For Sale Signs Now Sprout Everywhere
The Boston Globe reports from Massachusetts. “The section of the South Shore centered around Plymouth continues to experience a big drop-off in home sales and prices. Figures compiled by the Warren Group show that home sales throughout Plymouth County are down 10 percent so far this year, compared to the same period in 2006, while prices have fallen nearly 7 percent.”
“Kimberly Allard-Moccia, former president of the Plymouth and South Shore Association of Realtors, said the soft market, while troubling to owners watching their home values fall, is actually a good thing for the overall market.”
“‘The region experienced unprecedented growth,’ said Allard-Moccia in Braintree. ‘It wasn’t healthy from 2001 to 2005, when buyers were getting into homes that didn’t meet their needs.’”
“‘I tell sellers, ‘This is not rocket science. You have to be realistic in your price,’ said Peter Ruffini, president of the Plymouth and South Shore Association of Realtors. ‘If you’re not, you are setting yourself up for failure.’”
“Already, said Georgia Taft Pye, of the Duxbury firm Buyer Brokers of the South Shore, ’sellers are getting more realistic.’ And that, she added, has really benefited buyers who ‘really can pick and choose.’”
“Developers are going forward with several major projects now on the drawing boards. In neighboring Kingston, town planner Thomas Bott said he has not seen a big slowdown in development. ‘I keep hearing people tell me it’s awful out there. On the other hand, I just received an application for an 80-unit subdivision,’ he said.”
“Of all of the players in the South Shore and Plymouth real estate market, first-time buyers have the biggest advantage, brokers in the region say. ‘With no house to sell, they are in the catbird seat,’ said Pye. ‘Everyone else has to sell their house first, and you are just waiting for the domino piece to set everything in motion.’”
“The foreclosure crisis (is) sweeping the north side of Lawrence, a crisis that is…shaking a local economy only beginning to recover from the real estate crash of the 1990s, when so many abandoned buildings burned that Lawrence became known as New England’s ‘arson capital.’”
“‘I thought nothing could be as bad as the ’90s,’ said Mary Marra, executive director of a nonprofit developer of affordable housing. ‘But I’m beginning to question that.’”
“Lawrence’s north side is one of many communities that were flooded in the late stages of the boom with subprime mortgages. Many succumbed to the lure of easy money, and bought homes beyond their modest incomes. Now, pick any street and chances are you’ll find homeowners in foreclosure, or desperately trying to sell before it’s too late.”
“At Ebenezer Christian Church, Pastor Victor Jarvis said, church members approach him and whisper, ‘I’m losing my house. Please pray for me so I’m able to sell it.’”
“Ana Luna is executive director of Arlington Community Trabajando, a north Lawrence neighborhood group. She shook her head as she recently drove past empty homes, slapped with tags that indicate lenders, unable to sell foreclosed properties, have sealed them up and shut off utilities. ‘You think of all the people who need a place to live, and these buildings are just sitting there,’ she said.”
“Altagracia Portorreal remembers her next-door neighbor sobbing at the front door. After a year of working 12-hour days to pay her mortgage, the neighbor was giving up. She sent the keys to the bank, packed up, and abandoned the three-decker on Walnut Street.”
“An estimated $1 billion in subprime mortgages flooded this one section of Lawrence from 2003 to 2006, according to First American LoanPerformance. The amount of subprime loans nearly quadrupled during the peak of the housing market in 2005, to an estimated $300 million from less than $80 million in 2002.”
“‘It was so exciting for the city to see people buying homes and investing, and neighborhoods becoming economically stable,’ said Andrea Ryan, housing manager in Lawrence’s Community Development Department. ‘Now we know it wasn’t all real.’”
“‘For Sale’ signs now sprout everywhere, often several to a street. Properties frequently are being sold for less than what the delinquent homeowner owes on the mortgage, a so-called short sale. Bob Ciccarelli, a real estate broker, said he has 19 listings in Lawrence. Eighteen are short sales. One of these properties, bought last year for more than $300,000, is now listed at $180,000.”
“‘Even decreasing the prices,’ Ciccarelli said, ‘they’re still not selling.’”
“Two years ago, Diane Jones bought her Danvers apartment when it was turned into a condominium. Today, Jones shakes her head when asked how those good intentions went awry. ‘I trusted people,’ she said, explaining that she didn’t shop around for a mortgage, didn’t read all of the mortgage documents, and didn’t understand how bad things could get.”
“But as her adjustable-rate mortgage approached reset in June, eventually boosting her monthly payments by more than $450 to nearly $2,000, she knew she was in trouble and might even lose her home.”
“To pay for her $228,000 condo, Jones took two mortgages. The first, with an initial interest rate of 6.99 percent, charged interest only for the first two years. After 24 months, Jones not only started repaying principal but found her rate jumping to 9.99 percent. That resulted in a 43 percent increase in those monthly payments, which jumped to $1,520 from $1,063, an amount that exceeded what she had previously paid for both mortgages.”
“Worse, a provision in the mortgage allows rate changes of up to one percentage point every six months to a maximum rate of 12.99 percent.”
“The second loan is a fixed-rate 11.25 percent mortgage with monthly payments of $443 that comes due with a lump-sum payment in 2020.”
“She sat down with Karen Busanovich, a certified financial planner in Woburn. Delays in the consolidation process, however, damaged her credit rating, which dropped to the 400s from the 600s. Scores under 600 are considered high risk.”
“When she contacted various refinancing programs, Jones found her credit was no longer good enough to qualify. Her lender wasn’t interested in negotiating because she had been managing to scrape together her monthly payments.”
“A quick review of income and expenses showed that Jones was spending about $1,000 a month more than she was bringing in. Even if Jones trimmed her bare-bones budget by dumping the cable TV at $66 a month, she would still be in the red.’
“Jones was faced with unpleasant choices. Busanovich said she could get a second job, sell the condo, or get the lender to renegotiate. Or she could let the lender foreclose. ‘At some point, you have to decide if you really want to be a homeowner,’ Busanovich said.”
Lancaster Online from Pennsylvania. “The summer collapse of the subprime lending market, which sent shock waves through the mortgage industry, is now affecting customers who want to purchase or build costlier homes.”
“So-called ‘jumbo’ mortgages, defined as loans that exceed $417,000, traditionally have slightly higher interest rates than conventional mortgages, but now that gap is even bigger.”
“Mark Pontz, a VP of Arlington Capital Mortgage in Lancaster, said about 25 percent of the loans there are of the jumbo variety. Typically, the interest rate for a 30-year jumbo loan is maybe a quarter of a percentage point higher than for a conventional loan of that length, Pontz said.”
“But with the lending crisis this summer, ‘that jumped, in some cases, to more than 1 percent,’ he said.”
“‘Everybody freaked out’ when the default rate escalated, and the jumbo mortgage market took a hit because those loans carry risk, too, Pontz said.”
“One woman, who asked not to be identified, said she and her husband, who are building a home in Manheim Township, went to get a jumbo loan and were stunned at the 8-plus percent interest rate one lender offered. ‘We were thinking 6-ish,’ she said. ‘It really made us pause.’”
The Long Island Business News from New York. “If the national economy stumbles into a recession it could very well start right here. Overstocked with overpriced homes and suffering equally from chronic brain drain and dwindling job creation, Long Island may become the poster child for all that has suddenly gone wrong with the U.S. economy.”
“Housing stocks on the Island stand at 15 months, or 50 percent higher than the national average, with prices well off their 2006 peak. And while home prices set records in other parts of the country, as much as five times annual household income, in some places, few spots can match Long Island, where prices reached nine times annual household income in some parts of Nassau County.”
“Most homebuyers can’t afford those prices. In fact, only about 10 percent of Nassau residents and 15 percent of Suffolk residents can afford to purchase the home they live in. ‘Our housing has not only become unaffordable, but it has moved away from affordable by a very large amount,’ said Pearl Kamer, chief economist at the Long Island Association.”
“Thanks to the glut of home-equity loans and adjustable-rate mortgages, many Long Islanders can’t afford to sell their homes, either.”
The Staten Island Advance from New York. “A recent spike in foreclosure filings on Staten Island is helping self-storage facilities here thrive like never before, according to those who manage them. Many of the Island’s 11 self-storage facilities are near capacity.”
“Thousands of units are filled with furniture, appliances and decorations owned by people whose mortgages are in default.”
“The borough had 1,582 foreclosure filings from July 2006 through July of this year, according to a recently released state Senate report. And in August, there were 240 foreclosure filings in the borough, up 4 percent from 230 in July. Percentage-wise, the borough ranks second in foreclosures among the state’s counties.”
“‘A lot of people are having a hard time,’ said Jesus Sanchez, manager at Victory Self Storage in Travis, which is currently renting more than 90 percent of its 439 units. ‘You’ve got people losing their jobs, they can’t afford to pay their mortgage anymore. Once they get (forced from their homes), they don’t want to lose their stuff.’”
‘Properties frequently are being sold for less than what the delinquent homeowner owes on the mortgage, a so-called short sale. Bob Ciccarelli, a real estate broker, said he has 19 listings in Lawrence. Eighteen are short sales. One of these properties, bought last year for more than $300,000, is now listed at $180,000.’
IMO, this is where those $billions of Wall Street write-downs are evaporating. And notice; no bail-out, and none needed.
$180,000 in Lawrence is still 50% over priced - at least.
120k gone in a year…that’s a serious hit.
spike66,
three words..
location, location, location..
it’s no different than when you are looking for a spot to dispose of a body…
In the city of angles, Angeles Crest Highway is the preferred drop off spot…
or, in l.a. county, the palos verdes peninsula. no street lights and a strictly enforced “rural-like” enviornment make a perfect place for dumping murder victims from the nearby port….
How is it that you guys know these things? Wait. Don’t tell me.
Tinicum Marsh used to be the spot to find bodies in Philly. This might have changed.
Chicago killers are less fussy, cornfields, car trunks, dumpsters, etc.
The scale of the housing debacle appears to finally be dawning on the MSM.
Another article from today’s edition of the BeanTown Globe.
http://www.boston.com/business/personalfinance/articles/2007/10/07/tips_to_lower_anxiety_as_mortgage_rates_reset
“And notice; no bail-out, and none needed.”
I’m grateful for that bit of justice. It should also corner many politicians in areas where property taxes rose quickly due to inflated appraisals. When the appraisals come back down to what they were 5-8 years ago, the pols will have to explain why the taxes don’t, also.
What’s really strange, is I felt like I was the only person angry about what was basically “counterfeit money” purchasing nearby property and raising my property tax!
Everyone else I spoke to thought it was just fine! Now that their house was “worth” so much (because of valuations based on comp sales), they were now Millionaires!
What idiots! Their taxes go up for no good reason and they’re HAPPY because some “what’s my home worth” website shows a big number.
This is my first post.
I lived in the same house for 7 years and walked miles every night. The housing boom looked odd for many of those years. But the nature of its impact on neighborhoods started to change in 2004. There was a complete shift in 2005; 10% of the homes within a few blocks of mine were sold and all were sold to people who would be questionable renters. That’s when I told my wife–it’s time to leave California.
Howdy, Clair.
And, did you in fact leave California? If you did, where’d you go? Is it better?
Welcome C.V.
Feel free to share your experiences selling your house and to whence you went?
Olympiagal,
I sold my house a year ago. I accumulated a lot of equity in the prior 7 years. I only refinanced to get a lower rate and redo the kitchen. I took my equity and purchased an undeveloped subdivision from a builder in a Midwest College town. My new “lot” is over 1/2 mile deep. A few months ago we started construction on a single home in the middle of the forest. While working on our new job plan, we rented in the SF Bay Area for the past year. This summer my wife left her faculty position at a California University for a new role at a Big 10 school. I’m still working on my plan–but it’s going well. The kids are in a new school and having a great time. We spend our weekends hiking our new home. We have deer, turtles, snakes, coyotes, wild turkeys. Things are looking up!
Good timing…
We sold in Sept 05′, and stories like yours & ours will be few and far between, the happy exception to the drama unfolding.
And I should add–I did recognize that my “accumulated equity” wasn’t earned. It was a gift from the fools that surrounded me. I simply recognized that the only way to convert my $350K debt into a $300K pile of cash was to sell–otherwise known as “profit taking”.
I should also add that I put a lot of effort into improving my home with landscaping etc. I had a wonderful rose garden, water features and an out door garden railroad. I really put a lot in that house. And though it kills me to drive by and see how it’s neglected, I think about my private paid in cash forest–then my despair isn’t so unbearable.
Aladinsane,
Where did you sell? Where did you move?
Also sold my house in July 2005 after living in San Diego for 35 years. With my tax free very large equity moved out of state and paid cash for a beautiful farm. No more city life, nature is my neighbor.When the public “wakes up” and find they have been had, city life will be most unpleasant and anger riots will be the norm while many houses will be empty from wall away buyers who felt they have be burned. Many unhappy people as the cost of living keeps rising and jobs, income remain stable at best. The middle class will disappear in California within ten years due too high taxes, cost of living, etc. Government can’t pay for everything any more even with new printed money.
Jerry F,
You are spot on. I’m not sure if the public will wake up—but they will feel pain—though many may never know why.
We sold an incredibly unupdated tract home in Rancho Palos Verdes and escaped to paradise, somewhere intrastate
Our neighbors are Bobcats, Foxes, Quail, Mountains Lions and the occasional Bear, and lots of Stars, that twinkle brightly…
Without the brazen light of civilization getting in the way
I agree that there will be bedlam in the bigger cities, and we were lucky to escape, just in time…
The rest of you:
There’s still time to get away
I would love to upgrade to a larger house right now, but can’t get over the fact that the area that we’d move into would have an annual property tax of >$8,000. This would probably be our retirement home and I just don’t think that we’d have a fixed income that could afford that growing tax level when that time comes.
I can handle the mortgage, bc it would be fixed. But the property will always grow, and I just don’t want to have to get a loan to just to afford the property tax in the future.
Chicago — sounds like you are/were headed to Florida or Texas. Florida prices and taxes are awful, though the former is coming down and the latter should trail it, but won’t completely. From everything I’ve read here, Texas prices are relative cheap, but the property tax rates are much higher than even here in Florida.
Chip, I’m from southwest suburb of Chicago and have plans to retire here also. We currently live in a raised ranch and to move into a four-bedroom contemporary would put us near the half a million range. That’s crazy money! The home we can afford, but right now I’m waiting for tax appeal fallouts to see what the city’s going to do to help current struggling homeowners.
Increasing gas, food, cable tv, resetting ARMs, HELOCs, Xmas, etc. - I want to see how the average consumer does the balancing act……those with and without a job.
Clair: I have a “Paid in full” forest, too! I’ve named it “Swampworth”. Haven’t built the house yet, though it’s been architected and permitted. We decided to wait because it was supposed to be for “retirement” and we didn’t want it valued at the peak of the bubble (for tax reasons).
Then we deferred the build again because there’s a thing on the ballot to REMOVE the inflation protection for property tax! It’s name deceptively like the “Roll Back Your Taxes” initiative, and most people will save a few $$ for the first few years if it passes so I’m very afraid it will pass. These “howmuchamonth” folks don’t care about a few years down the road.
Anyway, here’s our forest/swamp: http://www.swampworth.com/Album/index.html
(20 acres, physically adjacent to Walt DIsney World.) THe name “swampworth” pokes fun of ritzy “isleworth” to the north.
reuven -
Did you change your moniker? After that description of 20 acres in FL, it makes me think you’re the one from near scdave down in Santa Clara or Sunnyvale (or somewhere near there)…. as I recall that land was part of your plan for later in life.
Yes! I started out here as “Robert” but switched to my actual name “Reuven” (it’s Hebrew) because there were other Roberts here.
We moved our son into an apartment last week in Lowell, which isn’t far from Lawrence. Lawrence is not the kind of place if you’re looking for suburbia. A lot of cars stolen from the city where I work wound up in Lawrence. But we’re far enough away. Pretty stunning to hear that a billion dollars of mortgages made it’s way into Lawrence.
Stock market had a huge week last week on Monday and Friday. Goldman Sachs is back near its highs. For some, it’s party on.
RE: Lawrence is not the kind of place if you’re looking for suburbia
Arson and auto insurance fraud capital of the country!
Hi-ho Silver away!
If you’d only have been a Scrooge and saved a little, but now you are looking for prey to save you…
“At Ebenezer Christian Church, Pastor Victor Jarvis said, church members approach him and whisper, ‘I’m losing my house. Please pray for me so I’m able to sell it.’”
“Dear Lord, please find it in your heart to give my leprosy to somebody else. Amen.”
i dunno why people think it’s ok to pray for such things..
“Oh Lord, wontcha buy me.. a mercedes benz..”
For those with a religious bent, lemme tell you that God’s not some sugar daddy. So, ask for strength.. for wisdom.. for the tools you need to do the job yourself. He helps those who help themselves.
amen!
Not to mention they might want to read those chapters on how they are supposed to live per their religion. e.g., Jesus put a limit on the number of coats a man needs. Hmmm….
I’m thinking St. Joseph has first dibs on talking to the lord and he has a few not so kind words to say.
Got popcorn?
Neil
Newsflash!
St. Joseph has been found dead, the apparent victim of a children’s aspirin overdose
More news as it comes in…
“So, ask for strength.. for wisdom …”
That last part you said, the wisdom, that’s what’s been missing from this RE mess.
Get the wisdom and all else naturally follows. If you can’t get it for yourself then find someone who already has it and LISTEN to what he has to say.
“So, ask for strength.. for wisdom.. ”
And God grants it if used to help others… no different than when we ask Him for forgiveness. We’re called to forgive others when He forgives us.
But where in the world did the “God helps those who helps themselves” BS come from?
But where in the world did the “God helps those who helps themselves” BS come from?
It came from the Greek fable writer Aesop. “The gods help those who help themselves.”
It’s a religious version of an old wive’s tale.
But there is nothing biblical or scriptural about it. It’s a fallacy if you’re a Christian.
No, I believe the saying “god helps those that helps themselves is the protestant ethic. Robber barons used it to justify their theft to the masses. The protestant church (read new england church establishment) reinforced it.
Don’t believe me, look it up.
“God helps those who help themselves”
ok.. let me rephrase it.. use the converse.. and see if it passes muster with the biblical scholars.
God won’t help those who refuse to help themselves.
I believe the statement is invalid. Who says god cares one way or another about your financial lot in life. I guess, the question is, is wealth a sign of god’s grace on the believers. If I recall, under the protestant ethic, and I was raised as one, If you were frugal, hardworking, etc. wealth was a sign of his grace and it was reflected in your wealth. This ethic ran counter to the catholic ethic, which, if I recall, was supposedly rejection of this world (money, power, etc) for the salvation of your soul in the next.
This is just what I remember and read.
Either way, there is nothing Christian about it.
Although it’s correct we shouldn’t treat Him like some kind of vending machine He makes clear that we are to ask. Jesus himself says the same thing.
However, we are also to ask with the right motives. That part seems to be ignored a lot, especially by some TV preachers.
LMFAO!!!
Dear Lord, let me screw someone else over.
Why is religion always used to harm others…
Now now, I’m sure you aren’t serious.
Many of us need no invisible means of support…
Um, earth to HBB, come in HBB. This is your invisible friend up in the clouds calling. The Easter Bunny and the Tooth Fairy want me to tell you that unless you’re under the age of ten, this is starting to sound pathetic. Let’s get back on topic, shall we– and leave the fairy tales to the Sunday School blogs?
I wish I were the minister there!
I’d get up and say:
“When house prices were going up, not one of you came up to me and said: My house is now worth $100K more. Here’s a check for 10,000 to help the poor and needy, as the Bible instructs us to do”
Too bad I’m Jewish and probably wouldn’t get that job.
Sounds like they lacked a mortgage broker so they could HELOC themselves for tithe.
“‘It was so exciting for the city to see people buying homes and investing,
and neighborhoods becoming economically stable,’ said Andrea Ryan, housing manager in Lawrence’s Community Development Department. ‘Now we know it wasn’t all real.’”
- Sorry Andrea, these people were not ‘investing’, they were ‘gambling’ with money they didn’t have.
Pyrrhic Victory Economy
town planner Thomas Bott said he has not seen a big slowdown in development. ‘I keep hearing people tell me it’s awful out there. On the other hand, I just received an application for an 80-unit subdivision,’
ok.. well.. allow me to submit this application for a 8,000 unit complex, Mr. town planning genius.
dead market + additional supply = complete disaster
This guy is really a Botthead not to see this.
These developments will continue to be built until is costs more not to build them than to build them. Given the builders can be profitable at prices well below 2005-06, these means prices will need to drop 10%-20% below the lowest builders can sell at. Land keeps falling, construction costs down…bar is being lowered. When the current buyers are in foreclosure in 2009-10, and that round of foreclosures are price reduced in 2010, you’ll see prices at numbers far below what you could have imagined not long ago.
If they already have a lot of sunk costs, I’m guessing it may be possible to shave enough off the building process (after all, construction labor is probably cheaper today, and you can substitute some lower end materials), that even they can still make money even charging well under 1/2 of the original price.
In areas where there’s a ton of land (Central Florida, Idaho, etc), land prices–for the lots of the size that developers are interested in, generally 60 acres or more–basically tracked inflation over the past 30 years. Why? Because mortgage companies, even the free-wheeling ones, simply didn’t finance these types of transactions. You had to have cash, or be a large builder who can get credit.
I can show you large lots–60-150 acres that are in Orange County Florida (home of Walt Disney World) that sold to developers two years ago for less than some of the homes in Celebration Florida did. And, as a google map search will show you, there are still huge chunks of land near and around Orlando and WDW, even though home builders were shoving “investment homes” out in Lake County 40 miles away.
(Of course, in order to do anything with this land, you need a bunch of lawyers and connections with the county to work out wetland/zoning issues, but that’s Florida.)
If the builder in the early stages of construction can scale back the project a bit (lower quality even more, etc), it still may be worth building! Heck, rent them out to Section 8ers and get rent chacks from the guv’ment for a while.
I attended a short sale discussion last week. In attendance were two RE brokers (actually good reputable brkrs), one mtge brkr, one short sale attny, one bkrptcy attny and some lay folks. Anyway, from what I gathered from all but the lay folks, things are beginning to get ugly. It was all pretty dour. Now, when you’re in a room with re & mtg brokers, and they’ll not spinning the buy now yarn, you know things can’t be good. What I found very interesting is that they were all saying how the problems are/have spread to the more affluent towns. I am not saying its different here, but the towns they were mentioning had very low levels of BK, foreclosures, etc. These are some of the old money towns and relatively high median incomes. From what I gathered, the containment area has vanished and the disease is spreading far and wide.
The BK atty was scary honest about what he sees coming.
“What I found very interesting is that they were all saying how the problems are/have spread to the more affluent towns.”
The affluenza bug was very widespread.
“The BK atty was scary honest about what he sees coming.”
Hey Pen, check out the link on the Bits thread. Couples making 85k-250k, all deep in debt, and still spending, as if it’s still 1960 and the US is an economic powerhouse.
What’s the point of education,if all these well-paid folks can’t stop and look around for a moment and put two and two together?
Slightly OT, but from Manhattan this weekend. Don’t know if its the Buildings Dept. or the insurance companies driving this, but a lot of Manhattan condos and coops are being forced to spend big money on re-pointing bricks and redoing building facades. Two different people mentioned that to me this weekend–one a client, one a friend. Friend is being hit with 500 a month assessment, on top of 1100 maintenance and her whatever mortage payment. Doesn’t have the cash to write a 12k check.
She expects her maintenance to go up in Jan again, as well.
Client gave no numbers, just was generally moaning.
There’s a lot of ways to get squeezed for cash.
Not to play the one-up-mans-ship game, but here in Beantown, there is a twin building condo development in downtown near the aquarium, built in the late 60s, early 70s, where then unit owners are getting hit with a $100/sq ft assessement. It must feel great to get with a $100,000 assessment on a 1,000 sq ft condo on top of a monthly HOA fee of $500 plus. The owners thought it was bad when they got hit with $10,000 per unit for windows. How 100 sq ft of glass cost ten grand, I’d like to know.
Which is why I’ll never buy in a condo. Too scary to contemplate what could happen in the future, especially here in FLA, where so many illegals were employed. I just wonder when the wave of people walking away from condos because of assessments will happen.
Even in SFH, if you have an HOA, you don’t know what can hit you. If, for example, someone sues the HOA and wins, then guess who all has to pay the judgement (if the insurance won’t cover it, or they forgot to pay their liability insurance, etc).
Visit one of the many HOA horror story sites for HOA horror stories!
Basically, if you have CC&Rs and and HOA, you’re always in danger of getting a surprise bill.
(While Nancy Pelosi calls the tax bill on forgiven debt a Surprise Tax Bill, as if that hasn’t been taxable since 1930, this type of assessment truly is!)
reuven, I once lived in an HOA and that was enough for me. I prefer to avoid such arrangements if I can. Traditional neighborhoods are good enough for me, but as Bill in Carolina pointed out not too long ago, not much was built since 2000 that wasn’t in a HOA or condo association. Scary.
Orange county, Florida, MANDATES HOAs for all new construction. They feel it will save the county $$$ on code-enforcement costs, etc.
So, yes, you basically have to buy in older communities, or find odd scraps of land that are outside of an HOA-ruled area and deal with permitting, zoning, building yourself.
But, who wants some old biddy on the “Architecture Review Board” to tell you what color you can paint your house, or to get a fine because your kid left his basketball hoop in the driveway. (What’s with these people!? When I was a kid, we all just had basketball hoops nailed above the garage! Try doing that in Celebration, Florida!)
I have lived in a HOA for 20 years, and you are correct, that it is a nightmare if someone on the board makes redicious demands. I have fought HOA’s and gone on the board. You would be surprised how little number of votes it takes to be elected. Just knock on homeowners door’s with doc assigning their vote to you. In our community it takes to board elections to elect board members. The first meeting requires a 51% quoam and the second meeting only requires 26%. Homeowners have to take an interest in the HOA or they will get screwed.
the 1986 townhouse in which i reside (in an apt) has been surrounded for the past 2-1/2 years by the repointing of the 2 15-storey corner highrises.
i believe the bldg dep’t now demands careful inspection every 5 years, with subsequent repointing a common consequence.
i think this all dates back to an accident in which a girl was killed by a falling piece of concrete about 20 years ago, after which the repointing requirements were considerably stiffened.
“1986″ should read “1896″
I read that article on Friday. Unbelievable.
Here in MA, one of State Reps (I think) is introducing a House Bill to put personal finance into the school curriculum. Of course, there is the usual, “how do we pay for it?” problem. Why they can’t just build it into the math coursework, I don’t know. It would be the perfect answer to the math is useless comments that kids always make.
Before putting two and two together, they need to start with 1 + 1 and go from there.
My stepson had a personal finance course in his senior year in high school. They learned “all about” checking accounts and credit cards etc. but when he joined the Marines he went right into debt and we get calls for him all the time.
I don’t think there’s anything that can be done! I can recall personally explaining to at least 3 different people how dangerous and silly it was to get an I/O or Option-Arm back in 2005 when 30-year-fixed were 5.5%! Even the “teaser” rates were higher than that on ARMs (but the payments lower because of the Neg-am).
Basically, there were three categories of customer for these products.
1. Complete Idiots. They just wanted a piece of the pie. *This* get-rich-quick scheme will work. All the others they tried in the past (Multi-level marketing, “Day Trading” courses) may have been scams, but this was the real deal
2. People who knew the math, but paniced thinking they would be “priced out forever”
3. “Magical Thinking” types who just thought they’d be making so much money in 2 years that it won’t matter, or that the Government simply wouldn’t let *everyone* fail! There are too many people in it.
And you know what, the #3 magical thinking types may prove right (with the Guv’ment bailout). Now *I* feel like a sucker.
I have a BA in Mathematics, so it’s very easy for me to see the rip-off in things like 40-year mortgages, etc. It’s simply an equation to me. I’ve never even paid credit card-debt in my entire life, even though just about every purchase I make is on a no-fee cash-back credit card (Fidelity gives 1.5% back on all purchases with no annual fee.) I don’t have any confidence that all my “smarts” will make be any better off than people who saved nothing.
(Do you know that something like 40% of all people simply spend their 401K when they switch jobs—even with the massive tax hits!)
nothing wrong with continued education..
But, should he fail this course, i hear the Marines teach them all the basic survival skills.. how to live off the land.. eat bugs.. bathe in streams.. bed down in the bush. He’ll survive.
Reuven,
I’m with you..acquaintance wanted to buy a coop in Bronxville, nice place, decent price in 2004. But, with fixed rates at their lowest in 30 years, did she get a fixed-rate?
Noooo. Money mag ran some article on how ARMs were a better deal because most Americans move every 7 years.
Her ARM, 2004 vintage, was based on Libor, and my guess is that she will be underwater or forced out long before 7 years is here.
Consumer outlets like Money, Smartmoney and the like have been printing irresponsible advice all thru the bubble…with no consequences, except to their readers.
Spike — late for this post, but your reference to the Libor-based ARM fired me up. As I understand it, a huge percentage — presumably the majority — of ARMs in the U.S. are indexed to the Libor, not the Fed Funds rate. So it baffles me that the talking heads on TV and in print can so successfully pull off the Lenin-quality big lie that the Fed’s rate cut was going to benefit mortgage-holders.
Penn~
Mazzholeland wants to implement a commuter road tax @ 5 cents per mile.
The media sound bites all allude to the fact that roads are just like a utility and must be paid for.
Read between the lines and it’s a situation of, “You idiot Mazzholelander’s have been clipped by the political and big union thieves runnnin’ the POS leakin’ and crumbling Big Dig for $15 billion in “over-runs” and now you have to ante up.
And never mind the fact the pol systems squanders the state gas tax on a lavish collection of pay, pension, and benefit packages for gold-bricking, over-staffed transport departments.
Abandon hope all ye who enter here!
yo, ho, ho, HD.
Ye’ be preachin’ to the choir, mate.
Unfortunately for me, I’m stuck here for a good ten years. Sure, I’d like to leave, but all of my friends and family are here, as are the other halfs, etc.
For now, I just have to grind it out and make the best of it. I’m lucky to be fairly well off.
hey hd74man,
I know you know New England well…is there anyplace there not saddled with killer taxes? I usually rent a few weeks in the summer in Knox Cty, Maine, but buying, even with prices coming down looks nuts. Friends bought in Arlington, VT., but they are well-funded. I love upstate NY, but taxes there are killer. Any thoughts? (We’re not talking soon–3-4 years out).
Many thanks.
I’m not HD, but I think the answer is “No”. I can’t think of anywhere that doesn’t get you coming and going.
Here in MA, we even have excise tax on our boats. Yes, after you pay the sales tax, registration fees, title fees, mooring fees, you get hit with an excise (use) tax for the use of the ocean.
Spike66~
RE: is there anyplace there not saddled with killer taxes? I usually rent a few weeks in the summer in Knox Cty, Maine, but buying, even with prices coming down looks nuts. Friends bought in Arlington, VT.,
Spike66-If you want New England, New Hampshire is the brightest spot. Consistantly ranked in the Top 5 as a place to live in various financial/lifestyle rags.
No sales or income tax-but a heafty property tax, which you avoid by not building a McMansion. Personally, I like the topographical area between Concord and Mt. Sunapee. Not too congested-and easy access to interstate
systems and north country plus Southwest airline hub in Manchester if you want to fly somewhere on the cheap.
Concord recently rated as a Top #10 retirement town.
Maine’s a great place to vacation-but it’s a tax hell-hole. #1 in the country, while 33rd in per capita income.
While I love VT, it’s got the same socialist attitudes and problems as ME.
Both state’s are runnin’ recruitment ads for recent college grads, because all the young have left with the businesses which have been run out by the leftie politco’s and now there’s nobody left to pay the bills.
Maine is in a definite economic death spiral.
They have let the problems fester to long, and the age demographics plus a large expensive to maintain infrastructure are killing them.
Interesting you bring that up. My wife and I are seriously considering staying here in this area (North Conway, Bartlett, Jackson- New Hampshire). Probably make a decision in the next few days and possibly hang up our spurs after almost 4 years of travel.
I have to agree that NH is probably the brighest spot in NE. Anything north of Concord is beautiful. We make a trip at least once a summer to the North Conway region. Except for the fact that my family is here, we’d probably seriously consider living in that region of NH.
There are many pockets of conservative thought in Vermont but they do tend to be drowned out by the mostly out of state (New Yorkers, mostly) who are looking to make VT their own little slice of paradise. The small towns and what’s left of the farmers, especially, have some very conservative streaks.
BWHAHAA! Arlington, VT… chock full of metro morons creating the very thing they’re trying to escape. My family (father, 3 uncles) own a 400+acre dairy farm in Arlington. Last spring they peeled off 2 five acre lots for the endless supply of fools swarming there. Get this…. Lot 1 required roughly $100k worth of site work just to put a shack on it (either blasting or weeks chopping rock with a HoeRam). Lot 2 was ready to roll. My father priced a $50k difference in lots with lot1 being the “cheapest”. Just as we predicted, the sneaker wearing fool looking to buy insisted on buying lot 1 saying “it’s cheaper”. He “bought the farm” on that one. Guess who he hires to chop rock? Uncle#2. Uncle#2 is working on TIME AND MATERIALS for this idiot buyer at the buyers insistence. My uncle is already into this guy 70k for rock removal and he’s only 30% finished removing rock. Well the dopey fool of a buyer “ran out of money” and now he has $220k into an unusable 5 acre lot!!!!! Whats funniest is dirt in VT has always been $1000-1500 an acre for as long as my 40-something mind can remember.
“There are many pockets of conservative thought in Vermont but they do tend to be drowned out by the mostly out of state (New Yorkers, mostly) who are looking to make VT their own little slice of paradise.”
But they’ve turned paradise into the very thing they’re attempting to escape from. Clogged roads, gargantuan vehicles, high taxes, nasty attitudes, architecture found only in Ripleys believe it or not, etc.
We spent a few days in Bretton Woods last weekend and it’s very pretty in the area right now. There’s a train that goes to North Conway though we drove over. We had a very nice lunch at the Stairway Cafe in NC.
The points about New Hampshire are generally spot on. I’d just like to add a few comments though:
there is an income tax in the form of interest and dividends. If you make more than $4,800 in interest and dividends, there is a 5% tax on the amount of income above $4,800. You’d better like the cold weather unless you have a second home where it is warm. There is demand for an income tax by Democrats that want more tax money available and by Republicans that are fed up with high property taxes. I do not think that we will have a broad income tax in the near future but it is something that should be watched.
If you have a good income, don’t need a really expensive house, can handle cold weather and like the great outdoors, it’s a great place to live. The big city isn’t that far away and infrastructure is in decent shape. You can head to Maine if you want the beach or Mass if you want the big city.
I’m encouraged by this exchange. There apparently are a number of people who what their vacation or retirement homes to be in the North, instead of here in the South. More power to ‘em.
Veering sort of O/T, I once stumbled into some listings in Santo Domingo, along the coast. Naive me thought that the property would be cheap. Not at all. But maybe that is because once you’re in, there are little or no additional taxes — you can moor and use your boat without paying for the ocean, etc.
Chip, I think in the end, more temperate climates are where most retirees end up. I know this…. those who move north typically bail once the high costs (taxes, fuel oil, etc) and the hard winters bear down on them.
In the end, we don’t want them either.
RE: Interesting you bring that up. My wife and I are seriously considering staying here in this area (North Conway, Bartlett, Jackson- New Hampshire). Probably make a decision in the next few days and possibly hang up our spurs after almost 4 years of travel.
AI~
Burlington, VT and North Conway NH are the Boulder CO’s east of the Mississippi.
You won’t go wrong with the area as a place to hang your hat.
I like the area a lot.
Huh, guys, I guess you missed the news earlier this year that the oldest of the elderly were leaving Florida and returning to the North (such as New Jersey) where they would enjoy state-subsidized care.
Low taxes are great, when you’re 55 and healthy…
The funny thing about the short sale is that the media keeps saying ask for a short sale..but I have heard from people in that business that the lenders, ESPECIALLY the banks, are not accepting the idea of short sales and are saying basically pay up or get out. So in reality what percentage is really going to get the lender to agree to it?
ah yes, the old mtge payment poem is in effect..
If you, you stay,
If you don’t, you won’t
If you pay, you stay,
If you don’t, you won’t
My guess is that banks want to make sure that not paying your debts really hurts. From a lender’s point of view there is little difference between a short sale and a foreclosure and a sale. What motivation do they have to let a debtor of the hook with limited damage to his credit?
The BK atty was scary honest about what he sees coming.
Please elaborate!
I give bravo where it is due - good work, S.I. Advance, for wisely using an ancillary biz -like self-storage - to take a true gauge of the market instead of relying on a realtor talking head!
“Once they get (forced from their homes), they don’t want to lose their stuff.’”
But a lot of times they do lose their stuff, too, when they don’t pay the storage bill and the contents of the storage unit gets auctioned off. Happens all the time around here in FLA.
I predict a storage bubble. Prices for storage units in the NYC area are insane. You are better off burning your $hit.
That article has some funny comments about folks wasting their $ storing stuff.
yes, people just can’t let go of their “stuff”. Reminds me of the George Carlin riff about “Stuff”.
Cities of the future: cardboard box houses with Chippendale furniture!
if these people would just use their heads, they would figure out that every payment they make on their junk in storage is just how much more they are paying for that junk. its cheaper to leave it behind and start over with used furniture.
“That article has some funny comments about folks wasting their $ storing stuff.”
This is a strong argument in favor of (1) garage sales or, barring the feasibility thereof, (2) trips to the local dumpster.
It’s a great idea to watch these businesses - I posted a question on weekend topic suggs. about not-so-housing-related businesses that may be hurting during a recession - folks mentioned stuff like bars, cable TV, and I mentioned high-priced coffee places —
It would be really interesting to have a list of these places -and find folks who know someone in these industries — and do a spot check every now and again - both the places that would suffer and those that will benefit.
It sure is a better idea than depending on MSM to take such a pulse. The Advance’s piece is the first one I’ve seen smart enough to try to take a pulse this way. God knows, the Times would rather parrot an appraiser or realtor than do this kind of legwork.
i’ll try and start a list of recession proof products and industries..
self storage.
pawn shops.
alcoholic beverages.
women’s makeup.
women’s shoes.
women’s clothing.
women’s clothing accessories.
women’s perfumes.
women’s hairstylists.
smelly bath bars.
loofas.
hmm.. that’s all i can think of at the moment.
Let’s see:
alcoholic beverages.
women’s makeup.
women’s shoes.
women’s clothing.
women’s clothing accessories.
women’s perfumes.
smelly bath bars.
loofas.
Alright! I like all those things! And I got lots of it! Hooray for me!
Except for the hairstylist thing. I cut my own hair. Usually when I’m drunk.
Seriously, you sound a bit bitter there, joe. Woman in your life cluttering up your bathroom counter with beauty products? Shoot you with a gun she bought at a pawnshop?
Try to relax, man. Have a bath and use a loofah. They’re great.
LOL! Joey I think you need to file a full disclosure with that list
OK seriously, a couple more recession-vulnerables (just thoughts so chime in if you think otherwise):
Travel (someone listed this as well -sorry I forgot about it)
High end clothing (both sexes)
High end prepared foods
Charities (sad but true - people won’t be donating as much)
Computers/Tech/Electronics (upgrading will be minimized as much as possible)
The entire wedding industrial complex - florists, photographers, videographers, planners, et. al.
“The entire wedding industrial complex”….
Lol, thanks for the chuckle.
Housegeek,
I liked your list – but computer tech won’t be affected. The sh$t they make now generally breaks within two years – and businesses are addicted and can’t function with out them. We’ve watched ‘em send everyone home when a server blew up in the middle of the day as they couldn’t do jack with out it so there was no point in the staff hanging out while we replaced & restored.
Reality is they *have* to fix ‘em when they break. Keep in mind the “dot com” bust wasn’t really anything more then web people & the on-line companies they worked for. Real techs and admins didn’t even notice (the last 15 years have been nothing but up for our company every single year…).
Home stuff might suffer – but the margins on that suck anyway (again, no one would notice – real money is made on the business side, the home crud is how you addict the workers to specific things… easier to just use what your staff already knows then train everyone on a quality product built for that industry…).
i kinda agree that computers and various peripherals are now as much of a necessity as telephones .. the home stuff provides cheap entertainment (we are here, aren’t we?) .. the industry will do just fine, imo.
wedding industrial complex will suffer.
divorce industrial complex will thrive.
And somewhat related the continued necessity of the care and feeding of all which attends to maintaining and enhancing female beauty, I forgot razors and blades and soap (non-smelly) for the men.. sales will be stable.. the wimmin don’t want us walking next to them if we look and smell like stray dogs.
Good point about biz - but I’m thinking of tech/electronics in connection with home — high-priced toys, I think will not be as alluring -that is, unless the prices come down — hmmm… $50 iphones anyone?
If we really go into a Greater Depression, I would expect divorces to peak. Yes, at first they go up as all the FB’s and spoiled brats divorce over money problems, but then I would expect them to slow down as no-one has fast cash to woo extracurricular mates and people are seeking financial safety. (I’m thinking of some comments in Since Yesterday about the 1930’s.)
We’d have to be talking serious pain, though.
I have heard of people liveing in storage units because homes are so expensive.I knew a kid in college that lived in one.Hey lets all do a movie about roaming the country takeing turns liveing in storage units in bubble cities?
I had my first office in a 10×10 storage unit. Went okay for about 3 months until I overloaded a circuit running too much equipment on it and the owner discovered my hideaway.
self storage.. another disaster / recession proof industry?
in Lake Tahoe, after the fire where about 250 homes were destroyed, you practically couldn’t find a vacant storage unit in the area.
RE: self storage.. another disaster / recession proof industry?
Wait until the divorce rates starts spiking and all those prior divorcees employed in the RE industry, who used their artificially high incomes to ditch hubby, start losin’ their jobs and swingin’ single condo’s.
Useage for storage is gonna blow thru the roof.
I think you’re correct about self-storage, but logically the opposite should be true. Why pay $100/month to store crap you don’t need? The entire business is based on a couple of defects in thinking. One is that you’ll only hold the storage unit for a few months to a year while you either a) get rid of the stuff or b) find a bigger place so you can store it at home. In fact, most people end up storing their junk for three years, on average. In other words, you end up spending three grand to store crap you will never need. The second psychological defect involves holding stuff that a decedent left behind: people would rather hold onto stuff for reasons of guilt and sentiment rather than sell it off. Again, they end up holding on to stuff they will likely never use. Self-storage is mostly a big scam and a waste of good, usable real estate. In fact, Public Storage made its fortune by buying nice urban real estate, where people could easily get to their useless crap.
RE: Self-storage is mostly a big scam and a waste of good, usable real estate.
L~ While I agree with your people are hostages to their possessions perspective, most of the self-storage area’s in my neck of the woods have been built on rather crappy sites like tapped out gravel pits, backed-filled swaps, locales with low-quality high commercial density, etc.
Only way to establish a positive cash flow biz today in the Northeast is with a low site acquisition cost which is very difficult.
Plus what better way to turn a legit buck than to capitalize on people’s gluttony and addiction for “things”.
Hellava lot better than casinos.
The new Low Cost Housing solution
http://www.pleasantonweekly.com/morgue/2005/2005_11_18.astorage18.shtml
A good friend of mine, who started out with little other than a well-placed (in time and location) father-in-law, worked hard and was frugal and made at least $50M in RE — probably $100M by now. I’m happy for him, though I’m too far down the food chain to be able to socialize much without feeling uncomfortable. Anyway, ten or more years ago, he told me that self-storage units were going to be big money-earners in the future. That and, at the time, trailer parks here in Florida.
About once a year I sell of my latest book-buying spree on Amazon. This year, the stuff is just sitting there. I always track it and keep my listings the lowest price, just to get them out of the house. Normally, most of it is gone within a couple of weeks, and I dump the remainder in the library drop box. This time, 1 sale. It really shocked me. I’ve been keeping my basement and attic cleared for years on Amazon and Ebay, and it never crossed my mind that would ever dry up.
YIKES!!! Books not selling? I would expect books to sell well during a recession, as people can’t afford to do anything else. Maybe all the readers are on this blog instead.
I buy a lot of used books on Amazon and one of the cruelest ironies is…
Many tomes cost me 2 Cents, and the shipping is $3.99
I’d rather pay $3.99 for the book and 2 Cents for shipping, that seems more appropriate~
It’s all current nonfiction, too…climate change, electoral politics, Chinese economy. There were months after 9-11 destroyed my career I would not had made it without Ebay. I wonder that FBs are doing if the market of last resort dries up?
“Chinese economy”?
Have you got “China’s Trapped Transition” by Minxin Pei by any chance? I’ve been looking for that for quite a while now…
I ended up collecting 1 too many of a collectable. There was a 2 month delay before I could get back on eBay. My highest bid out of 2 auctions was 1/2 of what I paid. (This was something that I priced before and knew to be reasonable when I bought.)
I haven’t sold it yet and I may just hang onto it. Luckily, it was not expensive ($400), useful, and I have room to hang onto it if I want. I was a huge suprise how quickly the market dried up.
I don’t envy those who make a living on Ebay if this is happening to everyone. It has to be more than nightmarish right now.
“Altagracia Portorreal remembers her next-door neighbor sobbing at the front door. After a year of working 12-hour days to pay her mortgage, the neighbor was giving up. She sent the keys to the bank, packed up, and abandoned the three-decker on Walnut Street.”
I seem to recall another post on this blog about Lawrence (maybe Lowell, too) being an area that had been heavily colonized by Brazilian immigrants, both legal and illegal. But that the attitude was that now that the $$ in the US had dried up, many were just walking away and going home, because that’s what they wanted to do anyway.
What were all those immigrants doing before the bust? Were they living off HELOC money, too, or employed in real estate or what? I haven’t been up that way in years, so I’m just asking what was the jobs magnet there for these people. It had to be RE related, otherwise why go home.
“What were all those immigrants doing before the bust?”
They were selling each other mtges or houses. If not that, they were doing hardwood floors for each other. If not that, they were running used car lots. Such is life in a closed economy.
At the risk of sounding racist, this is what happens when people don’t assimilate. They become total dependant on what is going on in their own micro-economy. Also, by sending so much money to their homeland, they don’t have reserves. Those outside of their microcosm don’t offer their patronage, because they don’t feel welcome, resent it or fear entering it.
When things go bad, they all go down.
I grew up not too far from there. Back then Lawrence and Lowell were both blue collar factory towns. They had a lot of ups and downs as industries came and went. Don’t know if anything about their economy has changed in the last decade or so.
Palmy — what I’ve observed in recent years is disturbing reality. We have been so accustomed to being top dog for so long that we never saw the “newbies” in our rear-view mirror. There are a whole lotta Brazilians, Argentines, Chileans and Uruguayans (in a non-exclusive list) who are better off than most of us posters are now. Sure, that does not apply per-capita across their countries, but there are an incredible number of rich South Americans, in US$, who can waaaay outspend us every step of the way. What we had, is gone.
“‘It was so exciting for the city to see people buying homes and investing, and neighborhoods becoming economically stable,’ said Andrea Ryan, housing manager in Lawrence’s Community Development Department.”
This idiot is the housing manager and he thought subprime loans were making the area “economically stable”? Bureaucrats and brains have no business together in the same sentence.
test
“Housing stocks on the Island stand at 15 months, or 50 percent higher than the national average, with prices well off their 2006 peak. And while home prices set records in other parts of the country, as much as five times annual household income, in some places, few spots can match Long Island, where prices reached nine times annual household income in some parts of Nassau County.”
Wow! I had given anecdotal evidence of this last weekend. We ran into a couple in a bar on Hudson Street and they said the exact same thing. They told us half of the houses in their area were for sale and nothing was selling. Their home was already off at least 20% of what it could have fetched at peak. So much for that 3% median decline spoken about by the NAR. Long Island is officially “a disaster”. That’s too bad. Pass the beer nuts, please.
I’ve often wondered how Long Island was avoiding the meltdown we’ve been seeing in SoCal. Prices were just as insane there, 9x over median income, and yet I’ve read very few stories about a crash. Looks like it was just a delayed time bomb. I can’t see how this area doesn’t drop 40% or so from its highs.
Ted — again, very late to post a reply — I’m beginning to think that we are witnessing a unique moment in US economic history (apologies for the drama). The “rent ratio” as a principle for investors in real estate and, presumably, a yardstick for those of us who need shelter and have to choose between buying and renting, seems on the very of a renaissance in the sense of public awareness. I would not be surprised to see the term bandied about more frequently in coming months, because it is a fact that trumps all the emotions that created “wishing prices” we see today for properties all over the U.S. (”Wishing price” courtesy Robert Cote, a long time ago, here). I am one of the oldest posters here, if not the oldest, and I cannot recall a time when property ownership, and more specifically home ownership, was held in such low regard as it is likely to be in the next 2-5 years. With that reality check will certainly come the mathematics that make sense of it all, to the shocked and disbelieving. The simplest, most effective math check is the rent ratio. It works for me; it now works for my wife, after initial disbelief. It will work for an increasing number of people. I think that it will fit the definition of a sea change.
I’m still not seeing the “disaster” in my area because nothing is technically happening….people aren’t buying …you hear of a few houses lowering the price 10k on the asking prices but no one is truly taking the plunge(except for two notable houses that were quite literally 3 room unlivable shacks that they are still asking for 189k). It’s slow and painful. My town’s median asking price is still about 475-500k and the avg. income is 87k. Not exactly the 9x the income that they mention but ultimately it doesn’t matter because it could just as well be 20x the income….people can’t afford it, regardless.
We’re at a “pause” point where people are putting homes on mkt at unrealistic prices, then living off their meager savings or maxing their credit cards back up until they just can’t anymore. Give it 6 more months to reach panic stage -but panic will be inevitable, IMHO. It’ll fall back fast as it shot up, if not faster.
not sure why the link won’t post, but go to BostonBubble.com and check on the Boston vs. Income Graphs 1984 - 2006.
“‘It was so exciting for the city to see people buying homes and investing, and neighborhoods becoming economically stable,’ said Andrea Ryan, housing manager in Lawrence’s Community Development Department. ‘Now we know it wasn’t all real.’”
And what was she smoking when she saw this vision?
Yes, I’d like to call out this woman, actually. She’s a housing manager in Lawrence’s Community Development Department. Either she buried her head in the sand and deliberately refused to recognize what was going on, or she’s incredibly stupid and shouldn’t have had that job from the get-go.
I tell you, that just might be one of the most frightening things about this bubble/bust. People who should really have known better, especially when they work in the biz, didn’t, whether they were mentally defective or deliberate in their ignorance. I can understand executives and salespeople at for-profit builders, mortgage companies, real estate agencies, etc. doing their shilling. Don’t like it, but I understand it. But gov and non-profit, who should be stewards of the public welfare and looking out for their communities, I don’t get it. They stood by and watched.
So Ms. Ryan, why don’t you just do the honorable thing and quit? Your hubris in standing around to give a quote to the press after the fact is amazing. If your community is now crumbling, here’s a thought for you: YOU had something MAJOR to do with it, missie. Unless of course your title is complete BS and has nothing to do with either housing or community development.
Friend or Faux?
“‘It was so exciting for the city to see people buying homes and investing, and neighborhoods becoming economically stable,’ said Andrea Ryan, housing manager in Lawrence’s Community Development Department. ‘Now we know it wasn’t all real.’”
That’s actually a very telling statement: “It wasn’t all real”. Nope. Smoke and mirrors. Three card monte. Shell game.
But I’m sure this pathetic excuse for a community development executive actually thought her community was coming alive because she was in charge.
I predict a storage bubble. Prices for storage units in the NYC area are insane. You are better off burning your $hit.
Heh…
I remember years ago at my 10 year college reunion in Portland Oregon, one of my classmates who was from California and had moved back there right after graduation suddenly “remembered” that he still had a storage unit in Portland that he’d been paying on for the past 10 years through an automated credit card payment. I don’t remember what he was paying all those years… maybe $50/mo or something like that. He was from a wealthy old San Franciscan family and I doubt he ever actually saw the bill. It was probably paid by some family business manager.
Anyway, so a bunch of us jumped into our cards and followed him down for the grand opening of the mystery storage unit. He had no clue of what it held.
As it turned out? He’d been paying $50/mo for 10 years to store a couple boxed of battered old textbooks and paperbacks and some friend’s long forgotten old drum set that had been bought for a few bucks many years ago in a garage sale.
It was good for a laugh as we hauled that pile of junk out to the dumpster next to the storage units. And a good reminder for me once again that the rich really are different.
One would think that the existence of a dumpster at the storage unit facility would be warning enough to those storing their junk.
“I predict a storage bubble. Prices for storage units in the NYC area are insane. You are better off burning your $hit.”
LMAO!!!!! So true! Doesn’t it make far more sense to put the loads of worthless shit on Ebay or craigslist and recover your losses instead of extending said losses?
People are Smart?
“Two years ago, Diane Jones bought her Danvers apartment when it was turned into a condominium. Today, Jones shakes her head when asked how those good intentions went awry. ‘I trusted people,’ she said, explaining that she didn’t shop around for a mortgage, didn’t read all of the mortgage documents, and didn’t understand how bad things could get.”
Now the real bad news. She’s a school teacher.
Not sure if this is worse than knowing she was a school teacher but the financial consultants answer to her troubles was to retire and collect her 80% pension (read our tax dollars) and then get another job.
I’ll leave this to the rest of you as I have already lost a perfectly good breakfast.
Good find Ben…
This is a good anecdotal stat, for as people are foreclosed on, self storage space will be pretty scarce, i’d imagine.
“‘A lot of people are having a hard time,’ said Jesus Sanchez, manager at Victory Self Storage in Travis, which is currently renting more than 90 percent of its 439 units. ‘You’ve got people losing their jobs, they can’t afford to pay their mortgage anymore. Once they get (forced from their homes), they don’t want to lose their stuff.’”
Sort of OT, sort of On Topic…
Here in MA, in the past few years, there has been an explosion in the number of apartment complexes that have been built. Just guessing, but I bet ten to twenty thousand units have been built.
I have no inside information or proof of what I am about to write, but I truly believe that the developers (corps. REITs, etc.) did this, because their demographic studies, identified the bubble years ago. Sure, they probably built for anticipation of a normal growth in the rental market, but I suspect they saw the looming foreclosure boom and built a few extra thousands of units.
Why pay $300,000 - $600,000 for a condo, when you rent a nice new townhouse style apartment for $1,200 - $1,800 per month?
Have any of you noticed this in your areas?
Penn~
Have any of you noticed this in your areas?
Remember that Seinfeld episode where the fast food chicken franchise goes up across the street from Kramer’s apartment and he wants to swap units with Jerry because he’s gets sleep deprived from the nightly flashing neon lights?
Here on the northshore you see scads of condo developments directly on the periphery of some huge mall parking lots with their all night mega florescent lights.
Developers obviously got the land cheap, and up went the vinyl and glue condo’s.
As an ex-appraiser I can only shake my head, and think to myself what fookin’ idiot would pay mid 6 digits for a location where you literally can’t tell night from day.
I won’t even get into proabably air quality and noise issues.
This housing debacle has literally hatched a bazillion bad ideas in bad locations-and the number hitter appraisal hacks have ignored all of them to avoid arousing the concern of underwriters.
I think that people getting financially squeezed are going to go for the cheapest rent that they can find and that usually isn’t the fairly new condo but the old tenement-style multifamily apartment building.
In Lowell where our son has an apartment, there are lots of apartments with for rent signs on them. In good times, students would rent these out so that they wouldn’t be subject to dorm restrictions. Now a lot of these are empty with students living like sardines in the dorms because they are cheaper. I’ve also seen signs for apartment buildings for sale. There are some that like and can afford nice apartments but in a crunch, they’re highly sought after and not easy to find.
I already have a self storage ‘asset’ in lease.
“If you do not sell now, you will never sell”.
Me too. I wonder if I will ever use the my virtually unused 400W PEAVEY PA system, bass guitar and amp but keep it in the event that I will wake up and become that rock star afterall
.
One thing putting me off selling it all is that it is stored too organized. I’ve already had it for 18 months. Still it is a safe place to store my silver coins as it it indoors that can only be accessed during business hours.
I’m well aware that it is money down the drain each month and deep down, I know I should just dump it all. However, I was gifted with a natural talent called Lazyness .
Sell now, or get priced in forever!
There’s always plan K…
Drink Up, Ms. Jones
“Jones was faced with unpleasant choices. Busanovich said she could get a second job, sell the condo, or get the lender to renegotiate. Or she could let the lender foreclose. ‘At some point, you have to decide if you really want to be a homeowner,’ Busanovich said.”
you really want to be a homeowner
or, if you can really AFFORD to be a homeowner..
Pontz-i Schemes are so 2005
“‘Everybody freaked out’ when the default rate escalated, and the jumbo mortgage market took a hit because those loans carry risk, too, Pontz said.”
“Delays in the consolidation process, however, damaged her credit rating…”
Yup, it’s those darned delays, not her failure to pay bills or her continuing to spend on things beyond ramen and gas. It’s all the fault of the delays in the consolidation process — none of it is her own fault — she was just a victim.
I suppose if we can’t require people to prove they can read in order to vote, then we can’t force them to prove they can read before they sigh mortgage papers. Maybe a singed credit rating will get them to sign up for a reading program somewhere.
“Jones was faced with unpleasant choices. Busanovich said she could get a second job, sell the condo, or get the lender to renegotiate. Or she could let the lender foreclose. ‘At some point, you have to decide if you really want to be a homeowner,’ Busanovich said.”
dosent this broad know that she is a debtor not an owner?
*Their* Stuff! HA HA HA HA!
That’s most likely stuff financed with HELOC! And since we, the shareholders and taxpayers are going to paying for it, isn’t it OUR stuff?
Also, the wisdom of storing your crap with another montly fee is amazing. You’re not going to want that moldy sofa in a year. Sell it or toss it. It’ll be cheaper than paying to store it for two years and then throwing it out.
Note to self: Check out the financials of publicly traded self-storage companies! Look at ticker “PSA”. I’m not sure about their P/E (listed as 0 in the WSJ quote engine–did they have a loss?). They dipped from 110 to 70 over the past year, but over the past month or so went back up to 85. And just yesterday, they went up over 2%. Also, they pay a dividend. I need to read some annual reports here.
I’m happy with this trend. As the FB’s pay to store their crap. Pay off their CC that bought that crap (because they were cut off from that last Heloc), it reduces my competition.
So is it stupid? Very. Do I have a motivation to fight the trend. Nope!
Got popcorn?
Neil
This may be a sucker bet. It sounds good, sure, and WSJ declares that PSA is a bargain, but looking at the historical chart, PSA did quite badly during the 1990-1991 recession.
And if you think about it, you’ve got people buying less stuff, you’ve got people who are broke and quit paying for storage, and then the stuff fetches little at auction because nobody has any money, and then you have low-lifes living in the units, guaranteeing that businesses or anyone with money will seek higher-end storage.
I’m sure there is money to be made as the FB’s get flushed out of the system, but most of them were so house poor I really question how much furniture or whatever they have to store. I mean, the cars and boats are going to get sold.
IMVHO, not a good play. Also, I think PSA kind of depends on growth because of the way it’s set up, which is not going to happen in a recession.
This quote kills me
““‘The region experienced unprecedented growth,’ said Allard-Moccia in Braintree. ‘It wasn’t healthy from 2001 to 2005, when buyers were getting into homes that didn’t meet their needs.’””
How ’bout “when buyers were paying wildly inflated prices using voodoo loans” jeez…
The Long Island Business News from New York. “If the national economy stumbles into a recession it could very well start right here. Overstocked with overpriced homes and suffering equally from chronic brain drain and dwindling job creation, Long Island may become the poster child for all that has suddenly gone wrong with the U.S. economy.”
Actually, i think the poster child for this mess will be in either FL, Las Vegas or Phoenix. Long Island has a megabubble yes, but at least the NE states have economies that can take a 80% hit much better. South Florida and Vegas and Phoenix and the majority of the other markets have hokey economies that don’t really produce anything. The only real economic growth in S FL is housing, and when it disappears, so does the GSP for Florida. I don’t think Floridians are going to be too happy when their personal income goes from $xxxxx.xxx to $0.00. Las Vegas and Phoenix and the entire southwestern fourth of the USA aren’t even sustainable states at all. You have water and electricity problems and backwards economies. For all practical purposes the Southern half of the USA is a Third world dump, and I don’t see how they can get up after a 90%+ drop in housing prices.
“If the national economy stumbles into a recession it could very well start right here. Overstocked with overpriced homes and suffering equally from chronic brain drain and dwindling job creation, Long Island may become the poster child for all that has suddenly gone wrong with the U.S. economy.”
There will be no national economic recession until the NBER says there was one.
A few comments about MA. Firstly, I am seeing many “sold” signs around Newburyport and Amesbury. Prices are down, but things are moving. The media was very slow to recognize the bubble, and now they are delighting in over-covering the down side.
Secondly, The story about Lawrence included a man who bought a 375K house with 100% financing on an income of 23.5K per year. Whether or not he is a victim is up for discussion. However, the mortgage broker who signed him on committed a criminal act. I am very interested in seeing these folks charged with crimes and put before the judicial system. The people who bought my house in 2003 with 100% financing were barely employed. I questioned the legality of the 80/20 financing and my RE agent told me things had changed and it was “perfectly legal.” I have to wonder if she is mulling this over while she says “Welcome to Wal-Mart.”
Finally, Ms. Jones, the school teacher, lives in the town where I sold the house mentioned above. All I can say, is thank goodness she isn’t teaching math. Another DF who now says they were duped and didn’t read or understand their mortgage. Just ducky.
I asked my wife when the civil suits would be starting. She had some interesting comments I’ll share in regards to the legal morass we’re in for. She actually worked on the mess created here in AZ. representing a trade union against a certain corrupt Gov.
Basically she said she’s shure they are already underway, we just aren’t hearing about them yet (it’s not just the criminal side – think civil here & lots of the scmaers finding trouble they never dreamed of…). From past experience a lot of the DA’s will wait for the civil cases to get done so as to not have to do all the background work – think “handed on a silver platter”. Once that’s done there will be even more state prosicutions, but she thinks that’ll be a year or two from now.
On another note,
Another mortgage broker is going out in town, though it hasn’t been announced yet. A year ago they had about 150 employees. They got offered a plea to basically go under & lose their license or pay 5 mil in fines and possible jail. Owners were not involved in the shenanigans and canned the responsible agents as soon as they found out – state doesn’t care (it was their company…). Real kicker is they will bring in a few new people, get licensed in the other 49 states and keep on keeping on.
Spucky! Hey, send me some. I’m dying down in here in Central Florida. No good Italian food to speak of.
I’m just shocked that anything in Lawrence sold for $375,000.
although I shouldn’t be; loft condos in the renovated cotton mill next to my apt building in Lowell are starting around $300,000. unless you commute, there are no jobs in the Merrimack Valley that can sustain those prices. all of the river towns — Lowell, Lawrence, Haverhill, etc — are depressed, low-income places with high crime rates. although I really like my apartment with its 18-foot ceilings and exposed brick, I. Hate. Lowell. and will be leaving in January when my lease is up.
The western part of Pawtucketville is nice. There’s lots of land and SFHs, parks and it isn’t densely populated but, of course, housing costs are a lot higher than the eastern part of Pawtucketville (a part of Lowell).
There are lots of jobs associated with UMass Lowell and Middlesex Community College in Lowell. It’s pretty clear that Paul Tsongas and others really brought in the money to the Lowell area in days gone by.
Wang (computer company) must have been a shot in the arm to the area when it was in its heyday.
Regarding those loft condos - I put an ad in Craigslist looking for an apartment and there was a lady trying to rent or sell hers. I said that it was too far away but she kept insisting that it wasn’t. She still puts in frequent Criagslist ads looking to rent or sell the place.
Lowell tried to be the fancy Boston-like place with a dynamic waterfront area bringing in professionals and big money. Lowell doesn’t have the business environment to do this. I have a really hard time identifying major businesses in Lowell other than the publically funded colleges.
I think that Nashua and Manchester NH have done a better job in revitalizing their downtown areas. Nashua seems to have a bunch more high-tech and small companies that have moved into the old mill buildings. Manchester has attracted a lot of companies in the mill buildings near downtown too and the relatively new UNH campus there adds a lot of foot traffic. Manchester is helped by the fact that it’s still a relatively affordable place to live.
42 - Haverhill has some lovely areas, especially on the Merrimack River. There are good jobs in the Merrimack Valley. I work in Lawrence, but I don’t live there. There are jobs for people with specific skills and training, but no unskilled jobs, e.g. factory work.
My son also came to hate Lowell and was happy to move to NY.
I don’t know if the mill conversion in Lawrence is back up and running. It was shut down due to lack of financing. It was hoped that fairly expensive condos would help bring Lawrence back, but its going to take more than that. Lawrence needs jobs.