What Goes Around Comes Around In California
The Inland Valley Daily Bulletin reports from California. “Foreclosed homes are getting scooped up by investors and first-time buyers, but the massive supply of units being repossessed by banks and put on the market still exceeds home-buyer demand. More plunging home values are destined for Southern California, and especially San Bernardino and Riverside counties. ‘Home prices are falling faster than they were before, and that’s what people don’t understand,’ said Michael Carney, executive director of the Pomona-based Real Estate Research Council of Southern California. ‘We won’t see any leveling off until at least the spring of 2010. It’s likely to be later.’”
“Alex Espinoza Sr., president of Ontario-based California Capital Home Loans…says there are 8,000 homes and condominiums in the two-county area now going for $200,000 or below. Buyers should realize it’s a long-term investment and that California home prices rise an average of 5 percent to 6 percent every year if you hold on to the property for at least 30 years, Espinoza said.”
“Jim Mulvihill, an urban planning and economic geography expert at Cal State San Bernardino…notes the tax break homeowners receive for owning a home. ‘We’re the only industrialized country that does that,’ he said. ‘We’re going to have that, I think, forever.’”
“‘In general, in California, property is always going to rise in value,’ Mulvihill said about long-term real-estate values. ‘It’s an investment.’”
The New York Times. “With nearly one in six homes worth less than the mortgage owed on it, according to Moody’s Economy.com, divorce lawyers and financial advisers around the country say the logistics of divorce have been turned around. For John and Laurel Goerke, in Santa Barbara, Calif., the housing market crashed in the middle of what Mr. Goerke said had been an orderly legal proceeding. At the height of the market, Mr. Goerke said, they had their house appraised at $2.3 million, which would have given them about $1 million to divide after paying off the mortgage. But by the time they sold last year, the value had fallen by $600,000, cutting their equity by more than half.”
“‘That changed everything,’ said Mr. Goerke, who is now nearly two years into the divorce process, with legal and other fees of several hundred thousand dollars. ‘The prospect of us both being able to buy modest homes was eliminated. The money’s not there.’”
“Now, with both spouses living in rental properties, their lawyers still cannot agree on what their remaining assets are worth. Their wealth is ticking away at $350 an hour, times two. ‘It’s got to end,’ Mr. Goerke said, ‘because at some point there’s nothing left to argue about.’”
“‘We used to fight about who gets to keep the house,’ said Gary Nickelson, president of the American Academy of Matrimonial Lawyers. ‘Now we fight about who gets stuck with the dead cow.’”
The Recordnet. “State and federal regulators have hit Community Bank of San Joaquin, based in Stockton, with a cease-and-desist order that charges bank management with unsafe or unsound banking practices.”
“The bank was operating with insufficient capital, had too large a volume of ‘poor quality’ loans and engaged in unsatisfactory lending and collecting practices, according to an order issued jointly by the Federal Deposit Insurance Corp. and the California Department of Financial Institutions.”
“The bank did no subprime mortgage lending, said Bank CEO Jane Butterfield, and all of the ‘nonperforming’ loans were to local home builders taking out loans before 2007 to buy land and build single-family homes. No one guessed the real estate and financial sectors would see such a harsh downturn, she said, and San Joaquin County is ‘ground zero’ as the worst market in the country in the real estate-related meltdown.”
“‘Hindsight is 20/20,’ Butterfield said. ‘I don’t feel we were operating in an unsafe and unsound manner. … At the time we made the loans, they were good loans.’”
The North County Times. “One of North County’s largest home builders, Carlsbad-based Barratt American, filed for bankruptcy protection from creditors last week as it struggled to survive one of the worst local housing downturns in history. If Barratt American were to fail completely, it could cause a painful ripple through several local businesses. Of its top 20 creditors listed in a Chapter 11 bankruptcy filing, 11 were based in San Diego or Riverside counties and were owed $10.9 million.”
“Michael Pattinson, the company’s president, said Barratt was forced into bankruptcy after its lender, Bank of America, canceled a line of credit. He said the two companies had worked together for 27 years. Bank of America has seized all four North County projects in foreclosure.”
“Pattinson has crisscrossed the country, telling legislators about the pain builders are feeling because of ‘bad banks.’ ‘What upsets me is that a company that I was loyal to was not loyal to me,’ Pattinson said. ‘But we’re big boys. We know what goes on in this world, and what goes around comes around. I’ve got my boxing gloves on, and I’m up for the fight. I’ve lost Round One, but there’s 14 more rounds to go.’”
“But Dan Schaldach, owner of D&S Construction in Escondido, said he sees it differently. His company has been framing houses for Barratt for years, he said. ‘I think he (Pattinson) has been blaming other people for their mismanagement,’ Schaldach said. ‘They had a pretty high lifestyle, and it caught up with them.’”
From New Times SLO. “Caleb Lopez is one of the lucky ones. With several big development projects on his plate and a steady flow of smaller, private jobs coming in, Lopez might be considered a rarity when it comes to being a contractor in today’s economy. Following the overall downturn of the nation’s economy and the collapse of the housing market last year, contractors have been working especially hard to stay afloat financially.”
“‘Everything has changed,’ said Lopez, a general contractor and owner of Cal Coast Construction.”
“For several years, he said, construction was ‘people’s bread and butter’ in San Luis Obispo and Santa Barbara counties. But as the economy began to slow the business was forced to readjust to the changing economic climate. To make ends meet, companies tightened their tool belts by lowering prices, laying off laborers, or even filing for bankruptcy.”
“According to Leslie Halls of the San Luis Obispo Builders Exchange, development has slowed significantly.She said the number of bidders per project is higher than it has been in 15 years. ‘There’s just a lot more guys coming in chasing a lot less work,’ Halls said. ‘It’s gotten incredibly competitive.’”
“And while Lopez continues to do good business the state of his ailing industry stays on his mind like caulk on kitchen tile. ‘The industry has a pattern that repeats itself over and over again,’ he said. ‘Hopefully, you saved up when times were good.’”
The Press Enterprise. “The Inland region’s population boom is over, in large part due to skyrocketing foreclosures and unemployment. In Riverside County, about 13,600 people moved into the county, nearly one-third of the 30,000 people who moved in the previous year. In San Bernardino County, about 9,000 people who lived in the county left this year; about 1,000 people left the county in 2007.”
“Inland economist John Husing…said the state’s finance figures suggest that people losing homes and jobs are moving out of state. This group also includes retirees, who Husing said are moving to places like Utah and Nevada because of the lower cost of living. ‘If they can’t afford a house here, how are they going to afford one in Los Angeles County?’ Husing said. ‘If they are moving out, they are moving to places that they can afford.’”
“Husing predicted the next housing boom would begin in 2012, when he believes homebuilding will resume. ‘That still is four years away,’ Husing said.”
“Those who try to predict the future in a sometimes unpredictable California economy aren’t immune to the subjects of their prognosticating. That includes the economists.”
“The California Building Industry Association, a statewide trade group that advocates on homebuilder issues, this week sent out an e-mail to the media containing this message: ‘We’re sending you this note to let you know that due to budget cuts, Alan Nevin will no longer be under contract with us as of the end of the year. We encourage you to continue contacting Alan for his insights into the marketplace, but in order to avoid confusion, please do not refer to him as CBIA’s chief economist in the future.’”
“Now, with both spouses living in rental properties, their lawyers still cannot agree on what their remaining assets are worth. Their wealth is ticking away at $350 an hour, times two. ‘It’s got to end,’ Mr. Goerke said, ‘because at some point there’s nothing left to argue about.’”
When there`s nothing left to argue about, the lawyers will stop arguing.
Or when their clients run out of money.
That is what I meant, when their clients money is gone so are they.
lawyers will stop when their is no money left for them. they make more if they can keep the couple fighting.
When I got divorced 8 years ago, I refused to argue. $200 an hour x 2 arguing over a few hundred here and there. I’d rather pay a little extra alimony and let her keep the RV than spend $10K on a lawyer fighting over it.
SHAME ON YOU Darrell:
Think of all the paralegals and others grunts you are going to tossing out of work if lots of people adopted your idea.
Why its UnAmerican to be nice in a divorce…….lol
I know, I know… I’m unpatriotic for refusing to overspend.
Seriously though… life insurance. Have to have enough to cover the remaining alimony and child support. So, the standard is to write into the divorce decree a declining scale for the life insurance.
My wife comes back demanding a flat policy of like $150K… Rounding it of: $800 alimony x 5 years and $1000 child support x 9 years.
My lawyer wants to fight it and get a standard decreasing policy… For an average of $15 a month over 8 years… Total of $1400, I’m supposed to spend $600+ an hour (since I was paying my layer, the moderator, and half of her lawyer) fighting over $15 a month.
I dont’ think so.
Anyway… 8 years down… 13 child-support payments to go!
You should be so proud. I love your attitude toward child support payments, too. It seems you abandoned your kids when they were 9, but hey…at least you’ve only got “13 child-support payments left go go.” What a guy!
Sorry about the OT, but Boomer divorce discussions really get me steamed up. If people aren’t going to man up and take responsibility for their kids, why are we surprised to see them walking away from their mortgages? Seriously, it’s all related.
RE: If people aren’t going to man up and take responsibility for their kids,
Kinda like the Covina, CA dude who footed the bill for his -ex’s 3 kids from another marriage; the $2700 mortgage on an underwater $500k house; and $1750.00 per month alimony, so she could continue her manicures and pedicures, with some new luxury wheels thrown in for the trips to Vegas for some post-divorce re-hab partyin’ and gamblin’.
Got a link, hd? Because I’ve been looking for more detailed info on this, seems like there’s more to it than meets the eye.
If there was any justice in the world, the divorcing couple wouldn’t be allowed to sell the house the kids live in until the youngest kid is 18 years old.
The kids live in the house, continue to live in their neighborhood, continue to go to their schools, etc.
The parents would rotate living in the house for a week at a time. If this means that the parents have to live in the same town, c’est la vie.
If I were a judge, that would be my decision in nearly all cases.
The decision would benefit the kids AND benefit the divorcing spouses financially as a good many lawyers would suddenly not be interested in working divorce cases.
Standard billing practices of the lawyering elite is by the 1/4 hour. So 5 minutes on the phone is $350/hr x 3 = $1,050/hr. Nice work if you can get it.
Not so now. Standard billing practice is in 1/10 of an hour. Billing in 1/4 hr increments is widely viewed as inappropriate now. Some clients for whom money is no object might still pay it, but fool them twice, shame on them. The leading edge in the profession is arguing, moreover, that the time has come to abandon the billable hour and move to unit pricing.
In the “old days” 1/4 might have been true. “Old days”=when GM was solvent, the US still had a sound manufacturing base and Gerald Ford was President. But that was back when our society, except for the Wall Street vanguard, was on firmer economic ground.
Billable hours are the spawn of hell. I guess some people can divide their minds into 6-minute compartments, but not me. My billing sheet would be full of stuff like “spent 8 minutes figuring out what I did in the last 15 minutes.” Some types of work just do not lend themselves to it.
I’ve never understood why legal services and psychological counceling are so pricey. I knew someone who was going through a custody battle. Her lawyer charged several thousand dollars, and he did none of the paperwork he was supposed to do. He just charged for the time he had to wait around for the hearing to start. Seriously, what kind of job is that where you can charge people for hours of doing nothing?
” Seriously, what kind of job is that where you can charge people for hours of doing nothing? ”
The lawyering elite sure have got a good thing going on, over and beyond the GM jobs bank. This continues ad infinitum, since the lawyers in every legislative body in America are quite happy with this fleecing of the sheeple.
Seriously, what kind of job is that where you can charge people for hours of doing nothing?
Aside from lawyering…
politicians
mortgage brokers
Feng Shui
life coaches
animal psychologists
diversity counselors
astrologers
Fact. We have a consumer economy.
Fact. We expanded to meet the demand.
Fact. The demand was driven by debt.
Fact. The housing, automotive and retail industries are in oversupply
But don’t worry, the boom times will be back in 2010.
It is so strange what Peak Oil and a permanent depression will do to such beautifully thought out fantasies.
How about:
- US at the standard of living of Mexico in 2020
- Lower Hispanic North America at the standard of living of Somalia in 2050
‘But don’t worry, the boom times will be back in 2010″
Why are you such a pessimist?
- CNBC reports via the experts the middle of 2009 for the turn-around.
“‘In general, in California, property is always going to rise in value,’ Mulvihill said about long-term real-estate values. ‘It’s an investment.’”
My brother said the same thing about the new Harley Davidson Fatboy he bought last year…
I’m amazed that they still quote that iron-clad rule of 5% to 6% annual increase on CA RE. I profoundly disagree with the whole “timing doesn’t matter” and “dollar cost averaging” view of such things. I bought my San Jose home in 1981 and sold it in 2006, getting over 600% return over those 25 years - that’s what, simple interest of 24% or so? Had I bought in 1985 - for about the same cost - I would have done even better over 21 odd years.
People who, say, bought in 2004 and sold this year won’t see much in the way of “profits”.
“I’m amazed that they still quote that iron-clad rule of 5% to 6% annual increase on CA RE”
Yep… as if house price has absolutely NO corilation to affordability. House prices up 63% in 10 years (100 x 1.05^10 = 163) as wages up only 10%… Sure, no problem.
WRONG!!!!!
Houses have to be affordable, and that means that house prices are tied to incomes, not some imaginary “cost of money” reasonible RoI bull they need to tell people to get tehm to overpay for a house.
What we need is a good class-action law suit against the Realtors for this BS.
Yeah, I wonder where that 5%-6% figure comes from. My impression is that over time RE prices correlate pretty well with general inflation. So if we’re entering a deflationary phase, which COULD last quite a while (though the PTB will fight it), there is no reason to suppose that a Calif house bought right now will necessarily appreciate 5%-6% per annum for the next 30 years. For sure, it’s NOT an “investment.” The negative “dividend” of property taxes is a problem, and the insurance and maintenance could eat up most of the rest of that 5%-6% even if one bought for cash. A time to buy will come.
I am interested in Husing’s prediction that the RE market will turn in 2012. That was my date. If Husing agrees with me, I was probably wrong, no? Husing is not one of the good guys is he?
“My brother said the same thing about the new Harley Davidson Fatboy he bought last year… ”
Used Harley’s have come waaaaay down in price. Seeing a lot “MUST SELL” ads on craigslist. There is a decline in Harley interest as there is in golf. The younger generations aren’t following in the boomers footsteps. Methinks many boomers will be taking baths on their Harley purchases.
Yea big time drops. I`m a biker,bmw sport bike, and I can tell you the cool factor of the harley and the chopper thing is falling fast. Boats are taking a huge hit as well. The marina where we had kept our boat for 10 years….well, about every third boat is for sale…and these are big boats.
lane
That’s why I bought a Sporty. It has 14K in two years mostly because it rains here and I have to work. Ya never know, I may pick up a used Road King at some point later when the ’09s have been out for a couple of years.
HD did just buy MV Agusta - we’ll see how the Ferrari of motorcycles sells with US marketing. Not well right now, time will tell later.
I’ve had a great time with my HOG puts this year. I would welcome any suggestions regarding golf and boats. And what about skiing and spas? I’m already in the money on some other puts and leaps on companies that make big silly toys for boomers. I just have a feeling that boomers are going to be off the consumer credit habit for a year or three now. Of course, I’m also planning to buy some toys for me, for cash off Craigs List, once the real panic selling begins in 2009-10.
I broke out my old Lionel train for the Christmas tree. I was thinking, “Man these are neat.” So I started looking to see what an Amtrak train and cars would cost. And a Norfolk Southern. $450 for the locomotive, and $300 for cars? And the NS train is like $900 for the locomotive and a few cars. It’s a TOY TRAIN! I got to contemplating it, and how people tend to buy them and say they are in the box never opened…. and it seems to me like perhaps they are like beanie babies and comic books (and houses) where the thought process is the value will go up in the future. Very odd.
RE: Methinks many boomers will be taking baths on their Harley purchases.
When the old HD hard-cores got tired of ridin’ they used to just put their machines in the corner of an old barn and throw a tarp over them until the widow sold them off to some antique collector.
The new breed of the johnny-come-lately, mid-life crisis, poser would trade every other year to always have braggin’ rights to the newest, biggest and baddest. To accommodate HDI gladly ran their production lines to the max completely glutting the market with redundant model lines.
In the 70’s the sayin’ use to be-Honda’s are like azzholes, ’cause everybody’s got one…fast forward to the 90-’s and the ownership situation reversed itself, with the refrain- HD’s are like a-holes ’cause every losers got one.
Moron’s who paid $5k over MSRP, plus the average $3k in accessories in the boom years are indeed gonna be takin’ it up the wazoo on re-sale, if they are pressed to sell.
Not much call for $21k motorcycles in a Depression.
maybe he meant 6% in 30 years
Even the 5-6% annual “rule” is complete BS. On average, housing only appreciates at the rate of inflation.
“‘In general, in California, property is always going to rise in value,’ Mulvihill said about long-term real-estate values. ‘It’s an investment.’”
What? In any burg in the central San Joaquin valley with crop picking as the main income and air pollution the highest, real esstate will always rise in value?
Or in Victorville/Palmcaster meth central real estate is always going to rise?
There are a lot of POS cities in California, and that’s mostly places more than 1 mile from the LA beaches or 5 miles from beaches north of Santa Barbara.
Most of California is not special. And some places used to be nice but are overrun by illegals and their descendents who refuse to speak/write English.
California home prices rise an average of 5 percent to 6 percent every year if you hold on to the property for at least 30 years, Espinoza said.”
There are 30-year periods after 1945 when this holds true. However, if you look at the big Case Schiller graph, you’ll notice that the 50-year period between 1890 and 1940 saw a net decline in real estate prices (the value is in the land). What led to this? Well, there was a telecommunications revolution. Due to the proliferation of roads, automobiles, and telephones people no longer had to live within a hop, skip, and jump of industrial job centers so there was a vastly increased supply of usable land. Now we have the Internet and half my employees live in other states and countries. There was also a panic, a depression, and a big war. Now we have… well, the fallout and blowback from the key disaster of the 21st century known as the Cheney-Rumsfeld regime. Yes, we are reliving the 1890-1940 period but instead of arriving at the height of the industrial might of our country, we will be exporting our information economy over the next 20 years and arriving somewhere else. And that somewhere will have universal wireless access and alternative energy, impacts that delink us from geographic restrictions that propped up real estate prices in the 20th century.
“I’ve got my boxing gloves on, and I’m up for the fight”
Right, and if I’m not there in 10 minutes ( start without me! )
Dude, it is SO over. Focus your energy on more productive things. Anything would be more productive at this point. Why is it I’ve always been left with the impression builders are a lot more attracted to the lifestyle being a builder can provide than the building thing itself?
I use to be a member of the BIA of the LA and Ventura County region. Lifestyle was also a factor in selling those God awful fugly McMansions. One meeting, they were discussing passing on the cost of infrastructure (roads) to the general public, as they built out a huge PUD with a new improvement tax. I had to keep myself from being a verbal warior for the taxpayer. I almost lost it. Privatize the profits, socialize the cost.
awaiting wipeout,
What I eventually grew to understand ( once I was able to choke back tears of anger over the bubble ) was that the REIC-Always-Profits-First!
It’s just their rule. It’s their way. Talking a city council into jumping through hoops to build out ‘their’ infrastructure is just the start. Then the rest of the carpetbaggers descend upon you to feed. The builders, the subs, the realtors, the mortgage brokers. So this growth “is good for ALL of us, right!”
Not quite. If I own a coffee shop what is the liklihood ALL these new residents enjoy good coffee? If I own a health club, what are the chances ALL these people are fitness freaks? Again, even if they were, how long would they have to be customers for me to profit at -your- level? Forever?
DinOR,
Thanks for the insight and good points. After belonging to the REIC establishment, I concur with you.
awaiting wipeout,
My point more broadly was, as other members of a town’s business community become more aware of those dynamics they’ll likely be a lot less enthusiastic about rubber stamping development.
Funny to note in our tiny community of 8,000 here in Marion County OR, we’ve bent over for the builders’ every whim, ( but we’re on the verge of running of a bona fide employer ) In this case, as Quick-Crete plant! God forbid we have any development that results in jobs beyond jobs that involve building SFR’s!?
‘What upsets me is that a company [BofA] that I was loyal to was not loyal to me,’ Pattinson said.
How can you be “loyal” to a bank? It’s a business relationship. If your credit is good, they will loan to you. If your credit goes south, they will cut you off. How is that being “disloyal”? These rules-of-the-game should have been understood up front.
I keep a checking account with BofA and only keep enough in it to pay bills and avoid service fees. BofA doesn’t pay doodly on deposits so I don’t save with them. My real savings are spread around various other banks depending upon who’s paying good interest rates. When one bank lowers its interest rates on deposits, I fire them and hire another that pays better. Is that “disloyal”?
DennisN,
And IN… those 27 years of having a relationship w/ the bank you’d think he’d have read the terms and conditions of those loans? This is so typical of the “Builder Class”. They begin to think of themselves as above the rest of us commoners in that ‘they’ are taking all the risk and the bank simply profits off their backs in parasitic fashion.
( I’ve cold-called a million of these guys )
I can only hope in the future that the barriers to entry toward calling yourself a builder are a little higher.
For what should be the *very* last time: IT IS *NOT* AN “INVESTMENT”!!!
They’re still drinking the Koolaide in CA central coast - consider the realtwhore’s description of MLS 80781903 - 3/2 1600 sq. ft. condo in Pacific Grove, CA -
“Perfect for the investor or buy now at today’s prices and occupy later.”
Asking price $750,000. You have to wait to occupy it because it is leased for two years at $2400/mo..
Let’s see, let me get my pencil out - $150000 down leaves $600,000. mtge pmt. or $3625/mo + $380/mo HOA + $625/mo for property taxes (1% in CA) plus say $100/mo insurance = $4730/mo. going out minus $2400 coming in = minus $2330/mo. cash flow - sign me up!
Course, a couple of doors down there’s a 2/2 1564 sq. ft. for $548,800.
“buy now at today’s prices…” indeed.
Thank you Rintoul. You said exactly what I was going to say.
Alas, it will mostly likely *not* be the last time…
“Michael Pattinson, the company’s president, said Barratt was forced into bankruptcy after its lender, Bank of America, canceled a line of credit. He said the two companies had worked together for 27 years. Bank of America has seized all four North County projects in foreclosure.”
A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.
–Mark Twain–
No one guessed the real estate and financial sectors would see
such a harsh downturn….
I have given up counting the number of times this statement or
some variation of it has been repeated by those in high level
executive positions.
Yet these morons are paid outrageous salaries and bonuses.
For what?
Being dumber than a box of Cracker Jacks without a prize?
Check their back pocket for that prize…
No one guessed the real estate and financial sectors would see
such a harsh downturn…
‘Twas even a puzzlement to her majesty, the Queen of England.
‘Home prices are falling faster than they were before, and that’s what people don’t understand,’ said Michael Carney, executive director of the Pomona-based Real Estate Research Council of Southern California. ‘We won’t see any leveling off until at least the spring of 2010. It’s likely to be later.’
This is not rocket science, folks — grade school arithmetic is sufficient.
For instance, if San Diego homes had a current median price of $305,000*, then fell at a 25 percent annual rate* over the next year, the decline in median price over the next year would be
$305,000 X 25/100 = $305,000/4 = $76,250,
and the median price one year later would be
$305,000 - $76,250 = 3 X $76,250 = $228,750.
By waiting another year to buy, a hypothetical San Diego family could avoid incurring a $76,250 capital loss.
For a mental exercise, I suggest you try these calculations on your own without using a calculator, paper or pencil.
*Hypothetical scenario
Those calculations are too confusing to the avg joe.all they want to know is how much the payment is.
Wouldn’t it be better for them to know how many years worth of household income they can save by waiting another year to buy?
Professor Bear,
And wouldn’t it be easier for those potential home buyers that ‘were’ in their 50’s ( and NOW feel like their in their 70’s ) to have done a similar “mental exercise”?
I find it embarrassing that you have to get in people’s face at that age when they ran out ( against ALL your better judgement ) and bought a 500k+ home when they only intend to be in the work force another couple of years?
Dude, what are you thinking!? You only have another say 10 years before you retire. Why are you pumping 40% of your PRE-tax income into a dream home?
Hells bells DinOr and PB, I would do a quick calculation (price of house, monthly payments, taxes, utilities, food etc..) in my head and knew I could not afford to buy a house in this area.
I used to argue against this big-house thing TWENTY years ago when my buds and I had a good 35 years left to work. When you factor in all the hidden costs of buying a monster - extra tax, maintenance, utilities… on and on… the gain on the investment kinda goes away.
Unfortunately, the average Joe and Jane still believe that they will get honest information about housing affordability from the Used House Sellers and Lenders.
Think about it. Do Joe and Jane 6 pack do any due diligence when they decide to buy a house? Chances are slim. They go to a Used House Seller because they have been sold the falsehood that these are the “Professionals” who will guide them through this process. The fact, which has been born out by the Bubble collapse, is that the REIC has only their own self interest in mind and very few truly represent the best interests of their clients. If they had, they would have advised their “clients” to rent once prices rose beyond the 3 x gross income levels. Instead the lending side of the equation created new, “sophisticated” loans which it turns out where actually sucker plays that gave J6P just enough rationalization to take the risk because at the outset the monthly payments were “affordable”. But J6P chose to look beyond the teaser rate period to a not too distant future when the monthly was no longer affordable. Those who did question the fully amortized monthly payment amount were told by lenders and brokers not to worry because before that happened the house would appreciate in value and they could refinance back into a teaser rate.
I think both the REIC and J6P are culpable and both need to take the hit. REIC needs to take the hit in terms of their status as “Professionals” who have failed their clients. J6P takes the hit by being forced into foreclosure. The problem is that the REIC has deep enough pockets to keep the lie believable. And poor J6P being rescued is a politically potent move even if it is a head fake.
I can only hope that enough sheeple realize that the REIC was the primary fleecer in this debacle and lose respect for the whole bunch. The internet gives us the tools to find the properties and a RE attorney can walk us through the process of buying. I just wonder if the offer process hen house is held hostage by the MLS foxes.
oc-ed,
Better than I could have EVER put it! It occured to me that going forward the few remaining realtors will have to required to show rentals, have an understanding of Comm. RE etc.
As long as we continue to incentivize “churn” of the same houses over and over again, well then that’s what we’ll get! If you’re like me you’ve about HAD it with realtors that “specialize”. It would also set the bar higher thinning their ranks considerably. If they don’t stay current on the laws regarding rentals etc. then they don’t get their license renewed. Simple as that.
As things are it’s just too easy to get your buddy a license and then bring him on board with some subdivision you are selling and give him/her sole rights to sell the property! No conflicts ‘there’?!
Yep, I’ve had it with realtors as a group. There is one who actually did not try to bamboozle me into the fake affordability trap, but she still did the cheerleading in terms of where the market was heading so I’ll not go there either.
You’re spot on with your comment about the bar getting set higher. I think it will be the true professionals with years of experience who are left standing and I hope it is the ones with ethics that make the cut.
I had one Used House Seller who countered my concerns about the stbility of the market back in 2005 with a Gary Watts list of why there was no bubble. I shiite you not. And just recently the same UHS invited me to be her “friend” on LinkedIn. There are only two people whom I have declined to be “friends” with on LinkedIn. This UHS and a collegue who stole an idea I had and filed a patent on it with a gain of over 30k in options. Somehow these folks have lost their dictionary and moral compass.
What’s really sad is where a lot of realtors came from….
Lawyers actually get tossed out of their state bars due to ethical lapses. So guess what these losers go into for a second career? You got it - used house sellers! They already know the basics of RE and contracts law so they are good to go - especially since the realtor organizations don’t care if they lost their law license due to ethics problems.
In CA for example, a member of the CA bar is “waived in” to a broker’s license since he/she “obviously passed a bar exam testing the requirements of competency for a realtor.” You got it - no testing. Just send in your bar documents along with a check and you become a realtor.
Try it this way….
Let’s say 24 months ago my house as worth $250K. Then let’s say the foreclsoures started, and about 1 per month was liquidated by a lender, for say…. $5K under “current market”.
Okay, 3 months goes by, 3 liquidated foreclosures, and my house is off $15K. $60K annualized rate… $60/$250 = 24% annualized rate of decline.
Jump ahead another 9 months.. Now my house is worth $190K. Still 1 foreclosures liquidation a month, each going for $5K less than the previous… $60K annual decline. $60K/$190K = 31% annaulized rate of decline.
The numerator is probably about the same with houses fall $x a month, but as the denominator gets smaller, the % rate of decline increases.
“The numerator is probably about the same with houses fall $x a month, but as the denominator gets smaller, the % rate of decline increases.”
Point taken. Radar Logic data for San Diego suggests prices per square foot have been falling at a nearly linear rate over time since April 2007, which implies an increasing percentage rate of decline.
Exactly I only look at price per square foot.
Also in a market thats starting to get sanely priced you should see the larger homes become cheaper per square foot then the smaller homes.
Given median household incomes seem to average around 40k outside of a a few ritzy areas then you get the standard 15000 sqft house going for about 80 a sft and you should see the larger homes between 60-80 a sqft. So a 3000 sqft mcmansion should go for say about 210k with the nicest areas hitting 300k very few houses should be listing for over 300k. 300k at 3X gives 100k a year which is pretty much the high end for most areas as far as median salary goes.
Of course right now things are still way out of wack for most of America. I’m seeing spot checking around the place for nice neighborhood 4/2 2000sqft house is 200-300k.
This implies to me we should see and additional 30% drop in prices from right now just to really get back to sanity.
So for 2009-2010 we should see and average of 15% further drops in home prices for each year. Since we should overshoot the bottom I’d say at least and additional 15% over 2011-2012.
So I think the best bet is and additional 45% off from todays prices in most markets. For a market with the std 4/2 at 300k this means a savings of 135k over three years is very possible or 45k a year. Thus renting at say 2000 a month or 24k a year is saving you 18k a year.
Or basically by waiting at least three years from now to buy you can buy yourself a very nice new car or two during the time you own your home effectively for free vs people buying now.
Now once home prices in general fall back into this 100-200k range with 300k for the upper end it begins to make sense to buy vs rent. And this does not include expenses etc etc.
And of course 2000 a month is a LOT for rent. This is about the worst way you could pencil it out. Bottom line is the 3X income concept works just about every way you do the math.
Also of course if you pay 150k for a house and put 20% down and it drops 30% which is a bad drop your out 15k out of pocket something thats survivable for most. Its similar to a bad credit card binge. So no matter how you do it until salaries rise substantially housing in the US should in general cost 150-200k on average.
I just checked on HUD’s Fair Market Rent figure for San Diego County in 2009. A 4br home is supposed to rent here for $2,493/mo (about $30,000/yr). With the economy in a worsening recession and myriad homes going into foreclosure with many others sitting vacant and never occupied, I am surprised there is not more evidence of downward pressure on rents. Any thoughts about why? (The obvious explanation is that hhs losing their homes turn to the rental market, but $30,000/yr is a lot of money to throw away on rent for a newly-foreclosed hh.)
P.S. Only Fairfield County, CT, “The OC” and Honolulu County had higher fair market rents for a 4br home than San Diego County.
With a 5 pct 30-year fixed mortgage, $2,493/mo (assuming 0 pct down*) would get you into a home purchased for $464,400. By contrast, the median MLS list price in our zip code (Rancho Bernardo 92127) for a 4br home is currently north of $1m.
*Assuming a 10 pct downpayment is unrealistic in a world w/o savings.
PB, it’s true that $2500/mo is a lot to throw away on rent, but who the hell really needs a 4BR house? Do they have five kids? Yeah, maybe they do, maybe it goes along with being dunces…
My use of the phrase “throw away on rent” is just a quotation of your post. If they honestly want and need a 4BR house, the rent is not thrown away, is it?
We may have enough kids to qualify us for “born and bred American dope” status. We therefore honestly need a 4br house to keep us all sane. As I pointed out in a recent post, Radar Logic data suggests home prices have fallen at about $0.23/SqFt/day since May 2007, which means we save an amount in ‘opportunity benefits’ equal to our monthly rent every five days by not owning a 2000 SqFt home (2000 X 5 X $0.23 = $2300).
You only need 3 kids to need a 4 bedroom house. You might stick 2 very little ones in the same bedroom but just try it with teens! But the 4 bedroom house doesn’t need to be 3000 s/f either.
Need?
IAT
I grew up, with my three sisters, in 1300 SF just fine. BR # 4 we converted from a storage area.
We are renting a 4 bdr house with three kids. The secondary bedrooms would be crowded if we tried to fit 2 kids into them. We have a huge master bedroom (lots of wasted space) but the other bedrooms are like 10X10 so with 2 single beds and a dresser its a bit tight.
Do the kids come with the house or is that a separate lease contract?
when i was a kid my brother and I shared a room, it wasnt a big deal
My 3 girls shared a bedroom and we all survived it.
I’m a floor plan connoisseur and here’s my take:
up to 1000 square feet is a vacation cabin, or extremely cute Hansel and Gretel-y cottage, like what you’d find at a Ren Faire.
1000 square feet: a squeezed 3 bedroom house 1 bath, 1 living room, 1 eat-in kitchen (or galley with small dining). Twin-size beds for the kids.
1300 square feet: comfortable 3 bed house, 1.5 bath, a little larger bedrooms, extra small den.
1700 square feet: very comfortable 3 bed house. 2 bath, den, dining room etc. — OR — very squished 4 bed house.
2100 square feet: comfortable 4 bedroom house center hall colonial 2.5 bath, living dining family kitchen with island.
over 2100 square feet, they just make all the rooms bigger without adding value. (none of this includes crawl spaces or man caves.)
What?!
No kid of ANY age beyond age two *needs* their own room. Kids that whine that they do likely are spoiled brats. Likely they need a good spanking and a long list of household chores to do.
I’m one of six kids. Grew up in an ample four-bedroom, 2,700 square-foot home. Despite having 4 bedrooms, one bedroom was never used as a bedroom. Three kids slept in each of two bedrooms….and the parents had their bedroom downstairs and, notably, on the opposite end of the house.
As for the 4th bedroom? We kept our pony in there!
…not…downward pressure on rents. Any thoughts about why?..
I have noticed the same situation here in the O.C (Irvine).
I believe part of the phenomenon can be attributed to
individuals doubling or tripling up to split rent costs.
I have personally helped friends move into such an arrangement.
In fact, it has become such a trend that our HOA (Woodbridge/Irvine)
is trying to figure out legal ways to prevent the practice. The
HOA is concerned about increased demand on services, i.e.
parking, fire, police, etc..
“I believe part of the phenomenon can be attributed to
individuals doubling or tripling up to split rent costs.”
It is not clear this would result in keeping rents high, as your story appears to imply that one or two homes which would otherwise be rented are sitting vacant.
People don’t seem to think they can bargain on rents. Don’t pay the asking price! Offer $200-$300 less per month. It works if they are desperate. They think they can raise the rent once you are in but get a lease and within a year they are happy to have anyone and won’t raise it if the market has deteriorated.
Been following rentals in my area through Craig’s List and it appears there are two types of rentals on the market.
(1) owned by long time landlords
(2) owned by FBs.
The long time landlords are charging between $1200 and $1600 for a two-bedroom apt.
The FBs are charging $2,000 - $2,500 for a two-bedroom apt.
The less expensive ones go quickly, the more expensive ones sit.
Any guesses as to how this will end?
Either the FBs will wise up, or they will end up selling out at big discount to the long time landlords. At the right price, I would consider levering up again to buy more apartments. It’s not a bad business if you buy low. I even expect to see a few deconversions, where condo buildings turn into apartment buildings.
But we’re not there yet, and may not be for years. If the government runs the presses 24×7 for the next several years, it may never happen, as inflation could bail out situations that could have been good deals. If we see extended high inflation, that could result in draconian rent controls, which would make the rental business untenable.
Those sorts of FB’s are so freaking stupid. NOBODY rents at those delusional prices. Furthermore, they are unable to comprehend that a few months of vacancy essentially guarantees their net for the year will be no more than if they rented it at the going rate, and that’s assuming it ever even rented at the fantasy price. Of course, that’s an impossible scenario, so they burn cash monthly, collecting zero in rents, until they bite the bullet and rent it at the market rate, or lose the alligator to foreclosure. I’m guessing foreclosure is the most likely scenario for these imbeciles.
I’m definitely seeing downward pressure on rents in Newport Beach, as people who don’t absolutely have to sell (yet) are fighting with each other trying to rent out their dead parents’ houses. (Eastbluff neighborhood is great for this — the aged first generation of owners are dying like flies, and their spoiled trust-fund kids are absolutely delusional about prices, so nothing sells.) Rents are down about $500/mo. from a year ago, e.g. $2,500 that would have been $3,000 or more last year.
Well, as long as you don’t do your ^ thingies, I’m ok.
” “Alex Espinoza Sr., president of Ontario-based California Capital Home Loans…says there are 8,000 homes and condominiums in the two-county area now going for $200,000 or below. ”
He failed to mention that the lowest priced tier of houses are the shacks.
Along these lines, I checked out Long Beach last night for the first time in a while.
About 480 condos on the market with a two-bedroom at $69,900. It’s a POS, but would have been on for 3-4 times that 3 years ago.
You can pick up a cozy two-bedroom, one bath home for $99,900. There are about 400 sfhs currently on the market in Long Beach.
Who says it’s expensive to live in California?
Real Estate Refugee,
I wasn’t able to find the exact listings you were referring to, but I found puh-lenty of reasonably priced units in the area. Ever since I was stationed there in the early 80’s I’ve never ruled out spending at least ‘part’ of the year in the LB/SP area!
Very encouraging to see. Used to hang out at Ma’ Walker’s at the end of Gaffey St. I think right by Point Fermin.
I was stationed in Long Beach for most of ‘87 while my ship was in the yards…. U.S.S. Tarawa, LHA-1, which I hear is scheduled for decomissioning next year (tear).
Anyway, I just loved the view of the refinery out of window of my military sub-standard housing unit. And the smell… oh, the happy memories.
Darrell,
That is insane! I was in V-1 Division!!!
Actually from June of ‘86 to Dec. ‘88. I got out and went into the reserves from there but I -definitely- was there for that overhaul!
Unlike a lot of guys ( that had base housing or bought a home in San Diego ) I said, hey, LB is a GREAT place and moved my family to base housing in LB. My youngest ( now married… daughter ) was born at LB Memorial Hospital! Anyway, what Division were YOU in!?
Try going to themls.com and click the Guest Search tab. The areas are listed along with the types of properties.
This is the Multiple Listing Service for LA county.
All kinds of fun stuff.
Oh, and although they no longer give you the total number of listings at the top, there are 20 listings per page. So, 20 pages = about 400 listings.
“Husing predicted the next housing boom would begin in 2012, when he believes homebuilding will resume. ‘That still is four years away,’ Husing said.”
It is idiots like Husing who keep other idiots from doing the right thing — moving on with their lives away from the REAGU mantra, and all of its evils.
REAGU?
My moniker for real estate always goes up, up, and away!
How silly of me ( of course! ) LOL!
“Buyers should realize it’s a long-term investment and that California home prices rise an average of 5 percent to 6 percent every year if you hold on to the property for at least 30 years, Espinoza said.”
Ah, the simplicity and expedience of investing in the rear-view mirror! If only the Realtywhores® of America could guarantee the 5-6 per cent annual 30 year return! I wonder if Espinoza also knows-a that history shows us, in the most recent century, in years ending in “45″, two thermonuclear devices explode over cities in Japan? Or that the world’s population of dodo birds has never decreased in any year, for the last 30 years?
California homes and real estate were always a great long-term investment, until they weren’t.
They’re drinking the Kool Aid in Julian, East of San Diego:
Some 3 bdrm 3 bath 2000 sq ft is going for… 600k!!!
This ain’t Aspen… and even less Santa Barbara. Especially in Harrisson Park and Whispering Pines where the working class of the small town lives.
Did anyone else catch the piece on NPR a few months ago about how the upper classes are divorcing less because they know they’ll lose money? They also said that the lower class is simply marrying less often, and that it does not seem to stop them from having kids.
I can recall about three couples who lived separately during the week and then spent the weekend together. Although work was always given as the excuse (work in Manhattan, raise kids in the ‘burbs), none of these marriages were what I would call happy.
Here in high-cost Santa Barbara, I know two couples who divorced but dad stayed in the house sleeping on the couch.
Dad couldn’t afford his own place and still pay enough child support for mom and the kids to keep the rented house.
The beginning of the NYT article:
“When Marci Needle and her husband began to contemplate divorce in June, they thought they had enough money to go their separate ways. They owned a million-dollar home near Atlanta and another in Jacksonville, Fla., as well as investment properties.
Now the market for both houses has crashed, and the couple are left arguing about whether the homes are worth what they owe on them, and whether there are any assets left to divide, Ms. Needle said.
“We’re really trying very hard to be amicable, but it puts a strain on us,” said Ms. Needle, the friction audible in her voice. “I want him to buy me out. It’s in everybody’s interest to settle quickly. That would be my only income. It’s been incredibly stressful.”
So her “solution” is that she gets the cash, and her soon-to-be ex-husband gets stuck with the real estate.
LOL! Nice work if you can get it…
My SIL and BIL divorced last year. She asked for the house and he was happy to give it to her. Supposedly ex-SIL was required to refinance to get his name off the mortgage. She has been a stay-at-home-mom for about two years, so I didn’t think that would fly anymore with lenders, but last I heard she was able to do it. I am not entirely convinced - though this is none of my business - that this issue won’t come back and blow up in BILs face at some point.
She’s cute enough though that she’ll get another dude gig before too long, if she doesn’t have one already.
When I lived in California most people I knew would never move to the Inland Empire. Much of the dire news of falling home values in California really aren’t in housing locations that are so grand. Not to say Americans aren’t hurting all over the country. (I know I am in post bubble Arizona), but please wake me when desirable Southern California neighborhoods see a realistic fall in prices. My sister-in-laws place in Lake Hollywood has hardly seen a decline at all. When the location is very desirable the doom and gloom pronouncements sound kinda pithy.
Fair enough, but the vast majority of Californians never could afford to live in Malibu or Atherton–they’re atypical markets, and most people would ever even aspire to them. The fact that a market that has always been expensive continues to be expensive doesn’t mean that the bubble isn’t bursting–even at the height of the Depression, there continued to be rich people who lived in expensive neighborhoods and bought expensive things. It didn’t mean things were GENERALLY hunky-dory.
man the J boats !
Alert, obscure nautical reference above.
http://www.thej-classboatshop.com/ships.htm
The worst areas just capitulate first. It will happen eventually to pretty much everything, just takes longer.
Austrian School,
Forbes, Reuters etc. have been running stories all week about wealth destruction among the upper crust. In many cases I’d have to say another flurry of margin calls and a lot of those formerly wealthy folks will have a net wort of zilch.
The lead IB from Iceland is already there. Kirk Kirkorian has taken an extreme bath. The list goes on ( and we’re not finished )
Din,
Wait for next year when it becomes very
obvious that the pension funds are going to
tank and that lovely stipend that they’re
expecting is going to be much lower than they
anticipated.
And for the really rich with their trust funds,
do they really think that their standard of
living won’t decline when their income is halved
or quartered?
Sheeeeesh……
No one guessed the real estate and financial sectors would see such a harsh downturn, she said, and San Joaquin County is ‘ground zero’ as the worst market in the country in the real estate-related meltdown.”
“‘Hindsight is 20/20,’ Butterfield said. ‘I don’t feel we were operating in an unsafe and unsound manner. … At the time we made the loans, they were good loans.’”
Time and time again we read these statements, ‘no one saw it coming’ good lord! Just once I’d like to see a note taker/reported that had brushed up on the past 5-6 years in RE and ask why the hell not?
This Butterfield like thousands in her position, have no idea what they are talking about and are in positions to make decisions on loaning money.
As and old banker told my father once back in the 50’s… ” A man can run into debt, but to get out he’ll do so at a walk”.
wmbz
you posted:
as an old banker told my father once back in the 50’s…
” A man can run into debt, but to get out he’ll do so at a walk”
Great comment !!
That IS one hell of a comment. I hope someone here (wmbz, maybe) uses it every time he or she posts. Maybe I’ll swipe it.
Here’s an interesting website full of retirement cheer:
PensionTsunami.com
rms,
Great site! Thanks for the link, it’s now in my favorites! What a great ref. tool. All too often, info ( particularly on these state plans ) seems to be entirely too elusive.
Here in OR anyone hired before ‘96 got a deal so fantastic, it’s just incredible. I’ve been trying to set up a Pension Watch ( here ) but the last guy that tried that has spent most of his waking hours and resources being tied up in court. In fact he’s got one foot in jail. They’re like mobsters up here!
Excellent. Thanks, rms. I hadn’t seen this site before.
‘We’re sending you this note to let you know that due to budget cuts, Alan Nevin will no longer be under contract with us as of the end of the year. We encourage you to continue contacting Alan for his insights into the marketplace, but in order to avoid confusion, please do not refer to him as CBIA’s chief economist in the future.’”
That’s cold.
I’m wondering when the University of Central Florida (or whatever) will send out the same notice about Sean Snaith.
http://biz.yahoo.com/ap/081230/federal_reserve_mortgage_debt.html?.v=4
<>
the last two paragraphs as post script are telling,
<>
Why is minimal in quotes? It absolutely is not minimal, otherwise why the need to move the securities from a government sponsored agency to another.
Why the need to involve the investment banks. If they are getting a 1% fee on $500B, thats $5B in fees just for moving paper from one agency to another. Nice work if you can get it.
the above article is titled, Fed to start buying mortgage-backed securities
the quoted paragraphs are
“The Fed also said the risk of losses from the purchases is “minimal” because they are backed by the government-sponsored mortgage giants.
The Fed also announced that BlackRock Inc., Goldman Sachs Asset Management, Pacific Investment Management Co. and Wellington Management Company LLP will operate the program.”
“The Fed also said the risk of losses from the purchases is “minimal” because they are backed by the government-sponsored mortgage giants.”
Minimal to the Fed because of mortgage giants which are backed by you and me, which means WE eat any losses, right??
So the Fed says the Treasury going to cover the losses. The same Treasury that is borrowing from the same Fed.? This will blow up bigger than the size of the problem to begin with. What’s the cost of US treasuries default swaps these days? I heard they were at a all time high not long ago. The size of these packages ($500 billion this time) is blowing my mind. The Fed must be leveraged really high by now. Can the Federal Reserve Bank really operate at the same level 50X that Lehman & Bear Sterns did when they failed? I guess we will find out pretty soon.
This could be a data blip, but Radar Logic’s PPSF for San Diego on 28-Oct-2008 was $192.01, implying a sale price of $384,000 for a 2000 SqFt home. Unless I am missing something, the last time the 1-day series touched a level below $200/SqFt was when it was at $198.92 on 17-Jul-2002.
A one-month decline of 3 pct occurs at an annualized rate of
((1-3/100)^12-1)*100 = -30.6 pct.
Further, by the rule of 72, homes lose half their value every 24 months at a 3 pct monthly rate of decline (72/3 = 24). It has always amazed me how accurate this rule of thumb estimate proves for low rates of percentage change:
((1-3/100)^24-1)*100 = -51.9 pct.
North County Times
HOUSING: Terrible October for San Diego home prices
By ZACH FOX - Staff Writer | Tuesday, December 30, 2008 11:00 AM PST
Home prices in San Diego County continued their free fall in October, according to a report released Tuesday.
Prices declined 3 percent in San Diego County —- the fastest rate since February —- according to the respected Case-Shiller index of home values compiled by Standard & Poor’s. It was just the fourth time ever the county’s home prices declined by that much in the report’s 20-year history; all four declines have occurred since November 2007.
Tuesday’s report might also mark the beginning of an era of increased pain for owners of San Diego County’s high-end homes, defined by the study as any house selling for more than $469,174. It was the first time since house prices peaked in November 2005 that the high-end market performed worse than the low-end tier, defined as houses under $317,768.
A quick look at SD ziprealty dot com shows 9771 used SFRs on the market, with 4993 listed at $400K or above (51.1 pct) and 4460 listed at $450K or above (45.6 pct). This suggests the median used SFR list price now resides on this range, and is likely closer to $400K than $500K. But it also suggests that over 4000 homes currently on the market qualify as “high end” (at least based on their list prices) according to the study cited in the NC Times article.
Realtonium.
Radioactive decay with a half-life of 24 months.
If an archer shoots an arrow at a target, it must travel half the distance to the target, then it must travel half the remaining distance (1/4), then half of the last quarter (1/8), etc. Since the arrow must traverse an infinite number of these half-distances, how does it ever reach its target? (Zeno’s paradox).
I’m tired of waiting for North County coastal to finally crack. Renting bites. I really hope 2009 is the year for good deals on the coast.
Anyhow, Happy New Year!, housing bubblers.
there was an article in the washington compost about cleanup crews that empty out foreclosed houses in Prince george’s county, MD. one of the cleaners was a typical idiot about superficial wealth. said he felt bad emptying out a studio apt b/c he figured the renter would be poor and hard up but felt somewhat more judgmental when emptying out a nice house, like one in which he found a photo of the evictee with magic johnson.
well, displays of flashiness and ostentatious spending do not equal wealth. that cleaner has not learned that fact yet. some of us studio apartment renters are in no danger of eviction and in fact have five figures in cash savings. we don’t own many belongings, and we don’t run up restaurant, bar, and hotel bills, but that model didn’t work out so well for its practitioners, did it?
**The New Standard of Living in the U.S.**: Lowering the Bar on America’s Living Standards -
My name is Jay Shafer and since 1997 I have been living in houses smaller than some people’s closets. I call the first of my little hand built houses Tumbleweed. My decision to inhabit just 89 square feet arose from some concerns I had about the impact a larger house would have on the environment, and because I do not want to maintain a lot of unused or unusable space.
http://www.tumbleweedhouses.com/
Not necessarily lowering the bar, but a different way to look at it. My father taught me the Wilderness Ethic growing up, when we would go backpacking. He said that when we left a campsite in the morning, no one should be able to tell we were there. Recently it has been occurring to me that this Ethic shouldn’t be limited to the wilderness. With that in mind, I’ve been trying to lessen our footprint bit by bit.
Oh, I love these little things! Jay is part of the Small House Movement. There’s a lot online if you look, lots of discussion.
The problem is that Jay’s 89 square feet it a little extreme. Good for a weekend, but not for permanent living. A rule of thumb is that the minimum sq footage for a dwelling with all the amenities (full bath + stacked washer/dryer + dishwasher) is 500 sq feet, basically a studio apartment.
There are quite a few designs for the 400-700 ft range. Jay Schaeffer designed a few, so did rosschapin.com. Also check out vacation cabins in home plan books, or any home plans website. There is some amazingly cute stuff out there under 1000 sq ft.
Jay, I love your small houses!