“Staring Each Other Down” In Massachusetts
The Boston Globe reports from Massachusetts. “If home shoppers are frustrated by the lack of bargains in the real estate market, they might want to follow John Pesa’s lead. When sellers would laugh at his outrageously low offers, he would counter with a lower figure. He would dig up information on comparable, but less expensive, houses to buttress his point and learned as much about the pricing and movements in the market as the brokers showing homes knew.”
“The result was a house in Halifax that they bought at the end of summer for $81,000 below the seller’s original price. ‘I was able to put myself in a frame of mind where I was a complete businessman,’ Pesa said. ‘I was a stone cold hunter.’”
“For home shoppers who don’t have Pesa’s tenacity, the current soft real estate market has been something of mixed bag. Home prices have only fallen around 5 percent, hardly the kind of discount that would get buyers rushing off to a department store sale, much less to make the largest purchase of their lives.”
“Karl Case, an economics professor at Wellesley College, said the most recent annual survey he and a colleague conducted among home buyers revealed growing pessimism about buying in a down market. ‘They’re scared they’re going to buy something very expensive that’s going to fall in value,’ he said. Sellers, meanwhile, he said, are being ’stubborn. They seem to be holding out so far.’ The result: ‘People are staring each other down.’”
“Buyers should not panic at a sudden resurgence in the market and make rash offers, said Pesa. Be patient, be selective, he counseled; but more important, get to know the target market inside and out. ‘You’ll get to a certain point where you’ll be able to recognize what’s a good deal,’ Pesa said, ‘and what’s not a good deal.’”
The Enterprise. “After being on the market for more than a year, the house in Taunton is finally under agreement. But while the house sold for about $100,000 less than the original $459,000 asking price, its $421,900 assessment is likely to remain the same next year.”
“It’s a situation that property owners throughout the region are experiencing: Property values are plummeting but assessments, done at the height of the market, aren’t budging.”
“Abington assessors, expecting the situation to cause some confusion, have put homeowners on notice that lower values of today’s sagging real estate market, they’ve told homeowners, cannot be reflected until next year, fiscal 2008.”
“Even if the values drop, East Bridgewater assessor David Lincoln Phillips said tax bills will not necessarily be lower because the tax levy or amount the town needs to collect generally increases. ‘The tax rate is driven more by what the town needs for revenue,’ Phillips said. ‘So if the values are high the tax rate may be less. If the values are lower, the rate may have to go up.’”
“The three-bedroom house at 10 Tania Drive is assessed at $421,900, according to city records. But listing agent Jim Ricker says the agreed selling price is mid-way between $349,000 and $379,00. In this slow real estate market, it is not unusual for houses to sell below their assessed values, according to municipal assessors and real estate agents.”
“‘It’s really a strong buyers market,’ said Jean Sawtelle, spokesman for the Plymouth and South Shore Board of Realtors. ‘Values are down, the demand has eased and the sales pace is moderate. It’s helped boost the affordability level.’”
The Gazette. “Ana Martinez’s three-storey house in the Dorchester section of Boston is scheduled to be auctioned in December because she’s far behind on her mortgage payments.”
“Martinez has become so desperate to save her clapboard house on a quiet working-class street that she’s even appealed to America’s patron saint of lost causes: Oprah. ‘I offered myself as a charity to her,’ she says. ‘Her workers called me back and said there were thousands of cases.’”
“Martinez has dug a hole for herself by repeatedly refinancing her home over the last decade as its value soared in a real-estate boom that’s lifted prices in Boston and other U.S. cities. The downturn in the U.S. real estate market has exposed folly and fraud in an orgy of mortgage borrowing over the last five years.”
“Besides a surge in mortgage lending for home purchases, Americans cashed out $740 billion from their houses in 2005 alone through refinancings and home-equity loans, according to the Federal Reserve. The Fed estimates half of that cash went to buy goods and services, cars, granite counter tops, vacations. It’s called using your house as an ATM.”
“Now, with house prices falling in many cities and the inventory of unsold homes rising, an out-of-order sign has been hung on the mortgage refinancing ATM for many families.”
“Lois Meisler runs a Boston company that manages foreclosed properties across the U.S. for banks. Meisler’s business gets better with each passing month and she expects the real estate bust to continue for years. ‘People have refinanced every dollar out of their house. There’s no equity left.’”
“Many upper- and middle-class homeowners and real estate speculators were caught owing too much when the music stopped. For example, a columnist for the Boston Globe newspaper and a Massachusetts state senator narrowly avoided foreclosure this year when they failed to keep up with mortgage payments.”
“The situation has been made worse by predatory lending practices. These operators frequently saddle unsophisticated borrowers with high fees and penalties and have gone as far as fraudulently inflating borrowers’ incomes on applications to qualify them for mortgages.”
“The mortgage companies are in it for the fees and quickly offload their default exposure. They achieve this by selling the loans to Wall St. investment banks that packaged them into ‘mortgage-backed securities’ that are in turn sold to investors.”
“The mortgage broker who arranged Ana Martinez’s refinancing recorded her income as $8,420 a month, said Virginia Pratt, a counsellor at an community group. In fact, she was earning only about $2,500 in rental income at the time the deal was closed.”
“To close this refinancing, she had more than $16,000 in charges tacked on to the loan, including an astonishing $12,825 fee paid to the mortgage broker. Martinez says she was supposed to have received $28,000 from the refinancing, but claims never to have received the sum.”
“Martinez has repeatedly remortgaged her three-storey home since buying it in 1994 for $97,500, moving down the chain from bank lenders to sub-prime mortgage companies. In all, she has taken more than $300,000 that she says went for major house repairs and trips to Honduras to visit her ailing mother.”
“Most recently, she refinanced through a California sub-prime lender in October 2005. She ended up with two loans, one for $427,500 and another for $28,500. The interest rate on the larger loan was fixed for two years at 7.35 per cent. After that, the rate is to ratchet up every six months until it hits a maximum of 13.35 per cent, said Pratt.”
“Documents show her monthly payment is to rise from $2,766 to $3,612 beginning June 1, 2008. After paying that amount for 27 years she will still owe a lump-sum ‘balloon payment’ of $276,938. In all, she is scheduled to pay $1.14 million in interest over 30 years. At the same time, she’s supposed to pay $421 a month on the smaller loan.”
‘They’re scared they’re going to buy something very expensive that’s going to fall in value,’ he said.’
It’s odd how the media continues to portray potential buyers as a frightened group. With the high tax assessments and over-leveraged FB’s, let the tax collectors worry.
Or everyone else worry when they need to raise taxes on people who can still pay
Exactly. The tyranny of the majority, coming soon to finance an FB bailout near you.
I’ve noticed that as well, but it’s only when they ask an agent for their opinion. When they talk to an actual buyer, they always seem pretty rational.
Moral of the story: It’s easier to find an RE Agent than a buyer these days.
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I have a significant amount of my net worth (15%) in a municipal bond fund. Should I be worried about the municipalities ability to pay back those loans due to a collapsing RE bubble?
If you are concerned about defaults, you might want to check into bond funds that invest in only insured, high quality municipal bonds. I don’t think you would give up more than 0.25-0.5% in yield per year.
Municipal bond funds, by their very nature, are heavily diversified, to lessen the effects of individual defaults. This diversification effect, however, is dampened if you are investing in only a single-state municipal bond fund, and that state is fairly small. I invest only in California municipals, which is pretty diversified due to California’s large size.
In general terms, municipal bonds are one of the safest investments in the U.S. Even in counties going into bankruptcy (Orange County comes to mind), bond holders are the first to made whole. For a municipality not to do this would mean that it would be forever sealed off from Wall Street credit markets.
My municipal bond fund is based on Arizona munis. Its prospectus says it also invests a chunk in other state munis. I am happy with it. The quality of my fund’s picks are very good. I’ve been dollar cost averaging into this one since 2002. I’m not worried about when the Phoenix RE crash happens. 11% of my net worth is in this bond fund right now, but another 11% of my net worth is in savings bonds. Unless you have 60% invested in one area, there is nothing to worry about when you diversify like that.
The ratings for state and local government bonds are subject to a hit when their accounting rules change this December obligating them to report their pensioner’s future healthcare liabilities.
Thanks for the tip rms.
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thanks for the reply. yes it’s one state.
Distribution By Credit Quality is as follows:
AAA 82.5%
AA 10.5%
A 2.7%
BBB 4.3%
A review of holdings lists lots of school districts, colleges, utilities, airports, highways/infrastructure.
It looks like you’re in pretty good shape, with high-quality bonds and excellent diversification.
Even in my individual bond holdings (at least $10K a pop), I went with AAA’s, and decided against paying the insurance premium.
I would be a strong proponent of buying the individual issues rather than any fund. (a) You can make sure you get only AAA if that’s what you want. (b) You can control the maturity ladder. (c) You don’t pay a management fee. (d) You can control any capital gain tax consequence. (e) You can respond appropriately to changes in market interest rate curve (i guess (b) covers this).
Everthing you state is good advice, except for one caveat. To have diversified individual bond portfolio, you need to invest ~$100K (i.e., ~10 issues at $10 K each). This will allow you some diversification, although still not as much as with a bond fund. Ten issues would also allow you to ladder the bond maturities, as you indicate.
For those with less than ~$50K to invest, municipal bond funds would be my preferred vehicle.
Full disclosure: I use both strategies for my municipal bonds. A laddered bond fund of individual AAA’s for intermediate- to long-term debt, and a California Muncipal bond fund (aka money-market) for short-term debt.
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i like the Vanuard bond fund vs. individual bonds because of easy/large diversification, razor thin low expense ratio (0.09%), management’s eyeballs, ability to continually and cheaply dollar-cost-average and reinvest distributions, no effort to manage, tax-efficient management philosophy.
Gekko, you should add that you are refering to Admiral shares, for folks that have more than $100,000 to put in that fund. Otherwise the expense ratio is 0.16, which is still good - beats the 500 index fund’s 0.18.
>beats the 500 index fund’s 0.18.
True. But my 500 Index Admiral is 0.09% too. My Health Care Admiral is 0.14%.
I love low expense ratios!!! Costs are the one thing you can absolutely control in investing. And every basis point you save goes right to your return and into your pocket.
There are many problems with municipal bonds, no matter how good their quality might appear right now. The two most important are these:
1. If they have a high rating due to the issuer buying insurance, then the rating is only as good as the insurance company. The big municipal bond insurers have very high leverage on their capital, 150-to-1 or so, so any significant losses will wipe them out. This will destroy the rating of these issues.
2. Municipal bond defaults are NOT independent events. Many municipalities will fail when the Ponzi financing that has blown up the real-estate bubble collapses.
Conclusion: don’t buy municipal bonds unless you can afford to lose the money you are investing.
Gekko would argue that it still is less risky to go with a national municipal bond fund than an individual state’s. I learned quite a bit today. I’m probably going to have $100,000 in my Alliance Bernstein fund at the end of 2007. My expenses are 1.44 and wills begin to be converted down to 0.78 as my class B moves to the class A fund (after 6 years). I’m going to check and see if I will be better off in the national muni with a 0.09 expense ratio or my Alliance Bernstein bond fund.
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I like the state=specific bond funds because of exemption from federal, state, and local taxes.
1.44 expense ration? that’s criminal! $1,440 every year for every $100,000! .09% would be $90! Also factor in the lost compounding and the time horizon and it looks really ugly. You should stick with Vanguard!
Yeah. I’m a believer now. I was aware I could have had a much better deal with the Fidelity Spartan AZ muni bond fund. I compared even the class A Alliance fund with Vanguard’s national tax exempt. At 5.5% annual gain for 5 years, I would have $587 expenses for Vanguard’s Admiral shares and $14,540 expenses for Alliance. If you are still reading this thread, would the national tax exempt Vanguard long bond fund be exempt from any state tax as well? Vanguard does not have an Arizona municipal bond fund.
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Vanguard Insured Long-Term Tax-Exempt Fund Investor Shares (VILPX)
Vanguard Insured Long-Term Tax-Exempt Fund Investor Shares (VILPX)
I think the two above are just FEDERAL tax-exempt. Look at the After-Tax returns on both vs. the Fidelity Spartan - the VG funds may still be a better deal.
Looks like the AZ state income tax is 2.87-5.04%.
duplication. here’s the 2nd one -
Vanguard Long-Term Tax-Exempt Fund Investor Shares (VWLTX)
Interesting stuff. Thanks for the education! Fidelity Spartan may work out best for me to get both state and federal tax free income. Spartan seems to have lower expense ratios than Alliance, plus more state municipal bond funds than Alliance. Also to Mistrial, I am pretty much into I-bonds too. There are occasional lurkers who think I-bonds are the worst type of investment and will go into some fit about it. They are wrong.
I have wondered the same thing. As a result of this, I’m only investing in I-bonds at the present. Next year, its short-term, high quality bond funds along with the I-bonds.
Good response from lmg.
~Misstrial
Thanks, Misstrial, praise from Caesar!
In a diversified bond portfolio, definitely you would want to include I-bonds, either purchased directly from the Fed or through Vanguard (ticker: VIPSX) or TIAA-CREF (in a 403B account).
A fully diversified bond portfolio would also include exposure to international bonds (i.e., which is also a good hedge against the falling dollar), maybe even a small taste of high-yield (junk) for those not amongst the faint of heart.
As I suggested below, Roger C. Gibson’s “Asset Allocation: Balancing Financial Risks” has some good ideas.
Thank you, lmg.
I LOVE Vanguard & Fidelity! TIAA-CREF is a good one too. Thank you for the refs
I buy my I-bonds direct thru: http://www.treasurydirect.gov
~Misstrial
No, muni’s are safe. Based on historical defualt rate going back to the 1970 the rolling 10 year cummulative default rate for junk muni’s is about 2%. Compared to 36% for ordinary Junk bonds.
For investment grade muni’s the the default rate is basicly meaningless because of a lack of data. General Obligation’ muni’s almost never default.
If you are concerned about it, you can switch to an insured muni fund.
I wouldn’t take investment advice from someone who does not know when to use an apostrophe!
I have a significant amount of my net worth (15%) in a municipal bond fund. Should I be worried about the municipalities ability to pay back those loans due to a collapsing RE bubble?
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(snickers) Do you have a clause in any of your bond paperwork that defines what is to happen when the dollar collapses? What will be suitable sustitutes for Federal Reserve Notes? You have to understand that if the dollar collapses, ANYHING paper that is dollar-denominated will be destroyed.
Good luck!
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So what do you suggest, Steph? Physical Gold and Silver?
a lobotomy
“…Comment by Gekko
2006-11-26 14:02:49
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So what do you suggest, Steph? Physical Gold and Silver? …”
Check into Roger Gibson’s “Asset Allocation: Balancing Financial Risk” (2nd and/or 3rd Editions). Gibson provides helpful asset allocations, which allow you to factor in risk to the dollar (e.g., diversify into foreign stocks and bonds, commodity hedges including gold and oil stocks).
Gibson’s portfolio strategies have been very insightful in maximizing return and minimizing risk. It’s available on amazon.com, probably also on barnesandnobel.com.
I have found that it is almost impossible to explain the terrible riskiness of all dollar-demoninated instruments to most Americans. They just have a blind spot regarding the eventual total destruction of the dollar. It’s never happened before (well, not since the Continental, and the Confederate Dollar doesn’t count because they lost the war), so therefore it cannot happen in the future. The fact that a pre-1913 dollar has already lost over 95% of its value doesn’t seem to faze them. It must be the “publik skool” system, or something in the water. Europeans seem to have a lot less trouble contemplating the possibility of hyperinflation, as they have seen it there in living memory.
Ben wrote “It’s odd how the media continues to portray potential buyers as a frightened group. With the high tax assessments and over-leveraged FB’s, let the tax collectors worry.”
I was thinking along those lines as I read the feature. Beyond that, just who are “buyers” anyway? Those who sign the purchase agreement today? Or those who are shopping for a house and going to open houses this year? Or how about those who say they will buy in at most 6 years (such as myself)? Buyers are in the catbird’s seat. Renting is cheaper than buying in probably 98% of the neighborhoods in the U.S. right now. Saving more money should not be a frightening experience. I think to protray the “buyers” as being frightened is hilarious!
Buyers are frightened to buy! I’d agree with that statement. The psychology (fear) has likely spread across the entire nation now…perhaps even to Austin and Raleigh. It certainly seems to be the case here in Atlanta. All of these are non-bubble markets with significant influx of people!
Ben is completely right. This is not the time for buyers to be frightened. This is the time for sellers to be frightened. It’s a beautiful Sunday morning. I plan to go eat a big cheeseburger, drink a few beers and watch football. I have no fear. The HELOC’ed moron with debts up to his eyeballs will be spending the day shaking as he dreams rosy dreams of the Spring ‘07 selling season. The fear in his eyes makes it hard for him to focus on football or anything else.
This Martinez person is a prime example of financial Darwinism at its best. And of course when all else fails, still looking for a bailout (Oprah!). You couldn’t find my sympathy for this person with an electron microscope.
“You couldn’t find my sympathy for this person with an electron microscope.”
AMEN!
I think it would take an electron microscope to find this person’s brain, sense of right and wrong, sense of responsibility, common sense, etc.
I have no sympathy at all for these fools who have lived off of home equity for the last few years.Now when it comes to pay the money back they are broke, go figure. I have been living within my means all my life and it feels great to be in good financial shape.
tx, I want to feel sorry for people like this. I really do. But I can’t - so send them to the desert casino/debtors prison. A lot of stupid people go to the lender and talk to the nice man wearing the expensive suit. He says everything will be OK. What a helpful man. All her friends did the same thing. What could go wrong?
It’s so obvious that no fault lies with Ms. Martinez. It’s clearly that evil doer George Bushs fault, that the poor dear has fallen on hard times. That coupled with Global Warming and you have a recipe for disaster. For heaven sakes the article states that she was wearing a worn t-shirt. As soon as the house ATM ran out of dough her clothes started falling apart right then and there. One can only hope that Okra will come to the rescue!
Great sarcasm. Bush is a clueless dolt but it’s funny when people try to blame all the world’s problems on him as if he were some omnipotent power. The think the people in his administration are crooks.
Well to be fair many of the people in the Bush administration really are crooks. But I agree they weren’t responsible for idiot homeowners (although ironically idiot homeowners were responsible for them).
I’d say “Hell, let her roast in her own damn juices! In fact, this woman might turn out to be the Revolutionary Citizen who shuts down mortgage fraud, or worse-case, lead the way in kidnappings and executions of RE agents, loan officers, mortgage brokers, ad nauseum, Iraq-style!
“Martinez has repeatedly remortgaged her three-storey home since buying it in 1994 for $97,500, moving down the chain from bank lenders to sub-prime mortgage companies. In all, she has taken more than $300,000 that she says went for major house repairs and trips to Honduras to visit her ailing mother.”
Looks like another illegal alien come to find the good life in America.
Buy a house and retire…………Oh! you mean I can’t keep taking money out of the house?? But I thought this is how people in Amerika got rich ?
You mean I need to earn the money by working?
This isn’t fair. I’m calling Oprah!
I didn’t read in the article that she’s an illegal alien. There are plenty US Citizens with Hispanic last names and parents in other countries. Also, there are PLENTY of Smiths and Joneses that have done this same thing.
In defense of “diogenes,” she/he was using circumstantial evidence to arrive at a possible conclusion that the subject could be an illegal alien. Juries convict largely on circumstantial evidence and it is a completely acceptable method at arriving at a conclusion.
Those who arrive in the US legally from Central America most likely would *not* live in a lower income home/neighborhood. the ones I have met (and lived next-door to) pride themselves on their family wealth and their ability to “keep up with the Jones’es.” Also, legal residents tend to sponsor relatives to be able to come to the US. Illegal residents tend to just send money offshore.
So, diogenes was merely using clues in the text to arrive at a considered conclusion.
In California, I have met many potential clients who are here illegally and who claim a net worth of $1M+. They are very adept at “working the system” and judges are very aware of this.
I am not the only Californian (where I am a legal resident) who is very aware that this occurs. There are lenders/banks who specialize in home loans to illegal aliens.You do not need to be a citizen to buy property here.
~Misstrial
Mistrial,
Sorry I missed the remaining discussions.
I was out most of yesterday, accept the morning when I posted several messages.
Apparently, Ben felt the commentary was not germaine to the blog, and some didn’t like what I had said, so all of the posts have been Deleted, except the above.
I was curious to read the comments, but that is not to be.
Thanks for whatever ‘defense’ you thought I may need.
Sorry I didn’t get to read the other comments myself.
-D.
If I was her, I would move back to honduras. This situation can’t be saved and isn’t worth saving.
“Martinez has become so desperate to save her clapboard house on a quiet working-class street that she’s even appealed to America’s patron saint of lost causes: Oprah. ‘I offered myself as a charity to her,’ she says. ‘Her workers called me back and said there were thousands of cases.’”
‘Her workers called me back and said there were thousands of cases.’
Ms. Martinez should be pretty scared right about now. I don’t want to see people suffer but these FB’s will suffer from their own SELF inflictions and I guarantee these lenders will hold them accountable. Just like their pipe dream of ever increasing equity, so is a “Oprah bailout.”
“Martinez has repeatedly remortgaged her three-storey home since buying it in 1994 for $97,500, moving down the chain from bank lenders to sub-prime mortgage companies. In all, she has taken more than $300,000 that she says went for major house repairs and trips to Honduras to visit her ailing mother.”
What on God’s green earth make Ms. Martinez think she could afford a refinancing of 300K in equity? The chick only had rental income of 2500/mo.
Amazing!
“I don’t want to see people suffer”
Why not? Do you think Ms. Martinez is going to give two $hits about the fact that you are going to have to clean up her mess through higher taxation and a screwed up economy? I really doubt it. She is too busy calling Ellen, Maury, Rosie, Montel, Tyra and any other talk show loser she can think of. I say, “let her suffer”. Bring back debtors prison. I think the desert of Nevada would be a good spot for the world’s largest casino/debtors prison.
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More notorious even than his miserly ways are Scrooge’s cynical words. “Are there no prisons,” he jibes when solicited for charity, “and the Union workhouses?”
Terrible, right? Lacking in compassion?
Not necessarily. As Scrooge observes, he supports those institutions with his taxes. Already forced to help those who can’t or won’t help themselves, it is not unreasonable for him to balk at volunteering additional funds for their extra comfort.
Scrooge is skeptical that many would prefer death to the workhouse, and he is unmoved by talk of the workhouse’s cheerlessness. He is right to be unmoved, for society’s provisions for the poor must be, well, Dickensian. The more pleasant the alternatives to gainful employment, the greater will be the number of people who seek these alternatives, and the fewer there will be who engage in productive labor. If society expects anyone to work, work had better be a lot more attractive than idleness.
http://www.mises.org/fullstory.aspx?control=573
Gekko, I love watching the various incarnations of the Christmas Carol each year. The Albert Finney version is still my favorite. But god how I hate the moral of that story.
I would love to have the crotchity Scrooge on the subway with me. The other day it was a blind guy with a “pregnant diabetic wife” about to give birth begging for money. If that story was true, which I really doubt, he would be racking in huge welfare benefits. I never give on the subway. I give at work every 2 weeks.
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I don’t give money to bums anymore. If they say they’re hungry I offer to buy them a sandwich and drink at the fast food place or convenience store. A couple of times I have been taken up on my offer but often they decline as they simply want cash for drugs and/or alcohol.
I’ll gladly buy anyone food and drink if they are hungry/thirsty - but I’ll be damned if I’ll give money for more drugs and booze.
Hear hear. Earlier this year I was having a late lunch inside a Carl’s Jr. at 6th & Grand in downtown L.A., when a guy approached me at my table and asked for money. I told him I’d be glad to buy him dinner and when he heard that he told me no, he just wanted the money - he actually declined and walked off after it became apparent I was not going to give up any cash. There’s a guy who panhandles around my downtown neighborhood who walks around in torn up rags smelling to high heaven, appearing truly pitiful at first encounter, but if you see him enough, you’ll catch that he carries around a huge wad of bills which he furtively pulls out before going into the cafe to strip off a ten for coffee sometimes. Not that there aren’t people in real need obviously, but this is not how to help them - give to an organization you trust to help those with real need, never to someone on the street. This experience is repeated 10000x a day in this Country.
I give at work every 2 weeks.
In some ways, socialism dulls the Spirit of giving . . .
55 aint that old. I say get your but up from watching Oprah and freakin work.
How does anyone feel entitled to grab 300K from a clapboard house on a working class street, that cost less than 100K? And, in her last refinancing, did she honestly plan to repay some 1million plus on this shack? Clearly not…fixing up the house? With what? Gold fixtures? and trips to Honduras, one of the cheapest places in the hemisphere, for a total of 300K?? So she got scammed by the mortgage broker–so what, she’s nothing more than a thief herself. Go live on the street with the rest of the hustlers.
Good Grief! This story about Martinez multiplied by hundreds of thousands of dumb *ucks. I was half serious when thinking there will be a war between the FBs and the responsible people. But I think they will certainly figure out a way through their Democrat hacks in Congress how to take from the responsible and give to the irresponsible. No one commented on my idea how the Dumbos will pull this off. Here is how it will work (once again): Raise the income tax for all tax brackets by 10 to 15% and double the amount of mortgage interest that you can deduct for houses purchased before the year 2007. That way if you pay $2400 per month in mortgage interest, you would be able to deduct $57,600 from your taxable income ($4800 *12). If your household income is $57,600, then no tax! In effect, this will be the way for renters to pay for the mistakes of the FBs. There will be a big bailout and you can take that to the bank.
“But I think they will certainly figure out a way through their Democrat hacks in Congress how to take from the responsible and give to the irresponsible.”
Is that anything like the republi-criminals foisting the tax burden on my shoulders as a means to provide “tax cuts” to corporations that already don’t pay their share?
If you are older than 40, you will understand Democrats talk the talk and walk the walk of big government and robbing the productive to give to the lazy. At least Repugnants talk the talk of free enterprise. Also, Citizens Against Government Waste shows the voting records of Demos and Repubs in both house and senate. See for yourself which side is really more taxpayer friendly. Or are you too chicken?
I’m up for anything that shatters your version of tax fantasy when you spread the burden of the hidden tax increases (debt) imposed by the liars you willingly worship.
Cappie - you seem to have some issues. Perhaps you should talk to someone.
Hi Porty.
it is so simplistic to assume that such scheme will be able to go pass the republicans.
“Do you think Ms. Martinez is going to give two $hits about the fact that you are going to have to clean up her mess through higher taxation and a screwed up economy?”
No doubt Martinez will be making a very long visit to her mother in Honduras.
so if Oprah is now the patron saint of lost causes, who gets to bury her upside down in the yard?
I’ll order the backhoe.
“Staring each other down” is a great way to put it here in the Pacific Northwest also. Inventory way up, but now static as new listings come on & some expired (not sold) waiting to be relisted for the sooon coming great spring selling season. Prices in my area are down only 10%+/- with sales waaaaaay off. While we read a few horror story’s on this wonderful blog, taking the country as a whole, this thing is just getting started.
You know what really pisses off the other side when you are in a staredown.
Get up and go to a movie, or the beach and check back in a month or 6 months.
The sellers only think they are in a staredown, really it is buyer aversion/ambivalence.
At my thanksgiving visit home to Bellevue, WA (outside Seattle), my mom updated me about my childhood friend who, recently married, got caught in a bidding war for a 900 sq ft house in Seattle. They kept “losing” properties, so on this last one they wrote a pleading letter and the sellers “let” them raise their bid to top the “other” bid (real or phantom, who knows).
Meanwhile, my friend in Kirkland has had his house on the market for ~$600k for 5 months with 1 price reduction and is carrying two mortgages.
Bellevue is still completely infested in cranes building condos, offices, retail, etc.
So it appears to be a mixed bag out there.
“Even if the values drop, East Bridgewater assessor David Lincoln Phillips said tax bills will not necessarily be lower because the tax levy or amount the town needs to collect generally increases. ‘The tax rate is driven more by what the town needs for revenue,’
This is the next big story. Municipalites will be big winners in this. Their overall tax revenues will be much higher, on the same housing base. It is, in effect, a huge tax increase, with no voting or legislation necessary.
Well, if Ben ever does a story on the windfall tax revenue increases, I will certainly be all over that one. I used to work for a city in a huge bubble zone (West Palm, FL); and the spending was totally out of control. The taxes had almost doubled in 4 years; again, without changing a thing by the govt. Just keep the meter going. And the money from permitting…. Oh my god!
Anyway, I would revise your statment “Municipalities ARE the big winners…”.
The only question is, how long before people relize they are paying 2X as much for exactly the same services? And paying for huge “public improvement” projects like this (that I don’t think anyone REALLY wants except for politicans).
http://www.wpb.org/citycenter/index.html
“Municipalities ARE the big winners…”.
I work for a municipality right now. Municipalities WERE the big winners. After six years of out of control spending and almost 20% growth in the number of employees in my city, I see some panic setting in. Revenue from development is falling. Property tax assessments are looking pretty weak. Sales tax should be slowing shortly. Inflation is not slowing. Screwed. That’s all I can say about municipalities.
Well, California has prop 13 which prevents run ups in RE prices from affecting everyone’s tax basis.
That may well be what the future holds for the other bubble markets.
Did you notice the contradiction: The tax guy is justifying an artificially high assessment based on his revenue needs, and then talks about the “rate”. Why not reassess all the houses, then raise the tax rate, instead of using a false appraisal?
I’m not sure I understand this. The municipality can clearly raise the appraised value of houses at will, but I thought they couldn’t raise the RATE without voter appproval. Is this correct? If so, they will be loathe to lower the appraised values because they will almost certainly have a hard time getting millage increases approved when the SHTF. I find it hard to believe that the municipalities will be the big winners … I think they’re in for a world of hurt.
It usually takes a vote of the people to raise the rate. There are some exceptions, like in my county the local school board was able to implement a small mill levy at will for recreational needs, which they did recently. That’s an unusual case. Assessors will hold the appraised values as high as possible for as long as possible. My guess is that property tax increases will be as popular as a train wreck.
In my neck of the world, your correct, it takes a vote (or a administrative decision, not sure) to raise the rate. The rate, however, has not been raised. The homes are 2-3X their value 5-6 years ago, so the taxes have increased by the same amount just by keeping the rate constant. Now, I realize that govt does not control the property appraiser/home prices, but COME ON, lower the rate you greedy bastards!!
In S. FL, this is killing the market as much as anything else right now. People cannot afford to move (because they are locked in on their previous home’s sale price, something we call Save our Homes), people cannot afford to buy for the first time (the home I am renting for 24K/yr; if I were to buy it, would cost me 12K/yr, just in TAXES!!); and the market is in total gridlock. In the meantime, govt is planning massive projects, adding to ongoing expenses left and right, etc. They are also building all this infrastructure for people who do not live here. The buildings are empty; so we don’t really need 10 more cops for the latests new developments, they are going to be 10% occupied.
If I owned a home here right now, I would request a reassement every single year, as I know the value will be dropping for at least the next few. However, I truly wonder how they are going to deal with apprasials coming in far below the “paid” price on these homes? Will they really appraise at FMV? In Palm Beach, I think the answer is “Yes” (our property appraiser is HATED because he is so fair and accurate; I expect he will appraise at value on the way up and down). However, I wonder about other areas; will they really drop 10-20% off value if you bought at the peak last year and ask for a reapprasial this year?
sharpen your pitchfork
- demand a rollback
Yeah, you can sue and force a reassessment. The same thing happened in California in the early ’90s.
The municipalities always find a way to slow the reassessment process on the downside. You have to either fight, or pay.
Governments are like elephants. They never forget. Would anybody on this board really sue the local government to get their appraisal lowered? Something tells me the probability of that coming back to haunt you far outweighs any tax money it will save you.
Call me crazy but taking on the government at any level never seems like a really great idea. Protest? Maybe! Sue? No way! Good luck to all that choose to do it but I hope you know what you’re doing. I’d rather just sell the house.
I see a lot of problems in our area with “Welcome Stranger” So yes it just takes the right person to sue. Our tax assessors only tax at full value after a new house is built or after a sale of an exsisting home. So it pits one neighbor against the other. I cannot get my local real estate board to take this on yet, but we are talking about it. It is not fair and it will cripple our market soon. We had reassessment before the market went up.
Well this guy has just come out and admitted to the operating principle of our gov’t that is hidden beneath all those feel good checks and balances, which never seem to operate in the way they are written. Basically it goes like this: We (the fed,state,city,etc) gov’t will decide what we want to take from you regardless of your need’s or ability to pay. If you don’t pay up (after the obligatory hearing to show the fairness of the system) we will take your land/house and garnish your wages. Any questions? Have a nice day.
The idea that this guy comes out and says that he will just adjust rates so that “his” needs are met without regard to what that number means to the folks paying the tax just chaps my ass. Typical gov’t leech. F*ck him!
We need a tax revolt (among other things).
Yes, typical government attitude: What’s mine is mine, and what’s yours is mine.
“As we all know, individuals cannot be trusted to make good decisions about their own finances.” (Actually, the housing bubble lends some credence to this position.) “Besides, only the government can make long-term plans, because we can sell 30 year bonds to lock in financing for our pet projects. You proles have demonstrated your inability to think beyond your next paycheck, so we’ll just have to take your money and make sure it’s spent wisely. And remember, we’re the government, and we’re here to help!”
–typical government functionary
In local news, the LATimes carried two stories today about RE that I found interesting. First, Steve Lopez wrote about seniors facing rent increases as their building was being improved. Next, government impacts on new rental housing are mentioned here.
Turns out that someone trying to build an apartment building in Van Nuys (that could increase the supply for all) faces a total of $258,224 in “impact fees”, of which $212,033 went to “school fees”.
And we wonder why there is a shortage of rental units for seniors.
What a farce.
This is how it really works:
City Council adopts an operating budget which includes city services and education funding.
Assessor has total taxable value in the jurisdiction.
Adopted Operating Budget divided by Taxable valuation equals tax rate.
As such, assessor don’t care if values are going up, staying the same, or going down. They prefer when they are stagnant because assessments don’t need to be changed.
Politicians, on the other hand, want the tax rate declining, which sometimes gives the illusion of declining taxes.
“Case described home prices as having “downward stickiness,” meaning they don’t fall nearly as much as they rise during the strong periods”.
Some of this is just a function of what you make the numerator and the denominator, e.g., a 33% decrease is equal to a 50% increase. ($150 is 50% above $100, but $100 is only a third below $150).
Also, there is often a steady backdrop of general inflation meaning that what is happening in REAL dollars is different. The $50 increase from $100 to $150 is 50% at face value, but less in real dollars if there is inflation. Conversely, a fall from $150 to $100 is minus 33% at face value, but greater in real dollars.
For example, let’s assume a home is purchased in 1999 and sold in 2006 and that 2006 dollars = only 80% of 1999 dollars:
Scenario #1 - If a house was bought for $100 in 1999 and sold for $150 in 2006, because the $150 = only $120 in 1999 dollars, the % real gain is not 50% but 20%. ($120 divided by $100).
Scenario # 2: - If a house was bought for $150 in 1999 and sold for $100 in 2006, because the $100 = only $80 in 1999 dollars, the % real loss of $70 is not 33% but 47%. ($70 divided by $150).
So indeed, there typically is stickiness in downward prices when looking at percent change without looking at real dollars.
The point of increases vs. declines is rather funny and is brought up here often. I am amazed at how many people think a 50% increase in value followed by a 50% decline in value will leave them as being even. The equation for figuring out the break even point is so simple that a chimp could calculate it. Unfortunately, the average FB is not as smart as a chimp.
Increase = 1 / n
is wiped out by a
Decline = 1 / (n+1)
If your value increases by 1/2 it takes a decline of 1/3 to wipe it out. If it increases by 1/8 it takes a decline of 1/9 to wipe it out.
Understanding this simple rule would keep a lot of people from making real stupid decisions. Anyway, I better get going I plan to solve the problems in Iraq later this morning. That should be easier than getting this lesson across to the average homeowner.
NYC–so easy a CAVEMAN can do it.
Related–saw an interview a couple of days ago w/Case (of the Housing Index fame). Commented on stickiness of a different sort. Gist of it was that the wealth effect directly translated into rising spending on the way up, but didn’t show an opposite & equal effect on the way down. Essentially people are slow to ditch the $5 cuppa joe from the barista. So they keep spending like drunken sailors (sorry, USN) even as their “wealth” evaporates. Nothing like digging the hole wide & deep.
Expensive coffee is a difficult habit to break. But budget constraints reigned in by falling home prices will eventually get the job done…
I would like to start a small survey: How many readers on this blog are like me: You do not touch the equity in your home. If you need money you use your SAVINGS, or you do without. I have not & never will do a cash out refi or a HELOC. As we can all see, if the marketplace changes you CAN lose your home. I would love to make more home improvements , like putting in a deck, but until the CASH is available I WONT.
We paid $525,000 for our home five years ago and could probably sell it for $700,000 today. Our 30 year 5.75% mortgage is only $150,000. We have a 1400′ square foot unfinished basement which we can have finished, including a bathroom for $35,000, which would bring our house to over 5,000 square feet.
We are scared to death to use a home equity loan to finish the basement. We are thinking about selling some stock and having it done. But borrowing to do this runs against our nature. Are we being too conservative?
With only $150K on your mortgage, $35K more isn’t risky (unless you can’t make the payments and are already stretched). The question is…do you NEED to finish the basement? Want to? Are willing to pay $35K cash or the payments on a loan to do so?
We are in a similar situation here in Atlanta with a 1900sf 3 sides above ground basement that is partially finished (mostly not, though). However, we don’t see the need at this time.
We use it for storage and an exercise room and a laundry room.
Also have the original (!) 1935 kitchen cabinets and pantry down there!
Wow! Only $35,000 to finish 1400 square feet. Is this legal labor or your own? Including material? Remember, basements are not legal square feet unless there is outside entry. Can I ask why you need 5,000 square feet. Large family? In New York State basements that are finished can be seen as a bonus for the kids or the adults if it is done tastefully. But like anything else it depends how much you spend on it, how much does it cost extra to heat and cool? Will you be taxed on the additional space? Will you get a building permit? Sometimes you just do something because you want it and not about adding more value on your already expensive home. the higher you home gets the less people in that price range to buy it someday. My vote. Pay as you go…
Most estimates were $40,000. This was the best price except for one that came in at $20,000 that would have been terrible. If we did this it would be for our enjoyment and my assumption is we’d only get about half the money back if we sold. We clearly don’t need the extra space but it would be nice to have for exercise equipment and a media room, pool table.
If you will get more than $35,000 worth of enjoyment out of it and it won’t hurt you financially then I say, “don’t wait another second”. There is nothing wrong with spending money to invest in your quality of life. Spending it just to spend it, or thinking it will return 10 times what you spent, is foolish. I recommend paying cash but a low interest rate loan to improve your life is not being foolish. If the family balance sheet still looks good then it makes sense.
If the finished basement won’t get used then don’t do it.
Portland Mainer-
Just remember-when the appraiser comes, any finished area below grade is not reported as gross living area in a standard FNMA appraisal report.
BTW-If you could sell you’re home for $700k, I sure the f*ck would be gettin’ out of Dodge.
The recent re-election of Baldacci and Co., demonstrates nothin’ more than Mainer’s like bein’ poor socialists and at the absolute bottom of the economic barrel.
Where demand is coming for $700k homes escapes me….
$700 is pocket change for transplants from away who either don’t have to work or can work wherever they want thanks to the Internet and today’s incredibly pwerful hardware/software that can turn one computer savvy person with a career’s worth of experience into a one person wrecking crew - more nimble and more efficient than the big corporations.
Such people are coming here in droves and have been for some time. It’s less expensive than the New Yorks, New Jerseys and Californias where they come from and it’s a lot less crowded. Obviously we don’t have as much culture as a place like NY, but it’s sufficiently civilized for most.
We wouldn’t sell our house because we’d have to turn around and spend it again to get something comparable in this school district, which we like.
Such people are coming here in droves and have been for some time
You and Gov. Baldacci must be sippin’ off the same jug.
Falmouth, Cumberland, Cape Elizabeth and Yarmouth is where all the people with high paying jobs in Portland live. And these towns also draw many transplants. If you were in a business that attracts upscale types, you’d be amazed at how much money is flowing into these towns - as well as the tony parts of Portland.
If you’re a native who can’t keep up with the escalating prices and taxes, I could see what might be making you bitter. Sorry guy.
Huh? I looked at some houses around the Portland area a year or two ago and saw some *massive* and nice places in the $300’s. As a potential transplant myself (my wife is from Maine originally and I can work from anywhere), I must say that $700K is just unrealistic for what I would pay. Transplants may want to move to Maine because the housing is cheaper, but that would necessarily preclude prices like that.
Yes, you can find some nice homes in the 300’s. But you will pay more in the better school districts which are:
Cape Elizabeth
Falmouth
Cumberland-North Yarmouth
Yarmouth
lmao…525k in ME 5 years ago? Worth 250k in 2010 at best.
Based on?
All the evidence is here on this blog. As a ME native, 525k is an outrageous amount, especially 5 years ago, irrespective of any location, coastal or not.
Captain –
I haven’t seen any compelling evidence on this blog that would say my $525,000 purchase in 2001 will drop in value to $250,000 as you suggest. I could sell the house today for $700,000 based on comps including a recent $800,000 sale across the street. Therefore, you are suggesting a 65% drop at a minimum. That is just not going to happen and if you base your planning on drops of such magnitude, you are setting yourself up for disappointment.
We are actually very pleased with our $525,000 investment. We live eight minutes outside of Portland in an almost 4,000 sq ft CH colonial on 1.5 acres in the premiere private golf course community in the Portland area. The school system is top notch and year after year sends a large number of its graduates off to the nation’s most competitive colleges. The people who live on our street include the president of a midsized company, a doctor and several entrepreneurs who own their own successful businesses. Several of these folks also have lake houses within an hour from here and a couple have ski condos at Sugarloaf. There are many, many streets like this all over Greater Portland.
Have you heard of fDi? Published by the Financial Times of London group, fDi is the top magazine written about the business of globalization and foreign direct investment.
Last year they named Maine as the top place to live in the states. See: http://www.fdimagazine.com/news/fullstory.php/aid/1248/Best_quality_of_life. The largely foreign readership was alerted to the fact that “Maine is one of the greatest natural playgrounds in the world” and also that “Maine offers an exquisite menu of performing arts and cultural entertainment”.
I’m not sure what part of the state you are from. But it seems you may have been away from here, and that perhaps you are not familiar with Portland, because your sense of prices is very out of touch.
My guess is local real estate will be hurting some over the next year or so, but by 2010, our house will sell for at least the $700,000 it would fetch today and quite possibly as high as $850,000 or $900,000.
The people from away are coming — and no let up is in sight.
We
Dream on my friend. All your bulldogging and cheerleading for ME RE won’t change the fact that you grossly overpaid. Clearly, you’re a import who has no clue as to historical pricing here, otherwise, you wouldn’t make such foolish statements such as “people from away are coming”. They’ve been coming for generations…. and leaving dejected and poorer than they came. To suggest or even imply that ME population is growing is delusional at best, possibly psychotic.
The only disappointment is in the minds of the fools we took money from.
Captain Credit said: “To suggest or even imply that ME population is growing is delusional at best, possibly psychotic”.
According to the April 2006 U.S. Census report entitled “Domestic Net Migration in the United States: 2000 to 2004″, Maine has the fifth highest Annual Rate of Net Domestic Migration in the nation, trailing only Nevada, Arizona, Florida and Idaho.
See: http://www.census.gov/prod/2006pubs/p25-1135.pdf
Overall population is growing also, particularly in the Portland metro area, which is exploding.
By the way, even though we’ve only lived in Maine since 2001, I’ve owned viewshed land up north for 27 years. I paid $4,000 for this back then and have been offered $100,000 for it but have no plans to sell.
Quoting a report based on, and headlined as “estimates and projections” does little to help bolster weak founded assertion that “people from away are coming”. But as a means to take humor in the stupidity and blind ignorance of it all, ME doesn’t rate in net inbound numbers according to the report. You quoted a inbound rate/1000 residents.
Worthless upcountry dirt doesn’t in any way give you any knowledge of what ME is or isn’t, irrespective of how long you’ve owned it. Whatever it is, $100/acre is all its worth at best.
Nevertheless, you’ve spoken like a true import.
Get some help.
Sorry skippy but cheerleading RE so to cover your loss and trolling behind alternate usernames won’t fly on this blog or ME.
Get a grip my little friend.
Buying for $525 and being able to now sell for $700 is a loss? Get some help. And make sure some of it is with math.
If 700k and 100k for upcountry dirt were based in reality, you’d find no need to convince the rest of us on this blog. By virtue of the fact that you grossly overpaid is of no consequence to us here in ME.
Why do you not feel my #’s are based in reality? I already told you a neighbor’s house went for $800,000 recently. And the people who have moved in from away feel they got a great deal. The neighbor’s house is very comparable to ours in terms of size and quality. Theirs is five years newer, but ours has a better site.
My guess is you are from the interior where there are frankly no jobs, losuy winters and where very few people from away would want to move. Believe it or not, people move to Portland and stay here. And many of them can easily afford a winter getaway too.
Bottomline, a lot of people have money. Perhaps you are not so fortunate?
Feel free to lie back and rest in the fantasy of your assumptions and dreams of riches betting on ME RE. The fact that you got caught cheerleading it on this blog escapes you.
The rest of us know better.
What do you mean “cheerleading”? I think Maine - and a lot of other desirable places are great long term bets. We will be in this house for about 10 more years I’d say so I have a safe time horizon.
Would I want to buy in Maine today? No, I wouldn’t as I think prices could fall. Do I think Maine is a safer buy today than some other places - yes I do.
Your viewpoint is one of an inlander. You’ve seen people come from places like NY, buy some cheap land and build a house inexpenisvely and then get chased out by the cold winters and boredom. Frankly, as much as I love the interior (and have land very close to the much ballyhooed Katahdin Lake - except I like our view better), I could not live year round in the Maine interior. It would be way too boring.
But Portland is very stimulating and sufficiently sophisticated in its own way.
It must kill the people from the interior to be priced out of Maine. So many people leave Maine and go to the big cities and come to realize that Maine wasn’t so bad after all. But then some try to return and get massive sticker shock because while they’ve been away in places like NY trying to scrape together the money they never had, we flatlanders have come to Maine with our NY wealth and not only are we discovering their favorite swimming holes and fishing spots (and in some cases misguidingly posting our land), but we are driving up prices on everything from homes to lift tickets to plumbers. And perhaps the worst rub for those natives who fled Maine - we think it’s cheap. And compared to NY it sure is.
It must be tough for these natives to have the door back home closed on them.
The good news is if you come back, you will find that Portland is a much improved place - thanks in large part to the infusion of new blood and wealth from away!
The way life should be.
Quote: Maine has the fifth highest Annual Rate of Net Domestic Migration in the nation
Do you think that might have a little something to do with the flood of refugees pouring into the Lewiston area? Poor people flocking to your state because of the generous welfare are not going to be propping up the inflated housing prices there.
Please keep going…. Your silly assumptions of ME have a whole lot of people in stitches at work today.
Portland’s gene pool has been revitalized by flatlander transplants and is much closer to Boston’s than the boonies. And thus follows the level of sophistication and wealth. And as in migration leads the nation (very close to it), even more transformation is in the works.
You no doubt come from some backswoods backwater. The nice thing about Portland is it’s close to Maine.
Quote: The nice thing about Portland is it’s close to Maine.
I think you probably meant that it’s close to Boston.
You know what’s even closer to Boston? Massachusetts. The median price for a single family home in Massachusetts was $341K as of September. It has already fallen 13% from its peak, in real terms, and the momentum is there for even greater declines. How do you plan to justify a $700K selling price by proximity to Boston when you could get something even closer for much less?
The market in Portland is sputtering and will likely follow Massachusetts’ lead into a tailspin:
http://www.usatoday.com/money/economy/housing/2006-08-21-close-portland-me_x.htm
http://pressherald.mainetoday.com/news/local/061017condos.html
Also, don’t you think that it’s more likely that the net migration numbers for Maine are being propped up by the flood of refugees into Lewiston as opposed to “transplants” willing to pay high housing prices because they are absurdly wealthy and like Maine because… … (Amato’s?)?
Nope, I meant it’s close to maine. Just like they say the nice thing about Burlington is it’s close to Vermont.
In other words, Portland is so different than the rest of Maine that it might as well be another state.
I hadn’t seen the USA Today article. I’d agree that propped up asking prices need to be trimmed and if someone in 2006 inflated 2005 comps they’s need to trim it back to get a sale in this market. Nevertheless, inventory has not grown much and builders have cut back.
The USA Today article says Portland has a lot of vacation homes. I would disagree. We have some, but they tend to be confined to vacation type places such as Portland’s islands in Casco Bay. What we have a good amount of though is snowbirds - six months here, six months in warmer climes - or something like that.
We bought in 2001. We have 2500 sq ft home on a quarter acre lot that we purchased for just under $200K. We put down 20% and have a 30 year fixed mortgage at 6%. Last year we grudgingly took out a small HELOC (around $20K) to replace the crappy carpeting that came with the house and to buy a used car as our old one died. Although the term of the loan is 20 years, we are making accelerated payments and will have it paid off in four more years.
Although I’d love to save more, we simply cannot put away as much a we’d like since my wife stays at home with our children and we try to put away what we can for retirement. When my wife returns to work as the kids get older, we will be in excellent shape.
From researching the public records, I am the only person I know in my neighborhood who does not regularly pull money out of my home. Sometimes I feel like an alien.
The bad news is that you may have a significant number of foreclosures around you over the next few years given neighbor’s habits to cash out. Plan for that and the likely depreciation it will mean. But good for you!
My home is a place to live. I’m happy with my low payments and I work and live in Chandler. Unless I lose my job, I don’t care what my house is worth.
84259 is Toast,
“From researching the public records”
Sorry, but could I ask, How is this done?
You can find the owner of any property (and last sales price) through the Assessor’s web parcel search page:
http://www.maricopa.gov/Assessor/ParcelApplication/Default.aspx
You can find all Deeds of Trust on the Recorder’s search page:
http://recorder.maricopa.gov/recdocdata/GetRecDataSelect.asp?mcrs=1
Have fun!
Thanks, I have some friends that always have the latest SUV, the biggest house, the finest backyard pool area with pool, etc, etc, etc. It’ll be interesting to know how they do it.
By the way, I live in Anthem.
Boy are you in for an education! I have numerous friends exactly like that (out here in SE Chandler, everyone wants to act like they live in Beverly Hills!). For the longest time, I simply thought everyone was making lots more money than I was. Now I know the truth. They’re all living for the present with money they’ll owe in the near future. The next five years are going to be very interesting around here…
The Asssessor’s site will tell you who owns a property and what they paid for it:
http://www.maricopa.gov/Assessor/ParcelApplication/Default.aspx
The Recorder’s site will tell you how they financed it:
http://recorder.maricopa.gov/recdocdata/GetRecDataSelect.asp?mcrs=1
Have fun!
I am trying to do this in Pinal County and can’t find it. I can find what someone paid for a property, but not the loans on the property. Am I missing something. Any help would be appreciated. Thanks!
Pinal doesn’t have as nice a set of search tools as Maricopa. Still you can find Deeds of Trust on this page:
http://apps.co.pinal.az.us/Recorder/Search/
Chris,
In order to find the amount of the loan, you need to open the PDF and start reading. Usually, you can find that information (as well as whether the loan is fixed-rate or adjustable-rate) on the first two pages. If the loan is an ARM, there will be a Rider attached to the end of the Deed of Trust (called and Adjustable Rate Rider). This is where you can find all the details about what a person’s rate is, when the rate will reset, whether it has I/O or neg-am options, etc. After reading and understanding a few of these documents you will know more about mortgages than 90% of the population and will likely know more about your friends’ mortgages than even they do.
“I am trying to do this in Pinal County and can’t find it. I can find what someone paid for a property, but not the loans on the property. Am I missing something. Any help would be appreciated. Thanks!”
For loans (called “liens”) on the property, you have to contact First American. Lexis shows only a limited number of liens against a property. FYI, First American is very selective who they give lien info to.
~Misstrial
Thank you muchly! :>)
There is a site, realist.com, where realtors can see the amount of your initial mortgage and if you’ve borrowed against your equity.
Bob,
I’m a lot like you, I bought a house in 2003 with about 35% down, will not use a HELOC for upgrades even though it’s tempting, my wife drives an old Dodge Caravan with 160,000 miles (my wife hates the minivan but she hates the payments more), and I grew up in Crystal Lake, IL.
(How about those Bears)
Illinois Bob,
I don’t touch my home equity either. I am a new buyer having bought only in December of ‘05 here in Massachusetts. It was a difficult market last year and I did the best I could to negotiate my deal at the time. I put 20% down and went with a typical 30 year fixed mortgage at 6.25%. I plan to stay here for at least 10 years. Although I would love to see my property appreciate in value immediately, I am realistic about what will happen in the short term.
I have been bombarded with HELOC offers in the mail. I have even been called and harrassed by my own mortgage company! I have been slowly fixing up my house, however, I do all of the work myself and I try to stay within a reasonable budget. I decided it was a better idea to spend only what I can afford to take from savings than to take on a HELOC. I think it is a mistake to spend thousands of dollars on granite countertops, stainless appliances, and exotic wood floors if you really cannot afford them. Yes, they look nice, but do they really add true value to the property? I have never once walked into my house and said, “Gee, my quality of life would be so much higher if I only had a cherry floor and a black granite counter in my kitchen!” I tend to use things until they break or wear out and only then do I replace them with something nicer.
This MA market is somewhat stuck in the mud. It is difficult whether you are a buyer or a seller. I have one friend who is trying to sell a fairly nice antique in a very good town and he is struggling. He started out with an aggressive price and he has already lowered it by $40k. I told him to get the house on the market last spring because I think now he has missed the window for top pricing. If you truly have a nice property in a good location in a top town, you will still be able to sell it, however, you probably won’t get as much as you expect anymore. Likewise, if I were a potential buyer right now, I would only consider the best properties I could afford and I certainly would not feel bad about offering 10% or more off of the asking price. In looking around, I don’t see many great buys out there. The prices are still quite high considering average Massachusetts incomes. Eastern MA is still a very expensive place to live.
I wish our voices were as loud as thunder and heard by many years ago. We would not have the housing mess we are in now …
“Documents show her monthly payment is to rise from $2,766 to $3,612 beginning June 1, 2008. After paying that amount for 27 years she will still owe a lump-sum ‘balloon payment’ of $276,938. In all, she is scheduled to pay $1.14 million in interest over 30 years. At the same time, she’s supposed to pay $421 a month on the smaller loan.”
If you sign your name to a contract like this you don’t deserve any pity.
There isn’t any way this woman could ever pay that loan back. A million in interest on a house she paid $97,000 for?
If a reporter can find a loan that overstated the income this high, how come a detective isn’t knocking on that loan officers door the next day?
Let’s call the mortgage company with the information. We could use it as a sort of Laboratory experiment to see what would happen next if we did call.
Mrs. Martinez was unavailable for comment on Friday because she was busy maxing out her last remaining credit card on after Thanksgiving bargains. “These prices are just too good not to take advantage of them. I’ll call Oprah in January with my compulsive shopping sob story and see if she can’t help me out.”
Too bad Oprah will be busy down at the lipo clinic getting a drumstick and pumpkin pie sucked out of each a$$ cheek.
“Paulette Mendes climbed the stairs out of the rain and quickly noticed tears on the face of her neighbour, Ana Martinez.”
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“But she, like many other lower-income and minority homeowners across the country, has been preyed upon by unscrupulous mortgage lenders”
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“the mortgage companies are in it for the fees ”
Of course the’re in it for the fees. This is such a lame attempt at impartial journalism. This lady is not a victim. She in fact is part of the problem and I guarantee there is more to this story: perhaps the kids are hoping mom will get bailed out, if not mom will live with them.
“the mortgage companies are in it for the fees ”
Gee, ya think? and this martinez hustler was looking to grab as much cash as she could while the going was good. Just like any thief.
I don’t owe anything against my house, or anyone else for that matter. However, I did get a HELOC at Bank of America just because they agreed to give me free rental on a saftey deposit box. Now I can sleep at night knowing my gold and silver is locked safely in their vault.
As far as Ms. Martinez’s troubles, I posted a while back that Oprah would be summoned, and here she is right on cue. How can anyone mow through $ 300,000.00? Who is holding the MBS? There is a ton of toxic crap out there masquerading as investing. For anyone interested, this is a link to a website with a discusion by Dr. David Martin on the mortgage house of cards:
http://www.arlingtoninstitute.org/library/davidmartin_05.asp
I’m not so sure the bank vault is a good place for silver and esp gold…re what happened in the Depression (gold confiscation) and what could happen in a 21st century banking crisis….e.g., limited and overseen access to your box.
I think there is a ‘lock-down’ provision for banks under the Patriot act, that can be invoked by the President under a national emergency.
I can even see the justification for the confiscation: “Only terrorists would barter in gold”!
In the sage words of Art Cashen on CNBC, when asked if an investor should own gold: “…Always have enough gold for the border guards…”
And, let’s not forget, we still have two years to suffer through with Dick Cheney, George W. and cohorts. Who knows what mischief they can get into?
“A house doesn’t increase in value, only price.” — Bill Bonner
“America’s patron saint of lost causes: Oprah.”
More like: America’s patron saint of idiot tv zombies and the all-mighty dollar.
This housing bubble story was on Oprah last week, http://tinyurl.com/y32bup.
“After six months on the market, this couple can’t sell their home. Our designers come to the rescue!”
In its’ entirety that Boston Sunday Globe article was still slanted for the sales hucksters with the tone obviously influenced by how much ad revenue the Globe takes from realty interests.
What was glaring in it’s omission was the fact that the writer in his comparisons to the ‘90/’91 bust, totally ignores the fact that the most recent equity ballon has been the result of toxic loans and a vampire mortgage industry.
But I can guarantee, Pesa isn’t as much as a “bulldog” as he thinks he is. He’s done nothin’ more than to catch a fallin’ knive at high velocity, with the press making out him to be some kind of due dilligence hero, to incite the hordes to continue to play the game.
Joe Gobbels couldn’t have done it better.
I have never taken money out of a house . If someone has a emergency you can understand taking out money for that, but save the money for the extras .
I have seen people get rid of a beautiful fixed loan and replaced it with a adjustable junk loan just so they could get some money for stupid stuff .I have a friend that refinanced a good loan to buy expensive furniture , do some minor home improvements,go on a trip , and pay off a car . The current loan has adjusted up now to a much higher interest rate than the prior loan . The furniture already looks like sh-t and the home improvements are already outdated .
I know it’s hard for those attacking Ms. Martinez to think outside the “box” because of their, “Gotta support the team, man,” mentality but maybe much of the fault lies elsewhere.
Let me be clear by saying Ms. Martinez is stupid, became caught up in greed and deserves bankruptcy. However, human beings come in all shapes and sizes and with all kinds of faults. Ms. Martinez is probably one of them. As we have seen recently, people will say one thing - then do the other. I refer to right wing “Gotta support the team, man,” people like Mark Foley and the preacher who were shown to have hidden their true characters. In the case of the preacher who hired male prostitutes, he actually stood up and declared “war” on homosexuality to milllions and Mark Foley did the same on the capitol steps in front of a battery of cameras and declared “war” on sexual predators while he was a sexual predator. I’m not religious, but there is a saying which goes, “He who is without sin - let him cast the first stone.”
Which brings me back to Ms. Martinez. All of you kind hearted souls who want her flogged, incarcerated, sent to debtors prison to walk a treadmill, might want to ponder on the fact that Ms. Martinez could only keep doing her re-fi game because she was helped and enabled by those even more crooked and more greedy than Ms. Martinez. You don’t know Ms. Martinez and neither do I. You don’t know all the facts and for all we know she could have an I.Q of 90, be as naive as the day is long and firmly believe that bankers, realtors and mortgage brokers are honest and wouldn’t mislead her. I can almost guarantee you she was told by those honest brokers that there would be no problems if she signed up for another helping out of the overflowing money pool.
The main fault lies with the banking system, Alan Greenspan, a government which has allowed (but where government is concerned I think there is a method behind the madness) this craziness to flourish.
Are people stupid? Yes and No depending on circumstances and perception. It’s hard for many to resist reaching for (what they think will be and the brokers/realtors/bankers/ tell them will be) financial freedom for the rest of their lives. Especially in a society which continually bombards them with “You Must Have This” goodies at every turn. Greenspan turned on the money spigot and said, “Help Yourself”. Not Ms. Martinez. Brokers allowed her to sign on the dotted line when they knew she would get into serious financial trouble without being “professional” enough to warn her that it was the road to financial disaster.
I had a friend (now dead) who was the nicest guy you could meet. He worked hard and supported a wife and 2 kids. He was as law abiding as the most law abiding. He managed his financial responsibilities with no problems. He was the first to step in and help if someone needed it BUT he had just one problem. He became addicted to drugs. The outcome was that it destroyed him and his family. So, what’s my point? My point is that most of the blame lies with those that sold him the drugs and made it freely available. No drugs - no addiction. Where Ms. Martinez is concerned - no free money - no greedy realtors, mortgage brokers, arrogant Fed Chairman - then no problem for Ms. Martinez. Like my friend who was addicted, Ms. Martinez only bought a “temporary” high which bought her a glimse of financial niverna and now that “high” is going to wear off. On the other hand, those that enabled Ms. Martinez will probably do okay and some will move onto the next scam - instead of being made to walk the treadmill.
For all, you “Gotta support the team, man,” people, there is another saying. “There but for the Grace of God Go I.”
My point is that most of the blame lies with those that sold him the drugs and made it freely available. No drugs - no addiction.
And yet, not everyone becomes an addict, so obviously personal responsibility remains. Don’t confuse your feelings with facts.
I’ll save my sympathy for the honest. Martinez has a rental income of 2500 a month, which is more than many Americans make working 40hrs a week. She grabs 300k from her 95k house, doing refi after refi, and blows it all. And it’s greenspan’s fault? I am no fan of the maestro, but adults are responsible for their actions. She took the money, including signing a contract to repay a million+…and exactly how did she “honestly” plan to meet the financial obligations she so willingly took? A thief is a thief–and it’s the rest of us who will pay for her actions.
So, the score in the blame game remains the same. 50% blame to the users, and 50% blame to the enablers.
Sorry to hear about your friend who became addicted and died. He bears the responsibility for his addiction, which doesn’t make his story less sad.
I am not enjoying reading about Ms Martinez’ misfortune, but she has to bear the consequences of her stupidity and live on a smaller foot.
Drug dealers, mortgage brokers etc. should be regulated (yes, I’m for legalizing drugs). If they break the rules, they should be punished, but if they use just their salesman charme, they should go free.
Had a friend (now also dead) who would become addicted to just about anything, drugs, gambling, achohol. She finally wised up to her problem and got clean. But the damage had been done. Pancreas and liver gave out. In our last conversation she said, “I really screwed myself up, didn’t I?”
Some people take responsibility for their own actions. Others do not. Haggard and Foley did not until they were forced to, neither will Ms. Martinez.
I had a beautiful 30 year fixed loan at 6-7 per cent. Three years ago I refied with a 7-year 4.7 ARM- a pure refi, no cash out. My savings are in insured CDs at 5.5 per cent. So for the next four years I’ll be paying the mortgage at 4.7. After that I’ll either pay off the house in full, or move.
I’m thinking, fixed loans are not better or worse than adjustables, they are just different. Its up to the debtor to use leverage optimally, or not.
Many people don’t understand that the payments will eventually increase with ARMs when the initial rates were set at historical lows.
Your situation is far different than the Coastal Californian who used an ARM with 0% down to stretch the family budget into purchasing a home they could not afford.
Absolutely Ronin. We had an ARM for 10 years. It was tied to the 11th district COFI and was great. Interest went down every year. Every year I looked to see if there was a better instrument. There wasn’t. When fixed rates were so low in 2004 we found that fixed made better sense and were ready to refi. But decided to sell in late ‘04 instead.
You are taking a little gamble, though. But it looks like you’ve done your risk/reward calcs.
Anyone NOT doing this when making one of the largest financial transactions of their life, is commonly known as a Greater Fool.
Yes. He timed his hop onto the eddy current. Too bad he forgot about timing the wave and not to mention the tide. He shall soon understand what I mean, come 2007-10, a la guilotine crash, or 2007-20 a la Japan water torture.
“Do you think that might have a little something to do with the flood of refugees pouring into the Lewiston area?”
Great point. It probably contributes to the rate. But I believe the in-migration stats are state to state. I’ll check. If I’m right, then any Somalis coming directly from Somalia would not factor into those numbers.
What I’m talking about are the large numbers of wealthy folks from NY, NJ, Ct, Mass and California who move to Falmouth, Cape Elizabeth, Cumberland, Yarmouth, North Yarmouth and parts of the city of Portland.