Bits Bucket And Craigslist Finds For September 4, 2007
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Plunge Protection Team Keeping Dow Jones Afloat?
http://www.usnews.com/blogs/capital-commerce/2007/8/20/did-the-white-house-rig-the-stock-market.html
“After the 1987 stock market crash, President Reagan authorized the creation of the PWG—consisting of the Treasury secretary, the Fed chair, and the heads of the Securities and Exchange Commission and the Commodity Futures Trading Commission, so that top regulators and economic policy chiefs could formally consult with one another in event of a financial crisis as well as prepare a plan of action in case of a financial markets meltdown.”
Oh, thank God, and I thought they were manipulating the markets. Yes, like the author, I’m absolutely sure all the players involved in this wouldn’t even THINK of manipulating the markets. (sarcasm off)
I never understood why anyone would doubt the government directly intervenes. We know they manipulate rates, money flow, conduct ‘open market operations’ in treasuries, backstop money center banks by accepting junk collateral for cash, arrange bailouts for hedge funds (LTCM), and on and on. Yet somehow we are to believe they stop short of buying S&P futures and stocks? Please…they don’t even deny it actually. They just don’t answer the question.
I doubt that they are accepting junk collateral for cash. And it isn’t the government, per se, it is the Federal Reserve, which is a group of PRIVATE banks, that have the cushiest position of all the banks in the nation, which is why I doubt that they are accepting junk for collateral. The other things you said I don’t have any problem with, although I doubt that they buy futures and stocks with the idea of saving the economy, if they think the stocks are going to rise they buy and if they think they will fall they will sell, same as anyone else.
NOT same as anyone else, as they obviously have a major advantage over all other players: they can position themselves before major events like rate cuts/increases, BB or GWB speeches, bombings in the Middle East or leads for events like 911 (remember the huge put/call numbers for the airlines)?
Weren’t they lending banks the face value of CDO’s against the CDO collateral at the time when the banks first discovered that the value of their CDO’s was so nebulous that there was NO market for them at all?
The face value of the CDO’s was determined under their “mark-to-model” method, so the fact that no one would buy them even at steep discounts wasn’t considered when using them as collateral.
Sounds like junk to me. Maybe worse than junk. Even BBB’s have some market value.
Everything’s contained.
http://www.nypost.com/seven/09042007/business/markets_brace_for_seismic_sept.htm
It was a “secret”. Not any more.
The stock market always goes up — end of story. Get with the program or get your savings inflated down forever.
Think about it…..
http://tinyurl.com/2oabwv
The guy is a wingnut. This isn’t an appropriate place to post such political babble IMO.
Terms like “wing nut” (and “conspiracy theory”) are merely rhetorical devices designed to discredit alternative points of view. I would be careful about throwing those phrases around because they immediately mark you as someone who is so immersed in the matrix that they can’t consider anything outside the current “group think.”
Our ancestors fought and died so that we would have things such as habeas corpus. Now, few Americans can even tell you what the term means. If you think this is an accident, you’re the “wingnut.” Orwell had it right; 1984 and Animal Farm really say it all about where we are today.
LOL, perhaps I am a wing nut. Let me rephrase;
I began to read the link and was impressed that the ideas of the writer were more extreme than my own. When I got to the part about how well the north treated southern prisoners of war I became appalled and a realization that the writer had no regard for the facts overwhelmed me. I concluded that the writer was spinning off into space without a tether to reality.
Google Elmira Prison Camp.
I heard about the fighting and dying that you mention. My kids are in it now.
Sorry, BubbleViewer, the guy is a wingnut.
Blue Skye, It certainly does not belong here. In fact, I can’t think of a publication or blog where that would be appropriate.
Here is another crazy wingnut with his take, similar to some of the points made in the earlier wingnut article.
http://www.bohemian.com/bohemian/12.06.06/byrne-0649.html
On a RE related note, inventory appears to be really building up quite nicely in the upstate NY region! Folks that are pimping lake properties still have pie-in-the-sky pricing but I have started to see “price reduced” signs as well.
Where are you now auger-inn? Which lakes have you been by?
I spent yesterday in Saratoga and around that lake. I was up in Lake Placid area earlier last month and picked up a RE ad mag on Lake George and surrounding area (I was born in that area). Later on this month we head back into New Hampshire (Lakes area).
I don’t see many price reduced signs in the Finger Lakes. Some, but not many. I do see twice as many for sale signs as in the spring. The local Real Estate office on main street has both windows plastered with listings rather than half of one. We’re a little behind the curve.
They are still working on the monsterous lakefront hotel in Watkins. Heard they expect to get $250 a night. Might happen three race weekends per year. That thing is going to be an awful eyesore.
“Heard they expect to get $250 a night.”
We stopped in Klamath Falls, OR this summer at the Silo Inn. Two queen beds, continental breakfast, that’ll be $180. What? This is toothless chainsaw country for Christ’s sake! Note to self: never stop there again.
You can stay at the Motel 6 in beautiful Ridgecrest, California for $32.39 a night…
Upstate NY/VT border Update- I watch inventory, wife watches pricing.
Inventory- Anectdotal evidence suggests a leap in new inventory since my last visit in May. Oddly, some towns have a dramatic increase of 4sale signs inside of village limits, other towns have increased number of signs outside of village limits. I can’t really draw a parallel. Wife watches local weekly periodicals and the reality of the increase in inventory is best reflected in the growing number of RE ads. What was a half page of individual listings, mostly FSBO has grown to 2 full pages of Realtor ads. To maintain perspective, these aren’t big block type ads. Small font, 2-4 line blurbs. Nevertheless, I was shocked by the forsale signs and wife was shocked by number of ads in paper. Last nite I confirmed our observations via OSG hardtack. Generally speaking, all of these towns show a 75% increase in inventory since 2/23/07 with much of that gain since mid June.
Pricing- Wife tracks pricing trends, nothing scientific but according to her, prices for the typical 3/2 ranch have dropped some.
The KoolAde Factor- 3 relatives, brother, cousin and sister in law all conceded at different times over the weekend that “I was right about the mortgage mess” although one of them said “but foriegners are coming in to buy into the bust”. I asked him for an example. His response? His realtor friend told him so.
“On a RE related note, inventory appears to be really building up quite nicely in the upstate NY region! Folks that are pimping lake properties still have pie-in-the-sky pricing but I have started to see “price reduced” signs as well.”
I guess it’s all relative, but what is “pie-in-the-sky pricing” in the Finger Lakes? Perhaps 200K? The place looks decent for 2 months out of the year. That’s it. Folks up there think 150K is a world of money for a home. Taxes are outrageous. If you live there and make over 100K a year the jealousy and hate directed towards you is unbearable. Too many losers there.
“I guess it’s all relative, but what is “pie-in-the-sky pricing” in the Finger Lakes? Perhaps 200K? The place looks decent for 2 months out of the year. That’s it. Folks up there think 150K is a world of money for a home. Taxes are outrageous. If you live there and make over 100K a year the jealousy and hate directed towards you is unbearable. Too many losers there.”
I think you’re right on with the exception of the “losers” comment. There is widespread contempt for outsiders (mostly from NYC, NJ, CT etc) but at the same time, they are very astute at separating those outsiders from their money. It’s a long practiced, well tuned game that natives have been using for a long time but I think you’re confusing their contempt for outsiders with jealousy.
I guess I was referring to the 1.7 million “camps” that I see listed for Lake George, NY. Basically 60yr old ranch-style camps that may have 3 bedrooms/2ba (maybe not) and about 100 ft of lakeshore on a 1/3rd acre lot. Insanity IMO.
My mom has a nice place up in Maine that she and my dad bought 20 years ago after selling their historic Pasadena bungalo and leaving the rat race. Since then, more and more “from aways” have emerged, snatching up ocean/lake front “bargains” and driving up property taxes. The best example was when MBNA moved into Camden and Belfast. When B of A bought them out, they vanished, taking hundreds, if not thousands of jobs with them and leaving a huge tax bill behind, (that they still haven’t paid). People like my mom, who have no intention of selling since she went there to retire, don’t reap the benefits of the inflated property values, but she sure gets to pay the higher taxes!
My husband, the upstate NY native, tells me Lake George is all NYC money and the like.
I think the highest price I’ve seen on our lake is like that (closer to $2mm) but it is (I’m guessing) an 8000 - 9000 sq foot monster that was once was an NYC financier type’s vacation home in the early last century) It’s no ranch, honey.
Now Lakes in the Adirondack Chain have some interesting places and prices. Like castles made of wood. Those are often NYC and NJ types too.
One NJ couple bought the year round home of a friend of ours on 4th Lake. They stayed one winter and in the spring the for sale went up. The locals laugh like crazy mostly because they tried to tell them about the winters before the sale but were quoted something stupid like, “well ya know we have snow in NJ too ya know.”
RE: she sure gets to pay the higher taxes!
Welcome to the way life should be.
Maine is the highest taxed state in the country as a percentage of income for the combination of state income tax, property tax, and sales tax.
It’s really all a mirage
Great place to vacation for a couple weeks.
But once you look behind the scenic vista veneers, it’s nothing more than a decaying socialist welfare state engaged in an unstoppable demographic and economic death spiral.
“One NJ couple bought the year round home of a friend of ours on 4th Lake. They stayed one winter and in the spring the for sale went up. The locals laugh like crazy mostly because they tried to tell them about the winters before the sale but were quoted something stupid like, “well ya know we have snow in NJ too ya know.”
———————————————-
Fourth lake is in the school district I grew up(for 5 years anyways) in so I know the area well. The land around the lake has turned into a magnet for retards from nj/ct/nyc but just as you said, they don’t last long and bail, almost always selling at a loss. Nevertheless, I despise them for the mess they left behind.
“Comment by hd74man
2007-09-04 10:00:36
RE: she sure gets to pay the higher taxes!
Welcome to the way life should be.
Maine is the highest taxed state in the country as a percentage of income for the combination of state income tax, property tax, and sales tax.
It’s really all a mirage
Great place to vacation for a couple weeks.
But once you look behind the scenic vista veneers, it’s nothing more than a decaying socialist welfare state engaged in an unstoppable demographic and economic death spiral.”
hd74man: Although taxes in the state of Maine probably are high, I doubt that the combined property taxes, sales taxes, and especially income taxes in Maine are nearly as high as those taxes are in California. Thank goodness I only am renting now. Soon enough, I will be moving out of California to another state where taxes are lower and the quality of life is much better. People who are homeowners in California generally are stuck here with properties, many of which they cannot afford, with ridiculous mortgage payments and high property taxes (even with Proposition 13, which California voters passed I believe in 1978). The property tax increases, in most cases, was self-imposed on recent buyers who worship real estate so much that they are willing to pay astronomical prices for overpriced houses and condominiums. In my opinion, California is the state that your statement, “it’s nothing more than a decaying socialist welfare state engaged in an unstoppable demographic and economic death spiral” best describes. Although I like nice weather, there are things that are much more important to me, such as low taxes and good quality of life, which are two things that California now lacks.
I never experienced the hate and jealousy you mention. Maybe it is because I don’t tell my neighbors how much I make. I hope not too many of you folks from the metro get to feeling this way, our economy has grown dependant on your thinking our $200K houses are worth $500K.
“our economy has grown dependant on your thinking our $200K houses are worth $500K.”
Has it ever!!!! I’ve seen these cycles previously where an influx of metro people overpay by 3,4 and even 5 times and think they are getting a bargain. However, this cycle has had a wierd effect on the natives. I’m a native no longer living there but those that do seem to think there is no end to the “dumb outsiders” overpaying. The native are absolutely correct on the fact that the place is literally swarmed and crawling with these retards from elsewhere but if the number of for sale signs is any indication, I’d have to say that the well has run dry.
The place looks decent for 6.5 months, is heaven during the 2 months of autumn, and the other 3.5 months are hell. $200-$250K is bubble pricing for new cookie cutters, but you can get a fixer-upper in a bad neighborhood in the cities for under $75K. The real pie-in-the-sky is for vacation homes (LOTS of high-end vacationers), but Carrie Ann would know more.
“The place looks decent for 6.5 months, is heaven during the 2 months of autumn, and the other 3.5 months are hell.”
To each his own, I guess. With snow in October and 40-50 degrees common late into May and even sometimes into June, it’s not a comfortable atmosphere for me.
“I never experienced the hate and jealousy you mention. Maybe it is because I don’t tell my neighbors how much I make. I hope not too many of you folks from the metro get to feeling this way, our economy has grown dependant on your thinking our $200K houses are worth $500K.”
We never told our neighbors how much we made either. It’s quite obvious when one has new cars in the driveway and vacations out of the country for 3 months out of the year. I’m not going to argue about 500K homes in Upstate NY. It’s ridiculous. Just look at the median income and you will be able to see that those who can truly afford a 500K home anywhere in Upstate NY are few and far between. Now, I don’t know exactly what you refer to as being Upstate NY, however, I am referring to the area from the Finger Lakes region all the way to the north of Buffalo.
I’m probably the guilty party with regard to the upstate ny issue. I was specifically referring to the area north of Albany up to Canada. I would agree that everything north of the east-west NY Thruway is considered upstate.
I spent a bit of time in my youth in the finger lakes area and still have relatives there. I was last out there a few years ago and was surprised to see how many vineyards had popped up around the lakes. From what I know about the area I don’t see many high paying jobs around there.
The people who live west of the Finger Lakes like to call it “Western NY”. There are not many employment opportunities above service industry level. I bought a 4000 sq. ft. Victorian mansion when I moved here before the boom for $100K. Million dollar replacement cost. Taxes, utilities and upkeep were killers. I am a happy renter now!
The vinyards are doing very well in general, but the carriage trade is way off this year. Glenora is, I think, the second largest producer in the US.
Everythiing north of Putnam/Westchester and Rockland counties is “Upstate NY”.
“I guess it’s all relative, but what is “pie-in-the-sky pricing” in the Finger Lakes? Perhaps 200K? ”
That’s pretty funny. We’ve got multi-million dollar homes around here that aren’t even on the water.
http://www.cnyhomes.com/Listing/Search/info.cgi?mlnum=169273
The prices have come down but lots of lakefront here still hovers near the $750k - $1mil mark
Carrie, I think his point is that a house, a castle, a refrigerator box, anything that is priced above 150k in upstate is an absurdity in consideration of the economic conditions there.
“That’s pretty funny. We’ve got multi-million dollar homes around here that aren’t even on the water.”
Huh? “To be built.”? OK, you found one 3 million dollar to be built home in Dewitt. Nice. I’d like to see the sucker who’s going to buy that. The taxes alone would be about 150K per year. Oh, and good luck selling it when you decide to dump a depreciating asset. I’m sorry, but I don’t care what you say, Syracuse is a dump.
Agreed that this will cannot last forever but there’s a new development south of the private school Manlius Pebble Hill where a good 50 or so of these are already built and moved into.
When I pulled up the entire 3300 inventory for the greater Syracuse area, just go home on that same above link and pull up all inventory there were about 23 homes for sale over $1mil. (Some were typos-in wrong place) At least 1/2 were existing structures which means someone paid for them at some point. Those are the ones for sale.
What cracks me up about your comments is you seem to be unaware of the fact that in the early 1900s it was fashionable to own vacation homes up on these lakes. Some of these structures are still owned by the same families but even if they are not, the families, and their money are still here.
“What cracks me up about your comments is you seem to be unaware of the fact that in the early 1900s it was fashionable to own vacation homes up on these lakes.”
OK, but weren’t the early 1900’s about a hundred years ago? That has nothing to do with today’s economics in that area. I hope it will suffice to say that the median income there is quite low. I lived there for a number of years. I was only there because I went to school in the area. It was hell the whole time I was there. Sure, there are people with some money there. Nevertheless, it doesn’t skew the median income which is pathetic. In the last few years people Upstate also went a little nuts purchasing homes on the various lakes there. They thought they were good investments. Idiots.
“Carrie, I think his point is that a house, a castle, a refrigerator box, anything that is priced above 150k in upstate is an absurdity in consideration of the economic conditions there.”
I think I understand the confusion, exeter. I just saw above you guys were talking about Finger Lakes west to Buffalo which I know nothing about. Considering most of the people I know make that $150k or more in a year, the only reason these people may be in economic pain is if the competition bug got the best of their spending habits.
Heck Lockheed Martin spent $25k just to move my friend out here never mind what they pay him. I’ve gone on and on in the past about what people do for a living in this town. Many of them don’t even work in this country but fly out to “where ever” in the world for a few weeks while their families remain here. The kid my son is playing with sees his Dad on weekends. His office is 1/2 way down the Coast. He’s 5th to the top in this country’s branch of a major European financial firm. The former Clinton Speech writer is around the block. One of the last appointees to the Bush cabinet lived 1/2 mile from me before moving to DC. A former screenwriter for a major 80s tv comedy lives here, and now is an SU adjunct professor. A former Time Warner executive just built a monstrosity out on a formerly quiet road. And our town doesn’t even have the 1/2 wealth of the 2 north of us. You get the picture.
(Carrie, I think his point is that a house, a castle, a refrigerator box, anything that is priced above 150k in upstate is an absurdity in consideration of the economic conditions there)
clearly you don’t know the economic state of upstate ny. it’s not all hard times. there are good jobs. there are people with money. could you be more specific of an area?
You’re kidding right? Lets start with the job losses in the hudson valley in and around Washington, Warren, Albany, Schenectady areas.
GE 100,000
SandyHill Brass and Iron 2000
International Paper 2000
Ford Motor, Green Island, 5000
Waterveliet Arsenal 4000
James River Corp 2500
Decora 1000
Hercules/Ciba Geigy 4000
Please don’t be so foolish to say that I don’t know upstate NY. Even more absurd that you suggest there are “good jobs”. And people with money? Who would they be.
GE and many other good jobs are still there. my parents could easily qualify for 150K. you think NOBODY in upstate makes more than 50K/year, what it would take to buy a home at 3X income? there are tons of colleges, state jobs, lawyers, doctors, local businessmen and etc.
“GE and many other good jobs are still there.”
Thats a nice broad statement although an absurd on. GE has gone from 100,000 jobs to 2000. To suggest that that loss of 98000 jobs has a positive impact is looney. The “many other jobs” statement has yet to be backed up with any facts or numbers. “Lawyers and doctors” ain’t gonna cut it.
those job cuts are in the past. I can’t find a few counties where the media household income is over 50K- they can easily afford a 150K house. easily.
GE just recently added jobs.
That real estate note you rang up for Upstate NY is mirrored in Northern Cal area (95501) and central Oregon (97402). We are seeing inventory build (still) however, anything with water access or view is pimped to high. Standard 1970’s 3/2’s homes with popcorn ceiling, pink toilets and original kitchens still have high wishing prices. However there are a few “reduced” prices usually brought down about 7% or 8% off first asking price. Prices are still unaffordable for “average income”.
During the May/Jun/July “hot” months, the local realtors assn (jacstats.com) shows an average of 191 houses sold monthly. Inventory: 3014. Loads of FSBO not counted however….. Let me know how this works out…
“Those that believed they could automatically make junk bonds safe by “backing” them with assets, be they homes or railroad cars, have been proven wrong.”
http://finance.yahoo.com/expert/article/futureinvest/43359
“But more troubles soon surfaced. On the very next day, BNP Paribas, France’s largest bank, barred withdrawals from three of its hedge funds that held subprime loans. All of a sudden the crisis took on international proportions. Investors was asking, “Who owned what, how much, and what was it really worth?”
In spite of this I hear everyday ‘not to worry the global economy is in great shape’, the same spiel we heard from the RE industry right up to the point of the were the truth could no longer be hidden in the home mortgage business. I really believe that the spielmeisters believe what they spew and are not brought back to reality because the MSM is clueless in their ability to report anything in depth.
this clearly is a con game that works as long as the general public believes things are OK, and does not object to all the fraud that is going on behind the curtain (rampant inflation, manipulation of statistics) to keep the impression that things are great. I have no doubt that the general public still believes the fairytales from Wall Street, especially in Europe.
People wake up when they start losing money. That’s why the ABCP market has dried up.
sure, trouble is that people often only notice when it is too late. In Europe the middle class has been getting poorer for at least the last 10 years or so; I guess the US is not much different. But most of them didn’t notice because of all the spin in the media; probably some people notice that there is less and less money at the end of the month though, and start wondering why they can’t make ends meet when everybody is getting ‘richer’ …
Mortgage brokers are right up there with used car salesmen…
http://redtape.msnbc.com/2007/09/can-laws-force-.html#posts
“Will mortgage broker be forced to be your friend?”
[...]
“Mortgage brokers, for example, may act like they are on the buyer’s side, but they’re not. They’re working for themselves. When it comes down to it, they are economically motivated to pick profits over the buyer’s best interests..”
[...]
“A law passed by Illinois legislators earlier this month and backed by state Attorney General Lisa Madigan attempts to do just that. It would extend what’s called a “fiduciary duty” to mortgage brokers, making them legally bound to do the best thing for their clients.”
“Supporters think it’s high time to institute such a consumer protection; but detractors say the law is folly, impossible to enforce and bound to make class-action lawyers rich.”
Interesting article.
The level of education required by mortgage brokers does not covariate itself with ‘fiduciary duty’.
brokers already have a “fiduciary duty” to the borrower in California… see how well that turned out.
Pass any law you want, it’s just a piece of paper until you enforce it.
I agree that there should be some consumer protections. What if a doctor recommends unnecessay tests or surgery just to make profit for himself? Am I required to have a medical degree to judge his decisions? Or is his bound by law to do the best for his patient? Shouldn’t the same apply to financial guys, or do I need a degree in accounting?
On the other hand, there should be some reasonable common sense limit. If my teeth hurt and the doctor recommends heart surgery, I should be able to figure it out. How about requiring loan documents to have a one page summay with interest rate and stuff, including a full 30-year amort table? That would stop most I/O’s/Neg-ams in their tracks, and give pause to the ARM’s.
How about making them give a copy of the loans papers to the borrower at least 24 hours before closing instead of trying to rush people through signing a stack of papers and giving dirty looks when people try to read over the documents?
actually, aching in the teeth can be a referred pain from Myocardial Infarction (heart attack). I HAVE had patients come in to the ED with tooth pain and go for emergent heart surgery.
E.D.
note: ED = Emergency Department and E.D. = evildoc. Sorry for any confusion.
E.D.
Not erectile disfunction?
Oh dang, I DID read that teeth and heart are related.
But I guess this just proves my point even more. How do I know whether an I/O is the best thing for me? those loan guys have all the experience! They know SOOO much more than I do…
It never ceases to amaze me that some people are so stupid…
In the hours before the Category 4 storm was to make landfall early Tuesday, Grupo Taca Airlines frantically airlifted tourists from the Honduran island of Roatan, popular for its pristine reefs and diving resorts.
Bob Shearer, 54, from Butler, Pa., said he was disappointed his family’s scuba diving trip to Roatan was cut short by the evacuation order. “I only got seven dives in. I hope they didn’t jump the gun too soon,” he said as he waited for a flight home in the San Pedro Sula airport.
http://apnews.myway.com/article/20070904/D8REHM3O0.html
Flew over Roatan in my trusty P-3 two weeks ago and I don’t think I’d like to ride out a storm there. Not much island to see from 17,000 feet so I’m sure Felix would have given Mr. Shearer the ultimate diving experience.
He would have loved diving in New Orleans after Katrina.
I read that guy’s comments, too and thought he sounded like a clueless idiot. But I know fishermen that are reluctant to come in when it starts getting rough, as well. For some reason, they think that catching the big fish is more important than saving their lives. In a lot of cases, I concur.
PPT? Doesn’t matter. Soon the S&P 500 companies will start to show reduced earnings due to no more HEW’s, tighter credit card limits and overall reduction of consumer spending. Then look out below as fundamentals reassert themselves.
Funny isn’t it how the MSM and Wall Street geniuses were attributing the consumer spreding boom during 2003-6 to HEW’s and the increase in house prices but I have yet to see an article talking about the exact opposite effect that is hurrying our way.
Of course, maybe I’m just an old traditionalist who doesn’t understand the new paradigm….seriously, how can AMZN trade at a PE of over 110?
Aw come on. AMZN’s shorts are taking a well deserved beating.
Yeah, but the PPT doesn’t even take the thumbscrews off long enough to allow us to bail!
Yeehaw. Nothing like a company that makes 190 million profit with 33 billion market cap. I do admit that the short interest is very high, but being the fundamental idiot that I am, I think it is warranted. People like to slam MSFT but at least it makes money.
AMZN shouldn’t have survived the tech bust, but like the mighty disgusting cockroach, which Bezos slightly resembles, it carries on.
I think our grandparents had it right: passbook savings. I swear that I think the WHOLE MARKET is a flimsy house of cards. I trust none of it anymore…
Good for you. It is obviously rigged.
It’s been rigged for generations. Yet people profited over the long haul while the value of your dollars in passbook savings diminished below the inflation rate.
“I swear that I think the WHOLE MARKET is a flimsy house of cards.”
I expect markets to be volatile in certain areas, but the S&P 500 where many people’s 401k accounts reside shouldn’t “whip-saw” weekly. I mentioned my feelings to a broker who told me that’s it’s all just a big game. Well, my 401k isn’t a game-piece, so I’m in cd’s and treasuries.
It may not whip-saw, but those cards can fall down to the ground. Good for you for putting your 401 into CD’s and Treasuries. I hope the CD’s are with a safe bank. I wouldn’t trust deposit insurance to last through the storm I believe is coming.
I did the same rms … unfortunately not before I lost almost $20k. My retirement nest egg is no game piece .. it’s my quality of life in the future and I sure don’t want to be Googling what dog food brand has the best flavor!
Cheer up! Stocks are cheap (cough) and the Fed will save the day:
Sept. 4 (Bloomberg) — U.S. investors are returning from summer vacation to the cheapest stock market in almost 12 years, and some of the biggest fund managers say they’re ready to load up on shares of technology, energy and industrial companies.
http://www.bloomberg.com/apps/news?pid=20601109&sid=ayv0_Y9dkSkc&refer=home
True. I’m waiting to join them, timing these things is just so tricky.
Over the weekend, I heard about a phase of foreclosure that I didn’t know about before.
It seems that a neighbor of a friend did the HELOC-to-the-hilt story, which by now is a cliche on this blog. They moved across town “in preparation of the renovations”, which was the reason for the HELOC.
The twist was that there was a “mysterious” break-in into the now-abandoned house, which trashed the place. Fists through walls, feet through attic ceilings, water everywhere. So, they collect the insurance money on the damage.
As near as I can tell, they borrowed the max, and then collected almost as much again, both on 2005-era appraisal values.
Insurance fraud isn’t new!
Wow, the insurance company paid right up, no arguements? I’m really surprised. My sisters first husband blew up their South Lake Tahoe home. The insurance company refused to pay him because they thought it was suspicious. They were right of course but they didn’t know that for sure till they found my sister and I.
You know how the REIC is always saying that rents are going up, etc… Well here is some info on that for the DC area..
We were looking at home values and noticing they are getting down to rent comparables, only about 30% more instead of 200% more. So we were considering a low ball offer on some places. However, we just got our lease renewal, our rent is going down!!!!! We live right off the shady grove metro in a prime area of DC.
So, I think we will wait another year and keep banking 2k/month instead of paying interest to some rich fat cat.
Bob
hopefully the next prez will chop heads bringing things down- my hood is 200x rent
Amen brother.
Mine is 300 x rent. Got home after a beautiful day yesterday - there was a business card wedged into my front door - a realtor, I thought.
Nope, MPDC Detective - Homicide Squad. Welcome to the ‘hood.
Very nice. When your rent drops $100/month, the price of a home should drop $12,000. That is the multiple: 120 times the monthly rent. More reasons to be careful of the market.
I am glad for the reminder on the multiple. Just so I understand correctly: rent $1500 X 120 = $180000. Smiliar houses to the one I rent sold at right about $360,000 this past spring. Guess I will sign another year lease.
Great news, Bob. I am near the Twinbrook metro and I am planning to negociate or move when my lease comes up this year (January).
Have you wandered around the new Rockville town center yet? I stopped by this weekend and it is wonderful. Not $600K for a 2 bedroom condo wonderful, but wonderful still. Wonder if the area will stay safe enough to rent there?
The area is safe enough to rent, for sure. However, dont go on the east side of Rockville pike(other side of the metro). Super ghetto over there. Rents are pretty outrageous in rockville town center, also, the area is kind of in a transient stage. They were supposed to be condos, didn’t sell. Now they are apartments. So, the area is still a bit of an unknown.
Rents will likely drop 20%-30% on most generic suburban property, esp SFHs. At least this is what happened in the last bust in Austin.
3-2 1500 sf went from $750-800 in 1985 monthly rent to $550-$600 in 1990.
Hey TX, when do we get confirmation that we have a doubletop? I’m talking about the Twin Towers of SPX 2000 and 2007. See below:
http://stockcharts.com/charts/historical/spx1960.html
That would be nice. 7 years is good too.
I apologize for being an idiot, but I don’t understand what you’re saying, or how it answers his question.
wapo on bailouts:
LIKE MOST other politicians, President Bush basically ignored the subprime crisis while it was incubating. Last week, though, he unveiled a proposed fix — and not a moment too soon. A month from now, $50 billion worth of adjustable rate mortgages will “reset” from the low interest rates at which they originated in October 2005 to much higher rates that will be due for the next 28 years. Hundreds of thousands of people are about to be hit with 30 to 40 percent increases in their monthly payments.
http://tinyurl.com/3xfojh
1. Inherent contradiction alert:
“The president’s proposal appropriately focuses government resources where they are likely to do the most good: on subprime borrowers who are behind on their payments but have the means to handle modified loans at reasonable terms.”
If a subprime had handled his debts, like CC or car, then he wouldn’t be subprime in the first place. And remember they were subprime BEFORE they saddled themselves with the mortgage. They can’t handle ANY reasonable mortgage payment.
2. You have to have 3% equity, which excludes the entire fast-growing underwater pool. And if prices fall more than 3% by the time this gets implemented (likely), anybody who’s breaking even — meaning every single no-down I/O — is done for too. And if they had 3% equity, they would have HELOC’d it by now.
Leave out fraud, re-fi, and second homes, and this plan will help NOBODY, except to make them THINK they’re getting help. This is all a perception game with the intention of firing up the weath effect and bail out Home Despot.
3. I wish the press and the market would stop calling these things “subprime.” The problem is not “subprime.” The problem is “EXOTIC” loans, which is any payment that’s not a fixed PI. Yes, it’s true that low FICO’s often got exotics, but they do not necessarily have to happen together. How many PRIME McMansion folks got “into” their castle on an exotic? There’s going to be a real bloodbath when they reset.
I wish the press and the market would stop calling these things “subprime.”
I wish the press would start saying “Overpriced housing problem”, instead.
“This is all a perception game with the intention of firing up the weath effect and bail out Home Despot”
Or maybe just something so Bush could say he acted without totally ticking off his consituency. Good thing, too.
Barney Frank on CSPAN right now taking calls on the mortgage crisis….
Please update what nonsense he spews in the name of “the little guy”. Thanks.
He’s not in favor of bailing out individuals, aside from waiving pre-payment penalties. He sounds like he’s more interested in more regulation. That’s a good thing in my mind.
More regulation is a TERRIBLE idea. It wasn’t the lack of regulations that ever cause asset bubbles, it is the fraudulent fractional reserve banking system that uses non-money to entice banks to take risks with their non-money to try to make a fraction of a percent profit on each transaction.
GET RID OF FRACTIONAL RESERVE BANKING, and the inflationary concerns, plus the malinvestment concerns, will tend to go away as banks have to now find a return on REAL money, not non-money.
some earlier bubbles like tulipmania in the Netherlands occurred without any fractional reserve banking. But I agree that playing with other peoples (or ‘free’) money is often a big factor in creating asset bubbles.
Yep, I don’t trust him or any of the others who claim to help the “little guy”. I trust more the guy who comes right out and lets you know he’s gonna stick it to ya. At least I can count on that and prepare for it.
I read a post on an immigration blog where McCain said that shamnesty didn’t pass because people do not trust CONgress. I’m no fan of McCain, but he said a mouthful of truth there. With a few rare exceptions like Ron Paul, I don’t trust CONgress to do anything except make things worse and feather their nests while doing so.
I second that request. I’m not sure Barney is going to be a bleeding heart here.
He doesn’t favor a direct bailout, but he wants Fannie/Freddie and FHA to hold the bag. Smart fella
But to me if Fannie/Freddie and FHA rewrites these bad loans ,its a set up for taxpayers to pay . Currently the government can’t bail out the mess because the loan paper is all spread and diced out between a bunch of private lenders that invested in MBS’s or CDO’s that do not have insurance to cover loss .In addition you have a bunch of lending institutions that are holding bad paper that they couldn’t sell into the secondary market .So the whole system of passing loan paper up the line ,came to a standstill. In addition some of these funds started reporting major loss ,so now the cat came out of the bag on just how bad this high rated loan paper was really.
It doesn’t surprise me that they are trying to use FHA loans that are insured and backed by the government as the bail out lender for re-writes or even new loans . The only problem is the FHA loans are not high enough to bail out the higher priced States if you have a max of 362K loan amount .They say that the borrowers will have to qualify for these bail-out loans ,but I believe they will be liberal on the qualifying as well as the appraisals in the final analysis . The government will be the new sub-prime lender of choice except they will be giving people a lower rate that they don’t even deserve if they are liberal in the underwriting . They already said that they would rewrite loans on people who are starting to default after the adjustable re-set . Lenders do not generally make loans to people in default , so there is already a concession regarding underwriting verses normal guidelines . IMHO , I believe they will be very liberal with these re-writes of loans if Hud/FHA insured loans becomes the sub-prime bail-out lender .
IMHO ,I do not see why the current lenders who made the bad loans or the MBS’s holders can’t re-write their own bad junk loans if they want to keep foreclosures down at their own expense . I also do not see why the government should re-write loans in default .
Bailout misread. I see jbunni in the article.
http://tinyurl.com/ywvxsz
Cool!
I agree this is “cool”, and it should be sent to every Congressperson who favors a bailout, but perhaps it would have been even better had Mr. Viles mentioned that many bloggers have pointed out that renting is a very good option for many about to lose their houses.
They are not being “thrown out on the street”.
Why is this point lost on nearly everyone who pontificates on this matter in the public realm?
I propose a new “speaking” FB Barbie.
She says, “Moving is hard.”
Not to be confused with the Realtor Barbie. I’ll let others decide what she says….
(For those of us who are too young or too cosmopolitan to understand the reference, Mattel once had to recall a speaking Barbie doll aimed at the tween set that said, “Math class is hard.”)
Or how about:
“But my FICO is like 90210″
Securitized Debt Comic:
http://www.stockmania.com/2007_09_04_archive.html
LMAO!
Look! It’s Bernanke to the rescue:
http://www.ewmaa.com/images/bruceflying.jpg
Cloud of fraud hangs over investor
Regulators allege that a Twin Cities man is involved in investment and mortgage fraud. But his lawyer claims that his client is the victim.
“…LaFavre, 41, is also under investigation by the state Department of Commerce for violations of state real estate laws, after state and federal regulators uncovered what they believe is evidence of a multimillion-dollar mortgage fraud at a Burnsville firm. That company is LHS Mortgage Inc., which LaFavre founded.
In June, the Commerce Department permanently barred Ronald Clark Joseph, who worked for LHS, from originating or servicing mortgages. Earlier this year, two LHS loan officers pleaded guilty to federal wire fraud and money laundering charges.”
Full story at
http://www.startribune.com/535/story/1397068.html
Why am I smiling?…because this guy ain’t the “only” “Lone Ranger” to ride in the wild wild west!
“…Wiers said. “He continued to buy all those cars when we weren’t selling a whole lot of houses.”
“…and then it went dark”
“…One simple answer is that the spread of fear and panic is impossible to predict.”
Especially if you… “manipulate”…”distort”…”supress”…& “deny” what the “whole” truth is…i.e., the Fed “knows” “exactly” what the “sit-u-ation” is in regards to the “valuation” of all the “transparent” hedge funds & private equity activities…and then the FED readily makes all this “data” “clarity” available to the individual investor who has their $$$$ in securities. This is how the Fed prevents & protects “all” the “players” know as: “here-wall street-take-my money-and-make-me-more”
Remember, you don’t have to out-run the “bear” just the guy in front of you! 
“Remember, you don’t have to out-run the “bear” just the guy in front of you!”
I hope any lurking sellers hear this loud and clear. Better start cutting your asking prices folks - next spring is worlds away.
Next spring is worlds away — especially in markets like Chicago and Minneapolis, where the spigot is simply turned off from November to March.
Countrywide’s message of confidence turned to crisis
“We are experiencing home price depreciation almost like never before, with the exception of the Great Depression,”
Anthem Times - Sellers practically begging for an offer, this one isn’t even on the MLS. Seveal neighbors are listed in the $630k range.
http://phoenix.craigslist.org/rfs/412936757.html
“Will structure terms anyway buyer needs/wants which makes this a better buy than foreclosure (cash, then refinance) or short sale (banks are not flexible with terms). “
It was not too long ago (3.5 years) that a home over 500k in Phoenix metro was a small mansion for the wealthy and an expensive home for your average white collar worker would be 250k. Anthem and every other 400k+ mcmansion debacle are in for a world of hurt, but we already know that.
Told ya a few weeks ago they’d try to play catch up with beta (tech) stocks. They’ll probably be a nice short in early December.
The beta stocks NEED a price rise right now — many of the retail dotcoms know they’re going to have a terrible Christmas, the executives need to exercise options at the best profit before their Christmas report comes out.
I agree on shorting in early December and even early January.
My money will be “under the mattress” in full starting on Black Friday. It is my little kick to the fractional reserve-based credit system. I’ll take out $50,000, and I’ll reduce the available liquidity by $500,000 magically. Take that, Amazon.
Why the hate for Amazon? I like that company. One of the few who does everything right IMO.
Amazon.com is good place to shop but do you really like the stock?
Isn’t it the stupid market that has given Amazon its insane P/E? That said I certainly wouldn’t buy any Amazon stock.
FYI, Amazon is NOT a tech stock, it is simply a retailer….
Yeah, I bought Amazon in early ‘02 in the $9 area. It took a long time to get going. I also got it at $32 last year. I really think it’s a great company. I’ve never shorted it.
This one is in honor of the new quarter. (Remember the phrase “jingle mail”, for mailing the keys to your underwater house back to the bank?)
Christmas 2007 (tune of Jingle Bells)
——————————————-
Dashing to the store
There’s a poor guy in my way
Nailed him with my door
Don’t tip the valet
Buy the plasma now
Soon I’ll have that yacht
Jacuzzi party on the bow
But guess what I forgot
Oh, jingle mail, jingle mail
Fling it all away
Oh what fun it was to ride
The bubble of the day, hey!
Jingle mail, jingle mail
Wife left me today
Now I’ll move to South Central
And say “I’m in L.A.”
“Jingle mail, jingle mail
Wife left me today
Now I’ll move to South Central
And say “I’m in L.A.” ”
A Fairy Tale from a guy:
One day, long, long ago, there was this woman
who surprisingly, did not whine, nag, and bitch……..
But this was a long time ago…..
and it was just ONE day.
The End
Dear kckid:
What is your problem? Why are you always posting antiwoman remarks? Is it because girls don’t like you, or just because you’re gay?
-Big V
New Quarter?
Would you believe, “new third”?
hard work or handouts:
http://www.safehaven.com/article-8336.htm
It’s not even real money anyways!
Just back from the Durango, Colorado area - still expensive but lots of price reductions. Some small (under 10k), a few large (over 100k) - it appears the market is headed the same way as the rest of the country. One realtor was moaning that the market was still very good, but because of a slowdown in other areas, people who wanted to buy couldn’t because they had to first sell their homes - I’m wondering how, then, the market is still good? Same person who is always saying real estate is local, and SW Colo is “so very special.” Yup, it’s special, almost drowned in the HUGE rainstorm that came through, big lightning. Didn’t see many tourists, though friends in Moab say they’re having a great season.
I have never understood the allure of Durango. It is so remote and inaccessible. Its ok for tourists I guess (nearby Mesa Verde is cool). But who would want to live there?
agree - as a Colorado native, I’ve never even liked Durango that much compared to places like ouray or redstone. The traffic is impossible any more, worse than some cities.
I just spent several days in Durango/Dolores/Telluride. It was great! My uncle/aunt/cousins have an amazing life out there. Beats our quality of life in DC handily.
Anyway, my aunt also happens to be a RE agent. She’s doing very well selling land to people planning to develop big vacation homes, though she says that the 1st residence/local/existing home market is in the tank.
The problem with a place like Durango is that it is a days drive from any major city. Plus its in a major fire zone. We drove through there in 2002 and the air was thick with smoke. As we drove out on the million dollar highway we drove right past the burning mountain sides, and could actually see the flames from the road.
You’re right about the distance. I drove there yest. to take my camper to my new rental. It’s a 6 hour drive from Glenwood Springs, MOL, one-way, beautiful, but you don’t have to go that far to see stuff just as nice. I’m like you, never have figured out why Durango attracted anyone when you could live places just as nice (or nicer) and more centrally located. I’m moving to that area to work on a book, but otherwise would stay more central, someplace like Glenwood Spgs.
Hi Folks,
I’m a regular lurker here. Appreciate all of Ben’s hard work and everyone’s insights. Wish I had something to contribute, but I don’t know squat about real estate, I’m just another click monkey, and I’m afraid all I have are questions. Hope that’s OK.
What I’m mostly wondering about is land. Where does land fall in the cycle? By which I mean will land stay depressed until after the excess housing inventory clears up, or is it more likely that interest in land speculation will precede any rebound in housing?
As long as I’m here, I hope you won’t mind if I also ask your advice on my particular situation and plans. I live in a trailer on 39 acres about 30ish mi. NE of… Colorado Springs. Yeah, yeah - chock full o loons and not where I’d choose to live in the best of circumstances, but circumstances had other ideas and this is where I’m at. Anyhow, I bought in 2002, paid $99k, owe $78k, 30 yr. fixed at 5.75%. My payment is a whopping $525/mo., I’m just about done with the student loans and I have no other debt, so I’m confident I can weather just about any storm short of the Second Great Depression. The land itself is not so bad, an arroyo runs around the edge, have a couple trees and a couple tiny ponds (OK, large puddles), close to the highway. My plan (not the original one for what it’s worth) is to hang tight until I can save a bit and make enough off of this place to buy 40 acres of barren scrub in BFE (San Luis Valley, So. Co., or someplace similar), build a tiny home and live out my days as a cranky hermit.
I’m expecting the poostorm to peak next summer as the ARM resets kick in full force, but hoping that by 2010 or so things will start to crawl back towards normalcy and I might be able to escape around then. The growth out this direction has been ridiculous since I moved out here, and barring any more ill-considered military fiascoes and the accompanying $10/gal. gas (not an especially safe bet I realize), it seems like I might be able to pull this off.
Crazy? Well, about the plan anyway? Oddly enough, the market here doesn’t seem as decimated as the coasts or even in town. Zillow, Housefront, et al. have me pegged around $160k (yeah, right), but in the real world I might actually be able to pull $130k which wouldn’t be enough for the full retreat, but would be better than a sharp stick in the eye. Another factor is my current lame job which could likely be improved on just about anywhere else. Would it make more sense to try and bail now, move to the big city and make a living wage while renting, or stick it out and hope for a bigger payoff on some brighter tomorrow?
I’m really at a loss as to what to do and don’t want to end up like some trailer trash version of the mortgage broker/valet, working graves at the Amoco in Calhan just to hang on to my cactus ranch and luxurious single wide. Your thoughts and advice would be genuinely appreciated.
Heh, don’t hear that word around here often. Seriously though, many thanks.
squirrelian
Is the land farmable? Does it have water rights?
Um, farmable would probably be a bit of a stretch. 30 ac. hayable I’d guess, but not sure how it could be irrigated considering that it’s fairly sloped, bottom of a little valley. Grazable is probably the only thing I can say for sure.
The water rights are standard for A35 zoning, one home plus 1 acre. The existing well is great as far as residential use (10+ gpm almost indefinitely), but would be inadequate for anything beyond a hobby scale greenhouse or garden. I think it would be an ideal spot for a commercial greenhouse, but without any greenhouse experience I don’t know how I could convince anyone to finance it, and a super cheap visqueen quonset hut type would get shredded by the wind out here. I think I could obtain commercial water rights and handle the veggie growing side, but not terribly confident in my ability to find/coddle customers. If someone wants to loan me $300k I’ll give it a whirl though.
Lets see….
Its 30 mile NE of colo springs, out on the prarie. It will be a very long time before it could be considered viable for subdividing into houses.
It has minimal water rights.
I suppose that the only potential customer would be some one like yourself, who likes having some distance from the folks next door. But I could be wrong.
It doesn’
Ultimately it depends upon how much you enjoy the isolation. If you moved to 40 acres somewhere else, where would it be, and how would it differ from where you are now? What do you love about your current property? What would you change? Arroyos are always fun. Are you simply bored and looking for a change of scenery/social stimulation? Why do you not aspire to building your little house on the land you have now? Would it be suitable for your needs? Is its proximity to the highway a good thing (future development,) or a bad thing (future development,) for you?
If there is any way to pay off your property (or rent it out until you do,) I’d hang onto it if I possibly could. Habitable land, with WATER (and the hard-learned knowledge of how to live on it,) is not all that easily come by anymore. You might consider wind farming, growing a specialty herb crop, planting a cactus orchard for landscapers, raising pheasants, learning a tele-commutable job skill, setting up a sound studio, starting a dude ranch or badger farm, developing a hybrid grass for biofuel….or??? Thirty acres is thirty acres.
Good luck to you!
Buy some pink flamingo’s and add this addition:
http://www.tipi.com/
to your single-wide to enjoy in the more seasonal weather while you munch on:
“Neil’s Hot Buttered Derivative Popcorn”
Then do as you already suggested yourself: “…stick it out and hope for a bigger payoff on some brighter tomorrow”
Psssst: If anyone asks you about the future of real estate just repeat the following with an aura of aloofness:
It’s …”normalized”, it’s…”stabilized”, and it’s…”contained”
Heh, more of a minimalist moco kind of guy. Might get the flamingos though.
Well… this puts the count at one and one. All good food for thought though.
Any thoughts on when that brighter tomorrow may be? Three or four years seem reasonable to you?
I think Neil was being sarcastic, actually. I’m pretty sure Neil thinks you should sell.
A friend of mine always said, why not live where you want to be? Life’s short. Sell now and go wherever it is you want to be and rent, get a job, and watch the market. You may find something sooner and cheaper than you think. Don’t stay in a place just because you have a little security, you can create security wherever you go, if you’re reasonable about your expectations, and you sound like you are. Just MHO. Also, I think you’ll find prices in BFE cheaper than you may think, esp. in the San Luis Valley, where I’ve seen some pretty nice places for less than 100k.
So true, so true. Eep… I know there’s a pair of stones around here somewhere…
FWIW - I completely agree with everything said by Lost in Utah at 2007-09-04 11:07:58 .
but not the rest of my comments??? whatsupwiththat????? LOL
My recommendation is to go find an honest appraiser and get a highest and best use analysis on your acreage done.
Not sure how everybody in CO lives, but for all intensive purposes 39 acres is way more than a typical person needs relevant to single-family residential needs.
Depending on zoning requirements, I say put the mobile home on 9 acres and go subdivide for a pair of additional 10 acres houselots.
Hopefully, the mobile and the 9 acres will cover your note with the bank.
They won’t go for a split if their equity position is compromised.
There’s always somebody lookin’ for a decent reasonably priced building lot. As you note, the land is reasonably good.
JM2C
They are still jawboning rate cut on CNBC. Still waiting for the rate cut like it’s what’s going to save the economy. Where’s my TV brick (anyone else remember those)?
‘Still waiting for the rate cut…..’
Sounds kinda cargo cultish to me.
Just throw your TV set out the 2nd story window. “I’m mad and I’m not going to take it anymore!”
There was actually a pretty hot exchange.
Cramer was filling in for Mark Hanes(?) and was continually beating the “cut rates now” drum.
The bond guy and the general econ guy kept asking… Voulker used a recession to get inflation out of the system. What is wrong with a slow period if it helps remove these repetative asset bubbles from the system?
Cramer would side-step the issue with some goop, and return to the “cut rates beat”… They would again calmly ask the question. Each time he was forced to side-step Cramer kept getting angrier and angrier. Cut to commerical.
Back from commercial, no Cramer. Guess he took his ball and went home.
“Guess he took his ball and went home.”
let me fix that:
Guess he took his bottle and went home.
Bankrate has turned decidedly bearish of late. In this “advice” piece, they encourage the Chapter 7 FB to consider mailing in the keys.
http://tinyurl.com/ypq6c8
1813 Shirewick, Las Vegas, NV.
From what I can piece together from the assessor pages, Brandi bought the place in 07/03 for $178k.
So far so good. Then in 02/07 she lost it to the bank for $330k!
Can you say HELOC?
Now, two weeks ago, Robin bought it from the bank for $303k. Awesome.
How to make millions in Real Estate each month… My system really works!
http://www.youtube.com/watch?v=0f6wrXXv8Zw
This warms the very cockles of my cold, cold, stucco-box-developer-hatin’ heart.
Notice, the “Newsletters” stopped coming out in Spring ‘06.
Nice.
Just another thing to take into account. There were 776 people arrested this weekend in Phoenix for DUI. From experience with co-workers, those people are looking at an average of about 8K + tent city jail time. I wonder how many of those were FB, who will have to pay the 8k in fines, court fees, lawyers, and education classes, increased insurance prem, etc.
AZ Cenntral
“…Close to 1,000 law enforcement officers and deputies participated in the statewide task force”
I take it that these were all volunteers, including the Justice costs and least we forget, the non-overtimed paid prison system employees.
Keep paying your Taxes America…and go see a Doctor at a hospital, just say your not feeling well…ask for the low-cost fast-trak examination… speak slowly and clearly…
This increase in revenue-hunting, which seems to be going on almost everywhere, will begin to put an even bigger hurt on bars and restaurants. My usual personal limit of one beer or glass of wine has shrunk to zero, not because of the cost, but because of the risk of a DUI. End result: I don’t eat out as much, because it’s just not as much fun. Bad for business. Maybe restaurants should consider subsidized taxi service.
and you just can’t win…
A yeaer ago Labor Day, I was coming back from a long trip, driving slow, late at night, and got pulled over for doing 45. This was in rural Colo. and not illegal (as some highways have minimum speed limits), and I wasn’t obstructing traffic (4 lane). The cop thought I might be drunk since I wasn’t driving like a bat outtahell.
He couldn’t give me a ticket, since I wasn’t doing anything illegal.
He forgot to ask for my driver’s license, which I’d forgot, and my insurance, which I didn’t have any papers for (a friend’s car). The real reason I was driving so slow is the car’s speedometer didn’t work.
This might have been posted yesterday. From the Atlanta Constitution:
“With credit and mortgage problems rising, Grosvenor has seen an increase in business at Speedy Recovery and repossesses a variety of vehicles including construction equipment, plumbing trucks and even realtors’ cars.”
http://tinyurl.com/3cj4×8
Re: Lender Owned Homes. How low of an offer can you make (one that they’ll consider)? There is a 2400 sq ft home and both yards are dead. They are asking $425,000, sold “as is”. Will they negotiate with you?
THe key is to NOT worry about whether they accept your offer. Offer what the house is fundamentally worth in terms of equivalent rent. Compute the total monthly carry costs (mortgage, insurance, taxes and maint.) and that should equal equivalent rent. Or for a quick rule of thumb, multiply montly rent by 120 (maybe 150 depending upon interest rates, etc…). You will be shocked by the “fundamental” value of the ome, but that is what you should be offering.
If you make a good, reasonable offer chances are that they will think you are being completely unreasonable and the offer won’t be accepted. Just wait and eventually home prices will come down to fundamental levels–and quite likely overshoot on the down side.
Maybe ask them for a price they’d extend a loan to you for
Just received a credit-card teaser from WaMu. Envelope says, “0% fixed APR on purchases until April 1, 2009 when you transfer a balance NOW!”
I haven’t opened it, but in the style of Johnny Carson’s “Karnak,” I put on my turban and sure enough, I can read what’s inside:
Dear Renter,
We are very impressed that you decided to remain on the sidelines during the housing boom and bust, when so many other unfortunates did not. We’d like to reward you, by offering you our Most Honored Customer credit card, with a virtually unlimited balance and NO — repeat NO — interest until April 2009! Why can we make this offer? Because we now realize that you had better sense than an awful lot of our former and delinquent customers and, as we seek to replenish our faltering pay-on-time cadre, we want you to join our ranks. Please respond soon! Please! Really please!
I haven’t seen this posted here so far:
http://www.nytimes.com/2007/09/03/us/03debtor.html?_r=1&oref=slogin
Basically some young Air Force guy with $68,000 in debt (in addition to a mortgage) volunteers to go to Iraq in order to pay down his debt.
Lots of guys with huge IRS tax bills do some combat infantry service time and get to start over…if they survive.
Good for him, but sad in general — especially for the ones who bought a house with an ARM, during the bubble.
happy for you DCBob! my rent will go up 3% but still it’s a bargain, as my multiple is 390. i’m in manhattan, and the same company is selling exactly the same type of apartment in the same block.
i’m hoping for a catastrophic bonus year, so prices in nyc go nose diving.
Ok, my husband and I are English majors, so forgive me. How do I compute the “total monthly carry costs (mortgage, insurance, taxes and main., etc)”?
Thanks
First, you need “PITI” (Principal, Interest, Taxes and Insurance). You must make an assumption about the mortgage you would have. Assume 10% down, for this math. So you amortize 90% of the purchase price, including closing costs, over 30 years at a fixed interest rate. If your credit is great, you have few other debt payments and the mortgage is $400K or less, assume 6.5%. Assume 7.5% for greater than $417K mortgage or if your credit is middling but no big problems. To calculate this, you need either a mortgage calculator or a spreadsheet. Calculated Industries makes a great handheld calculator called the Qualifier II (or whatever the current model would be). Or you probably can find one on the Net; search for mortgage calculator.
To reiterate, enter Loan Amount (the 90%), 30 as the # of years, and 6.5 or 7.5 as the interest rate, then click on “payment. That gets you the PI in PITI.
Add to that amount the annual property tax divided by 12 and the annual homeowners insurance divided by 12.
That gets you PITI. Then you add HOA dues or condo fees plus maintenance — yard care, pool care, bug spray, replacement of stuff if the house is used.
But if all you want to do is compare the cost of renting to the cost of buying, I think most folks use a tried-and-true rent ratio, one of which is multiples of monthly rent. Judge your buying desire as timid or aggressive. In most areas, “timid” would be 100x rent, so $1,500 monthly rent would equal a purchase price of $150,000. “Aggressive” would be 150x rent, or $225,000 for the same house. “Bordering insane” would be 200x rent, but I don’t know of any poster on this blog who would pay that, even in better times.
TINFA — This Is Not Financial Advice — it is just my personal opinion and observations. Many posters here are a lot better at this than I, but it is late and it looks like no one else is going to answer your call. Good luck.
BTW, if you will be doing this exercise a lot, as in house-shopping, that handheld calculator would be a great acquisition. You can change any parameter and recalculate the answer without re-entering the rest. Should be able to find one on Amazon.
Go to http://www.dinkytown.com and use their rent-vs.-buy calculator. They break it down nicely for you.
Oops, I fell asleep in the middle of that thread - joy of grave shift. I wanted to thank everyone for taking the time to share your thoughts on my situation. Definitely some excellent points to ponder. Appreciate all your efforts. Is great to see that the intertubes still have something more to offer than Brittney’s cooter.
Take care all.