Island dynamics/bad economy

ditto...lots of places still have houses in that price range. National average is around the low 200k. If the average is 220k you got to bet there's a lot of starters for around 100 to150k.

GoodtoGo - the same rule changes that allowed "poor people" to purchase homes allowed others to buy homes beyond their means in hopes of cashing in on a rising market. I have always been a believer in you don't buy what you can't afford. I kept watching people who made much less than my family buy larger homes & expensive cars and wondered how they could do it....now I know. This country needs to get back to it's roots and work for what you have, not expect things to drop in your lap or to get more than what you've worked for.

im surprised about the cost, i guess i need to stop watching hgtv. on there it seems as if you can get a 2bedroom/1bath for about 300,000-500,000. they never show anything cheap

Well a lot of the shows there are based out of the west coast, LA, San Fran, Seattle, Oregon, etc....places where its still very expensive to live. That new one Property Virgins is out of Toronto and thats the same price range, high, high, high...

Well a lot of the shows there are based out of the west coast, LA, San Fran, Seattle, Oregon, etc....places where its still very expensive to live. That new one Property Virgins is out of Toronto and thats the same price range, high, high, high...

The beautiful thing about Oregon is that the cost of living compared to the quality of life is relatively low. The only problem is putting up with 8 months of rainy colder weather to get 4 months of beautiful sunshine. I have to say, the summers in Oregon are gorgeous, but you have to pay a price to get them (the winter weather). I went to college in Eugene, OR, right now a 3 bdrm 1500 square ft house with a hot tub, nice yard, and dual garage will run about $220k.

Middle America has/had lots of homes in this price range. Louisville, KY as an example. Nice little starter homes in good neighborhoods.

betty
now that i think about it you are right most houses are out west.

I don't think all of Oregon is that cheap, my sister in law lives in Medford and paid $650k for a fixer. She says it full of Medical type people and dot comers.

ECONOMIC MESS TODAY and HOW WE GOT HERE
>>
>> The following is a condensation of a series from the Investor's Business
>> Daily.
>>
>> 1977 Pres. Jimmy Carter signs the Community Reinvestment Act (CRA) into
>> law. The law Pressured financial institutions to extend home loans to
>> people who would--otherwise--not qualify. The premise: home ownership
>> would improve poor and crime-ridden communities and neighborhoods, in
>> terms
>> of investment, jobs, etc.
>>
>> 1993 The rules governing both Fannie Mae and Freddie Mac were rewritten,
>> turning the quasi-private mortgage-funding firms into semi-nationalized
>> monopolies that began dispensing cash and loans to people who were 'on
>> the
>> edge', in terms of credit worthiness.
>>
>> 1994 The National Home Ownership Strategy was unveiled, broadening the
>> CRA
>> massively.
>>
>> 1995 Treasury Dept. re-wrote the CRA rules, which forced the banks to
>> have
>> to meet new quotas for sub-prime and minority loans in order to earn
>> satisfactory CRA ratings. (In order for a bank to expand or merge, they
>> had
>> to have a satisfactory CRA rating.)
>>
>> 1997-1999 Housing & Urban Development Dept. (HUD) got into the sub-prime
>> market in a much-bigger way. Capital limits were eased and Fannie &
>> Freddie
>> were allowed to hold just 2.5% of capital to back their investments (vs.
>> 10%
>> for banks), allowing them to borrow at lower rates than the banks.
>>
>> 1999 Treasury officials became alarmed about the excesses that were now
>> visible to all at both Fannie and Freddie. Congress held hearings
>> but--due
>> to the lobbying and campaign contributions given to members of the
>> Congress--no meaningful changes occurred. Fannie CEO Franklin Raines:
>> "We
>> manage our political risk with the same intensity that we mange our
>> credit
>> and interest rate risks--1999".
>>
>> 2000 Treasury officials went to Congress, seeking an end to the 'special
>> status' of both Fannie Mae and Freddie Mac. Following the hearing,
>> Freddie
>> spokesperson Sharon McHale said: "We think the statements made by
>> Treasury
>> officials today evidence a contempt for the nation's housing and mortgage
>> markets." No change occurred.
>>
>> 2001 Efforts to bring fiscal sanity and reform to Fannie and Freddie
>> were
>> again blocked by members of the Congress who--it turns out--were
>> receiving
>> large campaign contributions from both agencies.
>>
>> 2003 Reform was again proposed. This time, however, the NY Times called
>> it
>> 'the most significant regulatory overhaul in the housing finance
>> industry's
>> history". Even after discovering that earnings at both Fannie and
>> Freddie
>> were overstated by nearly $11 billion to boost bonuses, no reform took
>> place.
>>
>> 2005 Fed Chairman Alan Greenspan warned in testimony to the Congress:
>> "We
>> are putting the total financial system at substantial risk". A reform
>> bill
>> was introduced with this statement: "If Congress does not act, American
>> taxpayers will continue to be exposed to the enormous risk that Fannie
>> Mae
>> and Freddie Mac pose to the housing market, the overall financial system,
>> and the economy as a whole. Those who sponsored this bill were accused of
>> trying to cripple the ability of Fannie and Freddie to carry out their
>> mission of expanding home ownership in America. The reform bill died.
>>
>> 2007 By this point, Fannie and Freddie owned or guaranteed over ONE HALF
>> of
>> the $12 trillion mortgage market in the USA. They began working with Wall
>> Street to repackage the bad loans and sell them to investors. When the
>> housing market began to fall, the subprime portfolios began suffering
>> major
>> losses.
>>
>> 2008 More than one dozen attempts were made to reform Fannie Mae and
>> Freddie Mac during this one year, to no avail.
>>
>> 2009 Taxpayers have now been asked for $700 billion to bail Fannie and
>> Freddie out, and with no reforms included.

For more on what Terry was saying, please check out www.globalovethinktank.blogspot.com. It is a blog comprised of over 40 writers from around the globe focused exposing and demanding the truth and contributing toward a more peaceful humanity.

Jimmy Carter has been exposed and the truth known for a long time. 😉

This reads like the conservative Republican line to the letter: The blame belongs to all those darn liberal democrats, starting with ole Jimmy Carter. But, you left out the part about there being absolutely no financial business regulation for the last 8 years. Plenty of blame to go around. Just wonder how long it will take to clean up the mess.

Some people think a year or 2. I think it could be 10 or more. It's global. Our islands have barely felt the pinch yet and there are existing economic problems here which have been ongoing.

This reads like the conservative Republican line to the letter: The blame belongs to all those darn liberal democrats, starting with ole Jimmy Carter. But, you left out the part about there being absolutely no financial business regulation for the last 8 years. Plenty of blame to go around. Just wonder how long it will take to clean up the mess.

Yes, you got that right. It makes me sick to hear the drivel from the right wing ideologues trying to place the blame someone else. Must be a guilty conscience or something.

The housing mess was caused by greed and stupidity. It seems that both left and right are capable of that. I shake my head in dis- belief when we hear the tortuous denials like that from terry.

I am living in California right now, so I know about expensive housing. I also know about seeing your home value decrease by over 30%. One more thing that is making my return to St Croix more difficult. I am lucky because I made mostly good decisions and bought at the right time. However it is still a major set back.

That is one of the reasons, that in other posts, I have predicted that USVI homes will also need to make price adjustments too.

You cannot base VI real estate based on whats happening stateside. Here it is much harder to get a loan, you must be able to put down at least 10% if not 20% to get a home loan. There are no ARMs or any of the flaky stuff that goes on stateside. PLUS most locals build their homes slowly as they can afford to, so they owe NOTHING on their home.

So even with the market going slow stateside, people here can afford to hold on to them, and if you can't get the price you want you HAVE to leave for some reason, you just rent it out to pay the mortgage, if you have one. So why would anyone sell for below market? I know I won't. If it takes five years to recover thats ok.

I agree with Betty on this one. The financing shenanigans from the states were not practiced in the VI, so most local homeowners have enough invested in their property that defaulting on their loan responsibilities is less fiscally desirable than continuing to pay. Add to that the fact that most of the transplants from the states who have purchased homes here are more financially stable than many statesiders who buy homes, based on the cost of the average home here versus the states and the down payment and credit worthiness requirements here versus the states, and I think there is sufficient reason to think local real estate prices will weather the economic downturn pretty well.

Also with California, its mostly southern california that got hit hard. We lived there for about 8 years, I know how crazy that market was and glad to be out of it. But it will go up again, not as quickly and maybe nor as much. It did seem a little inflated. But it's a crowded metroplex and people have to live somewhere. Long as people don't sell and can afford to wait it out, I think most will be ok. The problem I felt living there was everyone was working two or three jobs just to bay the minimum on all their bills. If felt like everyone was living beyond their means, its was so fake. When a starter home was 500k, I could never figure out how these people were doing. So many of them were just average joes with basic jobs.

You cannot base VI real estate based on whats happening stateside. Here it is much harder to get a loan, you must be able to put down at least 10% if not 20% to get a home loan. There are no ARMs or any of the flaky stuff that goes on stateside. PLUS most locals build their homes slowly as they can afford to, so they owe NOTHING on their home.

So even with the market going slow stateside, people here can afford to hold on to them, and if you can't get the price you want you HAVE to leave for some reason, you just rent it out to pay the mortgage, if you have one. So why would anyone sell for below market? I know I won't. If it takes five years to recover thats ok.

Yes, I agree that VI real estate moves to a different drummer. On St Croix it has always been slower to move up and fortunately also slower to move down. The property owned by long time locals almost never goes on the market. What I am talking about are the many condos and villas that have been purchased by stateside buyers. Those units are already under pressure. That pressure along with the perception of problems like Stanford will eventually effect local prices. It is already beginning to show up as increased listings and longer sales time on the MLS. There is currently a listing at Cardin Beach that is about 35% less than just one year ago. The number of listings at most condo properties is much higher than this time last year.

The last property I sold on St Croix took three years to sell, that kind of expectation will help protect some prices, but we are not immune from this meltdown's effect. In high impact areas (like California and Florida) houses are selling like crazy right now. However they are selling for prices much lower than a year or two ago. I have the unique perspective of moving back and forth between places. so I see up close what is happening.(unfortunately)

So, as long as you don't need to sell your property, you haven't lost any value. At best prices will stagnate over the next few years, just as they did in1989 after hurricane Hugo.

Cardin is not the best argument. Units in there can be completely different, based on size on upgrades and decoration. These are expensive condos, some people just buy them for investment, some live in them and decorate. A Kitchen thats been redone with top of the line materials is going to get a lot more then the builders special.

There is one that sold for $825k last year (unit 414), but it was incredibly furnished and upgrades and I do mean incredibly. It looked much more like a million dollar home, the furnishings alone, the new tile, the dream kitchen, all furnishings included, etc...

Then there's one on the market right now for $699k, its a builders special, its smaller. Old nineties cabinets, with white plastic pulls, plain white ceramic tile, some furnishings included etc...

My point is compare apples with apples. Yes the people that have to sell right now will have to take a little less. Is it ever going to be as bad as California? NO. Anyone that sells now is not all there in my book, or they have to and I am sorry for that.

It's correct that the mortgage business on St. Croix was a tighter ship than stateside. But, what may affect the direction of house prices here more is the lack of stateside buyers brought on by the world-wide recession. Sellers who have to sell are the ones who set the prices, not those who can "hold-on."

Normally I would agree with you, thats a very good point. But it just doesnt happen here. The ones that have to sell will lower there price yes, so in a sense you are right. But the other half on the market are not going to budge. At least half or more on our MLS do not have to sell, so they just leave it on the MLS. They may change realtors once a year but its the same houses at the same prices or higher when they switch. So I haven't seen the market move too much except on a few statesider homes who I guess need to get out.

But in some ways STX has a lot to look forward to if it can get its tourism butt in gear. We got cruise ships back (hopefully we can keep them). We have several major developers that want to build resorts here. Sure it'll take 5 years or longer, but just the jobs for construction, admistrative, etc.. that that will bring in will be a huge boon.

It is far from all doom and gloom here. Its sorta like we're standing on the line right now, we can get it together and do really well or it can all go south. We need the tourism and really we're a great island for it. We're so much bigger then stt and have so more wide open beaches with great snorkeling and incredible diving. But stx doesn't really seem to be ready, so we'll see.

Most people who buy houses here are financially stable and don't have to sell. Yes, even the financially stable have lost money in this economy, but losing a million from a thirty million portfolio isn't going to prevent people from buying a fifth home; my neighbor has three full-time staff and hasn't set foot on island in three years. Condos may be more vulnerable to the economy because they are not as appealing to investors who can afford to hire full-time staff to care for their properties while they're absent, but many of those fare pretty well on the short term and long term rental markets.

"Losing a million from a thirty million portfolio," Who's that lucky soul? From what I can tell the rich have been hit harder than the less fortunate this time around. Second homes are always the first to go during recessions. The ultra-expensive real estate market in places like Long Island's Hamptons have been particularly devastated. Time will tell for the St. Croix, but I understand sales in high-end St. John have come to a stand-still.

If only - that would be a 3% loss. The market has lost something like 30% in the past 12-18 months so in this scenario you're talking about losing $9M out of $30M - a significant bite particularly if you try to live off an annuity stream (live off interest and not touch principal.)

...but losing a million from a thirty million portfolio isn't going to prevent people from buying a fifth home...

Many financially stable people have investments other than the stock market. These investments may not be growing much due to the economy, but they aren't losing 30%.