We’re not very expert in real estate matters, but have a lot of Realtor friends. These people used to be phenomenally successful…but now, most of them are working part time in restaurants or retail shops because it’s been a month or two since they’ve received any real estate commissions. One person hasn’t sold a single property since last Christmas. And that guy is GOOD at what he does. Really, really good. No one has ever seen anything like this.
We’ve been talking for several months about all the abandoned malls around Chicago…especially the ones on Michigan Avenue that were once Wonders of the World…staggeringly tall, packed to bursting with shoppers, every sort of high-end store you could imagine. It was incredible to come to Chicago and “shop the Magnificent Mile”, being dazzled by something you’d only see in movies. Well, the Mile’s not so magnifiecent anymore. Most of those malls are empty. One of them has no stores left open in it at all, and is being turned into either a condo tower or a mausoleum. They all look like looted pharaoh’s tombs.
Around the country, we’ve heard of large malls failing as anchor stores collapse. In Chicago, other commercial projects have either shuttered, downgraded to the dollar stor tier of retail, or, if they were in construction, have stalled at empty pits that look like massive open graves.
For those of you watching real estate, we want you to chime in — how bad is it going to get as the mortgages on these big, empty malls start to collapse? If it’s been so long since Realtors we know have made commercial transactions, and it’s been a long time since retail shops were thriving in those buildings, and many of these have been for sale with no buyers for a year or more, doesn’t it stand to reason the owners of these properties could be running out of cash to make their mortgages.
And that should mean a giant wave of commercial foreclosures is on the way.
How close is it?
Will something like this happen?
What impact does that have on the economy?
December 18, 2009 at 12:08 pm
I can tell you that the next wave of foreclosures are going to be prime mortgages worth a million plus. Short sales in the high end market are going to shock people in the coming year.
December 18, 2009 at 12:43 pm
Sorry, but does anyone know what
“Short sales in the high end market”
means?
December 18, 2009 at 12:48 pm
A ‘short sale’ is when you sell for less than what the mortgage is worth.
Bad. Very bad.
December 18, 2009 at 12:52 pm
Oh!
Thank you very much Marie.
December 18, 2009 at 12:22 pm
Commercial real estate has been in trouble for a while, but as long as leases were still in force it wasn’t apparent. As stores close and new tenants can’t be found, you see the empty stores more frequently.
Also, businesses that are still solvent have some leverage to renegotiate with landlords as their leases come due, because they KNOW there isn’t another tenant to replace them if they are kicked out, so leases are going downward in price.
Around here (Indianapolis) a lot of strip malls were built on speculation, and they are sitting empty. Small retail businesses are closing and cutting their losses (I ran into 4 garage sales this summer which were inventories of gift shops, children’s clothing resale shops, etc.), and that was just in a 10-mile radius on the south side of Indianapolis only. Increasingly, the auction houses I go to have not only estates, but business inventories (candle shop, Firestone tire store, auto repair, lamps, valet parking, cabinet shop are the ones in the last 3 months).
Commercial real estate has been not on the media radar because there aren’t sad stories about people forced out of their homes (plus I think reporters don’t understand it). I think it is going to cause the Dow to fall again after Christmas.
December 18, 2009 at 2:10 pm
This is what I’m seeing in the Tacoma, Washington area. Nearly new strip malls with either one tenant (the rest have gone out of business) or no tenants to begin with. I haven’t seen any “garage sales” of inventories, but that doesn’t mean it’s not coming.
December 18, 2009 at 4:42 pm
I can say from my vantage point in the suburbs of Chicago, there have been strip malls that have been open, but many of the store fronts still sit empty. I also see a lot of vacancies in the existing office buildings. I’m told that this collapse will be really BIG. It’s hang onto whatever you’ve got.
December 18, 2009 at 12:24 pm
On my end down here in N. AL, we’re expecting the commercial forclosures to drop any minute. Last I heard it was this Dec or Jan when the local commercial market will begin to crash.
December 18, 2009 at 12:46 pm
Obama, Rahm, Axelrod, and Biden sending you the warmest
“Welcome! To your Great Depression!”
December 18, 2009 at 12:32 pm
Here in Arizona (Phoenix metro area), commercial real estate is hurting. I’m not in the biz but can see it wherever I drive. There are signs in empty strip malls and business parks. Even brand new buildings (as in less than two years old) are sitting empty! I think this market will be the next one to collapse as small businesses close their doors next year.
What I am hearing from some friends who sell to small and family-owned businesses is that a lot of them will close-up in 2010. These are the lifeblood of the economy, when they shut-down its gonna be lights-out. With no revenue to tax, governments are going to go through at least a couple more years of falling income.
Oh, and less money from people who were formerly employed at these small businesses.
I think we are going to experience another shock or two early in 2010. Commercial real estate is in trouble as are the big media companies. If anything blows-up in Iraq/Iran/Afghanistan/Pakistan/Yemen or even in the Americas (Venezuela/Columbia) then it will be a free-fall. I hope I am totally wrong but we will be looking into the abyss soon.
But maybe this is necessary. Japan and Germany needed to be destroyed before they could be rebuilt, maybe this is our (financial) bombing that we need to start over again. Its gonna hurt BAD but we need to start anew and shed all this socialist legacy that’s been built-up over the past seven decades.
Then we need people to wake up, put the Kool-Aid down, and get a clue.
We certainly live in interesting times.
December 18, 2009 at 2:23 pm
Yes, the big media companies are in trouble too. My hubby works for a TV station owned by Tribune, one of the big TV/newspaper chains (owned by Sam Zell, a real estate developer). Tribune went into bankruptcy in December of last year. Once that happened, surprise!! suddenly no one was accepting Tribune credit cards for things like satellite news truck and TV van maintenance. Employees were expected to pay for things like repairs and gas for the news trucks on *their own credit cards* and submit expense reports to get paid back. Meanwhile, Zell and his co-horts are making MILLIONS selling off parts of their holdings (like the Chicago Cubs).
December 18, 2009 at 2:36 pm
Doug, I think you are touching on a lot of issues beyond real estate, inherit of a disastrous economy. I hope I’m wrong, but I strongly believe our only long term hope is a severe short term economic wipe out so that we can rise from the ashes.
Families, business and local, state, federal government are way beyond their means in debt. I believe we will see local, state and the federal government default on their debt. Also, the feds have the power to create hyper-inflation as a means to knock down the massive and unsustainable debt they are in. This has happened in many other countries. Unfortunately, this will also wipe out everyone’s retirement savings.
If the US economy dies, so does the world economy. I believe we will have a world depression that will make the ’30′s seem mild. Back then, our federal government had little debt, a lean budget and was not committed to massive social spending.
It took a world war to rise up out of the economic ashes then. If we are to rise up out of the ashes in the future, the size of local, state and the federal governments need to be severely cut down in size. We Americans need to live within their means, spend and save responsibly and vote for responsible politicians.
I cannot use the word responsible enough! Study world history. There were very, very few free and democratic nations. They all fell because they rotted from within.
I’ll get off my soap box now.
December 18, 2009 at 4:51 pm
I’ve been saying since the Bush JR. deficits that they (the federal government) would hyper-inflate their way out of their debt. Whether they do it intentionally or by mistake, the results will be the same.
Note, it would not be the first time huge government debt was in effect paid off by hyper-inflation. Look of the old folk saying “Not Worth a Continental” (meaning the continental army’s currency used in the Revolutionary War to finance it by the 13 colonies).
http://en.wikipedia.org/wiki/Continental_(currency)
The painful experience of the runaway inflation and collapse of the Continental dollar prompted the delegates to the Constitutional Convention to include the gold and silver clause into the United States Constitution so that the individual states could not issue bills of credit.
December 18, 2009 at 6:57 pm
I lived through the Carter inflation. It was horrible! Both Himself and I held onto our jobs, but neither of us got a riase while the cost of everything skyrocketed. For a couple of years, home mortgage interest rates were about 18%.
Nixon froze prices and wages, but that was worse than useless because he froze wages at their pre-inflation rates and prices at their post-inflation rates. And, of course, stuff that cost more to make than the price freeze allowed went away.
December 18, 2009 at 3:39 pm
Obama et al are hoping for exactly what you describe with economic collapse.
From Cloward-Piven.com, “Cloward-Piven is a strategy for forcing political change through orchestrated crisis. The strategy was first proposed in 1966 by Columbia University political scientists Richard Andrew Cloward and Frances Fox Piven as a plan to bankrupt the welfare system and produce radical change. Sometimes known as the “crisis strategy” or the the “flood-the-rolls, bankrupt-the-cities strategy,” the Cloward-Piven approach called for swamping the welfare rolls with new applicants – more than the system could bear. It was hoped that the resulting economic collapse would lead to political turmoil and ultimately socialism.”
Whenever he gets on the TV and talks about jobs “saved or created” I have to laugh. The LESS jobs, the better for implementing their strategy. We have a bunch of radicals in control now, and it has been years in the making. If we need to reset, we need a George Washington in charge, not Dr. Utopia and his merry group of Marxists.
December 18, 2009 at 4:16 pm
Obama et al are hoping for exactly what you describe with economic collapse.
That maybe so, but they’re fools if they believe they can manage the tsunami that it will release.
December 18, 2009 at 4:37 pm
Exactly. It will consume them.
December 18, 2009 at 4:44 pm
Agreed. Their strategy might be that the collective anger will be turned towards the remaining capitalists and they’ll be the knights who come to rescue. But, they’ve completely underestimated the intelligence of people who have already figured out who are actually responsible!
December 18, 2009 at 5:24 pm
I agree. There won’t be anything left to Socialize.
Wasn’t it Margaret Thatcher that said “The problem with socializism is that you eventually run out of other people’s money”?
December 18, 2009 at 5:42 pm
You guy give me hope. Actually, I’m not an overly religious type, but the timing of certain things such as Climategate and the snowstorm at Obama’s arrival in Copenhagen make me think God is out there looking out for us.
Blagogate too. If Blago was able to sell Utopia’s seat, we would not have Burris in the Senate ready to stir things up against Utopiacare.
December 18, 2009 at 7:24 pm
In the United States, there is a mechanism for preventing this from occurring nationally: states can (and will) secede from the Union.
I think Cloward-Piven may be a theory some are trying to use, but that doesn’t mean it will work. The logic of creating socialism by crashing the system with socialism is certainly questionable. Not to mention that the majority of producers in this country will still be free to leave, unless Dr. Utopia is planning on martial law. Which I don’t think the military would go along with.
December 18, 2009 at 11:02 pm
Thanks, Eric, I live in Tejas and a lot of us (OK, too) are pondering that – secession – don’t want to but may have to. And martial law won’t go down well here, I might add. Y’all freezing, yet?? It’s low here, and we be South..
December 19, 2009 at 1:08 am
With all respect, EP:
Winchester is to supply Homeland Security with 200 million rounds of .40 S&W hollow-point ammunition over the next five years. This isn’t target ammo; it’s designed for fatally shooting people with handgun or submachine gun. It isn’t military-calibre ammo, either. How is it that the bulk of the military is conveniently stationed overseas, while some hypothetical paramilitary force arms up with truckloads of ammo? So who is the hypothetical enemy? Who are to be the recruits who will do the shooting? Imo, it looks like preparation for martial law; and a career change for ACORN and SIEU thugs. Purple-Shirts in the future? It worked for Germany, Italy, and Spain in the Thirties. Works for Chavez. Would it work for Homeland? You decide.
For recent developments in Eurabia, along this line, journalist Jim O’Neil presents a detailed study in Canada Free Post, 17 Dec. 2009.
Truly chilling.
December 18, 2009 at 12:40 pm
Experts were predicting a big second wave of foreclosures on commercial properties.
Has that happened yet, or started to happen?
I predict after this Christmas season that several more large, national retail chains and some of their wholesalers will go into bankruptcy or out of business.
Even Target (the big promoter of Oprah) had sales revenue declines last month (November) which means they dropped lower than the big big drop down of November 2008 after the stock market crash.
December 18, 2009 at 12:50 pm
Since everyone is sharing personal experiences, here’s one of mine.
Last month upon visiting a small, long-time-in-business book store, I commented upon the lack of new periodicals and the blank rack spaces on their periodical stands (they carry lots of periodicals from around the nation and from other countries).
The store clerk informed me that two of their wholesalers (distributors of magazines) had gone bankrupt in this past year.
December 18, 2009 at 2:29 pm
IMO, the problem with Target is that they went from a reliable mass merchandiser with sensible prices to trendy ready-to-wear wannabes and dealers in Crate & Barrel and Pottery Barn knockoffs. Come on, $25 candles. At Target? Their “fashion” labels consist of mass-produced Orient junk from a couple of has-been designers … and buyers who priced the goods two or three times their actual worth. Wal-Mart has filled the former Target niche and closeout stores (Marshalls/T.J. Maxx, Ross, etc.) have grabbed the rest of the retail dollar. It used to be that finding a place to park at Target required a long wait or a long walk. Not anymore. Usually by this late in the selling season stock depth was depleted. This year displays remain full and there are more clerks than shoppers. Hope that’s still the case tomorrow, because I haven’t bought a thing for seven grandkids.
December 18, 2009 at 3:57 pm
Target does carry some lovely disposable plates, designed by a Scandinavian, that added significantly to the festivities of my Christmas party last weekend. Okay . . . I’ve turned off my snob voice now. But seriously . . . very cool plates.
December 18, 2009 at 4:53 pm
And totally disposable!
LOL
December 18, 2009 at 5:32 pm
but they have great diapers…..I know that is corny but when you have a 15 month old, cheap well made diapers that say Target and not a name brand makes your day!!!!!
December 18, 2009 at 12:46 pm
My best friend is a realtor, and she says it’s going to get MUCH worse.
The only thing anyone is buying is foreclosures, so if you are trying to sell your house on the market, you are bound to lose money. People that have to sell their houses because they are moving, etc. are SCREwED as they can’t even break even.
It’s going to get much worse, according to my friend, who has real estate licenses in two States.
December 18, 2009 at 12:52 pm
Tamara, I sorry to hear that.
I think we are all sorry to hear that.
December 18, 2009 at 4:47 pm
Not all of us are sorry to hear it.
I sat out the ‘irrational exuberance’ of the real estate bubble of the last few years and now I am ready to buy a house with cash. I am glad to see that prices are coming back down to earth.
There were lots of people who were priced out of real estate in the last decade as it blew up like a big bubble who are excited to see the opportunity to buy real estate is again within their reach.
December 18, 2009 at 12:50 pm
Throughout history, there have always been period crashes, panics, etc. In the past, they were dealt with by having the people who made the bad decisions take the losses. They liquidated and the assets passed into more competent hands, and the economy recovered. Nowadays, it is politically unfeasible to let anyone take a loss, no matter how foolish they were, so the govt bails them out. This is what Japan did 20 yrs ago (and is still doing) and what we’re doing now. The effect is that we avoid the pain but supress the recovery, going from one bailout to another. The prime mortgages mentioned earlier and the coming commercial real estate problems will be additional potholes in that road.
Think of it as someone who had an infected, absessed tooth. The tooth could be removed, which might be very painful but the pain would be temporary and then the individual would recovery. Or, he could just go along treating the symptoms, dealing with the pain and the ancillary problems caused by the infection, but he would never really feel better and one day might just keel over and croak. The latter is the path the economy is now on.
December 18, 2009 at 1:01 pm
My house was listed as a short sale 3 weeks ago. I owe 500K and the short sale is 399K. We have 2 buyers, and 3 backups. BofA has already agreed to the short sale and I should be in contract by New Years Eve. On a side note. I am a Dozer operator, been outta work a little lately, but out here in socal, we have pretty much built all we can build. I go past projects I completed within the last year and see all vacancies. My last project was a 1.5 million square foot tilt up (warehouse) and last I heard there were still no tennants. Its easier for the developers and inverstors to build empty buildings cause the tax incentives are worth it! Come out here and drive around socal,, commercial real estate is a buyers dream right now, just like residential. I fear for our future with Odumb1 in office. Merry Christmas
December 18, 2009 at 2:06 pm
Make sure that when you get a mortgage paid in full note from BoA. Don’t want some eager beaver coming at you sideways for that additional $100K.
December 18, 2009 at 5:06 pm
Make sure it’s not only Paid in Full, but Paid in Full without Recourse. Last two words very important or else they could come after you for the difference.
First time poster here. Hi everyone! Love the site!
December 18, 2009 at 8:31 pm
Wow–great post, first time or otherwise. WELCOME!!!!!
December 18, 2009 at 2:10 pm
Why isn’t that Obamamoney helping you? I thought his point was to let people refi to keep their homes?
My son bought a home in SoFL during the bubble, got a crappy interest only loan and the house is worth 200k less than his mortgage. I sent him all the Obama housing info, which would have let him refinance his original loan to a much lower interest rate. He didn’t expect the bank would let him refi at the lower value, but was shocked to find out….he makes too much money ! To this day, I don’t know who exactly all that housing money is helping?
December 18, 2009 at 2:18 pm
And my son (a realtor) didn’t make enough money to rework his loan to a more reasonable rate, even though he has never missed a payment and the mortgage is only 50% of the assessed value of the house. So I’m with you, who is that housing money helping?
December 18, 2009 at 2:27 pm
All that money is helping Chicago-Obama run his re-election campaign and pay off his cronies, don’t you think?
December 18, 2009 at 3:03 pm
That’s why Obama’s plan has only helped ~36,000 home owners so far.
The problem is the houses that need to be refinanced to help the homeowner are now worth less that what folks own on them. Banks will not refinance more than what the house is appraised at.
The only way to get people into more affordable mortgages, for the same amount they own on the home, is to waive appraisals. That will never happen. Hence, once folks find out they are screwed…they walk.
It’s much cheaper to rent now then own. Especially with insurance and property tax on the rise.
December 18, 2009 at 3:38 pm
Yes, even renters are bailing on their landlords and moving back in with pappy and mama.
What was that last statistic about twenty-somethings who had moved back in with their parents this year?
December 18, 2009 at 4:01 pm
You are definitely right, Ashter- we sold our house about two months before it all went to shite about two years ago, have been renting ever since.
We’re seeing more and more very nice houses going up for rent because they can’t be sold… and that’s down here in Texas, where the economy hasn’t been hit near as bad as points north and east.
December 18, 2009 at 4:19 pm
It’s much cheaper to rent now then own. Especially with insurance and property tax on the rise.
Particularly in Florida, or pretty much anywhere considered hurricane country and you’re required to have hurricane coverage by your lender.
December 18, 2009 at 4:27 pm
I saw an economics paper the other day about strategic faults and the morality of continuing to pay a mortgage that is unaffordable.
It basically said that it’s in peoples’ best interest to default on their mortgages and decrease their personal risk as much as possible.
On one hand, I feel like if you signed the papers you should honor your agreement.
On the other hand, part of that agreement is that you’ll give the lender your home if you no longer pay.
So, is it immoral to walk? It seems like it’s more immoral to stay in the home and use government power to force the lender to renegotiate agreed upon rates and principal amounts.
However, when you take in to account the effect foreclosures have on your neighbors’ property values, morality springs up again.
However (and this is the biggie), your first responsibility has to be to your own family, right? If you can’t swing the mortgage and put food on the table at the same time, the neighbors are going to have to deal with it.
December 18, 2009 at 10:22 pm
On morality and doing the right thing. I tried and I tried and I tried. 2 yrs ago, as a tip earner, I saw troubles coming. My tips steadily declined until I was finally laid off in summer. At 1st I was just taking a little bit each month from savings to cover expenses. Then it was more, then more. If i would have walked out of my house 2 yrs ago, I’d have a hella lot more cash then I do now. But I did the righ tthing and paid my bills hoping things would get better. Now, I am losing my house, my good credit score and I have absolutely no cash. Admittedly, I made some bad choices. Choices that were extremely easy to make. Now I’m 50 and starting all over again.
But my Faith is strong and I know it will all work out.
December 18, 2009 at 3:51 pm
The mortgage help is only for people 5% under water.
Most are way more underwater than that.
December 18, 2009 at 7:21 pm
The government shouldn’t help ANYONE! The housing fall needs to collapse on its own. With government intervention, the housing bubble can’t hit a BOTTOM, and until that happens, no recovery will happen.
This will drag on for years if ObamaJesus keeps interfering.
December 18, 2009 at 9:43 pm
agreed!
All this debt we have now makes a recovery a far distant dream.
December 18, 2009 at 3:25 pm
Sean…this sounds like you are describing our section of Florida.
December 18, 2009 at 4:47 pm
Sorry to hear Sean. Best wishes.
December 18, 2009 at 8:33 pm
Ditto. Hope things work out for you, Sean, and for every one of us experiencing challenging and downright unfair times.
Prayers all round.
December 18, 2009 at 1:04 pm
All I can say is the scenery around here in the Portland, Oregon area is much the same–half empty malls and office parks. For Lease signs all over the place.
This state bet heavily on high tech manufacturing and the local rag, the Oregonian (affectionately known as the Zero), ran a list today of those companies that are planning to close entirely or lay off staff in the upcoming months.
Merry Christmas–or should I say Obamamas?
December 18, 2009 at 1:22 pm
Realize that most commercial property loans are for five years. In the past the notes were renewed because the valuations on the property minimized the risks. However, with the current situation those notes will not be renewed and the borrowers will not be able to borrow more money on these properties. The valuations (some call them appraisals but I dislike that term) will not be there to make financial sense to loan the money. If the lenders don’t want to end up owning these commercial properties then they will need to perform some fancy financial footwork.
December 18, 2009 at 1:23 pm
I do know the banking industry is bracing for another round of failed banks the first of the year. BOA has put up signs in their banks talking about FDIC policies. There is another round coming….and lord help us if they raise interest rates. That alone is going to be a scary day.
I have started an emergency food storage that I am stocking up because I think when inflation hits it’s going to be very bad.
50% of the $800 stimulus bill was designed to be released right before the 2010 election to help the Democrats get re-elected so whatever happens they’re going to try to paint a “we will rescue you” picture but I think by then people will be so pissed off it won’t work.
December 18, 2009 at 1:55 pm
I like the emergency food idea, I have been stockpiling for months. Whenever I go to the store I grab any non perishables on sale. Canned goods last for a very long time, any type of mixes, beans, rice, flour etc I put in the freezer. My wife thinks I’m crazy, but I just have this feeling something bad is on the horizon.
December 18, 2009 at 6:53 pm
I’ve been doing the same. In fact, I had a can of potato soup that expired in 2005 and once it reconstituted with the milk, tasted just fine. All my goods I mark with the date so that it is easy for me to see and to organize. Sugar, beans, white rice, dried onions, bullion cubes etc I think store indefinitely as long as kept dry (sugar and beans need special packaging to keep pests out).
December 18, 2009 at 11:32 pm
We have a piece of rural property that we inherited years ago and have been dutifully paying the $97 per year tax bill. We have recently looked into a packaged home building kit called a Katrina Cottage that Lowe’s offers. I believe the smallest costs around $20k. We’ll have to have a well dug and a septic tank installed, but that can be done without incurring a mortgage. I’ve been stockpiling veggie seeds for years (just in case it came to this – I remember Carter!) and while we never aspired to live the farm life that sustained our grandparents, it’s starting to sound pretty appealing. Just imagining the civil unrest in urban areas that would accompany a total economic collapse is very concerning.
December 18, 2009 at 2:30 pm
Hyper-inflation
http://en.wikipedia.org/wiki/Hyperinflation
Root causes of hyperinflation
Germany, 1923: banknotes had lost so much value that they were used as wallpaper.
The main cause of hyperinflation is a massive and rapid increase in the amount of money, which is not supported by growth in the output of goods and services.
Also there see:
Germany, 1923 – banknotes had lost so much value that they were used as wallpaper.
and….
Sweeping up the banknotes from the street after the Hungarian pengo was replaced in 1946.
December 18, 2009 at 3:17 pm
The hyperinflation in Germany was so bad that stamps cost millions of marks. I have some of the stamps that were overprinted.
December 18, 2009 at 3:27 pm
They are printing money as we speak…trillions of it. When they raised the debt limit that meant “print more money” to pay off debt…which lowers the value of the dollar. When they raise the interest rates (which they say they won’t do for a year) the asset bubble will pop and the value of the dollar will implode. With hyperinflation we’re talking about food shortages, goods shortages, gas shortages…it’s not going to be pretty.
December 18, 2009 at 5:48 pm
I think that the real problem here is that they are ignoring the economic history of the past.
Or maybe they are not ignoring the past but are trying to recreate it.
If anyone has studied J.M. Keynes then those people should be able to recognize that he at least was aware of all of the signs that was leading up to the Great Depression – in that case it was the reparations being forced upon Germany.
Now look at what is happening but this time even more countries are involved. It is the big handouts to these “poor” nations. It has to stop.
I wish I had my copy of J.M. Keynes book because right now would be a good time to go do some revision. Personally, I think he was an astute observer. We need to adopt the same form of astuteness.
Tim Geithner and the rest have no idea. They are not Keynesians. They might follow Milton Friedman, but they definitely do not follow anything from Keynes.
I think that people who are seeing this as an attempt to recreate the situation prior to the Great Depression are correct.
Obumnut is so disgusting… he is not in the slightest bit intelligent,yet he is more cunning and more sly than a fox.
December 18, 2009 at 7:31 pm
Keynes was an extremely astute economist, akin to the original Adam Smith in that way.
December 19, 2009 at 1:08 am
buttered I agree. Keynes was extremely astute. He predicted the economic disaster after the Versailles treaty.
Roosevelt did not really follow Keynesian theory. If you want to see how it really worked then you need to study what England did during the same period… he was Chancellor of the Exchequer in England.
Also, he believed that during a time of war taxes should be raised….
December 19, 2009 at 7:42 pm
You mean when Keynes was Chancellor of the Exchequer in England during
World War II, correct?
December 18, 2009 at 2:55 pm
You are right about the banks, and the Govt knows ALL about it…FDIC has requested to DOUBLE their budget for next year b/c they are looking at 1600 banks that are in trouble.
But, all we hear is how the recession is over, and happy days are here again. Yeah, I’m buying that.
My husband and I are putting our food storage together as well, and I am stocking up on 2nd hand clothes for my kids in the larger sizes they will need over the next few years. I believe what Gerald Celente (a well known trends analyst who predicted all of this) says–by 2012 all of Main Street America will resemble Detroit.
December 18, 2009 at 3:30 pm
Yep. I’m buying rice and dried beans and such, soups, powdered milk, tea, paper goods, canned fruit, etc…I’ve got storage tubs and each grocery trip I’m throwing more into it.
December 18, 2009 at 4:30 pm
We’ve been doing that for some time now. It’s getting harder and harder to keep the stockpile funded out of our normal grocery budget, though. At one point, I was able to get all of our needs plus stockpile for $100 a week. Now, our basics take almost that whole amount.
December 18, 2009 at 4:55 pm
I’m afraid you’re right Bev!
December 18, 2009 at 1:24 pm
I think it’s all going to be in late January or February, after the Christmas sales numbers come in. Until then, people can put off reality with the hope of a good sales season.
We should have known this was coming long ago. The fact that “Black Friday” even exists in popular terminology is enough to show how fragile our consumerist economy is.
December 18, 2009 at 1:29 pm
Here in southeastern Wi. its the same story: lease signs all over the place. The business periodicals we get have been predicting a big commercial real estate problem. I think a part of the commercial real estate problem is that more people are buying more things online. I know we are.
December 18, 2009 at 2:32 pm
More and More Snowqueen, online is the only place to find More and More Products, because the big box retailers are dropping product to concentrate only on the biggest sellers.
December 18, 2009 at 1:35 pm
There used to be ads on the radio all the time for “own your own business condo” companies. They’d talk about how you could take advantage of the rising real estate market to build equity in your business.
The problem is that so many businesses operate on such a narrow profit margin. Heck, even the oil companies only have about a 7% profit margin.
Any increase in costs or decrease in sales has eaten up the little profits that businesses were able to pull in. That means no reinvestment in to their businesses.
The boom made to many owners out of places that should have stayed in leases. If you’re leasing and business gets bad, you can always reduce your costs by leasing some place less expensive. You don’t have to take the loss of trying to sell a commercial building.
December 18, 2009 at 1:37 pm
“too many”
December 18, 2009 at 1:39 pm
Looks like this is a common site everywhere. Same here in NW GA. Side note: local restaurant decided to expand and was looking to hire 6 ppl, article in paper 4 days ago. Today my friend who works there said they had over 300 applicants for the jobs. Not good!
December 18, 2009 at 1:53 pm
I am by no means an expert on the matter, but the Wall Street Journal has a good article on it:
http://online.wsj.com/article/SB125167422962070925.html
My feelings are that it will be heavily localized. In my immediate area, for example, commercial real estate isn’t doing that badly. As stores who’ve been hurt by the economy close up shop, the storefronts get a little cheaper and then entrepreneurs open up things like thrift shops and used book stores and the like.
Nevertheless, a large-scale commercial mortgage crash could be devastating to our economy, if it is large enough. It could a deeper recession or an actual depression, it could mean 20% official unemployment, it could mean a mass exodus from population centers, it could mean a lot of folks have to look for completely different kinds of work, it could mean another bailout, or any combination of the above.
December 18, 2009 at 1:53 pm
Where I live in the PNW, we are still experiencing a commercial real estate boom, although it’s been slightly dampened. Case in point, a certain man owns all of the city. He own three malls, which he calls the “Bellevue Collection.” Someone else just came in and put up a building called The Bravern, and it has a Neiman Marcus, Anthropologie, ridiculously priced boutiques, a gym from the movies and fancy restaurants. It’s doing juuuuust fine, as it seems everyone else in Bellevue is doing.
It’s really strange, and I know it’s not indicative of the economy everywhere else. Homes are certainly not experiencing the same boom, even in Bellevue.
December 18, 2009 at 2:26 pm
That wouldn’t be Paul Allen would it?
December 18, 2009 at 4:04 pm
Paul Allen is more active in Seattle, but it was a good guess! Kemper Freeman owns all of Bellevue. Amazingly, he doesn’t really hand his fingers in anything tech-related. He just started Bellevue Square a long time ago, and now he makes bank with swanky stores.
December 18, 2009 at 8:10 pm
I’m in the PNW too, so Paul Allen was the first one I thought of. I know he owns most of downtown Seattle, and a good portion of Renton, so I guessed he had Bellevue too! I love the name of his property company – Vulcan. It always reminds me of Dr. Evil in Austin Powers. I can picture Paul Allen in a sub-basement at Quest Field sitting at a big oval table along with his own version of Number Two and Frau Whatever her name is, plotting to take over the world. Actually, with Obama at the helm now, having Paul Allen take over could only be good news.
December 18, 2009 at 3:34 pm
Pacific Northwest?
December 18, 2009 at 4:04 pm
Yep, sorry I wasn’t clear. I was talking about Kemper Freeman, who basically owns all of Bellevue, the swanky city across from Seattle.
December 18, 2009 at 2:32 pm
I was eavesdropping the other day and I heard a real estate agent say that interest is about to shoot up next year and all of those not on a fixed loan are going to be in trouble.
But, but, but… I thought I was supposed to get a pink palace and a unicorn!
December 18, 2009 at 2:36 pm
This is the best real estate blog I’ve seen around. I’ve been following it for years.
http://thehousingbubbleblog.com/index.html
December 18, 2009 at 2:44 pm
Here is a detailed report of the mountain west region of our country and it’s economic and housing situation. I’m glad I live in Colorado Springs. Las Vegas and Pheonix are not looking good.
http://www.brookings.edu/~/media/Files/Programs/Metro/metro_monitor/2009_12_metro_monitor/2009_12_mountain_monitor.pdf
House prices have not yet stabilized in the Intermountain West, and the region’s aggregate rate of bank owned properties remains high, although it is highly concentrated in Las Vegas and Phoenix. To be specific, only metropolitan Denver and Colorado Springs among the 10 large Mountain West metros had registered slim year-over-year home price increases by the end of the third quarter, while in September the incidence of real estate-owned (REO) properties remained disturbingly high. On this front, the region’s aggregate large-metro REO rate (measured in REO properties per 1,000 mortgageable properties) of 8.15 nearly doubled the large-metro rate nationally. However, it bears noting that that showing was largely driven by the difficulties of Las Vegas and Phoenix, where the REO rates continued their upward trend—albeit at a slower rate—to 17.40 and 12.19 REOs per 1000 properties, respectively, in the third quarter while elsewhere the variation was on a more moderate plane.
December 18, 2009 at 3:16 pm
Gerald Celente has been predicting the commercial real estate bust for several years. Search for his videos on YouTube. In the meantime, I’ll forward you his newsletters.
December 18, 2009 at 6:52 pm
I heard a radio interview with him a few months ago. Scary stuff.
December 18, 2009 at 8:37 pm
Yeah, he’s really a no-holds-barred kind of guy. He pops up on Coast to Coast every now and then. I really sleep well on those nights. /snark off. ;)
December 18, 2009 at 3:20 pm
This is why we MUST elect good, Constitutional conservatives, no matter what letter is behind his/her name! This IS all going to fall. Obama and friends have every intentions of propping up the economy for a while but when it falls again (and it will) that will be the crisis that they will take advantage of to propel their Socialist Utopian Agenda.
Remember “Let no crisis go to waste.”
It’s still going to fall, but if we have peoople who are willing to let it go (no more *too big to fail*) it will right itself and be in far better shape than this false (place sneer here) “recovery.”
December 18, 2009 at 5:58 pm
someone like Senator Ben Nelson deserves to be there. Hard to name a lot of your conservatives though.
December 18, 2009 at 7:57 pm
I think it’s funny they’re saying the Democrats are going to use the “Blame Bush for everything” game for the election in 2010. If the economy collapses and Obama starts whining it’s Bush’s fault he’s going to get slammed. Now I’m sure they’re hard at work gathering all the negative paperwork they can get to “reveal” to the public before the election how “evil” Bush was…but people are soooo tired of seeing Obama gives speeches and blame everybody but himself…I don’t think it’s going to work.
December 19, 2009 at 12:12 am
Nelson will fold in the end….anyone who votes for this hef’caruh bill is just putting another nail in the coffin. Word is they’ve threatened to close one or more military bases in his state to strongarm him into voting for it.
Regarding “our conservatives”….if you notice, Angela said we needed to elect “good Constitutional Conservatives”. She never once said any of ours were worth a d*mn…..and I’ll go so far as to say that the other side, as a whole, is worth much less. However, given the chance, I’d fire all of them….starting with King Koopa in all this mess…BAWNEY FWANK.
December 19, 2009 at 1:13 am
Since I am from Australia, I am referencing conservatives in both parties.
It does not matter if you vote Dem or Republican if you are Conservative that is what matters.
December 18, 2009 at 3:24 pm
Phooey, I wonder what I said this time that the filters didn’t like. LOL. I don’t curse much and I’m not a hate-monger but apparently, the filters don’t like me anyway. So, I start over and rephrase.
Yes, I believe firmly that it is going to fall and fall hard. We need to make sure we have good people in place who are willing to allow our economy to reset. This business of propping it up with bail-out money is creating another bubble.
There is no safe way of sucking that money back in, so we are going to have a rough way to go.
December 18, 2009 at 3:59 pm
I dont think we have seen anything yet.
I was in the mortgage biz for 20 years. The wholesale end.
I now check on homes in collection and foreclosure. Its unreal….
Even if my some miracle these homeowners find a job.. they still OWE the missed payments so those homes will be foreclosures..which will sink prices even further.
Commerical loans are going to be worse if/when they crash.
America needs to wake up and vote all these politicians out.
December 18, 2009 at 4:13 pm
This just came to my attention: Florida State University’s Research in Review.
The most…shocking…place they went is Lehigh Acres, a 61,000 acre development in Lee County, east of Ft. Meyers on the southwest coast. Lehigh Acres started life as a cattle farm tax shelter for a Chicago businessman, Lee Ratner. He and his partners divvied up 100,000 lots, but things didn’t really get rolling until 2001. By 2006, we see
at the peak of the real-estate boom, more than 6,000 new homes were built. Housing prices doubled, then tripled with speculators flipping the same houses sometimes four times in a year.
In 2007, the cacophony of hammers and drills went silent. Between 2005 and late 2008, average housing prices in the Fort Myers area plunged from $322,000 to $106,000, according to the New York Times. In 2008, the Federal Bureau of Labor Statistics put the percentage of Lee County job losses higher than any other county in the U.S.
Money quote: They walked into “brand new abandoned houses with graffiti spray-painted on the front and the electricity still running,” Raulerson recalls. “Everywhere were abandoned homes and vacant notices. What was booming five years ago had become a ghost town.”
December 18, 2009 at 4:29 pm
I’m an insurance field investigator and you are actually 100% right with this post.
Back in 2007-2008 there were hundreds if not thousands of newly constructed homes. Now, Lehigh Acres is made up of mostly immigrant and seasonal workers. They built homes, shopping centers, etc., and it was beautiful.
Whenever I have a case down that way, I cringe. There are hundreds and hundreds of empty homes; some folks live in subdivisions where they are the ONLY residents. It is spooky. There is nothing… nothing left there. It is chilling.
P.S. Remember Henrietta Hughes? That was the BchHoe that asked HIs Obamaness for a new kitchen. The black freeloading hosebag with a 34 year old able bodied son standing next to her, askin for the handout. And? She got it. From a republican senator’s wife.
Where’s Henrietta now? Prolly moochin up over in Georgia, I presume.
December 18, 2009 at 4:14 pm
Just curious: What’s the current state of Water Tower, Boyz? I haven’t been to Chicago for almost 3 years.
December 18, 2009 at 4:23 pm
Guys-I’m originally from Chicago-suburbs, but I now live in Florida. This was the “weirdest” thing I heard years ago, but Florida has shopping tours from South America because products are much cheaper here. I saw this on Mad Money, so it gave me an idea. You guys are fun, you could arrange shopping tours in Chicago for the Europeans, South Americans-all I can tell you is, it is a huge business in Florida. Hope this helps somebody, anybody.
2. Cramer asked if they are seeing European customers coming to their stores in New York to buy clothes there because of the strong Euro, and the CEO said that tourists are coming back this year after a weak 2008, and New York is now outperforming their other markets, with the store in Manhattan that they are sitting in making up 20% of the company’s sales.
December 18, 2009 at 4:30 pm
Would the guys need a tour bus? What about shopping tours for rich gay Europeans and South Americans? Besides the tour fees, maybe they can get a modest percentage of sales and discounts from the stores and travel-booking agents?
This is just the kind of entrepreneurial foot in the door that Celente hints at!
HILLBUZZ: with more info, can you make it work?
December 18, 2009 at 4:32 pm
OK, I was so excited, I wasn’t clear. Will try again.
Perhaps, along with the tour fees, the stores at which the tourists shop would give the guys a modest percentage of their take. Also, maybe the guys could get a modest fee from travel agents booking the tours?
Or maybe I should just mind my own business, but I agree with Michelle. This idea resonates with me on behalf of our Boyz!
December 18, 2009 at 4:55 pm
Honest to goodness, coming from the suburbs of Chicago I had no idea shopping tours even existed, but due to exchange rates the South Americans and Europeans come here to shop til they drop. Another possibility products that can’t get a home? I’m not a mall person, we used to shop at OakBrook-Sears-paint etc., but boy could everyone have fun with tour buses-pick-up the folks at O’Hare, find reasonably priced hotels, great places to eat. Works for Florida.
December 18, 2009 at 5:44 pm
Those shopping tours even come up from Mexico so Mexicans can shop the Southwest U.S. region – Texas, Oklahoma, etc.
December 18, 2009 at 5:50 pm
I believe those shopping tours from Mexico come in part to shop the close-out discount stores such as Ross, TJ Maxx, Marshall’s, etc. I’ve seen their tour members in those stores before – huge groups of them.
I just checked and discovered that those deep -discount retail stores do not have operations in Mexico. So those Mexicans have to come to the U.S. for those bargain stores.
December 18, 2009 at 4:24 pm
I heard a blurb today that a company in San Francisco (Hello Granny Botox) is going to “return 5 high rise buildings to the landlord”.
There is a coming catastrophe, and it’s not just in Real Estate. People like me, who pay their bills on time, live within their means and play by the rules are now getting royally screwed by the big banks that took bailout money.
Ex: Credit card I’ve had since 1998, never missed a payment, pay more than is due notified me that my interest rate will go from 10.4% to 29.99%. Retroactively.
Do you hear that? Retroactively. This means that the balance I have on my card will have a 29.99% hike put in place going back since the dawn of the balance, hiking the amount I owe to unsustainable.
My answer? F&ck the banks, F&ck the Feds, F&ck the IRS, F&ck ‘em all. I’m not paying a penny, I will not file taxes, and I will no longer participate in this hideous game. They can take that turdburger they’re trying to feed me and suckit.
/Rant off.
December 18, 2009 at 4:35 pm
I smell consumer revolt, and I’m IN! Enough with the rewarding of evil people and bad behavior! Eff them all is right! If we all defaulted and claimed bankruptcy, credit reports would be meaningless!
(((((((((((WEARY)))))))))))))
December 18, 2009 at 5:37 pm
That’s the whole point.
In other words: How long will we lay down and get Obamafied without a kiss?
Me? No.
I choose “NO”.
Support only local, small business. If you are a renter then do NOT pay taxes for federal schools. DO NOT PAY these foolhardy souls that think they are better than us, know better than us, want to manipulate, govern and control us.
Just say NO.
And for you, SQT? Fend off, baby. Your government has lost control. By your government’s loss of control, they have lost everything. The most important lesson YOU will learn is that WE THE PEOPLE will NOT. EVER. BE. CONTROLLED.
December 18, 2009 at 6:41 pm
Damn, weary!
May I ask how much is on the cc?
your story makes me wonder how stupid i am for having paid off all my debt except for a $6000 cc and a teeny mortgage balance on my even teenier cottage which i downsized to 3 years ago when I was diagnosed with an illness which prevented me from eaching.
Let’s just say the cure was almost worse than the disease.
And let me add that when I got struck with a double whammy – recovery from one illness only to be diagnosed with another- which I’m just ending chemo for – I decided to treat NOW coz of the HCR nightmare.
I have paid into HC all my working life but I feared the impact this bill will have on insurance coverage.
Hopefully, I will be cured of this, too, and will never be ill again. Let’s face it – no one can afford to be sick.
December 18, 2009 at 10:28 pm
Reply to Basil–Basil, you’ve been whammed enough for this lifetime. Yiii.
I hope your downsizing has the upside of gaining you more time, more mental and spiritual space, and fewer worries (e.g., no basement that floods every spring, lower property taxes). Definitely look for silver linings in those clouds.
As for paying down debt–we should do it to make our conscientious selves feel better. It’s not fair, but then what is? It’s sort of like not shoplifting or picking somebody’s pocket even when we see we have a golden opportunity to do so. We will have one less thing to feel vaguely guilty about. And don’t forget that all our credit-related actions will live on in our credit reports, so it doesn’t hurt to have evidence of our financial responsibility for future use.
December 18, 2009 at 4:37 pm
Weary, I hear you.
The only way we can get back at them is to get out of debt as quickly as possible and not take out loans….save and buy with cash only.
December 18, 2009 at 5:17 pm
That’s utterly insane. I see a lot of like minded people joining that revolt.
December 18, 2009 at 5:52 pm
Weary, I guess you already know that a lot of other good credit-card users, just like you, have already cut up ALL their credit cards and completely stopped using them for the same reasons you cite.
December 18, 2009 at 5:56 pm
It is Morgan Stanley that is returning those keys.
http://www.huffingtonpost.com/2009/12/17/if-morgan-stanley-walks-a_n_396543.html
December 18, 2009 at 4:30 pm
I was listening to some economists (they are conservative economists) and they were saying that the commercial property industry is a trillion dollar industry and that starting 2010-2013, $1.3 trillion in loans will be due. If things do not improve, which they are projecting they will not since there has been no focus on the commercial property bubble, they said that we may experience another crash like the housing crash.
I was surprised when I finally ventured out for Christmas shopping where I live in WA state, a lot of empty buildings. A new shopping center was going to be built but it was scrapped completely, land was bulldozed to start building commercial property over 5 years ago and there hasn’t been any new building on the land for over a year. My parents moved into their current house three years ago and the land behind them was bulldozed for new housing at around the point they moved in. There were supposed to by 19 plots and in three years about 4 houses have been completed. It is just empty land.
December 18, 2009 at 4:33 pm
On the 6th Day of Obamamas
Obama Gave to Me
An Economy crashing
into the sea.
Barack the Vote, ya’ll!
December 18, 2009 at 4:37 pm
The one good thing about extreme distress is that it often sparks creativity.
CONSUMER REVOLT!
December 18, 2009 at 5:42 pm
Consumer revolt is one thing, but please know this:
We are not “consumers” of Government.
At least, I am not. I don’t wish to revolt against honest business owners trying to make a living (I am one); what I am against is the elitists in some distant land called Washington DC where they get an automatic life time pension of over $70k just for signing up.
Washington DC is a sewer. I am a small business, a homeowner on the edge, a mother, wife and daughter.
I want to put RID=EX into the sewer of Washington DC and get rid of the smarmy, disgusting turds that are trying to control everything from Climate Change*tmalgore to MountainDew soft drinks.
STOP. PAYING. TAXES.
STARVE. THE. BEAST.
December 18, 2009 at 5:57 pm
Weary, did you ever wonder and try to imagine how fed government might change if we said, DC is done. The new capital will be some, normal, un-glamorous place such as Great Bend, Kansas?
I think it would make a difference. Imagine all those effete east coast and snobby west coast nere-do-wells who would turn up their noses and refuse to run in politics again!
LOL
December 18, 2009 at 6:52 pm
Buttered:
Great idea! In a DRY county! And the only restaurants Bob Evans and Denny’s. And the only shopping Wal-Mart.
A complete exodus from government would happen in a New York minute.
December 18, 2009 at 7:40 pm
Buttered:
I LOVE that idea!
And make sure the city doesn’t have an airport so they have to take a BUS everywhere. A stinky, no-frills Greyhound bus.
Love it.
December 18, 2009 at 8:50 pm
I agree, Weary. I used “consumer” for my inability to come up with a more precise word.
I’m a supporter of small, local business (my family had one for over 50 years), and I would never want to hurt or punish small biz owners…the govt’s doing plenty of that!
I would, however, like to see certain banks and brokerages punished for their collusion with the smarm in D.C.
December 18, 2009 at 4:39 pm
Government cannot fix this stuff. Government cannot save. Jesus saves. Government doesn’t and can’t. I
am not suggesting everyone here become Christian (although there are worse things to be). I am saying we have to get rid of the notion that government is the source of goodness and wealth and salvation. We have to rely on ourselves and our neighbors–mutually, at our own will and our own discretion.
Religious folk (and I am one of them) would say we have to rely on God. Self, neighbor, God–whatever you want to say or call it, it ain’t government!
December 19, 2009 at 1:21 am
this is a theme that has going around in my head for several weeks – kinda since Climategate broke.
This is how I see the issue – people have moved away from God, to the point that they think that they can compel nature to bend to their will, not God’s Will. As a result of this move away from God (via Church) people have also begun to believe the lie that govt can provide.
Over your summer one of the campaigns concerned the “morality” of having government health insurance. I saw a lot of arguments, people bringing up Bible passages that were irrelevant because no doubt the big DNC machine who was paying them to troll, gave them the passages to use. The fact is, that when Jesus spoke about helping others, Jesus was not referring to handing over one’s wages to the government for the purpose of redistribution of income. The difference is compulsion vs. what comes from the heart or charity.
So yes, you are right government cannot save; we cannot stop global warming by reducing carbon emissions through crap and tax or in my country through ETS.
December 18, 2009 at 5:04 pm
FWIW I read a few weeks ago that in Phoenix 19% of single family homes are not currently occupied.
Folks, that is one in five!
My sister’s best friend just did the Jingle Mail thing on her property and moved back with her parents. Five other people on her street are leaving their homes too. Oh, and there are empty lots all around them where houses were supposed to be built.
The house I just purchased was a short sale and I paid 70k less than the previous owners paid two years ago. Of the twenty of so places I looked at, only two were *not* short sales or bank-owned properties.
And this is on the residential side of the market…
It’s gonna get ugly soon and people are angry. My belief is that responsible people aren’t keen on supporting the irresponsible ones anymore. That includes elected officials so they had better take notice.
Bad news but it may ultimately cleanse a corrupt system and get us back on track.
I will work towards this in any small way that I can. Thanks to all those in blog-land (ex. Hillbuzz) that “get it” and have the audacity to give voice to what is boiling just below the surface…
December 18, 2009 at 5:13 pm
Hi there from the other side of the planet!
You are not alone, the same thing is happening here. You have Obama, we have Rudd. Both are creations of a marxist mainstream media, and neither have a clue about how to fix the stuff ups they’ve created.
Our last Prime Minister, John Howard, left a large surplus for Rudd and he blew it in less than a year. This is a pattern in Australia – the Liberal (free markets) Party fix up the economy, and Labour (Socialists) stuff it up again.
I think you are all pretty much correct here – we are heading for a Great Depression style economic catastrophe.
December 18, 2009 at 6:20 pm
Aren’t we the lucky ones to have KRUDD!!!
For the first time ever my husband was made redundant. He was lucky enough to end up with “employment” and this will be turning permanent, but the down side is that he has to take less pay.
You are so correct in that analysis with regard to the destroyers of our economy.
So far we are not having it as bad with real estate, but here in the Peoples’ Republic of Canberra there is that odd sign of businesses not doing so well.
December 18, 2009 at 7:34 pm
Love your name, Winston; sorry about your situation, tho.
December 18, 2009 at 5:22 pm
I live in Ca and we’ve kind of been the spearhead, along with other over-inflated states like Florida, in the real estate downturn and it’s been ugly here for years both in residential and commercial real estate. In fact, we bought a foreclosure ourselves. But the last year has really been something as far as commercial properties go. I have seen so many businesses shut down– blows my mind. We have a pretty big mall near us that’s all but vacant and I’m seeing more go out every day. I have a couple of friends who own a restaurant in Wisconsin and they may have to shut down because business is so bad. This is not going to get better any time soon.
December 18, 2009 at 5:57 pm
Those malls that are empty will soon be inhabited by the homeless.
When you are hungry, when you are alone, when you are without family or friends, when you reach the point of destitute, you will lash out.
Be careful.
And above all, please do all that you can do to feed, clothe and give aid and comfort to our fellow brothers and sisters and their children. Give blankets, stuffed animals but above all, give food. And love.
/I know about these things. I spent time in a Salvation Army and when you’re starving, there is nothing better than a big giant bowl of bean soup. Beans are great. Oh, and those little soaps from hotels, shampoo’s conditioners, sewing kits, shaving razors/creams, underpants, undershirts and pajamas. And interview suits (pressed and cleaned), toothbrushes and paste, socks. Fresh, unused pillows. Cheap blankets. Moisturizer for chapped skin is good, too. Oh, and a hairbrush!~ or comb. And something really nice is a robe… unused; cheap, cotton robes. It helps when you walk down the hall after a shower. Oh, and Bibles and Torah’s are awesome. Also, magazines.
/spoken by a woman who lived in Salvation Army shelter at aged 12 through 14. And lived.
Let’s donate time, blood and treasure to help our fellow man during the Obamamess.
December 18, 2009 at 6:25 pm
Congrats, Weary. You are one strong soul.
December 18, 2009 at 6:27 pm
Weary,
that is an excellent idea that you have.
I am Catholic, and at my last parish we had what is known as the Family Group Movement. It was started by a priest in Sydney by the name of Fr. Peter McGrath.
My former parish was a very big supporter of St. Vincent de Paul Society. The big event each year is the Christmas Hamper Mass which is run by the Family Groups. Everyone gets involved, including the local Catholic primary and high schools. In fact some of those high schools are outside of our area but they have local children attending them. We gathered in over 500 hampers.
I must mention here another church group from the inner Sydney area that provides Christmas lunch for the poor every year. Sydney has been very good on this score.
I now live in the Peoples Republic of Canberra.
December 18, 2009 at 5:26 pm
Guys-re: real estate market Chicago, due to foreign exchange rate also, properties are being pick-up here, refurbished, remodeled etc. Florida got very beat-up in the real estate market. US is considered a bargain compared to other counties. All those abandoned buildings can be retrofitted-that is where creativity is needed, also what one person can do, with partners the possibilities are endless. Down here they are using abandoned shopping centers for art exhibits-all kinds of different “stuff”. It’s miserable I know but with a new government the people due to their hard work will get America back to work.
December 18, 2009 at 5:57 pm
This thread just breaks my heart (and spirit).
I had a PA real estate license (which I dropped…not even in referral as insurance costs–Errors/Omissions– were greater than what I expected to earn). I have been back in retail (hell!!!) again. With hours cut. No ‘second’ seasonal job (a Rite Aid nearby put a small sign on their door…their door!!! no advertising…and got over a dozen applicants the next bus. day morning (I know this because I wanted to apply!). These are ‘just make some money’ jobs (nothing that you can live on) and people are literally lining up to put in their aps. A former RE agent (a top seller, had a company vehicle, well respected, sponsored local youth sports teams year after year) is now working the Service Desk at my grocery store. I fear a ph.D may be slicing my deli selections at the same outlet. And THIS is in suburban Pittsburgh…we had our BIG failure in the early 80s when the American steel industry died…no real estate bubble here…yet…
I know of several families (their kids are friends of my kids) in foreclosure. Not McMansions…nope…three bedroom ranches and four bedrooms two stories…built in the 60 thru 80s. Family homes–no cathedral ceilings/soaking tubs/granite kitchen…
I still ‘play’ at being a realtor…(but I can only visit the same sights any buyer would–no more password for me!!! so I don’t know about how many bids are in/etc) and I can ‘see’ short sales. I know what the neighborhood ‘went’ for prior…and in nonbubbled, middle class Pittsburgh homes are selling down.
Now I never worked in Commercial RE…BUT…I get a sick feeling in my stomach when I see brand new, empty (yet mortgaged thru the nose) strips mall sitting empty. Old shopping plazas where 50 or more percent of the store fronts are empty. Machine shops, on major highways that used to employee 100 plus…gone. Empty land. Empty shop/warehouse. Major mall nearby…anchors in place (sort of) but the ‘specialty shops’ gone (or going out of business sales). A NEW car dealership (gone…used do come and go…but a rarity to see a Chevy dealer fold). Those retailers still in business are now in a position to neg. their rent down…as they can ‘get a better deal’ elsewhere…so Comm RE holders are in quite a pickle as well. Its kind of like the perfect storm brewing.
Enjoy Christmas…because, like others ‘here’ I trully fear what is coming next.
December 18, 2009 at 6:13 pm
So… How about we all get together as HillBuzzers and insist that we will not “fear” anything. We will do unto others and give what we can, do what we can (in silence) and just start feeling better about being Americans.
Like Sebastian. Never met the guy, but I hear that he cleaned homes on weekends.
Let’s get together and help eachother and those in need. Note: when helping “those in need”, always do this annonymously. It’s better for their soul and yours.
December 18, 2009 at 9:15 pm
Amen Weary, you make a lot of sense. We need to help when ever we can, and try to keep our spirits up. There are always others with greater needs.
December 18, 2009 at 6:31 pm
This is what happens when you run an economy on fiat money, phony statistics, and borrowing. Add in local, state, and federal government obligations to employees and, at least in CA, ridiculous ballot mandates, and you basically have a recipe for disaster. Thankfully our military’s cultural milieux is, for the most part, to the far Left what Turkey’s is to radical Islam — the bulwark.
December 18, 2009 at 6:51 pm
As forclosure rates hit record levels,more sellers are turning to short sales as a way to avoid foreclosure. In a short sale, the seller arranges with their mortgage lender to accept a price that’s less than the amount they owe on the property.
Sounds good right?well,sellers need to know that a short sale may damage their credit,but not as much as foreclosure.
Its just a beggining,things are going to get worst,this is a lot happening in California,i am a realtor and i haven’t sold a house in months.
December 18, 2009 at 6:55 pm
The irony is that Germany is going to be a better place to be — even for Jews — than is the U.S. because the U.S. cannot survive on half-baked socialism and liberals running the machinery of gov’t. We are a pull-yourself-up-by-your-bootstraps country and if we try going Sweden, it all falls apart. It’s like taxing Sweden to fund Finland. There’ll be problems.
December 18, 2009 at 7:02 pm
I read several months ago that there was 300 plus hotels and resorts in CA on the verge of bankruptcy. The Sahara in Vegas just closed down two of their three towers for the winter because vacancies were so high. IT IS alot worse than this administration will admit. I’m afraid thay are trying everything and anything to make it appear that everything is ok to keep the sales up for Christmas. It is bad and we all know it. It ticks me off when I see the headlines – unemployment down, we are out of the recession, etc. Its all lies! When Bush was in office if employment lost two jobs it was doomsday – here they will say that the moving average is improving, or other BS.
December 18, 2009 at 7:04 pm
Now I just read that there is a global warming agreement and Obama is heading back to DC. Did you hear Hillary offered 100 Billions dolars a year to the other countries. Can you tell me where the money is coming from – you and I via increased taxes on just about everything, gas, heat, etc. etc.
December 18, 2009 at 7:11 pm
Yes i heard that,i guess we are all going to go broke,but if we are not making any money who is going to pay for it.
December 18, 2009 at 7:33 pm
It’s a non-binding agreement, sort of “Hope and Change for the Climate.” In other words, it’s nothing.
December 18, 2009 at 7:38 pm
Funny then how they spin this to make it sound like Obama did a wonderful job as usual!
December 18, 2009 at 7:39 pm
It might not be as bad as you think. The Houston Chronicle’s science reporter just got spammed by a bunch of environmentalists claiming that there’s nothing binding in the agreement, so it’s worthless.
December 18, 2009 at 7:48 pm
Here’s a site I like to play with:
http://www.zillow.com
Type in any address in the country, and it gives the value (based on comprables I’m sure).
December 18, 2009 at 10:10 pm
Thank you for the link!! I had been wondering what the most recently sold home in my neighborhood went for. It looks like the seller took a $100,000.+ bath down from his original listing. Ugh. . .
December 18, 2009 at 8:21 pm
What an awesome thread. It is so good to get first-hand information from all over the country. But it’s not good to hear that things are dismal all over.
The big screaming unanswered question is how a still rich and prosperous country like ours could be so utterly hamstrung at the moment.
Where did all our money go? It did not all disappear in bad real estate loans and bankers’ bonuses. Has anyone followed the money? Do we even know how much of it has gone into pork over the past one, three, five years? Who besides ACORN has been getting handouts?
Boyz, maybe you can start a new thread on the topic of following the money. It would do us good to pool our research on the subject.
December 18, 2009 at 10:02 pm
This is a question I have, too.
December 19, 2009 at 1:32 am
SEIU has also been getting the money.
Just follow the links and the cronies turn up.
December 18, 2009 at 10:32 pm
Can any of the RE-savvy explain the obsession with the current value of these properties? Home values go up and down over the years; were these houses so overvalued when purchased that they can never again reach those market values? Or is the fuss only because people are trying to refinance their loans and can’t get the full mortgage amount anymore?
December 18, 2009 at 10:54 pm
They dont fall like this.
Say you bought a 300k home in Ca, NV, AZ, or FL… its now worth about 180k.
You CANT refinance.. you cant sell it.. you cant modify it..
God help you if you got an adjustable rate mortgage.
Most people bought a home with as little down as possible.. but even if you put down 20, 30%… you are screwed.
So.. people are walking away… or if they lost their job.. they are going to lose that home.
If you happen to be the nieghbor, your house just lost value.
December 19, 2009 at 10:45 am
What I can’t understand is during this crisis they could create a one time 40-50-60 year mortgage, it would effectively lower the payments, the people could stay in their homes,as the market bounces back (eventually) the dollars collected would be the same, just not collected as quickly. The loses shouldn’t be as large either.
December 19, 2009 at 9:27 am
Well, here’s my perspective from the trenches of the foreclosure process and a bit of a reply to Szoo:
Houses were overvalued because mortgages were too easy to get, so the increase in “credit-worthy” buyers spiked demand and then prices. I don’t see prices, on a national basis, reaching 2005 levels for a long time. Unfortunately, because so many people bought/refinanced their houses at the peak or with so little equity, the smallest change in their budgets creates a cascade that ends in a mortgage default and then foreclosure because no bank will loan money based on the old value of the house.
I actually don’t think that the next big wave of foreclosures is coming from the commercial side of things. Yes, there will be more commercial foreclosures in the near future, but the next wave of defaults is going to come in the group of residential loans that are optional-payment mortgages. This was just about the last creative form of a bad mortgage deal, and the bulk of those mortgages are coming up on the first date where the borrower has to start repaying principal along with interest. Since many of the people that got into these loans were likely paying the minimum to start with or have been forced to pay the minimum due to wage losses, the loans have been capitalizing interest and the new payment level is going to be more than they can afford.
There’s something like $1.3 trillion (IIRC) worth of these mortgages out there, and those foreclosures are going to get a lot more media coverage than commercial loans.
December 19, 2009 at 10:50 am
Guys-since I’m originally from Chicago, altho I haven’t been down there for years. Do they still have those area’s that were ignited during the 60′s but were still standing in the 90′s? If they have such a glut of outstanding commercial property, wouldn’t this be a good time to demolish all those vacant properties that the gang-bangers took over. Turn that into a green space or a park-something useful-even parking lots that the City of Chicago is so desperately lacking. I know that Chicago brick is still desired the world over.