It Seemed A Safe Gamble
The Denver Post reports from Colorado. “It’s not pretty in the 80013 ZIP code that’s second-hardest-hit along the Front Range for unemployment claims. Last October, with the kids grown, their house paid off and a few bucks in the bank, Kathy and Herb Myers set in motion the economic plan that would propel them to retirement. They bought a modest ranch home on a cul-de-sac in southeast Aurora and took on another mortgage — albeit a small one — largely because the convenient workshop dovetailed with 56-year-old Herb’s passion: the woodworking that would launch his second career. He quit his auto-repair job and sank some retirement money into a small business. Kathy, also 56, had already finished classes to earn certification as a nursing assistant. Finding a job to cover the mortgage seemed only a matter of time.’
“She never counted on an employment drought that would drag on for two years and counting. The Myerses don’t live on the brink of economic desperation, but Kathy’s difficulty finding work has drastically changed not just their financial outlook but the can-do attitude she once brought to the workplace. ‘I clean the house and do laundry, but I don’t make a difference to anybody anymore, outside of Herb,’ Kathy said. ‘You lose faith in yourself. Society loses faith in you, and you start to believe it. That’s an ugly thing.’”
“Last year, Rita and Michael Pugh brought home enough income to consider themselves firmly entrenched in the middle class, living with their youngest son, 13-year-old Jonathan, in a nice condo. Two lost jobs and one foreclosure later, they were on the verge of living out of their car. Rita opened the refrigerator one day and found only a half-gallon of milk, some ketchup, mustard and butter and then did something she’d never done before. She visited a food bank.”
“‘It hurts to see yourself at that level because we’ve never been there before,’ said Pugh, whose family of four now shares a tiny apartment. ‘I looked at my husband and said, ‘How can people live like this?’”
“The last time the state was hit this hard by unemployment was in the 1980s with the real estate, oil and gas, and savings and loan collapses, said Gary Horvath, managing director for the research division at the Leeds School of Business at the University of Colorado at Boulder. Back then, the downturn was centered in Colorado, and people left the state to find work. ‘With the current recession, there has been no place to hide,’ Horvath said.”
The Arizona Daily Sun. “Investment properties were the bulk of Jacquie Kellogg’s rental portfolio when she got into property management here in Flagstaff five years ago. Today, roughly half of the homes she represents are now owned by former residents who have left the community for one reason or another but have not sold their homes. In particular, many seek out Kellogg’s services because they have lost their jobs.”
“‘There weren’t a lot of distressed properties (five years ago), there weren’t a lot of renting instead of selling,’ Kellogg said. ‘It wasn’t like it is now, where people are losing their jobs and having to leave Flagstaff and wondering what do you do with a house you just bought two years ago.’”
“Kellogg said some mortgages, especially on homes bought during the peak of the market, simply cannot bring in enough revenue to make a full payment to the bank. She offers an example of a home in Ponderosa Trails that might have a $2,000 monthly mortgage. Kellogg might be able to rent the home out for $1,800 to a family. Minus the $180 monthly fee for Kellogg, the homeowner could get $1,620 to pay toward the mortgage.”
“Many turn to her believing it is a temporary solution by bringing in some form of revenue while waiting for the real estate market to recover. ‘That is the key word: until the market turns around. Everyone wants to rent out their house until the market turns around,’ she said.”
The Arizona Republic. “For a financially struggling homeowner, the decision to pursue a short sale does not come easily. Homeowners who make that choice generally do so after months of searching and pleading for an alternative that would have kept them in the home. Even when it goes smoothly, the short-sale process is painful for sellers. When it’s bumpy and slow, the pain is far worse, said experts who met in Tempe this month for an educational conference on short sales.”
“Phoenix-area short-sellers’ many encounters with insult upon injury stem from a combination of problems, including sellers’ lack of experience with the process and lenders’ initial reluctance to adopt on a mass scale what they had long considered an obscure means of resolving bad mortgage debts.
Scottsdale resident Mary Purvis, 57, said Bank of America finally approved her short-sale application after 10 months of frustration and uncertainty. But the pain didn’t stop there.”
“‘The sale finally went through last September, but now BofA reported my short sale as a foreclosure on my credit reports, which I have no idea how to fix,’ Purvis said.”
“The bank approved 18,000 short-sale applications in April, said Bank of America’s Matt Vernon, the bank’s top executive in charge of foreclosures and short sales. Unfortunately, it received more than 50,000 short-sale applications that month. ‘Our system was never designed to handle this kind of volume,’ said Rick Sharga, chief economist at RealtyTrac. ‘Short sales were never intended to be a mass-market product.’”
The Salt Lake Tribune in Utah. “More than 22,000 homeowners in Utah found themselves in some stage of foreclosure between July 2008 and April 2010, according to a Salt Lake Tribune computer analysis based on data from RealtyTrac. And having lagged behind other hard-hit regions where housing markets are now slowly improving, Utah has yet to reach the peak of its crisis.”
“In Salt Lake City, foreclosure filings doubled in the first three months of 2010 compared with the same time last year, the highest rate of increase for all U.S. cities. ‘I truly believe that we have not seen the worst of this,’ said Julia Borst, president of the Utah Mortgage Lenders Association. ‘I can’t even explain to you the gravity of it.’”
“Alisa Madill and her husband moved into their dream home in Riverton four years ago. But the recession devastated the family’s concrete business as the value of their home plummeted. They’ve borrowed against her husband’s life insurance policy and wiped out their 401(k) to pay bills. Now seven months behind on their mortgage and with two failed attempts to modify their loan, Madill faces stark uncertainties. Concrete work is picking up again, which might help with the latest loan modification plans, but they still may not be able to keep the house.’
“‘At any point, they could say we’re out,’ Madill said. ‘It’s not a home we really want to walk away from. All of our eggs are in one basket.’”
“The Tribune’s analysis found that nearly 12,100 foreclosed properties have languished unsold across Utah, often for months, held by banks or lenders after auctions failed to bring a buyer. These real-estate owned, or REO, properties exert a downward pull on property markets and overall home values, especially when empty houses are allowed to deteriorate. This burgeoning stock of REOs is straining the ability of lenders and loan servicers to keep up, Borst said. ‘They had no idea it would happen like this,’ she said.”
“The list of top banks and lenders now filing foreclosures in Utah includes some of the largest institutions bailed out by the federal government because of the recession, such as Wells Fargo and Bank of America, as well as the government-backed lenders Fannie Mae and Freddie Mac. Thousands more Utah foreclosures are being filed by loan servicers and companies fronting for banks, such as BAC Home, Aurora Loan Services and Mortgage Electronic Registration Systems, or MERS, a controversial mortgage registry set up by lenders in the 1990s whose name is now on millions of foreclosure actions across the country.”
“In the mid-2000s, lenders in Utah and nationally wrote large numbers of subprime, adjustable-rate mortgages (ARMs) and homebuyers — of high, moderate and low incomes alike — snapped them up. Credit was so fluid, many banks and private lenders gave only passing scrutiny to a borrower’s ability to repay. In some cases, lending practices bordered on predatory.”
“‘We’re seeing a lot of bad mortgages out there,’ said Jeremy Roberts, a mortgage consultant in Draper. ‘It was the real estate people. It was the appraisers. It was the mortgage officers. They were flipping pages faster than you could read them. It really was a real estate bubble that was about to burst. It was just so unregulated and nobody cared.”’
“With the economy starting to boom in 2003, Steve Newton of Kearns leveraged his home to boost his growing industrial manufacturing business, and it seemed a safe gamble. He had paid the mortgage off several years before. With $5 million annually in sales, Newton never imagined taking loans against the property might put his home and family at risk.”
“But problems surrounding the construction of a new facility eventually led to corporate and personal bankruptcy. After applying for more than 125 jobs from laborer to chief executive, Newton remains unemployed. Now he uses his unemployment dollars to make monthly payments on his debt, cover the utilities and buy a little food.”
“With help from family, he’s caught up some, but the bank is demanding cash he doesn’t have. ‘My plan is to do the best I can to keep these two banks from repossessing this home and kicking my family out in the street,’ said Newton, the father of two small children. ‘What everybody needs is time, and what these banks don’t need are more repossessed homes.”’
“‘The point is for anyone who thinks there’s a recovery or jobs out there,’ the 49-year-old said, ‘there isn’t.”’
The Deseret News in Utah. “Speaking at the Mid-Year 2010 Real Estate Summit at the Grand America, Zions Bank executive vice president Michael Morris said the Utah commercial real estate market may not even begin to recover until next year. ‘This year I don’t see much reason for optimism that we’re going to have a big rebound in commercial property,’ he told the Deseret News.’
“Morris said the amount of debt used to finance projects prior to the economic meltdown has caused major problems for the commercial sector and there are no simple solutions that will resolve them anytime soon. ‘It’s more that we over-leveraged then we overbuilt,’ he said. ‘Over-financing and over-leveraging and over-engineering financial products is really what has led to an artificially highly valued market to begin with.’”
“‘On the residential side, declining home values have pushed housing prices back to much more affordable levels, according to Zions Bank senior vice president Lee Carter. ‘The lower end of the market (under $300,000) … is recovering,’ he said. Carter described the middle part of the market as ‘a little bumpy’ with the higher end ‘going to remain a mess for some time to come.’”
“He said prices on the more expensive unsold inventory are falling more dramatically — on a percentage basis — than any other segment of the housing market. Eventually, the market could see more foreclosures or short sales as those properties are no longer financially viable for their owners. ‘We’ve just got too much high-end real estate in the state … and we just don’t have people with the incomes and fundamentals that can support those higher payments,’ he said.”
The Las Vegas Business Press in Nevada. “Southern Nevada’s apartment market had a surprise uptick in activity during the first quarter. Vacancies dropped to 10.2 percent, while average asking rents increased for the first time in a year and a half, CB Richard Ellis reports. ‘Vacancies have gone down for the last five months, which is a pleasant surprise,’ CB Richard Ellis Senior Vice President Spencer Ballif said. ‘It still isn’t a healthy market, but it’s better than what it was. There are a lot of renters that have been burned by investment homes.’”
“Nevada had the nation’s highest state foreclosure rate for the 40th straight month in April, with one in every 69 housing units receiving a foreclosure filing last month or more than five times the national average, RealtyTrac reports. In April, 16,217 properties statewide received a foreclosure filing, up 10 percent from the previous month.”
“‘We are getting a lot of renters who have lost or sold their homes, and are now moving into apartments,” said Rondetta Troutman, senior vice president of Picerne Development Corp., which manages 5,680 apartment units across 16 properties valleywide. ‘We’re seeing an increase in people who are having trouble qualifying for home or are nervous about a home purchase.’”
“‘Some of the rents were well below where they needed to be,’ Bentley Group President Christopher Bentley said. ‘We still have some catching up to do with jobs and getting people back to work. It’s going to get better, but we are going to see a new normal. We are going to get back to normal underwriting and rent growth of 2 to 5 percent a year, and not the dramatic spike we saw a few years ago.’”
‘Roughly three-quarters of apartment properties still offered rent concessions during the first quarter, CB Richard Ellis reports, with move-in specials among the top incentives. ‘The latest quarter represents a slowdown in the decline of the apartment market, but economic recovery has yet to clearly show its face,’ Applied Analysis principal Brian Gordon said. ‘The depth of Southern Nevada’s recession has property managers and lenders adjusting their financial pro formas to mirror an extended recovery period, which may reach into 2011. The ability for rents and occupies to return to prerecession level will span an even longer period of time.’”
The Reno Gazette Journal in Nevada. “Northern Nevada’s housing collapse didn’t just cost Randall Hoover his equity in two homes, it cost him an opportunity for job advancement. An area manager for Amazon, Hoover was offered an opportunity to transfer to Pennsylvania for an Amazon startup venture. But as the owner of two underwater homes that he can’t sell, Hoover didn’t want to risk the potential hit to his credit and finances by moving to a different area.”
“‘I did an assessment of my properties, and I just said, ‘I can’t do this,’ Hoover said. ‘Even with the company paying for my moving costs, I would still be behind financially.’”
“Although walking away is an option, Hoover said he spent a lot of time getting his credit back on track. After doing a short sale on a California home several years ago, it took Hoover a decade to get good terms on home loans once again. ‘I feel the damage (from walking away) would result in bigger penalties for longer periods of time. And if more people bail … it will just continue to pull the economy downward,’ Hoover said.”
Not to worry, we’re all going to be saved. The markets up 140 points. RahRah.
Now for that 2nd cup of coffee.
“‘Some of the rents were well below where they needed to be,’ Bentley Group President Christopher Bentley said. ‘We still have some catching up to do with jobs and getting people back to work. It’s going to get better, but we are going to see a new normal. We are going to get back to normal underwriting and rent growth of 2 to 5 percent a year, and not the dramatic spike we saw a few years ago”
Oh yeah…rents and housing were both well below where they needed to be… for the gamblers, speculators and investor class that don’t produce a freakin’ thing for this nation except debt and bailouts.
Jack up those prices and lets have another round of investor class warfare on the taxpayers dime.
People are discovering that what they thought were needs are really only wants. And nobody else really cares what they want.
One the first lessons to teach children - the difference between need and want, IMHO. Teach them young to be discerning consumers.
I remember when the bubble was going strong, that when confronted with the fact that rent/purchas price ratios were completely out of whack bubble head would blithely assert the rents were going to have to rise. I can’t say how many times I tried to explain all the ways that the rental market was more efficient than the purchase market. If there was a lag in responding to the supply/demand for housing, it was in the purchase, not the rental market.
Life seems like a ’safe gamble’ — until one realizes that in the long run, we’re all dead.
And in a hundred years, who’s going to give a d%$#.
Your children? Your grandchildren? To many, it means nothing.
2banana,
I’m onboard w/ that mantra ( but only to the degree it helps you to keep from freaking out altogether? )
Other than that, yes, your deeds ‘matter’. Like most couples, we’ve gone thru our “keepsakes” by this time in the downturn over “the things we could have done better/differently?”
We argued about why I spent so much money replacing the roof ( 2 homes ago ) and my defense was simple. When other neighbors were letting their place go to s%&!, complete w/ junk cars etc., ‘we’ OTOH left the place better than we ‘found’ it! And in that ( I explained ) is something we can always… be proud of.
Sure, we all have to leave, that’s a given, it’s about ‘what’ you leave behind.
DinOR
Absolutely, it’s what you leave behind. You are what you do.
awaiting wipeout,
Just moments ago some newbie-psycho specuvestor posted on the Portland blog:
“Now that we’re at or near the bottom for the PDX market ( really!? ) and rates are in the low 4’s making payments as cheap as rents, it’s really like a housing option. If it doesn’t work out, you can just walk away. It’s a win-win-win”
Well firstly ( d!ckhead ) you’re hardly the ‘first’ clown to conjur up that little plan and secondly it’s only win-win for YOU! Lenders, taxpayers and neighbors get stuck w/ the bill for your little misadventure! That’s lasting… that matters.
Walking away from a mortgage is not a win.
1. Taxes on the loan default
2. Judgments against you and any other assets
3. Credit ruined - people actually look at your credit for renting, another mortgage, job application or security clearance
4. Defaulted loans are being sold to collection companies at pennies on the dollar - and they mean to collect using all means fair and unfair.
2banana,
Well precisely. Sounded like another “fresh from the infestor seminar” gobbledegok to me? A wake of destruction. But hey ( if it means it might give you a ’shot’ at “not being poor” ) then it was worth it right?
Firstly, you guys are just s’wonderful.
Secondly, “Well firstly ( d!ckhead )” -
DinOR, I love your anger. I doubt any of these a-holes have any remorse over their actions of scaming the system. Remorse is a sign of decent character, and not doing something cr*ppy in the first place,is a sign of good character imo.
Phyllis Diller was asked, how she wanted to be remembered, and she replied “kind and a decent human being.” Not bad for a celeb with lots of cash, and living a dream 2/3 of her life. I’ve always liked that lady. (She’s still kicking.)
awaiting wipeout,
I think nearly all of the posters here have done a 180 at some time. Previously, we’d read all about the coming financial turdstorm ‘here’ on the BB’s and then export that negativity into the balance of our lives.
NOW… we take all the negativity we’ve found out in the real world and dump ‘here’ ( on the blogosphere ) where it can’t hurt us any more. Or any more than it already has.
There was a time when I didn’t have the energy to go around to wish ill on all these tools ( but I’d dig deep and find it! ) Now we just let them fall on their ‘own’ sword. So sound the CHARGE mf’r!
“Life seems like a ’safe gamble’ — until one realizes that in the long run, we’re all dead.”
Been there, done that and I came back from the dead just to “haunt” people.
“Life’s a bitch and then you die.” — Nas Feat
“‘The sale finally went through last September, but now BofA reported my short sale as a foreclosure on my credit reports, which I have no idea how to fix,’ Purvis said.”
Hmmm…perhaps that’s what it’s supposed to say? I guess I don’t know much about short sales, but it wouldn’t shock me to see them reported as a foreclosure.
Buy a house that you can afford and pay the mortgage on time?
I’ve read that short sales are supposedly less derogatory on your credit report, but that makes no sense to me. If you couldn’t meet your obligiations, then what exactly is the difference?
What’s more, should there even be a difference.
Anyway, save up for 7 years and start again. They’ve rolled off by then.
Eh, I do believe short sales damage your rating, but it seems fair that it shouldn’t be quite as bad as a foreclosure. After all, the lender is consenting and it probably costs them less.
‘That is the key word: until the market turns around. Everyone wants to rent out their house until the market turns around,’
Every too-clever-by-half real estate investor seems to be playing the same strategy at the moment. I wonder how this will turn out if things don’t turn around until 2015 or so?
And here I thought that Tucson had cornered the market on the “rent it out until the market turns around” folks. Seems that they’re everywhere.
Sigh.
Flagstaff is possibly the last market to go down in AZ, with the possible exception of Pinetop/Lakeside. BTW, many of those accidental landlords are from CA or Phoenix.
I personally know a few folks who own Arizona investment properties.
You hear this a lot. I suspect that the amount of property held by people who WANT to sell, but only at prices higher than current ones is larger than stuff in the REO slowwagon that Ben is always complaining about. People TRUELY do no realize that “the market turns around,” is equivalent to saying that the price has fallen to the point where homes are affordable. It does not mean that house prices start shooting up again. Right now, mortgage rates are at a lifetime low. To a great degree, this has stabilized price declines, but there is still a HUGE amount of supply waiting for prices to go back up. IMHO there is a ZERO percent chance that the large oversupply of housing that was built during the bubble can be absorbed without putting further downward pressure on prices.
Trying to persuade people of these simple facts makes me flash back to the bubble years, when there were SO many people who simply WOULD NOT BELIEVE that there was a RE bubble because it was so much better to believe that they were smart and wealthy. People so often believe what they WANT to believe, rather than the truth of the world around them.
People TRULY do no realize that “the market turns around,” is equivalent to saying that the price has fallen to the point where homes are affordable. It does not mean that house prices start shooting up again.
Thwack! (A nail just got hit on the head.)
“When you have a hammer, suddenly everybody is wearing a nail-shaped hat.”
Thoughts like that reminds me of the Great Florida and elsewhere condo and housing Boom/Bust of the 1980’s and it’s wonderful “recovery”.
Florida did recover then …didn’t it !?!
sings….
“Memories, pressed between the pages of my mind
Memories, sweetened thru the ages just like wine…”
“REO Slowwagon” LOL
I remember that band! I’m gonna’ KEEP on… shortin’ you!
( That was their big Hit right? )
‘That is the key word: until the market turns around.
What I love is the phrase “rent it out until the market comes back”. I always want to ask people, “Where exactly did the market go?”
“Kathy, also 56, had already finished classes to earn certification as a nursing assistant.”
Things are pretty bad when you can’t find a job as a CNA.
“but I don’t make a difference to anybody anymore, outside of Herb”
Kathy.., I hear ya’ sister. At a time when Mrs. DinOR and I were looking forward more than -anything- to making a difference in ‘other’ people’s lives.., we’re reduced to Survival Mode.
Sure, we’ve helped my wife’s family ( and you’ve all… heard how much we’ve stepped up for the kids! ) but that’s EXPECTED! How sad we’re afraid to be able to step up for perfect strangers for fear we find ‘ourselves’ in financial peril?
Self-actualization my @$$!
If she wants to feel productive, she could volunteer. There are many places that need help. Sometimes those efforts turn into jobs.
Volunteering to build skills and contacts works. I’m here to tell you that it does.
If nothing else, the CNA-to-be could start volunteering at Red Cross and similar organizations. I’ll bet that the blood drives could use her help.
crazy/Slim,
No doubt, but that’s a realization she needs to come to in her own good time. If she’s a good person ( and they certainly sound like they are ) I’m sure she will.
I believe though what she was referring to was being economically viable. Clearly they’re in no place to retire in the traditional sense and they could use the income.
This is the downside to all that heady “empowerment” every one was so full of during the run-up. At that time, America felt like anything was possible! ( Now that the “reality circle” has set in ) let’s just say I can dig where she’s coming from?
“An area manager for Amazon, Hoover was offered an opportunity to transfer to Pennsylvania for an Amazon startup venture.”
Isn’t Amazon an online book seller? What do bricks and mortar have to do with its operation?
book seller? They sell practically everything now.
The have distribution centers around the country.
By “have” I assume you mean “own”? Wouldn’t it just be cheaper for them to rent their warehouses, given the epic commercial RE bust underway?
I think that it would be. Furthermore, there are places called fulfillment houses (yes, that is what they’re called) that can handle the picking, packing, and shipping for them.
A good friend owns such a company in Tucson. She’s been in the business for decades, and, at one point in a previous venture, her company filled orders for SkyMall.
People actually ‘buy’ stuff from that Skymall catalog? Who knew! ( I usually employ it as a drink coaster but whatever )
Believe it or not, they do.
And, as the operator of the aforementioned fulfillment house, my friend did quite a bit of business with SkyMall. It was a very good account.
Hey, I got stuff from SkyMall. Believe it or not, high-quality stuff still exists out there, and believe it or not, high middle class business travelers buy it.
Reno is where one of their distribution centers is.
“The bank approved 18,000 short-sale applications in April, said Bank of America’s Matt Vernon, the bank’s top executive in charge of foreclosures and short sales. Unfortunately, it received more than 50,000 short-sale applications that month. ‘Our system was never designed to handle this kind of volume,’ said Rick Sharga, chief economist at RealtyTrac. ‘Short sales were never intended to be a mass-market product.’”
Apparently that isn’t the way Uncle Sam sees things, Rick. Check out the details on the HAFA program. Unlike most other misnamed “affordable housing” programs, this one could actually result in drastic increases in affordability:
U.S. Treasury program encourages short sales to avoid foreclosure
By KEVIN POST Business Editor | Posted: Sunday, May 2, 2010
Short sales, compared with foreclosures, can save banks money and leave homeowners with cleaner credit records. But for many houses, lenders aren’t participating in the new federal program to increase short sales. The lender that foreclosed on this house on Shore Road in Linwood is mortgage giant Fannie Mae, which is formulating its own, similar program rather than taking part in the federal effort.
Short sales give distressed homeowners an exit that doesn’t lead through credit-damaging foreclosure and save banks money compared with taking and selling houses with failed mortgages.
That should make them a preferred option, even though they still result in the loss of the home and the lender accepting less than what is owed on the mortgage.
But short sales take longer, often two months longer, and can be nearly impossible if other lenders have liens on the house.
So at the urging of the National Association of Realtors, the U.S. Treasury Department came up with a new program to encourage short sales.
Home Affordable Foreclosures Alternatives, or HAFA, went into effect April 5, although banks and real estate agents will need time to take full advantage of its provisions.
HAFA encourages short sales chiefly by:
* holding parties to deadlines for various parts of the process
* providing financial incentives, including $3,000 to help the homeowner relocate; $1,500 for servicers to cover their extra costs; and as much as $2,000 for mortgage security investors who allow as much as $6,000 of sale proceeds to go to other lien holders;
* allowing the current mortgage holders to get pre-approved short-sale terms before listing the property for sale
* requiring that homeowners be fully released from future liability for the first mortgage debt
Jose Rivera Sinclair, a short-sale expert at Balsley Losco Real Estate in Northfield, thinks the new program will help.
“This will help systematize short sales and let people do them online,” he said. “With Bank of America, for example, you can input the information on their website and they’re supposed to get back to you a lot faster.”
Banks must decide within 10 business days whether to approve or deny a requested short sale under the program.
…
Well, they’re not really a PRODUCT, any more than a foreclosure is. They’re a loss mitigation strategy.
The NAR are amazing lobbyists. Sadly.
Back then, the downturn was centered in Colorado, and people left the state to find work. ‘With the current recession, there has been no place to hide,’ Horvath said.”
How did they do that in the last recession?
Oh - a lot more people rented (government did not guarantee loans so banks were careful in lending) and the people who owned homes did not mortgage their homes to the hilt to “liberate” equity.
So people COULD move to where the jobs were.
“Back then, the downturn was centered in Colorado”
As a college graduate “back then”, I object to the notion that the downturn was centered in Colorado. What about the 12% unemployment in Ohio and elsewhere in the industrial midwest?
And where did these Coloradoans go to find work? Certainly not in mypart of the country.
I think they’re refering to the oil/re bust. I’m sure that every state involved felt like they were at the center.
Colorado did have a tough time. I knew plenty of Texans that bought recreational/ski property, and it crashed pretty hard. To this day, you get dirty looks if you drive in CO with Texas plates.
To this day, you get dirty looks if you drive in CO with Texas plates.
Here in Arizona, we give the same treatment to cars with California plates.
Some Arizonans may give dirty looks to cars with California plates, but many in the REIC are desperately hoping that people will start moving again to Arizona from other states.
+1
MightyMike,
There’s no Double Standard quite like a REIC double standard now IS there? Oregon, same deal. Buy “a real nice property”, use my agent, broker, lender, builder and appraiser.
( Then leave the property empty thankyouverymuch! )
I see new over-priced POS McMansions, Civil War Relics and ancient shacks throughout Wisconsin where RE agents and FB’s are dying on the vine in a vain attempts to rejuvinate and “liberate” those elusive E*Q*U*I*T*Y V*A*P*O*R*S.
May they all twist in the wind and dance with the squirrels and snowflakes this Winter.
“Rejuvinate and Liberate” LOL!
( Why is it I can visualize that on a magnetic sign on some contractor’s ( read flipper’s ) truck? )
mikey, you’re a poet! Yeah, squirrels, snowflakes, harsh winds, whatever. Nothing’s too good for ‘em.
I used to wonder how there could be sooooo many people who could afford all the high-end homes being built.
Turns out there weren’t, and they couldn’t.
And now we all get to pay for their folly, as well as the folly of those who loaned them the money to buy unaffordable homes.
back in 2006 an acquaitenance of mine put me on a friends and family list for a condo project he was developing. i drove to the “open house” event and their was a line of people wrapping around the whole entire block. he told me to just walk up to the front and i would not have wait in line. i told him to forget it…soemthing just wasn’t right.
the people in line looked like they were all in their 20s. the one bedrooms were in the 400s and the two bedrooms were in the high 500s. this was in the clarendon area of arlington va.
a couple days later…i found HBB.
Elanor,
I’ve wondered that long and often. In the end our worst suspicions were confirmed. My theory is that, for every starry-eyed specuvestor that dove head first as big and often as they could.., there were four couples that were as much motivated by the fear of -not- being “poor” as they were by the greed of becoming “rich”?
Not to make excuses for these people but I saw it play out at my wife’s work. Early on she’d even ask me, “Why don’t ‘we’ have a place at the coast?” Looking back, I think there was a LOT of peer pressure here amongst co-workers, neighbors and your basic Stanley Johnson’s.
“Two lost jobs and one foreclosure later, they were on the verge of living out of their car. Rita opened the refrigerator one day and found only a half-gallon of milk, some ketchup, mustard and butter and then did something she’d never done before. She visited a food bank.””
I’m going to be serious for a minute. While I show a lot of contempt for these gamblers who receive all sorts of valuable handouts and tax credits from the Taxpayers, I also think it’s very important to support the local community foodbank!
For me (94087) it’s Sunnyvale Community Services.
http://www.svcommunityservices.org/
Despite widely publicized food donation programs (clean out your cupboards!) most prefer cash, because they have experienced volunteer shoppers that buy in bulk from retailers that give them discounts, etc.
Here in Tucson, our food bank provides emergency food. A lot of it these days.
It’s also quite involved in teaching people how to grow their own food. To the point of offering plots where this can be done.
Whenever I meet someone from the food bank, I tell them that they really need to crank up the publicity for the food security program. It just doesn’t get as much attention as their “bring a can of food” drives.
It may be my World War II Victory Gardening ancestors speaking through me, or maybe it was that neighboring family that kept bringing their extra produce to the Slim household when I was growing up, but I think we need to become more self-sufficient in food production.
The renewed interest in backyard vegetable growing is encouraging. I would love to see people growing food to eat in their backyards instead of grass.
The renewed interest in backyard vegetable growing is encouraging.
I read (heard?) recently, tomatoes described as the “gateway vegetable” for back-yard gardening.
It appears that many people start out in search of a more delicious tomato, but find it hard to stop once they’re successful.
I read (heard?) recently, tomatoes described as the “gateway vegetable” for back-yard gardening.
I hate tomatoes, but am very excited about the snow peas I’m growing for the first time this year…
and the carrots, broccoli, garlic, spinach, onions, green beans, zucchini, basil, and lettuce.
I sure hope at least some of this stuff turns out to be edible!
When I try to grow vegs on my property the deer try to (and do) eat it. I can’t get adeprevatiuon permit from fish and game so I’ll hire an Indian to shoot them (it). A mixture of Cayote and lion pee will keep them away, but the smell is like a garbage dump. Do any HBBrs know anything I can do ?
Put up a really tall fence. Possibly with netting over the top. Sort of a batting cage for vegetables.
What I found interesting was the following:
“‘It hurts to see yourself at that level because we’ve never been there before,’ said Pugh, whose family of four now shares a tiny apartment. ‘I looked at my husband and said, ‘How can people live like this?’”
I always find that to be a fascinating question. It makes you wonder, is she considering suicide?
Consider this, Rita - the poverty rate in this country is something like 15% - 17%. So there are tens of millions of Americans who are living like that. Have you ever heard of saving for a rainy day? That’s what you and your husband should have been doing back when you had decent jobs.
What is meant by “poverty rate”? The USA has got to have the richest “poor people” in the world. Compare:
USA: GNI per capita: US $47,580*
Mexico: GNI per capita: US $9,980*
Haiti: GNI per capita: US $660*
I’d wager that the average US “poor” person spends more on cable tv, than the average person in Haiti makes in a year.
Not to pick on you Mike, but what Rita needs to do is spend her last $1000 on a trip to Haiti. Perhaps she might realize how utterly blessed she is.
*Source: BBC News { news (dot) bbc (dot) co (dot) uk/2/hi/country_profiles/default.stm }
And what’s really interesting is that when you go to poor places, you’ll often hear the people say how blessed they are.
Happened to someone I know when she was in Rwanda a few years ago. We all what happened there back in ‘94. Mass genocide. And, among those who weren’t killed, missing limbs and scars for life.
But, when she was there, she was amazed to hear people saying that they were blessed. Over and over again. It was like a refrain.
“I’m going to be serious for a minute. While I show a lot of contempt for these gamblers who receive all sorts of valuable handouts and tax credits from the Taxpayers, I also think it’s very important to support the local community foodbank!”
I agree. Rita is exactly the type of person (as opposed to welfare queens who might try to use the place as a supermarket) that I hope to help whenever I bring in a bag or two for the foodbank. I do this - as I’m sure many HBBers do - with the expectation that food banks are a source of temporary help for folks in tough times. Its a valuable safety net for the community.
There has never been a better time to gamble on a home purchase — except that prices are still too high.
I heard my wife explain this to my (attorney) FIL over the phone a couple of nights ago. She said that the other two times we bought a home, the mortgage interest rates were over twice their current levels, but prices were low. She also astutely noted that you can refinance into falling rates, but not into rising rates, and that eventually, higher rates will happen, driving down home prices.
My wife is one of the best students I have never taught (she learns well by osmosis).
Keep on a pimpin’, noted-economist Mark!
A great time to buy a house
Based on home-sales data and loan rates, noted economist Mark Zandi says this may be the best time in the past 25 years to buy a house.
he also astutely noted that you can refinance into falling rates, but not into rising rates, and that eventually, higher rates will happen, driving down home prices.
In the early 1990s, after the Gulf War ended, interest rates went down. Locally there was a lot of refi activity. IIRC, a lot of it was done by people who’d purchased houses while interest rates were still up in the Volcker-sphere.
“The convenient workshop dovetailed with 56-year-old Herb’s passion: the woodworking that would launch his second career. He quit his auto-repair job and sank some retirement money into a small business.”
Herb is one of the few characters appearing on this blog whom I actually feel sorry for. Here are my rules, learned in the school of hard knocks, for anyone thinking of turning their “passion” into a business:
1) You think you’re good at what you want to do? So are tens of thousands of other people, many of them located in countries where the cost of living is way less than in the USA.
2) Don’t expect to make any money at all for at least a year.
3) When you finally start seeing glimmers of hope, opposite and more than equal patches of darkness will snuff them out.
4) Mortgages and start-up businesses are like oil and water.
It’s even tougher now than it was a few years ago, because it’s not like you can just get another job if things don’t work out. Good luck Herb!
I hear the alarm bells ringing whenever I hear about someone turning a passion into a business. Sorry to say, but the passion doesn’t necessarily translate into good business sense. (I have personal experience in this area. Learned a few expensive lessons, if you get my drift.
Think back to those Venn diagrams from the New Math era. The most viable businesses are in the intersection of these three circles:
1. What you can do (the ability circle)
2. What you want to do (the passion circle)
3. What the market will pay you to do (the reality circle)
“(the reality circle)”
?
What’s that? Don’t you know I’m passionate about real estate, that I’m ‘good’ at it and the market WANTS to pay me to do that!?
Yeah and we don’t know had it not been for the bust that Herb wouldn’t have been a’ flippin’ his little heart out to that tune either? If I ‘did’ anything w/ RE going forward.., I’d seek to put the ‘affordable’ back in family vacations.
“Lots at the Lake for $5k!” ( Weenie roast every Friday )
fries with that?
Yep, and Herb is one of the FEW I’ve felt sorry for. As others noted ( when your wife can’t find work as nurse!? )
A big part of the reason I’ve held off on commiting to what ‘I’ planned to do as a sideline in semi-retirement. Right now “boutique amplifiers” ( for electric guitars ) are the rage for small operators. That’s great and I’d be more than qualified to do so.
But who knows… what the landscape will look like a decade from now? Please, no CO posters take this the wrong way but as an OR, I think I can say ‘where’ they’re at is a big part of their problem?
Start the “passion” business in the garage, on evenings and weekends.
Which is what one of my bike framebuilder friends did.
I remember going to his house to get measured for a frame back in 1980. His workshop was in a corner by the wife’s laundry area, and his toddler daughter kept tugging at his sleeve, begging for his attention. Reason: He’d just gotten home from work, and the daughter hadn’t had her proper hug-and-kiss greeting from Daddy.
He’s now one of the top builders in this country.
Slim/Fixer,
How true. That is what I’d always kind of envisioned anyway. Develop a loyal following ( and who’s more loyal than cyclists and guitar players? ) and build from there.
And I think ( in his typical coy fashion ) GSfixer is implying, “if you’re not “passionate” enough about to give up your eves & weekends ( you’re probably not ‘that’ passionate about it? )”
Did I get that right?
And I think ( in his typical coy fashion ) GSfixer is implying, “if you’re not “passionate” enough about to give up your eves & weekends ( you’re probably not ‘that’ passionate about it? )”
Did I get that right?
You sure did! (Cue up sound of nail being thwacked on head.)
i don’t feel sorry for herb. i know nothing about herb.
When I was about 7 or 8 years old, my father was looking at buying a new truck at the dealership. I remember the salesman saying “It’s a great time to buy”, and we looked around and left. I asked my Dad why he didn’t buy after what the salesman said. “Son, when is a car dealer EVER going to tell you it’s a bad time to buy a car?”
Fastforward many years later and I’m looking for a place in the DC Metro area. I went to three open houses and ALL THREE said the old sales mantra: “Hey, it’s a great time to buy a house.” Too many people getting sucked in still.
whenver i ask my barber if he thinks i need a haircut…he says yes…i just don’t get it.
Speaking of so-called “safe gambles,” I guess we will soon learn whether or not government stimulus measures are a free lunch to the global economy?
World economy
Fear returns
Governments were the solution to the economic crisis. Now they are the problem
May 27th 2010 | From The Economist print edition
IT’S not quite a Lehman moment, but financial markets are more anxious today than at any time since the global recovery took hold almost a year ago. The MSCI index of global stocks has fallen by over 15% since mid-April. Treasury yields have tumbled as investors have fled to the relative safety of American government bonds. The three-month inter-bank borrowing rate is at a ten-month high. Gone is the exuberance that greeted the return to growth (see article). Investors are on edge.
What lies behind these jitters? New nervousness about geopolitical risk, with tensions rising in the Korean peninsula, has not helped. But that comes on top of two wider worries.
One is about the underlying health of the world economy. Fears are growing that the global recovery will falter as Europe’s debt crisis spreads, China’s property bubble bursts and America’s stimulus-fuelled rebound peters out. The other concerns government policy. From America’s overhaul of financial regulation to Germany’s restrictions on short-selling, politicians are changing the rules in unpredictable ways (see article). And the scale of sovereign debts has left governments with less room to counter any new downturn; indeed, many of them are being forced into austerity.
The danger is that these fears reinforce each other in a pernicious reversal of the dynamics of 2008-09. Then, co-ordinated government action on a grand scale stopped the global financial crisis from turning into a depression. Now, thanks to incompetence and impotence, governments may become the problem that will drag the world economy down.
Don’t panic
That is far from inevitable. Fears about the fragility of the global recovery are exaggerated. Led by big emerging economies, the world’s output is probably growing at an annual rate of more than 5%, far swifter than most seers expected.
This pace will, and should, slow, not least because the big emerging economies need to tackle rising inflation and possible asset bubbles. China is in obvious danger, which is why its government has tried to constrain loans and property prices. Pricking asset bubbles is never easy, but there is scant evidence that its efforts are too heavy-handed (see article).
America’s growth may also slow as firms stop rebuilding their stocks and the government’s stimulus tapers off. But the world’s biggest economy does not seem on the verge of a second recession. For all their heavy debts, American consumers have returned to the shops. Their confidence is rising as the economy is producing jobs (albeit not enough of them). And Congress seems likely to slow the pace of fiscal tightening with a new “mini-stimulus” of temporary spending (see article).
Growth prospects look grimmest in Europe. Yet even there the likely immediate outcome of the euro zone’s crisis is the enfeeblement of an already weak recovery, rather than a sudden slump. The region’s profligate economies will struggle for longer as austerity kicks in. But waning confidence will be mitigated by the boost that exports receive from the euro’s plunge.
Look only at those probable short-term prospects and it is hard to see why financial markets are suddenly in such a lather. The reason is that the risks of a far worse outcome have risen, and those risks lie mainly with governments.
…
“‘On the residential side, declining home values have pushed housing prices back to much more affordable levels, according to Zions Bank senior vice president Lee Carter. ‘The lower end of the market (under $300,000) … is recovering,’ he said. Carter described the middle part of the market as ‘a little bumpy’ with the higher end ‘going to remain a mess for some time to come.’”
Not sure where this leaves FIL/MIL. They bought just north of $300K early in the 2000s, saw appreciation to north of $800K, at least based on what comps in their ‘hood sold for at the bubble top, and now they are somewhere in between — part of the muddle in the middle, I guess?
At any rate, the number of Wasatch Front households that can afford an $800K house based on their incomes is vanishingly small.
utah salt lake city realestate is in serious trouble. It seems they still haven’t figured out that the prices are too high, and the bubble has burst into a bunch of small bubbles going down hill getting ready to burst. There are too many speculators still thinking we are still in 2006. It’s really hurting the people who would like to find a home based on their real ability to make the mortgage payment. Utah doesn’t generate much wealth as a state. They need to get of the crazy greed train, and start getting back to reality.