The Candidates and the Collapsing Economy

[donsu]

http://counterpunch.com/farago08042007.html


-snip-

Bloomberg reported (July 20,2007) on the weird manifestation of the housing boom and bust as dozens of construction cranes in Miami edge skyscraper condominiums toward foreclosure. “The oversupply will force prices down as much as 30 percent, the worst decline since the 1970s, and help push Florida's economy into recession as early as October, said Mark Zandi, chief economist at West Chester, Pennsylvania-based Moody's Economy.com, who owns a home in Vero Beach, Florida.”
Forget about October: the Florida economy is in a recession today.

“Thirty-seven new high-rise condos and 20,000 new units are being built in Miami's 1,040-acre downtown, where sales fell almost 50 percent in May, according to the Florida Association of Realtors. The new units will join the 22,924 existing condos in Miami-Dade County that were for sale in April, according to Jack McCabe, chief executive officer of McCabe Research & Consulting LLC in Deerfield Beach, Florida.”

-snip-

Today Florida’s housing markets are in tatters. The state budget is nearly $1.5 billion in the hole, as receipts from real estate transactions dry up.

-snip-

David Leonhardt, in the New York Times “Keep your eyes on adjustable-rate mortgages” (August 1, 2007) dryly noted, “… the carnage in the mortgage market thus far has come even before the bulk of mortgages have reset.”
President Bush called it “the ownership society”. You don’t much about that anymore. Nor did you hear much about the recent visit to China by HUD Secretary Alfphonso Jackson who was rebuffed in his effort to persuade the Chinese to buy more US mortgage debt. In early July, Jackson told the Chinese, according to Bloomberg: "Mortgage securities offer China's central bank better returns than U.S. Treasury bonds at the same level of credit risk." Is that so?

“The peak month for resetting of mortgages will come this October, according to Credit Suisse, when more than $50 billion in mortgages will switch to a new rate for the first time. The level will remain above $30 billion a month through September 2008. In all, the interest rates on about $1 trillion worth of mortgages, or 12 percent of the nation’s total will reset for the first time this year or next. A couple of years ago, by comparison, only a marginal amount of mortgage debt—a few billion dollars—was resetting each month.”

-snip-

The candidate who can tap into the frustration around collapsing home markets and the proliferation of unsustainable risk to the economy will be the next President of the United States.
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the snipped parts are interesting too

Chinese refused to buy more......

42,924 empty condos.....

[Sarah Ibarruri]

1. Nothing is selling in Miami. No one wants to buy...

There are so many properties in the market, that it's ridiculous. The funny thing is, nobody wants to drop the prices. They are guiding themselves by those programs on cable that teach you how to flip a property, rather than looking around and realizing that that no longer applies to this market. Some people are getting desperate. Other people are trying to rent. Soon there will be a glut of rental properties. In either case, the "flippers" are screwed royally here in Miami.

[wildhorses]

2. flip-

flop

[Sarah Ibarruri]

3. Exactly. But hey, I think that program on HGTV teaching people how to flip houses is on regularly

That's what's keeping up the hopes of these highly deluded flippers in Miami. :-) I find it rather funny.

[wildhorses]

4. yeah.

not cutting edge humor funny, either;)

[cliss]

5. It's unbelievable.

I think the real estate market is like a patient at the ICU. The blips are getting really faint. I see the line has flat-lined now.

I think Washington is trying desperately to hide this crisis, which is just about to hit. There are even bigger problems in the lending market, like GNMA and FNMA which they've tried to sweep under the rug. But you hear tiny bits of information.

NOW when it hits, it's going to be ugly. I have 2 brothers who want to sell their houses, and "get out while they're at the top". But they're still thinking about it and might wait a few more years. (hint: don't think TOO long, fellas). I have a friend who has a "fixer upper" for $529K which has not sold in 1 year's time. (hint: baby mark that thing down).

I wonder how people will feel if their homes are worth 10 cents on the dollar. Are they prepared for that?