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"Real Feel" of Housing Market (Economy)

As the temperatures are droppping to cold, winter time levels and the firewood vendors sit at street intersections offering fuel for teh fireplace in preparation the cold nights, the real estate market is not looking so hot. Wile mercury drops, interest rates rise. And where no one wants to miss the next weather report to know how to layer up for the raw cold, many investors and homeowners prefer not to think that values can go anywhere but up.

As this is written, the temperature is 39 degrees fahrenheit, but, according to Accuweather, it has a "real feel" of 27 degrees.

Atlanta Business Journal has an article entitled, Georgia's foreclosures up in November.

The writer notes, "Of the states with the highest number of foreclosure listings, only Georgia had an increase in new foreclosures from October to November, according to data reported Wednesday by Foreclosure.com.

"Georgia had 1,584 new foreclosed residential properties available for sale in November, bringing its total to 5,311."

Foreclosure.com also reported 85,375 foreclosed residential properties were available for sale in the United States during November -- a decrease of 2.7 percent from October. The total number of new foreclosures listed for sale in November (20,951) also decreased 2.7 percent."

But here's the kicker, "Even though new foreclosure inventory is on an even pace compared to last year, we are closely watching areas of the country such as the Northeast and South where foreclosures are beginning to increase," said Brad Geisen, president and CEO of Foreclosure.com. "There is still a high foreclosure level throughout the country, even with the drop in new foreclosures. When we compare the slow buying pace to the number of new foreclosures entering the market, we see that a strong investment environment exists for foreclosed homes."

Okay. But, what good is an investment in a foreclosure if the market supply is increasing at the same time interest rates are rising AND major corporations like GM and Ford are planning major restructuring?

In Cobb County, one can easily check the foreclosure situation by clicking on MDJ Foreclosures or Foreclosure.Com.

Plus, USA Today offers this look at the tea leaves, Sustained decline forecast in U.S. housing market.

"UCLA Anderson Forecast released Wednesday.

"The widely respected forecasting center at UCLA said rising interest rates, slowing population growth, overbuilding and the fact that prices had reached bubble-like heights in some hot areas will drive the decline. Housing, which had been a big driver of growth, is contributing little to the economic expansion at present, the forecast said.

"While a sharper slowdown in housing will hurt the broader economy, it is not expected to push it into recession, the economists said."

We'll see.

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More Diebold Data - Not Good For Voters

Documentary charges electronic voting flawed, by SZABOLCS KORDOS, Sun Staff Reporter
12/02/2005:

"Only a handful of people showed up at the Cline Library on Wednesday for the first Flagstaff screening of the new documentary "Votergate," yet the movie's topic could affect everybody in this country.

"The creators of the movie claim that the new touchscreen voting systems are vulnerable to hackers and fraud and that citizens have no way to verify if their vote was really counted.

"The young team behind the movie ended up with a shocking result at the end of its nationwide investigation: Anybody is able to change the results of the elections.

"According to the movie, the central tabulator of the Diebold voting system, called GEMS, is based on Windows Access, jut like any household laptop or PC."

"And just like in the home, it does break down quite often."

Hope I can track down a source for this film and bring it to Georgia.

Technorati Tags: /diebold//cobb county//libertarian//georgia/

Fiscal Conservatism is not Seasonal

Thanksgiving 2005 is now behind us and it's time to move into the Christmas season, a time of hope for peace on earth and good will toward men. And as we coast to the end of the year, politicians are assessing how they will posture themselves for the campaigns of 2006 and the miriad of legislative challenges to confront the elected/annointed as they do the people's business in their respective offices.

The Foundation for Economic Education (FEE) sends an email drawing our attention to the associated costs of luxury pork in a Boston Globe article entitled State lags on upkeep of parks system.


Essentially, Boston's governor and state legislature is now short of funds to pay all the expenses associated with decades of building things when times were easy. Now, as tough times force reductions in state budgets, the "golden calf" projects are tarnished, with no one to polish and maintain them.

Here, in Georgia, we read an Associated Press article in the Atlanta Jourmnal-Constitution that Budget for Lake Lanier shrinks.

"Although Corps officials originally requested $8.5 million to operate the popular Georgia lake, Congress has only allocated $7.66 million for the lake."

"It costs about $8.9 million yearly to run all the federally mandated programs for the lake, including hydropower generation, flood control and recreation, said Patrick Taylor, acting project manager for the lake."

"The cut is part of a 10 percent cut across Corps departments in the southeast, Taylor said."

The costs of Hurricane Katrina and other natural disasters are mentioned as part of the blame.

Aaron Baca has a piece in the Marietta Daily Journal, Marietta council to vote again on TADS- Another vote required after changes to agreement language.

He points out that "TADs are used by cities to help pay for redevelopment costs. Cities create TADs to issue bonds to pay for certain projects within the tax district. The bonds are paid off using a portion of future property taxes within the district. Taxes collected beyond a set level when TAD financing takes effect are used to pay off the bonds."

Redevelopment is the old urban renewal with a new face. Governments wish to risk tax money in the future to offset obvious risks to private developers. In light of the plights of Massachusetts, Lake Lanier and the occasional unforeseen natural disaster, you would think they would know better.

We offer David Boaz's March 2000 (pre 9/11) article, More Public Investment Needed? It Just Aint So! from "The Freeman: Ideas on Liberty:"

"We should briefly note the clever use of the word “public” by advocates of bigger government. When we contrast “public” parks, schools, and so on with “private” spaces, there’s always the implication that the “public” spaces are open to us all, while the “private” spaces are closed and exclusive. But of course, most private schools are open to the public, as are most private parks, malls, and transportation systems. The real difference is how they’re paid for: “Public” spaces are paid for coercively, through taxation, while “private” spaces are paid for by those who choose to use them or to contribute to their upkeep.

"Why do market-provided services generally work better than taxpayer-funded services? Because incentives matter. Investors who put their own money into a project have a great deal to lose if they take six years to complete a four-month project. Employees of private companies are much more conscious than government employees that if they do a bad job they could be fired—or the entire company could fail. And as much regulation of business as there is, there is even more regulation of government projects."

Lastly, check out Matt Towery's Getting back to principles. He writes:
"Suddenly, everyone's a fiscal conservative. Virtually every Republican friend I have is talking about the desperate shape of the Republican Party. They cite President Bush's sagging numbers in the polls and begin to recount their sudden interest in the 'out-of-control' spending by Congress."

For Libertarians and free-market-Austrians there can be no seasonality for fiscal conservatism. Rather, liberty requires full-time personal responsibility, and with that comes greater rewards from taking greater risks unencumbered by the gravitational pull of government bureaucracy.

Technorati Tags:/cobb county//taxes//libertarian//politics/

Toil and Trouble in Housing

Peter Schiff : With Real Estate, This Time it Really is Different

Guest Commentary from PrudentBear.Com

Schiff's article is the one I wanted to write and have not made time. It's worth your study.
Here are his conclusions:

"In the final analysis the temporary factors artificially elevating real estate prices will subside. Rising interest rates and inflation, and a resumption of savings as home equity fades, will combine to suppress consumer spending, leading to recession, job losses, and reduced demand for housing. The supply of unsold houses will continue to rise as higher interest rates, tighter lending standards, and higher down payments price more potential buyers out of the market. Without the expectation of routine cash-out refinancing, homebuyers will no longer be willing to devote staggering percentages of their incomes to mortgage payments. In addition, the expectation of lower prices will bring more sellers to the market, just as buyers are backing away.

"Once the trend reverses, falling prices will purge speculative demand from the market. Once speculators become sellers, supply will overwhelm demand. As lenders see housing prices fall and inventories rise, increased default risk will result in tighter lending standards, restricting access to mortgage credit. As more mortgages go into default, the secondary market for mortgage backed securities will dry up as well. This will act as a self-perpetuating, vicious cycle, as tighter lending standards reduce housing demand, leading to lower home prices, more defaults, fewer qualified buyers, lower prices, tighter standards, ad infinitum. In addition, the collapse of consumer spending associated with higher mortgage payments and vanishing home equity, will plunge the economy into a severe recession, further exacerbating the collapse in real estate prices, worsening the recession, and continuing the vicious cycle.

"The housing mania, like all manias that have preceded it, is finally coming to a long overdue end. Time tested principles of prudent mortgage lending will inevitability return, and houses will once again be regarded merely as places to live. However, the country will be a lot poorer as a result of the unprecedented dissipation of wealth and accumulation of consumer and mortgage debt which occurred during the bubble years. Before real estate prices can return to normal levels, they will first have to get dirt cheep. It has been a wild party, but in the end all that will remain is a giant hang-over."

It's hard for folks to believe how different things are going to be. And, with modern technology and nanosecond electronic communication, there are those who suspect certain markets are easily manipulated. That may be, but it can not go on forever.

Follow up to Housing Bubble Equals Tax Base Bubble and Economic Dungeons and Dragons

Technorati Tags:/cobb county//housing bubble//property taxes/real estate