Property Grunt

Wednesday, August 19, 2009

Roll Call: More and More of the Same

Break out the bowls because it looks like we are having ourselves a green shoots salad.

Frailty Lingers in Housing and Producer Price Reports

New figures showing a decline in wholesale prices and a drop in new-home construction highlighted how weak the economy remains, even as some optimists declare the recession to be over.

Producer prices fell more than expected in July as the costs of food and energy slipped, the Labor Department reported on Tuesday. The 0.9 percent monthly decline came after three months of increases, and suggested that demand was weak up and down the ladder of production, from consumer goods to intermediate goods like chemicals and rubber to raw materials.

Producer prices declined a record 6.8 percent from last July, when crude oil prices soared above $145 a barrel and pushed the costs of fuels, food and other products sharply higher, before they fell back amid the global financial crisis. The decline in the last 12 months is the largest drop in 60 years, since the government starting keeping such records.

So-called core prices excluding food and energy costs fell 0.1 percent, their second monthly decline of the year.

The figures offered more evidence that inflation remains a distant concern for the American economy, even as some investors speculate that higher oil prices, rising interest rates and a weaker dollar are in the pipeline, a result of the government’s enormous recovery programs.

On Friday, the government reported that consumer prices were unchanged in July from a month earlier and were down sharply from a year ago, reflecting the drop in gasoline and transportation costs. Economists say that there is still tremendous slack in the economy, and that wages are likely be flat over the next few months as unemployment ticks up.

“The economy remains weak and even as it begins to recover, the amount of excess capacity is high,” said Peter Kretzmer, senior economist at Bank of America.

The word delicate is probably an understatement. We are barely digging ourselves out of this mess. That is why whenever I heard people screaming that the recession is over and happy days are here again, I just want to scream.

So clip your coupons. Live frugally and save your money for the next cycle.

The New York Times published an article on how homeowners are put in the cobra clutch because of property taxes. What is happening now is that owners have are having to choose between paying the mortgage or their property taxes. And those who chose to pay their mortgages have tax liens filed against them.
Tax Bills Put Pressure on Struggling Homeowners

Hard times are causing more homeowners to fall behind on their property taxes. But in thousands of cases, they are not responsible to their local governments, but to private companies that charge double-digit interest and thousands of dollars in service fees.

This is because in recent years struggling cities and counties have sold their delinquent tax bills to the highest bidder. It seemed a painless way to turn old debts into cash to finance schools or public services.

But housing advocates say the private companies may be exacerbating the foreclosure crisis, pushing out homeowners faster than would governments, which are increasingly concerned about neighborhoods becoming wastelands of abandoned properties.

“In the beginning, you’re getting this immediate windfall of cash,” said Anita Lopez, the auditor of Lucas County, Ohio, which sold off more than 3,000 tax liens for $14.7 million. The county includes Toledo. “But when you think about abandoned properties, foreclosed properties — the cost to the community is far more expensive than the short-term benefits.”

Investors say the arrangement actually benefits everyone. School districts, fire departments and public parks get an infusion of cash. The investors take on a risky but potentially high-yielding investment. And taxpayers do not have to pick up the slack from scofflaw landlords or tax evaders.

Governments, of course, can charge interest and penalties too, and they foreclose on properties for back taxes. But governments charge interest rates that are half what private investors charge — often offering no-interest payment plans — and are also more likely to be concerned about the long-term prospects of neighborhoods.

In the world distress properties, tax liens are a very lucrative industry. Private investors will swoop in and buy the liens and then take over payments from the homeowner while making money off the interest. Like mortgages, often these lines are packaged into some type of investment product and sold off or traded.

One of the key advantages of buying a tax lien is that the holder is the first in line when a property is auctioned off.

About two years ago before the s**t really hit the fan one developer who specializes in distressed properties told me that the banks in Florida were compiling a list of real estate developments and watching very closely because once they went into default, they were going to shopping. But now these lenders are freaking out because now they are the owners of these properties which is something they do not want.

The same goes for investors in tax liens. The last thing they want to is to become owners of the properties because it means they have to spend more money and time taking care of these properties. This is still a very lucrative industry, however you need to be very selective in where you invest.

Now for some really scary s**t

Bank Sells Woman's Home By Mistake

Apparently this was due to human error. Another reason why all homeowners should invest in an alarm system so you can prevent this type of stupidity. And a 12 gauge.

And I just got this from Recessionwire.

How hard is it to find a job in your city? Here's the number of unemployed per job posting for the 50 most populous metropolitan areas in the U.S.

It looks like DC is the place to go.