The Housing Bubble

My development “lagged” the true market by about 4-6 months before Zillow started to drop in earnest; when they did, they ignored the short/foreclosure/reo sales totally. Now that secondary buyers’ (falling knife catchers) inventory has/is being sold/offered they cant ignore the real numbers being spit out in county records. Example in my development: 3/2 brick ranch house for sale at 224K ….reduced to 195….goes into foreclosure…..bank takes back at 185….bank sells at 160…new FB puts in 20K, lists at 195….sits 8 months….sells at 165. Neighbor to this house, 3/2 1/2 brick ranch lists for 222K….sits for 6 months, sells for 180K two months ago. Zillow now starting to take notice but still shows these homes at 190K or higher. Numbers are what you want to make of them.

“Neighbor to this house, 3/2 1/2 brick ranch lists for 222K….sits for 6 months, sells for 180K two months ago.”

What’s median income in your area? Unemployment climbing or steady?

Median income about 55k, median household income about 70k, older demographic,bedroom community, some light industry, 1 hospital, average unemployment but like other N Ohioans severely underemployed, reluctant to leave; 70 percent of last year’s college graduates living at home. Many Kasich/Taylor signs for governor popping up. That means the Obloviator (you missed that one, below) will be making many more trips to make sure we all vote GOP this time.

Every zombie elimination manual I’ve ever read says go for the brain.

Congress stymies the zombie hunters with a magnificent and futuristic brain-cloaking device.

To believe that we actually have representatives in itself is crazy belief and the further we go with that line of thought the further we’ll go from really understanding anything that is happening.

And yet, elections determine who writes our laws. I would rather have laws written by thinking people than ideologues. If I disagree with a thinking person, I may be able to persuade them.

And banding together into organizations has been effective for some groups, like the AARP, teachers, farmers, unions. And before the tirades start about unions, they grew in influence because workers needed to counterbalance the power of corporations. And they have been effective in increasing the safety of workplaces.

The fewer the number of participants in this charade, the faster the system will be radically altered. Guns or not. The demopublican machinery has control of the outcome and the vote is no more than sanction of the machinery.

I always get a real kick from people who go on tirades about unions, especially when the individual in question enjoys all the benefits that have been shaped and developed as a result of working people getting together such as set hours, hourly wages, vacation pay, holiday pay, etc, I mean do all those well meaning “free country” believing people think that some schmuck running a slave/sweat shop type of business as most were in the back of the day, got up one day and said “it’s time to take care of these people and show them I really appreciate what they are doing here for this business of mine”.
http://www.youtube.com/watch?v=xIraCchPDhk&feature=related

And along those lines of thought, it’s those same wage slave dopes you refer to who wave the stupid flag for US Treasury robbing tax breaks for the wealthiest.

Thank you, saywhat.

See the latest issue of TIME concerning what’s wrong with our education system. It pained the editors to no end but they had to admit the problem is primarily the teacher’s unions and tenure.

In the teacher’s defense, my first guess would have been that parents are responsible.

Marko,

It has nothing to do with teachers’ unions, and everything to do with demographic shifts. We’re just not allowed to say that in public.

marko:

I’ll say it we need a massive infusion of English in our educational system….and i mean to the American born peeps no more ghetto rap and hip hop..

Even if that means no summer vacations to those who refuse to cooperate.

There would be no PAC’s…..and nobody can donate except the $3 on your tax form……

and Everybody would participate in at least 1 debate even the socialists and the right to life parties….

the total election season would be 3 months max.

So yes 3rd parties would hopefully get some seats and play a pivotal role in making better decisions

“Let’s talk price/sq.ft.”

Thank you.

When estimating the price of an existing property, all items need to be assigned a value. Structures, wells, septic, dirt, etc. My rage towards realtors directly relates to their CMA/BPO estimates. They know NOTHING about estimating, construction costs so will someone please tell me how the @#$% these scumbags come up with a BPO? You can’t possibly look at and take a walk around a dump for 5 minutes and come up with actual replacement costs less depreciation.

Sq footage costs are bogus. Take two homes
with the same square footage, 1,600. One
home is 40X40, the other is 20X80. Linear walls on the first is 160, the second is 200.
Every time you have a corner or a nook, your
linear cost per foot just went to X3.

“linear costs per foot”? lmao.

40×40 has four elevations thus four corners.

20×80 has four elevations thus four corners.

I’ve been in the construction management business for decades now and perform take-offs everyday. I have yet to see four elevations with more than 4 corners…

Again, request some insight.

Exeter, if you please - what the Sam Hill is an ‘elevation’ and what does it have to do with a ‘corner’?

I tried to Google ‘building elevation’ but kept getting topo maps.

Thank you.

Building elevations are merely the four sides of a structure shown on architectural drawings indicated as north, south, east and west elevations based on project north.

Rancher is correct in that your linear footage of materials goes up once you move from a perfect square to a rectangle but it has nothing to do with corners. However, he takes it to an extreme. What archy draws up 20×80 or 20×60 structures? Typically they’re laid out 32×50 and 30×40 nominally. Using those dimensions, the increase in linear footage over a perfect square doesn’t amount to much.

In general, in construction, corners and angles do cost more. I just built a city house requiring an air/light shaft and 90 degree offsets to allow windows to face other’s property lines to code.

It cost a lot more money than a box.

The walls are only a small part of the cost. Think plumbing, foundation, electrical, roof, flooring, fixtures, etc. My understanding is that hard costs per foot for new production product (Lennar, KB, etc.) at about $45-$50 psf. Add about $10-$15 psf for soft costs. We haven’t yet covered land and infrastructure. Call infrastructure $20 psf (about $50k per lot, unless you have a flat piece of land immediately adjacent to existing homes). Let’s round down on the lot to $40k for a 2,000 square foot home.

So, that 2,000 square foot home that is trading for $150,000, would cost about $170k to build…if the land was free, and entitled, with KB/Lennar type finishes.

We will continue to see new home starts fall until home prices rise. It’s simply not economical to finish raw land to build homes.

Wiz,

I’d contend that the prices of 2005 were not “real” market prices, either. Those prices were based on the sales made to borrowers with loans they could never pay off — so they bid prices up well beyond their fundamental values.

Foreclosures are the unwinding of these fraudulent loans. The places where foreclosures were allowed to take place (the lower half of the housing market crashed before the govt was able to intervene — they slowed down the foreclosure on the high end with their “foreclosure moratoriums” and foreclosure avoidance schemes.

It’s the prices that we see AFTER the foreclosure have been allowed to take place that are the true market value. In the areas where the govt has prevented foreclosures from occurring, we still see the **artificially high** prices from the bubble. Those are not at all “real” market prices, IMHO.

BTW, I don’t think the bursting of the bubble was a “Black Swan” event. It was as predictable as the sun coming up each day.

CA renter
That might tie into the “Property Preservation Specialist” hiring BofA is doing right now. One ad I read said the workload was 500 homes. Holy Moly! I’m educated, prompt, fast and accurate, but that’s a lot of properties to handle.

Interesting, Awaiting.

If you hear more about this, please post it here. As always, we have to rely on each other to get real information, as the MSM will never manage to get this information out to the masses. Instead, they’ll keep spouting the nonsense that, “the market is getting better, and foreclosures are dwindling.”

I wonder how these properties are being held? Maybe in some off balance sheet vehicle? This would be good info to find out.

Isn’t that Ben’s real job?

Property Preservation Specialist

I went to ICSC/U San Diego Management School in the 80’s and worked for a REIT.The BofA position knowledge is 1st hand knowledge. Not only are the banks in heaven with Mark To Market, our nefarious govt gave the banks Rule 157, so the banks can pad their financials (even more) and the bigwigs get bigger bonuses. Don’t even get me started on what’s going on. I’ll blow a head gasket. I’ve been interviewing SS and REO Depts.

Job hunting? Let us know how it goes.

Best of luck, awaiting!

Thanks, Ca Renter. I fell like the R E firm I worked for, sucked the life out of me and left my carcass on the ground. All the events, I had no time to attend. (When I come back, I plan on being tall, blonde, beautiful and rich. That ought to fix everything.Oh, and I promise not to be a dingbat.)

But critical damping would still allow one overshoot, and that just won’t do.

The more fundamental problem with the damping analogy is that the system is actually based on with flows.

closed loop control system, if you increase gain you risk instability. Wonder if the monetary system has any kind of anti windup compensation… because the input has been saturated for 2 years.

I would agree with this statement.

Rednecks versus Elitists. Which is more the Con Man?

Funny the extent of class-bias among people living on the upper East Coast and all along the West Coast. But not racist. To all the proud anti-racists on this board: do you realize there are black rednecks, too?

Rednecks versus Elitists. Which is more the Con Man?

Which one has health coverage?

Right?

If you KNOW where to go sure you can

and Dennis:

yes they are down to earth but also..but also very arrogant you know I am the King of my castle………like I am supposed to jump out of bed at 630 on a Sunday morning pay the rent so he can get drunk?

Some might see quite the opposite. Nothing downstate is worth 200k but costs 800k. Many upstate houses are actual… houses… for 200k, not just bathrooms, which run $200k downstate. Heh

Based on the secular economic deterioration circa 1977-current, I’ll stand by my statement that there isn’t a house in all of upstate NY worth $200k.

based on reality, I note most houses costing more than $200k upstate are more “worth it” than houses costing double downstate

Keep telling yourself that.

In the meantime, the fact remains that chronic under employment, falling real wages and long term chronic unemployment doesn’t support $200k housing prices anywhere. But I’m a native of the post-industrial decay in the northeast, what could I possibly know….

Physicians on average earn far more Upstate than in the NYC area.

OK, I can release the sour grapes. I’m not a doc.

Does this income inequality reflect the ‘expense’ portion of income and expense? I can’t think of anything in lower NYS that would hit that hard other than insurance. As a counterbalance, the pharma kickbacks and residuals from equipment referrals would be a LOT higher in NYC. The phantom billings to Medicare and Medicaid are likely to be a wash.

Just think. All those poor doctors up there ministering to one another, and to ghost towns. Maybe trying to flag down the last hearse in an attempt to give the deceased one final MRI. Just to make sure, you know.

Doesn’t bode well. Service providers - docs and lawyers and accountants - ministering to one another in a hermetically sealed bubble. I guess required periodic injections of new money being are from the government by way of increasing Medicare billings on a declining population.

I own and run a manufacturing/ franchising company. There are plenty of buildings to buy at low prices, cheap lazy employees, decent highways to dump your manufactured goods 4 hours away in markets such as Ottawa, Toronto, Montreal, Boston, Philadelphia, NYC. The consumers around 4 hour drive have the tons of money. It’s also cheap to pick up used Dairy industry equipment have it modified and use in the chemical industry. The NY state dairy industry got hammered and there is plenty of expensive equipment to be had at pennies on the dollar. We get some short term decent employees from the nearby universities again at bargain prices. We live in Syracuse NY but very little of our income comes from NY state. It’s better to be a big fish in a little pond that way the bankers kiss you’re a$$ a lot.

My understanding is that in the world of biz that “gross income” == “operating income” and not “revenues”.

Net income is “operating income” minus expenses that are not directly linked to cost of goods sold, lie interest expense.

ok… well..

Mom and pop had a fight, closed the store and split up.

Mom got the two kids and rents a house.
Dad got nothing and moved back in with his parents.

They both found jobs that pay $20K a year.

Mom makes barely enough to feed and clothe the family while dad’s expenses are near zero if you ignore all the partying he does..

Should those two have an equal income tax burden?

“…..dad’s expenses are near zero……”

Not meaning to sidetrack the discussion, but there is this little thing that the government came up with……It’s called “Child Support”.

Like it or not, government/political parties uses the tax code to promote certain behaviors/actions.

speaking of child support..

mom protests and dad has to pay $5,000 a year child support. It’s not tax deductible, so dad pays a 10% tax on that earned money.

Under current law, mom doesn’t pay tax on child support she receives. But that $5,000 is income (or isn’t it?) and she would pay 10% on that money. If it’s deducted, it’s a deduction, and we can’t have that..

It appears that the same $5,000 would be taxed twice under a simple flat tax with no deductions.

Child support is not deductible to the person who pays (just like the money you spend to feed your kids isn’t) and is not taxable income to the person who receives it. Just like the noncustodial parent doesn’t pay tax on what the custodial parent spends to feed the kids.

yeah polly but I’m just going by what Diogenes proposed:
That there be No deductions. No credits. No “income brackets”. No difference from “source of income”.

Saying the child support mom gets “is not taxable income” seems to suggest it is income… and would be taxable no matter if she earned it or got it from her ex or found it in the street.

That may be what Diogenes meant, but the interpretation leads to double taxation on money meant to support children of unmarried couples because he would pay taxes when he earns it and she would pay taxes when he pays it to her.

Polly, a few days ago I proposed an idea that has been wandering through my mind for about 30 years. I am wondering what you think about it.

In addition to filling out a tax return reportng income and expenses, have a section of the return to designate how tax money is to be spent. So much for military, health, education, transportation, etc. Maybe a certain percentage that would by default go to administration, such as the IRS that nobody would choose. It might increase compliance. And those wealthy folks who choose to hide income or overstate expenses would find their influence decreased.

This sort of thing happens in large charitable organizations where donors can designate part or all of their donations to particular purposes. But this only works for organizations that have a large general fund so they can buffer waves of popularity of particular causes. For example, the whole thing where the Red Cross fund for victims of disasters got a huge influx of funds after September 11th, but then they really didn’t need it - too many of the victims were dead, not injured. Boy, did they get in trouble when they tried to divert some of the donations to a reserve fund for future disasters.

So, you have the issue of the mismatch of where people want to put their funds, vs. what is actually needed. If you get around that by diverting a percentage to unpopular activities (like the IRS) then you have a population that thinks it should be able to direct its tax money and finds out that only a bit of it gets to where they want it. It won’t do much to increase compliance in that circumstance. You have the issue of how small to make the bands. Do you say just “military” or do people get to designate particular weapons systems? What if Northrup tells all its employees to desinate their taxes to a system that Congress is just about to cancel because the DOD has finally managed to convince them it is not needed?

And then you get the perverse incentives. Government departments are supposed to root out fraud and waste. This happens and it is a good thing. Can you imagine a department actively telling the world that they have found $x millions of fraud and are correcting the problem right before April 15th? They would lose a huge chunk of their funding. It is hard enough to convince Congress that fixing problems is a good thing, without managing communications to the whole country.

Plus there is the PR that would go on. Great for media - the farm lobby buying ads on American Idol to get people to designate farm subsidies as their tax support choice. Just another way for big money interests to throw around their influnce.

Oh, and then there is the Constitution. The House of Representatives is the only location where budget legislation can originate. I’m not sure they would be allowed to put in clauses that push around money based on what the people want to pay for. You might be able to get a version that would pass Constitutional muster, but it won’t be easy.

And what happens to people who receive significant money from the government? If you are a farmer and pay $10K in income taxes but receive $50K in farm subsidies, do you get to make an election? Why? What else counts? What if you live in an area that is getting a huge federal grant for public schools? What if you live in that area but send your kids to private school?

Honestly, the only way it would work is if enough is kept “aside” to make sure there is no actual influence on spending. If that is the case, enough people will understand that so that it won’t help compliance at all.

Oh, and Mr. Goolsbee’s suggestion of sending people an already filled out form? Public relations nightmare. If you send it out and someone receives a late 1099 that wasn’t included and they don’t add it to their 1040 before sending it in, the IRS would have to send out a letter asking for more taxes from someone who used the *government approved* form. Imagine what the press will do with that one.

Thanks, Polly! Well thought out.

I had considered the constitutional question. That would probably require an amendment, unless the law stated that Congress was delegating its responsibility to the taxpayers. Even then, it might not pass constitutional muster and would probably be challenged.

I hadn’t considered some of the other issues, which is why I asked for your opinion.

I’m going to go with “genuinely clueless moron.” And putty in the hands of his neo-con handlers.

What he did was what we all did… Moron or not.. I’ve seen worse….. What would BO’s teleprom…said

The real question is what would Reagan have done. Do you think Ronald Reagan would have sat there with the country under attack, reading a kid’s story? I don’t. And, no real president would have done that. Further, no self-respecting American would defend that dereliction of duty.

This isn’t about partisanship. It’s about moving immediately to protect the country when it is under attack. I certainly hope that is something we all agree we want the president to do.

IAT

Do you think Ronald Reagan would have sat there with the country under attack, reading a kid’s story? I don’t.

242 US Marines got blown up in Beruit on Reagon’s watch, and he didn’t do a damned thing about it. The Reagon mythology even in here is downright cloying sometimes.

The Raygun mythology is pathological.

“and he didn’t do a damned thing about it.”

Yes he did do something. He ran like like the coward he really was. He ordered a full evacuation of Lebanon and then began negotiating with terrorists in earnest.

Those are facts.

“The Raygun mythology is pathological.”

Also mythological.

Look, I just picked a president. What do you mean “Didn’t do anything about it”? I mean, what would you want him to do?

But. Look. Name a President, ANY President, who, with the cameras whirring, would have stayed sitting in an elementary school classroom, reading a first grade or kindergarten story, while the nation was under attack? I’m definitely no fan of Reagan, but I am certain he would have gotten up immediately to deal with it. I believe Bush I and Clinton would have gotten up, too. I believe Carter, Ford, Nixon, Johnson, Kennedy, Eisenhower, Truman, and FDR would have left the stage immediately as well.

This is no partisan issue. This is basic to the office of president. Defending the inaction is just, well, basically, its treason.

IAT

There’s a lot of power in telling people what they’re dying to hear, no matter which side of the political spectrum you’re on.

Do you think Ronald Reagan would have sat there with the country under attack, reading a kid’s story?

Is ketchup a vegetable?

Guess I need to order a hearing aid now.

Thanks for your help. I thought I was losing my mind, and spent hours trying to find out why he said “Secretary Robert Gates”.

(Getting old is FUN!)

Find me a reference where Keynes is against creative destruction. Or are you still incapable of understanding him?

And if I’m not mistaken, many an Austrian schooler around here, and elsewhere, will assure you (as they have assured me) that recessions/depressions/7 thin years would be unknown under their system, for they are caused by central planning/banks/etc- we’d only have ‘panics’, which are short-lived and quickly surmounted.

Which they mistakenly think was how it was back in the Good Old Days, a plethora of contradictory evidence notwithstanding.

The difference is the austrian economists think they have found a way to borrow a fatted calf from the future during the seven lean years.

Why don’t you provide a little reference for where Austrian economics promises ‘endless fat years’ once we ’sacrifice a golden calf at the altar of Free Markets.’ Otherwise we will know you are blowing smoke into our eyes.

from wikipedia:
“All Austrian theorists consider the unsustainable expansion of bank credit through fractional reserve banking as the driving feature of most business cycles.”

There’s a reference for ya! Get any smoke in your eyes?

It’s a basic tenet of the Austrian School that recessions/depressions/7 lean years are caused by central banks and the like. They believe that we will no longer have a boom/bust business cycle without the ‘economic misinformation’ that such central control creates.

Therefore any smoke getting in your eyes must be coming from the burning golden calf, sacrificed at the altar of free markets, ensuring endless fat years. Just like their priests promise us.

“Creative destruction”

Another one of those great oxymorons that people bought in to.

Perhaps if you boned up on the difference between Keynes’s theories and monetarism, you’d perceive an element to my theories that you apparently are missing.

Uhh, the problem here is not that Bove didn’t get equal time on CBS– it’s that a GOVERNMENT chartered megabank used the GOVERNMENT court system to harass someone for speaking out. Kapish?

Has he been around since Oly has been gone? I figure that news might be more dangerous to him than the rock.

He came back a while after Oly passed, and found out about what happened. He seemed very upset about it (as most of us were), and he seemed to disappear after that. I do hope he’s okay.

It may be my imagination, but it seems to me that wild fires are happening a lot more frequently than they were 30 or 40 years ago. Or perhaps they’re being reported more.

Unclear which it is. But, you can’t stop fire. If you suppress it for 30-40 years, you only get more massive fires when they do happen.

Also, I do not believe the court case concerns urban fires. I am not sure. But, do they really have fireplanes dropping fire retardant in neighborhoods? I don’t think I’ve ever seen that. Maybe at the urban-wilderness interface, but not in downtown San Diego.

IAT

“It may be my imagination, but it seems to me that wild fires are happening a lot more frequently than they were 30 or 40 years ago.”

It’s not your imagination. This is a direct result of Smoky’s fire prevention program
instituted decades ago by the USFS. The
result is a tinder box of dead trees, fallen
limbs, dieing underbrush that, when ignited, fuels the fire until it becomes a crown fire.

Before Smoky, when you had a lightning strike, the fire was naturally contained to
the ground as there wasn’t that much fuel.
Repeated fires kept the ground clean and you rarely had a Crown fire.

You can look up old photos of the Mogollon
Rim in northern AZ and see what it looked
like in the 1870’s; almost park like with
grass growing between the widely spaced
trees.

Before the 1940’s, crown fires were the
rarity. Now, they’re commonplace. Think
Yellowstone fire.

Right now, both the BLM and USFS are
contracting out ground brush cleanups
efforts to thwart this type of fire, unfortunately, it’s a dollar short and an
hour late.

It’s not your imagination. This is a direct result of Smoky’s fire prevention program
instituted decades ago by the USFS. The
result is a tinder box of dead trees, fallen
limbs, dieing underbrush that, when ignited, fuels the fire until it becomes a crown fire.

Only you can prevent minor forest fires…