Bits Bucket for May 26, 2011
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Bill would let appraisers ’round up’ home values ~ MSNBC
Lawmakers seek legal way to fight effects of distressed property sales
At the urging of such shell-shocked homeowners and real estate agents, lawmakers in four states sponsored bills this year that would direct appraisers to exclude distressed sales when they determine how much a house is worth.
Pity the poor Nevada homeowner. With home prices tumbling there at perhaps the fastest rate in the nation, it has become nearly impossible to get a handle on how much a home is worth. Why? Because appraisers, who base home values on comparable sales, have to depend on the plummeting target of “distressed” property sales that dominate in the state.
Nevada state Sen. Mike Schneider is trying to fight back with proposed legislation that aims to set a floor under prices, which have fallen well over 50 percent on average in the Las Vegas area over the past five years. A few months ago, he sponsored a bill proposing a radical new mandate for appraisers: Stop paying attention to those “distressed” sales. Legislators in other states and industry executives are watching closely.
The legislation’s legality has been called into question because it runs counter to the Uniform Standards of Professional Appraisal Practice, the federal regulations home appraisers are required to follow.
Opponents — who include professional appraisers and their trade association, as well as some skeptical realtors — say there’s no way such a law can be worded that wouldn’t require appraisers to violate those regulations. This opposition persuaded sponsors of similar bills to abandon their campaigns in Maryland and Missouri. Likewise, action on another such measure is stalled in Illinois.
A law that forces an appraiser to close his/her eyes and pretend something is not there. I’m loving it!
At least I can start my day with a laugh.
I can see why the appraisers are fighting this. Their reputation took a hit during the bubble, and this law would pretty much finish them. Why would anyone bother with an appraiser if you know they are legally bound to overestimate the value of a property you are considering?
Why would anyone bother with an appraiser, period?
The Internet and the tax assessors office have pretty much ended their usefulness.
I don’t think I’d put much faith in alternate sources of determining value for a property. They tend to be off pretty badly. Appraisers have the potential to do better but haven’t been. Given their recent track record I wouldn’t bother either.
I’ve found using the tax assessors office as the source for surrounding comps as well as buy/sell history to be very accurate. At least within a 5k ballpark.
Add the home inspection and you’re close enough.
Isn’t that what they were doing during the Bubble?
More extend and pretend.
Based on my experience, this bill is largely unnecessary as appraisers already ignore distressed sales. Of course, if the only sales are distressed I guess that would lead to the inability to ignore the distressed sales.
Notwithstanding such a law, wouldn’t a prudent lender (not bubble era lender) require/demand an accurate/representative appraisal before lending on a property?
That’s just one of the things about this. What is the point of trying to distort appraisals? To make people feel better or deceive buyers? No, it’s so houses would qualify at a higher price! I mean Jeebus, who the hell would want more bad loans being made?
Again, why isn’t the media asking these simple questions?
“Again, why isn’t the media asking these simple questions?”
Simple is as simple does.
FBs everywhere, in the legislature, in the media, and they can’t be clearheaded and objective. oh, and REICsters.
“Again, why isn’t the media asking these simple questions?”
Because their paymasters have ordered them to not ask questions?
Isn’t a corporate owned MSM wonderful?
You have problem with Corporate Communist Capitalism©®™, comrade?
You left out Program, giving Corporate Communist Capitalism Program, also known as CCCP. (You may not get this joke if you didn’t grow up during the cold war.)
You left out Program, giving Corporate Communist Capitalism Program, also known as CCCP. (You may not get this joke if you didn’t grow up during the cold war.)
It reminded me of the Olympics!
Good one aragonzo!
I’m still not cynical enough! Working on it.
The media is paid by advertisers.
It’s why car magazines don’t have critical articles on cars. Because car manufacturers are the ones paying the freight.
No. They’re just going to securitize the loan. They want an appraisal that meets the selling price with minimal fuss so as to enable the transaction to be completed in a fast and trouble free manner.
+1.
Not if they are going to resell the loan (and therefore the risk).
Isn’t it amazing that after all the press there’s still a market for all this risk?
Guess they are true believers of the full faith and credit of the United States gov.
You can’t fix our kind of stupid.
“Bill would let appraisers ’round up’ home values ~ MSNBC
Lawmakers seek legal way to fight effects of distressed property sales”
Lying will only get you so far in life.
In the case of property sales, misleading future market participants by lying about the comps is likely to reduce future transactions, as there may be no buyers who are willing and able to pay artificially inflated comp prices, especially if they realize the prices are lies.
But lying seems like one of the standard tricks in many lawmakers’ playbooks these days, so I say GO FOR IT!
“Lying will only get you so far in life. “
Yep, like Senator, CEO, Congressman, stock broker, hedge fund manager…
“A policy based on illusion will crash on the shoals of reality.”
They just won’t let the market correct itself organically. All these little market manipulation scams is doing nothing to help the cause. All it’s doing i prolonging the next big dip. Just let the sh** crash already!
So just how many ways are there to denote prices?
There’s list price, appraised price, manufactures suggested retail price (MSRP), discount price, fire sale price, going out of business price, distressed sale price, Super Bowl price, market price (whatever that means), and now - what? - legislated price?
legislatedfabricated pricePretty amazing when foreigners invest here because it is the safest bet in a world filled to the brim with swindlers.
One of the positive aspects of deliberately inflated appraisals is that it could encourage more foreign investors to inject needed funds into the U.S. economy through all-cash real estate purchases at premium prices.
“Missouri”
‘Show Me the real price!’
Ben, could you make this a weekend topic? This is a huge gray area open for discussion.
There’s a fundamental question here: is there any way to calculate the worth of a house based on some concrete value?
Do you base it on what someone is willing to pay for it? That’s not always correct. Extreme example: those $1 houses in Detroit are obviously worth more than $1. I’d pay $1 just to get out of the rain for a few hours.
Do you base it on “historical” data? The definition of historical alone could tie up debate for years. When do you start your history — at the start of the 30-year mortgage? Do you include or exclude obvious bubbles — like the NAR using this bubble to say home values have “doubled?” in the past hundred years?
Do you base it on the cost of materials and labor? Commodity bubbles produce wild swings in the price of lumber, not to mention copper. Labor is wild too, especially if you try to calculate the real value of low-quality illegal labor, which leads to repairs later (not included in price). What about the age of the house?
On a similar note, what about the age of the house? My rental townhome was built in 1960. The materials and labor were paid for long ago. Should my house be “free?” Meanwhile, brand-new McBoxes are selling for the same price as an old brick home.
Do you base it on square footage? Homebuilders love to blow up the size of bedrooms, while the expensive part of the house (kitchen and bath) remain relatively the same. Is there a reduction for Attached Product? The NAR certainly doesn’t think so.
Do you base it on comps? That seems to be the most reliable combination of all the factors, but even then that brings in factors not related to the house…like the attitude of the bank.
What’s an appraiser to do? Congressman can barely attach a value to a stalk of corn when they calculate their farm subsidies. Could you imagine all those bought-off politicians — desperate for tax money — determining a price floor — oh wait what about the free market — for housing?
Do you base it on what someone is willing to pay for it? That’s not always correct. Extreme example: those $1 houses in Detroit are obviously worth more than $1. I’d pay $1 just to get out of the rain for a few hours.
I get your point but I can’t agree with you. I think if they are listed for a dollar then they really are worth only a dollar, at most. Why don’t you buy one to use for getting out of the rain if you’re ever there? I assume it’s because you don’t live there and don’t plan to and aren’t in the market for that sort of thing, etc.. THAT is why it’s worth a dollar. Nobody wants it. Not you, not anybody who lives there. And while you’re right that even just the materials should be worth more than that, once you disassemble them and transport them to where they’re useful, apparently not. Maybe somebody there would pay $1 to make a giant bonfire for the night to keep warm, but that’s probably not allowed. In the end I think the price probably IS accurate, or even distorted on the upside due to the liabilities. If they were really worth more than that, somebody would buy them.
I think those $1 dollar houses would require a large expenditures in Kevlar and bullets.
If you buy that house for $1, you get a lot of other bills to go with it. You could chose not to heat it or maintain it to some degree, but you’re still stuck paying the property taxes. The NPV of a house that you can’t rent out and don’t want to live in is negative thanks to the property taxes.
And what if they are free?
Link challenged, I tried to post a link to BoA article donating abandoned homes.
“Chicago Mayor Richard M. Daley and Bank of America’s Illinois Market President Tim Maloney today announced that the bank is taking several actions in partnership with the city to alleviate the impact of vacant properties on surrounding neighborhoods and the community at large. The initiatives include the donation of the vacant foreclosed properties by Bank of America to the city and nonprofit organizations for reuse, redevelopment and neighborhood revitalization.”
My father always said you should be able to get 1% of the price in monthly rent for the place. That’s old landlord thinking, goes way back and I think it’s still valid, because it determines your cash flow if you want to be a LL, or what you would pay in rent if you don’t.
One big problem I see now is that FBs can’t get 1% for the McMansions. There are not that many people who have that kind of rent money to throw around, so the rent flattens as the price rises. So the house really is not worth that much; it’s a white elephant. That is, if you leave emotions out of it.
My father always said you should be able to get 1% of the price in monthly rent for the place.
I think our fathers were separated at birth. Why? Because my dad told me the same thing.
I couldn’t get 1% rent on mine. 1.5%, yes. 1.125% of the mortgaged amount, yes. Guess I’m not horribly far off the mark.
Wait, that’s not right. Go the other way on the math.
.7% of purchase price; .9% of mortgaged amount (man, I must already be on Memorial Day weekend vacation)
A monthly house payment in Texas is about 1% of the appraisal.
HBB also uses the 1% rent/price ratio — up to 1.2% in high cost areas. Rents are generally more stable than house prices, I guess.
LOL, I’m paying less than $3k/month for a house that would sell for about $900k based on the price per square foot of recent neighboring sales. By my calculation that’s 0.33% per month. But Silicon Valley is “different.”
The problem is that your $1 is not buying just an hour or two out of the rain. It’s buying responsibility/liability for a property that probably has a lot of major issues: structural problems, unpaid property tax, meth lab residue that needs to be cleaned up, whatever. Most of these values probably have quite NEGATIVE real values.
The clown princes here in the land of stinkin’ also want to legislate away the distressed sales.
Ewww, how clever. So what? Sooner or later someone will buy the distressed properties at their distressed prices. And, when buyers who bought using legislated comps get wind of this, they’ll walk. Yeah, let’s stretch this out a little longer, shall we?
the land of stinkin’
Now there’s a state nickname!
Appraisers Are Liars? It sounds like it might make a great moniker for someone.
Can it be established that Appraisers Are Liars in the same way we know that Realtors Are Liars?
It’s appropriate that Chicago, a native word meaning “stinking onions,” is sited there.
legislated comps
What a dreadful concept.
http://articles.chicagotribune.com/2011-04-08/classified/ct-biz-0408-home-prices-20110407_1_chicago-area-home-distressed-sales-home-prices
Earlier this year, Rep. LaShawn Ford (D-Chicago) introduced legislation in Springfield that would bar real estate appraisers from using the sale price of a home sold at judicial sale — in other words, a foreclosed home — for 12 months after the date of the sale.
Ford, whose district includes parts of Chicago’s West Side and portions of several western suburbs, is a broker/owner of a real estate firm , so he has seen the effect of foreclosures on the neighborhoods he represents, as well as in his business.
If anything, a foreclosure is GOOD for a neighborhood. The deadbeat gets kicked out and a nice new family moves in to improve both the house and the neighborhood. The problem now is that there are many more foreclosed houses than there are nice new families to move in.
And yeah, I guess it would affect the guy’s business — by exactly 6%, I imagine.
True confession: A previous owner of the Arizona Slim Ranch had to sell under duress. ‘Twas right there in the title search report on the property. I wonder if it was due to the foreclosure vultures circling overhead.
‘Because appraisers, who base home values on comparable sales, have to depend on the plummeting target of “distressed” property sales that dominate in the state.’
If those represent a huge share of the market, why shouldn’t they be considered in conducting appraisals?
“At the urging of such shell-shocked homeowners and real estate agents, lawmakers in four states sponsored bills this year that would direct appraisers to exclude distressed sales when they determine how much a house is worth.”
A cat and kat are still one and the same. So who do they think they are going to fool. If such tomfoolery raises its ugly I would suggest each town get a retiree to run a web site publishing all pricing of recently sold housing along with addresses. This is an attempt by the banks to keep from lowering the price of holdings on the books.
Articles like this cause me to think of several issues. One is the idea that government can “fix” anything. If we just had the right laws, with proper enforcement, nothing bad would ever happen and even if it did, government could fix that too.
And the media. I didn’t see any questioning of why the “lawmakers” have any business setting the “floor” under any price. I could go on.
Long ago, I made a theoretical proposal about the housing bubble. How about, we simply have a series of accounting entries, where the Federal Reserve absorbs all the losses. Everything. While we’re at it, how about free houses for everyone? They could just print the money, right? (I know that’s not true, but stay with me).
Would house prices stay where they are? Would they go up? Here’s the kicker; who would they sell to? If people can’t afford it, they can’t afford it. It’s not that hard to understand.
Ultimately, stuff like this goes to show we’ve never had a serious public discussion of the housing bubble.
“Articles like this cause me to think of several issues. One is the idea that government can “fix” anything.”
“We’re sort of three or four years into the housing repair, you could say,” Geithner told Politico
Housing recovery to take few more years: Geithner
WASHINGTON | Wed May 25, 2011 9:02am EDT
(Reuters) - It will take several more years for the housing market to completely recover, U.S. Treasury Secretary Timothy Geithner said on Wednesday.
“We’re sort of three or four years into the housing repair, you could say,” Geithner told Politico in a live interview.
“But we’ve got several more years to go. Again just realistically I think it’s going to take time still to heal that,” Geithner said.
Geithner also said the United States “absolutely” has a jobs crisis, noting that unemployment remains very high and will come down “too slowly for everybody.”
http://www.reuters.com/article/2011/05/25/us-usa-economy-geithner-housing-idUSTRE74O3SG20110525 - -
“housing repair”
See — the government really is fixing it! And when and if housing ever does recover, it will be due to the government’s fix.
Quick! Somebody start looking for the real Geithner. That man is obviously and imposter! Nobody in DC has that kind of common sense!
I think that Geithner’s trying to keep his job. After all, he isn’t who one would think of when nominating candidates for the Best Cabinet Member Award.
“we’ve never had a serious public discussion of the housing bubble.”
Perhaps not possible as a group until the vast majority have come to reality, one person at a time.
In a nation where the liars are making the most money, that is never going to happen.
One is the idea that government can “fix” anything. If we just had the right laws, with proper enforcement, nothing bad would ever happen and even if it did, government could fix that too.”
the government can fix anything for certain people
We have a winner.
http://www.zillow.com/homes/recently_sold/
The active map lets you zoom down to neighborhood level. Shows address, date and price.
The selling prices of homes in my old Sarasota ‘hood turned out to be a LOT lower than the current asking prices I see on realtor.com. Turns out the Sarasota area has seen drops comparable to those on Florida’s east coast; my statement of a few days ago stating the opposite was wrong.
The above post was meant as a response to salinasron’s comment that-
“…each town get a retiree to run a web site publishing all pricing of recently sold housing along with addresses.”
Property taxes are based on the market value of real estate in
many states. Another reason why Lenders shouldn’t of messed with ‘the fundamentals of real estate” with faulty lending and hit the mark appraisals .
Residential real estate is based on “Market Value “,which is what
willing and able borrowers in a competitive market would pay for a property in a arms length transaction ,the “Market sales comp approach .”
If a high percentage of the sales are distressed ,than thats the market . A prudent lender would not lend 50% more on one property if the bulk of the sales are 50% less .
I was always wondering what they were going to do with this
situation once distressed sales were a high percentage of the sales . It would make it impossible to bring in a high value on a non-distressed sale .
Look at any tract and they have such a wide variety of prices
listed for the same basic house . This is insane
(1) Wish price (bubble list price )
(2) How much I need to get price
(3) foreclosures price
(4) short sale price
(5) Damaged property price
(6) Property that no lender will lend on (cash price )
(7)Dump in a hurry price
If so many of the sellers are actually Lenders or the investors of the lenders ,or sellers who would lose money ,than its not a normal market and value can’t be determined other than the actual conditions .
You could say there is a problem because it’s the crash of a fraudulent market ,a market that the borrowers were not really “able ” borrowers .
So this attempt, as usual ,to deny what actually took place during the Mania ,along with all the bail outs and ongoing attempts to prop a false market up ,is the elephant in the room
“,which is what
willing and able borrowers in a competitive market would pay for a property in a arms length transaction …”
And what transactions currently taking place would you consider NOT arms length transactions?
–REO sales?
–Homes purchased by RE agents (who presumbably have inside info or can conviently “loose” any competing bid on a house)
–Homes purchased in bulk from banks by RE investors?
–Homes with substantual maintenance neglect?
While I agree distressed sales should be considered comps, I am not sure the appraisers are taking “condition” into account when using them. Many distressed properties are in poor condition by now, so using them when the appraising a “quality” house can be a problem.
I saw this in the late 90s when Syracuse came out of it’s depression decade. There was a shortage of well-maintained homes and a glut of maintenance-neglected homes. (And is Syracuse, that means everything.) This caused a spike in the prices of quality houses, but the banks could not understand the difference. Several potentual sales fell thru when the appraisal on the quality home came back low, due to the inclussion of the neglected houses.
And again, we are seeing articles on the quality differences in homes in a given market, and how there is an actual “shortage” of well-maintained homes in some markets (article posted on this blog a few days ago).
Sheesh, nothing showing for my area. There isn’t the online info here that you have other places.
Got $2,000 in a pinch?
(MSN.com)
Half of Americans said they’d probably be unable to come up with that kind of emergency cash in a month’s time.
Roughly 28% of Americans said they would be unable to come up with $2,000 in a month’s time if they needed it, while another 22% said they would probably be unable to do so during that time period, according to a new report from the National Bureau of Economic Research. Just one quarter of those surveyed expressed complete confidence that they could get that much money if necessary.
While the $2,000 figure seems arbitrary, the researchers picked it as a ballpark figure that the average consumer might incur for an unexpected expense, whether it be a hospital bill or the cost of fixing up a car. Indeed, for many families, the amount one should have stowed away in emergency funds is far greater, as experts recommend having five to six months’ worth of living expenses set aside.
But, according to NBER, the fact that so many Americans would be unable to conjure up even $2,000 shows just how precarious the financial situation is for many households.
“Just one quarter of those surveyed expressed complete confidence that they could get that much money if necessary.”
Just one quarter of those surveyed? Just one quarter?
ONE QUARTER?
I don’t believe it. They need to broaden the number of people they survey a bit.
Cash is king and all that, but this is insane.
This isn’t about Cash, it’s about credit lines.
“It isn’t about cash, it’s about credit lines.”
Yeah, well that just goes to show how insane these times have become.
One time when I was with a potential beau, he ordered a pizza on the phone. After he hung up he asked if I had a credit card, “in case his card went over the limit.”* For a PIZZA?
That’s why no one can come up with $2000.
————-
*This was 15 years ago, when CC companies refused charges that went over the limit. Nowadays, they let you go over the limit, call it a “loan” and slap on a huge fee and interest rate. They tried that with ATM checking accounts too, but consumers resisted that.
I was like that once. It took me a solid yr of FT job to “repair” my credit cards after college.
One time when I was with a potential beau, he ordered a pizza on the phone. After he hung up he asked if I had a credit card, “in case his card went over the limit.”* For a PIZZA?
If that were my potential beau, that would be the last time we ever saw each other.
On the way home I noticed that a store called “Supper Solutions” had folded and was now replaced by a loan store, which had a big banner proclaiming: “6 months to pay!”
So they’re moving beyong being “payday” loans now.
I have noticed that a lot of payday loan stores opened here, and then folded after just a few months. I wonder what was behind that? To many defaults? Not enough business?
If near a military base the expansion was due to the large number of payday loans made to military personnel; receintly Federal laws were passed limiting payday loans to those same personnel, reducing profits and the number of transactions.
Maybe this is the reason they closed.
“New Colorado payday lending laws to go into effect”
http://personalmoneystore.com/moneyblog/2010/07/27/new-colorado-payday-lending-laws/
What the heck is “Supper Solutions?” It reminds me eerily of scrapbooking, pottery-painting, candle-pouring, and swashbuckling shops.
High end Italian designer store closed along my walk to the Metro a few days ago. So high end that there was no closing sale of any kind - one day they were there, the next day the windows had a custom created cover featuring the names of all the other high end retailers and the owner in a somewhat pleasing pattern. This is in the same line of shops as Tiffany, Barneys, Dior, etc. However, a miniscule space across the street is about to open with some European “apothecary” that looks like it will be selling smelly stuff like soaps. That space has been empty for months. No apparent bites on the space a few blocks down that used to have the Borders, but the ice cream shop did reopen for at least the summer.
“Supper Solutions”
It’s called planning ahead and cooking. Look into it.
Geez…
What the heck is “Supper Solutions?”
I think they were a “high end” outlet that sold “take and bake” dinners, supposedly better than what you could buy at the grocery store or warehouse club.
“supposedly better than what you could buy at the grocery store or warehouse club.”
We would Iron Chef their “low-grade dog food” (respect to Rodney D) any day of the week. The venison burgers we had last night were not haute cuisine, but the cilantro mint marinated roast turkey breast with preserved lemon and sun-dried tomato couscous and fennel and grapefruit salad would have crushed “Supper Solutions” like so many olives on the sidewalk that I saw this weekend but that the wife wouldn’t let me cure.
Just when you find the solution, I change the equation!!
http://www.suppersolutionsinc.com/index.php
Supper Solutions? Jeez Louise!
It’s not like learning to cook is impossible. And, get this, it’s an activity that the whole family can participate in.
Mr. Bubble, you’re correct. The basil-stuff flank steak with thyme–and-gruyere French onion soup with a side of tender white asparagus and haricots verts in a basalmic vinegar sauce and dessert of berries poached in a cinnamon red wine sauce was hard to beat a month ago.
And aren’t these houses supposed to be full of gourmet chefs who “entertain” HGTV-style with their granite countertops and stainless steel Viking ranges and high-end coffee-makers? Surely those homeowners would never stoop to patronize a Supper Solutions, or Applesbee’s or McD’s or Starbuck’s again…
You had me at “The basil-stuff flank steak…”.
Truth be told, we are going to an infant CPR class tonight and will be stopping for cubanos at Sol Food. It’s take-off, so we do bend the “rules”. Nice habanero sauce, those guys.
aren’t these houses supposed to be full of gourmet chefs who “entertain” HGTV-style with their granite countertops
Yes they are! I know because they always show the Happy Buyers in the kitchen slicing tomatoes and rutabagas and stuff, at the end of the show.
Yes, one quarter. Ask that same question to folks walking into or out of your local Wal Mart and the number would be very close to zero.
“Just one quarter of those surveyed? Just one quarter?
ONE QUARTER?
I don’t believe it.”
Welcome to a country with no middle class.
I hear this stuff on the radio all the time 94.7 smooth jazz has teamed up with KNX 1070 to bring you some of the worst ads and scams I’ve ever heard.
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We can loan you money even if you have poor credit or you’ve had a prior bankruptcy or repossession.
Borrow up to 50% of the value of your vehicle
If you own an vehicle that is paid off or nearly paid off, we can give you a personal loan from $500 up to half the wholesale value of your car with interest rates starting at 3% per month.
With a result that odd, I’d look to the exact wording of the question. It is possible that they put some conditions on how people were “allowed” to get it for purposes of the response.
Maybe they excluded borrowing from family? Or cashing out anything like a CD or an IRA? Or borrowing of any kind?
Polly, Just getting back to you on your government retirement plan sucking. I must say, that one does really suck without a lot of personal financial planning outside of the system. I can’t imagine anyone waiting into their 50’s to start a supplemental plan.
The defined benefit retirement plan portion is not all that we have. We participate in Social Security. We have a 401(k)-like plan called the TSA. When I was making that comment, I was just pointing out that when I started, I wasn’t all that impressed - and that part of that was probably because my previous private sector job had also included a small defined benefit pension that I never vested in. I have to admit, I don’t remember any of the details of how the benefit was calculated from that plan.
And for the people who started right after the new one was implemented, when everyone who retired was getting double the pension they could anticipate having (old system was 2% per year up to a max of 80% of average of highest three, still no inclusion of overtime or bonuses, I believe), it must have been a little depressing.
“With a result that odd, I’d look to the exact wording of the question. It is possible that they put some conditions on how people were “allowed” to get it for purposes of the response. ”
I agree the wording of the question is important. The study is for sale, but free to fed gov employees and people at universities. Anybody in that group want to look it up and see the exact question(s)? Here’s an excerpt, that’s even more confusing:
NBER
“We also find evidence of a “pecking order” of coping methods in which savings appears to be first in the ordering. ”
It seems from this and another quote I read but can’t find again, that ‘dipping into savings’ may count as not being able to easily ‘come up’ with the money. So it sounds like more of a cash flow thing- ‘do you have $2000 that you can take out of your current cash flow without difficulty, and without having to use your savings?’ That’s a pretty big difference from simply not having $2000.
Exactly. If they are asking how many people have an extra $2000 a month in their cash flow, 25% seems an absurdly large number. Absurdly.
Well, I didn’t have any issue getting it. Go to NBER website. It is working paper 17072. PDF file.
They didn’t restrict the ways people could get the money in the initial question, but they admit that they have no idea how people interpreted “come up with $2000.” They didn’t provide a list of options of how they might do it until the follow up question.
So there is a chance that a lot of people said they couldn’t or probably couldn’t come up with the money not because they actually couldn’t, but because they don’t know how to do it and have never faced the situtation.
‘do you have $2000 that you can take out of your current cash flow without difficulty, and without having to use your savings?’
I’m not sure I understand that question. If I have $2k in my cash flow above and beyond my expenses for the month, by definition that is savings.
No need to look at the wording. All you have to do is look at the numbers. 72 million make less than $500 a week.
That’s very close to half the 156 million workforce.
24k a year is now poor. Anything below that is just various degrees of poverty. Has been since the start of the century.
“But, according to NBER, the fact that so many Americans would be unable to conjure up even $2,000 shows just how precarious the financial situation is for many households.”
Doesn’t that also possibly indicate the very small number of people that could come up with even a modest downpayment for a house, much less 20 percent of current asking/wishing prices?
I saw them talking about this on TV this morning.
Some of these people in this study make up to $100,000/year.
But they save nada…
So I gather from this that the reason such few people in the country end up with most of the money is because the majority of people who make a lot of money willingly send most of their money to them.
A co-worker of mine in the ’70’s used to claim that if all the world’s wealth were equally divided among all the world’s people, within two generations it would be back to the way it is now. I couldn’t, and can’t, disagree.
A fool and his money are soon parted.
“A co-worker of mine in the ’70’s used to claim that if all the world’s wealth were equally divided among all the world’s people, within two generations it would be back to the way it is now. I couldn’t, and can’t, disagree.”
Yep. The first generation was make money off of overt criminal activities and then the next generation would make the laws to legitimize those activities. Ever thus.
was = would
“Some of these people in this study make up to $100,000/year.
I know couples who make MORE than 100K who don’t save. They lease luxury cars and take fancy trips, shop at Nordstrom, etc. They don’t save in their 401Ks (forsaking the free match money). One even told me “we don’t believein 401Ks”. I wonder how they plan on retiring. They work in the private sector (small tech firms) so no pension.
Maybe they were, snicker, counting on their house?
I just finished reading Chris O’Dell’s book, Miss O’Dell. It described all the sex, drugs, and rock and roll she experienced while being the tour manager for Dylan, the Beatles, and the Stones.
During her years with these bands, she became close friends with a number of household names. What really struck me about the Beatles as people was how free-spending they were while the band was still together. Afterward, they seemed to go into frugality mode. Especially George.
Here is the top 5 richest UK musicians:
1. Paul McCartney, $750 million
2. Elton John, $500 million
3. Mick Jagger, $225 million
4. Keith Richards, $220 million
5. Tom Jones, $149 million
(tie). Engelbert Humperdinck, $149 million
Paul lost a few bob in his divorce…
Miss O’Dell wasn’t close friends with Paul McCartney. Reason: Fortress Linda, aka his first wife. She made sure that no other woman came near Paul.
As for Mick Jagger, well, all the girls wanted him. Including Miss O’Dell. And I’ll leave the rest to your very active imaginations.
And all the guys and everything in between wanted Mick.
Just one quarter of those surveyed expressed complete confidence that they could get that much money if necessary ??
On a number of occasions now I have had the cashier at either Lowe’s or Home Depot be quite shocked that I was using a gift card for my purchases that had over a $3,000. credit on it…I guess in a way its like carrying over three thousand in cash so maybe that was why they were surprised…
Well that is a serious gift card… Can you be my secret Santa?
I go there often….
Dave, Lowe’s now offers 5% off everything in the store if you pay with their credit card. Have you noticed whether they’ve jacked prices up 5% to compensate?
No…If anything they have lowered the prices…Yes they offer 5% and you can get more if you are buying in a large amount…Just need to ask…
We’ve done similar things. Some non-profit and charitable organizations sell gift cards as a fundraiser. A $3,000 Home Depot gift card might net that organization about $150, at no cost to the organization or to the buyer of the gift card (Home Depot picks up the cost, but avoids credit card fees, and nets a customer).
“On a number of occasions now I have had the cashier at either Lowe’s or Home Depot be quite shocked that I was using a gift card for my purchases that had over a $3,000.’
I didn’t know there were gift cards for anything close to that amount. Home Depot Black?
Looks like they can go even higher,
“An October report by the 34-nation FATF, the Financial Action Task Force that sets global anti-money laundering standards, cites just a half dozen laundering cases involving prepaid cards in their short history — each involving from $200,000 to $5 million and most in the U.S. Yet Tobon says they have in the past year or so become the preferred method for paying smugglers to move drugs across the U.S.
“Their payment is being given to them on these cards,” said Tobon, who runs ICE’s illicit finance and crime proceeds department.”
Rebates are often handled that way. I once bought a phone from Verizon and they mailed me a Visa $50 gift card rebate. I think I could have requested an real $50 check but there were a lot of hoops.
I’m assuming that Verizon and Visa were buddy-buddy here. Verizon get to hand out rebates, Visa gets the 5% transaction fee. It’s a good way to force a transfer between cash (from overpaying for the phone) into consumerism (must buy something.)
They probably own cars though, they can just get a title loan for the $2,000. Yeah, they’ll have to pay loan shark rates but that’s the cost of desperate money.
One of my friends worked at a title loan place. On the day she started the manager arranged for the local beat cops to come by and make introductions. She said it was so that the cops would be familiar with her description - should she need to be found - for whatever reason. He then handed her a necklace with a wireless panic button.
“Need to be found.”
Do I even want to know what that means? I think I get that they might want to recognize her as an employee, not someone robbing the place if they got called in through her panic button or some other alarm system, but “found” has me squicked. Did his employees get kidnapped on a regular basis?
The poor borrow money at a 100% a year or more rate while the the rich borrow from the government at .01%: http://www.bloomberg.com/news/2011-05-26/fed-gave-banks-crisis-gains-on-secretive-loans-as-low-as-0-01-.html
Then, the rich re-loan the .01% money at the 100% and we wonder why wealth is increasingly concentrated at the top.
That would be the 72 million who make less than 25K a year.
Or almost half of the 156 million workforce.
In other words, “duh.”
Realtors Are Liars
Realtors are not only liars, but they solicit prostitutes and they are spies too!
Real Estate Agents Caught Up In Russian Spy Case
by Tom Royce on June 29, 2010
A Redfin agent, Tracey Foley, was arrested yesterday in a Russian spying case that included 10 others. Here is the report from Redfin’s corporate site.
Another Russian spy, Anna Chapman, also had an online real estate business according to the New York Post. I will try to find out what the online real estate business she ran.
http://www.therealestatebloggers.com/housing-general/real-estate-agents-caught-up-in-russian-spy-case/ - 36k -
Realtors are spyers.
I think ours is trying to cut us loose, after unlocking doors for us for over two years. Recently we changed focus from buying an existing mid-pricepoint house to looking more at lots and teardowns (in anticipation of possibly - possibly - building our own, which we can do for the same or even less money than asking prices of existing homes). Well, the follow-through from the agent was all good on those mid-prices homes, but fell off a cliff (along with the amount of her potential commission) on the lots and teardowns. I can’t blame her for wanting a paycheck, though.
Realtard: RAL….. I’ve done alot of work for you but I need a paycheck. Are you going to buy soon?
RAL: Show me something I like where the price isn’t grossly inflated and I’ll buy.
The burden is on you lying realtors….. waiting.
Realtors are Nyan Cats.
http://www.youtube.com/watch?v=QH2-TGUlwu4
The US is in permanent downturn stagflationary depression
That’s rather harsh. Perpetual contraction? We may be just getting started, but extrapolation to zero is a silly as the idea of expansion to infinity was.
Yes, but wages dropping to world levels is going to feel like a “perpetual contraction” especially when it lasts most of our life. Real wages have been dropping since 1973, maybe not every year but the trend has been down.
Exactly.
Got to Tom’s inflation calculator and plug in some numbers and play with the various settings.
http://www.halfhill.com/inflation.html
Be sure you are sitting down.
I’m earning the same as I did in 1988, when I was a “Junior” Programmer. The work was a lot easier back then too, as programs were tiny compared to today’s bloatware.
I’m at about twice what I started at in 1996 with my first engineering job. I notice that my raises only kept pace…all the real gains occurred at each job switch. And every single one of them was a layoff (I did volunteer for one of those). I guess I should look forward to layoffs instead of being paranoid of them :-).
I’m up slightly from 1990 when I was a tech working over time. Same year when I finally got my engineering degree. And then got laid off in the lost aerospace decade of the 1990’s. Switched to fiber optic communications in time for the last of the 1990’s which were crazy !!
so I make almost the same now as an engineer as I did as a tech back in 1990. Getting laid off and having to change my speciality didn’t help. So I stayed with tech type work for most of my career, PCB designer now.
I worked for Loral in the 1990’s remember them ?
I worked for Loral in the 1990’s remember them ?
I sure do! One of my friends worked for Loral up in the Phoenix area.
Adjusted for inflation, my starting salary of 8K in 1974 is now 39,239.54. If inflation continues at the same rate for the next 37 years, I will need income of $192,467.69 when I am 96 to live as I did in 1974.
If I save 1/4 of my current gross income, I can then retire and live for the next 5 years on savings before running out of money. And that is if something doesn’t claim my savings in the meantime - like end of life care for my husband. I think I should encourage him to take up a risky hobby.
I just don’t see how I can ever retire.
I’m at 2.8x my 1995 salary, not including stock compensation. However, as I live in California, the median house is a higher multiple of my salary than it was in 1995, so in that sense I’ve lost ground.
All we need to do is drop to 3rd world levels and it’s “Mission Accomplished!”
Not extrapolating to zero, but it’s headed toward a hybrid of Charles Dickens’ England and 21st century Foxconn City in Shenzhen.
Best description ever.
I buy the “stagflation” part….
+1 No assembly required, void where prohibited.
If they would let the market set the true cost of housing - there would not be any need for “affordable housing” programs…
Because there would be plenty of it.
Especially in FL.
——————-
Some say it’s time to drop affordable housing rules (FL)
Sun-Sentinel.com | May 25, 2011 | Susannah Bryan
DAVIE— Requiring developers to build affordable housing may have made sense five years ago.
Not anymore, some say.
Builders, housing experts and some government officials point to the tattered housing market with its plethora of foreclosures and short sales.
In Davie, developers building projects with at least 10 units either have to set aside 20 percent of new homes and condos as affordable housing for 15 years or pay into a housing trust fund.
Town leaders say the rule — approved in 2008 — is stifling development. They are expected to vote soon on a plan that would suspend the requirement for two years. The plan excludes the town’s Transit Oriented Corridor along State Road 7, where developers are required to set aside 15 percent of new homes as affordable housing.
Officials from both Broward and Palm Beach counties say they have no plans to relax their affordable housing requirements.
the bubble collapse demonstrated that deed restricted, affordable housing protects the poor from profit but leaves them exposed to losses.
the local deed restrictions had to be removed as the values became higher then market not lower.
True story from Tucson, and yes, I know. I told the same story yesterday:
A couple of years ago, I was talking with one of the staffers at Habitat Tucson. She asked me if I knew anyone who was interested in becoming a Habitat homeowner. I didn’t.
Then she explained why she was asking the question. She said that house prices had dropped to the point where many of their potential homeowners no longer had to go the Habitat sweat equity route. They could just buy a house.
Not to mention the job market. A lot of the would-be Habitat homeowner crowd was feeling insecure about job prospects. And, as we all know, such insecurity does not put renters into a home-buying frame of mind.
So who was buying Tucson Habitat houses in, say 2000? Jobs don’t pay any more now than they did in 2000, and houses are about the same price.
Who was buying ‘em? Well, people who worked two or three min-wage jobs. And their spouses, if one was around.
To me, it didn’t seem like very sustainable homeownership, but what did I know? I just kept my mouth shut and pounded nails. After all, I was there to enhance my handygal skills. And I did.
HFH is a non-profit, right? Couldn’t they just consider the mission accomplished and turn their charitable efforts towards, say, rescuing animals abandoned in foreclosed houses?
It doesn’t seem like we need more houses built right now.
“Affordable housing” = apartment != house
I don’t buy the standard REIC mantra that “distressed home sales are delaying the housing recovery.” By contrast, I would argue that distressed home sales ARE the recovery — to affordable housing prices.
Distressed Homes in U.S. Sold at 27% Discount
By Dan Levy - May 25, 2011 9:01 PM PT
Foreclosures are luring all-cash buyers who demand discounts, pushing down the value of all properties. Photographer: Jeff Kowalsky/Bloomberg
U.S. homes in the process of foreclosure sold at an average 27 percent discount in the first quarter and purchases of distressed properties fell to less than half the peak set two years ago, according to RealtyTrac Inc.
The discount reflects the price of distressed properties relative to normal sales. A total of 158,434 homes that sold in the period received notices of default, auction or repossession, down 16 percent from the fourth quarter and 36 percent from a year earlier, RealtyTrac said in a report today. At that pace, it would take three years to clear the supply of distressed and bank-owned houses, the Irvine, California-based company said.
“While this is probably helping to keep home prices relatively stable, it is also delaying the housing recovery,” Chief Executive Officer James Saccacio said in the statement.
Foreclosures are luring all-cash buyers who demand discounts, pushing down the value of all properties. More than three-fourths of U.S. metropolitan areas showed price declines in the first quarter, with foreclosures and short sales accounting for 40 percent of all transactions, the National Association of Realtors said May 10.
…
How can you ignore 40% of the sales are distressed as well as a knowledge of the shadow inventory being held back ,as well as the issue of clean title
and the issue of job loss and on and on ?
The real estate market has the potential of falling more . When your in a falling market you can’t come in at high value .
Goooood Morning all you low life renters out there and welcome to WHBB where it`s a beauuuutiful day in West Palm Beach. This is cousin Jethro spinnin the hits and this one is from Country Ben and the Fish goin` out to all those victims who have been livin rent freeeee for years.
Stole another one
Just like the other one
You’ve been hangin on to it
And I sure wish you would quit
Don’t bogart that house, my friend
Pass it over to me
Don’t bogart that house, my friend
Pass it over to me
Stollllllllllllllllle another one
Just like the other one
Another year has just about hit it`s end
So come on and be, a, real, friend
Don’t bogart that house, my friend
Pass it over to me
Don’t bogart that house, my friend
Pass it over to me
Everybody sing along this time
Don’t bogart that house, my friend
Pass it over to me
Don’t bogart that house, my friend
Pass it over to me
WHBB FMMMM Hey all you crazy deadbeats out there, can`t get a workout? BofA got you down? Wells isn`t treatin` you so well? Then listen to cousin Jethro and just walk away Renee.
THE LEFT BANK
“Walk Away Renee”
And when I see the sign that points one way
The lot we planned to build on that sunny day
Just walk away Renee
You won’t see the padlock on my home
The empty sidewalks on my block are not the same
You’re not to blame
From deep inside the tears that I’m forced to cry
From deep inside the pain that I chose to hide
Just walk away Renee
You won’t see the padlock on my home
Now as the rain beats down upon my weary eyes
For me it cries
[Flute]
Your name and mine are on forclosure papers on a wall
Still finds a way to haunt me, though they’re so small
Just walk away Renee
You won’t see the padlock on my home
The empty sidewalks on my block are not the same
You’re not to blame
OK, you’ve just used one of my fave oldies to memorialize the housing bust. Good on ya, cobber!
With respect to the ditty above, however, I think the term is “bogard”. As opposed to “Bogart”, which is Humphrey.
Sorry if I ruined a memory.
With respect to the lyrics, I used to do this from memory but I found it`s a lot easier to cut and paste them and change the appropriate words.
Country Joe And The Fish - Don’t bogart that joint Lyrics
http://www.stlyrics.com/songs/c/countryjoeandthefish6021/dontbogartthatjoint841711.html - 15k -
I stand corrected.
I’ve been waiting for some good HBB lyrics to that song myself. Nice job.
“As opposed to “Bogart”, which is Humphrey.”
I think the expression comes from Humphrey Bogart’s habit of always having a cig in his hand or mouth, though rarely puffing on it. ‘Don’t Bogart that spliff, dude’- ie pass it on.
Why is a less-constipated housing market supposedly bad for the economy? I don’t get where these guys are coming from, at all. Do they think that no sales at completely unaffordable prices would be an improvement?
Foreclosures for sale: Big supply, low prices
By Les Christie May 26, 2011: 5:16 AM ET
Foreclosures for sale: Big supply, low prices
NEW YORK (CNNMoney) — There’s a three-year inventory of homes in foreclosure for sale, and that’s devastating home prices.
Las Vegas has so many foreclosures that 53% of all the homes sold in Nevada are in some stage of foreclosure, according to a report from RealtyTrac, the online marketer of foreclosed properties.
Foreclosures represent 45% of sales in California and Arizona, and 28% of all existing home sales during the first three months of 2011.
“This is very bad for the economy,” said Rick Sharga, a spokesman for RealtyTrac.
…
PB …It has always been the issue of who is going to take the loss on the prices crashing from the fake boom prices . The way they handled this mess from day one was the problem .
When Hank Paulson walked on the stage with this good bank/bad bank analogy I thought I would scream . What do you mean “Good Bank /Bad
Bank ,that sounds like no crime /major crime .
“If they would let the market set the true cost of housing - there would not be any need for “affordable housing” programs…
Because there would be plenty of it.”
Not necessarily. In the late 1990’s, the supply of housing in San Diego was short and prices were rising which was a typical market response. There was some additional building then which was also a typical market response. The bubble greatly increased both supply and prices. A typical market response would have then been a decrease in prices based on the increase in supply. This has happened, but not to the degree that should have happened. There’re too many vested interests that have been trying to keep that from happening. Even if/when that eventually happens, there are going to be more than a few for which housing is still not affordable because of low wages. I suppose a market solution to that could be shanty towns. I do see stronger market forces being preferable, but not all market solutions as necessarily desirable.
“A typical market response would have then been a decrease in prices based on the increase in supply.”
When people think of something as an “asset,” they bid up the price regardless of other factors such as supply, need, less expensive alternatives, etc.
I suppose a market solution to that could be shanty towns.
Only in your socialist dreams.
Go google Levittowns - where a person could buy a decent house in the suburbs for a $20 downpayment.
Housing prices would be at SANE levels if the government would get OUT of the housing price fixing business.
Force banks hold on to their own mortgages (this means the only mortgages out there would be 20% down and 2.5x income)
Let banks lend their money to whom they want to (no more forced PC lending)
No more Federal backing of every mortgage out there
Reduce/eliminate the mortgage tax deduction
Ban public unions and reduce property taxes
Well - look at that - affordable housing starts to pop up EVERYWHERE
“Only in your socialist dreams.
Go google Levittowns”
OK, I did. Here’s what I found:
With the full implementation of federal government supports for housing, administered under the Federal Housing Administration (FHA), the Levitt firm switched from rental to sale of their houses, offering ownership on a 30-year mortgage with no down payment and monthly costs the same as rental. The resulting surge in demand pressed the firm to further expand its development, which changed its name from Island Trees to Levittown shortly thereafter.
wikipedia
Good thing they got the government out of the way!
Darn those facts.
while at it, you could add tax cut too.
“I suppose a market solution to that could be shanty towns.”
Another market solution: More people living on the street. We saw plenty of them downtown near Petco Park when walking from our car to the Padre’s game and back this past Tuesday evening.
Well outside of tornado alley I think mobile homes are still a good option. I’ve known plenty low-income who were thrilled to get into one. I’ve lived in them and liked it. I wouldn’t mind living in one again in a well regulated park.
But the REICsters and planners think this is not decent housing, and besides they hurt property values. So they get zoned out. Everyone must have stick-built!
The real solution would be factory built houses, but for some reason, the prices aren’t competitive. I still haven’t figured out why.
The build time is much shorter. The quality is much better. You can’t tell them apart from on-site stick-built, yet they cost the same or more as on-site built.
Makes no sense.
Samples:
http://www.google.com/search?hl=en&safe=off&q=factory+built+houses&bav=on.2,or.r_gc.r_pw.&biw=1101&bih=842&um=1&ie=UTF-8&tbm=isch&source=og&sa=N&tab=wi
Plus mobile homes can be manufactured in China!
Well outside of tornado alley I think mobile homes are still a good option. I’ve known plenty low-income who were thrilled to get into one. I’ve lived in them and liked it. I wouldn’t mind living in one again in a well regulated park.
But the REICsters and planners think this is not decent housing, and besides they hurt property values. So they get zoned out. Everyone must have stick-built!
Being one of the few professionals actually living in one at the moment, I can’t say I love the thing, but you can certainly live cheap thanks to everyone else’s distaste for them. As I watch rental prices climb due to empty houses being kept off the market, I have no regrets about just paying cash for one and waiting. Thanks to the incentives that I got for moving one into the park, I’m still paying less than 25% of what I would for any other options in the same area. Those incentives will run out in about another year and a half and then I’ll be up around 50%.
I’ve heard that mobile homes are firetraps, are not insulated, and offgas formaldehyde and god knows what else for years.
I think the real advantage of mobile homes is that they are small, and sit on small pieces of land. Perhaps the best compromise would be a mass-produced pre-fab Katrina Cottage on a mobile-size plot. it would cost may half as much.
I’ve heard that mobile homes are firetraps, are not insulated, and offgas formaldehyde and god knows what else for years.
That may all be true. Ours is a 1991 that was remodeled just before we bought it. I assume that takes care of the outgassing issues, except for the new material used in the remodel. I’m not sure about the insulation…all I know is it’s way better than the 3-story townhome we’d been renting previously. But that was horrible, and it was an end unit.
We’ve got lots of good smoke alarms…hopefully that’s enough to mitigate the firetrap issue.
Manufactured housing is indeed distinguishable from “stick” housing as you call it. For one thing, code allows for 2×4 framing in them instead of the 2×6 of a “stick” built home. And the rest of the materials and code requirements are of similar Barbi-doll house quality. Snap-on, snap-off trims, paper-thin interior walls (literally,) off-gassing, lousy sub-flooring, low-quality roofing, plumbing, minimal insulation, etc.
The advantage of manufactured/assembled housing is that you can live in areas where getting materials and labor to build an insurable house might be problematic– although the useful life of one is about 20 years…if that. For folks who have land somewhere, it’s a lot easier to plop a mobile on it than contract a house and get it built.
Oh, and they don’t burn, they melt.
Troubled home market creates generation of renters
By DEREK KRAVITZ, AP Real Estate Writer Derek Kravitz, Ap Real Estate Writer – Tue May 24, 3:44 pm ET
WASHINGTON – A growing number of Americans can’t afford a home or don’t want to own one, a trend that’s spawning a generation of renters and a rise in apartment construction.
Many of the new renters are former owners who lost homes to foreclosure or bankruptcy. For others who could afford one, a home now feels too costly, too risky or unlikely to appreciate enough to make it a worthwhile investment.
The proportion of U.S. households that own homes is at its lowest point since 1998. When the housing bubble burst four years ago, 31.6 percent of households were renters. Now, it’s at 33.6 percent and rising. Since the housing meltdown, nearly 3 million households have become renters. At least 3 million more are expected by 2015, according to census data analyzed by Harvard’s Joint Center for Housing Studies and The Associated Press.
All told, nearly 38 million households are renters.
http://news.yahoo.com/s/ap/20110524/ap_on_bi_ge/us_the_new_renters - 100k -
I’m surprised they didn’t use the article to pimp the REIC, i.e. better hurry and Buy Now cus rents are rising.
This happy renter will NOT be doing yard work, house work, charging up the Home Depot credit card this weekend. Just lock the apartment door and hit the road for 5 days.
I’ve heard of “Keynesian beauty pageants,” but now “Keynesian ugly contests”?!
May 26, 2011, 5:47 AM ET
Treasurys win ‘ugly’ contest?
Folks, the latest data on the preferred government bonds of Japan’s institutional investors is in!
And it’s still hot so come and get it.
The results are far from straightforward and come varnished with caveats and polls of polls, so the Tell has reached out to Lisa Twaronite, our Tokyo bureau chief, with the hope she can shed some light on the matter.
Here’s what she had to say on the issue:
“Japanese institutional investors — for the week through May 23 — ‘passively prefer European government bonds over U.S. Treasurys,’ according to a survey by Barclays Capital strategists. And that’s even as most of them believe that a Greek debt restructuring is looming.”
…
So they’re essentially betting on Germany then?
Restructuring means defaulting by Greece.
The consumer really is tapped out.
Global Colonizers Stage Retreat to Corporate Banking
Financial Times
Competitive Dynamics - Retail Banking
Is the era of the global consumer bank over? HSBC has become the latest group to signal a retreat from some of its furthest-flung retail-banking operations, and Citigroup is pulling out of retail markets where it is overstretched, such as Spain, Greece, and Belgium, and refocusing on just 100 cities around the world. Barclays, too, is on the retreat, announcing that retail-banking operations in Russia and Indonesia should close. Increasingly, the heads of so-called universal banks - those that combine high-street banking with corporate and investment banking - are deliberately shifting their focus away from foreign adventures in retail branches and on to corporate business instead. Some of the reasons are obvious. Many banks have come out of crisis mode and are now in a cost-cutting phase - often under the direction of new management. Branch networks are costly to maintain in terms of both property and staffing. And increasingly the global colonizers are realizing they cannot compete with local operators who know the quirks of the domestic banking scene far better. (801 words)
My little section of the DC government cesspool is considered one of the safer ones. When you ask Americans which government functions to cut, it rarely makes the list. We are already under the pay “freeze” and the hiring freeze, significant promotions have come to a dead stop, and there is a group examining how to cut overhead. A couple days ago, they floated the idea of retirement buyouts due to an anticipated flat budget.
If this is what’s going on at my job, the rest of government must be slimming too. With no new influx of pretty young things to buy condos in NoVa, guess what that will do to housing in the DC area? I’m giving those wishing prices a year.
It will be interesting to see what happens.
A year is a long time. The Federal spending spree might resume by then, as both parties have their pet projects they love to spend borrowed money on.
But oxide works for the D.C. government (Yikes!). Jobs in the state/local government sector aren’t real secure these days.
oops sorry. I’m a full-on Fed… working in the DC area.
Lots of people in the DC region are government contractors.
The thing about government contractors is that..
The government doesn’t have to renew their contract.
No more big salaries. No more housing needs.
And
It does not affect unemployment one way or the other…
“Government contractors” are companies like IBM, SAIC, Lockheed-Martin, etc. Look at the names on the buildings in Tyson’s Corner and Crystal City. Those companies have employees. When the employees get laid off due to a canceled contract, they will show up in the unemployment stats.
That said, I still believe such layoffs will be negligible, at least for the next six years. And actual federal government employment will increase over that same time.
Buy in the D.C. area now or be priced out forever.
Our Federal contract is 6 months into a 5 year contract, the terms of which are subject to review at the end of each year.
There was a change of contractors at the end of last year resulting in dozens of layoffs as not all employees of the previous contractor received offers from the new contractor.
Those laid off received small severance packages, and then yes, unemployment compensation.
It kind of works the same way in the private sector
But worse
At HP we hired Contractor A (they have an electrical sounding name) to provide our Q/A (SW Testers). Then one year we didn’t renew with “A” and gave the contract to another company (much cheaper).
Contractor B hired most of the laid off Contractor A employees, BUT OFFERED THEM 40% LESS PAY. The testers went along with it, as the alternative was the unemployment line.
These people worked onsite in Fort Collins. They wore the ubiquitous “red” badges, and at times you felt like the minority at HP (being an actual employee).
You were.
When I think about what happening, how haves are becoming have nots, I am reminded of being on a hillside house in a floodplain, during a flood.
The people at the bottom are the first ones to get washed away. Then the floodwaters rise and the next tier, who were on slightly higher ground, are also washed away.
At first those in the middle felt safe, as the flood was “down there”. The thing is the floodwaters just keep rising, and people who at one time thought they were safe are wiped out. It then starts to dawn on those above them that the flood isn’t going to recede, and that it might continue to rise.
I was with you until, “It then starts to dawn on those above them that the flood isn’t going to recede, and that it might continue to rise.”
It does, but they don’t.
The consumer really is tapped out.
Global Colonizers Stage Retreat to Corporate Banking
Financial Times
Competitive Dynamics - Retail Banking
Is the era of the global consumer bank over? HSBC has become the latest group to signal a retreat from some of its furthest-flung retail-banking operations, and Citigroup is pulling out of retail markets where it is overstretched, such as Spain, Greece, and Belgium, and refocusing on just 100 cities around the world. Barclays, too, is on the retreat, announcing that retail-banking operations in Russia and Indonesia should close. Increasingly, the heads of so-called universal banks - those that combine high-street banking with corporate and investment banking - are deliberately shifting their focus away from foreign adventures in retail branches and on to corporate business instead. Some of the reasons are obvious. Many banks have come out of crisis mode and are now in a cost-cutting phase - often under the direction of new management. Branch networks are costly to maintain in terms of both property and staffing. And increasingly the global colonizers are realizing they cannot compete with local operators who know the quirks of the domestic banking scene far better. (801 words)
“Many banks have come out of the crisis mode and now are in a cost-cutting phase - often at the direction of new management.
From this I get:
1. The rewards used to go to bank managers who could float the most loans. Now the rewards will go to bank managers who can collect from those loans. Which means…
2. Less loans will be made and more loans will be collected from. Which translates to less money being put into the economy by banks and more money being withdrawn from the economy by banks. These two combined will continue to shrink the float of money in circulation.
And … because the banks will be more stingy in making loans those who need money will have to go to those payday stores that are springing up everywhere and will have to pay payday store interest rates.
It used to be (not that long ago) that bank managers got FIRED if too many of their loans went bad.
Of course, those were the days the banks serviced their own loans instead of selling them to the taxpayer.
I’m not even sure a local bank branch manager even has the authority to make loans these days.
“It used to be (not that long ago) that bank managers got FIRED if too many of their loans went bad.”
Exactly.
No need to worry about that these days when you can offload the loans, blame the FB and have the government make you whole.
“The consumer really is tapped out.”
I think the tipping point has been reached and this sucker’s going down. People have managed to hang on for the past three years or so, now the poo has hit the fan for real. I say this as a result of anecdotal evidence. Being in the stuff biz, I’m watching local antique/collectible malls, flea markets, shows, etc. experience a decline in vendors, because the venues they’re located in are taking a dump big-time. The “boom” years masked all the weak hands and it turns out there are more weak hands than it appeared. Even venues that did well before the “boom” are going down.
And of course, there are the tragic stories that go along with it: I heard yesterday about one long-time dealer who lost his day job, went into foreclosure and his wife is divorcing him, and that’s not all. Holy Downturn, Batman!
Agree with you palmetto . From day one this was all about how the
Money brokers could try to change the losses that were build in the cake and transfer it somewhere else .
This big fake out of a recovery coming was always a joke ,especially when right action wasn’t taken .
I can believe how many people have “weak hands ” and many people are in scrounge mode . Course the Fats Cats party on .
“I think the tipping point has been reached and this sucker’s going down. People have managed to hang on for the past three years or so, now the poo has hit the fan for real.”
Yup, the savings have been raided and anything of value has been sold. These people are finally beginnning to accept that there isn’t going to be a “recovery” and that this is the new normal.
Duration duration duration…
lost his day job, went into foreclosure and his wife is divorcing him,
I wonder if American husbands divorce their wives when she’s down and out at the same percentage that American wives divorce their husbands when he gets down and out. And if not or if so, why?
went into foreclosure and his wife is divorcing him
This has been really difficult to stand by and watch. While listening to my female friends complain bitterly, I usually totally get where her budget minded husband is coming from. I think I have a permanent groove in my tongue made for the sake of friendship.
Women (often) don’t see it as a money thing. They see it as a power thing. And they see it as their spouse taking power from them, not the PTB taking the family’s power. Don’t ask me how to break through that. I’ve stuck my toe in and it didn’t go well.
I’m the offspring of a tightwad and a cheapskate. So, needless to say, foolish spending is not in the family DNA.
If anything, we view parting with money as something quite painful. It’s almost comical to see what we do to avoid it.
Yes we can! Yes we can!
————————–
Stubborn Jobless Claims Still Keep On Climbing Higher (+424,000)
CNBC | 5/25/11 | Reuters
More people applied for unemployment benefits last week, the first increase in three weeks and evidence that the job market is still sluggish.
The Labor Department says that the number of people seeking benefits rose by 10,000 to a seasonally adjusted 424,000. A department spokesman says no states cited extreme weather as a factor in the increase. Tornadoes and floods have devastated several states in the Midwest and South in the past month.
400K is the new normal.
Get used to it.
“The Labor Department says that the number of people seeking benefits rose by 10,000 to a seasonally adjusted 424,000.”
Didn’t Madonna have a movie named…
Desperately seeking benefits
I will see your Yes we can! Yes we can! And raise you by one How’s that Hope and Change working out for you now?
The quip that NEVER ceases to be funny, I do declare…
It’s great. And it will work out even better from 2012-2016.
How about “Four more years!”
Now that - never stops being funny!
Be honest. The thought of it brings tears to your eyes and you know it.
May I suggest a “1.20.2017″ bumper sticker for your bananamobile?
And there is 8 years of Delaware Joe after that.
20 years ago today Dan Quayle was looking good for 1996. On paper, anyway.
Dan Quayle was never looking good.
[(400k x 52) x 4 years and counting] + 1 year avg unemployed ! = ~9% UE
Its called “new math”.
This is not good for NY State. When will our politicians do the right thing for the citizens of this state? Perhaps never. Andrew Cuomo is a disaster for NYS.
What the 2 percent tax cap deal really means for Central New York taxpayers
There’s just one catch: Under the new plan, individual property tax bills will likely continue to go up beyond the advertised 2 percent cap.
That’s because the proposal would allow local governments and school districts to ignore the cap if their pension costs increase by more than 2 percent — which has happened with regularity in New York in recent years.
The proposal would allow local governments to carve out other things from the cap, too, like expenses caused by hefty lawsuit settlements and potential revenues from new housing developments or businesses.
And, critics say, the plan introduced Tuesday by Assembly Speaker Sheldon Silver does nothing to limit other state-mandated costs to local communities at a time when the Legislature and Gov. Andrew Cuomo have cut aid to schools, cities, towns and villages.
Syracuse expects its pension costs to jump 42 percent in the 2011-12 fiscal year, to $28 million. Facing that kind of skyrocketing expense, the 2 percent cap may be a mirage.
“Unless you address those cost factors, the property tax cap is really just a symbolic, at most, gesture,” said Syracuse Mayor Stephanie Miner.
http://www.syracuse.com/news/index.ssf/2011/05/nys_political_leaders_agree_to.html
Syracuse expects its pension costs to jump 42 percent in the 2011-12 fiscal year, to $28 million. Facing that kind of skyrocketing expense, the 2 percent cap may be a mirage.
Public unions are the largest money contributors and supporters of the democrat party
The democrat party controls New York State
They will tax every person and business to oblivion before they touch one public union salary/benefit or pension.
Conclusion:
Leave if you can. Sell property now.
There really is no hope left. NYS will eventually go bankrupt as they will never control their public unions.
Corporations are the largest money contributors and supporters of the republican party
The republican party controls red States.
They will tax every person to oblivion before they touch business tax loophole or tax cut.
http://www.reuters.com/article/politicsNews/idUSN1249465620080812
Study says most corporations pay no US taxes.
There is such learned helplessness among the population about it too. In my last state the population stirred things up, organized and made changes when taxes got out of hand. This cracks me up in retrospect because the taxes are 1/3 there what they are here. Here you start to grumble and people (online) tell you to get out and don’t let the door hit you on the way out like you’re not good enough for them unless you’re contributing your $10-$12k with a smile. One friend pays $16k. Another pays $21k. I can’t even talk about it w/them. They just look at me blankly when I mention dismay at the $10-$12k as if to say, yeah, so?
TaxWatch
May 25, 2011, 12:01 a.m. EDT
Nasty tax surprise on retirement loans
Propose law could give 401(k) savers the break they need
By Eva Rosenberg, MarketWatch
LOS ANGELES (MarketWatch) — It’s bad enough to lose your job during these tough times. But folks who are unemployed get another nasty shock. Those 401(k) loans they took in better times suddenly become due and payable. If not paid back, taxes and penalties result.
Two U.S. Senators have co-sponsored a bill to fix this problem — and some other problems.
Wisconsin Democrat Herb Kohl and Wyoming Republican Mike Enzi introduced the Savings Enhancement by Alleviating Leakage in 401(k) Savings Act of 2011, or the SEAL Act (Senate Bill 1020) to give people more time to pay back these loans, and to protect all retirement accounts.
…
“Savings Enhancement by Alleviating Leakage”
Sounds like an advert for Depends. Well, now I’m the one with my upper lip curled so far back in contempt it has become permanently fused to my septum. Because some staffer or staffers sat around trying to come up with an acronym to “market” this bill. And we pay for little twits to do that, along with tweeting and Facebooking on behalf of their “boss”. That is, when they’re not busy making appointments for lobbyists.
‘give people more time to pay back these loans, and to protect all retirement accounts.’
And give people more incentive to borrow on their 401K in general. If I thought I could have a back-up plan of cash in the event of facing job lay off, I’d keep that option available to tap the funds, just in case.
Borrowing from a 401k is about the dumbest idea ever.
You’re paying it back with taxed earnings and then getting taxed on it at retirement age no?
Yep. If you have to borrow against your 401k, you are already in trouble.
I don’t know why it’s such a surprise. In every place I worked the paperwork and HR both bent over backwards to make this perfectly clear. Oh, I get it. I was actually paying attention because I considered myself responsible for my own decisions. That’s so 1980s.
Self-made Korean immigrant tattoo parlor mogul sentenced to prison for mortgage fraud. Ya just gotta puke when you read a story like this, although the Federal judge did agree that the banks had something to do with the scam.
http://www.tampabay.com/news/courts/civil/house-flipper-sang-min-sonny-kim-sentenced-to-prison-time-for-mortgage/1171921
Shoddy homes with broken windows that were gutted from the inside out had somehow managed to get mortgages approved by Wachovia, Washington Mutual, Bank of America, National City Bank, Lehman Bros., Fannie Mae, Freddie Mac, Wells Fargo — the same financial institutions that either went bust or survived only when they merged with other banks or took billions in a taxpayer bailout.
…
When Kim first got into mortgage fraud, he immediately became involved with real estate agents, mortgage brokers and lenders and others in an extensive network who were already well-versed in the scam, Escobar said.
Fraud from top to bottom…
Good find and just one of thousands.
BWHAHAHAHAHAHAHAHAHA!
April 2011 NY resales are down a staggering 23.4% statewide from April 2010. It’s the spring selling season!!!!
BWHAHAHAHAHAHA!
Want sales commissions you Liars? Lower the price!!!!!
BWAHAHAHAHAHAHAHA!
Median price fell 5.3% in the same period.
BWHAHAHAHAHAHAHAHAHAHA!
Hey NY Realt-liars……. How come you didn’t release the data tables this month? For the first three months of the year, you’ve been hiding and obscuring sales and price data from specific counties….. now you’re hiding the entire thing? You corrupt den of thieves make me vomit.
Suck on a shotgun barrel you maggots.
I posted a while back that the realators themselves know the market is in freefall in Western NY. This is getting to the interesting part for me.
Indeed it is Bluester. The burden is weighing on sellers in a very big way.
My last town has for sale signs everywhere and is looking like the photos Ben used to post from bubbleland when this thing was first gaining momentum. Taxes are 1/2 what they are here. So the flight is not merely about $$$$$$.
The latest housing news from Tucson’s daily fishwrap:
City’s home-value drop 20th-largest in nation
Here’s an “ouch” quote from the story:
The numbers mean that someone who paid $200,000 for a home in Arizona five years ago would get, on average, $107,540 for the same property now. And homes are selling for what they were in 2002.
Question: Here in CA state, county and city workers always got raises based on the cost of living. With counties, it was always based against comparable counties. Now that property values are in free fall, essentially lowering the cost of living, should those salaries be rolled back? Or should those salaries be based on a high five year average vs the present high one or high three?
Priced food, gas, energy, and medicine lately?
Seen the return on savings accounts?
It was great to have a 30 year lease on the way up, wasn’t it?
It is good to be rich and have access to .01% money:
http://www.bloomberg.com/news/2011-05-26/fed-gave-banks-crisis-gains-on-secretive-loans-as-low-as-0-01-.html
It’s GOOD to be the Banksta!
They`re not making anymore land you know.
I know, now who is going to take care of the land they
already made?
Palm Beach County loaded with unused vacant parcels it can’t develop, can’t sell and can’t maintain
By Eliot Kleinberg Palm Beach Post Staff Writer
Posted: 4:19 p.m. Sunday, May 22, 2011
BOYNTON BEACH — It’s a big empty lot, bordered to the north by a potholed road that dead-ends at a line of Australian pines. The street’s terminus is marked by a rotted mattress and silver bowls someone put out to feed feral animals.
The lot’s hump suggests weeds and scrub and little purple flowers hide a mass grave of rebar, concrete blocks and other construction materials left by developers some three decades ago.
Terry Lonergan, head of a nearby homeowners group, has complained long and hard to the landowner to do something about the eyesore.
Problem is, the landowner is the city.
At a city commission meeting recently, Lonergan made an offer: give us the deed to the lot and we’ll maintain it.
But, she said, “It’s not going to happen in my lifetime. I know that.”
This isn’t just a Boynton thing. The Palm Beach County Property Appraiser counts 3,567 vacant parcels owned by county or municipalities with a total value of approximately $734 million.
Wellington, for example has many vacant parcels, but it’s hard to pay a lot of attention to them when the city has one of the largest concentrations of foreclosed properties in Palm Beach County, city manager Paul Schofield said.
http://www.palmbeachpost.com/news/palm-beach-county-loaded-with-unused-vacant-parcels-1491346.html - 93k -
“vacant parcels owned by county or municipalities with a total value of approximately $734 million.”
I hear the clue phone ringing!
Municipality Man: Hello, this is Municipality Man
Clue God: Dude, how are you!
Municipality Man: Great, and you?
Clue God: Excellent. Hey, about those vacant lots…
Municipality Man: Which one, we have 3,567 of them
Clue God: Uh, well, all of them
Municipality Man: Yeah, what about them?
Clue God: Well, they ain’t worth sheeeit.
I know you were being facetious, but the idea behind the phrase “they aren’t making anymore land” is that there is a finite amount of space for people to live/work. And that’s just silly.
Everytime someone creates a new condo map with air rights, they create “land”.
Everytime someone increases density by building higher, they create “land”.
They make more “land” every day…
Any time they cut down a citrus orchard to build McBoxes…
Kind of like my old place in NoVA: Woodlake Towers. No woods, no lake, just towers.
There’s a house I like, but my realtor says, “he can’t find it on the MLS.” It’s freakin’ there!
Why is he doing this?
Because he can’t figure out why that darn clue phone keeps ringing?
Every now and then I see a sign from listing agent go up a day or two before it hits the MLS.
Have your agent call the LA and work out way to get you in to see it, if that’s what you want.
As Kim says, have your Realtor arrange for you to see it, or, failing that, find a different realtor, or call directly.
The home we just bought never made it to MLS. There was never even a sign on the property. Our realtor was called in to opine on listing price. She knew what we were looking for and scheduled an appointment for us to see the house. We walked through twice, got the full disclosure packet and made our deal with the seller before it was listed.
Did you sign one of those buyer’s agent agreements that commits you to involve and pay him/her even if you found the property on your own?
If not, approach the listing agent directly and, if it comes to an offer, offer the listing agent 4% (or some number over 3 and less than 6%) of the final sales price to be the sole agent on the deal…
The LPS Mortgage Monitor is out with data through the end of April:
http://www.lpsvcs.com/LPSCorporateInformation/ResourceCenter/PressResources/Pages/MortgageMonitor.aspx
Nothing earthshattering. New delinquencies down, foreclosures sluggish to leave the system, big overhang of bad stuff.
However, one new page is interesting to me…look at page 14. This is the first time I’ve seen anyone quantify how many homes in the foreclosure process actually go back to the bank (and how many are paid in full, aka short sale, become current, etc.). Looks like, give or take, 50/50 over time.
I thought there was a significant number that took a different path out of the foreclosure process than becoming REO, but this was the first time seeing data.
No QE3, dollar improves, oil improves, inflation up, interest up, pensioners happier, gov unhappy with higher rates, more unemployment, debtors happier holding usf, stocks priced at real worth, banks less profitable, fewer loans, housing flutters, banks get nervous and unload housing in a short period. Gov employees choked into line.
Gov recognizes we have half the global economy. Tariff walls erected. NA economy improves. Forces repatriation of corp profits, changes from a controlling force to becoming a fighting police force, global corps more local control.
There are hundreds of thousands of citizens who would give their eye teeth for their country - including good and honest decisions.
This lunacy will not continue when they take the controls.
Keep dreaming. We’re up “that” creek without a paddle.
Sounds like there is no urgency to start looking for an affordably-priced home for at least three years. Why buy now when you will be able to get it so much cheaper after the comps price in all the foreclosure sales, short sales, fire sales, etc, with plenty of additional foreclosures and REO inventory release to come?
3-year supply of foreclosed homes hurts home prices
CNNMoney
5:54 a.m. CDT, May 26, 2011
There’s a three-year inventory of homes in foreclosure for sale, and that’s devastating home prices.
Las Vegas has so many foreclosures that 53 percent of all the homes sold in Nevada are in some stage of foreclosure, according to a report from RealtyTrac, the online marketer of foreclosed properties.
Foreclosures represent 45 percent of sales in California and Arizona, and 28 percent of all existing home sales during the first three months of 2011.
“This is very bad for the economy,” said Rick Sharga, a spokesman for RealtyTrac.
What’s more, the homes are selling at steep discounts, especially so-called REOs, bank-owned homes that have been taken in foreclosure procedures.
The average REO cost on average about 35 percent less than comparable properties, according to RealtyTrac.
But in some areas, the discounts were ever greater: In New York State, the discount for REOs was 53 percent during the first quarter. And it was nearly 50 percent in Illinois, Ohio, and Wisconsin.
…
And the jokes just write themselves…
—————————
Barney Frank Admits Getting His Former-Lover A Fannie Position
Economic Policy Journal ^ | 5-26-2011 | Robert Wenzel
Robert Wenzel
May 26, 2011
Rep. Barney Frank has admitted that he helped his ex-lover, Herb Moses, land a lucrative post with Fannie Mae in the early 1990s. Frank was, and still is, on a committee that regulated Fannie — but he called questions of a potential ethical conflict “nonsense, ” reports the Boston Herald.
If it is [a conflict of interest], then much of Washington is involved [in conflicts],” Frank told the Herald last night. “It is a common thing in Washington for members of Congress to have spouses work for the federal government. There is no rule against it at all.”
According to Frank, Moses “was hired to an entry-level position.”
Frank’s assistance in helping Moses land the Fannie position was first reported in a new book, Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon by NyTi reporter Gretchen Morgensen.
In an interview Tuesday on WBUR’s “Fresh Air,” Morgensen said Frank “was very aggressive and really tough on those who were testifying in Congress about reining in Fannie Mae and Freddie Mac” during hearings after Moses was hired. She said Fannie Mae “rolled out the red carpet” for Moses as part of a strategy to curry favor with Frank and other members of the Financial Services Committee, according to the Herald.
“Barney Frank Admits Getting His Former-Lover A Fannie Position”
Wouldn’t it be more apt to say, ‘into a Fannie Position’?
Great day for politicians
Barney Frank worked to get job for live in boyfriend and Freddie and Fanny
and good old Newt’s troubles just get worse
they extend beyond that pricey “no-interest” credit line he received from the tony jewelry company.
As Spy Talk’s Jeff Stein reports, Tiffany’s just so happened to be spending big bucks on lobbying the House Agriculture Committee on mining issues when Gingrich’s wife, Callista, worked there, and her husband received that increasingly infamous loan.
But there’s more: Per the Washington Examiner’s Timothy P. Carney, Christy Evans, a top Gingrich aide when he was in the House, is a registered lobbyist for Tiffany’s and was leading their lobbying efforts at the time.
As The Ticket reported last week, House ethics disclosures filed in 2005 and 2006 by Gingrich’s wife, Callista, revealed the former House speaker recently owed between $250,000 and $500,000 to the jewelry company (zero interest) ? what’s the duration on the loan?
Is a 50 year zero interest loan a gift??
If I lend money to family at 0%, the government will impute interest. A 0% loan is considered a gift in that case.
Why not with Newt?
The Blingriches never learn. Always taking, never giving.
CarrieAnn,
onondaga county sales collapsed 35% YOY in April.