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When the last boom slowed, a few years later the asian economies felt the pain. I think you'll see the pain spread east as the need for $29 DVD players evaporates. I always remember the Japanese conglomerate buying Pebble Beach for billions in the late 80's and selling it for millions in the mid-90's during their banking crisis. And as the asian economies slowed back then, oil fell into the low teens per barrel. It can happen again if the world economy slows thanks to the US slowdown. Heck, the president of Russia even got pissed off at the US for causing the global credit mess the other day. Reminds me of Hardy telling Laurel "another fine mess you've gotten me into" :)

And it isn't just the east that feels the pain. 40% of the homes sold in the Orlando area from 2004 to 2007 were bought by EuroZone residents who took advantage of a strong currency/weak dollar and the romantic thought of owning a place in Florida that was much larger than the flat near London or Frankfurt they now call home and with much better weather more months of the year. Almost all of these homes are well under water in value and with mortgage companies red-lining Florida, they won't be sold anytime soon. Quite a bit of foreign investment capital will share in the Florida real estate bust.
Florida, especially SW Florida is doing pretty bad, but the ultimate F*d housing market award still goes to Riverside. Median price was $435,000 in April 2006, today it is $279,500. For all you midwesterners that think it's all doom and gloom with no basis in reality, below are some of the metro areas most affected by the current housing downturn, with their near peak prices set in 4/2006 and their current prices:

Washington, DC: $479,930 - $349,900
San Francisco: $654,663 - $520,000
Los Angeles: $579,666 - $440,000
San Diego: $537,666 - $410,000
Riverside: $435,000 - $279,000
Sacramento: $439,500 - $305,000
Boston: $389,900 - $349,000
New York: $469,000 - $434,900
Las Vegas: $344,900 - $239,990
Tampa: $279,900 - $204,900
Phoenix: $333,800 - $250,000
Orange County: $694,833 - $519,900

Source: http://www.housingtracker.net/

Both the housing bubble and now bust are pretty much a coastal/sun belt phenomenon, so I can see how someone living in Texas might think that the mass media stories are much ado about nothing. In reality, the media stories just scratch the surface. It is true that the media tends to focus on the sensational stories, but based on the underlying information that I have seen, the situation is likely to worsen much more than even the "doom and gloom" stories in the media let on at this point.

The areas affected by all this represent a majority of the population of the country. In reality, even in these areas, the price drops are not uniform. In a market downturn, the most exposed fall first. This downturn has been no different. Subprime debt, the most leveraged, risky debt created during the bubble, has already experienced a high-profile collapse. Sectors of metro areas that had a high concentration of subprime have already seen considerable drops. For this reason, individuals that live in parts of metro areas affected by the bubble/bust that did not have a high concentration of subprime lending have not seen as big of a drop or any drop at all. For some, it is easy to justify this phenomenon on a myriad of factors, some factual, many psychological. But as this bust continues, debt of higher and higher calibre is getting sucked into all this. So people with stronger and stronger finances have begun to become affected. And so the bust goes, working its way up the food chain of debt.
 
Excellent post! Most people are saddled with debt - in the form of a house they can't afford, an expensive fleet of automobiles and credit card debt. I have a sister in law that has criticized me for living too far below my means. I have no credit card debt, two cars that I own free and clear and am moving into a home that I had built with a 40% down payment. Funny thing is that in the long run by living below my means I will live much better than her (and the rest of the country) when retirement hits.
Ah, but you don't realize that people like your SIL outnumber you, and they will vote in politicians like Obama who promise to take the "hoarded wealth" away from people like you and give it to them, because they "deserve economic security".

Obama has already promised the largest capital gains tax increase in history, not because it will lead to increased tax revenue (tax revenue will actually go down, as John F Kennedy knew when he LOWERED capital gains taxes, same with Ronald Reagan), but because he thinks it is "more fair".

Unfortunately the stupid and shiftless outnumber the smart and careful, and they will vote themselves the right to take away everything you have saved.
 
House prices in cities located two hours from Paris increase when those cities are connected to the TGV rail system. America needs high-speed rail, however, the powerful gas and auto lobbies will fight it to the bitter end.
 
The issue is that these developments are so far away from job-centers, that as the price of gas goes up, the value of the houses goes down, since living closer to job centers would save you more money.

Example:

Bob's McMansion is 50 miles from his job, and Bill's McMansion is 10 miles from his job.

Annual Miles Driven

Bob = 50 miles x 2 times per day x 5 days per week x 52 weeks in a year = 26,000 miles per year

Bill = 10 miles x 2 times per day x 5 days per week x 52 weeks in a year = 5,200 miles per year

Annual Fuel Consumed

Bob = 26,000 / 20 mpg = 1,300 gallons

Bill = 5,200 / 20 mpg = 260 gallons

Annual Fuel Cost at 2.50 per gallon

Bob = 1,300 x 2.50 = 3,250 bucks

Bill = 260 x 2.50 = 650 bucks

Annual Fuel Cost at 4.00 per gallon

Bob = 1,300 x 4.00 = 5,200

Bill = 260 x 4.00 = 1,040

Now, let's multiply that by 20 years of home ownership, and calculate the difference in price-hike impacts between Long-Distance Bob and Short-Hop Bill:

Bob = 65,000 total cost at 2.50, and 104,000 total at 4.00... difference of $40,000

Bill = 13,000 total cost at 2.50, and 20,800 at 4.00... difference of 7,800.

Hence, houses further away from job centers are impacted more by higher fuel costs.
Now lets look what you left out .
Bob's 3 bed room house in the suburb has a mortage of $1600 / month .
Bill's 3 bed room house in the city has a mortage of $ 2600 / month .
Bob has extra $1000 to pay for gas a month .
 
Now lets look what you left out .
Bob's 3 bed room house in the suburb has a mortage of $1600 / month .
Bill's 3 bed room house in the city has a mortage of $ 2600 / month .
Bob has extra $1000 to pay for gas a month .
That's exactly what I was going to point out. Besides a 50 mile commute being a little extreme, housing rates in the cities are outrageous. And with the current housing "problems" you can get a great deal on something in the burbs. If you think long-term, instead of short-term like "Bill" did, in 10 to 15+ years, when everybody realizes how stupid it was to drop everything and run, you'll make out like a bandit.
 
Now lets look what you left out .
Bob's 3 bed room house in the suburb has a mortage of $1600 / month .
Bill's 3 bed room house in the city has a mortage of $ 2600 / month .
Bob has extra $1000 to pay for gas a month .
Not so fast.

My house 40 road miles from Manhattan is about the same price as a residence of equal prestige in the city. No savings there.
 
That's exactly what I was going to point out. Besides a 50 mile commute being a little extreme, housing rates in the cities are outrageous. And with the current housing "problems" you can get a great deal on something in the burbs. If you think long-term, instead of short-term like "Bill" did, in 10 to 15+ years, when everybody realizes how stupid it was to drop everything and run, you'll make out like a bandit.
And it is even more savings living in the suburb .
Compare cost of service like car repair .
Calling a plumer .
Yard maintence .
Computer repair .
And most everything else .
All of above cost more in city the because they can .
 
"Your house" Like to see a house mortage in Manhattan that is
same as 40 miles outside Manhattan . Can't compare house to
condo . It would be like compare Chevy Cobolt to a Cadillc DTS .
No... more like comparing a fully loaded 335i sedan to a Cadillac DTS... same price, but the smaller BMW has more prestige.

There's more to a residence than size. A friend of mine lives on Park Avenue, and although he technically has less square footage than I, you'd be hard pressed to find anyone that'll say my residence is nicer than his, land and everything factored in.
 
Ah, but you don't realize that people like your SIL outnumber you, and they will vote in politicians like Obama who promise to take the "hoarded wealth" away from people like you and give it to them, because they "deserve economic security".

Obama has already promised the largest capital gains tax increase in history, not because it will lead to increased tax revenue (tax revenue will actually go down, as John F Kennedy knew when he LOWERED capital gains taxes, same with Ronald Reagan), but because he thinks it is "more fair".

Unfortunately the stupid and shiftless outnumber the smart and careful, and they will vote themselves the right to take away everything you have saved.
Right now capital gains tax is lower than income taxes. So if you have a $3 million dollar wealth and live off the interest and I earn the exact same amount of money per year at my job, you pay dramatically lower taxes per year than I do.

Quite truthfully, people who already have wealth can accumulate additional wealth much faster than people in the poor and middle class can accumulate any wealth at all.

Is that fair to you?

Also remember, capital gains taxes were much higher than they are now when the US economy was undergoing massive growth in decades past.

Also remember, this is the lowest US tax rates have been while the country is at war in over 100 years. Never before has the government kept taxes low while borrowing against future tax revenue to fund a war.

Frankly, I haven't read anything about Obama's plan for the economy and I don't really care if it's dumb as hell. I'm still spitting nails that McCain wants to keep the tax cuts that let people richer than me legally pay far less taxes than I do, and that's enough to stop him from getting my vote.

[EDIT] http://www.capitalgainsandgames.com/blog/pete-davis/238/even-more-false-budget-comparisons
Even after President Reagan cut taxes, the government had higher tax revenues in the 1980s than under George Bush in 2004 and 2005. If cutting taxes was the solution, we wouldn't be in our current economic mess.
 
Right now capital gains tax is lower than income taxes. So if you have a $3 million dollar wealth and live off the interest and I earn the exact same amount of money per year at my job, you pay dramatically lower taxes per year than I do.
I'm no accountant, but I don't think Capital Gains tax applies to money made off interest. Interest is taxed at the same rate as income. Capital Gains applies to selling of property, stocks, etc.

Check your facts before you spew lies.

Quite truthfully, people who already have wealth can accumulate additional wealth much faster than people in the poor and middle class can accumulate any wealth at all.

Is that fair to you?
No! We should all become socialists and communists and share all our wealth equally so that there is no incentive to work hard and get educations!

Also remember, capital gains taxes were much higher than they are now when the US economy was undergoing massive growth in decades past.

Also remember, this is the lowest US tax rates have been while the country is at war in over 100 years. Never before has the government kept taxes low while borrowing against future tax revenue to fund a war.

Frankly, I haven't read anything about Obama's plan for the economy and I don't really care if it's dumb as hell. I'm still spitting nails that McCain wants to keep the tax cuts that let people richer than me legally pay far less taxes than I do, and that's enough to stop him from getting my vote.
Again, where are you getting this info from? From what I could tell when doing my taxes, the tax rate goes up as you earn more money?

Are you the Obama campaign manager, or just the Director of the Ministry of Misinformation?
 
Right now capital gains tax is lower than income taxes. So if you have a $3 million dollar wealth and live off the interest and I earn the exact same amount of money per year at my job, you pay dramatically lower taxes per year than I do.

Quite truthfully, people who already have wealth can accumulate additional wealth much faster than people in the poor and middle class can accumulate any wealth at all.

Is that fair to you?

Also remember, capital gains taxes were much higher than they are now when the US economy was undergoing massive growth in decades past.

Also remember, this is the lowest US tax rates have been while the country is at war in over 100 years. Never before has the government kept taxes low while borrowing against future tax revenue to fund a war.

Frankly, I haven't read anything about Obama's plan for the economy and I don't really care if it's dumb as hell. I'm still spitting nails that McCain wants to keep the tax cuts that let people richer than me legally pay far less taxes than I do, and that's enough to stop him from getting my vote.
When you recieve interest or dividends, they get taxed at your normal income tax.

Capital gains taxes are on the APPRECIATION of the value of assets, when you sell those assets.

Let's say I buy Exxon stock at $50 per share, and I earn $2,000,000 per year in income from my job.

Exxon pays me a dividend, it gets taxed at 35% like the rest of my income.

Exxon's stock can appreciate to $100 per share, but unless I sell it, I don't get taxed, since I haven't realized the gain yet. Also, I need to wait at least a year to sell it, otherwise it's taxed as ordinary income.

So, for a "rich person" to benefit from this, they would need to be constantly investing and selling appreciating assets. By doing this, they would be giving their money for growing companies to use, which in turn benefits the entire country economically, since these growing companies are building goods, providing services, and hiring new employees.

Is this not something we would want to encourage?

Without these rich people investing their piles of money, our country would have no one to invest in new businesses. Then you don't have a job to pay your income.
 
The best set up is living in the suburb = low expenses
work in the city = high salarys .
That is, until commuting costs increase to the point where the numbers don't add up anymore.

Thank goodness for commuter rail.
 
The issue is that these developments are so far away from job-centers, that as the price of gas goes up, the value of the houses goes down, since living closer to job centers would save you more money.

Example:

Bob's McMansion is 50 miles from his job, and Bill's McMansion is 10 miles from his job.

Annual Miles Driven

Bob = 50 miles x 2 times per day x 5 days per week x 52 weeks in a year = 26,000 miles per year

Bill = 10 miles x 2 times per day x 5 days per week x 52 weeks in a year = 5,200 miles per year

Annual Fuel Consumed

Bob = 26,000 / 20 mpg = 1,300 gallons

Bill = 5,200 / 20 mpg = 260 gallons

Annual Fuel Cost at 2.50 per gallon

Bob = 1,300 x 2.50 = 3,250 bucks

Bill = 260 x 2.50 = 650 bucks

Annual Fuel Cost at 4.00 per gallon

Bob = 1,300 x 4.00 = 5,200

Bill = 260 x 4.00 = 1,040

Now, let's multiply that by 20 years of home ownership, and calculate the difference in price-hike impacts between Long-Distance Bob and Short-Hop Bill:

Bob = 65,000 total cost at 2.50, and 104,000 total at 4.00... difference of $40,000

Bill = 13,000 total cost at 2.50, and 20,800 at 4.00... difference of 7,800.

Hence, houses further away from job centers are impacted more by higher fuel costs.
All true in theory but are there any studies indicating the urban housing market is strong right now in comparison? I actually believe the notion promoted by planners and smart growth advocates that compact development is becoming more attractive and that remote exurbs may go into decline but I am wondering if there is any hard evidence that this is happening now or is the drop in home price mentioned in the article related simply to overall falling housing prices rather than to commuting costs.
 
All true in theory but are there any studies indicating the urban housing market is strong right now in comparison? I actually believe the notion promoted by planners and smart growth advocates that compact development is becoming more attractive and that remote exurbs may go into decline but I am wondering if there is any hard evidence that this is happening now or is the drop in home price mentioned in the article related simply to overall falling housing prices rather than to commuting costs.
The article seemed to imply a more serious hit to remote exburbs, although I haven't read any specific empirical studies to back that up.

My anecodotal evidence from this city has shown nothing but a continuing rise in prices.
 
First, let me say that the Socialists I meet on the Interwebs are very frightening folks.

Second, I do not live in a "McMansion", but I live in suburbia in a 1960s ranch home. I have two kids, 1800 sq feet. You could not pay me enough to live in a cramped little 2 bedroom condo 10 miles from where I work. That's what I would get for the same mortgage. In addition, I have space for all of my camping gear, my RC cars, my Mustang, my Minivan, a garden, etc...

Between the higher crime rate, lack of parking (how much stress and time does feeding parking meters cost you?), higher taxes, and a less child friendly atmosphere -- no thanks. I like wide open spaces as well. I hate looking out of my window onto a busy street. We lived in a nice apartment before we had children. There are some nice pluses to city living, but once you have children -- I'd rather be minutes from the mountains than from the Drug Dealer.

I never understood the hostility towards people in suburbia. We value things differently, and city folks are always eager to jump down our throats for why we're "stupid" for living so far away from centralized population centers.
 
I never understood the hostility towards people in suburbia. We value things differently, and city folks are always eager to jump down our throats for why we're "stupid" for living so far away from centralized population centers.
It's mostly the complaining about high gas prices and other consequences of sprawl development. If you live in the city, you can get rid of your car, and you won't need to pay for gas anyway.

I live in the suburbs, but the endless complaining about stuff that is their own fault gets to me sometimes.
 
But you wouldn't get your money out of it when you sold it. People won't pay for high-dollar features in small houses. Small house usually equates to small budget.
Exactly. In San Antonio - to get high quality features and good resale you have to go relatively large unless you live in some of the very very expensive older areas that have new construction - but those cost more than my 3,221 square foot home would have...and did I mention my new house has a 853 square foot three bay garage...not part of the 3,221 total. The garage is my favorite part! Plus I am on a good sized 1/4 acre lot.
 
Of course "doom and gloom" is one aspect of the problem. If you didn't go way over your budget during the bubble and can afford your mortgage, stay put. Do not do anything. Your home WILL go up in value, but it may take 5-10 years to do so.

What do you do in the meantime? Well, I'm thinking of buying a nice little vacation home. For $200,000 I can buy something nice, and maybe even out near some of the lakes around here.

So for every downside, there is an upside. If you ask me, it's about the perfect time to buy a second home. Rent it out, or use it for vacationing.

But if you went in way over your head, it's not going to be pretty. We really had no choice when we had our children, we bought in 2004. So not at the peak, but fairly high. But we didn't buy as much as we could get approved for. We bought sensibly. 4 bedroom, 2.5 bath 1800 sq ft ranch home. We've been upgrading it so we can live quite nicely in it for the next 10+ years as the kids go to college if we had to.

Sure, it may soon be worth less than we paid for it. So what? In 10 years, it will probably be worth a fair bit more than we paid for it.

In the meantime, this is the perfect time for us to start looking at other pieces of real estate to purchase.

Florida, especially SW Florida is doing pretty bad, but the ultimate F*d housing market award still goes to Riverside. Median price was $435,000 in April 2006, today it is $279,500. For all you midwesterners that think it's all doom and gloom with no basis in reality, below are some of the metro areas most affected by the current housing downturn, with their near peak prices set in 4/2006 and their current prices:

Washington, DC: $479,930 - $349,900
San Francisco: $654,663 - $520,000
Los Angeles: $579,666 - $440,000
San Diego: $537,666 - $410,000
Riverside: $435,000 - $279,000
Sacramento: $439,500 - $305,000
Boston: $389,900 - $349,000
New York: $469,000 - $434,900
Las Vegas: $344,900 - $239,990
Tampa: $279,900 - $204,900
Phoenix: $333,800 - $250,000
Orange County: $694,833 - $519,900

Source: http://www.housingtracker.net/

Both the housing bubble and now bust are pretty much a coastal/sun belt phenomenon, so I can see how someone living in Texas might think that the mass media stories are much ado about nothing. In reality, the media stories just scratch the surface. It is true that the media tends to focus on the sensational stories, but based on the underlying information that I have seen, the situation is likely to worsen much more than even the "doom and gloom" stories in the media let on at this point.

The areas affected by all this represent a majority of the population of the country. In reality, even in these areas, the price drops are not uniform. In a market downturn, the most exposed fall first. This downturn has been no different. Subprime debt, the most leveraged, risky debt created during the bubble, has already experienced a high-profile collapse. Sectors of metro areas that had a high concentration of subprime have already seen considerable drops. For this reason, individuals that live in parts of metro areas affected by the bubble/bust that did not have a high concentration of subprime lending have not seen as big of a drop or any drop at all. For some, it is easy to justify this phenomenon on a myriad of factors, some factual, many psychological. But as this bust continues, debt of higher and higher calibre is getting sucked into all this. So people with stronger and stronger finances have begun to become affected. And so the bust goes, working its way up the food chain of debt.
 
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