Bits Bucket for February 8, 2011
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Fiats are apparently not entirely worthless yet: people are trading houses for them.
http://online.wsj.com/article/SB10001424052748704570104576124502975117950.html
Cash Buyers Lift Housing
By S. MITRA KALITA
Buyers in markets around the U.S. are snapping up homes in all-cash deals, betting that prices are at or near bottom and breathing life into some of the nation’s most battered housing markets.
Cash buyers represented more than half of all transactions in the Miami-Fort Lauderdale area last year, according to an analysis from real-estate portal Zillow.com. In the fourth quarter of 2006, they represented just 13% of deals. Meanwhile, downtown Miami prices rose 15% in 2010 from a year earlier, according to the Miami Downtown Development Authority.
The percentage of buyers in Phoenix paying cash hit 42% in 2010—more than triple the rate in 2008, according to Raymond James’s equity research division.
Nationally, 28% of sales were all-cash transactions last year, according to the National Association of Realtors. The rate was 14% in October 2008, when the trade group began tracking the measure.
More from the article:
——-
To pay the $1.8 million, $1.2 million and $1 million prices on the condos, Mr. Stoker, 73, and his wife, Jane, cashed out of some financial investments and sold a Roy Lichtenstein painting and an Alexander Calder mobile.
Last summer, piano teacher Virginia Hall-Busch… 62, got a call about a 1918 bungalow with three bedrooms and one bathroom listed … $159,000, then dropped to $129,000 and then to $79,900. Ms. Hall-Busch closed in October for $52,500 and began renovations within weeks.
——-
Good on you, Mrs. Hall-Busch! Mr. Stoker, on the other hand, can fry in Miami.
Meanwhile, here’s an interesting entry in the comments section: “American businesses are not anything like the American government: their balance sheets are pristine, their profit margins are fat and they are more competitive than ever. In other words, American businesses are not swimming in the sewer with housing.”
Ha ha ha ha! That’s because the banks BOUGHT Congress, you moron!
“American businesses…. their balance sheets are pristine, their profit margins are fat and they are more competitive than ever.”
Somebody is not in touch with reality. The majority of businesses are puckered up like a prune.
Not the 100 biggest ones. You must be thinking about small business…
The ones that matter - banks, power companies, cell phone companies, insurance companies, grocery stores, big box stores etc are doing really well apparently!!
The Fortune 100 had record profits last year.
As I’ve said, the recession IS over… for the rich. For the rest of us? Not so much.
Indeed, eco.
“Ha ha ha ha! That’s because the banks BOUGHT Congress, you moron”
Man, I love the smell of criminal Congress being flamed in the morning!
I don’t buy the volume of cash buyers. I called a few Escrow firms this week, getting information on who’s paying what these days (bargaining chips for us), and they all tell me cash is rare. I’m in So Ca. We’re cash for our final home.
I’m also skeptical, as I don’t get the impression they have run out of people who make their livings by lying about real estate just yet. Where is the statistical evidence to back up this ‘cash buyer’ story?
Yesterday evening, I took my weekly constitutional around Downtown Tucson. The event is called Meet Me at Maynards, in case anyone’s interested.
Any-hoo, my walking buddies and I passed by a newly listed house in the Presidio neighborhood. Info flyer went on at great length about the place. However, one important bit of info was missing, and that was the price.
Which prompted me to open The Troublemaker (my mouth) and rant about the uselessness of a real estate flyer that did not include the price.
A fellow walker said, “That place is six-fifty.”
As in, $650,000.00. Which really got me going. And, as soon as I caught up to the pals I’d been meaning to walk with, we had a collective rant about that price.
I mean, come on. This place is one of those old adobe charmers (read: money pit) that will require all sorts of maintenance and repair. If I were the buyer, I’d want to get the price down well below the half million mark, just so I’d have a nice pot of money to pay for that ongoing maintenance and repair.
Thanks for letting me rant this rant one more time, people!
As that NY politician said, “the rant is too damned high!”
The half million mark? I don’t know what you mean by a “charmer” but when I think charmer I think 2 maybe 3 bedroooms. And if that’s the case, if it’s north of $250k, I become the Tasmanian Devil of ranters.
The half million mark? I don’t know what you mean by a “charmer” but when I think charmer I think 2 maybe 3 bedroooms. And if that’s the case, if it’s north of $250k, I become the Tasmanian Devil of ranters.
One of my walking pals (with whom I finally caught up) noted that the aforementioned charmer was all of 900 square feet.
Bad move on his part. I erupted again.
Because 900 square is less than the size of the Arizona Slim Ranch House. And this place sure didn’t cost $650k.
Awaiting,
I’ve also wondered about all the claims of “cash” buyers, but have talked to enough people involved in the transactions (buyers, trustworthy agents, etc.) that I’m convinced there is a lot of cash out there.
IMHO, a lot of it is from overseas, possibly foreigners getting out of their USD holdings. Also, a lot of U.S. investors are trying to get out of dollars, and housing is providing a MUCH better return than bank savings…and housing is perceived as much less risky than stocks…so, they are throwing all of their money into housing.
It remains to be seen IF interest rates ever rise, whether or not these house-hungry investors will continue to snap up housing at this alarming rate. I’m guessing they won’t if the return on savings comes anywhere near the return on rental housing and flipping.
“…BETTING that prices are at or near bottom…”
Click.
The rate was 14% in October 2008, when the trade group began tracking the measure.
This is odd….they have only tracked this data since 2008?
I paid cash for my place here in Boise. I may have lost some money, but there’s no way I can ever become “underwater”.
Dennis
You have to live somewhere, so if it’s long term, you’re still OK. I’m figuring we will break even and live almost free in 3 years of buying. We have multiple rents going. I figure $370/mo property tax, and so forth. That’s SS affordable, should the worst happen.
I bet it feels great to OWN your place.
” live almost free in 3 years of buying.”
I’m sorry, I mean to add that we expect prices to continue to fall to 1998 ish (at best) prices or beyond. We’ll lock in our forever housing expense.
Looks to be just another part of a campaign to pass houses off as inflation hedges. Too bad the real inflationary period in house prices is fading fast in the rearview mirror.
Yes.
The key word is “betting”. Sounds familiar.
Question
If you are a rich investor and think that hyperinflation is around the bend and that rents and property will outpace it. Why would you not leverage yourself and buy even more property given that interest rates are being suppressed by the FED.
My guess is that people with money can’t get any return in bonds or conservative investments and thus they are purchasing their homes for cash. Maybe they see further deflation and figure a home is a safer investment because you can live in it.
+1
Question of the Day
Is it a good time to invest in residential real estate?
(Results so far)
Yes 62.3% (455 votes)
No 37.7% (275 votes)
Are 62.3% of Americans brain dead robots?
a) Yes
b) No
Thank you
Nah, the agents have plenty of time to answer online surveys nowadays.
Update:
Yes 66.1 (1600 votes)
No 33.9 (821 votes)
Sounds like the realtors finally woke up, stumbled into the kitchen, had a cup of Folgers, and got online.
I don’t consider a owner occupied residence an “investment” so my answer would be no……
Good point. When I finally do buy, it’ll be to live in it, long term.
And even if they didn’t, what DO they mean by “invest”? Flip? Buy-hold-rent?
I used to love (despise) the RE listings in 2007 that would say “Great Investment” on them. Let’s see…the market has topped appreciation-wise and, based on income potential, this place hasn’t cash-flowed since the early 90s, so who exactly is this a great investment for??
For the seller of course! Duh.
Reverse those numbers and I might think about it!
The 62% were voted by sellers. 37% by buyers.
There is plenty of helicopter drop money flowing into San Diego real estate these days.
We visited the Hotel Del a couple of months ago, and it was largely deserted at the time. Maybe San Diego tourism has subsequently picked up?
Real Estate; Some like it hot at the Hotel Del
* February 7th, 2011 3:24 pm PT
Just when you thought all real estate was a market to be avoided, San Diego has received a wake-up call today.
The Hotel del Coronado faced with a loan deadline of $630 million this week, restructured their loans and reorganized their partnership, saving this California landmark, that was once the set location for the 1959 movie, Some Like It Hot.
Main principals in the transaction were the Blackstone Group LP which will have a 60 % share in the property while two limited partners, Strategic Hotels and Resorts and KSL (the hotel operator) will have 34.3% and 5.7% respectively. Kohlberg, Kravis Roberts & Co will no longer be involved with the hotel.
Deutsche Bank has agreed to supply a $425 million loan as part of the new workout.
Blackstone Group reported in September, 2010, real estate fee earning assets under management totaling $24.3 billion.
…
‘We visited the Hotel Del a couple of months ago, and it was largely deserted at the time.’
At $400+ per a night I can’t see why that is.
“I only need the room for about 8 minutes. What do you charge for that?”
Will the sheets need washing?
Homeowners face ‘new normal’ in housing bust
By Julie Schmit, USA TODAY
MERCED, Calif. — Life has changed in ways big and small in this central California county, which is still trapped in the wreckage of a housing boom that went bust five years ago.
The median home price, $116,000, is down 68% from its peak in 2006. Three of five homeowners with a mortgage here owe more on their loans than their houses are worth, compared with about one in five nationally.
Socked by a sharp loss of property and sales tax revenue, Merced County and its cities have slashed budgets, workers and services. The grass is being mowed less often in city parks. A senior center is open fewer hours.
Families have adjusted, too. Forget dreams of making big bucks on California real estate. Many here now count the years — guessing, really — until they’ll no longer owe more on their homes than they’re worth.
“We’re in survival mode, waiting for recovery,” says Stephen Hammond, 42, pastor at Bethel Community Church in Los Banos, a Merced County town of 35,000 amid cotton and tomato fields.
More cuts are possible because of looming budget deficits, Merced government officials say. Dozens of other communities nationwide may face the same tough choices in the wake of huge drops in home values, which often lead to less property tax revenue. In Merced, the impacts have hit hard, and they hint at what may be to come for others.
For Merced County government, property taxes are the No. 1 source of general fund revenue, says Scott De Moss, deputy county executive officer. Property tax revenue has dropped 25% during the past three years. Almost 15% of the county’s workforce has been slashed. Social and mental health service positions took the biggest hits, officials say.
…
It’s a ‘perfect storm’ of falling home prices and falling property tax revenues in Merced! Too bad that’s the ‘new normal’ for California municipalities’ local tax bases.
Too bad that’s the ‘new normal’ for California municipalities’ local tax bases ??
Which is likely why Meredith Whitney made the call she has on the muni’s…How would you like to own some muni bonds issued by Merced California right now…
When I see a sentence like “Los Banos…amid cotton and tomato fields,” I have a pretty good idea that the local tax base is more likely to need government services than to pay for them.
And when I think of Los Banos, I think of a close English language equivalent: The Bathrooms.
The folks who are currently criticizing Meredith for questioning the soundness of muni’s, given their stellar track record, clearly don’t understand the Black Swan phenomenon.
The reason for the squalls of outrage is that Whitney’s statements are quite plausible.
If her statements were laughably wrong, they would be ignored.
The relentless bloviating makes me think that they doth protest too much.
“We’re in survival mode, waiting for recovery,” says Stephen Hammond, 42, pastor at Bethel Community Church in Los Banos, a Merced County town of 35,000 amid cotton and tomato fields.
I’m not a southern man, but I know that cotton is a real thirsty crop, and besides that there’s no irrigation water in the southern central valley due to the ninth circuit court’s defense of the Delta smelt.
Should be plenty of water this year. Greater than normal snowpack this winter in the Sierras, and in the Rockies that drain into the Colorado River.
But you never know from one year to the next.
“Should be plenty of water this year.”
There’s available water if the Tracy pumps are allowed to run. It’s uphill from Tracy to Bakersfield.
I hate that term….”new normal”. It’s like trying to make your sh1tty situation more bearable by making it seem hip.
“Sure I’m stuck in mom’s basement, living off of food stamps*, but hey it’s the new normal!”
*disclaimer: I am not stuck in mom’s basement, living off of food stamps. Though in today’s economy who knows what next year will bring?
Or maybe its just good old fashioned stoicism?
Looked at the classifieds today; not that it took time to sift through all the help wanted ads. 7 help wanted ads in our local rag; one that serves a tri-county population of around 250,000! One caregiver in Prineville(45 minutes away), one super-type job in Sunriver(same distance), one cement mixer operations manager. I know that print is dead, but SEVEN jobs????
There is not going to be any “recovery” in the job market, which means there won’t be any “recovery” in the housing market.
We sometimes hear correctly that small businesses are where 70% of new jobs come from. These days, it just won’t be happening. The combined forces of competition from BIG established businesses, together with the burdens of rent, insurance, payroll, taxes, and regulatory compliance are simply too high. Uncertainty about taxes and business conditions in general would prompt most sane people to forget hiring.
New businesses will be out of spare bedrooms and garages and personal computers be doing their advertising and bookkeeping ” in the cloud”.
There may be one or two equity sharing partners, but few if any “employees”. Those “jobs” the eggheads in Washington are so eager for everyone to believe are around the corner, are actually six feet under in the cemetary of yesterday. They won’t be coming back in our lifetime.
And most of these new “businesses” will fail in the first 5 years leaving their owners in a bigger hole than when they started.
Most people are not well suited to be running their own businesses. Most lack one or more essential skill or character trait or the resources to sustain the startup curve.
Charles Hugh Smith
Pundits and politicos promote a magical myth: a coming small business hiring boom. That fantasy is completely disconnected from the harsh realities of private enterprise.
Regardless of their ideological persuasion, pundits and politicos reliably repeat the mantra that “small business is the engine of jobs growth.” The mantra is followed by the pundit-politico’s belief that a “small business jobs boom is right around the corner.”
I have news for the pundits and politicos: ain’t gonna happen. Why? The answer cannot be found in the manipulated and massaged Bureau of Labor Statistics numbers (have any real jobs been created, net of jobs lost, in the past year? Who knows?) or in the punditry’s Cargo-Cult-like belief in a mythical “small business jobs machine” that they have never experienced and know nothing about.
While a handful of the new crop of politicos are entrepreneurs, most Washington denizens are attorneys, the offspring of wealthy or politically connected families or people who have lived off the government at some level their entire lives. Most have never had a customer or client or had to borrow off a credit card to make payroll. (I have; any pundits who can honestly raise their hands for that one?)
Pundits come in two flavors: the academics, happily making mud pies in the moat surrounding their secure Ivory Tower, and the loud-mouths who have screeched louder and longer than the other media-monkeys. All know less than zero about actual small business.
To understand why small business isn’t hiring and won’t be hiring, you need to understand the psychology of this era and the systemic pressures on all small businesses which don’t live off Federal government contracts. In a very powerful sense, those businesses which live from one government contract to the next are not private businesses at all: they are merely proxies or extensions of the government. Their non-governmental work is either trivial or non-existent.
So when some government set-aside program sanctions $40 million or whatever for “small business,” it’s no different than opening another government office: the only difference is the employees are not Civil Service. The competition is not between private-sector and government, it’s only between rival government contractors.
What pundits and politicos don’t get is small business knows the “recovery” is totally bogus. Why hire somebody who you’ll have to lay off a few months from now? Laying people off is emotionally painful–you dread it, tire of it, are wearied by it. This is a real human being who is losing their job, not some ginned-up statistic hyped by some think-tank-pundit pulling down $15K a month for dishing whatever flavor of propaganda he/she is paid to churn out.
The Washington establishment–the Fed, the Treasury, Congress, the Obama Administration– seem to believe they’ve successfully pulled the propaganda wool over Americans’ eyes, and that the yokels actually believe “things are getting better and better every day and in every way.”
Only the yokels without clients, customers and payrolls can believe the propaganda.
Meanwhile, back in the real world, small business income is down 5%. Small Business: Still Waiting for Recovery.
According to data from the Bureau of Economic Analysis. Proprietors’ income– the profits of unincorporated businesses such as partnerships or individuals who work for themselves–is down nearly 5 percent from two years ago, while corporate profits have jumped 21 percent in that period.
About 19.9 million partnerships and sole proprietorships with no employees existed in 2008, the latest year for which U.S. Census Bureau data are available. That number fell almost 2 percent from the previous year.
In a private-sector workforce of about 106 million, that’s about 19% of all people with a job. Recall that the BLS counts you as employed if you work one hour a week or if you’re “self-employed,” even if you aren’t making a dime.
Only in the Fantasyland of propaganda does nobody notice that self-employed people who are seeing revenues and profits fall do not need to hire someone: they’re sinking all on their own.
Only in the Fantasyland of propaganda does nobody seem to notice that for every celebrity-chef restaurant opening to gushing hype in Manahattan, West L.A. or San Francisco, two other restaurants quietly closed.
Small business understands uncertainty is now permanent. That’s why 26% of all new private-sector hires are temporary–and if we subtract the bogus phantom jobs created by the BLS “birth-death model,” then the number is probably more like a third or even half.
Small business understands that the “recovery” is merely a Federal towel stuffed in the gaping hole in the rowboat’s leaky planks, and that it’s literally insane to hire workers when your revenues could evaporate next month.
Small business re-discovered it could do more with less. Once businesses trimmed payrolls to survive, they discovered they could make more money for themselves and do so with fewer people. Why add to staff when all that means is transferring your own paycheck to someone else?
Small businesses are closing, not opening. Rents have barely dipped, local government taxes and junk fees have skyrocketed, and the complexities and costs of the new healthcare bill have all added systemic pressures on every small business: it’s either adapt quickly and successfully or perish, and many are choosing to close down and quit working so hard for so little payoff.
When leases expire, the doors close, and no one leaps in to pay boomtime-level rents, and heavy business licence and permit fees. The only people insane enough to hire anyone are three guys working in a living room somewhere, trying to hire a few Javascript programmers to finish their app so they can cash out by selling the “company” to some larger enterprise.
The programmers are independent contractors who have to take care of their own healthcare and taxes, or they’re young and single so the healthcare insurance costs are modest–if they even bother with buying insurance.
Nobody’s hiring for the long-term for the simple reason that there is no long-term: we’re either selling the company as soon as we can, or we’re waiting for the next dip in revenues to close down before we lose everything.
Local government has grown accustomed to small business being uncomplaining tax-donkeys, silently paying every junk fee and every additional tax the government levies. Only a funny thing happened on the way to local government’s plan to fill the shortfalls in its own revenues by taxing small businesses even more: they’re closing down.
The reason is simple: why work for free? This is incomprehensible to both local governments, who expect all those “filthy-rich small-business Capitalists” to pay higher taxes and fees, and the safely remote-from-the-real-world pundits and politicos.
These members of the academia-think-tank-media-politico Cargo Cult have a magical belief in a mythical “small business” which is anxious to get out there and create new jobs because “to get rich is glorious,” as if “getting rich” is even an option for 90% of real small businesses.
In the real world, small businesses aren’t getting rich, they’re going broke and closing down to save whatever remains of their sanity and assets. You want high-tech and “clean energy” jobs? Well, how about MySpace laying off half its 1,000-person staff? How about Evergreen Solar closing its Devens, MA plant, laying off 800 workers and moving production to China? Did the pundits honestly think that globalization was over?
Memo to pundits and politicos: you worship at the altar of Capitalist profits driving small business–get real. People will do whatever they have to in order not to go broke.
That’s why the three guys or gals aren’t renting an office–who needs the overhead? They also don’t have health insurance: who can afford $1,000 a month for crappy, confusing “care” young people rarely even need? Better to pay cash.
And they aren’t hiring “employees”: they’re paying their friends with equity shares, or cash, and paying their own taxes is up to each free-lancer.
That is the new model of American entrepreneurship: no office, no overhead, no employees, no health insurance, no business travel. That’s the only way any new enterprise can survive.
Everyone who buys into the myth and pays absurdly high rents, junk fees and healthcare insurance will be ground down and bled dry. The only exception are those well-connected enough to run a pipe into the limitless lake of Federal money. Yes, 40% of the lake is borrowed from our kids, but no matter–the “recovery” is real, and this stone with a crudely painted radio dial is in fact a working radio. It’s magic. You just have to believe.
Small business can’t afford to believe in myths and fantasies. They are dealing with the harsh reality of adapt or die.
Sounds like yet another argument in favor of a single-payer universal health care system.
Sounds like yet another argument in favor of a single-payer universal health care system.
That’s what it sounds like to me too.
And, here I go, striding boldly out on a limb with the following prediction:
AZ District 8 Congresswoman Gabrielle Giffords was shot a month ago today. She’s now in a rehabilitation hospital in Houston.
In the course of her rehab, she will no doubt come into contact with other patients who are having problems with their health insurance coverage. Not to mention the families of the other patients. I think they’ll have a few things to say to Gabby. And to her husband, Mark Kelly.
Recall that in his January 12 Tucson speech, President Obama announced: “Gabby opened her eyes!” That got a big cheer from the crowd in McKale Center — and from us cool kids who were sitting outside in Arizona Stadium.
So we know that Gabby’s eyes are open. Wait ’til she opens her mouth. I think she’s going to have more than a few things to say about private health insurance in this country.
nice post…enjoyed it
Nice post Rancher….
Let’s revisit rancher’s post in four or five years. Never covers a VERY long time.
Yes, that was a great post, Rancher.
I absolutely agree with Alpha and Slim about this being a perfect example of why we need universal healthcare, though.
Is it a revival of “animal spirits” or a revival of “easy money hair of the dog”? Hard to tell…
* HOMES
* FEBRUARY 8, 2011
Cash Buyers Lift Housing
Bargain Hunting Boosts Prices in Depressed Cities; Broader Asset Rebound Spreads
By S. MITRA KALITA
Buyers in markets around the U.S. are snapping up homes in all-cash deals, betting that prices are at or near bottom and breathing life into some of the nation’s most battered housing markets.
Cash buyers represented more than half of all transactions in the Miami-Fort Lauderdale area last year, according to an analysis from real-estate portal Zillow.com. In the fourth quarter of 2006, they represented just 13% of deals. Meanwhile, downtown Miami prices rose 15% in 2010 from a year earlier, according to the Miami Downtown Development Authority.
The percentage of buyers in Phoenix paying cash hit 42% in 2010—more than triple the rate in 2008, according to Raymond James’s equity research division.
Nationally, 28% of sales were all-cash transactions last year, according to the National Association of Realtors. The rate was 14% in October 2008, when the trade group began tracking the measure.
The jump in real-estate purchases made with cash is another sign of the revival of animal spirits in the U.S. economy.
…
Your typical slum property lost about 80% when compared to the peak in late 2006. Now you get a slum property for around 25 - 60K. I can’t figure out why in the world anybody would want to own a house in the ghetto. Nobody there pays any rent and you certainly wouldn’t want to live there yourself. So the value seems to be near zero. You can’t live there, can’t make any money with it, but infestors are snapping ‘em up. On the upper end prices didn’t drop as much. What could be had for 1 million in 2006 is probably about 600 - 700K today. Still, I know many people that bought those $1 million properties at the peak. Now they’re all stressed out about their finances and reitrement and not having any money and being under water. I told you so!!! One friend of mine told me in 2006 that I sounded like his grandma that always sees armagedon around the next corner and that he wants to live NOW! Fast forward 5 years and things didn’t turn out so swell. My wife’s cousin from Venezuela had to buy an investment property in 2006. A condo with ocean view for $600K. Nice place, but association fees are $1000/month + taxes about another $1K/month. The loan is $2800/month (not sure how much she put down, didn’t ask) for a grand total of $4800/month. She rents the place for $2300/month but had to go through an eviction recently. Took her 6 month to dislodge the deadbeat. My advice was to negotiate a short sale. But no! She actually believes real estate will come back in 5 years or so. How insane is that? Not sure, but for now we have a stock maket bubble like it’s 1999. Will the be the biggest and final bubble in the series?
“I can’t figure out why in the world anybody would want to own a house in the ghetto.”
1) Slum lords.
2) People who can’t afford to own a house anywhere else.
to 1. You be hard pressed to collect any rent. I have 2 friends that own(ed) slum property. Extracting rent is near impossible. You are still liable for taxes no matter if you collect rent or not.
to 2. If you can’t afford a house elsewhere then rent. Why put your life and property at risk? Have your car burglarized twice a year, get mugged at knife point, have your home broken into while at work.
The Miami ghettos are paricularly nasty and violent. Not all poor neighborhoods in the US are like this. I have the feeling many investors from out of town/country have no idea what they’re getting into.
1) Perhaps they’re thinking they’ll get Section 8 guarantees. (yea, right)
2) One thing I think we’ve lost in the last generation or two are the “working class” type neighborhoods (that are not ridiculously far out in the “drive till you qualify” Siberia).
It takes a certain type of person to be a slum lord. You damn sure aren’t going to be getting your rent checks in the mail. And good luck stopping by after work in your BMW to collect from them in person.
I knew a guy who was an old-school slum lord. He collected his money by showing up at their front doors every month with his huge dog and a very visible .38 in his pocket, and he didn’t leave til he got his money. He was a scary looking dude even without his props, looked like he might run a motorcycle gang.
That’s the kind of guy who makes it as a slumlord. If you aren’t one, don’t bother.
And you can’t let even one renter slide on the rent. If one doesn’t have to pay then none of them have to pay.
The word gets around fast; There’s lots of bragging rights connected to sticking it to the man.
One thing I think we’ve lost in the last generation or two are the “working class” type neighborhoods
…because the “working classes” have been outsourced to China in the last generation or two.
” knew a guy who was an old-school slum lord. He collected his money by showing up at their front doors every month with his huge dog and a very visible .38 in his pocket, and he didn’t leave til he got his money. He was a scary looking dude even without his props, looked like he might run a motorcycle gang. ”
sounds like you’ve got a reality TV show on your hands.
It would be interesting to get some data on an “Archie Bunker” house in Queens over the past 40 years. Back when the show was aired that house was supposed to be an standard example of a blue-collar worker’s place.
Hey i knew a guy like that too, except this one didn’t have the biker look and left his jack russell terrier at home. The slumlord business chewed him up and spit him out. However, he scammed his way through a bankruptcy and is looking to get back in the game. This time he “knows what to do”.
I knew a guy who was an old-school slum lord. He collected his money by showing up at their front doors every month with his huge dog and a very visible .38 in his pocket, and he didn’t leave til he got his money. He was a scary looking dude even without his props, looked like he might run a motorcycle gang.
I’d like to see that type of guy collecting TARP funds. What color would Jamie Dimon’s underwear be after a visit?
“I’d like to see that type of guy collecting TARP funds. What color would Jamie Dimon’s underwear be after a visit?”
That would be difficult to answer. They would probably be wedged so far up his a$$ that it would take an excavating team 3 days just to retrieve them.
“And you can’t let even one renter slide on the rent. If one doesn’t have to pay then none of them have to pay.
The word gets around fast; There’s lots of bragging rights connected to sticking it to the man.”
Sounds disturbingly similar to raising kids…
“Sounds disturbingly similar to raising kids…”
I think that’s what slumlording is like.
whyoung wrote:
One thing I think we’ve lost in the last generation or two are the “working class” type neighborhoods
Comment by oxide
2011-02-08 08:15:16
…because the “working classes” have been outsourced to China in the last generation or two.
—————–
Precisely.
“I can’t figure out why in the world anybody would want to own a house in the ghetto.”
1) Slum lords, check.
2) People who can’t afford to own a house anywhere else, check
3.) Amateur and wannabee landlords
4.) Hope and change enthusiasts
“I can’t figure out why in the world anybody would want to own a house in the ghetto.”
1) Slum lords, check.
2) People who can’t afford to own a house anywhere else, check
3.) Amateur and wannabee landlords
4.) Hope and change enthusiasts
Speaking as a Tucsonan who’s seen a lot of those who’ve wanted to own houses in the ghetto, my vote is on item #3. And, oh, do those folks get an education in the realities of landlording.
Too bad. They could have saved themselves a lot of misery by checking Leigh Robinson’s book, Landlording, out of the library. Talk about a cold shower in print.
That book’s 400-plus pages of landlording realities (and horror stories) was enough to dissuade me from ever wanting to own rental property.
Not to mention hearing my former landlady complain about the problems she had with her deadbeat tenants. Those stories still have quite the power over me. As in, the power to prevent me from seeing an “investment property” as anything other than a gray hair and ulcer producer.
Hey Slim,
Up here in Mesa I have a BIL who together with his wife now have 23 rental units. Two tri-plexes, three duplexes, and 17 standalone single family homes. He started with one tri-plex about 18 years ago. This is his full time job, and she has a part-time one elsewhere, primarily for the health-care benefits.
Here are some of the characteristics of a successful long time landlord in Mesa AZ:
1. All of the units are within 5 miles of his own house. He is the property manager and handyman repair guy. If there is a choice between a cheap repair and a longer term repair, it is always the “better” repair for the long term that gets done.
2. When he paints, all the units get the same color interior paint and the same color exterior paint. He buys in volume.
3. He doesn’t do carpet. All the units have the same 18″ ceramic tile throughout. He buys in volume. The same local guy has installed all the tile and does any repairs as necessary. If the tenants like carpet under their feet they can buy area rugs on their own.
4. All the appliances are color white and he’s been buying replacements since day one at the same place.
5. He knows enough Spanish to carry on a conversation about when the rent is due and how much, and what number to call if something breaks.
6. Every property was bought at a price that was immediately cash flow positive after insurance, taxes, and mortgage, etc.. They have “penciled out” from the git-go. In 2006 he sold some units for cash because the prices went “kind of ridiculous” in his words, and he has used the cash to buy foreclosures since then.
7. He will only buy a property where the tenant has his own parking area and can walk directly from their car into their place. No second level stairs, no community parking. He feels this type of unit will always rent faster than an apartment building as people want to be able to park in the same place and carry things like groceries and babies with minimal walking.
8. When someone moves out, he and the wife clean, scrub and paint and make any necessary repairs so that the place is spotless and running smooth before anyone is shown it.
9. The rents are mostly in the $700-800/ month area.
10. The first time rent is late he puts them on the twice-a-month rent plan, coinciding with their paydays. Evictions happen but are relatively rare.
My BIL never graduated from high school. He and his wife live very frugally. He got his start-up money from savings from work at grocery stores, light construction, and car washes. Out of 23 units today, 22 are rented and current.
Hey, cobaltblue in Mesa! A sunny Tucson greeting to ya!
Thanks for the story. Looks like your BIL knows what he’s doing in his landlording biz. And the fact that he and the wife live very frugally can only help.
Your BIL seems like he has a good head on his shoulders, cobaltblue. Good for him.
HOA fees + taxes = $2K a month? You’d be hard-pressed to be cash positive on that place even if someone gave it to you for free. No, these folks were looking for flip appreciation, with gravy rent in the meantime.
OX:
We said years ago Condozes in Miami could be sold at $1 each and still be too expensive.
Mike:
How come these nut case landlords don’t give the tenant their deposit money back and money to move if its done in 15 days…Hmmm lose $3000 vs $13,800 plus legal fees
I think that’s the whole point — the deadbeat didn’t want to move on; from their perspective, they’d rather kiss their deposit goodbye seeing as how it bought them 6 months free rent.
Free houses for cops! That is just plain smart…I am 99 pct confident that if Detroit morphed into a low-crime city, its economy would reinvent itself.
Detroit will try to lure police with deal on houses
The mayor of Detroit unveiled an unprecedented plan Monday to offer 200 tax-foreclosed homes in two neighborhoods to officers.
By Leonard N. Fleming
The Detroit News
DETROIT — Mayor Dave Bing says he’s so serious about wanting to make Detroit more attractive, livable and safe, he’s practically giving away homes to lure police officers back to the city.
Bing unveiled an unprecedented plan Monday to offer 200 tax-foreclosed homes in the East English Village and Boston-Edison neighborhoods to officers. The plan calls for officers to pay up to $1,000 for the homes while receiving as much as $150,000 apiece in grants to rehabilitate them.
Backed by federal funds, the “Project 14″ plan could be a model for the nation, Bing said. The proposal’s name refers to police code for “back to normal.”
“Detroiters want to live in safe, stable neighborhoods, and they deserve no less,” Bing said. “This is just step one of many things that we think we’re going to have to involve ourselves in as we bring our city back.”
…
How is cash “easy money hair of the dog?”
I guess I hold a more traditional definition of “cash;” that is, an wholly owned (not on margin) asset that, given a couple weeks, could be converted in physical Bennie-bills.
First….person to borrow Shilling’s new The Age of Deleveraging from my library. Knowing my track record, how on earth am I going to finish 500 pages in 2 weeks?
By not sleeping?
And your HBB Librarian is the 8th person to reserve this on-order book at the Pima County Library.
gary-shilling-on-the-age-of-deleveraging -Another point of view.
http://www.dailyfinance.com/story/streetwise/gary-shilling-on-the-age-of-deleveraging-video/19721159/
Can’t sleep… I blame Dow 12,000 smoke and mirrors….
Can’t sleep…I’m still competing w/med students whose Daddies are buying their houses for four years while they attend med school here and other all cash offers. Sometimes these Daddies are from oil producing countries. Sometimes they’re American.
And this is why the whole jobless numbers only matter if you’re looking in the areas where the jobless live.
Also, a 2nd friend in 2 mos announced they’re moving out of the area to a better job. One I really wanted to invite here to the HBB as he has a very impressive background and he so enjoys a rowdy discussion. I still could refer the site. We just won’t be able to talk about it afterward and I so love hearing of his experiences. Both outward bound friends’ presence in my life and many others around us will be missed.
CarrieAnn
I feel for you. Even though we don’t need a mortgage (we’ve rented a good portion of our lives away, waiting to re-enter) we are in competition with flippers. I know the frustration, believe me.
Maybe it’s just my bias, but I get nervous when OPEC Dads are buying houses for med students. Hamas has MD members. No halos for med school.
Don’t worry… be happy…
Found a “good deal” on CL yesterday. It presented itself as “Not a short sale; not a foreclosure!” and as owner, rather than broker, advertised. 125k for a nicely located dump is how I would describe it.
Little bit of snooping turns out the place is owned by Gorilla blah blah, llc. They bought it 11-10-2010 for 75k. Listing it now, not three months later, for 125k.
First of all, how did they score it for 75k? How is it a “good deal” now at 50k more? At 75k, it sure was not visible to the general buying public, as I have been looking at foreclosures in that price range and I sure did not see that one.
I believe it was snapped up before any average Joes got to see it.
And looking at the owners, Gorilla, inc. I see tons of consumer complaints, mostly about them not returning escrow deposits.
Those f’n guys! Flipping in a crashing market apparently takes a certain unscrupulousness plus an insider’s line on the deals.
Awaiting, for all your trying to find a good deal, IMO all you or I get to see, regardless of our respective locations, are the scraps that noboby with connections will touch. Keep your standards high and your price point low; someday soon you will be rewarded, I hope.
mikeinbend
Your experience echos mine. I cruise the MLS every day, and I see these flips show up that I had no knowledge of, and I am licensed, so I see a tad more than J6P.
It infuriates me to no end, that a 1960’s ranch is turned into a one-story starkitechure want to be McMansion, and the upgrades don’t match my taste. Add to the fact they’ve ruined the house (foam window frames on a 60’s hse, yuck), the fact they tack on $200K for $30K worth of work, sometimes 30 days from their purchase date. The insiders get any deals first.
I hear ya. But one good signal, is a home I’ve been eyeing is down $35K. It’s a start. Housing is still way overpriced in So Ca.
I’m still letting the flippers have their glory days in the hot sun. I’m hoping that the prices will get real enough to where we don’t need to get the best deal in town to still get a decent place at a decent price, but I’m also in So.Cal, so that may be a while.
At 75k, it sure was not visible to the general buying public, as I have been looking at foreclosures in that price range and I sure did not see that one ??
No way of knowing for sure but I will take a guess…The reason you did not see it is because it was a “bundled” purchase (purchasing a portfolio of foreclosed houses from one lender..Maybe 20 at a time)….This has been going on for some time now and there is no lack of investment groups that are active in this area…
Last time around it was the Resolution Trust Corporation, a government entity, “giving away” the properties to well-connected entities. This time it’s the banks doing the same thing.
“The reason you did not see it is because it was a “bundled” purchase (purchasing a portfolio of foreclosed houses from one lender..Maybe 20 at a time)….”
I’ve always thought that when the shadow inventory is finally unleashed, much of it will be sold like this.
It helps the rich and well-connected, and screws the little guy.
Win-win!
it sure was not visible to the general buying public…sold as a bundle…
Let me get this straight. Various and sundry banks and bottom feeders are secretly passing their inventory a few rungs up their own private property ladder before it is finally released to the public at $50K above the bottom price. They are forcing even the smart money into being a Greater Fool.
In other words, why should I bother to log onto HBB and look for a bottom? For the hoi polloi, there IS no bottom. I may as well resign myself to renting a f’in floating blox of air until I retire to Podunk. Maybe if I go far out enough into the sticks, the bottom feeders won’t care, or maybe they’ll run out of money by then (not likely with HeliBen in charge.)
It helps the rich and well-connected ??
Kind of I guess but it is really more about research and banging on bankers doors…
From the lenders perspective they unload a lot of problems in a very short period of time…Just think of the time and effort that is put into one short sale or foreclosure for a lender…It takes a ton of time and is expensive….These investment groups buying these bundles know this and that is there pitch…”We will buy all 20 for 1.5 mil in cash and close in 30 days, as is condition”…
I recall that the non-profits and municipalities get first crack at the REO’s. (Thanks for the wakeup.)The bundling is smart, but from the end users point of view, the houses are priced to high. Profit is one thing, insane profits is another. Way too much showy cosmetic work, and the $15K roof needs replacing, pool equip shot, etc…
I read/heard that in So Ca you should subtract 25% of the Recorder’s sold price on these homes, to get to what the flippers really paid for them. A friend is a Contractor and told me some need 35%.
The flips around here are sitting on the market. I don’t think Spring will bring them the ridiculous prices either. Rates are almost at 5%, and people don’t seem to be in a rush to get screwed.
Yes, we’re seeing tons of flippers around here, too. I’ve seen a few of them ask $200K++ more just a few months after buying them!!! Needless to say, I absolutely despise flippers — they are some of the worst parasites on this planet. As if they didn’t destroy enough during the first part of this bubble…they are cockroaches.
Could someone remind me of the movie Professor Bear was providing us trailers for just prior to its release? It was the movie w/insider commentary on the 2008 market collapse. I finally have someone interested in the road trip to get there and the title has slipped my mind. Thanx.
Inside Job (?). Bear will be along shortly to fill in the details.
Thx oxide!!! Have you seen it? Anyone else?
I just recommended this to some attorneys in my circle who do corporate securitizations. I guess they have been too busy as of late to get out to see it.
Inside Job Trailer 2010 HD
Highest Rated Comments
“Agree completely with WESTLOS. People are kept uninterested, so the elite can keep doing what they do. All we can hope for that more and more people wake up.”
On Netflix it’s available March 8th. I must see it.
Here’s one of the more interesting comments from the reviews:
“The biggest shock for me was how enmeshed the top gun academics (Harvard, Columbia, UC Berkeley) are in the scheme. Watching them squirm was high drama; I only wish they would be made to squirm in real life. This movie should be required viewing for anyone contemplating a business degree. Also, it should be required for anyone who votes or consumes a financial product.”
Thanks, Professor.
I found I could preorder it on Amazon. I think it’s available the same date it’s on Netflix. I’m going to have a little movie dinner party to help get the word out locally.
The joke of the day…
Feb. 8 (Bloomberg) — Homebuilder executives and economists predict a post-Super Bowl bounce in demand for residential construction as Americans turn their attention from football to another national pastime: house hunting.
buy now real estate never goes
down…
Second Joke of the day
Retirement in Ireland anyone
Ireland is more affordable than it has been in more than a decade, and I predict that it is going to become even more affordable over the coming couple of years. This country is one of the world’s longest-standing overseas retirement havens. It is also one of the most charming places on earth to think about spending your retirement years. As prices continue to drop, it’s worth a new look.
yahoo.com/s/usnews/20110207/ts_usnews/irelandbecomesanaffordableretirementlocale
Cheap and beautiful may be. But not a great weather country IMO.
I’ve always wondered this. If you’re not tied to an office, aren’t too susceptible to cabin fever, and want to stay quiet, retirement in a not-great weather country may not be a bad thing. It’s not as if you have to bundle out of the house every day.
Depression and alcoholism. Get some sun.
The trouble with retiring to another country is that it would be hard to make friends with the locals, as a retiree from another land with little in common with them, so you’d end up either alone or trapped in a little community of expatriates, b!tching about how lazy the locals are. Either scenario seems bleak.
Actually, now that I think about it, they pretty much describes retiring anywhere.
The trouble with retiring to another country is that it would be hard to make friends with the locals, as a retiree from another land with little in common with them, so you’d end up either alone or trapped in a little community of expatriates, b!tching about how lazy the locals are.
I’ve heard of this very thing happening to Americans who’ve retired to places like San Miguel in Mexico.
I also had a buddy who moved to Costa Rica for a few years. Place drove him so batty that he moved back to the US of A. Ditto for my buddy who went to Chile with her now ex-husband.
The US of A isn’t perfect, but in comparison to a lot of other countries, this place is paradise.
“they pretty much describes retiring anywhere.”
Your travels are nothing like my travels!
This is the only time of the year when we can suffer boredom in retirement. It usually sets in on about the third straight cloudy, damp, chilly day. I can’t imagine living north of 33 degrees latitude unless you had the necessary bucks to fund an annual 3-month winter getaway to some tropical or near-tropical destination.
Fortunately it’s February, which means the Dark Times are over for another year.
The US of A isn’t perfect, but in comparison to a lot of other countries, this place is paradise.
I think it comes down to one’s comfort level. There are parts of the UK I’d rather be in than parts of the U.S. The main thing is you shouldn’t move some place else expecting the locals to change to suit you. If the place suits you, stay. If not, then move some place else.
Well unless you are moving to the US of A. Then you are within your rights to expect the locals to change for you. And the locals get labelled intolerant if they don’t agree!
“The US of A isn’t perfect, but in comparison to a lot of other countries, this place is paradise.”
As much as I point out the faults every day, I will still have to agree with this.
But I complain, because if we don’t fix those “imperfection” we will end up like those other countries.
Blech! Within a week I’d throw myself off the nearest moor.
So they are suggesting the housing market will come back after the Souper Bowl, then?
All those great commercials make everybody want to go buy something.
It could work out well for housing bubble sitters, as if the masses go out and blow a ton of money on their credit cards, they will be less qualified to mortgage themselves up to their eyeballs over the foreseeable future.
“All those great commercials make everybody want to go buy something”
Yeah, for sure LP…I’m running out to Walmart and buying one of those cool Darth Vader outfist ASAP.
Don’t leave home without one.
“outfits”
sheesh…maybe I should buy one of those speech recognition software programs and do away with this confounded typing and spelling nonsense.
May the Voice be with you mikey.
Could not be more true, myself included. I was just waiting for em games to get ova. Now I can get back to buying houses for me the dogs and also gift one to help the poor Shepard boy in Goatswana. Ha Ha… F’in idiots.
Anecdotal evidence of the ’shrinkage’ in food packaging:
I am taking a cooking class at a local community college - we were making stuffed pasta shells. Instructor comes over, says she is surprised that normally there should have been 40 shells in the box, yet we had only 36. I commented ‘food companies are slowly decreasing the amounts in the boxes [as heard on this blog]‘, she looked stunned and plans to look at the quantities for the rest of the course.
FYI…the pasta was from a well known manufacturer, however, at this time the name escapes me.
A lot of this “less product in the same size container” has been going on for a while…
If you visit consumerist(dot)com and search for “shrink ray” you’ll get lots of examples.
For a while? How about for at least the last 40 years.
Thanks whyoung, I’ll be looking at that tonight. I have noticed the trend over the past 10-12 years with soda, chips (junk food), but now that I’m becoming aware of the food I eat, I’m getting stunned by it.
Amazingly there still is 16 ounces of pasta in a 1 lb box….
and Scott toilet paper still kept the 1000 sheets but made the width smaller…doesn’t fill the toilet dispenser anymore
Had to buy a new dispenser this year at IKEA. Sam’s Club and Northern both downsized to the point that both fell off of my spring-loaded old oak and brass end-held unit.
I guess it is OK since my ass doesn’t seem to get wider as I get older -
Nothing “anecdotal” about it, cottagechris. You’re just more aware it now.
Good catch.
The inventories of REO and shortsale still appears to be shrinking in northeast and mid atlantic states. Of course I’m skeptical as banks and GSE’s have been playing games with inventory for a while. I’m not convinced the shrinkage is a result of sales.
Inventory may be shrinking but interest rates aren’t. We are very close to hitting the 5% mark which will have a large psychological impact. People are used to the rate beginning with a 4 for quite a while now. Let’s see how it can handle a 5. That is quite a bit of buying power that has been taken away from Mister and Misses How Much A Month.
If The Fed loses control of the stock market then housing will get jackhammered. But maybe Priceline really is worth $440 per share and Lululemon is worth $80 per share. And perhaps I will succeed Obama as president.
Recontrust’s number of auctions (Bofa’s repo arm) scheduled in Deschutes County was 630ish in October. They have not sold a single one since then; at least not at auction. The number of scheduled auctions is now 435. What happened to 200 homes on that list? Anyone wanna postulate? I got nothin’ in way of explanation.
That’s right Mike. That’s the stuff I’m talking about.
While we’re on the subject of Rich People buying houses:
——-
The Shrinking Second Home: Real-Estate Resorts Pitch Cabins, Cottages as ‘Affordable Housing for the Affluent’ [excerpted]
They are building smaller, less expensive houses in resort communities… The goal is to avoid lowering the sales prices on existing homes and upsetting homeowners who paid more for their homes. The communities typically cater to people seeking a second, or third, or even fourth home as well as amenities like a clubhouse, beach access, or golf courses.
…On a private, 1,100-acre island, Turks & Caicos Sporting Club at Ambergris Cay… Mr. Schram…rolled out an option to build a small house…as low as $1.4 million. That’s 44% less than the $2.5 million previously.
…In central Florida, at Pine Creek Sporting Club, a hunting retreat where members shoot quail and deer and ammunition is included in homeowners’ dues, [anybody got any Cheney jokes?] new buyers can purchase cabins, starting at 1,500 square feet and $600,000. Previously, the least expensive option was to pay about $2 million. Private wealth manager Kim Fonseca, of North Palm Beach, Fla., purchased one of the new cabins, paying less than $700,000 for a three-bedroom cabin… With a smaller house, “I can lock it and leave” instead of keeping a staff on-site, says Mr. Fonseca, 55.
…In Bend, Ore., golf-club community Pronghorn has designed a series of homes starting at $700,000. That’s 50% less than the minimum required to buy a lot and build a custom home, the next cheapest form of ownership there… “The whole world doesn’t live in second homes that are over $2 million,” says Terry Russell, president of the development and management group at Atlanta-based Reynolds Co.
online.wsj.com/article/SB10001424052748704388504575419992461333122.html?mod=WSJ_newsreel_realEstate
———
I gotta stop reading WSJ. Sob stories of the rich and famous affect my health. The attitude alone is enough to pop a vein. They are jockeying for the cheapest 3rd home in an exclusive club.* Meanwhile, there are regular folk, like Carrie Ann, or me, or muggy, who don’t want a 4th home, or ammo, or white beaches. Just something to live in and raise children in. Or not to be packed into a f’in floating box of air. Are the usual suspect on this board going to tell me that Mr. Fonseca somehow “works harder” than the rest of us?
*I don’t believe this talk that building cheap houses in the exclusive development will prevent upsetting the other homeowners No, inside those clubhouses or the ammo store, those folks who own the larger manses will look down on the cheapies trying to buy into the lifestyle with a sneer and a
the way that homeowners look down upon low-life renters.
The cluelessness of the entitled may come back to bite them.
Eventually. But don’t hold your breath.
“The whole world doesn’t live in second homes that are over $2 million,”
Like, dude, not even 1/10 does.
“Meanwhile, there are regular folk, like Carrie Ann, or me, or muggy, who don’t want a 4th home, or ammo, or white beaches.”
Speak for yourself. The truth is I’ve been looking for a fifth home all this time.
‘Home prices are poised to fall in most markets this year, but 2012 will bring a rebound. Here are the 10 large metro areas that will record the largest price gains. Tacoma, Wash. Median home price: $240,000
Drop since market peak: 27.9% Forecast gain by 9/2012: 11.8%’
‘King County (Seattle) is built out,” said Lennox Scott, CEO of John L. Scott Real Estate. “A lot of the new single-family-home development is going into the Tacoma area…There will be a shortage of supply in the more affordable price ranges,” said Scott, “and that will put pressure on prices.”
http://money.cnn.com/galleries/2011/real_estate/1102/gallery.best_recovery_bets/index.html?source=cnn_bin&hpt=Sbin
‘September 11, 2008. ‘I cannot stress enough what an amazing opportunity exists right now for move-up buyers,’ said J. Lennox Scott, CEO of John L. Scott Real Estate. ‘The price gap between the more-affordable price ranges and higher price ranges has narrowed, which means these buyers can afford to ‘price jump’ into a new home at a premium value.’
http://thehousingbubbleblog.com/?p=4928
‘Home prices are poised to fall in most markets this year, but 2012 will bring a rebound.’
Serial bottom caller’s mantra: There will ALWAYS be a rebound NEXT YEAR.
someone will eventually be right. closer to bottom than top.
I agree. If you make the stop-clocked prediction that “the real estate market will come back next year,” and never count the number of years you were wrong against your prediction track record, you will eventually look like a clairvoyant.
I am wondering whether Japanese serial bottom callers have steadfastly kept up a track record of failed predictions over the past two decades?
…stopped-clock (ugh!)…my Freudian slip is showing again.
I remember seeing an episode of Columbo a long time ago. I never really loved that show so I don’t know why I was watching. Anyhow it was an episode about somebody that claimed they had psychic powers, I think. Peter Falk was in a room with another person. I can’t remember if it was a kid or an adult. He told the person to pick a number between 1 and 5. I believe the person picked 4.
Peter Falk told the person to pick up a telephone from a table. Underneath the phone was a note that read, “I knew you would pick 4″ or something like that. The person was shocked and impressed. They asked how he had done it. He explained that he had placed a note under 5 different objects. If you picked 1 he might tell you to pick up a certain lamp. If you picked 2 he might tell you to pick up a book.
I think the point of this little tale is to never forget just how dishonest people can be when they are trying to make themselves look good. And never forget how many people will be fooled. This is why I hate magic shows. I know it is all bulls–t and refuse to pay somebody money for fooling me when I know I’m being fooled. I already pay enough for politicians and corporate leaders to do that. I don’t need to pay David Copperfield or Penn and Teller to do the same thing.
stopped-clock (ugh!)…my Freudian slip is showing again
———–
Your slip could have been much more Freudian, and gotten Ben on a naughty list on everyone’s work computers.
at least penn and teller are funny.
We put my mom’s luxury pasadena condo on the market two weeks ago and none of us have any expectations of selling it let alone getting the price. we are just glad that at 87 she is in an independent living situation. it is lots of work for four grown children to get her comfortable in her new digs. I will only buy a one story place if I ever buy!
Hold it, there. Why did you put it on the market if you don’t expect to sell it?
Gosh Ann,
I wish I could afford So Pasadena. I am a huge fan of the area, and take the GoldLine all the time, leaving my car in the SFV, and hoping on the RedLine , making the swich at Union Station (Downtown Los Angeles).
So Pasadena is such a walkable city. Some incredible architecture and rich in a history. We love it.
Hey, my girlfriend’s husband wants to dump her and the house in so pasadena. he is forcing her to sell her hilltop home near the fwy. I told her do not sell. her mortgage is 1200.00. where is she going to find a rental for less than 2100.00? I’m not sure why any woman would obey a man like that, but polly is the expert. do tell.
I don’t understand the question. Are your mother and your girlfriend the same person?
Hi Ann!
FWIW, I think you guys could sell your mom’s condo in an instant. You might not get the bubble price (but you might, in So. Pasadena), but it is most definitely sellable in this market. The market is still **very** hot, especially in the more desirable areas.
Never trust a shifter.
J. lennox Scott
John L. Scott
‘The nation’s economic stress inched up in December because higher foreclosures outweighed lower unemployment, according to The Associated Press’ monthly analysis.’
http://finance.yahoo.com/news/AP-analysis-Foreclosures-apf-1281996596.html?x=0&sec=topStories&pos=4&asset=&ccode=
‘In December, Georgia joined the list of five most-stressed states for the first time, and Michigan emerged from the list for the first time.’
‘Michigan is benefiting from having missed the real estate bubble and bust.’
Bzzz… Wrong answer AP:
‘June 26, 2008:
‘The Oakland Business Review from Michigan. “Even Oakland County’s luxury home market faces a chilling effect from the general market freeze, as potential buyers can’t sell their current houses for the price they want. Conventional wisdom suggests the $500,000-and-up markets should be insulated from lower-end troubles, but such home sales fell off in the last two years.”
“Fewer people in Oakland County are ‘buying up,’ said Dennis Wolf, president of a niche real estate brokerage managing high-end listings. ‘The thing that’s most troubling to me is, you have buyers who don’t want to buy. There are a lot who would and can’t because they can’t get credit, but there are a lot who think prices haven’t bottomed out,’ he said.”
“‘It affects the high-end market in that they have a bottom house to sell. If they have to give on price too much, they won’t put their house in the market and make that move,’ Wolf explained.”
“There were 13 non-foreclosure houses sold in Oakland County this year in the $1 million-$2 million price range, and one that was in foreclosure…according to Farmington Hills-based Realcomp II Ltd.”
“In the $400,000-$1 million range, there were 41 foreclosures sold so far this year and 260 non-foreclosure houses sold in Oakland County.”
“‘If you have a three- to five-year supply of homes, you may have 50 or 60 competing with yours and only seven a year are selling,’ said Kelly Sweeney, CEO of Birmingham-based Weir Manuel Realtors.”
“The supply of houses in the $500,000-plus price range is as high as 60 months, reported Dan Elsea, president of Real Estate One. The supply of high-end homes was relatively high even when the economy was robust, he added. ‘That was because of builders, who prefer to build the upper end over the lower end,’ he said.”
http://thehousingbubbleblog.com/?p=4681
(BTW, this was one of my favorite HBB titles ever.)
“The Dreary Truth Presses Dark Upon The Homeowner” sez Ben.
The dreary truth: no matter how you slice it dice it or price it, your average house isn’t as special as you thought. And it will sell as such.
(btw, there are far more knives falling than there are slightly clueless rich folks with a spare Lichenstein hanging around gathering dust, WSJ notwithstanding.)
“‘It affects the high-end market in that they have a bottom house to sell. If they have to give on price too much, they won’t put their house in the market and make that move,’ Wolf explained.”
Wow, increasingly screwing those below you might some day have an undesirable impact on those closer to the top. Truly shocking.
Better hope they aren’t following events abroad, or you might be more worried than disappointed.
Charlotte NC somehow simultaneously makes both CNN’s ‘Best recovery bets’ list:
“Economic confidence is swelling in this financial-services center as planned corporate expansion and relocations hold the promise of job growth, according to Emma Littlejohn, a Charlotte-based consultant to the condo-development industry.”
and also makes CNN’s ‘10 foreclosure hotspots’ list:
‘ “Filings will likely remain at an elevated level until the overall economy improves,” said Will Corbett, director of North Carolina’s State Home Foreclosure Prevention Project.”
money.cnn.com/galleries/2011/real_estate/1102/gallery.latest_foreclosure_hotspots/5.html
“I cannot stress enough what an amazing opportunity exists right now for move-up buyers.”
A species of sheep that I thought would go extinct. If you are meeting your shelter needs right now, might you want to put any extra income into, say, saving for retirement, charity, anything but more energy sucking house?
It is sheer idiocy that affluent couples choose to uproot their kids and move to much larger houses two years before their kids depart. Rather than downsizing to smaller housing units ten years after their kids depart.
“It is sheer idiocy that affluent couples choose to uproot their kids and move to much larger houses two years before their kids depart.”
I love my inlaws, but…
“It is sheer idiocy that affluent couples choose to uproot their kids and move to much larger houses two years before their kids depart. Rather than downsizing to smaller housing units ten years after their kids depart.”
This describes my former neighbors whose daughters are now both away in college, so they’re hemorrhaging cash. They later admitted their folly and remorse to my wife.
I’m told the big house is for when the grandchildren visit. This apparently requires a McMansion.
Heh….. Those rationalizations by the arrogant and now humbled MortgageOwners made me projectile vomit at the time. Now those same lame rationalizations make me laugh.
Guess I didn’t get the memo. When the grandchildren visit me, they will get the camper.
When the grandchildren visit me, they will get the camper.
And, if they’re anything like my friends and I were during our “grandkid” days, we’d think that the camper was the coolest crash ever.
Much better would be to downsize to a smaller house and build a charming guest house in the back yard for $30K or so. Kids absolutely love tiny houses, and the empty nesters will appreciate the relative quiet.
More likely for when the kids boomerang without a job.
And if those kids’ parents were anything like mine, they’d make the home front as unwelcoming as possible. Just so I’d leave.
“And if those kids’ parents were anything like mine, they’d make the home front as unwelcoming as possible. Just so I’d leave.”
Hey Slim, they could have left you a midget sized Cannondale touring bike with training wheels on the front doorstep as a hint.
Lets find out where this guy lives and post both of these quotes in his local paper…Great catch Ben…
“…but 2012 will bring a rebound.”
I think I just hurt myself laughing.
U.S. Homeowners in Foreclosure Process Were 507 Days Late Paying
http://www.bloomberg.com/news/2011-02-07/u-s-homeowners-in-foreclosure-process-507-days-late-paying-at-end-of-2010.html
507 days into the “squat” and counting.
507 days is the average. No doubt that amounts to over two year’s worth of rent-free living in future REO for many (2*365 = 730 days).
How will the lenders work these loans out? Is there any sense about what percent will go to foreclosure versus forbearance, with the accumulated interest tacked on to the principle balance of the loans? I have to assume that if only $1 bn out of $75 bn worth of HAMP money was used, then not many of these FBs are anywhere close to the surface of the water, as otherwise many more taxpayer-subsidized workout deals would have been executed. After 507 (average) days of non-payment, loans that might have otherwise have been only slightly below water at this point are now 20,000 Leagues Under the Sea.
I can’t say how this will all be resolved, except that I firmly and rationally believe it will end badly.
Amy Hoak’s Home Economics
Feb. 8, 2011, 12:01 a.m. EST
More people choosing to rent, not buy, their home
Homeownership rates are falling as number of renters rises
By Amy Hoak, MarketWatch
CHICAGO (MarketWatch) — The share of Americans who own their home dropped again last year, but that decline is not being driven by foreclosures pushing people out of the real-estate market. Instead, more people appear to be rejecting the idea of a home as an investment.
About 66.5% of U.S. households owned their home at the end of 2010, down from 67.2% in 2009. The rate was 69% at the end of 2005, according to the U.S. Census Bureau.
The main driver of last year’s drop was the substantial rise in renters. The number of homeowner households dropped by just 30,000 in the fourth quarter last year compared with a year earlier, but 1.1 million renter households were added in that time period.
“We’re keeping steady on the total number of homeowners at 75 million, but all of the [household] additions are renters so the ratio goes down,” said David Crowe, chief economist for the National Association of Home Builders. It’s the younger demographics where homeownership rates are falling most, while the rate among those ages 55 and older have been more stable, he pointed out.
…
“…while the rate among those ages 55 and older have been more stable, he pointed out.”
Hmmmm, I wonder why that might be?
And statistics show that the majority of renters actually pay cash.
The Romans’ public works projects were epically great until the empire collapsed.
David Weidner’s Writing on the Wall
Feb. 8, 2011, 12:00 a.m. EST
The great muni panic
Commentary: Analysts are fueling a panic over municipal bonds
By David Weidner, MarketWatch
NEW YORK (MarketWatch) — Let’s talk hypothetically.
Let’s say you’re a king or a baron. Let’s say life is good in your kingdom. Crops are growing, commerce is buzzing.
But you’re a visionary and benevolent leader. You’re thinking about the future. You want to engage in some big projects: new schools, more police, maybe a new colosseum for jousting.
You don’t want to tax your subjects to death. So you borrow. You borrow from neighboring kingdoms. You borrow from feudal lords such as Sir Warren the Lionhearted. You borrow from your subjects in exchange for a tax break. You create small taxes to pay off these debts over a very long time.
Then you have a bad year. Crops are wiped out, famine and disease strike. But it’s not just one or two bad years; it’s three. You check the coffers. If it keeps going like this, you’re not going to be able to repay Sir Warren and those lenders at the rate you’ve been paying them.
But why should you panic? You know that as bad as times are, your kingdom is fundamentally sound. You can institute a pay freeze. You can delay some of that spending on the future. You can get creative about raising revenue — speeding tickets, charging to watch executions and so on.
There is some good news. Ye royale banker Lord Bernanke says things are turning around in the kingdom, albeit slowly. That sounds encouraging, but he’s not entirely reliable.
…
Yeah, but the Roman Empire lasted 1,500 years didn’t it? And a lot of the buildings are still standing.
“Yeah, but the Roman Empire lasted 1,500 years didn’t it?”
Roman civilization, maybe, but not the Empire. I thought that it was from Caesar to 476 AD (the fall of Rome). Even if you include the time after the fall of the western Empire, it still wasn’t that long. Perhaps some historians can shed some light with some dates?
The mythology says that Rome was “founded” in 753 BC when orphaned brothers Romulus and Remus (suckled by a she-wolf) settled on one of the 7 hills. I think they were descendents of the Greeks. Still only 1100 years. But longevity doesn’t mean it’s a good civilization. Ancient Egypt lasted 3000 years, owning slaved the entire time. And judging from current events, they don’t seem to have progressed too much.
Rome was founded in 800 BC give or take 20 years. It was a republic for most of the time up to Ceasar. Ceasur conquered the Gauls in about 50 BC. Then there will civil wars which led to the Empire run by his cousing Augustus starting around 45 BC. The Empire broke in to in 400 AD with the Western portion led by Rome being invaded by barbarians. Those barbarians together with the “Romans” then formed the Holy Roman Empire which lasted until about 1800 ad.
The Eastern Roman Empire had its capital in Constantinople and adopted the Greek language and existed until a bit over 1400 AD. So the Roman Empire from start of empire to end of eastern empire was 1,500 years.
I would not count the Holy Roman Empire as part of that but some do.
By the way, Romans suffered from a strong central government running deficits, raising taxes and debasing the currency. When some people say it was conquered by the barbarians, there is a counterargument that the Roman poor invited in the barbarians because they could no longer pay the taxes.
A final fact, when the city of Rome was conquered by the barbarians, the gates were opened in the middle of the night by poor people on the inside.
Deep.
Where do we find such barbarians and how do we convince them to invade??
They’re already here. Although “barbarians” might be a bit rude and unfair.
I think what we call “Imperial Rome” lasted a lot less than 1500 years. Nonetheless some of their buildings are not only still standing, they are still in use (i.e. the Pantheon in Rome).
And they didn’t put in any granite counter tops in the Pantheon. Surly, some flipper will rectify that?
As I said, the the “Not a Depression Recession©®™” is over for the rich.
For the rest of us? Not so much.
Irwin Kellner
Feb. 8, 2011, 12:01 a.m. EST
Rotten to the core
Commentary: Food and energy inflation cannot be ignored
By Irwin Kellner, MarketWatch
PORT WASHINGTON, N.Y. (MarketWatch) — It’s time to look at all prices — including food and energy.
One of the biggest canards ever to be foisted on the American people is the notion that removing food and energy from the price indexes provides a clearer picture of inflation.
In reality, it’s just the opposite.
The so-called “core” rate of inflation (the headline price indexes minus food and energy) is grossly misleading. It was designed in the 1970s to take our eyes off what’s really happening to prices so the Federal Reserve could maintain an ultra-easy monetary policy.
Guess what? This is exactly what the Fed is using it for today.
…
Food and energy inflation cannot be ignored
Tell that to Chairman Bernanke. I believe he would laugh all the way to the printing room.
they say they exclude it because the prices of food and energy are too volatile…but when the prices are only going up…guess what…they ain’t volatile anymore mr. bernanke.
PB
Did you or some other sage here on the HBB, share with us that medical expenses/premiums are played with too in the CPI, and that housing as a component was a joke?
National debt question.
I have been reading that the public debt as percentage of GDP in the US is about 59%.
Our GDP is about $14.7 trillion and Congress is about to raise the debt ceiling from $14.294 trillion to whatever ‘cos we’re at $14.079 right now. I would say 14.079 is about 96% of 14.7. So what’s up with the 59% that is supposedly our debt to GDP ratio? Is there some Enron style accounting at work or am I missing something?
You’re confusing annual GDP with our current debt ceiling.
Not Enron, we are talking Bernie Madoff or bust on this one.
Make sure you are getting your GDP number from the same place that put out the 59% number?
Some of the outstanding debt is held by government entities, such as the social security trust fund. Those holdings aren’t part of “the public” debt.
The world’s banker is tightening. Try not to land under water at the end of this currency market logrolling contest!
China Raises Rates to Counter Accelerating Inflation
February 08, 2011, 9:28 AM EST
By Bloomberg News
(Adds economist’s comment on outlook for more rate increases, in eighth paragraph.)
Feb. 8 (Bloomberg) — China raised interest rates for the third time since mid-October ahead of a report forecast to show inflation accelerated to the fastest pace in 30 months.
The benchmark one-year lending rate will increase to 6.06 percent from 5.81 percent, effective tomorrow, the People’s Bank of China said on its website today. The one-year deposit rate will rise to 3 percent from 2.75 percent.
Oil and copper fell and emerging-market stocks extended losses on concern Premier Wen Jiabao’s campaign to contain consumer prices will slow the fastest-growing major economy. China joined India, Indonesia, Thailand and South Korea in boosting rates this year as Asian policy makers seek to avert economic overheating in the region leading the global rebound.
…
Palladium is at its highest prices in ten years:
http://www.marketwatch.com/story/gold-gains-after-bank-of-china-rate-hike-2011-02-08
I hear that Chevrolet is selling three to four hundred volt cars per month. I don’t think will be putting a dent in palladium demand anytime soon. Go government motors.
Since Volts have a gasoline engine they still need a catalytic converter.
I love how GM can do nothing right in some people’s eyes. They beat Toyota to market with a plug in hybrid. Had it been the other way around the same people who trash GM for developing the Volt would be singing Toyota’s praises, commending them for “innovation”.
IMO it had nothing to do with innovation and everything to do with market.
GM had the EV-1 in the 90’s, and amateur shops in CA began converting Prii to plug-in almost as soon as they came out. Not like they needed a breakthrough to make a plug-in. I suspect that GM sat on the Volt while they put their engineers on making SUV’s into bigger and bigger profit-mongers. Only after GM almost went down the tubes did they haul out the Volt — what a coincidence.
(I see something similar in housing. Just now, builders are “discovering” smaller houses, after 20 years of air-filled crap.)
Didn’t they got research money from the Feds to ‘develop’ the Volt?
To combat inflation China could
1. Let their currency rise and allow more imports
or
2. Increase interest rates and bank reserves.
Now normally increasing interest rates would increase the value of currency but as they control their currency this is not the case.
#1 Would stimulate our economy more by increasing exports. #2 not so much.
Yes - but there’s one small itsy bitsy problem with #2.
It isn’t working. Check out their money supply figures sometime.
http://finance.yahoo.com/q/cq?d=v1&s=agg,%20bab,%20babs,%20babz,%20bbk,%20cmf,dia,%20ief,%20mln,%20mub,%20nyf,%20shy,%20tfi,%20vrd
Munis crashing hard - will Bernanke bail out involvent municipalities next? Oh, silly me, New York City and Washington DC are the only municipalities that count as far as the Fed is concerned.
“Oh, silly me, New York City and Washington DC are the only municipalities that count as far as the Fed is concerned.”
The rest of you can suck it.
The people of this area don’t understand just how much they have benefited from The Fed’s criminal activities. They also have no conception of what might happen if that is ever stopped. “Buy, buy, buy.”
Nice article in NYT about how Congress is going after Merideth Whitney ??sp. because she called it and said they would crash.
Cockroaches hate the light.
I overheard a conversation down at the apartment complex Gym yesterday. Went something like this…
Our new house is closing any day now “I cannot wait”
We got a 3 day notice, because we had to put more money in the bank to qualify and could not pay our rent and buy the house at the same time…
This is going to end badly…
“This is going to end badly…”
For the lender. Which is probably the U.S. taxpayer, by way of some convoluted feel-good government program. Shrink the damn government and most of this crap would never happen.
“Which is probably the U.S. taxpayer, by way of some convoluted feel-good government program.”
Funny, ain’t it, how the banksters work the game so they are the ones doing the lending when real estate always goes up, and the U.S. taxpayer is making (or at least guaranteeing) the mortgage loans when real estate goes down.
How do you spell J-I-H-A-D…100,000,000 unemployed middle eastern men under the age of 30 in 5 yrs time….if that doesnt scare you nothing will……….
I think civil wars in every Middle Eastern country would be more likely than attacks on The West. Don’t think this doesn’t scare the heck out of the Saudis and their American backers.
I think civil wars in every Middle Eastern country would be more likely than attacks on The West. Don’t think this doesn’t scare the heck out of the Saudis and their American backers.
Ordinary Americans should be concerned too, because when the revolution happens in Saudi Arabia, Americans will long for the worst days of the 1970’s.
Not so much,
1. Saudi Arabia would starve without selling that oil.
2. It would give the war machine justification (in their eyes) for using WMD.
Saudi Arabia with a new government will sell it, just not to us. There’s no where else that can make up the difference.
who ever buys it from Saudi Arabia will sell it to us oil is fungible. Last I checked the US consumed something like 20% of world oil. The new militant saudi arabia would also see it’s investments in the US frozen. They would not be able to feed their population which has expanded very rapidly.
nursing!
It’s the boogeyman!!!! Be skeeerd Goober!!! look out for the boogeyman!!!
Now about 400 million brideless men in Asia, as a result of selective abortion? Probably the nastiest and least well off in each of their countries, if the remaining ladies have a say.
As relative affluents reverses, that whole Asian Bride thing may go into reverse too.
The new normal for real estate: http://www.usatoday.com/money/economy/housing/2011-02-08-1Amercedcalif08_CV_N.htm?loc=interstitialskip
Anecdotal musings from: “The OC!”
So, the question is: “Are you smarter than a 3rd grader?”
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
Subprime high roller defaults on Newport mansion:
February 8th, 2011, by Marilyn Kalfus, real estate reporter OC Register
Daniel Sadek, dubbed “Predator Zero in the subprime-mortgage game” by Vanity Fair magazine, is in default on the mortgage for his Newport Coast mansion, records show.
Sadek owes $2,825,918 on a home loan he received from Wells Fargo for $2,590,000 on June 21, 2004, according to the trustee. The amount in default is listed at $235,918
From the article:
“Meet Predator Zero in the subprime-mortgage game: Armed with a third-grade education and the $250 he paid for a California lender’s license, Sadek quit his job as a Mercedes-Benz salesman (in Orange County!) and opened Quick Loan Funding, whose TV commercials promised,“No income verification! Instant qualification! You can’t wait, and we won’t let you!” According to a competitor, Sadek would have written a loan to “an insolvent arsonist.” By 2007, Quick Loan had approved $4 billion in subprime mortgages and was pulling in almost $200 million a month selling them to Citigroup, Wells Fargo, and Bear Stearns. His personal take-home was $5 million each month, which he splashed out on fast cars, million-dollar Vegas gambling jaunts, and a $26 million feature film—Redline—whose $8 million gross barely covered its budget for Porsche destruction. After it all went south, in 2008, the Lebanese immigrant fell behind on his own mortgage payments. Citibank modified his loan.”
The Department of Corporations at one point banned Sadek from the lending and escrow industries after investigators concluded he used funds from his company, Platinum Coast Escrow Inc., to take out markers to cover gambling at the Bellagio, the Venetian Hotel and Casino, and the Wynn Las Vegas, among other offenses.
Vanity Fair magazine in 2009 ranked Sadek No. 86 on a list of 100 institutions and people most to blame for the nation’s economic troubles.
The modified loan was for a house in Irvine. It later was foreclosed and bought at auction by an investor.
Ho ho, hah hah, hehehehehehe, BwaHaHaAhHAHAHAHAHAHA!!! (Cantankerous Intellectual Bomb-thrower™)
(After 11:22am):
BWAHAHAHicHAHAHicHAHAHAHAHicHAHAHic* (DennisN™)
Ooh! I wanna see Redline. 8 million dollars worth of Porsche destruction? Brother, that’s my kind of movie!
Probably catch it on Masterpiece Theater next season…
Sadek was dating Nadia Bjorlin, an actress from some soap opera, and made the movie to give her a lead role. As they say, “a fool and his money are soon parted.”
How does a guy with a 3rd grade education get money for a damn thing?
Mercedes salesman? TV commercials? 3rd grade education?
This does not compute.
Well, salesmanship doesn’t require a degree.
…On a private, 1,100-acre island, Turks & Caicos Sporting Club at Ambergris Cay… Mr. Schram…rolled out an option to build a small house…as low as $1.4 million. That’s 44% less than the $2.5 million previously.
this project crashed and burned, and went into receivership about three months ago, hopefully the iguanas will once again rule the island…
iguanas
“From Ignoramus…to Iguana’s” Hwy likes it!
In “The OC!” …Costa Amazing! (Costa Mesa) city motto was:
“From Lima beans…to…Limo’s!”
What’s up with HorseFace Margaret Kelly of RE/max fame? She and her lies just dropped out of sight.
I wonder if Babs Corcoran and Horseface Kelly are related……. both have similar equine characteristics. Get them in the same room and toss in a bag of apples..
I bought a car from a guy in Las Vegas last week. He paid $350k for a nice tract home a few years ago, worth $150k today, hasn’t made a payment in 22 months. Tried to short sell but the bank would not cooperate. He is leaving the country soon, not unhappy about it all as he went in with only 5% down.
$350K x 0.05 = $17.5K.
Not bad rent to pay for two years of living in a nice house.
He’s paid less than $800/mo if you consider his down-payment losses as hit rent for the past 22 months.
And his rent only averages down the longer he has lived there.
Nice to hear that some are “not unhappy about it”, and don’t consider themselves victims.
Cheney-Shrub Shadow Effect #17: (-8.5 million jobs) = Lower taxes!
By One Measure, Federal Taxes Lowest Since 1950
Stephen Ohlemacher
Monday, February 7, 2011 / AP News
Taxes too high?
Actually, as a share of the nation’s economy, Uncle Sam’s take this year will be the lowest since 1950, when the Korean War was just getting under way.
And for the third straight year, American families and businesses will pay less in federal taxes than they did under former President George W. Bush, thanks to a weak economy and a growing number of tax breaks for the wealthy and poor alike.
Income tax payments this year will be nearly 13 percent lower than they were in 2008, the last full year of the Bush presidency. Corporate taxes will be lower by a third, according to projections by the nonpartisan Congressional Budget Office.
Income tax rates remain unchanged. But many taxpayers are seeing their bills drop under Obama because of more generous tax credits for college students, working families, homebuyers and the working poor. Many of the changes were enacted as part of the big economic stimulus package passed in 2009.
Congress also extended Bush-era tax cuts through 2012. Lawmakers let Obama’s Making Work Pay tax credit expire at the end of 2010, but they replaced it with a one-year cut in Social Security payroll taxes that is already showing up in workers’ paychecks.
Isn’t blaming Bush getting a little tired? The article itself says that Congress passes these laws, even under the current Diety.
Bush gets blamed because his admin was ALL Repub.
Congress. White House. Supreme Court. Repub all the way down.
If only GoldenmanSucks & the Oil Companies can figure out how to price gasoline similar to printer ink cartridges they might improve on their profits. ;-/
Oil prices waiver on questions about China demand:
Oil prices shaky after China interest rate hike raises concerns about global demand
Heheeeheehee:
“Chinese Government leaders fear a sharp rise in prices for things like food and fuel could trigger unrest.
The Chinese government doesn’t release actual oil consumption data.
China imports 5.5 million barrels of oil a day and uses about 10 million barrels a day, according to Michael Lynch, president of Strategic Energy & Economic Research.”
Oil prices waiver on questions about China demand:
I’d like to get an oil price waiver.
AP News / Topics: Commodities
Cheney-Shrub & Crissy Cox nearly had the same idea, they just ran out of time…well, here’s to Hope the Change…makes trouble! Cheers!
Wall Street Whistleblowers Ready to Cash In:
On Tuesday February 8, 2011, 12:33 pm EST
When President Barack Obama signed the Dodd-Frank Wall Street reform act into law last summer, very few in the financial industry knew that the bill included a massive change in the way whistleblowing law works in this country.
But they know it now. Welcome to the new world of Wall Street whistleblowing.
At the National Whistleblowers Center, Stephen Kohn helps connect whistleblowers with the lawyers who can bring their cases to the government’s attention. And he says he’s looking forward to a bonanza of Wall Street cases under Dodd-Frank.
“I need everyone in those board rooms to be looking at everyone else and saying, ‘Is this guy gonna turn me in? Or am I gonna turn them in?” Kohn said. “You need that level of fear, of an understanding that the world has changed. And people that you work with can become multi-millionaires by turning you in.”
Under the previous laws, whistleblowers only got a payout if the fraud was against the government. But the new Dodd-Fank law okays payouts to tipsters of fraud on Wall Street, even if the government wasn’t the entity defrauded.
And on Wall Street, the size of those frauds could be huge: “Hundreds of millions of dollars, if not larger. In the billions,” says attorney Stuart Meissner, who says he has already gone to the SEC with seven new cases under the Dodd-Frank rules.
OMG. Shred everything!
Wait. Dodd/Frank? Aren’t they the neocon’s favorite boogeyman?
Now we know why.
Deutsche Bank Sees U.S. Rents Doubling Inflation
A plunge in rental vacancies will drive up monthly housing payments in 2011, propelling U.S. consumer costs excluding food and fuel to increase at more than twice last year’s pace, according to economists at Deutsche Bank Securities Inc.
http://www.bloomberg.com/news/2011-02-08/deutsche-bank-sees-u-s-rents-doubling-inflation-chart-of-the-day.html
Hmmm. How long can that work if incomes don’t go up?
Until about 2007.
OK, so we still have a little mo….oh crap.
Tin Foil Hat Time
1. Reports of cash buyers abound
2. People consolidating
3. Rising Rents
I remember an article about 6 mo ago suggesting the FED should buy up rentals and moth ball them to drive up rents to make purchasing a house seem like a better deal. I’m sure they would use some Hedge Fund surrogate.
We belong to the same club, measton.
I’m suspicious of anything related to housing (or assets of any kind, actually) with all of the manipulation that’s been going on.
Haha Deutschlanders! Actual rent is not part of our equation. We use something called “equivalent rent”. That’s what government lackey robo phoners report that falling knife mortgage slaves say they think they could get for rent on their little piece of the Shrinking American Dream, if they were to rent it. It has nothing to do with actual Rent!
In another episode of to KILL THE MESSENGER
From NYT as posted on Yahoo
finance.yahoo.com/news/A-Seer-on-Banks-Raises-a-nytimes-1533801587.html?x=0&sec=topStories&pos=5&asset=&ccode=
Ms. Whitney is also drawing scrutiny from Washington, where a Congressional panel will meet on Wednesday to examine the turmoil in the muni bond market, including whether Ms. Whitney’s call has fed the volatility and allowed some investors to profit unfairly.
Citing scheduling conflicts, Ms. Whitney has declined an invitation to appear before the panel of the House Oversight and Government Reform. But the subcommittee’s chairman, Representative Patrick T. McHenry, Republican of North Carolina, said that would not dissuade him from investigating her record.
“This isn’t a gotcha thing, but she’s going to be part of the hearing, whether or not she participates,” he said. “If she doesn’t want to come forward in a venue like this, that makes a statement.”
Isn’t this the definition of Sophomoric? We’re going to hold hearings about what you said, to whom, and how it hurt my feelings. Meanwhile, the thieves are tucking away billions. Thousands of billions.
It didn’t just hurt feelings
It hurt MegaBanks plans to get people to invest in bubbles.
That’s a capital offense these days and even big players can be taken down for that!!!. No different than Merril firing an analyst who had the gaul to proclaim Irelands bank lending risky. 2+2=5 say it with me and be accepted into the loving arms of MegaBank.
Yep. To not participate in the treason is now… treason.
Now smile or you will be beat some more!
You guys will love this: I sat down with my realtor today and we got caught up (he’s a friend and co-worker)… he said don’t bother looking for another two years, and he knows a guy who stopped paying his mortgage on an investment house two years ago but has been collecting $1,100/mo. rent since…
You guys will love this: I sat down with my realtor today and we got caught up (he’s a friend and co-worker)… he said don’t bother looking for another two years, and he knows a guy who stopped paying his mortgage on an investment house two years ago but has been collecting $1,100/mo. rent since…
Have I got an IRS link for you — and your real estate agent:
How Do You Report Suspected Tax Fraud Activity?
Have fun!
Don’t forget the local tax assessor as well.
Great quote from Bloomberg News.
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aZqwY2wnT9_U&pos=3
“China’s central bank will likely need to increase interest rates further in coming months as the three moves since mid-October leave household wealth being eroded by accelerating inflation.”
“The People’s Bank of China yesterday raised the one-year lending rate by a quarter point to 6.06 percent and the one-year deposit rate an equivalent amount to 3 percent. The deposit rate remains almost 2 percentage points less than the pace of consumer-price gains, giving savers an incentive to buy goods and assets.”
How come eroding savings isn’t considered a problem over here?
Because we don’t have an aging population. Oh, wait…
“How come eroding savings isn’t considered a problem over here?”
Because there is a shortage of money over here and an abundant supply of money over there.
One country wants its citizens to spend money, the other country wants them to slow down on their spending.
On country is flush with cash, the other country is broke.
One country is flush with cash because the other country is populated with a buch of dummys who keeps send them all the money that they don’t have.
send = sending
And then one sees why the gov turns a blind eye to immigration
1. Keeps wages down when times are good
2. Expendable when times are not so good
LOS ANGELES/DALLAS (Reuters) – Chipotle Mexican Grill has a lot going for it — an upscale burrito concept, a hip and eco-friendly image, expansion plans galore and a 500 percent-plus stock price gain in just over two years.
And then it has something not going its way — a federal crackdown on its immigrant labor force that has so far forced Chipotle to fire hundreds of allegedly illegal workers in the state of Minnesota, perhaps more than half its staff there.
And there are *no* Americans who can do restaurant work? ISTR having more than one restaurant job when I was young.
Me, too. Adjust the wage for true inflation since then and it’s more than they’d like to pay, though.
If I may make another heretical comment, permit me to say that this country has gotten over-restauranted.
I’m probably flying my over-50 flag in a big way, but I can remember a time when going out to eat was a big event. As in, something your parents may have done once a year on their wedding anniversary. And maybe-just-maybe on your birthday. But not every year. We’re talking milestone birthdays like turning 16.
Methinks that, going forward, eating at home will be a lot more popular. Something about economic necessity.
BTW, a friend (who’s one of those pals with whom I finally caught up on last night’s Meet Me at Maynards walk) runs a cooking blog. He says that it gets a ton of traffic. Might be a sign of the times, I don’t know. But I do know that his blog has quite the readership.
Methinks that, going forward, eating at home will be a lot more popular. Something about economic necessity.
I think ideally that would happen. Wonder if it’s a one way street, though…kind of like a fish trap? Like maybe once people lose the ability to feed themselves, they’ll starve (or die stealing prepared food) before they learn again?
Just saw some old friends who have discovered the joy and SAVINGS of eating at home again.
I wish I had the money they were spending eating out every month.
When I had my first restaurant job, I was making $2hr.
Today’s avg restaurant* job is still paying… $2hr.
What’s wrong with this picture? Only the ignorant work for that kind of money.
*Restaurants, not fast food. FF pays approx $10hr, but it’s only part time. Cooks may make up to $10hr on avg. with only the head chef making a living and even then, that will be only about 40K at the avg restaurant. Maybe.
Jobs like that only screw up UE and food stamps for savvy American non-workers.
http://www.slate.com/id/2278914/
Statistics show the problem is getting worse. According to a study by Emmanuel Saez of Berkeley, the top 1 percent of earners captured two-thirds of all income growth between 2002 and 2007. The most recent census statistics show a continued march in the same unbalanced direction. The bottom 20 percent of the population—which earned 5.4 percent of national income in 1967—earned just 3.4 percent of it in 2009. The highest 20 percent went from 41.5 to 49.4 over the same period. The Gini Index—the standard measure of income inequality—ticked up again between 2008 and 2009, from .451 to .458. According to the CIA World Factbook, this figure puts the United States ahead of Russia and Turkey in inequality, and on par with Mexico and the Philippines.
Why is income inequality proving so intractable a problem? If you haven’t already, you should read my colleague Tim Noah’s excellent series exploring the reasons for the Great Divergence, which began sometime in the mid-’70s. It was around that time, as Malcolm Gladwell described in this New Yorker piece, that stars and professionals across a range of fields simply began to demand a bigger piece of the pie. How much you blame Obama for his lack of success in taking on this trend will depend on whether you see him as a victim of circumstances or of his own mistakes.
On one hand, Obama is up against macro forces like globalization and a system that has grown highly effective at transmuting economic privilege into political power. Somehow, wide majorities have come to support tax law changes that benefit only tiny minorities. While I was writing this column, a press release arrived in my inbox from a New York estate lawyer telling me about the goodies hidden in the new bill: “For the first time, wealthy individuals can make gifts of up to $5 million during their lifetime to anyone, including grandchildren, and pay no tax.”
It’s like the old Steve Martin routine about how to be a millionaire and never pay taxes—except that instead of “I forgot!” you now say, “I’m allowed!” It is an American peculiarity that rich people want to be thought of as middle class, while those in the middle class identify with the economic interests of an upper class they have only a remote chance of joining. The United States, the land of opportunity, now boasts the world’s second-lowest level of intergenerational income mobility. Meanwhile, the people most alarmed about the rise of new economic dynasties seem to be the enlightened superrich themselves, people like Bill Gates and Warren Buffett.
Obama deserves fault for failing to articulate this abstract threat in a way ordinary people can appreciate. Like the deficit, income inequality never killed anybody—it merely has the potential to sap the entire country’s health and spirit. Moving toward an income distribution like Brazil’s threatens individual happiness, social peace, and American values. But so far, the president hasn’t figured out how to get the public to relate to the issue. In April, Obama told a group of frowning bankers at Cooper Union, “There is no dividing line between Main Street and Wall Street.” But there is, and it is growing deeper every year.
It was around that time, as Malcolm Gladwell described in this New Yorker piece, that stars and professionals across a range of fields simply began to demand a bigger piece of the pie.
OK. But why did they suddenly start getting it? Could they have gotten it all along? Or did something change? I bet something changed.
Agents and unions.
Seriously.
(more “not rocket science”)
“Why is income inequality proving so intractable a problem?”
It ain’t effing rocket science that requires 1000 words or more.
The rich are greedy SOBs. Period.
Pig men are pigs, who know best how to use their money to make money: Through buying political influence.
“Statistics show the problem is getting worse. According to a study by Emmanuel Saez of Berkeley, the top 1 percent of earners captured two-thirds of all income growth between 2002 and 2007.”
How far we have come down the Road to Serfdom!
This looks promising:
http://www.thestreet.com/story/11001174/1/wells-fargo-cfo-retires-unexpectedly.html
I know the spotlight is on another bank but it would be really funny if the Wikileaks harddrive copies turned out to be WFs.
Good thinking, Carrie Ann. Let’s see how this turns out…
Here’s a curiosity… Some of you have been discussing foreclosure flippers, maybe this is an example of that, gone awry. In my hometown, there are MANY listings that were bought in the last couple of months that are now for sale again, listed for well under what was just paid. Looks like someone was trying to flip, but didn’t know what they were buying? Not sure, maybe y’all have some insight. Here is Redfin info and link for three such listings.
Dec 13, 2010 Sold (Public Records) $335,862 (This home was foreclosed and bank-owned)
Asking price as of today: $215,000
http://www.redfin.com/CA/Woodland/2599-Allen-Cir-95776/home/19484510
http://www.redfin.com/CA/Woodland/917-Ross-Dr-95776/home/19491198
Sep 22, 2010 Sold (Public Records) $237,500 (This home was foreclosed and bank-owned)
Asking price as of today: $199,000
http://www.redfin.com/CA/Woodland/2599-Allen-Cir-95776/home/19484510
Dec 13, 2010 Sold (Public Records) $335,862 (This home was foreclosed and bank-owned)
Asking price as of today: $215,000
Sorry, the first and third link are identical.
Maybe they jacked up the “Sold” price (via seller concessions) to make their new list price look like a better deal?
First,consider that when a home doesn’t sell at Auction, and it goes back to the bank and becomes an REO, it’s the loan amt that gets recorded as the sale amt, and the banks knows a write off is coming. That’s why the banks have made a boat load of $ in global investments to pad themselves.
There are other games being played with Auction sold prices showing 25%-35% higher than the real price (So Ca). Don’t ask me why this isn’t fraud?
I am licensed due to my REIT career.
When was the home bought? (Property Tax Assessment will tell you the last sale amt and date.) Look down below on each Redfin Listing and the PT info should be there.
Was the owner a serial refi’er ?
Did you use the Recorder’s info to verify?
A starter list to get your “juices” flowing…
(Things to research)
There is a way to get County Recorder info online on other R E websites. Redfin may not give out dates. I don’t remember off hand. Property Tax infowill give you an idea of how many owners, and their length of ownership, and a sale price history. You can also use an Agent for a Property History Report.
We tried Redfin and our opinion was we were not impressed. They pretend to be buyer-centric, but only if you put a leash on them and control the situation. Their buying class was a joke, imho. They steered the class in their direction. Nothing was really objective and informative. The loan guy speaker was after FHA 3.5% down folks. The young audience was their target. That is just our opinion.
“Their buying class was a joke, imho. They steered the class in their direction.”
Wouldn’t you expect any “buying class” put on by a realty group to be a thinly-veiled sales pitch, trying to sell themselves and their services?
I would.
Pete,
Those look like true REOs (bank-owned). If it says it was foreclosed and bank owned, that would explain it.
From what I’ve seen, the flipper purchases at the foreclosure auctions state that it was “foreclosed and bought at auction” or somesuch — which means an infestor bought it.
These examples you’ve posted just look like bank foreclosures that are now being sold on the open market for the going market price.
“when a home doesn’t sell at Auction, and it goes back to the bank and becomes an REO, it’s the loan amt that gets recorded as the sale amt”
If that’s the case, I think my question is answered! I would never have considered that possibility.
Good news for banks holding REO!
83% of Buyers Comfortable Buying Bank-Owned Homes
By Brandon Cornett | 2/8/11
Apparently, the robo-signing scandal hasn’t scared buyers away from bank-owned foreclosure homes. According to a new survey by the Home Buying Institute, most home buyers are comfortable with the idea of buying a bank-owned property.
Buying Bank Owned
The 2011 Foreclosure Survey was presented to more than 15,000 readers on the Home Buying Institute website, from January 1 – 31. Out of the readers who responded, 83% said they would be comfortable buying a bank-owned foreclosure home in 2011.
Most people also said they expect foreclosure inventories to rise in 2011.
“This survey actually went the opposite direction from what I expected,” said Brandon Cornett, publisher of the Home Buying Institute. “I thought a higher percentage of people would be reluctant to buy a bank-owned home, because of all the ‘robo-signing’ stuff in the news lately. It turns out that most people are comfortable with the idea [of buying a bank-owned property].”
Definition of a Bank-Owned Home
About 10% of respondents did not know what a bank-owned home was. Here’s a quick definition for those who are not familiar with the term. A bank-owned property is one that has been foreclosed upon by the lender. When a homeowner stops making the mortgage payments on a home, the bank that owns the loan will eventually foreclose. This is the legal process through which the bank repossesses or takes back the property. These repossessed homes are also known as REO properties, which is short for real estate-owned by a bank.
Some Buyers Had Concerns
Nearly 7% of respondents said they would not be comfortable buying a bank-owned home in 2011. The three most common reasons given were:
* Concerned about the condition of the property (most common reason among the “no” respondents).
* Banks take too long when dealing with buyers. *
* Home prices are still falling in my area.
…
You have to hand it to them for coming up with a plan that sounds vaguely reminiscent of the Republican plan!
But if you want a cautionary tale on the political viability of eliminating subsidies once they are systemically ensconced, I offer agricultural subsidies as a related example. The talk of eliminating them has gone on for years with no action to show for it. My best guess is the F&F phaseout will be accompanied by the birth of some new REIC subsidization mechanism.
* EARNINGS
* FEBRUARY 8, 2011, 10:43 P.M. ET
White House Plans Phase-Out of Fannie, Freddie
By NICK TIMIRAOS
More than two years after the government seized Fannie Mae and Freddie Mac, the Obama administration will recommend phasing out the housing-finance giants and gradually reducing the government’s footprint in the mortgage market, according to people familiar with the matter.
The administration is expected to include three options for a post-Fannie and Freddie world when it releases a long-awaited proposal for the future of the nation’s $10.6 trillion mortgage market, which could come as soon as Friday. Together with federal agencies, Fannie and Freddie have accounted for nine of 10 new loan originations in the past year.
The White House’s “white paper” will begin what promises to be a prolonged and fiery debate about the future of how homes are financed across the U.S. Any wind-down of Fannie and Freddie would happen gradually to avoid roiling markets, and the central, unanswered question is what kind of federal function, if any, the administration and Congress will invent to take their place.
Steps to reduce the government role in the mortgage market likely would raise borrowing costs for home buyers, adding pressure on the still-fragile U.S. housing markets. Consequently, analysts believe any transition could take years and would be driven by the pace of the housing market’s recovery.
The fight over how to restructure the housing-finance system has roiled Washington, and yet both parties have been hesitant to propose detailed legislation.
For conservatives, Fannie and Freddie played a starring role in the financial crisis, and any solution that is viewed as replicating their function could face fierce opposition from some Republicans. But more moderate Republicans may resist such an approach and could join Democrats who have said a federal role is necessary to ensure broad access to home ownership.
While advancing one detailed plan risks providing fodder for partisan battles, offering multiple proposals may help the administration force those views into the open, said Michael Barr, a former assistant Treasury secretary in the Obama administration.
“If you focus on the steps everybody agrees on—here are the 10 things you’ve got to do—that gives people a chance to unite behind a set of steps,” he said. A list of options he added, has the benefit of forcing Republicans “to come up with their own plan, and make their own mistakes.”
The administration’s proposal to Congress is likely to assess the merits and drawbacks of each of the three options. The most conservative would propose no government role in the mortgage market beyond existing federal agencies, such as the Federal Housing Administration.
The two others would create a way for the government to backstop part of the secondary mortgage market, a role long- filled by Fannie and Freddie. Under one, that government backstop would kick in primarily during periods of market stress; under the other, the government would play a role at all times.
For 40 years, the housing-finance system has featured a blend of public and private entities. Fannie and Freddie buy mortgages from banks and other originators, repackage them for sale as securities and make investors whole when borrowers default. Investors long assumed the two shareholder-owned firms had an implied federal guarantee, which let them borrow at below-market rates and facilitate 30-year fixed-rate loans.
As the recent housing bubble inflated, Fannie and Freddie joined private lenders in loosening standards. Mounting defaults wiped out the pair’s razor-thin capital reserves, spurring the government to take over both. The White House has committed unlimited amounts of aid to ensure that the firms meet their obligations to debt and securities holders. So far, taxpayers are on the hook for $134 billion.
Treasury Secretary Timothy Geithner told PBS’s Charlie Rose earlier this month that the housing-finance business was a “mess” and that the administration’s plan would “crowd private capital” back in. That, he said, would curb the government role and leave “a system that will not be vulnerable to the really tragic colossal failures” of the past.
…
“As the recent housing bubble inflated, Fannie and Freddie joined private lenders in loosening standards.”
Dumb question of the day:
Have the top brass at the Fed yet recognized that there was a massive housing bubble in the mid-2000s?
I second Bill’s comment about Bush’s Resolution Trust Corporation giving away properties to well-connected entities. According to my calculations, they owe me $300,000 in 1999 dollars for stealing a commercial building that came under their jurisdiction when Old Stone Bank went bankrupt.
This was after the FDIC did a dirty deal that bankrupted Old Stone - Old Stone, having deep pockets, ultimately won their suit against the FDIC in 2007. I couldn’t afford the legal costs (of suing the RTC) when they refused to honor my purchase agreement with Old Stone.
At the moment, all I see is government by and for Wall Street investment banks - which will only end when we abolish Bill of Rights protections for corporations (the Bill of rights was meant to protect ordinary citizens against moneyed interests, not vice versa. The first step is to go to http://www.movetoamend.org and sign the petition to amend the Constitution.
I write about my experiences with the RTC and other crooks (the ones in US intelligence) in my recent memoir THE MOST REVOLUTIONARY ACT: MEMOIR OF AN AMERICAN REFUGEE (www.stuartbramhall.com). I currently live in exile in New Zealand.
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