Bits Bucket And Craigslist Finds For September 26, 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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Excellent graph by NYTs to illustrate just how long & how much pain we’ve got to endure before we revert to the mean. Best guess, at least 5 more years of significant drops in value in addition to the inflation erosion. See you in 2012!!
http://tinyurl.com/26ppzz
Interesting graph, but the scale is anything but linear. Like most reports these days, the chart doesn’t start at 0 so you are left to assume that. It then makes the bubble look like 600% times the base line 1987 home, when in reality it is just 60%. It does make for a dramatic effect (almost like they are trying to scare people now).
Or more correctly, the scale is linear but the origin is shifted.
Previous low was 92 + prices often overshoot = god knows where the bottom is.
Yeah, I was thinking that if you just sort of floated the numbers down to the zero axis it would look the same. The peak happens to look taller because of the physical position of the page, but the housing bubble spike, in relative proportion to everything else is correct - right?
Yes. Just take the y-axis and continue down by the height of the peak + some more. Leave the shape where it is.
It still a whopper of a peak.
The chart doesn’t at all reflect how ugly the early 90’s were in terms of housing price declines.
exeter: I must respectfully disagree. The chart clearly shows that from 1991 until mid 1998 that housing was significantly below their reference point.
I think the problem is that the latest bubble’s upswing so dwarfs this long painful trough that it appears to minimize what happened in the 90’s.
I retort that if you know how bad it was qualitatively and if you see it laid out here quantitatively then you must have a shiver go up your spine because the back side of this bubble will make the 90’s housing recession look like child’s play and the good old days.
I did not suffer the 90’s pain, but I had many people who did. I was the benefactor of the residual affect of the 90’s pain by purchasing a condo in NOVA in 1998 at a price much lower that the 87-90 bubble peak, factor in inflation and it was a steal. Then I made a unrealistic profit in its 04 sale, it went up even more in 05 and now is at or below my sale price. So b/t the pain I benefitted from and learned first had from friends I will not touch housing for several years until all this clears out, and if that means I never own again so be it.
Well said Joe.
The chart looks like Eichorn Pinnacle, in Yosemite…
http://www.summitpost.org/images/original/8119.jpg
Get a rope
Wonderful post, aladin.
I’d like to see the chart overlayed with California data.
Me too - I think this would show a much larger increase and hence even farther left to fall.
that will be about 2050 for the EU property market then …
An interesting chart. The amplification on the Y axis actually shows signs that this bubble is going into a decay pattern rather than a classic bell, which makes sense, given the system suffered a severe shock in terms of rapid price increases driven by phony loans and EZ financing. If true, if could be a very long downturn, possibly on the order of 15 years or longer.
What does a decay pattern look like? (I know what a bell curve looks like..)
http://en.wikipedia.org/wiki/Exponential_decay
15 year decline - excellent…I’d be just about ready for retirement at that time. Maybe I’d buy a buy a beach house at that point. Cash.
Holy cow!
crashmaster - you’re back. I haven’t seen you here in probably 18 months, at least.
Where have you been? I was just thinking about you the other day… wondering if you’ve been enjoying the show in metro Boston.
Things are playing out as you hoped, I’m sure.
Are you still holding to 50% declines as a possiblity there? What does your model say today?
Yeah, but if it is a decay, then that 15 years could be meaningless. What matters is the half-life. If the half-life is 2 years, then prices will be x% over real intrinsic value:
Year Percent over inflation
0 100%
2 50%
4 25%
6 13%
8 6%
In other words, there is a sharp drop, followed by a slow asymptote. In my example, prices look pretty good at year 8. Of course, it all depends on your half-life and other asumptions in your model.
The take home message is: if prices are dropping exponentially, then the majority of the drop will occur in the early years.
I believe we will get the big drops the first 5 years from peak ,but than minor drops for another 3 to 5 years or a flat pattern for 3 to 5 years before you get any appreciation again ,which will be under 5% a year .
Alot of how the pattern goes depends on how fast the excess inventory is absorbed and how tight or not the lending is going to be .If BB takes the rates down to nothing than it might keep the extreme bottom from happening .
I’d say this is most likely. Right now, people are still clinging on with their last gasp, unable to drop the price below what they owe because they cannot bring any money to the table. Even as this happens, foreclosures and the crumbling builders are undercutting them. With in a year or so, I think the whole thing will start to fall apart at a much faster pace as the crest of the 1st wave of ARMS’s resets and finishes off any of the F’d Buyers who are still standing while the coming recession and job changes/loss will force others to sell even if they have to hand the keys over. The homebuilders will race to the bottom even as some of them go under, and eventually nobody will want to touch real estate again for years… and unless wage inflation happens, these silly days of absurd prices won’t be seen again for a generation. Somewhere in there will be a good time to buy, but not yet!
Looks awfully familiar to me:
http://tinyurl.com/2423r6
http://tinyurl.com/22yvbz
I’m thinking we’re in for about another 12-15 years of inflation-adjusted declines, and about 3-5 years of nominal declines
What I’d like to know is how much money Greenspan paid NYTs to make him look like the good guy in the captions compared to BB.
Pulte Homes (PHM) just broke thru it’s five year low (5 year low)
A great visual for this is Big Charts, PHM, 5 years, daily prices.
Pulte is on it’s way to it’s all time low of $5.00 and then maybe BK.
We’re Saved!!!
Naples and Ft Myers Area Realtors say the worst is behind us
There are so many people focusing on the too many negatives in this business and the cause and effect has manipulated a downturn.”
Of course, it had nothing to do with insane greedy speculation, fraud, and standardless lending. Nah . . .
A few sales but no mention of the inventory.
That is my sticking point too. Thousands of empty hopmes in every conceivable nook of the country with no hope of filling them any time soon…. modern day ghosttowns….
Not to mention afford ability. Everyone is moving for cost of living reasons. The tidal wave must have broken at work; for when I ask for new employees I get an earful on our shortage in California. Its getting worse fast.
Not that homes will drop in prices *that* quick. But soon they’ll drop as fast as they went up. 2.5% to 4% price drop per month.
Got popcorn?
Neil
Not to mention afford ability. Everyone is moving for cost of living reasons. The tidal wave must have broken at work; for when I ask for new employees I get an earful on our shortage in California. Its getting worse fast.
Not that homes will drop in prices *that* quick. But soon they’ll drop as fast as they went up. 2.5% to 4% price drop per month.
Got popcorn?
Neil
Which brings to mind an interesting phenomenon that occurred during the bubble: eminent domain laws being used against long time homeowners on behalf of developers, justification being that “improved” condo buildings, etc. will bring in more taxes. Wonder how many developments that went up or were approved as a result of eminent domain are now stalled, or empty, or abandoned or in foreclosure, thus becoming a liability to local taxpayers.
The reason I mention this, is that “affordable housing” is becoming a shill battle cry in some areas, like South Florida. So I have an idea: if eminent domain can be used to kick out long time owners of modest homes, why not use eminent domain in reverse to provide workforce housing in developments or condos that already exist, but have gone bust, instead of building even MORE unwanted housing?
How much longer before Realtors don cheerleading clothing?
Palmetto,
Check out the Marina Grande in Riveria Beach. I don’t think that they actually used eminent domain there, but they threatened it. Anyone willing to pay 300K+ for a condo in Riviera Beach is NUTS. That whole building is abandonded, they won’t need “reverse emeninet domain”..
That building (and many others just like it) will just become part of the slum that it was built in. No need to pass a law, the natives will integrate it into thier way of life before long!
why not use eminent domain in reverse to provide workforce housing
should be cheaper than building more.. But here’s a matter that I doubt many local govts will put a lot of thought into:
How much can we afford to shell out to acquire these failed projects?
I don’t wanna be a GF by association.
I guess I’d call myself a “liberal” (though if Hillary wants to bail out FBs, I’m voting Republican, even though I sort of want universal health care.)
But I’ve always been opposed to any measure supposed to provide “affordable housing”. The next town over from me in Sunnyvale, Los Altos, once tried to get some subsidized housing available for teachers, firemen, etc. Sounds worthy enough, until you realize it’s just a tricky way of keeping property values as high as possible! If there was a demand for some lower-cost housing, some might occur naturally. But having the government fill the gap for lower-income folks they deem “desireable” is simply an elitist move designed to further isolate the community from the world.
Of course Los Altos is a truly desirable place to live, and can’t be directly compared to Sacramento suburbs (where nobody really wants to live) that have become unaffordable to many.
Riviera Beach is a war zone, at least it was when I lived in South Florida. Marina Grande sounds like an excellent candidate for eminent domain taking, instead of building new “affordable” housing. That’s exactly what I’m talking about.
“How much can we afford to shell out to acquire these failed projects?”
I don’t know, but I’m sure it can be less than what we’d shell out to subsidize developer to build new projects. Didn’t I read something in one of the Florida threads a few months back about how money given to developers for affordable housing in South Florida had sort of disappeared, without much being done?
Riviera is still a war zone, not a thing has changed in the 5+ years that I have known/lived in this area. It’s one of the most dangerous places in the county to live; and, on top of that, it’s also very run down and ugly. It’s really the “worst” of what S. FL has to offer; it’s kind of a little he** right here on earth.
For those not from the area:
http://www.preconstructionnetworks.com/building.php?id=46
Basically, I think that we agree; I just don’t think that any “taking” needs to occur at all. Govt does not need to get involved in this at all. Just let the “hood” do it’s thing. It will suck that condo tower right back into the slums that are now Riveria Beach.
I think that these condos MIGHT sell for 100K at the bottom of the bubble. MIGHT! Asking 1M for some of them is just so ridiculous it pains me to put it in writing. Nothing like driving your Bently through a war zone every day to park it at your overpriced condo building.
Not to mention afford ability. Everyone is moving for cost of living reasons. The tidal wave must have broken at work; for when I ask for new employees I get an earful on our shortage in California. Its getting worse fast.
Everytime a Cali headhunter calls me I just laugh at him, and tell him that until housing becomes affordable in LaLa land I would never go back. I especially get a chuckle when thay act all surprised and try to convince me that I can too afford a house in California. “Don’t you have equity in you current house?”, “Not 500K”.
Sure I could rent, but even Cali rents are higher than what my mortgage payment is right now.
I would call those items negatives
“the cause and effect has MANIPULATED a downturn”
I hate when supply and demand collude to manipulate markets. LOL.
P’cola,…that’s a good one…LMAO
Wasn’t Ft. Myers/Naples the region that refused to report their numbers to the NAR? There was an article posted here a few months ago. Someone please refresh my memory.
Yes, I believe it was the Naples Board of Realtors that refused to release their data. Lest there be any doubt about the sorry state of real estate, especially Florida, read this report from Mike Morgan, a Florida based real estate analyst :
http://www.treasure-coast.us/weeklyupdate09-23-07
Yikes !
Mike Morgan, along with Ben and Patrick and a handful of others is one of the heroes of the housing bust. Look at what he has to say about Ivy Zelman…great read.
“The Wall Street Journal’s Mike Corkery does it again, as he touts the virtues of the return of Ivy Zelman. The title of his article is fitting, “Expert on Housing Has Her own Nest.” More on the nest in a moment. Corkery makes it sound as if Ivy led the way when it comes to the housing issues. Well . . . before you run out and plunk money down on Ivy, I can assure you she came to the party reluctantly and very late. She also had a rather sloppy track record for quite a few years prior to leaving Credit Suisse.”
If things are so great in Naples, why do they refuse to give out their numbers? For the past few months, the statistics from the FAR do not include Naples. http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/09-25-2007/0004669559&EDATE=
“See Naples and die”
old saying…
I wonder how many were sold back to the banks. E-mailforclosures currently lists 205 REO’s in Lee County, and that just might explain the sticky median price. I guess I’d be a bit hesitant about releasing data sources as well.
http://www.emailforeclosures.com/
Yeah right..why don’t they take a look at inventory…chances are the inventory rose as well…so ratio to ratio…the bottom isn’t even close…
Dollar in China, if the dollar keeps declining
http://www.stockmania.com/2007_09_26_archive.html
One ply black white and green goodness
Dollar chart over the last year:
http://quotes.ino.com/chart/?s=NYBOT_DX
Nobody seems to care.
You are awesome!
Well, thanks. I hate doing one like that, but nobody seems to care the dollar is going in the crapper.
I suspect you correctly identified one group who may care (the Chinese savers).
Crappy depreciating currency in exchange for crappy deffective products. Sounds fair to me.
Small wonder that they are pushing so hard for the NAU with a common currency. Mexico would become our new “China” and they would accept the TP du jour (the Amero) as legal tender.
This amero nonsense is a bit much…
The powers that be, north and south of us refuse to jump out of a plane, without a parachute.
That is my hope. I am certain that the citizenry of Mexico and Canada are opposed to the NAU (as they should be). The oligarchy, on the other hand, has much to gain from such a union.
I heard about the Amero my immediate thought was, what’s in it for Mexico and Canada? The US isn’t going to give up control of the money supply. If Mexico’s and Cananda’s fiat currency is going to die, it should be at least under their control and serve their purposes.
FWIW, the peso is for all practical purposes pegged to the dollar already. Mexican oligarchs know that their economy is joined by the hip to ours. So is Canada’s, but they have (so far) kept their house in order which is why the Loonie is doing well.
My understanding is that the argument goes something like: “Our economies are so intertwined that we might as well formalize the financial interation.” Like I said, this will be good for oligarchs and billionaires, but not so good for J6Packs in the US and Canada. Mexico would definitely love the escape valve that a fully open border would offer them, allowing them to export their excess population to the US and Canada without any impediments.
From USAToday, sales are going to get much worse:
Sales of existing homes fell last month to their lowest point in five years, the National Association of Realtors says. The NAR says it expects more dismal figures for September as the housing market reels from the crisis in the mortgage industry.
But the September figures might be much worse. Re/Max International, which analyzed existing-home sales in five major cities for USA TODAY, says September totals so far are down sharply from last year. In Baltimore, Tucson and Seattle, for example, sales in the first three weeks this month are off more than 40%.
http://tinyurl.com/23u9rq
“With sales falling for two years now, Yun says, “It’s my firm view there is significant pent-up demand.”
What is the going rate for selling yourself out, nowadays?
(fun)Yun is a complete idiot if one were to believe what he says and take his word at face value. If it is view that there is significant pent up demand, that would suggest that 2002-2005 was a normal supply and demand market. 2002-2005 was nothing less than a herd mentality follow the leader off a cliff frenzy. Any description less than that one is a lie.
“There must be a pony in there, somewhere…”
The problem with these NAR clowns is that they think 40% speculator demand or more that we got a peak sales years is a normal demand ,as well as unqualified buyers .
I guess true affordability numbers doesn’t mean anything to the NAR cheerleaders . There is always demand at the right price .These NAR clowns are basing their analysis on liar low down loans being available . Someone should ask these goofs how they expect this demand when lending is changing .
It’s not just speculators. IMHO a significant number of sales were no-money-down crazy financing sales to borrowers who, in normal times, might have qualified as first time homebuyers if they’d spent a few years saving up for a downpayment. So for years we’re likely to have reduced demand because those who would normally have been shopping for a first house in ~2010 will instead have a foreclosure from 2008 on their credit report. Somebody will probably make good money buying at bottom and renting out to those who can’t buy because they can’t get credit.
Just watched “Nightly Business Report” where the a**h*** CEO of Coldwell Banker asserted that a typical (?!?) 4BR house has declined in value by only 0.4% YOY, and that housing will bottom 1Q08. YAAWWWWNN. Happily I can report that just a few minutes after that interview was over, the hostess (Suzanne Pratt) used the words “mortgage meltdown.” Another guest interviewed later in the program pointed out that homebuilder stocks now stand lower than they did just before the recent Fed rate cuts.
Terrific, I’ve been waiting for Seattle to hit the wall.
Good… I very happy to hear Baltimore finally on the list of “dead men walking.” It is not “different here” and I am so sick of hearing people prattle on about how “housing should be very expensive” and how “DC makes us all rich” in Maryland.
They sell a few houses but never mention the inventory…
Which just proves that there are still some idiots out there that are able to obtain finanacing. It does nothing to dispell the housing bubble problem; just reinforces the idea that “A fool and his money are soon parted”.
Too many houses, WAAAYYY too many houses. My reaction, when I drive around and see all these developments, is one of faint nausea.
Something that occurred to me is that styles come and go. A lot of the mini-McMansion developments in FL, Sacremento, or LV may just not appeal to people now in their 20s who will be looking for a home in 5 years. They may opt for more urban living, for example. (It’s greener to live in a city and take public transit to work, etc.)
So some of these homes may never sell. They’ll be torn down, or rented out to section 8 people, etc.
I’ve driven thought (quickly!) many a neighborhood in New Jersey that had streets of once-nice homes, now crackhouses and abandoned shells. What makes people think this won’t happen again. Generally if something happens once, it will happen again.
In this country, it seems bigger is always better. Big homes will go “out” not as a matter of simplicity or greenness, but as a matter of financial hardship. In the 70s, cars got small when gas got expensive, not as a matter of pollution prevention. Small houses will come back when people can no longer afford the payments on big ones, and “afford” means to be able to pay at the absolute limit of one’s means.
But houses last much longer than cars do, even the cr*pboxes they put up these days. With the oversupply in alot of areas, the housing mix that we have today will be the housing mix that we have in the future. Yes, tastes will change, but in general more is more and less is less. The irritating thing is that older, established neighborhoods from the 60s-70s are likely to suffer more from an oversupply of housing than the new cr*p.
On the other hand, many of us in urban areas have been thinking similarly about cheap new condo construction — who will want to live in these things 10 years from now? How much of it will be turned into Section 8 / subsidized housing? How much of it will be torn down in the next 20 years?
The allure of an “urban environment” alone is not enough to guarantee value for a piece of residential property.
My point wasn’t urban vs suburban. It’s that tastes change and the style of home or condo they’re building today may not appeal to buyers of tomorrow.
How right you are. In the 1970s urban decay in Chicago was atrocious. Former mansions, built by craftsmen out of stone and fine wood - built to last forever - were boarded up. What makes anyone think that today’s gaudy Tyvek wrapped garabge is above a similar fate? Heck, out of sheer principle alone - the McMansions ought to someday be crack houses - if there is any justice left in this world.
Condos almost always get hit much worse than SFH in a downturn. In fully built SFH areas, there is no source of new construction supply. With very few exceptions that will never be true of condos. You can always knock something down to build upwards.
You have obviously never been to Las Vegas or much of FL if you think taking public transportation is an option. Well it is an option if you like waiting for a bus in 100 degree heat with gang bangers waiting next to you.
my nausea isn’t faint. I almost pissed my pants when I saw what they put up where the 10 and 15 meet in SoCal. MILES of houses crammed togather forever. Used to be open space. And such an undesireable area too…
“houses crammed togather forever”
Those McMansions crammed on the .2 acre lots or less remind me of stalls of cattle. The sentiment feels analogous to Sting’s commuting commentary, “packed like lemmings into shiny metal boxes”, in Synchronicity II.
That used to be one of favorite songs, due to those lyrics.
I guess 0.2 acres is small for a McMansion lot, but I am always amused reading the Morro Bay low-price listings, where lot sizes are proudly announced as 2400 sq ft. You know, like 1/18 of an acre.
New “Flash Gordon” series episode:
(Flash heads to the suburbs to find a newly arrived alien.)
Flash: “How come those aliens never stick around to meet the welcome wagon?”
Flash: “Nope! No aliens in the burbs today… except for the one we brought with us.”
And they’ll all seem to have non-functioning faux Italian window shutters, as an added bonus…
71% over 20 years. Wow, that’s a whole 2.7% per year even with the bubble. Imagine the 20 year return for someone who bought at the peak (or even now for that matter).
From the teachings of Warren Buffett: The price you pay for a security determines your rate of return. Buy at the top of a market and your rate of return is dismal. Buy at the bottom and your rate of return is outstanding.
The same principle applies to real estate.
Well said combo.
Sounds like just a fancy way of saying, “Buy low, sell high.” Hey, I could be Warren Buffet.
You have to come up with negative cost financing for a good 20 years (then your rate of return matters a whole lot less) for your claim to have much credibility.
Me and Warren sold our el lay digs in 2005…
What is this stuff I was hearing in the late afternoon, how Warren Buffett might bail out Bear Stearns ???
Don’t disregard the implicit returns from having a roof over your head. This factor roughly cancels out the financing costs.
I would prefer enjoying the “opportunity returns” from renting to keep a roof over my head, rather than incurring financing costs plus explicit home equity losses in a falling-price market. The home equity losses more than cancel out the classic renters’ problem of throwing money down the drain.
Indeed. A 4% decline in prices where I am means free rent while I’m waiting.
But the value of those returns is the value of the equivalent rent. The thing about housing is, unless you rent out a room, you completely consume all of it. A store has a 10% sale on banannas, so you decide to buy two bunches instead of one, then eat them all. Have you saved more, or have you spent more? In many markets these days, buying is SO much more expensive than renting, buying makes NO sense economicly.
You’re not getting my point. Housing bear I may be, but I wanted to point out that the 71% over 20 years does not take into account the implicit returns. You are welcome to price it as you wish, but I am guessing a 3-4% opportunity return is reasonable even with property taxes and maintenance over the long term, especially over the past 20 years.
You are right though that the future doesn’t look so good unless home prices crash back to ‘01 levels.
Regarding “consuming all of it”, that may be ok if you were to rent an equivalent place. But given the push to buy more than you can afford or need, I agree this is a waste and eats into the implicit return.
2.7% / yr [i]above inflation[/i]. If that had been the trend (instead of approximately = inflation) for 100 years 1890..1990, the housing prices would be 14 times higher at the start.
This is my favorite comment based on a one month uptick in sales (but still down yoy):
“If I was a seller I would be looking at this as a positive,” said Fowlkes, who has been selling real estate in Naples since 1991, “and if I was a buyer, this may signal that the bottom is about to come and could be gone so I better jump on it now.”
Definition of insanity: Doing the same thing over and over, expecting different results.
Inanity, sean
addiction-thats the definition of an addict.
This is my favorite comment based on a one month uptick in sales (but still down yoy):
“If I was a seller I would be looking at this as a positive,” said Fowlkes, who has been selling real estate in Naples since 1991, “and if I was a buyer, this may signal that the bottom is about to come and could be gone so I better jump on it now.”
Actually, come to think of it… sellers better start to raise their prices!
Dude’s tired of dining on Tender Vittles. Give him a break
Perhaps some yummy Fancy Feast?
My cat now refuses to eat anything but Fancy Feast or people food. But I indulge her because she is getting on in years.
Your cat demonstrates (yet again) who are the masters and who are the pets.
My cat owns me
Funny, my cats won’t touch the stuff.
LOL - that was a good one.
Perhaps all the cheap eats are affecting the realtors’ mental capacities (what little was there I mean). There’s lots of MSG in those Raman noodles, don’t you know.
FHA is advertising to FB’s on Bloomberg Radio. It was much like the pandering ads by ditech to the “people are smart” audience.
Amazing. From my conversation with the Congressional staffer yesterday, FHA is actually now supposed to fill the subprime void. Hence the reason for the $500,000 FHA loans. Oh, and by the way, the govspeak for this is “modernization”.
Can you summarize the conversation? I wasn’t able to read yesterday.
I’ll try: Basically, I called my Congressperson to question the wisdom of FHA insuring $500,000 loans. I was told that “modernization” of the FHA was needed as an alternative to subprime, because housing for low and middle income people in areas like NY, New England, CA and South Florida was so costly. (I’m just telling you what I was told, doesn’t make any sense to me, either). I was sneered at and condescendingly treated like I was crazy when I said that it takes an income of $200,000 minimum to carry a $500,000 mortgage, but was shut down when I tried to ask what income they thought was appropriate for a $500,000 mortgage. I was told it was a done deal, and that’s that. End of story. It has been decided. I was told that FHA is well in the black and has plenty of money to guarantee those loans. When I brought up Fannie Mae and cooking the books, I must have really hit a nerve, because the staffer asserted that Fannie Mae is NOT FHA and the conversation ended at that point. I was very polite all the way, just voicing my concerns, but you would have thought I was an insane person from the staffer’s reaction.
Are they guaranteeing these amounts for new purchases or refis of existing voodoo loans only?
Thats my question too TXchick.
Dunno, LOL, didn’t think to ask, but not sure I would have gotten a response either way. I guess I can google to see what the the final read is on this legislation, I never understood it from the get go, that’s why I called.
I was sneered at and condescendingly treated like I was crazy when I said that it takes an income of $200,000 minimum to carry a $500,000 mortgage, but was shut down when I tried to ask what income they thought was appropriate for a $500,000 mortgage. I was told it was a done deal, and that’s that. End of story. It has been decided.
I would think that 200K is the ideal income for such a mortgage. I also think that it could be done with less (maybe 150K), but not with what a J6P earns.
The FHA is going to have a boat load of defaults if they hand out these loans like Halloween candy.
So, pardon my ignorance here, but are the new proposed FHA loan programs to allow low and/or zero down on $700k homes?
tx, hope my post comes through.
Currently, I believe the US government is the one of the largest debtors, if not the largest, on the planet.
And now, they seem to want to become one of the biggest lenders in the housing industry, lending to, and guaranteeing loans in the subprime market. Another constitutionally mandated duty.
Does anyone recall terms like ‘house poor’ or ‘money pit’, back when prices were sane? They referred to the stupidity of paying too much for a house. That very concept seems to have disappeared. What is the purpose of trying to entice the poor or unsavvy into taking on gargantuan debt?
If the only way to buy a house is a toxic loan, then the foreclosures continue. But now, with government eating the cost, the homeowner may able to keep his home - wow.
Interesting new entitlement. Part of the shadow bailout.
And the lenders, hedge funds, NAR and builders keep getting paid out of the taxpayer pocket.
Looks like the NAR being one of the top three contributors to Washington politicians will help them out.
The problem with handing out so much money though, is corruption and favoritism. I wonder how that angle will play out.
The problem with handing out so much money though, is corruption and favoritism. I wonder how that angle will play out.
The way it plays out is this: people realize that the costs of living in this so-called “civilization” (taxes, stress, work, turning over your paycheck to pay for war, cronyism, and destruction) exceed the benefits (goods, services, savings, quality of life), and that the harder they work the worse off they are. So they figure out how to evade taxes, or stop working so hard (or in my case, stop working altogether).
My sentiments exactly, DP. My interest income is adequate, not huge. But I refuse to knock myself out to support a system that seems basically corrupt. I try to work on some barter basis whenever I can.
What is the purpose of trying to entice the poor or unsavvy into taking on gargantuan debt?
Threefold.
First, keep people buying overpriced crap, in this case, homes, to kkep the economy going.
Second, to fill rich banksters pockets with fees, penalties, interest, you name it.
Third, and more sinister. Keep the people in line with debt and the fear of losing everything, inc. their credit score. People in debt = workaholics = noncomplainers. In other words, no more million man marches. Too busy paying off the debts.
–
“Interesting new entitlement. Part of the shadow bailout.”
Nothing new and nothibg shadowy. It is the basis of our econo-political system:
“Democracy, media, and money
“Spengler asserts that democracy is simply the political weapon of money, and the media is the means through which money operates a democratic political system. The thorough penetration of money’s power throughout a society is yet another marker of the shift from Culture to Civilization. Democracy and plutocracy are equivalent in Spengler’s argument.”
http://en.wikipedia.org/wiki/Decline_of_the_West#The_State_and_Caesarism
That’s swell Jas, but what political system is preferable to democracy? Or is it that democracy is healthy only when it’s novel? (As in, early US.)
It is all about the next election. If they do nothing, prices will crash 20% in the next year, and lots in congress will lose thier jobs.
If they do something, they may hold declines to “only” 10% in the next year. That will let a lot keep their jobs…. Then allow prices to crash 20% the year after teh election. Gives them another year to clean up the mess before the next election.
“In quiet places, reason abounds.”
Adlai E. Stevenson, Jr.
Was he talking about blogging?
I laughed so hard I cried yesterday - your response to my typo where I said conspitacy instead of conspiracy. Classic!
Words r’ fun
I was just looking for a pitch to hit…
yeah, you didn’t miss a beat. I am sure to have many typos in the future. Feel free to jump all over them!
Quiet places, but not so quiet when the blogger has to fight off spammers, the internet equivalent of crazy mobs. It is tough to assert calm and sanity in the face of rabid insanity. Reason is constantly being shouted down, but as Abba Eban said, when all else fails, men turn to reason.
Kudos to Ben though, for fighting off the hired Russians. Free speech lives on Ben’s blog. (Donation now being sent). I am sure fighting the good fight is not cheap.
OT
no SS? Freeze! So There!
http://www.courant.com/news/local/hc-heatillegal0926.artsep26,0,4110604.story
guarantee some sob story editorials and heartbreaking stories this winter because the over-extended (forget about illegals) cannot pay their heating bills. Certainly amplified by the fact that heating a McMansion is no easy task.
from Washington Post’s Express:
McLean - $1,949,000 - reduced by $850K. New lux SFH. 6BR 5BA. 6 fpls. 70% complete. Buy as is & finish it or a bldr can help. May [be] worth $3.5M -$3.8M after compl. [phone number] Make Money Now.
Oh, yeah. It’s different in DC.
Will someone explain who NEEDS 6 bathrooms and 5 bedrooms? 6 friggin fireplaces? Might it be the same pig people who drive gargantuan SUV’s? The sooner these monstrosities are taxed out of existence, the better of the world will be.
Dont blame the SUV I have 4 kids you get tehm in to a civic
$5/gal fuel will take care of them.
Quoi? I had five siblings, we owned a Civic (4-door) and a junky minivan. You’d better believe five of us got crammed into that Civic … It was a 1990 or 1991 model year (can’t recall) and we fit better when we were little … but four adults and one child can squeeze in okay.
Civics aren’t THAT small (look it up on Wikipedia … they’ve long since busted out of kei car territory).
That car sipped gas too (it’s up to nearly 300K miles so it drinks oil now, but my parents are dithering about replacing it before it dies for good).
“who NEEDS 6 bathrooms and 5 bedrooms”
Probably come in handy after a big Tex-Mex or Crawfish party when your guests are too drunk to drive home.
Oh, 6 bedrooms is easy.
1. Master
2. Emma Jane
3. Geoffrey Arthur
4. adult guest room (my mother comes ALL the time)
5. my craft/scrapbooking room (the man cave and the play room are in the basement)
6. converted into a closet for my off season wardrobe (The larger walk-in closet in the Master is adequate for this season but not for ALL my clothes and shoes. Besides, the fur needs a temperature controlled environment and cashmere should be stored in a cedar lined room.)
Yup. That should just about do it for McLean.
It’s painful to imagine the greedy busy body you just described Polly. These people need an serious adjustment.
Hey, if they can afford it, fine. I just don’t want to have to bail them, or their lender out if they can’t.
They can afford heroin, crack cocaine and every illegal drug from A to Z too but its not “fine”.
If it is such a money maker - why not get the project done and sell it!
We have a couple of these in the Philly ‘burbs. Of the ones I’ve seen, the one was originally listed at $1.2M with a harsh note that this is was the current as-is price and that all renovations completed subsequent to [date], would be extra, so get it now. Current price? $650K with new blurb describing all of the demolition and yard-clearing work that was done just waiting for your personal touch. He bought it a year ago at $500K, which I thought was crazy then. Given its location on a busy street across the way from a stone quarry, I wouldn’t give him the going rate for the acreage.
May [be] worth $3.5M -$3.8M after compl.
isn’t it so cool to be able to pull numbers out your asz?
I just received a letter from a realwhore showing the recent sales in my area. I was surprised at how close the asking prices and selling prices were - I don’t think that most people understand that house prices are pretty much a guess, especially existing homes (which most are in my area). “Oh, the realtor listed it at such-and-such price, so it must be worth near that amount.” I think that’s why price drops are so slow; seems like there’s always some clown out there offering the asking price regardless of what the overall market is doing.
IIRC you are tracking Rose Valley. That’s going to be sticky on the way down, but inevitably, someone will be in a situation where they just want to dump the house. Divorce, BK, whatever. There go the comps.
BTW I read your post about the seller writing you giving you a hard sell on the neighborhood. That was pretty good.
Anyone drive on Route 7 past Leesburg, VA? There is a development of mega McMansions to the right (as you go west), with the crowning jewel a behemouth that has been under construction for over 2 years now. It looks like a hotel perched on this little knoll smack dap in the middle of the development. It is the ultimate ‘in your face, i have more money than all of you but no class’ house.
Oh yeah, the entire Route 7 corridor just screams “nouveau riche.” Or perhaps “nouveau wannabe.” In Great Falls, you see jarring contrasts between the old properties owned by the “horsie set” and the stunningly gauche mansions built next door by the AOL executives.
I grew up in NoVa, and it’s really dispiriting to see the sheer amount of sprawl creeping out Route 7.
When I was a lad, there was a whole of nothing from a little past Tyson’s out to Leesburg.
I live in the Cascades area off of Rt. 7. Most of the so-called mansion are vinyl boxes. Some of ugliest architecture I have seen anywhere in the US. The fact that people bought those pieces of garbage stuns me. These people obviously don’t know what a good house is. The area cracks me up. This is one of the most characterless places on earth.
The land was beautiful. The rolling hills. The Blue Ridge foothills on the horizon. This arfea has been raped a thousand times over and the people here brag about their “great houses.” I had rather rent than invest a dime in such trash.
So I buy property elsewhere and kept a SFH in my hometown which my adult daughter lives in. I feel sorry for just about everybody in the DC metro. There are areas which look like 3rd world and cost .5 million. For all the education in this area, most don’t use common sense.
Good morning all and thanks again for the laughs from last night’s California posting.
San Diego Inventory –
I noted last year inventory in San Diego (All property for sale per ZipRealty) peaked at 23,586 as of 08/26/2007 and was down to around 21,500 by 09/26/2006
This year, Inventory continued to climb, reaching a current year high of 23,583 as of today. This year’s pattern is very different from last, and I believe reflects a lack of belief on the part of sellers that they should wait for the spring rebound as was common concensus last year at this time.
Roach clippings…
http://www.nytimes.com/2007/09/25/opinion/25roach.html?ref=opinion
“Why worry about a weaker dollar? The United States imported $2.2 trillion of goods and services in 2006. A sharp drop in the dollar makes those items considerably more expensive — the functional equivalent of a tax hike on consumers. It could also stoke fears of inflation — driving up long-term interest rates and putting more pressure on financial markets and the economy, exacerbating recession risks. Optimists may draw comfort from the vision of an export-led renewal arising from a more competitive dollar. Yet history is clear: no nation has ever devalued its way into prosperity.
So far, the dollar’s weakness has not been a big deal. That may now be about to change. Relative to the rest of the world, the United States looks painfully subprime. So does its currency.”
So far, the dollar’s weakness has not been a big deal. That may now be about to change. Relative to the rest of the world, the United States looks painfully subprime. So does its currency.”
Hoz has made this point repeatedly. The government/ruling class complex has three ways to raise money: raise taxes, raise prices or deflate the currency. The first two are so conspicuous that they rouse the rabble. So they have chosen the third. No matter how you slice it, it means the same thing: they own your a$$.
You mean devaluing the currency, which has the effect of inflating prices.
in the UK (and Netherlands …) flipping is still a popular passtime; they even suggest it might get more profitable when the credit crisis gets worse …
London property market: Flipping easy way to a profit
http://tinyurl.com/32u8sq
NJ Update: GSMLS now have nearly 37,000 listings. Creeping up slowly but steadily. Very little in NJ is moving. My FIL owns a RE company in NNJ and says he has never seen it so bad.
Local Observation: Virtually every house on Magnolia Way in North Haledon is for sale. Don’t be fooled by the recent reduction in homes for sale on this road, many have pulled their townhouse off the market because after so many months it’s obvious they can’t sell it as these absurd asking prices.
$550K for a “starter” townhouse!!! Not anymore my greedy HELOC’ed friends, not anymore.
House prices fall 4% in the NY Metro area, per Shiller-Case.
http://www.newyorkbusiness.com/apps/pbcs.dll/article?AID=/20070925/FREE/70925005/-1/rss01&rssfeed=rss01
Manhattan and Brownstone areas of Brooklyn are the last home of the bubble deniers. They’ve shifted from it can’t happen in the NY area to it can’t happen in Manhattan and prime Brooklyn neighborhoods.
I’ve said it before — if these neighborhoods were fairly priced at current levels, then their price would double from current levels and then crash given what has gone on. But I think that has already happened.
The only difference here is that for the most part those earning $75K are packed many to an apartment renting rather than having bought a condo for $1.2 million. But that doesn’t mean they can afford the condo for $1.2 million, and once all the new units get completed and there are fewer hedge fund buyers around…
Think of all those poor NYC cabdrivers and hairdressers whose leveraged RE investments are getting flushed down the toilet right about now. Oh the humanity!
Prices are falling in New York? Good - then there is no escape from the fall of this Bubble! Hahahaha! I guess it is NOT different there!
wt — from the article you quote:
“The index relies on single-family home sales from the city and surrounding counties in New York, New Jersey and Connecticut that have significant numbers of commuters who work in the city. It does not include prices from the city’s condominium and co-op markets, which appear to have held up better than homes in suburban markets.”
with all due respect, WT…
as i’ve said before, even the gold coast co-op enclaves of manhattan will sink, but probably not crash anywhere as bad as the outlying boroughs and suburbia.
whatever interest europeans (or any cosmopolitans) maintain toward nyc will be directed specifically toward prime manhattan locations.
i still expect a 20%-25% drop — which will be only half as bad a hit as the suburban/subprime locations should expect.
Manhattanite,
from 89-93, prices in Manhattan tanked far more than 25%…and that includes the Upper East Side, which was the gold standard then. The West Side didn’t make the transition to top zone until late nineties. I’m a renter and intend to stay one, so I have no dog in this fight. Even if prices crash, I ain’t buying, as I do not intend to get hit with the increase in property taxes et. al. to cover the underfunded public pensions, and the decaying infrastructure, for example. Washington will be in no position to provide matching funds or much help. Before I buy anywhere, I want to see how the tax, demographic issues play out. It’s not just about the price.
I have decided to begin making lowball offers. Lowball as in %40 less than asking. You never know…
My local Kmart in NO.VA. is pathetic in that they are not stocking any inventory. The shelves are looking a little bare. Owned by Sears whose CEO was taking the cash generated by Sears etc. and running a hedge fund. Nice returns for shareholders but the stores are paying for it in more than one way. Another name like Ford soon to be a memory. By the way it was dead as was the local Home Depot.
I do a fair amount of Ebay purchases in Germany and lately no one wants my dollars. Most Europeans do not understand how difficult and expensive foriegn currency conversions are here. The euros I brought back this summer may have been my best investment in 20 years!
Three months ago a teller refused a canadian quarter from me. Yesterday a different teller said to the lady in front of me “oh that’s Canadian (quarter) let me give you an American one”. I abruptly butted in and told her to save all her Canadain currency and I’d be by once a week to exchange it one for one for US$.
lol, but sadly.
all this talk about the strength of the Euro.. i dunno..
Is the Euro somehow sheltered from Europe’s own impending RE bubble collapse?
Blind faith works until nobody believes anymore…
good question, but at this point not relevant. It is clear that EU politicians will stop the euro gaining strength very soon; the line in the sand now seems to be 1.45 US$; we might be there within a few days or weeks. Anything over that and there will be total war between the dumbocrats in Brussels (plus many of their inflationist bosses like Sarkozy and many other EU pm’s) and the few remaining ECB bankers that want to keep inflation under control.
The EU housing bubble collapse might be some years in the future, because of all the anti-market manipulation that is going on here. We will have to see by that time (when the ECB/euro still exists then, which I doubt) if the ECB will try to print themselves out of the mess in Bernanke style.
My local Kmart in NO.VA. is pathetic in that they are not stocking any inventory.
Which one is this? Is it the one off of Metrotech and 50? That place is so understocked, understaffed, and filthy that we’ve given it the nickname “Dirty KMart”.
“Honey, I’m stopping by the dirty KMart on my way home for some batteries. Do you need me to pick up anything while I’m there?”
Same here (Ebay Germany, I have the same experience with Ebay France too)
I saw an advertisement from the US Mint on TV last night. I had never noticed them advertise before, is this new? Are they trying to get Gold/Silver into the hands of people or just make a buck?
Careful. Somebody calling themselves the U.S. Mint may have no relationship at all with the U.S. government mint.
The best way to explain what’s happened would be to describe what you could buy from the U.S. Mint in 1980, vs today…
In 1980 you could buy a proof coin set or mint coin set, that’s it. About $20
Today, if you bought one of every collector coin/s they offer every year, it would run you about $10,000
Coinsumers, if you will.
On CNN Money this morning - article on the internet — “10 Cities that will rebound”? HAHAHHAHAHAHH — in the next realestate bubble.
This is the end of the beginning rounds of the late great real estate bubble…
http://www.youtube.com/watch?v=ZDN9y2vTdUs
Well here’s one way a granite-accessorized FB can make some money:
not sexual, just nudity
“Seeking to rent per day, a large, luxurious, island style kitchen for production
of a nude cooking show with female model/chef. Non sexual, just nudity”.
Contact me at: lagnat5@yahoo.com
Well I know where my next job might be; filming the show of course.That is so hot you know.
I wonder what’s on the menu
Birthday suit cake?
Jaybird pie?
Stripped Bass?
stuffed beaver.
open-faced roast beef sandwich.
Maybe they have Rachel Ray booked as the hostess.
She seems to be everywhere nowadays.
smegbiscuits?
Smeg Biscuits?
Y’all are grossie gross!!!
I know, we all are except arizonadude who is taking this opportunity to launch a new career.
Rachel Ray = okay. Two Fat Ladies = very bad. http://en.wikipedia.org/wiki/Two_Fat_Ladies
The other other white meat.
It’s not clear to me that Manhattan prices or brownstone Brooklyn prices will fall, though I’m astonished as to how sticky the prices have been. But supply is actually incredibly low if the figures are to be believed. Essentially, it seems, if you’re not receiving hedge fund bonuses you can’t buy here. 200k/year does nothing for those who covet downtown living.
“It’s not clear to me that Manhattan prices or brownstone Brooklyn prices will fall, though I’m astonished as to how sticky the prices have been. But supply is actually incredibly low if the figures are to be believed. Essentially, it seems, if you’re not receiving hedge fund bonuses you can’t buy here. 200k/year does nothing for those who covet downtown living.”
I just want to re-iterate for you “Sex and the City” viewers who think that 42nd Street is where Disney’s northeast headquarters is: less than 20 years ago, Manhattan was rife with burned-out buildings with squatters in them. Homeless people on every subway vent (and in every car), crack ho’s and heroin addicts following you down every street. Three of my college classmates bought a burned-out six-story building for $25K in 1990. Now New York magazine says wealthy Irish people want to live in New York, rich people all want to live here, you can’t build new buildings, etc, i.e, “it’s different here”. I love this world-class city (my city), but trends come and go. There will be a recession, there will be flight, and the slums will return. I don’t know when it will happen, but it will happen. And it will happen regardless of how many Laxmi Mittals there are in this world.
But the real question is which neighborhoods will slumify? Not all of ‘em I’d bet.
they will fall — but not considerably and not for a considerable amount of time, absent some financial/terrorist ‘event’.
don’t expect a serious decline in prime manhattan prices (not sure about bklyn) for at least 3-5 years. the market is more likely to just seize up as all but desperate sellers simply take their places off the market.
that’s what happened in the 90s — the bottom wasn’t reached until 95-96. for the first 5 years of the bust, from ‘89-94, the market was just dead in the water.
Sept. 26 (Bloomberg) — The cost of borrowing pounds for three months fell to the lowest since Aug. 10 before a Bank of England money auction that failed to muster a single bid.
The London interbank offered rate that banks charge each other for three-month loans in pounds slipped 3 basis points, or 0.03 percentage point, to 6.31 percent today, according to the British Bankers’ Association. The overnight rate dropped 7 basis points to 5.66 percent.
Financial institutions made no bids for today’s 10 billion- pound ($20 billion) Bank of England auction. The cash was offered at a minimum rate of 6.75 percent, 1 percentage point above the U.K.’s benchmark interest rate. Borrowing rates have been falling after central banks around the world provided extra cash to ease the drought in short-term lending.”
personally I like the approach the BoE is taking, essentially making the banks deal with one another by RAISING the emergency rate.
As opposed to the opposite of our FED, who is now cherry picking at the discount window…I sure hope our guys know what the F**CK they are doing because some banks are about to go under…ooops, I mean “MERGED” with other stronger institutions.
but what value is the interbank rate if banks are not willing at all to lend to each other? Despite 500 billion or so of ECB liquidity injections, EU banks are just as suspicious about each other as they were a month ago. I guess they must be on to something, and in the UK it isn’t much different.
of course, it is nice if you can borrow billions from the central bank against a worthless subslime portfolio (just like they are doing in the US).
Take heart, investors, more rate cuts are in the bag.
Reports raising fears on economy
Consumer confidence, existing home sales fall
By Philana Patterson
ASSOCIATED PRESS
September 26, 2007
* Lennar posts record loss
http://www.signonsandiego.com/uniontrib/20070926/news_1b26lennar.html
NEW YORK – Crumbling consumer confidence and slumping home sales could prove to be a bad combination for retailers, and for the broader economy going into the holiday shopping season, if the labor market contracts further and chokes off spending, economic data showed yesterday.
But markets took some heart from the warning signs, hoping that they would goad the Federal Reserve to lower interest rates more.
http://www.signonsandiego.com/uniontrib/20070926/news_1b26economy.html
Durable-Goods Orders Decline 4.9%
By Jeff Bater
Word Count: 388
WASHINGTON — Demand retreated for expensive goods in August, and a barometer of business spending fell, sharpening concern about the effect recent financial turmoil might have had on the mood of corporate America.
Orders for durable goods decreased by 4.9% last month to a seasonally adjusted $219.53 billion, the Commerce Department said Wednesday. Durables, which are goods designed to last at least three years, increased 6.1% in July, revised from a previously estimated 6.0% advance.
http://online.wsj.com/article/SB119080942643739892.html?mod=hpp_us_whats_news
The companies have to do something to pay their debts. The first to go is new equipment, the second to go is jobs.
Agreed.
Wall Street is unconcerned because they smell more FFR cuts in the pipeline. Keep your eyes off the falling dollar, folks, and focus on that ever-resilient DJIA!
Housing Chill Grows Worse, Bites Consumers
By SUDEEP REDDY and MICHAEL CORKERY
September 26, 2007
The housing market is going into a deeper chill, and consumers are starting to shiver.
Sales of existing homes in August fell sharply, and home inventories by one measure soared to an 18-year high, according to data released yesterday. One major home builder, D.R. Horton Inc., is auctioning homes this weekend with starting prices for some units at 50% off an earlier price.
The housing market is worrying consumers, raising fresh concerns about economic growth. Consumer confidence fell this month to its lowest level in almost two years, a new survey showed. Retailers such as Lowe’s Cos. and Target Corp. said they’re feeling the pain. Both reported softer-than-expected sales Monday.
“The combination of all this is indicative of an economy that has lost quite a bit of momentum,” said Joshua Shapiro, chief U.S. economist at the consulting firm MFR Inc., an economic forecasting firm that advises investors.
Wall Street seems unconcerned for now. Broad stock indexes moved little yesterday, and the Dow Jones Industrial Average is just a few hundred points from its all-time high.
http://online.wsj.com/article/SB119072589181638646.html?mod=hpp_us_whats_news
Well, they should be concerned. Look at this on Bloomberg. It sums up my view exactly.
Roidy
http://tinyurl.com/eyg7r
Look at the “Bove of Punk Ziegel Calls Fed Rate Cute “Huge Mistake” when you get to the page. I can’t seem to make the actual video into a tinyurl.
OMG — how much did the NAR have to pony up to Businessweek to get them to publish this shill piece?
Real Estate September 26, 2007, 2:01AM EST
Affordable Homes in Every State
Coldwell Banker’s annual apples-to-apples comparison of homes across the country shows a lot of variety in house prices—and in local economies
by Maya Roney
BW Exclusives
* Affordable Homes in Every State
In Greenwich, Conn., Boston, and many parts of California, a four-bedroom house can easily set you back more than $1 million, while in parts of Texas and in the Midwest, a similar house can be had for just over $100,000.
http://businessweek.com/bwdaily/dnflash/content/sep2007/db20070925_163905.htm?chan=top+news_top+news+index_top+story
I’m calling a crash in prices (which means I’ll most likely be 100% wrong). I see things going like this:
- We’re currently at the beginning of the downslope. Since 2001 the only thing propping up the US economy has been the housing market. People have borrowing against the increasing value of their homes, buying homes they cannot afford under normal mortgage conditions and selling houses for exorbitant profits. This is done. Now.
- Builders are beginning layoffs and the MBS fiasco is beginning to unwind
- More layoffs = less buyers and the MBS situation will continue to lead to layoffs in the financial sector
- Fuel prices at record levels and the dollar in the toilet.
- Rinse and repeat for the next year and heaven knows where we’ll be. Of course we can count on more rate cuts from the BOE….oops the FED, but this will only feed the thugs on wall street, and do nothing for the J6P who is basically screwed.
Rosey outlook ain’t it?
I live in VT in a condo I purchased in 99 and have sat back the past fews years and thanked god that I won’t be a bagholder when this bubble bursts. In VT there is still a rampant amount of greed in the housing prices but no one is getting their asking prices, inventory is rising (I go by what’s listed in the local papers) and this fall/winter should be nasty for sellers.
My wife is getting house lust but I refuse to cave until I see things return to a more sensible level….sensible level meaning that a 15 year mortgage can buy us something we won’t regret in the future……
Hi there neighbor - general area do live in? We purchased a condo in ‘97, sold it as things really started to warm up in 2000 and bought a house and sold again this spring thanks in part to this blog. We’re renting now in Northern VT.
If you would like to have some stories about home ownership that will scare your wife, just let me know. ;)The only thing that’s 1/2 decently priced (sort of) on the market are the fixer uppers. We lived in one for 7 years before we decided we liked things other than building maintenance.
Chittenden county. There’s plenty of bargains up in the Kingdom, I hear.
I’d love to sell now but with a toddler in the house, mobility has become quite the challenge.
Not quite that northern
- we also live in Chittenden county.
If you want to sell and rent, it’s not too bad. We have two kids and managed to find more than acceptable housing. Let me know if you want more info and we can figure out how to email.
I remain entirely unclear on how the engineering solution of lower interest rates can possibly repair the fundamental loss of trust which explains the breakdown of the loan-securitization sausage manufacturing operation?
Judgment Calls
The Bernanke Era Has Begun
Last week the Fed shifted its emphasis from fighting inflation to preventing panic. Was that the right call? Certainly it was the popular call.
By Robert J. Samuelson
Newsweek
Oct. 1, 2007 issue - It’s Ben Bernanke’s moment of truth.
…
When the subprime mortgages—loans to weaker borrowers—began to default in large numbers, so did the bonds into which they’d been packaged. Rattled investors revolted; they stopped buying other securities whose value seemed unclear. From July to mid-September, outstanding U.S. commercial paper (a type of short-term business loan) dropped by $308 billion, says Brian Bethune of Global Insight. “This credit crunch is one of trust,” says economist Roger Kubarych of UniCredit Global Research. “People who had been buying things on trust—rather than their own due diligence—went on strike.”
Enter the Fed as strikebreaker. In effect, it supplies banks with more credit at a lower cost (a.k.a. a lower interest rate). Banks then find it more profitable to increase their lending to fill the vacuum left by skittish investors. The economy and financial markets don’t spiral downward as less lending weakens the economy and leads to more losses. Confidence returns.
Sounds sensible, but it could be short-sighted. “The unemployment rate is 4.6 percent. Is that a crisis? Suppose it goes to 5 percent. It’s still not a crisis,” says economist Allan Meltzer of Carnegie Mellon University and author of a history of the Fed. “It sure looks like they’re responding to pressures from the markets, from Congress.”
Implicit in this view is that the economy and financial markets must periodically suffer setbacks. These remind investors to be prudent; they also check price and wage increases. A falling dollar last week (against the euro and the yen) suggests that inflation anxieties are not entirely abstract.
http://www.msnbc.msn.com/id/20920375/site/newsweek/page/2/
What do people think of gold right now? At its high, or going much higher? How does the price of gold relate to the value of the dollar? If the economy goes into a recession (huh, maybe it already is in one!) does gold typically go up or down? Thanks for any words of wisdom.
I would say that gold’s price is affect mostly by inflation. It soared in the 70’s when we ‘enjoyed’ double digit inflation and interest rates, but came back down as inflation was tamed.
Another thing to consider is that the supply of gold can increase (that’s what gold mines are for). And unlike oil, gold is not a consumable, so we won’t run out of gold in the future. There is, of course, a limited supply of precious metals (otherwise they wouldn’t be precious).
That said, I don’t think that a recession alone would cause a major spike in gold prices.
Supply may not increase but demand will - driven by population growth and of course Asia. Everyone needs a little bling-bling.
I just added to my long term physical gold holdings. I don’t ;ile the price but quite frankly i really don’t like all the fundamentally bad paper out there that so far has not been acknowledged by anyone. I also don’t like fiat paper money and credit that seems now to be used so wantonly and recklessly by the PTB. That being said, my purchases are long term and will likely be passed on to my kids whether they like it or not. As to trading the physical, i just don’t.
Talked to a counter wholesaler (granite, corian stuff) in DC/BAL area yesterday. No surprise that business is off 50%, and as a result the staff and vehicle fleet have been cut accordingly.
Seems the builders have been pushing hard for price concessions from these suppliers (to support the incentives on these items to grab a few more suckers), when in reality most of the suppliers have maintained relatively stable pricing for the last several years.
Kinda reminded me of the ripple effect this is having: fewer employees, reductions in leased space to adjust to smaller production, reductions in leased vehicles, reductions in purchased materials. Multiply this by all the like contractors and related industries effected, then consider the effect on other industries as those employees no longer have money to spend, and it is really scary, depression like scary.
Not all granite is the same. The counter here has a chip missing at the edge which tears the cleaning cloth apart every time, and is sharp. Imagine paying thousands for this? Also, the surface is simply not even, with many little nooks, and over time, a lot of dirt must get lodged in there. Not very sanitary.
The stone they used is very obviously third rate, as it was just as obviously not the kind which allowed a smooth polish suitable for a kitchen.
Just a common sense remark from me. Plus the pattern of those counters is just too ‘restless’.
What makes it especially scary was that construction was supposed to be our last “industry”. I know that where I live that construction related folk have been living large these past few years, while for others (especially those in tech) it has been slim pickings. Out here residential work has ground to a halt, but commercial is still going strong (I know that won’t last).
Still, there are signs that the building boys are starting to hurt. For one thing, there are no longer any waits at local restaurants. Even during peak periods you only have to wait a few minutes.
Nice table here to see how far quality-adjusted prices fell in your city even before the onset of the credit crunch (NYC = -3.8 percent, LV = -6.1 percent, LA = -4.8 percent, SF = -4.1 percent and SD = -7.8 percent from July 2006 through July 2007).
September 25, 2007, 9:33 am
Home Prices Tumble, Case-Shiller Index Reports
Standard & Poor’s S&P/Case-Shiller home price index fell in July as 16 of 20 major metropolitan areas saw a decline in annual growth rate.
http://blogs.wsj.com/economics/2007/09/25/home-prices-tumble-case-shiller-index-reports/
Wall Street investors are reputedly partying to celebrate the end of the GM strike, similarly to an alcoholic who finds a reason to celebrate every day of the week. Nonetheless, the DJIA looks mighty plunge-protected this morning — its price chart follows the typical recent pattern of a spike at the opening bell, followed by a settling in to a temporarily-higher plateau. The Bernanke put strike price appears to currently reside near 13,800 on the DJIA.
September 26, 2007 10:49 A.M.ET
BULLETIN
Stocks getting back to work
General Motors shares lift blue-chip Dow as UAW announces tentative agreement. The dollar touches a new low vs. the euro, while crude-oil futures reclaim the $80 mark.
http://www.marketwatch.com/tools/marketsummary/
Can anyone comment on why all the major U.S. stock market indexes started to soften in the past hour?
OK — soften is too soft a term. Why did the major U.S. stock market indexes all start to plunge at the same time?
Fed cut sends long-term rates up
By MarketWatch
Last Update: 10:59 AM ET Sep 26, 2007
BOSTON (MarketWatch) — Greg McBride, senior financial analyst for BankRate.com, says that many would-be home buyers are about to be stripped of a misperception, namely the idea that when the Federal Reserve Board is cutting interest rates mortgage rates will fall as a result.
In a radio interview with Chuck Jaffe, MarketWatch senior columnist, McBride noted that the Fed is combating the economy, but some observers worry that its bigger-than-expected move might be opening the door to inflation, a concern which has pushed mortgage rates up slightly since the Fed’s most recent move.
According to BankRate.com, the average 30-year fixed rate mortgage in the country currently carries a rate of 6.4%, which represents a reversal of course. The average mortgage rate had dropped below that level, to roughly 6.25%, in the two weeks leading up to the Fed announcement Sept. 18 that it was cutting the target for the federal funds rate to 4.75% from 5.25%.
McBride noted that the Fed’s rate cut is bad news for long-term savers, as rates on certificates of deposit maturing in two or more years have fallen, while short-term rates have remained steady. This erases any risk premium that a saver gets for tying up money for a longer stretch of time.
There is a lot of talk in the MSM about the steepening of the yield curve indicating a lower likelihood of recession and relatively little (that I have seen) about the steepening yield curve as indicative of higher future inflation prospects.
In 1998, Clinton rather obviously lobbed a few cruise missiles Africa’s way, to throw the dogs off his scent of a woman…
Will we have something similar go down, if suddenly things go in the crapper, financially
Subterfuge is ’ssshrubery’s middle name…
wrong again..it was afghanistan at al qaeda camps….the MSM reported it as throwing the dogs off the scent of a woman when in fact it was the right thing to do. History’s a b*t*h when the truth is remembered.
Sudan remains firmly entrenched in Africa…
I guess we were both right…
http://www.cnn.com/US/9808/20/us.strikes.01/
A very strange way to admit that you were wrong…
I thought Clinton bombed Serbia into submission in defense of Moslem extremists in Kosovo in order to throw the dogs off the scent. Silly me.
You’ve got me Balkanized
It was the right thing to do. Unfortunately, it took a scandal to force Clinton to do it.
Exactly, Deron!
I’ve been waiting for two years for someone here to mention that.
As far as the NATO bombings in the Balkans, it took Secretary Albright haranging Colin Powell for anything to be done.
Sheesh.
Actually he targeted OBL in Africa - and from what they say he missed him by less than 2 hours - as far as we know one of the closest misses we’ve had nailing that SOB.
Partisan politcal garbage like that has no place on this board.
I agree !
I disagree!
Clients start suing law firms that worked on MBS issues… Let the fun begin!
$70M Suit Against Cadwalader Reflects Risks of Practice in Mortgage-Backed Securities
What did Shakespeare say about barristers?
Well, I would hope a few of us would be spared…
Don’t worry Jim. It’s only 90% of lawyers that give the rest a bad name.
How to lose $220K in San Diego in just over 2 years.
http://tinyurl.com/28o6vq
This Carmel Valley palace was purchased in June ‘05 for $1,220,000 and they’ll now settle for just a million. Purchase price in ‘02 was $590K
You can get a house like that out here in the low 400’s (right on the Golf Course too). Under 400K if it isn’t on the Golf Course. And of course those are overpriced.
Its not like the house is in (or even near) Del Mar.
What I found especially interesting was the pie chart with the neighborhood racial breakdown. Very 1950’s (what happened with the “race is not an issue in California” lip service.
Also of interest is that only about 25% of the neighbors make more than 150K. I wonder how many can actually afford their mortgage payments?
Coming soon to a neighborhood near you: (dramatic music)
“THE INVASION OF THE RENTERS” (more dramatic music)
http://finance.yahoo.com/real-estate/article/103586/The-Invasion-of-the-Renters
This goes to show that Wall Street is drinking the Juice and fundamentals is thrown out the door.
Stocks goes up because of news that the GM/UAW is done. They should be looking at the Demand for Durable Goods plummeting more than expected.
GM? who cares?
“Stocks goes up because of news that the GM/UAW is done. They should be looking at the Demand for Durable Goods plummeting more than expected.
GM? who cares? ”
If durable goods sales are down, that’s great for GM- their cars are ANYTHING but durable.
Well, it depends partly on how cute you are, and partly on how believeable you are. Lawrence ‘Good Time For All’ FunYun is clearly lagging on both counts, so I bet he was/can be had for a real bargain.
Comment by aladinsane
2007-09-26 06:05:44
“With sales falling for two years now, Yun says, “It’s my firm view there is significant pent-up demand.”
What is the going rate for selling yourself out, nowadays?
It’s my view there is significant pent-up demand, once prices bottom out at affordable levels relative to rents and incomes.
Spot on. I’d guess there is significant pent up demand for homes at 3x income and that inventory might return to normal levels quickly if we got there. Unfortunately, here in LA, that still requires a 40%+ drop in most places, so sit down and have some coffee while we wait…
–
That is pent down demand!
Jas
Sept. 26 (Bloomberg) — The House Ways and Means Committee, seeking revenue to help homeowners in foreclosure, unanimously approved higher taxes on the sale of vacation homes.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aimqrSLesKyw&refer=home
Short sales are non-taxable
“The Realtor group applauded the broader legislation, which would spare homeowners who have their mortgages forgiven from a surprise tax bill from the Internal Revenue Service; U.S. law generally taxes the value of forgiven debt as high as 35 percent. The legislation would be effective retroactive to Jan. 1, sparing many of those who lost their homes to foreclosure this year from a surprise tax bill if their mortgage was canceled.”
“The Realtor group applauded the broader legislation, which would spare homeowners who have their mortgages forgiven from a surprise tax bill from the Internal Revenue Service”
WTF? There’s no “surprise tax bill” here. This has been in the tax law for at least as long as I’ve been paying taxes.
Maybe I can start calling my quarterly estimated tax payments a “surprise tax bill” and our government will figure out a way to confiscate someone else’s money to help me pay for it.
Well they could tax it as a capital gain rather than income. But forgiveness should definately be taxed unless they’re insolvent.
If they are going to forgive taxes on loan forgiveness than I see no reason to let the banks take the write off on the loss ,otherwise agin,the taxpayer pays for the shortfall .
As I understand it ,the codes have always said if your insolvent you didn’t have to pay the tax penalty . Aren’t the current codes enough ?
But isn’t it the Gubment’s job to make sure that my realtwhore wasn’t lying to me when he said that buying property is a sure thing?
According to the NAR one in five realtors report having sold a home to an international client in the past year. With the falling dollar and ample inventory this is the mortgage underwriters dream come true especially in FL.,CA.. This could be the answer to the Feds rate cut, the cure for housing crisis and a step closer to globalization. The light has come on.
Source: Secondary Marketing Executive by Paul Decoff
“Dream” is the operative word in this little nugget.
“According to the NAR one in five realtors report having sold a home to an international client in the past year.”
Out here in flyover land, we have a $400k+ home/horse farm that has sat for over a year. It is finally in the process of being sold to an Irish national who started his search in NJ. He will be doing international horse trading and working for the local hunt club. The home has had big price reductions from the original price. But you wonder what would have happened to that property w/o the Irish coming in.
On the other side of the village, another large property with lake views has sat untouched and abandoned for over a year. A few months before it was up for sale, it sported not 1 but 2 Hummers parked in the driveway. Now the multi acre yard is overgrown and who knows what is going on inside. Maybe a foreigner will scoop up that one too.
Suprised that this hasn’t already been posted. Maybe I just missed it, but the SF Chronicle published a story today about Bubble Bloggers and mentioned this one in the list at the end. Kind of a left-handed compliment and they focus on one local guy (South Bay) in the article.
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/09/25/BUKCS4NNB.DTL&type=business
I absolutely loved the HB glossary at the bottom. Great to see it in a MSM story, even if the overall effect is a mixed review. For entertainment value, check out the reader comments. A lot of angry fearful folks attacking the blogger. Sound familiar?
Yes, it was fun seeing how our very own commentator “jbunniii” kept having to defend himself as he posted HBB-like comments. Thanks for your efforts jbunniii, I couldn’t be bothered.
Dollar news from the Telegraph:
The dollar has at last begun to stabilize after a week of preciptious falls on news Saudi Arabia intends to stick to its closely-watched exchange-rate peg, despite its refusal to cut interest rates in lockstep with US Federal Reserve.
http://tinyurl.com/34nlxe
Very strange. They can’t peg to the dollar if they keep their interest rates too high. Foreign money will pour in, pushing the FX rate up. I suppose the Saudi government and/or CB might sell riyals to buy dollars but that’s a stopgap, not a policy.
looks like the word on the street is that the ability to “export” the inflation may not be as easy as I thought.
Your letters: Housing market
Wednesday, September 26, 2007
It’s up to Congress
Re: your Sept. 19 article, “House approves plan to help struggling homeowners avoid foreclosure”:
I keep hearing how government and Countrywide are trying to find ways to help keep struggling homeowners from going into foreclosure, and it infuriates me.
My husband and I do not own a home. We, along with our two children, have spent the last five years living with my parents, saving our money for our future down payment.
As we saved and saved, the market went up and up. As lenders essentially gave loans away to anyone who could breathe — further sending home prices into the atmosphere — we stayed put, not wanting to risk getting into a house we couldn’t ultimately afford if the market changed.
Homeowners, who find themselves in a default or foreclosure situation, gambled on the real-estate market and lost. I find very little difference between this and someone who buys a stock that plummets or bets on a team that loses. Should we bailout these people, too? What’s the difference?
http://www.venturacountystar.com/news/2007/sep/26/no-headline—ob11housing26/
Thanks for sending this along, Professor Bear.
The correct link:
http://www.venturacountystar.com/news/2007/sep/26/no-headline—ob11housing26/
Or:
http://tinyurl.com/2rcpwv
Thought I fixed the link; one part is being read as a dash instead of as “–”.
The tinyurl works, however.
Fun MSM coverage of bubble blogs. The story focuses primarily on one local (South Bay) blogger and there are some left-handed compliments but surprisingly even handed overall. Even mentions the HBB by name in the “online resources” section near the end. The bubble glossary is awesome - great to see it in an MSM article.
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/09/25/BUKCS4NNB.DTL&type=business
For real entertainment, check out the comments section. A lot of angry, frightened FBs unless I miss my guess.
Apologize if this is a double post. Original submitted about an hour ago.
Mmm, delicious, delicious irony.
Howard Stern was interviewing SteveO from Jackass. Howard asked him where he was living and he said that he rents 4 apartments in LA. Howard then asked why he doesn’t buy a house and he replied:
“My dad won’t let me. He’s waiting for the housing bubble to burst.”
SteveO’s dad knows what’s up.
Question about companies who relocate their employees and buy their homes… I have a friend who is in this potential situation. So do these companies continue doing this in a market like this? How can they?
Old metaphor: 9 inning baseball game
New metaphor: 12 round heavyweight boxing match that goes the distance
Merrill Lynch May Write Down Assets by $4 Billion (Update1)
By Bradley Keoun
Sept. 26 (Bloomberg) — Merrill Lynch & Co., the third biggest U.S. securities firm, may record losses of as much as $4 billion on fixed-income assets, resulting in the lowest quarterly earnings in almost six years, Goldman Sachs Group Inc. analyst William Tanona said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a5rTUAmDH7pc&refer=home
Now that’s more like it…. we have a $10 trillion problem, so keep that red ink flowing and maybe we can get the hot air out of this economy. Lehman and MS had much smaller write-downs (the lump under the rug is so big the edges are hanging off the floor).
The House Ways and Means committee passed the “Mortgage Forgiveness Bill” and now it goes to the full house.
The way this will work is if a person’s house sells for less than the mortgage they will not pay taxes on the difference.
So if a person used a HELOC to buy cars, boats, vacations, Plasma TV’s or pay off other bill all the money will be totally FREE.
How many stories have we read where they took $50K -$100K or more from their fantasy equity ?
And so far this bill “will” include those with muliple homes
Where is the end of the madness?
I would like $100K free too
Do Homeowners Deserve a Bailout?
By Dan Caplinger September 26, 2007
From Wall Street to Main Street, lots of people are asking for help. So far, the government’s response has been very positive: “Ask, and you shall receive.”
For investors, the first 10% correction in years for the stock market brought on near-panic, leading to demands for the Federal Reserve to cut interest rates. The Fed obliged, going beyond many expectations and giving those investors the best thing to happen to stocks this year.
Now homeowners are getting in line, hoping for financial assistance in the form of easier refinancing terms from the Federal Housing Administration and greater flexibility for government-sponsored agencies like Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) to buy more mortgages on the secondary market. And there’s every indication that politicians will give in to those demands, too.
http://www.fool.com/personal-finance/home/2007/09/26/do-homeowners-deserve-a-bailout.aspx
Loan forgiveness bill: Some win, someone else pays
Mark Schwanhausser
02:24 PM on Wed, September 26, 2007
Congress took a crucial step today to eliminate a tax bill facing many homeowners who lose their homes in foreclosure. But to raise revenues to pay for that tax relief, lawmakers intend to close down a tempting tax-saving gambit for wealthier homeowners with second homes or rental properties.
http://www.mercextra.com/blogs/realestate/2007/09/26/loan_forgiveness_bill_some_win/
The passage of this measure would accelerate the price declines, as many would-be sellers in waiting will rush into short sales once the tax forgiveness provision is put into place. The comps will get marked down from fantasy to market in short order.
Exactly. Which is why I’m perfectly happy to watch it happen.
Just like the Great Depression, economic historians will spend decades analyzing how precisely the wrong policies of the government exacerbated the financial crisis through unintended consequences. Last week, the rate cut heightened inflation fears and drove long-term rates higher. Now we have a tax-forgiveness “rescue plan” that will incentivize people walking away from their mortgages.
The result will be an acceleration of price declines coupled with even tighter lending standards for new loans and refi’s. The tighter lending standards will further accelerate declining prices, driving more people to walk away from their mortgages, and so on.
The only government proposal that I’ve seen that could slow the pace down is the raising of the conforming limit to the stratosphere of $700k+. The only thing keeping a lot of “qualified” buyers on the sidelines is the fact that jumbo loans are so tight right now. But my guess is that “modernizing the FHA” can only delay the inevitable price correction, and it’s quite possible that the government other attempts at rescue will backfire enough to mitigate any potential buoyancy that raising the conforming limit might offer.
Hillary wants *your* opinion!
On her “mortgage bailout” page, Hillary wants people’s stories on how mortgage payments going up “ruined your American Dream”.
So post your story on how giving mortgages to people who didn’t really qualify ruined your American Dream, and how taxing you more to bail out these people (many of whom are criminals because they lied on a mortgage application) makes you want to move to China.
The debate on moral hazard of bailouts is shaping up as a major issue in central banking. I hope it soon becomes obvious that monetary governance through frequent crises mitigated through ad hoc bailouts is primarily a stealthy way to levy a regressive tax.
September 26, 2007
Fed must weigh inflation against recession
By Martin Wolf
“I regret to say that the Federal Reserve independence is not set in stone. FOMC discretion is granted by statute and can be withdrawn by statute.” Alan Greenspan, The Age of Turbulence.
To critics it is now the “Bernanke put” - the belief that, as under Alan Greenspan, the US Federal Reserve will always ride to the rescue of Wall Street. The jubilant response of traders to the Fed’s 50 basis point cut in the short-term interest rate might justify this suspicion. But saving Wall Street from its follies is not the Fed’s objective. It is an (unfortunate) by-product of the attempt to do its job.
It would be wonderful if those responsible for this most absurd of financial crises could be punished without damaging millions of innocent bystanders. But it is impossible. If the Fed does its job, it helps the financial sector. The latter will, no doubt, recover and then find some new, imaginative and currently unforeseen way to generate a possibly bigger crisis several years hence. Whereupon, it will expect the Fed to do its job, as Wall Street sees it: saving the economy, by saving finance. Moral hazard matters, but only for the poor.
http://ftblogs.typepad.com/wolfforum/
Don’t get Marriage Tips from a Realtor(TM)
See this mailing:
http://www.flickr.com/photos/tppllc/1445400052/
http://money.independent.co.uk/property/homes/article2996808.ece
Ex-UK realtor spills the beans on dirty realtor tricks in his new book & website. A good read - next month his IhateRealtors.com website is due to go online, where people can post their negative experiences/lessons learned with realtors. Enjoy!
Not everyone believes the War on Savers will ultimately succeed.
GETTING GOING
By JONATHAN CLEMENTS
When a Recession Threatens, Cash Suddenly Has Cachet
September 26, 2007; Page D1
When recession rules, cash is king.
It’s tough to figure out where the economy is headed, and some folks think today’s biggest risk is inflation, not recession. Still, in trimming the federal-funds rate last week, the Federal Reserve noted that “the tightening of credit conditions” could “restrain economic growth.”
Indeed, the signs are ominous. August’s jobs data were notably dismal, with nonfarm payrolls shrinking by 4,000, instead of the 112,000 job increase expected by Wall Street. Americans are getting squeezed by tumbling home prices, rising mortgage payments and $80-a-barrel oil, and all this could cut into consumer spending.
http://online.wsj.com/public/article/SB119075752076939145-rPqdYJLBsIMLhbB5VW6bRUJhhYU_20071006-search.html?KEYWORDS=getting+going&COLLECTION=wsjie/6month
Here’s the LINK to Hillary’s Page where she invites you to tell how your “American Dream” was ruined because you can’t pay your ARM
http://www.hillaryclinton.com/feature/mortgage/
(And how she’s going to steal my money to bail out Harry Howmuchamonth)
(My response to Hillary on her “American Dream” web page)
http://www.hillaryclinton.com/feature/mortgage/
Dear Hillary:
My American Dream is at risk! I’ll have to sell my home (which I own free and clear–no mortgage) to pay for the tax increases that you want!
Also, by pumping “funny money” into the housing market, instead of letting the market take care of itself, you raise property values artificially, which raises my property taxes for no good reason.
I thought I could pay off my house and, with a few million in the bank, retire. I can’t! Interest rates are kept so low (to “save” the housing market) that I can’t get reliable income from my money, and I’m taxed to pay for my irresponsible, greedy, and foolish neighbors.
Hmm it seems like your site ate my first comment (it was super long) so I guess I’ll just sum it up what I submitted and say, I’m thoroughly enjoying your blog. I too am an aspiring blog writer but I’m still new to everything. Do you have any points for novice blog writers? I’d certainly appreciate it.