Weekend Topic Suggestions
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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President of Ford is delivering some seriously bad news as I post this…..What cities are the ford plants located ??? What impact on those cities when they close ??? Similar to the Steel closing back in the 80’s ???
Does this mean the economy is going into a recession? Naw — the economy is on a sound and prosperous basis. And as long as the economy is so strong, go out and buy yourself a McMansion…
———————————————————————————————–
Ford plans to offer buyouts to remaining hourly workers
By Tom Krisher
ASSOCIATED PRESS
2:51 p.m. September 14, 2006
DETROIT – Ford Motor Co. will offer buyout and early retirement plans to its all of its hourly U.S. employees – more than 75,000 of them – as part of a broad restructuring plan aimed at cutting its costs in light of slumping sales.
Ford had about 82,000 workers represented by the United Auto Workers at the end of last year, but about 6,500 have taken previous buyout and early retirement offers made mainly at plants slated for closure, company spokeswoman Marcey Evans said Thursday.
http://www.signonsandiego.com/news/business/20060914-1451-fordcuts.html
They offer buyouts to all and expect that maybe 1/3 will accept. They can’t cut all their employees.
If they don’t start building cars people want they will be cutting all jobs.
GS, thought you might be interested in the following (which you may have already seen):
http://tinyurl.com/fk43t
It’s the “How a downturn in dealers’ new car sales predicts a recession” analysis. Pretty convincing.
Wow - five out of five recessions correctly predicted by the same indicator! That must be even better than the yield-curve-inversion indicator (which is also currently signalling recession). But I guess this time (the sixth) is different, judging from the great recent performance of the stock market.
Yes, this time is different. Party on, Wall Street. Party on, Garth.
Thanks for the article. Although my timing has been imperfect in the past, I looked at my S&P500 fund (part of my IRA) near multi year highs and decided to sell half and plop it in a money market yeilding 5.12%. I would feel like a dumbass telling everyone about how we are going to have a severe recession because of the housing bust while having a retirement account with a large stock allocation. I hope my timing is decent, but given my past luck next week will probably be a 3% gain.
Many of the plants are in Michigan, near Detroit. Michigan’s economy has been suffering for the past 5 years due to the demise of the auto industry. This will only make it worse. Auto suppliers have also cut drastically and many restaurants and small businesses have gone out of business. This is just the beginning.
According to my inside sources at Ford, 30% of the white collar jobs will be cut too.
“The nation’s second biggest automaker said Friday it would shutter a stamping plant in Maumee, Ohio, in 2008 and its Essex engine plant in Windsor, Ontario, in 2007.
It will also close an assembly plant in Norfolk, Va., in 2007, a year earlier than previously announced and will cut a shift in January. An assembly plant in St. Paul, Minn., which is scheduled to close in 2008, also will have a shift reduction in 2007.”
OT here but if anyone locates a David Leareah Costume mask please post details as I’m trying to get a jump on my costume this year. BTW, would I wear a tux with that or a prison outfit?
I suggest the DL mask with a Mr. Housing Bubble t-shirt to compliment it.
But of course! Thanks for the tip.
What do you guys think will happen to TLC shows like “Flip that House” and “Property Ladder” in the next couple of years? Will they show people losing their shirts on flips gone bad or will they just cancel the shows now that the mania is over?
I’m sure there is a huge time lag based on filming and production as flippers in the show are still having great success. The show might get even higher ratings once they start showing flippers after the bubble has burst because people always seem to like looking at car wrecks.
N. VA,
Went to a media conference one time and learned that HGTV and one other network (I can’t remember) were created by a media company b/c there were sooooo many home related advertisers and not enough networks to support them.
The shows could still be interesting from a human stress and misery point of view. The network will have to scramble for new advertisers though.
Are you thinking a new network….FBTV….
That would probably start looking like just one long episode of “Cops”.
“And here in the basement, we’ve added a methlab to help with the mortgage.”
In the Sarasota Herald Tribune, there was an article stating Mark Hughes(local realtor who made a killing during the boom), will be hosting a mini series for HGTV or one of those home networks called Open House.
This should be interesting, as only 4% of listed homes are selling in the area.
On another note, I caught the tail end of one of those shows. The one where the expert helps them flip the house. The flippers (broken english) decided to rent the place out because they couldn’t make the next mortgage payment. The expert referred to the “softening of the market.
They will be cancelled and replayed in 30 years on CNBC as a sign of “folly times in the past”.
APPEND:
much like the dust bowl shows and soup kitchen lines of 1929
I don’t really care what happens to the shows but I hope that chic Kirstin from Property Ladder stays on TV. She’s a dish!
Implications of the (announced this week and seriously under-reported) record US monthly Trade Deficit in July.
(And what sort of number are we likely to see for the Q2 Current Account Deficit which comes out later this month?)
Oh boy, oh boy! I’m not usually much of one for Schadenfreude, but I’ll make an exception here for a HELOC maniac about to go bust!
There’s a house that drive by occasionally in the far reaches of the DC suburbs, in a nice rural area dotted with faux-colonials and split rail fences. One of the houses was bought a couple of years ago by some maniac who decided to add on every “enhancement” he could think of:
An in-ground pool, Greek statues around it (!), pompous and oversized columns at the front drive, and a (poorly made) deck semi-enclosure reminiscent of Big Fat Greek Wedding. He also put a tacky, way-out-of-place plastic white privacy fence all around his back yard, and it’s a major eyesore as you drive through the basically green and tan countryside. I’ve hated that thing ever since he started.
But now a For-Sale sign has appeared! Oh my! But no listed price on his brochure, which happens to show photos of the inside, very over-furnished and if not tacky, well… everyone to his own taste.
Turns out he wants over $700k in a place where all his neighbors houses are (er, were last year) worth $500k! Might there be a problem getting that? Methinks so!
Yet he NEEDS to sell for that much to avoid bringing money to the closing table! A quick check of mortgage docs shows that this couple have been serial refinancers over the last couple of years. A few months go by, and they get a home equity loan. A few more months, and they roll it all up with a cash-out refi! Then shortly after comes a HELOC, and another refi! Aiiiiee!
They just finished their last refi, getting rid of an ARM at 6.75% that goes way up next January. Dunno what they pay now, but they borrowed $645k. Remember, typical house in their neighborhood might fetch $500k. What about their improvements? No accounting for taste, but on most of them, I’d have to consider the $10k’s it would cost a buyer to remove them!
I think these people will be feeling some intense depression as the buyers don’t show up to even look at this overpriced POS, and the financial pain will mount and mount. I hope the mortgage company likes fake Greek statues!
Such a description of this beautiful SFH lot demands a photo!
One photos can hardly show the tackiness of it, especially how out of place it is with the neighborhood. His agent is not completely stupid and positioned the camera to avoid the worst of it for the brochure. Front looks like a typical house, back that gaudily faces a main road (and statues expecially) was not even displayed! The print brochure, interestingly, show’s “squashed” photos of a bathroom, I guess a sad attempt to make the room look wider, but also making the toilet flat and funky like a UFO.
If I can get a photo of the place from the farm across the road, with the For Sale sign in the shot and the statues visible, maybe I’ll send it in to Ben.
Me thinks this is an appraisal situation for him to receive those refi’s and HELOC’s
Borrowed $645K?! I cannot even fathom this.
How do you check mortgage docs? It would be interesting to see if the houses we’re watching are heloc’d. Would also help us to take them off our list if they are too deep in debt.
Almost always public record if you have a bit of time at the courthouse, which is maybe how the junk mailers find that info when they send you offers. (I used to do some basic title search work for my dad many years ago, just a teenager walking in and perusing everyone’s recorded mortgage docs!) Depending on the state/county, you might even find places that post them online.
Sifting through the docs on a given property can get messy when you have lots of overlapping loans, though. You need to select out which ones are still active and which liens are cancelled. Not hard, just tedious in the case of serial refinancers.
The thing about a HELOC, though, is that you don’t know how much they’ve actually borrowed. The docs can say $50k, but they might have borrowed nothing. Likewise, you can’t tell how much someone has paid down their existing mortgage, though you can guess. However, in a case where you see them refinancing the sum total of the original mortgage, plus a home equity loan, plus a HELOC all into one single refi mortgage, you can be pretty sure they tapped out the HELOC.
I know that house. Within a 1/2 mile of it there seems like a lot of big spec built houses are finishing up. A lot of knock down and fill it in with a MCMansion in that area.
This amount of financial “churning” and gross bad taste makes me suspect fraud or criminal activity of some kind. I wouldn’t be surprised if these ‘buyers’ are into several kinds of nasty activity (ID theft, consumer fraud, etc.) simply disappear in the next few months, leaving the lenders holding the bag.
Obviously, that’s just my guesswork, but this whole thing raises a red flag for me. And the far-out Va. suburbs are a great place for this, with all of the tacky new money floating around.
The article this last week about the appraiser who saw his first bidding war in New York provides a possible topic; when did you first observe a bidding war in this cycle? Please describe the details.
Late 2001/early 2002. At first, was offering 100% of asking price on the urging of my realtor. Then was offering slightly above asking price based on the bidding wars. Probably made offers on about 4-5 places. Lost every single one - oftentimes, allegedly to buyers with cash.
In Cupertino California (Highly rated Schools with strong Asian demand) I wittnessed a transaction that had 28 offers….I heard stories of transactions with offers in the 30’s….Thats all gone now….
Be sure and include the date.
In Sept 2001, there were people sleeping in the cars outside of new home developments in Orange County to get on the waiting list. California burped the bubble and blew it all over the world.
San Diego in the North Park part of town. Second week of May, 2001. We bid full price –stretching then — but supposedly there were three other bidders so we moved on. We also participated in one of those auction-by-owner sell-your-home in 5 days things that week. The guy put an ad in the paper for a low price and supposedly had 45 people bidding on the place. We did not win. The next week we put in an offer on a really ugly house that had been listed for about 2 hours and got that one.
I believe the bid wars were already bubbling up through the SF Bay area market back in the late 1990s — definitely seemed to be a feature of the dot com era at the time. Someone should check on Lexus Nexus for articles which mention “bid wars” or “bidding wars.”
What do the bloggers here think of a topic like this:
Accountability: How do we ensure it in the housing bubble’s bursting?
Civil lawsuits?
Criminal lawsuits?
Tarring & feathering or other community direct action?
Those are the only ones that I can come up with, what are some other ideas.
When I say accountability, there could be different levels.
Garden variety FB
Flipper with 20 homes
Public figures in the REIC
Garden Variety RE agents & brokers
Scuzzy mortgage brokers
How will the responsible end of the community ensure that the deserving shame follows these people and the endure the consequences of their prior actions?
Good topic. Tough answers. I’ve been very vocal about my stance - no lawsuits / personal accountability. Unfortunately, that means the scuzzy mortgage / appraisal folk are spared. However, their payback should be job loss (and for many, it will be - even the ethical ones if they exist).
Look, the information is out there to buyers / owners. If people are gullible enough to believe their homes will never drop in value or that their interest-only mortgage will still be affordable upon reset, etc. then they are going in with blinders on. They are listening ONLY to the cheerleaders. They are hearing only what they want to hear. But at the end of the day, they are the ones who made the ultimate decision to buy / refi / use a toxic loan / whatever. This is the single largest purchase most people will make in their lives. To go into it half educated is just stupid. But no one’s fault but your own.
I feel sorry for people who lose their jobs and then lose their homes because of it. But maybe they need to work 2-3 lower paying jobs temporarily to make ends meet. People lose jobs every day and survive. Myself included a few years back.
I feel sorry for those on fixed incomes who see their tax bill overbloated due to this ridiculous housing mania. But at some point, taxes will go up! You can’t expect to retire and be on the exact same budget until they put you in your grave.
I do not feel sorry for anyone who put all their financial planning / goals / dreams into their house. That’s not what a house is for. If you rode the tide successfully over the past 5 years, congratulations. If you didn’t, time to go to plan B. But that plan shouldn’t be to hold someone else accountable.
I think that people who bought a home and lived in it for at least 2 years should be able to avoid paying income tax on the amount the bank loses because they would not have had to pay tax if the house value went up and they sold it at a profit, but the people who bought the house as an investment and not to live in should have to pay the taxes.
Explain to me, though, why someone would buy a house to live in for only 2 years? Not including a sudden job transfer, what’s the point?
Well, I am referring to people who bought a house intending to live in it for a longer time who have to sell or end up in foreclosure, not people who planned to live in it only 2 years.
Have you been watching this boom at all? The old common sense about 5-7+ years to make it worth it is gone. I live in a semi-bubbly area (50% in 5 years) and think this is all too common. I know one example first hand. Single guy, friend of mine, bought at $125k house on a $30k salary. Plans to stay there only two years. I asked him why he bought, and he said “I think housing is a good investment” and “I’m tired of throwing away money on rent.” Now he’s complaining about how expensive it is while I rent dirt cheap. Never underestimate the psychological power of expected appreciation. The way things have been going, he expects to sell for $150k easy in two years.
I realize that’s what people have been thinking. I just find it silly. It’s such a hassle to move. But during the best boom years, yeah I guess it’d have been worth it to pocket 6 figures.
I wonder how many people did buy only with the intent of staying only a couple of years and making a windfall. I, personally, know not one person who has thought like this.
One can have the expectation of appreciation without being greedy and waiting for a “windfall.”
I think the decision to buy is a combination of things. Especially in a place that’s not totally mania-driven. Young people hear about “building equity”, buying as a sound financial plan long term, being able to do whatever you want with the place, and so on. My friend had a lot of these things in mind. Not to mention that buying shows “responsiblity” and it’s just what people do when they are able. He didn’t buy solely as speculation. But that expectation of appreciation really drove him to conclude that it was a no-brainer next to renting. Likely he will have a situation change soon (being married, moving, etc.), but because he was sure of great appreciation, he bought even though he may only stay there two years.
What if the place is worth $95,000 then? Could be a problem, especially since he was cash-poor enough that he got a down payment grant and brought nothing to the table.
I know of a family in So Cal where the mother and father (older, retired) would move to a place for 2 years for tax purposes then sell and buy another place.
Their kids w/spouses all pooled their money so they could continue to buy up and would split the profit on sales. They were making some good money for a while but I don’t know if they quit before the music stopped.
San Diego city finances. Has the city moved past its past problems with a pension scandal and misappropriation of utility fees to cover other expenses? Or does it matter, provided a deal can be struck between big boys on Wall Street and govt officials which will allow the bond money pump to start up again?
http://www.signonsandiego.com/news/metro/pension/20060915-9999-7m15sec.html
I wonder which community will be the first to bull doze empty houses as they did in Houston in the 80’s? AZ is a good candidate with the remote subdivisions containing homes that are going to be unwanted post-bubble. How can you expect people to move far from jobs to live in relatively undesirable areas? If they aren’t bull dozed, then what will be done to utilize them?
I’ve been thinking the same thing. Many of these empty neighborhoods were built so fast that the quality is inferior. I think people are fooling themselves that they will be absorbed eventually. Personally, I’d rather build a new home now where the builder can be watched by an inspector and they don’t need to throw it together. Nobody is going to want a house that was thrown together for someone who took no interest in the quality as they never intended to live it. It was a builders dream come true!
My fear is that they become low income housing! I’d rather see them bulldoze neighborhoods than that happen! But what happens to the people who really bought the homes to live in and can’t sell their homes???
yeah, I can imagine (I’m not being facetious) bulldozers tearing down some of those unbought new $900,000 gated community homes on the fringes of Queen Creek.
My husbands’ business partner is trying to get him to move a part of their operations to Adlanto (sp?) out in the high desert of CA. Apparently the space is across the street from a dog track. It won’t be happening.
There are 300k 3,000 sqft homes there, but it’s still meth lab central. Seriously, it’s halfway between Vegas and LA. I’d much rather live in Vegas. I could see these getting torn down or maybe turned into minimum security prison neighborhoods. Ooh! It’d be a good place to stick all the sex offenders, there’s already plenty who live there…
This town and many others in the high desert don’t have a chance.
Good topic . “What are we going to do with the ghost towns “.
Maybe something constructive can be done with them .
U.S. Inflation Measure May Be Rotten at the Core
http://immobilienblasen.blogspot.com/
Talked about often, just a relevant re-post;
http://www.shadowstats.com/cgi-bin/sgs/
Could a substantial piece of the run up in housing prices since 2001 be the work of the “invisible hand” capturing under reported inflation?
Is the deflation of the housing bubble already going so fast that it will be a major issue in upcoming elections?
That would be a GREAT topic, how the housing bubble could impact the upcoming elections. For example, here in Florida, we have a serious problem with taxes and insurance (yeah, I know some of you have no sympathy for this, but the issue here is not whether Florida should have higher taxes and insurance, but whether the population can sustain the economic impact and if this will affect the elections). Just this week there have been a series of local news stories about Floridians up in arms about their taxes and also the insurance hikes. The television stations show clips of angry homeowners at local city/county commission meetings. Just to add insult to injury, last night, the news was about yet ANOTHER insurance increase by Citizens Insurance, which will also cause increases in the insurance bill to those lucky enough to have insurance with another carrier. One news story I saw focused on those who had left or were trying to leave the state because of the taxes and insurance. Meanwhile, we’ve got two really milktoast gubernatorial candidates, one of whom is making very mild noises about doing something about taxes and insurance. There is also an idependent candidate, perhaps he has a plan he hasn’t unveiled yet, but I doubt it.
What’s this in the news today about Tampa lowering property taxes due to a revolt?
It’s already been mentioned as an issue in several news accounts of races that I’ve seen. And the fact that Congress just held that hearing indicates that they see it on their radar screen, which probably indicates that it came up in their polling data.
However, I think that the issue is still too amorphous and limited to have a dramatic, nationwide impact. 2008 could be a different story, however, if things go off the cliff next year.
I’ve thrown that one out a couple of times. The only thing is to avoid discussion of whose “fault” the whole thing is. That’s too facile. More interesting to figure out how the various issues will play (bankruptcy laws, etc.) There are democrats that will get tarred with that brush as well (Hillary). I think they’re already laying the groundwork for her to bow out gracefully.
I think a topic for discussion is how fragile these people are with just a little [in my view] change in the re-set of there ARMs… EXP. I have read a lot of story’s about Mr and Mrs X about to loss there home on a reset, THE BIG surprise is they were paying $900 per month and now they have to pay $1200 per month.
This $200- $300 increase that is enough to send these people to foreclose or BK is shocking to me. No savings in this country is a bigger story.
We have friends who will be listing their house at the end of this week because their payments went up $100 two months in a row. I guess their payments change each month. This is an increase of more than 20% in the payments. However, we are still not experiencing a drop in price in that price range - the lowest for a 3 bed around here- and I expect that they will come out with 50K free and clear as they go back to renting in a larger apartment for $200 less per month than their house payments. For them 50K is a huge windfall that they would never have been able to save if they had continued renting instead of buying in 2003, but they are only reaping that windfall because they are smart enough to sell now and not trying to hang on to the house.
If a person is that close to being able to afford the payment maybe they should get a extra job ,or rent out a room . Seems a shame to lose a house over 100 or 200 bucks a month . Also it shows that the lenders could of cared less how marginal the borrowers were .
There are certain jobs that just don’t get alot of pay increases,so what were lenders doing putting those people on a adjustable . What about a retired person on a fixed income ,not the right person for a adjustable unless they qualify at the highest rate it could go to .
Here’s a topic: Realtors as Our Friends?
Think about it. Once the housing market really craters it’s going to flush out most of the bad and mediocre realtors (the vast majority). The remnants will have a simple choice: make deals or starve. They’ll be lean and hungry. They also won’t have time to waste on sellers who cling to their “I’m not giving it away” high-price fantasies.
If a potential buyer comes along with lots of cash, a credit score in the 800s, and no debt (renting, obviously), they’ll latch onto him or her like a Remora fish, and go that extra mile (not in the Suzanne-on-her-street corner sense) to close a deal.
Comments, anyone?
I think it depends on the antitrust law suits against the NAR, IMHO real estate agents are the most overpaid job in America. I have acquaintances that have tried to buy thru ZipRealty and the selling Realtor(tm) would not show. I know another Realtor(tm) that when I asked her said, she would not show any house to her buyer unless it had 6% commission. This is in an area of $3million to $15million houses. I believe this collusion between Realtors(tm) will collapse after the congressional hearings on this bubble burst. In the meantime the NAR is aggressively fighting to maintain its position which is to make the most amount of money for its members and screw the customers.
Good topic , how will the real estate correction alter the real estate industry ?
Definitely like this topic.
I find it amazing that real estate brokers have been able to maintain their commission structure for so long. You can look at a typical HUD form from 1981, 1991, and 2001; in real dollars, most closing costs have gone down (e.g. title search). One constant — 5-6% commission.
BTW, I will take the contrarian position and state that I don’t see the traditional brokerage firm disappearing or even radically changing over the next five years. Individual brokers getting flushed out, yes; firms, no.
I need T-Shirt suggestions.
—————————–
Housing Checklist:
[x] Bucket of Money
[x] Box of Stupid
[x] 6% for Realtor
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A House is a Home with a HELOC
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Ask Me About My Equity
—————————–
PITI Me, I Bought in ‘05
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Broke is the New Paradigm
—————————–
My House Has Achieved A
Permanently High Payment
—————————–
McMansion
McJob
McScrewed
—————————–
My ARM is Bigger than Yours
… and It’s Still GROWING!
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Who-hoo Roberto’s back!
Don’t feed the squirells. (Front)
Feed me (back)
How about: My dad owns more defaulting homes than your dad
Sell now or be priced in forever.
I vote for TxChick’s:
Broke is the new black.
How bout the Mastercard theme:
At the end state:
“Watching a FB’s face when he realizes he’s made the biggest financial mistake of his life …. PRICELESS!”
Renting (Front)
Biggest no brainer in the history of mankind! (back)
( for those who missed, so goes the radio commerical in SO.CAL for a Zero down Zero cost everything toxic loan/ mortage)
Is that Lenox Financial? That idiot is on the radio here in Chicago too.
Can not recall now..stopped listening to that station!
“Ask Me About My Equity” “PITI Me, I Bought in ‘05″
Those two are definitely my favorite. How about a picture of David Lereah with “Wanted: Dead or Alive” written under it?
RealEstate Inferno…burn baby burn
“Loose money now, ask me how” underneath the realtor symbol.
Caution: Falling knives ahead!
—————————
Shanna, they bought their tickets, they knew what they were getting into. I say, let ‘em crash.
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Warning: ARMed and dangerous
P.S. Glad to see you back, Robert.
A question I’ve had for some time is this… will Joe Public:
* Who bought a house for $500,000, with $0 (or negligable) down ARM
* Now finds finds himself underwater to the tune of $100,000 with a increasing payment.
has two choices:
1) Live poor, probably very poor, for many years paying more for something he could buy back for less.
2) Walk. Jingle-mail. Now his credit is ruined for 7 years.
Joe will walk, and although I am a moral person (or however you classify this), I’d walk to. Here’s my logic, I walk now and I can live good, not poor. After 7 years I’ll actually have a downpayment and can start over. The two choices/paths probably meet up in 7 years, except #1 means hard, poor, living, while #2 is no real pain.
(A subtopic is would those with non-recourse loans - helocs, refies? - would they walk to? How have the BK laws limited them?)
And the credit is not really “ruined” for 7 years. After one year, the chargeoff has less effect and as time goes by, even less. It’s not that bad and without access to credit, Joe might actually learn to live within his means. It could be a good thing!
This kind of discussion makes me worry that those who think they have been prudent in recent years by not drinking the I/O ARM koolaide will feel like there would have been nothing to lose by following the herd. When Joe and friends walk, who is left holding the bag?
The retirement funds , you local bank , the government , a increase in taxes for a bail out . Good topic to discuss who should be holding the bag .
All I know is I don’t want to pay in any form for what a flipper or some greedy borrower or lender did .Good topic , “who should pay “. I know we have discussed it before but its going to be a major issue . Also maybe we can have a topic on the best constructive ways the correction needed could take place .
Do folks even realize how much a trillion dollars is? Who is going to pay? We’ve just been banking on the the fact that deficits don’t matter. Brilliant logic.
Let’s take our national debt of roughly 8.5 trillion. Divide that by half of our approximate population (an extremely conservative estimate of people actually producing things). That comes out to roughly 60k. I’d say that of that extremely conservative figure of 150 million people producing things, the actual percentage of people who even make 60k a year is very small. Back to the question of who is going to pay. It should be pretty obvious we, as a country, should have been asking this question 30 years ago when we went to a fiat currency with fractional reserve lending.
The only way it wouldn’t end badly is if the bankers holding the strings were the most honest and trustworthy people none to man. How are we doing so far?
How long can a house remain empty until it is unsellable? If no one lives in these newly constructed homes will buyers eventually just never want them? Will it be a year, two years?
Will new homes be different than used homes?
Vacant homes will quickly become targets for copper thieves. There was a newspaper article here about how thieves are taking A/C condenser coils (the outside unit) from houses, in some cases while the owners were home. The evaporator coil inside the house is just as valuable, and the copper water pipes would also be targeted for removal from vacant homes.
What else is valuable and easily removable? The kitchen fridge and dishwasher, I suppose. Most other things are too difficult to remove without damaging them, and wouldn’t fetch that much from a fence.
Then there’s the problem with mold build-up if the A/C isn’t kept on during the hot summer months. How many lien holders keep the utilities on?
The thieves should know better, last I heard the most expensive item was the $15000 granite countertop!
Nobody needs one ? Ooops.
The scam here in Chicago is this. Steal the oven door from all all the nearly completed condos and repackage them in empty flat screen TV boxes. Sell them on the street to dumb two & thirty somethings we “NEED” a flat screen for the new condo they just over paid for.
We will see these uninhabited homes become residences for squatters, transients, and undesirables. The yards will go to hell and in the north, there is a distinct possibility of flooding when water pipes freeze in the winter. In the south, mold will take over due to lack of ventilation. These houses will fall into a state of disrepair and be sold for pennies on the dollar in 5-6 years.
I expect to soon read articles about the large number of vacant Central Valley McMansions converted into meth labs.
i would like to see a weekend topic re: what would be the best way for this housing bubble to resolve… best for the economy and the regular people of this country (and others) who will eventually pay in one way or another for this crazy run-up. i also would like to hear more from the bright folks here about how the next 20 years could be approached as far as dwindling energy reserves start to take effect - in regards to housing.
i feel like the last 6 years have been so depressing as far as the future goes. i would like to see some great ideas for the next generation. we may have an opportunity to change things for the better with this selfish bubble business finally ending.
I think some trends you are going to see in the future are,
1. More homes built or re-mod to have the family stay longer in one home, our kids are not going to be able to support a home, and with this down turn the education on this will be easy to point to…. also your parents in there old age [this would be me soon] will not be able to afford a free standing home with all the fees etc. and again will make it better [cheaper] for family to stay together. This will be somewhat forced because the banks in coming years will go back to old lending standards.
2. Fuel prices go up, think the airlines are going to be hit big time, days of going from CA to east coast for some weekend bingo party for $300 will be gone. I think in 20 years train travel will get bigger. best cost per ton per mile there is.
3. Homes will have to be built or re-tooled to have more than one energy system, what I mean is your lighting will have to be split into 110 service and a battery service to help when rolling black outs happen.
Minimum hourly Wage in California rises to $8.00 per Hour.
Pretty soon the hourly wage will increase to $7.50 and in 2008 it is $8.0
In his relection bid Gov. Arnie signed this into LAW.
What will be the effect of it for the CAL housing market and national market.
(Considering the price increase in california has been one of the biggest mover of prices everywhere else. As existing owners borrowed against their existing equity to buy elsewhere.)
Now this Hourly wage increase, will it lead to salary rise across the board and thus leave people with more money. Will it have a counter effect to increasing ARM mortgage payment, and housing downturn.
Thanks
It’ll mean that many more Mexicanos working for $4.00 or less under the table, and living 10 to a room in the house next door to you. It was a good move to help prop up the Mexican economy, if nothing else.
What is also does is drive the capitol/labor balance toward capitol investment (so does low interest rates…).
Thus expect your local car wash to invest in fancier “buffers” to speed up waxing cars. Maybe install better “spray bars” to apply wax…
Is it enough to get US robotics to invent an industrial Roomba to replace a Janitor or two? Probably not, but maybe…
Most likely a minimum wage hike will just increase teen unemployment as retailers retrench…
Minimum wage hikes traditionally have more of a negative economic impact than positive. If people have the skills and work ethic, they’re generally paid more. While minimum wage stories make good “sob stories,” its generally easy to get a job that pays more (not a first job, but one’s second).
Should there be a minimum wage? Sure. But In-and-out pays $10/hour here in California, so its not exactly tough to get a better paying job!
As to an “across the board” wage increase? Why? Most of California isn’t unionized. Our salaries are not geared to the minimum wage. It just means a little retail inflation; that’s the only “across the board” effect we’ll see.
Would have been more helpful if they voted to raise the minimum wage in China.
Here is a question everyone outside this blog will soon be asking, how did we get here? Outlined below is a succinct response.
Lower the cost of borrowing to near zero, slowly take away the risk of lending by securitizing mortgages (MBS), steadily promote homeownership via national government agencies HUD, FNM, and Freddie, reward said homeownership with tax cuts, then season the whole thing with the NAR’s “Power of Positive Thinking” speak, add a touch of speculator greed and buyer price-out fear, carefully pour on Interest only option ARM fuel; lastly, gently fold in the assumption real-estate only goes up, and bamm!…you have the ingredients for a national housing bubble.
What do you think? Please feel free to add, subtract, or in any way
improve. Change the order if you like.
You just about hit it on the nose . Add to your list that Greenspan was slow to raise rates following 911 and the media seems to just like the bull view /the big advertisers view ,leaving the bears without a voice .
It’s the midterm elections, stupid! Does anyone besides me suspect the stock market will muddle along just fine until at least early November, no matter how loudly underlying indicators and/or fundamentals are screaming the R word?
http://tinyurl.com/ozs4t
Of course it will. The fix is in, probably work too.
Don’t forget “mysteriously” lowering gas prices all of a sudden. We went from rocketing oil prices to plunging prices based on what news?
My topic: Is the fed done raising? They pulled back due to the election, but I don’t think they have the cajones to start up again. I’ve been adding to gold positions during the triple witch, I’ve seen this before over the past 6 years. If the fed starts to cut next year due to fears of recession - and the fact that theyre gutless - savers will get punished, again. 5% money markets may be as good as it gets in this cycle, and that sucks when you look at inflation (not the govt stats). Who’s on my frequency?
Anyone familiar with downpayment assistance programs as offered by Nehemiah. URL http://www.getdownpayment.com/
Downpayment assistance is a govt program which portends either widespread bankruptcy amongst low-income households, or else a future govt bailout to help them continue paying off homes they bought but could not afford.
Correct me if I am wrong but I was led to believe the source of funds has to originate from a (401-c) charitable org.
Moreover, Nehemiah has links to builders like Dr Horton and Hovnanian. The site says no income or asset limits! Have you guys covered this subject on the board before?
Is this for real or as you suggest another creative way to lead sheeple to slaughter?
It seems there is an amazing mix of government and charitable downpayment funds available. URL http://usadownpaymentassistance.com/index.cfm
You may have discovered the plunge protection team for housing…
SD ziprealty puzzle: The number of used homes listed is dwindling (off recent highs down to 23,089, never made it up to 24K this summer). But there are 200+ homes on there shown as “new listings” (yesterday or today). Given that new listings are pouring in, does anyone know how to assess how many of the disappearing ones are selling versus expiring?
It’s been dwindling the last couple of weeks. I was a bit sad about that. I was really enjoying watching the listings grow by 50 to 100 homes a day and was hoping for 24k by Labor Day. Anyway, it’s nice to see things picking up again.
I just got back from a vacation in Holland. Just for fun, I looked at real estate prices.
You can buy a restored canal house in the nicest part of Amsterdam right on Herrengracht for LESS than a McMansion way out in Pleasanton or Grass Valley.
You start to realize how bubbly our bubble really is, when inflated prices in ritzy neighborhoods of other countries don’t match prices for throw-away commodity housing in the middle of nowhere.
Cover story of this week’s buisness week.
The *only* thing propping up our economy now is the Health industry. All those trillions moving from the pockets of older Americans (and Medicare) into hospitals.
That’s it!