Here's recent history of the Fed’s policy committee and its Fed Funds rate. Next Fed decision is June 24/25.
Ailing O.C. builder gets half-billion-buck bailout
May 27th, 2008, 6:58 am · 87 Comments · posted by Jon Lansner/O.C. Register columnist
Standard Pacific of Irvine, the ailing builder, said this morning it found a financial savior in a complex deal that would apparently ease the company’s cash crunch. The magic potion is a complicated arrangement with investor MatlinPatterson that sees $530 million in fresh capital boosting Standard Pacific.
MatlinPatterson, founded by former Wall Street traders of distressed debt, invests in troubled companies. Among its well-known bets was aiding what’s now known as the MCI communications company out of bankruptcy. If nothing else, MatlinPatterson must see long-term value in homebuilding.
MatlinPatterson’s deal with Standard Pacific will need approval of the builder’s stockholders, who’ve seen their shares loses 90% of their value in the real estate downturn. Once the news came out, Standard Pacific’s stock soared. Traders bid up Standard Pacific’s bonds, too.
Standard Pacific got into a financial pickle by, among other things, losing $216 million in its first quarter after losing $767 million in 2007 and having its long-time CEO “retire.”
Says Vicki Bryan, analyst at bond tracker Gimme Credit: “A white knight has appeared with $530 million in the nick of time to save Standard Pacific, just like in the movies. That’s more than twice the market value of the company last week. It also is the first major cash infusion directly into a homebuilder in this, one of the worst housing recessions on record.”
That boost comes from MatlinPatterson, a form that describes itself as “a $9 billion global private equity franchise. Over a 14-year period, the firm and its investment professionals have successfully invested across a broad range of industries in over 25 countries and have led the restructuring of and made substantial investments in more than 65 companies.”
If you want the gory details of the deal, CLICK HERE! And a summary …
• MatlinPatterson will buy $381 million of a new preferred stock, equal to 125 million shares of common stock at $3.05 per share. That’s approximately 37% over the closing price of Standard Pacific’s common stock on Friday.
• Also, MatlinPatterson will exchange approximately $128.5 million of Standard Pacific’s debt for warrants to acquire preferred stock representing 89.4 million shares of common stock at $4.10 per share.
• After closing, Standard Pacific will sell $152.5 million more stock. MatlinPatterson has agreed to purchase any unsubscribed shares.
May 27th, 2008 at 7:09 am
They are going to need all that money if they want to stay in business after today’s S&P/Case-Shiller U.S. Home-Price Index
Home prices in the LA metro area are down 21.7% in just one year. Ouch!!!
May 27th, 2008 at 7:19 am
……..it must be a bottom: 16 year low for consumer confidence
http://money.cnn.com/2008/05/27/news/economy/consumer_confidence/index.htm?postversion=2008052710
it’s hard to believe………… it’s not like everything is twice as expensive, salaries basically the same, and jobs precarious…..
time to leverage up and let it ride !
May 27th, 2008 at 7:25 am
Yeah and it was less than expected and Wall Street met the news with a big Yawn. How about New Home Sales being up 3.3%? You know Bubbie you’re going to have to get used to the idea that the guys that control the markets just aren’t going to call you for your opinion.
May 27th, 2008 at 7:32 am
alfster,
up 3.3% from March LOL……… great news…. to bad that’s still near 16 year lows….. must be a bottom !
May 27th, 2008 at 7:38 am
Could be meat head. How do you know it isn’t and what will you do if it is?
May 27th, 2008 at 7:42 am
The tide has turned.
May 27th, 2008 at 7:45 am
For the worse.
May 27th, 2008 at 7:48 am
alftster, show me one bubble were fundamentals did not only return but prices actually went below fundaments……..
or do you still not admit that we have/had the worst housing bubble in American history?
…… let me know if you want me to teach you the fundamentals…. poser
May 27th, 2008 at 7:49 am
Surely this is an ominous sign.
May 27th, 2008 at 7:51 am
White knights for banks. White knights for builders. White knights for lenders. I am sensing a pattern.
May 27th, 2008 at 7:53 am
Hey Thoughtful:
Thanks for taking care of this blog over the long holiday weekend. I noticed that you kept posting on an hourly basis over the weekend.
Thank god there are a few people like you who have nothing better to do than to spend a holiday weekend posting comments on a blog.
The rest of us enjoyed the weekend with our families.
Thanks again.
May 27th, 2008 at 7:57 am
Prove it, liar.
May 27th, 2008 at 8:01 am
Market anomalies skew home-price data, providers agree
Market anomalies painting skewed picture, index producers acknowledge
Commonly cited measures of U.S. home prices are overstating the degree to which the vast majority of Americans’ home values have declined in the last year, producers of two of the most widely tracked indexes acknowledged this week.
Top officials with the National Association of Realtors and Standard & Poor’s, which issues the S&P/Case-Shiller Home Price Index, agreed this week their monthly reports are giving imprecise readings of price changes at all levels — national, state and regional — due to rare market conditions that are skewing survey results.
The NAR reported last week that U.S median home prices fell 7.7% in March from a year ago. The decline resulted largely from a market anomaly — a steep decline in costlier home sales due to tighter lending standards and high jumbo-mortgage rates, coupled with a foreclosure-driven spike in cheaper homes.
“If there are a lot more homes sold on the low end and fewer on the high end, the median price is bound to drop dramatically,” NAR Chief Economist Lawrence Yun said. “In normal times, a median price would reflect typical homeowner equity changes, but these are not normal times. The jumbo (mortgage) market is frozen and the buying activity is more concentrated in lower-value homes.”
The S&P/Case-Shiller index, which Tuesday posted a 12.7% decline for February, is skewed for two reasons of its own — it tracks just 20 major markets, many among the hardest hit, and its “repeat sales” survey by design pulls in individual homes both bought and sold in the last few years. Many of those are now being dumped by distressed homeowners and investors who bought at peak market prices and face higher mortgage-rate adjustments.
A widespread problem
The misleading home-value figures are just one example of recently sketchy readings of the U.S. economy. U.S. consumer-confidence readings, for instance, have been wildly divergent.
The Conference Board’s closely tracked index Tuesday showed confidence falling in April to its lowest since the eve of the U.S. invasion of Iraq in March 2003. A University of Michigan survey incorporated in the U.S. Index of Leading Economic Indicators last week rang in at its lowest level since November 1982 –when the country was suffering through 10.8% unemployment and the worst recession since the Great Depression.
That 26-year-low confidence mark grabbed headlines nationwide while the Conference Board number that many economists find equally reliable drew far less media attention. Not one journalist who contacted Conference Board Communications Director Frank Tortorici’s office Tuesday inquired why there was such an astounding discrepancy, he said.
NAR’s Yun said the financial media is seizing on gloomy numbers and providing little analysis or historical perspective. He freely admits NAR’s readings aren’t accurately reflecting what’s happening with home values for the overwhelming majority of Americans.
“Like any economic measure, it can be imprecise, and it is especially so now,” Yun said.
Grim reapers
As reported Tuesday, the S&P/Case-Shiller Home Price Index’s12.7% decline in February was the largest drop since its creation in 2001. Despite that index’s limited seven-year history, the Associated Press reported that home prices “plunged by a record” percentage and “at their fastest rate ever.”
The GLARING DISCREPANCY in this case is that 17 of the 20 metro areas posted record annual declines, and yet 78% of the 330 metropolitan regions that NAR tracks reported price increases in the latest period — and that despite the acknowledged downward bias in current price readings.
S&P Index Committee Chairman David Blitzer acknowledged his organization’s overall and metro-market readings paint an incomplete picture. For that reason, he said, the report now charts price changes in 17 of the markets at three specific levels - low-, mid- and high-priced homes — to provide a clearer assessment.
In the high-priced San Francisco area in February, for example, homes priced below $512,000 fell 32% in value from a year ago, while homes priced from $512,000 to $750,000 fell 21% in value and those over $750,000 fell 6%.
“The homes that had the biggest run-up and biggest run-down more often than not are the least-expensive homes,” said Blitzer, S&P’s managing director of portfolio services.
Yun said the S&P/Case-Shiller Index is flawed because “if you focus on down markets you’re going to get a downward price. We are disappointed that its very limited market coverage gets such attention.”
Conversely, Blitzer said the NAR figures are faulty because “it’s well understood that a median is subject to sharp swings in the sample. The only plus is that it’s easy to compile using inexpensive computing resources. If I had 88 years of data, I wouldn’t want to change (methodologies) either.”
In both cases, pockets of severe price declines in local markets are skewing figures, Yun said. If homeowners want to determine their property’s value, it’s never been more critical to take the measure of recent sales by home-price level in their town or city neighborhood.
“Just like saying the average nationwide temperature today is 57 degrees doesn’t tell you anything, the same is true for real estate prices,” Yun said. “The only way to tell what your own home is really worth is to look at local-market conditions, do Internet research and utilize professionals (such as licensed appraisers) to help determine the value of your home.”
May 27th, 2008 at 8:15 am
So jake just found out first hand what the crackheads meant by “purdy mouf”
Anyone else wanna find out? C’mon…who wants some??? I’m very giving, if you know what I mean.
May 27th, 2008 at 8:21 am
Mav you don’t know a funDUHmental from a fudgebar. You ignore all kinds of fundamentals except the ones you agree with.
May 27th, 2008 at 8:25 am
I’ll rock your world…make you forget all about the crap smelling foulness all around my condo. Come on…you know you wanna find out what all the crackhead hype is about.
If you need a testimonial, just ask jake and rants. They loved my naked Twister games and the round of Find the Furry Tomato.
May 27th, 2008 at 8:26 am
I know somebody who (as part of a larger syndicate) purchased 200 condos in OC for $0.28 on the dollar from their original new purchase price. These are brand new, never lived in, and not in either Santa Ana or that other OC slum Villiages of Columbus.
Twenty eight cents on the dollar for a brand new never lived in condo. Let that sink in for a minute. And consider what that means to the future values of your property
May 27th, 2008 at 8:35 am
Was that in Orange, where you live in someone else’s property?
May 27th, 2008 at 8:45 am
so alfster, let me get this straight….
you don’t think we will get back to the price to income ratios of the mid 90s
LMAO…. that’s a good one…..
May 27th, 2008 at 8:47 am
Nope. Somewhere between Irvine and Oceanside.
May 27th, 2008 at 8:51 am
Here are the good news. There are some signs of capitulation by sellers, which is great news for all of you out there who will be looking to buy a home a year or two from now.
Take a look at David Blitzer from S&P discussing today’s horrible numbers. He says we’re getting to 2002 home price levels.
May 27th, 2008 at 9:04 am
Capitulation is inevitable in a situation where most live in a property owned by another (The bank) and have obligated themselves to paying more than market valuation.
May 27th, 2008 at 9:07 am
That explains why so many sellers are flooding the MLS this year.
May 27th, 2008 at 9:10 am
Thoughtful give the banks some time……… they are new to this home ownership thing
be thoughtful, and give them some time to pay property tax and liquidate
May 27th, 2008 at 9:18 am
You Think about NoVas, they bought it because they know that they are going to be able to turn them for a huge profit. You guys are going to have to admit some day that these Global Fund Mangers and Private Equity guys are smarter than you are. And don’t give me the crap about “then why didn’t they see the bubble coming” . They did dipstick they quietly established long positions on the Case Shiller as a hedge but I guess they just didn’t tell you.
May 27th, 2008 at 9:19 am
You brought it up, so lets discuss my little house in ordinary workingclass no nosy neighbors Orange.
My landlord (both he and his wife formerly worked for two big busto OC mortgage companies) has absorbed the following costs.
Mine:
I spent $42,000 in rent over 24 months.
Price of home next door (sold the week before I moved in): 665K
Price of home on corner (sold 9/07, equivlent home): 500K
Price of home down the street (sold 2/08, nicer lot, nicer home): 415K
Price of home down the street + 2 doors (sold 3/8, REO, fresh pergenteel remodel, nicest in the neighborhood) $405K
Landlord took the capital risk and took my rent checks, so that nets him a loss of $210K over 24 months. That’s an equity burn of $8K a month.
You can live in your dillusional world all you want, Janet. Unlike you, I’ve sat on the other side of the desk at the bank (you know, the one you’ll be sitting at here soon) and done workouts and foreclosures. I have zero desire to sit on the other side of my old desk.
May 27th, 2008 at 9:26 am
Are you trying to stalk someone, s c u m b a g?
May 27th, 2008 at 9:32 am
Alfalfa,
I agree, but my buddy isn’t so sure. He was screwing around with apartments for the last decade and when they got hot, he dumped them to a REIT and 1031 the proceeds over to the syndicate becasue he didn’t want to pay the tax.
His cap rate is still below 3% (!) and he got them at 28 cents on the dollar.
He figures they’ll probablly go down another 25% (!) but his contention is if he takes this line (as opposed to cashing out) he has the oppourtunity for future capital appreciation plus the cash flow between now and then. If he hits the eject button and pays the tax, there is no potential upside.. Either way, he figures he’s going to get stuck for a quarter of it or so.
If you really want some alfalfa, I have 1450 tons of it for sale in the Fresno area at $250 a ton. It’s pretty good stuff and got bailed before that fluke storm late last week.
May 27th, 2008 at 9:33 am
No. Not anymore than you are going to shut down the IHB Pebbles.
May 27th, 2008 at 9:35 am
Funny, the average price per square foot in Orange in the past three months is $300. By your argument, that number used to be $900. Smells fishy, like your rent amount.
May 27th, 2008 at 9:39 am
You want copies of my canceled rent checks as proof Janet?
May 27th, 2008 at 9:39 am
Wow, it looks like the high end market is not that immune after all.
May 27th, 2008 at 9:42 am
Sounds like you are trying to stalk someone. Why is that? You seem very afraid of certain people here. If you are so confident in your world view, what is there to fear?
May 27th, 2008 at 9:43 am
The blog has taken on a putrid stench these past few days.
May 27th, 2008 at 9:44 am
Better go back to the vaseline.
May 27th, 2008 at 9:47 am
I don’t live here, but this is less than 1/4 mile from my house.
http://www.irvinehousingblog.com/forums/viewthread/2264/
May 27th, 2008 at 9:48 am
If you used the same name on a consistant basis I wouldn’t be forced to keep a scorecard, ROC.
May 27th, 2008 at 9:51 am
If you are still speaking to me, blow it out your ear. YOU are not the boss of me.
May 27th, 2008 at 9:54 am
Not to be on-topic or anything, but for what it’s worth, I do really like a lot of the design elements of Standard Pacific homes, much more so than the other cookie cutter builder homes I’ve seen. If I had an independent investment company, and I had the opportunity to scoop up a large share in this company at a huge discount (and have enough control to ensure they bunker down until the market starts rising again), I’d probably invest in them too. The industry is terrible right now, but it might be a worthwhile gamble if they can survive another couple years until after the massive bailout.
May 27th, 2008 at 10:01 am
The dumbest thing I have read in months…
How about New Home Sales being up 3.3%?
LOL, yeah… and they were down 42% YOY. Nevermind the 11.7% + or - margin of error, and with the lowered revisions being - month after month. Or, the fact that these are contract and builders are still seeing 30% cancellation rates. Or, the fact that there is still 10.6 months of inventory, the highest level since 1981.
Would someone please teach the desperate bulls that it is the year over year numbers that matter, not the month over month numbers. This blog has gone down hill, the level of stupid coming from the bulls is delusional.
May 27th, 2008 at 10:15 am
Housing prices have another 30% to fall before real estate agents and mortgage brokers can get back to work. Until then we will have to see their foolish postings on this blog…………..
The funniest thing is how the real estate pushers try to talk up the market and make something happen. Turns out people with money, that want homes for the most part are not buying. We are at historic lows in sales volume and prices are falling.
May 27th, 2008 at 10:17 am
The half-billion dollars in this story says otherwise.
May 27th, 2008 at 10:47 am
Thoughtful Says:
May 27th, 2008 at 7:51 am
White knights for banks. White knights for builders. White knights for lenders. I am sensing a pattern
THE ONLY WHITE KNIGHTS U SHOULD SEE IS THE ONE WITH A COVER OVER UR HEAD AND PUT BACK TO SLEEP.
A MAJOR HOMEBUILDER NEEDS A HALF BILLION DOLLARS AND U SEE THIS AS GOOD
DESPERATE TIMES MEAN DESPERATE MEASURE AND THATS ALL THIS SAYS..
ITS LIKE PIGS RUNNING UP A MUD SLIDE THEY NEVER DO GET BACK TO THE TOP…..LOLLLLLU
May 27th, 2008 at 10:51 am
Graphix, nobody here really cares what you think of them and quit pretending to be Poggi
May 27th, 2008 at 10:54 am
“If you are still speaking to me, blow it out your ear. YOU are not the boss of me.”
That’s not very Thoughful, thoughful. I was being nice, honest, and factual, and you’re being a big meanie in return. I’d suggust a time out, but after your antics of the past weekend, that’s probablly not going to do.
In any case, you seem to have anger managment issues. Therapy maybe?
http://www.orangecountycounseling.com/
These are good people. Seek help girl.
http://www.orangecountycounseling.com/
May 27th, 2008 at 10:57 am
Right. You are an angry stalker who can’t take a challenge. Period.
May 27th, 2008 at 10:59 am
Interesting, how according to you, you are stalking a woman.
May 27th, 2008 at 11:02 am
Wow, some great comments on this thread. And such a coincidence too. Turns out that my condo is now worth exactly 28 cents for every dollar I paid for it too! But mine comes with free driveby shootings and horrible weather.
May 27th, 2008 at 11:05 am
THOUGHTFUL
IS NOT A REAL PERSON HE/SHE/IT IS A BOT!!!!
THIS IS A PAID GOOFBALL BY THE WIZARD OF BLOGGING TO KEEP HIS BLOG GOING AND TO GET YOU PEOPLE ALL EXCITED THAT THERE REALLY IS THAT DUMB OF PEOPLE OUT THERE.
SO RELAX IT(THOUGHTFUL) IS A INTERACTIVE GOOF BALL.
DONT FALL FOR THE WIZARD OF BLOGGING LANSNERS TRICKS
ASK HIM TO COME OUT FROM BEHIND THE CURTAIN
OLE WIZARD OF BLOGGING
May 27th, 2008 at 12:00 pm
depakote 750 mg qd
May 27th, 2008 at 12:02 pm
Thoughtful,
Can’t you just come clean and tell everyone how much housing debt you’re in?
Maybe then they can understand why you’re always on here.
May 27th, 2008 at 12:06 pm
What I am in is a big, beautiful, comfortable home that I enjoy immensely and will leave to my heirs.
May 27th, 2008 at 12:11 pm
to be nice
i will tell the bank to dress up like a couple bratty trust fund kids when they come to take the keys……
you crazy girl ! get help
May 27th, 2008 at 12:14 pm
It is really sad to see so many personal attacks on a daily basis here. I would say that 95% come from people just like Bill. Face it: it hasn’t worked and it will not work. This is a free forum. I suggest you check your bad attitudes, they do NOTHING for your case.
May 27th, 2008 at 12:18 pm
can heirs inherit a neg-am loan?
May 27th, 2008 at 12:29 pm
“U.S. home prices dropped at the sharpest rate in two decades during the first quarter”
http://hosted.ap.org/dynamic/stories/H/HOME_PRICES?SITE=PAPIT&SECTION=BUSINESS&TEMPLATE=DEFAULT
When will you wake up to the fact that our economy is tanking and that housing started it and will be dead for years to come with falling prices probably overshooting 2001 value levels.
I almost feel sorry for people like you that have no clue as to what’s in store for you.
Turn in the keys in and start clean, or continue paying until your debt becomes so unmanageable you end up with years of high payments with nothing to show for it.
Negative equity for life is what you’ll end up with.
May 27th, 2008 at 12:31 pm
Bitter Pill Bill
May 27th, 2008 at 12:33 pm
http://www.latimes.com/business/la-fi-homes28-2008may28,0,2372957.story
May 27th, 2008 at 12:36 pm
“Nothing to show for it”.
That’s right, Orange County real estate is worth nothing. Just like you
May 27th, 2008 at 12:40 pm
Their still dropping like a rock!
May 27th, 2008 at 12:43 pm
Funny how you were making fun of a minor typo I made two weeks back, when you are functionally illiterate.
May 27th, 2008 at 12:47 pm
I continue to be amused that the upward effect of skyrocketing foreclosure and short sales on overall sales numbers is being viewed as a positive by certain pumpers. Distressed sales are now nearly 50% of the OC housing market per Steve Thomas; non-distressed sales continue