Combs Spouts Off

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Posts Tagged ‘real estate’

Crippling regulatory uncertainty

Posted by Richard on May 29, 2012

A friend who owns a condo showed me the latest condo community association newsletter the other day. An article in it illustrates in a small way why the economy in general and the housing market in particular aren’t going to get healthy as long as the Obama administration is in office.

Because they often attract first-time buyers with limited funds for down payments, condos are frequently financed with FHA loans. Let’s set aside for the moment the issue of whether the FHA program should exist — or needs to. It’s been in place for many years, guaranteeing loans with low down payments. To offset the increased risk, the government requires buyers to carry mortgage insurance until their equity in the property reaches 20%, and there are stricter rules on what properties qualify for an FHA loan.

Apparently for condos, HUD requires the condominium association to apply for FHA certification of its properties. And the process has become much more onerous under the Obama administration. For one thing, in this area as in so many others, the Obama administration has made regulatory uncertainty a way of life, as the newsletter explains (emphasis in original):

In November 2009, the federal government decided to change EVERYTHING with respect to the process and approval requirements for condominium associations only. Then they changed again in February 2011. And again in June 2011. …

Through June 2011, Westwind Management (our management company) was successful in recertifying all of its qualified condominium clients within HUD standards. Now, condominium associations are required to be recertified every two years. This is a time consuming and costly burden that was not necessary before 2009.

But it’s not just constantly changing regulations and burdensome paperwork. The managing agent has to keep HUD informed continuously of any information changes, possible defects, disputes among owners, etc. There are no doubt scores, and perhaps hundreds, of pages of hard-to-understand regulations detailing what the management agent is obligated to provide. And he or she is personally responsible for failure to comply:

The language is vague and the penalties are untenable. The penalty for a fraudulent package or not reporting changes is up to $1,000,000 in fines and/or a maximum of 30 years in prison.

Would you want that job? Or invest in a condo management company in this regulatory climate?

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Gold or house?

Posted by Richard on October 6, 2010

Gold hit another new record today. Richard E. Band recently noted (in a subscriber-only journal entry) that the price of gold has been rising as if a "tsunami of inflation" were about to hit, but in the here and now, quite the opposite is the case (emphasis added):

Recently, Enid and I spent a night at the brand-new Country Inn & Suites just south of Toledo, Ohio. Beautiful room, freshly decorated, better-quality furniture. Breakfast included. Cost of our stay: $59. That's less than I would have paid 10 years ago in the same region, when we were visiting our girls in college. (And there was no free Wi-Fi then, either.)

Sure, prices continue to rise for some products and services (notably, healthcare and education). However, broad swaths of the economy are locked in a vicious deflationary undertow.

Meanwhile, gold goes its merry way. Today, it costs 138 ounces of gold to purchase a typical existing home in the United States. Ten years ago, the same house cost 498 ounces of gold.

In other words, home prices have dropped 72% in terms of gold. Is gold the better buy now, or a house? To anyone who focuses on long-term value, the answer should be obvious.

That's a compelling factoid, and one worth thinking about before placing that order for Gold Eagles, Maple Leafs, or Krugerrands.

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Trickle-down socialism

Posted by Richard on May 18, 2009

With the federal government nationalizing banks and automobile companies, rewriting mortgages, and spitting on the sanctity of contracts, it was only a matter of time before state and local governments began emulating it. Especially when they get federal money to do so.

The city of Aurora, Colorado, got a $5 million federal grant to buy homes in foreclosure. So that's what they're doing. By outbidding private individuals and investors for the properties.

(Note: I tried to embed the video, but the code from doesn't seem to work. The link above should take you to their video. As of now, there is no text version of the story.)

I've seen significant advances in liberty — both social and economic — throughout my adult life. And because of that, and my own inherently optimistic nature, I've always felt pretty good about the future. No more. Toward the end of the Bush Administration, I saw that trend grind to a halt. And in the early months of the Obama Administration, I've seen it reversed with a vengeance.

We're not just re-creating the dreadful Carter years, we're descending headlong into the socialist and statist policies that crippled the Great Britain of half a century ago. 

If and when I'm ever able to contemplate retirement, Costa Rica is looking more and more appealing. Those of you who are still young have my sympathy — and my sincere hope that you'll have the good sense and courage to reverse this trend.

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Libercontrarian on the housing crisis

Posted by Richard on February 19, 2009

After about a ten-month hiatus, Libercontrarian started posting again last week, and I encourage you to drop by there from time to time. In particular, you may want to peruse his post about the housing crisis. Off the top of my head, I'd quibble with some of his numbers and recollections, but I think he's basically right.

Except for that "60% over-valued" thing. The real estate bubble got that bad only in a few places like California. Certainly not here in Denver. … I hope.

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