Housing Market Has Fallen Off The Table In Florida
The Herald Tribune reports from Florida. “If you need evidence of how the slumping housing market is impacting the local economy, look no further than Port Manatee. Shipments of lumber, plywood and fencing materials that exploded during the housing boom have dropped off significantly during the bust.”
“‘The market crashed and no one needed plywood,’ said Capt. Rasmus Okland, terminal manager for Port Manatee’s largest forestry product importer. ‘Prices have come down and stayed down, and consumption remains low.’”
“Sarasota County’s impact fees could become the second most expensive in the state by the end of the summer. The county recently approved two rounds of impact fee hikes that will raise the fees. Builders say the impact fee hikes come at a dangerous time for the construction and real estate industries.”
“‘We have a housing market in Sarasota that has fallen off the table. And to make such severe impact fee adjustments right now is certainly not helping stimulate the recovery,’ said Wayne Farrell, President of Southwest Florida Homes, Inc.”
“A Boston-based company working to transform a 200-acre tract in Charlotte County into a massive mixed-use development has revamped its plans in response to market conditions.”
“The Wilder Cos. has reduced to 500 the number of new residences that would become part of its massive project. When Wilder’s plans were announced last May, plans called for 800 homes.”
“Wilder said the drop in planned homes stemmed not from the softened residential real estate market, but rather from an enthusiastic response from merchants to the planned retail. ‘We found there was a little more demand for the retail we’ve planned,’ Wilder said.”
The Bradenton Herald. “Jim Hicks and other members of District 5 in Lakewood Ranch, a district comprised of the northern part of Lakewood Ranch Country Club, have the tough job of putting together a 2008 budget. Some Lakewood Ranch officials worry about foreclosures as a budget breaker.”
“On Tuesday, 15 homes were in foreclosure in Lakewood Ranch, according to Cynthia Wills, community association manager.”
“It doesn’t seem like a huge number when compared to the 6,000 total homes in the planned community, but the temporary loss of taxes and dues from foreclosures has been a steady stream in 2007 and will affect the 2008 budgets, which are being put together this week.”
“‘When there is a foreclosure, their assessment doesn’t get paid,’ said Wills. ‘Taxes don’t get paid. Quite often before a home goes into foreclosure, they haven’t paid their dues for a year. Then, of course, the property tends to go downhill, which impacts the rest of the neighborhood.’”
“‘I wouldn’t call it shocking, but it is disturbing,’ she said. ‘There might be 6,000 homes, but that doesn’t matter to you if you are living next door to one that is foreclosing.’”
“Nationwide, foreclosure has become an issue. ‘I don’t have any hard, cold facts, but a lot of people bought properties as investments and apparently are having difficulties,’ Wills said. ‘A lot of homes they purchased they couldn’t sell and now they are for rent.’”
From Money Magazine. “Steve and Carol Daimler retired to Florida from Virginia two years ago. The Daimlers spend most of their time consumed with selling two investment properties they bought shortly after the move, holding open houses, distributing fliers, cold-calling realtors and catering to prospective buyers.”
“The properties remain unsold, draining nearly $6,000 a month from the Daimlers’ dwindling retirement kitty. The couple had thought the properties would help finance the lovely new life they planned to lead in Florida.”
“To supplement their retirement savings of $260,000, they figured they’d buy fixer-upper homes to renovate, then sell at a profit in the state’s hot housing market. ‘We thought we’d make $100,000 without batting an eye,’ says Carol.”
“But when the housing bubble burst, so did their dreams of a real-estate funded retirement. The properties have been on the market for nine months without a serious offer, and the carrying costs are killer: The Daimlers pay more than $65,000 a year on their mortgages (including loans for their primary residence and a vacation house in North Carolina), plus tens of thousands more for property taxes, insurance and maintenance.”
“The couple are pulling out $15,000 a month from savings to cover their expenses, and they’ve already run through more than half of their nest egg.”
“Exactly how fast the local real estate market was deteriorating wasn’t clear in August when the Daimlers bought two three-bedroom, two-bath houses: one in a Daytona gated community for $235,000; the other in Palm Coast for $120,000.”
“To finance the purchases, they took out a $400,000 mortgage on their home. They spent $31,000 on renovations and listed the houses in September. But since then the market has been flooded with homes for sale, and the Daimlers have been caught in the changing current.”
“With just $120,000 left in his 401(k), Steve decided in March to go back to work. One thing hasn’t changed: The Daimlers remain staunch believers in real estate. ‘If the financial pressure was off, we’d still look for opportunities to invest,’ says Steve. ‘For now, though, we just don’t have the means to hang on.’”
From Florida Today. “The housing market in Brevard County is doing better than some markets in Florida, and doing worse than others, said Franck Kaiser, chief executive officer of the Home Builders & Contractors Association of Brevard.”
“Because of the housing slowdown, small homebuilders like in Brevard County like Bruce Pearcehave been forced to focus on home repair and remodeling jobs.”
“Pearce, owner of Talbott Construction Design Inc. in West Melbourne, said he may get out of homebuilding if business does not pick up because it is hard to compete with large corporate builders in a slow market.”
“Kaiser said homebuilders generally have dropped prices for new homes, including taking losses on some homes to clear out their inventory.”
‘As the air escapes from the real estate bubble, legal problems are cropping up. Two lawyers with Shutts & Bowen firm in Orlando have joined a new practice group formed to deal with fallout from the real estate slowdown. Andrew Brumby and Michael Gore will join seven other members of the Miami-based firm in the multidisciplinary ‘complex loan workout practice group.’
…The group will focus on financial restructurings, bankruptcy alternatives, reorganizations and contract disputes. Clients range from developers and landlords to investment banks and pension funds.
Where’s the love for the little guy AKA Mr. and Mrs. FB?
“Where’s the love for the little guy AKA Mr. and Mrs. FB?”
These vultures are looking for carrion with a little meat left on the bone. The FB’s can’t even afford toilet paper.
“‘We have a housing market in Sarasota that has fallen off the table.”
I would say it has fallen off its barstool.
And judging from the Daimlers it’s saying: “I can’t get up, pass me my drink will ya?”
http://biz.yahoo.com/ap/070524/economy.html?.v=18
So, somebody’s yellin’ “Fire”
The price slashing builder are only the first to scramble out the doors.
The dwaddlers will suck on the smoke and die.
hehehe…43% crash in the Northeast
It’s what ya get in the redistributionist “Worker’s Socialist Paradise of New England”.
Uh . . . I think that’s an increase of 43% in the NE, must’ve been the weather.
The Midwest and West saw the declines.
Also, Freddie says mortgage rates with a big increase and expected to increase the rest of ‘07. The perfect storm continues to brew.
More like…
The Prefect Storm
http://ancienthistory.suite101.com/article.cfm/what_is_a_prefect
Aren’t words fun?
So let me get this straight, we have roughly 300K NEW people filing jobless claims each week, which is over a million per month, and we gain 88K (though I don’t believe this number, because of the birth / death model) in a month and they still consider it a healthy labor market? WTF? I want to scream! Someone tell me I’m missing something here!
You’re not the numbers are skewed and Wall Street isn’t questioning it.
Okay, no I’ll scream. AAAAAAHHHHHHHHRRRRRGGGGG!!!!
The $200K mark has been breached in my subdivision. This is proof of the BS that FAR is blowing a lot of smoke. Peak of boom prices were $349,900. Today one popped up on the MLS at $199,000. Granted it needs work but that’s a 40% haircut and definitely back to 2002-2001 prices.
Hey Bad Andy,
What city do you live in?
I live in Miami, and prices had not drop that much yet.
I expect a 40% drop in the next two years, but it keeps hanging tight. Let’s see if this 10% drop nation wide reflects here in the meantime.
West Palm…and not all in West Palm have done this. It’s really subdivision by subdivision. Once someone puts a 2002 price on their house and it sells, the comps go to hell. At that point everyone who sells has to do it at the lower prices.
How far prices drop depends on how much they’re offset by the collapse of the dollar, which depends on how long those smart boys can keep all those economic balls in the air — so to speak.
And they had to practically give away Chrysler, to get rid of it, as well…
“Steve and Carol Daimler retired to Florida from Virginia two years ago. The Daimlers spend most of their time consumed with selling two investment properties they bought shortly after the move, holding open houses, distributing fliers, cold-calling realtors and catering to prospective buyers.”
The Daimlers pay more than $65,000 a year on their mortgages (including loans for their primary residence and a vacation house in North Carolina) They’re on schedule to be broke within 4 years and they haven’t given up on their vacation home?
‘Eventually he became a sales director, earning about $150,000 a year.’
The guy makes that much money and has $120K in his 401K, obviously he doesn’t know much about finances because he wants to retire with less than one years income if you exclude his properties. He was in sales and probably could BS with anyone but wasn’t all that bright and didn’t really understand money/savings/retirement. Luckily in Florida he will have lots of company with the other GFs at Walmart doing everything he can to hold onto an overpriced house that a retired couple had no business buying on a fixed income. I have no sympathy for him, but would love to make an offer of $350K on their $900K vacation home in NC.
Their decision-making blows me away too. My wife and I made oftentimes tough decisions that would minimize our monthly outgo as retirement loomed and our income dropped way down.
Oh yeah, just one week until the start of hurricane season. At least the storms should bring needed rain to Florida.
The art of looking back at weather to better appreciate whether things will remain at somewhat of a constant…
Is so 20th century mentality.
I especially like that the wife was a benefits consultant. WTF? They have to know about personal finance, I thought, since they deal with 401ks and retirement planning. Personal Finance classes always taught that equities (stocks) have a higher return rate than real estate. What a couple of dumba$$es.
Wow, the decision making also amazes me.
These types of articles stress me out. These people are NO WHERE NEAR being able to retire. $260,000 is peanuts, ESPECIALLY if he was making $150,000 a year before. what were they doing with all that cash? Oh, I know, buying 900k vacation places.
“One thing hasn’t changed: The Daimlers remain staunch believers in real estate. ‘If the financial pressure was off, we’d still look for opportunities to invest,”
oh wait, never mind, that explains a LOT.
I hope these people never figured out how to breed.
It’s the entitlement mentality once again. They are entitled to everything whether they can afford it or not and that includes a retirement. I wonder how prevalent this type of thinking was in the 1920’s?
OF COURSE they could have retired on $260K, Clouseau–given, of course, that they were happy living on the $10K that it would throw off annually @ 4%.
Vacation homes are piling up in north carolina… And they keep building more of them… In the fields, in the farms, in the mountains…
Sweet. Maybe I can hoover up one of those shortly for $30K cash. Hopefully it will have a fireplace, so I can use the lumber from the abandoned homes for fuel during the winter.
“…so I can use the lumber from the abandoned homes for fuel during the winter.”
I don’t know, that styrofoam building material will really mess up your fireplace. Lumber was sooo 80s.
Just get a chimney sleeve and feed it outside air directly, you should be fine.
SOMD,
When do salespeople EVER know anything about finances? Also, why would you give $350K for anything in NC? Could you have an income there that would support it?
350K is cheap for property in NC along the coast these days. It’s insane. Basically ‘all them thar rich Yankees from the Northeast funded that explosion’. But I know - they are smarter than us southerners!!!!!! Should be interesting to see now that ‘dem smart Yankees’ can’t see their overpriced, overtaxed residences anymore……
Assets-Liabilities, he still has a net worth (on paper) of about $1.6 mil. If he fire sales his properties, he can still come out of this “OK”, with Social Security in the future (an option many of us younger folk probably can’t rely on). He didn’t do too bad, it’s just risky to have so much of your “retirement savings” in one asset class (like real estate).
They do make $60k in pensions, and in a few years they’ll make another $35k in SS. They’re just greedy as hell.
So why exactly are the whining?
The Daimlers, and people like them, terrify me.
We can probably ask him, the next time we go grocery shopping at Publix and he is bagging our Wheaties…
(The Daimlers pay more than $65,000 a year on their mortgages (including loans for their primary residence and a vacation house in North Carolina)They’re on schedule to be broke within 4 years and they haven’t given up on their vacation home?)
That stunned me too. Are they both drawing big time, rock solid pensions? If not, what made them believe social security and $260 K would finance a two-house lifestyle?
Take out four percent per year (about what you ought to) and that 401K is worth about $10,400 per year. Their mortgages (why even have one when retired) are taking six times that amount!
And that’s not exactly high finance, simple multiplication and division.
“With just $120,000 left in his 401(k), Steve decided in March to go back to work. One thing hasn’t changed: The Daimlers remain staunch believers in real estate. ‘If the financial pressure was off, we’d still look for opportunities to invest,’ says Steve. ‘For now, though, we just don’t have the means to hang on.’”
Christopher Hitchens should write his next book about these fools.
“Christopher Hitchens should write his next book about these fools.”
Yes, it would be interesting to have Hitchens apply his intellect, wit and sarcasm to the housing bubble. However, it is almost too massive for anyone to get their arms around it as a social phenomenon.
I think Ben could write a interesting book , especially if it was in a format that was from a Bear type view of the events . If you think about it ,the housing boom crash is going exactly according to predictions on this blog .
As far as this retirement couple goes ,I think they should cash out now before they go down hill more . The problem is to many people believe that the market will go up again in the near future .This couple doesn’t have time on their side and they are lucky that they don’t have medical problems yet .It’s so hard for people like this couple to think in terms of scaling down their lifestyle .I wonder how many of the soon to be retired went the real estate investment route hoping to cash in big .?
Did you see the HOA fees these idiots are paying? What happens when those go up too? Reading about people like the Daimlers is better than reading the comics!
Just think when people default on HOA fees, then the pretty muched fixed expenses have to be paid by a smaller number of suckers ah Owners…..
Their children must be very proud of them (sarcasm off). And a little nervous that they will be supporting them during their “retirement” years.
No kidding. If my folks told me they were moving to California to live closer to me, I’d start looking into the job markets in Maine and Alaska.
MAybe it’s sour grapes but… they have a household income of $200,000 but only $260,000 inthe 401(K). What the heck were they doing?
A net profit on their vaction home of $650,000 on the Outer Banks of North Carolina but Mrs Daimler doesn’t want to sell because she has “…an emotional attachement to the house”.
Rome is burning while they fiddle. I have no remorse for these people due to their unadulterated avarice. What gready pigs. Capiatilsim works both ways. They made it so they better not call for a government bail out!
It’s because RE is the way to retire comfortably on…oh, wait. Florida RE is the only way to go…oh wait!
Hee Hee! I e-mailed that Money article about the Daimler’s to a buddy of mine overweighted in RE. I am sorry I did. He got p.o.’d at me and said he’s going to buy even MORE [his emphasis] real estate in a few years.
Cool…heh heh…(as Butthead would say).
In a few years, it might be a good idea.
If they pissed this kind of moeny away on prostitutes and blow they’ll be laughed at, do it with SUVs, multiple homes, everything that can be had at Nordstrom and all of a sudden they’re just everyday American Joes trying to get by and are ‘victims’ of the system.
Sell the vacation house and they could easily live on the $60k income they already are getting. F%cking morons. Not only that, but, uh, they live in a vacation spot and they need another vacation home. This doesn’t make sense. It reminds me of that monkey trap where they put food in a hole that’s just big enough for a monkey to slip his hand in without grasping something but can’t get his hand out of when he’s holding the food that was put in the hole. Then the stupid monkey sits there and spazzes out trying to get his hand out of the hole while still holding the food. Meanwhile a guy comes along and calmly wrapps the monkey in a bag to be taken to market to have his brains served while he’s still alive from a special table. Classic.
http://www.maxent.org/ch/monkey_brains_ad.html
“To supplement their retirement savings of $260,000, they figured they’d buy fixer-upper homes to renovate, then sell at a profit in the state’s hot housing market. ‘We thought we’d make $100,000 without batting an eye,’ says Carol.”
Making an extra $100,000 is not just the American dream .. it has now become the American Right. Carol and Steve are not discouraged though, ‘If the financial pressure was off, we’d still look for opportunities to invest,’ says Steve. ‘For now, though, we just don’t have the means to hang on.’”
We thought we’d make $100,000 without batting an eye,’ says Carol.”
The new American dream/right - make big money fast while doing absolutely nothing productive.
We thought we’d make $100,000 without batting an eye,’ says Carol.”
You and millions of other FB’ers while pointin’ the finger at everybody else and lookin’ for a government bail-out.
You got that right. Stories like this are a sign of the extent to which actual productive work has been degraded in this country.
” Stories like this are a sign of the extent to which actual productive work has been degraded in this country.”
AMEN, Brothah snake charmer! TESTIFY! Can I get a witness here?
Hahmen!
The worship of unearned wealth. The idea that you can get something for nothing is drummed into people’s heads 24/7 via mass media. Why do you think poker shows are so popular?
The sad truth is that the big bucks people in RE made during the boom actually came at other people’s expense. Our communities and way of life are going to suffer tremendously.
Our communities and way of life are already suffering tremendously. You would not believe the junk and clutter that have taken over Tampa, especially Harbour Island, blocking everyone’s view of everything, and turning a once peaceful place into a third world-looking ghetto, albeit a very pricey one. It’s absolutely horrible, and our city council won’t do anything to stop the lunacy. I think every council member should be impeached and the local variance board thrown into federal prison. I have no doubt deals are being cut, and those giving endless variances have all kinds of ulterior motives.
Ugh. Harbour Island. That place is Tampa’s ground zero for the condo-market meltdown. My personal banker told me a couple of weeks ago that the number of foreclosures at Parkcrest is already in double digits.
“We thought we’d make $100,000 without batting an eye,’ says Carol.”
Ergo the negative savings rate in this country. Greed, greed and more greed. No one wants to just live within their means and make sure retirement accounts are properly funded.
Didn’t the same article say they didn’t want to touch her $25,000 lump sum retirement. Does that mean she didn’t even work for an organization that has a defined benefit plan and if not why didn’t she load up her plan when they were making big (his income here) bucks? Plus they aren’t going after their SS money until at least age 65 because they will get more at that time. Good thinking there if your health is great and you have a good gene pool but if you take it at age 62 you have to go out 14 years before you hit the break even point.
And people laughed at my Folger’s retirement plan buried in my backyard!
Good plan. Coffee has gone up a lot!
“But when the housing bubble burst, so did their dreams of a real-estate funded retirement. ”
Call me old fashioned, but my understanding of a real estate funded retirement is owning a portfolio of PAID FOR properties and living off the rental income.
Of course that is so mid 20th century, and we all know that the true path to riches is in flipping houses.
Colorado,
Nope,that is what i manage for my parents now. A paid for apartment portfolio that provides enough for them to enjoy themselves.
The best part is i am saving very extra penny i make,my parents are also. When the bottom drops out of rentals we will be ready to pick up the pieces. We have not even thought about looking at anything till next summer (08). Our long term goal…At least double what we own now.
Chris
OT:
A House of Cards: Prof. Nancy Wallace Warns of Risk in Real Estate Securities - 2007-05-23
“Working with Haas Associate Professor Richard Stanton and Rice University Assistant Professor Christopher Downing, Wallace developed a new way to calculate the implied volatility of the return on properties underlying commercial mortgage-backed securities. The trio was the first to provide an empirical test of such a model, using a sample of 14,000 properties in 206 deals between 1996 and 2005. They found that the return volatilities by property types are substantially larger than those calculated by either rating agencies or investment banks.
“Our estimates suggest that some investment-grade (as opposed to speculative) bonds in commercial mortgage-backed securities are likely to be at greater risk of default than current ratings suggest,” Wallace says. “We are concerned that defaults will be higher than expected if there are even relatively modest commercial property market corrections.”
“Wallace believes the models used by banks, Wall Street, and bond-rating agencies to estimate default risk and to price mortgage-backed bonds rely too heavily on aggregate indexes based on short-term performance without accounting for long-run real estate cycles.
“The banks and rating agencies have been lulled into a sense of complacency about how volatile real estate returns are,” she says.”
Prof. Nancy Wallace is singing my song .
I could never understand why the risk rating people had such a short term analysis of a long term loan that was adjustable .People who go from a 2% teaser to a 7 to 9 % interest rate up to a 13% rate have a higher risk of foreclosure as the loan term moves forward ,unlike a fixed rate mortgage . The borrowers ability to pay goes down with time unless real estate is going up and they can refinance into a new teaser rate and we all know that easy money can dry up . The rating system relied on real estate going up so people could refinance or sell .,..crazy.
“The properties have been on the market for nine months ” So they were bought in what, March 2006?!
‘We thought we’d make $100,000 without batting an eye,’ says Carol.”
Now these equity locusts are losing $100,000 without batting an eye.
Got 10% down?
“With just $120,000 left in his 401(k), Steve decided in March to go back to work. One thing hasn’t changed: The Daimlers remain staunch believers in real estate. ‘If the financial pressure was off, we’d still look for opportunities to invest,’ says Steve. ‘For now, though, we just don’t have the means to hang on.’”
Translation: We still enjoy catching falling knives but we’ve lost all of our fingers.
I wonder if there is any money in creating some type of 12 step rehab facility for real estate “investors”?
“I’m doofus and I ensured that i’ll have no future, aside from standing in a soup line, because of real estate investing”
(altogether now) Welcome Doofus!
There is no money in treating addicts in-patient unless those addicts come from families who have money they are willing to spend on the treatment. I do not imagine that “investors” have any family members left with money by the time they hit bottom. Debtors Anonymous is free, but that doesn’t come with a 24/7 environment to protect you from your own stupidity. That takes old-fashioned will-power.
Anecdotes like this give me hope for Social Security.
Mr. and Mrs. Boomer *think* they’re ready to retire but really have no clue. So it’s back to work for him until he croaks.
I have been thinking the same thing for years. How many Boomers do you know who have anywhere close to the savings they need to retire or the proclivity to reduce spending?
BP…
I can comment on this one. Down here in Florida my parents have a wide variety of friends. They are 65 and 58. after lots of discussion, LESS than 25% of the people they are friends with can afford to full time retire. Some still work full time with i am gonna guess quite a few working part time. It really is sad that me at 40 has a better handle retirement wise than people 25 plus years older than me…
Chris
Boomers just can’t catch a break, can they? If they retire early, they are criticized by GenX for being spoiled, if they continue to work and be productive they are criticized by GenX for taking jobs.
That said, I have a feeling that many folks of all generations who pat themselves on the back for being prepared for the future investment-wise just may be in for one of the rudest shocks of their lives somewhere down the road, unless of course they have precious metals hidden in a hole in their backyard. The “money” so wisely and painstakingly saved and invested can go poof Enron-style so easily. Work hard, save, invest. This was a good idea back in the day when you could trust the markets, companies and financial institutions.
I’ll be 48 soon. I started working late, at 26. Two of my older sisters have started working long before me. I started saving long ago. They never saved. I have very little real estate ($5000 equity in a timeshare), but over $800,000 in various assets. I like working and hope to work through age 67. I anticipate contributing to my 401k(s) the next 19 years still.
palmetto,
Thats where you and i differ which is cool. I am a short term bear. Long term i am a bull…always have been,always will be. I started investing in the stock market at 14. I was required to put 20% of everything i made away in some type of investment. I survived the crash of 87,kept on puttin in,the nasdaq crash,kept on saving. If the maket drops tomorrow i will still put my 20% monday like i have done for the last 26 years.
I look at it like this…back in the late eighties the japanese were buying every piece of real estate they could get thier hands on. The talk was “Oh no,they will soon own everything”. We see how that worked out for em.
I have long term faith in the ingenuity of the american citizen to overcome long term odds…well not the fb’s anyways…But the average hard working person…yep…
Chris
Ah, but you haven’t lived through the Depression. Neither have I, but both my parents did, though one was a young child at the time.
Being a short term bear and long term bull is the old school thinking, which is actually the correct way of thinking. Compound interest and all that. However, the average hard working person seems to be taking it on the chin these days. We have factors at work now that never existed before, like the hedge funds, illegal immigration, etc. I’m not talking about illegals taking jobs from middle class, necessarily, but about the middle class having to subsidize the lower and upper class parasites in ways they never had to before.
I agree with you about Japan, I scoff in the same way about China. However, China means to kill us, there should be no doubt of that. At least the Japanese weren’t slipping poisons into our food and other products.
palmetto,
My parents are Boomers. Recently I’ve been helping them with financial planning, and let me tell you, they are currently F’d in the A. Very little savings, mutltiple wasteful vehicles, multiple occupancies (home and RV) and no desire to scale back any of it. I’m currently in the process of teaching them that material wealth does not equal success. It’s a tough nut to crack.
So… the bulk of my 30s (I’m 30) are going to be spent saving up to make sure they don’t go to the poor house. Good times, good times…
“So… the bulk of my 30s (I’m 30) are going to be spent saving up to make sure they don’t go to the poor house.”
OK, but let them keep their gold jewelry and sterling silver if they have any. Because you may need some of that from them in the future.
On a serious note, that’s great you are helping them out to be self-sufficient. That’s what your grandparents were supposed to do. Pity you had to take up the job.
OT, but locally air conditioning compressors are being stolen from empty properties for the metals. Weird.
IMHO, widespread retirement is going to disappear. Why? Because it will be unaffordable to most people.
Money is important, but not the endall be all that we make it out to be…
Perhaps 3/4’s of my friends live on salaries of $15-30k a year and have full rich lives that aren’t centered on making more, they are content to make do with less…
I live between and betwixt the world of plenty and the world of contentment.
I’m concerned that faith in precious metals is based on the assumption that there will be comfortable, honest people willing to give you something that can be traded for life’s necessities in return for your precious metals. What if nobody wants your gold because they’re too busy looking for food? What if the only people who want it just come take it from you once they find out you have it? I hope that backyard that the gold is buried in is big enough to grow a lot of food, and that you have non-hybrid seeds and a water supply sufficient to make that work.
I just think that the range on the disaster scale where precious metals are truly useful may be rather narrow, with a large abyss of “who cares if you can’t eat it or wear it?” below. And then, if everything goes just right and PM does turn out to be the right resource for the situation, is there enough ammunition in the world to keep the stuff from being taken from you once people find out you’re looking to sell/trade it?
There’s a perfectly good reason ALL of my gold is in a most secure location somewhere in New Zealand…
How will you access it when the s#!t hits the fan? A Kevin Costner catamaran?
virtually no one
My mom just turned 83 and she works for the state of California (tax payment data entry). I think she is the oldest employee on the payroll. She intends to keep working until she physically can’t do it anymore.
At least if he is over 55(or 50 ?) he can use his catch up otion on the 401k,right?
What a dumdf…raiding his 401….
Chris
She says…
Watching their savings drain away, she admits, “is scary.” Worst of all, Steve confesses quietly: “I feel like I’ve let down Carol and the kids.” She counters, “We both made this decision, but now it feels like a failure.”
So they suggest she sell her NC home to which she says,
Sell the vacation home. To alleviate their cash shortage and help rebuild their savings, Michael Cirino, a financial planner with Lincoln Financial Group in Jacksonville, Fla., urges the Daimlers to sell their beach house in the Outer Banks. Probable net: $650,000. But while Steve is open to the idea, Carol is reluctant. “I have an emotional attachment to that home,” she says, “and I don’t want to make any more fast decisions.”
Sounds like she will keep making stupid decisions.
The couple had thought the properties would help finance the lovely new life they planned to lead in Florida.”
Sucks, doesn’t it when you can’t finance your “lovely new life” off the backs of people who just want to buy a place to live.
Every time I think these media types can’t possibly come up with a less sympathetic “victim” they surprise me. These ones with a 3700 square foot house paid for with cash and a 900K vacation place are victims? Give me a break.
65k a year just for mortgages. You figure with everything else it is costing them close to 80 or 90k a year to live. heck round it up to 100k with food and everything.
So at that rate, it will take them 9 years to go broke. Do you think they will die by then? The kids might hope so they can get their inheritence.
If memory serves me the article mention the daughter was a RE agent so she may need her inheritance now to pay off her mortgages.
‘Sucks, doesn’t it when you can’t finance your ‘lovely new life’ off the backs of people who just want to buy a place to live.’
Excellent point and one has to wonder why the media can’t pick up on this. What the heck did these people do to ‘earn’ a retirement? Borrow a bunch of money and hope working families will hand it to them?
Well they saved what, ~2 years of income… yeah that should be enough. NOT In what conceivable universd do people think that 2 years of income will support them in the style to which they have been accustomed for 20 years of retirement? And we haven’t even begun to account for the eventual deterioration of their health as they get older.
Had they sold the vacation house at the peak and bought a nice condo instead of the monster “dream house” they would be set.
Their situation reminds me of a monkey trap i saw in tv. The trap was a box with a very small hole, just big enough for the monkey’s hand to slip in.
Inside the box is a piece of candy. Once the monkey grabs the candy his hand will no longer fit through the hole and he is trapped. Of course, he won’t drop his treasure to enable his escape.
Seriously, who can really feel sorry for these people?
I smell a reverse mortgage opportunity for someone.
They robbed their retirement account that was probably growing tax free to help pay for a beach house that they share with others (rent out) but can’t sell because they have an emotional attachment. But if they sold the beach house they would have $500K tax free money that could be invested at %5. Please don’t make any fast decisions here, hold on to that house until it’s taken in foreclosure.
[i]To alleviate their cash shortage and help rebuild their savings, Michael Cirino, a financial planner with Lincoln Financial Group in Jacksonville, Fla., urges the Daimlers to sell their beach house in the Outer Banks. Probable net: $650,000. But while Steve is open to the idea, Carol is reluctant. “I have an emotional attachment to that home,” she says, “and I don’t want to make any more fast decisions.”
[/i]
Carol skimps on her cholesterol medicine to save money, but wouldn’t sell the vacation home to ease the cash crunch! I think that the attachment to real estate is a disease for some. These people fit the definition of ‘house-poor’.
Yeah, and when Hurricane “youreadumbshit” bowls a strike on their vacation house later this summer they can kiss the last of their home equity goodbye. These dolts are doomed.
Land for sale by developers in SouthShore Hillsborough County. Note the very frank comments about how Wall Street drives the actions of the publicly held developers.
http://cnewspubs.com/waterfront/modules/news/article.php?storyid=421
I’ve been waiting for you to post. There was a story in the Tribune the other day about a massive “mixed use” center planned for south Hillsborough. Along with big box stores and the usual grostequerie of “high end” luxury retail, there will be office buildings and even a church, just in case prospective shoppers forget that their real God is materialism. Your thoughts on the project?
The next day’s paper featured similar projects approved for Pasco, which appears destined to be paved over entirely. We’ve already learned that absentee children of absentee owners don’t go to school here. I think we’re about to learn that absentee people don’t shop either.
“Your thoughts on the project?”
Ah, snake charmer, my thoughts on the rape of South Hillsborough are unprintable. Walmart, for example, for many years had one of their regular “big box” stores in a center off 674, between 41 and 301. It was actually an excellent location, very well positioned to tap the local family markets of Ruskin and Apollo Beach, as well as the retirees of Sun City Center. They just recently shut it down to move to their new location at 674 and 301, as a Super WalMart. Haven’t been there, don’t intend to go, ever. At that location, they still have the retiree market of Sun City Center, but instead of the Ruskin and Apollo Beach family market, they now have the illegal immigrant market of Wimauma. Their former “big-box” location has a sign up that says “Pepsi Center Now Hiring”. I have no idea what that is. Maybe a Pepsi distribution center. Good on ‘em, cobber! I used to go to WalMart for two things only: packing tape and labels. I have now discovered that I can get these items cheaper at the local Ace Hardware.
I dunno what developers and retailers think they’re doing in these parts. People are leaving, houses and condos languish on the market and yet, they’re still building. Houses of worship seem to be full, though. It is evident that people are looking for answers. Or maybe they are just praying for someone to buy their homes and condos.
Commercial always lags residential by 18 mos or so.
I’ve been thinking the same thing. Made some “easy $$” shorting the builders a year ago, then some more shorting the subprime lenders more recently. What’s next? Commercial is what pops into my mind. Anyone have any clever thoughts on good short candidates in the commercial RE space??
you are totally on target with commercial real estate. the spreads on the paper relative to treasuries is exploding. this is going to be the next shoe to drop. with commercial reit cap rates way less than tbills people are in it for the pure RE speculation. they are going to get hammered.
And another thing. The article you linked to says the land “used to be a tomato field.” In addition to tract McMansion housing, I suspect we’re going to replace the field with a supermarket selling tomatoes imported at great expense from somewhere else. Way to go big thinkers!
snake charmer, Ruskin tomatoes are awesome. We’ve lost tomato fields and orange groves around here to development and despite that, ANOTHER apartment complex (complete with clubhouse, swimming pool and tot lot) was built at taxpayer expense (Farm Bureau) for agriculture workers.
I can understand the orange groves going under, after years of being hit by freezes and citrus canker, if I owned a grove, I’d probably sell it, too. But the tomato fields? I don’t know about you, but the produce selection in the local Publix has become pitiful and expensive.
And far be it from any of the FBs to figure out how to grow their own tomatoes.
Testify, Arizona! Tomatoes aren’t all that difficult to grow. My mother, who worked full time, always grew a bunch of tomatoes in her garden, big, juicy beefsteaks that we enjoyed in late summer/early fall in New England, along with corn purchased at roadside stands. Nothing like it. Who needs Metamucil when you’ve got corn and beefsteak tomatoes?
The Daimlers remain staunch believers in real estate. ‘If the financial pressure was off, we’d still look for opportunities to invest
These are the kind of people that keep going back to the casino; the lure of the cash keeps drawing them back in spite of the odds against them. Greed is an amazing thing.
Our collective casino mentality…
Some people keep leaning into the punch.
1st prize is a no expense paid trip to Palookaville…
http://en.wikipedia.org/wiki/Palookaville
2nd prize is a set of stake knives (wooden, but of course)
In keeping with the theme of this thread, make those stakes out of plywood, please.
Plywood! Naah, OSB. Nobody uses plywood anymore.
Big headline numbers on new home sales but also record drop in price.
Just another excuse to run stops in a thin market.
I think it underscores the thesis that the builders will agressively cut price to take share in a soft market. Many homeowners have an irrational sense of what their home is worth and/or can’t affford to cut price (due to high leverage) and so their homes don’t sell while the HBs cut and run. The stock market seems to ignore that fact that clearing so much inventory comes at a price and will eat into HB margins.
Right, that will all matter when these stocks have been cut in half and it isn’t actionable.
Am I the only one who wants the 2001-2002 market back? I hate this!
i’m with you there. it’s amazing how many stocks (not just builders) levitate while their businesses deteriorate. Stocks don’t remain in the dog house very long.
And others which are just trashed despite they are apparently going to survive (JDSU for example) continue to be sold.
yeah. 11% price drop is major news! That should have been the headline, not surge in sales. But I still haven’t heard yet about LA prices dropping much. Beach cities probably dropped only 6% from the peak. 46% more, and I’ll start looking.
all gains in NE- wtf who wants to live there ?
also 1993 was the midpoint, kinda familiar
he jump in sales was the biggest increase since a 16.4 percent surge in new home sales that occurred in April 1993.
More on the DaimlersExactly how fast the local real estate market was deteriorating wasn’t clear in August when the Daimlers bought two three-bedroom, two-bath houses: one in a Daytona gated community for $235,000; the other in Palm Coast for $120,000.
If only they’d asked us… Actually, I don’t think that they’d have paid any attention to us, they sound like “true believers.”
WASHINGTON (MarketWatch) - Sales of new U.S. homes unexpectedly surged in April, rising by 16% to a seasonally adjusted annual rate of 981,000, the Commerce Department said Thursday, far exceeding the 865,000 pace expected. Sales were boosted by plunging prices. The median price of a new home was $229,100 in April, down 10.9% in the past year. The inventory of unsold homes fell by 1.5% to 538,000, representing a 6.5-month supply. In March, the inventory was at 8.1 months. Sales in April were down 10.6% compared with April 2006. Sales in the first four months of 2007 were 20% lower than in the first four months of 2006. April sales were led by a 28% gain in the South and an 8.5% gain in the West.
Great news!! Prices down and sales down. Surge of 16%??? Spin it baby!
and 06 scked
try 05 for real comparison
Some builders allow buyer to trade in their old homes to promote sales. The surge of new sales will cause the surge of existing home inventory.
Reading further, sales down 25% in the West? Eeek this report is very bearish.
New information: major lenders are now shunting properties away from foreclosure regardless of the level of default. They are instructing servicers and others to send loans out to be refinanced, and there are complex webs of “incentives” (read: kickbacks) being used to make this happen with cooperating refinanciers. Reasons? Undisclosed. However, two immediate possibilities present themselves. 1) Lenders want to avoid Congressional regulation and want to be able to say they’re solving the problem themselves. 2) Lenders REO departments are full up and they’re feeling liquidity pinches, but they cannot dump off the REO properties without lowering the prices, which will precipitate major LTV crises with respect to any refinances in the future, thereby guaranteeing a market shock, not to mention shattering their book values and torpedoeing their stock prices.
I believe both of these factors are very much in play.
I’d love to know the terms of those re-fis. How can you squeeze blood out of a stone?
“I’d love to know the terms of those re-fis.”
Really depends on the original loan. If that original loan is hanging out at 10 to 12% after the ARM reset, a fixed rate in the 6’s would be doable to the person who was just barely haning on.
When that person has negative am’ed out and P&I payments were too high to begin with, there are no options…except foreclosure.
There is no way someone in default is getting 6% fixed. or 7%, even if they could afford it. I would love to know what they can get… especially because the ones the banks don’t want to foreclose on, super high LTVs, are exactly the ones that have the worst chance of getting a survivable refi.
“There is no way someone in default is getting 6% fixed.”
But there is. There is a mortgage company that I know of that has a modification team to avoid foreclosure. This mortgage company offered a “rate rollback” to 6.75% for the remaining life of the loan to one of my clients. That’s from a rate of 15.625%. They ARE reporting not paid as agreed…but at that point the borrower does not care.
That is a fantastic deal for that person. I take it they were one of the people that could have afforded better but really got screwed by someone nasty.
Are you talking about EMC doing thse deals? I’ve wondered what’s been going on with them… they’ve managed to keep very quiet during this mess, despite a huge number of stated income floating through their halls.
“Are you talking about EMC doing thse deals?”
I don’t like to use company names as they own the trademarks and they have confidential business practices. The company you speak of has a blurb about avoiding forclosure on the website.
This mortgage company offered a “rate rollback” to 6.75% for the remaining life of the loan to one of my clients. That’s from a rate of 15.625%.
So if every lender offered similar terms to foreclosed owners, there would be no need for govt. bailout - right?
“So if every lender offered similar terms to foreclosed owners, there would be no need for govt. bailout - right?”
That would be true if this were the case for every borrower. This is the least a bank who is charging close to 16% on a secured loan could do!
For those who are in the 7’s or 8’s that are in too deep and can’t afford to pay P&I, there isn’t a bailout large enough.
My understanding at present is they’re trying to take people out of ARMs and put them into interest-only loans. It’s the only way to keep the payments low enough to keep current while taking the loan out of default.
Boy does that sound a lot like a rental agreement.
No kidding! Even if you’re trying to go the 5yr I/O “starve out the crash” route, they are talking about refi in lieu of foreclosure. These people are already defaulting… once you start getting hit with recent 30s and 60s, your options narrow considerably.
I loved the quote yesterday about “refinancing to get money to pay the mortgage”. OMFG.
Well it makes their number look better: I believe that a loan that was refinanced to avoid foreclosure is not a default. This is one of the reasons that those that look at the ~15% default rate in subprimes and see 85% happy homeowners are so wrong. Those that bought a couple of years ago with exploding teaser-rate subprimes and NEVER HAD A CHANCE of making ammortizing payments will probably have REFI’d (and gotten in a deeper and deeper hole) a couple of times before they finally hit the wall. Those earlier loans are on the books as having been paid off. They look like successful loans, even if they never should have been made in the first place. Tanta over at http://calculatedrisk.blogspot.com/ has coverd this extensively.
Reasons? Undisclosed. My Cousins husband works for HSBC, and last year they were allowing people to extend their delinquencies before foreclosure. Adding the payment missed to the end of the loans.
Reason, it still stays on the books as performing loan, even though they may not have paid a payment in 9 months.
That sort of thing actually makes sense for people who have had some sort of financial hiccup when a one time event put them a little behind. But so many of the FB’s out there have simply paid more than they could ever hope to reasonably afford for a home. Temporary forebearance does them no favors in a falling market. Really the only reasonable explanation for this kind of poo is that the executives have been looking at the “Implode-o-meter” and want to stave off the wolves and placate the investment bankers another quarter.
“I believe both of these factors are very much in play.”
I’ll give you a third. Lenders can’t afford to have the property sitting there unattended. Keep the FB in that house so that the yard gets mowed, air conditioning turned on and paying the fire insurance. Any house unoccupied will have weeds growing and the REO property will have home owners insurance costs. Fortunately, nothing at this stage is going to help turn this puppy around but may prolong things and allow the hurt to go deeper.
salinasron,
I agree with you. The house at the end of my street was foreclosed on 16 months ago. Not a single offer on the place that i know of. The owner has been living payment free…She just must keep all utilities paid up and keep the place looking good(she does).
Chris
This is very interesting. Where did this info come from?
Greed and stupid idea that they could finance their retirement in real estate caught this retired couple in Florida. They are extremely F’d - http://biz.yahoo.com/hmoney/070522/052207_retirement_interrupted_moneymag.html?.v=4&.pf=oneclick
The wife is a retired benefits consultant. I’m thinking - duh, doesn’t a benefits consultant have to know about 401ks - personal finance? And doesn’t personal finance 101 teach that stocks are a much better investment than real estate? I like this quote from her husband Steve:
“I know you should have a diversified portfolio,” says Steve. “But I believed real estate would give us bigger returns.”
Dumb and Dumberer.
“The Wilder Cos. has reduced to 500 the number of new residences that would become part of its massive project. When Wilder’s plans were announced last May, plans called for 800 homes.”
“Wilder said the drop in planned homes stemmed not from the softened residential real estate market, but rather from an enthusiastic response from merchants to the planned retail. ‘We found there was a little more demand for the retail we’ve planned,’ Wilder said.”
I know that if I were a retailer, I’d be THRILLED that my target market was just reduced by almost 40%. By this logic, a perfect situation would be all stores, no customers.
If the price of raw materials, labor and land has fallen so much, why are new home prices not falling at the same rate? I think the new home buyers need to negotiate a little harder
All in due time. New builds are bargains relative to asking prices for existing homes, at least in my area.
The are negotiating. they’re getting free granite and free pools and free landscaping and what not.
The prices are falling, but masked by incentives.
That said, the current home buyers aren’t pushing ENOUGH, but they are pushing a little.
why are new home prices not falling at the same rate? I think the new home buyers need to negotiate a little harder
You just answered your own question. The selling price of new homes has nothing to do with the cost of building them - they sell for whatever the buyers are willing to pay. At a market top, far more than the cost of building. At a market bottom builders will sell below their own cost to get rid of them. It’s all up to the buyers.
In the long run, the houses must sell for more than the cost of construction or nobody would build them, of course.
Just two of the of RE “Paperwork Millionaires” that are sucking Equity Vapors as they financially CROAK. They DIED OFF by the thousands in the 80’s recession.
The couple are pulling out $15,000 a month from savings to cover their expenses, and they’ve already run through more than half of their nest egg. The irony: On paper they seem to be in great shape, with a net worth of $1.6 million. But since most of that money is tied up in real estate - assets they can’t easily sell - it doesn’t ease their current cash crunch.
Steve, Carol and Carleton Sheets…meet JOE BLACK
How exactly do they have a net worth of 1.6 million? Do they really have that much equity? Or is that just the total appraised value of all the property that they have? I would expect MONEY to be a little more detailed with this.
“One thing hasn’t changed: The Daimlers remain staunch believers in real estate. ‘If the financial pressure was off, we’d still look for opportunities to invest,’ says Steve. ‘For now, though, we just don’t have the means to hang on.’”
We have a long, long way down. These people lost their life savings and still have not capitulated. Most still denying reality…
“We have a long, long way down. These people lost their life savings and still have not capitulated. Most still denying reality…”
Most still see this as a “short term” correction. You know, the market could bounce right back in 6-12 months. Just wait….once people understand WHY we may never see these prices again in our lifetime (voodoo financing & house ATM no longer available), the denial should turn to panic pretty quickly.
They are sounding off today over on the disscussion board at MSNBC. http://tinyurl.com/2jpms2
I’m not a registered user over there but if anyone is be sure to set all those idjuts straight.
UH OH I think those residents in their MILLION dollar trailers just missed the boat Old Briny Breeze
http://money.cnn.com/magazines/fortune/fortune_archive/2007/02/05/8399151/index.htm
“The deal doesn’t close for two years, and OLI still has to gain various government approvals. That gives some slight hope to residents who voted no, like Bonnie Labreque, 63. She says, “It’s not over until I see the check. Property values are plummeting around here. So maybe the developer will pull out. That’s my hope.”
Maybe we should start a virtual HBB office pool betting on whether or not these people ever see their money. I wouldn’t be surprised if someone changed the game plan on the residents and had local gov take it by eminent domain at the “plummetted” value and hand it over to a developer.
no, they cashed in. (they took the money)
$510 million for 488 trailer homes.
Just 2 years ago some of those trailers cost in the low $100,000’s range.
“no, they cashed in. (they took the money)”
No money has changed hands yet. The deal doesn’t close for two years. Anything can happen in two years. Who honors contracts anymore? If the developer can weasel out of it and wants to, he will find a way. Or he can always go BK. I don’t trust any corp further than I can pee, and not even that.
May I be Franck with you?
You can’t swing to both extremes, in your pithy predictions, and expect anybody with half a brain, to not think you are the weatherman that tells us, that it’s going to be 106 degrees, or snowing heavilly and 23 degrees,
it could go either way…
chief eloi orator
“The housing market in Brevard County is doing better than some markets in Florida, and doing worse than others, said Franck Kaiser, chief executive officer of the Home Builders & Contractors Association of Brevard.”
Imagine Gene Wilder getting sucked into the housing game… whooda thunk?
One of my favorite movies, and one of your first ones:
http://www.imdb.com/title/tt0063462/
“Wilder said the drop in planned homes stemmed not from the softened residential real estate market, but rather from an enthusiastic response from merchants to the planned retail. ‘We found there was a little more demand for the retail we’ve planned,’ Wilder said.”
I was watching Real Estate Confidential last night on Living Channel. While I know there are probably actors this buyer and seller were hagling over a house in burbank or somewhere near there. the seller wanted 1.2 million but it needed some wiring fixed. The buyer wanted a $23,000 credit to fix the wiring but the seller was only willing to give $8000. The realtors were on the speakerphone with the buyer, some dingy lady, giving her the sellers offer. She finally said “Well I really love the house, Ok that sounds fine, lets do it.” I was completly shocked! I though, you got to be kidding? Lady you are not buying a car or piece of furniture. I can’t believe how stupid some can be. They think that this is the only house for sale in the world and there are 9 thousand people in a line waiting to sign on the dotted line. My father taught me that if someone is selling something and they tell you there are “others interested” then walk away.
“From Money Magazine: Steve and Carol Daimler retired to Florida from Virginia two years ago.”
Ah yes, thank you Money magazine for regularly featuring couples like this as “Millionaires in the Making” up until a few years ago. Now you have an opportunity to revisit them and see how they are progressing toward that millionaire status. If they aren’t returning your calls don’t be surprised.
I have to give the Daimler’s credit for openly admitting to a financial blunder of this magnitude.
Same stuff in all the personal finance magazines. Money, Kiplinger’s, SmartMoney — it really doesn’t matter.
My advice? Read this blog instead. It’s a priceless education.
These personal finance magazines are nothing more than repeaters of the conventional wisdom. (This is also true of most personal financial planners.) These magazines are for people who never aquired critical thinking skills and want somebody else to do their thinking for them. I do not automaticaly reject all conventional wisom. Some of it is quite good. (You should have insurance on your house.) But I do prefer to think for myself, and question what and why people do what they do.
The short of it is that these magazines are nothing more than advertising for financial products that most people are better off without.
Got 10% down?
I don’t think the Damler’s see this as a financial blunder as they are still in denial.
They will need to see the Ethan Allens being carted out before they realise.
What an overrated brand of furniture! We bought our bedroom set from them 8 years ago, and every piece that arrived had a defect.
This just in… Steve and Carol Daimler remain idiots.
Good Lord these people are in denial. They are up to their eyeballs in trouble and they are planning a trip to Europe according to the last paragraph of the article?
Wouldn’t this make a good reality TV show though? The networks could pick a few choice idiots like this and we could watch them sink deeper into the quicksand every week.
We thought we’d make $100,000 without batting an eye,’ says Carol.”
suckers will capitulate at the bottom.
“To supplement their retirement savings of $260,000, they figured they’d buy fixer-upper homes to renovate, then sell at a profit in the state’s hot housing market. ‘We thought we’d make $100,000 without batting an eye,’ says Carol.”
With a $260k nest egg, you should be planning for a cat food retirement, not flipping real estate!
The couple are pulling out $15,000 a month from savings to cover their expenses, and they’ve already run through more than half of their nest egg. The irony: On paper they seem to be in great shape, with a net worth of $1.6 million.
And this is from “Money Magazine”! Any prudent analysis would suggest withdrawing at most 4% of your nest egg per year, while these chuckleheads are spending at three times that rate. Furthermore, the 4% adage assumes that you have invested in a relatively low-risk portfolio as opposed to, say, buying a bunch of Florida crapboxes at the top of the largest real estate bubble in history.
Take a look at their annual costs. $23k for insurance and association fees, $22k for property tax. They are hemorrhaging a sum roughly equal to the US median household income and sending it straight into a black hole!
And people say that renters throw their money away.