A Product For Which There Is No Market
It’s Friday desk clearing time for this blogger. “Spanish Trail, one of Las Vegas’ most affluent gated communities, is starting to feel the pinch of the recession. Some residents are outraged that Spanish Trail association directors have started a $4.1 million remake of the landscaping and plan to collect a $3,350 special assessment from each homeowner over the next two years to pay for it. Alex Forgette, a retired California lawyer, said he would like to buy a new Mercedes but is driving a 4-year-old Lexus because of the hard times. ‘The economic downturn has hit Spanish Trail just like it would anybody else,’ Forgette said.”
“Roughly 60 percent of existing home sales in Polk last year were distressed properties, and the county’s current median price of $107,600 is off 16 percent from the year before. Twila Jarvis purchased her home after moving here from the Seattle area in 2005. Earlier this month, Jarvis found herself packing the contents of her mobile home at Lakeland Harbor. She had fallen short on payments after two years without steady work. ‘It’s emotionally draining,’ she said. ‘This kind of lifestyle makes you want to take a long walk off a short pier.’”
“Foreclosed homes can still be found all across Merced. RealtyTrac reports nearly 8400 properties here received a foreclosure filing in 2009. ‘It doesn’t surprise me, just what I’ve seen since I’ve been here with UC Merced and the investors coming from outside, buying then losing, it doesn’t surprise me,’ said Spence Boelter, Merced Homeowner.”
“Boelter bought his home in 2007 and has watched its value plummet in the past few years. ‘It’s not, maybe I don’t know, might be worth half what it was when we bought it, so we don’t feel real good about that,’ Boelter said.”
“But there are some signs that the market is improving. Realtor Andky Krotik said more people are having success selling their homes now than a year ago. ‘It’s typical that new homes on the market are shown within 2 hours of being listed and are usually in contract within 2-4 days after they’re listed. It’s not uncommon. In addition to that for houses to sell for anywhere from 13-15 percent over the list price, said Krotik.”
“But Krotik says that’s largely because banks have artificially caused a lack of inventory as they face more government pressure to delay foreclosures. “In the past it would take 4 months, and now some are letting them sit there before they confiscate them for up to a year,” Krotik said.”
“He says more than a thousand homes are sitting empty in Merced County, but most are not available to sell.”
“Last year, there were foreclosure filings on 8,174 metro Birmingham properties, according to RealtyTrac. And along with new foreclosures hitting the market, there’s also the problem of shadow inventory — houses that have been foreclosed on but have not been listed yet. ‘There’s a lot of this foreclosure inventory out there, and it has the potential to erode home values further,’ said David Higginbotham, VP of Alabama Title Co. Inc. and the author of a monthly report on local foreclosures.”
“Linda Rheinberger, president of the Nevada Association of Realtors, said it appears short sales are the future as banks and asset managers catch on ways to avoid letting homes go into foreclosure. ‘There is a lot of political and social pressure on banks, especially those that received stimulus money, and they have been highly encouraged to do this,’ Rheinberger said.”
“President Barack Obama’s efforts to bolster the U.S. housing market, the trigger of the worst recession since the 1930s, may be undone by record unemployment and repossessions by lenders. ‘We’re working to lift the value of a family’s single largest investment — their home,’ Obama said in his Jan. 27 State of the Union speech to Congress.”
“The Federal Reserve said Jan. 27 it will keep the target rate for overnight bank lending near zero to help nurture the recovery. ‘Household spending is expanding at a moderate rate but remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit,’ the Federal Open Market Committee said this week in a statement.”
“The statement dropped the previous reference to real estate that said housing ‘has shown some signs of improvement.’”
“U.S. Federal Reserve Chairman Ben Bernanke Thursday won confirmation from the Senate for a second term at the helm of the central bank. But he faced more opposition in the chamber than any previous Fed chief. President Barack Obama congratulated Bernanke on his confirmation and said he looked forward to working with him.”
“‘As the nation continues to face the consequences of the worst recession in a generation, Ben Bernanke has provided wisdom and steady leadership in the midst of the financial and economic crisis,’ Obama said in a statement.”
“Sen. Bernie Sanders, the Independent from Vermont who has led the opposition against Bernanke, said the Senate sent a clear signal to the Federal Reserve with a historic number of ‘no’ votes. ‘Start representing the needs of the middle-class and working families, not just Wall Street CEOs,’ Sanders said. ‘Break up big banks, and stop the secrecy surrounding trillions of dollars in blind loans,’ he added.”
“Critics say he helped fuel the housing bubble at the root of the financial crisis by endorsing low interest rates in the early 2000s, when he was Fed governor and Alan Greenspan headed the central bank. ‘I’m troubled that Bernanke refuses to take responsibility for the housing bubble,’ said Jon Kyl from Arizona, the No. 2 Republican in the Senate.”
“Despite the criticism, Kyl voted in favor of Bernanke, fearing President Obama might pick somebody worse in his place.”
“‘He allowed the Fed to become the lender of the nation. Nobody had ever done that,’ said Sen. Judd Gregg (R) of New Hampshire on Thursday.”
“Sen. Shelby voted against Bernanke, adding that the Fed chief’s actions in helping feed the housing bubble led to the economic melt-down in the first place. ‘I believe it is far more important to consider the facts surrounding Chairman Bernanke’s record than it is to speculate about the impact of his departure,’ said Shelby.”
“Housing markets appear to have stabilized for the moment, with Case-Shiller price indexes rising for six consecutive months and sales stimulated by federal tax credits and fixed interest rates below 5 percent. The Case-Shiller index for November was up 0.2 percent.”
“There is a wave of adjustable rate mortgages on which rates will reset in 2010 and 2011, said economist Kevin Gillen, vice president of Econsult in Philadelphia. ‘It was the reset of subprime ARMs in 2007 that was the specific trigger for the market’s downturn,’ Gillen said. ‘Will this coming wave cause us to double-dip?’”
“It appeared to the housing industry that the tax credit was a panacea, but Gillen suggested that ‘the true effect of the home-buyer tax credit is still unknown.’ ‘Did it truly halt the market’s decline, or just give us a temporary reprieve? We won’t know until after its expiration in April,’ he said.”
“What the tax credit might have done is pushed people who had been planning to buy in the first half of 2010 into the market in the last quarter of 2009 - meaning that sales will actually decline in 2010 as ‘payback.’”
“Another major factor is high unemployment. ‘People need to feel comfortable about buying a home again,’ Gillen said. ‘They not only need to know that they’ll be able to support their home’s value, but that their neighbors will be able to also.’”
“Although Honolulu finished 2009 with fewer foreclosures per household than the national average, the city’s foreclosure activity increased at more than six times the national pace over the last 12 months and is expected to worsen this year. On Oahu, Ewa Beach was the hardest-hit market followed by Waikiki, Kapolei, Waianae, Waipahu, Mililani, Kaneohe, Hawaii Kai, Kailua and Pearl City.”
“‘We had so many military buyers that gravitated to Ewa Beach in 2005 and 2006 that were on three- to five-year tours of duty,’ said David Kucic, a Realtor-associate with RE/MAX Honolulu. ‘Now that they’ve been transferred, they can’t afford to keep those houses and the rents aren’t covering the payments.’”
“As a result, certain neighborhoods such as Gentry’s Tuscany/Montecito have many listings that are in short sale or foreclosure, Kucic said. Ewa Beach homes that sold for $430,000 to $500,000 during the previous boom are now selling for around $390,000, he said.”
“Baby boomer buyers fueled a big run-up in U.S. home construction and sales in the 1970s and 1980s. Now beleaguered homebuilders say they’re hoping aging boomers, who are just entering retirement age, will once again give them robust housing sales. ‘The number of people in that age group is increasing, and there is a lot of promise out there,’ builders’ association economist David Crowe said. ‘The good news is they usually have a lot of home equity and can get a mortgage. The bad news is they have to sell a house.’”
“Most older homebuyers surveyed are holding down their cost expectations, industry research shows. ‘When we asked the consumer, ‘What are you willing to pay?’ they said $190,000,’ Crowe said. ‘And when we asked the builders, ‘What are you building [for this market]?’ they said $287,000. Obviously, there’s a real big problem there.’”
“The City Council voted Tuesday night to allow a developer to drop an age-restriction clause from a planned condominium project in a rural part of the city. The 9-1 vote gave Home Associates of Virginia Inc. permission to build 54 traditional townhouses, amending an earlier plan to build 60 condominium units restricted to people older than 55.”
“The market for upscale age-restricted housing is saturated, Eddie Bourdon, the company’s lawyer, told City Council members. ‘In our view, it doesn’t make sense to build a product for which there is no market,’ he said.”
“BankAtlantic Bancorp., set aside a $76.8 million provision for loan losses for the fourth quarter, which amounted to double the loan-loss provision it booked for the year-ago quarter. The banking company has posted 10 consecutive quarterly losses, putting its last profitable quarter at June 30, 2007.”
“‘We are still not seeing improvements in the local Florida economy,’ said Alan B. Levan, CEO of the parent company. ‘BankAtlantic’s losses are coming exclusively from continued writedowns on real estate, and we anticipate these losses will continue until the Florida economy turns to improvement.”’
“Much of troubled loan portfolio is on land parcels around the state ‘that were spoke for by national homebuilders, who walked away from options or obligations to buy the real estate’ amid the collapse in the housing market, Levan said. ‘Most of the losses come from reappraisals of real estate [the bank has loaned money on] for the second or third time, with continued reductions in valuation,’ he said.”
“During a meeting yesterday, Neil Chrystal, CEO of Polygon Homes Ltd. gave his take on the local real estate market, noting he was surprised by some of the incongruencies between this city and Vancouver. While both hit a wall in terms of real estate sales by November of 2008, consumer demand has long since returned in Vancouver, spiking prices and sales volume above the highs of 2008.”
“In Kelowna, however, that’s far from the case. ‘Vancouver bounded back and Kelowna got nothing,’ said Chrystal, adding he’s wondered what the difference could be and landed on the lack of appeal to the Asian consumer. ‘You are a resort market — a secondary home market a bit like Whistler— and that market continues to be dead. (The Albertans) left town and they aren’t coming back for awhile.”
“Condominiums are contending with weak pricing because there’s still an over-supply in the valley, and the more than 400 complete, empty and as of yet purchased units sitting on the market will act as an economic hangover.’”
“The House of Representatives has approved a bill to stimulate economic development by cutting taxes and creating new incentives for businesses, despite complaints from critics that the measure was rushed through before it could be understood completely. Democrats who opposed the bill said legislative budget staff hasn’t even had a chance to analyze what impact the tax cuts would have on the state’s general fund. They said the bill was a ‘corporate bailout’ because large companies will benefit most from the incentives and tax cuts.”
“It also will hurt homeowners by shifting more of the property tax burden to them because of the business property tax cuts, said Rep. Tom Chabin, a Flagstaff Democrat. ‘It is very clear that homeowners today cannot sustain this kind of burden,’ Chabin said.”
“Arizona has based its economy on the housing industry for decades, said House Speaker Kirk Adams. That makes the state particularly vulnerable to economic swings. ‘It’s well past time that we get serious in this state about attracting jobs,’ he said.”
“Alex Forgette, a retired California lawyer, said he would like to buy a new Mercedes but is driving a 4-year-old Lexus because of the hard times. ‘The economic downturn has hit Spanish Trail just like it would anybody else,’ Forgette said.”
An occasional dark cloud can drift over anyone’s life, poor Alex is stuck driving a raggedy assed 4 year old Lexus. He’ll probably have to wear dark glasses and duck down when passing through his neighbor hood, to hide his shame.
You took the words right out of my mouth…
The world’s smallest violin will now play “I Won’t Forget You, Forgette, My Heart Bleeds for Youuuuuuuuuuu You Whiny Douchenozzle”.
I was going to post similar sentiments about poor retired attorney Forgette. I would tell him to Forgette-About-It. A four-year-old Lexus sounds pretty good to me.
If he “can’t afford” a Mercedes because of a $4,600 unexpected fee, then I think his definition of affordability is a little removed from reality. A new windshield for a Mercedes could cost that…
In any event, this shows why houses in “gated communities” aren’t worth s[p]it. You’ve paid full price for a house and have fewer rights than a renter.
something tells me his lease for 2 years would be a similar price….
How long has it been since that guy’s had a reality check? He has enough money to retire and chooses in an entirely artificial city built in the middle of a desert and dependent upon gambling, and he can’t even embrace driving a four-year-old luxury vehicle when there are people living in their cars.
The explanation is high time preference. Alex Forgette, like many Americans, especially retirees in Vegas, currently has a very short planning horizon.
He wishes to eat, drink and be merry while there’s still a couple thousand left in the account, for tomorrow he will either go bankrupt or die of coronary heart disease.
But tomorrow comes so slowly…
pathetic.
But isn’t it kinda amazing that this guy can’t even buy the car he wants?
And that’s the gist of the story.. the whales are being forced to tighten their belts.
Assuming he’s telling the truth, that he has no financial cushion is even more amazing, imo. He either took a big financial hit or is living beyond his means.. or maybe gambles too much.
He doesn’t sound like a tightwad so that can’t be it..
According to this….
http://members.calbar.ca.gov/search/member_detail.aspx?x=42229
Alex still keeps a place in Newport Beach with a local phone number.
Not neccessarily, he’s been inactive since ‘01, ie: not a practising lawyer, so he has no obligation to update the bar when he moves, that’s just the address he had when he went inactive.
His law school looks like it’s not ABA approved - one of those ca ’specials’ and he doesn’t seem to have have an undergraduate degree. But he did practice for a long time.
Actually no - you have to keep an updated contract address/phone with the bar even on inactive status - as I am.
You don’t keep it updated - you get disbarred!
The article says that he is retired. Isn’t there a way to retire without becoming disbarred?
He is on “inactive” status - as am I. You pay reduced dues to remain on the rolls. You can become “active” again simply by paying more dues and taking a few continuing education classes.
Being inactive means you can “unretire” easily if things change in your life. If you just quit the bar, then you have to take and pass the bar exam all over again if you want to unretire!
BTW “inactive” bar dues in CA are $125 this year - I just got my bill today.
Oh, man, I’ll never escape them!
An occasional dark cloud can drift over anyone’s life, poor Alex is stuck driving a raggedy assed 4 year old Lexus. He’ll probably have to wear dark glasses and duck down when passing through his neighbor hood, to hide his shame.
Think about it. He’s driving a cop/firefighter car.
I’m driving a 10 year old farking Honda accord that breaks down on a regular basis. I’d love to have a 4 year old Lexus.
You’re not a home debtor. You don’t deserve a nice car. Serf!
Plays Mercedes Benz on my tiny finger/thumb fiddle…
Oh lord won’t you buy me a Mercedes Benz.
My friends all drive porsches, I must make amends.
Worked hard all my lifetime, no help from my friends.
So oh lord won’t you buy me a Mercedes Benz
Oh lord won’t you buy me a color TV.
Dialing for dollars is trying to find me.
I wait for delivery each day until 3.
So oh lord won’t you buy me a color TV.
Oh lord won’t you buy me a night on the town.
I’m counting on you lord, please don’t let me down.
Prove that you love me and buy the next round.
Oh lord won’t you buy me a night on the town.
Oh lord won’t you buy me a Mercedes Benz
My friends all drive porsches, I must make amends.
Worked hard all my lifetime, no help from my friends.
So oh lord won’t you buy me a Mercedes Benz
Janis Joplin
Another resident from New York said this Spanish Trail has turned into a Spanish Harlem
Arizona has based its economy on the housing industry for decades, said House Speaker Kirk Adams. That makes the state particularly vulnerable to economic swings. ‘It’s well past time that we get serious in this state about attracting jobs,’ he said.”
Yeah, Kirk! Nice to see that you finally get it.
And, hey, while we’re at it, howzabout if we create an Arizona economy that isn’t based on building houses for people who are going to come here and sell houses?
That’s not an easy thing to do. Michigan, for example, would probably like to create an economy that is not so dependent on the auto industry.
Here’s one more to make you fall off your chair. It’s just a matter of time before the 1973 Arab Oil embargo is repeated with money.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=afbSjYv3v814
“Russia urged China to dump its Fannie Mae and Freddie Mac bonds in 2008 in a bid to force a bailout of the largest U.S. mortgage-finance companies, former Treasury Secretary Henry Paulson said.”
“Paulson learned of the “disruptive scheme” while attending the Beijing Summer Olympics, according to his memoir, “On The Brink.”
The next time might be oil and money at the same time.
“She had fallen short on payments after two years without steady work”. ‘It’s emotionally draining,’ she said. ‘This kind of lifestyle makes you want to take a long walk off a short pier.’”
Get over yourself Twila!
If you have even thought about the deep six just because of a “lifestyle” change, then by all means take the long walk.
Seriously, what are these people going to do when things really get bad and they’ve already exhausted their hyperbole?
It’s not hyperbole to be distressed when you haven’t worked for a year and are losing your home. Only a person who’s never lost a decent job and can’t find one right away would be so callous as to write something like that. Get over yourselves !
Agreed. No everyone who is losing their home overpurchased or used it like an ATM.
Only a person who’s never lost a decent job and can’t find one right away…
I know more than one person who’s been out of work and could have a job, but refuse to take one that’s “beneath” them. I did just that - took a job that I was vastly overqualified for (from a Sr. Production Manager with a BS degree and 12 years experience in publishing to an Adminstrative Assistant in a laboratory). It’s what I could get at the time. It has worked out well for me, luckily. And if it didn’t, I could have been looking for another job while working that one. But I didn’t just sit around refusing to apply for jobs that I didn’t deem worthy enough. Bills don’t pay themselves.
Are you commenting on what Silverback1011 said above? I can’t see how your statement relates to his or her statement.
Having lost more than one decent job myself and having been through prolonged unemployment and bankruptcy, I assure you that falling behind on rent — er, “house” payments is far from the worst that can happen. I’m deadly serious. People might not be able to imagine much worse based on their happy experiences to date, but the chasm still yawns before us.
Sorry, but I’ve been down so deep in the hole sun light can’t make it through. You lose your job you lose your house, and you keep trying as long as it takes to get back up.
If you have to live in a damn tent then that’s what the hell you do. Don’t whine about it, some one some where has it worse, you can count on it!
“The Federal Reserve said Jan. 27 it will keep the target rate for overnight bank lending near zero to help nurture the recovery.
…and to punish a generation of people who lived modest lives and carefully saved money in the hopes of having some interest income to supplement their retirement.
‘We’re working to lift the value of a family’s single largest investment — their home,’ Obama said in his Jan. 27 State of the Union speech to Congress.”
“The Federal Reserve said Jan. 27 it will keep the target rate for overnight bank lending near zero to help nurture the recovery.
Again, we see the idiocy of college boys in public office with stupid theories about economics. Took much Krugman, another “Nobel Winner” and complete imbecile.
I have distinct definitions contrasting Free Economies from Capitalism as used today. Capitalism has become control of Capital by central banks as opposed to a Free Enterprise system.
Under a Free Enterprise system, improvements in production methods and technology continually LOWER the cost and price of goods, making everyone richer in the process.
Under the control of Capital system, the FED prints enough money to confiscate the increased value that technological improvements will provide. HIGHER PRICES, as proposed by Obama and the Keynesian Clowns running our government make no improvement in the lives of everyday people. Housing prices, along with all other prices should continue to go lower over time, as we are becoming richer.
Instead, the dollar is now less than 4% of its value when the FED was started.
There “mission” to stabilize prices and create full employment are both failures and the FED should be disbanded and the criminals most recently caught stealing our money should be prosecuted. Bernanke, Paulson, Geithner and their wallstreet cohorts.
Instead, we have an administration that wants to start the ponzi borrowing scheme up again and game the system to create higher prices. This is all backword for working people. We all just end up paying more and end up on the “Treadmill”, never able to finally settle our debts and support a decent retirement.
If the FED can keep a 2.5% inflation rate, then we lose over 25% of our savings in 10 years. In 20 years, it’s cut by half.
With ZERO return on savings, we are forced into servitute because there is no stable way to save money, except to risk it in the markets.
I could write a tremendous amount about the evils of the FED and the bankster system we are dealing with, but it seems we are losing in the political realm. Bernanke, who takes no responsibility for the recent collapse has just be “reappointed” to rob us some more, and has vowed to keep rates “FREE” for banks and bankers, who are charging working people 18-25% for credit. How can this be happening?
I’m with you. I have tried to save money and to be responsible in buying. I did not buy overpriced housing and i haven’t risked money in speculative ventures, but the value of my savings is being depleted and i am certain the thieves in Washington will be going after our 401k, stock and pension fund money in the near future. Nothing is safe.
T’was “Free Enterprise” what led us here, Dio. What living entity would you like to see as Secretary of the Treasury? Chief Economic Advisor? As head of private banking interests?
It was not free enterprise. There was no enterprise at all.
It’s been a banking cabal that creates money out of nothing and then lends it out.
The problem is the FED and central banking in general.
There were NO savings to represent the new money that was being loaned to buy houses with “no money down”. It has all been a mirage, except that new debts have been created that cannot be repaid.
That is the reason for the collapse. The inability to support the supposed new financial creations of the bankers and wallstreet traders.
Now, the FED is hiding all the loses on its “balance sheet”, hoping to push prices high enough to make the bad loans “solvent”. Unfortunately, the need to push more loans to create more debt. There aren’t enough solvent buyers of debt to make the game work.
This is Bernanke’s “Financial Innovation”. It’s all a mirage.
The taxpayers and holders of dollars are getting fleeced while Wallstreet pushes their papers onto the FED who gives them cash for their toxic loans and derivatives to buy out the assets of whatever remaining values exist in World-wide commodities and businesses.
This is not “free enterprise”. This is a rigged banker/broker system where the entitled get available “currency” handed to them, to buy out the rest of us, who must labor to provide some “value” for the currency they print.
As Volker said, the only financial innovation created in the past 25 years was the ATM. The rest is just a shell game of passing paper documents and taking claim to various assets, supposedly “purchased” with dubious instruments representing artificially created values.
We need to end the FED and find our way be to a sound currency. The “strong dollar” stories of the FED are laughable.
Yes, we puzzle about the return on our savings every so often. Savers are getting their azzes kicked by these artificially low interest rates, but hang onto your money: the contraction continues.
“…supposedly “purchased” with dubious instruments representing artificially created values.”
So, in essence…I take it your not a BIG fan of MAJOR league SPORTS or a supporter of Billionaire Owners DEMANDING Billion TAX dollar $$$$$$$$$$$$$ STADIUM’s right?
Rod Tidwell: “Show Me The MONEY!”
i am not. they should pay for their own stadiums, and if the stupid fans don’t want to pay the ridiculously high ticket prices that would result, well, then, i guess they would just need to reduce player salaries to a level that the market would support.
i opposed ALL major league “handouts” to bring the team to a town near them.
I also OPPOSE all government tax breaks to lure private business. Everyone should be treated the same, large or small.
The deals always end up being a loser to the taxpayers, although sold to the public as a benefit.
“…What living entity would you like to see as Secretary of the Treasury? Chief Economic Advisor? As head of private banking interests?”
Well since Corporations are people…I nominate this tried & true Soul:
Mr. GoldenmanSucks, why re-invent the wheel?
More like “Shackled” Enterprise, handcuffed by Too-Big-To-Fail and their concurrent Monopolies. If those banks hadn’t been so inbred, then they would have had FreeFall Enterprise, and we could get on with the business of living without them.
“…Under a Free Enterprise system, improvements in production methods and technology continually LOWER the cost and price of goods, making everyone richer in the process.”
Evidence: The “Oil” industry
Yep. I keep waiting for the mainstream media to describe me as a “hero,” probably in vain, since to my knowledge not one prominent political figure has taken a stand against the Fed’s decision to punish prudent financial behavior. While Bernanke takes a long victory lap and successfully campaigns for reappointment, the level of cynicism and outright disgust among responsible people has to be approaching an all-time high, which is not a good thing for this country’s future.
When I was small I read the fable about the grasshopper and the ant. Looks like it needs to be rewritten to the grasshopper’s benefit.
http://en.wikipedia.org/wiki/The_Ant_and_the_Grasshopper
‘Household spending is expanding at a moderate rate but remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit,’ the Federal Open Market Committee said this week in a statement.
Let’s see….retired person living off interest on savings….Fed’s policy of zero percentage rate…no income growth/lower wealth….spending can’t increase….connect the dots!
The Fed has artificially held interest rates down for almost a DECADE now and thereby caused the depression.
no income growth ??
Not if you work in any level of government from Washington DC to the local municipality…Their income growth is guaranteed by all the rest…
Feds, maybe. Munipal employees, not so much. My wife works at the local library. Her pay was frozen, she has to take furlough days too. Oh, and she doesn’t have some juicy pension waiting for her either.
She needs to come to California ! The State employees make 40% more than comparable private sector jobs. Let’s hear a cheer for the SEIU terrorists and Acorn.
Exactly Reuven…
“…and to punish a generation of people who lived modest lives and carefully saved money”
Hwy = Old School = Economically naive = Tombstone, AZ Cemetary Headstone:
“Here lies Old Hwy, victim of a Wall St. Chupacabra!”
I miss the days when savings in the bank was earning 6% interest. Money just isn’t worth much -in so many ways.
What? I have a lot of friends that would love to have access to my bank account.
Cash might not be king but he is certainly in the royal family, looking at the king while clutching on to a dagger.
Aye Aye! After selling several hundred shares of a couple of stocks, my cash holdings seem substantial now. But AAA munis in bond funds are still great in this climate of 0% rates.
4% yields on AAZAX rocks!
AAZAX
Careful Bill,
That 4% yield goes “poof” if interest rates tick back up. Maybe the Fed will keep them low, maybe they won’t, but there is plenty of “risk” in AAA bonds too. they have had a great run in the past 3 months.
watch TBT, runs inverse to US treasuries
Amen Reuven!
Anybody know, when you sue the HomeOwner’s Asociation, who pays their legal fees? THe home owners, right?
Suing your HOA is similar to suing yourself.
Exactly Dennis…And, be careful what you ask for…One question that is always asked by any lender is; “Is the association in any litigation”…
“It also will hurt homeowners by shifting more of the property tax burden to them because of the business property tax cuts, said Rep. Tom Chabin, a Flagstaff Democrat. ‘It is very clear that homeowners today cannot sustain this kind of burden,’ Chabin said.”
What about banks sitting on a huge pile of REO? Won’t a shift of the tax burden to property tax hurt them as well?
Re: Property Taxes on Bank owned Properties
This is a qustion that really gnaws at me.
They must be paying the taxes, right? What about HOA fees?
I would think holding all this stuff would be draining them of cash even if they’re allowed to “mark to fantasy”.
Maybe those expenses will finally get them to start unloading, and the infamous shadow inventory will see the light of day.
JDinCT, that though has been nagging @ me too, triggered by researching a property on line @ a county assessors office and seeing it valued for tax purposes substantially below what the bank bought it back for @ the recent foreclosure ‘price’ as well as the sold price the FBer paid a few years ago. What I’m wondering is what the appraised value assigned to those houses they’re sitting on is and where it comes from. Personally, I’d like to see them forced to pay taxes on whatever fantasy no. they carry on their books.
Banks do not pay taxes or HOA fees until the time the property is sold.
But if the about-to-be-foreclosed owner can’t pay them, then the state puts a lien on the property, yes? So the bank would have to pay taxes eventually.
This is what happened to a friend of mine who walked away from her townhouse in TN. The bank paid the taxes but not the HOA fees. This allowed the bank to avoid the loss associated with a foreclosure, but also prevented the bank losing the property to a tax sale.
Market or no market, one thing is for sure: Housing mania thinking is alive and well among San Diego newspaper editors. The housing bubble lives on in San Diego!
For example:
rising home prices = improving
falling home prices = worsening
And if all-cash “investors” are driving the market up by outbidding “end-users,” all the better!
Local Home Prices On The Rise
An audio recording of this interview will be posted here within a few hours of the live broadcast. A transcript will also be added within 24 hours. Thank you for your patience.
By Megan Burke, Hank Crook, Gloria Penner
Editors Roundtable | Friday, January 29, 2010
San Diego was one of only four large metro areas in the nation to see an increase in home prices late last year. Why is the local housing market improving in San Diego, while home prices are declining around the rest of the country?
Guests
Kent Davy, editor of the North County Times.
John Warren, editor and publisher of San Diego Voice & Viewpoint.
Joe Guerin, editor of the San Diego Daily Transcript.
Yes, you see what i see, a “viewpoint” of the press as to what is good and bad concerning rising and falling prices, as opposed to “stability”.
You must keep in mind, though, that the REALTWHORE scheme of selling a house as an “investment” has created this ideology.
If you buy, then the house will be worth more than the money you put into it. That enables the reasoning for rushing in to get a deal before you get priced out forever.
As i have stated many times, the concept of homebuyer should be a Forced Savings Plan. You are essentially paying an equivalent rent on the mortgage, but at the end of the term, you still have all the mortgage payments from the purchase. So you get to keep the money you would have spent on rent, less repairs, maintenance, and taxes.
It’s better than renting, but in the past 20 years, it became a financial plan, not a place to live. Even if you sell the place you need a place to live.
So, if you “buy” for $100,000, and sell 30 years later for $100,000, you essentially are getting you rental expense back that can be used to pay for a rental in your old age. It works out good with STABLE money supply and inflation. It looks better with high inflation if the price triples in 30 years, but then you need to live for 20 years with high inflation and you lose the value you thought that you gained.
Unless inflation is curtailed, you can’t keep up with the rising prices.
The FED is supposed to create stable prices with their policies and gaming the interest rate. How’s that worked out?
DeFLATION is GOOD for the dollar, but bad for holders of assets.
I say let the prices fall some more. It’s good for the economy.
Well. Someone is excited and posting some stuff today.
Go Dio!
“the concept of homebuyer should be a Forced Savings Plan.”
Yes! I like this. It’s a lot closer to how I think of house-buying.
That and place to live. Seriously, “investment” never enters into it. The only person I know who has bought a second home calls it her kids’ college fund– that they can enjoy until the kids are old enough for college. (She’s hoping to have saved enough otherwise to not need to sell it, but if she has to, it’s definitely a Forced Savings Plan.)
they’re hoping aging boomers, who are just entering retirement age, will once again give them robust housing sales ??
I happen to be one of those “aging boomers”….I have “zero” interest in being in some gated community riding around in my golf cart and playing shuffle board…What a boring unproductive life style…
You missed the best part….
Most older homebuyers surveyed are holding down their cost expectations, industry research shows. ‘When we asked the consumer, ‘What are you willing to pay?’ they said $190,000,’ Crowe said. ‘And when we asked the builders, ‘What are you building [for this market]?’ they said $287,000. Obviously, there’s a real big problem there.’
Ha Ha Ha.
“What we’ve got here is (a) failure to communicate”
This is not a problem.
You simply need to make the “payment” equivalent to the 190k and back-load the remainder onto the mortgage as a future payout. re-adjust the payments down and make up the difference with inflation and future gains.
With proper financing, people with sub-standard incomes can live in million dollar houses. Isn’t this a great idea?
Someone should try it. I’ll bet they can sell millions of new homes to people that don’t even really want them.
“I have “zero” interest in being in some gated community riding around in my golf cart and playing shuffle board…What a boring unproductive life style”…
You and me both!
I lived in South Fla.(God’s waiting room)for a few years in the early 90’s, had several “shuffle” board/golf, “high socks & shorts” neighbors. I would go out of my skull with the routine so many end up living.
One unsung benefit of all this (the Housing Bubble) has been the death (well, at least thinning out) of the snowbird in SE FL. RE got so expensive here, and taxes so outlandishly biased against snowbirds (like 2 people, on the same street, in the same exact model of house with tax bills 10X one another) that the bird decided to migrate elsewhere. The roads are much better, shopping is much better; frankly, everything is much better in SE FL since the HB popped. It’s wonderful (as long as you didn’t buy); just make sure that your fav places to eat/shop don’t go out of business!
That’s the thing I don’t get, everyone wants to “capture the snowbirds” or “capture the rich” or some other hairbrained scheme to make an area grow. And, if they are successful, the quality of life in the area drops dramatically, pretty much proportional to how much success they have. I don’t get it.
SE FL is dead to the retirees anyway, nobody in their right mind would retire to FTL, MIA, or any of the larger SE FL cities. They are all “mini-Manhattans” now; no place to park, crazy pace of life, crime, fraud, etc, etc.. People don’t retire to a place like this, they live here and then retire to a place that’s quiet and affordable. Yes, there will always be Palm Beach/Jupiter Island, etc (which are quite, but most certainly NOT affordable), but, in general, the busier and area gets, the LESS likely the wondrous Snowbird is to come and roost.
Success of the plan destroys the entire plan. Great plan.
I’m not seeing as many snowbirds in Tucson as, say, the late 1980s and early 1990s. Methinks that the number of people who can afford to live that way has declined.
Yeah, I’ll be listening to The Clash whilst playing ye old shuffleboard.
Clampdown Lyrics
Artist(Band):The Clash
(Strummer/Jones)
1-2-3-4!
Hey, hey!
Ooh!
the kingdom is ransacked
the jewels all taken back
and the chopper descends
they’re hidden in the back
with a message on a half-baked tape
with the spool going round
saying im back here in this place
and i could cry
and there’s smoke you could click on
What are we gonna do now?
Taking off his turban, they said, is this man a Jew?
’Cos working for the clampdown
They put up a poster saying we earn more than you!
When we’re working for the clampdown
We will teach our twisted speech
To the young believers
We will train our blue-eyed men
To be young believers
The judge said five to ten but I say double that again
I’m not working for the clampdown
No man born with a living soul
Can be working for the clampdown
Kick over the wall ’cause government’s to fall
How can you refuse it?
Let fury have the hour, anger can be power
D’you know that you can use it?
The voices in your head are calling
Stop wasting your time, there’s nothing coming
Only a fool would think someone could save you
The men at the factory are old and cunning
You don’t owe nothing, so boy get runnin’
It’s the best years of your life they want to steal
But, you grow up and you calm down and
You’re working for the clampdown
You start wearing the blue and brown and
You’re working for the clampdown
So you got someone to boss around
It makes you feel big now
You drift until you brutalize
You made your first kill now
In these days of evil presidentes
Working for the clampdown
But lately one or two has fully paid their due
For working for the clampdown
Ha! Gitalong! Gitalong!
Working for the clampdown
Ha! Gitalong! Gitalong!
Working for the clampdown
Yeah I’m working hard in Harrisburg
Working hard in Petersburg
Working for the clampdown
Working for the clampdown
Ha! Gitalong! Gitalong
Begging to be melted down
Gitalong, gitalong
Work
Work
And I give away no secrets – ha!
Work
More work
Work
Work
I can recall from my own family, that when my grandmother and grandfather’s kids were grown and gone (except for weird Uncle Jim), they sold the big house and moved into…
…an apartment.
And, lemme tell ya, that apartment building was the coolest place to visit. Dad always insisted on walking up the stairs, which meant that Mom and I had to do so too. (I think my fit and trim father was trying to one-up his dad. Grandpa did have a bit of a paunch.)
There was this lady down the hall who’d invite me over to hear what her mynah bird had to say. Man, that bird had a vocabulary. None of it salty, mind you, but it sure could talk a blue streak.
Neighbor lady was fond of asking the bird who the President was. “President Eisenhower!” the bird would respond. Didn’t matter if Ike had left office. To this mynah, he was still da man.
As my grandmother’s memory started disappearing, the neighbors stepped up to take care of her. They brought her back home on more than one occasion.
Now, that was an apartment building.
Dave, are you 62 or older?
Even if we ever move to another home it will be in a 55+ gated community. My wife and I both golf and play tennis, and we enjoy other activities with other folks our age WHO ARE ALSO AROUND ALL DAY EVERY DAY. Being the only retired couple on your entire block where everyone else is off to work or school all day (like we were in Sarasota) is pretty boring.
Oh, and no driveway basketball games continuing even after dark, and no cars with their megawatt boom box speakers going by any time of day or night.
If you don’t like those boom boxes, you’re not alone. (I hate ‘em!) Meet your new best friends at:
http://lowertheboom.org/
No large gated community homes for us here….we’re almost, almost retired. Five more years for me. We’re getting rid of stuff/property, not trying to hang a huge tax burden of some kind of McSeniorMansion around our necks. Just enough room for us and the little poodle, thank you !
Tell me which aging boomers are going to shackle themselves with 30-year mortgage at the exact moment that their income stops.
Umm, Oxide, I don’t know about you, but the aging Boomers I know have the financial savy of an invertibrate, and are moaning about their current upside down houses due to all those helocs they took out to pay for their kids college, big wedding, senior prom, new car, vacation, etc.. My guess is a whole lot of them wouldn’t think twice about taking out a new 30 yr. mortgage if they could.
BTW, I consider myself to be an aging, if not downright aged boomer.
Dammit, I keep forgetting that not everyone is as intelligent as we HBBer’s.
OK, tell me which aging boomer is ABLE to move into one of these communities. They all have to sell their other homes first.
I have two coworkers who have been at the company 16 months and 24(?) months. Both of them relocated here to work. Both wives are still in the old state trying to sell the other house. It’s to the point where the company may not even pay for the relocation expenses if it takes too long to move.
How many times is that story being repeated?!?!
re: relocation with two houses
“I happen to be one of those “aging boomers”….I have “zero” interest in being in some gated community riding around in my golf cart and playing shuffle board…What a boring unproductive life style…”
I agree. Me too. The way to age very fast is to live among people 20 years older than you complaining about aches and pains and being grumpy all the time. It’s depressing too. Being with young people is much more fun!
Age restricted communities do not appeal to me for a fraction of a second!
“…banks have artificially caused a lack of inventory as they face more government pressure to delay foreclosures.”
Government pressure? Even after the FB has mailed in the keys?
“in a rural part of the city. ”
What - ?
Some cities place their city limits so far out that you run out of people before you run out of city land. In the early 90’s there were cows grazing within the city limits of Durham, NC. Columbus OH just keeps adding parcels to the city, usually when a developer wants to build subdivision. Indianapolis gave up and just made the city its own county.
I need to get out more.
I think that was a property tax strategy in places like the mid-west.
For example, Kansas City annexed lots of land north of the city a long time ago when they built a new airport. My understanding was that they annexed lots of it so they would never be “land locked” by other town governments the way St. Louis is.
Some of it did develop lots of housing developments, industrial parks and malls, but still lots of open space.
The airport is “conveniently” located on the other side of the city far from the wealthy suburbs in Johnson County Kansas…
Actually, you can have areas within city limits that feel very rural due to zoning. Fair Oaks, a small municipality in the greater Sacramento area, is a fairly upscale area with huge lot sizes, so there are horse owners and the like. And it’s right next to the American River Parkway, a huge wilderness area that follows the river for 26 miles. But the real “rural” feel is the wild chickens. Every so often, somebody gets annoyed at the crowing and tries to get the city to take care of them, but the vast majority of the residents- even the rich ones!- think the Fair Oaks chickens are part of the unique feel of the area, and shoot the naysayers down.
Seriously, wild chickens and million-dollar homes. I love the juxtaposition.
From the VA article about dropping the age restriction on a condo development:
“In the last two years, Home Associates of Virginia has given more than $10,000 to City Council members, including $3,500 to Rosemary Wilson, $2,750 to Glenn Davis, $2,500 to Harry Diezel, $1,000 to Mayor Will Sessoms and $1,000 to Ron Villanueva, who is now a state delegate.”
And these are only the amounts that they’re willing to admit to.
The article describes how the developer convinced the Council to approve a development which built twice as many units as township regulations allow.
In our neck of the woods, the 55+ market is indeed saturated. Erickson just filed bankruptcy and another TH development has turned out to be too expensive for new buyers who were unprepared for the high tax assessments. At lunchtime I noticed that FOR SALE signs are beginning to reappear in front of single homes. I imagine that post Super Bowl we’ll see quite a flowering of homes for sale.
Lots of inventory here.
Whadaya know? Montana wasn’t different after all.
“Contrary to popular belief, Montana’s economy didn’t lag behind the rest of the nation in terms of the effects of the recession. Data show that Montana’s downturn, for the most part, was in sync with the rest of the country, Barkey said.
What was lagging was the ability to collect reliable and timely data in Montana, he said.” http://missoulian.com/news/local/article_cefcb7cc-07d1-11df-9926-001cc4c03286.html
That’s what happens when you live a non-disclosure state.
“…Some residents are outraged that Spanish Trail association directors have started a $4.1 million remake of the landscaping and plan to collect a $3,350 special assessment from each homeowner over the next two years to pay for it.”
Hey, when was the last time those director’s got a “haircut”?
‘We’re working to lift the value of a family’s single largest investment — their home,’ Obama said in his Jan. 27 State of the Union speech to Congress.”
Yep, and five minutes earlier he referenced the housing bubble and reckless investment.
But he’s still working diligently to lift the values of peoples’ homes?? Huh??
…and to lift the price I have to pay for one.
It’s like the government is trying to create an army of zombie debt slaves!
Most people latch on to ( and remember) what they want to hear and forget the rest. Something for everyone in that speech.
so true dave
Well, I finally let it slip… I lost my cool today at an informal meeting when real estate came up.
5 years of “cluelessness” was a good streak…
Did you do the “If I tell you, I’ll have to kill you” routine, Agent Muggy?
Huh?
Tell us in tomorrow’s Bits Bucket! *salivates*
I just saw this…
Oxide, it was actually one of my least professional moments. I usually stay on-task and stay low-key with non-work stuff, but I was with a group of managers and one guy (millionaire via RE) said I should buy. I went ballistic. After 2-3 minutes I just stopped talking. It was embarrassing, really.
If I thought any of them could put a thumb on me, I’d be doing damage control, but it was isolated, thank god.