Vail Valley Voices: Not any reason to celebrate
Vail, CO Colorado
A Vail Daily staff report on Sept. 2 read, “there were 92 completed (real estate) transactions in July, with a value of more than $88 million. Those numbers are far above 2009’s sales, when 75 transactions closed. (This is down from over 200 in the bubble years.) While there was action at the upper reaches of the market, there were no sales in the price range between $3.5 million and $5 million. Beyond the high-end properties, almost 75 percent of all transactions sold for less than $1 million in July. Almost 70 percent of the transactions for the year have fallen in the lower price ranges.” It goes without saying that many of the “low-end deals” were driven by now-expired federal tax incentives.
While real estate and construction were the economy here for a decade or two, they aren’t now, nor will they ever be the heavyweight employers or wealth makers they were during the bubble era.
This past July was up 22 percent from last year’s dismal level, but with foreclosures today 368 percent greater than the best month’s sales this year, is there really any reason to celebrate?
According to http://www.realtytrac.com, there were 339 homes and properties in foreclosure in Eagle County as of Sept. 5.
The recent improved sales amount to only 27 percent of the present foreclosure figure here and, if these foreclosed properties all sold at July’s rate, it would take about four months just to get rid of the distressed inventory, assuming nobody else defaults in the coming months. Add the homes for sale for reasons other than defaults and there is about year’s backlog of housing on the market in Eagle County, Colorado, just like everywhere else.
Some of the local foreclosed properties fall into that “vanishing middle class” of local housing over-valuation, the $3.5 million to $5 million dollar range, which isn’t selling at all due to the evaporation of loan schemes that briefly made this type of property a short term “investment” for the lower-end working portion of the upper 10 percent.
The few up-end units that sold? A handful new luxury condos at one site in Vail, purchased by members of the upper crust who have prospered in this depression. These few sales, while still in the many millions of dollars each, probably closed at prices that were lower than projected to the project’s lenders when they financed the deal originally. Other members of the crust are carpet-bagging the low-end housing (here, that’s under $1 million) that, even with tax breaks, they believe can be converted into still-overpriced rental units; homes for the people recently foreclosed upon can live in, if they still have work and hang around here after their credit ratings have been shattered.
According to http://www.bankrate.com, some well-known local banks loaded with nonperforming “assets” are as close as it gets to dissolution; one local bank holds the lowest score possible and another is barely above that, and that’s counting the “mark the loan and collateral to full face value or whatever the bank needs it to be, not what it might actually return, if anything” accounting rules in effect now.
A larger bank holding company has consolidated all of its former separately chartered banks statewide into one chartered bank with branches, a move the now-bust FDIC must love, since semi-wealthy people who’ve maintained higher-than-insured total cash balances will no longer be able to easily spread these funds across several formerly-independently-chartered co-owned banks. This may increase the liabilities of weaker banks as people who don’t check out a bank’s performance shift their assets, also known as bank liabilities, from a “strong” bank (OK, with today’s accounting rules, who really knows?) where large deposits above FDIC limits may no longer be 100 percent guaranteed from loss, to smaller, weaker banks in order to maintain their perceived FDIC deposit insurance.
How is it that virtually anyone you talk to will tell you that there’s been no recovery, other than on now openly-manipulated stock exchanges, but everything you read or hear in the media pretends otherwise?
We all know shine-ola when we step in it, yet big-lying about the economy has been the only growth industry over the past couple of years besides medical marijuana. We’ve all just wasted another year listening to the Pimps of the Way the Things Used To Be spinning their various lines concerning the Housing Humpty Dumpty. (Few question why old Humpty got up on a wall, or how, or if that was the best use of a nest egg, but that’s another topic.)
As the flatscreen heads talk about the recovery, foreclosure legal notices became our newspaper’s larger revenue streams. Local tax revenues have fallen to the point Eagle County resident are losing more essential county employees and services while the same county antes up tens of millions for brand new marble-encrusted Eagle District judge’s chambers; new luxury offices for people who go to work in robes, ultra-plush private digs that are larger and cost more than many of the foreclosures which make up most local adjudication these days. (And no, they don’t offer tours; these posh new judicial offices are kind of like that “open space” you pay for (conservation easements for failed ranches, bailed out with public funds to preserve their post-operational ranch beauty) but can’t visit either. You can be assured there’s good reason to call it “Chambers Road” now, though.)
There are times when facts and dealing with facts take on great importance; when the consequences of pretending and denial are too high to ignore. Unfortunately, the only option we the people are given is to shove the political revolving door around one more time in November. The expected outcome will accomplish less than nothing. Years of gridlock as the public debt mountain passes the stratosphere is not a solution to anything, but that will be probably what the country votes for, and gets.
While hope may spring eternal, you can’t eat it. The local harvest of crackerjack house selling is over; there’s just dead stubble in that field now. It is time to plan next year’s crop, which has to be different, since the “field” was depleted entirely by a lack of crop diversity over the past few seasons. Pretending there’s value in the stuff that was left for rot when the machinery needed to run the farm ran out of financing two years ago is not helpful, nor is expecting the same field to support another year of the same old crop, if only we could get some creative financing again.
Bill Sepmeier lives off the power grid on Sweetwater Creek.