Prices Are Dropping Steadily In California
Bloomberg reports on California. “San Francisco Bay Area house and condominium sales fell 25 percent last month to the lowest for an August in 15 years as stricter loan standards pushed some buyers out of the market, DataQuick said. Standards are particularly strict for jumbo loans, mortgages higher than $417,000, which are prevalent in Northern California, DataQuick said.”
“‘Homes in the Bay Area are more expensive than elsewhere and most of them are financed with jumbo mortgages,’ DataQuick President Marshall Prentice said in the statement. ‘The turbulence in the mortgage markets has made it more difficult to get this type of financing.’”
“The number of homes sold fell in all nine Bay Area counties, dropping the most in Solano, which had a 43 percent decline, followed by Contra Costa with a 36 percent drop, DataQuick said.”
“Foreclosure resales accounted for 4.8 percent of last month’s Bay Area sales, up from 4.5 percent in July and 1.2 percent a year earlier.”
The San Francisco Chronicle. “Called loan modification or loan workout, it means changing a mortgage’s terms to make the payments more affordable. Mortgage lenders have publicly embraced the concept. But consumer advocates say it appears that few modifications are actually occurring, and lenders refuse to provide any data to show how common the practice is.”
“‘Lenders are not modifying these (adjustable-rate) loans,’ said Martin Eichner, director of dispute resolution at Sunnyvale’s Project Sentinel. ‘A lot of these loans are so hopeless and irrational that lenders won’t even talk to us.’”
“To be sure, many subprime borrowers have a basic problem that a loan modification cannot solve: They cannot afford their houses. They never should have gotten the mortgages they have now. They might have exaggerated their incomes or underestimated the drain of monthly payments.”
“‘If the borrower is not going to be able to handle even a modified loan in the long term, it’s probably good for the lender, investor and borrower to face that fact early on,’ said Tom Kelly, a spokesman for Chase. ‘To extend somebody so they can make payments for (an additional) six months and then face foreclosure anyway, (doesn’t) accomplish very much. We’ve incurred more costs on behalf of the investors (and those) investors are not much closer to getting their money back. If the borrower can’t handle it, they can’t handle it.’”
“Tom Davey of Mill Valley refinanced his home with an adjustable-rate jumbo mortgage that was fixed for five years at 4.875 percent.”
“‘If we don’t refinance before next May, it will jump to the fully indexed rate of at least 7.5 percent. That would add $800 a month to our payments. By refinancing, I figure the best we can do is around 6.75 percent on another jumbo short-term, interest-only fixed. Even that will increase our payments about $500,’ Davey says.”
“Davey has plenty of equity in the home, which he bought 12 years ago. ‘Although I’ve been thinking about selling our house to cash in on all that equity, we should be able to get by keeping it. But it will mean tightening our budget, such as eating out only on rare occasions and camping more instead of flying somewhere for a vacation,’ he says.”
“Although it might be painful, Davey won’t be out on the street.”
From AFP News. “With a population of nearly 300,000, Stockton has acquired the unfortunate distinction of having the highest foreclosure rate of any US city, with one in 27 households left counting the cost of the credit crunch, according to Realtytrac.”
“Sign-after-sign beckon to potential buyers on the Weston Ranch streets. ‘American Dream Realty — Reduced Price!’ reads one placard spiked into a brown lawn. ‘People are just walking away,’ said Geri Taylor, a broker at Weston Ranch Realty for twelve years. ‘We’ve seen houses with food still on the table from when the sheriffs have come knocking.’”
“‘There are just are no buyers out there right now,’ said Taylor. The average sale price has dropped by 10 percent, she said. ‘We’ve got 350 homes for sale in this neighborhood right now and at this rate, that is five years of inventory,’ said Taylor.”
“Stockton has had 8,000 foreclosures so far in 2007. ‘Home ownership is a great thing,’ said Taylor, ‘But only if you can afford it.’”
The Ventura County Star. “With 548 tallied through the second quarter, Ventura County foreclosure sales have increased 784 percent compared with 62 in the first half of 2006.”
“‘Lenders were apparently shoveling the money out the door,’ said Michael Carney, executive director of the Real Estate Research Council at California State Polytechnic University in Pomona. Another cause is that home prices leveled off and started to fall. ‘A lot of people are forgetting this,’ Carney said.”
“Early this week, Bob Majorino took a team of Prudential employees out to tour the Oxnard properties that have been foreclosed upon. ‘Looking around, I have to mentally adjust because I don’t see this every day,’ he said of the change in prices.”
The Union Tribune. “San Diego County housing prices continued their slide in August as home sales dropped to a 15-year low, DataQuick reported yesterday.”
“Ramona resident Michael Wrightsman, a site superintendent for home builders for 29 years, said he cannot find work after three months of looking.”
“‘I can’t last much longer – I’ve maxed out my credit cards – and if I don’t make my truck payment this month, I’ll lose my truck,’ said the father of four boys. ‘It’s a bad situation out there. I don’t know where to turn or what to do.’”
“San Diego’s distressed-property market grew substantially larger last month as mortgage defaults topped the 2,000 mark for the first time and foreclosures hit a record that was more than six times what they were a year ago.”
“DataQuick said notices of defaults, the first step leading to foreclosure, numbered 2,071 in August. That was up from 1,573 in July and more than twice the number recorded last year, 794. The previous record was 1,596 in June. DataQuick’s figures go back to 1988.”
The Orange County Register. “‘The month of August was probably the strangest month that I’ve ever seen in the 15 years that I’ve been in the business,’ said Jeff Altman, a mortgage broker and lender with Westcal Mortgage Corp. in Orange.”
“Last month also capped the worst selling season on record, DataQuick figures show. Just under 10,000 homes sold countywide during the peak May-through-August months this year, or 43.3 percent below the season’s average of 17,600.”
“House prices per square foot declined by 6.9 percent and condo prices dropped by 8.8 percent. ‘Prices are dropping steadily,’ said Dan Slater, owner-broker of Orange Realty, who estimates that prices in his area have dropped by 15 percent since late 2005. ‘Homes priced under $900,000 are taking it the worst.’”
“‘It’s gotten brutally hard to get a great rate on a jumbo product,’ Westcal Mortgage’s Altman said. ‘Even your good A borrowers are affected because they can’t get a great rate on financing.’”
“Next month’s sales figures promise to be even lower. According to Steven Thomas, president of a local chain of RE/MAX Real Estate offices, the number of new escrows fell 33 percent in August. Those numbers will be reflected in DataQuick’s September sales figures.”
The Press Enterprise. “Homes sales fell faster in Riverside and San Bernardino counties than anywhere else in Southern California last month as rising foreclosures and a credit crunch scared off homebuyers. A glut of unsold homes also depressed home prices.”
“Some sellers, such as Marcia Hinds, of Beaumont, have given up. Hinds said she and her husband had hoped to live in their new, expensive house for two years and then sell it at a $100,000 profit. With that they could move back to their first home, which they still owned, and she could stay home with their new baby.”
“But after putting their house on the market in November and moving back to their original home, the couple watched prices sink around them.”
“Hinds said that after they listed their house for $435,000 and got no offers, they continued to drop their price. Eventually they lowered it to $339,000 and hoped to come out even and stop having to make mortgage payments on two houses.”
“On Tuesday night they finally took down the for-sale sign, Hinds said, and decided to look for renters. She said she will have to go back to teaching. ‘I love my son. But if I knew the market would have dropped I would have waited and not had him now,’ she said.”
“From April to June, 1,489 homes in San Bernardino County were lost to foreclosure, up almost tenfold in a year, while Riverside County saw a record 2,509 foreclosures, eight times the figures from last year. The number of resale homes vying for buyers has increased almost 24 percent so far this year, compared with last.”
“Ken Gonzales said he and his wife are postponing plans to downsize to a retirement community because they were unable to get their price for their four-bedroom house in the Orangecrest community of Riverside. He said that in the three months they had the house on the market, only two agents brought clients and a half-dozen people wandered over from the community park across the street. There were no offers.”
“Gary Teeters, the owner of Coldwell Banker Kivett-Teeters with sales offices in Beaumont and Hemet, said most sellers today are realistic about pricing their houses and will negotiate. But he said, ‘buyers are reluctant to commit to a purchase because everything they read and hear tells them the market will decline more.’”
IF ANYONE IS INTERESTED
There will be an SF bay HBB party in Arguello park in Belmont, CA on Saturday, September 15th (this Saturday) at noon.
I will bring a purple frisbee and potato salad, and we will go drinking afterward.
Please RSVP to this post if you think you wanna go.
Thanks,
Big V
This HBB party idea has me like a dog has a bone. I can’t let go of it. Anyone up for similar festivities in Tucson?
You should plan a big party after this year’s Super Bowl because it is the start of the selling season right ?
Hey, Rich, that’s a GREAT idea! You in Tucson?
Slim I’m in ground zero of this mess ( High Desert CA section) but it be my pleasure to meet the World Famous Arizona Slim, but another time my friend.
Hi Slim, I’m in Philadelphia, but will be back in AZ eventually. Ask me in high season. Maybe I’ll get to meet NYCityBoy before that.
A housing bubble party? C’mon, you need to bring popcorn.
Any people in Southern New England up for one?
And we’ll meet under the “It’s Different Here” sign. Anyone have a 20-pound trout?
You need to have that party now or be priced out forever
Anyone up for one in the Southbay part of LA?
I’ll be there wkend of 9/30
Sounds good Saturday or Sunday? Saturday the 29th is better for me.
Location suggestion, just for the schadenfreude, the cheescake factory. (All the dying F’B’s love to eat there…)
I’m welcome to other suggestions.
Got popcorn?
Neil
ps
I was wondering what my wife would think when I asked on this… turns out she’s meeting up with a group from her blogs. LOL.
pss Redondo Beach?
Bummer - the one weekend my brother is escaping LA to come to the desert. I’d be willing to put together a party out here in Nov or Dec when the weather is great. By then the panic should be in full swing and we can really have some fun between swimming, golfing, picnic, etc.
If anyone’s holding one on the L.A area, then count me in.
I’m going to Yellowstone with my husband and MIL next week (my own Private
IdahoHell, but there you are) but will be back by the end of the month, ready for shenannigans.LOL! Sounds like fun, speeding pullet!
Hope you have a great week!
I’m in Oak Park, Ventura County, and would love to put a face with many of your monikers.
Matt R.
Definitely.
You’re holding this in a public park? Huh? Haven’t they run out of land?
Camaraderie is the greatest defense.
Best,
Leigh
I would go but I’m afraid a fleet of H2’s driven by Reeltors would accidently run over everyone. Led by David L.
the logical place to hold a HBB party is at an open house…
We’re in San Diego, but would be willing to drive to LA for a HBB party. We love the Cheesecake Factory! Yum!
So much for it’s different in the SF Bay Area. Sales are down foreclosures are up.
Crash & Burn baby…
These are the places that you’d never be willing to call “home”. Normal places are still selling (albeit taking a little longer) at asking price.
I feel sooooo bad for poor Davey. Imagine the horror of not eating out very often or camping instead of flying to the Caribbean!
These people need a reality check. I prescribe a trip to a poor village in northern India, let them see what real housing horror looks like.
“Early this week, Bob Majorino took a team of Prudential employees out to tour the Oxnard properties that have been foreclosed upon. ‘Looking around, I have to mentally adjust because I don’t see this every day,’ he said of the change in prices.”
With all due respect to Lt. Kilgore:
“You SEE that? Do you SEE that? Foreclosures, son. Nothing else in the world looks like that. I love the look of Foreclosures in the morning.”
Blame the media!
I’m surprised nobody has tried to blame Bill Clinton for this mess.
Bill Clinton was responsible for the real estate meltdown in Southern California in the early 90s, ’cause until January 1993, housing was right, tight, and outta sight (if you listen to the true believers.)
They have, Joe, they have…
“On Tuesday night they finally took down the for-sale sign, Hinds said, and decided to look for renters. She said she will have to go back to teaching. ‘I love my son. But if I knew the market would have dropped I would have waited and not had him now,’ she said.”
Notice what is absent: if I knew if the market would have dropped I would NOT HAVE BOUGHT AN OVERPRICED HOUSE THAT WE COULDN’T AFFORD WITHOUT RESORTING TO A TOXIC LOAN.
Instead, she blames her kid for getting in the way of flipping investment properties.
yes, people have scary priorities, don’t they?
Yea, amazing but not surprising.
I know this doesn’t apply to everyone in her boat, but her comment is very telling about where we are headed as a nation. This is esp. directed at your repsonse to me in the previous thread incomestream. Not getting on you, just responding about the interesting times ahead comment you made. With her attitude I don’t need to wonder why I hate people, my job, and work at times.
It just makes me want to throw up may hands and give up the ship. Not in the worst case scenario, but just go to seed and not care about anything. She would rather forego the experience of parenting, all the bad, but ALL THE GREAT, just for a home.
We have seen the enemy and it is us. Man, this planet would be great, if it weren’t for all the people.
OCDan,
I don’t think she would rather forego the experience of parenting for a home. I think the point was she wanted to be home with her child and because of her flop she has to go work and leave the kid in childcare.
I think the point of her “investment” in the house in the first place was to find a “sweet deal” that would enable her to be a stay-at-home mom.
Sure, it was dumb, but I don’t think she doesn’t love her kid.
sorry, Carl, your neighbor Dan is right. Why would anybody say something like that!?
“Out of the abundance of the heart, the mouth speaks.”
Under stress, people say what their hearts really feel.
Poor kid. Mommy is a moron (IQ is lower than just dumb), and now she’ll be subliminally be telling him that his existence forced her back to her job.
Save this part of the blog and send it to the kid when he get’s older.
“Hey son, you are a mistake!”
“she and her husband had hoped to live in their new, expensive house for two years and then sell it at a $100,000 profit. ”
I’m guessing this sort of 2-years-then-flip scheme will prove to have been a huge part of the speculative buying that ran up prices, especially in areas that might be consider vacation/getaway areas. Hey, we’ll enjoy the property, then cash it out after a couple of years in for a huge profit.
OOps.
Two years is the magic number for owner-occupied capital-gains exemptions, right?
Exactly. A pretty good bonus if you managed to utilize it once or more times between, say, 1999 and 2005-6 or so ….
Of course, it just encouraged more people to do the “live-in extended flip”
And, to be exact, I think it’s that you had to occupy the residence two out of the last five years before selling (not that the IRS checks your occupancy unless you get audited, I guess)
That’s why the 2/28 pay option loans became so popular. Now we the taxpayers get to bail them out through the GSE’s and FHA.
Now that story is definately like watching a disaster unfold that no one can stop. Those folks are soooooo F-n hosed and they don’t even get it. A moron could tell you how this one finishes.
I would like to be there 15 years from now when sonny reads how mommy felt back than.
The part that floors me the most, she thought that they could flip the house for $100K! Wow, real investiment genius. I don’t even think they thought of it as Greed, but rather INTITLEMENT. And the kicker, she’s going to go back to teaching! I,I, I think I’m having the big one.
there goes our education system
Know a few teachers that drank the cool-aid.
Was talking to a Business Broker today – the realtors here in Phnx. are wigging. Trying to get into business brokering and they are in for quite a surprise. Different rules, way more classes to get licensed, different kind of practice insurance, at least a year under the wing of an established broker that they pay dearly for, confidentiality agreements – everything is done behind closed doors… they’re selling a business – and it’s generally never something businesses want to advertise to their employees during the process…
She’s had a few e-mail her about listings. They get told “you’ll get a finders fee, but we don’t co-broke with realtors. You don’t have the proper insurance to do these deals…”. She’s annoyed because they try to hide who\what they are. She asked one about signing the confidentiality agreement – the realtor didn’t know what that was. She just kinda laughed. She also related from a few who she knows that they report half the phone calls going on in the offices are people trying to line up their next jobs, so I think their numbers are thinning fast.
About this deciding to look for renters, where do I start? Landlording’s not the easiest of jobs. In fact, if you’d like to learn how tough it can be, take a look at this bookstore:
http://www.mrlandlord.com/mllshop/management.html
Frugal HBB-er tip: Your public library can probably hook you up with quite a few of these books. If they don’t have them, try Inter-Library Loan.
Gonna get renter. You and hundreds of other FB’s. Check out craiglist down that way. TONS of homes available (condos/apts OMG!). Everyone is trying to rent out something there….
Ha ha aha ha
hehe This is so priceless….. this woman is like I love my son, BUT if I’ve known that that I had to give up living in a 5 bedroom 4 bath 3 car garage house that I like so much, I would have never had my son that on top of giving my luxurious home costs me a lot to support. Wow that’s America folks, there you have..
priceless, she is so dumb that she’ll even tell that to a reporter… wow
and Beaumont is such a garden paradise, isn’t it?
Yup, it’s the garden spot of the IE………..
$435k for a home in Beaumont. Did they not lean back in the lay-z-boy and think of how insane that sounds. You should be able to buy a housing TRACT for $435 in Beaumont. $135k maybe, even that sounds too high for that shitehole.
$435 = Beaumont = crazy
Blowmont is a piece Of S*it area to have a home. If you commute to LA OC or even riverside the drive along the 60/10 going thru moreno valley is hell, both ways. Plus there is a seedy side to blowmont-lots of riff-raff off the 10 fwy. No home in blowmont is worth 100,000.
Hi Hawk.
You know, I just don’t get it…children are NOT a commodity.
Gawd…talk about selfish! Then they wonder why offspring (bracelets on the arms) are ruly.
Children are getting the message they are sent…perhaps ma and pops could have waited…
Talk about reap what you sow! (no judgement)
WE (the collective greed) created a mess they [this generation] may never recover from. Sigh. (reaching for aspirin).
Leigh
P.S. We have one 22yo son (wanted more…long story)
Could NOT even imagine wishing him away for WEALTH?
Thanking lucky stars (not judging) we do NOT think in this fashion.
Nice person, great manners, fine human being. (Wish we could take credit…just flew in that way…very lucky).
And love, hard work, fun, quality time…maybe we helped some.
I love you Son : )
“Hinds said that after they listed their house for $435,000 and got no offers, they continued to drop their price. Eventually they lowered it to $339,000 and hoped to come out even and stop having to make mortgage payments on two houses.”
Aha! I’ve been telling everyone about my co-worker who bought in Blowmont last year and those numbers are almost exactly his situation.
This was never about her wanting to stay home with her kid. Obviously. It was all about not wanting to work. Lazy, greedy, bitch!
I notice that median prices increased in most bay area counties on the DQ report. Any bets if that’ll finally turn around next month?
Was that for the month of August? Or July?
August numbers will be ugly–that is when prime jumbo dried up.
“‘Lenders are not modifying these (adjustable-rate) loans,’ said Martin Eichner, director of dispute resolution at Sunnyvale’s Project Sentinel. ‘A lot of these loans are so hopeless and irrational that lenders won’t even talk to us.’”
The thought they would modify them en-mass was a horsesh*t notion to begin with… That has to be one of the hardest things on earth to get accomplished even when you are beyond bankruptcy and jobless.
More fool’s gold being sold to the sheeple. It’s not in their interest to modify. Because any modification that results in them not making money will not be done.
As they note later in the article, most of the people in trouble simply can’t afford the home they are in. Most can’t come close to affording the home they are in. Modifying the loan to distribute the payments differently won’t work.
The only way out is for lenders to write off a loss and let current occupants effectively short sell to themselves. But as we know, lenders are doing everything possible to NOT recognize losses.
Another interesting thing I read on the L.A. Times site yesterday on their blog, which I have to verify because I thought purchase money was purchase money. But it’s that these 20% piggybacks actually have recourse so if you foreclose they can still make you pay the second even if you don’t own the house purchase or refi. If that is the case the chances of a modification unless you are just destitute and can show a way that you can get it done, are none and none. With no way to BK it you’re on the hook for a long time. So foreclosing instead of a workout is a no brainer. I’m really going to have to research that to get clarity howerver…
Ouch, 20% of even 600K is what, er, uhhhhh….120K. That is some serious pain. Then add in the 1099 for the feds. On top of that, if they make the AMT. Oh brother! Why bother? Move to canada and just use an alias. Work as a farmer. Sure, the tax up there is tough, but with what awaits some of these FBs, I think relocating is the best move. Besids, like Mike wrote earlier, stick it to the MAN!
I like this quote from main post:
‘Home ownership is a great thing,’ said Taylor, ‘But only if you can afford it.’”
unfortunately most people can’t afford it at today’s prices
The reason above in the article is just another bit of proof that reducing the Fed Rate will do nothing! If you are upside down the rate could be 0% and you will still be stuck with a loan on a house that is worth less than your mortgage balance…The tidal wave has to come in and complete going out before we will see the light..and that is years away! So many do not want to face the reality…
Gary Teeters!
Ben………….You’re makin’ em up again. Aren’t you?
“Gary Teeters, the owner of Coldwell Banker Kivett-Teeters with sales offices in Beaumont and Hemet, said most sellers today are realistic about pricing their houses and will negotiate. But he said, ‘buyers are reluctant to commit to a purchase because everything they read and hear tells them the market will decline more.’
You betcha! Jeepers, Creeper, where’d ya get those crazy Teeters?
At least Teeters’ business partner isn’t named Totter. I hope.
With Heywood Jablowmi as office manager.
gary teeters from hemet.
how come I picture an inbred toothless imbecile?
If you hear banjos, run like hell.
don’t worry, I will!
‘I love my son. But if I knew the market would have dropped I would have waited and not had him now,’ she said.”
This greedy cow and her ilk are signs of how out of whack this country’s priorities have become. I wouldn’t trade either of my kids for all the money [or house] in the world. The bovine stupidity and hubris of this couple - buying an overpriced house on the assumption they can bag an easy $100K profit after living in it for two years - is sickening. Of course, what should be their number one priority - properly raising the child they brought into this world - will probably be their last priority, after their well-deserved financial loss on their second (hence, unnecessary) house and servicing their galactic sense of entitlement. Imagine when this couple is old and broke, and they try turning to the son they neglected - justice would be him slamming his door in their faces.
She can walk away from the house, she’s stuck with her son.
you mean he’s stuck with her.
Sammy, good comment! You beat me to it as I posted the same idea above, but later. I am so sick of these people. Even if this came out wrong, it just goes to show that people don’t think before they speak. However, I think she did mean this.
As for being stuck with the kid. Good gracious. Unless you have a little Hitler/Manson-like child, the good outweighs the bad. My two children, while nowhere near perfect are incredible benefits and one of the reasons we chose to sell and rent/move closer to my work, let my wife stay at home (a decision she fully endorsed since the day we married 14 years ago), get out of a mountain of, yes, self-inflicted debt that no one perpetrated on us, and bank a bundle.
The alternatives she considered appear to have been limited to “have a kid and buy a home” versus “have no kid and keep renting.” Why doesn’t it occur to people that many, many families rent and have money left over after paying their housing costs to send their kids to summer camps, music lessons, karate class, good schools, etc?
Amen, GS!
As parents of 3 (one intentionally conceived and born while we were living in a rental), I can attest to the fact that our kids have suffered no ill effects from renting. We are able to live near DH’s work, and I get to stay home with them. Why? Because WE RENT!!!
I second that. I just had my first and I…gasp!…rent. The kid doesn’t know any better–they do however, pick up very quickly on stress, tension, and emotion in the house if you’re barely scraping by.
I walked to work today. My wife downsized her job while pregnant (less pay, less hours), and if she doesn’t want to go back to work, she doesn’t have to. All because we rent.
Life is good. Life is very good.
Notice how she has no problem stealing $100K from the next couple and THEIR kids just so SHE can have the easy life without working in order to raise hers.
Disgusting.
Correction: raising kids **IS** work — the most difficult and important work a person can do.
C’mon….seriously. Ms. Hinds of Beaumont did NOT say that she regretted having a son. She simply said that if she had foreseen her present economic situation, she wouldn’t have had him NOW. Which actually sounds fairly intelligent to me.
Nothing wrong with a bit of family planning, is there? Or are all of the commenters devout Catholics? If I had been born in November 1929, would I feel unloved if, in 1944, I learned that my parents had said that if they knew the Depression was coming, they would have waited to have a son? Not really.
The only really stupid thing that Ms. Hinds said is the business about “if I knew the market would have dropped”. Shitehouse mouse, if any one of us could tell the future–as opposed to educating ourselves and making reasonable predictions about what the market will do–we wouldn’t have to worry about things like the stock or housing markets.
Wine CD, Hi…Leigh here.
C’mon….seriously. Ms. Hinds of Beaumont did NOT say that she regretted having a son. She simply said that if she had foreseen her present economic situation, she wouldn’t have had him NOW. Which actually sounds fairly intelligent to me.
Nothing wrong with a bit of family planning, is there?
It’s difficult to know if you’re pulling our collective toes (sarcasm?).
Family planning is not putting the $100k first and the child second (IMHO…no offense intended).
Best,
Leigh
Family planning is not putting the $100k first and the child second (IMHO…no offense intended).
———————-
No, but intelligent family planning does include making preparations so a parent can stay home to take care of the kids. I think that was this woman’s point. She does NOT regret having her son, just regrets that she can’t stay home with him. Makes sense to me…
Not at all, Leighsong. My comment was genuine.
Many commenters on this blog are seemingly obsessed with depicting people who showed poor financial judgment in the recent boom as idiots, feebs, “maroons” (a good one), mental retards (did I say “feebs”?), riders of the Short Bus and, in general, as utterly contemptible. Kind of an overreaction, in my view. People make silly decisions in all walks of life (I would wager that many of the commenters here–maybe even you–have done so, if not in finances, then in other areas of their life); it doesn’t mean that their continued existence is risible.
I don’t read Ms. Hinds’ comment as establishing a preference for $100K over having a son. In fact, misguided as it may have been, the plan was to use the $100K to facilitate, overall, the raising of the son. The major thing that I did object to was her statement that “if I had known the market was going to drop”…..Hey, if the Queen had balls, she’d be the King (if you, or any other reader, is sensitive about the imagery, substitute “if the King had ovaries, he’d be the Queen”.) It doesn’t make much sense to sigh over things that are impossible.
Actually - if they concieved any other time (the next day, a year later, different sperm, etc) then their kid would be a completely different person - right? So the comment actually means that she wished her son was a completely different person. She meant that if she understands basic biology - but maybe she’s not that bright.
Daddy….mommy said I was a bubble baby……whatsa bubble??
“Ken Gonzales said he and his wife are postponing plans to downsize to a retirement community because they were unable to get their price for their four-bedroom house in the Orangecrest community of Riverside.”
Yes, I know, the market will come back next year and then you can move to your retirement community…*slap*…sorry, I was dreaming again!
Dude, the price will go back up to where it was when you both are dead and buried. Get rid of it now before you lose even more next year.
Such morons…
But the retirement home should be cheaper than their current, large house, right? So it’s not that they CAN’T sell and move down, it’s just that they don’t want to because they know it’s a better deal to downsize in an expanding market than in a receeding market. So silly. They should just sell that big house and move already.
My guess is they don’t actually have any retirement savings and were counting on phantom home equity gains to finance their golden years.
Groundhogday,
I agree with you. I have a feeling their “retirment plans” were just exposed. Most likely they’ll have to walk away from the big house and greet at Walmart until its too late.
Got popcorn?
Neil
‘were unable to get their price’
- Ole Ken knows what he is doing … he will not sell unless he gets his price, after all - He’s not going to ‘give his house away’.
My sister-in-law lives withing spittin’ distance of these poor bastards. If their original listing price was 425K, I’m guessing it was 3/2/3 of about 1800 - 2000 sqft. My sister-in-laws place is a 2500 sqft and at the top it would of broke 500K. Now here’s the deal - They bought in ‘01 for 198K. So I figure normal appreciation should have them at about 280K today if you take the bubble of all bubbles out of the equation. I told her the other day to expect her home to drop to the low 300’s within the next couple of years, easy. The couple in the story? Mid 200’s is what there looking at real soon. Retirement? Don’t count on it.
No worries. That retirement home will still be there in 10 years when you are above water again. Plenty of time to top of the war chest so you have coin to purchase incontinent pants.
Try 15 years, minimum. We can’t go off past housing cycles with this monster.
x boss insisted on buying in 2/06 in Riverside - $1M for house - he had just moved out from east coast. When I suggested he might want to wait as he didn’t know the area and the market was going to dive. He asked if I was a real estate pro and when I said no - he said then why should I listen to you. He put another $200K into it. I wonder how much he’s lost in value so far. You couldn’t pay me to live in Riverside - the air is putrid and their idea of culture is a joke.
I had a co-worker JUST like that - Oh well!
I grew up in Riverside. I would be a little less quick to be critical of a very nice area.
Santa Ana is far worse.
“I grew up in Riverside”
I’m sorry. Need a hug?
I grew up in Riverside. I would be a little less quick to be critical of a very nice area.
Santa Ana is far worse.
Crazy : Serves you right for trying to help.
Feck ‘em. Let him buy in haste and repent in leisure.
Watch out: He may also hold it against you for being right. Never mention RE again in front of him. Ever heard of shooting the messenger…
The guy was an ass - he actually said to many that he doesn’t like to be told what he doesn’t know even though he was new and didn’t know anything. I lasted 1 year after that and quit. I didn’t mean to insult Riverside, but it’s not what it used to be. Many yuppie types have moved in and think they are all that. It’s not just my opinion about the air quality there - IE has worst air quality in SoCal. Used to live in Idy and you could see the the brown and gray haze hanging over the IE when descending the mountain in the am.
‘I love my son. But if I knew the market would have dropped I would have waited and not had him now,’ she said.”
Ben, destroy this post! What if little boy Hinds reads this in about 10 years. It’ll devistate his self worth!!
Every time he looks at the mouth-breathers who spawned him and realizes he carries their DNA, his self-worth will die a little.
mouth breathers
When he turns 18, I picture his old toothless mom smoking on a Camel Light..”boy, if it wasn’t for you, i’d have two houses right now to retire with. Now look at me, working 3 jobs to keep us in this tiny trailer.”
HA HA HA HA !!!! Now that is funny !!
breathing was likely all their mouthes were being used for…
given the kid and all …
She said it to a reporter, so you can be sure it’s online elsewhere. Wait until the kid is old enough, gets curious, and Googles his name…
OT, from Florida: Don’t worry, it’s all good!!
http://media3.washingtonpost.com/wp-dyn/content/photo/2007/09/12/PH2007091202876.jpg
LOL! Those cupholders look like skulls, too.
Backstory on this?
Sorry, I was laughing so hard I forgot the rest. Marlins game in Miami with “perhaps” 400 in attendance.
http://www.washingtonpost.com/wp-dyn/content/article/2007/09/12/AR2007091201874.html
I guess all the Miamians were out flipping condos instead of attending the game?
That empty stadium is amazing. If its a trend, even a short term trend, that will be amazing. Obviously that game was at a loss.
Got a fan base?
Neil
instead of the game’s high costs of attendance, they are at the local bars sucking up relatively cheap beer watching the big screen..
alcohol.. recession-proof.
Inside source at WCI says some bad news is about to hit the fan. He couldn’t say much but I could tell in the tone of his voice that it wasn’t good. Let’s see what happens.
The executive vice president and chief financial officer of homebuilder WCI Communities Inc. sold 25,000 shares of common stock, according to a Securities and Exchange Commission filing Wednesday.
No insider trading there, huh? Brazen.
I think the executives are gone and Icahn is bringing in his own people. This might cause the stock to pop.
Hi CA bloggers. This is a bit of an OT question. Can you recommend any communities north of SF as potential retirement spots? This will be years in the future. Looking mainly for moderate temps and relatively low crime so I can enjoy outdoor activities like hiking, biking, and maybe a little golf, all year round. Would prefer something within about 2 hours of SF, but other ideas are okay too.
Thanks,
Bill
If it takes a big enough dive look at the Santa Cruz, Aptos, La Selva area. Nice weather, close to SF, tons of parks, MTB trails, and nice beaches. My parents moved from there to Folsom and god do they regret it.
Bill - no way to forecast that far in the future. Places that aren’t too sucky now…well all bets are off with decline and decay. Nice places can suck 10 years from now. Your best bet is a place relatively untouched by new development.
Napa.
Check out Healdsburg. Still very nice, last time we looked.
Point Arena. Rustic. Actually a town. Surfing if you don’t mind sharks.
Head farther up to Ukiah if you want something really rustic and much cheaper than Napa/Sonoma. Mendocino County.
But rent there a month in the winter to see if you can handle it. It’s an oft-repeated story: retirees buy on the northern California /Oregon coast in the summer and later have to bail.
“…retirees buy on the northern California /Oregon coast..”
One time (late 80s) while driving from Washington to L.A., I decided to vary my route and drive along the coast (Tillimook area) of Oregon. I was beautiful. I mused to my wife ‘Wow. It is gorgeous here. Wonder why it is so sparsely populated?’ Then the rain began to fall. Soon, logs were floating across the road. I gave up and made a dash over the mountains just to get away from the coastal rain- it was literally like being in a car wash- sheets of water running down the windshield. That is when I learned why not many people live out there… (that and the fact that you have to brush up on your Finnish if you want to live in Astoria)
Ahem. In the above, replace ‘I was beautiful’ with ‘It was beautiful’. Perhaps I have subconscious narcissistic tendencies.
I spent four winter months at a friend’s beach house near Newport, OR. It was very beautiful, dramatic coastline with deep forests and green valleys just inland. The six days it didn’t rain were especially stunning.
Jesting aside, the people there are among the nicest and most genuine I’ve ever met, and many of them are working some of the toughest jobs there are (i.e., logging and fishing.)
Tillamook… the land of cheese, trees, and ocean breeze (cows
Tillamook means “land of many waters”.
Spend a winter there and find out why…
Thanks for the ideas so far… keep ‘em coming. I’m not asking anyone to forsee the future. Just making a list of places to visit the next time I’m in SF and have some extra time.
Bill
B.C. Canada
The joke is that “BC” means “bring cash”. California RE prices, Oregon incomes. For now - just wait a year or two.
Anyway, foreigners can’t retire to Canada unless they are independently wealthy. You can visit for up to 6 months a year, but you’re going to have to drop south of the border if you need medical care, or pay for it out of pocket. Canada’s health care system does not cover visitors, and I don’t think US Medicare pays out-of-country.
If that part of the world appeals to you check out Washington State.
I’m rather perverse, weatherwise (I like in Alaska, after all)- I actually rather like the Susanville, CA area. At least it is really far away from the CA population centers…
You just described Bend, Oregon. Unfortunately, all the housing locusts heard about it a long time ago.
Bend has a short summer, and it’s 2X overpriced at the moment. The locusts will be dying in droves shortly. Case in point: My friends bought into a new development there (they have a longtime family business there). CC&Rs prevent renting. Currently, there are seven *7* empty houses on their street for sale… every one “owned” by a stuck flipper.
BillL if you went ultra North, you’d eventually get to Argentina. Does that count?
Stan, that is actually not true! Let’s say you went due north from SFO and then continued across the north pole without turning left or right. You would’ve started out on the 122.5W longitude line, and after crossing the pole you would be on the 57.5E longitude line, taking you down through Russia into Iran and then into the Indian Ocean. Buenos Aires is wonderful but I wouldn’t like to live in Tehran (or more accurately Mashad).
You’ll probably find some great deals after SF is hit with a few earthquakes in the next few years. Man, there’s been more 7+ earthquakes worldwide in the last few years than ever before. We’re headed for a gianormus solar storm in 2011, usually a precursor of major earth changes. Put on your tin foil hat and move to n AZ or s UT. Good luck.
N arizona or s utah, where the soil is radioactive. Great idea.
Just don’t buy in the El Dorado hills
http://www.motherjones.com/news/feature/2007/05/not_in_their_back_yard.html
News: When the EPA discovered asbestos in their Little League fields, the residents of idyllic El Dorado Hills rushed to protect themselves—from reality.
>snip
“‘If we don’t refinance before next May, it will jump to the fully indexed rate of at least 7.5 percent. That would add $800 a month to our payments. By refinancing, I figure the best we can do is around 6.75 percent on another jumbo short-term, interest-only fixed. Even that will increase our payments about $500,’ Davey says.”
WHAT? You mean banks are still giving out teaser-interest-only ARMS to serial refinancers? I guess he can keep his house ’till the equity runs out. That should extend the decline for a while.
“…I figure the best we can do is around 6.75 percent on another jumbo short-term, interest-only fixed…”
He hasn’t had a conversation with a banker/broker yet. Get back to me when he does…
This guy had an IO loan on a house he owned 12 years ? Whats wrong with this picture ?
He didn’t want to “throw his money away on rent?”
How about the fact that the brokers are working around the Jumbo issue by..get this..give the first loan up to the Freddie/Fannie max of $417 and then doing a SECOND on the balance..Ouch!!! Can you imagine the interest on that second!!!
Who will provide the 2nd?
You laugh, but I’ve heard of private investors doing it. Rates around 12-15%. No joke.
15%? only the gary teeters of the world would want that action.
Some of the int only’s here in Phnx top at 17%. Who’d be that crazy you ask? Well, apparently many were… guess they had to finance that half mil condo down south of the boarder..
Now that’s upside down.
Tom probably has a lot of equity even if he has to price 20% less than 2005. Mill Valley is a very nice area. I don’t think prices have fallen much there yet. If he hasn’t refinanced since 2002 or 2003, he would be better off not being able to refinance and selling now rather than dragging it out. He probably could walk away with 200-300k if he doesn’t wait a couple years.
“Some sellers, such as Marcia Hinds, of Beaumont, have given up. Hinds said she and her husband had hoped to live in their new, expensive house for two years and then sell it at a $100,000 profit. With that they could move back to their first home, which they still owned, and she could stay home with their new baby.”
Hm, ya, I think I’ll take my life savings to the roullette wheele and if it works out right, I can stay at home and raise my child. Morons.
“Ramona resident Michael Wrightsman, a site superintendent for home builders for 29 years, said he cannot find work after three months of looking.”
“‘I can’t last much longer – I’ve maxed out my credit cards – and if I don’t make my truck payment this month, I’ll lose my truck…
So basically this guy saved NOTHING during the boom years, didn’t even pay off his truck. Three months without work and he is about to go under. 50 years old, 4 boys, and no savings. Good job taking care of your family.
It’s often said a that a whole lot of people are only a few paychecks from bankruptcy. I think this will be another theme as we move forward with this bust, no savings to fall back on. Save us Uncle SAM !
and I had people laughing at me with my..7 Year old car….well we saved and bought our last car with cash this year…so when my son reaches driving age next year..that paid off 7 year old car in the garage is all his!!!
I can remember my parents driving used cars into the ground. In fact, I used to enjoy watching the road rushing by beneath us. This was after part of the floor fell out of one of our cars.
happened alot w/ vw beetles - esp around the running boards
When I finally got rid of my 1974 Gremlin in 1986 (that HAS to be some kind of record), the road was visible through the floor on the passenger side and the passenger door had to be lifted while closing it because one of the hinges had rusted away. It was your basic deathtrap at that point, but it still ran.
I drove my 1977 volvo wagon for 25 years. Gave it up when the air conditioner quit working. Had over 250K miles and still ran strong. Purchased my Beemer with cash and plan on running it until it dies. On the other hand, my husband bought a Sable. It lasted about 6 months before the tranny gave out.
I drove my Mazda pickup (four cylinder) 1972 into the ground. I then purchased a 1980 Pontiac Sunbird (first new car), drove that for 20 years. Had 275,000 miles and still would have kept going. Unfortunately the body frame was falling apart and parts were getting harder to find. Right now I am driving a 1982 Oldsmobile Custom Cruiser station wagon. This is on the second engine. This engine has over 150,000 miles on it. Looks like I will have to let this one go pretty soon. Once again parts are getting harder and harder to find for the car.
When my boys were ready to drive I bought a 1988 Ford Taurus with faded brown paint and brown interior with bad headgaskets for $125 bucks. I fixed the headgaskets and they “learned” to drive it. What was funny was kids at their high school with no car would make fun of it but other kids thought it was a cool car for $125 bucks. Thanks to my dad for teaching me to fix anything home or car.
Mom, is that you (disguising as Annette)?
My first car was a 1983 Skylark Buick. Engine tend to stop at low speed, and it was difficult to maneuver because it has no power steering.
My uncle works in construction, and his van odometer broke when it had 870K miles on it. He drove it for another 5 years, a total of ~15 years. To this day we still debate whether it went over 1 million miles, because the last three years it did not see much driving.
Cinch
Groundhogday -
Welcome to reality, I see this type of situation day in and day out. The vast majority of Americans live this way.
Unforunately, I must agree with mrincomestream. One of my coworkers who should have been in great shape financially in instead in trouble. Overtime was curtailed for a bit (now definitely back on). Well… he couldn’t meet his lifestyle obligations w/o overtime.
What way is that to live? Oh well, this is going to be on heck of a rinse and wash cycle.
Got popcorn?
Neil
Neil,
You can’t imagine how many people I meet who think that overtime is part of their “regular” pay — something they are entitled to & account for when determining what their expenses should be.
Even my husband tends to fall into that trap (esp what he thinks we can “afford” for monthly housing costs) & I have to keep pulling him back to reality.
Unfortunately, a lot of overtime (public & private) is going to disappear across the board, IMHO.
Why is Cupertino seemingly immune to all this turmoil? It’s killing me… Still there are 30 offers to a one million dollar house… Are these people insane or do they have lots of money…(probably Google/ebay/yahoo) with lots and lots of stock options?
Apple’s headquarters… probably a good source of jobs.
Apple and the other local techs are only a small part of it. Cupertino has a highly concentrated Chinese community and families pay a premium to be near the best schools.
Absolutely.
check out Saratoga. A house in Cupertino schools will generally sell quickly. Moreland or Campbell, not so much. Woodside Drive in Saratoga is a good example. Some houses there on the Cupertino school side have sold quickly for way over asking, like $1.48 for a 1900 ft2. On the Moreland side, there’s an equivalent house asking ~$1.3 that’s been for sale for quite a while.
Even within cupertino, houses west of De Anza (Monta Vista High) are significantly more than houses east of De Anza (Cupertino High, lower API scores.)
It is very strange, there’s a little island of continued high home prices along hwy 85. The jumbo mortgage situation may change this.
Actually it may be better financially to save $150k and buy the non Cupertino school house, then send kid to private school. Works out if you have one child, maybe not if you have two.
Cupertino is holding up a little better than other places, but is not immune - there are reduced price listings, and this is even before the end of “Jumbos for Dumbos”. Bubble-Swamy (BS for short) showed up with the same message on Patrick.net, and could be an out-of-work realtor trying to keep knife-catchers alive in Cupertino.
SP
“Tom Davey…has plenty of equity in the home, which he bought 12 years ago. ‘Although I’ve been thinking about selling our house to cash in on all that equity, we should be able to get by keeping it. But it will mean tightening our budget, such as eating out only on rare occasions and camping more instead of flying somewhere for a vacation,’ he says.”
Someone’s laughing, Tom, kumbaya
O Tom, kumbaya
Does Tom really have any equity left. Given his loan, it is obvious he refinanced at least once during the boom years. I’m betting that we he finally caves and tries to sell, there won’t BE any equity left.
I can recall very few vacations when my family flew anywhere. Instead, we drove and camped out along the way. I still treasure the memories from those trips.
Jen I got it
Anyone know what kinds of loans are available today compared to a couple years ago?
Any examples, like in 2003 you were going to get a no down loan for X amount with your income and deposit of X amount for a interest rate of X%. Now you can get X amount and have to put X% down with a higher interest rate of X% for the same credit score, income, etc.
I’m just curious about much less the size of a loan people can get, if they wanted to, with the the same credit score and income as 2 yrs ago. I would guess that whatever % payments would go up compared to a couple years ago, would be a good guess for % prices will go down or at least a minimum for the next year.
It is so different now..2003..no money down..FICO 500-500, no income proof, no asset proof…amount you could borrow..a million dollars plus…income..stated…no docs..TODAY..fico min is 670..full doc maybe some stated..rate depends on how much you put down/credit score/points…amount you can borrow TODAY is directly related to income and assets…and if you try to fudge the info the lender has you sign a IRS form saying what your income is..can’t remember to number/name of the form..if you don’t make your payments on time for the first year..they will send in that form to the IRS..that is what my buddy at the bank said..
“amount you can borrow TODAY is directly related to income and assets”
Great, that was what I was hoping. That’s the only way prices can go back to historical income to price levels (also depending on interest rates) for any given area.
Form is 4506
Is that a new form, MIS?
No, it’s been around for quite awhile. When they used to underwrite loans the lender would send it in to the IRS to verify income.
Once lenders get back to requiring full principal and interest payments, the monthly mortgage will be 2x what it was on a fully-amortized i/o loan, up to 3x what it was on a neg-am i/o loan.
So it sounds like prices should be half of what peak prices were in areas that had mostly i/o loans, if people most people could only afford their loans with i/o no down loans.
That’s my take on it.
Big V, the large % changes in the payments are not the result of adding in the principal, they’re the result of resetting the interest rates. At a 7.2% rate, the difference between an amortizing P&I payment and an I/O payment is only 13%. The lower the interest rate, of course, the more you notice the principal. At a 4.8% rate, the amortizing P&I payment is 30% higher than the I/O payment. Talking about 30 yrs in both cases.
However, the “teaser” rates make your conclusion quite valid, people eventually paying 2x or 3x what they were paying at the beginning. and the people who were paying 1% or some similar ridiculous rate at the beginning do indeed lack the ability to repay the principal in their lifetimes.
“Ramona resident Michael Wrightsman, a site superintendent for home builders for 29 years, said he cannot find work after three months of looking.”
“‘I can’t last much longer – I’ve maxed out my credit cards – and if I don’t make my truck payment this month, I’ll lose my truck,’ said the father of four boys. ‘It’s a bad situation out there. I don’t know where to turn or what to do.’”
Welcome to America, Michael.
“Ken Gonzales said he and his wife are postponing plans to downsize to a retirement community because they were unable to get their price for their four-bedroom house”
——————————————-
everyone was going to retire on the house……..backup plan? Savings? Didn’t think so.
the dim bulb in Riverside should sell the kid and keep the house. If the kid is still a baby, she can probably make a decent profit still.
I’m only partially kidding.
Hey a good kidney can fetch a tidy sum ya know…
Hey Txchick:
Do you think these stock market shenanigans will hold up? I hate it. I feel like everything should be tanking. This is just how I felt a few months ago about the housing market.
It could go either way. Option prices are still high which means either someone knows something or is expecting something.
txchick:
I don’t know if you’re still on, but I looked around and I can’t figure this out. The price for a call option is high, or the price for a put option is high? Are you saying that someone is expecting market to rise?
Scroll down a bit and read “Home on the Range”. Adam really is very generous with his knowledge of options.
http://www.adamsoptions.blogspot.com/
Thanks a bundle!
I’m clueless…I admit this outloud…chuckles.
http://tinyurl.com/2778w6
Is this how the players do put and calls and so may other things?
Best,
Leigh
Didn’t the cops arrest a mexican couple for trading their baby for a used Chysler Sebring few months back ?
“If the borrower can’t handle it, they can’t handle it.’, said Tom Kelly, a spokesman for Chase”
So WTF were YOU and your a@@wipe cronies thinking of when you were GIVING AWAY these very same loans just a few months back?.
They were probably banking on people having short term memories….which we’ve noticed that they do.
Tom: “Hey, what do we tell people now.”
Equally Clueless Colleague: “Tell ‘em anything. They won’t remember what happened 5 years ago, so you don’t have to worry about 10 or 15 years.”
BayQT~
“Some sellers, such as Marcia Hinds, of Beaumont, have given up. Hinds said she and her husband had hoped to live in their new, expensive house for two years and then sell it at a $100,000 profit. With that they could move back to their first home, which they still owned, and she could stay home with their new baby.”
“But after putting their house on the market in November and moving back to their original home, the couple watched prices sink around them.”
Whoa. They bought a second house…in Beaumont!!?!? I’ve been to Beaumont. Who on earth would buy a FIRST house there, much less a second? Were Barstow, Needles and Indio too out of the way for them?
But wait, there’s more! They actually moved to Beaumont, so assumedly Beaumont was somehow a more livable to them than wherever their other house was. What, do they commute to Palm Springs and Banning was too expensive?
“Whoa. They bought a second house…in Beaumont!!?!? I’ve been to Beaumont. Who on earth would buy a FIRST house there, much less a second? Were Barstow, Needles and Indio too out of the way for them?”
You are killing me. My sentiments exactly. I moved to Yuma, AZ three years ago for a new job, and have been renting. Kept scratching my head as prices kept rising. This place is a pit in the desert, 25 miles from the border with Mexico, a three hour drive to civilization. People were going around talking about how much money they were making on their house. No earthly reason why 1100 sqft track home should top $250,000 here. The average joe makes 8-$10 an hour. And let me tell you how ugly some of the houses are. Its like they had one design all over town. Some people are still drinking the koolaid because Yuma was rated a good place to retire. Prices are coming down.
Tina,
You are so right about Yuma. We moved there in 2005 and thought people were insane to pay $240,000 for a POS house. We got a transfer out of there earlier this year.
What was so amazing is as house prices were falling in Phoenix, they were going up in Yuma. Late last year we were at a mall in Tempe, and noticed that one of the same builders in Phoenix builds in Yuma also. The homes were cheaper to build in Phoenix than Yuma. Like you said Yuma is almost three hours from civilization. For the life of me, I can’t figure out why a house cost more to build there than in Phoenix.
Cost of transporting materials? Or maybe PHX enjoys economies of scale? E.g. cheaper (per roof) to put roofs on 300 houses than on 30 houses.
Oh the denial is thicker than molasses. If you want to be entertained head over the the San Francisco Chronicle’s website and view the comments on their latest RE article (the one linked here is old).
I bet if a nuclear bomb his SF tomorrow these guys would still be saying “it’s special here, just look at the orange glowing hills and the three eyed fish…prices will never go down, we don’t need jobs here”.
OTOH, most long-time residents of Miami seem thrilled their bubble is popping. I was reading the comments of a recent Miami Herald article today; they sound almost like us.
Presumably you’re talking about SFMann’s comments at this SF article.
His proclaims to be very wealthy and bemoans how people aren’t taught finance and economics. His investment strategy which he recommends to all goes something like this.
Always keep your house equity at 25%. If it goes over, then you “extract it”. Since housing goes up 3-4% every year overall to keep up with inflation over any 20 year period (except for what he deems “statistically insignificant outliers”. I guess the Black Swan analogy is not a good one for him), it’s like getting a 3-4% return on a 25% capital base if you can hold on for the “long term.”
But alas, the bank will charge you an interest rate on your “equity.” That extraction will need to be repaid, and there is a cost of capital attached to it that will exceed his inflation rate (banks have to make money too). That means he will have to invest his “equity” in something that yields a post-tax return greater than his post-tax cost of capital.
So, you plunk down your money in this investment source and cross your fingers while repeating “long-term, long-term, long-term” and ignore that nasty Keynes death comment.
Of course, you will need liquidity to get you through the times where your rate of return on your investment and housing appreciation have the nerve to go in the wrong directions. If you should be so unlucky to have this happen to you, you just grit your teeth and wait for the “long-term” to bail you out.
Should something happen to you like an illness, needing to move (ie, life) or heck, you just get stuck in one of those pesky statistically insignificant outliers, and if that necessary liquidity isn’t there and if you didn’t have enough years to qualify for the “long term”, well…thanks for playing anyway.
But on your way out of the casino, you learn a few things:
1) Leverage works both ways.
2) Is losing a dollar always equals to gaining one, regardless of the number of dollars?
3) The true meaning of the phrase “picking up pennies in front of steamrollers.”
The Ventura County Star reports foreclosures have risen by 780+ %. However, the numbers are misleading for 2 reasons. On the bright side, that 720% increase was based on the previous tally of 62 foreclosures. The new number being 548 foreclosures. The housing earthquake rumbling beneath those numbers could be a 7.5 on the housing richter scale when it breaks though the surface. The reason? Thousands (literally) of new homes being built all over Ventura County. If foreclosures are happening now - who can buy those $400,000 to $650,000 stucco boxes. It gets worse. I live in Thousand Oaks. All I kept hearing from my neighbors when the property market started to turn was, “It isn’t going to happen here. We have Amgen and CountryWide.” Mmmmm. Nuff said about CountryWide. Amgen isn’t looking too slick compared to days gone by either. No new drugs in the pipeline and they are offering big bucks to employees wanting to buy out. “It can never happen happen here.” Sure, that goes in my favorite sayings book along with “Now is a good time to buy,” and “Prices never go down.”
Mike, I live in Ventura. I hear that Oxnard has the highest amount of subprime loans in the state of California. I wonder where that man from Prudential in the article was looking when he made the comment about the foreclosures.
mike
i live in Toaks too. I’ve a friend who works in amgen. he used to argue with me for the past year that ” too many good jobs”, ” lot of people with money”, “fed will lower interest rates” etc.
recently I had a chance to give me the reasons, facts, showed some graphs from zip realty etc.
now where ever he goes, he recommends me as an expert in housing and with coutnry wide and amgen lay off announcement, he doesnot even talk about ” Toaks is safe , lot of good jobs ”
what a turn
he himself is not an FB, having bought in 2002 and husband and wife pulling in close to 180K. they are not in trouble.
he did his MBa from pepperdine and he was quoting some REIT expert professor and asking me what do I know that he does not know. this was before the layoffs and my spl lecture of course.
Wow, this is sad. MBA’s that appear to be illiterate. I hope I am mistaken.
“To be sure, many subprime borrowers have a basic problem that a loan modification cannot solve: They cannot afford their houses. They never should have gotten the mortgages they have now. They might have exaggerated their incomes or underestimated the drain of monthly payments.”
This is why I don’t think Schumer’s bill will do much to solve the foreclosure problem. In fact, it could have the exact opposite effect in the near-term, but tempting more families to buy homes they cannot afford, setting them on course for a future foreclosure.
Interesting “real life” note: My sun has the local suburban thursday weekly paper. We had “special” free plastic bags for rolling. The good folks at OSTER homes [hovanian] have advertisements on them for 4 subdivisions….1 year interest deals, “free” lots up to $85 k, and a ONE YEAR price guarantee among other enhancements. I think the rubber has hit the road…..[and the wife still thinks house prices are great because the local real estate 'guru' is going to TRY and develop the odd corner lots behind our 40 year old homes....] for some reason I think the lot has been VACANT 40 year is that living next to a busy stop sign with no trees really isn’t ideal!….even some RICH real estate guys STILL DON:T GET IT!..
OOPS…my “son” is my “sunshine” …but I guess i had the PAPER NAME…”new SUN” on my mind… HA HA!
Mike -
I rent in TO, just for fun I went looking at places last weekend.
(I am not looking to buy unless things drop to 2000 levels which aint gonna happen soon or at all). The places I saw were crappy for 500-600k, and there was a clear sense of panic in the realtors…. I would not buy in this market even if I won the damn Lotto…
Cruising by one of my favorite failed housing projects in the Central Valley of California, that has sat idled for over a year, and had been one of those walled off failures, compacted and gas & electric in ground, but no further…
Suddenly, there’s activity.
2 houses have been partially framed and there were 4 construction guys doing their thing.
Why are they bothering?
In Hinds sight, nothing went right.
“Some sellers, such as Marcia Hinds, of Beaumont, have given up. Hinds said she and her husband had hoped to live in their new, expensive house for two years and then sell it at a $100,000 profit. With that they could move back to their first home, which they still owned, and she could stay home with their new baby.”
Anybody know if aany of the condo projects in Orange County have been canceled or run out of funding?
To anyone who had lived through 89-90′ market run-up, did you see Mcmansions for rent then as you do now? I saw one the other day, and the asking price was $1M+ in Bozeman, MT. How bizarre!
Cinch
The late 80’s run-up was nothing like this one in size. But all the spin and all the optimistic predictions are the same. People are saying the exact same thing they said in 91/92. The only difference I see is the speed at which the corrections are happening. The internet is probably the driving force behind this.
“The internet is probably the driving force behind this.”
Okay then, before going beddy-by…
Dear Homeloaners,
Your dwelling is, or very soon will be, declining in price. Every mortgage payment you make, every utility bill, HOA fee and property tax levy you pay will only afford you the pleasure of watching that price decline even further. To make matters worse homebuilders and investors, both with much deeper pockets than yours, have already begun to undercut your home’s price even further. If that weren’t enough, many of your neighbors - through their own inability to manage their financial affairs - are flooding the market with foreclosed houses. Lastly, to add insult to injury - many of your fellow citizens are not clinging to the past but have already productively invested their money elsewhere, while you fall further and further behind. At this point your only solution is to cut your price before your neighbor beats you to it. Sell now or maybe sell never.
There, how’s that for keeping up the internet’s end tonight?
yep. Citi was big loser back then. looks like they learned a lesson.
Good one…
“Comment by jrutt17
2007-09-13 17:16:32
You need to have that party now or be priced out forever”
I was happily stunned to see a couple of large homes in Fontana, CA being listed on Realtor at very steep discounts. Home #1 is currently listed at $300K - 3,144 sq ft, built in 2005. Home #2 is listed at $350K - 2,300 sq ft, built in 2005. Both homes are in new developments in North Fontana. Here is the stunning part: I went on tax collector’s site to see how much those homes were sold for in 2005. Home #1 originally sold for $600K that’s a 50% price decrease, home #2 sold for $470K thats 26% decrease. These homes haven’t sold yet, so the final sale price will most likely decrease. The published statistics does not yet show declines this big, but it will in a couple of month.
One of the first anecdote of a 50% haircut, ouch!
Santa Clara real-estate - Anyone remember my neighbor who first tried to get $600,000 of a townhouse (!) in May because a realtor told her “it’s a seller’s mkt” (and my neighbor wouldn’t listen to me)? Remember when around June she got an offer for $575k & I said “take it!” (because I want her to be happy)? She did not take that offer because “I can get more”. When she did not in fact “get more”, she went down to $585…and then to $575…and I resisted mightily the urge to say, “I told you so.” Now her realtor is urging her to drop the price yet again…so my neighbor is taking her place off the market “until prices go up again”. (What amazes me is how otherwise intelligent people don’t want to invest the time to understand how mkts work.)
After tracking about 81 days worth of data for Santa Clara the city and Santa Clara the county, each week there are new highs reached. In SC county, today there was a new high of 2,652 current pre-foreclosures, according to http://www.realtytrac.com. Yesterday, there was a new high of 340 homes for sale in SC city. (When I first started tracking the MLS on June 8, there were 224 homes for sale on the MLS…so much for the summer selling season!)
Oops - make that “my neighbor tried to get $600,000 FOR HER townhouse…”
Most people just can’t bear to be wrong, that’s why they do these things that others like us consider absolutely crazy. They HAVE to be right, and will go to the most amazing lengths to justify their actions.
This comment of yours makes a lot of sense and fits with what I know about my neighbor - great insight. Thanks!
I checked in my zip (95126). If I’m reading this correctly, there are 979 properties in various stages of distress, and only 48 that are for sale, but not distressed. Can that possibly be right? I must be making a mistake.
Big V, what numbers you get depends on to which website you go. The numbers seem to vary widely. Here are the websites I use to track Santa Clara County & city real estate -
(1) http://www.foreclosure.com
(2) http://realestate.yahoo.com
(3) http://www.realtytrac.com
It seems that typically, realtytrac has higher numbers.
Big V - Try these websites, but keep in mind the numbers vary greatly. Typically, realtytrac has higher numbers.
(1) http://www.foreclosure.com
(2) http://realestate.yahoo.com
(3) http://www.realtytrac.com
What websites are you checking? foreclosure.com? realestate.yahoo.com? realtytrac.com?
I was checking realtytrac.com, like you.
Big V - count me in at the Belmont party in spirit. If I was still in the Bay area, I would love to hang out with fellow HBB. I wish the party great success.
I would love to hear that greedy Beaumont B%TCH taking a financial beating. Maybe Protective Services can take the kid away from her based on her being a blithering idiot. Selfish plans gone awry. Priceless.
See Drudge report:
GREENSPAN SAYS HE KNEW ABOUT ABUSES IN SUBPRIME LENDING BUT FAILED TO FORSEE THEIR PARALYZING MARKET EFFECTS UNTIL LATE 2005
Thu Sept 13 2007 12:30:11 ET
Matt Drudge? I’ll get right on it!
Hey Ken. Others in Riverside are giving their houses away.
What about the Whittier dude that wanted to ‘get on the road’? Did he refuse to give his house away too? And the idiot lady in Reno who was mad at the developers for overbuilding, and she didn’t want to give hers away? Any more info on these blithering fools?
Greenspan is the ultimate party to blame for this mess. If the maestro couldn’t see, how was Joe 6Pack to see? Funny thing, I saw it. And so did most others here on Ben’s blog. The Maestro should have been reading Ben instead of the funnies.
The LA Times this week has been awesome on this subject.
Lately I spend my days reading and deleting e-mails from various agents with foreclosures/REOs in Ventura, Oxnard, IE and OC, knowing that the deals will be much better 2 years or so from now. So, I can just sit back, watch, save even more $$ while the sellers get more and more desperate. I just love it when I get an e-mail with a third or fourth reduction, this is just great, definitely worth the wait…
As for my neck of the woods, WLA, prices still high, but it’s pretty obvious something’s got to give, if not here than at least within an hour’s drive which is fine by me for managing a rental. Thanks Ben.
realtytrac.com
The seige continues….
The same situation that is playing out for Ken Gonzalez and his wife is happening here in Connecticut as well. A friend of mine and his wife get offers on their beachfront home but they are never close enough to their magic number. So meanwhile the lot they bought in South Carolina sits vacant, waiting for the money from the Connecticut sale. Cash is king right now, if you have liquid assets and don’t need a mortgage, you can negotiate hard.