Tag Archives: housing

A bubble, bursting

Some commentators have said that there really was not much of a housing bubble, because buying a house is a major decision in an individual’s life, and the responsible homeowner would not walk away.

We’re back down to 2000 levels of homeownershp.

Not that the bubble has burst yet.

us_home_ownership_rate

More info available at  Calculated Risk.

The American Real-Estate Market

If you have been following a respectable media source, like this blog, you already know that only suckers pay their mortgages and organized gangs are systematically seizing homes.

miami_squatters

If you only read a partisan newsletter, like the New York Times, you found out about this today.

With Advocates’ Help, Squatters Call Foreclosures Home – NYTimes.com
Mr. Rameau said his group differed from ad hoc squatters by operating openly, screening potential residents for mental illness and drug addiction, and requiring that they earn “sweat equity” by cleaning or doing repairs around the house and that they keep up with the utility bills.

“We change the locks,” he said. “We pull up with a truck and move in through the front door. The families get a key to the front door.” Most of the houses are in poor neighborhoods, where the neighbors are less likely to object.

Hat-tip to Calculated Risk.

Only fools bought houses they could afford

the_housing_bailout_w480
(Based on the Detroit Bailout, using a photo from Wikimedia Commons)

A nice follow out to only fools pay their mortgages

By David Leonhardt (corutesy Calculated Risk):

Now, not all economists buy this argument. They say that the psychology of the current bust is different from what it was in Boston in the early 1990s. In a handful of metropolitan areas, including Phoenix, prices have fallen almost 50 percent from their 2006 peak.

Homeowners in such places may wonder if their houses will ever be worth more than their mortgages. So fairly small changes in their lives — like a reduction in work hours or the breakdown of a car — may lead them to walk away from their homes.

“I would not minimize that risk at all,” said Frederic Mishkin, a member of the Fed’s board of governors until last year.

If even 10 percent of the underwater homeowners walked away, Mishkin notes, foreclosures would soar, exacerbating the economy’s many problems.

Other economists who share his view are calling for across-the-board programs that would reduce interest rates or otherwise juice the housing market. They are worried that without bolder government actions, the housing market will continue to spiral downward.

In the end, the choice between the two approaches becomes a matter of cost-benefit analysis. The more aggressive approach would almost certainly do more to reduce foreclosures. But it would also be enormously more expensive.

If the economists from the Boston Fed are right — or even close to right — then the aggressive approach may cost something like $500 billion to prevent 500,000 foreclosures.

That’s $1 million per prevented foreclosure. Is that really worth it? Or could the money be better spent in other ways? (There is also the small matter of whether Congress would be willing to spend another $500 billion anytime soon.)

An example of the sort of house that you may soon be paying for are these McMansiosn in California, which have lost a million dollars worth of value.

Warrior Housing is Part of the SysAdmin-Industrial-Complex

During the Cold War, we built the “Military-Industrial Complex” to see us through to victory. The Military-Industrial Complex provided the network of civilian workers, Congressional politicians, and bureaucrats who worked together to give the Cold War political support, even when the complicated and divisive consequences of a global war against communism proved too difficult to express publicly.

The “Military-Industrial Complex” did its job. The only real purpose of the Complex know is to make sure our Air Force and Navy are strong enough to remove hick leaders (Milosevic of Serbia, Saddam of Iraq) when needed, and detour China from attacking Taiwan. The first is an important job. The second can be done much more quickly by providing Taiwan with nuclear weapons.

Now it’s time to build up a “SysAdmin-Industrial-Complex” to see us through to victory in Iraq, Afghanistan, and the other wars in the third-world Gap. While the Military-Industrial-Complex required us to buy high-tech fighters, high-tech air craft carriers, and other high-tech weapons, the SysAdmin-Industrial-Complex requires us to support and sustain a fighting force that are “never coming home,” that will have such things as housing, health care, and other human services as major expenses, and will require long stays in the military to build up the proper experience.

Support the military. Support the SysAdmin Industrial Complex.

Fix the Army Barracks conditions in 82nd Fort Bragg.