February 13, 2007

“Buyers Feel They Have Unlimited Time” In California

The LA Times reports from California. “There’s a lot of speculation about where the housing market is headed. Dave Hennigan and the company he works for, Home Center Realty, don’t have the luxury of waiting to see how the story will play out. They need to make a living now, and they’re betting that things are going to get worse. Maybe much worse.”

“The roster of agents has sunk to 52, only about half of whom are active. ‘The rest are looking for side jobs at McDonald’s,’ said Home Center President Jason Bosch. ‘It happened overnight.’”

“In this queasy market, sales are slumping. Sellers remember the boom and want more money than they can get, while buyers feel they have unlimited time to make a decision. An agent’s best prospect for a sale is someone who must act now — a homeowner told by a lender to pay up or get out.”

“The new issue of the company’s 22-page listings magazine will tout nothing but distressed and foreclosed properties: 95 of them, many nearly new, each priced at around $250,000. ‘When you throw out the words ‘foreclosure,’ ’short sale,’ ‘repo,’ the buyer thinks it’s a deal,’ said president Bosch. ‘It’s still very early, but I’m convinced that’s where the market is going.’”

“Bosch thinks the residential real estate market will soon revisit the horrible days of the mid-’90s — and then get worse. ‘I have no doubt that we are entering the next phase of an unprecedented market,’ he says. ‘One that Southern California has never seen.’”

“Sure, there’s been employment growth in the area. But much of it, Bosch argues, was related to real estate. This was a boom that fed upon itself.”

“The biggest problem, Bosch believes, was created by the lenders. They used to be cautious. Sub-prime loans changed all this. As houses got more expensive, fewer buyers qualified under the traditional guidelines, so they went sub-prime.”

“Lenders would take their word on income. They no longer needed down payments. They didn’t worry that their loans would soon reset to higher interest payments. Nobody cared too much as long as prices went up, although many people in the business knew the day of reckoning wasn’t canceled but merely postponed.”

“‘To make a living, you had to push a product you didn’t believe in,’ said Aimee Quigley, a Home Center mortgage broker. ‘It was like being a defense attorney where you know your client did it, but you have to say he didn’t.’”

“Quigley says she tried to emphasize how quickly these loans would adjust, but the message rarely got through. ‘Nine out of ten times when these loans closed, we would sit there and say, ‘How long can they hold it together?’”

“If Hennigan barely knew what a default was in September, now the business is coming to him. Lenders are calling. In Fontana, he knows what to expect. No point knocking on the door. This house, like the others, is empty. The electricity is off, the grass brown.”

“It’s a foreclosure. In December 2004, there were about 12 foreclosures a week in Riverside and San Bernardino counties. In December 2006, there were 123.”

“He doesn’t have a key, but the back door is open. The carpets are stained, the living room wall has a hole punched in it, and the bedroom doors are missing. The lender will use Hennigan’s report to set a price and then turn it over to the agent to find a buyer. A little paint, a little plaster and it will go for $500,000.”

“Hennigan doesn’t know who the owners were, why they couldn’t pay or where they went. It’s much better this way. He doesn’t have to feel sorry for anyone. Instead, he can concentrate on work. ‘People are walking away from their houses,’ he says. ‘I’m giddy because I’m going to be so busy.’”

The North County Times. “The number of San Diego County properties in some stage of foreclosure increased by more than 50 percent in January from December, according to RealtyTrac.”

“Notices of default and foreclosures rose from 759 in December to 1,150 in January. That means that every one in 904 properties was facing foreclosure. In San Diego County, 915 property owners got notice last month that they were delinquent in paying loans against their properties, an additional 165 received a notice of foreclosure sale, and 70 had been foreclosed on and repurchased by a bank.”

“While foreclosures in Riverside County actually decreased by 30 percent, from 1,698 in December to 1,196 in January, the overall outlook is weak compared with San Diego. The most recent figures shows that troubled properties accounted for one in every 489 households.”

The Press Enterprise. “A racketeering conspiracy said to have defrauded more than 700 investors in multiple states, including California, was described last week in a federal lawsuit filed by two Rialto residents who claim to have suffered losses of more than $600,000.”

“Richard Ackerman, who represents the plaintiffs in both Riverside lawsuits, said the mortgage-fraud allegations focused on one facet of the operation, raising investment cash by borrowing against residential properties that allegedly were appraised at a much higher value than their worth.”

“The plaintiffs in the latest suit, Anna Richter and Deborah Weber, said they were persuaded by the defendants to extract all the equity from their homes, which was subsequently wired to accounts that the defendants controlled. They never received the promised returns, the suit said.”

“Richter said she borrowed $187,000 on their house in Rialto that Pacific Wealth used to help her and her husband buy three more homes. In addition, she said, Pacific Wealth opened credit cards in her name on which she borrowed $76,000 in cash. She said she invested that and another $15,000 from her 401(k) for a six-month investment that Pacific Wealth was touting in foreign currency.”

“The Richters’ finances started to crumble when in December Pacific Wealth stopped making monthly payments totaling $20,000 on the three investment properties, she said.”

“The Richters lost the funds they invested, she said, and also cannot afford the $4,400-a-month mortgage payment on the home where they and their four children live. In addition, she said, they must make $1,200-a-month payments on the credit-card borrowings. She said the family is trying to get their mortgage refinanced at a lower rate and, failing that, they may move to Texas.”

The Orange County Register. “Brea-based ResMae Mortgage Corp., a U.S. lender to Americans with poor credit, has filed for bankruptcy protection and agreed to sell its assets, court papers show.”

“ResMae said it made nearly $8 billion of loans in 2006, up from $540 million in 2003, when it entered subprime lending, papers filed with the U.S. bankruptcy court show. The four-year-old company nevertheless said it has been ‘devastated’ by a surge in defaults, which led to increased demand by investors that it buy back soured loans it had sold.”

“Closely-held ResMae’s ‘future and immediate financial performance has been adversely affected by challenging business conditions and significant repurchase obligations, and it faces a near-term liquidity crisis,’ General Counsel Steven Glouberman said in a court filing. ‘The proposed sale provides the best opportunity to realize value for ResMae’s creditors.’”

“The company said it employs 1,037 people, and hopes the sale will preserve jobs for more than 800. In court papers, ResMae said it does not have enough cash to fund operations past Feb. 16, and is seeking court approval to obtain operating cash from Credit Suisse. The asset sale also requires court approval.”

“Goldman Sachs & Co. analyst Lori Appelbaum wrote Tuesday: ‘The outlook for subprime mortgage credit quality remains extremely challenging.’”

“‘The fundamental issue is weak underwriting on 2006 loans coupled with flat to declining home prices nationally,’ she added. ‘The subprime mortgage market (is) now hitting peak levels of early payment defaults and delinquencies in 2007, with peak losses to follow.’”

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Comment by Ben Jones
2007-02-13 12:56:31

‘Enrollment at San Diego public schools is expected to decline for the seventh consecutive year this fall, which could cost the school district more than $12 million, it was reported Tuesday. Roy MacPhail, director of instructional facilities planning, attributes the loss to fewer births and the region’s high housing costs, as well as the recent rash of condominium conversions that have displaced lower income families, the newspaper reported.’

‘Santa Ana Unified trustees tonight will consider eliminating dozens of teaching and staff positions and shuttering at least one school in order to erase a $17 million budget deficit. District officials blame the deficit primarily on several consecutive years of declining enrollment. Since the 2002-03 school year, the state’s fifth-largest district has lost more than 6,000 students, many of whose families moved inland to escape high housing costs, district officials said.’

‘It happened overnight.

The heck it did. This thing turned like an oil tanker in California.

BTW, where are those commentors who would chime in with, ‘but these are such low levels…it’s insignificant’, every time I posted something about California foreclosures?

Comment by formerlahomeowner
2007-02-13 13:16:50


In my part of LA County (Valencia, CA) foreclosures and pre-foreclosures have slowly crept up but prices are not declining.

Comment by Ben Jones
2007-02-13 13:20:54

Do you remember the press release from the Norris Group? As they said, right now prices are sticky because the sales are retail. When the defaults kick in, nobody will want to pay retail, even the RE bulls. It happens every cycle, except this time was a real blowout.

Comment by IrvineRenter
2007-02-13 13:49:02

Where is Neil and his popcorn?

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Comment by Neil
2007-02-13 17:46:40


I wonder, how many bubble market school districts are going to get spanked because their parents had no choice but to cut and run?

A coworker just lost his “arrogant” neighbor to foreclosure. $600/month pushed him over the edge. My coworker found out the details due to a loud cell phone conversation by the foreclosed easily overheard *inside* his own home. This was due to a September rate reset.

Sticky prices are gone. Sellers just don’t know it yet.

I’m waiting to hear about the coming sales tax drop-off here in California. It will be a doozy…

Got popcorn?

Comment by SeattleMoose
2007-02-13 19:09:39

Having been on several city councils I can assure you that once the spenders of your tax dollars realize the golden goose is dead they will try everything in their power to stick it to you in every other way possible….to “maintain the lifestyle to which they have become accustomed”….think Dr. Makim Bendovuh the proctologist…

Now pass that crunchy stuff up here…

Comment by rms
2007-02-14 04:21:47

“Having been on several city councils I can assure you that once the spenders of your tax dollars realize the golden goose is dead they will try everything in their power to stick it to you in every other way possible…”

Correct. I’ve seen this in San Jose, CA right about the same time the economy was slipping into a recession; great timing!

Comment by nnvmtgbrkr
2007-02-13 16:38:24

By the way Ben, ever broke the 400 comment mark? I think this thread does it easy.

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Comment by Chuen
2007-02-13 15:27:14

I’m just up the 14 - and it’s starting to happen in the Antelope Valley. Nothing priced over 350K is moving. And short-sale listings have increased. This is just the tip of the iceberg.

Comment by AE Newman
2007-02-13 18:04:38

posted “I’m just up the 14 - and it’s starting to happen in the Antelope Valley.”

Just up the 14 is “up $hit Creek with a split cannoe and a busted paddle!

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Comment by dude
2007-02-13 18:11:43

Unless you have a bucket full of cash and a box full of PATIENCE.

Comment by peter
2007-02-13 15:50:50

They might be declining yet but just wait. The number of foreclosures you are seeing now are just the tip of the iceberg. Too many people bought in over their heads, so now sooner rather than later they won’t be able to make the payments. Brace yourself.

Comment by desmo
2007-02-13 15:53:40

In my part of LA County (Valencia, CA) foreclosures and pre-foreclosures have slowly crept up but prices are not declining.

That is totally an untrue statement for Valencia. Resales are in the tank, prices are dropping it is just hard to tell with the information presented in the msm. I sold in 9/05, I look at what you can buy now for what I sold for, 1000 sq. ft more in some cases. I imagine if I sold my old house now I would have to list for $100,000 LESS. Prices are dropping in Valencia.

Comment by AE Newman
2007-02-13 18:07:47

posted “Prices are dropping in Valencia.”

White flight area, filled with smoke and mirrors. IMHO will get hit very hard.

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Comment by formerlahomeowner
2007-02-13 19:16:33

“filled with smoke and mirrors”

Kindly elaborate on that comment. It is one of the few places left close to LA where you have a relatively safe community, excellent schools, decent employment (if you don’t mind the commute), and a sense of community involvement.

Comment by mrincomestream
2007-02-13 21:12:23

It is one of the few places left close to LA…


Comment by peter m
2007-02-13 22:34:39

“It is one of the few places left close to LA…”

There is a small area believe it or not in garbage grove(zip 92845) and cypress( zip 90630), which is north of fwy 22 all way to katella and between valley view ave and beach blvd. This tiny corner of the OC is still shockingly a stable middle class area of well=kept sfh’s, good decent parks, schools,abundance of jobs,and no heavy immigrant influx. Good fwy connections to LA and all of the OC. One observation: the abundant parks are quite empty, as there aren’t too many good decent families left in this area to afford the average $550,000-700,000 sfh prices.

Comment by PV TOM
2007-02-14 07:09:04


Comment by peter m
2007-02-14 07:22:27

rossmore is a tiny enclave of Los Alamitos, which is just west of the area of cypress/garden grove i referred to. To the south lies Seal Beach. That entire little corner of NW OC, which lies at the eastern edge of Long Beach just off the 605 fwy with katella as the main thoroughfare, is still kept up pretty well, with good decent parks, thriving corporations in cypress and GG, and well kept up middle class neighborhhods.

Comment by formerlahomeowner
2007-02-13 18:48:22


You must be a real estate insider or have better information sources. I have been tracking ZipRealty since January 2005 and I have not seen prices budge. I am hoping to buy by the end of the year when my lease expires but may have to postpone until 2008.

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Comment by jerry from richardson
2007-02-13 20:28:49

Extend your lease by 6 months

Comment by nick the wizard
2007-02-13 13:21:46

time is on my side. yeah, time is on my side.
i have been eyeing that house on the beach. but the same house went for 1.5 million in 2002 is now at a staggering 3.5 million. it’s going to take some more pain and a lot of price reduction before anyone can even contemplate taking on such risk. the average time to sell houses over 2 million in ca is now at two years. what a joke.

Comment by AZ_BubblePopper
2007-02-13 20:42:59

$2M carrying costs for 2 years+? Talk about being eaten alive by a man-eating alligator. Maybe Casey ought to see about getting one of these, as a quick flip, since he’s flush with cash.

Comment by krills
2007-02-13 13:24:44

Ventura County Star is posting larger than normal Notice of Trustee sales. Averaging 15-25 a day.

Comment by AE Newman
2007-02-13 18:11:29

posted “Ventura County Star is posting larger than normal Notice of Trustee sales. Averaging 15-25 a day. ”

IMHO that will go 10X’s or worse before it is over…. I have see in the las 30 plus years great parts of Simi borded-up in the past.

Comment by awaiting bubble rubble
2007-02-13 18:57:58

I’ve been watching that too. Ventura County Star had an average of 2/day in July, 2005. Now about 20/day.

But now the LA Times is even acknowledging the crash, at first with the column one piece, but soon with a Business Section piece and then it will hit the “California” page and eventually the front page. This will indeed be an unprecedented crash.

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Comment by krills
2007-02-13 21:39:53

The Notice of Trustee sales are taking up almost 3 pages of the back of V.C. Star.

Comment by ft lauderdale
2007-02-13 13:43:01

Overnight sure, if you are Rip Van Winkle. and am I the only one having far too good a laugh about realtors look for work at the McDonalds?

Comment by Housing Wizard
2007-02-13 13:46:31

Remember how we use to joke a year ago about realtors serving renters fries at McDonalds.I guess it wasn’t a joke .

Comment by Jim A.
2007-02-13 14:41:10

I’m picturing a hotel event space, filled with the faithful true believers, who have paid $600 a head to hear about the shure-fire no money down ways to make money. Up on the stage, there is some highly caffinated guy with perfect hair walking back and forth on the stage, leading the faithful in a chorus of “DO YOU WANT FRIES WITH THAT! DO YOU WANT FRIES WITH THAT!” Casey is in the third row.

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Comment by waiting_in_la
2007-02-13 21:51:15

Oh shit, I busted out laughing on that one. F%^K, that was funny!

Comment by desmo
2007-02-13 16:02:51

Stop piling on…………..

State Realtor group suing Blue Shield
Medical plans at risk for 5,500
Article Last Updated: 02/12/2007 09:27:20 PM PST

The California Association of Realtors said Monday that it is suing Blue Shield of California to prevent cancellation of medical insurance for more than 5,500 members and their families.

The Los Angeles-based trade association, which represents the state’s residential real estate industry, seeks unspecified general and punitive damages and a permanent injunction directing Blue Shield not to cancel members’ policies unless they do not make their payments.

The suit was filed Friday in Los Angeles County Superior Court. It called Blue Shield’s action callous.

“We were abruptly notified by mail that our insurance coverage was being cancelled,” association President Colleen Badagliacco said in a statement.

The notice, received in mid-December, gave members until May 31 to find new carriers. The association has also been unable to find a new carrier.

“Many have operations scheduled, others are recovering from surgeries and require continued medical care or additional therapy. Some are dying and are in need of palliative care during their last days. Blue Shield is denying them all, just when they need medical care the most,” Badagliacco said.

Blue Shield spokesman David Seldin




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Comment by Incredulous
2007-02-13 16:22:11

Does the word “karma” come to mind? Actually, I feel sorry for ethical realtors (I know one) hurt by this, but NAR has a lot of nerve complaining about the unfairness of Blue Shield. How many people have had their lives ruined by the NAR?

Comment by snake charmer
2007-02-13 20:54:36

A number of years ago I worked for a company which was acquired by a much larger entity. According to the benefits people I spoke with, many employees, seeing the writing on the wall with respect to their jobs and the associated health insurance coverage, took advantage of the months between the announcement and the closing of the transaction to have surgeries.

If I was a realtor now would be the time to have an extreme makeover.

Comment by Neil
2007-02-14 13:25:37

How can you sue an insurance company to insure a large group? That’s a group policy. They’re not cancelling an individual, but a whole block!

The CAR needs to find a new provider. If they are unable to find one, its due to the CAR not bidding high enough. Cest la vie.

Got popcorn?

Comment by Louie Louie
2007-02-13 16:37:26

Get rich in Real Estate ! Be Your own Boss ! Build Wealth and
enjoy That Quality of Life Few Dream off…

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Comment by ChecksInTheMail
2007-02-13 18:07:24

You’re not the LouieLouie whos daughter I married are you? Oh that would be a doozie.

flashback to Christmas - you stated that it didn’t seem like a lot of houses in my neighborhood had for sale signs.

They do now, and there’s a lot of sign-spinners who have weekend work!

Comment by Bill in Phoenix
2007-02-14 06:36:43

Get rich when prices are rising! Get rich when prices are falling! I heard that advertisement by a RE huckster (last name kessler, I think) on one of my favorite radio stations. Basically you buy his product and make Kessler rich, not yourself. I laugh hard when I hear you can get rich while riding the prices down to the cellar! Like buying CSCO at $100 and riding it down to $12!

Comment by calex
2007-02-13 13:50:26

That is pretty darn funny. Sometimes I answer my house phone like I am at work (too many calls per day will do that) but imagine a realtor at the register…
I’ll go first
How many bedrooms with that quarterpounder?

Comment by calex
2007-02-13 13:51:54

And second
You know with an option ARM you could supersize that

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Comment by Norcal Ray
2007-02-13 13:59:59


Comment by OCDan
2007-02-13 14:04:35

How many quarterpounders can I get with an ARM?

Comment by OCDan
2007-02-13 14:05:44

Then again, if I go i/o, I can move up to double or triple quarterpounders. The Mc D’s reference is one of the silliest/funniest/hilarious quaotes I have seen in a long time on this blog, Ben.

Comment by nick the wizard
2007-02-13 16:23:54

the realtors should feel at home working Mcdonalds. Since both McDonald and McMansion have industrial size ovens and stoves.

Comment by NYCityBoy
2007-02-13 17:53:47

“I will gladly pay you Tuesday, with an interest only negative amortization ARM, for a hamburger today.”

Comment by waiting_in_la
2007-02-13 21:47:12

Do you need fries with that? I know a really good guy that can help you out.

Comment by bubbleglum
2007-02-13 14:43:25

“The roster of agents has sunk to 52, only about half of whom are active. ‘The rest are looking for side jobs at McDonald’s,’

I wonder if they’re working for 6% commissions at their new job?

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Comment by joe
2007-02-13 16:30:11

Yes, its a return to their roots, but employers are having to fire them because they keep pocketing the 6% sales tax from each sale. Something about a small price to pay for facilitating and adding value to the transaction?? Old greedy habits are hard to break!!

Comment by optionedunarmed
2007-02-13 14:09:29

From McMansions to McDonalds…. “Do you want granite with that?”

Comment by calex
2007-02-13 14:19:32


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Comment by Chrisusc
2007-02-13 14:20:02

Hey they came from McDonald’s so they might as well go back, at least they “understand” that business.

Comment by AZgolfer
2007-02-13 13:48:13

Off topic - I just heard on the news that someone in NJ just shot some people over a RE deal he lost money on. Anyone heard anything about this?

Comment by txchick57
2007-02-13 13:56:19

Oh, you’re gonna see a lot of that, along with the mysterious fires. Rotisserie plan anyone?

Comment by August
2007-02-13 16:11:52

Man, how right you are, I am sure there will be a LOT of this!

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Comment by Blue Falcon the FBs
2007-02-13 21:57:24

At least these crazies will have a specific target.

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Comment by Arizona Slim
2007-02-13 14:10:22

The news from Philadelphia is indeed about a real estate deal gone very wrong. At least from the shooter’s perspective:


Comment by joe
2007-02-13 16:35:23

The shooter was a freak from Delaware. People from Delawhere are very odd, they are not called delaweirdians for nothing. I lived there for about 2 years and had to get out. I had to go to Philly to have a life, whenever a woman found out I lived there they quickly tried to distance themselves from me until I explained I was not Originally from there. However they insisted that if we were to have any future together I would have to move. I did, to Washington DC and despite taking it in the shorts on the sale of the luxury ghetto townhome in DE and moving into one of the biggest housing bubbles in the country I am much the better for it.

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Comment by salinasron
2007-02-13 13:53:04

Wow! This is a rolling earthquake. Families can’t afford one area so they move where it’s cheaper and the new area incurs infrastructure costs while the old area implodes. After the shake out these families will return to the old area as renting costs decrease and the new area will now be setting on structures not needed. Gotta lov it!

Comment by gwynster
2007-02-13 14:02:32

Now the fact that this is news is what I don’t get. It’s been happening in shape or anyone throughout the ages. However, this current family-affordabilty shift in CA has been underway for at least 7 yrs. Damn you US census - give us our 2006 estimates raw! >; )

Comment by gwynster
2007-02-13 14:03:34

bah “in one hape or another” - thinking too fast to type

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Comment by mrincomestream
2007-02-13 13:53:30

“BTW, where are those commentors who would chime in with, ‘but these are such low levels…it’s insignificant’, every time I posted something about California foreclosures? ”

I’m probably one of them Ben but my argument has always been lets see how many actually goes to sale before you celebrate the increases and compared to last time the numbers were low. But they appear to be picking up steam in a grand way. I know a lot of people hitting the streets like that agent in the article trying to get them before they do. But it seems like even that kind of activity has slowed if the agent didn’t actually run into 2 or 3 lurking in the shadows while he was there.

Comment by OCDan
2007-02-13 14:07:48

Mr Income, what gets me is the comment about a home in Fontucky getting some paint and a little love, going for 500K. WTF? When that house is down to $150-200K then we can start talking affordability.

Comment by Chrisusc
2007-02-13 14:21:44

Yes, I was thinking the same thing. But thenyou have to understand that these people have no actual longevity in the business, so they dont understand what a true r.e. downturn involves. Nor do they understand basic economics.

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Comment by calex
2007-02-13 15:25:28

And they built them big in Fontucky too. You would think 5 families were moving in…oh wait they are going to be I think they are called squaters

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Comment by AE Newman
2007-02-13 18:16:35

posted “And they built them big in Fontucky too. You would think 5 families were moving in…oh wait they are going to be I think they are called squaters ”

They should do it. Live off the land. Pay zero….LOL

Comment by peter
2007-02-13 17:39:35

“what gets me is the comment about a home in Fontucky getting some paint and a little love, going for 500K. WTF? When that house is down to $150-200K then we can start talking affordability”

I completely agree. 500,000? Who the hell has the income in “fontuky” to pay for this. People were buying (and a few braindead still are) without giving second thought to the fact that they could not afford the actual payments. Everybody (including immigrants who make a living cutting lawns) wanted to get in and use the house as an ATM with collusion from the banks. Hang the banks but first get your money into a save place.

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Comment by peter m
2007-02-13 18:58:59

“Mr Income, what gets me is the comment about a home in Fontucky getting some paint and a little love, going for 500K. WTF? When that house is down to $150-200K then we can start talking affordability.”

No way any foreclosed POS in fontucky, nor anywhere in the IE, will sell for more than $300,000 in even the most exclusive sylvian exburb in the IE. That quote was from the LA times front page article feb 13th about a foreclosed fontucky home needing a littel touchup job to sell for$500,000 grand. That Article was good and mostly spot on but they don;t know their IE market.

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Comment by clearview
2007-02-13 15:04:28

With all these realtors working for Mcdonald’s, look for Big Macs to shoot up to $20: “Buy now or be priced out forever,they’re not making any more secret sauce!”.

Comment by rentor
2007-02-13 15:59:28

Bank of America now giving credit cards to illegals.

The next scam has started

Comment by GH
2007-02-13 16:13:02

Makes me think seriously about closing my BOFA accounts. I’ll bet one of my accounts is worth a hundred illegals accounts too.

Comment by imploder
2007-02-13 18:00:27

I doubt it. You probably have money and can avoid fees. illegals are perfect . They’re use to getting fleeced at Payday loans and Check Cashers etc. All the banks have been wanting in on the low end Check cashing business cause it’s so profitable. And the fees will flow…

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Comment by Melsky
2007-02-13 18:40:12

But when they max out their cards and then go back across the border, B of A will have to make up the money somehow, probably by raising rates and fees from the rest of their account holders.

If I had an account there I’d be closing it so fast!

Comment by jerry from richardson
2007-02-13 18:53:19

What incentive does the illegal immigrant have to pay? You can’t sue them. They have no credit score. What if they want to pay buy get deported?

I plan to close my account with BoA too. I know this will end badly and they are just pandering to the Hispanic community. What next? Will they give credit cards to people in jail?

Comment by imploder
2007-02-13 19:13:37

B of A is a rip off to anybody with 2 nickels to rub together. Wouldn’t have an account there.

But I think you misjudge the immigrant community. Number 1: THEY DON’T WANNA GO BACK! Back to what? Plus, they are all used to one form of usury or another from their home countries. It’s standard procedure in Central American countries that people buy clothes and essentials from what we would call the local “loan shark” on “time” payments and at nutty interest “rates”. And they pay it.

Comment by Bill in Phoenix
2007-02-14 06:40:09

I want you to justify your comment. How is B of A any more a rip-off than any other bank?

Comment by OCDan
2007-02-13 16:18:56

Forgive my language, but this plan by BoA is effin sh*t. These megacompanies are so damn greedy that now they want to enslave the very illegals that shouldn’t be here to begin with. The very reason they are called illegal. I wonder if I can go over to China, take the driving test in my native tongue, then get a job paying US min. wage, and then go get a credit card from a Chinese bank. Megacompanies don’t give a sheit about this country anymore. I am so pissed seeing this. I always knew BofA was a crap company, but this has got to stop.

Comment by Incredulous
2007-02-13 16:23:57

Now you know why the illegals are allowed here in the first place. Businesses want them.

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Comment by Mike D OC
2007-02-13 16:48:28

BOFA Is a Japanense Company, not an American Company.
SO why would they care?

Comment by BubbleButt
2007-02-13 16:57:40

Since when is it Japanese?

Comment by crush
2007-02-13 17:43:49

D OC … check your facts….BOFA is an american…started in San Fran by an italian, then called bank of italy…got its big jump after the 1906 fire cuz it had all its cash in a safe that didn’t burn, and the dude made a ton of cash making loans to the destitute victims…funny how we’ve come full circle


Comment by Pointlines
2007-02-13 22:18:24

Maybe he got it mixed up with Union Bank of Ca.???

Comment by Sandra
2007-02-13 19:04:51

I got a credit card as an “illegal” in Thailand. It’s not rare, and certainly not confined to the US.

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Comment by rentor
2007-02-13 17:18:32

Without SS# do you have to pay taxes on your interest income?

This is lot deeper than it looks.

illegals paid under the table keep money in the bank because they get mugged in Oakland, CA if they carry it with them. That was on KCBS radio this morning.

Comment by Matt_In_Tx
2007-02-13 18:08:42

Um, they HAVE social security numbers. Well, to be more precise, they share them with us.

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Comment by dude
2007-02-13 18:19:14

Most of them actually use TIN (taxpayer ID #), and can use them and a mexican ID to open the account. I imagine BofA will have them use the TIN for this as well.

Comment by jerry from richardson
2007-02-13 18:57:11

the dirty secret is that the illegal aliens who file taxes with a TIN actually get refunds due to their low pay + dependents. They get child income credits of $1000 plus use their family (even those living in Mexico) as deductibles. I would rather them not file Fed taxes.

Comment by dude
2007-02-13 20:33:17

You’re right on the money there. Add to the EIC (earned income credit) the fact that their medical care, child birth, food stamps (for kids) wage deflation, etc. and there is no valid argument for them being a boon to the economy, to the contrary, they are a tremendous drag on the american middle class.

Comment by bottomfeeder1
2007-02-13 18:51:47

California is toast baby,i love this shi*.Everyone looked at me like i was crazy when i sold my re assets in november 04,yes i left a little on the table but i will gain it back when i buy back in at the bottom.

Comment by GetStucco
2007-02-13 19:56:45

“The heck it did. This thing turned like an oil tanker in California.”

Amen, Ben. You have documentary evidence that some of us noticed that turn that aimed the tanker directly for Bligh Reef in the Valdez Straight.


Comment by dvo
2007-02-13 13:18:26

wow. that LA Times article has more truth in it than any TEN articles from last year. Time to come clean, RE industry…

Comment by Pointlines
2007-02-13 14:39:17

I am actually surprised the LA Shill Times took on an article this negative. Quite a big change for them.

Comment by Jas Jain
2007-02-13 15:04:42

Whatever sells! Now, it is the negative news on housing that will be in demand. In old days, wars were great for newspaper people.


Comment by imploder
2007-02-13 14:41:38

This is a “column one” article. That means front page of the Print Edition.

Comment by Gillsie
2007-02-13 13:18:50

Well, after 3 years of fruitless househunting, my wife of 4 years threatened divorce if we didn’t get close to making an offer on a house. Her job is being relocated from Boston to Southern New Hampshire and we will get a relo package from her company if we move towards one of Boston’s North or West suburbs. Anyway, it’s been a very disspiriting episode and my wife has played the “Susan Says We Can Do This” role quite well. It’s nearly caused a divorce.

So finally, we find a house that’s been on the market for 270 days, original asking $729k, then $699, then $649. Current tax assesment in metro west town is $630k. Most of the recent sales closing within January or late December were +/- 5% of assessed value. We put in a $590k offer. Though insulted, they countered at $637. We countered back at $610 final. And they didn’t respond.

I think sooner or later someone will crack. But still, $610 for a 2700 sq. ft 4 bedroom is soooo much money - even in a good town on an acre plot. Our version of Susan was saying, c’mon, the $25k difference is only about $100 per month. Still, my offer is more than fair and reasonable. Now we’ll just wait until either these people who want a 3/30 close come back or we can find another desperado somewhere.

Or it’s time to get a divorce lawyer.

Comment by formerlahomeowner
2007-02-13 13:21:20

I’ll vote for a divorce lawyer. Wait, will the divorce cost more than $25K? Then, I’ll increase the offer. Your wife is being irrational.

Comment by ft lauderdale
2007-02-13 13:26:21

whoa, how much will a divorce cost him later if he buys a depreciating asset???

Comment by Knockwurst
2007-02-13 14:42:58

Depends on how you feel about your wife. If my wife got irrational about our money, I’d rather lose it all than leave her. Some things are worth more than money.

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Comment by imploder
2007-02-13 14:52:49

So what were the vows “Till No Mortgage do us part?”

Comment by Big Bob Slob
2007-02-13 14:59:45

If you do something stupid and it causes your financial situation to go south, you will end up getting a divorce anyway. One thing Big Bob Slob has learned: If you want a woman, make money; if you want to keep her, keep making money! If she insists that you waste your money, tell her you will be rich with a new wife.

Comment by MacAttack
2007-02-13 15:02:44

Tough call. I stood up to my wife, at last, and she left. Best thing that happened to me in YEARS!

Comment by Gillsie
2007-02-13 15:03:37


Comment by MazNJ
2007-02-14 08:09:20

When I want to be a thorough arsehole, I would tell the SO if she wants it, to buy it herself. That may not work as well though the savings or income disparity doesn’t favor you. I even offer to pay her rent if she wants for my half.

Comment by Barnaby33
2007-02-13 16:12:05

Depreciating asset, the wife, or the house?

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Comment by waaahoo
2007-02-13 13:59:37

Have her come here and explain her reasoning. If she can convince the posters here she wins.

Comment by spike66
2007-02-13 14:43:09

I think waahoo is onto something. Maybe she needs to hear it from someone besides you.

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Comment by waaahoo
2007-02-13 16:01:21

And if she is threatening a divorce if you don’t buy remember that in real estate your first offer is usually the best offer you will get. I would take that offer.

Comment by San Diego RE Bear
2007-02-13 17:43:28

The price doesn’t tell us much without knowing what an equivalent rental costs.

At $600,000. Assume 20% down. $480,000 financed @ 6%. $2,878/month in P&I. Maybe $100/month insurance. At 1.5% property tax (sorry - no idea of the rate there) $750/month. And 1% maintenance/year for $500/month. Total monthly carrying costs: $4,228 if you have good credit and the $120,000 to put down. Now what is the rent? Half that? A third?

To me numbers don’t lie. If she wants to pay twice as much to own as to rent, well you have some decisions to make. A marriage is a partnership, and both parties need to be in agreement to build wealth. If one is a spendthrift (I may spend twice as much but it’s MINE! At least until foreclosure) you will have a much harder time building said wealth.

Is she willing to wait until July before making any decisions? My guess is the cracks are going to show very publicly this spring and the negative commentary from everyone (not just us tin foil hatters) may finally convince her that the sky is falling and she can wait longer.

I wish you the best of luck. Further proof I will never get married. If my husband tried to browbeat me into buying a house he’d disappear for a few weeks into a reconditioning camp complete with water torture and sleep depravation until he came out chanting “Real estate can go down. Real estate can go down.”

Hey! Anyone else seeing a business opportunity here? :D

Comment by quietann
2007-02-13 21:15:39

I’m a resident of the area and rents for SFH in towns with good schools start at about $2500. In less good towns, start around $1800 or so. If you don’t have kids, it’s probably worth putting off buying and just renting in a safe area of one of those less good towns. Put $1500 or so away each month — that’s what you’re saving by renting instead of buying. When the time comes to buy, you’ll have a better down payment and it will be easier to get a good loan.

Comment by NYCityBoy
2007-02-13 18:11:03

Is she hot?

Comment by waaahoo
2007-02-13 18:16:56

You see things clearly.

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Comment by safe_as_apartments
2007-02-13 13:23:09

Sorry to hear about that, man. I’m even more sorry to hear that you are about to get priced in to the Boston area. Talk about an area whose better days are behind it…

Comment by JP
2007-02-13 13:29:06

Realtor says: $25k difference is only about $100 per month

Reply: Glad you feel that way, cuz we’re taking it out of your commission.

Comment by Hoz
2007-02-13 13:33:34

For whatever reasons, some folks have nesting instincts! If you can afford to take the loss of $275,000 - 300,000 then go ahead and buy the house. Maybe the housing prices have bottomed - I doubt it, but I have erred before. Are your jobs secure? And remember your $100/mo difference is $2500/month to the seller. Do they really wish to lose that much money for the next ten months?

Comment by waaahoo
2007-02-13 13:55:40

So you commit finacial suicide to satisfy some prehistoric instinct?

I vote for divorce over suicide.

Comment by We Rent!
2007-02-13 21:15:34

Man Law.

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Comment by cashedin05
2007-02-13 23:16:45


Comment by desidude
2007-02-13 14:01:03

looking at the issue , with open eyes and practicality
Better would be to buy the home and put only wife on the title.
If things work out good, otherwise no need to worry about credit report. Probably , divorce would be easy too, if it comes to it .

Comment by Chrisusc
2007-02-13 14:25:46

Not that easy. If she loses the home, it will still affect his credit. I have dealt with numerous cases of both spouses being affected by negative credit on spouse’s report. The credit bureaus dont care and neither do the creditors. By the way, if he lives there then there is a strong argument that funds were comingled, so your statement probably doesn’t fly.

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Comment by Louie Louie
2007-02-13 17:45:37

“nesting instincts!”

Andrew Dice Clay would say:

Had that last Saturday nite! Banged her on my cars hood in a alley way! Flipped her a 5 spot and said, “Here your cab fare, dont call me I will call you!”….

Comment by JWM in SD
2007-02-13 13:33:36

Man this is a real common theme isn’t it. I have gone through somewhat similar discussions with my wife. Luckily I’ve convinced for the time being. The ultimate trump card in my case was I told her that this was the one thing that I would divorce her over (other than infidelity) and would not capitulate on no matter how much she insisted. Sometimes, you have to put it on the line.

Comment by nnvmtgbrkr
2007-02-13 13:53:52

Hey, my wife went kicking and screaming when we sold our last property, the home we lived in. Now, as the horror unfolds, she almost on a daily basis thanks me for “forcing the issue”. We’re renting .50 cents on the dollar, making 5% - 6% on our money, and sleeping like babies at night. (Oh, and she also likes strutting around her friends like the real genius that saw this all coming. She loves that the people that were all telling her she was crazy are now asking “how did you know”. I let her steal the glory.)

Comment by JP
2007-02-13 13:56:36

I let her steal the glory.

Ah, the key to happy marriage. :)

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Comment by jag
2007-02-13 14:31:06

the key to happy marriage


Comment by Norcal Ray
2007-02-13 14:14:57

Glad that worked out for you nnvmtgbrkr. By the time, the public sees what they should of done (sell), it is hard to do so or too late. That is why only a few ever did sell.

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Comment by desmo
2007-02-13 18:14:46

She loves that the people that were all telling her she was crazy are now asking “how did you know”. I let her steal the glory.)

Did the same thing, went thru hell for a year after sellling 9/05, first it was why did you sell? Now it is I am so glad we sold. With women, they will never be happy.

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Comment by tl
2007-02-13 22:04:55

NEVER compromise your terms. Bravo.

Comment by brianb
2007-02-13 13:34:56

Why don’t you move to S. New Hampshire? Prices are cheaper.

Comment by not a gator
2007-02-13 13:43:20

Have you ever seen South New Hampshire? lol.

Comment by brianb
2007-02-13 14:34:49

It’s nice. Her job is up there. Why live in MA and reverse commute. That’s idiotic.

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Comment by hd74man
2007-02-13 14:02:53

RE: Southern NH…

Commuters nightmare down RT. 3 and 93.

Beaucoup stop and go light systems just to get to the feeders.

Zip for public trans.

People never see their young families, they spend so much time on the road.

Gotta luv the state motto-Live Free or Die (as long as I have a job to go in Mazz)

Comment by BP
2007-02-13 13:35:53

It’s only been 4 years go for the divorce!

Comment by oc-ed
2007-02-13 13:36:16

I am sorry to hear you are in this bind. Your wife is being irrational as said by formerlahomeowner. Have you put the numbers in front of her? Can she see how it may make sense to rent for a year just to get to know the area and then buy where you want to live based on some first hand knowledge of the neighborhoods? Can you afford 600+ ? Can you afford to lose 100k or more once you do buy? Get irrational and take the risk of offerring her half the savings if you wait it out and rent. Ask yourself why she is not acting like a partner, but rather trying to storng arm you into buying? What are her reasons? Is it just that she only has heard the REIC party line and nothing else? With kindness, patience and compassion, educate her with the facts and numbers if you can. Divorce is a place you take vacations in Hell from. DO NOT GO THERE especially if you have kids. But, buying a home and immediately being underwater on it is a close second. Use this as an opportunity to strengthen your marriage by working together, understanding each others motivation and needs and then finding a balanced way to address those needs. Good luck!

Comment by FoxV
2007-02-13 13:54:17

I cant grasp why renting is not the first and foremost option, especially if theres a debate about what to do.

There must be some really nice places available to rent these days. Rent the place, bank the 50% savings you will get over owning, and watch the show.

Being in Boston, you will have a ringside seat to watch the bubble implode

(btw, my wife and I have had a similar type debate. I wanted to sell our current house and rent, she wanted to stay put. Unfortunately we do not have the appreciation here to make it an obvious choice)

Comment by Gillsie
2007-02-13 14:25:46

Yep - for the past 3 years have been doing the spreadsheets, running the numbers, sending articles from this site and elsewhere. They’ve worked to a point. I had a 15 slide power point that went down in family history and became the butt of family jokes - but the numbers have born out. Anyway, logic and reason can only take you so far.

Comment by imploder
2007-02-13 15:00:46

Dude, you guys sound more like business partners than Man and Wife anyway. I honesty have never heard of a Woman that loves her husband divorcing him at 35 cause he doesn’t want to buy something, cause why?.. Your gonna loose on a relocation package? Guess I’m a wide eyed romantic.

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Comment by Auger-Inn
2007-02-13 16:14:57

I don’t have an answer or any advice for you but I’m sure happy to hear that someone else has a wife whose idea of compromise is a kick in the nuts if you don’t agree with her.

Comment by AE Newman
2007-02-13 18:21:02

posted “I don’t have an answer or any advice for you but I’m sure happy to hear that someone else has a wife whose idea of compromise is a kick in the nuts if you don’t agree with her.”

Auger, I am in shock!!! I would think your usuall advice and cure all would sufice for this problem?

Comment by Auger-Inn
2007-02-13 19:30:56

He he, good point AE. Perhaps that’s why she is so keen on trying to kick me? :)

Comment by Gillsie
2007-02-13 13:43:49

I figure divorce is more expensive when you count alimony plus the cost of maintaining 2 residences. That’s just part of the financial hit. It’s also a drain on time, like all litigation, and that needs to be priced in, as well.

I’ve been able to hold the line for 2 years, which seem fine in retrospect, if you accept peak bubble somewhere in late 2005, early 2006. I still think prices will meander for several years or receed in the near term. But my biggest fear is a credit implosion and the resultant 40%+ haircut that every home owner will take. I still peg those chances under 10% — but since the cost of that catastrophe is so large, it has to be factored in.

Regarding Boston demographics, they’re horrible. I can’t really think about resale value, therefore, I have to presume I will die in this house. Thus, it’s not an investment, but a place to live for 40+ years.

Regarding jobs, we’re both OK, but tied to the financial industry. Thus, a credit implosion, while killing real estate in the area, would probably also decimate our livelihoods. On the plus side, our combined liquid assets, outside of a potential house or anything related thereto, is about $300k (which, in a credit crunch would probably also take a big haircut - but even a 50% shave down, a la the -44% the S&P 500 displayed in 2000 - 2002, would leave a reasonable cushion to ride on….at least for a while - but a $4k/month PITI payment would shorten that life boat).

Comment by Captain john
2007-02-13 13:49:08

Wait a minute, you still own the old house? She cant see that because this one is not selling there just may be a problem in the real estate market? I am so sorry. Maybe tell her rent until old house sells?

Comment by Gillsie
2007-02-13 13:52:31

No - we’re current renters

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Comment by Captain john
2007-02-13 13:55:02

Phew! Good luck, I dont envy you. Does she see prices falling and foreclosures rising or is she in denial that this is a fact?

Comment by sfbayqt
2007-02-13 14:29:56

OK…you are currently renters. I was under the impression that you would have 2 notes if you bought before you sold. Some of what I said below was based on that. The rest is still food for thought. :-)


Comment by pinch-a-penny
2007-02-13 13:55:22

Living in MA, Hopefully you can hold on untill at least August, as the implosion will be well under way. Life comes at you fast, and changes on a heart beat. Now you are secure, but as you say, there is a financial meltdown ala tech stocks of 1999-2002, with its related job loss, and capital meltdown, you could be in rough waters for a while. What is so wrong with renting for 6 more months? Specialy if her job is relocated (prudential???) to SE NH. I assume you still work in Boston, right? Not much choice for eithr of you to avoid a nightmare conmute either up 128/rt3 or 93… What if she hates her conmute and wants to relocate to another company in say, RI?

Comment by Gillsie
2007-02-13 14:28:18

Yeah - I’m in Cambridge. I don’t know why August would be better, other than all the ARM resets and additional sub-prime bankruptcies and added volume via foreclosure. There still haven’t been many auctions around and I haven’t heard that the REOs of the local banks are all that busy.

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Comment by gwynster
2007-02-13 13:57:47

I hate to see any marriage end but …oh wow. If she’s willing to divorce over buying a house then you have worse problems then buying or not buying a house. Something is up.

I think OC-ed had a great point in renting to see how the neighborhoods adjust and how to time the market etc. The fact that you have liquidity and she still wants to throw it away - it just boggle the the mind. You have my sympathy.

Comment by hd74man
2007-02-13 14:09:08

I can’t really think about resale value, therefore, I have to presume I will die in this house.

The most famous LAST WORDS I ever heard while in the appraisal biz for 23 years.


With your wife’s attitude, I give you 5-7 years.

Comment by sfbayqt
2007-02-13 14:19:30

I’m with Cap. John and the others. It makes WAY more sense to rent in Boston (or anywhere for that matter) while looking for the next house to purchase (all the while, keeping an eye on the market and prices, and picking a prefered neighborhood based on observations over time). This also buys you time to sell the house you are living in now BEFORE you obligate yourself to another loan and additional debt.

For the life of me, I cannot understand why people do not see the logic in SELLING the present house before buying the next one. Are people THAT impatient that they feel they MUST buy when moving to a new location?? What’s that about? The supposed “stigma” of being a renter. Please! Come up with a better reason because that one won’t cut it. Time and time again it’s been noted here in very clear numbers (and, finally, news articles) that you can rent for half the cost of being a homedebtor.

Gillsie, could your wife be getting pressure from elsewhere? Peer and family pressure can be huge, and if that is the case, she is caving in. Would it help to create a spreadsheet, provide anecdotes, whatever, to make your point more clear and how it would/could negatively affect the bottom line for your family?

I dont’ know….threatening divorce is a bit severe for something like this. And what happens if the decision to buy prematurely doesn’t pan out as she envisioned? Can *she* then be put in the doghouse and be willing to hear you say ” I told you so, dear.”?

I wish you the best.


Comment by Chrisusc
2007-02-13 14:34:50

Maybe you could do what I did and buy my wife a new car. That should stave off her complaining for a while (say 1 year or so). In other words, compromise. Then when the implosion happens (underway now), you can start looking at that time and in the meantime, you can be pocketing the savings from renting and take her on a nice vacation, say skiing, island paradise, etc.

No matter what, the things that I am mentioning above are still cheaper than buying. I talked my wife into waiting and then she has now come to understand that I “actually” do know more than most of the r.e. shills and idiots working in that field. And that I was right to get out of r.e. and go into accounting (stable work) and just wait for the implosion and then eat from the carcasses that will be littering the highways…

Comment by Gillsie
2007-02-13 14:41:15

Yeah - the compromise was my 2006 strategy. Went into the year and offered a deal - week long Italy trip in exchange for not buying a house. Money WELL Spent. But I can’t sell that again this year. With a lapsing relo package offer, it won’t fly.

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Comment by P'cola Popper
2007-02-13 15:13:36

Good strategy. I call that one “pleading guilty to a lesser offense” or “the bribe” and has worked on a number of occasions.

Living in Russia, I have thrown a fur coat at the problem rather than a car. The coat trick usually buys me a year or two of peace. Don’t try jewelry–the effect doesn’t last long.

Comment by brewster
2007-02-13 17:48:58

From someone in the same situation (with kids), here is my 2 cents

I am going to assume a few things, as I read them into your post.
(1) It’s not that she is going to divorce you, but she feels life is passing by, and you are not taking care of her.
(2) You understand that this is not about divorce. It is about the bio clock, the need to settle, and so on. There is an elephant under the rug.
(3) The relocation package has brought this elephant into the open.

You first have to decide how to deal with that elephant. If you agree that her real concerns (not the house, but the elephant) have merit, then you have to address them.

My advice(take at your own risk) is this. Do not postpone life, it will pass you by soon. There are some things that can be enjoyed well only at certain stages in life. Everything cannot be about money.

So move out of the cramped apartment, rent a house. (In fact I would bet that if you were renting a town home/house in a good locality now, you wont be facing this situation). You owe yourself some quality of life, within your means. You cannot take it with you when you die. You cannot live expecting doom tomorrow, and you can never expect to be perfectly secure.

What does that mean? You dont have to buy a house to enjoy living in one, you can lease one. If you want some stability, lease for 2 years. Especially if not owning a house is the reason you don’t have kids yet, then its really a bad decision. I find equally bad the two premises that says you cant live with kids in an apartment (you can), and you have to _buy_ a house if you have kids (you can rent a house). The caricature of the bubble is apartment renter(a loser), and house owner(a winner). What is missing is the renters of townhomes/duplex/SFH…etc. A lot of options.

Renting does not mean that you have to give up the comforts of life, and live in a cramped apartment. If your state of life requires you to have a bigger place to live, rent a house. You’ll still save over buying a **comparable** house. And you wont miss out on life.

Now coming back to the original point, If you _do_not_ agree that her real concerns (not the house, but the elephant) have merit, then you probably should have a talk with your wife. Because buying a house is only buying a bigger rug. The elephant is still going to pop up from under the rug, sometime down the line.

Me, Ive been there. I now rent a townhouse. Expensive than renting a condo/apartment, but still cheaper than owning a comparable house.

As a practical matter, ask the company if they’ll pay 6mnths/1yr rent while you look for a house instead of closing costs etc.

BTW, I completely agree with your take on Greenspan. He has forced us all to become gamblers. Gamble with buying a house, or gamble that life passes by you. Took me some time to figure out that the second option is not completely required.

Comment by oc-ed
2007-02-13 21:46:30

brewster is on target. I have lived in the same house since my kid was 1 and I rent it. For the first year I rented a very nice craftsman home in Santa Cruz 6 blocks from the beach. You can rent a very comfortable house for much less than PITI and have kids. I would suggest finding a landlord who has no interest in selling any of their rentals too.

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Comment by bubbleboi
2007-02-13 21:56:52

Try to find a house that you can rent for a year, with an option to buy the house at the end of the year at a pre-set amount. Go for something in a new subdivision, as i think that’s where values will be softest going forward, and it will be easier to determine market value based on most recent cookie-cutter comps.

If the market craps out over the next year, then hopefully even your wife will see that the price is too much, because she will see the house down the block that’s priced say $50,000 less that your pre-set price.

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Comment by bedub
2007-02-13 20:00:54

Go to cash….

Comment by BanteringBear
2007-02-13 13:43:51

Threatening divorce because you have not purchased a home yet? You may just want to take her up on that. She sounds exceedingly shallow. What’s next, another threat of divorce because you won’t buy her a new set of humps, or a Range Rover? That’s crazy.

Comment by Gillsie
2007-02-13 13:51:01

Part of it is the relo package from her employer lapsing June 30 which covers closing costs, 2 points, moving expenses, PMI for a year and 1 month (of her) salary, grossed up. That drives 80% of her decision to make the move now. DNA/Instinct probably drive the other 20%. Logic is not part of it.

Fortunately, no kids. Just a desire to climb up the adult food chain (we’re both 35 and, in addition to the ticking of a lapsing relo packages, there’s the bio clock ticking in the background).

Financially, and logically, it isn’t a great decision. However, that relo package is probably worth 5% or so of a house purchase. Question is, let it lapse (forego that 5%) and wait for a 10% further drop (in real terms - my bet is that inflation is coming which will at least maintain prices in nominal terms for a while yet).

Comment by FoxV
2007-02-13 13:59:37

what are the rents like for the size of house you want to buy.

How does that compare to the mortgage you will hold?

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Comment by Tulkinghorn
2007-02-13 19:40:29

No picture on this one, but $2200, or less than 50% cost to own with a fixed rate loan, looks pretty good:

Comment by txchick57
2007-02-13 14:00:01

Ouch. I feel for ya, man, and I’m a woman. I had to go through a few guys myself before I found one that agreed w/me about the no kids thing. One of them is now worth over $100M. Still wouldn’t do that over though. He reminds me of Tony Soprano.

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Comment by Fla Bubble Meister
2007-02-13 15:04:42

Exactly how many guys have you been through? I bet by now you look like Tony Soprano

Comment by STL Engineer
2007-02-13 16:27:25

Ha Ha!

Given Txchick’s sourpuss attitude, she deserved that!

Comment by txchick57
2007-02-13 16:41:25

Gee, I guess I’ll just hang myself. Grow up, will ya?

Comment by Fla Bubble Meister
2007-02-13 16:49:33

I couldn’t resist that cheap shot, Texy Chicky

Now you know why I’ve been divorced 3 times.

Comment by San Diego RE Bear
2007-02-13 17:59:40

“Exactly how many guys have you been through? I bet by now you look like Tony Soprano.”

Be careful here. Just because a woman can eviscerate you like Tony doesn’t mean she looks like him. :D

My guess is that if you saw her in person you’d be too busy flirting to notice the knife. (And TxChick I mean this as a compliment.)

Comment by San Diego RE Bear
2007-02-13 18:00:41

you’d be too busy flirting to notice the knife until it was too late.

Comment by Fla Bubble Meister
2007-02-13 19:57:40

Hey, I thought I was flirting!!!

Again, now you know why I was divorced 3 times.

Texy-Sexy has already forgiven me

Comment by waiting_in_la
2007-02-13 21:45:18

I’m sorry, but that comment made me bust out laughing.

Comment by Jim A.
2007-02-13 14:53:42

It might be worth finding out if any of the relo package can be converted to some sort of cash equivalent?

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Comment by spike66
2007-02-13 14:55:59

Ben’s posted a lot of articles from Boston newspapers on foreclosures, rising inventory and stalled sales…prices have already dropped in Mass. What does your wife do…why so resistant to numbers?

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Comment by Gillsie
2007-02-13 15:02:42

She’s involved in corporate training at a financial institution. It’s not that there’s resistance to the numbers (especially the ones that have borne out, like y-o-y sales/medians, etc.) but that it’s her version of a mid-life crises, i.e., 35 and in an apartment despite 2 healthy adults with OK salaries. In other words, if her loser friends can live in great homes they can’t afford, why can’t we? While most of the time, the logic is there and understood, many times the desperation of the situation (years of savings, good cash position, prudent life and financial decisions) in which we’ve done all the proper things and still can’t commit to the ‘normal thing’ (home ownership) is wearing on everybody’s nerves. For that, we thank Maestro Greenspan and the carry trade. Both events out of our control, but something we have to accept as did those who lived through WWI, the Depression, WWII, etc.

Comment by Central Valley Boy
2007-02-13 15:55:54

This is my situation to a “T”–except that we are 36 years old. (And for anyone who remembers from last month, I have convinced the wife to hold out a good deal longer here in L.A. She pointed out the Column One article in the Times today and I almost lost my coffee I couldn’t believe what they were printing. I think I actually danced a jig at about 6:15 this morning!

Comment by az_lender
2007-02-13 16:08:57

I can understand her feeling fed up with the apartment, but aren’t there any actual houses for RENT ? Even if you pay a high rental price for a year or two, it should be worth avoiding the risk that nominal prices are still in for a big decline.

Comment by spike66
2007-02-13 16:30:54

I know that you’re in a stressful situation (and being snowed in may not help) but you gotta consider how you’ll feel in July when you might be 100-200K underwater, and unable to unload your albatross. You and your wife are in the same industry…in a downturn you’re both vulnerable. At least protect yourself…

Comment by We Rent!
2007-02-13 21:32:00

Imagine this in 2008:

YOU - Lost job due to recession in financial sector.
WIFE - Knocked up now that she got her nest.
HOUSE - Soon to be repo’d (Ain’t no one making payments anymore!)
REST OF US - Paying out the ear in taxes to cover your welfare check.

Don’t use the threat of divorce as a potential weapon (cowardly position - trying to disrupt the balance of “power” with your life partner). That being said, if she mentions the “D” word even ONCE - take her up on it immediately.

Comment by rootvg
2007-02-13 14:38:39

I guess that would depend on how big her humps already are.

Comment by Lionel
2007-02-13 16:37:48

I’m with banteringbear on this one. Anyone who’s in their 30’s and is applying that kind of emotional extortion to someone they supposedly love is in deep need of therapy. That’s something a teenager would reort to, not an adult.

Comment by hd74man
2007-02-13 13:54:05

Man, if you’re wife is willing to divorce over an issue like purchasing a $600k house in an obviously overblown declining market what the f*ck is gonna happen when some real serious shit goes down.

Like you gettin’ sick or laid-off? The “for better or worse” clause sounds pretty damn thin to me

Listen to your gut.

The New England crash hasn’t even started yet.

Comment by garcap
2007-02-13 13:54:30

Time to get a divorce lawyer or buy a home?

My 2 cents:

a) Your wife probably won’t leave you for not buying a house.
b) If you see yourself married to this woman for the rest of your life, your job locations/incomes are stable, and you can afford the homes you are looking to buy, then buy the house and enjoy it. Renting is a drag (especially here in the the Northeast) and getting your wife off your back is a bonus. Plus, you won’t be buying at the peak.

Comment by txchick57
2007-02-13 14:01:03

I agree with that. She won’t leave you. It’s a game of chicken. And if she does, you haven’t lost anything.

Comment by Chrisusc
2007-02-13 14:36:54

And if you dont have kids, then it doesn’t matter anyhow.

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Comment by Big Bob Slob
2007-02-13 15:07:26

If my wife one told me that she was going to divorce me and I threw her out. She pleaded that she was lieing and that she really was not going to divorce me. Now she never makes that threat.

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Comment by Gillsie
2007-02-13 14:44:30

Yes - I don’t know how to price in getting the wife off the back. It’s worth something, but what? 10k? 20k? I think it’s at the lower end of the continuum, because once the nagging ends on house purchase, it moves on to something else…it’s like water running down hill.

Comment by garcap
2007-02-13 15:00:48

“I think it’s at the lower end of the continuum, because once the nagging ends on house purchase, it moves on to something else…it’s like water running down hill. ”

I was thinking the same thing as I wrote that post but didn’t want to bum you out. Maybe you can bargain a “quid pro quo” with her. You agree to buy the house and she agrees to take care of all the maintenance of the home for two years or something. With a snow storm heading your way make her think about much she really wants to shovel a driveway over the next couple of winters.

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Comment by imploder
2007-02-13 15:06:18

“once the nagging ends on house purchase, it moves on to something else…it’s like water running down hill.”

None of my business, but the way you talk about her sounds like you neither like or respect her. Maybe buying a house is the least of your issues.

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Comment by Greenlander
2007-02-13 18:26:11

Maybe she has big tits.

Comment by jerry from richardson
2007-02-13 19:04:13

Big tits end up sagging to the knees. Get a divorce while you’re still young.

Comment by waiting_in_BA
2007-02-13 23:34:51

hey garcap, dont let all the cheap shots bother you! I know exactly what you are talking about when you say
“once the nagging ends on house purchase, it moves on to something else…it’s like water running down hill.”
And its not like I dont love or respect my wife. But after all these years I figured its just the way some people are…she doesnt mean bad..but just the way she is. She has her positives too which outweigh her nagging. So dont jump to conclusions based on just one aspect of personality.
My advice would be to rent a nice place. Look around and I am pretty sure you can grab one of those “investment” properties for 2/3 or less of the mortgage. All the best!!

Comment by Deborah
2007-02-13 13:56:08

I can SO relate to this situation, though it is me telling my boyfriend I’m going to stay on the sidelines until this market shakes out. His RE friends think I’m “doom and gloom”… too bad. I am debt free and renting… what piece of mind. I have dug in my high heels and am standing firm.

Comment by mrquoi
2007-02-13 13:56:53

I feel your pain, only it’s my husband that is so itchy to sink everything we made on our house in LA into a house in SD.

What I did was pull a REVERSE SUSAN. I told him I was going to find a place for us to live and then went out and leased a really nice, really expensive condo and completely took care of the move. (So he couldn’t complain about packing.) It’s not exactly a healthy rent/income ratio for us, but I figured that laying out an extra $500 a month now will more than pay for itself when we buy later. The key is that I signed a one-year lease so we’re “stuck” here for a year. Oh and every time there is a WSJ or Business Week full of doom n’ gloom I leave it on the breakfast table. The other thing I do is to frequently ask how much we’ve earned by having our house money in the bank and he kind of gloats about how much we earn per month just sitting on the moola.

Comment by climber
2007-02-13 16:36:15

We were in that situation, but my wife absolutely “had” to break the lease to get out of the apartment. Now we’re stuck in a house she doesn’t like, and she’s been trying to get me to upgrade for the last 4 years.

Comment by nnvmtgbrkr
2007-02-13 14:01:52

Sounds like she needs txchick’s 20lb trout upside the head a couple times, and then shoved up the tail-pipe for good measure.

Comment by patient renter
2007-02-13 14:07:42

I’d be leaning more towards a divorce lawyer as well if your wife is seriously so irrational that she can’t be patient and rent for a few years to save a few hundred thousand dollars. This would be in the best interest of your family, and if she can’t understand that then it seems she doesn’t care about your best interests. I’m sure you’ve explained to her how many years it would take to pay back a 200,000 or 300,000 dollar difference on an amortized mortgage loan? A very long time is the answer, long enough to make it well worth it to wait a while.

Comment by OCDan
2007-02-13 14:10:37

Gillsie, not to be a killjoy, but if the wife is basing marriage on a house, something is wrong. I know you guys love one another, but her attitude is crazy. I know this ain’t the marriage blog, but when a person puts up the ultimatum, divorce or the house, something is very amiss. Just my $000.02!

Comment by jag
2007-02-13 14:21:30

“We countered back at $610 final. And they didn’t respond. ”

My bet is they will. Just driving around my neighborhood in Boston I saw For Sale signs about every three blocks. Sunday? One stretch of road had a dozen open houses in about 3 miles.

My suggestion? When they come back to you tell them the market’s changed….your back to your original offer. Its musical chairs time…..you’re one of the few chairs left. Don’t let anyone sit on you until they’ve proved “worthy”. If you don’t make them squirm, at this early stage of a market decline, you’ll kick yourself before the year is out.

Comment by Gillsie
2007-02-13 14:33:20

Yeah - if they call back, we’re probably going back down to the original $590 offer because they made my wife cry and added additional agita to my life that I didn’t need. As all the standard offer sheets state….’time is of the essence’.

Our bet is that since we don’t have a prior house sale contingency, can close within a reasonably short time, and are one of the few remaining deck chairs on the Titanic with access to traditional financing (straight 30 Year Fixed, no opiton ARM or anytying), that should count for something and to those looking to hang on for the last few thousand bucks — too bad, we’re off to find the next desperate seller trying to hand off their financial albatross.

Comment by sfbayqt
2007-02-13 14:47:44

Sounds like they are pulling your leg, and counting on using your wife to push their point. Remember, too, that the RE agent is NOT your friend. They are also “at work” with the sellers agent to get that house sold. Unless, of course, you actually have a signed contract that your agent is acting as your buyer’s agent. If not, that agent sees all of the heartache that your wife is wearing on her sleeve and they are working it for sure. Stand your ground on the offer of $590k with these people. You have time to move on to the next house. You DO have until June 30. Why not use that time, between now and then, wisely?


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Comment by hd74man
2007-02-13 16:30:13

Remember, too, that the RE agent is NOT your friend

If more people understood this basic, the world would be an infinitely better place.

Comment by Captain john
2007-02-13 15:01:24

Just a thought, why not say to her that you might consider a foreclosure? You may succeed in giving her a reality check when she sees ho much money people are loosing and thus bring home the image of her nesting dream in tatters? worst case you could pick up a cheaper foreclosure! Again, just a thought. Good luck to you

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Comment by waaahoo
2007-02-13 16:07:50

Crying? Jeez. I guarantee you they know your wife wants the house and are waiting for her to wear you down.

You have to have the wife act like she hates the house.

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Comment by mfj
2007-02-13 17:02:06


Stay married. This is what you promised and your word should be worth more than money.

Love and serve your wife. This too is what you promised. While the threat of divorce over this decision is entirely inappropriate and should be addressed, think first of your obligation not what you want.

I am in a similar situation. We are going to buy a house - probably 300k - even though I would prefer to rent. However, renting has severe, non-financial, implications. My wife wants stability for our four kids, which I appreciate, and which is much harder to guarantee with renting. We are also blessed that a 50% haircut on the property will not materially impact our financial situation.
While I am leary of the current risk of a deflating bubble, please be aware that your argument, as well as that of the rest of those fearing massive price declines is fundamentally irrational. It says that the market is pricing a certain asset class irrationally, but it also assumes that rationality will return to the market in some predicatable way. This is a prime example of cognitive dissonance. An irrational market may stay irrational for an irrationally long period of time, once one accepts the idea of an irrational market.
The flippers, the subprime lenders, etc. are idiots and many will be burned. But BUYING A HOUSE IS NOT PRIMARILY AN INVESTMENT DECISION. It is where you live.
Buy a house. Try and get a good deal on a house you can live in for 20 years. The history of markets in this country is that for non-commodity purchases, a long holding period will overwhelm bad timing. Clearly we are not at peak and you are getting a nice 5% discount from the location package. In whole I would say your wife if being more rational - other than the divorce threat, which is despicable and should be addressed aside from the housing issue.

In sum nobody here knows if housing will be more expensive or less in 2 or 3 years, although we all have our guesses (I think substantially lower). Make a decision about how you will live and stop worrying so much about the money.



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Comment by AE Newman
2007-02-13 18:27:56

posted ” Love and serve your wife.”

No bonehead! She is to “love, honor and obey”

Comment by imploder
2007-02-13 19:01:32

“Love and serve your wife.”

I think your just suppose to: Love and SERVICE your wife.

Comment by bubbleboi
2007-02-13 22:07:26

Interesting arguments, MFJ. It reminded me of the Shiller interview in the WSJ the other day when he talked about the irrational nature of the housing market, how back in 2001 noone predicted that it was going to explode for the next 5 years, and how noone now really knows what’s going to happen over the next 5 years.

i know this is one of those quotes i’m going to get wrong, but it goes something like “the market can stay irrational longer than you can stay solvent”.

Comment by Fla Bubble Meister
2007-02-13 14:51:48

Divorce, no question.

You might want to try this: honey…sweetie….YOU DONT HAVE TO BUY A HOUSE NOW!!! RENT!!!!….than divorce her. believe me, it will be cheaper.

Oh yea, if you buy a house then divorce her, give her the house in the settlement.

Comment by waaahoo
2007-02-13 16:08:54

Ah yes. Why get married? Just find a girl you don’t like and give your house to her.

Comment by Fla Bubble Meister
2007-02-13 16:51:35

Did that twice….ouch!!

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Comment by lainvestorgirl
2007-02-13 15:02:15

Why don’t you just go knock on doors of FBs, like this agent does? LOL

Comment by Melissa
2007-02-13 15:28:06

I would not buy a house right now if I were you. Tell your wife that if she wants a divorce then she can have it. Then later on you will be richer with a better wife. Something tells me that someone who puts pressure on you like that is somehow not the right person for you.

Comment by Not Mssing It
2007-02-13 15:44:45

We put in a $590k offer. Though insulted, they countered at $637. We countered back at $610 final. And they didn’t respond.

Well there was your problem right there. When they countered with their $637 you should have come back with a $550

Comment by evil doc
2007-02-13 16:07:52

this is what happens when folks get pressured into real estate deals.. Don’t let this happen to you. Just say no!



Comment by Fla Bubble Meister
2007-02-13 16:06:28

Gillsie, If your wife seriously feels this way, take the pain now. Wait until you have kids. You ain’t seen nothing yet. I don’t know about your state but in Fla., if you’ve been married less than 10 years with no kids, you split marital assets and go on your merry way. There are exceptions to that but that’s basically how it works here. You probably need to find out how it works there.

I am single probably because I am such an a**hole that no decent woman would have me (3 divorces, two useless kids..yes I’m a role model for familial disfunction)

At anyrate however, I am very successful financially. This has a lot to do with having no wife and therefore no “second opinion” to deal with, I can work late and weekends and go where I need to go when I need to go without any worry about little Joey’s Soccer game or Little Mary’s Dance recital or whatever.

I live in an apartment over the garage of an adjoining single family house, 3br, 2bath, big family room. I own the property. I live over the garage and rent the house. I get a new Corvette every two years and I have a Camry when I need to transprot more than 2.

Marriage is great, I guess. Since most end in divorce, most of us are evidently not very good at it.

Since, statistically you will probably end up hating each other anyway, I say go for the money. The first is the worst, by the third I was a pro. Sorry for the brutal honesty but when your 65 and your life has been one big negotiation with you loosing most of the time, maybe you’ll see my point.

This is not an anti female post. Basically I suck at marriage as do most of you reading this. Face the numbers. I agree with an earlier post, your situation is bigger than the purchase of a house.

Good luck, buddy.

Comment by Not Mssing It
2007-02-13 16:33:22

I get a new Corvette every two years

Cool, but one doesn’t have to be flying solo to accomplish something like that.

Comment by Fla Bubble Meister
2007-02-13 16:54:44

It does when they want an AUTOMATIC!!!!!

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Comment by imploder
2007-02-13 18:16:14

good come back

Comment by August
2007-02-13 17:39:45

I love this blog!

Comment by Arwen U.
2007-02-13 16:13:34


It sounds like your wife has a really good job. Does she get any say in how her money is spent?

Comment by Chuen
2007-02-13 16:16:12

Surely you don’t want our feedback on this.

Comment by jbunniii
2007-02-13 17:25:37

You want to rent, she wants to buy. No problem, let her buy and you can rent from her. If she balks at this then it’s time to question her motives.

Comment by tj & the bear
2007-02-13 20:44:18


My 2 cents… [although I too question the strength of a marriage threatened over housing,] here’s another tactic you might try:

Total up what the house would cost (monthly), then rent a house for an equivalent amount.

My guess is that you’ll get twice the house while assuming none of the risk. There’s no way in hell she won’t jump at living that well, and once she’s in she won’t want to settle for (i.e., purchase) anything less. This buys you as much time as it takes for buying to realign with renting, and then you’re In Like Flint.

Comment by turnoutthelights
2007-02-13 13:25:56

Anna Richter and Deborah Weber. They borrow the money to buy the gun that they loaded with credit ammo, shot themselves in both feet (or apparently all four) and are crying that it hurts. How many thousand more rubes are out there, deep in debt, deep in trouble, and drowning in stupid?

Comment by SunsetBeachGuy
2007-02-13 13:47:10

To borrow a quote from a previous article on the Bend, OR area…

They had bags full of someone else’s money and two boxes of stupid each!

Comment by scdave
2007-02-13 14:11:19

There is some serious delusion in the Bend/Redmond area…..commercial real estate is even worse than resi…..

Comment by oc-ed
2007-02-13 13:26:04

“He doesn’t have a key, but the back door is open. The carpets are stained, the living room wall has a hole punched in it, and the bedroom doors are missing. The lender will use Hennigan’s report to set a price and then turn it over to the agent to find a buyer. A little paint, a little plaster and it will go for $500,000.”

Whom, may I ask is going to pay half a mil for a POS like this today? I realize there are many sheeple still out there completely clueless, but the news is getting out and those numbers are dwindling.

Comment by Ben Jones
2007-02-13 13:30:51

Right, when I started this blog, even the people living in Fontana mocked the idea of $700,000 houses there. Then they got religion as the money flowed in.

Comment by oc-ed
2007-02-13 13:42:01

The news is getting out because of you and people like you Ben. Thank you for your tireless efforts for all of these years. Keep the faith, we’re with you till the bitter end. Then I’ll buy ya a beer or whatever you like to imbibe.

Comment by Neil
2007-02-13 13:42:20

Soon the attitude will shift.

Its going to be amazing what down payments do to price assumptions. Double that once sellers realize homes are 20%+ below the peak.

That will be… about August. :)

Got popcorn?

Comment by calex
2007-02-13 13:43:36

She said the family is trying to get their mortgage refinanced at a lower rate and, failing that, they may move to Texas.”

Why Texas, we have enough of these types already here. Can’t they be put in Arkansas for debtors prison.

Comment by Pen
2007-02-13 14:11:54

I thought Arkansas is debtors prison.

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Comment by oc-ed
2007-02-13 13:44:42

I think your point above, that retail sellers are the reason for the stickiness, is spot on. It seems like it is impossible for owners who have seen a high number associated with their property to even imagine it being less. It will require foreclosures/REO sales to drop the comps.

Comment by BanteringBear
2007-02-13 14:02:20

While foreclosures and REO’s will most definitely have the largest impact on prices, there are still sellers who are realistic. A family member of mine, at long last, listened to what I had to say about the market, and significantly dropped the asking price of their home, and sold it. Another friend has done the same thing and is now the lowest priced home in the neighborhood. After waiting several months with no buyers, some people just want to sell and move on with their lives. They are not overcome with the greed that others are. This is helping lower prices as they are the most recent comps.

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Comment by OCDan
2007-02-13 14:19:56

Ben and you guys know me and the wifey sold our home in Fontucky last year for numerous reasons, so I can speak with some relevance. I can’t believe that anything other than a real castle might fetch $700K in Fontucky! That area is soooooo overcrowded and smog-filled in the summer it is miserable. If you don’t have a pool or access to one you might as well stay inside because it makes Hades comfortable. In the winter you gets those Santa Ana winds 4-5 times at 3-5 days each time. Lovely! As I posted above, I can’t believe someone thinks that with a little plaster and paint a foreclosure home, that originally went for $700 K, in that town will still get $500K. This bubble is far from over.

Comment by Big Bob Slob
2007-02-13 15:12:12

It would be interesting to hear when you started this blog. I started reading in August of 2005. That is when I relized that bubble was bursting and put my home for sale. Back then we might have a news story every couple of days if we were lucky. Now we get lots of articles everyday and there are hundreds of blogers. In my opinion, things are going to get a lot worse that even we can imagine. The subrime colaps is the start of something rotten.

Comment by krills
2007-02-13 13:53:57

Yeah, alot of GF’s had the Back Door Open as they signed on the dotted line.

Comment by nnvmtgbrkr
2007-02-13 16:23:38

auger-inn, that’s your cue.

Comment by Arizona Slim
2007-02-13 14:00:34

A half a mil for a paint and plaster renovation? Yipes!

Comment by mrincomestream
2007-02-13 14:00:36

It’s too early in the game, if the “hood” is nice enough and he puts the R.E.O. tag on it some GF will buy it. But if the “hood” is marginal it’ll sit for awhile the thing about banks though is if it sits for 30 days they are going to be looking to reduce it and fast.

Comment by BanteringBear
2007-02-13 14:14:05

“…the thing about banks though is if it sits for 30 days they are going to be looking to reduce it and fast.”

I have been watching a bank owned which has been languishing on the mls for over three months with no price reductions. The asking price is the amount owed, which is a shade over $530k and ridiculously high for the city/area.

Comment by OCDan
2007-02-13 14:26:07

The problem with the bank owned junk is that all these PoS homes are overvalued anywhere from 35-60%, so any “real ” reductions in prices are going to echo througout the economy. I.e. home that originally went for $750K, which should really be $200K, is selling at $500K because no one wants to take the $500K hit.

Now, multiply this scenario out by tens of thousands and you have anywhere from $50-100 billion dollars, minimum! Something is going to give.

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Comment by Fla Bubble Meister
2007-02-13 15:02:15

Interesting thing about houses that sit unoccupied in Florida.

In Florida with the humidity in about 90 days you have mold, mildew and all types of critters from ants to rats. In 6 months you need to replace most of the drywall and Carpet and in 1 year you bulldoze it.

To the repo’ers I say “repo away”. Your house will turn to s**t in a year in this humidity.

Maybe you will luck out and some squatters will move in. I don’t think they would turn the power on but they might eat the rats.

This is fun to watch!!! The most fun you can have with your clothes on!!

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Comment by BanteringBear
2007-02-13 15:34:20

Wow, I didn’t know that houses degraded that quickly there. Now that’s “ripe”.

Comment by rootvg
2007-02-13 17:03:20

We lived in Dallas for eight years and it happens there, too.

If you don’t run that A/C most of the time, you’re gonna have trouble. We had two houses during the time we lived there and it was always the same.

An honest air conditioning contractor can make a killing there.

Comment by Fla Bubble Meister
2007-02-13 17:03:38

Unoccupied houses will degrade everywhere. The longer they sit, the more they rot. Leave a house in Florida for a year with no A/C and see what you get. It’s differant for differant areas. For example dry areas like Cal and AZ they may fair better. I have no real stat on the degredation factor, but if houses start sitting for extended periods of time, they will degrade. Not to mention vandalism. With lots of vacant houses this can be a real problem,

Comment by jbunniii
2007-02-13 17:31:30

Let me get this straight. Prior to the mass availability of air conditioning (1940s?), did houses in humid climates have to be torn down and rebuilt every year?

Comment by jerry from richardson
2007-02-13 19:14:58

The Texas heat will crack your foundation like an eggshell. If you find a REO that sat thru the summer, deduct $20K for the foundation work you will need to do.

Comment by Fla Bubble Meister
2007-02-13 20:24:25

jbunniii: Before A/C, houses were built with hardwoods, cypress, oak, block and the walls were plaster. Still, they were subject to termites and some mold but these materials were not damaged as much by the elements.

When Fla got A/C, then comes the pine studs and drywall.

I live in the Historic District in a Brick house, with cypress frame built in 1928. I actually live in the garage apt and rent the main house.

And yes, if houses were built by todays standards with todays materials the would rapidly deteriorate.

Comment by peter m
2007-02-13 23:11:59

“I have been watching a bank owned which has been languishing on the mls for over three months with no price reductions. The asking price is the amount owed, which is a shade over $530k and ridiculously high for the city/area.”

I spend much of this past weekend scoping the trend of sales, sold prices and foreclosures in my hood, Long beach. Out of 73 foreclosures/REO’s listed for Long beach in jan 2007 i did not see bank prices reduced by much, maybe around 10% in majority of cases. I saw a very few steals,E.G. 3/2’s 1000+ sq ft in the crappy 90805 zip area of N LB for under $300,000 but these would be in some really nasty hood areas.
Banks are still pricing REO’s at near peak prices, and/or just need to recoup the amt of the loans outstanding on the REO’s. Too many ignorant GF’s still
swallowing the Kool-aid, as judged by the sold prices i saw on zillow for about a hundred recently sold homes last 3 months. Were talking about prices of between $450-600 per sq ft on 700-900 sq ft shoeboxes, with the best deals being made on large 3/2’s over 1300 sq ft at about $400 per sq ft. And these are for 50-60 yr old WWII era shoebox homes in working class somewhat degenerated sections of Long Beach.
At least in this corner of LA county the buyers are still complete dimwits and/or the toxic subprimes have not yet gotten cut out of the market.

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Comment by Pasadena Renter
2007-02-13 14:38:04

I think that the market is very mixed now. For example, a great house (>3000sqft) in Pasadena (Orange Grove - Allen, great great hood despite schools) in Pasadena was a REO and advertised as such stayed in the market probably for more than 2 months. It was listed at 860 k, which taking into account comps, was a bargain, and just slightly above the previous purchase 2 years ago. I almost got interested enough to take a look at it.
My point is that in my area there are several REOs, this particular one was well priced, and still it would not sell.

Comment by az_lender
2007-02-13 16:16:30

Because $860K is still about 25x the likely annual rent from reliable tenants.

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Comment by implosion
2007-02-13 18:26:09

Orange Grove and Allen? Really?

Since you guys are up-to-date on the area. What’s gated stuff in La Canada going for? Zip 91011

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Comment by Pasadena Renter
2007-02-13 22:20:33

1.1M-1.4M for 2400 sqft without gates, i.e. the common stock. I guess gated properties are all over the place, maybe starting just below 2M.
But there are clear signs of distress, last autumn inventory and reduced were off the scale. They came down in December, but know they are increasing at a parabolic rate. I have also seen a few flips going wrong.
One interesting thing is that Pasadena 91104 and La Canada are ahead of the curve vs Altadena 91001 (I know, La Canada is a different beast pricewise, no need for MrIS to point it out), in the sense that property prices went up faster, and they have begun to deflate earlier. They also have more foreclosures, specially 91104 (~9 foreclosures currently), I guess for the same reason. NODs in 91104 and 91001 have reached epidemic proportions.

Comment by tj & the bear
2007-02-13 20:53:11

Pasadena & 3000sf for less than a mil? Really??? Looks like things are-a-changing!

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Comment by Pasadena Renter
2007-02-13 22:32:00

What I found interesting is 1] it took a long time for this one to sell, and 2]prices are all over the place. I cannot understand how some people expect to sell their POS at higher price than a much better house, which is not selling anyways.

Comment by gwynster
2007-02-13 17:03:38

Here is a bank-owned property outside of Sacramento. Even the banks can’t price anything right.
MLS# 70014017

Comment by PS
2007-02-13 14:12:27

The takeaway I got from the LA Times article was the comment from the realtor (formerly a Peet’s coffee route salesman just 2 years ago) in the very last line of the article:

“”People are walking away from their houses,” he says. “I’m giddy because I’m going to be so busy.”"

You absolute buffoon of a man! With all this empty inventory sitting out there in the lovely Inland Empire, do you honestly believe people will be knocking down your door with cash in hand begging you to sell? You’ll be pleading for the glorious days you drove corner to corner with taste shots of Ethiopian in hand.

BTW, here’s the link to website for the realty office highlighted in the article. You can tell they put big $$$ in their IT budget…


Comment by imploder
2007-02-13 14:47:53

If this guy is gonna keep knockin on doors like that, he better start “packing”… and I don’t mean a lunch.

Comment by mrincomestream
2007-02-13 21:09:50

You got that right, what that guy doesn’t realize is that if someone is behind in payments like that a Realtor is the last thing on their minds. They are looking for cash. If you have no cash don’t knock on the door. He smells of rookie and if he intends to survive in the business he better get rid of the partners times are about to get lean and splitting fees will not be in his best interest if they don’t steal him blind first.

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Comment by rootvg
2007-02-13 14:53:21

This is going to sound awful, but I’m beginning to think what the country really needs is a brutal depression along the lines of 1980-1982 or worse.

We need to reset these irrational expectations not only in terms of real estate and other asset appreciation, but also in terms of the value of work (no, I’m not a Democrat or Socialist or Communist or anything like it) and getting an education and service to the country.

We’ve got some real sociological problems brewing out there. Many of the boomers think they’re owed all this asset appreciation and cheap money…just because. Most of Generation-X is getting screwed to the wall and either doesn’t understand what’s going on or doesn’t care. I’ve met Generation-Y types that are so despondent they aren’t even thinking about college or post-secondary training because they don’t think there’s going to be much of a country or economy here.

This is some really scary shit.

Comment by turnoutthelights
2007-02-13 15:07:38

Just a thought, but one of the prime deflators of this bubble has been boomers NOT acting out the fantasies of Gen-X’ers and the RE industry. They may like the unearned appreciation on their 30 year-old homes, but they aren’t moving enmass to greener pastures, and condos seem not to be their style either. Most will simply hang on to the money, and spend it on travel, good food and a better level of creature comfort. Not very imaginative, but frankly most of them aren’t.

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Comment by rootvg
2007-02-13 15:18:09

Here in SoCal, it’s been the younger boomers and a fair share of Generation-X (with the cooperation of the mortgage lending and RE industry) who’ve brought us to this point.

You have a point that many of the older boomers (Vietnam era crowd) have held onto their homes because they actually remember what recessions and depressions look like (1974-1975, 1980-1982) and understand the value of not being in so much debt all the time.

Comment by CA Guy
2007-02-13 17:07:06

rootvg: I have to agree with you. Both my folks born in ‘47, early boomers. Not buried in debt. I’d say alot of folks in their 40s and 30s are the main root, with some even in their 20s. This bubble infected all generations, and my only hope is that those who were wise enough to pass will not be taken down with them.

Comment by Bill in Phoenix
2007-02-14 06:48:19

rootvg and CA guy, this is arguable. I am 47 - born in 1959 and a tail end boomer. The older boomers drove up the stock market in the 1980s when I was in my 20s and still in college with no money to invest. I got in late, in 1989, fortunately missed the 1987 crash. I got in late in the RE boom of the 80s, actually 1990 and it went bust. I vowed never to follow in the older boomers tracks again because they always got the cookies and I always got the crumbs (or even had to give away those crumbs). In fact, they had sexual freedom (before herpes and AIDS) while in my early 20s, AIDS became the big scare and there was no “free love” for my own generation. My own revenge is to be a contrarian. And I’ve been a contrarian since 1996. I have been profiting ever since by doing the opposite of what the older boomers (born 1946 to 1955) are doing.

Comment by Oats
2007-02-13 15:48:57

What the globe is probably in for is fun and games along the lines of the period after the 1340 liquidity crunch, it was also called the Dark Ages.

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Comment by Central Valley Boy
2007-02-13 16:04:47

Oh there was lots of liquidity in the 1340s. It just happened to be in people’s internal organs, courtesy the Black Plague.

Comment by sleepless_near_seattle
2007-02-13 17:25:47

I have to agree. For me, its all about expectations and standard of living.

I mean, it was only 5 years ago here in Portland that $250K seemed like a LOT of money to spend on a house even in the nicer close-in areas. Now those places sell for $600K+. People now feel like $350K is cheap.

On the other hand, jobs keep leaving the States only to be replaced by lower paying jobs. Either the salaries of those jobs overseas need to rise quickly, or we need to accept a lower standard of living to keep them here.

I have forced a much lower standard of living on myself (sold my house, renting, drive a 10 year old car) as I truly believe that soon enough a lower standard of living will be forced upon us.

Funny thing is, I’m much happier living this way!

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Comment by August
2007-02-13 18:27:56

“I have forced a much lower standard of living on myself (sold my house, renting, drive a 10 year old car) as I truly believe that soon enough a lower standard of living will be forced upon us.

Funny thing is, I’m much happier living this way! ”

Wow…I am kinda in the process of doing the same thing right now! Gonna sell the motorcycle collection and toy hauler and the new truck I bought to pull it last year. Going to keep the 3 yr old truck that is now paid for and one or two bikes that I will actually ride….I have learned that toys do not allways equal happiness!

Comment by BanteringBear
2007-02-13 18:37:54

“…only 5 years ago here in Portland that $250K seemed like a LOT of money to spend on a house even in the nicer close-in areas. Now those places sell for $600K+. People now feel like $350K is cheap.”

I am happy to see that someone else has noticed this too. People have seemingly lost touch with what “affordable” is. Before this bubble, pretty much everyone I know would agree that a $300k home was A LOT of money. Now, I hear people saying things like “it’s ONLY $375k”. I, personally, have not forgotten what prices used to be, nor will I. While I am more interested in raw land than a house, I would only buy a house if it was cheaper or equal to renting. Otherwise, forget it.

Comment by sleepless_near_seattle
2007-02-13 20:56:31

Good luck! I must say, it really is liberating.

My next purchase will hopefully be a multi-family if I can find something, anything that will cash flow. Could be awhile….

Comment by bubbleboi
2007-02-13 22:19:35

Sleepless - i’m trying to find a small multi-unit building to live in that just breaks even assuming i’m paying market rent, so not really a positive cash flow, but enough to cover my costs if i move out. There is NOTHING out there that meets this criteria, not even close. North side chicago.

Comment by sleepless_near_seattle
2007-02-13 22:32:10

Yep, I’m looking for the same situation (live in one unit).

Had a chance at a great price in 2002, but had just bought my house (the one I just sold).

Now, the sellers of these properties know that people buy them to do condo converts, so they jack up the price to an absurd amount.

Lately, however, converted condos aren’t selling and so the overpriced multi-units are sitting too.

Hopefully in a few more years……

Comment by sfbayqt
2007-02-13 23:22:37

I SO agree with all of you. I’ve been preaching (and living)this for years about living below your means…*before* the housing market went bubbly. Whenever I hear, “wow, $500k is a great price for XXX area”, I call bulls&%t. $500,000 is a half million no matter how you look at it, and THAT is a lot of money. And what that gets you these days is laughable.

I’ll be glad when this tide goes back out. Sure, it will return with the next housing cycle in some form (it’s the nature of the market), but it has spent enough time on shore this time around.


Comment by Jim A.
2007-02-13 15:00:07

The problem is that he’s still looking for sellers, when buyers are the precious commodity.

Comment by Arizona Slim
2007-02-13 15:18:41


That’s a site for Web Pages That Suck (a real site, BTW) if there ever was one. URL, if anyone cares to nominate it:


Comment by Chuen
2007-02-13 16:51:21

They almost had me at the swirly font and the google search box.

Comment by Bruce Dickinson
2007-02-13 20:50:19

Holy smoke, what a website…..

Comment by peter m
2007-02-13 20:06:29

“The lender will use Hennigan’s report to set a price and then turn it over to the agent to find a buyer. A little paint, a little plaster and it will go for $500,000.”

That quote from LA times was one of the few flawed items in a other wise excellent Article. The Author(s) do not know what a POS area Fontucky(Fontana)is! The recently overbuilt new section of fontana astide the new 30 fwy may have upscale tracts similar to Rancho cucamonga, but they are of a mass-produced cookie cutter design reproduced in thousands of other new tracts which sprouted all over the IE last several years. The older decayed industrialized
southern half of Fontana from the 10 fwy south is the pits.
The entire IE region saw massive overbuilding of sea to sea new housing tracts, which were purchased by floods of first time buyers using the most toxic mortgage products. Now that the Homes have stopped appreciating all over the IE the real effects of tract overbuilding will be felt, such as 1st time buyers defaulting EN MASS. And new tracts/homes are still coming online almost daily all over the IE. The HB’s will do deep discounting to move these new homes, which will lead to still more foreclosures.
North fontana is one of the overbuilt IE regions, and one of the least attractive IE areas to boot,which is why large 4/2 foreclosed SFH properties will go at dirt cheap prices of around $200,000 in 2007-2010. $500,000? Only a RE dolt would even think about getting a foreclosed fontucky home for $300.000, much less $500,000.

Comment by JRinUT
2007-02-13 13:43:47


“The roster of agents has sunk to 52, only about half of whom are active. ‘The rest are looking for side jobs at McDonald’s,’ said Home Center President Jason Bosch. ‘It happened overnight.’”

And I thought everyone was just being facetious when they said real-estate agents would end up working in fast food.

Comment by IrvineRenter
2007-02-13 13:51:15

I’ll take a quarter pounder with cheese, fries, a coke, and your latest listings please.

Comment by Ken Best
2007-02-13 14:06:37

In Merced, used car dealers turned away a lot of Realtors applying for a job, and that was last year. Saw it here on Ben’s blog.

Comment by Pen
2007-02-13 14:08:29

ouch..when a used car dealer turns you away, what does that do for one’s self esteem?

please pass the Zoloft…and the scotch..

Comment by IrvineRenter
2007-02-13 14:32:29

Perhaps these realtors could go work with Al Bundy at Garry’s Shoes and Accessories?

Comment by gwynster
2007-02-13 14:55:13

We get them here at UCD, applying to intro-level staff work (file clerics and receptionists). They almost never get interviews. I know I posted this before but my favorite application was from someone holding a RE license with previous employment being a farm equipment operator for 2 yrs.

Comment by Arizona Slim
2007-02-13 15:20:28

It’s pretty sad when they can’t get an entry-level clerical job interview at a university. Then again, it does say something about their skills and qualifications, doesn’t it?

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Comment by hd74man
2007-02-13 13:46:07

distressed and foreclosed properties: 95 of them, many nearly new, each priced at around $250,000.

LMAO…$250k foreclosures?

What’s the median family income in the US?


$60k x 2.5 = $150k qualifying.

Sorry guys, another $100k cut please.

Comment by Pen
2007-02-13 14:06:20

Hey HD,

check this out..



Comment by Pen
2007-02-13 14:17:07

Hey HD,

Check this out..


Comment by Isoldearly
2007-02-13 14:57:33

U.S. Census Data: Median Household Income is [drum roll please] $43,318 per year. That was as of 2003 .. if your area had huge income increases, add to the median a bit. So what price house can the median American household afford? (p.s. nearly 50% of those household will eventually be divorced and the house will go back on the market because it takes to salaries these days.) Pull out your hand held calculators and play with these numbers!

Comment by az_lender
2007-02-13 16:21:08

Your $43K sounds more like it. I thought Calif was around $60K, and the rest of the country is (obviously) poorer in salary terms.

Comment by bubbleboi
2007-02-13 22:44:28

the wikipedia “household income in the united states” page gives some more recent statistics re: income from 2004/5 census.

median us $44,473
median CA $49,894 (#13)

granted, the median is higher, but once you start to factor in the cost of living the income advantage gets completely erased and then some. So i wouldn’t say the rest of the country is (obviously) poorer in salary terms.

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Comment by Bubblewatcher
2007-02-13 17:06:28

Just pulled up this site:
and plugged in $43K. With a 20% downpayment, and 6% loan that household could afford (generously) about a $110K house, or about 50% of the national average.

Oh, this is gonna get ugly.

Comment by Neil
2007-02-13 17:50:47

Ugly happens when salaries drop.

We’re entering deflation folks.

Got popcorn?

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Comment by jbunniii
2007-02-13 17:51:42

However, only about 68% of households are owned. Therefore roughly speaking, the median house should be affordable by a household earning the midpoint of the upper 68% of incomes, i.e. the 66th percentile.

According to the 2005 census, the 60th percentile is $57,660 and the 80th is $91,705. Interpolating linearly, I would estimate the 66th percentile income to be $67,873.

The same mortgage calculator suggests that someone earning $67,873 can conservatively afford a $250k house if a 20% downpayment is made. So the national numbers aren’t as bad as your analysis suggests. (Not that I don’t think there will be a national decline.)

The California numbers, on the other hand, are completely insane.

Interestingly, that mortgage calculator has a typo: it tells you the “minimum” house price that you can afford, when obviously “maximum” was meant.

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Comment by jbunniii
2007-02-13 18:03:25

PS. I’m not sure how “conservative” that calculator is. Its suggested “conservative” and “aggressive” mortgages correspond to 3x and 4x gross annual income, respectively.

I personally consider 3x to be on the aggressive side, and 4x to be extremely aggressive. A few years ago, most banks would have agreed with me.

These days of course, someone earning $67k per year can easily obtain 100% financing for an $800k house (12x gross income) - it happens all the time in California.

I would estimate that reversion to the the old mortgage guidelines would easily cut the median California house price in half.

Comment by tj & the bear
2007-02-13 21:01:33

6% is still an abnormally low rate, historically speaking. Try the numbers again at 9% and see what happens.

Comment by txchick57
2007-02-13 13:55:00

“The Richters lost the funds they invested, she said, and also cannot afford the $4,400-a-month mortgage payment on the home where they and their four children live. In addition, she said, they must make $1,200-a-month payments on the credit-card borrowings. She said the family is trying to get their mortgage refinanced at a lower rate and, failing that, they may move to Texas.”

This ain’t the kind of Clowinfornian the Texas fools are looking for. If I could talk to this lady, I’d tell her to stay in California. There are enough broke deadbeats in Texas already.

Comment by oc-ed
2007-02-13 14:04:51

Unfortunately, we may see a reverse of the dustbowl migration out of CA and back to the midwest where people can actually afford to live. Or maybe to the rustbelt where homes are much less expensive. Of course if there is no work in these places there is no draw.

Comment by scdave
2007-02-13 14:18:48

I have often thought about this…..Just where could you live on a decent social security check ($1200./Mo) with your medical covered by medicaid ??? Is there anywhere in the USA doable ??

Comment by txchick57
2007-02-13 14:22:30

Arkansas maybe, Mississippi, Nebraska, Oklahoma.

I know. It’s depressing as hell.

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Comment by OCDan
2007-02-13 14:37:02

I think we need to step back and look at the larger question. Just in the world did the US get to a point that is almost unaffordable for most? Now I know I will get the usual suspects, i.e. lack of real wage increase, inflation, etc. But why does it seem that one needs to make more than a Brink’s truck worth to get bt comfortably? My stepfather made $75K a year with OT as a grocery manager in NJ back in the 80’s. Where have wages like this gone? Give me sone financial history help on this one. I also realize a lot of people live way over their means, but when $1200/month gets you Arky, Miss, Okie, and Hotter -n- hell NV, what is the deal?

Comment by cactus
2007-02-13 18:05:10

technology like the internet. Makes it easy to outsource work and replace workers. How about thoses cool laser bar code readers, check out yourself and get rid of a checker at a grocery store.

Comment by JTZ
2007-02-13 18:39:50

Automation increases efficiency and supports wages - the self-scanners mean fewer workers per unit sale.

In reality, labor has been under attack for decades. They pay less becasue they can.

Comment by Gwynster
2007-02-13 19:47:11

Makes you wonder if the Luddites were onto something >; )

Comment by rootvg
2007-02-13 15:06:37

Sure, NE Ohio or Western Pennsylvania, but those places are only attractive for those of us who have family and/or friends there.

Other than that, Cleveland is a bad idea for anyone other than medical professionals or retired folks.

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Comment by bubbleglum
2007-02-13 15:09:28

I live on about $500/month in Nebr. No debt, house paid for.

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Comment by Norcal Ray
2007-02-13 15:17:51

Wow, that is amazing on only $ 500 a month. That is a car payment in a lot of well off metro areas. Are you single and have a paid off car too?

Comment by scdave
2007-02-13 15:21:57

Bglum;….Yes but your house paid for effectively gives you free rent….for the $1200./Mo SS earner they would need to pay rent….I suppose some of the locations suggested you could rent for $400-$500 Mo. ??? Leaves you $700 for all other living expenses….

Comment by scdave
2007-02-13 15:24:01

Bglum;….Sorry, misread your $500./Mo remainder so I guess it is doable….

Comment by bubbleglum
2007-02-13 16:24:23

“Are you single and have a paid off car too?”

Yes for both.

Comment by az_lender
2007-02-13 16:23:54

Many of my trailer-dwelling clientele have incomes in this range, scdave. When they get big medical bills they file BK, with their BK attys sending me letters reaffirming their commitment to pay for their trailer-lots.

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Comment by gwynster
2007-02-13 15:10:18

Bingo! We’re having a rash of early retirement where employees want the early cash out, sell the house, and relocate into places like rural Michigan, Kansas, etc. Some have no plans to work again. A few are figuring on taking a min. wage job for the benefits and paying cash for the house. I tried to point out that finding an entry level with benefits is less likely then spotting an ivory billed woodpecker but they have no sense of humor.

The reoccuring theme is that if they stay here, they will get zip for the house and the pension will be worthless so they feel they have to move now to be ahead of the market.

Comment by Norcal Ray
2007-02-13 16:07:52

Isn’t the pension Calpers since you work at UC Davis, gwynster? That should be solvent for a long time.

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Comment by Paladin
2007-02-13 18:04:38

About a year ago, I took CalPERS assets, divide by members and it totalled $135,000/member. They better hope the state is willing to kick in a lot of money after all those state employees retire. The average age will probably dictate maximum payments in about 15-20 more years. That day of reckoning will come all too soon. lather, rinse, repeat at every municipality in the state.

Comment by implosion
2007-02-13 18:47:51

My guess is that gwynster is in UCRP.

Comment by RMB
2007-02-13 19:12:49

Calpers has about 10 to 15 years of solvency left. They are projecting about 40-50% of the employees retiring in the next 8 years, which will at a minimum quadruple the number of people drawing from the system. Calpers has some big time investments in RE which will probably go sour in the next few years. The funny thing is all of this is plain if you can do simple math, but the live for the moment gov’t crowd just ignores it and keeps their fingers and toes crossed all will be well. It is going to be really hard to sell tax increases to pay these pensions in the future and with all of the bonds CA is floating I don’t think they will be able to go to that trough again.

Comment by Ozarkian from Saratoga, CA
2007-02-13 20:57:49

My mom has Calpers retirement/medical and the retirement isn’t much but the medical benefits are HUGE. She pays practically nothing despite having had very serious medical problems (2 strokes) and expenses and even being on hospice care for several years (they finally decided she wasn’t going to die and stopped it which was fine). This kind of medical care costs a fortune.

Comment by tj & the bear
2007-02-13 21:06:09

Calpers has about 10 to 15 years of solvency left.

Cut that in half once the depression sets in.

Comment by NOVAwatcher
2007-02-14 06:48:19

UC schools are not part of CalPERS, but instead are part of UCRP. From what I understand, UCRP is doing quite well. That had such a surpplus, that for 15 years, employees did not need to make contributions to the plan! CalPERS, on the other hand, is a joke.

Comment by implosion
2007-02-14 07:43:41

That surplus is seriously reduced. Based on market value, the surplus (mv of assets- act acc liabilities) went from $18B in 2000 to $2.6B in 20005. The actuarial surplus went from $13.0B in 2000 to $3.8B in 2005.

The actuarial accrued liability went from $24.1B in 2000 to $37.3B in 2005. The actuarial value of the assets went from $37.0B in 2000 to $41.1B in 2005. They are having trouble keeping up with the increase liabilities.

Contributions to the plan will likely start again in July.

Comment by gwynster
2007-02-14 08:24:32

You guys are good!

Yep, the plan is UCRP and while us staffers haven’t been paying into it in a while, that’s about to change.

Meanwhile, we do have an option of Fidelity, UC bonds, UC savings, etc that we can also contribute to pre-tax. The good part of renting is that I can max those out. I’d be saving $0 if I had a mortgage.

Someone mentioned retirements and I know in my dept I have at least 50% of my faculty retiring between now and 10 yrs max. My sure what my staff levels will look like in 5 yrs. I know lots of people who are banking on early retirement, selling the house, moving out of state and then picking up another mcjob job so that max the SS.

Strange times are afoot here in Davis.

Comment by BanteringBear
2007-02-13 15:56:25

“Unfortunately, we may see a reverse of the dustbowl migration out of CA and back to the midwest where people can actually afford to live. Or maybe to the rustbelt where homes are much less expensive. Of course if there is no work in these places there is no draw.”

This is the conundrum many find themselves in these day. Affordability problems relative to the wages in any given area. The bottom line, housing (the largest expense in most peoples budget) is WAY too expensive everywhere. It has never been so hard to afford a roof over ones head. Not only do we need a major crash in housing values, but legislation to prevent this sort of thing from ever happening again. I have never been one for big government, but these last five years have shown that big business and industry are incapable of policing themselves. The problems created by this mania will be felt for generations. Single family homes should not be get rich quick investments, so maybe some mammoth taxes on second homes is a start.

Comment by rootvg
2007-02-13 16:15:58

Herbert Hoover said, incredibly enough, that the problem with capitalists is their greed. This is coming from a guy who was one of the wealthiest men in America for that era. This is also the same guy who said the Red Cross should take care of people who didn’t have jobs or places to live during the Depression.

I’m fairly sure we’re going to end up with increased regulation and government oversight of the mortgage and real estate industry when this is all said and done.

Standards for qualification will be higher (as they once were), a minimum percentage down payment will become mandatory and something the banks can’t just “get around” and they’ll comb your finances and background with an electron microscope before they just hand over a couple hundred grand for a house.

This is how it was when we bought our first home in 1996 and I suspect it will be again.

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Comment by climber
2007-02-13 16:44:18

This kind of thing didn’t happen until governemt made it their business to “help” people afford houses, all they did was increase demand and cheapen money.

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Comment by manraygun
2007-02-13 15:10:18

“The Richters lost the funds they invested, she said, and also cannot afford the $4,400-a-month mortgage payment on the home where they and their four children live.”

Gambling this way with four kids? What degenerates. They might as well have plopped their house down on a roulette table in vegas.

Comment by Been There
2007-02-13 15:47:10

They probably could sell the kids faster than the house.

Comment by Jas Jain
2007-02-13 15:24:57

Come on, Chick, don’t be selfish. We got too many and we all need to help each other to restore some balance. Please.


Comment by jtcc
2007-02-13 13:55:22

Anna Richter and Deborah Weber, said they were persuaded by the defendants to extract all the equity from their homes, which was subsequently wired to accounts that the defendants controlled.

This is the kind of stuff that gets me going. As an overall society just how dumb have we become. The scary part is I dont even feel bad for these people,not even a little. The survival of the fittest rules apppear to be appling more now than ever. Do these sheep think that can outrun their stupidity by moving to Texas. I cant take it.

Comment by Jas Jain
2007-02-13 15:29:13

“As an overall society just how dumb have we become.”

Well, are have created a society of born-and-bred dupes, thanks to the Propaganda Machine that targets kids from an early age. No going back until there is a lot of misery and backlash. Can you imagine the level of control our economic rulers have over people’s lives?


Comment by Curt
2007-02-13 13:57:47

Ben Jones. admit it! You’re really Jason Bosch in disguise!

Comment by mrincomestream
2007-02-13 14:03:34

LOL I thought the same thing.

Comment by Bill in Phoenix
2007-02-14 06:53:58

Who is “Jason Bosch?”

Comment by Tom
2007-02-13 13:58:58

Stocks are up bigtime today. TOLD, KB Home, DR Horton. Plus subprime lenders like FMT (over 10%).

Some wishful thinking if you ask me. We shorts know a money making opportunity when we see one :-)

Comment by salinasron
2007-02-13 14:43:25

I heard Cramer at noon pumping or pimping up KB Home. This whole housing fiasco has taken the clothes off the whole financial world.

Comment by Pen
2007-02-13 13:59:36

OT..but sort of on topic, though…

“The new issue of the company’s 22-page listings magazine will tout nothing but distressed and foreclosed properties: 95 of them, many nearly new, each priced at around $250,000. ‘When you throw out the words ‘foreclosure,’ ’short sale,’ ‘repo,’ the buyer thinks it’s a deal,’ said president Bosch. ‘It’s still very early, but I’m convinced that’s where the market is going.’”

“Bosch thinks the residential real estate market will soon revisit the horrible days of the mid-’90s — and then get worse. ‘I have no doubt that we are entering the next phase of an unprecedented market,’ he says. ‘One that Southern California has never seen.’”

I can only hope that the Greater Boston and Boston-North market will soon present itself as such. Not that I want to see people suffer financial apin, but I would like to be able to buy a decent home in a decent area without it sucking up 1/2 my income. I don’t need a McMansion, but I also don’t want to pay $500,000 for a 1960’s cape/ranch.

Comment by jag
2007-02-13 14:46:41

Be patient. In the last bust I told my wife we should sell (1988) because prices were insane. With new twins, a motherinlaw next door, no could do. But I got point for being right.
I told her the same thing last year but we’re now lifer’s here.

So, I’ve called two RE peaks (not bragging, it wasn’t very tough….would that I could call STOCK peaks…). Its going to get nasty in Boston, as nasty (or worse) than the 90s. That means another 30% down. Houses I track around my home are already down 25% from peak (with few exceptions). I’ve got six houses in my neighborhood on the market 9-12 months.

All the fundamentals; increasing supply, decreasing demand, lack of demographic and economic stimulus, are either unchanged or getting worse. It won’t be the end of the world (anymore than it was in 90) but it will, IMHO, be more painful this time because the foreclosure stories will be numerous and nasty. The press will eat it up in hopes of getting “the government” to “do something”.

By the time anything is decided it will be too late. I may be a buyer then.

Comment by Pen
2007-02-13 14:03:34


For the Massachusetts folks…


Comment by Mr Vincent
2007-02-13 14:07:14

“In Fontana, he knows what to expect.”

I know what to expect there too. I lived there for a brief time in the early 90s, for reasons I am still not sure of.

The wind blows so hard there that the only good thing about it is you cant hear the gunshots.

Comment by Chrisusc
2007-02-13 14:40:09

That’s rich.

Comment by Jas Jain
2007-02-13 15:33:27

Last year, I had to take a detour because of hwy construction. Got a little lost and had to drive thru Fontana. What an overbuilding. I had no idea what was there until last year.

Comment by Central Valley Boy
2007-02-13 16:13:31

My Fontana moment was a few years ago when I pulled off the 10 to pick up some errr, road sodas. I went inside the nearest grocery store and encountered a gargantuan mountain of a woman, perhaps 500 lbs., dressed in a baby blue mumu that said “I’M HAVING A MAALOX MOMENT!” I ran back to the car and got the h-e-l-l out of there.

Comment by rootvg
2007-02-13 16:25:01

Sounds like the kind of woman who, if she went jogging, could crack tectonic plates.

I’m six foot, 260+, so I shouldn’t say too much. I’m a big guy (11 EEE shoe, 19 inch neck) but it’s still too much weight.

I’m working on it.

Comment by Cow_tipping
2007-02-13 14:11:43

Yes they have unlimited time. Whe I was buying a house, I told my realtor, I am not too bothered if somehting goes, I am in no hurry. That A$$HOLE said, “but I am”. I dumped his sorry ass … Or like I made him show me 15 more houses and gave him the distinct impression that I am a dead beat … and he was glad to let me go with 1 month left. I had a good agent lined up and I bought a new one in under a week with that agent … only to cancel just before closing and buy a different one - also new …

Comment by clearview
2007-02-13 14:12:13

Unbelievable. Who would have ever thought you’d see the day that the L.A Times would write a story as honest and as hard hitting as this about the real estate crash. This truly is the beginning of the end for this speculative housing runup which has plagued this state for over 11 years.

No person, and I mean not even the dullest dolt, would buy property without thinking very carefully about the risk after reading this article. Talk about watershed moments. This is like Midway or Stalingrad. The L.A times! Who woulda thought…

Comment by Neil
2007-02-13 15:11:45

Talk about watershed moments. This is like Midway or Stalingrad. The L.A times! Who woulda thought…

I have this picture of the captured Realtors ™ and brokers marching down the main street. Everyone silent as they go off to work camps.


The average Joe and Jane sixpack will be in denial another month. By then the word will be out that credit has tightened.

Sigh… which means it probably will take them three months to react. :( Grrr… wake up people!

Got popcorn?

Comment by emcee
2007-02-13 15:54:55

Yup … as subprime continues to tighten, there goes the demand side in California … 2/3 of all mortgages in SD county in 2006 were I/O or negam … yikes.

Comment by aladinsane
2007-02-13 15:19:33

The L.A. Times has nothing to lose, really…

Every other newspaper knows the score, but are terrified to say anything. You know, Ben knows, we all know, what sort of wicked hangover is coming. Sort of like months of Tequilla hangovers, you know the ones that feel like there’s a lil’ meskin’ in your forehead with
a tiny ballpeen hammer, that kind?

Newspapers are a dying breed and to be part of the new 24/7 info cycle, perhaps they felt the need to be the 1st to “blow” the story?

Comment by calex
2007-02-13 14:28:29

My dad fixed a computer system for a car broker in delaware years ago. He said they only loan to people that can’t afford it and they fully expected to repo at least half but didn’t mind because they could resale for the same price. Even they required a downpayment. I still find it hard to believe that banks would do 100% on money as large as a house, but they were probably running the same way because resales were so easy early in the bubble.

Comment by OCDan
2007-02-13 14:43:25

I said that is was a sad day in this country when homes were being sold like used cars. I knew then that the REIC was in trouble.

Comment by santacruzsux
2007-02-13 14:56:41

LOL! How much would you pay for a “certified” pre-owned KB home?

Comment by Jim A.
2007-02-13 15:09:54

From the song, Chocktaw Bingo by James McMurtry
Uncle Slayton’s got his Texan pride
Back in the thickets with his Asian bride
He’s cut that corner pasture into acre lots`
He sells ‘em owner financed
Strictly to them that’s got no kind of credit ‘Cause he knows they’re slackers
When they miss that payment
Then he takes it back

Comment by Mo Money
2007-02-13 14:35:01

‘I’m giddy because I’m going to be so busy.’”

Yeah, you and all the other drooling idiots hoping to make a killing in foreclosures. Does he really think he’ll have the market to himself ? The San Jose Mercury News has had full page ads the past few weeks for the next big scam to part morons with their money. “Investing in Foreclosure” courses. My prediction, multiple foreclosures on the same houses until the right value is obtained.

Comment by Arizona Slim
2007-02-13 15:24:15

Former landlady invested in a foreclosure back in 1998. Last I heard, she was still handling repairs and maintenance that the previous owner didn’t do.

Comment by rex
2007-02-13 15:50:50

“multiple foreclosures on the same houses until the right value is obtained.” quite correct…though I only expect two rounds of foreclosures. That’s when the “asset” holders start getting cold sweats….nothing like having to rehab a wrecked foreclosure twice…IMHO that’s the time to buy.

Comment by garcap
2007-02-13 14:48:29

wow, this topic isn’t even two hours old and it already has 126 comments!

Comment by ChillintheOC
2007-02-13 14:57:22

Wow! This article by the LA Times is the ultimate “Anti-Gary-Watts BS” antidote. Something to carry around to counter the “7% It’s In the Bag for 2007″ crap.

Comment by MacAttack
2007-02-13 14:58:55

“‘To make a living, you had to push a product you didn’t believe in,’ said Aimee Quigley, a Home Center mortgage broker. ‘It was like being a defense attorney where you know your client did it, but you have to say he didn’t.’”

“Quigley says she tried to emphasize how quickly these loans would adjust, but the message rarely got through. ‘Nine out of ten times when these loans closed, we would sit there and say, ‘How long can they hold it together?’”

Aimee should return all the money she took… don’tcha think?

Comment by Mo Money
2007-02-13 15:17:52

“Aimee should return all the money she took… don’tcha think?”

Nope, do Casinos force you to gamble ?

Comment by rootvg
2007-02-13 15:34:27

I’m not an attorney, but frankly…I didn’t think you’re supposed to defend someone whom you think is guilty.

(Attorneys feel free to chime in if that’s incorrect.)

By that same rationale, doesn’t it make sense that mortgage brokers doing things or being asked to do things that are predatory should be legally actionable?

I despise Barney Frank, but his subcommittee has upcoming hearings on this and I suspect we’re headed for increased regulation and oversight of the mortgage industry as a whole.

If that happens, the coastal regions are gonna REALLY get walloped…especially California. So much of the overall economy out here is based on real estate that it almost has to.

Comment by brianb
2007-02-13 18:22:33

No, you should defend people who are guilty. They need representation too. Probably more than others.

I think a lawyer can’t “knowingly” put a client on the stand if the client is going to lie, but if guilty clients couldn’t get a lawyer, who would represent them?

Comment by sleepless_near_seattle
2007-02-13 18:30:48


If they’re guilty, why is there even a need for a trial?

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Comment by technovelist
2007-02-13 20:33:58

Because it’s up to the government to prove beyond a reasonable doubt that they are guilty. And even then, the jury can find them not guilty if they (the jury members) consider a guilty verdict unconscionable.

That’s why we have juries.

Comment by JTZ
2007-02-13 18:32:07

The decision to testify is one of the few decisions a defendent makes. e.g. Scooter Libby today was asked by Judge Walton if he wanted to testify. Libby declined.

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Comment by MacAttack
2007-02-13 14:58:57

“‘To make a living, you had to push a product you didn’t believe in,’ said Aimee Quigley, a Home Center mortgage broker. ‘It was like being a defense attorney where you know your client did it, but you have to say he didn’t.’”

“Quigley says she tried to emphasize how quickly these loans would adjust, but the message rarely got through. ‘Nine out of ten times when these loans closed, we would sit there and say, ‘How long can they hold it together?’”

Aimee should return all the money she took… don’tcha think?

Comment by RickWla
2007-02-13 15:01:23

This never gets old

In Miami, Ron Shuffield, president of Esslinger Wooten-Maxwell Realtors, predicted that a limited supply of land coupled with demand from baby boomers and foreigners would prolong the boom indefinitely.

‘’South Florida,’’ he said, ‘’is working off of a totally new economic model than any of us have ever experienced in the past.’’

“Trading Places: Real Estate Instead of Dot-Coms”, by Motoko Rich and David Leonhardt (New York Times, March 25, 2005)

Comment by Norcal Ray
2007-02-13 15:20:24

But I thought there isn’t really anything new under the sun, only the characters change through out the centuries. Human nature stays the same.

Comment by jtcc
2007-02-13 16:07:13

Didn’t Shuffield get a Noble prize for discovering that new econimic model.

Comment by luvs_footie
2007-02-13 15:02:54

OT…….U.S. Trade Deficit Hits Record High for Fifth Consecutive Year.

For December, the deficit jumped a bigger-than-expected 5.3 percent to $61.2 billion.


Question………..where does this madness end?

Comment by luvs_footie
2007-02-13 15:10:16

supplementary question…..

Is the US living on borrowed money and borrowed time?

Comment by rootvg
2007-02-13 15:20:26

You know…I think so.

If the combined public and private debt bubble doesn’t bring an end to the country as we know it, maybe we’ll look back on this someday as a major “lessons learned” experience.

Comment by aladinsane
2007-02-13 15:26:16

There’s an apt sentence that pertained to the Califorrnia gold rush, that applies equally well to the California real estate bubble…

“I’ve seen the elephant”

In the days of ‘49, it pertained to those that tried their hand in the California gold rush and never made any money at it.

Modern day, it would be those that tried their hand at real estate in the Golden State and never made any money at it.

Comment by AE Newman
2007-02-13 18:30:18

posted ““I’ve seen the elephant”

If it was pink….quit drinking.

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Comment by luvs_footie
2007-02-13 19:06:24

AE Newman posts……..

posted ““I’ve seen the elephant”

If it was pink….quit drinking.

First of all we have an elephant under the rug……and now it’s turned PINK!!


Comment by rentor
2007-02-13 16:06:42

Like the Romans, near the end everything was imported and the Empire thought they had reached a new era of prosperity. There was even talk of everyone becoming Roman Citizens if the made it to Rome.

Comment by turnoutthelights
2007-02-13 15:32:42

A good old fashion hard-ass recession will cure many an ill: Reduce the trade deficit, improve the savings rate, dry up the loose money. It will happen just in time to screw the Repub’s, and give the Dem’s a big fun stick to beat things with.

Comment by rootvg
2007-02-13 15:58:51

Maybe or maybe not.

No Democratic candidate for the White House has ever won without carrying five southern states. Look it up…I’ve researched this back into the late 1800s. If you can find a case in the modern era (post-Civil War/Reconstruction) where that’s not true, let me know.

The Democrats’ candidate for President will be Hillary Clinton. She has the money, she has the name recognition within her own party, she has most of the liberal campaign management talent tied up (intentional)…and she is absoutely NOT electable to national office. Bill won six southern states in 1992 and five in 1996, all the while never getting more than ~43 percent of the popular vote. Hillary’s negatives are so high among white southerners that she’ll be very lucky to win just one. If that’s true, she’s a dead duck before the campaign ever starts.

If the race is Hillary vs. McCain, we get McCain because of the likelihood that Ahhnold will throw his support behind him (both men are moderates) and cause him to carry California. Hillary could never recover from that…with Florida or without Florida. She won’t win Florida anyhow. If Gore couldn’t take it in 2000 (by a hair) and Kerry couldn’t take it in 2004, she’s guaranteed to lose it in 2008.

Did you know that Howard Dean is telling his contributors that Republicans will retake the House by 2012? Yes…that was in The Nation, which is just about the most liberal magazine you can buy. They’ll retake it because of reapportionment…that’s like winning a war without firing a shot. Libs don’t say much when the topic comes up, because they know you can’t sell gay rights and gun control in places like Columbia, SC and Alpharetta, GA and Plano, TX. You just CAN’T. The culture won’t allow it. It doesn’t fit.

If THAT weren’t enough, there are other issues for Democrats. In the 2010 census, the population of North Carolina will exceed the population of New Jersey. If it suddenly becomes more important for any Democratic presidential candidate to carry North Carolina than New Jersey, there are suddenly a whole new set of issues to deal with in terms of where to allocate funds for individual campaigns…especially since much of Jersey is union friendly (a big deal for Democrats) and North Carolina is just about the most unfriendly place in the world for organized labor.

All of this, PLUS Ohio and Pennsylvania are supposed to lose as many as two Electoral votes each in the next census and New York is projected to lose as many as three.

HOWEVER, if we have a killer recession, all bets are off.

Comment by arlingtonva
2007-02-13 16:33:21

Thanks for the houing comments

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Comment by tj & the bear
2007-02-13 21:17:58

Well then, all bets are off.

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Comment by rootvg
2007-02-13 21:54:12

BUT…what if the Chinese continue buying our debt to the point where we DON’T have a recession because the money remains too cheap?

What if it’s in their interest for us not to have a recession?

I also remember Ravi Batra screaming about the Great Depression of 1990 that never happened…unless you lived in the Rust Belt, where they had a moderately nasty recession.

To be perfectly honest, I’m not sure who to believe any more.

Comment by tj & the bear
2007-02-13 22:42:39

The Chinese could hasten our downfall, but they can’t stop it.

Comment by James
2007-02-14 09:43:14

If the chianese are intent on financial suicide just like the japanese then fine. Let em do it.

Comment by Jas Jain
2007-02-13 15:37:06

“Question………..where does this madness end? ”

A: Next depression to begin during 2008-10. Hope this helps.

Comment by Louie Louie
2007-02-13 17:48:13

LOL! oh thats rich! Reminds me of some Doom and Gloom author writing about the great depression of the late 1990’s.
Books was worth only as firewood.

Comment by tj & the bear
2007-02-13 21:22:55

He’s serious, and when you realize why you will be too.

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Comment by SVGUY
2007-02-13 22:48:41


Comment by SMFC
2007-02-13 15:32:35

My realtor friend just called to say “Home prices are going up again in Foster City!” (SF bay area - peninsula). Guess I will just go out and buy one tomorrow. Not!!

Comment by JWM in SD
2007-02-13 15:54:42

Yeah, list prices.

Comment by rex
2007-02-13 16:01:32

Got hit with two offers on my Denver listing two days apart. Both pre-qualified and looking since Thanksgiving. Closing date requested for before March 1st. Buyers are desperate before losing their last chance for 80/20 loans..Expect a deathly quiet after March for borrowers trying to find new zero down loans.

Comment by Neil
2007-02-13 17:57:33

Interesting factoid…

I didn’t know 2/28/2007 was the day the zero down died.

Bye bye miss subprime lie
Took the chevy to the levy by the levy was dry
Them good old boys were drinking wiskey and rye
This is the last day that I can buy.
This is the last day that I can buuuuyyyyyyyyyy!

Is it because we see that light at the end of the tunnel that all the songs are popping up?

and yes, I stole the “American pie” song idea from someone who posted a totally different variation earlier (and longer too).

Got popcorn?

Comment by Louie Louie
2007-02-13 16:40:01

Foster City needs a good 55% haircut to get back to mean!

Comment by ockurt
2007-02-13 15:33:37

Grand Avenue project approved

While some see it as a model for “smart growth,” others consider it a tax giveaway.


Comment by Robert Coté
2007-02-13 17:40:18

What is the difference between “smart growth” and “tax giveaway?”

Comment by imploder
2007-02-13 18:48:17

Hey, what’s 100mil between friends? We’ll just deny and delay some more services to the Valley… I mean,… they’re all just hayseeds out there anyway.

Comment by jbunniii
2007-02-13 18:16:38

I heard some guy on KCRW’s “Which Way, L.A.?” defend the use of taxpayer dollars to build a luxury hotel on Grand Avenue by saying that it would reduce traffic because affluent travelers with business downtown would otherwise stay at Beverly Hills hotels.

Anyone who really believes that he would notice a traffic difference for the better if this hotel is built is welcome to pay my $27 for me - that’s the share that every man, woman, and child will have to cough up to get to $100 million.

Comment by jbunniii
2007-02-13 18:20:36

($100 million being the estimated taxpayer share of the $2 billion project.)

Comment by Robert Coté
2007-02-13 21:50:04

Anybody who thinks this stops at $100m is crazy. Then there’s the nonsubsidies. The “W” hotel gets a portion of the hotel tax rebated. The surrounding hotels raised a stink about that as well.

Comment by peter m
2007-02-13 23:51:26

“While some see it as a model for “smart growth,” others consider it a tax giveaway”

They could put the Versailles Palace or the Taj Mahal on that lot and it would not make any difference. LA DWTN would still be the same quacking ugly duck. You can walk several blocks north from grand and hope and descent into the squalid China town district. Or go west/northwest a half mile and emerge into the equally nasty third-world rampart/westlake district.
LA dwtn is surrounded by some of the grimiest slovenly inner-ring slum districts in American. Nothing they do in dwtn will alter that fact. Developers and politicians always have heavenly visions about their projects. In LA the dream collides with an uncomfortable fact:LA city is a third-world immigrant magnet, with third-world cesspool areas literally at the doorsteps of LA Dwtn.

Altering LA’s image is a bit like putting fancy ornaments on a donkey.

Comment by SKB
2007-02-13 15:49:30

“Pacific Wealth opened credit cards in her name on which she borrowed $76,000 in cash.” I love how she says “Pacific Wealth opened credit cards in her name”. (what a poor victim) If that part was true and THEY spent on them it would be credit card fraud. Saying SHE “borrowed 76,000 in cash advances shows she is the only one to blame, she is only a victim to her own greed. Her 1200.00 payment is sure to be just the minimum payment. I wonder if this credit card had a teaser rate which will be re setting to the new rate of 24.90% (compounding daily) for cash advances.
I guess she has done her research to move to Texas because they can not garnish her wages in that State for credit card debt unless she is paid from an out of state location. If she has any money in Bank accounts, rents and royalties they can be garnished, I doubt she has any of that.

76,000 on ONE credit card, I bet anything this is not the only one she has either. The average consumer has 3.5 other bill collectors calling every day.
Like I have said before the real winners in all of this will be the collection agencies.


Comment by Sammy Schadenfruede
2007-02-13 15:57:17

“The roster of agents has sunk to 52, only about half of whom are active. ‘The rest are looking for side jobs at McDonald’s,’ said Home Center President Jason Bosch.

He may be an RE industry insider, but I’m starting to like this guy!

Comment by rentor
2007-02-13 16:00:35

Forget McD for employment all umployed RE people should go to Bank of America and process credit card applications:


Comment by moderator
Comment by paladin
2007-02-13 16:40:42

“Sure, there’s been employment growth in the area. But much of it, Bosch argues, was related to real estate. This was a boom that fed upon itself.”

Now it is going to eat itself for lunch.

Comment by Neil
2007-02-13 18:01:31

Now it is going to eat itself for lunch.
Would you like fries with that?


Got popcorn?

Comment by SDChad
2007-02-13 16:45:31

I wonder how many of these foreclosures are actually due to flippers who can’t sell and mortgage fraud rather than interest rate resets? A lot of the foreclosures we are seeing may not even be primarily attibutable to resets yet.

Comment by Mr Vincent
2007-02-13 17:05:44

Alot of flippers are following the market down with price reductions. Meaning, many flips will never sell.

I look at the MLS listings and am i awe at how many of the homes for sale in my area are empty.

Comment by peter m
2007-02-13 17:11:12

This is a repost from original post done a few days ago on bits and pieces. Still rediculous overvaluations and FB’s overpaying in Long beach:

Report from Long Beach Ca:

I perused zillow and looked at sold prices of about a 100+ sfh’s in LB zips 90810, 90805, 90806,90807. These are generally working class or lower middle class neighborhoods with WWII- era older sfh’s. Exception: Bixby 90807 is a small isolated middle-upper middle class enclave.
The point is that of the 100+sold homes in last three monthes,only a half-dozen have sold at or below the previous peak sale prices of 2004-2006. All the rest still showing sold prices at close to or above peak prices. What this tells me is that The sold prices in this part of LB generally have not showed any pullback, and sellers are still getting prices of $400,000-$450,000 for 2/1 700-900 sq ft WWII shoeboxes, at $450-$600 per sq ft.
And these are SFH’s in marginal declining older hoods of LB,
though not yet at ghetto stage. The larger 3/2’s of over 1000+sq ft are selling at $500,000 and up.
Also looked at foreclosures in this area, and not much % reduction. Banks are not giving away these foreclosed properties. Maybe yoy might find a steal in some nasty bombed out hood part of Westside(90810) or North LB(90805),
but no deals in foreclosures in the better neighborhoods yet.
Too early for foreclosures to affect the overall local market at least in this section of LB, as it looks as if there are still an overwhelming supply of GF’s/RE idiot buyers still overpaying for aging LB POS houses, and still able to get in with toxic loans.

Looking ahead to Dataquick Jan figures, I can extrapolate
that Prices in many inner CITY LA, marginal LA communities will still show YOY% increases of 5-30% The effects of the cutting off of toxic subprime loans, ARM resets, and foreclosures have not yet hit the inner LA city hood/marginal areas as of Jan 2007.

WE at Bens blog may have to eat crow from the Local LA REIC for several more months till the real S*it hits the fan maybe by late spring 2007

Comment by oc-ed
2007-02-14 08:05:20

We have unlimited time …

Comment by Neil
2007-02-14 13:27:38

We aren’t eating crow. Many, like bearmaster, have noted that the lowest priced areas are the last to bubble (e.g., Longbeach).

With the current MBS market, we’ll stop looking insane by June. By then the floor will have fallen out.

Got popcorn?

Comment by catspit1
2007-02-13 17:15:38

Flipper i know in the OC had an Open House party over the weekend to try to sell house for 2.8 mil., something he never had to do before. I guess it is like any biz, he made lots o dough on flips last few years and then alla sudden music seems to have stopped?
I need to get the address and zillow out the bottom line i think…
I have read more desireable areas go up first and come down last. True or False? seems to make sense…

Comment by crush
2007-02-13 17:28:36

We should do a article on the most bubble-ish-ous catch phrases from the 2001-2005 1/2 bubble…some of my faves were:

Real estate never goes down

you’ll be priced out forever

this lovely 900k home features granite counter tops

3.2% 100% no doc, good / bad credit ok…preapproved to 700k

cash back

free trip to tahiti incl in this spacious 2 br 2 ba for under 1.1 mil

ETCETERA…feel free to ad…


Comment by crush
2007-02-13 17:30:13

forgot…my other fave:

perfect for first time buyer, or investment potential (cuz they’re assuming both are GFs)

Comment by peter
2007-02-13 19:22:44

“ETCETERA…feel free to ad”

one more: Everybody in the world wants to leave in fontucky.

Comment by renterbychoice
2007-02-14 03:29:41

theyre not making any more land!

Comment by garcap
2007-02-13 20:06:55

Phrase Translation

“instant equity” You’re being ripped off
“gracious home” This place smells of cats and moth balls
“up and coming” Don’t mind the crack dealers next door
“granite countertops” This is a cheap flip

Comment by Melsky
2007-02-14 06:02:48

Everyone wants to live in California because of the weather. Real estate there will never go down.

Everyone wants to live in San Francisco because it’s San Francisco. Real estate has never gone down there, ever.

Those are two that I have heard in the last couple of weeks.

Comment by Bubblewatcher
2007-02-14 08:00:22

“Permanently high plateau” always cracks me and my husband up. Also Gary Watts’ classic “It’s in the bag!”

Comment by Joe
2007-02-13 17:53:43

Any news on Long Beach area (Cerritos, Lakewood - Bellflower)??

Comment by Mozo Maz
2007-02-13 17:56:05

The next Realtor trick, will be to put “Reduced!” in the text of fresh listings, because those are the only ones buyers bother with.

Comment by IE Fencesitter
2007-02-13 18:01:44

“In this queasy market, sales are slumping. Sellers remember the boom and want more money than they can get, while buyers feel they have unlimited time to make a decision.”

So true. I rent in Rancho Cucamonga (next to Fontucky). The next door neighbor (also his own agent) has had his overpriced house for sale for exaclty one year. It’s vacant because dip*hit moved before he sold this one, so now he has two mortgages. Do you think he has dropped his price? Oh about 2%. He actually had a buyer on the hook for about two weeks last month but now it’s back on the market, escrow cancelled. Those buyers are slippery suckers these days. Hard to catch a good one.

Comment by Housing Wizard
2007-02-13 18:20:06

Maybe instead of the realtors saying ,”Get in now because we are running out of land “,they should be saying ,”Get in now because we are running out of sub-prime lenders .”

Comment by crush
2007-02-13 18:43:04

good one wiz…actually the sub prime lenders would be game on if they could find some MBS suckers to pick up their sewer loans…i believe the banks/mbs’s have finally awoken…i.e. hsbc

Comment by jr
2007-02-13 18:25:21

Walking away from a mortgage is a rational economic act. I’m surprized more people aren’t doing it. Hedge fund managers who loose money and feel like they won’t get above water in a reasonable time just shut down their funds and start over. But most people with negative equity in their houses think they must do the honorable thing and pay it off.

Comment by rentor
2007-02-13 18:51:05

But investors in Hedge funds know this will happen unless the fund goes up. Homes aren’t supposed to be speculative investments. The gov. is supposed to protect us from home becoming priced on fancy of some hedge fund manager.

Comment by spike66
2007-02-13 22:15:22

“The gov. is supposed to protect us ”

I know you’re being sarcastic.

Comment by jr
2007-02-14 00:25:01


Comment by SeattleMoose
2007-02-13 19:06:14

“Let them eat cake”…

It is hard to be sympathetic for the architects. cheerleaders, and con artists behind the biggest ponzi scheme in history which have grave implications not only for themselves but possibly even the non-participants.

The BIG question is how they could NOT have seen this coming.

But there is hope ye sinners….repeat this mantra over and over and soon it will be so…”Welcome to WalMart”

Comment by crush
2007-02-13 19:52:28

more like walmarket

Comment by cyppok
2007-02-13 19:08:40

I do not want much just a vineyard of 4-5 acres in California near San Fran or in it for a 100k… (never been there but I figure for a 100k a vineyard in the city would be a good deal or right outside)

Comment by BanteringBear
2007-02-13 21:58:54

“I do not want much just a vineyard of 4-5 acres in California near San Fran or in it for a 100k…”

To go along with it, you’ll need your new $300 John Deere and $750 pickup truck.

Comment by calex
2007-02-13 19:18:44

This house has be listed for a while. Current MLS ID#: K682244 price is $365,000.
Zillow history
Sale History
12/28/2005: $404,000
04/18/2000: $145,500
03/10/1998: $116,000

2235 Indigo Hills Drive 4
Corona, CA 92879
If it sells for list, 40,000 haircut and 10% drop.
I think these TH were in the 365 range back in 2004. I still think they should be in the low 200’s, but it is getting closer.

Comment by SVGUY
2007-02-13 22:46:25

Your lucky homes in Bay Area zoomed from 160 in ‘97 to 450 K by year 2000.

Comment by calex
2007-02-13 19:21:31

And I think they went new for about 130,000 in 1991 after they flattend to motorcycle track and built them new.

Comment by Jason
2007-02-13 19:36:38

The 2003 tax act phases out after the 2008 tax season. So, the extremely wealthy will no longer be able to convert their income into 15% dividend gains through the use of asset shelters. This, more than interest rates, more than arms readjusting, will end this madness. No wonder Microsloth switched to dividend payments rather than their previous reinvestment strategies.

This goat rope was entirely predicted and the wealthy have made enormous amounts of money. As they start offloading these crap boxes to the poor at exagerated prices the circle will be complete. And bonds will once again be the main tax shelter vehicle just as they are starting to get good again.

At least its a good show. Love the popcorn.

Comment by rex
2007-02-13 20:00:54

ECC Capital Corp. of Irvine said Monday that it closed the sale of its loan-making operation to New York-based investment bank Bear Stearns, with ECC effectively paying Bear Stearns to take over the troubled unit.

The two companies had originally agreed on a sale price of $26 million, but because ECC sold some loans for less than expected, it owed $33 million to Bear Stearns, which had lent money to ECC to fund the loans. In the end, ECC paid Bear Stearns a net $7 million.

Comment by rellimgerg
2007-02-13 20:15:45

First week out of Orange County for me after moving to the much more affordable (yet still overpriced) Ridgecrest, CA. Lived in OC for 21 years. My income has quadrupled in the last 6 years, yet I am in no better a position to buy a home than I was then. Of course that’s not what a RE agent would have me believe; especially right now.

Boy, there sure are alot of posts on this thread! If you’ve read this far, then you really need to spend some time away from the computer :) Or you cheated and skipped to the bottom…OK, I cheated.

Comment by OCMetro
2007-02-13 21:01:34

rellimgerg, Ridgecrest wow!, how did you end up there, are you working for NAWC China Lake? I lived in Ridgecrest for a few years, know alot of nice people there, great community, but it has become overpriced too in the last couple of years. Don’t buy right now, the price will drop by at least another 30%. You could buy a home there for about 60K back in 98. Now many of those homes are going for 200K, I think that 150 is more reasonable.

Good luck!

Comment by FBnolonger
2007-02-14 00:25:23

Haha…I need a life.
I am going to get all 391 of them now though.
Wonder how far over 400 it has gone in the last 90 mins?

Comment by melody
2007-02-13 20:55:57

Oh my Gawd, just got home… came here and there are 363 posts!!!!!! What have you done Ben????????? Wowie!!

Comment by FBnolonger
2007-02-14 00:29:59

Well this would now be 415.
The main thing pushing this thead would be Gillsie looking for a house (or I should say his wife is).
But the article referencing Realtors working at McDonalds did not hurt either ;-)

Comment by dude
2007-02-13 21:38:27

Looks like it broke 400. Good night, and good luck.

Comment by peter
2007-02-13 22:31:45

Wasn’t there one not long ago that broke 500? I thought there was one.

Comment by waiting_in_la
2007-02-13 21:43:18

Here is the 387th comment. Looks like we have a new record.

Comment by tj & the bear
2007-02-13 22:38:41

This should be 405, which is still short of the record (somewhere north of 425). There’s a very good chance this could set a new high, though.

Comment by GetStucco
2007-02-14 00:46:57

We may have discovered the new bubble — in the number of Housing Bubble Blog posts!

Comment by GetStucco
2007-02-14 00:48:00

P.S. I will be the first to predict that Ben will break 500 posts on one topic by this summer…

(Comments wont nest below this level)
Comment by tj & the bear
2007-02-14 06:20:08


Comment by HarryD
2007-02-13 23:56:25

From the article “ResMae said it made nearly $8 billion of loans in 2006, up from $540 million in 2003, when it entered subprime lending, papers filed with the U.S. bankruptcy court in Delaware show. The four-year-old company nevertheless said it has been “devastated” by a surge in defaults, which led to increased demand by investors that it buy back soured loans it had sold.”

Nearly sixteen fold increase in loan volume essentially by entering subprime and they wonder what went wrong?
Subprime credit provided the rocket fuel to launch this bubble - and it will soon cause it to explode

Comment by GetStucco
2007-02-14 00:45:25

Wow — the blogosphere is running out of space, with 400+ posts on one thread! The information cascade of blog posts suggests the bursting bubble is accelerating. And all the while, the MSM is playing mum (just like in 1930 — the WSJ is only slightly less clueless this time as they were in the early 1930s, in fact…).

Comment by Betamax
2007-02-14 00:53:14

The bears are gleeful and getting ready to tear Goldilocks a new one.

Comment by Billy_Boney_and_Ma
2007-02-14 03:51:18

GetStucco said:

“Wow — the blogosphere is running out of space, with 400+ posts on one thread! The information cascade of blog posts suggests the bursting bubble is accelerating.”

The bubble may very well be accelerating, but I would guess the primary reason for so many posts in this case is the particular topic — “Buyers Feel They Have Unlimited Time In California”.

Buyers having unlimited time is an appealing headline given past markets where zero time led to bidding wars. But couple this with California, and the appeal becomes much more relevant to a large number of readers of this blog.

That is of course because the number one state in terms of housing bubbliness is the Golden State. California has seen an incredible amount of investors and an incredible amout of subprimers. And of course, California is huge. While I’m impressed at a topic breaking 400, I’m not surprised. Real estate is 100% local — location, location, location. And California is about as bubbly as it gets. In fact, based on the number of cities and aggregate population, one could make a very compelling argument that California is ground zero for the bubble explosion.

Comment by ChecksInTheMail
2007-02-14 02:26:39

So I’m looking to move. I rent right now; $1900 for a 2bdr 1ba. apartment, no yard. In the SF bay area super-crowded megopolis east-bay/berkeley area.

My wife hates to move, wants to own a house. Impossible at these prices! Okay, so I start looking around.

$2100 for a 3bedroom, 2ba house in Half Moon Bay (coast side), included gardener, attached 2 car gaage, 30 minutes from work vs. 45 now.

Hitting the realtor sites, homes are listing there for $700-900k for a comparable size (or about $4500 a month with current 5.81 interest rate on a 30 year fixed)

Since $2100 seems to be all the current owner can get for the house (even skipping figuring the gardener and property taxes), shouldn’t the house be worth about $350,000 (or less, maybe even $270 with taxes/etc) instead of the ~800k range?

Comment by Ozarkian from Saratoga, CA
2007-02-14 04:51:25

That great commute over the mountains each day counts for the extra $500K.

Comment by cactus
2007-02-14 06:20:09

Economy is still in good shape as far as jobs goes, just think what will happen if that changes.

Comment by oc-ed
2007-02-14 20:01:23

It is changing. This will be the first year in the last five that my company gives no bonuses and they are laying off 5000. I have also seen other layoffs announced as well. I am in Telco. Also, think about what the changing psychology from perceived wealth to poor as many folks paper profits vaporize and their ability to treat their homes as ATMs goes away. Sub-Prime lenders going belly up and tightening credit are also factors.

Comment by mikey
2007-02-14 07:26:12

OKAY…WHO put all these RE listings and a magnetic calender with a photo of Ronald McRealtor beside his Lexis IN MY HAPPY MEAL Bag this morning ??????

Comment by mikey
2007-02-14 07:36:58

Hey..I asked for a HAPPY MEAL….Not 2 McMansions and a HELCO to GO !……Who is the Clown ….SUZANNE….Is THAT you ?

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