Use access key #2 to skip to page content.

alstry (< 20)

Housing will be DEAD in America



February 05, 2010 – Comments (5)

Englewood NJ Proposes 10.5% Tax Hike

I know, a few are still selling two units in month in a prime infill locations in San Fransico at 1/2 the price they were selling two weeks ago because the builder got paid by Uncle Sam to take over the finished lots.   Just because were are only selling 1/5th the new homes we were selling a few years half the price.....things will get better as long as you keep chugging Red Bull.

Sorry receipts to cities, counties and states are evaporting.  Jobs are being cut faster than afros at Marine boot camp.  And wages are being slashed across practically every vocation and costs for daily life are going up up up.

As municipalities are forced to tax your house more and more to keep cities operating.....the value of homes will go down faster and faster.  People have only so much money to allocate to housing.....most of us need to eat.....and the higher taxes go, the less people have to pay the monthly mortgage payment.

In addition, as more and more lose their jobs and costs for the eldery skyrocket, fewer and fewer can afford to maintain their homes even if they don't have a vacanies increase prices will be driven down.

For a perfect example of what happens to housing when jobs are lost, wages go down, costs increase and WITHOUT even factoring rising property taxes.....take a look at Detroit.

I know we are not there yet.......but it is the current trend and it is accelerating as more and more lose their jobs and taxes are forced to be increased so there will even be a functional community for that house to live in.

Welcome to the Alstrynomic Digital Age....where housing will not be as important an asset as it used to be in the industrial age..........and its primary function will be to raise revenues for the government and humans will focus less on stuff and  more on knowledge.

5 Comments – Post Your Own

#1) On February 05, 2010 at 12:08 PM, ralphmachio (< 20) wrote:

I have a weird vision of people inhabiting tent cities and stadiums, with their houses empty, all because the gvt plays a mean game of 3 card monty.

Report this comment
#2) On February 05, 2010 at 12:13 PM, alstry (< 20) wrote:

I am not sure why people keep envisioning tent cities.....although if I were a few decades younger and single, it might be fun.

What is the difference between paying $2000 per month for PITI or simply $2000 month for taxes.  Each payment is the same assuming other factors untouched.

Anyway, the point is that as taxes rise....the room for principal and interest will decrease assuming wages wage fall, the room will get smaller and smaller.

Report this comment
#3) On February 05, 2010 at 12:27 PM, davejh23 (< 20) wrote:

"Anyway, the point is that as taxes rise....the room for principal and interest will decrease assuming wages constant..."

With a weak labor market, I think it's safe to assume that wages will not be increasing significantly.  Just as increasing taxes decrease affordability, every 1% increase in mortgage rates decreases affordability by ~10%.  If mortgage rates return to a "normal" 7-8%, home prices could easily fall another 20-30%.  This would likely lead to even larger increases in property taxes, and more downward pressure on home prices.  Those that claim that there was no bubble in their area need to recognize that mortgage rates have been far below historical averages for a decade...this affected home prices everywhere...even if some areas didn't see median price to median income ratios skyrocket during the boom.  Hopefully we don't have another period of 10%+ mortgage rates...

Report this comment
#4) On February 05, 2010 at 4:45 PM, alstry (< 20) wrote:

It won't matter what mortgage rates do, other than impact the timeline of how quickly homes devalue to practically nothing.

In the industrial age, staying put and working at the factory or support businesses was the standard....going forward, ability to change and adapt is going to be key....

The thirty year mortgage will become a relic as we see homeownership duration contracting year after year.  My guess is we will finance homes not too differently than the way we finance cars today.

The change will be convulsive and we enter the Alstrynomic digital age.

Report this comment
#5) On February 06, 2010 at 1:30 AM, wvillegas007 (< 20) wrote:

US Bankruptcy Certain based on Default Formula

Has anyone herd of the Greenspan-Guidotti rule? It’s a formula that Accurately predicts if a country would go bankrupt. According to the Formula to US is certain to go bankrupt. Carefully read this well written article that explains it.

Report this comment

Featured Broker Partners