Where The Hell Is The Cavalry On This One?
It’s Friday desk clearing time for this blogger. “From Key West to Tallahassee, Brevard County to Belleview, local governments struggling to reinvigorate the stagnant housing market are finding themselves in the middle of a heated debate regarding impact fees. Developers are pushing municipalities to relax or eliminate impact fees. The Marion County Builders Industry Association recently released an economic impact study conducted by the National Association of Home Builders Housing Policy Department that shows the home building industry in Ocala not only pays for itself, its economic impact results in new income and jobs for Floridians and additional revenue for local governments, eliminating the need for impact fees.”
“‘These results show that home building is more than paying its own way and should put to rest the notion that existing home owners are subsidizing new home construction here in the Ocala area,’ said Dr. Elliot Eisenberg, NAHB senior economist who conducted the study. ‘This is an excellent result and tells me that local residents should be thanking the building industry.’”
“Seventeen years after Hurricane Andrew leveled much of southern Miami-Dade County, a different kind of storm is devastating households here: foreclosures. In certain ZIP codes in places like Homestead and Florida City, around 25 percent of the homes are in one stage of foreclosure or another. Countless others were built by developers and sit vacant in ghostly subdivisions, with not a buyer in sight.”
“In the days after Andrew, then-Dade County Emergency Management Director Kate Hale famously said on national TV: ‘Where the hell is the cavalry on this one?’”
“Maria Kriegh’s two daughters signed up about 20 neighbors for Girl Scout cookies in late February, but when they returned to deliver the boxes two weeks later, the mother of four was shocked to find that a few of the homes were empty, bare living rooms glimpsed through window panes. The Kriegh family lives in ZIP code 89131 — ground zero for the nation’s foreclosure crisis.”
“As a business owner who depends on residential construction, Neal Williams has taken one hit after another in the past two years, dropping from 81 to 23 employees and withholding his own salary some months. ‘We’re on the verge of losing everything,’ he says.”
“Local home builders and real estate companies are pulling out all the stops — offering perks…in hopes of selling off new and existing homes and condominiums. ‘Incentives are being offered to move houses, especially after a disastrous late fall and winter that slowed down the housing market,’ said Jeff Burd of Tall Timber, a Ross-based construction market research firm.”
“Incentives helped Heartland Homes sell 50 houses in February, said Marty Gillespie, president. ‘We are not reducing prices, but, through our incentives, are providing buyers with increased value,’ he said.”
“‘Even with these incentives, local home builders are not holding fire sales, nor giving away their homes,’ said Jim Eichenlaub, acting executive director of the Builders Association of Metropolitan Pittsburgh.”
“First cars. Now condos. Thornton Place, a big, new project near Northgate with cinemas and a creek, is offering prospective condo buyers a layoff-protection plan in hopes of spurring sales in this sour market. Buy a condo, the developers say, and if you lose your job within a year they’ll make your mortgage payments for up to six months.”
“Thornton Place’s 109 condos have been on the market since last summer. None has sold, and now the complex is nearly finished. ‘We were looking at what would get people off the fence,’ said Jeff Cook, president of one of the companies building Thornton Place. ‘We think there’s a pretty big pent-up demand for housing.”‘
“The number of unmarried homeowners grew during the real-estate boom, especially in markets that saw double-digit price appreciation. When home values were rising and the economy was strong, a partnership deal seemed like a slam-dunk. But not all relationships last as long as a 30-year mortgage, and for co-owners who need to split up, the real-estate crash presents a challenge. If you or your partner now want out of the home, here are your best options: Sell the home.”
“Second, if you don’t sell, one person has to buy out the other’s share of the equity. In addition, you have to persuade the bank to remove the co-owner’s name from the title—not an easy proposition in today’s economy.”
“Here in North Texas, realtors say they have some good news. While new home sales are still sluggish, people are buying in more stable areas. And they’re willing to spend more for a stable investment. ‘As far as sales volume, it’s down,’ said Kenneth Jones, with the Greater Fort Worth Association of Realtors. ‘As far as dollar volume, it’s up, so that tells me home values are on the increase.’”
“Terri West says she’s seeing prospective buyers, but most are not looking for the kind of house she’s selling. ‘I find more are looking for a lower price range than this house,’ she said. ‘And banks are lending less, so it does diminish the clientele just a little bit.’”
“The preliminary first fiscal quarter report, based on early findings for only January and February, indicates that completed foreclosures in Colorado are down by half compared to the first quarter of last year. But said Kathi Williams, director of the Division of Housing, said Colorado still has a long way to go before it is in the clear. She pointed out that there are still 91,000 outstanding subprime loans across the state, which are set to adjust — some of them for the second time — within the next two years.”
“‘It is still too early to know exactly what the recession may mean for foreclosure totals,’ said Williams. ‘If those folks have not done some type of work-out with their lender, then they’ll probably get back into the (foreclosure) process.’”
“The current financial crisis is all-inclusive; our path to prosperity or even simple financial stability seemingly obliterated. Howard Zynkian, 89, filed for Chapter 13 bankruptcy more than a year ago to help him save his home. Zynkian, who lives in El Cajon, Calif., refinanced his home five years ago and didn’t understand that he was getting into a risky, alternative mortgage. After his monthly mortgage payment had jumped from $1,500 to $2,700, he was facing foreclosure.”
“The retired dentist had used up all of his retirement savings to pay his rising mortgage bills. He cares for his daughter, who has severe back problems, and together they receive about $2,900 a month in Social Security. This week, after much effort, he was able to get a loan modification from his lender. Now he will pay $1,269 a month on a 3% loan rate. After five years it will go up to 4% and then six years later, it will move to 5% for the rest of the term.”
“‘I can just barely manage it,’ he says.”
“Last year, Amy and Mike Dew, from Sanford, N.C., both were laid off from jobs. It took Mike about nine months to find a new job. Amy, who lost her job in November, just started working again this month. Recently the Dews, who have two teenage daughters, filed for bankruptcy. They gave up one car and their home. ‘”We literally went from almost a $100,000 salary to probably $50,000 for the two of us,’ Amy says.”
“Dubbing the looming crisis ‘Sub-Prime Lite,’ Professor Steve Keen told The Sunday Telegraph Australia was making the same mistakes as the US. Professor Keen said in trying to avoid an economic crisis caused by too much borrowing, Australia was in effect encouraging the poorest in the community to take on even more debt. ‘Yet these low-paid first homebuyers are the people who are most vulnerable to the economic downturn,’ he said.”
“The top end of capital cities housing market has been suffering for some time as mass redundancies within the financial sector have forced homeowners to sell. Meanwhile, the first-home buyer end of the market has been booming. But economists fear this flurry of activity at the lower end has inflated prices to unsustainable levels. In Sydney, the average property already costs nine times the average household income, while the UK and US reached a peak of only seven times average income before their markets crashed.”
“According to Professor Keen, the First Home Owner Grant has cost the government about $200 million, but has inflated property prices by close to $3 billion. ‘This is all illusionary wealth that could disappear very quickly,’ he said.”
“Gerard Minack, chief economist at Morgan Stanley, said property prices were likely to fall by 20 per cent in some cities, while the value of houses on coastal strips such as the NSW mid-north coast and the Gold Coast could halve. ‘People paid Hamptons prices for properties up there but it is not the Hamptons,’ he said.”
“‘Traditionally what has hurt people has not been rising interest rates but rising unemployment. The additional $2.8 billion or so has come from increased mortgage debt taken on by those most vulnerable to a serious economic downturn at a time when we can see very clearly that the global recession is coming our way,’ Minack said. ‘I don’t care what rate you’re paying, if you have a mortgage five times your income and you lose your job, you’re toast.’”
“While Realtors and builders acknowledge that many people are avoiding big purchases because of the uncertain job market and economy, they contend that there are a number of financially secure buyers who are holding back for the wrong reasons. There are people out there who believe the bottom will soon fall out of local housing market. So instead of taking advantage of low interest rates, tax rebates and affordable home prices, they are holding back, opting to rent in some cases.”
“‘They are waiting for all these great bargains they think they are going to get,’ said Dixie Robertson, executive officer for the Northwest Louisiana Homebuilders Association. ‘They do not want to buy a house for $400,000, when they think it will sell for $200,000 in a year.’”
“Brad Goslee, co-owner and chief operating officer of Coldwell Banker/J. Wesley Dowling & Associates, said now is as good a time as any to buy a home. ‘It’s not a good decision to rent in hopes that housing prices will go down in our market. With 4 to 5 percent interest rates, very affordable home prices and a potential for demand growth … now is the best time to move.’”
“David Rosenberg, the chief North American economist at Merrill Lynch & Co. in New York, refused to trust his computer models, sensing that the end of the credit and housing-market booms would cause a deeper rout than most analysts thought. ‘We came off a prolonged period of prosperity that was fueled by excessive leverage and an asset bubble of historical proportions,’ Rosenberg said in an interview. ‘Either you believed that this was sustainable or you didn’t. I came to the conclusion that this was going to end very badly.’”
“It won’t help anyone recoup the money lost in the housing bubble or the market crash or the recession, but there’s a certain satisfaction in knowing where to put the blame. Niall Ferguson, a Harvard and Oxford historian: ‘Nothing would be easier than to blame everything on the bankers. I blame them for much of what has gone wrong, but I blame the politician more. It’s just too easy to heap opprobrium on Wall Street. And if you noticed, that’s exactly what the politicians do. Could it be that they’re trying to divert our attention away from Washington’s own responsibility for the debacle?’”
“‘I invite you to consider the roles played by four institutions in bringing about this financial crisis, and I want you to reflect on the location of those institutions. The first is the Federal Reserve Board. Its role has been to allow a housing bubble to inflate, and burst.’”
“‘The second is the Securities and Exchange Commission, which under Christopher Cox allowed the leverage in the banking system to spiral out of control. My third prime suspect is the Congress that wholly failed to supervise Fannie Mae and Freddie Mac, which on the eve of their destruction were leveraged 65 to 1. And that brings me to the White House. ‘We want everybody in America to own their own home,’ declared President George W. Bush, in October of 2002. Everybody in America!”
“But it’s the role of government to strike a balance between market forces and stability, and we should blame Washington more than Wall Street for this crisis. In my view Washington sold itself to Wall Street.”
“Bankers are nearly always actuated by greed, and so are many ordinary people too.”
“Homeowners are seeing their home values plummet and their negative equity increase in unprecedented fashion. Owing significantly more than their homes can sell for, options narrow and they are left to ponder the one remaining: ‘Do we stop paying our monthly mortgage and prepare to walk away form our investment, our house … our home?’”
“It’s a sobering question for those who come to ask it. The answer, even when assured, is not one arrived at quickly. Much deliberation is warranted. Alternatives must be sought. The choice to walk away is not just a little humiliating.”
“I know … I made that choice last summer. For many who have lost their jobs, whose payments have escalated while their incomes have declined, who are going through a divorce, or for whatever reason can’t keep up with their monthly obligations, their answer, while not easy, is simple. They simply have no other choice. I feel fortunate to count myself among them.”
“Critics will chide: ‘Morality should not be transitory!’ ‘They are ‘debt slaves’ of their own making!’ In many cases, these are unfair indictments. The policy decisions of our government, and of our banking institutions, have contributed mightily to their plight, and they know it.”
“Our government is enticing these banking institutions to work with underwater homeowners. Will they do so meaningfully? Will this effort stop the slide in home values and stem the mounting tide of foreclosures? So far, the government’s effort in this regard has not worked … and actually has made things worse.”
“In 1802, Thomas Jefferson said ,’I believe that banking institutions are more dangerous than standing armies.’ Continued failure will prove Thomas Jefferson had it right.”
Another great week! My thanks to those who support this blog. I apologize for the server problems, and we will continue to work on it. Please check back this weekend.
“In 1802, Thomas Jefferson said ,’I believe that banking institutions are more dangerous than standing armies.’ Continued failure will prove Thomas Jefferson had it right.”
The banking sector has accomplished what the 9-11 attackers could not.
I hope by “banking sector” you are including Mr. Greenspan and the sycophants at the FRB.
Not to mention some of the clowns in Congress and at Treasury.
Fair enough. I misspoke, as I don’t think the private sector should be blamed for regulatory failure.
I don’t think the private sector should be blamed for regulatory failure. Then Jefferson’s quote does not apply.
PB, I think of it not so much as a regulatory failure but more as of a national looting sucess
Oh, snap.
I’ll blame the banks for regulatory failure. They bribed, lied to and manipulated our weak A## congressman.
# who voted against repeal of glass Steagle = 8
# who voted against TARP = 42
Russ Feingold was in both groups so he gets a check the next time around.
No kidding. You would think Barney Frank and Chris Dodd are alQueada operatives secretly embedded by OBL himself for maximum destruction. Great job, guys!
ohshutuppressboardboxyouforgot the others
“In the days after Andrew, then-Dade County Emergency Management Director Kate Hale famously said on national TV: ‘Where the hell is the cavalry on this one
The cavalry boyz. Oh..they rode down to the Tigris River to poke some sleeping natives with a sharp stick. It seemed like a fun thing to do.
How about adding in the general public. It’s not as if anyone held a gun to the head of a borrower and forced them to take particular loans, lie their heads off to get them or buy houses they couldn’t afford.
“Say the net gain from the home’s sale is $30,000. First back out the down payment, say $20,000, splitting that amount based on each owner’s respective contribution. So if you had put in 60 percent, you’d get back $12,000. Then divide the remaining balance—$10,000 in this example—based on the percentage you covered of monthly payments and fees. If you paid half the costs, you’d get back $5,000.”
Anohter example of how Chicago is the worst off… Publishers still forcing bs down the throughts of young, recent graduates of Big-10 journalism schools.
“Let’s say everyone stops paying for this garbage…
Oh, wait, it’s already happened.”
or better yet…
“Let’s say the net LOSS from the short sale is $90,000. First, add that to the down payment, which was $50,000, you two “partners” are now down $140K. First thing you do, is get a lawyer, the first one you see on TV. Then accuse the other party of strongarming you into the deal, and sue for your half of the $140,000. Then your parner gets a lawyer with more commercials than yours, and the Judge says “tough $hit.” Now, you’re both out $100K. The race to the pawn shop to buy the cheapest pistol is on…”
LOL, I LOVE it!
“Incentives helped Heartland Homes sell 50 houses in February, said Marty Gillespie, president. ‘We are not reducing prices, but, through our incentives, are providing buyers with increased value,’ he said.”
“‘Even with these incentives, local home builders are not holding fire sales, nor giving away their homes,’ said Jim Eichenlaub, acting executive director of the Builders Association of Metropolitan Pittsburgh.”
We’ll see you two money grubbing jerks down at the courthouse steps.
“nor giving away their homes”,’ said Jim Eichenlaub
One of the top ten moron comments that pop out of these d-bags mouths. IMO
“One of the top ten moron comments that pop out of these d-bags mouths. IMO”
BINGO
Wake me up when the “fire sales” start please.
The dataquick numbers for California cities in Feb is out.
Holy cow.
Median sale price in Sacramento City is $123K, on sales of over a thousand houses, so this isn’t a case of a few sales skewing the stats. Los Banos is down to $119K. Stockton $113K–down an even 50% from last year, and last year was national-headline-grabbing bad.
Some of these cities may well see the median drop under $100K by the end of the year.
San Francisco was down 16%, but sales were only 200, so they’re still in the early stages of denial. The classic pattern has been a drop in sales, followed by capitulation and collapse.
SF home prices will eventually fall simply because private sector incomes are plummeting. But SF will hold value better than most other places, simply because it is a 7 square mile peninsula with very little vacant land that can be used for new construction.
Even if it’s true that San Francisco will hold it’s value “better” than some of the other places around, the fact remains that regression back to ‘97-’99 values (around $400k-$450k) isn’t out of the question. That’s still a lot of ground to go considering that they’re still in the $640k range according to the latest DataQuick, AND those homes were financed using many subprime or Alt-A or AR mortgages.
Also don’t forget that south city prices could get dragged down hard. Daly City, Colma and South San Francisco have absolutely no cachet or charm, and people who want to buy will consider those as alternatives versus the southern portion of San Francisco. As cheaper purchases flow there, prices will almost literally “flow” down from more desirable places in the northern parts of the city.
“As a business owner who depends on residential construction, Neal Williams has taken one hit after another in the past two years, dropping from 81 to 23 employees and withholding his own salary some months. ‘We’re on the verge of losing everything,’ he says.”
Neal, not smart to stay aboard a sinking ship. What are you waiting for? The elusive big turn around in the housing market? You may well die on the vine, 2003-2006 are in the rear view, look forward, find something else to do.
I still long for the day when the headline in the Orlando Sentinel reads, ‘Its tearing the ass out of us in Florida! Tearing the ass out of us!!’
Why did I picture Will Farrell when I read that?
Keep. Our. Composure!
Yes. Will Farrell, in a speedo
“While Realtors and builders acknowledge that many people are avoiding big purchases because of the uncertain job market and economy, they contend that there are a number of financially secure buyers who are holding back for the wrong reasons. There are people out there who believe the bottom will soon fall out of local housing market. So instead of taking advantage of low interest rates, tax rebates and affordable home prices, they are holding back, opting to rent in some cases.”
“‘They are waiting for all these great bargains they think they are going to get,’ said Dixie Robertson, executive officer for the Northwest Louisiana Homebuilders Association. ‘They do not want to buy a house for $400,000, when they think it will sell for $200,000 in a year.’”
“Brad Goslee, co-owner and chief operating officer of Coldwell Banker/J. Wesley Dowling & Associates, said now is as good a time as any to buy a home. ‘It’s not a good decision to rent in hopes that housing prices will go down in our market. With 4 to 5 percent interest rates, very affordable home prices and a potential for demand growth … now is the best time to move.’”
Ghad, we’ve heard this BS since 2003! Grrr… We always know the Realtors ™ think its a good time to buy. But what if rates do go up? Doesn’t that make those rare down payments even more valuable?
Unemployment hasn’t peaked. I know of five people who bought within the last 12 months who have received layoff notices. Exactly how does that help the market? How can you be certain one is financially secure? Don’t the realtors know that high end home prices track the stock market? I’m not expecting this bear market rally to continue another month. Are the Realtors ™?
There is four years of inventory in California at the $2.5M+ price point. Exactly how will we not have the ‘Great Squish down?’
Oh… reset graph too. Its *just* starting where I wish to buy.
Got Popcorn?
Neil
Actually Neil, I caught an interesting use of words in that quote:
“is as good a time as any to buy a home”
What? It’s not the best time in the history of the human race to buy, it’s only just “as good a time as any”?
Did I just hear a member of the esteemed REIC going a wee bit wobbly on us?
It’s not a change in sentiment, but maybe a very early leading indicator of things to come.
shoe,
Good catch of “is as good a time as any to buy a home.” What next?
If you just gotta buy a house, why not?
Well, yeah, you wanta buy a house? - I guess we could help you find one.
If you just gotta buy a house, why not?
SNARF!
good point.
Neil
“‘They are waiting for all these great bargains they think they are going to get,’ said Dixie Robertson, executive officer for the Northwest Louisiana Homebuilders Association. ‘They do not want to buy a house for $400,000, when they think it will sell for $200,000 in a year.’”
Those sound like pretty good reasons for waiting to me.
Where is the patriotism? Buy now you fascist sideline-dwellers!
We walked away from a repo 1 BR condo that we had a chance to buy last weekend for 1 seventh of what it used to sell for. It’s a nice one, too, easily rentable, but, well, we just decided to say “no” and save they money. It’s in a nice complex not too far from where we live. It would rent out for about $600 per month. We just don’t want to pay the taxes/condo fees and have to deal with another property.
Believe it or not, it’s still for sale, priced @ $ 13500. It was pretty nice inside and looked rentable on the spot.
Where is the patriotism? Buy now you fascist sideline-dwellers!
Shouldn’t it be “Where is the patriotism? Buy now you fascist, recently-laid-off sideline-dwellers!”
“‘They are waiting for all these great bargains they think they are going to get,’ said Dixie Robertson, executive officer for the Northwest Louisiana Homebuilders Association. ‘They do not want to buy a house for $400,000, when they think it will sell for $200,000 in a year.’”
Yeah, sheesh…crazy, isn’t it?
‘They do not want to buy a house for $400,000, when they think it will sell for $200,000 in a year.’
Yeah…and it seems like all those big TWO family incomes for your $400k shacks are shrinking to ONE.
Ooops…and then there were NONE!
‘They do not want to buy a house for $400,000, when they think it will sell for $200,000 in a year.’
Because there are so many households with $125,000/year incomes to buy the millions of houses on sale for $400,000 and up…
Couple that with the fact that last year’s $125k income is more like $90k this year.
My income is going to be down about 25% this year, and I’m happy to have even that much.
Exactly. Too much uncertainty. Scared of the bumps in the future. We are….
I’ve been to NW Louisiana. I wouldn’t pay $25,000 for any property in Shreveport or Bossier City…
Here are some of the things HBB-types would like to see happen to the FBs — except perhaps for the beautiful women.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aAnBviwQjxr4&refer=home
Where do I sign up for an illegal loan?
“That’s in addition to the traditional incentives such as putting debtors in a cage, splashing their houses in red paint or breaking their limbs…”
Believe I’d check the box for the hot-chick treatment.
‘This is an excellent result and tells me that local residents should be thanking the building industry.’”
Hmm, a “Study” conducted by the housing industry somehow concludes that people should be kissing their butts for churning out identical poorly built stucco shacks while enjoying huge margins and shouldn’t have to pay for the services that the cities need to provide for all these future foreclosure farms. Who woulda thunk ?
Eh…. FB’s don’t need sewer lines or schools. Let ‘em use the outhouse out back and give those kids a good education in despair and destitution. Makes ‘em tougher, resilient little buggers.
“In 1802, Thomas Jefferson said ,’I believe that banking institutions are more dangerous than standing armies.’ Continued failure will prove Thomas Jefferson had it right.”
During the same press conference, Jefferson also remarked that Sally Hemings was as cute as a button. Few at the time fully understood the implications of that statement, either.
Luv
Jen
http://www.monticello.org/plantation/lives/sallyhemmings.html
( TJ what was up )
The details of Thomas’ personal life have gone 404. New link, please.
http://www.pbs.org/wgbh/pages/frontline/shows/jefferson/
Oh you beat me to the punch. I was gonna say that good Ole Tom was a pretty forward thinking guy when he wasn’t having forced sex with his chattel. Let them direct their wrath at me. I can take it. You seem so sweet. I am experienced with weaponry.
Natalie,
I think my link is off but the more you read the more exploitive it becomes. I never knew children as young as 6 and 8 were forced into being “childtenders”?
Over the years I’ve learned to be a little leery when people jump at the chance to say: “And do you KNOW who said ‘that’?” ever eager to align their argument with the one man with whom there IS no arguing!
Since Jefferson died deeply in debt, I guess that would tell us where he was coming from.
Not sure if this made any bits bucket over the past week, but the New York Yankees’ Derek Jeter is building a 30,000 square foot house right here in Tampa, on Davis Island. It will have seven bedrooms and nine bathrooms and Sports Illustrated reports that it will be 4,000 square feet larger than the typical Barnes & Noble bookstore.
I know I’m out of step with American society on many subjects, but I don’t understand how a single man without children — even a multimillionaire superstar professional athlete — comes to a decision that he needs a home that large, particularly when he only will live in it for part of the year. Perhaps Jeter is trying to compete with others who he feels are in his peer group (Tiger Woods? Tom Brady? LeBron James?), much like business titans do ego-driven battle over who can commission the largest yacht.
I’d think this would be obvious, but sports stars are not hired for their intellectual abilities or their money management savvy.
You’re not kidding — earlier this month, the magazine had a long story about some of the ridiculous investments made by sucker pro athletes, some of whom had subsequently to declare bankruptcy. And I remember another SI article from the 1990s, this time about a baseball player’s divorce. The proceeding required a sale of the couple’s Gatsby-ish marital home, which came complete with an entertainment room set up so that a model train could deliver drinks from the bar to people watching television. I think I would have appreciated that arrangement as a college sophomore. Otherwise no.
snort, or maybe as a twelve year old!
It’s like an English country home. I would assume there are numerous, family, friends, domestic help and other hangers-on living there at any given time. Or maybe not.
It’s in FLORIDA. The home can’t be attached by creditors. Rush Limbaugh and lots of other people have expensive homes in Florida for the same reason.
Maybe these bloated estates are huge landing pads for Martians. They have to be BIG in order to attract attention from outer space. Or perhaps a stucco version of a Venus Flytrap, to lure unsuspecting gold digger groupies?
Kinda makes you long for the old days, when these guys would just get drunk, then whip ‘em out and measure.
It’s a hell of a lot cheaper.
Jeter does not seem like the type but the strategy is to fill the house with antiques, Tiffany lamps, tight bid/ask jewelry and easily saleable and portable assets. Then file for bankruptcy. In Florida they can’t take your residence or furnishings.
Jeter is a race to see if he can reach bankruptcy faster than Michael Vick.
“but when they returned to deliver the boxes two weeks later, the mother of four was shocked to find that a few of the homes were empty”
Man, stiffing a girl scout for $3 is a new low.
“Man, stiffing a girl scout for $3 is a new low.”
Some statements take on a whole different meaning when taken out of context…
I’ll never forget the time a girl scout showed me her cupcakes.
GIrl scouts don’t have cupcakes. Are you sure it was a girl?
hehehee
A ‘ditto’ hehehehe!
That was funny, desert.
Just wait ’til the Chinese stop buying girlscout cookies. The Fed will have to step in with TARP money.
She’s much too easily shocked: “a few empty homes” — Jeesh.
Heard an ad by Remax on the radio the other day. I wish I could remember and print the transcript verbatim, but essentially it was:
” Did you hear about Jimmy?”
“No, what happened, did he get the house?”
“He felt that the price was going to come down more and so he didn’t put a bid in, and Someone Else got the house!”
“Oh, no, how does he feel?”
“He’s kicking himself now for not placing a bid.”
And then some nice voice comes on and says how “now is the time to buy, prices have never been lower, don’t miss out on the opportunity to be a homebuyer.”
Unbelievable. Desperation in the air.
Opportunity to be a homebuyer. Let’s run that through the Slim Analyzer…
In my first week of homeownership, both toilets broke. One was usable, but I had to be verrrrrry nice to it. Both toilets had to be replaced.
Within the first three months, the washer/dryer that came with the house bit the dust. Within the first six months, the swamp cooler sent out death signals. Both items had to be replaced.
Oh, did I mention my waking up in the wee hours of the morning, with my heart pounding and it was hard to catch a breath. (”Oh, so this is what panic attacks are like.”)
So much for opportunity. I was convinced that my house was trying to kill me.
Yup. 3 weeks into the house I woke up the screaming @ 3am. Other half went down to use bathroom and stepped into 3 inches of water. Hose to dishwasher had sprung a leak and filled the entire downstairs with water. Miserable experience and expensive.
Oh, you would have to remind me of that. I forgot to mention that the washer/dryer had a suicidal drain hose. Water would be ejected from the washer, and the pressure was strong enough to cause the hose to leap off the top of the drain pipe. Flood.
The replacement washer’s drain hose is anchored in place by zip ties. No further floods.
Slim,
Get the washer discharge hose that has a molded 180* bend built-in. You’ll no longer have this problem.
Mike
I think my house still is. Both husband grandfather and stepgrandfather died here. Grandmother was a near invalid for 20 years. There are reasons we would like to move. But it was free when we needed it. And I hate to take on payments this close to retirement. It isn’t as if the house would bring a lot, so it’s cheaper here.
I’ve owned two condos that tried to kill me. Sold the one in Vegas in 2006 at the top of the market. Now with the new tax credit I can probably get rid of the one in Florida by year-end. I plan to be a happy renter until I drop dead.
“Oh, no, how does he feel?”
“He’s kicking himself now for not placing a bid.”
“And then some nice voice comes on and says how “now is the time to buy, prices have never been lower, don’t miss out on the opportunity to be a homebuyer.”
LOL! But plenty of suckers still fall for this crap!
Ha! That’s pretty funny.
The only thing “Jimmy” would be “kicking himself” over is not getting the knifecatcher’s name so he can thank the guy for lowering the comps.
I can almost hear poor little Jimmy crying and sobbing in his pillow because he has to leave RIO after 10 days of hard partying and celebrating with the money he saved on not buying that DOG
Record it, and youtube it. Don’t let that one be forgotten.
“Thornton Place’s 109 condos have been on the market since last summer. None has sold …. ‘We think there’s a pretty big pent-up demand for housing.’”
Ja. Whatever you say, pardner.
We recently tried to sell an old fax machine, in excellent condition and original box, on ebay for $5, no reserve. There were no bids, hardly any lookers. By his logic, there’s a pretty big pent-up demand for fax machines. Now I just need to find the right incentive…
TP 109
Oh… oh, that’s PT109, my bad.
More like PT 73.
McHale’s Navy
“They start at $299,950 for a 595-square-foot one-bedroom unit.”
No buyers tells you how much “pent up demand” there is. How much market is there for non-penthouse condos at $500/sqft?
Just because a builder paid bubble land prices and bubble constructions costs doesn’t mean it will sell for bubble prices.
But if you beileve…
‘We think there’s a pretty big pent-up demand for housing.’
I think they are right — once prices drop to near $0, buyers will again materialize.
I’m not so sure about that. In Detroit you can get all sorts I houses for next to nothing, yet they’re bit moving. Houses still require maintienencw and taxes which can be very expensive. If there are no jobs in an area, I wouldn’t even live there in a free house
It’s different in Detroit, for sure!
Read my story of NOT buying the $ 13,500 BR condo (not in Detroit ), but as above your comment, yes. On the flip side, the cost of living has pretty much plummeted here in the area in many ways.
I should say, not in the City of Detroit. About 30 miles away. I am still watching the price. If it continues to go down, we shall see. But the property taxes are gradually falling, obviously the price of real estate has fallen, they’re practically begging you to come into the car dealerships, groceries are cheaper, etc, etc. Tipping at restaurants has gone down percentage-wise, and we’re now getting senior citizen specials on meals because my husband grew a gray beard, and I stopped paying the freight to have my hair colored when it was cut, and am growing out mostly silver. I am saving $ 40 per hair salon visit. I really was only doing the coloring to help out my friend the hairdresser, but when her salon raised their prices yet again, I just dropped back to the cut. I still give her the same tip, though. Used cars are cheaper, yard & estate sales have a lot of buys, and people at work are selling various peronal items at ridiculous prices. I haven’t bought anything. Landscapers and other workmen are charging about 30 percent less than they were about 3 years ago. We just had our much-sunken sidewalk raised for $250. A few years ago it would have been $450. So, if you hang onto your money and wait for bargains, they can be had, and of course, there is always the possibility of a real find. We don’t all have to endure the costs of the East & West coasts. I get a giggle over the housing prices when I go to visit our daughter out east. Yikes.
The key word is live. Many of those houses would cost you your life if you tried to move in.
Crime and corruption is the bane of real estate.
Speaking of crime, in the lovely town of Palm Springs, Wed, midday, the WAMU was shut down, radio stated …Bank Robbery.
And I was just going to make a dep. Never mind.
My congress critter just sent me an email to come visit with him tomorrow. He never learns.
We hate each other and this might not end well.
If I go and hear anything of interest, I will post it.
If I go missing, give Olygal that 4 year ? old rib eye steak in my freezer.
‘We think there’s a pretty big pent-up demand for housing.” and “109 condos have been on the market since last summer. None has sold”
Sorry, your logic makes my head hurt.
What kind of sick m@ther f*cker orders Girl Scout Cookies knowing full well when these little girls come back welling with pride to collect money for their troop they will be long… gone..!?
latest news
[JPM] Dimon says “I don’t think we need equity” at J.P. Morgan
OUTSIDE THE BOX
Memo to Wall Street: America hates you
Commentary: Those in the financial echo chamber still don’t get it
By Jeffrey D. Korzenik
Last update: 7:54 a.m. EDT March 27, 2009
BOSTON (MarketWatch) — The New York Times’ publication of the resignation letter of American International Group executive Jake DeSantis has garnered a great deal of attention. What I find even more interesting than the letter are the angry responses to it.
There are 917 comments on the Times’ Web site in response. Browsing through a few dozen of them, I’d estimate 95% or more are hostile to Wall Street in general. There is nothing but bad that can come out of an environment where the majority of Americans are furious at their financiers.
I’ve spoken to some of my friends at the major firms. For the most part, they have not fully appreciated the anger that most people feel towards Wall Street. I can understand why. When you live in an affluent New York suburb, a disproportionate number of your neighbors work in the industry. Most of your friends work in the industry. Heck, your kids or your parents may be in the business, too.
It’s all one big echo chamber.
Within that small, self-contained world, it’s no big deal to make $1,000,000 a year. It’s simply assumed that $850,000 of that may be in the form of a bonus, and that of course you’re entitled to some kind of a bonus every year.
It’s accepted that sacrificing for your company’s sake or for your fellow employee’s sake is a sucker’s game, because you’ll be sold and laid off in a New York minute if it puts another dollar in someone else’s pocket.
Decades ago at Lehman Brothers, I often heard the mantra, “You have to do what’s right for you and your family.” I quickly learned that this was really code for, “I’m going to stab you in the back if it helps me and my family one iota.”
Is it any wonder that the rest of America is appalled by this culture?
Sure we’re appalled by Wall Street, but I, personally, am more appalled by the aiding and abetting they get from the Federal Reserve, CONgress and their regulators.
Don’t forget Greenspan hawking ARM mortgages and insisting that derivatives spread risk efficiently and shouldn’t be regulated. What a goon.
I may not be able to stop CONgress from bailing these idiots out but I can damn sure change my investing to make sure these parasites never collect a fee on my money again.
I’m going close to 100% municipal bonds in my investments just to get the tax collector out of my pockets. I still have to pay taxes on assorted retirement income, but that’s quite enough taxes to pay, thank you.
PB,
Even those of us further down the food chain on the retail end are equally frustrated with these clowns. Like many here, I’ve warned about HF’s etc. until I’m blue in the face.
The way it works ‘down here’ is some “regional sales manager” will tell a bank or wirehouse “I’m used to making money and I’m used to producing, why back when I was at Merrill I increased their ROA from 1.5% to 2.25%!
So they pencil themselves in for a 500k salary and shortly thereafter ( usually around 18 mos. ) it becomes painfully obvious they can’t even come -close- to delivering “the numbers”. They’re pretty good at smelling the axe too, so before you can fire them, they’ve already been in the process of working -another- deal ( but mind you, based on their salary! ) And on and on it goes as the set about torching people’s careers without regard.
After they’ve worked through everybody in town, they can go back to their original firm as likely, w/ attrition, it’s all new people anyway?
The 2006 US median income was $48,201 and they worked hard for it.
Is it any wonder that the average American worker has little sympathy or understanding for the Wall Street million dollar plus yearly bonuses ?
The bonus picture gets much more difficult to fathom when said Wall Street firms throw billions of dollars into the sea, ruining the retirement nest eggs of millions of Americans in the process, get hundreds of billions in TARP monies to replace what they lost, then turn around and pay multi-million dollar bonuses to executives who oversaw the scam.
I will admit the bonus fiasco creates a great distraction for the sheeple to take their collective attention off the continuation of too-big-to-fail insurance policy as usual.
But…But…But we must not worry about the bonuses right now. The systemic risk to the entire financial system is just too great to rock the boat on this one little issue. Those guys need those bonuses so they can just focus on saving the world. If we had to double the amount of each bonus, it would be worth it. Whatever it takes… We are supposed to go along with this??? obamapparently.
Well, surely you don’t expect we should let all that “talent” go, now do you?
Who in the world will save us from ourselves?
“Dimon says “I don’t think we need equity” at J.P. Morgan”
He was also heard to state, “Debt is wealth!”
If I’m not mistaken, the old, “we don’t need to raise no stinkin’ equity”, is the last gasp before the feds take you under.
From one article:
“Thornton Place… is offering prospective condo buyers a layoff-protection plan… Buy a condo, the developers say, and if you lose your job within a year they’ll make your mortgage payments for up to six months.”
From another:
“Last year, Amy and Mike Dew, from Sanford, N.C., both were laid off from jobs. It took Mike about nine months to find a new job. Amy, who lost her job in November, just started working again this month.”
It seems that six months isn’t going to cut it.
I have been reading this blog for awhile and really value your advise..so i would like to ask you all a question with hope of getting some good direction. I am interested in moving back to Orange Co., CA and want to know if I should rent now and wait to buy or have the prices come down to the lowest that we will see them and I should start looking to purchase a home. Any feedback would be greatly appreciated…Thank you
Dont move back to OC. It sucks here. Prices have not come down enough. Too many delusional sellers trying to sell or rent at 2005 prices and it is too crowded. Stay where you are.
Vic is right. Wishing prices and rents are still far out of line here. The denial level remains high and the Used Home Sellers are still pouring out kool aid by the gallon while the sheeple slurp it up eagerly.
Sales prices have come down about 25-35%, but the real bottom is still far off.
Also, the deepest price drops have been inland with the declines spreading very slowly toward the beaches. IMHO the pro RE forces here remain strong and are doing absolutely everything they can to prop up prices.
I’m looking at an exit strategy as I can no longer accept the madness. While the climate is superb here, so much of the rest in crazy making. And the state is going to take more of your income to cover their increasing costs, which they refuse to reign in. Kind of like the Bikini atoll just before that large bright flash.
Rent, next wave of ARM resets are due next year giving you a whole new selection of REO’s to chose from at lower prices.
Hey, there’s another Potential Buyer — phew thought it was me for a moment. Anyway, I think I’ve now become an ex.
Congratulations.
Check the median price for the zip you want to buy in vs. median household income for the same zip.
3.5X would be the absolute max I’d pay. You can also use PPSF to correlate bigger houses to the medians. Look at the latimes chart at dqnews dot com.
Also, if you buy in the next 5 years, assume in your calculations that you’ll be unemployed/underemployed for at least a year during that 5 year term.
Here’s the way I looked at it. My liability for rent is 12 payments of $2,000. So my liability would be $24,000 plus the cost of an extra move, IF I signed the lease and never spent a day in the rental unit. But that is pretty unlikely, since I decided to rent in order to have the luxury of looking around and finding a neighborhood and house I really like at a price I really like. Most sales contracts don’t close within 30 day, though you sometimes can get a really good deal by doing so. My made-up rule of thumb is that my real exposure is no more than 9 months’ rent plus the cost of another move, or in this case a total of about $20,000.
In today’s market, and using these numbers, it should be pretty easy to get an extra $20K knocked off the price of a house for which the wishing price is in the $300-500K range. And that degree of “loss” assumes you’re liable for the full year’s rent and the owner does nothing to mitigate your loss (I don’t know the law or practice in CA). To me, that is a very acceptable risk. Obviously, tweak the numbers to suit your situation. But I would never let the liability of a lease scare me out of taking my time on a purchase.
Orange Couty is still high. But in Temecula, which is in Riverside county, I see that condos that were selling for roughly $225,000 when new in 2005, are now less than $85,000!
http://www.realtor.com/realestateandhomes-detail/31345-Taylor-Lane_Temecula_CA_92592_1100484212
http://www.realtor.com/realestateandhomes-detail/44790-Adam-Lane_Temecula_CA_92592_1107903526
I have an econ degree (which means I could be borderline retarded, -man I’d love to be North American economist for some bank or such
You’d probably have to learn how to compose complete sentences with proper punctuation and grammar first.
hahahahah good one.
Hmmm, I have one of those econ degrees too.
No, wait a minute. (Slim goes over to studio wall shelf to check on University of Michigan degree.)
I’m back. That dang degree doesn’t say “economics.” It only says that I received a Bachelor of Arts.
But my transcript’s in the file cabinet below the wall shelf. I could check that if y’all don’t mind waiting.
Slim you crack me up. As the Michigan State grads say, you can tell if someone went to Michigan because they will tell you in the first 15 seconds of every conversation. You certainly prove that point. I’ve been hearing that joke since I got my bachelor’s in mechanical engineering from UofM in 1993
Woo for the engineers!
Go Green ! Go State ! Go Spartans ! Go Huskies engineers. Huskies engineers rule while the Wolverines drool. Just ask a Michigan Tech. grad. I should know - I’ve got 3 of them in my family. But my blood runs green and white.
A side joke was then when a friend of mine who worked for the School of Medicine at U. of M. was looking to purchase some cemetery plots for her family, we decided to take a drive thru a certain cemetery she was inerested in. I cracked up when we came to the “University of Michigan” section, so named. I said, “Florence, are you going to purchase plots in there ?!” She growled, ” I may work for ‘em, but I’ll be damned if I’m gonna be buried with ‘em.”
I’m not sure what I’ve got. One of my undergrad degrees says BS in Business, Industry & Communications.
I DO know that it didn’t require a whole lot of grammer, spelling, or typing and that one cost me nearly a case of Johnny Walker Red in academic bribes
For some reason when I see BS I can’t but help think BullSh*t degree
MS = More of the Same
(which I don’t have, more’s the pity)
I have a master’s in accounting with a minor in econ. Here is how to decipher college degrees:
BS= BullSh*t
MS= More Sh*t
PHD= Piled Higher & Deeper
If you think it’s always a great time to buy then you should forward your resume……..
‘I don’t care what rate you’re paying, if you have a mortgage five times your income and you lose your job, you’re toast.’”
Let’s see… Nothin’, carry the nothin’ totals up to nothin’. Aren’t you ALWAYS toast if you lose your job? Unless you’ve got savings, but that’s unAmerican.
If I had a mortgage five times my income, I’d be toast even if I kept the job. IMHO, that is a nutty ration and persons in those straits should be renters, or relocate, if they can’t stand buying something less expensive. For our first two houses, in the 1970s, our ratio was exactly 2.5X, and we never had a lot of money left over for high living or even for saving much.
What people are going to have to deal with is buying smaller houses that get them back to traditionally sane debt ratios. I see it happening, but very slowly.
Well, gee, the president of Brazil blames the financial meltdown on “white people with blue eyes,” so I guess I– a blue-eyed, salaried, workaday guy of Irish extraction– can expect the ACORN crowd to come drag me out of my house, while all the Wall Street types with brown eyes get off and cheer on the rapacious horde. Great! “Blue eyes” = advantaged. Do I have that right?
DAMN YOUR EYES !!!!!!
Yet another reason to be grateful for my brown eyes. Lula won’t be comin’ to get me.
See, Obama had nothing to do with it. Told you.
He has brown eyes too.
Well, heck, just think of that teacher in ‘68 who did the
experiment with her classroom, brown eyed people are smarter etc, than blue eyed. To get her point across about black vs white.
Children learned alot from teachers in the day.
HEY THIS IS GREAT……
I can still use my joke from the S&L crisis….15 years ago…here goes
What do you call an Italian thief…..Mafia
What do you call a chinese thief…. Tong
What do you call a WASP( white /blue eyes)thief…. Bank President
the president of Brazil blames the financial meltdown on “white people with blue eyes,
Has he seen Mozillo
Bargain-hunting home buyers wearing on sellers
http://www.ajc.com/business/content/business/stories/2009/03/24/spring_lowball_homes.html
Looks like “Pete” will be staying where he is for a while longer.
“This is a unique year,” Forsman said. “The mindset of the buyer is way different. They’re negotiating all the way to closing.”
You mean… they’ve stopped throwing their money away? **(%&!
That is the old norm.
But I love later in the article:
a client of Matthews’ put her home on the market for $525,000 and sold it a year later for $382,500 — a 27 percent reduction. The price had been trimmed five times before the lowball offer was made.
Wearing on sellers? Awww… the market was brutal to buyers. 3X price in 5 years. It sounds like we’re down to 2X. I think, nationally, we’re through more of the decline than there is ahead… but man is the ‘ahead’ ugly!
Got Popcorn?
Neil
“I’m not panicking, I’m not in a hurry. I’m not going to sell for a big loss,” Withers said. “If it’s next year, it’s next year.”
What is happening next year that I am unaware of? I am intrigued. I would have assumed it would be at least 20% off the highest off he got this year next year.
The first offer is the best offer. These fools like to ignore the maxims that don’t favor them.
“I can only do so much to educate my buyers. I’ll present the offer they want to write,” Michael Topor of Metro Brokers/GMAC Real Estate, said. “The goal of the lowball is, ‘Hey, are you desperate?’ The sellers will be disappointed, hopefully, not angry.”
Hey Michael, Blow it out your azz! Go ‘educate’ yourself really hard! Who gives a flying crap if a seller get angry. Good lord these jerks really piss me off.
Pete will end up leaving that home on a slab…
Check out this great pic
ritholtz.com/blog/wp-content/uploads/2009/03/evil-kniev-quad-form.png
CRASH!!!!!!!!!!
That was the sound of housing sales and prices collapsing in New York state. Get this….. Sales are down DOUBLE DIGITS MONTH OVER MONTH,i.e. Jan09 to Feb09.
Whuchya got to say now real estate pukes?
http://www.nysar.com/pdfs/monthsales.pdf
See it finally hit. It just took some time.
Bank of America May Raise Investment Banker Salaries (Update1)
March 27 (Bloomberg) — Bank of America Corp. plans to increase some investment bankers’ salaries by as much as 70 percent following the takeover earlier this year of Merrill Lynch & Co., people familiar with the proposal said.
Bank of America, which has received $45 billion of taxpayers’ money, may raise the annual base pay for some managing directors to about $300,000 from $180,000, said the people, who declined to be identified because the final numbers are still under discussion. Salaries for less-senior directors would climb to about $250,000 from $150,000, and vice presidents would get $200,000, up from about $125,000, the people said.
are you f#cking kidding me?
I wish.
They have to raise the salaries, because g– only knows the remains of their profit-sharing plans won’t pay for a used singlewide in tornado alley!
“‘These results show that home building is more than paying its own way and should put to rest the notion that existing home owners are subsidizing new home construction here in the Ocala area,’ said Dr. Elliot Eisenberg, NAHB senior economist who conducted the study. ‘This is an excellent result and tells me that local residents should be thanking the building industry.’”
Ha ha hahahahaha. Ha.
I’m sure the fact that you’re NAHB senior economist has no bearing on your results.
Actually, in some sense, building in Fla may look like a plus in the short-term if they are turning disused land (ie, non agricultural land) into buildings. Long-term, they are sucking the aquifers dry and threatening the very foundations of Florida’s economy. Bottom line: overdevelopment in Fla is NOT SUSTAINABLE. Time to turn to an industry that isn’t going to cause an ecological and economic, not to mention public health, disaster.
Infinite growth is a must! That is the Republican Party mantra.
Fla is so screwed. I went to a small informal public discussion of the state of the underground aquifer (which has been explored heavily by divers and is finally getting serious study by geologists with the divers’ help). There are serious issues with lower water table levels and pollution of the water supply, algal growth, and so on. There are also issues with all of the drinking water supplies being depleted (although that wasn’t the topic of the night). After the presentation by the diver, we talked amongst ourselves. Almost immediately a kind of discord arose between city dwellers and country dwellers. The country dwellers were bemoaning the fact that few families kept up their septic tanks because of the high cost. They thought it should be subsidized. The city dwellers countered that while protecting the water supply was paramount, wasn’t it a bit much for the country dwellers to ask the city dwellers to subsidize them? After all, they lived in much higher density, without (often) so much as a garden plot of their own, and as a result, could be on direct, legacy sewer lines (not to mention power & proximity to other services), which keeps costs down for the utility and the taxpayer at large. Should it not be “pay to play”? Yet, it was clear that enforcement of any sort of rules on septic upkeep was prohibitive as well. Quite a conundrum!
Most likely the end result is that the few will fail to keep up their property and pollute the waterways, and we all will suffer for it.
I have developed a new way at looking at markets.
On Trulia I sort by price per sqft. And look back that the price per sqft in 2000.
Then I throw out the high end homes and count how many homes are priced 20% greater than the 2000 median and how many below.
As and example the Vancouver WA market is supposedly close to its correct price. However one finds about 60% of the listings are still significantly over priced vs the 20% more than 2000. About 30% are priced to sell and the average listing prices is twice the median sell price. I’d say that a market is not stable until the average listing price is within 20% of the median sale price.
This indicates potentially up to a 30% drop in this market just to return to sanity take in the local 10% unemployment rate since this city is basically a suburb of Portland Oregon and a further 50% drop is entirely possible.
And this is a market thats supposedly return to sanity and you can see it still distorted lots of fantasy listings.
Now I don’t have information on listing prices vs selling price pre-bubble but I just can’t see that this market is even close to normal esp given the high unemployment rate. Also a lot of the non-bubble midwest cities show similar patterns. A ok supply of decent homes priced reasonably and tons of similar homes with unreasonable prices.
When I was in Portland last summer, prices had finally started to drop. And Vancover WA had a 13 month inventory of property for sale. With 10% unemployment, there’s plenty of room for a 50% price drop over the next 2 years.
The real estate agents in Pullman, WA strongly denied there was a bubble and that we would ever see price drops. Now prices are down 10% and they are telling everyone housing has crashed–great time to buy at the bottom.
The state is cutting high ed support by 20%. Pullman is a tiny little town dominated by Washington State University. Gosh, hard to guess what will happen to the housing market in the next couple of years.
Well as far as college towns student loans are just as much a game of leverage as housing always going up. I suspect that the student loan game will collapse who wants 60-200k worth of debt to make 30k a year ?
It probably will take longer but I think college towns will far hard as they revert to the core student sources rich kids and smart kids. The lack of jobs in most college towns will put a real damper on those who can and want to work their way through school.
I have three kids 2 years apart so college is going to be a challenge when I finally but getting a house in a college town if I can make a decent salary so my kids can live at home is a real consideration. They probably will need to work for a lot of their tuition even then but I’d suspect in 20 years they will be damned grateful for even this.
Right now I’m looking a Eugene Oregon as a prime candidate.
“Last year, Amy and Mike Dew, from Sanford, N.C., both were laid off from jobs. It took Mike about nine months to find a new job. Amy, who lost her job in November, just started working again this month. Recently the Dews, who have two teenage daughters, filed for bankruptcy. They gave up one car and their home. ‘”We literally went from almost a $100,000 salary to probably $50,000 for the two of us,’ Amy says.”
And N.C. literallly went from having one of the lowest unemployment rates in the nation to having the fourth HIGHEST unemployment rate (as of today) in the nation, beat out by only Mich., S.C., and Oregon.
There is another side to furloughs and two-earner income reduction that I haven’t seen addressed yet. If has to do with cash flow for the federal government and for the state governments that levy income taxes. A reduction of 10% of one’s pay doesn’t reduce his or her tax payments by 10% - it is more than that, because that reduced money is at the top of their marginal earnings. I wonder how many state-level budgematicians have bothered to consider that?
On the flip side, furloughs can be less painful than they seem at first glance, if the employer is flexible enough to allow hours that will eliminate costly after-school care costs and the like.
There are lots of unintended consequences out there and the government’s ever-changing rules makes even more of ‘em, but occasionally the UI is a beneficial one.
Reduction in OT I think would have the same effect. For Cali it is a plus, though, because they pay 110% of the amount (including payroll, except for some very high income earners, then only 100%) but only get, who knows, maybe 10% at highest marginal rate back? AND they shut down the building for some days and this does save them some money. So 90-100% gain for them. (Hope they did back-end the income reduction in their budget, though.)
Bad for the feds, but so are layoffs. For highest income earners they were only paying marginal not payroll but maybe some of these families will be bumped below AMT? Bottom line, fed tax receipts are going to suuuuuuuuck.