Monthly Archives: November 2010

Pretty Good for Government Work

Published: November 16, 2010
Warren E. Buffett

DEAR Uncle Sam,

My mother told me to send thank-you notes promptly. I’ve been remiss.

Let me remind you why I’m writing. Just over two years ago, in September 2008, our country faced an economic meltdown. Fannie Mae and Freddie Mac, the pillars that supported our mortgage system, had been forced into conservatorship. Several of our largest commercial banks were teetering. One of Wall Street’s giant investment banks had gone bankrupt, and the remaining three were poised to follow. A.I.G., the world’s most famous insurer, was at death’s door.

Many of our largest industrial companies, dependent on commercial paper financing that had disappeared, were weeks away from exhausting their cash resources. Indeed, all of corporate America’s dominoes were lined up, ready to topple at lightning speed. My own company, Berkshire Hathaway, might have been the last to fall, but that distinction provided little solace.

Nor was it just business that was in peril: 300 million Americans were in the domino line as well. Just days before, the jobs, income, 401(k)’s and money-market funds of these citizens had seemed secure. Then, virtually overnight, everything began to turn into pumpkins and mice. There was no hiding place. A destructive economic force unlike any seen for generations had been unleashed.

Only one counterforce was available, and that was you, Uncle Sam. Yes, you are often clumsy, even inept. But when businesses and people worldwide race to get liquid, you are the only party with the resources to take the other side of the transaction. And when our citizens are losing trust by the hour in institutions they once revered, only you can restore calm.

When the crisis struck, I felt you would understand the role you had to play. But you’ve never been known for speed, and in a meltdown minutes matter. I worried whether the barrage of shattering surprises would disorient you. You would have to improvise solutions on the run, stretch legal boundaries and avoid slowdowns, like Congressional hearings and studies. You would also need to get turf-conscious departments to work together in mounting your counterattack. The challenge was huge, and many people thought you were not up to it.

Well, Uncle Sam, you delivered. People will second-guess your specific decisions; you can always count on that. But just as there is a fog of war, there is a fog of panic — and, overall, your actions were remarkably effective.

I don’t know precisely how you orchestrated these. But I did have a pretty good seat as events unfolded, and I would like to commend a few of your troops. In the darkest of days, Ben Bernanke, Hank Paulson, Tim Geithner and Sheila Bair grasped the gravity of the situation and acted with courage and dispatch. And though I never voted for George W. Bush, I give him great credit for leading, even as Congress postured and squabbled.

You have been criticized, Uncle Sam, for some of the earlier decisions that got us in this mess — most prominently, for not battling the rot building up in the housing market. But then few of your critics saw matters clearly either. In truth, almost all of the country became possessed by the idea that home prices could never fall significantly.

That was a mass delusion, reinforced by rapidly rising prices that discredited the few skeptics who warned of trouble. Delusions, whether about tulips or Internet stocks, produce bubbles. And when bubbles pop, they can generate waves of trouble that hit shores far from their origin. This bubble was a doozy and its pop was felt around the world.

So, again, Uncle Sam, thanks to you and your aides. Often you are wasteful, and sometimes you are bullying. On occasion, you are downright maddening. But in this extraordinary emergency, you came through — and the world would look far different now if you had not.

Your grateful nephew,


Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.

US Mortgage Applications Hit 4-Month Low – CNBC

US Mortgage Applications Hit 4-Month Low – CNBC.

 U.S. mortgage applications dropped last week to their lowest level in four months as home loans rates jumped, an industry group reported on Wednesday.

Property Tax

 The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes loans for home purchases and refinancings, fell 14.4 percent to 713.6 in the week ended Nov. 12, the lowest since the July 9 week.

 Borrowing costs on 30-year fixed-rate mortgages surged to a two-month high of 4.46 percent in the week, up from 4.28 percent in the previous period. The rate last month reached 4.21 percent, the lowest level in the survey, which has been conducted weekly since 1990.

 Market interest rates have risen despite the U.S. Federal Reserve’s pledge to keep them low with the purchase of $600 billion in U.S. Treasury securities. Treasury rates, which help guide mortgage rates, have jumped amid concern that the Fed’s effort would be its last, or even cut short if the economy shows more signs of life, economists said.

“Rates increased sharply last week due to stronger economic data and lingering uncertainty regarding the structure and impact of the Fed’s” program, known as quantitative easing, Michael Fratantoni, the MBA’s vice president of research and economics, said in a statement.



The MBA’s seasonally adjusted index of refinancing applications slumped 16.5 percent to 3,831.0. The seasonally adjusted purchase index slipped 5 percent to 179.2.

Copyright 2010 Thomson Reuters. Click for restrictions.

Coldwell Banker Ranks College Town Affordability

Originally Posted by Jim Gillespie on Blue Matter

Fall is for college football…at least that’s the way I see it. And as I’ve mentioned before, I’m an Illini through and through. I have to say, it killed me on Saturday when Michigan beat us in triple overtime. We are 5-4 and should be headed to a bowl game. But there is more to college football than just the scores and records. It’s the pageantry of the game, the bands, cheerleaders and crowds. The unbelievable traditions that make the sport what it is. But it is also about the towns. Those quintessential American communities that are home to some of the great learning institutions in our country.

Today, Coldwell Banker explores these great towns with the Coldwell Banker College Home Listing Report. We rank the affordability levels of the markets that are home to the 120 Football Bowl Subdivision schools. The most affordable market this year is Muncie, Indiana (Ball State University), and the most expensive is Palo Alto, California (Stanford University). Hopefully David Letterman will be happy to hear about how his Cardinals stand out. Check out the full listing to see how your school stacks up!

Why is this list important? I’ve said it before and I’ll say it again. Homes in college towns can be a strong investment for many people. Say you’re a parent whose child is in or starting school. Instead of paying for dorms or rentals with zero return, many “parent investors” purchase a home where their child (and potentially other friends) can live during their school years. They collect rent from roommates who hopefully respect each other and the “parent investor” and maintain the home’s upkeep.

Our survey showed that two-thirds of Coldwell Banker real estate professionals in college towns are seeing a significant number of these “parent investors” in their markets. Who else is buying in these areas? General investors (73 percent of respondents report this), alumni (51 percent report seeing them) retirees (49 percent reported this trend).

Do you live in a college town? What makes your area special? Our team interviewed dozens of fans for their thoughts in this fun video. What do you think? Do you have a powerhouse sports program? An amazing academic reputation? A restaurant or coffee shop that’s second to none? I love Billy Barooz in Champaign. Chime in with your comment!

Economic Issues and Residential Real Estate Business Trends

Housing Supply is Your Crystal Ball – CNBC

Housing Supply is Your Crystal Ball – CNBC.

By: Diana Olick
CNBC Real Estate ReporterI know I tread housing stats all day every day, but two particular numbers struck a nerve today.

A condo expert I was interviewing in Miami Beach told me that at the current sales pace there is an 18 year (yes, year) supply of condos on the market here.

As I was trying to digest that, the Census released its quarterly home owner/vacancy report, and noted that there are close to 19 million vacant homes in America today.

And that’s a quarterly improvement.

There will be plenty of election night discussions on CNBC and other outlets I’m sure, on how the outcome of elections will affect economic policy and trickle down to housing. Some will argue that a Republican surge will quash any hope of more government stimulus in housing, while others will argue it will give the banks more breathing room and help investors back into mortgage investment.

I don’t know what to believe today, when I look at the sheer numbers.


The gentleman I was interviewing here in Miami Beach is a real estate broker/consultant whom I met several years ago during the condo boom here in this same city.

I remember asking him then how it was possible that there was enough demand for so many new condos. Obviously there wasn’t, or perhaps there was enough demand, but just too much faulty leverage.

Today that has all changed here.

“The anticipation and the anxiety in the market today is the same as in the boom; the difference is today it’s cash, during the boom it was all leverage, but it’s the same mentality. People are not buying to consume, to live to contribute, they’re buying to make money,” says Peter Zalewski of Condo Vultures. “These individual investors, primarily foreign, are basically parking their money, and what’s interesting is as people get foreclosed, and there have been 250 thousand foreclosure filings down here, people are giving up their homes and moving into a similar type of lifestyle for reduced costs, so they’re keeping the rental rates higher than most people would have anticipated.”

Nine out of ten buyers here are foreign, many of them Venezuelan, looking to secure their money somewhere outside their country, due to financial turmoil at home. There are very few U.S. buyers because there is just no financing out there. Some cagey investors are actually buying with cash and then refinancing the cash out, because apparently the banks are more willing to refi than originate new purchase loans. But this is Miami Beach, which is not really America.

In the rest of the country millions and millions of homes are sitting empty, and household formation is near historic lows. The troubled U.S. economy isn’t all that enticing to immigrants anymore, so you’re losing even more demand there. The critical confidence needed to bring buyers back is nowhere to be found, even in some of the nation’s more healthy markets.

The foreclosure freezes may stem the tide of bank repossessions temporarily, but eventually more distressed properties will flood the housing market, pushing home prices lower yet again. Yes, it will be largely in the former boom states, but the headlines will spread their doom and their poison as they did before.

Paul Krugman warned in the New York Times this week that those of us yelling about that moral hazards of housing bailouts are just hurting ourselves. That’s because we, the ones doing the yelling, the ones paying our mortgages, are the ones most hurt by housing’s continued downfall in the long term. We may not lose our homes, but we lose everything else: We lose equity, job security, safe, clean neighborhoods and the ability to get credit.

I admit, I’ve been one of the moral yellers at times.

It infuriates me that others get a bailout, while I sit and pay.

I even tried to get my share, refinancing at these government-induced low rates, but some appraiser in Ohio overruled the local appraiser and dropped my home value by a ridiculously wrong amount (and trust me, I know my market). There’s your housing reform at work, costing me more money in the end.

So here we sit at the precipice of possibly a new force in government.

This as we have nothing less than the restructuring of our entire mortgage finance system (Fannie Mae and Freddie Mac) all warmed up on our plates.

No question, the coming year will be historic for housing’s future. I would just caution those who shape it to keep an eye on the numbers, always keeping in mind that there are homes, people, communities and jobs behind them. While the fixes may not be fair to some, they may just be the bitter pill we all need to swallow to build our wealth once again.

Change the Way People Find Real Estate

Change the Way People Find Real Estate
October 29, 2010Posted by david_marine in General Comments (1)

The picture below is from the 2010 Google Creative Canvas book. It’s a publication that Google puts out at the end of every year showcasing some of the most unique and innovative ways that partner brands and companies are using their products.

This year the Coldwell Banker YouTube channel, Coldwell Banker On Location was honored to be included. My favorite part is the title: Change the way people find real estate. While Google wrote it, that’s what we intended to do when we launched On Location last May.

We are pleased with the success we’ve had so far and the adoption of video by our network, but we’re not done yet. No sir, there’s more to be done and we’re excited about what the future holds not just for On Location but for the Coldwell Banker brand as a whole.

Enjoy this peek into the On Location feature in the Google Creative Canvas and if you haven’t explored our YouTube site yet, now’s a perfect time to take a look.