Yesterday the Wall Street Journal’s Developments blog (it covers real estate) carried a post Is Your Rent Too Damn High? inspired by a classic only-in-New-York character, Jimmy McMillan, the Rent is Too Damn High Party’s candidate for governor. The photo alone makes it worth the click.
The post muses, without resolution, on the eternal question of how high is too high.
Many personal finance experts say you should spend no more than 35% of your gross income on rent (not including renter’s insurance) whether you live in a high- or low-cost area. Of course, this amount can mean the difference between living in a studio on the outskirts of an expensive city or living large in a condo overlooking the beach in a low-cost area.
Many experts say this? It is the sort of faux wisdom that is often attributed to unnamed others and then passed on half-heartedly. I spent several minutes looking around the web for first hand advice on how much to budget on rent. I didn’t find much. There is lots of stuff out there on how big a mortgage you should take on, but relatively little discussion of renting. I guess renters just aren’t interested in personal finance.
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The other day The Wall Street Journal introduced me to a new word. From German, it is fremdschämen, meaning “a feeling of cringing embarrassment for the actions of others.” If only to discuss reality TV shows, English really needs 
to adopt this one. We can spell it without the umlauts. It is pronounced something like FREM-shame-in.
I bring this up because there is a minor scandal brewing that has just inspired fremdschamen in me. The Consumerist has taken to calling it the Foreclosure Fracas. Wednesday’s update on it in The New York Times began:
The uproar over bad conduct by mortgage lenders intensified Tuesday, as lawmakers in Washington requested a federal investigation and the attorney general in Texas joined a chorus of state law enforcement figures calling for freezes on all foreclosures.
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I guess I should start out by stating that I do not find anything in this bit of junk mail to be the least confusing or misleading. Do you?
In case you can’t read it, it is a postcard from ING pitching their “ING DIRECT 5/1 Orange Mortgage.” It lays out what the loan would cost as compared to an average 30 year fixed. Although it does not use the term “adjustable rate mortgage” or “ARM” it gives the reader plenty of clues, including calling it a 5/1 and breaking out the numbers into two periods, with the interest rate for the second (Year 6-30) period labeled as “projected.”
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Just for fun, today let’s play journalist and headline writer.
Here are the morning’s facts that we have to work with: 1) For the month of July 2010, the Case-Shiller 20-City Home Price Index was up 0.6% and the 10-City was up 0.8%. 2) For the year to July, the indexes are up 3.2% and 4.1%, respectively. 3) House prices are now at the level they were in fall 2003, but are still about 50% higher than they were in January 2000.
Okay, so what’s the headline you would use for your story reporting this news? Here are some I think would be appropriate:
“July Brought More Modest House Price Increases”
“S&P Case-Shiller at Highest Level Since ‘08”
“House Prices Continue Recovery Despite Tax Credit Expiration”
Or, taking more of a big picture approach:
“With Dust Settling, House Prices Hold on to Half of Boom Gains”
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Last year I wrung several good posts from the Obama Administration’s doomed-from-go scheme to get banks to modify mortgages. It was good material for me. I got to mock both those few who were clueless enough to
think it might work and the great many people who were too polite or too loyal to the White House to admit that they understood that the program’s outlook was grim.
After a while, I got bored of beating that particular dead horse. So many other things to mock.
But I realized recently I never really addressed the basic conceptual flaw in the Home Affordable Modification Program. This came to me as I was reading a recent guest post at Smart Spending, a blog that carries many thoughtful guest posts.
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Yesterday the Wall Street Journal’s Developments blog (it covers real estate) carried a post Is Your Rent Too Damn High? inspired by a classic only-in-New-York character, Jimmy McMillan, the Rent is Too Damn High Party’s candidate for governor. The photo alone makes it worth the click.
Housing | Frank Curmudgeon | 
October 20, 2010 3:29 pm | 
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