Just When It Looked Like The Lunacy Would Last Forever…
The Denver Post reports from Colorado. “The pitch was made to a group of San Francisco immigrants packed into a windowless Holiday Inn room over plates of cold chicken and glossy photos of Colorado vistas. Three years ago, Edwin Resplandor was tantalized by the deal: Put down merely $2,500 and he’d wind up owning an investment home — its construction and mortgage neatly packaged into one loan handled by American Dream Seminars of Denver. Months later, however, ADS withdrew more than a half-million from his loan account and abandoned the project without driving a nail, he claims in a lawsuit joined by seven other investors, leaving him holding a half-million-dollar debt and only empty land.”
“‘Now we’re in limbo — we’re just trying to survive,’ said Resplandor, a Filipino transit driver in San Francisco now working two other jobs to support his wife and 2-year-old daughter.”
“Once regulators shut down New Frontier in April, the investors’ collective bank debt and property titles shifted to the Federal Deposit Insurance Corp. And in at least a half dozen counties across Colorado, the over-valued properties with names like Sunflower and Fountain Village either sit empty or are only partially completed. A former ADS attorney said he’s not sure where his former clients are located. ‘They hosed us too,’ Denver attorney Mike Bohn said without elaborating.”
“Real estate brokers and economic development officials are scratching their heads over a Forbes report that ranked the Denver area among the worst-selling housing markets in the country. Citing data from Zillow, the story last week said there were 42,000 homes on the market in January, a 27 percent increase over the previous year. But local data indicates there are fewer than half that number of homes for sale.”
“Forbes reporter Francesca Levy could not be reached, and other magazine officials did not respond to requests for comment. Levy culled the 42,000 figure from the number of listings on the Zillow website in January, said Katie Curnutte, a Zillow spokeswoman. The number includes foreclosures and homes for sale by owners as well as data from multiple-listing services. ‘Inventory can be a tough thing to pin down,’ Curnutte said. ‘This includes any home for sale from any source.’”
The Telluride Watch in Colorado. “‘According to Telluride Building Official David Samuelson, ‘If you have the cash or ability to get it, things are going to get done quicker and cheaper. People are hustling to find jobs.’”
“Things have certainly changed since the last building boom. ‘Five to eight years ago everybody was just crazy [busy],’ said Montrose County Building Official Greg Pink. ‘They didn’t have enough help; getting work was not an issue, all they had to do to start a job was finish the last one.’”
“But it’s a different story now, with more workers bidding on the same jobs and many carpenters scrambling to find the most basic work. ‘All in all I see our region being down,’ said Jay Kyne, owner of K&K Concrete in Ridgway. ‘People that want to do projects are unable to get funding. Our glory days are certainly well behind us for a while and I don’t see it changing in the next year.’”
From Vail Daily in Colorado. “First quarter construction activity in Vail is showing some signs of growth compared to the first three months of 2009. Building valuation totaled $6.44 million as of March 31 this year, compared to $4.7 million during the same period in 2009, a 37 percent increase. Vail’s record year for valuation was $496 million in 2007.”
The Yuma Sun in Arizona. “Yuman Ruben Garcia stood in line Wednesday morning long before the doors to the job fair at the Main Library opened. He said he got there at 7:30 a.m. The job fair didn’t start until 9 a.m. And it wasn’t long until he was joined by hundreds of others. Out of work since January, Garcia said he’ll take ‘any job’ right now - he just wants to work.”
“The unemployment rate in Yuma was just shy of 30 percent in February.”
The Kingman Daily Miner in Arizona. “Like a number of other proposed large housing developments in Mohave County, Pravada may be a thing of the past. The Las Vegas Review-Journal reported that 1,300 acres of the Rhodes Homes Pravada master-planned community will be sold. Rhodes Homes filed for Chapter 11 bankruptcy last April. A bankruptcy judge approved an agreement between Rhodes Homes and its creditors in January. That agreement declares that Rhodes Homes will sell all of its Las Vegas holdings and the 1,300 acres from Pravada. The exact date and the terms of the land sale have not yet been set. Rhodes Homes may hold onto the remaining 4,000-plus acres of the property.”
“During the housing boom, Rhodes Homes used Rhodes Ranch and Tuscany as collateral for a $500 million loan. The company used the funds to expand during the boom, but because of the downturn in the market, the company was not able to make a March 2009 payment and was forced to file for bankruptcy.”
“Jim Rhodes was allegedly involved in several real estate scandals in the Las Vegas area. Former Clark County Nevada Commissioner Erin Kenny testified in a federal case that Rhodes paid her $16,800 a month or about $200,000 a year for consulting services.”
The Phoenix Business Journal in Arizona. “Gov. Jan Brewer’s appointed head of the Arizona Department of Housing is one of the principals of a company that defaulted on a $97 million loan used to construct Safari Drive in Scottsdale. The mixed-use project near Camelback and Scottsdale roads has been mired in foreclosure proceedings, complicated by the demise of both Lehman Brothers and Corus Bank. Mike Trailor is a principal of Vanguard City Home, which received the loan from Corus through an entity called Riverwalk Square Development LLC.”
“Trailor said he never met with Brewer, but he passed muster with two staff members who interviewed him, including Brian McNeil, the governor’s deputy chief of staff in charge of operations. ‘If people are disqualified because of real estate issues, there won’t be enough people for these jobs,’ he said.”
The Spectrum in Utah. “Bolstered by an influx of affordable bank owned-properties coupled with attractively low interest rates, Washington County recorded 993 sales in the first quarter, representing an increase of 287 sales from last year’s quarterly figure, according to data collected by Southern Utah Title Company. St. George real estate agent Jeremy Larkin described the region’s housing situation as ‘the tale of two markets,’ with prospective buyers flocking to distressed properties and other residential units boasting impressive savings opportunities, but little activity occurring in the overpriced and high-end segments of the market.”
“‘It’s as though they don’t exist,’ Larkin said of the overpriced homes in competition with an influx of foreclosures and other distressed properties.”
“Foreclosures and short sales remain prevalent in Iron County, with distressed properties representing approximately 85 percent of the county’s sales in the fourth quarter of 2009. The county’s market is rife with distressed properties, said Chris Dahlin, president of the Iron County Board of Realtors, and he expects the trend to continue at its current inflated rate for another three to six months.”
“‘We still have a crop of foreclosures still coming on the market,’ he said. ‘Which means prices won’t be going up.’”
The Deseret News in Utah. “If hearing is believing, Utah’s housing market is in the midst of recovery. Check out all those rebound sounds emanating from a new subdivision near you. The incentivized truth, though, is that those are really only the sounds of the federal and state governments working mightily to keep the sickly homebuilding industry on respirator. It turns out nearly all new construction taking place in the first quarter of 2010 was spec in nature as builders have been bolstering inventory to cash in on the last-minute rush by people taking advantage of expiring federal and state tax incentives.”
“One homebuilder who won’t miss federal and state incentives when they go away is Bill Perry Sr., CEO of Perry Homes. He sees the stimulus doing as much harm as good, artificially propping up the market. With or without government subsidies, homebuilders are of the mind that they’re not going to be able to sell houses for much less than they already are.”
“‘We’re not going to lower prices. There’s no more room to go. We’re at our bottom. The only way for us to lower our prices is if we could find cheaper lots, but that’s becoming difficult,’ said Perry, who has snapped up a few land bargains over the past year that he’ll be repurposing for market.”
“After 37 years working in the business, Perry also believes ‘fundamental changes’ are coming. He sees Utah’s housing market morphing into a different animal out of necessity. He said Utah’s penchant for big homes on big lots is no longer practical or affordable. ‘Both the family size and size of house will need to be reduced in Utah to something that’s more efficient,’ the homebuilder predicts.”
“Oh for those boom times of early in 2007 when Utah was the toast of American residential real estate, boasting the strongest housing market in the nation. Real estate know-it-alls were everywhere capturing appreciation and tapping equity that was being inflated to the moon by seemingly insatiable demand. The rather quaint notion that someone’s home could serve as a family piggy bank for special occasions, such as paying for a child’s wedding or college, mutated into this idea that houses were no-limit ATM machines.”
“But just when it looked like the lunacy would last forever, the repurposed Ponzi scheme went Madoff, leaving Utahns scrambling, as when the music stops in a game of musical chairs. Except that in musical chairs, only one player is left seatless. This time, all the chairs seemed to have disappeared. And the music doesn’t appear anywhere close to starting back up.”
Casino Gaming Stock. “Last week MGM Mirage reported a preliminary first quarter 2010 loss of $96.7 million, explaining that the loss is the result of decreasing property value in Las Vegas causing problems with condo sales at the CityCenter. The gaming company has said that they plan on taking a $171 million non-cash impairment charge on condos at the mega casino resort complex on the strip.”
“MGM has reduced prices of the condos by about 30% to bring them in-line with the general fall in Nevada property prices. Net revenue for the quarter is expected to be $1.46 billion which is a 4% drop on last year. ‘Las Vegas was still very weak … there were some pockets of strength, like international business, but for the most part it was very challenging,’ MGM Mirage CEO Jim Murren said.”
”’There is a point where real estate drops so low, it’s past the intristic value of replacing that real estate’, said Robert Lang, director of Brookings Institution at University of Nevada, Las Vegas.”
So I gather intristic value = replacement value. Good luck with that concept.
Go to any ghost town and you’ll see how much replacement value is worth. If the reason for a town’s existence disappears then the value of the “intristic value” disappears with it.
Only an economist or real estate expert wouldn’t know that when property taxes, maintenance costs, etc. are factored in, the intrinsic value of real estate can be negative, especially in an overbuilt market with a dismal economy.
“…the intrinsic value of real estate can be negative,…”
In theory, yes, but other than Detroit or a few other horrible ghetto areas around the U.S., can you offer empirical examples?
Well there’s a place about 45 miles south of me…the ironically named town of Democrat, Idaho.
It’s a ghost town on the road to Whiskey Mountain. :lo:
There are ghost towns all over the western US. How about the town of Drawbridge, CA? It’s right next to the 10th largest city in the US, San Jose, but it’s abandoned and all the buildings are rotting and sinking into the marsh.
Vegas?
Not just there. Abandoned farmhouses dot New England, upstate NY, Appalacia, the Midwest, and South. I’ve even seen them in ‘wealthy’ Eruopean countries like Norway and Switzerland. Making any of the livable would entail cash outlays far in excess of anything they might bring at sale.
An old abandoned house actually detracts from the value of the land. A bare lot is cheaper to build on compared with one having a derelict building. You have to figure in the demolition charges with the latter.
You probably should separate the value of the land from the value of the “improvements” in these kinds of discussions.
Hell - go to Trenton or Detroit or Cleveland or…
You will see beautiful mansions, all stone, turrets, intricate woodwork, leaded glass, slate roofs, etc. They would cost 1-2 million in today’s world to replace them.
You can buy them today for $30-100K.
Another Green Shoot for the Ohio housing market…..
On Saturday April 24, 2010, 1:49 am EDT
BROOKLYN, Ohio (AP) — Union workers on Friday approved an eleventh-hour agreement to keep open a Hugo Boss men’s suit plant in Ohio where the more than 300 workers drew the support of actor Danny Glover.
In a joint statement, Hugo Boss and Workers United said the agreement was designed to help the company’s competitiveness by increasing its flexibility and reducing costs. The statement said the planned April 27 closing of the factory in suburban Cleveland would be canceled if union members ratified the pact, which they did shortly afterward.
“Against all odds, we have saved a critical U.S. apparel manufacturing facility,” Workers United President Bruce Raynor said. “This is a tremendous result that we attribute to our Hugo Boss members who stood up for their jobs.”
Actor and activist Glover, star of the “Lethal Weapon” movies, asked Hollywood not to wear Hugo Boss suits to this year’s Oscars and gathered twice with the workers to show he was behind them.
Glover said the outcome is not one workers are accustomed to and called it an important victory.
“It’s huge, not simply for those workers … but also for all workers feeling that they can stand up in the midst of what is happening,” Glover said from his office in San Francisco.
He credited the workers, unions, community and government officials with pulling together to keep the plant open.
“I’m happy that I can say that I can wear Hugo Boss and say at the same time that I’m proud of the steps Hugo Boss took on behalf of these workers,” Glover said.
Workers United said the agreement should give employees full-time work and includes a “piece work” system that should allow them to earn $10 or more per hour. It also maintains defined benefit pensions, health care benefits, paid holidays and summer and winter vacation periods.
Most of the plant’s 375 workers, including 300 union members, were earning about $13 an hour, and the company told workers it wanted to lower wages to $8.30 hourly, the union has said.
“This is a victory for the working guy, which we don’t have often enough these days,” said Gov. Ted Strickland. “Danny Glover did a very effective job in drawing attention to the plight of these workers.”
The Strickland administration and leaders of the Ohio Public Employees Retirement System applied some pressure in the effort, urging executives at Permira Holdings Ltd. — the investment company that owns Hugo Boss — to bargain in good faith or risk the Ohio investment business it does with the pension fund.
Hugo Boss AG, based in Metzingen, Germany, had said the plant was not globally competitive when it announced the closing plans in late December. In subsequent talks, union leaders had said they sought to avoid big pay cuts and the company said concessions were rejected by the union.
The Strickland administration and leaders of the Ohio Public Employees Retirement System applied some pressure in the effort, urging executives at Permira Holdings Ltd. — the investment company that owns Hugo Boss — to bargain in good faith or risk the Ohio investment business it does with the pension fund.
What an ironic statement coming from public unions that gather all their capital on the backs of the taxpayer. They know nothing about competition or the coming tidal wave of tax foreclosures to support their fiscal insane pensions…
‘If people are disqualified because of real estate issues, there won’t be enough people for these jobs,’ he said.”
Bwaahahahahaha…nice touch of whimsy on a beautiful Saturday morning. *Goes for more coffee*
Hey Guys,
I haven’t posted on this blog for a long time, except for the reply’s today. We sold in 2006. We are currently in escrow for a home that is 2200 sq ft, 15000 sq ft lot for 195k with major, major upgrades. We are putting 20% down and are looking at a payment of 1000 to 1100 per month. the house was built in 2007 surrounded by really great homes and golf courses. The home was sold in 2007 for almost 400K. I am in Bakersfield, Ca. Do you guys think we are doing the right thing? This 2 bedroom apartment we are living in is getting cramped with 3 children. I wanted to stay in the 2x annual income but we are slightly above that threshold. (single income family) Unemployment is high here @17%, inventory is huge due to foreclosures, but rent is higher in some cases than buying. Median family income in Bakersfield in 45K (that is household income!). I have this thesis that hyper-inflation will occur because the federal gov’t wants to pay their high debts with inflated greenbacks. If this is true, then buying now would be a prodigious move. I would be locking into that payment and to a fixed interest rate of 5% or so. I feel I have a job that will keep up with inflation. What say you guys given this info? Pls ask questions if you need more to answer. I’ve always respected most everyone on this board.
As long as Suzanne researched it for you - sorry couldn’t resist.
As someone who is renting a 2500 sq. ft. house for $1625 a month, that payment doesn’t seem too bad. I would buy for that kind of price if I liked it. I have “owned” 4 homes and now that I know pretty much what I like, I am probably way too picky to find anything that I like.
Enjoy the new place and the peace of mind that the house hunt is over and you won’t have to move anytime soon.
thank you
“I feel I have a job that will keep up with inflation.”
What if Gollum stops propping up oil prices. Will your job be secure then? Or will we be looking at the Bakersfield version of the mid-1980s Texas Oil Bust?
I should clarify that I am in the natural gas side of the oil business. I work on a plant that is the 10th largest in the US. They are drilling like no one’s business. My job is specialized and takes a long time to get trained up on. I have other skills in the Banking and ATM world so worse case scenerio I revert back to a lesser paying job with less stress and still afford my mortgage payment,
you sold in 2006.. probably have a bunch of cash reserves to get you past the worst case scenario.. What’s not to like? Enjoy the house.
if you consider owning lots of shares in a mutual fund cash reserves then yes
I do not. One big mistake by the that fund’s managers and it’s gone. Or the fund’s primary market could tank and seriously cut into what you thought you had just a few days earlier.
Emergency money is not something to be put at risk or to play with, imo. I would at the very least diversify from that single fund.. or sell some shares and stash cash in several bank savings accounts, CDs or whatever.
Sounds like you can afford it, did your homework, love it, not flipping it, getting a sane loan and understand ALL the costs of home ownership.
Congrats!
What part of BK? South West? BK has problems with settling, alkali and cracking foundations. BK is a great town but the bad air quality over the past 10 years does away with a lot of its good qualities.
BakersFried
The CA high speed train through your area should help. Just glad the train does not go west, Pismo is already overflowing with the valley gangs on the weekend.
North-east Bako near Bak CC has settling problems where many houses need to be mud jacked.
rent yourself a beautiful house hold on to your down payment and watch as more and more houses become avail,driving down prices even further. in bakersfiled there is no rush to purchase as home prices will not go up for years,w all the excessive inventory…why be a house slave when prices are nt rising….
Only an economist or real estate expert wouldn’t know that when property taxes, maintenance costs, etc. are factored in, the intrinsic value of real estate can be negative, especially in an overbuilt market with a dismal economy.
Another Wisconsin bank in trouble mentions it’s bad loan exposures in Arizona. This song is becoming to sound like one of those old broken record players.
Business
Maritime in talks with potential investors as deadline looms
By Paul Gores of the Journal Sentinel
Posted: April 22, 2010
“…Bildsten acknowledged that the decision by previous Maritime management to expand into the Arizona market in 2007, as the housing slump was under way, was part of the bank’s problem. Arizona has been one of the states most hurt by declines in real estate values.
“Certainly Arizona has caused some pain from the bad timing,” Bildsten said. “And just as importantly - or more important - has been the challenging loan environment everywhere, including Wisconsin, for us and so many other banks.”
At the end of 2009, about 11.5% of Maritime’s loans were considered noncurrent. That compares with a ratio of 4.05% noncurrent loans for savings banks nationally.
The Office of Thrift Supervision issued a cease-and-desist order to Maritime in November, accusing it of “unsafe or unsound” practices. The agency said at the time that Maritime was operating with inadequate capital, an excessive level of troubled loans and other problems.”…
What were all these idiot Wisconsin bankers thinking with all of these out of state loans ?
Speculation, speculation, speculation.
Greed is good, greed is good, greed is good.
Nothing can go wrong, nothing can go wrong, nothing can go wr…
‘It’s gonna take a lot of fireworks to clean this place up.”– hOMER sIMSON
“‘Now we’re in limbo — we’re just trying to survive,’ said Resplandor, a Filipino transit driver in San Francisco now working two other jobs to support his wife and 2-year-old daughter.”
It is great to hear about all these recent immigrants and foreign investors pouring money into the U.S. real estate market. While prices most likely have further to fall, an influx of money from foreign knifecatchers will help buffer the U.S. economy from the worst recession since the 1930s. The money will stay in our economy after the falling knife wipes these people out.
I’m thinking record U.S. real estate investing opportunities might ensue when the China property bubble breaks, as an influx of hot investor money from Asia is a key prop driving U.S. home prices above fundamental value based on local market conditions.
I note that the Fed attempted something like Xie suggests for China, resulting in the collapse of U.S. housing prices. I expect a similar threshold effect to result in a massive crash in Chinese property prices over the next five years; but then I am a real estate bear.
Economist says China’s property market the biggest bubble in history
(chinadaily dot com dot cn)
Updated: 2010-04-14 16:44
Andy Xie, a former Morgan Stanley chief Asian economist, asserts that China’s property market is the biggest bubble in the history of finance, and only by raising the interest rate can the bubble be pierced, says an article in China Times. Here is an excerpt:
Xie underlines that priority should be given to increasing interest rates rather than to appreciation of the renminbi. Revaluation of the renminbi alone would further exacerbate the property bubble and inflationary pressure, potentially causing a major economic crisis in the next two years.
Actually, Xie believes that growing expectation of the yuan’s appreciation in financial markets is the most important reason for China’s vast property bubble. Massive hot-money inflows would spark excessive liquidity and speculation, fueling China’s property bubble.
According to Xie, in a normal economy, currency appreciation cools inflation by decreasing import prices. However, China imports mainly raw materials, equipment, and components. A modest currency appreciation would do virtually nothing to curb inflation.
Xie said that China has to increase interest rates steadily if it wants to achieve a “soft landing” from the current property bubble — if possible, by 2 percentage points in 2010, another 3 percentage points in 2011, and more rate hikes in 2012. Such a trajectory for interest rates would not burst the bubble. Instead it would prevent the real interest rate from further declines and curb inflation.
A San Francisco transit driver. $500,000. What’s wrong with this picture?
Somehow, I can’t visualize Ralph Kramden, Jackie Gleason’s bus driving character on the Honeymooners, snapping up a $500,000 house 1000 miles away. Alice’s reaction might be interesting, but that situation would be too improbable for a TV situation comedy skit.
What do you wanna bet he earns a six figure income?
“Community banks in Nevada, unlike investment banks on Wall Street, had little to do with the problems that triggered the country’s financial meltdown, Reid said.”
It’s good to know that the Nevada economy, unlike the NY economy, does not rely on fleecing greedy people who are bad at math,
“Based on a campaign tour of Nevada, Reid said he thought the state’s economy was starting to recover.”
Funny but people are saying that thanks to Wall Street, the NY economy is also starting to recover. At least for some people.
“Las Vegas property values have declined to levels of 10 years ago, but will recover to 60 percent of their peak in the next two to three years, the leader of a local academic institution said. ‘There is a point where real estate drops so low, it’s past the intrinsic value of replacing that real estate,’ said Robert Lang, director of Brookings Institution at University of Nevada, Las Vegas. ‘I think the actual bottom is irrelevant once you pass that zone. Anything on the upside of intrinsic value, you don’t even need a full recovery.’”
So Lang is predicting an LV property value rebound akin to what happened in the Japanese property market after it crashed in the early 1990s?
Oh wait…
Hey Bob, I’ll sell you some NV real estate with your retirement money if you are so sure that it will come back 60% by the time you retire. Oh wait, you don’t mean that I could use ‘your’ money ! Why not if you are so sure ? Sounds like Reid or Obama again !!!
“As a result, the legislation ‘draws a bright line’ between what investment banks do and what community banks do, he said. ‘The greed and excess on Wall Street, there is no question that has spiraled out of control,’ Reid said.”
Barn door left open
All of the horses have fled
Harry, shut the door!
“‘We’re not going to lower prices. There’s no more room to go. We’re at our bottom. The only way for us to lower our prices is if we could find cheaper lots, but that’s becoming difficult,’ said Perry”
I remember two and three years ago EVERY builder was pitching this pitiful scare tactic to anyone who would listen. Then the banks took the properties.
At least Perry is on to the problem and the solution:
‘Bill Perry Sr., CEO of Perry Homes. He sees the stimulus doing as much harm as good, artificially propping up the market…After 37 years working in the business, Perry also believes ‘fundamental changes’ are coming. He sees Utah’s housing market morphing into a different animal out of necessity. He said Utah’s penchant for big homes on big lots is no longer practical or affordable. ‘Both the family size and size of house will need to be reduced in Utah to something that’s more efficient,’ the homebuilder predicts.’
IMO, he’s right, getting away from mcmansions (which were a by-product of the bubble) is a must. And the stimulus is doing more harm than good; it’s perpetuating what is wrong with the system.
‘With or without government subsidies, homebuilders are of the mind that they’re not going to be able to sell houses for much less than they already are…’We’re not going to lower prices. There’s no more room to go. We’re at our bottom. The only way for us to lower our prices is if we could find cheaper lots, but that’s becoming difficult,’ said Perry, who has snapped up a few land bargains over the past year that he’ll be repurposing for market.’
And here’s where I think he’s missing the answer. We can grow and build reasonably priced houses for the people that want to move out west, if we can get back to our strength: plentiful, inexpensive land.
“He sees Utah’s housing market morphing into a different animal out of necessity. He said Utah’s penchant for big homes on big lots is no longer practical or affordable.”
Dude.. Have you every been to Utah? I think you must have never set foot in the state to think that “big lots” somehow make the homes unaffordable there. Utah has so much land that it makes my head hurt. An acre of land in most of the state is probably worth 100-1000 dollars. So, tell me again why “big lots” are no longer affordable?
These morons just can’t stop with the land prices. Land is a “limited resource”, it’s just that, in most of the country, we’ve already “discovered” enough of this resource to sustain us for the next 10,000 years. So sure, there’s only so much of it. But there’s PLENTY to go around (like air!).
Ben
Your last comment about inexpensive land reminds me of 20 years ago when I was in college. I saw a map which showed the federal govt owns 50% of the land west of the Mississippi. My economics professor at the time was in disbelief but I showed him the map. If we ever wonder why our t-bills seem have value, at least there is some physical asset (other than gold or the tax base) which could back them. It would be quite interesting to see what would happen if the govt were put in a position where it seemed beneficial to sell some portion of land to foreigners. They in turn would put it on the market if the US govt were to face a Greece situation. It could be even more deflationary for housing for a decade.
If the total debt hits 20 Trillion with 650 million acres, that’s about 36K per acre.
“The Federal Government owns nearly 650 million acres of land - almost 30 percent of the land area of the United States.”
If we ever wonder why our t-bills seem have value, at least there is some physical asset (other than gold or the tax base) which could back them.
That and the world’s best military means your currency will always have some value.
That and the world’s best military means your currency will always have some value.
It always amazes me that more people don’t
realize how absolutely and totally true this is and
how it allows us to literally rule.
2banana,
it is the economy, not the military that determines the value of the dollar. as our economy and dollar weaken, so will the military. and if our economy crashes, the military is toast too. we would have to close all overseas bases and many at home too. we would have to reduce its size relative to the size of the shrunken economy. and if we are defeated economically, it has the effect of making it much more likely to be defeated militarily. sure there will be a lag time from the economy to the military, but not very long. i remember seeing pictures of russia’s navy rusting in shipyards after russia imploded. and it was their economy that caused them to implode.
“If we ever wonder why our t-bills seem have value, at least there is some physical asset (other than gold or the tax base) which could back them.”
Tried that with Assignats, didn’t work.
What sort of land does the US govt own? National parks.. protected wilderness.. The majority has to be dry, desert terrain in the middle of nowhere. If it had any productive potential and was not environmentally protected, it would already be privately owned.
Even if some foreigner bought it, how could they make any money? Raise sheep or grow cactus? They wouldn’t get mineral rights and would have to pay property taxes.
Since such sales would be considered extremely “distressed” in some desperate attempt to raise money, they certainly wouldn’t take our national debt, divide it by the number of acres available and agree to pay that amount. Instead, they’d offer almost nothing.
I can’t see what your point is. Sure, more than half of the west is worth nothing, while I know dozens of young families that wish they could afford a house in N AZ.
Who cares about foreigners? What about us? Maybe you should do a little research. For example, in Arizona there is a state land trust that owns millions of acres raw land, in 1000 acre patches all over the place; around almost every town and city including Phoenix. You know what they do with it? Lease it to cattle ranchers at such a low rate that it barely covers the cost of maintaining the fences. Meanwhile, here in Flagstaff, which is surrounded by such land, the median house costs over $300k and the median income is under $30k.
Same with the forest service, the BLM, etc. The government hoards MOST of the land in the west, makes no practical or sensible environmental use of it, and if they can’t get peak bubble prices at auction, they just won’t have auctions.
Bottom line is, this isn’t their land; it’s ours. And somewhere along the line, this process fell into the hands of the REIC, for their benefit. Just about the only thing we have out here is land, and lots of it. For decades, people have chosen to retire here and that’s been the basis of our economy. Yes we need to diversify, but these are the assets we’ve got. Bust the land trusts, I say.
My point was directed at Derek’s observation that we have T-debt and that govt land is somehow an asset that might cover it if and when we need it.
My contention is that the land may not prove to be as valuable as it first appears..
The San Francisco peninsula is not a whole lot different from AZ. A huge percentage of it is public lands and is off limits.
It’s not the government hoarding it and and it’s not some scheme by the REIC.
It’s the current property owners who live around there that encourage and vote for anything and everything that limits land use. It keeps their property values inflated.
” the median house costs over $300k and the median income is under $30k.”
Same thing here in South East Florida, and artificially low interst rates, $8,000.00 first time home buyers credits, mortgage cram downs for victims who are gonna default anyway, cash for clunkers, wampum for washing machines
( personally, I am holding out for cash for couches and loot for lamps cause my wife wants a new family room ) and allowing people to live in their houses for 2 years without paying their mortgage while their houses live in the shadows aint gonna chage that.
Only 10 days to the extension of the 8,10,15 or $20,000.00 first time home buyers credit, better buy now before it`s too late.
Hey! Don’t slag AZ. I happen to like cactus.
As someone that has wanted to buy my first house for over 7 years, it still looks like the lunacy will last forever. First I was in competition with people borrowing crazy money from the banks, now I’m in competition with people getting crazy handouts from the government.
There’s way too much stupid out there for it to ever end.
Funny thing is… if u’ve been waiting 7 years… & the market has slid back to 2003 prices on its own… consider yourself right back in the same spot (2003 prices)
So.. you’ve neither lost $$ or made $$… it’s all just even. Your rental payments would’ve just been interest payments anyways.
Matter of fact… I’m sure you’ve come out ahead. Even after considering the tax deductibility of everything.. after interest, taxes, maint, etc…. you’ve probable saved quite a bit!!
‘They hosed us too,’ Denver attorney Mike Bohn said without elaborating.”
Sounds like the last guy at the table after a dine-&-dash, trying to explain to the waitress that he has no money and shouldn’t be blamed for what the others in the party have done.