Molalla: LONGEST COMMUTE = FASTEST FALLING PROPERTY VALUES

WELCOME TO MOLALLA? LAND OF OPPORTUNITY? NOT!


“New York Times News Alert: Stocks Fall Sharply on Oil Jitters; Dow Drops 228 Points to Close Below 12,000 (1pm, 3/10/2011)”

“… the pain could get worse as rising energy costs begin to threaten a sector that’s already taken a historic beating in recent years: the housing market.

The prospect of a much more expensive commute is beginning to make suburbia look less appealing. As demand for such homes weakens, economists worry that growth in the real estate market — and the broader economic recovery — could be stopped in its tracks.

It really blunts the hope of rebound in a lot of those outlying areas,” said Joe Cortright, president and principal economist of the consulting group Impresa, in Portland, Ore. “Those housing units come with the added penalty of a higher commuting price.” – William Alden ‘Oil Prices Raise Cost of Home Ownership” (posted below)

“The pace of home value declines further accelerated in January with monthly home value depreciation reaching 1.2 percent and annual depreciation hitting 7.3 percent. This rate of monthly depreciation is the highest seen in the national index since December 2008. The median home value nationally in January was $172,182, down 28.2 percent from its peak in June 2006.” – Dr. Stan Humphries ‘Home Value Depreciation Accelerates’ (posted below)

As we count the days until we can finally KILL fake planner Potter’s ridiculous land speculator urban reserves via County hearings, the articles about accelerated drop in value for real estate “investments” in isolated commutervilles like Molalla are piling up.

Numbers don’t lie. The most recent year to year values for zipcode 97038 on Zillow.com say that, as of 3/2/2011 the average house value has FALLEN TO $170,400. That represents an 18.9% year to year drop in value for the Molalla area. Statewide, the average is $185,000 with a 13.4 year to year drop. That’s a pretty big gap and shows that cheap development, fostered by ignoring the need for SDCs to pay for quality of life improvements, bites back when gas prices rise. The first hit in value is suburbia. Real Estate will have to be cheaper and cheaper to compensate for the cost of the commute.

I’m in the process of compiling the disgusting and depressing history of “planning” grants to Molalla. Molalla is literally a welfare city with high-end dreams. It is totally appalling to trace the trail of money you and I have forked out as taxpayers to fund a trail of “what if’s” that NEVER ARE IMPLEMENTED. There was a HEP grant for improvements to Toliver/211 – NEVER IMPLEMENTED because welfare Molalla couldn’t come up with matching funds. There are TGM grants for piles of needed transportation improvements that are NEVER IMPLEMENTED because welfare Molalla is nearly broke.

And a big part of the reason welfare Molalla is nearly broke is the well over $400,000 planning deficit brought about by all this endless planning for projects that can’t afford to be implemented and/or aren’t legally defensible.

My favorite welfare Molalla current fiasco is the stalled Hart Street MILLION DOLLAR SDC waiver mixed use apt/commercial space non-starter project. It is gross to see the piles and piles of documents that have been generated so MOLALLA CAN TRY TO LOSE A MILLION DOLLARS AND CREATE VIRTUALLY NO JOBS – just more COMMUNTERS!

The most tragic part is that to implement that development (if the developer ever finds a bank dumb enough to loan money on the fiasco) the city and developer would have to fork over millions to improve the 211/Molalla intersection – money welfare Molalla doesn’t have because it didn’t charge and account for SDCs!

How’s that for the ultimate circle jerk: Molalla has no money, wants to give away another MILLION, needs MILLIONS AND MILLIONS to improve an intersection to give away a MILLION and gets a “quick” TGM grant that generates piles of paper advice at taxpayers expense so welfare Molalla can learn it can’t afford to do the MILLIONS AND MILLIONS of needed road fixes because it didn’t charge SDCs and wasted its future planning 50 year from now indefensible nonsense!

Wow! Nice work there, fake mgr. Atkins. You really know how to steer a city to the BOTTOM OF THE BARREL!

Many in the community are sick and tired of the wasted of public money – and we are not taking it anymore. The people at public agencies who have been forking over these grants that have lead to NOTHING are coughing up the FACTS – the paper trail that PROVES that welfare is all beggar Molalla has in store for its future. I’ll be at the oversight commissions at every opportunity to tell how  a decade of land speculator driven, “aspirational” planning crap – financed by the public – has led to nothing but a bunch of nasty closed storefronts and the ugliest “city” in Oregon.

The letters of protest are piling up in files at various agencies saying: “Don’t waste another cent of our public funds on welfare Molalla’s dead end dreams that NEVER COME TRUE.”

Don’t fall in them there Highway 211/Main Street ditches as you “plan” the Forest Rd! Soon we’ll be a catchin’ them catfish right in them ditches if they get any deeper (maybe the sign is pointin’ the wrong way?). Don’t let the kids out of the car, there might be sharks in there, tryin’ to get to the ocean:

Put blinders on any potential “investors” so they don’t see the crumbling, shuttered mess called “downtown”:

Don’t let “investors see all the empty commercial spaces:

And don’t let them notice the lack of parks and the lack of PROFESSIONAL PLANNING. I would put a bag over their heads as you drive them to brownfield Floragon! Or to the ugly, trashy industrial “park”!:

Don’t let the fantasy “investors” know that the concrete factory is in serious violation of its conditional use permit:

Hey, Atkins and Team: Don’t let the last closed pawnshop door hit you in the ass or the URBAN DECAY bite you as you “dream” of turning polluted Floragon into INTEL. Cover your eyes, don’t look or read further if FAILURE scares you and you can’t take the TRUTH. Or does anyone know of a film crew looking for a set for the next Road Warrior or End of Planet Earth movie? We’ve got the place for you here, in Molalla, land of (no) opportunity:

Oil Prices Raise Cost Of Homeownership, Threatening Housing Recovery

First Posted: 03/ 8/11 02:09 PM Updated: 03/ 8/11 02:36 PM

NEW YORK — As unrest in the Middle East shows little sign of cooling, the price of a barrel of oil continues to climb, raising transportation and heating costs in turn. Already, Americans have cut back on spending, and small businesses have scrapped plans to hire new workers.

And the pain could get worse as rising energy costs begin to threaten a sector that’s already taken a historic beating in recent years: the housing market.

The prospect of a much more expensive commute is beginning to make suburbia look less appealing. As demand for such homes weakens, economists worry that growth in the real estate market — and the broader economic recovery — could be stopped in its tracks.

“It really blunts the hope of rebound in a lot of those outlying areas,” said Joe Cortright, president and principal economist of the consulting group Impresa, in Portland, Ore. “Those housing units come with the added penalty of a higher commuting price.”

Rising energy prices hike several key components of the total cost of living for many Americans. Not only does driving become more costly, heating and cooling also become less affordable. In the winter, high heating bills can encourage consumers to go without, causing pipes to freeze. As summer nears, the prospect of air-conditioning a spacious suburban home increasingly seems untenable. Homeownership, predicated to a significant degree on affordable energy prices, is becoming more expensive.

“Once you start to see gas prices get into the $4 range, that’s going to have a downward effect on sales,” said Bernard Baumohl, chief global economist at the Economic Outlook Group, who until recently was known for his relatively optimistic predictions. “Home sales deteriorate probably exponentially after that.”

The oil price spike could hardly come at a worse time for the ailing housing market, which, along with high unemployment, continues to weigh heavily on the U.S. economy. While financial and manufacturing sectors have recently shown strong signs of recovery, housing seems to get worse.

Since peaking in 2006, home prices have fallen 31 percent, according to the Case-Shiller 20-city index. Last year, nearly 2.9 million homes received foreclosure notices, an increase of 2 percent from 2009, according to data collected by RealtyTrac, an online foreclosure market. More than a quarter of all U.S. home sales last year were of foreclosed properties.

This situation isn’t helped by a lack of demand. For homeowners, the price fall can be a vicious cycle: Falling home values erode homeowners’ wealth, making them more vulnerable to default and foreclosure, which in turn tends to drive nearby home values even lower. As potential buyers see prices fall, they become less interested in making a long-term investment in a home. Until prices hit bottom and a home turns from a sinkhole into a bargain, buyers are expected to show the kind of tentativeness that aggravates a slump.

Oil could make things even worse. Gas prices have lately been climbing toward $4, making consumers less and less able to spend money on other things as their dollars head from the U.S. economy to oil companies overseas.

“The big increase in oil prices serves as an effective tax on consumers, which means they’ll have less capital to spend on housing expenditures,” said Michelle Meyer, an economist at Bank of America Merrill Lynch. “People are going to be looking for an even lower price.”

To some extent, of course, the decision to purchase a home is insulated from rising gas prices. Because a house is a long-term investment, homebuyers consider what their income will be over the next several decades, not just over the next few months, and may dismiss the gas hike as a temporary inconvenience.

“People would have to perceive that energy prices would be stuck at this high of a level for the foreseeable future,” Meyer said. “At this point I don’t think people are convinced of that, nor should they.”

But as long as unrest in the Middle East has dragged on, the price of oil has continued an uneven but persistent rise, with investors afraid the world’s supply could be significantly disrupted. Professional investors and average commuters who are closely watching energy prices have seen unexpected events unfold daily. The key takeaway, experts say, is that events that seem improbable can nevertheless happen.

As protests began in Tunisia and spread to Egypt, then to Bahrain, Libya and elsewhere, the market has evidently priced in the possibility that the oil-producing heart of the region, Saudi Arabia, could see its output compromised.

“Unfortunately it’s sort of a known unknown,” said Michael Darda, chief economist of MKM Partners, an institutional equity research, sales and trading firm. “We know this is going on. No one knows really where it stops.”

While investors’ fears have been driving oil prices higher, consumers’ fears could effectively keep home prices pinned down.

Every few days, headlines announce that the price of oil has reached a new record, achieving highs not seen since 2008, when months of astronomical energy prices were dragging the economy into recession. The price of a barrel of Brent crude, an industry benchmark, cleared $118 on Monday, after starting the year at around $95. Each $10 rise in the price of a barrel of oil translates into a 25-cent increase in gas prices, which tears more than $25 billion from the economy yearly, economists say.

“Chronically-high energy prices obviously are not a friendly development for housing,” Baumohl of the Economic Outlook Group said. “If households are squeezed, you can expect the demand for homes will likely weaken. With that, of course, we could expect to see perhaps even more foreclosures.”

Already, Americans have cut back. Although surveys in recent months have shown an improvement in so-called consumer confidence, high prices at the pump seem to be hurting that newfound enthusiasm. One in three U.S. consumers has already significantly reduced discretionary spending, according to a new survey from RBC Capital Markets. Small business owners say that higher transportation costs will force them to charge customers extra fees and put hiring plans on hold.

With transportation more expensive, prospective homebuyers become less willing to buy in a community miles from a city. When demand for far-flung houses weakens, prices stay depressed and the broader housing recovery can be threatened.

“It’s really more of a reminder that there’s a lot of volatility in [energy] prices,” Cortright, the consulting firm president, said. “People think, ‘Do I really want to expose myself to the risk? I may have to pay even higher prices in the future.'”

In the suburban community of Homestead, Fla., where the mortgage delinquency rate is statistically the worst in the nation, homeowners are now suffering from the added strain of expensive gas, the Wall Street Journal reported last week.

Some potential homebuyers might choose to refrain from house-hunting altogether, as even the long hours of driving involved in searching for a new place to live could seem like an undue cost. Already, consumers have begun to cut back on driving.

But some experts were skeptical that expensive gas would have much impact on what’s already a persistently weak market. Diane Thompson, a lawyer at the National Consumer Law Center, who has spent nearly two decades representing homeowners, said the problems in the housing market run deep.

“The scale of the housing crisis swamps all of things you might expect to contribute to it,” Thompson said. “We had this explosion of predatory non-affordable loans for a decade leading up to this, and those loans are still working their way through the system.”


 

Dr. Stan Humphries

Dr. Stan Humphries

Posted: March 8, 2011 07:14 PM

Home Value Depreciation Accelerates

The pace of home value declines further accelerated in January with monthly home value depreciation reaching 1.2 percent and annual depreciation hitting 7.3 percent. This rate of monthly depreciation is the highest seen in the national index since December 2008 (see Figure 2). The median home value nationally in January was $172,182, down 28.2 percent from its peak in June 2006 (see Figure 1).

Of the 131 metropolitan regions with a Zillow Home Value Index in January, 124 metros experienced year-over-year declines in home values (95 percent), four metros saw annual increases (3 percent), and three metros were flat from year-ago levels (2 percent). The markets experiencing the largest annual declines in home values included Ocala, Pueblo, Mobile, Flagstaff, Atlanta, Spokane, and Detroit.

The rate of foreclosure liquidations remained steady in January at 0.091 percent, indicating that 9.1 homes out of every 10,000 were liquidated in the month (see Figure 3). The foreclosure liquidation metric peaked in October at 0.12 percent, and the recent declines are attributable to delays and lengthened processing times resulting from the fall 2010 “robo-signing” controversies. It’s unclear right now whether this new lower level represents a more permanent peak processing capacity of a slower overall foreclosure process or a transitory low point because of the temporary moratoriums, in which case we should expect the liquidation rate to continue its upward march that was interrupted by the moratoriums.

We continue to believe that these high depreciation rates are death throes of the 55-month-long housing recession visited upon us at this time because of the full expiration of the federal home buyer tax credits. Further, we believe we’ll start to see some stabilization and then reduction in the depreciation rates in the spring numbers ahead of an eventual bottom nationally later this year. Downside risks to this forecast are numerous, but probably the single most important downside risk is that the continued elevated foreclosure rates are not fully offset by higher demand introduced by declining unemployment and a higher post-recession household formation rate. If not, then supply will continue to substantially outpace demand in the housing market, thus keeping depreciation forces in play and delaying the eventual bottom. At this point, however, our best synthesis of the various data points continues to suggest a real estate bottom later this year.

2011-03-08-Figure1_FINAL.jpg

2011-03-08-Figure2FINAL.jpg

2011-03-08-Figure3FINAL.jpg Follow Dr. Stan Humphries on Twitter: www.twitter.com/StanHumphries

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