Renters Have Got The Bubble By The Tail Now
It’s Friday desk clearing time for this blogger. “The Northern San Joaquin Valley’s new home market is dreadful and may not stabilize until 2012, home appraisers were warned this week during a conference in Modesto. ‘The new home sales rate is nothing short of dismal,’ lamented Dean Wehrle, VP of Sullivan Group Real Estate Advisors. He said Stanislaus, Merced and San Joaquin county subdivisions are averaging one sale per month. At the peak of the market in 2005, each subdivision was selling on average about eight homes per month.”
“‘Builders can’t survive selling one per month,’ he said. ‘It’s brutal.’”
“New home prices have dropped dramatically to lure buyers, but Wehrle said homes in the region still cost far too much for most residents. In 2006, median new home prices in the three counties peaked at more than $458,000, but now they’re down to about $360,000.”
“‘The homes still are about $62,000 above where they should be,’ said Wehrle, who showed the appraisers detailed price trend charts. He said it was ‘outrageous’ how the region’s home prices more than doubled from 2000 through 2005.”
“Wehrle said there’s ‘zero appetite for acquiring finished lots’ so developers can’t find builders to buy excess inventory. Some ‘vulture firms’ are willing to purchase such lots, but ‘they only want to pay 20 to 30 cents on the dollar,’ according to Rick Botelho, senior VP of The Ryness Co.”
“Frank Maruca and his neighbors insist they are not snobs. But he understands it may look that way based on a lawsuit they filed arguing that a group of homes priced in the low $100,000s should not be going up near their own, which cost nearly $300,000.”
“The lawsuit, filed Friday in Manatee County, argues that the lower-priced homes will drag down the overall value of the community. ‘The whole issue is buyers’ rights,’ said Maruca, who paid $273,000 for his home in 2006. ‘We did not buy in to be part of an affordable housing community.’”
“Manatee County Commissioner Gwen Brown said she could not understand why residents would sue. ‘The market’s not there for those $300,000 homes,’ Brown said. ‘If they know how to turn the market around, I’m sure he’d be open to ideas.’”
“Finding a place to rent in Broward and Palm Beach counties is easier and in some cases cheaper than it has been in years because more housing is available and the competition for tenants is lowering prices.”
“‘Renters realize they’ve got me by the tail now, so they’re asking for concessions and bargains and money off the security deposit, and I find they have the upper hand,’ said John Dryden, owner of a half-dozen rentals in Tamarac and Plantation. ‘Of course, I have no choice but to negotiate if I want to get my property rented.’”
“The stream of foreclosures that began to hit Capital Region homeowners last year turned into a flood in the first three months of this year, and neither bankruptcy court nor various foreclosure prevention efforts are providing much help. One out of every 622 households in Albany, Rensselaer, Saratoga, Schenectady and Schoharie counties got foreclosure notices.”
“‘A lot of people are just walking away from their house because they’re finding they are just so under water,’ said Barbara Whipple, who is the president-elect of the Capital Region Bankruptcy Bar Association.”
“High-end Ho Chi Minh City housing projects, all the rage for investors in 2007, look a lot less appetizing since tightened monetary policy put the market into hibernation. As investors rush to make their money back through rapid sell-offs, prices have plummeted by as much as 40 percent, real estate traders said.”
“The situation is so gloomy that some investors who have paid deposits for property in under-construction projects have decided to desert their payments – some of which are up 10 percent of the property’s full price tag – to avoid further losses.”
“A market analyst told Thanh Nien that most investors are short-term speculators that cannot leave their capital stuck in property for too long. Many of them who took bank loans to invest are now burdened by high interest rates. He also said that a steep fall in market prices was now unavoidable after last year’s ‘property fever’ inflated the price bubble.”
“John Prescott, the former deputy prime minister, has accused Britain’s ‘greedy’ banks and building societies of destabilising the economy by fuelling the boom in house prices over the last 10 years.”
“Prescott, who was in charge of UK housing policy between 1997 and 2006, also attacked mortgages providers for relaxing their lending criteria. He said this had sent house prices soaring to unsustainable levels.”
“‘Instead of keeping the supply of money in control, they allowed people to go from two or three times [salary], which used to be the building society requirements, to four, five and six [times],’ said Prescott, who also accused the industry of ‘total greed.’”
“The 10.5-acre site of the proposed 90-unit Terrell Creek Villas condo project on Birch Bay Drive, which got Whatcom County approval more than two years ago, is in foreclosure, but those involved say the project isn’t dead yet.”
“‘We’re working with the borrower and we’re hoping we can get something worked out to where we don’t have to take the property back,’ said Bo Brower, president of First Down Capital LLC of Bountiful, Utah.”
“Brower’s firm provided California developer Art Wiener with a loan to purchase the property and get it through the permitting process. According to a foreclosure notice filed March 28, Wiener owes First Down Capital $4.25 million in unpaid principal. When fees, late charges and unpaid interest are added in, the debt totals $6.8 million.”
“‘I think it’s a solid project there,’ Brower said. ‘I think our borrower, for whatever reason, hasn’t been able to obtain takeout financing.’”
“There is more evidence that the housing crisis is hitting all neighborhoods in North Texas as realtors say they are seeing more foreclosures in some of the priciest parts of the metroplex, NBC 5 reported.”
“With the help of Realty-Trac, NBC 5 found more than 400 foreclosures currently priced above $500,000 listed for sale or auction in the Dallas - Fort Worth market. Nearly 150 of those homes are priced above $1 million.”
“Realtor Michelle Boyd specializes in foreclosures and said even affluent families were caught off guard by rising interest rates. ‘We’re seeing an increase in the high-end properties,’ Boyd said. ‘A lot of the people I’ve spoken to who were still living in the home they took out an adjustable rate mortgage and it just kept going up and they didn’t re-finance.’”
“A house in Southlake that was listed at $2 million a year ago is now listed for $1.5 million. ‘I think in our lifetimes this is one of the great times to buy real estate in the metroplex,’ said Realtor Mark Robbins.”
“Since 625 resale homes were recorded sold in third quarter 2007, the Pinal County resale market has consistently posted improvement. The median price has steadily eroded from $220,000 in fourth quarter 2005 to $193,000 in third quarter 2007 and $156,160 for the current quarter. It was $204,600 for a year ago.”
“‘In Pinal County, there is a wide range of homes available from listed homes to foreclosures, but a key force is the rapidly declining prices,’ said Jay Butler, director of Realty Studies at Arizona State University’s Polytechnic campus. ‘Homeowners and investors are buying with the expectation of strong appreciation in the future.’”
“Living in a gated community is nice, but it’s no antidote to the ongoing foreclosure wave. That’s the lesson from last month’s sale of a waterfront home in West Knox County. According to county records, the home was purchased by an entity called Crown Investments in 2006 for $1.25 million.”
“A deed from last month, though, shows that Crown defaulted on a payment owed to SunTrust Bank, and in January the property was sold at a public auction for $865,000 - a nifty 30 percent discount.”
“Broker Debbie Elliott-Sexton said she has seen an increase in short sales. Elliott-Sexton said she had just left a home where the owner owes $410,000 and is facing a short sale, even though the lender renegotiated the rate.”
“‘There are solutions out there,’ she said. ‘It may not be the same solution for everybody, but there’s a solution.’”
“The housing bubble is over. Good. Perhaps now we can stop thinking about property as a pension scheme, drop the delusion that house prices only ever rise, and liberate middle class dinner parties from the tyranny of conversations about how much everyone’s house has gone up in value and what the place next door went for.”
“Gazumping and gazerundering can be forgotten. First-time buyers can walk into estate agents without fear of mockery. Those overpriced but luxurious city centre ‘regeneration’ flats will soon be suddenly affordable to young buyers.”
“Even in the US the ‘No Income, No Job, No Assets’ loan has been consigned to the financial history books. But what’s so bad about that?”
“This week the Governor of the Bank of England, Mervyn King, said that he thought it would be ‘a serious mistake to go back to where the mortgage market was a year ago’ and it was these crazy loans he had in mind. He was right. Hopefully, ’sub-prime’ borrowers will now be replaced by a new generation of careful, thrifty homeowners on manageable mortgages.”
“Many realtors are blaming the media for inflaming fiscal fears, thereby making their business suffer. But economists and media researchers say don’t shoot the messenger - the nation’s economic difficulties were not made by the media.”
“‘My feeling always is that people who are adversely affected typically blame the media,’ said Dr. Edward Deak, economics professor at Fairfield University. ‘The data speaks for itself. It’s not something that the media concocted.’”
“Vicky Fingelly of Nicholas H. Fingelly Real Estate noted a recent headline that talked about a Connecticut-wide downturn in real estate prices but, a few paragraphs down, a 10 percent increase in Westport over last year and a 1 percent increase in Fairfield over last year.”
“‘Depending if the area really extended a lot of sub-prime loans, that’s where you see a lot of foreclosures,’ she said, noting that that was not the case in Fairfield County. ‘It’s a very leading headline, that housing has fallen 30 percent.’”
“But newspapers ‘are not manufacturing numbers,’ Deak said. ‘This is a problem for the whole economy. It was not made noticeably worse by the press.’”
“To the contrary, Deak said if the media had been ‘a little more aggressive’ in running stories about the abuse of lending practices prior to the current crisis, the effects of that crisis might have been mitigated.”
My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
“The lawsuit, filed Friday in Manatee County, argues that the lower-priced homes will drag down the overall value of the community. ‘The whole issue is buyers’ rights,’ said Maruca, who paid $273,000 for his home in 2006. ‘We did not buy in to be part of an affordable housing community.’”
That…is…hilarious!! Funniest f-n thing I’ve read in a while. Thanks for diggin’ up the chuckle nugget, Ben. Have a good weekend bro!
I’d like to see where in his sales contract he got the right to oversee development of the whole sub-division, cause whoever let THAT one get through is totally getting fired.
So he paid 273k in 2006…how much is his house worth now?
probably close to what the proposed affordable homes are selling for. What a dummasssss………
I live in a Million Dollar Home!
I live in A Million Dollar Home!
…NOT!
I love how all these people buy homes to keep everyone out or away..so do they go to work in a tank? How about shop at a “special” store? Use a 24 ct crapper?
Man, this sounds like the East Bay neighborhood I live in. Anytime anyone talks about building new housing that’s even remotely ‘affordable’, this whole argument that it would errode ‘the quality of life’ comes up.
Translation: we don’t wanna’ let anyone new move here and drastically affect our property values.
Well, being somewhat familiar with Manatee County, I can understand why someone would be gibbering with fear about having “affordable housing” next door to them. You’d have to be there to understand. We’re talking about a county where there’s an annual tradition of an Easter Sunday gang showdown on the beach. This is no joke, it’s actually true.
Let me guess. Each side fights in the name of their savior? Just as he would have wanted it, I’m sure….
I am always amazed that anyone will buy a house in an unfinished subdivision without looking at the covenants/deed restrictions. Contained therein are two sets of numbers that are critical to understanding where you are relative to potential future construction on empty lots.
The first is the minimum square footage of the structure. If Mr. Maruca has a 2,500 sq.ft. house and the minimum is 1,200 sq.ft., he has no right to be peeved if someone builds a 1,200 sq.ft. house on their lot. It is possible but not revealed in the article that the subdivision was platted with multiple sections, each section having different footage specs. That is increasingly common in central Florida, and dead-certain in PUDs.
The second is setbacks - front, rear and sides. For anyone unfamiliar with the term, these numbers tell you how far from the property line the structure can be built - the “footprint” relative to the lot.
I would never buy in a significantly unfinished neighborhood without knowing at least those numbers. Easements are also important, but usually in a lot vs. lot way, and as neighborhoods range upward in price, buyers often want to see some control over the elevations, so that there are not ten two-story houses in a row in a neighborhood that was touted to be a mix of one and two-story models.
So, tough luck to these folks, IMO. Either they didn’t read the paperwork or they paid way too much per square foot relative to what thehouses about to be built will cost. I look at it as the flip side of the HOA argument - if you hate HOAs, you are more likely to have anything and everything built around you. The architectural review boards exercise control that some buyers crave and others absolutely hate.
“Since 625 resale homes were recorded sold in third quarter 2007, the Pinal County resale market has consistently posted improvement. The median price has steadily eroded from $220,000 in fourth quarter 2005 to $193,000 in third quarter 2007 and $156,160 for the current quarter. It was $204,600 for a year ago.”
Proof realtors ONLY care about their comission…. Median price off 30% is “improvement”. I doubt the sellers see it that way.
The smart Realtors have flipped sides to the “buyer” side, saying “awesome! Affordability! Let’s go buy a house!” and avoiding sellers like the plague. They used to fellate sellers to get the listing because it was so little work to sell a house. Getting a listing = getting a check. Having a buyer meant filling out countless bids until your buyers either gave up or FINALLY didn’t get outbid. Now having a listing is an anchor of work, and having somebody dumb enough to buy right now is gold.
OOOOOHHHHHHH!!!! Is that what “buyer’s market”/”seller’s market” means. See, I anways thought it means “good time to buy”/”good time to seel”.
So, it really means “I need buyers” or “I need sellers”.
In this market I would think they need both. They probably have plenty of “people wanting to list, but not for a price that will actually sell” and plenty of “I want to buy a house, but don’t have a down payment and can’t document my income”.
Many of the transactions are post-foreclosures. How many of those use Realtor? Are the comissions really flowing for the used house sales people on the slowly ticking up sales?
We’ve apparently lost a quarter of our realtors here in Portland. For those who think we’re different - one realtor here in Inner Northeast said he used to represent about 50/50 buyers and sellers. Currently, he has 9 listings - all sellers - 5 of whom have never lived in the houses they’re selling. Dear portlanders: Sell today, or forever hold your note.
That’s the best story that I’ve heard in a while! Nobody listens when I suggest that the 30-40% of demand that has gone away came mostly from specuvestors.
Thanks Mac. I am toasting a Bridgeport Pale Ale to you!
I, too, will toast to you, MacAttack! With what I am drinking. What am I drinking? If only the bottle would hold still, I could tell you, and then we all would know.
You will soon be hearing from my attorney when I sue you for such lies!! Everybody wants to live here, especially in Hillsburrito!! Urban Growth Boundaries keep the prices up forever!! Every rich Californian with all the equity in their houses is moving up here by the droves.
I just got through talking with my “owner” neighbor who was bragging that this vacant land across the street from us is worth $5 million. The city worker told her so. So I asked her why the house bordering the property was having such a hard time selling after dropping the price and then giving up to rent. She didn’t have an answer for that. Funny thing is, they tried to sell their own house last summer with not success getting an offer that they would accept. Had it for sale for $350,000, got an early offer for $330,000, wouldn’t accept it because then they would only have $10,000 for the next house. But what do I know?? I am just a bitter renter with a few hundered thousand in the bank.
I just paid my rent yesterday, best $1525 I ever spend each month.
Drop prices drastically and you sell homes. We’ve been saying it here forever. At least it’s finally sinking in.
You get dirty looks when you say that to people. I usually suggest 100k as the price drop.
But the light in their eyes when you say “I know how you could have your house sold by the end of the week” before dropping that bit of wisdom on them is pretty hilarious.
I told that to a buyer here a year ago - that we were in a bubble - even gave her a Mr. Bubble picture. She looked at me as though I were clueless, and went about buying her house. Oh well! She bought right at the top, and in a “trendy” neighborhood, too.
But was it also “hip”?
I guess. It’s the Alameda district. It used to be kind of nasty, and my guess is, once the hip/trendy restaurants go under (this process is starting) it may be kind of nasty once again.
What restaurants are going under? Do tell.
Broke is the new black!
Hattip Txchick.
Got Popcorn?
Neil
The “improvement” in Pinal County is an increase in volume of units sold, many more in 1Q 08 than in 1Q 07. The comparison of 1Q 08 to 3Q 07 is meaningless, since nobody comes to south-central Arizona to buy a house in July or August. The volume improvement in Pinal since a year ago actually corresponds quite closely with my personal experience. A year ago, my loan demand was non-existent. Now it is feeble, but there are SOME transactions in the offing. In Trailer Park land, prices have not come down very much; but they were affordable to begin with, even if they were absurd amounts to pay for a tin can planted on a 1200 sqft lot and a swimming pool/laundromat shared with 400 people at peak season.
I know I posted this yesterday in Bits’, but it was late and I don’t think many people saw it.
Foreclosures in Minneaplois neighborhood
Take a look at the map (which is astounding), and then the comments. Realtors acting like they are ‘victims’ themselves.
Man, I got pissy with them.
I like when they cite all the hardship cases (Divorce, Medical/death, relocate). But hardship cases have been priced-in for decades, so in a normal market, hardships can still sell without too much loss. It’s only the insane market, egged on by Realtors(TM) et al that made the hardship cases even harder.
Go back and tell those Realtors (TM) that much of the pain and suffering is THEIR fault.
Real Estate Agents are nothing more than salespeople looking for a commission check. If any real fiduciary responsibility existed, the NAR would have been saying “Now is a TERRIBLE time to buy a house” in 2007.
But that doesn’t generate commission checks, now does it?
And that is why many people consider used house salespeople to be complicit in this whole mess.
Is this your comment? Cause if it is, it’s so good I’m surprised they didn’t filter it.
yah, that was me. My wife was the poster using the aliase ‘bee’ in there.
Nicely done SF. I thoroughly enjoyed reading that and passed it along to some colleagues. I *almost* felt bad for the realtards after they were silenced from the pummeling they received from you.
“‘Renters realize they’ve got me by the tail now, so they’re asking for concessions and bargains and money off the security deposit, and I find they have the upper hand,’ said John Dryden, owner of a half-dozen rentals in Tamarac and Plantation. ‘Of course, I have no choice but to negotiate if I want to get my property rented.’”
Never underestimate the joys of landlording.
It’s even more fun to do the repairs and cleanup after the tenants move out.
It is nice to see the worm turn. Landlords have been acting like they are doing renters a favor by renting to them.
What I love is how we had communites in SFL during the boom having the “snob” factor..well we live here and we golf here and our homes are worth a MILLION DOLLARS because they are here…now those communities are a renters haven..loaded with THOSE KIND of people they were trying to keep out..Now the renters are enjoying THEIR CLUBHOUSE, THEIR GOLF COURSE and THEIR POOL, THEIR GUARD GATED COMMUNITY..without having to fork over the HOA dues, Taxes, and Insurance and a BMW in the driveway…
ain’t life grand!
I love it too, when my mom sniffs abouts the possibility of oh horror rentals going up near her fancy house in the boondocks of Bakersfield - they bought back in the late eighties in the last boom and saw housing prices dive for 10 years before the final short-lived boom.
When I say but mom, I’m a renter, she just ignores me.
In 2006, median new home prices in the three counties peaked at more than $458,000, but now they’re down to about $360,000.”
People should know this area to realize how insane the $458K median price WAS for this area. There are literally towns in the middle of nowhere were satellite pictures show that about half the town was recently built. (Think Patterson and Los Banos)
These areas WERE and ARE low paying areas. Not many in their right mind would live there.
I’ve looked at those maps so much that I can guess when a neighborbood was built, within a decade or so. The 2000-2007 cookie-cutter ‘hoods look offensive even from 30,000 feet.
“Prescott, who was in charge of UK housing policy between 1997 and 2006, also attacked mortgages providers for relaxing their lending criteria. He said this had sent house prices soaring to unsustainable levels.”
“‘Instead of keeping the supply of money in control, they allowed people to go from two or three times [salary], which used to be the building society requirements, to four, five and six [times],’ said Prescott, who also accused the industry of ‘total greed.’”
Don’t tell this Prescott guy about Cali; he’d blow a gasket. I think it got up to about 11.5X income at the peak.
Or more! Don’t forget 775k house to the 15k a year strawberry picker!
He couldn’t even afford the pick-a-pay negative amortization option.
“Gazumping and gazerundering can be forgotten.”
Ah, the British do have a way with words.
Yeah, but I’m getting tired of all the Brits and their accents on my TV–commercials, anchors, etc. I think it is just a ploy to sell something, no real talent.
The British still sound smarter to me.
Totally random thought: I watched a documentary on the history of the English language. (Total expert here…) IIRC, their theory is that the current southern accent was actually one of the major British accents of the 1600’s or so. (The UK has several accents.)
American English apparently retained several “old” English words such as “mad”, etc as they were heading out of fashion on the other side of the pond. The theory goes that the colonists, cut off from their cultural links were eager and able to hang to language and accents that gradually died away in the homeland.
If you follow this theory to it’s logical conclusion, there’s a distinct possibility that Shakespeare’s plays were pronounced in an accent not too far away from those tones we stereotypically associate with hillbillies. I find it kind of a lark to watch some of the Shakespeare productions with the totally British accents knowing there’s a good possibility that the “native” accent alone is somewhat throwing off how true to the original they can be.
Ah Bollocks. Leave it awd, Mate. Yar full o shite. GOD BLESS THE QUEEN.
Btw: wanna buy a house in Florida ?
PS: How dare you sir. I’m talented: My tongue can touch my nose.
Methinks Great Brittan has looked across the pond and foreseen its own future. They’re probably hoping for a more orderly decline if they start forcing the air out of the bubble through regulation. (What we should have done 5 years ago.) I suspect they, like us, are too late.
Canada still has a chance though. Hopefully they’ll take the opportunity.
I don’t know about that. I’m from Calgary. Prices have doubled to trippled over the last 6-7 years. I think the multiple is something like 5 or 6 times household income. And in Canada, you don’t get the tax deduction (unless you bought the house outright).
“Frank Maruca and his neighbors insist they are not snobs. But he understands it may look that way based on a lawsuit they filed arguing that a group of homes priced in the low $100,000s should not be going up near their own, which cost nearly $300,000.
Wouldn’t it be funny if it were the same house, now $200K less?
But still, admit it Frank, you are a snob. Heck, I’m a snob! I hate section 8, HUD and everything of the like that puts poor people into my neighborhood. I’ve yet to see an example of where this actually betters the poor people vs. drags down the whole neighborhood as a whole.
And someone living a 700K house is trying to keep his kind OUT!!
Funny…
And that the beauty of the US is that we can go through the class structure by hard work. We are unique in that we are not born into it, but can advance through it. God bless America.
Preach it, jckirlan!
Only by considering only anecdotal evidence could one claim the US is an open society. Any reading of scholarly analyses reveals that it takes 5 generations to go from the bottom 20% in income to the top 20% in income. That’s certainly not an open society where hard work pays off (unless your comparison is some kind of caste system where no mobility is possible). I can give you the scholarly cites on this if you want.
The US has lots of things in its favor, but openness to upward mobility, despite the myth, is not one of those things.
IAT
5 generations according to some Ivory Tower intellectuals.. as compared to never in a true caste / class-based society..
.. some goddamn ingrates think the world should be handed to them on a platter.. don’t be one of them or you’ll go nowhere.
Only by considering only anecdotal evidence could one claim the US is an open society. Any reading of scholarly analyses reveals that it takes 5 generations to go from the bottom 20% in income to the top 20% in income.
“I give you my word as an academic”
“No good. I’ve met too many academics”
Many of the academics I have encountered rarely had the talent and where with all it takes to succeed outside the ivy covered walls.
Further, many of them share the trait of either disliking or even outright hating everything American. Anyone - the Europeans, the Africans, the terriosts all do it better than us dumb, ignorant oafs called US citizens.
I’ll conceed we are not perfectly open society - the US is not a strict “meritocracy”. A casual set of observations at the office can “prove” what it appearently takes years of study and reading for an academic to discover. Yes, Virginia, the world isn’t fair.
On the other hand, there are not many other places in the world whose culture practically begs you to dream big. How many international organizations, corporations, inventions started in a county with slightly more than 200 years of history behind it’s belt? This is truely one of the places on the planet you can succeed. I even have proof living from me right upstairs, but you probably wouldn’t like to hear it, because it’s anecdotal and all.
I’m totally open to the idea that we can improve as a country. I apparently stopped being open to the idea that “experts” can tell us in neat sound bits what’s wrong with us.
What does this actually mean, the five generations? It surely doesn’t mean that NOBODY goes from the bottom quintile to the top quintile in 1 or 2 generations. We all know of someone who has done so. We also all know of several someones who have gone from the top quintile to the bottom quintile in 1 or 2 generations. That most people remain in approximately the same class position as their parents is to be expected — people don’t expect a set of outcomes extremely different from those their parents experienced. Furthermore, one of the things that persons in the top quintile try to assure is an easy way for their children to remain there. They don’t all succeed in this — and you would applaud that fact — and so would I — ’cause there has to be SOME way for others to get in! Even rich people make sacrifices to send their kids to whatever they think are the best schools etc…so how much mobility would you expect? I’m not convinced that absolutely mobility is desirable; it would render parenting futile, would it not?
its - I think there is a serious flaw in that conclusion because it obviously has to have been drawn in retrospect. If we consider an average generation to be 20 years, then we are talking about what people today achieve compared to 100 years ago. I don’t know if Michael Dell was born with a silver spoon, but it’s possible he wasn’t. Kids who get a job and put themselves through junior college and then modestly priced-universities, but who major in areas that will lead the economy do very well in a hurry.
I think the model to which you refer quite likely was true in China until the just last decade or so and in India perhaps. But not in the U.S. or Canada, IMO. The top 20% is a pretty broad category.
Thanks Chip. And AZ lender, you are right, it doesn’t mean no one. But (and I see this as a friendly example to contextualize AZ lender’s point) it does mean almost no one. There are 300,000,000 people in the U.S., and let’s say 20% live in poverty, so that’s 60,000,000 people. If 1% of them rise into the top 20% over their lifetime, that’s 600,000 people. That’s certainly not no one, and thus you might actually meet such a person. But, the odds are *still* stacked against them.
Speaking of no one, in all the blather, no one wants to actually *read* the systematically gathered evidence. A few of you condemn all academics, and all they might convey, because you happen to know a few knuckleheads who have doctorates. Guess it doesn’t dawn on you that knuckleheads hang together, and, hey, they hung out with you, so . . .. Guess it doesn’t dawn on you that Chris Thornberg (I think) has a doctorate, and so does (I think) Yun. So, having or not having a doctorate is not the issue. Having or not having an accurate analysis is the issue.
Now, you can trust my report of studies I have read, evaluated, and dutifully reported, or not. You can read them yourselves or not. But to dismiss them simply because they tell you some myth you learned in elementary school is wrong–especially when you just saw with your own eyes Bear Stearns get bailed out by the power elite, as if *that* doesn’t happen in various ways every day–well, that’s the same kind of “follow what someone tells me because it makes me feel good even though I should know better” logic that has placed most of the people now crying foul about their re-setting mortgages onto the road of ruin.
It’s tough to rise in this society. Complete mobility would probably not be good but, then again, (historical) research indicates complete mobility is virtually impossible. So, there is little reason to fear that happening. However, research also indicates that complete immobility *is* possible. I wouldn’t say 5 generations is complete immobility, but, to be clear, what it means is if I live in poverty, my kid may live a bit better, my grandkid may live lower middle class, my great grandkid may live middle class, and my great great grandkid may live upper middle class. I doubt many people in U.S. society make decisions with their great great grandkids specifically in mind. In that sense, mobility is basically *not* on the horizon of most.
IAT
now that was a very intellectual-type argument.. support a bunch of stats about mobility by supporting the statitisticians.
Granted that it takes, on average, 5 generations to advance to some degree, here’s my question: Why do you blame the lack of mobility on the society?
Are there laws that prevent upward mobility? Is descrimination due to religious affiliation allowed? gender? Sexual orientation? .. disability? ..race? ad infinitum.. Are there ANY govt sanctioned social barriers? No.
The only thing that can prevent a person from getting ahead is that person. The USA provides all the necessary tools, materials and protections, so stop blaming society and redirect your blame towards those who deserve it..
Hey JoeyinCalif,
Where in my comment was there any statement about cause? I simply reported a fact (whose existence seems to make you angry). Someone said one can move through the class structure here, and I pointed out that research shows that’s not common, in fact, is very uncommon. I never said why. Perhaps it is the vast majority of Americans are lazy idiots who can’t think straight or defer gratification. Judging from the thinking in response to my note, your thinking especially, I certainly would not reject that hypothesis.
IAT
Here’s my beef.. from your original post:
The US has lots of things in its favor, but openness to upward mobility, despite the myth, is not one of those things.
Your conclusion is completely unrelated to the statistics you cited.. You admonish society as a whole while presenting absolutely no evidence of how the USA is not open to mobility.
I pointed out that research shows that’s not common, in fact, is very uncommon.
Quite the contrary.. That research says it’s inevitable that, given a span of 5 generations living in the USA, any given person’s family is statisticly favored to become wealthy.
JoeyinCalif,
My original post said the US has lots in its favor, but openness is not one of them. True. But that does not mean I am saying the fault is US society. There may be little upward mobility because people should change how they act, how they live. It could be the US rules are extremely open, but people are lazy. For those lazy people, open rules are not enough. The elliptical phrase in my statement which I did not think I needed to explicitly state was “for people currently in the US living as people in the US currently live.” Change those people, or their behavior, and the US very well might have openness to upward mobility. I know this may be too nuanced for some, and you’d rather read all sorts of motives and claims into what I wrote, but that does not make the explanation and nuance any less true.
As for your claim of statistical certainty–there’s that poor thinking I mentioned earlier. Put simply, it seems you did not read the papers I was referencing. So, perhaps understandably, you misinterpret their findings. No, it is not inevitable that your family will rise. As for being “statistically favored,” if you want think people should celebrate that their great great grandkid has a nonzero chance to be upper middle class while they sit in the dark in their foreclosed upon house as they fall further into poverty, fine. But, that is moving the goalpost. People’s great great grandkid’s success is hardly what most people mean when they talk about the US being an open society. If that’s what you mean, well, I have no disagreement there. But, it’s hardly what the original poster seemed to mean.
So, I repeat my offer–if you’ll just ask, I’ll supply you with a list of citations you can follow up on that will, I hope, clarify these issues. As you have not asked already, even though I have offered, I presume you’d rather pontificate in ignorance than study in seriousness.
IAT
Again you miss the point.. It doesn’t matter how long it takes up move upward. It might be 5 generations or 50.. it might take 5 years.. Whether or not the time frame is acceptable is nothing but a matter of opinion. When compared to a caste society, 5 generations is infinitely better, imho. Compared to Fairy Land, 5 generations sucks.
There are no known socially acceptable barriers to upward mobility in the USA. When we find a hidden one, or when a new one is born, we make it a point to extinguish it.
Just provide one example of a US government approved barrier to mobility and I’ll back off, and we can send this thread to the archives.
Exactly…and I don’t want people that don’t work hard for a living to live near me. People that live off of government subsidies (short of the elderly and truly disabled) don’t tend to make the best of neighbors.
But I understand his reasoning somewhat. You work hard, earn a decent living, and want everyone else around you to do the same. Every time a new development goes up near the beach, some idiot wants 15% of the units to go to those living under the poverty level. What is the point of working hard to live in a modest house in LA when I can instead live off of welfare and live walking distance to the beach? The system is fundamentally flawed.
I agree. Only hard-working people next to me. None of those damn pot-smoking lazy trust fund babies who don’t work and have a new lexus to crash every 6 months.
People making minimum wage work a damn sight harder than anyone else and I would be proud to have them for neighbors.
The condo-bubble crack-up in Ho Chi Minh City made my day. I was a kid during the war, which seemed to go on forever. Everybody who wasn’t against the war was afraid of the commie takeover. Apparently, left to their own devices, commies become crazed capitalists.
Maybe if we wait 10 years, it will be condo-fever in Sadr City.
Maybe if we wait 10 years, it will be condo-fever in Sadr City.
But Sharia Law forbids charging interest. There won’t be any subprime loans.
No interest? No problem.
Fundamentalist hypocrisy allows them to find work-arounds..
But Sharia Law forbids charging interest. There won’t be any subprime loans.
I’ve read a little bit about Islamic banks. If the articles were right, the formulas that they use to “not charge” interest makes tax accounting look like 1st grade math.
My husband suggested I look into some trusts that invest in Islamic banks because he read that they are financial conservative, similar to our investing style. (You can invest in anything these days.)
I told him when Sharia Law stops considering the testimony of 1 man as equal to that of 4 women, I’d give the investment some thought. And to his credit, he completely agreed with me when I told him that aspect of Sharia Law. Sharia Law - *shutter*
Vermontgal–>I told him when Sharia Law stops considering the testimony of 1 man as equal to that of 4 women, I’d give the investment some thought. And to his credit, he completely agreed with me when I told him that aspect of Sharia Law. Sharia Law - *shutter*
that is one retarded opinion. stop watching Fox news gal and head to the library and do some reading.
“that is one retarded opinion”
Now there’s a witty rejoinder. Though anyone who refers to a woman as a “gal” is probably a toothless yokel.
yeah, V-gal.. do some reading:
In 2003 a Malaysian court ruled that, under Sharia law, a man may divorce his wife via text messaging as long as the message was clear and unequivocal.
http://en.wikipedia.org/wiki/Sharia_Law#Women
that is one retarded opinion. stop watching Fox news gal and head to the library and do some reading.
LOL - so am I wrong? What actually is the law anyway? I’m okay with being wrong when it happens. Being called names because you don’t like the opinion/statement I was offering is much lamer than watching Fox TV on a regular basis.
At any rate, in my reading (yes, I read it…) rape cases are practically never convicted under Sharia Law because it takes 4 women to “prove” that it happened. 1 woman’s testimony against 1 man’s is not “good” enough. A woman quite literally would need to be raped in broad daylight on a crowded street to get a conviction.
Sharia Law/Islam at one point was the most advanced in the world for women’s rights. The current culture, however, has pretty much trapped it at 1000 A.D. or so. *Shrug*
(And the totally funny part of that insult is that we don’t have cable TV…. )
“The stream of foreclosures that began to hit Capital Region homeowners last year turned into a flood in the first three months of this year, and neither bankruptcy court nor various foreclosure prevention efforts are providing much help. One out of every 622 households in Albany, Rensselaer, Saratoga, Schenectady and Schoharie counties got foreclosure notices.”
BWHAHAHAHAHAHA! But according to the natives, EVERYBODY wants to live upstate !! What happens if there’s another 9/11??? But AMD is building a plant in Malta so we’ll all be rich!!!
The truth is that these three particular counties, Albany, Schenectady, Rennsalaer and points north will now resume their slow slide decline into the post manufacturing darkness. The area lost hundreds of thousands of high paying manufacturing jobs over the last 35 years and still losing them. $12/hr retail jobs aren’t gonna float 250-500k notes so wrap your empty skulls around that fact.
http://biz.yahoo.com/usnews/080501/01_why_consumers_should_cheer_if_the_fed_stops_cutting_rates.html?.v=1&.pf=banking-budgeting
Yahoo telling us to be happy about end to Bernake rate cuts.
Ya gotta watch the video to the end on the NBC 5 link that Ben posted where the guy says: “I think in our lifetimes this is one of the great times to buy real estate in the metroplex,” Robbins said.
Would you trust a word that comes out of his mouth?
Totally off topic, but I really hate the goatee look. I just shaved off ten days of stubble (the result of being a confirmed hermit) because I couldn’t stand the look of my own face in the mirror.
your post makes me feel ashamed of my mutton chops.
confession:
shorn sack.
eeeeeeeeeew
too much information
I wish I could be the judge on that Manatee County lawsuit.
Me: So, Mr. Maruca, this is a supply/demand economy. If you feel the houses the defendant wants to sell at a lower price, well then you buy all of them for $300K each. The defendent will be pleased to get a higher price. You keep your house value. Everyone goes home happy. Now get out of my courtroom. I have more important cases, like prosecuting politicians for ordering hooker services.
“Renters Have The Bubble By The Tail Now”
I am happy to say that I just rented a two year-old, 16th floor beautiful corner apartment with a view of the Chicago skyline for 50% of the current monthly PITI on a comp unit. Includes parking ($30,000 to buy). My middle finger wags at FBs. (My landlord is not one of them).
Hahahahah. Attention Whore
http://www.thestreet.com/story/10414998/1/erin-brockovich-sets-sites-on-lennar.html?puc=newshome
“‘Homeowners and investors are buying with the expectation of strong appreciation in the future.’”
Oh, we still have a long way to go.
Depends on what timeframe one uses for defining “future.” Perhaps geological time would be appropriate.
There’s just too much get rich mentality still out there, to be any where near a bottom.
“There’s just too much get rich mentality still out there, to be any where near a bottom.”
Exactly. I see it around in my little town everyday. Because prices are 5-10% off and there are more foreclosures, people think this is a great time to buy a house. We even have a prospective FB in my own workplace (despite my pleas not to buy). Somehow, the masses can never understand that a “discount” of 10% isn’t a discount if the price was propped up 200% above fundamentals in the few years before the bubble burst.
I’ll believe that it’s truly a buyers market when Realtors stop listing apartments and houses as 2br, 3br, etc. — and just give me the damn square footage.
And when “foreclosures” websites stop charging readers to browse — then we’ll be approaching reality.
My 2 cents…
Soho - that bothers me, too. I hate it when I look at an area’s listings in realtor dot com and the square footage isn’t given. I suppose it is all geared toward forcing you to call the listing office, but it doesn’t work with me. Too much of those games and I look elsewhere. There’s a whole lot for sale out there.
This is funny. Clinton on being rich, in an interview last night with O’Reilly.
On today’s “state of the race” conference call, a reporter asked about an exchange between Hillary Clinton and Bill O’Reilly on yesterday’s show in which Clinton uttered the words, “Rich people—God bless us.”
Clinton spokesman Howard Wolfson denied that’s what she said: “She said ‘God blessed us.’ B-L-E-S-S-E-D.”
That may be what she meant. But it’s definitely not what she said. I just watched the video again with headphones and cranked the volume way up. Not a trace of plosive after the sibilant.
Here’s the full context, as described by the Huffington Post:
[O’Reilly said,] “I’m not middle class, I’m a rich guy.”
Clinton responded (in an awkward moment), “Rich people, God bless us. We deserve all the opportunities to make sure our country and our blessings continue until the next generation.”
someone please put that odious hag out of her misery so we can get about the business of ripping the other one to shreds this fall
I agree, I don’t like McCain either….
Operation Chaos is in full swing, sir
Oof, I’d be careful with that strategy! Diety-forbid it backfire!
Does anyone know how to get a bumper sticker made.
I’d like to memorialize that quote…
“Rich People..God Bless Us” Hillary Clinton.
By the way, I’m betting against Big Brown in the derby tomorrow. He’s owned by hedge fund guys.
Ramblings running around the net, indicate that you keep you lights on while driving in your SUV if you like the old fart from Arizona and turn them off at night if you get a whiz from those people from Illinois and New York.
Received same from RE in Idaho that I went to high-school with.
I responded as noted below.
FROM: “CHAD”
Please continue to support “The Shrub” as usual. The (2) alternatives are mute points, in any case.
Just continue to leave vechicle on the concrete blocks in your front yard in the weeds, as you have been doing for the last 7 1/2 years.
See how easy that was!
FROM: Jeb
Whatever!
Hahahah! Funniness.
“that odious hag out of her misery ”
Which one? Hildebeast or that mummified stepford wife, cindy mccain, she of the hidden tax returns and investing buddies with s&l cheat charles keating. I agree, both are enough to give you the heebie jeebies.
“rich” people dont sit behind a desk jockeying papers and phone calls with a steady stream of wrench monkeys and parts prima-donnas prancing about…I cant figure out how to get wages moving higher.
Grab your ball-joint cuz OTR vehicle service/maintenance is getting another strong round of pricing increases, not just the metal stuff either….5th straight year of 20% plus price increases on medical coverage.
Already laid off 30% of the force, cut hours and overtime, halted hiring, poor performance in the A/R, and sales rolled back 5/6 years, hard goods sales are dead in the water, builders giving trucks and equipment away, plenty of abandoned iron just laying around…tell me how to win that war.
goin to the confessional:
voz got caught Sprinting with an S&P downgrade of debt to junk status, Im lookin for it go back down to 5/6 range…..might be time for another covered call opportunity. not that ratings have anything known to humankind to the price of a stock. Let the hatchet man do his work, while the envoys wearing turbans learn Chinese and Portuguese.
got me thinking about debentures:
CFC, S, or HTE?
funny how that all works.
the 6% percenters:
let it not be forgotten that the pension funds are addicted to 6% or better just to cover liabilities.
voz cant do the arbitrage on CFC/BAC fed bailout backstop financial engineering….dont matter how smart im not.
release the moderation, ben..Im spillin the beans.
Builders Facing Facts: No Congressional Bail-Out
http://www.cnbc.com/id/24407612
did anyone see this? and if so do you think its true? i have a feeling that this wont be the last we will hear of this!!!!
I read about this in a dead-tree paper this morning. It looks smart politically if you can convince yourself that anything will get people to start buying houses again soon. Maybe 1% rates on 30 year fixed mortgages? Maybe prices will correct back to 1997 level in next six months? Not likely IMHO. I’m still looking for 1997 prices (inflation-adjusted), but not for another couple of years.
i’m probably in the tiny minority about it, but i really think the cut off PAC money sealed the builder’s fate.. a few people like Harry Reed got all flustered, but the rest of congress is thinkin screw-you builders..
I think this would be a great thread title.
How Low Will Real Estate Go?
Check it out in Yahoo http://promo.realestate.yahoo.com/promo/how-low-will-real-estate-go.html
Now does anybody really believe the Fed can do anything constructive about this. Sounds great. I expect them to make it worse. Good topic, as many folks are living off cc’s since HELOC is gone.
http://biz.yahoo.com/ap/080502/credit_card_rules.html
In honor of the proposed gas tax holiday, I would like to propose another set of holidays:
Federal Universal Service Fund
Oregon Universal Service Surcharge
Oregon PUC fee
Residential Service Protection Fund
Federal Access Charge.
but, bye my payment of those I am secured from the onslaught of the great horde in the virtual world….I am happy to pay it. the new godfather protection racket aint just about liquid black gold energy getting pumped from sand.
itsaboutime, What a load of manure. I grew up on a farm in northeastern North Carolina, raising chicken, pigs, you name it. I picked cotton for 3 cents a pound at age 8, chopped cotton for 40 cents an hour…I could go on and on. I just did some unamerican things growing up like SAVE, INVEST, delay gratification, have roomates when I didn’t want them, have housemates when I didn’t want them, and studied physical chemistry and physics when I didn’t want to. I now live in a million dollar house that I can afford, married a beautiful (inside and out) gal thirty years younger (a medical professional) than myself. Life can be good here in the US…IF you work and save and plan for the future. My advice to people who think they don’t have the opportunity here…I don’t think I would want to stay in a place like that.
Diogenes, you rock!
I’ve had good relationships with older women but currently am having great times with women 25 years younger than me. Haven’t married one yet since I have not made up my mind. Some of these young women are very good looking, but some of the older ones are too. This problem is a good problem to have.
Diogenes,
I know a smoker who lived to a ripe old age. So, all that research showing that smoking causes cancer, what a load a crap.
Congrats on your success. It is insufficient evidence of the phenomenon of which we write.
It’s very frustrating. People have been brought up on sound bites. So, you write something that says something specific, but they read what you wrote, and then hear all the sound bites they’ve come to associate with what you said and act *as if* you actually said those things. It is poor thinking, it explains a lot of what we discuss here on the blog and, frankly, Diogenes, I thought it was beneath you. I stand corrected.
IAT