Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.
Posted By: Ben Jones @ 7:31 am
| Trackback URI
I was so tempted to do “20th” the otherday and managed to resist the urge even though it really cost me.
See you fooled the gate keeper
This is not going to be about zip 90274.
Have buyers of THBB shirts send in photos of how shirt looks on them and have readers pick best two.
On a man and on a women size D through K works for me.
K? Is that like Dolly Parton size?
Just the chicks.
Are there any pictures of the Las Vegas meeting that people
went to ? Did everyone have a good time ? I couldn’t make it of course .
How are you doing?
awaiting wipeout …..Some minutes are ok ….the rest suck .
The World goes on I guess .
You did your best, and were there for her. I just had a big loss myself.The hole in your heart will get smaller, with memories and time. I promise. How long were you guys married?
Sorry to hear about your loss Wizard
Me, too, Housing Wizard. You’re one of my favorite posters and your decency shows in your posts. It really sucks to lose a loved one, where life and memories have been shared. My deepest sympathies.
If you want us to stop the condolences, let us know. Just when you get to a non-crying moment, a condolence will start the tears rolling again, yet you want the acknowledgement. We’ve all been there.
Our little community is here for you.
There are so many platitudes about suffering and loss - each loss, though, is unique and felt deeply by just a few individuals in their own way. I wish I knew of something helpful to say, but I know the complete unhelpfulness of that. If I lived nearby, I’d ask you out for a beer and maybe ask what she was like. Whoever said “time heals all wounds” was full of sh*t, or never experienced actual grief and loss. If someone lived a necessary life, their loss will always be felt, along with an appreciation for their earthly existence. So will the respect and love we had for them.
Sammy, TESTIFY. The “time heals” thing IS full of sh**. I still ache when I think about my Dad, and he died over thirty years ago. Another truism - “I know what you’re going through”. The violence of the pain of loss is incomprehensible to anybody who has not actually been in that particular relationship, with its own flavors and substance. I believe Nature applies amnesia to the rawness of loss - otherwise we would each surely do ourselves in at the time.
I was trying to think what to say to Housing Wiz, and wasn’t coming up with anything worthy and that didn’t sound trite. I mean, man. What a terrible, terrible heart-ache.
Anyway, Housing Wiz, I ditto what Sammy said.
God bless yer.
HW, regardless of the fact that your pain is incomprehensible to me, I have the utmost empathy for you in feeling it and honor its magnitude. May the great powers in the Universe bless you and keep you.
A big hug from me Housing.
Housing Wizard, please accept our deepest condolences.
Been thinking about you and hope you know we are sending good energy your way.
Here are some photos by Lavi D:
And here are some photos I took:
Eventually there will be videos but I think I really dropped the ball on that one. Lavi - I will e-mail you soon I promise!
I hope you can make the next big meeting - people are talking about possibly Florida as the logical choice. Hugs!
Thanks SDREBEAR and everyone .
May the small distraction you find here in this community bring you some relief. I am aching for you, Wiz. I’m so sorry for your loss.
minor DC area report - I got a ride to the metro earlier this week from a woman who told me she is trying to sell her house in Chevy Chase Circle. Her frustration was palpable. She said it was “priced right” and a great location (Chevy Chase Circle is a great location) and it had been on the market for three weeks and no interest at all so far. I poked around a bit and the low end for single family houses in Chevy Chase is $700K.
So, this is where Florida and Las Vegas were in February of 2005, right? Our turn next?
This is a very nice lady, so all I offered was a hypothetical. Went through an analysis of “traditional” metrics and told her that if she was looking to sell a house for half a million dollars, she was looking to sell to people with $100K of down payment and $170K of solid yearly income and if those weren’t the people looking to buy her house, there was a mismatch under traditional affordability standards. The I said that I don’t think we are really back to requiring those standards yet.
Silence was deafening.
Original post went to wrong place.
Only difference in that DC has much more recession proof jobs that pay decent wages. I dont know if you can compare a region tied to federal government jobs under Obama to regions where the economy is built on gambling and/or the new Walmart accepting applications. I tried to move back to the DC area, but I didn’t want to spend more than $500k on a place. I looked at what I could get for that in 2007 and gave up.
I should note that housing decoupled from salary in most cities (i.e., I admit salaries don’t support current pricing in DC area), but no job v. stable job, even with prices out of whack, will limit the desperate dumping). I did not mean to imply that housing was reasonably priced in DC, only that it may not fall as much in other places where the median family income can fall to 20k once you get rid of the real estate jobs.
The identical townhouse to the one I rent in 22042, located on the other side of the building, went on sale by the bank that foreclosed last week for 310k. Mine was purchased by 2 men from PA and their nephew (that lives in the area) for 430k in March of 2005.
There is another foreclosure I can see out my window that sat empty for 5 months before I saw workers coming in and out a few weeks ago. Last week it too went up for sale and a sign went up in the front.
The funny things is, 2 doors over another townhouse that had been for sale for 6 months finally got a sold sign put up, just before the foreclosures were put on the market.
Maybe I can come back one day. Thanks for the update. I love to hear actual data.
Actually, there is a bit of fear running in the government contractor circles these days. A lot of the money the last 10 years has been sent straight to “counter-terrorism” boondoggles of the highest order, and companies like Lockheed Martin and Raytheon are losing contracts left and right.
Still, it “is” different here, with a large number of rich government employees and contractors. But there are still a lot of foreclosures and vacant houses - hell, half of Northern Virginia is vacant office space.
The main difference here is that the banks haven’t started selling their REOs and the wishing prices are still high.
My uncle is a senior military officer, and he told me the “counter-terrorism” gravy train is going to be coming to a screeching halt over the coming fiscal years. There’s been such a crazy, insanely expensive proliferation of “counter-terrorism analysts” since 9/11, the vast majority of whom have done little or nothing to make the country any more safe - that responsibility rests primarily with FBI and CIA, not the multitude of duplicative organizations and agencies that have sprung up since the 9/11 attacks.
I thought some 40% of Americans pay comes from gov’t jobs?
We suffer a similar fate here in Southeastern Virginia. Many of the better paying (but boring) jobs are with gov’t contractors and what not.
more recession proof jobs ??
= government job….disgusting..
The funny part is that many think it’s possible to base an entire economy on providing social services.
If that’s the case then drug addicts, ex-cons, and kids with ADD are probably our biggest resources.
Time for the government job boondoggle to take a great, big haircut…
It won’t be this year, but with the deficits we’re running, the day is definitely coming.
The guy that sold me his inexpensive house in Houston went to Washington D.C. to work at NASA headquarters. I expect he can use his equity from here as a downpayment on a studio condo or something.
Polly, you have self control and compassion. I applaud you for those qualities, they are hard to come by for most of us. No offense meant to other HBB’ers, I refer only to myself.
This is the true definition of “tact” - very impressive. The Secretary of State should get you to work over my “Bomb it - Pave it - Paint it - Park it!” speech for North Korea.
Although you didn’t mention the part about “… and can afford to risk losing their entire down payment in case they lose their job(s) or have to move to keep it in this wilting economy - and housing turns out not to have bottomed yet.”
Only difference in that DC has much more recession proof jobs that pay decent wages. I dont know if you can compare a region tied to federal government jobs under Obama to regions where the economy is built on gambling and/or the new Walmart accepting applications. I tried to move back to the DC area, but I didn’t want to spend more than $500k on a place. I looked at what I could get for that in 2007 and gave up.
Lets face it, almost EVERYBODY was living beyond their means, including people in Dee Cee.
Like I said before, im not saying it want fall. I didn’t move there, although it is my preferred place to live, because I thought it was 50% overpriced. I’m just saying housing there probably won’t become totally worthless like say a vegas or fl condo. 2010 median household income in Vegas and many parts of FL should be around 20k tops. Very little should sell for more than 100k.
$20k median for LV? Stop watching all those movies about LV where the poor waitress with 2 kids has to struggle to pay the rent.
The typical casino employee makes $50-70K a year plus benefits. All casinos are unionized which means generous benefits time off, etc. At the high end properties, it’s not all that unusual for dealers, waitresses, bartenders to make 6 figures.
And given that, not everyone works in gaming or construction or real estate, despite what you read here. I lived in LV for almost 6 years during the height of the boom. These were my neighbors (at least the ones I knew well): a high school principal, an Air Force colonel at Nellis, a retired couple from Japan who lived there 1/3 of the year because the husband loved poker and an engineer who was working on the Hoover Dam Bypass project. Not exactly $20K a year jobs and not dependent on housing.
And there is an incredible amount of economic activity that goes on unreported. Everything from cash tips to cabbies to paying the bouncer at clubs $100 to bypass the 2 hour line. It’s like an economy all onto itself that never gets reported officially. Unless you think that the bouncers, cabbies, valets, doormen and yes strippers all report 100% of their income to the IRS every year.
I am in no way justifying the insane house prices of 2-3 years ago in Las Vegas. But at the same time you and many others are going in the opposite extreme expecting houses to cost $50K next year. Prior to the boom, the typical 3/4 bedroom suburban house in LV was $150K to $200K. That turned into $450 to $600K. But it was never $50K to start with and it won’t get to $50K. Yes you can probably buy a house for $50K, but you should budget another $50K for guns, ammo, guard dogs, security systems and a private body guard. You’ll need it in those neighborhoods.
Las Vegas existed for 100 years before the housing boom. It will exist well after the housing bust. Every 10-20 years Las Vegas is written off. And yet it has managed to double its population every decade since its founding. Not many people have bet against the city long term and won. Last time I was back was 6 or 7 weeks ago. Things definitely felt quieter. But it wasn’t like The Strip was empty either. And my flights to and from LAS were both full.
I did not say median salary, I said median household income. I think unemployment will go through the roof. Also with all the new casinos, and less patrons, salaries have to drop dramatically.
David Cee is that you?
The problem I see with housing in Vegas is massive over supply and type mismatch. Too much large housing and lots of vacation condos that will become hotel rooms.
Besides your trollish rants, I expect prices to undershoot significantly. Also expect out migration.
Vegas is such a dump. Outside occasional visits to the strip.
Investors will by buying up houses at 30-50K from the banks. Will you need guns to live in those areas? Probably not. You will be surprised at what you see.
Think nice houses mean an area will stay nice? Take a look at forgotten Detroit or all over NJ. 3000+sq ft mansions sat and rotted in Trenton, NJ. Remnants of the roaring 20s.
We have plenty of people thinking high prices at the beach areas will last forever too. However, you can see wage destruction going on and the prices aren’t going to be supportable. Either prices drop or business leaves.
Good luck Manny the troll.
You accuse me of being a troll yet you’ve not refuted a single thing I said. You couldn’t buy a decent house in LV for $35K 20 years ago but it will be $35K in 2010. Maybe you can buy a new Lexus for $500 to go in the garage. Why not? Anything’s possible in la-la land.
Manny the troll,
You couldn’t buy houses for a dollar in Detroit 20yrs ago either.
I have not studied the Vegas market except in passing. It was extremely over built and over valued. Far more so than California. My opinion is that much of out burbs of Vegas, Florida, Phoenix, Inland Empire CA will have housing with zero value.
I expect the severe over supply, dropping tax base and high crime will have a similar effect on parts of Vegas. You will be surprised at which neighborhoods tank to near zero. Remember, thanks to property taxes, houses have an intrinsic negative value. If an area is unlikely to support industry or has impediments to it, say its a huge desert, prices will attract people and investors. However, those places are traps that can go into a long term decline. People move in and find they lack jobs/resources to move out.
This is the trap. People should really think about being trapped these days. Looking out for traps.
Can you imagine joesixpack moves to Vegas with a little bit of equity from his California sale. He pays for the property with a modest mortgage. Well, the house keeps dropping in value and Joesixpack discovers he has little equity. Since the area typically has crap for jobs and is in a depression from a lack of consumer spending; his high end job as a builder is gone. Well, Joesix is on unemployment for a while till that runs dry. Then its welfare time. Joe knows there are some jobs somewhere else but can’t sell his house and doesn’t have money to move his junk. So, he sits and waits. Meanwhile people are in trouble so the depression goes on longer than joe expected. Now, he is having some minor health problems and his car both with a HELOC is going downhill. Plus gas is 10$ a gallon so its pricey to drive. Poof. Joe is pinned with little way out. The casinos that looked all shiny and new have been upstaged by…who knows… Gamblers City Utah. Area is dead. No new casinos. Still overbuilt with decaying property from the bubble. Tax base headed down. Illegal Mexican’s draining resources while installing corruption and anti-gringo policies.
So, I would advise against investing there until longer term trends are understood.
Also expect that a prolonged drought will cause more havoc with energy and water supplies for CA and NV.
While the old growth graphs are nice, growth is a short term transient phenomena. See notes on exponential functions. It was in that high school class you cheated off us smart kids.
As they say without meaning it… good luck.
I’ve been hanging out in DC since the Inauguration. Except for the federal govt, layoffs here are as bad as everywhere else…
Except for the federal govt, layoffs here are as bad as everywhere else ??
And therein is one of our country’s biggest problems…
Chill, SC Dave, they don’t do much hiring either. Because it’s so hard to shed gov’t workers, they typically contract huge amounts out (welfare for private sector). Of course, a huge amount of the contract money is “captured” by corporate management (and funneled back into lobbying to get more contracts), while the workers are paid market rate (sometimes clearances are required, so no H1-B’s for them) but have NO job security.
As for those complaining about social workers, you do realize they are paid VERY little, right? They earn less than some of their “clients” make under the table. Scratch a retired social worker and you’ll find a very bitter human being.
So are you defending the bloated Fed Govment Gator ?? The fact that they are contract workers changes nothing…The federal government NEVER gets smaller just bigger…See TSA for a most recent example…
“As for those complaining about social workers, you do realize they are paid VERY little, right? They earn less than some of their “clients” make under the table. Scratch a retired social worker and you’ll find a very bitter human being.”
I never get why social workers and teachers are so bitter about their incomes. Yeah the pay is piss poor. But it’s not like that’s a big secret. Everyone knows the income potential is minimal. Yet people become teachers/social workers and the minute after they sign a contract they start complaining about the low pay. It’s like someone who moves into a house next to the airport and then is shocked to discover the plane noise.
“Except for the fed gov” is no small exception in DC. My family lives there. Most of them work for the feds, as does a very significant portion of the population.
Hi. Actually I think the fed goverment is about 20% of the workforce in DC metro area. But yes lots of the jobs are high (over) paying secure jobs.
Natalie, I don’t know your situation, but I rented a perfectly acceptable 2 BR apartment three miles west of Tyson’s, for under $1200 during that timeframe. Falls Church (Marshall) and Annandale 3/2s (Wakefield) are now to be had for $250K - down $100K from 2007. Unless you want to be in North Arlington, there are properties to be had in neighborhoods that are not plastic, and that have vitality as well as US News and World Report worthy HS stats. Personally, I like apartment living and am not buying diddly.
California’s economy is not as awful as neighbors’
2:00 a.m. March 29, 2009
Photo of Dean Calbreath
Call Dean at 619-293-1891
Although California’s unemployment rate soared to 10.5 percent last month – and seems fated to continue on that upward track – there may be some cold comfort that we’re not alone in our misery.
The recent round of state-by-state employment data, released by the U.S. Bureau of Labor Statistics on Friday, should help lay to rest some myths that have grown up about California and how our economy compares with other states.
Even though our double-digit jobless rate puts us well above the national average of 8.1 percent, we’ve got plenty of company. The list of states with worse economies than ours – or that are performing nearly as badly – is rapidly growing.
It should come as no surprise that Michigan – ground zero for the troubled auto industry – leads the nation with its 12 percent unemployment rate. But Rhode Island, Oregon and the two Carolinas also have higher unemployment rates than California, and Nevada, Ohio and Florida are not far behind.
In percentage terms, California does not rank among the top 10 states that have lost jobs over the past year. True, the total number of payroll jobs in the state has declined by 4 percent, which is a pretty serious loss. But in comparison, neighboring Arizona lost 6.7 percent – the nation’s largest percentage of job losses – outstripping the 6.5 percent job loss in Michigan. Nevada, Florida, Oregon, the Carolinas, Georgia, Rhode Island and Ohio have also been shedding jobs at higher rates than California.
This is not meant to be an exercise in schadenfreude, taking pleasure in somebody else’s pain. But there is an irony in those numbers that Californians should take note of.
Because of the higher cost of living in CA than most of those other cities though, unemployment can be somewhat more problematic.
That’s a good point, and it’s the reason I’ve declined lucrative work offers in Flagstaff and So. CA. Sure, renting our living space would be a given right off the top. Even with that, I think about what our situation would be like if things didn’t work out at the new position, and it always leads me to just politely decline and stay put for now.
That is smart. Let the dust settle and control your destiny, rather than having circumstances control you.
You can get a lot more government support in California than in either of the Carolinas.
Interesting you should say that. KNX News Radio had a report that the once middle class make too much on unemployment to qualify for the food stamp program, even though they can’t afford their mortgage, and have run out of savings, in some cases. (LA County)
An income over $841/mo (iirc) for 2 people disqualified them for help. You can’t even pay an apt. rent on that unemployment, let alone eat. Maybe they need the illegas to coach them on what to say.
Maybe they need the illegas to coach them on what to say ??
Not what to say but what to do…
I went to look at a 22 unit apartment building for a out of state owner friend of mine…one bedroom apartments are $850./MO….There are 4-6 adults in each unit…There were a dozen weber BBQ pits in the court yard…
Exactly. First of all, work in the underground economy: No w2’s or 1099’s. I have a friend who rents out a townhouse in Oceanside, CA (he bought it in the 80’s).
He once had a tenant who:
1) Collected disability.
2) His girl friend/wife received food stamps for herself and the kids.
3) Section 8 paid the rent
4) He worked off the books installing carpeting.
“First of all, work in the underground economy: No w2’s or 1099’s.”
Shoot, I thought I was in the above ground economy and I can’t get my last small business employer to give me either a W-2 for wages or even a 1099 for “cash advances” given me. Now I am concerned that he didn’t bother to send in the withheld pay stub taxes either. I imagine he expects all his employees to just join him going “underground” rather than pay the IRS while they are “temporarily financially embarrassed.”
Still, rather be me than him. Especially after a call to the IRS and a Form 4852. (Sorry, I’m in a tax frenzy.)
I’ll take low cost of living over government support, every single time. The bottom line always pencils out far better, as does the quality of life.
No kidding, besides the states offering the most programs will eventually attract those searching for handouts. From what our CA posters say, their state is welcoming to either the ultra rich or the poor - the middle class best keep on moving.
Absolutely. Some folks are trapped in h*ll right now. They’ve done all the right things. Life just happened.
I stayed in MT because it was cheaper to live here compared to Seattle or Cali. I figured I’d blown it by leaving SoCal when I was young and not ever owning anything there to sell off when I left. For years it seems I’ve been making more or less the median income. I was bitter because I knew people in my line of work (govt bids) were making a lot more money in San Diego or NoVa. But whenever I figured in the expense of living someplace where I could make more, it just didn’t make sense so I stayed put, feeling like loser. It seemed like everyone, even young newlyweds, were buying big new houses and driving new SUV’s.
Things are more expensive here now, but I bought in here way back when and everything’s paid for. Still making median income with no raise in 6 years, but realized what I was seeing around me was a lot of crazy HELOC spending and EZ money mortgages. Ohhhhh I see! The people making the big money have been laid off, and only the govt workers are hanging on. A relative who laughed at my salary hasn’t worked since the ‘91 recession.
So I guess staying put wasn’t such a bad idea.
I feel ya. Similar situation with myself versus friends who stayed in Massachusetts. Still waiting to see how things will turn out.
I like Mass better than Fla (though my corner of Fla isn’t TOO bad) but it’s not worth being broke and becoming a bag lady when I can’t work any more.
Though I wonder, if violent crime gets much worse, if maybe hightailing it for the NE rustbelt will start to look much more attractive…? Theme park jobs may be harder to get in the future. (Theme park jobs are infamous, but the bus driving jobs are apparently a nice gig–they have to pay above min. wage to get a licensed, safe driver, and the patrons are always in a good mood b/c they’re on vacation. But as schools close and theme parks die, there will be way more drivers than driving gigs, I think.)
So Ca is not only expensive, it’s a third worlder ceespool now. The sunshine tax is all that’s left, and the ROI is zilch.
The functioning middle class has been calling it quits and has been leaving.
Not a gator, how can you use publicly available statistics to figure out where there is a critical mass of bus drivers? I’ve observed if you go with the numbers, there will be turnover, and there will be demand. If you head for somewhere where the bus driver population is five, ex, you are likely to be waiting a long time for an opening vs. where bus driver population is 500.
WMATA, here in metro DC (incl MD and VA) has an extensive bus route system, but I do not know anything about how drivers are hired or how routes are assigned. Here is the website - wmata dot com slash careers slash metro_jobs slash
Let us know if you actually want to make a scouting trip.
Recession dries up traffic in Port of Milwaukee
There wasn’t a boatload of freighter traffic to mark the opening of the Great Lakes shipping season last week.
In fact, there was barely a single boat.
The recession has weakened demand for iron ore and other commodities transported on the Great Lakes, keeping all but a few of the behemoth lake freighters tied to the docks.
Only one ship, the 450-foot Canadian tanker Algo Star, was waiting at the Soo Locks when they opened Wednesday. Normally, freighters are lined up for miles waiting for the spring opening of the waterway that connects Lake Superior with Lake Huron.
Thanks, good story.
So, because of one accident the state willingly turns away a much needed source of jobs and revenue in the shipment of wind turbines? Wow, talk about inept leadership. Imagine if pols like that were around at the founding of this nation - we would have never made it to the Piedmont.
Yeah, Wisconsin is a great state but they do get some really weird Command Decisions coming out of Madison
Madison is suuuuuuper lefty. And I’m sorry, don’t care what political orientation, when you go too far in one direction the ideology and la-la dreamland start to replace all critical thinking and “facts”.
Hmm, reminds me of that t-shirt from Amherst, MA: “Amherst, where reality is an option.”
“Madison is suuuuuuper lefty”
That’s only because it’s surrounderd by suuuuuper conservative mad cows who think they have them “contained”
A money quote: The port and its terminal operators also have lost millions in revenue - and about 25 jobs - partly because of state rules that clamped down on the shipment of wind-turbine components, one of the region’s hottest commodities.
Caravans of the huge turbine parts are now shipped through Duluth and Beaumont, Texas, rather than Milwaukee.
“We had gradually built up that business for about four years, and the end result was that we were regulated out of it overnight,” said Eric Reinalt, Port of Milwaukee executive director.
The high cost of screwing up.
We were following quite a lot of these shipments up I-45 on numerous trips while moving from Dallas to Houston last year. The blade tips were fun to watch oscillating a couple of feet peak to peak in the wind.
Thanks, very informative article. That’s the kind of article I like! Facts and figures, no fluff.
I like the Algo Star. I’ve been cruising beside it and behind it on my Dad’s boat on the Detroit River/Lake St. Clair. It’s a pretty freighter and the crew always waves back at you. ( Housing Bubble - put in those words just to keep it topical ).
Just spoke yesterday with a family member in Grants Pass Or., and he said business is just awful…
Rancher is from the Grants Pass, OR area.a
Some of his posts have indicated things are not that great.
Oregon has always been hard for employment. It used to be that lumber was the major industry– near the only industry. If it weren’t for Portland, there wouldn’t BE much of job market in the state at all.
I loved living in Oregon, but it’s a retirement state, not a working state. There’s never been much in the way of jobs there.
OR is a bad choice for retirement.
They have no sales tax, and therefore try to make it up by jacking up the property tax.
Retirees would much prefer a progressive income tax - because their retirement income is limited - and very very low property taxes since they should have a paid off house by that time.
OR has a hellish income tax - almost as bad as California…
RI is bad? Just wait until TJX and Caremark announce corporate layoffs/restructuring when the CRE crash sets in.
Buy now or be priced out forever!
They ended up buying a three-bedroom condo in Bellasol, a development in Fort Myers, where prices currently range from $39,000 to $170,000. “We paid 25% of the original selling price,” she says. “We feel that we got an extremely good deal.
The Gourleys are part of a new surge of buyer interest along Florida’s Gulf Coast, where real estate websites are seeing a dramatic increase in traffic and local brokers are experiencing an uptick in inquiries and sales.
Wait till they see their monthly condo assessment go up 25% next year. Citizens Insurance, the state-run property insurance company, just doubled its premiums.
I already made the mistake of buying a condo in FL at the end of 2007 when prices were already down 30%, but they dropped another 30% in 2008. Hopefully the 10% first time buyer tax credit will allow me a graceful exit from this turkey.
My question is why on earth would anyone buy a condo in Fort Myers, Florida when you can rent the thing for $495 a month, with no condo fees, no property taxes and no special assessments???
You can watch HGTV and spend your weekends trying out all that design crap. Fun, fun, fun!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Then, for weekend entertainment, there’s more a couple of ancient subdivisions tracks from the 60s that never made it.
But, you can still see the outlines of roads as far as the eye can see, hundreds of square miles!
Been told it also is a great place to catch rattlers sunbathing.
Endless fun in this “the fair white goddess of States!”
Would it really run more than $495/month?
$39k with 6k down is only going to run $200/mnth + taxes + HOA.
Doesn’t seem that bad a deal.
Would you really want to live with neighbors paying $200/month? I can only imagine the quality people living down the hall. Good luck sleeping.
I live with neighbors playing $390/mo + utilities. Nice and quiet. Love my neighbors. You know who’s annoying? Neighbors at $724/mo + utilities. Wouldn’t go back.
I hope my days of shared walls are forever over, nice neighbors or not.
Not a Gator, where is that? Some section 8 people are looking to pay less than $500 and want to be your neighbor. They play mariachi music LOUD!
After being SFH owners for 25 yrs (sold)and now renting with shared walIs (and ceilings), I agree. There is nothing like a private home. Only this time around, we’re buying a private yard too. No more two-story jungles for this gal.
My wife and I have decided we are going to live the “Warren Buffet” lifestyle after she wins the lottery, and keep this cheap house. Except we are going to buy out our noisy neighbors next door and turn it into a garage for my GT40.
I expect it will be less noisy for the next over neighbor than the current incumbent divorcee’s red Mustang. Bye bye daughter’s pot smoking “fiance”.
Ah, the joins of suburban ownership society.
Bellasol is one of those places that is filled with renters, foreclosures and short sales. It was finished in 2005, right before the bubble burst. And in Fort Myers, the bubble was HUGE.
The unit I looked up online for $88,900 had taxes listed at $2640 and HOA at $261 a month.
The taxes and HOA are exactly why it’s better to rent at $495 a month.
The logic in this article is so wacky it makes my head spin. Getting wrapped around the axle about so-called “low ball” appraisals misses the key determinant of market value, which has to do with what a willing buyer is willing to pay for a home and what a willing seller is willing to accept as payment. There is no essential role for an appraiser whatever in a market exchange between a willing buyer and a willing seller. Why is an appraisal even needed, except as a means of transferring more money from private parties to REIC servicer providers? A better solution would be to break the NAR’s death grip on real estate data; if recent sale prices were made publicly available, market participants could come to their own conclusions about what homes are worth.
As to the notion that low ball appraisals depress prices, why would a seller willingly part with a home for less than it was worth? This makes no sense whatever.
NATION’S HOUSING | KENNETH HARNEY
Up in arms over fast and dirty appraisals
2:00 a.m. March 29, 2009
WASHINGTON – Are low-balled valuation estimates on short sales and bank-owned foreclosures artificially depressing property values in neighborhoods across the country?
Growing numbers of appraisers and consumer groups believe the answer is yes and are demanding that either Congress or state regulators crack down. Their complaints focus on what are called “broker price opinions,” or BPOs, that substitute for actual appraisals.
Unlike standard property valuations performed by licensed appraisers – which can run to hundreds of dollars – BPOs often cost $50 and are performed by real estate agents who may have minimal or no appraisal training and are subject to no regulatory oversight. Realty agents defend BPOs, arguing that their extensive knowledge of local market trends equips them to render accurate estimates.
BPOs have become a booming business as foreclosures and short sales have risen sharply. When banks that own foreclosed houses need to put values on them for resale, increasingly they order BPOs that can be delivered quickly at rock-bottom fees.
Short sales – where a lender agrees to take less than the principal amount owed by a delinquent owner provided the property is sold to a new buyer – also frequently entail use of BPOs.
On the Internet, BPOs are hawked to realty agents as a route to quick profits in an economic downturn. “This is the easiest and fastest way to make big money in 2009,” says one Web site that promises agents “six figures or more” per year. The same site suggests that “bad times put you in the ideal spot” to rack up income by churning out BPOs for lenders.
One problem is that selling BPOs to value houses violates the law in 23 states, according to appraisal industry leaders. In other states, BPOs may not be prohibited but critics say they may be far off the mark in accuracy – typically coming in below appraised values. That’s partly because agents who perform the BPOs may set the value extra low to ensure quicker sales.
When BPO-valued houses are listed at fire-sale prices, they exert a downward pull on the values of other houses in the neighborhood because, under current lending industry underwriting guidelines, appraisers must consider recent listing prices as well as closed sale prices.
There is no logic to the article - it appears to completely ignore the notion of supply, demand and an equilibrium price. So it’s just more nonsense.
You wrote: “A better solution would be to break the NAR’s death grip on real estate data; if recent sale prices were made publicly available, market participants could come to their own conclusions about what homes are worth.”
I think you have hit upon a great idea for a web site, as real estate sales are public records in most states. All you have to do is collect the data from local governments and post it on a website. You should set it up and make yourself some money, and you would be providing a true public service while doing so.
One should do their own research for real estate just as they should do their own research in analyzing stocks. Depending on total strangers for determining “value” is nuts.
In this Information Age, research has never been easier.
Isn’t this what Zillow already does?
They can hide behind “make me move” and “z’estimates” all they want, but sales are sales.
The writer of this article is a real estate shrill. He use to write for an online real estate propaganda newspaper. A few of the writers from that rag are published in online and main stream media these days.
“real estate shrill” - real estate shill shrilly promoting pet ideas
“There is no logic to the article…”
This is par for the course for Kenneth Harney’s financial journalistic drivel. The most glaring flaw in his argument is the implicit assertion that if current appraisals are coming in much lower than sale prices circa 2005, there must be something wrong with the current ones. Wasn’t it back in 2005 when a complete abandonment of traditional loan underwriting standards made it possible for Central Valley agricultural workers earning $20K a year in household income to qualify for loans over $700K?
Where was Mr Harney back when appraisals reached ridiculously, unsustainably high levels just before the onset of the real estate crash? That was the time to complain about appraisals distorting market values; what we see currently is a realignment of sale prices (and associated appraisals) with local incomes. Remember, All Real Estate is Local.
The appraisal was so that the bank could confirm there was no mortgage fraud going on. Ironic and silly given the last decade.
An appraisal based on the last sale price + 10% is not an appraisal at all. A better solution would be to consider long term values and rental values, which would form the basis of the loan amount given. Thereafter if a buyer liked a house so much they were willing to double up with their own cash that is fine.
The reason we are in the trouble we are in today is that appraisals were based in large part on fraud from all involved parties, not sound economic fundamentals. It was a clear example of why comps don’t make good valuations, although this could have been substantially mitigated by including historic valuations into the mix.
“That’s partly because agents who perform the BPOs may set the value extra low to ensure quicker sales.”
In all the flippin craziness that has been happening over that last 4 years, this makes perfect sense and I find it weirdly comforting. Finally, a group from the “establishment” working to get things back to fundamentals so business can start again. Their profit depends on getting back to reasonable prices.
If I were the NAR, I would have Lawrence Yun screaming “Your home is not going to sell unless you lower the price!!!” An individual broker can’t say this to a seller, s/he needs to see it in the media, the appraisals and the statistics…
I’m not sure what to make of that article. One thing that jumped out at me from your clip was that
” BPOs…are performed by real estate agents”.
So now, some in the real estate industry look to generate income by engaging in arguably bogus appraisal tactics, much to the chagrin (and reduced commissions) of the rest of the bunch. That strikes me as the REIC starting to eat it’s own, doesn’t it? If that’s the case, it merits a puzzled look and bemused shrug.
This article has nothing to do with appraisals.
“Unlike standard property valuations performed by licensed appraisers – which can run to hundreds of dollars – BPOs often cost $50 and are performed by real estate agents”
It has to do with $
BPOs cost a lot less and is cutting into someone’s rice bowl.
(though the article is wrong on 2 points: the BPO is supposedly done by a broker, not an agent and secondly, it’s usually a little more than $50, at least in Fl.)
“BPOs cost a lot less and is cutting into someone’s rice bowl.”
Exactly! Harney is all about defending REIC rice bowls.
“That’s his rice bowl. You don’t mess with a man’s rice bowl.”
Alas, later in the movie:
“I was home… What happened? What the hell happened?!”
I see your point, makes perfect sense.
The end result still seems a bit self-defeating though, at least for NAR’s long-established goals of keeping house prices arificially propped up.
I’ll stay with the bemused shrug (now a bit less puzzled, thanks), given it looks like a symptom of a developing overreaction on the downside, for short-sighted immediate benefit of the same old few. The end result (driving down prices, if in fact they are low-balling) is inevitable and good.
The Harney column had me seeing red this a.m., too. All the mark-to-model, or -formula, or -fantasy nonsense reminds me of when I worked as a gas-pump jockey one summer at a car wash in Atlantic City. A taxi came in one day, and the cabbie told me to fill it and also to do his windows. It was a big, old yellow cab, and the inlet to the tank stuck straight out the back, on top of the bumper, not on any angle down. Well, the gas nozzle slipped out as I was doing the windows under the cabbie’s watchful eye, and I’d say a maximum of one-third gallon spilled onto the asphalt before the little safety switch clicked the nozzle off. This was back in the day of gas around $1 per gallon, and the cabbie’s total was about $20. Well, he says he’s not paying the bill, gets the poor manager out there, points to the gas on the ground, and says, “That’s, what? $15, $16, $17 easily. I’ll give ya four bucks.” The manager gave in and got maybe a fin from the cabbie, who drove away triumphantly. Seems a result similar to what you’ll get in every situation where you enable someone unilaterally to dictate the value of an object, commodity, etc.
Banks gaming Geithner’s plan?
Appears Citi and Bofa are already front running Geithner’s plan by buying toxic assets in the secondary market in preparation for selling them at higher prices to bidders. http://tinyurl.com/c29v4k
How’s this for a conspiracy theory?
Per Geithner’s plan.
1. The private investor bids on the asset and chips in 7%.
2. The treasury chips in 7%.
3. The Fed chips in 86%.
Let’s say bank XYZ wants to unload an asset for 70+ cents on the dollar. However, if the asset was sold today it would only fetch 35 cents on the dollar.
Bank XYZ sets up a hedge fund. The bank’s hedge fund (e.g. private investor) bids the asset up to 75 cents on the dollar under Geithner’s plan. Bank XYZ receives 75 cents on the dollar. Let’s also assume the bank’s hedge fund, the treasury, and the Fed eventually takes a loss on the asset. The end result is bank XYZ received 75 cents on the dollar for the asset minus the 7% the hedge fund lost, netting bank XYZ 70+ cents on the dollar. The Fed, treasury and ultimately the tax payer would effectively over pay for the assets in the newly formed “bad bank”
Similar to how a bank shows up at the court house steps and wins the bidding on one of its foreclosures.
I watched Geithner on MSNBC with the volume off. Anyone else watch Lie to Me?
Very iteresting show
The new Three Stooges are Barry, Joe and Curly. I’ll let you guess who plays Curly.
Any PhotoShop funsters out there who’d like to take a crack at putting together a suitable photo? If you do, be sure to post a link here.
I also watched “Eddie Haskell’ on tv this am.
The entire financial system was and still is rigged and gamed. This was and continues to be the problem.
It took a severe depression to fix it the last time.
This is also why “economics” will always be the dismal science until it factors in the criminal activity.
Just when you thought it was safe to venture out:
Rare sight: Homebuyers camp out in Anaheim
Fast, 30, and his girlfriend Michelle Ewing, 31, of Dana Point, were among more than 75 people who camped out Friday night into this morning for “The Event” – a marketing blitz to sell 60 of the 120 condos remaining inside the 390-unit Stadium Lofts complex on Katella Avenue, across from Angel Stadium.
We are in the worst recession in decades, and students (e.g., ppl with little if no salary and uncertain futures) are camping out for an opportunity to buy a shoddy condo. Beauty is skin deep, ignorance soaks into the marrow.
The only “pure” student in the article was Lasman and he’s not buying anything (probably the smartest guy in line):
Lasman’s mom, Mindy Weiss, waited in line with him. She was planning to buy it for him…
The other student mentioned sounds like he has a real job.
“I was mad,” said Jeremy Lasman, 21, a student at Chapman University, about drawing No. 42. Still, he spent the night in line, hoping he might get the two-bedroom condo he was hoping for.
“I like this area. It’s close to my school, there’s a gym and a Subway (restaurant),” he said. “It would be a great place to live.”
He didnt buy because of circumstances, and he was pissed.
He actually cited the proximity to Subway as a reason for buying? That’s sad.
Just like living in Manhattan baby!!!!!!!!! LOL
My comment stands. If you are a student with no stable job, income and future you shouldn’t be buying condos regardless of who is footing some or all of the bill. How can you disagree with that?
Not that he wasnt smart enough to say “Mom don’t be stupid.” He was pissed because he didnt think he could get it.
Not = Note
I was just pointing out that your statement wasn’t entirely accurate as a generalization.
One, he was the only real student. The other guy was an MBA student, that’s a little different of a situation.
Two, in the Lasman situation Mom was the one potentially buying so the mortgage isn’t dependent on his income in any way (as far as we can tell from the article). That might be even more stupid for other reasons but as for the son, he’s acting fairly rationally (assuming you discount the value of ethics to zero). A place to live for free? Why not? Maybe Mom gets hung out to dry on the deal, but he’s mommy’s sweetheart and she would gladly do anything for him.
You didn’t point that at all. The story like others posted hear talked about students buying condos, I responded to the material. Not once did I make the generalizations you referred to. We all have bad days I guess.
Bluprint - what do you mean by the “only.” Where did you find the other occupations listed? I didn’t see your point either. The focus was on some 21 yr old student that wanted to be near a Subway restaurant.
There was another individual who the article pointed out was an MBA student.
The original statement was a generalization about students, who have no income, buying condos. I think that implies a certain type of student (e.g. a “normal” full-time undergrad with no real job or only a low-paying part-time job). In contrast, I too am a (grad) student but also work full time in a well-established career. So for that reason I’m ignoring the MBA as being lumped into that category since the article says he works full time as a salesman.
That leaves the 21 y/o, presumably undergrad, student that wants to live by a subway (whiskey tengo foxtrot all over that one) and he wasn’t planning on buying anything, mommy was.
So other than the working grad student, we have 1 student in the article who was never planning on buying anything.
There is plenty of stupid stuff going on out there, we don’t need to manufacture more.
The only “pure” student in the article was Lasman and he’s not buying anything (probably the smartest guy in line):
When I went to school (after first serving in the military) I worked nights and lived in a small apartment in an old Victorian that cost $300 a month - which I paid for. It never occurred to me to ask my folks to buy me a condo or contribute a red cent toward my upkeep - I’d flown the nest at 17 and wanted to make my own way in life. This student who depends on his mommy is probably going to be a classic example of the “boomerang generation” - when they go out and life kicks their a$$es, they come crawling back to their parent’s basement.
Ha ha ha ha :)
Hey I’m a net homebuyer. We rent. We are looking for a house. We’re going camping this summer. So I guess homebuyers still camp out.
Too bad there are no serious sellers in our area. We are so anxious to spend money we bought two pairs of skis, boots, bindings, poles. The guy at the ski store was very nice. And, the prices made sense compared to renting.
A serious house seller would read that last sentence very carefully.
IIRC Katella is one of the ugliest strip-mall streets in southern California, not mitigated at all by the presence of Disneyland.
Katella has been undergoing massive gentrification, both around Disneyland (during the resort are “remodel” 10 years ago) and now the Stadium neighborhood.
This should an FB poster. That is insane. Those people should be spanked. Oh wait, they are being spanked.
You can RENT an apt that nice in Houston, Dallas or San Antonio, that will by default, be in a nice neighborhood, for, oh, +/- $800 month.
I’ve noticed something odd here in SW Boise and wonder whether others have noticed the same thing….
Our subdivision has had a certain number of resales lately. Time on the market isn’t that long - say 6-8 weeks? However, ours is the last subdivision built in the last decade that was fully built-out: now only one vacant lot out of 400.
Homes in newer subs, especially those with fewer than 20% homes built on lots, aren’t selling at all.
I presume people don’t want to get stuck in an isolated home in a barren subdivision full of weeds and dust.
One really nasty case is Kingsbridge.
Kingsbridge was roughed out in 2006, right at the peak of the bubble. The sign at the entrance stated “From the $400,000s”. About a year later the sign was changed to “From the $300,000s”. And still there’s no action. Only a handful of model homes have been built, and they are way too fancy for the neighborhood. A bunch of speculators apparently bought up some lots there, and are now trying to bail out. A drive through shows about 70% of the lots still have the developer’s sign on them, and the rest are advertised by realtors.
Same is true in a lot of the condo complexes that were overbuilt in Salt Lake. They’re just sitting there, no one’s buying even at 30% reduced prices from original, and SL is a better market than many. (I’m not saying that’s cheap, just that there’s a limit to how far a developer can likely cut without going under, and they’re beginning to do that, but still no buyers.) Other developments are stopped in their tracks.
I think you may have hit the nail on the head as to what’s happening. My guess is that a lot of these complexes will simply go under and re-emerge as rentals in 2-3 years. What will that mean for the handful of people that did buy in?
I want to clarify….Kingsbridge is SFH lots. And almost all of them are still vacant lots. Nothing is being built even on those lots the developer’s maps shows as “sold” - those sold lots are apparently owned by speculators who have NO plans to build on them.
I understand you’re talking about SFH and I brought up condos.
My point was that I think the same basic phenomenon is going on in both cases. Even with an increasing willingness in general to re-enter the real estate market due to reduced prices, this will still be offset by extreme reluctance to buy into particular sinking RE ships. Particularly when the inferior seaworthiness of many of those ships is now laid bare for all but the most blinded to see.
Come to think of it…there’s a city of Meridian sign posted in front of Kingsbridge now announcing a planning & zoning meeting concerning the subdivision. I wonder if they are going to try to re-plat the place for cheaper houses? Maybe I should go to the meeting for entertainment’s sake.
Could you please erase this duplicate post? Thanks.
What you have written, you have written.
SO SAY WE ALL!!!
Car sales anecdotes, part 2
About two weeks ago I mentioned my experiences working with a few new car dealers and their refusal to budge on price and the disconnect between their saying ‘cars are selling’ in spite of my seeing no one in the showrooms while I was there and dusty windshields and many cars visited by the birds - and these were the NEW cars.
A local used car dealer has been having a very unadvertised program where cars are only kept on the lot 6-8 weeks. Prices are lowered every few weeks, but if they don’t sell they are auctioned off the lot to another dealer. My opinion is this creates the impression cars are actually selling when they are just moving from dealer to dealer. Much like houses, there is a lot of phantom inventory but it can be difficult to track as the car is moved from lot to lot.
Within the first minute of the test drive, the sales person volunteers this particular car has been on the lot for almost six weeks already so is about to be cut in price by $600-$800. What really floored me is this is the local “no haggle” place where as recently as four years ago it was almost impossible to get even $200 off the price of the current MadMobile.
Forgot to mention, I did stop by Toyota (new car sales), yesterday, and that dealership was REALLY busy, unlike the two other new car dealerships. I don’t know how many were trying to arrange financing and failed, but it was just amazing going from being the only potential buyer in the dealership to having trouble finding an open salesperson that could answer questions.
Of course, end of month and end of first quarter could have a lot to do with it.
It’s the tax returns rolling in.
Or maybe things aren’t all doom and gloom and people are buying cars again. Crazy, I know.
I had a Wednesday off a few weeks ago and took my 8 year old Corolla in for the yearly check. The service area was hopping.
I was there about 90 minutes. Number of people walking into showroom: zero
Day after tomorrow tax goes up to 9.5% and the DMV fees double here in Cali….That should kick start new car sales…
Sheesh Sdave…Taxes, fee’s and disguised “service” charges are bad everywhere.
Maybe it’s time to invest in a luxury cardboard box, a little Red Wagon and camp out on these Govenor’s front yards. We could use a dropline from his street lamp post for power to stay in touch with our HBB bud’s
New Twit to FSBO’s here - They’re running their own round-robin bid AUCTIONS on the next GF.
Sheesh…the people…never QUIT !
I here ya mikey….I do believe another tax revolt is brewing in Cali…Last one was Prop.#13 in 1979….
I used to live in California long ago and really liked it. It’s a shame to see it with so many problems today.
Whatever all the naysayers say about California, sure it has problems. But if you are into T-bills, Series I bonds, AAA and AA municipal bonds (still some quality ones in CA), and found a way to legally reduce your AGI by more than 40%, the problems seem miniscule.
The weather is the best outside of Hawaii.
But yeah, i think for sure I am going to be back working in Maryland this November. I’ll just store my furnishings again in my storage unit here in the south bay for when i’m back.
I made a cash offer yesterday on an ‘07 RDX. Listed for 27,500 my last offer was 25k. No deal, they weren’t interested at all.
Do used cars run on <10% margins? I really thought 25 was a number that would be good for everyone.
Well, the reason they said no depends on what you meant by your 25,000$ offer.
Just a cursory check of things says KBB Wholesale Book on a 20,000 mile 07 RDX is 25,600$. They probably took it in on trade or purchased it through auction between 23,000$-24,000$ depending on how nice the car is. They put it through their shop (usually runs 500$-1000$ against their cost), so it hit the sales floor with a “cost” around 24000$-25000$. When it’s all said and done your “dealer cost” is VERY close to wholesale book, maybe a BIT less. Bear in mind this is an Acura, they hold extremely good value in the market. Also bear in mind “book values” aren’t what they used to be, they have been updating to reflect current market conditions/auction values WEEKLY, as opposed to once every 3 months like during the good-old-days.
You’re asking to buy it for 25,000$, I’m assuming you mean 25,000$ out-the-door, cash. This means the dealer actually has to sell it for considerably less (here in AZ our tax is 8.1%, title license on that car would run in excess of 400$, and doc is 399$). For this store to sell you the vehicle at 25k would require us to sell it for around 22,400$ + fees.
That’s about 2500$ less then their “cost” for the car.
If you asked to buy it for 25,000$+fees (tax, title/license, and doc), they would probably accept your deal.
Tax, title license was never discussed specifically, I assumed my offer to be excluding those things (I would pay them).
My intent was just talking price of the car. That’s what we were discussing as far as I was concerned. Perhaps our assumptions weren’t in line.
I’d rather just buy a near-new car off Craigslist from someone who just lost their job or is getting divorced and needs to trim their expenses. I hate dealing with new-car dealerships.
Have used free Craiglsist, but far better success (both buying and selling) on AutoTrader for $40.
Where to start! I run an Internet Dept at a Honda store…
I’ve found lately there is a disconnect between buyers perception of a discount, and the reality of the situation.
A buyer comes in and we offer him below-invoice pricing on a new Honda (every single one except the insight) right off the bat (something that basically never happened with Honda’s up until very recently). The buyer comes back at us wanting an even deeper discount, then gets annoyed because we will not “budge” further. They might even shop all 8 nearby Honda stores to find one willing to dig a couple hundred dollars further (physically -losing- money to sell a car).
The buyers are sitting in front of me, telling me how bad the economy is, and wondering why in the world we wouldn’t take an additional thousand dollars off the price. The reality of the situation is Honda’s have -never- sold for less in relation to invoice, and any further discounting means physical cash losses. Paying a customer to take one of our vehicles is not currently feasable. With the overall decline in revenue (less people buying cars, less people using service, less parts sales) we simply cannot afford to lose money and continue to operate.
That’s not to say some dealers aren’t doing just that (losing money that is), just don’t expect those dealers to be there when you need your 12,000 mile checkup. In most places there are still too many dealers and this problem tends to fix itself over time (I cant remember the exact number but I read somewhere between 700-1000 new car dealers went out of business last year alone).
As for used cars, many dealers do have a 45-60 day inventory turn policy. As you said, they usually lower prices as the car gets older to help “move the metal”. This said, you are a bit incorrect in your assumption that they are simply shifting inventory from dealer to dealer for percieved sales. I can’t speak for everyone, but in any given month we may send 1-2 cars to wholesalers (other dealers etc), the rest sell within their window of opprotunity. Buyers are shopping for bargins and when we discount a car down to wholesale values it usually sells immediately.
The used car business is slightly down from our record year last year, but not by a huge margin. Most dealers are adjusting their amount of inventory to match current sales rates. Nice quality used cars (low mileage etc) are getting harder to come by though, people haven’t been trading them. Prices on used cars have been rising a bit lately as a result, not because of a drive for profit, but because the cost of obtaining these cars is rising. This leads again to a customer perception that dealers aren’t discounting their cars (and is why the cars that end up “old aged” and discounted tend to sell immediately as explained above).
I’m not arguing with you, as you’re in the business. My observations are just based on what I saw on the lots I visited. Also, I don’t expect Toyota and Honda to sell for large discounts. FWIW, the new dealer was Ford. Also, I distrust the “we’re giving you at invoice” because of the MRSP versus invoice in combination with holdback. I know dealers need to make a profit, but I feel at a huge disadvantage.
I believe you are right about cutting prices on the used car lots, but the one I visited was Saturn who in the past would NEVER discount the price of the car, at least at this particular dealership. They might increase the price of your trade, but NEVER, NEVER reduce the price of the car.
When I buy a new car I always start by looking up the target price on carsdirect.com. The first dealer who comes within a hundred bucks of that price gets my business.
Apparently not all policy makers agree that blowing yet another bubble is the best antidote for the collapse of the previous one.
Merkel warns on further stimulus
By Bertrand Benoit, Quentin Peel and Chris Bryant in Berlin
Published: March 27 2009 23:30 | Last updated: March 27 2009 23:30
Angela Merkel, the German chancellor, will warn leaders of the world’s largest economies next week against pumping too much money into reviving global growth, saying that such action would create an unsustainable recovery.
In a forthright interview with the Financial Times before attending the Group of 20 nations summit in London, she rejected renewed calls to spend more public money in Germany as part of a co-ordinated stimulus across the world economy. Ms Merkel said China, in particular, had much more room for expanding domestic demand.
She said it was essential not only to revive the world economy but also ensure that no such crisis occurred again.
“This crisis did not come about because we issued too little money but because we created economic growth with too much money, and it was not sustainable growth,” said Ms Merkel. “If we want to learn from that, the answer is not to repeat the mistakes of the past.”
Which came first? The bubble or the fraud?
“It’s better to sell cars and lose a little money than have them sit on the lot and not make any,”……..
Of course!!! Especially when taxpayers are funding it.
Chrysler is going out of business, they are in the process of liquidation (even if they don’t come out and say it), while milking the government for every penny they can get.
Funny little fact. Last month the average amount of new-car sales for the Dodge/Chrysler stores in Phoenix was 33. Just 33 new car sales per store (not a typo).
To put that in perspective, it wasn’t very long ago (a handful of years back) that Earnhardt Dodge here in town would sell 700 new cars a month all by themselves.
Thats SEVEN HUNDRED, and now, 33. Slight difference.
Wow Temporal. Thanks for that information. I appreciate it.
Spain’s finance minister shuns new stimulus
By Victor Mallet in Madrid
Published: March 27 2009 18:46 | Last updated: March 27 2009 18:46
Pedro Solbes, Spain’s finance minister, said on Friday that there was no room for new fiscal stimulus plans in Spain or the rest of the eurozone, a cautious assessment that puts him in direct contradiction with José Luis Rodríguez Zapatero, his prime minister.
… Mr Solbes – who moved the Spanish budget into surplus from 2005 only to see the global economic crisis and Mr Zapatero’s spending plans plunge it back into deficit last year – has persistently called for fiscal prudence.
Both he and Mr Zapatero say Spain’s 2009 deficit will be “clearly” above the EU’s limit of 3 per cent of GDP, and independent economists expect it to reach 7 per cent of GDP.
“In these conditions, I and the rest of my colleagues from the eurozone believe there is no room for new fiscal stimulus plans,” Mr Solbes said yesterday after a cabinet meeting in Madrid.
Freddie Mac loan contractor, Ocwen Financial, has spotty record
By ALEXANDRA ANDREWS
Sunday, March 29, 2009
Last month, Freddie Mac introduced a pilot program designed to guide 5,000 homeowners with high-risk mortgages through the loan-modification process, but it outsourced the job to a subprime loan servicer with a history of customer dissatisfaction and run-ins with the federal government.
The West Palm Beach-based company, Ocwen Financial Corp., is a publicly traded financial services company specializing in subprime loan servicing. When asked why it tapped Ocwen for the job, Freddie Mac spokesman Brad German pointed to recent coverage in the New York Times and Time about “the good job that [Ocwen is] doing on the job we’re looking for them to do for us.” He declined to say whether there had been a bidding process or how much the contract was worth, citing the information as “propriety” and referring further questions to the Federal Housing Finance Authority, which acts as Freddie Mac’s conservator.
An FHFA spokeswoman declined to give ProPublica the contract details. She said that Freddie Mac, which was seized by the federal government in September, is still run as a private-sector firm and not subject to federal procurement rules. Freddie Mac will decide later this year whether to expand the program, and it may hire additional servicers for the job.
Ocwen has, in fact, had an impressive success rate with its recent loan modifications; it said in December that its delinquency rate for borrowers with modified loans was 25 percent, far below the national average of 53 percent. But its business practices have also drawn a wide array of criticism from customers, consumer advocates and the federal government itself.
Trouble With the Feds
Ocwen got a lucrative contract in 2003 to manage and sell thousands of foreclosed properties owned by the Department of Veterans Affairs, but a report  from the Government Accountability Office in 2007 panned Ocwen’s performance and said the “VA also has not been satisfied with Ocwen’s performance”: Ocwen racked up $1.3 million in penalties from the VA in the last three quarters of 2005 (at the height of the housing boom) for failing to meet sales targets.
There were other problems too: Ocwen charged the VA for home-upkeep repairs that were never made, the GAO reported. Houses fell into disrepair and were covered in “trash and debris,” which the GAO suspects might have lowered property values.
Chairman of House Veterans Affairs Committee Bob Filner, D-Calif. 0 told The Palm Beach Post last January that he would recommend the VA not renew Ocwen’s contract. “They obviously didn’t do the job,” he said. The VA transferred the job to Countrywide when Ocwen’s contract expired last year.
Did OBwan declare war on Megabank, Inc without the press picking up the story?
And what do the managers of Megabank, Inc have to do with entrepreneurship? If anything, large near-monopolies stand in the way of innovation driven by smaller, leaner, more competitive firms. However, small banks don’t qualify for the generous subsidies embodied in the free too-big-to-fail insurance program, and hence are put at a competitive disadvantage to members of the Megabank, Inc cartel.
Bank chiefs hold peace talks with Obama
By Andrew Ward and Tom Braithwaite in Washington and Francesco Guerrera in New York
Published: March 27 2009 17:58 | Last updated: March 27 2009 17:58
Top bank chief executives held peace talks with President Barack Obama at the White House on Friday as the administration sought to soothe tensions over lavish Wall Street bonus payments.
The meeting came at the end of a week in which in which Mr Obama pushed back against efforts by Congress to slap hefty tax penalties on bonuses and warned people not to “demonise” investors and entrepreneurs.
OBWan wants to get re-elected in 2012.
Too much partying with Megabank might just lose him the election.
This’ll be long forgotten by then.
It’s possible but I am not convinced.
Biggest event for most people might leave a few scars. This is not your run-of-the-mill crisis.
A key factor behind the bonus outrage is seeing Wall Street executives routinely pocketing millions of dollars for helping to engineer and execute a man-made financial disaster which led to widespread job loss and a halving of many Americans households’ life savings. I, for one, do not expect this episode to be soon forgotten. In fact, I expect OBwan’s rival to dredge it up as a campaign issue circa 2012 if no further action is taken at this point.
He has to pretend to beat up on them without actually alienating them to the point where he loses their campaign contributions. Good luck with that plan.
I just took it as a meeting of the Mafia bosses at the Don’s house.
I just found a house that shows the first solid evidence (that I have seen) of a price decline in central Ark among houses of which I care about (some of the really huge 500-600k+ have already shown evidence, but I don’t care so much about those).
~2500 sq ft, on 3.5 acres sold in 2006 for 270k. They are asking 240 now (on the mkt for 138 days, originally listed at 256) and it is listed as a short sale.
For over two years i’ve been tracking sales numbers for central Ark. Only in Jan have I finally seen evidence from those numbers of a solid decrease in median price. While I have seen several places listed for sale which I felt would have been listed for more in 06 or 07 this is the first example of a house that I can really see a price decline. (granted, being as busy as I am with school, I might have already found some examples if I were able to spend more time looking).
I’m probably going to look at it and unless there is something surprising I may very well make an offer at 180k, just to see what happens. But aside from that, it really warms my heart to such a clear and significant example of declining prices.
About a year ago, I had a conversation with my dad that prices here would drop by my calculation by at least 10-15% and possibly as much as 30% or maybe even a bit more. He flat told me I was crazy (at that time, there was still little or no evidence of price declines around here). This example, from 270 to 240 (assuming it sells for that) is -11%.
Building houses and pink purses aside, honestly, even 180k in Frogballs, AR seems completely outlandish bluprint….. Completely unimaginable. I’ve only passed through AR and spent the hottest summer on record in basic training in Misery but that amount of money there seems completely detached from reality. Regardless of our many disagreements here, our common bond trumps all the BS on the periphery and to be succinct, I view this entire housing bubble and it’s collapse as a war between us and them that we cannot win if a single individual concedes to the real estate crime syndicate. I really have to wonder what prices there would be today if you inflation adjusted 1980 Arkansas prices.
We don’t have a madmax scenario
3% annual inflation
Given location and size, I think 180 would be in line with inflation-adjusted prices, 200 would probably still be ok.
Some evidence for your digestion:
My mom and stepdad bought a place further out (longer commute to work-center of Little Rock and outside of the town of Conway) for $65-74/sq ft (that’s a bad estimate, the place burned down and I’m estimating size) in inflation-adjusted terms in 1984.
180 for this place would be $70/sq. ft.
Land is in my estimation roughly comparable with the benefit going toward this place, 3.5 acres good flat land. Where I grew up we had almost 6 acres but at least half was the backside of a steep hill.
Some other info:
I bought a new 1124 sq ft house in 98 for 71k. Very basic starter type place. I feel this was pre-bubble in Ark, just by a year or so. That’s $63 per sq.ft. Multiply that by the 2565 for this place gives you 161,500. My house was on a quarter acre lot and this one is on 3.5 acres (both in town). If the additional land is only valued at 10k an acre makes up the difference easy, and that is a very conservative number for the land, being in city limits.
Taxes are less than 2k/year.
I can put ~80k down and have a 100k mortgage. Be totally out of debt in 10 years or so, well before the kid hits teenage years. Also I could maintain that debt load easily even at a much decreased income level.
Found another interesting data point:
Mom bought her current place for inflation adjusted $53.5 per sq ft in 1992. It’s in another town north of Conway about 20 mins. 1.77 acres, good land.
Her place is in a 100 yr flood plain
The Conway place has:
additional external garage/shop
twice the land.
It’s a much nicer place I think by most measures
Taking the $53.5 by the 2565 sq footage gives ~137k. 40k lower than the Conway place.
Itchy trigger finger blue?
1998 was a good year, as I recall.
Just think, in 10 years you could tell those hungry teens that you missed buying at the top, by “that much”.
Not any more itchy than normal. If I were satisfied with renting my entire life I wouldn’t even be talking about this.
I’m just throwing information out there to the smart people here for scrutiny. As always I’m trying to find the truth.
Same as when I would shoot down the dumbarse realtors that were telling me the reason land was going up so much was b/c of the newly discovered* natural gas, even though the prices we were discussing was land WITHOUT mineral rights.
*It wasn’t really newly discovered, but they had developed some new methods of extraction that made it feasible to harvest and turned into a mineral rights land rush.
The place can be built for roughly 128k, not including well, septic and dirt. Of course thats brand new, not lived in, perfect condition so deduct for use, abuse, wear and tear. Only you can determine that adjustment. The balance is the land, well and septic but it’s all in what you believe dirt is worth. I’ve bought dirt for $500/acre 3 times over as recently as 1998 and contend that it isn’t worth anymore than $1000/acre at best. I’ll wager if you go down to the county and look at tax maps, you’ll see evidence of $500/acre sales all over your county back in the 1990’s.
I remember $500/acre. Back in high school (I graduated in 94) I remember you could buy land around here for about 1000 on the main highway in the small town I lived in, out in the county would have been ~500. But thats raw land, and larger tracts. A single acre on the road would have been more.
But land in the middle of (the larger) town has always been priced different. I just checked some records, subdivision lots in Conway, 1991-93 for 30k (nominal). Thats maybe 1/2 acre with utilities at the road.
The land we are talking about sold for 16k in ‘90. Adjusted at 3% per annum comes to 28k. Back then it wasn’t in town, it is now.
Take your $50/sq ft to build (I think that’s nut cuttin’ but we’ll use it anyway, you could probably do it for that but I doubt I could and I may not want to…might could earn more working as a consultant and paying a crew for the labor) and that comes to 128k. I could build myself for that maybe but we’re talking about a ready built house here, so have to adjust for that. But if I built it would be new and done differently, so lets call those two things a wash. Plus we won’t adjust the price of the land for having been annexed. I would actually prefer it be out of town but we’re talking about the whole market here not just my preference…
128K (house) + 28k(land) = 156k.
It’s got a pool. I don’t know anything about it but lets assume its functional. Probably a little old (the place was built in ‘96 so that’s the oldest the pool could be), so lets call it 15k? I’ve never bought a pool but that seems like a conservative number.
That gets us to 170k. I said I would be happy at 180k and that I feel that fairly reflects inflation-adjusted pricing.
I dunno…I’d be surprised if you ever saw this place (or one on the same street) sale for that and if our numbers (which I think are very conservative) are getting within 10 grand then we’re probably close to the truth.
Remember, they are asking 240k for this right now. I’m just speculating of what might be an eventual “fair” price.
Just a note bluprint, $50/sq costs isn’t picking up a hammer or a board. It’s all coordination. If you decided to work, you’d cut that number by whatever your own production rate is. $50/sq is very realistic and even high in my estimation.
Regarding the land, you used with keyword; subdivision. It’ is precisely this point that land is grossly inflated. Subdividing is building in value to the end user. Think of it this way…. Raw land is always a loser on a retail basis unless you’re building in value, i.e, site survey, cutting, filling, utilities. Without all these added costs (enormous profit), raw land, even lots smaller than 20-30 acres, are net losers in the end. The profit potential is realized only from a site/civil perspective, not the end user.
Bluprint, the incremental value of the pool is ZERO unless you intended to install one yourself. Let’s not get sucked into the fallacy of paying the seller for his whimsies. That’s where we get wishing prices from. They feel they have to make back the cost of improvements.
Would you subsidize his purchase of wall to wall carpeting in the event you decided, quite reasonably, not to live with somebody else’s ground in dirt, and intended to rip it up and replace it with hardwood? Similar situation, IMHO.
Not even the cost of the pool? I’m not talking about some additional “value add”. Things cost money. If you want to own a pool, you gotta pay for it. If you want a shop or garage or gazebo, etc that cost money and carries some value in the market place.
In some cases, the value an individual places might be zero or negative. For example if I hated pools and wanted to fill it in, then I would need to include the cost of removing the pool and filling in the hole, etc. That would be a negative value.
But in the market place in general, what is the price assigned to a pool? I am under the impression it is the same as the cost to install one. Neither more nor less.
Longer response on the way (currently in post purgatory)
I think it’s inline with inflation adjust prices, even 200k might still be in line.
Downside, it’s in town and probably has covenants. I would like to own some small livestock (few chickens, pig or two, etc).
Upside, it’s in town. Faster internet and cheaper utilities (a city run thing, they got cheap electricity there).
I like your resolve.
Is Mena in Arkansas? I just saw a documentary called “Lioness” about a platoon of female Army ordnance specialists and mechanics who were assigned to a Marine squadron in Iraq during the Gulf War for the rest of their tour, and regularly engaged in front line intense combat. They were assigned to search the Iraqi women - Marines could not have done that. But they wound up fighting alongside them - without training in how to use the heavy artillery, without training in how things were said (different language in Army vs. Marines), without combat pay, and when returned, without corresponding benefits. One of the women was just ditched by the Marines in the middle of the street in Fallujah(?), none of the guys told her to disappear. She was the only target on the street with no cover. It was grueling to watch.
She went back home to I think Mena, Arkansas. Modest extended family compound of multiple double wides. Very nice river running right in front of it. I am looking for a place like that to serve as a bit of river frontage for my forty acres and a mule. Those were right nice people. Once you get the posturing and BS fried out of you and strip life down to its essentials, IMHO that is what it boils down to.
Mena is in bum-fkd egypt, arkansas. Pretty country though. You could find cheap land there as long as you don’t care about income. Also some can find it hard integrating into a small town like that, sometimes it can be closed off.
I saw you post the other day about wanting a river, watch out for that. Do a google search on the white river, might find some interesting stories. floodways are a beeyotch.
Not everyone agrees that the remedy to the credit crunch is a hair-of-the-dog effort to reload household financial balance sheets with debt.
# Mar 26, 2009 3:48 PM — Scott Jagow
Debt is the devil
If there’s one thing I’ve learned in my financial life, it’s that I hate debt. I used to find debt annoying, you know, like getting a ticket for rolling through a stop sign or stepping on a piece of gum. But that wasn’t good enough.
I’ve been thinking about debt during this whole financial crisis because to me, the frantic push to reopen the credit markets is a solution for people who only find debt annoying. Let’s just get the credit flowing again, and we’ll worry about the rest later. For me, that’s like someone who destroyed their marriage saying, just forgive me and everything will be fine.
Debt is on my mind today for two reasons. One is Stacey Vanek Smith’s series on Marketplace. She spent some time in Sioux Falls, SD, the town that credit built. A lot of credit card companies are based there. Today, she looks at what’s happened in Sioux Falls since Americans laden with debt can’t pay their cards off.
Plus, our Public Insight journalists are asking about debt on their blog, the Trading Floor. Their question of the day is: What are your top three debt regrets?
I hate debt because I’ve been in it, and I can’t stand the feeling. In a Marketplace Money story a few years ago, I said it was like being underwater.
That story was a personal one. I was $10,000 in debt at the time, and I was asking whether I should cash out some of my 401-K to bail myself out. The financial expert who advised me said absolutely not, and she listed several excellent reasons why. I took her advice and kept plugging along, which is how the radio story ends. But later on, despite cutting costs, with the interest mounting and a tight salary, I wound up further in debt. I finally caved. I sliced off a portion of my retirement money and paid it all off.
It was one of the best decisions I’ve ever made. I just couldn’t handle the stress. I honestly didn’t think I would live to retirement with that hanging over me all the time. But in exchange for taking the “easy” way out, I had to learn to hate debt and vow never to get in it again. I haven’t, and I won’t.
Barn door left open
All of the horses have fled
Hurry, shut the door
Mar 26, 2009 12:28 PM — Scott Jagow
Too big to… succeed?
Today’s big story is Treasury Secretary Tim Geithner’s proposal to Congress for regulating the financial system. You can read summaries of his testimony from Reuters, Marketwatch and The Washington Post. I’d like to highlight a couple things Geithner said, and a couple things he didn’t say.
What he said, in a nutshell: One, the government needs to address systemic risk, the “too big to fail” problem. Two, consumers and investors need more protection — better enforcement of existing rules, closing loopholes, increasing transparency — in an effort to prevent lending abuse, Madoff schemes, AIG shell games. Three, regulate the unregulated or barely regulated — hedge funds, non-bank financial companies, credit default swaps, executive compensation. Four, empower a single federal agency with policing risks in the financial system and assign clearer authority for other regulatory agencies. And finally, coordinate regulation with other countries.
Let me catch my breath for a second. The plan sounds like a brilliant model for retroactively preventing the collapse that’s already happened, but is it too ambitious, excessive and unrealistic?
We have to start on the regulation some time, but there is a system in place and many of these problems could be solved by tweaking the oversight instead of throwing the baby out with the bath water. Then there’s that other saying. Haste makes… bailout sink holes.
Finally, Geithner said this:
“… we need to establish a stronger resolution mechanism that gives the government tools to protect the financial system and the broader economy from the potential failure of large complex financial institutions.”
A glaring omission here — why should these extra-large financial institutions be allowed to exist in the first place? Instead of trying to prevent them from failing, why aren’t we trying to prevent them from being?
This was a point of discussion at our morning meeting. Marketplace Senior Business Correspondent Bob Moon asked why do we have antitrust laws? They’ve done very little to stop corporations from becoming industry-devouring-and-destroying Pac-Men. The American system has prided itself on survival of the fittest and dog-eat-dog and all that, but once upon time, wasn’t it also about making sure there was competition left and that no one got too big to take down the system?
No. Google “trust busting.
Big monopolies are our history.
The so-called “intelligence fusion center” of the Mississippi Highway Patrol was forced to retract a scurrilous “intelligence bulletin” they had put out, linking support to Ron Paul and other third-party candidates as a possible indicator of anti-government militia involvement. I’ve heard widespread reports of people with Ron Paul bumper stickers being pulled over for no apparent reason, and now this.
“First they came for the Ron Paul supporters, but I wasn’t a Ron Paul supporter so I said nothing….”
An anxious populace is always on the hunt for scapegoats. Look for such wackiness to increase as it’s always easier on the PTB than actually confronting the real problems.
There is now one less difference between the Mississippi Highway Patrol and Mussolini than there was a few years ago.
Big Brother’s job becomes a lot easier when the MSM, instead of spotlighting government abuses and overreaching, serves as willing border collies to corral the sheeple into the corporate cartel’s (i.e. their owners) incorporated global plantation. Politicians who aren’t bought and paid for by those same cartels - rare exceptions such as Dr. Ron Paul - are viewed as, at best, wild cards, and their supporters, who show dangerous free-thinking tendencies - well, you get the picture. A frightened, cowed, compliant populace is a lot easier to manipulate into whatever con job you’ve got in store for them.
…which is usually BOHICA!
The quest for squeaky-clean dishes has turned some law-abiding people in Spokane into dishwater-detergent smugglers. They are bringing Cascade or Electrasol in from out of state because the eco-friendly varieties required under Washington state law don’t work as well. Many people were shocked to find that products like Seventh Generation, Ecover and Trader Joe’s left their dishes encrusted with food, smeared with grease and too gross to use without rewashing them by hand. The culprit was hard water, which is mineral-rich and resistant to soap.
As a result, there has been a quiet rush of Spokane-area shoppers heading east on Interstate 90 into Idaho in search of old-school suds.
Real estate agent Patti Marcotte of Spokane stocks up on detergent at a Costco in Coeur d’Alene, Idaho, and doesn’t care who knows it.
“Yes, I am a smuggler,” she said. “I’m taking my chances because dirty dishes I cannot live with.”
What further depths of depravity will “real estate agents” descend to? Stay tuned.
The problem is not waste per se. The problem is overpopulation. I would do the same thing as the smugglers. Freedom requires a revolution, which is essentially disobedience, every now and then.
The problem is being eco-friendly gone completely nuts.
State law for eco-friendly dishwasher detergents?? HAHAHAHAHAHAHA!!!!!!
State borders - where some state have stupid laws - encourage “state border arbitrage”.
OR has no sales tax: ID does. People in southwest ID drive into Ontario OR to purchase unregistered items like washers and dryers.
NV has cheap unregulated liquor stores: ID has state stores that charge “full list price”. People in ID drive to Jackpot NV once a year and fill their cars with half-price booze.
Now people in WA drive into ID to buy bootleg dishwasher detergent.
And people in Clark County, WA drive across the river to Portland, OR for tax-free shopping all the time.
Mar 26, 2009 8:13 AM — Scott Jagow
Monopoly needs an update
Yeah, yeah, Monopoly is digital now, with debit cards and electronic banking. There are new tokens, like a flat-screen TV. There’s even a Here and Now, World Edition for the global economy. Still, if you go bankrupt, the game’s over. WHAT? Where’s my bailout?
Options trader Adam Warner found his son playing Monopoly on the Wii, and he overheard Mr. Moneybags tell one of the players, game over, you’re bankrupt:
And I’m thinking, “What are they teaching kids these days? This is 2009; that’s not how we roll.” Clearly, the words “too big to fail” don’t mean anything to this popular Parker Brothers mascot.
So Warner came up with his own Monopoly cards, which he calls the Greed and Graft edition. Samples below. Pretty amusing, but now that I think about it — Geez, how do we talk to kids about the new economic reality?
Captions shown on the cards below Scott Jagow’s article:
YOU HAVE LOST $1 BILLION FOR PARENT COMPANY; COLLECT $10 MILLION RETENTION BONUS FOR EACH PLAYER”
MAKE GENERAL REPAIRS ON ALL YOUR PROPERTY. CHARGE RICK SANTELLI AND HIS FRIENDS IN THE TRADING PIT.”
GO DIRECTLY TO JAIL. DO NOT PASS GO, DO NOT TRY TO MAIL $1 MILLION DOLLAR VASES OUT OF YOUR UPPER EAST SIDE CONDO TO YOUR KIDS IN JERSEY.”
An acquaintance of mine has created a game for the iPod or iPhone called “Bailout Bonanza.”
Thursday, March 26, 2009
Listen to the show
Why home ownership is U.S. obsession
Columbia Professor Edmund Phelps
Kai Ryssdal speaks with Columbia Professor Edmund Phelps about the reason why so many Americans want to own their own homes.
Edmund Phelps, director of Columbia University’s Center on Capitalism and Society. (columbia dot edu)
TEXT OF INTERVIEW
Kai Ryssdal: So you grow up, get a good job, marry, you have a couple of kids, and buy a house. It’s the American dream, right? But a lot people got in trouble chasing that last part and helped take the economy down with them. In today’s installment of Taking Stock, our series of occasional conversations with people who can give us the longer view of our economic situation, Columbia University economist Edmund Phelps and American attitudes toward home ownership. Phelps says that dream of owning a house has been fueled, in large part, by the government.
EDMUND PHELPS: Democrats and Republicans have been very keen to make home ownership almost a national purpose. President Clinton got through Congress a 1997 act to force mortgage lenders to relax the conditions on loans for low-income people. And then there were tax breaks on capital gains and houses in 1998. But I have to say that it isn’t just public policy. The banks, which used to have something to do with business lending, sorta of lost their expertise in that area, and they began to focus all their lending efforts on residential mortgages and other soft targets.
Ryssdal: Let me ask you this, though. Because if the government gets rid of the home-mortgage interest deduction, I for one will be extremely annoyed, and so will the 70 percent of Americans who own their own homes. I mean, it would be a sea change in the way we look at homes in this country.
PHELPS: Yes, it would be. But to me it makes a lot of sense. Because, look, this is a very funny kind of asset in which the owner of the asset gets the services of the asset — the shelter and the comforts and so forth that the asset provides — and at the same time, as if the owner was paying income tax on those services, the owner gets to deduct the mortgage costs.
With every passing day I’m more and more convinced that the overriding priority behind the ownership society was to create a massive captive tax base - and nothing more.
Numerous states and local governments will be increasing taxes substantially this year, what can “homeowners” do about it? What can renters do about it?
Who really retains the initiative here?
The renters can say “no más” and move wherever they please. That includes Thailand, I might add.
A good quality small private plane can transport a fortune in gold in one trip between Miami and Turks/Caicos. I have yet to see a plane do that with a McMansion
Whatever. Who gives a cr@p about gold?
In a non-gold standard, it simply doesn’t matter where you hold your wealth as long as it satisfies the basic principles of wealth - don’t lose purchasing power.
This whole gold thing is such a stupid side-show, it’s like watching a buncha short-bus children all arguing about a half-broken candy bar that was licked by a few diseased dogs and a cat.
Then stash cash. Loaf of bread will cost $15.00 when the monetary inflation changes to price inflation.
Right!!! And we should also DCA and invest in equities “long-term” and read Ayn Rand.
And this sort of vivid image, my darlin’ HBBers, is why I read this here blog allllll the freakin’ tiiiiime.
I can’t stand Ayn Rand, but I do like having some gold on hand. You can invest in whatever you want. These are weird times. Very weird.
You can get a whole lobster dinner there for like a dollar.
Oops, this was a response to the comment about Thailand. Apparently lotsa people still posting here.
You hit the nail on the head! This is exactly what the government wanted!
Does anyone have any viewpoints on Oldsmar, Fl. It appears that there are a huge number of houses for sale for such a small city- 450 or so by Realtor.com. Then I found that there are 150 or so foreclosures.
So, this is about 600 houses in a city of 15,000 people or so and 4536 households.
I used to live there. I loved the place. So 10% are up for sale and 3% are in foreclosure? Is this correct? Could someone give me a local assessment of what conditions are at the moment?
I was on a long line at Costco the other day, with the person at the checkout taking a very long time (perhaps didn’t have the money, credit card rejected, or something).
So as I changed lanes I let out a wisecrack I have often used when waiting to make a simple transaction, whether at a teller, the post office, etc. “The guy in the front must be getting a mortgage.” I went through the whole housing bubble without it hitting me that the wisecrack no longer makes sense — people were getting a mortgage as fast as they normally get a bag of chips.
Anyway, rents are falling in New York, which happened in the early 1990s but people were telling a few months ago couldn’t happen.
And for sellers, reality has arrived in Manhattan.
I’d say it’s late 2007 here, for those of you in other places. We still have that 30% to 60% drop ahead of us.
It you should use such a phrase. In just the past three weeks, I’ve made the statement “NY and the Northeast are where CA and FL were in late 2006, early 2007″. Irrespective of that, IT’S HERE!
Looks like one of those $749K 2 family semi attached homes in queens was abandoned in the middle of the night…… I walk around the block at night on garbage day see if i can find a freebie to sell on CL. There was no garbage the last 3 weeks, the other night no blinds and an overflowing mailbox.
NPR is doing a stellar job with producing a steady stream of online articles and news stories which do not fall into line with the dead tree MSM FIRE-friendly positions. Keep up the great work, and we will keep sending in our membership contributions
Thursday, March 26, 2009
Fed as super-regulator a super bad idea
Congress is seeking to create legislation to regulate the broken financial system. Commentator Susan Lee says one idea to make the Federal Reserve a super-regulator isn’t very super at all.
TEXT OF COMMENTARY
Kai Ryssdal: There’s a wide range of options open to Congress and the White House as they try to work out the details of these new regulations. Commentator and economist Susan Lee thinks one of those options is one too many.
SUSAN LEE: One totally obvious thing has emerged from our current mess: the need for a better, smarter way to regulate the financial system. And the financial-reform lobby has been furiously generating ideas.
So far there have been zillions of suggestions, and I’ve only heard one that stands out as nonsense: making the Federal Reserve into a super-regulator over the entire financial system.
It’s easy to see why this idea is appealing. Right now, regulatory authority is divided among dozens of state and federal agencies. And so it’s possible for somebody like Bernie Madoff, whose business was regulated by three different entities, to elude detection.
So maybe, just maybe, one regulatory superpower could nail criminal activity by individuals, or even mischief by a single institution. But that’s way different than the notion that one giant regulator can spot the beginning of systemic risk.
The current Fed failed to sight a bunch of alarming problems that were occurring system-wide. It didn’t notice the over-leveraged condition at many bank-holding companies; it was oblivious to the bubble blowing up the real-estate market; it ignored predatory lending practices; and it didn’t recognize that a little oversight of the derivative markets was necessary.
The problem, simply, is that a super-regulator requires super-people. People who have super foresight. Since no such people exist, pretending they do will only give us a false sense of security. And we’ll feel betrayed the next time a crisis hits.
If you doubt me, consider that the creation of this super-regulator is being left to a collection of some of the least super people on the planet. The U.S. Congress. And at the head of this effort is Barney Frank. The same person who had the foresight to declare that the financial position of Fannie Mae and Freddy Mac was absolutely solid. He made this declaration just weeks before those institutions collapsed into the hands of the federal government. I rest my case.
If the definition of insanity is trying the same things over and over while expecting different results…then what’s the word for relying on the same people over and over while expecting different results?
Banks would love a super regulator
Then they would only have to pay off one group of people.
When states get involved you have ambitious prosecutors that go after these guys. I say let’s have some redundancy in the system. I’d also like to incentivise the whole regulatory process.
“Then they would only have to pay off one group of people.”
I think you nailed it. And if said group of people is above the law, because they exist somewhere in between the realm of private corporations and the realm of government agencies, then all the better.
It is also worth mentioning that US Constitution created a separation of powers between the executive, judicial and legislative branches of government. A much better plan would be to distribute any beefed up regulatory enforcement capacity across the three branches of government, in order to avoid the risk that an Übermensch Fed repeats the regulatory glitches of the past three or so decades with accountability to none.
Thursday, March 26, 2009
Iceland in the cold after collapse
Icelandic author Andri Magnason
Iceland’s economy crashed last year after its three largest banks collapsed. Stephen Beard reports on how the country is coping with the fallout.
Andri Magnason, author of “Dreamland: A Self-Help Manual for a Frightened Nation.” (Courtesy of Andri Magnason)
TEXT OF STORY
Kai Ryssdal: Just last year Iceland was officially the happiest place on the planet. That’s how one survey in London described it. A high standard of living with among the best health care and education systems anywhere. Of course, that was before anybody figured out how to say subprime in Icelandic I think.
The global financial crisis crashed onto the island last fall. Its three largest banks collapsed, owing more than 10 times what the whole economy was worth. So Iceland became the first developed country to ask for help from the International Monetary Fund in 30 years. We sent Stephen Beard to the capital, Reykjavik, to see how things are going six months later.
STEPHEN BEARD: Icelandic tour guides usually take you to see volcanos and geysers. But local author Andri Magnason is showing me Borgatun Street, the site of a man-made disaster.
ANDRI MAGNASON: Yeah, we could call this street the “Boulevard of Broken Dreams.”
The street runs through the heart of Reykjavik’s stricken financial district. It’s lined with Iceland’s busted banks.
MAGNASON: Just here in front of us is the headquarters of Kaupthing, where capitalism fell in Iceland.
Iceland’s three biggest banks borrowed and lent billions overseas, but when the credit-crunch struck, the tiny Icelandic economy just wasn’t big enough to bail them out. The crash hit the wider economy hard. The local currency fell 50 percent against the dollar. Unemployment has soared, and pretty soon one in 10 will be out of a job.
Unemployment has soared, and pretty soon one in 10 will be out of a job.
Oh, so its almost as bad as here in the USA.
Examiner dot com
Residential Real Estate Examiner
Surge in FHA loan defaults
March 13, 7:50 AM
Washington Post reporters studied federal data and discovered that FHA (Federal Housing Administration) mortgage defaults are on the rise. Their research shows that the number of borrowers who failed to make more than one payment before defaulting nearby tripled over the past year.
According to the article by Dina ElBoghdady and Dan Keating, “Many industry experts attribute the jump in these instant defaults to factors that include the weak economy, lax scrutiny of prospective borrowers, and most notably, foul play among unscrupulous lenders looking to make a quick buck.”
If someone lapses on their mortgage because they have suddenly lost their job or face a health crisis, that’s understandable these days. But, after everything our country has faced since the subprime lending mess began a few years ago, it is criminal to think that lenders are once again committing fraud and failing to do the work to make sure the people they are lending to can actual repay their loans. Do we have to learn this lesson again?
Even scarier is the fact these loans are government-backed. So, guess who pays when these borrowers default? Not the lenders who messed up and made bad loans. Nope. The FHA has make good on those loans from government reserves - which, in case you aren’t sure, come from taxpayer money. If the FHA reserves run out, Congress will be expected to bail out the FHA, with — you guessed it — taxpayer money.
I just knew there was more bad news for today.
I will look for this to be news on the mainstream this week.
Examiner dot com
Residential Real Estate Examiner
Home prices continue to slide across the country
March 27, 6:45 AM
First American CoreLogic and its LoanPerformance Home Price Index (HPI) shows that resale housing prices dropped by 11.6% in January 2009 when compared with January 2008, which represents 11 consecutive months of deprecation of more than 10%.
Since U.S. home prices peaked in July 2006, they have declined 21.2 percent on a cumulative basis and are currently back to the lowest price level last seen in March 2004.
The number of metropolitan markets experiencing price declines is, by far, the highest ever. As of January 2009, over 700, or nearly three-quarters, of all metropolitan markets were experiencing home price depreciation, up from 254 markets experiencing depreciation in December 2007 and 394 in June 2008.
“Home prices nationally continue to fall, and are no longer confined to just the ’sand’ states. Nearly three quarters of all CBSAs are now experiencing declines, almost three times more than a year ago.The economic downturn and high levels of distressed housing inventory means that the likelihood of a price recovery will not begin until 2010,” said Mark Fleming, chief economist for First American CoreLogic.
Among the country’s 35 largest metropolitan markets, or Core Based Statistical Areas (CBSA), 10 markets show depreciation of more than 20 percent.
CBSA 12 Month HPI Change %
Riverside-San Bernardino-Ontario CA -29.62%
Miami-Miami Beach-Kendall FL -28.79%
Las Vegas-Paradise NV -28.41%
Oakland-Fremont-Hayward CA -27.73%
Cape Coral-Fort Myers FL -27.23%
Los Angeles-Long Beach-Glendale CA -25.14%
Phoenix-Mesa-Scottsdale AZ -24.26%
Fort Lauderdale-Pompano Beach-Deerfield Beach FL -23.48%
San Diego-Carlsbad-San Marcos CA -21.99%
Orlando-Kissimmee FL -20.96%
Tampa-St. Petersburg-Clearwater FL -18.05%
San Francisco-San Mateo-Redwood City CA -15.12%
Washington-Arlington-Alexandria DC-VA-MD-WV -14.77%
Chicago-Naperville-Joliet IL -13.12%
Portland-Vancouver-Beaverton OR-WA -11.62%
Seattle-Bellevue-Everett WA -11.48%
Minneapolis-St. Paul-Bloomington MN-WI -11.10%
Honolulu HI -10.82%
Edison-New Brunswick NJ -9.34%
New York-White Plains-Wayne NY-NJ -8.46%
Boston-Quincy MA -7.25%
St. Louis MO-IL -5.85%
Cleveland-Elyria-Mentor OH -4.84%
Charlotte-Gastonia-Concord NC-SC -4.38%
Atlanta-Sandy Springs-Marietta GA -3.58%
Detroit-Livonia-Dearborn MI -3.44%
Raleigh-Cary NC -3.38%
Salt Lake City UT -2.95%
Philadelphia PA -2.85%
San Antonio TX -1.10%
Denver-Aurora-Broomfield CO 0.97%
Dallas-Plano-Irving TX 1.54%
Houston-Sugar Land-Baytown TX 3.58%
Austin-Round Rock TX 3.92%
Source: First American CoreLogic, LoanPerformance HPI, Single-Family Detached as of January, 2009
Denver up 1%. No way!
Is it really that hard for a federally insured lending program offered by the FHA to police fraud? Or is deliberately lax regulatory effort which turns a blind eye to lending fraud an intentional part of the home price reflation strategy? After all, if the borrower defaults, the loan is federally guaranteed, so the lender has nothing to lose on making fraudulent loans (unless they get caught).
P.S. Exercise special precaution when considering a decision to purchase Florida swamp land.
The Next Hit: Quick Defaults
More FHA-Backed Mortgages Go Bad Without a Single Payment
The Palm Hill Condominium project in West Palm Beach, Fla., has a default rate at 80 percent for loans from one lender. A dozen loans went bad after no payment or one. The apartments built 28 years ago on former Everglades swampland were converted to condominiums three years ago.
The Palm Hill Condominium project in West Palm Beach, Fla., has a default rate at 80 percent for loans from one lender. A dozen loans went bad after no payment or one. The apartments built 28 years ago on former Everglades swampland were converted to condominiums three years ago. (By Joshua Prezant For The Washington Post)
By Dina ElBoghdady and Dan Keating
Washington Post Staff Writers
Sunday, March 8, 2009; Page A01
The last time the housing market was this bad, Congress set up the Federal Housing Administration to insure Depression-era mortgages that lenders wouldn’t otherwise make.
This decade’s housing boom rendered the agency irrelevant. Americans raced to aggressive lenders, seduced by easy credit and loans with no upfront costs. But the subprime mortgage market has crashed and borrowers are flocking back to the FHA, which has become the only option for those who lack hefty down payments or stellar credit. The agency’s historic role in backing mortgages is more crucial now than at any time since its founding.
With the surge in new loans, however, comes a new threat. Many borrowers are defaulting as quickly as they take out the loans. In the past year alone, the number of borrowers who failed to make more than a single payment before defaulting on FHA-backed mortgages has nearly tripled, far outpacing the agency’s overall growth in new loans, according to a Washington Post analysis of federal data.
Many industry experts attribute the jump in these instant defaults to factors that include the weak economy, lax scrutiny of prospective borrowers and most notably, foul play among unscrupulous lenders looking to make a quick buck.
I’ve seen dozens of these PB. (The Palm Hill Condominium)
That’s why I know we have a LONG way to go (whatever the stats say)
I need a beer.
IIIII don’t. ‘Cause I got one in each a my paws this very minute.
In fact, I’m typing this post with my nose.
Yeah, you’re excused. I knew that.
Call me intuitive.
And you missed all my posts yesterday about food, and eggs, and nettles, and washing eggs, and raw beef.
You should read them. There will be a pop quiz at short length soon.
And you missed all my posts yesterday…
Sorry, I was drunk. I shall go read them all RIGHT. THIS. VERY. MINUTE.
Because I want an A+, on this quiz.
I did hear about the nettles, and I deftly blocked your death-rays from exterminating poor nettle-brutalizing dude, there in Orem, Utarr.
Especially the ‘washing eggs’ part, because I get my eggs from the vet up the street, who has many poultries clucking and pooping and laying various eggs about here and there. Sometimes they come poop-bedizened, which I don’t mind, because it reminds me of my childhood.
And I think you missed my posts as well yesterday in the FL thread.
I answered you with 3 replies.
3 whole replies?!
Like I said, I was drunk.
I’ll go see that, too!
But, in case, here’s my email. Then you can rebuke me at length. ‘blue dot is dot best ‘at’ hotmail dot com’.
Serious, today I was so freakin’ wicked all day long, that right now I long for a good rebuking.
that right now I long for a good rebuking.
Nope. I changed my mind. That was a fast change of mind, I know, but I remembered that I don’t wanna be rebuked this year. No rebuking!
Maybe you don’t want to be re-buked, but how about just a single buke, or maybe two, in 2009 ? I heard that buking is one of the most popular indoor sports, although it can be done outdoors, also.
Maybe you don’t want to be re-buked, but how about just a single buke, or maybe two, in 2009 ?
You are pretty sassy, I’ve noticed. Overall, that’s probably good, although in this case, I’m thinking about becoming enraged.
Anyway, yeah, sure! Go ahead and ‘buke’ me. I haven’t done that, yet. Is it fun? Does it hurt? Can it be both?
I’ve been ‘buked an’ I’ve been scorned, children
I’ve been ‘buked an’ I’ve been scorned
I’ve been talked about, sho’s you’re born
Dere is trouble all over dis world
Children, dere is trouble all over dis world
Ain’t gwine to lay my ‘ligion down
Children, ain’t gwine to lay my ‘ligion down
We’re in Palm Coast, FL. It’s a heavily wooded community of about 68k between Daytona Beach and St. Augustine. It borders the Atlantic and stretches about 4 miles inland.
Unemployment here is 14%. Flagler County was the fastest growing county in the U.S. during the boom. I read the other day that it is still fourth! With 14% unemployment?!
The town was a tree farm owned by ITT, which decided to develop it with a master plan of quarter-acre lots. It was incorporated in 2000. All homes are custom-built, no tracts, mostly 3br/2ba, about 1800sf. The builders range from small shops to national companies. Many are now gone. But there are no unfinished homes.
Few condos except on the beach. So we have not been hit with that blight. There are a couple high-priced gated golf communities, mainly sf homes. Tiger Woods spends time here. His yacht is sometimes berthed on the intracoastal.
The average lot price shot from $5k in 2000 to $75k at the top, now half that at best. We moved here in 2004 and there was the constant sound of lots being cleared for new homes. It’s been quiet since mid 2006.
The town is mainly retirees. Many want to move to condos somewhere else but can’t sell their homes. Not for the prices they want. Most paid cash or are carrying small mortgages. But they got used to seeing prices go up, up, up. They’ve been trying to ride out the downturn. Now they have to deal with the stock market crash. They feel besieged. But we’re doing better than many other FL communities with big tract and condo developments.
We have our share of renters who come and go. Some don’t keep up the property thinking the landlord should do it but that’s not in the lease. Local government is doing a good job enforcing code and fining tenants and landlords who let things slide. So the town still looks good. For now.
The city government recently moved out of city hall so they could lease it to a tech company from another state. Jobs and revenue. The city now rents space in an office park that completed just as the real estate market crashed.
Based on web sites I visit, foreclosures and short sales here seem to have declined a great deal. A lot of speculators have been shaken out. I am not a realtor and don’t talk regularly with any, so the web stats could be misleading. I hope not.
Kohls just opened a new store, which surprised everybody. New retail, especially restaurants, is coming in as long as the price is right. An upscale strip of restaurants and shops got slammed hard so that is not being repeated.
I think we are a ray of light in a terrible market but few of my neighbors would agree.
“The average lot price shot from $5k in 2000 to $75k at the top, now half that at best. We moved here in 2004 and there was the constant sound of lots being cleared for new homes. It’s been quiet since mid 2006.”
I tell people this.
It will hit the 10s and 20s.
I know the area.
Nobody has to buy, nobody has to catch a falling knife, and it really makes no sense as a long-term investment strategy to buy when home prices are still falling and unemployment is still climbing.
But don’t take my word for it, if you think the DataQuack analysts know better — go for it!
San Francisco Chronicle
Bargain home prices attract investors, novices
Carolyn Said, Chronicle Staff Writer
Sunday, March 29, 2009
Despite a tattered economy and grim real estate market, every month more than 5,000 people buy a house in the Bay Area.
Are they fools to invest in homes that could plunge in value, or are they fortunate folks taking advantage of bargains?
“You hear all this talk about how nobody wants to catch a falling knife,” said MDA DataQuick analyst Andrew LePage, referring to the expression for investing in a plunging market. “Despite that, there are plenty of people who have decided that it is time to buy. They are bargain hunters buying because they perceive a lot of these homes as good deals.”
A Chronicle analysis of sales data from MDA DataQuick, a San Diego real estate research firm, indicates that the majority of local buyers are either first-time homeowners or investors taking advantage of the huge glut of fire-sale-priced distressed properties - bank-owned foreclosures, short sales and homes surrounded by foreclosures and short sales.
“At least two-thirds of the market is split between investors and first-time buyers,” said LePage. “The balance is mainly the people who have to buy because of a new job or other life events.”
Many homes here have returned to the realm of reasonable prices, with the median sale price hovering below $300,000. That means that even people with incomes around the Bay Area’s median of $80,000 or so can find properties within their price range.
“They are able to get a toehold because things are becoming so much more affordable,” said Stephen Bloom, a Realtor with Lawton Associates in Berkeley.
The comp prices continue to drop at a high rate in California. But I have seen no evidence yet that prices have bottomed out, especially given the news that investors and first-time buyers are driving the market. I have also seen no evidence the high end of the market has capitulated yet, as, for instance, the median SFR list price in our (predominantly middle class) zip code, 92127, is stuck at $1,150,000, where it has been for maybe a year or more already. I don’t expect the market to bottom out before first time buyers and investors are too scared or broke to participate any more.
Thursday, March 26, 2009, 6:00am PDT | Modified: Friday, March 27, 2009, 9:21am
California home sales up 83% as prices plunge
San Francisco Business Times
The number of homes sold in California rose 83 percent in February compared with last year, as the median existing home price dropped 41 percent, according to the California Association of Realtors.
“Home sales in California continue to be considerably stronger than the nationwide sales figures,” said association president James Liptak, in a news release Wednesday. “The market will continue to register large, but diminishing year-to-year percentage gains in the coming months, as current sales are compared against the extremely low numbers that prevailed during the early months of the credit crunch.”
The statewide median existing home price was $247,590, 41 percent less than February 2008’s median home price of $418,260. The February 2009 median was 2 percent less than in January.
“The California median price has declined by a larger margin than the nationwide median price,” said association vice president and chief economist Leslie Appleton-Young. “This can be attributed to the under-$500,000 portion of the market, which has experienced larger price declines than the other market segments due to the large share of distressed homes for sale. This further contributed to the decline in the statewide median.”
” for instance, the median SFR list price in our (predominantly middle class) zip code, 92127, is stuck at $1,150,000, where it has been for maybe a year or more already. ”
Laughing hysterically. Thanks for the giggle.
My BIL who is a realtor tells me that the market for lower end REO’s in the SFV is hot. He told me that numerous low priced REO’s are getting multiple offers. I responded that of course there would be activity in these really low priced houses.
The only reason there is increased activity is because of the artificially low interest rates and low prices. The difference now is that people are NOT buying for future appreciation, they are simply buying because it is cheaper than renting.
That said, the majority of these listings are still crap and overpriced!!! I am just thoroughly disgusted with the whole manipulation of the market. I think that I’m going to find another blog, one that talks about gardening or something soothing!!!
I’m willing to bet real money that when he says that it’s not a “possibility”, he really means it’s virtually guaranteed.
There is so much money to be made here, it’s like dollar notes everywhere.
Britain may have to go to the IMF for a huge financial bailout, the influential investor George Soros warns today.
The man who made $1 billion on Black Wednesday in 1992 told The Times that Britain was particularly vulnerable to the economic crisis.
Mr Soros – speaking days after an auction of government bonds failed for the first time in 14 years, ringing alarm bells about Britain’s ability to fund its growing debts – said that Gordon Brown might have to go begging for billions of pounds in international aid. He also warned that next week’s G20 summit in London was the last chance to avert a full-scale depression that could prove worse than that in the 1930s.
“You have a problem that the banking system is bigger than the economy . . . so for Britain to absorb it alone would really pile up the debt,” he said. Asked about the chances of Britain having to seek help from the International Monetary Fund, he said that if the banking system continued to collapse, it was “a possibility”. At this stage, he added, it was “not a likelihood”.
This is stupid. The IMF was never intended to be a safety net for the majors. It is a way to control little weak governments and transfer wealth to them for political control. The model is so completely broken.
But it has been.
The UK was bailed out by the IMF in the 1980’s. This is hardly the first time.
I leave the observation that the UK owns 5% of the IMF as an obvious easy navel-gazing exercise for the reader.
Does this mean it will get cheaper to travel to England? Dollar to pound is a lot cheaper than it was in 1998. At that time I need $1.67 to buy one british pound.
Want to take mom there before her cancer gets worse.
I’m betting on parity or even less.
Timeframe should be relatively soon but I’m not gonna comment on that.
Parity??? Wow. That’s a helluva win if you’re short GBP.
Oh, it’s virtually guaranteed. I have a hard time imagining otherwise.
The reason I am not commenting on the timeframe is kinda obvious. If your mom wants to go, and things are uncertain to use a euphemism, the financial part isn’t the dominant operating concern if you get my drift.
Financially, I’ll stick to the basics. Short the pound. It’s going to parity.
Why is this not going on at the big banks??? They’ve taken a lot more money than GM has.
Don’t worry, daah-link, even OBWan needs to get re-elected.
How many people here remember that FDR changed his tune quite abruptly? Not many, I bet.
He used to be Governor of NY during the crash. Does anyone remember that part?
It’s how the game works.
Well now I have to listen to everyone around here say “it’s not fair!!! It’s not fair!!! Everybody’s against us!!!” And so on.
General Motors Corp. Chairman and Chief Executive Rick Wagoner has agreed to step down as part of an agreement to get a new package of federal aid for the auto maker, people familiar with the matter said.
An administration official confirmed that Mr. Wagoner was asked to step down by the administration as a precondition for ongoing restructuring within the company.
“Help me, OBWan, you’re my only hope.”
OOPS - To GrizzlyBear, on his comment yesterday re: my housing security systems - “Aww, Jane, bless ya. I’ve got my own big bear! Have been in the breed for more than 20 years, and I can’t imagine life without one by my side. I even showed this one in his early years and, boy, was that a comedy of errors on my part”
Yay! Great to find a Kindred Spirit! As well as being security systems, they are great companions, IMHO. The downside with rescues, you don’t know their ages, and they are stoic. When they start declining, it is because they simply can’t hold it together anymore, and it is precipitous. I just lost one to age who I’d only had for four years, and he was the best. The rescue org assigned me a “replacement” immediately - they are crawling with Akitas in this downturn - but it takes time to sort out the swim lanes. And of course, it is never the same kind of bond.
Seems so ancient now:
Nah, someone will just HAVE TO post a reply and ruin this awesome great last post.
Muir Last = FAIL.
March 30 (Bloomberg) — The Monetary Authority of Singapore may devalue the city’s currency and allow it to drop 4 percent against the U.S. dollar by June 30 to aid exporters and lift the economy out of the worst recession since independence in 1965.
March 29 (Bloomberg) — The Obama administration plans to give General Motors Corp. enough government aid to restructure over the next 60 days, while Chrysler LLC is being told it must complete a deal with Italian automaker Fiat SpA, according to a government official.
March 29, 2009
Why Are These Renters Smiling?
By ELIZABETH A. HARRIS
WHEN Whitney Pettyjohn and her 19-year-old sister, Chelsey, moved to Brooklyn last August, the best deal they could find in their price range was a two-bedroom in Bushwick with unreliable heat, nine blocks from the Morgan Avenue stop on the L train. It cost $1,700 per month.
When they looked again this year, they found a very different market. Four weeks ago, they moved two stops closer to Manhattan, into an apartment with more character and more storage for the exact same price.
“We’re one block from the subway,” Ms. Pettyjohn, 24, said. “It’s like living in a dream!”
Rents are down throughout New York. According to the February Manhattan Rental Market Report produced by the Real Estate Group, a New York brokerage firm, rents in the borough have fallen “across the board.”
The biggest drop was in studio apartments in doorman buildings, which have fallen 8.33 percent from the same time last year.
Many people who signed leases in the bubble years are paying much more in rent than what their apartments would get today. So when their leases expire, some New Yorkers are trading up for better deals, finding comparable places for less money or nicer apartments that do not come with a big rent increase.
“No one’s willing to pay more now, because there’s always another deal next door or down the block,” said Georgia Kaporis, an associate broker at Citi Habitats. “They’re just upgrading for less.”
Erika Allen, for example, moved earlier this month from a first-floor studio in the East Village between Avenues B and C. Only through a remarkable New York-style exercise in stacking belongings and maximizing space did Ms. Allen, 21, a journalism student, manage to share the place with her boyfriend, Clark Hassler, 25, a professional skateboarder. (Picture shoe storage above the refrigerator.) They were paying $1,885.
For $15 more a month, the couple now have a one-bedroom five blocks from their old apartment that is closer to the subway, has a working fireplace and, perhaps most important, more privacy.
“I was looking forward to having a bedroom door,” Ms. Allen said. “I love to have people over, but it’s hard when you have to have them sit on your bed. It’s just crazy the things you get used to.”
Though more apartments are becoming more affordable as rents come down from their lofty peak, New York prices might still seem shocking to the uninitiated.
In February, the average rent for a one-bedroom apartment in a nondoorman building was $2,632, according to the Real Estate Group. It was $3,395 for a one-bedroom in a doorman building.
“Probably somebody who’s relocating would still be surprised today: ‘This is the size of apartment I get for this price?’ ” said Caroline Bass, an associate broker with Citi Habitats. “But New Yorkers think this is great right now. Maybe you appreciate it more if you spend more time here.”
Another bonus for New Yorkers concerns the broker fee, which has usually been paid by the renter and can add 15 percent of a year’s rent to the initial cost of leasing an apartment. These days, as attracting good tenants has become more difficult, owners have started paying the broker fees themselves.
According to Halstead Properties, out of 4,230 open and exclusive listings for apartments between Feb. 15 and March 15, 30 percent offered owner payment of the broker fee. Over the same period in 2008, only 8 percent of Halstead’s apartments offered that incentive.
A big jump, but it still leaves the majority of apartments requiring tenants to pay the fee.
“There’s so much media attention paid to no fee, free rent, rental prices coming down, that now everybody has an image that everything is a no fee,” Ms. Bass added. “But it’s not true.”
Liz Sterling, a client and friend of Ms. Bass, stepped up to a larger, less expensive apartment in a neighborhood she prefers, but to do so she had to pay a broker fee. It was, she said, worth it.
“I did not think I could get an apartment as nice as I did,” she said.
When she moved into a studio apartment in Midtown last year, $1,800 was the best deal she could find. “It was the biggest place I looked at that I could afford,” she said.
“I wanted to live on the Lower East Side, but I couldn’t find any place that I could afford,” she said. “I figured if I couldn’t live in a neighborhood I really wanted to, I’d at least live someplace convenient.”
From her Midtown studio, Ms. Sterling, 28, could walk to work at Christie’s, where she is a specialist in the American paintings department, and to Hunter College, where she is studying for a master’s degree in art history.
After moving in, however, she discovered the apartment had some quirks, including little sunlight, the smell of greasy meat from the restaurant below (Ms. Sterling does not eat meat) and an acupuncture parlor down the hall that stayed open very, very late and served a male clientele.
So toward the end of her lease, she began looking elsewhere. When she saw how far rents had fallen, she asked her landlord to drop hers to $1,650 per month. But, she said, “they wouldn’t lower my rent. So I moved.”
She looked at some 25 apartments and finally settled on a large one-bedroom in just the location she’d hoped for, the Lower East Side. “It’s exactly where I wanted to be,” Ms. Sterling said.
According to her broker, Ms. Bass of Citi Habitats, the asking price was $2,400 a month for the apartment. It sat vacant for weeks and the building had several other vacancies to fill, so the landlord was amenable to lowering the price drastically — and throwing in a month of free rent. Ms. Sterling signed a two-year lease for $1,700 per month — $100 less than for the studio that smelled of hamburgers. She moved in this month.
Seven hundred dollars less than the asking price is a striking drop. But Marc Lewis, the president of Century 21 New York, said a lot of surprising things are happening in the rental market right now.
One new experience for Mr. Lewis is being told by landlords that they will accept tenants with bad — even very bad — credit.
“Imagine that, saying, ‘I’ll take anyone,’ ” Mr. Lewis exclaimed. “I’ve never seen that in 36 years.”
Roberta Axelrod, the director of residential sales and rentals at Time Equities, a real estate developer and management company, says that from the owner’s perspective, the important thing is to keep apartments filled.
“Look, we would rather rent the apartments for more than for less if we can,” she said. But, she added, she believes that the rental market will strengthen again in the future. “I wouldn’t panic,” she said.
With great deals available, some renters may be tempted to break their leases. But, said Dov Treiman, a lawyer and the editor of The Housing Court Reporter, they probably won’t have much luck. Landlords are not obligated to let tenants out of a lease.
It’s impossible to know when rents will stop falling. Gregory J. Heym, the chief economist at Terra Holdings, which owns Halstead and Brown Harris Stevens, said there are two key indicators to watch: the for-sale market and the job market.
“When do prices reach the point when people start buying again, or when does the confidence return?” he said. “Also look at hiring, that’s one of the more direct links to the rental market.”
Rents, he said, are unlikely to rise until jobs start coming back, and the Independent Budget Office of New York does not expect the city to add jobs again until 2011.
Dire economic projections like that, of course, make people nervous.
Kiley Bates, 34, a freelance fashion stylist and event producer, and her boyfriend, Patrick Brennan, 28, an editor at Scholastic, decided that in this economy saving money was paramount.
“I’m a freelancer, and I was getting a little worried about work,” Ms. Bates said. So even though she and Mr. Brennan liked the spacious apartment they shared on the border of Park Slope and Gowanus, they realized they could be paying less than $2,350 a month.
“At first I was like, ‘what if we found a place that was $2,000 a month — that’d be amazing!’ ” Ms. Bates said. “But then we saw that there were places that were even cheaper.”
The apartment they moved to this month was another one-bedroom, slightly smaller than their old place, near the Grand Street stop on the L train in Williamsburg, Brooklyn, for $1,775.
Even New Yorkers who feel secure in their jobs are moving to save money.
Elizabeth McKeveny, who works in academic fund-raising, and her boyfriend, Sean Hamel, who works in public relations, were paying $2,800 for a one-bedroom on the Upper West Side.
“It was a good building, good people,” Mr. Hamel said. “We just wanted to find something cheaper.”
Both 27, they moved to a one-bedroom in Midtown last month, in a prewar building with high ceilings and hardwood floors, for which they pay $2,000 per month.
“It definitely felt like things were more, quote-unquote, negotiable, in terms of rent and broker fees,” Mr. Hamel said, comparing their apartment hunt this year with their search last year.
“Prices are still coming down in virtually every sector,” said Daniel Baum, the chief operating officer of the Real Estate Group. “There’s a general theme out there. It’s called ‘Let’s make a deal.’ ”
Name:Ben Jones Location:Northern Arizona, United StatesTo donate by mail, or to otherwise contact this blogger, please send emails to: email@example.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Subscribe to comments
Photo Submission: firstname.lastname@example.org
View the HBB Photo Gallery *updated 4/13/2008