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Whence housing?

Permanent Linkby Jack on Mon Sep 28, 2009 5:48 pm

One of the developing themes over at tickerforum.org is housing - both foreclosures, and the avoidance of foreclosures by the banks. It seems that if a bank forecloses on a property and sells it, the bank must recognize the loss, representing a major hit against capital. And with too many losses, the bank ceases to be viable and must (by law) be dissolved. So - the banks don't foreclose. The property may be occupied by the former owners (but how can one be an owner with no equity?), or is abandoned and becomes prey for squatters and worse.

The problem, of course, is that the economy may stagnate with high unemployment and reduced business activity - or, worse, peak will hit with a vengeance and force the economy into another slide. In either case, we could easily see an increase in abandoned properties. If gasoline takes another run to $4 per gallon, it seems likely that the suburbs will be notably vulnerable to such developments (pun intended).

This creates a variety of interesting problems. For those who have a house in such an area, the squatters may represent both a liability and a threat. Some will contend that they are a potential asset - but their assistance will cost. In a period of restricted resources, such costs may be unsustainable. Worse, the price may escalate over time.

How are the squatters a liability? First, by reducing the value of the other houses in an area and impairing potential sales. Second, by constant attempts to obtain assistance - everything from food to electricity, from water to cash. Third, by forcing increases in personal security efforts.

How are they a threat? If the beggars are sent away, the logical next step will involve criminality, ranging from theft to burglary - and on up to robbery or worse. But if the beggars are bought off, the costs will increase over time. And if one ever departs the area, many eyes will note the absence of protection for property.

There is a distinct lack of elegant solutions. It is time - probably well past time - to think carefully where one will go to face the upcoming crises - plural due to the interconnected nature of the problem.

By the way - comments are limited to friends only. Those with a track record of cogent, insightful posts are welcome to become friends. Those with a different track record....aren't.

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Re: Whence housing?

Permanent Linkby TWilliam on Tue Sep 29, 2009 12:20 pm

Not a comment per se, but just another little item for the stew.

Caught a comment elsewhere the other day (forget where now dangit) that the housing collapse last year tallied something like 1.25 million foreclosures, and that there is now an expectation of an additional 7 million in the near future. Didn't follow up for details, but I suspect the projection relates to the upcoming wave of Alt-A resets that most of us here know about.

'Green shoots'... mmm hmm...
We all feed on tragedy; it's like blood to a vampire. Vicariously, I live, while the whole world dies. Much better you than I. ~ Tool, Vicarious
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Re: Whence housing?

Permanent Linkby Jack on Tue Sep 29, 2009 4:22 pm

Probably this:

http://www.housingwire.com/2009/09/24/a ... se-prices/

Which rhymes with the complete takeover of the mortgage market by the Fed, here:

http://www.chrismartenson.com/blog/fede ... 2009/28343

And, from the article you mentioned, notice that missing one, single payment increases the chance of liquidation of a property to nearly 75%.

My, my. I wonder how we are to address the problems of peak oil while we run about madly trying to solve a mortgage crisis - one which will get worse as suburbia fails?
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Re: Whence housing?

Permanent Linkby TWilliam on Tue Sep 29, 2009 6:11 pm


Jeezus. So it looks like that's not talking about the upcoming resets, but rather those mortgages from 'phase one' of this bust that have defaulted but on which the 'processing' has been 'deferred'.

Now consider the Alt-As on top of this... :shock:
We all feed on tragedy; it's like blood to a vampire. Vicariously, I live, while the whole world dies. Much better you than I. ~ Tool, Vicarious
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Re: Whence housing?

Permanent Linkby smallpoxgirl on Wed Sep 30, 2009 1:37 pm

Yeah I'm in a twist about this right now. I'd kind of like to buy a place. I feel like we're turning the corner out of deflation and staring straight down the barrel of inflation, rising interest rates, etc. OTOH, if there's another big wave of foreclosures yet to come, this could be a really bad time to buy.
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