Real Estate Market / Inflation / Recession / Depression (Denver, Aurora: housing, condos, rent)

[multitrak]

Originally Posted by Bob from down south

There are cycles other than the short term business cycle that we're all familiar and/or comfortable with. A guy named Nikolai Kondratiev postulated about a long-term economic cycle, too. Recommend the cycle buffs do some reading on that one. We're too quick to assume that this is just another replay of something we've seen before.

actually, that "replay" is exactly what Kondratiev had proposed: periodic 54 year cycles of expansion following by depression. the current problem is that most economists that advocate or follow this nonsense can't figure out whether the last k-cycle trough began in 1940 or 1950, nevermind the "cycle's" statistical irrelevance with only 3-1/2 samples since the 1780's. so before you jump on the k-wave bandwagon, you might want to read this 1984 article first... The Kondratieff Cycle: Real or Fabricated? by Murray N. Rothbard here's a sample:

If "the Kondratieff cycle" is a myth and a chimera, why are there business cycles at all?...In short, government intervention cripples the market economy, and recession or depression is the painful but necessary adjustment by which the market reasserts itself, and liquidates the distortions committed by the government's inflationary boom. After each depression, the government generates inflation once again, because it is the government's natural tendency to inflate. Why? Quite simply, whoever is granted a monopoly of printing money (e.g., the Fed, the Bank of England) will use that monopoly and print – to finance government deficits, or to subsidize favored economic groups. Power will tend to be used, and the power to create money out of thin air is no exception to the rule.

[Bob from down south]

I think there are longer "grand" cycles...possibly, as I've heard suggested elsewhere, related to the longevity of the generation that experienced the last depression or other economic calamity. Once the elders who remember the greater sins of the past die off, we tend to line ourselves up for another round. With generational longevity increasing, that would explain a lengthening of those long cycles.

But, all that aside, I don't understand how anyone can look at the perfect storm of negatives lining up in front of us and conclude that this is just another short-term business cycle thing. Well, OK, maybe I can. I do seem to remember a quote from FDR at an economic summit in Washington in 1933...he told the economists they had arrived too late, the Depression was over.

We know a lot more than we did in the 1930s, that is true. Like how to hide crippling losses off the books in obfuscated SIVs. Like how to "insure" ourselves from losses with $trillions in credit default swaps backed up by maybe a percent of the liabilities of the so-called default insurance. Like how to count all the chickens that might ever possibly be hatched and include that in the basis for pricing a stock.

But we should have learned from our experience with Charles Ponzi in 1920. Or from the Florida real estate bubble...of 1925. My grandparents certainly learned their lesson about the evils of debt from their hard lives in the 1930s. And some 1920s era lessons from T. E. Lawrence (aka Lawrence of Arabia) about the difficult challenges of occupation of Arab lands certainly would seem to apply in far-off Iraq about now.

[Mike from back east]

Originally Posted by sterlinggirl

In some areas of the country, the excess inventory is being converted into section 8 housing.

I don't know why they don't put some of the Katrina victims in these homes and get them out of cheap mobile homes which are said to be making people sick from formaldehyde fumes. I get bummed when I see so many obvious solutions go unused while government "policy" gets in the way and drives up the cost of doing business. FEMA pays for mobile homes AND the Treasury pays to swap or eat the bad mortgages and properties off the hands of Wall Street jokers who own the sub-prime junk. I can assure you there is so much smoke and fog in the various policies that it might takes weeks for even a high level Congressional panel to sort out who has jurisdiction and what is "allowable" under the "laws" that we have on the books. Understand that most of our "laws" are written by lobbyists for their respective industries.

Allow me to digress and offer one example of one actual policy that I worked with for 30+ years in Defense transportation, that being the hundred-mile rule. If we needed to ship something over 100 miles, we had to hire commercial truckers, even if we had a motor pool of trucks and drivers sitting available to do it at no cost, save for fuel. If the Army wanted to haul a load of its own property from Fort Carson to Fort Collins, they'd have to hire a trucker and pay the bill, instead of putting an Army driver on the highway for the mere cost of fuel. Stupid, but that "policy" was written many years ago and is still followed today.

We have met the enemy and it are us.

[Bob from down south]

I think we're about at the point where anyone still living in a temporary FEMA shelter (not a home) wearing a "Katrina Victim" armband needs to be rounded up, put on a boat, and be made part of a new retrograde flow...into Haiti. C'mon, it's been what, coming up on three years now? The emergency has long passed for those that got up off their a**es and got on with things. Time to move on.

Agree with Mike on the pork protection laws...one of my pet gripes is the law on the books in most states requiring an expensive embalming procedure even when a body is to be cremated.

Who knows, maybe a nation full of pillaged, broke, hungry people might take back the government from the lobbyists and the politicians that feed off them.

I often wonder why our supposedly independent news media has never looked at how a politician can enter public office with maybe a couple hundred thousand dollars in net worth...go to Congress, and leave six or eight years later, having made himself a multi-millionaire on a $160,000 salary in high-cost Washington D.C. How does that work? Surely there's a story there?

[suzco]

Nudge, nudge; even a mention of Colorado, please. . .

[sterlinggirl]

Originally Posted by Bob from down south

Agree with Mike on the pork protection laws...one of my pet gripes is the law on the books in most states requiring an expensive embalming procedure even when a body is to be cremated.

Is that on the books in Colorado?

[multitrak]

Some Home Prices Are Actually Rising in Denver - US News and World Report

this article supports my analysis and the data that the denver real estate market is in the initial stages of a bottoming phase. it's a decent rebuttal to usa today's apocalyptic blather, and confirmation of what denver residents have said on this forum about pockets of stable and rising house prices in the metro area. a small uptick in the cme apr housing index futures last week (after a month of flat price) also indicates bottom forming action in the denver market. http://chartsrdc.cme.com:443/cs/char...=DEN&_month=-1

colorado law requires reporting a foreclosure when the paperwork is filed with the county trustee, but not every foreclosure results in a sale. so colorado's foreclosure rate might be highly inflated (more than 100%) due to the unusual reporting process. for example, in 2007 el paso county reported 3556 foreclosure filings, but out of those filed, only 1682 properties actually resulted in a sale while the remainder (1874) got worked out. see article cited here... Business: WHAT COUNTS: Colorado's method of calculating foreclosures | colorado, counts, foreclosures : Gazette.com

[suzco]

There's a declining vacation-home market nationwide; haven't yet been able to find Colorado specific analysis, though the rumor mill says Colorado ski resort markets are still going up, especially with this phenomenal snow year. Anybody have that information? The declinig market can't bode well for Colorado resorts, in any case.

PR Newswire - news distribution, targeting and monitoring

NAR's annual Investment and Vacation Home Buyers Survey shows
vacation-home sales dropped 30.6 percent to 740,000 in 2007 from a record
1.07 million in 2006, while investment-home sales fell 18.1 percent to 1.35
million last year from 1.65 million in 2006. At the same time, primary
residence sales declined 10.0 percent to 4.34 million in 2007 from 4.82
million in 2006.

[multitrak]

Originally Posted by suzco

There's a declining vacation-home market nationwide; haven't yet been able to find Colorado specific analysis, though the rumor mill says Colorado ski resort markets are still going up, especially with this phenomenal snow year. Anybody have that information? The declinig market can't bode well for Colorado resorts, in any case.

i've researched house and land markets in the upper arkansas river valley (salida, buena vista, leadville) for the past three years. the closest ski areas are monarch to the southwest and breckenridge and copper mtn to the north. what i've found is some houses have been continuously listed during that time with little or no decrease in the listed price. in addition, when researching the sales, almost all sold at a price within 95-100% of the listed price. one realtor based in salida noted that there is a 30 year inventory of homes in the valley. 30 year supply! incredible if true. my conclusion is that most these folks live out of state (obtained from the county tax records), their houses here are 2nd homes for either investment, vacation, or future retirement, and as such, they are unmotivated to sell unless it's within 95% of the their listed price. it's this stubbornness refusal to sell that is responsible in keeping rural prices up when compared to a such large inventory. i'd like to hear from residents that live here if the situation is as weird as it appears.

[dj32]

suzco, I think the vacation home market in Vail Valley specifically is going up because of foreign money. We spent alot of the winter up there and had many people in real estate telling us that many people buying were doing so b/c of the weak dollar. Also, Vail and Aspen have long been international meccas... I wonder how Crested Butte, Breck, etc.. are doing?