When the housing ATM shuts down, the credit cards are maxed out, and the jobs go away, the results won't be pretty.
That said, certain towns and cities in America needed an enema. Places where debt was perceived to equal wealth. Places where keeping up with or showing up the neighbors was more important than helping the neighbors. Places that frankly needed to be taught a lesson when it came to money and morals.
So, have at it. Where will the debt bomb be felt the most? And on the flipside, are there any places that didn't get caught up in the madness, and now will be just fine?
October 16, 2008
So, now that the debt-fueled lifestyle of Americans is over for the time being, what cities are going to take it on the chin the worst?
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1. Phoenix
2. Scottsdale
3. Surprise
4. Mesa
5. Buckeye
6. Maricopa
7. Avondale
8. Glendale
...see a pattern here?
St. Louis probably isn't as bad as those listed in the first post, but I'm betting it will get socked pretty hard. I see a lot of houses in my neighborhood with two or three very expensive cars in their driveways.
New York is going to be hit the hardest, for now. They are looking at the destruction of their number one industry, which accounts for over 50% of all income on the isle of Manhattan. Every job on Wall St. was supporting 5 lower wage jobs.
They're going to see an explosion in crime.
Well, I haven't traveled all that much to the heavily hit areas, but my current home, Miami, is in serious trouble.
Many months ago I would get accosted by so-called 9/11 truthers while having my evening coffee at Starbucks. Now it is real estate agents. They're so desperate that they are "cold-calling" people in person while they have a cup of joe.
My neighborhood in Miami Beach is covered in empty condo buildings. Virtually every one of my peers is in some way connected to the FIRE economy (finance, insurance and real estate). It is not good.
Obama's home town Chicago is $500M in the hole.
Obama's home state, Illinois is $1B+ in the hole.
http://www.financial-planning.com/asset/article/
716331/partial-chicago-shut-down-save-20m.html?pg=
Partial Chicago Shut-down to Save $20M
The Bond Buyer
By Yvette Shields
October 15, 2008
¦Advertisement
Chicago will partially shut-down government with the exception of essential public safety services for six days over the next two years in a move that will trim nearly $20 million off of what's grown to a $469 million deficit in the 2009 budget, Mayor Richard Daley said yesterday.
Dallas thinks the economy is going well here - yet everyday's Dallas Morning News brings word of more and more layoffs.
There are way too many 30K millionaires living in this city - I think the uptown section - condo hell - is going to get hard. Very hard.
Dallas has been living on severe debt far too long. As this sucker gets deleveraged, every day brings more and more new pain to people at work. It is now getting almost painful to go to work. People's wives committing suicide, cars getting repo'd while people are in the workplace. I do not see an end in sight.
detroit-lansing;
vegas;
sacramento;
orlando;
D.C.
.
Dopes as usual will take one for the team!
Right on the chin!
.
I think New Orleans will do better then most. Our housing and real estate is more fairly priced then some of the other cities. Plus, we have huge amounts of recovery dollars about to be injected into our economy. As far as the state goes, the high price of oil for most of the year has given the state a large surplus which should keep our budget much more stable than many of the other states.
I live in upstate NY: Albany-Schenectady. We never had runaway house prices. My house has gone up a bit some years and stayed level other years. People here did not have to take on foolish loans to purchase a reasonably priced house. In 2007 house values went up a few percentage points and in 2008 they stayed the same. Every house for sale on my street has sold quickly this year.
If I had puchased a house in 1993 in the suburbs of NY for what I paid up here, that house would have gone up 4 or 5 times in value and would now have enough equity to easily put 4 kids through 4 years of Harvard, even with the recent drop in house prices. Why should I feel sorry for these people? They've had their equity fueled good-times. I have not had the luxury of exponential appreciation with my house upstate.
Despite this lack of exponential appreciation, or perhaps because of it; my house and all 3 cars are paid off and we have put our kids through college without resorting to a second mortgage...oops.. Home Equity Loan. My house is my home more than an investment. Frankly I don't care if it drops in value...at least I have a nice place to live, AND it's paid for.
We have a stable economy upstate with the state government, high tech and GE. None the less, I am sure we will be affected by the melt-down of the financial sector in NYC. House prices will need to drop a lot in the NY Metro area before they are even close to our prices in the Capital Region. Many people from downstate seem to have moved up here in the last couple of years. I would agree that we will probably see more crime and fewer social services, Obama notwithstanding. Dropping house prices don't scare me.
Unfortunately for me, I am now the sucker who now will be paying the taxes to prop up the inflated house prices for the Coastal Elites, now that the over-extended deadbeats can no longer live large by taking out HELOCs to pay for boats, renovations, fancy food and college.
Los Angeles - epicenter for the housing crisis. Median home price still 7x income AFTER last year's unprecedented 35% drop in home prices.
The economy highly dependent on the entertainment industry (which, after trying to recover from a three-month writer's strike, is now facing down the possibility of an actor's strike) and the entertainment industry is highly dependent on massive amounts of credit supplied by various channels.
To top it off - fires, mudslides...anyone predicting an earthquake?
Reno NV. If there ever was a place that has nothing to offer in the way of industry and commerce (there is a Russell Stover warehouse, and a Scheels). The only industry is building housing developments and to a lesser extent casinos. I will give you and example of one person I know. He is married has 1 child owns a $55,000 truck, and a $45,000 SUV both bought with zero down. He has condo he can't "flip" and it is going below his purchase price in value and not one single person has looked at it. His house was bought at the peak of the bubble for almost $500,000 and is now worth about $335,000 and he hates his job. I try not to engage him in much conversation, but he seems to dump his problems on everyone. He is one example of many I have encountered in the Reno/Sparks area. Can't wait to see the utter implosion of that crappy city and all its bubble inhabitants.
New York. The average price for a one bedroom apartment is $750,000. The world of Wall Street financiers is turning upside down, and these are the people that provide 25% of state taxes with only 3% of the population.
I predict New York will see the greatest overall decline in prices in the country. That $750k apartment will be worth $350k in two or three years.
everywhere is going to be hit....not a city will be spared.
why?
(i) most everyone bought into the 401(k) scam. every single investment vehicle available in the average 401(k) plan will take a major hit - hell, even the safety of money market funds has come into question lately. why is it that CD's were not made part of the 401(k) plan structure - nothing FDIC insured was available in any 401(k) plan that I'm aware of.
(ii) at some point, Federal, State, and local governments will be forced to eliminate overly generous retirement benefits or cease functioning. it's that simple.
WHERE ARE THE F'ING GUILLOTINES!!!!
Who cares. The fact that the 'flipping' credit cards got pried out of their hands is to be celebrated.
Nobody has said "Southern California" yet?
You think Buckeye,AZ has more of a debt problem than every city in the O.C?
Wow.
AZ is just the froth emanating from the wannabe trumps refi-ing their houses in CA to buy spec-houses in AZ.
previous poster: "(i) most everyone bought into the 401(k) scam. every single investment vehicle available in the average 401(k) plan will take a major hit - hell, even the safety of money market funds has come into question lately. why is it that CD's were not made part of the 401(k) plan structure - nothing FDIC insured was available in any 401(k) plan that I'm aware of. "
Check out recent news of the inclusion of money market funds to be FDIC insured. It's out there now and working its way through the system. Not surprising because the very wealthy use money market fund accounts extensively so when push comes to shove, they will work toward making sure those funds are insured against loss - just remember that all the movement in government as of late has come about because the very wealthy are starting to feel the pain that the average "lower slobovian" has been feeling for a number of years. Prosperity may trickle down but deflation tends to trickle up. Now that all these 'master of universe' types are getting pinched, they are phoning their buddies to see how they can work the system to protect their gains - my advice is to ride their coat tails.
Smug Bastard
Hey Keith, I thought you suggested we were coming out of the panic stage. What I'm reading here and in the news sounds like we are at the beginning of it. The sheeple are just now waking up that the government can't schmooze our way out of this one. They are now realizing that the bailouts aren't going prevent the pain for the common man. Also, what do you think about the reports released by the U.S. govm't on the 16th?
Seattle is crash-proof.
We have Microsoft,
we have Boeing,and
we have Starbucks.
uh...never mind!
Prepare for a wave of divorce and civil disruption never seen before. This is not rocket science guys.
As the great McBurbia model breaks apart people will be living in those $50k SUVs.
The trophy wife capitols such as Scottsdale will be extra interesting and facinating since you can't repo a boob job.
I'm curious about this too... I live in Northern California in a downtown neighborhood of old homes. Many people here are silently struggling, but overall my neighbors seem to practice a sort of inconspicuous consumption. (Of course, anyone who bought or remodelled between 2005-2007 may have sampled Tangelo style kool-aid.) But you don't see multiple SUVs or fast boats or fake boobies parked around my neighborhood. These rickety little old homes just didn't provide the proper backdrop for that lifestyle.
This week I'm leaving on a road trip and I wonder what I'll encounter on the way. I'll be passing through Santa Barbara where I grew up, then on to a beach house in Hermosa Beach owned by a relative, and ultimately on to a destination wedding in the Palm Springs area - a place I've never visited in my entire life.
Santa Barbara has been a bad travesty of itself for 20+ years. I've just sort of written it off. I wonder if any suffering there is visible yet? And Hermosa Beach astounded me when I paid my first visit there this summer. Really amped up consumption, amped up displays of wealth, amped up population density. Tiny little italian joints charging $40 for a plate of gnocchi completely packed on any weeknight. Tons of tans. Tons of chihuahuas. Tons of plastic surgery. Hollywood accounts for a fair stream of the money floating around, but a healthy dose of it is probably as fake and financed as some of those tans. I wonder if any of its brashness will have been drubbed down by the past 28 days?
And then on to points unknown in Palm Springs... Does Palm Springs run on old money or new? And is that a distinction that really matters in this panic? I'll be watching people there as well. Curious. The wedding promises to be a potlatch of competitive consumption held in Greta Garbo's old bungalow. I'll need to keep my mouth shut and my head down. Smile a little smile to myself at any and all allusions to Ninotchka, then have another drink... Finally I'll head out to the desert and hike through a little bit of what really matters. Nothing like communing with some 300-year-old cacti and 75-year-old tortoises to remind one of what endures and what too shall pass...
I'll let you know what I find. L.
New York
Boston
DC
Seattle
and the rest of the cities already mentioned here.
Crime will go up everywhere; no city will spared. It's already happening here in NYC where I live.
Having said that, I think this quarter will be OK for the city since people are still coming due to having made trip plans months ago. And people will still come for the holiday season, which is huge here.
Starting next year we will see things drop off after the year end wall street layoffs, more bank failures, the market dropping to below 8k, housing imploding, and people realizing they are not in Kansas anymore.
Got cash. Got Gold. Got opportunistic buys and sells in the market. And got popcorn.
"WHERE ARE THE F'ING GUILLOTINES!!!!"
that was funny; i hope that you're not labeled a domestic terrorist!
Scottsdale is my number one pick for a phoney town, followed by West Side LA. . .NYC is headed for a fall too. . .here is sleepy town San Diego, we are returning to a nice little Navy and beach town. . .actually I really like it without the phonies. . . even the Mexicans are going home because there isn't much work.
The Greater Phoenix metro area, with the wannabes of Scottsdale being Ground Zero.
"...every single investment vehicle available in the average 401(k) plan will take a major hit..."
Bond funds?
"...most everyone bought into the 401(k) scam..."
I've been begging for a long time to get out of stocks; my significant other says our financial advisor and co-workers all say that would be foolish.
40% of our retirement lost so far; we will ride this loser all the way down.
"I live in upstate NY: Albany-Schenectady"
I think you can buy a pretty decent place in cash, for about $70-100K, in Utica. Upstate NY has been in a RE bear market channel for almost three decades. It's really the best place to retire, after having work in urban locales, like a Boston, where you can save the cash instead of wasting it on exorbitant condo fees (plus mortgage) in the various northeast cities, and then simply buy the whole unit for retirement. Then you just need to cover the property taxes and maintenance and you're all set.
I have come across a few houses for sale that have seemed to lose one of their zeros.........
"(i) most everyone bought into the 401(k) scam"
It's a scam, not because it's 401K, that's just a tax deferral strategy, but the fact that it's controlled by a few MF vendors like Fidelity which give you a choice of essentially, their own suite of mutual funds like some S&P 500 or some Mid-Cap pool. If it were real, they'd provide a full service discount brokerage account where you could buy, whatever you want on the open market. Then, one could have bought bear market funds or short centric ETFs, like QID, and have really preserved their capital during the past few months when it became clear that the banking/mortgage industries were in trouble. And those, who're enterprising, could play the options field and made a real bundle with S&P puts. But no, that would eliminate the Ponzi-Pooling schemes which MF companies need to maintain their portfolio cushions.
Not Miami. Shopping mall was full of shoppers as usual, wannabes driving the latest luxury car and SUV, women wearing design clothes and handbags everywhere, nightclubs are packed.
Someone's gotta tell me the secret.
Nope. Friends are still telling me its a great time to buy and that 500K is not that much for a condo or townhome.
It's 1/2 of a million dollars, folks.
Doc the ZEALOT said...
St. Louis probably isn't as bad as those listed in the first post, but I'm betting it will get socked pretty hard. I see a lot of houses in my neighborhood with two or three very expensive cars in their driveways.
October 16, 2008 5:31 AM
Uhhh ahhh I dont supose your talking about "East: St Louis? Nawwwwwwww! LOL
During the 90's made 7 figures in my 401k pulling arbitrage deals between options before they shut down my sweet deal. then I retired in 2003 and rode the market up and now down to what I had in 2003. I have liquidated all my investments and now am waiting for the shoe to fall by the consumer. Any city where there is a premium mall with a Tiffany's and Bloomingdales will be hosed. The population in those places has a high percentage of "aspiring rich" that will be crucified and will crucify the local economy. The Darden restaurants and those like Cheesecake Factory will close and Hummers will be sacrificed.
Anon - Reno/Sparks will be hit very very hard.. I lived there for a few years and left in early 2007, when my best friend bought a new home off Geiger Grade. His home is down 100k along with the Reno median. It'll be back down to $125k median from the $350k peak and $250k current. I had money down on the Riverwalk condo downtown and thank god I took that money and ran outta Reno. I'll be back when the crash is over though - nothing like Tahoe in the world.
This whole housing "thing" is a masturbatorial nightmare of epic proportions.
KAGUNGA!
Oakland CA are millions in debt. Two years ago the state took over their public schools. Services will be cut, city workers layoffs are coming.
Southern Ca almost went bankrupt in 1995-1996, it will probably happen this time.
Even if they slash jobs and cut services, it wont do any good because city workers have been getting huge pay increases for more than 10 years. They will have to do the unthinkable, and start cutting salaries to put a dent in the deficit.
Seattle Metro... big time.
Bellevue, Everett, Seattle, Tacoma.
Sorry, my friends and neighbors. I don't want to see hardship fall on you.
But years of living on credit cards to keep up appearances and to keep up with the small handful of Micro$oft millionaires will have to come home to roost.
I'm sorry, but cities with medians of less than $50K can't support home prices of $400K.
LA, Miami, NYC, Pheonix, Chicago, Boston, Seattle, SF, San Jose, SD, Irvine-Newport Beach, Scottsdale.
You think Buckeye,AZ has more of a debt problem than every city in the O.C?
Wow.
AZ is just the froth emanating from the wannabe trumps refi-ing their houses in CA to buy spec-houses in AZ.
What nobody told you is that OC is full of people with tons of wealth. I'm doing pretty damn well but even I have to turn down dinner with friends all the time because they think nothing of going out and spending $200 or $300 every night, cash. You would not be able to comprehend the amount of wealth here having lived in debt-cesspool Arizona.
Arizona on the other hand, and Scottsdale in particular, is full of rejects who can't even afford a bad neighborhood in OC let alone live on the coast.
SW Florida
Was watching the news last night and there was a commercial urging people to move to California for jobs! Does this mean the Oakies will start loading up their trucks and heading across the USA to find work in CA?
The unemployment here is 9.6% and they expect it to move higher. An article in the paper noted that the unemployed are in the 45+ age range. Scary.
Two years ago there were reports about how police and teachers could not afford to live in SW Florida because there were no houses under $200,000. There was even talk about building dormitory style housing on campus for teachers and their families. How things have changed!
Last week there were several pages in the local newspaper featuring houses in the $50,000 - $100,000 range. These are houses built in 2006 and 2007. I am really tempted to buy one.
Gas is under $3/gallon. Everyone I know is leaving for TX, TN or NC or has already left.
Vancouver BC will take it on the chin, nose and between the eyes.
No more housing ATM means people will need to start focussing on the important things in life....hey how about just hanging with your friends and family for fun?
there are no thrills like cheap thrills...
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