Bits Bucket For May 30, 2009
Post off-topic ideas, links and Craigslist finds here. Please visit the HBB Forum. And see the American Visionaries series from Schwarzfilm.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
November 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
The ultra-low end, my lending niche, has finally clogged up. Too many people holding out for $100K or $150K for their dolled-up tin cans, er, mobile homes. I just hope the amortization keeps up with the depreciation. Typically they owe me $30K-$70K.
az, I laugh sometimes when I troll the local real estate ads and see people selling mobile homes for outrageous prices. In Florida, it’s especially ridiculous, because mobiles are the first to be evacuated if there’s even so much as a hint of a storm off in the Atlantic or Gulf. A mobile home is just impractical in Florida, and yet we have a ton of them. I don’t get it.
What’s even funnier is the rental prices for some of the tin cans. Sometimes as much as a regular concrete block house. Go figure. And if they’re in some waterfront park, there’s a premium, but people hear waterfront and go bonkers, I guess. My worst nightmare would be to be caught in a waterfront mobile home in a storm. Of course, after I was sliced and diced, I suppose the waterfront would come in handy for the runoff, LOL!
Palmy:
You’re right. Saw one place (if purchase) had lot rent 685.00. Nothing about it either, except on trib. No geo-ducks, either.
A mobile home is just impractical in Florida
They are pretty inpractical in most parts of Idaho, since they will collapse under a heavy snow load. One good snowstorm and squish! I’ve seen people build peaked-roof “carports” over mobile homes in some places around here.
Those people are lazy. They’re supposed to get out there and clean the snow off before that happens. They should know better.
And mobile homes are pretty impractical in the Midwest because tornados like to seek them out. And in the Southwest because fires seek them out. Is there anyplace mobile homes are a good idea? What we need are neighborhoods of Katrina cottages.
“A mobile home is just impractical in Florida, and yet we have a ton of them.”
Can’t say I think they are much more practical in the Midwest than in Florida. We used to refer to trailer parks as “tornado magnets.”
Morning AZ:
When we need so many affordable housing units in our country why did we build so many Mc Mansions as “starter” homes?
I’ll admit I lived in a trailer twice in my life, its wasn’t so bad. But then it was cheap and close to my jobs so i could save $$$.
My brother has a 2 story module home built almost 20 years ago came in 4 pieces and the crane put them together in one day and its still a very well built home and at 1/3 less then a site built home.
It’s interesting to see how they build houses around here. Builders have gotten to a point where there’s no hard distinction between site-built and modular built. Much of the framing is built off-site and trucked in. All of the roof frames are made off-site and put in place in about 3 hours with a crane. With the rise of CAD and CAM the modules now are not “cubes” but prefab wall assemblies - much easier to truck around than the cubes were.
I had the chance to tour the factory where they assemble modular homes. The “outside” walls of each module are at least 2×6 construction and everything is built stronger because those modules have to ride on flat-bed trailers over highways and back roads from the factory to their destination, then be lifted into position onto the foundation.
Modular homes are FAR better than single- or double-wide homes.
AZ-
Does that include land as well? I never could understand why someone would buy a trailer if they don’t own the land (I’d only purchase one if it was on some beautiful acreage). What happened in WA, during the bubble, is the park owners sold the land forcing the people to move their home on wheels. It proved too expensive, and impossible for many.
Around here it’s even worse. When a trailer park gets condemned to build condos, the “owners” of the trailers find they can’t move them: the government only lets you move them IF they meet present codes, which of course they don’t. Since owners face about $20K costs to upgrade to present codes, they are forced to abandon them. Oh yeah, there’s also a fine they pay for abandoning them.
Many older trailers would never survive a move to another park. They tend to deteriorate a lot over 20 years.
Yes, it includes a teeny-weeny bit of land — but more importantly, it includes your 1/200 share of the swimming pool, the ballroom, the pickle-ball court, the laundromat, the billiard room, and the weight room.
This lifestyle seems to suit seniors who came from NJ, Ohio, Michigan to live in the sun in AZ. But then they find out they have to buy a second one in maybe WA to get out of PHX in the summer.
Oly: Will you mail me a geo-duck? (Pack it in dry ice)… No. Wait a minute. I want a female and a male geo-duck. So, they can have baby geo-ducks.
Mind wanders…
What a good idea, ATE!
You betchulaceae! (That’s a tree joke, there. Family of birches. My sister made it up. She’s an arborist.)
Only instead of dry-ice, sending some overnight express would be best, I imagine.
Why, soon you will have tanks and tanks full of little geoducks!
Looking just like these:
http://tinyurl.com/mrlvzt
http://tinyurl.com/mhz7kw
How adorable.
*snort *
Weird lil’ critters, huh? Almost too lovable to eat…
test?
test? YES!
A little history, Yoko won John over with the word YES.
Thank you for the pictures.
When are you going to mail me Penelopie and Theo the Geo-Ducks???????
John Mauldin this week points out that the supply of $750K+ houses nationally is 40 months, seven times a “healthy” market. Watching and waiting.
In my humble and limited mind, what is going to happen with McMansions is beyond our comprehension.
Even cutting them up into apartments may not help much, when you think of the sheer numbers of unused units at all levels. PB’s proverbial 19 million.
19M x 4U =76M
HA_1 HA_2 HA_3 … HA_76M !
Yeah, and don’t forget the way the Chinese dry wall, plastic, unseasoned wood, particle board, and other shoddy materials will hold up under “refurbishings” of the kind the slumlords do on sturdy structures built back in “The American Century”!
Cutting them up would ADD more units to our already bloated supply. They’ll just fall in price until they are affordable. Well until the mortgage is affordable even when you account for the energy costs of heating, cooling, and commuting to them.
ATE:
Most are poorly designed so you cant even split them up into 2 apartments…or even an in law type. So Much wasted spaces Giant entrances with vaulted ceilings..
Most zoning wont allow rooming houses, so why did so many single people buy 4-5 bedroom homes, refuse to get roommates, and then complain about the costs?
I really pray that the era of “Dumb and Dumber” is finally over with.
That is true. They are poorly designed for busting them up.
A hot plate, toaster oven and microwave in every room! A padlock on every door! Life in Timber Grove’s Executive model c. 2011.
LMAO!!!!!!!!!!!!!!
Can’t speak for whether it has changed yet, but when I was in college there was a rule (I think it was city, not state but I could be wrong), that more than 4 women who were not related to each other living in the same house was automatically assumed to be a house of ill repute and was illegal. The sororities and co-ed frats would have all fallen under this rule except for the protection provided by being recognized by the college.
Wow. There must have been some real prostitution problems.
Unless its changed, Washington, DC doesn’t even have the college exemption. There were no sorority houses in WDC colleges and universities. Can’t speak for other places, though.
Bear,
I doubt there were ever any real problems. This was New Hampshire. Bunch of uptight New England Puritans could have put the rule into place in the 1700’s and no one ever bothered to change it.
Polly I went to school in NH and worked wt WMUR tv in Manchester
I thought the quotes Maudlin mentioned from Diane Olick of CNBC were interesting as well:
“Yesterday Fitch ratings estimated that up to 75 percent of the modifications now being done through the administration’s Making Home Affordable program will re-default in six months to a year. I’m not talking about the old modifications, which were largely repayment plans that could actually raise monthly payments. I’m talking about the new mods, which lower monthly payments to 31 percent of a person’s income. I couldn’t understand Fitch’s reasoning, so I called them.”
“Diane Pendley, managing director at Fitch, said the problem is not on that “front-end” ratio, but on the back end, which is all of the borrowers other debt (credit cards, car loans, student loans, etc.). She said that in talking with servicers, she’s hearing other debt is so high that most of today’s troubled borrowers cannot afford any loan payment at all, even at a very modest debt-to-income ratio. ‘Just getting the house payment done doesn’t mean their lifestyle is sustainable,’ she said.”
“Another problem is that with home prices continuing to fall, more and more borrowers, who are essentially just renting their mortgages now because they will never see any home equity, are walking away. Even if the mortgage payment is low, the property taxes and home maintenance costs are padding that payment, and without an upside to the investment, there’s simply no reason to pay. Suffice it to say, the foreclosure crisis, on the high and low ends, is not getting any better.”
Many credit worthy people are buying a new, cheaper home then sending the first one into foreclosure. It’s BS. My attention was drawn to a particular sale in Reno, NV by someone on another blog. The party bought the first home back in 2004. Originally purchased for $500k (way bubbly), they mortgaged the thing up the wazoo to more than $700k, then late last year purchased another home right around the corner for ~$400k. They immediately stopped paying on the old home, and it is slated for sale in June. NV is a full recourse state, yet the lenders are not even pursuing it.
The funny thing is, the people paid $400 psf for the recent purchase, an INSANE number considering how bad the meltdown is in Reno. The appraiser should NEVER have signed off on it. I checked the recorders website to find out who the braindead lender was and it’s JPMorgan Chase. These megabanks are STILL at it. This particular sale is all but guaranteed to go into foreclosure as well, because these people are already upside down by more than $100k. We’re not even close to being through this mess.
It just occurred to me that those most responsible for the bubble bursting were accidental homeowners. Amatuer speculators, trying to pad their retirement funds and those that thought a quick flip or instant MEW would solve their insolvency/debt problems. Aided , of course, by easy credit.
and HGTV.
Blano,
Yikes, 75%. I missed that. Yikes again.
Local market observation;
95050-95054…Inventory has dropped by roughly 35% in the last 4 months…Now sitting @ 130 SFR’s which would be considered low for a town of 100,000…
Here in 94024 two of three homes for sale in my area have sale pending notices.
I believe you are seeing the same thing PB describes in SD. The houses are out there, just not being listed. If you compare what you see on realtytrac or foreclosure to what is on MLS the shadow inventory becomes evident.
In my neighborhood 93551, there are oodles of houses with signage that indicates it is for sale but they are not on MLS.
I got to apologize - last night I made some comments that were grossly immature. Most didn’t make it through the filter and Ben’s watchful eye; however, some did.
For that, I am sorry.
You’re a Man, Ben’s Cool, and I have done the same.
Don’t drink and blog.
Looking for FPSS…
Bill Clinton in Toronto with the first Bush talked about and admitted his personal failure to stop the Rwanda Genocide that cost 300,000 lives…
I did the other night. What’s worse, my posts made me come off like a mean drunk. But I have to pat myself on the back for the impeccable spelling effort under the influence
.
Way to go, Da Bear!!!
Nice work, PB. Unfortunately, I think my spelling was horrible, which is scary as last night I was just sitting around on the blog, had a couple beers, waiting for my wife to yell at me to stop drinking beer and take her to the hospital as she was going into labor.
Yep, there’s a mini-chile on the way. Hopefully this weekend it happens, I guess some of the signs of a “child bottom” are on the horizon, but being disgusted by most things medical and a guy I didn’t pay attention to my wife when she was telling me what these signs were…
And we’re terrible parents - we rent. Oh yeah, and own only one car - not even an SUV. Someone might want to call DSS on us in a few days since we’re apparently unfit parents.
Bad, bad Chile, you’re just suffering from New Parent Worries which beset almost every parent on the planet that cares about their offspring. You’ll be fine. Now stop drinking delicious ( ! ) beer and pay more attention to your very pregnant and probably very annoyed wife. You’re little Jalapeno pepper will arrive soon enough.
Now stop drinking delicious ( ! ) beer and pay more attention to your very pregnant and probably very annoyed wife. You’re little Jalapeno pepper will arrive soon enough.
Hahaha, silver! I was gonna say to Chile ‘Your little habanero’.
Oh, and Chile? Ignore Silver’s advice on not drinking beer. You should probably stock up, in fact. Oh, about a pallet load may get you through.
I was present at the birth of my nephew, and I’m a girl and all, and I know about uter*uses and thingies, but I gotta tell you, if you’re ‘disgusted by most things medical’…?
Chile, baybee—you best brace yourself.
*snigger *
Oh yeah– and don’t forget to lay in a supply of the “Baby Mozart, ” “Baby Einstein,” etc. programs to which all the up-and-coming young parents in my ‘hood have subjected their little, darling Ethans and Amelias. We just had a city-wide yard sale two or three weeks ago, and you probably could have picked up some at a real good price (everything that failed to sell was out at the curb with the rest of the trash on trash day).
On the other hand, I dunno. I subjected myself to The Stooges, “Astroboy,” and “Combat.” I turned out semi-sane. No Ivy League lacrosse player, for sure, but semi-sane.
Really, Chile? I missed ‘em. I’m gonna go look right now…
has the market reached bottom yet?
no
ok see you in 6 months
Patience has its rewards.
All is well…Fed Tax receipts down 44%…
“Fed tax receipts down 44% …”
One more case made for cash.
Those who have cash get to easlily ward off the tax man. Those who don’t have cash get hassled by the tax man, are forced to raise the cash, are forced to sell their assets for pennies on the dollar.
Sell to whom? Why, to those who have the cash, who else?
I think you’re clouding the issue here, combo. Just because you don’t have much cash doesn’t mean you’re more likely to owe taxes.
I could tell you my dog vomited last night and you’d somehow try to turn that into an argument for being all-cash right now
Veterinarians probably treat cash customers better than credit customers.
Everywhere I look I see cases made for cash.
Tax recipts down? The governments need cash to keep their spending up. Less government spending means job cuts. Job cut means less income for people who get laid off, which means these people will be short of cash.
Interest rates going up? This screws those who need to borrow and screws those who hold bonds. It screws everyone except those who hold cash.
Debts being written off? One person’s debt is another person’s money. If one is at the wrong end of a written-off debt then the one who loaned out the money is screwed.
Etc.
Add this all the expensive TV commercials popping up everywhere directed to those who are short of cash. Also the TV commercials directed to those who have issues with the IRS.
Debts being written off? One person’s debt is another person’s money. If one is at the wrong end of a written-off debt then the one who loaned out the money is screwed.
Not when more money is simply printed to make the lender whole.
Combo just say cash is good for financial reasons
Which “market” are you referring to?
The NY state’s massive public pension fund has lost more than $40 billion during the recession.
State Comptroller Thomas DiNapoli said the fund lost more than 26 percent on its investments during this fiscal year - down to about $110 billion when the fiscal year ended on March 31 from about $154 billion a year earlier.
He said benefits to retirees are secure, but state and local governments are being asked to raise contributions from 7.5 percent to 11 percent, to compensate for losses.
About 40 percent of the state pension invests in stocks, but the comptroller said the economic downturn has not scared him away from continuing to invest.
“This was such an unprecedented year of volatility, it would be difficult to predict today that that’s going to be the future or the foreseeable future,” said DiNapoli. “So it just means you need to be as strategic and smart as possible. But for us to meet our goal over the long term, we can’t hide. We need to be invested.”
DiNapoli is the sole trustee of the fund, which pays pension benefits to 350,000 retirees and 650,000 state and local employees. It is funded through payroll deductions that are then invested nationwide.
“His fund actually outperformed some of the major stock indices but the results are pretty dismal for the one million people who will depend on this fund going forward,” said Joan Gralla of Reuters.
DJ…We have something in common…California is right there with NY as the least free state…
California
Contrary to popular perception, California not
only taxes and regulates its economy more than
most other states, it also aggressively interferes in the personal lives of its citizens. California ranks #48 on economic freedom and #37 on personal freedom. California simply needs to cut government spending. The budgetary categories most out of line with the rest of the country are public safety, natural resources and environment, and administration. The state actually does not spend more than average on education and social services. For a large state, it is also fairly centralized, with local governments receiving about half of their revenue in state grants, and almost two thirds two thirds of all state and local tax revenues controlled by Sacramento. Labor laws are of course extremely strict; for instance, California is one of only five states to mandate short-term disability insurance. Health insurance mandates add about 60 percent to the cost of premiums in the state. Eminent domain reform has been cosmetic, and the state’s liability system almost reaches the abysmal quality of the Deep South. On personal freedoms, California does
well of course on same-sex partnerships and marijuana, but it also has the most restrictive gun laws in the country, a highly restrictive policy regime for motorists, and smoking bans. Arrests for victim less crimes are surprisingly high, with 21.6 percent of all arrests being for victimless crimes, the fifth highest in the country. Effective homeschooling regulations are about average, but the state has no statute explicitly permitting homeschooling. Fortunately, the state has a reasonable asset forfeiture regime (burden of
proof on government, owner knowledge of criminal activity required)
I understand how it could be possible to rank states on their relative economic freedom. It’s mainly the relative total tax burden. But how the heck do you rank the states on their relative personal freedom?
But how the heck do you rank the states on their relative personal freedom ??
How about the highest incarceration rate per capita in the entire world ??
Didn’t California outlaw plywood and helium balloons last year?
The “motorist” thing has gotten in my way, for sure. California mandates that if you are in the state more than 30 days, you must get a California Driver’s License. What? What about us bicoastals? Since I don’t spend SIX months in Calif in a year, I am not about to declare myself a California resident and pay their ridiculous income tax. So in theory, when I “vacation” there in winter, I should cross into NV at least every 30 days to comply with the Dept of Motor Vehicles code.
more than 30 days, you must get a California Driver’s License ??
Its all about the $$$$$$$$$$$$$$$…CHP wrote 9200 tickets the first month the new cell phone law went into effect…
I have really grown to loathe this former great state.
This is what I don’t understand. What do people do who go back and forth between states? Should they take 6 trips to the DMV every year to get a new license and registration? Stupid, stupid laws.
Most states don’t have the same stupid law as Calif. Maine is very happy to have its “summah people” and does not subject them to a lot of scrutiny. AZ is pretty benign that way too.
CalSTRS pays a you a bonus for losing pension money.
http://www.sacbee.com/capitolandcalifornia/story/1791260.html
Where is everybody? Hell, normally, there are 40 posts by now. Wake up!!!
Sheeeesh….I’m up and wide awake, just sipping the brew and thankful that my time on the city’s
budget committee is over for a year. Surprisingly,
the city came up with a lot of cuts, knowing that
if they didn’t, we would have. Out to the garden
today. Everyone enjoy the day.
Let’s see…it’s the weekend, so they’re out mowing lawns, repairing sink leaks, painting the soffits and discovering a bad case of termites therein, trying to figure out where that mouldy smell in the basement’s coming from, fighting with the neighbor who’s trying to put a fence two feet too far onto their property line, writing a letter to the county contesting their property taxes that went up astronomically yet again, cussing cause the frige seems to be not working again and they just stocked the freezer…
Whoops, wrong blog…
I would never stock a freezer. I’ve known too many people to lose a lot to power failures.
and never plug your freezer into a GFI circuits.
Homes built here in Idaho have two specific architectural details which are new to me. One is a “mormon sized” pantry in the kitchen, but the other is a dedicated 20 A circuit to a 20 A outlet in the garage for a “game freezer”. You don’t want any other item to get plugged into that circuit and turn off the freezer.
Can’t speak for anyone else, but I’m hungover after being out late last night. Easing into the day…..one cup of coffee at a time
1:49 pm Eastern. Hope you are feeling more satisfied now, ATE.
Bottom???? I get the shakes when I hear this term. This is not your typical hole…..it’s a worm hole inside a black hole….the black hole grabs um’ and they linger a bit only to be filtered through the worm hole sieve.
Here in Florida we will know we are at “bottom” when the D-7 Caterpillars show up and level entire subdivisions or complexes. Now that’s a bottom. By this time next year they will come to the conclusion that the best way to clear up excess inventory is to reverse engineer.
I lived there 5 years. Except coastal, metro, I believe every word you said. They will level the stuff.
ATE:
No choice… closeup a house with 90 % humidity all summer and wadda ya get?
add in a little Chinese drywall and shoddy leaky flashes…oh boy they wouldn’t even approve those for section 8 housing.
No poop.
I think they will level subdivisions all over the place. FL, CA, AZ, NV for sure.
Good morning HBB! Today I am out scouring for a bargain that I can snap up!
Of course, I’m looking at a ‘67 VW bug. It’s a great substitute for a house. It’s always got something breaking, I can paint it whatever color I want to, and people have ridiculous ideas of what one is worth, yet I still want one!
Ahh… You like it in the rear-end, huh?? Well, go buy a house then instead. One with chinese drywall would move this conceptual ball…
I think an actual house would be a better investment than a substitute house - VW. My parents owned a blue one of 1965 vintage and had to get rid of it because it rusted out quickly, the paint was pealing off within the first year, the heater didn’t operate until well after the engine had warmed up, and they’re deathtraps if you front-end anyone at a pretty high rate of speed - no engine up front to protect you. You’re just so much crumple-shield. Maybe get a nice new safer VW.
Yeah.
At this point, they’re for tinkering with and driving around town, like any other 40-50 year old car.
And given that I live in the Bay Area, they cost 1/300th of the price of a decent home.
Well, you do have a point. Yes, 1/300th is something to think about
And since it won’t be a leveraged purchase, my downside is limited to what I put up.
Look outside the bay area sfbubblebuyer
good times
My first car was a 1968 bug with a sun roof. Loved it.
Sunroof is neat. Don’t remember one with a sunroof.
I had a 69 in highschool. Highly entertaining around town car. Highly not entertaining freeway car.
My first car was the volkswagen dasher (mini station wagon). Loved the car. Being rear ended by a drunk driver took care of my first love.
My first car was a 1970 VW Bug; a hand me down from my sister who had smashed up ever corner of the thing. I installed a few new fenders and bumper, pounded out the hood, and off I went. Shortly thereafter, there was a very loud “POP!!!!” and the engine was screaming like a banshee. The spark plug had blown out of the head. Turns out it had been heli-coiled in because the previous one was stripped, and it was a different size. That cost a bit to fix, but I was off and running again. The vehicle proved easy to work on, and that was a huge bonus for a kid with little money.
The worst part about the Bug was that all of the material was missing from the seats, so you basically sat on springs. At 16 years old, I had no desire to spend my hard earned money on seat covers for this jalopy, and it was of little concern to me anyway- that is until one summer I took the most adorable girl out on a date, and she ripped her shorts because a spring had shown through a towel I had put down as a cushion. Suddenly, at least for several moments, I hated that car.
I purchased a 1966 VW Beetle new in January 1966. It was the first and last VW (or any import) I have ever owned. It was far and away the worst car I have owned and driven.
In 1967 I traded it even for a used 1963 Oldsmoblie 88 and I was happy.
Oldsmoblie>=Oldsmobile
Had a nice 1974 VW camper that was a cherry.
Perfect body and spotless interior. Stuffed a
nice Porsche into it with some mods and changed
the rear end for better gearing. My wife and
I have great memories of camping trips all over
the west. Wish I had kept it.
You put a Porsche engine in the VW, right? That is an art.
Well, the four cylinder from a 912 or 914 should slide right in, right?
I didn’t know. I used to race professional motocross and have replaced engines. Just didn’t know.
Two of my sisters purchased brand new Bugs in the 1970s. One was the “Sun Bug” and the other was the “silver beetle.” They were solid, “bug free’ cars. The only mistakes they made were the emotional mistakes of wanting sexy sports cars instead. The “sun bug” owner got rid of hers and got a Porsche 914. It was a POS. The other owner got rid of her beetle and got a Fiat X19 which was also a POS. Their sexy sports cars had all sorts of maintenance problems.
They continued their series of bad economic decisions to the present day. They never saved much money. Now in their 50s, they will have to rely on social security, which will go bankrupt when they are still alive.
Of course, I will help them out by that time (don’t tell them that!). What’s a brother for?
Good Brother, you are.
Yes, you are Bill. Are you switching employers, or thinking about switching employers with the possible move to Oregon ?
Thanks!
I’m a job shopper. My work is usually in a different state from where my base residence is. There are no jobs for my skills in Oregon. I am just bored with having a base residence in Arizona - it’s been 13 years! I will pay state income taxes whether I keep my base residence in AZ or move it to Oregon. It’s just a “boredom” thing.
Seems that a lot of people are moving to Phoenix like crazy now. There are some good things going on in Phoenix, such as the light rail, but not enough good things to counter some of the bad things I’m seeing - like totalitarian laws.
oooh! X19! My sister had one of those. Truly a crime against humanity.
With apologies in advance to those of italian descent, my dad called my sister’s X19 an Italian beer can.
About 20 years ago, a 914 hit a telephone pole drivers door first hard enough to knock out the power in my apartment. I can’t imagine that the driver survived, that thing was bent around the like grass around a bridge abutment.
Love da bugs…..my first car was a 61′ VW and in that day thay didn’t even have a fuel gauge. You just drove till it started to sputter and you reached under the dash to turn a reserve handle and you were back under power.
I always wondered how much gas was in the reserve and I drove a long way a time or two but never ran out of gas.
That car would still be on the road today had we not entered a rally where you had to maintain exactly 35mph over a long distance. Sadly, Florida heat and 35 mph for hours on end did the poor thing in.
Darn I wish I had her back.
So, you want one of those new-fangled jobbies with 12 volt electrics, gas gauges, big rear windows,and all those other luxuries.
This one has a fancy schmancy sun roof!
OK. You’re right. Go for it.
Go for it!! My sister had bugs (wait, that sounds weird) - we had lots of adventures in them. Like the time we drove to the Grand Canyon in July with the heater stuck on. Loved those little cars. She painted a dragon on the rear end of hers, it was great, until I totalled it. Ahhh, fond memories…
Make sure the one you’re getting wasn’t ever in Colorado.
Wait, the heater WORKED?
I had a bug in Montana. Driving it in the winter was…. well… it was chilly.
Iy only worked in the summer.
And I remember hanging out the side window with a long ice scraper driving through a Colorado blizzard trying to keep the windshield ice free, for about 200 miles. Never forget that trip. We averaged 25 mph cause of the bad roads. But that bug would go about anywhere.
“Wait, the heater WORKED?
I had a bug in Montana. Driving it in the winter was…. well… it was chilly.”
LOL. My Bug had one little vent on the floor that provided heat- if you could call it that. I could handle the chilly part, but having no defroster and scraping ice off the INSIDE of the windshield was problematic, as was the lack of visibility.
1973 standard Beetle sleeps in my garage between occasional sccootabouts, less frequent in summer.
“…‘67 VW bug…”
Hope you get the one I used to drive, if it is still on the road…
I wound up not getting one.
It had body issues, not motor issues. Motor issues I’m more comfortable with. It had been in an accident, had the front end pulled back into place, and the hood and top repainted. They didn’t repaint the bottom or inside the ‘trunk’, so rust was working its way through the car.
They are really hammering the public that now is time to buy.
Whatever money I have goes to living and my future, why would i ever buy in California?
With liar loans, a lot of neighborhoods in California cities experienced integration of the “will nots” (or the irresponsible types) in with the productive people. This integration will slowly reverse over time. But it’s too soon to tell when and which neighborhoods will return to the proper owners (to the responsible types).
So it certainly is no time to buy real estate in California.
However, if you can find legal ways to greatly reduce your income taxes while working in California and rent, why not work and rent in California?
I greatly reduced my federal tax rate to far, far less than that of a typical mortgage payer with dependents. I’m doing this legally without being a home owner. I use tax breaks that are on the IRS web site publications and forms. I won’t mention the tax breaks I use because when they become too popular, Congress will remove them. However, to take advantage of my tax break, it requires a very simple, rootless, footloose lifestyle.
Don’t for get the $8000 tax credit! They are really pushing that here….I’ve even seen it on the For Sale signs. Because, of course, $8K will go a long way toward the purchase of a ranch condo in the high $200’s.
At a 3.5% downpayment, $8000 allows a moron to offer to pay almost $229K more for a house than they otherwise could manage (and assuming they can get someone wiling to sign off on them making the payments). At a 20% downpayment, it allows them to offer $40K more than they otherwise could.
Thanks so much. I’ll wait until the morons with no or limited downpayments are wrung out of the system.
“…why would i ever buy in California?”
If you are here for the long haul, just wait until all your neighbors start saying that anyone who buys a home is insane (like ours did when we bought back in 1996). At that point, it is likely to be cheaper to buy than to rent, and you will have the security of a reasonable probability you will be able to sell for more than you paid for the home should you ever need to move in the future. We aren’t there yet, and probably won’t be until the end of the prime- and Alt-A- option ARM reset tsunami, circa 2013.
Agree. Mid-1990’s the buy/rent calculation in LA was at least a close one.
“…probably won’t be until the end of the prime- and Alt-A- option ARM reset tsunami, circa 2013.”
Could this tsunami be shrinking in size due to early walkaways?
Dunno, but no matter. To the extent early walkaways shrink the future tsunami, many of them are still hidden from view in the banks’ shadow REO inventory.
Methinks a lot of this shadow inventory will never hit the market, but rather be sold off in large chunks to wealthy elitists who had a hand in orchestrating this mammoth meltdown and wealth transfer.
Everyday I imagine my own place, then I remember imminent domain. I mean bills, tax and repairs.
Designate some Gov’t BLM land in every state, make it 5-10 acres, hire more kids for domestic American Peace Corps to help out, supply basic tools, deploy some National guards for security, restrict resale to 7 years…blah, blah, blah
Just thinking this morning of alternatives then just giving Mega Banks trillions of dollars to hold in their computers
“The Homestead Act was a United States Federal law that gave an applicant freehold title to 160-640 acres (1/4-1 section or about 65-259 hectares) of undeveloped land outside of the original 13 colonies. The new law required three steps: file an application, improve the land, and file for deed of title. Anyone who had never taken up arms against the U.S. Government, including freed slaves, could file an application and improvements to a local land office. The Act was signed into law by President Abraham Lincoln on May 20, 1862.
Eventually 1.6 million homesteads were granted and 270,000,000 acres (1,100,000 km2) were privatized between 1862 and 1986, a total of 10% of all lands in the United States.”
Back East, we don’t know from BLM land. I suppose they could give away some BRAC land, but as a taxpayer, I’d rather see them sell it to the hightest bidder as planned. WRAMC ain’t exactly Dakota territory.
Do the Carlin thing and eminant domain some golf courses.
I have a question for anyone who might know:
The bank with whom I have my mortgage (Anchorbank, FSB in Madison, WI) I have heard rumors they will not make it, and may go go into bankruptcy or be forced to merge with another bank.
The question is: I have escrow added onto my payment each month, to cover insurance as well as property taxes. In the event this bank doesn’t make it, is my escrow account at risk?
Is there anything I could / should do to protect my escrow? Thanks for any replies…
I think they will just transfer your mortgage to another servicer, along with your escrow. I don’t think that you can do too much to protect your escrow since you pay a little piece of it to the mortgage servicer, and withholding that piece would be a violation of the terms of your mortgage agreement. I would call the bank, though, and talk to them about it.
Word on the street is in Wisconsin -
You can go to the bank and fill out a form stating YOU will be responsible for your own escrow -
One of the few states that allows this option.
But for the asking.
Best,
Leigh
Document document document….It will always be your figures and receipts vs theirs…so YOURS has to be perfect.
The escrowed money likely needs to be in a trust account…
Ahhh, the joys of renting.
Yesterday, I got an offer of free housing for 3 weeks (housesitting). Tomorrow, I’m moved. Of course, my lease is up also, but I could’ve extended it.
I’ve owned 4 houses, and each time I decided to move, it was a major undertaking. Fix up/clean the house, sell it, move - sounds simple, but this could take up to 6 or 8 months even in a good market.
After my 3 weeks is up, I’m moving into a resort 4-plex that’s very cute and in a great location, they pay utilities. Four nicely furnished rooms. Week by week, can leave anytime I want. Nothing to do, they even do the cleaning, and it’s $400 cheaper than my current house. And I can have all my gang of pets. Fenced yard.
I think I’m going to become a gypsy. Six months in each place is about right.
Just call me another bitter renter…
Good for you Losty!!!!
June 1 is my first payment of my 20% discounted rent here in LA. It will be nice and allow me to accelerate my debt reduction. My debt is between 1 and 2% of my net worth. I want to reduce it to less than 1% of my net worth.
We’re getting rid of our non-fixed debt ASAP, then onto the fixed ( accelerate husband’s student loans repayments ). I just got a great promotion at work which finally came thru ( we talked about it last August ), and a nice raise to go with it. Finally, in my 50’s, my career is finally booming LOL. And I don’t have to call insurance companies anymore, just code (medical, not IT). I have some great bosses who have believed in me and gave me many chances, and I thank God for that.
I don’t understand why anyone would have debt of 1% or 2% of his net worth. Why don’t you just pay it off? Are your assets illiquid?
I certainly understand people who have NEGATIVE net worth, but apparently that’s not you.
DCA.
Well it does not seem like a big deal. Over half of that debt is what I owe on a time share. The remainder gives me miles on the airline I use. I fly a lot between where I work and my base residence in Arizona.
I want to do that once a week in the situations where I’m working in a location where I don’t want to spend weekends. For now, working in Los Angeles, I prefer spending my weekends here than return home to Arizona. It must be a temperature thing!
My kind of person.
Yeah Losty
i used to be the hippie type till i got stuff….Gf is an artist she has stuff, me i have lots of dj stuff 3 computers and 2 cats and they have stuff……my old carpeted speaker cabinets to scratch on and to jump on to look out of the windows to the world of queens!
Don’t want all this stuff, but all this stuff does make us money.
You go girl.
Pretty soon you can live in a different place for each season
As a cheap-living software consultant, I find it interesting to watch direct hires make big ticket purchases. One guy past my age (50) just bought a 2004 Porsche 911. It’s a beauty. I think he said it was over $100,000 brand new.
You see, Porsches seem to depreciate “less” than other vehicles. And his dad bought him a Porsche many years ago when he was a student at USC (wealthy family).
But this guy said he will hardly drive it. He only drove it in to show a friend of his. He says he will tend to keep it in his garage.
The company has been making too many risks with cutting schedules (which allow enough time to do the work the right way), cutting SDLC (software development life cycle) phases.
There is only one condition I would put $60,000 into a Porsche: I’d have to have a net worth of at least $1.5 million. I know other Porsche owners in the past told me that they cost a lot of time and money to maintain.
Funny though. I thought the trend these days was to be frugal and not flaunt your wealth!
I remember those days, and I am glad I got over them. very painfully, by losing my wife.
I had them all, except. a Lamb.
“Minimalism, it’s where it’s at!!!!”
Now I understand what’s behind your screen name.
Yeah, combo, you’re probably right there.
I don’t. I must be missing the obvious. What do you mean?
Combo means Oly, I still love my wife. That is why I have my name.
ATE -
May you find comfort.
Best Always,
Leigh
Hi.What strikes me as funny is where would you drive a Porsche ? You see people in their race cars / high performance cars commuting in bumper to bumper traffic.
Out here in the Wild West (at least during spring break), you’d be sorry to have such a car, as the majority of cool places are only accessible with something where the bumper’s a bit off the ground.
In fact, out here, people with “street cars” are kind of pitied…those who are considered with it are the ones with old beater pickups or such that you don’t worry about beating up. You’re kind of judged by how much mud and how many scratches you have on your vehicle.
The ultimate dream vehicle is an old Toyota Land Cruiser. With a winch (no not a wench, although if you’re a guy, I guess that would work, too).
Just make sure you get a strong wench in case you get stuck in the mud…she has to be able to pull you out.
Ben vowed this to be a Family blog…uh huh uh huh
Anon, the guy I wrote about lives in the Thousand Oaks area. While I haven’t been in that area for years, I guess there are more drivable roads than in the high traffic South Bay part of Los Angeles where he and I work.
A Porsche may loose less value than other cars, but I bet he didn’t pay over $40k for that car. 40k is about right for a 5 year old 911 in North Texas.
Another side of Chinese capital formation and world “leadership”:
“These poor, hopeless, angry people exist by grubbing for scraps of cobalt and copper ore in the filth and dust of abandoned copper mines in Congo, sinking perilous 80ft shafts by hand, washing their finds in cholera-infected streams full of human filth, then pushing enormous two-hundredweight loads uphill on ancient bicycles to the nearby town of Likasi where middlemen buy them to sell on, mainly to Chinese businessmen hungry for these vital metals.
To see them, as they plod miserably past, is to be reminded of pictures of unemployed miners in Thirties Britain, stumbling home in the drizzle with sacks of coal scraps gleaned from spoil heaps.
Except that here the unsparing heat makes the labour five times as hard, and the conditions of work and life are worse by far than any known in England since the 18th Century.
Many perish as their primitive mines collapse on them, or are horribly injured without hope of medical treatment. Many are little more than children. On a good day they may earn $3, which just supports a meagre existence in diseased, malarial slums.
We had been earlier to this awful pit, which looked like a penal colony in an ancient slave empire.
Defeated, bowed figures toiled endlessly in dozens of hand-dug pits. Their faces, when visible, were blank and without hope.
We had been turned away by a fat, corrupt policeman who pretended our papers weren’t in order, but who was really taking instructions from a dead-eyed, one-eared gangmaster who sat next to him.
By the time we returned with more official permits, the gangmasters had readied the ambush.
The diggers feared - and their evil, sinister bosses had worked hard on that fear - that if people like me publicised their filthy way of life, then the mine might be closed and the $3 a day might be taken away.
I can give you no better explanation in miniature of the wicked thing that I believe is now happening in Africa.
Out of desperation, much of the continent is selling itself into a new era of corruption and virtual slavery as China seeks to buy up all the metals, minerals and oil she can lay her hands on: copper for electric and telephone cables, cobalt for mobile phones and jet engines - the basic raw materials of modern life.
It is crude rapacity, but to Africans and many of their leaders it is better than the alternative, which is slow starvation.”
Link to full article, “China’s New Slave Empire in Africa”, from the UK Mail Online:
http://tinyurl.com/4bnuv6
Incomprehensible. It also makes me wonder what I have always wondered: Why is there not legal suicide?
Well, in this case, maybe legal murder would be better…for those “masters” contributing to such poor conditions.
Yep!
P.S. Losty, I watch your flower video every weekend!
Thanks, youtube pulled it cause of the music, so I put it on Vimeo:
www vimeo com/4746519
Huh? If I kill myself the state is going to charge me and try me?
Please explain.
I meant with chemicals and dignity.
“China’s New Slave Empire in Africa”
Don’t worry the Walton Family will use a portion of their wealth to make things all better in the “Dark Continent”
…and furthermore the Chinese Gov’t knows how to take care of their own environment and are very concerned about polluting the globe, really.
It’s raining very late in the season in San Diego, perfectly timed for “
garagefire sale Saturday” in our ‘hood. You would not believe the riffraff wandering in and out of garages up and down the block where we live, with their cars parked in every open parking space. I have my garage tightly locked for fear that one of the customers will mistake items found therein as free merchandise. I am fervently praying the drizzle will soon turn into a downpour in order to scatter the rabble.On the other hand, being the cheap riffraff that we are, we have acquired extremely cheap used books in great condition in our areas of interest, a really nice coffee table for $100, a platinum and diamond ring setting for $ 277 (yes ! I had a fake = synthetic ruby set in it that i paid $25 for and the jeweler who did the setting was almost choking ), cheap plants, and I stand to get a 1 ct center diamond ring relisted by the seller tomorrow if the bidding closes for $338. Times are tough but we are toughter LOL. After we get all debt but current mortgage paid for, we’re looking at acquiring a house in Maricopa, AZ, maybe, maybe. Husband not so sure about that one, but I couldn’t believe how low the prices were. Then we would have winter home paid for ( cash deal ). The office that the ex-attorney had borrowed money from my husband for has gone thru the sheriff sale and he is now the legal owner, although we still have 4 months and 29 days to go of her rants and ravings before we can move her crap out and do something with the darned thing. I’m contemplating the back taxes as we speak. But the best deal I got this last week was finding out that a mass ( I didn’t write anything but it has been very horrible ) they found on my right boob is BENIGN !! Yay !
Benign is good, Silver. Enjoy the big relief.
Most excellent, all of it, but esp. the benign part.
I think, therefore I am benign.
Yes, I guess I have been rather acquisitive lately, reading over my list of bargains. Didn’t mean to come off so smug. Or snug. Or shrug. Sorry, but I’ve had a lot to celebrate.
You deserve to be however you feel being, and you esp. deserve to celebrate big!!
Losty, you’re right. I pulled it last weekend but it is gone now. Me no comprende.
Oil is setting up for an even bigger crash than the one that ended late last year. This liquidity tsunami has multiple wave crests.
High prices at pump to climb further
Gallon of gas may top $3 mid-summer, experts say
By Onell R. Soto
Union-Tribune Staff Writer
2:00 a.m. May 30, 2009
After rising slowly for much of the year, San Diego gas prices have jumped 36 cents in the last month and yesterday hit $2.71 a gallon for regular, the Auto Club reported – more than a dollar above December’s low.
Price watchers don’t expect the increases to end soon, and they say local gas prices could top $3 by mid-summer – still a long way from last summer’s record high of $4.63.
The increases come just as oil prices have seen their largest one-month rise in a decade, and just eight months after oil and gas prices plummeted as the world began sensing the full breadth of the recession.
“The party’s over,” said Charles Langley, who tracks prices for San Diego’s Utility Consumers’ Action Network, or UCAN. “Let the hangover begin.”
The run-up in gasoline prices, which hit $2.47 a gallon nationwide yesterday, surprised even Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.
“If you had asked a month ago if we would see a $2.50 national average, I would have said ‘no.’ ”
The 46 percent increase in local gas prices this year comes as oil prices have more than doubled in five months.
Benchmark crude for July delivery rose $1.23 to settle at $66.31 a barrel on the New York Mercantile Exchange yesterday. Just five months ago, crude was priced around $32 per barrel.
The 30 percent hike in May was the largest one-month increase since March 1999.
The predictions for just how high oil can go this year, just as in 2008, continue to creep upward. Kloza said crude may peak at $70 to $75 a barrel.
Part of the increase in crude oil prices is attributable to investors who are betting on commodities such as gasoline and oil to lead the way in a recovery, which some are beginning to believe is real.
Still, Americans are driving less – many are unemployed and more still are worried about the future – and refiners are making less gasoline than normal, though production is picking up.
I’ll bite. Why do you expect an even bigger crash than last year? Just because there are speculators involved?
Developments
WSJ.com tracks the housing market with news, tips and analysis
* May 26, 2009, 8:00 AM ET
How to Make Money in Real Estate: Count the Beer Cans in the Garbage
By Michael Corkery
Looking to make money in real estate? Well, the banks have a deal for you. Actually, they have 765,000 deals for you in the form of foreclosed houses that they need to sell across the U.S., according to Barclays Capital.
Developments asked Mark Allen, of Gorilla Capital, which is buying and reselling dozens of foreclosed houses in Oregon and Phoenix, for advice to people looking to invest in foreclosures. (See “Investors Pounce on Distressed Homes.“)
Here are some of Allen’s tips:
# Keep an open mind. Just because the neighborhood looks run down and you might not want to live there personally, it doesn’t mean that house won’t resell or rent to someone who can afford it.
# Avoid neighborhoods with multiple foreclosures. You will eventually have to compete with those houses for tenants.
# Aim to charge rent that totals about 1% of the purchase price. So, if you buy the house for $150,000, make sure that you can charge $1,500 monthly rent. That offers a healthy annual return of 12% before expenses and provides a good cushion in case there are unexpected repairs.
# Only buy the first mortgage. If you bid for a home at a courthouse auction make sure that the mortgage you buy is a first mortgage and not a line of credit or other subordinated loan taken against the property. Only the mortgage in first position can ensure you the keys to the house.
# Be aware of back taxes, which need to be paid in order to take ownership of the house. The back taxes have to be figured into your acquisition costs.
# Expect about $15,000 to $20,000 in cosmetic renovations, but avoid houses that need major overhauls. If you buy a house at a court auction, you may not be able to inspect the house because it may be occupied or otherwise inaccessible. Do detective work. Talk to neighbors. If the lawn is trashed and the garbage can is overflowing with beer cans, there’s a good chance the inside of house may need a costly make over.
Professor Bear’s personalized tip:
# Don’t speculate on foreclosure homes when prices are falling at the fastest rate in U.S. history.
More rapid rate of price increase => more speculators trying to capture short term gains => faster race to parabolic bubble peak number two => bigger crash.
I disagree PB. Production shut-ins and delayed/cancelled new rigs will likely stay ahead of demand destruction going forward. Why? Because all of those activities require leveraged investment and all parties are seeking to unwind leverage at present.
Things did not shape up that way last year, but maybe this year will be different…
I’ve been right about this so far and I’m pretty sure I’ll be right going forward. Throw a major regional conflict into the mix and we could easily top last year’s high.
My clue is Exxon and others in the field with cash arent buying. When they start buying companies I’ll start looking at investing in oil. One story I read suggested that many in the oil industry have locked in contracts that will expire this summer. My guess is that prices will fall after this. Oil consumption is falling still as far as I can tell and stories suggest that there is a mountain of oil in storage now.
And this is a Problem??????????????????????
—————————————————
The economy’s downturn has made finding work for day laborers that much more difficult as contractors throughout the borough tighten their belts. NY1’s Ruschell Boone filed the following report.
They spend hours waiting for work on 69th Street in Jackson Heights, Broadway in Astoria, and more recently on Queens Boulevard in Elmhurst and Liberty Avenue in Woodhaven. But after hours of pounding the pavement to try to make some money, most day laborers go home empty handed.
“Sometimes we get something, sometimes no,” said one day laborer.
The biggest issue at hand — too many workers and not enough construction jobs. “Italian, Mexican people, Ecuador people, Central America, South America everybody looking for work,” said one day laborer.
When the housing market was booming, many day laborers found steady work with contractors who would pick them up. These days the jobs are few and far between. “Not everyday job. Maybe two days per month,” said one day laborer.
As a result, there are hundreds of laborers, most of them undocumented, waiting where there used to be dozens. In some places, they line the streets for several blocks. While many have been day laborers for years, some are new. One man NY1 spoke with says he was laid off last month after 10 years at a construction company.
With very little cash, many are struggling to take care of themselves. Advocacy groups say a great number of them are becoming homeless.
“Nobody don’t have money to eat, for the rent to pay the apartment you know,” said one day laborer.
“These people are living right now in the parks, they sleep in the subway stations or they take the train back and forth. Until the morning,” said Latin American Workers Project Executive Director Oscar Paredes.
Many say they came to the U.S. to work and support their family, but in the current economic climate they can no longer afford to send them money.
“For now, nothing, you know because the economy is no good,” said one day laborer. Mohan Masjey has been communicating with his family in Nepal and has been thinking about leaving the U.S.
“If I cannot get a job, I go back,” said Masjey.
Some say if things don’t turn around soon, that’s something they will have to consider as well.
Unfortunately, the best thing they can do for themselves is to GO HOME ! At least they would have family there. Some people move back and find they do better there economically than they do here because the cost of living is so much lower.
I see it an issue as the crime rate in Dallas is slowly increasing as many of these people turn to other avenues to acquire money.
Luckily, the police have changed the way they count crimes so as not appear to be ineffective.
Recent San Diego gas prices
December 15, 2008 $1.71
May 29, 2009 $2.71
Increase since December 15: (2.71/1.71-1)*100 = 58.5 percent.
Annualized rate of increase since December 15:
((2.71/1.71)^(360/(16+31+28+31+30+29))-1)*100 = 173.1 percent.
Move along — nothing to see here, folks…
Financial Times
Oil prices hit six-month high
By Javier Blas in Vienna
Published: May 29 2009 11:35 | Last updated: May 29 2009 16:16
Oil prices on Friday hit $66 a barrel, setting a fresh six-month high and heading for their biggest monthly gain in more than 10 years, following Opec’s upbeat comments about oil demand in Asia at its meeting this week.
Abdalla El-Badri, Opec’s secretary general, said prices could rise to $70-$75 a barrel by the end of the year. “The outlook is improving,” Mr El-Badri said over breakfast. But added: “The fundamentals are still weak.”
…
PB, you are leaving dollar devaluation out of your calculations. The petrodollar is where it’s at.
I just posted a snippet of the FT article verbatim, so I can’t really claim those are my calculations. But I agree — see my exchange rate post in yesterday’s bits buckets which shows the dollar dropping against every currency except the Zimbabwe dollar.
Anyone trying to save up for a downpayment to buy a home when prices bottom out should have dollar hedges in place as insurance against losing out big time in the Fed’s War on Savers.
“Anyone trying to save up for a downpayment to buy a home when prices bottom out should have dollar hedges in place as insurance against losing out big time in the Fed’s War on Savers.”
Tell me more.
SLV Jan 2010 19.0000 call
(OPR: SLVAS.X)
$1.00 each in contracts of 100
I actually don’t think these are long enough dated, but the idea is if silver goes above $19 between now and next January you can cash in the spread on each contract. It would not surprise me to see SLV at 24ish by end of ‘09. That would turn $10k into $50K. That is an inflation hedge. The $1 premium is lost if not traded before expiry and not in the money.
There’s that word again: “efficient markets”
There’s that “other” word: “Supply & Demand”
There’s that “other, other” word: “internal combustion engine”
I still think the ballot measures were a done deal whose sole purpose was to signal that California is a bailout-worthy too-big-to-fail financial entity. Wall Street, Washington and Detroit got theirs; when do we get ours?
Financial Times
A failing state
By Matthew Garrahan
Published: May 29 2009 18:49 | Last updated: May 29 2009 18:49
(Photo: Barack Obama and Arnold Schwarzenegger)
When Arnold Schwarzenegger appeared on The Tonight Show on Tuesday, he joked with Jay Leno about advice he had given in a recent address to students at the University of Southern California. “I told them to work like hell and marry a Kennedy,” he said, to laughter and applause.
The studio audience loved Mr Schwarzenegger, who is married to Maria Shriver, John F. Kennedy’s niece. Making his 25th appearance on the show, he was in his element sparring with Mr Leno, who poked fun at the California governor’s Austrian accent.
But he has had little to laugh about away from the television studio. In the past two weeks the former movie star has had to deal with the biggest crisis of his short political career after voters in a “special election” spurned revenue-raising measures he hoped would avert financial disaster.
Hailed as the state’s saviour when he replaced Gray Davis, who was ousted in 2003, Mr Schwarzenegger’s poll ratings have reached their lowest ever. Amid a 29 per cent fall in tax revenues since last September, the state faces a budget deficit this year of $24bn (£15bn, €17bn) and the Republican governor is threatening to take a Conan the Barbarian-style sword to spending on health, education and other vital public services. “The people have spoken,” he says in a Financial Times interview. “We have to live within our means.”
Well Citi sent me an email letting me know they raised my credit limit by about $2K or so. Haven’t heard of that happening in a long time.
I pay it in full every month and rarely ever use more than a small fraction of my old limit.
Lending money to people who more than likely won’t use it… are they doing this so they can tell the government they are “still lending”?
Is this one of them “green shoots” I keep hearing about?
Seems like a great answer to give, that will be over the heads of the average politician
———————————————
Lending money to people who more than likely won’t use it… are they doing this so they can tell the government they are “still lending”?
More evidence the bubble still has room to deflate: At least some WSJ columnists have still not left the denial phase of the housing bubble stages of grief. Why would anyone be talking about capital gains when housing just dropped at a record YOY rate across the U.S.? Shouldn’t we be talking about how to limit exposure to housing market capital losses by now? Note that the annual returns he cites are not inflation-adjusted.
Wall Street Journal
* ROI
* MAY 29, 2009, 11:00 P.M. ET
Why Your Mortgage Won’t Make You Rich
Even when your home rises in value, the costs of borrowing often chew up those gains.
By BRETT ARENDS
Does a mortgage make your home a better investment? Of course it can. But it’s not as simple as many people think.
After my recent column about anemic real estate returns lots of readers wrote to ask whether the use of leverage — in other words, a mortgage — makes a difference to their investment in a home.
From my correspondence it seems some are engaging in oversimplified mental accounting. In making the investment case for real estate, some ignored the opportunity cost of their initial down payment. If you weren’t buying a home, you could invest the money elsewhere. Others ignored the annual interest cost on their mortgage, as if the debt were free. But you’ve got to factor both of those into the equation.
And, as we’ve probably learned by now, debt isn’t magic. You can’t borrow at 7%, invest at 5% and expect to make yourself rich thanks to “leverage.” Anyone who thinks that way missed their true calling — working for Bear Stearns.
(There may be a job for you at the Treasury, though.)
To bring us up to date: From 1994 through 2009, according to the Case-Shiller index, U.S. home prices produced an annualized return of 4.7% a year. The picture since 1987 has been even less appealing. Homes have only gained about 4.1% a year since then.
Both rates of return are far below typical mortgage rates throughout that period.
These days mortgage rates look pretty cheap at around 5%. That certainly makes leverage look more enticing. If we see inflation, borrowing at 5% to buy a discounted home may turn out to be a smart move.
…
Research at the Massachusetts Institute of Technology even suggests home owners may end up earning less over the course of their lives than renters do. The reason? Renters can more easily move for good jobs. It may sound fanciful, but it’s not completely ridiculous. Just ask someone who owns a home in Detroit.
I’m not arguing that buying a home is a bad financial move. My wife and I own. But we bought after running the numbers and comparing the annual costs with renting. We didn’t gamble on big capital appreciation to help us out.
Nor am I denying the other benfits of ownership. Owning your own place can be a great feeling.
But if you are trying to decide whether to rent or to buy, and you take a purely financial point of view, it’s risky to rely on brisk home-price appreciation to swing the argument.
The real benefits of home ownership are any capital appreciation, plus the imputed rent, minus the effective cost of the mortgage and property taxes, other costs, and the return you could earn on your down payment elsewhere.
That’s a complex figure, and it varies widely. But if your home’s appreciation is lower than the annual cost of borrowing, as it has been for many over the last 20 years, leverage is not much of a friend.
You can’t have your green shoots and eat them too.
Wall Street Journal
* MAY 30, 2009
Jittery Bond Market Threatens President’s Agenda
By JONATHAN WEISMAN
WASHINGTON — Senior Obama administration officials said Friday that policy adjustments necessary to contain soaring budget deficits would be made once an economic recovery takes hold, in response to growing concerns about a run-up in long-term interest rates.
Treasury Secretary Timothy Geithner, National Economic Council chief Lawrence Summers and Office of Management and Budget director Peter Orszag said in separate interviews that the administration was acutely aware that rising interest rates pose a threat to the improving U.S. economy.
Yields on 10-year Treasury notes have risen 1.5 percentage points this year as bond traders pull back amid worries about rising federal debt. Higher yields will leave the government with higher interest costs and still higher deficits. They could also push up other forms of interest rates, making borrowing more expensive for many people.
On Thursday, the Treasury Department is expected to announce an auction of roughly $65 billion in three-year, 10-year and 30-year notes and bonds, and the result will be closely watched.
“We’re going to do what’s necessary,” Mr. Geithner said. “That’s the only way you’re going to get a strong, sustainable recovery.” As soon as a recovery takes hold, the administration will reduce the deficit to a sustainable level, he said, adding, “That’s difficult, but critically important.”
Capitol Report
May 29, 2009, 10:25 a.m. EST
Geithner goes to Beijing to manage bad marriage
Relationship, smooth during recession, may get stormy
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) - Treasury Secretary Timothy Geithner is about to get on a plane and travel half-way around the world to manage what is probably the world’s worst marriage-of-convenience.
Mutual mistrust, competition and rivalry complicate a U.S.-China relationship that, on the other hand, has been so lucrative for both sides and the global economy.
The two sides got closer during the recent recession, but there are new strains on the horizon.
China’s currency has moved lower in recent weeks, riding on the back of the dollar.
Criticism is sure to follow. With one of the few economies growing in the global recession, by all rights China’s currency should be on the rise.
Experts said this love/hate bilateral relationship is well-established.
U.S. policy towards China constantly swerves “between marriage and a nasty divorce,” said Clay Lowery, a former Treasury official during the George W. Bush administration.
I’ve been reading that huge amounts of America’s real estate is owned by people connected to illegal narcotics profiteering, and that buying houses at bubble bust prices has taken off. Imagine if your rental property landlord is an acquaintance of an acquaintance of an acquaintance of a crooked Mexican politician or dope supplier - you’re unknowingly a part of the whole corrupted enchilada. Asked about trying to take dope dealer’s and suppliers off US streets, D.E.A. agent Marotta said: “It’s like sweeping sunshine off the roof.”
Have you ever thought about how the money is converted into houses?
How many banks are involved in money laundering? The illegal drug trade is over $65 billion/year.
The illegality of drugs also keeps law makers, law enforcers, Corrections officers (I mean PRISON GUARDS! - why don’t they want to be called that anymore?), judges, prosecuting attorneys, bail bonds owners all employed.
Here I am on my second glass of red Gallo Wine (Sonoma, Cabernet Sauvignon, 2006), and I understand that after I finish this second glass, I am on a stronger high than I would get from marijuana (never smoked, but inhaled at an Alice Cooper Rock Concert in the 70s - the whole danged arena in Fresno was dope smoke).
California corrections officers have been known to make $100,000 incomes, get very lucrative pensions after 15 years working, and so on.
What a scam. The Bill O’Reilly types are too naive and blinded by their Jerry Fallwell Bibles to notice they are being fleeced by the “law and order” special interests.
I figure when they realize they’ve been had, that’s when we will finally decriminalize drugs and prostitution and join most of the developed nations. Until then, we are in the 13th century.
“Sweeping sunshine off the roof”
More like “Walking on Sunshine”
Oh! Ohhhh yeeeh
I used to think maybe you loved me now baby I’m sure
And I just cant wait till the day when you knock on my door
Now everytime I go for the mailbox , gotta hold myself down
Cos I just wait till you write me your coming around
I’m walking on sunshine , wooah
I’m walking on sunshine, woooah
I’m walking on sunshine, woooah
and don’t it feel good!!
Hey , alright now
and dont it feel good!!
hey yeh
I used to think maybe you loved me, now I know that its true
and I don’t want to spend all my life , just in waiting for you
now I don’t want u back for the weekend
not back for a day , no no no
I said baby I just want you back and I want you to stay
woah yeh!
I’m walking on sunshine , wooah
I’m walking on sunshine, woooah
I’m walking on sunshine, woooah
and don’t it feel good!!
Hey , alright now
and don’t it feel good!!
hey yeh ,oh yeh
and don’t it feel good!!
walking on sunshine
walking on sunshine
I feel the love,I feel the love, I feel the love that’s really real
I feel the love, I feel the love, I feel the love that’s really real
I’m on sunshine baby oh
I’m on sunshine baby oh
I’m walking on sunshine wooah
I’m walking on sunshine wooah
I’m walking on sunshine wooah
and don’t it feel good!!
I’ll say it again now
and don’t it feel good!!
- Katrina and the Waves
I loved that song so much when it came out in the 80s it gave me chills when I listened to it! So positive, so good! I think it was my last year in college.
Another one I think is in the same league is “That’s what I like about You,” by the Romantics. That song was incentive enough to get me out on the dance floor with my gal friend who also loved that song.
Wall Street Journal
* MAY 29, 2009, 3:48 P.M. ET
UPDATE: Fannie Gross Mortgage Portfolio Shrank 19.2% In April
By Prabha Natarajan
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–Fannie Mae (FNM) saw its volume of refinanced mortgages drop in April to $45.5 billion from a high of $77 billion in March, its largest since 2003, according to a monthly report released Friday.
The mortgage giant’s investment portfolio shrank again, this time by 19.2%, keeping its total balance at $770.062 billion, well short of the curbs set by its regulator, according to the report from the company.
“Fannie’s lack of portfolio growth was driven by the relative richness of mortgages versus agency debt,” said Margaret Kerins, agency debt strategist with RBS, adding that discretionary growth will be a continuing trend for the company.
The mortgage company, which is under government conservatorship, expects to see its refinancing volumes stay at elevated levels as mortgage rates remain low, and the government widens the eligibility of refinanceable loans under its Making Home Affordable Program.
Meanwhile, the mortgage finance company said its delinquency rate rose to 3.15% in March from 2.96% in February, according to the report. This compares to a delinquency rate of 1.06% in January 2008.
The company says these numbers are elevated as a result of its moratorium on foreclosures that ended in March.
Market participants say that even though these numbers are still low compared to the averages on other kinds of mortgages, it represents an increased stress on the company from its mortgage holdings. These numbers are expected to rise as the unemployment rate continues to tick upward, and job losses drag even credit-worthy borrowers into missing payments.
On the business front, Fannie committed to buy nearly $4.9 billion of mortgage bonds in April, down from its net commitments of nearly $5.4 billion in March.
Over the past couple of months, the roles of Freddie Mac (FRE) and its sibling Fannie in the mortgage market have diminished as both the U.S. Treasury and the Federal Reserve have emerged as backstop buyers with deep pockets.
WTF? Small wonder the bond market vigilantes are back with a hangman’s noose in hand.
Is this what the Fedury had in mind when they went on an MBS shopping binge?
Developments
WSJ.com tracks the housing market with news, tips and analysis
* How to Get the $8,000 First-Time Home Buyer Credit Upfront
* Friday Diversion: Azaria Buys L.A. Home for $10 Million, Ferris Bueller’s House on Market
* May 29, 2009, 11:51 AM ET
A ‘Catastrophic Time’ for Higher Mortgage Rates
By Nick Timiraos
A spike in mortgage rates could chill a surge in refinance activity that began two months ago when rates dropped below 5% to nearly 50-year lows.
Rates ended at 5.44% on Thursday, up from 5.03% on Tuesday, according to HSH Associates. Rates have gone up because they’re closely tied to yields on long-term Treasury bonds that made similar jumps in recent days. (In today’s WSJ we take a deeper look at why rates are rising, and what policymakers may do about it.)
Applications for more than half of all borrowers who’ve applied to refinance but haven’t yet locked in low rates could perish if rates stay higher, according to an estimate by Mark Hanson, president of the Field Check Group, a research firm.
It’s less clear what effect the surge in rates will have on home purchases, because interest rates are just one of a handful of decision-making factors on buying a home. Some prospective buyers may have qualified for a certain loan at 5%, but won’t qualify at 5.5% because the higher mortgage payments may push their debt-to-income ratios above qualifying levels. Also, a big spike in rates that sticks around may send buyers back to wait on the sidelines. “Right now is a catastrophic time for the housing market to have interest rates going up,” says Mr. Hanson.
Higer interest rates leave debt to income ratios exactly where they were before. Exactly. They do change the monthly payment to monthly income ration, but only if you assume the price of the house has to stay the same.
Drop the price and they can qualify again.
It’s the math.
This conclusion that it is not overpriced homes, but rather unemployment and declining home prices, that leads to borrower defaults sounds like exactly the evidence the Fed needs to legitimize a program of housing price reflation. Meanwhile holders of prime and Alt-A ARMS continue to go into foreclosure as resets blow up their monthly payments to unaffordable levels.
Developments
WSJ.com tracks the housing market with news, tips and analysis
* May 28, 2009, 10:48 AM ET
Why Do Borrowers Default? Hint, It’s Not Because of High Mortgage Payments
By Nick Timiraos
Why do borrowers default? Many have assumed it’s because mortgage payments are too high. But a new paper from the Federal Reserve Bank of Atlanta argues that unaffordable loans—with high mortgage payments relative to income from the time they’re originated—are “unlikely to be the main reason that borrowers decide to default.” Instead, unemployment and future home price declines are likely to play a bigger role. (The paper looks at loans that are unaffordable from the time they’re originated, and not at loans that may start with low “teaser” rates before jumping higher.)
The Fed paper estimates that a 1-percentage-point increase in the unemployment rate boosts the chance of a 90-day delinquency by 10%-20%, and a 10-percentage point fall in house prices raises the probability of a default by more than half. A 10-percentage-point jump in the debt-to-income ratio, meanwhile, increases the chance of a 90-day delinquency by 7%-11%.
The paper also takes a look at whether it’s really in the interest of investors and lenders to modify delinquent loans instead of foreclosing on the homes backed by those loans. After all, some estimate that the gains from modifying loans rather than foreclosing on them runs as high as $180 billion. The authors note, “It is natural to wonder why investors are leaving so many $500 bills on the sidewalk.” Their answer: modifications don’t save much. While investors do save some money by modifying loans, they still lose money on those that work–and many modifications still fail.
…
Another point someone made yesterday was that in foreclosure there may be other sources of repayment (such as insurance), whereas in modifying a loan you are stuck with what the FB can really himself repay.
It’s not the price, but rather the cherry blossoms that will help your home sell this spring.
Wall Street Journal
* HOUSE TALK
* APRIL 3, 2009, 2:14 P.M. ET
Tips for the Spring Selling Season
If you’re staging your home for sale, don’t neglect your garden.
By JUNE FLETCHER
The cherry blossoms are in full bloom in my hometown of Washington, D.C., marking the beginning of the spring home selling season.
If you, like me, are preparing to put your home on the market, that means that you not only have to stage your home’s interior to impress potential buyers, but you have to spruce up your yard, too.
Although many sellers in my market hope that a drift of daffodils will clinch a deal, in truth, plants can hurt a home’s curb appeal as much as they can help it. For instance, a drift of wild, weedy onions hidden in the grass can make a newly mowed lawn smell like a gas station restroom; trees planted too close to a house mask its best features and conjure alarming visions of weekends on a rickety ladder, cleaning gutters.
Cherry blossoms in bloom this week in Washington, DC.
Cherry blossoms
Cherry blossoms
That’s not the impression you want to make on buyers who fantasize about lounging on the patio, not messing with pole pruners. So here are some tips for staging your yard for sale:
…
If rents and home prices are both falling, why is there any question about whether it is a better time to buy or to rent? How can the answer not be completely obvious? It is not like the scales are mildly tipped in favor of renting when rents and home prices are both dropping.
D’oh, let’s see: Would I be better off living rent free for another year, or buying now and paying my next year’s rent to the bank who loans me the money? How can these financial writers possibly be so stoopid???
Developments
WSJ.com tracks the housing market with news, tips and analysis
* May 26, 2009, 10:42 AM ET
Home Prices ‘Significantly Undervalued,’ Should Renters Buy?
By Nick Timiraos
The Case-Shiller home price index shows that house prices haven’t hit a bottom, and they’ve fallen so far—another 7.5% in the first quarter from the previous quarter—that house prices are “now undervalued, possibly quite significantly,” writes Paul Dales, U.S. economist for Capital Economics. That’s raising an interesting question for potential buyers who’ve rented throughout the housing boom: Is it time to buy?
Home prices have returned to 2002 levels in nominal terms and to 2000 levels when adjusted for inflation. Looking at the historic ratio of home prices to rental prices, home prices are now 9% below the normal market value, the lowest since 1999. And using the measure of home prices to incomes, housing is 18% below its historical level, according to Capital Economics, the lowest such ratio since the Case-Shiller index began measuring prices 22 years ago.
Some markets have posted even sharper retreats. Prices in Detroit have fallen to their 1995 levels, according to housing analyst Ivy Zelman, the largest such drop among the 20 cities tracked by the Case-Shiller index, while Cleveland has returned to 1999 prices.
But buyers may hold back because there’s no sign that prices won’t keep falling. Rising unemployment could push values down, as could a rising shadow supply of foreclosed, vacant and unlisted homes. Economists have long expressed concern about prices overshooting on the downside, or falling below the point at which they’d return to equilibrium. Mr. Dales estimates another 5-10% decline in prices.
Rents, meanwhile, continue to fall, too, which helps balance the scales a bit in favor of those who continue to rent.
Trying to find office space for a “hacker clubhouse” in Southeastern Virginia is dizzying. All of the people want peak bubble rates for their office space. And there is just so much space available.
I was trying to look for foreclosures on office/warehouse buildings, but there are so many garbage sites on the internet showing the same residential data it seems difficult.
Meanwhile, Craigslist has a growing number of people listing the first floors of their houses as offices for rent, or full houses as offices. Pretty nutty.
Well, things are officially crazy again in the Fort Myers, Florida, area. Sales have reached record levels and decent homes get snatched up almost immediately. No reports of people lining up to bid on places yet, but then again there’s no new construction. The vast majority are short sales and foreclosures.
Of course the big difference are the prices. Most are 60-70 percent off peak 2005 prices. Many, many homes selling for under $100,000. Even a lot of the crappier places are being bought. Many feel you can’t lose when the places only cost $50,000 to $60,000.
With all the sales, the supply is down to 3 months. How many more foreclosures can come on the market? We’ve had so many. Heck, most of Cape Coral is in foreclosure.
Troll? Is that you?
All of the people want peak bubble rates ??
Make them a offer giving them the rate they want but ask for free rent for a certain period of time that effectively gets you to the rate you want to pay…Landlords/property managers are very reluctant to reduce the “face value” of the leases..There are any number of reasons but I will give you two important ones…First; Any face value reduction would be met with a onslaught of current tenants paying more, asking for the same deal… Second; If they want to sell the building or more importantly, refinance it, the face value of the leases will be a Critical component in holding up the appraised value of the property…
I took care of some business, was going to catch up on HBB and go for a bike ride. After reading yesterday’s Bits Bucket, I am changing my plans:
1 - Go to collective farm and dig potatoes.
2 - “Volunteer” to paint red stars on public buildings for Communist Citizens Corps.
3 - Stand in bread line for hours.
4 - Practice goose step.
Well, maybe a quick bike ride first.
hip…I am getting ready to do the same…I ride my bike every day…What zip are you in ??
78704
south central Austin
yeah baby…
Don’t have to think or imagine. Lived in the Land of the Cocaine Cowboys in the 80’s in Miami. Saw things up close. The famous Dadeland shootout that defined the era happened next to where I worked. Mac 10’s really can muck things up. The amount Americans spend on illegal dope each year could fund health care for the uninsured, but we’d rather get wasted. Elvis personified the American dream for many, but he loved his dope by way of Big Pharma. Big Pharma is a legal dope peddler. Let’s see Barrack reign-in that industry. Ha ha.
Hosting an “asparagavaganza” tonight!
Cheers to all.
I switched to ‘Firefox’ yesterday morning, partly so I could get drumminj’s new application thingie for Ben’s Blog, and since then my posts only go through about half the time. For instance, none of my chatter about guns made it through to robiscrazy last night.
Is this something I need to fret about, or should I just kiss and fondle my computer and see it that makes it alllll better?
That worked last time.
Kiss and fondle, then post it on youtube.
Even if it’s not something YOU should worry about, it IS something the rest of us should worry about -
Not getting to read Oly’s posts = blog not as interesting or entertaining.
So, hope it gets fixed SOON, Oly.
Losty, Oly will find her way through a black hole.
Just kiss and fondle.
Just hit reload or F5 it does work …but don’t go hit the back button, it will reset the counter to zero new messages, just keep hitting next….
Reload/F5 does the same thing, actually…each time it loads the page it re-computes the “new” posts, other than if the page reloads due to you posting a comment…
Man, I really do need to put together a “readme”…Maybe tomorrow…
I vote kiss and fondle as well. The browser you use should be irrelevant.
We could all use a little more kissing and fondling. Especially me, since the girl I mentioned yesterday isn’t interested in a second date. Sigh.
Next time I’m going to parrot all of the NAR slogans. I should make a list of them…
They ain’t worth it.
Ate up?
Date me or forever be stuck with a realturd ..
Going, going, gone…..the $15M tacky Detroit area mansion mentioned here recently was auctioned for $4.5 million. Still think someone grossly overpaid.
http://www.detnews.com/article/20090529/OPINION03/905290384/15M-Bloomfield-Hills-dream-home-auctioned-for-4.5M
“The market spoke,” Rose said.
Testify Rose
Check out the look on the face of the woman who masterminded and built that piece of work.
Oh, btw…..why do they keep saying it’s a $15m home even after it just sold ~= $4.95m.
Looks like a $5m home to me. Wonder what she forked out to build it?
Has Economic Twilight Fallen on Nations Sun Belt?
http://news.yahoo.com/s/ap/20090530/ap_on_re_us/us_stress_map_sun_belt_sunset
Here’s the part I like and I think low rents are already the incentive in place:
What to do? Scrap policies that encourage homebuying, he suggests, and give incentives to more mobile renters who can go where the jobs are.
In the digital age, he says, industries will likely cluster in “mega-regions” of multiple cities and their surrounding suburban rings (e.g., the Boston-New York-Washington corridor). These areas will surge, lifted by the brainpower of educated professionals and creative thinkers that turn out “products and services faster than talented people in other places can.”
I am well aware of the Boston to Washington D.C. corridor as a job Disneyland for my skills. Also Los Angeles, Orange County, and Silicon Valley.
There are still some good jobs in my area in Phoenix.
Tee time at the resort: Where is everybody?
By GERALDINE FABRIKANT
The New York Times
Sunday, May 31, 2009
MONTVERDE, Fla. — Off the turnpike here in central Florida, hidden behind stucco walls, sits a sprawling Tuscan-style clubhouse on a hill overlooking a string of lakes, a golf course and green fields.
This 1,900-acre property, called Bella Collina, was designed to hold 800 homes. Today, only 48 houses dot the landscape, and just three are occupied. The clubhouse, though open, is eerily quiet, and a promised swimming pool and equestrian center have yet to be built.
Bella Collina, the brainchild of Robert Edward Ginn III, looks like a ghost town. So does Tesoro, another resort opened by Ginn near Port St. Lucie, where just 150 houses sit on 900 lots. And the Conservatory in Palm Coast, also from Ginn, is even more barren: 335 out of 340 lots are empty.
As the real estate boom expanded in recent years, developers and home buyers believed that residential golf resorts were a sure-fire bet. Many buyers looked to buy properties that they could flip for a quick profit. Others were lured by stunning views, club services and security. While there is no reliable data on the growth in residential golf resorts, analysts say the market is well past its peak - particularly in the Sun Belt - and there is now an overabundance of developments.
“The aggressive building of new resort courses continued from the mid-1990s into the 2000s, contributing to an increasing glut of inventory that finally found no market,” said Joe Beditz, chief executive of the National Golf Foundation, a trade group that tracks data on the golf industry.
Ginn, 60, was able to cash in on the boom despite a spotty record that included some well-publicized failures on Hilton Head Island, S.C., in the 1980s. But when the real estate market began to tank in 2007, his empire came undone. “As property values plummeted, many investors had property worth less than their loans, and they were unprepared to pay their club and association fees,” says Toby Tobin, a Florida real estate agent.