Another Inconvenient Truth -- Another Reason Folks Are Avoiding the Housing Market

Update

June 21, 2011: William McGrun, in the June 21, 2011 issue of the Wall Street Journal discusses why South Bend, Indiana, is on Newsweek's list of the top ten (10) dying cities in the US. He notes: "When Governor Daniels (R) succeeded in getting a property tax cap through in 2008, South Bend responded by pressing the county to raise local income taxes -- threatening that otherwise it would have to cut police and crossing guards and the like."


June 19, 2011: Marblehead, Massachusetts, chose to override Proposition 2 1/2 and will be raising property taxes. Median home property tax will go up $300 the first year, and under $250 for years 2-20.

As word spread through the building that three out of the four proposals had passed, Jean Eldridge looked on glumly and wondered how some residents would pay for the tax increases.

“I’m so disappointed,” said Eldridge, who opposed the school and transfer station proposals.

“There are so many people out of work, losing their homes, and there are a lot of people in town on a fixed income – including myself. This makes me sick.”

Do you think that will be the last property tax hike for Marblehead for the next 20 years?

June 4, 2011: I see that the mayor of Philadelphia is considering raising property taxes again this year to bailout the schools after raising property taxes ten (10) percent last year. As noted below, there is no limit on how much they can raise property taxes in most states.

Also being discussed as part of the School District bailout is a hike in property taxes similar to last year’s nearly 10-percent hike (see related story), which the administration says could bring in $95 million.

Original Post

Front page story of New York Times: Housing Index Expected To Show A New Low In Home Prices

The desire to own your own home, long a bedrock of the American Dream, is fast becoming a casualty of the worst housing downturn since the Great Depression.

Even as the economy began to fitfully recover in the last year, the percentage of homeowners dropped sharply, to 66.4 percent, from a peak of 69.2 percent in 2004. The ownership rate is now back to the level of 1998, and some housing experts say it could decline to the level of the 1980s or even earlier.

The article goes on:

Housing is locked in a downward spiral, industry analysts say, not only because so many people are blocked from the market — being unemployed, in foreclosure or trapped in homes that are worth less than the mortgage — but because even those who are solvent are opting out.

“The emotional scars left by the collapse are changing the American psyche,” said Pete Flint, chief executive of the housing Web site Trulia. “There was a time when owning a home was a symbol you had made it. Now it’s O.K. not to own.” 

Go ahead and read the article. See if you notice something unsaid. See if you notice another reason -- perhaps one of the biggest reasons why folks are not rushing to get back into the housing market.

Jump To Below the Fold

I didn't read the entire article but I read enough of it to get the feeling the writer did not address one of the biggest reasons why folks are not rushing to get back into the housing market.

There is a joke about home ownership in several communities. Once the final mortgage payment is made, a homeowner is now renting his/her home from members of the local teachers' union, firemen's union, police union, or the city's "fathers." We saw it most recently in Wisconsin and in Bell, California.

Theoretically, there is no limit to what one might end up paying in property taxes.

$5 Gasoline and Cuban Oil in the Gulf

I can only imagine the public's reaction to $5.00 gasoline when the US has a moratorium on drilling off-shore and the Cubans are drilling in our backyard.

First, the Goldman Sachs story that we will see $5.00 gasoline this summer.

Even with pressure on gas prices easing en route to Memorial Day, Goldman Sachs predicts U.S. consumers could see $5 a gallon this summer.

Goldman estimates oil could reach $135 per barrel by mid-July, with accompanying gas prices hitting the $5-per-gallon mark, the New York Post reported Sunday.

Then, the Cuban story.

"... the discovery of up to 20 billion barrels of oil in the waters off of Cuba's coast, 100 kilometres from Florida..."

How Much Water in North Dakota? Too Much For Amtrak

Update

May 31, 2011, 4:07 p.m. Amtrak now scheduled to arrive 6:40 p.m. tonight in Williston; fueling depot was unable to refuel the train in Minot; will refuel in Williston, which means the wait in Williston might be a bit longer than usual.


May 31, 2011: The Amtrak train is completing its run from Chicago to Williston to Portland, Oregon, today. This will be the last run until Saturday as it stands now. But the train is running today as usual (though a few hours late coming into Williston).

Original Post

Amtrak has started canceling service across North Dakota (and Montana/Idaho?) due to flooding.

I don't know the particulars. We all knew that Amtrak was going to start avoiding Devils Lake but that was something different than what appears to be going on now.  We know that coming from the west last week, Amtrak almost couldn't get into Williston due to the flooding.

I'm not sure exactly when the cancellations start, but my sister was just notified that her Wednesday reservation has been canceled and she will leave three days later, Saturday.

Apparently the Empire Builder will be going back and forth between Chicago and Minneapolis, and on the west coast only between Portland/Seattle and Spokane. For now it appears that the interruption in service is temporary and very short-lived. [I may be too optimistic. See first comment below which is quite helpful.]

1-800-872-7245 for "Ask Julie" at Amtrak.

It is confusing. Maybe travel is only affected some days. It is all contingent upon BNI (Burlington Northern) when they will make the track available.

Charolais Cattle -- McKenzie County -- The Bakken, North Dakota, USA

McKenzie County, North Dakota, Charolais:

One of the nice things about blogging is observations made by other folks. I never thought about it, but it turns out the oil companies have contracted with a manufacturing firm to provide cattle guards in the Williston Basin.

On one of my first road trips, it was not uncommon to drive across four cattle guards to get to a well site. The cattle guards are identical and it is obvious they are being mass produced by a mom-and-pop operation with five employees. (I'm making that up, but you get the point.)

I was told the cattle guards are individually made at the site, and that may be true, but the cattle guards I drove over yesterday all looked alike. Until told differently, my hunch is they are being mass produced in a steel building somewhere in western North Dakota. [Update, June 23, 2012: being built by Steffes Group, Dickinson-based; business has doubled; recently added capacity west of Grand Forks.]

Why I Stay Excited About the Bakken, North Dakota, USA

I wish I could say more, and I apologize that I cannot. This is a trivial posting but it's a datapoint that may prove interesting in hindsight.

There is a Fortune 500 company expanding in Williston. The company already has operations in the Bakken but is in the process of "building."

Based on comments, it sounds like there may be more potential than even the most optimistic scenarios (notwithstanding CLR's prediction of 24 billion barrels of recoverable oil).

Hydraulic Fracturing -- Fracking --

From PennEnergy:

What is the process of extracting natural gas from deep shale formations supposed to be called in its condensed version? Is it fracing or fracking? How about fraccing? Frac, frac-out and frac job also have been bandied about.

Fracking seems to be the short choice among most folks, although some industry officials and online media bloggers tend to favor fracing. But, fracing makes it appear the term rhymes with tracing when it actually rhymes with tracking.

Fracturing, fracing, fracking? In the end, it’s only a word.

I am attempting to be consistent throughout the site, and use the "k" when appropriate.  The AP style book and Modern Language Association will eventually sort this out. My hunch: the "k" will win out. 

I originally posted on this some time ago; one can find more at FAQ and scroll down to #34.

Still Think Price Of Oil Is Going To Go Down? Germany To Exit Nuclear Energy By 2022

Link here.

Chancellor Angela Merkel's ruling coalition declared on Monday it would shut all German's nuclear reactors by 2022, in a policy reversal drawn up in a rush after the Fukushima disaster in Japan.

The coalition, sensitive to accusations it may increase dependence on highly polluting brown coal, said it planned to cut power use by 10 percent by 2020.

"Highly polluting brown coal"?

"Cut power use by 10 percent"?

It doesn't take a rocket scientist to sort out the carbon footprint on this one.

Bullwinkle Lurks

Neil tells me "they" have counted about 100 moose who have made their home in the Missouri Basin area.

My number one goal this trip to Williston is to get a photograph of a North Dakota moose. My niece has a photograph but it is taken with a smartphone at a mile or so away, and it looks like a brown speck.

For Investors: Seeking Alpha on Oil and Gas Master Limited Partnerships

Six companies listed. At least one is in the Bakken: EEP.

For all those investors who are tired of CISCO and MICROSOFT going nowhere for the past five years, look at some of the Bakken-related companies. Just saying.

Boondoggle That Utility Customers Will Be Paying For -- Wind Story

Link here.

A wind farm planned just south of Rawlins has added a radar system to monitor birds.


The radar, originally for the military, will help developer Power Co. of Wyoming LLC collect data about the habitat and migration patters of golden eagles, bald eagles, hawks and other bird species and bats at the proposed 1,000-turbine wind energy project.

The information will be used to help create a management plan for eagles, birds and bats on the company’s Chokecherry and Sierra Madre Wind Energy Project.

The proposed 2,500 megawatt, $4 billion to $6 billion wind farm site will sit on portions of 154 square miles of the Overland Trail Cattle Co. ranch, a 500 square-mile checkerboard of public and private land.

My understanding is that the FAA will install several observation towers in Wyoming and retired FAA air traffic controllers will guide the migrating birds through the wind turbine maze. Washington bureaucrats are now drafting a plan to collect eggs, and attaching transponders to hatchlings.

These hatchlings -- when they grow up -- will then "lead" their flock of birds through dangerous windmill territory.

Call signs have already been assigned: "Bald Eagle 1."  "Bald Eagle 2."  "Egret 1." "Egret 2."  "Whooping crane 1." "Whooping crane 2." "Bat 1." "Bat niner-one-two-niner-three."

Crows and pigeons will not be provided transponders. They will be on their own.

Branding -- North Dakota -- Heart of the Bakken -- There's More to North Dakota Than Oil

Branding -- McKenzie County -- Memorial Day Weekend, 2011.

This was at least one of three sites where this group was branding cattle. It appears they could accomplish their goal in about 45 minutes (maybe less) in each area that they branded.

This is just one area so you can get a feeling about the number of head of cattle involved.

It was "fun" to note that the mother cows did not stray far from where their calves were being branded.

Clicking on the photos can enlarge them, and they are not copyrighted. 

Road Trip -- McKenzie County -- Mondak Oil Field -- Bakken, North Dakota, USA

This is a posed, staged photo.

The bad news: there is no signage identifying this well.

The good news: based on GIS map server, and a few landmarks, there is a 99.99% chance that this well sits where this gentleman has a few mineral acres. The best landmark: a rig-on-site a few miles north which matches the one on the GIS map server. There is currently only one rig-on-site in the Mondak oil field.

The bad news: this well is still confidential and neither the gentleman nor the photographer know which way the horizontal legs run.

The bad news: based on where this well is sited inside the section, the horizontal legs most likely run south. The gentleman's mineral acres are north.

More bad news: this well has only three tanks. A small well?

Good news: The area is becoming very active, and over time additional wells will be put in.

Another Story on Lack of Adequate Workforce in the Bakken -- North Dakota, USA

This time: a focus on Minnesota workers. From the Minneapolis Star Tribune:

North Dakota's governor and commerce and tax commissioners, among other state officials, recently launched a full-scale recruiting mission in the North Star state. They are seeking engineers, electricians, IT pros, machine operators, health care experts and anyone else who wants a job, so long as they don't mind relocating.

"We are in such a wonderful position over here right now," said North Dakota Commerce Commissioner Alan Anderson. "But we have a 3.3 percent unemployment rate. ... So we have to either get some more folks coming back home or get more coming across the state line to share in the opportunities."

In the Twin Cities, North Dakota officials have dined with business leaders and brought in 40 businesses to interview 350 Minnesotans at a job fair in Minneapolis. They also have tapped Minnesota's colleges and universities for hiring leads.

After just a few days in Williston, I have heard many, many stories regarding this issue.

Perhaps when I have more time, I will post a few notes.