It’s Not A Happy Time To Be A Banker In Florida
The Palm Beach Post reports from Florida. “Earlier this year, megabank National City Corp. aggressively entered the Florida market, buying Fidelity Bank & Trust in January and Harbor Federal Savings Bank in April for a total of $2 billion. On Monday, National City announced it would set aside $700 million in loss reserves to cover delinquent loans. It also said it would take a $200 million charge in the quarter related to mortgage securities.”
“‘Company officials previously reported its biggest problems were in Florida and Michigan. ‘It’s not fun being a banker in South Florida today,’ said Ken Thomas, a banking analyst based in Miami.”
“It’s not just bankers who are balking. Loan customers have disappeared as houses sit on the market and potential buyers wait for prices, which have fallen dramatically, to drop further. ‘Demand is way down,’ said Dennis S. Hudson, CEO of Stuart-based Seacoast Banking Corp.”
The Daily Business Review. “Gary Laurash surveyed the numbers showing the vital signs of South Florida’s community banks and offered a plainspoken bottom line.”
“‘It’s not a happy time to be a banker,’ the chief financial officer of Great Florida Bank said. ‘In general, the numbers indicate we’re in a very difficult credit market right now in South Florida, especially on the residential real estate side.’”
“Overdue loan payments at South Florida community banks have tripled in a year. The value of foreclosed property held by South Florida banks soared by 21 times in the year ended Sept. 30, according to a Daily Business Review analysis of Federal Deposit Insurance Corp. data.”
“The banks with foreclosed real estate held property worth a combined $77.6 million as of Sept. 30, up from only $3.6 million a year before and $49 million at the end of June. At the same time, loans and leases more than 90 days overdue more than tripled regionally to $686 million from $184 million. And the banks’ cumulative net income dropped 28 percent.”
“‘The number and amounts of these properties is startling now, but given the sheer size of the downturn we haven’t seen the worst of it yet,’ predicted Luis Salazar, an attorney at Greenberg Traurig. ‘I think we’re going to see an uptick of these properties’ after the first of the year because many banks are holding off on foreclosures for accounting purposes.”
“As the next wave of condominium projects are completed, the financial strain will get worse.”
“‘A lot of these buildings are coming on line now in the next six to eight months,’ said Raymond Miller, an attorney with Gunster Yoakley & Stewart in Miami who specializes in foreclosures. ‘They’re going to start calling people and saying, ‘OK, we’re going to close in 90 days, 60 days, 30 days.’ That’s when you’re really going to find out in the very local market what is happening.’”
“‘There’s a price for all of this property,’ Miller said. ‘Finding out what it is right now is going to be a continual task.’”
“Bank of America is eager to recover $20.5 million it lent to Boca Raton-based developer Sterling Communities to build a luxury community of single-family homes in Lake Worth.”
“But the giant lender, which filed a foreclosure suit in Palm Beach Circuit Court, is only the biggest of dozens of creditors seeking payment from Sterling.”
“Derrick Griffin, of Griffin & Wilson Stucco, a plastering and lathing contractor who worked on the Talavera development for nearly two years, said Sterling owes him more than $100,000 for his services. ‘They were supposed to pay me when I finished,’ Griffin said. ‘And they never did.’”
“Griffin has liens against at least six houses in Talavera, according to county records. Griffin, who has been in business for about 20 years, said Sterling is not the only builder that owes him money, but would not disclose the names of the other companies.”
“A subcontractor, who spoke on condition of anonymity, said Sterling paid him for his services but the checks bounced.”
“Several homebuyers who had deposits to purchase Talavera houses are also named in the lawsuit. One is Stella Hermesh, who said she heard Sterling was having financial difficulties and asked to transfer the deposit she had on a house that was under construction to a house that was finished. She paid $1 million for the house.”
“‘It was frightening,’ she said. ‘I figured they wouldn’t be able to finish the houses a couple months ago and said, ‘I know you have a few houses for sale and you are not going to finish my house.’ So I closed on another house, a bigger one — and I know I did a good deal.’”
“But buyers with pending deals may be running out of time. Depending on the terms of their purchase contracts, buyers who haven’t closed on their Talavera homes risk losing their deposits if Bank of America takes over the unsold houses, said Alan Rosenthal, a partner at Adorno & Yoss in Miami, who focuses on business litigation including real estate and lending. Rosenthal is not involved in the case.”
“‘If the developer is not able to deliver, one would expect the deposit would be returned,’ Rosenthal said. ‘But if the developer doesn’t have any money to pay for it, they could be protected under terms in the contract. It all depends on what’s in the contract.’”
“Deposits on homes in Talavera, with prices as high as $1.5 million, could total as much as $300,000, based on a typical 20 percent preconstruction deposit.”
The Herald Tribune. “It did not take long for the new owner of Coast Bank to get roped into the legal battle with disgruntled borrowers. First Banks Inc., which took over Coast on Nov. 30, is being sued by customers who were stuck with mortgages and unfinished homes in the loan debacle that brought down the Bradenton bank.”
“Sarasota attorney Alan Tannenbaum said he will file 11 lawsuits against St. Louis-based First Banks on behalf of Coast borrowers. He had filed 162 lawsuits against Coast for borrowers who want to get out of their loans. First Banks, as the owner of Coast, will be named in those as well.”
“Tannenbaum said he is disappointed that First Banks rebuffed his request for a meeting to discuss the lawsuits. ‘We are anxious to resolve them,’ he said. ‘Once they can be resolved, we can get these folks on a permanent path, either as an owner of a lot or finishing a house.’”
“In an interview last week, First Banks President Terry McCarthy said it would take ‘a couple of years’ to clean up the bad loans left behind by Coast.”
“One of the primary builders, Construction Compliance Inc. of St. Petersburg, could not handle the nearly 500 construction contacts from Coast borrowers. The company stopped building, leaving many borrowers with unfinished homes.”
“In one case, borrower Richard Pachino of New York has a CCI home in south Sarasota County that is 90 percent complete with a $185,000 mortgage balance, Tannenbaum said. Pachino has more than $8,000 in liens against his property.”
“Coast filed a foreclosure suit against Pachino last month.”
“The suits allege that Coast improperly disbursed money to CCI for work that was not performed and allowed the builder to commingle borrowers’ funds for work on other homes. Borrowers want the banks to rescind the mortgages and to pay damages.”
The Chicago Tribune. “In typical Floridian fashion, the squat condominiums of Carrollwood Lane encircle a tiny man-made lake. This is the unlikely picture of the economic crisis that threatens to spin Florida and the nation into recession and shake up an already turbulent race for the White House.”
“Lenders foreclosed on 10 homes on Carrollwood Lane over the last year, according to statistics compiled by RealtyTrac.com, along with more than 90 others in the surrounding ZIP code. The working-class neighborhood mirrors subdivisions throughout the city and its suburbs, where foreclosures more than doubled this year and housing prices fell further than any major metro area in the country.”
“Political scientists say Tampa is a bellwether metro area in perhaps the most bellwether of big states.”
“‘In 2004, people looked at the election in terms of [national] security,’ said Susan MacManus, a political science professor at the University of South Florida. ‘This time out, people are going to look at every dimension of the election in terms of the economy and their own pocketbook.’”
“Tampa, more than most of the country, has a job market dependent on housing, according to Moody’s Economy.com. So when home prices fell 11 percent in Tampa from Sept. 2006 to Sept. 2007 and foreclosures jumped 140 percent, the entire regional economy suffered.”
“Construction laborers worked less and spent less. Homeowners tapped less equity to buy cars or boats. Several planned downtown condo projects, including one by Donald Trump, ground to a halt.”
“‘It’s bloody,’ said Allen Crumbley, who runs one of the largest commercial real estate companies in the Tampa Bay area.”
The St Petersburg Times. “The economy hasn’t been great of late. Higher gas prices, higher housing costs, higher insurance bills, the slumping construction industry and real estate market - what all that means for food banks, food pantries and soup kitchens is this: Supply is down, need is up.”
“What’s most striking, though, to the people who run the Volunteer Way and other food banks around the Tampa Bay area, is who’s in their lines.”
“‘I think the face of hunger has changed just in the last six months, and dramatically,’ said Lester Cypher, the CEO of the Volunteer Way. ‘There are some people who come here who have two jobs.’”
“One recent morning, Heather Pannell, a young, married mother from Holiday, walked into Volunteer Way on Congress Street. She had her 9-month-old son, Trenton, in her arms, and her 4-year-old daughter, Madison, clinging to her thigh. This was her first time at the food bank.”
“‘I just lost my job,’ she said. ‘Last week. Lennar Homes. I was a permit coordinator.’”
The Tampa Tribune. “New York’s Fifth Avenue, London’s Oxford Street and Chicago’s Magnificent Mile have nothing to fear from downtown Tampa.”
“Although Channelside Drive, the Arts District and the Franklin Street corridor have begun to show some retail stirrings after years of stagnation and promises, few would agree that downtown Tampa has yet to show its potential as a vibrant urban center for shopping, dining and entertainment.”
“A handful of new condominium buildings, mostly towers, have just been completed. The new condominium buildings create demand for new shops and restaurants by bringing new residents to downtown Tampa.”
“The Towers of Channelside opened earlier this year; it has 257 units in two 29-story towers. About 100 units, representing 200 tenants, are now occupied.”
“A few blocks north, the 127,000 square feet of ground-level retail space at Grand Central at Kennedy is still empty.”
“In 2007, developers completed 1,500 new condominium units in downtown Tampa, according to the Tampa Downtown Partnership. In comparison with this year’s condo crop, developers completed 720 new condominium units in downtown Tampa from 2004 to 2006, according to the partnership.”
“Retail expert Lee Nelson, a senior associate at CB Richard Ellis in Tampa, said restaurants and shops will ‘flock’ to the newly built space. But it will take years - not months - for the vacancies to be filled.”
“‘Retailers have to have customers,’ she said. ‘Until those condos are full of people, the retail will not come. Then it will be vibrant and exciting.’”
‘Federal prosecutors on Monday announced the indictment of 31 people in connection with a mortgage fraud scheme involving at least 28 properties in South Florida and fraudulent loans totaling more than $14.2 million. The loans ranged from about $145,000 to $891,000, according to the indictment.’
‘Officials said the scheme included participants at every stage of the transactions, including bank employees, title agents, appraisers and fake buyers, and involved property in Miami-Dade and Broward Counties and in the city of Marco Island on the state’s southwest coast.’
‘Mortgage fraud ‘has become a real and daily threat to the asset most important to most of us Floridians: our homes,’ R. Alexander Acosta, the United States attorney for the Southern District of Florida, said in a statement.’
The fraud is only begining to surface. I’ve watched a ton of homes sell 2 and 3 months apart with appraisals 125K or more higher than the previous. Outside looking in you know something is up but can’t put your finger on it.
In the end people were taking loans on the escalated amount and never made a single payment.
Where’s Paladin?
..
I hope he’s not at the bottom of San Francisco Bay wearin’ concrete shoes.
..
He posted a few days back, and his shoes didn’t look concrete. I can’t find the post quickly, but the summary was that the IRS is his new best friend. They’ve got a vested interest in identifying any money that changed hands (no matter what the circumstances) because they want their cut.
They also give a sizeable cut to those who provide information leading to the collection of the avoided taxes.
OT but the Bits Bucket seems to be full:
Amusing show on NPR right now, “Money on the Brain”, about why people make stupid investment decisions, with many desperate FBs and HELOCers calling in for help. Available on the Web at 3 EST:
http://tinyurl.com/3cek8k
Get your Schadenfreude fix today!
“Retail expert Lee Nelson, a senior associate at CB Richard Ellis in Tampa, said restaurants and shops will ‘flock’ to the newly built space. But it will take years - not months - for the vacancies to be filled.”
“‘Retailers have to have customers,’ she said. ‘Until those condos are full of people, the retail will not come. Then it will be vibrant and exciting.’”
Ah, Ben…saved the money quote for the end.
There will be “flocking vibrant exciting retail”…in about a decade, if that. By then the economic house of cards that has been built upon people buying imported unnecessary, sparkly stuff they can’t afford hopefully will have crashed. Then what will “retail” look like? Any ideas?
Then what will “retail” look like? Any ideas?
(Sound of crickets chirping)
I haven’t heard too many crickets chirping on Craig’s List. Or at the yard sales I’ve gone to. Or, for that matter, on the local Freecycle.
In short, the market for used stuff is holding up pretty well. And, if you know what you’re looking for, you can get some good deals.
(Didn’t show up, sorry if double post)
This is exactly what the retail problem is where I used to live (CityPlace) a manufactured downtown community in West Palm Beach. There are daily closings of businesses/resturants there; mostly because of the fact that there are 3000-4000 condos within walking distance; but only 300-400 of them actually have people who live in them.
I do feel a bad for these folks (the retailers), they were certainly fleeced by this whole thing as well. They were told there are going to be 3000 condos, with an avg selling price of 750K within .25 miles of your front door. Sounds like a perfect place to open the Gucci, B&O, Macys, etc (name your high end store of choice, etc..
What they did not realize is that the 750K condos were being sold to people who have
who have 75K HH incomes, not the 300K the retailers were expecting.
Sorry, the blog was hungry today, it really chopped up this post.
“Vibrant” and “exciting” are the LAST words I think of when it comes to shopping or anything related to it.
“‘Retailers have to have customers,’ she said. ‘Until those condos are full of people, the retail will not come. Then it will be vibrant and exciting.’”
Get real. This is Tampa, dump of the Universe, with one of the ugliest, dullest, and dirtiest downtowns I’ve ever seen. There is nothing down there to do, nowhere to go, the traffic is a nightmare for anyone trying to cross a street, and it smells. There are no nice restaurants, only one nice store I know of (but cheap wig shops abound), and nobody goes there except people stuck with working there.
The developers who pretended that downtown Tampa was the next upscale urban wonder can now look back at the junk they built and pat themselves for creating the most Section 8 housing ever built at one time. Channelside, bragged about in the article, is an industrial wasteland literally overlooking a waste treatment plant, and the air quality is so bad, builders have to disclose it in contracts. All the condo buildings built there–look like huge, cheap Soviet housing blocks.
What a lot of media people in other areas don’t grasp is that people in Tampa really think they’re at the center of the Universe, and that Tampa is a major city, and that the rest of the world takes it seriously. Arts District? Designating a block of slums as an arts district, and installing maybe one or two stores selling reproductions does not an arts district make. Tampa has been pretending this or that area is an arts district since the 1980s, and it has never pulled it off.
Tampa is the center of the world for strip clubs. Not so sure if that makes a vibrant economy or not, but, hey, at least you’re number 1 in something!
West Palm Beach, btw, has exactly the same delusion of grandur. I loved living there, but they really did think they were a big, high price, high income city. They most certainly are NOT any of those things. It’s not a bad place to live, but it’s not at all what most people would think from looking at the home prices and shopping/stores/arts that are available there. It looks like 5th ave on paper, in reality, it’s just Riviera Beach with a whole bunch of nice new condos and stores for a few blocks.
You’re right about the strip clubs. In fact, Tampa is world (in)famous for its sex shops and lap dancers, and every year is the site of a huge S&M ball which is openly advertised with huge posters all over town. It also has one of the highest per capita venereal disease rates in the Western world. No wonder.
With its other main attraction, the Florida State Fair, how could Tampa NOT become the most important place on Earth? A few years ago, it actually deluded itself into believing it would be hosting the Summer Olympics, and huge areas of low-cost and slum housing were knocked down to build an Olympic Village–because our leaders just KNEW Tampa would be chosen. Ha. Ha. The Olympic Committee must have fallen down laughing.
Now that was just plain stupid. The Summer Olympics typically are held in August and September, which are the peak months of hurricane season.
Not to mention that it’s beyond hot in Tampa at the time of year. The older crowd that typically attends the Olympics would be dropping like flies in the 90 degree, 11+ UV index heat of a Tampa summer.
Beyond stupid. Hilarious. Can you imagine anyone trying to compete in outdoor sports in 100 degree temperatures with 100% humidity? Worse, Tampa was going to split the festivities between Tampa and Plant City, and possibly Orlando–so this event would be held here and that event held there. Everyone would be on the interstate hours a day just driving back and forth to get to events.
When Tampa was not chosen, the local politicians were heartsick. They really believed Tampa was a world class metropolis.
you mean Tampa is not a World Class city???Here in Orlando all our politicians were saying “we need to build a billion dollar events center if we ever want to be a world class city like Tampa and Miami. All the best entertainment passes us by because the one we built 10 years ago wasnt big enough.” They also purchased the land for the Arena at peak times of the bubble. Now they claim look at all the jobs we will be supplying…etc…
They do have an NFL team. Even LA cannot claim that.
I don’t agree with the ferocity of that criticism of Tampa, but I do agree that the allegedly glorious Channelside condo towers, which I can see from my window, have a kind of concrete Soviet aspect. And I have yet to see any retail; how could any retail succeed, when condo owners in that area — to the extent they actually live there — are being crushed by their mortgages?
The Tribune article today was a pure puff piece likely prompted by a marketing or public relations firm. No one was quoted other than developers. Somebody actually claimed to have seen people pushing strollers and walking dogs downtown, which is laugh-out-loud funny.
The people pushing strollers are homeless, and using the strollers for their possessions; the people walking dogs are security guards or blind. Nobody in his right mind would walk around that area with a baby; someone would be likely to eat it.
Oh my
I think that goes for much of Florida. We used to go to Daytona Beach from TN when I was a kid. Even then, I was almost glad when we returned home. Even then, it looked like the place was essentially a place with no real economy and the dumping ground for Northerners to place their parents in retirement condos and lofts.
And, in the case of my mother’s family, the Florida relatives kicked my grandmother out. So, she came up to Pennsylvania, in the vain hope that she’d live with my family.
“No way,” said my mother, who’d already taken more than enough guff from her mother. My mom got her mom into a nearby apartment, and that was that.
What is with every little town building a pile of condos or lofts on top of a bunch of retail and deciding that it’s the next upscale urban environment? Where did they get the idea that everyone wanted to live an urban lifestyle?
“There is nothing down there to do, nowhere to go, the traffic is a nightmare for anyone trying to cross a street, and it smells.”
You have summed up some of the problems with Tampa. These are basic. Tampa is, and has always been an PORT town. It’s primary shipments are PHOSPHATE and Scrap metals.
The loading docks for these items are at Port Sutton and Hooker’s Point, immediately adjacent to Harbor Island. This facilities are mess.
All the activity around those facilities, including the new “harbor island” and the old Davis Island were based on dirty industries and shipping in and out of the port.
The SMELL is from the phosphate plants loading at the Port. This smell permeates all of downtown Tampa, Ybor City and All of East Tampa.
The former Cargill fertilizer plant is strategically located on the Alafia River, at the very mouth of Tampa Bay near Gibsonton. It’s fumes permeate all of Gibsonton and travel up the Bay to Tampa.
From Alafia to Downtown Tampa. the whole area has always stunk due to these operations.
But, this is the “engine” that drives our economy according to the Chamber of Commerce.
The new port facilities gave Downtown and the Channelside area a “chance” to be a more interesting place until Port Security closed off the docks and installed fences on the walkways in the name of National Security.
No fence on the southern border, but a fence to keep Americans from using their port facilities.
The entire political class here is all about ‘favors’ for payoffs. Tampa should have stayed a Mafia stronghold. They ran a cleaner city.
Get rid of the phosphate pits around the bay and the SMELL would be gone. It’s like Mobile Alabama when the pulp factories stunk up the entire region. It took a long time to rid that city of it’s rats. Tampa won’t get the job done, either.
The polluters have all the money.
Charming, huh? And this was to be “America’s next great city?” Ugh. The cancer rates on Harbour Island (note the pretentious British spelling) are really bad, and those multi-million dollar houses jutting into the filthy Hillsborough Bay are as good as nuclear power plants. Anyone who would build there has to be stupid in the extreme.
The people who run Tampa today are part of the same clique that ran it fifty years ago. And it shows.
This is exactly what the retail problem is where I used to live (CityPlace) a manufactured downtown community in West Palm Beach. There are daily closings of businesses/resturants there; mostly because of the fact that there are 3000-4000 condos within walking distance; but only 300-400 of them actually have people who live in them.
I do feel a bad for these folks (the retailers), they were certainly fleeced by this whole thing as well. They were told there are going to be 3000 condos, with an avg selling price of 750K within .25 miles of your front door. Sounds like a perfect place to open the Gucci, B&O, Macys, etc (name your high end store of choice, etc..
What they did not realize is that the 750K condos were being sold to people who have
Cityplace has a rent problem for retail more than a retail problem. A Friday night crowd is enough for them to stay in business if only there were rents that were affordable.
I certianly agree with that assesment, and would go further and say it’s more of a “targeting” and rent problem then a retail problem. There are plenty of people who come down there, and some places do fine there.
However, the people that come down there are NOT the people targetted by the stores that are there. Most are younger, some are yuppies, some are kids.. Either way, VERY FEW have the kind of money that it takes to shop in most of the stores there. The “normal” stores seem to do fine (BR being a prime example). But the high end places/expensive restraunts, etc.. They can’t seem to gain any traction.
It’s because they thought the demographic was people making from 100-500K a year. In actuality, the demo is more like 50-150K/yr.
“It’s because they thought the demographic was people making from 100-500K a year. In actuality, the demo is more like 50-150K/yr.”
That’s also true. I’m concerned that everything is being turned into restaurant space. Restaurants are good, they bring people in. Too many restaurants is bad…no wait times means no customers to shop while waiting…increased competition means decreased profits.
“they” have been beating the swaybacked old nag of “downtown-Tampa-as-vibrant-and-exciting” for 20+ years…. oh, build a convention center…. oh, more hotels will do it! oh, and what about an arena, and an aquarium, and a trolley!
those things are nice, but nearly all of downtown still rolls up the sidewalks at 6 o’clock when all the office workers go home.
Same thing happens in Downtown Tucson. It’s like a ghost town after dark, yet the revitalization efforts continue (to vacuum up our tax dollars).
Its 2nd and 3rd tier towns trying to act like mini SF’s, Chicago’s, Manhattan’s etc…Theory being to build condo’s to build the residential base so the night life will light up….San Jose & Sac have the same problem…
I still don’t understand this idea to “revitalize” a city by creating a nightlife?
How on earth is it helpful that there are a bunch of partygoing 20 year olds on the streets at 3AM? I would think that the way you revitalize a city is by brining in good jobs, nice places to live, good shopping/resturants, etc. However, in almost all of these “redevlopment” efforts, it seems the whole thing hinges on high end bars and clubs. How is that supposed to sustain an economy?
Well 10-15 years from now after all those condo’s have sold to actual end-users for ~20¢ on the dollar, you’ll see alot of off-brand, ethnic and dollar-store retail, so they might be right in some sense.
We, as a society, need to stop buying useless junks and toys! Debt does not equal Wealth. Unless we are talking about wealth for the banks, lenders, credit card companies, NAR, etc.
We’ve cut out most silly purchases. Christmas expenditures didn’t exceed $40 per person and rarely reached that. $20 was the average. And we only give to the immediate family.
I’m even cutting down on book purchases. And that is my big area. We are eating mainly at home. Once in a while my husband and I eat out but not often. And we shop thrift stores a lot. We found some great furniture bargins a couple of weeks ago on items wee needed.
“We’ve cut out most silly purchases.”
This will be the rule, not the exception very soon. The economy won’t be able to handle it. Recession is not a maybe in my opinion.
Don’t cut down on book purchases. Books, imho, are the most underpriced asset in the natural world. You can buy a book for 10 bucks, and be entertained or educated for hours/days. The value proposition of a good book should place the cost for many in the 100’s of dollars. And, you can even get them for free in the library. Books are, imho, one of the greatest assets of our society.
Agree 100% about the last statement. I’d give $10 donation to the libary instead. And, borrow books from library. (First walk to the libary, rather than drive.)
I certainly don’t have anything against the library; it’s one of the few public (government) places where I really enjoy going. At the same time, I also don’t begrudge anyone 5-15 dollars to purchase a book either. I buy 30+ books a year, and I can honestly say, even though I have bought some that I didn’t enjoy, the work that goes into creating a book makes it, in almost all cases, at worst a break even on the purchase price.
Let’s see, I can get a latte from STBX, or a book that will take me 3-10 hours to finish, educate me, simulate my mind, etc.. Hmm.. Tough choice (unfortuantely, I sometimes wind up doing both!).
Me and my wife are big cheap skates when it comes to spending. We don’t buy books, but do go to the library. If we eat out, it might be once every 2 weeks. We bring our lunch, drink office coffee, both drive cars that are over 12 years old, carpool in my truck, avoid bridge tolls, buy groceries at grocery outlets, fix up furniture thrown out on the side of the road or go to Goodwill, take vacations in December, and bought Xmas presents from the Salvation Army.
We make six figure incomes, but we’re preparing for retirement first, house last.That and we figured the housing market would crash anyway.
Man, I thought I was cheap-skate, but you have me beat. However, I will probably implement some of your techniques (unless their patented). -:)
You guys may want to check this out
http://books.google.com/
jetsonboy - I’m making my usual Nashville trip for Christmas and will be driving my van - hope you haven’t removed all the broken-down furniture from the East Brentwood area.;)
We make six figure incomes, but we’re preparing for retirement first, house last.That and we figured the housing market would crash anyway.
Be careful. You current lifestyle will follow you right into retirement. You may have half a million in savings and absolutely refuse to spend $3 to fix a hole in your screen door. I’m not kidding. I have an Aunt that is just like that.
Kind of funny you mention that. My wife is the one that got me into saving mad money. I used to eat out all the time and was planning on buying a new Mustang once I got a decent enough job. But after getting married, I did a 360 because the shocking realization that housing was incredibly expensive out here In CA made me think twice about where the money would go.
That you mention repairing that $3 screen door made me forget another little cost-saving trick: learning to repair your own things. My truck has 220,000 miles. My wife’s car has close to 200k. Yet they’re in good shape. If you’re patient, you can easily repair your own car. I’ve replaced the water pump, starter, alternator, and other stuff like belts, plugs, and brakes. I recently had to remove the dash to replace the stupid engine trouble light because they failed it because it was burned out. It took most of Saturday, but it cost me the $1.99 for the replacement bulb versus what would’ve been $5-$600 if the dealer did it. My biggest ambition will be having to replace the transmission which I am guesstimating will be in another year or two.
My granddad was the worst. I recall spraying a hornets nest with his can of dollar store wasp spray. It just made them mad and I got stung anyway. Some thing in life are worth the cost
My aunt still waters down shampoo and ketchup - holdover from depression even though she has tons of money.
Comment by jetson_boy
2007-12-19 09:26:30
“Me and my wife are big cheap skates when it comes to spending. We don’t buy books, but do go to the library. If we eat out, it might be once every 2 weeks. We bring our lunch, drink office coffee, both drive cars that are over 12 years old, carpool in my truck, avoid bridge tolls, buy groceries at grocery outlets, fix up furniture thrown out on the side of the road or go to Goodwill, take vacations in December, and bought Xmas presents from the Salvation Army.
We make six figure incomes, but we’re preparing for retirement first, house last.That and we figured the housing market would crash anyway.”
Ya know, there’s no guarantee that you’ll make it to retirement. My father retired in September of 1989. He died in December of 1989. That was very sad. I spend my money to enjoy my life TODAY. I’m not going to wait until I’m crippled to think about what I should have done because I was trying to save a buck. I won’t be the one in the rocking chair with regrets about not having done something. I spend a great deal of money on vacations every year. It’s always tickets for 5(me, wife & 3 children). To me it makes absolutely no sense to live such a penny-pinching life. A buddy of mine has a million bucks in the bank. Literally. He has never been on a plane. His health is failing and he speaks of what could have been. Well, like I said, that’s not gonna be me.
Consider the opportunity cost of your time. Could you and your wife find additional work in your areas of expertise that would allow you to make extra spending money? Moreover, performing this work would likely lead to additional work.
If your an automotive engineer or technician, and the repairs are within your area of knowledge and you have the appropriate tools, carry on. If your doing this to take a break from your day-to-day work, that’s fine as well - though as an engineer I’d call it fun, not work.
Otherwise, this may not be the best use of your time. It can be a hard habit to break though, I relapse more than I should.
Have you considered moving out of California? That could also help for housing and quality of life.
I got my mba books for under $200 on ebay/amazon used
some were $6 w shipping
I buy used books all the time over the Internet. Because of the 4th class rate for books, if you’re not in a hurry, it’s the cheapest way to get them.
Cutting out only the completely forgettable stuff. I’ll still buy philosohy, history, and technical books. And fiction that I will want to read more than once.
Check out your local library website for a catalog, and for inter-library loan. In the SF bay area, I can log on and search the entire county system for a book, and if it’s not found, I can automatically search Link+, which is made up of a long list of libraries in california. I rarely search for a book that isn’t in the loan system, and it’s delivered to my local library within a week, free. I almost never buy books anymore.
Michael,
“The value proposition of a good book should place the cost for many in the 100’s of dollars…”
I agree that not enough people read these days and that a GREAT book is worth its weight in gold, but these days it is so easy to get published (and so much cheaper) that a lot of junk gets published nowadays, IMHO. Same for movies– it is so tough to find a quality movie anymore.
People would really stop buying if the Fed stops meddling with the market mechanism. The citizens are broke, and the evil nexus of Govt+bankers still wants the debt-ridden population to take on more debt. So they keep lowering the interest rate. Or, they give free moneys to banks to distribute, etc.
Fortunately, there is only so much they can do, before the system self destructs. I can see the future. It is Zimbabwe.
We refuse to consume much. We rent out books, CDs and DVDs from the public library. We look up new recipes on the internet and try out. It is far more fun and cheaper than eating out. Healthier, too. Both of luckily live close to work and hence keep only one car, drive no more than ~5 miles per day!
Because of our lifestyle and genetics, we are healthy, so we take the High deductible plan at work and hardly ever go to the doctor or spend money on medicine, which means we stay healthier. Believe me, the doctor+medicine make most people sick! We rent, so no hassels. Our lifestyle has worked wonders. I am in mid forties, wife exactly 40, only one kid, in college on scholarship. Our average post-tax cash accumulation rate is about $8K net per month during the last 3 years (I kept track).
Life is good. It’d better if the house prices crashed further.
You are not saving that wealth in the form of US dollars are you? If so then this graph will give you an idea of how much the frn has lost just recently:
http://stockcharts.com/charts/performance/perf.html?GOLD,SILVER,USD,C,BBT,INDU,HGX,CFC
Agreed. Steps to staying healthy:
1. Exercise regularly
2. Eat smart
3. Stay far away from our “health” system
Such a good point-I am 58 and recall as a kid noone ever went to the Dr. We had to pay for it back then, remember that?
We ha colds, flu, splinters, and minor cuts etc and had a first aid kit. Iodine fixed everything and butter did the rest. To get a splinter out my Mom would put a piece of bacon over it and it would pop right out.
Now everybody goes for the sniffles and I swear we are sicker than ever. I wonder how many poor lactose intolerants there are in China.
free-er healthcare is coming in 09 !
“pols offer to change the value of things and fools forever believe them”
free money is not working out as planned
I am 58 and recall as a kid noone ever went to the Dr. We had to pay for it back then, remember that?
Yep! Then in-steps insurance and ruins the whole thing!
I do remember going to the doctor, and then as now we only did it for more serious issues. Things like innoculations, stitches, inner ear infections, etc. Why go for the sniffles? There’s nothing they can do about that.
What did your mom do for polio?
“Fortunately, there is only so much they can do…”
A cash society is an independent society. An independent society wouldn’t accept such abuses of power as we see today. The powers that be will do anything to prevent this from happening.
Mr. Magoo is now urging the government to do more where the mortgage crisis is concerned. The mortgage crisis was initiated by Mr. Magoo with his “free-money-if you-have-a-pulse,” policy. However, as he tours the rubber chicken circuit, Magoo denies he had anything to do with it.
Comment: Mr. Magoo, shut the fu*k up! You’ve done enough damage.
I agree, he is a disgrace!!
How he (or anyone else in the central banking arena) can claim that they did not see this coming, when ALL of us here, and many that aren’t could see it plain as day is really an insult to my intelligence.
I didn’t go to college for economics. I am not a central banker. I don’t even read that many books on economic history. However, the housing bubble was like an elephant sitting on the US economy, how in the HE** could you “not predict” that this was going to happen? Does that mean that all of us are soothsayers, and can see the future? Come on Greenspan, you knew exactly what was going to happen. We did; how on earth could you miss it.
BTW, I saw this mentioned in the bits bucket, the WSJ today was an orgy of housing bubble news. Honestly, it’s starting to get tiring to read; after participating on this blog, all the news papers seem like they are 1-2 yrs behind us. Many of us have predicted exactly this scenerio 2 years ago, finally the MSM is catching up.
The only good thing; when the MSM starts to catch on, the real drops should be coming soon. When everyone thinks your crazy for buying a house; that’s when you buy!
The MSM is a lagging indicator. We, OTOH, are a leading indicator.
I didn’t go to college for economics. I am not a central banker. I don’t even read that many books on economic history. However, the housing bubble was like an elephant sitting on the US economy, how in the HE** could you “not predict” that this was going to happen?
That’s not the reason. They were not too dumb, not at all.
The reason is that seeing what was plainly obvious would have lead to the next phase, “what should we as the central bank should do?”
And the actual, sensible, answer, was like holy water on their pasty terminally Rand-infected scrawny torsos: “eeeet burns eeet burns!”
What’s that answer you say? Government regulation.
That’s why they didn’t “see it”.
Yes, it is plainly obvious that greed times stupidity is a danger to us all, not just the greedy and stupid. Most pertinently, a little bit of regulation can preclude the massive bailout-begging crap we have now. Think of it as vaccination for government intervention: a little now will prevent much worse later.
Even now this self-proclaimed “Objectivist” is advocating straight up government checks to the imprudent and foolish. Naturally, the ones to the banks will have nine more zeros.
All because he still won’t say les mots qui vont bien ensemble
Even Robert McNamara at long last admitted he was dead wrong about Vietnam.
A bartender has much more wisdom than Alan Greenspan.
Every bartender knows the way to deal with an out-of-control drunk is to cut him off from liquidity, cold turkey. Not by raising the price of beer to everybody by 50 cents.
Well at least his bailout plan is right-flat-out in the open and labeled as such. As opposed to the sneaker camel-nose-in-the-tent stuff others have been proposing. It has a certain honesty that his “how could I have seen this coming” protestations do not.
Isn’t Greenspan pretty wealthy? How much of his own money is he willing to donate or “invest” in helping people with their mortgages?
This can’t help, I guess the idea of 1000 people a day moving to FL should be re-evaluated:
http://www.palmbeachpost.com/business/content/business/epaper/2007/12/18/s1a_heading_north_1218.html?imw=Y
(Good comments from the readers, as well)
“I don’t think 20 percent of the population is going to be leaving anytime soon,” Snaith said. “Actions speak louder than words. If it’s so unbearable and hideous and oppressive here, there are 49 other states you can move to.”
Snaith is awfully snippy isn’t he.
If and when I sell my house, I am so out of this state. Moved here in 2003 and tried to make a go of it for the past 5 years. I have a decent job and make good money (I am one of the few lucky ones) but the quality of life otherwise is certainly lacking (high crime rate in general and lack of culture). The cost of living is not much different from the Northeast (NJ and PA) anymore. I would much rather deal with a few months of cold and snow than deal with 12 months of living in a tropical cesspool. Affordabilty was once part of the appeal. Once that is gone, speaking from a northerner, there is really not much incentive to stay.
Right on Jeff, if my whole family didn’t live in FL I would never consider retiring there. I do think I would have loved living in FL in the 50’s and 60’s, with A/C, of course. Sun’s only fun if you can get to or live near a beach. The state’s just too politically corrupt right now.
“‘In 2004, people looked at the election in terms of [national] security,’ said Susan MacManus, a political science professor at the University of South Florida. ‘This time out, people are going to look at every dimension of the election in terms of the economy and their own pocketbook.’”
When will folks ever learn to vote with their wallet instead of the smoke and mirrors issues, even at their own economic peril? We can breathe a sigh of relief in light of the fact that the latest 8 year run of the ideological war on wage earners is nearing its end.
“This time out, people are going to look at every dimension of the election in terms of the economy and their own pocketbook.’”
I believe this. I wonder if Iowa is not a bellweather state, mainly because ag prices are sky high. None of the candidates from either party seems to have grasped the dimensions of the economic downturn we’re facing (Ron Paul excepted). I think the recession and the solvency crisis will change every political calculation, but I’m guessing that the MSM will have to start reporting on story outside the “subprime’ tagline.
I know political talk is not really condoned here, but I just have to mention one thing..
I don’t understand how everyone is not a libretarian; how does that party continually fail to gain traction? Low taxes, less laws, less regulation, more freedom.. Isn’t that exactly what everyone wants?
“I don’t understand how everyone is not a libretarian; how does that party continually fail to gain traction? ”
Because the fundamentals behind the libertarian party aren’t realistic in a mature economy. In nation states where said state is transitioning from 3rd world to market driven economy it would work… for a while. Revenue for all the services we benefit from in a mature economy have to come from somewhere. And sourcing those revenues has been problematic for 27 years now. Slowly over time, those who can most afford to contribute to that revenue stream have gotten a free ticket. The rest of us have had to shoulder the a greater burden for the benefit of the wealthy elite.
And sourcing those revenues has been problematic for 27 years now. Slowly over time, those who can most afford to contribute to that revenue stream have gotten a free ticket. The rest of us have had to shoulder the a greater burden for the benefit of the wealthy elite.
Soooo….This is the system we have, that is not working in a mature economy…How does this back up your statement that Libertarian ideas wont work?
Go back and reread.
Its not worth the read
Denial….. your favorite river in Egypt.
It requires ability. We understand.
Another government and people hater. Hello Flat.
And…Not worth a reply:-)
Michael:
Look for your answer here: Ross Perot in 96, Perot had $18 MILLION dollars of our taxpayers money to launch his presidential campaign. While the repubdemo has $40+million
Perot realized spending the money before the debates was spendthrift because he had no idea how much he could raise after the debates ….while the demorepubs could count on $40 million more
Then he was denied equal opportunity to debate because his poll numbers were low.
Now did my network Court TV or Fox news think this was a serious legal issue? NAH and Perot was literally a Forbidden word at Court TV……
When you HONESTLY look at the history of America someday people will realize what happened to Perot in 96 killed just about any chance a 3rd party will ever exist in Amerikkka
YES! that is the only thinking persons conclusion
Thanks Bronco:
Nobody fully understands the legal implications of this…we checkoff $3 on our tax forms each year and hope we can have a more choices in our government.
Well golly gee…..Ross Perot was really right on target….why cant we man-up and admit he was ahead of his time.
“We can breathe a sigh of relief in light of the fact that the latest 8 year run of the ideological war on wage earners is nearing its end.”
The unfortunate thing I see is a field of candidates who don’t get it. Look at Mrs. Clinton’s housing plan. Look at the ideas put forth by the other Democrats. Nothing new here…just tax and spend.
Don’t even get me started on the Repulican side of things. Most of those candidates are staus quo on 8 years of failed policy.
Nothing new here…just tax and spend.
You prefer the Republican “borrow and borrow and borrow and spend’?
Top 1% of households have as much income as the entire bottom 20%.
Top 1% of households control 33.4% of the wealth. The top 20% control 84.4% of the wealth. (Wealth= net assests.) The other 80% of the population get by on 15.6% of the wealth.
Top 1% own 58% of the financial securties, 46.3% of the trusts, 44.1% of the stocks and mutual finds, and 34.9% of the non-residential real estate.
The those in the top 90-91% own 30.6% of the financial securties, 40.4% of the trusts, 40.4% of the stocks and mutual finds, and 43.6% of the non-residential real estate.
The other 90% have 11.3% of the financial securties, 13.3% of the trusts, 15.5% of the stocks and mutual finds, and 21.5% of the non-residential real estate.
I think the top 10% can ante up a whole lot more money to keep the country running, the infrastructure repaired and all the other necessary expenses (clean water is a good thing, ditto clean air, fire departments, safe consumer products, ……)
Better to have someone in charge who at least admits that if ABC needs done it is going to cost money and the money has to be paid - lot better than ‘oh just charge it, we’ll worry about it later.)
Well said Ann.
This is why politics is frowned upon here. Nowhere did I say anything positive about either of the 2 major parites yet I’m labled a Republican. It’s the reason no 3rd party has made much of an impact. Everyone has to have a label.
I’m not going to take that label AnnScott! I’m not going to take any label. Not from you or anyone else. When I registered as an independent, the lady at the counter was very quick to point out that I wouldn’t be able to vote in either party’s primary. Fair? No…but no one cares about fairness do they?
Bad Andy, remember that the intolerant left is the first to apply labels to discredit legitimate discussion
Kinda like the intolerant angry right?
No, they are second. The left one’s are first. ;^)
What is intolerant about the numbers?
Never said Andy was a Republicn. Just ask which version of money-mangement he preferred.
I worked on the staff of a Republican congressmen and on the staff of a Democratic congressmen. (This was a few decades ago when you were hired for your skills and knowledge and not on the basis of rabid unthinking partisanship.)
A pox on all their houses. It is a question picking the least awful choice ather than the best choice.
Ron Paul
Comment by Bronco
2007-12-19 14:26:47
Ron Paul
Don’t even go there. No woman who doesn’t want to be barefoot, pregnant and in the kitchen will have anything to do with that loan.
(And don’t fogert he is another ‘put it on the credit card’ with his “more tax cuts, more, more, I’m still not satisfied.)
“barefoot, pregnant and in the kitchen” huh? where do you get all that?
cut the spending, just like you would do with your personal budget if your income declined
Nice strawman. Cut what spending….
So we have one poster who now speaks for womankind, and says womankind does not like Ron Paul.
Well, that settles that.
The top 10% of income earners equal about a salary of about $75-80K on up for what I remember on these figures, I could be wrong, but I cannot make heads or tails of the US census data in this regard.
If you are making about that amount of income, then the idea will be to reduce your tax burden not increase it.
Comment by colomountains
2007-12-19 11:01:25
The top 10% of income earners equal about a salary of about $75-80K on up for what I remember on these figures, I could be wrong,
Yes - you are wrong. WAY WAY WAY WRONG
Percentile of Income
.01 from $6,000,000 and up(11,161 of them)
.1 from $1,672,726 and up (111,617 of them)
1.00 from $402,000 and up (1,116,174 of them)
1.50 from $250,000 and up (1,674,261 of them)
3.4 from $200,000 and up (3,817,000 of them)
5.0 from $157,000 and up (5,580,870 of them)
10 from $120,000 and up (11,161,740 of them)
Then looking at it this way,
Top 80-100 percentiles (top 1/5th) $88,500 to ????
60-80 percentile (second 1/5) $55,300 to $88,500
40-60 percentile (mid 1/5) $34,800 to $55,300
20-40 percentile (lower 1/5) $18,500 to $34,800
0-20 pecentile (bottom 1/5) $0 to 18,500
(My husband with his University of Chicago degrees always says that I’m the only person he has known well who finds the US Census data compelling reading.)
Actually deficit is smaller and smaller every quarter due to record tax receipts. Also you forgot to point out top 1% pay 60% of the taxes. If you punish capital it will go into hiding and neither rich nor poor win that class war.
There are more apologies in that one than I care to address. Please Apologistas…
“Also you forgot to point out top 1% pay 60% of the taxes. If you punish capital it will go into hiding and neither rich nor poor win that class war. ”
No - the top 1% do not pay 60% of the taxes - try closer to around 30-35% depending upon the additional tax cuts of each year. Also those living on unearned income do not pay FICA/FUTA (unemployment and Medicare.) They also do not spend the same proportion of their income on sales taxes as do the wage slaves.
Lets just say that under Eisenhower the top marginal bracket was 91%. Biggest economic boom in the history of the US with the creation of real jobs and real businesses.
Also - what do you think the Walton heirs and Paris Hilton are doing with their money? It is hiding in their bank accounts. It sure as bejesus isn’t creating real bricks ‘n mortar businesses that actually make something.
Buying stock is NOT investing in a business unless it is purchsed during the initial offerring of the stock. Sotck purchases after that are nothing more than betting that the value will go up and then you can sell it to another sucker who is betting it will go up more. The actual business does not see a dime from the sales of it stock after the initial offerring.
The problem is that most of the non-rich people are very optimistic and think that soon, they will be in the top 1%, so they will not support any efforts to tax them.
Yeah - from buying their lottery tickets.
Top 1% of households control 33.4% of the wealth. The top 20% control 84.4% of the wealth. (Wealth= net assests.) The other 80% of the population get by on 15.6% of the wealth.
Did you mean they earned 84% of the wealth? The problem with the left is they think income and wealth are distributed. Last I checked, you had to earn and work for your income. There is a small % that inherit their $$$’s but most wealthy people in this country are first generation.
Wealth is defined as net assets after debts. It includes stock, trusts, funds and non-commercial real estate among other things.
Wealth = power to affect the political process.
Don’t know any 1st generation wealth - all the ones I know inherited it like Jacqueline Mars.
The top 1% incomes are at least equal to all of the bottom 20%.
Try looking up the definition of “wealth” versus ‘Income” before you shoot off your mouth. They are economic concepts. Google is your friend.
People are voting way beyond their own wallets. They are voting for your wallet and their cut of the FED flood of dollars.
I also agree that Libertarian core precepts won’t work for long. The game of MONOPOLY isn’t much fun when one player has all the property and all the money and everyone else is out of the game.
The problem boils down to the fact that “the government that can give you all you need will take all you have”. But, if the government is too weak something else will take it’s place. Individual rights are great, but few individuals are strong enough to secure them. Strength in numbers is the only way, yet you need to keep those “fellow citizens” from turning on you and devouring you. While it’s not hard to show what doesn’t work, figuring out what will work is harder and it’s possible that there is no path that is best for everyone which is why we’re constantly having to fight to keep at least an adequate spot in the scheme of things.
SD County is land of the tax averse, and we have a horrible city budget to justify the anti-tax crowd. Yet at the same time they’re first in line for their generous city-supported pension, giving away public land for the NFL and bayside developers, or demanding firefighting resources that they refuse to pay for with special bonds. Nobody wants to see their tax money wasted, but taxes are the price we pay for a first world civilisation. For years now politicians have been promising us more security, more prosperity, more free lunches, but fail to mention who has to pay for it.
‘I think we’re going to see an uptick of these properties’ after the first of the year because many banks are holding off on foreclosures for accounting purposes.”
Thats the money quote!
And let me get out my chalkboard so we can multiply this situation times 50!
well x-mas for my “gasp” rental apt will be just fine
lots of presents for my nieces and nephews maxed out the old 401k
and pumped up the old bank account as well
silly me has been working saturdays for my in-laws
i am sorry i have no tales of woe and impending arm resets to discuss, but i did have a lage cc bill, oh i paid that
this renting thing may just pay off afterall
I just nuked a big debt last week. And I’ll pay my monthly credit card bill down to zero before the end of this week.
Got Stucco
“Derrick Griffin, of Griffin & Wilson Stucco, a plastering and lathing contractor who worked on the Talavera development for nearly two years, said Sterling owes him more than $100,000 for his services. ‘They were supposed to pay me when I finished,’ Griffin said. ‘And they never did.’”
I was a swimming pool contractor back in the 80’s and I have been screwed over a time or two, but I would never ever let anybody get that far behind with my draws! Never!
So, after helping a friend dodge a falling knife, he asks some good questions, so I will put them out here:
When will it be a good time to buy in San Diego? What data would be the best to track? Median price? $/sf? When the knife stops falling, how many months of steady prices would indicate a time to buy?
Thanks, y’all.
when prices equal 120-130 times rent
sorta like 1992 ,(100 x rent)but w lower interest rates
San Diego will suffer worst of all the big 3 cities, (L.A. & S.F.) because of the rampant overbuilding of new homes and condos there.
It also appears that quite a few new developments were built on ground that is unstable, and events like what happened in La Jolla a few months ago with land slippage, will happen more often.
San Diego is sandwiched between and betwixt the navy and marine corps, and the economy lives and dies by the sword.
It’s easy to see that we’ll be done with our forays into other people’s countries, sooner than later, which means even more pressure on S.D.
Be patient, this isn’t 2003 and there aren’t 7 people that are vying to buy a single house, a day after it’s listed…
It’s more like 7 houses, for every buyer now.
Depending on interest rate, monthly payment should not exceed 2.5x or 3.5x gross income. Buy from prices fall in check with the median income and rent.
And where also matters.
3X income for a home in S. FL would be tough to carry. The taxes are extremely high, as is insurance. Also, many of the newer homes are in HOA’s with very high fees.
Here’s how it would break down for a 300K home in S. FL:
MTG: 300K @ 6.25% = 1847/mo
Taxes: 6K/yr = 500/mo
Ins: ~3K/yr = 250/mo
HOA: ~4K/yr = 300/mo
~2900/mo in carrying costs for the 300K home, no maint/repairs included.
100K income, monthy pay:
5600-5700 (asssuming no 401K contributions, no health care deductions, etc).
I suppose you COULD afford a 300K home on 100K salary, but you would be incredibly cash strapped in FL to do so. In other areas, the situation is a bit better, but 3X income is still, IMHO, on the edge of disaster. I might do it if I was pretty sure that my income was going to quickly rise. However, 100K income is top 5% of the country, I don’t see a ton of upside when you’re already making that much…
And yes, I am aware of the MTG interest deduction, and realize you would get some of it back at the end of the year. But you give up the standard deduction to do so; this is always an overstated benefit, imho.
Mortgate interest deduction doesn’t last long either unless you have an I/O and never want to “own” the house. I’ve been in my house 7 years now and my interest rate deduction is down to less than 40% of what it was when I first bought (rates went down from 7% to 4.5% and I’ve paid off a load of principal). NEVER use the tax deduction to figure a payment. The last few years of the loan you get NO tax break, but you CAN’T stop making the payments.
Don’t buy until it becomes about as cheap as renting. But be sure to include the cost of your capital and about 2% a year for maintanence or depreciation if you buy. Many people forget these expenses because they are not so obviously out of pocket.
The 120-130 times rent is a good approximation.
Will
Timing, Timing, Timing
“Earlier this year, megabank National City Corp. aggressively entered the Florida market, buying Fidelity Bank & Trust in January and Harbor Federal Savings Bank in April for a total of $2 billion. On Monday, National City announced it would set aside $700 million in loss reserves to cover delinquent loans. It also said it would take a $200 million charge in the quarter related to mortgage securities.”
Earlier this year, megabank National City Corp. aggressively entered the Florida market, buying Fidelity Bank & Trust in January and Harbor Federal Savings Bank in April for a total of $2 billion.
Being late to the game has its drawbacks…
what happened to escrow laws ?
If the developer is not able to deliver, one would expect the deposit would be returned,’
In my experience, these types of deposits (new construction) go straight to the builder, not a title company or escrow agent.
If buying an existing home, earnest money goes to title company.
Lesson here is choose your builder carefully before scratching out a big check.
“Lesson here is choose your builder carefully before scratching out a big check.”
Not quite. The real lesson here is to put as little down in “deposit” money as possible when dealing with ANY builder. They will hold it over your head even if you go to close on your home. Who’s to say YOU’RE not in violation of the contract when you don’t want to close due to the gaping hole in your entry way?
Oh this was a doozy of a deal….the way it worked is you signed a document allowing the builder to make withdrawals directly from your money market account. This was supposed to be based on draws for work. Only issue there were lots of draws and no work in many cases.
The bank was in on the whole scam.
For people who don’t know, a bank can lend 10x what they have in deposits. This is how they print money. If you put in a dollar, the bank can loan you 10 dollars. You can then put in those 10 dollars, and the bank can lend you 100 dollars. You get the idea. It’s a ponzi scheme of fiat currency.
Here is how the system comes crumbling down. Let’s assume a bank has $10 billion in deposits. They can loan out $100 billion. Now let’s suppose they lose just $5 billion, they actually have to make that up.
How do you think they do that?
Now if they make %5 on the money they lent, then they break even. So banks were willing to loan to deadbeats at higher rates banking on the fact that they would make more in interest than would default. They knew it would default. So now they are defaulting more than expected. Now the banks need the FED to jump in with cheap money that they can use to offset their losses and give money to their customers.
Here’s a great video explaining that process in which banks “print” money:
Money as Debt
http://video.google.com/videoplay?docid=-9050474362583451279
Tom, lets not mislead the group . . .
The creating money part of your post is right, but the numbers are not. A bank can loan 10 or more times its capital, but not deposits.
Banks on the whole have a loan to deposit ratio of about 90 to 95%, regulators won’t let an individual bank go much over 125% loan to deposit ratio. More conservative and rural banks are sometimes as low as 50 to 60% ratio. You are suggesting a ratio of 1000%, that’s just not accurate.
Besides, a bank has to fund its loans with something (fed funds, FHLB borrowings or deposits) . . . you are suggesting they are loaning out funds with funny money, not true.
Obtaining funds from the FED is not as simple as you make it sound, banks must borrow from the FED or FHLB, but they have to put up collateral to do so. FED money is not cheap to a bank.
Do a little research next time.
Banks make their money by giving x% to depositors and charging x% + y % to borrowers. This is why it doesn’t take much of a hit in bad loans to sink a bank. They have to make up for any loss of principal from the interest rates spread - the rest of the money isn’t theirs.
That money from thin air thing presumes that all loan proceeds are deposited into banks, and that everyone gets to count the money twice. I.e. if you deposit $100 in the bank you “have” $100 (not really), and the bank lends out $90 that gets put into another bank, and then that bank lends out $81…..
The flaw in this analogy is that once you “put” money in the bank you don’t have it anymore (just like when you lend your chainsaw to a neighbor - that doesn’t create a new chainsaw but it does put more wear and tear on one) In my grandparents’ day it was not unusual for money “in” a bank to disappear entirely, just like that chainsaw will if it gets lent out enough.
The banking industry is not fraud. They make money by bringing savers and borrowers together, brokering the deal and taking most of the risk of default onto themselves. There is a hint of fraud in that they make long term loans using short term deposits, but it’s no secret so if it is fraud it’s plainly visible.
The FED is a fraud, and the US dollar is a fraud. That’s a whole different matter.
“they make long term loans using short term deposits”
Not fraudulent, the risk is managed. When the SHTF and banks need liquidity, many loans are callable - I’ve seen that happen too. All kinds of default triggers in the loan docs.
When a serious run on a bank begins, and the bank is unable to go to the FED, we will see that - loans will get called to meet liquidity needs. The only way for a bank to survive in this case is shrink its asset base (loans) to match the deposit runoff. That is when the credit crunch moves from Wall St. to Main St.
“Sarasota attorney Alan Tannenbaum said he will file 11 lawsuits against St. Louis-based First Banks on behalf of Coast borrowers. He had filed 162 lawsuits against Coast for borrowers who want to get out of their loans. First Banks, as the owner of Coast, will be named in those as well.”
An owed to lawyers, every one of you…
O Tannenbaum, Owe Tannenbaum
Much pleasure dost thou bring me!
O money tree, O money tree,
Much pleasure dost thou bring me!
For every year for a set fee
Brings to us all both joy and glee.
Owe Tannenbaum, O Tannenbaum,
Much pleasure dost thou bring me!
First Bank replaced all the Coast Bank signs. The CEO bought this bank pretty cheap but he is arrogant to think that taking care of the loan problem will be easy.
OT…being in bizness…5 business days to process a payoff. tap a few keys, pop in the account number, date of payoff, perdiem and any other fees and whalla…a payoff. You should be able to call up and get a payoff in minutes rather than days. If congress wants to pass laws how about that one. The grey areas in this business are open to so much bs its ridiculous. Why should someone have to pay a fee for a payoff statement from a bank. another scam. wake up people.
Ha, reminds me of my companies old expense-reimbursement system. Say you travelled for work a few days and submit an expense report. Used to take 4-6 weeks to get reimbursed. Lowly $50k/yr employee giving an interest-free loan to a company that cleared almost $4 billion last year…
It’s better now, usually only a two week wait…
“One recent morning, Heather Pannell, a young, married mother from Holiday, walked into Volunteer Way on Congress Street. She had her 9-month-old son, Trenton, in her arms, and her 4-year-old daughter, Madison, clinging to her thigh. This was her first time at the food bank.”
“‘I just lost my job,’ she said. ‘Last week. Lennar Homes. I was a permit coordinator.’”
I hope you find a job Heather. Unfortunately, it probably won’t pay what Lennar did but it will put food on the table. I hope.
She likely has no savings whatsoever if she’s at the food bank one week after being laid off…
betamax,
My thoughts too, and with two kids in tow, you should have some money socked away. And lets not forget the dollar type stores have food now (name brands and produce). This couple lived beyond their means, or should have waited to have kids. (I know, I am mean and insensitive.)
notice how no one is calling super bowl 08?
that was the standby for bulls
Current would be and wanna-be home buyers need to get something into their head and lock it in before they even go looking at property: From 2000 thru 2007, ANY and ALL prices related to real estate were based on fraud, deception and corruption. That has been the foundation upon which this boom was built. Speculators, flippers, corrupt realtors, corrupt brokers, corrupt appraisers, all worked in unison to force values higher. Not one single property increase over that period can be applied to assess the real value of ANY property which changed hands during that 2000/2007 period. Every sale, because of the cast of characters listed above, simply distorted the true values. Of course, the problem was compounded by the incredibly lax banking regulations and (surprise) greed on the part of Wall Street.
I would not touch (but I have no intention of ever buying again anyway for reasons I have posted several times) property until prices drop to at least the 2000 level. If you are young and still naive enough to believe in the “American Dream” of owning a home (which you will not own for 30 years or longer anyway) and that house you are looking at and dreaming of owning is listed at $700,000, do your research and find out what it was worth in 2000. If it was $250,000 - that’s where the price will eventually end up give or take several thousand. It will not happen overnite - but it will happen over the next 2 to 5 years.
“It’s not just bankers who are balking. Loan customers have disappeared as houses sit on the market and potential buyers wait for prices, which have fallen dramatically, to drop further. ‘Demand is way down.”
Here’s the killer for the financial sector over the next year. Not only will the face losses, but they will earn less on future transactions, because there will be fewer of them. I’d be doing heavy retraining to get my employees in to the workout biz if I were them.
foreclosure fell10% from oct to nov ?
wow, everyone is waiting for the GOV bail machine
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It wouldn’t be happy time to be a banker anywhere! Just wait for couple of years. Don’t be surprised if some bankers are nailed to the cross.
Jas
“What a lot of media people in other areas don’t grasp is that people in Tampa really think they’re at the center of the Universe, and that Tampa is a major city, and that the rest of the world takes it seriously.”
Are you sure you are talking about Tampa, Fla., and not Charlotte, N.C.!
People in NYC have no idea what is going on elsewhere in the U.S. People in Manhattan have no idea what is going on elsewhere in NYC.
Hah! Yes, globalization has put every city in competition with one another, and even puts neighborhoods and suburbs within metro areas in competition with each other.
For the past few decades that was all well and good, but now we’re about to find out how many art centers, symphonies, sports franchises, upscale shopping districts, etc. we really need.
Add Jax, Nashville - in other words every second-tier southern city with an NFL team. Unfortunately for Tampa Bay area, Charlotte, Nashville and even Jacksonville have some hope for the future.
Re Time’s Man of the Year: At least there’s one guy from St. Petersburg having a good year.
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The World’s Largest Banks Are Now Trapped by Gary North
The subprime mortgage crisis constitutes the worst banking error in my lifetime. Nothing else comes close.
It has visibly begun to unravel. The European Central Bank on Tuesday, December 18, opened a line of credit of $500 billion to commercial banks.
The Federal Reserve System under Greenspan was the prime instigator. It forced down short-term interest rates by supplying the overnight bank-to-bank loan market with sufficient liquidity to drop the rate to 1%. This encouraged banks to make loans at low rates.
…
http://www.lewrockwell.com/north/north591.html
“The World’s Largest Banks Are Now Trapped by Gary North”… well, Gary had better let them go!
It makes you wonder if all this fraud is going to take out pensions and Treasury bonds as well. Seems like even government bonds are somehow tied into this mess.
On any house being foreclosed by Freddy flipper I’d offer no more than .0001% of the listing price. Hey if you’re going to lowball these people, don’t hesitate on being a villian. They’re the same ones who gave us a hard time over not buying because some realtor said so. I’d buy a nice house in one of the Bluey states for $400.00. Who cares about the job market at that price. It’s not like we have a real job market in Amurica anyways. No more mortgages, no more realtors, no more hot air. Even if the dollar takes a dump you could offer a silver coin, just like the pirates used to.
ARRRRR!!!!