If you think you’ve seen it all be prepared to see the most manic pricing action in the history of this housing bubble courtesy of a condo in Long Beach California. That’s right, the home of Snoop Dogg and the beautiful Queen Mary. The ability to access past sales history readily makes for […]
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■Real Homes of Genius: 675 square foot home in Lynwood California at $425,000?!
■Real Homes of Genius: Today we Salute Inglewood. Bought in 1970 for $20,000 now selling for $397,400.
■Real Homes of Genius: Today we Salute you Stanton.
■Real Homes of Genius: Biggest Ever Percentage Housing Drop Ever in Santa Ana! 68 Percent Drop in 1 Year. The Journey of One Home in an Epic Housing Bubble.

If you think you’ve seen it all be prepared to see the most manic pricing action in the history of this housing bubble courtesy of a condo in Long Beach California. That’s right, the home of Snoop Dogg and the beautiful Queen Mary. The ability to access past sales history readily makes for some fascinating forensics on the incredible financial stupidity of this bubble. If this happened say 20 years ago, it would take some savvy journalist a lot of time to head down to the county clerk’s office, work with local realtors for MLS access, and finally be able to put all the pieces together to show the insanity of the housing orgy. Now all you need is an internet connection, some common sense, and the insanity of the housing market comes together like a thousand piece jigsaw puzzle.

For those of you thinking we are at a bottom, there are futures traders that would like to disagree. In fact, the futures markets are pricing in a 28.3% further drop for Los Angeles by November of 2010. The housing futures contracts are also pricing in 24.8% of that drop in the next year! You may want to take a look at some of the other housing futures over at housing derivatives that compiles a list periodically. Here’s a little rundown of the April 2008 published future prices:

November 2010

Las Vegas: -28.9%

Miami: -21.9%

New York: -15.2%

San Francisco: -25.6%

Chicago: -12.0%

Bottom line? More pain ahead at least from people that are putting their money where their mouth is. Think housing will go up? Go ahead and put some money down.

Let us now move on to one of our most absurd Real Homes of Genius on record (hat tip MC). Today we salute you Long Beach with our Real Homes of Genius Award.

From $1,325,000 to $200,000 in 3 Years?!

Today we are looking at a 948 square foot condo in Long Beach California. In housing bubbles, condos usually run up the quickest first but also correct the fastest as well. This place makes no exception to that rule. Yet the pricing action on this place makes you wonder if you aren’t living in some Twilight Zone. Instead of Ed McMahon stopping by your home with a $1 million check we get a reverse housing clearing house award; in this world you get a knock on your door and you have the potential of losing $1 million simply for turning the knob.

This place is located on Ransom Street which runs deep with Shakespearean irony. Let us look at some of the sales history on this place courtesy of the excellent website, Redfin:

Oh sweet mother of Earth! This place is now half off of a price that was reached 20 years ago! Could it be that we’ve found a condo that went through the late 80s bubble but also the current mega housing bubble? This place sold for $622,000 in February of 1988 and then sold for a peak of $1,325,000 in July of 2005! It also sold for a ridiculous price of $730,000 in January of 2004. The real action is all the entries that occurred in 2007. There is something going on here and I’ll leave it up your imagination as to what exactly is playing out.

Let us now take a look at the pricing action on this place:

Bwahaha! Hey, if this place sold for $622,000 in 1988, sold for $1,325,000 in 2005 anything is possible so why not ask for 10 zillion dollars? I think the $3,500,000 was an input error but at this point nothing would surprise me. This place is now listed at $200,000; that is a $1,125,000 discount in three years! Bwahaha! Hold on a second and let me catch my breath…Bwahahaha! What the hell is going on here? Why would you even want to rob a bank were you are probably only going to get $50,000 and be put behind bars when you can be a shady broker, lender, appraiser (seriously who the heck appraised this place?), or agent and you have yourself a method of getting criminal amounts of money without facing prison time. I’m still waiting to see massive amounts of people being put behind bars because I equate this with flat out stealing money.

I love how these ads tell us that you have “great freeway access” when everyone in Southern California by default has great freeway access. You’ll be stuck on the freeway once you do get on and idling away that precious $4 a gallon fuel but yes, you do have great freeway access. We are also told that this place has “low maintenances living” whatever that means.

Digg this article, Reddit, Stumble it, and get these insane examples out to the larger public. Frankly, the best way to show how idiotic any bailout would be is to highlight financial irresponsibility through actual real world examples. I think most folks with common sense can see how pathetic any help would be to lenders that clearly manipulated the system and now need to eat their own imprudence. The lenders can go pound sand for all I care and their CEOs think the same way about borrowers.  How is bailing out a place like this good for our economy?

Today we salute you Long Beach with our Real Homes of Genius Award.

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Related Posts:
■Real Homes of Genius: Today we Salute you Buena Park. $511,000 for 864 Square Feet. Even Knott’s Berry Farm is Cheaper!
■Real Homes of Genius: 675 square foot home in Lynwood California at $425,000?!
■Real Homes of Genius: Today we Salute Inglewood. Bought in 1970 for $20,000 now selling for $397,400.
■Real Homes of Genius: Today we Salute you Stanton.
■Real Homes of Genius: Biggest Ever Percentage Housing Drop Ever in Santa Ana! 68 Percent Drop in 1 Year. The Journey of One Home in an Epic Housing Bubble.

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Filed under: Major movement, Google (GOOG), Yahoo! (YHOO), Apple Inc (AAPL), Pfizer (PFE), Intel (INTC), Ford Motor (F), Citigroup Inc. (C), Technical Analysis, Stock screen, Stocks to Buy

Forget about overwhelmingly random stock market noise and small daily percentage moves exemplified by the likes of all the most popular names such as Yahoo! Inc (Nasdaq: YHOO), Citigroup Inc (NYSE: C), Pfizer Inc (NYSE: PFE), Google Inc (Nasdaq: GOOG) and Apple Inc (Nasdaq: AAPL). Don’t be fooled by the all-too-frequent daily commentary-those stocks are really only good for long-term investors and the few truly professional traders out there.

If you’re neither, focus more on market inefficiencies because not only are they more predictable, but they’re ideal for smaller investors and traders thanks to their illiquidity. Meaning the market offers up these high profit probability opportunities that the big boys can’t and won’t take advantage of-they’re strictly for us little guys.

I’m talking about price moves created by the quirks of the finance industry itself-namely the media circus, stock promoters and hype that influence the great derided microcap market. For example, when a CNBC reporter inadvertently suckers amateurs by pumping a penny stock (good short selling opportunity as the stock is now down 50% in a month) or when a stock promoter is paid to hype a stock (another one down 50%+ in one month since).Right now there are several tiny stocks being promoted, but I won’t even mention them because their promoters haven’t done a good enough job of pumping their prices high enough to make them worthwhile shorts. Surging commodity prices have done an infinitely better job helping push microcaps like Mexco Energy Corp (AMEX: MXC), Pyramid Oil Co (AMEX: PDO), China Precisions Steel Inc (Nasdaq: CPSL), Cardero Resource Corp (AMEX: CDY), Solarfun Power Holdings (Nasdaq: SOLF) and Fieldpoint Petroleum Corp (AMEX: FPP) up exponentially.

Unfortunately, instead of learning the catalysts for such surges, many wannabe technical analysts / traders only look at the charts-and considering the speed and strength of these run-ups-many short these stocks too early, inevitably helping to create mammoth short squeezes. Just ask those who shorted Pyramid Oil after its 2-week run-up from $4 to $10, now $16!

Each day on my blog, I cover these kinds of exponential movers and the most important lesson I can teach is that hype pushes these stocks further than anyone expects. I assure you these stocks will crumble-as the vast majority of surging microcaps inevitably do (see some historical examples HERE)-but considering many of these latest runups are due to solid earnings reports, do not mistake them for pump-and-dumps that can collapse within hours or days.

For now, let these kids play-some are even good to play form the long side, if you’re willing to take on that kind of risk (not me!). Call them in from recess-or short sell them-only when it begins to get dark outside-meaning when commodity prices aren’t in such an overwhelmingly bullish uptrend.

Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund.

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Filed under: Scandals

On Friday morning before the opening bell, American Apparel (AMEX: APP) announced that CFO Ken Cieply — the main founder and CEO Dov Charney called a “complete loser” — had resigned. Except they didn’t exactly announce that. The headline was American Apparel Announces Hiring of Interim CEO, which is reminiscent of the old joke about NASA needing another seven astronauts. But the market saw through the attempted spin and sent the stock down a few cents.

But American Apparel’s spin machine wasn’t done. At 2:00 PM ET that same day, the company decided to announce a “$25 Million Share Repurchase Program,” which allowed the stock to close up for the day. That press release raised a number of red flags. The reason for its timing was obvious: give investors some good news to go along with the resignation of the CFO. I’m always of skeptical of companies that use buybacks to try to pump up share prices. It’s even worse when the company times its announcement of a buyback to pump up its stock price.

Then there’s the question of whether Charney and company are really in a position to be buying back stock. American Apparel has a substantial debt load and ambitious expansion plans. I doubt that it’s generating enough cash to make a buyback prudent.

Of course American Apparel hasn’t committed to buying back stock. It’s board of directors has simply said that it can. I’ll be surprised if it does but, either way, the company made some PR hay.

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Is the California city an outlier or the canary in the coal mine?  Vallejo, California filed for bankruptcy today as the first city put underwater by the foreclosure and housing crisis. With property values declining and folks lined up for reassesment of property taxes local governments who have lived like kings on bloated real estate tax revenues are going to see lots of red ink in the near future.  Will Vallejo be the only or the first?  I imagine that they’ll only be the first, with cities outside of 25 miles from the coast being the suspects to keep an eye on.

From the San Jose Mercury News on the Vallejo bankruptcy:

The city of Vallejo filed for bankruptcy protection Friday to deal with a ballooning budget deficit caused by soaring employee costs and declining tax revenue.The San Francisco Bay area suburb of about 120,000 residents became the largest California city to declare bankruptcy, which will protect the city from its creditors while it develops a plan to return to fiscal health.

Mayor Osby Davis said the city’s attorneys filed papers seeking Chapter 9 bankruptcy protection in federal court in Sacramento.

The foreclosure crisis and economic downturn have caused a sharp decline in revenue from sales tax, property tax and development fees.

Many officials and residents blame Vallejo’s chronic financial problems on labor contracts that they say provide overly generous pay and benefits to the city’s police officers and firefighters, which make up about three-quarters of the city’s general fund.

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Source [blownmortgage]

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Contractors, particularly in the Florida, California and Nevada bubble-markets, have seen business boom as banks try to maintain thousands of REO properties (bank-owned, foreclosed property) not yet sold at auction.  Banks need to maintain the properties in order to recoup as much of their investment as possible.  Contractors, who sign deals with mortgage companies and REO property management firms have been kept busy trying to clean up foreclosed homes in those areas hardest hit by the housing downturn.

Foreclosed homes often face a tough fate between the time they are abandoned by their owner and the time they sell.  From left-over trash of the evicted owners, to theft of everything from appliances to piping, and to the regular maintenance required to keep a house in shape contractors have seen business lost to the housing bust replaced by demand from mortgage companies to keep these properties in livable conditions.

According to economist predictions the business of keeping up foreclosures will be booming for some time to come as more people face foreclosure and properties get turned back over to banks.   Contractors, who can bill up to $5,000 every two weeks per mortgage company contract have seen work lost from construction of new homes replaced by the upkeep jobs.

The New York Times reports on the boom of contractor work for foreclosure properties and highlights some of the tough duties that come with the job:

These contractors and thousands like them see first hand the detritus of the subprime era: peeling paint, gutted interiors, family dogs left behind to starve, overgrown lawns infested with snakes.

In Florida, the crisis can seem overwhelming at times. It can take months, even years, for some homes to wind through foreclosure in the backlogged local courts. The longer a home sits vacant, the more vulnerable it becomes. After a few months, the Florida weather starts to takes a toll. Mold and mildew creep. Algae chokes forsaken swimming pools. Sometimes vandals strike. And sometimes wiring or plumbing just give out.

The problem of vacant homes is all the more striking when considered against predictions by economists that a couple of million more homes will enter foreclosure in the next two years, said Cheryl Lang, president of Integrated Mortgage Solutions, a company based in Houston that contracts with Mr. McCallister and Mr. Law on behalf of mortgage companies.

“We still have two million more people that need to go through this process,” she said. “That’s like the entire town of Tampa going through foreclosure.”

In most cases, the contractors do not interact with the homeowners, but sometimes the contractors are present during evictions that are conducted by county sheriffs. Mr. McCallister recalled the eviction of a 60-year-old man who had misread his eviction notice and thought he had one more week to leave.

“He fell down on the floor and started crying,” Mr. McCallister said. “We gave him 24 hours and he had his stuff moved out and he found another place to live.”

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Source [blownmortgage]

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Filed under: Deals, Rumors, India

It would have been a blockbuster deal; that is, the merger of Bharti Airtel (India’s largest mobile operator) and MTN Group (the largest mobile operator in Africa). But, cultural and control issues intervened - and, the deal essentially died this week.

If the parties could have pulled off the transaction, the combined entity would have a market value of $70 billion.

True, it might be a missed opportunity to add huge scale (which is critical in the mobile business). Yet, Bharti still has lots of growth left in India. Besides, the company needs to fend off the competition, such as Reliance and Vodafone Group (NYSE: VOD).

Interestingly, it looks like MTN is still in play (this is according to a piece in the Wall Street Journal, which is a paid publication). For example, it looks like Reliance is in talks with the company, for good reason: MTN has a fast-growing franchise in over 20 countries.

In fact, there could be a bidding war. Some of the other potential bidders include: Deutsche Telekom AG, VimpelCom and Etisalat.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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Filed under: Before the bell, Analyst reports, Analyst upgrades and downgrades, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Apple Inc (AAPL), Wal-Mart (WMT), General Motors (GM), Toyota Motor Corp. (TM), Penney (J.C.) (JCP), Kohl’s Corp (KSS), Nordstrom, Inc (JWN)

Before the bell: Futures higher ahead of housing data

Goldman Sachs cut its view of U.S. department stores to Neutral from Attractive. Specifically, the broker downgraded J.C. Penney (NYSE: JCP) and Nordstrom Inc. (NYSE: JWN) to Neutral from Buy after its commodity team upped 2008 oil price forecasts to $149 a barrel.
Still, Goldman upgraded TJX Cos. (NYSE: TJX) to Buy from Neutral and removed Kohl’s Corp. (NYSE: KSS) from its conviction-buy list in favor of Wal-Mart Stores Inc. (NYSE: WMT).

By now I’m getting confused with all the deals Apple Inc. (NASDAQ: AAPL) is signing with wireless operators to sell the iPhone in different countries around the world. I believe the past two weeks we heard of at least two deals, including one with a S.Korean company. Today, French wireless operator Orange said it has signed a deal to sell its iPhone in the Middle East, Africa and several European countries. Orange will be the exclusive iPhone provider in Belgium and Romania. It seems that by now Apple’s got the world covered.

General Motors Corp. (NYSE: GM) is apparently considering launching its Chevrolet brand in South Korea. In its attempt to stay ahead of fast growing Toyota (NYSE: TM), GM will try to capture a larger share of S.Korea’s growing market for imported cars.

As Yahoo! (NASDAQ: YHOO) is trying to keep Icahn off its board back, it keeps talking about a search advertising partnership with Google Inc (NASDAQ: GOOG), according to a Reuters source.

And Microsoft (NASDAQ: MSFT) also keeps to other business these times. The software giant joined The One Laptop Per Child project as the green-and-white “XO” computers now can run Windows in addition to their homegrown Linux-based interface. This could further the cause of the organization.

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Filed under: Berkshire Hathaway (BRK.A), Goldman Sachs Group (GS), Wrigley, (Wm) Jr (WWY)

This past week, Wrigley Co. (NYSE: WWY) filed a proxy statement for its $23 billion sale to Mars. And, if you go to page 18, you’ll see an account of the transaction — and how Goldman Sachs Group (NYSE: GS) was a key player.

Actually, it was back in 2006 that Goldman arranged a meeting between Wrigley and Mars. After signing confidentiality agreements, the parties talked about possible business arrangements (although, a buyout was not mentioned — but, I’m sure, it was something everyone was thinking about, especially Goldman).

However, by August 2007, Mars and Goldman talked about possible strategic options. One suggestion: buy Wrigley. To this end, Goldman arranged a meeting with Berkshire Hathaway (NYSE: BRK.A) to explore financing possibilities.

By April 2008, Mars had made an overture to William Wrigley, Jr., to discuss a possible transaction. The result: Mars offered $75 per share.

Of course, the price was not enough. As a result, there were several more bids — with the final one at $80 per share.

Continue reading How Goldman brokered the Wrigley buyout

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Filed under: Oil, Headline news

The New York Times reports that people are changing their habits thanks to $4 a gallon gasoline. Surprisingly, gasoline is not consuming as much of the family budget now as it did in 1979, but those high gas prices are hurting. Some people, me included, are skipping their traditional Memorial Day vacation — opting instead for what AP dubs a Staycation.

People are certainly driving less. The Times reports that Americans drove 11 billion fewer miles than in March 2007, a decline of 4.3%. It is the first time since 1979 that traffic has dropped from one March to the next, and the month-on-month percentage decline is the largest since record keeping began in 1942.

And even though families are not paying as much of their income now as they did in 1979, we’re funding our enemies — Saudi Arabia, which supplied 15 of the 19 9/11 hijackers, is the U.S.’s second largest oil provider — 80% more than we were five years ago. Americans spend 3.7% of their disposable income on transportation fuels — that hit a low of 1.9% in 1998 and a high of 4.5% in 1981.

Continue reading $4 a gallon Memorial Day Staycation

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