arguing about the current facts is worthless. It is what it is.

    I believe most markets will begin to show small signs of increased stablility in the first quarter. I see and hear anecdotal signs now in all three states in which I do business. But, stories from the street aren’t reliable by any stretch of the imagination.

    We’ll just have to wait and see.

    Now be honest Mike. You expected me to totally blow off any such thing as a bad time to buy, didn’t you?

  29. Richard November 25th, 2006 10:58 pm

    “The poor sod has been Masturbating to Armageddon for months now, to no discernible result.”

    Did I miss the part where armageddon has been avoided? Seems like we are well on our way along various fronts.

    So who was to receive the lubricant?

  30. Kaiser Sose November 26th, 2006 12:58 am

    Jeff, you show your true colors as a classless, uneducated shill. Who cares what name I use on a blog? Joe Smith, Thurston Howell, Eddie Bauer…what’s the difference? Even if your name is Jeff Brown, who cares? Although, I do think its amusing how you try to discredit reason by making retarded comments because someone isn’t posting under their Christian name. Sorry fella.

    No facts and emotion? Not in my post, unless your reading comprehension is as much as an uneducated realtor…oops, sorry. I appreciate your overly-dramatic response. It clearly displays your fear.

    You have completely avoided the issue of the discussion as to how this market is sustainable at current prices. You cite CURRENT data as your justification for the condition of the market in the future. You completely and ignorantly refute any data that contradicts your rosy point of view. Making millionaires? So did the Nasdaq bubble. Do you even bother to read these posts before you post a childish comment about “holding your jock”? Seriously, that has to be the most galactically immature and stupid comment I’ve ever heard. That is soooo 70’s geezer.

    BTW, I also appreciate your fallacious assumptions about myself and other posters who don’t conform to your insanely optimistic view of the world. You are clearly an uneducated shill who has no understanding of economics or finance. All you know is selling homes. That’s right…homes. People like you have turned OWNING HOMES into a leveraged casino. You think you are smart because Alan Greenspan lowered interest rates to absurd levels? Seriously? Next you are going to tell me that our government never makes mistakes and is always perfect. The “free market” and “supply and demand” my foot. It was incredibly low rates and a nearly unregulated mortgage banking industry. Those days are over and you, sir (and I use that term liberally), are a clown.

    This is a CREDIT BUBBLE, and the housing market ramped higher because of it. Of course, I wouldn’t expect a shill like you to understand that. Let’s chat in one year’s time when this market is even lower because, if you actually understood market fundamentals, you would know it will be with a certainty.

    BTW, why aren’t you sitting on an island with a cool one with a pink umbrella in it?

  31. Kaiser Sose November 26th, 2006 1:05 am

    And, for crying-out-loud Greg, what is up with the masturbation references?

    Is it “childish idiot day” on the Bloodhound blog?

  32. keith November 26th, 2006 3:12 am

    Greg

    I offered to play nice, but you chose the different path.

    You are an unprofessional, disgusting, vile man. I truly feel sorry for you, and I hope you don’t have children, parents or attend a church. One thing I’ve noticed in life is that the lower the intelligence or education, the higher use of profanity and disgusting sexual language.

    I also feel sorry for anyone foolish enough to do business with you, especially given that realtors are a dime a dozen these days.

    – Keith @ housingpanic

  33. Blood Hound Realty November 26th, 2006 3:48 am

    Blood Hound Realty

    What a horrible name. Yes, I want to do business with a realtor from bloodhound realty.

    Of all companies. They are the ones for me.

    You might want to read a book on “Branding”.

  34. david lereah November 26th, 2006 4:30 am

    Taking the high road and offering a truce doesn’t seem like being “for sale” to me

    You are the one for sale Mr. Swann. Another realtor whore who’ll say and do anything to make a buck

  35. Kelly November 26th, 2006 5:40 am

    When you’re finished with your grade school potty humor you might think of a second career.

    http://www.desertsparkle.com/

    One can only sit by the phone and hope so long.

  36. Ken Lay November 26th, 2006 5:43 am

    Mortgage troubles are rising
    Valley foreclosures nearing 2-year high

    Catherine Reagor
    The Arizona Republic
    Nov. 25, 2006 12:00 AM

    The bigger the boom the bigger the bust!!

  37. Willy November 26th, 2006 7:15 am

    What a pile of excrement is here in this blog.

    It’s a waste of time to try to read blood whatever.

    You better go anywhere else on the web.

    This site is brain dead.

  38. R November 26th, 2006 7:30 am

    Both of you seem to be ridiculous to me.

    Fact is – real estate is unaffordable to many first time buyers at the moment. Until the adjustment is made, we’ll see downward home prices.

    But demographics WILL save the day, in the long run. Generation Y, those born from about 1981 to 2000, is as big as the Baby Boomer generation. The oldest is turning 25 this year, and those born in the peak birth year of that generation – 1990 – are turning 16. Given that the median age of first-time home buyers is 32, we’re going to see a home buying boom from this generation that will last a least a decade, and which will begin in earnest in about 5 years.

    All that ‘excess inventory’ we have now – it will be gone.

  39. sam November 26th, 2006 7:33 am

    yea, well you are lying about my comments now, Greg.

    I don’t lie. This would imply that you are lying. Who could guess that of someone who uses fake names and fake email addresses?

    +++++++++++++
    Dear Greg,

    You do not know anyone on a Blog. It is all anono (fake?), even when you have a handle; you do not use your real name. I am the only person in the United States that has my mane, so why would I put myself out there for YOU???

    I was just trying to give some ideas to people who still wanted to buy. DUH. You can not possibly have tracked me, because I used a NEW yahoo e-mail just to register for this thread. So, there is the proof that you are making things up as you go along.

    Additionally, if you did not delete my post which recommended that all buyers only make their offer to buy, through the LISTING AGENT, then engaging said Listing Agent as a Transactional Agent, and offering 2% for shuffling paper on THE WHOLE DEAL, then where is it?

    I actually did this when I bought my house and saved 4 to 5 % off of the ENTIRE PURCHASE PRISE, because no one in your business, has a BUYER right now, and no one, in your business, wants listings!

    I only worked with the listing agent when I viewed a property, I made my offer, and NO ONE (buyer/me) paid a “BUYER BROKER COMMISSION” and The listing agent got (two percent) 2%. Everybody wins.

    But you deleted the post, because you want Transactional Agency to be Outlawed, to force every one to pay both a Buyer Broker COMMISSION and a Listing Broker COMMISSION.

    WHERE IS THE POST? It was gone withiN 30 Minutes, whilst you gave your spun advise to the question from a dear reader. I just offer another solution to the question. Whos lying now baby????

    You need to get off of your I am holier than thou High Horse and get OUT OF THE MATRIX.

    Sam

    IS my real ‘nick’ name and you are NOT getting my last name, but I will tell you I am a chick.

  40. dave November 26th, 2006 7:52 am

    Greg,

    The statistics out of housing tracker are not encouraging for Phoenix real estate. You should hope that rates are cut next year or else it could get really ugly for AZ and especially Phoenix real estate. And that is one probability that you won’t be able to spin shout it become reality. Hoping for ignorant and stupid clients isn’t exactly the most promising business model.

    http://www.housingtracker.net/old_housingtracker/location/Arizona/Phoenix/

  41. sam November 26th, 2006 7:53 am

    Jeez, I had my coffee and walked my dogs, now I am back because I need to tell you that your ridiculous accusation of me using profanity is just a ‘red herring’. Would you like a wiki linky for that phrase, Greg?

    You should name your Blog http://www.blogspot.morelies.com, imo

    Sam

  42. Paul E. Math November 26th, 2006 7:56 am

    Nice work, Mike and Kaiser.

    Whenever I evaluate an opinion I first assess whether I can trust the person on 2 main fronts. 1) Does this person have a vested interest, any way of benefitting from the conclusions they draw? 2) Does this person have the intelligence, experience and facts on their side?

    Greg Swann, other real estate ‘agents’ and the rest of the National Association of Realtors are immediately disqualified by criteria #1. They make money by volume sales, that is why they will try to convince you of the preposterous claim that ‘now is the perfect time to buy or sell a home’. Either it’s one or the other, but it can’t be both.

    I can’t imagine what Mike and Kaiser could have to gain by posting their opinions and conclusions. Even if they are wrong, at least I can trust their honesty. That is far more than can be said of Greg Swann, the eternal housing bull.

    Jeff Brown, it is easy to point to a time in the past when it wasn’t a good time to buy, but honesty would require you to say ‘now is not a good time to buy’ – were you saying that back in summer of 2005? Maybe you were, I don’t know. If you were, why were you saying it and why would anything be different now? If prices have dropped by as little as you claim then all the reasons not to buy in 2005 would apply today, right? This is why I don’t believe you are honest.

    As for intelligence, experience and facts, I tip the scale to Mike and Kaiser. I find Mike and Kaiser to offer cogent, fact-based argument without resorting to meaningless insults as Greg and Jeff Brown both did.

    37 years selling homes does not qualify you as an expert in real estate, as a market. If I was a car salesman for 37 years, would that teach me something about economics, about the automobile industry? No, it would teach me what to say to convince someone to buy a car.

    I will say one thing for you, Jeff Brown and Greg Swann, you’ve become good at saying the right things to convince someone to buy a house. But as the saying goes, ‘you can fool some of the people some of the time, but you can’t fool all of the people all of the time’.

  43. Buzz Saw November 26th, 2006 8:18 am

    I notice you didn’t respond to his allegation that you troll his site frequently. What do you say oh purveyor of truth, do you troll his site, if so, why do you call him a troll?

  44. Greg Swann November 26th, 2006 9:13 am

    > Additionally, if you did not delete my post which recommended that all buyers only make their offer to buy, through the LISTING AGENT, then engaging said Listing Agent as a Transactional Agent, and offering 2% for shuffling paper on THE WHOLE DEAL, then where is it?

    These are your three prior comments relating to transactional brokerage. I have never deleted any of your comments, for profanity or for any other reason. I do not tell lies, ever.

    Name: richard
    E-mail: TypicallyMoronicBubbleHead@yahoo.com
    URI: http://none

    Lesson number one: Post For Sale By Owner Sign and Network ALL Friend and relations before engaging a Real Estate Sales Person. After this is exhausted, then go to the MLS system.

    Then you eliminate the 6% costs if there is a buyer in your circle that you did not know about.

    Put the real Estate agent into transactional agency to do the paper work only at the closing and coordinate inspections etc. Talk to the Agent about a flat 2% transaction Fee (total) as a compromise, and as a peper pusher, rather than giving them problems for not working to earn a commission.

    Posted Oct 19, 5:46 PM

    Post “Ask the Broker: How do I figure out if this deal makes sense . . . ?”

    Name: boomer/bubblesitter
    E-mail: The SameTypicallyMoronicBubbleHeadWithADifferentFakeName@hotmail.com
    URI: http://housingpanic.blogspot.com/

    PS Florida Law is going to Transaction (Dual) Agency only in the future, I have head.

    Posted Sep 8, 6:30 AM

    Post “Location, location, location: Refusing Dual Agency puts Realtors above reproach . . .”

    Name: boomer/bubblesitter
    E-mail: The SameTypicallyMoronicBubbleHeadWithADifferentFakeName@hotmail.com
    URI: http://housingpanic.blogspot.com/

    In Florida it is called ‘transactional agency’ and that is the only way to buy, peroid. I only deal with a listing agent on a given property, make a short offer, tell them they are bound to present the offer.

    I then inform the dual agent or Transactional agent that my budget is 2% commission, as they do not have to pay a buyer broker, they do not kow this but I will go 3%, which is what they would make anyway.

    When selling, the same thing, when a RE Agent brings a buyer, put the RE Agent into Transactional agency @ 2 or 3%.

    I save thousands, have representation, and the money goes into my pocket. hehehe

    Posted Sep 8, 6:22 AM

    Post “Location, location, location: Refusing Dual Agency puts Realtors above reproach . . .”

  45. RE.Agent November 26th, 2006 9:34 am

    It’s a new paradigm, and everybody who doesn’t buy, now, will be priced out forever. Anybody who does buy will be rewarded with a lifetime of riches, as their property will continue its 30% yearly price increase.

    Renters, and anybody born in a future generation, will not be able to afford a $10,000,000 starter home in 15 years. They will live in tent cities, and Hondas.

    This asset bubble is different than all of the others – it will never slow down, or pop. The gains are permanent.

  46. Bill November 26th, 2006 9:46 am

    Swann, what’s with your dearth of quality listings? Show us something we can work with…

  47. Kelly November 26th, 2006 9:48 am

    Explain

    http://www.biggerpockets.com/images/blog/shillerbig.gif

    a) Massive influx of wealthy mexicans.

    b) Lack of barren desert moonscape, where one would perish if it wasn’t for air conditioning.

    c) Speculative binge fueled by ridiculously easy credit and exacerbated by unemployed waitresses and cab drivers who took the weekend “get rich in real estate” seminar at the local Holiday Inn.

  48. sam November 26th, 2006 9:53 am

    WELL, IS IT A LIE THAT YOU WILL NOT PUBLISH PERSONL INFORMATION. I AM FILING A COMPLAINT WITH THE DEPARTMENT OF REAL ESTATE REGULATORS IN AZ ON MODAY, ON YOU, FOR BREACH OF CONTRACT IF YOU DO NOT TAKE MY E MAIL OFF OF YOUR SIGHT.
    BELOW IS THE PROMISE ON YOUR BLOG; BREACH OF CONTRACT IS NOT DOING WHAT YOU PROMISE ‘OH GREAT TRUTH TELLER’.

    COPIED FROM BLOODHOUNDREALTY;
    Leave a reply

    name

    email ( will not be shown )

    website

  49. Jeff Brown November 26th, 2006 9:55 am

    >BTW, why aren’t you sitting on an island with a cool one with a pink umbrella in it?

    I love what I do, and enjoy having company on the island. Creating more millionaires does just that.

    Paul – I haven’t been a ‘house’ agent since 1976. I’ve been an investment broker since then, specializing in building wealth and getting people to their retirement early and with more income then they imagined. The majority of my transactions are multi-state tax deferred exchanges.

    The last time I showed a house, Ford was president.

    I’ve told investors countless times they shouldn’t make a move at certain times. Most of that advise was based upon their particular circumstances, though there were times it was directly due to the market.

    As for NAR’s statement about being a good time to buy or sell? It was a typically arrogant statement by an organization concerned with public image.

    That said, in the spring of ’95 I told clients buying San Diego income property, even with interest so relatively high at that time, was the smart move. The media as usual was still preaching doom and more disaster. Those who believed then that the final crash of the real estate bubble was eminent said anyone buying then was a fool. They said, much like today, that the huge mid-late ’80’s run-up was artificial, and about to fall into the black abyss.

    We know what happend. I could have been wrong then, just like I might be wrong now. This slow-down is now about 15 months old. I think you’d have to agree that if values were going to do a NASDAQ like dive, they would have fallen more than they have to this point.

    I concede the possibility that those espousing your school of thought could absolutely be correct.

    It would be the first time though.

    As I’ve said elsewhere, the price decline caused by the credit fiasco known as the S & L crisis was far deeper and happened more quickly than we’re seeing now. Nobody who experienced it would call it anything but terrible. It made today’s market look attractive.

    You could be right Paul, and I could be totally wrong. But real estate has never experienced a real bubble burst like NASDAQ which is still only about half of what it was just before its bubble burst, and it’s now been over five years.

    That’s a bubble bursting. In my opinion this real estate market isn’t comparable to that. It will recover nicely. How long it will take is for the seers.

    You and I just disagree. But so far, I’ll take my batting average when the chips are down.

    As for fooling all the people all the time? Do you think I could be in the same town doing business for over three decades and fool all the people all the time? Would all these fools bring their friends, family, and neighbors to me so I could ‘fool’ them too? These same fools have tricked their bankers into thinking they’re wealthy.

    Scams have short lives Paul. The execution of a real plan using time tested principles consistently over time is what results in wealth and a killer retirement.

    I wish the same result for you some day.

  50. devestment November 26th, 2006 9:58 am

    Pissing contests are for people with something to prove. On this issue, the proof will be in the pudding. When the cash stops flowing so readily into the economy and folks are trying to keep their investments afloat with less money, job loss, and government cut backs the real pain will begin. Historically housing has gone down in price 30 of the last 100 years and in the 1991 bubble prices went down 40% in Los Angeles. When I consult the writings of Yale’s Robert Schiller and the UCLA Anderson study it becomes obvious. The only folks touting future gains in prices now are special interest REIC with conflict of interest.

  51. Greg Swann November 26th, 2006 9:58 am

    > IF YOU DO NOT TAKE MY E MAIL OFF OF YOUR SIGHT

    I will most happily accomodate you by changing the fake email addresses you have used here in the past.

  52. mcbee November 26th, 2006 9:59 am

    So why are PHX house prices immune to dropping if they’ve risen so far above incomes? For years (decades) they track incomes and now they don’t? Because of teaser rate mortages? Do teaser rate mortgages affect the long term cost of a house?

    I think PHX has the same arguement that Florida has (or had). “People are moving here in droves, retiring, blah blah”. Well, yes, they WERE. Until housing prices shot up. People in the MidWest for example can’t retire in Ariz. anymore. Their houses in the hollowed out industrial heartland have declined in value over the past few years while PHX is up 100%. The main reason, or one of them, to move to PHX, WAS cheap housing. Now it’s not cheap anymore. So immigration changes. Unless you count hundreds of thousands of illegals as ‘immigrants’ to your state.

    They’re discovering the same thing in Fla. School enrollments are down 10% in some counties. Families are leaving and house prices are too expensive for new families to move in.

    Who above said that “housing was overpriced in summer 2005” but they think it’s ridiculous to say it’s overpriced now. Yet they also state prices are down 4% or something. OK, which is it? If they were overpriced in 2005 and only have fallen 4%, then how are they not now STILL overpriced? Inventories are up from 4,000 to 40,000. IS that a lie too?

    I don’t know what you’re looking at in CA, but everything I’m looking at says prices are down 10% in the hot areas, at least. More in SD. And the defaults from the teaser rate mortages which enabled people to buy houses at 300% of what they were 5 years ago haven’t started yet. Millions of houses bought with the idea that “I can afford the teaser rate and that’s all I need, b/c by the time it adjusts, I’ll sell for a 50% gain.” That is if the homebuyers even knew they were buying on a teaser rate schedule. Tons of Mexicans didn’t even realize it. No bigee, it’s not like illegals need great credit anyway.

    What about Schiller (sp?) and other economists (the Economist magazine) who call this a spectacular bubble? Are they all in need of lubricant?

    Greg Swann, you write so well, you diminish yourself with your profanity.

  53. Bill November 26th, 2006 10:00 am

    Jeff Brown,

    How do we get in touch with you???

    We want to be rich too!!!

    The Robert Kiyosaki just took all my money!

  54. Bill November 26th, 2006 10:03 am

    WHAT???? A REALTOR? with Ethics Issues? How is there even such a place to file complaints? Why would ANYONE complain? REALTORS? are the most ethical people on earth. I mean they have ETHICS TRAINING for God’s sake!

  55. sam the Moronic HPer November 26th, 2006 10:22 am

    Every one should use fake e-mails on this sight. I shall do so henceforth. Posters you should not use real e mails unless you want your private information published to be seen around the globe. Oh, this sight is only a local Phoneix blog.

    HP AKA FLYING MONKEY WARRIOR

  56. Paul E. Math November 26th, 2006 10:48 am

    Jeff Brown, even Warren Buffet would not make the claims that you just did about uninterrupted, unblemished success. That makes me once again question your sincerity.

    About your facetious claim that your clients have ‘fooled’ their banks into believing they are wealthy – I absolutely agree. Verification of stated income for mortgage qualification for the last 5 years has been asleep. It takes nothing to fool the bank into thinking you’re wealthy, nothing at all.

    And here’s another untruth, I’m quoting your previous posting: “real estate has never experienced a real bubble burst like NASDAQ”. Have you ever heard of Japan? Hey, I’ll admit I could be wrong about this bubble or whether this bubble will burst. But please don’t go around mislead people into thinking there are no such things are real estate bubbles – Japan had one as recently as the 1990s.
    http://en.wikipedia.org/wiki/Japanese_asset_price_bubble

  57. David November 26th, 2006 10:58 am

    I stand withn Keith! You are a cheerleading member of the REIC.

  58. Jeff Brown November 26th, 2006 11:09 am

    Paul – I was speaking about American history.

    >About your facetious claim that your clients have ‘fooled’ their banks into believing they are wealthy – I absolutely agree. Verification of stated income for mortgage qualification for the last 5 years has been asleep. It takes nothing to fool the bank into thinking you’re wealthy, nothing at all.

    That comment wasn’t about qualifying for loans, it was about my clients being wealthy in fact. Being worth millions, using TODAY’S values. Being retired with tax sheltered incomes of five figures monthly.

    If you took anything I’ve said to mean I and my clients have had uninterrupted success, it wasn’t my intention. Like anyone else, we’ve also had to deal with setbacks in markets.’80-83, 91-95, and the last 15 months are excellent examples.

    Success in the long run, comes from having planned for the inevitable downturns. My success, and therefore my clients’ success means only that they are far wealthier now than when they started listening to me. The chart never goes in one direction forever. But by prudent planning, expertise, and not a little courage, anyone can succeed over time.

    Uninterrupted success is simply not possible. Long term success can be made likely with objective analysis, long term vision, and the willingness to stand on the sidelines when prudent.

    Wouldn’t you like to be retired with $15,000 monthly tax sheltered income?

  59. Cathleen Collins November 26th, 2006 12:13 pm

    Anonymous-Joe has made several comments on this post. Though I disagree with much of Anonymous-Joe’s point of view, I believe he writes in earnest, so I’m responding to this one point he raised yesterday:

    … to be clear, I don’t think Phoenix needs to go live in bunkers and stock up on peanut butter and bottled water, but come on, do you actually believe this “it’s a great time to buy or sell a house” ad campaign nonsense? What’s wrong with leveling with people and saying “look folks, things are dicey in Phoenix right now, if you don’t absolutely need to buy, then maybe wait a little while”??

    Obviously, you are making assumptions. You have no knowledge about our brokerage, no more than other of your bubble-brothers who assumed we live in a “Mac Mansion,” drive a luxury vehicle, and have studied Winston Churchill. If you care about facts, then you would be interested to know that we are actually discouraging prospective clients to sell right now into a buyers’ market, unless they must sell, can afford to sell and are willing to price at today’s market… not last year’s (which should still bring a profit to the seller who bought as recently as two years ago). But this is indeed a buyer’s market. Is it the best buyers’ market that we can expect? Is this the consummate market at which to buy? Probably not. But this is certainly a great time for some individuals to buy, based upon their own particular needs.

    The point is, our professional counsel is extended to individuals. Information broadcast through a website can only speak in the general. In general, we are in a buyer’s market because 1-interest rates are attractive; 2-sellers are willing to negotiate; and 3-lots of people continue to move to Phoenix, meaning there will probably be more people competing for housing a year from now than there are today (yeah, I know… Phoenix is hot — but I’m talking about actual demographic trends not some housing panic devotee’s personal preference for cold weather over hot).

  60. :o) November 26th, 2006 1:56 pm

    You’re sick and lost if you think the housing market won’t continue it’s death spiral this spring…..I’ve been reesraching this trend for 1 1/2 years now….The data, facts, and history paint a very scary picture coming to a housing market near you. WAKE UP!

  61. mike November 26th, 2006 4:57 pm

    I have never deleted a comment for disagreeing with me — most of them do that.

    Thank you. I appreciate being able to speak openly with you here, even though we disagree on almost everything.

  62. mike November 26th, 2006 5:16 pm

    As I’ve said elsewhere, the price decline caused by the credit fiasco known as the S & L crisis was far deeper and happened more quickly than we’re seeing now.

    Yes, but only in retrospect. In the first quarters of the downturn – and that’s where we are now, in this cycle – the full impact wasn’t known.

    There’s a lot of credit fraud in this run-up, Jeff. Stated income and no/low-doc loans are an open invitation to lie.

    I wouldn’t be surprised if this down cycle accompanies a national lender scandal as bad or worse than the 1985 S&L fiasco; all the essential elements are there.

  63. mike November 26th, 2006 5:37 pm

    Have I ever seen a time when it was bad to buy? You bet! The summer of ’79, the end of ’89, and the summer of ’05. The common denominator you’ve no doubt discerned is they’re all at the end of pretty impressive run-ups.

    You’ve stated (and I agree) that even the hardest-hit places like San Diego haven’t yet seen significant price corrections.

    So, in terms of buying, where the primary factor is price, and since we both agree that prices haven’t moved significantly (yet), isn’t now as bad a time to buy as the Summer of 2005 was?

  64. mike November 26th, 2006 5:38 pm

    Have I ever seen a time when it was bad to buy? You bet! The summer of ’79, the end of ’89, and the summer of ’05. The common denominator you’ve no doubt discerned is they’re all at the end of pretty impressive run-ups.

    You’ve stated (and I agree) that even the hardest-hit places like San Diego haven’t yet seen significant price corrections.

    So, in terms of buying, where the primary factor is price, and since we both agree that prices haven’t moved significantly (yet), isn’t now as bad a time to buy as the Summer of 2005 was?

  65. Jeff Brown November 26th, 2006 8:13 pm

    Mike – We’re about to begin the sixth quarter of this down trend. If after almost a year and a half San Diego has gone down just 5%, one might plausably conclude it’s possible we might be getting away without having our jugular cut. But, still, I agree with you we don’t know the ultimate destination of this animal.

    When you decide to buy isn’t, or shouldn’t be primarily driven by price, but by what you believe to be the future. Buying a $175K priced home in Nebraska isn’t better than a $500K home in San Diego if you truly believe the SD home will be worth $600K in a couple years. I’m not in any way saying I believe that, because I don’t. But buying now must be based on a belief in a recovery, and not in five years.

    I’m having my clients go to regions I believe will be growing again sooner rather than later. And yes, I believe it’s not a bad time to buy IF you know what you’re doing, and you have confidence in that particular region.

    As you are no doubt well aware Mike, investing isn’t for sissies. 🙂 But it’s the investors combining prudent research with courage that make the real hits.

    The thought of another lender going down via fraud or horrible underwriting has crossed my mind too. I think maybe the tightened (relatively speaking) regulations have had a positive effect. However, you make an excellent point about the low and no-doc loans.

    Even then, lenders can now refer to a stated income borrower’s statements of income for properties recently purchased. I’ve heard many stories of lenders refusing loans due to differing income statements.

    The result has no doubt meant hundreds of loans not made that may have caused problems in the system over time as they grew in number.

  66. Paul E. Math November 26th, 2006 8:24 pm

    Jeff Brown, I completely agree with this statement that you made: “Uninterrupted success is simply not possible. Long term success can be made likely with objective analysis, long term vision, and the willingness to stand on the sidelines when prudent.”

    Based on the objective analysis of home prices v. average incomes and average rents as well as the alarming increase in foreclosures I cannot see any prudent course of action but standing on the sidelines right now regarding real estate investment.

    You and Greg Swann are attempting to hide the truth, that current home prices are unsustainable. If someone wants to own a home and can truly afford to make the mortgage payments and will be happy living in that home for the duration of their mortgage then perhaps now is the right time for them to buy.

    But if you argue that now is the right time to buy a home based on ‘investment’ reasons then you are misguided at best. New home prices are down 10+%, not including cash back and incentives. Inventories remain high and no end to price declines is in sight. How can you honestly recommend real estate over the countless other investment options? Unless, maybe, somehow, you make more money by recommending real estate?

  67. Joe November 26th, 2006 9:55 pm

    Christ, I go away for one day and the whole world explodes.

    >Oh and “Joe”, hate to burst your bubble, but Greg isn’t using JUST HIS DATA.

    Yes, he is. Greg has demonstrated a remarkable aptitude for posting selective facts that back up his personal opinions and dismissing as “lies” anybody who refutes his information with other facts.

    Then he dismisses newspapers as “dying” (which they’re not, the smart ones are adapting and printing money) because they “refuse to tell the truth” (um, HUH!?)

    That kind of reasoning is childish and shows an astonishing failure to grasp basic logic. First, the newspapers print the news that comes from OTHER SOURCES, such as:

    a) the Federal Reserve
    b) the auction houses that are having a field day with foreclosed homes
    c) the banking commissioners that are now for the first time realizing that Option ARM loans aren’t a good thing
    d) the Bond houses like PIMCO who have a far better track record than probably any Realtor on this blog

    Sorry, but given the choice, my money is NOT on the people who have to move houses in order to make a living.

    >He’s not making this stuff up. I’m seeing exactly what he’s seeing, so is
    >Wake, Dalton, and anyone else who cares to look at and logically
    >analyze the available data.

    BULLSHIT. Sorry if that’s crass, but BULLSHIT, plain and simple. The fact you’re all seeing the same thing means you’re drinking from the same well, that’s all. I’d broaden my data horizons, if I were you.

    I’m absolutely positive that real estate will one day in a few years be a good investment again, even in Phoenix, but to suggest that it is right now is simply ridiculous and only serves to further undermine your reputations.

  68. Jeff Brown November 26th, 2006 10:15 pm

    >Based on the objective analysis of home prices v. average incomes and average rents as well as the alarming increase in foreclosures I cannot see any prudent course of action but standing on the sidelines right now regarding real estate investment.

    Of course you can’t. And if you believe your analysis to be the absolute truth you should stay on the sidelines. Even though you call your analysis objective, (and I believe you) it may be flawed in its conclusion. It’s not THE objective analysis, nor is your conclusion The one to follow. I think my analysis/conclusion is (and btw, you still don’t know what my analysis is, or what I’m really advising) is for those who believe as I do.

    The market gives the final grade on who, in the end was ‘objective’.

    >You and Greg Swann are attempting to hide the truth, that current home prices are unsustainable.

    I think because I disagree with those who are in agreement with you that Greg and I agree. Plus when you say we’re attempting to ‘hide the truth’ am I to infer that whatever comes from your mind is truth? And that therefore those who say otherwise are attempting to hide that truth? I certainly respect your take on things, but you’re not the arbiter of what’s in the future, or what can or cannot be ‘sustained’. Nobody is.

    But let me take a shot at your ‘unsustainable’ prices conclusion. That is literally not remotely supportable under any system of logic. What’s the Phoenix median price now, around $265K or so? For God’s sake SD passed that figure so long ago we can’t see it in our rearview mirror. And the pay there is roughly equivilent to AZ.

    We passed $100K in 1981 and I heard the same mantra – “We can’t possibly sustain these prices. The pay just isn’t keeping up.” Even after this market price decrease we’re still over half a million bucks for a standard 3/2 1,400 square foot home! And the L.A./Orange County median is higher. What happened to the unsustainable prices as they raced past 200 then 300 then 400 then 500K? And I won’t even begin to talk about SF.

    The sustainable price argument has been in a coma since somewhere around George Bush’s Dad’s time as president.

    What folks learned was that they didn’t have a right to live where they wanted if they couldn’t afford to. There were others who gladly could, and bought their homes. They moved to places like AZ, CO, ID, and the like.

    Unsustainable prices have been, up to this point, proven false in every market it’s been used before Phoenix.

    >But if you argue that now is the right time to buy a home based on ‘investment’ reasons then you are misguided at best.

    I ask you again – is it misguided because you know the right way? Are you the analyst we’ve all been searching for? The one who knows the only real truth about the future of the real estate market? If I disagree then I’m ‘misguided at best’? If that’s true, and you’re that good, then you’re a multi-billionaire having fun on the blogs, right? Paul, neither one of us are that analyst.

    >How can you honestly recommend real estate over the countless other investment options? Unless, maybe, somehow, you make more money by recommending real estate?

    This part brings the biggest smile to my face. Countless investment options? Why don’t you tell me about the dozens of folks you know who have been doing so well in the stock market? Or maybe they’ve gone into business for themselves somehow?

    Paul, the regular guy out there has very few options. He can buy stocks, bonds, various CD’s and Treasuries, invest in REITs, TIC’s, or in some sort of real estate. If he’s buying a home in which to live, he’s not talking to me because I don’t do that. Frankly, I tell those who ask me, they shouldn’t look at their house as an investment, but as a home. But that’s just me.

    If, on the other hand they ask me how they can possibly insure a solid retirement in the next 20 years, I don’t tell them to give up. I also don’t tell them to invest in So Cal right now. Or Phoenix, at least for a few months, to see what happens in the first couple quarters.

    But I do have them put their money in other places – in real estate. And that’s where we disagree, which is OK.

    Paul, when you include the insinuation that I’d gladly put my clients in bad situations merely for the money I’d make, you signal everyone you’ve run out of rational things with which to debate the subject. I won’t defend myself as I don’t need defending. I will point out that though I don’t ‘do seminars’ in the traditional sense, I speak in the homes and offices of my clients to groups invited by them only.

    They wish to share their long term success with their family and friends. Why do they do that? Because they’ve been phenomenally successful investing based on my firm’s advise to them.

    And seriously? They know that sometimes I’m wrong. But they don’t think I’m ‘seriously misguided’ or trying for a payday at their expense. They just remind themselves that their bank account now requires two commas.

  69. Joe November 26th, 2006 11:20 pm

    Jeff,

    The fact that housing prices are (for now) staying high doesn’t mean they are not unsustainable, and certainly is no guarantee of future results.

    The simple fact of the matter is that high housing prices have persisted throughout many US metro areas mainly due to:

    a) increasing willingness by buyers to further stretch their incomes to cover higher payments, using credit to make up for income shortfalls
    b) increasing use of loans such as ARMs to purchase houses that otherwise are unaffordable

    This is one of the main reasons why we’re seeing San Diego housing prices drop – these loans are now resetting, causing buyers to walk away, foreclose, or otherwise sell their homes, thus increasing the supply and driving down demand. Even the vaunted SF market is seeing prices drop.

    Let me ask you a simple question: how many Phoenix homeowners could buy the houses they live in today if:

    a) they had to limit their loan amounts to less than 3 to 3.5 times their annual income
    b) they had to qualify for the loan based on the true 30-year amortization schedule and not the interest-only or negative amortization payment amount
    c) they couldn’t spend more than 33% of their incomes on their mortgage

    My guess is that the affordability index would be far worse than it is today, and the unsustainable rise in home prices would have ended 2-3 years ago.

  70. Jeff Brown November 27th, 2006 12:33 am

    Joe, the underwriting approach you want in place was loosened in around 1971 or so. I was there. As a matter of fact, the agent test I took asked the factor used by lenders to approve borrowers. The answer? 3.5 to 1.

    If that was invoked today, there’d be a depression or close to it. A buyer earning $100K a year and living in SD would have to move to Phoenix to buy a home. He’d only qualify for $450k home. (6.25% fixed rate)

    Housing prices are dropping for many reasons not the least of which is that since they’ve been going up for almost a decade, it’s past time for a breather. It’s never gone up for that long. Credit of course has played its part very well.

    However the argument against a loan like the Option ARM is difficult to digest when it has been around since before the last credit crunch. And that fiasco was far worse than what we’re now experiencing. If the dang loan was so horrible, how has it lasted for the last 20 years? It’s made it through one ‘crisis’ and a recession. It’s not going away.

    Let me ask you a simple question: how many Phoenix homeowners could buy the houses they live in today if:

    a) they had to limit their loan amounts to less than 3 to 3.5 times their annual income
    b) they had to qualify for the loan based on the true 30-year amortization schedule and not the interest-only or negative amortization payment amount
    c) they couldn’t spend more than 33% of their incomes on their mortgage

    Using that criteria the only way they’d be able to buy a house is if we all held hands and wished up a ‘Way-Back Machine’ to make it all work. I do understand the sentiment though, and don’t totally disagree. But trying to force the genie back into the bottle just ain’t gonna fly.

  71. Joe November 27th, 2006 10:58 am

    Jeff,

    OK, so I’m going to have to start insisting that you actually READ what I’m writing and not trying to read between the lines and divine things that aren’t there.

    >If that was invoked today, there’d be a depression or close to it.
    >A buyer earning $100K a year and living in SD would have to move to Phoenix to buy a home.
    >He’d only qualify for $450k home.

    YES! YES, JEFF! EXACTLY!

    OR, prices would have to moderate back to where they were affordable again. Or they would NEVER have gotten that high in the first place, and would have tracked inflation the way they’ve done for most of modern house price history instead of shooting up 10-20% per year for the last 5 years. Are you just OK with the fact that houses are the least affordable they’ve ever been in the top 10 metro areas in the US?

    >Housing prices are dropping for many reasons not the least of which is that
    >since they’ve been going up for almost a decade, it’s past time for a breather.
    >It’s never gone up for that long.

    Well, yeah, I agree with that. That’s just common sense. Affordability is another reason. So is rising supply. So is increasing defaults. Again, common sense. But the point is that prices are dropping, and will continue to do so for (I’m guessing) at least another 1-2 years.

    >However the argument against a loan like the Option ARM is difficult to digest
    >when it has been around since before the last credit crunch.
    >If the dang loan was so horrible, how has it lasted for the last 20 years?

    No, Jeff! NO, NO, NO! Now you’re just spouting red herrings!

    I NEVER SAID that the loan was horrible or that it needed to go away. The problem is not the EXISTENCE of Option ARMs, Jeff. The problem is that these loans are now FAR FAR FAR outside of the envelope that they belong in. John Q. Public has NO BUSINESS taking out Option ARMs in order to afford a more expensive house or to “invest” in real estate. THAT’S THE PROBLEM – there are many many loan originators in this country that are putting people in these loans who don’t belong in them. And only now are they beginning to blow up. When I bought my house a couple years back the loan officer tried her DAMNDEST to get me into this ridiculous option ARM nonsense even though I had 20% to put down and could EASILY handle the PITI.

    20 years ago, Jeff, ARMs were less than 2% of loan volume, and Option ARMs even less than that (and only went to the people who actually could understand and use them)

    About three weeks ago, I was at a dinner party and wound up talking with a woman who was a Realtor, and she was going on and on and ON about how wonderful these Option ARM loans were and how they let people buy nicer houses.

    “Fine,” I said, “but don’t you think people should be qualified for these loans based on the full 30-year amortizing payment and not just the neg-am or interest-only portion of the loan? After all, they’re just asking for trouble if they can’t afford the full payment.”

    She stared at me like I was from Pluto.

    This is going to end badly, Jeff, for a lot of people who got loans they didn’t deserve or need. Anybody who could fog a mirror in the last 4 years could get a 100%, no-down, no-doc loan. And many did. And now the piper is at the gates.

    Again, I’m no bubblehead and I don’t think the sky is falling for everybody, but for the next few years real estate is in for a tough sledding. Like you said, it’s the way of things – we all go through cycles.

  72. Jeff Brown November 27th, 2006 11:53 am

    Joe – I think I may have spotted the real fork in the road for you and I. You want the world to conform to prudent, rational behavior. I do too. Much of what your last comment said is correct. But here’s what may be the different road taken that’s taking us to slightly different destinations.

    Marxism has failed everywhere it has been tried. And no, I don’t think you’re anywhere near a Marxist, probably far from it. But Karl wanted to control everyone’s behavior for the good of all. What makes our economic system work is the one thing he didn’t account for: The freedom to fail, and suffer the consequences of your bad economic judgment.

    When these ARM loans end up with the lenders, it’s not the borrower alone who is hurt. The lender now has to deal with angry stockholders, their board, and the general perception of the public.

    Folks were just as miffed by the VA and FHA loans when they were new. What? No down payment? 3% down payments? We’re all gonna die! What happened? The American Dream spread to Joe Lunchbucket and his family.

    I’m not equating ARMs with those loans, but they too had foreclosure rates greater than did traditional loans.

    Joe, I preach until my voice fails about the correct use of ARMs. Investors of course, can use them as a tool where it makes sense. Homeowners have made tremendous use of them by way of accessing their equity in order to invest for their retirement. (And no, NOT just in real estate. 🙂 The region in which the borrower resides is key also. Is it East Toilet Seat Iowa? Or somewhere a reasonable person might project 3-5% in annual appreciation over the long run.

    If a young couple came to me and asked about a 1br condo they wanted, should I tell them to put 20% down with a 30/yr fixed rate loan? The condo they want probably runs about $175-225k here. That’s +/- $40k to close, and $1200 +++ for monthly payments. An ARM would be $20k to close, and $465/mo payments +++.

    Assuming the young couple doesn’t approach having $40k, do we tell them to save like Grandpa did and buy a home when they’re in their late 30’s? If ever?

    It’s a risk. And in some markets an untenable one at that. But in SD where the condo market is selling like hot chocolate in Death Valley at noon in the summer……maybe it’s not a horrible way to go. They have, or will soon hit the bottom.

    No doubt Joe, there’s a happy medium between what you’d call prudent underwriting, and what I’d define as a controlled economy. Usually the free economy finds a way, though often through wrong turns, and bumpy dangerous roads. But the most dangerous road to travel is the one that doesn’t allow the freedom of failure. Those failures are what has led to our economy’s greatness.

  73. Joe November 27th, 2006 12:56 pm

    >Marxism has failed everywhere it has been tried.

    Got that right.

    >And no, I don’t think you’re anywhere near a Marxist, probably far from it.

    Got that right too!

    >When these ARM loans end up with the lenders, it’s not the borrower alone who
    >is hurt. The lender now has to deal with angry stockholders, their board,
    >and the general perception of the public.

    Actually, no, that’s where I think you’re wrong. That USED to be the case, yes. But not anymore.

    The majority of these loans are now sold in Mortgage Backed Securities to investors looking for yield. The originator no longer suffers from bad loans.

    And “the general perception of the public”? Come on, Jeff. They stopped caring about what the public thinks a long time ago. The public is too busy focusing on the next get-rich-quick scheme.

    >If a young couple came to me and asked about a 1br condo they wanted,
    >should I tell them to put 20% down with a 30/yr fixed rate loan?

    Well, gosh, that depends, doesn’t it? How much they earn, how long they’ll be there, what their savings are, etc. If they’re planning on moving in 5-7 years, well then yeah, an ARM just might work. No argument there (yet).

    >The condo they want probably runs about $175-225k here. That’s +/- $40k
    >to close, and $1200 +++ for monthly payments. An ARM would be $20k to
    >close, and $465/mo payments +++.

    OK, _now_ I start to have a problem.

    This is why people are getting into serious trouble.

    Now, you didn’t specify whether those terms were for an Op-ARM, but let’s pretend they are. If buyers can’t afford a house without getting into an Option-ARM loan (and only truly qualifying for the I-O part or neg-am part) then THEY CANNOT AFFORD IT. PERIOD.

    And YES, Jeff, you SHOULD tell them to walk away. You SHOULD pass on the deal. That’s called “having ethics”.

    There’s nothing wrong with being a renter, Jeff. I did it for years. I took the money I saved from not having a higher house payment (almost double my rent!) and put it into an index fund and made more money than the supposed “equity building” the house would have made.

    What I think you keep missing in all of this is that these loans are a major reason WHY prices are high _in the first place_. They allow people, along with lower interest rates, to continually justify spending more and more on houses.

    You keep arguing from the side of “well, prices are high, so people have to use these loans”. _My_ argument is that prices WOULD NOT be this high if:

    *) lenders hadn’t gone to sleep in ethics class and started marketing these loans as “affordability tools” (and please don’t tell me this isn’t happening – visit ANY YAHOO PAGE and look at the stupid ads for the Option ARM loans from lowermybills.com)
    *) the Fed hadn’t gone to sleep in economics class and kept the funds rate so low for so long (which at least one fed governor has now publicly acknowledged)

    We saw this behavior back in 96-01 in the stock market too, Jeff (and before you reply, I’m not comparing stocks to houses – just the financing part!)

    Margin loan rates were so low that people were encouraged to borrow to the hilt to buy stocks. Not many people did, of course, but the ones that did ruined the party for the rest of us for several years. It took until LAST MONTH, nearly 5 years later, for the DOW to make up the lost ground.

    Here we are once again, only this time it’s ARMs and Option ARMs. Percentage-wise, not many people abuse them. But enough of them do to amplify the problems in the entire market for everyone.

    That’s the trouble with leverage, Jeff. It works just as well on the way down as it does on the way up.

    I don’t disagree with you that people have to be allowed to fail. The problem is that people are being LED TO FAILURE by lenders in order to keep the orders rolling in and these lenders don’t have to worry about the consequences anymore.

    Will things be OK? Sure. In a few years. The dust will clear. It always does. But the next few years are going to be tough, make no mistake.

  74. Jeff Brown November 27th, 2006 1:38 pm

    Joe – As far as ethics go, the adviser becomes unethical once he believes a loan to be ‘wrong’ either in general or for a specific borrower, and still recommends it.

    I don’t, never have, and never will do that.

    Ethics based upon your opinion of ARMs, or any other subject will by logical conslusion result in the ‘unethical’ tag by anyone who violates your opinion. It’s irrelevant that your opinion may not only be very well thought out, or that millions agree with you. It’s not universally held.

    I think polygamy is unethical, but I wouldn’t call someone in another culture practicing that philosophy unethical. Enough said.

    You and don’t disagree much on these ARMs really. It’s a matter of degree. We should, and I look forward to resuming this conversation a year from now. I’d bet one if not both of us will have modified their position at least somewhat.

    I think what you see as my bias, or even blind spot, is really just years of positive experience in good and bad markets, using ARMs.

    As for that young couple? Joe, if we don’t watch ourselves we’re going to create one of two situations, both of which should be avoided.

    Either we’ll find ourselves with the younger generations as permanent renters, fostering that mindset. Or we’ll try to turn the clock back by imposing regulations that will choke the economy slowly to less than first world status.

    Although certainly the potential is for many other options, those two should be avoided.

    Let’s talk next fall. I’ve enjoyed this very much. Good luck to you.

  75. Joe November 27th, 2006 3:41 pm

    Jeff,

    My opinion of ethics has nothing to do with products. I don’t think ARMs by themselves are “unethical.” They’re just loans. For some people they make sense. For others they don’t. Very simple.

    I don’t think _you_ are unethical. You seem like a good, rational guy who wants to do the right thing as he understands it. But the fact remains that there are plenty of others in your industry that aren’t as ethical as you are. When lenders start advertising these loans as “affordability tools” that everyone can take advantage of, that’s unethical. Plain and simple.

    >Either we’ll find ourselves with the younger >generations as permanent renters

    Which won’t happen, since house prices would eventually come back into line with personal incomes and they would then be able to buy.

    >…Or we’ll try to turn the clock back by imposing regulations that
    >will choke the economy slowly to less than first world status.

    Oh, come on, Jeff. Seriously?

    Yes, it’s just horrible, HORRIBLE that we would require lenders to qualify buyers for Option ARMs at the full payment! Oh, the HUMANITY! Somebody stop the regulation machine before it destroys us all!

    Sorry, got carried away for a minute. Jeff, the world isn’t going to end just because we tell lenders to be truthful to people about Option ARM risks. There’s a reason why 40% of foreclosures in the last year had some kind of ARM loan as a root cause. Is everybody abusing ARM loans? No, of course not. But enough are to create serious problems for the rest of us.

    >Although certainly the potential is for many other >options, those two should be avoided.

    I think you can rest easy, Jeff. I highly doubt that either of those scenarios will come to pass.

    Good luck to you as well.

  76. Joe November 28th, 2006 5:02 pm

    For anyone else who’s interested, stories like this one are perfect examples of what I’m talking about:

    “‘Pick-a-pay’ loans are the worst possible on the market because they lure buyers who really can’t afford to purchase a home, said Dennis Peck, a Lodi lender. ‘They’re given an option to pay below interest and it sounds great to them at the time,’ he said. ‘The problem is nobody explains to them those low payments won’t last.'”
    …SNIP…
    “‘It’s a result of people getting loans who probably should be saving money instead,’ Peck said. ‘People don’t see down the road; they just want a low monthly payment.'”

    EXACTLY.

    And the result is increased foreclosures, which results in increased supply and lower selling prices.

  77. Steve November 28th, 2006 10:34 pm

    They hyped this market up, now watch it fall

    http://www.dqnews.com/ZIPAZ.shtm

    Maricopa = -36.1 Percent Sales Volume
    (Not including builder contract cancelations)

    Pinal = -19.3 Percent Sales Volume
    (Not including builder contract cancelations)

    Pima = -24.6 Percent Sales Volume
    (Not including builder contract cancelations)

    Third Quarter Foreclosure Rate On the Rise
    Foreclosure filings have once again increased during the third quarter, new statistics indicate.

    http://www.foreclosurelistings.com/blog/2006/10/?s=phoenix

    Certain states have seen large increases during the third quarter as well. In Arizona, 5,348 properties went into some stage of foreclosure, a figure which has risen from 4,512 in the second quarter. One of the largest increases regionally came in the city of Phoenix. Many feel that this is a result of investing and real estate speculation in the area, and that many investors, who live in other locations, are now not able to sell the homes they bought or afford the rising mortgage costs associated with ARM loans.

    The Money Knows:
    http://www.realestatenewssite.com/2006/10/housing_slump_in_us_poised_to_worsen_derivatives_t.html

  78. Alfred April 29th, 2007 12:31 pm

    Some guy posted at MagicBullets that he tried to post an offer to buy the houses of the hp crowd who believes Keith is right in his wishes of a collapse.

    You can read it at http://www.magicbullets.com/forum/showthread.php?t=7127

    If he really believes what he writes why wouldn’t he allow a post like that? After all, it could help his followers dump their houses and become renters.

    Or have I missed something?

  79. […] Last night in bed the word “Armageddon” rolled around inside my head for a bit… ah ha! Now I remember. The famous Bloodhound to Housing Panic line where Greg said to Keith Brand… […]

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