The Market Is Tanking
The Plain Dealer reports from Ohio. “The devastation extends far beyond Slavic Village, where 1,500 houses are abandoned. Nearly every one of the 59 communities in Cuyahoga County, along with many cities in neighboring counties, have taken a hit. More than 120 houses in Cleveland are being offered to the city for a buck apiece because the U.S. Department of Housing and Urban Development can’t find other buyers.”
“The homes have been on the market for more than six months with no takers. All told, the federal agency owns more than 1,000 houses in Cuyahoga County, two-thirds of them in Cleveland. Lenders are stuck with thousands more unwanted properties and are willing to unload many of them for pennies on the dollar.”
“A California investor, shopping via the Internet, bought a four-family house in Slavic Village for $1. Texas investors scooped up 90 houses — primarily in Cleveland — for prices as low as $750.”
“During the first nine months of last year, nearly 1,000 parcels in Cleveland traded hands for less than $10,000 each.”
“‘The market is tanking,’ says Dave Sarver, a real estate agent who specializes in lender-owned property. ‘We’re giving houses away.’”
The Kentucky Post. “If you want to know how soft the home construction industry is in Southwestern Ohio, just ask contractors like Dave Conradi of KEP Electric in Batavia. ‘I’m kind of busy still, but the company had to let people to go,’ he said.”
“Conradi’s comments are the face between the latest roller coaster round of home building statistics from the Home Builders Association of Greater Cincinnati.”
“Association Executive Director Dan Hendricks says the boom years occurred from 2003 to 2006 with unprecedented growth each year. ‘Those were such huge numbers,’ Hendricks said. ‘Nobody thought they were going to be sustainable forever.’”
The Flint Journal from Michigan. “Hammers were rarely heard across the county last year as the number of new houses dropped at staggering rates. ‘It’s scary,’ said Ted Henry, building inspector for Clayton Township.”
“According to Barry Simon, consultant with the Builder’s Association of Metro Flint, new houses countywide is down 80 percent over 2004, a peak building year.”
“‘It’s not just Genesee County,’ he said. ‘It’s from Clio to the Ohio border.’”
“Adam Zettel, assistant city manager of Swartz Creek, said subprime lending and the economy likely are affecting the construction of new houses locally. ‘In our area I suspect the economy is bigger than foreclosures, however, there are a lot of foreclosures,’ he said.”
“And although Genesee County may seem worse off than its counterparts across the state, it’s not. ‘We’re on life support,’ Simon said. ‘Oakland County is in rigor mortis and Livingston County already is decomposed.’”
“But Simon said there is an upside to the current market conditions. ‘You can get your dream house for pennies on the dollar.’”
The Kalamazoo Gazette from Michigan. “Steve Starbuck’s four-bedroom home in Portage has been on the market since February 2007. He’s dropped the price twice in the past 11 months and, at $189,900, it’s listed at the same price he paid in 2001. ‘I guess it’s been a nice house to rent,’ he said.”
“According to the latest figures from the Greater Kalamazoo Association of Realtors, Starbuck isn’t the only Kalamazoo-area seller who’s felt the housing slump of the past year. Sales of residential properties by Kalamazoo real-estate agents in 2007 were down 13.5 percent compared to 2006.”
“While part of the drop last year was exaggerated because of a runup in prices over several years, Matthew Maire, the association’s CEO, said the fall wasn’t far because the Kalamazoo market has held fairly steady. ‘In Kalamazoo, we don’t see the tremendous fluctuations you see in other markets,’ Maire said.”
“Starbuck said a combination of the overall market slowdown and an unrealistic original asking price probably kept his house on the market longer than it should have been.”
Chicago Business from Illinois. “Sales of new homes in the Chicago area fell even faster in the fourth quarter, and with the economy on the brink of recession, homebuilders face another tough spring selling season.”
“Builders sold 2,196 units in the quarter, a 51% decline from the year-earlier period and the biggest quarterly drop since the residential slump began more than two years ago, according to Tracy Cross & Associates Inc. Homes sold in the quarter at the slowest pace in 15 years, the firm says.”
“‘It’s frightening, it’s nerve-wracking — it’s a lot of things,’ says Jerry Thiel, president of a Rolling Meadows-based carpentry contractor that employs about 30 carpenters now, down from 275 in 2005.”
“‘We’re quote-unquote not in a recession,’ Mr. Thiel says. ‘What’s going to happen if we’re actually in a recession? Our prospects aren’t going to be any brighter.’”
“The market ‘is probably worse than it was in the early ’90s,’ says Frank Libby, second VP of the Chicago Regional Council of Carpenters.”
“‘It’s almost like a limbo pole that’s almost on the ground and can’t go any lower,’ says Tracy Cross, president of the eponymous consulting firm. ‘This is about it.’”
“About 3,500 unsold downtown condos are under construction and will be completed between now and 2010. ‘Some of those buildings are going to have some trouble,’ Mr. Cross says.”
“Apartment rents are surging in the Chicago area, but that check to the landlord is still a lot smaller than a monthly mortgage payment.”
“The average rent in the Chicago area represented just 60.0% of the after-tax monthly mortgage payment for the median home in the third quarter, according to a recent report by Deutsche Bank.”
“The rent/buy relationship has taken on greater significance recently as analysts try to determine how much home prices — or interest rates — need to fall before the residential market returns to equilibrium.”
“In Chicago, ‘the gap has got to narrow,’ says Deutsche Bank analyst Louis Taylor. ‘Chicago is going to have an adjustment, and an adjustment that I don’t think is going to be particularly painful.’”
“Of the 58 U.S. cities Deutsche Bank tracks, Chicago falls in the middle of the pack at 60%. The Oakland/East San Francisco Bay area in California is the most expensive place to own a house, with the monthly rent representing just 26.9% of the monthly payment, which includes mortgage, property taxes, insurance and tax savings.”
“Nationwide, the monthly rent represented 62.7% of the monthly payment in the third quarter, up from a low of 60.9% in second-quarter 2006.”
“‘With short-term rates falling along with home prices, there’s the potential for a significant (66%) portion of the country to return to affordable levels,’ the Deutsche Bank report says.”
“Unable to sell their condos, many owners are renting them instead and competing for tenants with traditional apartment landlords. Though this so-called shadow market has become a factor in Chicago as well, it’s not a huge concern, Taylor says.”
“Including condos for rent, the Chicago-area apartment vacancy rises to 7.3% from 4.5%.”
The Journal Sentinel from Wisconsin. “Bankruptcy filings jumped 39% in Wisconsin last year, an increase driven partly by adjustments in mortgage payments that were too big for some consumers to handle.”
“Samuel J. Gerdano, executive director of the American Bankruptcy Institute, said he expects the number of bankruptcies to climb again this year as adjustable-rate mortgages reset at higher monthly payments.”
“‘Some of those aren’t predatory at all - they’re just adjustable-rate mortgages that people can’t handle, largely because they are in homes that they can’t sell or refinance,’ Gerdano said.”
“Milwaukee bankruptcy attorney James Miller said he is seeing more people here ‘just tossing their arms up’ about their mortgage.”
“Rather than try to keep their homes, more consumers - particularly those with little or no equity in the house because they put no money down or its value has dropped - are just assuming the home is a lost cause and asking the courts to relieve their other debts.”
“‘Before, if someone was behind on the mortgage payments, it was, ‘What can I do to save my home?’ And now, people are just so frustrated with the interest rates and with their climbing mortgage payments, it’s, ‘What can I do to get out from under my mortgage debt?’ said Miller.”
“Madison attorney Tim Peyton said his practice has been handling an increasing number of bankruptcy cases for people who were working in the mortgage industry - real estate agents, brokers, small developers. The retreat of the housing market and prices has put them out of business and into personal financial trouble, he said.”
“For example, he said, construction workers who during the height of the housing boom started their own small home-building businesses now can’t keep up with what they owe on lots they planned to develop or houses they intended to renovate and resell.”
“‘There are a lot of those out there,’ said Peyton.”
“Like the bankruptcy institute’s Gerdano, Peyton said he expects the number of bankruptcies to rise again this year. ‘I think we are just seeing the tip of the iceberg,’ he said.”
‘part of the drop last year was exaggerated because of a runup in prices over several years, Matthew Maire, the association’s CEO’
‘Association Executive Director Dan Hendricks says the boom years occurred from 2003 to 2006 with unprecedented growth each year. ‘Those were such huge numbers,’ Hendricks said. ‘Nobody thought they were going to be sustainable forever.’
Unprecedented growth. Runup in prices. Ohio, Michigan. No national bubble, MSM?
Prices did not shoot up in SW Ohio (Cincinnati), but home building sure did. It seems like the number of housing units practically doubled in the metro area over the past decade.
Even though home prices did not skyrocket during the boom, the median price did fall 5% lst year in Cincinnati.
Prices in many small towns I can think of should have dropped, due to economic changes, but they didn’t. It may have stayed the same or increased slightly. If one looks at simple supply and demand, overbuilding can only result from an artificially high price. It lures in development where it shouldn’t be. It’s the same with any product. Over-priced apples will eventually result in too many apples.
It’s interesting that these supposed non-bubble areas are crawling with FBs. Ohio leads the country per-capita, at least for now.
I would agree with this assessment completely. Suburbs and exurbs in the Columbus, Ohio-area (one of the two highest growth areas of Ohio, along with the Clermont/Brown County areas outside Cincinnati) showed significant growth in high-priced homes. (”High-priced” here is relative: a $400,000 house in the suburbs of Columbus, Ohio is getting pretty pricey. Probably equivalent to at least a $1.5 million house in a lot of areas of California.)
One area (Dublin/Union County border) had an explosive growth in $350-$500,000 homes, with another development down the road (Tartan Fields) with $500,000 - $3,000,000 homes. (These are beautiful homes — not McMansions — closer to true mansions. I can’t even imagine what houses like this would cost in California.) As a co-worker of mine asked two years ago, “who’s buying all these houses?!?”. We couldn’t come up with any good explanation on the demand side to explain the over-supply. There didn’t seem to be any good rationale for overbuilding in that price range, given what we knew about job and income growth (and new businesses and new industries) in central Ohio. Now, from what I hear, Tartan Fields has now seen a huge number of defaults and foreclosures, with the early signs of desperate price reductions. This comes from an elected official I spoke with who’s in a position to have first-hand access to the numbers.
‘Exhibit A’ for a national/global asset bubble ….
Million dollar homes for sale in Bowling Green, KY also. How many millionaires are there in BG to buy all of this stuff?
On Tuesday I helped a buddy of mine deliver firewood to the Three Springs area of BG. This is an area that has mushroomed with subdivisions in the past few years. We saw lots of for sale signs.
Some of these houses have more bathrooms than bedrooms. I must be seriously missing something here, ’cause I don’t get it.
We had those huge-home subdivisions crop up horth of Detroit & Pontiac, too. $500,000 homes! I always said that even if the whole family worked as a unit to contribute, they had to be selling drugs, too, to afford to live in those ‘hoods. What else is tax-free income?
It doesn’t take a bubble for areas to be crawling with FB’s. All it takes is a downturn in the job market. In my area in OH the prices on homes has only risen 1-2% a year, but it’s tough to find a decent paying job out there.
Only saving grace as I understand it jobwise is that commuting is so much easier there than say CA. This allows one to work in PA and other areas. Cost of living seems so much cheaper there, also - not just housing so one doesn’t require as high a wage if their overhead is low.
“Cost of living seems so much cheaper there, also - not just housing so one doesn’t require as high a wage if their overhead is low.”
Excellent topic idea. What is the realistic possibility of writing a check for a shack in very affordable areas and being able to get by on walmart wages? It’s always been a quandry for us. I can write a check for a house in probably 80-90% of the country but the possibility of earning 100k+/year in those areas is laughable. In some areas one would be fortunate to get a job a walmart (ugh). It would be a choice to live frugally (more so than we are now) and I’m not sure I want that for me and mine for the rest of our lives.
The Ohio, Michigan and Indiana states were impacted by a runup in prices, overbuilding, permanent job loses due to offshoring of manufacturing jobs, lack of new jobs to replace the jobs lost or people being underemployed and unable to find jobs that paid what their former jobs paid before being sent offshore, fraud in the mortgage industry, fraud in the real estate industry, speculation in the housing market, high tax increases and high inflation that has crushed the consumer.
All of these factors seem to be playing a significant role nationwide and specifically in the midwest region. In my opinion, the consumer has been crushed by the factors I mentioned and it is having a significant impact to the economy.
‘replace the jobs lost’
- I am from Indiana and most all of my kin folk worked in the glory years of the auto industry. It is almost completely gone now with the Borg Warner plant to close in Muncie soon.
The only work is ‘Low Low Paying’.
When I hear that the local gov’t is going to lure ‘High Tech’ to the cornfield-rustbelt area it is depressing and delusional.
“When I hear that the local gov’t is going to lure ‘High Tech’ to the cornfield-rustbelt area it is depressing and delusional.”
You can’t be serious! People move here for the balmy weather. (-6 below this am, -24 with wind chill here in Chicagoland.)
Sobay, I agree with you 100%. I am originally from Ft. Wayne, but have lived in Tampa for 22 + years now. I was just up in this area to visit family. I also conducted an economic study of the three states and would agree with you on the depressing and delusional aspect of the area. I also have a study that clearly shows where the “High Tech” jobs are going and it is not Indiana or this region.
And how did United’s maintenance base work out in Indy?
A few years ago while flying through Indy on business I waited for the plane next to a group of mechanics who were “commuting” - the lucky guy of group was commuting IND-ORD, the other three were IND-SFO. Years before that, when I myself was a mechanic with them, IND was all the rage - everyone wanted to work there - ORD pay and IND housing costs. Didn’t work out so well.
My ‘96 Subara was made in Indiana. Is that factory gone too?
Nope. Still there. Right on I-65 outside of Layfayette. Pretty new, so they may be there for awhile.
Indiana actually has a reputation for decent job creation — in the Midwest. Of course, being perched next to Michigan, Kentucky and Ohio means we’re bound to look good as long as we don’t shoot ourselves in the foot. Taxes are low, and although IN is not a right to work state, the unions have always been somewhat docile. The other climate, i.e., the thing people think about when they hear the word climate? Not so good.
As you pointed out Sobay, the loss of high paying industry jobs has really run a dagger through places like Kokomo, Marion, Muncie and Anderson. Muncie at least has Fruit Jar U (won’t use the other term for BSU on a family site) to keep some employment there. The other places have been hurting for 20 years and it’s not going to get much better. Indy has done well and since its fortunes aren’t tied as closely to industry (pharma and state gov will keep going no matter what), should continue holding steady at least.
South Bend has “only” had 50 inches of snow so far this winter. I guess that makes this place a tough sell for Californians and Floridians. Oh well, keeps the riff raff out.
One thing i’ve never seen addressed is the great economic divide that exists in many parts of our country.
Californians have until recently, had their pick of any place in the country, to move to.
Not so for most of Middle America.
The music stopped long ago for them, in their game of musical chairs.
True dat. I’ve thought of returning to Cali but there’s just no way. I was priced out many many years ago.
I moved to Fort Wayne from Cali. I like the people here much better. You can actually get service, and nobody seems bitter that they aren’t millionaires. The winter weather is no problem at all if you garage your car overnight. It is just a very pleasant place to live. Housing costs - I show listings to friends in Chicago and get belly laughs from them.
Mind you I did like biking along the ocean…
There’s the Toyota plant in Princeton, the Subaru plant (in Lafayette?), and a Honda plant being built in Decatur Co. — last I heard it wasn’t online yet. Those are only the ones I know about.
I’d say Indiana has done pretty well in attracting some new manufacturing jobs, much more so than the rest of the Midwest.
“Nobody thought they were going to be sustainable forever.’”
Pardon me, but “everybody” thought they were sustainable. From banks to mortgage brokers to builders big and small, from local and state governments to re agents to buyers…everything was built on appreciating real estate. And of course, my personal favorite, Money magazine, a rag that every month for years had ‘millionaire in the making’ cover stories, egging on people to buy, to invest, to ‘liberate’ their equity,to treat their phantom appreciation as real income and spend, spend, spend.
Only on the internet at blogs like Ben’s, or Patrick’s or CR could you find sane hold-outs against the mania. Hell, less than a year ago, you couldn’t find a media outlet or a Treasury or ibank spokeman who acknowledged there even was a bubble.
They lied on the way up, and they’re lying on the way down.
About time someone called Money Mag to task for their part in the bubble.
Ben:
Fresh quote off of Bloomberg which may shed some light on the politics and the fed:
“The Fed is trying to battle against the fundamentals which say housing is not going to recover until we have a substantial decline in prices.”
exactly, and that is why their policies will all fail as they do not address the basic fact that houses in the housing stock are financed at prices which under any financincing scheme are unaffordable by the buyers in the market that housing stock was created (erroneously) for.
The Kalamazoo Gazette from Michigan. “Steve Starbuck’s four-bedroom home in Portage has been on the market since February 2007. He’s dropped the price twice in the past 11 months and, at $189,900, it’s listed at the same price he paid in 2001. ‘I guess it’s been a nice house to rent,’ he said.”
“According to the latest figures from the Greater Kalamazoo Association of Realtors, Starbuck isn’t the only Kalamazoo-area seller who’s felt the housing slump of the past year. Sales of residential properties by Kalamazoo real-estate agents in 2007 were down 13.5 percent compared to 2006.”
“While part of the drop last year was exaggerated because of a runup in prices over several years, Matthew Maire, the association’s CEO, said the fall wasn’t far because the Kalamazoo market has held fairly steady. ‘In Kalamazoo, we don’t see the tremendous fluctuations you see in other markets,’ Maire said.”
———————-
Wow, this brings back memories. I grew up in Portgage, in a nice neighborhood of 4 and 5 bedroom houses. The place my parents paid $85k for in 1980 was sold for $115k in 1992. Now the listings in that area in 2008 are around $180k, but they won’t get that much. Just imagine any California city with barely a doubling of prices over the last 28 years! And Portgage really is one of the nicer small cities in southwest Michigan - but it too is affected by the regional recession and the foolish reelection of Granholm by the Detroit welfare set.
Them wise ol’ Detroiter types are in a bit of shock today now that it turns out their hip hop mayor perjured himself under oath about an affair he had with his chief of staff.
http://www.freep.com/apps/pbcs.dll/article?AID=/20080124/NEWS05/801240414&theme=KILPATRICK082007#article_comments
Portgage really is one of the nicer small cities in southwest Michigan - but it too is affected by the regional recession and the foolish reelection of Granholm by the Detroit welfare set.
The economy of Michigan has been in a slow-motion avalanche since the 1970’s–but every section of the state still tries to project all the blame for their deterioration on Big Bad Black Detroit. Isn’t it time to look in the mirror?
Exactly right. Portage went down the tubes because Upjohn Pharmaceuticals was bought by pfizer and moved away. Detroit had nothing to do with that.
Looking in the mirror? Who does that anymore when you can find somebody else to blame?
Plenty of mirror looking has gone on around here and is ongoing.
Ultimately though this state will never really come back without a healthy Detroit. And a healthy Detroit will never happen until you have a political mindset within the city that quits looking at challengers as “white candidates” and “them” as plantation owners trying to take over “their” city.
I see the problems in Detroit being firmly related to problems in the auto industry. West Virginia has gone through similar problems, so has Pittsburgh and many cities in Ohio. The destruction of the U.S. manufacturing base is the foundation of the problem. I worked in Germany for several years and saw similar problems in areas where the industries have moved on (several towns particularly hit by US military closures).
They told us that NAFTA and globalization were good for us. They told us we could all have service jobs. They told us that outsourcing was necessary, as were H1b visas.
I’m trying to think. What, of all the things they told the middle class in these areas, was true? Anything?
Very true gw, and unfortunately I don’t see that changing any time soon. With Ford announcing some more buyouts, there go even more good paying jobs in exchange for so-so paying jobs. Plus it just reduces the homebuyer pool around here even more.
“A California investor, shopping via the Internet, bought a four-family house in Slavic Village for $1.”
Sell it for $2 and double your money.
I dont know the details but nuisances in bad areas are more of a liability than an asset. Can he be held liability for the activities of crackheads and prostitutes that use his property while he sits in California. Yep. Yes ppl, homes can have negative value.
The City of Cleveland has already filed a major lawsuit against numerous investment banks claiming that urban blight was a forseeable consequence of their actions and they are liable on a theory of nuisance. Buy for $1 and get listed in a class action lawsuit. I wish I could see his face when the City fines and lawsuits pile up. Of course the floor isnt $0 when it comes to real estate.
Yeah, I was thinking about that limbo stick analogy - on the ground? Utilities are underground, coal mines - how LOW can it GO? What is negative cash-flow?
Exactly.
Where is this property so that I can go injure myself on it, and then sue the pants off the “rich Californian investor” for not maintaining it?
Well, I wouldn’t do this, but maybe a John Edwards trial lawyer type would.
You would be a trespasser……and you pay the civil damages (after you get out of jail for the criminal trespass.)
Unless there is an ‘attractive nuisance’ (think swimming pool) where the access to it is not sufficiently restricted.
Stupid nonsense.
I am not familiar with Ohio law, but in many states abandoned/non-occupied property is an attractive nuisance. If you do not remedy it, you can be held liable on a variety of causes of actions. For example, if you should have known it is being used for illegal activities, and you do no nothing, and someone is murdered or injured as a result thereof there are lot of theories on which a judgement may be claimed. I did a few minutes of research and in fact abandoned property may be deemed an attractive nuisance for childen in Ohio. Thus, if they go in their to get high and get injured, a lawsuit may be brought.
http://ohioline.osu.edu/als-fact/1007.html
(1) He wasn’t talking about abandoned property - he was talking about going on to the property owned by an investor.
(2) I do know Ohio law - 1st state where I passed the bar.
If the place is locked up and someone goes in (read: breaks in) and gets hurts, they are the trespasser. If they decide to cut across the yard and trip over their own 2 feet, they are the trespasser.
Now if a place is abandoned and attracts rats and other nasty things, then it is a nusiance and/or health hazard. If it is not secured (doors and windows locked) it could be an ‘attractive nusiance.’ (And see above.)
The question is whether the doors and windows are locked. If the building is secured, any trespassers who force their way in are on their own (including the rug rats who break a window and climb in.)
The only point that was being made is that there are legal issues with buying abandoned property, particularly when the owner lives out of state. Typically these properties are not locked with all windows intact, and even if they were at some point, one trespasser may leave the door open or windows broken. Since the owner is in Cali he may not recognize this and fix it in a timely manner.
With respect to the issue of whether it was in fact abandoned. If they could get a tenant in the property as is, why was it for sale for $1. The price suggests it was in fact not being occupied and tended to.
A California investor with no other property in the state has little to lose. About all they can do is take the property, and if it only cost $1, so what?
I wonder if the purchaser must pay back taxes or something like that.
Yes there’s lots of back taxes involved because the city is way behind collecting anything that’s delinquent. Here’s the clincher. A lot of those areas are so bad with crime, murder and drug trade that:
1. You wouldn’t even want to go in to remodel the house to sell or rent.
2. No one wants to rent in those areas because it’s not safe to go out your
door and chances are high of getting shot in your bed by a stray bullet.
3. Back taxes and gov tax liens are also prevalent.
I’ve told this before but, I had a realtor friend that had a guy call the office to list his house. He bought a south side Youngstown home over the internet sight unseen. He thought he was pulling a fast one and getting a great deal. He paid $16k. Well it was in the middle of a drug neighborhood where the amount of plants would rival the largest nursery in the world. Murders, drive-by shootings, gang related shoot outs, etc. He couldn’t get anyone to take the listing and he was so d*mn stupid he couldn’t figure out why. You know the old saying, “If it seems too good to be true, it probably is.” Anyway she told him he might be looking at writing off his $16k since he’d probably overpaid by about $10k, and then expect taxes and fines for cleanup and demolition. I’ve passed many of these same types of places in Cleveland on my way to Cleveland Clinic and believe me no one wants to live there let alone rent anything. That’s why the main freeways coming into Cleveland are bumper to bumper in the morning. They’d rather commute.
Sell it for $2 and double your money.
haha snort….coffee up the nose on that one!!
And 6% comission for the realtard is: $0.12! Wow, now I feel ripped off by the amount paid!!! They are not worth even that much!
I wonder what it will cost after he evicts the squatters, pays the taxes, replaces the roof and gets all 4 toilets flushing.
Hope he has four renters ready to move in before it gets vandalized again.
What a waste of a good dollar.
“‘Some of those aren’t predatory at all - they’re just adjustable-rate mortgages that people can’t handle, largely because they are in homes that they can’t sell or refinance,’ Gerdano said.”
These types of observations seem to get lost in all the pronouncements about the “Sub Prime” crisis. Yes, there was some fraud on the part of lenders and genuine ignorance on the part of borrowers. However, most of the problems we are seeing now because the underlying assumption “real estate always goes up” was wrong.
“‘Before, if someone was behind on the mortgage payments, it was, ‘What can I do to save my home?’ And now, people are just so frustrated with the interest rates and with their climbing mortgage payments, it’s, ‘What can I do to get out from under my mortgage debt?’ said Miller.”
Yea, but in the form of “double-speak”, what did all the industry specialists call these mortgages of black death??>………….”Affordability Products”>
Really??? Seems like they really can’t afford it, now, doesn’t it. It totally depends on the abilitiy to serial refinance or find a sucker to bail them out.
I got in an arguement with a realtor neighbor we have here in 2005… She was telling us how we could get a $700K house for what we are paying in rent. I told her she was nuts and property tax, assoc fees and insurance alone would be $1200 a month, plus at 6% another $4200 a month on a mortgage. Then she started off with the teaser rates and 5 years then you can “just refinance” bs… I told her in 5 years the same house would be $350,000 and got the usual don’t count on itif you don’t buy now you’ll bever get in. I’m like well, looks like I never got in
Then I started telling her about a 30 million property in la Jolla on the beach with 19 bathrooms and a gatehouse. She was like - you can’t afford that. I responded I could no more afford a $700K home and she gave up.
Something that has been a point of frustration for me during this mania is that people ignore all other expenses associated with owning a house aside from the mortgage. I always got advice telling me I could get a mortgage for less than what I was paying rent. Even if this was true no one ever took into property taxes (I live in Jersey), homeowners ins etc. I have a friend who bought a 3,800 sq ft. house at the height of the bubble. I was recently at his house and he was telling me how he will end spending $4k this year on heat alone. The house is about 12 years old, right at the age of when things will start breaking, I am sure none was taken into account when he looked at what he could afford.
that’s cheap. my wife’s aunt pays over $600/mo in heat for her McMansion in PA.
I always enjoy the stupid realtor stories, thanks. I bet everyone that reads this blog has tried at least once, to convince some idiot friend that their dreams of getting rich in real estate is a risk. I live in California Santa Clara, and even now they believe this crash will not occur here. Only 50 miles from the poster child of the housing crash (Merced, Lodi, Stockton, Brentwood, Sacramento). At least now when I warn them the don’t treat me like the village idiot.
I have a good friend who is one, but when she tried to sell me a house I told her what money I had was for college. She was a dear, but I think she went to so many of those seminars that she thought she had all the answers. I guess they get all pumped up at those things…
there are allot of believers in gov good deeds, even on the bb
they make things worse 100% of the time- HUD-FRE-FNM
More than 120 houses in Cleveland are being offered to the city for a buck apiece because the U.S. Department of Housing and Urban Development can’t find other buyers.”
We are all wired into a survival trip now. No more of the greed that fueled last 5 years. That was the fatal flaw in Alan Greenspan’s trip. He crashed around America selling his “no national housing bubble” spiel
without ever giving a thought to the grim meat-hook realities that were lying in wait for all those people who took him seriously… All those pathetically eager ARM freaks who thought they could buy into a Million Dollar House with no money down.
But their loss and failure is ours too. What Greenspan took down with him was the central illusion of a whole life-style that he helped create, a generation of permanent cripples, failed “investors”, who never understood the essential old-mystic fallacy of the Sheeple Culture: the desperate assumption that somebody is tending the light at the other end of the Lincoln tunnel.
That was deep.
Someone’s shrooming.
“the federal agency owns more than 1,000 houses in Cuyahoga County,”
this what would happen is the govt started buying and bailing out troubled FBs- the feds would be come the the largest homeowners in the country and values would decrease even more. Subs built during the bubble would start to look more like war zones and quickly become slums.
One could hope they (govt property owners) hire some out of work contractors to go around to these houses, rehab or scrape them and turn the decent ones into Habitat homes or something productive. The need for quality affordable housing is overwhelming. Plus, if the house is beyond repair, I would much rather see an empty lot than a POS house overrun with vegetation and crackheads.
Some good can come out of all this BS if they get off their collective arses and make a freakin’ decision.
Growing up in Cali- I saw what govt controlled housing looked like and it wasn’t pretty. In big cities, you have the projects; in the San Joaquin Valley you have labor camps or whole neighboorhoods essentially controlled by the government. These areas were always known to be dangerous and crime-ridden- not the nicest part of town.
I would like to see habitat involved in rehaps, but I would hate to see the govt take control of any of these neighboorhoods and turned into government owened section 8 housing or worse, turned over to some private contractor who’d run the homes like a slumlord.
Good luck finding contractors to work in these areas. I’d bet they’d prefer working fast food over working in a war zone.
from the yahoo ! marquee
Lawmakers near agreement on economic package Worry
should have an Alfred E Nueman picture
Buy for $1 - Sell for $2 - a whopping real estate commission of twelve cents - gotta love it!!
These buyers may be in for another surprise. A few years ago Buffalo had to bulldoze poorly maintained homes in declining areas because they became a fire/health hazard. City billed the owners of record for the clean-up and the costs were upwards of 15k for each house.
Buying a one buck house is a naked put.
Brilliant plan. City obtains dangerous properties that need to be condemned. City sells to ignorant California “investors” for a dollar so they have someone to send the fines and nuisance abatement bills and notices to.
Buying a one buck house is a naked put.
If it is a naked put, it should be located at Paridise lakes, clothing optional resort in Land O lakes, FL.
“Unable to sell their condos, many owners are renting them instead and competing for tenants with traditional apartment landlords.”
One of my friends has a pet gator - rented it out since the summer of 2006 and bleeds $100-$200/mo. while carrying it on an I/O ARM. In October I told him again to sell ASAP, he calmly and confidently and leisurely told me he would sell it summer 2008 for a more modest profit. He and my other friends then laughed at my suggestion that condo prices could fall in half. Many Chicagoans will readily concede that other parts of the country are boned, but not here, not ever.
Cheap (relatively) rentals are still abundant in many areas of Chicago. Come to Edgewater for cheap rents, some of the neighbors might be a little crusty and ornery but its worth it. Still, who is going to buy all those new condos when rents are so cheap? Does that Deutsche Bank analyst really think rents are going to surge - or that condo prices declines will really be “painless”?
“Unable to sell their condos, many owners are renting them instead and competing for tenants with traditional apartment landlords. Though this so-called shadow market has become a factor in Chicago as well, it’s not a huge concern, Taylor says.”
“Shadow market”? I’m going to upgrade to a bigger rental (possibly a Chicago bungalow, if I can find the right one) this spring, and I’m getting pretty annoyed by all the new condo construction listed on Craigslist and the Reader. I’d say the majority of rental listings in Chicago right now are condos-turned-rental, at least in the places I look online.
Oh well, in many neighborhoods the best way to find rental deals is to walk the residential side streets once the weather warms up. I’m guessing that’s how I find my next pad.
Try Jeff Park, or anywhere west of Pulaski (4000W) but with SFH rentals you might want to check the local papers too. Sometimes folks out in the neighborhoods don’t want to upset their neighbors with “for rent” signs - but you’re right - they will be out there to be had.
“Does that Deutsche Bank analyst really think rents are going to surge - or that condo prices declines will really be “painless”? ”
I had to read that at least three times myself. I kept thinking there was a typo.
With oil, like other imports, increasingly expensive, there is an argument for living in compact settlements where you can walk or take transit to things. The problem is that cities like Cleveland are economic zombies and social landfills. But Cleveland has a subway system, a lakefront, etc.
I think three things need to happen. First, whole neighborhoods with substandard housing need to be bought up for a dollar a house, and torn down.
Second, new development needs to be indemnified against the crushing tax burden of sharing a property tax base with the desperately poor. Otherwise, no one will live where the poor are, a blight now spreading to older suburbs as well as cities.
Third, there needs to be a voucher system in education, so a middle-class couple who moves to a new development in a place like Cleveland would fee secure that they would have an option other than a violent, failing school.
Do those three things, and it may be that the next upturn in development will produce a more energy-efficient mode of living, and the reuse of existing infrastructure that will otherwise deteriorate for lack of customers. Right now, public policy works against it.
So we need to construct an economy that will both accomodate a substantial population of the desperately poor, while simultaneously freeing everyone else from the consequences? Good luck with that.
Why give out vouchers instead of fixing the failing schools for everybody? Vouchers seem like a bandaid over cancer to me. If you want to limit the desperately poor, the first place to do it is in educating properly the children of the desperately poor. I’ve been a mentor for the last 15 years. One of the children that I mentor just graduated from high school last year, the first in his family. He’s now studying engineering at a public college and received a full-tuition military scholarship. In the end, it is about us working together instead of working apart. There are some really good and decent people who just happen to be poor. Their children deserve a chance like middle class and upper class children.
You’re right, they do deserve the same chance. So give them a voucher good enough to send them to the best school they can find. Give those poor people a choice rather than locking them in to inner city s**t schools (generally speaking).
Then what do you do with the inner city s**t schools? If you win the voucher lottery, you get a pass. If you do not, you get a substandard education. Congratulations! Why not just fix the schools?
The schools cannot be fixed. What is needed are viable alternatives to force the schools to compete for the money. Right now, the model appears to be to provide the worst possible service and complain you need more money.
My thoughts exactly, Guess Who’s - why not spend the money on making public schools good enough for all kids, regardless of household income?
Your assumption is that truly sub-standard schools can be fixed. And while a few can be- with special attention, highly motivated people and lots of money to spend - as many will fall out of grace as you save. The market can help schools, much like a national health-care based on the strange notion that it’s better to live a healthy life than try and fix a body after it’s broken.
Schools vouchers would put ‘the right to fail’ front and center in education, which is why the NTA truly hates the idea.
There shouldn’t be a lottery…..every kid should get one.
Let the parent/guardian decide where the kids will get the best education. Even Detroit has some “magnet” schools where education, expectations and results are on a par with the best suburban schools. A lot of the other schools should just be killed off. Easier said than done though because of the teacher’s union.
Vouchers aren’t the be all, end all, but it’s a step in the right direction. Other problems aren’t as easily solvable. Some local reports have talked about the extreme amount of apathy in inner city adults toward education. How does one fix that?? I have no idea, but the kids suffer for it in the meantime.
Throwing money at schools is not an automatic solution. Cleveland schools spend well over $10,000 per student, more than just about all its much higher-income suburbs.
Ask the citizens stuck in the city if they want freedom of choice, or to be stuck in a dead system. They will take the vouchers every time.
I know teachers unions hate vouchers and are anti-choice. Let’s see what the citizens say.
Vouchers would only exacerbate the current inequalities in schools.
The REAL solution, which will never happen, is to take all school funding and divide it equally across cities and states. Rich neighborhoods get the same funding as poor inner-city or rural areas. Everybody gets the same money regardless of location - THEN you’d really see some changes in the way schools are run. No more having the rich neighborhood schools look like small college campuses and the poor ones look like Beruit. You’d see some real increases in funding for schools as well as increased parental involvement in education.
You can already hear the banshee wails of wealthy soccer moms across the country as I type this…it would never happen. God forbid your little angel get the same education as a brown or black child…
Wyoming basically does this. The state takes all the money and doles it back out at a certain $/student. Of course, it’s quite complicated, with some “recapture” districts being able to keep 109% of the per student amount, and rural districts getting a higher amount because there is no economy of scale, and they are required to provide the same “basket of goods” as larger districts.
I think it works because Wyoming citizens don’t have to pay their own way, practically everything is funded by mineral severance taxes (Thanks, Marathon, et. al.). So people don’t so much see it as “their” money going to pay for other people’s kids.
The gripe I have with the way that Wyoming distributes education funding is that they leave all cost decisions in the hands of the district (i.e. negotiations with the union on salaries) whether or not a district or districts is going to have three high schools within 30 miles of each other, each with less than a hundred students etc, and then force the state to pick up the tab when there is inequitable funding between districts based on what the various boards have caved into, whether it is new facilities, too many buildings for too few students or gold plated teacher benefit packages with no accountability to anyone as to what the local school boards decide to do with the funds they have. Not enough money? The Supreme Court has hijacked state funds to cover for your bad decisions. Real equitable funding would require the state to actually manage the education system, make the teachers state employees, and get rid of the individual boards.
God forbid your little angel get the same education as a brown or black child…
Just the land-based version of Cuckoo birds.
Allowing the natural inequalities to manifest is the only way to go. Black legislators in US-Midwest and Canada have been pushing a return to Black-only schools. You can segregate, equalize, shuffle, shuck & jive, but you can’t erase the fundamental differences.
I think its better to meet the scammers, thieves and thugs when you’re young so you can learn about motives, deals and crooks on a small scale, rather than to naively sign with a mortgage broker and be a FB who takes a whole family down. Viva la diversity in school (against home-schools and vouchers)! Public schools are the basis for this country - equal education for all. (And I’m the only grandchild on either side to graduate from a 4 yr college - from the public high school system)
Vouchers don’t work. Giving a poor/middle income person a $1500 voucher on a school that charges over $10k per year doesn’t make it more affordable.
Exactly, all you’re doing is driving up inflation.
Give the poor a $1500 voucher and the “good suburban” schools will charge $3000. Give the poor a $3000 voucher and the “good suburban” schools will charge $6000.
Anyway to keep out those inner-city poor in the name of “free market” libertarianism.
The inner city schools have a high percentage of poor and believe me teachers can only do so much. If no one is there at night to make them do their homework, help them do their homework or are even smart enough to help them with it, there’s little chance these kids are going to make it out of poverty. Teachers have classrooms of 25 or 30 and the day is only so long. The biggest problem in this country is the fact that families rich and poor alike take no responsibility for their children. They want everyone else to teach them everything besides the basic education courses. It’s not going to get better until people take some responsibility for their own children or for gods sake quit breeding.
or are even smart enough to help them with it,
Not really anything to cry over, since intelligence(along with most everything else..) is hereditary.
It’s not going to get better until people take some responsibility for their own children or for gods sake quit breeding.
Not everybody gets to grow up to be an astronaut. (despair.com)
Intelligence is hereditary in the same way height is hereditary. Give people a decent diet for a couple of generations and suddenly the kids are 2 feet taller than their parents.
I don’t understand why people are OK with paying for choice in Colleges, but get their undies in a bundle when vouchers are handed out for choice in elementary school. Get a grip people, a free resource is ALWAYS abused, even schools. The only way to get people to value schools are to make them pay directly. Vouchers give everyone the same amount to spend on the best they can find.
You should have know it was intended to Dumb Down inner city kids by force feeding them Rap and Hip hop music 24/7. Keep them in jail, do not spend $$$ on failing schools…just a trade off.
“I wanna give a shout out to my gang bangers on Rikers island ya’ll be out soon so we can even up the score…..”
No kidding i heard this 2 weeks ago on Hot97 at some rap and hip hop party live on the air!
I commend your commitment to mentor a poor kid…However, tell me who paid for this;
“received a full-tuition military scholarship”
In the end the student will pay for it by working for the government for years at far below his market value. Keep in mind that market value for educated professionals willing to be shot at is quite high…
“Keep in mind that market value for educated professionals willing to be shot at is quite high…”
How do you know that?
Have you seen the salary numbers for Blackwater guys?
Problem with vouchers is where are you going to use them? The private schools are filled. Private schools can also decide who they take subject to testing and for parochial schools, quotas. Just because someone hands you a voucher, doesn’t mean there’s a better place available to send the kid.
I would prefer the torn down substandard housing to be turned into parks or used for municipal buildings. Too much development as it is. I dont understand the viability of vouchers. So you let everyone that cares walk, and everyone that doesnt care get stuck with the local school? That would result in a downward spiral for all but the top schools. In most cities public schools suck even in great areas because those that can send their kids to private school. Vouchers would have the same effect. If you could force everyone to go send their kids to their local public schools, such schools would be improve dramatically.
“substandard”??? Applying to the eastern edges of Cuyahoga County? That means Cleveland Heights and Shaker Heights- both filled to overflowing with absolutely stunning architectural gems built in the 1920s. Tudor Revival, Colonial Revival, ……sunporches, fireplaces, hardwood floors, real plaster -not wallboard, gorgeous wood trim……..
Anyone who thinks those houses are ’substandard’ would be the sort who thinks a stucco box is just the thing.
I have repeatedly read comments here that houses ‘only last for 50 years’ or ‘houses older than 30 or 40 years’ are fixer-uppers or need to be torn down.
90% of the stuff built before WWII has workmanship and quality that you probably can not reproduce at any cost today. Thoses houses were also built to maximize heat and cooling without AC or gas central heating (many origianly had coal furnaces.)
I’ll put my one grandparents 1928 brick Tudor Revival, my other grandparents 1868 Folk Victorian, my great-grandparents 1881 Queen Anne and (the first family home not in Massachusetts) the 1817 5000 sq ft farmhouse up against ANY POS built post-1950. All those homes are still in the family and are still functional and do not have the kind of repair bills seen with post-1950 or even post-1990 houses.
90% of the stuff built before WWII has workmanship and quality that you probably can not reproduce at any cost today. Thoses houses were also built to maximize heat and cooling without AC or gas central heating (many origianly had coal furnaces.)
I agree completely.
It pains me to see houses like that demolished in favor of new crapboxes. Thankfully Chicago has done a good job in protecting its distinctive “Chicago bungalows” and two- and three-flat graystones (which are all considered desirable anyway), but lots of other pre-war, small-scale housing was torn down in the last decade.
And I’ll match you with the 100 year old house I’m currently renting in the nicest part of town, looks beautiful from the outside (2 story bungalow) with beautiful woodwork and all kinds of charm that is a total POS with a rock foundation that’s sinking and floors so crooked that I actually have to watch my step or I’ll slip. Not all old houses are that great, no codes then and owner built, with quality depending entirely on that owner. Oh yes, hardwood floors, a sunporch, etc. but still a POS. And not the first by a long stretch that I’ve been in of that era that’s not a POS. I like old houses, but like anything, caveat emptor, saying 90% were built with quality is BS. Where do you get that statistic?
Thank You Lost….Ann must be smoking something this morning…You can’t compare these homes with tract housing…Two different animals…These houses were the crème de la crème of their time….Beautiful from the street but are functionally obsolete without complete, 100%, modification including structural engineering…The idea that they are energy efficient is absurd…The materials were of the highest quality, workmanship was good given the standards at the time…The idea that they would stand up against a quality custom home built today is laughable…I have owned and rehabbed 6 of them….Its like saying a car that was built in the 1930’s is better than today… smoking crack this morning…
Don’t know how the last sentence got in….Guess I modified my Ann coment and it then dropped to the last line…
Yup, the charming POS I’m in is a total energy gaper, never been in anything like it, single pane windows, etc., always cold. The 1978 house I owned before this was totally energy efficient and snug compared to this one.
The idea that they are energy efficient is absurd…
Obviously these houses need modern insulation, furnaces and so forth, but once that sort of thing is up to snuff, older houses can be extremely energy efficient.
Better materials, better site planning (e.g., making real use of shade trees, airflow, orienting windows to maximize sunlight — gee, there’s a thought), smaller square footage: there are multiple things the typical contemporary house can’t or won’t offer.
A well-planned, well-built contemporary house is a different matter — but if you’ve rehabbed six older houses, you’ve prob’ly seen how bad modernity can be, too.
How do you properly insulate ?? Clear heart 100 year old siding that you “Cannot” remove…To brittle….Or remove all the lath and plaster inside…Cost a small fortune….First, the plaster contains asbestos so needs to be removed in a controlled and certified way…At least under California law…Second, putting new lath and plaster (IF you want purity in maintaining the authenticity) is a small nightmare…First in finding qualified tradesmen for a price that’s of this world and then in the damage that you do to the exterior siding when pounding on the interior walls setting the lath…Gosh…I could go on and on and we are just dealing with trying to insulate walls…
Depends on the house. My grandparent’s 1928 brick Tudor Revival has walls 12 inches thick. The only place it needed insulation added was the attic. It was desinged with an enormous number of south-facing windows and minimal north-facing windows.
No matter how you cut it, that was a LOT better design than walls of north-facing glass with 28 ft vaulted ceilings which are in vogue today.
The 1817 famrhouse was not built on the highest point (the view-thing that is now in vogue) but built down on the lower land where it is sheltered from the northern and western winds by the surrounding knolls. That is a LOT more sensible than sticking the house with walls of glass up on the hill, spending a fortune trying to get high R windows and wondering why the heat bills are so high.
Many of the older houses were designed with the idea of passive solar (although they just called it ‘letting the sun in) and minimizing the northern windows.
Real plaster has a higher R value than gypsum wall board.
We too have always bought and rehabbed the older houses. I would rather go to the trouble of adding some of the new reflective barriers. The houses are just more solid. The wood floors are thick - an inch or more as compared to the laminated wood floors being peddled now.
Not the ones that were built with care. The ones built en masse (think those innumerable bungalows tossed up in the 1910s or so) were done rapidly in urban areas.
I’m talking about the ones built mostly in the 19th century when less than 30% of the population owned a house.
The family home that was built in 1817 is a timber frame. Rock solid with a basement where the mason carved and fitted each large block of stone.
Where I live, there weren’t ANY houses in the 19th century. My rental house was built by one of the town founders here, though, and it isn’t in an urban area, but a small town.
Ann gets awful selective when she gives examples….Brick houses ??….They are the exception not the rule…Now their is a hell of a lot of them compared to wood frame right ?? And if she had read the post I was responding to she would have seen that we were discussing insulating the walls…I gave the arguments against….I don’t give a rats ass about the R value of plaster…We were talking about rehab and insulating and it appears you did not either comprehend or chose to overlook my points…And since you did, I can’t quite believe you ever rehabbed any turn of the century house….Maybe threw a little paint and carpet on it and now your a expert…
(“substandard”??? Applying to the eastern edges of Cuyahoga County?)
No, applying to wood-frame three-families in the poorest neighborhoods of Cleveland. The residents of those neighborhoods will be able to afford eastern Cuyahoga any day now, and would be better off there.
Substandard was not defined. I dont know why you would assume he was refering to architectural gems rather than the projects. To assume that all housing over 20 years is worth saving is questionable.
(1) I did NOT say anything over 20 years old is worth saving.
(2) I DID say that ost stuff built after 1950 was not anywhere near as well-built as before the WWII.
(3) I assumed he was referring to the east side of Cleveland/Cuyahoga County since he SAID he was talking about that area.
(4) Cleveland Heights and Shaker Heights are in that area.
Go look up the real estate listings for those areas. There are many many beautiful homes built between 1900-1940. I have been in those houses and they are stunning. Thick wood floors, carve bannisters and trim, multi-pane windows, sunrooms, real brick - not brick veneer, real stone…..
After reading the post, I wandered through some of the listings.
Tear this down and replace it with a stucco box?
http://www.realtor.com/search/listingdetail.aspx?cmid=1004305&ml=3&mnp=22&mxp=22&typ=5&ofbm=2000000&sid=a9ec5960616b4023877c15f76a84206e&pg=2&lid=1092939396&lsn=19&srcnt=28#Detail
or this
http://www.realtor.com/search/listingdetail.aspx?zp=44120&ml=3&mnp=24&typ=1&sid=dbe96664f36f4ec2b60c7ee75488e04f&lid=1093521545&lsn=8&srcnt=34#Detail
or this
http://www.realtor.com/search/listingdetail.aspx?zp=44120&ml=3&mnp=24&typ=1&sid=dbe96664f36f4ec2b60c7ee75488e04f&pg=2&lid=1091698690&lsn=11&srcnt=34#Detail
http://www.realtor.com/search/listingdetail.aspx?zp=44120&ml=3&mnp=24&typ=1&sid=dbe96664f36f4ec2b60c7ee75488e04f&pg=2&lid=1090967287&lsn=14&srcnt=34#Detail
http://www.realtor.com/search/listingdetail.aspx?zp=44120&ml=3&mnp=24&typ=1&sid=dbe96664f36f4ec2b60c7ee75488e04f&pg=2&lid=1090967287&lsn=14&srcnt=34#Detail
Those are all Cuyahoga County.
BTW, to add insulation to older houses without ripping off the plaster, you use blown-in insulation. And to repair the plaster, I learned how to do real plaster work (a very old man taught me many many years ago when we first had to deal with the plaster problem.)
I have owned tudors and craftsman bungalows and love the architecture and workmanship, i saw nothing in the post that evidenced a desire to tear such functioning houses down. I guess you saw something I didnt in post. Maybe it was deleted somehow.
Blown in insulation is like pissing in the wind….You ever heard of “Freeze blocks” Ann ? I don’t think so….Or any other infrastructure in the wall that would obstruct the ability to fill the cavity ?? I new you were going to come up with the blown Insulation technique….Blown insulation is a big scam for people like you….Just confirms what I said earlier that you don’t have a clue about rehabbing 80 or 100 year old homes or the extreme difficulties and deficiencies of the same…
Yes my grandmothers 1921 house had Full size windows on the ends of the attic, and so did most of her neighbors, nice draft in the summertime kept the attic pretty cool.
“During the first nine months of last year, nearly 1,000 parcels in Cleveland traded hands for less than $10,000 each.”
“‘The market is tanking,’ says Dave Sarver, a real estate agent who specializes in lender-owned property. ‘We’re giving houses away.’”
- Don’t worry, Larry Yun has assured everyone that all real estate is ‘local’. No fear here.
Don’t worry, Larry Yun has assured everyone that all real estate is ‘local’. No fear here.
And the price of real estate will always go up according to the NAR.
Cognitive disconnect
January 24, 2008 10:12 A.M.EST
BULLETIN
MEDIAN PRICE OF U.S. SINGLE-FAMILY HOMES FALLS IN ‘07 — FIRST TIME IN 40 YEARS
Bulls maintain their footing
MarketWatch.com
Could any calculus experts in the virtual room please explain the concept of discontinuous first derivative?
http://www.marketwatch.com/tools/marketsummary/
I believe it means the rate of change is not smooth, like a step function.
Case in point: Look at the headline indexes around 10am today…
It means that for one or more points in the domain the first derivative (function’s rate of change) can’t be defined. Shows up in step functions and functions that contain a trigonometric function like sine. An example is a first derivative that has “x” somewhere as a denominator and 0 is in the domain. Since division by 0 is undefined the first derivative does not exist at that point.
I thought the governmental finance guru’s said this mess was all contained last August (tongue poking thru cheek).
http://www.ft.com/cms/s/0/24f73610-c91e-11dc-9807-000077b07658.html
‘We’re on life support,’ Simon said. ‘Oakland County is in rigor mortis and Livingston County already is decomposed.’”
- If you are from SoCal, you substitute any city to apply to your area such as;
- ‘We’re on life support’
1. San Diego
2. Riverside
3. San Bernadino
4. (list your favorite city)
‘already is decomposed’
1. Sacramento
2. Bakersfield
3. (list your favorite city)
Every half-empty glass has a silver lining.
Existing-Home Sales Down in December But 2007 Was Fifth Highest on Record
By National Association of Realtors
http://www.sunherald.com/447/story/322235.html
2005 6.2 mil SFDs 0.9 mil condo/coop apts
2006 5.7 0.8
2007 4.9 0.7
2008 “estimate” based on Dec 2007 results
4.3 mil SFDs 0.6 mil condo/coop apts
All of the above is according to the NAR.
They have a lot further to fall.
Merrill Lynch said we will see a 30% correction in RE prices over the next 3 years.
The unintended consequences will know no limits.
—————————————————
As the city poured millions into tearing down houses and mowing lawns, homicides soared to a 13-year high.
“We’re spending money on demolition that could be spent on police,” says Chris Warren, who oversees housing issues for Mayor Frank Jackson.
Always the answer - spend more on police, prisons, fire departments and schools. Ever notice the more that is spent on each of these areas the worse their performance?
Going forward, property taxes will increasingly reflect that.
To some degree yes, Remember John Rocker’s comment about the 7 train in queens?
20 years ago it WAS the most dangerous subway, graffiti, kids with the boom boxes, they even had to have police on the trains for all the Mets games, but not today. So sometimes it really does work.
8 cops showed up to escort a naked chick from our hood- I asked if was a guy how many would show ??
they said you never know what they have hidden !
I’m going to give props to the folks of Cincinnati and Cleveland, mentioned in this article. It seems even those most caught up in the frenzy knew it was only temporary, and now they are adjusting. There is so much less of the, “we’re-so-freakin’-special-and-it’s-different-here -attitude.”
Midwesterners seem grounded enough to call a boom a boom and not some sort of new reality.
WTF!!!!!!!!!!!!!!!!! THE City of Cleveland is trying to make it sound bad because they filed frivolous suits against all of the Investment Banks on a theory of nuisance to supplement tax revenues. The City of the Cleveland and their attorneys are total scum. Talk about exploiting the housing bubble to their own advantage. Their actions are reprehensible and I hope they get nailed in the courts. I’m not saying investment banks are innocent of any wrong doing, I’m just saying the City of Cleveland’s exploitation thereof for their own benefit is sickening.
So where did you get your law degree fromm that gives you the ability to assess the merits of a claim based upon the statutes and common law in Ohio?
Ann, I have 3 degrees (one graduate), and I can honestly say one doesn’t need a degree to apply intelligence and comman sense to comprehending a problem. It really does NOT take a degree to read and understand legalese, just persistance (and a HIGH level of boredom-tolerance). Please drop the high-horse crap, it’s getting old.
Ann earlier in the thread you state that nuisance lawsuits are “stupid nonsense” against the property owner. Then when Tim suggested a nuisance lawsuit against investment banks was frivolous you jumped all over him. I too sense you have become an angry presence on the site.
Univerity of Virginia. Its currently ranked in the top 10 of US law schools. I represent investment banks. Thanks for asking. Your comments have grown much ruder over lately.
I forgot to mention I graduated with a 4.0 in Economics with a speciality in real estate and urban development. Before you attack ppl you dont know, please try to know the facts, or at least be open minded.
The nuisance is the hundreds of thousands of tax dollars these cities have to spend to clean up these deteriorating houses. The banks own them, let them take responsibility for them. Maybe next time they’ll actually verify if some has a job and if make the buyers have some stake in the property. Don’t feel sorry for these banks. Buyers couldn’t have bought them if banks hadn’t loaned on them. So buyers lie on their apps, let the mortgage brokers get off their a**es and verify the information while they’re collecting their exhorbitant commission fees.
It is not the banks that hold the mortgages that they are suing. That would hold more water. They are suing all investment banks for their problems based on the burst of the housing bubble. Very weak theories.
Wow.
“‘The market is tanking,’ says Dave Sarver, a real estate agent who specializes in lender-owned property. ‘We’re giving houses away.’”
You’re not giving houses away. You are selling them for closer to what they’re worth.
Yeah, and here thought everyone had agreed that we were NOT going to give them away.
ahhh… what abysmal news this morning. So now the market is apparently ‘recovering’? That and the NAR reported that there was a drop in inventory.It looked like things were actually going to do a nice crash and things would be nicely underway for a severe correction.
But admittedly there’s an awful lot of ‘rosy’ news on Wall Street today. Anyone with more financial knowledge than me care to take a stab at this?
These “crises” are occurring more frequently and becoming more severe each time. Things were “rosy” March-July 2007, Sept.-Oct. 2007, Dec. 2007, and now Jan. 23, 2008…?
Most financial news is cherry picked to explain what has happened, not what will happen. Therefore, most financial explanations of why something happened are meaningless. Case in point - Oil is (up/down) which (scared/encouraged) the stock market to new (highs/lows). Run the numbers and you will find oil prices and the Dow Jones have no correlation whatsoever. It is pure myth.
If you have a minute, watch this. Jim Cramer contradicting himsel fand Rick Santelli slamming him live on National TV.
http://www.youtube.com/watch?v=SGkrNJ19DSU
I continue to see few builders who are in the fire sale mode, matter of fact walk into a housing model and you would think everything is very normal they show no panic or williness to deal other then a few options thrown in.
Tanks for the memories…
I’m no Democrat, but it is worth mentioning that by insisting that unemployment insurance extensions not be provided, the Republicans screwed the Midwest.
The UE system works like this — the states pay for six months, and the federal government collects separate UE taxes and doesn’t pay. Unless it is agreed that a recession is on and people need more than six months to get a job. Then Congress votes to extend unemployment benefits.
Well, there has been a regional recession in the Midwest for sometime. One might say the recession after 2000 never really ended. With UE not extended, the message is to leave and move south, where there are jobs, except that job growth is slowing there too.
The message seems to be that when unemployment rises in Texas and Wyoming, unemployment insurance will be extended. But until then, nothing will be done about the deserate conditions in the Midwest. I remember being on the other end of that in the late-1980s and early 1990s, a regional recession with no net job losses outside the Northeast and California. The Midwest and Southwest, coming out of regional recessions in the early and mid-1980s, were doing well. Nothing was done for NY at the time.
“Steve Starbuck”? Stranger than fiction baby!
On the wire today: “The median home price dropped for the entire year, the first time that has occurred in four decades.” Good luck to Starbuck’s - Steve and the falling $4 bucks a cup stores.
“The devastation extends far beyond Slavic Village, where 1,500 houses are abandoned. Nearly every one of the 59 communities in Cuyahoga County, along with many cities in neighboring counties, have taken a hit. More than 120 houses in Cleveland are being offered to the city for a buck apiece because the U.S. Department of Housing and Urban Development can’t find other buyers.”
I can buy 2 bags of frito-lay sunflower seeds, or a house in Cleveland?
decisions, decisions?
The thing that everyone is missing is that all this is happening with interest rates at historical lows. We can’t keep interest rates at nothing forever for a number of reasons, including that nobody is ever going to have any savings, inflation is going to get out of control, the US dollar is falling and the US is running a deficit.
We are in a credit crisis. Its only a matter of time before interest rates reflect that.
If you want to see a housing bust, wait until interest rates hit 8 or 10%.
Does anybody have a link to the full Deutche Bank report that was referenced in the Chicago Business Article about how un affordable houses are based on rental rates?
If you buy a house for $1, can you write off 10s of thousands if you have Habitat for Humanity tear it down for the materials?
Houses may be a Buck, but it ain’t no Dollar Value Menu…
“With all the talk about how to stimulate it, you’d think that the economy is a giant clitoris.”
http://www.thenation.com/doc/20080204/ehrenreich