Without Greed, There’s More Than Enough To Go Around
It’s Friday desk clearing time for this blogger. “When Harvey Clavon took out an exotic mortgage to refinance his home in Santa Clarita, Calif., three years ago, he thought he knew what he was doing. He planned to sell the home before the mortgage reset. Because Mr. Clavon made only minimum payments on his mortgage, his balance has risen to $680,000 from $618,000, on a house worth closer to $400,000. ‘I don’t know what I’m going to do,’ he said. ‘I got duped into the loan, and I consider myself an educated man.’”
“‘This was a loan meant for sophisticated investors, or people who expected their cash flow to increase over time,’ said Elena Warshawsky, a residential credit analyst with Barclays Capital, which expects 81 percent of the option ARMs originated in 2007 to default, with many ending in foreclosure. ‘But then they were extended to all sorts of buyers. Now it wasn’t people hoping their income would grow. It was people hoping their house price would increase’ so they could refinance or sell, Ms. Warshawsky said.”
“Ron Dzurinko, who lives on a fixed income in Sacramento, took out an option ARM five years ago without understanding it, knowing only that he could afford the initial payments of $900 a month. ‘The mortgage person said, ‘It could adjust, but we don’t foresee any major bumps,’ Mr. Dzurinko said. ‘It sounded good to me.’”
“One Utah neighborhood…is loaded with high-end homes with foreclosures and lawns full of weeds. Homeowners in the area say they’re fed up with the eyesores affecting their property values. Angie Snarr has an ever-growing problem in the front and to the side of her home: weeds that threaten to overtake her yard. She’s tried cutting them, tilling the soil, but she can’t keep up and has now all but given up.”
“‘This was actually our dream home when we built, and at this point we can’t wait to get out of it,’ Snarr said.”
“Trump Hollywood oozes opulence, from the sprawling pool deck to the cigar room to the Italian cabinetry and wine fridges in the 200 condominiums, all with dramatic ocean views. Of course, the lavish digs, unveiled Friday, come at a steep price: The condos range from $1.3 million to $7 million.”
“Donald Trump and Jorge Perez, the high-profile development duo behind the $355 million project, say they have lined up roughly 140 buyers so far. Closings start next week. ‘In the end, the cream rises to the top, and this building is that,’ said Donald Trump Jr., wearing a gray pinstripe suit as he stood in for his famous father during a press tour of the tower.”
“Buyers will back out of deals, and sales will be challenging, Perez said. ‘Some people are very, very afraid, asking for discounts that we will not give,’ he said.”
“Lewis Goodkin, a longtime housing consultant in Miami, said…elling the rest of the units will be difficult because most buyers are searching for bargains, he said. ‘The last thing in the world I’d want to be doing today is opening a condo development,’ Goodkin said. ‘This is not one of those things where people who are bigger than life will make a difference.’”
“In the second quarter, the Standard & Poor’s/Case-Shiller U.S. National Home Price Index posted its first upward turn in quarter-over-quarter home prices - 2.9% - since the collapse of housing prices began in mid-2006. Although average home prices nationwide still are down 30.2% from their peak and off 14.9% from the same quarter last year, the uptick in the widely watched index’s April-June period suggests that the rapid descent of housing prices may be at an end. Karl Case, an economics professor and co-creator of the S&P/Case-Shiller indexes, told Bloomberg News the latest result ‘looks like a turn.’”
“‘It’s not going down anymore and it’s beginning to come up. That’s very good for the future of this financial problem,’ Case said.”
“We’ve highlighted proposals, picked through reports, and listened to testimony from advocates concerned that Illinois has an insufficient number of affordable housing units. But nothing illustrates the need better than the scene in south suburban Park Forest yesterday, where hundreds of people lined up outside of the police station just to get their names on a federal housing voucher wait-list that has been closed for a decade. Yesterday morning, FOX Chicago sent a reporter out to the rain-soaked lawn where entire families are camped out.”
“‘It’s almost like the Grapes of Wrath looking at those people,’ anchor David Navarro gasped.”
“An affordable housing complex in Fraser, Fox Run, is in pending foreclosure. The recession made Fox Run’s sustained vacancy rate downturn worse. ‘In the future there will be a need for more affordable housing. But right now, there’s more inventory out there. Occupancy rates are down right now. Not just with Fox Run, but with the entire rental inventory,’ said Grand County Housing Authority executive director Jim Sheehan.”
“More than $3 million will flow into Yuba and Sutter counties in the coming months to help restore, rent out and sell homes caught in foreclosure limbo. Sutter County, which announced its payout in June, will add 10 to 15 restored houses to its stock of public housing, whose waiting list has grown with the two-year recession, according to Gustavo Becerra, program director for the Consolidated Housing Authority of Sutter County.”
“More than 2,600 families are on the county’s waiting list for apartments as collapses in the building and other trades have helped push the local unemployment rate north of 18 percent.”
“The Tuolumne County Board of Supervisors has approved the latest update of the housing element of the county’s General Plan, and, in doing so, addressed concerns by a group of developers who felt their input had not been heeded in prior discussions. The housing market is so bad right now that unnecessary regulation should be scrapped, goes the developers’ philosophy. That has prompted them to ask the county to consider postponing the affordable housing ordinance if the analysis can’t be done in a timely manner. The median home price in the county sits at $232,000; it was $271,000 when the ordinance was adopted in 2008. In 2006, the peak of the housing boom, the median price was $332,000.”
“Several affordable housing watchdogs were at Tuesday’s meeting, and a few of them spoke up during the public comment portion of the meeting. Marge Brown urged supervisors to provide ‘hope for the hopeless.’ ‘Without greed, there is more than enough to go around,’ she said.”
“If consumers are once again to spend the nation out of recession, we need more than Cash for Clunkers. My brother, a self-employed home remodeler, called my attention to an impromptu video made last week by members of the Home Builders Association of Greater Kansas City. ‘We’re drowning here,’ said Travis Graham with Graham Construction, who called for a life raft like that tossed to the auto industry.”
“Housing industry members got a reality check Wednesday at the Builders Association of Northern Nevada’s Mid-Year Construction Analysis, even as increased affordability had some hopeful about an improvement in the market. ‘The big reset button has been pushed and this is the new reality,’ said Brian Bonnenfant, project manager at the Center for Regional Studies at the University of Nevada Reno. ‘We really need to adjust our attitudes.’”
“Of the more than 4,000 actual listings on the market in July, 59 percent were distressed properties, according to Bonnenfant. Adding to real estate’s woes is unemployment. As of July, the size of the area’s workforce has fallen to levels not seen since 2002. Construction, a key sector for housing, saw the biggest drop in employment, Bonnenfant said.”
“Jobs have done a vanishing act in this recession, and Oregon’s official economic forecast released Thursday predicts they won’t start coming back until 2011. The United States has lost 7 million jobs in this recession so far — more than were lost in the past three recessions combined, the state Office of Economic Analysis estimates.”
“‘Those projections seem pretty dire,’ said Mike Gansen, a homebuilder in Eugene and past president of the Oregon Home Builders Association. ‘I would imagine we’ve already hit (a) 16 percent (decline) this year, but a 9 percent loss next year — I don’t know.’”
“Gansen pared his business down to five employees, including himself, from a peak of 11 in 2007. He said he’s not sure when he’ll start hiring again. ‘It does feel better, but I hate to make plans for expansions just to have a false start.’”
“Nearly one in four Alabama homeowners is underwater on a mortgage or close to the brink. One of trend’s key drivers was the proliferation of more aggressive mortgage products during the height of the housing boom in the mid-2000s, said John Kottmeyer, a banking professor at Samford University’s Brock School of Business. Back then, it was common to see mortgages financed with no money down or 10 percent down, instead of the more typical 20 percent down payment, he said. As a result, homeowners didn’t have much up-front equity in their homes. Since then, values have dropped.”
“There’s also the fact that homeowners pay more interest and less principal on their mortgages in the early years, he said. ‘It really is a non-event if you plan to stay in your house for a long time,’ Kottmeyer said. ‘The risk is there if there’s a major change and you need to move. You have negative equity. … that’s what’s leading to foreclosures.’”
“(A) report from Fitch Ratings Ltd., a credit-rating firm, focuses on a plunge in the ‘cure rate’ for mortgages that were packaged into securities. Fitch found that the cure rate for prime loans dropped to 6.6% as of July from an average of 45% for the years 2000 through 2006. For so-called Alt-A loans…the cure rate has fallen to 4.3% from 30.2%. In the subprime category, the rate has declined to 5.3% from 19.4%. ‘The cure rates have really collapsed,’ said Roelof Slump, a managing director at Fitch.”
“Merced County’s median home price dipped slightly in July, though it seems to have stabilized after last year’s free-fall. Merced remains the county with the highest foreclosure rate in California. Krotik said one promising sign is that banks are more willing to do short sales. While some owners are losing their homes because of a lost job or other economic circumstances, real estate agent Andy Krotik said the market is still driven by people making a business decision of whether it’s worth paying off a home bought at the boom’s height.”
“For so many, it’s not.”
“New home sales increased from June to July nationwide, but that gain didn’t extend to California and the Bay Area where the expiration of a state tax credit for new home purchases is being attributed for a drop in sales. When the state tax credit was launched in March, new home sales picked up substantially until funding for the $100 million program ran out, said Tim Coyle, senior vice president of the California Building Industry Association.”
“‘Activity has dropped off dramatically,’ said Coyle, adding there are reports of consumers canceling sales contracts to buy new homes after the state tax credit was no longer available. ‘We call it the ‘can’ rate (short for cancellation). Those went way up in July. If you want to keep the momentum going, that means that the state tax credit has got to be renewed,’ he said.”
“DataQuick analyst Andrew LePage noted that foreclosures are also competing with new home sales in California and the Bay Area. ‘Foreclosures are a larger factor in California, especially in the inland areas, including in parts of the Bay Area such as east Contra Costa and Solano (counties),’ he wrote. ‘Those are the areas where it’s extremely difficult for builders to compete with plentiful and heavily discounted foreclosures.’”
“If you’re in the new home sales business, prepare yourself: The supply of finished lots ready for home construction - which has been suffering a huge oversupply hangover in the area - might run out by mid-2010. That’s the view Randall Lewis, executive vice president of Upland-based developer Lewis Operating Corp., expressed at Thursday’s quarterly Real Estate Research Council of Southern California meeting at Cal Poly Pomona.”
“One could easily perceive a rush by developers to sell unfinished lots to builders, but construction costs would need to drop - or new home prices rise - for this to make fiscal sense for home builders, Lewis said.”
“Foreclosure sales dropped 35 percent in Southern California between second quarter 2008 and second quarter 2009. Banks probably aren’t letting piles of foreclosures flood the market even more than they already have for a reason, said Michael Carney, director of the real estate research council.”
“‘My suspicion is that regulators are putting pressure on lenders not to do this,’ Carney said.”
“California’s domestic out-migration…may have a simpler cause than dysfunctional government or high taxes. Houses became much more expensive in California than in the rest of the country during this decade’s housing boom, with the gap growing until early 2007, when most of those emigrating today would have begun to make their plans. Many Californians who already owned homes took their profits and are looking for larger houses in other states, while people in other states were priced out of California.”
“Housing ‘unaffordability,’ says Steve Levy, the boss of the Centre for the Continuing Study of the California Economy, was and is California’s ‘principal competitive disadvantage.’”
“Steve Shea, an acting member of the State Board of Equalization, reported this week that the total value of state-assessed and county-assessed property declined to $4.448 trillion for 2009-10, a drop of $107.2 billion - 2.4 percent - from the previous year. This is the first year-to-year decline in the statewide total since the board began keeping records in 1933.”
“Year-to-year percentage increases ranged from a high of a 7.1 percent gain in San Francisco County, to a low of a 13.4 percent decline in Merced County. Thirty-eight counties posted year-to-year declines, with 14 of them declining by 5 percent or more. Only two counties (San Francisco and Trinity) saw a positive growth rate exceeding five percent.”
“Mike Himes, director of NeighborWorks Homeownership Center in Sacramento, which counsels struggling and first-time homeowners, said his office is seeing more clients facing growing debt and making choices between house payments and other expenses. His clientele includes a growing number of state workers whose paychecks have been pared by unpaid furloughs.”
“‘There’s a lot of money borrowed to stay in the house and keep up with living expenses,’Himes said. ‘This is becoming more and more of a problem.’”
“Half-a-billion dollars in cash was spent on down payments and home purchases in metropolitan Phoenix last month. That tally doesn’t include mortgages on homes. It’s the pure cash figure buyers spent on existing Valley homes in July, according to Arizona housing analyst RL Brown. In his recent ‘Phoenix Housing Market Letter,’ Brown uses the figure to prove the housing market is showing signs of life after last year’s crash.”
“‘The recovery in metro Phoenix housing is becoming undeniable,’ Brown said.”
“Phoenix is not leading the nation in home-prices declines, according to the latest S&P/Case-Shiller home-price index. Las Vegas is No. 1 with a 32.4 percent drop from June 2008 to June 2009. The Valley came in at No. 2 with a 31.6 percent decline. Detroit was No. 3 with a 25 percent drop.”
“A University of California anthropologist says her study of 19th-century silver prospectors sheds light on the recent bubble in the U.S. housing market. Susan Glover, in a report published in the journal Human Ecology, looked at the relationship between what was reported in contemporary local newspapers and the strategy used by prospectors in Gothic, Colo.”
“She compared the 19th-century silver rush in Colorado to the dot-com boom of the late 1990s and the housing bubble that brought on the current global financial meltdown. She said overoptimistic information in the news media and from informal networks over-exaggerated payoffs while underplaying the risks.”
Greetings from Mohave County on the CA border, where there are more foreclosures than you can shake a stick at. Soon, I’m off to the AZ/NM border. Tomorrow we have a new guest poster, and of course, the Miser should be back. My thanks to those who support this blog, and please check in this weekend!
FYI
I’m a small contractor on the east coast. Every supplier of sub I’ve been in contact with for the last 2 months has said that incoming work has just stopped incoming. One vendor ordered a years worth of material based on what they were seeing a few months back and now it’s just sitting in a warehouse.
Everybody has done all the cleaning-up-the-shoptype of work they could find to keep their guys busy so I anticipate more layoffs.
“…incoming work has just stopped incoming.”
More stimulus, please?
Actually I’ll bet Stpn2me would wish that “incoming” just stopped incoming.
Many many outgoing Army soldiers at DFW airport now. Iraq.
Our street just welcomed home a soldier on Wednesday night. His family tied yellow ribbons up and down the street and put flags on the end of everyone’s driveway. It seemed like every police car and fire truck in town was in the line to escort him. It was quite a happy moment.
Glad to hear this Kim. Our community hosted a “wounded warrior” event a couple of months ago. About 20 Marines and the Navy Corpsmen who support them who had been wounded in combat. The community support and turnout brings a lump to this Army enlistee’s throat writing about it even now, knowing what guys like Stpn are going through.
Semper Fi, guys.
Keeping them busy is right. The dirt movers finally cleaned up their mess across the way from me after years of hustle & bustle and using it as a storage yard for their rigs. Got a relative, heavy equip operator, who just got on with the county. I hope he can hang on but even they’re not immune now.
‘I don’t know what I’m going to do,’ he said. ‘I got duped into the loan, and I consider myself an educated man.’”
Sorry fellow, you can cry all you want, you were not duped, your plan failed. So you lose, now go get some boxes, and start packing.
The wizards duped the herd into thinking asset prices only go up.
We’re at the end of the fifth wave, where invincibility and denial is overcome by payment shock and feelings of loss and despair.
“He planned to sell the home before the mortgage reset.”
How can these two statements be true. How can he have planned to sell before the reset, and get duped?
Sounds to me like this man lost his bet. He didn’t sell on time. Probably went thru months of saying ‘I won’t give my house away!’, hoping for that magical return to 2005 prices and his profit.
Moron.
“How can these two statements be true. How can he have planned to sell before the reset, and get duped”?
Exactly, he’s just pissed he got stuck holding the bag, and wants to blame the evil lender.
Oh.., good point. ‘Another’ great MSM follow-up. ( And people wonder how you get hooked on BB’ing? )
Getting “duped” would be if I ordered a pizza from a pizza place and when the pizza is delivered, I open the box only to find it empty while the delivery guy drives off laughing his head off.
Getting duped would be if I went to a well respected electronics store, buy what I believe to be a camera, get home, open the box and find not a camera but a rock.
No, this guy lost his bet (as others have said).
Not to mention he bought in 2006 — there was already rumblings of a bubble even in the MSM (as we all know here) at that point.
Ben, for the love of God please post this youtube link:
http://www.youtube.com/watch?v=3lQtBzq7CdI
Sa-weet!
See how easy it is/was, she sits on her fat azz, dipsh!t appraiser pulls numbers out of his azz, and Bam! Mo Money! Lots of azz in the equation.
Happy days are here again!
Now you don’t even need a granite counter top to create bling.
You can do it with a concrete sea wall.
Hmmmm,
Now my house is worth 1.3 mil….hmmmmmm
Now I have to find some idiot to pay 1.3 mil…LOL
Just find another moron appraiser to set value at $2mm.
Refi loan from another moron bank.
Isn’t that how America is supposed to work?
After all, making and producing things of value
is *so* 20th century.
octal77,
Don’t laugh. A few years back Ben posted a story in FL where homes that weren’t selling since peak all of a sudden had offers -well- above asking!
( Seems the FBI got involved and found out it was neighbors in the same plush community selling homes to each other at inflated values and pocketing the difference! )
By the time it was all said and done, they didn’t even bother to MOVE any more and simply stayed where they were. The “move” only occured on paper.
wow! Only in Florida would you find that level of super scheister!
Don’t forget, it always takes a super sucker to finance the super scheister. The problem is that the super sucker is always back by the taxpayer. Banks know it, so what do they care?
Ted, Mike,
AFAIR, it was an “upscale” toney neighborhood on the canal and obviously there was a “cast of thousands”. ( As in, ‘what’ do all of these transactions have in common!? )
Oh.., gee, ’same’ appraisewhore, ’same’ realtwhore, ’same’ title thugs etc. In many cases there were “multiple bids”. Go figure.
The latest from SoCal……
My accidental real estate mogul/Trump-wannabe sister is happy as a pig in slop……..seems that one of her neighbors wants to buy her old California house. The plan is to walk away from her current house/mortgage, and have her brother buy my sister’s place (with the money she saved by walking away from the current place as a down payment). It’s all good.
Call me old fashioned, but this should be against the law. But it’s probably not. Or if it is, there are so many people doing it, she will never be arrested, or never put in jail, because about half the population is doing it.
Guess I picked a bad day to stop sniffing glue……….
X-GSFixer,
Bad day indeed. ( Leaving family out of it for the moment ) this is the very scenario I’ve been harping on forever. Hence my “lit stick of dynamite” ref’s.
What with all the dirty ( musical down payments ) serial re-fi and straw buyer schemes on the way UP, we’re just now seeing many of them played out yet again, only this time, reverse engineered.
Sadly, no, no one is -evah- gonna’ go to jail over this. The general sense “I” get is: Any time a circle j@rk of (3) homes winds up being a net addition to Foreclosures of +1 ( vice +2 ) the lenders are going to look the other way.
Was that guy an appraiser or a realtor? I’ve watched several of those shows, and usually it’s a realtor saying that he would list the house for 1.3M. Not appraiser for loan purposes.
Of course, that realtor would be taking 6% of that. No reason to inflate his estimate, oh no prreciouss no reason at all.
My wife and I watch a show called “Sweat Equity” because it’s fun seeing the renovations, but I want to throw a brick every time they say “Francine and Taylor’s kitchen renovation cost $30,000 but added $50,000 value to the home, giving them a “profit” of $20,000.”
No, you didn’t profit ONE PENNY, because you didn’t SELL your house, you fool!!! Some douchebag pulls a number out of his arze, and it’s a profit???
I loved when ‘Sea Hunt’ made the comment about sniffing glue.
I think this video best embodies the greed and rampant speculation that got us here. I am sure it was exactly the same when a tulip-bulb was appraised back in the day. It should have been Greenspan’s job to watch shows like this and act accordingly with his “FED tools” . Proof the man is an idiot.
I’ve looked for those shows on bittorrent. I want to build an archive, and keep them around. Future generations can look back. We’ve got numbers from the great depression, but no reality shows
Could there be a one minute clip that more perfectly embodies the mania mentality than that?
Or an endorsement for Nutri-System?
Sorry, just… sorry.
Nope, that one summed the entire debacle of 2002-2007 perfectly in one minute. The g–amn house is falling into the ocean and its worth 1.3 millon?! I want to see the idiot they find to actually pay her that today.
Go to YouTube and google Hitler and housing bubble.
lmao…. oh my word…. read the last and most recent comment on that youtube clip… lmao…
Won’t even fit in the canal…
Just amazing that this appeared on TV in April 2008. So late in the game. I thought most people knew by a year earlier.
It was posted on Youtube in 2008. The little writeup next to it states that it is from 2006.
Is that Kendra Todd? She should be put in shackles and tomatoed on a daily basis.
Yep I thought that one was yrs earlier.
It seems that most of the stuff if rerun.
For an even bigger laugh, here are some links to the property today:
WHITE, ANDREA D, (Single or Unmarried Woman), 2290 BAYVIEW LN,, NORTH MIAMI,, FL, 33181, 3/20/2007, 25465/191, 2007R0286753, 06-2228-015-0270, NON-PURCHASE MONEY, $200,000.
Looks like shes in the hole from her purchase price.
“Unfortunately, the only alternative available to those families that don’t make the wait-list will be to wait it out in homeless shelters.”
“Many Californians who already owned homes took their profits and are looking for larger houses in other states, while people in other states were priced out of California. ‘Housing ‘unaffordability,’ says Steve Levy, the boss of the Centre for the Continuing Study of the California Economy, was and is California’s ‘principal competitive disadvantage.’”
The long term trend since WWII is for the percent of consumer spending going to housing to rise, and rents to rise as a share of renter’s income. The massive misallocation of resources to housing in the past decade, however, should accomplish one thing — it should reverse that trend.
There are going to be sanitary, decent housing units available somewhere in the U.S. for peanuts. Places where life may be lived decently (crime and the tendencies of the neighbors excepted) for the minimum wage, the minumum Social Security payment, SSI, or even welfare.
Therefore, housing unaffordability will simply be a matter of location — wanting to live in a place one cannot afford. I can consider myself a middle class Brooklyn homeowner, or a homeless resident of Manhattan’s Gramercy Park who needs an affordable housing subsidy.
Housing affordability advocates need to change their thinking.
WT,
Not only that, but it was an incredibly arrogant thing to say. Just today Yahoo Finance had a feature article on the waves of boomers that will begin occupying small towns across the fruited plain. ( Good thing too, it will be what they can afford )
Besides, Mr. Levy’s comments are So… 2005. ( Oregonians only ‘wish’ that Cali pipeline still existed? ) Go Bend!
+10!
Thanks for the tip to Yahoo Finance.
I realize we all enjoyed ridiculing former poster ByeFl for wanting to move to Oil City PA, but it’s not a bad idea. Even now there are plenty of places in flyover country where a retired couple with a little savings (less than $50K) can establish a decent home and live on SSI. They need only to be within 15 miles of a WalMart.
I still think of him/her. But Oil City? There’s gotta be better affordable places than that. I think he went on Realtor dot com to search out the lowest-priced house in the U.S.
Don’t knock it till you’ve driven through it and run through the range of your own probable scenarios, is my thinking.
There are some very nice brick urban homesteads that could be made very liveable. The place grew up with oil money and steady jobs - the kind of environment that, coupled with a first generation craftsman ethic - fostered quality construction.
Look. We’ve all got to make trade offs. Living in a cheap, solid house with a sizeable back yard in a small town in flyover country in an area with cold winters would not be my first choice if I were assured of my current income, inflation adjusted, throughout retirement. However, that is not in the cards.
Therefore, my sustainability plan is a solid house and some acreage bought for cash, in an area where I can have some influence over the town fathers. This means the equivalent of Oil City, further south, in a town small enough that home made apple pies brought to chuch suppers buys influence. In an area where the household income hovers around $30K, you are likely to find reasonable repair people. Or builders. Or window replacers. Or fence post diggers. Generally, in poorer areas, the same person might do all these things, and may be happy to do them for you for (what seems to us here, in ‘civilization’) an extremely liveable price. Especially if you are in his/her mothers’ knitting circle, or whatever.
Is it Paree? No, to be sure. However, I am so darn content with the prospect of living with no demands other than my own, that the idea of quitting civilization is awfully cheery.
This is probably not the sustainability scenario for folks who are easily bored. But that’s not me.
Just sayin’.
We’re staying in Michigan in our already paid-for home once I retire, which we currently rent out to make it work for us. We live closer to my job in another home with a mortgage. My husband is already retired due to disability, but I have another 7-8 years to go. While we had dreamed of having one home in a warm climate to live in during the winters, it looks like it’s not meant to be. We can rent what we like, where we like, for a few months at a time. Personally, I don’t think there’s anything wrong or unwise about smalltown, scaled-back living. A lot of people are finding they have to live a scaled-back lifestyle anyway, no matter where they’re located. I’d rather be able to buy a home for $ 69,900 in Michigan than $ 869,000 in S.F., although I fully acknowledge that I’d rather live in S.F.
Many Californians who already owned homes took their profits and are looking for larger houses in other states, while people in other states were priced out of California. ‘Housing ‘unaffordability,’ says Steve Levy, the boss of the Centre for the Continuing Study of the California Economy, was and is California’s ‘principal competitive disadvantage.’
California was once a good place for the little people. My family had lived there since the 1860’s and had seen first-hand how the changes panned out. Housing really didn’t rise above US averages until the 1970’s, when the price of urban/suburban housing went up 400% during the decade. This was one housing bubble that didn’t bust: prices only went soft about 15% in the early 1980’s.
[DinOR: did you ever get my email I asked Ben to forward to you?]
DennisN,
Oh! My bad, I had to change ISP’s so I’ll get my new email to Ben! For a time there, they were sending just sending guys down to K’ Falls ( more convenient, less cost to taxpayers ) but they’ve resumed in Boise.
Right, if Mr. Levy’s assumptions were correct, Bend, OR would -still- be hopping! It is… just w/ foreclosures? And suicides. Again, sorry.
Well shoot just ask him to forward one of your emails to me. I need to plan my next couple of weeks.
DennisN,
Done and done.
I’ll be there from 8 Sep to 22 Sep. Unfortunately not only do I have to work the weekends, but I’ll also have to run PT so I won’t be my usual gin-soaked self?
Well. That was a big bunch of inflation after Nixon unhinged the dollar from gold.
Overall, certain aspects of our standard of living have been in decline. Most of which I attibute to mexicans crossing our borders and the other chunk to bad trade policies.
Unfortunatly, its really hard to undo things without causing a larger disruption.
I think we should be able to dislodge the Mexicans though.
Always have to track things verses inflation. We are expecting a lot of inflation in the near future but I can’t see how its going to happen with all the jobs that have gone to China/Mexico/Vietnam/India exc. Outsourcing has really gutted this country. That along with a lack of will to control our borders.
In business, patents and stealing technology is so common place. Along with doing business with countries like India, Japan and China, all of whom steal technology, pirate software and engage in one sided trade policies. Got a report from my bro from China. They have tarifs on American goods there. But for some reason, past two presidents put them on the prefered trade list. What a mess.
Anyhow, its strangled innovation in the US. Killed it.
On the trade policy… allowing all those imports from companies that don’t have any enviromental regulations. Again another mistake that has made the great dead zone in the ocean appear. That along with out any wage or labor standards too.
Put that as the topping on the cake with the bad financial and fiscal policy since 1970…. Here we are. Big fricking mess.
I think you nailed it. Outsourcing, piracy, environmental, labor. What in the world is going to re-flate the U.S. standard of living? We are screwed.
“I think we should be able to dislodge the Mexicans though.”
That’s a piece of cake. All we have to do is screw up our own economy so badly that they have better work opportunity else where. Hard working people find a way to wherever they are needed.
Right. Everyone may want to live in San Diego, but never will everyone who wants to live here be able to afford to live here.
“‘It’s not going down anymore and it’s beginning to come up. That’s very good for the future of this financial problem,’ Case said.”
Did he really say that? And allow the writer to quote him?
That has to be one of the most moronic-sounding statements by a famous professor which I have ever seen in print.
When I finally came to the personal conclusion that C/Shiller were a couple of establishment hacks, I took a lot of heat from posters here. But I think the way things have played out that these guys are obviously full of you-know-what. And it doesn’t matter when they wrote books on the housing bubble, if they have their head up their ass now.
Actually the other 1/2 of the Case Shiller duo is more of a realist. He was quoted in a news story over at the Palm Beach Post stating essentially that there isn’t enough data yet to call a bottom. Either way, I’d need to see year over year figures go up for several years before I’d be certain of any type of bottom.
Thornberg’s quiet right now. I like his reality.
Yeah…I have not heard much from Thornberg lately…
If C-S used a particular measuring methodology to chart the descent of prices over the last few years, and used the same measuring methodology to chart the leveling or possible slight increase in prices over the last couple of months, then I guess their methodology has been wrong all along. Correct?
“Yeah…I have not heard much from Thornberg lately…”
Seems like he drank some of the green shoots koolaide along with most of the rest of the economists on the planet. Perhaps it secretly contained a sedative?
I saw Thornberg back in April at his economic conference and he was a lot more optimistic than I was. Something to the effect that the rececssion would be over Q1 2010 and housing would start to balance out. The coming wave of Alt-A, Prime and Option ARM adjustments were not addressed at all. I’ll be the first to admit I may be far too bearish, but I think Thornberg is too bullish for my tastes at the moment.
But it is true that the MSM does not seem to be quoting him anymore. Would be interesting to know why. (He gets large speaker fees and I think his business has really taken off so he simply may not need to use the media anymore?)
Sounds like one could make a Case for Shillery by them.
Bad Andy,
I agree. And how you doing man!
Professor Bear and I kind of covered this and as usual, he’s likely to get the upper hand. Still, I think it’s important to point out this is very much a fledgling index.
Even though they drew from a ton of historical data, people in 1790 weren’t thinking in terms of their adding an outhouse would reflect on home prices 200 years hence.
You could actually do a hilarious parody on those home renovation shows with that.
Karl Case turned bullish in the spring of 2008, then bearish in the winter, and now bullish again. See Scott van Voorhis’s column entitled “A Market that has Karl Case Stumped.”
Considering Case’s first bottom call, this one is surely worth ignoring.
Not to attack too harshly, but despite the Shiller comments reported above (”too soon to call a bottom”), I’ve heard more bullish stuff out of Shiller in recent months as well. Roubini of course is broken-record bearish. Thornberg, right, I hear zippo.
Four words. Ivy Zellman Reset Chart. (Oh lots more words, too; I’m just saying this would keep the FCs coming if nothing else did.)
“Four words. Ivy Zellman Reset Chart.”
And here’s a bull case right back at you:
Suppose the PTB wanted to reflate US housing prices at all costs (my impression of the status quo). They are smart enough to be aware of the reset problem (believe it or not, some of the top economists at the Fed and Treasury are extremely smart and extremely well-informed). Hence they can take the reset chart into consideration in engineering their financial strategy to make real estate ‘always go up’ again some time soon.
Why wouldn’t they be able to do this if they decided it was the best plan for the greater good of all Americans (especially Americans who happen to also be bankers), given they have the full faith and credit of the US government to back up their efforts?
(risking double post)
Karl Case turned bullish in the spring of 2008, then bearish in the winter, now bullish again. Considering his first bottom-call, his present one is well worth ignoring.
Not to attack too harshly, but Shiller’s cautious comments above are not consistent. He has been making bottom-calling quiet gurgles in recent months as well. Roubini is stopped-clock bearish, of course. Thornberg, right: saying nothing.
I say: no chance this a bottom.
I have written here many times that both of these guys are idiots. Their index is one thing. That’s okay. It is signaling a HUGE BUY right now on housing of all types. Sorry, I had to add that. But both of these guys have been making ridiculous, pointless comments for years now. They are buffoons and shills. Their names are perfect. One is a case and the other is a shiller. Pay no attention to their opinions.
NyCityBoy,
Not that I ever ‘have’ paid attention but you need to understand, for obvious reasons, they are somewhat limited as to what they can and can’t say ( given it’s ‘their’ index )
We would all be better off if they just published their index and then shut the f*** up.
Well, probably but remember ( like the David Letterman schtick during the U.S’s first World Cup.. )
“You know, no matter ‘where’ I go or ‘who’ I see.., virtually NObody is talking about the World Cup!”
Um… other than BB’s, who the hell was talking about these Housing Futures thingee’s? There was NO volume and NO liquidity! Now imagine a world where LENDERS bought into the HF’s vice Credit Default Swaps?
Oh and The “Number 1″ reason to get people to see the WC?
“Have Madonna inflate the ball!”
“Karl Case turned bullish in the spring of 2008, then bearish in the winter, now bullish again.”
Sounds like he doesn’t know his arse from a hole in the ground.
I guess Case has never heard of the “Dead Cat Bounce”
http://en.wikipedia.org/wiki/Dead_cat_bounce
Once the State & Federal tax incentives expire we’re going to see the mania drop off again. Heck in the Phoenix area I have coworkers telling me about 15 offers on an REO just to get the $8,000 stimulus check. Nevermind the fact that the bank’s counter offer is $38K over list now on a property in Gilbert, AZ that has already had 1 pipe break and mold growing in between the walls.
I had to remind my coworker of a fortune cookie from last week:
“Your everlasting patience will be rewarded sooner or later. “
Thank you for taking the words out of my fingers.
I think those tax rebates, especially in lower-priced markets where it’s a bigger percentage of overall purchase price, are having a very big effect, but it’s been very stealthy because it gets very little mention. Sure, that can artificially inflate the market temporarily, and steal some demand from the future as well, just like good old cash for clunkers. I think we’re about to see how things “unexpectedly” dry up in a couple of months. We can’t keep this shell game going forever.
“Foreclosure sales dropped 35 percent in Southern California between second quarter 2008 and second quarter 2009. Banks probably aren’t letting piles of foreclosures flood the market even more than they already have for a reason, said Michael Carney, director of the real estate research council.”
See CA Renter’s post on what might be going on behind the scenes. Not sure how much weight to put on this explanation w/o further evidence, but if correct, I have to wonder whether it is legal?
This is what we are seeing in our area of the OC. Aproximatelly 200 homes in some form of distress in our zip code alone. A majority of these are not listed in any way shape or form. The ones that are listed are short sales and they just sit, a lot (most?) of them still have the defaulted owners in them. One example I know of only 2 payments have been made in 24 months. I know this because we made an offer on it. The owner told the bank the day before they were to take it back (trustee sale? Auction?or whatever it is), we have real offers and just need more time as we would like to rent back. The Bank said ok and gave them another month. At which point the owner did nothing, goal accopmlished, another free month. Looks like they started to do this again, then the listing disappeared as before, perhaps they accomplished it again, who knows?.
We offered $455K history shows 1st 650K 2nd 175K 3rd 5K. The 3rd helped them make 2 payments a year ago.
If you take out the Sort Slaes in our area you have only a handful of homes available under $650K. Couple bank owned, couple equity sellers. The moratorium on foreclosures drops on the 15th of September. Will this change things? I think it depends on the smaller institutions need to move these properties. Remember this moratorium did not apply to Banks that had a procedure in place that met Federal and Stae guidelines for working with distressed Homeowners, most the Big Banksters already had this in place. The smaller institutions just got stuck waiting.
Fall and Winter will be interesting.
I’m in OC, too (92646) and concur with OCBear 100%. I got a call from my Zip Realty guy the other day. He got wind of my lurking on his site. I told him I was waiting for prices to drop. He told me the prices had gone up the last few consecutive months and that inventory was down. There are 229 homes in some state of foreclosure in my zip code, yet only 92 homes are showing for sale, 25 of which are either foreclosures or short sales. The banks are doing a great job keeping everyone in the dark.
Zip is 92807, but 92808 is similar
OCBear,
Nice area, used to live there. Good luck getting something up the hill. IMO that area will have plenty of people with $$$ willing to pay so I doubt it will go a whole lot lower.
Lip
“New home sales increased from June to July nationwide, but that gain didn’t extend to California and the Bay Area where the expiration of a state tax credit for new home purchases is being attributed for a drop in sales. When the state tax credit was launched in March, new home sales picked up substantially until funding for the $100 million program ran out, said Tim Coyle, senior vice president of the California Building Industry Association.”
Holy cr@p — a state with a $24 bn budget shortfall is funneling $ millions into the pockets of real estate people? What is wrong with this picture?
Doubling down, doncha know.
You don’t suspect CA state leaders drank a few cups of green shoots tea, do you?
‘In the end, the cream rises to the top, and this building is that,’ said Donald Trump Jr.,
Does anyone else besides me want to take this punk into a closet for about five minutes…Man I would love to see this snot nose’s father go broke..
Doesn’t $hit float too?
corpses too.
So does fuesel oil on bathtub vodka.
resurrected bloated floaters (once a local punk band)
It would be so interesting to be in the rooms where these closings are going on. It might be like listening to the “workout” guy in the Tom Wolfe novel A Man in Full.
Also, I’m going to put a cigar humidor and a wine fridge in a ‘73 Pinto and park it at the beach. Oozing opulence, and transmission fluid.
That’s a good idea. Just don’t get rear-ended.
glengarry glenross
But vaaiiittt!!…there’s more:
“Buyers will back out of deals, and sales will be challenging, Perez said. ‘Some people are very, very afraid,…. asking for discounts that we will not give,’
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
I feel better now
The Donald always goes broke with Other Peoples Money. He’s been working that Gig since the 80’s. He’s just flamboyant enough the the suckers keep coming back.
Remember the Trumpet daughter on the Mex condo scam a few months ago? What ever happened to the lawsuits?
“The last thing in the world I’d want to do today is to be opening a condo development”
( That’s why Donald sent “the kid” )
See? This is that “lit stick of dynamite” I keep talking about ( but NO ONE wants to hear! )
‘In the end, the cream rises to the top, and this building is that,’ said Donald Trump Jr., wearing a gray pinstripe suit as he stood in for his famous father
Pinstriped stick of dynamite.
Hope he inherits his fathers hair issues.
desertdweller,
LOL! Given the sheer number of CANX they had in Palos Verdes and Vegas ( why have ‘your’ face in the publicity photos? )
If ( when ) it blows up, The Donald can palm it off on his son and as a rookie mistake. Granted he won’t have fooled anyone ‘here’ but it just shows what contempt he has for the avg. American.
Soon, Little Donnie will learn the difference between cream and soured milk.
I just ran into a guy last night who I have not seen in many years. In our conversation he mentioned that his now 20 year-old son had just bought a brand new house! The kid works at Wal-mart and goes to CC so you have an idea of his income. He was able to get a $160k (100%) loan from the FDA with NO MONEY DOWN by using some shenanigans with the $8k government cretdit that the homebuilder (DHI) has down to a science. Apparently his payment is only $545/mo but will go up next year when prop tax initiates or something like that. His dad is still helping with some of his bills, but is trying to wean his kid. I see a foreclosure in the near future. When exactly will our government stop subsidizing failure???
“When exactly will our government stop subsidizing failure”???
Sadly never! That’s what keep getting them re-elected.
When failures stop going into politics.
The largest failure subsidization program in existence is the Treasury and Fed’s “inflate away” strategy.
It may not appear to be working now, and it never worked for Japan, but at present I’m not doubting that it will happen.
The “War on Savers” will continue…
The “War on Savers” will continue ??
I dunno…..I think a double dip recession would reward savers quite handsomely with a fresh dose of deflation…
I agree with Jack that they’re making war on us (Savers), but I feel pretty good about our survival rate so far. Look, we’re a H of a lot better off than Debtors.
Speaking of debtors, today msm message was Credit Fi Co scoring today vs yesterday.
One question is this, if yesterdays people-you/me/them, had good to excellent credit Fi Co scores, and they were huge part of housing problems, how in the world could their credit be saved, or still be high enough? With so many ppl getting in these situations, how could the Fi Co still be relevant to the masses? Do you know what I am trying to say? say yes!
How much is it going to go up?
The minimum wage is now $7.25 per hour. With a 35 hour work week that is $1,100 per month. On traditional metrics, with 30% of income for the mortgage, that supports $330 per month.
Now there is no reason to buy a house unless you are married and prepared to settle down. Let’s say the second income is a part time job at minimum wage for 20 hours per week. That’s another $626 per month. For a total of $1,727 per month, which can support a mortgage of $518 per month, or close to what the kid is paying.
Hey, if you want affordable housing, this isn’t failure, it’s success. And at the minumum wage, there is always the possiblity of an increase. As long as there is no expectation of selling, it sounds reasonable to me — and a hopeful scenario for the future.
Or taking in a roommate.
WT,
Thank you. And remember, the kid works at Walmart, he can really only go up from here?
Better ‘this’ than someone ( where my WIFE works ) where engineers run out and buy ridiculous mansions only to find themselves working at… Walmart!
It has to be a Teaser Rate, though. If the principal of the loan is $160K, then $545/mo ( = $6540/yr) is just a bit over 4%. Without allowing anything for amortization. It “will go up next year” not just because property tax kicks in, but also because nobody is offering 30-year fixed-rate loans at 4% to 20-year-old Walmart “associates.”
Well, and I just did some more calculations.
Actually a $160K loan AMORTIZING over 30 years at only $545/mo represents an interest rate of (get this) one and a half per cent. How many vote that this kid’s mortgage payment is going to double within a few years?
SOme builders were, I haven’t seen it lately here in CA, but 4 or 5 mos ago they still were. FHA loans at 4.25% if you got your financing through their loan division. Even with the rate at 4.25% they still make a decent amount off of the loan. 620 credit score and you are good to go. Yuck.
The market is a suckers market right now. It makes me sick, the manipulation that is going on with bidding wars etc….
Big Sis’ stepson just bought a 300K home from a regular reseller using the tax credit. He probably could have snapped up a foreclosure for 50 to 75K less. Big Sis thinks it’s going to end badly. She’s a bitter-debtor, after all.
Most of the people buying right now missed the boom. They are probably buying at prices where they first thought of buying but were priced out. They are completely unaware of the foreclosure tsunami or other market forces at play.
Three pct down FHA loans are readily available. If your seller pays your closing costs (easily written into contract price), you can monetize the tax credit and walk away with cash in some cases. 3 pct down on a 100K debt trap — 3000. Tax credit - 3000 = 5000.
Maven,
Oh… ‘that’s how they’re doing it!
I once watched an episode of Simon & Simon where Rick and AJ were on a case about winos being taken to a “treatment facility” where they were given all the wine they could drink.
Of course the evil-doers were collecting on life insurance policies they’d written on them! Nope, you couldn’t fool old Rick and AJ!
LOL - Perfect analogy with the wino treatment and the easy money. Give ‘em more!
“His dad is still helping with some of his bills, but is trying to wean his kid. I see a foreclosure in the near future.”
I see two seniors eating cat and dog food in retirement.
Over the last few weeks, MSM has been clamoring over the “signs” of the end of the recession. NAR and CAR then jump on the bandwagon to report an increase in sales and prices. Oh good, everything is fine - move along, nothing to see here!
As I understand it, there are still no jobs. I am in the SF Bay Area and I can confirm that 60 employees of the San Mateo County Superior Court Clerk’s office are losing their jobs in the next two weeks. In fact, they called and emergency meeting last week to discuss the budget shortfall and how layoffs were prioritized.
Sadly, housing has not come down to an affordable level in man areas of the Bay Area. In the far Eastern Contra Costa, it’s been in a nosedive for a few years - but living in Siberia to realize the “American Dream”, is not my idea of a good time. It’s a different story when you stay within the core of the Bay Area. People are still holding onto unrealistic expectations for prices, and idiot buyers are happy to see a 15% discount on a house that is 200% overpriced - go figure.
Love this blog, keep it up.
“Love this blog, keep it up.”
Yes, but for how long? Yes, Ben Jones is very good at what he does. Yes, he’s a very good writer and this blog is fun to read.
But just like everything the doom and gloom real estate blogs, including this one, have an expiration date. The gloom and doom mantra cannot go on forever. At some point there’s going to be overkill.
Is it really productive, for America and the world, to keep hearing doom and gloom? Nationwide, real estate is certainly in better shape then it was. Maybe we should have less doom and gloom and move on with our lives? Saying how awful it is, year-after-year, is a downer. How much can we take of this?
At some future point Ben Jones, and other real estate bloggers, will have to pull the plug. And that judgment call will be a tough one. As they say, “Timing is everything.” No doubt most doom and gloom real estate bloggers will probably not pull the plug soon enough. It’s hard to time the market. And it will probably be hard to time the market with doom and gloom blogs.
If the information is accurate, there’s nothing wrong with doom and gloom blogs. And I must confess it is so refreshing to hear doom and gloom after the greatest *%&*()&^&*()*&^ of all time, Dubya Bush. Doom and gloom was staring him in the face at every turn, but we never heard it coming out of his mouth. Almost never!
The pity party has been fun. And we needed it after being told so many lies from the thugs that were elected to office. And they were thugs. Now, they’re rich thugs.
I’ve been thinking along those lines. I’ve not bought stocks for the last 6 months because of my bearishness. So, I’ve either missed the bottom, or there’s more to come. It’s really hard to tell. Now, I don’t want to jump in because whenever I do, everything seems to nosedive. I really feel like jumping in, so probably this coming week will be a down week for stocks!
Wasn’t there a poster named SanMateobaby! or something like that about 4 years ago?
Greetings all, I’ve been busy but lurking while monitoring banking news.
52 Wisconsin banks unprofitable in the second quarter
By Paul Gores of the Journal Sentinel
Posted: Aug. 27, 2009
About one of every five Wisconsin banks was unprofitable in the second quarter as loans continued to deteriorate in the struggling economy, a report Thursday shows.
Fifty of Wisconsin’s 282 banks posted net losses, and two others broke even, in the second quarter, according to the Federal Deposit Insurance Corp.
Altogether, Wisconsin banks lost about $161 million in the quarter, compared with a loss of $207 million in the same period in 2008. The number of non-current loans worsened, with 4.17% of total loans in arrears. That’s up from 1.99% in the second quarter last year and an increase from 3.44% in the first quarter of this year.
“We are seeing the effects of the weakening economy on banks,” said Kurt Bauer, chief executive of the Wisconsin Bankers Association. “When business and retail customers are stressed, the bank is going to feel it.”
Among Wisconsin banks posting losses in the quarter were three of the four largest in the state: Milwaukee’s M&I, Green Bay’s Associated and Madison’s AnchorBank. Because of M&I’s size - it is by far the biggest bank based in the state - its performance weighs heavily on the quarterly results for the overall banking industry in Wisconsin.
…The strife in the banking industry is nationwide, the FDIC said. Nationwide, more than one in four banks reported a loss for the second quarter.
http://tinyurl.com/n5ogjk
Wisconsin’s largest bank, M & I Bank, also recieves serious mention on Bloomberg.com as one of the largest bank having non-performing loans
“FDIC List of Problem Banks Surges, Putting Reserve Fund at Risk
… The biggest banks with nonperforming loans of at least 5 percent include Wisconsin’s Marshall & Ilsley Corp. and Georgia’s Synovus Financial Corp., according to Bloomberg data. Among those exceeding 10 percent, the biggest in the 50 U.S. states was Michigan’s Flagstar Bancorp. All said in second- quarter filings they’re “well-capitalized” by regulatory standards, which means they’re considered financially sound. ”
http://tinyurl.com/ngww7t
Helllooo Wisconsin…It’s GOING TO BE differenet HERE !
Ah pro-RE story in our Norfolk, VA based paper. Affordable new housing! They are selling these things on the edge of town for $167/sqft.
The prices of housing here makes me want to relocate to Raleigh-Durham or Northern Virginia.
These prices/sqft or so frickin obscene. If people actually took the time to break down the costs of procuring materials and assembling a structure they’d figure out how inflated 165/sq really is.
2 yrs ago, weren’t we looking for
and
posting for houses $100 per
and UNDER? Way under? before
we jumped in? Where is that?
Just in ugly parts of towns?
Or FL, same thing!
When I can build for $50/sqft and MAKE MONEY, why would I pay anymore than 66% of that number for a used shack?
exeter,
Good point and one I keep coming back to. Especially if one were to build a vac./ret. home? I mean why would I play w/ some FB and their massively underwater misadventure when I can start from scratch and screw things up just as much all by my lonesome?
Price/sqft really is the only means I have to develop a baseline value and add or subtract for quantity of dirt and extras like septic, well, etc. I can only laugh and shake my head when I see 20 year old 1500sqft dumps on a lot priced at $100/sq or more. It’s truly laughable and the sellers delusional.
‘We’re drowning here,’ said Travis Graham with Graham Construction, who called for a life raft like that tossed to the auto industry.”
I have an idea, I will allow you to do some renovations on my house if you agree to work for minimum wages. You’re a dime a dozen now, don’t expect to make a fortune swinging a hammer.
Life raft? Lots of people in the water it seems. What temperature is that water?
“‘We’re drowning here,’ said Travis Graham with Graham Construction, who called for a life raft like that tossed to the auto industry.”
I’m with Travis. The government has never done anything* for the housing industry, and in this time of need they should really consider doing SOMETHING!
* Well, except for capital gains exemption, interest rate deductability, Fannie & friends, first time buyer tax credit, etc.
Mortgage payments and property taxes are deductible when the IRS wants some loot. Our government sanctioned these programs. However, Canada has no such programs.
Maybe we should re-think these tax breaks? Like we should re-think healthcare.
Somewhere, I read on this blog the AMERICAN DREAM in reference to housing. Let’s wake up. Owning a house does not bring long-term happiness. No! And for sure, moving from a 2,000-square-foot house to a 4,000-square-foot house will certainly not make us one bit happier.
Why do people feel compelled to associate home ownership with long-term happiness? I don’t get it.
It’s short-term happiness. And then you need a bigger fix to be happy.
A writer for the WSJ recently wrote about his wealth-building in real estate. His bank account really didn’t see all that much action. He made a few bucks along the way and then lost a few bucks. As I recall, he’s presently stuck in New Jersey with an older house that’s depreciated a lot in value.
One theme he did stress pertains to owning an older house. According to him, it’s a no-no. You can kiss some of your money goodbye.
“I have an idea, I will allow you to do some renovations on my house if you agree to work for minimum wages. You’re a dime a dozen now, don’t expect to make a fortune swinging a hammer.”
Talk about greed. What’s with this contempt for skilled tradesmen? If it’s so easy, why aren’t you renovating your own house? To insinuate that skilled labor is worth minimum wage is BS. What do you do for a living, Mo Money? Push paper around for some bloated salary? Order people around while you sit on your fat @ss eating doughnuts? Unless you’re some scientist close to inventing a cure for HIV, I’d suggest you should start valuing yourself at minimum wage as well. Perhaps you’ll then wake up from your own greed filled stupor.
Say it Grizz.
What is with the contempt, Momoney?
I was thinking the same thing. Especially the comment about “swinging a hammer”, as if that’s all that is involved in building a house. I think housing construction is a complex interaction of skilled and unskilled labor. Although I have a lot of contempt for the building industry, I have a lot of respect for the many craftsmen within. Sadly, many of them HAVE been undercut by shoddy minimum-wage “hammer swingers”.
From the American Bankruptcy Institute this morning:
First American CoreLogic reported that default and foreclosure rates on option ARMs since February have passed those of subprime mortgages, the New York Times reported today. As the housing market seeks a bottom, option ARMs, which accounted for $750 billion in mortgages made from 2004 to 2007, according to the industry newsletter Inside Mortgage Finance, remain at risk, especially because many are not eligible for financing.
About a third are already in default, according to analysts. It is expected that 600,000 option ARMs will resent within four years. Barclays Capital expects 81 percent of the option ARMs originated in 2007 to default, with many ending in foreclosure. The firm projects that banks will lose $112 billion on option ARMs written from 2005 to 2007.
resent = reset
Perhaps I should have left it that way?
Your Freudian slip was showing.
“…About a third are already in default, according to analysts. It is expected that 600,000 option ARMs will resent within four years.”
The sign is quite tattered, but remains useful:
“I still see…debt people”
Cue Patrick to defend his meme.
“Barclays Capital expects 81 percent of the option ARMs originated in 2007 to default”
Gee, only 81%? Who are those other fools (19%) who are going to tough it out?
My sister is one ‘fool.’ Then again, it was the only way she could get a mortgage 5 years ago (due to starting up a business that is doing ok). Now her payments are less than rent *and* she’s paid down the loan enough its very unlikely she’ll ever go underwater. At first I didn’t like her buying, but it turns out the deal saved her money (area gentrified and its likely to hold as what was pushing down values was bulldozed and paved over, an old ship building plant that was a danger/eyesore. Kind of like the Packard factory, you just did not want to live close to it. Now its a river walk, etc.)
But as noted, that is one case of the 19%. The other 81%… ghad. 33% already in default.
Got Popcorn?
Neil
I keep reading about planned shrinkage in Chinese bank lending. I know people who regularly make trips to China to help clients (aka international real estate flippers) buy real estate in China. I keep wondering whether the Chinese government is not about to teach a cautionary lesson about the perils of international real estate speculation? Of course, this would also have the effect of strengthening their currency.
Aug 28, 2009, 4:05 a.m. EST
China’s bank lending may be much lower in August
Shanghai shares drop on unsourced reports of new-loan estimates
By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) — Chinese banks continued to slow their lending in August, according to reported estimates Friday, with concern of tighter credit conditions helping send shares in Shanghai and Hong Kong lower.
The state-run Xinhua news agency cited unnamed “media reports” as saying lending at the nation’s four largest banks totaled about 110 billion yuan ($16.1 billion) during the Aug. 1-Aug. 25 period.
The report said that, of the Big Four, Industrial & Commercial Bank of China Ltd. (HK:349 16.22, +0.10, +0.62%) had issued 27 billion yuan in new loans, while Bank of China Ltd.’s (BACHF 0.48, -0.01, -1.03%) loan issuance totaled 70 billion yuan and China Construction Bank Corp. (HK:939 5.85, -0.06, -1.02%) had written about 18 billion yuan.
Unlisted, state-owned Agricultural Bank of China, meanwhile, saw its total loan portfolio shrink during the period, the report said without specifying an amount.
A Reuters’ report Friday cited Western Securities analyst Cao Xuefeng as saying new lending by all Chinese banks in August would likely total 200 billion yuan.
This would compare with July’s total net lending of 356 billion yuan, itself an easing from 1.53 trillion yuan worth of loans extended in June.
On an average, Chinese bank ledgers grew by 1 trillion yuan monthly in new lending during the first half of the year.
Concerns that credit growth is set to cool sharply in the second half helped spark another round of selling on the stock market Friday, sending the Shanghai Composite to close down 2.9% at 2,860.69. Hong Kong’s benchmark Hang Seng Index ended down 0.7%.
…
I can comment on what I see currently in the Guangdong region of China. There is a lot new residential condo construction — and as far as I can tell, 90% of it is sold but unoccupied. Pretty strange that people would buy units that they neither live in or rent out, right?
The answer is rather simple. You can get bank loans to buy the just the unit itself (phrase translates roughly to concrete shell) but loans are not available to pay architects and construction workers to finish the unit. Even if the developer finishes the unit for you, they will split the purchase price into “shell” and remodelling and require 100% cash for the later. So plenty of people have the 20% to put down for the shell (after all, the average savings rate is 40%) and they can afford the payments (may even be multiple family units contributing). But to come up with both 15% down (20% on the shell = 15% after prorating total costs) AND another 25% to make the unit liveable is much harder.
Why do people people buy before they have the money to actually move in? The primary reason is face. Respect and reputation are extremely important to Chinese people. So even if they can’t live in a new unit yet, they can still say they own in a upper-class complex. Many will buy and slowly finish their units bit-by-bit whenever they get money.
I live in a building where I am the only active resident. There’s a Canadian on the 1st floor who only comes over periodically to have a tryst with his mistress. And there is one other unit under construction so it looks like I soon will have a neighbor. But at this rate, it will be at least 5 years before this condo complex (about 15 buildings total) is fully occupied. For now, I will enjoy having most of this place to myself.
a Canadian on the 1st floor who only comes over periodically to have a tryst with his mistress.
Must be a really good mistress. Periodically.
To buy a RE prop? sheesh.
Yeah, you’re leaving out important details. Is she really hot? And I don’t get it, does she live there or do they just meet there? That’d be a crazy reason to own a condo, just to meet at. Have they no hotels? Or would that be throwing money away?
“renting” is just throwing money away,in all cases.
“hiking the Appalachian trails” in China.
LOL “I was walking the Great Wall.”
It usually makes better financial sense to buy the condo and rent the woman instead of the other way around.
Spending cash on mistresses I think is not only for the sex but for the rep. After all, anybody can get it on with an employee or an escort at a karaoke club. But only successful businessmen have the money to have a mistress — which means if you have a mistress, you must be successful, right? (Business owners in China are notorious for infidelity.)
One of my wife’s old classmates divorced her husband and now is a “kept” woman. An overseas CEO puts her up in a condo, gives her a BMW 325 to drive, some cash to spend, etc. Hopefully, she squirrels enough away while she still have her looks & figure.
sounds like Vegas! (a few years ago)
Hence the term: “Mistress Index”
Economy good?: Plenty of extra $’s for posh diggs for side girlfriend.
Economy bad?: Picking up Take-Out on the way home.
Pretty sad -either- way really.
Thanks for posting Mossy.
“Pretty strange that people would buy units that they neither live in or rent out, right?”
Strange compared to what? If you dig back a few years into the blog archives, you will quickly learn that Florida condo investors were behaving similarly circa 2005.
“The primary reason is face.”
One advantage American flippers have over their Chinese brethren is their complete absence of shame.
P.S. I share that advantage. Aside from seeking the real story, I care little about reputation. That gives me a big advantage over high muckamucks with access to the MSM bully pulpit.
Foreclosure tsunami…well apparently properties, in one LA suburb, are transfering at a rate of approx 10 foreclosures (going back to the bank) vs. 1-2 third party transfers (including sales of distressed properties). Where the hell are all the foreclosures going…foreclosures going?
I’m always amazed by retirees who want to retire to a rural area far from any pickup jobs or medical care. For me, one selection criterion for my house is that it’s less than 5 miles from a major hospital with an emergency room.
http://finance.yahoo.com/focus-retirement/article/107616/15-top-rural-areas-to-retire.html?mod=fidelity-livingretirement
According to the report, the retirement-aged population will grow 32.1% in the Northeast, 31.8% in the West, 26.1% in the South, and 21.9% in the Midwest. As for which individual counties will experience the greatest growth, Cromartie said in an email that “projections of this nature always contain a degree of uncertainty. “ That said, he provided a list of 15 representative nonmetropolitan counties that are ranked in the top 50 in the projections for the 2010-2020 time period. Listed alphabetically, they are:
•Dare County, N.C.
•Forest County, Pa.
•Graham County, N.C.
•Highland County, Va.
•Hinsdale County, Colo.
•Jackson County, Colo.
•Jackson County, N.C.
•Keweenaw County, Mich.
•Lake County, Mich.
•Mineral County, Colo.
•Mono County, Calif.
•Monroe County, Fla.
•Pocahontas County, W. Va.
•Tillamook County, Ore.
•Valley County, Idaho
I know all about Valley County ID: home of Tamarack (or is that “Tamawreck”?) It’s about the hardest hit of any county in Idaho by plunging housing prices and surging unemployment rates.
“For me, one selection criterion for my house is that it’s less than 5 miles from a major hospital with an emergency room.”
Absolutely. And it’s a shame too, that just when I could afford to move out and buy some land way out in the country, it also becomes the stupidest move ever.
I know an elderly couple who retired and built their dream home down in the Bitterroot, but had to sell it and buy a condo in town soon after because of all his (unanticipated) chemo treatments. I think they sold at the top of the market at least..
I’ve got in-laws in exactly that situation. He was pensioned off 20 years ago, and they moved to the top of a hill on a dirt road in a very rural area where it snows a lot. It’s 15 minutes to buy a quart of milk.
It worked out very well for the first 15 to 18 years or so, a pretty good stretch by American standards. He even held a part time job as a school bus driver for years before his real retirement.
Now that their health is failing, however, they are having an increasingly tough time. She can’t get around by herself anymore, he is having a hernia operation, following a past quadruple bypass and prostate cancer operation. Maintaining their self-built house and large property is becomming a strain.
Three years or so ago, she said they might be interested in moving to an apartment closer to their kids. Dump the house now! I said, but they don’t move that fast. I plan to spend by Golden Years in the city, in a low maintenance situation.
WT,
What state are they in?
Catskills, NY.
This pseudo-trend of “retiring” in the country has always fascinated me and made me vomit at the same time. Having grown up in a very rural area, I observed old folks and their shacks degenerate, then get tossed between relatives, burden children and ultimately end up in a nursing home close in to populated areas. Meanwhile, their shacks were demolished or sold for cents on the dollar and the land turned back into tillable dirt. Those who chased this trend (and there are alot of them) are in for a rude awakening if they believe they’ll break even on their “dream” shack.
I tend to agree, yet they ‘did’ have a great run and… you only live once. The only place I take issue with is when they spend-every-damn-dime and THEN some on said shack.
If it really -was- a shack with a min. investment ( or even leased land ) having to move closer to town can’t be any particular sacrifice if one’s health fails.
We’re not ‘old’ ( least not yet ) and since people conduct themselves differently when they have visitors, we’ll never really know what kind of golden, irreplaceable moments that couple had together?
Irreplaceable memories can be had with your significant other irrespective of physical location.
I helped build said shack, though my role was limited to grunt work. Other family members were handy.
The 15 acres cost $13K back in 1986, the house was built for the cost of materials, plus the contractors who poured the foundation, built the chimney, did the plumbing, and dug the well.
It’s actually a pretty nice house, though my in-laws never got around to building front steps, and never got a C of O. They come and go through the garage and kitchen.
The trouble is, everything we did on the outside is wearing out due to the harsh weather — roof shingles, garage doors, siding. It needs a lot of work, and 22 years later no one is really up for the job. It is definately the time of life to sell to someone younger. Not the economy, however. They waited too long.
I’ve just seen so many people buy for retirement the dream house they wanted when they were in their 30’s.
My grandparents built a custom 2 story home on a view lot for retirement. Trouble was that all that was on the ground floor was the garage, and they had to lug groceries etc. up a flight of stairs. That only lasted about 4 years.
We sold our ranch when surgeries were necessary to keep working. We bought five acres on the river — in town — and are building
a 1500 sq ft home, single story, wide doors, etc. and are only two minutes from med and
groceries. Lots of space for garden and orchard. We planned ahead.
We planned ahead. How un-American!
Yeah, I know. Planning ahead actually requires brains and knowledge and the ability
to use them. Something that has actually worked for us over the years, but then, we
do things a bit differently than most folks.
We’re debt free, money in the bank and don’t have to rely on SS so I guess that makes us
UN- American….laughing!
I was hoping some other posters would fill me in on some of those other “rural counties” on the list. Other than Valley county ID the only other one I know about is Mono county CA.
Mono county is about as remote as you can get in CA. It’s sandwitched in on the far side of the Sierra between Yosemite and the Nevada border.
Dare County, NC is home to the Outer Banks. A really nice long stretch of barrier islands off the coast of northern NC. They are narrow: you can stand on ‘your’ second floor deck and see the Atlantic on the East, and the Pamlico Sound on the West. Great sunrises AND sunsets.
Equity locusts built monstrosities there starting after the 80s recession. Pretty well all built out now, except for the protected National Seashore. Every five years or so, a hurricane blows through and does serious damage.
This is a beautiful place. If you stay out of the McCrapshack developments. There actually is a local fishing-handyman culture. Have yet to discern where the home folks live, though.
This past Christmas, I rented a house that was on sale for $1M for $700 per week. Off season, you know. Also, tourist trade was down over 60%. That supply and demand thingie.
“I’m always amazed by retirees who want to retire to a rural area far from any pickup jobs or medical care.”
Romantic dreamers who have never lived far from big city amenities often tend to think that way.
From the Oregon link:
“The state forecasts that employment in transportation equipment manufacturing, which includes RVs, will be down 21.9 percent this year from last year, then turn around, growing by 1.3 percent next year and by 1.4 percent in 2011.
The industry employed 1,100 people in Lane County in July, according to state Employment Department figures.
Frank Magdlen, an RV industry analyst for The Robins Group in Portland, agrees that recovery will take a while. When it does come — probably in the second half of next year, at the earliest — there will be pent-up demand for RVs, he said.”
Frank’s just another delusional dreamer, believing the glory days are coming back. I’ve got news. There are more new and used RV’s for sale than there are potential buyers. And, most used RV’s are in new condition. Don’t hold your breath, Frank. Oh, and about that $5 per gallon gas that’s on it’s way back? Yeah, that’s going to crush your industry into oblivion.
there will be pent-up demand for RVs,
There will be pent up demand for low rent living situations — RVs.
Grizz,
They have “analysts” for THAT!? Well… o.k.
Yeah, the people “I” have spoke w/ ( at Monaco ) believe that ‘if’ it comes back, it will take a completely new format altogether. Tow-able or inflatable or whatever. But the days of the “Diesel Pusher” are quite over they assure me.
“But the days of the “Diesel Pusher” are quite over they assure me.”
Being an RV owner and enthusiast, I made that same exact statement to my house millionare brother a few weeks ago. He wants to sell his million dollar $250k house in hawaii and buy a house on the mainland and buy an RV. He asked me why I would think that Class A’s are now dinosaurs. With the exception of tourbus operators, the market for such beasts was small during the best of times. Besides, Super C class will fill the demand for a large chassis RV.
I keep toying with the ideal of getting a used pop-up trailer. But I’d prefer the carefree driving I get without paying attention to a trailer. With my F-150 I can get a really serious campsite packed along. I’d rather cook outside at a campsite anyway rather than in a “galley”.
Get a used hybrid….
And a weber Q. Problem solved.
Exeter, when you say ‘hybrid’ I have a feeling you are not referring to a Prius. I am one of those bookwormy women who has romantic notions about buying an RV and parking it at a bugout location.
I still feel very uneasy in the very congested greater DC area. I don’t care WHAT my paymasters are saying about all these lovely green shoots. I’m just not feeling the love.
I am thinking to buy a small flat sliver of land somewhere west of here within a one tank radius this winter, and park a trailer on it. Both for cash. I know how many ways I can be called dumb for this, but the peace of mind is worth it to me. Plus, it’s nice to have a non-motel base to go exploring from.
So what is this ‘hybrid’ thing I should be looking for, if you please?
A hybrid is your typical hard sided towable trailer with two distinct differences.
1) The front and rear of the trailer have swing out tented platforms for sleeping areas. Basically you don’t waste floor plan on bedrooms. It’s a very novel approach to RV design. I owned one and used the snot out of it.
2) They’re much lighter in weight.
They’re are quite popular as they are fairly inexpensive, easily towed behind standard half ton pickup. The smaller ones can be towed by minivans but you must be deliberate about it not exceeding weights.
Photo of a hybrid
http://tinyurl.com/mpefm9
I just ran across this description for a Pismo Beach house:
Luxury home without the hassle of all that extra square footage! Amenities/upgrades that will please and surprise you. Extraordinary tile work, accents, granite murals, glass backsplash and more. See all the photos to get the idea of attention to detail.
Can Realturds get any more moronic?
That is pretty funny.
“Luxury home without the hassle of all that extra square footage”
I just ran across this description for a Pismo Beach house:
Luxury home without the hassle of all that extra square footage! Amenities/upgrades that will please and surprise you. Extraordinary tile work, accents, granite murals, glass backsplash and more. See all the photos to get the idea of attention to detail.
“expects 81 percent of the option ARMs originated in 2007 to default”
If the taxpayers have to pick up the tab for this mess then I’m going to stop paying taxes. We know exactly what industry profited from originating this garbage. We can probably recoup some of the cost. That industry will have to eat the losses and the US economy can go back to being based on actually producing value in the world instead of stupid ponzi schemes.
“If the taxpayers have to pick up the tab for this mess then I’m going to stop paying taxes.”
I hate to break it to you, but one is far more likely to wind up in jail or on the street for refusing to pay taxes than for ceasing to make payments on an ARM after the reset results in ‘higher than expected’ monthly payments the loan owner cannot cover.
What he said, even if it’s downright criminal.
So take out an option ARM to pay your taxes.
Now that I think about it, I’m surprised anyone who owed the IRS money during the big bubble didn’t just take money out of their house to repay the tax debt and stiff the bank for it. The IRS certainly has more collection power than any bank will ever have.
I guess you could say that a minimum payment ARM is a “bare ARM”, and we have a constitutional right under the second amendment to bare ARMs.