More Clues on the Uncured Foreclosure Question and Trouble in Clusterfuck Nation
“Would the USA be a better place if we could run Wal-Mart and Las Vegas on wind power? I don’t think so.” – James Kunstler
I spotted this article from the San Diego Union that follows on my blog concerning the failure of lenders to recover adequately on foreclosed properties. If liquidation auctions become an important mainstay of the real estate market going forward, then this will rapidly and decisively feed through to general housing prices.
Plans by lenders to auction more than 200 foreclosed homes in Southern California reflect the weakening nature of the housing market, analysts say. The increased presence of auction companies illustrates that the Southern California housing market is “pretty weak,” University of San Diego economist Alan Gin said. “We have had all those foreclosures, and there are no buyers through normal channels.” “I do think you will see it more,” REDC Chairman Robert Friedman said yesterday. “You have lenders who have a lot of inventory and pressure to sell.”
There are also increasing signs of stress in what James Kunstler aptly calls the Clusterfuck Nation. Simplified this “concept” would include sprawl towns and cities in the Inland Empire where commuters drive a hundred miles a day or more to and from work. A few years ago I drove out to Yosemite from San Francisco and came across one, Tracy, California. You are driving out in the middle of nowhere, when all of a sudden traffic slows and then we came across this God awful place spliced down the middle by the freeway, with all the big box retailers to the north, and a “town/subdivisions” to the south. We dared not get off at an exit as it definitely looked like a place that had run out of left hand turn lanes. If this commuter crisis continues, and how could it not, then these Clusterfuck locales could quickly evolve from travesties into actual wastelands. I feel there is a second reason for the slowing demand for these outlying areas: the speculative incentive of housing appreciation is gone. Spending a fortune on gas (and time), AND losing your bet on housing, is a vicious proposition.
There has been a massive drop as commuters from elsewhere in Southern California have stopped coming to Riverside County,√¢‚Ǩ¬ù the San Diego-based economist said. √¢‚Ǩ≈ìIt’s largely a function, we think, of gas prices, because most of them commute at least an hour and sometimes two to three hours a day, and (the price of) gas has just gotten to them.√¢‚Ǩ¬ù In his report, Nevin said the rise in fuel prices translates into a $40,000 to $50,000 reduction in home-buying power, particularly in households where both adults are working and facing long commutes to their jobs in Los Angeles, Orange and San Diego counties.
Finally just about everyone reading this in America feels the inflation in the economy. It’s just not subject to debate by any thinking person. I’m finding that if I’m not especially careful about where I pull out my wallet, costs will nail you in a heartbeat. Just not showing up at all in places where money is required is about the only defense to being eaten alive by inflation and costs. I think much of the activity we are seeing in the “buy somethin’” markets is related to a inflationary crack up boom that is out of hand. But the crack up boom also goes along ways toward explaining way many Americans are pessimistic about their REAL (as opposed to nominal) income growth. The recent Univ. of Michigan consumer survey checked in at the lowest level in several decades on this score. If the housing malaise isn’t getting you, high inflation and expenses in real terms surely will.
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