On Apr 6, 6:23=A0pm, Vide...@[EMAIL PROTECTED]
wrote:
> foreclosures spreading to wealthy la la lands
>
> http://news.yahoo.com/s/nm/20080407/us_nm/usa_housing_mcmansions_dc
>
> foreclosures come to McMansion country
> By Andy Sullivan
> 55 minutes ago
>
> LEESBURG, Virginia (Reuters) - Million-dollar fixer-upper for sale:
> five bedrooms, four baths, three-car garage, cavernous living room.
> Big holes above fireplace where flat-screen TV used to hang.
> ADVERTISEMENT
> The U.S. housing crisis has come to McMansion country.
> Just as the foreclosure crisis has hollowed out poorer neighborhoods,
> "for sale" signs are sprouting in upscale developments so new they
> don't show up on GPS navigation screens.
> Poor people weren't the only ones who took out risky, high-interest
> loans during the housing boom. The sharp increase in housing costs --
> and the desire to live in brand-new, spacious houses with modern
> features -- led many affluent buyers to take out loans they couldn't
> afford.
> "People had in their head, 'I need a mud room, I need giant columns, I
> need a media room, and I'm going to do anything to get it,"' said
> Robert Lang, co-director of Virginia Tech's Metropolitan Institute, a
> research organization that focuses on real estate and development.
> The crisis has hit especially hard here in Loudoun County, Virginia,
> where upscale developments have supplanted horse farms over the past
> fifteen years.
> About an hour's drive from Wa****ngton, Loudoun is one of the nation's
> most affluent counties, with a median household income of $98,000,
> more than double the national figure.
> The county has also ranked as one of the nation's fastest growing in
> recent years as developers built thousands of super-sized, amenity-
> laden houses to keep pace with the booming high-tech economy.
> These houses are sometimes nicknamed "McMansions," disparaging both
> their extravagance and their look of mass production -- like
> hamburgers from a McDonald's restaurant.
> Between 1990 and 2005, the county's population tripled to 272,000.
> Many of those moving here relied on risky, high-interest loans to buy
> the house of their dreams.
> "People pushed the limits to be able to buy. They couldn't afford to
> buy there otherwise," said Virginia Tech consumer-affairs professor
> Irene Leach.
> High-interest loans accounted for 16 percent of the total during the
> height of the mortgage boom in 2005, less than other outer-ring
> suburban counties in the region but more than neighboring counties
> closer to Wa****ngton.
> Now the bill has come due. One out of every 69 households in the
> county was in foreclosure in the last three months of 2008, well above
> the national average of one filing for every 555 households, according
> to RealtyTrac.
> Most of these have been concentrated in the county's poorer
> neighborhoods, but local realtor Danilo Bogdanovic says he is
> increasingly seeing more foreclosures on properties worth more than
> $800,000 as affluent borrowers burn through savings in a vain attempt
> to stay in houses they can't afford.
> "They've just prolonged the pain," Bogdanovic said. "I don't think
> they're immune to it."
> At the end of 2007, 20 of the 25 houses for sale for more than
> $850,000 in Loudoun County appeared to be foreclosures, according to
> Tony Arko, his partner.
> These can take years to sell, as they must compete with brand-new
> developments still coming online.
> Housing prices in the county plummeted 8 percent in 2007, the sharpest
> drop in the region, according to the Wa****ngton Post. New home starts
> plummeted by 50 percent.
> Bogdanovic and Arko have sold many foreclosed properties to investors
> looking to rent them out. But there's no market for a million-dollar
> rental property, they say.
> In the Beacon Hill development, a golf course s****s among large
> houses and gazebos set on rolling hills. Residents keep their horses
> at an equestrian center.
> A 7,300-square-foot mansion on Spectacular Bid Place features three
> chandeliers, a spiral staircase and a state-of-the-art kitchen. The
> owner offered it at $1.35 million in January 2006, before foreclosing
> in August 2007. The house found a buyer in January 2008 -- for
> $963,000.
> Several miles away, the million-dollar fixer-upper with the holes in
> the walls has been on the market since December. It is still unsold.
1 in 67 is not a bad ratio in itself... more im****tant is what these
distressed forclosures do to the other house prices putting their
prices down below the loan amounts, erasing equity, and the ability to
borrow against it in a pinch... and putting the banks holding the
loans into a negative collateral situation.... the effect of the
forclosures at this rate is limitlessly worse than the direct loss
seen in the forclosed pptys themselves.... and now these effects have
spread to car and credit card loans... shrinking the larger economy
and with more layoffs etc... its spins in as you are well aware.
the spin in would be recoverable if we had remained the worlds premier
source of manufactured goods... alas we no longer are. our
educational system is among the worst in the world now, it used to be
the best just half a generation back...it is the worst now, our
skilled baby boomers are retiring now, with few replacements...
accordingly this mess will escalate ...to see where it will shake out
get a graph of the DOW spanning the last 100 years. plot the pre
bubble curve .. 1900 to 193 or so... draw a line though the mean.
and put an x in todays date... thats about where the DOW should be,
inflation adjusted.
to get the real inflation adjusted figure compare how many hours
worked as a blue collar worker it took to buy a loaf of bread etc in
each year approx. that will give a roughly accurate figure. x
will mark the spot along the date line where will end up.
then plot the down spikes. draw a line roughly though the average of
those, that will mark how far the dips will go, roughly.
Then notice the duration of the historical dips and thats a best case
for the duration of impending down spikes.
Then study history a bit and notice how long a nation usually lasts
( 250 to 300 years max)...and notice its end phase, and how long it
stayed in starvation mode before things got viable again.... a
generation or two..... china just finished starving for two
generations, russians just finished starving for a generation or
longer.... the US has peaked and is headed into its national life
cycle....not merely another depression.... thats not a graph theory...
it has obvious underlying demographic structure and markers driving
it.
Then notice who, which types, suffered the most in those end phases,
and who suffered less or prospered and plan to live in that condition
for the duration you see historically... for many of us with a
projected active life span under 10 or 20 years, what happens next
will be our eternity on earth. For the kids, insight now, will
allow them to come out the other side owning half of their town,
Phil Scott
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