The Housing Bubble

I’d have to go with Joe Stalin.

“Who’s the biggest commie”?

I know I sound like a broken record, but the turds floating around in the D.C. cesspool are unlimited. 99.9 % need to be flushed out, term limits should be imposed immediately (of course that ain’t gonna happen) It all about power, money & control as always. Both parties SUCK!

(Will these city areas remain expensive in this post-bubble world?)

Do you mean relatively or in absolute dollars? And per square foot or overall?

I believe there has been a structural shift favoring close-in areas in major metro areas where the close in areas are not social landfills. The demand for such areas now exceeds the supply, while for McMansion exurbs the opposite is true — there is plenty to go around.

Cyclically, however, the prices are still too high close in, just like everywhere else.

Let’s take the NYC case. When we were looking to buy a house in the early 1990s, a 1915 rowhouse without parking in Windsor Terrace Brooklyn, a 1940s rowhouse with a rear garage and front garden in further out (but still in NYC) Forest Hills Queens, and an early 1960s Levit ranch in the suburbs of Long Island, all cost the same — about $200 K.

I expect the Brooklyn house I live in to sell for more than the other two in the other two unless the state really succeeds in destroying NYC (they’ll try). But it sure as hell won’t sell for $1 million in todays’ dollars, the recent price.

BTW, with what may happen to mass transit and the price of gas, I’m glad I live close enough to bike the nine miles to work.

But the ideal commute is one I heard about one guy having in DC. He bikes the Potomac, picks up a boat at a boathouse, rows to another boathouse, picks up another bike, and rides to work.

People pay big bucks to go on vacation to do things like that. He gets to do it every day.

Good discussion topic.

My take (from someone living in the exurbs, though not commuting to the city) is that the exurbs’ curve is more extreme, and ahead of the city areas by about a year or two. It’s more extreme because the exurbs see more expansion during boom times, and conversely more contraction during bust times.

Downtown DC is declining somewhat now I think. It’ll continue declining after the economy levels off (*if* if levels off). Eventually the exurbs will start to pick up again, then they city.

Generally it depends on the area, especially the case with DC which is so affected by government policy. Loudoun and Fairfax counties were the biggest boom this time due to military and security contracting. My guess is that MD will boom bigger than NoVA next time, due to health care being the next big government thing, and the decline of the military as we pull out of Iraq.

That’s my impression at least that that’s the general layout of gov services around here - more military in NoVA, more health care in MD - I could be wrong about that though.

as soon as fed cuts workers = never
I’m in 22151 and off peak by 15+%

I live off in Rockville/North Bethesda and am totally amazed that prices in my neighbor have not really fallen and houses do not stay on the market for more than one or two weeks.

Price of oil will hammer all suburbs harder than inner cities.

I guess I meant as compared to pre-bubble. Lots of neighborhoods in upper NW DC have traditionally been middle-class or upper middle class neighborhoods, but during the bubble rose to levels that only the uber-rich can afford. Former lower-class areas became middle-class neighborhoods. Has the bubble permanently altered the composition of the city? Gentrification of DC began in the early 90’s, but it seems the bubble accelerated the trend. Since the bubble has burst, it seems that the gentrification train is continuing to roll. It’s very strange. People I work with that make less money than me can live in these now upper-class areas, while it seems that if I want to buy, I have to settle for something less. So it’s a little frustrating.

If you’re not seeing foreclosures in the area you’re watching, perhaps the homes you’re looking at were financed with Alt-A I/O or option ARMs rather than subprime - the reset curves look much different, and you may not see a tidal wave of foreclosures for another year or two.

Then again, how hard are you looking for foreclosures? Here in CA, we can use Foreclosure Radar, how are folks looking in DC?

Yes, many many believe this. I think so myself. The defaults will come when the cards are finally maxed and the users are overextended. This should come later this year. The Bush money will delay this as a major problem until AFTER the election. At that point, this incompetent boob will be gone and another in his place.
Roidy

What’s next mass C. card default?”

I’d say yes….I see it anectdotelly, but a lot of friends seem to be floating some payments on the belief that they will catch up next month. I think the herd will spend until they can’t, then?? crasssh.

The recent food riots in Haiti taught me that one staple of the poor Haitians’ diet is ‘dirt cakes’, dirt mixed with some sort of food paste and cooked. I imagine Americans will riot long before they begin eating dirt. Perhaps we can eat the rich?

I don’t think this has really hit most people outside of housing and real estate. It hasn’t affected the place I work at all, and no one seems to be complaining. This is in NYC.

It seems that a long of the falloff in consumer demand has hit imports and immigrants, some of whom are going home. And people are still running up the credit card bills to spend. Global growth and exports are cushioning the blow, though also pushing up inflation. So far it’s pretty much the best case scenario, considering.

We’ll see if the lack of spillover lasts. I think it’s starting to hit state and local public services, and that will certainly be a way the pain reverberates in NYC. And if rest of the world has problems as their bubble bursts, that will take that export cushion away.

I’d have to disagree with the others. I work at a company that sells IT equipment b-to-b. we’ve seen a 50%+ dropoff in the last six weeks - it’s like companies are suddenly afraid to spend money. anecdotally, we’ve heard it’s hitting everyone in our little industry just as hard, and the less well managed companies are starting to have cash flow issues.

I talked to someone yesterday that worked for a national company with no slow down but one employee with a good job was in the process of losing her two houses here in Salinas and was getting ready to file BK hoping to get out of CC debt as well. Salary somewhere in the mid $40K.
Last weekend in PG and Carmel and Monterey: More business just gone. No prior notification.

I believe my company is recession-proof. Toxicology / crime lab. We are growing by leaps and bounds. Some of our employees should be on tonight’s episode of 20/20! (ABC was in here on Monday interviewing / filming.)

I was looking around at other jobs not too long ago, but I decided to stay put for now.

I work in debt collections. While there are more accounts in default, it’s getting harder to collect, and the consumers are more irate as they struggle with their debt loads. No surprise there. Four trends that I am seeing and think notable: 1) state governments are requiring collection agencies to accept credit-card payments for the debt and/or installment payments; 2) the use of forced collections, e.g., garnishment of wages and financial assets and the lien/levy of properties, being used earlier in the collections cycle; 3) mandates that require financial institutions to provide reports to government-run databases to enable government to more easily identify financial assets that would be eligible for garnishment; and 4) debt buyers and credit issuers increasingly tapping into the Indian call-center populace to collect US debts.

Interestingly, some of the credit-card issuers refuse to allow consumers to put payments owed on their cards. Their view is that these consumers are already in default on what they owe, so it makes no sense to allow them to transfer that defaulted debt and the associated risk to the credit issuer. Also of interest is what the public relations fallout will be from off shoring jobs and then using the workers in those countries to collect from a very angry American consumer. I suspect the debt buyers won’t give a hoot, but some of the credit issuers will and may eventually pull back on off shoring. (Even though the credit issuer could sell the paper to debt buyers, some have stipulations on how the debts are collected because the credit was granted by their institution and their name is part of the debt record. )

From the ground in Argentina, the US wine market is slowing. We sell fine wine grapes to a winemaker who exports to the US. He tells us that the low-end sales ($20 to $30 per bottle) are way down, but that the high-end market is going strong. He’s bracing for a two-year downturn based on what his distributors are telling him. Fortunately, he also exports to China, Mexico, India and several other Latin American countries, such as Brazil and Columbia, and has seen those markets increase.

The entire world is like a big financial pinball being batted around, as all the various players are shaking the pinball machine violently, causing the inevitable…

TILT

The real estate market in our area of Argentina (province of Mendoza) has slowed dramatically. There is no credit to buy real estate. In general, credit is not awash here and is very expensive if you can get it, e.g., 30% to 40% at the national bank for a vehicle loan. It’s 100% cash to make a real estate purchase. The price increases were mainly due to folks from the US, UK, Europe, and Canada coming here and buying, some to live here and some as investments. In 2006, there were about 100 families that moved to our smallish town (under 200K population). Last year that dried up, and the real estate agents that cater to the out-of-country buyers are looking for other work. Some have folded up shop.

They should be enjoying the granite countertops and stainless steel appliances in their “American Dream”, shouldn’t they?

Populism leads to fascism, or revolution.

Already happening, and we will have to redefine our values a bit. Appearances will hopefully become less important, maybe we can start looking at how well people live their lives and do whatever job they do, rather than how much they make doing it. I saw a blog by a Prosperity Preaching Pastor’s wife that made me ill, her before and after permanent cosmetic treatment. Only in this current climate could such bs be accepted from someone purporting to be in the “helping others” industry.

I know of a woman who makes no excuses for the fact that she’s looking for a rich man to take care of her because she’s so burned out financially. Seems she has a sucker, er I mean rich boyfriend presently. She’s so fried that I guarantee she’ll marry him if he asks (even though she’s told me he’s not her type…well except for his bank account).

Point being, this is just one example of what someone desperate will do NOT to be “left behind”. Sad.

send numerous applications to Oprah’s Big Give

Yeah, it really worked well the first time around.

Oh goody! We get to talk about failed Fourierist experiments like Brook Farm all over again.

Didn’t people get the memo of why these things fail in the first place, and are always doomed to fail?

I am perplexed ??

To some degree I am also but every time I try to rationalize it I come full circle back to the same spot…”Jobs & Income”….Example; A two year twenty something fire fighter here is making 120k per year PLUS he has a 2nd job that he expects will generate another 30k per year…Now, if he happens to marry someone with even modest income they blow through the 200k mark quite easily…So, there ya go….

Sorry if this is a double post…Cyber space seems to have eat my post….

I am perplexed ???

I am also to some degree…Every time I try to rationalize it I come full circle back to the same spot…”Jobs & Income”….Example; A two year twenty something fire fighter here is making 120k per year PLUS he has a 2nd job that he expects will generate another 30k per year…Now, if he happens to marry someone with even modest income they blow through the 200k mark quite easily…So, there ya go….

150K is JUST barely enough money to even consider that 700K home. No way I would do it with anything less then 250K yr HH income.

And, to answer you’re question, no, not a chance in he(( would a family making 1/4 of M dollars a year want to live in a place like that. I don’t know NYC or the area very well, but unless that house is the worst in a 30 block radius… Well, let’s just say, that’s not where people making that kind of money live.

I am also baffled by it, although more (in my area of FL) by the condos with prices like that. How many people with 250K incomes are looking to live in a high rise condo in a terrible area? Doesn’t seem like a large (or even existent) portion of the population to me!

And remember, 250K HH income puts you in about the top 3% of all American households. That should help put things in perspective.

What I am also saying is that people that make 6 figures are not living in these areas. So how are these homes even selling.I just don’t understand, the finances just don’t add up. Are people paying 80% of there income for housing?

Austin doesn’t have huge natural gas and oil, but it’s a trendy to live in city, so I can’t see why it would be immune to bubble effects. In Amarillo our prices are still up 5 percent YoY, but that has a lot to do with the smaller towns around here making massive investments in oil and gas and the housing that is left over from the last big oil investment period are insufficient for the time being.

New McMansions in our part of Zilker neighborhood (just south of the river west of S Lamar Blvd, close to downtown and Zilker park) sit on the market quite a while before selling, although I haven’t noticed the teardowns slowing yet.

(Somewhat shabby) apartments on the corner of Treadwell and S Lamar were converted to condos. The sign on the building now says condos, but the big sales signs on the corner have been papered over with leasing signs.

One former condo project on S Lamar down by Sun Harvest is now for sale as commercial zoned land - don’t know if developers didn’t get their permit, didn’t get pre-sales, or just decided to get out of the game.

That said, every day I notice another condo project within a few blocks of S Lamar / Barton Springs Rd corner. The condo projects get a lot of grafitti on their billboards, especially the one right by Zilker Park at the WanFu restaurant site. The billboards mainly feature terribly bucolic pictures of the greenery that these projects are destroying, so the grafitti adds a nice “urban” touch.

I cannot imagine we aren’t heading for a pop. Today’s “Austin Towers” RE weblog has a “foreclosures” headline - talking about how we are different from the rest of the country. We ARE special in Austin of course, how could we not be? We’re so hip.

I’m wondering what others are seeing on the rental front. I rent a townhouse in a large complex corporate owned in Woodland Hills California. The rents have bounced around for the last 2 years but now according to their website they are actually renting units like mine for $179 a month less than I’m paying. But of course the people that are currently here when up for renewal they are trying to hike the rents. Current tenants are really annoyed and alot are moving. I have 6 months on my lease left and called them and said if they reduced my rent I’ll sign up for another year. They said they couldn’t do it. Moving is not so easy as I have 6 year olds and have already moved twice since I sold my townhouse late 2003.
I’m still seeing house rental prices that are in dreamland. I wish this mess would speed up and I could buy but I know I’d be stupid to do that now.

I’m curious about this because I want to get into grad school (yep, for one-a them limp-wristed humanities degrees that will never make me as much dough as an MBA…).

I’m also curious what the tightening of student loan credit will mean for colleges. The proliferation of borrowed money rather than saved money to pay for school is part of what has driven costs through the roof. Would schools actually end up cutting tuition costs in an attempt to attract students if loan money is harder to come by?

If so, then what would happen to all those cushy, you-can-never-be-fired-from-here positions on our nations college campuses? How about the gigantic sports stadiums and massive football and basketball budgets? There is so much waste at every level in most colleges and universities. I’m not a sports fan, so it annoys me that athletic departments are always better funded than any given academic department, but there’s plenty of waste in every aspect of the edu-ma-ka-shun racket.

I like this idea.

I will always buy or sell anything, if the price is right.

I’m looking to buy at a fair price.

It’s kind of hard to convince a landlord to knock down a wall in his house so I have room for an artist’s studio.

Wait. Snoop the sales, look for bargains. Do your homework and look at sales prices in the neighborhoods you want to buy in going back 15 years or more. See if you can dig up old RTC sales records (15+ yrs back).

We’ve got property from the last bust; worth 4x what we paid for it. Paid cash. Has saved about 150k in rent in the area over the time it’s been in the family. Cost about what we paid for it in repairs over the years.

Not a fancy house, but sturdy and suited to needs.

As to where to put smaller money than enough for a house/downpayment … I want to know, too. Right now I’m itchy about my CDs and my banks but am not quite ready to go to the hassle of jumping. But as quarterly reports come out on the banks/CUs … I’m looking hard at highly-rated (bankrate.com) to keep working money in (the in and out of monthly living) and hoarding money in (hurricane money, tax money).

My tech stocks are taking a dump, I should have never bought into an airline … good thing it’s all Roth IRA money and I’ve got a couple decades to fix it.

I’m probably going to take the boring investment track and keep educating us to bump us to higher paying positions within our career track. Keep an eye out for distressed properties near the beach, something the whole clan can enjoy.

home cookin …..

thats the recovery story, keep talkin stucco.

Seven steps…

I literally went back to see if the publish date was 4.1.
It wasn’t.
Funny find, PB.