Tuesday, January 30, 2007

Little Empty Houses - For You and Me

From Marketwatch - we've now reached an all-time high in overbuilt housing.

'WASHINGTON (MarketWatch) -- The number of vacant homes waiting to be sold surged 34% to 2.1 million at the end of 2006 compared with the end of 2005, by far the fastest increase ever recorded, the Census Bureau reported Monday.

A year ago, 1.57 million homes were vacant and awaiting a sale.

The vacancy rate for owned units jumped to a record 2.7% from 2.0% a year earlier. From 1965 to 2005, the homeowner vacancy rate had never been above 2%. The long-term average is 1.4%.'

So, in laymen's terms, what does this mean for the housing market?

'"We have more than a million housing units of excess supply," said James O'Sullivan, an economist for UBS. "If you are looking for evidence that the worst is over for housing, you're not going to find it in this report. This argues that housing starts need to go down more."'

And some discussion on how this will affect rentals, which will affect inflation.

'Meanwhile, the homeownership rate (the percentage of homes occupied by their owners) was essentially steady at 68.9%, the government said, close to the all-time high of 69.3%.

With so many vacant homes for sale, owners will begin to offer them for rent, said Asha Bangalore, an economist for Northern Trust. If the supply of rentals rises, rental prices should begin to come down, helping to bring down core inflation.'

(thanks to Crazy G)

Wednesday, January 24, 2007

Free Insurance Money for Everyone!

Unless you've been living under a rock here in Florida, you know by that Charlie and the populists (the legislature) have caved in to the "we MUST be subsidized" forces, and soon the Sunshine State will have the most socialized version of home insurance in the country.

From the Orlando Sentinel.

'TALLAHASSEE -- Lawmakers approved a sweeping package aimed at cutting the cost of homeowners insurance in storm-battered Florida but quickly drew heat from consumer groups that say it fails to go far enough to help those staggered by two years of soaring increases.

The wide-ranging legislation is expected to cut rates for property coverage anywhere from 5 percent to more than 40 percent.'

Wow - sounds great! But how does this get paid for?

'But with the state poised to shoulder a larger role in hurricane rebuilding, homeowners could face far bigger bills if another round of major storms pounds Florida.

"At first blush, it's kind of frightening," Senate Banking and Insurance Committee Chairman Bill Posey, R-Rockledge, said of the state's balancing act.

Still, he insisted higher risk was needed to lower bills now."

If you assume there wasn't going to be any relief, these people were going to be bled to death in the next year or so," Posey said. "We tried to stop the bleeding."'

In other words, you took a short-term minor gain for long-term major risk. Like everyone else.

'The House approved the legislation 116-2 and the Senate 40-0, ending a weeklong special session. Republican Gov. Charlie Crist, who repeatedly promised rate cuts during last fall's campaign, is expected to sign the measure into law.'

The last time I witnessed a state legislature vote so overwhelmingly on a hugely important, far-ranging issue? California's deregulation of their electricity market in 1996. And now a history lesson from the recent past...

Similar to our current insurance crisis, people in the Golden State were constantly complaining about their electricity rates being too high. In actuality, it was the commercial users of electricity that did the most complaining. On a per household basis, residential californians use less electricity than in any other state - purely due to the mild climate.

Enron, then a growing tiger in the gas and electricity trading markets, was only too happy to step in and provide the state with a heavy-duty lobbying campaign, telling the state everything they wanted to hear, "Open markets will create competition, and competition will mean lower rates for all!". So, when it came to a vote on giving away the franchise and opening the state's electricity lines to competition, how did it go? Senate 40-0, Assembly 80-0, and passed shortly thereafter by governor Pete Wilson (R).

Unfortunately, just like the baboon-ass monstrosity that just passed in Tallahassee, the lawmakers simply didn't know what they were getting into. It wasn't true deregulation - it's just not possible when everyone has to use the same power lines. It was purely a gamble, based on doctored numbers and charts presented by private parties (Enron) who stood to gain the most from legislation.

As it happened, rates did NOT go down for residential users, and only the largest commercial/industrial users were able to negotiate lower rates. Enron, on the other hand, made a BOATLOAD of money from the scheme, manipulating the grid, causing market rates to sky-rocket. The fox was guarding the henhouse, and getting plenty fat from it.

Fast forward to 2000, due to "gaming" of the power grid by private marketers and a record heat wave, rates went through the sky, while large segments of the state experienced blackouts. In 2001, the new governor Grey Davis (D) started the year with a state of emergency (which stayed in effect for nearly 4 years), and a new round of rolling blackouts and skyrocketing rates hit during the surmmer, while the state's largest incumbent electric utility, Pacific Gas & Electric, ended up in bankruptcy.

Finally, the game was over - the state was forced to buy out the numerous contracts for huge sums of money. In the end, rates were jacked up for everybody (much more than they were paying before the deregulation experiment) and Grey Davis got booted out for a perceived "lack of response" during the crisis.

California Energy Crisis

Think something like this won't happen in the Sunshine State? Be honest. El Diablo just got himself another big fat contract.

Full Sentinel Article

Sunday, January 21, 2007

Illegal Construction Jobs Dwindling

Here at Paradise Lost, many have predicted that the collapse of the real estate bubble in Florida would result in the loss of jobs for construction workers. Not only that, the prediction was that since a large portion of the construction work has been done by illegal labor, those job losses wouldn't be reflected in the unemployment numbers. Courtesy of the Herald-Tribune, some light has now been cast on the subject.

'With the huge drop-off in the state's formerly hot housing market, Latinos are leaving Southwest Florida for places offering more work or taking jobs that pay less.

Construction permits across the region were down as much as 66 percent in recent months, and with 50 percent of Southwest Florida's construction industry staffed by Latinos, the shift is likely to have a big impact on that industry and perhaps the region's general economy.

The impact goes beyond construction companies to rental managers and shops catering to Latinos.'

Up to this point in the article, I keep seeing the word, "Latinos" mentioned, but nothing about their residential status. Then this.

'"The majority of us here are illegal," said Benjamin Ramirez, a 34-year-old framing subcontractor from Bradenton, who has worked in the United States illegally for about eight years. " For us, when the work is gone, it's just no more."'

So, what are the options for this "silent workforce"?

'Many Latinos are moving to other areas, such as Louisiana and other Gulf Coast states where residential construction is still strong.

At the same time, lower-paying jobs in agriculture, food service and retail are reclaiming workers as they wait out the construction downturn.

About six weeks ago, Ramirez was called to a meeting with Lennar Homes, the big Miami-based developer and the biggest home builder in Southwest Florida.Ramirez, who had subcontracted for Lennar for three years, was told there would be no more work.'

And as predicted here, the loss of jobs for these guys is not being reported. Because, then the employers would have to admit they were breaking the law this entire time.

'Though the overall unemployment level has remained relatively unchanged in Florida, unemployment claims in construction have risen 63.37 percent since June.

That measure greatly underestimates what is going on because of the vast number of undocumented workers in the sector and its heavy reliance on subcontractors.

"Many of these workers may never have been included in the jobs figures," said Mark Vitner, a Wachovia Bank economist, who focuses on the Southeast. "Many may be working as independent contractors and still have jobs but just not be as busy."'

And the personal tale of the Ramirez subcontractor is very interesting.

'The best documentation of what is happening comes from the workers.

Benjamin Ramirez and his 31-year-old brother, Ricardo, said construction jobs in Southwest Florida have evaporated.

"Last year was nice. Everybody had a job. And there were a lot of houses to build," Ricardo Ramirez said. "This year there's no work."

The brothers came to the United States about eight years ago from Toluca, a congested industrial suburb of Mexico City, known as Mexico's Detroit because it is home to DaimlerChrysler, Nissan, General Motors, BMW and Mitsubishi plants.

They learned the construction trade on the job in Indiana, and moved to Southwest Florida three years ago.

Together, they formed The Brothers Ramirez Construction Co. of South Florida. They built up a base of 60 full-time independent contractors and began working with Lennar

With the downturn, the brothers thinned their crews to a handful of close friends and immediate family.

One crew went to Indiana, one crew went to Miami and one crew went to Tampa," Ricardo Ramirez said. "Others wait. They are sleeping on the couch or playing soccer -- not much of anything -- until there's more work."'

And surprisingly, enforcement of illegal labor laws had a banner year in 2006.

'Last year, employers and workers saw unprecedented enforcement of immigration laws, with more arrests for immigration violations at job sites nationwide than any other period in recent memory

Add to that new rules from Homeland Security designed to prevent employers from hiring undocumented workers, by checking for mismatched Social Security numbers. Employers are now becoming leery.

Wendy Smith, an attorney with employment law specialist Fisher & Phillips, knows why. Her firm began counseling clients about six months ago to be cautious in hiring decisions. Picking up an undocumented worker carried the threat of criminal charges

"We told our clients, 'You have to tighten up and get your house in order,'" Smith said. "We said, 'You know what? This is coming. And with the no-match letters, it's going to be: You can run but can't hide.'"'

And what's happening in these immigrant communities when the jobs have dried up?

'Property managers and owners in Southwest Florida catering to Latinos have been hit with unexpected vacancies

About 25 percent of the 1,400 units that Harvey Vengroff owns are rented to Latinos, and he has more than 40 vacancies

"I'm getting a lot of stories. It's really a very different world than it was last year," said Vengroff, also the owner of one of the world's largest collections companies, Vengroff & Associates. "Last year, people had more money because there were plenty of construction jobs".

Evictions are up.

"We have a huge problem of people who are nice people, but they are taking in other family members. And we are evicting them. It's not because they are not nice people. It's just not conducive to having a good neighborhood," Vengroff said.'

Full Article

Thursday, January 18, 2007

Foreclosures Continue to Rise

From CNN/Money, the latest foreclosure numbers are out. For the month of December, the Sunshine State rates the following:

#12 in rate of foreclosures - 1 in every 878 households. (Colorado is #1 with 1 in 376)

#3 in total foreclosures - 8,321. (Texas is #1 with 14,195)

'NEW YORK (CNNMoney.com) -- Americans continue having difficulties paying their mortgage obligations, with December foreclosure rates above the 100,000 mark for the fifth straight month.

The number of homeowners entering into some stage of the foreclosure process in December was 109,652, down 9 percent from November but up 35 percent from December 2005, according to RealtyTrac.'

You just KNOW that toxic mortgages (interest-only, balloon payments, ARMs, etc...) has been a huge contributor to this malaise. Well, that and prices that have levelled or declined.

'Adjustable-rate mortgages, especially subprime ARMs, continue to drive the spike in foreclosures: many of those loans are due to reset in 2007, and many of the loans written in 2006 are performing less well than in previous years.

The combination of slower home sales and rising interest rates on ARMs continues to drive foreclosures at significantly higher numbers than a year ago," said James J. Saccacio, chief executive officer of RealtyTrac.

Other circumstances are involved. One is that the housing market turned, removing one avenue of escape for some homeowners facing foreclosure. "People would be reselling their homes if they got into trouble," says Rick Sharga, VP of marketing for RealtyTrac.

When they can't sell at or above what they owe, they may go into delinquency instead.'

No! Really?!!! (okay, I'll get that smirk off my face)

Full Article (with foreclosure numbers for all 50 states)

Wednesday, January 17, 2007

Builders Losing Money

From today's Tampa Tribune, more bad news from the homebuilding industry.

'U.S. - home builders, stuck with more than 500,000 unsold houses, may report the lowest earnings in five years because a rebound in the real estate market is too little too late to save 2007 sales.

Net income at D.R. Horton Inc., the industry's largest company, may plunge 60 percent in fiscal 2007 to $498 million, the worst since 2002 when the domestic economy was recovering from the slowest growth in more than a decade. The average drop in annual profits at America's four biggest home builders probably will be 55 percent, according to analysts surveyed by Bloomberg.

"The demand side of the market is stabilizing, but it doesn't mean that all of a sudden construction is going to be off to the races," said Michael Darda, chief economist of MKM Partners in Greenwich, Conn. He cited a 3.4 percent gain in new-home sales in November from the previous month.

New-home sales fell 18 percent in 2006 to 1.05 million, the biggest contraction since 1990, after median prices rose 41 percent in five years, making them unaffordable for many buyers, said David Berson, an economist at Fannie Mae, the largest mortgage buyer.'

But there's light at the end of the tunnel. Well, at least according to these guys.

'Sales will rise to 946,000 homes at an annualized pace in the third quarter and gain until at least the second half of 2008 after falling to a five-year low of 942,000 in the second quarter, the Chicago-based National Association of Realtors said last week.

Freddie Mac, the second-biggest mortgage buyer, and Mortgage Bankers Association predict more housing demand in the second half of this year. The National Association of Home Builders in Washington projects new-home sales will gain in every quarter of 2007.'

Lennar, which made a BOATLOAD of money over the past 5 years, has a different take.

'Stuart Miller, chief executive officer of Miami-based Lennar, the fourth-biggest U.S. home builder, isn't as optimistic.

"Market conditions continued to weaken during the fourth quarter and we have not yet seen tangible evidence of a market recovery," Miller said on Jan. 2. Lennar reported its first loss in more than a decade in the fiscal fourth quarter, which ended Nov. 30. Analysts believe Lennar's earnings will fall 51 percent in fiscal 2007.'

And remind us again - how has homebuilding affected overall economic growth in the US?

'New-home sales bottomed in the fourth quarter at an annual rate of 970,000, sliding from an all-time high of 1.3 million in 2005's third quarter, Berson said. The construction slump helped to slow U.S. economic growth in the fourth quarter to an annual rate of 1.6 percent, down from 5.6 percent in the 2006's first quarter, he said on Dec. 20.

Buyers canceled contracts to purchase homes at a record pace in the second half of 2006, swelling builders' inventories. Measured in terms of how long it would take to sell off the existing stock, inventory stood at 6.3 months in November, down from 7.2 months in July and up from 4.9 months a year ago, according to the Commerce Department.'

And my personal favorite: a tale of couple who smartly waited things out, and got a killer deal. My question is: could the price they paid still be undercut in years to come?

'That means buyers like David and Wendy Butler of Orlando are able to purchase an already-completed new home at a discount rather than ordering one and waiting for it to be built. During the five-year real estate boom that ended in 2006, that option was rare.

The Butlers are purchasing a four-bedroom, 3,700-square- foot house in Orlando built by Ashton Woods USA LLC for $545,000. The same home was listed at $768,000 three months ago, David Butler said. Nationally, the median home price probably will slide 5.4 percent in the current quarter to $231,700 from $244,800 a year ago, according to forecasts from Fannie Mae.

"People were saying the average homes in this neighborhood would be $1 million-plus, but there's so many homes on the market the prices have been tumbling," said David Butler, 45. "It's incredible really. All of a sudden, it's time to buy."'

I don't know why they titled this article, "Builders See Deep Losses In Spite Of Rebound". What rebound? To 1999 levels?

Full Article

Monday, January 15, 2007

The Exodus Started in 2006

From the Sun-Sentinel, new evidence that out-of-staters are getting the message about the high cost of living down here.

'For the first time in 30 years, United Van Lines Inc. says it moved more people out of Florida than in, and analysts see that as a sign that consumers are looking elsewhere for a cheaper slice of life.

The nation's largest moving company reported 16,212 inbound shipments to Florida last year and 17,019 outbound shipments. United moved more people to Florida in each year from 1999 to 2004, but the number of inbound moves fell in 2005, spokeswoman Jennifer Bonham said.

The study isn't scientific, but it does underscore a recent trend in which fed-up Floridians are moving to other parts of the country, in part to escape rising property taxes and insurance rates.'

To quote Mr. Spock, "Simply fascinating." So, if Florida is no longer the #1 moving destination east of the Mississippi, where ARE people moving to?

'United's report shows that North Carolina, Oregon and South Carolina were the top destination states in 2006. Michigan, hit hard by automobile industry layoffs, North Dakota and New Jersey were the states that saw the most people leave.'

Again, fascinating. So the anecdotal stories of "half-backs" and "J-turns" to the Carolinas are true. It looks like the free income tax system in Florida has lost it's luster. I still wonder how many folks who are thinking about moving here realize they'll be asked to subsidize all of the current dwellers (via the regressive "Save Our Homes" tax) when they buy or lease their residence in the Sunshine State. I suspect the word has gotten out, but most are still clueless.

'The housing boom brought more people to the Sunshine State at the start of the decade, but the run-up in home values during the past five years sent property-tax rates soaring. Many residents now say they can't afford to move elsewhere in Florida because of the huge hit they'd take on taxes.'

And of course, along with taxes, our good friend The Insurance Crisis has had a major role in convincing people to move out. C'mon folks, admit it. It is VERY expensive to live and work in Florida (extremely rural areas excepted).

'What's more, busy hurricane seasons in 2004 and 2005 led to massive rate hikes from the state's largest home insurance companies.

It all just pushed us past the breaking point," David Levin, a Delray Beach-based housing consultant, said Wednesday. '

Besides having one of the worst income/housing cost ratios in the country, we have another issue that's been like a debilitating disease, slowly destroying the place. It's called the "build it first, take care of growth problems later" cancer, a product of an unholy union: the scorched earth developers and the elected officials whose campaigns they fund. This has led to bad street design, horrible congestion, overcrowded schools, leveled forests, ugly condo-towered beaches, and the steady, continued degradation of the Florida lifestyle.

'Recent U.S. census figures show that Florida gains 1,000 people a day while losing 400, said Grant Thrall, a professor of business geography at the University of Florida. But some residents clearly are reconsidering because of the cost of living and other factors, Thrall said.

"People move to where their well-being is going to be the greatest," he said. "Many people find the urban-built environment of Florida totally disgusting."'

Thanks to Ben at the Housing Bubble Blog for the story.

Tuesday, January 09, 2007

Insurance Crisis: More Brainstorming in Tallahassee

From today's Miami Herald, more ideas on how to lower insurance rates.

'A rate freeze for the state-run insurance pool, which is the largest home and condo insurer in Florida, is among the proposals in a 153-page bill that is being offered by the Senate's Banking and Insurance Committee.

Rates for Citizens Property Insurance would be frozen for one year at the Dec. 31, 2006, level and would require the insurer to set new actuarially sound rates for 2008. The bill also would eliminate a rate hike that already was approved for Jan. 1. Citizens would have to provide refunds to any policyholder who was charged the higher rates.'

Sounds great - so how are we going to pay for this? Ohhhh, I see...just gamble and hope that Citizen's never has to actually PAY on claims from a major catastrophe. But hey, at least everyone doesn't have to pay now, right? Sweet - I love short-term thinking politicians - they're the best, and here in Florida, we have the best, ever!

'Sam Miller from the Florida Insurance Council said by lowering premium rates, consumers could be facing higher costs after a major catastrophe if assessments are needed to make up a deficit in Citizens or the Florida Hurricane Catastrophe Fund, which sells reinsurance to insurers.

A proposal from the House Insurance committee is expected late Wednesday.

A major component of the Senate bill focuses on eliminating many of the onerous provisions of the insurance law that was passed in the final minutes of the 2006 legislative session last May.

One provision would be to remove the requirement that the state-run pool raise rates dramatically by March to increase its reserves so it would have the cash to pay future claims from storms.'

And more ideas that were passed around...

'• Citizens would be allowed to continue covering vacation and second homes as well as homes valued at more than $1 million.'

I particularly love that one - let's subsidize the insurance of vacation homes, because you know, THAT's the kind of business gov't should be in.

'• Citizens would be allowed to write multiperil policies throughout the state. Citizens officials have said previously that writing the extra policies would expand its premium base and spread risk. '

To be honest, I have no opinion one way or the other - though it sounds good in theory.

'• Insurers would be allowed to buy additional reinsurance from the Florida Hurricane Catastrophe Fund. This could be less expensive than buying in the private market. Insurers would be required to pass on any savings to policyholders. '

Again, this is a wonderful idea - lower the rates by subsidizing the private insurers. This is almost as genius as the original idea to create Citizen's. Now, instead of just allowing the IL to "cherry pick" the low-risk buyers, we'll now go ahead and remove all hurricane risk from the insurers and pass it on to the state. Brilliant!

'• The Panhandle's exemption from the statewide building code would be eliminated. Most experts believe stronger buildings would reduce insurance losses, and this is a move that many lawmakers and the insurance industry champion.'

Huh? Why was the panhandle ever exempted from building codes that the rest of the state had to follow? Ohhhh, that's right, it's FLORIDA politics at work here. Sorry, I forgot that reason and logic are not strong suits up in the halls of Tallahassee.

• The position of the state's insurance consumer advocate would be beefed up, moving it out of the Department of Financial Services and combining it with the Office of Public Counsel. The public counsel represents consumers in utility rate filings, something the current insurance advocate can't do for policyholders.

Why do I get the feeling that the Office of Public Counsel just got double the work with no corresponding increase in resources? Awwwwwwwesommmmme!

• Homeowners would be permitted to take on larger deductibles, buy less coverage than what would be needed to rebuild their homes after a major storm and even go without windstorm insurance if they've paid off their mortgages.

Another beauty! This way, Granny doesn't have to drive all the way over to the nearest bingo hall/indian casino for entertainment. She can just opt for the "minimum coverage" policy and get great excitement every hurricane season to see whether she loses everything (while the bank losses nothing) if her house gets hit! How is that NOT a cool way to go?

Full Article

Friday, January 05, 2007

Insurance Lobby - Vows to Fight!

From today's Palm Beach Post, it appears our new governor (in his first week of office) is getting a cold splash of reality.

' TALLAHASSEE — New Gov. Charlie Crist's campaign vow to lower property insurance rates Thursday ran smack into the real world of the insurance lobby.

"If we create more regulations, more mandates, and rate rollbacks, then we will have even fewer companies willing to do business in Florida," said Barney Bishop, president of Associated Industries of Florida, an influential umbrella lobbying group that includes property insurers.

The group staged a news conference Thursday to say it would be following the developments in the special session that is to begin Jan. 16 and would oppose legislation that requires rates to be reduced.

"We believe rates have been suppressed," Bishop said. "And we believe that rates are going to have to rise to the current level to (give incentives to) insurance companies to be in Florida."

Crist, who in his inaugural address Tuesday said that it was time "to rein in overreaching insurance companies," said he was astonished to hear Bishop's assessment.'

Should we be astonished that Charlie is astonished? Hey, here's an idea: let's SUBSIDIZE these poor folks in the IL (insurance lobby)!

'Bishop, speaking for a Florida Hurricane Crisis Coalition made up of Associated Industries members, said past elected insurance commissioners and the current appointed insurance commissioner, who answers to the elected governor and Cabinet, are too sensitive to political pressure.

He and his group instead suggested that Crist and lawmakers should make it easier for insurers to obtain subsidized "reinsurance" - the financial backing to pay for massive claims from a catastrophic storm - from the state; that the state spend $500 million a year to help Floridians harden their homes against storms; and that homeowners be permitted to buy hurricane insurance with 10 percent or even 20 percent deductibles in return for lower premiums.'

A few thoughts:

  1. I can't believe they have the gall to ask for free money from the state.

  2. With that outrageous proposal in consideration, enquiring minds want to know how much the IL collected as a whole, from Florida homeowners in 2006.

  3. The idea for "home hardening" is a great concept, but in reality, it's just another subsidy for the IL.

  4. The last suggestion is a good one - but how do you prove that granny has $60K in the bank to cover the deductible on her $300k home (the one she bought for $75K back in 1982)?

  5. If a company doesn't offer home insurance, they shouldn't be allowed to offer any other form of insurance (as in the highly profitable auto insurance), period. The IL's claim of "you'll chase all the insurers out of the state" is anectdotal CRAP. Not based on fact, not based on anything but their collective money-grubbing hive mentality.

  6. Where are the proposals from Crist to eliminate Citizen's?

Full Article

Thursday, January 04, 2007

Disappointing Holiday Sales

From the Orlando Sentinel, sales were not too keen this past holiday season. Even for Wal-Mart.

'NEW YORK -- An already disappointing holiday shopping season turned out to be even worse than expected for many of the nation's retailers, who said Thursday they had tepid sales gains for December.

The downbeat results came from merchants in all retail categories, particularly from apparel sellers who struggled with depressed sales of cold weather items like heavy coats amid mild weather across the country. Wal-Mart Stores Inc. posted better-than-expected results for December following a dismal November, but the discounter's overall holiday season was the worst on record, analysts said. '

Are customers getting smarter or do they just have less to spend (now that the housing ATM machine is shutting down)?

'Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass., said retailers were forced to mark down heavily to bring in sales.

"Clearly, this was a promotional Christmas," he said. "Consumers clearly waited until the last minute."

Such aggressive discounting led a number of merchants including Zale Corp., BJ's Wholesale Club Inc., Gap Inc. and AnnTaylor Stores Corp. to cut their profit outlooks. '

Could it be the warm weather? Not enough socks, hats, and boots?

'Mild weather across much of the country meant consumers were in no hurry to buy cold weather wear such as coats and gloves, depressing sales at many apparel stores. Declining gasoline prices and a steady job market should have helped merchants, but Perkins believes the recent drop in home equity loans -- a big source of buying power over the past few years -- curtailed spending among middle-income shoppers.

Sales results were also hurt by two big shifts in the way consumers are shopping: the increasing popularity of gift cards and robust online buying, which is not included in same-store results. Gift card sales are only posted when they are redeemed rather than bought, helping to extend the holiday season into January. '

There were some winners...

'Costco Wholesale Corp. posted a 9 percent gain in same-store sales, beating Wall Street's 5.7 percent estimate.

Nordstrom Inc. reported a robust 9 percent same-store sales gain, exceeding the 4.3 percent forecast. Luxury operator Saks Inc. had an 11 percent same-store sales, gain, nearly twice the 5.3 percent estimate. '

But more losers.

'Pier 1 Imports Inc. suffered a 10.7 percent drop in same-store sales, worse than the 9.4 percent analysts anticipated.

Gap, which has long been struggling with its merchandising formula, suffered an 8 percent drop in same-store sales, worse than the 5 percent estimate. As a result, the company said it was slashing its annual profit outlook.

AnnTaylor posted a 5.3 percent decline in same-store sales; analysts predicted a 0.6 percent gain.

Among teen retailers, Pacific Sunwear of California Inc. had a 3.2 percent dip in December, worse than the 2.9 percent forecast. '

Not being a certified "economist" (who can make predictions that never come true - see David Lireah from the National Ass. of Realtors for example), I am not sure what to make of these numbers. Do they relate in any way to the housing situation? I am inclined to think so.

Wednesday, January 03, 2007

Would-Be Trailer Park Millionaires

A great article from MSNBC about a waterfront trailer park in Palm Beach County. If they agree to get bought out by a developer, they'll get over a HALF-BILLION dollars for their little 43 acres of paradise.

'BRINY BREEZES, Fla. - The owners of nearly 500 mobile homes in one of the last waterfront trailer-park towns in South Florida stand to become instant millionaires if they agree to sell to a developer. But some are holding out, saying there are things more important than money.

“You just can’t buy a way of life,” said Tom Byrne, a 68-year-old retired sales executive from New York who doesn’t want to sell even though he would make a little over $1 million on the trailer and site he bought two years ago for $150,000. “This is my home.”'

Okay - the first question is - what kind of land are they sitting on?

'With 600 feet of oceanfront property and an additional 1,100 feet along the Intracoastal Waterway, real estate like this in southeastern Florida is pure gold.

Boca Raton-based Ocean Land Investments has big plans for the property if the deal goes through, as many residents are certain will happen. The company envisions about 900 low-rise multimillion-dollar condo units, a high-end marina and a 300-room luxury hotel.

“There really is no other piece of property like this in Florida,” said Logan Pierson, the company’s vice president of acquisitions.'

And a view from an owner who wants to "Sell, sell, SELL! Like NOW!".

'Kevin Dwyer, 47, is all for the deal. Dwyer, who paid just $37,500 for his trailer nine years ago, would make about $800,000.

“See these pockets? They’re empty,” Dwyer said, a stack of unpaid bills sitting on a table in his single-wide trailer less than 100 yards from the ocean. “I’ve nickeled and dimed my whole life. I hit the lottery.”

Pierson acknowledged that the loss of Briny Breezes means a piece of old Florida will be gone forever. But he said that because of the town’s location on a barrier island, a hurricane could eventually wipe out Briny Breezes.

“At some point Briny is going to face a bad storm,” he said. “There are other potential threats out there other than development.”'

And is this really a good idea for the developer, being on the ocean?

'Palm Beach County Commissioner Mary McCarty is not so sure it’s a done deal because of constraints on zoning, water, sewage and traffic. “I find the developers extremely optimistic to the point of being delusional,” she said.

For one thing, the community is in a hurricane evacuation zone and has few ways in or out. Developers will have to clear their plans through the state before any dirt is moved, and neighboring communities will have a chance to weigh in.

“This would be extremely complicated and extremely unpopular,” McCarty said. “But people see dollar signs and it sparks the imagination.”'

Full Article
(Many thanks to SKB for finding this.)

Finally, a "Happy 2007!" to all our readers and posters. 2006 was a break-through year - let's keep up the fight and make 2007 the year that EVERYBODY discovers the truth about the fantasy of a bubble market.