BofA Plans to Cut 10% of Branches

 

CEO Tells Investors of Pullback; a Break From Two Decades of Growth

BY DAN FITZPATRICK

 

Bank of America Corp. Chief Executive Kenneth Lewis told investors last week he is planning to shrink the company's 6,100-branch network by about 10%, a pullback from the two-decade expansion that took the bank from coast to coast.

 

Mr. Lewis discussed the plans during a meeting Thursday in the bank's hometown of Charlotte, N.C., according to people familiar with the conversation. Liam McGee, president of Bank of America's consumer and small-business bank, also said branch closures are in the works but added it would be premature to specify how many locations could be closed, ...

 

http://online.wsj.com/article/SB124874668619485699.html

 

Current TV did a series about the current recession and I thought that I should share them with you. By the way, these videos are all about 25 minutes long.

 

Lost Vegas

 

Outsourcing Unemployment

 

Thank You, Recession

Current TV did a series about the current recession and I thought that I should share them with you. By the way, these videos are all about 25 minutes long.

 

Lost Vegas

 

Outsourcing Unemployment

 

Thank You, Recession

 

to add to that NBC and it's affiliates were discussing the "home entertainment" market and porno is way down, but internet and amateur porn is up.

nytimes has more good news on housing,

most recently instead of falling it's flat:

 

 

 

Recovery Signs in Housing Market Stir Some Hope

Isaac Brekken for The New York Times

Published: July 28, 2009

 

After a plunge lasting three years, houses have finally become cheap enough to lure buyers. That, in turn, is stabilizing prices, generating hope that the real estate market is beginning to recover.

 

Eight cities, including Chicago, Cleveland, Denver and San Francisco, showed price increases in May, up from four in April and one in March, according to data released Tuesday. Two other cities, Charlotte, N.C., and New York, were flat.

 

For the first time since early 2007, a composite index of 20 major cities was virtually flat, instead of down.

 

...

 

http://www.nytimes.com/2009/07/29/business/economy/29housing.html?_r=2&partner=rss&emc=rss

 

the cleveland chart:

http://www.nytimes.com/interactive/2009/04/29/business/2009-wide-housing-graphic.html

 

 

 

Some skeptics say they believe the market is merely pausing before it resumes falling and that much of the life in the market is coming from speculators. Even the most enthusiastic analysts acknowledge that rising unemployment, another leap in foreclosures or a significant jump in interest rates could snuff out progress.

 

Skeptic here!!

 

 

Some skeptics say they believe the market is merely pausing before it resumes falling and that much of the life in the market is coming from speculators. Even the most enthusiastic analysts acknowledge that rising unemployment, another leap in foreclosures or a significant jump in interest rates could snuff out progress.

 

Skeptic here!!

 

I like how they actually counter their own prediction with reality.

Unemployment is going to continue to rise (even the FEDs have admitted that), foreclosures are still increasing with the ARM resets beginning in 2010 (the banking industry has admitted this) and interests rates can only stay this low for so long before external market forces cause a change.

 

This really is not brain surgery, its simply already cooked into the future and can't be avoided (delayed yes, avoided no).

 

 

Some skeptics say they believe the market is merely pausing before it resumes falling and that much of the life in the market is coming from speculators. Even the most enthusiastic analysts acknowledge that rising unemployment, another leap in foreclosures or a significant jump in interest rates could snuff out progress.

 

Skeptic here!!

 

I like how they actually counter their own prediction with reality.

Unemployment is going to continue to rise (even the FEDs have admitted that), foreclosures are still increasing with the ARM resets beginning in 2010 (the banking industry has admitted this) and interests rates can only stay this low for so long before external market forces cause a change.

 

This really is not brain surgery, its simply already cooked into the future and can't be avoided (delayed yes, avoided no).

 

Ragerunner this is banking and finance, where.....

 

 

 

Some skeptics say they believe the market is merely pausing before it resumes falling and that much of the life in the market is coming from speculators. Even the most enthusiastic analysts acknowledge that rising unemployment, another leap in foreclosures or a significant jump in interest rates could snuff out progress.

 

Skeptic here!!

 

I like how they actually counter their own prediction with reality.

Unemployment is going to continue to rise (even the FEDs have admitted that), foreclosures are still increasing with the ARM resets beginning in 2010 (the banking industry has admitted this) and interests rates can only stay this low for so long before external market forces cause a change.

 

This really is not brain surgery, its simply already cooked into the future and can't be avoided (delayed yes, avoided no).

 

Ragerunner this is banking and finance, where.....

 

 

So true, so sad and to bad.

its simply already cooked into the future and can't be avoided

 

But do you think that the GDP will go any lower than this?  Do you think it will decline further?

 

No one is disputing that the future holds no short-term prospects for a nice economic recovery.  Given that, everyone is focused on identifying the end of the drop.  It's a pretty meaningless statistic (like saying the S&P crossed the 2,000 level today), but it is a ray of sunshine everyone is promoting.  Hitting bottom and staying there is not necessarily a good thing.  Think the the Russian sub (the Kirst?).

 

There is a lot of headwinds against the economy.  But there is also a lot of tailwind too.  The tailwind comes from general population growth, as well as all the stimulous spending, low interest rates, delayed foreclosures, etc.

 

So far, the headwinds have overwhelmed the tailwinds.  But are we reaching a point where they are equal?  That's what everyone is cheering for right now.  Not a bad thing, but not necessarily a great thing either.

 

I suspect we may have hit bottom GDP-wise. Do you guys think the GDP can realisticly go down any more from here?  I'm not talking about stagnating, but about an actual decline.  I think most of us would agree a 0.2% GDP growth is still a recession, but the 'experts' do not see it that way.

 

----------------------------------------------------

 

Everyone is anticipating a jobless recover.  What about a GDP-less recovery?

 

If you look at the Great Depression, technically didn't we have a series of recessions and then growth for several quarters, then recession, the growth... and so on.

 

Everyone seems so eager to declare this recession over, and maybe it is.  That does not mean we won't face a double-dip recession 3 quarters from now, or a triple-dip recession soon there-after.

its simply already cooked into the future and can't be avoided

 

But do you think that the GDP will go any lower than this?  Do you think it will decline further?

 

No one is disputing that the future holds no short-term prospects for a nice economic recovery.  Given that, everyone is focused on identifying the end of the drop.  It's a pretty meaningless statistic (like saying the S&P crossed the 2,000 level today), but it is a ray of sunshine everyone is promoting.  Hitting bottom and staying there is not necessarily a good thing.  Think the the Russian sub (the Kirst?).

 

There is a lot of headwinds against the economy.  But there is also a lot of tailwind too.  The tailwind comes from general population growth, as well as all the stimulous spending, low interest rates, delayed foreclosures, etc.

 

So far, the headwinds have overwhelmed the tailwinds.  But are we reaching a point where they are equal?  That's what everyone is cheering for right now.  Not a bad thing, but not necessarily a great thing either.

 

I suspect we may have hit bottom GDP-wise. Do you guys think the GDP can realisticly go down any more from here?  I'm not talking about stagnating, but about an actual decline.  I think most of us would agree a 0.2% GDP growth is still a recession, but the 'experts' do not see it that way.

 

----------------------------------------------------

 

Everyone is anticipating a jobless recover.  What about a GDP-less recovery?

 

If you look at the Great Depression, technically didn't we have a series of recessions and then growth for several quarters, then recession, the growth... and so on.

 

Everyone seems so eager to declare this recession over, and maybe it is.  That does not mean we won't face a double-dip recession 3 quarters from now, or a triple-dip recession soon there-after.

 

My opinion.

 

Could we have a jobless recovery. For Wall Street yes (look at today, Wall Street is up significantly over the last month or so, yet 500,000 American's are losing their jobs every month). Could Main Street have a jobless recovery, NO. I really think we are seeing a growing divide between Main Street and its wealth (or lack of it) and Wall Street that is going to be very noticable going forward. (have and have not)

 

GDP, They massage the data to the point that anything is possible. They are also consistantly presenting rosy numbers only to modify them at a later date lower. I think GDP will stay negative for several more quarters, but each quarter will be flat or a little higher than the previous quarter (they might even pull a positive number out of their butts here and there). This will give the cheerleaders something to point to as a great positive step forward yet, we will still be in the longest recession in US history.

This is crazy.

 

 

 

http://money.cnn.com/2009/07/30/news/companies/bonuses_tarp/index.htm

This is crazy.

 

 

http://money.cnn.com/2009/07/30/news/companies/bonuses_tarp/index.htm

 

The gap between Main Street and the Wall Street elite is only growing wider. Will Main Street finally revolt someday?

This is crazy.

 

 

http://money.cnn.com/2009/07/30/news/companies/bonuses_tarp/index.htm

 

The gap between Main Street and the Wall Street elite is only growing wider. Will Main Street finally revolt someday?

 

I don't think so.  My best friends partner works for one of the banks mentioned.  As long as I've know my him, his bonus has been astronomical.

 

It insane that his bonus is 2.5 times my annual salary.

This is crazy.

 

 

http://money.cnn.com/2009/07/30/news/companies/bonuses_tarp/index.htm

 

The gap between Main Street and the Wall Street elite is only growing wider. Will Main Street finally revolt someday?

 

I don't think so. My best friends partner works for one of the banks mentioned. As long as I've know my him, his bonus has been astronomical.

 

It insane that his bonus is 2.5 times my annual salary.

 

I think this time might have different varibles than other times. With Main Street income shrinking, taxpayers providing a massive amount of money to the Banks and Wall Street and the deepest recession since the great depression it will be interesting to see how long the average joe will go along with this wealth transfer.

This is crazy.

 

 

http://money.cnn.com/2009/07/30/news/companies/bonuses_tarp/index.htm

 

The gap between Main Street and the Wall Street elite is only growing wider. Will Main Street finally revolt someday?

 

I don't think so.  My best friends partner works for one of the banks mentioned.  As long as I've know my him, his bonus has been astronomical.

 

It insane that his bonus is 2.5 times my annual salary.

 

I think this time might have different varibles than other times. With Main Street income shrinking, taxpayers providing a massive amount of money to the Banks and Wall Street and the deepest recession since the great depression it will be interesting to see how long the average joe will go along with this wealth transfer.

 

Those bankers are going to fight to the death for those bonuses.  It's not like he doesn't already make a decent salary.

The word "Bonus" has a very different meaning on Wall Street than it does on Main street.

 

The business world needs to come up with a different definition for the contracted payouts to employees that are not performance based.

 

Instead of a 'retention bonus', call it a 'retention paycheck'.

 

Reserve the word 'bonus' for true cases of exceeding (realistic) performance targets.  Fogging a mirror on Dec 31 should not count as a bonus.

 

But do you think that the GDP will go any lower than this?  Do you think it will decline further?

This was the point I was trying to make last week. I think our GDP is going to stabalize near where it is, technically ending the recession, but we're not going to feel like it's over for a long time.

US GDP contraction slows to 1%

By Alan Rappeport in New York

 

Published: July 31 2009 13:51 | Last updated: July 31 2009 13:51

 

"The US economy continued to shrink in the second quarter making this recession the longest on record, but the more moderate decline lifted hopes that government stimulus measures could be loosening the grip of the downturn.

 

Preliminary commerce department figures showed on Friday that US gross domestic product declined by an annualised rate of 1 per cent in the second quarter after declining by a revised 6.4 per cent during the first three months of the year. While the contraction was less severe than the in the previous three quarters, it was the first time since official figures started in 1947 that the US has suffered four consecutive periods of declining output."

http://www.ft.com/cms/s/34977262-7d48-11de-b8ee-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F34977262-7d48-11de-b8ee-00144feabdc0.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus

 

^^

 

"This was the point I was trying to make last week. I think our GDP is going to stabalize near where it is, technically ending the recession, but we're not going to feel like it's over for a long time. "

 

OK, then I agree with you.  Sorry for misunderstanding your point initially.

 

And you just stated your point much more succinctly than I !!

first time since official figures started in 1947 that the US has suffered four consecutive periods of declining output.

 

While there is no straight-up technical definition of a recession vs a depression....

 

When I was in college, my Economics Professor always said that a recession was defined by 2 consecutive quarters of GNP contraction, while a depression was defined as 4 consecutive quarters of GNP contraction.

 

We've discussed the definition of a recession/depression before, but based on one of my old college professors, we're in a Depression !

 

(However, I expect the term 'Great Recession' to be used in the future)

first time since official figures started in 1947 that the US has suffered four consecutive periods of declining output.

 

While there is no straight-up technical definition of a recession vs a depression....

 

When I was in college, my Economics Professor always said that a recession was defined by 2 consecutive quarters of GNP contraction, while a depression was defined as 4 consecutive quarters of GNP contraction.

 

We've discussed the definition of a recession/depression before, but based on one of my old college professors, we're in a Depression !

 

(However, I expect the term 'Great Recession' to be used in the future)

 

I am sure the debate over what this economic plunge will be defined as will be one for the history books. With that said, this is far from over. We may very well se a small positive GDP in one quarter followed by a negative GDP in the next quarter, rinse and repeat.

^I know, they are better than all of the big cable news networks. I am not sure who owns them or if they would be considered independent, but I know Al Gore is a co-owner/founder.

You got to love it. One buys while the other offers and Goldman and a few selected others make a very nice profit on the action. I will say this, Goldman has got it going on. Taxpayer money, less competition, people in strategic position in the FEDs, and a computer program that they admitted could be used to manipulate the stock market in the 'wrong hands'. No wonder Goldman is making near or at record profits through the deepest US recession in history.

 

Wall Street benefits from Fed and Treasury

By Henny Sender in New York

Published: August 2 2009 23:04 | Last updated: August 2 2009 23:04

 

"On a steamy July morning in New York recently, the US Federal Reserve, in accordance with announced plans, began purchasing $3bn in government bonds maturing between February 2021 and 2026.

 

Prices rose in anticipation of the Fed move.

 

Some two hours later, the US Treasury auctioned $39bn in five-year notes.

 

...

 

http://www.ft.com/cms/s/0/ffa60e50-7f8c-11de-85dc-00144feabdc0.html

These are the kind of articles that put the bigger picture in place and should make us wake up and smell the dying roses. But, who needs this type of info when you have Jon and Kate, Michael Jackson, and whatever else to keep the American public well occupied. The truth is, the US is financially unsustainable and so are many European countries. The piper will come and when it does it will be interesting to see how the situation is handled, nationally and internationally.

 

AP ENTERPRISE: Federal tax revenues plummeting

By STEPHEN OHLEMACHER, Associated Press Writer Stephen Ohlemacher, Associated Press Writer – Mon Aug 3, 8:51 pm ET

 

WASHINGTON – The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation's plate and struggling to find money to pay the tab.

 

The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.

 

Other figures in an Associated Press analysis underscore the recession's impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.

 

...

 

http://news.yahoo.com/s/ap/us_plummeting_taxes

Consumer spending was up last month !!!!!!!!!!!!!!!!!!!!!!!

 

ummm... unless you factor in inflation.  Then it was unchanged - not bad !!!!!

 

ummmm... unless you factor in population growth.  Then it was negative 1%.  Not so good.

 

Most of the reported increase was largley on the rise of retail gasoline sales - so the base number (before inflation, population) was not so good either.

Consumer spending was up last month !!!!!!!!!!!!!!!!!!!!!!!

 

ummm... unless you factor in inflation. Then it was unchanged - not bad !!!!!

 

ummmm... unless you factor in population growth. Then it was negative 1%. Not so good.

 

Most of the reported increase was largley on the rise of retail gasoline sales - so the base number (before inflation, population) was not so good either.

 

You are thinking to much. The headline is all you should think about, spending was up, the recession is winding down, all is well. Did you see Jon and Kate this week?

Consumer spending was up last month !!!!!!!!!!!!!!!!!!!!!!!

 

ummm... unless you factor in inflation.  Then it was unchanged - not bad !!!!!

 

ummmm... unless you factor in population growth.  Then it was negative 1%.  Not so good.

 

Most of the reported increase was largley on the rise of retail gasoline sales - so the base number (before inflation, population) was not so good either.

 

You are thinking to much. The headline is all you should think about, spending was up, the recession is winding down, all is well. Did you see Jon and Kate this week?

ragerunner, you're going to the hell for this post!  LOL

Did you see Jon and Kate this week?

 

No, I was too busy following the Michael Jackson doctor case.

 

Actually, I did see Kate.  She was on the cover of a checkout-line tabloid.

 

---------------------

(I've never seen Jon and Kate on TV, just the tabloids.  Nor did I watch any MJ coverage.  At my house, TV consists of Spongebob, iCarly, etc, with the occasional PBS stuff for the parents.)

 

I do see a lot of HGTV, though.  Interesting how the show lineup has evolved over the last decade

 

10 years ago on HGTV...Lots of house decorating and yard landscaping shows

 

6 years ago on HGTV - lots of home renovation shows

 

3 years ago on HGTV - lots of Househunting, staging, and house flipping shows

 

Today on HGTV - Reality shows:  My house is worth (how little?), Renovation reality (with broken stuff all over the place), Real Estate Intervention (Mike Aubrey tells people they are under water and should rent out their place, so they will bleed slowely!)

This may sound harsh, but I don't think many big returns in the future will be made in the United States.

 

Agreed - but that does not mean that they won't be made by US companies.

 

P&G gets well over 50% of its revenue from overseas.  Same with lots of other companies (Avon, etc). 

 

And as the dollar stages its long, steady decline, those overseas profits will be expatriated back with currency profits as well.

 

Remember, much of the capital to build the US back in the 1870s-1900 came from Great Brittain.  That country was cresting economcially, militarily, and politically at the time.  Good returns for GB investors were to had in the US.  Our country may be in a similar position today. (notice GB is still a major force in the world, and still rich.)

 

I am diversifying my holdings to more international stocks.  I resisted this previously because those stocks were subject to wild swings year-to-year, but tended to cancel out the gains.  Not so these days.  I am also thinking that investing in small-cap companies is not the way to go, because most of the big companies are internationally diversified, but I'm not so sure about the small caps.  Technology small caps, maybe.

Did you see Jon and Kate this week?

 

(I've never seen Jon and Kate on TV, just the tabloids. Nor did I watch any MJ coverage. At my house, TV consists of Spongebob, iCarly, etc, with the occasional PBS stuff for the parents.)

 

My house too. Actually, after watching some Fox, MSNBC, CNN, etc... I find Nick, and the Disney channel much more stimulating to the brain cells.

post bailouts -- whos getting after them? :whip:

 

 

Legal »

Who’s Modifying Mortgages?

August 4, 2009, 10:52 am

 

Washington has pushed hard for the nation’s bailed-out financial institutions to give troubled homeowners a break as well.

 

But according to data released by the Treasury Department on Tuesday, some big banks are moving much faster than others to modify mortgages that they service under the government’s Making Home Affordable program.

 

In releasing its first report card on the mortgage modification program, the Treasury Department didn’t single out any particular firms for praise or blame. But it pointed out that performance among financial institutions in the program has been “uneven.”

 

...

 

http://dealbook.blogs.nytimes.com/2009/08/04/big-banks-differ-sharply-on-easing-mortgages/?ref=business

 

I don't have any sympathy for those who bought above their means to keep up with the Jones.

Agreed. I have some sympathy for people that got talked into a bad mortgage if they were misled, or people that bought a house they could afford at the time, but can't now as a result of job loss or injury, but buying too much house just because the bank says you can afford it is irresponsible and you deserve whatever comes you way as a result of it. When I bought my house in 2007 my bank offered me a 30 year mortgage whose payments would have been higher than my monthly net income. I, being a somewhat responsible adult, worked out roughly what I could afford and bought a house accordingly. This is why I live in a tiny little house and spend half my weekends making some kind of repair to it. If someone making a similar income to me bought a nicer house than mine that doesn't need a lot of repairs, has wiring that isn't a safety hazard, has a garage that doesn't shake everytime the wind blows, but now has to stress over phone calls from collectors and is fearing foreclosure, why would I consider feeling sorry for them?

Agreed. I have some sympathy for people that got talked into a bad mortgage if they were misled, or people that bought a house they could afford at the time, but can't now as a result of job loss or injury, [glow=red,2,300]but buying too much house just because the bank says you can afford it is irresponsible and you deserve whatever comes you way as a result of it.[/glow] When I bought my house in 2007 my bank offered me a 30 year mortgage whose payments would have been higher than my monthly net income. I, being a somewhat responsible adult, worked out roughly what I could afford and bought a house accordingly. This is why I live in a tiny little house and spend half my weekends making some kind of repair to it. If someone making a similar income to me bought a nicer house than mine that doesn't need a lot of repairs, has wiring that isn't a safety hazard, has a garage that doesn't shake everytime the wind blows, but now has to stress over phone calls from collectors and is fearing foreclosure, why would I consider feeling sorry for them?

 

Thats what I'm talking about.  Those and the first time home buyers who think "new and bigger" is better.

 

Look at the loss in value at those home in solon, brecksville, westlake. 

 

I know not everyone is "handy" but if you buy a house should have enough in reserve to maintain and/or improve the property. or hire someone to do that.  I think lots of people get scared off by "fixing" things.  Buy a house you can grow into and add onto if you need the space.

I don't have any sympathy for those who bought above their means to keep up with the Jones.

Some buyers bought above their means because they saw runaway home price inflation and wanted to buy before homes would be "totally" unaffordable.

^People have argued that HGTV helped fuel the sprawl/housing disaster that is America. It makes sense. It wouldn't be the first destructive thing OU grads have done...

 

It is so funny you said that, because I told my wife that a year ago, and she thought I was stupid. 

I don't have any sympathy for those who bought above their means to keep up with the Jones.

Some buyers bought above their means because they saw runaway home price inflation and wanted to buy before homes would be "totally" unaffordable.

 

I think that is BS, since there are affordable homes everywhere.

I don't have any sympathy for those who bought above their means to keep up with the Jones.

Some buyers bought above their means because they saw runaway home price inflation and wanted to buy before homes would be "totally" unaffordable.

 

I think that is BS, since there are affordable homes everywhere.

Absolutely there are and have been affordable homes in most every region. You just might have to have a home with less square footage, worse neighborhood, worse school system, longer commute, or a home that requires you to do a little work around it. This may require you to, God forbid, take pride in yourself rather than your home.

I don't have any sympathy for those who bought above their means to keep up with the Jones.

Some buyers bought above their means because they saw runaway home price inflation and wanted to buy before homes would be "totally" unaffordable.

 

I think that is BS, since there are affordable homes everywhere.

Absolutely there are and have been affordable homes in most every region. You just might have to have a home with less square footage, worse neighborhood, worse school system, longer commute, or a home that requires you to do a little work around it. This may require you to, God forbid, take pride in yourself rather than your home.

 

affordable and desirable are not the same thing, says the woman with over 540 homes in her "rejected" tab on her real estate portal.

affordable and desirable are not the same thing, says the woman with over 540 homes in her "rejected" tab on her real estate portal.

LAWD!  SOMEBODY sign the RNR's up for property virgins or real estate intervention.

LOL.  In my defense, the portal pulled a lot of properties that didn't have certain criteria we wanted.  For example, we got hundreds of "cluster homes."  If I'm buying a house I want a house, not a cluster home.  We really want a fireplace and a basement, but it pulled lots of properties that had neither or only had one.  We want min. of 1.5 baths but lots of properties only had 1.  So many, many of those 540 were eliminated simply because they didn't meet basic criteria we desire.

I don't have any sympathy for those who bought above their means to keep up with the Jones.

Some buyers bought above their means because they saw runaway home price inflation and wanted to buy before homes would be "totally" unaffordable.

 

I think that is BS, since there are affordable homes everywhere.

 

In some markets afforability of any kind was a real issue during the big bang and the RE PR machine was telling people in those markets buy now or be a renter forever. I lived in one of these types of markets and the way I dealt with the out of control cost of living was to apply for jobs in other locations were I could afford to buy a home for my family with a 30 year fixed mortgage. I got a job in such a location and moved my crew. While almost all of our friends, co-workers, etc... took the plunge in the twilight zone market and are now losing everything and some are even suing each other over bad housing business deals. Very sad. All for greed, and granite counter tops. Thank you RE industry, finance industry, media, and HGTV you have done America proud.

I'm assuming a cluster home is a detached condo?  You own the home but not the property?  Doesn't seem ideal for a young family.

I'm assuming a cluster home is a detached condo?  You own the home but not the property?  Doesn't seem ideal for a young family.

 

I think people have a lot of different taste and needs. My family and I (3 young boys) live in a townhouse development currently and find that it works great for us. I am a big supporter of living in a more dense environment were we can walk to the grocery store, Target, restaurants, a great neighborhood park and the bus stop all within 10 minutes or less. But, I do respect that some families and individuals want something different. The big problem with American cities is we built to much of the sprawl and not enough of the more sustainable type of development. Things are starting to change, but this change is happening very slowly in some parts of the country.

I'm assuming a cluster home is a detached condo? You own the home but not the property? Doesn't seem ideal for a young family.

 

Most are detached, but less than 10 feet in between homes, hence "cluster." Usually means a very small lot and I believe you don't own it, it's kept up by the management company like in a condo. 

 

All families are different and this works for a lot of people, as do condos.  For us, if we're going to invest all that money, we want our own home with our own yard that we can do what we want with (within zoning/city restrictions, of course).

I don't have any sympathy for those who bought above their means to keep up with the Jones.

Some buyers bought above their means because they saw runaway home price inflation and wanted to buy before homes would be "totally" unaffordable.

 

I think that is BS, since there are affordable homes everywhere.

 

In some markets afforability of any kind was a real issue during the big bang and the RE PR machine was telling people in those markets buy now or be a renter forever. I lived in one of these types of markets and the way I dealt with the out of control cost of living was to apply for jobs in other locations were I could afford to buy a home for my family with a 30 year fixed mortgage. I got a job in such a location and moved my crew. While almost all of our friends, co-workers, etc... took the plunge in the twilight zone market and are now losing everything and some are even suing each other over bad housing business deals. Very sad. All for greed, and granite counter tops. Thank you RE industry, finance industry, media, and HGTV you have done America proud.

 

Where were you and were are you currently.  How is affordability and issue when in any given city in america, you can find an affordable home.  It may not be in the neighborhood you want, or exactly the type of house you "envisioned" buying but there are affordable homes.  I find that most people use that as an excuse to move further out to some new crappy tract home with no character.

 

I'm sorry, nobody forces you to sign on the dotted line.  When I bought my apartment, they approved me 130k and even then not knowing a damn thing about RE, I knew that I couldn't afford a house at that price and maintain my current style of living!  That is the key.  People buy a house and dont realize their lifestyle and spending habits need to, correction, must, change.

 

When I was looking to buy in NYC, I was approved for 8 million dollars.  I just remember thinking, "do I look that dumb, stupid and crazy???"  At the time I was looking at apartments in the 1 million dollar range.  Based on my calculations, lifestyle, the only way I could live was to buy a brownstone and renovate.  I wasn't willing to buy a co-op and pay the outrageous maintenance fees. 

 

My mortgage is outrageous now but I can't imagine paying or being stuck with an 8 mil. mortgage and housing prices are dropping like rocks in NYC.

affordable and desirable are not the same thing

Absolutely not the same thing, but if you look around at what you can afford and it's not desirable, it's time to either look in a different neighborhood, or lower your standards of desireability. It is not time to just decide to pay more, hoping for a raise, or that you can refinance to a lower payment later. That's just idiotic.

Bottom line is this...

 

100% of the housing stock of an area must be affordable to 70% of the buyers of that area. 

 

For most areas, that's the people living and working there (some cities are exceptions).

 

Affordability is determined primarily by income (again, primarily wages) and lending standards.

 

So yes, things do get out of balance from time-to-time.  But in the end, they must come back into balance. 

 

Using the rising value of a house to help pay the mortgage on it is simply not sustainable. Using a future rise in income to pay for a mortgage is a gamble - may work for young lawyers & doctors, probably doesn't work for most others.  (Of course, using any future income to pay for a mortgage is also a gamble, but in most cases it's a pretty good one as most people will have some sort of job with some sort of income.)

 

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edit:  this post was in response to others above, but primarily the statement about 'buy now or be priced out foreever'.

In Ohio cities, the value of housing is set by the cost of an undeveloped lot plus the cost of constructing a house.  Workers will commute farther so that they can have a house at the price that they want.  In coastal cities or other cities that are geographically constrained against sprawling development, there is no undeveloped land to acquire.  Hence, the values of the lots that houses sit on can skyrocket to whatever price the market will bear. 

 

We certainly did not have skyrocketing home prices in Ohio.  Some of that was due to Ohio's weak economy, but most of it was due to the safety valve of sprawl.

 

So, I stand by my contention that buyers were pressured to buy at whatever terms they could get else they see their dreams of home ownership be forever lost.