Bits Bucket And Craigslist Finds For January 24, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Mortgage Fraud Web Site Progress: The Address is Secure
We have the web site up and running now at http://www.paladinreports.com . You may visit it to see the home page, if you like. This plan is starting to come together. We have some other addresses, but they are tied up in a snag. Several of you are very anxious to report data, but we do not yet have the database reporting system completed. This project continues to eat time at a greater rate than Ownit Mortgage’s investors are eating “buy back” home loans!
If you want to establish contact about some important data, or have an idea about identifying and stopping mortgage fraud, you may use the e-mail link from the home page, which will reach me as paladin@paladinreports.com.
If you want to contribute financially to this effort, you may send funds to Paladin Reports at P.O. Box 59, Mendocino, CA 95460. This will be very helpful. We will have PayPal account soon. So far, it is all my own personal funds to get this operational.
In the future, the web site will have a page you will use for reporting each instance of suspected mortgage fraud. The more properties you identify, the better. The most current information is also the most valuable. We will be reporting the suspected mortgage fraud to the rating agencies and the RMBS buyers. Our strategy is simple: the rating agencies will downgrade securities with fraudulent loans and the RMBS buyers will refuse to buy loans on properties with addresses we have identified as suspected mortgage fraud. This will remove the “profit” motive for the lenders and end their exit strategy for the loans.
With a little bit of luck and a lot of hard work, we will put most of these practices (and ourselves) out of business within 3 to 6 months. The Sub prime loan mortgage fraud phenomenon will be history.
When you look for mortgage fraud to report you may be surprised at how blatant the fraudsters have become. Look for houses that have been empty and unsold for a while and then suddenly, the listed price jumps up and it is reported as “sale pending”. Also, look at homebuilders in trouble and poke around the comparable sale records on the web sites or other databases. We all know the market is drifting down, so if some FB closed on a new home in early 2006, and you see 5 other houses selling for more, you should report it. You can also call any title company and ask for their customer service department. Give them 4 or 5 addresses and they will tell you the buyer, seller, lender and price. They may even fax our e-mail you the data. It is pretty simple, but you have to do it or this plan will not work.
So far, just with what Lex in Indio and Deb from San Fernando have reported to me, plus some work I have done, our grand total of “suspected” (I have to use that word in all the communications now) fraudulent loans is $21,500,000, with an overburden of $4,300,000 in fraud. We will show the daily totals on the web, as the amounts grow.
How many investors will buy those 37 loans in the investment pools? Particularly with 1) a declining market that is constantly eroding more collateral value and 2) the sub prime lenders folding like a tent on a daily basis, unable to buy back their bad loans?
Exactly! Zero!
Paladin
Have Gun Will Travel
I nominate the following as the blog theme song:
http://tinyurl.com/2xfbb9
I think that this song might be more appropriate.
You guys are too funny. And Chuchundra wins. Together, my dad and I watched “Have Gun Will Travel” while it was on TV in the late 50’s and replayed in the 60’s. That si where the name comes from.
Paladin, Down the street from where I live, this house at 7907 Colton Street in Ventura sold for 699,000 on 7/18/06 and a recent sale 12/18/06 at 217 Crocker had a sale of 555,000. These houses are on opposite corners of the street. Also, at 279 Baker, sold 10/23/06 228,500. Same house as 217 Crocker.
Krills, these are absolutely goofy numbers. $699,000, $555,000 and then $228,000. What do you think the market value of these homes is?
Paladin, 4 years ago the value of these homes were around 250,000. Now, who knows what the real market value of these homes are. My neighbor bought his home at 335 Crocker, Vta, 93004 for 620,000 9-21-05.
Todays bit on the Plunge Protection Team:
PLUNGE PROTECTION TEAMS
The Plunge Protection Team (PPT) has been confirmed in its existence by US Federal Reserve Chairman Ben Bernanke in testimony before Congress. This is not so shadowy a group, formally called the Working Group for Financial Markets. It is composed of the USFed, the Dept of Treasury, the Securities & Exchange Commission, and a select few large bank & brokerage houses on Wall Street dubbed worthy to profiteer. Their unspoken but understood mission is to prevent meltdowns like on Black Monday of 1987. The group was established immediately after that date of breakdown when the wizards lost control.
One would have to be brain dead, or more naïve than a kindergarten child, or politically corrupted to the core not to observe clear pervasive patterns of PPT effects. Some call it the “10am lift” or “3pm lift” at work. Critical support and stimulation has been delivered routinely to the stock market via S&P futures contracts, major stock index options, USTreasury Bonds, gold, euro currency, yen currency, and probably even crude oil.
From Jim Willie at http://news.goldseek.com/GoldenJackass/1161788580.php
Ummm……no comment
What is there mission with Gold? Somewhere between $250 and $750? A 300% fluctuation seems to be somewhat suspect of real manipulation considering gold price versus the Dow or any financial instrument has been fairly extreme over the last 6 years.
“What is their mission with Gold?”
Get Goldilocks
Paladin,
My husband thinks you had better budget for a bodyguard. Hopefully you really do have gun, you might need it.
I agree Paladin - you are doing a great service but the amounts of money you are exposing are certainly enough for someone to kill over. I hope you are taking efforts to protect yourself and the web site. Be careful out there.
Paladin Jr. is a U.S. Marine with two tours in Iraq under his belt. The last one was in Anbar Province. He could tell you some stories about violence that would make your hair fall out. I appreciate your concern, but trying to stop what I am doing is futile for the criminals. Their cake is already baking. I am focusing mostly on stopping the financing arm that allows this crime to foster and thrive. Once that is done, the real estate mortgage market will no longer be their playground.
Paladin, you are doing a great service. I am going to start looking for homes in my area. I think I know exactly where to look. It appears their are some brand new homes built in some sketchy hood areas of Sacramento that are sitting empty. I have a feeling the builder, who is small time may become desperate.
Paladin, look out for yourself.
Paladin Jr. is a U.S. Marine with two tours in Iraq under his belt. The last one was in Anbar Province
Hi Paladin,
You may think about requesting Ben to remove this…..as this kind of personal data makes it more easy to identify you out of 150 possible “paladin”.
The cause is not worth dying for, also it can’t be fixed an individual. (you will make a difference no doubt, with support from blogger, still you are alone at top as target)
The fact is “system” allowed this kind of thing to happen and people at powers that be
were not totally sleeping or naive.
They have other things to worry about more or whatever….that is why these loopholes were left open for so long.
And someone on the edge after getting stuck with $$$ mortgage burden can be very unstable and irrational.
Also please keep all data as secure as possible, people who report or support your website…..
Thanks.
It is all anonymous. Not to worry.
You may think about requesting Ben to remove this…..as this kind of personal data makes it more easy to identify you out of 150 possible “paladin”.
Call me paranoid, but I tend to agree with Rent2home. You are doing enough without running the risk of being identified on top of everything. These people are not innocent dupes and there is a lot of money at stake.
Hey Paladin,
I read these fear messages from other bloggers, and it makes me sick. This scum in our society win when people are afraid.
If we can ask our boys and girls to go face down Saddam, how can I stay home and profess fear of a crooked real estate borrower? You are right David, we must press on. No one has anything to gain by harming me. The system is in place and will be operational shortly. I don’t even run it now. And shortly, I hope you all take over majority funding.
I will send you a check today. For a small fee I can great civic results. God knows our government won’t do anything except throw money at FB’s. This crap needs to stop now.
Paladin,
Agree with you & David. If you let the scum run without fear, it’s the good citizens who end up imprisoned and fearful.
I feel the same way about “street” crimes. Nothing disgusts me more than seeing apathetic morons watch as someone else is victimized.
Time for Americans to grow a pair and stand up for what’s right.
You can count on my support, Paladin!
This is what my 90 year old mother has to say. She wrote this to me last week:
Mourn not the dead that in the cool earth lie,
but rather mourn the apathetic throng,
the coward and the meek
who see the world’s great anguish and its wrong,
and dare not speak.
Ralph Chapin
Paladin:
You are a real and true American with the values and ideals and actions that made our land great. Not these poseurs like Sean Hannity et al. that sit behind a microphone and use silly self serving euphemisms. Man I hate his silly tag line that the sycophants use: “your a great American Sean”.
But, you Paladin, are truely a great American!!!!!!
Keep up the good work.
INVICTUS!!!
I believe you posted that the other day. I LOVE THAT QUOTE!!!
You are fortunate to have such a mother.
Please continue to let us know how we can help. As I’ve offered before, if I can assist your “college kid” in some way, please advise.
Contributions coming as soon as PayPal is set up.
You are a hero, Paladin!!!
“Our strategy is simple: the rating agencies will downgrade securities with fraudulent loans and the RMBS buyers will refuse to buy loans on properties with addresses we have identified as suspected mortgage fraud. This will remove the “profit” motive for the lenders and end their exit strategy for the loans.”
Paladin –
This should be the standard model for government law enforcement in situations where white collar criminal activity is so endemic to an industry (e.g., mortgage lending) that it would cost a fortune to control it through direct legal intervention.
1) Shine a bright light on the criminal activity.
2) Assemble incontrovertible evidence and prominently display it on the internet where anyone who cares can easily read it or print it out.
3) Let the invisible fist of justice do the hard work of pounding the rampant criminal activity out of the system.
“With a little bit of luck and a lot of hard work, we will put most of these practices (and ourselves) out of business within 3 to 6 months. The Sub prime loan mortgage fraud phenomenon will be history.”
I am pretty sure you will find another project to occupy your very creative mind when this one is through. And the “system” you have set forth should find many other applications. Keep that gun handy!
GS
There is a book or a movie of the week in this…if anyone knows a good agent, they should send the info on to Paladin.
‘When you look for mortgage fraud to report you may be surprised at how blatant the fraudsters have become. Look for houses that have been empty and unsold for a while and then suddenly, the listed price jumps up and it is reported as “sale pending”. Also, look at homebuilders in trouble and poke around the comparable sale records on the web sites or other databases. We all know the market is drifting down, so if some FB closed on a new home in early 2006, and you see 5 other houses selling for more, you should report it.’
I have a suggestion (which I plan to implement locally): Set up “neighborhood watch” programs for mortgage fraud. With the widespread availability of MLS, Craigs listings, Ebay home sales etc on the internet, it is fairly simple for anyone who is slightly motivated to keep tabs on a small number of homes in a particular area over time, in order to catch bizarre price anomalies in particular listings such as Paladin has described.
Somebody with a lot more time and motivation on their hands to pursue this effort than I have could probably figure out how to create a data mining system which used some kind of filtering system to detect anomolous price movements over a much larger area. If anyone is thusly motivated, I could share my thoughts further on this (I know how to implement this, but I don’t have Paladin’s motivation…).
“Somebody with a lot more time and motivation on their hands to pursue this effort than I have.”
Ummm……no comment.
I think the phrase is– RTFLMAO
LOL!!!
Hope there will be provision in your database for including details of the REIC shills involved in the fraudulent deals.
Good luck!
There is, we just have to get it up.
Hi Paladin,
I don’t have a lot of money to help, but I can ghost write for you if interested. On your home page, change “night” to “knight.”
Best Wishes,
B
BM, Thank you, we will change it. Paladin
My check is in the mail this morning. I wish Ben had a P.O. Box, as I don’t do PayPal. Think about it Ben.
Ben will be all over this…….take a peek.
http://www.latimes.com/news/local/la-fi-foreclose24jan24,0,4412832.story?coll=la-home-headlines
Chris,
What’s with the anti-PayPal thing? I’ve heard a number of people say they don’t want to use it, but don’t know why.
Sorry, I can’t give a good answer, maybe someone else can. I just had a bad experence the first time I used it over a year ago & decided to pass on using it again. I did not lose any money & they did straighten it out, but I hate hassle.
Simply put, Paypal is not a bank. Therefore, users are not afforded all of the rights stemming from years of regulation on banks designed to protect consumers. Paypal can put indefinite freezes on accounts. They have done other nefarious things, just google “Paypal sucks.”
Had a problem with pay-pal as a seller. Had a buyer buy via pay-pal account. Gave him the merchandise. Since he funded his pay-pal account via a credit card, he then instituted a charge-back whereby the CC comp rescinded the funds. I disputed with pay-pall Pay-pal disputed with the CC company and lost even though I provided some evidence of the transaction. Ultimately Pay-pal took the loss but it took about 3 months to straighten it out and during that time my account was short the money.
So don’t use it as a bank. I don’t keep any money there, but it’s quite nice to be able to pay people out of it with funds backed from either my real checking account and/or my credit card.
I used it only once to make a purchase throug e-bay. The purchase went OK and I got what I had bought, but my credit card number was stolen and I got a statement with electronics purchases made in Rome. I did not have to pay for those expenses, but it was a hassle.
I love using PayPal. So simple. And never had a problem with it.
Ditto. Never had a problem, though mostly use it for Ben’s donations. Haven’t personally bought anything through it.
Paypal is easy if you want to SEND money ( like as a BUYER/Donor) and want to pay using Paypal.
However if you are receiving payment for good sold, then Paypal is NOT going to protect you much against any dispute initiated by Buyer.
I use paypal if I buy anything on Ebay, and also send some small donation for this blog now and then.
Yet even a jump in foreclosures, said Ellen Schloemer, one of the report’s authors, isn’t by itself going to bring back the dark days of the early and mid-1990s.
“It won’t crash the housing market,” she said. “There’s still a lot of people who will buy homes and keep them. As long as no life event comes along that pushes them over the edge, they’ll probably be OK.”
Yeah, what kind of life event could affect FBs already stretched to the max…divorce, death, car accident, job loss, illness,or maybe an ARM resetting? Nah, she’s right, never happen.
hope raines mudd and others get serious time
how can mort fraud NOT be a felony ?
A certain overpriced condo I watched this summer sold for the asking price according to the MLS.
The tax records show the same owners, and no recent sales.
The owner was also the realtor, a young woman I met who was offended by my suggestion / verbal offer of 10% less than her asking price .
She promptly RAISED the price and it SOLD-
Now renters seem to be occupying the place.
If this is a lease option would it record as sold on the MLS?
Can a realtor enter “sold” without it actually selling?
Is it possible to inflate the comps this way?
If so how can I report this…
A lease option would not show up as a closed sale on the transfer records. It is possible the Realtor sold it to her “sister” of something at a fraudulent price. What is the address?
This link hopefully works.
http://www.oahure.com/details.php?M1=2614810&OneProperty=Y&MyPropertyType=2
Got it.
Palladin, though i appreciate what you are doing, I would suggest changing a few things. You call youself palladin and define it as virtuout, thus patting yourself on the back. Scrap the Knight picture, scrap the definition. Also, your narrative sounds like yet another bogus consumer protection organisation. The royal blue and black backgrounds have to go as well. Those colors are dark. You need to use mostly white backgrounds with perhaps a little of other colors just to give it some life. Black is dark. white is good. Bottom line: just focus on FACTS. Leave out the beautiful narrative to others. Actions speak louder than words. And you have your actions, Palladin. So why ruin your reputation with pompous narrative?
Right on. Your comments are stongly noted and we will implement many and maybe all of your suggestions. There is so much to do and so little time. Obviuosly you have great design and marketing knowledge. It all makes sense.
Paladin
I kinda liked it, but no matter, what counts is getting your message out there and getting this going. You are demonstrating great leadership; I hope some of the MSM are shamed into doing more by seeing your (and Ben’s and others’) work.
And you have your actions, Palladin. So why ruin your reputation with pompous narrative?
I agree, this is about action. More about nailing the bastards.
eewk. Please dont do the center justification. And whatever you decide to say [and I agree about dropping the narrative and graphic] use a larger font size. Have pity on us old folks. [And yes, I tried changing the text size in the browser and it doenst work].
You are doing great work. Please accept this as constructive comments about the presentation of the data.
I agree with this. I’d keep it simple, like google’s website. Just the information and facts needed presented as clearly and plain as day.
I will check ALL sales going thru my local MLS (there are so few nowdadys…)
I expect everyone here who has such access to do the same. Especially if anyone is a Realtor(TM) that oath means reporting fraud!
The sooner the market normalizes the better for everyone.
Hi Paladin,
I noticed this “suspected” fraud or cash back transaction:
Address : 24 Ametrine Way, RSM, CA 92688
This house was in the market for more than 6 month, last asking price was $665.000 and willing to negotiate.
In zillow says it sold in 12/22/2006 for $699.000. It is $34K over asking price!!!
Alex OC, this looks suspicious. The house next door at 24 Amertine sold for $655,000 on 7/17/06. Is the market rising in RSM at 7% every six months. The subject property does not show up on my database as having sold, yet, so I can not determine the financing.
typo….next door at “22 Amertine”
Since last 3 months, sellers started to make reductions on prices (no much, but it is a beginning). The 92688 is starting to tank.
There is another house at front (23 Ametrine way) that is not selling for more than 6 month as well, last asking price was 689,900
State of the nation?……………… Broke!!!
http://articles.moneycentral.msn.com/Commentary/Experts/Jubak/Jim_Jubak.aspx?msn=1
The Bush administration has been adamant about keeping certain costs out of the budget figures. Spending on the war in Iraq, for example, has been included not in budget resolutions but in special emergency spending bills. They are “off budget” in the language of Washington. That spending, estimated by the Congressional Budget Office at $360 billion overall and $95 billion in the fiscal year that ended in October 2006, aren’t in either of these two budget figures. And Iraq funding for fiscal 2007 won’t be included in the budget the president will introduce next month, either.
Enron accounting, writ large. Every admin, no matter what party, should be required to use accurate numbers, especially in the State of the Union address. Otherwise, citizens and taxpayers are just dupes for shysters.
In fairness to W, I believe the off-balance-sheet accounting practices in govt predate his tenure…
No, they don’t. If you will recall, we has a surplus when Clinton left office. A real one.
Uh, yes they did; and no, there never was a surplus. Pure DC spin.
Uh, yes they did;
Hey tj, do you have an example?
Let’s not forget that the SS “trust fund” has been off-the-books for years–as I recall–with SS contributions never making it into any “lock box”. Instead, they are absorbed into the general revenue (replaced with gov’t IOUs). Smoke and mirrors, Charlie Brown. Lucy has a football she promises to hold onto THIS year!
The USA spends 4% of GDP on the “Military Industrial Complex”
and 16% on the “Medical Industrial Complex”.
What’s your source, or did you hear it on Fox news?
Amazing how much energy people have to attack the military - yet they seem to ignore the other 96% of the budget.
Wait until some unfriendly power (i.e., China, for you dummies) decides to take us on, and wins (circa 2012). Then maybe your thoughts will ‘advance’.
Uh, hello?
The budget is not 100% of GDP. This isn’t the soviet union. The government budget is about $2.5T out of a $13T GDP. 4% of GDP on the military means 20c out of each $1 of government spending.
More to the point, China isn’t concerned with winning a military war. The USSR tried that and lost. China is focussed on the economic front, while the US goverment is focussed on military successes. Beijing is half way towards winning the next war while Washington is still trying to win the last one. Shades of the Maginot line.
the house as the atm on msn this morning
http://articles.moneycentral.msn.com/Banking/HomeFinancing/YourHomeYourATM.aspx
Blogging for Property Sales - today’s NY Times
“Increasing numbers of potential buyers and investors are exchanging information in online forums, downloading video and audio reports and reading blogs for property news and opinion”.
http://tinyurl.com/2cf9uc
Haahah. Ya think? How appropriate that the Times’s first peep on Real Estate blogging fluffs its way right past the bubble blogs, where the most useful consumer news can be found.
Housegeek,
it’s better than that. The NYTimes first started its’ own blog about 10 months ago, but killed it when the market started to tank. Didn’t want to upset those advertising dollars from realtors.
Notice they don’t mention their own shameful retreat from the blogosphere.
Donald Trump sent me a personal invitation!
http://louminatti.blogspot.com/2007/01/donald-trump-sent-me-invitation.html
“Think Big, Live Large.”
Trump Jr. has a dog and pony show about how to get rich through foreclosures.
I hear the people who are advertizing a “sure” investment in Orlando Florida condo hotels on WFAN in New York will be at the Trump Expo. Units will be sold for only $99,000, while similar units have sold for $140,000. “Get the return you deserve.”
That was ilouminating.
When I got my invitation, I thought it was from Eddie Munster, so I threw it in a bag with grandma’s soiled adult diaper. Now that I’ve been informed it’s from the chosen one, maybe I’ll fish it out.
I got that one. I think my wife pitched it into recycling while I wasn’t paying attention, though…
I think he would have more experience running a “how to get rich by filing bankruptcy” course.
Oh wait, I forgot, he never filed bankruptcy, just all of his companies.
An invitation from the Donald! Go for it Lou and don’t forget your video camera!
Mine is being used as a coaster on my desk.
Last week I got the Donald’s invitation to his daughter’s (Ivinca?) real estate and investment seminar here in San Diego. They were offering free lunch IIRC.
http://articles.moneycentral.msn.com/Banking/HomeFinancing/YourHomeYourATM.aspx
article on msn regarding housing as an atm
sorry if this is a duplicate post
Taking out $35K on a ~200K house? Ooh, how brave. I want to see the articles about people buy a house for $400K and then a year later, cash out $500K for the Escalade and down payment on condo flip.
But still a good article — sounds like ~20% is the maximum amount to take and still break even.
That article is just nonsense - these people could not keep control of their finances with a $78K mtg. and now they’ve added another $35k to it - which included $6K cash out to pay taxes and a few other things. Talk about finding ways to justify BS.
There’s this incredibly irritating calendar from the credit union hanging in my office. There’s a photo of somebody with the quote “Getting a LOAN was the key to getting oft of debt.” Getting a loan was what got you in trouble in the first place. While restructuring you debt may indeed be helpful, the KEY is always going to be spending less money than you make.
You mean you can’t borrow your way out of debt?!
talked to someone at work yesterday. turns out they bought at the last peak and were upside down until a few years ago. and they live in one of the better NYC suburbs throwing out the theory that good neighborhoods with good school districts don’t drop in value
A lot of Texas has been below the last peak for 20 years. That’s WITH a growing population.
Ask the poor guy or gal who bought a house in Alief circa 1983.
Why is The Woodlands so guddam expensive.
Because it is the one area of Houston anyone from outside Houston has heard of. Let’s say you are an executive, and you are transferred or posted to Houston, a big, nasty, crime-ridden, traffic plagued city that you know nothing about. Where are you going to go? Well, when my Dad was posted there for a couple of years a decade ago, he went to the Woodlands.
Never heard of it.
It’s really pretty there. I used to play in tennis tournaments there. One part of Houston worthy of living in.
Txchick57, When I was in Houston 1991..Woodlands was outside of Houston.
Hey bakahaafuu, how you doin’? Don’t think either one of us has posted ’round these parts for awhile (I have nothing new to say - at least until I see what happens with inventory after the Super Bowl).
Lots of new condo developments still coming online in SE Va. 900 s/f for $300k in Hampton Roads, yeah, I’m gonna buy that.
Last time you posted, you linked to a hilarious Steve Martin routine, and I wondered if the next vlog was yours. If so, you gotta start vlogging from a better room! Take care!
Oh, and I never heard of that Houston suburb either….
State of the nation?………….. Broke!!!
http://articles.moneycentral.msn.com/Commentary/Experts/Jubak/Jim_Jubak.aspx?msn=1
The reality is rentals are strong, meaning sales are weak. The following article is total BS.
“A high price or a cheap price, the sooner the purchase the better,” Ms. Saatchi said, “because 2007 is shaping up as a very good year for the Hamptons.”
http://www.nysun.com/article/46879?page_no=3
Just back from a roadtrip to San Diego to see our 2 nephews and had a great time, San Diego is a quite liveable bigger American city…
Notes on a scorecard:
Came down the 15 freeway and from Corona onwards, and with the exception of a few new car dealer billboards, every last billboard was for either a casino or new housing development, a testament to how pervasive gambling has become accross the land. On the drive up on the 15, it was all new house billboards, as the casinos are the other way.
Hadn’t been in SD since June and the desperation of sellers, in our drives around the city was incredibly obvious. I have never seen so many handwritten “for rent” signs, seemingly all over the city, the last gasp before giving the house back to the bank and walking away.
San Diego reinforces my opinion that it’s the newer housing developments that will fare worst, when things really crash and burn, as they’ll be ghost towns, chocka block full of squatters, sometime soon. SD will truly be the epicenter for financial pain in the Golden State.
I live in SD and I don’t mind the casinos. They bring in a lot of tax money and it’s completely voluntary to donate to the cause. I rarely gamble so I love it. Also most southern california casinos are far enough out of the way that they don’t bring crime to their area (yet).
“I live in SD and I don’t mind the casinos.”
Hold your opinion until you see how they fare during the next economic downturn, when a dearth of house money (from home equity ATM cashout lending) really hits their bottom lines.
I can’t wait for the next downturn. If people are taking money out of their house to fund a gambling habit. It just make it easier for me to buy the house in foreclosure.
I’ve worked hard my entire life to save up money and not made poor financial decisions. I’m actively looking to take what I deserve from those that need to be “culled from the herd”.
Old people love to gamble. Mine 80+ year old mother was gambling away her home equity at the Pachenko Casino (in Temecula) until I had to step in and put a stop to it. I don’t know why old people are so addicted to gambling but next time you go into a casino in S. Cal take a look around you and estimate the average age of the clientele. It’s 80 yrs is my guess. These people are bored, lonely, or something, but generally not rich.
Older folks tend to be lonely and the casinos really cater to them, knowing they’ve got 2 things going for them:
They’ve got moolah.
They’re easy to take advantage of.
i would *bet* it will be las vegas that will be hit harder compared to those in san diego.
“They bring in a lot of tax money and it’s completely voluntary to donate to the cause.”
“Casinos are good for the economy” = broken window fallacy, again.
I never said casinos are good for the economy. I said that they bring in tax money to repair roads and fund schools that I don’t have to pay for if I don’t gamble. That’s what I like about them.
“They bring in a lot of tax money and it’s completely voluntary to donate to the cause.”
Could be talking about home ownership, couldn’t we?
Yep but at least they keep some of the gambling money here in California that would be headed over to Nevada……. Sort of a balance of trade. Money that remains here in California as a gambling loss offsets the California money that goes to Nevada as a real estate investment and is lost there…….
OK. I’ll bite. What is the “broken window fallacy”?
Google it - here is a link to give you the idea.
http://en.wikipedia.org/wiki/Parable_of_the_broken_window
Wikipedia is your friend.
http://en.wikipedia.org/wiki/Parable_of_the_broken_window
http://biz.yahoo.com/rb/070124/ethanallen_results.html?.v=3
here is something else that’s interesting, there is a slowdown in the furniture industry
You had to know that was coming next.
I thought Stanley reported horrible numbers about six months ago?
big time. I have a friend who owns a Badcock’s store, and he had to sell his $600k 2 year-old dream house and downsize into a “normal” ($300k) suburban Orlando house because their sales have slowed down so much in the past year. I told him it was only going to get worse in ‘07.
Just another tib-bit….future brother-in-law who works for a kitchen cabinet maker that supplies roughly 80% to new homes across North America - 1 year ago, they were getting 15 hours of overtime each week, now they have cut their working hours too only Mon- thurs….. he’s seeking additional part-time work elsewhere (he told me most workers at the plant make ends meet with the additional overtime)…now they get only 32 hours….this is gonna hit everybody really hard soon .. it won’t be a question if prices will drop…but, when will the prices stop dropping will be the talk… Obama and the Democrat’s are sitting pretty come the 2008 election …. while George Bush seems to let the American people figure this out on their own….nice work George!
“Obama and the Democrat’s are sitting pretty come the 2008 election”
If the Democrats don’t manage to succeed with their normal presidential race self-immolation effort, then they will inherit an economy weighted down by years of profligate spending and new home construction run amok. A winner’s curse awaits the next occupant of the White House. (Of course, as long as the black eyes are already common knowledge as of the day you take office, this kind of political liability can turn into an asset…”We can only go up from here.”)
Obama . . . lol . . . not in our lifetime.
I think the next president will be a Republican anyway unless Al Gore can find a way to get rid of his Apple problem and run. A few more years of nasty hurricanes would help that too.
I am mostly Black and I have to tell you that Obama as Pres will never happen. Maybe he becomes a cabinet member under John Edwards…
I agree. It’s not prejudice, it’s reality.
Obama will become president if somebody assinates president Hillary.
Did you all see the picture of O Bam with his head tilted resting against his two hands. My, he is soooo sensitive to our problems. His supposed star quality reminds me of the stories about Frank Sinatra and how his managers would pay to have women swoon and screem when he sang.
The Obama thing is pure fantasy. Just so I don’t appear prejudice, I have always thought Colin Powell would have been a far better president (actually Mickey Mouse would even fit the bill) than the current idiot in the White House. However, Obama is simply the current flavor of the week, being promoted by sycophants like Chris Matthews. I doubt very much if Obama will end up occupying the White House even though (via Madison Avenue) we are being subjected to the “Stupid White Guy-Smart Black Guy-Take Charge White Woman” syndrome.
I always smile when I watch these dumb tv shows with the take-charge white woman, computer savvy black guy and dumb white guy. A beaten to death format if ever there was one. Does anyone look at the faces at JPL or in the top levels of government or in the top levels of Wall Street or big business? Hardly a black evident.
Now and again, a token black gets in to keep up the illusion that America is a color blind society. Yeah, right.
As for 2008? It all depends if the Dems can clean up some of the mess Bush and Greenspan (the deadly duo who have almost ruined the USA in so many areas from financial to credibility it’s scary) have created WITHOUT getting too much crap on their hands by making things worse than they already are.
I would almost bet money that Republicans will make large financial contributions to Hillobam’s campaign.
I like Obama, but I think he’s too wet behind the ears to be president just yet - and I agree that a lot of his ’sex appeal’ seems to be media hype. I’d like to see him put his money where his mouth is before I give him my vote.
Actually, “If I Ruled The World”…..I’d like to see Obama run for VP on Hillary’s ticket. She’s sucking up most of the Dems funding as it is, and if they both really want to see the Dems win, rather than stroke thier own egos, then its a good match that many will like. I’d much rather see them joining forces than battling it out between themselves.
Obama is a young man and has decades to run for Prez - let’s see how he’d do as number 2 Ruler of the Universe first.
not investment advice
“i think the next president will be a republican”
you mean after gw. not in 2008, though. keep dreaming that this guy will step down.
I wanted McCain to be the Republican candidate in ‘00 and was deeply disturbed when the party backed Bush (somewhat due to a little dirty pool by the Bushies).
If McCain runs again, I’ll be pushing for him. Dems approach to Iraq is not impressing me.
There is some historic evidence that the democratic party, when out of power, has favored backing out in defeat from wars. McClellan ran for the democrats against Lincoln in 1864 under the banner of pulling out of the Civil War and allowing the nation to be divided. Vietnam, same story. Iraq, most voted to allow the war and now play “cover your ass” to get out ASP.
In World War 1 and 2 the republicans where out of power yet backed the democratic presidents in fighting the wars to victory. In Korea republicans supported Truman but thought he was not aggressive enough. It took Ike, a republican, to threaten nucleur weapons use on the N Koreans to get the armistice.
did you get this off a cereal box or as a blast fax/email from the republican party?
McCain fought against the early UFC, calling it “human cockfighting”. For that, I hope the Vietnamese put him back in prison. He has a short-guys-mentality. I wouldn’t trust him. He doesn’t care about freedom.
I hear you. I like McCain but I feel he is a few cards short of a full deck. A good soldier and officer but I wouldn’t want him as President or on the Chief of Staff.
I used to like McCain before. If he had won his primary against Bush, I would have seriously considered voting for him, although it never got to that point, so I don’t know. As for the McCain of the past few months, I can’t think of something I’ve agreed with him about. The other guy, Hagel, seems to at least stick to his guns, agree with him or not.
I also once thought McCain was a good choice but I’ve changed my mind. He flip-flops and, as Tim Russett has shown by old video clips, changes his story to suit his agenda (Gee! What a surprise for a politician!).
America has lost the war in Iraq. End of story. Now the BIG fear is Bush trying to pick a fight with Iran. If he does, the first thing Iran will do is sweep into Iraq like a swarm of locusts and I hope to hell the 160,000 US military are not there. If you look at the results of the Iraq-Iran war, you will see they (Iran) have no problem sending thousands and thousands of troops into the line of fire with no thought of casualties as long as they kill the enemy.
No one goes to war thinking they might lose. If the US attacks Iran, the Shiites could cut off the army from a sea escape route, and the US couldn’t use nukes without hitting their own troops. The Romans under Emperor Valerian lost an army in Persia once (Valerian had the guts to personally lead his troops, not just stay in Rome, unlike W). Will history repeat, or just rhyme?
I like Obama, but he’s very young, if he doesn’t make it this time, he’s still got a great future.
I’m usually a dem, but I really like the republican Hagel, and I am impressed, so far, with the new dem senator, Webb.
I like McCain, but I haven’t forgetten that he was one of the Keating five.
mccain? “i’m tough, i’m a maverick, i’m independent, let me bend over”
I am baffled; how did Bush convince millions to leverage themselves to the hilt in the RE market again?
Bush the dope? Bush who’s been somewhat tied up with terrorism, Iraq and Afghanistan?
Exactly when did Bush push the “time to bet the farm on RE” button? And why, again, did people listen to him?
Unless I missed something along the way, none of the fundamentals that elevated RE to ludicrous levels (liar loans, Fed policy, indidividuals buying multiple properties etc) can be laid at Bush’s feet.
Should he have “done something”? Sure. What and when should he have done “something”?
The government has a role in this debacle, for sure. How liar loans, 100% financing, tax deductibility for $1 million mortgages, FNMAE and Freddie Mac underswritting $400+ mortgages…..down to local officials who waived through development after development in the hot areas.
Maybe Democrats will be able to pin all of this on Bush and ride it to power, I don’t know. I do know that its a joke to think Bush is somehow THE reason for people taking ludicrous, personal, financial risks in RE these last few years.
I’ll bite. Bush is responsible for blowing the lid off liquidity markets (through Greenspan’s fed) after 9-11. Bush is also the president who told all of america that the way to defeat the terrists was to go out and spend, spend, spend. Go back and read his speeches from late 2001 and 2002. It was a travesty.
Not only that, he actively encouraged Joe Sixpack to get out there and borrow . . . while dumping piles of money on the richest 1-2% through skewed tax cuts.
Can you imagine what real leadership might have done instead?
1) The Fed is independent. If you think Bush influenced Greenspan to blow “the lid off liquidity markets” then you have to explain why Greenspan agreed with CLINTON to “blow the lid off liquidity” leading up to the stock market debacle in 2000.
2) I doubt you can document where Bush said anything such as “spend, spend, spend”. He did say that, if we all just stopped, in fear, doing our jobs and going about our economic lives, yes “the terrorists win”. And with air travel virtually shuttered, the stock market already in melt down and a recession underway exactly how would a “leader” say “hang in there”, economically, without suggesting (in some way) people keep spending ?
Oh, and I forget the part where Bush said “spend everything you’ve got on real estate”. That is the point of the problem we have now isn’t it? The problem isn’t that people continued to spend post 9/11 (for whatever reason) but they MIS-spent it on real estate speculation.
3) Point out ONE speech, one statement, by BUSH where he suggests to the middle class (heck, any class) that they should go out and borrow. Publish it here and I’ll send $100 to Ben.
And the tax cuts to the rich?
“Those making over $200,000 now pay 46.6% of total income taxes.. That’s up from 40.5% — despite Bush’s tax cuts.
http://www.investors.com/editorial/IBDArticles.asp?artsec=5&issue=20060612&view=1
More money is being raised from “the richest” to pay taxes than before. Where is the “inequity” for Joe Sixpack who, by definition, has to be paying less in percentage terms, than before?
Would “real” leadership RAISED taxes in a recession? Would “real” leadership have said “we don’t know how this entirely new experience with terrorism is going to work out..best save more, spend less and, certainly don’t go out and buy a new home!”?
“1) The Fed is independent.”
Was.
http://news.goldseek.com/GoldenJackass/1161788580.php
“As we work with Congress in the coming year to chart a new course in Iraq and strengthen our military to meet the challenges of the 21st century, we must also work together to achieve important goals for the American people here at home. This work begins with keeping our economy growing. … And I encourage you all to go shopping more.” Bush
http://thinkprogress.org/2006/12/20/bush-shopping/
“And I encourage you all to go shopping more.”
When the going gets tough, the tough go shopping.
Wow. Stop the presses. He said “I encourage you all to go shopping more”.
Holy moley. This constitues recklessness?
Did he say “If you don’t go into debt, take out liar loans, leverage your home to the hilt., buy second and third properties and bid up housing like crazy the economy won’t ever recover? ”
And last I saw, a little over half the country voted for W, twice. Is anyone here seriously suggesting that many people actually listen when a president (much less a relatively UNPOPULAR president) says something like “people need to spend more” or “people need to save more” or “people need to buy housing”?
I think most Americans act in (what they percieve) is their own self interest first. When the issue is big enough, they’ll act more collectively (like in putting up with airport security). But listening to or acting on political entrities to spend, save or invest?
I think virtually every American is deaf in that regard (but for perhaps minor changes in behavior from time to time).
jag, if you think Bush is not an awful president, you’re blind.
he is probably not blind. but he is a *believer*.
Okay, so tell me, if a Dem were president during 9-11, do you think the interest rates would NOT have been dropped?
This was in 2006, when the bubble had already reached the exhaustion point. Nothing like getting the poorest and least qualified into the “American Dream” right at the top of the market.
What some people fail to understand is that the more people you push into housing, especially when bypassing traditional lending standards, the cost of housing will actually **rise** and become less affordable. By using gimmicks to reduce monthly payments via downpayment gifts and funky financing, the COST of a house increases. Guess he failed the whole “supply & demand” thing in his econ classes.
“…my Administration continues to promote an ownership society where the promise of America reaches all our citizens. The American Dream Downpayment Act of 2003 is helping thousands of low to moderate income and minority families with downpayment and closing costs, which represent the greatest barrier to homeownership. Since 2002, when I announced our goal to help 5.5 million minorities become homeowners by the end of this decade, the rate of minority homeownership has climbed above 50 percent, and more than 2.5 million minority families have become new homeowners. My Administration will continue to provide counseling and assistance for new homebuyers and expand homeownership opportunities for all Americans.”
” NOW, THEREFORE, I, GEORGE W. BUSH, President of the United States of America, by virtue of the authority vested in me by the Constitution of the United States of America, do hereby proclaim June 2006 as National Homeownership Month. I call upon the people of the United States to join me in building a more hopeful society and recognizing the importance of expanding the ownership of homes across our great Nation.”
http://www.whitehouse.gov/news/releases/2006/05/20060524-6.html
AND more in 2006:
I am pleased the House passed the “Expanding American Homeownership Act of 2006.”
By providing the FHA with increased flexibility for mortgage downpayment requirements and the authority to tailor financing to suit a family’s unique situation, this bill will improve FHA’s ability to help lower and moderate-income families achieve the American Dream.
I encourage the Senate to join the House and pass this critical legislation.
http://www.whitehouse.gov/news/releases/2006/07/20060726.html
ALSO:
President Bush signed the $200 million-per-year American Dream Downpayment Act which will help approximately 40,000 families each year with their downpayment and closing costs.
The Administration proposed the Zero-Downpayment Initiative to allow the Federal Housing Administration to insure mortgages for first-time homebuyers without a downpayment. Projections indicate this could generate over 150,000 new homeowners in the first year alone.
The President has proposed to more than double funding for the Self-Help Homeownership Opportunity Program (SHOP), where government and non-profit organizations work closely together to increase homeownership opportunities.
The President proposed $2.7 billion in USDA home loan guarantees to support rural homeownership and $1.1 billion in direct loans for low-income borrowers unable to secure a mortgage through a conventional lender. These loans are expected to provide 42,800 homeownership opportunities to rural families across America.
http://www.whitehouse.gov/infocus/homeownership/
Wow! GREAT comeback CA renter. Thanks for showing these pro-Bush morons the light.
Give W a break — he is not an economist. If you want to assign blame, figure out who his economic advisers where when he wrote that speech.
wherewereTypical DC bullsh!t that both parties engage in… identify a “positive” trend they had nothing to do with and attempt to capitalize on it. Bill Clinton did the same thing with the stock bubble.
p.s.: And don’t forget how Al Gore invented the Internet.
“and don’t forget how Al Gore invented the Internet”
my goodness, after years of browsing the internet you still parrot this debunked myth? must be a *believer*
Typical DC bullsh!t that both parties engage in… identify a “positive” trend they had nothing to do with and attempt to capitalize on it.
—————————–
TJ,
Notice how the “Dream Downpayment Act” was initiated in 2003 — exactly when we saw a blip in the bubble (end of 2003, the mortgage market went through a period of significant shrinkage, only to get “juiced” again in the beginning of 2004).
There have been some **very influential** people trying to keep this beast afloat for a few years now.
It’s not like we are all geniuses on Ben’s blog (and other bubble blogs which pre-dated Ben’s). Those “top economists” and advisors KNEW full well everything we did…and much more. Warning bells have been ringing since late 2002/early 2003 regarding the housing bubble. The very issues we discuss here were being discussed then…3-4 years ago.
I don’t know if any “party” was in charge of the whole thing, or if it’s more insidious than that, but we (housing/credit bears) are definitely swimming upstream here.
I won’t believe it’s over until I see pre-2001 prices with my own eyes (and we ARE getting there, very slowly). Too much power behind the bubble to let it deflate as many of us expect — at least that’s what I think at this time.
“What some people fail to understand is that the more people you push into housing, especially when bypassing traditional lending standards, the cost of housing will actually **rise** and become less affordable.”
Especially if flippers hop on board the price appreciation gravy train to enjoy the ride up. A bunch of speculators hording 20+ houses a piece can quickly cause a virtual housing shortage, even if the underlying stock is in excess of what is needed to satisfy end user demand.
None of those acts have ANYTHING to do with the current housing debacle.
None advocate liar loans, 80/20s, etc. None advocate “flipping” or buying 2nd or multiple properties on spec.
The problem isn’t “ownership” its SPECULATION. No one advocated that, people just did it. Their (stupid) choice.
Trying to blame Bush for the mistakes of thousands of individuals taking out bogus loans is utterly fatuous. Just as fatuous as blaming Clinton for people who lost money on margin in the dotcom meltdown. I don’t remember him “talking people down” from taking those risks, do you?
As mentioned elsewhere, there’s plenty to criticize Bush for, lots of arguable decisions but blaming EVERYTHING on him and trying to stretch every comment, every event to reach his responsibility is intellectual dishonesty at its worst.
Um, jag…
By providing the FHA with increased flexibility for mortgage downpayment requirements and the authority to tailor financing to suit a family’s unique situation, this bill will improve FHA’s ability to help lower and moderate-income families achieve the American Dream.
What do you think the above statement means???
Speculation is the ***RESULT*** of loose lending. As more buyers (with “free” money) were brought into the market, prices rose. This caused more people (with more “free” money) to enter the market in order to capture the gains.
Loose lending is like rocket fuel for speculators. Read the above…GW was trying to get the govt agencies to drop downpayment requirements to ZERO (there’s your 80/20 loan equivalent), and “tailor financing” means funky ways to decrease monthly payments, instead of making full payments on their loans.
Sorry, but these actions are VERY DIRECTLY RELATED to the housing bubble.
“This was in 2006″
Really? Do you actually believe any of these have, instantaneously, impacted the current housing market that began turning down in January 2006? Were they implemented retroactively?
I’ll bet virtually NOTHING has been spent yet. Passing bills are one thing, getting them administered is quite another.
You do agree its impossible for this bill to have had any impact on the bubble accretion from 2003 to the end of 2005, no? Or did low income people go out and bid up mcmansions in 05 ANTICIPATING they’d get this help?
jag,
Read this (from above quote) very carefully…
“The American Dream Downpayment Act of 2003″
Let me make it even more clear…
“The American Dream Downpayment Act of 2003“
The 250,000/500,000 capital-gains free profit that can be done every two years and the interest rates going down to 1% had a huge deal to do with this. Both occurred/started right after Bush took office.
… and neither had anything to do with him.
FTR, the capital gains change took effect in 1997. It can also be reasonably argued that interest rates were lowered as a result of the burst of the stock bubble, which also originated during Clinton’s second term.
Sheesh. There’s tons to criticize about W; you don’t have to go making stuff up!
In the United States, congress holds the purse strings, not the president. There is no need to wait for 08. They are already sitting pretty.
What exactly are they doing about things right now?
Not to mention Dems have the convention in Denver, ready to monopolize on the situation at forclosure ground zero for non costal areas.
I had that thought too and was surprised that no one commented on that selection.
you’re guess is as good as anyone else
Anecdote of Pending Woe
A friend of mine up in Maryland passed this along to me, a sad situation with someone who worked down the hall from me at one time. For anyone looking for a prime example of FB’s, here they are.
After years of flipping their primary residences and buying SUV’s and paying off cards with the proceeds, on their last flip they ended up unusually short of money and couldn’t buy the “next McMansion” they’d dreamt of. Hmmm… could this be the housing market turning south? Nah! No chance of that. Buy, buy, buy! “It’s all about the equity!” But they couldn’t afford another McMansion, so they bought a “townhouse/duplex thing” up in Hagerstown, Maryland (while she works in Bethesda — oh my gawd!). They didn’t like it, but it’s only temporary, and the price was “right”:
Stats per public record:
Purchase price last summer/fall $303,500
First mortgage $227,600 plus second mortgage $60,700
So 5% down, and they owe $288,300 on a brand new Hovnanian “home” in a row of little cookie cutter duplexes. So far, so good. Or good enough.
Sadly for them, they timed the peak of the boom with near perfection.
Prices for new homes on their street teetered above $300k for a very short while before encountering a steady slump as the year went on. $310k, 317k (wow, we’re rich!), then $268k, $273k, $254k, $275k, and then the first sale this year was for $235. Same type place. Ouch! That was about the time Hovnanian was advertising “Name Your Price”, which has to be an FB’s total worst nightmare to see that in the paper for his neighborhood!.
So if this situation continues, and they need to get out, they could be in the position of needing $65k or more at closing just to escape this deal. Painful.
But what if they just stay and wait it out? Sadly, very sadly, they don’t really *want* to live there. They planned on selling at about the time the mortgage rate went up. Yes! They have a teaser Hovnanian mortgage. I can’t tell what the rate is on the second mortgage which appears to be a basic fixed rate, but the first one is most likely the 4/5/6% stepped deal which is on offer in the ads: 4% first year, 5% second year, and then 6% for the next 28 years.
So as their primary mortgage adjusts from 4% to 6% (and they are struggling at 4%), they’ll be desperately wanting to move out or refinance. But what are the chances of refinancing when they are under market rate already? Or selling when they are so far underwater? If they hate the house and want to move, they better bring a box of cash (oh wait, that was bucket of cash, box of …) to the closing table. I hope they can find a way to like it up there because they will probably be there a lot longer, and more expensively, than they ever reckoned.
“That was about the time Hovnanian was advertising “Name Your Price”, which has to be an FB’s total worst nightmare to see that in the paper for his neighborhood!.”
Fugly. Not only did they not win the musical chairs competition, Mr. Hovnanian compounds the situation by opening up his personal version of the Price is Right in the development.
Its been said before and I will say it again, the secondary market for home sales cannot compete with the builders. No how. No way. It will only get worse before it gets better–in about 15 years.
Yes and others have mentioned, the builders can continue to renogotiate their sub contracts and land purchases and follow the market all the way down and still be profitable. All the while, the foolish new sellers/old buyers are left holding the bag.
Hagerstown… easy to get in. Very hard to get out once the market starts going south, and it already has.
There will be similar stories all over the bubble market areas. Call ‘em Hagerstown Housing Horror Tales.
Or “Hagtown Housing Horror”, using the term some of my Maryland friends affectionately call that town.
I know one guy who lives up there, and if you work there and you aren’t big on cultural/intellectual stuff but instead like TV sports and chain restaurants, then it’s OK. Well, he likes it, anyway. Then again, he’s one of those who goes to see pro wrestling live.
But given the remote location away from all the jobs around DC, that’s one of the first places I’d expect to be hit with a sales slowdown, given the extreme traffic bottlenecking on I-270 every morning into DC.
Bears some similarity to the Japanese middle class who bought in the suburbs outside of Tokyo when they could no longer afford to live in the city–and, 17 years later, are still commuting in more than an hour, sometimes two!
The only way to win at gambling is to quit when you’re ahead.
Wonder if foreclosures, etc. will make the State of the Union in 2008.
Here’s a helpful squib from an article in today’s WSJ; I am sure these tactics will work wonders:
Mortgage companies also are looking for additional ways to reach financially stretched borrowers. In some of the Midwestern markets where it has bank branch offices, National City Corp. is working with local clergy, United Way organizations, social workers and housing counseling agencies to help borrowers reluctant to talk with their lender. The bank’s Web site explains workout options and allows borrowers to apply online for assistance. National City is one of a dozen major lenders behind a national advertising campaign that will, beginning this spring, promote a toll-free number (888-995-HOPE) borrowers can call for homeownership counseling and referrals.
Pure evil — sell them the dream, then sit back and watch it explode. Trouble is, those exploding dreams are going to maim some bystanders.
Anyone seen the new realtor ads? There was one this morning while watchign the today show that had the home buyer stating, “If we wouldnt have bought now we would have risked losing the place.” The home in question was actually quite nice, in a neighborhood setting of slightly older homes with a big yard. Not like the tract homes that prevail in every newly constructed developments.
Its a great time to earn a commision.
How come they never show the 1,000 sq. foot “shotgun shacks” for sale in the hood for $500,000 in those advertisements?
They always do that in commercials and in tv shows. They use large homes in established neighborhoods with lots of trees and big yards. They are selling people on stability and old-fashioned values of thrift and the Judeo-Christian work ethic (which will get you a nice home in a good school district). But in reality, most people are stuck with a poorly-built POS with no yard and hours from the nearest employment base. Then when they cant afford the thing, nor the commute, then they go from the dream to the reality - they are screwed.
Reminds me of the Twilight Zone episode “To Serve Man” where the aliens come down and solve all of the world’s food and health issues. They have a book and the title is translated into “How to serve man”. But the title is a bit misleading and people take trips to the aliens’ home planet expecting a great free ride with free food (sounds like some flippers) only to discover that the humans are the dinner.
Pertaining to yesterday’s thread about leaving CA/high COL areas.
If you’re interested, do it. Other areas really aren’t that bad. And contrary to silly CA-belief, all of “flyover land” isn’t the bible belt. The upper midwest is MORE liberal in many ways than Californian. (example: Minneapolis, Madison, Chicago)
I’m a native SFer, moved to SD for a few years. Then decided I couldn’t kill myself trying to afford life anymore, and made the “crazy” decision to go to minnesota of all places.
San Diego used to be beautiful. It’s now just LA-ified. Yuck. Everywhere near my home IN the city, people were simply paving their front yards to put parking, putting ill conceived houses on small lots. shoving multiple families into 800 sq ft homes. (I lived in the Mission Hills Neighborhood, one of the last truly nice areas left IN the city of SD)
when I moved to MN, I thought it would be temporary. I thought for sure I’d move back “home”. But the more I go back to CA, the more I don’t really want to move back there. Which surprises me because I hate winter more than any person alive on the planet.
And yet here I am, in Mpls, making 2x what we made in SD, my house cost 1/3 as much. I live near not one but 2 beautiful inner-city “lakes” (really they’re somewhat larger than ponds), and there’s greenery and bike trails and arts and entertainment.
the interesting thing: because it’s cold here, there’s more actual stuff to do. People say “hey, it’s cold outside, let’s create a theater or an art exhibit or something so that people don’t have to be sad alone in their homes”.
So unlike in SD where the theater/arts/entertainment options are basically nil (except for Sea World and the tourist traps), there is actual culture here.
And I can afford it all. It’s not just present, it’s accessible.
And yes, I know that it’s cold as H-E-double-toothpicks right now. (that said, we’ve only had snow for 2 weeks, and only in the last week is it sticking).
But we travel way more now. In the winter we take 1 week off every month and go somewhere warm. This winter we went to Sedona (awesome) and Phoenix (yuck), Charlotte (in laws), San Diego, and we’re going to Puerto Vallarta next month and SoFl the next month and then to Europe in May.
Because we can afford to.
I actually go to Broadway shows MORE than any of my NYC friends. I go to the Ocean MORE than any of my SD or SF friends (but SFers don’t go to the beach!). I lay out on a big beach more than most of my other friends (we also have a place in Lincoln park in Chicago, on the Lake, paid for by my wife’s work).
California is awesome (at least it was) in so many ways. too bad it’s not liveable anymore. By liveable I mean that one can afford to live without working 24/7 and squeezing into what would be called slum living anywhere else in America.
this last year was the first year as I was walking through SF that I had NO desire to move back.
So don’t believe the hype.
The choices aren’t only
“coast” or Mississippi (sorry Mississippians)
Don’t believe the hype: There are many liveable cities away from the coasts that have culture and arts and things to do
Don’t believe the “it’s conservative” hype: there are many “flyover” cities that are liberal or moderate or conservative (whichever you prefer).
Don’t believe the income hype. It’s BS. Many times you can make MORE than you will on the coasts doing the same jobs.
Don’t believe the job hype. There are many jobs off the coasts, in almost every field. With RARE exception do you ‘have’ to live in CA to do your type of work. (maybe Hollywood actor, that’s all I can think of)
I once believed the hype.
Now, I realize that I live in a very liberal, large, relatively low COL city (although higher than many places I know) that offers some of the highest wages in the country (yes, higher than CA) and has more “to do” than most other areas of the country. It is also extremely green, and clean, and easy to maneuver with acceptable traffic, low crime, good schools, safe for kids and a GREAT place to grow up.
But it’s cold. Darn cold. Always gonna be a tradeoff.
Nothing wrong with cold. As I’ve always said…it builds character!
Go to the Gopher Bar on 7th St. in St. Paul. They have the best Coney Island hot dogs. Beer is cheap and the bartender swears more than any sailor ever to sail the seas. That is culture in Minnesota. It is like heaven on earth. Then afterwards, stop at Savoy Pizza to pick up a Canadian Bacon and pineapple pizza. You can save it for later.
I used to hang out at Lord Fletcher’s on Lake Minnetonka during the summers when I was dating a guy who lived in Minneapolis. Good times.
Gopher Bar, I’ll try it.
As for the Savoy, that is an institution, and I doubt anybody who lives IN the cities (sp or mpls) doesn’t know about it!!!!
If you like Can. Bacon and pineapple, might I suggest Can. Bacon and jalapenos. Fantastic. If you’re a little greedy, you can do all three!
Thumbs up!
And yes, Lord Fletcher’s on the lake is a good time. Expensive, but good. Nothing like watching the sun setting on a large serene lake in a major metro area.
Isn’t Minnesota in the “18th century French literature” belt?
mais oui!
I lived in Madison, and still think its the greatest city in the country, even though its way too libereal for even moderate’s! I live in DC now and hate it here but love my job. I am torn. I really think people in these big cities are missing out on a better quality of life. My sister just moved from jersey back to madison and said she will never leave again. The funny thing is her job in jersey allows here to telecommute from Wisconsin. I am so jealous of her!
I lived in Lawrence, KS, and its still the greatest place I’ve ever lived (note: I’m not remotely a KS native). Like Dclukes from Madison, I detest DC. The quality of life sucks, as does the culture. I got far more culture living one year in the Lawrence/KC area than I’ve gotten in 5 years of living in the DC burbs. Oh, and the 10% higher pay on the coasts does not remotely make up for housing that is 3x as much (never mind the traffic).
Na, there is nothing good in fly-over country. Take Cleveland for example. Very liberal, friendly place, good schools in the suburbs, one of the better art museums in the country, the best symphony in the country, sailing on the lake, The Lake Erie islands nearby, Major sports, Cedar Point (nearby), the roller coaster capital of the world, probably more city parks than any other city,and they claim to offer more live performing arts than any city in the country except NYC. And there are still good paying jobs if you look for them. But who wants to live in Cleveland?
http://www.weather.com/outlook/driving/interstate/tenday/USOH0195?from=36hr_topnav_driving
Point being? Snow driving really isn’t that difficult. I find it rather fun, myself.
It’s nice to have 4 seasons. And there is probably more to do in-doors in Cleveland than you can imagine. Since 90% of life is taken up by work and chores, you really only have to consider the 10% that is yor free time. Working all day in an office in LA is no different than working all day in an office on Cleveland. Sitting at home in the evening helping kids with the homework is the same in both cities, as is grocery shopping, sitting in a restaurant, etc. You get the picture.
Like I already said, yes it’s cold in the Midwest. duh.
No it isn’t for everyone.
But again, I HATE winter. I HATE it more than anybody I know. Yet, I love living in Minneapolis (which is colder than Cleveland I think)
This was the point of my post… there are lots of places to live, all have POSITIVES and all have NEGATIVES.
The negative to the midwest in many people’s minds is the snow. But get over it people, it’s not like it’s the bubonic plague.
I find it interesting that people are willing to put up with 1 hour commutes, 800 sq ft places in dangerous areas, unsafe areas for children, grueiling work hours, DELAYED retirement, smog and horrible pollution, to escape snow. And it snows a few days per winter. (this winter it’s snowed 4 times here, each time under 3 inches.)
but yes, it HAS been cold every day though. so no going to the beach to lay out. I live right off 2 beaches, but no way am I laying out there today!!!!!
If I could buy my house in SD for $200,000 more than what I paid for mine, I’d move to SD. (sure, there is a premium to live in a warm beach climate)
But my house would cost probably $500-750k more (minimum) in SD than it does here.
(the weather isn’t worth that much TO ME)
Besides, there are other cheaper COL areas as well which aren’t as cold. I can only speak for my experience.
Mpls. is great! And they get the roads cleared right away so driving really isn’t much of a problem in the winter. Try driving around areas of WA state with a little snow, YIKES!! Buckle up and wear a crash helmet. Also, the cold in Mpls. is dry, while on the coast it is damp. The coastal dampness chills you to the bone.
I was in Seattle for the huge winter storm that happened around xmas 1995 I think (maybe xmas 1996).
They got like a foot of snow or something. Buildings were falling down, everything was closed. Seattle only has 1 snowplow! So they airlifed snowplows from other areas.
But the Pacific NW is GORGEOUS. One of the most beautiful places on earth IMO.
And being from Cleveland I can say pretty much the same things about Cincinnati except it is a little warmer, they get much less snow and are decidedly more conservative than Cleveland. That and they eat some concoction of chile and spaghetti that is incomprehensible.
Cleveland, big enough to have every thing you could want, small enough that you can afford to live here and do anything you want to do….oh and rush hour traffic moves at 60 mph. 16 miles to work takes 20 minutes give or take. Go to realtor.com and search the zip code of 44116 one of the top rated suburbs in the region.
go to http://www.kforce.com look at Cleveland for IT/Finance/Healthcare jobs….compare the 60-80 k salarys to the 130k - 250k (up to a couple of million to live on the lake in a mainsion, not a McMansion but a real live mansion) house prices in the nicest area of town.
You can have Cali/Florida/Arizona, I have been to all of ‘em and choose to be here…mostly just because it makes more “sense” than all those other places.
Bonus, which applies to Cincy as well…we serve as a hub (like Detroit, Chicago, Minneapolis, Pittsburgh) to a major airline Anywhere you want to go is a reasonably priced direct flight of less than 2 hours.
CincyDad,
Good to hear some positive news for Cleveland. I’m from there and all I ever hear is “Mistake on the Lake!” or “It was just voted poorest American city.” There is a lot of good in that town as well.
It doesn’t have the activities that I like to do, but it’s as liveable city as any.
“But who wants to live in Cleveland?”
I do!!! Been several times as a friend lives there. However, I suspect I only see the good stuff - the art museums and symphony as he is a concert pianist/professor. Love Shaker Heights in the city but would prefer to live outside the city, maybe an area like Chagrin Falls or surrounding area? However, I worry about the $25,000 median household income and other economic problems as well as taxes. Would anyone be willing to talk to me about Cleveland? (CA native but have lived other places and I like seasons except for summer anywhere but Alaska.)
Mpls. is a great town. Not only is it a good place to raise a family, it also has vibrancy — it has managed to to keep many of its energetic and cultured younger people around and so there’s a freshness and creativity about it that’s often absent in similarly-sized towns. I’ve known a few interesting people who’ve moved to Mpls. after getting fed up with SF, NY, or LA. Hey — it produced Dylan, Prince, Replacements, and Husker Du, so there has to be something special going on there….
yes, to me it is fantastic.
my point wasn’t to get people to move HERE per se…
it was simply to OPEN THEIR MINDS to the idea that
1) California has it’s own issues and isn’t utopia
2) so do all other coastal areas. so does flyover land
3) Flyover land is very diverse. Mpls is very different than Little Rock AK which is different than Cincinatti which is different from Gary Indiana which is different from Atlanta which is different from colorado springs.
4) I find it hard to believe that people cannot find a mixture of a good job, a good living environment, and happiness off the coasts. They can’t find it because they refuse to find it
5) there IS a place for all coastal folk inland. but you gotta look for it.
6) look at the opportunity cost of living in a high COL coastal area, and make sure it is truly ‘worth it’ to you.
7) tear down the ignorance (and frankly silly stereotypes) of “flyover land”
9) in many/most instances, there is MORE available and accessible culture/things to do in flyoverland compared to coastal towns. (due to harsh weather, and due to the sheer cost of coastal living)
if a born and bred liberal San Franciscan who hates any temp below 55 degrees and can’t stand snow can find happiness in Minneapolis MN, then I’m sure each and every one of you can find something similar.
I have to agree and I live in a suburb of what is probably the worst city…Detroit. But it still has major sports teams, cultural events, museums, and my burb has great resident only parks with a marina on the lake, pool, fitness center and movie theatre. Winter is a bite…but it’s cheap enough to live that we can get away and travel anywhere we want. Different strokes for different folks.
From your screen name, I assume that you live in one of the Grosse Pointes. It’s quite pleasant there, but the City of Detroit may as well be as far away as the moon, even though it’s ~10 miles away, at least to hear people from there describe it. Hardly anyone seems to go into the city, unless their job requires it, and people don’t seem to stick around much after work.
BTW, if you live in GPS, I can tell you an amusing story about their police dept. and an encounter I had with one of their finest while I was there to visit a girlfriend I dated in college.
HIC,
Thank you for sharing your insights.
My husband and I are both native So Californians, and our elderly parents are here — we have to stick around to take care of them. Other than that, I would **run** to another place in the US.
The California of today doesn’t come close to the great state it used to be. And you’re right about COL and incomes. Much better paying jobs elsewhere, with housing & other costs much lower than in CA.
It’s good to hear a Californian talk about a successful transplant. It is difficult to pull up one’s roots and move to a different place. Good to keep one’d mind open.
The ‘California Sucks’ mentality is here! Yes, Everyone move out. I agree with Mr. Minneapolis. He makes me want to move as well.
I agree!!!
Thanks for this post! I am also a former Californian living in St. Paul.
I moved here in high school when my parents decided they’d had enough of trying to scrape by in California. We arrived in January in 15 below weather, but I immediately loved it. The high school I went to had lockers, unlike my high school in Dixon (near Sacramento), where they’d taken them out because of gang activity. I could write for the school paper- ours in CA was cut from the budget. I could go on and on.
I went to the U of M, got a great job in journalism, and have a nice, small home in St. Paul with my husband. There’s plenty to do here- great restaurants, music venues, theaters and museums. And because it’s cold half the year, I find that most Minnesotans really enjoy the summers and make the most of them.
My brother actually moved back to Orange County this winter, but I’d never go back. I think that Minnesota, inspite of the cold, is a wonderful place to live.
“California is awesome (at least it was)…So don’t believe the hype.”
Yes. I wish more people would know this and either leave, or not move here to begin with. Get out, you fools!
(I’ll stay and take care of the plants).
I have seriously considered moving out of California, but places I have visited just don’t have what OC has. I WISH there was someplace with a lower COL that would make me happy, believe me. If I could find such a place, I’d be outta here.
We get every tour of both Broadway shows and concerts, usually with multiple opportunities to see both between all the venues in LA, OC and SD. We spend summer holidays (Mem. Day, July 4th, Labor Day) at a friend’s beach house in SD. We went to Oktoberfest in both the mountains (stayed at a friend’s cabin) and at a local cultural center (Anaheim is an old German town). My husband and I (and many of our local friends and family) have annual passes to Disneyland, and since we live within walking distance, we sometimes choose to walk around the park instead of going to the gym (of which OC is often commended in health magazines for having so many). I’m not really into nature, so the urban sprawl suits me fine.
And then there is the food. Sorry folks, but in my experience NOBODY beats SoCal for Mexican food. We get all the varieties of Mexican food as well (Baja, mid-continent, greasy take-out, Tex-Mex, etc). Thanks to the diversity of SoCal we also have many choices of great Cuban, Japanese (sushi, tepan, whatever), Chinese (Mandarin and Szechuan), Thai, German, Korean BBQ, American BBQ (although Texas does it better, I’ll give it that), Italian (hard to miss this, but we do have many varieties plus the pizza places as well), and Irish pubs. I am also excited that Ruth’s Chris and Morton’s are both opening soon just down the street. Basically, if you can name it, we can find someplace that will serve it. I love this about SoCal. It is definitely one of the plusses of being an immigrant magnet.
I also have already mentioned friends and family many times, and that, too, is a huge draw. We have often joked about our group of friends/siblings all picking up and buying a cul de sac in Texas (in-laws live there) and putting up a California flag just to piss off the Texans that hate us for being there.
No, I am not one of the “everybody wants to live here” cheerleaders, as I know that these things to not appeal to everyone. If you only eat chicken (like my sister-in-law) and always stay at home with your family, then you have a certain luxury of your life being the same no matter where you live. So for me, I am just stuck hoping and praying for a giant housing crash.
“Sorry folks, but in my experience NOBODY beats SoCal for Mexican food…love this about SoCal. It is definitely one of the plusses of being an immigrant magnet.”
This ranks high on the unintentional comedy scale.
Sorry, but to someone who grew up in the Midwest, went to grad school in the Pacific Northwest, interned in the Rockies, and now lives in California, I can state with certainty that the only redeeming quality California has is the ocean and the mild/sunny climate. There is a limit, to many people, to how much those things are “worth”. There are better mountains in the interior, safer and cleaner cities elsewhere, and the people are so much more down to earth away from the coasts. “Californication” is a real phenomenon. I just have to shake my head every day at how vain and self-centered people are here. The Midwest quality of life is higher in nearly every way. The only part that is lacking is in the “weather factor” and arguably the recreational opportunities, ie mountain/ocean recreation.
To think there are not great varieties of cuisine available in all the larger cities (over 200,000 people) is downright laughable. Sorry, but you really need to travel out of CA more. People here really are brainwashed think they have it the best. Then when you ask where else they’ve traveled inevitably the list is very short (or else includes Mexico, Europe, Hawaii et al).
I grew up in the Colorado countryside a short distance from the mountains. Loved every minute of it; even the winters!
Of course, now I hide out in the Hollywood Hills, SFV-side.
All those things wrong with SoCal? I believe the coming “perfect storm” will fix them, albeit for all the wrong reasons.
P. D1 of today’s WSJ features two housing-related articles (with peanut gallery comments in italics):
————————————————————————————————–
(top right corner)
Banks Move Earlier to Curb Foreclosures
As Mortgage Delinquencies Mount, Lenders Offer Free Refinancing, Debt Forgiveness for Selling Homes at a Loss
By Ruth Simon
As the number of borrowers falling behind on their mortgage payments climbs to the highest level in five years, the mortgage industry is trying new strategies to help bail them out. A perfect parasite never makes the mistake of killing off its host.
Much of the attention is on homeowners who in recent years took out adjustable-rate mortgages, a popular way to finance a home when interest rates were low. Now, with rates having moved up, many of these borrowers have recently seen, or soon will see, their mortgage rates adjust higher for the first time. Is it proper to call a loan a mortgage if the borrower mainly or solely pays interest with little prospect of ever repaying the principle balance?
————————————————————————————————-
(lower left corner)
GETTING GOING
Why You Should Think Twice About Investing in Real Estate
By Jonathan Clements
Real estate may be getting cheaper. But homes are always expensive.
Like any good knee-jerk contrarian, my enthusiasm for the property market grows as the bad news piles up. Only last week, the Federal Reserve’s “beige book” report on regional economic conditions noted that housnig markets continue to soften, with sluggish home sales and falling prices in some areas. Did you ever bother checking how long and far prices kept falling during the last real estate bust? Nope — history doesn’t matter, because it’s different this time…
After getting to the last sentence of Clements’ column, I have to say that this is the best, most easily understood short article on the perils of real estate investing that I have ever seen. This should be required reading for all SDCIA members.
Here is one paragraph that particularly caught my eye: “Instead, as you toy with whether to trade up to a larger place or purchase a second home, your real focus should be the dividend. This dividend is the rent you receive or, if you live in the house yourself, the “imputed rent” — the rent you would have paid if you didn’t own the place. This rent might be worth 7% or 8% of a home’s value each year, though the figure will vary depending on the location.”
The investor-owned SFR where we live rents for around 5% of the purchase price. I don’t believe it has or ever will pencil out as an investment.
“This should be required reading for all SDCIA members”
Heh heh, most of them are RE bears now.
That’s the whole problem with this go around in the RE market. Everyone thought appreciation would keep happening (have we been here before?) and so eschewed cash flow.
Cash flow will once again be back in vogue (a la dividend paying stocks), and by that time all these wannabes will be gone. That’s when I re-enter the market.
Investment is an expansion of the capital stock. Did I or didn’t I is all you have to ask, and all you need to answer. If you didn’t, well, you didn’t invest.
“As the number of borrowers falling behind on their mortgage payments climbs to the highest level in five years, the mortgage industry is trying new strategies to help bail them out”
Watch out, the law of unintended consequences may rear its ugly head. Goving rewards to those that aren’t managing their finances properly (home equity extractions, buying more house than you can afford, etc.) while effectively punishing those with more responsible spending practices (by forcing them to compete with otherwise non-qualified buyers for a house purchase) could someday backfire.
OK, just kidding, nothing bad will come of it, you can effectively screw the people that act responsibly left and right, and they won’t make trouble…because they act responsibly. The screw-ups will inherit the Earth.
Arroyo –
Do you (or anyone else who reads here) have a sense about whether the mortgage market has ever before faced a FICO inversion* on the order of magnitude of the current one?
*A FICO inversion is situation where the current state of the mortgage lending market adversely selects those who are most likely to default and provides strong disincentives for better FICO scores to borrow for purchasing a home.
“for borrowers with better FICO scores…”
(Didn’t mean to suggest FICO scores now qualify to borrow money, as scores don’t breath…).
“Do you (or anyone else who reads here) have a sense about whether the mortgage market has ever before faced a FICO inversion*”
GS,
IANAE (I Am Not An Expert), but I do remember a similar situation where unsound lending practices not only abounded, but also fed off of each other (along with a good dose of ever increasing fraud). Do you remember that time? It was the Savings and Loan crisis. The riskier that the S & L industry was with “investing” money, the greater the potential upside…and with almost no downside as the federal government was guaranteeing the assets (through the FSLIC)! There was a huge incentive to act risky and stupid, with very low (perceived or real) downside, as someone else (taxpayers) would have to clean up any mess should anything happen. How could a “responsible” S&L compete?
Sound familiar?
And we all know how that ended. The party stop, the taxpayers got the bill, and I was able to buy a nice desk chair at low cost from the RTC. At least I got a chair.
Good example. My recollection is that the S&L crisis was to commercial lending what the housing bubble is to residential lending. And I remember well the large number of vacant, newly constructed office complexes after the S&L collapse.
Of course the first thrifts to fail were the STATE charterd ones in Ohio and Maryland. No FSLIC for them. I remember when the govenor mandated legal maximum withdrawals
The disaster started. Let’s try to quantify it.
How many foreclosures will be generated in San Diego County during this disaster?
Assessment of the boom:
1. Before peak: people who bought before 2005 either have a housing bill that can be managed or they had the opportunity to sell during 2005 and 2006 to a GF;
2. During peak: people who bought during 2005 and 2006 are very likely to get foreclosed unless they put a high down payment that is around 50%;
3. High down payment: due to the outrageous high prices during the peak, the only way one could put a high down payment was by moving up and using the proceeds from the sale of the smaller house;
4. Conclusion: half of the peak buyers will be foreclosed.
Note: to simplify things I did not take into consideration people who extracted money from their equity and people who left the area, so this estimation is better then the reality.
Crunching the numbers the easy way:
1. In recent data published by DataQuick, already discussed here, it is mentioned the number of sales in December and I estimate that the average in 2005 and 2006 was 4000 sales per month.
2. Conclusion: there will be 4000*24/2 = 48000 foreclosures.
Does anyone have other ideas?
PatienceSD…
Your numbers will come out low IMO.
I have MANY friends who bought in 2003 and 2004 in San Diego who did not do equity extraction who are UNDERWATER now anyway.
In times past, I lamented about my friend on this board.
He bought in 2004 in the “up and coming” University Heights Neighborhood in SD. He had to use option ARM financing to “afford” the loan. He also had to have a roommate to afford the lowest option arm payment.
forward to 2006, he tried to sell, but he can’t because his 3 yr old condo is going up against new condos, and the new condos cost what his did 2 years ago.
add in realtors fees (6% of 450,000 is still $27,000) and he’s underwater $27,000
Oh, and the $450,000 (which was what he paid) is what new condos are LISTED for but not SELLING for in his neighborhood, so who knows what the true “value” of his home is. (hard to know the value when the product isn’t moving)
Oh, and his ARM readjusted in September (I think) of 2006. It went up $800 per month.
Did I mention he makes under $36,000/yr?
I have at least 5 friends in this situation NOW in SD.
The world has gone mad when someone making 36k buys a near half a million dollar place.
I’d second that. The boom in SD started taking off much earlier, maybe 2000. Things were getting stupid by 2001 when we bought and our realtor was pushing adjust-o loans back then. Houses in Carmel Valley were about $500K and UTC, about $400K. So by 2003 those houses were going for $750K and $600K, respectively.
I’d say the SD peak is a big fat thing that should take into account pretty much any fool who bought after 2002.
How much will it take for the total number of foreclosures to hit the market?
Known data from a graph published recently in SDUT:
1. In December 2006 there were a total of 288 foreclosures;
2. Prior to 2005 there were virtually zero foreclosures;
3. From the graph one can see that the foreclosures are increasing exponential and
4. One can estimate the exponential as being 10*(1.15)^n, where n is the numbers of months starting from the 1st of January, 2005.
Note: an exponential increase is normal due to the fact that the news about the bubble spread, like any gossip and like the flu, exponentially.
Results:
The sum of all the foreclosures predicted by this exponential from the beginning of 2005 up to the end of 2009 makes a total of 62750 foreclosures.
Does it mean that the bursting of the bubble ends in 2009?
PatienceSD…
Minor anecdote here: My local inventory tracking on Realtor.com shows inventory in my zip code hit a new high today, using the parameters of at least 2 beds and 2 baths, list price of $100,000 to $500,000.
# of hits when I started tracking in June 2005: 150
# of hits at the previous peak (11/13/2006): 634
# of hits today: 643
I believe this supports my thesis that a lot of the inventory decline I witnessed in late November through early January was holiday-related (sellers pulling homes from the market to wait out Thanksgiving, Christmas, etc.). Now, we’re seeing the “I’ll just relist when spring approaches” people coming out of the woodwork. It’s early, of course. But I fully expect inventory levels to hit a new high this spring, and that means we’ll have yet another realtively weak spring selling season.
Oh, and one other thing — purchase mortgage applications have tanked sharply for two weeks in a row. They’ve been extremely volatile lately due to problems with seasonally adjusting the figures around the holidays. But I think it’s clear that the recent rise in interest rates is having an impact on purchase demand. More thoughts here:
http://interestrateroundup.blogspot.com
I’ve been using realtor.com to track the Wesley Chapel area. The inventory is up about 4.5% since beginning to mid December. I started tracking Westchase more recently and the inventory there is growing too. My parameters have been SFHs with price greater than 225K.
Home builders looking for relief from subs:
http://www.ocregister.com/ocregister/homepage/abox/article_1553367.php
Arizona Slim reporting in from Tucson. Yesterday, I took a bike ride across town. Traveled several miles along a major street with numerous empty properties up for sale. Investors trying to unload them, I suspect.
Also saw an emptied-out cinderblock apartment complex that underwent condo conversion last year. Two different agencies tried to sell units in this complex. Neither agency was successful. Most of the units are still empty.
I noticed that the second agency’s sign has been replaced by one from Coldwell Banker. I suspect that the posting of the CB sign means that this complex will soon revert to being a rental property.
You’ll enjoy the comment(s) that follow this story:
http://www.tucsoncitizen.com/daily/local/39540.php
“Friends don’t let friends buy condos Downtown.”
“If these rubes have any brain cells, they should market the lofts to rich people from California who don’t know anything about downtown.”
Please bring your bucket of money and box of stupid to Tucson. Actually you don’t need a bucket of money since financing can be provided but man, we need that box of stupid!
PMI’s new risk score is out. San Diego (60.3% risk of a decline) has been beaten by Sacramento (60.4%). We’re no longer number 1!
http://phx.corporate-ir.net/phoenix.zhtml?c=63356&p=irol-publications
Why doesn’t the risk go up to 100% if prices are already falling?
Because they are forward looking, not stating what the current condition is. So in San Diego they estimate a 60% chance of an additonal drop in prices.
I think the PMI report is important because:
(A) this is people who put their money where their mouth is. I.e. if they actually believed that the chance was 90%, but charged premiums as if it was 60%, they would knowingly lose money later on their insurance business.
(B) this report is widely cited in the mainstream media.
That was my guess; thanks for confirming.
This is hilarious. The Canadian arm of ReMax publishes a paper and gets their figures wrong !
http://www.cbc.ca/consumer/story/2007/01/24/home-values.html
Article states real estate values rose by 11%. They got that number by dividing 264 by 25. Apparently they don’t understand compound interest !
264% over 25 years is 3.9% gain y/y ! THAT IS LESS THAN INFLATION !
Even for Barry, Ontario at 374% is 5.4% y/y. How the heck did they get double digit growth from that ?
Point #2: What was significant about 1981 ? It was the trough of the last housing bubble ! Its when everyone sold their house because they couldn’t make the payments.
So if you buy in the trough and sell at the peak (now), you can make these sorts of gains. Notice that they didn’t calculate from the last Toronto peak until now, because the gains would have been really poor.
Point #3: interest rates went from 20% to 5% during that time. Do you think the same is going to happen in the next 25 years ?
I can’t believe they were that stupid and that nobody within ReMax would have caught that. It shows you how much they really know ! Remember that the next time a broker tells you what a great investment RE is !
That’s why they’re realtors. If they were good at math they’d be engineers and accountants.
Thanks for that one. The CP / CBC version seems to derive from a National Post piece, also from today. CBC’s is (now) “updated” and they give a nod to compounding: “After adjusting for compounding, which factors incremental price increases into the calculation of annual prices over time, the annual growth rate was 5.3 per cent.”
I assume your two compoundings are different, or one of you had finger-trouble. Anyway, this baby’s going up on Doom in 5 hours, hopefully. CBC’s behaviour in keeping that headline 11% even after they know better is especially egregious.
264% over 25 years is 3.9% gain y/y ! THAT IS LESS THAN INFLATION !
We’re going from 100 to 364 (or “from $76,021 in 1981 to an estimated $277,000 in 2006″ as in the articles). That’s about 5.2% compounded continuously, or about 5.4% with the absurdity of compounding annually. 5.4% is the new headline figure in the next wave of stories (Montreal Gazette, etc.).
More at Doom (click on the name).
Centex sees more layoffs to get to ‘fighting weight’
By John Spence
Last Update: 10:12 AM ET Jan 24, 2007
BOSTON (MarketWatch) — Centex Corp. (CTXCentex Corporation
CTX ) Chief Executive Tim Eller during the company’s quarterly earnings call Wednesday said the home builder’s headcount is down 17% since the beginning of its fiscal year. “There will be more reductions in the [fiscal] fourth quarter,” the CEO said. “We’re taking the necessary steps to get our balance sheet and our organization to their fighting weight,” he added.
I found a 33% real price decline in Woodland Hills, CA - a new ‘haircut’ for my blog. Whopping price decline, I can’t even believe it!
It does not appear to be cash back fraud, perhaps appraisal fraud?
See it here:
http://realestatehaircuts.blogspot.com/
Good job, Crash!! Nice to see a little sanity being restored in the Valley. Still a long ways to go, but we’re getting there. Keep up the good work!!!!
That is some hit!
Ca foreclosures going through the roof:
http://bakersfieldbubble.blogspot.com
How the boomers will retire, move to your town, and buy your house for good money:
http://www.usatoday.com/money/perfi/retirement/2007-01-22-senior-debt-usat_x.htm
Aw, Ronin, we already have too many indebted seniors in Tucson. Now we have to get the boomer-debtors too?
Damn that was depressing.
Wow, talk about inflation!:
LA Times:
http://tinyurl.com/39f966
Coin shortage could turn pennies to nickels
“A potential shortage of coins in the United States could mean all those pennies in your piggy bank could be worth five times their current value soon, says an economist at the
Federal Reserve Bank of Chicago.”
…
“But Francois Velde, senior economist at the Chicago Fed, argued in a recent research note that prohibitions by the Mint would unlikely deter serious speculators who already have piled up the coinage.
The best solution, Velde said, would be to “rebase” the penny by making it worth five cents rather than one cent. Doing so would increase the amount of five-cent coins in circulation and do away with the almost worthless one cent coin.
“History shows that when coins are worth melting, they disappear,” Velde wrote.
“Rebasing the penny would … debase the five-cent piece and put it safely away from its melting point,” he added.”
Would you buy a condo from this woman? (see link). She’s a realtor AND a model (as it clearly states in her personal data on the right):
http://maximonline.com/hotties/votingprofile.aspx?id=5994&src=sL22:brunette:2
When is a Full Doc loan the same as a Stated Income/Asset (Liar) loan?
When a mortgage broker falsifies the documents for you!
http://forum.brokeroutpost.com/loans/forum/2/87749.htm
bbastian: “I have lost loan in the last week, and now I am wondering what is going on in our industry. My client told me he is going with a different broker because the broker can get him bank statements. My client knew that I would not do that so I lost the loan, he also told me his paid 3 points for the privilege. To make matters worse my client is an AE who should know better. I am really tired of doing the right thing all the time, but I would not do it any other way.”
Tsnyder: “Do I understand you correctly? Another LO/MB has offered to provide bogus bank statements? Tsnyder”
bbastian: “Yes, there is a service that will create them for you. The borrower found a broker who would do this for them and went with them. And yes the borrower is an AE.”
===
Keep buying those mortgage backed securitites, investors…
Flipper Central
Here’s an interesting excercise. Go to
“this site and type “Fairwind Acres” into the Street Name field and hit enter. Start clicking on the listings to see the Owner and Mailing Address entries. 17 out of the 25 listings here have addresses different than the property address. This leads to the assumption that these houses are either vacant or rentals.
Fairwind Acres is in a Pulte subdivision called Silverstone Ranch. I took a picture on that street a couple of weeks ago (it’s in Ben’s photo archive) of EIGHT houses side-by-side with for sale signs in the front yards.
You can search google maps for the addresses that come up in the Assessor page and find more nieghborhoods with less than 40% owner-occupation.
Happy hunting!
MjM
Weird….. I looked at the assessor information for some of those houses on Fairwind Acres…. 3 different owners on those homes had mailing addresses in Northbrook, IL. Same investment advisor? One “friend” recommending a “great fli- err…. investment opportunity in Las Vegas” to two other friends?
Fixed URL for above
Look at this spacious gem near the downtown of Austin! Good grief!
http://tinyurl.com/26bfmo
“Look at this spacious gem near the downtown of Austin! Good grief!”
That one has grief written all over it.
One of the local Portland, OR real estate blog is run by a realtor couple. I just had to share this part:
______
Our first Lexus RX400h hybrid SUV just completed its first year of service. It proved to be such a worthy client-friendly vehicle with its roominess, GPS navigation and impressive 24 miles to the gallon (for a full size SUV), we bought a second one in June. You may see them driving around town with our names on the rear window. ( from portlandrealestateblog.com )
PDXrenter,
Thanks for re-introducing me to their site. I had forgotten about it. I also liked your post to their “investor vs. watcher” article. And I think 400K condos will be less than 200K, personally. I remember when they just had a few down there, and they sold for $180K. Now there’s about 800+ for sale in Portland’s inner core.
I think it’s hilarious that they site a desire for SFH as rentals. Where in Portland can you cash flow a SFH even with 20% down? I don’t think that’s been possible since, oh, ‘97 or ‘98. I also love their comments about buying a condo to flip. Are they insane?
And every owner of multi-family properties knows that their property has “condo-conversion” potential, so those haven’t cash-flowed for years either given current asking prices.
I’ve cashed out for now. If market stays strong, I’m still in a good position to buy. If not, I’m in a GREAT position to buy.
I think there is no way PDX market is going to stay even moderately robust. PDX and Seattle are a few months behind the leading edge of the bubble. And they WILL buckle & collapse this year.
Any directions you look over downtown PDX, there are construction cranes building condo towers. And they are still announcing planned condo towers out to the year 2010 (see links below). Thousands of For Sale signs already mushrooming in the suburbs, and it’s not even Super Bowl yet (plus the weather is still pretty darn cold and foggy here).
2007 will be to PDX what 2006 was to San Diego and Florida.
Developer plans 32-story condo near I-405 - tinyurl.com/236dm2
Tower a sign of renaissance? - tinyurl.com/yrq7a9
But haven’t you heard, EVERYONE wants to live here! Well, even if everyone does, I have a feeling there’s going to be a lot of “room for rent” listings soon accompanying all the vacant condos for rent.
Did you see the recent article (Oregonian I think) about using recent condo builds as “luxury apartments?”
Dropping prices and dropping rents coming. Ugly.
Thanks for the links.
Didn’t see the article about luxury apts. but I’m not surprised. That will happen to a lot of these new condo towers. I think in late Spring the sellers will capitulate on price. Right now there is still leftover illusion that the market is coming back.
I do know a few Californians who want to move here but can’t find a similar position professionally. I think THAT will be a key item in this story - no more equity locusts, and hard to find good jobs for CA refugees. Mix that with the tighter lending taking hold now, and the market is going to seize up bad.
I agree. I also know of several Californians that hate it here and want to move back. One such couple has moved back to SD and have over $4k in mortgage and rent obligations. House just went on the market a month ago here - they bought in May, 2006 - ouch!
I think the overall trend will still be in-migration to Oregon, but I agree with you that the frequency, and corresponding leap in prices, will subside.
Anyone want to see the stock market crumble? All I have to do is buy a call on the index. It seems I am a guaranteed loser in options.
Buy calls on the indexes, please. I’ve been losing on my puts!
I looked at a house recently that was listed as 1600 sq. ft. In reality it is about 1100 (they included the half story which is unfinished, basically an attic). It has been pointed out to the realtor who more or less admitted the mistake. This was over a month ago and the listing continues to show 1600 sq. ft. and the price more or less reflects this delusion. I’m wondering if it’s some kind of serious violation to knowingly continue to misrepresent this property to potential buyers?