Monday, March 20, 2006

See all the pretty houses

Vacations are fun, if only as a temporary diversion from the larger reality that is life in the Bush oligopoly. Dispensing with mainstream news and the clamoring talking heads of cable television, while basking in picture perfect days of 85 degrees and sunny, gives the illusion that all is well in the land of the formerly free.

As Mary and I took our daily walks at dawn, amongst the villas of the Rotunda subdivision (aka, Pleasantville), replete with sprinkler fed front lawns and SUV’s and Jaguars sitting in the driveways, the surreal quality of the picture made me chuckle each day. My guess of the makeup of most of the residents, were that they were retirees who had come of age in a country that allowed retirement in manicured subdivisions, bordering impeccably kept fairways. An economy that was powered by companies that hadn’t discovered offshoring jobs as a way to keep investors fat and happy, allowed these folks the luxury of a retirement based on leisure and comfort, truly, the American dream as promised. Many of the men, part of the post-WWII crowd, buoyed by the GI bill for college, entered a career track that allowed them to build a comfortable nest egg that provided their twilight years with comfort and financial happiness. Without corporate-sponsored pensions and the favorable economic model available to them, my generation and the ones that follow, probably won’t be spending their waning years in the lap of luxury, like these fortunate folks have.

Over the past four years of traveling south, I’ve witnessed first-hand the up spike in real estate prices. Each year, I’ve seen the prospect of being able to sell my home here in Maine and uproot, to a warmer climate, disappear. Our first year, back in 2003, we stayed in Homestead, which was a town bordering south Florida’s agricultural region. Many of the modest homes were priced below our current evaluation here in Maine. The next two years, we stayed in Clearwater Beach and obviously, real estate near the coast was beyond our means. However, a 25-30 minute drive inland revealed some affordable options. This year, the Port Charlotte area, with its abundance of new construction, all built within the past five years, rarely had property below $200,000, and quite often, affordability was defined as property below $400,000. When I looked through the help wanted sections of the Sarasota-based paper, most jobs were paying less than similar positions in greater-Portland. My thought was, “who the hell is buying these homes” and I wondered out loud about where the landscapers, builders and other working-class people would be able to afford to live? The local public radio station, as well as the local newspaper, The Englewood Times featured that subject on more than one occasion, as this is obviously an issue that locals are aware of.

Interestingly, I also noticed a number of partially finished homes, displaying “for sale” signs, as the builder had started construction and the prospective client had been unable to see the process to fruition. I then ran across this post by Jim Kunstler, discussing his own area in upstate New York, the beautiful Saratoga Springs region.

Referring to his own local newspaper, once more trumpeting perpetual growth in the in the local housing market, and that housing prices will continue to escalate ad infinitum, Kunstler writes, “Spring here in the North Country brings with it a ripe expectation that the winter real estate doldrums will soon yield to raptures of zippy sales. Of course this is based on the assumption that the year ahead will be like the recent years just past, only better! The sense of momentum in the real estate markets is reinforced by the fact that so much stuff has worked through the arduous permitting process and is just now coming up for sale, with even more stuff behind it moving through the cloacal pipeline, so to speak -- so therefore the buyers will automatically appear drooling into their checkbooks.I don't think so. I think that what we are getting here is stupendously delusional behavior. The ebullience in the newspaper only tells me how much unexpressed subconscious terror lurks just below the surface of wished-for "normality." For one thing, anybody who walks around this town can hardly fail to notice how the realtor's signs are accumulating in the front yards. Nothing's moving. Outside of town, in the suburban asteroid belts that only ten years ago were cornfields and cow pastures, there's a much more lavish supply of new houses. I detect an odor of bloodshed.This has been a hot market for a while, because Saratoga is an historic "main street" town in pretty good condition with a high level of cultural amenity, close to the gigantic Adirondack Park. The three old cities nearby which comprise the employment centers of the Capital District -- Albany, Schenectady, and Troy -- are in such a state of squalid decrepitude that practically anyone gainfully employed has fled shrieking lately, and Saratoga has attracted many willing to tolerate a 30-plus mile commute.”

Kunstler’s terrain, like the overbuilt subdivisions and filled-in swamps of Southwestern Florida are ripe for a correction. He goes on to mention that hot real estate markets all over the country appear to be cooling off, causing many recent buyers sleepless nights and a reach for the roll of antacids. He continues in the post, “It makes my head hurt to imagine the coming carnage on the real estate scene here. Nation-wide, the latest figures are not reassuring. Even hot markets cool off when evil economic winds blow. According to the California Association of Realtors, sales of existing, single-family detached homes were down 24.1 percent, the highest year-on-year decline since December 1990 when sales dropped 25.2 percent. The National Association of Realtors reports Massachusetts home sales are down 21 percent and listings up 41 percent. In Florida existing home sales are down 19 percent. In Alabama existing home sales down 21 percent and listings up 17 percent. Pennsylvania sales down 17 percent. Minnesota sales down 7 percent and inventory Up 35 percent.”

What does all this mean? Well, obviously, what goes up, must come down, at least if the current housing bubble bursts. This could obviously mean some very tough sledding for many in our country, particularly those utilizing adjustable rate mortgages and other tools that allowed them to acquire more house than they ordinarily could afford.

Now that I’ve awoken from my “dream” of the past ten days, I’ve been able to process some of the indicators that made me a tad uneasy at times, on my trip. Kunstler’s weekly shot across the bow helps me make some sense of my own recent misgivings.

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