February 1, 2009

Fixing What Happened The Last 10 Years

The Argus Leader reports from South Dakota. “Homes sales in metropolitan Sioux Falls dropped almost 12 percent in 2008, and the median sales price was down more than 4 percent. 2007 was the fifth-best year for home sales in Sioux Falls, said Barton Hacker, CEO of the Realtors Association of the Sioux Empire. ‘We knew we weren’t going to be able to sustain the type of record numbers we saw the last five years,’ Hacker said. ‘So a 12 percent drop was not surprising given what’s going on around the rest of the country.’”

“‘The $150,000 home is a first-time homebuyer moving into a house at that price range,’ real estate agent Todd Headrick of HJN Team Real Estate said. ‘It’s that segment in that $200,000 to $250,000 range that aren’t making the moves to the $400,000 house.’”

The Star Tribune from Minnesota. “For a busy executive like weatherman Paul Douglas, vacation means exploring the world with the comforts of home but none of the hassles of home ownership. That’s why last April he paid a six-figure sum to join the Lusso Collection, a destination club that offers most of its members unlimited access to dozens of multimillion-dollar getaway homes around the world.”

“Now, less than a year after he bought into the Eden Prairie-based club, a gray cloud hangs over Douglas’ next vacation. The Lusso Collection recently filed for Chapter 11 bankruptcy protection. Lusso isn’t the only high-end destination club or private resort to succumb to the sagging economy and the eroding real estate market. Several recently have closed, consolidated or reduced services as membership sales have fallen and their business models have been turned upside down by plunging real estate values.”

“Jim Pippin, managing director of a destination club adviser based in Colorado, said Lusso stood out among the competition because of its compelling set of services and benefits, but it suffered from bad timing. ‘It’s the same cause of so much financial hardship in the U.S. right now,’ Pippin said. ‘In boom times, the model would have grown and been sustainable for the long run. Their fatal flaw, if there is one, is that they didn’t predict the future.’”

“Mainstreet Bank of Forest Lake, one of Minnesota’s largest and oldest community banks, has received a cease-and-desist order from the Federal Deposit Insurance Corp., alleging ‘hazardous lending and lax collection practices.’ Like many community banks, Mainstreet is getting stung by loans it made to developers and builders during the real estate boom, when property prices were going nowhere but up. Now, those loans are souring at an alarming rate.”

“‘Real estate was booming, and we were there to support the development,’ said Karen Greisinger, chief marketing officer, of the bank’s focus on real estate. “It was a niche for us, and there was a need for it. of the bank’s focus on real estate. ‘It was a niche for us, and there was a need for it.’”

“‘It was the residential housing market that burst first,’ said Jennifer Thompson, a financial analyst with Portales Partners. ‘But all these home builders borrowed from someone, and those loans are starting to crack, too.’”

The Baraboo News Reporter from Wisconsin. “Home sales in Baraboo are down about 45 percent, about 30 percent of remaining homes sales are foreclosures and the average cost of a house has declined to the level of 2005 or 2006, representatives of the city’s assessment firm reported. About 25 - 30 percent of all homes now on sale in the city are involved in foreclosure, added Wisconsin Appraisal Manager Mark A. Link. From Jan. 1 through October of 2008, Baraboo had 105 regular, ‘open market’ home sales and 41 foreclosure sales.

“‘For 2007, for example, there were 189 home sales and I believe there were three foreclosures,’ Link said.”

The Journal Sentinel from Wisconsin. “Bankruptcy filings soared 35% in Wisconsin last year. Attorneys said the pace of people declaring insolvency quickened toward the end of the year, which could bode ill for 2009. Milwaukee bankruptcy attorney James Miller has noticed an increase in upper-middle class consumers among his clients. They are struggling to keep up with debt, including payments on houses that have dropped in value, he said.”

“‘Part of the reason we got into this mess is because all these people making $100,000-$150,000 a year were buying $600,000 and $700,000 homes they can’t afford,’ said Miller. ‘I’m seeing more people saying, ‘We are jumping off the treadmill,’ and filing.’”

The Bolingbrook Sun from Illinois. “A quick search on the Internet will reveal dozens of houses in Bolingbrook in some state of foreclosure. In fact, Will County was ranked first in the state last year in foreclosure filings, and that trend doesn’t seem about to turn around soon. Mark and Carol Weidinger have been living on the edge for some time. As a carpenter, Mark has seen work dry up because of the crisis in the housing industry.”

“‘Even my bosses had to go and work for someone else. They dissolved their businesses,’ he said.”

“He is grateful that his wife still has her job, but he needed to find a part-time job at a local restaurant to help make ends meet. That still hasn’t solved their problems, though. Earlier this month, the family had their water turned off because of difficulties paying the utility bills. Mark Weidinger woke up Jan. 19 to hear his water heater hissing and popping like it was about to blow because the water had been turned off. The couple paid the $1,000 water bill, after getting a loan from his father-in-law, he said.”

“They had no choice but to borrow the money for the bill, he said, because the bill had been growing since the fall even as their income was dropping. ‘But for all of 2007, and every year before, we had a zero balance every month on our water bill,’ he said. ‘We are just the quintessential average Joes. It’s the lower income people that are affected most. It’s so hard to lose everything. I don’t want to lose everything.’”

The Courier News from Illinois. “Marisol Rojas did not appear convinced by Realtor Bonifacio Mondragon’s pitch. She glanced around the living room of the four-bedroom, three-bath St. Charles Street home in Elgin. It needs a bit of work, Mondragon said as he walked through the kitchen with its stained walls and floors.”

“The former owners purchased the home in 2006 for $225,000, then tried to sell it last year for $237,000, reducing it to $229,000 for a short sell. It recently went into foreclosure. Now the home is on the market for $92,000. ‘”Basically, there are great, great deals,’ Mondragon said. ‘Properties right now are priced at least half of what they were in 2005.’”

“‘”I’m working with clients right now who are tired of the stock market and they are looking to buy land and just sit on it for 10, 15 years,’ Anthony said. ‘Land is always valuable. I have a couple of listings right now that are way below market value that I know will definitely appreciate.’”

The Daily Herald from Illinois. “‘According to figures released by the Illinois Association of Realtors, prices throughout the state have dropped,’ said Mike Drews, president-elect of the Mainstreet Organization of Realtors. ‘October, 2008 prices were down 8 percent from October, 2007. In November they were down 16 percent over the same month the previous year. In December, that figure was a 32 percent decrease. And the number of transactions statewide in December were down 25 percent over the previous year.’”

“‘I just went to a seminar where they were saying that even in Chicago the condominium market is totally saturated right now and until inventory decreases, that will be the case. It is the whole supply and demand thing,’ he said.”

“In the suburbs Drews monitors, the same is true. They saw transactions in the condominiums and townhouse market decrease 30 percent in December because they, too, are saturated. ‘The problem is that many of the association fees on these places are so high - $180 to $200 per month - that it is cheaper for people to buy a roomier single-family home,’ Drews said.”

The Journal Gazette. “Last May, Joe Wyss lost his job making truck trailers for Strick Corp. in Monroeville. Then in December, Wyss’ wife, Lucinda, was laid off from her job making RVs in Decatur. The Wysses – along with thousands of families in northeast Indiana – have been swallowed by a global recession that has ravaged the regional manufacturing base. Now, with two kids to support, they’re wondering what their next move is. ‘It’s never been this bad,’ Joe Wyss said last week.”

“With six northeast Indiana counties posting double-digit unemployment figures for December, WorkOne offices have reported long lines, long waits and overtaxed resources. Their phone systems have been so overwhelmed, they recommend that clients go to offices in person despite the waits they may face there.”

“A slowing economy, a burst housing bubble, summer’s spiking gas prices and collapsing credit combined to stifle demand for the cars, trucks, RVs and homes that support the region’s manufacturers…Home sales and prices will be slow to recover. And without equity to borrow against, homeowners will find it difficult to buy.”

“Tamara Nightingale and her husband, Brian, are owner-operators of two trucks they use for long-haul freight. She explained that as the economy slows, so does the need for trucking. ‘Business has gotten so bad, all we can do is pay for our trucks,’ said Nightingale, 51, of Fort Wayne. ‘We’ve parked our trucks, and we’re seeing if we can do better being greeters at Wal-Mart or something.’”

The Saginaw News from Michigan. “Saginaw County foreclosures reached a record 1,130 last year as a hard-biting economy put more people out of their homes and businesses, records show. ‘This is the most we’ve ever done in the history of Saginaw County,’ said Register of Deeds Mildred M. Dodak.”

“The number of people who leave their homes or other mortgaged properties without telling lenders also has risen sharply, she said. Affidavit of abandonment filings, filed by lenders, reached 334 last year compared to 244 the year before, 160 in 2006 and 71 in 2005, statistics show. Abandonment numbers are included in foreclosure statistics, she said.”

“Even as the numbers rise, Dodak said she’s noticed fewer people arriving in her office to ask for information about keeping their homes. ‘We don’t even get that anymore,’ she said.”

The Kalamazoo Gazette from Michigan. “It’s a trend repeated across Southwest Michigan: the bursting of the housing bubble and increase in foreclosures have pushed down home values, and assessments are slowly catching up. Eighteen of the 19 municipalities in Kalamazoo County will either hold flat or decrease their overall residential State Equalized Valuations this year, according to Kalamazoo Gazette calculations.”

“Home prices may be falling precipitously in many parts of Southwest Michigan, but most homeowners here are unlikely to see a decrease in their property-tax bills. Instead, many may see one of the largest increases in their tax bills in recent memory, local assessors say. The reason: a provision in Proposal A that held property-tax bills artificially low during the housing boom of the late 1990s and early 2000s.”

“While housing prices in many areas increased by double digits, tax bills grew no faster than the rate of inflation — generally not more than 2 or 3 percent in most years. During housing booms, it protects homeowners from steep increases in their annual property-tax bills by keeping property taxes from increasing by no more than 5 percent, or the rate of inflation, whichever is less.”

“But as the market turns, like it did in 2007 and 2008, a dark side to Proposal A emerges: It can take a long time for tax bills to decline because of the gap between SEV and taxable value that can build over time. ‘Just because your assessment goes down, if there’s a gap, the taxable value must raise up until its equal with the SEV,’ Kalamazoo City Assessor Connie Darling said. ‘The city has no control over that. I can’t stop mine, and I can’t stop theirs from doing the same thing. So please don’t shoot the messenger.’”

The Columbus Dispatch from Ohio. “With investigators closing in, a 63-year-old Bexley man…put the barrel of a .32-caliber revolver in his mouth and pulled the trigger. It was 2004, and a massive mortgage fraud was beginning to unravel. The suicide would further complicate a thicket of real-estate transactions, far-flung millionaire investors and loans totaling tens of millions of dollars that were suddenly pouring into run-down Columbus neighborhoods.”

“Authorities think it was the largest mortgage-fraud case ever prosecuted here. Details are only now becoming clearer, as several prepare to be sentenced Wednesday. Many other people were involved — victims and dupes, innocent bystanders and street hustlers, suspected criminals and secret informants.”

“‘With a lot of fraud cases, you look at the victims sometimes and wonder, ‘What were you thinking?’ said Assistant U.S. Attorney Daniel Brown.”

“Red flags quickly began popping up….Ohio Bar Title Insurance stopped closing loans connected to Stillwater. ‘It was a lazy scam,’ Samuel J. Halkias, then president of Ohio Bar, recalled in a recent interview. ‘Everybody with half a brain could see it.’”

The Beacon Journal from Ohio. “Summit County home sales plunged by 9.5 percent compared to already low sales in 2007 and the lowest total in at least six years. The average price per home also fell to $130,153. That was a 10.5 percent drop from the 2007 average of $145,349.”

“Gary Stouffer has been selling real estate since 1979. Stouffer said he bought four repossessed properties in just the last four months as his own personal investments. ‘I’m going to buy as many as I can,’ he said. The bargains are along the lines of 40 percent discounts, meaning homes in the area that once sold for $100,000 can now be had for $60,000, he said.”

“Cindy Slabaugh, the 2009 president of the Akron Area Board of Realtors, said a combination of factors in the past seven years led to the current situation. Buyers were able to get loans, including adjustable rate mortgages, with no money down, she said. ‘People overpaid for homes,’ she said.”

“A lot of people who bought early in the decade thought their incomes and housing prices would keep rising, with those expectations fueled by a growing economy, Slabaugh said. But it all came crashing down when the economy slowed, energy prices rose, incomes dropped and more and more jobs were cut, she said. Many people found out they bought more home than they could afford, she said. Instead of the best happening, the worst hit, she said.”

”’We had an exceptional market for years,’ Slabaugh said. ‘Now we need to get realistic. We’re just fixing what happened the last 10 years.’”

The Norwalk Reflector from Ohio. “While sales figures are lower than previous years, prices are lower as well. Area Realtors remain optimistic about the opportunities available for buyers in the current economy. ‘Right now, we’re looking at prices that are more in line with prices from the 90s’ — shortly before the market took off, said Frank Van Dresser Jr., of Remax.”

“But, he said, that’s not a bad thing. Before the downturn, housing prices were rising much faster than wages and salaries. ‘Without a market correction, there’s no affordability,’ Van Dresser said.”

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Comment by Ben Jones
2009-02-01 10:58:11

The Columbus Dispatch article is a good read. And while the media and government are in denial about the housing bubble, these commentors from the Argus Leader piece are not:

‘I agree with sdslim 1500 a month on SD pay for a home get a life. The realtor should be ashamed of themself for this. One of the reasons we are in a decline is because of housing, people buying more than they can handle and sales people talking them into more. This has got to stop home prices have to fall 30% before this is all over that is where the hurt is going to come from. It will be years before we get out of this one not everyone can have a home!!!’

(from the article) ‘The $150,000 home is a first-time homebuyer moving into a house at that price range,” real estate agent Todd Headrick of HJN Team Real Estate said. “Those folks are still moving. We saw a lot of activity in that price range.”

sdslim wrote: ‘A savvy banker once told me you don’t want your house payment to be more than 20% of your pay. The payment on a $150,000 house, if you want to pay it off in a reasonable time frame, would be at least $1,500 a month with taxes and maintenance. $7,500 X .2 (20%) is $1500.’

‘So according to the realtors in Sioux Falls, most “first time buyers” are making $90,000 a year in Sioux Falls. I wish they were right.’

‘It is thinking like this that got the country into the sub-prime debacle we are in.’

Comment by Olympiagal
2009-02-01 11:15:07

“Red flags quickly began popping up….Ohio Bar Title Insurance stopped closing loans connected to Stillwater. ‘It was a lazy scam,’ Samuel J. Halkias, then president of Ohio Bar, recalled in a recent interview. ‘Everybody with half a brain could see it.’”

Alas, the half- a- brain that was available was clamoring ‘I want free money! Look, I’ll be rich! If I only do what the nice man says!’

That’s why I keep my own half-a-brain busy with reading poetry and drinking beer and staring at trees and stuff. That way it won’t have as much time to trick me into acts of complete dumba*ssery.

Comment by Hwy50ina49Dodge
2009-02-01 12:29:16

“…reading poetry and drinking beer” ;-)

Geez, I do the same thing only bassackwards, (drinking wine & reading poetry)…of course that’s what happens when you start off at age 11 reading Alan Watts in a tree house .

Comment by Olympiagal
2009-02-01 15:33:09

‘…when you start off at age 11 reading Alan Watts in a tree house .’

Really? Well, there you go. I call that a ‘high quality formative influence’, for sure.

Comment by edgewaterjohn
2009-02-01 11:17:39

“…they were saying that even in Chicago the condominium market is totally saturated right now…”

Saturated is an understatement. That word implies there’s a balance - which there is most assuredly not.

‘The problem is that many of the association fees on these places are so high - $180 to $200 per month - that it is cheaper for people to buy a roomier single-family home,’ Drews said.

This dude is right, especially in the context of all the suburban condos they built. Years ago I looked at some new units in downtown Des Plaines - the overhead costs were way outta whack for the area - in 2001! In the city of Chicago proper there’s an itty bit more leeway, but the cost of living in those burbs should reflect their location.

Comment by Kim
2009-02-01 12:32:23

I’ve seen listings - places with no pool or other potentially worthwhile amenities - with association fees as high as $300/month.

Comment by palmetto
2009-02-01 12:50:35

$300 a month? Try $400-$500 a month at some of the complexes around here. Granted, they do have pools and clubhouses and stuff like that but even so, that’s almost a mortgage payment for a little concrete block shack home where the worst that can happen is you get cited for having a weedy yard.

Condos, at least in most parts of Florida, are traps where you’re nailed to your neighbors. These days, you practically have to chew your arm off to get out of the trap.

LOL, I am experiencing the most exquisite moment of schadenfreude today over one of the newer owners in the condo complex where I’m renting. I can’t get into all the details, but these turds jacked the former owner down at closing with threats about foreclosure if she didn’t sell cheaper than what she had agreed to. Poor lady was desperate, so agreed. BUT THEN they took out a second, thinking they were such sharpies. Then the market fell out. Now, there’s marital problems and there was a major, very noisy fight today. These two are nailed to each other by an underwater condo. There’s more to it, but I am thoroughly enjoying their discord for a variety of reasons. And to think it’s a little old condo that’s going to bring two very dishonest (not just because of the closing) people to a nasty, miserable end. I knew it would happen, it was just a matter of time.

Comment by SanFranciscoBayAreaGal
2009-02-01 13:54:22

Oh I can top even that. Try 700-800 in SF or San Mateo County with very few amenities.

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Comment by mikey
2009-02-01 14:59:32

Those Florida condogators will eat you alive..everytime :)

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Comment by Muir
2009-02-01 17:50:07

You’re all pu**ies. :-)
Try $750-950
plus taxes for about the same.

p.s. + special assessments (reserves? “Ahh, well….”)

Comment by Michael Fink
2009-02-02 05:17:11

My house’s carrying costs (which I rent) are insane.

HOA is ~400/mo
Taxes ~800/mo
Insurance ~400/mo

That’s ~1,600/mo before the MTG. This place rents for ~2K a month, which puts the value of the home at about 40K. :)

Comment by Lost Cause
2009-02-02 10:50:52

No, no, no… 3131 Michelson Dr. Irvine, California — HOA over $1119 per month.

Comment by wmbz
2009-02-01 13:56:22

“…they were saying that even in Chicago the condominium market is totally saturated right now…”

“Saturated is an understatement”.

We have never seen so many condo projects in our city, and our town has a history of being resistant to them.

I drove past a recently completed condo project in a strip shopping mall, they start at $312,000.00.We are in South Carolina mind you! You get to live above a Sub Way sandwich shop, nail salon and tanning bed outfit & travel agency.

We also have some that start in the $1.2 million dollar range going up downtown. The developer says once the ‘markets’ calm down and turn around, they will be well “positioned” to lead the way! LMFAO!

Not only is this going to end badly, they will be foreclosed, vacant and become half assed rentals at some point.

Comment by edgewaterjohn
2009-02-01 16:12:22

That’s simply amazing that someone at some time justified building those things. I’ll say it a 1,000 times - condos should have remained a niche product.

Comment by Faster Pussycat, Sell Sell
2009-02-01 16:15:52

Already happening in New York.

Sending older landlords into an apoplectic shock but the new pawners don’t care. They just keep lowering the rents to make the market move.

Quite entertaining.

Comment by ET-Chicago
2009-02-01 15:53:47

Saturated is an understatement. That word implies there’s a balance - which there is most assuredly not.

Indeed — and the condo oversaturation in our fair city is difficult to comprehend without traversing the landscape.

The numbers sound high, sure, and walking through a typical northside residential ‘hood one will see shoddily built future Section 8 housing marketed with words like “luxury” and “granite.” But the saturation is everywhere, not just the typical residential neighborhoods that make up middle class existence.

I am, to this day, taken aback when I travel through the southside neighborhoods that used to be crumbling urban deserts — there are sprawling, cavernous condo developments sprouted where only weeds grew in the mid-’90s. Or the far westside, the neighborhoods decimated in the late ’60s and early ’70s — condos, rehabs, conversions, for sale signs.

No, there is no balance. Nor is any neighborhood immune from the condo blight. Some areas will fare better than others, of course, but the curse has been cast wide and deep.

Comment by Muir
2009-02-01 17:55:15

Doubt it’s any consolation, but I think Miami has you all beat.

Comment by ET-Chicago
2009-02-01 20:44:20

True, true.

But it’s not much consolation, especially for a city that’s supposed to be pragmatic.

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Comment by edgewaterjohn
2009-02-01 20:21:19

Yes indeed, they overbuilt everywhere - and just like all the other cities before us it’s collapsing from the margins inward. Back in 2005-6 I did manage to take quite a few photos, and I’m so glad I did. The other day while looking through a few of them - many already seem like bad jokes and a few are downright unbelievable.

Comment by exeter
2009-02-01 11:22:32

“‘The $150,000 home is a first-time homebuyer moving into a house at that price range,’ real estate agent Todd Headrick of HJN Team Real Estate said. ‘It’s that segment in that $200,000 to $250,000 range that aren’t making the moves to the $400,000 house.’”

Just what do folks do for a living in BumFukk, South Dakota to float these prices? Mine gold? Sell tech stocks? These realtards dosed up on the same drug they sold to the masses.

Comment by exeter
2009-02-01 11:38:10

oopsy… Missed Ben’s commentary on top.

Comment by edgewaterjohn
2009-02-01 12:39:25

The agents need to take a really good look at who exactly is making up the potential first time buyer pool nowadays.

For instance, last night I broke my boycott of dining/drinking out to go see a friend make his debut in a new band. At a table next to us were a group of twentysomethings from northwest OH. They told us they had come to town to look for work, but had no luck and were returning home.

Are such people the first time buyers these agents are counting on? No jobs, burdened by student loans - will they be buying anytime soon?

Comment by mikey
2009-02-01 11:45:28

“‘Part of the reason we got into this mess is because all these people making $100,000-$150,000 a year were buying $600,000 and $700,000 homes they can’t afford,’ said Miller. ‘I’m seeing more people saying, ‘We are jumping off the treadmill,’ and filing.’”

If they feel like jumping, try this :)


Comment by L. Opine
2009-02-01 12:08:19

Here’s something that bothers me.

Milwaukee bankruptcy attorney James Miller has noticed an increase in upper-middle class consumers among his clients. They are struggling to keep up with debt, including payments on houses that have dropped in value, he said.”

A drop in the value of your home has nothing to do with how easy it is to make the payments, all else equal. If you could afford $3,000 a month last year and your job/salary/mortgage payment haven’t changed, you can still afford $3,000 a month, even if your home value is $0.

The endless conflation of unwillingness to pay for a depreciating asset with struggling to make the payments on said asset is really irritating.

Comment by Darrell in PHX
2009-02-01 13:51:10

Let’s say you bring home $6K a month and your house payment is $4K a month. Let’s say all your other expenses are $4K a month.

No problem. You just charge $2000 a month on the credit cards, and 2 years later you cash-out refi the house to reset the credit card debt back to $0.

Oh, of course, the $4K on the $600K is only because it is on a negAm loan.

But, 10% per year appreciation is in the bag, so no problem.

Comment by Tim
2009-02-01 14:31:59

It results in a lower bottom, so I got over the bad taste fairly easily.

Comment by mikey
2009-02-01 15:15:40

Yep. Realtytrac sees only 1/3 of Wisconsin’s foreclosures listed on their MLS.

People don’t want to pay for their over-priced shacks and the banks and lenders don’t want to dump them.

Before this all ends, somebody will be found floating in Lake Michigan again.

Comment by Professor Bear
2009-02-01 12:19:47

Here is one proposed fix for what happened (a portion of this was already pasted into the bits bucket by FPSS…):

Wall Street Journal
* JANUARY 31, 2009
Why Be a Nation of Mortgage Slaves?

Comment by Professor Bear
2009-02-01 14:23:54

“What is the market telling us? Dataquick recently released December sales data for Southern California, once the hotbed of speculative excesses supported by nontraditional financing. Foreclosures now dominate sales. Prices are down. Sales volume is up. New home construction is down. These are beautiful textbook illustrations of supply and demand driving price and market equilibrium.”

Ah yes, textbook illustrations — something with which undergraduate economics textbook author Ben Bernanke must surely be intimately familiar.

Comment by Darrell in PHX
2009-02-01 16:04:03

That is a great article

Comment by Tim
2009-02-01 12:36:53

“I’m working with clients right now who are tired of the stock market and they are looking to buy land and just sit on it for 10, 15 years,’ Anthony said. ‘Land is always valuable. I have a couple of listings right now that are way below market value that I know will definitely appreciate.’”

As the stock market heads towards 15 years lows, instead of investing at the bottom with very little effort or transaction costs, why not dump your money into something that bears extremely high taxes (every year regarding of gain or loss recognition) and transaction costs associated for merely holding. Who needs to save for retirement when you can count on that fat Social Security check? Buy high, dump when down, and churn enormous fees and commissions. God bless America.

Comment by Tim
2009-02-01 12:38:44

regarding = regardless

Comment by Darrell in PHX
2009-02-01 13:03:18

“instead of investing at the bottom ”

False assertion, unless you are going to offer some kind of insurance that stocks won’t fall further.

The way I do the math, we can only fall 100% from here.

Comment by Tim
2009-02-01 13:28:45

I didnt say it was the bottom, but i believe we will see the bottom in the next 12 months for the stock market, and will find much better deals in real estate in 2 years for properties that actually have structures on them and generate income. I expect to get them well below cost.

Are you suggesting that buying non-income generating land today and holding 10 years or more, is more intelligent than investing in stocks at the low during the next 12 months, or housing in two years? I couldnt disagree more. I guess I’m an optimist for this board as I think that stocks will bottom the second half of the year, and the damage will be so severe you can get them below what they should be based on the historic mean. Please note that this is coming from someone that was called as a doomsayer mentioning Great Depression 2, and RTC 2, well before the crash.

Also, as I stated yesterday, most ppl use debt to buy property. Thus, there is a risk you can loose much more than 100% of your cash investment, as opposed to your note principal (e.g., you invest 50k in stock market you can lose 50k, you use it for a down payment on a 500k property you can lose 200k or more).

Comment by Darrell in PHX
2009-02-01 13:45:33

“Are you suggesting that buying non-income generating land today and holding 10 years or more, is more intelligent than investing in stocks at the low during the next 12 months, ”

Hecka no!! I think both real estate and sotcks have atleast 30-40+% to fall from here.

I’m looking for somewhere other than treasuries to put my 401(k) money. I’m just looking for data that indicates what that place is.

I see a MASSIVE wave of corporate bankruptcies that will wipe out stock holder value and bond holders both. I see massive drops in real estate prices. I even fear losses in treasuries due to massive supply.

Oh course I also see drops in commodities as demand crashes, and even cash as eventually all this money printing WILL cause inflation.

So, where to hide?

I refuse to be one of those “can food and ammo” people.

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Comment by Tim
2009-02-01 13:56:44

I think we are on the same page, although I may be more optimistic on timing. I went all cash last year, and am rolling my 401k money back into equities on each major dip. My 401k is about 65% cash, and 35% invested at average buy in of about 850 on the S&P. All of my other money (which I call my house fund), which is much more than my 401k money, is in CDs and Money Market funds. If we fall 25% more, I will starting putting some of that money in the market slowly, and if we fall 50% more from here may start putting significant chunks in. I think if we get in at the low which i think will be this later this year, but may change based on new information as it arises, and buy housing a year or two later at 40% or more less with 5% interest rates, debt leverage may start working again. Again this is a 2.5 year structured plan, and I didnt mean to suggest I was jumping in right now.

Comment by cobaltblue
2009-02-01 18:43:36

“So, where to hide?
I refuse to be one of those “can food and ammo” people.”

Darrell in PHX, then be a canned food, frozen food, dried fruit and money market fund type with some kruggerands in the closet person. I think the bottom is going to fall out of equities and corporate bonds from here through at least a few years, as well as RE going down. If you avoid those markets, you’re doing a pretty good job of hiding safely, I think.

I’m not suggesting everyone buy ammo, rifles, handguns, flamethrowers, grenades, crossbows, and camo gear.

However, avoiding the markets that appear to be extremely vulnerable; keeping ready cash and stocking up on some food and liquid for further hard times or shortages won’t hurt you.

Comment by pismoclam
2009-02-01 20:44:33

The socialistlib Dems want to take our guns and ammo and my local market won’t take kruggerands for milk and bread. What’s a FB to do? hehehehehehe

Comment by Silverback1011
2009-02-01 12:50:38

Even at the height of the housing madness, my husband & I were afraid to get into something with more than a $ 1200 a month mortgage, and that with a 35 % ( which is now largely eaten up of course ), including insurance and taxes, in 2001. That was about 15 percent of what we used to make monthly, combined. Since his health has deteriorated os badly, of course, he can’t work. Luckily, he was approved two weeks ago for S.S. disability, so he has income again, and is feeling better emotionally, if not physically. Thank goodness we didn’t go for the $ 500,000 house back then, which we were informed that we could “easily” afford. Well, if we had taken the plunge, we sure would have lost it by now. As it is, we’re pretty careful with our money, although we’ve had to replace our computer and dryer so far in 2009 :( Now, we
are beginning to look at a cash deal on a foreclosure in Arizona. If anyone has anything, or a line on a severely reduced property in good to very good condition, please email me at Oakash1011@aol.com. I guess I’m just not optimistic enough to take on a $ 500K mortgage late in life. Thank goodness.

Comment by Darrell in PHX
2009-02-01 13:34:19

Why would you buy now, while defaults and foreclosures are still increasing, banks are holding massive supply of houses they are trying to liquidate, job losses are going vertical, and prices are still falling 3-4% a month?

Why would you not wait another year and get ATLEAST 20% off today’s price and maybe 40% or more off?

Comment by SanFranciscoBayAreaGal
2009-02-01 13:52:45

It might have something to do with Silverback husband’s health Darrell. Not everything is so cut and dry.

Comment by joeyinCalif
2009-02-01 14:08:07

note the nick.. silverback.

When you are young, waiting a year or three is no biggee.. but someone who was a youngish 58 in 2001 and put off buying is now over 65..
Meanwhile, prices have fallen to a level where further reductions will be comparatively smaller.
And it’s probably the last piece of RE you’ll call home.. and it’s NOT an “investment”.. and you can afford to make payments or even pay cash.. and you probably can’t work anymore, so who gives a rat’s butt about the state of the economy.

While opportunities and investment are certain to get better given time, there can be excellent reasons to buy now.

Comment by Darrell in PHX
2009-02-01 16:09:06

And if there is a MAJOR overhaul to SS disability, which I fully expect since it is (for many but not all), the new welfare???

I still see no reason to buy when you can still rent cheaper then buy, a pricesare likely to continue to fall at a rapid pace.

Emergencies happen, and seems it would be far less convenient to be upside-down on a house when one happens.

(Comments wont nest below this level)
Comment by Silverback1011
2009-02-01 16:25:13

Darrell, you know the market better than we do, most certainly, since you’re already in AZ and a very aware person as per your posts. Your points are certainly ones that are important and we’ll take them into consideration. And, yes, the reason why we’re looking around now is that he’s got to get out of these cold winters. He’s on a new med and feeling and doing and feeling better physically, which is helping , but the slide downward continues somewhat. But today is today, and we’re enjoying ourselves, and really, no one knows what the future holds for themselves.

Comment by Darrell in PHX
2009-02-01 21:26:54

AZ is sooooo incredibly overbuilt. And we have very little economy other than construction and providing healthcare to old people. Construction is already dead. We’re so overbuilt that we don’t need to build another building for atleast 10 years. As the economy spirals down, I expect healthcare will be getting pounded hard too.

We just can’t afford to provide the healthcare to which we’ve become acustomed.

Comment by Tim
2009-02-01 14:40:49

I wish you the best Silverback. I would start looking into the process and starting to get to know the right ppl and how to find the best deals, which is what you appear to be doing. I think the second half of the year will have better deals, and if you use the first 6 months to gain an education of the foreclosure process you will be at an advantage.

Comment by Silverback1011
2009-02-01 16:29:13

Yes, that is what we’re trying to do. We have two pieces of real estate to liquidate in our home state also, but as I’ll still be working in the frigid north for the next several years, we’ll be hanging onto one of them for awhile. That doesn’t count the office condo we’re (still) in the process of foreclosing on (next hearing is on Feb 6th ). He may go down with the dog and rent next winter to give it a try out before we buy. We really don’t want to be separated but it doesn’t make much sense for him to keep having problems up here in the cold.

Thanks for all of your well-wishes everybody. I really appreciate it. Sometimes this blog really keeps me going.

Comment by Esko
2009-02-01 15:43:24

In the Courier News from Elgin, Illinois, the report states that home values have dropped by as much as half of what they once were. That sort of stuff was supposed to happen only in the hard-hit states of Arizona, California, Florida and Nevada. The real estate corrrection is sweeping pretty much across the land then. On the positive side, there are terrific buys all over the market now and mortgage rates remain outright attractive.

Comment by edgewaterjohn
2009-02-01 16:14:16

After you, kind sir (or madam).

Comment by L. Opine
2009-02-01 17:51:17

Well played, Esko. You wouldn’t happen to have a vested interest in people taking out mortgages, by any chance?

Welcome to our friendly home loan boutique

Customers come first at Sinifox Financial, the creative and straight shooter Las Vegas mortgage lender. [...] We are the mortgage broker with solutions.


What is our business formula? It is consulting. Or some call it mortgage planning. We are the exact opposite from a loan salesman. We listen, we share ideas and we find rewarding solutions. As an experienced Las Vegas home loan consultant, we provide financing for owner-occupied, second home and investment properties.

Contact us today with your refinance plans and questions

I’ll take that as a yes.

(from the URL in your name).

Comment by cobaltblue
2009-02-01 19:04:32

“there are terrific buys all over the market now and mortgage rates remain outright attractive”

I hope you don’t have too much money riding on this premise.

The $900,000 house in 2005 might have seemed like a terrific buy at $750,000 in 2007,
but when it’s going for $450,000 in 2009, the $750,000 sure does seem terrific, if you SOLD it for that. Unemployment is rising faster than at any time since WWII. That alone should be a major red flag to anyone thinking of buying.
For as far as mortgages go, any rate for 15 or 30 years is too much when you have no job or income. Better to rent month to month, for most. Knife-catchers often bleed to death.

Comment by awaiting wipeout
2009-02-01 19:20:27

Your post reads like a press release/infomercial from The Illinois Association Of Realtors.

Comment by MadBoy
2009-02-01 19:39:37

Sinifox financial mortgage “solutions”

Comment by Housing Executive
2009-02-01 17:17:01

In the past it was rare that a bank or lender would accept a short sale however due to overwhelming market changes lenders have become much more negotiable when it comes to these transactions. Recent changes in policy within many organizations have made the chances of getting a short sale approved even higher!

Comment by exeter
2009-02-01 18:09:41

Halftime… Unbelievable Steeler 100 yd interception.

Comment by need 2 leave ca
2009-02-01 19:13:31

Now that the Super Bowl is almost over, I am feeling the thunder of feet rushing out to buy up all of these great real estate deals.

Oh wait, it was just the vibration from the jacuzzi tub going. Sorry folks, back to the bubble and enjoying the last quarter of the game.

Comment by bink
2009-02-01 20:05:49

Now those are some bubbles I could learn to enjoy.

Comment by palmetto
2009-02-01 20:14:32

It’s over. The Steelers won. AWRIGHT!

And now, back to Tampa’s regularly scheduled decline.

Sheesh, I’ll be SOOOO glad not to see those danged Superbowl rental ads all over the place. It was the last shot for Tampa FBs to grab some cash.

Comment by pismoclam
2009-02-01 20:54:41

Great game. The Cardinals beat the spread (61/2) and I bet the over(46) . Fantastic finish. Wish I could make money in the market or on RE that fast.

Comment by rms
2009-02-01 21:09:40

So how are things there in NM at 5,000-ft ELEV in Jan/Feb? It was NM, right?

Comment by MadBoy
2009-02-01 19:37:34

Foreclosures up in Wisconsin

Foreclosures increased because of predatory lending or foreclosure on second homes, especially for condos and timeshares….

…..but I thought the out of state buyers were going to swoop in and save the condo market (but maybe that was only in Edgerton, WI).

At lease I KNOW Dane County will be fine….after all we have the twin engines of the Wisconsin economy 1) State Government and 2) the University of Wisconsin.

Fixing a $5.7 billion budget shortfall

uh oh….and rumor has it persons at the UW have been instructed to create budet contingency plans at 90% and 80% of previous budgets.

Comment by need 2 leave ca
2009-02-01 20:19:54

I was feeling some rumbling under the couch after that final touchdown. It was feeling like the buffalo stampede heading out for those great housing deals.

Oh wait, I was reminded of an ad for a new casino here in New Mexico called Buffalo Thunder. Back to post game celebrations (or lack thereof).

jacuzzi bubbles are great though.

Comment by awaiting wipeout
2009-02-01 20:47:44

Built into bathtub or above ground jacuzzi bubbles ?

Comment by palmetto
2009-02-01 20:56:32

Loved to see The Boss. He can still bring it. Fell to his knees and sprang up again. I can’t do that. When I crouch down to do something, I like to stay there for a little while to see if there’s anything else I have to do before I get up again.

But, I was reading some reports on all the hoopla surrounding the Bowl and the word is things were pretty much subdued. Sign of the times.

Comment by palmetto
2009-02-01 20:57:39

Glory Days. Sigh.

Comment by need 2 leave ca
2009-02-01 21:44:38

built into the bathtub. nice touch and large.

Comment by measton
2009-02-01 23:17:15

Jan. 30 (Bloomberg) — Regret is cheap for some delegates at the World Economic Forum in Davos, Switzerland. Redemption for their role in the worst economic wreck since the Great Depression comes at a steeper cost.

“Nobody in Davos wants to get near a negative like redemption,” said Robert Dilenschneider, chief executive officer of the Dilenschneider Group, a public relations firm in New York. “But the truth is that everyone here is part of the problem, and the public will soon begin demanding a pound of flesh.”

“No banker or businessman wants to take responsibility,” said Dilenschneider, who counts 40 Davos delegates as clients, their identities shielded by confidentiality agreements. “It’s their view that everybody else did something wrong.”
‘Stupid Things’

At a panel on leadership yesterday JPM CEO Jamie Dimon expressed frustration at those who seek to pin all the blame on bankers.

“I take full blame for all the American banks and all the things they did,” said Dimon, 52, the only CEO of a major U.S. financial institution to attend the conference this year, adding that he knows that’s what people want to hear.

Regulators, he said, should share some of the blame.

“God knows, some really stupid things were done by American banks,” Dimon said. “To policy makers, I say where were they? They approved all these banks.”

Well he should know where they were, he paid to get rid of them and water down all forms of regulation. What a P0S

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