People Who Were Well Off Are Feeling Nervous
The Princeton Packet reports from New Jersey. “Mercer County’s more affluent communities, including Princeton and West Windsor, have experienced an increase in foreclosure notices during the past year, according to an analysis by The Packet. Both towns have seen a tripling of initial notifications of foreclosure proceedings, year over year. In Lawrence Township, such notices have nearly doubled.”
“While the actual numbers are still small compared to those recorded in Trenton, Hamilton and elsewhere, the trend suggests that Mercer County’s wealthier enclaves are not immune from the long term effects of the housing crisis and slowing economy.”
“‘I’m not surprised,’ said U.S. Rep. Rush Holt, whose 12th Congressional District includes Princeton and West Windsor. ‘People just a few years ago who were well off are feeling nervous,’ in some of his district’s wealthy towns, Mr. Holt said.”
The Capitol from Maryland. “The year-to-date average median sale price for homes in the 21401 ZIP code of Annapolis stood at $393,635. That’s a 5.9-percent drop from a year ago. Housing prices in Anne Arundel have remained relatively stable even as home sales have dropped by 20 to 30 percent in most county neighborhoods.”
“‘You’re seeing a demand pullback but not a rapid decrease in prices,’ said Dr. Daraius Irani, director of applied economics for the Regional Economic Studies Institute at Towson University. ‘Homes are keeping their value, we’re just selling a lot fewer of them.’”
“Dr. Irani said there are some homeowners ‘who are still clinging to the memory’ of what their neighbor sold a home for during the peak of the market. Others are holding prices because they don’t necessarily have to move and are saying, ‘I can stay and wait another three years to sell the house,’ he said.”
“The estate at Horse Shoe Point at 1 Norwood Road that originally was listed for $12.5 million is expected to sell for under $7 million, said Charlie Buckley, a Realtor who calls himself ‘Mr. Waterfront.’”
“‘This is sort of the upper bracket people doing some bargain shopping,’ he said.”
“Dennis Deitch said he hoped to sell his five-bedroom Colonial home in the Murray Hill neighborhood of Annapolis ‘a month ago’ so he and his wife and two children could move to another area such as Arnold or Davidsonville. But Mr. Deitch said he has had to adjust his expectations on price and how long it will take to sell.”
“‘Part of it is not only the uncertainty but the constant barrage you hear about how bad the economy is,’ he said.”
“Mr. Deitch said his home, which is within walking distance of downtown shops and restaurants, is listed for $869,000. However, he’s planning to lower the price to $849,000 next month, he said.”
“Mr. Deitch said he senses hesitancy among potential buyers. ‘There are people who come to our house, they really like our house, but they are not ready to buy,’ he said.”
The Washington Post. “Foreclosures in Virginia nearly tripled last month compared with July 2007, with Northern Virginia accounting for more than half of the foreclosures. The number of Loudoun County homes in some stage of foreclosure rose from 378 to 581, up 54 percent, according to RealtyTrac. Loudoun’s foreclosure rate was the second highest in Virginia.”
“Prince William County continued to have the highest rate, with one of every 103 houses in a state of foreclosure. Virginia had 5,745 foreclosure filings last month and the 10th-highest rate in the country last month.”
“The median sales price of a home in Prince William last month was $214,000, compared with $354,450 in July 2007, according to Metropolitan Regional Information Systems. Nearly 550 more homes were sold last month than in the previous July.”
“The median home sales price in Loudoun decreased 20 percent in July from the same month a year ago, from $440,000 to $350,000. The median price in Fairfax was down about 17 percent, with little effect on the number of homes being sold.”
“Experts said the housing market will not fully recover until foreclosures are absorbed.”
“The report from the Virginia Association of Realtors pointed to ‘dramatic’ differences between Northern Virginia and other parts of the state, which have not experienced such steep drops in home prices. The association said it expects regional sales activity ‘to widen in the next quarter before the overall housing market edges back toward equilibrium.’”
The Times West Virginian. “As subprime foreclosures create problems for the country’s housing market, more homeowners are experiencing losses because of liar loan default, The Associated Press reported.”
“Liar - or no doc - loans were one of the risky products with no documentation introduced in the early part of this decade, said Walter Molony, spokesman for the National Association of Realtors. ‘Frankly, they’re the kinds of loans that were not suited for many people and should have never come onto the market,’ he said.”
“Molony said it was mostly mortgage lenders and brokers, rather than banks, who introduced these products into the market and sold them. These lenders then collected quick fees and resold the mortgages into the secondary market.”
“‘It took a long time for the problem to become apparent,’ he said. ‘They’re terrible mortgages.’”
“He said most of these liar loans went away quickly last year along with other risky products. This period of very loose lending with no criteria or oversight then transitioned to overly restricted lending today.”
“‘Borrowers with good credit are unable to buy homes that they can afford,’ Molony said. ‘They need to loosen up the lending criteria.’”
“Molony said the country should start to see the rate of foreclosures trend downward and return to normal levels next year.”
“‘When you look at our inventory and sales data, we have unprecedented levels of distress sales - either foreclosure or a short sale in which the home is being sold for less than the outstanding mortgage value,’ he said. ‘A lot of people have been hurt by that.’”
The Rocky Mount Telegram from North Carolina. “Increasing numbers of Rocky Mount residents are falling behind on their mortgage payments and losing their homes to foreclosure. ‘Until a few months ago, their economy (in Rocky Mount) was holding up, but unemployment has increased quite a bit recently, so those job losses could translate into increased foreclosures next year,’ stated Sam Khater, a senior economist with First American CoreLogic.”
“In states like California, Florida and Nevada, where double-digit increases in home prices were the norm only a few years ago, values have tumbled so fast that thousands of mortgage holders could not sell their homes for what they owed.”
“Many have walked away from those properties, said John A. Barker, who is CEO of Providence Bank in Rocky Mount. ‘Those people opted to let the bank take the home and put their cash into their credit cards, which has been a source of income to get through this (economic downturn),’ Barker said.”
“‘In Michigan, they had a lot of car workers laid off. When they were laid off, they couldn’t make the mortgage payment,’ Barker said. ‘And in those communities, each time a home is lost to foreclosure, prices on the same block started to tumble. It was like a domino effect.’”
“Rocky Mount Mayor David Combs, the broker for Century 21 The Combs Co., said sales are being held back in Rocky Mount because of the increased difficulty in obtaining home loans.”
“‘The number of home sales are down partly because of the (lack of the) availability of credit, but not because there is not a demand (to buy homes) in the market,’ Combs said.”
‘A lot of people have been hurt by that.’
That’s right Mr NAR. Some people have been ruined financially, some even commit suicide. And all this time the NAR has pretended this was some public relations game, when in fact now millions of families are “hurt.” You don’t deserve to be lecturing anyone about how lending should be loosened, or anything else for that matter. Go crawl under a rock with the other NAR economists.
“The owners are nowhere to be found when the sheriff’s deputy shows up. The landlord is ready, however, and unlocks the business and tells the crew of 25 men to start removing the contents. Everything. Out go the computers, copy machines, desks, cubicles, conference tables, paper-stuffed file cabinets, posters that say “Ask About Our Zero-Origination Fee Programs,” monthly sales charts, coffee makers, plastic plants, a pair of women’s shoes left under a desk.”
“In the back of the cavernous office, the movers find the remains of a nightclub/party room, with stereo speakers, flat-screen TVs, cocktail tables and what looks to be a dance floor. Behind the bar, a sign hangs on the wall with a picture of a palm tree: Club ReMax.”
“Gary Michael, president of NAI the Michael Cos. and Michael Management, two longtime Washington area commercial real estate firms, said he expects to see more small businesses having difficulties, struggling to cover their overheads.”
“If you’re a consumer and you’re not going out to dinner much, I think that small businesses are less capitalized and less able to handle it,” Michael said. “It’s a lot tougher for the smaller guys to borrow money if they need it to cover short-term cash flow hiccups. A lot of people used to rely on their homes as a source of borrowing and that has dried up.”
“A corporate spokeswoman for ReMax said office consolidations are not uncommon in the current real estate market and asserted the D.C. region is still strong. Pemberton, who has watched other brokers turn to bartending or other jobs, thinks the market will turn.”
“Come back in a couple of months,” he said. “We’ll be selling more than filing cabinets.”
Yeah, you’ll be liquidating what’s left over after you sell the filing cabinets.
“He said most of these liar loans went away quickly last year along with other risky products. This period of very loose lending with no criteria or oversight then transitioned to overly restricted lending today.”
“‘Borrowers with good credit are unable to buy homes that they can afford,’ Molony said. ‘They need to loosen up the lending criteria.’”
Uh, Mr. Baloney, wasn’t it loose lending criteria that helped myriad households to buy homes they cannot afford, thereby driving prices to levels that are now reverting so rapidly that no lenders want to touch the falling knife collateral? Who is supposed to wave his magic wand to undo the damage caused by loose lending earlier this decade?
“A lot of people used to rely on their homes as a source of borrowing and that has dried up.”
as well it should. How about relying on your savings account as a source of borrowing. (Which is itself not without risks.)
“It’s a lot tougher for the smaller guys to borrow money if they need it to cover short-term cash flow hiccups.”
Is there any chance they might qualify for a below-market-interest loan through one of the Fed’s myriad special lending facilities?
This is Mr. Bastiat in action.
Who? That one pretentious wall-scribbler who had to effortfully send hisself on to ‘Shake Hands with Sweet Baby Jeebus’ in order to get some recognition? Or is this a different Bastiat?
Basquiat?
http://www.basquiat.com/
Bastiat
http://bastiat.org/
I think you are thinking of Basquiat.
Now I’m thinking of Bisquick. Mmmm. Pancakes.
Naah, this is Frédéric Bastiat, classical economic theorist.
http://en.wikipedia.org/wiki/Fr%C3%A9d%C3%A9ric_Bastiat
from that article from the WaPost:
*********
“On a recent weekday morning in Hyattsville, the only son of a local cabinetmaker came face-to-face with the end of his father’s business. He watched, shellshocked, as a crew of 25 men carry the contents of his father’s woodworking shop to the curb of an industrial park.
John Robey had worked there for more than 20 years, said Charles Wenger, his landlord. When Wenger stopped by the office to check on his tenant, he discovered Robey had died. A local police official said he died of natural causes…It took four hours for the crew to haul Robey’s table saws, sanders, jigs and other woodworking equipment to the curb. A craftsman’s tools, accumulated over a lifetime….
Once Wenger locked the shop, sheriff’s deputies left. Then a flood of passersby began to stop and scavenge through the contents of the dead man’s shop, throwing tools, furniture and half-finished projects into their cars and trucks, then driving off.”
*********
in a nutshell: 20 years to build up, 4 hours to pull apart. I wonder if the passersby took their new tools to a nearby graveyard to see what was available. Or an Ikea. Ugh.
“Come back in a couple of months,” he said. “We’ll be selling more than filing cabinets.”
Yeah, he’ll be selling a glossy photo of a filing cabinet, or a funny knick knack to sit on your filing cabinet, or designer folders to go into your filing cabinet, or a loan backed by filing cabinets, or shares of the stock FLCBNT, or tickets to a workshop about how you can find great filing cabinets and sell them at a profit, or new software that helps you organize your filing cabinets. (And I will say to him: MY filing technique is unstoppable. hee.) I bet he won’t be selling something real or useful.
Too many people have taken the idea that you can define your own reality way too seriously. Saying it, believing it, making a logo for it, chanting for it, praying on it, having a passion for it, teambuilding it, packaging it, marketing it, rebranding it, meditating for it, developing a lifestyle around it, networking it, workshopping it, refinancing it, consolidating it, spinning it, outsourcing it, reframing it, thinking positively about it, getting out there and sell- sell- selling it. is. not. enough. The magic beans economy.
Oh, I just got all mad. I have to go back to work and make something real myself.
‘Others are holding prices because they don’t necessarily have to move and are saying, ‘I can stay and wait another three years to sell the house,’ he said.”’
Sure they can: See no price drop, hear no price drop, think no price drop.
‘Homes are keeping their value, we’re just selling a lot fewer of them.’”
“Dr. Irani said there are some homeowners ‘who are still clinging to the memory’ of what their neighbor sold a home for during the peak of the market. Others are holding prices because they don’t necessarily have to move and are saying, ‘I can stay and wait another three years to sell the house,’ he said.”
This makes no sense. Homes have held their values but the prices that a neighbor sold their house for is “a memory”. WTF? If prices haven’t gone down, why would people have to face the fact that prices are down? I hate The REIC.
Such thinking by FBs should be encouraged, IMO. The longer FBs hold onto their houses and keep up with the mortgage payments the better for all of us. The banks are already overwhelmed with walkaways and the RE market is saturated with houses offered for sale.
correcto. We here all want a decline in prices, but we are going to get that anyway. We needn’t have chaos to go with it.
Yep.
Yes we do….chaos in this case is a good thing.
If my own limited observations are any clue, I think it means that homeowners remember the prices at the peak, and still somehow think that they’re going to get $100-300K MORE in 2008. Because, you know, real estate always goes up. And it’s different here.
‘Homes are keeping their value, we’re just selling a lot fewer of them.’”
Ha! In that case I could have a POS house here in Baltimore and claim that its value is $10,000,000!
Post peak, fence sitters are too smart to accept any bull like that coming from home moaners.
If I want to listen to an Iranian Economist, I’ll listen to Nouriel Roubini -
(not Dr. Iran-i , meaning “one from Iran” in Persian/Farsi for those of you who don’t know!)
After all - he’s been right in all his predictions so far about the Housing / Credit Bubble meltdown
I have some gold which has held it’s value at $1000 /oz if anyone wants it
(Hint) you can buy very similar gold at a local coin store for a bit over $800 right now.
The same is true for houses. If someone wants to declare their house to be 2006 prices, good for them. I suspect waiting 3 years will result in much lower values however, so I believe these individuals should be thinking longer term, around 15 - 20 years to break even.
Exactly.
I like to rile my buddy who is so much into real estate by telling him you can put trailing stop on a stock but you cannot put a trailing stop on your real estate. The closest you can get is by making darn sure you know the comp prices of houses in your area and you radically undercut the lowest comp price.
Of course, the greed will get those who say they will wait 3 years. They are the ones cheering because they are hearing Faux News financial gurus or reading AOL headlines that say the bottom in Real Estate is in the next 12 months and the boom will return. Those Faux Nes gurus don’t mention that wages still are in the 2% annual increase range and more stringent loan requirements are in place.
I had an ebay garage sale recently. It was an interesting experience in whatever the opposite of mark to market is for our household.
When I’m buying something now there’s a little part of me that truly knows just how little it will be worth once I get it home. Very helpful, psychologically, if you’re tightening your belt right now (which we are).
Of course, one reason why lending got so out of hand (or why so many people got caught up in it) is that it is an appealing idea that the thing you **want** to buy is also a prudent **investment**. What a gorgeous mousetrap: hardwood, gold springs & double cream brie.
I don’t think that anyone who was truly “well off” is feeling nervous. But a lot of well-off-wannabees are! They’re the ones who thought they had a million dollars because some bank appraiser claimed the house next door to them was worth $1M, and a bank was willing to finance it.
(I have a 2nd cousin twice-removed who lives in one of those not-quite-Princeton suburbs, and I know all about that lifestyle…)
Right, reuven. I am “well off” because the only RE I own is a vacant 1.5 acres in SW NMex, taxes = $12 per year. I am “well off” because 499 out of the last 500 mortgage installments due me were promptly paid. I am “well off” because I underspend my income, and I am not very nervous, although the insolvency of ML and other big firms could cause me some inconvenience at the very least. Some on this board would say I can’t be well off without a gun and lots of stored food. I’ll work on the food storage, not the gun…
Cash stuffed Mattress might be good too.
Azzie, I admire you greatly for your wisdom, courage and the ability to look people in the eye and discern whether or not they are trustworthy. I know there is a good reason for you to own a New Mexico piece of land with property taxes of $12 per year. Please tell me. If you are doing it, I might should do it also. Heaven knows, the carrying costs are certainly affordable. Thank you.
Bingo. You’ve reiterated my point in a previous thread almost to the letter.
Many “wealthy” people making $150K + annually have no wealth. All they have is debt. Living large hardly means one is wealthy. Living in a $400K house and having no equity actually means you are dirt poor.
Perhaps if such people weren’t such pompous asses they could address what really ails them: Insecurity.
In our own situation (zero debt) we’re not nervous. We’re ANGRY! Angry that we’re the ones (along with the 5% of Americans who pay 50% of the taxes) that will have to pay for the excesses of 95% of the population.
Those numbers are true, if the Middle Class makes $5M or less.
What an unbelievably selfish post. You’re angry? How about being happy that you are one of the very fortunate few? Twould be a shame if you lost everything…or not…
Oh, reuven’s just a grump. You’d think that entering into the state of wedded bliss would calm him down and make him sing cheery songs and stuff, like a rich boy Pollyanna, but you’d be wrong. I bet his partner rolls his eyes and sighs patiently a LOT.
Also, now that I think of it, I recall a long ago post where reuven was all grumpy about regulations that protect wetlands and things.
Hey, reuven! You’re a dingle! So there! Wetlands are great! Being rich is nice! (I wouldn’t personally know, but I’m sure I’m right here.) Answer that, if you can, Mr. Grumpy! Huh? huh? Yeah!
Or his partner may nod in agreement at his every word … what do you know?
‘Or his partner may nod in agreement at his every word … what do you know?’
It is so true, and you are so right. I admit it.
(Tell me, did reuven smack you around some to make you come post? Is this your first time? Come on, man, the hour is late, the time is ripe…the truth feels so very good to speak.)
I dunno, guys, I think I see reuven’s point, grumpy or not.
Perhaps he’s someone who work his ass off, was diligent, prudent and above board — and you think his anger is without merit? Hmmmm….
There are millions of people in this country who haven’t done or exhibited such qualities for any length of time in their lives…and yet reuven is supposed to fork over his money to cover their lazy, entitled butts?!
There also are millions of people who decided on their own volition to go into fields of lesser pay…and yet reuven is supposed to cover their asses as payback of some sort for the latter’s chosen altruism?! While I’m one of those people myself, I would never expect reuven or anyone else who has achieved considerable wealth to help me live as comfortably as I’d like.
Of course there are millions all over the country who have drawn a bad card…been unlucky…reuven knows this and also recognizes where he has been lucky and where he has not. To bring that subject up is to expose yourself as not very bright. (And yes, I see the irony of my doing so).
While I can’t say for sure, my guess is that reuven is p.o.’d at societal leeches. I’d say that’s true of most people that frequent this board. (With the exception of maybe a dozen or two individuals who are clearly here because they are drawn to all subjects gloom and doom and enjoy wallowing in it. It’s emblematic of their world view…which I consider myself lucky not to share).
Well, I wouldn’t consider myself rich, by any standards.
But anyone with a savings account or an income based on actually producing some useful product will be very vulnerable in the coming years because they’re the only ones available who can be tapped to pay for this entire mess.
And I’m a very cheerful person! In fact, I’m the life of the party!
“‘I’m not surprised,’ said U.S. Rep. Rush Holt, whose 12th Congressional District includes Princeton and West Windsor. ‘People just a few years ago who were well off are feeling nervous,’ in some of his district’s wealthy towns, Mr. Holt said.”
Funny - no one talks about the insane property taxes in New Jersey…
“‘Borrowers with good credit are unable to buy homes that they can afford,’ Molony said. ‘They need to loosen up the lending criteria.’”
These idiots still don’t get it. Many buyers with good credit are unwilling to pay inflated prices for depreciating assets that will cost less in the future in the current deflationary environment in residential real estate. Lending criteria isn’t going to loosen up for a llllooooooonnnnnnnggg time. The banks (and eventually Resultion Trust II)will eventually lower the prices and find the floor. The FBs can’t lower much, if at all, since foolish lender must approve short sale. But I think those who are patient over the next 2-4+ years and wait for the REO ForeclosureWagon of 2010+ will be rewarded handsomely.
“Resultion Trust II”
You misspelled ‘Revulsion.’
“This period of very loose lending with no criteria or oversight then transitioned to overly restricted lending today.”
“‘Borrowers with good credit are unable to buy homes that they can afford,’ Molony said. ‘They need to loosen up the lending criteria.’”
HA HA, “they NEED”. It’s interesting how REs try to make decisions for you on how to spend your money.
RE’s to Banks: Loan your money with low lending requirements
RE’s to Buyers: There is no better time to buy! Priced out forever! Bottom is coming and you miss out!
REs to Sellers: Upgrade to Granite countertops! Price the house at this amount.
And you know what, most of these Re probably don’t have a college degree or a financial bankground.
I would ask for credentials before hiring an RE. Experience, Degree, any financial bankground, their occupation before coming into RE. Kind of like going to see a medical specialist or new doctor, a lawyer, or a investment banker. You expect the most competent person, not a person that got his/her medical school at University of Tijuana medical, or passed the bar at San Quentin, or got his MBA at a graduate program with only 50 students near a Bayou.
California economy continues to crumble. The wife got layed off last Friday. Siemens medical solutions finds it cheaper to operate out of Georgia than LA. Cant say that I blame them, at least they are staying in the US for now…
The California economy is a complete joke. It consists mostly of government and real estate. What is scary is that the unemployment rate in California is already 7.3% even though the housing market in most areas is not even close to a bottom. In most areas of California, it is still much cheaper to rent than to buy a house.
Much of the technology industry in California that gets so much attention has already shifted its footprint offshore. The only things left are the profits, the top management, and business services functions like legal, accounting, etc.
In my opinion,the main reason there are even as many businesses in California as there are today is because the top management would rather live in California than North Carolina or Shanghai or Bangalore.
For the record, I live in California.
Keep the popcorn popping,
Red Baron
And even that’s changing. “Top management” at many tech firms make very low six-figures, which is no longer enough for comparable life styles in the Bay Area etc. Many of the stars are choosing to relocate to other parts of the country or overseas.
According to the WS information source, alot of folks are being offshored themselves in order to keep their jobs.
The jobs used to be in WS and the majority would never think of going to some foreign country to work this job, but now, according to the articles, the fellas they are moving to S.AM and Singapore etc.
Willingly now.
The truly elite want to live where they want to live.
The Bay Area has some of the best weather in the world. That and Stanford University plays a large part. I’m not talking about .com BS or even Google (which defies logic to me). I’m talking of some of the best and brightest in the world.
But it’s still overpriced.
Mike
Jobless see little to celebrate on Labor Day
By Michael Stetz
STAFF WRITER
September 1, 2008
Today is Labor Day, and if you have a decent, well-paying job, celebrate that good fortune. Because a lot of people don’t.
It’s bad out there and getting worse. In San Diego County, the unemployment rate is 6.4 percent – the highest in 12 years. For the state, the rate is even higher, 7.3 percent.
Industries from construction to finance to – yikes – newspapers are taking it on the chin. And every day seems to bring more bad news about the economy.
Check out the South Metro Career Center in Mountain View, where the state Employment Development Department provides services.
Business was hopping on a recent day, and that’s not good.
Last month alone, 600 people came for the orientation to help them find work, double the number of a couple of years ago.
Around here, 7.3% unemployment would be a cause of celebration.
sorry about that , and med equip and testing is a bright spot
sorry to hear that, buckwheat. good luck to your wife this fall.
Thanks, we are expecting our first child in a couple months so it just made the decision for daycare easier. With her severance and my income we should fine for the next year or so.
PS, as I wright this NAR is spouting over the radio what a great time to buy it is LOL.
well, then, congratulations! exciting news!
I voted with my feet and left about 5 years ago. Unloaded the house and moved to a place with good job market, easier housing, and nicer people. Glad I left.
Joe, where is that? I moved from the Northeast to Northern Virginia because I knew I’d be able to find a job, and for me that was enough at the time. I find myself moving up the Maslow hierarchy, and am starting to think about things other than fending off starvation. Thanks for any insight.
Buckwheat,
not only California , but other states as well.
I got laid off August 2007 from UBS in New Jersey , I had been looking for the job for about 9 months since then until I settled for the short term contract in Delaware (it is 2 hours commute each way for me from Central New Jersey), was observing hourly rates for new jobs offered (I am in IT field) gradually decline from about $50-60/hour to about $35-40 range now and the number of job postings reduced as well. Outsourcing is in full swing.
But I am being told that GDP was up 3.3% last quarter, so all is well. 3.3% - my arse.
Oh and the number of first claims for unemployed benefits is above 400,000 for the n-th month in the row, but it is not a recession ,according to gov officials, it is just “slowing economy”.
I have to add that being the devoted reader of HBB (Thanks, Ben) since about February 2005 ( and Real Estate Journal Forum before that) I am well prepared to withstand any financial storm now.
Yeah, I dont understand where the 3.3% is coming from. I work in the trade industry and exports are up a bit, but that is mostly due to the decline of the dollar. Imports are way down and the only one of my friends who isnt worried about his job works for the California Dept of Corrections.
Bucky, My sympathy on your wife’s layoff. None of us need pain that is not of our own making. Good fortune to her in her search for a new job. Thankfully, demographics being what they are and the complexity of medical billing being what it is, it IS somewhat of a useful specialty. So it might turn out OK for you.
In the meanwhile, best of luck to you both, take care of one another.
“‘Borrowers with good credit are unable to buy homes.”
In my experience, there is some truth to this. There are quite a number of people here in Hawaii who did not leverage their homes or borrow on credit cards, and are stressed out to find that the home they built for cash cannot be mortgaged. Maybe they used to have $500,000 equity and now have 350,000, and they put $150,000-200,000 cash into the house, but the banks won’t loan a penny. They are a few years too young for a negative mortgage. Stuck in a decent house with a great view in a place with no jobs — no tourists, very few part-time $7/hr jobs to choose from. No loans(mortgage) means no capital to start a small business. Any solutions (other than growing the local cash crop) folks?
well…you’re typing this on a computer that is hooked up to the Internet…
fB
Those who think “cash is king” turning every one dollar bill into a one million dollar bill are in for a rude awakening too.
How many people even here believe the dollar, and various other foreign currencies, actually ever really gain value against each other? No, they are all constantly losing value in unison. The last great hedge against inflation, houses, has finally collapsed.
There is no real money, and this experiment of world-wide fiat paper currency will eventually systemically melt down.
I seriously have to laugh every time I hear somebody mention the “trade deficit”. There is no such thing as a “trade deficit”, and there never will be. Anyone spouting such nonsense is a pure flat Earth Sun revolving around the Earth crank, and there are plenty of so-called “prestigious” economists who fit that bill. It doesn’t get any more religiously unscientific.
The only solution is to eliminate the Federal Reserve, eliminate fiat debt money, and permit competing free market money. All trade only occurs because that which is received is valued more than that which is given away in exchange, without exception.
Exchange occurs because the exact same goods are valued differently by two different persons. Good ‘A’ is valued greater than Good ‘B’ for Person 1, and Good ‘B’ is valued greater than Good ‘A’ for Person 2. Mathematical equations of value in exchange are thus fraud, as ‘A’ is greater than ‘B’ while ‘B’ is simultaneously greater than ‘A’.
Interesting post.
You know, the first post I ever wrote on this board was about the need for our economy to return to some form of mercantilism. The value of a good or service is set directly by the parties involved at the time of the transaction.
I agree wholeheartedly that all talk about trade deficits, etc., essentially is pablum. Not because the comments aren’t intelligent per se, but because the entire subject is null and void. Actually, it’s not even that. Not even trifling piffle.
Sadly, your proposed solution will never be considered. Could you imagine the outcome? 95% of the general population (sheeple) would find themselves hoofing it to the nearest Cardboard Box Inn, unable to cope with living life forever on the edge.
How many people even here believe the dollar, and various other foreign currencies, actually ever really gain value against each other? No, they are all constantly losing value in unison. The last great hedge against inflation, houses, has finally collapsed
It never was a great hedge to begin with. How do you call a 1%-1.5% increase in average value over 100 years a great hedge?
and they put $150,000-200,000 cash into the house, but the banks won’t loan a penny
I’m having difficulty taking this at face value. Exactly what sort of “home improvements” require this large of an expenditure? For $150-200k, you can BUILD a very nice brand-new house in most parts of the country.
Is it possible, just possible, perchance, that your neighbors spent some of this pricely sum on (*ahem*) “other things”? Say… new cars, vacations, big-screen TVs, plastic surgery, assorted bling? This is what the serial-refi/HELOC crowd was doing here in CA.
“While the actual numbers are still small compared to those recorded in Trenton, Hamilton and elsewhere, the trend suggests that Mercer County’s wealthier enclaves are not immune from the long term effects of the housing crisis and slowing economy.”
Excuse me for nominating someone else for the Nostradamus award.
We have been predicting for months, if not YEARS, on this (and many another) blog that while the initial hits appeared to be confined to the bottom end due to subprime resets, ‘better’ areas would be affected later because of the impact of Alt-A resets/recasts. (Plus the general ability of wealthier folks to absorb financial impacts for longer before capitulating.)
Also, the lower end was more likely to have 100% LTV mortgages.
The people who sold those starter homes had a couple/few hundred thousand to use as a downpayment on the next level of housing…and on up it worked.
The higher end will fall just the same as the lower end after the down payment cushion is gone (many have done a “Hail Mary” refi in the past two years in preparation for the fall in prices, and to have some cash socked away).
The new buyers in the move-up market will not have all this down payment money as we go forward, so prices will have to come down to what they can afford with savings (instead of bubble profits).
Paul Craig Roberts says that according to US Labor Dept. calculations in use pre-Clinton, the current unemployment rate stands at 14.3%.
“‘Borrowers with good credit are unable to buy homes that they can afford,’ Molony said. ‘They need to loosen up the lending criteria.’”
Join the long line of epic fail. If they have good credit and don’t have the cash to buy it outright and they can’t qualify for the loan, they can’t afford it: that’s the fricken definition of can’t afford. Not can afford, can’t afford. Getting that backwards created the bubble, and until all the epic failures like this guy get it beaten into their skulls that no, they really can’t afford that house, we won’t be at the bottom yet. Think more, thanks.
That’s right Mr NAR. Some people have been ruined financially, some even commit suicide. And all this time the NAR has pretended this was some public relations game, when in fact now millions of families are “hurt.” You don’t deserve to be lecturing anyone about how lending should be loosened, or anything else for that matter. Go crawl under a rock with the other NAR economists.
BEN…
Why on earth are you feeling sorry for these families? In my humble opinion, I think most of these “families” knew EXACTLY what they were doing. They knew they were trying to get away with murder…they knew they were trying to flip and run.
I have not a single ounce of remorse for most of these families you speak of. Screw em.
If I can take the time to sit down and read a contract that will bind me to a 1/2 million dollar pile of debt, so should have the rest of these losers.
If I could sit down and do some simple math and figure out my mortgage will double in 5 years, so should have these other losers.
As far a I’m concerned, I hope things just get worse so responsible, honest people like me and many readers here I’m sure will have a chance to finally buy a piece of property for what it was intended….to my life in.
That’s right Mr NAR. Some people have been ruined financially, some even commit suicide. And all this time the NAR has pretended this was some public relations game, when in fact now millions of families are “hurt.” You don’t deserve to be lecturing anyone about how lending should be loosened, or anything else for that matter. Go crawl under a rock with the other NAR economists.
Ben…
Why on earth are you feeling sorry for these families? In my humble opinion, I think most of these “families” knew exactly what they were doing. They knew they were trying to get away with murder…they knew they were trying to flip and run.
I have not a single ounce of remorse for most of these families you speak of. Scr&w em.
If I can take the time to sit down and read a contract that will bind me to a 1/2 million dollar pile of debt, so should have the rest of these losers.
If I could sit down and do some simple math and figure out my mortgage will double in 5 years, so should have these other losers.
As far a I’m concerned, I hope things just get worse so responsible, honest people like me and many readers here I’m sure will have a chance to finally buy a piece of property for what it was intended….to my life in.