Monday, March 27, 2006
A Political Crash-O-Matic
The good times have already ended here, in the same way slamming into a wall reduces your speed. A house will fetch 20% less today than it did last summer, brokers say, assuming it finds a buyer at all.So no jobs, nobody who can buy, and the RE brokers are at the car dealers looking for work. A new UC campus is going up in the town, but that's not going to help for a while. There is no worse thing you can do to destroy the value of the house you bought last year for $300,000 than to rent it to four students for $1000 a month. Last year this was one of the hottest housing markets in the nation.
At the sales office of Shadow Creek, whose prices range up to $523,000, signs on the front door and walls proclaimed: "Ask us how to save $40,000 off a new home!!!"
"If you want to ask for more, just do it," the saleswoman advised. She said a $60,000 break would probably be fine.
Over at Summer Creek, the saleswoman offered a $75,000 discount, subject to a few restrictions, like using a preferred lender. There was also a $3,000 referral fee available — talk a friend into buying there, and the money's yours.
This is a very good time to be a renter in Merced. A new $450,000 house, owned by an investor waiting to flip it — or sell for a quick profit — can be had for less than $1,000 a month. That's a silver lining for locals who missed out on the boom.
Fewer than 3% of Merced families can afford a house, according to the National Assn. of Home Builders' latest survey.
There are some RE/property management firms on the west coast who will tell you privately that many of the tenants at properties they manage have stopped paying their rent every month - but they don't get evicted. Some money coming in when the owner is leveraged down to his boxers is better than nothing. It's sort of a unilateral rental agreement renegotiation.
The Fed wants to change the rules on ALL (Loan Loss Reserves). Why didn't they do that two years ago? In far too many places in the nation, the bad money has chased out the good. The Fed bears some responsibility for this, and everything they are doing now is going to make things worse instead of better. What happened is that the pool of Fool Buyers ran out. You don't want to accentuate that by yanking the credit line tighter for people who actually want to buy a house and live in it....
Is it me, or has our government been snoozing? It's not just this. I think the average American is kind of fed up. If it's not bridges to nowhere in Alaska, watching the average homeowner in NOLA get worked over, rioting illegal immigrants - sooner or later the truth that our government is not working particularly well really sinks in. I think the average person is just fed up. Fed up. Has had it. Oraculations. Mover Mike. How many people is Ron Paul really speaking for?
My real worry is that the federal government is such a huge behemoth that I think it will be almost impossible to turn its course. You can't elect a president to do that. They have relatively little power in most areas. Sometimes that is good, but I get the sense the government is increasingly far away and moving further from the reality that people are experiencing on the ground. The whole enterprise seems more and more like the attitude of the NY Times - just ignore the bleeding and it will go away. But it won't. How many of us are sitting with raised eyebrows watching video or reading stories like this? The mood of the country is implacable, but not hysterical. We're all just sleeping on it.
In the end, this is a democracy. No matter how many learned articles are written by psychology professors at Berkeley, no matter how many times Harvard manages to explain that the Jews are the problem - people are going to make up their minds based on what they see around them. We know a threat when we see it. Jimmie's right - nothing has changed since this was written. People are just in the mood to see clearly; Charles Napier is probably a better spokesman for rank-and-file American of today than almost anyone in Congress today:
You say that it is your custom to burn widows. Very well. We also have a custom: when men burn a woman alive, we tie a rope around their necks and we hang them. Build your funeral pyre; beside it, my carpenters will build a gallows. You may follow your custom. And then we will follow ours.See, I think the voting public has a pretty clear idea of just how Charlie Sheen and Fantasia are related. Add to that Teddy, and the Enron cookers of the books. All the Code Pink bimbos and Harvard tweepers don't even matter any more. The population of the US doesn't get in a serious mood very often, but when it does it cannot be moved by words or propaganda. Can mindsets like this ever form a core around which the will of a people can coalesce? Hat tip Beth of MVRWC.
I think most of our old arguments and coalitions are dead men walking. They will fall of their own weight with no intervention needed. We are in way more than a real estate crash. That will correct itself (and quicker and better if the Fed keeps its dilatory paws out of this porridge.) The political crash coming is going to change the American landscape immensely. I cannot believe that the American public is going to keep taking "no" for an answer to its requests for a reasonable government. Unlike the French we don't riot, so this has been largely invisible. But it's going to well up in some fashion or another.