Indications Of A Booming American Economy Gone Bad
The St Louis Post Dispatch reports from Missouri. “The downtown St. Louis turnaround that seemed just around the corner last fall may take longer than many had hoped. Indeed, the once-booming downtown residential market has cooled considerably. Over the past two years, 2,500 new rental and for-sale units were added to the 4,746 already in downtown, according to the Downtown St. Louis Partnership. Only 298 new units are expected to be added this year, said Jim Cloar, executive director of the partnership.”
“‘I have never built condominiums before so I have nothing to compare sales to, but the pace is slower than I would have expected,’ said Craig Heller, managing partner of St. Louis-based LoftWorks LLC, which is developing the Syndicate building.”
“‘If we can get the building built, we will get the condos sold,’ said Steve Smith, a partner in the St. Louis-based Lawrence Group. ‘Because housing prices are slowing, the psychology of the buyer is to wait and see if it becomes cheaper.’”
“One victim appears to be a boarded-up building on 14th Street, which was to be converted, starting a year ago, into Ford Condominiums. Condo and loft prices are falling along with the pace of development, said Lewis.”‘
“The last thing developers want is inventory sitting on their hands, so they will take a hit, sell at a lower price or give concessions,’ said Bob Lewis of St. Louis-based Development Strategies Inc. ‘We are starting to see that.’”
“Downtown has long faced distinct challenges: obsolete buildings, the difficulty of assembling land for large projects, and competition from cheaper, easier-to-develop suburban sites. ‘If St. Louis had constraining factors that prevented sprawl, that would give downtown an advantage,’ Lewis said.”
The Journal Register from Illinois. “The number of single-family homes started in Springfield last year was at the lowest level since 1984, and even fast-growing bedroom communities such as Chatham, Rochester and Sherman saw a slowdown in construction.”
“The Reserve, a 60-acre development on the southwest side of Springfield where most homes start at $500,000, sold out in three years. But father-son developers John and Steve Klemm decided to lower the price range when they started the adjoining Savannah Pointe development last fall.”
“‘We didn’t think there was as much demand now in that market (The Reserve). It’s somewhere between The Reserve and Panther Creek. We kind of toned it down a bit,’ said Steve Klemm.”
“He said he expects homes in Savannah Pointe, which is just south of Panther Creek on Illinois 4, to start for about $300,000.”
The Chicago Tribune from Illinois. “Once a relatively obscure slice of the real estate business, foreclosed homes that are now in the possession of lenders loom much larger as the economy flattens and housing sales stagnate.”
“Across the country, federally chartered banks held more than $12 billion worth of foreclosed properties at the end of 2007, about 100 percent more than a year earlier. Of those, $6.6 billion are residential properties of one to four units, said Keith Leggett, senior economist at the American Bankers Association.”
“One housing data firm said it found the same extraordinary doubling in the Chicago area in what’s known as REOs—real estate owned by lenders and investors.”
“Janice Lee fears she will lose her 1,400-square-foot Wilmette home next month. Lee found herself heading for trouble after she was diagnosed with lymphoma in 2003. To keep pace with her medical bills, Lee sought a $70,000 equity line on her home in 2004. Two years later, she sought a second line.”
“Nearly half of her $130,000 loan, or $60,000, went toward her mortgage and property taxes. But that pushed her monthly payments to $4,000 from $2,500 in two years. In January 2007, she refinanced, pushing her monthly payments to more than $6,000, she said.”
“She missed her first payment last March and received a foreclosure notice in June. Lee said she has tried to get the terms of her loans modified and still hopes to work something out. She’s due back in bankruptcy court next month.”
“‘It’s like quicksand. … I went from a very normal, upper-middle-class existence to ‘Oh, my God, I can’t pay anything.’ It’s just crazy,’ she said.”
“David McCarthy, CEO of a Denver-based company that manages and disposes of REOs, said it will take three to five years to work through the properties on lenders’ books. The REO manager has 7,500 foreclosed homes in its inventory—double the amount from this time last year.”
“‘Some lenders want to explore leasing properties in hopes the market will turn around, and others are just churn-and-burn, get it off the books,’ particularly in struggling housing markets such as Detroit and Cleveland, McCarthy said. ‘They think, ‘The first loss is the best loss.’”
The Detroit Free Press from Michigan. “A three-bedroom, dusty pink colonial sits cold and empty among the family homes on a sophisticated Huntington Woods street. Last spring, the owner tried to sell the house for $399,900. But it would have been tough to overlook the blue cabinets in that unloved kitchen, the outdoor pool that spans the tiny backyard or the fact that metro Detroit’s housing market had hit the skids.”
“The house went into foreclosure, and this January the bank-owned property got slapped with a price tag of $239,900.”
“Next Sunday, if no buyers are found, the once stately house built in 1927 is expected to be part of The4closurebus Tour — a creation of Jeffrey Reiter and Pat Teeley, real estate agents in Huntington Woods.”
“‘A year ago, I couldn’t have done a foreclosure home tour,’ said Reiter. Earlier, he said many of the foreclosed homes were grotesque, had bad cases of mold and weren’t priced to sell.”
“Now, thanks to record foreclosures and the credit crunch, he and his partner see more banks becoming aggressive about pricing. And they’re spotting opportunities.”
“In Oakland County, one of the wealthiest counties in the country, there are 13,980 homes for sale. And 2,016 of those homes are either owned by banks or would need bank approval to sell.”
“Teeley, who has been selling real estate in southeast Michigan since 1995, blames part of the foreclosure mess on Michigan’s loss of jobs, greed and the fact that some people shouldn’t have been able to buy some of the homes that they did.”
“That said, she’s stressing the growing mainstream acceptance of shopping in the foreclosure market. ‘People can’t believe in this market there can be 10 offers on a house, but it’s happening. But only on foreclosures,’ she said.”
“We visit another home in Royal Oak. The home had a $280,000 mortgage on it in 2006. It’s now got a foreclosure price tag of $154,900.”
“Investors from as far away as Hong Kong and Hawaii are coming to Detroit to make their fortune buying foreclosed homes in bulk.”
“‘This is a millionaire’s market,’ said Jeremy Burgess, a 28-year-old investor from Washington state who has been living in Detroit for the past year. ‘I feel like I’m driving through the city and stopping to shovel diamonds in the back of my truck.’”
“His wife, Jeanna Kiehle, and partner Jared Pomranky formed Urban Detroit Wholesalers to scour the city for houses they can fix and rent. The idea is to generate cash flow until the market improves, and they then can sell the houses. They own 38 houses now and close on 15 more before the end of the month.”
“Burgess said homes in Detroit’s better neighborhoods are renting for $850 a month. His company manages the properties for the out-of-state investors. The investors are banking on a Detroit recovery in the next 5-10 years.”
“Banks see Detroit as a sore spot, said said broker Mark Nagy, because they cannot move the properties and there are so many.”
“‘Bulk buying will become more commonplace by the end of the summer,’ Nagy said. ‘Right now, so many properties in Detroit are like a hot potato. Whoever ends up with it will be crushed.’”
“In many cases, a bank today wants 55-65 cents on the dollar for a suburban property, yet investors want to pay 40-45 cents on the dollar, he said. In Detroit, the bank may want 30-35 cents on the dollar, and investors want it at 20-25 cents on the dollar.”
“‘Those two points have not met in the middle yet,’ Nagy said. ‘It’s an evolution process. It’s going to evolve that bulk sales will increase.’”
“‘Right now, people are buying for the thrill because prices keep going down,’ said John Graham, a real estate agent in St. Clair Shores who works primarily with investors. ‘The rental market is going to be crazy good. That’s what these out-of-state people are seeing.’”
The Journal Sentinel from Wisconsin. “Developer Scott Fergus, whose First Place on the River condominium development was taken over by a court-appointed receiver in January, filed a Chapter 7 bankruptcy petition Tuesday.”
“Fergus listed assets of $721,567 and liabilities of $80.9 million in documents filed in U.S. Bankruptcy Court in Milwaukee. Most of Fergus’ assets are tied to his Oconomowoc home. Cost overruns and a lawsuit involving its former general contractor have plagued First Place, among the largest housing developments downtown.”
“Fergus, a former state legislator, has completed other housing developments in the Milwaukee area, including a 10-story condo building at 601 E. Ogden Ave.”
“Fergus had planned to develop the $120 million Pointe Blue, with 434 condos, 90 apartments and commercial space overlooking Lake Michigan, just north of downtown Racine. He dropped those plans in January after he was unable to secure financing.”
The South Washington County Bulletin from Minnesota. “There are…indications of a booming American economy gone bad in a city where almost nothing stood in the way of growth for decades: For sale signs that won’t go away, single-family homes converted into rental properties at an increasing rate and a disconcerting spike in mortgage foreclosures that dot the sprawling suburban landscape.”
“The wave of foreclosures in Washington County — 148 alone in Cottage Grove during 2007; more than 850 county-wide — has left government agencies scrambling in a search for how best to help, city officials trying to stay on top of vacant properties and some homeowners, buffeted by a lagging economy and lower home values, hunting for help.”
“‘Up until the end of last year, people would’ve assumed it was an inner-urban problem,’ said Ed Nelson of the Minnesota Home Ownership Center in St. Paul. Now, ‘most people understand it’s across the board, it’s not hitting one specific neighborhood, not hitting one type of income group.’”
“Lack of knowledge about the home buying process turned into one of the multitude of contributing factors in the surge of foreclosures. Nelson said many buyers took out adjustable rate or no-down-payment mortgages without comprehension of what fluctuating interest rates could mean to their monthly payments.”
“‘In the suburban areas specifically we are seeing that clients were maybe overextending themselves, getting into a little more home than they could handle,’ he said.”
“It has all led to a problem so vast, so void of easy solutions, it has many experts scratching their heads in a search for solutions. ‘I’ve been working in this field since 1992 in urban areas,’ said Rich Malloy, deputy executive director of the Washington County Housing and Redevelopment Authority, ‘and (I’ve) never seen anything like it.’”
The Star Tribune from Minnesota. “Not long ago, Minnesota home builders led the way out of recessions with placards that read, ‘Now Hiring.’”
“During the last two recessions — one seven years ago, the other 17 — home-building jobs bounced back earlier and more energetically across Minnesota than they did across the nation.”
“From March through November 2001, Minnesota home builders turned in an astonishing performance. They hired more workers each and every month of a national economic downswing.”
“This time around, Minnesota home builders have few incentives to be heroes in the job market in the face of a brake on sales that started almost two years ago, said Pam Perri Weaver, executive VP for the Builders Association of Minnesota. ‘Never have they been in an environment where interest rates are 5.5 percent and residential home building is not rising,’ Weaver said.”
“Said state economist Tom Stinson: ‘Even though interest rates are low by historical standards, you still have to convince people to borrow money to buy an asset that may be going to continue to decrease in value for a year or more.’”
“‘This is a sector that, all of a sudden, has enormous leverage on the rest of the economy,’ Stinson said. ‘It’s affecting the free flow of credit,. Not just credit for housing but credit for all kinds of activities.’”
“Another reason Minnesota’s home-building industry held up well in the last two recessions — and may be more vulnerable now — was that the state’s population was growing at its fastest pace in decades, said Steve Hine, director of labor market information at the Minnesota Department of Employment and Economic Development.”
“‘We were a magnet state,’ with job and population growth that outpaced the nation in many industries, he said. ‘As our unemployment rate has approached the national unemployment rate, that magnetism has been reduced.’”
‘During the last two recessions — one seven years ago, the other 17 — home-building jobs bounced back earlier and more energetically across Minnesota than they did across the nation. From March through November 2001, Minnesota home builders turned in an astonishing performance.’
Astonishing, and no mid west bubble? BTW, it isn’t widely known but Minnesota had some big subprime players even before Orange Co in California.
I have to wonder if the reckless lending and paper gains people thought they had led to situations like the lady in Chicago. Why on earth would one use a house to finance a medical bill? And you see the same with credit cards, refis to pay off balances. Just default on the card!
Why on earth would one use a house to finance a medical bill? And you see the same with credit cards, refis to pay off balances. Just default on the card!
It’s semi-crazy, no?
I want to induce “shaken adult” syndrome every time I hear about someone paying off large medical bills with credit cards or HELOCs. For the most part, hospitals and doctors are forced by philosophy to charge little or no interest and to pretty much accept whatever you can pay, even if it’s $10 a month.
Why in the world would you transfer that debt to your house or loan sharks (oops, credit cards) who will charge 21% on a good day? The only people who benefit from that odd sense of responsibility are the hospitals/medical system.
For healthcare policy geeks (warning 18 page pdf) :
http://grassley.senate.gov/public/releases/2007/07182007.pdf
Well the hospital could just foreclose your house and auction it off to pay what you owe. Taking a 2% interest loan from the hospital only works if you have no money and no assets.
You hang onto the house, the other assets get stripped down, and then you file BK.
One more argument for national health care - because many of us are a JOB LOSS away from having it happen to them.
The hospital billers here start calling and putting the pressure on right away - how are you going to pay for this? do you own a home? I mean they pretty much tell you what to do. Not that you have to do it, but I can understand why a well-meaning patient would go along. I think they’re lucky to have a way to pay the med bill, and lymphoma is as good a reason as any to be underwater. But she needs to wait, save money and walk away now.
“‘It’s like quicksand. … I went from a very normal, upper-middle-class existence to ‘Oh, my God, I can’t pay anything.’ It’s just crazy,’ she said.”
On the health care issue, as my boss put it, we have a national healthcare program. The problem is it is Medicaid, and it sucks.
You can qualify as “medically needy” under Medicaid once own your money is gone. But a home you own, and one car per adult to get to work, don’t count. Neither do retirement accounts. And you get to keep some small amount of money in checking. Sure, you have to have relatively little left to live on, but that appears to be true in any case.
In NYC someone like that would be put on Medicaid. Heck, here the hospitals recruit people from other states to put on Medicaid, with NYC footing 25% of the bill and NY State 25% as well, to increase their revenues.
I have a client who is a bankruptcy attorney. According to her, high medical bills are one of the most common causes of bankruptcy. This has also been confirmed in several studies.
I’ve mentioned a few times that quite a number of my clients have gone through bankruptcy (while reaffirming their intention to pay off my secured notes). Most if not all cases involved large medical bills.
The big three causes of personal bankruptcy traditionally have been (1) job loss (2) divorce and (3) uninsured medical expenses. Lately I’ve seen more people who wanted to file but who didn’t have any of these factors present. What I am noticing is some unbelievable CC debt. 30-40K is basically the norm now, and I had one person who had racked up 93K. It seems that a lot of daily living expenses are going on the cards, along with the usual useless sh*t that people like to buy.
Just saw the DOJ stats that show a 27% increase in personal filings, and if, as many here have stated, we’re only in the 1st or 2nd inning, this is gonna get a lot worse before it gets better.
I know that divorce and BK seem to go together, but why? Is it just a given that a couple have racked up loads of debt they want to discharge when they break up? Doesn’t anyone break up WITHOUT a load of debt?
Untill that Med bill goes to a judement! Then some sleaze bag lawyer starts tacking on his fees and damages!!!!!!!
re: Chicago “A very normal upper-middle class existence” - with how many re-fi’s and a $6000 mortgage???? I consider my family to be UMC, but we’ll stay that way by living as iff we aren’t…
There is a big house bubble in the midwest. No way should Wyoming or Montana cost as much as Florida!
For that matter, there’s no reason for houses in Florida to cost as much as houses in California or Massachusetts.
I can understand Cali, but Mass costing more than FL? Maybe if theres a pleathoa of high paying jobs and those people like four season weather with cool winters.
HUH? You can’t understand why Mass is more expensive than FL?
Have you heard of MIT? Harvard? Boston Scientific? Raytheon? Fidelity? Fleet Bank? State Street Bank? Gillette? EMC? Boston Consulting? Any of these names ring a bell?
All based in Mass and all employ lots of people paying high salaries. I know it doesn’t pale in comparison to Disney jobs, but you know…
I understand now. Does this apply only to Boston or the whole state as an average costing more than all of FL as an average?
Once you get outside of the Boston metro area, there isn’t much else. Mass is a small state and the Boston metro area takes up about 40% of the state geographically and I’d guess around 70% of the state’s population.
It depends on which part of Florida you are comparing to which part of the northern Rockies when it comes to what is “worth” more, but yes, they are behind you in the bubble cycle and are just now peaking in advertised prices. Inventory is already going up, though.
Why on earth would one use a house to finance a medical bill?
The following are some common reasons:
1. Incomes not keeping pace with inflation and are now in negative areas.
2. People are not saving money and are too busy keeping up with the jones.
3. Paper equity on homes turned into loans making it easier for the sheeple to use their house as a savings account.
4. Lack of or poor healthcare insurance.
5. Desperation of those in need of money.
I am always amused when this recession is compared to past recessions. I just read a North Carolina economist say that NC probably won’t have a recession, but if it does, the recession will be short and shallow BECAUSE the last two recessions were short and shallow. I don’t remember, though, the last two recessions being caused by reckless lending, HELOCs, credit-card debt, etc.
If what we’ve seen in 1Q 08 is as bad as it will ever get, as many would like us to believe, then I’m going out this week and buying (signing the loan docs for) a $700k house and a $80k car.
“Astonishing, and no mid west bubble? BTW, it isn’t widely known but Minnesota had some big subprime players even before Orange Co in California.”
Ben, I think I have pointed on this subject several times. Minnesota had a huge bubble dating to 1997 or 1998 and had a lot of subprime. We used to play Cottage Grove in sports. Seeing their pain makes me feel good.
No midwest bubble — BAH! Huge midwest bubble — Chicago is a nutty bubble and it’s on its way to bust!
The experts like to say this about Chicago, “Average/Median price is only $240,000.” Unfortunately that is total BS. Remember the entire West Side and nearly the entire South Side of Chicago is undeniable, stray-bullet, ghetto. The reason the median/average appears affordable is because there are hundreds of thousands, maybe millions, of ramshackle huts that can be bought for ~ $100K.
If you made 45% of San Diego ghetto it would look affordable too. If you want to live in one of the safe, developed North Side neighborhoods you’re looking at $500 - $650K starter (two bed one bath, oh, lest I forget SubZero stainless). Big bubble, nicely concealed by the ever entrenched ghetto.
“INVESTORS from as far away as Hong Kong and Hawaii are coming to Detroit to make their fortune buying foreclosed homes in bulk.”
“You keep using that word. I do not think it means what you think it means” Inigo Montoya, Princess Bride
A buddy wanted to do that
New Zebraville
word
“…The investors are banking on a Detroit recovery in the next 5-10 years.”
LOL!
I would lump a future Detroit recovery in with Santa Claus, the Easter Bunny, and the Tooth Fairy.
Because I subscribe to the peak oil theory, I do agree that someday houses in metro Detroit, St. Louis, Buffalo, Pittsburgh, and other rust belt cities near navigable waterways could have value. They certainly will have more value than suburban tract houses miles from anywhere. I think the five-to-ten year horizon is way too short, however, and owning fifty-three Detroit houses, during a recession, in a state where one out of every eight persons already is on food stamps, with the hope of covering carrying costs with rents, is embarrassingly naive. Just wait until Devil’s Night.
Because I subscribe to the peak oil theory, I do agree that someday houses in metro Detroit, St. Louis, Buffalo, Pittsburgh, and other rust belt cities near navigable waterways could have value.
Don’t forget that the Great Lakes hold about 20% of the world’s freshwater. And 84% of North America’s surface fresh water.
Call me crazy, but I think that’ll be an important asset in the long term.
Short term, yeah, the Rust Belt is the Rust Belt — but not without its charms.
Because I subscribe to the peak oil theory, I do agree that someday houses in metro Detroit, St. Louis, Buffalo, Pittsburgh, and other rust belt cities near navigable waterways could have value.
Could have value? The value is that they are affordable. It is my view that as this country continues its economic decline, more and more young people and those priced out of the larger cities will seek such places due to their affordability. And, what they will find when they get to such places is plenty of well constructed, turn of the century homes, that have character, close knit communities and neighborhoods, exceptional schools, that they are doing the exact same things they were doing in the big cities, that the food and beer tastes the same, if not better, as it does in the larger cities, but for a fraction of the price, and finally, that they are living a much better life.
I think you’re right. May take 20 years, but I think you are correct. People can MAKE good cities if they are willing to get involved.
JOBS. Homes are worthless in these areas because even if you moved there and fixed up your nice turn of the century building you’d have no source of income. You can also get a charming farmhouse in the middle of nowhere in Kansas for next to nuthin’. These areas are cheap because there is no longer an economy there. Some companies or SOMETHING has to move there to make it viable.
“One victim appears to be a boarded-up building on 14th Street, which was to be converted, starting a year ago, into Ford Condominiums. Condo and loft prices are falling along with the pace of development, said Lewis.”‘
So now even a building is a ‘victim’ This mind set is beyond compare!
Weep for the brick and mortar as it sits empty, remembering its past glory. If you want to help these poor buildings, please send a check or money order to….
I laughed loud on that one! What’s next? The trees are victims for being cut down to make way for new developments?
‘The trees are victims for being cut down to make way for new developments?’
FOOK, YES!
To be honest, I actually feel sorry for those trees. I want to plant a whole bunch of trees in an orchard. They are pretty and good for the environment too
What is “fook?” Did you mean to type “fool?” I agree, those developers are fools for killing those pretty, innocent victim trees.
Trees are victims: they are alive and have more right to exist than useless condos and shopping malls. Trees contribute to the Earth, while useless development only hurts the planet.
What is “fook?”
LMAO!!
A few comments
1) I’ve always liked the St. louis Metro, but the downtown area is a pit. Way too close to slums, crime is ridiculously high in that area. Anyone thinking to make a profit in selling high-status condos in that area is nuts.
2) Here in the near west chicago burbs, spring is here according to the calendar but not according to the damn temperature. Anyway, the inventory is up, and the houses in my area are being listed for, on average, about 10% less for what a similar property may have been listed for 2 years ago. On top of that, very slow moving. House behind us was on market all last year, no sale, and now back on market for another 5% less. Two other house for sale on same block, and I’m in an old established neighborhood where that’s a bit unheard of. I’m sure the damn increase in Cook County taxes hasn’t helped matters at all.
I’d like to say that instead of the “Spring Selling season”, I’m afraid it’s the “Spring Stagnating Season”
Just relocate to another city or state, house prices are much more reasonable elsewhere, such as Pennsylvania, Texas, Ohio, WV, etc
Uh, no, I enjoy my job, family is here, most of my friends are here, and I’m happy with my home and neighborhood.
Roots are where it’s at, baby.
I don’t have roots anywhere so I get to enjoy the flexibility of being able to relocate anywhere. Any chance you can find a good job elsewhere and get your family to relocate as well?
Bye, Florida:
When are you going to stop yammering on about relocating and just do it already?
You are a weird one, Mr. ByeFl. There’s more to life than a 50k house. And although I’ve never been, I would think that there’s much more to life than a 50K house in Oil City. Make friends, keep them, enjoy your family. Way more important.
There’s no reason for myself or anyone to move if you’re overall happy with your situation.
ditto (urging Bye to move on)
LOL@When are you going to stop yammering on about relocating and just do it already?
I enjoy hearing Bye and Jetson continually praising the joys of Oil City and suburban Nashville–from afar. Everyone needs a dream . . .
Bye FL: I have to chip in here and agree. You’re young, energetic and free. Why not pack up and go? Apartments are cheap in the semi-boonies like Scranton or so. You could probably support yourself there better than in FL, even if you just work at Borders or Costco until you decide what you want to do.
And if you want to do the hobby farm thing (you sound like it), get online and start looking for local farms or orchards in the area. Intern for a summer to see if you like it.
There’s so much you can do!
Well…in my case, I’m originally from TN, so for one, my family lives there, and secondly, Nashville’s actually a really nice city. I’ve lived in 3-4 first tier cities including SF. But in my opinion, Nashville is actually a bit nicer.Certainly nicer than Boston, which was an overpriced Sh*thole with miserable weather, and SF, which is jammed-packed and severely overpriced.
I gather from your tone that you must think Nashville’s some Southern hell, or at the very least on the same level as Ohio, which is fine by me. That someone might actually mention Ohio and TN in the same sentence regarding economic similarity is interesting. Yes- you’re totally right- it is HORRIBLE in Nashville, or anywhere South of the Mason Dixon line. Remember- I warned you!
Uhh . . . okay.
Let me simplify it for you. I did my research,I grew up near there and I know what Nashville is like, so no- I’m not yammering about it from afar for seemingly pointless reasons.
BYE is all hat and no cattle.
Let me simplify it for you. I did my research,I grew up near there and I know what Nashville is like, so no- I’m not yammering about it from afar for seemingly pointless reasons.
No, but like Bye, you still haven’t moved.
Because the economies in WV, PA and Ohio are red-hot? And don’t forget to sign up for food stamps when you get there.
Heard a story just last night from just up the road from you in Elmwood Park. Sales are still dead in the water - no livelier on April 1 than Jan 1 - but the REOs are popping. It was from an agent I used back in 2001 - he said nothing is moving in his areas along Harlem Ave.
I know it is still cool out - but April 1 is spring - this is gonna get ugly.
“Fergus listed assets of $721,567 and liabilities of $80.9 million in documents filed in U.S. Bankruptcy Court in Milwaukee. ”
Either there’s a typo, or this guy’s net worth is negative $80.18 million and there are some EXTREMEMELY careless lenders out there.
Perusing the article again, I think the figures are probably accurate, and yes, the lenders just assumed that housing development projects couldn’t fail. Mr Fergus is probably an experienced credit-juggler, too.
I’d still think with 80 million there would be something to show for it. ie. 2-3 million worth of building supplies and 1 million worth of partially developed property. Unless he took the money to the casino hoping for a ‘hail marry’ to save himself. The article even says that most of the $700K is his personal home. Crazy.
If he can pull off that kind of leverage he’s underemployed! There’s some banks that could use his talent.
I’m from the area and looked him up. I expected someone who owes $80 million to owe some of it on one of the unique, beautiful and hella expensive lake homes on Oconomowoc Lake. But no, just a McMansion in a pricey subdivision on I94.
Craziness.
“Investors from as far away as Hong Kong and Hawaii are coming to Detroit to make their fortune buying foreclosed homes in bulk.”
Make a fortune! Make a fortune! Whoo hooo!
When I was in college one of my jobs was at a summer school, K-6 grades. For break time I would gather my kids, 2nd graders, on the PE ground and order them to run the lap whilst we shouted ‘I’m a tiger! I’m a bear!’ I told them it would make us fun faster. I did this for my own pleasure, and it was indeed totally hilarious to watch those cute little kids earnestly screeching ‘I’m a tiger! I’m a bear!’ as they scampered along, especially the cute little princess girls, adorable in their patent leather shoes and wee pig-tails. (My own opinion is that being a princess is very fun, but you oughta be a princess who can run fast and hit hard, because that’s even very funner.) Often I would stop running for a bit to catch my breath from laughing so hard.
Anyway, they all became convinced that this noisy chant DID in fact make them run faster. The summer after that, when I did the job again at a different school, some of my kids had moved and guess what? They insisted on running laps to the tune of the chant. And it made us run faster, there, too. It was a magic chant, clearly. It still is, I bet.
Why I thought of this right now is, hey, maybe those Hawaiian and Hong Kongian ‘investors’ can have an inspirational chant of: ‘Make a fortune! Make a fortune!’ They can merrily sing it on the Foreclosure Bus tour!
I wonder if such a chant will work quiiiiiiiiiite as well for the investors?
“Investors from as far away as Hong Kong and Hawaii are coming to Detroit to make their fortune buying foreclosed homes in bulk.”
It pisses me off that not only are we sending our jobs abroad, but we are hawking our land to foreigners like the Chinese, Europeans, and Arabs (not Hawaiians, of course). The debt machine and greed will result in Americans sending rents, interest payments, and infrastructure abroad.
I’m glad I don’t have kids. I don’t know how I would even begin to apologize for how this generation f*cked things up for them for the next 50 years.
Foreigners buying whole ghetto neighborhoods in food-stampland bothers you? I say let them buy all the slums they want, and by all means I hope they invest more in our rotting financial services companies. I hope the Chinese buy Lehman Bros. and the Arabs buy St. Louis, Detroit, and Milwaukee. This is a money pit and they will never recover their losses. Can you imagine living in Korea and renting to impoverished Midwesterners, while being paid in depreciating dollars? This is the first good news for this country that I have heard all day.
Sure, a foreign bailout beats a domestic one. But I’m angry that our asleep-at-the-wheel financial services sector and government are selling us out for short term gain.
Over the long term, we will no longer own our own country, and will be funding interest payments of our creditors from the developing world.
Speaking from here in Tucson, I can say that the foreign-born landlords are some of the stupidest ones around. Case in point: Two doors to the east of me. The whizbang Asian landlord rented to yet another set of bad tenants.
Not the first time this has happened, but he managed to get rid of this crew in just five months. They were preceded by another loutish family that only lasted three months.
Meanwhile, across the street is another house owned by another Asian landlord. He rented to a family of dolts (and their barking dogs), and I think he’s got them on a one-year lease. That year ends this month, and I think they’ll be gone soon.
I’m not sure why you think a dog barking in Arizona is going to bother a landlord in Asia. Less’n it’s a darn big doggie.
‘I’m glad I don’t have kids. I don’t know how I would even begin to apologize for how this generation f*cked things up for them for the next 50 years.’
These weren’t ‘my’ kids, like I produced them, I called them ‘my kids’ because I liked them all so much, all 23+ or so, and they were my herd. I was the kid herder, leading the way to Happy Safe Learny Land, and I took the responsibility seriously. I still think of them, lo, these years later, as ‘my kids’, and remember their names.
Kids are great. They might forgive us, even if this generation did fook things up for them pretty good.
I’m glad I don’t have kids. I don’t know how I would even begin to apologize for how this generation f*cked things up for them for the next 50 years.
Or the next 150 years… Anyone watch the “Live to be 150 years?” on ABC last night? God help these young-uns if they have to live to be that old.
Lady, you are delightfully nutty.
‘If St. Louis had constraining factors that prevented sprawl, that would give downtown an advantage,’ Lewis said.”
$3.00/ gallon gas isn’t enough? In a democracy there is only so much strong-arming the government can do. Boulder is a prime example. The sprawl just happens outside their jurisdiction. People just cannot afford the prices that such tactics produce.
“A three-bedroom, dusty pink colonial sits cold and empty among the family homes on a sophisticated Huntington Woods street.”
Sophisticated……Huntington Woods……..HAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!!!!
Somebody doesn’t get out much.
“‘A year ago, I couldn’t have done a foreclosure home tour,’ said Reiter. Earlier, he said many of the foreclosed homes were grotesque, had bad cases of mold and weren’t priced to sell.”
Total BS. Decent homes in foreclosure have been out there for 2-3 years or more around here, even outside the city of Detroit. These two are just discovering the foreclosure bus tour bubble that’s sweeping the country.
“The magical foreclosure tour
is waiting to take you away,
waiting to take you away, take you away!”
Okay, Bill, game on. That was a magically mysterious Beatles quote, but I’ll counter with one from the Firesign Theatre:
“I think we’re all a bunch of bozos on this bus.”
A Rasta-type friend of mine had an old bus he’d converted into an “RV.” He had blonde dreds clear down to his, well, rassta. He was a ski bum from New Hampshire, hanging around Aspen.
Above the front window he’d painted, “You are directly above the center of the earth.”
What revelance does this have to anything? I dunno…
Before Firesign, there was Ken Kesey and his Merry Pranksters.
So, let Neal Cassidy drive the bus, and spike the kool-aid with a little acid. That will help the investors expand their horizons.
So, Spike…hmmm…now we know why you’re called Spike????
“…, single-family homes converted into rental properties at an increasing rate …….[in the] sprawling suburban landscape.”
Most places that I’ve lived have had a shortage of single family rental properties. Not everyone who rents wants to live in a 3rd floor apartment (and hardly anyone really wants to live on the lower levels at all). Of course a lot of these “rentals” are not the good kind of rental - (i.e. cash flow positive with a competent landlord).
There is no point in renting from someone who’s going to lose the property before your lease is up, that’s the real problem, not the fact that there are more rentals.
“Investors from as far away as Hong Kong and Hawaii are coming to Detroit to make their fortune buying foreclosed homes in bulk.”
Anyone buying in the state of Michigan needs to really understand what they’re getting themselves into. For starters, MI has SEVERE budget problems. This in turn affects everything from schools, roads, and infrastructure. Take California’s budget problems and double it. Secondly, as anyone well knows, Michigan’s economy has not been able to transition to a modern economy. The state is still heavily reliant on manufacturing, which as seen over the past 30 years has been migrating away.
All I know is that when I used to visit a number of relocation forums, almost all the forums were full of families wanting to move out of MI to somewhere else since it sucked that bad.
I have no problem with foreign investors investing in Detroit. Hopefully they will also have enough money to hire maintenance staff to take care of these homes because none will sell, and they’ll likely join the rest of the abandoned urban prairie.
They better enjoy doing Section 8 because that’s going to be the main market in Detroit for quite some time.
I don’t know how these out of towners can see gold, when the local guy pretty much summed it up:
‘Right now, so many properties in Detroit are like a hot potato. Whoever ends up with it will be crushed.’
That’s why I chose Pennsylvania instead. When are you leaving CA for TN? You say CA is having economic problems too and prices suck big time!
For the time being, I’m staying put simply because even now, my rent is very reasonable. I pay roughly 17% of my income in rent. The rest goes into a savings account. We both have good jobs that pay well. So for now. we’re basically ’slummin’ it, saving up lots of dough, and preparing for the future.
I may bitch a lot about CA, but the one thing that is accurate is that the job market despite the bust is still fairly robust. While it sucks living in an area with extremely high prices, most of that is pure psychological. Do I really need a house? no. If I bought even if prices were 50% of what they are now, would I be more secure? no, because buying a house is a liability. Would buying a house now be a financial benefit? No, because as we’re seeing nationally, prices are going down.
So in the meantime, we’re enjoying ourselves, saving up, and riding out the bust for the day that we decide to either buy here or relocate to an area where we can buy something. The thing is that I’m less concerned about a house and more so about having any debt. If I can live debt-free for my entire life, then that’s perhaps the biggest peace of mind most Americans never get.
A house isn’t everything. A house doesn’t make your life better.
Good for you! Are you saving/investing in foreign funds/currency? Because inflation in America is eroding people’s savings. No fair I know.
The big difference is you and your wife have good, high paying jobs. I am self employed so my earnings is the same if I lived in Manhattan or if I lived in NW PA. People choose to live in Manhattan mostly for the sky high salaries, otherwise none could afford to rent or own unless prices were much lower.
People need to live in locations where the cost of living matches their salary. You can afford to live in CA and rent there because you two make a fortune. I am not one of those rich people making 6 figures. I make a modest lower middle class income so I need to live in a location where the median income is the same as my own.
Rent is cheaper in bubble locations, but more expensive in cheap locations. I can buy for about 2/3 the cost of renting in Tennessee. In NW PA, I can buy for less than 1/2 the cost of renting. Where you live, you can rent for 1/3 the cost of buying.
“You can afford to live in CA and rent there because you two make a fortune.”
No- we live as we are capable of doing because we live frugally. We still drive crappy old beater cars, buy discount groceries, clothes from Goodwill, and check out books from the library.
Anyhow, the choice is up to you. Let us know how NW PA works out.
He’s not going anywhere, mom’s basement is too comfy cozy to abandon.
OK I know I just fed the troll.
I have to stop doing that.
LMAO!!!
I betcha uncle sam is giving subsidies to the wealthy foreigners to buy property in detroit. that’s our govt hard at work giving our money away.
““He said he expects homes in Savannah Pointe, which is just south of Panther Creek on Illinois 4, to start for about $300,000.””
Starting price of $300k to live in cold Illinois? Those people would rather be in other states with cheaper houses. It’s funny how alot of you whine how cold NW PA is, but you happen to live in an even colder state that costs quadriple!
Have you actually lived somewhere that gets arctic cold temperatures? I did for two years in Boston. It got down to below zero with regularity in the winter. Let me tell you how un-fun that is. That kind of cold actually hurts to be outside in. Basically, half of the year is outright crappy weather. So I can say that I tried it, but there’s no way in hell you could pay me to live anywhere North of NC.
I you’re still making big plans to buy a cheap house in PA, I would suggest renting in the dead of winter first and see how much you enjoy it. Who knows? Some people actually like cold weather. Count me out though. I don’t mind paying a bit more to not freeze my rear off.
I live in Ottawa Ontario and it gets plenty cold here. -30 C (-20 F) is not uncommon during the dead of winter. I still ride my bike to work, however, as it really gets the blood pumping for the rest of the work day.
I rode my bike in the dead of winter in Boston too. I recall that my hair would freeze solid after a shower within 5 minutes of heading out. I moved to CA in the middle of the winter. I went from -15 degrees to 60 degrees. I was walking around in shorts and a T-shirt and the locals thought I was nuts. ” aren’t you cold? they’d ask. ” You don’t know what cold is!” I’d reply.
Does it get to -15 in Boston? It’s rated zone 6 for annual minimum of 0 to -10 so tell me when did it get to -15? This is extremely unusual, if not record lows. I checked Oil City/Franklin weather and it did not go below -7 in the last 15 years. It can get below 0, like -2, -3, maybe -5 but that is unusual and doesn’t happen every winter. You can blame global warming for this. If Oil City/Franklin regularly got below 0, including as low as -15, I would be less interested.
My parents also tell me I have no idea what cold feels like, they lived in Toronto for 7? years. I pointed out to them that 30 years ago, Toronto was about 10 degrees colder than it is today and also NW PA is milder than Toronto. So whatever cold they experienced in Toronto, ill be getting about 15 degrees higher temperatures in NW PA.
Does Tennessee even have four distinct seasons today? Does it snow much, if at all? I would like to enjoy the beautiful fall as well as some snow(enough for snowballs and a small snowman)
The last year I lived there, it got to -18 with a wind chill of -30. Either way, when it gets to below zero, you get numb, so once you’re into - territory, a few degrees doesn’t make much of a difference.
TN does have four seasons. It gets cold, but usually around 35-45 winter, which lasts until March, April. In Boston, it was still cold in May, early June.
Let’s just put it this way- The cold I experienced in the Northeast was a shock to my system. I would strongly suggest living there- renting of course- for a winter and see how you manage.
I am not trying to start any arguments, I admit I have no idea what cold is like below 35-40 degrees. I did visit Toronto in early winter as a little boy but it wasn’t that cold, maybe 20-30 degrees. I remember seeing the snow melt after a few days as a warm(er) front came and rose the temps to 40-50.
I have been into a walk-in freezer at 10-15 degrees and I could not stand it more than 1-2 minutes in my summer cloth. The fridge at 40-45 degrees was quite pleasent actually when I was hot and sweaty from being outside in 90 degree weather. It took me about 5 minutes before I started feeling slightly cold. I would say 15 degrees is at least 5x(maybe even 10x) colder subjectively compared to 45 degrees based on how long it took before I was cold. But as I said, I had summer cloth on. I would have to test it with a winter coat and long, baggy jeans.
http://www.arborday.org/media/zones.cfm
Looking at the zone hardiness map, Boston, MA isn’t much colder than Briston, TN. If Boston got to -18, wouldnt it have been around -8 in Bristol? If you say TN is around 35 degrees, wouldn’t this make Boston around 25-30 then, accroding to the zone map? Looking at NW PA, it’s the same as Boston.
I’m not arguing either, but as someone who has actual experience living in East TN, which is considered the colder end of the state to Boston, MA, there’s a BIG difference between the weather there and TN. I remember the first winter I was in Boston I nearly froze to death. It was a totally different level of cold.It got colder earlier in the year, and stayed cold later. It snowed a lot more, as in regular 12-24″ snow storms. The snow would stay around for months on end too, so you would have to get used to walking around on sidewalks packed with dirty, frozen snow.On top of that, it got Hot as hell there in the summer- way more so than I recall TN ever getting. In TN, it might snow once every two years, and we were lucky to get 1″ or more, which would usually melt either the same day, or the next. Since you’ve never even experienced much below freezing, even TN for you might be a shocker since it gets colder than FL. TN has four seasons, but the weather isn’t what I’d call extreme. It doesn’t get crazy cold in the winter and it also doesn’t get insanely hot in the summer.
All I’m saying is that yes- there is a BIG difference. I completely understand your plight and desire to own a house. But I’m just saying that you aught to at least check some of these places out first. I plan on doing the same. So if me and my wife eventually go to Austin, Raleigh, Atlanta, Nashville, or whatever, we plan on living there and rent for at least a year so we can see if we like it. What good would it be buying a permanent house somewhere that we hated? I see this all the time when I visit my parents: people from up North or FL who moved in and bought a house for the house alone and simply hate it there. I would not want to be in their shoes.
Uhm -15 degrees in Boston? I lived in Boston - Cambridge to be exact for 5 years. Winters were wet and miserable as opposed to cold. -15 happened maybe a couple of days a winter.
Average temps for Boston are 37 high and 24 low. Not exactly Siberia. Let’s get some perspective here people. And cold can come anywhere short term. In Atlanta this winter there was a stretch where the low was in single digits. We got snow a couple of days too…followed a few weeks later by tornadoes. Weird weather happens all over the place.
Avg temps for January is what I meant to say.
It is kinda weird to go a whole new place and buy a house right away. Yet that happens here all the time too, big fancy log homes etc, and lots of them find they don’t like the winters.
When did that start, anyway? Is it a way of feeling you “belong”?
The counter to this, is how can anyone survive those crazy hot summers in the southern states? I consider 30C (85F) as uncomfortable.
Its a dry heat.
I grew up in Buffalo, and yeah, they get plenty of snow, due to the lake effect, but Toronto is much colder, as the Arctic winds encounter no physical breaks.
I live on Riverside Drive in Manhattan, were it really doesn’t snow much, but the wind really howls from the Hudson. The grid pattern of the streets really amps up the wind tunnel effect. Wind gusts are going about 35 mph today…it’s enough to stop you in your tracks. Not a lot of wildfires or mudslides, though.
Pick what you can live with. Nothing is perfect.
Let me ask you something. Tell me which of the two is a better deal.
(Bristol, VA)
$48,900
2 Bed, 1 Bath
675 Sq. Ft.
50×150 lot
(Bristol, TN)
$49,000
3 Bed, 1 Bath
974 Sq. Ft.
In NW PA, those shacks would be around $20k. $50k would get me 1500-2000 square foot of house thats 5x nicer than the two above.
Can you tolerate NE Tennessee winters? It’s USDA hardiness zone 7. NW PA is USDA hardiness zone 6, so that’s only 10 degrees colder for a minimum.
Boston’s Janurary average is 36/22. Bristol’s is 44/24. This means Boston is only 2 degrees colder for a Janurary low(but 8 lower for a high)
Which would you choose, guys? Would you rather live in a shack with milder winters or a nice house with colder winters?
Again- you’re stressing only the price of the house and nothing else. In order to get an answer to a question like that, you need to do some research. How is the economy in NW PA? Is it a typical rust belt town with all the jobs being sent overseas or is it stable? How much will your heating bills be in PA versus TN? How much is the property tax in PA? In TN, it is less than 1%. I’m not sure what is it in VA or PA.
I think you’re putting way too much importance on the price of the house and none of the external factors. You should live somewhere you really want to live, and not just somewhere because the houses are cheap. Have you even been to NW PA yet? If not, I would go and check it out yourself.
Sure- there are $10,000 houses outside of Tulsa, OK. But do you want to live there? I can rattle off any number of rural, desolate, economically downtrodden regions with seemingly obscene low housing prices. But there is a reason for them being so, and once you see the factors for them being priced as such, they suddenly become less affordable.
When I lived in Chicago it got so cold that the snot would freeze in my nose. One time, after having been outside for way too long, I tried to speak but could not: to the amusement of my friends, every time I opened my mouth, my lower lip would curl inward with cold.
Another time I had to curtail a twenty-minute walk because I just couldn’t take it anymore. I detoured into a building and sat down next to a radiator.
The test for very cold air is a quick inhale through your nose.
-10 F and below will freeze the nose hairs.
At -45 F, spit will freeze in the air before it hits the ground. Anything above that is not to be bothered with.
I am a refugee from 19+ years in SoCal. Just wait until you get 100+ degree temperatures, smog, heavy traffic to overcrowded beaches and air-conditioner driven brownouts in the summer. I guess some people actually like that though.
“Just wait until you get 100+ degree temperatures, smog, heavy traffic to overcrowded beaches and air-conditioner driven brownouts in the summer.”
All that is tolerable to me. Temps below 40 degrees are not. I hate being cold worse than anything California has dished out in over 40 years.
But, you’ll never hear me say that California is Heaven on Earth or some such nonsense. I actually wish more people hated it here.
It’s not the cold state that surprises me about the $300,000 (formerly $500,000) homes…it’s the fact that they’re in SPRINGFIELD, IL. Are you kidding me?
Having grown up in central Illinois, I find it hard to believe that any house can sell for more than $150k. My dad sold his house for $60k in the late 1990’s, nice late 19th century farm house completely remodeled, 2500 sq ft. $300k is BIG money for a house outside the major metropolitan areas in the midwest.
Starting price of $300k to live in cold Illinois? Those people would rather be in other states with cheaper houses. It’s funny how alot of you whine how cold NW PA is, but you happen to live in an even colder state that costs quadriple!
In Chicago and Minneapolis and Milwaukee (and other fine cities, too, I’m sure) we say: God bless our challenging climate, it weeds the jackasses out.
Well, some of the jackasses.
I like to say “It builds character”. I lived in Chicago for 7 years. Loved it - even the winters. Miss it…
Me too, for 7 years. I live in Hawaii now but would consider moving back. Chicago is one of the great American cities, big enough to provide anything you want, small enough to get to know, and mid-western enough not to have a big attitude about it.
“Quadriple”? Is that like when a baseball player hits a triple, rounds the bag and heads toward home, then stops halfway and runs back to third?
“Fergus listed assets of $721,567 and liabilities of $80.9 million in documents filed in U.S. Bankruptcy Court in Milwaukee”.
Dang. Missed it by that much (holding thumb and index finger 1/4 inch apart). WTF?
““A new housing development in Regina is opening the door to home ownership for some families. The city has committed to providing five-year tax exemptions to families moving into Maple Leaf Estates ‘For our family, it’s an opportunity we probably wouldn’t have had (otherwise),’ said Connie Grasdal, who recently moved into her new home.””
That is only going to add onto Canada’s house bubble. The smart buyers will wait at least 5 years. When the FB have to pay taxes ontop of a high mortgage, they will all walk away and house prices will crash big time.
The city has committed to providing five-year tax exemptions to families moving into Maple Leaf Estates
This is an outright subsidy to the RE developer. WIthout the tax exemptions, the developer would have to sell at a lower price because otherwise there would be no buyers.
““The homebuilding industry is returning to older standards. ‘In Dallas-Fort Worth, every year we have produced more houses than we sold, and we have done that for five or six years,’ said Bruno Pasquinelli of Portrait Homes.”
“‘We have got to get rid of all these extra communities and get our pricing power back in this market,’ he said. ‘There is just too much of everything.’”
How low can Texas house prices go? It costs developers $30-$50/foot to build those houses plus a few thousand per lot. I am already seeing some prices at $50/foot including lot. This makes for very little, if any profit. If prices go down more, developers will be selling at a loss. I guess I shouldn’t be so surprised, after all, banks are taking big losses on REO and are still reducing prices further just to get them off the books.
Texas is going to be very tempting for me and my family if house prices get down to $40/foot. It will be tempting for millions of other people when they are looking at middle class houses for $50k and upper middle class houses for $100k! Wouldn’t this just keep prices from falling much lower or people will just move to Texas then?
$30-$50/foot ??
Uhhh…Are material costs that much different in Texas.??..I just don’t think you can build for this price per ft…2000 sq ft $40. per ft = $80k….Chick…Maybe you can advise/clarify….
You can get houses in Dallas for free from the city if you promise to fix them up.
Search zip code 75210, there are plenty of houses under $20k within walking distance to the Cotton Bowl:
http://dallasidx.internest.com/75210/homes-for-sale.aspx?pricemax=25000&listingtypelist=4,2,3,1&newconstructions=0
Skip….Thats not what Bye Fl suggested….She/He said; “It costs developers $30-$50/foot to build those houses” , Build being the key word here…I know fully well you can purchase for less that replacement cost…Thats happening throughout the country…My position is its impossible IMO for a developer to “Build” a 2000 sq.ft. house for $40. per ft….The material costs alone are that or more…
“His wife, Jeanna Kiehle, and partner Jared Pomranky formed Urban Detroit Wholesalers to scour the city for houses they can fix and rent. The idea is to generate cash flow until the market improves, and they then can sell the houses. They own 38 houses now and close on 15 more before the end of the month.”
By next year, I think they’re going to be filing for a name change: Crack Den McFailure, Inc.
Conspicuously absent was any mention of whether the cash flow would be positive. I can’t help thinking that it will be negative.
“‘Some lenders want to explore leasing properties in hopes the market will turn around, and others are just churn-and-burn, get it off the books,’ particularly in struggling housing markets such as Detroit and Cleveland, McCarthy said. ‘They think, ‘The first loss is the best loss.’”
Can banks actaully do this? I thought accounting rules forced them to sell as quickly as possible and get hte bad loans off the books. Are banks allowed to rent small properties for several years?
They do that already with interest only loans, especially with 0% down. Those FB are basically renting from the bank and most simply pack and walk away.
Property management is not their field so they’d rather not. But being expert at manipulating money, assets and liabilities and having their backs against the wall, I’d expect them to rediscover old and invent all sorts of new ways to avoid crossing the line to where they’re forced to book losses.
And it sure doesn’t look like the govt / fed would be averse to changing banking rules to help them, thus preventing bank failure.. and so ‘protecting’ the overall economy.
The real answer to your question is Yes, a bank can rent/lease out an REO property rather than selling. Accounting rules make them mark to market (new appraised value) when they take the property back. They don’t HAVE to sell, but they definitely want to sell. Renting out at fair rental value keeps them from taking further short-term writedowns (main objective IMO). If not collecting fair market rents, when they get the property re-appraised at regular intervals (every 12 months I think), they have to write it down some more.
I doubt that you see too many banks holding rental property long-term. The return on assets doesn’t justify tying up the resources.
“‘This is a millionaire’s market,’ said Jeremy Burgess, a 28-year-old investor from Washington state who has been living in Detroit for the past year. ‘I feel like I’m driving through the city and stopping to shovel diamonds in the back of my truck.’”
I know this quote was posted on the HBB before but this one is just to hilarious to pass up. I don’t whether to shit or go blind when I read it!!!!! You can make this stuff up… good Lord… Maybe this guy is confusing turds with gems… Hey ByeFL, Are you sure you’re not from WA state?
At least that spudhead is providing us with useful services - price discovery and fleecing the much ballyhooed Chinese investors.
I’ve read some posters’ arguments that the Detroit area could be a good investment in the longterm…but what are the odds that the diamond shovelers will remain solvent in the interim?
This is not good news for the “we have reached the bottom” crowd:
Factory orders drop double what expected
http://tinyurl.com/2kffcv
The falloff in demand was widespread, with steep declines in orders for motor vehicles, various types of heavy machinery and demand for iron and steel.
This is not a recession, but a Great Depression. Expect to see vast soup lines and riots. DC may burn to the ground.
Wow - now THERE’S a thought…DC, gone? I need to get out there and see some of those monuments and libraries and Smithsonian-type places ASAP. All those books in the Library of Congress would make quite a conflagration…
Burning DC to the ground is an idea that never goes out of style, but the depression angle seems extreme. Even with construction, finance, and most retail in the dumps there is plenty of stuff going on. The economy is likely to bounce back after a contraction, and even with people delaying retirement age and demographic changes are going to put even more pressure on labor markets than productivity increases have.
may be off topic but it’s all incestuous at this point: Now part of the bailout you haven’t heard much about: tax breaks for homebuilders. “Corporate homebuilders — including those responsible for the mortgage and housing crisis — would receive billions of dollars in tax breaks under a provision of the Foreclosure Prevention Act currently pending in Congress,” the Laborer’s International Union of North America argued in a press release today.
More from LiUNA: “… under the bill’s little publicized ‘carry-back’ provisions, builders would get billions in tax breaks. The carry-back provision would allow homebuillders to apply losses from 2006 and 2007 as far back as five years against taxes paid on profits…”
It’s all getting beyond crazy.
call,email,write your rep
NO BAIL”
I’m all in favor, so long as stock investors get to write off losses against ALL capital gains taxes they’ve paid for the last 5 years. Why should only homebuilders have this advantage?
I sold my home in sarasota fl and pocketed about 125 thousand…about a year previous to selling my home i bought a midtown condo in st. louis for 140 thousand my payment is around 750 a month and taxes under a thousand a year…here in sarasota i am renting a 1700 sq ft townhouse for 1100 a month and will snowbird back and forth…getting back to the condo in st. louis it is in a great location close to mass transit , forest park and all the hip shops and cafes…i will be putting some money into a much needed redo of the condo but i think it is worth it…. and yes downtown st. louis is dismal even with all the loft redos that have been going on… but all in all the condo building/conversions in st. louis is nothing in comparison to other parts of the country
“Downtown has long faced distinct challenges: obsolete buildings, the difficulty of assembling land for large projects, and competition from cheaper, easier-to-develop suburban sites. ‘If St. Louis had constraining factors that prevented sprawl, that would give downtown an advantage,’ Lewis said.”
They should visit Oregon and look at Oregon land-use laws - or visit British Columbia. The Urban Growth Boundary laws do a reasonable job of containing the sprawl and making development (and thus land valuation) relatively predictable. As energy gets more expensive, they will thank themselves. Atlanta is an example of the opposite - sprawl everywhere, long (time and mileage) and expensive commutes.
Why on earth would one use a house to finance a medical bill? And you see the same with credit cards, refis to pay off balances. Just default on the card!
It’s semi-crazy, no?
I want to induce “shaken adult” syndrome every time I hear about someone paying off large medical bills with credit cards or HELOCs. For the most part, hospitals and doctors are forced by philosophy to charge little or no interest and to pretty much accept whatever you can pay, even if it’s $10 a month.
Why in the world would you transfer that debt to your house or loan sharks (oops, credit cards) who will charge 21% on a good day? The only people who benefit from that odd sense of responsibility are the hospitals/medical system.
Not the ONLY people. Banks and alternative financers have discovered there’s money to be made here too. Look up a Business Week article on the subject about last summer or so.
I’m a native Bostonian.
The thing about Boston is the WIND! Boston is the second windiest area in the states. Windier than Chicago. You’ve heard of the Lake Effect? In New England they have what is called the Montreal Express. Weather sweeps down from Canada and moves over the White Mountains in New Hampshire and picks up cold and speed. Mount Washington is the windiest spot in all of America.
The result is a numbing wind chill at times. The temp might not get much below 0, but the wind chill makes it nasty. I had a friend who moved from Buffalo and 3 foot snow falls to Boston and was shocked at how awful it was.
But then there is the occasional winter where the daffodils are poking up in January.
The thing about NE winters is you can’t judge them just by temperatures. ByeFL, until you have experienced the misery of the clinging wet, gray, miserable winters, of cold that sinks into your bones, of dark skies and wet feet and numb hands–not to mention no relief in sight for months–you don’t know how depressing it can be. It isn’t about average temperatures. Colorado no doubt has lower average temps than the NE states, but it also has almost-constant sunshine and dry air, and the snow is beautiful soft powder, not foul gray slime. Winter in Colorado doesn’t make you want to kill yourself. Now, my brother moved from Colorado to Alaska, and he’s a guy who loves cold weather and anything outdoorsy, but he said the winters there — although also sunny — were almost unbearable, even for him. (Although he loved living there.) That’ s what people are trying to tell you: You can’t know from a chart of weather temperatures what it’s actually like to live somewhere. Where I live, our winters are Boston-like but for a MUCH shorter time, and our summers are Florida-like (without the beach). They’re our two longest seasons and they both suck, but you wouldn’t get that without living here.
Two weeks of ice from the sky is usually enough to flush the unprepared. This has an interesting effect on culture. In New England it is common to be spare with words and not always share views with neighbors because that might expose differences in opinion and living that could result in conflicts later on. If you need help and the roads are impassable then one may rely on neighbors for assistance. If your energies and allegances have already been committed to feuding then this fails and you may freeze to death or at least suffer far more than necessary for want of local aid. The porch culture, banter, and feuds of the South are yet more aspects of geography as destiny and do not have New England equivalents.
Just wanted to add, I actually like the summers here OK because I like hot humid weather. Many others, however, curse it.
We’re ALL STILL DEALING down here at Crazy Jim’s Used Homes and Auto Lots, USA Ltd.( formally Down n’Out BK Realty and Associates)
Raindrops KEEP falling on you head and you NEED a ROOF ? Want 4 wheels and that ROOF. We even have late model slightly used Hummers that will certaninly amuse and THRILL your poorer neighbors, friends and your local gas station attendants.
( We also have a fine selection of used Rolex watches, flat screen TV’s and assorted building construction tools..See Big Lenny in the back room for all CASH ONLY/1st Born Child Purchase Items)
Come on down and take a test drive in either…better yet..both.
Get that shack or wreck on wheels with our in house instant financing and/or CPR resuscitation…no NEED to fog a mirror here at Crazy Jim’s. We’ll breathe FOR you. All our RE/Used Auto sales staff are highly trained survivors of the Florida condo bust of 1980, the last recession of Motor City or the Irvine, CA Mad Money Giveaways.
You’ll have have our famous no questions asked and no money back guarrantee with your little old signature on our dotted line.
Plus you get our 20 point Quality Checklist to make ensure that you get the VERY BEST in Doubletalk, Scams, and plain out, good old American Flag Waving Fraud to make sure that every House or Car is STILL standing or able to roll when you woddle off our lot.
All of Crazy Jim’s Lots may NOT be open depending on the exact Location, Hours and Density of FBI or US Treasury Agents Per Square Mile.
And…”The Beat Goes On”
Mikey…
post of the day. Really good.
“As values fall, owners of 41,231 Santa Clara County homes to get tax relief
HOMES IN SANTA CLARA COUNTY GETTING A CUT IN ASSESSED VALUE”
Who said the bay area is different?