Most People Don’t Even Realize That This Is Happening
A report from the Idaho Statesman. “The Treasure Valley residential housing market declined again in November, with prices falling and sales sharply below year-earlier levels. The MLS said 580 homes sold in the valley last month, 40 percent fewer than the same month a year ago. November’s totals were 46 percent fewer than the 1,068 homes sold in November 2004, a year industry members say reflects more-normal sales in the area.”
“In Ada County, the median price was $215,000, a 7 percent decline from the same month a year ago. Industry experts say they are encouraged that building lots selling for six figures a year ago have in some places fallen below $50,000.”
The Oregonian. “This weekend, and this weekend only, home builder Roger Pollock is auctioning off more than 200 homes he couldn’t sell in the slowing housing market. Real Estate Disposition Corp. attracted more than 1,200 people with a Web site and newspaper and TV ads that promoted prices as much as 50 percent off the previous list price.”
“‘It’s kind of crazy,’ says contractor Will Davis as the auctioneer’s next sale booms out of speakers at rock concert decibels. ‘I think it’s fun. Usually the noise gets people bidding much higher than they would.’”
“‘Our idea is to expose these properties to people who may not be aware of them,’ said Joe Joffrion, executiveVP of Real Estate Disposition Corp. ‘Then bring a bunch of people into a room to create the market value.’”
“Later on, organizers would hand out coffee and candy. Sugar, one person said, to get them excited to bid more.”
“The Davises knew about the unpublished ‘reserve price’ that represents the lowest price the builder is obligated to accept. They picked out 10 homes they wanted after visiting 90 and creating a detailed spreadsheet to rank parts of the homes.”
“In front of the Davises, a few ‘ringmen’ — including one woman — wave their arms and scream to signal bidders to the auctioneer. They visit people whose bid got bypassed by a higher one, wiggling their fingers to draw a higher bid.”
“Davis passes on most homes. He likes No. 43, a five-bedroom, 3,500-square-foot place in Happy Valley. He raises his bidding sheet for $350,000, his top limit. Not bad for a home once valued at $530,000.”
“Davis had it for about 10 seconds before he was passed by. The woman ‘ringman’ comes by. ‘Is it still too much?’ she asks. ‘Is it $350?’ he jokes. ‘$395,’ she replies. Her sales pitch doesn’t work.”
“Loc Hoang was among those who got just what he wanted. He’s always wanted to move to Happy Valley, where his friends live. ‘The prices have been too high,’ he said.”
“Not any longer. Hoang left after buying a three-bedroom, 4,400-square-foot place. The builder said he once had advertised it for $620,000. Hoang said he paid $450,000.”
From KATU 2 in Oregon. “It certainly sounds like an incredible opportunity - the chance to buy a home at 40 percent of the original asking price. But like anything that sounds too good to be true, we learned you have to look at the fine print.”
“‘We built too many houses when the times were good,’ said Pollock. ‘And we have an … excess of inventory and we want to sell it.’”
“His brochure advertises bids starting as low as $149,000 for homes previously listed at prices up to $688,000.”
“But some real estate experts say you should be wary of such opportunities. ‘Whenever a situation arises where something sounds a bit too good to be true, I think there usually is a reason for that,’ said Mike Hasson, president of Hasson Realtors. ‘And I’ve seen a lot of fallout in those situations.’”
“He and his managing principle broker, Dennis Kelly, point to the fine print on the auction rules as reasons for concern. One line states that an inspection after the auction cannot be used as a condition of the sale. It says: ‘No sale will be contingent upon inspection of the property after the auction unless otherwise specifically permitted under the purchase agreement.’”
“But that purchase agreement isn’t available until the day of the auction, which Kelly said raises another red flag.”
“‘There’s a lot of gray areas that haven’t been … worked out, and unfortunately you’re not going to be able to work those out until you’re sitting down there and trying to sign this paperwork,’ he said.”
“Also, the auctioneer himself is allowed to bid up the price on behalf of the seller, and they ‘have the right to postpone or cancel the auction … and to change any terms … or particular conditions of sale …’ just by announcing it during the event, the rules state.”
“Finally, there’s this point: bidders must bring cash or a cashier’s check in the amount of $5,000 as an earnest money deposit.”
“However that money is non-refundable on site if the winning bidder uses the auction’s financing but for some reason the deal doesn’t go through and the buyer wants to pull out, Pollock said.”
The Daily News from Washington. “November marked only the second time over two years in which the monthly median price fell below the level of a year earlier in Cowlitz County. The other was in May 2007, when the price tumbled 7.36 percent from May 2006.”
“Although the once-superheated local housing market is cooling a bit, the new numbers don’t necessarily indicate a downward spiral in housing prices, said Scott Bailey, regional economist for state’s Employment Security Department.”
“‘It sounds like it’s pretty steady (upward) and happened to dip this month,’ Bailey said. A three-month decline, he said, would create a trend.”
“The number of homes on the market last month soared to 751, up by about 190 over a year earlier. Eighty-two houses sold last month, 18 fewer than in November 2006. And so far this year, the number of homes sold is down 24 percent.”
“Jerry Flaskerud, a broker in Longview, said he’s expected the median price to come back down to around $185,000. ‘I don’t think that’s a signal of decline. I think it’s a signal of the market plateauing,’ Flaskerud said.”
The Seattle PI from Washington. “Three months after he and other soldiers received a welcome home from their 15 months in Iraq, Sgt. Marcus Barton and his family might soon be losing theirs.”
“Their small part of the American dream is a wood-frame $152,000 house bought three years ago for nothing down but with plans of fixing it up and reselling it. In the three months since he’s returned home, the Bartons have been treading water while debt mounts and their credit rating plummets.”
“Their mortgage payments went from $850 to $1,350 a month in the summer. The family’s expenses on its total debts are more than $4,000 a month. The Bartons have maxed out their credit cards but have managed to keep up with their house payments.”
“Some of the kids’ toys are being returned. Barton is selling off banisters, countertops and other bargains he shopped for to renovate his house. He has swapped his car for a beater, and he eyes his television and computer as barter bait.”
“‘I’m Craigslisting everything,’ Barton said.”
“‘When I call lenders, they say, ‘no problem’ and thank me for my service. Then in 20 minutes they say there is nothing they can do when they see my credit score,’ he said.”
“One company offered a loan that would reduce the family’s payments from the current $4,600 a month to around $2,700. ‘I need a co-signer,’ Barton said. ‘The problem is I don’t have anybody. I’m the success story in my family.’”
“He also could go take his family back to post housing and has signed up to do so if he loses his house. But the Tacoma house is home.”
“It snowballed with payments on a second mortgage, utilities, a car and other expenses. Credit cards haven’t been paid in four months.”
“‘Before this, we were always on time with all my bills; we had a great credit score. I never missed a mortgage payment, car payment, credit payment,’ Barton said. Sarah finds occasional work. Barton, who is on leave until January, said he wanted to take a second job but his wife discouraged him, noting he needs to needs to rest and relax after 15 months in a combat zone.”
The Heraldnet from Washington. “Question: We are thinking about refinancing our home and pulling out some cash. But with the holidays coming up…we are planning to wait until after the first of the year….But we are concerned about your predictions that home values will fall. Are prices already starting to come down? If so, should we refinance now?”
“Answer: You should refinance as soon as possible because the longer you wait, the more equity you are likely to lose.”
“As I said before, I expect home prices to drop about 10 percent to 20 percent over the next year or so, and then the housing market will flatten out with very little appreciation or depreciation for a few years.”
“And it’s already happening in several areas of the Puget Sound region.”
“One of the top local appraisers that we often use at my mortgage company says that about 75 percent of the homes that he is appraising today have comparable home sales in their neighborhood with depreciating prices.”
“A house in West Seattle that was purchased for $499,000 on May 23 recently appraised for $470,000. That’s a price drop of 6 percent in only six months. A three-bedroom condo in Renton that sold for $360,000 on Sept. 29, 2006, recently appraised for $335,000. That’s a decline of almost 7 percent.”
“And the sad part is that most people don’t even realize that this is happening. They still have the idea that their home is worth what it was at the peak of the housing market.”
“If you currently owed $300,000 on a $400,000 home. You would have no problem refinancing and pulling cash out because you have $100,000 worth of equity in your home. But what happens if the value of your home drops 20 percent?”
“Your $400,000 house would then be worth only $320,000 and you would have only $20,000 worth of equity in the home. That’s a loan-to-value ratio of almost 94 percent, which means you could no longer pull our any cash, and you barely have enough equity to do a ‘rate and term’ refinance to get a lower interest rate if mortgage rates come down.”
“And what if you owed $350,000 instead of $300,000 at the start of this example? If your home value dropped 20 percent to $320,000, you would find yourself in the very uncomfortable position of owing more on the home than it’s currently worth. So if you’re thinking about refinancing, don’t delay.”
“The Treasure Valley residential housing market declined again in November, with prices falling and sales sharply below year-earlier levels. The MLS said 580 homes sold in the valley last month, 40 percent fewer than the same month a year ago. November’s totals were 46 percent fewer than the 1,068 homes sold in November 2004, a year industry members say reflects more-normal sales in the area.”
http://www.youtube.com/watch?v=NPjhEsZr8Nw
No worries…Easy Al is going to step up to the plate and give his cash to all these FBs.
http://tinyurl.com/yug6tr
Oh, wait, I guess he’s offering your and my tax dollars. What a pig.
Nothing has upset me more in recent years than these plans to help FBs.
As someone who has carefully saved money for the past 26 years, watching the savings erode with low interest rates, and high inflation and taxes, it’s enough to move me to tears.
The message from the US government is clear: Don’t follow the rules. If you’re earning a decent living, do whatever you can to hide your income from the Government. It seems like everyone–democrat and republican alike, sits around all day trying to figure out how to take money from the 5% of the population that saves money and pays most of the taxes.
The Buena Vista auction is under way in Portland. More details can be found on the Portland Housing Blog
http://www.portlandhousing.blogspot.com/
“‘Our idea is to expose these properties to people who may not be aware of them,’ said Joe Joffrion, executiveVP of Real Estate Disposition Corp. ‘Then bring a bunch of people into a room to create the market value.’”
Hoo Boy. That’s what creates market value, all right. Bring a bunch of doofs into a room, feed them sugar and coffee, blast them with loud noise, and get some salesdroids yelling in their faces.
I’ve been wrong all these years, but now I see the light. Market value is all about the hard sell.
‘ Bring a bunch of doofs into a room, feed them sugar and coffee, blast them with loud noise’
- When JuanSixpack gets a cup of ‘Joe’….he feels invincible!
It is almost like watching two Raider games back to back.
I know when I hear lots of noise and am given candy Im more likely to buy overpriced housing. I would make a comment about locking the doors opening the fire squad to make the world a better place, but I’m too controversial as it is. So I wont.
Here is a followup on some of the Alaska news:
‘Bad news for the Mat-Su real estate market — there has been a big drop recently in the price of Valley property and subdivision has fallen into foreclosure.Real estate agents say overall the market is doing OK, but developers are struggling to make monthly mortgage payments in some sectors.’
‘Sometimes, unfortunately, it has to go to the courthouse steps,” said Craig Thorn, senior vice president of Wasilla’s First National Bank of Alaska. Thorn says foreclosure is a last resort for a bank. But Discovery Construction, owners of the subdivision, failed to make payments.
The particular foreclosure sale that we’re talking about is not really indicative nor symptomatic of a larger problem,” Thorn said. The average sales price for vacant land like this has dropped drastically in just one year.’
‘Land prices in Palmer have dropped from $100,000 an acre to about $60,000 an acre, according to the Alaska Multiple Listing Service. In Wasilla, prices have fallen $20,000 an acre, from $75,000 down to about $55,000.’
Hi Ben,
I live in Alaska. The foreclosure market in Alaska is strange in that properties for auction must be purchased in their entirety at the auction, and can’t be paid for with a mortgage preapproval or a down payment. That pretty much leaves foreclosure purchases up to investors or the lucky few who have 250K sitting in their bank accounts. Developers are so overwhelmed with cheap properties I think even they aren’t bidding on anything but the choicest property.
This market is tough to figure out. RE agents are saying that high end property isn’t selling, but low end properties are…I think that means that “on average” things aren’t that bad saleswise. However, if you look at tax records of people who own property for sale on the high end in older parts of the city, they bought 5-15 years ago when properties were dirt cheap (right after the oil pipeline bust in the late 80’s and early 90’s), and are holding out for their 400-500% payday, so nothing is moving. However, newer high end homes are being cut drastically to sell, since I think the owners and developers are in way over their heads and in many cases need to sell quickly.
Alaska is also a heavily military, resource based, and seasonal tourism economy so the summer months of ‘08 will settle definitively how bad the bust will be here. I predict the economy here will be hurt if oil prices continue to slide and the cost of air travel and discretionary income in the lower 48 leads to a slow tourist season. A mitigating factor will be brisk sales of lower end real estate.
great, did my long comment not post? is there a time limit to how long the post window remains open?
Two comments:
1) What kind of a moron would accept the conditions of this auction?
2) The auction conditions are essentially another way for the builder to cheat buyers. Holding out a brand new house for sale conjures up the notion that such a house is without major defect. Obviously the builder is not willing to stand by his product when the auction precludes inspections as a reason to terminate the purchase.
This is NOT an auction due to the presence of reserve pricing. Insult to injury is the inspection auction terms. Good luck to any idiot willing to trust a soon to be BK builder under these conditions.
One wonders if the house is even completed .
not to mention muni liens, mechanic liens, unpaid development fees, ins. bond pmts, legal fees, engineering fees, etc.
even IF and I do mean “IF” the title is clear of all those things, you still aren’t getting the opportunity to visit the property, inspect the property, etc.
Was there a roof included?
maybe windows or doors to outside?
Just wondering if those are part of the deal.
Just imagine what doesn’t show - the electrical and plumbing especially. We’ve already seen stories of conduit-less wiring.
My understanding is that, at least in Washington state, residential construction doesn’t need electrical conduits; commercial builedings do, however.
Exactly, Steve. Most residential construction that I’ve seen does NOT have conduits and didn’t require it. I don’t have the latest NEC by my side right now, but I’d be surprised if that’s changed lately.
There is another side to this. Allowing inspections as a contingency would allow bidders to buy an option on the house for $0. Why? Because the buyer can claim they don’t like any of a zillion picky little things about the inspection report and get out of it. A traditional inspection contingency has no provision for mediation or arbitration — it gives the buyer carte blanche to walk on the deal. The builder is appropriately cautious, IMO — he stands by his reputation. Buyers can ask existing homeowners in the neighborhood what they think about the build quality. You don’t get a great deal at an auction for taking no risks at all or for doing little or no homework. TANSTAAFL.
Fine, but how about allowing people to do their own inspections of the property BEFORE the day of the auction, even without a contingency?
These auctions as they are a 0$ option for the seller - they have the power to tell you to fvck-off for any reason. Not allowing inspections of the properties is bounding on criminal practices. They really deserve the worst that will happen to them.
“Later on, organizers would hand out coffee and candy. Sugar, one person said, to get them excited to bid more.”
I know an auction just down the street
Prices so fine, they can’t be beat
Got everything that a FB could desire
Sugar-based real estate transactions, make you pay a little higher
I want candy
I want candy
Ought to see the dog and pony show in town
Ain’t no finer houses around
Candy’s just what the doctor ordered
Sugar rush so sweet, it makes my mouth water
I want candy
I want candy
Candy for free, there’s nothing better
But I like candy, who cares if I become a debtor?
Some day soon I’ll make this house mine
Then I’ll have candy all the time
I want candy
I want candy
http://www.youtube.com/watch?v=RRXbkCa1J9E
‘Then I’ll have candy all the time’
- That exactly captures the entitlement mentality of SoCal!
Juan and Joe think only of tacos and beer. No need to think about savings and tomorrow’s needs.
“Three months after he and other soldiers received a welcome home from their 15 months in Iraq, Sgt. Marcus Barton and his family might soon be losing theirs.”
Sgt. Barton may be a “military hero,” but has no one to blame for his financial predicament but himself. The money he earned in Iraq was tax-free and included hazardous duty pay - which should’ve been more than sufficient to pay his bills. If you’ve ever seen the kinds of establishments that thrive outside of military bases - strip joints, payday loan sharks, tattoo parlors, car dealerships and (most of all) pawn shops - it gives you an indication of the money-management skills of so many of these military personnel and their families. Heroes they may be, but financially prudent they are not.
Interesting. I read that same story and resolved to contact this young man and help him out.
I respect you for doing so. Let us know if you reach him. I may contribute as well.
I worked as a volunteer driver for the Disabled American Vets, helping get injured (and often maimed) vets to their VA appointments that are often 150 miles or more from their homes. Have also helped a lot of them navigate the VA paperwork and bureaucracy, which seems designed to cause them to give up in frustration. Many of these guys - and their wives, especially - seem to have no concept whatsoever of sound management of their finances. I’ve squared away a few, but many just HAVE to have the latest toys and don’t mind going deep into debt to acquire them.
“While he was away on his second deployment to war from 2006 to 2007, Barton, 34, his wife, Sarah, their two young sons and a third child on the way became caught in the subprime mortgage crisis.”
I don’t know Sammy, this guy looks and sounds like a stand-up guy. Sounds like his wife, hopefully not purposely, got him in a jam while he was away. Which often happens when the wife has a power of attorney and the husband is off to war.
Half of the military wives are angels, and the other half are life forms gone bad. During my time in the military I gave my wife full power of attorney, which is something the JAG tried to talk me out of doing. I told him I trusted my wife completely - still do, ten years later - and wouldn’t have married her if I hadn’t. But a lot of guys in the units I was in, married truly evil [or stupid] succubuses who should never have been given anything but the most restricted access to their paychecks and accounts. Defrauding a deployed military member should result in an automatic doubling of normal penalties, and vigorous prosecution, given the effects on morale.
I never had trouble making do on a military salary, even with my wife staying home after we had our first child. Not sure why so many others end up in the financial straits that they do.
Their small part of the American dream is a wood-frame $152,000 house bought three years ago for nothing down but with plans of fixing it up and reselling
The american dream is now to become a house flipper?
C’mon give me a break!
You guys would be all over this if it were not a service person involved. Geez……
I could imagine mayhem if the guy had a latino last name, serviceman or no…………….
balckbox: Yha, I agree. People pouring out here… and he openly admits he intended to flip. And did you guys read the part about OTHER monthly obligations?! They are way high, what is the guy paying for. financed a HDTv, motorcycle, furniture?
Agree. There seems to be a not-so-subtle double standard at play here. This guy’s getting a pass because he’s an Iraq vet. He still looks like a classic FB to me.
I missed the flipping part, I stand corrected. I saw the picture of him with the tools and thought he was fixing so he could live.
You’re right he’s a FB.
One of my first jobs in WA was running the mental health program for military dependents. So many of them were young mothers with small children, no car, 3 time zones away from their own parents and in-laws, and husbands overseas or away on 3 weeks of maneuvers. Completely unprepared for independent life.
interesting….i read it and thought, gee, another person that needs all the toys and run credit and will get to file bankruptcy and keep everything.
I thought the same thing and would help. Young people need to be taught about these things -it’s our generations responsibility -schools , parents , grandparents -to build defense against consumption society
Don’t feel sorry for this guy. According to the article he’s been in the army for 10 years. So, he is probably an E-6 not an E-5. Plus, on top of his base pay (tax free + combat pay while he was in Iraq), he gets a food and housing allowance.
Not all enlisted people are broke/dirt bags. I always had plenty of money when I was a Sergeant (E-5). Most of my enlisted friends had plenty of money, too.
No excuse for him. None.
I’ve been lurking on this site for some time and expect more from you guys. Don’t let his sob story get the best of you. He’s a flipper. He’s getting the JT he deserves.
Last year, the powers that be militarily…
Had a law passed so that g.i.’s would stop being sheep to the slaughter, when it came to them getting sheep thrills out of borrowing money from usurious lending joints.
I wish these guys would bank with USAA. They could get some decent financial advice. And I know they’re adults, but many do not have a lot of formal education. Is it too much to ask that budgeting and basic financial skills be made mandatory for them? Money stress is too much to load unto young men and women heading into or back into combat.
USAA only allows officers into the fold…
Alad,
That’s just wrong. Please don’t post misinformation, even inadvertently. Lots of folks read this blog who don’t post, and I’m sure there are plenty of readers with relatives in the services who could benefit from USAA…which is dedicated to giving them great advice and good service.
Who is Eligible?
* Children of USAA members.
* Active-duty officers and enlisted personnel.
* National Guard and Selected Reserve officers and enlisted personnel.
* Recently retired or separated military personnel.
My bad…
I was thinking of insurance, not banking.
Spike,
Go easy on Aladinsane. USAA used to be for officers only. It’s only been in the past few years that they allowed enlisted swine into the fold.
Alad and Sammy,
My bad, I apologize for jumping too fast. Servicemen and women facing combat deserve a far better deal than they”ve been getting, and these stories make me nuts.
Sammy’s right, I owe Alad an apology–please accept my regrets.
No problemo…
We’ve been members for a long time, and that’s how it used to be.
I’ve been in USAA almost a half-century. In the beginning, it was limited strictly to military officers, active or retired. I believe that included warrant officers.
In the 1970s or so, the company wanted to grow and created a separate corporation called USAA-CAC (or CIC). That separate corporation is the USAA entity under which enlisted personnel could gain membership and coverage. If that has changed, I’m not aware of it — USAA does not make a point of advertising the distinction, nor is there any value in doing so. So… Group Hug! (barf) Everyone’s right.
…not to mention that they are used to having regular living “stuff” (food, haircuts, etc.) provided for them. It must be a very difficult transition to have to budget post military service.
Certainly a culture shock.
Many are also very young with very limited skills….
It’s not a lack of formal education with these people; some are simply ruled by their emotions.
I knew guys in the barracks that were always broke, always in debt, always borrowing five from their buddies and paying back six.
There is no way to reach these people. Trust me, I’ve tried.
My sis was in the military, and can attest to the enlistees profligate spending: stereos, jacked-up cars, etc. HOWEVER, the American business community shamelessly shakes them down with seductive come-ons (so-called Zero financing on ugly furniture that balloons into 29% interest, PayDay loans, etc.) and preys on their lack of financial sophistication. These young men and women should get mandatory credit counseling to counteract a natural spendthrift response to the emotional rollercoaster of living constantly in harms way.
All of us, military or not, get swamped with seductive come-ons. It’s not a military mindset - its not restricted to the military - it’s pervasive through all stratas of our country.
I suspect the military folks get hardest hit because:
1. They have a steady income, and
2. There is little risk to loaning them money; one phone call to the base commander is enough to insure repayment.
Certainly not pleasant having to go through a clearance investigation with money issues.
I hate to agree with the above post, but I will have to. I am pro military, I have 10 years of service myself. I don`t know why but most people in the service are very bad with personal decisions. For alot of folks its the first time they ever recieved a real paycheck. Kind of a lotto effect. This country needs to spend more time teaching money and driving education.
Lane
The absolutely worst predation I saw was hucksters approaching single enlisted men to talk them into buying encyclopedias. A whore was a far better expenditure and she wouldn’t count against weight allowance when shipping home.
Don’t borrow anything for consumption. Borrow only for an expansion of capital-in the classical sense of the word. Next.
(For less-financially educated folks–don’t spend more than you make…. Next).
No sympathy here.
(1) Military pay for a Sgt. will NOT support a $150,000 mortgage. No way. It takes a $50000 income to handle the mortgage, taxes and insurance on that.
Betting the reason they didn’t go with an FHA loan was that no-way would the FHA have lent to them because the mortgage was in excess of the income:: debt ratios.
And,when the bill passes to allow FHA to refinance, it won’t help them because they still can not meet the income:: debt guidelines.
(2) Read the article.
Wifey only works ‘occassionally’.She could have tried getting a job. Even $6 an hour at McD’s would have meant another $1000 a month gross. That would have more than covered the mortgage increase.
He got back in Sept., mortgage was in trouble and what do they do but get her knocked up again with a thid kid. Can’t pay the mortgage but they are going to pop out more kids and keep her out of the ob market.
We saw this kind of horrible judgement and financial mismangement among enlisted ranks all the time. As we lived near several military bases when we were practicing law, we had a lot of military clients.
“No sympathy here”
Now there’s a big surprise. We saw…we knew better…we made money off these schmucks…we didn’t care. Yeah, we’ve heard your whole song and dance. You are one soulless old cow.
Aw, give her a break, Spike66- she’s a lawyer. During most law schools’ orientation, all the students line up and sell their souls to help pay tuition. (Ever wonder why you see so many lawyers in politics?)
No that is not true.
We are taught to be logical and rational AND that the same rules apply to everyone.
FInancial irresponsibility (and wifey not getting jo when they are in the debt) would bring howls of outrage around here - and should.
Same rules apply this guy. No excuses, no whining and no ‘free passes’ on acting like a grownup.
do a combat tour and get back to me on the ‘free passes’ , bovine one.
Whether you like Ann or not she has some valid points. I was in the service also and saw first hand some of the irresponsibility that came with the pay checks. Heck, I was one of them. Bought my self a used Mazada pickup truck, stereo system, and camera. Also got my first credit cards in the service. I was living beyond my means because I did receive my checks on the 1st and 15th.
And by the way can we disagree without the name calling. I tend to lose respect for people on this blog when they start to use name calling to justify their position.
You are a DISGUSTING MORONIC PIG.
HOW DARE YOU!!!
All the ranting around here about personal responsbility around here - and some nitwit who runs up more than he can pay while his wife sits on her backside suddenly gets a free pass??
Doesn’t matter whether he is a butcher, a baker or a candlestick maker - same standards of responsiblity apply. The job he choose happened to be the military. So what? It doesn’t make him any smarter or more responsible than the truck driver who mishandled his money. It doesn’t make him a ‘victim’ anymore than anyone else who over spent wanting things he couldn’t afford.
You are a Schiesbach.
Ann Scott makes some valid points here. Far too many servicemembers, knowing they’ll get a paycheck on the 1st and 15th and exactly what ammount it’ll be, seem to have few qualms about living beyond their means. I’ve seen exactly what Ann has seen about “horrible judgement and financial mismanagement” among military personnel. While they may get preyed on by off-base establishments, as the saying goes, you can’t cheat an honest man.
Why do military people even buy homes? Most, if not all of them, move every couple of years. Either live on base for FREE…or take the housing allowance money and buy something you can afford…and lose money on it 2 years later when you get moved to the other side of the country.
The military is a rootless existence. That’s why I got out after six years. When I got to basic training, back in the day, I noticed that all the Drill Instructors drove brand-new Corvettes, Trans Ams, etc. Then it dawned on me, that’s the only thing most of them had that could somewhat compensate for a vagabond existence.
Enlisted military members had a sky-high divorce/dysfunctional marriage rate, and never stayed anywhere long enough to feel a sense of place or community. They made up for it, or tried to, with fancy toys. Not all, but a very high percentage. A lot of wives, too, took hubby’s absence as an excuse to go on spending binges with credit cards. And yes, every move you make ends up costing you a lot of money, especially when you move overseas.
Indecent exposure…
“‘Our idea is to expose these properties to people who may not be aware of them,’ said Joe Joffrion, executiveVP of Real Estate Disposition Corp. ‘Then bring a bunch of people into a room to create the market value.’”
“We built too many houses when the times were good”
Times are still good. He means that they built too many houses during a speculative mania.
“the sad part is that most people don’t even realize that this is happening. They still have the idea that their home is worth what it was at the peak of the housing market”
And just why would people realize? Unless they coudln’t afford it to begin with. A house is a long term commitment. Taking out a variable rate during generational lows is a sure sign that you can’t afford it or that you are outright gambling. And for the the flippers, who encompass the worst of the problem, high return comes with high risk. And they are professionals.
Let’s get a grip. We are talking about six specific areas of the country, each of which still represents several 100% appreciation over the hearland for the past quarter century. Only folks who gambled at last two years of the top are impacted.
“And what if you owed $350,000 instead of $300,000 at the start of this example? If your home value dropped 20 percent to $320,000, you would find yourself in the very uncomfortable position of owing more on the home than it’s currently worth. So if you’re thinking about refinancing, don’t delay.”
Yeah, get yourself even more upsidedown, quick! What the heck kind of advice is that?
The Heraldnet from Washington. “Question: We are thinking about refinancing our home and pulling out some cash. But with the holidays coming up…we are planning to wait until after the first of the year….But we are concerned about your predictions that home values will fall. Are prices already starting to come down? If so, should we refinance now?”
“Answer: You should refinance as soon as possible because the longer you wait, the more equity you are likely to lose.”
Moreover, given the nature of this sales pitch, which lender would be stupid enough to lend the money?
“Yeah, get yourself even more upside down, quick! What the heck kind of advice is that?”
Amazing isn’t it? The advice should be not to pull any money out, useless it’s a real emergency, like medical expenses. Instead their being advised to hurry up and get what they can.
How about another option?
You get a second job and work for extra income.
Save more money. Stop spending.
Then you won’t need to use your house as a piggy-bank.
I’m trying to envision in my mind, what sort of sense of entitlement our predecessors would have had in 1930, compared to us?
I love the Heraldnet article: Hurry up and cash out your equity (borrow against it) before it vanishes in this rapidly declining market.
A genuine ticket to financial doom.
I didnt understand the logic in the argument either, unless it’s if your going down, might as well buy as much as you can and stiff your lenders why you still can. God bless America.
I wanted to blow a fuse when I read that! Cash out refi’s always have a higher default rate than traditional 1st mortgages. When will the underwriting practices reflect that?
And when will the REIC realize that declining equity means a slowed economy… they’ll still stay its a great time to buy!
Gto popcorn?
Neil
There’s a local scumbag group called E-mortgage Solutions that preys on people in the Maryland area. I deeply desire to see them destroyed utterly by the popping Bubble since they have made a practice out of giving out horrible advice on TV during the news hours.
Their latest scam is to encourage people who are living paycheck to paycheck to take all the remaining equity out of their houses and put it into the stock market?! God, how I hope there is a nice spot reserved deep in Hell for people who make their living by flat-out scamming others!!
“If you currently owed $300,000 on a $400,000 home. You would have no problem refinancing and pulling cash out because you have $100,000 worth of equity in your home. But what happens if the value of your home drops 20 percent?”
Huh? Does this person realize that this would drive up the monthly nut by 25% - 33% or so?
This may not be a bad strategy for someone that has discipline and wants to create a large reserve fund for themselves, but I suspect most people would find someway to blow through the reserves on things that they “need”. The house needed the jacuzzi tub, the Hummer needed the 22’s, the kids needed private school, the in-laws needed a condo near by for when they visit, etc…
This may not be a bad strategy for someone that has discipline and wants to create a large reserve fund for themselves
What on earth are you talking about? You don’t create a reserve fund by borrowing money. You create a reserve fund by saving money.
“In front of the Davises, a few ‘ringmen’ — including one woman — wave their arms and scream to signal bidders to the auctioneer. They visit people whose bid got bypassed by a higher one, wiggling their fingers to draw a higher bid.”
Fools can be separated from their money in oh so many ways, nowadays…
We looked at several of these homes by buena vista in Portland. We’ve seen thier homes for many years. Let me just say, there is a reason these homes don’t sell. The construction quality is some of the worst we’ve seen. During the heyday build up, they could not put them up fast enough. In our humble opinion, these are the remaining dog’s with fleas. Lord help the poor schmuck who ends up with one of these turkeys. YUCK!
Perhaps that’s why “… an inspection after the auction cannot be used as a condition of the sale. It says: ‘No sale will be contingent upon inspection of the property after the auction unless otherwise specifically permitted under the purchase agreement.’”
“But that purchase agreement isn’t available until the day of the auction, which Kelly said raises another red flag.”
So you’re basically buying the house sight unseen (from an inspection point of view.)
And getting shilled to boot - “Also, the auctioneer himself is allowed to bid up the price on behalf of the seller” - not to mention the hidden minimum price.
Is the neighborhood at least conveniently located? Or is it one of those farms out in the boonies that sprouted houses after a hard rain. God help the suckers…
Drop, prices drop!! Whee! We’re havin’ biscuits tonight!
A Pollock joke for you:
“Finally, there’s this point: bidders must bring cash or a cashier’s check in the amount of $5,000 as an earnest money deposit.”
“However that money is non-refundable on site if the winning bidder uses the auction’s financing but for some reason the deal doesn’t go through and the buyer wants to pull out, Pollock said.”
“‘Before this, we were always on time with all my bills; we had a great credit score. I never missed a mortgage payment, car payment, credit payment,’ Barton said. Sarah finds occasional work. Barton, who is on leave until January, said he wanted to take a second job but his wife discouraged him, noting he needs to needs to rest and relax after 15 months in a combat zone.”
A quarter of a million Americans have been to Iraq in the military, and all of them have seen what an i.e.d. can do, in an urban setting…
And more than a few of them are pissed off.
A scary thought, but worth pondering. Remember Timothy McVeigh? He was a veteran of the first Gulf War, and his cohorts were his former Army buddies. We all know what they did with their anti-government anger.
Not only do people not know that this is happening, most people don’t know that the entire US banking system is teetering on the edge of a meltdown. Most people don’t recognize that the biggest banks in America are basically insolvent.
Most people don’t know that the Fed is doing things to bail out the banks, that it’s never tried before in it’s history.
And most people are utterly unaware of the fact that the US dollar has crashed — losing a massive 30% of its value in the last 5 years.
But there’s no mystery to that. The reason people don’ t know is:
(1) because the news media has proven itself during the last two bubbles to be nothing short of incompetent. They are always the last to pick up on a story and they are shills to their advertisers. The blogosphere is replacing the MSM in importance and relevance every day.
(2) The only thing more dangerous than bank insolvencies is joe-sixpack being *aware* of bank insolvencies.
If people knew how much danger their nest-eggs were currently in, we’d already have runs on the banks.
“The blogsphere is replacing the MSM in importance and revelance every day.”
Very astute comment.
A well run, self-enforced blog (like this one) attracts quality posts that dig deep into the true nature of unfolding events, something you will never find in the MSM.
I completely agree. It stuns me that most people I bring this up to have absolutely no idea what I’m talking about, never mind the ramifications/consequences you mention.
Thanks, sohonyc, for your astute perspective. I`ve stopped watching CNBC, and Fox news entirely.
I’ll give credit that CNBC does put some people on who tell the truth of how things don’t play out. And they express shock at bad days; they clearly are addicted to up days like most traders seem to be, but I don’t see any denial of the down days - in fact, they all act scared (reflecting what the traders around them must be showing).
The media may be many things, but I would not say that they are incompetent. They are in business to make money not to inform the populace. I too have given up on TV, it’s just one long commercial with mainly mindless drivle in between the ads. Thanks goodness for the Economist and the Internet.
“Thanks goodness for the Economist and the Internet.”
Exactly!!
I completely agree with your analysis, but want to ask that you refrain from using MSM to describe the media that have traditionally dominated the dissemination of new in this country. There is nothing mainstream whatsoever about multi-millionaire glamour gals and guys, mouthing platitudes in order to boost the stock prices of their billionaire owners.
There is a movement to change the term to “traditional” media. After all, blogs are mostly written and read by the average citizen, as mainstream as you can get.
A lot of sellers are still in a state of delusion. We are looking for a house right now in northern NJ. We have looked at tons of them over the last several months and narrowed it down to one we would make an offer on. They had it listed at $649,000 (this was in Sept) after dropping it from $679,000 when it first listed in June. We offered $550,000 after finding out they already received an offer for $530,000. There were no recent comparables in the area we found that some of them sold just two years ago for that price range. So we figured going back to prices from 2 years ago isn’t crazy. They turned us down. This was in September and the house is still on the market and they’ve now dropped it to $629,000. They still need to drop the price further.
I think statistically NJ has done pretty well in this housing downturn but it depends on the area. In places where there was a ton of new developments prices have fallen quite a bit, its just that NJ is mostly made up of established neighborhoods with older homes and longtime residents. But all that recent Toll Brother type stuff is getting hit badly, as well as the condo developments in Hoboken, Jersey City, Weehawken, etc.
Time for an offer of $ 450,000?
““Their mortgage payments went from $850 to $1,350 a month in the summer. The family’s expenses on its total debts are more than $4,000 a month. ”
Whoa. Mortgage payments are only a third of their total debt expenses? Mortgage resets aren’t the problem with this family.
I have a relative who’s back from three tours in Iraq. He can’t spend his money fast enough. He’s calling every few days to brag about his latest toy. He and wifey figure they’ve earned it all because of his service.
Meantime, they can’t sell their house in the boondocks he insisted on buying after his first tour. It’s an hour away from their new jobs, so they’d like to unload it, but it’s now worth less than they owe on it. Plus the subdivision has lots of vacant new homes, so they’ve got lots of competition - and no buyers.
They’ve taken in another married couple as renters, and have been spending more money on blinging up the house. They love to show it off, but trouble is, they live so far away from everyone else, it’s too expensive and too much hassle for most folks to want to visit them.
Oh, and his new civilian job? He drives a delivery truck.
Thats my question too. Where is the other $2700 going. I don`t know for sure, but even If you have a 2`nd mortgage for like 30-40k isn`t that like $400-500 per month. You can lease a 5 series bmw for $600 and a new volvo xc90 for another $500. All of what I stated including the house payment is still less than $3000.
I hope its a typo.
Regards,
Lane
Greenspan calls for taxpayer bailout for FB’s.
http://bloomberg.com/apps/news?pid=20601087&sid=ae4kKgk4O4Ks&refer=home
“Alan Greenspan, former chairman of the Federal Reserve, suggested Sunday that a tax break or other government financial help for homeowners facing the mortgage crunch would be the best political fix for the economy.”
Why don’t we just give them the houses? After all, they are so deserving!
http://biz.yahoo.com/ap/071216/greenspan_economy.html
When AG speaks…it’s all clicks and whistles to me.
The man is delusional. In the same article that Greenspan recommends a “cash infusion”, he cautions against “the risk of inflation.”
What a sad showing…
If this comes to pass, I’m going to withhold and equal sum from my taxes.
The whole system is BS
I make a paycheck which is being eaten by inflation
I pay 35% tax and AMT has done away with most of my deductions, while Hedge fund managers pay 10%
I pay attention to the market and sold my house a few years ago and now gamblers are going to be rewarded with my tax dollars.
It is no secret that inflation is raging, but here is more anecdotal evidence. Last year I bought dry-aged Wagyu steaks for my parents for $122.00 each. This year the same item cost $165 each. Inflation is probably running 10% plus in this country, but our rat-infested government is lying through their teeth about it.
I feel sorry for anyone living on a fixed income. They are being devastated financially. And now they are facing serious cuts in social services thanks to the GOP strategy of “starve the beast”.
With friends like our government…who needs enemies?
If you look at the producer price data released Thursday morning, the year-over-year increase in the PPI Finished Goods category has spiked to a disturbingly high + 7.2%. Check out the sequential rise over the last 13 months on a year-over-year basis:
Nov-06 … + 0.9%
Dec-06 … + 1.1%
Jan-07 … + 0.1%
Feb-07 … + 2.4%
Mar-07 … + 3.1%
Apr-07 … + 3.2%
May-07 … + 3.9%
Jun-07 … + 3.3%
Jul-07 … + 4.2%
Aug-07 … + 2.2%
Sep-07 … + 4.4%
Oct-07 … + 6.1%
Nov-07 … + 7.2%
Could be simple supply and demand. I’m still seeing deflation on many things I buy, especially if you shop for things via organized forums like Slickdeals / fatwallet. This year I’ve gotten tons of good food deals, electronis. And I got a very good deal on a new car buying a no haggle Scion [Toyota] (and even then, the dealer threw in free add-ons, as technically they can’t lower the price)
I think Chinese goods will skyrocket after their currency finally adjusts… buy now. I’ve picked up Lenovo (IBM ThinkPad) laptops for all my employees at best prices ever. Fatwallet/Slickdeals is place to get details.
Fine computers and maybe cares are cheaper -what about energy, college, health care, core food items and housing ? No deflation there
This is rich!
Greenspan, speaking on ABC’s “This Week” program aired today, said cash bailouts, while creating a larger budget deficit, have the advantage of helping homeowners without distorting property prices or interest-rates on mortgages.
“Cash is available and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this,” Greenspan said.
I really need to get all my assets out of this country.
“I really need to get all my assets out of this country.”
And go where with them? The expropriation risk is even worse in most other places, especially as the global economy turns down.
said cash bailouts, while creating a larger budget deficit, have the advantage of helping homeowners without distorting property prices
Well at least AG serves his lies straight up these days instead of just obfuscating. The whole purpose of bailouts is to distort property prices - by keeping them from falling to levels justified by fundamentals.
“One company offered a loan that would reduce the family’s payments from the current $4,600 a month to around $2,700. ‘I need a co-signer,’ Barton said. ‘The problem is I don’t have anybody. I’m the success story in my family.’”
Another oddness during the bubble. A lot of the speculators were (as far as they knew) the smartest ones in their peer/family groups, smart enough to get in on the free money while the schmucks slaved away for sucker pay. I’m sure that most of them felt and acted quite superior during that time. If they happen to have a friend or relative smart enough to have avoided the bubble, what are they odds that their relationship with that person is good enough to get a helping hand at this point?
At least people are starting to get good advice from the press. (Although, I’m not sure helping people “get their equity out” before they “lose it” can be classed as good advice, at least it seems factual and realistic to current and near future conditions.)
Oh my sohonyc!
“Not only do people not know that this is happening, most people don’t know that the entire US banking system is teetering on the edge of a meltdown. Most people don’t recognize that the biggest banks in America are basically insolvent.”
This is nothing close to reality. There are 6 metro areas that went nuts with overspeculation. People gambled, got really greedy and learned a lesson the hard way. Don’t be so greedy. No taxpayer bailout for greedy flippers who are still up several hundred percent. Sorry.