Colorado Springs: The 255 single-family homes started in the county during July were the fewest in any month since November 2002 and represented a decrease of 47.6 percent from July 2005.
Posted by Flamethrower at August 23, 2006 09:22 PMAMT loans? Do you mean ARMs?
Posted by at August 23, 2006 09:26 PMYes. Thanks for the correction.
Posted by Mary at August 23, 2006 09:38 PMWell, there are those of us who are glad to see a slow down in the escalating prices of homes. I have seen my personal property tax jump from $994.94 in 2003 to $1,421.41 in 2005, which of course increases my mortgage payments.
Posted by Judith at August 24, 2006 12:52 AMPrices. Are. Too. High. PERIOD.
I have friends from California who've scattered to such far-flung places as Ithaca, NY to Bismark, ND to find affordable shelter to buy.
For a long while I have said that much of the homebuyer market was made up by trade-up buyers; people who had been in their house for years, sold it for an obscene figure and took the profit and bought a bigger, more lavish home.
Once that market was tapped out, then who's left to buy a 2 bedroom Dolger house in San Francisco for $900,000?
Posted by Christopher at August 24, 2006 04:44 AMpeople who had been in their house for years, sold it for an obscene figure
Or they took their false equity and spent it on Suk-Vs and boob implants. If it crashes -and it certainly can, I've seen it happen before- they'll hold a note that is 100% greater than the value of their home.
I have seen my personal property tax jump from $994.94 in 2003 to $1,421.41 in 2005
Try to explain to a neo-con how current fiscal policy at the Federal level lead to increased local taxes and you get a blank look. Then they'll call you a socialist and wonder why you don't support the troops in Iraq. Neo-cons are a special breed of linear thinking idiot.
Posted by phidipides at August 24, 2006 06:03 AMGreat post n' links, thanks.
The reckless mismanagement of our country by the Criminal Republican party is "coming home" to roost.
This housing bubble was intentionally created by Republican Greenspan after the dot.com bubble (and its ensuing recession) to aid Bushco and the Republican Congress. It was also helped along by the Republicans immense tax cuts for the extreme wealthy, much of which went into investing in this oversupply of new housing, ultimately glutting the market.
They intentionally lowered interest rates to preposterous unprecedented levels to manufacture a fake housing boom. Naturally such absurdly low interest rates caused prices to skyrocket.
Now that interest rates have had to be increased (even slightly), ordinary people can no longer afford the new price level. But it takes a long time for housing prices to fall even a slight amount (many prices are tied to an actual mortgage and can't "fall" without the owner losing his shirt).
So the Republicans, in manufacturing a fake economic "expansion", basically wildly increased the price of American housing for the rest of our lives, without any corresponding real wage increases.
Lots of people are going to be wiped out. And interest rates are going to keep rising, so we're just starting to enter the woods.
This Republican gambit caused an huge oversupply of crappy, substandard, ugly, suburban tract housing served by miles of "freeways", converting countless acres of productive rural farmland into sprawling belts of big-box franchise shitland.
Sorry Kids, your nation looks like shit, we've wildly overinvested in suburban sprawl that requires cheap gas to function, and you won't be able to afford a house if you're just an ordinary working schmoe. But the Bushco "economy" looked "good" for about 4 years, so it was all worth it.
Posted by euzoius at August 24, 2006 06:29 AMthank you, mary.
this is the single best post on this important issue that i have seen. it is full of facts i had not heard about and very well-written.
it seems like all the chickens - domestic and foreign - are coming home to roost at about the same time. god help us if that happens. in additon to a number of well-known issues, we have an engulfing national debt problem that the bush admin has managed to keep "hidden" from the public.
Posted by orionATL at August 24, 2006 06:30 AM...property tax jump from $994.94 in 2003 to $1,421.41 in 2005.
Judith,
That's still only about half of what I pay quarterly in property taxes. If that makes you feel any better. :)
We have a neighbor several houses down who has her house up for sale. We got the dirt from another neighbor who likes to gossip and is friendly with the seller. Apparently the woman selling her home is divorced and has a mentally handicapped daughter. After her divorce she got the house but didn't want to go back to work since it would have meant she couldn't focus on caring for her daughter. She's been living on child support and equity mined from her home for the last four or five years. Now she wants to sell. It's a small house built on a piece of property subdivided off of an older property. There is no room for expansion at all. She's asking a ridiculous amount for the house because she needs to cover what she owes on it. When I heard what she was asking for this house my jaw dropped. There's no way. Especially now that the market has gone cold. Apparently she has no room to ask for less since anything less would leave her in debt to the bank. It's been on the market for months now. Houses in our area never stay on the market for months.
It's quite sad.
Posted by snark at August 24, 2006 06:33 AMj, good luck with you tax grievance, i've always thought market based assessment unfair if your house isn't on the market. if you haven't seen an assessor in ten years your increase reflexes market speculation not the real value if you where to sell. the situation; state and federal tax revenues not returning to municipalities, we pay up the government doesn't pay down.
the village i live in increased property taxes 20% last year and is looking at a possible 40% this year. ( lost legal battles over tax rates on a now privatized power generating station's declining revenues ) on some blocks there's a for sale sign on every other house. granted some of this is, "let's thro' three grand of plastic on the front of the place and make a hundred grand... " but there all heading up-state or down-south, happy to trade less services for less taxation, not back into the communities that put there kids through school.
but as of last week i'm homeless so fuck it all !!
Posted by mark miller at August 24, 2006 06:53 AMWe live in a suburb of Birmingham, AL and the annual property taxes on a house bought for $115k in 2000 (but now worth at least $170k bases on recent sales here and our relentless upgrading of it) is $600.
With no other debt besides our 15 year, 4.5% fixed rate mortgage, I think we're prepared to gut out the coming downturn.
Posted by ran at August 24, 2006 06:54 AM
Funny... there are 5 different economist quoted in the original times story... none of them are predicting that the sky is falling.
Mary only quotes from some blogger who sees the world economy caving in. Then states that economists are arguing whether or not the best housing market in the last 40-50 years is actually the 'worst' housing market in the last 40-50 years.
Sorry guys... there is no real argument here. Only one blogger quoting another blogger who is predicting gloom and doom that is not founded in any of the economic data available.
Most important piece yet on the subject? Let me go get my tin foil hat and see if that helps me see it.
Posted by C.H. Truth at August 24, 2006 07:00 AMC.H. Truth,
I didn't see Mary "flip out," so maybe I missed something?
What I did see was a post supported by a series of reputable links that show the nation's housing market is cooling.
In fact, the matter is sufficiently serious that CNBC is devoting more and more airtime to the colling housing market and what it means to you and me.
wtf "truth" when wages don't go up for twenty years while expenses increase 100's of % , and funding relies on winds of speculation, a shop without debt (the way i run mine) doesn't have a chance. i've been in the housing field for 35 years, swinging a hammer and trying to keep up with my bills. a sharp decline always happens after a two term republican administration. the fat cats will make it sure, they'll just shift to an other market till it's bled out.
Posted by mark miller at August 24, 2006 07:30 AMCornholio can't even spell rebuttal! Why would anyone click a blogwhore link from an illiterate troll?
Posted by iamcoyote at August 24, 2006 07:55 AM".... i need tee pee for my bung-hole " one of jude's (sp sorry ) funnier bits ! i can always use a laff ... thanks coyote
Posted by mark miller at August 24, 2006 08:21 AMFrom TheBigPicture's post, this tidbit from Barrone:
• 32.6% of new mortgages and home-equity loans in 2005 were interest only, up from 0.6% in 2000;
• 43% of first-time home buyers in 2005 put no money down;
• 15.2% of 2005 buyers owe at least 10% more than their home is worth (negative equity);
• 10% of all home owners with mortgages have no equity in their homes (zero equity);
• $2.7 trillion dollars in loans will adjust to higher rates in 2006 and 2007.
Clearly the housing market is under tremendous pressure and as it goes down, lots of people will be hurt.
Posted by Mary at August 24, 2006 08:45 AM• 43% of first-time home buyers in 2005 put no money down;
Good news for them is all they'll lose is a good credit rating. If they even had one to begin with.
Posted by snark at August 24, 2006 08:49 AMMary:
Nice post.
What we face here is Stein's law. Stein was a Republican economist (was head of Nixon's economic advisor council) and Ben Stein's father.
Stein's law says, "If something will not go own forever it won't." There is no what that the housing boom could go on anything like it has. We are 4 or 5 standard deviations from the mean. The correction is going to be sever and extend for 7 to 10 years.
It should be noted that there has never been a post WWII downturn in housing that has not also caused a recession. We are looking into the mother of all downturns which is going to lead to the mother of all recessions.
Interesting, Greenspan a couple of years was saying there has never been a national decline in housing prices. The NRA has said there needs to be a 10% decline of housing prices to get this market going (I think as usual this is optimistic). I can not believe people are still paying to hear this loser speak.
Mr. C.H. Truth needs to go check what the head economist for the NRA is saying. Up to about 2 months ago this guy was saying there was no bubble. This guy was near hysterics yesterday.
The general rule anymore is whatever anyone admits to it is far worse. If Iraq was near civil war then it is in a civil war. If house prices need to drop 10% then they probably need to drop 25% or more.
Our government has been playing a confidence (con) game on the US citizen. Keep them happy by talking happy talk and cook the numbers so they can not figure out what is going on.
Posted by Ishmael at August 24, 2006 09:25 AMmark, are you really homeless? You got family?
Posted by iamcoyote at August 24, 2006 09:46 AMI live in the sudsiest part of the housing bubble: the San Francisco Bay Area suburbs. The prices where I live are ridiculous, and peaked about a year ago. There are at least half a dozen homes for sale within a half mile of my home, and nothing has sold for at least 4 months. Asking prices have fallen 10-20% during that time. Anyone would be crazy to buy right now, since the prices will no doubt continue falling for a while. The Bay Area will soon be the negative equity capitol of America. The correction is going to be really ugly around here.
BTW, Judith, this probably won't make you feel any better, but an ordinary 3-4 bedroom house on 0.25 acre bought a year ago in my area would have costed $800,000 to $1,000,000 and the property tax bill would be on the order of $10,000 per year.
Posted by CA Pol Junkie at August 24, 2006 12:11 PMyou bet ! after 25years of running my own, very small, shop,
a downtrend in the housing market, ( i compete with illegals and unemployed carpenters from larger builders ) a back injury last summer,( w/no insurance for treatment ) two failed partnerships in an attempt to find work my back can tolerate. i have not money, shop or home. my kin are all over this great nation and not much better of, i do have a client with half completed cottage i can finish in trade for a few months but that's it for assets. so at 52 im' giving up my independence to becoming a wage slave ....
Mary:
CH Truth above seemed to think that you only found one economist to talk about the housing slowdown. Here is what another economist had to say:
``There is no question we have what could be called a housing recession,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, who forecast a drop to 1.075 million. ``I don't think we've seen the full effect of this yet on the overall economy.''
Posted by Ishmael at August 24, 2006 03:47 PMAs many of you have discussed, the housing market phenomenon is a reflection of interest rate fluctuations. We also know that interest rates are driven by the supply and demand for capital.
So what happened?
Countries with huge U.S. trade balances created historical low mortgage interest rates by buying U.S. Treasuries with their surplus capital.
This articledescribes this “foreign vendor” financing arrangement.
ThisAsia Times article describes the phenomenon as:
"Many economic commentators believe that as this excess foreign capital started sloshing around and through the US banking and financial system, it kept US interest rates low and thus fired the tremendous rallies in real-estate and stock-equity prices that have occurred in the past few years.”
The Bush Administration intentionally devalued the dollar.
The “foreign vendors” changed their financing strategies to buffer the impact of a weaker dollar.
The changes reduced U.S. bond market capital supply. The above
Asia Times article reported:
"But nothing good lasts forever. From reaching a high of $117.2 billion in August 2005, the TIC reports are showing a steady decline in foreign inflows, down to $74 billion in December, and $78 billion for January, the last month for which data are available. The nasty thing about this is that with a projected $975 billion current-account deficit for this year, the US is no longer getting what it needs from the world to maintain its lifestyle. The foreign-capital food supply is dwindling just as the hunger increases.”
In February 06, the Bush Administration reintroduced the 30 Year Treasury Bond – increasing demand for 30 year debt financing.
In summary, the budget and trade deficits, caused by the over reaching wars and tax savings to the rich, increased demand for capital and reduced supply from the “foreign vendor” financers.
You will not read or hear this information from the corporate media.
As many of you have said, the chickens are coming home to roost.
Two things -
1) it seems to my little mind the lack of foreign investors leaves only two options, raise taxes (aka political suicide) or inflation. Hang on to your houses they maybe the only thing you own that will keep up with the inflationary tsunami heading our way.
2) Mark Miller - are you in California? Check with the Department of Rehabilitation for help in bad back friendly careers.
Posted by Jim Hurt at August 24, 2006 05:09 PMJim Hurt,
1.What about regulating the "out of control military complex" (Eisenhower warned us)to balance the budget?
2.Investing renewable energy. We could become net exporters again.
Posted by smooth at August 24, 2006 05:15 PMTo get more cash flowing into the US, interest rates will have to increase.
In addition, short falls of buying by outside parties will cause the federal reserve to step in and become the buyer of last resort. This is how the inflation will start. The federal reserve will create dollars out of thin air.
Thirdly, the government will cut back on spending. This will be painful and hard to do in the middle of a recession.
Fourth, taxes will have to be raised. Mainly on the top earners.
Posted by Ishmael at August 24, 2006 05:32 PMIshmael,
While I agree that interest rate increases are required to stimulate capital inflows, the solution must involve reducing the need for large capital inflows. Tax rollbacks (including corporate welfare) must be coupled with reduced military and pork barrel spending.
Posted by smooth at August 24, 2006 06:03 PMSmooth:
I agree on all of your points. It will be a combination of the 4 points I listed. I just hope the fed does not fire up and start buying Treasuries. The fed eliminated the disclosure of M-3 growth a couple of months ago. Growth in the M-3 money supply is the best way to know if the fed is buying Treasuries and printing dollars. This will be very inflationary.
One thing I left out. There will also be a roll back on the when someone can draw social security. It might be set up that person can not draw social security until they are 70. Of course what is working against this is if the economy is in a real bad recession with no jobs.
Posted by Ishmael at August 24, 2006 06:10 PMEvery cloud has a silver lining. In this case it is the Federal debt. While increased interest rates will be required to get the Chinese (for example) to buy Treasury bills/notes,they still have to do something with all those Wal=Mart $s.
The 30 year bonds were issued to lock in (relatively)low rates. The 2007 budget at CBO shows,I think,a roughly 10% average interest rate on the existing debt. Also,$4.5 trillion of the debt is held by the public,the rest is interagency debt.
Okay, I know there's a lot I don't understand about taxes and economics. I especially don't get how the idea that "taxes are political suicide" continues to seem so carved-in-stone. (Everybody says so; this is not a criticism of the above commenter.)
Rolling back the tax cuts for the extremely wealthy (which can only be regarded as a tax increase), retaining the inheritance tax, doing whatever it is that needs to be done about corporations locating themselves off-shore - how long can any of this be credibly regarded as political suicide? Do I and people like me have to "re-frame" the issue ourselves? Which is to say, do I have to convince them that not raising taxes on the wealthiest could bring about political homicide?
Posted by larkspur at August 24, 2006 06:52 PMLarkspur,
In the above linked Asia Times article, Julian Delasantellis (an international business professor in the United States) addresses responsiblitly issue. He said:
"On the first day of class, business teachers like me love to introduce our sleepy students to the concept of TANSTAAFL - there ain't no such thing as a free lunch. The United States may soon be introduced to the concept of TANSTAAFE - there ain't no such thing as a free empire."
Specifically, will the nation still think it's so important to control the sands of Samarra, or the streets of Fallujah, or, for that matter, those of Baghdad if, like the signs say in US doctors' offices, "payment is expected at the time of service"?
This reality flies in the face of the brainwashing and pandering provided by the politicians and the corporate media. I'm afraid that the uninformed and falsely entitled public is a key part of this problem. This mental fantasy is a barrier to the public holding the government accountable.
Posted by smooth at August 24, 2006 07:29 PMa
Posted by coldheart at August 29, 2006 11:13 AM