REAL ESTATE - HSBC says: "The sky may be falling"

[Z.]

This is _huge_ ...


http://biz.yahoo.com/rb/061205/mortgages_warning.html?.v=1

Reuters
HSBC warning ominous for U.S. lenders
Tuesday December 5, 3:56 pm ET
By Jonathan Stempel

NEW YORK (Reuters) - Experts have warned all year that a slowing U.S.
economy and rising borrowing costs would lead to an increase in bad
loans by homeowners and other borrowers.

Grim comments from Britain's HSBC Holdings Plc (London:HSBA.L - News)
about fourth-quarter trends suggest the experts may have been right.

"We think the sky may be falling," said Mark Fitzgibbon, director of
research at Sandler O'Neill & Partners LP. "Credit quality has been
deteriorating for two quarters and we think the pace of deterioration
will accelerate this quarter."

HSBC, the world's third largest bank by market value after Citigroup
Inc. (NYSE:C - News) and Bank of America Corp. (NYSE:BAC - News), on
Tuesday said U.S. lending results may worsen from the third quarter,
when higher loan losses crimped overall revenue growth.

"We've seen more data coming into the fourth quarter and there is a
weakening," Finance Director Douglas Flint said.

In 2003, HSBC paid about $14.8 billion for Household International Inc.,
which lent to many people with below- average credit histories. It has
since evolved into HSBC Finance Corp.

The bank's North American operations, which include HSBC Finance, last
year generated 31 percent of total profit, but 65 percent of bad loans.

Most major U.S. lenders will report fourth-quarter results in January.

Many have cautioned that loan losses will increase as economic growth
moderates and bankruptcy filings rise to more normal levels. Some may
set aside more reserves for losses.

Stock prices may reflect this. The Philadelphia KBW Bank Index
(Philadelphia:^BKX - News) was up only 1 percent this quarter through
Monday, while the Standard & Poor's 500 (^SPX - News) was up 5 percent.

Rising risk and shrinking rewards are why H&R Block Inc. (NYSE:HRB -
News), KeyCorp (NYSE:KEY - News), National City Corp. (NYSE:NCC - News)
and others are selling or scaling back their subprime mortgage lending
businesses, which lend to people with weaker credit histories.

H&R Block's Option One unit, which the tax preparer is trying to sell,
posted a $39 million fiscal second-quarter pretax loss, compared with a
year-earlier $48.8 million profit.

Other lenders are taking precautions.

Wells Fargo & Co. (NYSE:WFC - News) on Tuesday began an education
program to help subprime borrowers handle their finances. The No. 2
mortgage lender, like many rivals, has long denied charges it unfairly
burdens such borrowers with onerous rates and fees.

ARM WORRIES

Still, what particularly worries analysts is how many borrowers will
skip payments as rates on many adjustable-rate mortgages (ARMs) reset
higher in 2007.

Many borrowers obtained ARMs earlier this decade, when borrowing costs
were at or near multi-decade lows, helping them afford costlier homes as
prices soared.

About one-third of U.S. single-family home loans in 2004 and 2005 were
ARMs, up from 12 percent in 2001, according to the Joint Center for
Housing Studies of Harvard University.

Experts, however, now expect delinquencies to rise as home prices
stabilize or decline and many consumers find themselves unwilling or
unable to take on much more debt.

"I've never seen a soft landing in 53 years," said Angelo Mozilo, chief
executive of Countrywide Financial Corp. (NYSE:CFC - News), the largest
mortgage lender, cautioned in July.

Sandler's Fitzgibbon noted that benchmark short-term rates have risen
4.25 percentage points since 2004, while oil prices have more than
doubled over three years.

"Consumers are stressed," he said.

This stress may lead to more bankruptcy filings, which government data
released Tuesday show have begun to rise from a 10-year low.

"The amount of consumer credit and mortgage debt outstanding drives a
lot of filings and those are rising," said Robert Lawless, a University
of Illinois College of Law professor.

[lcz]

Just for the heck of it, I'm going to pull my head out of the sand (no,
Mr. Potatohead, you stay right where you are - I'll be right back -
keep my spot warm for me), and ask some probably obvious and stupid
questions.

Post by Z.
Other lenders are taking precautions.
Wells Fargo & Co. (NYSE:WFC - News) on Tuesday began an education
program to help subprime borrowers handle their finances. The No. 2
mortgage lender, like many rivals, has long denied charges it unfairly
burdens such borrowers with onerous rates and fees.

This is where my ears perk up. Wells Fargo holds my mortgage. When I
went to buy my house, my credit score came up something like 875 (the
person processing my mortgage application was surprised by the number -
she'd rarely seen one so high). I got a 30 year fixed rate mortgage.
Each month, as I pay my mortgage, the amount that goes to the principal
gets higher and the amount that goes to the interest gets lower.

Last year, the town of Narragansett reassessed the real estate values
on homes. My property assessment doubled, and so did my real estate
taxes.

Despite this, I am able, on my fixed income, to pay my monthly
mortgage, pay my property taxes, pay all the rest of the stupid
Narragansett and/or RI taxes and fees, pay my utilities, and still have
just enough left over for food. I'm not saving, mind you, but I'm a
frugal Yankee who knows how to budget on nothing.

So ... here comes the stupid question part -

If my mortgage holder, Wells Fargo, has difficulty recovering mortgage
payments from "subprime borrowers", does this affect me (a "prime
borrower") at all?

And, if I am happy with where I live, and can afford to live in it
(even if it's just barely), and I don't plan on moving until I die,
should I be concerned about all this real estate hoopla in the first
place?

(Idiot answer to the second question - yes, I realize that if my real
estate taxes go any higher, I'm screwed, but from what I understand,
the town can't reassess any sooner than 10 years, and by then I'll have
an additional source of income)

So, Z, is the sky actually falling on me?

And yes, I am really asking stupid questions, but I am asking them
seriously.

lcz
crawling back into the warm sand with Mr. Potatohead

[CB]

Post by lcz
(Idiot answer to the second question - yes, I realize that if my real
estate taxes go any higher, I'm screwed, but from what I understand,
the town can't reassess any sooner than 10 years, and by then I'll have
an additional source of income)

I believe in RI reevaluation occurs every 3 years now, not every 10.

Also, if the town adjusts the tax rate higher (say, from $15/thousand to
$18/thousand) next year and your property is worth $300k, you pay an
additional $900 next year ($300 x 3).


What RI doesn't have, but Mass does, is Prop 2.5.


My property taxes in Glocester are just shy of $5000 per year now ($14.24 x
$325 + $375 "fire tax"). T has been to my place, and he can attest to my
statement that (I think at least) my house is fairly average.

Taxes were $2400 when I bought the house 8 years ago. Thus, I've seen an
annual increase (average) of 9% per year in property taxes for the past 8
years.

Compare that to similar properties in Mass communities, I'd be paying 1/2 to
2/3rds less in property tax.


My next house (which I'm looking for now, and have no real intention of
buying until the market completely tanks) will be in Mass. No way in hell
I'm buying another house in RI.


People call Massachusetts "Taxachusetts". WEll, I don't see it. I've "lived"
(at my SO's place) and worked in MA for the past 8 years. I pay *LESS* in
taxes in MA than I would in RI. My income taxes are less (for 5 of those 8
years I still filed as a Glocester resident) -- I *always* owed RI money
after getting my "Credit for taxes paid in another state". If I worked in
RI, not only would my income taxes be roughly the same, but I'd also get
hammered with RITDI as well.


RI? No thanks. I'm outta here.

[O]

Post by CB

Post by lcz
(Idiot answer to the second question - yes, I realize that if my real
estate taxes go any higher, I'm screwed, but from what I understand,
the town can't reassess any sooner than 10 years, and by then I'll have
an additional source of income)

I believe in RI reevaluation occurs every 3 years now, not every 10.

That is correct. However, full in-house inspections are required every
nine years (not 10). The cycle is a full in-house revaluations once,
then two statistical updates spaced at three year intervals.

Post by CB
Also, if the town adjusts the tax rate higher (say, from $15/thousand to
$18/thousand) next year and your property is worth $300k, you pay an
additional $900 next year ($300 x 3).

Well - yes - but not necessarily.

There are two independent factors that are used to calculate your taxes
- your assessment and the Town budget. The assessment is set and reset
by revaluations, the budget is set by the Town council. Revaluations
redistribute the tax burden - some people pay more than what they were
paying as a percentage of the whole Town budget, some people pay less.
The kicker that often raises people's taxes is budget increases, and
often Town's put those in during a revaluation year, to let the
revaluation absorb a lot of the blame.

Post by CB
What RI doesn't have, but Mass does, is Prop 2.5.

RI has a similar function, though. Instead of 2.5%, Towns are capped at
5% without getting State approval.

Post by CB
My property taxes in Glocester are just shy of $5000 per year now ($14.24 x
$325 + $375 "fire tax"). T has been to my place, and he can attest to my
statement that (I think at least) my house is fairly average.
Taxes were $2400 when I bought the house 8 years ago. Thus, I've seen an
annual increase (average) of 9% per year in property taxes for the past 8
years.
Compare that to similar properties in Mass communities, I'd be paying 1/2 to
2/3rds less in property tax.

You forget that Proposition 2.5 has a mechanism called "overrides,"
where the Town can put on the ballot to let the voters decide whether
they can exceed the 2.5% cap. More often then not, the override
passes.

Post by CB
My next house (which I'm looking for now, and have no real intention of
buying until the market completely tanks) will be in Mass. No way in hell
I'm buying another house in RI.
People call Massachusetts "Taxachusetts". WEll, I don't see it. I've "lived"
(at my SO's place) and worked in MA for the past 8 years. I pay *LESS* in
taxes in MA than I would in RI. My income taxes are less (for 5 of those 8
years I still filed as a Glocester resident) -- I *always* owed RI money
after getting my "Credit for taxes paid in another state". If I worked in
RI, not only would my income taxes be roughly the same, but I'd also get
hammered with RITDI as well.

Massachusetts has higher user fees, higher tolls and its own set of
little problems. Will your taxes be less than in RI? Probably. Will
they be a less by a whole lot? Probably not.

-Owen

[CB]

Post by O
RI has a similar function, though. Instead of 2.5%, Towns are capped at
5% without getting State approval.

Doesn't seem to have worked in my case.

Why were my taxes $2400 in 1997, yet are $5000 today?

I have made absolutely no changes to my house, other than routine
maintenance.

Post by O
You forget that Proposition 2.5 has a mechanism called "overrides,"
where the Town can put on the ballot to let the voters decide whether
they can exceed the 2.5% cap. More often then not, the override
passes.

Not as of late in Massachusetts. Every override I've heard of going before
the voters is getting squashed like a bug. Seekonk (where I was employed and
was part of the town's financial team until 3 years ago) just had theirs
voted down by a huge margin. Likewise in Swansea. I've also seen reports
from the MMA that overrides in other towns are failing at a massive rate.

For a while, every override would pass overwhelmingly. Times were "good".
People would spend oodles of money in the form of overrides to build better
schools. Why does a town school have to look like a college campus, with an
atrium and other crap? When did Form over Function become important? Is my
education in a brick WPA building somehow not as good as it would have been
if the school I went to had a waterfall in the foyer as I walk in the front
door of the school?


More and more, taxpayers are getting tired of the never-ending cycle of
property tax increases. Maybe they are starting to realize "ooh, times
aren't good, and my interest-only ARM is going to adjust 2 points higher and
I can't afford to pay these stratospheric property taxes AND eat something
other than peanut butter sandwiches for the rest of my life"

Post by O
Massachusetts has higher user fees, higher tolls and its own set of
little problems. Will your taxes be less than in RI? Probably. Will
they be a less by a whole lot? Probably not.

In the past 20 years, I've lived in NH, MA, and RI. My taxes have
consistantly been higher in RI than any other place I've lived.

[O]

Post by CB

Post by O
RI has a similar function, though. Instead of 2.5%, Towns are capped at
5% without getting State approval.

Doesn't seem to have worked in my case.
Why were my taxes $2400 in 1997, yet are $5000 today?
I have made absolutely no changes to my house, other than routine
maintenance.

The 5% is on the overall budget, not individual taxpayers.
Revaluations can affect your net taxes, obviously.

Post by CB

Post by O
You forget that Proposition 2.5 has a mechanism called "overrides,"
where the Town can put on the ballot to let the voters decide whether
they can exceed the 2.5% cap. More often then not, the override
passes.

Not as of late in Massachusetts. Every override I've heard of going before
the voters is getting squashed like a bug. Seekonk (where I was employed and
was part of the town's financial team until 3 years ago) just had theirs
voted down by a huge margin. Likewise in Swansea. I've also seen reports
from the MMA that overrides in other towns are failing at a massive rate.

"Massive Rate?" Well, I think it's around 50% right now. So half the
overrides succeed, and half don't.

-Owen

[Z.]

Post by CB
Why were my taxes $2400 in 1997, yet are $5000 today?

$5,000?! That's farking ridiculous.

Here, with NO INCOME TAX, you'll need a $700K house to have a $5,000
property tax bill.

My best friend here has a 4 bedroom, 3 bath, 3k sq ft, HUGE home worth
$594K home (oops! dropped $11K in the last 30 days ... now only $583K),
and his tax bill is $4,000.

[capt bill]

does RI still have propert tax on autos'
wasnt that suppos'd 2 b pazed out?
--
latr$ bill fiore
If you leave me a VM - say when and how to reach you
(011-1)-401-738-0066 usa edt
(011-1)-401-249-1114 cell
www.klystos.com

Post by Z.

Post by CB
Why were my taxes $2400 in 1997, yet are $5000 today?

$5,000?! That's farking ridiculous.
Here, with NO INCOME TAX, you'll need a $700K house to have a $5,000
property tax bill.
My best friend here has a 4 bedroom, 3 bath, 3k sq ft, HUGE home worth
$594K home (oops! dropped $11K in the last 30 days ... now only $583K),
and his tax bill is $4,000.
--
You may call me noZtradamus.

[Z.]

Post by capt bill
does RI still have propert tax on autos'
wasnt that suppos'd 2 b pazed out?

To those who think states w/no income tax (like here) ream you on the
other taxes and fees, I submit my annual registration bill, which
includes property taxes on my $16K car: $192.00.

When I was in Providence in 2003, the City was reaming to the tune of
$100 a year in excise taxes on a beater I paid $500 for. You really
don't get a feel for just how bad New England is until you escape the
tax insanity.

[gamer]

Post by Z.
To those who think states w/no income tax (like here) ream you on the
other taxes and fees, I submit my annual registration bill, which
includes property taxes on my $16K car: $192.00.
When I was in Providence in 2003, the City was reaming to the tune of
$100 a year in excise taxes on a beater I paid $500 for. You really
don't get a feel for just how bad New England is until you escape the
tax insanity.

Having lived in TN where there are no income taxes and quite reasonable
property taxes, they also have 9% sales tax on everything (including
food & clothing) plus fees for trash pickup, using an out of town
library (local one was like an elementary school library), high home
insurance (no fire department, but no fire taxes) and high car insurance
(no mandatory insurance), I much prefer the quality of life in RI for a
couple thousand dollar more cost / taxes in RI. Actually, I was paying
much more to travel in an attempt to find some life after work in
surrounding states than I current paying in tax premiums (travel costs
add up significantly), never mind the significantly higher cost of
inferior groceries, etc. Of course housing is/was much cheaper in TN,
but I can also say the only two homes where I lost money were as a
result of my two stays in TN. Home appreciation has also been low since
I left there 6 years ago, especially vs the 50-75% increase most
everywhere else.

On the other hand, when I get to the point of not being about to enjoy
the long form to deduct local taxes / minimize federal taxes, I may need
to reconsider. I do feel for those who pay the steep RI property taxes
without qualifying for the long form deductions.

[O]

Post by capt bill
does RI still have propert tax on autos'
wasnt that suppos'd 2 b pazed out?

Like all great political tax State tax cuts, even this miniscule cut
was phased out before it phased out the tax.

-Owen

[lcz]

Post by Z.

Post by CB
Why were my taxes $2400 in 1997, yet are $5000 today?

$5,000?! That's farking ridiculous.
Here, with NO INCOME TAX, you'll need a $700K house to have a $5,000
property tax bill.
My best friend here has a 4 bedroom, 3 bath, 3k sq ft, HUGE home worth
$594K home (oops! dropped $11K in the last 30 days ... now only $583K),
and his tax bill is $4,000.

If I am thinking of the same best friend that I met, and I have been to
his home, I have news for you - that's not a home - that's his own
personal VILLA!

And his tax bill is $4000?

Wow. My tax bill is half that *but* you could fit my entire home into
his wife's clothes closet.

lcz

[Z.]

Post by lcz
If I am thinking of the same best friend that I met, and I have been to
his home, I have news for you - that's not a home - that's his own
personal VILLA!
And his tax bill is $4000?
Wow. My tax bill is half that *but* you could fit my entire home into
his wife's clothes closet.

Yeah, that's the friend ... and the house.

He says "Hey! When ya coming back to Reno?" :) You wouldn't even
recognize him now ... he's gotten so smug since he got his black belt
last month. What a prima donna. :)

Loading Image...

[Thomas Reynolds]

Post by lcz
Just for the heck of it, I'm going to pull my head out of the sand (no,
Mr. Potatohead, you stay right where you are - I'll be right back -
keep my spot warm for me), and ask some probably obvious and stupid
questions.

Post by Z.
Other lenders are taking precautions.
Wells Fargo & Co. (NYSE:WFC - News) on Tuesday began an education
program to help subprime borrowers handle their finances. The No. 2
mortgage lender, like many rivals, has long denied charges it unfairly
burdens such borrowers with onerous rates and fees.

This is where my ears perk up. Wells Fargo holds my mortgage. When I
went to buy my house, my credit score came up something like 875 (the
person processing my mortgage application was surprised by the number -
she'd rarely seen one so high). I got a 30 year fixed rate mortgage.
Each month, as I pay my mortgage, the amount that goes to the principal
gets higher and the amount that goes to the interest gets lower.
Last year, the town of Narragansett reassessed the real estate values
on homes. My property assessment doubled, and so did my real estate
taxes.
Despite this, I am able, on my fixed income, to pay my monthly
mortgage, pay my property taxes, pay all the rest of the stupid
Narragansett and/or RI taxes and fees, pay my utilities, and still have
just enough left over for food. I'm not saving, mind you, but I'm a
frugal Yankee who knows how to budget on nothing.
So ... here comes the stupid question part -
If my mortgage holder, Wells Fargo, has difficulty recovering mortgage
payments from "subprime borrowers", does this affect me (a "prime
borrower") at all?

No since you have a fixed rate.

Post by lcz
And, if I am happy with where I live, and can afford to live in it
(even if it's just barely), and I don't plan on moving until I die,
should I be concerned about all this real estate hoopla in the first
place?
(Idiot answer to the second question - yes, I realize that if my real
estate taxes go any higher, I'm screwed, but from what I understand,
the town can't reassess any sooner than 10 years, and by then I'll have
an additional source of income)

Actually, if the price of housing crashes it may have a good effect on your
taxes. If your property value drps, you may be able to ask for a
reassessment to reflect a lower value. Problem is that they may increase
the tax rate to pay for city services if the values crash too much. The
town has a payroll and streets to repair etc., bills which must be paid.

Post by lcz
So, Z, is the sky actually falling on me?
And yes, I am really asking stupid questions, but I am asking them
seriously.
lcz
crawling back into the warm sand with Mr. Potatohead

[Z.]

Post by Thomas Reynolds
Actually, if the price of housing crashes it may have a good effect on your
taxes. If your property value drps, you may be able to ask for a
reassessment to reflect a lower value. Problem is that they may increase
the tax rate to pay for city services if the values crash too much. The
town has a payroll and streets to repair etc., bills which must be paid.

That's what usually happens but at least the total won't rise.

[Mr Potatohead]

Post by lcz
Just for the heck of it, I'm going to pull my head out of the sand (no,
Mr. Potatohead, you stay right where you are - I'll be right back -
keep my spot warm for me), and ask some probably obvious and stupid
questions.

Post by Z.
Other lenders are taking precautions.
Wells Fargo & Co. (NYSE:WFC - News) on Tuesday began an education
program to help subprime borrowers handle their finances. The No. 2
mortgage lender, like many rivals, has long denied charges it unfairly
burdens such borrowers with onerous rates and fees.

This is where my ears perk up. Wells Fargo holds my mortgage. When I
went to buy my house, my credit score came up something like 875 (the
person processing my mortgage application was surprised by the number -
she'd rarely seen one so high). I got a 30 year fixed rate mortgage.
Each month, as I pay my mortgage, the amount that goes to the principal
gets higher and the amount that goes to the interest gets lower.
Last year, the town of Narragansett reassessed the real estate values
on homes. My property assessment doubled, and so did my real estate
taxes.
Despite this, I am able, on my fixed income, to pay my monthly
mortgage, pay my property taxes, pay all the rest of the stupid
Narragansett and/or RI taxes and fees, pay my utilities, and still have
just enough left over for food. I'm not saving, mind you, but I'm a
frugal Yankee who knows how to budget on nothing.
So ... here comes the stupid question part -
If my mortgage holder, Wells Fargo, has difficulty recovering mortgage
payments from "subprime borrowers", does this affect me (a "prime
borrower") at all?
And, if I am happy with where I live, and can afford to live in it
(even if it's just barely), and I don't plan on moving until I die,
should I be concerned about all this real estate hoopla in the first
place?
(Idiot answer to the second question - yes, I realize that if my real
estate taxes go any higher, I'm screwed, but from what I understand,
the town can't reassess any sooner than 10 years, and by then I'll have
an additional source of income)
So, Z, is the sky actually falling on me?
And yes, I am really asking stupid questions, but I am asking them
seriously.
lcz
crawling back into the warm sand with Mr. Potatohead

Comfy, ain't it!?

What they are not telling you, lcz, is that whatever
happens with your taxes, will also happen to renters
as landlords feel the squeeze. The real downer is
you cannot do any improvements without the
double-whammy whacking you. So live there, enjoy,
and let the place fall apart. :-)

Whilst Z cries the sky is falling, I'm saying the
tide lifts all boats. He's actively negative — I'm
just resigned.

I do agree with CB, though, that there are better
places, financially, to live than here. But if here
is where you wanta be... that's 'nuff said.

[Z.]

What they are not telling you, lcz, is that whatever happens with your
taxes, will also happen to renters as landlords feel the squeeze.

In a stable market, that's true, but this is not a stable market. Here,
for example, we have such a glut that I can rent a house for about HALF
what the mortgage payment on that house would be.

[gamer]

Post by Z.

What they are not telling you, lcz, is that whatever happens with
your taxes, will also happen to renters as landlords feel the squeeze.

In a stable market, that's true, but this is not a stable market.
Here, for example, we have such a glut that I can rent a house for
about HALF what the mortgage payment on that house would be.

My son ran into the opposite problem trying to rent in the DC area this
past fall. The demand for rentals went up as housing prices reached a
peak, resulting in significantly higher rents.

[Thomas Reynolds]

Post by gamer

Post by Z.

What they are not telling you, lcz, is that whatever happens with your
taxes, will also happen to renters as landlords feel the squeeze.

In a stable market, that's true, but this is not a stable market. Here,
for example, we have such a glut that I can rent a house for about HALF
what the mortgage payment on that house would be.

My son ran into the opposite problem trying to rent in the DC area this
past fall. The demand for rentals went up as housing prices reached a
peak, resulting in significantly higher rents.

A safe unfurnished one bedroom in nearby Montgomery County MD "burbs" will
run $1400 minimum and can run $2000 for a newer place. Furnished one
bedroom places in desirable parts of DC can run as high as $6,000 a month,
sometimes more.

[lcz]

Post by Mr Potatohead

Post by lcz
Just for the heck of it, I'm going to pull my head out of the sand (no,
Mr. Potatohead, you stay right where you are - I'll be right back -
keep my spot warm for me), and ask some probably obvious and stupid
questions....but I am asking them seriously.
lcz
crawling back into the warm sand with Mr. Potatohead

Comfy, ain't it!?
The real downer is
you cannot do any improvements without the
double-whammy whacking you. So live there, enjoy,
and let the place fall apart. :-)

You mean, do exactly what I am doing right now? I cut the lawn, clean
out the gutters, and make sure the major appliances are well
maintained. In about a year I'll "hafta" replace the old jalousie
windows on my porch, but I'm having a friend do it with scrap wood and
plexiglass (with a second set with scrap wood and mesh screen for
summer - just pop 'em in and out as the seasons change).

Post by Mr Potatohead
I do agree with CB, though, that there are better
places, financially, to live than here. But if here
is where you wanta be... that's 'nuff said.

Word.

lcz

[j***@gmail.com]

Post by Mr Potatohead
What they are not telling you, lcz, is that whatever
happens with your taxes, will also happen to renters
as landlords feel the squeeze. The real downer is
you cannot do any improvements without the
double-whammy whacking you. So live there, enjoy,
and let the place fall apart. :-)

The solution to the problem of rising residential costs is simple, and
usually follows the pattern prescribed, based on financial desperation:

Sell one's vacation home (many people owning a 2nd home are cash
strapped anyway so it's inevitable for quite a few)
Sell one's primary residence and use whatever equity (assuming you
bought wayyyyy before the bubble) to rent
Ask your other relatives to move in with you and share the cost
(consolidation of households)

The latter may encounter some minor glitches with
municipalities/HOAs/nosy neighbors, but as desperation increases, these
factors are eventually eliminated 'cause the local gov't needs its tax
money, and nothing is worse than an abandoned home with no taxes paid
on it.

In Europe, family consolidation is not uncommon. It's actually common
practice. It may not have been the American way for some time, but
that is also irrelevant when faced with an imminent financial meltdown.

All of the above solutions result in increased inventory, as Dick
Cheney would say...BIG TIME!!!!

Yours In Christ,
John

[CB]

Post by j***@gmail.com
In Europe, family consolidation is not uncommon. It's actually common
practice. It may not have been the American way for some time, but
that is also irrelevant when faced with an imminent financial meltdown.

Just about every evening, I am forced to sit thru another long and boring
excursion down the HGTV path, as my SO sits there and watches the house
shows.

Virtually every single show features DINKs or Empty Nesters buying these 2k
to 3k sq. ft houses for $500k-$1 mil.

Its actually good comedy. I sit there and laughing and ask "what planet are
these people on?" Some of the kitchens cost more than my last house. A
kitchen. To cook and eat. Hello?

[j***@gmail.com]

Post by CB
Just about every evening, I am forced to sit thru another long and boring
excursion down the HGTV path, as my SO sits there and watches the house
shows.

Poor guy. As long as she doesn't convince you that you need one of
these fortresses, all the better.

Post by CB
Virtually every single show features DINKs or Empty Nesters buying these 2k
to 3k sq. ft houses for $500k-$1 mil.

One can easily stuff about 10 folks into each of these homes. It'll
happen too. That's the tragedy of the matter. All the bullshit talk
about wanting independence away from family is a red herring to
financial despair. Makes perfect sense too. Since assisted living for
Gramps and Granny would be prohibitively expensive, and the
aunt/uncle/cousins were foreclosed on or evicted b/c of inability to
pay rent, they make perfect roomies for the kiddies. I've seen it time
and time again. This might actually be a good thing, because it will
help bring families closer together, whether they like it or not ;).

Post by CB
Its actually good comedy. I sit there and laughing and ask "what planet are
these people on?" Some of the kitchens cost more than my last house. A
kitchen. To cook and eat. Hello?

That oversized kitchen would make a perfect spare room to put a cot or
two on for the aunt/uncle couple who lost their pension and can't
afford their own home anymore. Also, the dining room makes another
great spare room for a new tenant to help pay the exploding ARM rates
and property taxes. Fuck the municipality and HOA laws. If enough do
it, won't matter.

Yours In Christ,
John

[pla]

Since assisted living for Gramps and Granny would be
prohibitively expensive, and the aunt/uncle/cousins
were foreclosed on or evicted b/c of inability to
pay rent, they make perfect roomies for the kiddies.

Too funny, man! You have a warped sense of reality
if you think the age group to which you refer has any
interest whatsoever in letting the all-too-slowly dying
fogeys move in.

Now, you *do* see more cohabitating multicouple living
situations in some of these McMansions, so in that
respect you have the right idea. But "extended family"?
No. Cohabitating close friends.

I've seen it time and time again. This might actually
be a good thing, because it will help bring families
closer together, whether they like it or not ;).

Destroying good relationships because one or more of
their parents represent a massive financial and emotional
drain does NOT count as a "good" thing. When people can
no longer care for themselves, they need to simply die.
The sooner society gets that concept, the better for us
all. Particularly with increasing expected lifespans...
Thanks to modern medical science, someone who once would
have just keeled over after a few months of hospice can
now drag on long enough to bankrupt the entire extended
family you praise so highly. Granted, thanks to that
same medical tech we can expect the good-health portion
of our lives to last significantly longer; but when the
end looms inevitably near and you start needing someone
to wipe your ass - Pull your own plug.

That oversized kitchen would make a perfect spare room
to put a cot or two on for the aunt/uncle couple who lost
their pension and can't afford their own home anymore.

One word for that situation - Move. Leave the land of
$300k 1BR condos, and move. And if you insist on staying
in the area, let me introduce you to Mr. Overpass and Mr.
Cardboard Box...



- pla

[j***@gmail.com]

Post by pla
Too funny, man! You have a warped sense of reality
if you think the age group to which you refer has any
interest whatsoever in letting the all-too-slowly dying
fogeys move in.

Happens in Europe. My E. European relatives live in the same house.
Too expensive to buy your own (although 90K would hardly seem
expensive, just is in relation to income over there: my high end
diplomat friends only make 30K/year there). Will happen here. Count
on it.

Post by pla
Now, you *do* see more cohabitating multicouple living
situations in some of these McMansions, so in that
respect you have the right idea. But "extended family"?
No. Cohabitating close friends.

It already happens in Europe. It will happen here. It's happened
during the Great Depression. Practicality wins at the end of the day.
Who better to trust than family?

Post by pla
Destroying good relationships because one or more of
their parents represent a massive financial and emotional
drain does NOT count as a "good" thing. When people can
no longer care for themselves, they need to simply die.
The sooner society gets that concept, the better for us
all. Particularly with increasing expected lifespans...
Thanks to modern medical science, someone who once would
have just keeled over after a few months of hospice can
now drag on long enough to bankrupt the entire extended
family you praise so highly. Granted, thanks to that
same medical tech we can expect the good-health portion
of our lives to last significantly longer; but when the
end looms inevitably near and you start needing someone
to wipe your ass - Pull your own plug.

Are you suggesting to kill them off harvest their organs when they
exceed, say, 60 years of age? Really good Star Trek TNG episode on
that one. Very Stalinist and practical.

Post by pla
One word for that situation - Move. Leave the land of
$300k 1BR condos, and move. And if you insist on staying
in the area, let me introduce you to Mr. Overpass and Mr.
Cardboard Box...

When 10 family membes move into the same house, the payments are
surprisingly affordable.

Yours In Christ,
John

[Z.]

Post by j***@gmail.com
Happens in Europe. My E. European relatives live in the same house.

It may happen here, too, when we actually run out of land in 100 years.

[j***@gmail.com]

Post by Z.

Post by j***@gmail.com
Happens in Europe. My E. European relatives live in the same house.

It may happen here, too, when we actually run out of land in 100 years.

The country I'm speaking of has a declining population (the subsidies
for producing offspring are very lucrative indeed...making a baby is
now fun and a nice payoff for some). The Mexicans will likely leave
during the next Depression, since Mexico will be about the same
standard of living as here, or at least not worth the hassle of being
an illegal immigrant.

Yours In Christ,
John

[A]

Post by pla
One word for that situation - Move. Leave the land of
$300k 1BR condos, and move.

No no no! People shouldn't move out of our fair state just because
housing is expensive.

The remedy is easy: Current home- and condo sellers should be charitable
and subsidize buyers' home-owning dreams. (Hmmm... did Karl Marx have
something to say about this?)


:-P

- Anne

[CB]

Post by A
The remedy is easy: Current home- and condo sellers should be charitable
and subsidize buyers' home-owning dreams. (Hmmm... did Karl Marx have
something to say about this?)

I detect a tone of bitterness.

I suspect you're seething inside over the fact nobody is buying your $600k
1-bedroom shack on the East Side.

[A]

Post by CB
I detect a tone of bitterness.

You do? Where?

Wit = bitterness? Not in my universe. I was just feeling puckish.

Post by CB
I suspect you're seething inside over the fact nobody is buying your $600k
1-bedroom shack on the East Side.

LOLsy. Not at all. (Nor does our property fit your description in any way
whatsoever.)

I'm only seething about the fact that all my Christmas decorations are
stored in a U-Haul facility in Warwick at the moment. Seethe, seethe. Tis
the seethin' to be jolly.


- Anne

[A]

Post by CB
I suspect you're seething inside over the fact nobody is buying your $600k
1-bedroom shack on the East Side.

P.S. to C.B.: I look forward to the day that you put your RI house on the
market (as you mentioned you're planning to do) ... Will you list it at
the assessed value? Maybe *under* the assessed value? After all, that
would show your compassion for buyers in these times of high housing
prices, right?

Or will you try to maximize your equity/return for your future use?

Shoe to other foot: Here I come!



- A.

[CB]

Post by A
P.S. to C.B.: I look forward to the day that you put your RI house on the
market (as you mentioned you're planning to do) ... Will you list it at
the assessed value? Maybe *under* the assessed value? After all, that
would show your compassion for buyers in these times of high housing
prices, right?

Why, hell, if I were really compassionate I'd just GIVE it away to some poor
homeless person, wouldn't I?

Post by A
Or will you try to maximize your equity/return for your future use?

As anyone who knows me personally can attest to, I'm not listed in the
dictionary next to the word 'compassionate'.

I'll try to maximize my return on my investment, naturally, so I can
minimize any mortgage I have on my next home (if not eliminate it entirely,
and invest the balance towards my retirement).

That won't be very difficult for two reasons: 1) I intend to move elsewhere,
where the prices are more reasonable; 2) I've already taken steps to
maximize my current equity by a) refi'ing when possible to the lowest
possible rate and b) not doing bonehead moves like pulling out equity to pay
down credit cards, buy a new car, take a vacation, or spend on other
consumable items.

The way I look at it, even if I get back what I paid, I still come out
ahead.

[Z.]

Post by A
P.S. to C.B.: I look forward to the day that you put your RI house on the
market (as you mentioned you're planning to do) ... Will you list it at
the assessed value? Maybe *under* the assessed value? After all, that
would show your compassion for buyers in these times of high housing
prices, right?

http://tinyurl.com/vdzdd (Forbes.com)

...
If you're trying to sell your home in 2007, brokers have one piece of
advice: Make sure the price is right. Perhaps your neighbor made a
bundle by putting his home on the market just when prices peaked. Maybe
your sister sold her condo last month, reaping a 40% return. But when it
comes to your own abode, that means nothing. Sellers need to get real,
and sometimes that means dropping the price. Unfortunately, many sellers
are suffering from housing bust denial. "All sellers are human," says
Sharon E. Baum, a senior vice president with Corcoran Real Estate in New
York City. "Hope springs eternal, right?"

But starting with too high a price can only hurt your prospects of
making a great sale. When you first put up that "For Sale" sign, you'll
be visited by a bevy of potential buyers who have been waiting to find
the perfect home. Brokers call this "pent-up demand." "Your first six to
eight weeks on the market is your hottest time," says Pat Vredevoogd
Combs, president of the National Association of Realtors and a broker in
Grand Rapids, Mich.

If you've set a reasonable price, they'll start bidding, and hopefully
the competition will push the final price higher. If they see the price
is too high, however, they're not going to bother. When you finally drop
the price, that pent-up demand may be gone. And you've wasted six months
of time and energy on an unsold home.

That's exactly what happened to Haines, who had to get rid of his
townhouse because he was moving to launch PropertyShark's Romanian
operations. He couldn't be on call to solve his tenant's problems when
he was living halfway around the world. But the building sat for six
months with no buyers.
...

[pla]

Post by CB
Virtually every single show features DINKs or Empty Nesters
buying these 2k to 3k sq. ft houses for $500k-$1 mil.
Its actually good comedy. I sit there and laughing and ask
"what planet are these people on?"

Earth. You want toys and a nice house? Don't have kids (or
somehow manage to save enough to afford a nice place when you
retire and can't enjoy it as much). Simple as that.

The world has far more than enough people, so I have chosen
to enjoy *my* life rather than make a new one. You can
call it greedy if you want; I call it not adding to the
planet's biggest burden, a choice that just happens to
come with a nice built-in reward.

Post by CB
Some of the kitchens cost more than my last house.
A kitchen. To cook and eat. Hello?

Well, I have to agree with you there. Give me a kitchen
with a modest pantry, a sink, a microwave, and 20ft or so
of counterspace, and I couldn't want anything more.



- pla

[Thomas Reynolds]

Post by pla

Post by CB
Virtually every single show features DINKs or Empty Nesters
buying these 2k to 3k sq. ft houses for $500k-$1 mil.
Its actually good comedy. I sit there and laughing and ask
"what planet are these people on?"

Earth. You want toys and a nice house? Don't have kids (or
somehow manage to save enough to afford a nice place when you
retire and can't enjoy it as much). Simple as that.
The world has far more than enough people, so I have chosen
to enjoy *my* life rather than make a new one. You can
call it greedy if you want; I call it not adding to the
planet's biggest burden, a choice that just happens to
come with a nice built-in reward.

Post by CB
Some of the kitchens cost more than my last house.
A kitchen. To cook and eat. Hello?

Well, I have to agree with you there. Give me a kitchen
with a modest pantry, a sink, a microwave, and 20ft or so
of counterspace, and I couldn't want anything more.
- pla

20 feet of counter space would satisfy Julia Child! :-)

[Z.]

Post by Thomas Reynolds
20 feet of counter space would satisfy Julia Child! :-)

I'd like to get Rachel Ray on 20 feet of counter space.

[A]

Post by Z.
I'd like to get Rachel Ray on 20 feet of counter space.

OINK!


- A.

[Z.]

Post by lcz
This is where my ears perk up. Wells Fargo holds my mortgage. When I
went to buy my house, my credit score came up something like 875 (the

Probably 775 (850 is the max). 775 is very good.

Post by lcz
If my mortgage holder, Wells Fargo, has difficulty recovering mortgage
payments from "subprime borrowers", does this affect me (a "prime
borrower") at all?

No.

Post by lcz
And, if I am happy with where I live, and can afford to live in it
(even if it's just barely), and I don't plan on moving until I die,
should I be concerned about all this real estate hoopla in the first
place?

If you don't sell or refinance and you continue to make your payments
there's really nothing for you to worry about.

If you find yourself in a position where you will be selling or
refinancing, then everything changes and you need to be aware of which
way the market is moving or you could lose a lot of money. Things are
very volatile right now.