The Definition Of Normal In Florida
The St Petersburg Times reports from Florida. “When Laura Roorda’s father died in March, a real estate agent advised her to put his Hernando Beach house on the market for $345,000. By the time she and her brother had it cleaned up and ready to show in July, the agent had bad news: $299,000 was the best for which they could hope. After five months without an offer, Roorda dropped the price to $259,000.”
“Faced with payments on a second mortgage, Roorda now fears she may have to go lower. ‘I don’t want to lose everything my dad worked for. I don’t want to say, ‘Five dollars and it’s yours,’ but I know I’m losing a lot of sleep about it,’ said Roorda, of Palm Harbor.”
“After the Suncoast Parkway opened in 2001, the relatively cheap property in Hernando Beach was a magnet for investors. ‘Prices doubled, and that’s not a normal appreciation in value,’ said Gladys Moore, a Hernando Beach resident and an agent . ‘All of a sudden it’s overpriced, and prices have just had to come down.’”
“The average sale price for houses continued to climb, from $324,000 in 2004 to $419,000 in 2006, records from the Hernando County Property Appraiser’s Office show.”
“But some sales may have been artificially inflated, said agent John Callaghan. He and other Realtors said they have seen at least a half-dozen cases of apparent mortgage fraud. Buyers took out mortgages for at least $200,000 more than the list prices so they could walk away with the excess, he said.”
“In a community as small as Hernando Beach, with about 1,500 lots, ‘that’s enough to warp the market,’ Callaghan said. ‘We’re in the middle of a zoo here.’”
“I’ve got a friend of a friend in Pinellas County. He’s almost a year behind on his mortgage payments.”
“You’d think he’d be pitched off his balcony and shaving his hobo’s stubble in a gas station men’s room at this point. You’d be wrong. He’s still enjoying his waterfront view without coughing up a condo payment for months.”
“The sheer scale of mortgage defaults in the Tampa Bay area seems to be turning our lions of the banking industry into bleating lambs: ‘Pleeeeassse Paaaay Meeeee!’”
“For enlightenment, I visited the daily auction of foreclosed properties at the courthouse in Tampa. Among the 15 or so properties up for auction that day, a good number were seized from homeowners who defaulted in 2006 and early 2007.”
“The day I was there, not one auction home sold. No investors attending the auction were enticed by minimum bids they felt the banks had set too high. More than one Realtor has told me that, contrary to expectations, many of the bank-owned houses are overpriced.”
“Bankers…don’t just want to give away a house for peanuts. But they also can’t afford to add to the glut of bank-owned property. That explains the generosity toward my friend of a friend. Don’t expect the free lunch to last forever. The housing slump will eventually end. On that day the lions will get their teeth back and the deadbeats will have to beat a retreat from their free lodging.”
From Bloomberg. “A newly formed advisory panel composed of Florida school and local government officials with money frozen in a state-run investment pool has said it will not accept a return of less than 100 percent of their investment.”
“‘The very fact that you’re out here talking to us about taking less than 100 percent is in my mind unacceptable,’ said MaryEllen Elia, superintendent of Hillsborough County Public Schools. ‘You need to figure out how to make the taxpayers in Florida whole. It isn’t going to be fixed by asking us to take less than what we put in there.’”
“Florida schools and towns with money frozen in a state-run investment account are unlikely to get their cash back tomorrow, when officials meet to discuss a crisis prompted by withdrawals that drained almost half of the fund’s $27 billion in assets, a policy officer said.”
“‘If we reopen the window without limitations on Tuesday, and we see behavior like we’ve seen up to now, there’s simply no way to meet that demand without having a fire sale on assets,’ said James Francis, senior policy officer for the State Board of Administration, manager of the Local Government Investment Pool.”
“Kevin SigRist, deputy executive director of the State Board of Administration, said the board can’t promise to make pool participants whole, because of the pool’s ‘problematic’ securities. ‘We have securities in the pool that clearly have credit risk associated with them,’ he said.”
“‘We don’t ever want to be in a situation here at the SBA where we are somehow issuing guarantees or suggestions that everyone will get dollar for dollar,’ said SigRist.”
The Palm Beach Post. “A sobering quarterly economic report for Palm Beach County, released Wednesday by the Economic Development Research Institute in West Palm Beach, sees the slumping housing market as a harbinger of bad things to come.”
“‘The unfolding economic slump in Palm Beach County is most notable and visible in the county’s labor markets and housing sector,’ says the report.”
“In the county, 31,009 residents are currently requesting unemployment benefits - up by 4,551 individuals since June. Retail sales are down 3 percent from last year at an estimated loss of $51 million. Professional and business services ended with a loss of 2,800 jobs for the third quarter.”
“Among households, 18,507 out of 474,175 - almost 4 percent - entered some stage of foreclosure activity this year. The county is on track to register the lowest level of housing starts in at least 15 years.”
“Realtor Sarah Howard, the former ‘Queen of Flagler Drive,’ has swept up her scepter and crown and moved to Winston-Salem, N.C. ‘It’s a wonderful area, with lots of homes of character, just like West Palm Beach,’ she says by e-mail. ‘The difference is pricing. People can really get a good buy here.’”
“‘I hear I got out at a good time,’ Howard says. ‘All my Realtor friends are telling me it’s really tough down there now.’”
The Orlando Sentinel. “If Central Florida’s economy has a heart of darkness in the waning weeks of 2007, it is beating inside the housing industry, where plunging home sales have led to widespread retrenchment and draconian job cuts.”
“Employment is often a lagging indicator of a coming economic cycle. Job losses in one part of the economy tend to spread to others. ‘Consumers have lost much of their discretionary spending power,’ said Bob Allsbrook, chief economist for Regions Bank in Birmingham, Ala. ‘That’s particularly true in Orlando.’”
“Although talk of a serious financial downturn is spreading, there isn’t consensus. University of Central Florida economist Sean Snaith predicts a housing-market recovery next year that would blunt the downturn’s effect on other sectors.”
“‘We are in for a couple quarters where there won’t be much good news for the real-estate industry,’ Snaith said. ‘But I think 2008 will be the year we put the housing situation behind us.’”
“Although housing prices have dropped and the number of unsold houses on the market is at a record high, Snaith says the market will begin to improve by the middle of next year.”
“‘There’s no shortage of Chicken Littles predicting a recession and worse,’ he said. There are signs the economy could take a spill, Snaith acknowledged, but he doubts Central Florida will suffer greatly. ‘I think we will see unemployment go up slightly,’ he said.”
“In little more than a year, the once-swaggering industry has lost confidence in the near-term future. ‘We are looking at a 50 [percent] to 60 percent work-force reduction for home builders,’ said Steve O’Dowd, president of Engineered Homes in Winter Park. ‘That is moving through the whole supply chain that feeds the industry. That could have a massive affect on the economy.’”
“Central Florida has a record inventory of pre-owned homes for sale but that’s not stopping builders from unleashing a flurry of town-home lots and construction.”
“Local builders have about 2,000 town-home units under way in a three-county Orlando area and are ’sitting on a supply of more than 10,500 developed town-home lots in over 100 active communities,’ according to a new report by Charles Wayne Consulting Inc. in Orlando.”
The News Press. “It was January 2005 when Tracy Emerson moved to Fort Myers. She rented an apartment and, after a year, contacted a real estate agent to help her look for a home. It was just after the peak of the frenzied real estate market in Southwest Florida. She didn’t like anything she thought she could afford, so she continued to rent for another year.”
“‘Then I moved in with my aunt last January so I could save some money to put down on a condo,’ Emerson, 26, said. ‘It was supposed to be temporary.’ She’s still there.”
“‘Renting is a waste of money,’ Emerson said. ‘I’m throwing money out the window and it’s not getting me anywhere. I want to buy a place. I’m not building any equity by renting.’”
“Like many young people, Emerson dreams of owning her own home. Prices have come down dramatically since she began looking at property, so that dream may soon become a reality. Even so, she remains apprehensive about buying.”
“‘I don’t want to be in charge of maintenance, cutting grass, things like that. When you own a condo, there are no worries about the maintenance of the exterior,’ she said. ‘But I also don’t want to pay the condo fees. As a young, single person, I don’t have anyone to share those expenses.’”
“Broker Janet Rushin said buying young is better because younger people can get a bigger jumpstart on building equity and credit history. ‘But with rentals being so competitive now, many are renting,’ she said.”
“For Emerson, that is why she hasn’t bought a home yet. ‘Renting is cheaper than owning,’ she said. ‘It’s great for the short-term, but I definitely don’t want to do it forever.’”
“Almost 30 months after Lee County’s real estate peak, one of the most frequent questions I’m asked is ‘when will things return to normal?’”
“The answer, I explain, depends on the specifics of the question and their definition of ‘normal.’”
“‘Return to where?’ I always ask. As discussed many times, the 2003-2006 real estate frenzy was artificial, caused by a combination of low mortgage rates, amateur real estate investors buying properties to ‘flip’ and lenders who would gladly make the needed loans.”
“Recently I consulted for a ’short sale’ on a waterfront single-family home in Cape Coral. The lot was purchased in 1987 for $11,000 and sold in 1999 for $26,000. This 7.42 percent compounded annual rate of appreciation was normal.”
“In 2001 the lot owners built a house, which they sold in November 2005 for $700,000. It then ‘flipped’ in April 2006 for $1.2 million and again in October 2006 for $1.9 million. This was NOT normal.”
“Today, the fair market value of that property is approximately $500,000.”
“On Nov. 20, The Greater Fort Myers and the Beach MLS showed 18,596 single-family homes and condos available for purchase and 444 sold in October 2007. At this rate it will take just under 42 months for the present supply to reach zero.”
“Southwest Florida is in the precarious position of having only two economic legs: tourism and home building. I don’t think I could write anything new about our current local home building situation. Out of necessity, it’s almost come to a grinding halt. Due to trickle-down economics, this has affected more than just the trades. When tradesmen aren’t working they don’t buy new vehicles, eat out, buy new tools, furniture etc.”
“In turn, when retailers, distributors and manufacturers see their sales decline, they reduce spending and often lay off workers or reduce employee hours. And so it continues.”
“At times like this I’m reminded of the words of Longfellow, who said ‘The best thing one can do when it’s raining is to let it rain.’ Many of us just have to endure through this down economy.”
“‘The very fact that you’re out here talking to us about taking less than 100 percent is in my mind unacceptable,’ said MaryEllen Elia, superintendent of Hillsborough County Public Schools. ‘You need to figure out how to make the taxpayers in Florida whole. It isn’t going to be fixed by asking us to take less than what we put in there.’”
Haha. Hahahaha. Let’s see any risk-taker (err, investor) get the same deal.
Here’s the deal: if you get a return on an investment, there has to be a coupled risk, regardless of what promises are made. If there is zero risk, there is actually zero return. Look at FDIC bank accounts versus real price increases from monetary inflation. The real return is negative, because of the “zero risk.” That’s how the game is played.
Now, if you put your money in a pool, and it gets back a return higher than the real price increases due to monetary inflation, the risk is position — that means you may lose some, or all, of your money. You can take insurance against that risk, but the cost of insurance will reduce your gains, possibly to the level of being a flat return (or again, negative).
The best thing that can happen to many municipalities and public school systems is bankruptcy or reduced funding. That’s when we see the chopping block for the useless, bureaucratic many. I’d love to see my own town lose 50-80% of the employees, leaving about 50% of them left as useless. It won’t happen, because our governments also have the fine ability to tax the residents of the town, but it still is a nice dream.
In Chicagoland, our Metra/CTA is dying because of budgetary problems. But Metra hasn’t raised its rates compared to the cost of fuel, insurance, and administration overhead. Metra/CTA can be saved by raising their ticket prices to be on par with what drivers are seeing in cost increases. The poor would suffer, but it would shine the light on the ugly reality of the Federal Reserve fraud, coupled with local governments who can’t stop spending.
All I could think is there’s our education system at work… LOL!
Oh, one of the first commenters on the Housing Bubble in a major German daily (back in August when they started talking about it) had the same line: not to worry, you get it all back.
I did not mean commenter, I meant editorial writer in the finance sector.
Virtually every bond measure asking for more school money has won big, giving school districts more and more cash. The money is seldom spent where it can benefit children, but rather goes to fattened retirement funds for senior administrators and more administrators. At the same time, education standards have fallen in inverse proportion to the level of funding they receive. Same goes for most local govt agencies in terms of quality of service.
What’s happening is they justify cost increases per pupil based on costs that include full-service special ed (which many northern districts do as a matter of course), but then they “mainstream” the kids anyway, as well as mainstreaming kids who are too disruptive for one reason or anothing, thus ensuring that no actual learning is going on in the classrooms. Then all the decent teachers leave because they’re frustrated. Meanwhile, the admin sorts feather their nests as you note.
The reason those “good” districts pay so much is because they have full-service special ed! Non-special ed students cost much less per pupil. When you cheat on the special ed, though, there is no justification for that high cost, so … somebody gets paid.
We’re scammin’ … we’re scammin’ … and we hope you like scammin’ too.
I’m a big believer in the Public School System. And I’ve voted “no” on every budget and bond measure that’s come before me in the past 20 years.
Sadly, the only way people propose to fix the public schools is with ‘vouchers’. That would give me even more taxation without representation. (I can go to public school board meetings, or even run for the board myself! There’s no transparency with private schools.) I’d only support vouchers if each *taxpayer* got to allocate them, not each parent.
dc area bus and rail can easily make over 100k
What staggers me is how guvmint employees or contractors wont pitch in and serve the public anymore.
This should be the major campaign issue for 2008 rewriting civil service rules and regulation to fit the modern world of 2007. For example why do gumint always have to work 9-5? we need to stagger shifts so the customers get better service.
If any of you have worked in a TV station like i have, well somebody has to be there 24/7/365 So i have no tolerance for anyone who wont work holidays, nights and weekends.
why isn’t construction done on a 24 hour basis to inconvenience drivers the least amount of time? Here in NYC the road leading to Laguardia Airport has been under construction for at least 6 months closing off one lane and i have NEVER seen anybody working there in the 20 or so times i drove by it. …..Why aren’t inspectors available 24/7 to speed up the process?
It can go on an on… the restrictive work rules which all other unions have to start discarding should have to apply to guv workers next…its only fair!
Well, some info just came out that working night shifts and day shifts in quick succession increases the risk of cancer. We all pay for that. I totally agree about staggered shifts. There is a need for unions to insure that when someone picks a shift, it’s the same time just about every day, though. What they do to nurses, for example, is absolutely outrageous. (And why would a patient want service from someone dead on her feet after 12 hours?!? I don’t!)
In Boston, shocking as it seems, they replaced ballast on the green line by working on weekends and running a bus service. They also worked through nights during the window when there is no trolley service. Beats me why the Crabapple can’t do the same thing.
Here in Gville we have a lot of traffic problems that are caused by the University insisting on 8-5 work schedules for the staff. It’s STUPID and it causes a lot of traffic congestion and air pollution problems for no good reason.
To be fair, the federal government has been pushing for a long time for staggered schedules or abbreviated work weeks, as well as telecommuting, to reduce traffic congestion, but I think there is a lot of resistance among employees and bosses.
It’s too bad we don’t have flex-time to the degree they have in Europe. Of course, they think a 30 hour work week is normal.
I don’t think it’s the workers that are choosing work hours. I suspect many could do the majority of work without going into an office at all - it’s management that chooses to have everyone in office at specific hours. I’ve bitched for years that telecommuting should be embraced and encouraged, particularly in LA. Anyone that was there in 1984 when work hours were staggered for the Olympics and testify to how great it was for everyone. Most of corporate culture is run like mini-miltary and the big boys want their troops present and accounted for.
Yeah, shame the way NOAA only forecasts 8 hours per day…
derrrrr
Off the top of my head I can think of about 20 government entities from local to federal that provide services 24/7.
The only problem with massive government reductions in payroll is that in many places the government IS the only game in town, unless one wants to work 2 minimum wage jobs with no benefits to barely make ends meet.
Strange how our “virtual economy of the future” seems to fall flat on its face once it is no longer able to run on the exponentially increasing debt engine!
‘If we reopen the window without limitations on Tuesday, and we see behavior like we’ve seen up to now, there’s simply no way to meet that demand without having a fire sale on assets,’ said James Francis, senior policy officer for the State Board of Administration, manager of the Local Government Investment Pool.’
This explains why the fund was paying extremely high rates to keep deposits. They don’t have a market. Again, I wonder if paying that out at a loss is legal and if disclosures have been properly made.
BTW, Bloomberg moved that second article after I posted it, so maybe someone can find the new one and drop it here.
Hmmm… methinks it’s the same reason Countrywide Bank is offering 5.25% on their CDs - it’s a nice little honeypot to draw in the unwary. Of course, getting their money back out is probably a different prospect altogether.
Holding the asset is 9/10ths of the law which forces those who own the asset to incur costs to recover the asset!
OK, found it:
‘Florida schools and towns with money frozen in a state-run investment account are unlikely to get their cash back tomorrow, when officials meet to discuss a crisis prompted by withdrawals that drained almost half of the fund’s $27 billion in assets, a policy officer said.’
“If we reopen the window without limitations on Tuesday, and we see behavior like we’ve seen up to now, there’s simply no way to meet that demand without having a fire sale on assets…”
Not quite correct, IMO. The real reason is that they are carrying bad investments on their books at values impossible to retrieve in any market now or in the foreseeable future. The fund administrators don’t know how to make it go away because it can’t go away. For every taxpayer-paid dollar that supposedly remains in that fund, I will bet you there is no more than 70 or 80 or at very most 90 cents in salable value. The smart “investors” got out of Dodge in a hurry and screwed their colleagues in the process.
“Fire-sale,” my foot. They are holding some worthless paper and are trying to lie their way out of an impossible situation.
In the aftermath, it will be interesting to learn, if possible, whether there were any close relationships between administrators of the fund and those who got their money out without loss. “Insider trading” in government. The odor from this scam is worse than the red tide.
This is a big part of Florida’s problem. Why does anybody think a State agency can manage a money fund any better than of the hundred private money funds already available to local government and school districts. A State auto insurance company, State property insurance. Re-insurance? Good grief that is not even possible. Who comes up with these lame ideas anyway?
Will
Almost state has a person doing this, (as do most corporations). Once you get to a level where a couple hundred million must be held for transactions it’s far cheaper to hire a guy and give him a bloomberg for about $250 in total, than to pay 4-10 bp for a fund. Don’t worry though, there will be states that outsourced the whole cash management to mmkt funds who will face similar problems, too.
My take on the rising yield is that the ‘run’ was forcing them to sell the lower-yield, more liquid investments. Thus, the higher-yield crap they had in the fund was moving the overall yield upward…
To infinity!
“You’d think he’d be pitched off his balcony and shaving his hobo’s stubble in a gas station men’s room at this point. You’d be wrong. He’s still enjoying his waterfront view without coughing up a condo payment for months.”
Is that Crocker or Tubbs?
Hey, even Elvis the Alligator got a NINJA loan. He lives in his own condo next to Crockett.
“Bankers…don’t just want to give away a house for peanuts.”
CASHews?
So we’re even then. Because I also don’t want to give away my money for peanuts.
“‘I don’t want to be in charge of maintenance, cutting grass, things like that. When you own a condo, there are no worries about the maintenance of the exterior,’ she said. ‘But I also don’t want to pay the condo fees. As a young, single person, I don’t have anyone to share those expenses.’”
God help the poor boy that ends up with this chick.
Ah yes. She’s entitled to have someone else do all the dirty work, but that clashes with her other entitlement of “I shouldn’t have to pay my share.” Some overindulgent parent(s) and Madison Avenue must be proud of this monster they’ve created.
If I was one of her fellow condo-dwellers who had to carry parasites like this, I’d be egging her car on a nightly basis.
She doesn’t have a condo, nor is she stiffing anyone for fees. She was just saying she likes condos becuase they are more low maintenance, but she doesn’t like the fees so she’s not sure if she’s going to buy. She’s currently staying with her aunt.
From what I could tell from the article she’s one of us because she realized she couldn’t afford anything at the peak….
Got to sort of agree, Devil. I don’t think there’s anything wrong with her not wanting to do exterior maintenance. She only gets herself into trouble when she says she also doesn’t want to pay anyone else to do it. I’m not sure I understand her logic - she doesn’t mind buying a place on her own, but she doesn’t want to pay to maintain on her own - what’s that about? At least she’s being pragmatic about not buying at current prices.
But she hasn’t bought anything yet. The way I read it she was just thinking out loud - “I don’t want to do the yard work myself, and I don’t want to pay someone to do it. Maybe buying right now isn’t a good idea for me.”
I didn’t read it like she was looking to stiff anyone.
“she’s one of us because she realized she couldn’t afford anything at the peak…. ”
I dunno…She thinks renting from Aunt is throwing money away even though she is saving.
It could just be the need for a better choice of words. It sounds like she’s really trying to say she’s still not sure if she can afford it. Maybe home ownership is a responsibility better shared with significant other.
All she has to do is get marred, then some guy will pay for everything.
no way in hell a high maintenance girl like that will end up with some poor boy..
yeah, well if she’s blonde and skinny with +2s, there will be no shortage of suckers lined up to take it on.
ackkk! The article has a pic..
Funny you say that. My wife is blonde and skinny (with some money, too), and when I met her, I faked being poor and broke. All her other suitors pretended they had cash (nice cars, nice rented apartments, nice clothes), and yet I won her over because she thought I was most honest. After we married I explained my financial situation — which she was very surprised about.
I still explain to guys now that honesty (or even a little dishonesty towards the less attractive reality) is better than lying, because the girl you end up with will be a keeper if she’s attracted to honest men.
My wife is way more attractive than me, too, so it was a double win for me.
I drove a pickup truck when my wife and I were dating. My sister advised me to purchase a sports car to boost my “image”. I didn’t follow her advice. After my wife and I were married, she told me that she wouldn’t have dated me if I drove a sports car. She said she associated sports car drivers with poor money management practices. I now drive a Taurus station wagon that I bought cheap on ebay, and I don’t give squat about my image.
Haha, I drove a pickup truck, too! In fact, it was a cheap Isuzu with no air conditioning, and rear wheel drive (V4 engine) with Chicago winters. My friends who knew of my financial earnings (6 figures by age 19) would laugh at me because I wouldn’t lease or buy anything “worthy” of my income.
I recall the fun days pulling up to an elite event with my then-girlfriend (now-wife) in tow, pulling up in an Isuzu pickup sandwiched by BMWs, Mercedes, etc. I’d spot the valet $50 to park it right in front, too. Nothing better than seeing the looks on people’s faces as they saw it near all the snazzy cars.
Even funnier, someone must have bought that truck used from a dealer I traded it into, because I see it on the street 2 miles from my house every day. No missing the ugly vinyl that the Isuzu dealer put on it (pink vinyl waves).
And my wife would not have dated me either if I drove a Porsche or a Beemer. Personally, I love BMWs and would gladly buy one if I had the desire (great to drive), but when I think about “BMW or 50 ounces of gold?” the BMW ends up losing.
Wow. I guess I dated wrong. My husband disgusted himself as a poor college student and he turned out to be… a poor college student. It’s alright, though, we’re building the nest egg together.
I tell the girl children that the criteria is: they have a job (not workaholic), they have a home (not mansion, but not crashpad - doesn’t matter if they rent), they have a car (not luxury, but not total clunker), they take care of their bodies, if they have kids, they see them and pay their child support and don’t go on and on with tales of the ex. I also tell them you attract what you are, so if you want a man of quality, be a woman of quality.
What if I don’t have a car because I’ve constructed a lifestyle where I don’t need one? I rarely use public transportation either; I walk to work and take cabs to the airport. Is that good or bad?
I have almost always had a big station wagon which back in the hippie days served a great other purpose, nice bed in back and curtains…oh …..
Women i dated understood the car was for my job, so it didn’t bother them to been seen in one.
Pass - of course if you live in a place where car is unnecessary, that makes sense, but majority of people don’t live that way. Point was just that prospective date should at least be at point in life where they have the so-called basics of life.
I rarely use public transportation either; I walk to work and take cabs to the airport. Is that good or bad?
That’s good, unless you bum rides consistently off your potential spouse, in which case it’s bad. *wink*
I suspect that are they crazy is giving his daughters some general rules of thumb to spot half decent guys, which in this “forgive these 20 something boys their endless spendthrift childlike ways, they are the product of bad childhoods/rotten luck/insert lame excuse here” world is pretty refreshing.
I joked about it above, but totally lucked out in my husband because I had no idea what I was doing at 18. He spends even less than I do. His most recent wants: to keep our paid off second car and a $400 laptop computer. Yeah, it’s tough to keep up.
It’s the season to count your blessings.
I lucked out that my wife is more careful with money than I am. The result is a huge cash reserve (net positive, $600K) although we’re still in forties. Many years left to accumulate more wealth. We find that if we spent less, we have more time to enjoy together! Now the main thing we’re waiting for is for the damn housing market to crash & burn. This blog is recording the unfolding events, we’ll happily wait while we munch on (the other) Neil’s popcorn.
doubtful….if she were a blonde hottie, she wouldnt be living with the Auntie…..(i think the other comment was swallowed by the filter…..lord knows why:)
“yeah, well if she’s blonde and skinny with +2s”….
looks like d) none of the above.
What’s +2?
Health. *eg*
” “Renting is a waste of money,” Emerson said. “I’m throwing money out the window and it’s not getting me anywhere. I want to buy a place. I’m not building any equity by renting.” ”
We need more of these people NOW!
“Renting is a waste of money” was my favorite line in Ben’s post today. It should be amended to “Renting MONEY is a waste of money,” which is a description of what homedebtors have been doing. Renting HOUSING pays for a lot of services, as the non-blonde non-skinny aunt-welching heroine failed to remark.
We need more of these people NOW!
The smart people will continue to rent until prices drop to where they are more in-line with incomes. the stupid people will buy NOW!
Absolutely! In fact, it’s probably safe to say that the only people who bought houses they couldn’t afford were
1. Stupid
2. Had nothing to lose!
If you had any significant savings or assets (which almost certinaly makes you not stupid!) then you wouldn’t have taken out a neg-am mortgage on a house you could never afford because you can just barely make the first-year teaser rate.
The people who know better will wait a long time before buying anything. And in the meantime, they may realize the benefits of renting (being able to relocate quickly is one nice thing.)
Disclaimer: I’m a homeowner (all paid up!) who doesn’t think renting is “throwing money way” esp. in high property-tax states.
I think she does realize that when you buy a condo, you go from having one landlord to having three (the bank, the HOA and the tax man). Flake out on any of them and the condo goes bye-bye.
Now be nice. She is doing the right thing, being realistic about what she can do and what she can afford. If everyone else lived with their aunts until they had a down payment and a partner we wouldn’t be in this situation.
Good for her for not buying at the peak. But she is still an idiot for complaining about not being able to build equity in 2007 Florida.
And the throwing away money by renting line proves that she is easily manipulated and failed math.
“‘The very fact that you’re out here talking to us about taking less than 100 percent is in my mind unacceptable,’ said MaryEllen Elia, superintendent of Hillsborough County Public Schools.
Who let this dummy to be superindendent? No wonder entire country is brain-damaged if Superindendent does not understand what Returns not guaranteed. You may lose money sentence.
s/what/that. Grr…
This goes to show what a soap-bubble la-la land most educators live in, especially the senior echelons. Nothing like losing “your” money to impart a little hard-knocks reality that for most of these Bozos is long overdue. Time to “educate” yourself on a little something called investing wisely, MaryElia! But for this lesson, you get an “F”.
but, but…
She’s on the newly formed advisory panel!
how true. maybe they should have put the business teacher in charge of investment decisions instead of the philanthropist super.
The very fact that YOU are out there risking the taxpayer’s money in high risk investments instead of returning the extra money to said taxpayers, is unacceptable.
Don’t you guys have school treasurers in FL? Here they have to be an accountant with a state treasurer’s certificate. No way would the super make the money decisions.
I agree. whats with the less than whole comment. superintendent or wall streeter. they are gonna take whats left with zero recourse. wonder what she did before superintendent. polish up that resume.
“‘I don’t want to be in charge of maintenance, cutting grass, things like that. When you own a condo, there are no worries about the maintenance of the exterior,’ she said. ‘But I also don’t want to pay the condo fees. As a young, single person, I don’t have anyone to share those expenses.’”
I want to own a house but I don’t want to pay for it and I don’t want to take responsibility for it. I’m a stupid, spoiled girl who wants to live in a fantasy land! Wah Wah Wah…
SubKommander Dred
How do you write women so well…..
“first, i think of a man, then i remove all sense of reason and responsibility” Melvin Udall; As good as it gets.
i can almost see the wide eyed starlet he was speaking to.
Talk about begging for a trout slap. Geez.
“The sheer scale of mortgage defaults in the Tampa Bay area seems to be turning our lions of the banking industry into bleating lambs: ‘Pleeeeassse Paaaay Meeeee!’”
Freedom’s just another word for nothing left to lose — Janis Joplin.
When you ain’t got nothing you’ve got nothing to lose — Bob Dylan.
Look’s like Florida is going to be the best place in American to be on the bum for a decade or so.
Of course we can combine the last two posts with the case of William Zantzinger, whom Dylan sang about. He collected rent on houses that he no longer owned. They had been seized by the county for back taxes.
Let’s not forget the Beatles’ Taxman.
Janis Joplin gets enough undeserved accolades. Kris Kristofferson wrote that.
Kristofferson was a Rhodes Scholar, son of an Air Force general.
Look’s like Florida is going to be the best place in American to be on the bum for a decade or so.
Which is why people move to Florida, become a resident and then file bankrupcy!
I wonder if “adverse possession” can apply in any of these cases. Presumably, the lenders would have an eye on that timeline.
How the heck can Ms Emerson acknowledge that “Renting is cheaper than owning”, and simultaneously believe that “I’m not building any equity by renting”.
YES SHE IS. In an environment where prices are falling, she’s building her equity by the margin between the rental cost and the ownership cost.
PLUS she’s not LOSING her equity due to falling prices.
This fool girl has, by the grace of her own inability to buy, dodged the biggest RE bullet fired at first home buyers for many a decade, and she’s COMPLAINING.
YES SHE IS. In an environment where prices are falling, she’s building her equity by the margin between the rental cost and the ownership cost.
PLUS she’s not LOSING her equity due to falling prices.
The occasions I have tried to explain this to friends who ask why I’m not buying right now, I’ve been met with blank stares and over-glazed eyes. I think most folks can’t grasp the concept that buying a house can be a losing proposition - unless they’ve experienced it firsthand.
Simple answer: “There is a big difference between buying and owning.”
A home owner who has the full title to their home may be in a position where owning is cheaper than renting, depending on maintenance, taxes, utility and insurance costs. A home borrower most of the time has been underwater compared to renting, if they bought recently.
I love to explain to most of my friends that they don’t own their cars or homes until the have the full title, in their name, in a lockbox. Until then, they’re borrowing it from the bank and investors.
Yep - if someone can take it away from you, you don’t own it. That’s why I like paying cash.
You know I don’t won’t to buy unless I pay cash. Probably about another 3 - 5 years. And it will be a modest place. Condo or very small house. Just don’t want the RE to own me. Figure if I can live for taxes, insurance, and utilities that will be fine.
“A home owner who has the full title to their home may be in a position where owning is cheaper than renting, depending on maintenance, taxes, utility and insurance costs.”
Trouble is, here in Florida at least (and I think most other places), the opportunity cost of not having that money invested in FDIC-covered CDs at 5% or even 4% taxable income, when added to the taxes, insurance and maintenance an owner would have to pay, causes ownership to be a losing proposition almost 100% of the time right now.
Only when a property is appreciating in value can it outperform at today’s rental rates. The difference is so vast that it also completely overwhelms, IMO, the traditional argument that the ability to retain and modify the home of your choice offsets some of the loss in actual cash return.
I think that in Florida prices will generally have to be 50% of their peak for housing to be a worthwhile purchase, whether all-cash or financed.
Rule of thumb, most people are really dumb. The average IQ is 100, which is certainly not brain surgeon territory. So half are even dumber, and about another 1/3 are somewhere between average (still really dumb) and reasonably functional. That leaves a very small percentage that are actually in the intelligent zone, which in general are the people who log in here except for the occasional realtor troll that’s lashing out.
As Buffett says: “The price you pay determines your rate of return”.
Buy a house at the right price and you get a good rate of return; Buy at the wrong price and your rate of return sucks.
Buying your house at the right price and then paying off the mortgatge allows you to enjoy the benifits of Imputed Rent.
It’s really not all that complicated.
My RE friend always says you make the money when you buy ( at the right price.)This was the case with the one house that I ever owned.
..Because she is incapable of not spending the money that she is saving. She simply doesn’t realize that the first step in having wealth is spending less than you make. Once you have SAVINGS, can you INVEST. (in property or stocks or gold or whatever)
Because she…., what i mean is she…… well you see, she…… it is just that she…… the way it works is that she……… nevermind….there i just no way i can explain it and have it pass through the filter
In an environment where prices are falling, she’s building her equity by the margin between the rental cost and the ownership cost.
PLUS she’s not LOSING her equity due to falling prices.
_________________________________________________________
Actually, she’s probably isn’t building equity–because most renters in our society don’t hold onto the difference between the cost of renting and ownership as equity, they spend that difference on depreciating consumer goods. That’s why conventional “wisdom” always refers to home ownership as “forced savings,” since that’s the only kind of savings most Americans are capable of anymore. Now, they don’t even have that . . .
Once HELOCs became big that forced savings went right out the window. In that sense J6P is probably much better off renting because he can’t borrow against his or her dwelling.
Good point.
“A newly formed advisory panel composed of Florida school and local government officials with money frozen in a state-run investment pool has said it will not accept a return of less than 100 percent of their investment.”
And said panel held their breath, until it turned blew up…
State Board of Administration: “Here’s 90%, take it or leave it.”
Advisory Board: “We’re not accepting it.”
SBA: “Swell, we’ll add it to the General Funds.”
Az — I think this is a workable analogy:
There is a giant vault in Tallahassee in which $90 Billion was stored. Trouble is, when the cash truck arrived, no one checked the bills and it turns out 10% of it is counterfeit. The smarter of the “investors” showed up and withdrew their money, making sure they good the “good” bills. So as of Friday, the counterfeit makes up 20% of the remaining cash. The percentage obviously would increase with each subsequent withdrawal and there will be no love lost between the screwed and those who cut and ran early.The SBA administrators have to figure out who eats the counterfeit. They really, really don’t want the public to know it is counterfeit. So they freeze the fund and suck their thumbs, hoping some hapless apparatchik will figure out how to move the bad bills to a different vault, in exchange for non-counterfeit.
This needs the bright light of what was once called “Government in the Sunshine,” but I’m pessimistic about that happening unless some sharp investigative reporters are hungry for the story.
“‘We are in for a couple quarters where there won’t be much good news for the real-estate industry,’ Snaith said. ‘But I think 2008 will be the year we put the housing situation behind us.’”
“Although housing prices have dropped and the number of unsold houses on the market is at a record high, Snaith says the market will begin to improve by the middle of next year.”
“‘There’s no shortage of Chicken Littles predicting a recession and worse,’ he said. There are signs the economy could take a spill, Snaith acknowledged, but he doubts Central Florida will suffer greatly. ‘I think we will see unemployment go up slightly,’ he said.”
Why is that no reporter ever thinks to ask Mr. Snaith to back up his assertions with some data? You’ve got a better chance of getting realistic economic analysis from Larry Kudlow.
If tourism sags and the house of mouse has to lay people off, there will be nothing left on OTown. I wonder how low the rooms at the Grand Floridian will go for, especially if the Euro-tourists stop coming (once the poop hits their fans).
Well until the ECB gets tired of standing alone at the top of the roller coaster, Disney vacations are the sort of “Export” that WOULD improve our balance of payments. Of course I predict they and the UK will start loosening soon.
I dont think tourism will sag. We will become to Asia what Cambodia/Thailand used to be for america.
I always here about this, but I’ve never met or heard of anyone over here in the states that went to those places for a vacation, no less a sex vacation.
Unlikely. At best, very few people will be coming here to vacation.
I have lived a totally sheltered life.
1)People (okay, men) travel all the way to Cambodia/Thailand to have a sex vacation?? (Yuck…)
2)People (okay, men) would travel to Florida and the USA where there are laws on the books about sodomy and prostitution to have a sex vacation? LOL - I’m thinking the prices at the Grand Floridian will be going down.
Is Disneyworld getting ready for a makeover. Reminds me of a Family Guy episode where a tearful Minnie had to strip down while a slimey Walt drew cartoons of her.
When tourism tanks in Florida, room prices get really, really cheap. Following the oil embargo and gas crisis of 1973, you could stay along US192 in the Kissimmee area for as little as $12 a night. You could stay in the next-to-best hotels for $35 - max $50. This was following a huge hotel building boom because of Disney and occupancy rates were running around 20% as I recall.
During Christmas week, 1973 we went to dinner with another couple at one of the large motels on 192. We were the only patrons in the entire restaurant.
Lodging can get relatively very cheap here when tourism dies, though an implosion the likes of 1973 is very unlikely to occur.
I can always tell when the economy is down by the number of offers I get for Disney vacations during peak times. One time in 2000 we got rooms at Christmas for $49 a night on site. I’m guessing the deals will start after the first of the year this time. A lot of people get packages and they can’t be cancelled.
That’s exactly what I was about to post about. It is so tiring to hear the “economists” to make statements like this. My sister in law made a similar statement a week ago about how the market will turn around by July. I didn’t press her on it, so maybe she has some facts to back her assertion up, but I doubt it. Has anyone seen any information from people on the pro-real estate turn around that is backed up by facts? I get so much of my information from this blog (thanks Ben) and the associated common sense that I sometimes feel that maybe I’ve got blinders on.
What has frustrated me is the hideous reporting on housing. The myths are so ingrained in our culture that reporters don’t ask obvious questions. People who are nothing more than sales people with a vested interest in real estate appreciation are quoted as experts. I have no idea what Mr. Snaith’s qualifications are, but I wouldn’t be surprised if he has some ties to a developer or some other real estate interest. I would love to find out who is giving him grants or what his other sources of income are.
Our California buddies have had their fill of Snaith, as well:
http://sacramentolanding.blogspot.com/2006/01/sunny-forecasts-for-lodi-stockton-and.html
So he’s wrong in 2006. Wrong in 2007. Who would even believe him anymore, much less pay him.
Has anyone seen any information from people on the pro-real estate turn around that is backed up by facts?
No.
What I’m seeing is inventory piling up. I’m seeing sellers pulling their homes off the market in anticipation of next year’s market turnaround. These homes will add to the existing supply of houses whose owners have no choice but to sell.
I’m seeing E-Z mortgage money drying up. I’m seeing Mc Mansion owners posting notices on local bulletin boards, offering a room or two for rent. IOW all my observations indicate the opposite of a market turnaround.
But what do I know, I don’t have a Realtor license.
Didn’t all the 2006 would-be sellers pull their homes off the market in anticipation of THIS year’s turn-around?
Lather, rinse, repeat.
Still contained, thankfully……
http://www.freep.com/apps/pbcs.dll/article?AID=/20071203/NEWS06/712030391
‘I don’t want to lose everything my dad worked for. I don’t want to say, ‘Five dollars and it’s yours,’ but I know I’m losing a lot of sleep about it,’ said Roorda, of Palm Harbor.”
“FIve dollars and it’s yours” - get real, lady.
I’m starting to think these folks enjoy the drama.
I’m thinking what he worked for was probably the mortgage principal that added up to about $60,000. He didn’t work for the $200,000 difference that this chick is trying to get out of it. SO to be safe, she can go a lot lower and still not be giving away what he worked for. LOL
“‘The very fact that you’re out here talking to us about taking less than 100 percent is in my mind unacceptable,’ said MaryEllen Elia, superintendent of Hillsborough County Public Schools. ‘You need to figure out how to make the taxpayers in Florida whole. It isn’t going to be fixed by asking us to take less than what we put in there.’”
Sometimes you have to take the good with bad.
lady take what you can get. after your done paying the lawyers it would amount to less than what you are going to get.
You take the good, you take the bad, you take them all, and there you have the facts of life . . .
when the world never seems to be living up to your dreams . . .
the facts of life all about you.
God I loved Tooty and those damned roller skates.
“‘Renting is a waste of money,’ Emerson said. ‘I’m throwing money out the window and it’s not getting me anywhere. I want to buy a place. I’m not building any equity by renting.’”
I guess he didnt get the memo. $2,000 in rent (and investing $2,000 each month in the S&P or even CDs at even 4.5% for the risk adverse) v. $4,000 month mortgage payment on a depreciating asset. Looks to me that buying a house is the choice to throw money out the window. Why are ppl so ignorant and lazy that renting means that all savings associated therewith must be spent frivously, rather than invested to buy a house in 3-4 years at prices 30-50% off. There is never a shortage of ignorant buyers.
AND of course in the first few years of a loan, MOST of that $4k is “thrown away” on interest.
I didn’t read the article. How much does this little sweetheart make?
“Local builders have about 2,000 town-home units under way in a three-county Orlando area and are ’sitting on a supply of more than 10,500 developed town-home lots in over 100 active communities,’ according to a new report by Charles Wayne Consulting Inc. in Orlando.”
I am a builder, therefore I build.
Considering debt service and other fixed costs even if they’re loosing money on every house, they may be loosing less money than if they suspended operations. There are a fair number of boom-bust industries like this. Even liquidatin is difficult when the price for used construction equipment has to be bottoming out as well.
“bottoming out” = “still declining” IMO…!
It’s bottoming out like a China Syndrome. The core just keeps finding a new bottom. LOL
That’s what happened before and will this time. It’s also why a sharp buyer will be able to buy an inventory house for less than the cost of construction, AFTER cutting the lot value to current market.
Existing home “owners” are waaaay more screwed than they know or even fear at this point.
“Although housing prices have dropped and the number of unsold houses on the market is at a record high, Snaith says the market will begin to IMPROVE by the middle of next year.”
“You keep using that word. I do not think it means what you think it means” Inigo Montoya; Princess Bride.
“IMPROVE” = “decline,” which is indeed an improvement for those who wish to buy within this lifetime and have not done so.
Touche - Mr Lender……as a fellow renter perhaps i should have written “i dont think that word means what HE things it means”
“Realtor Sarah Howard, the former ‘Queen of Flagler Drive,’ has swept up her scepter and crown and moved to Winston-Salem, N.C. ‘It’s a wonderful area, with lots of homes of character, just like West Palm Beach,’ she says”
What the heck are “homes of character”?
winston-salem, NC = West Palm Beach? this woman is clearly on dope…but i bet winston salem is almost safer now..
WS is a pleasant town, and houses are relatively cheap there.
Somebody new in town just insulted Winston-Salem. There are brick houses, and then there is everything else. W/S has brick houses; WPB doesn’t.
I didn’t intend to insult Winston-Salem — I’ve never been there. Who I meant to question was the realtor and her fatuous description of houses as having “character.”
I wasn’t talking about you - you’re not new in town too, like Sarah Howard, are you?
You guys missed the money quote from the St. Petersburgh story. Greed knows no age:
Waiting for the next boom to begin
The longer view, though, is not so bad, said Tom and Martha Smith, who bought their house on Gulfview Drive for $180,000 after retiring from a school system on Long Island, N.Y., a decade ago.
Planning to move to North Carolina, they put their house on the market six months ago for $695,000, said Tom Smith, 70.
Though they have reduced the price to $675,000, Smith thinks the 2,800-square-foot home with windows looking out on the gulf will still attract buyers once the market begins to improve.
“We’re just sitting on our surfboard, waiting for the next wave,” he said.
Serf’s Up, dude.
“We’re just sitting on our surfboard, waiting for the next wave,” he said.
What a coincidence, so are we. Next wave of resets and foreclosures that is.
Good one!
They probably only paid $150k when they bought the house.
Did you see Hillary’s call for a ban on foreclosures? Well hell, I wonder how many people start missing their mortgage payments when they think, “I can pay the credit cards instead of the mortgage since Capital One might actually cut me off.”
“ban on foreclosures” = “total end of mortgage loan availability”
Yes — I am surprised that a politician would throw that one out there because the quote will come back to haunt her. From a selfish point of view, I would be delighted at a ban on foreclosures just because, as you say, mortgage money will effectively evaporate. I can’t think of anything that would murder prices more effectively than that.
This might actually be a good thing. If we ban foreclosures, banks wont lend unless ppl put 20% down. Prices will spiral to bottom much quicker than they would otherwise. Im a liberal democrat, but she ignores the hell out of me. Just another politicial with a disasterous mix of arrogance, greed and ignorance.
Tim — eventually that 20% figure will be correct, but short-term, because of unaffordable prices, I will bet you dinner that average down payment requirements would shoot to 40% in the short-term, should there be an outright ban on foreclosures. That makes the point rhetorical, of course, because it just will not happen.
Same thing with teaser-rate continuation, IMO, unless the difference is neg-am’d into the principal. There will be blather and hope and promise and it just won’t work, except possibly for a few Oprah-quality cases for public display.
I guess I’m missing something, or else the down payment will have to be 100% since otherwise after I put my 20% down I’ll never pay another cent since I can’t be foreclosed on.
Michael — good point. However, there still will be those who don’t want their credit zinged or, particularly, to screw a lender.
Darn, and stupid me paid my house off. Maybe I could refi.
Let me ask a soul-searching question. I sold my house in 2005 for $460K. I just saw it listed in zillow for $338, following a foreclosure. When I posted this on the California board, I was accused of being greedy.
So my question is, was I greedy for selling my house at the top of the market to the highest bidder (who obviously couldn’t afford it)? What distinguishes me from the septuagenarian “serfers” above? Were we both greedy, only he is stupid and I was lucky?
Get over it.
We sold our house for too much, too soon, too.
That’s the thing about “arms length” transactions. As long as there is no material misrepresentation, the market price IS the market price. Of course in your case there probably was material misrepresentation on the buyers part to the mortgage company, and from them to the bond holders.
Dont blame his stupidy on yourself.
So my question is, was I greedy for selling my house at the top of the market to the highest bidder
You were realistic. Had you been greedy, you would have held on to it in anticipation of even greater appreciaition, and maybe taken out a HELOC to buy that 7 series BMW you so richly deserved.
LOL! You forgot about the b00b job for the missus!
And a vacation at a topless resort where you could show off the surgeon’s handiwork. I mean, why get a b00b job if you aren’t going to flaunt it?
Looking back, we bought our house at just the right time for us (1997). It was lucky but I like to think it was a little more than luck. We never got carried away by the paper appreciation and did cash-out refinancing. Actually, the appreciation made me suspicious and that’s how I learned about the housing bubble.
Market price is the price of the market at that time. In 2005, high. In 2007, lower and heading down. You did well, so invest wisely and wait for the back end of the bottom before you buy again.
I read a story of a guy who sold his start-up to Cisco in March of 2000 for +/-267 million. He won bigger.
Where does this make you greedy? That was the market rate at that time. And how were you supposed to know the finances of the buyer - no way for you to know they would get foreclosed upon.
I think you’re silly for wasting time pondering over whether you are greedy or lucky or some combo thereof. You would be making wiser use of your time by taking some of that $460K to buy some beer, buy some books, and sit by the fire and enjoy both all afternoon.
Is that a proposition, OG?
Droog — do you mean you posted on a California thread on this HBB blog? It would have been out-of-character for any credible number of posters here to criticize you for that, unless you left out some material facts.
Well, I probably invited criticism because I was mad at the people who bought my house and let it go into foreclosure. Now the house looks terrible. I regret all the weekends I spent on home improvements, only to see the yard and interior deteriorate in the hands of the philistines. Oh well, I suppose, as OlympiaGal says, I should just let it go. Maybe I’ll take up scrimshaw instead.
Not feelin sad for these folks, probably pulling in at least 100K each in NY teacher’s pensions. Hope the next wave isn’t the one that washes over the house and destroys it, jerk!
“We’re just sitting on our surfboard, waiting for the next wave,” he said.
Yeah, a Tsunami…
SubKommander Dred
That should put an end to that tiresome canard that the REIC always spins - “If you plan to live in your home for the next ten years, then you can afford to buy a house now.”
I know we all “plan” to live forever, but obviously, life (and sometimes death) happens and we may be forced to sell our home when we did not expect to; or, in this instance, the heirs have to sell it.
Your choices are to make sure you die during an up market, or forget counting on your home as a way to transfer wealth.
Their lack of receipt of the entire free windfall they were expecting at the expense of others saddens me deeply. I must go be by myself. Not once did they say Id rather have my father back then his inheritance. What a better way to honor his memory then by bitching at how they could off benefited more from this poor guy’s death.
I wonder if this 2nd mortgage was taken out BY HER after her father’s death?
Goodnight MaryEllen…
(a Waltons xmas)
“‘The very fact that you’re out here talking to us about taking less than 100 percent is in my mind unacceptable,’ said MaryEllen Elia, superintendent of Hillsborough County Public Schools. ‘You need to figure out how to make the taxpayers in Florida whole. It isn’t going to be fixed by asking us to take less than what we put in there.’”
RE: When Laura Roorda’s father died in March, a real estate agent advised her to put his Hernando Beach house on the market for $345,000. By the time she and her brother had it cleaned up and ready to show in July, the agent had bad news: $299,000 was the best for which they could hope. After five months without an offer, Roorda dropped the price to $259,000.”
Hellava lot of inheritance expectations are goin’ down the crapper.
Throw in a pension from a bankrupted corp. turned over to the fed run Pension Guarantee Authority; a 9000 DOW; and a re-drafted needs based Medicaid and SS system, and it’s weeee doggies…looks like all the financial planners have been pissin’ in the wind about future boomer retirement plans.
a 9000 DOW That’s the 10 trillion dollar question “Will the boomer retirement withdrawal lead to a long term bear market or a run on wall street and ensuing crash?”
“Will the boomer retirement withdrawal lead to a long term bear market or a run on wall street and ensuing crash?”
A better question would be, is there any retirement money to withdraw.
My wife knows a couple in their 60’s that are self employed (insurance sales, etc.). I asked her if her friend has retirement plans, and she said that she told her that they are so far behind on their savings that they expect to work until they are no longer physically able to work.
My mother needs to work part-time at age 67 to keep herself above the poverty line. I’ve been trying to convince my Dad to work as long as possible (without much luck) because he some but not nearly enough savings.
On the whole, it’s probably a good thing that the boomers can’t retire because “real” inflation (as opposed the kind produced by the Fed increasing the money supply) would rear it’s head very quickly. On the other hand, I’m not sure what happens when we get to a point when the boomers can’t work.
It’s hard for me to understand how people in their 60s and 70s get in that situation. I am only early 40s. The depression was so significant in my parents and grandparents lives. (Fortunately they did not suffer as bad as others. Always had a home, enough to eat and enough clothes.) It so influenced their attitudes about work, money, and savings, that it is almost as I if I lived through it,too. Would think this would be even more of the case for someone who is 60 - 70. And someone in the insurance business.
I think that part of the problem is that both had costly divorces earlier in their lives, and didn’t save back then (when they had regular jobs). Now they are “too old” for Corporate America, hence they both have commission only incomes.
On the other hand, I’m not sure what happens when we get to a point when the boomers can’t work.
They’ll end up living with their kids, and maybe helping them make the monthly nut with their SS income.
Dow retreated from above 1000 near the end of 1972 to under 600 near the end of 1974. A similar move in present times would bring it down to slightly below 9000. Someone points out that the 1972-74 move changed the DJIA from the price of 24 oz of gold to the price of 2 oz of gold, and that the DJIA is now near the price of 18-20 oz gold, and perhaps likely to fall to the price of 4 oz of gold (with gold rising as part of the adjustment).
Now I want to run over to our Bloomberg and run a chart of the Dow in terms of ounces of gold for the last 30 years or so. I’ll post a chart if I’m able.
The Dow in ounces of gold, since 1986:
http://i44.photobucket.com/albums/f19/frequentfreak/hbb/indu-gold.gif
The S&P 500 in ounces of gold, same period:
http://i44.photobucket.com/albums/f19/frequentfreak/hbb/spx-gold.gif
As a bonus, the S&P in terms of barrels of oil. Makes the 1996-01 period look like an outlier.
http://i44.photobucket.com/albums/f19/frequentfreak/hbb/spx-cl1.gif
I tried this once, but it might have been blocked because the URLs may have been too long. Anyway…
Value of the Dow as a multiple of the price of an ounce of gold, since 1986:
http://tinyurl.com/2xrqwu
Value of the S&P 500 in gold terms, same period:
http://tinyurl.com/2elnwp
As a bonus, value of the S&P in barrels of oil. This is the number of barrels of oil you would need to “buy” the value of the S&P (or 10 SPDRs, if you want to think of it that way.) Note it has stayed within a tight range before 1998 and since 2002.
http://tinyurl.com/29kazq
Thanks for the charts! Very informative.
“Broker Janet Rushin said buying young is better because younger people can get a bigger jumpstart on building equity and credit history.”
Really now? But, but I thought FLA REIC was counting on equity laden Boomers to snap up their multi-family inventory? Now they are turning on their own young?
Remind me that if this woman goes anywhere near my kids, who are graduating from college soon, I will set the dogs out after her.
“buying young is better because younger people can get a bigger jumpstart on building equity and credit history” = get into debt earlier and faster.
EATING their own young, is the proper term.
Not for me, suckas!
Is he the perfect eCONomist for the Right Corner Pocket State of denial, or what?
“‘We are in for a couple quarters where there won’t be much good news for the real-estate industry,’ Snaith said. ‘But I think 2008 will be the year we put the housing situation behind us.’”
Paulson:
“Housing market down turn is biggest challenge to US to economy!”
Where were these guys three or four years ago?
Do you think Hank Paulson ever attended a speech class in school?
University of Central Florida economist Sean Snaith predicts a housing-market recovery next year that would blunt the downturn’s effect on other sectors.”
Sean Snaith has missed all of his housing predictions and tends to follow the Nar predictions. Both parties have lost their credibility! Just the inventory on hand would clearly show that the market will not recover in 2008.
Even the NAR people seem to have matured enough to stop using the term, “Chicken Little.” Snaith, you are pathetic. I sure hope that you bought a really expensive house when you moved to Florida last year to share your knowledge.
Here’s an interesting real estate link. Enter any address, city, state and ZIP, and it will return ten nearby sales that closed within the last 12 months. Info includes selling price, $/sq ft, and settlement date.
http://www.homes.com/Content/Sold-Homes-Prices.cfm
In our old Sarasota neighborhood, prices are easily back to 2003 levels, with some homes selling for 2002 levels of around $100/sq ft. One house sold for $33/sq ft. It must have been a trashed foreclosure. By comparison, we got $180/sq ft when we sold in mid-2005.
I get a chill every time I think about where we’d be if I hadn’t developed a hurricane phobia back then.
In my Loveland neighborhood prices are between 70-90/sq foot.
In our old neighbor hood in Escondido, CA, houses are still selling for $250/sq ft.
Bill — cool site. While it probably is very accurate re price per sq. foot in no-basement Florida, I found a glitch when I went to Georgia. The square footage includes basements, finished or unfinished. I can confirm that because I’ve been in the houses that are shown. Nevertheless, it is a great quick-and-dirty way to find comps in a neighborhood. Thanks.
It gave me 6 trailers and one old rundown farmhouse, all several miles from us. I live in a newer 2000 sft 2 story on 6 acres. They had no sales like my house, so I’m guessing nothing is selling in this area.
Paulson (chavez)
wow the gop is going left fast
make mine lp.org please
forgiveness,municipal bondage ,the plan has it all
“There’s nothing worse than doing nothing.” - Paulson, 12/3/07.
This is the way all government management works. There is no P & L. Outcomes are unimportant; only growth of your empire matters.
“‘There’s no shortage of Chicken Littles predicting a recession and worse,’ he said. There are signs the economy could take a spill, Snaith acknowledged, but he doubts Central Florida will suffer greatly. ‘I think we will see unemployment go up slightly,’ he said.”
Snaith it ain’t so?
Snaith-in-the-grass, or Snaith-ON-grass?
The News Press. “It was January 2005 when Tracy Emerson moved to Fort Myers. She rented an apartment and, after a year, contacted a real estate agent to help her look for a home. It was just after the peak of the frenzied real estate market in Southwest Florida. She didn’t like anything she thought she could afford, so she continued to rent for another year.”
“‘Then I moved in with my aunt last January so I could save some money to put down on a condo,’ Emerson, 26, said. ‘It was supposed to be temporary.’ She’s still there.”
“‘Renting is a waste of money,’ Emerson said. ‘I’m throwing money out the window and it’s not getting me anywhere. I want to buy a place. I’m not building any equity by renting.’”
“Like many young people, Emerson dreams of owning her own home. Prices have come down dramatically since she began looking at property, so that dream may soon become a reality. Even so, she remains apprehensive about buying.”
“‘I don’t want to be in charge of maintenance, cutting grass, things like that. When you own a condo, there are no worries about the maintenance of the exterior,’ she said. ‘But I also don’t want to pay the condo fees. As a young, single person, I don’t have anyone to share those expenses.’”
I’ll say that Gen Y is probably the most responsable generation in this whole housing mess. A lot of people are blaming the younger crowd for falling for the housing scams; it’s certainly started up a big intergenerational food fight. There’s all sorts of stupid stuff being said about each generation: the Greatest Gen is greedy, the Boomers are stupid, Gen X is full of Nazis, Gen Y is a bunch of communists. In reality, all of them have had their fair share of people driving up housing prices and most of the stereotypes aren’t true. In any case, Gen Y and to some extent Gen X actually were more responsable in their financial affairs versus their older counterparts. Furthermore, only a small percentage of Gen Y owns any housing, and they will probably suffer the least. I think criticizing the gal in Fort Myers is only adding fuel to the fire. The majority of people I’ve seen in housing bubble trouble are the Baby Boomers and older. This is who the PTB are asking Gen Y to bail out; is there any reason why perhaps Gen Y doesn’t respect their elders like the older crowd feels they are entitled to?
Ditto from my experience attending Santa Clara country auction last month. 20 homes on the auction. None sold. All loan dates were from 2006 and some late 2005.
“Bankers…don’t just want to give away a house for peanuts. But they also can’t afford to add to the glut of bank-owned property. That explains the generosity toward my friend of a friend. Don’t expect the free lunch to last forever. The housing slump will eventually end. On that day the lions will get their teeth back and the deadbeats will have to beat a retreat from their free lodging.”
How did this quote get missed? Come on! Its going to recover some day with ‘lion’s teeth?’ ROTFLMAO. You haven’t seen a RE contraction before if you believe that. Real estate recovers slowly and is rather feeble.
Got popcorn?
Neil
The housing slump will eventually end. On that day the lions will get their teeth back and the deadbeats will have to beat a retreat from their free lodging.”
Don’t hold your breath. I think it’s quite possible that various governmental agencies will own or control much of the housing stock before there is any recovery (or, because there is no recovery) so that deadbeats will in fact be given free lodging.
Comment by Evil Capitalist
2007-12-03 08:41:44
I dont think tourism will sag. We will become to Asia what Cambodia/Thailand used to be for america.
Comment by AndyInJersey
2007-12-03 09:19:33
I always here about this, but I’ve never met or heard of anyone over here in the states that went to those places for a vacation, no less a sex vacation.
Unlikely. At best, very few people will be coming here to vacation.
And most certainly not for a ’sex’ vacation.
I went to a Walmart on Friday– for the first time in over a year, since I generally disapprove of Walmart– and thought ‘Oh, look, so THIS is where they keep the fat people.’ I’ve read all those horrifying statistics about Americans being fatties, but I don’t actually see very many, so I had wondered. Of course, I live near and work in Olympia, the Best City in the Universe, and this Walmart was in Lacey, Bastion of Squalid Idiocy, so that’s part of it. Still, my libido was utterly quenched, and might even be until, oh, gosh, Wednesday or something, it was that unpleasant an experience.
There are some trully nasty people in Wally-World. Occasionally you’ll actually see someone in bedclothes, and no I don’t mean a 5′2″, 100# Double-D blonde spinner in a neglige either… try 350# grandmother in a robe, shaggy slippers, and curlers with a 5 o’clock shadow, and it’s only 10am. Yes, believe it or not, someone out there actually mates with these beings.
The remarks on women’s appearances on this blog are starting to get tiresome.
pictures, please
Evolution is a volume business.
I get to Europe about once a year; whenever I’m in France I’m amazed how *thin* everyone is, and how fat Americans are. In fact, you’re almost always correct to assume that any fat people you meet are Americans.
I think a lot of this has to do when how towns/cities are organized. People are able to do a lot of walking during the day, and a lot less driving. And people are less likely to eat pre-packaged junk. There may be some truth to the “good calorie/bad calorie” books that are being pushed now.
Plus most Europeans smoke like there is no tomorrow.
Yes, that helps keep the weight down!
I remember feeling fat when I was in Paris - and I’m a size 6.
Most of Europeans -eat- reasonable food, not damn processed microwavable crap.
Interest on 30-yr fixed with 0 point is 5.5% on many lenders.