01-02-2010, 01:28 PM
Agreed, there is the issue.
If a bank forecloses, it must realize a loss. Otherwise, it is able to keep the asset on its books as an asset at it's previous(fantasy) assessed value. Here's the problem. If banks marked to market--they'd fold. It's cheaper to float a bad home owner for a couple of years on a "wish and a prayer" than foreclose. Assuming, of course, we have a miracle recovery. Which we won't. The recovery we will have, if any, will be to realistic valuations where property values reflect the real "owner/equivalent rent" ratios of the wages that are paid. I expect we've got a ways to go to the bottom yet in most markets unless they offer real value add.
This is part of my personal vision for Hawaii, by the way. If you look at the issue, without the blue sky, at this point and with several functional real ag projects as case examples--I wanted to demonstrate the real viability of a 1 to 3 acre ag project, mostly following a silvaculture model. This is proven, at this point. Considering that someone who had the backbone to work it--could purchase a 1 acre parcel and within a 3 year time frame produce a real 5 ton an acre gross ag product in a variety of foodstuffs--well, that changes the local equation radically and puts it back in scale with history. Details as they evolve, of course.
http://sensiblesimplicity.lefora.com/
If a bank forecloses, it must realize a loss. Otherwise, it is able to keep the asset on its books as an asset at it's previous(fantasy) assessed value. Here's the problem. If banks marked to market--they'd fold. It's cheaper to float a bad home owner for a couple of years on a "wish and a prayer" than foreclose. Assuming, of course, we have a miracle recovery. Which we won't. The recovery we will have, if any, will be to realistic valuations where property values reflect the real "owner/equivalent rent" ratios of the wages that are paid. I expect we've got a ways to go to the bottom yet in most markets unless they offer real value add.
This is part of my personal vision for Hawaii, by the way. If you look at the issue, without the blue sky, at this point and with several functional real ag projects as case examples--I wanted to demonstrate the real viability of a 1 to 3 acre ag project, mostly following a silvaculture model. This is proven, at this point. Considering that someone who had the backbone to work it--could purchase a 1 acre parcel and within a 3 year time frame produce a real 5 ton an acre gross ag product in a variety of foodstuffs--well, that changes the local equation radically and puts it back in scale with history. Details as they evolve, of course.
http://sensiblesimplicity.lefora.com/