Novel way for SUV owners to improve gas mileage

[Red Harvest]

Arson. SUV Owners Burning Their Vehicles

Ok, the problem is that some SUV owners are having trouble making their payments as interest rates and gas prices rise. Some are upside down on their loans/leases with some of the more creative lending/leasing arrangements.

EDMUNDS/CNN: SUV owners who are faced with rising gas prices have found a new way to get out from under their high car payments — arson.

This trend was spotted by a Southern California arson task force in the summer of 2005 when gas prices spiked. At one point, firefighters responding to a report of a vehicle fire arrived at the Los Angeles River Bed to find two SUVs burning at the same time.

I guess this is one way to improve the average fleet fuel economy.

[The Fish]

Well, I guess it saves ELF the trouble.

Whatever...I say the fewer ugly steel monstrosities cutting me off in traffic, the better.

[Erik]

two students were arrested after they torched their high school teacher's car in exchange for passing grades.

Who said school can't be fun, eh? LOL.

About the main story:
I wonder if the same thing is going to happen to houses when the US housing bubble bursts.

[Red Harvest]

I wonder if the same thing is going to happen to houses when the US housing bubble bursts.

Perhaps, but not in the same way. The idea works for vehicles because stolen vehicles have often been taken for joy rides, etc. then abandoned and torched in remote areas. Those seeking to get out of their leases/loans tried to take advantage of that.
A house is a lot trickier, because home arsons get more scrutiny, and (other than mobile homes and houseboats) you can't steal them, torch 'em and dump 'em.

The housing bubble is already popping in areas, but the bubble is very regional. The question is how much speed the fall will pick up and will it become a self reinforcing loop (like appreciating home prices and low interest rates had become to generate the bubble.) The loan structures are a lot riskier and will lead to many more defaults than in the past. Interest only and adjustable rate mortgages are a huge problem because they have become such a large share of the market. People bought more house than they could afford and it will take a few years for that to shake out.

With a housing bubble, you have more of a floor to protect you: replacement cost. The minimum price of a home (not a mansion) is going to be near its replacement cost. Really everything else (the bubble) is land speculation. If you have a house that would cost $200,000 to build today, sitting on 1/4 acre lot and selling for $450,000, then the market is pricing the land at (450,000-200,000) / (1/4) = $1,000,000 per acre. (Thanks to some explanation by Warren Buffet in some of his investor comments about two years ago I understand it.)

So some areas have been bid up, and could potentially fall hard, while other areas have not been bid up as much. Texas for example has fewer crazy prices in real estate in modest homes. Why? It appears to me that the high property tax rates restrain speculative appreciation. Texas funds the state off of property tax rather than income (and school districts, county, colleges, etc all nail you to), so financially it is better to have an affordable home and a high income, while in other states a larger home will be more affordable with a lower income.

[conon394]

Good point about the regional nature of the housing bubble. A lot of Economists are forgetting just how much a few regional areas with extremely expensive housing/rapidly rising prices can potentially skew aggregate numbers.

A related issue I think could be more worrying – with interest rates climbing I wonder how many people are going to start feeling real pain from variable rate home quietly loans that were used to support consumption or debt consolidation.

school discricts

I thought the latest ideal was to use the rainy-day fund?

[Red Harvest]

[QUOTE=conon394]Good point about the regional nature of the housing bubble. A lot of Economists are forgetting just how much a few regional areas with extremely expensive housing/rapidly rising prices can potentially skew aggregate numbers.

A related issue I think could be more worrying – with interest rates climbing I wonder how many people are going to start feeling real pain from variable rate home quietly loans that were used to support consumption or debt consolidation.

I thought the latest ideal was to use the rainy-day fund?

Egads, I had "discricts" next to school...some typos are worse than others. In Texas and most states I've been local taxes pay for various parts of the school expenses. I was getting taxed by at least four entities on one piece of property. A 2.5-3% annual tax rate on 100% assessment is not unusual. That actually functions like an effective interest rate adder I suppose--at least as high as the actual tax rate, but probably higher, because interest on principal falls over time, while the tax assessment rises every few years.

Fun with numbers is that presently affordable and moderate priced housing sales are falling but the higher end has not (more disposable income to play with.) So this means that the average home price has been artificially inflated/buoyed. That is starting to move however. Lower income buyers get squeezed first. However, there are substantial backlogs building in hot spots, and those areas will get whacked hardest if the trend accelerates.

Part of what will happen is that probably a few trillion dollars worth of "paper wealth" by speculators will evaporate, and those that have been using home equity loans to buoy overspending will get whacked pretty hard.

[IronBrig4]

I can't stand SUV's anyways, so I'm very happy about this. I swear that if I see one more SUV or Hummer taking up two spots in the "compact car" section of the parking lot, I'm gonna hire some terrorists to blow it up.

[Erik]

Egads, I had "discricts" next to school...some typos are worse than others. In Texas and most states I've been local taxes pay for various parts of the school expenses. I was getting taxed by at least four entities on one piece of property. A 2.5-3% annual tax rate on 100% assessment is not unusual. That actually functions like an effective interest rate adder I suppose--at least as high as the actual tax rate, but probably higher, because interest on principal falls over time, while the tax assessment rises every few years.

Hmmm.. Texas has a realy interesting tax system, I sould read more into that.

It looks like they have the exact reverse of what we have in the Netherlands:
Here you get money BACK from the government if you own a large house.
Rich people pay up to 52% income tax, but they can get almost everything back if they have a big mortgage.
Our system is very odd because the richest people pay less tax than middle class, and many people would like to change it (including me) but some political parties even refuse put it on the agenda.

Part of what will happen is that probably a few trillion dollars worth of "paper wealth" by speculators will evaporate, and those that have been using home equity loans to buoy overspending will get whacked pretty hard.

That's also what I was thinking.
Many people bought a home that is realy far too big and expensive for them because they beleived the housing prices would rise faster than the (mortgage) interest rates.
But if the interest rates rise and/or the housing prices fall they are stuch with a home that costs more in heating and maintenance than they can afford.
And it wil be very difficult to sell a large house once the housing bubble has burst because most people would be looking for smaller houses in stead of bigger ones.

So maybe some of those people wil set their home on fire rather then go trough the trouble of selling it?
That would be so strange: burning houses everywhere.
But like Red Harvest pointed out: it's probably way too risky to set our own house on fire.