Why thank you Liz!

Maria Niles — Sat, 29 Apr 2006 02:09:59 -0500

You're making me blush over here in Oakland. And, you've made tonight, with the unending "joy" of my latest round of sewage water raining from my light fixtures in my rental, just a little more bearable.

Must buy a home, must buy a home...

Cheers!

Wow, Maria - what an amazing

Liz Henry — Sat, 29 Apr 2006 00:02:25 -0500

Wow, Maria - what an amazing post!

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Liz Henry
lizzard@bookmaniac.net
Badgermama - personal & mommyblog
http://liz-henry.blogspot.com

Thanks for the insight, Jules

Maria Niles — Thu, 27 Apr 2006 21:04:05 -0500

It's tough to get a perspective outside my little bubble - particularly my bubble is located at the intersection of technology and San Francisco Bay Area real estate. And certainly tough to understand outside the U.S. since I'm not a professional economist - I just play one on the internet. ;-)

Most of what I've read about Australia has not been that nuanced and I suspect that holding up Sydney as representative of Australia is much like holding up San Francisco or New York City as representative of the United States - rather skewed.

About the Australian Real Estate Bubble...

Jules — Thu, 27 Apr 2006 19:24:53 -0500

One of the things that irks me about articles/blogs like the one you linked to about the real estate bubble in Australia, is that it is assumed that Sydney is representative of what is happening in the rest of the country (of course, this isn't helped by the fact that people in Sydney think that they are at the centre of the universe, but that's a whole other topic in the list of Things that Irk Me).

The city that I live in (Brisbane) was long undervalued in terms of real estate prices, so we haven't seen the same kind of bubble as has been experienced in Sydney (and Melbourne, to a lesser extent). Property prices here are still rising or are stable (depending on location), and it seems unlikely at this stage that we'll see the same kind of bubble burst as our southern neighbours.

The real estate market is something that I follow quite closely, both out of self-interest (I own an apartment, and am always curious to see how much it has gone up in value since I bought it 3 years ago), and because of work (I work for a property development company that has offices both here in Australia and in China).

Jules

BlogHer Contributing Editor, Australia, New Zealand & Oceania
Dragongirl blog

Why Real Estate Matters - To You - Even If You Think It Doesn't

Maria Niles — Thu, 27 Apr 2006 18:45:58 -0500

Warning: really, really, crazy, insane long!

"But Maria," you say, "I don't own a house and I have no plans to buy one" or "I own a house and I have no plans to sell... why should I care about the real estate market? Isn't talking about the how the real estate market bubble is about to burst or insisting that the real estate market always goes up just trendy cocktail party chit-chat for yuppies?"

Well, yes, there's that, but, if you can read this blog then real estate matters to you. Let me tell you why... because you are alive and living on this planet (though, there are some intrepid souls living in outer space, but they come back down eventually.) Hmmm, wild, hysterical, gross over generalization you say? Allow me to plead my case.

One reason is that because the ups and downs of the housing markets in countries that are global economic heavyweights affect the, well, global economy. And, since we've already established that you live on the globe, you therefore participate in the global economy - neat, huh?

As Katy Delay, the economist with a sense of humor points out in her "summary of the G7 statement with [her] sarcasms"

if governments hadn't created the real estate bubble in the first place, there wouldn't be all of this flipping of houses, underhanded writing of mortgages and admittedly wasteful speculation.

Australia and Japan, (where Shannon is making a documentary about the homeless shanty towns that have sprung up around Tokyo in the wake of their burst bubble ) may have been the canaries in the coal mine for the U.S., but the rest of the world is not immune as discussed (395 comments) in a post titled "The Global Property Boom: Danger and Delusion" over at one of my favorite voyeuristic blog reads: SF Bay Area Housing Crash Continues.

Hey, even Iceland is not exempt. Although, at least one person thinks that Canada might be.

Once again you protest: "But Maria - I'm just an ordinary squirrel looking for a nut - what's the price of tea in China got to do with me?" Maybe nothing, but allow me take you on a trip from the macro to the micro...

When the Chinese are in a building and growth frenzy then the cost of building materials (in addition to oil) get driven up because they want 'em, need 'em, gotta have 'em in China. When building and construction materials are in high demand both in China and the U.S. (from the house-as-ATM financed remodeling craze) everything costs more here in the U.S., including toilets. Then things happen like your toilet explodes and sends a geyser towards your ceiling like in my house and not only do you have then have to shell out some coin, it's supersized coin because the rapidly expanding economies in China and India demand concrete, steel and toilets. Feel free to apply this example to your rental whereupon your landlord raises your rent or to your local bistro where the price of tea gets raised to cover increased overhead due the cost of new thrones.

Now that I've used the story of my exploding toilet to lead you from the globe to the hood, please continue to let me point out why you, dear reader, should at least pay cursory attention to pornography of real estate bubble talk.

Because the real estate market giveth jobs and taketh away jobs - in your country, your state, your city and your hood.

Over the past four years, the housing market has been a big driver of job growth as almost four out of every 10 jobs created in the United States were housing related...

Because the real estate market might make your neighbors move - South.

Because your neighbors might not be able to continue to pay their now upside-down, interest only, negative amortization, subprime loan and rampant foreclosures might cause property values in your hood to plunge. Plunging property values lead to declining tax bases and decreased funding to schools. Foreclosed properties fortunately don't sit empty with un-mowed lawns at first because newly minted real estate investors still chasing the boom dragon snap them up and then try to play landlord with no real knowledge of how to manage property or properly screen for tenants (meth labs anyone?) and the places get thrashed or fall into disrepair eventually.

And, remember those Tokyo shanty towns? Well, some of those foreclosed upon may end up joining the growing number of mobile homeless. As Charles Hugh Smith points out, many of the newly minted home owner class are teetering on the edge...

Here's what the graph says in simple terms: only 74% of U.S. households are above the poverty line, and 69.1% are homeowners. In other words, just about everyone who has a paycheck above poverty level has bought a house. Homeownership, remarkably stable for years at 64%, suddenly leaped to 69.1% in the past 10 years. And who were those buyers? People who could not have qualified for a mortgage before standards were lowered.

And as I have previously noted, much of that increase in home buying has been by women.

Because as the two-part series "Dirty Deeds" by Chris Thompson in the East Bay Express pointed out, massive property values coupled with the growing threat of foreclosure leads to increases in mortgage fraud that claim victims like your grandmother

"We started to notice that elders would go to nursing homes, and in the church groups, people would talk about it," Denny says. Criminals would lurk among the church ladies, murmuring pieties and listening to the gossip. Once they learned the names of women who had retired to nursing homes, they would walk into the county recorder's office, figure out what properties they owned, and forge documents claiming they owned the properties themselves. Then they would borrow tens of thousands of dollars against the equity.

or the single woman next door

From Alaska to Florida, credit collection officials are knocking on doors and threatening to seize the homes of families who trusted the wrong people.

Doreen Bunnell knows she did something stupid. Bunnell spent years making the drive from Stanislaus County to Silicon Valley, where she worked a number of blue-collar gigs. She slept at her father's house, worked twelve-hour shifts, and returned to the Salida home she'd dedicated her life to financing. Then in 2002, she lost her job, and the bills started mounting. Someone told her about the Dorean Group. "There is now a PROVEN legal and moral way of eliminating your mortgage while adding $50K to your pocket," the company claimed on its Web site.

Bunnell signed the title to her property over to Dorean, and in August 2004, she was allegedly told her that debt was gone and she could stop making her mortgage payments. "I asked if properties were getting cleared, and they said, 'On a regular basis,'" Bunnell recalls. "They said when this is over, I'm gonna come out way ahead, and 'we're looking out for you,' blah blah blah. I was sort of brainwashed."

Then came the threats from Bunnell's lenders. Then came the foreclosure process. Then came the man from the Stanislaus County District Attorney's office. That's when Bunnell realized the Dorean Group was the subject of a criminal investigation. Far from clearing out her debts, she had gotten so far behind in her mortgage she would almost certainly lose her home.

Bunnell tried to sell her house or refinance her loan. But the Dorean Group still held title to the property, and they allegedly refused to release her title unless she paid them $5,000. She filed for bankruptcy in October. She went on food stamps and antidepressants, and took a part-time job distributing food samples at Costco. A few months ago, she says, she thought about killing herself. "At one point, well, I didn't want to be here no more," she says. "Let's put it that way."

Now she spends most of her time waiting for the day she must surrender her house. Bankruptcy court officials recently promised to help get her title back, so she could at least get a piece of the equity. But her life as she knew it is over. "It was my mistake, and I'm paying for it," she says. "I lost everything. I sold most of my furniture just to pay for bankruptcy. ... I've been packing to move little by little, just selling what I can to support myself. ... The only time I can bring myself to be happy is if I'm around people, and that's why I like handing out samples at Costco. I don't have to think about this till I get home."

"But that kind of stuff only happens in California" you say, NIMBlY. Think so? Then allow me to introduce you to the "Mad Mommies of Wolf Creek" near Atlanta:

When Cathy and Morgan Makley bought their two-story cottage in Dacula's Wolf Creek subdivision in 2003, cookie swaps and potluck suppers were the norm. Black, Asian and white professionals alike moved there because they shared the same hopes for their young families. Houses went up, moving vans backed in, and neighbors welcomed newcomers on a first-name basis. Cathy Makley soon joined a close-knit group of 10 stay-at-home mothers who met regularly while their children played. She was happy to find playmates for her boys-Morgan Joseph, 5, and Samuel, 4.

Click here to read how the mad mommies came together after they discovered (and fought back against) the destruction mortgage fraud inflicted on their suburban subdivision.

Have I depressed the hell and scared the crap out of you yet? If so, let the tale of the mad mommies give you some hope. It shows that women are using community, technology and the internets as a force for good in this crazy mixed-up market.

What I truly hope is that I've encouraged you to be aware of the issues and to arm yourself with some knowledge.

Here are three BlogHers who can help you in the education department:

Rachel Doller brings us the Mortgage Fraud Blog with a positive post today on using laughter and learning to fight fraud.

Fran and Rowena write The Real Estate Blog.

And, Lita Epstein blogs at The Mortgages Weblog.

So, if you've burned your mortgage or are a buyer, a seller, a renter, live with the 'rents or even are homeless, it pays to pay attention to the real estate market.

And, if you are a buyer or seller, you might even consider following in the keystrokes of Christie Miller and Mary Clare Murphy of Madison, Wisconson who run a very successful P2P real estate selling site out of Ms. Miller's spare bedroom.

Information is power, and might even lead to a new career in fraud busting or turning the real estate market upside down and re-inventing it for the 21st century!

BlogHer - Why Real Estate Matters - To You - Even If You Think It Doesn't - Comments

Why thank you Liz!

Wow, Maria - what an amazing

Thanks for the insight, Jules

About the Australian Real Estate Bubble...

Why Real Estate Matters - To You - Even If You Think It Doesn't