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First - tobe h appy I don't live in Denver anymore.
On some blocks, as many as one-third of the residents have lost their homes
That's a lot of people scrambling to rent, or move in with family members who haven't lost their homes.
There are a series of short- and long-term social and familial effects that I don't think anyone is discussing yet. Would it be fair to say yet that the housing bust may have a significant effect on an entire generation currently being born, going through primary school, and entering adolescence? That's going to be a lot of kids who watched their parents get in way over their heads and lose their homes. Those parents are going to handle the turmoil in wildly differing ways, and not all of them are going to handle it without lashing out.
The discussions of the housing bust/liquidity crisis are still focused on numbers, monetary values, estimates of worth. I haven't seen much in the way of discussing the greater social implications of this great, grand screwup, and I think everyone needs to, ASAP.
The economy in my city is slowing, yet glass and steel are still being tossed up everywhere. The prices are going to crash here in a few years, probably in the midst of a recession that parts of Canada are already facing (OK, parts of Canada once heavily reliant on manufacturing. Fine; Ontario).
What a mess.
Maybe you are all aware of this, but a lucid explanation of the big picture --the Mortgage Crisis--was presented on Fresh Air recently. Here is a link. It deserves your rapt attention:
Our Confusing Economy, Explained : NPR
Until we get through the mid-year crush of resets it is foolish to even predict that a bottom can be foreseen nevermind imminent.
By the same token there are agents in many bubblezones of SoCal that report increased activity, upticks in pendings and declining inventory. None is good news at this point. Inventory/sales is misleading as up to 40% of sales are the 15-20% that are bank owned. If you are a normal retail seller those are irrelevant to your prospects of making a sale. Taking REOs out of the equation and clearly months of inventory is still exploding. The same applies to pendings. It is taking longer to arrange financing and especially for the 10-20% that are short sales much longer to close. As to declining inventory, could be an improvement or it could be expired listings not relisting and general seller discouragement. This might be reflected in some early indications pricing softness of rentals. People who can are going to Plan B.
Oracle's Ellison Wins Tax Cut on Home, Upsets Schools, Parents
Oracle's Ellison Wins Tax Cut on Home, Upsets Schools, Parents - Bloomberg.com
From the article:
"Foreclosures are ripping through the rows of new homes in the flatlands where Denver turns to prairie."
I used to live in Denver and that's an accurate description, their version of California's Inland Empire.
Sebastia
Mark B - as to social implications, I heard an excellent talk recently in which it turned out that most people affected by bankruptcy DO NOT TELL ANYONE--even the children in their immediate family. Other stories are created to explain plausibly why the family is moving in with relatives or moving to another state.
(The talk was excellent--Elizabeth Warren at UC Berkeley, "The Coming Collapse of the Middle Class":
YouTube
- The Coming Collapse of the Middle Class
I heard about it here.)
Didn't the foreclosure crisis start in Colorado about 3-4 years ago, well ahead of most markets in the country?
The USA Today piece is interesting because nearly all the borrowers profiled admit that they could not afford their mortgage payment, they tried for a while but then the inevitable happened. Not a rate reset, just the slow realization that did not have enough money to afford their home (accelerated for some by injury or job loss).
Sobering.
If I divide last months listings by last months sales, net of sales of foreclosed properties, we now have 40 months of supply. This is in a small town in a rural state. Relitters desperately trying to sell the properties but people are figuring out that prices have a long way to go. The next sixty days should bring this to a boil.
Oracle's Ellison Wins Tax Cut on Home, Upsets Schools, Parents
As a Georgist I gotta say it's total BS to be taxed so highly to IMPROVE a property the way he did.
If Larry had put a mobile home on his property and added a junk yard everyone's property values would have declined, but Larry went to great pains to build the estate the way he wanted it.
This nation needs to tax land values much more, and NOT tax non-real property at all.
One thing to keep in mind about the bubble-less markets is that while the overly generous lending may not have created a bubble, it probably elevated prices just the same. In a lot of places that suffered job losses after the 2001 recession, home prices were stable when one would have expected them to fall. Though I have no idea what went on in Denver.
Beautiful day today in Detroit. I went for a walk, and the neighborhood is in shambles, due to all the vacant houses. The change in the last 2 years is astonishing...
Mark B,
"The history of this century shows that there is no more potent negative political force than downward mobility. If the American Dream becomes a mockery for tens of millions of vigorous young Americans who, it should be remembered, represent mainstream American youth not just inner city minorities, the nation can expect rising levels of violence, crime, drug addiction, rioting, sabotage, and social instability... We will be lucky if this is the worst of it: history suggests that under such circumstances, demagoguery is almost inevitable.
"The stakes for addressing the nation's competitive flaws and working them through are broader than economics. They go to the heart of America's viability as a democratic society."
Daniel Yankelovich, "Coming to Public Judgment: Making Democracy Work in a Complex World"
I grew up in Denver and saw this happen when the last oil boom and ag boom ended. For a while, the better neighborhoods -- Hilltop, Country Club and a few others did hold up and even some went up but I can tell you from the direct experience even those areas eventually joined the rest and saw eroding pricing and sales as the crisis lingered.
At the first of the last bust I worked for as a busboy in one of the hot single restaurants. I saw my tips drop by 30% from the previous year due to the Denver economic and RE bust. Yes it was a bit different -- the bust last time was due to a sharp downturn in Denver's economy but I can't help but think the RE crash will have a similar (or is having) on Denvers economic prospects.
In the second year of the last bust I worked as an intern at a bank. What I vididly remembered is how many of the senior execs and workers felt stuck given the high number of foreclosures. Even if they wanted to move and find a new job they couldn't because half of the houses on their block were foreclosed. It was an interesting experience and the reason why I ended up in CA after graduating from college. Simply put Denver did not recover for years.
I dare say this will be repeated. What it taught me is RE prices do not always go up -- the often go down. Perhaps why I got out of owning in 2003 -- 2 years too earlier -- in CA. It would be interesting to know how many of my grade school classmates who went through the same bust (about 55 of the 60 stayed in Denver last I checked) also learned that RE can go down vs. how many got sucked into the current coolaide that is it always a good time to buy RE.
hey downsouth,
what is your location?
ZODIACAL CONSIDERATIONS FOR TODAY
Re: there is simply too much supply, and much of the supply is distressed.
ARIES (March 21-April 19): You lose resolve and focus today. You need to be reminded of what's important and about your goals. Choose friends who prevent you from drifting; avoid those who encourage wasted time.
http://thumbsnap.com/v/afldsBbW.gif
Re:
Lunar Node........ 27th degree Aquarius, retrograde
manu06,
Queretaro, Mexico
This development was ridiculous from the start.
I lived out in Denver for years, and saw the boondoggle DIA project go from ludicrous pipedream to unstoppable force. Mayor Pena and many others got rich off this project, replacing a serviceable close in Stapleton airport with an uneeded larger airport near the Kansas state line, roughly an hour drive to center downtown with any traffic.
This development is part of that project, IIRC, building homes in areas formerly occupied by scrub brush, antelope and rabbits. They were affordable at a time when Wash Park/ Cherry Creek property was undeservedly going to unsustainable levels, and some stretched to make it work. Now we see the results. I'm sure the Lowry developments are part of the same trend out there.
On the plus side, the airport is still in the middle of nowhere, and Denver will always be a cowtown.
I was raised in Colorado and every time I go back, I feel sick looking at what these developer pigs did there and everywhere. There was so much discretionary abuse with city counsels and the politician linked to NAR and the hyper expansion of the bubble. I hope we do see equilibrium return and hopefully a new generation of green-minded children will come to power and shut down this type of abuse for ever more!
demagoguery is almost inevitable.
Well, duh! We've had demagogues on both sides since I can remember. Why do you think the nation started thinking of itself in black and white (red and blue) terms?
The change will be the appeal to violence.
shame on you larry, how dare you not to pay 3m a yesr to school district. they are entitled to those 3m xD
where are those days that people/districts/governemnts lived within their means ...
Queretaro, Mexico
DownSouth | 04.05.08 - 2:17 pm
Wow, way down south. Furtherest I ever got was San Luis Potosi.
Hi CR --
As a Denver Real Estate Appraiser, my experience is that both of these articles are true -- in high demand neighborhoods close to Downtown Denver, values are generally stable, and rising in some areas (values are also generally stable in high demand suburban areas).
I'm also seeing some evidence that REO glut bottomed out in the 4th quarter is some areas; the impact of the decline of construction economy remains to be seen.
On the other hand, values in areas on the outskirts of the Denver Metro Area range from stable to sharp declines. Everything is driven by supply and demand, and areas that are overwhelmed by REOs have seen 10-30% price declines.
The USA Today article cites Green Valley Ranch as a neighborhood hard hit by falling values -- which is obvious every time I do a GVR comp search. Large newer homes that sold for $350k two years ago can be picked up for $200k now.
The pattern is repeated in other new subdivisions -- homebuilders were selling houses with 100% financing, using 80/20 ARMs. Now, the homebuilders have slashed prices by 10-20%, which is a fast track to foreclosure for those who can't refi, or afford their ARM reset rate.
When I get calls on these properties, I tell the LOs or homeowners their best bet is a loan mod -- either the HOPENOW short term fast track or a full mod, if their lender will cooperate.
Last fall, I started feeling like a deck hand on the Titanic -- advising homeowners with ARMs to get into a refi lifeboat now, before falling values made it impossible later.
for the past 3 years Denver, Colorado Springs and Austin, Texas have been favorite spots for 30 year olds to move to after either (1) cashing out their home in SoCal and moving to a lower price area or (2) selling their low priced condo and moving UP by Moving OUT to another state where they purchased a similar priced home...
those people stopped leaving Southtern California last June when prices suddenly fell and they couldn't sell their houses...
in the next few years when people in Colorado and Texas must sell their home due to one of the Dreaded Three D's (Divorce, Death or Downsizing by their Employer) the sellers will find the pool of potential buyers much smaller and this will fuel yet another precipitious drop in home prices for everyone trying to sell ....
also, when the "recently arrived workers" do lose their jobs, they generally do not have solid references in the local job market, so they can't find a local job, ...then they sell/leave their home and move back to where they came from....in a U-Haul...
this phenomena seems to occur every 10 - 12 years
Denver bubbled between 1995 and 2000. It should have crashed after 85k telecom and tech jobs were lost in 2001-2003. Instead, due to low interest rates and easy lending, it continued to rise (although much less than many parts of the country). Denver (and the rest of the Front Range) has a couple more years to go before it bottoms. All neighborhoods will be affected. Supply and demand are still way out of whack.
Look at the picture in the link. The row of cookie cutter boxes looks more like a prisoner camp then anything. People actually paying to live in such a setting says something. Sheep.
They are not losing their home and jobs, they are getting a second chance to live as free men. Most will not take it.
CR wrote:
"there is simply too much supply, and much of the supply is distressed."
You forgot a 3rd, and equally important, reason: non-amortizing Option ARM and Interest-Only loans are no longer available.
I live 30 minutes north of Denver and the foreclosure rate in my town, according to the local paper, is one of every 42 houses.
I grew up here, and no one in my family has ever been able to figure out who has been buying these McMansions. What do these people do for a living? Er, make that what DID they do.
Does being 'more' liberal mean pouring 'more' good money over bad?
YouTube -
"As to declining inventory, could be an improvement or it could be expired listings not relisting and general seller discouragement."
Mr. Dawg,
According to a co-workers wife who is a long time realtor in North Port,Fl everyone who is not relisting is just going to wait for prices to come back. She has been trying to get people to get out now but it ain't workin. Methinks we have not seen the rush to the exits quite yet.
It should get very interesting in the next 6 months to a year here.
As for you harping on declining tax reciepts here is how its going down here.
This is a 1.25 acre lot in a small 4k lot subdivision behind the county airport.
http://tinyurl.com/43eoc7
It sold in January for 5k. All current lots on the mls are listed between 20k and 100k!!! for the EXACT same thing. Taxes are about 600.00/yr at a just value of 45k.
Prior years taxes are 100-150(includes assesments) year before the run up. The loss of tax reciepts in our county is gonna get really bad before this is over.
Here are some prior sales in the area
8040 Alfred,sold 04/05,120k
8108 Alfred,sold 09/05,85k
8173 Alfred,sold 09/04,80k
The sad part is the county appraiser is not allowing a lot of these sales as comps and is just calling them distressed sales !!! I'll go back to my bunker now...
Chris
Detroit Dan:
What part of town are you in? While my wife and I moved out of that area in 2004, my parents still live in the southern half of Warren (south of 696). I talked to my mom the other day and she said there were six houses up for sale on the two blocks between her house and the main road (out of about 50 total IIRC) last fall. Now there are two and all 6 are vacant. At least two of the houses where the signs came down now have what look to be foreclosure notices posted.
She also said one of the local relitters is planning to start their own "Foreclosure Reality Tour." Since the relitters are hurting for cash too, they'll probably serve muffin stumps to all the knife-catchers.
Rob Dawg writes:
"Until we get through the mid-year crush of resets it is foolish to even predict that a bottom can be foreseen nevermind imminent."
I agree wholeheartedly with you. But I think it's worse than just a mid-year crush of resets. I recall seeing graphs of resets peaking in a few months, only to REPEAK again in 12 to 18 months.
Double peak. So, I think it'll be like the eye of the storm. Just when you think the worst is over and you peak your head outside, BANG. Here we go again.
Thare is no doubt, this is going to put a drag on the economy for MANY more years. And the ONLY thing that will "bail-out" the system is home prices falling back to the norm. Roughly 3 times family income. That, or exotic loans coming back so people can buy without qualifying.
sdtfs,
But San Luis Potosi is far enough into the interior to get a real flavor of what Mexico is all about.
I've always thought that cities farther to the north, like Monterrey, have more of a hybrid culture, not unlike San Antonio, Texas.
http://thumbsnap.com/v/nRT5v83b.gif
Cobradriver writes:
[As to declining inventory]
Mr. Dawg,
According to a co-workers wife who is a long time realtor in North Port,Fl everyone who is not relisting is just going to wait for prices to come back. She has been trying to get people to get out now but it ain't workin. Methinks we have not seen the rush to the exits quite yet.
It should get very interesting in the next 6 months to a year here.
North Port... just 10 miles inland from my mom. Good thing she self insures. You are correct, this is the pause that refreshes (hope). The spit polish and spruce up process is probably why the home improvement industry has held on so long. For so long time healed all bad pricing mistakes. It is a tough lesson to unlearn. Around here we are "losing" equity at about $5/hour. Every day on market is another $100 away from being priced correctly. I don't think it will take you a year. Friday May 30th, the end of the month and the end of the week of memorial Day will have the "snowbird" exodous and "listed to sit" explosion. " Just put it on the market for me at $250k over the summer while I'm back east for the summer."
Would it be fair to say yet that the housing bust may have a significant effect on an entire generation currently being born, going through primary school, and entering adolescence? That's going to be a lot of kids who watched their parents get in way over their heads and lose their homes.
See: Depression, Great.
Although it doesn't fit our nation's gee-whiz narrative, the truth is that class mobility in America has always been very fluid from generation to generation. The classic narrative is that all Americans are successful (ha, ha), gain a better lifestyle through sterling hard work, and the sky's the limit for their kids.
When the truth is that, every generation, some proportion of Americans fail to get ahead, and fall OUT of their parents' bracket, and many times the slide affects the subsequent one or two generations. This is an everyday occurrence, it doesn't just happen during recessions. In recessions of course it happens in greater numbers.
So really, all this happy talk about how Americans would do well to "just walk away" and how it really isn't going to affect anything is bunk. It's going to affect their kids. A LOT. Failure is failure, financial insecurity is financial insecurity, not keeping up is not keeping up.
As the child of the child of a guy who lost everything in the Depression... believe me, the effects last for generations.
"Double peak. So, I think it'll be like the eye of the storm. Just when you think the worst is over and you peak your head outside, BANG. Here we go again." -- Doom
Good thing. Anybody who is calling a bottom right now knows nothing or has bad motives. Housing prices will be ugly for much longer as immense supply overwhelms ever-decreasing demand. Buyer psychology will also dissuade home buying for several years as home buying will become as unpopular as Demi Moore movies.
for the past 3 years Denver, Colorado Springs and Austin, Texas have been favorite spots for 30 year olds to move to after either (1) cashing out their home in SoCal and moving to a lower price area or (2) selling their low priced condo and moving UP by Moving OUT to another state where they purchased a similar priced home...
Yes, another good point... sometimes these boom areas are fueled by very specific populations migrating from specific places. When something affects the place of origin, the markets in the place of migration feel it.
Let me use North Carolina as an example (although it is not a boom area)... probably a significant percentage of new arrivals to North Carolina over the last 10-15 years come from the depressed cities and towns of Upstate New York. In fact North Carolina is bitterly referred to as "the land of milk and honey" by those who have watched their sons and daughters have to leave to find work.
And in the 19th century the people in Vermont probably said the same thing about Ohio and Illinois as their sons and daughters were forced to leave due to economic pressures.
If the economy improved in New York (if the crushing property taxes were ameliorated, for starters) you'd see a lot of people leaving N.C. and less people going down there.
Denver is bad but Colorado Springs is worse. We have sold 110 million dollars less in realestate in this quarter than the 1st quarter of 2007. That has got to hurt realtors and mortgage brokers. Forclosures are on pace for approximately 5500 this year, which far surpasses the old record set last year of 4300. I feel Fall will take on new meaning this year as things go from bad to worse, and forclosures accelerate after the Summer selling seaso
sdtfs,
It could be argued that Americans have been victims of demagoguery since the early 80's.
My Webster's New Collegiate Dictionary defines a demogogue as "a leader who makes use of popular prejudices and false claims and promises in order to gain power."
To quote Yankelovich again:
"In the Reagan years after the severe recession from 1981 to 1983, Americans went on a prolonged mental holiday. They were encouraged to do so by Mr. Reagan's own wishful thinking, which seemed to bring good times to the country. Opinion polls showed that once one got beyond the first superficial questions, people realized it was not possible to lower taxes, vastly increase defense expenditures, and balance the budget all at the same time. But Ronald Reagan was president. He accepted the responsibility. He said what people desperately wanted to hear after so many years of increased taxes, stagflation, divisiveness over the war in Vietnam, and social policies that deeply troubled average Americans. When in the 1980 campaign candidate Walter Mondale spoiled the fun by stating that, as president, he would raise taxes because it was the only realistic thing to do, he violated the national mood and threw away whatever chances he had of being elected."
So instead of adressing the competitive issue, the country instead went into denial and embarked on a 25-year-long credit benge. I think it would be safe to say that no presidential candidate since Mondale, including the current crop, has "violated the national mood." So all of them--Reagan, Bush I, Clinton and Bush II--have been demagogues.
Of course they had a whole group of "scientists" and other asundry "experts" who acted as enablers, Milton Freidman, Arthur Laffer and Alan Greenspan, to name only a few.
There is something really fucked up in a country that latinocrapholes like Florida and California are much richer than the hard working industrial bases like Detroit...
I live in a nice loft in the center of downtown Denver. My next-door neighbor's door has an eviction notice posted on it.
Every one of my neighbors that I've met, without exception, has been either on student loans or a commercial real estate broker.
The headquarters of American Crew, which used to be next door, are empty. The large bank building across the street is too, for a total of 17,000 sq. ft. at this intersection. The downtown mall two blocks away, 16th street, has vacancies on almost every block.
Things are vastly worse in the suburbs.
Re: Reagan - I tried very hard at the time to separate out the subliminal message conveyed by Reagan that made him so popular. I finally came up with:
In Reagan's day the section on virtues was important, even if not true. It provided a fig leaf for greed. That has been dropped in the decades since. Now it's simply: I'm on team alpha, therefore I deserve more.
Walter Mondale floated the idea of a .50/gallon gas tax to be used for energy related projects. I wonder if that would have helped us now, or whether the discoveries that fueled cheaper oil in the 90s would have negated any projects anyway.
OT, but it's Saturday: If you haven't seen the Bear Stearns day laborer video, check out Job Market 2009.
Sue, that's a great post. I saved it.
AlphaBeta writes:
There is something really fucked up in a country that latinocrapholes like Florida and California are much richer than the hard working industrial bases like Detroit...
Hungry yet? Let's move on shall we please?
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dubious-
who are they going to loan the money that You give them, that is actually going to pay it back
Investment Opportunities: Corporate Notes from GE Interest Plus
CR - The housing situation in Denver may not be as dire as USN&WR reports. Certainly there are neighborhoods with high levels of foreclosures. There apparently are many neighborhoods that are doing fine also.
I came upon a web site that reports real estate asking prices and inventory levels with lots of good data to analyze.
HousingWatch is Coming Soon!
My conclusion is that while California, Nevada, Arizona, Florida, DC, Detroit and NYC are in big trouble, many other parts of the country appear to be turning around. Even Cleveland!
It follows reasoning that the economy is OK in energy states (Texas), farm states and areas that did not participate in the bubble (Atlanta, NC etc.).
This is not to say there is light at the end of the tunnel for the banks - the decline in property values in California alone are out of sight.
It does indicate that, while some areas of the country are going to go through a severe recession, others areas are recovering.
I would appreciate your analysis of the data as you are in my mind perhaps the most objective of the bloggers that I read on a daily basis. (You definitely provide the most insightful charts and graphs!!!)
I take a couple of things from this article. First, house prices need to come way, way down. If a married couple, each working a full time job, can't make the payments on a crappy little tract house on the Eastern edge of Denver, then those houses are way too expensive.
Second, the banks really screwed these people over. A big chunk of them really couldn't make the payments from the start - the first layoff or illness and they were irrevocably hosed. Before any resets occurred. Yeah, home buyers should figure out how much they can afford, yadda yadda, but most of these people are math geniuses and if the bank tells them they can afford it they believe it.
Third, these people aren't "speculators." They aren't "flippers". They were excited to get a house and devastated to lose it. The people above fearing some nasty repercussions from the pain of this level of foreclosures are quite right, I think.
Sue,
Your #2 comment reminded me of this passage from James Baldwin's "The Fire Next Time:"
"The American Negro has the great advantage of having never believed that collection of myths to which white Americans cling: that their ancestors were all freedom-loving heroes, that they were born in the greatest country the world has ever seen, or that Americans are invincible in battle and wise in peace, that Americns have always dealt honorably with Mexicans and Indians and all other neighbors or inferiors, that American men are the world's most direct and virile, that American women are pure. Negroes know far more about white Americans than that; it can almost be said, in fact, that they know about white Americans what parents--or anyway, mothers--know aobut their children, and that they often regard white Americans that way. And perhaps this attitude, held in spite of what they know and have endured, helps to explain why Negroes, on the whole, and until lately, have allowed themselves to feel so little hatred. The tendency has really been, insofar as this was possible, to dismiss white people as the slightly mad victims of their own brainwashing."
zero: that video was awesome. in a wrong sort of way.
Well, I'm working on a price opinion for a foreclosed house that the mortgage insurance company is thinking of acquiring. The MLS history is as follows: 09/10/07 $312,000; 10/20/07 $309,000; 12/06/07 $250,000; 02/04/08 withdrawn.
This house is in a subdivision that has two phases. In phase 1, which is where this house is located, there are 14 for sale signs by builders. In phase 2, 10 unsold houses and all vacant lots have been foreclosed on by the First National Bank.
The nearest, most recent sale was one block away for $229,000 last month. There have only been 5 sales in this subdivision over the last year, prices ranging from $190,000 to $309,000. There are 7 active listings ranging from $226,000 to $345,000.
I'm wondering what to value this house at. I'm also wondering exactly what to write in the comment section of the price opinion. "Nice overbuilt home in failed subdivision. Good location, close to schools." ?
bsneath:
you bring up good points. there ARE areas that did not become quite so involved with the mania. there are areas that are still affordable.
(I know because I live in the midwest. a lot of the areas remained rather sane... and no they're not all economically devastated like Ohio and Detroit)
the problem is that the areas that did go crazy have a disproportionate dollar amount associated with them.
If I recall, I believe over 60% the RE value (by dollar) in our country is just in CA,NV, AZ, and FL.
combine that with the leverage and securitization in the industry, and it can be catastrophic, even if the other 46 states do well.
I guess I'd use Basketball and Michael Jordan as an example.
If you have a b-ball team with Michael Jordan and 4 schlocks, they may do pretty well.
If MJ goes down in injury, only 20% of the team is in hurt.
But without him they're blown out.
Sue,
You hit the nail on the head!
Yearning to Learn writes:
... there ARE areas that did not become quite so involved with the mania.
I don't think we know this yet. The places that merely held value or kept pace with inflation may have only done so because they were in a bubble too. Perhaps without the pervasive national bubble psychology and lending environment their fate would have been that of Buffalo. "can't go down because they didn't go up" is not justified claim. I see land and lumber pretty cheap. It may just be sunk replacement costs that hold the bottom for much of the nation.
DownSouth - I was once told by a black man that white Americans "are the most lied to people on earth." At the time I wasn't sure what he meant, and I am still discovering the depth and ramifications of that statement.
OK, back to the on-topic stuff that the much more knowledgeable ones here post!
CR - Can you do a post on the rental market supply? This article was interesting in that it appears that affordable rents are quickly becoming scarce. I believe I remember you writing way back about a glut in rental housing, but surely that has changed.
Perhaps without the pervasive national bubble psychology and lending environment their fate would have been that of Buffalo. "can't go down because they didn't go up" is not justified claim. I see land and lumber pretty cheap. It may just be sunk replacement costs that hold the bottom for much of the nation.
Rob Dawg | Homepage | 04.05.08 - 4:52 pm | #
This is my opinion as well. Detroit is a striking example of this.
Did i just see someone compare the real estate in cleveland favorably to the real estate in NYC?
I noticed that the channel my wife likes to watch that used to have a lot of shows called "what you get for the money" and "flip this house" had a show on that is brand new that was all about how to "get by on less". Clipping coupons, etc. I don't think this is the bottom. I'll call a bottom when there is a successful and funny internet based show called "what you got for the money".
In my relatively stable non bubbly high end historic urban neighborhood we just got our first bank sale announced. Methinks this is just beginning. I figure in 3 years I'll start looking for deals.
Does anyone find this humorous?
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Rob,
I have to agree 'didn't participate' is problematic.
My view is that participation is at least partly a function of how heavily people borrowed and at what terms, that is, not visible at the level of pricing.
California prices may reflect only that more people were competing for houses there, and fewer were interested in Atlanta in the same time frame.
I don't live in a bubble area and today the local cable real estate channel had a section on educating sellers about short sales.
Mood is decidedly different, no more get rich in real estate pitches and the two story ceilings and 3400 sf of rooms now beg the obvious question of who is going to pay to furnish/heat/maintain these ridiculously large houses.
Admittedly I have a bit of schadenfraude going. But that's not really fair given that I don't get to feel it against the people in power who created this mess because they never suffer.
I'm supposed to feel badly for someone who lost half his 1.2 investment in BSC? Only 600 million left.
The tragedy of it all (sigh).
I believe I remember you writing way back about a glut in rental housing, but surely that has changed.
Outsider | 04.05.08 - 4:56 pm | #
I have plenty,How many ya want to rent?
Rents went from 900-600 month and we may end up around 500 to keep the units full. Just gotta convince the parents took keep after the drops...
As more than one person said...Familiy/friends are consolidating,not living less per household.
As long as the renters keep quiet I really dont care how many split the cost...
Chris
So glad I rent.
"can't go down because they didn't go up" is not justified claim.
Rob,
Yep,a lot of states should have had drops instead of holding steady.
Is your mom in the Englewood/Venice area? If you have visited I am sure you have seen the sheer number of for sale signs recently...
Chris
Zero,
truly great video. Thanks.
On a related note, Newsday reports that Maggie Williams, Clinton's campaign manager, was a director of failed subprime lender, Delta Financial, known for targeting minority buyers and for big prepayment penalties on subprime loans.
and, Henry Cisneros, former HUD Chief, made 5 million working for Countrywide.
Stated income, no-ratio, no-doc, option arms, 100% financing, piggy back seconds, seller paid closing costs, subprime (bad credit, no credit), no SS# needed........... Oh,to reminisce. Yes, those were the days.
Denver, (Houston, and everywhere else).......we have a problem. We are all FULL DOC now.
Is your mom in the Englewood/Venice area? If you have visited I am sure you have seen the sheer number of for sale signs recently... Chris - Cobradriver
Exactomundo. Englewood/Woodmere where she paid cash for a couple hurricane magnets. The second just so she doesn't have to put up with house guests so you can imagine the prices are nothing to her. And that's why this whole mess is gonna be a random neutron explosion. I can't wait for 'cane season and the banks suddenly find themselves with hundreds of homes that need to be boarded up in the next 10 hours and they can't get permission to hire workers.
doom, [Double peak. So, I think it'll be like the eye of the storm. Just when you think the worst is over and you peak your head outside, BANG. Here we go again]
Right. Now overlay that mess with a contracting economy in recession, job losses and wage deflation. Talk about a shitstorm.
Sue,
The current "mania," to use Yearning to Learn's terminology, actually has deep precedents in Western culture.
"The Prasie of Folly" was Erasmus' 16th century critique on life. Folly, speaking for herself, shows how people of every rank and occupation prefer her to common sense, yet they give her a bad name, especially the worst fools. She is at least honest--no pretenses--anybody can see what she is like. Her father was Plutus, the god of riches, by whom everything in the world is governed. Folly concludes that, all in all, the greater the madness, the greater the happiness.
Then in the 17th century came the Physiocrats, precursors to the 18th century liberal school. They argued that prosperity depended on the greatest possible production and exchange. In England the Dutch doctor Bernard Mandeville published his book, "The Fable of the Bees," in which he argued that consumption and even luxury and waste were good for the country--his maxim was: private vices--public benefits.
Adam Smith's "Wealth of Nations" finally dealt a body blow to mercantilism. But liberalism's day in the sun proved short lived. The social abuses were just too great. Sydney Smith delivered this sardonic condemnation of liberal's anti-regulation madness, their throwing out of a bill to regulate the chimney-sweeping trade:
"An excellent dinner is the most pleasing occurrence and a great triumph of civilized life. It is not only the descending morsel and the enveloping sauce, but the setting and the company. In the midst of all this, who knows that the kitchen chimney caught fire and that a poor little wretch of six or seven years old was sent up amid the flames to put it out? Boys are made chimney sweepers at the age of five or six. Little boys for small flues is a common phrase in the cards left at the door by itinerant chimney sweepers. Girls are occasionally employed. It was quite right to throw out the bill for prohibiting the sweeping of chimneys by boys--because humanity is amodern invention. Such a measure could not be carried into execution without great injury to property and greatly increased risk of fire."
So for the last couple of centuries it's been a tug of war between liberalism and its critics.
But whenever liberalism is given a free hand, as it has been for the last 25 years in the U.S., the madness always returns.
AlanY writes:
Sue, that's a great post. I saved it.
AlanY | 04.05.08 - 4:22 pm | #
Sure, fiction is always refreshing.
OriginalFrank | 04.05.08 - 6:13 pm
OriginalFrank, the original wiener.
I went to New Smyrna Beach today. I stopped at Mon Delice for some subs and pastries. I got in to a conversation with a guy about condos there. He said he bought a condo at Minorca for 400k. He said in 2005 he was offered 850k for it. He said it is now worth what he paid for it...Quite a
I can't wait for 'cane season and the banks suddenly find themselves with hundreds of homes that need to be boarded up in the next 10 hours and they can't get permission to hire workers.
Rob Dawg | Homepage | 04.05.08 - 5:47 pm | #
One around the corner from where I am at right now. We had a decent wind 2 weeks ago and it took the shingles off the place. Tarpaper is holding up but will not stay forever.
Can't find the owners.
Bank has no idea when foreclosure will even start.
House will be junk in about 6 months.
I would love to make a serious offer of 50k. Stuff is selling but it has to be 100% and cheaper than anything near it. Smaller homes on the same street sold in the last two months quickly for 130-140...
Sue writes:
DownSouth - I was once told by a black man that white Americans "are the most lied to people on earth." At the time I wasn't sure what he meant, and I am still discovering the depth and ramifications of that statement.
Apparently you have never been to Africa.
Can't we stick to economics on this blog instead of trying to bring Air America to the print media?
No Guru,
Thanks for the link.
A very informative and thought provoking presentation.
Just FYI the tasteless video above:
Zero | 04.05.08 - 6:00 pm | #
was posted by some jerk impersonator, not by yours truly.
Can't we stick to economics on this blog instead of trying to bring Air America to the print media?
Tripleplay | 04.05.08 - 7:48 pm
Why worry about what's in the print media? You don't seem able to comprehend the written word.
Repost from wrong thread..
Wow ! two posts about Denver in the last couple of days and even though I live around here ( more Boulder than Denver, but still ) I can contribute nothing to the main post.
After 4 years I do of course know something about the area( Cornish and Italian coal miners - coal mining in WINTER only, natch) , its history and its geography, demographics but the stuff these last two articles have discussed seems a world away from me.
Of course I don't even get the Denver Post or the Rocky Mountain News (Boulder daily ) and I don't watch network news at all nor do I tune into local stations well perhaps PBS and NPR but that's it.
With the net, online video phones, phones - people in England, Canada, Philly, AZ, New England, India, France, Turkey, Australia and LA of course seem to be closer than ever.
The alienation concept of Marxism seems almost complete. I live here but I left my heart in Los Angeles - or was it London or ...
-K
I have plenty,How many ya want to rent?
What kind of a building is it? In what kind of neighborhood? If it's in a decent neighborhood, maybe you'll find things turning around like in Denver?
I have a sister who bought a condo near there this summer and I'm sure she's still kicking herself. Don't know why the Venice area is in such a downhill, it's a much nicer area than south FL if you ask me.
History will show that March 2008 marked the peak foreclosure rate in Colorado. Keep crying no, so I can keep buying low!
Tripleplay--"Can't we stick to economics on this blog..."
Nice try, Tripleplay. Yours is the classic liberal(reincarnated in today's neo-liberal) argument--to speak of the economic "laws" as if there were no social consequences.
Adam Smith, Ricardo, Malthus, Nassau Senior, J.B. Say, Bastiat, J.S. Mill, proclaimed that they had found the eternal laws of economic life; present conditions were dictated by the nature of things, one must submit to them as one does to gravitation; from which followed the dogma "laissez-faire," already taught in the 18C by the Physiocrats, restated with full historical evidence and some caveats by Adam Smith, and now proved deductively by the laws of economics.
But cracks began appearing in economic liberalism no sooner than it was applied. Simonde de Sismondi was the first heretic among Smith's disciples. Why, Sismondi asked, did liberalism, and its anti-regulation fervor, create so much misery (sweat shops, child labor, etc)? Why did it bring on so much "poverty in the midst of plenty?" What led to the recurrent "crises"--shutdowns or failures entailing unemployment and starvation?
What is amazing to me is how little the argument has changed over the past 200+ years, how quickly we forget and how little we learn. Why is it that we must re-invent the wheel every few decades?
Thanks NoGuru for the link to Elizabeth Warren's lecture.
HaloScan.com - Comments
She explains why bankruptcies are rising. And it's not because people are con artists or poor. And it's not because they can't control their spending or because they are victims of the housing bubble..
"demagoguery is almost inevitable"
This caught my eye because I was recently re-exposed (those are not ill-chosen words in this context) to RPW's All The Kings Men. It seems to me that one man's demagogue is another man's populist. Huey Long is still a hero parts of LA (and not w/o reason in their eyes).
Hey folks-
This is one of the better batches of comments in a while. Scary thread, though.
Denver still has developable land within 30-40 minutes of downtown. All that new house construction kept prices down through the past decade or so, with only a mini-bubble (compared to CA, NV or FL) due to the low interest rates and teaser ARMs.
Those close-in historic neighborhoods showing up as Blue or Green in the USN&W map are generally a mix of small and larger homes. The larger ones owned by lawyers, doctors, engineers, at $400-900k, while a lot of the smaller ones ($250-350k) by retired people. There are foreclosures in these areas, but not like other areas.
Because these areas are desirable, even the 1,200 sq ft bungalows tend to sell beyond what a young couple or new family can afford, and don't give them enough space. These are more likely bought by a single with equity, gaybots, or a high-tech worker moving from CA.
For the same price as a little bungalow, you could get 3,000 sq ft in a new, suburb, so that is where the
younger couples and first-time home owners were being enticed by 1% ARMs. The foreclosure rate is particularly high in areas where construction dates match the easy loan years.
In 2007, according to the National Priorities Project, the federal government spent 42.2 percent of every income tax dollar on military spending. This figure includes 28.7 percent for current military and war spending, 10 percent for interest on military debt and 3.5 percent for veterans' benefits. At the same time, 8.7 percent went towards anti-poverty programs, 4.4 percent towards education, training and social services, and 2.6 percent towards the environment, energy and science programs. "The current Administration made a priority of funding a half a trillion dollar war in Iraq and a yearly military budget of the same amount at the expense of virtually everything else," said Greg Speeter, spokesperson for the National Priorities Project.