A Massive Perception Of A Market In Freefall
The Courier News reports from New Jersey. “Business is brisk these days at the Somerset County Sheriff’s Office. Somerset Court Sheriff Frank Provenzano said the number of foreclosures increased by close to 500 in Somerset County from 2006 to 2007. The number of foreclosures recorded in the first nine months of 2007 exceeded the total number of foreclosures for 2006 in Middlesex and Union counties.”
“Lee Caprarola, a sales manager with Wells Fargo Home Mortgage in Somerville, said the spike in foreclosures was widely scattered across different economic strata. ‘Some number of foreclosures are going to occur, good times and bad, but it’s many, many more now than in the past several years,’ Caprarola said.”
“Much of the trend was caused by people taking mortgages that they could not afford after payment adjustments, he said. ‘There are people with equity in their homes who we could have done a loan two years ago that we can’t anymore, and I don’t mean just Wells Fargo — I mean any lender,’ Caprarola said.”
“A small group of regulars attends the auctions, Provenzano said. Most of the buyers are representatives of banks and mortgage companies that hold the loans and can obtain the property for a minimum bid of $100.”
“For example, on Nov. 27 U.S. Bank Association, the parent company of U.S. Bank, the sixth largest commercial bank in the United States, bought a 0.56-acre property in Green Brook at a sheriff’s sale for the minimum bid of $100.”
“U.S. Bank Association had a $982,225.81 mortgage on the property, which was bought in 1998 for $396,889 and was assessed in 2006 at $716,200 according to Gannett NJ figures. To get clear title to the property, U.S. Bank Association must satisfy any liens on the property, plus back property taxes of $7,753.”
“On Nov. 7, Commerce Bank bought a one-acre property on Old York Road in Branchburg for $100. The single-family home was bought in 1995 for $235,000 and had a 2006 assessment of $513,700. The defaulted loan from Commerce Bank was for $1,564,165.”
From Newsday in New York. “When Allan Press started looking for a new home in the spring, he was approved for a $561,000 mortgage at a 6 percent interest rate. In late June, he and his wife found a five-bedroom home in Miller Place that they liked. But as they waited to close, they saw interest rates on the kind of mortgage they needed - a jumbo loan, which is for more than $417,000 - soar as the mortgage crisis unfolded.”
“It wasn’t long before jumbo rates reached 8 percent, which would have translated into a $4,600 monthly payment, far above the $3,000 the couple thought they’d be paying.”
“In August, fearing rates would continue to rise, the couple locked in a 67/8 percent rate, which required them to pay points totaling $10,000. ‘I didn’t want to put that much of our salaries to the mortgage,’ said Press, an operations manager for a Wall Street brokerage firm. ‘After paying insurance and bills, I’d have nothing left to live on.’”
“After making a 5 percent down payment, the couple is paying $3,900 a month.”
“Since Long Island home prices are among the highest in the nation, borrowers here are feeling the fallout - especially in Nassau, where the median closing price of $461,500 is in jumbo territory, experts said.”
“‘There are a lot of people who are holding back on purchases,’ said Paul Schwartz, a certified mortgage planning specialist in Woodbury. ‘People are waiting to accumulate bigger down payments.’”
The Times Union from New York. “The cost of buying a house in the Capital Region has outpaced income growth during much of the decade, making homeownership a struggle for many first-time buyers.”
“In Albany County, for example, median household income grew by 19 percent from 1999 to 2006, according to the U.S. Census Bureau. During the same period, the median sale price of a single-family home in the county jumped 76 percent.”
“The trend was more severe in Saratoga County, where median income grew 16 percent while the median home price rose 98 percent.”
“Economists had warned the trend could not hold. And it hasn’t. ‘We knew that you couldn’t support the rates of appreciation we’ve seen for the last three or four years,’ said James Ader, president of GCAR, a Colonie-based trade group. ‘Or pretty soon, nobody could afford to buy a house.’”
“But even if home prices stabilized last year, the effects of the earlier price run-up may have been manifest: RealtyTrac says the 1,125 foreclosure filings in the Capital Region through the first nine months of the year were more than double the number for all of 2006.”
“Kirsten Keefe, the Albany-based executive director of Americans for Fairness in Lending, said it’s unclear if people borrowed under exotic mortgages because rising housing costs left them no choice or if housing costs rose dramatically because such mortgages became widely available.”
“‘It’s the age-old chicken-or-the-egg question,’ she said.”
The Connecticut Post. “Connecticut homes kept their value in 2007. Prices dropped for many Connecticut homes in 2007. Prices were stable, except for pockets of the market. It took longer to sell a home in 2007. Some homes flew off the market. Sales are languishing.”
“Pick whichever statement strikes a chord with you, because they’re all part of the picture that is the Connecticut housing market these days.”
“In cities and towns in which prices are off the peaks, the median is still generally higher than 2004 levels. A lack of sales at the lower end of the spectrum can drive up the median, even if fewer houses are selling, said Vincent Valvo, group publisher at The Warren Group.”
“Nationally, the housing market started heating up in the late 1990s and early 2000, thanks in part to the high-tech boom, Valvo said. Realtor Bob Stone in Fairfield remembers the market heating up around here in the mid-to-late 1990s.”
“‘The prices really went crazy I would say 2004, 2005 and 2006,’ Stone said.”
“A lot of people — and not just retirees — cashed out, he said, and moved south. There’s still plenty of money to be made, especially for people who have owned their houses for more than a couple of years.”
“‘The prices now are basically 2004 prices,’ Stone said. But, ‘the time on market has definitely increased.’”
“Valvo cautions against believing everything that is said about the state of the housing market. ‘Some of it is real,’ he said of the downturn. However, ’some is a massive perception [of a] market in freefall.’”
“But around here, some bought duplexes and triplexes in hopes of flipping, Valvo said. ‘In particular, the people who were investing in the small multifamilies are getting burned.’”
“There’s also the possibility homebuyers will believe the bargains should be better than they are, Valvo said. Buyers putting off purchases could drive prices down, he said.”
The Cape Cod Times from Massachusetts. “The Cape Cod real estate market ended 2007 on a negative note, with sales volume in December down sharply from the previous year and foreclosures continuing at levels unseen in more than a decade, according to numbers from the Barnstable County Registry of Deeds.”
“‘(Volume) was off significantly from a year ago and I am not entirely sure why,’ said Register John Meade. ‘Hopefully it’s an aberration.’”
“The registry report offers the first snapshot of the region’s real estate market at the end of a year in which slumping sales, sagging pricing and soaring foreclosure were headline news. Last month, 428 property transactions were recorded by the registry, down more than 20 percent when compared with the December 2006 total of 538 sales.”
“The median sales price was also down last month, falling to $329,000, the lowest value in seven months. In December 2006, the median price was $350,000.”
“The 29 foreclosures recorded in December brought the year’s total to 272, more than three times as many foreclosures as were completed in 2006.”
“Median sales value for 2007 was $345,000, down 5.5 percent from the previous year’s median of $365,000. These values, however, may not fully represent the state of the market, said Bill Ryan, a real estate agent in Hyannis. The registry numbers reflect all commercial and residential property sales valued above $50,000, including foreclosures, which generally have lower sales values than traditional sales.”
“In addition, many homeowners had to sell their property for far less than they bought it to avoid foreclosure. ‘Those are forced sales — they are not people who wanted to sell, they are not people who chose to sell,’ Ryan said.”
“Overall, the sales volume on the Cape and Islands in 2007 is approximately equivalent to the number of units sold in the region in 2002, which was, at the time, a record-breaking year for sales, several real estate agents noted.”
“This comparison, they said, demonstrates that 2007, though slower than the previous few years, was still a reasonably healthy one for the market.”
“‘It’s definitely down from the prior couple of years, but how do you sustain what was happening then?’ said Linda Collins, president of the Cape Cod and Islands MLS.”
“Lower home prices, modest interest rates and a glut of inventory are now creating great opportunities for buyers, said real estate agents. This dynamic, they said, could mean that a revival of the market is in store for 2008.”
‘The single-family home was bought in 1995 for $235,000 and had a 2006 assessment of $513,700. The defaulted loan from Commerce Bank was for $1,564,165.’
‘Realtor Bob Stone in Fairfield remembers the market heating up around here in the mid-to-late 1990s. ‘The prices really went crazy I would say 2004, 2005 and 2006,’ Stone said.’
Oh, there’s no bubble here. Just sign me up, Bob.
The defaulted loan from Commerce Bank was for $1,564,165.’
I don’t understand this. The assessed value is $513,700 but the loan amount is $1.5 million? How can that be?
It is called mortgage scam. An organized crime of brokers, re agent, and strawbuyers were probably involved. The bank was screwed big time.
For a second there, I thought you said “strawberry-picker buyers”.
by my calculations, Commerce Bank paid $1,564,265.
the loans that totaled $1,564,165 plus the $100 at auction..
It said “assessed” value, not “appraised” value. In many areas, city assessments are far behind what a bank appraisal would say the house was worth. In Atlanta for example, my first house was assessed at $150k. I paid $300k for it. They just raised all assessments a certain percentage a year. They dont have the employees to actually go out and look at the houses, and some dont even update when a sale occurs to match the sales numbers.
Does anyone know of a reputable company that does land equity loans w/ reasonable interest rates? Seems to be hard to find.
The only way you are going to get a good rate in a falling market is to request a loan only on a small fraction of the equity you think you have on the property. Why would anyone give you a good rate if the debt secured by the property is going to exceed the value of the property in a few months or years?
If you have no other debt on the property and request a loan for 10% of a realistic FMV, you’ll get a good rate because it will be a safe loan.
Just so. The loan I am about to make is for $50K in a transaction where the property price is $120K. The borrower is getting my best rate (9%). The only annoyance is that I am not certain of the legal status of Barney Frank’s bill, so I am having to ask the borrower about income, something I usually don’t care about at all. Low LTV ratios are my usual insurance.
Good for this guy to get a word from a real lender. I used the 10% of FMV as an exageration. It’s funny that people think it is the lender that is the issue, not the type of loan they want.
“For example, on Nov. 27 U.S. Bank Association, the parent company of U.S. Bank, the sixth largest commercial bank in the United States, bought a 0.56-acre property in Green Brook at a sheriff’s sale for the minimum bid of $100.”
“U.S. Bank Association had a $982,225.81 mortgage on the property, which was bought in 1998 for $396,889 and was assessed in 2006 at $716,200 according to Gannett NJ figures. To get clear title to the property, U.S. Bank Association must satisfy any liens on the property, plus back property taxes of $7,753.”
“On Nov. 7, Commerce Bank bought a one-acre property on Old York Road in Branchburg for $100. The single-family home was bought in 1995 for $235,000 and had a 2006 assessment of $513,700. The defaulted loan from Commerce Bank was for $1,564,165.”
$200 for $ 2.5 Million worth of property*, such a deal.
* Major league strings attached
To the DC-area HBBers:
We will have an outing to Capitol City Brewing on Mass Ave this Tuesday.
I have posted the details in the BitBucket, so please go to that post for details and discussion. Thanks!
I watch a 5 month old baby- the dad is a civil service worker, mom a teacher- and the dad was telling me how they put 70k down on their house which they purchased a year and a half ago, and are still paying a 3800 nugget…plus high utilities which is common on long island AND for some bizzare reason they have 3 cars and a pickup. I literally see the strain on the dad’s face everyday yet he tells me he couldn’t live like my family of four does- in a four room apt for 1200/mo with utilities, cable and internet included……
Admittedly it’s a tight squeeze with two rambunctious boys but, I’m thinking I’m sleeping better at night than him.
Fork him and everybody that looks like him.
I am sick of hearing that shet. Long Island needs to learn the most painful lesson available. I hope he loves that 800 square foot apartment he gets stuck in after he goes belly up. He’s teaching his kids a $hitty lesson, too.
LOL You know, when I re-read my post I have visions of some goomba in buttafuco pants with his truck and 3 cars but truth is, even though I think they made a big mistake getting their house and are delusional in their finances and will probably get bitch-slapped with reality they are genuinely nice people. I feel bad about what they are about to face but in the same breath….. getting their ass kicked is what needs to happen.
yes, Long Island needs to learn a painful lesson…
I dont care what image one likes to present, if you go around buying more than you can afford with the attitude I’ll either sell it to some sucker I will screw for even more money or stiff the lender, you are a bastard. Nice and/or considerate ppl dont going around screwing others because they feel they are more entitled than those around them. You said yourself he had mutliple cars, etc. It is clear that he didnt give a damn about his family, or he would have tried to protect them financially.
Bless you, Tim. I view these attitudes against the backdrop of attitudes that persisted when I grew up. And that wasn’t that long ago. I didn’t grow up in The Depression. We had nothing and we just lived without. Sure we wanted more but debt was not the answer.
People have forgotten the simplest of all lessons:
DEBT IS BAD
DEBT IS BAD
DEBT IS BAD
DEBT IS BAD
Double here. When I was a kid, my parents went out maybe three times a year - once for their aniversary for a nice dinner with a couple they met on their honeymoon, and maybe two other times for a movie and ice cream afterwards. And they had to save up for it too because my mom wouldn’t be stingy with the babysitter.
It never would have occured to them to go into debt for entertainment or expenses related to adult toys. Oh, and my birthday money from my grandparents went to buying a winter coat. Since it was my present, I got to pick the color.
I’m going to go out on a limb and put a chunk of the blame on the cultural change on television. Instead of everyone feeling fine because they are doing about as well as their neighbors, people compare themselves to what they see on TV - scripted shows a bit, but now a lot of reality shows too. Juliet Shor actually confirmed this in her book, The Overspent American. It came out in 1998, so it’s a bit out of date, but I think her conclusions are still spot on. There were always people who were more or less responsible about money, but the percent of people who are irresponsible has just exploded in the past decade.
I used to resent my folks being so tight when I was a kid, but now I appreciate the lessons learned. But I sure do feel out of step with those around me. My dad would holler about leaving lights on in the house, and now I find myself following the fambly around. They can’t seem to manage to hit the off switch when they leave an area (like the bathroom), and more bizarre to me, is even if morning sun completely illuminates a room, they still have to turn the lights on. Spent the weekend installing energy saving CFL bulbs, so there! I know, the bulbs are expensive, but I’m not so Agro.
I grew up in a family that didn’t have much. i remember my mom getting powered milk and mixing it with water and a little of the precious real milk, drying laundry on the line in the back yard and if something broke in the house Dad would spend his spare time researching how to repair himself, not always successfully, but he would try. Summertime consisted of free library reading programs, free tennis lessons at the local park and running through the sprinkler in the front yard. With the exception of the milk, ewww, I proudly took the lessons my parents taught me and pass them on to my kids.
I was chatting with a friend who also grew up on L.I. and we were discussing the new breed of LIers in the neighborhood. We both said that lately, for the first time in our lives, we don’t feel like we fit into our home town. Our kids’ friends parents think of us as quaint, old fashioned and out of touch….
Ugh… Powdered milk. I remember all to well. Very early 70’s, another moronic war raging, parents on a tight budget but all 12 of us living in a warm 5 bedroom house.
no he’s probably not no “goomba in buttafuco pants “(lmao,spitting up morning coffee)
part of the somnambulism we are seeing; because that is what it is, sleepwalking, is that people have been hypnotized by a media that drums into them on a daily basis (in the skies,on the telly, on the computer) that material goods will lead to happiness and security or will make them feel better, will fill the hole. It’s like the silent movie, The Cabinet of Dr.Caligari where the ‘good’ doctor controls the somnambulist into doing horrible things. A film made in Weimar Germany, anticipating Nazism. In the case of modern America it is spending to the point of self destruction, hurting those around us and indeed, threatening the common good.
Lots of people just wanted a decent home and overpaid because of the bubble. I have much more sympathy for such people than the living large types.
If Long Island didn’t learn the lesson after the 1980s, will it sink in this time?
The issue is home prices are just out of touch with incomes. Irrational exuberance and speculation have cause prices to reach heights that have no basis to the local median household incomes. The solution is house prices need to adjust to the economics of incomes. Prices need to come down. Everyone has been paying for homes with money they don’t have. Creative financing is not the answer. Prudent managing of your finances and only making home payments with 25% of household income towards your mortgage is.
Got popcorn?
I like that one!
“Everyone has been paying for homes with money they don’t have.”
Everyone has been bidding up the prices of homes with money they don’t have.
exactly! that is why i refused to buy, bid against some jerk with no dp,no real verifiable income, and no real way to pay for the home without appreciation?
no thanks il rent
There also has to be some reevaluation of what constitutes a “decent home.” I’m sure during the height of the bubble it was hard for many to resist the hypnotic pull of model homes with lavish bathroom suites and closets as a big as bedrooms. You may have a crappy life, with a crappy job, but hell, you could live like a King. You start believing a McMansion is normal, because that was all they were building. And you may be just a Lookie-Loo, and know you can’t afford it, but then the sales pitch comes down, you deserve this “lifestyle,” let’s crunch the numbers and make it happen.
my neighbors have a 5 car minimum - some over 40k mercedes etc.
no snow here ,but suv’s and all wheel drives abound
I’m slow I guess
I watch a show last night called “Please buy my house”. One of the sellers was a couple on Long Island, in Smithtown. They’re an older couple, trying to downsize( bought a place in Mt Sinai). The Husband developed Parkinsons. They started trying to sell the house in 2005 for $1.1 million. After two years of price reductions and finally offering their sons services as an interior decorator, they found a buyer, in early 2007, for $649,000. I think is was mentioned that they owe about $550,000. The adult son said that it was his childhood home, so they should have owned it for close to 30yrs.
It’s pretty typical of what you see on Long Island. People that have owned homes for decades, borrowed against them. Then still expect to make a killing on the sale. If they had been more realistic in 2005, I’m sure they would have gotten a lot more for it then. Yet despite the urgency of their situation, they overpriced it and chased the market down for two years. Their are still many sellers on Long Island, who are headed over the edge of the cliff, because of their stubborn denial and greed. We’ll continue to see the denial this spring as dumb sellers overprice because they think that they can get away with it during the spring selling season. When summer comes and they haven’t sold they be upset and acting like victims of the housing bubble, when it was their unrealistic expectations that sunk them.
My question is always what did they do with the money? If someone dumped $500K on me tax free, it would last beyond my lifetime. Society appears to be addicted to spending. I was in Target yesterday and the checkout lines were packed with women with full carts of Christmas junk - piles and piles of gift bags and wrapping paper, tags, boxes, etc. When I under my breath said “what is all this crap people are buying” a woman in front of me with her faux Luitton purse said in a very uppity defensive tone: “I give lots of gifts and now I have all I need for next year.” All I could wonder is why are you giving all these gifts and how do you know you will be able to next year. Just no thought of the future at all and snotty to boot.
holy crap
you may find this hard to believe but they are my wifes second cousins. i swear to god!!!! (distant thankfully)
it was tricked out to the max, pool guest house on a huge piece of property the guy was in a wheelchair so it was all customized for his needs as well
and the son was an excellent decorator and has worked with many celebs but 1.1 no way
i went there once for a reunion for the other side (thankfully we never see these people) and for all there grandiosity the food was scarce and terrible to boot (i left starving)
my mil told me about the show a few months ago
another thing these people alsos had a home built to spec in florida somewhere that they also need to sell
the day i was there was in summer 2004 and it was the height of my house is worth xxxx conversations, remember those days
and my wife gets mad and tells me everytime we go out socially to shut up and do not talk real estate but it is hard not to feel some vindication. no more trump jr talk
and i thought i was bad for spending $200 on dinner for my wife and i last night (it was her b-day)
nycboy i was the same way as a child we did not have so we went without and we survived. i guess that is why i am so against debt now as i refuse to be poor ever again
‘Some of it is real,’ he said of the downturn. However, ’some is a massive perception [of a] market in freefall.’
I spent the holiday in Southern CT. FWIW, the perception was that the market was nearly frozen, and some small declines might happen. However, a quick trip to Zillow would tell you everything you needed to know about the future.
I rang in the New Year in the Garden State. We have a friend in Jersey that is completely dependent upon residential home building. We were warning back in ‘05 to prepare for this crazy boom to end. “Nonsense”, was the reply. We got the “it’s different here” and “everybody wants to be in Jersey” stuff. We knew it would be bad for them. On New Year’s Eve I lost count of how many times we heard, “thank god 2007 is over”. Business is way way way (yes, 3 ways) off. I don’t think any preparation was made for the bust.
We love our friends but we also think they may be in serious trouble. It was especially sad for us since I felt 2007 was another good year for the NYCityBoy family. The key is that we live simply and know that we are as well prepared for bad times as possible. The number of people that we think are on the razor’s edge continues to rise. And this is before it gets really ugly. Oyyy!
Hey, Chick, we missed you yesterday. We made sure to give the musician his best tip of the night, in your honor. We always do. You need to move to NYC and join us in helping struggling artists.
Can someone please explain the auction process described above? It seems in these foreclosure cases the house would revert back to the bank that provided the mortgage, yet the mortgage-holder is formally participating in the auction? And who are they paying the $100 to? The county or essentially themselves? And how does it work if someone else outbid them? Surely if someone bid $200 the bank would not let the property go for that amount if it is worth hundreds of thousands? I am clearly missing the dynamic here… Thanks
My understanding is that the bank would be thrilled to have someone bid $200 and get the house … and all the liens on it including the bank’s lien.
Oh I see what you are saying… thanks
My guess is that the sheriff’s sale was for back taxes. Most banks even those that are upside down on a property don’t want to let the house go because they then lose the ability to control what small equity they have in the place. For example when the owner walks away away as this one clearly did, whose insurance covers the place in case of fire or other damage? The bank will probably have to continue to make sure this is paid anyway to cover what is left of their failed investment. Why do it for another owner (not that anyone would buy a property with that kind of lien over value ratio anyway) not anyone sane that is. Isabel.
It would be a judicial sale - not a trustee sale. The $100 minimum if basically the fee to the sheriff’s office for doing the sale.
Now if a bid came in that was more, the money would go first to back taxes and then any creditors with liens in order of priority (1st mortgage etc.) Anything left unpaid after the judicial sale stays with the property as a lien against it.
Ban would keep idding at a sheriff’s sale up to the amount it is owed.
Judicial = bank has to file a a lawsuit and go through the court. Trustee = bank does the auction and sells it to themselves (99% of the time.)
ITS THE COST OF LIVING STUPID!!!!!!!!!!!!!!!!!!!!!!!!!!!!!11
Never in American History has the cost of living ballooned so much under one administration and wages not followed.
The people are now living off of credit and their savings, until either are extinguished. As access to spending keeps slowing, the ability for the economy to generate revenues will follow the downward trend.
Look at your own life and where you spend money, what percentage of your income is spent in the following areas:
1. Taxes-all forms including income, SSN, sales tax, and property tax
2. Interest-mortgage, credit card, and auto loans
3. Insurance-health, homeowners, auto, and life
4. Food
5. Fuel?
Ask yourself, has my income kept pace with the rising costs(for the sake of sanity, I am assuming no one that reads this board has an ARM)
Folks, many people in America are financially ruined. Many more on on the brink. Something must be done. Is there any candidate with ideas that could resolve the above problem?
there any candidate with ideas that could resolve the above problem?
Ron Paul?
I am no big Hillary fan, however, I suspect that she is the smartist most hard working candidate.
What I am waiting for and have not heard, is an admission of the nation’s financial insolvency and what they intend to do about with regard to raising taxes and cutting expenses (programs and the military budget).
We are in the midst of the Great Financial War, and The United States was thought of as a great innovator in matters economic, until just recently.
Our timing pretty much sucks, because we’ve squandered the goodwill of our peer nations, who might be expected to come to our aid, had we not decided to become warmongering ogres, led down the primrose path by pied piper of a president, that nobody has any respect for, anymore…
And causing all those foreigners to lose Big Money, because of banking shenanigans that all point back to us, doesn’t endear us to our peers, either.
The ramping up of the military industrial complex in the last 7 years is staggering. As our infrastructure crumbles and the government deficits climb at every level, can’t help but wonder how different it might have been without the war.
In fact, I lost much of my respect to the American electorate when Bush II was reelected in 2004.
What makes you think a CANDIDATE can solve these problems. GREED caused these problems, along with 9/11 and the MSM. Unless a CANDIDATE can change the impetuous nature of an entire nation, the only thing that can solve these problems is a recession without Gov’t interference. The value of homes becoming affordable and the demolishment of the refinance party is priceless.
We have become so corrupt that we are losing the ability to govern ourselves. We may very well end up becoming as totalitarian society because of this.
A good leader cannot single handedly solve our problems, but he/she can set an example of good governance. It’s much like the difference between and good boss and a bad boss. A good boss sets high expectations, rolls up their sleaves and pitches in when the going is tough, and encourages/rewards competence. A bad boss is typically very controlling and secretive with socio-pathic tendencies which turn everyone against eachother, and though short term goals can be achieved through threats, in the long term the ship goes down.
“…and wages not followed.”
And how many FBs bought the biggest possible house(s) while aboslutely counting on seeing the same raises that their parents/grandparents saw?
My friend recieved this pre-buying advice from his dad last year.
“_______, I started working as a cop in 1978 and I made around $20,000. Today I make close to $80,000. Today you’re making $50,000 as a teacher, by the time you’re my age it’ll probably be four times that too.”
$200,000 for an elementary school teacher - and who will pay that? A big box cashier making $18,000?
Ok, as an elementary school teacher I have to comment. Your post rubbed me the wrong way.. maybe I’m imagining things. The struggles that a teacher has to go through to get by while living in a suburb of a city is depressing. I realize that I will never afford a house in this area no matter how long I teach. I have friends married to attorneys who are just managing. The teaching profession has lost so much respect in this country. Why? Because of the salary we are paid. If we made 200K, the nitwits in this country would certainly view us differently. Your tone in your post reflected the disdain for this profession - yeah, right who would pay a teacher that? I don’t think you believe that teachers are unworthy but you are cynical enough to believe it will never happen. Which is just as big a problem. Greed is destroying this country and it breeds cyninicsm and a whole host of other nasties. People do have free will. If people would boycott sporting events/concerts those idiots wouldn’t be able to make a 1/4 of a billion salary. Turn off the TV so celebs promoting illegitimate births in sitcoms/Oprah/heck everywhere wouldn’t command multi-million dollar salaries either. Such a mess.
When teaching a privatized profession that is tied to market forces as opposed to a unionized monopoly funded by state and local governments, we will all have what we want. You will get the respect and the wages will rise to a level where more qualified people will chose it. (although the retirement is probably going to suck compared to what it is now) While the general state of the teaching profession says nothing about the individual teacher (I know quite a few good ones) and a bunch of terrible ones too, I have to state that most teachers have no idea how generous their retirement is. Teacher retirement is front loaded so most teachers make in retirement exactly when they make when they are not retired with excellent health benefits. (I know that because my mother is a retired teacher) and I have done a legal abstract on the constitutional implications of educational funding. If you compare a federal civil service worker with 30 years of service, making 50k a year with a teacher, the teacher after thirty years of service will go on collecting that 50k until they die. The Federal civilian employee will be lucky to get about 18k. Of course if people were smart enough to boycott the public schools in favor of their private competitors, this situation would rectify itself soon enough.
Isabel.
My kids go to a parochial school and we are always losing our teachers to the public school system. I think it’s probably bc there are more benefits and higher wages in the public sector.
The good private school teachers who remain at our school have my utmost respect because it is truly a calling for them.
Comment by Isabel
2008-01-06 10:10:32
When teaching a privatized profession that is tied to market forces
Yeah right……and what do you do when a household can not pay private school tuition? Do the children of a woman who was widowed and sturggling to make it just not go to school? What about the 80% of households with incomes less than $85,000? They can’t shell out $10,000, 12,000 or more per child.
” I have done a legal abstract on the constitutional implications of educational funding”
And your law degree is from where???
“And your law degree is from where???”
Law school is like med school. Go to a certified school you can take the bar anywhere in the country. Go to one of those unaccredited ones and you can take the bar only in the state where the school is (if you can take it at all). However this debate is not about credentials, it is about economics and political philosophy. Do some reading about education in Japan. It is largely privatized. The public schools exist as a fall back and are only funded up until what we would call the 9th grade. It would be a tough transition but the United States could move to a privately funded system if the tax payers of the individual states willed it. There are few federal issues in educational funding. Most education funding issues are covered by State Constitutions and that is where the funding issues are litigated, in various state courts. The NEA has thrived under this system as they can pick their battles and fight one district or state at a time and win, particularly in small districts where the school is one of, if not the largest employer in the district. Rent seeking, pure and simple. Short of total economic collapse I don’t think we will change things anytime soon. I think a better bet is that teachers in states that are broke will be converted over to being regular state employees rather than district employees with their special benefits and union negotiated tenure. Also I think you totally over estimate the cost of private schools in general although I am sure they can be quite high where the income will support it. Here where I live, for the ones that exist, it is more like 2000-2500 a year. Private schools here are few and far between, as most taxpayers don’t yet perceive of our public schools are failing (which I do). I sent my son to private school for three years and my daughter for two. If I had it to do over they would have been in a private school for as long as they were available. Scholarships are also widely available in our private schools for those who really don’t have the money. The more people who opt for private school the more competition there will be and the costs will come down. That is the nature of the free market system when it is not artificially distorted by a free government alternative. When, and if, the public perception ever becomes that the public system is indeed inferior, more people will opt out of it, and act to minimize the cost of the alternative. Our district has already lost a huge amount of funding to home schoolers as their budget is calculated based on Average Daily Attendance).
Two ABA certified schools. New York Law School and the University of Wyoming. Started in New York and finished at Wyoming. A remarkable deal by the way. I think my tuition at UW was about $1800 a semester as an in state resident. Want me to send a copy of my diploma?
Also a lot of middle income people could find tuition for two kids if they stopped over paying by 200,000 -400,000 or more for their real estate and made education more of a priority than square footage. Isabel.
Isabel, what state are you from? I’m not a teacher, but here in nys a teacher retires on half pay 55yrs. old and 30 yrs. in the system. I believe the most you can retire with is 74%. Maybe, because social security and state tax are not deducted it may seem like full pay.
I am from Wyoming. and yes, you have to take the taxes into account. I imiagine that they are quite high in New York and a tax break is a substantial benefit. Another thing to look at is whether teachers pay Social Security. I think in some states they do and in others they do not. I know federal employees under the old system do not but those under FERS do. My cousin’s wife in Montana retired a couple of years ago with pretty much full pay and moved to Washington state where she got another job as a teacher. She is now collecting a lucrative Motana state retirement while being employed in a district in Washington at a 15 thousand dollar raise. Great work if you can get it. That is why here in Wyoming we have at least 40 applicants for every job. A regular state employee is “at will” with nothing like the benefits of the state teachers retirement system. We have a rule of 85 for teachers here. What that means is that anytime your age plus your years of teaching equals 85 you can retire with full benefits. That would be 55 if you stated at 25 but could vary. If you started when you were 30 you could retire at 57.5 etc. Of course it depends on what the union has negotiated in your particular district. If you run the numbers any way you slice it, it is way better than what a Federal retiree under FERS will get. I think I calculated that after 30 years my husband will end up with about 25 percent. I will get substantially less because I will have less than 30 when I retire.
Schools in Japan suck so much, it’s not even funny.
My wife (Japanese who was born, raised, educated in Japan) wants to move back to the US for fear of the horrible educational system. The American MSM paints a rosy picture of the Japanese system. It’s a system that is designed to pump out quasi militant sheep-like people who fit in the modern Japanese society.
My niece on my wife’s side is at the top in her class at her very expensive private school. She’s ranked #2 in her grade level for her prefecture. And she still has to go to cram school (Juku) after regular school, because she doesn’t learn anything in regular school. So she will be able to pass the entrance exams at her schools of choice. She has no life, outside of cram school studying. She gets no homework from her regular school.
And in Japan if you complain to the school or at the PTA you are marked as a troublemaker and your children will be given a mark on their record which the universities here (not that there any good anyways, Japan’s top university Tokyo University ranked 19th in the world) will use against your children when acceptance, regardless of your child’s test scores.
No wonder suicide among Japanese students is the highest in the world.
And as far as real-estate and Japan is concerned, to keep it short, let’s just say they completely forgot about what happened in the late 80’s and early 90’s when the bubble popped. People here are delusional and getting themselves into 10x income properties, which gets you very little in Tokyo.
Sorry, dc renter, but teaching is starting to be subject to pressure from districts willing to recruit overseas - like from India, the Philipines, etc. especially in areas like science and math. It isn’t technically outsourcing, but it is price competition. Unless you can get a rule passed that says public school teachers have to be US citizens, it is very unlikely that in an era of globalization and lots of people learning to speak English, you can push teacher salaries way up. So, whether you like the tone of EJ’s statement or not, the substance of it is likely to hold. Teacher salaries are not going to quadruple any time soon.
>Teacher salaries are not going to quadruple any time soon.
But don’t feel bad. I work for a private sector, Dow component firm that had revenues of $100B last year. Even thought we have record profits (again) we don’t have a pension plan, and raises were capped at 2% this year. I too am not expecting my salary to quadruple in the long run.
Private sector wages will be held down by globalization. Public sector wages will be held down by lack of tax revenue.
First, that was an anecdote and the subject just happened to be a teacher. Yes, there are wonderful individuals teaching out there. No, they are not an infallible group of faultless professionals who deserve unquestioned raises, benefits, and pensions.
I’ve worked with a wide range of workers, including unionized teachers, and all jobs have their challenges and hazards. Nevertheless I’ve never seen a single profession so fixated on its pay as teachers. Sorry your experience and opinions might differ - but I for one do not buy into the shameless and unceasing self-promotion of teacher’s unions.
Lastly, if simply paying people more is a way to give them more “respect” then why stop at teachers? Why not pay everyone $200,000 - and we can all pay the taxes the to support that.
“Nevertheless I’ve never seen a single profession so fixated on its pay as teachers.”
The reason for that is that teaching below the college level has traditionally been regarded as ‘women’s work’ and thus not worth as much money because the job is done by a woman; and then that women who taught didn’t ‘need’ the money as it was a 2nd income.
Learn some history. Those were exactly the attitudes until the early-mid 1980s. Probably still are - it just isn’t said openly now.
Women always get the short end of the stick on pay. Same job, same skills, same everything and women make less than men do. (Yes, it is illegal but proving it is very difficult and very very very epensive.)
Fields that are dominated by women pay less - and that is the origin of the concern about pay in teaching. They have 1 or 2 college degrees but make less than plumber (a male field.)
“Nevertheless I’ve never seen a single profession so fixated on its pay as teachers.”
Agree…..I never hear as much from nurses and other health care workers.
“Women always get the short end of the stick on pay. Same job, same skills, same everything and women make less than men do.”
Agree…..that’s why my chosen profession is more IT-related. And I’ve directing my daughter to do the same. Go into a male-dominated technical field. You’ll get all the perks that come with it.
Then perhaps teachers should be plumbers.
Of course there is a downside to being a self employed plumber: No pension, no 401(K), no health insurance, no paid holidays, no paid vacations, pay more in social security, etc. Plus the fact that plumbing can be dirty, nasty, back breaking work. And now they find themselves competing with illegals (there’s a reason I’m not a plumber).
Most school teachers get 2 weeks off over Christmas.
At my private sector job I get a total of 33 paid days off where I work (MLK day is coming up). I know a few self employed plumbers. They work year round, only take major holidays off (Christmas, 4th of July, etc.) ad maybe take a 1 week vacation per year. Some have wives who work only to get health insurance.
“The reason for that is that teaching below the college level has traditionally been regarded as ‘women’s work’ and thus not worth as much money because the job is done by a woman; and then that women who taught didn’t ‘need’ the money as it was a 2nd income. ” Historically a teaching career did not require a college degree. Women either did it till they were married when they quit or they never got married and continued as spinsters. Teachers went to what was called “Normal school” up untill the 1960’s when the unions and their goverment ed department lackeys got hold of public education ad tried to make teaching a field requiring a “college” degree in order to bolster pay and prestige. Since an elementary ed degree was (and is) a contrivance, it did neither.
“Learn some history. Those were exactly the attitudes until the early-mid 1980s. Probably still are - it just isn’t said openly now.”
Not politically correct to do so anymore, you can draw your own conclusion.
“Women always get the short end of the stick on pay. Same job, same skills, same everything and women make less than men do. (Yes, it is illegal but proving it is very difficult and very very very epensive.)”
Darn right because most of those studies dont’ take into account that there is a reason women are willing to take less pay to teach. It is a very family friendly position, unlike the corporate world. How do you place a value on having essentially the same hours as your minor children with lots of job security? It is worth a lot to a number of people. If it didn’t have an economic advantage we would have a teacher shortage and the pay would go up….:-)as it has in areas that are dangerous to go into where the negatives outweigh the positives. Isabel
Fields that are dominated by women pay less - and that is the origin of the concern about pay in teaching. They have 1 or 2 college degrees but make less than plumber (a male field.)” No one is stopping women from becoming plumbers. A plumber doesn’t make as much as you think if he works as an independant contractor who provides his own retirement plan. That is also one of those occupations that will take a big hit in a housing bust. The real money in plumbing is not fixing people’s toilets which are pretty fool proof these days. The money is in new construction and is subject the the whims of the market. A lot of the underpayment of women “c**p comes from the usual supects that aren’t willing to put a value on a family friendly job with flexible work hours, the kind that married women with children or single parents gravitate towards. Isabel
Hooray for Isabel. What is so hard about this? Men are on average bigger and stronger than women and no less intelligent. Thus they are better suited to more types of employment, which has the tendency to drive up wages in fields such as construction relative to school teaching.
‘$200,000 for an elementary school teacher - and who will pay that?’
- I think that the Los Angeles school district will pay that.
It is combat, er, battle zone bonus money. You literally take your life in your own hands teaching in the ‘Hood.’
Well I work in at At-Will employment state. The
“unions” here are a joke. I have seen corrupt adminstrators sabotage teachers simply because they didn’t like them for whatever reason. The teachers were left defenseless. The “union” advised them to resign. There was another long-term retired teacher who was accused out of the blue of molesting one of his former students. He lost his house, is facing bankruptsy and the “union” advised him to admit guilt (even though he screamed he was innocent and all his fellow teachers supported him) and take a “lesser” sentence. We’re so fixated on salary? If that were so, none of would have chosen education. Most of us have Masters degree by the way. So, we’re not unqualified, low intelligence, lazy parasites. I don’t want to be rich. I just want to be able to live in a small house, go to the dentist and doctor when I need to and be able to save.
Regarding the great retirement - what if we die before then? There’s no guarantee we’ll all live a long life. And does a “decent” retirement mean we have to sacrifice the wish of ever owning a home while working? Why not pay EVERYBODY 200K? Ugh - I won’t even bother answering that one.
I happen to thinking teaching is one of the toughest jobs out there, and I doubt many adults would want to spend their days in a room of other people’s kids while battling administrators, Fed rules and the like. Teachers make fairly lousy money during their active careers, but the trade-off is generous retirements relatively speaking. That may change quickly given underfunded public pensions and falling tax revenues across the country. I expect at the least health care coverage to be eliminated.
Funny how good schools are a RE selling point, but teachers engender so much resentment.
Teachers’ salaries are miserably low (at least for the starting salaries). Sure, if you stick around for 30 years, the salary can be pretty decent, but the work, at least to me, seems pretty miserable.
I know quite a few former teachers — I don’t think any of them lasted more than 4 years. They bailed, went into private industry, and made much more money for less work.
It is reasonable advice in NY. The school boards never stand up to teachers unions. We have teachers making about $100k in NYC suburbs (Long Island/Westchester).
The people are not yet ready to be led. Too much denial.
As for the solution, point the tax system to favor manufacturing again, loosen up enviornmental controls. Build nuclear plants, three a year. Choose a president who is stable, with a solid conservative outlook. That would be Fred Thompson.
gulp~
Just what this country needs, a fake district attorney as a father figure…
hahaha
“Is there any candidate with ideas that could resolve the above problem?”
Surly you jest??!!!!! Why is it government’s problem to resolve the issues involving private citizens and free commerce? I live in a free country and it’s about time my fellow countrymen stop abrogating their ‘rights’ for a false sense of security.
Couldn’t have said it better myself, Salinasron.
We don’t need a candidate to solve our problems. We are the problem, and we need to find the balls and ovaries to step up and take responsibility.
Seeing as 28 of the last 40 years have been Republican rule, I would venture to say a god start would be to elect someone that isn’t a Republican. Personally I like Edwards, but feel Hillary would be 100 times better than anything the Republicans have to offer.
28 of the last 40 years. That tells you everything.
Why is it that some people want to define political rule as who is in the oval office? I personally would define it by which party is in control of Congress. That is where the law making and the appropriations are done. The president can only sign or veto. I think both parties have a share of the blame for the financial situation that exists today. Acutally some of the best times in my opinion, are those when one party controls Congress and the other controls the oval office. Nothing gets done and a lot of time nothing is better than something.
Isabel.
“Kirsten Keefe, the Albany-based executive director of Americans for Fairness in Lending, said it’s unclear if people borrowed under exotic mortgages because rising housing costs left them no choice or if housing costs rose dramatically because such mortgages became widely available.”
Extraordinary Popular Delusions and the Madness of Crowds, might have been a determining factor, perhaps?
“Never in American History has the cost of living ballooned
so much under one administration and wages not followed.
“The people are now living off credit and their savings, unit either are extinguished.”
Your second paragraph explains the cause of the first. Easy credit expanded the buying power of the masses which financed the expansion of the cost of living. Now that the easy credit days are at an end the expansion of the cost of living should reverse itself.
Good news? Not if you’ve got a lot of debt it’s not. Or if your job existed because of the expansion.
Ooops, should of been linked to Charliebrown’s post of 07:41..
I have no debt and I do have savings. When I think rationally, I know I’m better off than so many others. But then I get invited to parties at their houses and feel worse (and I’m not talking about people in Toll Bros. homes - I’m talking 3/2 split level in a neighbor-friendly area). Yes, I know they are up to their azzes in debt. But they live like it doesn’t bother them. And they have a sense of permanence that I don’t have. I’m really sick of renting. Sure, it’s the more sensible thing to do right now, but I’m beyond burned out. Unfortunately, I’m still not seeing price budges around here at any levels that give me optimism.
“And they have a sense of permanence that I don’t have.”
And upon what is that sense of permanence founded upon? Upon a sanitized version of history that begins around 1950? Why is it still so outlandish to suggest that something might happen in the next 50 years that has not happened in the past fifty years? Is post WWII America really the template for eternity?
Before committing decades upon decades of one’s life and labor to buying a house these uncomfortable questions need to be considered.
I would like a place to move into tomorrow - and die in. I’m not planning on going anywhere. I have a young son to raise so my days of moving back and forth to Chicago (or wherever - I moved 2x to Chicago and back) are over. At least until he’s out of the house. He’s 3 - that’s pretty easy math to do.
I am not in love with my current rental. In fact, I’ve never been in love with any of my rentals. I could be if I put work into them to make them what I want. But hell if I’m putting money into someone else’s property. Easier to just find another rental. But therein lies the problem. I feel like I’m not fully settled at home unless and until I: A) find just the right rental for me or B) find a place I like that I can buy.
And even if I did find the perfect rental, let’s not gloss over the fact that my landlord could at any time ask me to move (after my year’s lease is up and I go month-to-month). Just doesn’t feel all that permanent to me. Has nothing to do with a sanitized version of history.
I’m pretty sure everything you say applies to owning as well:
Over the life of the house: 1/2 the money you pay will go to interest, repairs and taxes. (And in the current environment, even more.)
Eminent domain can force you out of your house anytime, and is about as likely as a landlord asking a good tenant to leave. Floods, fires, hurricanes, etc. can destroy your home.
The reality is: nothing is permanent. And putting a roof over your head costs a bundle, so make sure you get good value for that bundle of money.
Anyway, I’m guessing that I’m preaching to the choir. Good luck.
I know what you’re saying. I have always (since 1975) lived in a home I ‘owned’ until the last two years. I really miss the feeling that I can do whatever I want to the house, that it is a place of comfort, and that it is permanent. I will certainly own a home again, and really hate renting. There are certainly some intangibles involved in home ownership, and it is difficult to put a value on them. We each have to live at our own level of comfort for debt and reward.
My last landlord made me paranoid.
Ben’s Blog helped me sort out my fears.
Luckily, the place I rent now is managed.
The cul de sac I’m on is my new church.
Giving thanks.
I
Eastcoast: Your desire for stability is perfectly understandable, and to some degree it is shared by everyone. What my gripe was in that post is how so many justified spending so much on housing because they felt absolutely entitled to permanence - to permenantly soaring house prices, to permenantly rising wages, to permenantly stable neighborhoods.
Perhaps if they did not have that sense of absolute entitlement, you might have what you’re looking for?
Brillant, edgewaterjohn. Is post WW2 America really the template or eternity?? That says a lot.
It’s going to get real bad on the marriage markets as well as housing markets.
“Sell the house. Sell the car. Sell the kids. Find someone else. Forget it. I’m never coming back. Forget it.”
Kurts’s letter home, Apoacalpse Now
The sanatized version of history began around 1999. In 1962 I shared a bedroom with my grandfather. I got the top bunk he slept on the bottom. I cringe at the RE agents on flipper shows when they say things like” people like to have two sinks in the master bath” or ” people absolutely need a walk-in closet” how long does it take to shave or brush your teeth? How could a wall of closets with sliding doors not hold enough clothes? I despised RE agents when I bought my home in 1989 and I know my wrath will come back when I sell. Agents(of any kind), lawyers, brokers and salesman, the downfall started when these kind of jobs were celebrated. What ever became of quiet dignity?
I agree. People today don’t seem to be able to tell the difference between a necessity and a luxury. I was first alerted to this pheonemena when I read an article about how financial couselors in the 80’s had a lot of trouble dealing with the laid off auto workers in Michigan in the late 70’s. They had trouble convincing a lot of them that luxuries were not necessities of life. I think one of the examples used was a telephone answering service (this before the days of answering machines) Most of these people could not get it through their heads that when their 60k a year job for turning bolts was gone that most of what they had used the money for was unnecessary garbage. When my father was a child, his parents had a three bedroom house with one bath. One day the neighbors house burned down. The family moved in with them and took over the boy’s bedroom, My father and his older brother slept under a blanket in a corner of the living room for a year while the burned out family took over their bedroom until their house could be rebuilt, probably by my grandfather and the neighbor. Most people in 1920 were a lot less spoiled. Isabel
How bad can it get? My Mother, age 79, recently explained to me that no matter how bad it gets, it will never be as bad as the early 20th century. She explained that when families of immigrants arrived in Elis Island, and the parents died on the trip, the children were put on trains heading into the Midwest. Some of those children were murdered (killed?), because the belief in those days were that these children would end up as beggars and thieves.
Just wanted to pass on an interesting sidenote.
“Some”
1, a handful, dozens, hundreds? This is not an “interesting sidenote”; it is heresay.
Sorry, “heresay”=”hearsay”
“And they have a sense of permanence that I don’t have.” That sense of permanence will become a millstone in short order if they need to unload that house to follow a job elsewhere and market conditions won’t allow it.
I definitely agree with that. However, the husband is in the military and - after moving around a lot - this is their final resting spot (he retires this summer). Now, friends of his who just got orders elsewhere are probably going to have a hard time selling. I actually tried to discourage this guy from buying a few years back but was met with the old, “He’ll make so much money if he buys - even if he has to sell in a few years.” Guess we’ll see who was right when he lists in the spring…
“However, the husband is in the military and - after moving around a lot - this is their final resting spot (he retires this summer)”.
Stranger things have happened. A lot of people plan on a civilian career after the military and then find that they can’t do what they want to do (or what they need to do) where they are at. My husband and I were both active duty army in the 80’s and then lately we have both been working civil service. I have seen quite a few military retire out of our office find out that after planning on making here “their last stand”, that they had to move either because they were educationally unqualified for the job that they thought they were going to slide right into as a civilian or because they weren’t “as good of buddies” with the hiring authority as they thought they were. My own husband, the picture of stability and unwillingness to move, after two years retirement from the Army guard, has a tasking order for Iraq. Yes he is being pulled out of retirement to go active duty for the Corps of Engineers. Seems that qualified PEs are hard to come by. At this point I would not place bets on where either one of us will be living in five years. Isabel.
Isabel,
I was in the Army in the 1970s. I’m sorry to hear your husband is be called back in to serve in Iraq. When does he have to report for duty? Is there a possibility you will be called into active duty?
“was in the Army in the 1970s. I’m sorry to hear your husband is be called back in to serve in Iraq. When does he have to report for duty? Is there a possibility you will be called into active duty?”
Don’t be sorry. My husband is a West Point grad and checked the box on his retirement paperwork saying that he was available the minute he retired. We are both just happy that he has the skills they need right now in the Corps of Engineers and can be of some use in the reconstruction efforts. They are saying March for his deployment. Apparantly pulling someone out of the retired reserve takes a lot of paperwork. Our youngest child just turned 22 and is active duty army in Alaska. He will be off active duty in about six months and home and in college. Most of our entire family on both sides is prior military. I got out entirely after seven years of active duty so I will not be recalled. I would volunteer to go as a civilian but my 83 year old mother lives with us and I don’t think she would take it well if we were both out of the country at once. Maybe later if I stay in good health. Isabel
My first reply did not apparantly post. My husband is a West Point grad and happy to go. He wants to work somewhere his engineering skills can really make a difference. He should be leaving in March if they get the appropriate paperwork done. I am not subect to recall as after 7 years of active duty I never joined the reserves but would happily go as a civilian. I don’t think my 83 year old mother can take both of us being out of the country at once.
Isabel.
Isabel,
I wish you and your family all the best. Your husband sounds like an officer that I would gladly serve under if I was still in the Army.
I know you will not be happy with what I have to say, however I was in the Marine Corps in Vietnam (12 very long long long long months0 and I was more than happy to finish my military obligation of two years active and 4 years inactive reserves.
What I hate to say, is that Americans are used and abused based on their patriotism. If you really think that your service in the Wars in Iraq and Afiganistan is making this country safer, with our open borders and the concluding Big Business-govt. state, then I would like to sell you a “bridge to no ware in Alaska”.
As RP says, we need to disingaged in wars throughout the world. My ex-wife works for a major military contractor in San Diego. Her wages have annually gone up more than 10% per year and she has better health and retirement benefits than state or government employees.
Just for your information-
Thank you for going to Vietnam. The U.S. had treaty obligations it was honoring in defending Vietnam. In my estimation, the U.S. didn’t lose the Vietnam War. 55,000 died, but it was essentially a stalemate, and it ended the Domino Effect and prevented Thailand, the Phillipines, and Indonesia from becoming communist. Anybody who goes to Southeast Asia regularly has to understand that there was real value to the U.S. making a stand in Vietnam. BTW, Ho Chi Minh was a jerk and one day soon Saigon will say screw you and reclaim its true name.
Lostcontrol, Working for a defense contractor can be lucrative but it is rarely stable and your x wife’s job could disappear as quickly as it appeared. Government employment brings some stability and certainty. That is why it is not as well paid. Everything is a trade off.
The US did disengage from the world right after World War 1. That disengagement brought us World War II. Of course we haven’t tried disengagement lately so no telling what an RP foreign policy would buy us in the future and we will never know if we don’t go there. I personally get the feeling that it would resemble a Jimmy Carter administration but only time would tell. That is one thing about history, you can second guess any path taken until the cows come home but you can never know for certain what the opposite choice would have yielded. Any decision made that has any kind of negative outcome is always assumed to be worse than the choices that were not made and of course, since those alternative did not occur you will never know what kind of bad results would have resulted had any one of a different number of choices been made. You cannot determine those alternative results in either the long or the short term, you can only B***ch about the present and point fingers.
I brought up my husbands deployment only in the context of people not knowing whether their employment is stable, not to make some political point about patriotism or lack thereof. I am very thankful that “the republic” of the United States is not a suicide pact where we would maintain our pricipals even facing extermination because in my opinion Ron Pauls vision of the world is both the opposite of, and as deluded as socialism. I.E. It would only work if the entire world and human nature was in accoradance with the pricipals of libertarianism. They are not, and they never will be so I won’t be voting for Mr Paul. Most of the rest of the libertarian principals we can agree on.
I am really happy that the world now is so much more wonderful than it was back in the 70’s. No one has been drafted in this country since the early 1970’s. Everyone in OUR military is a volunteer. Back in the 70’s that is what the libertarians wanted but I guess the target has moved. I don’t want to be thanked praised or patted on the back for the choices that either I or my husband have made regarding the military. Our reasons for service are entirely self interested and voluntary, and based on our personal philosophy. I am not sure what will make the country safer, but I am pretty sure it is not Ron Paul.
Isabel - I share your political as well as your economic sentiments. And I say that as a former Libertarian Party member, just like RP was. I respect RP, and I admire his tenacity and willingness to go against the crowd. But he’s not my choice, either.
I`m with [man on long island], I don`t understand how or why the banks bid on their own property. But knowing the R/E companys they are probably counting that buy back as a sell. I have noticed something different going on in my area, Charlotte n.c. with is stonger than most but slowing. We have a dominate R/E co.,Tate, they put a flyer in the paper about everyday, but now they are showing all these houses with a sold across they. My wife asked why would waste all room on someting that has already sold. I said they probably know they are hosed and just trying to hide it.
Lane
(I don`t understand how or why the banks bid on their own property.)
If you are still reading, let me explain it.
At foreclosure, the bank doesn’t own the property. The government auctions it off, and then pays the lien holders including the bank in legal order, giving any remaining funds to the borrower. Of course if the house is underwater there are no remaining funds.
So the bank has a $500,000 mortgage. If the high bidder is $200,000, and the $200,000 is given to the bank, the bank management has to admit to an immediate $300,000 loss, plus all their costs.
Ah, but if the bank “buys” the property for $500,000, and pays the money to itself, it has given up a mortgage worth $500,000 for a house “worth” $500,000 and hasn’t lost a dime — yet. Get it?
I agree. Long Island needs a real lesson. Totally irrational behavior. People need to have losses for a wake up.
Got popcorn?
As long as the Wall Street Gangsters are making massive profits it will be different in Long island.
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“This comparison, they said, demonstrates that 2007, though slower than the previous few years, was still a reasonably healthy one for the market.”
In that case don’t we need to get to a sick market before the real recovery could begin?
“…glut of inventory are now creating great opportunities for buyers, said real estate agents.”
Yes, “glut of inventory” guarantees lower prices, no?
“…could mean that a revival of the market is in store for 2008.”
Maybe, a revival in sales, or volume, but how many people would want to buy into a falling price market?
Do you see the problem, “real estate agents?” Or, are we suffering from When Wish Becomes Thought (title of a book)?
Jas
“‘There are a lot of people who are holding back on purchases,’ said Paul Schwartz, a certified mortgage planning specialist in Woodbury. ‘People are waiting to accumulate bigger down payments.’”
No, you f#@king moron. They are waiting for prices to be affordable! People aren’t saving, they are barely getting by. Can we bring back public flogging for idiots like this?
Orwells Fargo doublespeak for the day: “many, many”
“Lee Caprarola, a sales manager with Wells Fargo Home Mortgage in Somerville, said the spike in foreclosures was widely scattered across different economic strata. ‘Some number of foreclosures are going to occur, good times and bad, but it’s many, many more now than in the past several years,’ Caprarola said.”
I’m in a bit of a pickle. I’ve just been sitting down with the wife (here after referred to as the muppet) discussing finances. I’ve finally persuaded her to cash in a policy linked to UK stock prices and we have a small but significant sum of money back. I want to pay a couple of years of the mortgage off, she wants to buy a car and a conservatory dipping into our savings to pay the excess, given that she doesn’t see a mortgage as a problem (because every one has one) how do I stop her?
Have her read this blog for a few weeks. When she hers about the foreclosures and funny money and shattered dreams of people who have fallen behind in payments, perhaps she will think it better to have some nuts in storage.
Ask her what situation she would rather be in (mortgage closer to paid off, old car, no conservatory vs. new car, conservatory, mortgage no closer to being paid off, reduced savings) if one or both of you lost your jobs. The US is very likely already in a recession and employment is going down. If you aren’t in the US, remember that this credit bubble is global, too large for government to do much about it and deflating.
The least you should do is save the money in a safe place and wait a year before deciding to pay off the mortgage or buy the toys.
Tell her no. In my opinion one should never borrow against their house except in emergencies, and if you do, I dont want to hear you guys complaining about being upside down (and no a new car when the existing one works is not an emergency, perhaps a used reliable, non-luxury car for a good price might qualify if the existing one has died or is no longer worth fixing). It’s just a credit line you have to pay back. Tell her she can buy a car with whatever she mangages to save. This whole debt thing is not as good as it seems. Im a bit conservative to most ppl’s taste though. Ppl think im crazy as I have a great job, but never have and never will buy anything on credit (not even a car). The only possible exception would be I would be willing to take out a mortgage and buy a home when we are back within historical norms (adjusted for then existing circumstances) and will only consider a second or third home if it has positive cash flow. The funny thing about it is that I can afford three homes, but own zero, while many that cant afford one have three. I have no doubt who will retire first.
Also note that I would not pay off your mortgage. Assuming you are fixed, you probably have the best interest rate you will ever get. I would put it in CDs or other safe securities (not stocks). In two years, the recession will have dropped the market enough you can invest in the S&P again with avg returns of 10%, while your mortgage should be 6% or less and you get to deduct it. There will be so many opportunities for cash in two years I wouldnt use it to reduce debt gaining interest at 4% (2/3 of 6% assuming you get a third off because of the tax deduction). Also I definitely would not pay of the mortgage unless you are maxing out 401k and IRA limits. That is the best use.
“some bought duplexes and triplexes in hopes of flipping, Valvo said. ‘In particular, the people who were investing in the small multifamilies”
I would consider “flipping”, especially of dupes and tripes, as a form of “gambling” or “speculation”, and NOT “investing”.
Just got done watching The Grapes of Wrath again. What a great movie. I really need to read the book. Even though this movie was made 60+ years ago, it is so relevant today. Banks screwing people. Wall Street right in the middle with their corruption and scams. Big business screwing workers.
What a timeless movie.
In Aramaic the word for debt is also used to mean sin.
http://en.wikipedia.org/wiki/Pater_noster#.22And_forgive_us_our_trespasses.2C_as_we_forgive_them_that_trespass_against_us.22
Correct. I grew up So. Baptist but went to a Lutheran elementary school and often heard “debts” substituted for “trespasses” in The Lord’s Prayer.
I wonder when our religious right master-wannabes are going to remember that usury is a sin?