May 19, 2008
That overly saracastic post title is an attempt to distance myself from a horrible reality that could have been my own (if I had been just a little more rich and a little less skeptical), the reality of owning a condo in the current completely frakked housing market (BSG is taking over my brain, but that’s another story…). The NYT covered it last week:
Four years ago, [Barbara Sanz] bought her first condo in a glassy new Miami tower when the building was filling up. Now nearly one in six residents in the 43-story building is battling foreclosure and their contributions to the building association are shrinking. Each of the remaining owners has had to chip in an extra $1,000 assessment and $50 more a month for cable and Internet. That is on top of Ms. Sanz’s $450 monthly maintenance fee.
So, in short, she’s 1) stuck losing value in a home she can’t sell, the kind of home that will be last to bounce back after everything is said and done, 2) forced to pay more for it than she originally agreed to, putting yet more pressure on her budget, 3) losing the services that she originally thought she was going to pay for and 4) quite possibly watching the value of her investment physically vanish before her eyes, bad in the long run and bad in the short run as living conditions get worse:
Even though she pays more, her building has broken washers and dryers and unusable exercise equipment, and her hallway is spotted with mold.
Mold is a word that strikes terror into my heart. Her building is less than five years old. To top off this suck sandwich, prospective buyers now are at least in a strong position to negotiate to avoid all of this pain, forcing more pain upon the first set of people:
His willingness to spend stopped short of $200,000 for the condo units, which once sold as high as $700,000, according to the broker, Peter Zalewski. Mr. Comoglio also wants a written guarantee that he would not have to pay more fees.
An investor like this is paying less than a third of what those first people did, and he won’t even do that unless he can get a promise that he will be exempt from the laws of physics, basically. Could this get less fair? It would certainly suck to be renting from a landlord who goes into foreclosure, but watching the home that you’ve paid for and continue to pay for, fair and square, be destroyed by others’ irreponsible behavior at the same time as hope dims for any kind of recovery for the kind of home you’re going to have to sell one day… I’m just really glad we didn’t listen to anyone who said that young people like us ought to be buying a studio somewhere as starter home, and I’m glad we didn’t have the money to listen even if we wanted to. That was bad advice, but not many people knew it yet.
Of course, people in these situations are just one group of the front line casualties, and the longer we ignore their suffering the more certainly we will suffer, no matter where we are living. I better go pet a cat, b/c this shit just makes me crazy.
February 24, 2008
This NYT story is not happy news for those of us who have sat out the housing market b/c we refuse to pay too much money using risky loans for a home in an overpriced area of the country:
Elizabeth and Ben Kilgore are back in the real estate market. All it took was a little-publicized section of the economic stimulus package President Bush signed into law last week that lowered the borrowing cost of buying a more expensive home.
And if the limit on loans backed by a government-backed housing finance entity like Fannie Mae is raised from $417,000 to the full $729,750 she has been hearing about, Ms. Kilgore said, “we will be able to get a 30-year fixed mortgage for less than what we’re paying now plus our homeowner’s dues.”
Okay, do I get this right? The stimulus package is going to help our economy because it will allow people w/ 700k houses to obtain nice, normal mortgages. Were they really the ones who needed our help?
700k, the article goes on to explain, is really just a number. It sounds outrageous to me and others who live in cheap-old southeast Florida, but the median price of a home in San Francisco, for example, is about 777k. So really, this change in jumbo loan backing is geared toward helping average people who live in the most exorbitantly priced places in the country.
No wait, I still don’t get it. It seems like those ordinary people would have been helped more by what the market is actually doing right now (unless it causes them to lose their jobs), which is falling in real terms. Housing prices in the SF bay area have fallen close to 20% in the last year, as they should when the market is flooded and has been overvalued. Hmmm, would I rather pay 777k or 650k for my house, let me see… They’ve started to fall here too, which could eventually help people like me… if it were allowed to continue. But it looks as though one of the package’s main goals is to prevent that from happening, favoring some of the very people who got us into this mess and some people who just plain don’t need help, people who could either afford very expensive homes in the first place and people who took on loans they couldn’t handle. Oh yeah, and only people who live on the coasts:
In areas where median prices do not exceed $271,050, such as the entire state of Alabama, the basic loan limit will be $271,050.
The economic stimulus package of 2008: some states left behind. Again, this seems to be exactly the kind of short-sighted, instant gratification-oriented thinking that got us (all of us, even those of us who tried to spend responsibly and not take on more mortgage than we could afford) into this situation. Either housing prices should fall and let waiting buyers back into the market, or they should rise naturally and encourage people to flow elsewhere. I know the jobs have to flow elsewhere first, and they would be more likely to do so if the there were not unnatural subsidies for being located in an expensive place to do business.
Oh well. I didn’t really want to own a home in Florida anyway, so at least this could help keep me motivated to move along.
January 10, 2008
While I may not like it’s political coverage re: 2008 presidential elections, there are indeed many pieces that I love on Salon and know I could only read on Salon. One of them came out this week, a piece in what I hope will be an ongoing series by Michigan writer Edward McClelland. He got my attention with this piece last year about Michigan’s economic blight, which had my favorite line of the whole year: “Michigan did not become great because of the auto industry. The auto industry became great because of a Michigander, Henry Ford.” Hell yeah.
But, as McClelland has pointed out, my state has fallen on some hard times:
“Sun Belters, there’s a man in Detroit with the answer to your water problems. “They can have all the water they want,” says Hugh McDiarmid Jr. of the Michigan Environmental Council. “All they have to do is move here.” There’s plenty of room. Some Detroit neighborhoods are so bereft of houses that pheasants hide in the vacant lots. And the cost of living is unbeatable. Earlier this year, an auctioneer was trying to unload a bungalow for $18,000. When no one would bid, he reminded his audience, “You get the land under the house, too.””
Anyway, this week’s piece about how the water shortage in the Sun Belt could be remedied by residents of those states moving along w/ their businesses to the population-challenged Great Lakes states was similarly interesting, and although I’m not really sure I want to share my beloved hand state with some of the folks I’ve run into down here, I think it’s a pretty good idea.
I particularly like this notion:
“water is a major cultural amenity, says John Austin, director of the Great Lakes Economic Initiative. Most Great Lakes cities sit on magnificent waterfronts. Tear down the old factories blighting the view — as Waukegan, Ill., is now trying to do — and you can create downtowns full of expensive lofts and coffee shops with open-mike nights. “People like to live and work in places that are proximate to water,” Austin says. “Traverse City, Mich., is so physically beautiful that people who can work anywhere — people with graphic design businesses, media businesses — have chosen to live there. That’s a huge piece of the economic picture. “
I can vouch for the Traverse City part–there isn’t a season that looks ugly on that place, and they start plowing almost before it snows.
Lakefront cities full of lofts is definitely a better idea than tapping the Great Lakes for a pipeline that could support the burgeoning southern metropolises that now find themselves facing drought and water shortage. This whole idea angers me more than even last year’s proposed cut of the property tax in trade for a much higher sales tax. I didn’t want to subsidize other people’s ill-advised mortgages that drove up the prices on houses that I already couldn’t afford to buy w/ my life in this state, and I don’t want to see the Great Lakes drained to support the lazy (sorry, if the main reason you left the north was b/c of the cold weather, you probably have a lazy bone–I count myself in this category too), reality-denying types who seem to think it is an American right to live wherever they want to in large houses, regardless of the environmental constraints. It may be a right that Americans are accustomed to having, but it may be an unsustainable one just like many of our privileges. It would be much better to reckon with that now and start planning to redistribute some population rather than sucking all the water out of the places it naturally is to support places that it naturally isn’t becoming more crowded.
So, word to the wise if you talk to me about water: “Michiganders see themselves as guardians of the Lakes, and have raised holy hell about issues as minor as exporting bottled water from local springs.” If any poorly planned, chronically overpopulated, or desert states come sniffing for some spare H20 from the Great Lakes, see my subject line. No, you cannot plead ignorance to reality and then deplete someone else’s resources on your own behalf.