An Increasingly Turbulent Soft Landing
The Herald Online reports from South Carolina. “HSBC Holdings PLC on Friday said it was closing a Fort Mill-based unit that made subprime mortgage loans through independent brokers, eliminating 369 jobs in the Charlotte area. ‘It’s no longer sustainable and not the right place to allocate capital in the future,’ said Michael Geoghegan, HSBC’s group CEO, in a statement. ‘We said we would make tough decisions, and we have done exactly that.’”
The Atlanta Journal Constitution from Georgia. “A year ago, Fulton Concrete Co. stayed busy pouring basement walls, foundation slabs, driveways, curbs and other infrastructure in new subdivisions in metro Atlanta. Residential work has all but dried up now.”
“The housing euphoria of the last few years created an ‘if you build it, they will come’ atmosphere. Developers flooded the market with plans for new subdivisions. Now, the building boom, plus a rash of foreclosures and a slowdown in new home sales, has created a glut of metro Atlanta subdivisions where the slab, driveway, sidewalks and curbs are in, but little else.”
“As of June, the latest data available, metro Atlanta had a record 133,538 vacant developed lots, according to Metrostudy. That’s about three years of inventory. ‘How are we going to burn through that?’ said Bill Benzur, Fulton Concrete’s general manager.”
“Real estate wasn’t booming in metro Atlanta in the early 2000s the way it was in cities such as Miami. But the market, with low interest rates and eager buyers, was still perfect for Phillip E. Hill’s mortgage fraud scheme to milk millions from inflated home values.”
“On Friday, a federal judge in Atlanta sentenced Hill to 28 years in prison and ordered him to pay more than $41 million in restitution for running a conspiracy that involved loan officers and real estate appraisers and racked up $112 million in fraudulent loans.”
“Prosecutors said the scheme involved the sale of more than 50 homes and 250 condominiums in eight Atlanta-area condo complexes. ‘The sentence today does not replace the losses that were incurred due to this scheme,’ said Rodney E. Clarke, acting special agent in charge of the Internal Revenue Service’s criminal investigation unit.”
The Naples News from Florida. “A Fort Myers man has been arrested and charged with 60 felonies as part of what investigators say is a complicated real estate scheme that bilked investors out of $3.8 million.”
“Heckler is accusing of scamming over a dozen people in Southwest Florida. For nearly a year and a half, Heckler and Jack, through a company called Alternative Home Financing, worked deals to arrange financing for lease option to buy homes in Lee and Charlotte counties.”
“‘They were preying on people who wanted the American Dream of buying a home and couldn’t get a conventional mortgage,’ said Trish Routte with Crime Stoppers. ‘Then they lost all the money they had worked so hard to save.’”
The Palm Beach Post from Florida. “Jobless rates continued to rise in Palm Beach County and the Treasure Coast in August, a trend largely attributed to the cooling of the region’s housing market.”
“The state’s slumping construction industry lost 18,500 jobs over the past year. In Palm Beach County, the construction industry lost 1,300 jobs over the past year. About 100 construction jobs were lost in Martin and St. Lucie in the past year.”
“‘Given the weakness in the national jobs numbers, I take the Florida report as pretty good news,’ said Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida.”
The Herald Tribune from Florida. “Unemployment in Southwest Florida edged up in August, carrying the region further into territory not seen in decades. Southwest Florida’s sluggish housing market is clearly a major player in the higher unemployment. The subsequent effects that industry has had on businesses from restaurants to retail stores also play a major role.”
“‘Overall, this report is good news in the midst of what’s becoming an increasingly turbulent soft landing of the national economy,’ Snaith said.”
The News Journal from Florida. “As the area’s unemployment rate continues to hover at 4.5 percent, the mood in the local One-Stop Career Center has turned desperate, even ugly.”
“‘There are no jobs in Volusia County,’ Brandy Harris snapped.”
“The slump in the housing market continues to plague the area, hitting not only Realtors and home builders but other businesses. Even companies that aren’t laying off employees are enacting hiring freezes.”
“David Plaza, who works for a beachside time-share resort, said he has to find a different job. He is paid by commission to generate leads of people wanting time shares. But no one wants to buy a time share now. ‘My paycheck was $72 last week,’ he said.”
From CBS 4 in Florida. “There are a record number of foreclosures in South Florida in what economists are calling a housing recession. The foreclosures are isolated to homeowners who financed their property with subprime and adjustable rate loans.”
“At the time when maintaining a home costs more, residents are complaining their proposed property tax bills haven’t dropped like a rock as lawmakers promised.”
“Property assessments are supposed to reflect property values January 1st of this year. But that’s not happening, because much of the real estate data tax collectors are now using goes back to when real estate values were way up.”
“Helen Guerrera’s fighting mad and she’s trying to do something about it. The Brickell condo owner said, ‘They’re screwing us badly. It’s really awful.’”
“Guerrera’s property assessment was $593,000, which was increased $168,000 over last year.”
“Assessments on the value of a property is based on so-called comparable sales in a neighborhood, but criticism has been that those sales were based on high values before South Floridas’ real estate market crashed.”
“Broward realtor Peter Maloney says his house has been over-valued based on last year’s stronger sales. ‘The assessment is on the high side, and of course we’ve had such a drop in prices recently that it’s killing me,’ Maloney said.”
“Miami-Dade Commissioner Bruno Barreiro said, ‘We’re looking at data over a year ago which I think is incorrect.’”
“Property appraisers do believe assessments and tax bills could be lower next year.”
The St Petersburg Times from Florida. “The Federal Reserve’s decision this week to cut the short-term federal funds rate more sharply than expected to 4.75 from 5.25 percent was met with some decidedly mixed views in a sampling of Tampa Bay businesses and borrowers.”
“‘Hopefully get foreign investors in here to buy new housing and some of those condos,’ said Mike Kelly, owner of Kelly Pools in Indian Rocks Beach.”
“Kelly noted that there are numerous people in the building trade ‘out there starving for work. I get calls from subs every day looking for jobs that never used to give us the time of day.’”
“In theory, the Fed’s rate cut should be a boon for mortgage brokers. Lenders should be slicing mortgage rates, homebuyers would be lured by more affordable terms, and calls to mortgage brokers increase.”
“Tell that to Scott L. Clark. The president of The Loan Store Inc. in St. Petersburg says the rate cut won’t help him much because most of the alternative loan programs he specializes in have either tightened their standards or disappeared, thanks to the ongoing housing slump. These include riskier ‘no-doc’ and ’stated’ loans, which require relatively little financial disclosure from borrowers.”
“It would take a huge rate cut to rejuvenate The Loan Store, which began the year with 22 employees and a nice office. ‘I’m pretty much down to myself and my wife,’ Clark said.”
Passengers:
If you could please assume crash positions in preparedness for a crash, we’d really appreciate it.
We know you had a choice of vehicles to get you here, and thank you for flying…
Subprime Airline
Fasten your seat-belts. Place your seats and tray tables in their upright positions. Place your head between your legs and kiss your a$$ goodbye.
At this time, the copilot (waves hand, wearing parachute), will walk the aisle and will take valuables such as wallets, watches, and other jewelry in order to protect your assets.
For those of you in the platinum refi club, sit up relax, and have another drink on us. We the crew thank you for flying subprime airlines. We’re just going to have a little meeting by that rear exit door of this ex-Cuban TU-144.
Got popcorn?
Neil
just a few months ago Atlanta was supposed to be an 07 hot spot
“metro Atlanta subdivisions where the slab, driveway, sidewalks and curbs are in, but little else.”
When I have a house built I’ll use one of these somewhere……
I heard this week from one of our consultants that the Atlanta billboard now reads that there are over 120,000 homes for sale. Sherman shouldn’t have burned the town down. He should have just handed out subprime mortgages to all the plantation owners and let them burn it down themselves.
I think Atlanta will be o.k., prices are not out of line. Might see some immigration from some of the bubble areas.
Matt…hope you are right. Atlanta is a nightmare to navigate by automobile. Haven’t been there in four years…have things improved?
Best,
Leigh
Atlanta traffic is worse over the last 4 years and yes, they do have bubble problems due to overbuilding.
We’re also running out of water. It’s a great place to live if you’r a cactus or a camel.
Matt — if prices there are more than 16-19% above what they were in 2001, then they were bubbly. Looking farther out in the Atlanta exurbs, I see prices that are up 60-100% in that time. That the bubble is not as big as Florida’s or Cali’s doesn’t mean prices in Atlanta won’t fall, nor that they won’t fall sharply, IMO.
I think Atlanta looks a lot like Austin 1985-86 with over building. Outside of the Perimeter is going to get nailed at least 20%-30%…worse in the southern suburbs/exurbs. In town, lesser areas will get nailed as well. Even the highest quality, close-in (3-5 miles or less from downtown-midtown-buckhead-perimeter business districts) best neighborhoods have 10%-20% esposure, but will come back much faster than most of these suburbs. Condos will get hit hard as well…but
An energy crisis or even a dollar crisis which drives oil prices up a lot or forces gas lines/rationing will kill the outer areas badly with a few possible enclave exeptions. Kill = 70%-80% depreciation –> the new slums. This would actually help the closer in condos which I believe will be fully occupied at some point in the future - some may even hold up as luxury while most of the 6000 sf McMansions 30 miles out become multi-family slums or farm worker housing.
“B-52″ Ben B., this week, just helped move us along this trajectory with the rate cut. $150-$200 oil and $2000 gold will not help these people in these large homes out in the huge expanse of Atlanta suburbs / exurbs. Their salaries won’t keep up and they’ll have to find other ways to keep cool / warm and to get around. I see wave after wave of foreclosures just like in Austin.
If Raleigh, Atlanta, Nashville, and SC are getting hit; as these areas still seem to have strong in migration…the rest of the country will get creamed.
Kill = 70%-80% depreciation –> the new slums.
I think you are spot on about the exurbs. Diced up tenement housing for speakers of Spanish.
Not sure I agree with you on the condos being fully occupied. I’ve lost count of the new towers in Buckhead. A friend of mine has been watching condos there now for about a year and has watched one place’s units go from 200k down to below 150k and it’s still falling. I think there is going to be some tremendous deals in a couple of years.
I’m an engineer and we did the MEP design for the complex at Lindbergh, it’s called EON now. They originally were touting it as a “green” building. All of the LEED stuff got VE’d early on and then it died for about a year. It just came back to life this past year under the new name apparently with new investors. sans the green promotion. Don’t know if you know that area but $300k for a shoebox there is nuts. That area is sketchy.
It will take time or an energy crisis…as people abandon remote exurbs that are totally dependent on cheap energy, those condos will be attractive. Of course, at a price that people can afford - unless the condo complex can convey a true luxury value that will draw the wealthy.
EON starts at $180K … seems about 2x too high. I think that area may make a comeback over time…and it isn’t the worst area even now. But who knows?
The middle and upper middle class will need to be beat up by an energy crisis here to get over their negative view of Marta (a good number already use it, though)….then, they may, en masse, take it over and use it. Someday we may even have the Beltway too….it’s moving too slowly.
“As of June, the latest data available, metro Atlanta had a record 133,538 vacant developed lots, according to Metrostudy. That’s about three years of inventory. ‘How are we going to burn through that?’ said Bill Benzur, Fulton Concrete’s general manager.”
I recall a few months ago somebody from Atlanta had posted a pic off on interstate that showed the number of homes for sale in an electronic sign. I was wondering how they was going to deal with that sign once it got to 6 digits, as it only had 5 electronic digits. Does anybody from Atlanta know if they simply pasted a “one” in front of the five digits, or did they add an additional electronic digit?
Thanx…..
Got 10% down?
They will have to borrow the sign from McDonalds-that ones goes up to billions.
lol,
Ow… must remember not to drink hot coffee while reading this blog. (wipes nose…)
Chuckle…
Neil
anyone have a chart of prices by year now ?
FL = 2004
CENTRAL VALLEY CA = 2004 ?
MA = early 05
etc…………..
I had a debate 2 weeks ago with a friend of mine who follows the stock market very closely. He said Bernanke can not lower rates because it will destroy the dollar. I told him I hoped he was right but I felt strongly that BB would not have the balls to do the right thing and hold rates, I knew that he would cut .25. But .50?, the market had only priced in .25 so BB was giving some people a gift.
Now a few days after this cut the dollar is indeed crashing, oil is up, metals are up. I really think this move by BB will be looked up as the last nail in the economy’s coffin(and not much help for housing either).
Does any body agree with me that BB must have taken a few “meetings” with the powers that be(whether bankers, builders, hedgefund guys-whatever) and “told” to step in line?
I always thought the feds. main job was to keep the cost of living stable and insure orderly running of the economy, not to insure that crazy leveraged investment schemes and ill advised RE deals do not go bust(as of course they eventually must and will).
Just my two cents(soon to be 1 cent with inflation).
“I always thought the feds. main job was to keep the cost of living stable and insure orderly running of the economy,”
I thought the Fed’s main job was to make a small cabal of bankers supremely wealthy. Mission accomplished!
“I thought the Fed’s main job was to make a small cabal of bankers supremely wealthy. Mission accomplished!”
Bingo. IMO this primarily because the Fed is a private, not public, institution.
— a publicly-funded private institution.
Not only that he has now become their boy or bit*h. You choose.
the Fed caught a distinct whif of impending panic in the air..
Remember, the fed is independent. Just as long as the president says it is.
Or to paraphrase Stalin, “How many divisions does the fed have?”
B-52 Ben is afraid of a deflationary depression…perhaps rightfully so. I believe he’s trapped. But a ballsier / better move would have been a .50 increase which actually may have lowered the 10 yr rate and 30 year fixed mortgages.
OTOH, we need the dollar to come down a lot to bring jobs back here … but no matter what happens, most Americans will have a significantly lower standard of living by 2015 - energy and food costs along with stagnant wages will ensure this.
His annual salary potential presently, as a time-share shill: $3,744
His potential salary, as a fast food employee: $13,000
A big step up, living la vida fast food
“David Plaza, who works for a beachside time-share resort, said he has to find a different job. He is paid by commission to generate leads of people wanting time shares. But no one wants to buy a time share now. ‘My paycheck was $72 last week,’ he said.”
At the rate he’s going, he could do doubletime … put up a sign on the resort’s sales office door — “Interested in a timeshare? Please ask for David at the Hardee’s on Route 5.”
Everyone,
I see a marketing opportunity here. Turn every condo and timeshare office into a Starbucks!
By the way, did condo hotels ever make it to Vegas? Talk about a made to order brothel…
Got popcorn?
Neil
How’s business?
Off 91%
“It would take a huge rate cut to rejuvenate The Loan Store, which began the year with 22 employees and a nice office. ‘I’m pretty much down to myself and my wife,’ Clark said.”
And to make matters worse, your wife is thinking of leaving. She just hasn’t mentioned it yet.
She’s decided to run off with someone with a dependable and relatively high wage job. The UPS delivery man.
Chuckle.
In all seriousness, this downturn is going to wreck 10% of the marriages in the US. Yes, there will be more divorces, but I subtracted out the marriages that were doomed to fail anyway. What the heck will this due to our already irresponsible society?
Got popcorn?
Neil
I’m more concerned about the poor animals out there. When all these people lose their homes to foreclosure and have to go rent somewhere, and most landlords anymore don’t allow pets, all these poor babies will end up at shelters or out on the streets.
It hurts my heart just to think about it.
That’s already a problem here in Phoenix. Many people who make those “midnight moves” are leaving animals behind in abandoned houses. Maricopa county humane society issued a statement a few weeks ago urging anyone hearing/seeing domestic pets in and around abandoned houses to report them. Unfortunately there’s no shortage of irresponsible creeps who treat their pets as disposable items.
Bachelors get ready! There will soon be a 27 month supply of trophy wives.
“There will soon be a 27 month supply of trophy wives.”
You aren’t kidding. But watch out for the baggage: single women bought starter homes at a much higher rate than single men throughout the bubble times. For instance, in 2003, one if five starter houses sold was bought by a single woman, while one in ten was bought by a single man.
I’d like to see reliable data supporting that claim. I sounds credible, based on what I’ve personally seen of the far more prevalent female sense of entitlement, and refusal to rationally consider the negatives and risks of buying.
AKron, thanks for bringing that point up. My local paper, The Chicago Tribune, has repeatedly run stories during the boom of single women buying aggressively. It will be interesting to watch what patterns the fallout will take in that regard.
Wouldn’t it be cheaper to rent a trophy wife for awhile?
“‘Hopefully get foreign investors in here to buy new housing and some of those condos,’ said Mike Kelly, owner of Kelly Pools in Indian Rocks Beach.”
- Mike would be better off buying a Powerball Lotto ticket than to hope for ‘Foreign buyers’. WTF!
This scheme has worked well for London Properties, which shot up some 60% last year and continue to climb, as Arabs and newly rich oil types from Russia buy up all the high end properties in sight. In fact, it has kept the English bubble from bursting a while longer.
Foreign investors read more than the average American. They know the game is over. Why on gawd’s green earth would they purchage a shaggy brown lawn? Or a granite/stainless steel condo? grrr.
One good thing about the bubble’s bust is that perhaps many from abroad will find out that “There’s nothing to see here” and “Move on”.
The last stage of a bubble is usually foreign buyers. But who could save Florida? Its too vast… and after Northern rock, I imagine Europeans want to diversify out of real estate just a bit…
The Arabs and Russians can delay the day of reckoning in London and New York. But where else are they excited about buying?
I guess we’ll get a bit of our oil money back.
Got popcorn?
Neil
Many of the suckers who bought in Florida the past few years were Brits. Then you have the massive housing bubble in Spain that makes the SF Bay look cheap. Those savvy foreign investors also bought most of the toxic CDO’s from 2004-2006
Those foreign investors are increasingly not coming to our country…
Here’s the standard operating procedure for a foreign national, upon arrival @ U.S. Customs
You’ll have a mugshot taken and all 10 fingerprints will be recorded as well.
The very same procedure we do, upon booking a suspect @ the police station…
They are staying away in droves~
“Ol Mike doesn’t to be too knowledgeable about foreign currency markets. Until the dollar is expected to be long-term stable or appreciating against the foreigners’ currencies, why would they want to buy here? Many of them are getting double-burned right now — their close-to-Orlando spec house is dropping like a rock in value and so are the dollars that they’ll get. I don’t think that will have them bragging to friends that US housing is a great buy, anytime soon.
“‘There are no jobs in Volusia County,’ Brandy Harris snapped.”
Sure there are jobs Brandy, just not the ones that you prefer to do.
ler
Brandy,
Your a fine girl, what a fast food employee you could be…
Nor ones that will allow you to even afford the garage at the prices these people are asking.
Oh, come on. There must be plentiful numbers of investment bankers and hedge fund managers in Volusia County.
Unemployment numbers are totally misleading. In the past, even in the 70s and 80s, those who signed up for benefits gave a fairly accurate reading of the job market. But now, with some many 1099s-commissioned sales folk,contract workers, self-employed service workers and the like, a good part of the job market is never sampled. Calculated Risk did a good post on this recently, will try to link it.
It suits the politicians, but it’s another crap number from the government.
NYC,
Trust me, I feel your pain. I can only imagine having these conversations when there actually ARE a ton of people with 10M dollar salaries looking to buy in your area…
All of which do pretty much nothing useful, just something that is extremely well compensated.
Honestly, that seems to be the American way anymore. The best paid people really don’t do anything useful (sports figures, actors/acresses, Paris Hilton (what does she do again??), etc).
Oh well… However, I don’t think that Volusia County has had a real influx of crazy hedge funders and actors recently though!
But I don’t care that I can’t buy. I see so many posts on this blog that are very angry because they can’t buy something. I don’t want to buy something. I am debt free, therefore I am free. I don’t want to give that away. I just don’t want all of these greedy buttholes to destroy our economy and destroy this nation.
“I just don’t want all of these greedy buttholes to destroy our economy and destroy this nation.”
Amen, brothah. Vote for Ron Paul.
Palmetto — ditto.
Like NYCBoy, I never before realized the feeling of being free that comes with renting. A buddy of mine has been renting since his divorce a dozen years ago and kept telling me how great it was. I didn’t believe him, so it’s logical that my owner friends now don’t believe me, either.
Interesting article in the link below on the nature of central bankers:
http://www.dailyreckoning.com.au/central-bankers/2007/09/21/
Also includes this telling remark: “But integrity in a central banker is like honesty in a politician or chastity in a prostitute…” Wow!
Dave Ramsey said last week that ALL Politicians are Blood Sucking Parasites. He is correct.
The question will be, “who will lead the world when the U.S. has to admit it’s broke?” Do we really trust China, Europe, the Middle East? Say what you want, but no other country could have had as much power as the U.S. the past 50 years and used it as sparingly, even admitting some pretty major mistakes. Imagine if the Soviet Union had had our capabilities. The thought of China being that powerful should frighten us all.
Gastronomically…
I’d take the Chinese over the Russians, being our masters~
What, you don’t like borscht?
I groove on Chicken Little Kiev, tasty
Have we all forgotten Tianamen Square? Did you guys not read about the 60 million people killed under Mao Tse Tung? You guys have no understanding of the Asian mindset(in Asia). Life is cheap over there. We make a big deal over five miners being trapped in a mine. They have thousands of miners dying every year in China. It’s no big deal over there. They use formaldahyde to preserve their foods. You guys are confusing Chinese Americans with the Chinese dictatorship, which has less regard for human life than al Qaeda or any other terrorist group out there. Look at the pollution of their rivers, toys, food, land and coasts. That should tell you something about their respect for human life
jerry, I agree with you 200%. I was just kidding with the borscht comment.
Snatch blade of eCONomy from hand, Grasshopper
“The thought of China being that powerful should frighten us all.”
It scared the daylights out of Mattel, that’s for sure.
It should, but it doesn’t. Too many people are concerned with American Idol and “experts” solving their problems for them. And it won’t until it’s too late. China is the first stealth superpower, and they’ve also duped our leaders.
It will not matter what we think or who we trust. China is setting itself up to be the power for the 21st century. So is Russia. When the Central Asia/ME/African oil spigots get shut off to N America and flow to China and Russia, game over. Probably will happen before 2020 even 2015 depending upon the US dollar, etc… Had we “won” in Iraq, perhaps this could have been avoided….now…we’ve shown the world we really are not as all powerful as we led on. Well, except for our nukes and neutron bombs….but then…
We’ll be the leading world power again if Russia and China go to war over central Asian oil… but it won’t look anything like the 20th century. More like a high tech version of the 12th century.
“It would take a huge rate cut to rejuvenate The Loan Store, which began the year with 22 employees and a nice office. ‘I’m pretty much down to myself and my wife,’ Clark said.”
No it would take a lot more than that. No income no doc option loans with a foreclosure guaranteed stamp on the application.
What WOULD rejuvinate the loan store are afordable home prices, so folks can start buying again and afford real loans with reasonable interest rates.
“‘Overall, this report is good news in the midst of what’s becoming an increasingly turbulent soft landing of the national economy,’ Snaith said.”
Yeah, if you’re a Pinocchio shill at UCF, it rules.
“‘Overall, this report is good news in the midst of what’s becoming an increasingly turbulent soft landing of the national economy,’ Snaith said.”
Told you this guy is a troll. He is knowingly mocking his audience.
Snailth
“The state’s slumping construction industry lost 18,500 jobs over the past year. In Palm Beach County, the construction industry lost 1,300 jobs over the past year. About 100 construction jobs were lost in Martin and St. Lucie in the past year.”
“‘Given the weakness in the national jobs numbers, I take the Florida report as pretty good news,’ said Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida.”
I know it has been posted before, but when housing is going like gangbusters then the local RE shills are quoted by the MSM that increases in housing related employment in an area is up by 5, 6, 8 thousand; but now that housing is dead in the water these same shills are quoted as saying job losses are only 1,300.
This is irresponsible reporting by the MSM. The least they can do is take these shills to task about this wide disparity in the numbers they are talking about, and perhaps engage them in a lengthy discussion as to what methodology is used to arrive at these very different numbers.
Got 10% down?
http://www.businessweek.com/magazine/content/07_40/b4052098.htm?chan=rss_topStories_ssi_5
Check out this great commentary on BB’s move in Business Week.
Great post! Felt like standing up and applauding after reading it.
Very good post .
Also ,I would like to add that the investors in these loan packages didn’t buy into a insured account ,so why is the government trying to act like a after the fact insurance agency against loss . Also if the loan investors have a problem with how these MBS accounts were marketed or rated ,than its a legal issue in my view . High yields always carry higher risk .
One of the problems is that mortgage loan investment was always a pretty stable investment in past lending cycles ,so the MBS market people and their models were selling based on a past record that doesn’t hold water if the lending changed .Loans based on real estate always goes up and you can always refinance this liar low down loan is not how loans were made in the past .
I just sent the Business Week article to Jim Webb, Mark Warner and my Rep, Thelma Drake. Everyone in office should read it if they already haven’t.
Poor, poor Fort Mill, SC. This was a nice sleepy old textile town. The textile mills don’t run any more but it was still a nice place with good parks and a nice little downtown street. The housing mania will destroy Fort Mill. How many nice places will be destroyed due to the maniacal building that has gone on the past 10 years?
“How many nice places will be destroyed due to the maniacal building that has gone on the past 10 years?”
Our area hasn’t quite been destroyed, at least not completely, but the developers have really done a number on the community. I hate faux stucco with a passion.
“As of June, the latest data available, metro Atlanta had a record 133,538 vacant developed lots, according to Metrostudy. That’s about three years of inventory. ‘How are we going to burn through that?’ said Bill Benzur, Fulton Concrete’s general manager.”
There is a lot of overcapacity not just inventory in the housing industry. Everyone waited for things to turn this spring. It has, but not in the direction the industry hoped.
“There are a record number of foreclosures in South Florida in what economists are calling a housing recession. The foreclosures are isolated to homeowners who financed their property with subprime and adjustable rate loans.”
Seems to me that covers a lot of people. Did anyone in the last 5 years get a fixed rate mortgage?
Shockingly enough, the answer (at least in S. FL, my area) seems to be “No”. I can honestly say that of the 5-6 couples I know who bought in the last few years, not a SINGLE ONE of them used a 30 year fixed rate loan. NOT ONE.
This is doubly shocking given that interest rates were at historic lows; where in the heck did you expect this to end up? It’s like taking out a fixed rate loan at 30% interest, WHY?? They have nowhere to go but down from there (at least historically). Why take out an ARM when the IR is 1%???
Yeah, I feel the same way and I feel these are the reasons people used these crazy rates even if they could afford a fixed:
1)First of all Greenspan in the mid stages of this thing encouraged the use of these liar loans and ARM’s if any one remembers that, probably at the behest of the bankers.
2)In pricey areas no one could afford a fixed rate, even at low rates and they just expected to either sell up to bigger house or refi. in a few years. They never thought the check would come. Well, as we all know this strategy only works if prices keep going up and as a wise man once told me,” nothing grows to the sky.”
3)Last BUT NOT LEAST-GREED. Even people that could afford a once in a life time low fixed rate took the teaser rates so they would have more disposable income to party likes it 1999-TV,s, cars, trips. My boss who lives in Dallas could have easily gotten a fixed on his new home but said his outlay was less with the zero interest for the first year or something like that, plus he got a LIBOR and I had to listen to him bitch for the last year how his libor was going up ever month.
TAKE YOUR MEDICINE-this will be my battle cry this year-the only way out of this thing is lower house prices-the home market is sick-lower prices are the MEDICINE!
This is doubly shocking given that interest rates were at historic lows; where in the heck did you expect this to end up?
I never understood this either — why not go for the conservative choice of the 15 or 30 year fixed?
When I owned (2000-2005), I had lots of people, both “financial professionals” and friends / neighbors / etc., ask why my ex and I didn’t choose an ARM or refinance into an ARM or I/O. I’d do my one minute spiel about affordability, historically low rates, building equity, future uncertainty (I’m sure most people here have done some version of The Spiel) — and invariably I’d get a puzzled look … at best.
Gah!
ARM’s were readily available when we built in the late 80’s, but we chose 15 year fixed even though the ARM would have been a lot less payment. We could have built a bigger house getting a 30yr ARM, but we had a financial plan to pay our house off faster and a 30 year wasn’t in it. We did pay it off a year early and years before we will retire. The problem with live for today and don’t worry about tomorrow, is that when tomorrow comes you’re screwed.
“Did anyone in the last 5 years get a fixed rate mortgage?”
My daughter and hubby did, but only after they came razor-close to getting burned big-time on the re-setting Libor ARM they had on the house they sold. For the new one, they took out a 30-yr fixed. Lesson learned and never to be forgotten.
“Helen Guerrera’s fighting mad and she’s trying to do something about it. The Brickell condo owner said, ‘They’re screwing us badly. It’s really awful.’”
“Guerrera’s property assessment was $593,000, which was increased $168,000 over last year.”
These same people want the higher price when they sell. I bet there have been many sellers who have gone to assessor’s office for a taxable value reduction while at the same time asking for a 2005 price.
Well, honestly, in this case, I think that I have to break from the pack of HBBs. I think that the “assesed values” numbers that these people are using are totally out of line in some cases. Also, the appraisers are their own fiefdoms; Palm Beach/Broward/Miami-Dade, they all appraise differently.
What’s the solution? We just need one more step in the appeals process… If you appraise my home at what I feel is unreasonably high; and I go all the way through the appeals process and still don’t get it lowered to a reasonable number; at the end of the process I am given a choice:
1) Pay the taxes.
2) Sell the home to the county at the assesed value.
The county MUST buy the home; and must buy it at assessed value. No wiggle room at all; however, they will be given EVERY opprotunity to lower that assessed value before being forced into that situation.
That would be the end of that problem, no doubt in my mind.
“1) Pay the taxes.
2) Sell the home to the county at the assesed value.
The county MUST buy the home; and must buy it at assessed value. No wiggle room at all; however, they will be given EVERY opprotunity to lower that assessed value before being forced into that situation.
That would be the end of that problem, no doubt in my mind.”
Michael — I agree, 100%. Because it is logical and fair, there unfortunately is no chance that it will come to be.
Wow: That Philip Hill got 28 years for his fraud. That is one long time to repent at leisure. He is 51, so will likely die in prison.
Since he is a non-violent offender he will be out in a few years.
Nah, fraud is considered worse than murder by the powers-that-be, as it affects them more. He’ll be in a long while.
Betamax — that is a very interesting point of view. Worth researching the statistics. I wouldn’t be the least bit shocked if you were proven correct.
I agree with the REIC that this will be a soft landing.
Yep, deep do-do.
“‘They were preying on people who wanted the American Dream of buying a home and couldn’t get a conventional mortgage,’ said Trish Routte with Crime Stoppers. ‘Then they lost all the money they had worked so hard to save.’”
Save=conventional loan. I do believe (as illustrated above) there are many, many unethical people operating in finance. What ever happened to, “If it sounds to good to be true, run, run, run away?”
There MUST be an enormous amount of folk out there that can’t punch their way out of a wet paper bag! The ignorant fall prey to the unscrupulous. Don’t get me wrong…I grew up VERY poor, and poor does not equal ignorant. I really want to pull these dolts by the ear and set them in “grow a brain” time out!
You know, you just can’t make this stuff up. (Note to self: quit saying that).
“Guerrera’s property assessment was $593,000, which was increased $168,000 over last year.”
That would be a 39.5% increase in property assessment value from one year to the next. Sounds about right for south FL, since RE down there always goes up.
/sarcasm
And, not to start a long standing argument between myself and other bloggers; but the simple fact that this can happen shows the lunaicy of the FL tax system.
My assesed value can go up 1000X from one year to the next, I couldn’t care less. The part that everyone in FL has forgotten is that there is a MULTIPLIER for that number.. So, I don’t care if my property is assesed in yen; as long as the MILL RATE is adjusted and all the properties are fairly valued.
39.5% increase in “value” also means a 39.5% increase in TAXES in FL. That’s insane, why on earth does it take almost 50% more each year to provide exactly the same services? Even if property values were going up legitimately at a very high rate, the mill rate should be coming down at exactly the same pace on the other side of the equation. A concept lost on almost all FL politicans…..
Without getting into the tax thing, Mike, as I noted yesterday, it would seem that much of the increase in value has been based on bogus values generated by fraudulent “cash back” loans in certain areas. That’s what gets me, you have people paying exorbitant taxes as a result of assessments based on fraudulent transactions. As yet, I don’t see any of our illustrious local govs taking this into account. They are smugly telling people to stuff it and go through the appeals process.
That’s insane, why on earth does it take almost 50% more each year to provide exactly the same services?
Michael Fink, I know many readers of this blog already have a good understanding of why gobmint requires more dollars spent for less or the same services rendered every year.
But I have an insider’s perspective on this.
I spent more than a decade of my working life at a Fed bureaucracy. I left for several reasons, but partly because I could no longer stand working next to these lard a$$ed people who were on “light duty.” “Light duty” means you show up for work and in between your clock rings you watch everybody else working while you sit your lard a$$ down counting sheep in your head for eight hours.
Then there are the light duty lard a$$es in the making; those who treat their multiple symptoms from their gross obesity by showing up to work with a concoction of pharmaceuticals.
Then there is the catch-22 of competency; those who can do the job can not get promoted because then only the incompetent will be left to do the job.
The manner in which this Fed bureaucracy trains their managers does not help either. They train them to ride the backs of the good workers to make up for the worthless workers. The more work you do the more work you get, but the less work you do the less work you get. The workplace becomes a nightmare for the conscientious workers.
Totally worthless coworkers who are accomplices to the killing of on-duty police officers do not go to prison. Instead, the judge rules that the Fed bureaucracy must keep these people “gainfully employed.”
Managers engaging in fist fights on the premises do not get fired. (Although this is one of the very few sure ways that the rank and file can get fired.) Instead, the rank and file who complain too loudly about this get disciplinary action.
This is what happens when firing people is not available as an option to an employer, and I suspect these are the workplace dynamics that take place in many state and local gobmints in the nation.
The question will be, “who will lead the world when the U.S. has to admit it’s broke?” Do we really trust China, Europe, the Middle East? Say what you want, but no other country could have had as much power as the U.S. the past 50 years and used it as sparingly, even admitting some pretty major mistakes. Imagine if the Soviet Union had had our capabilities. The thought of China being that powerful should frighten us all.
What rubbish.
Why is that?
I don’t know if any one country or bloc is in any position to “lead the world” these days. Countries have to learn to lead themselves, first. However, at this point it seems to me like the best job is being done in Scandinavia.
“I don’t know if any one country or bloc is in any position to “lead the world” these days.”
And just wait to see what that can bring. I don’t know what Snick’s amazingly eloquent post meant but the destabilizing effect the housing nightmare will have on the world is its scariest attribute. History has shown that in times when there is no clear leadership you will get a lot of bad guys doing bad things. Expect regional wars and instability at every turn. The leadership of the U.S. has not been anything near perfect but we are about to find out what the alternatives are. That is a frightening proposition.
Who says it is our job to police the world? We have enough problems of our own as it is. Let the Japanese or Germans do it. We have spent hundreds of billions to bring democracies to Western Europe, Japan and S Korea. We’ve also made plenty of mistakes along the way. since everyone only points out the mistakes, maybe we should let them see how much freedom the world would have under the Saudis, Iranians, Russians and Chinese.
Japanese or the Germans will not do squat. Neither will India. The Saudi use their money to buy other country’s armies, etc. They ain’t got the manpower or expertise to do squat. The Iranians are regional troublemakers. That leaves the Russians and the Chinese. We’re going to need our armed forces just to defend ourselves.
Amen, Jerry. The abysmal ignorance of Bush & his neo-con cabal and their utopian schemes of “building democracy” in the part of the world most unsuited for it, has cost this country dearly and will continue to cost us for a generation.
Your choices in the next election: Tweedle-Dee, Tweedle-Dum, or Ron Paul. It’s as simple as that.
China or Europe would probably do a much better job than we have lately. And not being the biggest and toughest on the block will provide Americans with a new degree of empathy. It doesn’t feel too good when the other side is holding a gun to your head, and you are powerless against it.
Our power has always been in our decency, our ability NOT to use that power when we could have. I thought most Americans knew that but I was wrong. Iraq proved that.
True power only comes when we choose NOT to use it. That is what made this country so powerful and loved during the Clinton years, and it is exactly why we are so hated today.
Frankly, with what I have seen the last 5 years, China or Europe couldn’t be any worse. In any case, it is a non issue. We have already lost our grip on ultimate power. Some just haven’t figured it out yet. And this is exactly why so many of us trying warning people that Iraq would be a disaster for us.
Now the world knows we can be defeated. This is precisely how the Soviet Union fell. Afghanistan showed their vulnerabilities. We have shown ours.
History may one day conclude the USA and Soviet Union engaged in a deadly game that ultimately claimed both super powers.
I don’t agree about China being that trustworthy but I think this is a really good post.
I second that, NYCityBoy. joemomma’s post is awesome.
“True power only comes when we choose NOT to use it.”
Just awesome. Thanks, joe.
” … but I think this is a really good post.”
Ditto.
Thanks. These are interesting times.
That is what made this country so powerful and loved during the Clinton years, and it is exactly why we are so hated today.
We were so loved that they bombed the WTC in 1993. Don’t forget the love they showed us when they killed our soldiers in Somalia and dragged their bodies through the streets while crowds danced in the background. Then our lovers blew up our embassies in Tanzania and Kenya in 1998. They also killed 5 of our diplomats in Pakistan in 1998. Then they blew up the USS Cole while it was refueling in Yeman in 2000. I’m sure I left out some of the other acts of love that the world showed us.
Just look to our fearless leader. I’ve always said that when you have all the money you could possibly need the only thing to strive for is power. It definitely went to his head.
China? Perhaps you haven’t heard about Tianamen Square or Tibet or the atrocities against the ethnic minorities in Western China? Even the Africans are complaining about the Chinese and said that they would rather have whites running the continent than China. Maybe you haven’t heard about the harvesting of organs from political prisoners in China? Slave labor, child labor, toxic food and toys in a totalitarian dictatorship. Yeah, the world is better off if china was the leader. What world do you people live in?
China…decency? Try googling China and Africans. The Chinese are buying mines etc. in Africa and employing locals to do all the work-7 days a week, 10-12 hrs a day for squat wages. If you observe how the Chinese treat each other, you can forsee much worse for “outsiders”. The Chinese have always been deeply racist–witness their actions in Tibet or against Vietman. And that’s against fellow asians. The middle kingdom is just that–the whole world.
The USA lives in a unique position on the planet. We are an island nation with considerably less powerful neighbors. Europe, Russia, China, the moslem world, and even Japan have major advasaries at their doorsteps. If we do retreat into “isolationism” again, we will be able at criticle junctures add our power the side we favor in Eurasia.
Note we joined Napoleon against the British Empire in 1812. We tipped the scales in WW1 and 2 preventing German dominance in Europe and Japan (WW2) in Asia.
We may drop from the position of king of the world to king maker again.
A huge debt default may make america stronger as debts are wiped out, new technology can replace the old and our people will be leaner and meaner. It happened in 1780, 1840, 1890’s and 1930’s. You have to love Kondratieff.
You don’t want the Chinese or Arabs leading the world. The Europeans would be ok, but they don’t have the ability or will. As Teddy Roosevelt said, speak softly but carry a big stick. The Europeans don’t have that big stick. Everyone here only looks at the world through Western eyes. You think we are so mean and terrible, look at the real atrocities in the world the past 30 years.
Are you telling me you wouldn’t mind having the Saudi Wahhabis running the world? How about Kim Jong Il? Maybe the nutjob from Iran? How many Russian journalists have been murdered for writing unfovorably about Putin?
Tell me how many countries have the Chinese, Russians, Saudis or Europeans helped stabilize or free?
Here is a short list of countries the USA helped:
Germany
South Korea
Japan
France
Belgium
Italy
After WWII, we left Western Europe as free democracies, while the Russians kept Eastern Europe under dictatorship. We left South Korea as a prosperous dictatorship, while the Chinese kept North Korea under a brutal dictatorship.
Jerry, you are right, China would be truly frightening, but I do agree with joe says wielding power.
I agree with the walk softly part. My other point, that snick seemed to disagree with, was the frightening thought of who will hold these negative forces in check if the U.S. shoots itself in the foot. The Europeans are weak. The Russians are thirsting for a rebirth to their expansionist empire. The Chinese have a thirst to dominate. It could get very ugly.
I don’t understand how people give Clinton such a free pass. He didn’t have to deal with 9/11. His attempts to deal with the embassy bombings, WTC part I and the USS Cole were all pretty feeble. Of course his feeble gestures seem better than the complete failure we’ve seen in Iraq.
I spent too much time explaining why I thought the original post was crap but it seems to have disappeared. I agree with you about the Clinton free pass. WTF?? I happen to think that if the whole world loves us then something major is wrong. A fair portion of said world would love to see us evaporated. That’s why I thought the “our power has always been in our decency, our ability NOT to use that power when we could have” line was such a joke. How long would Israel last if that was their attitude?? About a week.
The world knows we’re defeated because there’s a significant element in this country that is trying to defeat their own nation, turn it into just another nobody. Unfortunately assistance has been given to that by the screwup in Iraq. Going into Iraq was an excellent idea, sadly because we f**ked it up we probably won’t be going elsewhere for a long time, if ever, such as Syria and Iran. I happen to believe the US and A has by and large become a nation of spineless pussies who won’t do what is truly right. And the fact is, doing what is right sometimes involves bombing the living s**t out of somebody. And in the world today, there’s a lot of Al-Quaeda supporters and sympathizers who deserve nothing other than the Mother of All Bombs shoved up their a**. Sadly, that will never happen.
As I said in the lost post, thanks, I feel better now.
Thank you Blano! I agree 100%.
This bomb?
http://en.wikipedia.org/wiki/B61
“What rubbish.”
Thank you.
“Helen Guerrera’s fighting mad and she’s trying to do something about it. ”
Yeah yeah, yadda yadda …. thats what Tallahassee politicians hear from anyone who isnt: 1) rich 2) politically connected 3) strong voter block, like AARP,Bar Assn, or furious child support mothers (costs counties money doncha know pursuing all dem baby daddies). Taken a look at the size of the yellow pages in the Tampa Phone Book lately under Attorneys ?! HA HA !!
Now tell me just WHO controls the state !??! HAHAHHAHA
Helen can get “fighting mad” all she wants but unless she is a member of a special interest group in FL, she’s wasting her time.
Meanwhile, keep paying those taxes to support a huge army of govt workers, because Florida’s motto is ” why use just 1 person to do a job when 10 can make my turf ,,, err dept look even larger, and STILL manage to work at a snails pace, with an attitude”!
Yessir, keep on spending 10 million precious tax dollars to chase down 1 mil in overdue child support. Gotta set a precendent ya know. Cant have FL be seen as kind to slackers, nosssiree , why, those shrill harpies in the streets waving signs on Dale Mabry Blvd in Tampa could actually inspire people to VOTE.
Funny how all the deprived broke mothers leave the protests wearing designer clothes & driving new model SUV’s. Yes, very odd indeed.
((of course personal observations intersect with blog comments. Thats life.))
hilarious, actually
Maybe she can call La Raza, LULAC and MALDEF and tell them the greedy Gringos are denying her Constitutional right to own a house.
Hey Aquis,
of course your former gov, the illustrious Jeb, now works for Lehman, in their fixed asset division. You can’t make this stuff up.
“‘They were preying on people who wanted the American Dream of buying a home and couldn’t get a conventional mortgage,’ said Trish Routte with Crime Stoppers. ‘Then they lost all the money they had worked so hard to save.’”
Once again the greedy homedebtors are portrayed as “victims” and romantic “dream-chasers”… Unbelievable.
Plus this moron can’t even keep his story straight for two sentences. First he says the “victims” had to use an “unconventional” mortgage, and then he claims they had saved money for the purchase… Hello??
Who in their right mind would use subprime if not absolutely necessary (aka no savings and horrible credit). Ding, ding, sing!!! The answer iiiiiiiiiiiiissssss: FLIPPERS!!! Or ILLEGALS!!! Or FRAUDSTERS!!!
Dang, can te media be any more useless?
Here’s a concept:
If you can’t QUALIFY for a CONVENTIONAL MORTGAGE w/ 20% down….. YOU CAN’T AFFORD THE HOUSE!!! …. therefore you MUST RENT until you can!!
This “perpetual-victim” mentality is SICKENING!!
Lending Tree is advertising a 200k loan for under 1k a month, and there is a big notice at the top of the ad stating that no Social Security number is required. In other words, Lending Tree is trying to lure in illegal immigrants. I guess these loan people simply have no concept of honesty, honor, law, fairness, or anything else remotely concerned with right vs. wrong.
I saw the Lending Tree ads. But also I noticed this whole week that they don’t pop up when I sign onto the internet. Now every ad is capital one. Is anyone else noticing the financing ads coming up less often?
Funny how all the deprived broke mothers leave the protests wearing designer clothes & driving new model SUV’s. Yes, very odd indeed…
…hilarious, actually
Did you mean Hillaryous?
Got 10% down?
I know this isn’t a California article but I wanted to post some observations from the Sacramento paper this morning. First off, we have 3 New Homes ads sections in the paper today, I think it’s 2 normally. I love that the ads always use a headline like, “This weekend only!” and “Builder savings for a limited time!”. Sure, you mean until next weekend?
There’s a Tim Lewis community down the street from the house that I rent in Orangevale, CA. I’ve only been renting a couple months, and I’ve seen the prices fall pretty significantly. The lower end models that were first advertised (like 2 months ago) at “from 429,000″ are now listing at get this “from the high 200s”. I couldn’t believe my eyes this morning, I mean I knew they were priced too high for Orangevale to begin with, but I didn’t expect to see a 200,000 price reduction in less than 2 months.
Not only than, the JMC Homes ads are taking aim at the foreclosure listings. They have this giant page ad that has a picture of a foreclosed house on the left, and a new house on the right. The headline of the ad reads “? vs. New Home. They then proceed to list the disadvantages of buying a distressed sale, and the benefits of a new home. The ironic thing is, the picture of the foreclosed house that they’re using, looks like a new home, but with a bunch of signs hanging in front of it (”Foreclosure, Short Sale, Bank Owned, Auction”).
And lastly, I’m seeing several houses being vacated on my street this week, one family was loading up a pickup truck with everything but the kitchen sink, garage full of boxes plastic containers. And, a huge U-Haul drove by at 10 pm last night when I was watering the lawn, I usually don’t see those until the end of the month. Odd.
This reminds me how some business majors told me they were taught by their professors what advertising actually is all about.
Advertising is sometimes used to try to turn around your intended audience’s bad perceptions of your firm’s products or services.
So if you are a cell phone outfit with consistently low national marks for phone service by Consumer Reports magazine, what the CEO does is spend tens of millions of dollars in a nationwide advertising campaign telling people that his service has 5 bars anywhere and everywhere.
If you are a manufacturer of vehicles that is not recognized for reliability then you spend the requisite tens of millions of dollars telling people that at your outfit “quality is job one.”
And if you are a homebuilder stuck with homes that few can loan-qualify to purchase then you yell from the highest mountaintop “This weekend only!” and “Builder savings for a limited time!”
A smart consumer can deduce from these advertisements that the product or service being advertised is not worth bothering with.
Got 10% down?
How can you have a ‘turbulent soft landing’? Isn’t that like having a ‘gentle lynching’? Those words don’t go together in a sensible way.
RE: On Friday, a federal judge in Atlanta sentenced Hill to 28 years in prison and ordered him to pay more than $41 million in restitution for running a conspiracy that involved loan officers and real estate appraisers and racked up $112 million in fraudulent loans.”
Wheee Doggies…28 years bein’ Bubba’s bitch, while your -ex wife/GF is off enjoyin’ your dirty Caymen money with some other schlep.
Let’s have some more of this hangin’ judge justice!
Dang, hd, now I’ve got “coffee nose”. (late night, slow start to the day). Thanks for the laugh!
Dang them ,Dang them
They ought to take a rope and hang them
High from the highest treeeeeeeeeeeee
Women would you weep for me …dodupdo da doda
Roger Miller song
Y’all leave Bubba out of this.
Wheee Doggies…28 years bein’ Bubba’s bitch, while your -ex wife/GF is off enjoyin’ your dirty Caymen money with some other schlep.
We can only hope the ex-wife/GF drowns in the surf, or gets scammed by someone and loses all her money.
“Prosecutors said the scheme involved the sale of more than 50 homes and 250 condominiums in eight Atlanta-area condo complexes. ‘The sentence today does not replace the losses that were incurred due to this scheme,’ said Rodney E. Clarke, acting special agent in charge of the Internal Revenue Service’s criminal investigation unit.”
Notice that it this was an IRS criminal investigation. And where were the state & federal MORTGAGE BANKING REGULATORS who should have stopped this scheme BEFORE it happened ????
My guess is the regulators are one step below the FBs in the bubble food chain, and cannot even fog a mirror.
“‘There are no jobs in Volusia County,’ Brandy Harris snapped.”
So move someplace else, dumb-ass.