The Goose that Laid the Golden Egg

After my last post I was kind of appalled at the tone my blog has taken lately. Very down, for a very long time. This is not me. I am an optimist. I'm a little sick and tired of BANKS, and I've allowed them to get me down, like everybody else, and it occurred to me that I would say one last thing about them and then GET OVER IT.

As a child development major in college, I was enthralled with fairy tales. I love the way they seem to apply to everything, all the time. What I'm thinking about now is the story of the goose that laid golden eggs. If you remember, Aesop's famous fable features a husband and wife (read: bankers) who possess a goose (the housing industry) who lays golden eggs (interest payments, future mortgages, business loans, credit cards of homeowners, the list goes on and on). One day, they just can't wait for the one egg a day that the goose lays, and, thinking she must be full of solid gold inside, they kill her to take her wonderful golden stores all at once. Then they find out that inside, she was just an ordinary goose who happened to lay one golden egg a day. Classic, yes?

Anyway, I have a very busy day ahead...a visit with a client, an open house, and then a late afternoon showing of one of my listings with a new buyer. So, in spite of everything, things are really good. Humans are nothing if not irrepressible. Which reminds me of one more story, involving Conan the Barbarian. Toward the end of the movie, the evil warlord who killed Conan's parents when he was a child and pressed him into slavery found himself at the point of Conan's sword. He said, "Wait, wait! You owe me your life as you know it. I made you the incredible, strong and powerful person you are today!" If you haven't seen the movie, I won't spoil it for you by telling you what happens next.

The State of the Union

It's the morning after the morning after, and the lovely glow that President Obama can create with his humor, his intelligence and his considerable talent for speechmaking has definitely worn off. I am left with what might be compared to a Chinese food hangover...very hungry, and with a mild headache. So sad for us, our prez has come up with little to encourage the victims of the housing crisis. I counted only a couple of fleeting references to the problem, and nothing specific offered in the way of a solution. The only vague reference to any kind of relief had to share a paragraph with health care reform:

"This year, we will step up refinancing so that homeowners can move into more affordable mortgages. And it is precisely to relieve the burden on middle-class families that we still need health insurance reform. Yes, we do."

Read more: http://www.nydailynews.com/news/politics/2010/01/28/2010-01-28_full_transcript_text_of_president_obamas_2010_state_of_the_union_address_with_vi.html?page=7#ixzz0dzu8F1Gx

"Step up refinancing"...hmmmm. That sounds great...What about "foreclosure moratorium"? How does that sound?

Some folks say that we need to continue with the bloodletting to help the market recover. My daughter wrote a paper about leeching practices for a history of medicine class she was taking at her university. So many people died, including children, from exsanguination. The argument doctors made at the time, back in the early 1800's, was that those people were going to die anyway. It wasn't the leeching that killed them, rather the disease process...but the concept that "what doesn't kill us makes us stronger," is misplaced here. Sometimes what doesn't kill us all at once ends up killing us anyway.

I took a listing on a home recently, a short sale. The owner is not a speculator, he's owned his home for many years and has raised his children in it. But the housing troubles have driven down values in his neighborhood to a point where he owes more than the house is worth to a buyer. This story is amazingly common. So many really good people are finding themselves in similar situations.

I am personally involved in a foreclosure proceeding. A home I was working on as a developer was financed by a neighborhood bank that was (unbeknownst to me...they don't post that information in the bank lobby. "Interest rates on 90 day jumbo cd's, 0.8% We have insufficient assets. Have a nice day" does not appear on those little message boards with the felt and the white plastic letters you can move around.) in trouble. The amount of my construction loan was suddenly above the new legal lending limit of this institution. Now the bank is trying to take everything I own, rather than work with me on a rate or payment schedule that the project can support. This too is a widespread problem for a lot of people.

So, what can be done about it? Some banks, with a little help from Wall Street, have done some wild-assed speculating that hasn't turned out so well. Now the country has to pay, in the form of lower property values, a challenged job market, lower tax revenues, loss of jobs for skilled construction trades, which is really scary (who will build anything in the future? Who will fix these buildings when they need to be repaired or remodeled?). People have lost or are losing their homes, their place in their communities, their access to health care, education, transportation, and jobs, their retirement savings, the money they had for their kids educations...come on Mr. Obama! If I weren't so crazy cheerful, I might say the situation was, well, hopeless.

If you are interested in green, read this

Courtesy of Thomas Friedman:

http://www.nytimes.com/2010/01/10/opinion/10friedman.html?emc=eta1

Cost to Value Remodeling Report 2010

This link should get you to the new Hanley Wood Remodeling Cost to Value report:

http://ads2000.hw.net/C/CVV2010_final/index.html#/0_0/

It's important to know when undertaking a remodeling project that the money you spend will not be reflected dollar for dollar in the price you might command for the finished product. Especially lately, replacement cost has been virtually eliminated from the appraisal process and banks are relying almost entirely on market factors, including foreclosures and short sales, to determine value. But remodeling something outdated can get your home noticed, and make it so much easier to sell, if not for more money, perhaps in less time.