28thavenue.net

One of the most regularly visited posts on this site is one I wrote on May 19, 2006 called “Housing Shitstorm.” In it, I simply link to http://calculatedrisk.blogspot.com/, and mention that it’s required reading for homeowners.

That’s been a fascinating site to read over the past 10 months, as the housing market has, depending on your view, either deflated or burst. The future isn’t looking good either.

I anticipated the factor of over-supply, with homebuilders having increasing inventories and other speculators looking to sell houses and condos they had hoped to flip for a profit. What I didn’t expect was the collapse of the subprime mortgage market, pulling a sizable fraction of potential buyers out of the market.

Oversupply and lowered demand add up to one thing: falling prices.

“Let me begin by saying that these are difficult times for the home-building industry. We have recently completed our quarterly operation reviews with our division management team, and based on these extensive business plan and execution reviews, I can say first hand and with certainty that market conditions are very difficult across the country. As I listen to many of the leaders in the industry speak, that is our competitors and as I listen to economists and analyst and is investors, the message is becoming very unified and that is although we see some sporadic indications of firming in some markets, and we all look forward to seeing a firm foundation from which we can build forward, the reality is that market conditions are still challenging at best and in some markets continuing to deteriorate. Homes available for purchase has continued to climb while demand has been surely reduced. The market once driven by speculative build-up in demand and purchases that over the past years spurred more recent build up in inventory supply from speculators then put increased supply as they put homes back on the market and created the supply over hang and overall climate of customer caution.

On the demand side, the investor/purchaser part of demand has all but evaoprated. Primary purchasers on are on the side lines or demanding better pricing before purchasing. Because of the rapid deterioration of subprime lending market, an additional component of demand has now been sidelined because of the inability of a customer to qualify for a mortgage or because the purchaser of a customer’s home needed for closing cannot qualify. What is clear is supply and demand have shifted and had are continuing to shift in some markets more rapidly than expected, and the inventory over hang will have to be absorbed before conditions normalize.

That’s part of a statement given by Lennar CEO Stuart Miller yesterday. Lenner is a large nationwide homebuilder and financial services company. They’ll sell you a house, and provide the loan that lets you buy it. Yeehaw.

Haven’t seen falling prices, you say? You have to recognize that in a lot of cases the price adjustment doesn’t show up in the price itself. Often it appears first as a buying incentive — maybe a new plasma display, or the seller paying closing costs. Or, in the case of a condo conversion project on the wrong side of the tracks in Northeast Minneapolis, a 39 month lease on a new Volkswagen when you close on your new condo.

I recognize that I’ve been a part of this housing craze, and part of the sobering up, too. Fortunately I didn’t get sucked into the 3-year ARM that I was originally considering. If I had, life would be interesting right now.

My prediction — expect prices to be stagnant on houses for the next couple of years, if not negative. That is, your house might be worth less next year in dollars than it’s worth today. I’m considering that a very real possibility for myself. I’ve switched to thinking of it as a Home and not an Investment, largely for my mental well-being.

I’ve been amazed by what I’ve heard from people I know in the housing industry in the past 4 months or so, when I bring up the subject of the softening market. I’ve spoken with Real Estate agents as well as people in the lending industry. They’re always quick to correct me that things really aren’t that bad, and you can’t trust what you read in the papers.

I’m not just reading the papers, for one thing. And the way things are shaking out, I’m finding the Upton Sinclair quote to be quite durable: “You can’t make somebody understand something if their salary depends upon them not understanding it.”

No telling what the next few years will bring. It’s going to be interesting stuff, that’s all I can tell you.

I’m not sure if I’ll ever fully enjoy record warm temperatures again.

Lovely July day though.

I’m trying to get my mind around the recent flap about Garrison Keillor’s recent Salon.com article, which stated, among other things, that “Nature is about continuation of the species — in other words, children. Nature does not care about the emotional well-being of older people.”

He also said this, on the subject of same-sex couples raising children:

The country has come to accept stereotypical gay men — sardonic fellows with fussy hair who live in over-decorated apartments with a striped sofa and a small weird dog and who worship campy performers and go in for flamboyance now and then themselves. If they want to be accepted as couples and daddies, however, the flamboyance may have to be brought under control. Parents are supposed to stand in back and not wear chartreuse pants and black polka-dot shirts. That’s for the kids. It’s their show.

That created quite a response (he’s a bigot! Boycott NPR!), to which Keillor responded.

There was a lot going on in that little piece of his. I’d like to give you what I took away. I understand that “the flamboyance may have to be brought under control” will probably mean different things to different people. Indeed, it’s poorly worded. It may be missing the reality of same-sex parents today, who are surely not about flamboyance at all, but about raising their kids, just like most opposite-sex parents.

I have to state here that I think what Keillor is saying is universal — no matter what the gender combination, when the parents take center stage and the kids must stand in the shadows, it’s annoying. Kids are more important. When that time comes in your life to have children, you should no longer be the most important person in your life, your kids should be (and I fully believe gay parents know that as well as any straight parents).

He finishes the piece with three paragraphs seemingly off-topic, about a recent visit he made to a grade school.

Last week I visited a grade school not far from where I grew up, and I strolled into a second-grade classroom and, good Lord, those lovely faces — Somali, Ethiopian, Hmong, Hispanic. Only about six kids looked anything like the kids I went to school with, and of those, three were Croatian. Fifteen different languages and dialects spoken in the school, a teacher told me. In my lifetime, the potato fields had been developed into tract housing for World War II vets and now a landing site for immigrants and their second-graders, most of whom ventured into English only a year ago.

When the stereotype of the gay parent begins to line up with the stereotype of the straight parent (as I think it should), hopefully we’ll all be able to retrain our focus on those kids, because really, that’s who we all care most about anyway (right?).

I just got back from the 2007 South Minneapolis Housing Fair, held at South High School. It was kind of cool to find out about this mini-convention happening in my part of town. I didn’t get a chance to look at the exhibits, though, because I was working at the Door Prize table (more complicated than you might think), as well as the Standish Ericsson Neighborhood Association table.

It was a good opportunity to meet people from the area, though, and next year I hope to attend a seminar or two.

I’m reading The Essays of Warren Buffet right now, and came across this great line about patience:

No matter how great the talent or effort, some things just take time: you can’t produce a baby in one month by getting nine women pregnant.

Go ahead, try to find out if the State Boys Hockey Tournament is broadcast on radio. My alma-mater, Edina High School, is playing right now, and I can’t tune in.

It was Ms. Conry, my 4th Grade Teacher at Concord Elementary (ISD 273 Edina MN), who instructed us to “turn off the boob-tube.” I did as I was instructed, but that doesn’t mean I want to miss the hockey game. Ms. Conry was awesome.

The Star Trib has no information on radio — there’s just nothing to be found. I’ve been Googling for 20 minutes. It’s a damn shame.

You can call a candidate for president a “faggot” but you can’t call the Vice President “Vice President.”

I stopped by Target to pick up a webcam, and made it home without any delay. That train does pretty well in the snow — I didn’t notice a difference at all.

To all you auto-commuters — how’s that workin’ out for ya?

Paul Douglas, on startribune.com:

Yes, March will most definitely come in like a lion, or a polar bear, or a crazy, rabid penguin. I’m not good with animals.

Yay for snow!