From an analyst at one of the five large U.S. banks still standing, passed to me via Mark Hanson this afternoon:
In a foreclosure auction today, the John Hancock Tower - a marquee building in Boston - traded at $660MM to Normandy Real Estate Partners. That same property was appraised for $1.3BN in 2006 and traded for $935MM in 2003. This is VERY negative for commercial real estate. At face, it looks like even top quality assets are down 50% from their peak, but that forgets the value of the financing that Normandy now gets to assume. There will still be a $640.5MM mortgage on the property at a rate of 5.6%. What is the value of being able to get a 97% LTV loan at 5.6% these days? Let’s say you can get a 60% LTV mortgage ($400MM) at 8%, and the other $240MM in mezz financing (which... more»
For our readers that watch Comedy Central and like SouthPark — I do — this week’s episode centered on the bank bailout. (Warning: cartoon violence and crude language).
Full episode is available here.
(HT, Calculated Risk)
It may not be the Second Great Depression, but it’s the most severe economic contraction most of us have seen in our lifetimes. While we haven’t experienced the bread lines stretching around the corner or general despondency seen in the Depression-era ’30s, we have experienced significant losses of personal wealth, savings, retirement funds, homes, jobs and peace of mind.
Although we here at HousingWire can’t diagnose whether we’re likely to enter another depression any time soon, we are curious to hear how our readers are responding to the financial stress. Particularly, we want to ask: Where’s your money safe? And yes, the double meaning is intended. We want to know your opinions on where you think money should be kept and who’s keeping it safe: your... more»
This is sheer genius. (Fist pound, Calculated Risk).
We’re hearing some great color around the IndyMac sale that we thought we’d share with HW readers — our original story announcing the completion of the sale is right here, for those that missed it.
Obviously, the sale completion had been delayed, but it’s not entirely clear why; the deal was supposed to close in late January or early Feburary. It’s now late March, officially. We’re hearing from sources close to the deal that the hold up was due to details over financing the transaction between the FDIC and FHLB. Press representatives at OneWest had no comment on this, however.
We’re also hearing — confirmed from a source inside one of the investment groups behind OneWest — that Freedom Financial, the reverse mortgage wing owned by IndyMac... more»
My gut reaction to today’s better-than-expected housing start figures? Indicative of supply inertia moreso than any real demand, esp. in terms of permits. At least one well-known analyst seems to have agreed with me:
So why are permits up? Well, says building analyst Ivy Zelman, “This is supply. It is not indicative of demand.” She notes that builders, and the banks funding them, have money in the ground already, in finished lots. “You have to put a house on it. Vertical construction continues even though demand is not strong.” If you don’t put a house on it, the land is a total loss. If you put a small, cheap house on it, maybe you can recoup at least the cost.
CNBC’s Diana Olick has much more in her post that’s worth reading on this. But the starts number here... more»
Hands down it was Stewart in perhaps the most awkward and entertaining late night interview in at least five years, Thursday night on The Daily Show with Jon Stewart. Stewart and crew have turned up the volume a notch on criticism against CNBC in recent days, and last night’s episode was the latest high note in what has become a long-running feud between the two.
Here’s Part 1 of the interview:
Stewart was more serious than he was funny in the interview, which made for some awkward moments. But Cramer pretty much apologized for everything CNBC has ever aired, including his stuff. Business Insider said that “Cramer basically sounded apologetic all night, though Stewart didn’t do himself any favors by coming off as overly serious and not very funny.”
Stewart’s... more»
For those interested in this sort of thing, CNBC Mad Money personality Jim Cramer will be appearing on Comedy Central’s The Daily Show with Jon Stewart tonight. See the official announcement here. Hijinks and hilarity are sure to ensure, especially after the grilling Stewart gave the business news network last week.
From the Comeday Central blog:
Two men will enter! Only two men will leave!
And, of course, check out Stewart’s woodshed moment with Cramer, too.
One of my favorite reads each day is Calculated Risk — if you aren’t reading, you should be. The blog’s host put up a tour de force yesterday that asked the question: are we really facing a depression here in the States?
The bottom line of the well-reasoned analysis is worth paying attention to:
Even though the current recession is already one of the worst since 1947, it is only about 1/3 of the way to a depression (assuming a terrible Q1).
To reach a depression, the economy would have to decline at about a 6.6% annual rate each quarter for the next year.
Which means simply: things are bad, yes, but they could get a whole lot worse. While CR remains confident a depression isn’t in the offing, and I agree we have a ways to fall before we could get there, I think I’m... more»
So it’s been awhile — you know, since this whole subprime debacle morphed into uncontained financial chaos? Remember early on when everyone was trying to peg blame on someone for this mess, and it was considered edgy to say that Wall Street didn’t know what it was doing?
Sure you do. What I want to know now is what you think about the blame game — after all that’s taken place. Who’s really to blame for this mess? Is it still greedy homeowners? Greedy bankers? Greedy insurers? Hedgies?
Sound off and give me some answers worth printing. Click here to take our monthly Sounding Board — best answers make it into the magazine. It’ll only take a few minutes of your time, and who knows? You just might find it therapeutic. So fire away, and don’t... more»
