The WSJ reports on the downsizing of the American dream. Looking at the “before and after” schematics of two houses, though, I realize just how accustomed I’ve become to Greenwich-sized homes. These two Lilliputians are so small that the pre-recession model seem suitable as a Havemeyer starter home and the post-recession one maybe a guest room/pool house. We got a whole lot of shrinking to do before we start looking like Atlanta.
Compare the floor plans of a boom-era luxury home and a smaller, post-recession design.
Up in New York’s District 23, it seems that the vote count was screwed up and they’re redoing it. It’s entirely possible that Conservative candidate Doug Hoffman may prove to be the winner after all. Frankly, it won’t affect anything down in the tar pit whatsoever, but it will be entertaining to see what Krugman, the editors of the NYTimes have to say if the election results are reversed. They spent thousands of words parsing the meaning of Hoffman’s defeat ad concluding that all was well with liberal Democratism after all. And so if Hoffman wins ….
Reader AJ sent along this link:
Home-Purchase Index in U.S. Plunges to Lowest Level Since 2000
2009-11-12 12:00:00.8 GMT
By Bob Willis
Nov. 12 (Bloomberg) — Mortgage applications to purchase homes in the U.S. plunged last week to the lowest level in almost nine years as Americans waited for the outcome of deliberations to extend a government tax credit.
The Mortgage Bankers Association’s index of applications to buy a house dropped 12 percent in the week ended Nov. 6 to 220.9, the lowest level since Dec. 2000. The group’s refinancing gauge rose 11 percent as interest rates decreased, pushing the overall index up 3.2 percent.
The drop in buying plans points to the risk that the recent stabilization in housing will unravel without government help.
In a bid to sustain the recovery, Congress passed and the administration signed a bill last week to extend jobless benefits and incentives for first-time homebuyers, adding a provision that also made funds available to current owners.
“Uncertainty over the housing tax credit sent some tremors through the market in recent weeks,” Michael Larson, a housing analyst at Weiss Research in Jupiter, Florida, said before the report. “But now that Congress has extended and expanded the credit, we should see demand pick back up.”
AJ writes, and I agree, that we’re watching a market being artificially propped up with taxpayer subsidies. Greenwich isn’t affected by a piddling $8,000 buyer’s credit (so why do the two print columnists in town spend so much ink on them?) but the national figures reflect a Potemkin village, not a real marketplace. If people aren’t applying for mortgages, they aren’t planning to buy a house, all rosy predictions by builders and real estate brokers to the contrary.
We’re closing in on 300 active foreclosures here in town, and I know of many, many financial types, not yet in foreclosure, who are sucking wind, trying to keep up the appearance of solvency so they aren’t wiped out by their peers on Wall Street. Despite what you probably think, traders are not very nice people, and when they smell blood, they strike. So credit cards are being maxed out, late fees accruing, and mortgage payments are not being made. These are not people likely to be rescued by the federal government and so when they go down, they’ll go down hard. Add a couple of hundred more foreclosure properties to the 300 we have already and what do we get? Just about a doubling of our inventory, all of it bank owned and selling for peanuts. That’s not going to help sustain current values and to this Eeyore, presents a compelling argument against holding on til spring to await the market’s return. We should live so long.
101 Lockwood Rd (Rvsd) came on just a month ago asking $2.250 and already has a contract. Not the house of my dreams, but decent enough and a pretty good location (across from Druid). The sellers paid $1.965 for it in 2006 so they were smart to stay close to that figure now.
On the other hand 29 Byfield, a spec house, remains unsold. The builder reduced its price a whopping $100,000 today, to $5.898 million, but he’s got a problem: He originally priced it at $9.495 million back in April ’08 and I suppose buyers were too busy laughing to check out its charms because he was forced to reduce it, again and again, until last December when he reached $5.198. This January, he raised it to $5.998, where it has remained until now. I’m pretty dumb when it comes to these things but buyers aren’t and I’d expect them to conclude that, if the seller was willing to accept $5.2 last year, he should still be willing today, and I’d think price negotiations would start well below that figure, rather than the $5.898 he wants now. Furthermore, the assessment is $3.672, and some pesky buyer is bound to use that as a benchmark, rather than any of the seller’s prices.
And speaking of assessments, 11 Pinecroft, originally priced at $4.350 has, after two years, come down to $2.995. Its assessment is $2.3 million, which would be an attractive price for a house like this which is in a great location but in so-so condition.
The FHA, guarantor to just about every mortgage being written these days, is busted. You and I might think we had a problem were we in the same situation but this is Chinatown, Jake, so no worries.
Critics say the agency insured too many loans to unqualified borrowers in 2007 and 2008, a position the agency itself now agrees with. Nearly one in five loans it insured in 2007 now fall into the category of “seriously delinquent,” it revealed Tuesday.
The F.H.A. says that it is now insuring loans to more financially secure buyers with highercredit scores. In a sense, the agency is bulking up and giving as many loans as it can to diminish the pool of problem loans. It guaranteed more than $360 billion in mortgages in the last year, four times the amount in 2007.
Critics say this is only increasing the size of the ultimate peril.
“They keep saying they’re going to outrun their problems, but some way, somehow, the taxpayer is going to end up on the hook,” said Edward Pinto, a former executive with the government mortgage giant Fannie Mae.
132 Hendrie Ave
This Riverside cape came on the market in 2007 asking $.145 million. It’s a tired old house but the land is nice, even if it does back up to the tracks. My memory’s a little vague on the exact amount but I know I extended an offer on behalf of a builder client back then for, I think, $950,000. The sellers rejected it. As they rejected another offer, made a year ago May, for $750,000. Today it’s been reduced to $995,000. My reaction? That was 2007’s price, not 2009’s.
The Demmerkrats are getting ready to impose a medicare tax on capital gains. Don’t worry, it will only apply, at least at first, to gains of $250,000 or more so if you sell your Greenwich house in the immediate future, you shouldn’t be hit – they can’t tax what doesn’t exist, yet. But if the market comes back, …
As a public service, and for only $35 per sticker, I’ll be conducting an Obama removal removal session Thursday, November 26th at the Eastern Middle School parking lot, 10-12. Special discounts for Bentleys.