« October 2005 | | December 2005 »

Home Mortgages: Fannie and Freddie Get Richer

The "conforming loan limit" of mortgages that can be sold to Fannie Mae and Freddie Mac just got kicked up a notch.

I wonder what the rationale for this is....$417,000 still doesn't match the median home prices of bubblicious markets like D.C., the Bay Area, etc., but with prices dropping, that might keep ownership as a viable option for people that want to stay in the market, but can't handle the increased interest rates. Or maybe it's a boon to state governments who want to foreclose on all those jumbo-mortgaged properties and then sell them to Fannie and Freddie for a song.

Or perhaps it's a test bubble for the already-maligned mortgage interest deduction revisions from Bush's tax panel.

Or perhaps it's yet another part of the government's efforts to sustain the housing boom via pushing building and construction efforts to the Midwest. $417,000 will get you a nice little manse in the Sun Belt, that's for damn sure.

Ah, the conspiracy theories....

Posted at 11:15 PM | TrackBack

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Housing News: Build Your Own Architect

The Architourist is an open-source site that allows world travelers to develop and edit entries relating to architecture. It's based off a wiki, which for the uninitiated means that any reader can go in there and add any data they wanted as if they, themselves, created the site. Looks very cool, and it will be amusing to see who gets into flame wars over modern architecture trends. (Credit to Housing Finance for the link.)

Speaking of architectural trends, Business Week has an interesting story on what it takes to innovate with architecture. I have a friend who's an architect. Weird guy, stays up all hours of the night, socially malajusted...yet he's brilliant when it comes to conceiving designs and ideas that most people either never think of or take for granted. There's even a neat little slide show that demonstrates how we continue to expand our horizons and regain the engineering genius that brought us the Pyramids, the Great Wall, etc.

A foreclosure vulture predicts bad tidings for the housing market. Now, mind you, this woman specializes in foreclosures, so it's her job on the line if they don't happen. Still, some of the stuff she's slinging here is sensible. Money quote:

For example, according to a report by CNBC, 45% of all loans out there are adjustable rate mortgages. As rates rise, their payments will be going up. With little growth in real personal income, those households are vulnerable.

Ain't that the truth. (Credit to Patrick.net for the link.)

As gas prices fall, consumer confidence rises. Here's a cosmic irony...heating bills may not be as high this year because of unseasonably warm temperatures. In other words, the thing that's saving families from going broke due to high oil prices...is global warming.

There are no words.

Posted at 08:33 PM | TrackBack

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Housing Market: Mixed Messages

Existing home sales sank, but prices continue to rise, and The National Association of Realtors is wasting no time patting itself on the back. Isn't it amazing how median prices continue to increase, even though all the economic indicators are saying it's time to chill out?

(To be fair, the NAR just put out a very informative press release detailing the cooling of existing home sale trends, as well as how they garner their data for making predictions.)

Maybe this article about what a girl a home buyer wants has the answer. More space, more amenities, better life quality...basically just "bigger and better" overall. Sounds like a slightly less self-absorbed take on the "trading up and out" mindset to me.

All your home listing base are belong to Google. Yet another volley in the Internet-based real estate game, and this one designed specifically to compete with the likes of Craigslist. As the Bankrate article pointed out, searchers are using the Internet for discounts, comparisons, searches, and closings...another sign that the balance of power is shifting from seller to buyer.

With inventory at seven-month highs, mortgage rates staying reasonable, and the horror of insane price appreciation finally dying down, maybe now's not as bad a time to buy as the pundits would have you believe. But though gravity can be temporarily negated, you always end up coming back to Earth sooner or later.

Just for some perspective, here's today's "FEMA SUCKS" moment, specifically how evacuees are coping with their strange new environs. Sticker shock is bad enough if you're prepared for it. Imagine having to move thousands of miles after a disaster destroys your livelihood, and not being able to afford anything like your old standard of living anywhere else.

Like I said, mixed messages.

Posted at 07:34 PM | TrackBack

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Friday Housing News

There's a good deal of economic uncertainty in the air today, as evinced by rising jobless claims and sluggish wage increases. We're definitely moving towards a model of growth through passive income--dividends, investments, and of course, home equity. That's the prime mover behind the economy's strength, and why the bubble watchers are dancing like angels on the head of a pin every time mortgage data gets released.

Ben Bernanke does seem to be aware of this, according to his comments to Jim Bunning, the one guy to ixnay Bernanke's nomination to succeed Greenspan as Big Giant Fed Head. I'm a little concerned that he's focusing on reforming Fannie and Freddie. Granted, they need it, but it seems to be too much in line with the Bush regime's policy of leaving housing to the whims of the market as much as possible. That kind of thinking is what inflated housing prices in the first place.

The folks over at Patrick.net are speculating--some tongue-in-cheek, some not--on the economic consequences of a bailout. Money quote:

3. Do you think the government should institute a special renter’s tax to use towards the bailouts?

HAHAHAHAHAHAHAHAHA, DIE RENTERS, DIE!!!!!!

Heh. You just know some wonk over at the Fed was thinking of this very idea, only without the snark. ;)

To give you some perspective, here's a look at how bad things are getting for Wilma evacuees in Florida. It's not enough that Katrina and Rita's fallout is disappearing from the radar, but the media seems to be completely burying the devastation from Wilma. One million people without power in a country with our resources...nothing to sneeze at, kiddies.

At least FEMA has decided not to be turkeys about housing evacuees over Thanksigving, though they're clearly still Grinches for Christmas. Stop me if this whole "extending deadline" thing sounds a tad familiar.

And on that recursive note, I bid you all a HAPPY THANKSGIVING!!!!!!!

Posted at 08:35 PM | TrackBack

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Home Buying: Where The Homes Are...and Aren't

Business Week has a list of the affordable home regions.BW also provides the opinion that the market is in the middle of a blip, not a bubble pop.

I find it interesting how so much of the emphasis appears to be on the home's value in monetary terms, as opposed to its value in a geographical sense. I don't want to buy a home in Bum F$#k, Egypt just for an investment's sake. It's the eternal paradox...the coastal cities are where the culture is shaped, so that makes living arrangements and accomodations that much more expensive. If you want interesting things to do, you're gonna have to pay more for it.

That doesn't mean I don't think the Bay Area, New York, etc. aren't SERIOUSLY overpriced, of course...just making an observation.

An insight as to why certain regional markets have swelled housing prices so far out of proportion can be found here. The author's look at the continually expanding size--and price--of suburban living has some trenchantly funny observations within. For example:

Her husband, Jeff, who travels constantly and works 14-hour days, said: "Am I happier having space? Absolutely. . . . I don't worry as much. If my kid wants to hit a golf ball, I don't have to worry about it clocking a BMW."

I wonder how many readers picked up on the point that Jeff is barely around to enjoy the spoils of said massive house. ;) Here's another one:

It will be 9,506 square feet, a place Alex Hannigan, the builder, calls "an all-about-me home."...It has a guest wing, five fireplaces, three laundries, a hobby room, an elevator, a spa, a home theater, a summer kitchen, a chandelier lift -- not things that the average American can necessarily afford at the moment, Hannigan said.

But, he added, "we figured we'd make this home in keeping with where our country's going."

I wonder if that path includes treatment for an irony deficiency, because it seems like this guy's complexion is sadly lacking. ;)

Posted at 07:22 PM | TrackBack

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Friday Housing News

Mortgage rates have stopped the Great Leap Upward. I question the use of the CPI as a gauge of inflation, since it excludes the two most important expenses in anyone's budget--food and energy. Gas prices may be down from the astronomical highs of Labor Day, but they're still nothing to be frivolous about. And higher gas prices mean merchants and shipping have to bear bigger costs, which mean food will cost more down the line, if it hasn't already started.

Still, it's a nice breather for anyone who wants to take advantage of the colder weather to find a bargain on the house hunt. If it were me, I would lock in on a fixed rate and be done with it while things are still at the 6% mark. Here's an interesting look at how flattening bond rates may spell doom for ARM holders. The money (pun intended) quote:

For many borrowers, the savings from an adjustable may no longer be worth the risk that rates will rise further. Rates on one-year adjustables, for instance, currently average 5.48 percent, according to HSH Associates in Pompton Plains, N.J. That is just 1.01 percentage points less than average rate on a 30-year fixed-rate mortgage. Worse yet, even if interest rates remain unchanged, a borrower with a one-year ARM would see the rate on their loan jump to 7.1 percent after 12 months, according to HSH. That is because one-year ARMs typically carry low introductory rates.

Sounds a whole lot like credit card offers, doesn't it? "0% APR FOR SIX MONTHS!!!!! .... oh, and 27.99% for the rest of your natural life."

Apparently in D.C., gentrification and luxury condos favor rich gays and lesbians. This reminds me of talking with my dad...he can be amazingly incisive about politics and economics, and then he'll go off on some bizarre tangent about how blacks and Mexicans are ruining the nation's future. It's another reminder that real estate has myriad dimensions above the financial.

And hey, if D.C. residents want something to get riled up about besides the failing housing market, how 'bout that commuter tax battle?

Posted at 05:48 PM | TrackBack

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FEMAVille Tales: The Clock Is Ticking

FEMA is setting a deadline to move evacuees out of hotels. The National Multi-Housing Council points out the incredible difficulties of adhering to this deadline, many of which have been caused by FEMA itself.

To give you an idea of what kind of heartbreaking conditions may be awaiting people who move into "FEMAville" trailer parks, Rolling Stone has an in-depth essay on a trailer community created after Hurricane Charley, and how rough the situation is for those who live there.

The money quote:

"What is bewildering about the Katrina situation is why the federal government has chosen the trailer-park option over alternatives that are proven to be more effective and efficient," says Bruce Katz of Brookings. "Housing vouchers would give low-income and moderate-income families the ability to rent quality apartments or homes in neighborhoods with ready access to educational and employment opportunities. And providing vouchers for the next eighteen months would also be cheaper than the temporary options selected by the government."

I think we've been here before, you and I.

Notice also that my earlier coverage (and the RS article) noted that the hotel reimbursments were supposed to be indefinitely extended. I wonder what suddenly prompted FEMA to pull a 180. Might have something to do with that massively unbalanced budget, perhaps....

Posted at 08:59 PM | TrackBack

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Fed Watch: The Heir Apparent

If Senator Richard "You're all heart" Shelby's opinion is any indicator, Ben Bernanke's nomination to Fed chair should sail through. The Washington Post has a detailed profile of the man who would be king.

I can't stress the importance of asking Bernanke all the tough questions that need to be asked. Even as much as the controversy over Alito for the Supreme Court continues to simmer, in a very real way, Bernanke's decisions will carry as much weight as the entire Court. And just like Greenspan before him, Bernanke is going to be taking over in the middle of a looming financial crisis. Or, as USA Today put it, a fiscal hurricane.

Bernanke's savvy with numbers and disdain for swami-like "Greenspanese" will serve him well when it comes to the damage wrought by a bursting housing bubble, excessive debt, and so on. Let's hope this is a rare case of a Bush appointee putting policy over ideology.

Since I mentioned hurricanes, and I can't go a day without slamming FEMA for their seemingly infinite stupidity, have a gander at the miracle of overcharging. The amount of money being tossed around there is so staggering that you can't even get your head around it. And meanwhile, people are still living in trailers....

Posted at 07:51 PM | TrackBack

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FEMAVille Tales: Still Feeble

The San Francisco Chronicle reports that FEMA has yet to reopen their no-bid contracts.

I should be shocked by this, but at this point, it's almost mind-numbingly normal to expect that FEMA can do anything right, even with the whole of the nation using them as a punchline. Oh, yeah, take note of this:

Separately, FEMA will set aside up to $1.5 billion worth of work for small companies to maintain trailers housing Hurricane Katrina evacuees. The 15 contracts worth up to $100 million each will be awarded by Feb. 1, with eight of them specifically designated for minority-owned businesses

Remember the last time they did this?

If you think I have a "grimm" view of things regarding FEMA, Mother Goose & Grimm tend to agree. Indeed, the monumental inability of an agency specifically designed to handle emergency management to get even the smallest thing right is truly the "8th Wonder of the World."

Posted at 06:46 PM | TrackBack

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Friday Housing News: Housing Bubble R.I.P.

Picking up on the thread from Wednesday, everyone from the Washington Post to Consumer Affairs is attending funerals for the housing bubble.

The money quote from the Post:

Economist Gregory H. Leisch, chief executive of Delta Associates, an Alexandria-based real estate consulting firm, said consumers would benefit in the long run from the slowdown because house prices had been rising so quickly that the market was destabilized.

"The market is fatigued, and it should be taking a breather," Leisch said. "It's healthy that it takes a breather."

A fellow blogger and housing market watcher I know in Alexandria had this to say:

While I certainly have a stake in the housing market given my own ownership, I'm clapping loudly at the end of this madness. I know so many guys around my age, even couples, who want to start a life of homeownership and have been denied that goal because of outrageously unrealistic housing prices. At the same time I'm a bit concerned over what effect a slowing will have on the overall economy. Since much of the economy is propped up by consumers who've been using their houses like ATM machines, even stagnation of prices (never mind outright declines) could have serious consequences on consumer behavior as well as the large part of the economy based on housing (construction, real estate agents, home improvement stores, etc.). Time will tell. (Emphasis added)

That's it on the nose, really. With the market so completely balanced on new home construction and huge price appreciation in sales, we may be in for a good six months' to one year's worth of "sticker shock" before the market corrects itself. But the economy will benefit from more people being able to buy homes.

Unfortunately, a lot of those homes may be coming from foreclosures due to people being unable to pay their super size mortgages. I fear for the financial future of anyone thinking they could cash out their home equity and expect that the market would just continue to balloon forever.

Like the man said, time will tell.

Posted at 06:09 PM | TrackBack

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Wednesday Housing News: The Day The Bubble Died

New Fed heir apparent Ben Bernanke is lauded as a plain spoken kinda guy. So, if he says that there is no housing bubble, we're supposed to take him at his word, right?

Well, if Bernanke is looking into the future, he may be correct, because luxury home builders have proclaimed that the market has slowed. (Registration required--visit Bugmenot to get a free login.)

The money quote, and man, there's a lot to choose from:

"All of a sudden, the ads in the paper show special mortgage deals, special incentives," Mr. Toll said last week, referring to new housing developments nationally. "That's an absolute indicator that the market has softened."

CNN's Kathleen Hays comments on the Fed's current approach. It's going to be tough for Bernanke--a Greenspan disciple--to follow his mentor's policy of furiously cutting interest rates again for a good long while. Greg McBride claims that this is a bad thing.

I think what McBride is missing is the fact that the astronomical price increases kept buyers off the market just as readily as higher interest rates might. Consider what he says here:

When short-term interest rates fell to record lows, widening the difference between adjustable- and fixed-rate mortgages, borrowers piled into ARMs, interest-only mortgages and home equity lines of credit.

The eternal danger of those "creative mortgages" was that if the price for the home didn't appreciate fast enough to "flip" it before the mortgage rates changed, the buyer would be stuck paying huge amounts of interest on an expensive home before even touching the principal debt. I've said this time and time again.

That's been the key of the entire housing boom....relaxed lending standards, rapid price appreciations, and the marketing of dangerous "alterna-mortgage" products that encourage borrowers to use home equity as a credit card.

McBride then says:

Higher rates sap borrowing power from prospective buyers, keeping first-time buyers on the sidelines or settling for more modest digs. Even existing homeowners encounter resistance from moving up to a larger home. Add to this the burden of larger property insurance, and property tax bills that come with a larger home, and borrowers suddenly think what has been unheard of in recent years: staying put.

Any large-scale trend by borrowers along these lines -- you can see where this is going -- could lead to unfavorable trends in home prices.

We've already seen trends that new buyers are trading space (so to speak) for more amenities, which may signal an end to the McMansion era. Not only that, but as the mighty Ben Jones lays it down for the masses, high home price appreciation can cause more harm than good.

A truly sustainable dream of home ownership has to be about more than just prices and investing. It has to be about livability, community, location, resources, and costs. In the frenzy to "cash in" on a potential source of wealth-building, home builders, lenders, the Fed, and pundits like my buddy David "Going to Hell" Lereah all insisted that the thing to do was jump in on the boom and push those prices as high as they could go, then sell and retire early.

Well, to coin a phrase, the earnings reports have come home to roost. We may be in for a severe economic shock in the next few months, but we will emerge from it stronger, with hopefully less reliance on consumer debt and inflated markets to drive our spending and investing.

Today's the day the bubble died. Hallelujah.

Posted at 08:43 PM | TrackBack

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News from around the housing world

I'm all over the Washington Post when it comes to real estate and housing news. Their op-ed pages leave a lot to be desired, but you can find a lot of interesting gems in the middle to back pages. For example, check out this story regarding the renewal of an old neighborhood, and how it's leading to the dream of home ownership for families in the District. This also illustrates how the decision to find a place to live can take on cultural and political dimensions, as well as logistical.

In mining the Post, I also found a story about Thomas Stevens, the new head of the National Association of Realtors. The article's thrust seems to be how much of a combative negotiator and fighter he is, which spells trouble for advocates of discount brokers and Internet real-estate services. The money quote:

As for the antitrust actions, he said they are being propelled by "new Internet-driven business models that don't like the old ways business has been done." He said some discount brokers don't provide much actual service to consumers and have sought support from regulators to help make their businesses more profitable.

"Once the Justice Department and the others understand the business they will agree with us and we will prevail," he said.

I fail to see that having more real estate agents on the books is a good thing. Anyone can slap a badge on and say they're a broker or appraiser. That's part of the problem with traditional brick-and-mortar realty operations...no oversight. While sheer numbers of realtors gives buyers and sellers a dizzying array of options to choose from, it also means more room for fraud, abuse, and so on. Take a look at The Mortgage Fraud Blog for almost daily examples of how shysters and hucksters are getting away with the real estate equivalent of mass murder.

I think Stevens would find buyers much less reticent about paying the infamous 6% commission if they had more of a solid comfort that their house might not get taken out from under them, y'know?

Back to D.C. for a moment...the D.C. Examiner has a look at the flipside to the aforementioned Post story, namely fighting back against McMansions. The growing trend of homebuyers towards more amenities and less space is a smart move, financially, economically, and culturally, in my utterly biased opinion...but that leaves the question of what you do with these miniature castles that take up space and no one can afford to live in.

I say turn them into museums...stand-alone exhibitions of the Great Housing Boom of the Twenty-First Century. Y'know, so Duck Dodgers and the like can shake their heads and wonder what the heck we were thinking. ;)

Speaking of the housing boom, Ernst & Young note that condominiums are leading the trend in slowing markets. Take a note of where sales (and building, by extension) are remaining brisk:

In contrast with the rapid runup on the coasts, housing prices in markets such as Ft. Worth, Chicago, and Minneapolis have increased at a moderate rate and sales have remained strong. "There are many markets such as Austin, TX and Boise that are not only affordable but great places to live," Friedman said.

That squares with my previous discussions of how the housing market will sustain itself by pushing inward, while coastal market prices fall. This might actually not be a bad thing in and of itself, but our economy cannot be predicated solely by the desire to fill up available space with development.

Lodging industry reports new profitability in 2004. I wonder if those "raised room rates" will change at all, given the huge numbers of hurricane victims staying in hotels and motels, and how that may affect the scores for 2005.

Finally, dig the Brooklyn-based Brownstoner for a great look at local views on prices, buying, selling, and trends in that inimitable Noo Yawk style. I'm from Noo Joisey myself, but I can get where they're coming from.

Posted at 04:28 PM | TrackBack

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Friday Housing News

Going against the prevailing wisdom that higher mortgage rates will induce tighter loan standards and put the kibosh on creative mortgages, MSNBC reports that rising rates may have the opposite effect. The money quote:

At the same time, some borrowers with poor credit were able to resell their homes at a profit and borrow more money for another home before the first home’s mortgage rate rose.

“There have been no bad delinquencies yet because higher home prices bailed them out,” said Olson.

Flipping in a nutshell. I'm against refinancing willy-nilly for a number of reasons, and this is just one more on the list. Especially now, with the tax panel proposals generating much debate. Under this new plan (if I am not mistaken), the mortgage interest deduction would be eliminated for refinanced mortgages or HELOCs--which makes no sense, given how low mortgage rates are the very thing that has spurred equity spending in the first place. (Of course, if you're of the school that says equity spending is a Bad Thing(tm), it makes a lot of sense.)

Also, the new bankruptcy laws that have come under heavy fire from consumer advocates also puts heavy clamps on the homestead tax exemption, and as I've brought up before, it will eliminate disaster assistance for refinanced homes.

Even as local bubbles contract and others expand, we are still very much at the tipping point of a national bubble shrinkage, no matter what Greenspan, Bernanke, Snow, or any of the Kool-Fed drinkers will tell you.

But fear not, dear reader. Here's a good example of how cooling markets can benefit priced-out buyers and change the conditions of the market.

The House has basically neutered Kelo. The key here is that using private industry's desire to build new businesses on public land as a means of income and revenue generation only works if said income and revenue is returned to the city in the form of buying goods and services. With behemoths like Wal-Mart, the exact opposite happens. Wal-Mart drives all the small business competitors out of town. It puts experienced workers on the unemployment lines and replaces them with low-paid labor who often can't afford to live in the area they're working in. All of the capital generated by Wal-Mart flows outward from the town itself, into H. Lee Scott's coffers.

For that reason alone, there's no good rationale for allowing megastores to take private property for public use. If it's not benefiting the public, the public shouldn't have to put up with it.

FEMA hands Louisiana a $3.7 billion bill. Oh, wow. The sheer gall amazes me here. How much of that $60 billion collected for hurricane relief has been unspent?

Pick out any entry from this blog over the past 30 days for a good example of FEMA at work (or not), and then ask yourself where they got the stones to ask for recompense this fast. At least they're giving the same amount of relief to Katrina and Rita victims as they are to Wilma.

Of course, it's not always the best thing to let federal oversight take over the restoration of damaged or derelict property. Just ask the good folks of the Virgin Islands what they think about that. Here's a better look.

Not exactly the A-1 destination spot for tourists there, eh mon? :)

Posted at 05:47 PM | TrackBack

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Katrina Housing: Scenes from an American Disaster

As the news cycles on to whatever's the big crisis of the moment (Is it bird flu? Or was that last week? I forget...), the public's imagination often drifts to the new hotness and forgets about what happens next. In order to have a clearer understanding of the true nature of news, we need context. An ability to see the big picture.

With that in mind, I have a link to these pictures of the Katrina aftermath, brought to you by the fine folks at the Survival of New Orleans blog. This blog was going all throughout Katrina, and the updates were just amazing and heartbreaking to witness.

Industrial rock godfather Trent Reznor of Nine Inch Nails also has posted some photos of return to New Orleans, including a visit to the levee breach site itself. As he says, the scale of the devastation is unbelievable.

Look at those pictures and be thankful that you have a roof over your head tonight, wherever you are.

And where was Mike Brown when all this was happening? Wishing he had quit.

Believe me, Brownie, we wish you'd quit too. The money quote:

"I just feel like I'm getting the s--t beat out of me, but we're working our butts off down here."

There's nothing more stressful than choosing the right kind of tie or whether to roll up one's sleeves when dining out at the Whataburger, isn't there? But how can anyone understand Mike Brown's pain? It's not like they had anything to worry about in New Orleans, after all....

Make sure to download the PDF of the e-mails in case they magically disappear. :)

Just to show you that FEMA's nuttiness continues on long past Mike Brown's departure (Oh, wait, he's still there!), the agency is granting up to $26,200 for victims of Wilma. On the one hand, that's great...as I've said, the lack of coverage about Wilma's effect on Florida--not to mention the lack of response--is just mindboggling. But I also wonder why those relief packages are so much higher than those for Katrina and Rita....

Don't worry, though, because FEMA doesn't heart Hanover. There's plenty of stodginess to go around. And yet, they somehow managed to give $2 grand to a guy who never lived in Louisiana.

I couldn't make this up if I tried, folks.

30-year-mortgage rates hit new highs, while not coincidentally, applications drop. Although the drop in the final quarter of the fiscal year will not draw down overall success too terribly, these are still important signs of a cooling market, which may lead to lower prices and a renewal of the cycle in favor of formerly priced-out buyers. Holden Lewis of Bankrate has a very sharp look at what the rise in rates may mean.

I usually love me some Holden, but I have to chide him here, though. Courtesy of a quote in his blog that he got from the New York Times:

ILL WINDS: Hurricane-related job losses have peaked in the areas hit by Katrina and Rita. About 478,000 people have lost jobs. "The impact of the hurricanes is now clearly diminishing," says Ian Shepherdson, chief United States economist for High Frequency Economics, a private forecasting firm in Valhalla, N.Y.

That would be great news, except that it's not entirely accurate. See what I mean about context? Mortgage rates, hurricane relief, or Mike Brown's sleeves...it's all about the big picture.

Posted at 09:35 PM | TrackBack

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Wednesday Housing News

MSNBC's Bob Sullivan has come out swinging with his new blog, The Red Tape Chronicles, which covers consumer fraud, corruption, wasteful spending, and all the chaos that goes with it. Dig yesterday's look at FEMA busy signals, especially the comments section. The money quote was hard to pick out, but here's a winner:

Why is insurance the one product you are required to own and the one product that is taken away when you finally use it?

Why, indeed? I've often wondered that myself. We're drilled with the notion that we have to have insurance in order to prevent personal and financial catastrophe, yet when we need it, it seems like the lender goes through more hoops than a trained circus dog to make sure you don't get your claim filled. ;)

Consumer Affairs.Com brings us the tragic tale of Stephanie Moore, a writer and consumer advocate who found her way into a new home after bankruptcy. This is a worthwhile and informative read in and of itself, and if this were a movie, the story would end on a happy note. Unfortunately, it doesn't turn out that way.

When it comes to shopping, save the impulse buying and retail therapy for the DVD sale at FYE or the shoe sale at Nordstrom's. If there was ever any financial decision that required thought, planning, meticulous study, and yes, copious saving, home buying is it. If someone as savvy as Stephanie can fall victim to the relentless blitz that home buying is a key to the kingdom, imagine what all the everyday folks falling victim to predatory loans are going through.

I want all of you out there reading this to buy homes. Yes, even you in the back there! I see you. :) Seriously, I want you all to be able to live the dream of ownership and investment, but I want you to do it smartly. They call it the "American Dream" for a reason, not the "Nightmare."

If you're worried about whether or or not your lending history may leave you vulnerable to predatory lenders, Bankrate.com has a simple breakdown of what constitutes a subprime borrower.

The Real Estate Journal has a very thorough breakdown of the tax panel's mortgage deduction plan. The general consensus seems to be that this would actually place more of the tax burden on jumbo mortgage holders in expensive areas of the country. Wow, a Bush tax idea that actually helps the middle class? Get me a chair, I'm about to faint.

As the pundits say, this proposal probably won't get more than a few feet in Congress before it's shot down, and the fact is that until housing prices fall appreciably, that $312,000 or so limit is well below the median prices of desirable locations in the country. But as I've said before, the big boom for housing seems to be in the Midwest, where that amount of money could definitely get you a decent home to live in.

Things that make you go "HMMMMMMMMMMMMMMMMM....."

Posted at 04:10 PM | TrackBack

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Hurricane Housing: FEMA Enfeebled

I know it seems like I use this blog as a never-ending crusade against the ineptitude of The Federal Emergency Management Agency, but let's face it...this blog is read by homeowners, home buyers, and people interested in housing. Right now, the two biggest issues in real estate are the battles over the bubble, and the cleanup from this year's triple threat of hurricane hell. On that second count, FEMA's response has been about as dynamic as Dick Cheney's commentary on the Libby indictment, which is to say, nothing at all.

And yet, I have sympathy for the people who are out there, volunteering on the front lines, working insane hours to help the evacuees as much as they can. And just as the destruction to the Gulf Coast and Florida is taking a toll on the survivors and victims, it's exacting a toll on FEMA relief workers as well. Remember this the next time you vent your aggression on some nameless person on the phone...they're people doing their jobs, just like you.

In terms of not doing your job, you can't get much more obvious than FEMA giving data to the media before relief groups. Seriously, what is the point of that? It's not like it made FEMA look any more competent. Far from it. ;)

Apparently, the big housing boom expected in the wake of Katrina isn't what everyone thought. The big construction and buying trends are all for new homes, not repairing and selling existing ones. What does that tell you about the tenor of the rebuilding effort, as well as where the housing economy is going for the next few months?

I'm not sure, but it doesn't seem all that promising.

Bush is expected to name FDIC chairman Donald Powell to head the Gulf Coast recovery effort. Say, wasn't Karl Rove assigned to do this job when Katrina first hit? Gee, wonder what's occupying his time...

Anyway, Powell is one of those folks that hasn't been on the radar much, apart from his apparent financial largesse, especially when it comes to being a Bush Pioneer. What? Cronyism? You lie!

Housing Finance clued me in to the wonderful Real Estate Blog Squad, run by attendees of the National Association of Realtors' convention. Great read, and surprisingly more forthright than I'd thought. Check out some authors' views on the need for competition in real estate, and how the new bankruptcy laws may be affecting California foreclosures. Take that, David Lereah!

Posted at 08:27 PM | TrackBack

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