Whose Sanity Is Questionable?
Readers suggested a topic on economic recovery. “How long from now will virtually all the serial bottom callers throw in the towel? Or will some of them keep it up for decades, if necessary, so they can claim their stopped-clock prediction called the bottom, once it finally happens?”
A reply. “The housing bust is no longer hurting the economy. While prices may be edging down, and may continue to do so in real dollars, you may get more construction, sales and associated activity. Not excess, speculative activity, but more than the absolute bottom we’ve hit. You’ll get some building because people want different units in different places than those that are empty — multifamily in viable redeveloping cities rather than moving to the existing ghost towns on the exurban fringe.”
“So you’ll get an increase in housing-related activity from historically low levels, which will add to the economy. But housing won’t drive the recovery, as it has after several other recessions. People, after all, are now just buying or renting housing as housing. So something else will have to generate the growth. But at least the damage is pretty much done.”
Another said. “I see new construction as a sign that current owners are totally screwed…….when the new construction comes onto the market priced $2-300K less than what they paid for a equivalent house in 2006.”
One had this, “A take on Stealth Stagflation: Since 2006 (dates and figures for illustration only) we’ve doubled the money supply, and in essence doubled ‘productivity’ (by off-shoring, downsizing, reneging on pension and benefits, cheaper/better managed materials, technological improvements, etc.) Although housing may have lost 50%+ of ‘value’ since 2006, the prices remain proportionately higher–thus giving the illusion of stabilization.”
“In actuality, houses, cars, even packaged food stuffs have doubled in cost for what we’re offered over what they would have cost to produce in pre-2006. Housing in my area is back to 1993 prices. My point is that bubble prices WON’T go away, they’re essentially here to stay and this is the new normal.”
“The problem (if that’s what you want to call it,) is that incomes won’t increase proportionately, and that spending spree you reference is a long-over anomaly. Unless another world economy emerges to offset the USD, (unlikely, though they’ll equalize,) debt levels will re-balance at this new higher level of expectation and life will go on.”
“Over the next fifty years, the Boomers will all die off, taxes and necessity will re-balance income inequality back into a new middle class, then someone will ‘deregulate’ the banking system and the disparity will start all over again.”
A reply, “How can this be? Sales have cratered to 14 year lows, inventory is massive. The only way to address that lopsided supply/demand scales is dramatically lower prices.”
And another, “Who are they going to sell it to if wages don’t inflate? There’s a demographic time bomb coming along. The more you ‘extend and pretend,’ the less it works actually.”
Finally, “I suspect the builders are perfectly rational; it’s the buyers or whoever loaned them the money, which in many cases is unlikely to ever be repaid, whose sanity is questionable.”
From Bloomberg. “After several false starts, housing is flashing the strongest signals yet of a sustainable rebound. While foreclosures continue to depress prices, buyers are wading back into the market, lured by rising employment and record-low mortgage rates. Six years into the biggest real estate collapse since the Great Depression, housing may become a net contributor to the U.S. economy for the first time since 2005.”
“‘We are seeing early signs of the banks being willing to come back on a very selective and limited basis,’ said Barry Rutenberg, a Gainesville, Florida, builder who is chairman of the National Association of Home Builders. ‘We are starting to see it loosen up just a little bit. This is the very beginning of this. Let’s not get carried away with euphoria. It is generally loosening up.’”
“Demand also has grown for New York City-area condos and for homes in the Boston-to-Washington corridor, said Doug Yearley, CEO of Toll Brothers Inc., which reported that orders for the quarter ended Jan. 31 rose 19 percent and average prices climbed 22 percent to $682,000.”
“PulteGroup, the largest U.S. builder by revenue, and D.R. Horton, the biggest by volume, each have one community in Eastvale, California. Meritage sold about 30 homes in the town last year and this year opened a new community called River Road, with prices starting at $402,990, said Larry Seay, chief financial officer for the Scottsdale, Arizona-based builder. KB Home has four communities in Eastvale, with prices starting at $272,990, according to its website. The homes are selling at a profit, said Steve Reffner, president of the Southern California region for the Los Angeles-based builder.”
“Dan Kowalyshyn figures he owes about $200,000 more than what his four-bedroom house is worth today. It faces a cul-de-sac where three of the six homes have been lost to foreclosure since his $570,000 purchase in 2006. The software developer has decided to keep up on his mortgage payments because he sees signs of improvement outside his window. Trucks drive by to deliver lumber for houses being constructed.”
“‘Either those builders are insane or they’re getting some traction selling new homes,’ Kowalyshyn said in a telephone interview from his house in Eastvale, 45 miles east of Los Angeles. ‘I think we’re seeing the beginning of a recovery.’”
“After several false starts, housing is flashing the strongest signals yet of a sustainable rebound.”
Stupid is as stupid sez…
It’s “flashing” alright. One more flash and it’ll be all over.
In case your opinions are not already biased by reading my comments in the Bits Bucket, I’d like your opinion on this article:
The housing market
Holding back the spring
Mar 3rd 2012 | WASHINGTON, DC | from the print edition
THE reanimation of America’s housing market has been a long time coming. Residential building last contributed positively to growth in 2005. Housing-construction employment has dropped 43% since then. Government efforts to resuscitate the market have flopped. Yet tantalising signs of a durable recovery are emerging at last. The National Association of Home Builders’ index of builder confidence rose for a fifth consecutive month in February, to its highest level since May 2007 (see chart). Sales of previously-owned homes rose 4.3% from December to January. The housing overhang is receding. The number of homes for sale dropped 21% in the year to January, to just over six months of supply—a “normal” level.
…
I’m bored.
They’re talking their book.
YAWN.
“They’re talking their book.”
OK fine — that’s exactly what I thought (and thought you might say). Sorry to bore you…but not everyone realizes The Economist answers for the content of their articles to the likes of the Rothschild banking family members on their board, a point that seems worth publicizing.
It must be so. I had the local news on today, and after it ended a local housing market show with 4 Realtards came on. It was by accident I was even listening, and they started spewing forth the same old lies. “It’s a sellers market,” “multiple offers,” etc. It was nauseating beyond belief.
Well, if the market belongs to the sellers, we buyers better stay out.
Totally. Let the Ownership Society members with homes to sell eat the next several $100Ks in losses before stepping up.
you may get more construction, sales and associated activity ??
Local market observation regarding new construction;
Although new construction has picked up its coming off a base of zero…Its also only the biggest players that are active…The medium size builder has disappeared…The small builder is dead and now relegated to remodeling bathrooms…
Yeah, and look at how dumb this guy is:
‘KB Home has four communities in Eastvale, with prices starting at $272,990, according to its website. The homes are selling at a profit…Dan Kowalyshyn figures he owes about $200,000 more than what his four-bedroom house is worth today. It faces a cul-de-sac where three of the six homes have been lost to foreclosure since his $570,000 purchase in 2006′
One can guess he paid 450-550k. These builders are underselling him by over 200k, and he thinks this is a reason to keep paying the mortgage?
Once again, our leadership has painted themselves in a corner.
Busting azz and throwing up incentives to keep the 2000-2008 homemoaners paying on the mortgage with government fairy tales.
In the meantime (As predicted by several people on this very blog…..),
-The homebuilders can throw up all of the new crapshacks they want, and undercut prices on the 2000-2008 “buy now” crowd.
Our leadership, IOW, loudly announces a new government program (that might “Save” one out of 100),while crowing about the improved employment numbers in the construction industries at another press conference.
Scheweet. It’s good to be the King. Must be nice to be able to outlaw gravity.
Last year we had ten (10) building permits issued
by our city of 33 thousand. An all time record. Seven of them were for remodels……..
Yeah Rancher…And what are all those sub-contractors doing these days ??
How do they provide for themselves and their family assuming that has not disintegrated also ??
What does there future look like if that’s their only tool set ??
I remember this same thing happening in 1981…Many people I know never recovered from it…They lost it all and basically went hand to mouth for the remainder of there lives…I think he same thing has happened this time but many times worse…We better not tamper with social security because I think 20 years from now there are going to be a lot more people depending on it for sustenance then we realize…
Social security in 20 years? It might buy you
a loaf of bread.
But it’s cost-of-living adjusted…
Where’s the butter? I want my butter!!!
Social security in 20 years? It might buy you
a loaf of bread.
A myth spread by those who wish to loot SocSec and are ignorant or forgetful of the consequences pissing off a massive amount of cheated people.
“…ignorant or forgetful of the consequences pissing off a massive amount of cheated people.”
Are you expecting AARP to spark a senior citizen-led reinactment of the French Revolution?
Are you expecting AARP to spark a senior citizen-led reinactment of the French Revolution?
It’s bigger than that. If SocSec only buys a “loaf of bread” 20 years from now, the overall situation that would precipitate such would involve more than just SocSec and senior citizens.
Nobody expects the AARP Revolution!
Where’s the butter? I want my butter!!!
I bet you cash your social security check every month, ‘Rancher’. A little ’socialism’ in your pocket- but everyone after you needs to ‘get real’.
I bet you cash your social security check every month, ‘Rancher’. A little ’socialism’ in your pocket- but everyone after you needs to ‘get real’.
It’s like I’ve said before: It’s only “welfare”, “entitlements” or “socialism” when it benefits other people. When it benefits “me”, then it’s “earned”.
Just met another “disabled” person last night. His story: 32 years as a crane operator. Took a couple years to get on the disability list, but finally got it. Now he gets about $435 per week in “disability”. That’s WAY better than “unemployment”, about 2x and much, and better than “SS retirement” at age 62 or 67, which is actually less money.
He is as healthy as me, and my age or younger (i’m 56), and he gets basically an “early retirement”. At least, I can see anything physically wrong. He gets around as good as me. And, even after a couple of beers, he’s as cognizant as most everyone else, so I can’t see the “mental disability” angle. My opinion is that it’s just a ruse to collect free government money.
I wish I could do the same. I just don’t have the moral stance to scam the system for “benefits”.
However, I think more and more people just don’t care. They see how corrupt the government has become and figure, let me get mine, before it’s too late.
As this trend continues, I believe, with the added burden of “health care savings”, this country is screwed. It may take 10 more years, but I don’t see any “recovery” that is possible.
“Nobody expects the AARP Revolution!”
You have to admit the mental picture of Granny Smith beating Republicrat Congressmen about the ears with her cane is hilarious!
‘When it benefits “me”, then it’s “earned”.’
Not always; it could be a bailout that was needed to save the global financial system from collapsing.
My opinion is that it’s just a ruse to collect free government money ??
Maybe our senior data miners can find the exact amount but I recall reading recently that the amount of people on disability SS has doubled in recent times…Its non-taxable if I understand correctly…
FWIW my dad is one of those guys on SSD that looks and sounds normal. He had a somewhat mild stroke that he mostly recovered from but he gets fatigued *extremely* quickly. There might be something he could do to make money, but I can’t think of anything that he’s even remotely qualified for that he could do. He’s within a year or two of normal SS retirement anyway. Getting SSD was a huge pain for him…my mom had to do all the work and it took multiple attempts. It appeared to me that at that place and time the process had been made plenty difficult. I’m guessing there are significant number who should be on it and are not, at least equal to the numbers that should not be but are.
No
there will not be a AARP revolution,
This blog is a wealth of information; Good postings and good comments, but what I haven´t yet seen added to the mix is the following:
http://www.phillymag.com/articles/the_sorry_lives_and_confusing_times_of_today_s_young_men/page1
I don´t really like the tone of the above link, so to give a little perspective, some balance:
http://captaincapitalism.blogspot.com/2012/03/sandy-hingstons-lengthy-post.html
So, let´s add the effects of social tinkering to fed tinkering for another layer of predictors for the future.
I don´t see how anything is ever going back to how it was; not home prices and not social contracts. And no, there will not be a AARP revolution. If everything keeps getting kicked further into the next four years( Obama´s reelection), one day all of our entitled youth will be old enough to start making demands for a world that caters to them and not two-car, two-garage, and two-child households(i.e. 2500 square ft.)
http://www.youtube.com/watch?v=QtkVImn_v1M&feature=player_embedded
Gillespie to Stossel,
¨when you retire, you are going to be old and weak, and the rest of us here we´re going to tip the scales in our direction¨
lots of bubbles are about to burst, bubbles that have taken millenniums to fill
Subcontractors are doing work for people under the table. At least the smart ones are. I’ve spoken to a few people w/homes that aren’t even thinking of selling for another few years when their kids are done school. They’ve seen that it’s the homes in good shape that sell while the neglected ones languish. So they’re doing upgrades now.
Then there’s barter. We’ve been swapping work/knowledge w/another couple. The last project probably saved them about $10k w/the work my husband did for free for them. Why did we do that? They’ve done free stuff for us for years. This is the way we’ve always taken care of our properties. People can pay for the pride of not being friends w/blue collars if they chose. But in our opinion, that attitude only works out for those w/an income many of those w/that attitude didn’t have.
Excellent post, CarrieAnn!
I’m going to hijack it to make a larger point. At some point, society goes to barter and tax evasion.
I’ll let y’all make the obvious connection to current policy.
Thanks Pussycat.
One particular reason barter will make more and more sense: It’s beyond the ability of the government to tax that labor or benefit.
I’m glad somebody brought up barter. I am doing it, and it is worth thousands a year. I swap services with other small businesses. I know other people who are doing it, too, and the payoffs are really big, in other ways than just cash. The creativity (I think Americans are the most creative in the world) required to negotiate a barter yields real solutions for both parties.
“Although new construction has picked up its coming off a base of zero…Its also only the biggest players that are active…The medium size builder has disappeared…The small builder is dead and now relegated to remodeling bathrooms.”
You know its funny. Here in New York, there was a massive construction boom in the early 1960s, in the city and in the suburbs, and as a result market rate rents and prices plunged. Then the city’s economy tanked, and there was widespread abandonment in the 1970s.
And new housing collapsed to a low ebb. Basically, the builders had been wiped out. I wonder if that will happen in some parts of the country now — no one to build, even if there is demand.
Kind of like the shortage of skilled manufacturing workers after 50 years of downsizing. No one with any sense picked up the trade, and now all the workers are old and manufacturers can’t hire if they want to. The capacity to produce is gone.
That’s just silly. There are plenty of young people who are smart enough and eager enough to learn “trades”. 80% of any tech job is learned in the first few months.
Hey, it’s what business is saying.
Indeed yes, Blue. Many of them are attending the community college that I walk past, and they are all driving 1999 vintage cars.
Heck, even semi-illiterate illegals quickly learned the trades.
80% of any tech job is learned in the first few months.”
yes changing oil or installing car sterios. very few technicians in High tech any more now we are Test Engineers.
...shortage of skilled manufacturing workers after 50 years of downsizing.Google Onion “remains of ancient race” for a poignant satire of that process.
I’ve noticed one of the custom builders from my last town has now moved away from the $500k to $1mil homes to smaller, but still above median income metric pricing. He’s had to reposition his product in an area where there is a glut of used housing in that price range including some homes he built and my new town where there is a glut in cookie cutter homes in that price range w/a few custom homes too. I think this spring has provided the first signs that the builders are advertising and building spec homes again. I see it locally. I see it in towns nearby. But the spec homes are much, much smaller. The price/sq foot is still outrageous. Apparently materials pricing has not fallen enough or the developers/builders are trying to make up for down time. I’m pretty sure work crews and contractors are not raking in that money.
Apparently materials pricing has not fallen enough ?
Fallen ?? Material prices are up pretty much across the board…Lumber has always gone up & down because it is a perishable but everything else is up…Labor cost has dropped….The biggest single item that has reduced the cost of building a house has been the carrying cost…
‘housing is flashing the strongest signals yet of a sustainable rebound’
That’s great, so we can break up the GSE’s, the Fed can sell all those MBS, we can stop having the govt back the loans, the shadow inventory can be released, and the manipulation of interest rates can stop, right?
The REIC has to walk a line. One one hand they want to create a sense of urgency. On the other, they have to poor mouth their position so the govt/Fed keep the goodies flowing.
What does the Fed say?
‘Federal Reserve Chairman Ben Bernanke took heat from Senate Republicans on Thursday after the central bank sent a report to Congress outlining possible ways to reform the housing market. Bernanke defended the decision to issue the white paper, and maintained that the Fed was not stepping on any toes, noting that the paper laid out a series of options without recommending any particular path.’
‘Sen. Richard Shelby, the ranking member of the Senate Banking Committee…was not convinced the Fed is staying impartial in the debate, noting recent comments by Fed officials advocating certain housing policies. ‘These statements suggest that many at the Fed do in fact have a blueprint for housing market policy. That blueprint appears to involve using the taxpayer-supported GSEs as a piggybank,’ he said.’
‘While falling real estate prices and low mortgage rates have reduced the cost of buying a home, ‘many potential buyers lack the down payment and credit history required to qualify for loans,’ Bernanke said. Others, he said, ‘are reluctant to buy a house now because of concerns about their income, employment prospects and the future path of home prices.’
‘Bernanke also noted, ‘problems in U.S. housing and mortgage markets have continued to hold down not only construction and related industries but also household wealth and confidence.’
Just what ‘problems’ are these Mr Bernanke? Over supply? Prices higher than consumers can afford?
This is important: ‘hold down household wealth and confidence’
These people really think they can manipulate our way to prosperity, or at least that’s the plum they hang out for the public. In a large market like housing, it’s gonna find its equilibrium, no matter how much distortion the Fed and DC throw at it. The question is, will Fed/govt policies make the economy worse or better?
But to the overall question, IMO housing will be in ‘recovery’, how ever you define it, when these massive financial supports are no longer necessary.
Over and over again, clear and circumstantial evidence point directly to the Fed Reserve for causing and continuing this saga.
The contempt for the Fed isn’t nearly as as deep and wide as it should be.
It can’t be. Most people haven’t heard of it, don’t know how it works, and couldn’t tell you how interest rates are fixed.
If you’re in no position to understand how an engine works, can you really tell if you have a shoddy engine or not?
‘Federal Reserve Chairman Ben Bernanke took heat from Senate Republicans on Thursday after the central bank sent a report to Congress outlining possible ways to reform the housing market. Bernanke defended the decision to issue the white paper, and maintained that the Fed was not stepping on any toes, noting that the paper laid out a series of options without recommending any particular path.’
What does the Fed get for pandering to the NAR? I assume kickbacks are illegal.
It’s pandering to the banks not NAR.
NAR just happens to be a convenient pawn in the game.
Technically, doesn’t the Fed work for the banks?
Or is the proper statement, “…isn’t the Fed owned by the banks?”
Technically don’t government and law enforcement work for me?
Did the Tooth Fairy and Santa Claus visit you this year, sweetie-pie?
Awwwwww.
LOL…
“problems…….hold down wealth and confidence.
Mistaking the symptoms for the disease, once again.
The house and mortgage markets have no effect on my wealth and confidence. I’m totally uninvolved in either.
What’s holding down my wealth and confidence are the rising prices on everything else, and my stagnant/falling paycheck. They dont even recognize the real problem
are the rising prices on everything else, and my stagnant/falling paycheck ??
And there it is right there…Even if you have a job, you are probably doing with less of something because you must pay more for others…
‘While falling real estate prices and low mortgage rates have reduced the cost of buying a home, ‘many potential buyers lack the down payment and credit history required to qualify for loans,’
They also lack the permanent income (wealth plus future income prospects) needed to buy homes at the artificially high manipulated prices. This suggests that future foreclosures on government-guaranteed federally-financed mortgages are likely to be “higher than expected.”
If you change jobs every 4-5 years (either voluntarily or by layoff/termination/Chapter 11/whatever), it doesn’t make a huge amount of sense to buy a house.
Forget demographics and income. The fact that the US workforce is turning into a “temp” workforce would eventually screw the house market all by itself. At least everywhere except the major metro areas.
OTOH, it takes an understanding of basic math to see this. And we all know how low US math testing scores are.
Totally spot on! The destabilization of the American workforce from the “40 years with gold watch at retirement” career model to “move your azz on to something else after five years” model has huge implications for the financial prudence of purchasing a home, particularly during a protracted real estate downturn such as the one we are presently enduring.
But, but, but we were told that would make the economy “dynamic” and make our careers “less stagnant”
If you change jobs every 4-5 years
At most small companies where I have worked, I would say that that the average longevity was 18 months. 5 years would qualify you as an old timer in a small business. At my previous job, which I left after 2 years and 3 months, all of the engineers who were on the team when I was hired had already moved on to new jobs. And everyone who was hired after me quit before I did as well.
You’re right about that. For most jobs in all but the largest metros, you have to change metros to change jobs.
People were buying a house, and paying all those transaction fees, every three years. It made no sense.
You know it too well as a contractor. It’s like changing metros every year.
I do know some contract engineers who own houses, but it is illegal to rent them out and still get the tax deduction for a year. So these people are expected to either leave their places vacant most of the time or have friends or family members live in their place while they are gone on contract.
The other day a consultant I work with told me I should get a fifteen year loan and combine my own money to buy a $450,000 house somewhere in Southern California “because it mostly goes up.” Heard that a lot of times. There are beach areas with coastal cool air south of Laguna Niguel with prices in that range. But I’m still gun shy, particularly about loans. I only want to pay cash.
http://thehill.com/blogs/on-the-money/801-economy/213977-lawmakers-aim-to-assert-more-control-over-the-federal-reserve
‘The Federal Reserve’s relationship with Congress is growing more complicated as lawmakers second-guess its decisions and look to impose reforms. On Monday, the Fed will again face congressional scrutiny, as Rep. Kevin Brady (R-Texas) unveils a sweeping bill aimed at limiting what actions the Fed can take. The legislation from Brady is the latest in a series of bills in the 112th Congress aimed at reworking the central bank. On the left, Sen. Bernie Sanders (I-Vt.) has emerged as a vociferous critic.’
‘A major reason for the heightened scrutiny is the financial crisis, experts say. When the Fed stepped in and took unprecedented steps to keep the financial system afloat, the breadth of its power seems to have caught lawmakers off guard.’
‘There’s a sense in which the actions the Fed took during the crisis surprised people,” said Phillip Swagel, a former Treasury Department official under President George W. Bush who also spent time at the Fed as an economist. “I think members didn’t quite understand the discretion that the Fed has.’
‘A major reason for the heightened scrutiny is the financial crisis, experts say. When the Fed stepped in and took unprecedented steps to keep the financial system afloat, the breadth of its power seems to have caught lawmakers off guard.’…….
Actually, the FED has overstepped it’s authority, but “lawmakers” are too stupid to understand that they can contain the situation and should have impeached (filed congressional charges against) Bernanke and Paulson and the crew of crooks at the Treasury and FED.
The FED is authorized to buy TREASURIES, and to pay government DEBT. That is all. They are not authorized to buy up private bank loans from the Banks at 100% face value on a loss of market value loan.
The FED has simply found “Creative” ways to swindle the public to the benefit of the Banksters it represents, and CONgress has looked powerless to do anything.
Most likely, I think they feel impotent to devise a strategy to withstrain the FED and fear anything they do now will only get them the BLAME as things continue to unfold in a negative way.
‘There’s a sense in which the actions the Fed took during the crisis surprised people,” said Phillip Swagel, a former Treasury Department official under President George W. Bush who also spent time at the Fed as an economist. “I think members didn’t quite understand the discretion that the Fed has.’
Maybe Congress should hire a couple of staffers who took a college course in macroeconomics, as there is a branch of research into the subject of rules versus discretion in monetary policy. Or they prefer, they can just make comments that make themselves appear stupid.
My current limit on what I would pay for a house in the location I want is far lower than what the going prices are - bubble or not.
It’s still worth renting in an apartment building to have noisy kids bother the hell out of me when I come back home to Phoenix for peace and solitude. But I do look forward to 115 degree days and 95 degree nights so that the kids stay inside all day. Occasionally it gets too cold in Phoenix for the kids to play outside, but this winter is a warm winter.
There are places where neighbors teach their kids to be respectful of other people’s desire for peace and silence, but the price to get there is way too high for what I’m willing to pay to get there.
I want this, but too expensive:
http://www.mountainhomesofdenver.com/property_details_26_west_ranch_trail_morrison_co_80465.htm
My kids scream and all the time. It’s adorable to watch.
Youth is beautiful.
Yes it is, until you are old and grumpy and need your rest so that you can retain some of that youth.
By then, hopefully your kids are off somewhere fending for themselves.
Think of that unbridled screaming as evidence your kids will some day have the energy and moxie to fend for themselves in the world.
At least that’s how I always rationalize it, and many other annoying behaviors from a long list.
Where is the $669k in that? I don’t see it. In fact the isolation detracts from the structure.
“I want this, but too expensive.”
I’m curious. At what price would you buy that place?
With every decision in life, it seems to boil down to expectations. At this point, my expectation was that people wouldn’t be paying today’s prices, let alone 2007’s. But, pay them they do.
Easy to answer: One-sixth my net worth. I would therefore have $3,600,000 roughly before I would buy it.
There are houses in the ASU area (Tempe) that are close to one-sixth. Still too high, as they would need modernizing and that adds to the cost.
You are at a great disadvantage. Your competition is willing to pay -600% of their net worth.
When I was a renter (a long time ago) most of my neighbor were either thugs, crooks or at least outright pains in the butt.
A few years ago I checked up on the MCSO websites for outstanding warrants in my area. Surprised to find several at the apartment complex. All were bad checks.
Hi Bill , I bet you would like the San luis Obispo Area of Central CA
good weather and not crowded like areas North and South on the coast.
SLO is high on my list Cactus. A sister of mine lived there a few years in the 80s and I loved to visit there. Went on a tour of Hearst Castle back then. Since then I regarded Hearst Castle as the essence of California living. It would take billionaire status to afford to build and run and staff such a place as that today I suppose.
“Happiest city in the USA” = SLO.
The north county is cheap, if you don’t need a job.
82 degrees yesterday at the pool.
“I want this, but too expensive” “At what price would you buy that place?”…
As with many things it’s a question of how much money you have and what do you mean by “buy”.
If you’re loaded and can write a check or at least come close by paying it off in, let’s say, 10 years max then you can in actuality afford that place. If all you can do is purchase what amounts to a lifetime option contract where you’ll never pay it off, then you can’t ever actually “buy” a house and that’s the rub. Absent an exponential growth economic paradigm where you can staircase things via endless appreciation, the concept of buying a house may get redefined and maybe we’ll go back to some variation on Levittown where people buy little itty bitty houses of 750 sq. feet that they have some hope of actually owning it outright. I am hearing a lot of talk from younger people these days about the need to reform zoning laws so land can be broken up into small parcels where a person could park a camper and live in it while building on a pay-as-you-go basis some sort efficient house they can live in without working their entire life to have every cent go to a mortgage on 3 times the house they actually need…That’s what most people did not so long ago in this country.
the only way to buy a house properly is to pay cash for it.
the trouble is, that really would reduce homeownership to about the 1%. which is maybe the way things should be.
Are you Islamic?
Islamic banking (or participant banking) (Arabic: المصرفية الإسلامية) is banking or banking activity that is consistent with the principles of Islamic law (Sharia) and its practical application through the development of Islamic economics. Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees (known as Riba or usury) for loans of money.
…
It’s a buncha bollocks!
In modern lingo, you can’t take “interest” so you structure the loan so that it looks like “capital gains” (and the Islamic bankers take the cut.)
What a crock.
Good for the Islamic bankers though. Nice work if you can get it.
And for all the people here that don’t “get” derivatives, never before were derivatives so safe, cute and cuddly. Real teddy bears so you don’t have to pay “interest”.
I had an interview at an NYC law firm once that specialized in structuring “loans” in US business and real estate to comply with Sharia law. They didn’t share the details in an interview, but I was under the impression that it involved a lot of preferred shares with very strong prortections on the “dividends” actually getting paid. Not very hard, but requiring a lot of paperwork so very profitable to the firm. Also meaning that women in that firm never got any contact with clients. No thank you.
And shared appreciation mortgages were decades and decades old when I took a class in real estate finance in law school. I got the impression that they were very popular during a real estate bubble in Florida as that is where most of the case law was from. Just don’t expect to get one when whatever bubble you are looking at has burst.
“…you structure the loan so that it looks like “capital gains”…
what a crock.”
I’m totally onto your point, FPSS. I would think some brave economist with a personal body guard could write a slam dunk research paper to point that out (not volunteering for the job myself…).
My point was that Mr Stephen E Troll Hansen seems to take exception to the principles which underlie banking, suggesting a similar attitude towards lending as held by followers of Islam.
Why would a Saudi Imam pay any attention to the work of a Western economist. It is a religious determination, not an economic one. Besides, if they decide that none of the “work arounds” actually work, who will pay them to approve of the financing?
It was just a lame joke, Polly, no more nor less…
That is my intention. I can buy a good Kansas house in cash but I am a California boy. I would not want to go to an unfamiliar place just because I could afford it. Had a girlfriend from Hong Kong who checked out Myrtle Beach because beach houses were cheap compared to L.A. She immediately felt uncomfortable there. I knew she would but she had to see for herself. I advised her in 2006 to keep her $500,000 in CDs.
“I would not want to go to an unfamiliar place just because I could afford it”
Excellent point. The ex and I did this at the height of the bubble, just after we sold our house for a decent profit. We didn’t even move out of the state, just to a different part of it. Within two months we came screaming back to this area. It was one of the most horrific experiences I’ve ever had. We were just lucky it wasn’t too difficult to break the lease.
the trouble is, that really would reduce homeownership to about the 1%. which is maybe the way things should be.
And the douchebag troll of the year award for the HBB goes to… stephen e hansen!
Let’s show the folks at home what Stephen has won!
Landlords would love that.
Lots of areas are cheaper to buy with 20% down then to rent. Watching my rent increase over 30 yrs would be more depressing than owning. Timing is everything.
When my girlfriend and I shared an apartment in wonderful Costa Mesa, CA in the1990’s, we were guaranteed a rent increase of $50 every 6 months, even for our studio, then 1 bedroom.
Eventually gave up renting and moved in completely to a house I bought in 1987, about 15 miles further (aka hotter) inland.
No housing payment increase (excluding property tax) was too alluring to avoid.. had to evict my long-term roommate, though! -
Thirty year loan paid off easily in 17 years. May be able to live off the remnants of Social Security. Fingers crossed.
Some builders and real estate agents are also to blame for the housing bubble. They were conspiring with lenders and appraisers to artificially inflate housing prices higher than they should have been so they could sell them for more money. When we were looking for a used home at first no real estate agent would let buy a listed home for the list price. The response from all agents we contacted was always, “oh no, we’re accepting bids for way over that amount.” It should be illegal for real estate agents to do that. They should have to sell a home for the list price unless they have other offers in writing they should have to prove. It’s like me advertising one of my cars for sale then telling everyone that calls that I won’t sell it for the price I listed that I’m taking bids for much higher. Anyway, we decided to purchase a new home from KB Home which was one of the worst mistakes we ever made. They’ve left us stuck with a rippled, wavy downstairs ceiling where we would have to take a major loss to even sell this thing KB Home sold us. New home warranties seem to be another scam because ours has been practically worthless.
Realtors are wretched, corrupt liars.