Re: Dems caused current problems

Evelyn Ruut wrote:

"Islander" <nospam@xxxxxxxxxxx> wrote in message news:Z8mdnSBtY_bi8GDanZ2dnUVZ_tOtnZ2d@xxxxxxxxxxxxxxxxx
Thumper wrote:
On Wed, 9 Apr 2008 18:26:20 -0400, "Evelyn Ruut"
<evelyn.ruut@xxxxxxxxx> wrote:

"High Miles" <2Blues17@xxxxxxxxxxx> wrote in message news:N9ednV93hK8rqWDanZ2dnUVZ_jadnZ2d@xxxxxxxxxxxxxx
Evelyn Ruut wrote:
> All very well and good to say, but disastrous in actual effect. There ARE people out there who trust that the bank will only lend them what they can afford to pay. Not me and maybe not you, but there are many who are trusting in that way. The mortgage people were unethical in taking advantage of them, even if they themselves should have known better.

Those same slimy lenders who actively sought sub prime borrowers, because
they assumed property would always increase in value, are the very
same babies crying to the fed for a bail out now that their bubble has burst.

I don't think tax payers can afford to come to the aid of big lenders and
dumb home buyers. It will have to be one or the other.
Quite a few of the defaults in a neighboring township were huge houses,
already in forecloser, that speculators bought with zip down, hoping to
make a tidy buck as the places went up in price.
Didn't happen.
But then............the saying is...............BUYER be ware.


I worked as a bookkeeper for a large developer for a while, and at a certain point they stopped building normal size homes and went for these huge McMansions. I said to myself "just WHO is going to buy these huge places? Who can afford to heat them and pay the taxes on them?" All the builders got on board with the trend and for the last 15 years that has been the norm.

Now there is a glut on the market of those big homes, some in foreclosure and some that people just haven't bought. The young people are buying condos or renting apartments because there are so few reasonably priced smaller homes out there, and besides that, salaries have not kept up with the construction industry.

I recently advised a developer who is a friend that he needs to build small starter style homes. My friends in real estate tell me that there definitely is a market for that. Two or three bedroom, one and a half bath houses. The kind most folks grew up in. THAT is what is going to be selling, especially when we really start to feel the crunch in paying for Bush's war.


The problem is Evelyn that the building lots in many areas of the
country are $200,000 and up. My developer friend says that he can
still build starter homes but they would cost $400,000 on the lots he
can get here. When you get in that range for him to make a decent
return on investment he'll build the $500,000 houses first. In my
little city there is hardly any lots available. I know that lots are
less in the heartland but on both coasts they are very expensive.
In the early 70's there was a HUD program that built little box
houses, some as little as 800 square feet that sold for around
$14,000. Those houses now sell for $180,000 and up.
In my city the prices haven't really dropped. In fact the median
price went up a few percent. It does take a lot longer to sell now
and there simply are no starter homes for sale. People don't move
out of them unless they have to.
Thumper

The time worn expression in real estate investing is, "Buy land, they are not making any more of it!" Many communities have attempted to limit density through zoning and the downside of this is that it prevents development of higher density housing. Ultimately, we run out of affordable land and if we are to build affordable homes, we need to look beyond the house in the burbs model. We need to make better use of the land that we have, building more densely and saving the open space for everyone to enjoy.


That's been done too. Have you ever seen the so called "projects?" They are crime ridden massive buildings, rents paid by welfare, where drug dealing and the very worst elements prosper. Kids get shaken down and beat up for lunch money, killings, rapes, you name it. The high density makes all the problems of the lower elements worse. The term "High density" automatically brings the "projects" to mind. They don't work.

In NY area they discovered that blocks of attached individually owned townhouses gave the people a greater sense of pride in their homes and kept the crime down. The worst elements could not buy them, and the working people could. So far that has proven more successful. The density is greater than the usual suburban model, but the maintenance record is better, and the pride in home ownership is greater.

To most town boards, the term High Density means low-lifes moving in and crime going up. Small home ownership is different altogether. Unfortunately there isn't enough clamor for it, though there should be.

The "Projects" are the failed experiment that is always brought up in the fear of affordable housing. It was a bad model and I am not aware of any projects which are emulating it. I should also point out that well meaning initiatives such as rent control also backfired when landlords were discouraged from making improvements in privately owned apartments when they could not recover a return sufficient to justify their investment.

You are correct that the home ownership model provides incentive to homeowners to maintain their property. We have seen many examples of where this has worked to revitalize neighborhoods. Some of these projects, however, achieved such a high level of success that the neighborhood property values appreciated to a level that precluded affordable housing. This is a mixed blessing since it pushes the workforce away from these communities to hopefully more affordable neighborhoods. This is one of the main reasons that I like the community land trust model where appreciation is typically limited to the local CPI or to local wages. In this approach, the homeowner gets a modest return on their investment, but the property remains affordable. There are approximately 300 CLT developments across the country.
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Relevant Pages

  • Re: Dems caused current problems
    ... There ARE people out there who trust that the bank will only lend them what they can afford to pay. ... I worked as a bookkeeper for a large developer for a while, and at a certain point they stopped building normal size homes and went for these huge McMansions. ... one and a half bath houses. ... The high density makes all the problems of the lower elements worse. ...
    (soc.retirement)
  • Re: Dems caused current problems
    ... There ARE people out there who trust that the bank will only lend them what they can afford to pay. ... I worked as a bookkeeper for a large developer for a while, and at a certain point they stopped building normal size homes and went for these huge McMansions. ... one and a half bath houses. ...
    (soc.retirement)
  • Re: Dems caused current problems
    ... I don't think tax payers can afford to come to the aid of big lenders ... Quite a few of the defaults in a neighboring township were huge houses, ... certain point they stopped building normal size homes and went for these ... The term "High density" ...
    (soc.retirement)
  • Re: Dems caused current problems
    ... I don't think tax payers can afford to come to the aid of big lenders ... Quite a few of the defaults in a neighboring township were huge houses, ... certain point they stopped building normal size homes and went for these ... The term "High density" ...
    (soc.retirement)
  • Re: Dems caused current problems
    ... I don't think tax payers can afford to come to the aid of big lenders ... Now there is a glut on the market of those big homes, ... half bath houses. ... The term "High density" ...
    (soc.retirement)
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