Housing prices....

next61 · #1 02/13/07, 10:14 PM

Not to hijack another post but I have a question: what do you guys think about housing and farm land prices? Looking at the latest news about US deficit and the fact that nothing is made here (see China, India, etc.). Looking at the disaster waiting to happen with the reset of variable mortgages and incresed defaults (foreclosures). Looking at the builder incentives of over $100,000

( http://www.pulteplus.com/index1.htm ); what is your opinion? Are wwe going into the right direction? Let's not make a left and right issue, please.

I had to edit for spelling!

veggrower · #2 02/13/07, 10:32 PM

I think land prices in the PNW are crazy high. The farmland in the Treasure Valley (Boise area)of Idaho is insane. Last Thanksgiving, I drove the highway from Homedale to I-84, about 15 miles and every single farm had a for sale sign--It was all going for residential or industrial. Farms that 2 years ago would have been under $2k/acre is going for 10-20k/acre. Good ground that will never grow crops again.

daytrader · #3 02/14/07, 02:10 AM

One can not affords to farm in my area, yet they keep trying. They grow corn and soy beans. They already lost all their profit on seeding.

The reason they crow corn and soy, is because everyone else dose. I have a close personal freind that leased over 9000 acres of land. He did this for over 10 years after taking over from his father that did it for 35 years.

He sold out. He sold his equipment for more then he yearned in the last 10 years and IT WAS GIVEN TO HIM.

I asked him. That big a multi million dollar farm, WHY did you grow corn? His response " lance everyone around here grows corn dad did as well".

Now he is on his own 88 acres that he ownes. As of this am. HE IS PROFITING MORE THEN EVER IN HIS LIFE. Its also only his first year on his own land.

He was a full time farmer with many hired hands, but once he was on his own 8 acres, he had to figure out how to feed his 3 yound kids wife and sick father.

His 88 acres is still full time with one hired hand, YET he works full time on his land. Earning more then with 9k acres in the past.

He sure isn't growing any corn.

Its the same reason why you and you neibore have black shingled roofs. No one has the cherries to get a blue shingled roof.

This same farmer watched as I did this am at a local action 3.9 acres agricuture zoned land sell for 3.7 million dollars. 3.9 acres he used to lease for 100 a acre a year.

If you want to play around in corn and beans, you will go broke and be a asset to the government. That simple.

Land in this area is out the wall. Big time.

MY OWN FARM WAS OUTLAWED. I had to move my sheep and take down my fences on land zoned agricuture. I was ticketed 1k a day for 120 days. I have court at 1345 today. They are trying to anex my farm. The city can not grow south with out it. I will know today if I owe 120k in fines and lost my farm to money.

Small farmers and home steaders like us have to use our land for maximum profits and substance.

There is a huge differance in the amount of work and investment to farm 10k acres with a net profit of 140k a year or deal with your 20 acres and net 65k a year. What one sounds like a better deal?

Wolf mom · #4 02/14/07, 09:14 AM

thiught they out lawed eminent domain - or was it just here in AZ

Jim S. · #5 02/14/07, 09:25 AM

We have a vibrant city nearby with an arsenal that is getting an influx of relocated military jobs coming from D.C. Land prices have tripled in my rural county near that city over the past 2 years, and I just talked to an agent who told me, "Buy land now and you'll pay way more than you think it is worth. Hold it a year, and you'll sell it for way more than you thought you could get."

For farming purposes, it is overpriced. You can get an acre of good black Midwestern soil for that they are selling rocky, poor hill land for here now. But when you compare the value to what these folks are selling their houses for in DC to move here, it's cheap. Sell 2,000 sf house on a quarter acre up there, come here and buy 3,000 sf on 10-20 acres and have a hill of cash left over.

The only ones who lose are those of us already living here. LOL.

SteveD(TX) · #6 02/14/07, 09:30 AM

Quote:

Originally Posted by Wolf mom

thiught they out lawed eminent domain - or was it just here in AZ

No. Many states have passed laws to curb the use of eminent domain for private development in the light of the Supreme Court Kelo decision. But eminent domain is definitely not outlawed anywhere.

next61 · #7 02/14/07, 10:28 AM

http://streaming.americanprogress.or...0.240.mp4.html

You will convince your self about the state of our economy from the standpoint of housing, home ownership and land development. As responsible stewards of your farms, what is your decision? You pack up and move? Let the big developers slap some more McMansions on your homestead?
The video is long, I hope you will be able to see it; it was recorded during a conference in November 2006 by Center for American Progress.

TechGuy · #8 02/14/07, 07:58 PM

Quote:

Originally Posted by daytrader

Now he is on his own 88 acres that he ownes. As of this am. HE IS PROFITING MORE THEN EVER IN HIS LIFE. Its also only his first year on his own land.

Its really a shame to see lots of farmers pack up. The good news is that the housing bubble is coming to and end. Subprime load defaults are soaring which should end the surge in credit expansion as lenders start cutting back on lending. This will put an end to new construction (probably for a very long time.)

The other good news is that food prices are on the rise. Because of world wide droughts, the biofuels boondangle, there might be grain shortages soon causing prices too soar (well good for farmers, bad for urbanites that are going to pay more). If fuels prices climb back up it was also hurt food imports, futher driving up food costs.

Quote:

Originally Posted by daytrader

MY OWN FARM WAS OUTLAWED. I had to move my sheep and take down my fences on land zoned agricuture. I was ticketed 1k a day for 120 days. I have court at 1345 today. They are trying to anex my farm. The city can not grow south with out it. I will know today if I owe 120k in fines and lost my farm to money.

Thats a terrible shame! Your best option is to move somewhere else. Perhaps you can sell your land at a premium to a developer and relocate to another rural area. I don't think its worth the battle to remain. I would see if you can work out a deal to get your fines dropped, on the promise that you put up your land for sale so the town and put up subdivisions, condos or whatever it pleases and if they don't agree, you will continue to fight it out which could tie up your land for years. I suspect the town has "plans" for your land and thats why the suddenly made your farm "illegal".

Quote:

Originally Posted by daytrader

There is a huge differance in the amount of work and investment to farm 10k acres with a net profit of 140k a year or deal with your 20 acres and net 65k a year. What one sounds like a better deal?

I think it will remain difficult to sustain a large commerical farm. Fuel prices, agro-chemicals will continue to go up as oil, gas and other cheap energy supplies begin to deplete. Washington's again meddling with labor laws will make it difficult to hire foriegners as farm hands, and there are few young americans that will choose to farm, when they can go get much easier jobs with more pay. Net 65K (assuming after taxes) is a very good income. The average family incoming is only about $56K/year. Add in taxes, commuting costs, etc, and the average net is probably in the nieghborhood of $25K to $30K.

FWIW: I am going to be looking for rural land (60 to 90 acres) later this year. I am not sure if I will make a go at a commerical farming effort, since I have a professional career. But I do plan to plant several acres of crops every year as well as plant an orchard or two. I believe we are headed for very bad times and I would rather live in a place with a low population density, and where I can become almost self-sustainable on my own land.

Best of luck to you!

reluctantpatriot · #9 02/14/07, 09:03 PM

Land prices continue their rapid rise due to the raging influx of city people looking to make a full-time living here rather than the former habit of having a seasonal cabin or such. In the county south of mine where they enjoy development apparently they are now having residents fighting the condominium developments in their totally planned and zoned county. These are the same people who displaced the former residents that had lived there for generations. Now they want to fight progress when they originally were fighting for it. As far as I am concerned, I hope the smaller middle class subdivisions get pushed out by the upper crust condos as I see it as returned karma.

In my county there are groups pushing to implement planning and zoning in my own county so they can control development. Ironically, my county has an economy mostly based on farming and seasonal tourism dollars and seemingly is in need of economic development. However, it seems they wish to prevent development while at the same time making it harder for existing residents to use their property.

Don't misunderstand me, I hate the unsustainable development that is destroying our nation and my local region. Though I do think that trying to control development now is futile because those with money will do what they want regardless of the planning and zoning regulations. There are so many people wanting development and progress yet they want to control it, which I think is virtually impossible.

Honestly, the way property taxes and threats of explosive development are increasing, I think it is not worth the effort to fight any of it. I'm worn out from fighting and trying to defend against what I see as a harmful blight and disease spreading across the landscape of our country, this infinite development that is unsustainable and in reality harmful to the continued existence of our country.

Why fight the distruction when that is exactly what society wants in its quest for greed and avarice and unquenchable appetite for ever more consumption? Yes, I am jaded and worn out from reporting on all the "economic development" and "progress" sought for my county. I know it is all unsustainable and will destroy the beauty of this area even more than it already has been. However, there are too many of them to stop the downfall and it will just become worse. But where would I run? There is virtually nowhere in this country safe from development unless it is virtually uninhabitable even with the high (unsustainable) technology that exists now. "Progress" is inevitable no matter where you go or where you live.

next61 · #10 02/14/07, 11:35 PM

Reading these posts make me sad and furious; on another post, someone said that I have a problem with capitalism. No, I don't; I have a problem with this pseudo-capitalism that in the name of "progress", swallows and destroys. There are any visionary, intelligent people left out there? Capable of seeing and taking us into the 21st century without pushing for consumption and cheap Chinese crap? What can we do? Nothing? Continue to demand "progress" (developments and gated communities)?
"MY OWN FARM WAS OUTLAWED" This is a shame!

sgl42 · #11 02/15/07, 12:51 AM

i believe home prices are unsustainable. it's not just national, it's an international real estate bubble caused by cheap money from the US and from japan.

transactions have fallen up to 40% in CA and FL. prices will likely soon follow. debt levels for people in the US are at record highs -- no slack in the system for people to keep making their mortgage or car payments if they lose their job, have an illness, have a major repair, etc.

a number of sub-prime mortgage lenders and brokers have gone bankrupt since december, as hedge funds asked for their money back for mortgages that have EPD (early payment default). there are some people that are defaulting on their first mortgage payment! credit will be tightening for the no-doc loans, meaning the bottom end of the market, the one that buys so everyone else can 'move up the ladder' to a fancier house, will likely disappear, with a ripple effect up the chain.

the 'recovery' since 2002 has been among the weakest on record based on employment growth. and it took incredible amounts of tax breaks, and cheap money, and new debt to do it. in the 1970's, it took $0.50 of new debt to create $1 of GDP growth. in the 1990's, it took $1.50-2. today, it's taking $4 of new debt to create $1 of GDP growth.

housing has created up to 30% of the new jobs in the recovery, including builders, real estate agents, mortgage brokers, etc . if housing tanks, which it looks like it's finally doing (i've been expecting it to tank for several years), those jobs will likely disappear. along with the ripple effect of people spending less on going out to dinner,buying new cars ,etc. detroit has serious problems, and is laying off people.

so, i expect extremely hard time financially to be hitting very soon. tough as that will be, that's actually not what worries me most.

what worries me is the political and social effects. the politicians give no indication that they understand or care what's really going on. and based on history (of either party) they chances of them passing really stupid and counterproductive new laws is really high.

meanwhile, as people get more and more angry, and desparate, i expect crime and lawsuits to go up significantly.

and i expect companies to get more desparate too. i expect hidden fees and fines to increase. i expect worse service, and less interest when you complain. i expect increased fraud. increased billing 'mistakes' that are in a company's interest.

if the US dollar falls, cpi inflation could take off, since so little mfg stuff is made here, and oil is mostly imported too.

in short, yes, housing is unsustainable, as is most of our 'non-negotiable' way of life. housing is only the most glaringly obvious problem area. as a country, i believe really hard times are coming, and i'm doing what i can to prepare for it. yep, i'm a real fun guy at parties!

--sgl

Jenn · #12 02/15/07, 07:29 AM

have a friend (military wife) who reports making $300K profit on their house in MD a few years back (and bypassed another $100-400 by not keeping it until now) who is now here (AL) suffering from the bubble collapsing. They got a big fancy golfcourse home here 2 yrs ago and she says she'll sell it at a loss (after prettying for sale) to get rid of it as her husb PCSes. She also has two rental apts in FL she would lose a lot on if she sold, so much she isn't even going to consider selling but instead is moving to a FL house to manage the apts (to avoid losses on rental agents) separating for this reason from husband until the FL market improves enough for her to sell those vacation rentals.

Sounds like a good reason for me to never speculate in real estate, and how come they don't say 'Well we gained $300K before , if we lose $200K now we're still ahead of the game'. I suppose they can't admit staying in the FL rentals may lead them to lose even more money all the while they don't even get to live together as a family.

I am the opposite- we've never been stationed anywhere with a booming house market- so I buy someone's nice 'older' (at least 5 years!, sure don't want the hassle and wait of building new) house with acreage and turn it into an older house with a farm going on and then when we had to leave the first one sure didn't get back what we paid. The 'rent' of monthly interest plus the loss divided over the years we lived there wasn't too bad- noone in that area would've let me rent such a nice house and put in all the agricultural stuff I did even if I could've found such a rental. Now in the same situation but DH can retire Army in 3.5 years so if we want to move but the resale price would lose us too much money we can change our minds and just stay here- this time we won't HAVE to move anymore.

next61 · #13 02/15/07, 08:35 AM

What I see as a joke is the increased numbers of Beemers (BMW's), Lexus, Mercedes and other luxury cars for sale in the last couple of months... I guess those mortgage and RE brokers are getting desperate!

Hold on your horses guys, hard times are coming.

TechGuy · #14 02/15/07, 06:44 PM

Quote:

Originally Posted by sgl42

what worries me is the political and social effects. the politicians give no indication that they understand or care what's really going on. and based on history (of either party) they chances of them passing really stupid and counterproductive new laws is really high.

There a few other more significant problems headed our way:

1. Decline energy resources. Much of the leading exporters of oil and gas are declining as reserves deplete and rising internal demand. Well see shortages soon and much bigger price spikes. We have almost certainly passed peak production of oil and north american natural gas product has already occured several years ago.

2. Depleting Mid Western Aquifers. Aquifers such as the "Ogallala" are depleting rapidly forcing farmer to put in deeper wells and expend more money and energy to pump water from them. Eventually crop yields will begin to decline as the amount of water for crops declines.
http://www.uswaternews.com/archives/.../3scisay2.html

3. Unfunded pension and entitlement liabilities. The average boomer is expecting pensions and entitlements to get them through retirement. Except there is insufficient funds to support the flood of boomers that will begin to retire soon.

next61 · #15 02/15/07, 08:37 PM

Should I say something about "global warming" or there is no proof yet for that? I'm surprised that people are so smug about these issues that have been discussed here and from all the activity, there are no opinions.

sgl42 · #16 02/15/07, 10:24 PM

in case anyone cares about the real estate decline by area, here's some info. included in the original article (which i did not reproduce below) is a table showing gains and losses by area. in general, looks like FL has definitely tanked. WA/OR are still rising for the most part.

Quote:

CNN Money article

Latest home prices
149 markets tracked for the fourth quarter of 2006.

February 15 2007: 2:33 PM EST

NEW YORK (CNNMoney.com) -- The slump in home prices was both deeper and more widespread than ever before in the fourth quarter.

As part of its quarterly survey, the National Association of Realtors reported a 2.7 percent decline in prices in the fourth quarter compared to the fourth quarter of a year earlier. That's the biggest year-over-year drop on record.

In addition, 73 markets of 149 tracked reported a decline in prices. That decline was far more widespread than in the third quarter, when only 45 markets reported drops.

[Table included in original article, showing gains/losses for all metro areas covered.]

sgl42 · #17 02/15/07, 11:52 PM

techguy, i agree those are critical issues too.

i imagine there's someone in AZ with a mcmansion and a hummer, expecting to collect social security and their steel/airline/auto/airline industry pension to pay for it. they're in for a rude shock when the water runs dry for watering their lawn, the cost of a/c in Az summer heat goes sky high, the cost of driving their hummer to the nearest walmart goes sky high, their pension gets repriced at 10 cents on the dollar when their former employer goes bankrupt, shedding their pension and post retirement medical benefits. then they try to sell their 'asset', ie the house, and discover that it hasn't appreciated, as few can afford it.

i've read 2012 is when social security outflows/payments get larger than social security inflows/taxes.

i read a number of financial sites. amazing the number of mainstream pundits that say that china has to keep buying our bonds, that they have no other choice, so therefore our trade deficit is no problem, and can continue for a long time.

taking your aquafer's running out as an example... one individual solution is to use composting toilets, reducing your water usage. however, many local governments/zoning boards will not allow these. or else you have to buy a 'commercial' composting toilet for $1000 plus. if you move out farther from a city to be away from zoning rules, you can have a composting toilet and raise chickens, but your commute costs with peak oil go sky high.

so, right now, the logical solutions to the problems run up against counterproductive gov't policies that make harder/impossible to do. unfortunately, i don't think this will change for a long time, and i don't personally feel i have the time to wait.

one other point about farmland...
altho i think residential real estate is grossly overpriced in most parts of the country, i'd guess farmland is probably underpriced. we had a 20 year bear market it commodities at the same time we had the 20 year bull market in financial assets. i believe 2000 market the switch to a 15-20 year bull market it commodities. gold, oil, and farm products have risen since then.

i expect farm prices to rise for good farmland. someone i know is a money manager. he told me last fall that when he visited the mid-west, some of the farm brokers had chinese on the back side of the business cards. apparently there were some chinese investors that were buying up some of the farmland.

so, i expect the next decade to be quite turbulent. a lot of people will get a very rude and hard wake-up-call, and most will not be very happy about it.

but the people on this board are much more self-sufficient, which is why i like coming here. tho i'm not homesteading now, i've been reading and thinking, and plotting my escape from these problems.

--sgl

tiogacounty · #18 02/16/07, 06:54 AM

I have a friend who was just transfered to DC to work full time as a lobbist. He works for a corporation that provides services to the mortgage banking industry. So, it's easy to think, "yea, another ethically challenged lobbist trying to fill his company's pockets with ill gotten gains". Actually, the opposite is true. His job is to convince the powers that be that the industry is out of control and heading for a disaster if not reigned in. The resettable variable rate loans, no principal deferred interest loans and all the other flaky, shaky trash, invented in the last few years, is going to really do some damage when it's time to pay up. Folks want to be in their McMansions and will sign anything to get there. It can either be stopped in a controlled manner, or end up doing serious damage to our entire economy.

next61 · #19 02/16/07, 08:43 AM

Quote:

Originally Posted by tiogacounty

I have a friend who was just transfered to DC to work full time as a lobbist. He works for a corporation that provides services to the mortgage banking industry. So, it's easy to think, "yea, another ethically challenged lobbist trying to fill his company's pockets with ill gotten gains". Actually, the opposite is true. His job is to convince the powers that be that the industry is out of control and heading for a disaster if not reigned in. The resettable variable rate loans, no principal deferred interest loans and all the other flaky, shaky trash, invented in the last few years, is going to really do some damage when it's time to pay up. Folks want to be in their McMansions and will sign anything to get there. It can either be stopped in a controlled manner, or end up doing serious damage to our entire economy.

I agree with you Tioga, I've seen and met people in denial (no river in Egypt) over those loans like they where candy or something... oh well, we just lost 10 billions in Irak so who cares, right? HSBC doesn't sounds too familiar to a lot of people but is basicaly a Chinese/British bank (old Bank of Hong Kong) and just anounced some disturbing news: http://www.thedesertsun.com/apps/pbc.../1238/business

sgl42 · #20 02/16/07, 02:01 PM

tiogacounty,
don't know your friend, or the company he works for.

however, the time to lobby congress for rule changes on mortgages was 2-3 years ago, not now. the damage has already been done. and lots of people have been warning about this for several years, altho they don't get media attention because it's not 'popular'. perhaps your friends company was lobbying then, and is doing even more now, i don't know.

also, the bankruptcy 'reform' act was passed a couple/three years ago. my understanding that was passed due to financial industry pressure. it seems it has lots of provisions of benefit to the financial industry, and few to no benefits for the average homeowner.

so i hope you're right, and that there are sensible people trying to change the system for the better. but seems to me everything is being done for the benefit of big corps, not for the benefit of the average person. perhaps i'm jaded, but i see little evidence that that is changing. keep us posted on your friends progress and proposals -- perhaps that will renew my faith in the system...
--sgl