“People Make Choices Based On What Things Cost”
The Miami Herald. “The state-run insurance pool is getting ready to move second homes, vacation homes and most investment properties off its books. An insurance bill passed in May requires Citizens Property Insurance to stop offering windstorm coverage to non-homestead properties after March 1, 2007.”
“The one exception: Lower-value rental properties that are rented will be grandfathered in. These properties must be valued at under $200,000 and have a tenant with a signed lease for at least seven months.”
“If owners of non-homestead properties can’t find coverage from another insurer, they can stay with Citizens. However, they will be charged a 25 percent surcharge.”
“Nearly half of the 924,578 properties where Citizens provides hurricane insurance are in South Florida. It covers more than 1.2 million properties statewide.”
The News Press. “Snowbirds in Southwest Florida are viewing the dual lifestyle as more of a trick than a treat. ‘These taxes are killing me,’ said Louis A. Nitti, who divides his time between West Orange, N.J., and Cape Coral. Nitti has watched in dismay as his ‘little two-bedroom home, built in the ’60s,’ went from having a tax bill of less than $1,400 in the early ’80s, to $7,900 in 2006.’”
“‘A lot of people are going to North Carolina,’ Nitti said of fellow snowbirds. ‘I’ve been seriously thinking of that, also.’”
“Brad Hobbs, associate professor of economics at Florida Gulf Coast University, said a gradual attrition in snowbird residency here ‘is very likely.’ ‘There is still the draw of the environment, the Southwest Florida cachet,’ Hobbs said, ‘But people make choices based on what things cost.’”
“‘Middle-income people have second homes,’ Hobbs said. Those second homes comprise a significant chunk of Lee County’s tax base.”
From MarketWatch. “Baby boomers may not be as in love with second homes as once thought. The rate of second-home ownership among 50- to 60-year-olds has remained flat during the 12-year period between 1992 and 2004, according to a report sponsored by Radian Group Inc. and the Research Institute for Housing America of the Mortgage Bankers Association.”
“Early boomers were no more likely to own a second home than older generations of homeowners. Those who do have a second home are using the residence on a limited basis too: One-half spend two weeks or less and two-thirds spend four weeks or less per year in their second home, the report found.”
“Only 12% of second-home owners said they intended to sell their main home and eventually use their second home as their primary address, debunking speculation to the contrary.”
“‘There have been relatively few scientific studies on second-home ownership and mortgage activity,’ Doug Duncan, MBA’s chief economist said. ‘The report indicates that baby boomers are not acting differently than their parents when it comes to second-home ownership.’”
From Reuters. “Baby boomers are not flocking to cities from suburbia, defying some expectations and posing problems for some developers, according to a new study.”
“Condominium developers who had been counting on an exodus of baby boomers into cities seeking cultural and other services could suffer, said Gary Engelhardt, senior research director at Syracuse University, who conducted the study.”
“Flying in the face of other research showing suburbanites with a penchant for urban culture lured into buying second homes in cities, this study found just 2 percent of empty-nest retirement age suburbanites can be expected to make such a shift.”
“‘This is tremendously important because when you go to any metropolitan areas, you notice lots of condominiums being thrown up and substantial efforts to market these condominiums and townhouses to older individuals with the idea of them returning to the central cities,’ Engelhardt said.”
“‘It seems at this point there’s not a lot of evidence that its going to materialize,’ he said, noting that some condo markets are already overbuilt. ‘That’s probably not very good news for condominium developers who are placing big bets on these baby boomers returning in large numbers.’”
‘A banker is offering financial literacy classes to a work force it hopes will take advantage of a new affordable housing community in Naples. ‘Nobody has the patience to educate workerbees on how they can be financed,’ said Kelly Capolino, a Realtor with Coldwell Banker Real Estate. ‘We want to teach them, don’t go and buy the new truck now, buy the home first.’
‘No one can afford to live in Naples anymore,’ said Justin Shaw, who owns five Dunkin’ Donuts in Naples and Bonita Springs and has invited employees to attend the seminar. He has a hard time finding employees to fill his stores, and when he does, most have to commute at least a half hour. ‘I don’t even know where to go find people,’ Shaw said.
Mortgage Brokers and Realtors are saying, “Have we got a program for you!”
It’s probably an I/O, ARM, or Negative Amortization loan. Come get educated so all the greedy speculators and investors can mag you bagholders instead of them.
Here is the education they should get.
http://youtube.com/watch?v=7RTqk1NbKJU&mode=related&search=
Don’t take your eyes off this Florida development BEN; the social, political, economic, and market implications are huge. South FL is largely liberal and prices are much much higher. Whereas, North and Central FL are largely conservative and less expensive. This legislation effectively puts a ceiling on investment property prices.
Absolutely. This could KILL the Florida RE market, pure and simple. Bad enough the snowbirds were paying the rapidly increasing tax bills with no SOH cap, but now their Citizens insurance will carry a 25% surcharge on top of what is already (by law) the highest cost policy available. The legislature can do this with impunity since snowbirds don’t vote in Florida. But wait ’til the residents see what happens to their property values over the long run.
How soon will Florida’s population growth go negative?
On this posting’s other topic, why did any developer think suburban retirees would want to move to the city? The crime? The noise? The pollution? The higher cost? Oh wait, it’s the cultural activities. Yeah, right.
My mother just moved to a small apartment in the center of our city. The house that I grew up in had gotten too big for her to maintain (my brother and I do not live close by) and since my father passed away it didn’t make much sense to stay in a big house all by her. She absolutely loves her new place. She can walk to everything. There are restaurants, theaters, museums, shops all around. The apartment complex has a lot of retirees and she’s made some great new friends and even has a new boyfriend. I think city living is great when one is young and when one is old.
I live in one of the new inner-city developments in S. FL, and I can’t tell you how many times I hear people say “Its all snowbirds buying in there”. Well, I live in one; and it’s NOT. Well, actually, its kind of no one, I feel like I am in this place alone most of the time… But no retirees are not, on a large scale, looking to move into inner city developments, imho. I don’t even know where this idea came from.
I love where I live, its a great time, lots of bars/clubs/resturaunts, etc. However, I don’t think many retirees are looking to go clubbing at Resort on Friday night!
Anyone know where this “myth” came from?
That’s the problem with looking solely at historical trends to predict the future. South Florida once was a popular place to retire b/c of the steamy weather, low taxes, and low housing and cost of living. As a result, a lot of Floridian’s just assumed more retirees would come.
Instead, with costs going the other way most fixed income retirees are considering leaving. The mother of all ironies and a valuable lesson in using purely historical trends to predict future behavior.
My wife and I have contracts on two units in a new condo high rise development in my downtown area. One unit has two bedroom. It will be our main living area. The other unit is a studio on a different floor. It will be my home office and my place of refuge when the church ladies come.
We are moving downtown because it is getting harder to maintain our house. I don’t like to climb ladders anymore, etc.
SJ
If they buy the home first, how are they going to get to work? In the house? Something tells me that reliable transportation to and from work would be a better first choice.
Plus, you can take the car/truck with you when you need to leave the state.
“A banker is offering financial literacy classes….”
HAhahahaha… I just fell off my chair laughing after reading that quote. Talk about the fox guarding the hen house. Jas is going to flip after reading that quote. A banker coaching FBs on financial responsibility…. hellarious!!
“A lot of the reason people can’t afford a home is because they’ve increased a lot of debt,” said Moe Pereira, a community mortgage banker with Ironstone Bank. “Those two nice cars you have might keep you from buying a house.”
Of course, GF/FBs are spending too much money on things like food, clothes, and transportation. That is why they can’t afford an overpriced POS in Naples. GF/FBs need to get their priorities straight, don’t they Mr. Pereira?
In a related story, the United Hookers of America (UHA) union 269, located in Las Vegas, Nevada will be offering classes on celibacy.
the problem is that housing price is still way ahead of the median incomes. they want people buy at any cost and yet insurance rates are out of this world. (some development in boynton claimed to have sold out in 5 hours at the price of 310,000) it was called affordable housing. man, that kool aid must taste really good!
‘No one can afford to live in Naples anymore,’ said Justin Shaw, who owns five Dunkin’ Donuts in Naples and Bonita Springs and has invited employees to attend the seminar. He has a hard time finding employees to fill his stores, and when he does, most have to commute at least a half hour. ‘I don’t even know where to go find people,’ Shaw said.
I bet if Mr. Shaw offered $15 per hour, he could find all the employees he needs.
That’s a non-sequitor. $15 employees, but who’d buy his overpriced donuts.
“I bet if Mr. Shaw could print his own money, he wouldn’t need employees.”
I have a this friend, I can’t mention her name who is a neighbor of David Lereah and she says David has always wanted to be a meteorologist. He has this telescope in his back yard and is she can watch him always looking up at stars and stuff.
Anyway apparently next book coming out from Lereah will be on weather patterns in this country and what causes them.
Title of explosive new book, which is sure to be a best seller is.
Most Weather patterns are local can be regional and sometimes become national.
My guess is good ‘ol David couldn’t hack the differential equations and physics in college.
Actually, he probably did “get” calculus and probabilty just fine. Check out his 1985 book, “Insurance Markets: Information Problems and Regulation” (Praeger Publishers) back when he examined bank portfolios for credit risk, 170 pages peppered with “logarithmic utility functions” and “maximizing their expected utility of wealth”, complete with equationsnd tables of “histograms of predictied probabilities of solvent banks”. Compare and contrast…then and now…
lol.
He’s waiting for Hale-Bopp to come back.
Is that the one those lame-brain gene-pool-cleanup participants were sneakered up to get a ride on?
Heaven’s Gate. That wasn’t any sillier than buying overpriced houses with Interest Only negative amortization loans. At least the Heaven’s gate people got those cool purple shrowds.
NYCity Boy,
Actually up here in Oregon (rare cloudless night) it was really cool to see it fly past as the bright green hue! The kids and I turned off all the lights to get the best view. It wasn’t until later that we all learned about Marshall Applewhite and his twisted little cult. Perhaps that’s part of the “turn-on” for mortgage brokers is talking other people into commiting suicide along with them?
So, that’s where he gets his information… he’s got a celestial crystal ball… perhaps he does’nt understand the difference between redshifting and blueshifting and fallaciously concludes the housing market is forever redshifting (expanding)…
There are news stories all over the place regarding the ARM implosion, skyrocketing foreclosure rates, doubling or tripling of insurance and taxes, people moving away, inventory gluts, price depreciation, and the lack of buyers.
At what point do we reach critical mass? It appears that the pot is starting to ‘boil over’ so to speak. I would wager by the end of 2006 we will transition from denial to panic.
Big Daddy — I wonder how many people “out there” who try to forecast this stuff and hope for the clouds to lift next year, totally underestimate the effect of first, the crushing of ARM-holders that will accelerate in earnest next year; then the panic that will ensue when the FB bailers screw the comps for neighborhoods of “weren’t FB’s until now” people who had boogied along with their mortgage payments, but all of a sudden are looking at negative equity because of comps rather than neg-am foolishness. In other words, it’s not just borrowers who borrowed too much who are going down, it’s also a heck of a lot of people who *at the time* borrowed an OK amount who will be taken down with them. That’s my view, at least.
Good observation Chip,
As Warren Buffet once said, ” you don’t get to see who is naked until the tide goes out.”
Or, as Ross Peeeeerot said, ” You hear that GIANT SUCKING sound?” Well in this case, it is the sound of home values being sucked downward.
Whether or not they could afford to use a more traditional variable rate or even fixed loan really has no bearing on the fact that they still overpaid for the property. So “borrowed too much” still applies, at least in my eyes.
Agreed.
However, if they can really afford the home (using a tradtional 30 yr fixed product), and intend to stay for a long period of time, it’s not a disaster. Although you might kick yourself for a few years (maybe 5+) while your negative equity, the price will eventually recover.
However, if you need to move; or are in a timebomb morgage, it’s a finacial disaster! The end of the financial universe, to put it nicely.
Yes, I would be upset if I overpaid. These people overpaid, and many with money they do not really have. That’s not upsetting, it’s crushing/end game.
What about the person who bought a 500k house, zero down, last year, and next year someone buys the exact same house next door for 250k.
What do the ones who overpaid by 100’s of k’s usually end up doing?
“If owners of non-homestead properties can’t find coverage from another insurer, they can stay with Citizens. However, they will be charged a 25 percent surcharge.”
Can you say, OUCH!
So I guess all these SPECULATORS who speculated on all these people moving to FL are really screwed now.
Expect yet another wave of inventory to hit the FL market before the March deadline.
Maybe there is an insurance bubble
lol the insurance companies speculating on them paying higher prices haha.
An insurance induced glut + a bubble induced glut = DISASTER.
Don’t gloat too soon over the insurance woes of property owners in Florida …. The worsening of the insurance situation in Florida will only cause more clamoring (as the Florida representatives in Congress are already doing) for a “National Disaster Insurance Program” along the lines of federal flood insurance. In other words, taxpayers in the vast majority of the country with limited or minimal risk of natural disasters get to subsidize the insurance costs of those homeowners who choose to live in high risk areas, like hurricane alley in Florida, along earthquake fault lines in California, etc… Some of the biggest proponents of a federal disaster insurance program are Florida realtor groups, because of the disastrous effect the insurance problems are having on the real estate market there.
Before florida gets a dime of federal $ for any type of insurance program (which I am really against), let Florida open up it’s offshore waters for oil and gas drilling to pay for any federal bailout. Reduce the limits to say 50miles, way close than the 125 mile limit proposed. Then cut real estate taxes funded by the development leases.
I say, federal taxpayers should have nothing to do with Florida’s insurance problems, period. Let Florida impose a state income tax (something most of the rest of the country already pays) to pay for their own state government disaster insurance program, if that’s what they want!!
Or we could just not have the government funding insurance. Citizens is a boon here to all of the local wind insurers. Dump your policies, and then buy them back through citizens at a 40% markup. Hurray for state market intervention.
Tg, you are smokin my man. They can’t get a penny increase in the tax to supplement the faling school systems here.
You think they can get the taxpayers to foot the bill for them ‘Yankee’ snowbirds for their winter vacation homes?
Ain’t gonna happen.
I’m not smokin anything … If Floridians do not want to tax themselves to pay for a state-subsidized disaster insurance program, that’s fine with me! Just don’t come to the U.S. Government, with hat out, looking for federal taxpayers to create a federal program to bail them out and to subsidize insurance for Florida property owners!!
look, i got a house in west boca. pay for it 5 years ago and fixed it up. my taxes are nothing to complain about. they only go up 3% per year, regardless of the (value) of the home. the insurance compaines are the ones that are kicking butt. the reality is that after wilma, the insurance companies realized how crappy the houses are in south florida. they are not going to pay out on a home that was worth 150,000 in 2001 and now is 400,000. they are going to get there cash and then when you decide to get insurance, they are going to make sure they cover their butts. people have short memories, but they need to read about hurricane andrew and how it ruin insurance compaines (crappy over priced housing that they had to pay out everyone) just imagine a cat 4 or 5 in south florida today!
Second homes go along with people having very small primary homes. For example, Manhattan apartment dwellers have had them forever.
I don’t see why someone with a suburban house would want another house to take care of. Some buy early for a move in retirement, I guess. But with prices falling, some my choose to wait until they sell. And in any event, most baby boomers are in no position to retire.
‘Some buy early for a move in retirement’
IMO, this was a cover for closet speculation during the run up (I used to hear this all the time in Arizona). It is based on the assumption that prices will rise forever. ‘You have to buy that house in Flagstaff now, or you won’t be able to afford it when you retire in x years.’ That one is out the window now.
One problem is the carrying costs, maintenance, etc. Andthe buyer will be paying interest for those x years or suffering the opportunity costs if they can pay cash. Why not just put that cash in bonds and buy in x years, or save the payment amount?
Second homes never made sense for the bulk of people and were really a justification the RE industry came up with to reassure the markets and justify the huge percentages of speculative buys in the past few years, IMO.
Ben:
I bought my future winter retirement home in AZ a in 1999, traded up in 2002 for one on the golf course and sold my home here in San Diego in late 2003 and am now renting a 3000 sq ft home for less than half what it would cost to buy. It works for me, because my kids and I use the AZ house for vacation year round. When my kids move out, I will be looking for a good deal in a couple years in San Diego area on a smaller home, maybe even a condo, that I will live in for a few more years full time, and then when I retire, live in it when it is too hot in AZ.
I don’t know how many boomers have the same plan, but I have run into quite a few in AZ that are doing a something similar, with the exception that most did not sell their primary.
I think that is where some may get into trouble. In the developement I am in, I know of several that bought two homes, hoping to flip one to pay off the other (LOL), and are now unable to sell the flip. So far I don’t see anyone budging much on asking price, but there are now about 28 homes for sale in a developement of about 200 homes. These are rather high end homes for the area, and will not make good rentals, as the income for the area is not high, so it will be interesting to see how this ends. One forclosure so far.
Good post Joesixpack. Our situation is very similar and we too know a number of people in the same gameplan. There are probably many non-Calis who are waiting to jump into the Cali market once the prices are right. Prime Cali RE for all!!!
“There are probably many non-Calis who are waiting to jump into the Cali market once the prices are right.”
From the looks of things around here, North San Diego County, there is, and will be, plenty of inventory to choose from for some time. I have been watching my local area closely since I sold late 2003. I watch the same three neighborhoods that I am interested in and it has changed dramatically in the last year.
Many vacant homes. I see them go on and off and then on the market at lower prices and still just sit.
By the way, does anyone know the current inventory number for San Diego County?
“If owners of non-homestead properties can’t find coverage from another insurer, they can stay with Citizens. However, they will be charged a 25 percent surcharge.”
Holy floundering flip-floppers Batman! That’s going to leave a mark.
Speculators and builders are going to get creamed. The fallout is going to be huge. Like the recent impact of the comptroller of the currency on national housing demand, Florida’s legislative actions is also going to weigh heavy on future housing demand. Florida’s builders are probably wringing their hands as we speak. Likewise, speculators are probably up in ARMs.
That certainly does look like a disaster in the making. I think the love affair between Florida and senior citizens is coming to an end.
The latter were a cash cow with discretionary income and little public cost. Once they age, and custodial care beckons, they become another group competing for scarce public resources in a state with no income tax.
As things get tighter, fiscal conflict is going to get ugly down there.
so, can some gov workers
state run insurance always scks
health-home any and all
Seniors are much less of a cash cow than you would think. These are fixed income, where the majority only have S.S. (which just doesn’t go far). They actually put a huge stress on the state’s infastructure. My commute is normally 30 minutes each way, except Nov to Mar when it is goes to 50 minutes. Last Feb, we had to go the the emergency room and had a 9 hour wait just to get admitted, and I have been told by ER nurses that winter waiting times normally at least tripple because of the snowbirds. I have to schedule appointments with my doctor a year in advance if it is during the winter, but only a couple weeks in advance in the summer. I know a lot of jobs, particularly medical, are dependant upon snowbirds, but I have no problem seeing them go elsewhere.
DC, this statement echoes the sentiments of a lot of us in Arizona:
I have no problem seeing them go elsewhere.
The snowbirds are not universally loved here, believe me!
This is an interesting development. Florida and Phoenix were once largely settled by snowbirds. As years passed their families decided to move there too. Now the late arrivals act as if the snowbirds are the problem. Nothing ever changes.
Florida and Phoenix were once largely settled by snowbirds.
Yah, they came over on the freakin’ Mayflower. Gimme a break; any geriatric demographic is obviously going to be a drain on medical infrastructure - obese geriatrics doubly so.
I always wondered why the big push to get the reitred folk to come down here in droves, as they will end up receiving some sort of Medicaid from the state in an effort to prolong their life as the end comes near. I would venture to guess that this has not been considered, as no one is looking past the fat pay check that they can get NOW! Wory about tomorrow later it’s the American way. St. Petersburg was known as “Gods Waiting room, and those people did not really spend much money as their years waned. As a result the down town took a down turn untill they all “left” and redevelopment started taking place. However, it appears that the dice were rolled that they (the next generation of retired) could once again flock to the city to retire, this time in quite expensive condo’s. SO…Will history repeat itself? Do people ever learn? Can they? I would not bet on it.
Actually, Robert, when we were kids here in Tampa we knew St. Petersburg as the place that the “old folks” lived.
Later I learned that the Old Folks live in Naples and Sarasota.
Their parents live in St. Petersburg.
We used to call that area the land of the ” Newlywed and the Nearly Dead.”
“Newlywed and nearly dead” was originally used to describe Santa Barbara, CA.
Yeah, St Pete is for those that outlive Naples. Actually from my perspective of near decrepitude it looks like a rolling age stratification. We see clusters of retirees from similar geography and backrounds swarm a community and then age in place. The next cluster then forms somewhere else. Rolling gray locusts.
Don’t geet me wrong. My mom is one and it isn’t a bad thing. IMO Florida has killed/is killing the golden goose. The property taxes, the insurance scam, the dual, even treble taxation schemes all are driving away these sugar grannies.
Alot of people don’t understand what Citizen’s insurance is. It is the state operated insurer of last resort. By law Citizens must charge above market rates *and* they must be profitable on all business.
Since Citizens has no non-florida non-windstorm business, they must charge a lot to offset the concentrated risk. People are experiencing the real price of risk for the first time.
In order to reduce total pool risk(and improve capitalization), Citizens is trying to reduce the total amount of insurance in force, hence they are trying to kick out the second homes from the pool.
It’s not boiling over yet. 2 houses on my street in Thousand Oaks were sold recently. One was originally listed for $675,000 and sold for $595,000 but I think the original asking price was a fishing expedition, hoping to hook a sucker. Prior to that, a house listed for $625,000 was sold for $620,000 but it was something of a fixer and not in as good a shape as the other house. No other properties on the street are listed at the moment but there are PLENTY of For Sale signs in the Thousand Oaks area. I suppose the benchmark will arrive in the spring of 2007. If the market doesn’t bounce/take off then, I expect we can assume it’s game, set and match for the property market and we will see another $100,000 off the asking price.
Dirty Mortgages
http://youtube.com/watch?v=bClte9_7lEs
Here is a new one from Dan the Mortgage Man.
http://youtube.com/watch?v=Uv_cqPFElRo&mode=related&search=
My observations as a boomer: Most of those my age are not looking for a second home or frankly any major purchase - they are intent on reducing their debt exposure, reducing their lifestyle footprint, and slowing down. Most want to travel, but not in a romantic-swing-through-Europe kind of way. They drive their cars longer, try to exercize and are getting involved in community action kinds of things. They are probably more conservative than they think they are, but definitely more liberal than their parents. When the housing bubble is in full roaring implosion, I believe most will just hunker down and wait it out with family, right or wrong.
Right. About time we see this boomer BS debunked in print.
I”m right on the cusp of boomer/whatever the next one was. My husband is a late boomer. We have no more interest in moving into an inner city condominium than we have of walking on Mars. That whole thesis is probably cynically predicated on the notion that most people have not taken care of themselves and will need urban style health care and services in their old age. That may have some merit but not nearly to the extent that, as usual, everyone has tried to jump on the bandwagon and rip off their piece of the action.
We want to be out in the boonies, on acreage. We’ll take our chances with health care because we have taken care of ourselves. If something hits out of the blue, well, that’s baseball. I’m not going to live in crowded people storage to avoid that risk.
Baby boomers are owning *second* homes at the same rate as their parents, but they are not flocking to cities from suburbia
Flying in the face of other research showing suburbanites with a penchant for urban culture lured into buying *second* homes in cities, this study found just 2 percent of empty-nest retirement age suburbanites can be expected to make such a shift.
Ancecdotally, it seems difficult for me to dispute that I see more older people living in cities than I used to. Maybe that is because I live in a different city now than I used to. Nevertheless, I often run into people who’ve moved into downtown area around retirement age.
Part of the disconnect may be that the studies concern second homes, not primary homes. While I know plenty of people who have moved into the city from the suburbs, I know of absolutely no one who has kept his suburban home. Why would you? If you’re moving into the city to simplify your life and enjoy your hobbies, why would you saddle yourself with maintaining a suburban home in addition to your primary residence?
Right. If we downsize to a condo in a decade, we aren’t keeping our rowhouse.
Than again, we probably won’t buy a second home in the country (let alone Florida) in any event. We’ll just rent apartments or hotel rooms as needed. That said, several neighbors do have second homes in the Poconos, Catskills, Breezy Point Queens. It’s a city thing.
A lot of this gets back to traffic and cheap energy. Getting out to the country is a hard pull for a weekend when you have to get through 30 miles of suburbs first. But why would anyone get a second home they have to fly to?
annata,
Yeah, I can get on board with that, and then again maybe no? My problem w/Portland is that unless you really really like art other than a Triple A baseball team that plays a handful of home games there isn’t a hell of a lot for a guy like me to do. They aren’t a lot of “shot and beer” joints left in NW! My wife and I looked at some of the old hotel conversions and there is NO PARKING period! I’m not sure I’d ever be able to “simplify” my life to the point where I never needed a car or lived in a place so small I had to step outside to change my mind! Anyone from the Rose City remember George and Lou’s and all the great pawn shops in town? No more. All expresso bars and vegatarian pizza places now. What exactly is it that regular guys would find attractive about any city these days?
I agree
Low pay, high rent, wit’s end
As gentrification pushes poor residents out of once-cheap L.A. neighborhoods, apartment hunting can get desperate
http://tinyurl.com/yzh27j
Why stop at six kids in a one-bedroom apartment? Why not go for 8, or even 10?
Could they stop making babies?
Good point … and how would you like to be the lucky neighbors who get to live next to this overpacked apartment full of kids?!
When I was a landlady I used to advise prospective tenants that the municipality had occupancy restrictions on rental units…e.g. one person per x sq. ft.
If anyone had an idea of overpopulating my units, they usually moved on after learning this factoid.
The more kids they have, the more welfare and food stamps they get. Nice incentive.
Looks like they have reached the point of diminishing returns.
The whole idea that people have more children to get welfare and food stamps is just not reality. Somebody needs to knock themselves out of this myth that was promoted for nothing more than political reasons. I’ve worked quite heavily with poor women and most have been sexually, physically and/or mentally abused as children. They think having children will give them love that they never experienced. When the children are small, this is the case but children do not stay small for long. Also, it is just a normal phenomenon that poor people have more children than rich people do. This is the case also in third world countries were there is no such thing as welfare/food stamps.
I saw this article and just chuckled when I saw 6 kids. As for the phenomeneon about poorer people having more children than rich, as my history professor used to tell us, what it really boils down to is entertainment. Rich folk go out have a good time, maybe some sex. Poor married folk don’t have any entertainment other than one another.
Therefore, what do they do for entertainment?
“The whole idea that people have more children to get welfare and food stamps is just not reality. ”
Fine, just don’t come looking for sympathy or handouts after you have six kids when you are already below poverty level, and you cannot afford a place to live. And don’t give the line that most women in this situation were mentally or physically abused, and that’s why they had six kids. … Give me a break. Read the L.A. Times article about this illegal immigrant family with the six kids packed into a one-bedroom apartment… There’s no indication of any abuse involved; if anything, it sounds like they are a loving family. The problem is, mommy and daddy make no where near enough money to support all their offspring.
I’ve worked quite heavily with poor women and most have been sexually, physically and/or mentally abused as children. They think having children will give them love that they never experienced. When the children are small, this is the case but children do not stay small for long. Also, it is just a normal phenomenon that poor people have more children than rich people do.
Thus they pass their misery (and poverty and ignorance) on to a new generation. Welcome to Idiot America where only the least intelligent and least fit parents reproduce.
I did read the article and nothing was there to indicate that this family was on welfare. In fact, it said that he was mugged on his way home from working in the garment industry. So my question to you is how do you tie this story together with welfare and food stamps? I think you are mixing things up.
As I said earlier, I volunteered to do some mentoring in a welfare-to-work program. Many of the women who I worked with who had been on welfare/food stamps had some of the worst childhoods imaginable. One woman had two children by her uncle before she turned 18 years old, for example.
As far as your sympathy goes, nobody should expect something that doesn’t exist anyway.
Also, where does it say that they are illegal immigrants? Sometimes when we make comments on others, the comments are more a reflection of ourselves than a reflection on the person whom we are speaking about.
It says clearly in the article that both parents are illegal aliens…even mentions the husband has been in trouble with immigration. Just read the piece.
He probably went with the odds here. Some facts from the article: speak Spanish, immigrants (LA Times doesn’t use the word “illegal”), live in Echo park, work in the garment district, and most have lots of kids. While I’m sure there are some legal immigrants who fit the bill, they probably represent less than 10% of the population. Smart people go with the odds. Dumb people deny reality that conflicts with what is politically correct.
It costs the taxpayers about $150,000 to “educate” each one of those 6 kids.
$150,000 X 6 = $900,000.
The parents of those kids will NEVER pay enough in taxes to repay the rest of us. THAT IS WEFARE.
Sorry, should be welfare, or maybe it should be me-fare.
Ya know… you can bash immigrants all you want, but the reality is that even folks you might run into at one of your minuteman rallies have a hard time finding affordable places to rent in L.A. All the development in this city in the last few years is geared toward the “luxury” market. Pure unadulterated greed is what controls this here “market”. If it destroys the diversity (ethnic and economic) of the city well… it seems not to matter. Sucks IMHO. Plus, I get nervous when I’m surrounded by too many upper income white people. And I am one.
Well then, maybe you should take some money from your “upper income” salary and buy some run-down apartments, fix them up, and rent them out for $400 per month.
Better yet, why not adopt this family and prove that all upper income white people are not purely driven by greed?
That is an excellent idea! Thanks!
Yes, I’m sure you will show them compassion by putting them in the garage with the dog and charging them $1,000 a month in rent.
*That* is the problem. The place this family lived in was just that, a run down building someone bought out of foreclosure for 250k, fixed up, and rented. It was sold to specuvestors for 1.3 million. It’s vacant and boarded up now. Excellent use of resources eh?
yes, and you could’ve been that someone who bought it for 250K and allowed them to stay. Instead you complain about others’ greed while doing nothing but complaining on a blog.
Couldn’t afford it then, maybe I would’ve. Did I hit a nerve or something? Jeez… lighten up Francis…
The article touches on a lot of thorny issues — immigration, housing bubble, birth control, so cal economy.
Obviously on one level this story is a family planning nightmare. But what American in their right mind would “load mounds of denim into industrial dye vats for $7 an hour”, midnight to 6am? Third world jobs require third world workers, and our ecomony is brilliant at producing both.
Hard jobs should pay more money. Give him $20 an hour.
plysat,
You don’t have to live in LA to see that. Over the last at least 5 years we’ve seen very little if any 1,000-1,500 sq. ft. homes geared toward young families. It’s all “high end” and up-scale here in Oregon too! In fact you could say that we simply jump through the hoops for the retiring CA market but I think that’s bunk too! If that were the case they should have been custom, not spec. homes. What does the avg. Oregonian need w/a deluxe “chef’s kitchen”? Right! Deluxe for what, making venison jerky? Virtually every builder pencils in some low income dev. but you know, they never seem to get around to it?
Yeah… it’s nuts. I’m all for improving neighborhoods, but when you price everyone but people making high incomes out, IMHO the area suffers. When I moved to the part of town I’m in there were a lot of families. There was a little hardware store, radiator repair shop, shoe repair shops… useful stuff. Now it’s all furniture stores. The radiator place is a real estate office.
I agree with you. I am also all for improving neighborhoods. But the things that happened to the poor will eventually happen to the middle class. It is just a matter of time.
Just like the first jobs that were outsourced to foreign countries were manufacturing, then it was IT…
Interesting story. It’s obvioiusly written to instill some degree of sympathy in the reader.
However, they’re illegals, and why does that culture insist on having so many children, especially when they can’t afford it? Have they not heard of birth control? Probably getting government handouts.
I highly doubt that these people are still illegal. I’m not sure how comfortable illegals would be to report a story like this to the LA Times.
They would be perfectly comfortable. Immigration laws are rarely enforced in LA. Usually it takes blatant stupidity on the part of the illegal to even get arrested, let alone deported. Illegals complain to the media all the time in SoCal, you just don’t usually see it because it is mostly to the Spanish language media.
If they are Hispanic (esp. Mexican), they may be CATHOLIC - and birth control is considered a sin in the Catholic faith. Thus, six children……
Being Catholic doesn’t mean more kids. Italy, Spain and Poland have among the lowest fertility rates in the world.
They have calendars.
This is what their exploitation by the American business community gets them. Why do they keep coming here? Who cares. We just want the cheep labor.
As this news hits Main Street, the supply flood gates will swing wide open. It affects second homes, vacation homes, and speculative homes. Does anybody realize exactly how many home owners that affects? If this news is not carefully communicated, South Floridians are going to revolt!
But how many of them are registered to vote in Florida?
Excellent point Bill but don’t forget a significant percentage of speculator’s and landlords are Floridians.
Housing video clip last night from NBC Nightly News-
http://video.msn.com/v/us/msnbc.htm?g=D0187D39-78B1-415A-9AD0-22BC50782C2C&f=00&fg=email
There is a follow up on rising foreclosures tonite.
Saw Brian Williams ad about it.
Look at this one
http://video.msn.com/v/us/msnbc.htm?g=D0187D39-78B1-415A-9AD0-22BC50782C2C&f=00&fg=email
“‘It seems at this point there’s not a lot of evidence that its going to materialize,’ he said, noting that some condo markets are already overbuilt. ‘That’s probably not very good news for condominium developers who are placing big bets on these baby boomers returning in large numbers.’”
Well, what did they expect? The reason to live in a condo in a city is to take advantage of city services…e.g. be within safe walking distance to work and play, to take advantage of public transit, and to have a less expensive property to maintain than a house. If the condos were $50,000 AND there were things to do in the immediate area, yeah, seniors would move in. But when you can buy a HOUSE in a safe neighborhood for less than a condo, it’s a no-brainer. It’s all about value for money, and any condo above $100k rapidly becomes a poor value for the money.
The real estate seminar promoters where the people that where claiming that the boomers and snowbirds would be the buyers for these flipped properties .These scam artists had all the answers for these short term investors and at one point in the mania flippers were selling to flippers .
I guess the investors came instead of the baby boomers . It was a stupid idea to begin with because baby boomers don’t all retire at the same time anyway .
The builders knew they were selling to investors but now they are in competition with each other for the famous “end user buyers “.
Housing Wizard,
So true! Ben (among others) have been keen to point this out. Besides it’s as if every area built on the assumption they would all be getting the lion’s share of this phantom market. As a financial planner I’d like to think I have a fairly good grasp on what people in that age group are thinking and I can’t recall ONE of them saying anything about getting anything other than a shared ownership in their new digs saying they would decide on a purchase when the time comes! Are my clients THAT different?
This weekend I was in Las Vegas visiting with family and I found a church to go to on Sunday.
When the pastor asked for announcements, I expected anouncements about someones illness/recovery, new family addtions, like at other churches I have been to. But the first announcement was from a mid fiftys man asking for everyone “to pray that his houses sell”.
A sign of the times I guess.
Gene
Reading that made me ill. How selfish can someone be?
So this guys wants GOD to find him a GF?
Sounds like a solid christian to me. If he was truly a beliver in the word of GOD he would not be GREEDY and lower the price!
In the churches I’ve attended, such a prayer would be met with dirty looks from the other parishioners.
You obviously have not been acquainted with the “New Christianity” (sort of like “New Paradigm”
), in the form of Prosperity Gospel and the Prayer of Jabez.
Hey, sorry to ask this again but speaking of Florida, does anyone remember the name or the listing of that clown and his wife who had to sell their place to buy the bigger one or lose the 28K they put down on it? It was an article in some magazine and Ben did a thread about it weeks ago. Their drop dead date was today, October 24. Just because I’m an obsessive type, I’d like to know if they sold the first place or had to lose their money.
Someone had the MLS listing for their place. Do you still have it?
Casey Young & Jaime Ballance
3519 Stonefield Dr
Orlando, FL 32826
MLS listing #: O4704287
Original article from CNNMoney.com:
http://tinyurl.com/joj6r
Listing on their realtor’s website:
http://tinyurl.com/uyc8d
Their house was listed on realtor.com as recently as last Friday. However, it’s no longer there. Either they found a last-second GF or threw in the towel and took their listing down. I vote for the latter.
Sales info can be found by doing an owner search on the Orange County Tax Appraiser’s website (I couldn’t figure out how to get a direct link to their property):
http://www.ocpafl.org
The house is still listed in said clown’s name. However, I don’t know what the delay period is for sales to show up here. So it may be a while before we get a definite answer.
Amazing, two real estate agnets trolling vacant homes and defrauding elderly. Read the news article here:
http://sfgate.com/cgi-bin/article.cgi?f=/n/a/2006/10/18/state/n152852D61.DTL
If there were any justice in the world, in addition to jail sentences, they would be required to put all their personal belongings and family heirlooms into a pile that is subsequently burned.
“Baby boomers are not flocking to cities from suburbia, defying some expectations and posing problems for some developers, according to a new study.”
Wow, what a shocker. I’m surprised Robert Cote isn’t all over this. Many developers and planners have bought into this fantasy, but I’ve always questioned it. As the child of true boomers (both born in ‘47), I haven’t seen any of this trend. For the most part, retired people will continue to do what they have done throughout history: look to simplify life and enjoy their families/hobbies. For the overwhelming majority this path does not lead to a hip urban loft. The more things change, the more they stay the same.
All the more reason to self insure. This could be the last nail. This should put the debt to income ratios further out of reach, combined with the much higher taxes. Lets face it, at these prices, you can probably just rent vacation home for six months and come out ahead. What a disaster this is going to be.
The other Insurance disaster is that FEMA is phasing out flood insurance on second homes begining in 2007 as well.
“For the overwhelming majority this path does not lead to a hip urban loft.”
Exactly, their friends would certainly think they were fruitloops too. Whoever came up with the idea that older people want to move to a city is an idiot. It’s pretty common knowledge that downtown areas are for liberal-yuppy professor guys, 20-something women, and gays.
“I’m surprised Robert Cote isn’t all over this.” ["this" == gray locusts descnding upon the cenurbs]
I can’t be everywhere all the time.
The cenurbs have been in residential decline for almost a CENTURY. Really, the Census of 1910 recorded the inflection point. It isn’t even the “developers” that think otherwise. Thet go where thee money is. This used to mean going to where the declared and revealed preferences of potential customers indicated. Unfortunately for us all in recent decades the machinations of would be social engineers (aka planners) has upended this relationship. Nowadays, fees and subsidies and indirect subsidies and overregulation have twisted the situation. All these governmental overeaching intercessions have been in uniformly favor of cenurban overdevelopment. In periods of high demand like 1996-2006 people are forced to “settle” for suboptimal solutions. Thus the current situation where the cenurbs have actually seen a mild resurgence on the backs of the taxpayers. Unsustainable like all government intervention schemes.
“South Floridians are going to revolt!”….they already are revolting…that’s why I’m moving out
Yep, many of them are pretty revolting, all right.
So the baby boomers are’nt moving into all those jimcrack condos they are running up in Boston . Frankly, that jives with my own experience .I love Boston and shopping , dining out etc in town. I AM THE ONLY PERSON MY AGE I KNOW THAT DOES ! However ,as jas jain in always saying ,in America we’re all brainwashed by propaganda ,and I just believed that all these boomers were just itching to move to the city.Wow! now I cannot wait for the chance to live in
Boston !”Build it and they will not come”!
I don’t think he’s saying we all are, just that a lot of people have lost the ability to think critically, reason, or are mentally impaired in some way.
What Jas says is largely accurate, however the “down with America” stuff is tiresome. I know this country has some serious problems, but it has also been very good to me and my family. I wake up every morning and thank God that I have the freedom to make wise financial decisions that I don’t have to live in servitude to the bankers if I choose not to. I also thank God for the business opportunities this country has provided for me- not all have panned out but most have worked well and I’m somebody who started with nothing. America is a country where one can go as far as his abilities and effort will take him. Sure risk is involved, but if one wants no risk then move to a Scandinavian country and give 90% of your income to the government. The US was built by risk takers and I believe the next economic downturn will present even more opportunity for those who are prepared financially for it. There is a reason the 2nd richest man in America is sitting on $40 billion in cash and treasuries. Some of this county’s largest fortunes came out of the Great Depression in the ‘30’s as entrepreneurs took advantage of very favorable prices on quality assets. Yes, we will probably go thru much national pain again, but I believe this country’s best days lie ahead of it, not behind as I still believe we are the greatest country on earth.
Well said. IMO - everyone born here one the lottery.
I bitch alot about the stupidty of Americans, however, I have been all over the world and would never live anywhere else!
however the “down with America” stuff is tiresome
yep. This blog used to provide good commentary. Now it seems to be repetitive and inarticulate, like when people need to make points BY TYPING IN ALL CAPS BECAUSE THEY DON’T HAVE THE ABILITY TO CHOOSE POWERFUL WORDS.
Oh well, it was fun while it lasted.
I agree. As well, could we stop with the name calling and cussing at each other. Just because someone (hegdefundanalyst) doesn’t agree with JJ, doesn’t mean you have thweright to speak rudely towards him. By the way, I have read quite a bit of JJ’s posts, so H.F.analyst, tell us your background and resume, so we may all be enlightened.
“By the way, I have read quite a bit of JJ’s posts, so H.F.analyst, tell us your background and resume, so we may all be enlightened.”
I suppose you are referring to me? I work for a securities firm in flyover country. My two partners and I run client money in the 9 figures, quite a bit for attorneys and seniors. Most of our clients live very low-key lifestyles, nothing flashy, stayed married to the same spouse. When I talk with them about how they accumulated these small fortunes, the answer is almost always the same; “We got our house paid off in our early 40’s, took the mortgage money and plowed it into the market. We let it ride for 30 years.”
Funny, I’ve never read anything on here that I couldn’t handle. I’m all for the open discussion of ideas, however heated it may become. I think Ben is doing a great job with his blog.
Invest3, I couldn’t agree more. Thank you for making my day.
I believe the next economic downturn will present even more opportunity for those who are prepared financially for it
And as you indicated in your next sentence, those people are overwhelmingly going to be the rich. The people at the top of the pyramid knew all along this disaster would happen. Sure a few middle-class savers are going to pick up a few bargains from the debris, but the end result is that the rich are going to own an even bigger piece of the pie than they did before.
And BTW, the highest level of taxation in the world is 49% of GDP in, yes, Scandinavia.
Scandinavia? Is that a country? What’s the capitol?
I also thank God for the business opportunities this country has provided for me
Jesus F. Christ, god cares nothing for your business opportunities.
Betamax, one can be thankful for blessings even if God doesn’t listen.
Maybe you don’t understand but the key to happiness is being grateful for what you have. On the contrary, the key to everlasting misery is probably envy of others success, property or talent.
Oh, and are you sure “god” doesn’t care about his business opportunities? Maybe He does….maybe He doesn’t. Unless you’ve got a pipeline to Him maybe you ought to give it a rest.
Betamax,
I believe God does care about our livelihoods. He even tells us as much in His Word, Luke 12, 22-31 when Christ was speaking to his disciples:
22And He said to His disciples, “For this reason I say to you, do not worry about your life, as to what you will eat; nor for your body, as to what you will put on.
23″For life is more than food, and the body more than clothing.
24″Consider the ravens, for they neither sow nor reap; they have no storeroom nor barn, and yet God feeds them; how much more valuable you are than the birds!
25″And which of you by worrying can add a single [a]hour to his life’s span?
26″If then you cannot do even a very little thing, why do you worry about other matters?
27″Consider the lilies, how they grow: they neither toil nor spin; but I tell you, not even Solomon in all his glory clothed himself like one of these.
28″But if God so clothes the grass in the field, which is alive today and tomorrow is thrown into the furnace, how much more will He clothe you? You men of little faith!
29″And do not seek what you will eat and what you will drink, and do not keep worrying.
30″For all these things the nations of the world eagerly seek; but your Father knows that you need these things.
31″But seek His kingdom, and these things will be added to you.
The key is to trust Him!
The risk-takers and entrepreneurs have really built something quiet dramatic. The greatest housing bubble in history. Something to be proud of?
What do you want to bet that somebody like Buffett, after this is all over, ends up being the biggest landlord in the country? There’s more to successful risk taking than partying with the crowd.
OT:
Disintermediation Update - Real Estate
Disintermediation is a favorite subject here. Regular readers know that I believe that we are in one of those historical eras when the world gets reorganized. As I have defined it in earlier posts, disintermediation always occurs during these significant periods and there is usually a dominant agent of disintermediation that forces the reorganization. In this period of course it is the Internet.
I have also written about the fact that while the effects the Internet has had on such businesses as the travel industry and stock brokerage are obvious, there are business sectors that are just at the early stages of disintermediation. One of them is real estate. There has been much resistance to change by a large percentage of the residential brokers in the U.S. Others, seeing what is happening and what lies ahead are starting to come up with new business models. I have encouraged this as there is always a way to add value. The ‘way we have always done it’ is not necessarily the only way, and it is increasingly a losing position to take in the residential real estate business. This post points to some recent signs that things are changing fundamentally in this marketplace.
Two weeks ago the Federal Trade Commission announced that five regional real estate listing services had agreed to treat listings from discount brokerages no differently that those from the traditional 6 percenters. The FTC is pursuing administrative cases against additional listing services under the general belief that these services are restraining competition. The crux of the FTC case is that the control and power that traditional real estate brokers wield over regional and local listing services is discriminatory and is restraining trade and competition. The traditional brokers, holding firm to existing commission structures have kept discount brokers offering lower commissions from the listings. The FTC bluntly said that these listing services violated Federal Law.
The settlement with the five listing services requires them to open up all lawful listings without any restrictions. In addition to this ongoing effort by the FTC, the Justice Department is continuing forward in year old its’ suit of the National Association of Realtors, charging violation of anti-trust rules.
As many of you know, ‘virtual tours’ are available for thousands of on-line listings. Recently I have seen articles about brokers creating video podcasts for properties. The interesting thing with this trend is that the traditional agents are using the Internet, the medium that is disintermediating them, to try different business methods. That is a very good first step to altering how business is done. But please don’t think you can embrace this newness without fully embracing this newness. When the winds of change blow, they usually blow through the entire house, not just the corner of one room.
As linked to above and again here, the definition both of disintermediation and the business that are ripe for being disintermediation are clearly applicable to the residential real estate agency business. To all my friends in this business, and to any others reading these words, please, please, don’t be ostrich like in your reaction to this inevitability. Accept it and reinvent how you do business and how you charge for your services. If you don’t, you will have that most unpleasant experience of waking up one day saying: “What happened?”
I can imagine home selling to become more like stock brokering in a few more decades. It will become more impersonal and transactional volume will be what drives the biz.
Imagine a RE brokerage that has a couple thousand listings, and just pays a few lackeys an hourly wage to take appointments and show homes. It might charge about as much commission per house, as it costs for the appraisal and title insurance.
If that cannot be made to happen with auto sales, then home sales are even less likely. Selling big ticket items is important, so the market provides for car sales people and realtors and more. What you are saying is a lot like the “retail is dead” message from 1999.