Existing Home Sales Report

I was reading an article by Rick Reilly a couple years ago. The article was a day in the life of Kobe Bryant, I won't bore you with the details of the article (the hyperlink is Kobe's name), just one story. Rick said that Kobe would spend all day watching the news. Rick asked him,'don't you ever watch Sportscenter'? Kobe replied, 'I live it, why would I watch them report it incorrectly'. Interestingly enough, Rick did an interview with President Obama and the opposite happened. Obama (according to Rick) only watched Sportscenter and Rick asked him if he watches the news. Rick said that Obama gave the same response as Kobe. Both of these men expressed the same sentiment as Thomas Jefferson when he said, "It is always better to have no ideas than false ones; to believe nothing, than to believe what is wrong."

It was this article that came to my mind when the December 2010 existing home sales report from NAR came out. The report said:
 
"Existing-home sales report, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 12.3 percent to a seasonally adjusted annual rate of 5.28 million in December from an upwardly revised 4.70 million in November, but remain 2.9 percent below the 5.44 million pace in December 2009."

All you have to do is read Bloomberg, Yahoo!, or the Wall St Journal to see that many economists are using this data to point to a strengthening recovery (of the US economy). Well, I have been saying for the past three years that '08 & '09 would be terribly down years. I believed that 2010 would bring some stability (maybe even a little false hope). But, 2011 and 2012 would be down years again. I firmly believe this to be the case. I do not believe that one month up 12% can indicate to us that we are in recovery. Well, at least not here in Corona. Here is the data for Corona:

Month     Closed     Gain (Loss)
9/10              264
10/10            299         13.3%
11/10            263         (12%)
12/10            314         19.4%
1/11              191         (39.5%) - projected numbers


When I see these numbers, recovery is not the first word that jumps into my head. Schizophrenia, that is a word that pops up in my head. We are living in a market that is all over the place. I was looking at the median price closed in Corona during the month of December all the way back to 2002. Again, the numbers are absolutely staggering. The median price for a home in Corona during December 2002 was $274,900. The peak was December 2006 when then median priced home was $554,900. In December 2010, the median price has retreated all the way back to $315,000. That is 14% growth over 9 years, or an annual rate of growth of 1.5%. 

By contrast, the Dow Jones Industrial average (the stock market) was at 8,400 on December 31, 2002. On December 31, 2010, it was at 11,578. This represents 37.8% growth or an annual growth rate of 3.6%.


If you invested $100,000 in the stock market in 2002, today you would have $138,198. If you invested the same $100k into real estate in Corona during the same time, you would have $114,444.


I know that Corona is not a leading indicator of the markets in America. But, what I do know is that things are not as the media would make it out to be. I, too, believe what Thomas Jefferson had to say about knowing nothing is better than knowing something false. The more that I examine the data and not what they want me to believe, I am inclined to believe that they are false.


Last thing, this whole topic reminded me of this George Carlin routine. It is literally one of the funniest bits of stand up comedy that I have seen. Here is the transcript of the bit and the you tube link, George Carlin Jammin' in New York:

"You might notice that, I don’t feel about that war the way we were told to feel about that war, the way that we were ordered and instructed by the United States government to feel about that war. See my mind doesn’t work that way. I got this real moron thing I do, it’s called thinking. And I am not a really good American because I like to form my own opinion. I don’t just roll over when I am told too. Sad to say too many Americans roll over on command. I have certain rules I live by. First, I don’t believe anything that the government tells me. And I don’t take very seriously the media or the press in this country."

Ramblings, thoughts, musings, etc...

I know that it seems like I don't like Barack Obama, but the news out of Washington this week has been ludicrous. Before we talk about the two issues from this week...let's remember that more than one of Obama's appointees has had tax issues. Yes, the irony there is thick...American people, we need you to accept higher taxes. However, we forgot to pay ours.

From this week...

1.) There are rampant rumors that many of the companies that received TARP money have committed fraud. Yes, companies that needed our money to meet their obligations have not used the money appropriately.

Side note: companies like Liberty Mutual and Hartford Financial (Insurance agencies) were allowed to buy tiny banks (less than $10 million of assets) and then allowed to partake in the TARP funds. Probably not what was intended by the spirit of the bailout...but definitely fits into the "too big to fail" category. To quote John Rich the more I read, the more I get "fighting mad."

Side note II: most of the media is liberal...most of the media crucified George W. Bush, and these stories are getting out...I wonder what they are not releasing!

2.) The government made a HUGE deal to let us know that they are going to cut the budget by $100 million. I was watching Fox News and they were defending this action...like it was an act of goodwill. Like Obama deserves some credit for this...NO WAY! This is the stupidest thing I have ever heard...no wait, saying that they can cut $50 million from the budget by buying office supplies in bulk (5 years worth - where are they going to store enough office supplies that is so large that they are able to cut it by $50 million?). Hey look at us, we just cut $100 million from our budget...oh wait, we added $3.95 Trillion right? $3.95 Trillion...that is "tr" not "b" nor "m"...it is equivalent to this...

"Hi honey, I know we need to work on our family budget (we make less than $50k a year). So, I decided to buy a leer jet ($14 million), BUT I also got a six pack of Dr. Pepper for $3.19 instead of the $3.21 we normally pay."

Barry gets no respect for this...but he does deserve all of the credit.

NCAA Tournament 2009

The first day of the NCAA Basketball Tournament. A very good day. As a fan of basketball, I love to watch basketball...and there is NO better day to watch basketball than the opening Thursday and Friday of the Tourney (32 games in 2 days - no better sporting event...well, except maybe when the Trojans are playing for the NC).

I love to pick a bracket...however, I am a huge fan of the upset. They are difficult to find...for example the fact that a 12 seed has upset a 5 seed in 21 of the past 25 seasons...so it is a virtual lock...hello Western Kentucky (they are no stranger to the 12 upset of 5 - since they a 12 last year beat Drake the 5), BUT who on earth can decide which 12 seed is going to do the deed.

I picked Illinois to take care of business...before I knew their starting point guard was injured...but Western Kentucky took them out. Despite needing Illinois to win for my bracket...I was pulling for Western Kentucky because my love of the upset super cedes my bracket!

[Side note: thanks to UCLA for beating VCU - VCU was the trendy upset pick this year...by the way I think I have grown a lot over the years...in years past there was no way that I could have picked UCLA to win anything (insert any number of insulting comments)...let alone have two of my buddies be UCLA fans, or graduates or whatever they are...]

Oh, I forgot to mention how absurd it is that Barack Obama has the time to show us "Barack"etology! I think he has a lot of other issues that need his attention. Issues that are a lot more important than the NCAA tournament. I don't know, like, companies taking tax payers money and paying out $100s of millions of dollars in bonuses or, unemployment rates that are soaring through the roof or, the slumping dollar or, the crumbling world economies (I guess I could have said economy), etc...

Good luck Trojans...is it possible that 3 out of 4 10 seeds could win in the same season?

Notes on the Stimulus

So, we have a stimulus package that is in front of the Senate (60-38 with 3 GOP votes). They are voting on it as I write. I thought I would put a few notes about the package. Read all about it here - stimulus.

• Passed in the house 246-183...with no GOP support
• $787 Billion total cost
• Will raise national debt to $12 TRILLION!!!
  
• Temporary AMT relief
• $800 payroll tax cut for married couples, $400 for individuals, $250 for vets who do not get the $800 cut
• $59 Billion for unemployment aid
• $29 Billion for highway construction
• $15.6 Billion for tuition aid
• $11 Billions for new electrical grid
• $8 Billion for mass transit

I will offer my insights (opinions) about the stimulus after it passes the Senate (although, I was listening to a Senator today who said that his office received the 1,400 page document after 11pm last night - exactly how is any Senator going to be able to know the scope and nature of the stimulus package having that large of a document less than 24 hours?). Everyone thinks this is a done deal (since we are clearly a partisan Country).

SIDE NOTE: Citi, Chase, B of A, and Wells Fargo (added to Fannie and Freddie) have decided to freeze all foreclosures until March due to a housing recovery plan that Obama's administration is presenting next week (more on this once it comes out).

More ramblings, musings, et al...

* Gasol and the Lakers played tough this week knocking off Boston and Cleveland on the road.

* A-Fraud shows that baseball is in horrible shape...was anyone NOT doping? Here is Jeff Passan's take, "...he (Rodriguez) still has no saintly clue who he is: family man or cheat, religious man or agnostic, Dominican or American." Here is the whole article from Passan.

* Sean Casey wondering how A-Rod's name got out is a little disingenuous. Since when did right stop being right, and wrong stop being wrong. This country is built on the following premises "if I don't get caught, I didn't do anything wrong" and "if you aren't cheating, you are trying"...A-Rod, Barry Bonds, Roger Clemens are cheaters...and apparently so are about 103 other major league players.

* Congress passes the new stimulus plan - does anyone else wonder how we are going to pay for this? If I print money at my house...they call it counterfeiting...hmmmm!

* USC's recruiting class will be great. Telfort and Jones are going to make Trojan fans forget about Te'o and Burfict...one who can't hack it academically, the other can't hack it without his friend.

* I know I ramble about it a lot...but it is worth repeating. Barack Obama wants to raise our taxes, BUT he keeps appointing guys who don't want to pay taxes!

Coming soon...

1. Kenny Chesney top 10
2. More on the bailout and congress
3. More on the landscape of REOs and Short Sales

Ramblings, musings, etc...

This is just things that I have been thinking about a lot. Hopefully, they do not bore you...

- tomorrow is national letter of intent day for College Football. USC is poised to have a great class if they can convince Vontaze Burfict (from my town - Corona), Randall Carroll (seems like this would be simple, what with the guy having the same last name as the coach), Alshon Jeffery from de-committing.

- Tom Daschle withdraws from HHS nomination. Good move since Barack Obama wants to raise taxes and he keeps appointing guys who do NOT want to pay taxes! PS - paying your taxes after the fact is not honest...it is saving face after getting CAUGHT!

- if congress forces banks to modify peoples loans which could include but is not limited to lowering interest rates, lowering loan amounts (which basically consists of the person selling the house short to themselves) - then the whole individual credit ranking would be a worthless measure. All of the people foreclosed BEFORE the bailout would need to be relieved of the foreclosure on their credit.

- Kobe Bryant scored 61 points at MSG last night - helping to alleviate the sting of losing Andrew Bynum for the next 3 months (minimum). Pau Gasol is great a beating up bad front lines...see the Knicks, the Atlanta Hawks, etc...BUT he is going to have serious issues manning the middle against the Celtics, Magic, Cavs, Spurs...hopefully, '09 is not a repeat of '08.

- The Super Bowl was extremely boring for 52 minutes (nearly 3 hours in real life), but very entertaining for the last 8 minutes. Larry Fitzgerald is the man!

- Kenny Chesney's Lucky Old Sun is a great album. Makes me want to sit on the beach and drink (I know...I don't even drink)! You should check out his song The Life.

- California's debt has been downgraded to the lowest rated state by S&P. Should we be surprised??? No. Riverside and San Bernardino just announced letting go of approximately 450 firefighters and police officers.