“One Foreclosure Begets Another” In Colorado
The Denver Post reports from Colorado. “Sales and prices of existing homes in the Denver area continued to slide in February, largely a result of inclement weather and a high foreclosure rate. The number of homes sold last month dropped to 3,090, compared with 3,540 in January, according to statistics released Tuesday by independent real estate analyst Gary Bauer.”
“Competition from new homes also is negatively affecting the existing- home market. Homebuilders are now focusing on first-time buyers, Bauer said. ‘They’re offering some very attractive programs that give a good amount of upgrades,’ he said. ‘Until now, this hasn’t been a factor in existing-home sales.’”
“Another factor contributing to the declining market is the number of people taking the equity out of their homes to pay for vacations or expensive toys, said Larry McGee of The Berkshire Group. ‘If you use your house like an ATM it may be hard to sell it,’ McGee said. ‘Unless prices go up, you’re in trouble. It’s irresponsibility of the public.’”
“Foreclosures in Colorado soared 31 percent last year and have more than doubled since 2003, depressing Front Range home values, a new survey from the Colorado Division of Housing says.”
“‘One foreclosure begets another foreclosure. You have to ride that wave out and try to do what you can to minimize the damage to neighborhoods,’ said Zach Urban, director of housing counseling with Brothers Redevelopment in Denver.”
“There were 28,435 foreclosures recorded last year in the 43 out of 64 counties where the division obtained counts.”
“Unless new homebuyers move to the state in unexpected numbers, the areas hardest hit by foreclosures will probably suffer home-price declines before recovering within 18 months to two years, said Kathi Williams, director of the division.”
“About half of the homes that entered foreclosure in the state last year were lost in public trustee sales. About a third of the foreclosures started were withdrawn. Sandy Hume, Boulder County public trustee, estimates that many homeowners who withdraw their foreclosures still end up selling against their wishes.”
“‘Those withdrawals don’t mean that someone gets to stay in their house,’ Hume said.”
“‘A lot of people who are in problem situations are not subprime borrowers. They are borrowers who weren’t ready for a 2 percent hit on their mortgage rate,’ said Michael Thomas, managing partner with Hyperion Capital Group in Aurora.”
“Thornton homeowner Paul Hernandez blames officials too eager to win new housetops at any cost, even if means destroying the home equity of their current residents. ‘If you allow too much building, you are going to hurt the existing citizens of your community. It doesn’t take a lot of brains to figure that out,’ he said.”
“Homebuilders are expected to add 14,000 homes this year in the metro area, despite an eight-month supply of existing homes available for sale and more than 19,000 foreclosures last year.”
The Rocky Mountain News. “Foreclosures appear to have tempered the prices of homes sold in February in the Denver area, experts said Tuesday. ‘I think the number of foreclosures is definitely starting to impact the prices of homes, especially in some specific neighborhoods,’ such as parts of Aurora, Montbello and Green Valley Ranch, said Gary Bauer, who authors a monthly report based on Metrolist data.”
“Kirby Smith, a Metro Broker, agreed that foreclosures are driving down home prices. The drop in prices indicates that lenders are lowering prices of foreclosed homes for quick sales. ‘I think the biggest thing with foreclosures is that a lot of banks are getting serious about getting rid of this stuff,’ Smith said.”
“‘That is very good news for home buyers, sellers and investors,’ he said. ‘No home seller wants to be competing against overpriced foreclosures. I think it is good for everyone if the banks get rid of them quickly.’”
From KOAA 5/30. “In a county-by-county comparison, Pueblo County ranks 5th highest for per capita foreclosures and El Paso County ranks 8th. Local lender Roy Clennan, President of Freedom Financial Services says it’s not the loans that are the problem. Rather it’s the lenders.”
“‘These loans are good tools, all of the interest only, the adjustable rates they’re good loans and they’re good tools if right people get them,’ says Clennan. ‘If you put people in the wrong loan it can be devastating.’”
“Clennan says at least half of the customers he sees have borrowed more money than they can afford, usually from out-of-state lenders. But with little or no regulation of the mortgage industry in our Colorado, Clennan worries that more people will be taken advantage of.”
“‘Everybody wants you to buy the biggest house they can, because the real estate agent makes more money and the lender makes more money,’ says Clennan.”
From USA Today. “Since the start of the year, more lenders have been shutting their doors to people, just as those homeowners’ interest rates are rising. They’re slashing the ‘Bad credit? No problem’ types of loan programs, known as subprime, that helped fuel the housing boom. And they’re raising the bar for homeowners and first-time buyers to qualify for new loans.”
“The trend accelerated last week after federal regulators proposed stricter guidelines for banks that make subprime ARMs.”
“‘Some of these companies are yanking away six, eight (loan) products at a time, and the reps are just hanging on the phone with their mouths open, saying, ‘What are we going to sell?’ says Dave Tucker, owner of MileHighMortgage.com in Castle Rock, Colo.”
“That’s partly why he can’t help Anita Furakh and Bobby Pervez this time. Tucker helped them buy their first home near Denver two years ago with an ARM that covered 100% of the $195,000 purchase price. The young couple made their payments on time until December, when Pervez traded in his car for a new one. That month, they were late on their mortgage.”
“The timing couldn’t have been worse. They needed to refinance their mortgage before the rate started rising this month. But their home’s value hasn’t gone up, and their credit score has gone down.”
“‘I don’t know what I’m going to do,’ says Furakh, 24. ‘I’m trying to work on my credit, but sometimes you can’t be that good. I’ve got two jobs. I’ve got two kids. Sometimes, I am just late.’”
‘Mighty Mesa County housing market soared into rarefied air last year, as home values climbed to record levels amid a staggering number of real estate transactions. The median price of a home in Mesa County climbed 11.5 percent to $195,000 for the year ended Dec. 31 from $174,900 in the same period of 2005, according to data compiled and released by Stewart Title in Grand Junction. ‘
‘The median home price has increased $72,000 during the last five years or nearly 60 percent. At the same time, the number of real estate sales in Mesa County skyrocketed to 7,241 in 2006 from 5,149 in 2001.’
‘Bob Reece, district manager of the Western Slope for Stewart Title, said the increase in housing prices is a direct result of rising land costs and steady population gains brought on by a hardy economy. ‘The population is growing faster than we can build houses,’ he said, ‘and we can’t build them any faster because we don’t have enough lots (zoned).’
‘Even with the lofty increases in land prices, there seem to be no shortage of buyers and developers for just about any piece of available property. And they seem to be willing to plunk down large sums of money at a moment’s notice, evidenced by some recent deals.’
‘Reece foresees the median price of a home in Mesa County easily exceeding last year’s record-setting figure. ‘It’s hard to argue it’s not going up 11 or 12 percent,’ Reece said. ‘There is nothing out there that’s going to stop it at this point.’
‘D.R. Horton Inc., the second-largest builder by revenue, said it will miss its projections for closings this year. D.R. Horton said closings will likely drop below last year’s 53,000 and it will probably continue writing down land through 2008.’
‘I don’t want to be too sophisticated here, but 2007 is going to suck, all 12 months of the calendar year,’ D.R. Horton Chief Executive Officer Donald Tomnitz said at a Citigroup Inc. conference in New York. ‘Our future is not as bright as what we would like it to be.’
“‘Reece foresees the median price of a home in Mesa County easily exceeding last year’s record-setting figure. ‘It’s hard to argue it’s not going up 11 or 12 percent,’ Reece said. ‘There is nothing out there that’s going to stop it at this point.’”
Yeah, that’s normal buddy. No bubble there, just your average double digit per year appreciation, nevermind wages.
Yes, because we all know that Colorado is about to run out of land! Buy now or be priced out forever!
Ther’s a lot of tight gas in the Piceance Basin, Mesa County Colorado. Unskilled roustabouts can easily pull in 60K a year while roughnecks make double. That part of Colorado seems recession proof.
“going to suck”
Well said!
What does he care if 2007 is going to suck, Horton’s been making money hand over fist for how many years now!?
Ok, which one of you is this? LOL
Ben, “2007 is going to suck” NEEDS to be a headline.
Hey, he just shed liability for anything the stock does from here on out, plus he can sell if he wants to!
I was thinking the exact same thing.
‘If you put people in the wrong loan it can be devastating.’”
Geez, I guess that means just about every subprime borrower and many Alt-A and A people.
What he really should have said is…”These freakin’ behomoth homes are too expensive for 95% of the US population. Therefore, we’ve had to use toxic loans to push all these crap on the sheepel, er, I mean buyers. Now, we are seeing what happens when you allow someone making $12/hr to buy a $500-750K home.
If you are in the wrong loan, 2007 is going to suck. As will 2008, 2009, 2010, 2011, 2012 and 2013. Then it goes off your credit, so 2014 might be ok.
Au contraire. When the loan gets charged off, it goes into the hands of the zombie debt buyers where you have to fight like hell because they re-age the debts on the bureau records to try to force people to pay. So 7 years is a best case scenario.
Which makes work for the contingency-case credit-repair lawyers. Which, in turn, makes work for me. Unfortunately, none of this makes work for people who actually do anything useful — which has been pretty much the name of the economic game for the past four years.
If I wasn’t sooo busy with the San Diego market crash I would set up a Colorado office!
Here’s a quote from one of the guys BO complaining about how FBs still want the teaser rate option ARM even after he explains its pros and cons:
“Just going to hit Burger King see if they want to open a Mortgage Co with me, BK Mortgage and our slogan will be “BK Mortgage - Have it your way - and your mortgage will be in BK!”"
http://tinyurl.com/32gevm
“…”These freakin’ behomoth homes are too expensive for 95% of the US population. Therefore, we’ve had to use toxic loans…”
Well said, Dan. How in the hell do average folks justify these prices in their mind? Connect the dots, you fools! If it’s a financial stretch (impossibility really) for you, how many people out there can actually afford to pay even more? I’ll tell you: not many! And those who really could afford to pay these excessive prices don’t buy stucco boxes in BFE!
Heard on the radio this morning that since 1970 the average house size has increased from 1500 Ft2 to 2500 Ft2 while the average household decreased from 3.7 to 2.3 inhabitants (going from memory so I could be off on the person numbers by +/- .3).
So we have bigger houses with fewer folks per Ft2. Sounds like a really sustainable, energy efficient, “green” trend.
Could it be that builders are not actually in touch with demographic trends and have only been building ever more cheaply-made “McMansions” to make more money and in doing so, reduce the number of “good enough size” homes so folks are forced to pick between ever larger homes?
And what about “luxury” homes? See that word a lot up here. So they installed granite counter tops and SSA and now it is a “luxury” home? What if it is cheaply made and the roof leaks? Is it still a “luxury” home or just a expensive bucket for catching rainwater?
Or have people simply become more Ft2 greedy?
Either way, there are a lot of empty McMansions sitting around…
Spring Fever….coming to a local RE market near you.
Got Moose Munch? (sorry Neil)
Or have people simply become more Ft2 greedy?
Greed… lots of greed.
At the Moose munch I had a picture of throwing popcorn at you… but then I realized that if you threw much of a moose at me… you’d win that artillery duel.
Got POPCORN?
Neil
As far as these McMansions sitting MT:
Many of the bathrooms in these things are not vented through the roof, only into the attic. The bathroom ventilation fans are so dang cheap (plastic bearings instead of brass) they are guaranteed to make a racket after about a year. The blown-in attic insulation tappers down to nothing as you approach the exterior walls. The copper pipe connections under the floor look like globs of battery acid. Half of the cheap nylon straps for the HVAC conduit will loosen after about a year.
And these are the things that you cans see. What about the stuff behind the walls and under the unbolted sill plates?
Houses built by “Guest workers”. Contractors get what contractors pay for.
Lots of these Toll Brothers houses are going to be sitting MT for a very long time. The cost to repair/correct would be so high (once more rational pricing has been established after some years), it will be cheaper to just raze and replace with well built smaller houses by small regional builders who actually know what they are doing.
Meanwhile, society benefits from MET opera broadcasts every saturday, paid for (by an underteminable small part) by Toll Brothers.
OCDan,
No one pushed any of these people into these houses. They bought them because they wanted to buy them. They got GREEDY. The were sold on “appreciation”. Real Estate is your best “investment”. Buy the most expensive house you can “afford” so you can get in on the gains.
I didn’t buy. I am waiting it out. These people need to PAY for the loans the agreed to. If they could not PAY for the loan, they had no business taking it…….but then, if you want to “win”, you need to get in the game……….
And they did. Screw every one of them!!!!
Did any one else see Florida Power & Light (FLP) as the obvious play on behemoth homes and condo developments in Fl?
I am not so sure this is such an obvious play.
On a short term basis, if interest rates rise their earnings will suffer because of their very high debt loads. As an investor in utilities you have to ask yourself: What is the downside potential of interest rates that are already near their historical lows, and what is the upside potential?
Most of these tens of thousands of currently MT condos will never be occupied. Most likely, the houses will either be razed and replaced with more rationally sized housing for their 1.75 occupants, or inhabited by large multi-family illegals, or compartmentized into smaller units for the newly fallen former middle class. Either way, the outcome will be far more efficient use of energy and square footage on a per person basis. As the cost of electrical energy infrastructure increases, this will have to happen.
The electric utilities have been feverishly increasing output per facility by retrofiting with new technologies, as the cost of new plant construction is now very expensive because of NIMBY and other factors. But eventually, once enough people get good and fed up enough will rolling (planned) blackouts (this may take 20 years), their hand will be forced and they will have to sell more bonds (pay more interest) to make these very expensive investments in new plants, so it will not neccessarily extrapolate into higher earnings per share. If NIMBY dictates that they build in Mexico, then we will need more expensive investments in transmission infrastructure, (plus we will become even more politically “suavecito” with Mexico at the local and national levels, and at the mercy of the Mexican govt policing any terrorist activity in Mexico).
As a side note, the utilities giants are now pressuring the regulators for more smokestack scrubber technologies / regulations that will be very expensive on everybody, but especially so to the smaller utilities. Look for more consolidation in the next 10/15/20 years, and also for higher utility bills (outpacing inflation) during the next 40 years to pay for cleaner air and new power plants.
Only after this new wave of new plant construction (It may take at least 40 years), utilities may once again be the good div paying investment they have been for most of the 20th century; a good div yield with a modest but reasonable capital appreciation.
Some thoughts by philosopher Dr. Michael J. Hurd for those of you advocating stricter controls on the lending industry due to “market failure”:
Most economists like to talk of “market failure” as justification for government intervention in the economy. Yet “market failure” is never economically, scientifically defined. As examples, these economists point to undesirable conditions in life as evidence of “market failure.” But why is the existence of pain and suffering in the world the fault of the market? This would be like saying the existence of irrational people–like Nazis, or racists–is the fault of free speech. Are we to curb free speech because of “freedom failure”?
Interestingly, curbing economic freedom does nothing to alleviate the undesirable conditions the curbs were supposed to address. Remember the War on Poverty? It didn’t work, at least not by any economic standard. Fortunately, the remnants of the market in the semi-free United States keep lifting all economic levels of society higher and higher. Today’s “working poor” enjoy cable and cell phones, things that even the rich didn’t enjoy 3 decades ago. It’s also important to keep in mind that before capitalism, poverty and hunger were widespread; under capitalism, poverty and hunger are ultimately defeated. Former Communist countries, which have yet to adopt a fully free market, remain overall quite poor, while the United States keeps getting richer and richer. It’s fashionable in certain circles to hate the United States for this fact, but hasn’t anyone considered the underlying cause of this state of affairs?
I would like to see the next political candidate who speaks of “market failure” be forced to defend this definition, for a change. Most politicians have a vested interest in the notion of market failure, because, if there were no such thing, where would all their power go?
The whole concept of market failure is an oxymoron. It’s like saying that evolution arrived at the wrong result. The market has no goal; therefore it cannot fail.
What *can* happen is that the market does not deliver the products that people need to achieve a certain goal. That actually happens pretty frequently. That’s not the failure of the market though; the failure was in assuming that the free market was automatically, magically going to give you the result you desired. If the free market was the best way to meet a goal, why don’t corporations use the free market model to run their internal operations?
The conventional wisdom of the free market as “the most efficient” market is similarly misguided. Evolution looks “efficient” and “elegant”, too, but that is because we only look at the end result and don’t count all of the dead animals it took to arrive at the present state. The free market, in the process of arriving at equilibrium, produces an incredible amount of waste. All of these failed subprime lenders can be considered as an example of such waste. As disastrous as they appear now, 20 years in the future, they will be the textbook example of how the market “automatically corrects itself.”
“All of those failed subprime lenders” are a joint venture between private greed and government unwisdom. The government is ultimately responsible for regulating the money supply (a function it has delegated to the quasi-private Federal Reserve) and it has absolutely flooded the market with money. All that juice had to go somewhere — and if there weren’t enough good investment opportunities, it spilled over into bad ones. And even the progressively detonating subprime lenders made boatloads of money while the good times lasted — money which probably got paid out in bonuses and commissions into real people’s pockets. To the extent the last folks standing get creamed — well, stupid hurts.
Kind of implies that failure is a natural result in markets.
I can just feel people starting to think socialism is the way to go again.
All will lay in ruins in less than 50 years.
I’m more inclined to think we’re headed for fascism, not socialism. Big business loves big government.
While I tend to agree with the original post in spirit (less regulation is usually better), I am not convinced that the market itself can assess risk appropriately in every case. I guess we’ll see how those mortgage-backed securities will do the trick.
Facist is only a half breath from socialist.
An activist electorate and an activist investor can asses risk pretty well.
I’d like the government to persue fraud and companies that cooked the books. New Century is the example of the day. The insiders sell off THEN restate earnings. Easy call.
Money having real value would have prevented all this.
It’s easy to lend out worthless electrons in a computer. You put more thought into it when you hand over a bag of gold.
Ah, but that’s never going to happen. At least not until our paper money becomes worthless. It’s already almost meaningless as those close to the money source have an unlimited supply on tap.
Give an American enough credit rope and he’ll be sure to hang himself.
Ah yes, what is Market Failure? Well, “The Market” doesn’t care if grandma gets her chemotherapy medicine or if your job just got outsourced to some guy thousands of miles away who’s willing and eager to work for a quarter of your salary. How can a working person compete with that? How can anyone, in the long run? Indeed, I have heard many references over the years to the “Miracle of the Market” or “The invisible hand of the Market” gently guiding the world of commerce. Actually, it’s been getting to look to me that the invisible hand of the Market is more like a sucker punch to the back of the head, leaving the victim lying a stupor on the pavement while some guy in a 3 piece suit is going over the contents of his wallet. “The invisible hand of the Market is responsible, in part, for suburban sprawl, environmental devastation, resouce depletion and great economic inequality. The invisible hand of the Market is guided is ultimately guided by greed, and increasingly plagued with a desire to ignore (sacrifice) long term sustainabilty for short term profits. Indeed, is it not the invisible hand of the Market that got us to our imminent economic woes? As far as I’m concerned, the invisible hand of the Market can go Jack Off.
I’m all for a cutting off all trade with countries that perpetrate fraud, violate patents, violate trade marks, conterfit goods and do not enforce a living wage.
Of course that means we’d only trade with… with…. England?
Yep. Thats about it.
Well said, Dred!
As long as those with money have power over the masses (and they always will), there is no free market.
The people with the money will ALWAYS control the markets and the governments, whether capitalist or communist or socialist.
The best we can do is try to force power to those less powerful and less wealthy. IMHO, that requires the masses to form unions so they can, collectively, match the power and wealth of the few at the top.
CA Renter & SK Dred should look into Austrian Economics. The free market is the only manner to raise the standard of living across the board. There will, of course, be people who are wealthier and people who are poorer. But only gov’t intervention can actually freeze those classes so that there is no way to become richer, and no risk of become poorer.
Private property rights, enforcement of contracts, no gov’t intervention, and liberty makes everyone better off. Anything else is looting one set of people for the benefit of another set of people.
And that especially includes unions.
Paul
But only gov’t intervention can actually freeze those classes so that there is no way to become richer, and no risk of become poorer.
—————————-
Exactly my point. The **wealthy control the government.** You better believe they have all sorts of ways to ensure the rich stay rich and the poor stay poor.
As long as humans are part of the market, there is no free market!
“…with an ARM that covered 100% of the $195,000 purchase price. The young couple made their payments on time until December, when Pervez traded in his car for a new one. That month, they were late on their mortgage.”
“‘I don’t know what I’m going to do,’ says Furakh, 24. ‘I’m trying to work on my credit, but sometimes you can’t be that good. I’ve got two jobs. I’ve got two kids. Sometimes, I am just late.’”
You start with bad credit because you have late payments. Then you buy a $200K house, and a new car. You call that working on your credit?
let me guess, household income probably $35K.
What puzzles me is that the simple act of trading up to a new car stressed him to the point of missing a mortgage payment. Truly brainless these people are.
It’s not like he had a serious medical emergency or a job loss.
I don’t know why I’m even posting about this. I’m going to have to just accept that we’re operating in a new paradigm and it’s not like when I was in my early 20’s paying off a mortgage and knowing it was the first bill that had to be paid and I wasn’t out buying new cars or boats or plasma TVs or any other toy that I knew I couldn’t afford.
I agree with you about the 35k HHI. That’s about the right income to qualify for a 200k house in New Paradigm World.
No kidding, Phillygal: the simple act of trading up to a new car stressed him to the point of missing a mortgage payment
That is puzzling. What the heck was that idiot thinking when he went for that new car? It’s not like you suddenly wake up with a brand new car (and payment) out of nowhere. Looks like another one who is bad at math.
But then, I have a couple of friends (30-something) with kids who went and did the same stooopid thing. They are sweating their mortgage payments, having bought too much house with too little down. And yet four months after losing $10k’s on a failed flip and buying a nw, overpriced new-construction house, they both went out and bought new cars, trading in their perfectly fine 3-year-old cars! Idiots!
Justification for their stupid deed: “He reeeeeally has always wanted a brand new [fill in yer brand] with all the options, and even though times are tough, he works sooooo hard…”. I suspect that simply BECAUSE times were tough, they took solace in new vehicles. And then he said “And since I got my new car, she really deserved one for herself.” Arghhhhhhh!!!
I hope they like their cars. They might be living in them by year end, the way things are headed.
I bought a new car once, after my old car was falling to pieces. I expected at the time to keep it for at least 7 years. 6 Years in, I think I’ll keep it at least 10.
Got my wife a new car too. Her old car had 14 years on it. Finally needed more repairs than it was worth.
But then again, we’re just one step above those crazy people who live with 126 cats. We rent. And have no debt. Wackos…but we sleep well at night.
My fiancee wants a new car.
Her old 17 year old car with ~220k miles is about ready for the scrapyard. Yep… replace on schedule.
No debt. Oh… only my first car was used. I decided if I’m going to drive it to the grave, I’ll enjoy the first few years. Do a cost per mile analysis and you’ll see that after you keep a car 7 or 8 years… buying new or used doesn’t matter that much.
(Note: dependent on maintenance assumptions.)
But I agree, everyone thinks that is crazy.
Got popcorn?
Neil
A less expensive car vs SUV has huge implications over a persons lifetime.
I’m trying to get a used Civic and shooting for a 0.10$ per mile depreciation cost. (100K miles/10K$ sans fuel)… get down to 0.07$ if I can
I got 160K on the Excel 6500$… 0.04$ but hated that car…used
I have 160K on my Mustang…0.13$ and its about done though.. bought new
My first car Total cost of ownership was $0.25/mile. Everything. Every repair, every gallon of gas, every tire… boring, but I loved the car. Depreciation was $0.06/mile.
New.
Now I drive a “higher end” car that is a maintenance… headache (German engineering…). Cost? $0.72/mile over its life (so far) but was $0.50/mile for last year (not much depreciation left, but the mainenance was a bear). I expect the lifetime cost to be around $0.60/mile when I’m done. Depreciation? So far $0.20 but that’s about to plummet (not much depreciation left, but I expect to get out another 130k miles out of it). New
An SUV? $0.20+ gallon just for gasoline. Depreciation? Easily another $0.20. Insurance? $0.06+ Repairs? Tires? Carwashes (Hey, I track everything in my Quicken).
My brother’s total is $0.75/mile for his SUV.
If you compare… every penny (even wiper blades).
Got popcorn?
Neil
Even crazier, my wife’s a professional, making very good money. It was pretty funny to see her colleagues driving expensive BMWs while she had hand-crank windows and no power steering.
LOL!
Even my $300 cars from back in college had power steering.
I bought a new Pontiac once. Started falling apart from day one, and never really stopped. All my used cars have been better than that.
“while she had hand-crank windows”
Cars don’t have crank windows anymore?
Thanks Dave. I was thinking similar thoughts.
“‘I don’t know what I’m going to do,’ says Furakh, 24. ‘I’m trying to work on my credit, but sometimes you can’t be that good. I’ve got two jobs. I’ve got two kids. Sometimes, I am just late.’”
She’s been late alright. Twice by my count. Vote early, vote often. Wonder how good she really is?
If you allow too much building, you are going to hurt the existing citizens of your community. It doesn’t take a lot of brains to figure that out,’ he said.
If you artificially keep the prices of housing high, as you suggest, jobs will continue to migrate overseas due to the high cost of labor. It doesn’t take a lot of brains to figure that out.
Keep prices high and price yourself out of a job
Sounds good to me, so who is going to step up and take the first wage decrease? What? No takers, come on someone let’s go, “hey! what about you over there with the high school diploma swinging that hammer? You willing to drop down to, say, $25 per hour? come on don’t be shy now.”
No need for anyone to step up - inflation will take care of all that
Actually, the wage decreases are here. Look at construction suppliers. Most that are still opperating are demanding 10% wage haircuts. Look at sub-contractors, Lennar et al have all cut payouts and the vendors have no choice. Look at Realtors ™, as the dollar sales drop so will their commisions.
As to cutting my wage, I accept that I only get market rate. Thankfully, my skill set is rare enough with enough demand that if my employer demanded a cut I’d be in a new position within 6 weeks.
The other side of wages is productivity. e.g. semi-conductors. Wages can go up while product prices drop as long as productivity improves at a faster pace.
Got popcorn?
Neil
I’d be more productive if I weren’t on this site all the time!
The number of homes sold last month dropped to 3,090, compared with 3,540 in January,
how bout that super bowl
That’s from the previous month. I looked around and couldn’t find a year over year comparison.
March 21st. That’s the official first day of spring according to my calendar. We’ll see if that long-awaited rebound materializes or not…
2007 is going to suck.
Someone needs to adopt that as their user name.
Got popcorn?
Neil
How about as a new sign-off?
I call DIBS!
2007 is going to suck.
Rent
Rent,
You’ve got it!
Got popcorn?
Neil
They mentioned it on NPR this evening (marketplace).
Text:
“This final note . . .
There have been a lot of questions out there about whether or not the U.S. housing market has hit bottom. We’ve got two opinions to offer.
Former Federal Reserve chief Alan Greenspan said yes, he thinks we’re done dropping. But DR Horton CEO Donald Tomnitz has another perspective. DR Horton’s the second-largest luxury-home builder in this country. And Tomnitz said today that his company’s losses are going to continue into 2008.”
-Somewhere in the middle, though (and left out of the text), they mentioned that the guy said that “2007 is going to stink” but that he actually used a different word that starts with ’s.’
2007 is going to suck.
Rent
The folks that make for-sale signs will be very very busy, probably set a record for the 2nd quarter of 07 in production.
As will those that make lockboxes for keys. IIRC, there was a shortage of those last year, and there will be even more inventory this year.
As will those that make lockboxes for keys. IIRC, there was a shortage of those last year, and there will be even more inventory this year.
There will continue to be a shortage. GE’s factory is maxed out on overtime already. Lockbox demand will have to be controlled via the other free market mechanism: price.
Got popcorn?
Neil
Can’t we just use Al Gore’s?
“Sometimes I am just late.” (Especially since I need a new car.)
Yee-haw. Glad it’s not me.
I explained to a coworker a bit about FICO. How the median American gets a 725. If you’re in the top 10%, you get 810 (IIRC), etc. Thus, how for the last few years it was easy to keep up and thus hard to advance one’s FICO much beyound ~740 unless you were stellar. For the next few years, just holding steady will send up a lot of people’s scores.
Its like out-running a bear. I don’t have to truly outrun the bear… I just have to outrun the slowest.
Got popcorn?
Neil
“United States keeps getting richer and richer.” Based on what?
Not to be too hard on you. I agree that we have things the richest people didn’t have 30 years ago. However, I think that to see we are getting richer and richer is a misnomer.
Fact, the US currently has a 9 trillion dollar debt.
Fact, the US currently has a trade deficit of 750-800 billion dollars.
Fact, there is what, 5-6 trillion dollars worth of mortgages out there when RE is valued at what 9-10 trillion and rapidly falling.
Fact, the true savings rate of this country is negative. Don’t give me some BS about home value. Half of the people in this country don’t have any value in their home. Sure, it may be great to live in when retired, but try paying the artery bill for the doc with it. Hope you have equity for a HELOC.
Fact, state and local gubmints are, for all intents and purposes, broke. Look, my home state of Clownifornia needs more bonds. Heck, we have such a greaaaaat economy and can’t even keep from adding to our debt. What do you think is going to happen to other smaller states? As for my birth state, NJ. Ha, that state is going to go under eventually because of unions and gubmint retirees going retiring at 50. How the h3ll foots that bill? Yeah, taxpayers.
Fact, entitlements (SS and Medicare), which of course can always be rescinded are projected as high as 50 trillion. You can add to that all the state, county, and local entitlements on top of that.
Fact, presonal debt increased, sigh, again with the last FED report last week. This from an economy that relies on 70% of its growth from the consumer. I guess debt really does fuel this economy.
Sure, we can always print more cash, but that leads us to the Weimar Republic. Not a good answer.
For all practical accounting, we is flat stone cold broke in the US.
Sure, we have more toys, but just who is kidding who? People work longer and harder with more personal stress. Families more than ever are crippled by massive debt and the need to have 2 parents working. Commuters average more time than ever before in their cars. Quality of life is sliding down hill faster than ever before.
Well, I guess I have ranted enough on this issue.
In closing, I guess appearance and perception is everything and in that case, I would argue we are richer. However, if one looks long and hard, I know for sure we are not richer.
I think that the Europeans are much richer. Most work 35 hours per week and have 6 weeks (and more) vacation and lucky for us they spend most of that time over here!
Here’s a major problem: The US is running on leverage. We’re indebted to heck and gone. But that indebtedness is the only thing driving the export-driven economies, which includes the many European countries for which the US is one of their primary export markets.
When our debt finally catches up to us and precipitates a major American financial crisis, Europe’s not going to be immune. If anything, the crash will be worse there.
I’m not so sure. The export economies are essentially producing useful items and sending them to us for cash. They apparently have nothing useful to spend this cash on that we produce (hence the massive trade deficits) so this cash just ends up getting lent back to us in the stock market, bonds, etc. So we are able to continue consuming big chunks of the world’s raw materials (for instance, the 5% of us in the US consume 25% of the petroleum) keeping those prices higher by supply and demand. When they devaluate the heck out of our dollars, they’ll pay less for fuel and other commodities and they can use their own products. I think we will be hosed and they will weather it… If you had a no-good brother-in-law who you kept working for on credit (while never getting paid back), why would cutting the bum off hurt you?
As a Brit, I do think we have work:life balance a bit more sorted over here. I could get a job with an Investment Bank and earn 3x what I do now, but what is the point if you don’t see your family.
I also love the US. I honeymooned in California, and have spent many happy holidays in New England. I am looking forward to a few business trips soon too.
Events in the US are starting to affect other credit markets, and a credit crunch is what is going to trigger the collapse of all of the asset bubbles (not just housing). The fall could be quite substantial, but I honestly don’t know how bad and I am better placed that 99.99% of people to know.
At a more fundamental level, both Europe and the US are going to have big problems triggered by funding pensions. The UK and the US are better placed to survive these in comparison to Germany, France etc due to heavy immigration.
Nevertheless, the US and Europe have robust economies and educated workforces. The destruction of capital through asset bubble collapse isn’t the end of the world, it is a rebalance back to normality. The sectors to avoid will be the discretionary spending sectors, but even these will survive a fall, because many have such huge margins, they have the capacity to work even with substantially reduced sales or prices.
My view is to be long cash and live life to the full.
Regards,
Loafer
OCDan: rant on, dude! Don’t keep it bottled inside. I’ve traveled in 12 foreign countries (several in Europe, a couple in Asia, South Pacific & Australia), and yes America is great. But as you point out, everything that made it so great is quickly going bye-bye. Quality of life now seems to be measured by clothing, stucco boxes, and cars. They pointed out below that people will park a $50K car outside in the elements yet protect a bunch of worthless crap in their garage! Got to have that $600 video game system! $500 for a handbag that has a bunch of lame logos on it and will be out of style in 6 months? WTF!
Great to have a like-minded person on this blog. I realize that everyday I have to fight the commercial forces in this world. I am so grateful to live close to my work, have a wife that stays home, and be debt free. Not only that, but I am off on Fridays. I have to stay focused though because it is so easy to get caught up in the game. My riches are my family, faith, health, freedom from debt. Sure, I have “stuff.” I readily admit I collect baseball cards. Not for any hedge, but to pass along to the kids. Hopefully, my son will continue to enjoy them as he does now. When I die it won’t matter if he still has them though. He and my daughter will have memories of a father who was around. Not working tons of OT to pay for the overpriced PoS house.
We can all argue about morals, faith, war, politics, etc. However, what made America great despite what de Toqueville may have said, is family. Look at families during the incredible immigration of Europeans in the early 1900s. Sure they struggled and had their own problems, but family mattered. grandpa came over with nothing, but worked his butt off to get everyone else. Family and real dreams, like owning a business, not retiring at 45 with a pension and health plan for the remaining 50 years of life.
What also bugs me is that we are not only a debt-riddled consumer country, but wasteful with what we have. Heck, if you have 100 pairs of shoes in great shape, donate some of those puppies. No, people just through their crap away. Find someone who needs what you have and give it to them. When others mention garages full of boxes piled 6 feet high, I have to wonder not only about all that money wasted, but what the bleep are you saving it for. Give it away, sell it. But for goodness sakes, what are you storing it for? Armegeddon. That’s what frustrates me.
It is just like that with the new stucco homes. Just built to last five years. Isn’t that the Toll Bros. motto. What crap. If you are going to build something, make it last. Look at the pyramids. Without getting into a long argument, suffice it to say, those puppies were built to last. Why can’t we get stuff like that anymore?
Therefore, we not only have zillions in debt up to their eyeballs, but in debt up to their eyeballs for either stuff they don’t use or stuff that falls apart.
“Sure, I have “stuff.” I readily admit I collect baseball cards.”
Yes. OCDan came up with a great topic here. We talk about past bubbles in history. There was the tulip bubble, the South Seas Bubble and the Beanie Baby Bubble. But there was also the baseball card bubble. Yes, there was one and I remember it like it was yesterday. I was right in the middle of it.
The late 80s and early 90s were the golden age of the baseball card bubble. That was back when there was just Topps (sold yesterday I believe), Donruss and Fleer. Donruss and Fleer entered in 1982. Card prices in the late 80s took off. The 1984 baseball sets just took off. The Fleer Update set was trading for hundreds and hundreds of dollars. You could have bought it in 1984 for $12. The prices of cards such as Darryl Strawberry 1983 Topps Traded $90, Dwight Gooden Fleer Update $300, Kirby Puckett Fleer Update $250, Roger Clemens Fleer Update $250 were soaring. The 1980 Ricky Henderson was going for $250 or so. I had 3 or 4.
It was great. Baseball card shows were a blast. At a show in 1985 I saw my first Mickey Mantle 1952 Topps card. At that show I paid $10 for the 1984 Topps Traded set. The Fleer Update set was a gaudy $14 (later to be worth more than $700 as a set). I couldn’t part with the extra $4. The ‘52 Mantle was going for $2,000. That seemed astronomical. I was the kid that thought $4 was a huge sum of money. The ‘52 Mantle (the Honus Wagner isn’t realistic) to many collectors is the grail but it still seemed ridiculously priced. A little more than 5 years later I would see that card selling $20,000. I have seen it as high as $45,000.
Then guess what happend? Somebody please answer. What follows every boom? If you guessed “a crash” you are completely wrong. When prices boom you see a huge influx of greed into the market. Sound familiar? I knew the golden years were done when Fleer, Topps and Donruss were joined by one new company after another. All of these companies saw the market booming and decided to jump in. One of the first companies to jump in was Upper Deck. The 1989 Ken Griffey Jr. was the prize of that set. Stadium Club came onto the scene in 1991 I believe. That was actually a Topps product but looked completely different. At one time it would have cost about $300 to get both halves of the Stadium Club set. When it came out it was cherished by collectors. People ate up those Stadium Club cards. Ten years later you could get it for $15. New companies jumped in and Topps, Donruss and Fleer started glutting the market with one spin-off after another. Pretty soon, as a collector, you had no idea what to collect. There was so much inventory it made you feel like you were drunk. Back in ‘91 I actually was drunk about half the time so it was really confusing.
Sales for the ever-growing number of companies started to get hit. So, then what did the companies do? Stop me if you’ve heard this concept before. They started offering incentives and gimmicks. You could open the pack and possibly get a limited edition card like a Joe Dimaggio autograph card. The retail prices of the cards soared and the little kid with a dollar in his pocket was priced out. I remember paying $.45 for packs in 1983. These fancy new packs cost $3 or $4 a pack. And you didn’t even get any gum with them. I love that chalky, hard gum that came with baseball cards. It was only the “investors” that could afford these high-priced cards. There was no starter market any more.
It was awful. Card shows that used to be like a family event became frequented by scummy get-rich-quick charlatans. You felt like you needed a bath after a show. Autographed merchandise and every other thing that anybody could think of began to flood the market. It was horrible. I watched in complete despair.
In 1992 I sold out my entire collection of probably 50,000 cards or so. I had lived this stuff for about 7 or 8 years. Greed sucked every bit of enjoyment out of it. I remember several years ago seeing a 1980 Rickey Henderson rookie going for about $6.00. That was down from more than $200. I loved that card but I learned that they were just possessions.
I moved on. I have never looked back. It was never about the money for me. It was a lot of fun. Once the whole thing became about money it wasn’t about anything any more.
Stages of the baseball card market:
Normal market (fun but not too profitable) –> Prices rise as a few more selections are available (a lot of fun) –> the prices shoot up (inventory comes out of the woodwork) –> full-on greed jumps in (the hobby sucks and you exit as quickly as you can) –> move on with your life
Good night all!
Man, that was a class on baseball cards.:)
Beautiful posts, Loafer & OC Dan!
OCDan:
Off on Friday’s? You must work for Boeing!
WAman; What a wonderful description of the state of our national economy. We have everything but money, the lowest savings rate of any major industrial country and many not so major.
Mish, borrowing from Mr. Practical:
Total U.S. debt is now 3.6 times GDP and continues to grow. But new debt is having less and less effect in driving economic growth: more income is going to service that debt and less to creating production, the stuff that generates income. The second highest U.S. debt has ever been was 2.9 times in 1929. Despite Mr. Bernanke’s false recollections of Fed actions back then, they created an immense amount of liquidity (credit) trying to cure the stock market crash. The market did rally back temporarily as a result, then slowly crashed much worse as that new credit just went to short term speculation in stocks. The new money did no real good because there was already too much capacity, so the credit never went to creating production. The same thing is happening today. It now takes $7 of new debt to make $1 of GDP where it only took $1 in 1980 and $3 in 2000.
And the consumer, which is most of the economy, is in trouble too. Today household debt is now 130% of income. That is up from 100% just in 2001, 70% in 1986, and 40% in 1953. How quaint we were back then.
Of course, I should add that I would not want to live in any other country and I have visited a few. I love this country, but that won’t stop me from commenting about what I see and read about the US inderneath all the hype and hoopla.
I feel the same way. What I see happening, makes me sick, but on the other hand, I couldn’t see myself living anywhere else, except possibly Japan, where I lived for 10 years. BTW, the LARGEST dwelling I had in Japan was 400 sq. ft, where me, my wife, and our young daughter shared the love. That included the infamous “unit bath” with bath/shower, sink, and toilet in one tight compartment. My intuition tells me we are in for a 10-12 year period of falling real estate prices, which is what I witnessed first hand in Japan from 1990 to 2000.
400 sq. ft. WOW! Not many in this country who would accept that kind of living space. A tip of the cap to you!
I was young and had no idea what has happening in the US during my time away. I socked away a lot of money during my time there. Came back in 2000 and put 60% down on a house in Sacramento because I didn’t feel confident I could handle a higher mortgage payment. Only later did I find out that nobody was putting even 20% down anymore. We sold our house in January 2005 after I realized that every time I spoke to my neighbors, they were talking about how much home values were going up. That kind of thing is always a huge heads up to me. I believe the crowd is almost always wrong.
Regarding the small Japanese dwellings, I think somewhere in the middle is best. Probably somewhere around 1,000 to 1,500 sq. ft for a family of four should be sufficient. We Americans simply have too much crap! The very fact that there is a Mini Storage industry is testament to the fact.
In general, I really think this housing boom has been very detrimental to our communities and their worthiness as places to live and be a part of.
“We Americans simply have too much crap! The very fact that there is a Mini Storage industry is testament to the fact.”
True. Drive around my neighborhood on the weekend and peek in through the open garage doors. What do you see, cars? No, stuff stacked 6′ high from wall to wall. To good to throw away, but not as exiting as that new stuff from CostCo.
The very fact that there is a Mini Storage industry is testament to the fact.
LOL. No, it’s because Pa ain’t got no big barn no more.
“I believe the crowd is almost always wrong”
Just say no to kool-aid.
“I believe the crowd is almost always wrong”
you are a very wise man bubbleviewer. this applies to nearly everything.
I am a professional handicapper. Sports gambling. My most successful tool I use is to bet against the public, especially when they are all loaded on the same team.
Congrats on your sale in Sacto. As you know you were 7 months from the peak, but really only missed about 8% appreciation. Sold two there myself in August 05.
The time to buy again will be when that crowd is saying real estate is doomed and things look the bleakest. Not even close yet.
I love my 1500 sq ft for 6 people: MBR, 1 BR for two kids, 1 BR for study/storage/smoking room, big LR, combo Dining Room and Library, small Kitchen, and Maid’s Room for the nanny.
It’s big enough that everyone can get some privacy if they want it. Small enough that even the 2 year old can find a parent when she wants. No room for crap, so it gets thrown out quickly if it’s not being used.
I’ve lived in big houses (e.g. so big that people haven’t noticed that there were other people in the same room they were in,) but I love human-scale living.
400 sq. ft. WOW! Not many in this country who would accept that kind of living space.
Two of my friends here in DC are living in 400 sqft apartments. It’s kind of the norm for a lot of 30-year-olds who want a place without roommates.
Oh, and one of them got a notice from the building management months or so ago saying they are going condo. They want to know if she’s interested in paying $350,000 for her unit!! Aiiieee!! That’s almost $900/sqft! She’s all upset. I told her to just sit tight because that condo conversion might fall flat on its face in the current market.
Condo developments are switching to apartments:
http://franklyrealty.blogspot.com/2007/02/arlington-condos-joule-converts-to-apts.html
You would be amazed at how many 300 -350 sq ft. condos there are in NYC…..10×30ft bathroom closet on one end range refridge sink on one wall pull drop down kitchen table on the other and your “living/sleeping space”
But this is the WORST 300 sq ft $2500 a month rental in New Brunswick NJ……
http://tenant.com/viewListing.php?propID=115807
Our last apartment was under 400 square feet. It wasn’t that big of a deal. My wife and I loved the West Village neighborhood. I know a lot of couples that would have killed each other if they had been forced to live in that apartment for 2 weeks. We now have 500 square feet AND a bathtub.
The URL points to a 1300 sq ft apartment with a 300 sq ft patio…
Not to nitpick, but the 300 sq ft is just the balconey, not the whole unit. The condo mentioned is 2 br, 2 bth.
“400 sq. ft. WOW! Not many in this country who would accept that kind of living space.”
I read on the New York Times about this woman who was renting a 150 sq. ft. apartment, in Manhattan, for $1,100/month. How crazy is that? She had to build her bed over the desk to fit everything. She lived there for many years, until she decided to buy a condo for a million bucks or something. All she had for a downpayment was $100k, and her mortgage was more than $6k. These people do anything to be in Manhattan don’t they?
In regard to comments about people having too much crap in their garages…no kidding. I moved to south Florida in summer 05 and went through Katrina and Wilma. People were bitching about the damage to their cars from fallen trees and projectiles because they couldn’t park them in their garages due to all the crap piled in there or because they use the garage as a makeshift room. My wife was at a club meeting when some of this type talk was going around and she simply stated, “we had our cars in the garage, isn’t that what they are for?” People looked at her like she was from Mars. Jeez…talk about people with absolutely no brains, especially when they have hurricane season every year…it’s not like you get caught off guard or anything. Another thing here that pisses me off is some people have so many cars in their driveways that they block the sidewalks. A real pain in the butt when you are taking your kids for a scooter ride or walk and have to dodge all the cars in the way. Back where I lived in San Diego that would have been a ticketed offense (blocking a public walkway).
“The young couple made their payments on time until December, when Pervez traded in his car for a new one. That month, they were late on their mortgage.”
Poor Pervez. His New Paradigm calculator must have malfunctioned.
ha ha we simu-posted about this very thing.
I think your way of saying it is better.
‘If you use your house like an ATM it may be hard to sell it,’ McGee said. ‘Unless prices go up, you’re in trouble. It’s irresponsibility of the public.’”
Well now Mr. McGee I’d say that the “irresponsibilty” was not just on the part of the public. Blind greed is on both sides of the fence.
D.R. Horten CEO “2007 is going to suck.”
http://money.cnn.com/2007/03/07/real_estate/dr_horton.reut/index.htm?source=yahoo_quote
The percentage you’re paying is too high priced
While you’re living beyond all your means
And the man in the suit has just bought a new car
From the profit he’s made on your dreams
“The Low Spark of High Heeled Boys,” around 1970, I think.
From sub, sub, subprime world of Prosper:
A realtor needs $10k to pay their taxes:
http://prosper.com/public/lend/listing.aspx?listingID=104814
“As a Realtor, I am an independant contractor. The Broker office do not withold my tax. I pay my own tax in the end of the year. I am kind of short of money to pay tax this year. I will appreciate if somebody help lending me this $10,000.”
Another needs $25k for rehab…and there will be NO problem selling…LOL:
http://prosper.com/public/lend/listing.aspx?listingID=104813
“I am a realtor, I have 4 houses and have bought a very beautiful in a nice neighborhood community a 2 bedroom and 1 bath house, however, that area would sell if it is a 3 bedroom/2 bath house, so i plan to have a masterbedroom addition and putting the addition is very profitable and i know i will be able to sell the property.”
I am a realtor, I have 4 houses …
four fingers under the hammer is more like it
Am I the only one who thinks both posts were written while drunk?
Love the fact the “independent contractor” didn’t bother doing quarterly estimates. Loan? No. Here’s your sign.
And four houses begging for $25k… ummm… sell. If you loose money… sign a noteand here’s your sign.
Got popcorn?
Neil
/you missed the D credit rating
Posted this before
http://www.kiva.org
I think you will find these folks more credit worthy….more worthy in general…than those you find on prosper
The mantra used to be “buy now or be priced out forever.” Just heard a radio spot that said you had better refi now or the finance options you once had may soon be gone. Where’s the love?
For once they’re telling the truth. No doc I/0 loans will be impossible once the easy money gets turned off.
“‘That is very good news for home buyers, sellers and investors,’ he said. ‘No home seller wants to be competing against overpriced foreclosures. I think it is good for everyone if the banks get rid of them quickly.’”
–Yes, of course. And since coal, natural gas and petroleum are nasty fossil fuels, we should burn them up as fast as possible to limit the damage done to the environment.
Personally, if I was selling my home, I would MUCH rather compete against an OVERpriced foreclosure than an UNDERpriced foreclosure.
Market closed near lows of the day . . . I think this will be a down week after all.
Of course, nothing screams “buy!” like the massive insider selling at CFC and TOL, etc.
Pbbbt.
“WASHINGTON, March 7 (Reuters) - The U.S. Federal Deposit Insurance Corporation on Wednesday issued a cease-and-desist order against Fremont General Corp. (FMT.N: Quote, Profile , Research) because of its subprime mortgage and commercial real estate lending practices.
The FDIC, a banking regulatory agency, said Fremont was operating without effective risk management policies and procedures and was marketing loans that substantially increased the likelihood that its low-income borrowers default.
Fremont, based in Santa Monica, California, agreed to the order without admitting or denying any wrongdoing, the FDIC said in a statement”
and the stock goes up. who says miracles dont happen?
This is scary! Any news - good or bad - and stocks trade up. We are headed for tough times.
According to Larry Goldilocks Kuntlow our economy is growing, jobs and salaries are up and this is greatest story never told.
Now would be a great time to buy forget about what you read just follow Larry.
Below is picture of Larry and David after a luncheon for Realtors in San Jose, CA
http://img63.imageshack.us/img63/2567/realtorszf8.jpg
David’s beard needs a trim
Salaries are up. Just who is this clown kidding. Is he living in the same world as the rest of us or what? Oh, I forgot he is paid by some big conglomorate that attracts zillions in ads.
This guy is useless. I can’t stand him or Kramer. These guys never saw a US economy that wasn’t going to keep going up.
Nice, keep the ponzi scheme going just a little higher. I bet these jerks have all their assets out of the market already.
God knows how much I hate that Larry Pukedlow, the master of spin. That guy is so out of touch with real America that is not even funny anymore. If salaries are so great, why there was an article today at yahoo finance stating that borrowing was up again at 3.8% for Jan. Interesting, everybody is making so much money yet they keep buying crap on credit.
They probably use some statistic like the mean salary. The middle class keeps getting squeezed, but the top dogs keep getting paid bigger and bigger bucks, so sure, they probably can say that mean salaries are going up. Just like they way numbers are twisted around when talking about house prices.
The stock is down 40% since this news came out last Friday.
Also down 68% from its 52 week high. Also, down 9% after hours.
Here’s a local story, from smack dab in the middle of the Central Valley,
an area that mother nature blessed with what looks like a $5 Billion loss to it’s agriculture base, due to a nasty cold spell in January.
So, you go to plan B.
Plan B is the extensive prison system and it’s inmates 24/7 needs.
Seems the Central Valley is at a loss for medical professionals, from the top on down, doctors to nurses and everything inbetween, leaving to shortages of medical staff back in the real world. (or what passes for it)
They are getting like 40-50% more, to go work for our prisons. Shocking?
http://www.valleyvoicenewspaper.com/vv/stories/prisondoctors.htm
“Two years ago, a federal judge took control of the California prison healthcare system, and the Central Valley may soon pay the price. Changes in the state prison system have resulted in dramatic pay increases for healthcare professionals. This has caused many to leave community-based hospitals throughout the state to work in prison hospitals. While this created staffing challenges throughout the state, nowhere is the problem as serious as in the Central Valley with its abundance of correctional facilities.”
*********
You know, I had really thought up to now that nobody does the “treating of criminals like they’re innocents” quite like San Francisco.
Now I see the State has put us out of their league.
I say: “California prison medical care for everyone!!”
How utterly mixed up of a country we are…
We are # 1, with a HUGE lead over Russia, in the number of convicts we house, per 100,000~
Compared to the rest of the industrialized world, we have 4 to 6 times as many convicts, in our prison system.
http://www.kcl.ac.uk//depsta/rel/icps/worldbrief/highest_to_lowest_rates.php
Yeah, well that’s the new model for this country. If we weren’t so hung up on putting away pot users, an jaywalkers, who don’t pay fines, maybe there would be less prisons and prisoners. But we don’t. You want to know why because those people are easier to put behind bars then real criminals, like rapists, murders, embezzelers, swindlers, etc.
OJ (and I am an SC grad) walks, but the guy next door goes to jail for a year because he is growing pot. Nice country.
I am an SC grad. Met OJ a couple times. He acted more like a white man, with a little hustle, then I do. It was unbelieveable that that stupid jury bought into the racial card with a guy like Simpson. The cops loved that guy prior to the murder.
I wonder what our ranking is in terms of countries that take in illegal immigrants.
1st I think as well and Russia was 2nd but it cracked down recently I think they are in the process of deporting about 2 million chinese.
what about bail-bondsmen? more crime means more people need to be bailed out. I like “Dog Chapman” rough but spiritual, also like driving around in SUVs. Do I need a green card?
Maybe the plan B will be for the feds to really push medicaid fraud enforcement, thus naturally staffing the prisons with doctors willing to work at 60 cents and hour prison wages. Chain gang surgery, anyone.
Colorado is still relatively commuter friendly. Falling prices in the Denver metro area will spill over into the surrounding cities like Colorado Springs and Longmont. Other areas will probably follow later as people even commute to Denver from Greeley and Fort Collins.
The outlying areas (other than Pueblo and Greeley which have their own special problems) usually lag Denver. People still want to leave Denver for better schools and less traffic, but the incentive is dropping right along with house prices. A cheap house covers a multitude of ills.
How’s Boulder doing? Not being sarcastic…just want to know.
TIA
Well, Boulder has always been the most overpriced community of the front range. Beats me why. If you remove the FlatIrons, the place looks like Santa Ana, CA. I know of people who are having trouble selling in Boulder, but I don’t have any hard numbers.
oops wrong link
“Homebuilders are now focusing on first-time buyers.”
Interesting. In 2005 the sweet spot was the move-up market, people who had a house and thus equity. Not it is people who don’t have a mortgage, and might have savings.
A question on forclosure. I went to see a sheriff sale here in Ohio. Most homes had no bids and were taken by the bank at 2/3 of the appraised value. The more expensive ones (>than 250K) all went after bidding at close to appraised value. In short, for the more expensive homes foreclosure is not really a bargain. Or is it that banks have to bid to the level of their debt and hence REO are a better judge of true market value. Curious?
that’s wierd
I would think the higher the price the bigger the discount
provided both were in decent areas……
I don’t know much, but the holder of the note typically bids a dollar over. I’d never depend on an appraised value on a forclosure, ’cause who’s to say? Do your own research, & Buyer beware.
I’ve seen auctions get reeeaalll sick.
When they are dumping property, don’t pay attention to their “appraised value” otherwise you’ll be the GF who’s paying for “Built in Equity.”
Lmao.
paul
Can anybody local to Longmont/Niwot post some on the ground observations? Update on local market conditions?
We’re in the general area (Louisville). Here things are moving, slowly, if they are priced right. On our block there have been three houses on the market in the past year. One was priced more than $100K over what it’s worth, and they pulled it off the market. A second was on the market for probaby 6-8 months, and finally sold after several price reductions. The third one sold fairly quickly (1-2 months), and it was priced realistically.
My sense is that prices haven’t dropped, but they’ve been flat for several years.
Bill
I can’t comment on Longmont, but just a little north in Larimer County things are pretty grim. The only market that existed these past few years was for entry level, which has been heavily financed via sub-prime and other “creative” instruments, meaning that they sold a lot of $150-200K houses to people working at places like Best Buy. This market is drying up as well. We live in a neighborhood where the average “price” is around 300K, and I would guess that only 10-20 % of listed homes have sold these past 3 years. There about 5 empty foreclosures that I know about in our neighborhood (the dead lawn is always the sign). Some have been empty for almost 2 years now. One neighbor has been listing for over 3 years, and has dropped his price from 350K to 300K. This is a house with 3000 sq feet, plus a finished 1000 sq ft basement on a 12000 sq foot corner lot. Another neighbor added a bunch of upgrades recently (finished the basement, granite counters, replaced vinyl flloring with tile), but still no bites.
One thing I have noticed up this way is that it pays to be really close to I-25. With all the job losses at HP, Agilent, and other places a lot of people are commuting to Denver, and being right next to the freeway can shave off some time from that commute. I suppose because Longmont and Niwot are closer to Denver that they are more desireable to commuters, but in the past they were more expensive than Loveland or Fort Collins (especially Niwot).
Edison, New Jersey 10,524 (INVTY)+8.5% $379,900 -1.3%
guess the super bowl thing didn’t work out in NJ