Price Trend “Indicative Of Over-Extended Investors”
The News Press reports from Florida. “A chance at irresistible real estate deals attracted more than 300 sellers, bidders, speculators and spectators to a packed South Fort Myers hotel conference room. A market adjustment started about one year ago and intensified throughout the year, creating a surplus of homes and a buyer’s market.”
“‘”We got a lot of offers. We put a lot of deals together,’ said Jeff Miloff of Miloff Aubuchon Realty Group. ‘A lot of people are bottom feeding.’”
“But the success of the auction is hard to measure until closing time on Tuesday. That’s the deadline for people with property on the auction block to decide if they will accept the bid on their property.”
“The first two properties sold Saturday were waterfront Cape Coral homes. The first went for $385,000, well below the $690,000 value listed on the Lee County property appraiser’s Web site. The second home went for $400,000, considerably above the property appraiser’s value of $255,810.”
“Estero residents Greg and Kim Seiss were there to sell their condominium in The Greens, but left disappointed. The condominium is valued at $163,000, but bidding stopped $120,000.”
“Mary and Clarence Hilbert of Cape Coral don’t know what to expect now that they were successful bidders at $390,000 for a waterfront Cape Coral home. ‘We believe it’s an investment property. It’s in a good location,’ said Mary Hilbert. But they might decide to live there, she noted.”
“‘The price is about where we thought it would be,’ Hilbert said. The bid still has to be approved by the owner, Hilbert noted. ‘Sellers have their needs, too,’ she said.”
The News Journal. “Selling a home in the Pensacola Bay Area used to be all about location and price. But these days, it’s a buyer’s market, and homebuilders and sellers increasingly have to sweeten the deal with a variety of freebies to get properties sold.”
“Doug Gooch, newly installed president of the Pensacola Association of Realtors, said his group is working to get the word out to Realtors and buyers about the array of state and federal lending programs, especially for first-time home buyers.”
“‘An agent in our office just sold a house to a 21-year-old with no money down,’ said Gooch. ‘It’s always been our position to try and help anyone get into a home.’”
The Naples News. “The Naples Area Board of Realtors has released fourth quarter statistics for home listings and sales in Naples, utilizing the board’s local reporting format.”
“New listings are up from third quarter, reflecting both sellers’ renewed confidence in the market as well as new investor/developer units being added to the marketplace.”
“The overall trend for median pricing is holding steady with an upward trend line, reflecting the long-term value of Naples properties. The figure is significantly higher than 2004, although below the record numbers of 2005. The recent short-term down trend in median sold price is likely indicative of some over-extended investors electing to unload the properties at discounted prices.”
“Inventory: 11,000; approximately an 18-month supply.”
The Herald Tribune. “About six weeks ago, Benjamin Ramirez, a framing subcontractor from Bradenton, who has worked in the United States illegally for about eight years, was called to a meeting with Lennar Homes. Ramirez, who had subcontracted for Lennar for three years, was told there would be no more work.”
“No one is certain how much this shift will affect the local economy. ‘That distress is going to percolate through the economy,’ said Ralph Gentile, senior economist with McGraw-Hill Construction.”
“Though the overall unemployment level has remained relatively unchanged in Florida, unemployment claims in construction have risen 63.37 percent since June.”
“That measure greatly underestimates what is going on because of the vast number of undocumented workers in the sector and its heavy reliance on subcontractors. ‘Many of these workers may never have been included in the jobs figures,’ said Mark Vitner, a Wachovia Bank economist.”
“The best documentation of what is happening comes from the workers. Benjamin Ramirez and his brother said construction jobs in Southwest Florida have evaporated. ‘Last year was nice. Everybody had a job. And there were a lot of houses to build,’ Ricardo Ramirez said. ‘This year there’s no work.’”
“Consumers might want to go without wind coverage, and may decide on a higher deductible in return for lower rates, but mortgage companies could keep these options from producing what the Florida Legislature wants: lower property insurance rates for all consumers.”
“Fannie Mae has already indicated it won’t buy mortgages on Florida homes that don’t have wind coverage, said Bret Rock, spokesman for the Florida Bankers Association. The secondary market is also likely to balk at agreements with deductibles higher than 10 percent; the most common policy has a 2 percent deductible.”
“‘It’s just tricky when it comes to that because it puts our members in a position of making decisions knowing that they can’t sell it to the secondary market,’ Rock said.”
The Sun Sentinel. “Just a year ago, the condo conversion craze was reducing the inventory of apartments in South Florida. Now that the condo conversion craze is over and the condo market is in the midst of a slowdown, many analysts expect a number of condos to revert to rental stock.”
“That will occur either by developers abandoning plans to convert to condos or by speculators, who are being forced to rent their units because they can’t flip them.”
“In Miami-Dade County, developers are returning to apartment construction. About 1,000 additional rental units are expected to hit the market in 2007, up from 40 units last year.”
“Kirk Felici, regional manager of the Miami office of Marcus & Millichap, said that investors seeking apartments to purchase are looking for cash flow and yield, and planning to hold onto their assets rather than convert them. ‘They’re returning to fundamentals,’ he said.”
From the Pensacola piece:
‘Duncan Hudnall, regional manager for Pensacola-based Adams Homes, said his company is offering certain buyer incentives and working with lenders to make it easier for people to purchase a new home. ‘Builders are willing to take less profit to move a house,’ Hudnall said.’
What? No talk of land shortages, labor shortages and skyrocketing material prices?
Dr. Copper seems to have hijacked the recent discussion of material prices…
About six weeks ago, Benjamin Ramirez, a framing subcontractor from Bradenton, who has worked in the United States illegally for about eight years,
Is it me, or do we seem to have NO fear of the laws of the land, Be it lending, un doc workers, COMPANYS HIREING UNDOC CONTRACTORS.
Why not go further, write Joe Blow, admitted mass murder lost contracting job today.
One of the reasons why builders use so many subcontractors rather than employees, is that it prevents them from having to hire illegals directly. If a subcontractor is busted, the builder isn’t responsible.
The other reason is to avoid the mountain of paperwork, taxes and compliance issues that employers are faced with.
Yeah, also the reason companies use temp agencies.
I’ m with you, builderboy. That jumped out at me in a huge way, as well. So what if mountains of paperwork is saved, and the contractor stays out of the line of fire in case the sub gets busted for hiring illegals… how about ethics? Isn’t that worth anything anymore? Or, is it just about the money? And I may be naive here for asking these questions, but how has Ramirez managed to stay under the radar running a business with employees? Doesn’t he have to file business income tax returns like the rest of us, and other documentation in order to actually OWN and RUN a business? It just unnerves me to no end that people can come into this country and set up lucrative businesses….illegally, and not get touched.
And wait! He is not afraid of his story being covered in a local newspaper? The Brothers Ramirez of South Florida! Here we are!! Have pity on us…because of the slowdown in the market, we have to cut down to 3 crews. Oh, yeah, and “the majority of us are illegal…”. Ugh!
And what about the reporters covering such a story? I guess they turn a blind eye, as well?
I know….I threw a ton of questions in my reply. Are there any easy answers?
BayQT~
I agree. This stuff is over the top. There has got to be somebody who will read the story and want to check up on this guy. If he is an illegal, you know he is not paying taxes on his business. How could he? He probably doesn’t even have a business license. Worse, when the roof trusses collapse and kill the family of 4 at dinner, this guy is nowhere to be found. This nonsense has got to stop.
Are you kidding me, many cities build ’staging areas’ with toilets for illegal day labor. The feds can swoop in anytime they want and take 5 million people out of los angeles county!!
They simply outnumber us, the tide cannot be stopped. Making them illegal is like outlawing masturbation or cussing. pointless.
“Makingthem illegal is like outlawing …..”
Huh!!?
BayQT~
oops! Bold off. Sorry.
I don’t know, seems every day I read of one’s illegal adventures because someone put a mike or told them they will be in the papers, were it used to take the police 24 hours under a light and a rubber hose to get this info.
Lennar is an accomplice to the crime of, illegally obtaining a business license, by virtue of knowingly hiring companies that have obtained business licenses illegally, by virtue of their illegal immigration status. The Ramerez Brothers Inc., were hired by Lennar, who openly admitted they were in this country illegally. A business license is required by a company, in order to do licensed contract work. An illegally obtained business license is not valid, especially when code enforcement is mandatory. Lennar, and all the builders should be held accountable.
Not really fair or accurate to equate a guy like Benjamin Ramirez to a mass murderer. Looking at the bleak prospects and future he had in Mexico, I really can’t blame the guy for trying to better his situation in life, and provide for his family.
Also, a big part of the illegal problem has stemmed from American workers themselves. A friend of mine in LA had to fire his American workers, back in the early 80s, because all the workers’ comp claims (most of them BS) would have put him out of business. He hired a crew of Mexicans who showed up for work on time every day, worked hard, and didn’t try to defraud him. It sucks that so many American jobs have literally gone South (or the South has come North to take the job), but a big part of the problem lies with the work ethic and practices of the native-born workforce.
This is a completely ridiculous point of view.. If he couldn’t hire reliable honest citizens then he should have paid more and made the position more attractive to them. If these high wages would run him out of business then he should find a new line of work because he cant supply a service without breaking the law. Instead your friend becomes the cause of the problem by hiring illegals who now put pressure on other contractors to have to lower their budgets. Just magnifying the problem and screwing others who try to do things justly. The problem is not the local workforce, its the competition created by hiring illegals in the first place. Your friend is just as guilty as the next guy for causing and sustaining the problem. There are plenty of ways to make a living without breaking the law, I could sell drugs and make a decent living but thats illegal so I found something else to pay the bills. no excuses.
Tray,
I like your analagy “I could sell drugs and make a decent living but thats illegal so I found something else to pay the bills”
I tend to agree that the Mexicans are willing to work harder and have an amazing work ethic, but illegal is illegal.
1/21/07 numbers from Miami:
01/21/2007 1 month 3 month 6 month 12 month
Median Price $369,900 -1.2% -2.4% -4.4% -7.3%
Inventory 43,597 +2.0% +5.5% +18.7% +90.0%
About a 4 year supply with another 50,000+ in visible supply coming to market.
Very nice summary
Holy foreclosures Batman. This market is going to…… (”Slap, Bam, Bang)…..crash.
LMAO. You owe me a new keyboard.
Not if we can use our new Batloans, Robin. Tell the Fed to fire up the Bat-copter!
Hahahahaha. I just imagined the commercial for this.
How does this fit with some shill’s report at this link?
http://www.miami.com/mld/miamiherald/living/home/16501426.htm
As a buyer, I am not bound by any guidelines proposed by the REIC. The buyers strategy; keep the powder dry, or keep lowballing your a@s off. It’s a win win strategy.
“‘”We got a lot of offers. We put a lot of deals together,’ said Jeff Miloff of Miloff Aubuchon Realty Group. ‘A lot of people are bottom feeding.’”
More like a few GFs are trying to catch themselves a falling knife.
Yeah, I thought that you had to be near the bottom to be bottom feeding. Sounds like a bunch of cat-fish-wannabees.
They’ll reach the breakeven point in 10 years - minus carrying costs of course.
From today’s John Mauldin letter:
“When Housing Up 4.5% Is Really Down 4.1%
Sometimes you really just have to look under the hood of some of the headlines. I must admit I was rather surprised to read yesterday that housing starts were up 4.5% in December. With both of new and existing home inventories rising, this just did not make sense. But there it was. The TV pundits and the financial press were full of analysts telling us we have seen the bottom in housing.
So much for my thoughts of a housing led recession. Was it the weather? Overly optimistic builders? Or was I just wrong and the bottom in the housing slowdown had been reached quicker than it has in previous housing slowdowns.
It turns out that new home construction did not rise. In fact, if you look at the data, new home construction was down by 4.1%. What was up was multi-family apartment construction which by a very robust 19%.
And that makes perfect sense. Look at the CPI data released yesterday. What has been consistently the biggest source of inflation for the past two years? Rent, or rather, homeowner equivalent rent. It was up over 4% over the last 12 months.
The demand for housing is falling and sub-prime mortgages are harder to get. But people have to live somewhere. The population is growing and the demand for a place to live will rise. And the demand will be in rental units.
Rising prices? Increased demand? Money is cheap and willing to take lower returns? And there are a lot of construction firms that I bet are willing to put in lower bids as new home construction is down. There is a need to keep your employees working. That sounds like a recipe for a lot of people to decide to start building apartments.
But there is one more factor. There is a glut of condominiums almost everywhere. If you go to Google and type in “housing foreclosures” you find several stories in the past few days of high end condominium developers changing their project to lower priced apartment complexes. They have a great deal invested in land and planning and have to do something. Banks are not lending for condominiums without significant guarantees.
Of course, a lot of new apartments means that prices will not rise as much because of more supply. And that means that those looking for housing will have more options, which won’t help housing sales.
What triggered my interest in housing foreclosures? Headlines in the business section for the Fort Worth Star-Telegram say that February listings for housing foreclosures are up 15.7% to a new record high. Looking at the plethora of stories on Google, you find that is the case all over the nation.
The stories have a similar ring to them. You can substitute place and data, but they all seem to have a quote like this from the Star-Telegram:
“…the main factors are job loss, serious illness or divorce. But in recent years, people have run into trouble when the interest rates have risen on their adjustable rate mortgages. Higher energy prices have also been a factor.”
There was a different culprit in Las Vegas and a few markets where “investors” came in and bought homes expecting to flip them before they had to actually take out that mortgage. There was 1 home in the foreclosure process for every 277 households in Clark County (Las Vegas). That is significant.”
“It turns out that new home construction did not rise. In fact, if you look at the data, new home construction was down by 4.1%. What was up was multi-family apartment construction which by a very robust 19%.”
Somebody in the construction business is very forward looking. There will be increased demand for apartment housing among former McMansion dwellers whose FICO scores dropped from 600 to 500 when they got foreclosed.
This is partly a fallacy. There are so many vacant houses on the market (Stucco’s point several weeks ago for the SD market) that the rental market is going to be saturated with product. No new apartments needed. In 1994 & 1995, apartment foreclosures were very common. Idiots investors purchased units at low cap rates. Expenses rose, but more importantly, FB’s that could not sell, rented. Renters started banding together, renting the 4 Bd 3 Ba house for 60% of what they paid seperately for an apartment. The only difference today is that idiot investors are buying apartments at 4% cap rates. When expenses go up and occupancies go down (and interest rates possibly rise) there will be a lot of unhappy apartment complex owners. I would cerainly dump any REIT stock in apartments. It is generally at all time highs and the dividends are LESS than 2 year T-bills. How does that compute. The world is insane about risk/return today.
“…that the rental market is going to be saturated with product. No new apartments needed.”
Well in that case, they can just convert them into condos
Clearly there are going to be a lot of “unintentional” rental properties entering the supply, particularly in cases where whole buildings give up on selling as condos, but I don’t see huge amounts of single-family homes deluging the rental market. That “ad hoc rental” sector is just too inefficient, and most distressed sellers will either hang on, get foreclosed, or sell for a lowball price. If you are a failing flipper, you are living day-to-day on prayers of a buyer materializing, and you will not want to agree to lock up your property in a long-term lease that’s below your carrying costs. I see most SFH investment properties ending in fire-sales, not rentals.
I’m in your camp, too. I think the whole “tight” rental market is in the process of topping out/loosening up and people just don’t realize it yet. “Shadow” rental supply is building up fast, condo conversions are re-verting, etc. The change isn’t major yet, but a few indicators I follow appear to validate this thesis. Some of the stats are a bit outdated, but here’s a piece from back in November on the subject …
http://tinyurl.com/2hlyy6
That National Multi Housing Council report on market conditions can be found on the web at the following link, by the way …
http://tinyurl.com/2cz8fp
And I try to post my thoughts about the rental market, in addition to the purchase side of things, here:
http://interestrateroundup.blogspot.com
As stated above ,practically every other article is about some FB who now has to rent his old house because he bought a new one ,and can’t sell the old one..With the huge over supply, I forsee that rental market increasing exponentially as those ARM’s start resetting…and also with the unemployment looming ,I believe alot of extended families will start bunching up. Why rent a 1 br. when you can get to gether with a couple of siblings, friends and rent a Mcmansion for pennies more…I guess we really are becoming 3rd world,slow,but sure…
Good stuff, Mike. Thanks.
Well said, I couldn’t put it any better to describe that point in history in SoCal.
“‘An agent in our office just sold a house to a 21-year-old with no money down,’ said Gooch. ‘It’s always been our position to try and help anyone get into a home.’”
He sure sounds proud of himself.
He ought to be proud of himself, as he is doing his patriotic duty by helping America become an Ownership Society.
Casey Serin?
Guys like this make me sick. He probably destroys the 21 yr old’s finances and wants readers like me to believe his self-serving actions are somehow benevolent. What a twisted SOB. With realtors like this a buyer does not need enemies.
“Sold a house to a 21 year old with no money down.” Of course, we don’t know the circumstances. Could be the 21 year old was being helped out by his parents but the “no down payment” part makes me doubt it. In which case it looks highly likely that this 21 year old went looking to buy a pair of jeans, saw a realtor leaning up against the door of his office with a broad shark grin who said, “How’ya doin’ today, sailor? Wanna buy a house?” That’s the realtors phrase for, “Hey, mista. You want to sleep with my sister? For you special rate.”
A 21 year old buying property with no down payment sounds like toxic loans are still out there.
lol funny realtress description, Mike.
I worked with those shark womenz, but the ones in my office were the fanciest of fancy ladies since they were shilling new construction only, much of the inventory $1M+
I must say they were pretty impressed with themselves.
They have an easier time fitting into that dress than the 21 year old will fitting into the mortgage.
Though Pensacola’s still got relatively cheap housing costs, even after Ivan bumped everything up for a while. Adams’ prices for new construction these days are probalby in the $130-$140K range for something small but in a reasonably safe neighborhood. If the 21 year old has some sort of tolerable roommates to share the cost, he won’t have too horrible of a monthly payment.
…and an easier time getting out of that dress than the 21-year-old will have getting out of the mortgage.
Wonder if the kid’s from the Appalachians and got married at 15, raising a family. When I turned 21 I was still in college and owning a home then was even farther from my mind than signing up for an astrophysics course.
‘It’s always been our position to try and help anyone get into a home.’
Not everyone that WANTS a home can actually AFFORD a home, or has the discipline to KEEP PAYING for a home, especially when price appreciation comes to a standstill.
‘It’s always been our position to try and help ourselves get a commission by getting anyone into a home.’
Fixed for “truthiness”
‘It’s always been our position to try and help anyone get into a home.’
Hasn’t it always been the position of a crack dealer to sell drugs to kids?
“It’s always been our position to try and help anyone get into a home”….so we can make the most money we can.
“Mary and Clarence Hilbert of Cape Coral don’t know what to expect now that they were successful bidders at $390,000 for a waterfront Cape Coral home. ‘We believe it’s an investment property. It’s in a good location,’ said Mary Hilbert. But they might decide to live there, she noted.”
Or they might decide to rent the place out. Or let it go vacant. Or auction it off with their other 27-or-so investment properties when they finally figure out that prices will not work out in favor of investment gains over the next decade.
I am speechless.
When I was 21 years old, in 1982, there is no way that a 21 year old could have gotten a mortgage with no money down. NO WAY.
Man…..what a mess has been created.
he is not just any 21 year old, he is the assistant to the assisstant
mgr at the local starbucks!
Wouldn’t that be “Special Associate”.
I Think they call them Baristas
that would be “scone boy”
LOL!
yeah, he gets him coffee
He gets him coffee, I presume?
doh, my browser timed out…thought it lost the post…:*|
21 and no money down. Oh he must have a Union job.
Wow, ” The next agent that sell to a kid less then 21 years of age, gets a set of steak knifes” “C’mon, we let Agent SOB beat you guys. Let’s get this kids into homes to get our Commission from the banks” ” Agent SOB-Wannabe start cruising highschools. There are plenty of kids that dream of homeownership. Tell them they will difinately get laid if they own there own pad” Geez
When I was 21 the only credit I could get was a $500 visa card and an 18% car loan, and to get that I had to prove 2 years of income and fill out a form full of personal references and better not have so much as a single late payment…
This is rediculous indeed. I guess when you are not loaning your own money out what do you care.
I am your near contemporary. Rather than buy at 21 in 1983, I had to save for years for a big downpayment. With a decade of work history (20 years counting my wife, she all with one employer) and a 40% downpayment, and no other debts I was put through the wringer to get a mortgage in 1994.
That was ridiculous. So is this.
Me too GH. 21 in 1976. Took a loan to buy my first car, a POS Ford Pinto in 1977. Yeah, no car in college in Southern California, hard to imagine, huh? Got about a $500 credit card as I recall.
Hell, it was hard enough to get with 20% down.
“When I was 21 years old, in 1982, there is no way that a 21 year old could have gotten a mortgage with no money down.”
With a high enough FICO score, he could put no money down, no closing costs, and just “state” (nudge-nudge, wink-wink) his income in order to qualify. As has been stated before, it would cost this guy more cash (at least initially) to RENT someplace. With renting, you have to at least have a deposit.
18 month supply … The “investors” must be freaking out. Not a chance of selling without a substantiall price reducation right now.
“New listings are up from third quarter, reflecting both sellers’ renewed confidence in the market as well as new investor/developer units being added to the marketplace.”
Wow. That’s positively Orwellian. I’m so confident in the market that I’m going to dump the rock around my neck, ahem “investment”, along with all of the other FBs out there.
I agree. It looks like the Naples News decided to run the ‘new’ local realtors stats and talking points without edit.
Hey Ben,
Any idea what happened to the Saturday (”everybody will buy on Saturday!) auction in Naples? The couple who listed their home at 800K+?
I think they got a bid of 550K. The end users didn’t show
Oh, I think they probably got their end used. LOL
I did a search for the Naples results with no luck.
http://www.news-press.com/apps/pbcs.dll/article?AID=/20070121/NEWS0101/701210377/1075
Here’s the link to the news article. The couple got a bid for $525,000. Note: tax record shows that they purchased this property for $375,000 in 1/2001.
How do they call this crap an auction? And how do they get away with saying “sold?” If I send a lowball offer to a seller, the property is not sold/ It sells when the seller accepts the offer. This is a con game, IMO, a more expensive version of much of the nonsense on EBay.
I believe that to be an auction, the sale must require either (and only) that:
(A) The property will be sold with no reserve price whatsoever; or
(B) The reserve price is stated before the auction begins.
That is the only type I would ever attend.
BTW Ben, you’ve got some competition:
http://www.chicagotribune.com/business/chi-0701220040jan22,1,3873192.story?coll=chi-bizfront-hed
OMG Ben NABR’s press release has me ROTFLMAO. It is so hysterical; you cannot make this stuff up:
*The overall trend for median pricing is holding steady with an upward trend line,* reflecting the long-term value of Naples properties…..
and,
*The recent short-term down trend in median sold price* is likely indicative of some over-extended investors electing to unload the properties at discounted prices….
Posters usually mock members of the REIC by writing crazy stuff like this but this is NABR’s own press release. It is absolutely shocking yet laughable at the same time. If we cannot trust their words, can we really trust their numbers?
It’s as if they think their REIC happy talk is some kind of magic mojo buyer mantra that will materialize new GFs out of the ethers.
Get it through your heads, guys: Nothing but the people are staying away.
“About six weeks ago, Benjamin Ramirez, a framing subcontractor from Bradenton, who has worked in the United States illegally for about eight years, was called to a meeting with Lennar Homes. Ramirez, who had subcontracted for Lennar for three years, was told there would be no more work.”
‘That distress is going to percolate through the economy,’ said Ralph Gentile, senior economist with McGraw-Hill Construction.”
“That measure greatly underestimates what is going on because of the vast number of undocumented workers in the sector and its heavy reliance on subcontractors. ‘Many of these workers may never have been included in the jobs figures,’ said Mark Vitner, a Wachovia Bank economist.”
Many contractors are low on work here in the South Bay (Manhattan beach, Redondo Bch, Hermosa Bch, Palos Verdes CA etc. To actually have a builder call you and say that there is no work for you may become much more common.
“The best documentation of what is happening comes from the workers. Benjamin Ramirez and his brother said construction jobs in Southwest Florida have evaporated. ‘Last year was nice. Everybody had a job. And there were a lot of houses to build,’ Ricardo Ramirez said. ‘This year there’s no work.’”
IMO it is really poor economics that such a large labor force is invisible to the numbers.
Certainly puts a larger uncertainty on any data collected and related stats.
Not just poor economics, but illegal too.
It’s just a huge huge pool of people…
the word from Queen Creek (that lovely bastion of good taste and tanning salons) is that subs can’t find anyone to work on whatever slim pickin’s there is…they’ve all gone back to Mexico to live like peso millionaires on their saved riches from the past 7-8 years.
what worries me is when there is no more work for these illegals what will they do for money?
Break into your house and steal things. And the drug trade. That’s also quite popular. Especially the part of it that’s affiliated with gangs.
go on the dole
“go on the dole”
Many of these “day laborer’s women and children that are here in the U.S. are already collecting benefits since dad’s income is invisible.
“they’ve all gone back to Mexico to live like peso millionaires on their saved riches from the past 7-8 years.”
Nice retirement plan but that’s not the case. Most are in the US supporting an extended family of 10 or more back in Mexico so they CANNOT AFFORD to go home…..
Without getting into the whole discussion, a SS card, in any metro area is about $150 and a DL goes for $75. An employer does not violate the law unless they “knowingly” hire an illegal.
So….it’s a piece of cake to get here, a snap to get the docs, and a shrug of the shoulders for employers. This is simply another chapter in an ongoing saga.
Disagree! I live in AZ, and have mucho exposure to these guys…and many saved and sent back with a vengenence. I’ve visited one of our “guest workers” in Puerta Vallarta, and his family now lives on the beach in what we gringos call a mansion. Of course, that’s not the case with all (just like the crazy gringos, they were those who bought all manner of wide screen tv’s and Escalades) but many really made a lot of money and saved/sent most of it back to Mexico…
Catherine, you are correct. What do I know…I only hired hundreds and hundreds when I was in business.
How much for a US passport? If you have that you don’t need SS + DL.
Ditto, Dan. We do too. And still in business.
Simmer down. It’s an observation that has merit, just as yours does.
passthebubbly,
Don’t know about passport costs…..
Never was an issue. All I know of had the same “employment package info”….get SS and DL for documentation. It’s widely known where to go and who to talk to “downtown” to get what they need. The whole documented worker discussion, in light of what goes on, is silly. If workers needed a yellow bound ID book w/red lettering and the president’s signature…..within a week it would be available on the street…..and competively priced.
Look at the documents themselves….a SS card is just that. A simple card w/name and number. DL is little better and is not archived or reported. The only one that matters is SS and, by the time the SS Admin kicks the number back, the people are long gone. When the politicians have a central database employers can send info and then get an “ok to hire”, you know they are serious. Until then, it’s just one more thing to make speeches, raise money, and garner votes.
Catherine and Dan. Knowingly hiring illegal aliens is completely unethical. And, I am quite sure you (your companies) pay them a paltry sum in order to pad your own pockets (getting rich on the backs of cheap labor). I am hopeful that this government, at long last, starts levying ENORMOUS fines for such offenses. Say $100k per worker. I would like to see companies such as yours out of business permanently.
Bantering, I couldn’t agree with you more. They’ll probably never see this post, but it is folks like these, bragging about it, who have assisted in bringing great misery on their fellow citizens in ways they can’t even imagine. I hope they realize this every time they read about a death caused by an illegal, an identity theft, communities struggling to bear the costs, etc.
But they will get their, as sure as the sun rises and sets. We may not be around to see it, but they will. Little story: one time a relative of mine was really upset because a new salesman in her office was bragging about how he was collecting unemployment, despite that he had gotten a new job. His excuse? Everyone does it. Since he’s a s**tbag, he’s got to make everyone else out to be. Of course, he couldn’t admit he was ripping off his fellow taxpayers. Then, about a month later, he comes into the office horrified that his house had been broken into and robbed. He was yelling to high heaven about how horrible people were these days and how much crime. Wish I’d been there. What goes around, comes around. Sometimes it takes a while, but karma is king.
Catherine and Dan,
So you break immigration and employment laws, traffic in forged documents, and offload the costs of illegal aliens and their families on honest taxpayers…so you share the same ethics as realtwhores, bucket-shop subprime lenders, crooked appraisers, and all the others who have made corruption so much a part of the fabric of American life.
You two must be so proud of yourselves.
Weird, I have only worked in GA and IL (in the US) and in both places they have asked me for two photo ids, so I gave my DL and my green card. They get the SSN in the w4 and 401k paperwork. I am surprised in CA (I assume you are in CA) they only ask for SSN and DL.
I think policymakers secretly enjoy having parts of economic activity off the radar screen (M3), as these provide stealth safety release valves for policy initiatives which are out of sight and out of mind to the public.
Take the minimum wage, for an example. If it goes up, part of the impact is absorbed by a transfer of labor demand from the politically visible minimum wage labor pool to the invisible illegal immigrant sub-minimum-wage labor pool. The visible impact of a minimum wage increase is dampened compared to what it would be if the minimum wage was literally the lowest wage rate in the economy.
P.S. I should add that the impact of the imploding bubble on employment statistics is another example of my point. The direct impact of much of the loss in construction jobs will not show up in official employment statistics, due to the large share of construction carried out by illegal immigrant labor. However, the secondary effects, due to the loss of their sizable slice of consumer spending, will ripple through with a vengeance. Look for future MSM articles about economic dark matter killing off retail demand (”even though the unemployment rate has changed by little, consumer spending at regional malls dropped by XXX%…”).
very astute, GS.
dark matter=black hole
I think I saw an indicator of illegal alien construction worker hardship yesterday. The company that makes Corona has an 8-month supply, up from 2 months in 2005. They have a new PR campaign, saying “it’s a great time to buy, and choices have never been so good”. Some stores are pushing a deal where you can buy a six pack and get a plasma tv.
SFC can you keep this on the DL, please…
My roommate’s BF already keeps the fridge pretty well stocked with Corona, if he catches wind of this promotion, the house is going to be cluttered with plasma tv’s. Not to mention more fridges for the abundance of cerveza mas fina.
GS and Ben,
You guys raise a really great issue — understated statistics and their impact on economic performance perception.
employment figure look strong as 1099 types get regulayr jobs and become w2 type- so the numbers are useless
GS: Take the minimum wage, for an example. If it goes up, part of the impact is absorbed by a transfer of labor demand from the politically visible minimum wage labor pool to the invisible illegal immigrant sub-minimum-wage labor pool. The visible impact of a minimum wage increase is dampened compared to what it would be if the minimum wage was literally the lowest wage rate in the economy.
Illegal immigrants generally get better than minimum wage, because they’re a better quality worker than what we can get for minimum wage domestically. I mean - anyone who’s able to relocate to a foreign country and function *has* to have more initiative than a domestic low-wage worker. The attraction of illegal workers in the construction industry is not that they make below minimum wage - it’s that they make less than higher-skilled, but also much higher-paid (beyond the marginal value of their skills) domestic (typically unionized) construction workers.
Employers cannot be prosecuted for immigration violations if they show that they made good faith attempts to verify the work eligibility status of the workers they hired. They can, however, be prosecuted for labor violations if they paid below minimum wage. There was a news item in the Journal four or five years ago about how illegal immigrants who had returned to Fujian province in China were traced (by the Labor Department) and paid back wages (garnished from their employer) because he had paid them sub-minimum wages. This is why employers will hire illegal immigrants, provided they have ID that bears scrutiny, but pay them at or above minimum wage - there’s less financial and legal exposure this way.
“Illegal immigrants generally get better than minimum wage, because they’re a better quality worker than what we can get for minimum wage domestically.”
If you believe this contradicts my point, then you have completely missed it. So let me clarify: The minimum wage sets a price floor on W-2 and other legal compensation; the free market sets the illegal immigrant wage.
So, for example, illegal immigrant construction workers will get paid a market-based wage which (1) exceeds the minimum wage and (2) is set by the labor supply of illegal immigrant construction workers and the demand for their services (which recently plummeted with a 25% haircut in US residential construction).
By contrast, illegal immigrant dishwashers are likely to get paid below the minimum wage, which is what one would have to pay a US resident teenager to do the job. And I agree with you that the employer gets a double dividend, as he pays less for better quality workers. Illegal immigrants have to accept a discount to the real value of their labor because they happen to be illegal.
in the industries where I’ve worked (packaging & warehousing management) it was all about how well people did their jobs. most of our permanent, full-time employees were Mexican and started as temps, where the native-born people the agency sent usually lasted two hours and needed one supervisor per two employees to keep them working (the immigrants usually needed one supervisor per ten+). some of it just comes down to work ethic and the perceived desirabillity of the job.
No kidding. It really makes you wonder how bad the real unemplyment numbers actually are instead of these historically low numbers which are continually trotted out as evidence of a strong economy.
My guess is that unemployment is around 2x (using the “old math”) what the numbers stated are. My organization has downsized from around 60+ to about 20 in the past two years. I don’t think my employer is much different from many others.
I did a little activity analysis last week on construction activity. We interviewed clerks at convenience stores about business in certain construction corridors.
The largest users of these stores other than travelers is the construction industry as they get refills and other little perks from the stores. Most were giving away something like lighters or hotdogs after a purchase of $5 or more.
The majority of the people we talked to said business was off 25-40% in central Florida.
Sounds about right.
“Estero residents Greg and Kim Seiss were there to sell their condominium in The Greens, but left disappointed. The condominium is valued at $163,000, but bidding stopped $120,000.”
Um, no. If it’s a free auction it’s valued at $120k.
And next year it will be valued at $100k, and $80k the next. They did the winning bidder a favor buy not selling and taking the loss themselves.
“But the success of the auction is hard to measure until closing time on Tuesday. That’s the deadline for people with property on the auction block to decide if they will accept the bid on their property.”
I wonder how long people will attend these phony auctions?
Next up for the new real estate marketing paradigm - “Foreclosures as Family Fun!”
The second home went for $400,000, considerably above the property appraiser’s value of $255,810.”
Something smells fishy.
Cash back???
Property appraisers office reflects the “save our homes cap”, so their numbers are essentially meaningless.
Sounds like a case for Paladin of Haunted Hillwood Loop fame.
“Selling a home in the Pensacola Bay Area used to be all about location and price. But these days, it’s a buyer’s market, and homebuilders and sellers increasingly have to sweeten the deal with a variety of freebies to get properties sold.”
Selling homes anywhere used to and still is all about PRICE and location.
Builders and sellers can stop offering “freebies” and just lower their prices to fair market value.
TIMBERRRRRRRRRRRRRRRRRRRRRRR:
http://www.marketwatch.com/tools/quotes/quotes.asp?symb=CFHI
This florida bank will go bust!
Anybody with a 100K in depository accounts excluding government better withdraw fast.
A question for the esteemed panel: I was told by a finace guy rcently that FDIC does insure for 100K, BUT you only get 30K back immediately and the other 70K is paid out over 25 years. Does his statement have any merit?
I hope they have the FDIC forms in the lobby - they need to pass them out with each new account!
Click on the “all data” date range to learn the answer to the question, “What happens if plunge protection ever stops working?”
It’s amazing actually that they’ve only lost about 40% of their market cap, considering they’ll most likely go bankrupt. I can’t imagine what fools are buying that stock right now. Talk about catching falling knives!!
A couple of quick observations in my neck of the Florida woods —
* The house next door to ours went up for sale about a month ago. It’s just one of several on my street, including one across the street that has been for sale about a year. Anyway, the first open house yesterday appeared to attract zero visitors (though we were nice enough to tell the agent that one of the guy’s sprinkler heads has been MIA for a while — figure it’ll save his client a few cents on the monthly water bill!)
* I’ve been tracking inventory in my zip code, using specific criteria on Realtor.com (at least 2 beds, at least 2 baths, $100,000 to $500,000 list price range) since June 2005. I got 150 “hits” way back then. For sale supply climbed steadily before peaking at 634 in mid-November and dropping off. Now, as expected, the post-holiday, pre-spring listing increase appears to be unfolding. We’re up to 630 hits today, so it’ll take just a few more listings to mark a new inventory high for the cycle.
Granted, these are just two, anecdotal observations. But I figured they were worth sharing.
I’m seeing the same inventory increase the last 2 weeks in northern VA. I think there are lots of people who de-listed last fall that are now re-listing to try and “beat the spring rush”.
The first two properties sold Saturday were waterfront Cape Coral homes. The first went for $385,000, well below the $690,000 value listed on the Lee County property appraiser’s Web site.
If you want to know why things are so f’d up in this bubble and why it will only get worse, here is exhibit A. This home was sold at auction for $385k. According to public records, this home was purchased in August 2005 for $569,900. The purchaser got 95% financing with an 80/15 combo loan. Here’s where it gets real stupid. Four months later, the borrower takes out a loan against the property for $697,600. Not only did the borrower pay off both loans, they also got an extra $150,000 out in cash. Needless to say, the borrower didn’t have much luck paying back a nearly $700k loan. The lender for this fiasco was New York Mortgage. I bet their depositors or investors must be real happy that this particular loan was approved. Somebody is out $310k. Unreal.
Thanks Ben for this wonderful Blog. It is truly amazing to see the total disconnent between the reality of the real estate market and what the MSM reports. AMAZING.
I had a business that went under in 2003, which forced me to declare bankruptcy in 2004. I am currently a renter. Well, I have been watching the articles about the implosion of all the subprime lenders, and I was curious to see how or if these folks have tighened their standards since they have started dropping like flies.
So, I applied via LendingTree for a $300,000 loan. My FICO score is 609. Guess what offers I received? 6.04% APR, $609 in closing costs, 30-years fixed rate.
That’s INSANE! I can walk into a $300,000 loan and all it requires is I pay less than what would be required to buy a $20,000 car. This lack of risk premium and non-existing lending standards will lead to a major major financial crash, the likes of which will make the S&L scandal look like a walk in the park.
I N S A N E!
The article concerning the Cape Coral auction mentions one property that was bid considerably above the “appraisal” and another considerable below. They appear to even each other out. If you do some checking I will bet you will find that the property above “appraisal” had an owner occupier. Further I would wager the “appraisal” was based on the tax appraiser’s office. Why is this importan? Because in Florida if you claim to reside in a house the property tax appraisal can only go up 3% yearly. It is a phony appraisal in terms of past value say of 2004 or 05. It may well respresent price of ten years ago.
In general the auctions I have tracked down here have been 40-45% off the zillow.com supposed value. This includes this one in Ft Myers.
That Naples News story says that listings went up because sellers were more confident of the market? It further in a round about way garbled the fact that prices are off 20% since 05’s top.
This morning my cousin, a renovator/flipper in Palm Beach County, now turned home-inspector, was telling me about his search for yet another flippable property. While I cautioned him to wait a while, he said his realtor friends were telling him sales are going a little better this January than last January. I bit my tongue to keep from calling them liars, but just said I thought he should await the likely effect of insurance increases and stricter FNMA policies. Yawn.
Is there something wrong with my system, or did this entire thread just go “bold?”
WCI reports cancellations out number new orders. Oh yeah, “Florida bottomed out months ago”! That’s what Mr. idiot Cramer said the other day. BUY WCI!!!!! What a joke!
“‘An agent in our office just sold a house to a 21-year-old with no money down,’ said Gooch. ‘It’s always been our position to try and help anyone get into a home.’”
They could sell a house to my dog, Jake, too, but he wouldn’t be able to pay the mortgage either. Seriously, how many 21 year old people are in the position to buy a house?