“I’m so bored. I hate my life.” - Britney Spears

Das Langweilige ist interessant geworden, weil das Interessante angefangen hat langweilig zu werden. – Thomas Mann

"Never for money/always for love" - The Talking Heads

Friday, March 07, 2008

Now, dance

LI chatted with our brother on the phone last night. This brother got burned last year in the stock market. Although who didn’t? So he’s letting his buys coast at the moment – the wisest course. As always, in these conversations there comes a moment when D. tells me that I’m always pessimistic. He claims I’ve been pessimistic since 1990 – and that I had to be right once, so that last year, when I told him to get out in the summer after he’d had a good ride on his stocks, I was simply lucky that, for once, pessimism was the correct view.

Well, I always squirm and protest that I’m not a pessimist. I’m sour-castic – an entirely different thing. This means that I always sound pessimistic. But all I mean is – we’re all gonna die!

In actuality, I am a great admirer of the plodding tenaciousness of your average American Joe. So I found this article about the rise and fall of a house building family, the Dunmores, pretty fascinating.

“When George P. Dunmore started his business in Sacramento in the early 1950s, World War II was over and the building boom was on. Over the next several decades his company, Dunmore Construction, along with other respected builders, took the tabula rasa that was California’s Central Valley and etched it with entire neighborhoods filled with well-built ranch houses on trim lawns.

Mr. Dunmore lived through his share of lean years, of course; that is the rhythm of the home construction business. But for the most part, his company prospered. His son Sidney got into the business. And Sidney B. Dunmore’s boys followed him.

But by the time Mr. Dunmore died last October, at age 89, his son Sidney found himself caught in the middle of a real estate collapse. Overextended and pursued by a long line of creditors, the company bearing the family name, Dunmore Homes, was sold to a New York corporation owned by a Sacramento-area mortgage broker for $500, including the assumption of liabilities totaling more than $250 million. Two months later, the new owner filed for protection from creditors under Chapter 11 of the Federal Bankruptcy Code.

A bankruptcy court in Sacramento is left with the task of untangling a web of transactions, affidavits, property transfers, loans and liens that have come to symbolize the real estate crisis not just for Dunmore Homes, but for an entire industry.”

My old man, like George Dunmore, wanted to cash in on the building boom of the fifties. Unfortunately, my old man did not live in sunny California, but in snowy Syracuse, N.Y. Outside Syracuse, really. Back in the days when the Cold War idea of creating living patterns that mirrored the concentric rings on a bombing chart was just getting started. Always the outlier, my old man, he converted the farm that he’d borrowed money from his folks to buy into lots, upon which he erected large houses. Too large, it turned out. These beauties he built on spec, and sold in the end, to the family. My earliest memories are of the sweet work of carpentry. The smell of sawdust, the whine of an electric saw, the pocking sound of hammers and the way a nail will tune itself in the wood to a straight blow. Its work to make your hands bigger; always, no matter how much Lava you use, there’s something under your nails in the evening – grit, tar.

The Dunmores did well for themselves (unlike the Gathmanns) and prospered in what the NYT calls “the go-go years of the California real estate boom.” What curious years they have been!

“Not only was George Dunmore a fair businessman, friends and acquaintances say, but he was an avowed family man as well. Of Mr. Dunmore’s three children, Sidney, now 53, showed the most interest in taking up the family trade. After years of apprenticing under his father, the younger Mr. Dunmore started his own firm, Dunmore Homes.

Throughout the 1980s and 1990s, Dunmore Homes expanded. The company formed more than a dozen subsidiaries throughout the state, with more than two dozen developments, many of them catering to first-time home buyers in need of subprime and nonconventional loans. The company eventually built a total of 22,000 homes.

The region was one of the fastest-growing real estate markets in the country. In Sacramento County, from 2000 to 2005, the median price of homes more than tripled, to $385,000, according to DataQuick Information Systems.”

That’s a lot of board feet. When you have an asset run up like that of the early Bush years, you have to ask – I asked, continually, just drag my blog posts – where the money was coming from. As I’ve said before, the recession that keeps yawning before us (providing the newspapers with a by now very stale conditional for the last three months, that we may be in a recession) is the 3 trillion dollar recession – the difference between wages and borrowing. It would be interesting to know how many of those 22,000 homes became piggy banks for the homeowners, as the offers came in to borrow money against the accelerating value of the house. As my bro said last night, why not? The puritan in me protests that there had to be something wrong with the life of consumer prodigality which characterized the middle class lifestyle in the Bush era. Are we not men? Are we mere locusts? On the other hand, why knock the locusts? The non-puritan part of myself has always taken the grasshopper’s side in the fable of the ant and the grasshopper.

The Dunmore saga does not end in a “There will be blood” fashion – no homicide for these folks. It ends, more sensibly, in tax evasion:

“Any builder, even the best-capitalized builders, drank the Kool-Aid and bought too much land and loaded up at the peak,” said Ivy Zelman, a home building industry analyst. Ms. Zelman, who said she had no direct knowledge of Dunmore Homes, said she believed that the company might have taken on “way too much risk and just assumed values would go up.”
“I imagine that’s what they were thinking and didn’t have good disciplines in place.”
John Slaughter, a spokesman for Dunmore Homes who left the company this week, recalled how “so much happened with the mortgage industry, and prices dropping, and all the foreclosures.”
“It got to where we were a private company, competing with the large billion-dollar companies that could continue to reduce prices, and we just couldn’t compete with that,” he said.

In September, Dunmore Homes changed its name to DHI Development and sold its assets for $500 to a New York entity called Dunmore Homes Inc. The new Dunmore Homes is owned by Michael Kane, a Sacramento mortgage broker. He declined to comment.
Mr. Kane got not just the assets, but debts amounting to more than $250 million owed to a lengthy list of creditors that includes banks, contractors, landscapers, electricians, plumbers and paving companies.

Mr. Dunmore’s creditors cried foul over the sale, as well as the bankruptcy court filing in New York, a continent away.

Mr. Dunmore apparently had his reasons for the quick, cheap sale. According to court documents, by declaring his losses in the sale of the business, Mr. Dunmore is due a 2007 tax refund of approximately $11 million — money that he will use to pay off an $11 million obligation to Dunmore Homes.”

My brother might be right about my pessimism, which does blind me to certain truths that we hold self-evident. This is the New World, god damn it. We’ve moved out of the peasant world, with its iron Malthusian laws:

Nuit et jour à tout venant
Je chantais, ne vous déplaise.
--Vous chantiez ? j'en suis fort aise.
Eh bien ! dansez maintenant.
»

5 comments:

Anonymous said...

-- So vi et! we responded. Song! Shaun, song! Have mood!
Hold forth !
-- I apologuise, Shaun began, but I would rather spinooze
you one from the grimm gests of Jacko and Esaup, fable one,
feeble too. Let us here consider the casus, my dear little cousis
(husstenhasstencaffincoffintussemtossemdamandamnacosaghcusaghhobixhatouxpeswchbechoscashlcarcarcaract) of the Ondt and
the Gracehoper.
The Gracehoper was always jigging ajog, hoppy on akkant
of his joyicity
(FW)

Amie

roger said...

I love the Gracehopper and his joyicity! Three boos for the Ondt!

Brian said...

I have a friend who (briefly) worked for this clown carousel of a company (the son). The tales he told-let's just say that it's not the market crash alone that sunk the company. He luckily saw which way the wind was howling.

roger said...

Brian, my man - this is the bal masque. You can tell us the tales of the real estate tribe. Just add alleged randomly, so we don't all end up in court.

I try, as in my little post here, to calm my apocalyptic feelings about the big bites that are being taken out of the American hide. But I alternate between feeling all kind of pity for the three trillion dollar hole in our pockets and the thought:
They get what they want so they'll never want it again!

Brian said...

Let'sust say "drunken fratboys addicted to hard core porn" With limos.