Even Though We Learnt A Big Lesson People Forget
It’s Friday desk clearing time for this blogger. “O’Brien Homes started holding a monthly housing lottery for its 228-unit development called Fusion in Sunnyvale, Calf., after seeing throngs of prospective buyers camp out at the openings of other new condo complexes in the area. Lotteries are not a perfect solution, especially for the buyer who walks away empty-handed. Adding to that frustration was that home prices rose virtually every time a new group of homes went on sale. The two-, three- and four-bedroom homes started out between $420,000 and $620,000. The last grouping went for $555,000 to $815,000, a 32% increase. Even with the price hikes, buyers kept returning.”
“Last weekend, more than 1,000 people showed up for a sale of lots in its Boynton Beach, Fla., community featuring homes ranging from the high $300,000s to the low $600,000s. GL Homes held a lottery, in which 75 home buyers entered to win their first choice of lots. ‘The first winner was so excited, she was crying,’ said GL Homes division president Marcie DePlaza.”
“About 12,000 new homes were constructed in Wisconsin last year, reported Wisconsin Builders Association President Craig Rakowski. That’s a far cry from Wisconsin’s average year of 27,000 new homes, or the peak year when 40,000 were constructed, but Rakowski said at least the numbers are headed in the right direction again. ‘It’s the perfect time to build right now,’ he said. ‘Don’t put it off. The message is that the ‘wave’ is here – you want to catch the wave.’”
“At one of in Derrick Companies’ housing developments in New Richmond, sales people received three building lot reservations in one day alone. Bill Derrick, president of Derrick Companies said it’s been a long time since the western Wisconsin region has seen that kind of activity. ‘We’re feeling like there’s a light at the end of the tunnel … and it’s not a train coming at us,’ Derrick joked.”
“The chairman of Emaar Properties is setting his sights on building a new contender for the world’s tallest building, possibly in Dubai. Mohamed Alabbar said yesterday he was considering building a tower taller than both the Burj Khalifa in Dubai and the Kingdom Tower, under construction in Jeddah. ‘I think we might try to do something a little taller,’ he said. ‘We have learnt how to make money out of tall buildings.’”
“Mr Alabbar said Emaar was doing its best to try to control flipping in the market. ‘You can never really stop people who flip, that’s part of life, part of business,’ he said. ‘Even though we learnt a big lesson four years ago people forget. Greed is in our DNA.’”
“China’s leading developers were out in force when a four-day real estate fair opened at the Shanghai Exhibition Center. Many home-seekers seemed to have concerns about fast rising prices. ‘I just checked one Poly project in Jiading New Town and was told that there ‘could be’ some discounts in June when the second phase of the project is scheduled to be released and the sales price will also not be disclosed until then,’ said a woman in her 30s. ‘The only thing for sure, as the salesman told me, is that prices will go up further from the first phase which had been sold out,’ she said.”
“Another couple were checking out a project in Minhang District. The husband said: ‘It’s crazy that they are asking for more than 27,000 yuan (US$4,333) a square meter now for bare-shell apartments as the price was only around 20,000 yuan about a year ago. Our patience is wearing thin and we are really afraid that if we keep waiting, we will never be able to afford a house of our own,’ he said.”
“Almost a quarter of all properties advertised for sale in Australia are distressed sales, according to new figures. The Gold Coast region of Queensland fared particularly badly: 74% of its listings were distressed. Stewart Gilchrist, of Colliers’ insolvency property services, said high-end homes accounted for the majority of distressed sales on the Gold Coast, explaining that ‘there is still an oversupply of residential [properties] in excess of UA$1m so those distressed sales would be at the upper end of the market.’”
“Las Vegas would seem a highly unlikely locale for a new housing bubble. There are at least 20,000 homes in some stage of foreclosure, and the jobless rate hovers near 10 percent. But the surge here has another origin: the Federal Reserve’s continuing push to buttress growth in the wake of the 2008 financial crisis. Prodding investors further out on the so-called risk curve is part of what the monetary mandarins had in mind. But in treating the consequences of the last bubble, the Fed is now spawning new, smaller manias like the Vegas rental rush.”
“Not everyone is a believer. ‘The Vegas housing market has only firmed because of speculators,’ said Jason Ader, a New York money manager and former Wall Street casino analyst who invested in foreclosed homes in Phoenix a year ago but bypassed Vegas. ‘Vegas is only doing well for now because of the greater-fool theory.’”
“Kathryn Kay Chapman rents a two-bedroom house here with her boyfriend and has been looking to purchase a place nearby. The couple scraped together enough cash to make a bid on a three-bedroom home they’ve been eyeing. Their cashier’s check was found to be improperly drawn and they couldn’t participate. Chapman says they may try again, though she suspects they’ll be outgunned. ‘We know there is a minute chance we get anything,’ she says. ‘The most frustrating part of all this is how home prices keep going up and up, yet you have so many empty homes.’”
“Almost 43 percent of bank-owned properties in one Newark neighborhood remain vacant, even years after foreclosure, according to a new study. On a day when the city auctioned off 80 abandoned properties, the large number of vacant foreclosures ‘really jumped out’ at researchers as they walked the Upper Clinton Hill neighborhood and studied property records, Linda Fisher, a Seton Hall University professor, told a Newark City Council committee hearing. ‘We’ve heard a lot about homeowners walking away in the middle of foreclosures’ rather than continuing to make mortgage payments, Fisher said. ‘Well, these are bank walkaways.’”
“Foreclosures have added $56 million to expenses in a five-year period in which the city’s average tax bills have risen by almost 50 percent, said Carol Meyers, a researcher for the Service Employees International Union. Meanwhile, at least 9,000 more Newark residential mortgages are ‘underwater,’ with borrowers owing more than the current value of their properties, according to Meyers.”
“The researchers were particularly dismayed to come across squatters in the vacant units. Many habitable units are in ‘foreclosure limbo,’ Fisher said. Upper Clinton Hill ‘is one of the city’s more stable neighborhoods, or at least, it was,’ said Fisher.”
“Sixty-five-year-old Janis Thompson and her dog live in Euclid. Thompson wanted to escape the Midwest winters this year, by selling her cozy colonial and moving to North Carolina. But now she’s staying put, given recent events. ‘Each house on each side of me have gone into foreclosure. But both of them lost their jobs, and now both of them have lost their homes.’”
“Thompson is grateful she’s keeping her own home. But the value, once estimated at about $105,000, is now pegged at $78,000. RealtyTrac shows about 500 homes in Euclid are bank-owned, many priced at 20 to 50 percent of their original value. RealtyTrac says Ohio also has a 25 percent increase in unlisted, bank-owned foreclosures, known as shadow inventory. ‘After 17 years of paying mortgage faithfully, I’m not sure that I could sell the house for enough to cover the mortgage and Realtor fees,’ she said.”
“Thompson’s resigned to staying put. ‘Originally, I felt terribly depressed. I’ve picked out an apartment complex in the Raleigh area that I was going to move to. I have family down there. I thought, ‘Oh, you’re still young enough, you can make friends,’ and now I have no idea when—if ever—I can get down there. I don’t think we have choices anymore on that.”
“Ricardo Rodriguez lives in the Mission District of San Francisco in a modest two-story home he purchased from his parents more than 20 years ago. Today, half-filled cardboard boxes are scattered around his living room. ‘We haven’t bothered to clean it up,’ Rodriguez said. ‘We never know when we might have to leave.’”
“In 2006, Rodriguez refinanced and borrowed $643,500 from MortgageIT Inc. Bank of America later took over the adjustable-rate loan, which had a starting interest rate of 1.25 percent. Rodriguez said his mortgage broker assured him he would be rolled into a fixed-rate loan before the payments increased. But in 2008, his interest rate spiked. He went from paying $1,704 a month to more than $6,000 before getting a loan modification in 2009 that brought his payments back down, he said.”
“Bank of America said it had reduced the Rodriguez family’s loan to a 2 percent fixed rate, but they were unable to pay the lower amount. Rodriguez still was struggling when he lost his job delivering newspapers in 2011 and fell further behind. He is now 34 months late and owes the bank more than $92,000 in back payments and fees, loan documents show. Since 2009, Rodriguez has applied for at least 10 loan modifications without success.”
“‘I wake up every night thinking I’m going to get up in the morning with no house,’ he said.”
“The Obama administration announced an initiative to ensure more home loans for those with weak credit. For the public, it’s déjà vu all over again: an all-knowing federal government again pushing its way into the housing market against the backdrop of a softening economy. Yet again, we hear calls for banks to facilitate more home loans to mortgage seekers with less-than-stellar credit. And all in the name of helping young people and those with poor credit histories secure a house.”
“But the ink still isn’t dry on the bad (mortgage) paper and lawsuits generated as a result of the government’s last attempt to manipulate risk. How quickly we forgot about that five-year recession brought about by government-sponsored risky loan practices. The downturn has been referred to as the greatest economic calamity since the Great Depression. The president said so himself!”
“But now the feds wish to revisit ’subprime lending land.’ Government again wants to substitute its judgment for the market’s. And yet again, it will be federal taxpayers on the hook for the inevitable cascade of newly mined bad loans. One piece of good news for mortgage originators: Obama housing officials are asking the Obama Justice Department to reassure banks that they will not face severe legal consequences if (and when) large numbers of the newly issued loans turn out to be bad. Wow — bet everyone feels secure with their ‘get out of jail free’ card.”
“So, taxpayer beware: The government must be hyper-careful in reengaging banks in the subprime market. Indeed, mortgage creditworthiness should be a function of rational economic calculation and little else. Such is the hard (but familiar) lesson of our recent economic woes.”
‘The rampant growth of credit in China appears to be forming a bubble, Jim Chanos of Kynikos Associates said Wednesday. On CNBC’s ‘Fast Money,’ he said that credit was to blame. “New credit outstanding jumped by $1 trillion U.S.” he said, adding that China’s economy was equivalent to $8 trillion in U.S. dollar terms. “So, on an annualized rate, that’s 50 percent of GDP, new credit creation. “To put that in perspective, the total new credit globally went up by a trillion and a half in the first quarter. China was $1 trillion of that, yet it’s only 10 percent of the world economy.”
‘Chanos, a short-seller, said that he was interested in “booms that go bust.” “You look for asset inflation where the asset being inflated by credit does not generate enough cash to service the debt,” he said. In China, that appeared to be real estate, Chanos added.’
“That would be almost anything related to real estate or construction in China, so property companies, cement companies, steel, and then, of course, companies selling into that, that bubble, iron ore and mining, those sorts of things,” he said. “Inexorably, you can’t keep growing your credit at 50 percent of GDP. Something’s going to give. When? I don’t know.”
‘Despite the decelerating growth, the first-quarter lending activities increased by 60 percent and money supply M2 (the total money supply in a country’s economy, including all types of cash, and money held in banks) increased by 15.8 percent. Both reached record high levels, according to an April 15 article by China’s National Business Daily.’
‘Decelerating growth and increased lending activities are worrisome for many market analysts, because increasing loans does not stimulate economic growth. Senior auditor Zhang Ke, president of accounting firm Shine Wing, and vice chairman of China’s accounting association, warned that the local government debt is “out of control” and could spark a bigger financial crisis than the U.S. housing market crash, according to an April 16 article in the Financial Times.’
‘In addition, the corporate debt crisis is already beyond repair, suggesting that spending was far above revenues earned. Quoting JP Morgan Chase, an April 22 article in the China Securities Journal states that China’s enterprise debt has reached 110 to 120 percent of the Gross Domestic Product (GDP), far exceeding 90 percent, which could be construed as having reached a catastrophic level.’
What does it mean when the Yuan is back to 1994 levels?
Beijing’s pile of foreign reserves has got even bigger, hitting US$3.44 trillion, or around 40 per cent of China’s gross domestic product, at the end of March. Will the yuan become a reserve currency? And if it does can’t they then treat their debt just like we do?
‘can’t they then treat their debt just like we do’
All this money creation seems to often lead to the question; can’t they just do it forever? This is ignoring the distortions it causes, which IMO is what actually causes the crash.
‘A glut of vacant land is still hitting property developments, according to Suncorp’s banking arm. This excess supply of land - and higher-end projects - is causing ongoing challenges in the financing market for such developments, Brisbane-based Suncorp said in an update this week.’
‘Suncorp’s banking arm is laden with troubled property development loans after a mistaken plunge pre-GFC in areas including the Gold Coast. This development finance division is part of Suncorp’s “non-core” bank, or areas that are being wound down.
This non-core bank has $3 billion in loans remaining.’
‘The development finance section shrunk another $100 million to $1.2 billion in the last quarter. But almost $1 billion of those loans are tarred as impaired.’
One day we will wake up to find that all that debt was erased with the stroke of a key. Remember when they suspended FASB 134? “Accounting for Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise”. Debt is virtual at the level of central banks and trillions can be moved at the speed of light from one international account to the next.
At this point I guess the only thing that might have the power to force a change back to a more equitable economy would be for all the religions of the world to unite and overthrow the corrupt leaders of these nations. William Jennings Bryan almost did it in America 100 years ago.
‘all that debt was erased with the stroke of a key’
This is example of the conclusions people get to when thinking about central bank money creation. Let me ask, what would happen next? Sure, they can hand out money to their cronies, write down a few billion in loans (out of many trillion), but what if they wiped all of it away? The problem is individuals take bets with borrowed money. Much of that belongs to people like you. The central banks aren’t the only lender. They are probably not even a very big lender in the whole picture. So somebody has to lose if loans aren’t paid back.
Anyway, look at how these things are really done. Keep the newspaper guy paying. Keep the governments paying those bonds. Keep the credit cards rolling, the student loans. Remember just a few years ago how laws were passed making it harder to discharge debt? I’d say it’s just the opposite of what you suggest; we are plunged deeper and deeper into debt all the time. Sure, it’s tempting to think, ‘it’ll all blow up and we’ll walk away from it’. But that isn’t what I see.
Then there’s the matter of productivity. Why would anyone go to school and learn how to make things or fix things if they could just borrow, live the easy life and default, then do it again? Do you think these central bankers don’t consider the day when they look outside and nobody is working anymore because they are too busy flipping houses?
Do you think these central bankers don’t consider the day when they look outside and nobody is working anymore because they are too busy flipping houses?”
thats the trick. They borrow money for free and we have to work for it
lose that and they will lose everything. probably thier heads as well. I expect they will work very hard to keep the “economy” going in their favor without losing control.
Whether they can continue this and for how long I don’t know ? They have already proven they are NOT super smart.
Paperboy loses his house after refinancing.
What did he blow his money on?
I have one more to add. Those who have noticed the despairing tone in my posts of late, this is the reason why. From today’s Tampa Bay Times:
“With its cheap homes and growing prices, Tampa Bay is a paradise for flippers, whose profits last year made local neighborhoods a top market for flipping homes, a RealtyTrac report said.
More than 3,000 Tampa Bay homes were bought and resold within six months last year, with average gross profits of about $34,000, the real estate research firm said.”
http://tinyurl.com/cnw2vz9
A speculative mania needs to have a blow off. At the root of it is irrational greed, so eventually participants buy just because it will go up. That continues until it doesn’t.
Notice this realty track report; I got it in an email covering the US. Last month their report was the best markets to rent. This month, it’s the best to flip. Hmmm.
Yup and Orlando is #1 on the list for flipping. Throw some KILZ on the black mold, screw some 1/4″ sheetrock over the existing, corrosive Chinese drywall to hide that, replace the AC and get that pig back on the market! By the time the pre-existing problems rot out the new AC or give someone a lung infection, this dump will have had 3 new buyers! Oh, and realtors should remember to cruise the neighborhood 2-3 days in advance and paint over the gang symbols/tags so that the prospective buyers don’t get the ‘wrong’ impression…
The only real solution is a ban on weak, graft-encrusted politicians on both sides of the aisle. It is too bad that we have no real ‘leaders’ left in this country, only career ‘politicians’ who muscle their way to the trough year after year. The worst party is whichever one is in power at the time, as they all simply take turns at raping the villagers. And now we have President Kardashian leading the charge to facilitate more debt for those who can least afford it. Brilliant. As far from fundamental ‘good’ as it has drifted and as sick as it has become, this country no longer serves any constructive purpose. We have become a beacon of waste, fraud and failure.
We are great if you need a wedding bombed.
I’ve never bought in to the idea of American exceptionalism, but another reason for my tone is because I think we could, and should, do better. But it’s debatable whether there’s any such thing as “we” anymore.
I think a lot of our success had to do with inheriting the last unexploited land mass. As that runs out, we become less exceptional.
Our leader reflect our citizens.
‘The first winner was so excited, she was crying,’ said GL Homes division president Marcie DePlaza.”
No, she was crying because she came across this blog just after she won that housing lottery. The realization of what she had just done was too much.
I’m going to add a clause to my living will that if my family ever catches me trying to pay $600,000 for a house in Boynton Beach, they can have me forceably committed to rehab. The other two triggers are wearing my pants backwards and/or getting a sunburn on the roof of my mouth.
Delivered newspapers when I was a kid. Guess the pay has gone up significantly.
Wait a minute. I guy who was selling newspapers for a living took a Helloc out for over $640k? Yeah no bubble here!
Yeah, but his income took a hit when the economy crashed.
‘He is now 34 months late and owes the bank more than $92,000 in back payments and fees, loan documents show. Since 2009, Rodriguez has applied for at least 10 loan modifications without success’
This shows what a load of hoo-ee these FB programs are. How much money and energy has been wasted trying to keep an unemployed newspaper guy paying a 600k loan? BTW, note that these programs require no appraisal and no income verification.
Also, recognize this;
San Francisco in a modest two-story home he purchased from his parents more than 20 years ago ??
So, twenty years ago you purchased….Highly likely way, way below the $643,500. loan you refinanced into…
What did you do with the cash-out Mr. Rodriguez ??
The scary thing is that I’m not sure whether he is underwater. In most places in the US, you would say that with that loan on that house, he would obviously be underwater…SF to my understanding is above peak values…
He bought it from his parents….
Keeping the low low Prop 13 tax rate.
Probably got a “sweetheart” purchase price too.
Then he pulled out $640K.
Where’s the money?
Maybe he delivered papers in his “tricked out” ’sclade.
He took out the HELOC in 2006, not now. So yeah, you can still get stories like this even if there isn’t a bubble presently.
Stories like this are how now-Senator Elizabeth Warren and Tim Geithner got into their famous fracas. Geithner was saying, very carefully, that “they couldn’t save everybody,” clearly referring to FB’s like Rodriguez. Warren, I think, was referring to sheer magnitude of pending foreclosures. At the time, I don’t think Warren understood boxes of stupid in the secondary market. She’s been trying to hold feet to the fire, but it’s all a post-mortem by now.
17 years of paying a mortgage yet still underwater?
what did you do with the money ms. Thompson?
I know she is 65 but I can still picture myself performing a “where is the money labowski” moment on her.
I’m going to give Janis the benefit of the doubt.
I Zillowed up Euclid, OH, which is a section of Cleveland. Of the houses for sale in the $65K-$80K price range, many sold for $100K in 1999-2000. Cleveland is dying; prices have been falling enough to sink even a responsible mortgage holder underwater.
Hypothetically, let’s say Janis bought in 1996 for $100K and 10% down at 6%. In 2013, she would still owe ~$60K principle after 17 years. Her house is supposedly $78K. If she needs to pay “mortgage and realtor fees,” as she says, that would be very close to bringing money to the table, no HELOC.
If you bought house 1998-current, yes….. you’re still going to be underwater.
If you bought house 1998-current, yes….. you’re still going to be underwater.
I bought one of my houses in 1998. Tell me when I’m going to be underwater. And by underwater I mean my house is worth less than I paid for it if I were to sell it. I don’t mean some thousands to millions of years from now when somehow my skeletal remains end up underwater.
I bet you have nothing but a flippant remark rather than an actual prediction of a date.
You’re underwater my friend.
“I bought one of my houses in 1998.”
How many anchors are you wearing?
Millstone Mikey!
Housing bubble 2.0 silver lining…at least Friday desk clearing time is more interesting.
I’ll bet he delivered his newspapers in Beamer.
Yesterday I saw a Jimmy Johns delivery sign mounted on the roof of a recent model Jaguar.
I just saw one an hour ago on a BMW but it was probably 10 years old.
My brother just bought an ‘05 Jag for $4k.
They were crap cars when Ford built them.
Pimp is the alto in our loon chorus. Things just wouldn’t sound the same without him.
It’s quite simple. If you don’t want to be known as a liar, don’t lie Colorado.
It’s ok to lie, but not ok to call out liars? Huh?
Exactly.
“Not everyone is a believer. ‘The Vegas housing market has only firmed because of speculators,’ said Jason Ader, a New York money manager and former Wall Street casino analyst who invested in foreclosed homes in Phoenix a year ago but bypassed Vegas. ‘Vegas is only doing well for now because of the greater-fool theory.’”
The above is the key point from Ben’s post.
I understand madness in markets like Santa Clara County, where you have little new construction, high paying jobs, and low vacancy.
I DO NOT understand what is happening in Las Vegas. The only explanation is speculation.
‘I understand madness in markets like Santa Clara County’
This is funny. Houses in Las Vegas cost a fraction of California shacks, but it’s speculation in LV.
This reminds me of a thread back in 2005. I had a post on New York City, and some comments got started between people in San Francisco and New York. The New Yorkers said, I can understand that there is a bubble in San Francisco but there’s no bubble in New York. Someone stepped in and said, I know people in San Francisco that say the exact same thing, but in reverse.
Similarly, many people here will nod in agreement that there’s a bubble in Canada or China, but whoa Nellie, no bubble in my back yard. It’s all speculation. Why do you think this newspaper guy wants to keep that house? It’s likely he still thinks it will make him rich.
The difference is, we know people with at least some money will want to live in the Santa Clara houses. The Las Vegas ones I could easily see going ghost town or ghetto.
It’s a much poorer bet for a speculator.
Wow, more “it’s special here” talk.
In Las Vegas:
Tons of supply (high vacancy), massive amounts of distress, few high paying jobs, market is a one-trick pony (gaming, with lots of new competition), lots of land available to build more.
In Santa Clara:
Little supply (low vacancy–rents above peak), little distress, many high paying jobs, little land available to build more.
Yes, they are different markets.
I don’t care about all that. The question any real investor should ask is return. If I have $500k, what rents will that get me in these two places? And Vegas is a overbought joke. I see many times the returns of coastal California in some areas. The only explanation for this discrepancy is speculation.
For those keeping track at home, Ben’s last snippet about the “Obama Administration’s announcing an initiative to ensure more home loans for those with weak credit” was written by Bob Ehrlich, former Republican governor of Maryland. Nobody loved developers more than Bob.
This is a good quote from Ehrlich: “Indeed, mortgage creditworthiness should be a function of rational economic calculation and little else.” The “subprime” mortgages that Obama has been pushing(?) are FHA. FHA still requires 48% total DTI, regardless of FICO. Is 48% DTI a rational economic calculation? And we STILL don’t know whether these are fixed-rate fully amortized PITI. A loan with a full PITI is a far cry from a grace-period I/O neagam ninja, regardless of FICO.
Oh, we’re keeping track all right. This is all Obama now. And I’ll keep in mind he’s promising not to prosecute banks. (Just where did he get the power to do that, BTW?)
And it’s going to be put where it should be when it al goes south:
Albatross!
http://www.youtube.com/watch?v=Z_u7VGiMO0U
Get it on a stick!
“Is 48% DTI a rational economic calculation?”
no
http://money.cnn.com/2012/07/09/real_estate/housing-delinquencies/index.htm
3.5% down…and what ben said about not being able to hold banks accountable.
it’s bad policy…i know you will never admit it…unless romney had won of course.
It’s not enough to say that loans are defaulting. I want to know which loans are defaulting. Are these bad loans the same I/O ARM batch that were lent years ago? We already knew those were bad policy. *I* said they were bad policy, even before Obama got elected. I want to know how the NEW loans are doing. The ones which needed 48% DTI. Looking at DTI — i.e. looking at income — is a good policy, no matter who enacts it. (however, I concede that 48% might be too high).
Putting 3.5% down does not affect the PITI you have to pay after that. Theoretically, if I have the income, I can make the payments even if I have NO money saved up. You know who makes payments based on DIT with no money down? Renters. Every day.
Also please explain how one “cherry picks” DTI? You mean cherr picking income as a better indicator of repayment than FICO, or even better than % down? Guilty as charged.
Cherry picking the DTI requirement and concluding its a great time to loan money to someone is no different from pointing to low interest rates and exclaiming it’s a great time to buy real estate.
“But in 2008, his interest rate spiked. He went from paying $1,704 a month to more than $6,000 before getting a loan modification in 2009 that brought his payments back down, he said.”
From $1700 to $6000. Must have been a pick-a-pay, and he was taking the low negative amortization payment.
I bet his loan adjusted to 13%.
There was a huge housing bubble in the Northeast and California in the mid-1980s. After that one popped, I figured people had learned a lesson and it wouldn’t happen again. It happened again 20 years later.
Now it is happening again ten years later.
Then 5. Then 2. Then ???
The theoretical limit is the attention span of your average consumer. By my calculation it’s down to about 4 years now. I offer as proof G.W. Bush approval rating is now the same as Obama. With better pharmaceuticals we might get it down to 2 years.
After all those nice thing Obama said about Bush last week in Dallas I have trouble keeping the two straight.
Obama is a complete failure. The man got into office and pretty much ignored everything he ran on. He’s a liar just like any other politician. This country is screwed.
Obama is a complete failure. The man got into office and pretty much ignored everything he ran on. He’s a liar just like any other politician. This country is screwed.
What an understatement. The lying coward grovels at the feet of his MoneyMasters.
Of course they forgot.
They forgot the Savings & Loan disaster, didn’t they?
Now that you mention it, no they didn’t.
No one has built an office building since without a large share of the building already leased. No one will provide a construction loan otherwise.
Of course the office sector is a mess ever without building, because they are squeezing us into smaller and smaller spaces. The cubicles Dilbert used to complain about seem like McMansions today.
I went to one of these house lotteries once in San Jose, CA. I had been checking out these townhouses online and then in person. I was leaning on the side of buying one even though the location wasn’t that good for my work commute. But there wasn’t much to choose from or new stuff being built even back then. I guess interest was very high so they scheduled a lottery. I went there but the whole circus atmosphere turned me off so that I didn’t put my name in the hat. I just watched for a little while and left. I was disgusted with the thought of winning a chance to overpay for something that wasn’t exactly what I wanted. They had been raising the prices as well because of all the interest. This was around 1996, so in retrospect I made a poor financial decision considering what followed. But it was and is the right psychological decision. The gleeful people in that room, participating in that, I wouldn’t want them for my neighbors.
I was disgusted with the thought of winning a chance to overpay for something that wasn’t exactly what I wanted. They had been raising the prices as well because of all the interest. This was around 1996, so in retrospect I made a poor financial decision considering what followed. But it was and is the right psychological decision. The gleeful people in that room, participating in that, I wouldn’t want them for my neighbors.
You were probably the most rational person in the room.
UK: ‘Warning over “interest-only” mortgages’
http://www.youtube.com/watch?v=wzUhU3-w4Uc
The Financial Conduct Authority is warning that more than a million people don’t have enough money to pay off their debt - with an average shortfall of £71,000.
There’s got to be some sort of “program” to make things better, fix their mortgages to allow these people to keep their debt dumps.