“Is The Midwest Leading A National Downturn?”
The Christian Science Monitor reports on the midwest. “The housing market slowdown is nationwide, yet it has taken its earliest toll in Midwestern communities where the word ‘boom’ never applied to home prices. Here in the northern Indiana city of South Bend, where ‘For Sale’ signs sparkle in the autumn sun, the median price of a resold home is $101,000, less than half the national average.”
“Some forecasters say that coastal communities, from California to the Eastern seaboard, may in the end see the sharpest downturn in prices. But it is this region, characterized by slow job growth and gathering problems in the automotive industry, that has stumbled first.”
“In a business where outright price declines are rare, the Midwest was the first region in recent years to post a drop in prices, with median single-family homes down 2 percent in the second quarter from the same period in 2005. Is the Midwest leading a national downturn?”
“Here in South Bend, realtor Bruce Gordon says a weak economy with state property tax hikes have dampened housing. ‘It’s a way different market, towards the bad side,’ from just a couple of years ago, he says. In many parts of town homes are listed at $50,000 or less, and aren’t selling.”
The Muskegon Chronicle from Michigan. “Patient sellers will have a lot less frustration and heartache in the currently ’soft’ residential real estate market in Muskegon County.”
“Jim and Maria Tate of Whitehall, have had their 3,700-square-foot, four-bedroom, three-bathroom home up for sale since late July through Dan Tardani of Five-Star Professionals in Muskegon. There have been no offers and just a handful of showings on the property listed at $399,900, (realtor) Dan Tardani said.”
“There is a glut of homes in the $199,000-and-above market segment, agents say. At the $199,000 and above price level, there were 336 homes listed on the market. That calculates to about a 20-month supply for the upper end of the housing market, Tardani said.”
“‘The sellers are getting killed out in the market for those $200,000 and up,’ said Tardani, who has been selling real estate in Muskegon since 1987. ‘And if we look at the last quarter of 2005, it was the worst I have ever seen the market while I have been in this business.’”
“‘We just have too much inventory and not enough buyers,’ said (realtor) Bill Carlston.”
“Many people are getting hurt by the trend of pulling equity out of their homes through various mortgage programs, agents say. That leaves real estate agents faced with some impossible tasks, according to Carlston.”
“‘The problem is that people owe more on their homes than we can get for them in a sale,’ Carlston said. ‘I see that every day … several times a day.’”
The Chicago Tribune. “The proliferation of incentives is beginning to blur the true selling price of homes. Appraisers and other experts say..anyone who comes along later to the neighborhood and makes a bid on a comparable house based on the $500,000 figure, rather than the actual $485,000 value, may overpay.”
“The issue is a small but significant byproduct of a real estate market that has turned downward and made many sellers feel anxious. ‘It puts pressure on the appraiser,’ agreed La Grange Park appraiser Robert Napoli. ‘The next buyer comes along, and they get an inflated sale price that includes a non-real estate item,’ such as a car or a trip.”
KTHV from Arkansas. “Numbers are in for the September housing market and they’re down. This, as experts say prices are bottoming out. Ethan Nobles with the Arkansas Realtors Association says, ‘If you go up to Northwest Arkansas, things are down quite a bit. They’ve overbuilt and they’re having some adjustments to make. This is a great time to buy up there.’”
“In response to the recent housing market trends prices are falling. That is bringing buyers back to the market. Experts say that’s a good thing because we have one of the highest housing supplies we’ve had in years.”
The Idaho Statesman. “Jim Donerkiel believes reports of a major slump in the Treasure Valley residential real estate market have been overblown. Donerkiel concedes that his business is off about 19 percent from 2005, when an overheated market set a one-year record in the Valley with sales of 18,486 homes.”
“Newly released figures for the latest quarter show that 3,918 single-family home sales were recorded between July 1 and Sept. 30, a 29 percent drop from the 5,548 sales for the same period of 2005. But the numbers compare favorably with the same quarters in 2003 and 2004, when 3,281 and 3,878 were sold.”
“Terry Sklar said area appraisers are weathering the downturn with work involving estates, residential refinancing, home-equity loans and foreclosures.”
“A Boise State University economist said three consecutive months of declining sales should remove any doubt that the local housing sector is in a ‘recession.’ ‘It’s just a matter of how far it will go,’ said Don Holley, BSU professor of economics. ‘A 29 percent drop is huge.’”
I don’t know if we’re “leading” the downturn (I highly doubt it), but let me tell you:
I’d rather “lose” 20% value of a $100,000 house than “lose” 15% of a $650,000 house.
especially when that $100,000 house is a 4BR 3Bath comfortable home in a safe area
and the $650,000 home is a flipper redo in an iffy neighborhood.
“I’d rather “lose” 20% value of a $100,000 house than “lose” 15% of a $650,000 house.”
Amen to that HIC…..
especially when you brought in some equity and the mortgage is only $500.
the 650k house has already lost 10% since may 05
forget the reporting #s
Agreed Clouseau, sometimes it does pay to think small, and there’s nothing like being liquid and flexible during times like these. Plus, you have to factor in the higher (by and large) taxes, HOA fees, ultilities etc. that the $650k would require just for maintaining the property!
Does anybody have any solid info about Milwaukee WI? I am desperately trying to stop a friend of mine from buying.
ditto Corpus Christi TX
hard to get good data
I see Austin finally turned
Has Austin actually started to decline? I’ve heard the opposite from a Realtor friend and I didn’t quite believe it.
I have watched the Milwaukee market closely. It is not a good time to buy. Downtown Milwaukee is loaded with new condos for sale. Milwaukees property taxes are out of sight. Going north, to Mequon, Cedarburg…nothings selling. I have a friend who converted 8 four plexes to condos, two years ago. Smallest unit 900 sq ft, 120k, to 1200 sqt ft, 140k, only sold 2 of the 32 in the last two years…going back to rentals. Units built in the 70’s. Nice area of cedarburg…so goes the Milwaukee market.
or st. louis (inner ring of suburbs)?
Today’s edition of the St. Louis Business Journal has a short article on the St. Louis market by a freelance contributor (page 36). It only talks about the region as a whole, so the picture in the inner suburbs is probably different from that in, say, West County. The president of the St. Louis Association of Realtors admits that the region’s market is showing “a little slowness”. According to her, sales from January through September were off by about 5% from 2005 and the average time on market was 63 days versus 57 days. HOWEVER, a senior VP at First National Bank comments that his bank is now doing a lot more refinancing (accounting for about 50% of their mortgage business) and they’re seeing more borrowers with financial problems “who purchased or refinanced their homes based on higher appraised values than can be obtained now.”
Personally, I see a lot of stagnation in the inner suburbs with which I’m familiar (U. City, Clayton, Richmond Heights, Maplewood, etc.) - there’s a lot of new spec building and tear-downs, but the “for sale” signs in some neighborhoods are almost as common as the election signs. As for the excess condo construction/conversion in the Central Corridor and downtown, I suspect that’s more speculator-driven than many people are willing to admit, and we could end up with a lot of “dark towers” when this has all played out.
South Bend’s only that expensive because Notre Dame’s there. In most smaller Midwestern towns there are plenty of nice houses that go for $85K or so and never went up that much.
“In most smaller Midwestern towns there are plenty of nice houses that go for $85K or so and never went up that much.”
There are tons of small communities around Western Washington, where median income is only slightly higher than those midwestern towns, yet one can hardly find a trailer under $200k (excluding trailer parks). I believe these areas are ripe for a HUGE drop as they are not commuter areas to Seattle. They experienced mammoth price gains as they were inundated with speculators from Seattle, CA, etc. I anticipate mass foreclosures, BK’s, etc. We were one of the top states in the nation for funny money loans. There are thousands upon thousands of flippers stuck up here right now. They can be found on Craigslist as well as in the MLS.
I’m following the market in Pullman, WA and the minimum for a decent home is $200k, for a 3/2 that doesn’t need work it will be closer to $250k.
And this is in a wee little college town pop. 25,000 on the Idaho border surrounded by wheat fields in all directions. Hard to see why this rural college town is more expensive than a rural college town in Iowa.
Pullman has always been more expensive than Spokane, but both are absurdly overpriced right now. Wages are so low, that I see real estate plummeting very soon, most likely leading Seattle. Speculation has been rampant in Spokane. A few short years ago, there were thousands of homes available for much less than $100k. Now they are few and far between, while wages are stagnant at best. It will get really ugly all throughout Eastern WA, Idaho, Montana, Wyoming, etc. There is a reason things used to be so inexpensive there. NO GOOD JOBS!!
Yes. South Bend is more expensive because of the Univ. So what kind of work can you get in these cheaper small towns? TIME Mag did a story on small town Indiana schools and job opportunities. There’s no good work. Those cheaper homes are probably as inflated relative to local salaries.
A two-income household, each making $8/hr can easily afford a $90K house. Often one earner will own some sort of shop or small business, bumping their income up. It’s not glamorous but you can pay the bills.
Greetings from South Bend. While ND’s presence may make prices higher than they might be otherwise, this is perhaps the most affordable RE market in the country. My friends from bubbleland who come back here for football games routinely estimate that my house cost at least three times more than what I paid for it.
South Bend without Notre Dame (and a smaller Indiana Univ. regional campus) would be hurting big time. The manufacturing industry is mostly gone and we’re too far away from Chicago to be any kind of a bedroom community.
Still, living here has its advanatges. My commute is 5 minutes each way and if the weather is bad, it will probabloy change in 20 minutes.
Whoa — just think what $3/gallon gas meant for those folks.
> South Bend is more expensive because of the Univ. So what kind of work can you get in these cheaper small towns?
The Studebaker plant?
You’re joking, right?
There is some light manufacturing that still goes on, but it is mostly second or third tier supplier to other industries. Notre Dame is now the largest employer, there are two hospitals that run neck and neck for second place, and after them it’s the city and county government followed by the public school system.
It’s not high wage heaven, that’s for sure. What strikes me as odd are the reports on this blog from places that seem like they would resemble South Bend in demographic terms, but have RE prices much, much higher than here. At least here there is a rough balance between low wages and lower priced housing. Other places seem so entirely disconnected from what the economic base could support.
Lets see,
University, Hospitals, Government, Public Schools, and (retail) make up the main economy of South Bend. That sounds like a lot of American cities these days. Matter of fact, that beats a lot of American cities. Many medium to small Florida cities have less than this supporting their economy, the only difference is South Bend is still affordable and the Florida cities will need to fall drastically to get to the afforable level.
To put a twist on a common theme expressed by people to explain why housing “never goes down” in their city: We’re different because no one wants to live here.
People are (were?) moving to FL in droves, many of them coming from places like South Bend because of our allegedly bad weather. Not many people are flocking here, although the stories about the cold are somewhat overdone in my opinion. Superior, Wisconsin is far worse in the winter than here.
so is Fairbanks, Alaska, but I still don’t want to live there
I live near Springfield, MO the least expensive city (four housing) in an inexpensive state. There was recently an article in the News-Leader that quoted the median and average prices. They should be $85K (and they were a few years ago) but now they are $120K medium and something like $180K average. There is a boomlet here fueled by a modest influx of equity bandits from the coasts.
My guess is that losses by FORD and GM have a direct impact but also trickle down to midwestern towns that support the industry via parts and fastners and fabric for the automobile. These losses then hit secondary businesses and economy slows. Buying looks risky as the local economy suffers.
The coasts haven’t been hit as hard by the auto industry’s problems. Prices are holding as people try to hang on.
I would say not just autos, but all manufacturing. I think this is the business sector leading the economy and housing sector down in this region; in the bubble markets, I expect the housing market (and it’s associated financial firms) to lead the economy down.
“but all manufacturing.”
And one of the big things that have not yet been outsourced to China is home related items like windows, doors, appliances, heating and air-conditioning. So manufacturing in the US will take a big hit since housing has slowed down.
Let’s study these locations for a minute
INDIANA
MICHIGAN
ILLINOIS
ARKANSAS
IDAHO
This is not happening just in California, Nevada, Arizona, Florida, DC, Virginia or Massachusetts
Don’t forget Ohio in that list. And this isn’t just manufacturing drive. Cincinnati has little heavy manufacturing (neither does Columbus, Oh), but Cincinnati has recorded its first ever price drop. And building activity is definetely slow around here.
Cincinnati is home to 2 of the biggest consumer staples companies in the world (P&G and Krogers). When home prices are falling here, you know the whole nation is in trouble.
what area(s) are you looking in? I have a sister in Cincinnati and don’t know much about each area. It does not look very robust in their neck of the woods but they have a really nice small house. 45223-1757
I own an older house north of the city, and I work in the northern suburbs. My county is where much of the growth/expansion/residential building was taking place, but the pace has slowed noticably in recent months.
i see. she is in a pretty slow moving area. a few multi-families and small houses. either way the actual $$ are pretty low.
Any insights into Columbus? We left the OC and bought in a newer neighborhood the northern suburbs (southern Delaware county). I haven’t been here long enough to notice an appreciable difference in prices one way or another. Lots and lots of CA, WA, NY, and FL license plates though.
If the downturn is happening even in areas of the country where the bubble never happened, it’s a bad sign for the bubble communities. The conventional wisdom a few months ago was that areas that never saw the bubble would not see any downturn. But obviously the bust is affecting every place. Fear is going to take over the national psyche. It’s going to get ugly.
Bubbles and Jobs. These “non-bubble” areas are losing quality paying jobs and all the spin-offs jobs.
The perfect storm is a bubble and a national recession disproportionally hitting the local job market. So Cal had this happen in the 90’s. If it happens now, it will be a blood bath.
If we avoid a recession, many more owners can hang on to their homes. The economics may favor renting but home owners will at least have the chance to keep their home.
The slower the correction, the better for everyone, including renters.
I’m not sure how many more owners can hang on to their homes, even if we somehow avoid a recession. The ARM re-sets in So Cal are going to be enormous over the next couple of years, leading to many foreclosures, which will lower prices further.
In the last downturn, most folks had fixed rate loans with some downpayments (i.e., skin in the game). This time, people have ARMS and HELOCS re-setting, and many bought with zero down, so it is not as hard to mail back the keys when they realize they are underwater by $100-200K and their loan is re-setting.
I would rather see the correction happen quickly, which would allow the first-time homebuyers to re-enter the market that much quicker. Pain is pain, and I’d rather get it over quickly. Plus, the quicker it is, the less likely that the government will have time to try to interfere and “save” these people (FBs, bankers, etc.) from their mistakes.
I heard an ad on a MA radio station yesterday trying to woo businesses to Michigan. It was pretty odd to say the least but the ad tried to play to the current weaknesses in MA.
We have tv commercials appealing for same thing here in NY. Some actor saying he thinks his home state (Michigan) is a great place for business.
My Mom is struggling with her property taxes in a small rural town pop. 2000 in central Illinois. Flat horizons with corn and soybeans as far as you can see. Hard to imagine a place with less scenery. But with no improvements (actually, it badly needs some repairs) her house has still doubled in value over the last couple of years according to the most recent assessment.
someone here said that the thing about the midwest is that even if the largest mortgage bubble ever couldn’t drive up home prices, what would happen when they didn’t have that support?
we are finding out.
I think the agricultural-based communities will do OK. Any area that relies on farming will be quite used to booms and busts. Farmers are the biggest savers this country has.
Oh come now. In order to make a decent living farming, you absolutely must farm over 1,000 acres, at least here in Iowa. An old buddy of mine had about 800, and he couldn’t pay the bills. I do agree with the saver comment though. Why do you think organic food costs so much? They have small farms, and have lower yield.
That’s just one side of the equation. They also have high demand, at least currently, due to consumer fears of pesticides, irradiation and GM crops.
Not as much demand here in the midwest yet. I’m in corn country. The land of the megafarmer.
“Someone” was me:) The secondary companies that provide parts for the auto industry are still very important to the Midwest. There has been a huge push over the decades to diversify away from being so dependent on auto or agricultural jobs by offering huge tax incentives to attract companies that are not connected with the auto industry or agriculture. This is our own microeconomy that needs no macroeconomic rules. The result is a reliance on bars, nightlife, service industry, call centers and gambling, all supported by cash flush customers from elsewhere in the USA. Combine this with a huge amount of schools, hospitals, and further investments in those areas -there will be problems. The Midwest, or Iowa at least, has more old people than young and with so many sectors that rely on a tax base that is not growing, taxes would have to go up significantly just to maintain things as they are. Those, “saver farmers” are mostly older people who have turned much of that savings into house purchases over the years. What will they do with their collections of houses when they retitre? Name one large Midwestern city that is farmer friendly. It is too difficult and costly for many young people to get into farming, farmers will not provide the jobs here, the corporate farms may provide some. For example, it takes 40,000 head of hogs just to compete, small scale farming does not cut it, xspecially without two growing seasons, imho. The big thing now is that ethanol plants will save the day.
Everyplace that has access to easy credit is in the bubble. The fact that flyover country didn’t gain in the last 7-8 years only implies that without the bubble they would have declined significantly. Expect Buffalo to repeat dozens of times through the rust belt and grain belt and corn belt, etc.
Can you elaborate on your Buffalo comment Robert?
http://tinyurl.com/v32vd
http://tinyurl.com/y94qv9
Sniff.
There are areas like that within city limits, however.. You can find PLENTY of McMansions (TM) in the suburbs. Maybe half the price of CA (if that) but they still do exist. For reference, you could buy a 3/2 1500sf for about $125k-$150k. Taxes are high. $3-4k…
I often wonder who is buying $400k+ in the burbs.. There are maybe a handful of people making $150K+ here. $60k will net you a good lifestyle… Even those aren’t exactly abundant though.
$202 per month to live in Buffalo? No thank you.
You cannot compare Buffalo to NYC. You’re talking two completely different lifestyles. David vs Goliath..
To counter your statement.. 2K/mo to live in NYC? I’ll pass… To each his own.
I’d love to see how you they 5 bedrooms in a 1400 sq ft house.
oops. I meant “I’d love to see how they fit 5 bedrooms in a 1400 sq ft house”.
Slumps: First Goes Housing, Then the Economy?
Fortune on CNNMoney.com
http://tinyurl.com/yg3dwf
excellent article. thanks
I don’t believe that chart since if you extend out about 15 or so years earlier there is no correlation whatsoever. But, I still do believe that the housing bubble will drag the economy into a pretty deep recession.
Definitely a good article to read.
“I don’t believe that chart since if you extend out about 15 or so years earlier there is no correlation whatsoever.”
How do you know that some change in regime (e.g., development of a conundrum) does not explain the change in the chart midway through the past 15 years from uncorrelated to tightly correlated?
From the CNNMoney article…
“The historical record is extremely negative in terms of what comes next,” says economist Ed Leamer, director of the UCLA Anderson Forecast. “We’ve had 11 sharp declines in the housing market since World War II, including this one. Eight of the last ten were followed by a recession.”
This does not bode well for any of us…
It definitely paints a grim picture. Noruiel Roubini has some interesting thoughts on an upcoming recession and of course, housing’s drag on the economy plays a part.
You know, everytime you see the phrase ” it’s a great time to buy “, read back to the source of the statement; it’s ALWAYS a freakin realtor!
They must have that phrase burned into their brain in realtor course.
Doesn’t matter when, where, how, if, or who the subject pertains to .. . they always work in the phrase ” it’s a great time to buy “.
Yes yes I know they make their $$ from the commissions but they don’t realize that they have as much credibilty as a car salesman.
No deal = no income, so gee, small wonder the statement to buy now is overused.
There is one page ad in today’s USAToday by National Association of Realtors. Guess the Title … “It’s A Great Time To Buy or Sell A home”
Wonderful to see my basic assertion in print. Texas is a part of this, probably ultimately the biggest and ugliest part.
Funny how every realestate cheerleader says their location is different and wont be affected and every bear says their location
will be the worst hit.
Except me. I KNOW that mine will be the worst
LOL… sometimes I think we argue about whose locality is the least “different”…
Yes, Texas is big and ugly.
Oh, you meant the real estate market…
That too.
But it’s not all ugly. Parts of it are quite beautiful. That excludes 95% of Dallas and Houston though.
Hey I kinda like Dallas. Only parts though. Anyway, I don’t know if I mentioned it before, but I called in to a real estate radio show in late June, and gave the host a bunch of gruf because he was telling all of his cronies to buy, buy, buy, and that they should go with an ARM. . . you know the rest. He couldn’t back up anything he was saying convincingly, and I was suddenly cut off. Coincidence?
txchick, i dont know what you look like but, after reading your posts for the last several months, your knowledge of finance makes you 10 x hotter. Can i send my wife to Txchick School?
I don’t relate well to other women. They ask too many stupid questions
Damn, guess that’s not gonna work cause at the same time i typed that to you i asked my wife to bring you bakc with her.
/ dont know how to to yellow smiley dudes
hey wtf, how did i do a smiley dude??? i typed ; - ) without the spaces. Guess i answered my own Q.
test
:~(
;-0
I thought we were buddies?
Yeah, I thought of that after I posted it. Not all women but most of them drive me up the freaking wall. I can’t stand to be around them.
Oh crap Txchic-I wanna be your friend too. I quote you on a daily basis(to realtors and my hubby). Thanks for making me a smarter blonde
Oh crap Txchic-I wanna be your friend too. I quote you on a daily basis(to realtors and my hubby). Thanks for making me a smarter blonde
Actually, for all we know, most of the posters here on this blog could be women. At least the clever ones
I’m a man and I’m NOT clever. But I am a good listener.
There are a few men here that have a clue as well. But I guess that’s because we have wives that are sharp - so they make us better.
Geez, you been watching Oprah? LOL
I learned everything I know from guys. Love ‘em.
you and I would get along great.
Mina
From the Chicago Tribune article:
“A couple weeks ago, Cindy Gannon Buchholz decided to offer the buyer of her $800,000 Glen Ellyn home a 2007 Ford Focus if the deal were to close by the end of the year. There have been no takers, she said.
“Everybody in my office was astounded,” said Buchholz, who is a real estate agent and has been trying to sell her home for six months. “But I said, `Well, why not?’ If it’s apples to apples–if it’s between my house and somebody else’s house–why wouldn’t somebody want the incentive of the car?”"
Here’s the listing http://tinyurl.com/yjse7b And here are the prior sales:
6/02 595,000
9/98 335,000
And they always like to say Chicago & the midwest are not in the housing bubble, it’s just the coasts. Looks pretty bubbly to me!
Fed, Just wondering how you got those stats for previous sales. Can anyone justify a 200k + markup in 4 years time, especially in light of current RE conditions?
I got those from the local township assessor’s website. Here’s the link to the property info. page of that listing http://tinyurl.com/yhn2mf
Just keep reading this blog, it will become very clear very soon.
There is something terribly incongruous with an offer that uses a ford focus to promote an 800k house. A Hawaiian vacation or Viking appliances would seem like a better fit.
Yeah, speaking of Viking, I looked at the “gourmet” kitchen in that 800K POS. That’s a joke. Gourment maybe if the Simpsons or Hank Hill move in.
Hey, it’s got granite…lol
Hey, there was that one Simpsons episode where they did in fact install a full gourmet kitchen in their house!
Why in the hell would anyone that can afford an $800K house want a Ford Focus?
Because you can live in your car, but you can’t drive your house.
So if i dont buy your house will i suffer from a lack of Focus?
/quite contrair!
I thought the same thing! If you can truly afford that much for a house you probably wouldn’t want anything less than a Lexus.
Don’t worry, many Lexus drivers living in these houses will need to downsize their auto budget to a Focus soon anyways. Watch eBay once in a while and see how many cars are going waaaay under book. Then read some descriptions - SOME ACTUALLY MENTION SELLING TO PAY THE MORTGAGE AS A REASON TO SELL!!!!!!!! Hooray!
I searched e-bay “cars and trucks” for “must sell.”
There were 210 entries. An even dozen BMW’s and only one hummer. Two 911’s though…
Neil
Good work. Unfortunately, the deparation does not always come up in the descriptor line, only the body text of the actual item’s page. Maybe this is something I should keep track of.
desparation, sorry
desperation
Listen you CA guy. My $800,000 brokerage account doesn’t sneer at my Ford Focus, but is quite grateful for it. Next time I might even downsize to a small Hyundai. Maybe car-snobbery is a CA thing, or maybe it’s just a Guy thing!
It’s for the maid/nanny/gardner, daaaaahling. Juanita no longer has to take the bus — and, she can use it take our little Tyler and Bethany to elementary school, as well.
Actually, the Focus is one of the few things that Ford does ok on. I have one 6 years old and it is a good car. Not so sure about the 2007 model though, I rented one recently and it was a real turn-off.
Used to live near South Bend. It’s a complete pit and has been on the decline since Studebaker closed its doors 40 years ago.
Notre Dame is, of course, the only reason to go to South Bend and the university is actually in a separate enclave on the north edge of town that is not part of city itself. The campus is very insular and the town doesn’t have anything like the feel of a college town that you get in places like Anne Arbor, Boulder, or even Bloomington, IN. It’s more of a broken down rust belt city like all the rest scattered through Indiana, Ohio, and Michigan.
The only redeeming quality of South Bend is that you can easily take the South Shore Interurban RR to Chicago. Although you have to pass through Gary Indiana to get there.
I grew up in NE Indiana (Fort Wayne area) and graduated from IU in Bloomington. You are correct, South Bend isn’t a normal college town like Bloomington, Ann Arbor, etc. Notre Dame is a neat place to visit or see a football game (Touchdown Jesus). Gary, IN is arguably the armpit of the country. It ranks right up there with East St. Louis, IL. It is a defunct steel town that is more or less a ghetto ‘burb of Chicago. I won’t get off the interstate in Gary.
Chicagoans do, though, because gas is about 30 cents cheaper. Any given gas station along 80/94 will be 90% Illinois plates.
Also, the Gary airport should be the “third airport” instead of Peotone for about a millon reasons.
Gary is a great city. Just ask Lyman Bostock.
Not defending Gary, but crimes of passion can happen anywhere.
http://en.wikipedia.org/wiki/Lyman_Bostock
Gary Indi-
ana Gary
Indiana
Gary Indiana…
Nah, the title for “city with a much nicer college than it deserves” is a three-way horse race between Providence, New Haven and Durham, North Carolina. Maybe South Bend is a destant fourth.
Don’t forget Cambridge, Mass. An overpriced slum with one fairly good-looking university (not to mention the institute of technology at the other end of town which looks more like Warsaw).
Central LA with USC.
No fair spltting up big cities like that. LA has UCLA, so they’re out.
I guess by this rule I can’t lump Cambridge in with Boston. The issue with Cambridge is which do you prefer, snobs or geeks. I’ll take geeks any day.
And Waco is that much better than the Bend?
As a 30 year resident, and ND grad, your comments pretty much hit the mark. There have been some attempts to bring ND more into the surrounding community and there is even a plan to put in some college-y shops along Eddy Street south of the campus to generate more of an Ann Arbor or Bloomington atmosphere. It’s still years away though . . . . .
And Waco is that much better than the Bend?
Not greatly so. I moved here for my wife’s career not because of Waco’s qualities. Although the central Texas economy of which Waco is a part is certainly doing better than Northern Indiana. The economy is growing pretty decently and is relatively diversified.
Wanna trade Baylor for Notre Dame?
“Wanna trade Baylor for Notre Dame?”
Uhhh, no. Baylor played ND here about 6 or 7 years ago, so there’s a chance that the Irish will be coming your way soon.
Off to the game now. That’s one nice thing about living here. . . the stadium is only a 20 minute walk from my house.
Wonderful to see my basic assertion in print. Texas is a part of this, probably ultimately the biggest and ugliest part.
txchick57….
What do you mean exactly? I agree that overbuilding in Texas will eventually bring down a crash. But at least in Texas, future population growth over the next decade will serve to absorb at least some of the existing overcapacity. The upper midwest is entirely different. Those cities are actually shrinking and trends will only accelerate in the future as jobs and people move elsewhere. Those folks stand absolutely no chance of ever seeing their mistakes absorbed through growth.
“Those folks stand absolutely no chance of ever seeing their mistakes absorbed through growth.”
Ask anyone in Plano, Richardson, McKinney, Allen or Frisco if they’ve every seen their mistakes absorbed through growth. Some of them are still down after 15-20 years. It’s a like a little Japan on the Texas prairie!
My sister lives over in Mansfield. That is near Arlington, on the Ft Worth side. She says “it is different” of course and denies it is overbuilt. Lots of expensive homes and … trailer parks. Nothing much in the middle.
Evidently the school district is the draw for the area; the taxes are outrageous. They have built these Temples to Football but the kids in the Middle School have NO books. The books stay in the classroom and cannot be taken home.
I have a certain fondness for SW Dallas County and Tarrant County, where Mansfield is, but again, that’s the dead zone for appreciation. I woudn’t mind being stuck there though.
This is ominous from the Muskegon, MI article above.
A realtor in mid-level MI sees upside mortages “several times a day” this early in the housing crash cycle.
It’s gonna be a bloodbath next year.
“‘The problem is that people owe more on their homes than we can get for them in a sale,’ Carlston said. ‘I see that every day … several times a day.’”
But the NAR says its a great time to be a seller , Right ?. The NAR campaign is going to backfire so badly I relish the thought of them spending $40M for nothing but bad publicity and proof of their ability to lie through their teeth.
Pretty much everyone here believes that the RE bubble (and the underlying Credit bubble) are national, but regional economic conditions will impact how quickly the bubble bursts in each locale.
CincyDad,
True… to a point. The national slowdown in home sales is starting to effect even good region home sales and thus the economy.
Besides, its all academic until credit is tightened. At that point, the bubble will burst everywhere.
Neil
If they’re still down after 15-20 years then how much of a bubble can there be in DFW?
My observations after living in Texas the past 3 years is that there is a permanent construction bubble here because there are absolutely no brakes on construction. No geographic barriers. No regulatory barriers. Nothing. So scarcity or exclusivity will never drive up prices like it does in places like San Francisco. There is also a weird preference for new construction over old. In more civilized parts of the US, people actually value older neighborhoods for their established landscapes and architecture. Texans it seems, would rather live in a new house surrounded by dirt than in a “used” house in a pleasant, green, established neighborhood.
But it just doesn’t “feel” anywhere near as bad as the upper midwest. Texas has a certain energy to it that is totally lacking in the midwest where everyone over 21 and under 65 seems to be fleeing. I might be completely naive, but it feels like Texas has the capacity to absorb a lot of mistakes over the long run while the upper midwest rust belt stands no chance of it.
Oh, there’s a bubble all right. It’s inside the LBJ Freeway. There, it’s just as bad as any place in California.
That’s why I’ve argued endlessly with people from other states who think they can just breeze in and buy houses without really knowing the market. You buy a house outside LBJ with the intent of doing ANYTHING but living in it until you die, you might as well take your $$$ and toss it in the fireplace.
But it just doesn’t “feel” anywhere near as bad as the upper midwest. Texas has a certain energy to it that is totally lacking in the midwest where everyone over 21 and under 65 seems to be fleeing. I might be completely naive, but it feels like Texas has the capacity to absorb a lot of mistakes over the long run while the upper midwest rust belt stands no chance of it.
Which states are in the “upper midwest”? To me, that phrase connotes Minnesota, Wisconsin, and Michigan. I know that Michigan is on a long decline because of the car industry, but are Minnesota and Wisconsin in bad shape too? I thought Minneapolis was on the upswing over the past decade or so, and Madison, Wisconsin doesn’t seem to be doing too badly either. (Not so sure about Milwaukee.)
Geographically, it seems like Chicago is also “upper midwest,” but it does not fit your model of “everyone over 21 and under 65 fleeing.”
To me, “rust belt” states would be Indiana, Ohio, Pennsylvania, Michigan, but only Michigan would be in the “upper” midwest.
I’m in California, though, so maybe I have the geography wrong??
I live in Chicago. Usually by “upper Midwest” people mean everything above and to the left of us. This means Wisconsin, Minny, both Dakotas and arguably the UP of Michigan. Usually not Iowa and almost never the LP (Mitten) of Michigan.
I thought it the rule was that north of I-80 (which runs under Chicago, Des Moines, Omaha, Cheyenne) was Upper MW. I’m right on the border of it, that’s probably why I think that way.
Don’t know about the rest of y’all, but Minneapolis would be considered “upper midwest” but many people call us “north” too I guess.
Minneapolis is growing every year. So is Chicago. So is Madison Wisconsin. I think several Iowan cities are too.
People generalize North and South Dakota and Nebraska to the rest of the midwest. They definitely have their issues, but overall I’ve found the “midwest flight” rhetoric is overblown.
there’s also Michigan which is suffering, and Ohio, (but I don’t think Ohio is losing population is it? ) Besides, I consider Ohio “rust belt” and not midwest, but I know others disagree.
Mpls is growing just fine (actually, the metro area is). Not much fleeing here. Unless you mean fleeing TO here.
In general, the population changes have been primarly small city moving to Big city. The big cities seem to be doing ok overall, except for Detroit. (but then again, San francisco, San Diego and Boston have also lost population)
The sellers are getting killed out in the market for those $200,000 and up,’ said Tardani, who has been selling real estate in Muskegon since 1987.
I guess that the equity IDIOTS from CA have ceased their migration treks to Michigan and thinking these $200K McShitboxes are really cheap, so let me buy a few and make a killing when they double next year when the next wave of CA idiots spring up.
Most of the rhetoric on this board is focussed on the purchace price going down in value. There are a tremendous amount of people out there that have piled on a 125%ltv loan on top of their already upside down home. Why ami telling you this? Because the banks are in for a bigger stomach punch than alot of you are aware.
Still, I think the Lehman lawsuit and rhetoric is pretty disingenuous. These guys have access to custom derivatives and strategies and I’m sure they are very well insulated from any catastrophic losses.
Hedged until their hedge fund counter-party goes under. Oh I forgot. Counter-party default is not allowed to happen, see LTCM. Great country where if you are too big to fail you can write any f’in derivative contract you can think of and the feds will bail you out when the flood comes.
Some of us see the bigger picture. Lately, we’ve been trying to figure out where the boyz are hiding all their non-performing stuff. For example, the foreclosure rate in Maricopa County Arizona (Phoenix Metro) is extremely low with a population of 3.6 million:
Oct 05 728
Nov 05 704
Dec 05 749
Jan 06 726
Feb 06 687
Mar 06 790
Apr 06 638
May 06 764
Jun 06 797
Jul 06 851
Aug 06 1019
Sep 06 1114
Oct 06 1238
What are your thoughts on this Fred? It certainly looks suspect.
Rant on - If is a tough life when the ATM machine under the kitchen sink is now permanently closed. No more Hummers.
And to the stupid lady in IL thinking that someone dumb enough to buy her overpriced POS would actually WANT a Ford Focus? Why don’t you knock the price of the house down to a level that someone might actually want to purchase it? Say $300 or $400K???? If I had $800K, I wouldn’t buy a Ford Focus (was labeled as a dangerous car to get hurt in an accidentby some testing agency), and I wouldn’t choose Glen Elyn to buy in - would go to a warmer clime. Oh yeah, I did go to a warmer climate - and have a nicer home for under $300K. Rant off
What? The ATM is under the kitchen sink? I’ve been looking all over my house for that damn ATM, but forgot about the kitchen sink! ‘
Scuse me, I need some money now…
Rant on - If is a tough life when the ATM machine under the kitchen sink is now permanently closed. No more Hummers.
And to the stupid lady in IL thinking that someone dumb enough to buy her overpriced POS would actually WANT a Ford Focus? Why don’t you knock the price of the house down to a level that someone might actually want to purchase it? Say $300 or $400K???? If I had $800K, I wouldn’t buy a Ford Focus (was labeled as a dangerous car to get hurt in an accidentby some testing agency), and I wouldn’t choose Glen Elyn to buy in - would go to a warmer clime. Oh yeah, I did go to a warmer climate - and have a nicer home for under $300K. Rant off
“The housing market slowdown is nationwide, yet it has taken its earliest toll in Midwestern communities where the word ‘boom’ never applied to home prices. Here in the northern Indiana city of South Bend, where ‘For Sale’ signs sparkle in the autumn sun, the median price of a resold home is $101,000, less than half the national average. Some forecasters say that coastal communities, from California to the Eastern seaboard, may in the end see the sharpest downturn in prices. But it is this region, characterized by slow job growth and gathering problems in the automotive industry, that has stumbled first.”
I stand behind my earlier, kneejerk, unscientific prediction on this:
1) Coastal bubble zones will see the larger absolute dollar losses.
2) Flyover country will see bigger percentage reductions in price, at least wherever liberated coastal equity found a home in investment purchases.
3) Places that were largely immune from previous housing collapses (e.g. Wisconsin) will take a hit with everywhere else this time.
4) We enter in to a recession.
5) Our debtor society sends us spiraling in to a
depression.
6) A complete financial collapse with anarchy.
I will now retreat to my bunker for some beans and weanies to
plot out where to set my m18 claymores.
7) Arizona Slim has another “spit coffee on the keyboard” moment. (Economist, stop making me laugh so hard!)
I just found out it is not as easy as I thought to eat a weanie off the end of a 12 inch Bowie knife.
economist,
Stop………you are breaking me up………bwhahahaha
7) Grubner and those who took his advice, become rich feudal lords as they are the last known suppliers of the most precious and valuable Disposable Diaper.
You mean we not only have a housing shortage but also a disposable diaper shortage? Arghhh! The world is coming to an end!!!
No No No, your jumping the gun, in the post apocalypse world there will be a disposable diaper shortage and then and only then will I begin to slowly sell off my stash. 2 one ounce Krugerands for an eighty pack.
“m18 claymores”
Very cool. You shop at Walmart?
So,if you are the NRA and you have decided that you want to blow 40 large on an add campaign that says, “Great time to Buy or Sell!”….What and how are you going to pitch this? Does anyone have any real idea of how that pitch would go? i can’t wait to see these adds. These guys just dont get it. First time home buyers no longer exist. There is no entry level price. So even if all the current home owners ( who presumably have some roll over equity) decide to BUY a new home and SELL their old home the delta is still 0. There are still more homes than there are buyers.
Personally, I think the NRA (read: National Rifle Association) could come up with a better campaign for a lot less money. The Realtors? I just dunno about them anymore.
Thats it… Replace Liar with Charlton Heston…That would be a good start!
“What and how are you going to pitch this?”
Looking to Bag a Buyer?
Smith and Wesson has just the solution.
Heston has some respect from his earlier days. People will remember him as Moses.
Lots of people today consider him Jesus, so he’s got the both the Jews and the Xtians covered.
Heston has some respect from his earlier days. People will remember him as Moses.
No way. Charlton Heston will always be best remembered as “Taylor” from the Planet of the Apes. “You finally did it. You finally did it, you maniacs. You blew it up. Damn you. Damn you all to hell.” End of story!
loved this line from an earlier thread:
“‘We see people on the fence right now,’ said Jupiter agent Pat Fitzgerald
Pat, those aren’t people much less buyers…they’re VULTURES.
Which states are in the “upper midwest”? To me, that phrase connotes Minnesota, Wisconsin, and Michigan. I know that Michigan is on a long decline because of the car industry, but are Minnesota and Wisconsin in bad shape too? I thought Minneapolis was on the upswing over the past decade or so, and Madison, Wisconsin doesn’t seem to be doing too badly either. (Not so sure about Milwaukee.)
Sorry, my mistake. I guess I’m talking about the rust belt. The corridor between Chicago and Pittsburg. All those broken down industrial cities like Gary, South Bend, Fort Wayne, Flint, Toledo, Akron, Dayton, Youngstown, etc. etc.
I think of MN and the Dakotas as the northern plains & prairie. The Dakotas have their own fate but it is more tied to the plains agricultural economy along with Nebraska and Kansas than it is with the industrial rust belt.
In any event, having lived in both Indiana and Texas I can say that for whatever its flaws, Texas feels like it has a whole lot more economic future at this point than anyplace in Indiana.
“I can say that for whatever its flaws, Texas feels like it has a whole lot more economic future at this point than anyplace in Indiana. ”
that aint saying much
Give Indiana a porous 1000-mile border with a third-world country and it’ll turn into Texas in no time.
Dunno about IN, but in IA many talk of setting up stations on the other side of the border to bus up as many as possible to add to the tax base. Our only hope really. The Boomers will need fed and will need heat or even CAC when they retire.
NAR should Invest that $40 million in US Army Surplus Flamethrowers and Torch the potential Bigger Fools outright. It would be merciful and allow the_ economist an occassion Hot Weanie !