Bits Bucket for March 5, 2011
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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
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‘The 80 acres of rich farmland that Jeff Freking and his brother Randy bought near Le Mars, Iowa, on Monday for $10,000 an acre would seem to have nothing in common with a condo in Miami or a house in Las Vegas. But as prices for agricultural land surge across America’s grain belt, regulators are warning that a new real estate bubble may be forming — echoing the frothy boom in home prices that saw values in Miami and Las Vegas skyrocket and then plummet.’
“It just seems to be going up in leaps and bounds here,” said Jeff Freking, who bought a similar farm, also in northwestern Iowa, for $6,000 an acre just two years ago. “Everybody thinks it’s crazy.”
‘The rising prices have also brought in speculators. ..There is no agreement on whether a bubble is emerging.’
‘Michael D. Duffy, an agricultural economist at Iowa State University who conducts the annual land value survey, said the market appeared fundamentally sound and that land prices were responding properly to high crop prices. ..Bruce Brock, the broker who sold the farm to the Freking brothers, exudes an optimism that would sound familiar to anyone who bought a home in 2006. “If you look from the beginning of farming in the United States to now, the long-term trend has been up,” he said. “There will be market fluctuations where it will go down. But in 10 years, I won’t be surprised if our $10,000 land is $20,000.”
http://finance.yahoo.com/news/In-Price-of-Farmland-an-Echo-nytimes-1982753224.html?x=0
I know a guy who has 160 acres of Iowa farmland. He leases some of it out. Has a lot of supposedly good timber. He has been bragging for years that it’s value keeps going up. Like the saying goes, you don’t really know its worth until you sell. That is why I was happy to sell off some of my precious metals last Fall!
Yahoo headlines are postulating that this increase in private sector jobs might be a turning point (toward a job boom). Fodder for the perma bears!
timber is one of the commodities that is not participating in the rally. Prices are down in CA and probably wont recover until new home construction wakes from the dead.There are probably a handful of major mills left in this state.We would rather import from canada.
When I brought up the housing bubble burst to that acquaintance he said the Chinese are buying the Iowa timber.
Yeah, don’t you know the foreigners will save us? Notice jobs are coming back to the US? Not construction jobs, but manufacturing, FARMING, etc. Think that has anything to do with hyperinflation in Chindia coupled with volatile instability in most other cheap-labor regions? Nah, couldn’t be.
Some sales type makes up a plausible reason for the skyrocketing prices. My question is always - do you have a lick of evidence to support this?
I remember the skyrocketing real estate prices in Baltimore city. Greater demand they said. But… Baltimore has consistently been losing population for years, right through the height of the bubble. So… perhaps increased demand - but not due to more people moving in. Speculators perhaps.
Have ex BIL who moved to China and married a young Chinese gal. Has been doing business there for 10 years. Buys here and sends wood there to export back here flooring, doors, etc. He just bought acreage in Oregon and was pissed off when he found the logging restrictions in place. Currently looking for timber in the East and South.
timber regulations in CA are getting virtually impossible to deal with.If you own small acreage you might as well forget about it.
Serves him right for breaking up with your sister, HAR!
This is what we get for rewarding the speculators with bailouts.
Should have let them fry when the SHTF.
If this echo bubble gets some momentum, maybe they will tear down some of the bubble developments to make farmland.
Hope so. That was one of my
predictions, member?
Big, big jump between mortgaging a piece of Iowa farm land and bringing a crop to market. Oops, I forgot those damn government subsidies and crop insurance. I’m just as sure in this day and age that the big boys will find ways to limit production as well or to chase higher overseas markets to drive up local pricing.
10k/tillable acre is truly astronomical. Even 1k per seems way way out of line. This is a monumental disaster taking place.
Exeter,
Let me start by telling you I enjoy reading your excellent comments. Here in south central KY agricultural land for cattle, (less expensive than cropland) was running $1300/ Acre in late nineties, then marched up to $2200-2500 in 2005 ish. It has now relaxed and can be had for $1850 or so.
I also know ranchers that have put acreage in government programs for 5-10 year terms that pay them $300/acre. If you look at an asset that is guaranteed to pay you $300/yr for ten years with no work & no risk, what is it worth? Certainly I think in the 5-10 grand range. What are your thoughts?
regards,
T
Currently a 10-year treasury bond pays a return of 3.58%, which means a risk free $358 a year for ten years if one were to invest $10,000 into buying one of these bonds.
To get a $300 dollar return from from such a T-bond one would need to invest $8,380. If the acre of land will return a ten year risk-free return just as a T-bond will return a ten year risk-free return then the acre of land should be priced similarily as the T-bond is priced.
But one must take into the account the unknown factor of what the acre of land will be worth in ten years. It is known today what the T-bond will be worth ($10,000) but not what the land will be worth.
Just something to think about.
But one must take into the account the unknown factor of what the acre of land will be worth in ten years. It is known today what the T-bond will be worth ($10,000) but not what the land will be worth.
Ha, how many people are there on the spinning planet, gonna need “factory” food products…
I take it you’re viewing it in terms of return on capital, i.e. an investment. I’m no land buyer or big time farmer but I’ve jerked a few cows and baled hay in my younger years and watched small and medium sized dairy operations evaporate beginning in the early 70’s to today. Farmers are great at what they do but very poor business men.
Does the $300/acre government cheese offset the losses to taxes? Are there enough local dairy operations that might generate an interest in leasing? Will the govt. cheese program even allow you to do anything with it? You’re talking pasture so it can’t be cut for hay. Since 2007 guys I know (sons of defunct farmers) are finally making boat loads of money on hay from their tillable acres after years and years of losses to taxes. How long before hay prices collapse? What is driving it? I dunno but hay WILL collapse eventually.Then the prolonged losses associated with “owning land” will resume…. at least as it relates to areas I’m familiar with. I really can’t speak to areas other than VT, upstate NY and parts of NH.
I’ve watched too many goobers get burned on what they thought was “cheap land”. Most of the time they don’t do anything with it and it bleeds them dry slowly over years. Some got lucky and were smart enough to offload it on what seemed to be the endless supply of retards from NYC/NJ/CT but that’s long since been over. It’s finally dawned on the idiots from metro areas that they got burned and now they want out.
5k-10k for land is just unimaginable to me. Completely detached from reality. If I were looking for an acre lot to put a structure on then, *maybe* but to go out and pay that for anything but an ideally suited lot in the right location is complete idiocy. The potential losses are huge at that price and I don’t see any upside.
Plus …
One must take into acount the cost of buying the land, the cost of selling the land, and the cost of maintaining the land (i.e. property taxes).
A T-bond doesn’t have these costs but land does, so one should expect to price land at a lower price than a T-bond if he were planning to net the same return.
And please remember the risk that the rules for the government cheese may change.
Oh, and a few really good weather years in bread basket areas of the world (the Ukraine, expecially) will bring crop prices down a bit even if people in India and China continue to want/afford more food. Oil being up impacts fertilizer prices as well as world economic growth.
There are a lot of unknowns in this puzzle.
“There are a lot of unknowns to this puzzle.”
And these unknowns need to be priced in.
The bench mark, IMO, is the risk-free ten-year Treasury bond: This is what one should yearn to beat.
If one can’t beat the risk-free return of a T-bond (after factoring in risks of an alternative investment) then a T-bond is where he should stick his money.
As to the carrying costs of undeveloped land, yes they can be exorbitant. My property taxes for 40 acres of prime MT land ran $115 last year.
I will take land over fiat almost every time. Yes there are exceptions. You can overpay for it.
Do any of you remember when Buffett purchased the railroad (Burlington I think)? Many here blasted him for it. I have zero idol worship for the man but I could see the clear long term value in the purchase and I said so here. I feel the same way about prime land.
The fiat end game should be clear to all but the most dim-witted amongst us.
“prime MT land”? What is “prime” land? You’re losing money on it and you don’t even know it or refuse to admit it.
Yeah, combo, in the case of government-subsidized, PURPOSELY FOUL land, that’s the case. But that’s not how a farmer sees it. A farmer wants to know how much he can get for his crop every year, vs how much he has to pay for fertilizer, labor, equipment, and PITI. IMO, he should get muuuuuuch more for his investment than a mere T-bond, since he puts his labor into it as well.
But Trapper’s post (as I understand it to read) wasn’t talking about buying up farmland to work, his post was about buying up farmland to lie fallow and have the government pay him $300 an acre fo doing so.
Oh, fallow, that’s what I meant to say. I knew “foul” wasn’t right. ‘Twas on the tip of my tongue.
“5k-10k for land is just unimaginable to me. Completely detached from reality. If I were looking for an acre lot to put a structure on then, *maybe* but to go out and pay that for anything but an ideally suited lot in the right location is complete idiocy.”
You need to come out west to WA. We’re talking $500,000 for 5 acres, baby!!
Build your dream home here!
http://www.johnlscott.com/propertydetail.aspx?IS=1&ListingID=300276669
Taxes are $4,320 before you build the house.
“There are a lot of unknowns in this puzzle.”
Yep. Something wicked this way comes.
interesting link article
http://www.grandforksherald.com/event/article/id/193318/group/homepage/
It’s about potential wealth transfers (maybe to non-profits, to the Minnesota towns’ benefit) . Most of the $$$ is in the land so they think there will be wibdfall.
“That wealth can be substantial in places such as Wilkin County, where Matz lives. The price of an acre of tillable farmland in the county, typically planted with wheat, soybeans, corn and sugar beets, jumped from $900 in 1991 to about $3,000 today, Matz said. Farms in the area tend to be big.”
No big deal. The flippers who are using bailout cash to bid up the price of farmland will dump it just as quickly when the market turns south. I refer you to the recent collapse of the US housing bubble, tech stock bubble, beanie baby bubble, etc etc etc for a preview of what will happen to farmland prices.
Is it very difficult to get financing for farm land? usually lenders are tough on bare land.
It’s tough. Farm or ranch land. One reason
is if the farmer goes bust, Judges are very
reluctant to hand it back to the bank, almost
always allowing the rancher to try again.
50% down is not unheard of.
Don’t give the banksters any ideas…..
BBBS = Beanie Baby Backed Securities
Almost forgot to mention, but perhaps the Great Depression also offers some insights to where this might lead; remember the Joad family?
Just because the NY Times discovers something doesn’t mean it’s new. I recall long ago hearing that rural land in Texas had increased 2/3rds in just a few years. This has been going on for a while, it’s just the rational has changed:
August 4, 2008 “In the past 10 years, the value of farmland has more than doubled across Wisconsin and tripled or more in several west-central Wisconsin counties, according to a new state report. In Barron County, the average value of land sold nearly tripled from $847 an acre in 1998 to $2,444 in 2007. Values also nearly tripled in Eau Claire, Buffalo and Pepin counties. Values more than tripled in Pierce County, which went from $1,249 to $4,223, the highest in the region.”
“‘People are converting farmland into residential for housing or buying it for recreational purposes for hunting,’ said Tim Jergenson, Barron County UW-Extension Agricultural department administrator. ‘It was often people out of the area that wanted that land.’”
http://thehousingbubbleblog.com/?p=4821
April 14, 2010 “Michael Garrigan has seen the price of land plummet as much as 75 percent from a high of $110,000 an acre in the past couple of years. Garrigan, who has been Plainfield’s village planner since 2002, can’t believe how quickly prices skyrocketed, then crashed during his eight-year tenure. From about 2002 through 2005, Plainfield was one of the fastest growing communities in the country. But the housing bubble burst and what some are calling The Great Recession sucked the life out of residential development in Will and Kendall counties, which were among the fastest growing counties in the nation.”
“‘Now developers are having property foreclosed on,’ Garrigan said. ‘That is unfortunately the new norm in this economy.’”
“When the market was hot, Gus Rousonelos, whose family has farmed in Plainfield since 1963, sold farmland for $92,000 an acre. More recently, he bought different land for $14,000 an acre. The 120 acres he purchased had been sold by another farmer to Lakewood Homes for the LaBancz subdivision, which would have been in Will County. ‘We were lucky,’ he said of the timing. ‘It was fortunate for us, not so good for the developers. But they’re big boys.’”
“Mark Schneidewind, manager of the Will County Farm Bureau, sees a similar pattern happening in ‘pockets’ all over the county. Farmland that was selling for an average of $45,000 to $65,000 an acre in some areas is now going for $5,000 to $7,000 a acre, he said.”
http://thehousingbubbleblog.com/?p=5986
January 22, 2008 ‘Jim Anderson set a Decatur County record after paying $4,000 an acre for a 75-acre farm…after he outbid about 20 other people, including bidders from California, Illinois and northern Iowa. Iowa farmland set a record in 2007 for the fifth year in a row, Duffy’s survey showed, rising to an average of $3,908 an acre, 22 percent more than a year ago. It was the largest one-year increase since 1976.”
“Murray Wise of a leading Midwestern farm real estate brokerage based in Champaign, Ill., said the Iowa farmland market ‘is hotter than most, but Illinois, Indiana and Ohio follow close behind…The first demand market occurred in the early 1970s, when the Soviet Union purchased large quantities of U.S. grains, Wise said. That demand market only lasted about a year. ‘It’s a different world out there,’ Wise said. ‘The good times are here for an extended period of time.’
http://thehousingbubbleblog.com/?p=4051
‘Iowa farmland set a record in 2007 for the fifth year in a row…In the past 10 years, the value of farmland has more than doubled across Wisconsin and tripled or more in several west-central Wisconsin counties’
The NY Times is a several years late to the story, IMO.
Quite coincidentally, I was enjoying a conversation about astronomical farmland prices last night over beer with a prominent agricultural economist.
‘We were lucky,’ he said of the timing. ‘It was fortunate for us, not so good for the developers. But they’re big boys.’”
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
The sweet, sweet nectar of the “Single-Deposit Transaction!
Score:
Gus Rousonelos: +1
“Big Boys”: -(AWB) (A whole bunch!)
“In Barron County, the average value of land sold nearly tripled from $847 an acre in 1998 to $2,444 in 2007.”
Thank you BJ.
There it is folks. Go back and search my comments back in 2005 when I was nearly run off the blog for stating that $1k/acre is grossly inflated. It’s a fact. Even $500/acre is no bargain.
Comment by Professor Bear
2011-03-05 07:21:43
Quite coincidentally, I was enjoying a conversation about astronomical farmland prices last night over beer with a prominent agricultural economist.
————————
Did you guys come to any conclusions about it?
those damn government subsidies ??
One of the items on the “A” list thats going to go Bye-Bye….
We’ll see. Big farmers/agribiz is a reliable Republican voting/funding bloc. Such groups seem to be dodging the budgetary scalpel thus far.
$10,000 an acre is obscene. It is pure speculation.
Using the best agriculture techniques, equipment,
herbicides, pesticides, and fertilizers, not including
irrigation, it would be decades before that land would be paid off and producing income.
With rising prices for all of the above, you might never get a pay back.
Good bottom land with water should be around
#3k an acre.
Key word: “with water”.
Other Key word:
“Organic”
You know, I hate it when otherwise rational people’s brains turn to mush over basic economics.
Yes, organic, very good. You still need water.
Before you scream “inflation”, remember that equipment (metals, energy, manpower) are subject to the same “inflation”.
And sorry, you need to revisit your math. Organic yields are lower so you should factor that in.
I like organic myself but I do not let it cloud my judgment about how things actually work.
I like organic myself but I do not let it cloud my judgment about how things actually work.
Calm down son, I was talking about WHAT THE TREND is…(for people who care about what they put into their own flesh.)
And this is interesting to inflated agricultural prices because?
Sorry, kid, you’re full of Ess-Aith-Eye-Tee, and you just called on it!
Organic? You’re kidding, right?
Extremely labor intensive, smaller produce,
ugly appearance, very expensive.
With commodity prices rising, only the fruits
with excess cash will buy it; it makes them feel so good!
We garden with a mix of compost, rabbit,
chicken, and cow manure with great results.
Hoe’s replace herbicides, strategic planting
replaces pesticides. Very time consuming,
lots of hard work, would be cheaper and
easier to buy at the local store..but…
home grown has a taste that you can’t buy.
I’m with Hwy here. He mentioned organic because Rancher was talking about the cost of pesticides, herbicides, insecticides, homicide, genocide, suicide… sh!t, these farmers are like the grim reaper. Not everybody wants to start The Monsanto Farm.
“Not everybody wants to start The Monsanto Farm.”
Like you have a choice. If your stuff gets pollinated with their stuff they will sue your behind off for patent violation. And it doesn’t make any difference how the pollination happened. Some one needs to fix that. Being down wind from their stuff shouldn’t be a financial liability.
Oh, I know all about that, Polly. I’m a member of the “Organic Consumer’s Association”. Not only is the cross-pollination a problem, but non-organic farms have been known to “accidentally” spray organic farms with their crop dusters. When this happens, they lose everything, and the ground is contaminated. Support your local organic farms, everyone! SCREW MONSANTO!!!
“Like you have a choice.”
PS- Twenty lashes for your negativity, young lady!
“young lady!”
Aw, that is so sweet of you. Feeling about a million years old today.
And this is interesting to inflated agricultural prices because?
I’ll have to get back to ya later on this Mr.-I-just-returned-from-India…I was outside working on the wee lil’ school children’s experiment in understanding the process of how celery gets it’s unique shape…might be tomorrow, but I’ll return your comment…
“If your stuff gets pollinated with their stuff they will sue your behind off for patent violation. And it doesn’t make any difference how the pollination happened. Some one needs to fix that. Being down wind from their stuff shouldn’t be a financial liability.”
“Force Majeure” and an obvious clue that someone is being, er “persuaded” to make such an obvious unfair conclusion of liability over something beyond mortal control.
My father grew up near LeMars - far northwestern Iowa. It is a lot drier than eastern Iowa and the growing season is short. It wouldn’t take much climate change to push that area from tillable land into ranch land. And several drought years in a row could bankrupt a farmer.
LeMars is home to Wells Dairy - Blue Bell products. They grow lots of corn, beans, alfalfa.
Average precipitation about 26 inches. http://www.idcide.com/weather/ia/le-mars.htm
Average last frost is 5/18. Average first frost is 9/17. Source:Victory Seed Company: http://www.victoryseeds.com/frost/ia.html
For comparison, Davenport, in far eastern Iowa, gets about 39 inches and the first/last frost dates are 4/25 and 10/13.
I have fond memories of our visits there. Thanks for taking me back, Ben.
And home of the best steak in the entire midwest, Archie’s Wayside Inn. We stopped on a thursday at 4:15p, the place opens at 4:30, and there was already a line outside. We didn’t have a reservation, and just barely begged a table. When we left, we had to squeeze through the packed lobby. If you are a carnivore, it is worth going out of the way to LaMars.
I’ve been waiting, and waiting, and waiting for the land price crash, and it never happened. Now look, it’s rocketing up!
drumminj wrote:
I’ve not seen a single person first acknowledge an individual’s right to their labor and the fruits thereof (the basis of personal property rights), which is encoded in the Bill of Rights of our Constitution, and then argue that a progressive tax structure is consistent with that principle and does not violate it.
——————–
Again, you’re making the FALSE assumption that the rich have “earned” their money via their own labor. Nothing could be further from the truth.
………………
(But it’s important to note that for the rich, most of that income does not come from “working”: in 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries. See Norris, 2010, for more details.)
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
Why do you keep trying to talk around this fact?
x3 Cheers to CA renter & RioAmericanInBrasil… Et al., for your meritorious efforts yesterday (and many other days as well!) in your “TruthSlayer™” smackdown of the “Truefalse™” onslaught of the “TrueDistortionGang™” haymakers assualt.
Many Tankxs!
(A haymaker’s power is derived from weight transfer and momentum…of continue posts by “TrueInstigator’s ™” & “TrueProvoker’s™” who would rather “blah, blah, blah”, “but, but, but”…then learn)
Thanks, Hwy!
You need the rich. I need the poor. It’s my job to keep all of you at each others throats while you all earn money for me.
Get it yet?
Hey cousin, how’s your DNA holding up, still striving to improves on it’s longevity features?
I am not rich…I work for a living, save and invest. I don’t spend every minute of my day boiling my brain with anger about how the rich have given me the shaft. How bad does a persons life have to be in this country to put forth the notion (usually by covert or indirect means) that we would all be better off if we overthrow the constitution and institute some sort of Cubanesque Communist Utopia?
I will pass, I like our system with all of its imperfections. Life, Liberty and the pursuit of happiness is what makes me get out of bed in the morning. Not the idea that some master will provide a shanty, government cheese and toilet paper. Your spirit would perish and you would merely exist and not really live.
Don’t like the Wall Street - Washington Cabal? Vote for representatives that will attempt to clean up the mess or who will support your idea of taxing the rich within the bounds of our constitution. Take your business to companies who do not bribe our elected officials…if possible. We have a people problem, not a capitalism problem.
Enjoy your weekend!
I don’t think people are upset because of rich people in the world. People are upset because a handful of individuals have been allowed to get obscenely rich by way of breaking the law and stealing money from millions of people.
Ony a p uss y would just let someone steal from him without demanding justice.
Big V Exactly .
The institutions should have been allowed to fail and any person who committed a crime should be prosecuted to the fullest extent of the law. I hate the bailouts and the fraud just as much as anyone, but not enough to throw out our entire system. Better dead than red.
“Ony a p uss y would just let someone steal from him without demanding justice.”
+1,000,000 V
It’s kind of like asking someone nicely “Would you please stop banging my wife? Pleeease.”
Legitimate wealth is fine. It’s the officially sanctioned systemic theft that I find hard to stomach.
I’m a little bothered by the officially sanctioned systemic wealth generation for the chosen few, as well.
“Ony a p uss y would just let someone steal from him without demanding justice.”
Me liiiiike Big V.
“Ony a p uss y would just let someone steal from him without demanding justice.”
Missed that one on my first pass. Wow! You angry lefties are up in arms these last few weeks. I am sure that derogatory term was not directed at little old me.
Big V’s statement fits you perfectly and the fact that you run from it and deny it confirms it’s glove-like fitment.
Now get back to work wage earner.
nick:
You seem to be missing my point. You are supposed to be “angry” when someone steals your stuff. If you just sit around and do nothing about it, then you don’t deserve to have justice anyway. You know that old saying “Freedom ain’t free”? It’s true.
The corporatists have gotten away with huge spoils using illegal tactics such as bribery, fraud, etc. We would be stupid not to claw that money back.
“Big V’s statement fits you perfectly and the fact that you run from it and deny it confirms it’s glove-like fitment.”
Let’s keep those spurs from jingling and jangling cowboy…Easy on the personal stuff.
“Now get back to work wage earner.”
Just keep those handsome checks rolling in twice a month baby!
Big V
I was having a bit of fun with you. Anyway, like I said in one of my posts, I am just as pissed as anyone. Any Bankster that committed fraud should do hard time…period. The bailouts and so called stimulus used to prop up failing banks and auto companies were like a stab in the back to the tax payer. We still have a great country and a great system of government, we just need to make the proper adjustments and move on. Life is too short.
I have some Heinekens calling my name. Adios.
Run boy run.
You work for me, not for a living. And you always will.
“You work for me…”
Right up until the very moment when I chop off your head.
LOL!!
Thanks for the regular check cappy
Carry on peon.
That’s why I don’t think ppl should block other ppl’s comments. It makes it hard to see what they’re saying.
Same principle extends to collective bargaining rights for unions. How will the politicians figure out how public employee unions feel about pay and pension cuts if they take away their right to negotiate?
I see what you’re saying.
There is a huge disconnect from reality here.
Somebody stole money from us.
Look, there’s a guy who has money.
Let’s get him and take away his money and throw him in the well, he’s guilty as sin and we DESERVE what he has.
Careful with those straw men, it’s almost hay-fever season.
We DESERVE what is rightfully ours, and what he stole from us.
Ahhh. I just love collectivists. I was joking the other day about the TMBA (Take the Money Back Administration), I would not be surprised to see that come about. Can’t wait to get my check!
No, BS.
We have directly identified the group of individuals who did the stealing. It was the Globalist Bansterette Tea Party. What is so hard about turning the tables on these people?
Back-of-the-cereal-carton puzzle:
Can you locate the missing “k” in the comment above?
intereseting taht the wealth distribution. Share of wealth held by the Bottom 99% and Top 1% in the has come full circle since 1922 (63-37) 2007 (65-34). 1976/1979 (80-20) was the max for the bottom 99% ‘ers.
Perhaps coincidental, but I keep seeing statistics suggesting we are more in the buildup to GD2 than in the aftermath of the Great Recession.
Bingo, PB.
…the philosophy of limited govt and limited taxation leads to prosperity and opportunity for all, including labor.
————————–
I addressed this theory yesterday, and brought data that showed there is NO evidence that a limited govt and limited (low) taxation leads to “prosperity and opportunity for all.” It actually shows just the opposite.
People tried to redirect the conversation, suggesting that there might have been other factors at play (yes, I’m sure there were, but we’re talking about decades of data, not just a few years). Others suggested that the colonial times were better — I addressed that too…life was NOT better during those times (see yesterday’s thread for info).
Again, can anyone show any **evidence** (real data, not romanticized musings regarding a theoretical Utopia) that ultra-low tax rates and a weak/limited government lead to prosperity and opportunity for all? We need to show how these “capitalist” countries perform relative to their more “socialist” counterparts.
Statistics can be found here:
http://www.nationmaster.com/cat/eco-economy
Utopia is impossible because human beings generally suck.
Hell is other people.
“I addressed this theory yesterday, and brought data that showed there is NO evidence that a limited govt and limited (low) taxation leads to”
if you data shows no evidence then what good is it?
correction:
if you data shows no evidence then what good are they?
We’re all still waiting to hear an actual example of this limited government/low taxation shangri-la.
Final correction:
If your data shows no evidence, then what good is it?
Using the idea of a data set or collection as a single, countable noun.
It showed that there is a *negative* correlation between low taxes and “prosperity and opportunity for all.”
You’ve suggested low taxes and small govt leads to “prosperity and opportunity for all.” I brought plenty of data that disproved your theory.
It would be great to see long-standing data that would indicate your theory is right. Is there anything you can provide that would show is that low/no taxes and a small govt leads to “prosperity and opportunity for all”?
The terms are too vague. What is “limited”? What is “low”? There are a lot of grey areas. There is no black-and-white line between capitalism and socialism. Neither one really works. We learned from the Great Depression that capitalism must have some “socialist” safety nets in order to function over the long run. Otherwise, the wealthy few will accumulate too much power, and the will take over completely. Same thing happens with pure socialism.
I don’t understand why some ppl think that a capitalist system with meaningful rules and regulations that apply to everyone and allows upward/downward mobility is actually SOCIALISM.
“I don’t understand why some ppl think that a capitalist system with meaningful rules and regulations that apply to everyone and allows upward/downward mobility is actually SOCIALISM.”
Maybe because they believe that Corporatism is Capitalism.
So, are you saying it all comes down to poor vocabulary?
It’s a big part of it. But it’s more Orwellian than common ignorance.
My view of socialism is one where the government — that is fully transparent and accountable to the people — owns, controls, or strongly regulates the market that provides basic necessities, and also controls or owns the distribution channels. I would like to see an end to rapacious middle men.
IMHO, capitalism for “wants” is okay, as long as there are no monopolies.
Has anyone else noticed a shift in the air? It’s the “spring selling season,” and buyers seem to be largely absent around here.
Sure, a well-priced or exceptional home will sell quickly, but we’re not seeing the rush that we normally see this time of year.
I think the talk of cut backs in the public sector (including SS and Medicare) and the suggestion that the govt get out of the mortgage market are starting to make people wake up to the fact that the “recession” is nowhere near over.
What are you seeing in your neighborhoods?
“What are you seeing in your neighborhoods?”
New construction beginning on a large lot; the house behind me seeing lots of action; the house next to me being shown about 2x a week even though there is nothing on the books (other than a small lien) against it; the house around the corner closing at about $100k more than I would have guessed (or been willing to pay).
Good times, man, good times.
The word best used to describe this environment is static.
In our ‘hood there has been a pretty big bump in new listings on the MLS in just the last couple of weeks. Guess they don’t want to miss the spring selling season! That bump up has been partially offset by a few properties being taken off the market.
Price reductions abound, with most people chasing the market down (”my house is special, I’m not giving it away”) instead of getting out in front of it.
Despite the bump up, the total number of listings is about 10 to 15% less than it was in 2009 and the first part of 2010. It’s still a multi-year supply however.
Marked down from estatic to static.
A few weeks ago there was a post by someone that they saw properties that had sat vacant, were in default but never were offered by the bank as a short sale or foreclosure…When they finally came to market they were owned by a flipper or someone just moved in without a sale at all…I suggested that some investors were going to lenders and buying foreclosures in bulk transactions and then returning the product to market after re-habing them and renting them up….Here is a offering that came to my attention just a few days ago;
“This is one of 66 properties in a portfolio that are currently being offered for sale. Is is a combination of single family homes, multi-unit buildings and condos, a total of 82 units, ranging in price from $40,000 to $8,057,000 for the whole portfolio, over 90% of the units are currently rented with gross rent of over $1,043,000. This is an outstanding opportunity to purchase “turn-key” well maintined properties. These units can be purchased individually or in bulk”.
Just sell them in bulk to your bruddah in law’s construction co then resell and split the profits.
Thank you, scdave.
This is something we were discussing as the bubble began to burst. I was hearing a lot of stories in CA about these bulk purchases.
We have a few homes in our pretty desirable neighborhood that have been foreclosed on — sold to trusts holding the MBSs, apparently — and they are just sitting there empty. Some have been empty for a year or two. Could this be related to the MERS issue, or is it really about the banks sitting on this inventory and “waiting for the market to come back”?
From South Central KY:
The lower end houses here, $80-130 K are selling. Both owner occupants and investors are buying them. The over 250K and especially the over $340K or so is languishing and very plentiful. If your a buyer in that range you are like a kid in a candy store. Hopefully they won’t wake up with too big of a bellyache.
T
Hey never been to kentucky but heard it is nice.Is the whole state forested? Is it mainly hardwood forests? Have you ever been to jack daniels business there?
went there with my dad when i was a kid, he sold jd and the little pint samples made me pretty popular with the high school girls.
“Is the whole state forested? Is it mainly hardwood forests? Have you ever been to jack daniels business there?”
Jack Daniels is Tennessee pisswater. We make bourbon in Kentucky.
Eastern Kentucky is mountainous (very hilly really) and heavily forested. Central Kentucky and western Kentucky have rolling hills and lots of farms, not nearly as heavily forested- mainly because they’ve been cleared for farming. The forests are mostly hardwood.
the buyers have returned to mammoth lakes, ( houses & condos, not lots ) now just above 2006 levels.
mean prices are down 35% on houses / condos 55% on lots.
lots of cash purchases.
the buyers have returned to mammoth lakes
Must be tough to find a rental for recreation…or is Mammoth Lakes a thriving community of excess jobs not related to fun in the snow?
x12 Oppoortunities…stunning!
http://mammothtimes.com/content/jobs
Geez, what happen to “Fun in the Sun & Snow”?
“Homeland Security Solutions, Inc. is seeking professional individuals 21+ years of age; must have a HS diploma/GED, no criminal record, a valid driver’s license; pass a drug test, and be physically fit to pass an initial and subsequent periodic physical agility test (usually every six months). California (BSIS) Guard Card with baton, and firearms (Caliber 9-mm) permit required. This position will require work on holidays and weekends, outside in ALL weather conditions. Military, Security or Law Enforcement experience preferred but not required. Additional training and uniforms provided. Full time and part time positions available. Near Bridgeport, CA. Positions pay top industry wages. HSSI is an Equal Opportunity/Affirmative Action Employer.”
What in the world are they “protecting” there?????? Gold mines???
mammoth is not thriving, and there are plenty of rentals.
there are buyers due to perceived deals
Tankxs, for a moment Hwy thought he might be missing out on a “once in life-time oppoortunity!”
You have to guess that Charlie has investment property around Mammoth that he has to unload…
i advise against buying property in mammoth as investment.
it is a nice resort that suits many people, so if you can afford the property and you actually want to live here then buying a well chosen correctly priced quality property can makes sense.
i’m not a speculator and having nothing to sell you PB, sorry
having = have
Our neck of the woods is east Ventura County-Thousand Oaks/Simi Valley area of So Ca.
As you know, we are cash buyers, and there are some buyers (mainly “stretchers”) looking when we are, and slim pickens. Escrows are longer, and many deals fall through for a measly $2,000 uptick in deal costs for the buyer. (Betcha FHA 3.5%ers) A UHS told us what’s up. Evidently, so many FB’s are living in their home free, and shadow inventory around here, the MLS for our criteria is dry. Our price range should not be “can’t afford, but wtf”, but apparently it is.
When I mention that it’s “selling season” to the UHS, I get the BS that is no longer the case, all year long is a rush for homeownership. What a load…
At $230/sf, they can keep their “we’re not giving it away”. The reverse of that is “gth, we’re not paying that”.
And I thought the realtor hubris was bad here.
Hand out a few 6 month jail sentences to these lying realtors and watch the market change in a hurry.
Capitalist
I wish! We’ve been told, cash is no big deal. The seller gets a check regardless. The same UHS that just lost a deal to his listing, due to a stretcher. They are relentless in their lies, even when the facts are evident. Not even I have that kind of chutzpah, but then again, I have a moral compass.
Awaiting,
We’ve heard the same thing about cash. The truth is, they’re right. An FHA buyer who is willing to stretch because of their 3.5% down payment (which is often covered by the seller, even though I think that was supposed to be banned) will often be willing to offer more than we will. After all, they have very little to lose…just like during the bubble.
At $230/sf, they can keep their ??
$230. ?? Hell thats a friggen steal around here…Baseline here is $400. per foot and up…
So right Dave. $230 is nothing here.
At the peak, Zillow valued our property in the OC at $630 per square foot. With a view of….. the street.
Here in Woodland, Ca (15 miles NW of Sacramento), there’s a big new housing development going up right around the corner from us. From the website, “Home designs will range in size from 1,680 square feet to over 2,400 square feet.” Yikes. No word on the price. The foundations and walls just started going up in the last month. All on rain-saturated ground, I might add.
http://centexhomes.com/ca/sacramento/woodland/woodland/starlyn-park
Also, a home is up for sale around the corner. A foreclosure, identical to ours. We got ours last October for 189,000. This other one listed at 204,900 in November. New price: 189,900.
http://www.redfin.com/CA/Woodland/1967-Huston-Cir-95776/home/19474180
I like woodland for a small rural town yet close to a big city…
“get out of the mortgage market are starting to make people wake up to the fact that the “recession” is nowhere near over.”
Yes they are getting out of the mortgage bubble and choosing to find new ones to inflate. What’s next? Art, old cars, beanie babies?
I’d like to think they are going to be pulling back some of that money.
We’ll have to see where it goes, but everyone is ready for inflation. IMHO, we’ve seen the inflation (look at the prices of stocks, bonds, commodities, houses…especially when you consider where they were going in 2008/2009, which is where they belong. Sometimes, flat prices can show inflation if the fundamental value of those things is below where they are, like housing prices, for instance. They belong far south of where they are today, in many cases, but houses are being held off the market, and “fake” money was being pumped in to keep prices artificially elevated. IMHO, that’s inflation.
I dunno, I don’t see inflation. Really. There is speculation in commodities (again), but I don’t see that as inflation. I see declining rents, declining house prices, and seriously NO CHANGE in food prices for years.
I read comments on this blog all the time about inflation, but I personally have not experienced that at all. Not trying to be difficult, but it’s just what I see.
But regular “inflation” only works when wage earners are the ones seeing increased wages. When the financial elite are the ones getting the money, you have to look at asset prices. Asset prices have gone through the roof in the past couple of years. That’s where our inflation lies.
According to the Economists’ cartoonist, the US recovery is like a house of cards, with bickering architects, on an uncertain foundation, in a neighbourhood prone to tremors, with a general election in the wind….
The recovery seems to have been working in the DC Area. The prices just don’t correct in DMV and surrounding suburbs. Townhouses are still 350K or higher in places far off from DC like Centreville, Ashburn, Germantown etc. If you go close to beltway, they are 450K or higher.
It is just frustrating that prices are being held high due to Govt. spending. People still don’t make that much money. And if there is a 20-30% correction in this area, there would be a lot more foreclosures.
When can a person realistically buy in this area? The TH rents for $1500 and is priced at $350K. The taxes are like $4500. Why would anyone want to buy?
Perhaps the scepter of a federal government shutdown will help bring DC prices back to earth? I can’t imagine being on a two-week federal government funding cycle will offer much stimulus to the DC housing market’s red-hot spring sales season…
Republicans score big win with two week budget extension
* March 2nd, 2011 9:27 pm ET
The Senate today passed a continuing resolution to fund the government for two more weeks while talks over the larger budget for the rest of the year continued. The House has already passed the measure and President Obama signed it this afternoon. The measure includes $4 billion in spending cuts, and with its passage an impending government shutdown has been averted. President Obama and Democrats in Congress decried efforts to cut spending during a recession even as they capitulated on the issue by accepting the budget measure. Indeed, for all the complaining on the right that the measure does not go far enough, this represents the first time in decades that Congress has passed real cuts in spending, not just reductions in the rate of growth.
…
I’m skeptical about the specter of a scepter.
The big difference between DC and the rest of the country is that the Fed Gov doesn’t have mass layoffs like the private sector, and keeps growing its payroll of high paying jobs.
And can’t be “outsourced”. Or so they’d like us to believe.
Saw single families in far, far out MD (Beyond Frederick) advertised “from” the $270s this week. Hour on the Marc train to DC and that must be just the ride itself, not driving to the station, parking and getting there in time to actually get on the train. Plus the MARC train has to actually run on time. And I bet the picture in the ad (looks too big for anyone with less than 4 kids) is not a $270K model.
Of course, they would have been offered at a lot more than that a few years ago.
That’s OK, PB. A true economic recovery cannot be engineered. Just like the crash. You get everyone weighing in on “what to do about it”, but none of that has any meaningful affect. Let them bicker. Bicker on, fools!
At a glance, I have to guess these guys failed to properly adjust for the relative cost of living in their comparison (especially housing). It’s far cheaper to set up a homestead in Madison than in San Diego.
Pay in the public sector
Sun, salaries and public servants
The part that mild weather plays in wages
Mar 3rd 2011 | from the print edition
GOVERNMENTS in the rich world are taking the knife to the budgets, pay and pensions of state employees. But where to cut? A study by Jan Brueckner and David Neumark of the University of California, Irvine, finds that within America there may be more flab in public-sector pay packets in states like coastal California than wintry Wisconsin.
The two economists work out the fraction of American workers’ pay that cannot be explained by factors such as differences in education and experience. This “wage premium” reflects the extent to which workers have been able to extract more pay than is merited by their qualifications. Those who believe that America’s state workers are vastly overpaid will be surprised to learn that this premium is in fact higher in the private sector than in the public sector in many American states. But states where the opposite is true are ones like California, Florida and New York. The authors point out that these are all states offering the sorts of things that attract people from other states—mild, sunny weather in the case of California and Florida, and big metropolitan areas in the case of California and New York. They argue that this is no coincidence.
…
But where to cut?
Madison: Street Snow removal people
La Jolla: Life-guards
Little-known LA police/fire retirement plan pays pension, salary at same time
“DROP” stands for Deferred Retirement Option Plan. LAPD and L.A. Fire Department personnel who’ve worked for at least 25 years and are at least 50 years old can “retire,” then go back to work immediately. When they return to work, pension payments are held while they continue collecting a salary, and after five years, they can leave and collect that money in a lump-sum payment.
http://www.scpr.org/news/2011/03/03/little-known-la-policefire-retirement-plan-lets-of/
While it’s understandable why people don’t like this, it actually saves the employer money, in most cases.
From what I understand, employers do not have to pay any pension contributions for employees in the DROP program. These employees would have been getting their pension payments, no matter what. If the employer had to hire or promote a non-retired employee, they would have to pay into the pension plan for that employee.
Ultimately, the employer saves the contribution amount, and also gets to retain a person who is generally more experienced and valuable.
Case in point: a chief is about to retire, but the city needs them for some critical task the following year. If they keep him through the DROP program, they get to complete the task, and ALSO save the pension contribution amounts they would have had to pay for a non-retired person to do the job.
Oftentimes, the DROP program is used when a change or important task is upcoming, and they need the retiring person for a specific job on a temporary basis.
Glad to know TTT is upbeat about $4/dollar gasoline! My loverly wife almost went into shock herself last night when I showed her the receipt from filling the gas tank on my economy car.
Geithner upbeat despite oil shock
Published: March. 4, 2011 at 9:15 AM
WASHINGTON, March 4 (UPI) — The U.S. and other major economies have enough strategic oil reserves on hand to cope with the crisis in the Middle East, the U.S. treasury secretary said.
Political turmoil in the Middle East and North Africa, particularly Libya, helped push oil and gasoline prices to post-recession records. Gasoline prices in parts of the United States have topped $4 per gallon with British drivers paying as much as $10 per gallon.
…
Good thing you don’t have one of those 4 door, 12 mpg pickup trucks that have become the new familiy sedan.
$4/dollar? Dang, that sux.
Now that’s inflation!
I have parked the vehicle in favor of the public transit system. $47 a month to ride the bus/light rail to work now. It does cost me an extra 10 minutes each way in time. Other budget cuts are coming as well in the AztoORtoCOtoOR household. You’ll know when they hit, because you will see the wife and kids picketing outside saying how it just is not fair!!
You’ll know when they hit, because you will see the wife and kids picketing outside saying how it just is not fair!!
LOL!
The perils of property
Home truths
Financial crises and property busts go together. The link can be weakened
Mar 3rd 2011 | from the print edition
PROPERTY’S grip on people is unrelenting. After the worst housing crash in memory, almost two-thirds of Americans still think that property is a safe investment. In Britain ministers hold summits to work out how to get first-time buyers into a market where prices are falling. In China anxious buyers queue to snaffle yet-to-be-built apartments. The world of commercial property is saner, but not by much.
…
Why is it so hard to get people to accept that renting is not just OK but positively desirable (cheaper, flexible, convenient)?
If you are affluent, and I use that term very very loosely (most people on this blog would qualify), short of very-specialized circumstances (which do exist, I admit), there is not much to be gained by buying.
Case in point: very close friend of mine used to be a high-end dude in Silicon Valley. He is smart. He rented in Portola Valley, and I expect at least the CA people to know what that means.
He just decided to transfer to Shanghai where he, his wife and his three kids rent one more time.
Will this be his last move? Doubtful.
Smart? YES!!!
We took every penny we still had and poured into a home. All cash, 117k. It pays us back about 6% (rental proceeds of $825/monthminus maintainance, taxes and insurance). This was instead of leaving it in CDs or paying the mortgage on my wife’s townhome until the $$ was exhausted.
We will have a rent free paid off home in the nicest neighborhood in town when we decide to move in. We will either rent a place or move into the house when we get evicted from the home that we have stopped paying on.
What would have been a smarter move, given both my wife and I are employed, but at sub-sustinence levels? I have been trying for years to get a local teaching job, finally two months ago I have been added to the substitute teacher list, and am finding work at about 60% at $20/hour.
It all sounds kinda promising given I have my foot in the door at local schools and am making a name for myself in certain locations. However, one of our local districts is 10 million in the red, and massive pink slips to established coming this month are the rumor.
The only good thing other than our paid off house we can live in is that the foreclosure imminent has been postponed and we have no searchable Trustee Sale number or sale date anymore; nor sale date. So we have an indefinite time to snorkel in our underwater unpaid mortgage home. As long as we keep up on it I see no harm to the bank by staying until they ask us to leave.
We will be leaving $3,000 window coverings, and much more to the bank….More later, my kid wants to play chess!
If that local school stuff doesn’t work, then what?
Most people are house drunk - you are one of them.
When you are derelict and on the streets, and it’s a when not an if, at least I will be happy to go:
BWAHAHAHHAHAHAHHAHAHAHHAHAHHHHHHHHHHHHHHH!!!
You sir, do not actually know about the larger circumstances of my life. And mean spirited remarks that predict me on the streets, is ludicriuos. Having a paid for roof seems pretty good to me, and I don’t care if you “know” it will end us up on the streets.
We could sell it today for more than we paid for it; it is liquid. It pays more than a CD. We can move into it and never have to worry about a mortgage.
Two full time $10/hr jobs plus govt. cheese will keep the roof over our heads and as long as you can afford vacations to India I won’t worry about your tax payer burden of supporting us.
Never tasted the gov’t cheese; nor the coated brie of your parties; never intend to. But SNAP and Oregon Health Plan are there as safety nets if the work scene dries up. $20/hr is a good wage job here in Oregon; I can also move to where the jobs are and leave my investment to continue paying out its dividends in the meantime.
I am house-drunk, sure, but I take offense to your laughing at people destined to be on the streets (it is your opinion but certainly not a fact in our case); people who gave it their best shot at working; and want to educate our youth. It is mean spirited and reveals more about you than I want to know. Even if you are Chef de boyardee and take awesome pictures; I would respectfully decline your invitation to a dinner party. even though I could bring some self farmed organic veggies to the table. Blech!!!
Mike:
I appreciate you sharing the details of your experience with us. It helps us get a better idea of what’s going on outside our own sphere.
Thank you.
Tell me why BofA is only pursuing 14 delinquent homeowners in Oregon when it was over 5k in October.
My wife’s own pre-foreclosure no longer has a sale number or auction date.
Really am trying to get a pro job. I like working with kids and will pursue that avenue before tasting Govt cheese. But health care is the biggest expense we have.
Having a paid off home, whether that makes us drunk or not, seems to provide a modicum of security.
I confess I liked making 10x teacher pay flipping homes during the bubble. It afforded me major medical care at my own expense, an opportunity to be a stay home dad for 15 years before having any money worries.
Coming out the other side with a teaching license and a paid off home does not seem to me to be a path to the streets; rather one ot a working class neighborhood.
What about old folks who borrowed against their houses? I feel good knowing that we own a house outright that we would be happy to stay in until forever.
I don’t like FPSS behavior; I did not realize his meanness and ill will. If ever we go on SNAP, or when we collect our EIC, we shall be thanking him though!
Pay no attention to the “cat” Mike….He/She just likes to stir things up including being insulting at times…Personally in following your story I think you & the wife have thought things out very strategically and I am sure you will do just fine…
Puss is an interesting Cat but don’t let him dissuade you from sharing your story and on the ground perspective.
Thanks! Having a loving family does not hurt; I will never be homeless this is almost a given. I also may enjoy stirring the pot a bit myself. Like telling exeter that I rent to a likable trustworthy realtor.
But only in jest–the mean spirited remarks that follow my heartfelt ones will not go unnoted. Lots on this board have been more than helpful; otherwise I would take my keyboard and go away.
Polly has given me good legal advice (talk to a lawyer) and saved me a criminal record for stupid behavior on my part regarding a “toxic tenant” who called the cops on me for unplugging her Christmas display last February.
Kim has wished me well in my hunt for regular employment. Housing Wizard has never accepted the fact that my checker/lunch lady wife was granted a 300k loan without having to lie; but he was civil about the disagreement.
Rehobbbyist has told me to get my head examined (it turns out to be quite large!) out of concern.
Fecaltime told me never to reproduce (too late for that).
FPSS told me I am destined for a life on the streets,
Drunk on housing. Well maybe; bought in 95 for 275k(after saving 60k in cash under the mattress as a vegetable salesman/organic farmer) to be at the beach. Lived in a granny flat and rented out the house to students.
Met a gal, had two kids. House went to a million; sold it in 04 and was high as a kite. Went on to buy a few more winners; then a couple losers. Bought me time on a surfboard and time with my two wonderful kids.
What I have been asking, though, is why Bofa is only pursuing 14 foreclosure sales in the state of Oregon currently? This applies to us because we were on the chopping block, ready to move. Auction was rescheduled a few times, and POOF no more auction scheduled for us or thousands of other deadbeat mortgagees here in OR.
How much more time in our “free for now” home before Bofa sorts out whatever Oregon protocol they wish to follow?
I also appreciate your posts, Mike. Agree that having a paid-off house is very important, and a good hedge againts potential inflation (I’m a deflationist, but acknowledge the potential for a currency crisis).
The BofA stuff is very interesting, and your updates are much appreciated.
Enjoy the free rent for as long as you can.
Good luck finding a teaching job!
“We took every penny we still had and poured into a home. All cash, 117k.”
Not saying that doesn’t make sense from a personal business standpoint, but is it actually legal to do this when you are stiffing the bank? And what’s worse, what if the bank comes after you for a deficiency judgment on the mortgage you are not paying and claims a share of the home you bought? (Not sure the bank has the legal recourse to do this, but if I worked for the bank, I would explore that avenue…)
Wife owns condo; I did not qualify. I own the house. explored thru and thru. Talked to the city attorney. I am not on loan or title of the foreclosure to be; Oregon is not a community property state. So what is mine is mine and what is hers is hers to lose alone. Lots of folks foreclose on one property and keep others. Even more are not forced to drain retirement to pay note.
so our collective assets are “his” and “hers”.
“Even more are not forced to drain retirement to pay note.”
I’ve never heard of anyone losing their 401k account to a mortgage deficiency judgment.
“He rented in Portola Valley, and I expect at least the CA people to know what that means.”
I have close relatives who have a very large home in PV. It is featured in the tour of homes there. The carrying costs are astronomical. The annual landscaping bill is about $80K. Insane.
If that thing falls into my lap via inheritance (unlikely) you can be sure I won’t carry those costs very long.
Anybody interested in investing in an extra-tall sand castle?
A special report on property
Bricks and slaughter
Property is widely seen as a safe asset. It is arguably the most dangerous of all, says Andrew Palmer
Mar 3rd 2011 | from the print edition
THERE are plenty of candidates, from the ghost estates of Ireland to the foreclosure signs on American homes. But as a symbol of the property cycle that still distorts the world economy, the Burj Khalifa in Dubai (pictured above) takes some beating. The world’s tallest building is literally built on sand. Its height, at half a mile (838 metres), violates a basic rule of commercial property: when land is plentiful, build outward to use up as much of it as possible. The building opened in January 2010, just weeks after the emirate announced a standstill on debts largely incurred on glitzy property projects. Its name was hastily changed from Burj Dubai to Burj Khalifa to honour the ruler of Abu Dhabi for sending bail-out funds to its fellow emirate. A year on, tourists cluster at its base to take photos or to visit the observation deck; inside, many of the flats lie empty.
…
BWAHAHAHAHHAHAHHAHAHAHAHHAHAHAHAHHAHAHHHHHHHHHHHHHHHHH!!!!
Take a look at the comments on that article.
After the bust, it’s filled with the EXACT same fallacies that were present before the bust.
It’s extraordinary — we’ve been through the biggest bust in history, and people still don’t get it. WTF?!?
“It’s extraordinary — we’ve been through the biggest bust in history, and people still don’t get it. WTF?!?”
People are smart.
Or at least, that’s what Ditech wants you to believe that they believe.
Burj Khalifa
Decorating a Burj Khalifa apartment, however, is a challenge. The units are laid out in an “organic” way, meaning there are curved walls and huge structural columns in the middle of some spaces. The set-up “takes some getting used to”, she says.
This monstrosity is partially owned by our one time-VP, Mr. Richard Cheney, and the holding company received substantial bail-out monies via AIG. About 6.8B USD, in fact.
Your tax dollars at work.
Renting will remain popular with our household, right up until the point when it becomes cheaper to own.
A special report on property
Own goal
Renting is becoming more popular, but only up to a point
Mar 3rd 2011 | from the print edition
“THE psychology of the consumer has changed 180° from the bubble,” says Ric Campo, the boss of Camden Property Trust, an American real estate investment trust (REIT) specialising in multi-family residential blocks. If homeownership was the American dream before the bust, lots of people are now waking up to the benefits of renting. Until the bubble got going, the “move-out rate” (the percentage of Camden’s tenants leaving their apartments each year to buy a home) was about 12-14%. That rose to a peak of 24% when, as Mr Campo puts it, the banks started lending to anyone who could fog a mirror. It is now down to around 10%.
…
Speaking of which, I have a dilemma which luckily doesn’t have to be resolved any time soon. With my new job I’m commuting where I was walking before. I’d really like to get back to walking but the neighborhood close to the new job basically has zero rentals. Plenty of stuff for sale, but nobody wants to rent. It’s not an expensive neighborhood, I could easily afford to buy there, but I’d rather not for all the reasons we discuss here…
A bicycle, maybe ? Are you close enough to bike to work?
Not unless I was a serious biker, it’s about 12 miles or so and the bikers have to share the road with 70mph traffic.
Call some of the real estate agents on the signs. I bet there might be one or two in the neighborhood willing to rent for a year or so until the “market bounces back”.
LOL, skroodle.
After hearing my projection of a Japanese style controlled collapse of this still insanely priced housing market, I get the market will bounce back next year reply often. The NAR says so. I usually tell them to look up the words subjective vs. objective.
I’ve thought about doing that once I’m serious. I’ve wondered if it wouldn’t make more sense to contact the owners directly, though? It just seems like an agent would have no reason to want to help me rent the place.
They get a month or two of rent as a finder’s fee. And the hope of getting the listing back.
A special report on property
When the roof fell in
Housing will be a drag on the rich world’s recovery for the foreseeable future
Mar 3rd 2011 | from the print edition
Walls of worry
PROPERTY can cause huge problems, but the sector also traditionally leads economies out of recession. Housing is far bigger and more important than commercial property. Residential investment, which is driven by new housing starts, makes up a large chunk of the volatile bit of the economy. That means changes in residential investment have a disproportionate impact on rates of GDP growth. It has played a big part in driving previous post-war American recoveries, and many assumed the same would happen this time round. Things have not worked out that way (see chart 3).
…
“Things have not worked out that way ”
Dah. When you have cheap credit without due diligence of an individuals ability to repay debt in an economy modeled on consumption the end product will be a shortage of disposable income. The balance sheet is now shifted 100% to debt servicing and all buying ceases or BK follow en masse.
“Things have not worked out that way ”
Most everything that could be said about the collapsing housing bubble has already been said on the Housing Bubble Blog, but not everyone has had the chance to say it yet.
California uses 13 to 14 billion gallons of gasoline a year. That roughly translates to 1.12 B gallons a month. The average cost of gas in California today is 3.86, while a year ago it was 3.04. So, gas is 80 cents more a gallon compared to last year. Californians are paying 896,000,000 Dollars more for gas this month than they did last year. That is around 10.7 Billion more for the year. This will have a huge impact on real estate. Can someone please explain to everyone how…
Now, now…change doesn’t always happen in a vacuum. Pain is an indicator, and can sometimes result in mindset & financial behavior modification:
For example, anyone have the recent sales figures for Hummer…vs…Prius?
Oh, if hard data is a bother, just use anecdotal evidence, which do you see more often these days?
I still see a lot more pickups than compact cars in my neck of the woods.
It’s fun to watch the pickup crowd frown as they fill up their alligators, especially as the total on the pump approaches or passes $100 (we’re still at $3.30).
How quickly people forget! It was the same in 2008 when it approached $4 out here, people were frowning and pickup sales collapsed out here. Then gas dropped to $2 and the pickup sales bounced back with a vengeance.
I know a few people who hung in to their older sedan when they bought the shiny new 12 mpg truck and they are leaving them at home while driving the 6 year old car.
I know a woman who is very urban otherwise drives pick-up truck to work once in a while. First I thought she might have borrowed it from her husband or boyfriend, but lately I see her in that truck quite frequently. Either she is a lipstick L or her SO is going thru the mancession.
Ha, well Colo eyes can imagine that the 3″ chassis clearance for the Prius might be a problem in your everywhere ya look there’s a granite peak Mountainous St.
But things are different here in CA!
I get by just fine in my FWD compact.
It’s fun to watch the pickup crowd frown as they fill up their alligators ??
Pickup ?? Hell, thats nothing….You should get a look at Rancher’s face when he must fill up that big pusher…
“Pickup ?? Hell, thats nothing….”
My diesel PU has a 60 gallon tank. Ouch!
But try towing a Backhoe/Gooseneck trailer with a Prius. If the Prius came with a towing hitch it would be located on the front bumper. Brute power can’t be ‘greened away’.
For as long as transporation is required, diesel blocks will never go away. Never. Lower density fuels like gasoline, compressed gases, etc cannot do what diesel can.
I filled my Duramax yesterday afternoon. Price? $108.42. I’m fortunate in that I don’t have to pay for it.
“But try towing a Backhoe/Gooseneck trailer with a Prius.”
I doubt that many of those 4 door, shiny without a scratch pickup trucks I see around here are ever used for that (you can tell which ones are used for “work”, they are all scratched up.
They are used as family sedans and for ocassionally bringing something back from the Home Depot. I don’t get it. Why buy a 30-40K gas guzzler when delivery is very reasonable? And I still don’t get why it’s cool to drive a ponderous, poor handling truck. Maybe if bought a school bus I would be even cooler?
I can see the point of owning a truck.
My job is “on call”. Which means that scheduling my time around a deliveryman cost me money, as well as time. Having a truck available 24/7/365 allows me to pick stuff up when I have the time. But I have a ten year old truck, paid for with cash. that sits in the hangar about 80% of the time.
Someday, someone smart is going to figure out that he/she can sell a lot more high mileage cars, if they add a “free loaner truck/SUV” package along with it.
“I can see the point of owning a truck.”
I’m in fly-over country, and driving a $50k crew-cab, diesel-powered “dually” is a birthright.
re: birthright
get ready to pay through the nose
What I don’t get is the disappearance of the compact truck.
In case no one has noticed, formerly small P/Us have gone full size while full size went “monster.”
Those compact trucks were the prefect compromise between mileage and utility.
And NOBODY sells a compact diesel truck in this country, yet the entire world has them. What’s up with that?
Gas prices have gone up around here 40 cents a gallon since Christmas.
Trying to decide if I should beat the rush and buy a high-mileage spam can now, and avoid the spring rush.
How quickly people forget! It was the same in 2008 when it approached $4 out here, people were frowning and pickup sales collapsed out here. Then gas dropped to $2 and the pickup sales bounced back with a vengeance.
That’s one of the reasons that I tend to tune out when people complain about the price of gasoline. This pattern has been going on for a long time. The price of gas shoots up to some high number, people whine and cry and gnash their teeth, then the price falls back down again and the whole episode is forgotten. The cycle repeats every few years. It’s not only forgotten when the pick up trucks are purchased. It’s also forgotten when people choose to live many miles from where jobs are located.
And now that gas prices are getting high again, many people are complaining, but how many bother to do something like checking the pressure in their tires?
It does repeat every few years, but… it does eventually stay a little bit higher than the previous cycle.
Gasoline price increases also increase the tax revenues to the state of California…
I doubt that
Gas is taxed by the gallon.
Higher gas prices cut the number of gallons consumed.
It was 6% in California when I was there two years ago, a little bit less than the 20 cents/gallon I was paying in Texas.
Lawd bless the international residential property knifecatchers, for they shall inherit the bust.
A special report on property
A world apart
International buyers are still splurging on residential property
Mar 3rd 2011 | from the print edition
CONCEIVED during the boom and taken over by its lenders after the bust, the Icon Brickell has become the most visible symbol of Miami’s property renaissance. The Philippe Starck-designed condominium complex is, depending on taste, either hugely sophisticated or utterly naff. The columns at the base of the building are shaped like Easter Island statues (see picture); tables and chairs sit voguishly in the water of an outdoor pool; the walls of an enormous spa are lined with books wrapped in white paper. It’s seductively ridiculous.
…
Let’s see … rent for a few grand for two weeks or so on vacation.
Catch a falling knife worth hundreds of grand.
What a hard problem!
Me, I’m planning to tour the world with all the dough I saved, renting from all and sundry.
No kidding. It really sux to be a poor renter, as the guilt burden of going on European vacation when all your property-strapped neighbors are enjoying their staycations can be very troubling.
“Oh daah-ling, Sevilla was magnificent. You really must go there some time.”
There’s a time for introspection, and a time for rubbing it in. Each in their own place.
Who is Phillipe Starck? Why would I care? What is “naff”?
Marino Sold his HOUSE!!!!
Hall of famer Dan Marino recently sold his Weston, FL home for half of what he hoped to get for it. Built in 1998, Marino and his wife Claire first put the house on the market in 2005 for $15.9 Million. In 2009 they listed it for $13.9 Million. Unable to find a buyer this 10 bedroom 12-bathroom mansion was sold for $7.2 million this February.
With four kids in total, three of which are already in college, Marino told the Washington Post back in ’09, “we’re looking to downsize a bit”.
The house sits on 4.3 acres and is approximately 20,00 square feet.
It’s only a flesh wound.
Philippe Starck-designed condominium
J lo and Marc Anthony boght there!
Now all they have to do is sell the place in CA
i’d love to stay with it and find out what it goes for.
Meanwhile, J-Lo and Marc’s glorious French farmhouse estate at 487 St. Pierre Rd Los Angeles, CA in Bel Air, is still on the market (since January 2008) and is now priced at $7.9 million, down from $8.5 million. The couple purchased the home in 2005 for $6.25 million.
Did Dan marino ever sell that house in Weston Fl?
You’ve gotta love how these people price ABOVE peak prices.
What part of “you’re going to take a loss” don’t they understand?
“… if no one intervened to pop that bubble…”
I beg to differ, and I have two Housing Bubble Blog tee-shirts to prove it!
A special report on property
Between a rock and a living space
The lessons from the property boom
Mar 3rd 2011 | from the print edition
IF THERE is one chart that captures the madness of the housing bubble in the first half of the 2000s, it is Robert Shiller’s index of real (ie, inflation-adjusted) house prices in America. The index goes back to 1890, and for the first 100 years or so prices go up and down but gain very little overall. Then, starting in the late 1990s, house prices pretty much double in real terms within a decade (see chart 8). The run-up in values was not just unprecedented, it was obviously lunatic. That begs an equally obvious question: if no one intervened to pop that bubble, is anyone likely to do so next time round?
…
Last year my property taxes increased by 41%. I tried to explain to the assessor’s office that our county’s GDP growth didn’t increase by 10% during the past four years meaning that I had to pay their increased taxes with “other” money. The increased assessment was based solely on equity locust purchases with no weight given to the local economy. Some of the world’s largest data centers were recently opened here, but they received huge tax breaks and low-rate power contracts, and they employ too few to be worth counting. “Oh well, good luck to you!” Sigh.
Last year my property taxes increased by 41% ??
And every “anti” prop. #13 person should just let that statement sink in a bit….
“And every “anti” prop. #13 person should just let that statement sink in a bit….”
For those of us that may not have ridden to school in a full length bus I will reiterate the following message. Prop. 13 was designed to limit property tax increases to 2% max per year. Seems pretty fair to me, no? The fact that government spending far exceeded this level should make we property owners in Kali bad guys?
Try looking at all of the free handouts being given away in this state before seeking more landowner plasma.
Unfortunately, they did not legislate inflation to 2% as well.
scdave,
rms is prone to lying when it suits him.
I’m all for public control over tax rates, but Prop 13 has turned out to be a huge boondoggle (sp?).
Boondoggle = Wasteful pursuit…Of little practical value…
V…I would agree that over time Prop #13 has created some significant inequities…With that said, it was the only way that property owners could put a stop to the GOVERNMENT taxing authority using real estate taxes as their own private piggy bank so in that regard I believe the passing of prop. #13 had tremendous practical value…
As far as inequities, they are all around us…I happen to have a lot of vehicles but the wife & I are the only drivers and we don’t drive very much…Maybe 15000 miles per tear between the both of us…I am not quite sure where all the DMV fee’s go but, why should i have to pay 6x fees that my neighbor with two cars pay when they drive and put more miles on the road then I do ??
“rms is prone to lying when it suits him.”
Old assessment: $128k
New assessment: $181k (last yr)
No change in assessed value this year.
The only added employment has been in the next town due east in Moses Lake, a thirty minute drive.
Big V,
It would be best if Prop 13 protection only applied to owner-occupied housing. Most landlords do not limit their rent increases to 2%, so the tenants are not getting the benefit of “not being taxed out of their homes.” IOW, taxpayers are subsidizing landlords’ profits, and that is totally unjustifiable.
Otherwise, I fully support Prop 13, but ONLY for full-time primary residences.
Comment by scdave
2011-03-05 10:35:03
Last year my property taxes increased by 41% ??
And every “anti” prop. #13 person should just let that statement sink in a bit….
—————-
Amen, scdave.
As a pro-Prop. 13 survivor, our assessment actually went down by a very small amount last year. At least somewhat reflective of reality in formerly-bankrupt OC, CA.
You know what else is odd about that chart? It shows a total deflation of housing prices back to where they were.
But the chart of total credit market debt as a percent of GDP shows that deleveraging has barely begun.
The false wealth is gone, but the debts remain, many of them shifted to younger generations via the federal government.
And much of it to older peoples pensions, as well.
Exactly, eco.
Hong Kong hasn’t run out of Used Home Sellers just yet…
Global house prices
Hong Kong phew-whee
Our quarterly index reveals the world’s most overvalued homes
Mar 3rd 2011 | HONG KONG | from the print edition
IN CROWDED Hong Kong, property is so expensive that even the estate agents are squeezed for space. The number of licensed agents reached 31,306 at the end of last year, an increase of 40% since March 2009. The qualifying exam is so popular that fees are going up. Golden Hill Properties in Wanchai makes do with a storefront but no store. Its agents perch on stools outside, reading from computer screens encased behind glass and typing on keyboards unlocked from a drawer.
…
Did I mention the current print edition of The Economist contains a property bear’s cornucopia of articles about the global real estate bubble? If you ever plan to purchase a copy of this newspaper at the newstand, this is the one you should buy; it is destined to become a collector’s edition. I am going to buy a copy to give each of my children in three decades or so (but not planning to tell me loverly wife about the purchase
).
Your wife begrudges your a $15 transaction?!?
Boy, you are whipped!
His wife has a lot of mouths to feed.
Not so much. If I were truly whipped, I wouldn’t be making the $15 transaction to begin with. And I would have bought a house by now, to boot.
I’m also quite fortunate that my wife doesn’t closely resemble any of these stick figure babes:
Why men dont talk to women
Brutal!
Notice how he passes up the more “homely” girl…
Thanks Bear one of the better magazines. However, I liked it even better when it was a foreign staff reporting U.S. News, I have read it for 30+ years. It is a bit more bias than 10 years ago but it was pointing out the U.S housing bubble when most sources of U.S. news were cheerleaders.
Realtors Lie to Profit.
Isn’t that fraud?
I just spent the past week in Scottsdale, AZ enjoying the 78 to 81 degree weather; it was roughly three years ago since the last visit.
The consumer mood in Sottsdale has certainly soured. Borders bookstore on Camelback is being picked clean as they prepare to close; it was a nice place, but I’m sure the rent was a killer right there next to the fashion mall. Lots of empty store-fronts now as shoppers milled about with both hands buried in their pockets–very few carrying bags.
The ghost of Motorola by the country club brings back memories of a former girlfriend who worked real hard to get there only to quit in disgust. Teenagers were having a blast cruising the trail along the Arizona canal. Everyone I chatted with about home prices felt they were still too high, and that another leg-down was a certainty, just a matter of when. All housing bears!
The tall Centrepoint condos in Tempe have been recently sold, and the new owner will be a landlord as the units will be rented–no terms yet! The Tempe riverfront was busy, and events there have been booked through the year, but it’ll slow during the hottest months.
A shooting closed the freeway early one morning–some things never change. Plenty of fit, lean ladies to eye unlike Washington’s fly-over country. Ran into a couple of snow-birds too–envy!
Thanks for the report from Scottsdale rms….
Yes, good report, rms. Thanks!
This house was listed last Friday, looked at it with my wife and the realtor who has been making offers for us on Saturday. Told her this is it, write the offer for full asking price of $162,900 I am sick of all of this sh, well stuff. She started calling the listing agent on Saturday and continued through Tuesday when he finally responded. He had a written offer with approved everything 3 hours later to which he responded. You are second in line. The house went under contract yesterday to someone else. I now truly believe exeter, Realtors are corrupt liars. And I am just so sick of all of it.
HomePath by Fannie Mae
$162,900
17620 Cinnquez Park
Jupiter, Florida 33458
County Tax Roll Details
Lot Size: 7,405
Last Sale Date: 02/01/2005
Last Sale Price: $264,027
Sqft.: 2,209
Year Built: 2005
Realtor hubris and the Great Housing Fraud is what unites us. NAR’s corruption is not imaginary and now you got a personal dose of it. Another dose probably. I’ve been jerked around on GSE houses, repeatedly lied to by realtors as it relates to GSE houses, and watched the same GSE houses come back on the market that the lying realtors said were sold.
BofA’s games are even more insidious. I was able to view their non-public inventory by dicking around with the url and it’s massive.
It’s unfortunate you offered full ask. I just wouldn’t do it on principal.
Keep pushing Jeff, you’ll find something right. It just takes time.
Jeff….I sense your frustration…Just a suggestion…This has worked handsomely for me many times…It works, just try it…
Identify the area that you are interested in buying…From a data bank, you can get the names of the owners….Send a letter to every owner with “hand written” addressing on the envelope with a regular stamp…Why ? Because they open that envelope first, they remember it and it offers a high level of sincerity of your interest as a occupant..In other words, you are not a “Realtor” looking for a listing OR a investor looking for a steal…
Give a little background of who you are and that you have a interest in settling your family in this location…Tell the owner that you are more than willing to pay fair value and will work with or without a Realtor…Believe it or not, some home owners, particularly long time owners “care” about who is going to buy their house…Its a emotional decision for many, including family that has inherited the house…
I am assuming your area is not to narrowly defined…In the past when I have done this, I probably sent 300+ letters…Your two main targets are;
#1. A owner occupant that is close to or ready to sell…
#2. A Owner/Landlord that would consider it…
I would like to suggest that you ask your Realtor to do it but they won’t…They are to lazy really, and they will likely pooh-pooh it…
Try It…
Good suggestion, scdave.
Has anybody ever noticed that Wall Street /Corporation America with all
their blame the victims arguments have this smile on their face like
the cat that just ate the canary ? Now they got the arguments down to worker verses worker or taxpayer verses worker instead of the focus on their heist ,the transfer of their loss and liability to the taxpayer/worker ,and the corrupt financial systems remain in tact so they can create damage in the future with get rich quick with inflating the value by investment capital by the mere fact that gambling creates value .
Wall Street /Corporation America gets to keep all their bubble gains and the rest of the population gets the shaft .
To much value has been put on the investment capital and not enough value on labor . To much value put on the ability of capital investment to raise prices in a artificial manner . That’s a real hard days work for
the capitalist .
The rich reversing the argument to it isn’t fair that they want to tax us higher amounts and thats my hard earn money and its a commie plot
is a argument that capital used to create bubbles has more value than labor . Ignoring that Corporations have the power to raise prices
in a artificial manner with no compensation to the labor sector is ignoring that their profits are built into the cake .
Than for the Wall Street /Corporation sector to get Government to
pay for costs of business that they should bear to increase profit margins is the other trick .
I just can’t get my head around punishing every sector
but the rich/Fat Cat institutions when they enjoyed a royal heist for more than 20 years now that they get to keep . Add outsourcing ,out-manufacturing and
Monopoly power and our tax base and labor money going outside America ,and why do we think Wall Street /Banks /Multi-National Companies aren’t just raiders of American wealth ,while they leave
the labor sector in ruins . And they want more tax put on the sector that got fleeced in buying power and loss their bubble gains while they got bailed out and get to keep their bubble gains and get to raise prices
to keep their profit margins consistent ,or even gouge .It’s not fair to tax us more they say .
” Now they got the arguments down to worker verses worker or taxpayer verses worker instead of the focus on their heist ,the transfer of their loss and liability to the taxpayer/worker ,and the corrupt financial systems remain in tact so they can create damage in the future with get rich quick with inflating the value by investment capital by the mere fact that gambling creates value ”
Which is why the “cookie parable” is so apt.
We’ve got too many people in this country saying that putting the brakes on the banksters and MNCs is “socialism”
“Just because it’s legal, doesn’t mean it’s right.”
The voices would ring more true if they were about stopping corruption and healing the nation, and less about the evils of other’s simply having more.
I agree, but many of those who committed the crimes are those who have more. A LOT more.
And their “more” was acquired through… corruption.
You cannot separate the 2.
We must seperate the two.
You cannot. They are inextricably entwined.
http://www.hawaiinewsnow.com/Global/story.asp?S=14193234
HONOLULU (AP) - So many Hawaii residents are losing their homes that lawmakers are threatening a five-month foreclosure moratorium to buy time for homeowners to get back on their feet.
With 1 of every nine homes sold in Hawaii last year in foreclosure, legislators are considering temporarily banning the practice and creating a system for homeowners to seek mediation and loan modifications.
And they say Hawaii is immune. tee hee.
If anyone thinks this is actually for the homeowners, have I got a bridge for you!
Lying Dianne Swonk is on CNN right now backpedalling from her “housing always goes up” lie of 2007. ….. I’d like to punch her in mouth.
I guess she missed the latest edition of The Economist. Hopefully she will check in later today at The Housing Bubble Blog so she can get up to speed with present global housing market reality.
Sorry for the off topic post, but I am in the market for a new mattress, and the consumer reports website mentions that buyers should haggle - even come in with low ball offers of 50% of the retail price - when buying a mattress.
Anyone have experience getting that kind of a discount when shopping from a mattress retailer?
Thanks!
A mattress is only as good as the horizontal jogging that goes on it.
My wife wanted an extra-firm latex CalKing sized mattress last year, and it cost almost $2k all-up. We already have a bed frame, so it was just the mattress. We both like it, and it provides great support, but latex is too warm during the summer. Oh yeah, latex mattresses are heavy, really heavy!
I just spent a week sleeping on a soft hotel queen mattress, and it was great to climb back on extra-firm CalKing.
“Calif man pleads guilty to foreclosure bid rigging”
http://www.mercurynews.com/news/ci_17541232
Gee, what a surprise.
Good find.
I’ve heard this is going on at a lot of auctions. Going to be hard to get them all.
OTOH, is it really “fraud” when other, non-related bidders can still bid on the houses?
It’s really difficult to rig bids at open auctions, IMHO.
Who ate my mortgage!
MERS? It May Have Swallowed Your Loan
By MICHAEL POWELL and GRETCHEN MORGENSON
Published: March 5, 2011
FOR more than a decade, the American real estate market resembled an overstuffed novel, which is to say, it was an engrossing piece of fiction.
Mortgage brokers hip deep in profits handed out no-doc mortgages to people with fictional incomes. Wall Street shopped bundles of those loans to investors, no matter how unappetizing the details. And federal regulators gave sleepy nods.
That world largely collapsed under the weight of its improbabilities in 2008.
But a piece of that world survives on Library Street in Reston, Va., where an obscure business, the MERS Corporation, claims to hold title to roughly half of all the home mortgages in the nation — an astonishing 60 million loans.
…
Another piece of that world lives on in Washington, CD:
March 1, 2011, 2:21 p.m. EST
Geithner: Don’t be too hasty in reforming housing
Congress urged to OK Fannie-Freddie reform in two years
By Ronald D. Orol, MarketWatch
WASHINGTON (MarketWatch) — Acting too hastily to wind down and reform mortgage refinance giants Fannie Mae and Freddie Mac could destabilize the housing finance market or disrupt the broader recovery, Treasury Secretary Timothy Geithner warned lawmakers on Tuesday.
“Housing is a critical part of our economy and we will proceed with our plan for reform with great care,” Geithner said to a House Financial Services Committee at a hearing about a plan that the Treasury Department released last month to reform the government-controlled housing giants, which teetered at the climax of the financial crisis in 2008.
…
Too many suits make their living back-end loading the thirty year mortgage; none of ‘em want to see a return to the ten or fifteen year mortgage.
I will owe less than $10k by the end of March, and I’ll own my place by August providing my wife’s Toyota holds-up. My daughter will be ready for college in three years, and my 401k is under-funded. I’m in my early fifties now, so I can’t afford any mistakes going forward.
I earn more than the average Joe, and I’d never buy anything over $80/sqft or more than 2.5 x my net income. I don’t understand how the typical indebted family sleeps at night.
“I don’t understand how the typical indebted family sleeps at night.”
Cluelessness apparently induces lethargy.
Ignorance is bliss.
I have to suspect banks functioning this ineptly would be going bankrupt in droves if it weren’t for the free too-big-to-fail bailout insurance protection. Without competition, Megabank, Inc is no better than a government operation.
Behind the foreclosure crisis, big banks’ reign of error
By Dana Milbank
Sunday, March 6, 2011
The problem in the nation’s housing market now isn’t subprime lending. It’s subpar lenders.
Last fall, my wife and I refinanced our mortgage with Citibank. Sixty days later, we received a “cancellation notice” from our homeowners insurance company “for non-payment of premium.”
Turns out Citibank, which had been collecting hundreds of dollars a month from us to pay the insurer, hadn’t made the payments. It was, I later learned, one of the usual tricks mortgage servicers use to squeeze more cash out of their customers. About a month later, I learned of another trick: Citibank informed us that it was increasing our monthly payment by nearly $300.
…
PB
You’re hitting on all cylinders today.
great links
Cheating, as the current edition of The Economist has a gold mine of bubble poppin’ articles…perhaps the banksters who fund this publication are priming the market for future housing market fire sales?
The ultimate solution to this problem is: DO NOT DO BUSINESS WITH THESE PEOPLE!
Do not do business with Citibank, with Bof A, with any of the megabanks. They have shown themselves over-and-over again to anyone who cares enough to look just who and what they are, and yet people still willingly send them their money.
Combo is right. As far the megabanks are concerned, they are even worse than the government when it comes to stealing your money.
Heck, even the government lets you keep some of your money. The banks will take it all. And then tell you that you owe them more… in fees for taking your money.
“The ultimate solution to this problem is: DO NOT DO BUSINESS WITH THESE PEOPLE!”
The problem with the mortgage market is that you have no CHOICE about doing business with these people.
If the company that originates your mortgage sells it downstream to one of the big banks, you do not have any say in the matter.
Who you originate it with is the only part of the process that you can control. After that, it is entirely out of your hands.
“The problem with the mortagage market is you have no CHOICE about doing business with these people.”
Then exercise choice in areas where you have the choice.
From the article: “Last fall, my wife and I refinanced our mortgage with Citibank.”
There! They willingly refinanced their mortgage with Citibank. And they did this because …?
Probably because they did not do their research. Here we are, living in the middle of Information Age, where information is readily available to most everyone by just a few keystrokes and yet the snakes keep on ingesting the lemmings.
“And they did this because …?”
Suzanne researched this!
Today on CSPAN-3 they showed FDR’s First Inauguration.
” Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.
True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.
The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.
Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow men.
Recognition of the falsity of material wealth as the standard of success goes hand in hand with the abandonment of the false belief that public office and high political position are to be valued only by the standards of pride of place and personal profit; and there must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing. Small wonder that confidence languishes, for it thrives only on honesty, on honor, on the sacredness of obligations, on faithful protection, on unselfish performance; without them it cannot live.
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Finally, in our progress toward a resumption of work we require two safeguards against a return of the evils of the old order; there must be a strict supervision of all banking and credits and investments; there must be an end to speculation with other people’s money, and there must be provision for an adequate but sound currency.”
A voice of reason.
Thanks Mike!
Yes, that was great, Mike!
uncanny
I have seen the pitfalls of a Lennar house. Looked at one last year and what a POS.
Homebuilder ads highlight pitfalls of foreclosures
By BOB CHRISTIE
Associated Press
PHOENIX — Homebuilders trying to fight off customers’ attraction to cheap foreclosures are doing more to show buyers that the good deals can come with pitfalls.
Lennar Corp.’s website is fighting back with a “Buying a New Home vs. a Foreclosed Home” page that lays out the benefits of new construction - like home warranties, energy efficiency, and customization options - while highlighting the potential risks of buying a foreclosed home.
http://www.miamiherald.com/2011/03/05/2099651/homebuilder-ads-highlight-pitfalls.html - -
I suppose as long as the GSEs and FHA are funding well over 90% of new mortgages, there is no concern that an excess of regulation may serve to completely shut down private mortgage lending?
* MARKETS
* MARCH 5, 2011
Mortgage Practices Overhaul Proposed
By NICK TIMIRAOS And RUTH SIMON
State and federal officials are pushing to more tightly regulate the way banks and other mortgage servicers treat struggling homeowners in a bid to stem foreclosures.
Current government modification programs are largely voluntary, and there are few rules governing servicers’ practices. But on Thursday, the nation’s largest banks, including Wells Fargo & Co., Bank of America Corp., and Citigroup Inc., received a detailed 27-page proposal from state attorneys general and federal agencies to force a shakeup in banks’ mortgage-servicing policies.
One mortgage industry executive familiar with the document described it as “almost like a wish list.” It is “very prescriptive,” this person said. “It gets into the minutiae of how this group wants servicers to manage loans.”
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No commercial bubble at all…
http://www.charlotteobserver.com/2011/03/04/2112123/bofa-tower-uptown-still-has-lots.html
The figure no one wants you to see
COMMENTARY | March 01, 2011
If Americans were ever presented with the real bill for the total U.S. national security budget, it would actually add up to more than $1.2 trillion a year.
By Chris Hellman
What if you went to a restaurant and found it rather pricey? Still, you ordered your meal and, when done, picked up the check only to discover that it was almost twice the menu price.
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But we need bomb/tanks/batwings to counter all the invaders crossing the border…. we NEED them…. If we don’t slave away for this manufactured junk we’ll turn into communists overnite. We NEED this stuff…. all of it.
Today the threat to Israel’s safety is greater than it has ever been, and all of these middle-east stories never once mention this miserable situation that the U.S. is forced to subsidize while our economy sinks deeper in debt. How about an estimate of how much Jesus, Israel and the anticipated return actually costs this country?
It`s gettin ugly.