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maddezmom Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 09:17 AM
Original message
Housing Starts Tumble Unexpectedly
By Mark Felsenthal

WASHINGTON (Reuters) - U.S. housing starts plunged unexpectedly in June to their lowest level in more than a year as rising interest rates slowed the hot housing market, a government report showed on Tuesday.


Permits, a sign of builder confidence in future demand, fell to their lowest level since February, posting the biggest monthly decline in more than ten years, the Commerce Department (news - web sites) said.


Homebuilders broke ground at a seasonally adjusted annual rate of 1.802 million units last month, down 8.5 percent from an upwardly revised 1.970 million the previous month. It was the biggest drop since a 10.7 percent tumble in February 2003.


Analysts had been expecting starts to edge up to 1.99 million units.

~snip~
http://story.news.yahoo.com/news?tmpl=story&cid=580&nci...
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Misinformed01 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 09:19 AM
Response to Original message
1. Unexpectedly for WHO?
Or is it for WHOM?

Whatever, this is a load of shit; this country is in trouble.
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TahitiNut Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:29 AM
Response to Reply #1
10. My response as well. This was totally expected.
Housing starts are almost always a lagging indicator of serious systemic flaws in the economoy, with lags prolonged by artificially depressed interest rates.

This summer will see the long-delayed collapse of the housing market, imho.
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:33 AM
Response to Reply #10
13. Housing starts are not a lagging indicator.
Well, yes, they are a lagging indicator of the housing market (with sales being the leading indicator and permits in the middle).

But for the economy as a whole, housing starts are a leading indicator... not lagging.

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TahitiNut Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:58 AM
Response to Reply #13
21. Please try to distinguish between the 'market' and the 'economy.'
Yes, housing starts are typically viewed as a 'leading indicator' of the market. If you reread what I posted, I was careful to focus on systemic economic weaknesses - what we're seeing. The Fed's response to a single-ended (high-end) availability of cash and an imbalanced inflationary pressure is to raise interest rates, "signaling" a general tightening (and refocusing) of investment capital. The major problem in our economy is one of increasing bifurcation (increasing banana republicanism). The current (non-traditional) predominance of ARMs, drastic reductions in employment, boomer retirements, dislocation of existing jobs, and a host of other non-traditional systemic weaknesses hits T&E, durable goods (sans housing), consumer goods, and then housing. The housing market is headed for a drastic reduction - except on the very high end. The residential construction industry is prototypical in how slowly it responds to systemic weaknesses, particularly since its regional base is so non-"fungible" (the 'goods' are not transportable, inhibiting relocation of supply to meet demand).

The 'market' has nearly become a contraindicator of the 'economy' in many respects.
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Tandalayo_Scheisskopf Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:47 AM
Response to Reply #10
15. Anecdotal Evidence...
From a local realtor in NJ(Warren County):

Housing sales suck. Nothing is selling. 70 miles from NYC, at the furthest point.

Next up: Housing prices start to fall.

After that: Blood. Lots of bleeding.
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jwcomer Donating Member (177 posts) Send PM | Profile | Ignore Tue Jul-20-04 11:30 AM
Response to Reply #1
34. for whom
For what its worth, it is "for whom."

A good trick is to substitute he/him for who/whom. In this case, one says "for him" not "for he" and thus you know to use "whom".
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Misinformed01 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 11:38 AM
Response to Reply #34
35. Beautiful
Thank you.

Stephanie
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Jackpine Radical Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 02:54 PM
Response to Reply #34
55. As in "for whom the bell tolls."
It tolls for us.
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RUMMYisFROSTED Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jul-21-04 12:42 AM
Response to Reply #55
70. ...loudly.
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progressivebydesign Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 01:56 PM
Response to Reply #1
49. When housing starts tumble in good weather.. it's a BAD thing.
This should be prime building time. Raising the interest rates was incredibly foolish, and done only as a political panacea. Greenspan has overstayed his welcome.. he's a political hack, obviously.
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 02:04 PM
Response to Reply #49
51. It's a seasonally adjusted number.
The "good weather" is already figured in to the number.

The reported figure is annualized.
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stevebreeze Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 05:17 PM
Response to Reply #1
62. Who? the same people who didn't see the market as overpriced
in 1999. When Greenspan raises interest rates after Kerry's election we will be in even deeper.
:kick:
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Sub Atomic Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 09:21 AM
Response to Original message
2. Everything will be OK
In a day or two, the * administration will find some of those pesky housing starts in the cellar (with Saddam's WMDs) and announce that those idiots at the Commerce Department need to look around some more before they announce that all of those new houses are no longer being built.

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DBoon Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 09:24 AM
Response to Original message
3. And interest rates haven't even started upwards!
All hell will break loose when they do!
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gasperc Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 09:25 AM
Response to Original message
4. ooops
WE NEED MORE TAX CUTS, WE NEED MORE TAX CUTS.

I wonder how the GOP is spinning this mornings WSJ article that 76% of the tax cuts have benefitted the top 20% income earners. No further breakdown provided, although it would surprise me if 90% of the 76% was benifitting the top 5% of income earners.
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Ripley Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 09:28 AM
Response to Original message
5. I've noticed houses in my area sitting on the market a long, long time...
The only ones that seem to be selling are cheap used homes or the fabulously rich ones (over $400,000).
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Jeff in Cincinnati Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 09:29 AM
Response to Original message
6. Can't buy a house on the Minimum Wage!
It's going to dawn on people (hopefully not too late) that the Bush Recovery is all about former union mill workers who now wear paper hats working the drive-thru.
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Zynx Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 09:34 AM
Response to Reply #6
7. Ahhh...But you can load up on debt. That's the American Dream.
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:25 AM
Response to Reply #6
9. When have you ever been able to?
Even with incredibly low interest rates, a minimum wage salary qualifies you for about a $40,000 mortgage.

When have you been able to buy a house for that?
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mbperrin Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:45 AM
Response to Reply #9
14. Here's 9 in Odessa, Texas
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Tandalayo_Scheisskopf Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:48 AM
Response to Reply #14
16. We have a name for homes like that:
Edited on Tue Jul-20-04 10:51 AM by Tandalayo_Scheisskop
Shitholes.

On edit: Odessa TX? I think not. First, it's TX, which was once paradise, but is now the capitol of pissing on boots and announcing it's raining.

Second, what is the job base like there? Lots of work? Well, from what I have heard, there ain't that much work in that neck of the woods. Either.
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mbperrin Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:57 AM
Response to Reply #16
20. Thanks. I paid $32,000 for my home ten years ago here and
have lived here half a century. Did you actually click on any of the pictures? They're not McMansions, but they're very typical VA and FHA homes built in the 50s and 60s just like the ones I grew up in.

Course, in your neck of the woods, all folks are smart, scenery is great, and jobs are plentiful and high paying as well. Education system is wonderful, health care is abundant, water everywhere, no bugs, local politicos savvy and tuned in, state government enlightened and working hard for every citizen.

Right?
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Ripley Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 11:02 AM
Response to Reply #20
23. LOL.
Funny! I was wondering why that guy had such a snooty attitude. Sometimes I agree with repukes on that coastal "attitude." If you don't live in NY or CA, you're a hick and you deserve whatever shit you're in because you don't just move to their state.
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pbeal2 Donating Member (3 posts) Send PM | Profile | Ignore Tue Jul-20-04 11:41 AM
Response to Reply #20
37. No offense but price reflects demand
There is a reason you can find 29k houses in Odessa TX. if I am not mistaken Odessa is still ag based township.

I'm sure its a great place to live if you have a low paying ranch hand, feed store, fast-food or grocery clerk job. Its also likely a excellent place to live if you are retired.

But say you want to do something other than Cow tipping for fun, want to eat something other than Blue plate cuisine, or shop someplace other than Walmart. Well you have to drive to Abilene or El Paso either one of those is pretty much a 6 hour drive.

I grew up in a small ranch centric community in the southwest not in Texas but surprisingly close to Odessa, I live in Minnesota now and compared to where I grew up.
"all folks are smart, scenery is great, and jobs are plentiful and high paying as well. Education system is wonderful, health care is abundant, water everywhere, no bugs, local politicos savvy and tuned in, state government enlightened and working hard for every citizen."

House prices are stupid high and we do have some nasty bugs but then people want to live here.
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mbperrin Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 12:49 PM
Response to Reply #37
44. Odessa hasn't had significant ag since 1920s.
Abilene is 3 hours away, and El Paso 5. Largest employers here are school district, regional hospital, local branch of UT, city, county in that order.

There is a feed store all right (one for a town of 92,000). We have a local symphony, community theater, drama programs at both colleges as well.

New houses in the $100k range are being built. This area was petroleum based extraction until Reagan killed that. Been diversifying into education, health services, and distribution services since then; interstate 20 runs through, railroad, couple of airports.

Maybe you need to take another closer look - there's far more ag in Abilene than in Odessa!

No offense.
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Career Prole Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jul-21-04 12:07 AM
Response to Reply #37
69. Don't waste your time on Abilene...
...trust me. It's not worth the trip, I'm afraid. :shrug:
Welcome to DU, pbeal2! :hi:
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Media_Lies_Daily Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 11:24 AM
Response to Reply #16
29. And we have names for posters like yourself,....
...but the moderators won't allow me to use any of them.
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Pachamama Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 03:24 PM
Response to Reply #29
59. Definition....
Scheisskopf means "Shithead" in German....

:hi:
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louis-t Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 11:19 AM
Response to Reply #14
26. The home that is $44,500 would sell for $140,000
in my neck of the woods. I can only imagine what the multi-million dollar fortress of solitude that * lives in would be worth here.
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FrankBooth Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 12:18 PM
Response to Reply #26
42. It would sell for $350,000 -$400,000 in my neighborhood
Just because the property alone is so expensive here. (upper Queen Anne area of Seattle.)


I make a very good salary and I still couldn't afford to buy a home by myself where I live - my only options are to move to the burbs or buy on Beacon Hill, which is one of the historically rougher neighborhoods, and even that isn't exactly cheap.
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louis-t Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 01:43 PM
Response to Reply #42
47. Like, wow! I thought Boston was expensive.
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LibDemAlways Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jul-21-04 01:26 AM
Response to Reply #42
72. A 3br/2ba 25-yr-old tract house
would sell for 650K in my neighborhood. Ridiculous - but true.
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 11:22 AM
Response to Reply #14
27. Perfectly respectable little homes
Looks like even though I've moved out of the "ultra hot" market near DC, I'm still nowhere near the cheaper end of the market.

Maybe I should just move? I could almost retire if I could get a house for 35k! (assuming my employer wants to pay me my pension twenty years early - lol).
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sadiesworld Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jul-21-04 10:39 AM
Response to Reply #14
75. OMG!
They have a condo for $7,500!!!!!!!! THAT'S amazing.
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Jeff in Cincinnati Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:52 AM
Response to Reply #9
18. About Thirty-Five Years Ago
Back when the minimum wage had a purchasing power of just under $8.00 per hour. A two-income family on the minimum wage could, in fact, afford an inexpensive home.
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hatrack Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:54 AM
Response to Reply #18
19. And with one full-time M.W. job now producing $10,712 annually . . .
. . . well, you get the picture.
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 11:15 AM
Response to Reply #18
25. 35 years ago the minimum wage was $1.45/hr


And mortgage rates were a fair bit higher while qualifying ratios were tighter.

And I was talking about a single income, but even with two, that didn't get you more than about a $10,000 mortgage (mabe 15k). With virtually no PMI available at the time (and not allowing LTV greater than 95% to begin with), you had to come up with a down payment on that MW salary as well.

With no other debts, one MW income wouldn't get you much. But you're probably right... with two you could just get in to a decent home.


But things got out of hand quickly after that. My parents house ran a monthly payment in 1980 higher than what I'm paying now and it would have been far worse just a year or two later.
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Jeff in Cincinnati Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 11:38 AM
Response to Reply #25
36. $1.60/hr in 1968
That was the year I was using. Based on roughly $6,000 annual income in 1968, that would have purchasing power of $32,000 in 2004. My friendly online loan calculator says that the couple could afford a mortgage of some $90,000. I personally think that's a far too generous figure, but certainly in some parts of the country even $50,000 can buy a modest home.
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 11:57 AM
Response to Reply #36
38. Housing prices don't move with income levels
There's obviously some correlation, but not to the MW levels. You can't compute what the 1968 MW would have been "worth" today and then look at what that buys you (especially since the lenient lending practices which you - correctly - bemoan did not exist at the time).

But you don't have to... you can calculate how much it would have qualified you for THEN and see if there were any houses available in that range.

It turns out that there WERE (if you count TWO MW salaries). My parents bought a little cape cod outside Boston in 1968 for just a tad above that $15,000 line. It resold in the early 90's for around $200k and recently was listed in the half million dollar range.

Definitely something you can't get for MW these days. :eyes:
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Jeff in Cincinnati Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 01:00 PM
Response to Reply #38
45. As much as real buying power of the MW has lagged...
...housing prices have soared. I've had a "nibble" on my resume from a company in Boston and I've been looking at housing prices in the area. I don't think I can afford a house in Boston, either!
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 01:20 PM
Response to Reply #45
46. I've had similar problems.
Edited on Tue Jul-20-04 01:21 PM by Frodo
After having my company (a bank) acquired once (everything worked out fine for us), I'm sensitive to the possibility that it could happen again. But the new bank is big enough that there are only a handful of other companies who COULD buy it.... a couple are in NY.

Frankly, I don't WANT to live in New York... but if I did? I couldn't afford our current standard of living on TWICE my current salary. Not even close. Even if I were willing to go back to 75 minute commutes (hated it) I couldn't do it. The house alone would probably cost over a million. Heck, I bet there are 1BR efficiencies that cost as much as my house if I wanted to live as close in as we do now (and four kids do NOT fit in an efficiency).


"Nibble" on your resume? What do you do and where are you?
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Jeff in Cincinnati Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 03:02 PM
Response to Reply #46
56. Sticker Shock
I'm in Cincinnati where an average house in the first-ring suburbs goes for less than $200,000 (often a lot less). The McMansions on the new golf course go for $300-500,000. According to an online COI calculator, I'd have to earn 190% of my current salary to afford a similar house to the one I already own.

So it's going to take more than a "nibble" and a good offer (I'm in medical research administration) to get me to move.
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 03:10 PM
Response to Reply #56
57. Maybe we can swap houses when the time comes?
A couple of the banks on the list are HQ'd in your area, so I looked at Cincinnati at the same time (preferable to NY).

While at the same time... the Winston Salem area is becomming pretty big in the medical research field, though Raleigh/Durham is probably your better bet - and they keep coming up at the top of the "best places to live" stats.

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Jeff in Cincinnati Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jul-21-04 10:50 AM
Response to Reply #57
76. LOL!
My place comes with two kids...You game?
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louis-t Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 11:13 AM
Response to Reply #9
24. Ahh, but you don't understand.....
I am a Realtor, you can buy a home with 0 down and have the seller pay up to 6% of your costs through FHA with one of the buyer assistance programs (a scam that uses a dummy charitable organization, although perfectly legal). If you make double the minimum wage (which still isn't much) you can afford a tired old 2 bedroom home with no basement that needs a lot of work in my area. These programs have been available for a year or two, but this year I have seen a tremendous increase in their usage. Some Realtors report 90% of their business comes from these programs. Then when you lose your job, the bank takes back the home and sells it again. Traditionally, banks didn't want to be in the Real Estate biz, but now they are trying to take it over. The forclosure market is BOOMING. This, and low interest rates are the ONLY reason Real Estate mkt has been good. I agree with poster that said only the cheapest and the most expensive homes are selling.
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 11:24 AM
Response to Reply #24
30. As a banker I can tell you...
We STILL don't want to be in the real estate biz.


The rest of your math adds up assuming you are in the right market.

But people keep introducing "double the MW". What if you don't HAVE two people working?
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louis-t Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 01:49 PM
Response to Reply #30
48. Good question Frodo, but I have to ask you...
if banks don't want to be in the Real Estate biz, then why are bills being brought before Congress that allow banks to control the Real Estate industry? NAR has been fighting them off for years but I've gotta believe sooner or later they are going to get their way and I will be working for a banking conglomerate and on salary (if I am lucky enough).
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 02:02 PM
Response to Reply #48
50. Here's your answer... "they aren't"
Banks aren't trying to control the real estate buisness. I know you've been blinded by the Realtor talking points, but all they're trying to do is add Realtors to their staff so that they can offer a new product. Have you heard some of those NAR adds on WHY banks shouldn't be allowed to get in to real estate? The voice mail "press 1 to open a checking account" etc?

The whole argument boils down to "banks give poor service".

Their REAL problem? Banks would likely pay their agents a salary with incentives instead of beign 100% commision AND they would likely charge a lot less. That eats in to the Realtor's pocket.

The ONLY way they would be able to "control" the industry is if they offer a substantially better product at a lower price... which, while it would be bad for you, would be good for consumers.

Anyway, if it ever get's passed I think you'll see it regulated in a way where that can't happen. We'd get marketing benefits, but it would basically be a new Realtor in town with a different name.


So yes, if we ever get in to real estate, it will be a lot easier to handle properties that we have to forclose on. We won't have to sell them at auction and take so many loses. Until then? With the exception of the less ethical lenders out there... we make loans with the anticipation that people will pay them back - NOT planning on popping their house and selling it (at BEST you get your money back - usually it's much worse).
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louis-t Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 02:28 PM
Response to Reply #50
53. The answer is not "banks give poor service"
and if you think that banks in the long run would SAVE customers money, don't count on it. Having a monopoly on the entire Real Estate transaction is not condusive to lower prices and you know that. Yes, lowering commissions would be bad for Realtors. If some entity offered to watch people's money and offered them 5% interest with no service charges, banks would have a pretty rough time. Realtor commissions are 100% negotiable. Can you see the banking industry offering this? Don't make me laugh. The cost of selling a home might come down, but I guarantee you that the cost of buying would go up. Banks are not interested in the Real Estate mkt to save customers money. They are interested in contolling the entire process and all of the money and that can't be good for consumers, neither money wise nor service wise. By the way, my bank just lowered the passbook savings interest rate from .90 to .65% (I believe in anticipation of rising interest rates). I wonder if $20,000 wil fit in my mattress?
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 02:42 PM
Response to Reply #53
54. LOL. The "big bad bank"
Edited on Tue Jul-20-04 02:48 PM by Frodo
You poor guys I really feel for you.

I sold my house last year, but used a realtor because I had to for the relocation benefit. I have some background in real estate (probably been on the MLS longer than two of the three agents I interviewed). I had to argue up the asking price a bit and disagreed with some of the marketing plan (cleaned the carpets rather than replaced or offered an escrow for instance)

The house sold in one day for more than we asked.


Did he "earn" that commission? lol. The BIGGEST expense by FAR in buying/selling real estate (other than the price of the house itself) is the realtor commission. And the only reason they get it is because they have a strangle hold on the market.


Seriously. You can SAY commissions are negotiable. You HAVE to if you want to avoid a price fixing lawsuit. But they don't vary all that much. And no, a bank wouldn't likely "negotiate" the fee... they'd just come in and advertise a 5% commission to their existing customers. And the effect would be exactly what you expect to happen when someone comes in and offers a better deposit rate.

And Realtors are equally quilty of packaging the services for their own benefit. You think we don't know that many use "recommended" home inspectors? Or settlement companies? Or mortgage brokers? etc etc etc. You think we don't know about the kickbacks there? The ahem... "incentives" to keep using certain people?

If I'm underwritting a mortgage, I would MUCH rather have it be one of MY appraisers rather than one picked by the broker/agent who KNOWS what the house has to come in at to get the deal done.


BTW, that .9% was well above the amrket averages. I haven't been in the branches for awhile, but lots of banks are well below that.


"If some entity offered to watch people's money and offered them 5% interest with no service charges, banks would have a pretty rough time."

It's called a "credit union". And your tax dollars and mine subsidize them offering above-market rates and incrdibly low service charges to do just that. Banks are doing just fine. Nobody else COULD do it. Because if you could turn a profit offering that much better rates and stealing all the business... it would BE a bank that trying it. Lots DO... until they go under or get bought out - they grow like a colony of rabbits on that pricing, but they never earn a penny.

How do you expect someone to pay 5% on that passbook (like we did when I started in banking) and even break even when you have to loan it back out at 6% or 7%???
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louis-t Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 07:37 PM
Response to Reply #54
64. I see, Frodo
banks are entitled to give someone .65% on their money and then loan it back to them at 7% and charge fees for nearly everything. That's OK. But it's not Ok for a Realtor to get 3% (half of the 6% I charge a seller) to facilitate the sale? Stop looking down your nose at Realtors. What does the Realtor do for that commission? Probably a lot more than you realize, and a lot more than the bank does for its money. Buying and selling a home can bring out the worst in people. We are crisis managers, hand holders, negotiators, psychologists, but mostly we are experts in our chosen field. And your discount rate of 5% is laughable. I've sold a lot of houses that had 5% or less for commission. You'd have to change existing price fixing laws to do what you are saying. Who are you going to hire to work for you? The top selling agents? They will not take a cut in pay unless banks take over completely and force them to work for less. So then, if the bank makes money and the Realtor makes the same money as before, how are you going to save the customer money? Most brokerages operate at a small profit if any. Some at a loss. I know, I've seen the numbers. The broker/owners make their money selling Real Estate. Do you understand the cost of doing business? E & O insurance, a staff that can handle the calls quickly and efficiently (banks are NOT on the cutting edge in that department), supplies, network systems,expanded office space, blah, blah.... I don't know what state you are in, but here we don't "choose an appraisor that will give us the price we want". The bank chooses the appraisor, either in-house or from a pool. Appraisals are strictly regulated. And I don't get "kickbacks" from anyone. I can use whatever mtg co or title co I want and I choose Home Inspectors that are reasonable in price and do a good job.

"How do you expect someone to pay 5% on that passbook (like we did when I started in banking) and even break even when you have to loan it back out at 6% or 7%???" :nopity:

How can you expect a Realtor to put in the hours of training and in the field, working weekends and nights, 10-12 hours a day and not get paid??? You left your office at 5pm. It's 8:25pm and I'm still here. And I'm 3 weeks past the closing date on one of my listings because the underwriter decided to do an 'appraisal review' on a house that sold for asking price in 10 days because it was priced right. We have waited 2 weeks for them to set the second appraisal. They just set it for NEXT Tuesday. No pressure in this biz. Next time you have to work on Sunday, I'll cry you a river.
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 08:48 PM
Response to Reply #64
65. Lol!
Edited on Tue Jul-20-04 08:54 PM by Frodo
I was pulling your leg buddy! Like college rivals knocking the other team.

I love real estate. I'm not "looking down my nose", just defending another noble profession. I'd be in the business myself if I were single (the ups and downs of the commission only world are not good for my digestion - or the support of my family). I'm closer to the mortgage side of the business, but it's very similar. $200k one year and living off your savings the next. You have to have the stomach for it.


I do find it funny that you doubt my ability to judge the "cost of doing business", but you want me to pay salaries and branch mortgages (plus advertising, dividends, support, systems, utilities, training, etc etc etc) on the 2% gap between a 5% savings account and a 7% loan (really a 1% gap when you consider that ballpark 1% of loans go bad). But you were "in the moment" so I'll cut you some slack.

Of COURSE agents work for their money (in the average market). It's just that prices have gone WAY up in some areas and 3% of an 80% higher gross price is still 80% more real dollars than just four years ago for LESS work (because the houses are selling so fast). The last market analysis I saw for my old market put "sales chances" (a local figure derived from dividing listings by monthly sales) at OVER 110%!!!. That's right, more homes sold in the month of May than were on the MLS on May 1st. Several DC area counties had AVERAGE sales times in under two weeks. By comparison, May of 1995 had a "sales chaces" number of 10%.

It doesn't take a whole lot of effort to sell homes in that environment. Especialy when you consider that you all have a couple listings that hang around forever because the owner has outrageous beliefs about the value of their home and you KNOW it's going to sit there for a few months until they get their act together.

My real estate experience is in VA, and the situation I described is not far from the truth. You couldn't pick the appraiser, but you picked the mortgage broker (and the broker usually picked the appraiser) and the home inspector and the termite inspector, and the settlement agent, and the attorney, and, and, and...(many of these were actually affiliated with Long&Foster or ReMax or whoever).

And all of them knew that future referals hung on keeping the agent happy. There have been "eyewitness" stories on TV documenting some of the stuff that goes on. Appraiser who gloss over problems to get the deal done. Appraisers who boost the value too high so closing costs can be rolled in.



"And your discount rate of 5% is laughable. I've sold a lot of houses that had 5% or less for commission."

Less than 3% of the homes I've seen on the MLS list anything lower than 3% for the buyers agent (and more than that are at 3.5%). Add to that the fact that the Realtor who runs the shop gets between 1.25% and 1.5% and the agent can't cut the price too much. Going from 6% to 5% overall cuts the agents piece of the pie by two thirds. And the bank would be able to advertise 5% without breaking any laws. We can set our price wherever we want. What we CAN'T do is agree with all the other companies to charge 6%. We can undercut the average all we want (unless it becomes a monopoly issue). And no, they wouldn't take the "best" realtors. They would take second or third tier people whose output could benefit from the things a multi-billion dollar company can provide... like existing networks and equiptment and offices and CLIENT BASE. Tens of thousands of people who alreeady trust you with their credit reports and retirement plans and home loans and car loans and college funds and things they sometimes don't even tell their spouse about. Agents who would love to know that the paychecks will keep rolling in when January rolls around and nobody is buying houses. Who just might like to deal with a mortgage company who WON'T hose you over (like your seeing right now) because you both work for the SAME PEOPLE.

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louis-t Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jul-21-04 01:54 PM
Response to Reply #65
78. I do find it funny that you doubt my ability to judge the "cost of doing b
I'm sorry Frodo, I'd forgotten how much it costs to have a ballpark named after a bank. And you are right about a sellers mkt requiring less effort by listing agent. However, if you are working with a buyer in that environment, you work VERY hard just trying to get an offer in ahead of the rest or better than the rest. Give me a sellers mkt anytime. Michigan has been in a buyers mkt for 5 years. In a sellers mkt, the seller gets what they want, the buyer is happy to get ANYTHING and listings sell fast. In this mkt, sellers still have unrealistic expectations, buyers are extremely picky, and listings stay on the mkt 6 mo to a year unless they are aggressively priced and marketed. And the only homes that are selling are either bottom rung or top rung. And the expensive homes aren't selling all that fast. We have seen % of listings that sell go from 80% to 35% in just a few years. And our previous, wonderful, Repub Governor left a legacy of debt (which he lied about), a property tax system that is becoming unbearable to home buyers, and loss of manufacturing jobs (even after giving corporations huge tax breaks).

"Add to that the fact that the Realtor who runs the shop gets between 1.25% and 1.5%" Not where I work. I am on 100% program but I pay for everything: my office rent, ads, signs, cards, phone, everything. Cost of doing biz for me is 30K per year.


By the way, the Realtor you used in your transaction paid a "kickback" of up to 35% of his/her commission to the relo company.

"Stranglehold"? People are free to sell their homes themselves, but less than 20% nationwide are successful at it.

"Who just might like to deal with a mortgage company who WON'T hose you over (like your seeing right now) because you both work for the SAME PEOPLE." You make a lot of assumptions in your arguments and rely on "a few bad apples" to make your point. "Because you work for the same people" doesn't mean you can't still get hosed.


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Avalon Sparks Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jul-21-04 01:09 AM
Response to Reply #64
71. I totally agree with you Louis-t~
Buying a house was the most stressful thing my husband and I ever did in the 15 years we've been together.

We had a wonderful realtor that I would have gladly paid a 10% commission too, for all the work, crisis management, and refereeing she did. We would never have found the wonderful house we did without her. She helped us weed through 60+ houses in our search.

The inspector's she recommended were awesome, and so was the insurance agent who came through at the last hour when my State Farm agent of 13 years dropped the ball.

I won't even attempt to buy another house or sell this one, without her.
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jul-21-04 09:37 AM
Response to Reply #71
73. "had a wonderful realtor that I would have gladly paid a 10% commission"
Not hard to say when it's the OTHER guy paying the commission. :-)

Buyer's LOVE their agents. You get thousands of dollars worth of service and SOMEBODY ELSE pays for it.


It's one of the reasons so many agents have gone 100% "Buyer's agent"... it's the FUN part of real estate (IMHO). You get to help people find their dream homes and they don't have to pay you anything.

I bought my last home without a realtor and saved over $5,000. A realtor would have to throw in back rubs, two years of lawn care and washing my cars, and a dozen nights of babysitting my kids to earn $5,000 of my money. But then again, I knew that market like the back of my hand and it took some time to find just the right place.

When we moved to THIS home I didn't know the STATE, let alone the communities around Winston-Salem. Not only did I use a realtor... I recommend her to everybody. Buyer's agency and financial planning are two of the most rewarding careers out there. You can really help people achieve their dreams.
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louis-t Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jul-21-04 02:02 PM
Response to Reply #73
79. "I bought my last home without a realtor and saved over $5,000."
How did you figure that out? You say that a Realtor would have done all that to get "your" money and then say that the seller pays the commission. Frodo, I respect your opinion on political matters but when it comes to Real Estate, I think you need to get back to work figuring out how to charge more for returned checks.
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CheshireCat Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 11:27 AM
Response to Reply #9
33. 20 years ago in rural SC
you could get a nice 2 bedroom brick home for $40K.

I know because I bought one in 1985. Today the same house would sell for $75K.
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eridani Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 04:30 PM
Response to Reply #9
61. In 1965
My mother-in-law was abandoned by her husband then. She got a job at minimum wage and got into a rent-to-buy deal for a two-bedroom house for $8000 in a lower rent area of Seattle. She sold it to us in 1982 for $32000, though she could have gotten $40000 for it. House and land are now assessed at over $150,000.
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Jack Rabbit Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:12 AM
Response to Original message
8. How about that Bush recovery!!
The housing industry needs to stop building family units and start building vacation homes for the idle rich who can afford such things even at increased interest rates due to increased government borrowing to covering the bill the Frat Boy is running up.

After all, the middle class just can't afford to be middle class anymore in an era of falling wages and exported jobs. Why, if corporations had to pay them enough to live on, they couldn't afford to pay them at all. Who do these people think they are, asking for a hand out from their employers just because they work for it? Who needs a middle class, anyway?

It is up to the idle rich to make up for the decreased purchasing power of what used to be the middle class by buying expensive second homes and other toys they don't really need. American industry needs to readjust and cater to the needs, whims and desires of the idle rich.

Get with the program. Fish sticks for the masses is so yesterday. We have to retool our industries to produce caviar for the elite.
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:30 AM
Response to Original message
11. Calm down everyone.
It's going to take a lot more months like this before the housing market even gets back to normal.

It's a long way to go before this is a sign of a weakening economy. It's more likely the quick bump up in rates a couple months ago cause a qhole bunch of people to hop off the fence a bit earlier than expected (overly large numbers tha last couple months) so there are fewer people out there looking even though rates have settled back down a tad.

There won't be any scary numbers in this series before election day.
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louis-t Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 11:22 AM
Response to Reply #11
28.  It's more likely the quick bump up in rates .....
you hit the nail on the head Frodo.
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jayfish Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 11:26 AM
Response to Reply #11
31. How Does This Look When Combined...
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 12:06 PM
Response to Reply #31
39. It all fits fine - except for the "maggots" line
But I'm a bit squeemish when it comes to eating isects. :eyes:

Don't mistake headlines that are "bad for Bush" with "bad for the economy".

The job growth article talked about "slower than expected" job growth (bad for Bush), but it was still growth (good fro real estate).

The auto sales data only aids in keeping rates down (mortgages have gotten quite a bit cheaper over the last couple weeks).

No comment on the maggots.

None of it adds up to "plummeting housing prices". Just look at the "bad" news in the housing report. How many new homes were started? How does that figure compare to the 90's? This is "not quite as rip-roaring hot" not "collapsing real estate market".
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nolabels Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jul-21-04 02:30 PM
Response to Reply #39
80. I hate maggots too
Our So. Cal local Reich wing rag(with corporate HQ's in Texas) had this story today, and not a mention of the downturn story. I think it had one online, but scrubbed it (total propaganda is what it is)

Will the boom bust?

The Inland housing frenzy


10:20 AM PDT on Wednesday, July 21, 2004

By JACK KATZANEK / The Press-Enterprise

The building, financing and furnishing of homes has fueled the Inland economy during the last several years - a period most of the country considered lean. Now economists are being asked if a feared reversal of recent home-price gains will sink the Inland economy.
Recent

Their answer, in a word, is no.

"The housing market has been the number-one economic driver for Southern California for the last two or three years. It's the key component," said D. Linn Wiley, president and chief executive of CVB Financial Corp., parent company of Citizens Business Bank. "The continued building of homes is important for continued expansion, particularly because of the jobs created
(snip)
http://www.pe.com/business/local/stories/PE_Biz_economy...

If you go to the link, you have to register. I only get the thing for the coupons on sunday and sports section.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:30 AM
Response to Original message
12. Bubbles! Tiny Bubbles!
Care to hum along?
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fishnfla Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:51 AM
Response to Original message
17. i believe construction costs are part of the problem
builders i know are carping about the price of concrete for one thing. also subcontractors are getting tired of bidding on the cheap so the developers make all the profit
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midwayer Donating Member (719 posts) Send PM | Profile | Ignore Tue Jul-20-04 12:07 PM
Response to Reply #17
40. You get that right
I'm a sub in the second fastest growing area in the US next to Las Vegas and I'm having problems keeping it rolling right here. My pricing power is going to hell and the other subs are holding hostage the clients they have by bidding on the cheap just to keep the lights on and it's blocking any new business entry.

Concrete is a major issue, the price and unavailability is knocking the little guys out of the market + causing problems.

This is going to get worse before it gets better and the micro-enterprises are the first to go. This will translate to consolidation into the big boys hands. I've been here for 13 years and always stayed busy by word of mouth and now I'm having to really get out and market myself. Bidding alot of projects that either are being postponed or the competition is lowballing.

This the worse I've seen it. I may be out of business here pretty quick as it's just not worth it having to cover my overheads.

Will I be able to find a job if I do? Enough to pay my mortgage and support my family?




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skypilot Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:59 AM
Response to Original message
22. But..but..but...
...the economy is ROARING.
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Doosh Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 11:27 AM
Response to Original message
32. what happened to the "bush boom"
I guess that's out as a GOP talking point, now it seems they're pushing medical malpractice as an issue.
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midwayer Donating Member (719 posts) Send PM | Profile | Ignore Tue Jul-20-04 12:14 PM
Response to Reply #32
41. Not pretty.... the middle class are not squealing yet
Many are,,but many don't feel it

YET

It will have to hit critical mass
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midwayer Donating Member (719 posts) Send PM | Profile | Ignore Tue Jul-20-04 12:30 PM
Response to Reply #41
43. Property taxes to rise in some areas as much as 56% ?
Economically, we can add in the fact that the nation is running extremely high leverage right now. Could be a disaster waiting to happen, in fact some are saying it's not "if" but "when"

Risk of the carry trade hedge unwinding another huge issue.

The Fed. Greenieweinie created this problem and, it would seem is stuck between a rock and a hard spot.

The Dow and Spx have penetrated thier 200 day moving averages, possibly a relief rally from here but what will drive the market from here? If earning don't do it the shorts will come out to play and it could get very nasty. This will tighten money up and the folks who are depnding on the market for thier money will not be consuming.

Oil up
Metals up

Foreign money pulling out of our markets

http://www.financialsense.com/stormwatch/oldupdates/200...

I'm not seeing the glass half full right here

Lot's of systemic risk in our economy

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cmd Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 02:16 PM
Response to Original message
52. 114 foreclosures in my Ohio county last year
We expect the number to grow. Ohio has not fared well under the Bush* economy. We're looking for a change.
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midwayer Donating Member (719 posts) Send PM | Profile | Ignore Tue Jul-20-04 03:12 PM
Response to Reply #52
58. 162 in my county last MONTH
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cmd Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 05:21 PM
Response to Reply #58
63. Interesting site
According to it, my county has had 107 foreclosures since December. It is a rural county of about 92,000.

I'm volunteering at the Kerry campaign office at few miles from my house. We were busy all day with people coming in for bumperstickers, pins and any information about Kerry that they could get. They had some pretty sad stories to tell and more than one expressed that they were very pi**ed with Bush*.
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Pachamama Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 03:28 PM
Response to Original message
60. Think of all the Americans who have taken out Home Equity lines & spent
...it all on "consumer" goods like good patriots and then when their house becomes worth less than they paid and they owe more on it than they can sell it for....

Wonder what Dimwit and his Economic advisors will call that?

Unexpected? Not at all...I've been waiting and expecting this to be coming this year (actually, expected it sooner) but just wait until a huge terrorist strike happens or another oil price surge and this economy is going to hell....foreclosures, real estate prices dropping fast, the whole enchilada....

Then the really rich can take all the cash that they have and buy it up real cheap....It's the American Way....

:grr:
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midwayer Donating Member (719 posts) Send PM | Profile | Ignore Tue Jul-20-04 09:18 PM
Response to Reply #60
66. "The American Predatory Way" (eom)
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jul-21-04 09:43 AM
Response to Reply #60
74. Ah yes, but think of all the OTHER Americans who refinanced
their mortgages and DIDN'T take out lots of money.

They're now paying HUNDREDS a month less than they did before - for the same house. That's extra spendable income this year and every year.

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Pachamama Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jul-21-04 01:38 PM
Response to Reply #74
77. Very small % according to research...
Sure, maybe 5% of the population that refinanced can claim that they refinanced, lowered their monthly payments and then took out Home Equity loans/line of credits and didn't touch....Ask any banker, or economist - Americans are spending their home equity as fast as they get it and are gambling it on its continuing increasing or stable value...when those people's houses are worth less than their outstanding debt - that spells T-R-O-U-B-L-E...

Lucky you and me if we are that 5%...but falling home prices and foreclosures affects everyone...
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leesa Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:18 PM
Response to Original message
67. I'm shocked, I tell you.
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steely Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-20-04 10:20 PM
Response to Original message
68. I wonder what the problem is - under asswipe, there's no...
shortage of old-growth lumber at the rate he's giving it away.
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