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Thursday, January 7, 2010
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86 comments:
anyone used rebate agents before? i 'fired' my agent over the weekend (it wasn't pretty). two of my friends used the same agent and got at least 1% rebate. i'd considered the Delta frequent miles agents but thought rebates would be a much better deal. i know redfin got mixed review from sellers but buyers are mostly happy?
Good Credit Score Not Good Enough Anymore
this, and the higher DPs, and rising rates, are really hurting first-time buyers.
MM-
I used redfin for a while and was very happy, with them. Two of my office workers also used redfin and had good experiences. Redfin is only good if you like doing your own legwork on what houses you might want to buy, but I am pretty sure nearly everyone on this blog wants to do their own searches anyways. Redfin also will not tell you how much you should bid for a house, so you need to be good at finding comps, which I don't think is a problem for you.
MM, that's a good article.
I just checked my scores and found they had dropped. When I checked the reasons why, the major one was that I don't have enough credit cards with balances to pay off. Huh? I have one card that I use most of the time (to rack up frequent flyer miles) and I always pay it off entirely each month (to avoid paying ridiculous interest charges). So in other words, being rational and prudent with credit REDUCES your score? Crazy.
This wasn't an issue when this score was considered high, but if the banks keep pushing the minimum higher and higher, they are putting consumers in a no-win situation. I am putting some of my new charges on my "backup" credit cards now, but this is counterproductive since I lose the rebates/miles by spreading them around. And I am not about to pay 20% interest on credit cards, just to have a higher FICO!
Ace-
There is no need to ever pay interest to have a higher credit score. You just need to make sure you use a couple of credit cards and pay them all off every month. As long as you pay them off monthly you will not pay any interest. Also I agree it is a little annoying that you will be earning rewards on different credit cards, which will make it a little harder to use, but you don't need to spend much on the other cards. Fair Isaac just wants to see that you are able to spend on multiple accounts and still pay them off on time every month. What I would do is keep ~90% of your spending on the card you normally do and just spend the remaining 10% on at least one possibly 2 other cards. That way you don't lose out on many rewards, but it shows you can handle paying more accounts monthly.
Ace-
I should have mentioned that they also like when you pay off your bills every month. One of the most important calculations for your credit score is the total amount of money you owe divided by your total credit limits. So if you pay your card off every month you will only own what you spent that month so you will likely only spend ~10% of your total available balance. For people who hold balances this calculation is often 50+%, which really starts to hurt your score.
i'm not sure about the need to keep 2 cards active, i have several accounts that had zero balances for years and actively use one credit card with no revolving balance and a debit card for cash purchases. my fico can go down to 790 towards the end of billing cycle but not lower.
i do not have a car loan or mortgage at the moment, that may hurt a little bit too.
thanks, housebuyer. Yes, I know how to avoid interest charges (having done it for 30 years!)-- the problem is that FICO seems to imply that I'd have a better score if I didn't pay them off in full each month and then pay interest on some of the balance, which I refuse to do. But maybe they don't -- maybe they just want us to inefficiently put balances on multiple cards.
K, according to the info on the report I received, mortgages are treated as a separate category from credit cards. I don't have a mortgage either. But that wasn't noted as a reason for preventing the score from being higher. But I do understand that each of the 3 agencies uses its own system, so it may be a problem with another agency.
housebuyer, one other thing I should have clarified previously - Fair Isaac's position might make sense for someone just starting out but it has 30 years of records for me - paying off mortgages, credit cards, etc. For us old-timers, the data should make it pretty clear whether one can manage multiple payments.
Is anyone seeing good quality foreclosure inventory hitting the
streets?
In the slums I like I'm seeing
more stuff releasing.
it's still very schizo, good stuff
at good prices next to crap at
sky high prices, but, there is hope
for rational pricing.
MM
That's why I believe Prices still have
lots of room to fall.
I'm sitting on my big ass DP waiting.
Bernanke and the other POS's on wall street are trying to flush cash out of the system into their greedy little hands, but F Them.
Look, In the bubble Buying power tripled with no income gains,
Alt-A Option Arms, Zero Down was
all about multiplying the price.
Until prices revert to mean and that
is a Inflation adjusted C-S of 100-110 or in our local index unadjusted
150 something now or a little bit
later at a better score, the prices
will still collapse.
If you are buying at a 2002 price
sure. But, lots of people are
lining themselves up for a real hurt, because the taxpayers are broke. They cannot handle getting
the 23 trillion wall street wants
out of their back pockets.
Ace-
I agree it is silly that if you have been paying for 30 years they care about having more cards. Unfortunately they try and keep the rules simple so the rule wants you to use 2-3 cards rather than saying you need to use 2-3 if you have less than 10 years of history otherwise 1 is ok.
Also if it makes you feel better last time I checked my score they said that the thing hurting my was that I only had 10 years of credit history. I am 25 how many years do they want without a single missed payment... Either way I don't think that lowered my score very much
I have always used cash back cards this was using 2-3 cards generally maximizes your rewards rather than inefficiently giving you rewards on a bunch of different airlines.
Konstantin-
Aces comment is correct that they treat a mortgage and car payment as a separate category without these you will never be able to an 850 score although as you said you can get into the 800 range, which is plenty good.
If you want to manipulate your FICO score to your advantage, you need to carry 20% of your credit line month to month on your credit card balance. This maximizes your score, but only for that portion of your FICO score that computes revolving credit. So, 2K on a 10K credit line is the cost of a perfect rating for revolving credit. You have to pay to get the highest score, which is why I think the FICO thing is somewhat of a scam.
I took a hit last year and this year on my FICO when I paid off my mortgage. I don't have one currently and my score has suffered.
The other factors that are affected is WHEN you opened a credit line. Longer ago is generally better.
Folks who hop balances from 0% credit cards, year after year, take a hit because the card they currently have is considered new, as is the inquiry to get that card. So the year you get that new 0% card you take two hits on that portion of the computation, the inquiry, and the new account opening.
There are plenty of sites on the Internet that show you how to maximize your FICO score. Unfortunately, there are also a number of sites that give out equally bad information. Buyer beware. The FICO system is geared to make you pay to get a perfect score. It's extraordinarily difficult for the average middle class person to get above 750 without paying for it month to month.
It's been my personal opinion, and mine only, that the FICO system is somewhat geared to make passing 750 extremely difficult. Because there is money to be made on the margins between 650 and 750. Banks and other lenders don't want to lose that cash cow, since it's somewhat Politically Incorrect for bailed out financial institutions to stick it to to those folks who have scores under 650. That doesn't leave too many pigeons to pluck if you know what I mean.
Say what you want about the system, but the facts remain...the fattest most numerous pigeons are middle class Americans in a fairly repeatable income range.
Has anyone read the calculated risk story about vacancies? Nothing that interesting they are now at 8% up 1.3% from last year and 0.1% from last quarter. The QoQ numbers show that they are leveling off. My bigger question was based on this quote
"In the fourth quarter, U.S. asking rents fell by an average of 0.7 percent to $1,026 per square foot" What the hell unit are they talking about $1,026/sqft. Is it supposed to be $10.26/sqft/year. I was just curious as to what the average place costs to rent nationally
Credit score nightmare.
A car leasing company failed to send us a personal property tax bill (actually, they sent one that was for a full year when we only had the car 6 months). I called to get a corrected bill and was told to expect one. Well, it never came. Never any correspondance, except the normal monthly statement showing the auto-debit amount.
Fast forward 6 mos. Our credit report showed a charge-off, skip, bad debt, etc. An 800+ score achieved over 30 yrs became 630.
Meanwhile, at the same time we found about the "error", cards and lines started getting cancelled left and right. Limits went from 50K to 12K on a BofA visa and heloc's were frozen and reduced to any outstanding amount.
So at that point, we looked like we were using almost 100% of available credit. I have not carried a cc balance in 25yrs - it is paid in full each month and only used for convenience and to get miles.
It took infinity 3 months to actually tell us what we owed (and the charge-off was the full year error bill) and then they refused to correct our credit report. We wrote to all the proper credit agencies and were told that the info would not be removed.
It took a letter to Infiniti's legal department and another 3 months to get this fixed. There was no way to get those lines back even after the correction.
Their argument was that we knew we owed something and should have followed up. I get a ton of bills and if I get a bill I pay it. This was about the most frustrating experience I have ever had.
We are still somewhat screwed by the % of credit used. Heloc's are treated like revolving debt, not mortgages. Looking at my credit report (although back over 750) it shows we are maxed; whereas before we were at 20% or less.
I am going to make some calls and try to restore my old limits.
p.s. the car lease involves a company car. I would never lease a car. Mine was about 20k and bought with cash.
Robert said...
"I don't know a single person/couple in my circle of family, friends, work that can buy a house, but is waiting for prices to fall. So, I don't think there are that many of you out there."
And many people said "No one I knew voted for Nixon" .... LOL
I think you guys are kidding yourselves on your credit scores.
I havent run a balance in over 10 years and all 3 of my scores are above 800, and so are my wife's.
Neither of us have any debt other than our mortgage, we buy our cars in cash.
I think more likely you have never owned a house, paid off a major purchase, or your income is such that your recurring balances are too high. Those 2 things lower your score in the absence of debt.
As as carrying a balance helping, thats ridiculous.
2 of my cards have a limit of 30k, and the third has no limit.
There is no way in hell carrying 12k in credit debt would help my score.
contrarian,
You are talking about is something perhaps worse (much worse) than the Great Depression.
From what I have read, the people who kept their jobs actually enjoyed a much higher standard of living due to everything else being so cheap. What did unemployment hit?
Your statement is that the world as we know it is ending. When do you predict this will happen?
contrarian? Really? You sound all doom and gloom, I thought everyone was past that by now?
Although, we are ready. When it snowed those 15 inches I saw tons of people walking to the grocery store. I coupon and we have lots of food stockpiled just becaue we got it free and it will last long, like pasta, pop tarts, etc. We actually haven't had to go shopping for about two and a half months now :)
Well, Doug, I have owned several houses, all paid off early; have never had a late payment on any card; etc., etc. So your record is no better than mine. Score was previously above 800 and now it's below and the only reason given (other than that someone requested a copy of my credit report, when an airline company credit card switched from Visa to MC) is the one I stated above. So you can make up whatever reason you can think of but it doesn't apply to my case.
Thanks, housebuyer, I agree with you.
oh, yes, Doug, I bought my last car for cash. Have no debts, no HELOC.
I think you guys are kidding yourselves on your credit scores.
I havent run a balance in over 10 years and all 3 of my scores are above 800, and so are my wife's.
Neither of us have any debt other than our mortgage, we buy our cars in cash.
Well, I don't know about the rest of the folks here, but I certainly am impressed. I would offer you a cape and hearty applause.
So, the way to a 800 score is by not having any debt, except a mortgage, and zero other activity on your report, correct?
What's your annual income by the way?
(taking notes here)....
Doug-
I am with you on this one. You do want to use all of your cards, because they penalize you for inactivity, but staying as far below your limit is helpful. At least this was true when I was consulting for a credit card company 2 years ago. I guess it is feasible this is a new fico rule but I doubt it. I quickly checked a couple of improve your FICO pages and all of them said you want to be as far below your limit as possible.
I am also in your boat of always paying off my credit cards, never had a mortgage or car payment and my scores range from 790-810. So I agree as long as you are never late, few people are running credit checks on you, and you run little to no balances you can get in the 800 range.
Contrarian, I don't have time to read your posts right now.
Any idea whether they will be here tomorrow?
Texas-
You need to have activity. They want you to have 2-3 credit cards that are active and paid off each month. Preferably the amount you spend on them should be very low compared to the limit. E.g. if you have a 10K limit spending $500 on the card every month and paying it off is much better then spending nothing or spending a lot whether you pay it off or not.
Contrarian,
Worse than the Geat Depression? Jeez, you must be a laugh riot at parties!
What insight are you relying on for your extremely dire predictions?
Even if we do see terrible times ahead, do you dispute that the mid-upper class faired quite well?
How would you correlate this to our region? Well, yes, some highly leveraged (stock-wise) people jumped out windows; do you really foresee a repeat or worse?
Contrarian,
What you are posting is basically that the market changes and there are ups and downs. Yes, that's true, but no need for doom and gloom. People need to be prepared for what might or might not happen. If they are not, it is not my fault.
I agree that taxes are unfortunately going to start to increase, especially as the Bush tax cuts phase out :( The more spending this president and congress do, the more deficit and the more of the budget used to pay minimum payments towards our national debt. The indicator I would most look to for a fast and furious decline would be if any of our creditors (ie China) decide to call debts in full.
hopefully this will not happen and spending decreases and unicorns are real... But I doubt that to be the case. The best thing I can always say is to be prepared.
wunderbar-
There is always the option that the fed will just monetize a large portion of the debt. They have currently printed money to buy a couple trillion in assets. I would not be surprised if at least a large portion of this money is never repatriated and destroyed.
I think paying off a house makes a large improvement in FICO, as my credit scores were ~760-770 range before my first house purchase and close to 800 when I sold it and applied for my second house purchase.
Ace, I dont know what it could be either. Honestly I dont know what changed when my score went above 800, because absolutely nothing had changed since it was in the 780-795 range, just my income. A few years went by, and when we refi'd into a 15 year fixed it went up.
Doug-
I don't know much about how houses impact your credit score, because as I said I got my info when working at a credit card company. I think I have heard that they look at your debt to income ratios. So your income going up will help this. They also probably look at your loan type e.g. 15 year fixed is the best then 30 then ARMs then Option ARMs. I don't know this as a fact, but they would be stupid not to include this information seeing that numerous studies show the difference in default rates between these loan types.
I am 95% sure they can not just look at your income it needs to be in comparison to your debt. Otherwise they could run into legal issues of discrimination.
doug, ace, housebuyer,
fico scoring methodology got to change a little bit once in a while in part to capture the changes in credit markets in part to be competitive/just for the sake of change. variables stay almost the same forever, but weights do change.
as i said before, score around 800 can be achieved without mortgage and car loans and with no revolving balances. this score will fluctuate within a billing cycle on your credit card, going down when the balance increases and up when you pay it in full.
that can be the reason for ace --- if his mortgage got paid off long ago, then the score should be around 800 and can go slightly below if it was observed when the balance on the card was large.
score of 760-800 is enough for any reasonable purposes, you won't get penalized for not having 840 or whatever is the max.
housebuyer,
credit bureaus can get your income (from income verification services), but i do not think they look at it currently. it is all about your consistency in payments and used credit/total credit limit ratio.
credit card companies use income to set the credit limit.
When my wife and I went to buy her Jeep in 2008 we had FICO scores of 798 and 805. They went down slightly right after getting the auto loan, so we paid that off mid-2009. We have never owned a home or had a mortgage. Both our scores were low 800's when we went to the bank to get preapproval advice for our future home purchase a few months ago.
We pay our main credit card off every month, and use the other two (one in each of our names from before marriage) to buy Christmas presents so the other cannot see the bill and know what they got. This keeps the cards active so that they aren't canceled, which prevents the reduction of the length of our credit history.
You do not have to carry a balance to maintain an 800 FICO.
P.S. How would the credit rating agency know my income for the score? Does my employer report it to them? or the IRS? I just don't see how they could get that data for their calculation.
Ace, I agree with Konstantine that your score may be affected by a current balance (Christmas spending, perhaps?). I paid off my cars years ago, don't have a mortgage, pay my cards in full each month, etc., yet I've noticed that my score falls slightly below 800 on occasion.
jeremy,
www.theworknumber.com
www.irs.gov/individuals/article/0,,id=161649,00.html
they sell income data to banks/credit card companies. i do not think fico will use your income.
Jeremey & Konstantin-
I should have clarified I do not think they use income. I think they are given debt to income from the bank that gave you the home loan or car loan.
Although I agree there are services where you can get people incomes although they are not always that accurate.
housebuyer,
but the stale dti is not a very good metric. it will be missing for so many people, for example if you do not have debt. or non-relevant if you got some loan and already paid it off.
they only can punish you if your reported dti is very high.
all in all
--- do not miss payments on any of your cards and bills, pay in full every month and you'll be in a safe place.
pat,
I see inventory slowly getting better (up..) The fact that most sellers are still at WTF prices, we should see this inventory uptrend continue until it makes the headline...then we see run for the exit and dip to reality in housing prices.....
contrarian,
Major deflationary spiral is one of the scenario.
What do u think is going to be the trigger for that next major market crash?
Pat - I agree that prices have some falling to do. Where I'm looking in Northern Virginia (low-priced SFHs in Manassas/Bristow/Gainesville) I try to caution myself, however, not to discount the county's household income growth.
That said, however, I looked up the county records for a short out in Bristow this morning, only to discover that 80% of the street's owners are underwater by quite substantial amounts. Unexpected, for homes built in 2001.
And to finish my thought: Too many streets like that one could well push prices lower fairly quickly, depending on the timing of all the potential distressed sales...
Would-be
While I agree that if lots of underwater people decide to sell that would make prices fall, why would they all start to do this now. They have been underwater for a couple of years. In fact they are far less underwater now than they were last year, seeing that both prices have gone up and they have continued to pay down their mortgage over the last year. I think everyone on this blog understands the underwater people are a risk, but what will cause the tsunami of them to start selling now.
Housebuyer -
I was probably not clear. The homes on this particular street in Bristow were built and sold to their original owners in 2001. So many owners are underwater now, and by such vast amounts, because they were purchased by new owners in 2005, 2006, and 2007. Many of these new owners may be able to hang on, but they have not been paying down their mortgage by much over the last year - most of them paid $100K more than the last two comps - and they are most probably paying far more interest than principle at this state of the loan.
And I am not in a camp expecting an inventory tsunami to hit and request that you do not pigeonhole me so quickly. I am, however, cautiously optimistic that more distressed properties are on their way, though that hardly seems controversial in light of last winter's foreclosure moratoriums followed by the push for mortgage mods this summer.
Maybe it's just me, but I don't worry about credit scores or how they are calculated. I always had 2 credit cards, and paid them off in full every month. I paid my mortgage and taxes on time. I had a 3 year auto loan that I paid off in 6 months. My credit score is over 800, as is my wife's.
I think the biggest myth is having too few credit cards can *significantly* hurt you. From what I remember, that accounts for 5-10 points of your total score. If you keep your nose clean, you'll have a high score.
Heck, when I was married to my good-for-nothing ex-wife, I had a credit score in high 700s, despite her secretly opening credit cars and maxing them out (maybe it was on her record, and not mine). I even found out that paying "on time" for a credit card has quite a lee-way: there were 2-3 instances over a 3 year period in which the credit cards that were ~30 days late because the bills were buried under a pile of papers.
Thanks to all for your inputs re: FICO. The balance on that one card does go pretty high sometimes as I (used to) put everything on it to get the miles.
MM, did you realize you were going to unleash a firestorm? :-)
Would-be
Sorry I thought you were saying that the distressed inventory was coming soon. If you think it will leak out over the next couple of years as the distressed property owners give up that could definitely be the case. I just misinterpreted what you said.
"Contrarian said...
So, it's supposed to snow tonight.
Don't you love this global warming?"
So, is this the way you try to avoid talking about the fact that YOU HAVE DELETED NEARLY EVERY POST YOU EVER MADE AND REFUSE TO DISCUSS IT?
Seriously, why did you take those last few shreds of credibality you had left on this board, and pulverize them into oblivion by deleting everything you previously stood for?
Why are prices going to fall if...
Economy Growing at 6.5% +
Lowest Unemployment - Few Organic Unemployed +
Boatload of Unfilled Jobs - Relocations Coming +
WDC #1 in Income Growth +
Unprecedented Infrastructure Spending +
Stimulus +
2010 Budget +
New Home Construction +
NOVA Attracting Private Investment +
Low Inventory +
Dow 10,000 +
High Regional Consumer Confidence +
High Regional Business Confidence +
#1 for Foreign Investment
Virginia #1 for Business +
NOVA Foreclosures Waning +
Obama Transforming Federal Government - Making it Bigger
Housebuyer - you probably picked up on my inner conflict. What I think will happen: Inventory leaks out over the next few years, with inventory re-peaking in different areas at different times but usually at levels absorbed fairly easily as prices slowly go down about 5% to 10% over several years. What I wish would happen: Inventory peaks in my target areas at levels unable to be absorbed without depressing prices 10% immediately :)
Sehrwunderbar & Spider -- in case you didnt know (or were having a problem following Contrarian's line of so called thinking), Contrarian is a believer in the Elliott Wave.
Like many cults, Elliot Wavers believe in predestination and they (and their high priest Bob Precter) believe we are in for a once in 300 year event. Believers of the Elliot Wave believe this next downturn will be like nothing seen before. These guys here -- respected desciples of the Elliot church, believe the downturn will be worse (societally) than the bubonic plague which killed millions of people centuries ago.
http://www.gold-eagle.com/editorials_99/mbutler120299a.html
Unfortunately, these Elliot Wavers have a major problem with timing. The high priest Bob Precter (Contrarian's favorite) has been warning that the dow will hit 400 (no thats not a misprint) pretty much constantly since 1990. Likewise, the authors of that article I linked to assume that Y2K would bring about the hellfire and damnation they were predicting on 1.1.2000.
It seems like the Elliott Wave draws a good number of new disciples during downturns like this. However, a good 75% of them leave when the predicted doom doesnt come to pass in a year or two.
Contrarian isnt like them -- he is a long time believer. Contrarian has been standing in that pumpkin patch waiting for the great pumpkin to appear for a good 20 years.
Not saying hes wrong mind you. Anything can happen. But since he has recently deleted all his posts, I figured you might want some background on him and where his "predictions" are coming from.
Ace,
:)
Unfortunately I'm not able to make any meaningful contribution to the conversation on how to improve FICO score from 790 to 810...
Robert probably want to add another item to his NOVA #1 list - highest % of residents with FICO scores > 800...
I hate to change the subject from the FICO or Contrarian topics, but I found this article to be interesting and somewhat reminiscent of a discussion we had last year.
http://www.nytimes.com/2010/01/10/magazine/10FOB-wwln-t.html?hp
The morality of walking away from your mortgage has many views.
contrarian said...
And in a posting by Denninger about 20 minutes ago, he seems to agree on the Kondratieff wave:
Contrarian -- I didnt know Denninger was a member of the Wave church. Say hi to him next time you are at a lobotomy ceremony all wavers must undergo. Ask him too about this article I noted above. the following things sound like he may have written them:
"When a wave of any degree ends, the Elliott Principle says we can expect a correction of that wave commensurate with the degree of the wave ending. It makes a great deal of difference to a market observer in 1999 to know that we are not just ending a GSC Wave, but also an X Wave -- the duration of the correction appears to be 100 years or more."
100 years of doom -- oh my!!! Might as well go ahead and kill myself now.
"This also implies that the coming correction is not simply going to be a GSC correction wave, such as at the time of the Plague; it will be more substantial and of longer duration."
Sounds to me like Denninger invested heavily in body bags!!!
So, I wonder, when will all this doom come to pass:
"In our considered opinion, Y2K will most likely turn out to be one of the biggest problems civilization has faced since the beginning of recorded history on a global scale. It will likely be the trigger, if another is needed, that could propel the world into a chaotic and violent bear market worthy of the previous Grand Super Cycle (1776-1998) and X-Wave (1000-2000) bull market it will correct."
Aww too bad about the timing. Bet Denninger made a killing building Y2K bunkers -- glug, glug, glug...
"Keep in mind that one way governments could try to ameliorate the effects of the soon to come long term bear market would be by printing money – a course of action that could result in serious inflation and loss of purchasing power."
Well at least he got one part of it right...
Here is my favorite part of that article:
"Please observe that the events postulated here are in the domain of the real world – they either have a significant probability of occurrence, or conceivably could even already be beginning to affect our lives. We have avoided other possible causes of global doom and gloom favored by some of the more extreme doomsayers and catastrophe prophets."
Whew!!! Glad to see they werent being "over the top" the way so many Elliott Wavers are!!! Glug, glug, glug, glug, glug, glug, glug...
...the top 79 U.S. markets...
The report forecasts Washington, D.C., will be the healthiest rental market in 2010 for the second straight year.
I thought I would really enjoy this "deflationary depression", seeing as how I am debt free, house free, loaded with cash, part of which is downpayment cash, and about ready to buy.
But boy I am hating this deflation! Why? Well...
The cost of my offsite storage unit is going UP 7% this year.
The cost of my health insurance is going UP 20% this year.
The cost of food has gone UP, even after DOUBLING earlier in the decade, partly due to secret but noticable (to me) reductions in unit sizes for the same price. The usual tricks during an INFLATIONARY cycle.
The cost of my apartment is flat, only because I shrewdly negotiated no increase, and I'm no longer sharing the space with a second person.
The price of gold is UP 30%. (This part I actually do like, except for its role in indicating INFLATION.)
Credit card interest rates are UP DRASTICALLY on cards I have held for 20 years and always pay on time.
Gasoline prices are UP 55% year over year (although I could care less because I don't use any gas--but it is partly why food costs are up.)
My cable bill is DOUBLING this year.
Asking and closing prices of houses I am interested in are UP as much as $60,000 (10%) or so since the spring.
Airline ticket prices are UP for the route I use.
If this "deflation" keeps up, I'll have to start working longer hours!
Contrarian--
As for global warming and colder winters, LOL even Fox News has articles admitting that global CLIMATE CHANGE (the correct term) could not only ALLOW unusually cold winters, but CAUSE them.
How much colder do you think this winter WOULD have been, if there was no warming trend?
When climate change really gets going, and the gulf stream shuts down its warming effect, you'll see how just cold the northeast really can get in the winter, and yet still be hotter in the summer.
It's HILARIOUS that you believe in Eliiott theory but apparently believe that climate change is a hoax.
Proves your education and or current new sources was/are filled with "truthiness" instead of science--did you grow up in a red state?
Oh, and I forgot to mention--but I'll just add it here as a "homework" question:
Just how much has the stock market "deflated" since a year ago?
Hint: was 925, now 1140.
As for global warming and colder winters, LOL even Fox News has articles admitting that global CLIMATE CHANGE (the correct term) could not only ALLOW unusually cold winters, but CAUSE them.
Isn't that convenient.
NoVAWatcher,
Most credit card companies don't report late payments to credit bureaus if we call and pay within a month. And if you call and give a valid explanation, they will even waive the late fee.
Robert,
All your links showing optimism about local markets can still amount to nothing if there is a 'black swan' event (see Nassim Nicholas Taleb).
It is what we don't know that can cause serious financial problems. Contrarian is plainly wrong in his dogmatic beliefs in wave theories that have no scientific or probabilistic basis. But I am nowhere near as optimistic as you; I think many lenders are still lending loosely and it is like nothing has been learned from the great crash/recession. Bernanke has been wrong before and he may well be blindsided by another event. At that point, the Govt. could well run out of options to provide another rescue.
tedk,
Two black swans in a three or four year period would really suck. But, certainly possible.
TedK and Robert: While we are discussing animals and economics, it seems like Robert is more of a proponent of Akerlof and Shiller's "Animal Spirts." TedK: what do you think will be the next Black Swan event? I am torn between a terror event or a financial event -- or maybe the two will coincide.
this market is making me crazy.
http://franklymls.com/DC7166455
assesed at 299K, listed at 240,
lowered to 210 before it went U/C
108 DOM
this one
http://franklymls.com/DC7194108
assessed at 675K
lists at 300 sells for 375K
so we are seeing 30% off peak
but when they go for 55% off peak
whackos bid them up again.
Actually, the globe isn't cool at all. November was the warmest on record, and December was also way up there. There is a highly anomalous pattern that has set up has poured cold air into the continental US and Europe, and of course the conservative media has jumped all over it (Drudge has made it seem like the ice age apocalypse is here).
Yeah Pat the DC market is kinda unpredictable, it will be interesting to see if people lose their minds again this spring and bid everything up way too high. I am noticing more interesting REOs pop up lately, and also new 'organic' sales as WTF prices that are slowly piling up and not moving. It remains to be seen how much demand is really left out there since interest rates began their ascent.
I can't believe that Florida Ave house assessed for 671k, there's no way in hell I'd pay that much to live on that busy street at that location.
it seems like Robert is more of a proponent of Akerlof and Shiller's "Animal Spirts."
Grrrrrrrr!
jason
that house sold for probably 700K
3 years ago, but between HELOCs
and overextended mortgages
i think we will see a lot more
writedowns.
i like the florida ave place but
it's going to trip off other
foreclosures.
I think people ignored Ace's comment which was one of the biggest pieces of news. So I'll re-post the article:
Lockheed Martin to cut 1,200 jobs as Pentagon work slows
They do not yet know how many workers will be in this area but surely some. This is really potentially one of the biggest stories out there in terms of our local employment picture.
I think Robert is in huge denial about how disruptive these layoffs could be. And a little naive if he thinks any new DOD jobs will be 1:1 with lost contractor job (naive in not realizing all the red tape and preferences that goes on in federal gov't hiring.)
Ace/reecon,
Saw the radio tower today. I missed it while driving on N George Mason Dr the other day but then saw it on Lee Hwy today. Passed by it tons of times but didn't connect the two when I saw the new home community. No wonder that lot had been undeveloped for so long.
Remember Robert's circle of friends where everyone is doing super swell and nothing is wrong. Well, Robert does not necessarily know all of his neighbors so he might not interact with this couple but I'll note some details.
Neighbor of Robert's bought house in 2007 for $1.77M. House is listed for *hundreds of thousands* of dollars less (I'd put the listing price but that might give away Robert's neighborhood and that's not my intention). It is under contract. Unclear if it got list or much less.
Robert -- maybe you should get some intel on (a) why the couple is selling less than three years after buying the place and (b) how much they sold it place.
If they were not under duress or had to move to another metro area then I guess it's unfortunate they did not listen to you and wait for "boomtown" to recover.
I also suspect if you talked with the neighbors (or the couple) that you might realize not everyone is doing as super swell as you think.
Thanks TBW, I did notice that Low-Morals (Lockheed Martin Loral) was laying off 1,200, after AOL dumps 2,500 (who did not all take the incentive to quit so they are shifting to forced layoffs), and Northrup is dumping TASC. (Some TASCies think they are being given their freedom to give themselves lavish salaries and benefits. Others realize that a private capital firm will slash expenses and headcount until they show a profit.)
About FICO. My neighbor mentioned that when buying a car last year, the salesman said, "Your score is 830."
"Huh? I am writing a check for this. What do you or I care? I will never apply for credit, ever."
They paid off their Immundria house, maybe 10 years ago, $100+K job (3 miles away), NO expenses, direct deposit salary accumulates until they get around to writing a check to a mutual fund.
I'm not claiming that everyone in Immundria has paid off their place.
Some have. This neighbor lives simply. This is a point of reference and may explain why the substitution effect and the "it's coming inside the beltway to your neighborhood" was not a universal law. Both were web-baloney, cleverly written to excite and entertain, made sense in some cases but don't bet on it, as some seem to have.
4 years after 2006, Immundria and Immunington still laugh at C-S.
After 2 years of the Great Recession, Immundria and Immunington are holding value.
Is it stubborn, desperate sellers holding prime RE off the market?
Is it people like my neighbor who don't care, who have paid off their house and have many times the valuation in their investments? Some earn in one year, what they paid for their house.
It's a mix, of course but my opinion is that a long-term wealth effect (the ladder) is the main cause.
Robert -- maybe you should get some intel on (a) why the couple is selling less than three years after buying the place and (b) how much they sold it place.
SunTrust bank executive. Transferred to Atlanta.
What price they got? I'm afraid to look.
TBW-
To be fair Robert has said several times that the high price ranges will fair the worst. So I doubt he is that surprised to see this house do poorly. My guess is he thinks the cheaper markets will strengthen and over time the higher markets will recover, but that is just a guess.
tbw,
I read it but didn't comment because while the headline sounded bad the text made it into another nothing burger. Sure Lockhead Martin is based in Bethesda. Fine, but the article makes plan that the 1200 jobs are dispersed throughout the country. Consolidating two departments like that usually concentrates more jobs at HQ, wouldn't you think? Let's see, who has the best access to clout in the org? Whoever's at HQ. That will have the fewest of the cuts.
HB said...To be fair Robert has said several times that the high price ranges will fair the worst. So I doubt he is that surprised to see this house do poorly. My guess is he thinks the cheaper markets will strengthen and over time the higher markets will recover, but that is just a guess.
Well, that, but my wife has a TH in Lorton.
TBW said...And a little naive if he thinks any new DOD jobs will be 1:1 with lost contractor job (naive in not realizing all the red tape and preferences that goes on in federal gov't hiring.)
While the Obama administration is seeking to reduce outsourcing and bring more jobs in-house, some recruiters said contracting firms have actually increased hiring.
"In the last six to eight months, there's been a fivefold increase" in contracting for the Troubled Assets Relief Program, the Defense Department and transportation road projects, said John P. McCrea, president of Achieve-it, a Reston company that provides contractors to civilian and government agencies. "The people we're placing are telling us they're overwhelmed; we're anticipating it will go up even more."
These job losses for LM will be at
HQ, Manassas, Norfolk/Va Beach,
Owego. Owego gets it worst,
but, there will be some in the DC MSA.
reecon,
I am more worried about a financial event.
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