Those Bubbles That Have Been Saved
A weekend topic starting with the Squamish Chief in Canada. “It is hard to imagine where we go from here, but we have to try. Squamish reached a real estate milestone last month with the benchmark price of a detached family home topping $1 million for the first time, clocking in at $1,013,000, according to the Real Estate Board of Greater Vancouver’s November figures. That is an increase of 105 per cent over five years ago. No other community in the Lower Mainland experienced that much of an increase over five years. It is possible the proverbial real estate bubble will burst and housing prices will go down, but it isn’t likely. The horse is out of the barn, so to speak.”
“Yes, it would be nice if we were still an inexpensive town with trails up to our doorsteps and no buildings over two stories. But either we accept those days are gone and try to accommodate ‘lower income’ earners, or we acknowledge we have become something else: a resort where only the upper middle class and wealthy live comfortably.”
From the Associated Press. “In the decade since the recession began, the nation as a whole has staged a heartening comeback. Yet the rebound has been uneven. It’s failed to narrow the country’s deep regional economic disparities and in fact has worsened them, according to data analyzed exclusively for The Associated Press. A few cities have grown much richer, thanks to their grip on an outsize share of lucrative tech jobs and soaring home prices. Others have thrived because of surging oil and gas production.”
“Max Versace, CEO of artificial intelligence startup Neurala, who arrived in Boston in 2001 from Italy, has watched the city transform itself into a boomtown, filled with innovative companies working on robotics, AI and self-driving cars. Boston enjoyed the 11th-best income gain in the past decade, Moody’s data shows. ‘I have never experienced a slowdown in Boston,’ said Versace, whose company is based in Boston’s Seaport neighborhood, a formerly rundown industrial area now crowded with startups and high-end restaurants. ‘Boston is one of those bubbles — good bubbles — that have been saved by the two locomotives of computer sciences and biotechnology.’”
From Chuck Jaffee. “It has been so long since Americans last suffered through a bear market that they can’t remember how it felt to go through such financial pain, and they’re uncertain how that downturn — the financial crisis of 2007-08 — actually affected their finances. And yet, a large group of those investors are still letting that downturn affect their financial lives and futures.”
“That is the stunning dichotomy of a recent survey from the Hartford Funds, which found that many Americans don’t believe the financial crisis had any impact on their life, and yet — a decade after the last big recession — they still don’t trust the stock market.”
“For the 40 percent of respondents in the Hartford Funds study who said the crisis had no impact in their life — and for everyone else who may not remember the depths of despair they likely were feeling — here’s a refresher: The Dow Jones industrial average peaked in October 2007 north of 14,000, before entering a bear market that saw it decline all the way to 6,600 by March of 2009.”
“Along the way, the housing bubble — fueled by subprime and predatory lending practices — burst; major financial players like Lehman Brothers were wiped out. Right now, according to the Hartford Funds study, it seems like people are disconnected from their senses, and maybe from reality.”
The Gainesville Times in Georgia. “Today, as Hall County seems to be thriving, with housing and retail growth springing up in all corners, ‘there were hard lessons learned … that a lot of small business owners still remember very vividly,’ said Tim Evans, vice president of economic development for the Greater Hall Chamber of Commerce. ‘One of the things we learned was how important it is to have a very diversified economy. Where we probably caught a bad cold, some other communities had severe flu.’”
“Not that a bad cold was an easy pass. ‘It was a tough few years, for sure,’ said Brian Daniel of Carroll Daniel Construction. His firm deals in commercial construction, a sector that typically lags behind residential building in terms of economic trends. ‘2008, at the time, was the best year we had ever had,’ Daniel recalled. ‘We’d go home every night and turn on the TV and know that (the recession) was coming.’”
“He remembers during that time that ‘people would say we would all be better off because of this (downturn). It got to the point I didn’t want to hear that … from one more person.’”
“Frank Norton Jr. of The Norton Agency said a longtime consultant told him in March 2007 that the recession on its way. ‘He was seeing some pretty ugly signs in California,’ he said. ‘Before it got here, we had downsized in the spring and summer of 2007 and (otherwise) battened down the hatches.’”
From Toronto Life in Canada. “Sale of the Week: The $5-million Forest Hill home that proves mansions aren’t selling for quite as much as they used to: Address: 8 Silverwood Avenue. Neighbourhood: Forest Hill. Previously sold for: $3,200,000, in 2011. The house spent a month on the market before finally attracting a lone offer, dramatically below the house’s list price. The sellers initially balked, but a week later they accepted $500,000 under asking. Their agent says it took time for them to adjust their expectations after the housing market’s downturn earlier this year.”
From Domain News in Australia. “While temperatures soared outside, the signs of Sydney’s cooling property market were evident for all to see at the auction of a Maroubra apartment on Saturday. It had all the makings of a hot Sydney auction: a prime beachfront setting, gorgeous views and apartment hunters keen to buy before Christmas. But that wasn’t enough to secure a new owner for the ground floor, two-bedroom apartment at 1/458 Maroubra Road.”
“Auctioneer Glenn Farah, of N G Farah, was greeted with silence when he called for an opening bid for the apartment, which records show last sold for $600,000 in 2002. ‘Let’s start it low and watch it go,’ he said, after a bidder eventually piped up with a $1 million offer. And go the bidding did, jumping up in $50,000 increments as three bidders — an investor and two owner-occupiers — battled for the keys.”
“But after hitting $1.2 million the bidding slowed. By $1.28 million, it had come to a halt and the property passed in more than $100,000 short of the reserve. It wasn’t a surprise to selling agent Martin Farah, also of N G Farah, given the current market. ‘The market has definitely been hit by a cooling effect,’ he said. ‘There’s also a lot of property for sale, buyers have a lot of choice, and the market is finding its own level between [the price expectations of] vendors and buyers.’”
“Listing numbers over spring and summer are up 20 per cent compared to the same period last year, and clearance rates have taken a hit. Last weekend, Sydney’s preliminary auction clearance rate dropped to a two-year low of 58.2 per cent. More than 100 vendors also got cold feet, meaning 13 per cent of auctions scheduled for December 9 were withdrawn.”
‘He remembers during that time that ‘people would say we would all be better off because of this (downturn). It got to the point I didn’t want to hear that … from one more person.’
Not to worry Brian, trillions were created out of thin air to keep you from having to put on your big boy pants and deal with it.
‘Yes, it would be nice if we were still an inexpensive town with trails up to our doorsteps and no buildings over two stories. But either we accept those days are gone and try to accommodate ‘lower income’ earners, or we acknowledge we have become something else: a resort where only the upper middle class and wealthy live comfortably.’
The article mentions most of their jobs are service. Yeah, this is going to end well. Check out the photo of the schlubs bidding on the air box in the last link.
Aussie wages are by and large not very competitive in tech. I’ve lived, worked and gone to school there and considered applying for skilled migration back around 2000 and the disparity in wages made it unattractive and I dont think much has changed since. I much prefer it to California, which is where I was at the time but was able to angle my way out of that dump into a much more suitable location.
It also didnt help that the bar to get in via skilled migration was laughably high - as in, foreigners need not apply. They’ll take in nurses from the phillipines if theres a shortage and plenty of muslims to justify creating a police state but heaven forbid if you are law abiding and skilled trying to get into that country. They like their populous dumb and compliant.
December 17, 2007
A Lot Of People Made Dumb Decisions In California
The Wall Street Journal reports from California. “The bedroom community of Corona is a microcosm of the looming devastation for homeowners in California’s so-called Inland Empire. Corona lawyer Nathan Fransen says he has nearly 100 clients trying to avoid foreclosure but none appear eligible for the government rescue package.”
“‘The government has misread California. Most foreclosures here are on loans that haven’t adjusted, meaning that people can’t afford what they have now,’ says Mr. Fransen. He lives in a gated community where he says dozens of million-dollar homes face foreclosure. ‘The plan won’t help much here, and the problem is going to get worse.’”
“Economist John Husing predicts the number of area jobs could decline next year as expansion slows. Mr. Husing is an authority on the Inland Empire. ‘My sense is that the [rescue] plan won’t help,’ Mr. Husing says. ‘A lot of people made dumb decisions.’”
“On Calle Canon Road, residents say they were drawn to the street by the two-story, 4,000-square-foot homes, built on some of the biggest lots in the area. Developer William Lyon Homes Inc. was selling stucco-and-stone-faced models in 2004, starting at around $500,000.”
“Today, four of the 11 properties on one side of Calle Canon Road are abandoned, and some sport big foreclosure-auction notices. At least three foreclosed homes were originally bought by investors who never lived in them, and one was never occupied.”
“Of the scores of houses for sale in the area, about half are in default or foreclosure, real-estate agents say.”
“Karenn and Steve Oropeza arrived at Calle Canon Road in 2004. Public records show they paid $557,000 for a four-bedroom house and took out a $500,000 mortgage.”
“As property values skyrocketed, they refinanced three times, most recently in late 2006, for $835,000, Mr. Oropeza says.”
“The couple say they used some of the money they pulled out of the house for home improvement, such as a backyard waterfall. But Mr. Oropeza says the bulk was used to pay off credit-card arrears. ‘We were in a vicious cycle of refinancing our home to get out of debt,’ he says. ‘We banked on selling the house, but that’s where we failed.’”
“Meanwhile, Mr. Oropeza expected to be transferred to Texas…In June, they bought a 3,600-square-foot home for $283,000 in the Houston suburb of Katy, Mrs. Oropeza says. ‘It was easy. We had good credit.’”
“In the run-up to their move, she says, the couple lived off credit cards to ‘make sure we had cash for the house payments’ in Corona. They packed up in June, and then took their 9-year-old son and 2-year-old daughter on a long-planned Caribbean vacation. They returned to Calle Canon Road, ‘got in our cars and drove to Texas,’ Mrs. Oropeza says.”
“Neighbors Ms. Lefranc and Mr. Saffold are dismayed over the Oropezas’ departure and note that shortly before leaving, the couple bought a new Lexus. ‘I think they took money out of their house and split,’ Ms. Lefranc says.”
“Mrs. Oropeza says that she and her husband recently bought a Lexus and a Chevrolet Suburban with no money down. She denies that the family intended to abandon the house. The choice was straightforward, she says: ‘It was easier to keep the house in Texas than the one in California.’”
“The couple stopped making their Corona mortgage payments in June, triggering a notice of default 90 days later and starting the countdown to foreclosure. ‘We’re sad because there goes our credit, and because people think we are a bunch of flakes who walked away from the house and tried to make money,’ Mrs. Oropeza says.”
The Press Telegram. “The California Association of Realtors’ most recent housing report issued in November showed home sales fell more than 40 percent in October in California from a year ago and the median price of an existing home fell almost 10 percent.”
“The state’s median home price fell below the $500,000 mark for the first time in more than a year to $497,110.”
“Locally, the median in Bellflower fell more than 13 percent to $430,000, Downey’s median fell nearly 17 percent to $503,500 and Lakewood saw an 8 percent drop to $487,500. The median in both Long Beach and Norwalk fell 9 percent, with Long Beach dipping to $450,750 and Norwalk dropping to $424,000, and Paramount saw its median drop nearly 8 percent to $370,000.”
“Another hard-hit local community was Compton, where the median fell $50,000 in a year to $350,000 for October.”
“October also brought bad news in foreclosures. A total of 50,401 foreclosure filings were reported in the state for the month, more than triple the number reported in October 2006.”
The Modesto Bee. “Today, Police Chief Charlie Halford is scheduled to ask the City Council to allocate $102,725 for landscaping and boarding up about 35 houses. That amount is what it would cost to fix up and maintain for a year, 5 percent of the estimated 700 residences in the city in some stage of being repossessed.”
“It took the Police Department months to get the mortgage holder of a house on El Portal Avenue to board it up. Another house, on Grant Avenue, remains unsecured, and police respond to calls there almost daily, Halford said.”
“‘We’ve been told by the mortgage holder that they are planning on boarding it up, but that hasn’t happened yet,’ he said. ‘They came out and measured, but if it is not done in the next week, we’ll probably do it.’”
“Whether the city ends up recouping the money, he said, the $650 cost of boarding it up would pay for itself in fewer police hours spent there.”
The Contra Costa Times. “Affordable housing is becoming easier to find in Dublin as developers adhere to the city’s rules for providing such homes in for-sale developments. However, selling those affordable homes, in some cases, is proving harder to do.”
“For that reason, Dublin is looking at allowing owners of below-market-rate units to rent them out in cases of financial hardship. Some other cities, including Livermore and San Francisco, already have created such provisions.”
“Sellers now say they are having a harder time finding qualified buyers as a result of the market slowdown. Some qualified buyers are thinking twice about whether to go after a below-market-price home. A glut of unsold homes on the market means ‘regular rate’ homes are, in many cases, not much more expensive that the ‘below-market’ units, city reports say.”
The Press Democrat. “Finding a home under a half-million dollars was easier than expected for Steve and Becky Bovee, who landed a good deal on a Santa Rosa house that had languished on the market.”
“The Bovees got the seller to take less than the $424,900 price tag for the three-bedroom, single-story house in Santa Rosa’s Hidden Valley neighborhood, and then even kick in closing costs. The original price was $499,000 when the home hit the market four months earlier.”
“‘It’s better than we expected,’ Steve Bovee said. ‘This was a good time to look. It was more of a buyers’ market.’”
“From falling prices and favorable loan rates to a glut of choices, buyers are well positioned to take advantage of Sonoma County’s slowest real estate market in more than a decade.”
“Not everyone can seize the opportunities. Lenders have tightened requirements with loan defaults at record highs. For many borrowers, that means having $50,000 in cash to make a down payment on the typical home.”
“And many would-be buyers remain wary about the market’s direction with analysts forecasting prices will continue to decline well into next year.”
“Home prices have dropped 10 percent from their 2005 peak, returning the price of the typical Sonoma County home to $515,000, a level not seen since 2004. The price of homes under $500,000 has tumbled even faster, 15 percent or more, because the greatest number of homes for sale are in that range.”
“‘The buyers, they are in control now. They are very well aware of it,’ said Timothy Hedges, broke in Sebastopol. ‘They want at least the idea that they’re getting a good value. Even if a property is priced very competitively, they still want to deal. They want to know they were able to do some negotiating.’”
“But buyers aren’t in a rush. ‘Some look at dozens of homes,’ said agent Randy Tallariti. ‘There’s so many great deals, and they think the market is going to go down, down, down.’”
“More buyers are considering purchasing through short sales, which make up a growing number of listings. About 20 percent of houses on the market are short sales, in default or in foreclosure.”
“‘Very few people are paying asking price,’ Steve Bovee said. ‘That was unheard of two years ago.’”
“Today, they expect the value of their home to decline, but plan on staying in the home long enough for housing to eventually bounce back. ‘I actually foresee us to lose a little value. I think the market is still on its way down,’ he said. ‘But the opportunity presented to us was a good one. We plan on hanging out.’”
http://thehousingbubbleblog.com/?p=3890
Karen and Steve Oropeza…used SOME of the money they pulled out of the house for home improvement, such as a backyard waterfall.
HEY, A WATERFALL IS AN IMPROVEMENT?
She and her husband recently bought a Lexus and a Chevrolet Suburban with no money down.
HE WORKED FOR CARMAX.
She denies that the family intended to abandon the house.
HOW MANY xxx HAVE THEY xxx TO DATE?
MR OROPOZA NOW WORKS FOR MANHEIM AUTO AUCTIONS.
——————————————————————-
Do you think they save “20% Off” coupons from Bed,Bath and Beyond ?
A Lot Of People Made Dumb Decisions In California
Unless someone came after them for the unpaid loans, I think the Oropeza’s did just find. They lived above their means for years and got away with it.
December 17, 2007
Sometimes The American Dream Is Unattainable
The City Paper reports from Tennessee. “The Greater Nashville Association of Realtors has had to report yet another down month in sales. Nashville-area home sales dropped about 19.5 percent in November compared to last November. The median price has been declining since a peak of $196,000 in June, settling at $179,900 last month. Of course, sellers have sold houses in days or even hours and agents in hot areas got accustomed to that. Now the agents talk about the time it is taking. ”
“Brian Taylor, managing broker for Prudential Woodmont Realty’s Nashville office, said it is more important to educate sellers in how to price a house on the front end so it sells instead of establishing a price and lowering after sitting for three months.”
“‘We don’t have the 25 percent premium on housing like we did a year ago,’ Taylor said. He said if it’s not priced right, it won’t sell. ‘I think there are a lot of buyers on the fence looking for a deal.’”
The Daily News Journal from Tennessee. “The house on Gondola Drive was meant to be Jeanette Newton’s last, the home where the nurse turned legal assistant would grow old and retire.”
“But that was before a knee injury forced a job change and an escalating adjustable-rate mortgage pushed her payments up from $828 to nearly $1,200 a month. Now, Newton is in bankruptcy, fighting to save the two-bedroom, two-bath house that she bought three years ago.”
“Six of her neighbors in Chelsea of Priest Lake subdivision have faced similar battles. Five have already lost their homes, and the sixth is on the verge, awaiting an eviction notice. Nashville’s foreclosure rate doubled in 2007, reflecting the depth of the problem.”
“Banks and underwriters should have required higher down payments, steered borrowers away from risky loans and refused to extend credit to buyers who lacked the savings to weather financial downturns, said Kevin Lavender, the former state banking commissioner who warned of a pending foreclosure crisis before leaving office two years ago.”
“‘You have some people who say if the people were greedy enough to sign up for that particular mortgage, they get what they deserve,’ Lavender said. ‘But we have got people slinging pizza by day and selling mortgages by night. We had to know at some point that would be hurtful.’”
The Post Tribune from Indiana. “Portage has grown a reputation in recent years for being a popular place to build a home. During the past eight years, permits for new single-family homes have ranged anywhere from 195 a year to 240 year –until now.”
“Permits in Portage dropped by more than half to just 106, as of the end of November.”
“‘We have a lot more inventory than we need or is healthy,’ said Bob Coolman, president of Coolman Communities Inc.”
“Developers have been building homes without buyers for years, on the hope continued growth would bring in potential homeowners. But that extra building has finally caught up with them, Coolman said.”
“He pointed out that since 1992, demand for new homes reached about 900 a year. But starting in 2002, developers began building about 1,200 a year, leaving more houses than buyers.”
“‘You just have too much saturation,’ Pete Novack, president of the Greater Northwest Indiana Association of Realtors, said. Because housing permits jumped so much during the past few years, a decrease this year still leaves housing permits above levels for 2000 and 2001, he said.”
“‘Builders were throwing up (speculation) homes everywhere,’said Michael Haller, building commissioner for Porter County. ‘Everyone and their brother claimed to be a builder.’”
“A continued downturn in building isn’t good news for builders, Coolman said. But the one group who will benefit are buyers. The glut in new houses mixed with lowered interest rates create near-historic low housing prices, he said.”
“‘This may be the best time ever to buy a house because there’s too much inventory,’ Coolman said. ‘It doesn’t take a genius to figure out it’s a buyer’s market.’”
From Chicago Business in Illinois. “The condo slump has put developer Liviu Mihulet in a tight spot. His lender, Northside Community Bank, filed a lawsuit in August to foreclose on a 32-unit condominium conversion the developer launched in January in West Rogers Park.”
“The bank asserted that the property had declined in value and demanded that Mr. Mihulet put another $500,000 of equity into the project. When he refused, he says, Northside demanded he repay the $3.1-million loan.”
“‘This was an insult,’ says Mr. Mihulet, who is trying to refinance the project.”
“It’s an indignity more developers are facing. As weak condo sales make it harder to pay off construction loans and skittish banks try to reduce their exposure to the depressed market, condo developers are increasingly facing a fate similar to that of the thousands of Chicagoans who may lose their homes to foreclosure.”
“‘In ‘08, we’re going to have a lot more situations to work out than new projects” getting under way, says real estate attorney Steven DeGraff.”
“Mr. DeGraff, a principal at law firm Much Shelist Denenberg Ament & Rubenstein P.C., estimates he now spends 40% to 50% of his time on real estate loan workouts, a lot of them involving condo developers. That part of his practice occupied almost none of his time as recently as midyear.”
“‘The only light that I see at the end of the tunnel is another train coming,’ says Stuart Packer, the developer of a 19-unit condo conversion in West Rogers Park that was hit with a foreclosure suit in July.”
“Mr. Packer owes Hinsdale Bank & Trust Co. $2.2 million on a project he expected to sell out in 12 to 18 months. But 2½ years after he started construction, only four units have sold.”
“A sign of things to come may lie in once-hot neighborhoods like Lincoln Park. In October, LaSalle Bank N.A. filed a foreclosure suit to collect $5.3 million on an overdue construction loan for the Ashton Lofts, a 39-unit project.” “Several condo buyers bailed out of the project as it struggled with construction delays.”
The Bay City Times from Michigan. “Like millions of other Americans, Dave Kozuch of Bay City ran into a bit of trouble making his mortgage payments. About a year ago, the part-time maintenance worker was laid off. Finding $240 per month to pay the note on the $30,000 mortgage he got five years ago, to buy a house wasn’t always possible.”
“Soon, a variety of taxes, fines and insurance premiums sent his $240 monthly payment up to $610.”
“Kozuch says he tried contacting Chase Home Finance to straighten things out. But Kozuch met with frustration. ‘I’d fax something to San Diego, then get a call from Atlanta and a letter from Houston,’ he said. ‘It’s been unreal.’”
“Soon, he received notice the bank was planning to foreclose on his home and sell it at auction. Kozuch is doing all he can to avoid joining a record number of homeowners in Bay County - 378 so far this year - who’ve lost their homes to foreclosure.”
“In the past three years, nearly 1,000 homeowners in Bay County lost theirs that way. Industry experts say Bay County will be among the 10 hardest-hit areas in loss of economic growth spurred by the foreclosure crisis.”
“Kozuch, like many others in his shoes, filed for bankruptcy, which grinds the wheels of foreclosure to a halt. ‘But when I found out how much I’d have to pay each month for my debts through the bankruptcy payments,’ he said, ‘I couldn’t afford that either.’”
“Property values began dropping around 2000 after peaking in many markets, including Bay City. Mike Samborn, president of the Bay County Realtors Association, said the downward adjustment was a needed ‘correction’ to the market - although it’s led many folks to become ‘upside down’ in their mortgages.”
“A look at public real estate records on foreclosed homes in Bay County reveals that the problem exists in inner-city neighborhoods as well as the swankier suburbs. One bank unloaded a home on Woodside Lane, valued at $77,600, for $20,100 last month - less than a fourth of the $84,117 still owed on the mortgage.”
“Another bank sold a home on Eleven Mile Road, assessed at $93,900, for $41,500, a third of what was owed the bank that held the mortgage. And a home on Glen Eagle Drive, valued at $393,900, was purchased after foreclosure for $305,000, more than $50,000 less than what the former owners owed on their primary mortgage.”
“Samborn specializes in foreclosed homes…for the past decade, and he sees a silver lining as housing prices continue to adjust downward. ‘First-time homebuyers get more affordable housing,’ he said. ‘Investors can find deals. And the houses are there, too, for people looking to move up.’”
“The glut of homes on the market may leave the impression houses aren’t selling, but Samborn said sales have been steady over the past three years or so - although prices have been lower, and a larger share of the homes have been through foreclosure.”
“‘There’s a lot to choose from,’ he said. ‘Get yourself properly qualified, and don’t overextend yourself. The sub-prime loans are no longer readily available, but there are still a lot of good loan programs out there.’”
“For one Bay City couple, foreclosure was a double-edged sword. It meant losing the home they raised their children in, but it also yielded a more stress-free lifestyle.”
“They owed more than $50,000 on their mortgage when the bank foreclosed earlier this year. The house, in need of many repairs, sold in November through a sheriff’s auction for a mere $5,000.”
“‘Someone else has those headaches now,’ said the man, who agreed to speak with The Times on condition of anonymity. He’s a private man, and foreclosure carries great stigma.”
“‘The shame and embarrassment is great,’ he said, ‘but sometimes you have to swallow your pride, look at your finances and realize that sometimes, the American dream is unattainable.’”
“He is a white-collar worker. His wife is a blue-collar worker who often finds herself temporarily unemployed. ‘People think if you’ve got problems paying your mortgage that you’re a gambler or a drug addict,’ he said. ‘That’s not always the case. That wasn’t our case. Our family and friends know what happened and understand.’”
“Grown children and grandchildren who required financial help and other personal financial setbacks threw a wrench in the family’s plans to remodel and restore their turn-of-the-century home. The couple refinanced their mortgage a few years back. When an appraiser asked ‘how much they needed,’ they bit off more than they could chew, at a fixed rate of 8.5 percent.”
“Then energy costs shot up. Housing values fell. The wife lost her job. Soon, they could no longer afford to make their mortgage payments. ‘We tried refinancing,’ the man said, ‘but due to extenuating circumstances … we weren’t able to. Things began slipping.’”
“The foreclosure notices began coming in, and after scrambling to get on top of the matter, the couple decided they’d just let it go. They have settled into a spacious, affordable apartment, and are enjoying their new lifestyle.”
“‘We came to a very happy point in our lives,’ the man said. ”We downsized. We got that monkey off our backs.’”
http://thehousingbubbleblog.com/?p=3889
Why all the 2007 posts lately Ben? Are you trying to show the parallels to today?
It’s been ten years and IMO that fall was the most important period I’ve blogged about.
Definitely lots of similarities. I’m sure if you removed the dates in two years people would think those articles were current day events.
Agree in principle, but I think 2017 is more comparable to 2006. Although a couple of Canadian ponzi lenders had to be rescued in 2017, I don’t see any US lenders biting the dust in 2017. I remember New Century Financial bit the dust around February 2007, followed by many others and then Bear Stearns in March 2008, and then quickly Fonnie, Fraudie, WaMu, Drowney, and then finally Lehman and AIG in Sep-Oct 2008. This party won’t end until the US lenders start biting the dust…but it will end much quicker this time.
Anyone thinking about buying a house today should be patient another year or two until the GOP tax scam sinks millions of homedebtors over $750K, more than 1 property, and especially those in states with high income tax and high property tax paying more than $10K. And don’t forget about debtors soon to be underwater paying property taxes on second homes in Florida and other vacation spots. The $10K ceiling is total, not per property. And no more refinance for any of these fools, as the old $1 million rule is lost when any of these fools refinance, the new mortgage interest is only deductible to $750K.
Neil, please pass the popcorn.
Agree PDX. We’re still 2 years out. Maybe one if some other non house dominoes fall first.
Thanks for the laugh and the insights
clayton home douchbags:
“The terms were too extreme for the Ackleys. But they’d already spent $11,000, at the dealer’s urging, for a concrete foundation to accommodate this specific home. They could look for other financing but desperately needed a space to care for her father.
But the closing documents he set before them held a surprise: The promised 7 percent interest rate was now 12.5 percent, with monthly payments of $1,100, up from $700.
they didn’t realize that the homebuilder (Golden West), the dealer (Oakwood Homes) and the lender (21st Mortgage) were all part of a single company: Clayton Homes, the nation’s biggest homebuilder, which is controlled by its second-richest man — Warren Buffett.”
Have any of u been baited and switched by a carpet cleaner?
I heard Warren picks up pecans in his backyard and shells them himself and bakes pies. He’s probably vacuuming out his limo right now.
he probably cuts his own hair too
Sure looks like it! LOL.
“Buyers told of Clayton collection agents urging them to cut back on food and medical care or seek handouts in order to make house payments.”
Awesome people
Warren Barfitt…. The posterboy for globalist/socialist government apologists and liberals and loved by all of them and a favorite of Lester Hole of NBC Screws.
I’m sure he and his buddy Obama are sharing a bowl gruel at the soup kitchen this very moment.
Trump undoubtedly pisses off Buffett. Think Keystone pipeline.
Exactly. Warren, via back channels, was funding the pipeline protest groups, as he wanted to keep the oil trains a’ rollin’.
Warren Buffett got to where he is because of who he is. If one is to expect Buffett to change from his behaving in his frugal ways into behaving in some other manner then he is expecting him to change from who he is into somebody else.
Ain’t gonna happen, especially at his age.
Reportibly an enjoyable day for Warren Buffet is one spent pouring over various financial statements looking for mispriced values and such. This is something anyone can do but it is something most people will not do. So, in a sense, Buffett wins by default.
My Aunt, now about 90, says she knew Warren because he always came in to see her boss. Some Navy (In Omaha) brass guy. She said he was always trying to read the stuff on her desk and she described him, and this is a direct quote, as:
The biggest “brown-noser” I ever met.
Yeah, She is a little feisty!
December 17, 2007
Depending More On Luck Than Judgment
Some housing bubble news from Wall Street and Washington. Bloomberg, “IKB Deutsche Industriebank AG, the German lender bailed out by KfW Group, fell to its lowest in more than a decade on concern about further losses from U.S. subprime mortgage investments. The rescue of IKB may cost the German development bank KfW more than 5 billion euros ($7.2 billion) if market conditions worsen, KfW CEO Ingrid Matthaeus-Maier said in an interview with Sueddeutsche Zeitung newspaper today.”
“The bank has also written down the value of its 38 percent stake by 400 million euros, she told the newspaper.”
The Associated Press. “Securities in Australian property trusts Centro Properties Group and associate Centro Retail Trust crashed Monday after they cut their earnings forecasts because of increased debt financing costs linked to the U.S. subprime mortgage crisis.”
“The losses stripped a total of A$4.78 billion (US$4.12 billion; €2.84 billion) off the market capitalization of the two.”
“‘We never expected, nor could we reasonably anticipate, that the sources of funding that had been historically available to us and many similar companies would shut for business,’ CEO Andrew Scott told reporters in a conference call.”
“‘Centro has been lax with tying down its debt and is now paying the price,’ said Jonathan Kriska, property analyst at Patersons Securities in Sydney.”
From The Age. “Five weeks after telling shareholders the US subprime housing crisis has not had any impact on the operation of Centro’s US portfolio, Centro Property Group is in turmoil.”
“Yesterday, the group announced it had obtained an interim extension until February 15, allowing the group time to negotiate the refinancing of $A1.3 billion in maturing debt, which arose from the group’s exposure to the US subprime mortgage market.”
The Sydney Morning Herald. “Staring down the barrel of at least $2 billion in expensive short-term debt, Centro is facing its version of the St Valentine’s Day massacre. Its financiers have given the tottering property group just eight weeks to put in place new financing to replace borrowings the company sourced from the now-crippled United States commercial credit markets.”
“Centro took a gamble in August that ensuing chaos would recede, when it managed to get away a $US300 million 10-year term issue at ‘reasonable rates’ through a tightening CMBS market, which had been providing about $US80 billion in funding every month.”
“Despite all the overwhelming evidence to the contrary, Centro believed a few days ago that it could find a way to replace its crippling debt, including $2 billion due at the end of the month.”
“‘Up until late last week, we were of the view that our short-term debt obligations could be refinanced on a long-term basis,’ chairman, Brian Healey said.”
“But, in saying that, it appears the Centro board and its executive team were depending more on luck than judgment.”
From Reuters. “National City Corp, the ninth-largest U.S. bank, said on Monday it expects its provision for loan losses for the fourth quarter to be about $700 million. The bank said that home equity loans and non-prime mortgages transferred to its portfolio in the third quarter have shown further deterioration beyond what the company anticipated at the time its September 30 loan loss allowance was established.”
“‘The areas of elevated risk continue to be in the run-off portfolios of First Franklin non-prime mortgages,’ the bank said in its filing.”
“National City sold its First Franklin Financial Corp subprime unit to Merrill Lynch last December, for $1.3 billion, but kept several billion dollars of loans and is winding them down.”
From CNN Money. “National City said it will take $200 million in charges related to mortgages on its warehouse lines that it either sold to investors or transferred to a portfolio in October and November.”
“Total charge-offs, or loans written off as not being repaid, increased to $102 million in November, from $87 million in October. Charge-offs on residential mortgages and home equity products accounted for a combined $51 million during the month, a 13 percent increase from the $45 million in October and more than double the $21 million written off during November 2006.”
“U.S. investment bank Lehman Brothers is facing possible legal action by local councils in Australia who bought collateralised debt obligations (CDOs) from its local unit, Grange Securities, the Financial Times newspaper said Monday.”
“The FT said one Lehman-originated CDO exposed to the U.S. subprime mortgage market was marked down to just 16 cents in the dollar by the bank last month.”
“Mizuho Financial, one of the largest Japanese banks, last week stopped helping create U.S. collateralized debt obligations containing asset-backed securities or high-yield corporate loans. It also stopped trading such securities. Five people were fired.”
“‘Due to changes in the global market for structured-credit products, Mizuho Securities has decided to suspend U.S. asset-backed CDO and CLO activities,’ said Seth Martin, a Mizuho spokesman.”
“Mizuho said Dec. 5 that it would invest ¥150 billion, or $1.4 billion, in its investment banking unit to shore up its balance sheet amid losses tied to rising U.S. mortgage defaults. The unit may post a loss of ¥92 billion for its fiscal year because of subprime-related investments, the bank said.”
“At Mizuho, the group underwrote $4.4 billion worth of CDO deals before the markets seized, according to an industry newsletter. Mizuho, the 18th-largest underwriter of mortgage-bond CDOs during 2006 and 2007, may have retained about half of the debt, which may produce $700 million in losses, according to JPMorgan Chase CDO analysts.”
“Japan’s top three banks are expected to resist a request to put up a total of $15 billion for a U.S.-led subprime rescue fund, a move that could further cloud prospects for the bailout plan.”
“Executives at Japan’s top three megabanks have meanwhile been wondering why they were asked to shoulder such a comparatively large part of the fund, whose size has recently been estimated by media at $30-60 billion.”
“‘It could prove quite difficult for us to put up funds for this,’ said an executive at one of the megabanks, adding that he did not think the fund would be able to sell the commercial paper that would in theory be supported by Japanese credit lines. ‘Logically, it just doesn’t make sense for us.’”
“Nomura Securities bank analyst Keisuke Moriyama said he expected Japan’s top three banks to offer to pay less than the requested amount or even refuse to help altogether.”
“The issue could yet become political, the megabank executive said. ‘What did America do when we had our non-performing loan problem? They just pushed us into the corner. European banks also ran away. Why should Japan now shoulder this burden?’ said the megabank executive. ‘But this is a decision made at a high political level and could end up defying logic.’”
From AFP. “It is time for the banks to fully disclose their US home-loan losses to prevent fear from making a tough credit crunch worse since the central banks have done about all they can to restore confidence, analysts say.”
“Central banks ‘can’t do any more’ to boost confidence in the financial markets, Commerzbank economist Michael Schubert warned, while Bank of America’s Gilles Moec urged the private sector to state clearly ‘who lost what and how much.’”
“Clear statements by finance houses about how much damage the US home-loan crisis has done to their accounts ‘is really the key to the crisis,’ economist Moec stressed.”
“A solution depends on confidence because banks have stopped lending to each other since they do not know the extent of potential losses incurred by the banks they trade with.”
“‘If you are a medium-sized bank trying to borrow for three months in the interbank market you can more or less forget it,’ said Investec Securities chief economist Philip Shaw, who is based in London. ‘I’ve heard of institutions that won’t lend beyond one week, to anybody, it doesn’t matter who the name is.’”
“‘When in doubt, people tend to abstain,’ Moec said. ‘The problem for everyone is they don’t know if their counterpart belongs to the winners or the losers.’”
“Only transparent disclosures could convince market players a potential partner was solvent, the economist explained. ‘It’s beyond the reach of the central bank,’ he said.”
“The Federal Reserve’s plan to provide $20 billion in cash to the world’s money markets failed to reduce the cost of borrowing in euros.”
“The rate banks charge each other for three-month loans in euros stayed close to a seven-year high, rising 1 basis point to 4.95 percent, the European Banking Federation said today. That’s 95 basis points more than the European Central Bank’s interest rate. It was 4.58 percent a month ago.”
“The Fed will today make funds available to banks and financial institutions in an effort to increase the amount of cash available to the banking system.”
“‘It’s going to take a long time for these problems to go away,’ said Nick Stamenkovic, a fixed-income strategist at RIA Capital Markets Ltd. in Edinburgh. ‘These auctions might help stem the pressure until year-end, but the bottom line is until we get a clearer picture of how deep the problems are, the banks are going to hoard cash.’”
“Representatives of five of Wall Street’s dominant investment banks gathered around a blonde wood conference table on a February night almost three years ago. Their talks led to the perfect formula for a U.S. housing collapse.”
“The host was Greg Lippmann, then 36, a fast-talking Deutsche Bank AG trader who aspired to make mortgage securities as big a cash cow for Wall Street as the $12 trillion corporate credit market.”
“Those meetings of the ‘group of five,’ as the traders called themselves, became a turning point in the history of Wall Street and the global economy.”
“The new standardized contracts they created would allow firms to protect themselves from the risks of subprime mortgages, enable speculators to bet against the U.S. housing market, and help meet demand from institutional investors for the high yields of loans to homeowners with poor credit.”
“This is the story of how Wall Street transmitted the practices of southern California’s go-go lending industry and the inflated U.S. real estate market to the global financial system.”
“In Orange County, California, a mortgage lender named Daniel Sadek was among those who took notice of the increase in Wall Street’s appetite for subprime loans. He turned the staff at his firm, Quick Loan Funding, into a subprime mortgage factory. ‘You can’t wait,’ said his ads, aimed at high-risk borrowers. ‘We won’t let you.’”
National Mortgage News. “Alan Greenspan, the former Federal Reserve chairman, has found the roots of the current ‘liquidity’ crisis (which is really the subprime crisis but with a different name).”
“In an recent op-ed piece Mr. Greenspan – once a big fan of ARMs – wrote: ‘The root of the current crisis, as I see it, lies back in the aftermath of the Cold War, when the economic ruin of the Soviet Bloc was exposed with the fall of the Berlin Wall.’ Huh?”
The Philadelphia Inquirer. “On a recent weekday, stress-management guru Loretta LaRoche delivered her message in Hall A of the Atlantic City Convention Center to a standing-room-only audience of men and women who, of late, seem to be some of the most stressed-out Americans of all. Realtors.”
“LaRoche strutted across the stage for 45 minutes wearing feathered boas and silly hats. She cajoled her audience into grinning, laughing, shouting ‘Whoop! Whoop!’ as loudly as possible, then joining hands as she led in a sing-along of ‘That’s Amore,’ with Dean Martin crooning in the background.”
“The Internet is defining seller attitudes, said Roger Turcotte, a New Hampshire real estate broker and educator.”
“‘You meet with a seller and he wants to list at $390,000, even though your market analysis says to start at $345,000? That’s the Internet talking,’ Turcotte said. ‘Before they call you, [sellers] spend hours looking at Web sites, collecting information from sources that aren’t necessarily reliable. You show them the data, and they counter that they are not desperate and they are not going to lower the price.’”
“What should a listing agent do? ‘Walk away,’ Turcotte said. ‘You don’t need the listing that badly, and you know what’s going to happen. Someone else who tells the seller what he or she wants to hear will get the listing, and then the property will stay on the market until the price drops to what the market will bear.’”
“Turcotte blamed a lot of the current market downturn on an overwhelming emphasis on home purchase as an investment, even though the industry’s own rhetoric over the last several years also has focused on it.”
“In fact, the NAR’s 2007 Profile of Buyers and Sellers says the ‘motivation for home ownership often includes an investment component,’ which most of those surveyed believed to offer a better return than stocks.”
“‘We are trapped in a media mess,’ Turcotte said. ‘Eighty to 90 percent of buyers are looking for a lifestyle asset, not a financial one.’”
http://thehousingbubbleblog.com/?p=3888
December 17, 2007
If You’re Willing To Take Less, You Should Be Able To Sell
The Palm Beach Post reports from Florida. “The same issue that forced sellers to pull their properties off the for-sale market now dogs them in the rental market: inventory. There are nearly 35,000 residential properties for sale in Palm Beach County alone, according to Illustrated Properties Real Estate. That’s a staggering four-year supply at the current pace of sales.”
“But even homes renting for $3,500 a month, as in ritzy developments like Wellington’s Versailles or West Palm Beach’s Terracina, might not pay enough to cover the owner’s monthly costs. ‘In many cases, owners are renting for half their monthly costs,’ said Jack McCabe, president of McCabe Research and Consulting in Deerfield Beach.”
“In Palm Beach County, more than 3,500 units have been pulled out of the for-sale condo market and put back into the rental pool, McCabe says, including Mizner Court at Broken Sound in Boca Raton (450 units), Aventine at Boynton Beach (216 units) and San Merano at Mirasol (476 units) in Palm Beach Gardens.”
“Of course, not all renters are frustrated wannabe homeowners priced out of the market. Many can afford to buy a home - 20 percent have incomes above $60,000.”
“They choose to rent to avoid financial risk in an uncertain housing market, says the Joint Center for Housing Studies at Harvard University. Renting also gives them an urban lifestyle at a lower price - certainly lower than home prices in Palm Beach County.”
The Tallahassee Democrat. “Some lenders and mortgage professionals see a tightening of mortgage rules in response to the millions of risky loans made the last few years and the rising tide of mortgage defaults and foreclosures.”
“‘There is certainly a major effort to tighten restrictions on granting credit in the mortgage industry,’ says Ritch Workman, president of the Florida Association of Mortgage Brokers.”
“The proverbial pendulum, he adds, had swung too far toward easy access to home loans. At the height of the credit craze, there were plenty of cases where people were denied credit cards but then could turn around and with the same credit profile qualify for a mortgage.”
From Hernando Today. “Drive down any subdivision and the sea of ‘for sale’ signs swim across your vision like a row of landlocked vessels. If you’re one of those homeowners trying to haul anchor and set sail, you might be wondering what you have to do to get that home out of dry dock.”‘
“Builders and Realtors say it’s still possible to sell homes in a tough market – as long as sellers are willing to make concessions and get out of the ‘make a killing’ mind-set. It boils down to two things: curb appeal and lower prices.”
“Maybe two years ago, you could inflate the asking price for the house, Not anymore. If you’re willing to take less, you should be able to sell. In real estate terms, it’s called ‘realistic pricing.’”
“‘There’s no reason why a nicely prepared home is not going to sell,’ said Harry Willett, president of the Hernando County Association of Realtors. ‘We have a better market than, let’s say Tampa, (because) those homes are really overpriced.’”
“And what the price was even six months ago may not be where that price needs to be today, said local Realtor Mary Ann DeWitt. ‘We’re considerably busier right now than we were 60 days ago,’ DeWitt said. ‘I have a very optimistic outlook for the next year. Every month that passes, we’re another month away from the bottom.’”
“Local Realtor and developer Gary Schraut agrees that while the housing numbers are not good, ‘they’re not as bad as people would want you to believe.’”
“People are comparing the current market to that of 2003-05, when the investor-fueled real estate boom was at full steam, he said. Home prices were artificially driven up by the wild speculation, and it is unfair to use those years as a yardstick and say that the home market is a complete disaster, he said.”
“Hernando County is now reaching the point where it was before the boom hit. ‘We’ve done the (market) correction, and we’re waiting for it to level off,’ Schraut said.”
“‘I think all the speculators are gone. The homes we’re selling now are people looking to put a roof over their family’s head. Some investors are trying to pick up foreclosures, but there aren’t that many of them because they have no one to flip it too fast,’ he said, referring to quick resales.”
“‘It’s not that they can’t sell them, it’s just taking longer and it takes more marketing and more realistic pricing,’ he said. ‘You can’t put a real estate sign out front and say, ‘Buy me,’ at any price. That is over now and we’re back to a real market where it takes real negotiating skills.’”
“Dudley Hampton, president of the Hernando Builders Association, agreed that people cannot judge the housing market by 2005’s standards because ‘that was an anomaly year.’”
“Despite the gloom and doom, Hernando County still boasts some of the lowest prices in the Tampa Bay metropolitan area, he said. ‘People who can afford to buy a home can buy one and get it for an excellent price and get good value for their dollar,’ he said.”
“To get people to buy, some are offering to pay closing costs or even the first year’s mortgage payments, he said.”
“Hampton believes much of the negativity comes from so-called analysts who continue to preach grim housing news. ‘A lot of that has to with the pundits on TV who I personally feel don’t know the difference between a hammer and a hat rack,’ he said. ‘Right now the sexy thing to do is preach doom and gloom about the housing market.’”
The St Petersburg Times. “Big private money from places like New York and Los Angeles has decided our carcass of a Florida housing market is ripe for some plucking.”
“If you’re a home builder, they’ll pay about 70 cents on the dollar to take that excess inventory off your hands. If you’ve lost your house to bank foreclosure, they’ll snag your humble abode for as little as 40 cents on the dollar.”
“One local builder, Dave Seidenberg of Bayfair Properties, said one fund totaling $750-million approached him as it scavenged for quality homes up and down the Gulf Coast of Florida.”
“Seidenberg said the deal is attractive only if he’s closing out a community. Otherwise he risks ticking off regular home buyers who pay more or less full price.”
The Post & Courier. “The overbuilt Florida condominium market got the best of a local development company.”
“James Doran Co., based on Daniel Island, conveyed about 45 acres of land in Orlando back to an investor after officials couldn’t get additional equity funding.”
“The lender, a pension benefit fund for the International Brotherhood of Electrical Workers union, accepted the property’s deed as part of the sale agreement that the two groups worked out before the transaction took place.”
“‘As we all know, Florida is going through a housing downturn,’ said CEO Bob Doran.”
The News Press. “Land preservationists throughout Southwest Florida are suddenly able to go after major properties they couldn’t have touched two years ago when prices were high.”
“Big property owners are coming hat in hand to offer their land to the property tax-funded Lee County Conservation 20/20 Land Program — spurred by the disappearance of speculators and builders who had been buying at a fevered pace.”
“When the home-building industry collapsed, prices plummeted for undeveloped land because builders had no need to start new projects. But the economic slump brings with it a sliver of good news.”
“The lower prices paid off when the county was able to buy the 105-acre Orchid Isles parcel adjacent to the Six Mile Cypress Slough Preserve in Fort Myers for $16.1 million three months ago. The owners had originally asked for $30.4 million.”
“‘We have a plethora of options’ for future purchases, said county Commissioner Ray Judah.”
“The falling value of the county’s real estate has devastated Lee’s residential construction industry, with only 85 building permits issued countywide in November compared to 402 a year earlier.”
“The median price of an existing single-family home has fallen 26 percent from $322,300 in December 2005 to $239,300 in October, the last month available, according to the Florida Association of Realtors.”
“This year, Conservation 20/20 has been swamped with applications, said Lynda Thompson, program coordinator: There’s now a backlog of 49 properties under consideration, of which 11 are in negotiations.”
“‘I’ve never seen this many nominations come through,’ Thompson said.” “One of the most valuable parcels acquired this year was a 400-acre property off Corkscrew Road near State Road 82, purchased for $5.85 million in May,”
“Fort Myers-based real estate broker Ed Bonkowski, who negotiated the sale, said the 20/20 program had been interested in the land for years but hadn’t been able to close the deal until now.”
“The property went for about $15,000 an acre, compared to the $40,000 or $50,000 similar property was going for two years ago when major builders like Beazer and Pulte were going after them. At those prices, ‘and 20/20 probably wouldn’t have gone into that bidding war,’ Bonkowski said.”
“In Collier County, which also has a land-buying program, owners of the 2,500-acre Pepper Ranch bordering Lake Trafford had planned to build houses on the property but recently approached the county about selling it for preservation, said Jennifer Hecker, national resources policy manager for the Conservancy of Southwest Florida, which advises the county on purchases.”
“No purchase price has been reached, but the property is ‘loosely estimated to be worth $40 million,’ Hecker said — much less than it would have gone for during the boom.”
http://thehousingbubbleblog.com/?p=3887
“If You’re Willing To Take Less, You Should Be Able To Sell”
+1 And you might have to bring some money to the closing table, but you can always sell. Donkeys.
LOL @ California:
“It’s usually 8:15 or 8:20 when I get home at night,” says Cherry, who has been doing this merciless long-distance commute for 16 years, getting by on just 4½ hours of sleep each night. “Nine hours of work and six hours of commuting. That’s my story.”
http://www.latimes.com/local/california/la-me-lopez-commute-cherry-20171216-story.html
Being able to work at home has given me a huge incentive to not change jobs. Now my old 45 minute commute feels onerous. I can’t even begin to imagine a 3 hour, one way commute
Same here, I joke that I have a 5-10 second commute.
Going to an office is for the most part is a waste of my time. The time I save not commuting allows me to ride my bike before lunch and swim or surf after work most days.
I read stories like this and I just cringe. 6 hours of commuting sounds like hell. That is no way to live. But I totally get why people do it. This is why I continue to believe that self-driving cars have the potential to be salvation for people in situations like this. If you could somehow just sleep in your car and then just arrive, then you parlay a lot of your wasted commuting life into rest, relaxation, entertainment. It might be more tolerable. But man, as it stands now it sounds nightmarish.
She can sleep on the train, right? Or at least doze.
Paradise has its costs.
I would do that commute for one day, then quit.
Ms. Cherry is heavily overweight. Researchers are beginning to see a link between obesity and low-quality sleep. Stress plays into it as well.
The damage to her health is not worth it (especially for a 50K/year job) and sadly she will only collect her pension for 3 years max…
I agree. Why can’t these people see it? You can move to a lower cost of living area and get a lower-paying job and still come out ahead.
They must have a gold-plated pension plan. Otherwise she should have quit long ago. Even then, it’s probably not worth it. (Also, let’s be honest, she’s black. The low-cost rural areas are mostly white, and not too receptive or trusting of blacks.)
So what kind of minimum qualifying household income would be required for the mortgage of a median house, plus taxes and insurance? For the US on average, $47,200 per year. In San Francisco, $269,600 per year. It would require a household of four teacher salaries!
http://www.businessinsider.com/san-franciscos-housing-bubble-collapsing-under-its-own-lopsidedness-2016-8
Astounding. I remember reading an article this summer about homeless teachers in San Francisco. With housing prices such as they are, it’s easy to understand how you could have homeless teachers in public schools.
https://sf.curbed.com/2017/5/10/15612746/sf-math-teacher-housing-homeless
I wonder what happened to SFhomo, or whatever her name was. She was a teacher who bought a house in San Fran using down payment assistance for public servants. She landed the house by writing a letter to the owner about the fairies in the back yard.
so u think the FED will save u from losses:
https://www.youtube.com/watch?v=INmqvibv4UU
It took 4 trillion of money printing to buy bonds to clean that sh@t show up.
That is 2.5 times all the physical cash in circulation.
And guess who is gonna pay for it? added to national debt.
California is the most impoverished state in the country:
“San Franciscans are clamoring for leadership to address the wretched conditions of our streets — the sprawling tent encampments, the discarded dirty needles, the rampant mental illness and the filth.
Though it didn’t always seem obvious, Mayor Ed Lee was intent on addressing these issues in his trademark no-frills, low-profile way. He pledged his second term would center on improving San Francisco’s streets and said again just last month that his final two years in office would revolve around those interlinked crises.
But fate had a different plan, and Lee died after suffering a heart attack Tuesday morning.
As city officials grapple with their grief and the political machinations around the election of a new mayor in June, residents are right to wonder whether their biggest concerns will continue to be addressed or fall off the radar. And if the “Night of the Living Dead” scenes on the streets exist with the attention of City Hall, what would they be like without it?”
http://www.sfgate.com/news/article/With-Lee-gone-San-Franciscans-look-for-12435252.php?t=4163123e83
a lot of folks say those people are mentally ill.
They wont go away until u either give them free housing or make it a crime and lock them up , which is basically free housing.
It is more complex than that. Homeless on average stay in San Francisco for less than two weeks. One of the most successful programs for dealing with the situation identifies friends and family and gives free bus tickets to leave the city.
I’d like them to stay where they are. Everyone has to live somewhere; I’m quite content to have these people live somewhere far away from where I live.
Reminds me of the term “Build them and they will come” …
“Dozens testify at a meeting as San
Francisco considers safe injection sites for drug users.”
IMO (probably one that is not shared by many) you do not want life to be made comfortable for these people where you live if you do not want these people living where you live.
https://www.storiesflow.com/article/5911501709/dozens-san-francisco-testify-meeting-considers-injection
Banker:
My guess is that most people share your opinion on this matter.
It’s supposed to be a great place if you’re a brogrammer. I know that my employer would hire them straight out of school (elite schools only, Cal State San Jose grads need not apply) for $140K. Some employers even have school bus so you don’t have to drive to work.
The holy grail for brogrammers is getting into a startup. From what I was told, you need some serious Open Source cred to get one of those start up jobs. If things panned out there would eventually be an IPO or a buyout and your stock options could be worth millions, and before you’re 27 years old! Party on Wayne.
But if you’re not a brogrammer, life can be very challenging, unless you bought your house back when they much more affordable (still expensive, just not insanely expensive).
Every time I visit, the place seems more and more surreal. I suppose that is whey there is so much demand for brogrammers no sane person with a family could survive there. I know of a few dual income couples there that scrape by on combined 300K incomes (and they’re sweating bullets over the new tax bill). They often drive beaters because all their income goes to feed the house.
“$15 Minimum Wage Studies Predict Bleak Future For California, Seattle”
http://www.thegazette.com/subject/news/business/15-minimum-wage-studies-predict-bleak-future-for-california-seattle-20171217
Record high poverty, unemployment, crime…. Yep. CA and WA are a real paradise.
The study found workers are having their hours reduced at a rate that exceeds the increased wages.
So how are these businesses able to get by with less labor? If I were to guess: illegal immigrants. So much for the left’s precious “living wage.”
DebtDonkey
Arlington, MA Housing Prices Crater 18% YOY
https://www.movoto.com/arlington-ma/market-trends/
I don’t see homeless and their trash in photos of China’s major cities. They can’t Photoshop everything, so they must have found a solution.
In Hong Kong, people live in cages. Yes, CAGES.
http://www.dailymail.co.uk/news/article-2084971/Hong-Kongs-cage-homes-Tens-thousands-living-6ft-2ft-rabbit-hutches.html
With the wire cage crib they can lock-up their belongings while they’re out stealing or hauling meat in the rickshaw.
I don’t see homeless and their trash in photos of China’s major cities. They can’t Photoshop everything, so they must have found a solution.
There are poor sections everywhere. When you see a photo with those local first floor businesses in a line down the street look for the little 3-5 foot gaps between the businesses. If you’re used to western streets you don’t notice them and just assume it’s a wall doorway to an upstairs business or something. But those are little alleys that go back into whole neighborhoods with no cars that you can’t see from the street. The only problem is that once in a while the govt decides that the neighborhood was built illegally and flattens the whole thing to build another skyscraper or 20+ story apartment building. You can live really cheap back in there so almost nobody is really homeless.
Regarding the trash, the communist system pays people a basic wage to continuously clean the streets if they can’t find anything better to do. That and basic medical care is the safety net.
Prescott, AZ Housing Prices Crater 12% YOY On Ballooning Housing Inventory
https://www.movoto.com/prescott-az/market-trends/
https://www.youtube.com/watch?v=GKD8FNayCHk
SONGFACTS ®
This song is about drugs, especially marijuana. A “Toke” is a puff from a marijuana cigarette or pipe. Tom Shipley explained: “When we wrote ‘One Toke Over the Line,’ I think we were one toke over the line. I considered marijuana a sort of a sacrament… If you listen to the lyrics of that song, ‘one toke’ was just a metaphor. It’s a song about excess. Too much of anything will probably kill you.”
Mike Brewer and Tom Shipley were folk singers in Los Angeles. This was their only hit.
http://www.songfacts.com/detail.php?id=2506
I considered marijuana a sort of a sacrament
That word doesn’t mean what he thinks it means.
Witchi-Tai-To was their best song IMO, written by Native American jazz musician Jim Pepper:
https://www.youtube.com/watch?v=kkVjd1fJMME
Some other group had a hit with it, but I like this version best.
“Water spirit feelin’
Springin’ round my head
Makes me feel glad
That I’m not dead”
I really appreciate these older music references. Many of these songs I have never ever heard as they were way before my time, but I like to hear what other people grew up with or are nostalgic for. I probably would never be exposed to any of this stuff were it not for the people on this blog. A sincere thanks from an (old) millennial.
Hey, you’re welcome!
I can’t listen to that song and see those images of this country without feeling a bit full in my heart. Yeah, it’s stuff like this is what the US means to me.
Wellll, in that case, here’s one, way before my time. Keely Smith died yesterday at 89:
Louis Prima and Keely Smith “Black Magic”
Her deadpan act was a riot:
Louis Prima Just a Gigolo & I Ain’t Go Nobody
Good stuff! I used to listen to the public radio jazz station back when I lived in Salt Lake City. I went to Jazz fest in Montreal once. Great music that I know so very little about, but appreciate it nonetheless.
Blog followed since 2005 here. Maybe all of us are the crazy ones. Above you have one guy who said 2008 was his best year ever. The other guy listened to his consultant who said a recession was coming, he downsized in 2007 and completely missed out on 2008!
2 years ago, my retirement accounts were almost all equities, appropriate for someone my age. I diversified into less risky stuff, and one year ago I got out of stocks 100%. The s&p went up 20% in the last year.
Sure we will eventually be right about a recession. But being a constant party pooper had caused us to miss out. Sure I will feel validated when the market crashes. But for now I have to deal w a spouse who is angry that I wanted our future house payment in cash instead of stock, which has since gone up 20%. I hear about the lost opportunity cost all the time
Remember that guy in the Matrix who negotiated with the computers to be put back in? I can sympathize.
Picking tops is impossible. It’s better to get out too early than too late.
“Sure I will feel validated when the market crashes. But for now I have to deal w a spouse who is angry that I wanted our future house payment in cash instead of stock, which has since gone up 20%. I hear about the lost opportunity cost all the time.”
“… stock, which has since gone up 20%.”
And why is that? Why has the price of stock gone up 20%? Is it because the “value” of stock has gone up 20%? Does anybody here on this blog believe that “price” and “value” in the current environment are related in any meaningful way?
How about bitcoin? What is the “value” of bitcoin? Is there some inherent value for bitcoin or is the so-called value determined by its price?
If you say the value is determined by its price then ask yourself “Just who is it that determines its price?” Is it not the actions of strangers who may or may not have lost their minds?
If this is true for bitcoin is this also true for stocks. Is it true for real estate? Was it true for Beanie Babies?
On behalf of all the single people who are looking for wives I want to thank you for taking the woman you are currently married to out of circulation.
Of course it’s all beanie babies. Of course the price is in the stratosphere and has no relationship with reality. But at some point we have to recognize the possibility that maybe Zork isn’t coming, no matter what apocalypse date our leader chose and no matter how many times it’s been revised.
I been waiting for a crash since 2005! I want to be right!! But I also acknowledge that I been wrong for a long ass time.
And dude, don’t shit on my spouse. Once you make things personal people get defensive, they stop listening. Leave your incel bullshit elsewhere. And anyway, my spouses name is Adrian and he can beat you up.
It already crashed as evidenced by organic housing demand at 20 year lows.
San Francisco, CA 94109 Housing Prices Crater 7% YOY
https://www.zillow.com/san-francisco-ca-94109/home-values/
“There was a staggering 53-month supply of luxury condos on the market in the third quarter, according to the latest Douglas Elliman report on the Miami coastal mainland. That’s up from a nearly 40-month supply at the same time last year.”
“And yet there’s even more inventory to come. Peter Zalewski, founder of Cranespotters.com, has started offering what he calls ‘condo correction tours,’ during which he takes prospective buyers through downtown Miami, pointing out all of the inventory that hasn’t yet hit the market. Zalewski said that as the Miami condo market continues to soften, investors are signing up for his tours with the eventual goal of buying as prices continue to drop. ”
“‘We’ve had almost 150 buildings delivered in coastal area, and we have another 100 buildings under construction,’ said Zalewski. ‘So really, what you are seeing is all of the early effort of the beginning of this cycle from 2011 starting to come to fruition, while at the same time you are seeing sellers start to realize the jig is up.’”
http://thehousingbubbleblog.com/?p=10286
Miami is in it’s second crash in ten years now.
…my spouses name is Adrian and he can beat you up.
In that case, on behalf of all the single people who are looking for wives we want to thank Adrian for taking you out of circulation.
On behalf of all the single people who are looking for wives
Order one. I hear the Malaysians are obedient.
Malaysians are hit and miss. Filipinas FTW.
Why has the price of stock gone up 20%? Is it because the “value” of stock has gone up 20%? Does anybody here on this blog believe that “price” and “value” in the current environment are related in any meaningful way?
If you look at the cyclically adjusted PE ratio, I think it’s pretty obvious that prices have swung far beyond the historical norm. There ought to be a reversion toward the mean at some point, but as Keynes said, “markets can remain irrational longer than you can remain solvent (or patient).”
The only way I can see to justify stock prices at current levels is based on the belief in widespread earnings growth that will significantly accelerate, possibly due to the corporate tax cuts. If this happens (and I believe it’s a pretty big IF since I see no evidence in increased consumer demand due to way too much indebtedness), then maybe current prices can be justified by some sort of tortured mental gymnastics. The other scenario which might justify stock prices is if we have run-away inflation.
The other scenario which might justify stock prices is if we have run-away inflation.
yellen has just admitted that the fed doesn’t understand inflation. probably the first honest thing she’s said since she took the job.
Sunday in the Park with Goldman
Bradfood 99,
It’s a special day. Goldman begins trading futures on cryptos. Unless they changed the date, today is the day for their special clients. Not your better half, unfortunately.
Tell your spouse to read up on FIB retracements and she can join the party. A Lexus and Chevy Suburban await you.
The angle of inclination for BTC is now exceeding 60 degrees on the 3-month chart.
Whisper to her that a crash before March is coming.
Remember ….after a long car trip, nothing…absolutely nothing… cleans bugs off your front window like Warren’s Coca Cola.
P.S.
I heard the same from my spouse.
As the Bitcoin bubble continues its parabolic moonshot to $20k and beyond, with the media doing its best to help it along, I’ve been thinking about the “virtual gold” nonsense that’s spouted.
There is really no comparison whatsoever between physical gold and Bitcoin. You have to locate and physically mine gold. There is a lot labor, technology, intelligence, natural resources and equipment required. Beyond that, gold has been a store of value for thousands of years, not to mention its uses in industry, jewelry, art, etc.
Bitcoin, while using electricity, computer equipment and labor in order to be “mined,” has little use whatsoever. It’s not efficient enough to take over for any sort of daily monetary transactions. While there’s a finite number of Bitcoins, there’s absolutely nothing unique about Bitcoin that cannot be recreated an infinite number of times under different names. What exactly does Bitcoin offer that a bunch of programmers can’t replicate immediately? Nothing.
When you look at a one year graph of Bitcoin, Ethereum, Litecoin and other crytpto prices, they almost perfectly match. Why is that? Because it’s nothing but a speculative bet on crypto, so prices are soaring. And yet there’s no barrier to entry - an infinite number of cryptocurrencies could be created under new names. With currencies like the dollar, at least you have the full faith and credit of the United States of America standing behind it. What do you have with Bitcoin and other cryptos? Nothing.
I wonder if the internet causes bubbles to be more frequent ? The hype is broadcast everywhere all the time now.
“With currencies like the dollar, at least you have the full faith and credit of the United States of America standing behind it.”
I have no bitcoin or any other digital coin at this time. But it does have the necessary elements of currency, or a medium of exchange. People do have confidence in it, and it is more and more being accepted as payment. If you’ve got that, you’ve got money. Anything can be money if people are confident in it and will accept it for payment.
As to the speculation in these digital coins, how is that different from speculation in any nationally sanctioned currency? Isn’t that how Soros made his big fortune, shorting the pound?
I believe someone just accepted bitcoin as payment for a property in Miami.
As to the speculation in these digital coins, how is that different from speculation in any nationally sanctioned currency?
It’s not. That’s why people want dollars and not pesos.
Isn’t that how Soros made his big fortune, shorting the pound?
He made his fortune by being told at dinner with the Prime Minister that England was going to devalue its currency.
I believe someone just accepted bitcoin as payment for a property in Miami.
Thirty years ago they would have accepted kilos on the second floor of the Mutiny Hotel.
“There is really no comparison whatsoever between physical gold and Bitcoin.”
Aside from their mutual intrinsic worthlessness for any purpose besides speculative gambling, that is.
Gold, given it’s density, would be a great paperweight.
Can’t say that about bitcoin.
Neptune Bech, FL Housing Prices Crater 7% YOY As Defaults Hit Coastal Properties
https://www.movoto.com/neptune-beach-fl/market-trends/
McCain’s last rodeo?
http://www.zerohedge.com/news/2017-12-17/mccain-miss-critical-tax-vote-returning-arizona-after-chemo-treatment
Conveniently after saving the ACA but before the tax reform vote…good riddance
One theory is that McCain will never return to Washington. We need to understand that not everything is about politics.
oh, GAWD, cue all the mawkish “lion of the Senate” honorifics. Gag-worthy.
The 10 hottest bars in Denver right now, LOLZ:
https://www.bizjournals.com/denver/news/2017/12/14/zagat-lists-the-10-hottest-bars-in-denver-right.html
I’ve never been to any of these. If you’re going to drink downtown, Falling Rock Taphouse on Blake by Coors Field has the largest selection of drafts (including Russian River’s Pliny the Elder). Or Stoney’s on Lincoln if you just want a cheap place to get wasted and pick up slutty women.
I’ve never once taken an Uber or Lyft and there are plenty of watering holes in South Denver you can walk/bike/bus to easily without wasting alot of money. Genarro’s on South Broadway has several varieties of Deschutes Brewing (Bend, OR) on tap with 2 for $6 pints for happy hour.
Zaremba brothers revive plans for Avenue District townhouses their father envisioned:
“Brothers Matthew and Nathan Zaremba, Jr., are reviving a slice of the once-grand vision for the project, at Superior Avenue and East 13th Street in downtown Cleveland. They expect to start building 36 townhouses early next year, at a time when such for-sale construction is nearly nonexistent in the central business district and meager across the city.
Through October, builders pulled permits to erect 125 single-family homes in Cleveland, according to preliminary figures from the U.S. Department of Housing and Urban Development. That’s an improvement from the nadir of 2009, when 87 permits were issued, but down sharply from the heyday of 2004, when permits peaked at 374 in the city.
The trends are similar - though less stark - across Cuyahoga County and much of the nation, contributing to ongoing real estate industry concerns about a lack of inventory, rising prices and affordability hurdles for buyers. In downtown Cleveland and other hot urban areas, many developers have been focusing on apartments, which are easier to finance and fill.”
http://realestate.cleveland.com/realestate-news/2017/12/zaremba_brothers_revive_plans.html#incart_river_home
Southern California now:
http://thehill.com/blogs/blog-briefing-room/news/365258-california-wildfire-becomes-states-third-largest-in-history
This is awful. The latest conspiracy theory is that these fires are deliberate and produced by directed energy weapons and that California is being cleared out for occupation by China. Here’s the far-out presentation:
https://www.youtube.com/watch?v=2G6mTX07I1M
Here’s the more conservative, but similar presentation:
https://www.youtube.com/watch?v=EaFEM0ZjdKw&t=694s
Lionel is not a tinfoil hat guy. He gets into Agenda 21.
Hartsfield Airport in Atlanta is also burning. This is weird.
Most likely explained by graft, negligence and incompetence.
The latest conspiracy theory is that these fires are deliberate and produced by directed energy weapons
When a simple match would do the trick
Saw that.
>The latest conspiracy theory is that these fires are deliberate
WE MUST EXPOSE THESE HORRORS
Yah, it’s really weird. Lionel brought up the phenomenon of fused and molten glass, metal and even concrete, while just yards away a tree remains untouched. I’m not there to see it, so I really can’t say, but he does know people who live there, and I guess that’s what they’re telling him.
Except for muttering about global warming, Jerry Brown seems to be sort of blase about the whole thing, although having dealt with wildfires year after year after year, he’s probably weary of the whole thing. OTOH, there does seem to be something different about this wildfire season. Very whack-a-mole.
OTOH, there does seem to be something different about this wildfire season.
There is. The reservoir-filling rains of last January grew a lot of fuel in the spring. A lot. Something that hasn’t happened in many years.
Ain’t no such thing as a disinterested technocrat.
Everybody got a dog in this race. You bet they have real estate, stocks, bonds and various other assets, virtual or physical, on which their actions will have an impact.
“That is the stunning dichotomy of a recent survey from the Hartford Funds, which found that many Americans don’t believe the financial crisis had any impact on their life, and yet — a decade after the last big recession — they still don’t trust the stock market.”
Once these Rubes finally trust the market is when Da Boyz will again pull the rug out from under them.
JACKSON 5 STOP THE LOVE YOU SAVE
https://www.youtube.com/watch?v=C6pLV9xZczM
Never picked up on Isaac, Benjie, Alexander and Christopher slut shaming the girl in the song until tonight.
They’ll ruin your reputation
They’ll label you a flirt
The way they talk about you
They’ll turn your name to dirt, oh
Isaac said he kissed you
Beneath the apple tree
When Benjie held your hand he felt
Electricity
When Alexander called you
He said he rang your chimes
Christopher discovered
You’re way ahead of your times
https://genius.com/The-jackson-5-the-love-you-save-lyrics
If you take a knee in a stadium during the National Anthem and no one is around to see it, does it make a sound?
NFL HELL: Sea of Empty Seats Plague Stadiums Across League In Week 15 (PHOTOS)
December 17, 2017 by Joshua Caplan
http://www.thegatewaypundit.com/2017/12/nfl-hell-sea-empty-seats-plague-stadiums-across-league-week-15-photos/
$12 sh@tty domestic beers aren’t helping either.
The good news is players will never ever see the out sized pay packages again….. i figure 25-50% pay cuts now that ESPN is firing hundreds of people ever few months and much lower ticket prices too
Buffalo Bills tickets: $5, or free if you don’t mind shoveling
http://www.democratandchronicle.com/story/sports/football/nfl/bills/2017/12/08/buffalo-bills-tickets-cheap-help-shovel-new-era-field/935072001/
My bad, sorry for killing football. Blame it one me, an (old) millennial.
“If you take a knee in a stadium during the National Anthem and no one is around to see it, does it make a sound?”
If a NFL game is never played again will it really matter?
If you are rooting for your favorite team by screaming at your TV set does your favorite team hear you?
the stock market is doing great but the rest of america is incompetent
http://www.kiro7.com/news/local/train-derails-onto-i-5-in-pierce-county-all-lanes-blocked/665619813
see if this works it was a S curve in the track over I-5
https://www.google.com/maps/@47.0800043,-122.6792604,999m/data=!3m1!1e3