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December 13, 2008


With more and more people found to have called the current housing crisis, I'm trying to figure out how the various news organizations and regulatory agencies were always able to find people who were calling it the other way to blast an upbeat message to the nation ....

until it was too late for people caught in it to find out, of course.

A little perspective on housing affordability.

In October, 2007 it took 61% of the median income in my county to make the payment on the median house sold in my county. A year later, in October, 2008 it took only 38% of the median income in my county to make the payment on the median house sold in my county.

Prices fell 30%, interest rates fell 13%, and the median income rose 4%. This crisis has been the best thing that has happened for housing affordability in at least 30 years.

Conditions are right for Mr. Donovan to appear like a genius.

One last relevant statistic: 228 homes sold in October, 2007 but 506 sold in October, 2008. The market is twice as deep now.

//Market forces may not be on the side of affordability//

Excuse me?!! Are we in the same country?

A little perspective on housing affordability.

A friend of mine and his son in law are doing well right now buying up foreclosed properties in a nearby blue collar/immigrant city. If you have any cash at all, there are incredible deals to be had. They will turn most or all of the stuff they're buying into rental units.

He's well placed to take advantage of this, because he's been a home appraiser for the last 20 or so years. He's plugged in to the local community of lenders, he knows the folks in all of the local real estate related civil service organizations, and he knows what to look for in checking the soundness of the property itself.

His son in law is basically contributing sweat equity. He's a good kid, hard worker, and has enough trades skill to be a good enough general contractor for this project.

So, you know, conditions are right for my friend and his son in law to appear like geniuses. Not just appear, they are geniuses. They are picking the bones of the real estate bubble, and they'll do very well.

Scavengers are essential to any ecosystem. Without them, the world would be overcome with rot. And I mean nothing derogatory when I say "scavengers", it is actually invaluable for someone to turn the freaking disaster we're living through into gold.

So yeah, it's great that the market is coming back into alignment with reality. If you didn't get too far ahead of yourself, in the long run you'll probably be OK. Assuming you don't lose your job.

But the price of bringing the market back into alignment with reality is that a lot of folks are going to be ruined.

That, left to its own devices, is what the free market looks like.

Thanks -

I don’t really get HUD. Shouldn’t we have a department of “rural development”? I’m thinking that “urban” has been developed quite enough…

Yeah, I’m just being a pain this morning. But while I am, I’d recommend you replace “New York” with NYC here. They are not the same thing at all, and New York (outside of NYC and some rural areas yuppies liked) has not had a strong housing market in many many years.

As a long-time Brooklyn resident with an interest in sensible and sustainable urban development (e.g., *not* Atlantic Yards), I too am encouraged by the Donovan appointment. I am equally encouraged by Obama's transition team and apparent avoidance of *this* train wreck (http://newhavenindependent.org/archives/2008/12/carrion_gets_th.php) I hope the O/Biden administration has a *very* diverse cabinet, but one based on competence and maturity; not one that responds to the *recommendation lists* provided by assumed "representatives" of any ethnic/religious/interest group.

He needs to clean up HUD to start. He can start with Kim Kendrick.

Kim Kendrick at HUD should not be holding the office she does. Her solution and response to the Philadelphia scandal speaks volumes about her. A Bush leftover.

US Secretary of Housing and Urban Development (HUD) Alphonso Jackson resigned in April 2008. Orlando Cabrera resigned next. Why is Kim Kendrick still at HUD?

//Market forces may not be on the side of affordability//

Excuse me?!! Are we in the same country?

That's market forces in NYC. Learn to read.

The same market forces are happening in NYC.

As a journalist covering NYC at its insane real estate moment, I found Donovan's HPD quite responsive, even when the answers they provided weren't what I wanted. The fact that the "preservation" part of his portfolio was being fricasseed by a http://en.wikipedia.org/wiki/Dan_Doctoroff>development-mad deputy mayor until a few months ago was not his fault, or that of the impressive folks who work for him.

Hopefully he will do away with all the supervisors and managers at HUD that continue treating the employees like they have to be controlled under the wrinkled thumbs of old managment styles. Hey, it's a new world, why are we still allowing the old management rule of control? Ever wonder if that may be why we are in the mess we are in? These people don't understand the "think out of the box" method, they only understand tyrancy and control.

Cindy, In your experience, have you personally seen them send out Conciliation letters to get a $5000 extortion, I mean "donation" even though there is no evidence of wrongdoing? For instance in Google "The formal agreement made a mockery of Columbia National's supposed
wrongdoing. The firm admitted to no crime, and the Human Relations Commission
waived the right to take any further legal, administrative, or investigative
action. While HUD trumpets the agreement as a "settlement" of serious charges,
the only payout consisted of a pledge by the company to send $5,000"

"I don’t really get HUD."

I'd suggest familiarizing yourself with the history of urban affairs in the 1960s. Try Nixonland as a starter. (Please!)

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