April 19, 2010

The 21st Century Version Of Gold Rush Fever

The Miami Herald reports from Florida. “During the real-estate boom, when dilapidated houses in bad neighborhoods sold for $400,000 in Key West, buying an affordable home was impossible for most of the tropical island’s backbone workforce. Then came the flooding of Hurricane Wilma, the real-estate crash and national recession that decimated tourism and led to foreclosures, short sales and plummeting prices. ‘Dreams do come true like in American Hollywood — even simple people from [the formerly] Communist Poland can buy a house in Key West,’ said hotel housekeeper Aneta Swiecick. Aneta and her husband Mariusz Swiecicki, a maintenance handyman who works two jobs, paid $157,000 for the foreclosure that an investor bought in 2004 for $370,000 and in 2006 was appraised for $463,000.”

” The Swiecickis came to the United States five years ago…when Key West was the priciest place in Florida and among the most expensive locales in the country to buy a 2,200-square-foot home, at a staggering $949,000, according to Coldwell Banker’s annual Home Price Comparison Index. By 2009, the median selling price in Key West for a single-family home had fallen to $400,000, or pre-boom level. Lumping together all residential properties — single-family homes, condos, townhomes, duplexes, mobile homes and three- to four-unit places — the number was $335,000, according to the Key West Association of Realtors. For the first quarter of 2010, the figures are similar.”

“‘We’re back to 2002 and 2003 pricing at this point,’ said Key West Realtor Barbara LeRoux. ‘If we’re not at the bottom, we’re darn close. Anything under the $400,000 mark is a real hot property these days.’”

“U.S. Navy petty officer second class Sylwia Kwiatkowska and her best friend Lindsay Douthitt, who was in the Navy six years and is now a nursing student, bought a two-bedroom, one-bath townhome with a view of the No. 8 tee at Key West Golf Course for $170,000. It was a foreclosure originally bought by an Ohio woman, who paid $243,000 for it as an investment rental property in 2003 on the same day she also bought another townhome at the golf course for $227,000.”

“A year later, the Ohio woman refinanced the townhome bought by Kwiatkowska for $298,000, and took out a $150,000 equity line of credit. The townhouse appraised for as high as $418,000. ‘That stuff is crazy for this tiny place,’ said Kwiatkowska, 28. ‘I was relieved the market dropped. This was the perfect opportunity for a first-time home buyer.’”

“‘When we started looking for a house, one day it was on the market and the next day it was gone,’ Aneta Swiecicki said. When she looked at the house on Pearl, the price was right but it was a neglected rental that had been vacant for months. ‘I said, ‘Oh my God, this house is horrible,’ Swiecicki recalled. ‘But they said if we didn’t buy, they had another person who would. The house is like a hot bagel.’”

The Sun Sentinel. “Sheila Ryan put down $239,900 in 2006 for what she thought was a gem, a one-bedroom condo near downtown Fort Lauderdale. Over the next two years, investor-owners walked away from nearly half of the 20 units in her complex. Taxes went up and condo association fees rose to $350 from $180 a month for the owners who remained. As Ryan paid more, the recession cut into her income as a massage therapist. ‘I remember being at a homeowners meeting and actually shaking because I knew I wasn’t going to be able to turn it around,’ she recalled.”

“Now in foreclosure, Ryan is trying to sell her condo for a quarter of what she paid: ‘It’s all out of control, and you just want peace of mind again.’”

“Jack McCabe, a real estate consultant in Deerfield Beach, figures 65,000 condos were built in Miami-Dade, Broward and Palm Beach counties during the boom, while another 63,000 apartments were converted to condos. McCabe also estimates that nearly a third of those new downtown Miami-Dade units are still on the market. Now, Moody’s Economy.com estimates it could be 20 years before housing prices reclaim their recent peaks. ‘A lot of people, if they think they are going to stay long enough to get what they paid for the condo or more, they’re going to end up carrying them out feet first,’ McCabe said.”

The Bradenton Herald. “Homebuilder Jesse Battle III, who left hundreds of Coast Bank borrowers with unfinished homes, will lose his certified general contractor license, a state licensing board decided. ‘The only place he should be working is the house of many doors,’ said Seminole resident Richard Masi, who filed a complaint against Battle after he said his house-lot package was ‘loaded’ with liens from subcontractors. ”

“Masi obtained a loan for more than $300,000 through Home Bank to sign a construction contract with Battle for a home in North Port. ‘It was a big mistake,’ Masi said. ‘He cost me a bundle of money.’”

The Herald Tribune. “No one can fully explain why it remains such a difficult task to complete one short sale. Sometimes short sales bring more cash than foreclosures, and vice-versa. Which one it is depends on a host of factors, not the least of which is whether a lender has an agreement with the Federal Deposit Insurance Corp. for reimbursement of most losses on a bad loan like those sold short.”

“Multiple liens on a house and fat home-equity lines of credit that must be dealt with first are easy explanations for why a short sale languishes. Another is that lenders — historically only handling a few cases each year — are now overwhelmed with hundreds or more in a month, a logjam that builds upon itself.”

“In the worst straits are those borrowers, usually through sub-prime loans, who have had their mortgage wrapped into an investment pool like those held by Citigroup and Bank of America, said Mickey Ross of National Quick Sale, a Jacksonville-based company specializing in short sales. About 25 percent of boom-time mortgages are contained in such securities. Few of those securities have even basic guidelines for short sales, he said.”

“‘They got into some pretty crazy financial gymnastics,’ Ross said. ‘If your loan is in one of those groups it could be very challenging to get a short sale approved.’”

“The process of bundling notes and selling them to investors as a security was a boom-time staple, said Irv DeGraw, a banking professor at St. Petersburg College. AIG, Citigroup, Lehman Bros. and others backed, or insured, these so-called ‘credit-default swaps.’ It was an absolutely maniacal problem,’ DeGraw said. ‘Nobody understood exactly what we were dealing with and then it exploded.’”

From TC Palm. “Riverside National Bank of Florida was seized Friday evening by the federal government. Linda Beavers, a regional ombudsman for the Federal Deposit Insurance Corp, said the federal Office of the Comptroller of the Currency closed Riverside on Friday ‘because the bank was unable to maintain adequate capital to operate in a safe and sound manner. The FDIC was made the receiver for the bank, which means we have the responsibility to ensure that the deposits are safe and the assets sold. Fortunately, there was an immediate buyer.’”

“‘This was a dead bank walking,’ Miami banking analyst Ken Thomas said of Riverside. ‘The question is why has the FDIC let them flail away for so long.’”

From PBS Newshour. “Ray Suarez: Some of the places where foreclosures are highest are markets that once soared, including Cape Coral in Southern Florida. Last night, economics correspondent Paul Solman showed the impact there. He visited Jason Welsh, a golf pro who bought this house a decade ago for roughly $100,000. He renovated it, added a pool, hiking his mortgage to $240,000. Today, given the decline in prices in that neighborhood, the house would sell for possibly $100,000. Welsh hasn’t made a payment in six months, while he’s asked the bank servicing the loan to lower it.”

“He made the banks an offer of $150,000, saying he would re-buy the house for more than it’s worth. But the bank refused, and Welsh faces foreclosure or a short sale. The bank plans to sell the house for far less than what Welsh is offering. Welsh: ‘I call. I try and get help. They just say I don’t qualify. And they’re willing to sell it to somebody else for $100,000 out from underneath me. It’s just upsetting that there’s supposed to be help out there, and there is none.’”

“Bert Ely, banking consultant: Well, I think part of it is that the nature of the problem has changed…As the recession has deepened, as the jobless rate has gone up, a lot of mortgages that were prime mortgages at the time they were made are now in default because of a loss of income in the — in the family and the accumulation of other debts. And people are just not able to — to maintain their mortgage payment. And this gets to what I think is another aspect of this problem. And — and that is, is the government actually solving problems through the approaches it’s taking, or are we just simply rolling a problem forward and prolonging the housing crisis?”

“Quite frankly, there are a number of situations where it’s in everybody’s interest for the homeowner to give up the ownership of the house, to become a renter again, so that the housing market can find its bottom and start to come back. We saw this in Texas in the 1980s, and we’re going to go through that same process again.”

The Anniston Star in Alabama. “Calhoun County foreclosures for the past three months hit an all-time high since the recession began in 2008 — a snapshot of a national trend experts say is being caused by persistent high unemployment rates and banks finally tackling backlogs of troubled home loans. Keivan Deravi, professor of economics at Auburn University Montgomery, said the recent spike in foreclosures has much to do with consistently high unemployment rates and not the collapse in sub-prime mortgages that caused the first jump in foreclosures during the beginning of the recession.”

“‘This is the aftershock,’ Deravi said of the current trend. ‘A lot of people who have lost income and lost their jobs can’t pay their mortgages.’”

“Deravi added that foreclosures are increasing now because banks are now dealing with more bad loans. ‘A lot of banks at first hesitated to put foreclosures on their lists and a lot of people were allowed to live in their homes because (the banks) didn’t want to put pressure on the market and acknowledge there was a problem,’ he said.”

“To Deravi, it will be some time before the housing market fully corrects itself. ‘It’ll be sometime after the labor market turns,’ he said. ‘I would say it could take a good three years for the housing market to clear all its inventory.’”

The Atlanta Journal Constitution in Georgia. “When Theresa Ballard and her husband moved from Florida to the mountains of North Georgia, they had millions of dollars in savings and a golden retirement planned. But that all blew away like last year’s leaves after the Ballards got swept up in the 21st century version of gold rush fever: building and selling vacation homes.”

“These days, a single two-bedroom cabin in Ellijay is all that remains of a real estate empire the Ballards once thought would be worth about $30 million. Now bankrupt, her husband, Doug, has returned to work in Florida. ‘Nothing’s forever, and when it’s all said and done, material things don’t mean a thing. Right now I’d be satisfied with hair,’ said Theresa Ballard, 55, who is still struggling to recover from an ordeal so stressful that she lost much of her hair.”

“While her husband was running the family’s propane distribution business in Naples in the 1990s, the real estate agent had become heavily involved in Florida’s booming real estate business. She would put 10 percent down on homes in new developments while they were still on the drawing board, then flip them perhaps a year later, sometimes for $100,000-plus profits. She sometimes owned up to 20 properties at a time.”

“Flush with such profits and the sale of the propane business, Ballard and her husband were still in their 40s when they retired to Ellijay in 2000. But within months, Ballard was itching for something to do. ‘I started buying land,’ she said.”

“Mark Chastain, who owns a land surveying company in Ellijay and is chairman of the Gilmer County Commission, (said) the second-home market really took off around 2002, when easy credit and the rising values of buyers’ homes in Atlanta and Florida made second homes affordable to more people. ‘What was always a dream became a reality,’ said Chastain. ‘Twenty-five-year-olds with a few years’ work experience were buying $400,000 homes.’”

“By late 2008, ‘things really started to slow,’ said Ballard. ‘We weren’t selling anything…It’s made me very humble,’ she said. ‘We’ll start over and see how it goes.’”




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105 Comments »

Comment by pressboardbox
2010-04-19 05:09:11

Big commercial recovery underway in LA:

http://www.latimes.com/business/la-fi-cover-commre18-2010apr18,0,3886234.story

You can almost smell the green shoots.

Comment by mrincomestream
2010-04-19 08:34:50

LOL…recovery my rear…it amazes me how the L.A. Times contradicts itself almost on a daily basis…one day fairy tales another something close to reality…

http://www.latimes.com/business/la-fi-cover-side18-2010apr18,0,5480872.story

 
Comment by eggman
2010-04-19 14:32:29

Anytime you see green shoots, look closely to see what their sprouting medium is…

 
Comment by Sammy Schadenfreude
2010-04-19 15:18:06

Maybe the 12.6% of Californians who are unemployed can pool the last of their benefits and buy one of those lots. You know, as an investment.

 
 
Comment by palmetto
2010-04-19 05:09:43

“Aneta and her husband Mariusz Swiecicki, a maintenance handyman who works two jobs, paid $157,000 for the foreclosure that an investor bought in 2004 for $370,000 and in 2006 was appraised for $463,000.”

Oh, boy, here we go again. Key West, no less. A great place to go if you want to party, not so much to live. Very expensive. One good hurricane and pffft, there goes their “investment”.

Comment by Muggy
2010-04-19 06:23:46

Actually not a good place to party anymore either. It has been completely Disneyified like Times Square. I suppose I am partly to blame for this, but it’s mostly a place to eat food now.

Did I tell you that those popular vulgar t-shirts now have the curse words blocked out when on display on Duval? I’m serious, it’s very different now.

Lol, my dad gets mad a smokers. I’m like, uh, dad, it’s Key West.

 
Comment by snake charmer
2010-04-19 10:04:17

I had my bachelor party in Key West several years ago, and personally can attest that a lot of the Eastern European presence on the island does not consist of housekeepers. But the general point of the article is true — just like elsewhere in Florida, the Keys cannot have average prices that do not correlate with the incomes of people who make their homes there; otherwise, it’s impossible to have a long-term functioning community. At least recently, a significant percentage of Key West’s hourly workforce commuted up to three hours each way by bus from Miami-Dade.

Just my opinion, but the Keys also are way overpopulated.

Comment by Va Beyatch in Norfolk
2010-04-19 11:18:16

San Jose and Bermuda do. The workers just commute long distances or something.

 
Comment by Sammy Schadenfreude
2010-04-19 15:33:38

Just my opinion, but the Keys also are way overpopulated.

The next hurricane might fix that.

Comment by snake charmer
2010-04-19 19:17:18

I’ve written about this before, but there are McMansions on Islamorada within shouting distance of the monument to victims of the 1935 Labor Day Hurricane. I can’t go too crazy on the owners, because anyone living in coastal Florida, myself included, is taking a chance.

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Comment by pressboardbox
2010-04-19 05:10:54

Big-time Atlanta developer “hopes for change”.

http://www.ajc.com/business/allen-plaza-owner-optimistic-466563.html

Comment by Sammy Schadenfreude
2010-04-19 15:35:01

So did millions of dupes who pulled the lever for Obama. We can see how well that’s working out.

 
 
Comment by palmetto
2010-04-19 05:48:52

“When Theresa Ballard and her husband moved from Florida to the mountains of North Georgia, they had millions of dollars in savings and a golden retirement planned. But that all blew away like last year’s leaves after the Ballards got swept up in the 21st century version of gold rush fever: building and selling vacation homes.”

Easy come, easy go.

Comment by SanFranciscoBayAreaGal
2010-04-19 09:06:41

Easy Come, Easy Go

Takin the shade out of the sun
Whatever made me think that I was number one
I oughta know easy come, easy go
Sittin’ it out, spinnin’ the dial
Thinkin’ about the chump I’ve been
I have to smile
Didn’t I know easy come, easy go
She wasn’t kind, I wasn’t smart
I lost my mind and fell apart
I had to find myself in time
Now I can start all over again
Hangin’ around takin’ it slow
Happy I found
I still can smile and dig the show
Lettin’ me know easy come, easy go

-Bobby Sherman

Comment by Arizona Slim
2010-04-19 09:27:27

Bobby Sherman is now a paramedic and deputy sheriff in SoCal. After having such a successful performing career, he felt a need to give back to society.

 
 
Comment by Doug in Boone, NC
2010-04-19 09:12:16

Read in the local newsrag that another vacation home went up in flames yesterday. Empty vacation homes around here are starting to have a problem with spontaneous combustion.

Comment by Bad Chile
2010-04-19 12:18:32

Spooky. Heck of a coincidence if you ask me.

;-)

Comment by Doug in Boone, NC
2010-04-19 12:59:47

And for some mysterious reason they all are unoccupied with no or little furniture in them.

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Comment by Zeus Matuze
2010-04-19 22:09:59

It truly is a phenomenon. Anguished fire inspectors often find popcorn, empty homemade apricot beer bottles, bear scat and blood-soaked joshua tree needles in the debris.
…and graffitti that often says, “Ben B here, hear?”

Strange…

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Comment by Silverback1011
2010-04-19 06:19:39

“When Theresa Ballard and her husband moved from Florida to the mountains of North Georgia, they had millions of dollars in savings and a golden retirement planned. But that all blew away like last year’s leaves after the Ballards got swept up in the 21st century version of gold rush fever: building and selling vacation homes.”

Maybe it’s just my Scottish heritage rearing it’s cranky head, but there’s just something so wrong with this. If you have millions of dollars in savings for your retirement, LEAVE THEM WHERE THEY ARE, and stay retired. I am amazed at how thriftless and casual about nesteggs many people have become. It’s weird. Some people seem to think that nesteggs drop from the sky frequently and they can just ” make it up ” if things go awry. Savings aren’t like doubling down on the roulette table, folks. They’re hard to come by and should be guarded, not strewn around in rotten business ideas, such as “vacation home sales”, forsooth. Vacation homes have been a traditionally risky proposition. A little research would have saved the “poor” Ballards their millions. They put themselves into the poorhouse by being idiots. It’s sad, but instructional.

Comment by denquiry
2010-04-19 06:32:47

Hope and Change…..the Hope (skyrockets) and the Change ( cold hard cash, gets taken away). With my Hope and your Change we all will be OK.

 
Comment by Kim
2010-04-19 07:03:31

“If you have millions of dollars in savings for your retirement, LEAVE THEM WHERE THEY ARE, and stay retired.”

Bingo. You only need to get rich once. Beyond that its pure greed.

Comment by In Colorado
2010-04-19 13:53:44

I recall reading an article a few years ago about some bozo who won 100 million (Powerball) and was determined to “invest and grow” it in 1 billion. I wonder how that worked out for him.

WTF?!? Isn’t 100 million more than enough?

Comment by Va Beyatch in Norfolk
2010-04-19 14:22:18

Nothing is ever enough.

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Comment by bink
2010-04-19 07:27:03

I’m trying to think of how you even bet millions on land deals. Do you think they put down 50% of their retirement on land and then doubled-down when it dropped in value? I’m inclined to believe their “millions” were imaginary the whole time.

 
Comment by Natalie
2010-04-19 07:33:22

“A little research would have saved the “poor” Ballards their millions.” Unfortunately research for most ppl means getting a tip from one of their “friends” regarding how much someone else made on an investment. The majority of ppl feel it is safer to buy something after a major runup, rather than a major drop, in prices. Then feel “unlucky” when they don’t get the same results.

Comment by BubbleButt
2010-04-19 11:53:36

Sounds like the Ballards levered up and went all in with their can’t lose retirement bet.

Comment by Sammy Schadenfreude
2010-04-19 15:46:29

They’ll both end up pushing brooms.

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Comment by In Colorado
2010-04-19 13:55:45

We do have a “culture” of “insider knowledge” in this country. Of course it takes a little work to sift the “knowledge” from the ” hearsay”.

 
 
Comment by combotechie
2010-04-19 07:34:36

They were in their forties when they retired but “within months Ballard was itching for something to do.”

I see this all the time: People work hard, save up their money so they can retire young, then they yearn for something to do once they are retired.

Work is a blessing; Work supplies structure and purpose to one’s life. Depression and an early death too often await those who are not properly prepared to walk away from their jobs.

Comment by Natalie
2010-04-19 07:40:29

“Depression and an early death too often await those who are not properly prepared to walk away from their jobs.” You always put a smile on my face Combo.

Comment by combotechie
2010-04-19 07:49:22

Okay, help me out here: Why does writing about depression and early death put a smile on your face?

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Comment by Natalie
2010-04-19 07:56:21

Some ppl take me way too literally. It’s Philly speak for lighten up on a Monday morning.

 
 
 
Comment by 2banana
2010-04-19 08:36:23

I see this all the time: People work hard, save up their money so they can retire young, then they yearn for something to do once they are retired.

Work out, travel, volunteer, raise chickens, volunteer to serve in Afghanistan…

I can think of a bunch of things that don’t involved investing millions of my retirement account into crazy investments…

 
Comment by Arizona Slim
2010-04-19 09:31:01

Work is a blessing; Work supplies structure and purpose to one’s life. Depression and an early death too often await those who are not properly prepared to walk away from their jobs.

Depression is what I believe my mother has been suffering from since she retired from teaching. At least one other family member agrees, and, sorry to say, it’s not my father.

As for doing something about Mom’s depression? That’s a whole ‘nother ball of wax. One that I have tried (with little success) to tackle. Mom doesn’t trust psychiatrists (and I don’t blame her), but I do think some sort of therapy would be helpful.

Comment by JohnF
2010-04-19 11:12:44

Sorry to hear about your Mom.

She would be a very valuable asset to any school as a part time classroom assistant or at a local community center as a tutor for kids. Perhaps she misses the feeling she got from watching kids learn and blossom as students.

As a part-timer, she could get that feeling back without all of the political nonsense that comes with being a full-time teacher. Perhaps therapy could flesh out what she misses in her prior “life”.

In my opinion (and I realize there are VERY strong opinions about this on both sides), I would be wary of any medicinal answers to her depression.

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Comment by Arizona Slim
2010-04-19 11:38:59

Thank you for your thoughts, JohnF.

For a time, my mother was a tutor in a church’s after-school program. She parted ways with them over the lack of interest that some local charter school kids had in doing anything other than playing computer games. Mom and her fellow retired teachers were there to help with homework, and, supposedly, the charter school kids didn’t have any.

OTOH, the public school kids did have homework, and Mom was more than happy to help.

However, IIRC, the program became dominated by the homework-free charter schoolers, and Mom decided to take her time and energy elsewhere.

One thing that really struck me about her time as a teacher was how she became her own person with her own career and her own friends/colleagues. She became a lot more than my mother or my father’s wife. Heck, she even went off to Mexico and Central America by herself so she could study pre-Columbian archaeology.

Yes, I know. This is being said by the same Slim who went bicycling all over the United States. For the most part, by myself.

You should have seen me in the worry zone while I was visiting my folks and my mother decided to take off on one of her archaeology trips. Ever so slowly, it dawned on my that she was doing the same thing I was, traveling on her own to far-off places, learning all sorts of interesting things, and becoming her own person in the process.

More recently, I’ve gotten my passport re-activated. I’m planning a trip to Montreal later this year. I don’t know if Mom would be interested in a trip to Francophone Quebec, but my aunt is. Perhaps she might feel some motivation coming from all of our travel chatter.

 
Comment by JohnF
2010-04-19 14:55:26

…became her own person with her own career and her own friends/colleagues…

I was thinking about this issue but was a little hesitant to mention it so as to avoiding offending anyone here.

I have definitely seen this (lost their sense of purpose) in stay-at-home moms after the kids have grown up. There is probably a similar thing going on when you retire and so much of your “self worth” was based on what you did for a living. Especially for a “job” that involves a lot of sacrifice - like unpaid-professional motherhood and teaching.

So you Mom has two choices:

- try and find that feeling in something that is similar to what she did before (which it sounds like she tried), or

- cherish her new freedom to expand her knowledge on the things she loves, but never had the time to explore.

Perhaps the traveling you mentioned, or more serious study of the pre-Columbian archaeology you mentioned via her nearest college library.

Your Mom sounds like the kind of person that needs to feel a sense of accomplishment in what she does. There are so many places right here in the U.S. that she could travel to and learn about in-person. I would try and tie any travel to a specific “learning mission”.

Good luck….she sounds like a great person and has a lot more to offer the world than maybe she is giving herself credit for.

 
Comment by Arizona Slim
2010-04-19 15:58:32

Good luck….she sounds like a great person and has a lot more to offer the world than maybe she is giving herself credit for.

You’ve sized her up perfectly. Especially on the selling herself short part.

Personally, I’m of the mind that she’d be more free to travel if she weren’t so immersed in the family dog. I mean, come on. It’s a dog, not an invalid. You can have a dog-sitter come in and hang out with it while you travel. I used to do that on the side for my coworkers.

 
Comment by Rancher
2010-04-19 17:21:21

Slim,
I have a very good friend who is a retired
dentist (oral surgeon) who takes three to four
trips a year with a group of retired doctors
to third world countries where they set up a
medical clinic for the poor in rural areas.
His enthusiasm and energy when planning and
executing there trips are infectious.

 
 
Comment by aNYCdj
2010-04-19 11:38:39

slim:

Have her do what my father did after he couldn’t work anymore…He taught seniors how to use a computer twice a week.

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Comment by Arizona Slim
2010-04-19 12:05:08

If she were interested in getting her computer skills back up to speed, this would be a good thing.

Matter of fact, she wrote a very nice article about a deceased friend and how this friend was great about listening to people, then aiding them in arriving at the best course of action. The article was published in the newsletter that the friend was active in and that my mom still belongs to.

I encouraged her to do more writing, but she brushed off the idea, saying that, in essence, what she had to say was nothing special. I begged to differ — briefly. But, alas, Mom evinced no interest in starting a writing career.

 
 
 
Comment by are they crazy
2010-04-19 15:23:57

I can find plenty of productive and worthwhile activities - I don’t need work for that. I work for money so I can live my life. I never understand people that are bored, particularly when they have the money to explore the world, give back, get educated and/or party on. To each their own.

 
 
Comment by mrktMaven FL
2010-04-19 07:52:01

You’re absolutely right. They should have just left their moneys in a savings account and watch it be inflated away by the central planners. Had they bought some gold back then, however, she would still have some hair left on her head.

The central planners are in the business of under-pricing risks and the sheeple still don’t get it. They are at it again and still the sheeple don’t get it.

 
Comment by Arizona Slim
2010-04-19 09:28:54

Maybe it’s just my Scottish heritage rearing it’s cranky head, but there’s just something so wrong with this. If you have millions of dollars in savings for your retirement, LEAVE THEM WHERE THEY ARE, and stay retired. I am amazed at how thriftless and casual about nesteggs many people have become.

I’m Scottish on both sides of the house. (Clan Fulton on Dad’s side. Clan MacDonald on Mom’s.)

Frugality is very hardwired into my DNA, so I find the above scenario to be a real head-scratcher.

Caber toss, anyone?

Comment by MrBubble
2010-04-19 10:30:53

MacLeod!!!

Comment by JMS
2010-04-19 11:27:24

There can only be one!

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Comment by Curt
2010-04-19 06:20:33

“Jack McCabe, a real estate consultant in Deerfield Beach, figures 65,000 condos were built in Miami-Dade, Broward and Palm Beach counties during the boom, while another 63,000 apartments were converted to condos. McCabe also estimates that nearly a third of those new downtown Miami-Dade units are still on the market. Now, Moody’s Economy.com estimates it could be 20 years before housing prices reclaim their recent peaks. ‘A lot of people, if they think they are going to stay long enough to get what they paid for the condo or more, they’re going to end up carrying them out feet first,’ McCabe said.”

Per Fisery Case Shiller:

“•Orlando, Fla., won’t recover its average 59.9 percent drop in home prices until 2039.”

http://tinyurl.com/y24jcfa

 
Comment by Natalie
2010-04-19 06:27:33

“When Theresa Ballard and her husband moved from Florida to the mountains of North Georgia, they had millions of dollars in savings and a golden retirement planned. But that all blew away like last year’s leaves after the Ballards got swept up in the 21st century version of gold rush fever: building and selling vacation homes.”

I really dont understand how ppl can be smart enough to save millions, but think that buying property after (not before) the biggest pricing runup in history is a decent retirement strategy. I am familiar with North Georgia. It is a decent 3 day weekend - but permanent vacation home - give me a break. It wouldnt make a top 500 list.

Comment by DennisN
2010-04-19 08:35:25

The highest “mountain” in Georgia is Brasstown Bald at 4,784. Doesn’t sound too scenic to me.

Comment by Natalie
2010-04-19 10:08:57

I think the only ppl that really go are ppl from ATL that are looking for some peace and quiet and cooler weather, also it has some decent rafting and kayaaking. If you are going to get on a plane, there many better choices, and if you dont mind driving a little more, the Ashville area is nicer in my opinion.

 
 
Comment by snake charmer
2010-04-19 10:09:08

I know someone who bought property up there. Fairly or unfairly, it wasn’t too long ago that north Georgia was associated with carpets and Deliverance rather than real estate speculation. Anyone care to post on how the locals are getting along with people like the Ballards? If my family had lived in a place for generations, I wouldn’t be too happy about being priced out by a bunch of idiot parvenus from out of state.

Comment by Doug in Boone, NC
2010-04-19 13:27:02

“I wouldn’t be too happy about being priced out by a bunch of idiot parvenus from out of state.”

Unfortunately, that sad story is playing in western NC too.

 
 
Comment by eggman
2010-04-19 14:38:11

read carefully. She made the millions by flipping houses. Their problem was that they couldn’t stop.

 
 
Comment by palmetto
2010-04-19 06:45:18

Hey, Floridians, how about that Crist/Rubio/Meek Senatorial sad-sack trifecta? LMAO! Knowing how political operatives work, whaddya wanna bet the Florida Dem party is kicking itself in the arse for backing Meek a little too early? After this education bill fiasco, they coulda turned Crist into the Dem candidate and he would smear Rubio into a grease spot running as a Dem. Crist wouldn’t have cared, either. Rep, Dem, what difference does it make, just gimme my Senate seat. I’d bet real money someone’s probably already sent feelers out to see if Meek, “for the good of the party”, would step aside in favor of Crist. And I’d bet real money Meek told ‘em to “pound sand, mo-fo”.

What does this have to do with housing? Nuthin’. I just think it’s great political theater.

 
Comment by Kim
2010-04-19 07:15:20

“He visited Jason Welsh, a golf pro who bought this house… for roughly $100,000. He renovated it… hiking his mortgage to $240,000. Today… the house would sell for possibly $100,000. Welsh hasn’t made a payment in six months… He made the banks an offer of $150,000, saying he would re-buy the house for more than it’s worth. But the bank refused, and Welsh faces foreclosure or a short sale. The bank plans to sell the house for far less than what Welsh is offering. Welsh: ‘I call. I try and get help. They just say I don’t qualify. And they’re willing to sell it to somebody else for $100,000 out from underneath me. It’s just upsetting that there’s supposed to be help out there, and there is none.’”

You broke your promise once, Jason, and you want the banks to take a hit AND to trust you again? This time I bet you really, really mean it, don’t you? Will you give the bank all the upside up to your original loan amount when you sell? When you say “there is supposed to be help out there” did you not consider the six months of free housing you got to be “help”? No, Jason?

Oh. I didn’t think so.

Comment by Prime_Is_Contained
2010-04-19 20:05:28

“They just say I don’t qualify. And they’re willing to sell it to somebody else for $100,000 out from underneath me.”

What is this guy, an idiot?

Rather than offering $150K to the bank, offer $110K to a friend to act as an intermediary; the friend then offers $100K to the bank.

You could even set up simultaneous closings so that the friend would never even have to own the house!

 
 
Comment by aNYCdj
2010-04-19 07:17:29

Good Ole’ Jack, he sure knows how to tell it like it is…!!!

——————-
‘A lot of people, if they think they are going to stay long enough to get what they paid for the condo or more, they’re going to end up carrying them out feet first,’ McCabe said.”

Comment by mikey
2010-04-19 08:39:57

“Toes Up…you’re leaving now!”

:)

Comment by Muggy
2010-04-19 09:22:57

“Toes Up…you’re leaving now!”

And one more person not paying their HOA dues :grin: :grin:

 
 
 
Comment by shelby
2010-04-19 07:31:05

Hhmmm,

Looks like it’s ’bout time to go pick up that retirement Condo in Florida fer cheap :)

Comment by mrktMaven FL
2010-04-19 07:59:42

I recall posting a couple months back that 2 bdrm condos next door at 70K were very cheap. Now, you can get 3 bdrm condos w/attached garages at that price.

Comment by aNYCdj
2010-04-19 11:42:56

Someone predicted here a few years back FL condozes would sell for $1 and even that was too much….

Even at $1 you would lose money each month on a rental,

 
 
Comment by Will
2010-04-19 17:00:19

Read a little more carefully Shelby. Above expert says it will take at least three years just to work off the excess inventory. He is too optimistic, but after that you might think about buying, providing you actually were ready to retire. Meanwhile it is much, much cheaper to rent your retirement condo.

 
 
Comment by steve jones
2010-04-19 07:45:20

And do not get me started on Chinese drywall….

Comment by SouthFL
2010-04-19 08:49:31

Our house in Broward county ended up having Chinese drywall. We didn’t find out until after we moved. The buyer opted not to have it tested even after the inspector found some suspicious corrosion in the electrical panel in the garage. One week after moving in, he decided to test an area in the kids’ rooms where the thought he smelled something odd. Bingo, Chinese drywall. But it was sandwiched b/w American drywall. So it’s unknown how much was used and where in the house it was used.

I felt very badly - my kids never had any respiratory issues. And I never smelled anything discernable. But the buyer (a pulmonologist, ironically, thinking he got the deal of the century) is now stuck with a house he will likely never be able to sell. Because unless all of the drywall is taken out, it is unknown if there are other areas in the house where they put it in. And maybe there are no more. But he will have to disclose the situation - a deal breaker for pretty much anyone I would imagine.

Comment by X-GSfixr
2010-04-19 10:23:55

Maybe not. Drywall is cheap right now, and drywall installers can be found nearly as cheap. Or do it yourself. It’s not that hard, once you get the right tools, and learn the few tricks of the trade. The typical drywall crew around here is composed of about a half dozen drunk/stoned illiterate Mexicans, so how difficult can it be?

Heck, you even do it a room at a time, if you need to.

But you need to do it before the lawsuits really start flying, and the EPA starts sticking their nose into “smelly Chinese drywall” mitigation.

Comment by Arizona Slim
2010-04-19 10:33:36

Slim’s drywalling tips (all learned via experience):

1. As tempting as it may be, don’t nail your drywall into the studs. You’re likely to be dealing with nail pops a few years down the road.

2. Do use a screwgun with a dimpling attachment. And, if you’re a skinny drywaller like me, lean into it when you’re working. You need to make a good solid dimple, and if that means putting your weight behind the screwgun, that’s what you do.

3. Forget cordless screwguns. They lose power rapidly. Use a corded screwgun.

4. Measure and mark! Measure and mark! Draw lines on the drywall where the screws will go. Makes the job faster and more accurate.

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Comment by Bill in Carolina
2010-04-19 15:43:01

Move everything and yourselves out of the house, and cover the carpets and floors with heavy plastic. The removal of the old drywall and fastening the new drywall onto the walls and ceilings isn’t bad, but sanding all the joint compound puts dust EVERYWHERE!

If yer gonna do it, do it continuously from start to finish, not one room at a time.

 
 
 
 
 
Comment by Ben Jones
2010-04-19 08:39:18

‘We’re back to 2002 and 2003 pricing at this point,’ said Key West Realtor Barbara LeRoux. ‘If we’re not at the bottom, we’re darn close. Anything under the $400,000 mark is a real hot property these days.’

‘When we started looking for a house, one day it was on the market and the next day it was gone,’ Aneta Swiecicki said. …the price was right but it was a neglected rental that had been vacant for months. ‘I said, ‘Oh my God, this house is horrible,’ Swiecicki recalled. ‘But they said if we didn’t buy, they had another person who would. The house is like a hot bagel.’

Here’s a candidate for a class-action lawsuit on the shadow inventory.

Comment by mrincomestream
2010-04-19 09:14:16

shadow inventory…everybody should have a DataQuick account just so they can see, how they are being manipulated…the lenders are still up to their old tricks…

 
Comment by Sammy Schadenfreude
2010-04-19 15:40:59

Another serial bottom caller.

 
 
Comment by Les Pendens
2010-04-19 09:14:40

‘What was always a dream became a reality,’ said Chastain. ‘Twenty-five-year-olds with a few years’ work experience were buying $400,000 homes.’”

I saw ALOT of this stuff first hand here in Polk County, FL.

My best friend sold his house in 2004 to a Realtor for $ 15,000 more than he had paid in 2002 ( he had moved in with his girlfriend ).

Flipper / Realtor proceeded to slap on a coat of cheap paint, fix the roof and put the old “party shack” on the market…we were in a bar-band at the time and only used the place for practice. The electrical was the old 2-pole type and we had to do some fixin’ to get our amplifiers to work properly so we wouldn’t get shocked everytime our lips touched the microphones…

Anyhow, within 2 months of the “upgrades” ( they didn’t upgrade the 1930’s electrical system ) the “home” was sold off for $ 185,000 on a no-money-down 3yr ARM.

The lucky couple “was” an unmarried pair of young twentysomethings who thought it would be cool to own a house. He : 24 yrs old, self-employed. She: 22yrs old, hottie, worked at Hooters.

And they were just living together. And a Florida bank cut a check for $ 185,000 to the flipper/ Realtor.

The flipper made around $ 75,000 on just this one sale; the twentysomethings fell out of love before the ARM adjusted, and now this house ( in a not so desirable part of Winter Haven ) sits in the humid sun with 3ft of weeds in the front yard.

The place hasn’t been occupied for years. It will probably end up getting torn down.

This story was repeated many many many times; over and over and over here in Central Florida.

..

Comment by Arizona Slim
2010-04-19 09:34:48

Anyhow, within 2 months of the “upgrades” ( they didn’t upgrade the 1930’s electrical system ) the “home” was sold off for $ 185,000 on a no-money-down 3yr ARM.

The lucky couple “was” an unmarried pair of young twentysomethings who thought it would be cool to own a house. He : 24 yrs old, self-employed. She: 22yrs old, hottie, worked at Hooters.

There’s a lot of this sort of dipper-buyer flipper upgrading going on in Tucson. Houses with old electrical, mechanical, and plumbing systems getting new paint and new kitchen counters. And then they’re re-listed as remodeled houses.

I can’t wait to see what happens when the buyers try to plug their power-sucking home entertainment centers into the houses’ elderly electrical systems. Ka-pow! the fuses will go.

 
Comment by Pondering the Mess
2010-04-19 09:37:38

‘What was always a dream became a reality,’ said Chastain. ‘Twenty-five-year-olds with a few years’ work experience were buying $400,000 homes.’”

Typical in Maryland, too.

Everyone should buy a couple of houses because, you know, “housing only goes up!” Insanity…

Comment by Pondering the Mess
2010-04-19 09:39:13

Oh, however, in Maryland, the trendy thing to do is to buy a house in Baltimorgue (ideally one near lots of bars since that’s exciting), and then complain about the high taxes, run-away crime, etc. while still at the same time claiming that buying houses in Baltimorgue is the best investment ever.

 
 
Comment by Sammy Schadenfreude
2010-04-19 15:49:59

The flipper made around $ 75,000 on just this one sale; the twentysomethings fell out of love before the ARM adjusted, and now this house ( in a not so desirable part of Winter Haven ) sits in the humid sun with 3ft of weeds in the front yard.

These are victims. That’s what we need to focus on.

 
 
Comment by Green Shoots
2010-04-19 09:40:22

Published: Sunday, Apr. 18, 2010 / Updated: Sunday, Apr. 18, 2010 07:14 AM
Time is running out to use homebuyer tax credit

It’s been a buyer’s housing market for months, but it’s about to become a little less so.

The federal tax credit for first-time homebuyers is set to expire April 30, meaning the time is now to take advantage of the hefty credit of up to $8,000. A similar credit for repeat homebuyers of up to $6,500 also expires at the end of the month.

So far, around 27,000 taxpayers in South Carolina have gotten more than $197 million in first-time buyer credits, the IRS says.

“This is a sizable tax credit. It would be unfortunate for any potential homebuyer to leave this money on the table simply because they missed the deadline,” said Mark Hanson, an IRS spokesman for the Carolinas.

Read more: http://www.heraldonline.com/2010/04/18/2098279/time-is-running-out-to-use-homebuyer.html#ixzz0lZ5a7DyJ

Comment by Arizona Slim
2010-04-19 10:07:54

This is a sizable tax credit.

In more ways than one.

I’ve read several reports that say that the costs of these credits are far in excess of $6,500 per credit for the move-up buyers and $8,000 per credit for the newbie buyers. Sounds like the government finally noticed and pulled the plug.

 
Comment by cereal
2010-04-19 10:11:51

What Green Shoots meant to say is that prices will now come down $32 - 40k for those who didn’t swallow the 8k bait.

You know with leverage and all.

 
Comment by mrincomestream
2010-04-19 10:12:29

Buyers market for a few months…??? LOL…try a suckers market…get 8k to be a debt slave is more like it…

The tax credit is only good for one year…the debt is good for 30…makes no sense if have any type of business acumen…

 
Comment by edgewaterjohn
2010-04-19 11:06:03

“It would be unfortunate for any potential homebuyer to leave this money on the table…”

Ummm, and where did that money come from? The lotto mentality is going to kill this country. Stupid azz buyers - that money they think you’re taking for nothing will be paid - by them. Uncle Sugar put on lein on their future labor…and their kids’ too!

 
 
Comment by beachmouse
2010-04-19 12:17:44

I really feel a little for the Key West homebuyers. Because if the hurricanes don’t get them, the hurricane insurance will.

Comment by Arizona Slim
2010-04-19 14:33:39

It’s like other forms of insurance. In other words, if poor health doesn’t lay you low, your health insurance company will.

 
 
Comment by skb
2010-04-19 14:08:37

Hi gang,

I need some help this is rather important:

My son is doing a speech on the housing bubble in his class in College and he needs to cite three reliable sources ( he is doing a persuasive speech) in regards to why the price of homes should be allowed to crash to their former values to become affordable again.
He needs to cite from three people that are credible.

I was at a loss to give him names of credible economists other than using the Robert Shillers graph. I don’t believe that there were any economists that spoke out against the bubble.

Does anyone know of any people that he can use that knew about the crashing bubble and were outspoken on it?

Who could he use to support the theory of ” what has happened”

Who could he use to support the theory of “what needs to be done”

Who could he use to support the theory of ” What can be expected to happen after we let the market crash and stop trying to prop it up”.

So I need the names of three different people, do they even exist?

Thanks, I am proud of my son who because of my constant ranting over the years on the bubble has now become very outspoken on it and Ben Jones was the reason for it. He can’t cite Ben Jones unfortunately.

Comment by snake charmer
2010-04-19 15:32:33

Bill Fleckenstein writes a column called “Contrarian Chronicles” for MSN. He was on to this early as well. He could try Roubini or Nassim Taleb, but I’m not sure they zeroed in on housing.

 
Comment by Sammy Schadenfreude
2010-04-19 15:52:17

Since 97% of economists “never saw it coming,” good luck finding citations.

 
Comment by potential buyer
2010-04-19 16:30:11

What about Thornberg?

Comment by Martin Gale
2010-04-19 16:43:32

Yes, Christopher Thornberg, Beacon Economics (formerly of UCLA Anderson Forecast). Has quotes and press clippings going back 5 years on Beacon’s website.

Comment by Arizona Slim
2010-04-19 16:46:24

And what about Dr. Doom himself, Nouriel Roubini? I also seem to recall investor Jim Rogers’ article “Unreal Estate,” in which he rang the alarm bells back in, oh, 2002.

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Comment by Martin Gale
2010-04-19 16:45:56

And Dean Baker also.

 
Comment by Ben Jones
2010-04-19 16:48:38

Yeah, Chris Thornberg (the UCLA Anderson School, actually, until it turned a few years later).

Dean Baker, Robert Schiller, Bill Fleckenstein, Danielle Di Martino, Jack McCabe, Bruce Norris, Rich Toscano, and countless other people.

Comment by tj
2010-04-19 18:30:08

peter schiff was talking about a real estate bubble long before he got to be famous. he was more correct than even roubini. i think he understands economics better than anyone else out there. he boils it down to its essence.

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Comment by Ben Jones
2010-04-19 19:25:46

Also, the guy from Morgan Stanley that’s in China now.

 
Comment by Prime_Is_Contained
2010-04-19 20:19:55

“i think he understands economics better than anyone else out there.”

He was right regarding the bubble, but pretty off-the-mark on the rest of the world de-coupling.

 
Comment by tj
2010-04-19 22:14:25

hi Prime,

well, regarding the decoupling, he didn’t give specifics on exactly when it would occur. i still believe he’s correct and that it’s happening. i don’t believe that we’ve had any recovery. i know that home prices have recovered a little (but they’ll go down again) and the stock market has gone up. but the market has gone up in my opinion, because people are complacent because of the cooked numbers the government is feeding us. the main factor in any recover is employment and that isn’t improving. we could have a very good recovery if we returned to full or near full employment, even if the stock market tanked. but if there’s no employment improvement there’s no recovery.

one thing that schiff did get wrong was the panic INTO the dollar! but really, i didn’t see anyone that expected that. he just overestimated the average investor’s intelligence. i did too. it might even happen again, but i think it is much less likely than last time, and if it does, it will be of short duration.

here’s a schiff video from aug. 2009 if you care to watch. i still think he has it right.

http://www.youtube.com/watch?v=V7_J2fCPQWA

Ben, is the morgan stanley guy in china that you’re referring to named ‘wang’?

 
Comment by Ben Jones
2010-04-20 06:21:12

No, I remember now. It’s Stephen Roach.

 
 
 
Comment by pismoclam
2010-04-19 17:01:27

Yes Thornberg. For heaven’s sake don’t recommend LAY, Lereah, or Yun. hahahahahaha

 
 
 
Comment by Muggy
2010-04-19 18:01:26

“Who could he use to support the theory of ” what has happened”

I would throw Sean Snaith in there as a contrast. I mean, here’s a dude with a PhD, working at a state university, talking about the whole thing like it’s a cooking show and getting it completely wrong.

Sean, if you’re out there, I’d still like to treat you to lunch next time I am in Orlando, but only only if you’ll talk like you write — reduced, unleavened, and frothy!

 
Comment by jane
2010-04-19 18:25:16

I don’t think I’m speaking out of school here, about CT. I have several friends who are in the unenviable position of having lost jobs, and now, trying to sell their houses in Fairfield County. It was a three year progression - it seemed like just when the used house market was at its toxic best, CT became employment he*l for middle aged males in the private sector.

Three of them thought about selling when they were ‘laid off’. The appraisals: $625K, $900K and $450K for ho-hum 50s era 3/1 Colonials. OK, the $900K one was a 3/2. Not a one was anything to write home about. The first two in Westport, home of the pretentious with New York accents. The third in one of the Danbury suburbs.

Appraisals over the past couple of months for the same houses: $350K, $500K and $220K. The guy with the $900K house MEW’d, and he’s gonna be a hurtin’ puppy. The other two were more cautious.

This is a rare case study in just how the ‘values’ have come home to roost, almost Case-Schiller style. In a state where the realtors are saying out loud that it’s a slow market, and the jobs growth is in fast food and the public sector, netting out to negative gains.

Comment by pressboardbox
2010-04-19 18:43:39

I grew up in Fairfield. House was built in 1705 (original part). Some rich New Yorker ended up buying it and remodelling beyond recognition. Sad. Hope its under foreclousre now.

 
Comment by Prime_Is_Contained
2010-04-19 20:21:53

“The guy with the $900K house MEW’d, and he’s gonna be a hurtin’ puppy.”

Isn’t the guy who “MEW’d” going to be the only one who came out ahead, since he sold it to the bank at a much higher than current price?

Comment by jane
2010-04-19 20:43:22

Well, the gains have been blown after three years of pretending that the next $150K job is just around the corner.

I frickin’ don’t get it. What is it about that stagnant backwater that makes people so reluctant to leave it? If he’d actually sold it when he got ‘laid off’, he could’ve bought something outright in a less expensive part of the country, with low taxes, and had a year of breathing room. He and his wife could’ve just radically downscaled and lived on very modest jobs - all they would’ve had to worry about is (low) property taxes. Let’s face it, being that CT is the #1 highest taxed state in the country overall, it’s a slam dunk that anywhere else they went they would’ve been less stressed financially.

But NOOOOO. They had to stay THERE and watch one another get eviscerated slowly, over three years. Either willfully blind to the facts (public jobs and fast food up, private jobs down more, net loss), or arrogantly believing themselves immune to the numbers.

What we teach one another here is that we are all subject to forces beyond our control, and none of us is immune. Except for the ones that are, and they don’t post here. Market makers and market takers, and all. We are on the receiving end. How delusional, those folks who believe they were not, without some darn good evidence. Such evidence would have made its appearance in these peoples’ teens.

There but for the grace of the Almighty.

 
Comment by aNYCdj
2010-04-19 20:53:45

Maybe Polly can answer this one………discrimination????

Will those rich white guys from westport still get offered 6 figure jobs with a foreclosure on their credit report?

You know the guys in the next town over, blue collar Norwalk, will be screened carefully and rejected as qualified employees over their foreclosure….

 
 
 
Comment by skb
2010-04-19 20:23:07

Great feedback thanks to everyone for the great suggestions.
He is hard at work putting this all together.

Thank you so much.

 
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