That’s what some Californian mortgage-defaulters are discovering.
WSJ: PALMDALE, Calif. — Schoolteacher Shana Richey misses the playroom she decorated with Glamour Girl decals for her daughters. Fireman Jay Fernandez misses the custom putting green he installed in his backyard.But ever since they quit paying their mortgages and walked away from their homes, they’ve discovered that giving up on the American dream has its benefits.Both now live on the 3100 block of Club Rancho Drive in Palmdale, where a terrible housing market lets them rent luxurious homes — one with a pool for the kids, the other with a golf-course view — for a fraction of their former monthly payments.”It’s just a better life. It really is,” says Ms. Richey. Before defaulting on her mortgage, she owed about $230,000 more than the home was worth.
People’s increasing willingness to abandon their own piece of America illustrates a paradoxical change wrought by the housing bust: Even as it tarnishes the near-sacred image of home ownership, it might be clearing the way for an economic recovery.Thanks to a rare confluence of factors — mortgages that far exceed home values and bargain-basement rents — a growing number of families are concluding that the new American dream home is a rental.Some are leaving behind their homes and mortgages right away, while others are simply halting payments until the bank kicks them out. That’s freeing up cash to use in other ways.Ms. Richey’s family of five used some of the money to buy season tickets to Disneyland, and plans to take a Carnival cruise to Mexico in March. Mr. Fernandez takes his girlfriend out to dinner more frequently. “We’re saving lots of money,” Ms. Richey says.
Analysts at Deutsche Bank Securities expect 21 million U.S. households to end up owing more on their mortgages than their homes are worth by the end of 2010. If one in five of those households defaults, the losses to banks and investors could exceed $400 billion. As a proportion of the economy, that’s roughly equivalent to the losses suffered in the savings-and-loan debacle of the late 1980s and early 1990s.
The flip side of those losses, though, is massive debt relief that can help offset the pain of rising unemployment and put cash in consumers’ pockets.For the 4.8 million U.S. households that data provider LPS Applied Analytics estimates haven’t paid their mortgages in at least three months, the added cash flow could amount to about $5 billion a month — an injection that in the long term could be worth more than the tax breaks in the Obama administration’s economic-stimulus package.”It’s a stealth stimulus,” says Christopher Thornberg of Beacon Economics, a consulting firm specializing in real estate and the California economy. “The quicker these people shed their debts, the faster the economy is going to heal and move forward again.”
Twenty foot Great White chomping on his friends down under.
A stunning picture shows a 10ft predator thrashing about with two massive chunks missing on either side of its body, off the Queensland coast.
Experts said its rival may be 20ft (about six metres) long, judging by the size of the huge bites.
ACLU loses 1/4 of its funding after donor stops giving.
David Gelbaum said in a statement that he was indefinitely stopping the donations that had made him the New York-based group’s largest anonymous donor. He’s also stopping some $12 million in yearly gifts to the Sierra Club Foundation and about $50 million a year that he’s been giving to an organization serving veterans who served in Iraq and Afghanistan.
Gelbaum says the credit crisis and his investments in alternative, clean energy companies have left him with few liquid assets.
He should have invested with Al Gore – there’s a man who knows how to profit from the global warming panic.
Norwegians furious over Obama’s snubs. Too busy to have lunch with the King or attend any of the traditional ceremonies, “just gimme the prize, dude.”
Government – supplied food for school children fails to meet standards of commercial enterprises like McDonalds.
By Peter Eisler, Blake Morrison andAnthony DeBarros, USA TODAY
In the past three years, the government has provided the nation’s schools with millions of pounds of beef and chicken that wouldn’t meet the quality or safety standards of many fast-food restaurants, from Jack in the Boxand other burger places to chicken chains such as KFC, a USA TODAY investigation found.
The U.S. Department of Agriculture says the meat it buys for the National School Lunch Program “meets or exceeds standards in commercial products.”That isn’t always the case. McDonald’s, Burger King and Costco, for instance, are far more rigorous in checking for bacteria and dangerous pathogens. They test the ground beef they buy five to 10 times more often than the USDA tests beef made for schools during a typical production day.And the limits Jack in the Box and other big retailers set for certain bacteria in their burgers are up to 10 times more stringent than what the USDA sets for school beef.For chicken, the USDA has supplied schools with thousands of tons of meat from old birds that might otherwise go to compost or pet food. Called “spent hens” because they’re past their egg-laying prime, the chickens don’t pass muster with Colonel Sanders— KFC won’t buy them — and they don’t pass the soup test, either. The Campbell Soup Company says it stopped using them a decade ago based on “quality considerations.”
10 Sparrow Lane
Priced at $5.250 million long ago and far away on another planet, this house eventually dropped to $3.8 and sold yesterday for $3.370 million. Assessment is $3.009,250. There was nothing particularly wrong with it; partially renovated, with important stuff like kitchen and master bathroom (I think) done, and a huge backyard that, unfortunately, overlooks Putnam Cemetary. Ghosts don’t bother me but they do some people – my guess though is that more were scared off by its price, not its ossified neighbors.
10 Circle Drive Ext.
With the exception of western Greenwich, this 0.3 acre building lot is about as bad as you can get in terms of desirability – the original listing broker described it, without irony, as “convenient to transportation” and indeed it is, as you have only the Metro-North train tracks separating you from the Thruway. It didn’t sell – surprise! – at the $825,000 that broker asked for it the past two years but a new broker came along, slashed its price to $499,000 and has it under contract today (Assessment is $583,000).
My point is this: assuming it sells for, what? $425? $450? We may finally have hit a base price for land here in town. Almost any other lot should be worth more than this and that should give property owners in Havemeyer or better parts of Cos Cob a sense of relief: I was beginning to worry that we’d fall even lower before stabilizing. Prices could drop lower, of course, but I sense that we’ve just glimpsed bottom.
NYT: Cophenhagen plans will cost trillions. Well gollllliee, I wonder who’s expected to foot that bill?
On the other hand, there’s always an alternative, as pointed out in this WSJ Editorial:
“The public also has a right to wonder whether the bulk of the scarce financial resources available to mitigate ecological risks ought to be devoted primarily to climate change rather than to other threats to the environment and public health. For several years, Danish statistician Bjorn Lomborg has been convening meetings in Copenhagen of some of the world’s leading economists to consider that very question. Overwhelmingly they have concluded that the world’s dollars, euros and yen are better spent on tackling diseases such as AIDS or malaria or problems such as malnutrition and run-of-the-mill pollution than on hugely expensive (and dubiously effective) carbon-mitigation schemes.”
181 Clapboard Ridge
181 Clapboard Ridge, basically a two-lot subdivision of five total acres, is back again, having expired last month unsold. It started at $8 million, dropped a million before expiring and has now had another $500,000 shaved off for its return appearance, for a new price of $6.5 million. Or you can buy the half with the tear-down on it for $4 million, although I’m not sure why you’d want to.
The assessment on this property if $2.9 million, or just under $1.5 a building lot, and that seems a lot closer to its current market value than the owner’s price. In fact, judging from some recent negotiations on better land quite close to here, I’d say the assessment is spot-on. Your opinion may differ, of course, in which case you should hurry to make an offer before another buyer with a similar opinion snaps it up.
266 Palmer Hill
This last sold in 2003 for $765,000, had some renovations performed and put back up for sale in 2008 for $1.265 million. Sold yesterday for $1.040.
And this Cos Cob home – a nice one – started at $977.5 in June, 2008, was reduced to $795 on November 23 of this year and now has a contract. See how that works?
There’s an abandoned armory in the Bronx that could be filled with commercial tenants – and jobs for the locals – but the usual “activists” have teamed up with business owners who fear competition to shut it down. NYC’s Council is, of course, siding with the activists. To BusinessInsider, who reports this story, this is an indication that the Bronx must not need jobs but these battles are never really about jobs or the unemployed. Professional activists already have jobs: they’re professional activists, and if they can use the poor folks they care so desperately about to extract concessions and tributes from developers well hey, that’s why the East River’s so handy.
Old Greenwich, 12/09/09 9:45 am
Once the town gets around to discovering this hazard, they’ll probably shut off our power. If so, it’s a good day to go back home.
A couple of older contracts (October and August) closed yesterday and we now know what the properties fetched.
54 Byram Drive (Belle Haven), 4 acres of waterfront in the 1-acre zone, plus old house, listed for $23 million, sold for $14.525. Assessment: $5,643000.
15 North Crossway (Lucas Point, Old Greenwich), listed at $7.195, sold for $6.5. Assessment, $3.148 million. Owners bought it new for $3.925 in 2002 so here’s a property deal that paid handsomely.
By way of comparison, 37 Almira Drive in Byram, originally listed at $825,000 in 2008 and dropped to an asking price of $475,000 is now under contract. Its assessment is $482,000.
If you notice a pattern in under-assessment and over-assessment here, so do I. I wonder whether our new evaluation has used appraisers cognizant of the difference between waterfront and Byram hills? I doubt it – I think certain people like things just the way they are.
Barbara Boxer - dumb as a brick
She’s known as the dumbest Senator in the country, but she must be feeling the heat from Montana’s Baucus so California’s Boxer restaked her claim to the title yesterday.
As abortion took center stage in the Senate’s historic debate over health care reform, Sen. Barbara Boxer was right in the middle of the fight, comparing an effort to limit women’s access to abortion to restricting men’s access to Viagra.
Her combative stance on the issue was a familiar one for the third-term Democrat, whose support of abortion rights has been central to her political career.
“Why are women being singled out here? It’s so unfair,” Boxer said on the Senate floor Tuesday. “We don’t tell men that if they want to … buy insurance coverage through their pharmaceutical plan for Viagra that they can’t do it.”
Boxer ought to demonstrate to activists the danger of voting for one issue candidates. But she’s from California, so there’s no danger of her losing her seat.
Budget deficits will cause “untenable” choices.
When legislators start weighing another $84 million in proposed municipal aid cuts to close a current budget gap, Bridgeport, New Haven, and Hartford will face some untenable choices between cutting deeper into municipal services or raising property taxes, Bridgeport Mayor Bill Finch told business leaders Tuesday morning.
New municipal aid cuts when the General Assembly meets next week to close an estimated $337 million deficit budget gap for the fiscal year ending June 30 will hinder the revitalization of those cities, Finch said at a legislative breakfast on the upcoming legislative session sponsored by the Business Council of Fairfield County.
“The giant gorilla nobody in the room is talking about is social equity,” Finch said. “Our residents pay a higher percentage of their income in taxes than the people in Greenwich … I’m not saying we contribute as much, but this state is of the suburbs, by the suburbs, and for the suburbs.”
“Untenable” means, roughly, unacceptable and when Hartford Democrats are faced with a choice between passing unacceptable spending cuts or taxing Greenwich, they’ve gone after Greenwich, every time. Next year will be no different.