Enough Is Enough In California
The Lake County News reports from California. “The loss of homes to foreclosure across the United States, California and Lake County is showing no signs of slowing, and local Realtors are warning of another wave of foreclosed homes that is about to come onto the market. Anita McKee, president of the Lake County Association of Realtors, said Realtors are continuing to see a lot of activity. ‘The foreclosure market is really bad at the moment,’ she said. ‘Some of the agents are getting four a day, every day.’”
“Some areas of the county are being hit especially hard, including the Clear Lake Riviera, where McKee said some homes are selling for 40 and 50 percent less than they would ave in 2006. With those drops in value, it’s very hard for homeowners who are not in foreclosure to get their money out of the homes, said McKee.”
“McKee said they’re hearing that the banks are holding back on another group of foreclosures set to come onto the market until the current foreclosure are sold and cleared. ‘We’re expecting a lot more to come,’ said McKee.”
“Clearlake Realtor Dave Hughes, who is focusing on foreclosures in the south county, said he’s seen a small spike in the number of foreclosure listings, and is expecting to see more foreclosures coming onto the market in the next 30 to 60 days. Hughes said he believes Hidden Valley Lake is the most active area in Lake County for foreclosures. ‘It saw the best surge in values when things were good.’”
“‘It’s a good time to buy,’ said Hughes. ‘Even if things go down a lite more, you’re not going to get hurt that bad.’”
The LA Daily News. “The mortgage meltdown that spread into a global economic crisis started in the Valley’s own backyard, according to a new analysis from the Center for Public Integrity. Countrywide Financial Corp., formerly headquartered at 4500 Park Granada in Calabasas, topped the center’s list of 25 lenders responsible for extending subprime mortgages to homeowners who might not otherwise have qualified for a mortgage.”
“Those lenders accounted for nearly $998 billion of the $1.4 trillion in subprime mortgages made from 2005 to 2007, according to the report. ‘It was just a real lust for high yields and profits. Call it greed if you want,’ said John Dunbar, director of the center’s mortgage analysis project.”
“An investigation by the nonprofit journalism organization found that nine of the top 10 subprime lenders were based in Los Angeles or Orange counties, including all of the top five — Countrywide, Ameriquest Mortgage Co., New Century Financial Corp., First Franklin Corp. and Long Beach Mortgage Co.”
“‘The mega-banks that funded the subprime industry were not victims of an unforeseen financial collapse, as they have sometimes portrayed themselves,’ center executive director Bill Buzenberg said in a statement. ‘These banks were deliberate enablers that bankrolled the type of lending that’s now threatening the financial system.’”
“Bob Davis, executive VP of the American Bankers Association, said it was easy to find a market for these kind of investments in those boom days. ‘There was an investor market that was willing to take a benign view toward potential risk,’ he said. ‘It was the detonation that led to other financial problems.’”
The Recordnet. “The House of Representatives voted Thursday to outlaw ‘liar loans,’ ballooning mortgage payments and other bank practices that lawmakers say preyed on consumers who couldn’t afford their homes. The proposal is one of several that Democrats are pushing to tighten controls on an industry that critics say undermined the economy by underwriting risky loans, then passing them off to investors.”
“Under the bill, banks offering other than traditional fixed-rate mortgages would have to verify a person’s credit history and income and make a ‘reasonable and good faith determination’ that a loan can be repaid. Democrats said it would ban only the most egregious lending practices and wouldn’t keep most people from getting a mortgage they can afford.”
“‘The simple fact is that our laws and enforcement efforts did not keep pace with the complexities of a global economy and a financial industry where the greed of some trumped common sense,’ said Speaker Nancy Pelosi, D-San Francisco.”
The Lincoln Messenger. “Now is the best time to buy a house since the 1950s, according to some area Realtors. With home sales reaching their highest point since 2005, the housing market has turned the corner, said Bob Lagussi, a Realtor consultant and broker for Keller Williams Realty. Although Lagussi said some potential buyers are still waiting for the market to bottom out, he said the market bottomed out at the end of 2008 and the first part of 2009.”
“‘I’m seeing an improvement,’ Lagussi said. ‘I’m seeing rising prices in Placer County and I think that’s a good thing.’”
“Statewide, the median price of homes dropped 40.1 percent from last year to $256,850. ‘I don’t think it’s doom and gloom,’ said Gene Thorpe, president-elect of the Placer County Association of Realtors and a director for the California Association of Realtors. ‘It’s unfortunate for the people who bought in 2005 at the peak of artificially inflated prices but the net result of the lower prices are that hundreds of thousands of people who have not been able to buy a home before can.’”
“Home inventories are so high because so many homeowners have been forced out by the market and more than 1-million homes nationwide are going into foreclosure, according to Thorpe. ‘It’s not that they weren’t faithful,’ Thorpe said. ‘The sub-prime mortgages broke their backs.’”
The Sacramento Bee. “California’s 400-mile Central Valley and its largest metro area, Sacramento, are almost perfect poster children for housing boom excesses that doubled home values, then quickly shredded them in a torrent of foreclosures. How will we view this crisis in 10 years? The topic filled the room Thursday when Modesto-based Great Valley Center took a look ahead at its annual conference in the capital.”
“It was said we’ll wonder in 2019 what builders were thinking in the century’s opening decade. What was with all the 3,000-square-foot houses – and larger – in Manteca, Modesto and Merced, to name just a few area cities not famous for great-paying jobs? Gone will be the risky loans – with few questions asked – that made such homes affordable in 2004.”
“‘There are too many 3,000-square-foot homes for the low median incomes in the Valley,’ said Chelsey Norton, a planning consultant with Sacramento-based Mintier Harnish.”
“She said it’s not just that most people can’t afford them. Many won’t want them.”
The Modesto Bee. “Housing experts said a glut of foreclosed homes now offered at a fraction of their 2007 value is not making much of a dent in California’s need for affordable housing. A study predicts that the state will come up 3.7 million homes short of the need for low-income families by 2020, said Chelsey Norton of Mintier Harnish. Meanwhile, demand for large, upper-end suburban homes — which branded the Northern San Joaquin Valley the epicenter of the bank-owned home crisis — should be satisfied through 2030, Norton said.”
“‘Enough is enough, and we have enough,’ she said. ‘We need to build affordable housing that matches the income of the Central Valley.’”
The Record Searchlight. “Talks continue in Sacramento about extending the tax credit for the purchase of new homes. To date, the state has received nearly 4,900 applications for a total credit claimed of $47.3 million, an average credit of about $9,600.’The current tax credit is working quite well beyond our expectations,” said Tim Coyle, senior VP of the California Building Industry Association in Sacramento. ‘Here is the real problem: If you go and buy a home, you may not get the home delivered in five or six months, and the tax credit may be gone by then.’”
“Not extending the credit could be devastating, Coyle said. ‘We are concerned about derailing what clearly is a recovery prematurely,’ Coyle said.”
“Eight single-family home permits - two more than in March - were issued in Redding in April. All but three were pulled by Ochoa & Shehan, the most the Redding builder has taken out for one month this year. Four of the five housing starts Ochoa & Shehan took out in April were in its Crown Meadows Estates II subdivision, where prices start at just under $240,000. Four of the homes Ochoa & Shehan started last month were presold.”
“Ashley Wagar of Ochoa & Shehan said some customers are taking advantage of the state’s $10,000 tax credit to buyers who purchase new homes. In fact, many choose to buy an existing new home, rather than wait, so they’re assured of getting the credit. The credit expires March 1, 2010, or until the $100 million in funding set aside runs out.”
“‘A lot of them (existing homes) have been swooped up and that is why we have started some new specs (speculative homes),’ Wagar said.”
“Jeb Allen of Palomar Builders and S&J Development said the new-home purchase credit hasn’t had the impact he’d hoped, but that hasn’t slowed his company down. Allen said he put five homes in escrow in April. What’s more, he’s not afraid to start construction on a house he hasn’t sold.”
“‘I think if you are building something, you show that you are strong, you are here to stay, and people will come along and buy them,’ Allen said.”
The Daily News Group. “Menlo Park officials will spend $2 million in developers’ fees to help restore neighborhoods ravaged by house foreclosures. The City Council earlier this week approved spending the money to buy and renovate 10 to 15 foreclosed homes in the city, most of them in the low-income Belle Haven neighborhood east of Highway 101. The city will then sell the homes to residents on its affordable housing wait list.”
“The foreclosure acquisition program did, however, draw the ire of the Silicon Valley Realtors Association, which contends that by snatching up homes for sale the city will cut into realtors’ markets and drive up prices for homebuyers. ‘According to our numbers, homes priced accordingly in (Belle Haven) are selling quickly because of the lower prices in the soft market,’ said Adam Montgomery, the association’s government affairs director.”
“He added that many lower-to-middle income families are already taking advantage of those deals without city assistance.”
The North County Times. “In April the median price for a detached house was $390,000, an increase from $364,000 in March but still down 24 percent from $510,000 a year earlier, according to the North San Diego County Association of Realtors. At the same time, the report showed two distinctly different markets: the high-end, with few foreclosures and no sales; and the low-end, with lots of foreclosures and booming sales.”
“For example, the market in Del Mar has 30 months of inventory. On the other hand, western Vista showed two months of inventory. The median price increase could be the result of more ‘normal’ sellers getting into the market —- homeowners who have taken care of their properties commanding a premium over a glut of beat-up foreclosures, said Kurt Kinsey, a real estate agent in Oceanside.”
“And buyers are looking to stay in the home for longer, meaning they might be willing to pay more, Kinsey said. ‘A home is becoming a home again,’ he said, speculating that the average homeowner during the last few years moved after two years and that time in a home is going to increase to five years.”
“Analysts say banks have slowed the foreclosure process, meaning thousands of homes in foreclosure have not hit the market. For even more skepticism, Jim Klinge, a real estate agent in Carlsbad, said the buying frenzy on low-end properties could be purely seasonal —- sales traditionally pick up during the summer.’
“‘My guess is it will settle down again,’ Klinge said regarding the emerging bidding wars and 10 to 15 offers per listing. ‘You’ve got a bunch more foreclosures coming on, so when you get to the last three to four months of this year, you’ll get one to two offers —- if you’re lucky.’”
The Santa Cruz Sentinel. “Even though the median home price dropped 37 percent last year, Santa Cruz County remains unaffordable for many first-time buyers. Santa Cruz County is the fourth most expensive place in the nation to buy a home after San Francisco, New York and San Jose, according to a study.”
“Locally, the median price of a single-family home plummeted from $630,000 in 2007 to $400,000 in 2008, but homeownership is still out of reach for households with income under $130,000, according to the center’s calculations. Meanwhile, a two-bedroom rental cost $1,590 a month on average.”
“Local renters say the analysis is on target. Aptos accountant Trish Beckwith crunched the numbers for a $400,000 home. Putting 10 percent down would mean a $360,000 mortgage. Assuming 5.5 percent interest, with property taxes and insurance, the monthly payment would be about $2,600, she figured. ‘That’s a ridiculous payment for a first-time homebuyer,’ she said.”
“While homes in Watsonville are selling for $200,000 to $400,000, those closer to Santa Cruz are priced higher but need repairs, putting first-time buyers in a bind. Case in point: A home at 509 Clubhouse Drive in Aptos went on the market in January. The bank that foreclosed asked $399,000, and Beckwith found herself vying with eight other bidders.”
“Firefighter Danny Saracino bid $435,000. At 29, he’s been watching the market for more than a year, living in a 225-square-foot studio in Santa Cruz. He recently moved to Live Oak, where he pays $1,000 a month. ‘The other guys I work with are in the same boat — we’re outbid by investors going for their second or third home,’ he said. ‘Guys my age, the only ones who can buy have family in the area and can save up for a down payment.’”
“The home in Aptos, like others he’s seen, needed work. Saracino was willing to do it himself, but putting 10 percent down and paying the required private mortgage insurance, he worried about not having money for the repairs. ‘I’m a single guy, I can’t go up to $500,000,’ he said.”
“After rejecting Saracino’s bid, the bank called him back but he felt with salary concessions at work he would be stretching himself too far. He walked away. The home remains vacant.”
“‘For people in Santa Cruz, seeing how much value your home has lost, or hoping to get into homeownership, it’s discouraging from either side,’ said Maya Brennan, researcher with the Center for Housing Policy.”
‘My guess is it will settle down again,’ Klinge said regarding the emerging bidding wars and 10 to 15 offers per listing.’
‘I’m a single guy, I can’t go up to $500,000,’ he said.’
So I ask, congress, media, anyone who will listen:
Why should he go up to half a million? What in the heck are people thinking? We are encouraging thousands of people to hang themselves financially in this country. For speculators, I could care less, but the reckless disregard of this mania we’ve experienced is inexcusable.
We talked about this in Las Vegas in February. I told the group that one reason I still do this blog is that the focus keeps shifting; that the story just won’t end. So I guess I’ll keep fighting what should not be happening, and we’ll see where this thing goes.
We are encouraging thousands of people to hang themselves financially in this country.
I agree, Ben — I am totally befuddled why our politicians think encouraging households to financially hang themselves is good policy.
Well, we’re all told that if we spend within our means, then our economy will never recover. Our future depends on reckless spending. yaddah yaddah. I think this is a lot of bull, somehow we can and will wean ourselves from this plumped-up lifestyle. I’m truly shocked to discover that it had become so-called conventional wisdom that folks lived in a home, and drove a car only 3 years. I live in SoCal, near the coast, and the rest of the country thinks we’re wacko, but I don’t know one person who has flipped cars and houses at this rate. Though I hang out with those crazy, unemployable liberal arts degree people, rather than those saavy “use your home equity to create wealth” business degree folks.
Pardon me for saying so, but every person I know that tapped their HELOC was a what you just described. Most business degree folks just couldn’t believe it because it never made sense… it doesn’t fit with any financial model from any B-school.
Chuck Ponzi
MBA here. Taught me the incredible latitude of possibilities. -
The whole system is dependent upon a never ending stream of people who will take on excess debt! The government knows exactly what it is doing!
Looks like you just described a classic pyramid scheme.
The Washington Business Journal reporter who covered the story about the local government simultaneously trying to keep prices elevated to prevent foreclosures and provide housing assistance for low-income families, in the same neighborhoods, has been doing radio interviews this morning. They seem to be trying to avoid saying what should be obvious to everyone.. this intervention is only making things worse.
I’m glad you’ve kept the blog going, Ben.
“Home inventories are so high because so many homeowners have been forced out by the market and more than 1-million homes nationwide are going into foreclosure, according to Thorpe. ‘It’s not that they weren’t faithful,’ Thorpe said. ‘The sub-prime mortgages broke their backs.’
What Suzanne, NAR and the Basement Brokers Giveth, the Bankster Gods taketh away…with substancial pain. Play it again, Sam !
Sweet dreams are made of this
Who am I to disagree?
Travel the world and the seven seas
Everybody’s looking for something
Some of them want to use you
Some of them want to get used by you
Some of them want to abuse you
Some of them want to be abused
All those buyers who were forced at gunpoint to take extra stupid loan, lie about their income, lie about it being a primary residence. And all the other poor victims that were forced to suck the pretend equity out of their homes or use them as an ATM. Few were truly victims IMHO. So many thought they were so clever because they had reached the so called american dream with no real effort. Constant consumption as entertainment. They were faithful to what and victims of whom, exactly Mr. Thorpe, beyond delusions of grandure & greed?
I’m assuming that local governments “providing housing to low income families” translates into Section 8 types being artificially planted in neighborhoods where they will only drag down the home values and quality of life. Personally, I think the do-gooder liberal types who vote for Nanny State politicians should be first on the list to get a “low income family” next door.
Personally, I think the do-gooder liberal types who vote for Nanny State politicians should be first on the list to get a “low income family” next door.
Yep. We moved to get away from section 8. They absolutely do not give a crap about anyone but themselves. I’ve yet to read anything about section 8 renters on the HBB that was too negative.
The best thing for a neighborhood is to get the prices down enough so that young energetic couples can afford to buy in. They’ll put in the ’sweat equity’ to refurbish just about anything they can afford to.
So why the delay government? As Ben keeps noting, you are only making the problem worse.
Got Popcorn?
Neil
Neil: Why do you think that is that they don’t give a crap? How does that happen to people? I remember seeing a place in Germany many years ago that was supposedly a ghetto, but was immaculate and well cared for. And the flip side question is how do you make it stop? How do you get to where on a policy level you can even acknowledge the problem?
It’s political suicide to acknowledge the problem, so we all pretend that these “low income” types are “victims” who need our help. Then, they are forced upon us and our families…in our neighborhoods and our schools where people pay to get away from all of that. It’s never-ending, and will only get worse until someone gets the cajones to actually address the problem head-on.
As I read this last post, and others like it in the past couple weeks, I get the impression that the RE/lending industry, and millions of potential sellers are betting it all that the seasonal upswing will completely carry us out of this.
Real prices may in fact creep up for a few months, in some of the areas that are already hard hit or that are doing fairly well economically in relative terms. But count on it - if sellers sense an uptick, they’ll raise the price bar, desperately trying to minimize their losses, and the buyer-seller standoff will still continue if the houses remain unaffordable by traditional measures. Then the season is over, and that’s when I’m guessing the true desperation and capitulation will finally start setting in.
In CA, who knows. Too many people crazy with their personal finances out there. I can’t figure.
“In CA, who knows.”
Mr. McGuire: I want to say one word to you. Just one word.
Benjamin: Yes, sir.
Mr. McGuire: Are you listening?
Benjamin: Yes, I am.
Mr. McGuire:
Plastics.Trainwreck.Benjamin: Just how do you mean that, sir?
Mr Mortgage warned us this would happen. The median would skew up due to the growing Alt-A foreclosures giving the appearance of rising prices. The NAR will exploit this and the knifecatchers will jump in.
SO PREDICTABLE.
It’s like Tito’s Tacos near my house. Dozens of people line up for greaseball food why? Because dozens of people are in line for greaseball food.
Tito’s is not that bad … would never wait in line for it but i like
Titos in Long Beach? I live right down the street, I love greasy Tacos.
You live near Tito’s! Lucky dog!
Used to work down the street…
Tito’s used to be great in the early days, for what it was. At that time, it was really tasty food really cheap and we were young.
In Miami I am seeing properties move real fast.
And, there is plenty of money on the sidelines.
Houses in the Gables, Pinecrest, Grove are not long on the market.
And prices in those regions have bottomed.
I can pinpoint the month: April.
Right after the FEDs announcement of QE, and trillions for banks and stimulus.
IMO those buying in the areas I mentioned are doing the correct thing as investors.
I can pinpoint the month: April.
For this wave. Now what happens when the hot weather rolls in? April is still nice in Florida. What happens when the investors do not cash flow?
I say this as rent is dropping everywhere. The consumer can only afford to live at 75% of the previous level. If we hit high inflation, less will be able to go towards housing.
Got Popcorn?
Neil
Thanks Ben
Please keep fighting … I feel this is still the beginning. The Fed and Gov’t need to stop encouraging the new form of USA slavery - debt peonism. It is time to go back to the basics and create value and production instead of our blind reliance on the multitude of paper shufflers and destructive survivors.
+1000 Ben you have done America a great service with this blog and I agree 100% with this poster. We have a ways to go yet.
Ben: We all knew the story was going to evolve, because not so long ago there wasn’t even a story in the MSM. This and a few other places were the only bastion of sanity in a sea of hype. When I first came to the blog, I was mostly concerned with the psychological effect of millions of people having to move out of their houses. Maybe it’s sappy, but I felt for the young kids going through all the confusion, tension and turmoil through no fault of their own. Although a lot has happened since then and I’ve learned this is a way bigger issue building for a lot longer than the “housing bubble,” I’m still far more interested in the day to day human angle of it than all the business stuff. fI think everyone looks at if from their own perspective and your perspective is constantly evolving through experience and information.
“human angle” versus “business stuff”
We tenants who have been waiting a long time to own a house with reasonable costs, we are part of the “human angle” too. Just because we are not poor does not demote us to the category of “business stuff.”
“Firefighter Danny Saracino bid $435,000. At 29,
How much do 29 year old firefighters make in CA ??
150k with overtime.
I hate to say this but most of the cities in the SF Bay Area and Monterey are facing budget crisis.
Wouldn’t you think that with a massive state budget deficit that OT pay would be cut back?
We talked about this in Las Vegas in February. I told the group that one reason I still do this blog is that the focus keeps shifting; that the story just won’t end. So I guess I’ll keep fighting what should not be happening, and we’ll see where this thing goes.
———————-
Thank you so much, Ben, for keeping this blog up. This story is nowhere near over, IMHO.
“Some areas of the county are being hit especially hard, including the Clear Lake Riviera, where McKee said some homes are selling for 40 and 50 percent less than they would ave in 2006. With those drops in value, it’s very hard for homeowners who are not in foreclosure to get their money out of the homes, said McKee.”
Huh??? Most of the FBs not in foreclosure yet don’t have any skin in the game to start with. For those who did actually make a down payment, here’s a news flash. Your equity is gone and it won’t be coming back. There is no money to be gotten out of your homes. That is the reality and you might as well learn to accept it.
Many people may not be familiar with Lake County. I have cousins who live there so maybe I can fill you in.
The farther inland in California you go, the more miserably hot are the summers. Lake County is the third valley in from the coast, after Sonoma and Napa. Sonoma is great. Napa gets somewhat hot but good for Cab. Lake County is hotter than heck in summer. Little vegetation other than brown grass and poison oak.
Clear Lake is a cruel misnomer. It has volcanic vents on the bottom so the waters are warm down deep. This causes fish kills and tons of algae. The shoreline is generally covered with rotting fish and dead algae.
There are no good roads going into Lake County, just slow twisty mountain roads e.g. Hopland Road.
Get the picture? Not a place for wealthy Bay Aryans to buy a “summer home”.
Although realtors can put a spin on anything. . .
http://www.buylakecountyrealestate.com/lake-county/clear-lake.asp
Sounds like the Salton Sea. Hella hot and hella stinky.
The Clear Lake area has been a welfare/meth area for as long as I can remember. There are some great OHV areas just north. But the overall area is a sh*thole to me. I remember talking to a guy who was buying up there in 2006. He was feeling the pull of greed. The prices he was talking about seemed crazy to me. Wonder how that is working out now?
“…..hit especially hard, including the Clearlake Riviera”
“Riviera”….what a huge chuckle. Clear Lake is no Monaco.
Hey DennisN, don’t forget the mosquito eradication testing the US Army did back in the 50’s at Clear Lake. That had a lasting impact on the water quality. Did someone already mention the meth labs?
My parents live not far away in Ukiah and commute to Lake County for jobs. A coworker built a monster dream house on a 10 acre Clearlake Riviera lot with such things as MIL quarters, elevator, multiple hot tubs, dock, custom woodwork, god knows what else. Price tag $3,000,000+. What a disaster.
BTW…Clearlake median annual income ~= 34K (not sure on median home price). Ukiah median annual income ~= 42K with median home price still above 300K.
Where exacty is that “Riviera”? Lakeport? Kelseyville? Nice? Lucerne? Clearlake?
Last time I visited my relatives there was 1989, and nobody ever mentioned a “Riviera” around Clear Lake.
Years ago I spent a few summers with my girlfriend at “The Lake.” Her grandmother owned a cabin in Nice.
And yes I do remember days when the algae and dead fish would come floating to the top. One of the games we played was who would be the first one to jump off the pier and clear the algae.
Riviera on the map.
http://tinyurl.com/pwqsmr
Riviera on the map.
http://tinyurl.com/pwqsmr
oops… here it is.
Riviera on the map.
tinyurl dot com/pwqsmr
Try one last time.
http://tinyurl.com/pwqsmr
“‘The foreclosure market is really bad at the moment,’ she said. ‘Some of the agents are getting four a day, every day.’”
Shouldn’t getting four new listings a day, every day be considered a good thing for a UHS?
What did you want them to say PB?
“We made a killing on the way, and although some of us drank too much Koolaid, we are making a very nice profit on the way down?”
Some agents I’ve spoken with have told me that they have more business now than in 05.
They don’t have to talk about the prices at all. They would do better by parroting the MSM, ignoring prices completely, instead crowing endlessly about the evidence that the housing market has recovered, due to the pickup in the pace of sales. I am guessing the main reason they are freaking is 6 percent of 50 percent of the old price is only 3 percent of the old price.
Actually, Professor Bear, it’s even LESS than 3% of the old price: For example 6% of 100,000 = $6000. 3% of $50,000 = $1500. It’s hard to cover the lease on a BMW with that, unless you work really really hard.
Actually, Amazed415, 6% of 50% of $100,000 = (.06)(.50)(100000) = $3000 and 3% of $100,000 = (.03)(100000) = $3000. What Professor Bear is saying is that with a 50% drop in sales price, the equivalent commission for the $100,000 sale is 3%. They are making (should say getting) 1/2 of what they were getting before.
No. They are a waste of time and money because they won’t sell.
Around here, agents are still accepting new “for sale” listings but are refusing new rental listings a/c glut. (Coastal Maine vacation area.)
Reports on the local news here in DC say that in Q1 foreclosures have gone up by several multiples over Q1 2007 in DC proper. Not sure why they’re using 2007, but it’s about time the city itself started seeing the necessary correction.
I thought it was different in DC, due to bottomless demand for govt workers?
One would think so, but maybe as prices elsewhere fall far enough, DC folks who are NOT govt workers do move out…e.g., an 87-year-old friend of mine, former govt worker, finally moved from G’town to (ahem) Santa Barbara about four months ago.
“‘Enough is enough, and we have enough,’ she said. ‘We need to build affordable housing that matches the income of the Central Valley.’”
We need jobs in the valley, sweets.
We need jobs just about everywhere from what I hear. Things are getting bad in Arizona, that’s for sure. And encouraging knife catchers is not going to help, IMO.
I guess lots of policymakers must have missed Nobel Prize winning economist Vernon Smith’s recent Wall Street Journal Op-ed piece (with Steven Gjerstad) about how the Great Depression was made far worse by households purchasing homes with excessive leverage during a bad economic spell. Or is it that policymakers enjoy endlessly jawboning about their myriad harebrained schemes to assist homeowners whose finances are decimated by following the official financial prescription?
Wall Street Journal
* OPINION
* APRIL 6, 2009, 11:08 A.M. ET
From Bubble to Depression?
By STEVEN GJERSTAD and VERNON L. SMITH
Bubbles have been frequent in economic history, and they occur in the laboratories of experimental economics under conditions which — when first studied in the 1980s — were considered so transparent that bubbles would not be observed.
…
The events of the past 10 years have an eerie similarity to the period leading up to the Great Depression. Total mortgage debt outstanding increased from $9.35 billion in 1920 to $29.44 billion in 1929. In 1920, residential mortgage debt was 10.2% of household wealth; by 1929, it was 27.2% of household wealth.
The Great Depression has been attributed to excessive speculation on Wall Street, especially between the spring of 1927 and the fall of 1929. Had the difficulties of the banking system been caused by losses on brokers’ loans for margin purchases in 1929, the results should have been felt in the banks immediately after the stock market crash. But the banking system did not show serious strains until the fall of 1930.
Bank earnings reached a record $729 million in 1929. Yet bank exposures to real estate were substantial; as the decline in real estate prices accelerated, foreclosures wiped out banks by the thousands. Had the mounting difficulties of the banks and the final collapse of the banking system in the “Bank Holiday” in March 1933 been caused by contraction of the money supply, as Milton Friedman and Anna Schwartz argued, then the massive injections of liquidity over the past 18 months should have averted the collapse of the financial market during this current crisis.
The causes of the Great Depression need more study, but the claims that losses on stock-market speculation and a monetary contraction caused the decline of the banking system both seem inadequate. It appears that both the Great Depression and the current crisis had their origins in excessive consumer debt — especially mortgage debt — that was transmitted into the financial sector during a sharp downturn.
Couldn’t agree more with that opinion. Thanks for posting it, PB.
It’s sooo true we need jobs Ben.
Unfortunately, meaningful jobs won’t come easily in a national climate of Fear, Fraud and NO CONfidence. The greed and dangers are perculating from RE & Main to the canyons of Wall Street and to the Foggy Bottom gutters of “k” Street down to the clueless up and down Pennsylvania Ave.
Nearly 8 YEARS of near rock bottom interest rates that was supposedly promoted to be available for BUSINESSES that was supposed to INFUSE money for Capital Improvements, Ventures and Investments…and where did that borrowed cash GO ?…40% or better directly or indirectly to the FIRE scum ?
Well stated, sir.
There’s plenty of blame to go around. Consumers live and borrow way beyond their means, and the banksters and politicians have long encouraged and abetted such irresponsible behavior. We should just let the natural consequences play out.
The housing is not unaffordable because of the way it’s build, honeypuffs. It’s unaffordable because of the way it’s PRICED!
built. the way it’s built.
Actually, you’re both right. Most CA housing is *still* absurdly overpriced, however the *type* of housing being built is also ridiculous for most families. Unless you have a very large extended family living with you (or 30 rent-paying illegal aliens), there is no need for 6,000 sft of living space. These sheetrock McMansions are expensive eyesores –incredibly costly to keep cool in the summer, heat in the winter, and clean and maintain year-round.
‘Bob Davis, executive VP of the American Bankers Association, said it was easy to find a market for these kind of investments in those boom days. ‘There was an investor market that was willing to take a benign view toward potential risk,’ he said.’
‘It’s a good time to buy,’ said Hughes. ‘Even if things go down a lite more, you’re not going to get hurt that bad.’
‘A lot of them (existing homes) have been swooped up and that is why we have started some new specs (speculative homes),’ Wagar said.‘I think if you are building something, you show that you are strong, you are here to stay, and people will come along and buy them’
‘Not extending the credit could be devastating, Coyle said. ‘We are concerned about derailing what clearly is a recovery prematurely’
‘I’m seeing an improvement,’ Lagussi said. ‘I’m seeing rising prices in Placer County and I think that’s a good thing.’
Sometimes the world is just too crazy to contemplate being a part of.
‘There was an investor market that was willing to take a benign view toward potential risk,’ he said.’
Um, could it be because this was the only game where you could gamble with no out of pocket money?
“Snapped up”, “snatched up”, and now “swooped up”.
Soon to be followed by “puked back up”.
Burned up.
Abandoned with a beat feet back to Arkansas
It’s my understanding that buyers today have to put a minimum of 20 percent down and have an excellent credit rating.
The firefighter was only going to put 10 percent down. That sounds a bit low in today’s real estate environment.
In addition, I question how stable a firefighter’s job is. Due to budget cuts many cities are laying employees off, including firefighters, at alarming rates.
This firefighter isn’t even 30-years-old, and he’s bidding $435,000 on a house–a house in California. A state with red ink to the tune of 40 to 60 billion. Who knows the exact balance sheet figure? As I see it, the bank did him a great favor by turning him down. He should thank his lucky stars.
Where’d you hear 20% was being required anywhere? I’d love it if that were the case, but it doesn’t match my anecdotal experience.
Most banks are not exercising good judgment, if they’re not requiring a 20 percent down payment and a good credit history. Are these folks living in cave? Do they read newspapers?
I didn’t “hear” about this widespread lending practice. I’ve read about it in several business periodicals. I assume it’s correct. If it’s not correct, it should be.
Maybe it’s not applicable in North Dakota, but maybe the mortgage bank is very forgiving if your mortgage payments are three-months late. Thawing the envelope from the postman’s hand may take months.
“Most banks are not exercising good judgment, if they’re not requiring a 20 percent down payment and a good credit history. Are these folks living in cave? Do they read newspapers?”
Why would the banks care when they get to pass their bad debt off the taxpayer?
Exactly.
10% down is the new median. It was 5%.
But with FHA… its about ready to creep down. I agree that a bank is an idiot not requiring more… but with uncle Sam willing to take the risk… why not take in the transaction fees while you can!
Tons of coworkers are panic buying. Why? They think 20% down will be required soon and that would price them out. I try to get them to do the math but…
Got Popcorn?
Neil
bought a house just last week. won’t get into the long story - but save the lectures, we know what we’re getting into
… my point is though that we both have credit scores over 800, and put over 10% down. Still very rare to put money down apparently … this is in MD.
What did change though is the documentation. With our great credit, assets, etc … I felt like I had to produce a lot of paperwork (as well you should!) We got a great interest rate, etc but we were approved at the last minute because one document wasn’t good enough.
I can’t imagine how it was with no doc loans. Or to do this without any money down or money to spare.
There were a few new forms … one is now required to track the specific lender who worked with us - they are checking to see if one person is doing most of the bad deals that lead to foreclosure. A day late, a dollar short, if you ask me …
So things are changing .. but nowhere near 20% required. Just my personal experience here in Maryland …
So things are changing .. but nowhere near 20% required. Just my personal experience here in Maryland
Which means we’re also “nowhere near a market bottom” –and we won’t be as long as the government keep interfering to prevent the necessary and inevitable from happening.
Wake me up when we’re finally back to full-doc + 20%-down + 28% DTI. Until then, I happily rent and sleep soundly at night.
Apparently not, if this quote is accurate. From the Lake County News article:
‘Hughes said …he’s seeing loan options for prospective buyers including a 100-percent US Department of Agriculture loan and FHA loans with 3.5 percent down. He added that he’s seeing a lot more of the latter.’
To illustrate your point, Ben, here’s a listing I ran across today. Note in the description, 100% USDA financing with no PMI. Parrish Dave could give you first hand info about Riverbend(over), the Lennar development where this is located. It’s no coinkydink that this home would be eligible for USDA financing, given the area where it is located. Anyone who wants to know how Riverbend is going to end up, can take a look at the other developments in Ruskin, Florida where homes were eligible for USDA. The thing that’s laughable, is that I’m sure the original buyers in Riverbend thought they’d be living in a fancy-schmancy development on the river. The gate was never installed and the pool/clubhouse complex never was put in. It’s a stucco heaven for gang initiations.
http://tampa.craigslist.org/hil/reb/1161105001.html
Jeez Palmy… on the surface thats a clean place with a nuance of spanish flair. Don’t know if it was built right or priced correctly. Can the neighborhood be that bad?
exeter, Parrish Dave rented there and he’s told a story or two here on the blog about his experiences in that development. You’d have to see the place to get an idea of what I’m talking about. There are half finished homes, weedy lots, graffiti tagging, places being broken into. I think there’s some Chinese drywall issues, too, although I’m not sure.
“Gorgeous stone elevation?” I don’t see one stone anywhere.
Someone explain this one to me.
“Step through the front door into a formal living and dining area currently being used as a children’s play retreat!”
In other words, the kids have their stuff strewn all over the place?
Yep, Palmetto. Kids stuff strewn all over the place and the only furniture is a couple of bean bag chairs.
“Step through the front door into a formal living and dining area currently being used as a children’s play retreat!”
Our kids have the unfurnished living room as a play area, and I use it to pack my reserve parachute a couple of times a year. My titanium Serotta is parked against the wall too. No phatness allowed in my digs!
Unfortunately, our living/dining room is used as our kids’ playroom.
We try to keep the toys out of the family room and keep that as “adult” as possible.
Knife Catching Realtwhore??
These USDA loans with no PMI. Hows does this work.
Is the taxpayer holding the bag..!!
I remember when they ran cattle back in through there.
Not all that long ago.
re Palmy and Riverbend post
The crazy subdivision down the road from me, “Tuscany”, is still advertising no-down loans on new homes. Also what looks like 3% teaser rates.
http://www.tuscany-meridian.com/
Tuscany! FYI- Please turn on your sound and then check the listings…awesome and creepy! I had no idea Idaho had a large Mafia demographic. Why the Godfather soundtrack? The Sopranos soundtrack would have worked better.
I can attest to this, USDA and VA, you can still buy with zero down. And FHA is 3.5% down and it can be gift money, and you only need a 620 credit score…590 for VA. In delclining markets for a conventional loan you do need 10% down, and most banks you’ll need a credit score in the 700’s to get a decent rate. THe madness continues. Given all the losses the banks have taken and continue to take, credit is still not nearly as tight as the media and government would have you believe, at least not in the mortgage market. FHA is going to take a beating in a few years as I think there is going to be a huge wave of foreclosures on FHA loans. Time will tell. Despite the recent pick-up in sales activity we’re seeing now, this thing is far from over, in my opinion. Prices are still just way to high. There is no way around it.
The age of the players has been mind boggling all along. Twenty-somethings spending 300, 400, 500 thousand dollars…. on a house no less. Are they just stupid? No sense of value? I recall signing up for a 90some thousand mortgage in the early 90’s. A half bottle of valium couldn’t have taken away the tremors. At that time, wife and I had a $75k yearly income.
I bought my first house for $150k house in 1995. It was about 2,500 sq feet and in a great neighborhood. I was making 80k at the time, and couldnt sleep for two weeks. I can’t comprehend why these ppl are not scared, and don’t think about early retirement and being debt free by 45, or even at 90 for that matter. Even more annoying is family members that clip coupons and brag about getting 20% off on a $500 item, etc., and at the same time not worried at all about signing up for a 500k mortgage on a house that sold for 250k 5 years earlier. It is if they have no sense of reality, and have a profound inability to set and work towards future goals.
It really is the lack of fear that makes this scenario difficult for me to take in.The idea of a half million dollar 30 year burden ought to be panic inducing for the typical wage earner. I’ll live in a refrigerator box before I ever allow myself to be crushed by that mistake.
Do you hear me now REIC?
“I can’t comprehend why these ppl are not scared, …”
The lack of fear is directly related to a government policy of bailing out anyone and everyone who either deliberately or accidentally commits financial suicide.
It could also be related to knowing the loan is non-recourse. What have you got to lose, if you’re only putting a few % down?
Exactly right. No skin in the game. But having said that, a non-recourse mortgage is a legal agreement. If you don’t pay, all the bank can do is take the house. Why not make that deal? I mean, rational analysis from a purely economic standpoint says that if you default, all you lose is nothing. I know a lot of people protest that the borrower has a moral or ethical obligation to repay the loan if they can, but would a business hesitate to declare bankruptcy and default on the loan? Not for an instant. At some point this all becomes a decision as to what is in the best interests of the borrower. If the bank takes a hit, too bad for them. They made a legal bet that you would pay or the house would be worth the mortgage. If it isn’t then that’s the breaks. I don’t advocate that some standoffish cold calculation is necessarily the correct response, but the fact is for the bank this is true and anyone would be a fool to operate under a different premise. What’s good for the goose is good for the gander. We see, especially now with tough economic times, many instances of calculated bankruptcy by businesses; frequently they don’t even go out of business but just reorganize after dropping all sorts of socially useful obligations such as pension funds, retiree health care, etc., all without much social protest. So, given all this, what’s wrong with bailing on a mortgage if it is in your best interests? I wish this weren’t true, but it is a fact of life. I have never dodged a debt, missed a payment, or screwed someone over moneywise. I don’t want to have to think that way, but if everyone else is, I will be a fool not to.
Well, sometimes it’s worth being a fool to be able to respect yourself/sleep at night.
But I agree, overall. If one hasn’t put much down, then there’s not much to be afraid of. But I think a large part of it also (Being one of those who bought a house at 26..or 27, I forget), and while it took me a long time to decide what I was “comfortable” paying, I never gave much thought to the “holy crap, i owe $160k” thing. But then again, that was roughly 2x salary, not 10x salary like is often discussed here.
I suppose it was mainly due to ignorance that I didn’t consider the possibility that I’d have to bring money to the table if and when I went to sell it.
Steve, I have said it before: as a lender I agree with you. I make non-recourse loans all the time, and all I count on getting out of them is the property (or the money, of course). Hence, no 100% or 97% or 90% loans are forthcoming from my account. Even 80% makes me nervous, but I’m doing it. Most amortize in 15 years, so the amortization has a chance of staying ahead of the depreciation.
Twenty somethings lack of fear about the debt of a house as a syndrome is simple enough to explain. These people have not seen enough hardtimes when they were growing up. They also are old before their time. I had no notion of buying a house of any type when I was 25. I grew up in a poor family for the first part. For the 2nd part, I didn’t want to be tied down. I was having way too much fun.
House at 25 years old? Yeeecch!
Roidy
LOL! I know the feeling!
Just don’t plan on getting your valium from the same doctor today. There’s a good chance he’s lost his home and has declared bankruptcy.
It’s unbelievable the number of doctors and lawyers losing their homes.
Lawyers are hurting. Docs, not so much. The AMA does a superlative job of keeping the number of MDs artificially low in order to keep incomes high.
The ABA, by contrast, keeps accrediting new law schools at a rate that guarantees thousands will be dumped into a declining job market with debts that often exceed 150K for years to come.
Do you have any statistical evidence on this? I would love to see it.
My BIL is a doc; I will not be surprised if he is added to this group before we are out of this financial crisis. Though he makes lots of money, he appears to be far more efficient at borrowing and spending it.
Docs should be doing fine. The AMA does a superlative job of keeping the number of MDs low in order to protect their income. Sure, some specialties like plastic surgery are probably taking a hit, but people will go to the doctor when their sick, even if the economy is in the tank.
Attorneys, not so much. Thousands have been laid off from firms in the major cities. Incomes keep going down, and approximately 40,000 newly minted JDs are hitting the job market this year alone, many of whom racked up law school debt approaching $150K.
their = they’re.
So sue me.
“The AMA does a superlative job of keeping the number of MDs low in order to protect their income.”
I have heard that this was a subject covered in Milton Friedman’s dissertation.
Well NZ has a different strategy. The NZ government has done a superlative job of keeping the number of MDs low by paying the lowest salaries in the western world. Our medical school grads are outta here before the ink dries on their diplomas.
Many Kiwi doctors are working in the US, so the AMA must not be trying too hard to keep them out.
Many Kiwi doctors are working in the US, so the AMA must not be trying too hard to keep them out.
The AMA has made it difficult for foreign trained MDs to be certified in the US. We know a lady who was trained in Europe. It literally took took her years to pass all the tests.
“Docs should be doing fine….. Attorneys, not so much.”
You forget that doctors cannot legislate new diseases to gin up demand for their services in the way that lawyers can.
“‘The mega-banks that funded the subprime industry were not victims of an unforeseen financial collapse, as they have sometimes portrayed themselves,’ center executive director Bill Buzenberg said in a statement. ‘These banks were deliberate enablers that bankrolled the type of lending that’s now threatening the financial system.’”
This sounds highly illegal. Why is there no interest in checking out whether statements like this are accurate, and if so, whether the perpetrators of the mortgage financing disaster should be hold legally culpable?
holdheldwhat would they be legally culpable for, PB? Misrepresenting the nature of the securities they were selling? Otherwise, simply making bad loans you know are unlikely to be paid back isn’t illegal, I don’t think - assuming it’s one’s own money.
“what would they be legally culpable for, PB?”
That is a really good question. I guess if our free enterprise system truly allowed borrowers and lenders to bear the consequences of their bad decisions. In a system where the financial and social costs of bad loans get externalized to others who were not party to the transaction, there should be laws on the books to protect the rest of us if there are none already.
I agree..but I guess I’m firmly in the camp that the costs shouldn’t be externalized. My voice seems to be silenced these days. So yes, if independent parties are going to bear the costs, then there should be something on the books to protect us.
Maybe Supercop BB can ensure that no more bad loans happen?
I guess if our free enterprise system truly allowed borrowers and lenders to fully bear the consequences of their bad decisions, the financial system would be incentive compatible, and there would be no need for legal sanctions against the greater fools.
(Poor sentence structure results from blogging while wifey is preparing dinner for company…)
I am seeing some green shoots for SFR here in Culver City.
The 2 + 1 at 11117 Barman is in a prime Vets Park location. The place needs about 40k to be livable.
Scrape the ceiling
Sand the floors
Paint
Stuff
and Junk
It just closed at $565 April 10th. No house has broken below 600k until this one. Zillow is attaching it as a comp to other properties over a mile away in my neighborhood.
Vets park was consistently getting 725k+ during the pig years.
It’s coming guys. It’s coming
It’s coming guys. It’s coming
Oh, it is. The suckers will have shot their wad this ’sellers season.’ Just think of what will happen once we hit the time of year that is the buyers season… (July-October in Florida, October-February in most of the US is when sellers have trouble selling).
I’m not thinking ‘Johnny come lately’s’ ego can take the hit. But god… there are so many suckers!?! PT Barnum must be so proud.
Got Popcorn?
Neil
“‘My guess is it will settle down again,’ Klinge said regarding the emerging bidding wars and 10 to 15 offers per listing. ‘You’ve got a bunch more foreclosures coming on, so when you get to the last three to four months of this year, you’ll get one to two offers —- if you’re lucky.’”
I agree with him. What we are currently seeing is a wave of buying spurred by the Fed’s and Obamanites’ combined real estate punch bowl respiking operations. The knifecatchers who are shaken out of the bushes by these programs will serve to eat the chair legs out from under fundamental real estate demand over the next few years, much as year-2005 buyers pretty much exhausted demand for the interim period until the recent respiking operations took hold. Meanwhile, there is a mountain of foreclosures waiting in shadow inventory that will have to hit the market over the next couple of years, plus the oncoming wave of Alt-A and prime ARM resets that will add to the foreclosure pyre.
I see bulldozers in the future housing outlook!
20th century depression jobs program:
One group digs ditches, the next group fills them in.
21st century depression jobs program:
One group builds McMansions, the next group tears them down.
That’s not explicitly the plan (I don’t think) but it seems as if that’s where we’re headed, regardless.
you know, … if you come along and throw some seeds in the ground between the two groups, it could turn out ok!
Nice analogy, ITSF.
I’m of two minds about the House of Representatives bill described in Ben’s post. It says that banks offering mortgages other than traditional fixed-rate mortgages must verify a person’s credit history and income, and must make a good-faith determination that the loan can be repaid.
On the one hand, the law will not affect me (because my loans are all traditional fixed-rate), so I should applaud the mandate for prudence. Awfully glad it won’t affect me, since I don’t even have the capacity to verify a person’s credit history and income.
On the other hand, with my Ron Paul hat on, this business is simply NO business of the government’s. If homebuyers and mortgage investors insist on being stupid, why should it be against the law?
“If homebuyers and mortgage investors insist on being stupid, why should it be against the law?”
Because when banks fail, the taxpayers have to bail them out, that’s why. At least, in this current operating basis of the administration.
When they announced the “stress test” results the other day, it was flatly stated that banks wouldn’t be allowed to fail. If we’re going down that path, and clearly we are, then yeah, it has to be against the law.
Two wrongs don’t make a right.
Bailouts should be what’s against the law - period.
agreed. That’s the root of the problem.
I know, I know. I’m just sayin’…
AZ,
I haven’t looked into the details, but I believe the senate isn’t considering it, so it may just be posturing. However, to add another question; didn’t the Fed already ban this stuff? (And they didn’t even put it into effect until later in 2009. When the Fed voted for this, the industry said, ‘fine, we already stopped making these loans.’ Barn, door, cattle.)
with my Ron Paul hat on
Does your Ru Paul hat come with feathers and glitter?
No, but my Ron Paul hat came with tar and feathers.
Dennis, I really don’t have the hat, only the bumper sticker. No feathers/glitter. It was totally ignored during the political campaign season, but now passing motorists beep and wave “thumbs up” — an apparent comment on Bailout Nation.
“If homebuyers and mortgage investors insist on being stupid, why should it be against the law?”
The moral hazard incentives embodied in the standing offer to bail out anyone and everyone who commits financial seppuku provide encouragement for collective financial stupidity on both the supply and demand side of the housing market. There is no mystery how we got ourselves into the devastating crisis in which we collectively find ourselves, though I do find it mysterious that top policy makers still seem enshrouded in a fog of denial regarding the housing bubble’s collapse, as evidenced by their ongoing futile efforts to reflate the bubble rather than to face up to and cope with the aftermath of its collapse.
“McKee said they’re hearing that the banks are holding back on another group of foreclosures set to come onto the market until the current foreclosure are sold and cleared. ‘We’re expecting a lot more to come,’ said McKee.”
I here this and I think “I better get out there and buy one of these foreclosures right away!” Not. This is exactly the kind of thing that would make me wait. And waiting makes demand go down. Demand going down makes prices go lower. I wait some more…Jeez, if I owned a bank I think I’d get rid of all the properties I had ASAP and be done with all of it. But what do I know?
Obviously the banks think they can get higher prices on the next wave of foreclosures. If everyone would just completely buy into the bottom-calling, green-shoot touting, lying, organized from the president throughout the whole crooked system right down to the realtor, thieving, hoping for change, desperate, parroting-MSM, dishonest greedy dirtbag hype about a recovery. Why else would the banks wait as houses deteriorate and grass gets taller? It will not work and the banks will get exactly what they deserve for the foreclosures they are holding out on. Ken Lewis, I piss on you.
I here this and I think “I better get out there and buy one of these foreclosures right away!” Not.
You’re being un-American! Go out and buy before they require more of a down payment and you are priced out forever!
Jeez, if I owned a bank I think I’d get rid of all the properties I had ASAP and be done with all of it.
They wouldn’t let you do that. You would be the last bank standing and someone with political pull would have a ‘friend’ who owned a bank that wasn’t willing to do that…
Got Popcorn?
Neil
“Talks continue in Sacramento about extending the tax credit for the purchase of new homes. To date, the state has received nearly 4,900 applications for a total credit claimed of $47.3 million, an average credit of about $9,600.’The current tax credit is working quite well beyond our expectations,” said Tim Coyle, senior VP of the California Building Industry Association in Sacramento.”
—————————-
It’s always nice to know that our bankrupt state can find the money to help the poor, victimized homebuilders.
What’s a hundred million among friends?
Yeah– if the idea is to clear inventory (it isn’t), why wouldn’t the credit go toward resales, instead?
Personally, I vote the Scrooge Party line. “Nice idea, but WE’RE BROKE!” Wish my view had prevailed last fall before the high-speed rail prop. passed. (REALLY nice idea, IMO, but… WE’RE BROKE.)