Bits Bucket And Craigslist Finds For November 26, 2006
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Here is a lovely email from Standard Pacific I received this week. Check out the HUGE incentives on new homes in Southern California. How would you like to be competing with these builders when selling your **used** home?
Big headlines don’t make a home right for you. Great design, quality and surroundings do. They’re yours now in a spectacular Standard Pacific home, plus outstanding incentives and solutions that make it simple! No need to wait or to settle for less. The right home is waiting with incentives that will move you now!
Branches at Ladera Ranch:
Incentives up to $25,000*
Approximately 1,617 - 2,106 Sq. Ft.
From the $600,000s
Las Piedras at Ladera Ranch:
Incentives up to $125,000*
Approximately 2,781 - 3,181 Sq. Ft.
From the Low $1,000,000s
Caprizi at Talega:
Incentives up to $100,000*
Approximately 2,323 - 2,471 Sq. Ft.
From the $800,000s
Portomarin at Talega:
Incentives up to $100,000*
Approximately 2,610 - 3,009 Sq. Ft.
From the $900,000s
Catania at Talega:
Incentives up to $150,000*
Approximately 2,873 - 3,756 Sq. Ft.
From the Low $1,000,000s
Stella Mare at Talega:
Incentives up to $125,000*
Approximately 3,048 - 3,823 Sq. Ft.
From the Low $1,000,000s
Carillon at Talega:
Incentives up to $100,000*
Approximately 3,450 - 4,178 Sq. Ft.
From the Mid $1,200,000s
Mille Fleurs at Woodbury:
Incentives up to $100,000*
Approximately 3,174 - 3,648 Sq. Ft.
From the Mid $1,000,000s
I figured Talega and Ladera Ranch would get hit pretty good. They are so far east and its super hot there in the summer. That area was so much better rural with just Coto de Caza, a few old cabins, hiking, horses, and interesting old codgers and bikers.
Sold Out — as for those incentives, here in the Southeast, I have been hoping for more. Much more. But likely I am early. There is a neighborhood I’d like to buy into, that is 90+% built out (roughly, 180 of 200 lots), but within which there are more than a dozen spec-built custom-builder homes languishing at 2005 prices. I want to buy one of those for 30% off original asking price. My assumption is that (a) because of the bubble, the builder had at least that much profit built in or (b) if that is wrong, the builder might take my offer just to get the albatross off his books.
Will go there in late January or February to try out this theory. The best news is that options currently seem limitless, should the sellers be intransigent. A continued lease on the great place we’re in would please my wife, or we might cut a great deal on a new custom build.
I cannot imagine how awful it must be to be a wishful seller in most parts of the country right now.
Monopoly money / reits / economist
about all the players that keep the ball rolling.
private equity, derivatives, yields below treasuries etc….
http://www.immobilienblasen.blogspot.com/
“Blackstone deal is just the latest “privatisation” of the American property market”
If the equity is private wouldn’t that make it easier for China, Japan, Saudi Arabia and Russia to buy it with their huge reserves of dollars?
Illegal aliens buying lots of houses in N. Texas. Don’t want to “throw money away” on rent
http://tinyurl.com/ydhjou
Denver Post did a great front page story this morning about foreclosures. Homes in some neighborhoods are being abandoned and neglected. According to the story, one-family homes are popular for use by two or more immigrant families. One resident blames a Colorado crackdown on illegal immigrants that prompted some families to cash out and move to safer places like Seattle, New Mexico, and Texas.
The Absurdity of the SCal-LA RE bubble :
Here is that perfect made-to-order starter abode for the first time illegal alien homebuyer:
it is a 2 bed, 1 bath with a garage converted into a third bedroom. This 819 sq ft beauty on 2000 lot got a quick paint job only, is a simple flat-roof narrow row-house stucco, and is located at 3539 Caspian Ave, long beach, 90810 in a completely trashed-out LB westside street and neighborhood. Price just reduced from $425,000 to $405,000.
This may be either a starter or a moveup:
A few houses away, another 3/1 LB westside Beauty(3437 caspian ave LB CA 90810) available for just $535,000. 1272 sq ft/4800 lot. Same s**thole street and hood, but a more substantial upgrade/remodel, inc unpermitted 1/4 bath/laundry rm, granite ctrs,new tiling & carpets, fresh sod, new sprinkler sys, ect. Bonus: 3% or $16,050 credit to the buyer’s closing costs.
These overpriced 50+ yr old simple stucco SFH’s in a crappy deteriorating R-2 neglected hood in LB are tailor-made for the illegal alien/lower working class SCal immigrant, all at 100% financing, no-doc, stated, neg am,option arm.ect. The RE bubble here in LB still in full denial, and attempting to snare the last remaining GF’s.
will try to post links with pictures of the Homes to illustrate just how idiotic this bubble has gotten here in LA/LB, even in late november 2006.
this is a zillow close-up ariel view of 3539 Caspian, the birds eye view panned north. Notice that it is a simple flat- roofed narrow row house shoved onto a 2500 lot with a single driveway. At actual up close ground level it is far more ugly.
javascript:noop();
This is my first time attempting to link a picture direct ffrom zillow:hope it works.
http://www.zillow.com/aerial/DualMapPage.htm?zpid=21246240
That sucker is a bigger version of what in the South is called a “shotgun house.”
And this is the entire zillow link to 3437 Caspian ave.
http://www.zillow.com/HomeDetails.htm?city=Long+Beach&state=CA&zprop=21246235
This SHF on a blighted run-down street was last purchased 6-12-2006 for $140,000. Looks like sellers did aan almost complete top-down remodel. My estimation is between 10,000-20,000 worth: they cannot have used top-of line materials or labor in that dumpy area.
They are attempting to get $400,000 profit out of this sale. Good luck! I know the area and the hood: it is in fact perfect for illegal- alien multi-family conversion as LB city has completely abandoned any pretense to enforcing building ordinances and codes in this downzoned ass-end section of town.
LOL — “Year built — 1947. Year updated - 1950.”
Take a minute to read this piece…
http://www.lewrockwell.com/reese/reese322.html
Non sequiturs leading to loosely associated arguments by assertion in order to make the specious point that… damned if I can tell what it is, aside from an apologetics for the Confederacy. By an author who has elsewhere asserted that the US has a “Jewish problem”?
Don’t waste that minute.
“By an author who has elsewhere asserted that the US has a “Jewish problem”?”
If we didn’t have the influence peddling of AIPAC we wouldn’t be in Iraq right now. Dr. Paul Wolfowitz was a shameless instigator of regime change in Iraq looking to increase Israel’s security in the region. Unfortunately the security situation for Israel is now worse than ever, and we’ll likely see U.S. ground forces deployed there within the next ten years as Israel will bomb Iran’s nuclear facilities regardless of which political party resides in the White house, IMHO.
WMBZ-Good piece! We went through the same thing during Vietnam War. Supposedly well educated college students could not find Vietnam on a map of Southeast Asia.
WMBZ — Charley Reese, who wrote a daily column for my hometown Orlando Sentinel for as long as I can remember, is my favorite modern-day columnist. He’s an acknowledged libertarian and unapologetic Southron. Those who would wish to discredit Charley might wish to peruse his LR archives at
http://www.lewrockwell.com/reese/reese-arch.html
He is against foreign intervention and against imperialism, a position that roils many who believe the U.S. should act in whatever manner that benefits or defends Israel. Personally, I think the Swiss should take over that responsibility. Whatever, to me Charley is a modern-day Will Rogers — a plain-spoken individual forever unafraid to stand up against collectivists of the left or right.
Sorry if this posts twice… Good read.
http://www.lewrockwell.com/reese/reese322.html
And i am so desperate for work, behind on my bills, and cant even get an increase in my credit card line, so i can buy nice clothes for interviews, and they lend illegals money to buy a house….
Am i missing something here????
==========================================
While it’s illegal to hire undocumented workers, there’s nothing wrong with lending them money. In fact, federal and state governments are subtly encouraging banks to issue home mortgages to illegal immigrants through little-known individual tax numbers. Banks are also training employees to speak Spanish and guide customers into homeownership.
What really blows me away is the fact that they can be beneficiaries, or plaintiffs, in a lawsuit. Example from an actual court case: A large truck collides with a small pickup filled with 5 construction workers. Those that lived, or their families, received huge sums of money for their loss.
Now in this example the workers were wrongfully hurt or killed, but how can “the system” indemnify them if they’re illegal?
How about given them money and then shipping them out of the US? But this does not happen.
So if I overstay my visa in Thailand because I’m too busy doing more important things, and I get run over by some crazy driver, I should only get deported and nothing happens to the driver that injured or killed me? Use your head.
Is your last name “Karr”?
You should travel more, and not have your opinions formed by CNN and Fox News.
I’ve traveled to every Continent but Australia, and my opinions are formed overwhelmingly by personal observation and experience, not Faux news. But dude, you’re a bundle of contradictions. You say “no government” but then demand justice and recompense — which ultimately, only government authority can compell — if someone runs you over in Thailand. [I hope you're not one of those sex tourists -- if so, I hope someone DOES run you over].
I just finished reading a fantastic non-fiction book called THE GATE by Francois Bizot, one of the few surviving Westerners to be held captive by the Khmer Rouge [of Cambodia's Killing Field's fame] and lived to tell about it. The thing is, although the Khmer Rouge rank-and-file were young, uneducated peasants, the leadership were almost all from the upper class elites were were educated in France. They had a revolutionary, idealistic, utopian vision that degenerated into paranoia, madness, and genocide. The insights in the book are well worth reading for anyone who believes in “power comes from the barrel of a gun” simple solutions. Myself, I prefer to keep the world-improvers back in the woodwork and their mother’s basements where they belong.
It appears what you are missing is that the immigrants are willing to work at any job. Evidently, you are not.
What I see happening is middle class America in on the down escalator and the immigrants from south of the border on the up escalator, waving at one another, in passing…
At the turn of the 20th Century there was a saying:
“As rich as an Argentenian”
In 1900 they had the highest per capita income in the world, but nobody thinks of Argentina as wealthy anymore. (p.s.: Looking for cheap real estate?, like $40K for a decent house in the Beautiful Lake District, around Baraloche)
JR-this social security scam by immigrants is not new, and involves probably huge numbers. My friend who’s a trauma doc at Bellevue hospital told me it’s longstanding in Chinatown–that the promise to financially care for elderly relatives brought to this country by recent immigrants is regarded as a joke…and even tight-knit asian families are happy to offload their elderly relatives and their expenses on the taxpayer. There is no “work any job” requirement in this scam.
http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20061126/BUSINESS04/611260305/1071
Home Deals Sweeten as Market Sours
Wow! 42 percent discount on condos!!!! I can wait, I can wait!!!!
this probably deserves its own thread:
mortgage scam=Ponzi scheme, but these were very legitimate investments at some point, weren’t they?
http://www.nytimes.com/2006/11/26/business/yourmoney/26psyche.html?_r=1&oref=slogin
Agree. That’s a good article. Covers the scam you see all the time on Craigslist where people “lend” their credit scores to these crooks and end up on the hook for foreclosed properties.
Tchick;…send me a email….
There was a story on the front page of the Minneapolis Star Tribune this morning about how foreclosures are on the rise.
http://www.startribune.com/535/story/834704.html
——————-
In St. Paul, foreclosures are on a pace this year to be three times as high as they were in 2003. In Minneapolis, foreclosures have increased by about 79 percent compared with last year. Meanwhile in Dakota County, foreclosures exceeded last year’s total by Sept. 1.
“There are more and more people who have purchased houses using mortgage products that they didn’t fully understand,” said Cliff Morse, a mortgage financial planner with American Home Mortgage in Chaska.
http://www.flipernation.com/
Dave — FWIW — there’s a second “p” missing in your link.
There has been quite a dramatic drop in sales over last year but as far as I can tell from the aritcles they are still fairly good if compared to the years prior to the bubble. I wonder if anyone has data on how far sales fell when prior bubbles burst as to how far below prebubble volume they went. This might give an idea as to what to watch for to mark the low point over the next few years (decade?).
Took a drive around the ‘hood yesterday, and saw signs for absolute auctions and rent to own. In my 15 years of living in Lake County IL, I have never seen this. Sellers are getting desperate around here (and we are only in act 1 of the unfolding tragedy).
http://www.larouchepub.com/other/2006/3340hsg_bubble.html
It’s not just the houses that aren’t selling — it’s the loans (mortage backed securities).
NoVa, I keep thinking some of the buyers of these RMBS traunches are going to demand higher ROIs, but I still see zero down, 80/20 cash back deals going down every month. It is ridiculous. The problem is there is such a lag time between the loan issuance and the default and foreclosure, sometimes a year or more, that the cows have left the building by the time the barn door is closed.
Supernova — with all due respect, the following phrase discredits the entire article. Too bad, because it made many good points.
“…commented Lyndon LaRouche, the world’s foremost economist,…”
That is about like Robert Byrd commenting on the progress of blacks in America. He might be correct, but that is not important.
Currently many “investment” properties are tenant occupied, starting 2Q ‘07 we’ll see waves of desperate sellers hit the market.
And dont forget: if the tenant is SMART and gets a year or 2 yr lease, the new owner inherits the negative cash flow tenant.
Unless they want to fork out thousands to pay the tenants expenses to break the lease to move. Yes a lease works BOTH ways!
Hmm…. I wonder if the old owner is going to like, umm “forget” to transfer the security deposit and/or last months rent to the new clueless owner at the closing?????
http://www.larouchepub.com/other/2006/3342g-span_hsg_bubble.html
Reality Bursts Mortage Bubble and Greenspan’s Fantasies.
A trip to Clearwater Beach:
I went on my weekend bike tour yesterday. The new condos that are being completed were all posted with OPEN HOUSE signs. I cycled past about 8 of them. The only cars parked outside were the agents. The garages and streets were pretty much empty, and it was a beautiful day. Maybe everyone was out shopping with the money they got from their HELOC.
The townhouses that were completed last year and occupied or put up for sale are still largely “for sale or rent”. I would estimate 30%, but I did not stop to count.
One OPEN house was a new construction 3 story condo with 8 or ten units. The construction has not even finished, at least the grounds are still dirt and debris, no sod, no sidewalks or shrubbery. Nonetheless, the units are open for view. But, interestingly, in it’s incomplete state, there is a FOR SALE BY OWNER sigh in one of the 2nd story windows. I laughed when I saw it. Another FLip for $ale.
Is the whole country working on this new “housing paradigm”?
Nonetheless, construction continues. On Brightwater Drive, where the for sale or rent townhouses and condos are being offered (those occupied have Hummer H1 and BMW700’s or Mercedes 500 series convertibles in the driveways) a new condo is currently being offered, just finishing up, with an OPEN HOUSE today. Empty.
A half block away, a NEW SLAB is being poured for a new waterfront luxury (they are alway luxury, aren’t they) townhouse complex. It sits beside 2 or 3 other VACANT lots, the former remnants of a teardown of small motel/hotels and homes. They have been in this condition for more than a year.
I was actually surprised to see the slab being poured as I cycled past the empty open house condo complex………5 stories/40 units? No interest.
To be fair, I am only reporting sites I saw at the time I cycled by (mid-afternoon). I did not return to see if business was better later in the day.
Another anecdotal bit: I have 3 usual restaurants I visit there and know most of the servers. We occasionally chat. Business has been GOOD. Don’t attribute this to a new business cycle. To make way for more luxury condos, the developers torn down many businesses which included eateries and shops. Many of those sites are now vacant, awaiting the next wave of Pre-Construction Buyers.
The biggest tear-down, in the heart of Clearwater Beach, was for a luxury resort to be built by HYATT. I believe they are calling it “Aqualea”. It is billed as a hotel/condo job, i believe with the concierge service, blah, blah, directly across from the main beach parking area on the strip that we used to cruise when I was in High School. That site has been vacant for about a year also, and the former businesses and motels are a distant memory.
The Sales Centers for RDB Realty, the promoter of about 20 of these new luxury homes for wealthy flippers were EMPTY. No rush to buy here.
And the biggest projects, whose names I can’t recall that are going up where the Clearwater Beach Hotel once stood (a nostalgic turn of the Century wooden structure was demolished) continue to be finished at a snails pace. Based on rate of construction, they could probably be ready to occupy by Spring. I am told most are already “SOLD”, to which I just snicker.
The beaches were still pretty full, and many people still come over from the mainland to join the tourists basking in the sun, but the choice of eateries and sleeping places has shrunk. I am waiting for Starbucks to replace the former burger joint. I can hardly wait.
A depressing article on the front page of NY Times Real Estate section this morning. It says NYC landlords are making it very difficult for people to gain access to apts. Persons who earn a mere 3X the annual apt rent must come up with “guarantors” who earn 5X to 8X the annual rent. Funny how the same requirements are not applied to “buyers”. Advice in the article is that renters having trouble should try dealing w/ individual condo owners rather than big landlords. Sounds right to me. I have had best luck w/ landlords who owned only one or two rental units and who did not choose to use a management company (have never lived in NYC).
AZ — NY landlords are notorious for this kind of thing. It’s really crazy the kinds of hoops you have to jump through. My sister the corporate lawyer, with a mid-six-figure income and immaculate credit, had to present a huge pile of documentation to prove that she was worth renting to, and still got turned down by one place.
Sometimes it makes sense to screen. My apartment in Scottsdale was broken into from next door. The tenant, with two teenage kids, used his mom for referral. I tried to get the apartment complex insurance company responsible but they denied the claim/blame. I moved out of that complex in a month and left flaming notes on renter review websites about that complex. It since then turned condo conversion. Probably will turn back to apartments. The next door neighbor went to jail 2 months later anyway. My own insurance company gave me some money for recovery of some of what was stolen. I am one for allowing apartment to discriminate as much as they can to who they rent to. But this is the nanny United States where no one is responsible for their actions.
Bill — see? You know that libertarianism is the only real answer. Pot-heads do not dominate the party, nor the philosophy. Neither of the mainstream parties could, would or will protect you from a reoccurence. Me, I’d count on ADT and Col. Colt.
Why live in NYC? Why not move to somewhere where the cost of living is reasonable?
When I think of NY and trying to live there - IMO it is like trying to compete in a marathon when the strating gun went off an hour ago. Yeah, you will pass a few people buy you can NEVER truly get ahead. In many parts of the country if you work your a$$ off and save you can easily get to the top 5% of the population and enjoy life.
We went through a pretty rigorous screening process for both of our recent rentals. Both the landlord (1st place) and property manager (2nd place) noted that we had the highest credit scores they’d ever seen, and were completely non-obtrusive (no surprise inspections, etc.) and respectful. Kind of amusing that we got checked out much more thoroughly than the typical debt-ridden FB lurching through the doors of their mortage broker.
my point exactly
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Our Earth Sheltered Home
http://home.earthlink.net/~gmayhak/arches/arches.html
Gekko, that is one sweet abode. I assume you were able to get an 80/20, cash out refi, heloc, arm, I/O loan so you could afford to install that expensive wishing well? Thanks for sharing.
Try these on.
http://www.earthship.org/
Recycled, passive solar homes without any need for utility connections.
Very interesting place, Gekko. Thanks!
Awesome “digs!” - could not resist -
Actually, my parents subscribed to “Mother Earth” magazine in the late 70s or early 80s and there were occasional articles on earth sheltered homes. My dad and I were fascinated by this stuff. Great design Gekko, and looks like the type of design I daydreamed of way back decades ago. I would say 50 miles or more north of Phoenix would be a good area. For those who are unaware, earth sheltered homes have natural insulation and takes less energy to heat and less energy to cool than conventional homes. Fire resistance is automatic. My dad and I were thinking of earth sheltered homes as a good choice of contruction for forested areas.
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this is not me/mine! i just found it while doing a search!
Of debt and Gen Y
They’re burdened with debt, but have more than enough time to recover
By Linda Stern
REUTERS
November 26, 2006
The kids aren’t kids anymore – and they may not be all right, either.
Members of Gen Y, at least the ones between the ages of 25 and 34, are swamped with debt, own fewer financial assets than their parents did at the same age, and face housing costs that are historically high.
That’s according to a new study underwritten by the American Institute of Certified Public Accountants, which has started a public awareness campaign aimed at those 20-and 30-somethings.
“We picked that generation because they have a lot of time to correct their behavior, and because with all the life decisions they are going through, like marriage, buying a home, having children, getting new jobs, we thought we could have an immediate impact,” says Carl George, a Peoria, Ill., accountant who is chairman of the campaign.
But it’s not all gloom and doom.
Gen Y is a smart and highly educated generation facing a decent job market. And the bulk of debts have been undertaken during a period of historically low interest rates to finance appreciating assets – those pricey educations and homes.
Census Department data show that about 43 percent of Americans adults under the age of 35 already own their homes. That’s up from 37 percent as recently as 1994. “Generation Debt” is looking better off already.
Which does not mean they can’t learn a thing or two about financial fitness.
George’s campaign is called “Feed the pig” (www.feedthepig.org), to encourage piggy-bank-style savings behavior among young adults. So far, much of the campaign has been of the “skip-the-latte and save-for-retirement” variety. But there’s a lot more the targeted audience can do to get ahead.
Here are some ideas.
…
- Kill your debts.
Put them in order of most to least onerous, by interest rate. Pay off your credit card balances as soon as you possibly can, even if you have to hold weekly yard sales and moonlight at a second job to do it. Then promise to never let a month go by without paying off the balance. While you’re getting debt-free, send the biggest checks to the card or loan that has the highest interest rate. If you’ve got big student loans, consider a job (consulting, teaching, community service, etc.) where your employer will take those loans over for you.
- Buy a house.
There’s no better investment, over time, than living in your own home, so work toward that goal. But homes now are costly, and in some markets it makes more sense to rent while you amass more money for a bigger down payment and wait for a more affordable market.
Don’t jump into the first condo you can afford. Condominiums can be fun, but historically they have not held their value as well as single-family homes. If you’re condo shopping, don’t just go for the amenities. Make sure you buy one in a neighborhood that’s really worth paying for, and that the condo fees won’t be a burden you can’t handle.
http://www.signonsandiego.com/uniontrib/20061126/news_mz1b26ofdebt.html
LOL.. Kill your debts… Buy a house.. Anyone else see a conflict there?
Me thinks Linda Stern had best step away from the Kool-Aid..
Wealth gap swallows up American dream
Posted 11/24/2006 1:32 AM ET
By Noelle Knox, USA TODAY
NAPLES, Fla. — In the luxurious neighborhood of Port Royal, home to the likes of mystery writer Janet Evanovich and mutual fund magnate John Donahue, homeowners are insulated from many of life’s daily cares — including the real estate slump. This year, 15 estates in the country club community have sold for $5 million to $16 million. But in the rest of Collier County, home sales have plunged a gut-wrenching 50%.
Elsewhere across the USA, the megarich are still snapping up homes in such enclaves as Vail, Colo., and Beverly Hills, and often paying cash. Sales of homes above $5 million are up 11% this year and are on track to break another record, according to an analysis by DataQuick Information Systems for USA TODAY. As for the national average, by contrast, sales are off about 8%. Prices fell in September for a second-consecutive month, partly because they’d soared beyond the reach of many.
The divergent housing trends are a sign of how a widening wealth gap is reshaping U.S. neighborhoods. In Naples, as in other areas, the consequences of the growing divide between rich and working class are increasingly visible. Residents here face “Not in My Backyard” resistance to affordable housing, so workers live in distant suburbs and towns, roads are jammed, and labor shortages unsettle the economy.
In Naples, about 130 homes over $5 million are for sale. That’s more homes than the county will let Habitat for Humanity build this year.
“There’s the rich, and then there’s everything else, in terms of the economy but also in terms of social class,” says Edward Wolff, a New York University professor and expert on the wealth gap. He likens it to the social divisions of the 1890s, adding: “If you don’t counteract the extreme inequality trends, I see some social upheaval coming. That’s my worst fear.”
…
The state of Florida estimates that Collier County, which includes Naples, has a shortage of at least 35,000 affordable homes. That’s the estimated number of residents who spend 30% or more of their income on housing. It doesn’t include the thousands who commute from the surrounding counties because they can’t afford to live in Naples.
The lack of affordable housing in Naples has been magnified by growth — population has doubled in the past 15 years, to about 300,000 — and the real estate boom. Investors and vacation-home buyers helped drive up the median home price to $446,900, second-highest in Florida after the Keys. Though prices are falling a little, they’re still too high for most people in the area. More than 80% of the workforce is employed in the four lowest-paying industries: construction, retail, agriculture and services (pool cleaners, for instance, and golf instructors). Median income for a family of four: $66,100. That would qualify you for only about a $350,000 house, nearly $100,000 below the median.
House rich, cash poor
Homeownership is the No. 1 source of wealth-building for middle and lower classes, and the housing boom made millions of homeowners “house rich.” But over the past five years, once you account for inflation, incomes for these groups are actually down. Many low- and moderate-income families are spending home equity just to maintain their lifestyles.
Nationwide, nearly 90% of homeowners who refinanced homes from July through September took cash out of their property — the highest level in 16 years, according to Freddie Mac.
And while rising home prices mean rising wealth, they also mean larger mortgages. For the middle class, the ratio of debt to net worth has nearly doubled since 2001 and is now in dangerous territory.
“The figures are astonishing,” says Wolff, the NYU professor.
The number of homeowners who spend 30% or more of their income on housing has jumped to 35%, up from 27% in 2000, leaving little or nothing left to save. By contrast, incomes for the rich are rising, protecting them from the downsides of real estate cycles.
http://www.usatoday.com/money/perfi/housing/2006-11-24-luxury-homes-usat_x.htm
If there was any question about Oregon and a Housing Bubble just check out the front page of the Sunday business section
of the Oregonian.
http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/1164335110280590.xml&coll=7
Whither the dollar?
——————————————————————————————
RMB breaks 7.85 mark against US dollar
(Xinhua)
Updated: 2006-11-27 13:53
The value of the Renminbi (RMB) against the US dollar hit a new high on Monday, with the central parity rate at 7.8402 yuan to one dollar, breaking the 7.85 mark.
This signifies that RMB value has risen by 5.31 percent since July 21, 2005, when the Chinese government launched the reform of the exchange rate system to allow the yuan to float against the U.S. dollar within a daily 0.3 percent band from the official central parity rate.
The appreciation followed previous records on November 9 when the central parity rate hit 7.8697, breaking the 7.87 mark, and November 23 when it was 7.8596, breaking the 7.86 mark.
The exchange rate was set at about 8.27 yuan per US dollar before the reform.
The yuan’s appreciation is attributed to the continuous slump of the US dollar and expectation for an interest rate drop in the United States, said analysts.
http://www.chinadaily.com.cn/bizchina/2006-11/27/content_743841.htm