MartyT

FDIC Keeping Mum About Real Estate Auction Results

The current prices are still too high in Georgia (the state not the country). When I visited a relative there were two travel trailers in their neighbor's backyard. Their 60 something parents were in one and their 20 something kids were in the other. That's some cheap living...

I think most people spend 30-50% of their income on their homes (mortgage, maintenance, energy...). That has become the norm. The problem in that sacrificing 30-50% of your income for housing doesn't make sense unless you stand to make a significant profit from your investment down the road.

So if a family is earning 80K a year then spending 30K a year on a 250K house only makes sense if you think you will sell that 250K house for 350K in 3-5 years. Otherwise it probably makes sense to by an 80K house and invest in other things, enjoy the extra money, or maybe earn less money and enjoy the leisure time.

I think most people are starting to come to the conclusion that American homes just aren't worth the sacrifice.

Another thing is that the mini mansions are just too expensive to heat, cool, and maintain.

So I think that from a pure labor and materials perspective homes today are a bargain. Unfortunately, from a pure consumer perspective homes are very over priced. IMHO until we can consider homes an investment that will likely result in gains prices will continue to plummet.

The next couple of years are going to be interesting.

Rent-To-Buy

The laws in Georgia (the state not the country) pretty much make it possible to kick out a renter at any time. I think the courts assumes that a landlord would never want to kick a good tenant out of a home. This has resulted in rent-to-own scams being an easy way to make quick cash and the courts make it easy as pie.

Most rent-to-own scams include a several thousand dollar down payment, a very low monthly payment, and a complicated contract. The victim pays the down payment then after a couple of months receive a notice of eviction for some made up violation (usually something like playing music too loud). The owner keeps the large down payment and finds a new victim.

The laws will need to be modified before rent to own is viable in the USA or at least Georgia.

If Housing Were Priced in Gold

Thanks for the great article. I really enjoyed it. On a personal level when I bought my house my mortgage payment could have been paid by selling 3 ounces of gold. Today I could pay my mortgage payment by selling 1 ounce of gold.

My payment has gone up by 10% because of taxes and insurance.

If I were to buy my house today I am pretty sure I could buy it for significantly less than I paid for it and interest rates are lower today. So I am guessing that if I were buying today I could live in an equivalent to my house an the payment would probably be equivalent to just over a half an ounce of gold. So from 3 ounces of gold a month to 1/2 of an ounce of gold.

Technically, it's kind of irrelevant because I have enjoyed living in my house for 10+ years. I don't know what I could have done if I had been paying a mortgage on gold over the last 10 years. I guess if I had mortgaged $125K in gold at $300 an ounce 10 years ago I could sell if for about $500K today. That would buy a nice house in the Atlanta area today. Interesting stuff...

Slower Going for IT Spending - But the Recovery Continues

I think IT is a super thin market.

I think the world has absolutely consumed its IT resources and has failed to invest in creating new IT resources. I used to meet brilliant Indian and Chinese IT professionals, but all of the new ones I have met are not good programmers and will NEVER be good programmers. They try hard, but it's just not in the cards for them.

The skills that it takes to make someone a skilled IT person aren't very useful for survival in hunter-gatherer environments or in most social environments so those skills have not been genetically selected for reproduction. It's a rare skill.

Even if one has been born with the skills they have to have the background experience. Most really great programmers I have ever known have had two things. Access to programmable computers at a young age (13 is good), access to programming knowledge (books or magazines), and lots and lots of free time. I have known a lot of AWESOME Irish contractors... my guess is that has something to do with the weather.

So to have a truly talented programmer you need someone with the natural skill, access to programmable computers at a young age, access to the knowledge, and lots of free time. That my friends is a rare bird. You will find that most professional programmers are FAKERS and are not productive and likely do more damage than good (OK I am a little bitter).

If you are still reading then thank you... I do ramble on this subject. My point is that all of the talented programmers that I know are doing fine right now and newly minted talented programmers with any interested in working for a corporation are very rare. But if demand increases for programmers the wages will spike up quickly. Then a lot of FAKERS will fill the extra demand. Unfortunately, the FAKERS won't/can't deliver.

The reason companies will deal with all of these problems is because a single programmer can increase productivity of a company geometrically. The companies that can somehow find and motivate good IT professionals will dominate. Figuring out which pros are good and which ones are posing and keeping the good ones happy is very very hard.

Housing Bottom - Oh Really?

Thanks for the great article Jeff. The constant barrage of "news" stating that the housing collapse is over is starting to make me feel like a broken record. There are some fundamental problems with the housing market and it seems like the talking heads just ignore the basic and obvious problems and continue to parrot that the bottom has arrived. I guess if they keep saying that we've bottomed out long enough they will be right... Eventually

Thanks again.

Misconceptions About Health Insurance

Thank you for your post.

I have employer-subsidized health care for the duration of my employment and it's better than nothing. I am shocked that there is anyone that thinks the current system is broken. Our health care system is clearly hurting our county's ability to be competitive in the world.

I think the main problem is that there aren't enough doctor's in the USA and that insurance executives are making way too much money.

Oh well, thanks again for the post.

Eye on Unemployment: Should the U.S. Stop Immigration?

I work in a field that has been damaged by the H1B program and emigration. I have no problem with emigration, but I do have a problem with the H1B program. The problem with the people in the H1B program is that they don't have a stake in our society. I want the USA to be a great and prosperous country because I have children that will be living in the USA and I want them to have a good future. Most people in the H1-B program will eventually return to their birth country so why should they care about our future?

H1B people aren't any smarter than natural born Americans. They also tend to get very fat after they have been here for more than 3 years too (for some reason a lot of posts from Indians refer to "fat Americans" alot). Most of them learn most of their skills after they come to the USA and then they take those skills home to use them against us. Most emigrants learn most of their skills after they come to the USA as well, but then they use them to help the USA in the future.

I believe most corporations like to have a mix of the natural born Americans, H1Bs and outsourced IT folks. I believe they do this so they can spread their risk so that in case some kind of disaster strikes they won't lose all of their IT assets at one time. I also believe they use a mix of IT folks so the IT group can't unite and demand more power within their corporations.

So I am pro-emigration and I welcome all of my Indian and Chinese counterparts to join us in an effort to make the USA stronger. At the same time I am anti-indentured slavery (H1B).

Please, Shoot the Vultures, But Don’t Blame Them for Being Vultures!

I think your plan is a good plan and would help if it were properly implemented. At this time I believe that neither our elected government officials nor our hired government employees are capable fo executing or even agreeing to execute any plan regardless of any plan's merits.

I believe the main reason our goverment is unable to execute any plan is because:

1) Many individuals care more about personal gain than the good fo the country.
2) Many individuals would rather see their opponents fail than see the country succeed.
3) Many individuals are just too dumb to understand their jobs.
4) Many individuals are just too lazy and unmotivated to work hard.

When you add all four of those reasons togethor is difficult to get anything done on a national scale done.

House Prices: Two Views

My guess is that house prices will continue to collapse unless the US goes into a high inflation phase.

I think the high priced homes that people bought over the last 15 years only made sense if those people could assume the selling price of their home could never go down. Many people were paying 50% of their income for their homes because they thought their home was a sure fire long term investment. Paying 50% of the family income for housing doesn't make sense if the home is likely to drop in price.

A 21st Century Lend-Lease Plan

Nice post thanks. It seems to me that this plan assumes the value of the homes go up (or at least stays the same) over the next 7 years.

What happens if the house with a $200K loan is valued at $100K in 7 years? Wouldn't a lot of people just enjoy their lower rent while they can and then walk away?

Banks Not Letting Owners of Foreclosed Homes Walk Away

Thanks for the post. This is very interesting and I can't wait to see how all of this will play out in the courts. If someone stays in a home for 10 years without making a payment will the house become theirs? What if they file bankruptcy during that time? What if they rent it out during that time? What if the house burns down during that time? I don't expect any answers I just think the questions are interesting.

Your line "Never thought I’d see anything like this." was spot on and my guess is that our legal system isn't prepared for people owning homes for years and possibly even decades without making the payments.

Thanks again.

Could There Actually Be Another Reason Why Oil Prices Are Falling?

I guess I am just being a simpleton... It seems to me that it shouldn't have surprised anyone that the price of oil went up when a Texas oil man was the President of the US. Then on the other side of things it shouldn't have surprised anyone that the price of oil has gone down since the Texas oil man left office.

Please not that I am not judging GB, I am just making an observation.

Why the Recession Is Over

Mr. Murphy,

Thanks for the post it takes a lot of courage to make a post like that during times like these.

I have no idea if we've bottomed out or not, but I've noticed that the bottom occurs when pessimism is at its highest. I think the fact that your post was met with overwhelming negativity is a clear indicator that pessimism is at a high point.

My guess is that we are either teetering on the edge a total collapse of several of our systems or that you are correct and we are at the bottom. Assuming that we are at the bottom we may have a long, slow, painful climb up.

Thanks again...

Marty

Home Sales: More Reasons to Disbelieve the NAR

Thanks for the great post, I enjoyed reading it.

"Did non-distressed sales really surge last month?"

I surely don't know the answer to this question, but I do think it's possible. I've noticed that the price gap between distressed and non-distressed homes tends to be in the 10-20% range in most of the neighborhoods that I watch. I think a lot of buyers are starting to realize that a 160K home in a 200K neighborhood that has gone through a foreclosure will probably cost more than 40K to be as nice as the 200K home. In addition getting financing for the 160K repo can be more difficult than getting financing for a well maintained 200K home in the same neighborhood.

In my area if a home is not maintained for a couple of years one can be pretty sure that termites, carpenter bees, or some other natural pest will have done massive damage to it.

So if one is moving into the area they may very well be passing up on a 20% savings for a broken down distressed home in favor of a well maintained home.

Just a thought...

Without Debt Forgiveness, There Will Be No Real Recovery

BB your solution solves many problems facing the US, but it doesn't solve the main problem. The main problem for the government is fixing the economy while keeping the rich rich. Your solution would fix the economy while making many rich poor.

Thanks for the post, I enjoyed reading it :)