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And yet.... property taxes and home owners insurance keep going up up up.
That's due to the fact that, as your worthless neighbors default and don't pay, then us poor slobs, who do pay our RE taxes and insurance, gotta pay more.
Tinsu,
I think it has a lot to do with the cities, and states, not willing to go on a CRASH cut back on spending,eliminate excess public jobs, not needed, and take pay cuts.
Cities/Munis are sending folks to jail,for non pmt of utility bills!.
Homeowners trying to pay, doing the right thing, are having their utility bills turned over to collections, and courts.
Sheriff's are coming out, and arresting, or seizing their properties over utilities!.
What if everyone stopped paying?
They can't arrest everyone.
It's called Martial Law. Checkpoints, detentions, summary executions. Happens all the time if your view includes a little world history. I don't want it to happen but it's inevitable. Occam's Razor: There is no fix. What do you expect when we have criminal children running the show?
But then wouldn't they call "martial law" "job creation"?
As WW aludes to a good part is in how you define "they" -- They might be the armed forces, the national guard, other reserves, state and local police. To me, the key linchpin will be in how many individuals who comprise the aforementioned groups follow orders or can be convinced that they are not defending a system worth defending. Unless a sizeable portion of, let's call them, "authorities with guns," can be counted on to "defect" I'd say, yes, they can arrest everyone.
"Must...keep...ponzi....alive!" -PonziMan
CC,
In Bloomfield Hills, MI, a millage increase was passed to partically compensate for downward tax adjustments kicking in due to the reduced property values. For a given area, you can only reduce police, fire and maintenance budgets, not to mention schools, so much before problems begin. Police and fire coverage also affect both insurance rates iand property values f they are cut too much.
Total tax "take" by the area is, of course, down, just not quite as much as property value.
The funds to recapture are in the schools. The quality of schools will not delcine if you claw back the raises granted in the last two years.
Will the teachers quit? Yea right. The new applications would be huge.
For that matter, they'd probably improve.
The places in the country with the most obscenely high "education" spending (ie government-union-tenure-pension throwaways) consistently have the most miserable failure.
New Jersey has ~50% graduation rates.
Chicago cheats with its numbers (expulsions don't count, etc) just to report 50% graduation.
Detroit is at 25%, and its functionally-illiterate head is bringing back "social promotion" which consists of graduating kids who can't read so they won't feel bad.
Plenty of 6-figure pensions and superintendents for 1- and 2-school "districts" though...
Disputing the county's assessed value of my home last year was futile.
County thinks my home is worth 20% more than Zillow's estimate and recent comparable sales.
County assessor: "Short sales don't count."
County assessor: "Short sales don't count."
They do if that (and foreclosures) are the only market. Ask the County Assessor for their (non-existent) non-short sale comps.
actually, I think BP may have given the housing market a new lease on life....now that they've rendered much of the gulf coast (& eastern seaboard?) un-inhabitable
That would suit the control freak central planners running the show quite nicely.
No matter how many ghettos they create, the Chicago thugs keep romaniticizing the urban slums because they're great for centralized control.
Pile everyone on top of each other in cramped high rise projects, and prices naturally stay high.
That first chart looks like a dead cat bounce before another fall off the cliff.
Look out below!
that's a "bernanke stiffy"....if this economy's a rockin', don't come a knockin'
Well done Bananamerican!
$2 bet? Mortimer and Randolph scoff at such high stakes.
These are different Dukes - the Dukes of Moral Hazard.
Nice handle and icon there Ben.
With inflation, the stakes are significantly lower than Randolph and Mortimer's famous bet.
Just wait until the austerity maestros in the states and locales raise property taxes. That will be even more deleterious to home values. How many legs does this monster have to put down?
Like I said. They already are, I see it every god damned work day. I'm the schmuck who has to explain to people who already can't make ends meet why their house payments keep going up.
Keep teaching. Even if it seems like a lost cause. Keep teaching.
We must learn.
+10
Lumber prices are falling fast...
http://merrillovermatter.blogspot.com/2010/06/timberrrrr-lumber-prices-hitting-ground.html
Compare lumber to the other harder commodities which are trying to rally right now. Down Down Down it goes.
So are lumber rail shipments...they are about to cross under 2008-2009 ave.
Anecdotal observation.
In the "desirable" Northern California suburb where I live, which has excellent public schools (yes, there are still some in California) and established maturely landscaped neighborhoods, parks, functional localized shopping, BART, and great weather - housing prices have fallen about 25% since peak. Less than the exburbs near by with many newer housing tracks.
Most homes on market have been slower to sell over past two years, and most sold in the $1 to $1.5 million range. For past year, most have listed between $750K and $1.5 million and those that have sold are at a discount to list price. In past few months MANY $2-4 million dollar estates have come on the market. None have sold so far. They are in same neighborhoods as $1-1.5 million homes and driving those values down further.
We will definitely experience another leg down in prices here even as I write. By September, inventory still on market will go down even further. The spread is still happening here.
......and in Southern California, total MLS inventory is only half the number of distressed properties ( 77k versus 153k ).
www.doctorhousingbubble.com
Good description. Same thing in my neighborhood in New England. Everyone I know wants to unload their 1-1.5MM house and rent.
I really enjoyed Walnut Creek. Beautiful little town.
Good deduction! I am actually next door in Lafayette, but same dynamics.
LOL. Lafayette was my second choice. Well, enjoy it my friend. Never got to hike Mt. Diablo. Maybe I'll make it back in happier times. :)
I flipped properties in Lafayette and Danville area. Those hills are goldmines, one of the last areas to take the negative RE price turn. The suburbs benefited from the large number of custom home builds on undeveloped and newly parceled hillsides. When the negative turn came it hit hard and fast, cleaning out the highly leveraged speculators (ahem). But dirty money came in bringing prices back up 15% (i.e.; http://brentwood.localspur.com/2010/02/19/fbi-irs-secret-service-raid-se...) But even the institutional crooks couldn't keep the leverage going forever, and the area is following the same downward spiral as the rest of CA.
Still a beautiful place to live.
Best wishes to you and yours.
Funny, I grew up in Lafayette. It's an awesome place to live - provided that you are very wealthy. If the RE market is tough in Lafayette, everywhere else must be a basket case.
What is the average income in your suburb?
For your typical public-sector employee, about 80K to 100K.
For your typical private-sector employee, about twelve bucks an hour (that's what the maximum unemployment benefit averages out to).
Totally sustainable.
Onwards and upwards! Can't ya just feel it?
And public sector pay is much more "efficient".
Of what remains after taxes on that 80-100k, a private sector employee has to save for both his retirement and that of the public pensions.
A public sector employee receiving that same 80-100k can spend it much more effectively since he doesn't have to save for anyone's retirement, plus he's guaranteed to keep receiving at least that much after he quits working.
As of 2008, the average household income was $126K. I'm sure that is lower now.
So, how can one afford to pay for 1.5 million dollar home with that income?
So, how can one afford to pay for 1.5 million dollar home with that income?
Hmm...are we neighbors?
Fremont, Mission San Jose district. Near one of the best high schools in the country, BART, and shopping. Lots of 1950s construction (modest 3br/2ba with big yards) with non-remodeled homes the rare exception. Lots of realtor signs up asking for 900K to 1.1 mil. A few are selling, most are sitting on the market, a few sitting empty waiting for renters. My next door neighbor listed his corner property at 875K and got nothing.
Makes me wonder where the hell owners think they're going to find buyers who can afford an 800K mortgage. Hell, I'm amazed people out here can afford half that (well, maybe our six-figure earning public sector employees). I see the future of my neighborhood, and it's a lot of abandoned properties with a few holdouts who managed to not leverage themselves out the ass. I plan on hightailing it out of there well before the squatters and looters move in.
Even more telling, take a drive around the various retail and office buildings and try to find one that doesn't have multiple vacancies. This has been the case for the two years we've lived here...no new commercial tenants and the few left are slowing bleeding out.
Eh well, I was about thirty miles off.
Close enough and similar dynamics.
And right on about the commercial real estate. Many many vacancies. Increasing retail vacancies as well.
People are having trouble changing the plans they made a long time ago. People thought they would live comfortably, sell their house when they retire, and whatever. I know that this is not everybody, but the other situation is just as dire. Many people bought houses they now can not afford. People have been living in a false reality, one that is governed by price fixings of the Fed that were based on a FIAT ponzi. No price is REAL right now. None. Some things are about to go to infinity, and others zero. This in the next two years, if Hollywood is turned into a bubble. If not then it will only take 6 months for a collapse. All of this and throw in peak oil. Like I said, some things will have zero value. Numbers only exist in your mind. Please let us ask ourselves, what is real?
Had no idea so many of us were living in the Bay Area. Of course down here in Mountain View the rules are different.
We have 1,05sq. ft bungalows, like 475 Velarde St, being listed for over $1.1 Million... which you can tell from Zillow is quite common for the neighborhood.
Marin County...
The rules are different for you - ya keep dreaming ...
Only a complete fool would drop $1 million for 1050 sq. feet in Mountain View right now ...or Lafayette for that matter.
Only a complete fool would buy any residential real estate in this ongoing acute deflationary bust!
The smart money is in cash or equivalents (metal) waiting for the bottom ... we have not seen it yet!
Mountain View is basically a third-world country. Lots of illegals and their offspring. The schools are hit or miss. Definitely not the same as Lafayette. If I had the money, I would pay $1 mill for a nice home in Lafayette. You couldn't give me a house in Mtn View.
... how about I make you a deal on my apartment in Playa Gandia, Spain ... any takers?
Baltic dry looks good as well...
http://stockcharts.com/h-sc/ui
The US housing market will eventually revert to being an all cash market. Mark my words. The decline in housing won't be over until mortgage lenders completely dissappear from the market.
pitz,
"until mortgage lenders completely dissappear from the market."
it already has, the Fed's FM/FM,owns 96% of all U S Mortgages.
Plus we have the Re-Set of a TON of ARMS in 2012...............
Okay, let me rephrase that. The market will not have bottomed until all mortgage credit has dissappeared from the market. :)
(FNM/FRE, what a debacle....)
How might this be accomplished? Hyperinflation, perhaps. Continued deflation (ie: rising bond prices) pre-supposes that income generating assets continue to rise in value. This will not end well!
There most certainly will not be any Realtor, financial analyst, etc., waving the flag of the bottom either. All the housing bulls will have been long liquidated upon, and the sun will be shining on some other asset class when the true bottom in housing is reached.
Excellent use of the future perfect tense.
How do you see massive debt destruction leading to hyperinflation? Fedzilla paying off all the FNM/FRE mortgages would be inflationary, but having those bad loans fail and that credit/debt written off is deflationary.
All hyperinflations start with the government/central bank attempting to print their way out of a deflationary crash.
I believe you certainly have the right direction. I don't expect it will get to all cash, but a 50% LTV with a 10 yr amortization will be safe enough. Miss two payments and it is a march to the courthouse. Not too much different from a margin loan today. Lenders don't have many losses there on retail customers.
Cash? Perfect! So no more excuses about simplifying the tax code and going to some sort of flat tax since the mortgage interest deduction won't be necessary.
And I will add that not only has the MBS purchasing program (supposedly) expired, but the cash incentives have expired, too. Didn't mention the interest only and option arm resets that are about to start, either. But maybe a sun-loving pollyanna can tell us why things have never been better for our economy.
The President is a baller. He sits courtside in the seats owned by private citizens that win no bid contracts.
You should be thanking him for being so awesome.
Timber?
Happy Anniversary to Jim Cramer who called a bottom to the housing market one year ago this week.
And yet he calls a stock market top
Yesterday (in so many words)?
He back on the crack and destined to be living
single soon.
With his track record, he's a shoe-in to replace BB.
Senator Cramer already nominated himself for TARP Czar.
Adjustable Rate Mortgage Reset Schedule
http://www.dawnsellssandiego.com/blog/wp-content/uploads/2008/12/adjusta...
An end to the pain any time soon? That would be a no.
Seems odd to have a leg down in arms.
And with the disappearance of second mortgage markets, they won't likely be able to refi, at least not into a fixed rate. Even if they could, I'm not thinkin' interest rates are going down.
Only way to end the ponzi Benny and Timmy have started is to stop paying on anything. Use your money to buy physical gold and silver. Why contribute money to the ponzi scam they have going? Stay out of stocks, bonds, everything. Force them to fix the problem once and for all. Otherwise it is going to take riots to end it.
I grab the local papers around me just to see if they are expanding. This is the Twin Cities, MN. Section 2 is now entirely devoted to public notices of foreclosure. The 2nd half of section 1 is the beginning of it.
I don't get the title, "about to". Look at the CS or LP house price indexes - housing's double dip has clearly started already, the numbers are undeniable.
When the bubble burst, I figured RE needed to return to 2003 levels, maybe 2002. Thats about where it is now.
However, with the help of vast govt stimtervention, it looks like it is heading to 1999.
Where I live, 2003 is another 30% down from where we sit now. The high-end (around here $1.2M+) has collapsed, three years of inventory and some prices reduced 50% off of what they were asking in 2007.
I suspect many of these properties will be bulldozed and the lots subdivided for smaller houses or apartments. For now the banks are playing hide the weenie.
The bad part is we all know where the weenie ends up.
well played, sir.
Ice helps the swelling.
well played, sir.
Ice helps the swelling.
Bought my last house in 99 for $106,000 and sold it in June of 06 for $259,900. I was one of the lucky ones! I now live in a 3br/2b Apt w/wood burning fireplace, crown molding, gated community w/2 garages for $944.00/month, which includes water and sewer.
I will sit on the sidelines until this financial disaster is over, as far as, buying another home goes! IMHO, anyone buying a home now is uninformed and will be underwater in 6 months!
Agreed - only a fool buys real estate right now !
Confirming your good move:
From- http://patrick.net/housing/crash.html
1.Because house prices will keep falling in most places. Prices are still dangerously high compared to incomes and rents. Banks say a safe mortgage is a maximum of 3 times the buyer's annual income with 20% downpayment. Landlords say a safe price is a maximum of 15 times the house's annual rent. Yet on the coasts, both those safety rules are still being violated. Buyers are still borrowing 6 times their income and putting only 3% down, and sellers are still asking 30 times annual rent, even after recent price declines. Renting is a cash business that proves what people can really pay based on their salary, not how much they can borrow. Salaries and rents prove that prices will keep falling for a long time. Anyone who bought a "bargain" this time last year is already sitting on a very painful loss. 2.Because it's still much cheaper to rent than to own
SRS is ranging, now at lower bound. Should shortly know which way it will go.
RE has been the biggest illusionary bank prop job of any sector; the banks know they will be bankrupt if they have to show true value for all the shit on their books.
However the delusion is on its last legs as SRS looks tto be bottoming with a positve stoch. cross on the daily.
For laughs, you can read the CNNMoney and Fortune sponsored MSM view of the coming shortage in housing. Rather pathetic really.
http://money.cnn.com/2010/06/15/real_estate/new_housing_bubble/index.htm
Said it before.
I shorted my own house and sold in Dec 04.
Rented.
Covered my short position last December.
Outperformed just about everything.
(house bought has identical comp. a sale a month earlier that was 25% higher)
Based on my own observations, the actual bottom prices where I reside occurred in mid late 08 when I did see some sales that were at pre 1997 prices (which means that that they were the same as mid 1980s as prices had not advanced for 15+ years)
I strongly believe that if national home prices (inflation or nominal) revert to late 1990s level, the SP will retest the lows (and surpass it) as it would make the bankruptcy of 90% of all banks official.
Nothing would surprise me.
But in case of strong inflation, my fixed 30 year at 4.85% plus the wise one's $8k bonus made it a good deal.
Not mentioned here are the homes that the "owners" have abandoned, but the banks haven't officially foreclosed on. Also a (probably large) number of foreclosed homes that the banks haven't listed for sale, in fear of flooding a market already saturated with unwanted homes.
OK, This came to me embedded in an email and I could not find a way to condense. Sorry, but info is still good.
Subject: Research Flash from Radar Logic
Home Sales Have Shifted Toward Lower Price Segments Since 2006 Michael Feder, President and CEO Quinn W. Eddins, Director of Research New York, NY - June 15, 2010 - In this research update we examine fluctuations in sales activity within and between three housing price segments - less than $350,000, $350,000 to $900,000 and over $900,000 - from January 2000 and April 2010. During the housing boom from 2000 through 2005, sales of homes for less than $350,000 remained more or less constant on a year-over-year basis, while sales of homes in the $350,000-to-$900,000 range increased by 32% per year, on average. As a result, sales for less than $350,000 decreased from 87% of total sales in January 2000 to 60% of total sales in January 2006, while sales in the $350,000-to-$900,000 range increased from 11% of total sales to 36% of total sales. The shift in sales into the $350,000-to-$900,000 range was facilitated by attractive interest rates, readily available financing, and the general economic strength at the time, which combined to inflate home prices throughout the market. As a result, many existing homes that had been, or would have been, sold for less than $350,000 in 2000 and 2001 sold for $350,000 or more in 2005 and 2006. The shift into the $350,000-to-$900,000 range was also facilitated by the boom in new-home construction during this period, much of which was targeted to meet demand in the middle and high-end of the housing market.
In 2006, transaction counts in all price segments began to decline and growth in housing prices, as measured by the 25-MSA RPX Composite price, slowed and then came to a halt. Prices and transaction counts declined throughout 2007 and 2008 and then stabilized in early 2009. Transaction counts in the $350,000-to-$900,000 range declined by an average of 25% per year throughout the period, while sales of homes for less than $350,000 declined 22% per year, on average. Sales in the $350,000-to-$900,000 range decreased from 36% to 29% of total sales between January 2006 and January 2009, while sales for less than $350,000 increased from 60% of total sales to 68%. In a reversal of the dynamics during the 2000-to-2005 period, the shift back toward sales of homes for less than $350,000 reflects a decline in home prices in all price segments as well as a decline in demand for expensive homes due to the economic downturn and the paucity of housing credit, particularly jumbo loans. On average, home sales for less than $350,000 have increased 12% year-over-year during the months since January 2009, while home sales in the $350,000-to-$900,000 range have decreased 8%. Sales for less than $350,000 increased from 72% of home sales to 73%, while sales in the $350,000-to-$900,000 range decreased slightly from 25% of housing transactions to 24%. Recent data from the National Association of Home Builders suggest that new construction, at least the relatively small amount that there is, has started to reflect smaller footprints. This is probably a result of targeting sale price and backing into what can be built. Clearly, the existing inventory of newly-constructed unsold homes and the increasing inventory of recently constructed, foreclosed homes suggest a real inventory issue for the housing markets that may take some time to resolve. That said, we remain more bullish on home prices than home builders as the reset of prices to 2003 levels has clearly attracted new demand. The big question is how much inventory is still lurking and how will the perception of that inventory effect buyers' appetites and prices. © 2010 Radar Logic Incorporated. All Rights Reserved. Data presented "AS IS". Radar Logic does not make, and hereby expressly disclaims, any representation or warranty of any manner in connection with the information including, without limitation, with respect to its accuracy, completeness or fitness for any purpose. Forward email
Keep in mind the battle royale brewing now...FASB wants to return to some form of mark to market for the garbage portfolios banks are keepoing on the books whereas the Fed and Treasury want no part of that because of the instant insolvency it would create for thousands of US banks which are basically already insolvent since they can not survive just servicing loans and continuing to eat CRE and C&I loans going bad quarter after quarter.
The Real Estate bloodbath is a long way from over and until they just dump the shadow inventory on to the markets and foreclose on EVERYTHING that needs to be foreclosed on, we're just dragging it out and making it worse, year after year.
That is the key... any references for the FASB point?
If your mortgage is paid off and you have enough assets to cover any reasonable losses/claims why pay an insurance company?
Yesterday i called County Planning about doing a lot split so i could sell off a small piece of land. Similar-sized recently changed hands for $20k. They informed me their fee for a lot split is $5k !!! Way up from a few years ago. So the local govts are making land sneaky land grabs. I have a 25% partner and didn't even know it.