Wikinvest Wire

From boom to bust in the motherlode

Friday, April 25, 2008

It was just a couple years ago that newspapers all across the land were full of stories about how wealthy we had all become, largely due to rising home prices. Nobel prize winning economists were even justifying the zero percent savings rate by marveling at how much higher asset prices had moved.

Now that home prices are in a virtual free fall, the nation's newspapers are filled with stories of lament, anger, and disillusionment and you don't hear too much about the typical homeowner's balance sheet anymore.

Well, at least not about their balance sheets improving.

A story in today's USA Today noted the soaring number of unpaid utility bills and, here in the Sierra foothills in California, yesterday's local paper had a one-two punch on the front page - soaring food and energy prices along with steps the local utility company is taking to deal with the current wave of foreclosures.

It's too bad that the blog name Boom2Bust is already taken - that would have been a good successor to the name at the top of the page you are now reading (no, a name change is not being contemplated in the near-term, but someday the name will probably change).

From The Union Democrat - the "Leading Newspaper of the Motherlode since 1854" - comes a report of sticker shock at the local grocery store and problems at the food bank:

Food prices surging with gas
Published: April 24, 2008
By JAMES DAMSCHRODER

Surging gas prices are depleting wallets not only at the pump, but also at the grocery store checkout counter.

The cost of food is climbing faster than it has in 17 years and the No. 1 culprit is the surge in fuel prices, especially record high diesel prices, according to the U.S. Department of Agriculture.
...
Amador-Tuolumne Community Action Agency food bank director Lee Kimball said that, over the last five years, the food bank has suffered on multiple fronts: a rise in food costs, a decrease in government and corporate donations and an increase of those needing assistance.

The same amount of money will purchase 41 percent less food today than it would have five years ago, Kimball said.

Over the last five years, there's been a 41 percent decrease in government food donations and a 36 percent decrease in corporate food donations at the ATCAA food bank.

This is compounded by an 88 percent increase in households that are reliant on ATCAA food bank services over the last five years.

"People from the middle class, for the first time, are having to ask for help," Kimball said. "Two people recently were in here crying from embarrassment because they've never had to ask for help in their lives."
And, as if to reinforce how things are rapidly changing for the worse, this story was also on yesterday's front page:
CCWD ponders foreclosure aid for customers
Published: April 24, 2008
By HOYT ELKINS

Calaveras County Water District directors Wednesday tried to decide if it is in the best interest of the district and its ratepayers to offer fee waivers or other forms of relief to customers facing foreclosure on their homes.

Weighing in on the issue were the district's finance director, its customer service supervisor and its general counsel, all of whom agreed a carefully worded resolution would be needed to enact relief, and a carefully crafted form would be required to apply for it.

At issue is whether current district policy makes homeowners in the foreclosure process eligible for suspension or abatement of water service, or if the district could provide assistance in the form of waiver of fees or penalties.

Customer Service Supervisor Douglas Wilson told the board that 159 homes served by the district have gone to foreclosure between January 2007 and the middle of this month. He identified three types of foreclosure customers: those trying to save their homes; those who live in their homes, don't pay the mortgage and eventually abandon their homes, and, finally, those who have left their homes and are not paying the mortgage.

Among the first two types, Wilson said, a high percentage continue to pay for water service even though they are not paying the mortgage. For those not paying their water and wastewater bills, fees and penalties continue to accrue until they eventually go to collection. Wilson said only about half of the money owed is recovered by the district, and also noted that liens against the property can take years to collect.
We weren't here at the height of the boom in 2005 - maybe it's worth looking up some past issues to see what the front page looked like back then.

AddThis Social Bookmark Button

7 comments:

Charlie said...

Hey Tim, I'm not far away from you up here in El Dorado Hills where its about as bad as in Sonora. Welcome to the neighborhood.

Tim said...

Thanks Charlie.

vipness said...

It's OK. Once these "one off" foreclosures disappear and unclog the real estate game, prices will be back to acceptable levels and justify all sorts of overspending. This is what I am told.

Aleks said...

Don't try to change the name (again). Consistency and word of mouth are worth far more than a "meaningful" brand.

JP said...

Hey Tim, I read your blog daily and really enjoy it. This may be just a lil too early, but what are your blogging plans post-mess? Maybe change the name to "The rally that (insert name) made"?

Take care

Anonymous said...

Tim, I used to live in Sonora and worked in Murphys. It was interesting to see your post via ml-implode. I guess the Motherlode hit the big time. I was just reminiscing about a county where it took a reporter to find out that a Sonora taxi driver had driven the murderer of the 3 women killed in Yosemite back to Modesto since the local law enforcement couldn't figure that one out after several months. Happy to be outta there, though I miss the Sierras. Enjoying your blog. Aloha.

Tim said...

aleks and JP - Maybe it'll be TMTGM for the next 20 years. Who knows?

anon 7:35 - no, this is not the big time, but after living in Southern California for almost 30 years, we don't want the big time anymore. It's nice not having to drive on roads that have more than one lane in each direction and to be able to go to Yosemite for the day (like we did yesterday). We'll be wary of the local police.

  © Blogger template Newspaper by Ourblogtemplates.com 2008

Back to TOP