Reflections on recent posts
If you look over the recent posts here, you can see that the situation facing homeowners is troubling on a number of fronts.
1. Credit is tight, property values are weak, and it is harder than at any time in the recent past to borrow money or sell--at least, for a lot of people.
2. Owners who are in financial trouble with their homes aren't paying assessments, and neither are the banks when they foreclose. That means associations are hurting financially. That in turn means the solvent owners have to pay for those who are not paying.
3. And the falling property values are reducing municipal tax revenues, which is hitting municipalities and of course school districts and other units of local government.
4. The tax resistance of the average voter has to be at an all-time high. That means voters who have to approve tax increases (due to tax cap legislation in many states) will not want to bail out local governments through tax increases.
5. But we are in an election year where the Democrats figure to win big across the board, due to Bush having thoroughly discredited the Republican party. It looks like there will be gains for the Democrats in the House and Senate and in many state legislatures, and the presidential race currently favors the Democrats (although that could change quickly). The Dems in Congress, and of course Obama, have a host of costly programs in mind that will require substantial federal tax increases. Increasing taxes in the middle of an economic slowdown is bad medicine, but the voters have nothing to say about it after Election Day. If the Dems want to do it, that's that.
6. The cost of college education is going up, up, and up. So is the cost of health care. And I could go on. But pay is not going up, up, and up.

What does this all add up to? I realize the economy will turn around at some point, but the next three or four years or so should be interesting to say the least.

I think we are going to see increased conflict over taxing and spending at the local government level. I think the solvency of CIDs is going to become an issue (I have been predicting this for a long time, but now it is on the horizon). And I expect all sorts of demands for state and federal assistance for public and private local governments. But my guess is that the home-owning middle class is going to be expected to solve its own problems for the most part. As a member of that group, I'm not entirely happy with that conclusion, so please show me where I'm wrong.

The Associated Press: U. of Okla. freshman, 19, elected mayor of Muskogee

The Associated Press: U. of Okla. freshman, 19, elected mayor of Muskogee: "MUSKOGEE, Okla. (AP) — A 19-year-old freshman at the University of Oklahoma was elected mayor Tuesday of Muskogee, a city of 38,000 in the northeastern part of the state. With all precincts reporting, John Tyler Hammons won with 70 percent of the vote over former Mayor Hershel Ray McBride, said Muskogee County Election Board Secretary Bill Bull."
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"I'm proud to be the Mayor of Muskogee,
A place where little kids can have their say.
We all ride our skateboards down at the courthouse,
And chug Red Bull while we listen to Green Day."

--with apologies to Merle Haggard

Foreclosures filing set record in April, RealtyTrac says - May. 14, 2008

Foreclosures filing set record in April, RealtyTrac says - May. 14, 2008: "NEW YORK (CNNMoney.com) -- U.S. foreclosure filings reached a record high in April, rising almost 65% over the previous year and putting municipalities at risk by cutting into the value of taxed property, according to a study released Wednesday."
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The ripples continue to spread. Foreclosures are hurting CIDs and now municipalities, along with mortgage companies.

As Dues Dry Up, The Neighbors Pay - WSJ.com

As Dues Dry Up, The Neighbors Pay - WSJ.com: "Here's another consequence of the troubled housing market: Some homeowners associations are running low on cash."
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The problem is that for quite some time before people default on their mortgages and get foreclosed on, they stop paying assessments. After foreclosure banks usually don't pay the association either.
Nice to see the Wall Street Journal taking note of this problem that I have been writing about for quite a while now. The people who hate associations may think this is great, but it will hit owners. Why? Because of owner A doesn't pay, owners B-Z have to pay instead. That applies all the way up to association bankruptcy, appointment of a receiver, to infinity, and beyond.

Vallejo Votes For Bankruptcy - Politics News Story - KNTV | San Francisco

Vallejo Votes For Bankruptcy - Politics News Story - KNTV | San Francisco: "After nearly five hours, the Vallejo City Council voted unanimously late Tuesday night to file Chapter 9 bankruptcy protection. The city faces a $16 million deficit in the 2008-2009 budget starting July 1 and unsuccessfully negotiated with its police, firefighter and electrical workers unions for contract concessions through 2012. Public safety salaries comprise 74 percent of the city's general fund budget...Vallejo joins a small number of municipalities that have declared bankruptcy should officials decide it's their only option. Orange County declared bankruptcy in the 1990s after then-Treasurer Robert L. Citron borrowed hundreds of millions of dollars while speculating in high-risk securities investments that depended on low interest rates. The county lost $1.64 billion. Desert Hot Springs also filed for bankruptcy in 2001."
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Local governments are under considerable pressure these days. Nobody wants to pay taxes, the federal government is dumping responsibilities (unfunded mandates) on them, people move around like crazy, and the housing finance meltdown is still making big ripples.

Backyard pizza oven cooks up trouble with community ban -- OrlandoSentinel.com

Backyard pizza oven cooks up trouble with community ban -- OrlandoSentinel.com: "An east Orange County man is using a law designed to encourage modern energy-saving devices to save his old-world backyard pizza oven.

The Waterford Lakes homeowners association told Gary Dobis the oven had to go because it breaks the community's ban on accessory structures. The group sued him in January."

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Thanks to Beth Young for this link. Check out the photo of this awesome oven.

Father who flew Jolly Roger for daughter's birthday prosecuted by council | the Daily Mail

AAARRRR, matey! Father who flew Jolly Roger for daughter's birthday prosecuted by council | the Daily Mail: "One particular pirate prop was a must for David Waterman as he organised a themed party for his daughter's birthday.

With cutlass-wielding youngsters running around in eye patches, he thought, a Jolly Roger flag would add the perfect finishing touch - and he duly hung the Skull and Crossbones from the side of the family home.

Unfortunately the local council didn't see the jolly side and Mr Waterman has been threatened with prosecution unless he removes the 5ft by 3ft banner."
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Flag banning: it's not just for HOAs anymore.

Confirmed! Bureaucrats have no sense of humor, funny stop signs nixed - Autoblog
Oak Lawn, IL, comes up with a creative policy that the Illinois Dept. of Transportation sadly decides to rain on.

The Housing Crisis Is Over - WSJ.com

The Housing Crisis Is Over - WSJ.com: "The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.

How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor."
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I hope this writer has it figured out, but there are isn't one housing market. There are many different geographical areas and within each there are sub-markets for different types of housing and price ranges. It may be that we have hit bottom in the aggregate, but is that true of the entire Sun Belt?

CCTV boom has failed to slash crime, say police | UK news | The Guardian

CCTV boom has failed to slash crime, say police | UK news | The GuardianMassive investment in CCTV cameras to prevent crime in the UK has failed to have a significant impact, despite billions of pounds spent on the new technology, a senior police officer piloting a new database has warned. Only 3% of street robberies in London were solved using CCTV images, despite the fact that Britain has more security cameras than any other country in Europe.

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That seems counter-intuitive, but if you look at the recommendations from Scotland Yard, the problem may be related to difficulty in identifying people on the videos.

BBC NEWS | UK | UK Politics | Johnson wins London mayoral race

BBC NEWS | UK | UK Politics | Johnson wins London mayoral race
Boris Johnson has won the race to become the next mayor of London - ending Ken Livingstone's eight-year reign at City Hall.
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It is high time that "Red Ken" was sent packing. The last place you want a raving Socialist is as the mayor of a big city. Better to stick them in the national legislature where they can't do so much harm (see Bernie Sanders, D-People's Republic of Vermont) and where they might contribute a good idea every now and then (Red Bernie hasn't done that yet, but where there is life, there is hope).

Need to deal with water needs crucial

Need to deal with water needs crucial: "Two parched years - punctuated by the driest spring in at least 150 years - could force districts across California to ration water this summer as policymakers and scientists grow increasingly concerned that the state is on the verge of a long-term drought. State water officials reported Thursday that the Sierra Nevada snowpack, the source of a huge portion of California's water supply, was only 67 percent of normal, due in part to historically low rainfall in March and April. With many reservoirs at well-below-average levels from the previous winter and a federal ruling limiting water pumped from the Sacramento-San Joaquin River Delta, the new data added a dimension to a crisis already complicated by crumbling infrastructure, surging population and environmental concerns."
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Much of the recent residential construction in California has been in these bizarre CIDs in the desert--Palmdale, Lancaster, and points east that are even more arid. These places are too far from employment for any rational human to commute from, but people have been buying them anyway and driving four hours per day. The theory apparently was that they were going to get rich on housing appreciation. Now the housing market is in the tank. Gas prices are going through the roof. And on top of that, the water supply is vanishing. At what point to people get the basic point that it isn't wise to build, much less buy, housing in such remote and desolate locations?

wcbstv.com - New Jersey Lawmakers Consider Tax On Fast Food

wcbstv.com - New Jersey Lawmakers Consider Tax On Fast Food: "WINDSOR, N.J. (CBS) ― The sputtering economy has caused an increase in prices of many staples including gasoline, rice, ice cream, even beer. Now some lawmakers in New Jersey are considering taking food taxes a step further and install a proverbial 'sin' tax on fast food."
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That would hit lower income people pretty hard, because they spend a higher percentage of their income on food generally and fast food in particular. Add that to the taxes on cigarettes and alcohol and the state lottery (of course New Jersey has one: "Give Your Dreams a Chance!"), and you have some pretty regressive taxes that liberals like, I guess.

L.A. Land : Los Angeles Times : Disappearing now: $6 trillion in housing wealth

L.A. Land : Los Angeles Times : Disappearing now: $6 trillion in housing wealth: "A Washington think tank is warning that housing prices are falling at an accelerating level,destroying wealth at a pace that will cost the average homeowner $85,000 in lost wealth this year alone."
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You know, if you lose $6 trillion here, and $6 trillion there, pretty soon it starts to add up.

Happy farewell to 'boom' times -- baltimoresun.com

Happy farewell to 'boom' times -- baltimoresun.com: "For more than two years, the thundering booms and the blinding flashes that lit up the sky over a Baltimore County parking lot at all hours of the night mystified and infuriated the bleary-eyed residents of a high-end condominium tower next door, who could not figure out what the devil was making such a racket, or why."
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The photo shows Galdalf casting out demons or something. But the problem was a condo resident shooting fireworks out his window for giggles.

Weekend America: Foreclosure Behind Las Vegas Gates

Weekend America: Foreclosure Behind Las Vegas Gates: "Just recently in Las Vegas, there was a perfect storm of booming home construction, some unscrupulous lending practices and lots of housing speculation by first-time investors. That's added up to some of the nation's highest foreclosure rates. It's easy to find those neighborhoods hit the hardest by the real estate crisis -- just look for the nicest communities surrounded by brick walls and elegant wrought-iron gates."
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Fred Pilot sent this link. The ripples keep on spreading.

San Mateo Daily News

Smoldering Dispute: San Mateo Daily News: "Susie Parano, 55, and Jane Clusin, her friend and fellow Brittan Heights condominium complex resident, took their smoking complaints to their homeowners' association last week by submitting a petition against allowing residents to smoke inside their units and on their balconies and patios. The two women said the petition forwarded to the homeowners' association board on Wednesday was signed by about half of the residents in the more than 400-unit complex. However, the board did not take any action. Parano lost a small claims case against the homeowners' association last November in which she sought $7,500 in damages that she said was caused by her downstairs neighbor Oleg Gitin's smoking. The small claims judge did not give a reason for her ruling. The San Carlos City Council has also been reluctant to intervene with a Belmont-style smoking ban."
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Thanks to Kimberley Cane for this item. Smoking is a huge issue in condos these days. These owners seem to have tried everything.

Real Estate | New state law requires condo associations to report money set aside for long-term maintenance | Seattle Times Newspaper

Real Estate | New state law requires condo associations to report money set aside for long-term maintenance | Seattle Times Newspaper: "Attention, condominium shoppers: Washington soon will become one of a half-dozen states requiring condo associations to provide a financial-wellness check that can predict whether the place is a potential money pit.

The check, called a reserve study, estimates how much money an association must set aside to pay for expensive long-term maintenance, such as repaving a parking lot, replacing a roof or rebuilding rotting decks."
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It is astounding to contemplate that over 40 states don't require reserve studies to be done. Imagine it--nearly all associations have no specific data to support their assessment levels. Too high? Too low? Nobody really knows.

cbs4.com - Condo Assessments Can Be A Scourge To A Homeowner: "FT. LAUDERDALE (CBS4) ― A raging dispute over condo association fees boiled over into an armed standoff Thursday afternoon in Pompano Beach that ended when the Broward Sheriff's Office SWAT team opened fire on a man who had taken two office workers hostage."
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So now he can forget about paying that assessment. But it underscores how much stress these situations can create.

Daily Herald | Associations need to face troubled times square on: "If you own a home in a townhouse or condominium association, or an HOA, or serve on the board, and you fail to take into consideration what could possibly befall you without careful planning, you could be facing a financial crisis that could cause property values to crash, in your community."
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Hey, this guy sounds like me. But actually it is Jordan Shifrin, one of the top community association practitioners in Illinois, or the nation for that matter.