Euro-Trash/Carrion Feeder Hybrids Created Using The DNA of Short Sighted Americans
The ongoing economic meltdown (caused by the uniquely American combination of self absorbed consumption and delusional self destruction, otherwise known as the "housing boom") has become so convoluted and terrifying that it's starting to feel like science fiction. However, as the LA Times' indispensible LA Land blog makes clear, to make the most sense out of things, we should be boning up on Jonathan Swift, not Heinlein.
That's because even as California's housing economy sinks deeper into the sinkhole, unlikely saviors are stepping in to
exploit the hell out of salvage what can be salvaged from the wreck. Ladies and Gentlemen, I bring you the Orwellianly monikered California Distressed Land Fund Ltd.:
The California Distressed Land Fund Ltd., a closed-end fund planned to buy California land... said it will raise $150 million from European investors. The Jersey, Channel Islands-based fund plans to buy land sold by home developers and banks in California, said founder and manager David Michelson. He expects to eventually buy from an updated version of the Resolution Trust Corp., the Federal agency set up in 1989 to clean up after the U.S.'s savings and loan crisis.
U.S. foreclosure filings climbed 65 percent and bank seizures more than doubled in April from a year earlier as rates on adjustable mortgages increased and vacated homes added to a glut of unsold houses, RealtyTrac Inc. said. More than 243,300 properties, or one in every 519 households, were in some stage of foreclosure, the highest monthly total since RealtyTrac, a seller of default data, began statistics in January 2005. California, Nevada and Florida had the highest rates.
Then again, perhaps I'm being bitter. It's not like it's the end of the world, right?
"We're buying at Armageddon prices," Michelson, 57, said in an interview in London Wednesday. "Right now sellers are in panic mode and we're going to buy. We know there will be a time when they want to buy again and that's when we'll sell."
Michelson went on to add that "Lo! An Angel blew the first trumpet and I saw real estate prices the world over collapse, as the moon turned red as blood, and the sky turned black as sackcloth!"
But I digress.
Well, more power to them, I suppose. Still, as Atrios pointed out, the appeal of buying real estate in horrible places like the Inland Empire wasn't based on how wonderful and awesome it is to live there**. Sorry, but it's true. It was based largely on the (let's face it) mythical belief that the real estate speculator craze was never going to end, and property values were just going to keep going up and up and up. In that scenario, the issue isn't whether or not people truly want to live in a particular place (or if living there even makes sense, economically,) it's whether or not people want to own property there just long enough to turn a profit.
I'm fully aware that such places had a small number of true locals who liked living there***, but these days the locals are more than outnumbered by a combination of speculators, just slightly too late to ruin their own city's economy, forced to look elsewhere, and middle-to-working class people forced by said speculators to rent or buy in further and further out in the sticks. As we know, even the worst crack house in LA now requires a yearly income of at least 15 million dollars. And that's just to get a call back.
In either case, there just aren't hundreds of thousands of people who, for the most part, would choose, all things being equal, to live in a hot, economically poor backwater, so far away as to dictate a daily commute several hours long. Nobody starts their decision making process with "I want my monthly gasoline expenses outstrip my insurance bill." It seems to me that as energy prices continue to rise, and the economy continues lock itself in its bedroom, sobbing quietly and listening to way too much Elliott Smith, the benefits of living in such places dwindle to the point that even these vulture-esque speculators are going to find it difficult to turn a profit.
And this doesn't begin to deal with the non speculators turned out of their houses as the economy tanks. So it has that in common with LA's city government****.
Of course, there is a solution - maybe these far flung bed room communities could be redesigned so that they're not just cheap, they're also livable. Perhaps these investors might consider more walk-friendly environs, developed so that one isn't enslaved to the cars that increasingly feel more like albatross necklaces than modern conveniences. Perhaps investment in the American economy beyond sending every job possible overseas, so that people could work near where they live and have a reasonable expectation of supporting themselves, might help.
Given our behavior over the last decade, that's not bloody likely. I expect the IE to start the process of reverse gentrification in 5... 4... 3... 2... 1.
I could be wrong however. Thoughts?