United States Heading towards a Depression?

It's expected that Wall Street will lay off approx 165,000 people. Wall Street accounts for 25% of taxable income in NYC. That's a big hit. Jersey City and Hoboken should also take a hit.

From what I remember of the 90-91 recession was that it really didn't get bad until the recession ended in 92 and 93.

I've also noticed that home values really haven't decreased that much considering the big run-up the last ten years. Bloomberg is reporting home prices dropped 5.9 percent from a year earlier.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aRSZAUbCANHU&refer=us

Unemployment and the loss of wealth due to the slide in the market still have to play out in the housing market.

 

Bogart, that is just my point when the doom and gloomers wish death and destruction upon the world. Overall, the housing market, had it stayed with the rate of inflation as metric for its growth, its not down. Not down in the real world valuation of what housing should really be worth.

If anything housing values, if they had remained constant with the rate of inflation, or if anything UP, not down.

Its the over valuations that are down.

I'm not saying things are fine. I just do not think they are terrible. Things can certainly get worse.

Lets try and be optimistic for once.

Classic!

 

Prices are up in the bubble markets 250% since 1998.

A 20% drop is nothing in comparision.

Prices in general are still too high.

http://www.msnbc.msn.com/id/27417053

 

Agreed. I guess the point I want to make is that even if you deflate the bubble completely, prices have not gone negative. They are still north of the mark. If you bought intelligently, did not over borrow against or borrow against the inflated equity, you are still way ahead of the game. I'm getting one of my properties appraised in the next week or two. It will be interesting to see what "todays" more accurate market picture looks like compared to my 1998 purchase price.

 

I looked at a building with 2 apartments, studio, and small office/retail (450 sq ft). The property is a foreclosure with asking price 340k. The defaulting buyer paid 550k. The property isn't selling. I working on making an offer but on the downside is that the building needs repairs.

That's another problem that people aren't talking about. Many subprime buyers have not maintained the properties.

If you had some capital to buy that kind of effort will ultimately find you something that will make you money.

I'm going to make an offer but I'm going to let the Bank have a little time to see that they can't sell the property for 340k.

Capital isn't a problem considering that the property will produce income. The building is unoccupied so repairs could be made quick. Lowering the rents 10% should give me 100% occupancy.

There's an identical building tow doors down that just came up for sale. The building is 100% occupied. It will be interesting to see the asking price.

 

That and still others have raped the properties. What I mean is you have some people that out of spite to the bank vandalized their properties, and still others stripped all the fixtures out of them in order to recoup losses.

 

That's a good point. If people can't afford their mortgage, I can't imagine they can afford to maintain the property. I'm on my second house and it still amazes me sometimes how much crap you find yourself doing just to MAINTAIN the state of the yard, roof, and house. Pain in the ass sometimes to keep up with it!

 

Citigroup may be the next to fall. Even we all the government cheese that they have been hoarding.

That's the reasom the Banks need to unload the properties fast. They already need work and being unoccupied they are getting run down fast.

I'm wondering when Congress is going to announce a new $500 billion program to help subprime borrowers maintain the houses that they can't afford.

 

One of the problems w/ that building IMHO is that the commercial space should be deep discounted. At that small a space it is always marginal. Typically you can't get a credit worthy tenant that gives one confidence on collecting rents over a full year.

One thing I always liked to do was go in and measure spaces. Properties normally claim measurements according to certain "standards"....but one often finds that the measurements don't equal the standards.

If you remeasure it...it gives you an opportunity to bid low. One way to do that is with contingencies on the contract, subject to checking certain things and contingencies on price subject to the "claims" made by the seller.

If the sizes are lower than those claimed by the seller it makes it easy to adjust price lower than that initially offered.

 

See, this is my problem. You think because things are okay for you NOW they will always be that way because you follow the rules, you work hard, you believe in capitalism, you pay your taxes, or whatever.

You think you are entitled to your comfortable lifestyle because you earned it or deserve it.

I remember back in the late 1970s (showing my age ) how there were all these warnings about runaway inflation, irresponsible energy policy, underfunded social programs, and massive military budget and how it would affect us 10, 20, 30 years down the road.

Well, here we are 3 decades later, and I see how this country has just about hit the limits of its borrowed time.

Back then, you didn't have runaway consumer debt, a collapsed savings rate, a neglected public infrastructure, an emerging China/India competing for worldwide resources, and a government that is nearing the point of not being able to pay the INTEREST on its debt.

These collapses always happen suddenly (like the World Trade Center, Katrina, DOTCOM Bubble, Enron, Wall Street destruction), but they don't happen WITHOUT warning.

You may think things aren't terrible BUT just watch over the next few years as EVERYONE's standard of living collapses.

The real estate market is the first wave of this rolling American financial collapse.

I think one of the worst investments you can make right now is in real estate. There is absolutely no upside to any of these properties (overbuilt, oversized, and WAY overpriced).

Mark my words, whatever you think you are getting a good deal on today is going to be worth (real value minus compounded inflation) less going forward.

Neither McCain nor Obama propose any kind of responsible financial control on the US government and very few of the voting public seem to care.

They are like you, blissfully ignorant and unconcerned until this country turns into Road Warrior or Freejack or better yet, the inner city of Chicago, Baltimore, Detroit, Memphis, Cleveland, St, Louis, and on and on.

I have seen how desperate people get when food is hard to get, jobs are scarce, and money is unavailable in these areas and it's like looking at the future of this country.

Many choose to ignore the plight of people in these areas because of racism, but it is a very interesting view of what all communities in the United States may become.

A vast underclass with just a few very rich. Yet, the people and voters of this country do not seem to care (or want to take the adolescent view that just because it has been good means it will always continue to be).

 

No, once again, I don't sit behind a computer waiting for doom and gloom. I get up every day and go to work. If more people did that, and had a clear direction, good attitude and positive outlook, things would not be grim.

Keep wishing for it, it just might happen. The negativity here lately is beyond reproach.

 

Just wait until the subprime lending to risky national governments comes to a stand still next year. Manufacturing will start coming back home, it has started a little already.

 

Here you go with that simple-minded, if I follow the rules, things will be alright mentality.

Yeah, go to work maintaining the very system that creates/expands/ignores this mess. That makes a lot of sense.

There are millions in this country who are suffering everyday. It seems, you live in a bubble where everyone is happy, well-fed, safe, and comfortable.

This has not been the case for a good segment of the American population.

Because of this, people like you want to maintain the status-quo to the detriment of everyone else.

The thing is, you WILL BE like everyone else as this process continues. Of course, by then, it will be too late for you to make a difference.

You'll be struggling like so many others and reminiscing about how good it used to be. You will get ZERO sympathy from those struggling now who have adapted and learned to survive in the new American reality.

 

Oh, its simple alright. Don't live beyond your means. I've lived on both sides of the tracks. I think I'm more than qualified to speak on subject than people who only see on side.

Wishing for doom and gloom is not very productive.

 

I think you are not freaking out because you have NO reason to freak out. Like you said, if you don't live beyond your means (or I like to say: you act your wage), you are not going to be overly affected or worried.

Sitting here freaking out is only going to make the economy worse.

And I agree with Mia that it's not really as bad as the media makes it out to be. If you are prepared for the worst in the first place, then when the worst happens, you don't have to freak out and act like a maniac because the economy is in a little slump. I'm sorry that many Americans are not prepared, but nobody forced them to purchase more house than they could afford or rack up thousands in debt.....

 

Oh, it most certainly has affected me. It's affected me in the rising energy costs, its affected me in the slow down or lack of continued financing for expansion and other things.

Let me be more specific. The fuck ups of others HAS affected me. I'm the one that should be angry. Not the idiot that took out an adjustable rate mortgage on their house so they could buy a Hummer or Land Rover.

I'm just not running around screaming armageddon.

Exactly. But that is what "they" want!

The media has wished for this disaster every year for the last 8. And when they were not wishing for doom and gloom in the economy, they were wishing for the fall of the US, death and defeat of our troops, and an overall spanking by the world.

In the end, you are exactly right. No one forced these idiots to make bad decisions. But they did help them make those bad decisions. There are a lot of people to blame.

I guess I am just sick of hearing everyone blaming their person problems, the weather, world hunger, gas prices, the economy, the environment and hemroids on Bush.

People need to start taking responsibility for their own lives and actions for once.

The people in the end that suffer the most? Those of us that played by the rules that are now being asked to "spread the wealth" and bail out the fuck ups. No thanks.

 

Well, now I see. You think you are God's gift to the economy. I guess you are the only one in America who acted responsibly.

There are plenty of people who acted responsibly and still have to pay for the government's wise decision to bail out Wall Street, private banks and insurers, and allow CEOs to keep outrageous compensation packages, while everyone else is left with devalued 401Ks, pensions, and savings.

The inflation created from two wars in the Middle East has caused EVERYONE to pay more for milk, rice, orange juice, beef, and eggs whether you did the rights things or not.

Why did all of this occur?

Because people keep insisting things are okay and electing the same incompetent representatives in Washington DC.

As long as Americans keep thinking things are going to be "JUST FINE" the deeper in the whole this country will sink.

 

You obviously do not get it.

Energy

Again, you don't get it.

 

EXACTLY!

If anything, this is GOOD for those who haven't been stupid. This makes housing more affordable, lowers banks fees (as banks don't have to charge more for everyone else to cover all the bad loans), and for business owners who are doing a good job it'll see them boost their business. Those who run inefficient businesses will feel the crunch and have to change the way they do business or close down (and most will do the later, the main reason many businesses are running inefficiently is poor + naive management who refuse to change). Survival of the fittest

 

Its definitely dropped in california big time. Where im at, prices are down about 60% from a year and half ago and like ive said before they seem to keep going down still.