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Housing Bailout is ridiculous and we got a "Little"

Been a long time. 

I have been really swamped, I know everyone is busy, but I have been busier lately than normal. 

Maybe not as busy as you, not the point, just busy enough that I haven't written on here. 

Extreme Cody was a huge success! I made it and have chosen to go down another 5 lbs and make 190 my actual fighting weight. I am not actually gonna do any fighting just want to claim I have a "Fighting Weight". 

Whatsuphutch has really been taking off and keeping us busy and amazingly enough the website design business is doing ok in this economy. 

My sons basketball season ended this week with a 5 point loss in the championship game of the "End O The Year" 3rd grade tourney. Kinda a heartbreaker, but 2nd place was a proud moment. We lost to McPherson, they have one kid that was an incredible athlete and guess what... he had a buzz cut. If that doesn't mean anything to you ask around. Hutchinson debates over whether or not to add flouride to our water... McPherson adds some kinda basketball vitamin that also keeps your hair real short. Complete respect to them they played a great game. 

Ok Meat and Potatoes. 

This housing bailout is the first thing our new President has done that I can't deal with, with out discussing.

Are we seriously ignoring the fact that people in houses they cant afford is the largest factor in this entire budget issue we have right now. It's dumb, we need to get these people out of the houses and into housing they can afford, period. Using misguided funds to help people get things they can't afford is a bad idea. Not everyone in the world is currently in a situation that they should be a homeowner. The joy of this country is people can change their situation, make it better. I am not saying we abandon people and I am not even taking a hard line "every man for himself" approach. I am just saying, let's get them into a housing situation they can afford, not reward them for getting into one they can't. We have to be sensible about this. 

I am still making a conscious effort to stay positive about our new administration, but this is a big mistake. It will have positive effects in the short term, but it is no better than the sub-prime crisis we created by helping people get into housing they couldn't afford 15 years ago.

On a much lighter note, we got a little brother from Big Brothers and Big Sisters today, incredible experience. I will write much more about this later, for now just ponder the question "Why don't you have a "little"... Don't get all pissy, I know it wouldn't work for everyone. I do know this however, there is a huge waiting list for "Bigs" in Reno County Kansas and there shouldn't be. I am not being judgmental, I promise, my wife and I asked the same question a couple of months ago. "Why aren't we doing our part to help make that list smaller?" Why aren't you?


  1. While I have opinions about McPherson basketball, I want to address your frustration with the Obama’s Housing plan. I get tired of all of the blame being heaped on the regular folks who bought these houses that they are now having trouble affording--and that we should leave them to suffer economic ruin of their sole creation. I believe in personal responsibility, but there is plenty of blame and responsibility to go around here, not just the homeowners.

    When someone applies for a mortgage, they are not alone. There are two parties--on one side is a regular person (a school teacher, fire fighter or chef), and on the other side is a finance "professional" whose job is to decide the terms of a person’s mortgages. These “professionals” made loans with little regard to actual prospects for long-term payment on the theory that since house prices were rising, the borrower could always sell or refinance.

    That wasn’t the person buying the house’s decision; it was the judgment of people who were professional mortgage-offerers. The “professionals” got lazy at this point, because they were easily and quickly selling off these mortgages as securities. There were no consequences to them if the borrower could not pay.

    There really is plenty of blame to go around here (greedy house fippers, negligent banks, the bond dealers, lazy regulators, the Fed, etc.), but I think the smallest amount of blame here would be some school teacher or business owner who decided to basically trust that the financial services professionals and government regulators knew what they’re doing.

    I think it is a good plan and will really help middle class Americans.

  2. Was Steve Henson the guy from McPherson who played for K-State with the buzz cut? If that's not him, I'm drawing a complete blank.

  3. I just bought a new house, and I'm a pretty sophisticated buyer (I've bought a house before, I have a law degree, etc. etc.) and I was amazed by how complicated the process was and how much I had to rely on my mortgage broker.

    There were pages and pages and pages of legalese to read, and I certainly didn't read them to completion. I basically asked my mortgage broker to tell me what they said, and then I signed on the dotted line. Much of these documents came up for the first time at closing. If I would have read everything, a one hour process would have taken ten.

    My point is that there is a huge degree of trust placed in mortgage brokers and lenders. You ask them what you can afford. You ask them what the terms of your mortgage are. 99.99% of people don't read all the paperwork.

    If brokers and lenders aren't honest, it creates a huge potential for abuse. During the loosening of lending standards, this abuse of trust was clearly rampant.

    Of course personal responsibility is important, but this is an area where all of the transactional expertise lies with the professionals that you trust to treat you fairly. I place the bulk of the blame of the housing crisis on greedy lenders, hustling people through the loan process to make a quick buck.

  4. When we bought our house, it was very simple to google up a free mortgage calculator and decide how much we could afford to pay and were willing to commit to a monthly mortgage.

    We did all of that before we ever contacted a real estate agent or a mortgage banker.

    What we were pre-approved for was a ridiculous amount, about 2 1/2 times what we'd decided we were comfortable spending.

    I know this will be an unpopular thing for me to say, but at the end of the day, it was our responsibility to decide our personal budget and how much we could afford to pay for a home.

    Just as it's our responsibility to decide if we should buy a new car or a used car or continue using the ones we have.

    Just as it's our responsibility to decide what food to buy at the grocery store.

    Of course the grocery store sells $15 a pound steak and isn't particular about how shoppers pay for it. All they are interested in is selling the steak.

    We wouldn't say, oh that greedy grocer, he should only sell steak to the people who can really afford to eat steak.

    That's because, at the end of the day, we do truly know that if we overspend on groceries, we're not going to eat everyday that week.

    Same principle in a much simpler form.

    Except, of course, those folks who will buy the steak and then ask their neighbors or their church for food for the rest of the week.

    We can't sustain that with houses. We can barely sustain that with food right now.

  5. Using your analogy (which is not apt) , I don't remember scores of complicated papers and forms, tons of legal mumbo jumbo, balloon payments, adjustments to interest rates, balloon payments, projections of the steak's value in 5 years, etc. when buying a steak. I also don't recall the butcher keeping my steak, trading it as a commodity to bond dealers with no regard whether or not I could actually afford it or even pay for it. I also don't think a butcher could get away with selling a toxic piece of meat to consumer after consumer, even if it was ultimately the consumers' choice to buy it.

    Look, there is personal responsibility here, but it isn't solely, or even largely on the consumer. I just refi'ed my house, and the difference of what I had to go through this time compared to when I bought the house 2-3 years ago was dramatic, and frankly, much more realism and thought by the lender went into this.

  6. Dave,

    We didn't get to buy a house until I was 40. There were a number of reasons for that. I didn't marry until my late 20's. We were a military family. Then my hubby worked for the federal government and it would have been the time for us to buy.

    Except he was a GS-12 and that number and the DC housing market don't walk hand-in-hand in any realistic fashion.

    People do it, of course. But that doesn't mean it makes fiscal sense.

    The whole you-have-to-have-a-balloon mortgage to get into the housing market you want to be in doesn't really cut it, IMHO.

    The inflated housing market is what kept the poor out of home ownership and they won't stand a chance again until the market resets itself in a more realistic manner closer to what wages can be.

    Bill Clinton decided to make it easier to escalate home prices for created wealth. It worked for a time and creating wealth for some always means others are left behind, usually by increased percentages.

    The hard truth is the best thing that can happen to the next generation of home owners is to let the bubble go and have the market reset prices.

    But...the boomers don't want that to happen because they were counting on on inflated home prices to finance their retirements. A dream they cling onto ever tighter now that the market has tanked.

    I get that too. We finally made it to the place where we've contributed 10% of our gross earnings for the past decade to our 401K and to say that it's a sad thing to open our statements would be an understatement, just as it is for everyone now.

    I'm more concerned with Obama's decision to give "tax rebates" for payroll taxes...i.e. social security withholding, as a way to gain support from the American people. Social security is a mess already with not nearly enough reserves for those eligible to retire in the next few years. Now to bankrupt it even more in the name of giving folks $8 a week makes no real economic sense.

    I know that Obama's financial policies are welcomed by some but they are, at best, treading water. If that's even accomplished.

  7. Jolene-

    Wow! You make the mortgage process sound so easy. You just pull up an online calculator, plug in some numbers, and you're good to go.

    Did the online calculator factor in the possibility that property values might make you upside down shortly after closing? Did it factor in that some lenders would not properly explain mortgage adjustments that hit years down the line? Did it take into account that you might lose your job?

    We are in the midst of the worst economic crisis in several generations. People are hurting. Families are going under every day. This was not an event that could have been easily foreseen. Even by smart people. Even by 40 year old smart people.

    I find your response to this crisis cold and troubling. You seem to want to just point fingers at families who's lives are effectively ruined, at least financially, and say "I told you so".

  8. Another thing that frustrates me about this housing debate is the "what about me" aspect of the argument. It seems that the gist of it is, if I make wise, financial decisions, why should other less financially savvy folks get assistance. If I live within my means and haven't lost my job, why should others who haven't be "rewarded". Financial columnist Michelle Singletary wrote about this in today's Washington Post.

    She basically says, and I agree, consider yourself lucky and get over it.

    Just because I have healthcare doesn't mean I shouldn't care that all American's have access to it. Just because I did not live in New Orleans during Katrina does not mean I should not care about the Government rebuilding that great City. Just because I do not make minimum wage does not mean I should not care that the Government set and enforce that wage.

    Similarly, just because I am financially savvy, live within my means, and can afford my mortgage, does not mean that I should not want the Governement to help folks out there that made poor decisions or are hurting in these tough times, who were often in these situations thanks to a largely unregulated, greedy financial industry.

    I should care. I do care. And as a Nation, I believe we all should.

  9. Nate,

    I know it's popular to believe in the whole "dumbing down" of America and Americans but the numbers reflect that 98% of Americans are fine with their mortgages.

    All the headlines of huge percentages of increased mortgage defaults are misleading. While it is true those in default "soared" we're talking about an increase of roughly 1%.

    1 percent.

    Should some mortgage products be taken off the market - heck yeah.

    Should the changes Bill Clinton made to the Community Reinvestment Act be changed - heck yeah.

    Should the 85% of mortgages that were in default 6 months before last November's bailout and then were once again in default last November be acknowledges are poorly given - heck yeah.

    Are the inflated values in the 4 or 5 states which comprise the bulk of the mortgage defaults sustainable and in line with what people have the ability to earn, I don't think so.

    If you think it's "cold" to tell people to step away from a situation that is way over their head and will continue to be way over their head so the market resets and people have a fighting chance again, then I guess you'll think it's cold.

    Condemning people to struggle when the market is going to have to reset itself just prolongs the agony.

    It's much the same as telling someone to nurse a marriage with someone who's going to leave them anyway. Sometimes the kindest thing is to accept that there is pain and then move on.

  10. Dave,

    I have always considered myself extremely lucky.

    That said, I get tired of the perpetuation of the usual, if you don't believe in every rescue plan, you don't care about helping others.

    The truth is some things help others and some things don't.

    A while back, on this board, I commented that I am firmly committed to helping the elderly as well as the mentally and physically handicapped.

    Past that it's not a "given" that able-bodied people of working age need to be supported by the system.

    There's a very basic reason for that on my part.

    Numbers have to balance.

    We can all cry until the cows come home about this, that or the other thing but at the end of the day, if you overburden a social network, misery expands.

    I also take the position I do on self-sufficiency because I believe it's a message that needs to be heard.

    Ironically, I'm debating the position of ...there is nothing to fear but fear itself.

  11. Jolene-

    I promise that I will never ask for your help until I become elderly.

    Also, if you are going to prop yourself up with a bunch of numbers, give citations. You know, it's been proven by experts that 97% of everything that you write on CodyTalks is garbage 83% of the time, except during the 98% of the time that you are blaming Bill Clinton for everything, during which you 100% full of crap.

  12. You have a nice evening Nate. : )

    The numbers are out there for you if you care to google.

  13. OK, given that the housing bailout has a direct impact on my chosen profession I feel compelled to comment and give my 2 cents.

    First off, while I can see both sides of the issue being addressed here, I think you are all kind of missing the real point of why the so called "bailout" is so important. Yes, it will allow people who may have been fiscally irresponsible to stay in homes they otherwise could not afford and yes, it will also help people who may have been deceived by greedy lenders, but the real point behind the "bailout" is to reduce the number of houses going into foreclosure, thereby reducing the amount of debt on the books of these large investment firms that bought up the mortgages backed securities, regardless the situation of who purchased the mortgage.

    But for the sake of arguement, lets say we let more of these homes go into foreclosure, what happens? In an already clogged housing market with whole neighborhoods of homes sitting vacant, the market becomes even more stagnant which means all home values begin to drop as a result. And the large investment firms get even more debt on their books, which freezes up credit even further, which then reduces the ability of the fiscally responsible homebuyers to purchase a home they can afford. Which means the market remains clogged with vacant homes noone can purhcase and so on and so on. Its a viscious spiral, that if left unchecked will sink the economy ever further into recession.
    Whether its going to help someone who was irresponsible or help someone who was prayed upon by a greedy lender, really is beside the point. The only way to end the cycle is keep people in these homes so the market can hit bottom. Yes the "banks" and we may lose some money in the process, but the alternative is far worse.

    And its not like every person who asks for it is going to get help. I don't think the full details of the plan have been released yet, but I think I heard one of the possiblities being discussed is that an individual or family has to have an annual income equal to or greater than roughly 30% of the mortgage value of their home to qualify for a refinancing option that would readjust the mortgage to roughly 90% of its current appraised value.

    So if it offends some to think an irresponsible buyer might be rewarded, it really doesn't matter.

  14. Monty,

    I was not happy about the bailout last year but understood the need to get the credit markets moving.

    It seemed to me to be a situation where there were no good options. We'd cooked our own gooses over the long haul and it was time to pay the piper.

    But...the second half of the first bailout (Bush's bailout) wasn't released until this year.

    It's time to see if what the feds have done will work.

    One of my friends is a real estate agent in another state. At the end of last year, nothing was moving that wasn't pre-approved before the bailout.

    Now she's getting some really solid listings again in the commercial sector. Banks are lending - either again or still - but the criteria has likely changed.

    But this second stimulus package, soon to be followed by a third stimulus package we all hear..massive numbers which don't have to do with the housing market.

    Meanwhile investors have no clue which groups of people the feds are going to favor with their spending and they aren't putting their money into the market. In many cases this huge government stimulus package is discouraging private investors.

    There are a lot of things in life that I'm not a fan of. At the end of the day, what works is what works.

    I'm a very practical woman.

    Which is why, when people start talking about how we need to do this and we need to do that to help people I want to know if it will actually help...or if it the end result will be to actually make things worse.

    I don't think the public is hearing that and until they do, it's likely that the poll numbers in support of the stimulus/bailout packages will continue to tank.

    It's not me who needs to be convinced. It's the American public.

  15. Poll numbers tanking?!?! Seriously?!?!

    On Feb. 24, 2009, polls were released showing "68 percent of those polled approve of the new president; 77 percent say they are generally optimistic about the next four years; 64 percent favor giving government aid to homeowners facing foreclosure."

    and before the stimulus was passed, 43 percent believe the stimulus is a good idea, compared to 27 percent who think it’s a bad one, and 24 percent who don't have an opinion.

    And those are the first ones that popped up on google in the 2 minutes I took to look. The public wants, and is supporting, real change.

  16. Dave,

    While I have the greatest respect for Gwen Ifill as a person, she was writing a book on Obama when she moderated the Presidential debate and now has a book out which prominently features Obama's success.

    Your second link is dated January 14th.

    However, we're talking about bailout plans, not Obama's approval rating. Or at least I thought we were.

    If not, I'll be glad to clarify. It's the unpopularity of the bailout/stimulus plans that are dragging Obama's ratings to where they are. Usually a new President has more of a honeymoon period and while Obama's ratings are still good, their's a division between support for the man and support for what are now becoming viewed as "his policies".

    As of Feb. 25, Rasmussen has support for the stimulus plan dropping 4 points since Obama signed it into law with only 34% of voters believing it will help the economy.

    32% believe the stimulus will hurt the economy, 26% say it will have little impact and 8% are undecided.

    In addition, in related polls, the percentage of people identifying themselves as either Democrat or Republican changed nearly a full percentage point toward with Democrats losing a tenth of a point and Republicans gaining much more. Democrats still have a large margin - I think it's somewhere around 6% but the trend in the past few months has for more and more people to identify themselves as Democrats. It's the main reason most pollsters predicted an Obama win last November.

    AS far as daily president tracking, today's results for Rasmussen show Obama with a 39% strongly approve and a 29% strongly disapprove, giving him a plus 10 rating. His strongly approve rating has been pretty stable. His strongly disapprove rating has been slowly rising through February from the low twenties to the high twenties.

    The stimulus package is drawing him down. Slowly but it is drawing him down.

  17. Go ahead and attack Gwen Ifill and her book about race in politics in modern times, that has ONE chapter about Obama. The poll wasn't taken by Gwen Ifill, but by USA Today-Gallup, the Washington Post and ABC News, and the New York Times and CBS News. And it did directly ask about the HOUSING PLAN and "64 percent favor giving government aid to homeowners facing foreclosure."

    I guess wide majority support = tanking polls.

  18. Seriously Dave, if you live in a world where someone saying they have the greatest respect for Gwen Ifill as a person is an "attack" then I'd say you live in a world where you look for attacks.

    It is a fact that Gwen has a new book out titled "The Breakthrough: Politics and Race in the Age of Obama". As I said before Obama is featured in the book.

    But if you want to talk about the article you linked, that's fine.

    Know what I noticed about it? So much so I used the find function to count. The word Republicans was used 14 times and the word Democrat was used twice.

    Largely this article was to talk about how Republicans were being uncooperative and unsupportive of Obama's stimulus plan.

    As for the numbers of those supporting bailing out those who can't pay their mortgages, there's no clear cut line to tell if people are talking about the first stimulus package (Bush's) with it's second half disbursed this year or some part of Obama's stimulus plan.

    Also, I went back to polling report and looked at some of the direct questions and found they also were not specific to which bailout/stimulus or President.

    There's a definite carryover effect on the issue of housing.

    You'll notice I commented on the first bailout a couple of posts ago on this thread.

    I hope you have a nice evening Dave.

  19. Jolene-

    I was trying to keep my comments curtailed directly to Cody's original comments regarding the "housing bailout", which I think he was refering to the latest portions of the stimulus package directed towards homeowners facing foreclosure. The TARP (or as you referenced it "Bush's bailout") program was aimed at banks and lenders. I think its pretty safe to say at this point, the TARP program did not have the desired effect many had hoped it would, which was to free up credit to small businesses and private individuals.

    Aside from that, looking strictly at the portion of the stimulus package aimed at homeowners facing foreclosure I think it will be more effective than the TARP program. We've already seen how irresponsible the banks and investment firms were. Why did anyone think it would be any different if we gave them $700+ billion(or whatever the tally is now) without any strings attached.

    Under the stimulus package, homeowners will have to meet certain criteria in order to have access to the funds aimed at keeping them from foreclosure. Which I think you'll have to agree is a far more responsible way of directing funds at stimulating the economy or at the very least, there are some strings attached with these funds. Its not like these individuals can say, take that money and redecorate their office and spend $5 grand on a trashcan or just take that money for themselves (ie: a bonus, although I always thought a bonus was something received for doing a job exceptionally well. who knew you could screw up so badly and still get a bonus? all this time I've been going about it all wrong).

    And as I stated before, I don't really think the so called housing bailout is really aimed at the private individual. While its a nice thing to say you're helping out the average American in risk of losing their home, I think the real reasoning behind it is to keep these homes from going into foreclosure and ending up as debt on the books of the banks and investment firms who own the mortgage backed securities, thereby decreasing their capital to be made available as credit to small businesses and private individuals.

    Basically, what I'm saying is we have to apply a tourniquet somewhere in regards to housing foreclosures and its my opinion that the best place to apply it is as close to the bleeding as possible.

    I work for a small residential Architecture firm in Overland Park, Kansas. The housing boom was truely a godsend to us and thankfully the higher ups had the presence of mind to put some money away for a rainy day and I think its safe to say its raining. While your real estate friend may be finding the credit market is more open on the commercial side, I can say with all certainty, that is definitely not the case for residential properties. We have many respected builders who are actually willing to take some risk and do some building in the current economic climate, but can't get financing for their projects. About 1/3 of our work is spec homes, which has completely dried up. The other 2/3 are private clients looking for a custom home or remodel, which has also significantly decreased.

    Until something is done that actually stops the bleeding, we won't see any kind of bottom in the current downward spiral. And I honestly think, keeping these homes out of foreclosure is one step in that process. Its not the whole bag of tricks, but just part of a larger whole.

    On a side note, if you're thinking about building or remodling, please feel free to browse our website (which, don't tell Cody, but I designed and built) and give us a call.

  20. Monty,

    I've been very unhappy that banks took the money given to them and then used it to buy other banks at fire sale prices, increasing their corporate holdings.

    Corporate America being what it is, it didn't surprise me, but it didn't make me a happy camper.

    On the flip side of that though is that by them doing so, it likely saved even more banks from collapse.

    We all know our financial reserve systems are set up to handle a certain amount of bank failures but there's an overload point there too.

    It's another one of those things, danged if we do, danged if we don't. So while it may not have loosened up the credit markets as much as everyone hoped, it may have averted a greater disaster.

    I hear where your speaking from Monty. The entire engine that drives the housing industry has been largely stopped in it's tracks.

    I read an analysis about a month ago and whoever the expert was believed that there would be about a half percent decrease in the availability of existing homes before the building industries stood a chance of reviving.

    We all know that dynamic can be changed by political restructuring and it's likely that aspect that your industry is watching closely.

    Your right though. You do still also have to contend with the price stabilization of the existing market. It does builders no good to build new houses on the faith of a break even and/or fixed profit point when they may find after building that they have more in construction costs than they can sell the properties for.

    One of my friends is a long time union carpenter in Washington state. The work has been there for years, steady and strong. He hasn't worked since last fall.

    Quite honestly, I think we're talking about different aspects of the same situation.

    My understanding is that your talking about stabilizing the market so that the housing industry can recover.

    I'm largely talking about the futility of trying to hold to a price point in housing bubble areas where the median price for a everyday family home is in excess of $600K.

    If that price point was ever possible, it has been steadily degraded by the increased aspects of living in a global economy.

    We've been redistributing American wealth at a minimum since the early 1990's, NAFTA being the point that most people refer to as the outsourcing of American based production.

    On a personal level, I place the time frame much earlier than that. Bill signing NAFTA was only the conclusion of what had already happened. IMHO, by the mid 1970's, we were already on that path.

    Since you work extensively with builders and in the building process, you likely know a much more realistic price point where new construction can flourish and thrive and Americans can sustain the system based on average current salaries.

    I'm not taking issue with folks in homes in the couple hundred thousand range. Those are sustainable numbers for a lot of people.

    I just don't see a median price point of $600K plus for an average home being sustainable.

    We don't curently live in Hutch. My mom, sister, brother, their respective spouses and ex-spouses, my nieces and nephews and my grand nieces and nephews all do.

    We moved from DC to a Houston suburb about a decade ago. The suburb is Sugar Land. I mention it because it's been a bubble place to live. There are more millionaires per capita living in Houston than in any other city in the U.S.

    In the last few years the city council has been very specific about the expansion of our 'burb, which has a very healthy annexation policy and is a rapidly growing area. Very few apartments have been approved and almost all of them are clustered in one area by the mall. They are largely upscale developments.

    Home builders have their own criteria to deal with also. Single family homes must have a minimum square footage ...and I'm thinking it's 3,000 but it may be 2,500.

    The theory being that a community with few starter homes will be more stable and have fewer renters in residential homes.

    There's also the whole stabilize the tax base aspect of things. When we lived in the Virgina 'burbs of DC there was a real problem with large amounts of apartments and townhomes, putting a real strain on all services because of the number of people using them relative to the land space occupied. A block of single family homes may have 12 families needing taxpayer services from the taxes paid on that plot of land. The same block with apartments...I'll us an example from Navy/Marine housing in Woodbridge, VA...a block of land had 7 apartment buildings, each building had 14 apartments - 98 families.

    We live in a section of town that was built in the 1970's before current builder specs were put into place. We live in a 3-2-1 ranch style home with roughly 1100 sf. Your basic budget home of the early 1970's. It works well for our family of three.

    I included all this information as a base for a question I'm interested in the answer for. : )

    In your opinion, at what point is the federal government responsible for the choices of local and city planning ordinances?

    And, hand-in-hand with that, would over riding city and local planning have a rebound detrimental impact on the national level?

    Also going hand-in-hand, can the building industries survive and/or compete if the drive is to downsize again from the McMansion era to the budget sized homes of the early 1970's?

    What point in between those two do you feel is sustainable?

    I'm more than happy to see progress being made and there is much need for progress Monty.

    What I'm not willing to do is to blindly go forth without common sense and practicality being part of the whole thing.

  21. Jolene-

    I'll do my best to answer the questions you posed.

    With respect to city zoning and planning ordinances or even building codes for that matter, the primary goal of these regulations is to protect the health, safety and welfare of the public. So you could say the Federal Government is already responsible in some regard for that. But in real world legal terms, the Federal Government has no responsiblity for city or local municipalities zoning/planning ordinances. When you say "choices of a city's planning ordinances", it seems like you're leaning towards the topic of cities allowing subdivisions with large, expensive homes to be built and at one point is it the Federal Governments responsibility to step in and say, 'this isn't a sustainable model for a city let alone a whole nation,'and to what degree the Federal Government is responsible for helping clean up the mess created by cities. But to truely answer that means getting into the larger topic of supply vs. demand, which leads to the question of free market vs. governmental regulation, which leads to the really broader topic of what is the American Dream and is it a realistic ideal? So without getting to far off track, I can only say that the Federal Government has no responsibility with regards to the actual city zoning and planning ordinances themselves, but I'd also state that doesn't free the Federal Government from stepping in when it see's that the health, safety and welfare of a person or persons is at risk. I'll leave it to you to determine whether financing mortgages to a large number of people facing foreclosure qualifies under those terms. I personally think it does in this case because its not just the people in those homes that are affected by their foreclosure, its me, its you, its everyone.

    As for your second question, I don't think you really need to worry about it because there's never going to be a "drive" to downsize. The desire to have the largest, nicest home you can afford will always be there. Its the American way! That being said, I'm not under the misguided notion that McMansions for everyone is sustainable, but it sure does help to pay the bills for me when people want one designed. Put it this way, in the last 10 years at this firm, I've worked on a house that was a $10 million - 18,000 sq. ft. mansion and I've worked on a detached garage that was 16 feet X 24 feet and probably cost $30 K at the most, as well as everything in between those two examples. I'm fairly certain once things turn around, it will continue to be that way. I should also add that while some people actually do come in to our office looking for a smaller home (Empty Nesters), they usually end up spending the same amount for the smaller home that their larger one is worth, its just nicer and more curtailed to their own style of living.

    The real question, though, that should be asked is at how does the Federal Government regulate mortgages and investments without stifling the free market system? I have opinions on those, but thats another topic for another day.

    Hope that gives you what you were looking for.

  22. Monty,

    I'm short on time this evening so let me mull over what you've said.

    We're between a rock and a hard place with California and we all know it.

    Then there's also the problem of where new wealth creation will come from if not driven by the housing market as it has been these past few years.

    I know many people have hopes for that wealth coming from alternative energy and I'm a big fan of T. Boone myself. We've been on wind power since the pilot program in Texas years ago.

    I very much appreciate you taking the time to answer my questions and.

    I hear what your saying about the wealthy downsizing into expensive homes. My inlaws downsized a few years ago to a new construction retirement village in Topeka and even though there were a number of floor plans available, they customized it a long way past that with the builder and I'm sure an architect.

    We (hubby and I) live between worlds. I come from the working poor, he comes from a wealthy family. We live in neither place but have more than a passing aquaintance with both.

    Have a good evening. I'll mull on the rest. : )


  24. See how you are Monty, bringing information to the discussion and convincing me with facts.

    The article answers a lot of the things I was talking about. 5% is a cap that does eliminate the majority of people in crisis.

    I think it'd be wise for more states to pass many of the real estate finance laws that Texas adopted years ago too. Not that I favor that being nationally legislated but by the same token, if state's make lousy laws, they have some responsibility for living with them.

    When we lived in DC a lot of people couldn't sell because they owed more on their mortgage than the market value of their house. For some new buyers they walked in the door with that, rolling closing costs into their loans.

    Texas, especially Houston had a bad housing market crash a few decades ago when the oil industry went through a major down period. People walked away from a lot of property they couldn't afford anymore.

    Mortgage laws were changed here. You can't roll all that stuff into your mortgage. The total your allowed for home equity loans and the balance on your mortgage can't be more than 80% of the value of your home.

    So walking in the door, you can't owe more than the house is worth and after you pay a few years, you can't sink more money into it without a built in safety net of 20% devaluation in the housing market.

    Of course, over time the value of your home usually increases and negates some of that. Here it would have negated most of it. Our home value has increased over 40% in the past decade. If the market dove 40% here right now, we'd still come out with what we paid for it.

    I think that's my main complaint with home owners in bubble cities/states expecting to be bailed out when the price of their homes have increased so dramatically over the past decade or so. So many of them owe so much on their homes because they have used the inflated value of their homes as giant ATM machines to pay for other things in their life. It was found money.

    Now that they still owe that money, in many cases it wasn't ever to buy the home anyway. It was to support a lifestyle they chose.

    Some folks in those markets are caught in the crunch but so many more of them got there because they were riding high.

    Which is fine. Life is for living. But at the end of the day, a taxpayer in Kansas shouldn't have to pay the price for someone in California who "found" a half million in increased value of a home to live on along the way.

    When the market went bust in Houston years ago because the oil industry had a downturn, it was something the market in Houston had to absorb. Not something that the the people who had nothing to do with living on inflated salaries and shooting for the moon were responsible for.

    If the criteria becomes saving every area with an industry that tanks, then there's no fiscal reason for local and state lawmakers to write and enforce common sense laws such as those written years ago in Texas regarding mortgage limits.

    It's a bad thing to take that onus off the local and state level, IMHO.

  25. I have no opinion on the bailout. I have chosen to be dumb when it comes to that. With that said, congrats on the little. I know that you guys will be great bigs because you put your heart in everything you do.


I love the discussion in the comments.. so... GO FOR IT!

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