American banks wake up to reality.....

HAMISH_MCTAVISH

Bank of America, faced with a glut of foreclosed and abandoned houses it can't sell, has a new tool to get rid of the most decrepit ones: a bulldozer.

The bank has similar plans in Detroit and Chicago, with more cities to come; and Wells Fargo, Citigroup, JPMorgan Chase and Fannie Mae are either conducting or considering their own programs.

The prospect of those properties flooding the market has depressed prices and driven off buyers concerned that housing values will keep dropping.

"There is way too much supply," said Gus Frangos, president of the Cleveland-based Cuyahoga County Land Reutilization Corp., which works with lenders, government officials and homeowners to salvage vacant homes. "The best thing we can do to stabilize the market is to get the garbage off."

http://seattletimes.nwsource.com/html/realestate/2015759069_homeglut31.html

In a country where the massive oversupply means 13% of homes are vacant, and prices keep falling ensuring a sustainable wider economic recovery cannot take hold, bulldozing is the only solution that will work.

As I noted some time ago.....

Good to see the Americans are starting to wake up and smell the coffee.

There can be no sustainable economic recovery, without a sustainable housing market recovery.

sabretoothtigger

They need to make a profit on majority of business done. Bulldozing is not a profit and half of GDP is government which also makes no profit.

As soon as they stop making losses on things it'll be a recovery.

shortchanged_2

That is America and this is the UK. The sooner people realise that prices need to come down in the UK then we may get a functioning housing market here.

MacMickster

HAMISH_MCTAVISH wrote: »

http://seattletimes.nwsource.com/html/realestate/2015759069_homeglut31.html

There can be no sustainable economic recovery, without a sustainable housing market recovery.

The wrong way round surely. You mean that there can be no sustainable economic recovery while too much money is taken out of the economy by an overpriced asset bubble.

This is merely a desperate move by the banks to try to repair their balance sheets at the expense of an already fragile US economy.

HAMISH_MCTAVISH

shortchanged wrote: »

That is America and this is the UK.

Indeed.

We have a housing shortage with a vacancy rate of just 3%, they have a housing surplus with a vacancy rate of 13%. Ireland has a vacancy rate of 17%.

No surprise then that UK prices are 10% below peak, USA are 38% below peak, and Ireland is 48% below peak.

What is refreshing however, is that Americans seem to be starting to realise that there is only one solution to an oversupply problem....

Bulldozing.

The sooner people realise that prices need to come down in the UK then we may get a functioning housing market here.

Nonsense.

Volumes have fallen off a cliff since 2007. Falling prices have obviously not increased the ability of people to buy.

HAMISH_MCTAVISH

MacMickster wrote: »

The wrong way round surely. You mean that there can be no sustainable economic recovery while too much money is taken out of the economy by an overpriced asset bubble.
.

No.

Housing is a critical component of GDP. There can be no sustainable recovery whilst asset prices are falling.

As has clearly been the case.

shortchanged_2

HAMISH_MCTAVISH wrote: »

Indeed.

Nonsense.

Volumes have fallen off a cliff since 2007. Falling prices have obviously not increased the ability of people to buy.

Hamish you know you are talking rubbish. If house prices halved in this country for example they would be selling in large numbers and you know it.
You consistantly state that price has nothing to do with the lack of sales when it is blatantly obvious that if house prices were cheaper then they would sell.
Go look at the housing market in your own area and I'll put money on it that the houses that do sell are the ones that are realistically priced.

Graham_Devon

HAMISH_MCTAVISH wrote: »

In a country where the massive oversupply means 13% of homes are vacant, and prices keep falling ensuring a sustainable wider economic recovery cannot take hold, bulldozing is the only solution that will work.

But thats NOT the reason for bulldozing, and you are purposely missing out a very key part of what will be bulldozed, to put your own, completely misleading, angle on it.

The tear-downs are in varying states of disrepair, from uninhabitable to badly damaged. Simon said some are worth less than $10,000, and it would cost too much to make them livable.

I.e. homes beyond repair that are uninhabitable. It's not fixing the oversupply issue, or bulldozing homes due to oversupply. It is bulldozing uneconomic, beyond state of repair buildings.

HAMISH_MCTAVISH

Graham_Devon wrote: »

It's not fixing the oversupply issue, or bulldozing homes due to oversupply.

Ahem...

"There is way too much supply," said Gus Frangos, president of the Cleveland-based Cuyahoga County Land Reutilization Corp., which works with lenders, government officials and homeowners to salvage vacant homes. "The best thing we can do to stabilize the market is to get the garbage off."

It is bulldozing uneconomic, beyond state of repair buildings.

Which are only uneconomic because they're worth next to nothing.....

Which is caused by oversupply.

LisbonLaura

HAMISH_MCTAVISH wrote: »

No.

Housing is a critical component of GDP. There can be no sustainable recovery whilst asset prices are falling.

:rotfl::rotfl::rotfl:

Oh Hamish, that is one of your best ever.

Mr_Mumble

I don't see how this is different to anytime prior to the financial crisis. Consider the cities used as examples:

Chicago's population fell by more than 200,000 between 2000 and 2010, lowest since 1910.

Detroit has lost nearly 240,000 residents in the past decade, lowest since 1910.

Cleveland has seen more than half-a-million residents leave in the past 60 years, 80,000 in the past decade so the rate of decline is not slowing. Lowest number of residents since 1900.

This is in a country with a population that rose by 27 million between the 2000 & 2010 census.