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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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From Bloomberg
Ireland starts bulldozing unfinished houses.
About 553,000 houses were built in the 10 years through 2005 in the country of about 4.5 million people, as homebuilding expanded at twice the pace of the rest of Europe. About 294,000 homes now lie empty, as prices halved. In Dublin, prices have dropped 64 percent from the 2007 market peak, according to Irish real estate agent Lisney in a report this week.
Sounds as though they have enough houses to affordably house everyone in Ireland. But I guess that is bad for banksters and tax collection, so the gubmint will wantonly destroy some of them?
Wouldn’t it be far more practical and efficient to auction off empty houses to the highest bidder, then to bulldoze them?
If you auction houses to the highest bidders when the market is way down then you will get some very low bids and hence some very low prices, and these low prices will affect the comps, and the comps is what is used as collateral that stands behind the loans made on the houses.
Trash the prices of the houses and you trash the value of the loans that are backed by the houses. Since the name of the global game that is being played today is “Save The Banks” the prices of the houses must be kept high else the value of the loans will fall which will cause the banks to fail and the game will be lost.
“…and the comps is what is used as collateral that stands behind the loans made on the houses.”
And that is the beauty of my plan, as it is the lower comps which would drive improvements in affordability. America’s millennial workforce would soon take root in places with affordable housing and could easily maintain stable household finances, through not facing the burden of excessive housing costs. Rather than struggling day-in, day-out with household-level financial survival, they could channel their collective energies into rebuilding a viable U.S. economy to carry us out of the Great Recession and into 21st century prosperity.
As for the investors who bet long on the housing bubble and lost, I would just love to play them a sad tune on the world’s smallest violin.
Your plan may be beautiful if your goal is affordable housing but it is butt-ugly if your plan is to save the banks.
IMHO one must understand the motives that drive the decisions of the PTB, and (again, IMHO) these motives have more to do with saving the banks than offering to the masses affordable housing.
They may perform some convincing lip service to the masses but their actions (and it’s their actions that count) are directed to trying to save the banks.
Affordable: What does this word mean and how can it be obtained - how can something become affordable?
Two ways that I can think of:
1. Lower the price.
2. Lower the monthly payment.
If you can do number 2 then you won’t have to do number 1. Doing number 2 is a win for the masses and a win for the banks. Doing number 1 is a win only for the masses.
The PTB need a win for the masses so they can get their support and their votes. But they also need a win for the banks because the banks are what allows the PTB to remain PTBs.
and these low prices will affect the comps ??
Some effect but not as much as it would appear….First, comps are only good for 4-6 months no matter what the price… Second, the appraisal process is objective to the data but subjective in the appraiser’s ability to revise the data…A sale undre Auction is clearly a “duress” sale…The appraiser can, and probably would disregard the sale at Auction for use as a comparable…
Wouldn’t it be far more practical and efficient to auction off empty houses to the highest bidder, then to bulldoze them ??
You would think so….So, there must be other motivations involved…In Detroits case, its about infrastructure and municipal services…Its more cost effective to bulldoze, abandon the infrastructure, eliminate the maintenance and services…
If you read the full article, the ones being bulldozed are those that are partially complete. It would cost more to complete them, then they could sell for when complete, effectively making them worth less than $0.
By clearing the partially completed structures, you remove issues of squatters, crime, vandalism, and safety concerns.
you remove issues of squatters, crime, vandalism, and safety concerns ??
I agree…Exactly why Detroit is considering raising entire neighborhoods…
Couple of empty houses up the street just got bulldozed. I recently saw a courthouse steps auction notice on one of them.
I’ll betcha money that the land was snapped up by yet another real estate dude who thinks he’ll get rich by building student housing. And that’s the sort of housing that’s already in glut mode. Game over, dude.
I want to know just what people expect to get for the price that they are willing to purchase a house for. Let’s take for example something in the $400K to $600K price range. This can be a norm for places like CA. Are we talking a bare bones structure tract house here or are your expectations for this range elevated to a custom one of a kind house? Do you expect to get more land at these lofty prices? What about a view (I know every house has a view of something), will you pay extra for a view and if so what of and how much has to be viewable?(I have a friend who has a house in Cambria, CA who says she has an ocean view, if you go to one corner of the house and look at a very small corner you see some ocean water). I recently set in on a RE negotiation who stated that he just sold a house (cash) in Seaside, CA for $20K over asking because it has an ocean view (two miles away and 90% of the view is crappy house rooftops? For me a beach house is on the beach or within a block or two away. For an ocean view I want to hear and see the waves crashing on the shore otherwise it is just a view of water in the distance. A view in a city high rise like SF doesn’t do it for me as all I see are roof tops but at night the city lights aren’t bad.
Do you expect to have a house in this price range furnished according to the price you paid? Here in Salinas, CA most of the houses I’ve been in a furnished like a frat house and people living in them are living like slobs. Do you plan on making the house your own and if so does that mean balanced color and art work or does it mean slab counter tops and stainless refrig and stove top? Does it mean swimming pool, spa, fancy BBQ and pizza oven?
I ask because RE use selling points as slab tops, stainless appliances, fans, views, as a means to require higher selling prices.
I have a friend who has a house in Cambria, CA who says she has an ocean view, if you go to one corner of the house and look at a very small corner you see some ocean water
Real estate agents call this a “peek-a-boo” view. That is because real estate agents are infantile.
I would not buy a house for $400K. I would pack up and leave to a lower cost area. Oh, wait. I already did that.
I would not buy a house for $400K. I would pack up and leave to a lower cost area. Oh, wait. I already did that.
We have looked into this. The hitch: jobs.
This is one of the hidden benefits of working from home. It allowed me to get the hell out of California, and added about 25k a year to my bottom line. I was renting there and am here… I think if I bought in both places, that savings would be on the order of 40k a year.
The weather isn’t THAT nice, and what nature you’re allowed on is fairly trampled.
I lived in both Phoenix and Moorpark CA
Moorpark =400K 1650 sq ft
Phoenix = 200K >2000 sq ft
I used to walk in Phoenix under the power lines next to the tracks between Chandler and Ray even in the summer at over 115F it was sureal like being on a moon base, power lines crackling, water flowing in a cement culvert, nothing alive out not even red ants. Had to wear a big hat. bring water.
Phoenix was alright. Main thing I didn’t like about Phoenix was the air pollution.
Sounds awful. I am living on the Kawartha Lakes right now, free of real estate, if you don’t count the square foot of earth beneath my CQR. It is ironic, the money you pay over 30 years to buy that $400,000 house, so that you can have that prestigious job in a cube farm, would support not owning anything for many lifetimes.
BTW, the dry ground is really dry up here. Really.
Speculation around the blogosphere is that the only reason Romney is taking the political hit (from both parties) for not releasing his 2009 tax returns is because the damage he’d incur by doing so would be an even greater hit to his presidential campaign.
Several prominent tax attorneys who’ve examined Romney’s recently-released 2010 returns have suggested that given the massive losses to the markets in 2008 and the extent of the carry-over losses in the 2010 returns, it’s entirely possible that even with his $250M+ fortune and multi-milliion dollar income, Mitt Romney paid little or even NO FEDERAL TAXES AT ALL in 2009.
Apparently magic underpants don’t protect you from market crashes.
How much in taxes do presidents pay for their wifes vacations?
by Gary P Jackson | May 22, 2012 · 2:29 pm ↓
Michelle Obama Spends 10 Million Tax Payer Dollars on Vacations But LA Times Covers Ann Romney’s “Expensive” Horse Hobby
The Obamas’ summer break on Martha’s Vineyard has already been branded a PR disaster after the couple arrived four hours apart on separate government jets.
But according to new reports, this is the least of their extravagances.
White House sources today claimed that the First Lady has spent $10million of U.S. taxpayers’ money on vacations alone in the past year.
hilarious! Reminder: just because you read something somewhere, doesn’t mean its true. I notice you left out a link pointing to the “source” of this ridiculousness. Right, first lady, $10 million on vacations in twelve months — using taxpayer $10million. RIGHT . . . So . . . . she takes a one million dollar vacation each month?
When making up stories people need to remember that not everyone will unthinkingly buy every ridiculous tale spouted . . . .
If he does not release 8-12 years of taxes just like the preceding Presidents it just makes you wonder who would vote for the guy…The hate for the Black Man runs deep…Like Ted Nugent lamented;
“I will either be in jail or dead if Obama is re-elected”…..
I’m no fan of Romney and have no intention of voting for him, but while his opponent has released his tax returns, most of his personal and academic records are sealed tighter than a drum.
So how about this: how about Romney releases his tax returns and Obama unseals all those academic records and other stuff?
You show me yours and I’ll show you mine. I think that’s fair.
Then we can see how pathetic both of them are.
That was Trumps suggestion, and as annoying as that blowhard can be, I had to agree. If we’re going to get all up in arms about seeing stuff lets get everything from everybody.
Not paying any taxes in 2009 is one hypothesis. I’ve heard two others. One is that he made a lot of money in 2009 by shorting the market. The other is that he took advantage of the IRS amnesty in 2009 to declare previously unreported off shore accounts. That would mean that he had been failing to report them in violation of law in previous years but has zero criminal liability because of the amnesty.
All of these scenarios are consistent with him having given 23 years of returns to the McCain campaign when he was being considered as McCain’s VP as 2009 hadn’t happened yet. The 23 years given to McCain seem to concentrate the focus for something he doesn’t want public in the years after he gave his info to McCain and before 2010, the year he has disclosed.
I personally think that the zero taxes in 2009 is unlikely. It could be very, very low as a percentage of his income, but he did get some income from speaking fees and such and only $3000 of that can be offset by capital losses. I’m not sure that having his tax rate be 5% for one year is all that overwhelming. And besides, you can spin it as not really being a 5% rate since there are real recognized losses in there. Yes, if someone adds the ordinary income and cap gains without the losses it will look outrageously low, but the cap losses are there too.
Shorting the market is also a possibility, but it would just show in his returns as a good year in investing when everyone else was doing poorly. Possible, but I don’t think his campaign has shown itself all that self-aware when it comes to understanding that people resent folks who appear to have information the rest of us don’t. And it would play into his “I understand the economy” meme. Possible but not that likely.
Oddly enough, that leaves the IRS amnesty as the most likely scenario. It wouldn’t be my normal first choice. The man has been running for president for a long time. You would think he would have started reporting the income off any foreign accounts a good long while ago since US citizens and residents are liable for taxes on their world wide income. But until the US got a bunch of Swiss banks to hand over the names of their US account holders, the likelihood of getting caught was essentially nil. It trends a little conspiracy theory for me, but I see this one as most likely.
So what you are suggesting is that American voters should be satisfied if they can merely persuade Romney to divulge only one additional year’s tax returns (2009)?
Hopefully Obama’s campaign team can figure out how to force the issue so American voters can know in advance what a vote for Romney entails.
Where did I suggest anything of the sort? Seriously, Bear, where? Allena posted one speculation on why he won’t disclose tax returns from before 2010. I put forth the other speculations I have heard and guessed which one I found most likely. Where is that a suggestion that the disclosure doesn’t need to happen? I rather think that the very act of speculating and spreading it around makes it more likely that he will disclose eventually. Someday, someone is going to guess something so terrible that the campaign will have to refute it.
What is wrong with you these days? You have been in a particularly foul and accusative mood.
“Speculation around the blogosphere”
HAHAHAHAHAHAH….you kill me.
“given the massive losses to the markets in 2008…. paid little or even NO FEDERAL TAXES AT ALL in 2009.”
That’s the way taxes work sometimes, if you lose a lot. It’s not a moral issue, or a legal one, just an emotional hot button for us have less hampsters. That thing about convicting a person based on gossip, based on guessing, it’s better avoided.
Dear HBB,
Four years ago I dashed off a quick post to Ben’s forum, threw some tea down my throat, and headed up the mountain to work on my irrigation system. It didn’t turn out so well for me that day, but in the aftermath of a horrific bear attack, you guys came through like champs.
I’ve written a book about my misadventure (and way too many others), and would like to share the part about the “ursadent” with all of you who so nicely contributed to my reassembly and rehabilitation. If you read the blog regularly you’ve probably noted, I’m back– and I’m just as ornery as ever.
This is my anniversary thank you to everyone. And especially to Ben for his lifesaver of a blog!
Go to:
ursadent.com
Choose: Special edition for HBB Members
Password at the prompt is: HBB
With special thanks to Arizona Slim for setting up this nifty website.
Since the website also mentions a special edition for HBB members, does that mean you would prefer we not publicize your link outside of this blog?
Please share with anyone you think might enjoy it, Carl. After all, that’s why I wrote the thing.
Done.
You are awesome and an inspiration to all who have read your posts over the years.
What wonderful storytelling! I’m glad you’re still with us.
Congratulations on your continued survival Allena.