March 6, 2007

“The First Brick To Come Tumbling Down”: California

The Contra Costa Times reports from California. “When most people hear of high-risk loans, they think of first-time home buyers trying to purchase more house than they can afford. But according to a report Friday, the East Bay is seeing more of those loans as owners decide to refinance their homes with risky adjustable-rate mortgages that could lead to negative-amortization loans.”

“Economist Christopher Thornberg said he isn’t surprised that homeowners are refinancing with exotic loans and gambling on appreciation or interest rates dropping in the next two or three years. ‘There are people hunting for something to tide them over,’ he said. ‘Those people are the ones who are in it neck-deep.’”

“According to First American LoanPerformance, the East Bay’s optional-payment ARMs jumped from 0.9 percent of all refinance loans in December 2003 to 39 percent in December 2006. The greater Bay Area numbers were similar.”

“Luke Currier has an option-ARM because of what he calls ‘cash flow reasons.’ Currier, a loan consultant, is self-employed and his income is based on commissions, making him an ideal candidate for the high-risk loan.”

“His $520,000 loan for a Pleasant Hill home in Gregory Gardens works because he pays more than the minimum payment and sets up bimonthly mortgage payments. ‘I try to make a couple of extra payments a year, and that helps negate some of the negative amortization,’ he said. ‘It also sets us up well if we have dips in business.’”

“Currier and his partner, Ed Jeffry, make up Peregrine Lending Corp., which specializes in subprime loans.”

“‘It’s an addiction for homeowners. If you’re given the opportunity to pay the lowest possible payment, you will take it,’ he said. ‘But these loans are not made for W-2 wage earners.’ Jeffry said mortgage brokers are pushing these products without adequately explaining them, leading to trouble.”

“‘There’s probably more blame to put on their loan agents,’ said Jay Damato, owner of Elite Financial in Walnut Creek. ‘Literally, I have had people come into my office and don’t understand the loan they have.’”

The San Francisco Chronicle. “The Bay Area has not been immune to rising foreclosure activity. Between January 2006 and January 2007, every Bay Area county except Marin saw a rise in foreclosure actions, according to RealtyTrac. Solano County had the highest foreclosure rate in the state in January.”

“If your financial difficulties are likely to be long term and you have equity in your home, consider selling the house and preserving your stake, says Jack Guttentag, a former finance professor at the Wharton School of the University of Pennsylvania.”

“‘You have to do this before you become delinquent. If you are 30 days late, you might be able to get a loan. If you are 60 days late, you are not going to get it,’ Guttentag says.”

“If you have no equity in your home and think your problems will be long term, you might persuade the lender to accept a short sale or deed in lieu of foreclosure. Steve Elias, a bankruptcy attorney in Lake County, says he has heard recently from borrowers who thought they were doing short sales but had to sign a new loan to pay off their first loan.”

“Guttentag warns that lenders typically won’t agree to a deed in lieu or short sale ‘when there is negative equity in the house and the borrower has the capacity to pay but doesn’t want to.’”

The North County Times. “Accredited Home Lenders, a North County mortgage company whose stock price plummeted by 26 percent Monday, said that more than 8 percent of its $11 billion loans to borrowers were delinquent at the end of last year.”

“The company employs 4,000 workers nationwide and 700 in North County. It makes almost all of its loans to subprime borrowers. It currently holds 65,000 subprime loans, or 95 percent of all its loans, Rick Howe, company spokesman, said Monday.”

“Most subprime mortgage companies ‘took an absolute shellacking’ on Monday, said Bud Leedom, a San Diego stock analyst. Leedom said that only the well-run will survive in today’s cooling housing market. ‘This is sort of the first brick to come tumbling down,’ he said. ‘Some of these companies are going out of business.’”

The Union Tribune. “The problems in subprime, which have crescendoed in recent weeks, could have broader implications for the overall housing market. Lenders spooked by subprime’s troubles may tighten their standards for borrowers with better credit.”

“Lenders usually bundle their loans and sell them to investors in the secondary market. But as defaults have risen, investor appetite for subprime loans has evaporated.”

“‘They all got caught up in this insanity of throwing all standards out the window,’ said David Olson of a mortgage research company. ‘They just handed out money thinking any loan would sell to Wall Street.’”

“The result is that the amount investors are willing to pay for certain mortgage pools is less than it costs lenders such as Accredited and New Century to originate loans. ‘Finally, Wall Street is saying no more. These loans aren’t performing,’ Olson said.”

The Press Enterprise. “Sarkis Joseph Khoury, a professor of finance at UC Riverside, said Monday that the latest events could give added impetus to bills in Congress aimed at reining in lender practices that have made credit too easily available.”

“Khoury said subprime lenders are in a situation largely of their own making because many not only financed buyers with below-market-rate loans with temporary teaser rates but also enticed them into taking out second mortgages with similar terms.”

“Experts said lenders’ latest travails could exacerbate conditions caused by a slowing real estate market, with effects already being seen in the Inland region and Southern California.”

“Chapman University economist Esmael Adibi said New Century Financial has begun laying off workers, and similar moves are likely to be seen not only at mortgage companies but also at other businesses that support the real estate market, including escrow and title companies.”

“With second-market lenders giving more scrutiny to the mortgages they purchase, consumers will likely have less access to low-rate loans, Adibi added. Strapped homeowners struggling to make payments could sell their properties at below-market prices to avoid foreclosure, affecting the values of their neighbors’ homes.”

The Merced Sun Star. “Property owners who couldn’t be bothered to mow their lawns got their comeuppance at Monday night’s Merced City Council meeting. The council approved placing liens against 13 properties whose owners never responded to city requests to clean up their land in 2006.”

“After Monday’s vote, those owners are looking at liens ranging from $199 to $6,300 on three separate properties owned by developer Lafferty Homes of Vallejo. ‘There are a lot of property owners that prefer us to take care of (their mess),’ Councilman Bill Spriggs said.”

“That could be because some of them don’t live in the area, Councilwoman Michele Gabriault-Acosta said. Of the 23 properties that were cleaned up by the city contractor, 10 were owned by out-of-towners.”

The Daily Bulletin. “Homes costing half a million dollars now stand in an area once associated with prostitutes and drugs. One block west on Holt Boulevard is Pomona, complete with vacant and boarded-up strip malls, graffiti, shopping carts and debris.”

“But the homes, being built on Holt between Mills and Amherst avenues, are being touted by the developer as an oasis in an improving community. Not only does the company hope to reinvigorate a dilapidated area, it has the ambition to build higher-end homes.” “Between Mills and Amherst will sit 106 single-family homes, each 2,200 square feet, three stories and three to four bedrooms, starting at $475,000.”

“Jose Alkon, VP of sales for Taylor Woodrow homes, admits that some of the surrounding areas are not ideal, but he assures safety for future residents within the gated community. ‘(It) will be surrounded by a 9×13-foot block wall,’ he said. ‘Residents will have their own oasis with one way in and one way out.’”

“Francisco Guiterrez and his wife saw the model homes while driving on Holt and decided to stop. Although the couple are not looking to move right now, they were curious about the new houses.”

“The Pomona residents said they were enticed by the architecture, but were more impressed with the size. ‘You never see a three-story house,’ he said.”

“Guiterrez said he was familiar with the developing area’s past, but that should make no difference in selling a home now. ‘I know for a fact, whenever they build homes, they are going to sell,’ he said. ‘It doesn’t matter the area.’”




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223 Comments »

Comment by Ben Jones
2007-03-06 13:39:10

‘February 2007: San Diego Housing Market - single family attached and detached homes: Sales for the month of February were 1,725 homes sold, down 18% from last February and down 31% from February 2005.’

‘The inventory as of the first of the month was 17,058 homes. This is up from 14,847 from this time last year. It is important to note that expired, cancelled and withdrawn listing total 7,107 for the first 2 months of the year, this is up 233% from last years level of 3,048. This is an indicator that the time on market to sell a home is getting longer, increased inventory and lower sales being the cause. ‘

‘San Diego City Attorney Michael Aguirre has expanded an investigation of the former Naval Training Center redevelopment to include how The Corky McMillin Cos. prioritized home sales in the Point Loma neighborhood and how it might have reneged on public promises.’

 
Comment by ex-nnvmtgbrkr
2007-03-06 14:10:07

‘There are people hunting for something to tide them over,’ he said. ‘Those people are the ones who are in it neck-deep.’

Yes, yes, yes. I can’t tell you how much of this we’re seeing, even in our small little area. Contractors, RE agents, LO’s, and the like dumping solid mortgages for I/O’s and NegAm’s to ride out the slow spell, which in most of their minds will be short lived and relatively painless. And it hasn’t just been to refi the current mortgage, but to tap any remaining equity to live on for the next however many months it’ll get them. I truly marvel at the insanity…..it’s facinating and horrifying all at the same time.

Comment by GetStucco
2007-03-06 14:16:31

Neck-deep in what?

Comment by John Fleming
2007-03-06 14:26:39

Could it be something that’s supposed to hit the fan…?

Comment by SunsetBeachGuy
2007-03-06 14:28:10

go to OC fliptrack he had a funny you-tube video on being stuck and the grieving process.

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Comment by Marc Authier
2007-03-06 14:36:08

The silicon implants of Pamela Anderson are deflating. In the case of California you won’t even need a earth quake. Neck-deep in debt, silicom and Arnold’s steroids.

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Comment by SFer
2007-03-06 15:00:19

I can just picture people going into these offices asking to “liberate their equity” like the radio commercial instructed. Hilarious.

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Comment by AZ_BubblePopper
2007-03-06 17:25:04

Hey, did anyone notice that the Treasury Secretary called the housing bottom today. He did it way ahead of Mozillo or Toll. They said they have no idea but the wirst isn’t over yet.

Wonder who will call the bottom most — DL or Paulson?

 
Comment by GH
2007-03-06 19:18:15

Of course this is the housing bottom. Now that all the bad mortgages have foreclosed we can go about the business of 20% a year price increases again so everyone is well fed.

 
Comment by Loiue Louie
2007-03-06 22:25:13

“liberate their equity”

As I recall NASD issued a warning about the increasing number of people pulling home equity and investing in stock market. I just see how these people sleep at night…

Double wammy with market downturn and home price declines . Worst of both worlds …

 
Comment by krazy_canuck
2007-03-06 22:27:04

Paulson knows he is fulll of shit… Why is Greenspin calling him out ? Are we really that fucked?

 
 
 
Comment by imploder
2007-03-06 15:21:34

“Neck-deep in what?”

A guy winds up in H&LL and they let him choose his room.

In the first room demons are chasing the occupants around poking them with pitchforks and burning them with flames. In the second room, occupants are quietly talking and drinking coffee while standing on desks in a room filled with a pool of sh#t.

“This doesn’t seem so bad, I take this” He says.

He gets a cup of coffee and is instantly placed upon his new desk.

Two minutes later, just as the guy is becoming acquainted with his neighbors, a voice crackles over the loud speaker…

“ALRIGHT, COFFEE BREAKS OVER, EVERYONE BACK IN YOUR CHAIRS…”

Comment by luvs_footie
2007-03-06 16:22:37

As they say………..when you’re in the the sh@t……it’s only the depth that matters.

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Comment by B. Durbin
2007-03-08 11:11:49

I always heard the punchline as “everyone back on your heads…”

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Comment by M.B.A.
2007-03-06 16:50:36

OT - just got back from IE area. OMG - Beaumont - what a HORRIBLE place… and I CANNOT beleive how many houses have gone up in last 5 years in Rancho Cucamonga. Thousands. Fields of icky places where there used to be miles of open space!

Comment by Chrisusc
2007-03-06 17:49:27

Back in 2003, my wife and I could not fathom that Beaumont and Yucaipa were going for $500,000’s. Beaumont was the armpit of Riverside, which was the armpit of OC and LA. I remember growing up, my cousins would say, you live out in the booneys (referring to Riverside).

I can remember in 2003 walking into a new home development in Beaumont (strictly for fun) and the lady looking at me inquisitively, as if to say “can you really afford to buy here?” I thought to myself, I’ll remember that attitude a few years from now when you are back on the pole dancing and trying to make eye contact so you can talk me into getting that $20 chair dance…

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Comment by ew
2007-03-07 05:53:51

“I’ll remember that attitude a few years from now when you are back on the pole dancing and trying to make eye contact so you can talk me into getting that $20 chair dance…”

hahahahahaha. I luv this site!

 
 
Comment by peter m
2007-03-06 18:55:20

” - just got back from IE area. OMG - Beaumont - what a HORRIBLE place… and I CANNOT beleive how many houses have gone up in last 5 years in Rancho Cucamonga. Thousands. Fields of icky places where there used to be miles of open space! ”

That is the IE for you: rapidly dwindling open spaces being bulldozed into tract housing,shopping centers, and commercial parks. Call it ugly unplanned massive haphazard urban sprawl: they just bulldoze and build, buid, build. What is happening in such places as Moreno valley and south Corona is that Commercial businesses and parks, road improvements,schools and other urban infrastructures are playing catch-up with the massive amt of new tract housing put up all over the IE.
The formerly vast open pastures and orchards/orange groves of the IE have almost disappeared by now: in their place are ugly pockmarked ragged weedy open lots,cookie-cutter dull brownish stucco tracts, commercial/industrial bldgs plopped right in middle of some forgotten wasted field, and shopping centers plunked down at each fwy turnoff.
Beside Beaumont/banning,some other nasty IE spots include Colton,rubidoux.inner San Bern metro,South Fontana,Menifee, Romoland,Perris,parts of Lake elsinore,victorville,Norco,ad nauseum, ect, ect.

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Comment by jbunniii
2007-03-06 21:47:46

What wise guy decided to call it an inland “empire” in the first place? Inland craphole is more like it.

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Comment by cayo_ron
2007-03-07 09:08:53

I always thought “Inland Empire” sounded like some egotistical douchebag named it; the same kind of person that would be the self-appointed “Sausage King” or the like.

 
 
 
 
Comment by WaitingInOC
2007-03-06 14:23:02

Amazing. Looks like we’ll be seeing more foreclosures down the road from these folks. Are most of these getting 2/28s or 5 yr I/Os or something else (or a general mix)? Thanks.

Comment by Neil
2007-03-06 15:06:13

This will be big trouble down the road. Hence the delay in the pain. Most people treat their mortgage like rent. If it gets too high… they walk away and just don’t pay it. Whiskey Tango Foxtrot? A co-worker’s neighbor just did that. Mortgage went up $600/month and he just walked. No discussion, no further payments. Over $600 bucks!

By about june the market will hit the wall. At that point the rats will no longer have an escape route. And sales will be so slow there will be no more pretending its going to get better.

Got popcorn?
Neil

Comment by NYCityBoy
2007-03-06 16:25:14

“the rats will no longer have an escape route”

Oh, there are enough Taco Bells to go around. The rats will be just fine, it’s the people that will be caught. Like these fools being referenced below.

‘(It) will be surrounded by a 9×13-foot block wall,’ he said. ‘Residents will have their own oasis with one way in and one way out.’

Does that sound like prison to anybody else. When I read this I couldn’t help but think of the huge wall oustide of St. Cloud Prison. It sounds like St. Cloud Prison would be better than Pomona.

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Comment by Bill in Carolina
2007-03-06 17:18:33

Now I’d be afraid to eat at a Taco Bell that DOESN’T have rats!

 
Comment by Mole Man
2007-03-06 17:34:23

The medium security look is the new black.

 
Comment by peter m
2007-03-06 19:54:41

“It sounds like St. Cloud Prison would be better than Pomona.”

Warning! Stay away from Pomona zips 91767.91768. Holt ave is indeed a bad depressed blvd along it’s entire length thru Pomona. No homes anywhere in Pomona and Montclair are worth $500,000, and they will very shortly go down to under $400,000 even in the 5% of the city which is a decent area.
The entire city of Pomona is a depressed aging urban exurb, with serious decay in it’s mainly 70-100 yr old housing stock. Heavy immigrant impact area as well, along with Gangs and graffiti.

“But the homes, being built on Holt between Mills and Amherst avenues, are being touted by the developer as an oasis in an improving community.”

right next to those homes are the 1st street railroad tracts running east-west just south of and running parallel to holt. The worst decayed sections of Pomona/Monclair are along these tracts.

This is a list of median prices from that daily press article:

2006 MEDIAN HOME PRICES

Chino: $469,500
Chino Hills: $567,500
Montclair: $445,000
Ontario: $395,000
Rancho Cucamonga: $525,000
Upland: $527,500
Corona: $580,000
Pomona: $415,000
Claremont: $555,000
La Verne: $550,000

This writer is behind the curve. IT is now march 2007 and The LA Market is seeing signs of downward drag on home prices in the lower middle class/working class decayed aging exurbs. By late spring/summer ‘07′, medians in these mostly unattractive ugly sprawl areas along the LA/IE borderline will be negative 5-10% yoy.

 
 
Comment by sleepless_near_seattle
2007-03-06 16:28:37

Bring back debtors prison. Also, any potential buyer must sit through “Scared Straight: Debtors Edition”

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Comment by Chrisusc
2007-03-06 17:55:12

WTF. Walking away for only $600!

I’m no prima donna. I’ve worked part-time at Domino’s Pizza to help feed my family. And on Friday and Saturday nights I would bring home anywhere from $200 to $400, which is not bad for someone in the working class.

Neil, as you and others here have mentioned, these people have no skin in the game, so they can freely walk with the attitude of f*ck everyone. This is just one more example of the lazy, get rich quick, screw over your neighbor attitude that has been exhibited during the last five to ten years in our country. If he wanted to keep his home, he would get upp off his *ss and go get another job. But then that might be embarrassing to have neighbors see him moonlighting, so instead he walks away from his commitment. What a loser.

rant off

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Comment by Neil
2007-03-06 18:22:18

Exactly,

Your rant is exactly how i feel.

I know dozens of people who have moonlighted their way up the ladder.

Got popcorn?
Neil

 
Comment by We Rent!
2007-03-06 18:41:10

My colleague hasn’t made his payments since October. Just waiting to be kicked out.

 
Comment by Dan
2007-03-06 19:17:14

Ditto on the rant! I get pissed when I’ve worked my ass off all my life to get what I have and these dipsh*ts feel ENTITLED……

I’m all for anyone and everyone succeeding and salute their accomplishments…..but what have these people done to warrant anything other than contempt?

Rant mode off

 
Comment by jerry from richardson
2007-03-06 19:46:58

although i despise him, i’m glad the lender got screwed. that is the only way to bring lending standards back and prices down

 
Comment by az_lender
2007-03-06 21:25:04

A loan consultant living on commissions is not a lender. He’s a borrower (in this case). I despise him too. Lending standards will come back because the real lenders have gotten splashed in the face with cold water and will be more careful now.

 
 
Comment by CanuckinTX
2007-03-06 18:10:46

What happened to the stricter bankruptcy laws? I thought people could no longer just walk away without their being repercussions.

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Comment by az_lender
2007-03-06 21:26:42

California is a “no-recourse” state. Owe money on a home, you can just walk away from the home, put the keys in the night depository at the bank, no need to file bankruptcy.

 
Comment by jbunniii
2007-03-06 21:57:29

California is a “no-recourse” state

Provided there’s no second mortage, HELOC, or refinancing of any kind. I wonder how many “first-mortgage-only” borrowers still exist in this state after the last six years of loose lending.

 
Comment by Ghostwriter
2007-03-07 05:30:59

In Ohio foreclosure has nothing to do with bankruptcy. Here people who don’t make payments for 90-120 days end up going into foreclosure, but sometimes they live in that house for over a year before it’s totally foreclosed on. If they leave right away the houses still sit 1 1/2 to 2 years before they are sold. Talk about crap by the time someone buys them. First destroyed by pissed off people because they are losing them, then sitting empty for a year or two with no heat. Mold, bad plumbing, ruined septics. Just a few of the headaches you could inherit in your great deal.

 
 
Comment by rms
2007-03-06 20:27:16

“Mortgage went up $600/month and he just walked. No discussion, no further payments. Over $600 bucks!”

Most likely upside down too, so it’s easier to just leave the keys on the counter.

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Comment by jbunniii
2007-03-06 21:53:55

$600 x 12 months x 30 years = an extra $216k. Worse if you consider the opportunity cost versus investing that $600/month. Walking away from an upward adjusting loan in a declining market is economically rational, even if morally questionable.

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Comment by sleepless_near_seattle
2007-03-06 23:31:56

Renting would have been economically rational too, without any of question of morality.

 
Comment by SOMD Guy
2007-03-07 07:17:13

I don’t see how this is a morality issue. The bank chose to lend him the money and there was a risk he wouldn’t pay the back the loan so they charged him an interest rate as a reward for their risk. The bank underestimated the risk as a bad business decision, they could have denied him the loan or requested he put money down. The home owner has the risk of damaged credit hurting him down the road, but the reward is he can get away for a toxic loan he would have never qualified for 10 years ago. This is a pure business/financial decision not a morality issue.

 
Comment by jbunniii
2007-03-07 07:47:57

The bank chose to lend him the money and there was a risk he wouldn’t pay the back the loan so they charged him an interest rate as a reward for their risk.

Yeah, and if I leave my doors unlocked at night, there is a risk that someone will walk into my house and steal my belongings. Using your argument, that too is a purely business/financial decision and not a moral one.

The fact is, no matter how you sugar-coat it by pointing out the stupidity of the lender, at the end of the day, the borrower took a big stack of money and didn’t pay it back. Legally or not, he stole the money. That it was from a bank and not a poor schmuck who left his doors unlocked doesn’t make it right.

I’m not even remotely religious, but I do see it as a moral issue.

 
Comment by SillyConValley
2007-03-08 08:46:27

jbunniii, the loan is a contract between two willing parties, each entering into the contract because they believe it’s in their best interest. The case of the burglar is not.

 
 
 
Comment by ex-nnvmtgbrkr
2007-03-06 15:37:00

Again, they think it’s short term, so it’s the most toxic loan that will give them what they think is the most relief. But when no relief comes and they’ve spent every last dime of equity……..(do I need to explain further)

Comment by WaitingInOC
2007-03-06 16:14:31

Ooh, that’s ugly. The most relief would obviously come from a neg am, and coupled with them taking out any equity they might have had, looks like foreclosure is inevitable as the price drops and they add to their principal with neg am. Thanks for the insight (as always). And good luck with your new career. :)

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Comment by Neil
2007-03-06 18:24:30

Its relief from today’s pain…

Only to make the pain worse tomorrow.

In my opinion, the BK laws are going to have to be changed quickly. Yes, I think people should be held responsible, but as much as I hate to recommend it, this economy is going to need a restart. I’m not saying “save their house.” I’m saying get them back spending. But dang will this muck up the credit markets…

Got popcorn?
Neil

 
Comment by bottomfeeder1
2007-03-06 19:22:33

getting them back spending is what created this mess,what they need to do is start saving and we as a country need to start actually making things again.This whole Walmart,Home Depot dependent economy is so false it threatens our nation .Big corporations need to give way to smaller independent business.

 
Comment by rms
2007-03-06 20:31:14

“…and we as a country need to start actually making things again.”

We are making things…things called deals. It’s the new economy!

 
Comment by sleepless_near_seattle
2007-03-06 23:33:22

“…things called deals.”

Don’t you mean SWEET deals? :-D

 
 
 
 
Comment by Mo Money
2007-03-06 14:25:58

I guess getting another job not in Real Estate is out of the question ? Oh yes, those jobs don’t pay well enough for “Just Showing Up”, silly me !

 
Comment by IrvineRenter
2007-03-06 16:31:03

Every once in a while I am surprised by the stupidity of my fellow man. It used to happen more frequently on this blog, but I have become somewhat calloused after reading these stories.

This one caught me by surprise. It never occurred to me that someone who doesn’t already have a toxic loan would actually refi into one at a time like this. Just when I think the foreclosure situation looming on the horizon couldn’t get any worse, I see people like this adding fuel to the fire. Unbelievable.

 
Comment by Suzy K
2007-03-06 19:41:29

I cannot believe what people here in CA are thinking, It STILL staggers me. I just came from a trade show. Saw a gal who lives in SW RIverside (Murrieta). She took out a NegAm to finance some risky (her words) business venture. Says she’s knows it’s scary with values dropping but things will turn around shortly…WTF??? And she “used’ to be a RE agent!! I dunno…. here in the Bay Area everyone is convinced, CONVINCED, there will be little or no downturn here. It is facinating and horrifying at the same time…..and this party is just picking up momentum

 
Comment by bozonian
2007-03-06 23:47:51

It’s completely predictable. People will take the path of least resistance. The easiest. Right now, it’s obviously easier to sign a loan document and live with the anxiety of what’s going to happen than to walk away from your house, moving into an apartment and live with the credit ding for a long time.

You can always count on the masses taking the path of least resistance.

 
 
Comment by Mark
2007-03-06 14:12:04

“Jose Alkon, VP of sales for Taylor Woodrow homes, admits that some of the surrounding areas are not ideal, but he assures safety for future residents within the gated community. ‘(It) will be surrounded by a 9×13-foot block wall,’ he said. ‘Residents will have their own oasis with one way in and one way out.’”

Brings to mind that old movie, “Fort Knox, The Bronx.” Sounds like a real Oasis. Where do I sign up?

Comment by Mark
2007-03-06 14:18:04

Make that “Fort Apache, The Bronx”

Comment by turnoutthelights
2007-03-06 15:39:08

Maybe you were right the first time. Like Willie Sutton robbing banks ‘cus that’s where the money is’ that ‘oasis’ will feel like Fort Apache to those inside, and look like Fort Knot to folks just over the wall.

 
 
Comment by HARM
2007-03-06 14:19:11

How about “Escape from New York”?

Comment by JWM in SD
2007-03-06 14:21:19

How about…Escape from THE OC :-O

Comment by hwy50ina49dodge
2007-03-06 14:43:19

O. C., can you cee, by the dawn’s early light

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Comment by SFer
2007-03-06 15:02:36

Tangential, but there was a sequel to Escape from New York called Escape from LA. Kurt Russell as Snake Pliskin.

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Comment by Grant
2007-03-07 10:16:57

My favorite continuing joke from ESFN…

“Snake Pliskin, I thought you were dead”

 
 
 
 
Comment by HARM
2007-03-06 14:27:03

Gee… that 9×13-foot brick wall sounds great, at least until these guys show up:
http://www.scifimoviepage.com/images/roadwar_2.jpg

Comment by hwy50ina49dodge
2007-03-06 14:46:55

‘Residents will have their own oasis with one way in and one way out.’”

Pomona is HELL…one way in…no way out…unless you make a deal with the devil…I mean banker.

Comment by SunsetBeachGuy
2007-03-06 15:22:17

one way in and one way out means you are trapped, dumba$$es.

These stupid realtwh*res don’t know what a siege could be literally or figuratively (as in the case of the bubblesitters)

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Comment by bozonian
2007-03-06 23:53:16

California has one way in, and no way out…

“You can check out any time you want but you can never leave”.

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Comment by Mo Money
2007-03-06 14:33:31

Good luck with that roach trap security system when an earthquake, fire, or medical emergency happens.

 
Comment by mrquoi
2007-03-06 15:11:26

$475 for ghetto section of Pomona. Ha ha ha. Right now you can get a house for less than that in Claremont (good schools, college town, good local pubs), right next door, where you won’t get shot in the head or run over by a mexiwagon. What a joke and the developer knows it.

Comment by hwy50ina49dodge
2007-03-06 16:14:51

Where would you rather have a flat tire…Pomona or Claremont?

Of course, like the Russian that killed Cosby’s kid… it may not really matter on a spinning planet.

 
 
Comment by SinCityGr8One
2007-03-06 15:32:29

9X13 Block Wall? Sounds real COZY! One way in and one way out? Sure sounds like they’re building a Prison to me. Guard towers, next ?

 
Comment by Mugsy
2007-03-06 19:33:53

I immediately thought of the “Green Zone” in Baghdad. If they start dropping mortars on them, it can marketed as an adult theme park! Sort of like an updated “Westworld”!

 
Comment by peter m
2007-03-06 22:41:48

“But the homes, being built on Holt between Mills and Amherst avenues, are being touted by the developer as an oasis in an improving community. Not only does the company hope to reinvigorate a dilapidated area, it has the ambition to build higher-end homes.” “Between Mills and Amherst will sit 106 single-family homes, each 2,200 square feet, three stories and three to four bedrooms, starting at $475,000.”

Just a few blocks west of That development along holt ave starts a really ragged section of Pomona which hugs the old railroad tract/strip, an area of decayed run-down marginal commercial warehouses and small shops.

Since when does putting up a large brand-new SFH tract improve or reinvigorate an already declining community such as East Pomona? It’s like saying I will plunk down a 100-unit home tract smack in middle of Colton, roubidoux,Compton or any S*ithole hood and presto, the hood is improved. A community which is in an advanced state of decay took decades/generations to get there. Only via a slow gradual decades long gentrification such as happened with Venice/Silverlake or Huntington beach will a community gradually revitalize itself, and Silverlake is still a tossup.

Say i decide to put up a 100-unit gated SHF tract in boyle hts or rampart District, does it automatically ‘improve’ that community. No it will not, because the same blighted gang-infested barrios remain in that hood, and will not just disappear.
This is the second boneheaded article to appear in the local LA rags(press) touting some developments to supposedly prove that Compton/Pomona are on the ‘upswing’. Compton is what it has been for the last 40-50 years. a blighted inner city decaying slumburg. East/central Pomona has been slowly rotting over several generations;neither heaven nor earth can ’suddenly’ improve it.

Comment by peter m
2007-03-07 08:19:58

THis process of formerly aging rundown decayed districts going thru a gentrification process can be observed in Old Hollywood as well. Hollywood was for several decades in the 60’s thru the 80’s a real declining rundown crapzone, but LA/local civic leaders/developers started to improve on it via massive breaks to businesses and developers to infuse new life into this historic old LA landmark community. Results are mixed: lots of small and large companies and shops did indeed set up shop in old hollywood, but there are still seedy pockets left, especially toward the eastern edges. Also, Hollywood has a burgeoning immigration population which spills over even into historic hollywood/highland/vine aves.
Gentrificatiion has been an uphill battle, with negative-impact demographic trends(heavy imigration influx)clashing with attempts at Gentrifying the old historic Hollywood area.
That is why talk of an ‘improving’Pomona is such as joke:there is not even a hint of any gentrification taking place anywhere in Pomona. BTW Pomona is actually part of LA county, though it is an armpit region bordering the IE armpits of Montclair and Chino 91710.

 
 
 
Comment by GetStucco
2007-03-06 14:13:53

“According to First American LoanPerformance, the East Bay’s optional-payment ARMs jumped from 0.9 percent of all refinance loans in December 2003 to 39 percent in December 2006. The greater Bay Area numbers were similar.”

I wonder how those percentages are going to shape up going forward now that subprime lending is going the way of the dinosaur?

Comment by the_economist
2007-03-06 14:27:39

subprimeasauras

Comment by SFer
2007-03-06 15:05:06

For those who may not have seen it yet, I felt it’d be useful to repost the Map of Misery. Many people here in the Bay Area still think NorCal will be immune to any real corrections….

http://www.businessweek.com/common_ssi/map_of_misery.htm

Comment by CA Guy
2007-03-06 15:13:03

SFer: great find! thank you. I’m in the east bay, and indeed Nor Cal appears to be a dead man walking. Eventually the piper does get paid.

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Comment by sfbayqt
2007-03-06 15:56:47

Dead man walking is right. Folks are just delusional….but I’ve got more stories about price drops in Dublin that would make heads spin.

There are no commercials in this show.

BayQT~

 
Comment by CA Guy
2007-03-06 16:33:23

What are the biggest drops you’ve seen in Dublin? I would bet we have a high % of pay option arm “homeowners” here. Let’s see, there are condos going up at Dublin and Dougherty, condos at BART, and condos and single family all over the east side. Lots of open house signs starting to sprout up on the weekends. Going to be an interesting spring and summer in these parts.

18 months ago I had an acquaintance tell me how Dublin had nowhere to go but UP! You could tell from his eyes and his voice that he truly believed. Of course, he had bought a condo about a year before, so maybe that had something to do with it!

 
Comment by sfbayqt
2007-03-07 01:03:32

CA Guy,

Houses on the one block strip of Stagecoach Road beginning at Amador Valley Blvd had reached list price of $869,000 back in June 06. That particular house was taken off the market after 2 months. Since then an identical house (size) sold for $725,000 (11/06) and another 166 sq ft smaller sold for $655,000 (11/06 also). Difference between the high list and the sale price of the identical unit is a 16.5% drop.

Along Central Parkway: townhouses, 2/2.5, 1202 sq ft
2/30/06 - one unit sold for $565k
2/1/07 — identical unit sold for $495k
$70k drop, just over 12%.

The Village Park condos (condo conversion in April 2005…was originally Cross Creek Apartments) were priced at $440k, quickly rose to $560k. These units are all identical 3/2.
5/2006 – unit sold for $525k
1/2007 - most recent sale, $440
Back down to 2005 prices

Ironically, the Elan development still has the start price posted at $400k, although their web site clearly notes a 1 br at upper $300. PLUS, if your salary for a single person is $70k, you can get a 1 br unit for anywhere between $110k and $225k (BMR, below market rate). There are only a small number of these units.

BayQT~

 
Comment by CA Guy
2007-03-07 11:50:45

That is all good news! Thank you! I’ll catch up with you again in a newer thread!

 
 
Comment by BearCat
2007-03-06 15:55:58

Nope, I think that’s further proof that the East Bay (and SF Bay Area overall) are, to put it nicely, thoroughly screwed. We might be behind San Diego, but it’ll happen here.

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Comment by sf jack
2007-03-06 19:34:39

“The Bay Area has not been immune to rising foreclosure activity. Between January 2006 and January 2007, every Bay Area county except Marin saw a rise in foreclosure actions, according to RealtyTrac. Solano County had the highest foreclosure rate in the state in January.”

*********

No - not immune.

Also, Marin didn’t have rising foreclosures Jan ‘06 to Jan ‘07?

http://marinrealestatedata.blogspot.com/

http://marinrealestatebubble.blogspot.com/

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Comment by luvs_footie
2007-03-06 15:52:24

the_economist says……”subprimeasauras”

LMAO…….to funny

Comment by hwy50ina49dodge
2007-03-06 16:00:43

”subprimeasauras”

revised:
”subprimeasaurass”

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Comment by hwy50ina49dodge
2007-03-06 16:08:30

I’m on my way to Hooters, my local breastaurant, love the onion rings! ;-)

 
Comment by tcm_guy
2007-03-06 16:18:06

subprime-assure-ur-ass (for a while, at least)

 
Comment by AKRon
2007-03-06 16:19:51

Subprime. A Sore Ass?

 
Comment by luvs_footie
2007-03-06 16:21:05

I don’t think “Hooters” will ever become extinct.

At least I hope not.

 
 
 
 
 
Comment by ed in texas
2007-03-06 14:14:05

“each 2,200 square feet, three stories and three to four bedrooms”
So, a 700sq ft footprint, counting stairways, huh? I get a mental picture of a mobile home standing on end. Maybe it just has a ladder and a fireman’s pole.

Comment by WaitingInOC
2007-03-06 14:19:31

The fireman’s pole would be a cool feature. I wonder how these things are going to do in an earthquake. I assume they’re stick built, and I wonder how well they were structurally engineered to withstand the forces of an earthquake.

Comment by John
2007-03-06 14:26:53

Almost certainly they’ll do very well. San Francisco has lots of stick and steel construction–which do just fine in earthquakes. Bricks and stone crumble, so they are basically decorative in California these days. Anything built on unstabilized soft soil is in trouble, as the ground will liquify with vibration.

 
Comment by AKRon
2007-03-06 16:26:15

Yes, in the 1964 Alaska earthquake the stick built houses came through great. On the other hand, anything on wet clay soil went bye-bye, and concrete/windows on a steel frame tended to ’shower’ unfortunates below.
A funny comment about that quake that tells you alot about RE investors. In the quake a large area near downtown Anchorage slid (taking lots of businesses with it). For years afterward it was left alone, with a big sign pointing out that it was desolated in the quake. So, a few years go by, people forget (and get greedy), and the sign dissapears and new businesses are built all over the slide zone. It seems that the gov’t didn’t bother to condemn the properties, as it thought that no fool would ever build on these areas again!

 
 
Comment by SD_FotBotD
2007-03-06 14:20:54

My thought exactly. I’m picturing absurdly tall, narrow homes on tiny, postage-stamp lots.

 
Comment by hwy50ina49dodge
2007-03-06 16:26:27

Hey Ed,
Ever been featured in a calender? If so, email to txchick…
Please be holding a 20# Trout on a stringer…

 
Comment by Bill
2007-03-06 17:42:59

Visit here: http://www.missouritrailertrash.com/ for future high and low rises.

Comment by rex
2007-03-06 19:27:14

LOL!!! a gem of a site..

 
 
 
Comment by atlanta
2007-03-06 14:14:29

“Guiterrez said he was familiar with the developing area’s past, but that should make no difference in selling a home now. ‘I know for a fact, whenever they build homes, they are going to sell,’ he said. ‘It doesn’t matter the area.’

So funny….who is Mr Guiterrez..and on what authority does he speak… He sounds more like a member of the REIC industry….I am of the opinion that when “Joe Sixpack” says something…it sounds more like a member of the REIC. He knows they will sell….riiigghhhtt.

Comment by the_voz
2007-03-06 15:01:07

hey Essay, ju no they goin sell…tree storey houses, que bueno!

they accent doesnt really come through in the article.

 
Comment by Sobay
2007-03-06 15:01:57

I call him ‘Francisco’ and he is a close friend of Mr J. Sixpack. They hang out at the local watering hole “Jackass Jack’s” and share their great insight and wisdom.

Comment by imploder
2007-03-06 15:37:37

“Francisco Kid was a friend of mine, (wa, wa, wa waaa)
Francisco Kid was a friend of mine, (wa, wa, wa waaa)
He drink Kool-Aide, Poncho drink thee Wine (wa, wa, wa, waa)

Comment by Sammy Schadenfruede
2007-03-06 19:16:11

No panty-flingers at your concerts, imploder!

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Comment by GetStucco
2007-03-06 14:15:15

“His $520,000 loan for a Pleasant Hill home in Gregory Gardens works because he pays more than the minimum payment and sets up bimonthly mortgage payments. ‘I try to make a couple of extra payments a year, and that helps negate some of the negative amortization,’ he said. ‘It also sets us up well if we have dips in business.’ Currier and his partner, Ed Jeffry, make up Peregrine Lending Corp., which specializes in subprime loans.”

I’m wondering how it sets up if business falls off a cliff?

Comment by WaitingInOC
2007-03-06 14:26:50

Oh, it works just fine because RE always goes up. And, why would he have neg am if he is making more than the minimum payment? I’m thinking that he’s not always paying more than the minimum, and that he’s going to have more neg am as the business “dips” (actually, falls off the cliff, as you mentioned, GS).

Comment by imploder
2007-03-06 15:00:37

“Luke Currier has an option-ARM because of what he calls ‘cash flow reasons.’”

As in his “cash’ keeps flowing out of his pockets….

Comment by Steve@KFOE
2007-03-06 17:51:24

I just kept thinking,.. “A pusher that is hooked on his own stuff…”

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Comment by John Fleming
2007-03-06 14:31:38

”I’m wondering how it sets up if business falls off a cliff?”

Then he falls of a …Pleasant Hill

 
 
Comment by mikey
2007-03-06 14:21:28

“Another Brick in the WALL”….Brick us in Baby..Yeah ..for our own Safety !

Comment by hwy50ina49dodge
2007-03-06 16:43:36

I’ve come down from the upper class to mend your rotten ways.
My father was a man-of-power whom everyone obeyed.
So come on all you criminals!
I’ve got to put you straight just like I did with my old man –
twenty years too late.
Your bread and water’s going cold.
Your hair is too short and neat.
I’ll judge you all and make damn sure that no-one judges me.

Comment by Oaktown
2007-03-06 16:56:54

thick as a brick!

 
 
Comment by pismoclam
2007-03-06 17:13:36

Brick us in? I love the analogy to Poe’s ‘Cask of Amontillado’.

 
 
Comment by kpom
2007-03-06 14:24:29

“Currier and his partner, Ed Jeffry, make up Peregrine Lending Corp., which specializes in subprime loans.”

“‘It’s an addiction for homeowners. If you’re given the opportunity to pay the lowest possible payment, you will take it,’ he said. ‘But these loans are not made for W-2 wage earners.’ Jeffry said”

Jeffry - I’ll give you a clue. Neg-am loans aren’t for subprime loan officers either…

Comment by Mo Money
2007-03-06 14:31:16

“If you’re given the opportunity to pay the lowest possible payment, you will take it.”

Yes, if you’re a spendthrift idiot with no math skills. Funny that I’ve managed to throw away every hair brained loan offer I’ve been bomabarded with.

Comment by imploder
2007-03-06 15:42:01

“It’s an addiction for homeowners.”

Contradiction in terms, as they will never own the home if that is their addiction.

 
 
Comment by plysat
2007-03-06 15:45:27

A Peregrine is a falcon… in other words… a predator. Nice choice of name huh?

Comment by plysat
2007-03-06 15:57:59

Think I’ll start a subrime lending business too. Here are some names I’ve come up with. Thoughts?

Great White Funding
The Loan Shark
Mantis Lending
Crocodile Corp.
Predatory Lending Associates

Any other ideas? :-)

Comment by tom stone
2007-03-06 16:15:45

ATM home loans is already taken,they are in sacramento.

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Comment by dwr
2007-03-06 16:23:57

“Mantis Lending, Praying for you customers like you since 2006″

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Comment by SD_FotBotD
2007-03-06 19:47:54

Always liked the RV lot in an early episode of The Simpsons: Great White Motors, “Where the customer is our chum”

 
 
Comment by WaitingInOC
2007-03-06 16:24:14

Fog-A-Mirror Mortgage Co.
Liar Loan Corp.
Commissions-R-Us
Toxic Loan Co.
Piranha Loans
Debt = Wealth Mortgage

There are tons of other great names out there, too.

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Comment by GH
2007-03-06 19:20:37

So Su Me lending Corp

 
 
Comment by AKRon
2007-03-06 16:33:12

Vulture Ventures. (They dine on the dead and dying.)

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Comment by diemos
2007-03-06 17:50:19

The Loan Shark
“Where the customer is our chum.”

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Comment by Neil
2007-03-06 18:33:09

ROTFL

Got popcorn?
Neil

 
Comment by We Rent!
2007-03-06 19:08:10

Best today. :mrgreen:

 
 
Comment by Steve@KFOE
2007-03-06 17:54:51

Dewey, Cheatum, and Howe?

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Comment by BM
2007-03-06 21:29:22

Car Talk listener!

 
 
 
 
Comment by James
2007-03-06 17:04:24

“His $520,000 loan for a Pleasant Hill home in Gregory Gardens works because he pays more than the minimum payment and sets up bimonthly mortgage payments. ‘I try to make a couple of extra payments a year, and that helps negate some of the negative amortization,’ he said.

I put the bold on the suicide portion of this. It offsets some of the negative amoritization. Not all. So the rate the boat is sinking is still OK.

A little slip in the way it was presented. Rate of decay has slowed.

Comment by jd
2007-03-06 17:54:38

“Luke Currier has an option-ARM because of what he calls ‘cash flow reasons.’ Currier, a loan consultant, is self-employed and his income is based on commissions, making him an ideal candidate for the high-risk loan….”

“…Currier and his partner, Ed Jeffry, make up Peregrine Lending Corp., which specializes in subprime loans.”

Geeze Luke,… most dogs won’t even roll in their own poop.

 
 
 
Comment by WaitingInOC
2007-03-06 14:30:44

“Steve Elias, a bankruptcy attorney in Lake County, says he has heard recently from borrowers who thought they were doing short sales but had to sign a new loan to pay off their first loan.”

————————–

Does Steve start off by saying I have some good news and some bad news? The good news is you won’t be getting a 1099, the bad news is that you’re now obligated to pay (I’m assuming a recourse loan) a loan for a house that you no longer own. Congratulations, you’re an FB and don’t even have a house to live in. Man, that would suck.

Comment by Thomas
2007-03-06 15:01:51

I’m all for sticking stupid FBs like pigs, but from the sound of it, there might be a fraud or mistake defense for those borrowers.

 
Comment by tube_ee
2007-03-07 10:21:09

I’ve lived in Lake County. What’s the short-sale value on a 1955 singlewide with a meth lab in the bathroom?

If you’ve never been there, you have no idea what a s#!thole Lake County is. They’ve got the highest percentage of welfare recipients in the state, Wal-Mart is the largest employer in the whole county, and for years it’s been the place where the Dept. of Corrections released the parolees nobody else would take. That guy that chopped off that girls arms and legs and left her by the side of the freeway? He lives (or lived) in Lakeport.

There was a bubble in Clear Lake. That’s simply mindblowing.

–Shannon

 
 
Comment by CA Guy
2007-03-06 14:32:53

““Guiterrez said he was familiar with the developing area’s past, but that should make no difference in selling a home now. ‘I know for a fact, whenever they build homes, they are going to sell,’ he said. ‘It doesn’t matter the area.”

God help us with fools like this running around. Build a house anywhere and people will buy it? WTF is wrong with people. I’d like to see txchick beat this moron senseless with one of her 20lb trout. And now we have Hank Paulson running around proclaiming that the subprime implosion will be “contained.” F-you Hank! Enjoying your tax free maneuver to the public sector? I’m so sick of all these guys I want to scream.

Comment by ex-nnvmtgbrkr
2007-03-06 15:42:42

Snow wasn’t any better. But like DL, they’re paid to shovel sh*t.

 
Comment by cyppok
2007-03-06 16:25:01

you know him leaving goldman and selling his stock was probably the best move since goldman stock dropped. basically financially for him it was a blessing indisguise. and when he leaves the treasury job and goes back there they will give him more stock for all he had done on their behlf.

 
Comment by SeattleMoose
2007-03-06 17:49:20

““Guiterrez said he was familiar with the developing area’s past, but that should make no difference in selling a home now. ‘I know for a fact, whenever they build homes, they are going to sell,’ he said. ‘It doesn’t matter the area.”

So much for evolution…..

Comment by manraygun
2007-03-06 22:25:48

Hard to believe this is a real quote from a real person. If I hoped to stave off a crash, he’s the kind of character I’d create.

 
 
 
Comment by CA Guy
2007-03-06 14:36:27

“Of the 23 properties that were cleaned up by the city contractor, 10 were owned by out-of-towners.”

This should read: owned by out-of-town speculators

No one buys a second home in Merced for vacation or pleasure. For crying out loud. Central Valley is going to be HAMMERED.

Comment by DaniW
2007-03-06 15:20:25

Merced has a new UC Campus - these are speculators who either think the students’ parents will buy the house or they are trying to set themselves up as landlords. Either way, probably people who don’t know what they are doing.

Comment by SunsetBeachGuy
2007-03-06 15:25:03

Why would the University (since they are building from scratch) let those rent cashflows accrue to the local community.

They will/have built modern student housing to attract students to go to a UC campus without a track record in the central valley. Um, yeah that will work.

Comment by CA Guy
2007-03-06 16:37:40

Yeah, I don’t think UC Merced will ever really “catch on” like they hoped. Cal State Monterey never has. What does one study in Merced? Milking cows??

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Comment by implosion
2007-03-06 17:51:39

I’m sure you guys know Cal State and UC are two separate higher education systems. Long history.

 
Comment by Mike in Pacific Beach
2007-03-06 21:36:59

UCs have fabulous locations, Santa Barbara, La Jolla, Santa Cruz, etc, who the hell would want to go to Merced???

 
Comment by Diplomatbob
2007-03-07 05:19:08

UC Davis is often ridiculed by people for its location, but it is a fabulous college town. UC Merced might eventually help turn Merced…although the last time I was there many yars ago it was not my favorite spot. Lots of people might want to go to SD

 
Comment by jbunniii
2007-03-07 08:12:48

UCs have fabulous locations, Santa Barbara, La Jolla, Santa Cruz, etc, who the hell would want to go to Merced???

True but they also have UC Butthole, I mean Riverside, and for reasons unknowable to me, people choose to go there. One can only assume that they have drastically lower entrance requirements.

 
Comment by SF Bay
2007-03-07 08:33:31

Lots of people do want to go to UCSD, but they can’t - it’s impacted. My daughter just graduated from UC Davis - she enjoyed her stay. BTW, RE prices in Davis were insane five years ago. Wonder if they’ve come down…

 
 
 
 
Comment by turnoutthelights
2007-03-06 15:49:49

Very true. This is small town America, once much more like the Mid-West in prices and attitudes than California. The local papers were full of stories of van loads of Bay Area ‘investors’ buying up everything in sight, amazed at the prices. And then the national builders followed. But this ain’t the field of dreams, and they have stopped coming.

 
 
Comment by GetStucco
2007-03-06 14:36:54

‘Literally, I have had people come into my office and don’t understand the loan they have.’

Refinance, and get free money. What could be simpler than that?

Comment by John Fleming
2007-03-06 15:16:59

Lucky he, he still gets people into his office…

 
 
Comment by WaitingInOC
2007-03-06 14:37:31

“Guiterrez said he was familiar with the developing area’s past, but that should make no difference in selling a home now. ‘I know for a fact, whenever they build homes, they are going to sell,’ he said. ‘It doesn’t matter the area.’”

Gutierrez, don’t you know that the three most important aspects of RE are location, location, location? And do you understand that homes not only need to sell, but need to sell at a profit if the developer hopes to stay in business? The fact that the developer can sell them doesn’t mean he will make any money if the demand is not there at the price point he needs. Hmmm, almost $500K for a home in a bad area of Pomona? No thanks. Sorry, but location does matter.

Comment by txchicK57
2007-03-06 14:48:49

Why did any newspaper reporter consider this idiot’s opinion printworthy?

Comment by CA Guy
2007-03-06 14:54:45

“Why did any newspaper reporter consider this idiot’s opinion printworthy?”

He was the only person stupid enough to actually stop and look at this crap project? I agree, it annoys me that reporters waste our time with absolute garbage.

 
Comment by cj
2007-03-06 15:41:28

Because he was the only person the reporter could get a quote from.

 
Comment by mrktMaven FL
2007-03-06 17:05:17

Maybe the reporter is trying to flip a contract in the neighborhood OR the idiots endorsement helps her advertisement department. There’s always an angle.

 
 
Comment by OB_Tom
2007-03-06 14:52:10

The three most important aspects of RE are: commission, commission, commission.

 
Comment by the_voz
2007-03-06 15:43:46

you guys are forgetting that DEMAND does exist for these types of developments…

Course that Demand only exists in a F##KING WAR ZONE!!! So, yeah itll sell, in Iraq, Afganistan, you know places where fixer uppers are the norm, and protection from the horde is priceless.

 
 
Comment by OB_Tom
2007-03-06 14:41:58

“Accredited Home Lenders, a North County mortgage company ….said that more than 8 percent of its $11 billion loans to borrowers were delinquent at the end of last year…. The company employs 4,000 workers nationwide and 700 in North County. It makes almost all of its loans to subprime borrowers. It currently holds 65,000 subprime loans, or 95 percent of all its loans”

65000/0.95 = 68421 loans, 4000 workers ~ 17 loans per worker (now I see the truth in the comments yesterday about just showing up for work, not having to do anything). How many hours does it take to process a loan? 20?

$11Billion/68421 ~ $161k per loan, isn’t that quite low for sub-prime? And how do they make a profit? It’s not that they can make 5% on each, is it?

Comment by Markmax33
2007-03-06 14:55:18

The article should say that Accredited has 11 billion dollars of unsold debt. They sell off debt all the time. They don’t want to be the bag-holders. With the recent events they are going to be stuck because nobody on wall street is going to buy this 11 billion dollars. They can’t pass the debt off anymore, which is why they will go out of business.

 
Comment by Markmax33
2007-03-06 14:58:15

I can’t explain the 161k/loan other than the fact there are probably second mortgages for only 20% of loan value included in the mortgage pool.

Comment by Jingle
2007-03-06 15:19:44

I bet the “hold 68,421″ includes loans sold off, but they still service the debt. Most originators want to keep servicing. It is an income stream protection against a down market and builds “equity” in the company (provided you never have to buy them back).

 
Comment by Hoz
2007-03-06 16:58:22

Accredited lends in the nationwide. In the Midwest there are a lot of nice rural areas with houses priced less than 100K

 
 
 
Comment by OB_Tom
2007-03-06 14:49:56

‘cash flow reasons.’
= why he charges everything to his credit card
= why he took out a HELOC
= why he leases his car
= why he has an option ARM
Because he dosn’t have as much money as he spends

 
Comment by KirkH
2007-03-06 14:53:31

Hey. I just realized the housing crash can now refer to the executive branch white headquarters and/or the real estate market.

 
Comment by GetStucco
2007-03-06 15:16:09

“When most people hear of high-risk loans, they think of first-time home buyers trying to purchase more house than they can afford. But according to a report Friday, the East Bay is seeing more of those loans as owners decide to refinance their homes with risky adjustable-rate mortgages that could lead to negative-amortization loans.”

When I read this, and think about the recent demise of the subprime lending sector, I experience a sense of surreal disconnect between what has recently occurred behind the scenes and what is taking place on the ground. Can this divergence between subprime demand and subprime supply persist?

Comment by mrktMaven FL
2007-03-06 17:15:48

There will be a lot of panic but no selling as a result. Some will serf while others tumble under the thunderous waves of foreclosure. We don’t call them FBs for nothing. The insolvency boom is near.

 
 
Comment by GetStucco
2007-03-06 15:48:15

It’s all good, folks. Monday’s massive subprime selloff was nothing but a bad dream, and the sector is right back on its feet again only one day later.
———————————————————————————
The Associated Press March 6, 2007, 1:56PM EST
Sector Snap: Subprime rebounds
NEW YORK

Shares of mortgage banks that loan to home buyers with risky credit moved higher with the broader markets Tuesday as some investors looked past growing mortgage default concerns.

Wall Street’s rebound came a day after investors were spooked about losses over soured subprime loans.

New Century Financial Corp., the nation’s second-largest subprime lender, rose $1.27, or 27.85 percent, to $5.83 on the New York Stock Exchange.

On Monday, the company shed almost 70 percent of its market value after revealing that a federal prosecutor and the New York Stock Exchange are conducting investigations into its stock movements.

Despite two analyst downgrades following its 26 percent loss Monday, Accredited Home Lenders Holding Co. rose $1.76, or 11 percent, to $17.82 on the Nasdaq Stock Market.

Fremont General Corp., which said it plans to sell its subprime residential real-estate lending business, added $1.05, or 18 percent, to $6.94 on the Big Board, after it dropped more than 32 percent in the previous session. Roughly half of Fremont General’s business has been subprime loans.

Countrywide Financial Corp., which sees a portion of its business come from the subprime market, rose $2, or 5.7 percent, to $37.20. At the end of 2006, subprime mortgages made up 9.1 percent of the company’s servicing portfolio, Countrywide said.

Fox-Pitt Kelton analyst Matthew Howlett said the subprime shakeout has even hit companies that have only a portion of their business dedicated to the subprime sector. Howlett said investors have been clustering mortgage lenders in one group, and called Monday’s sell-off a “panic selling.”

http://www.businessweek.com/ap/financialnews/D8NMRJBO0.htm

Comment by Mo Money
2007-03-06 16:03:28

Good Old Wall Street, the attention span of a Gnat…..

 
Comment by GPBlank
2007-03-06 16:31:31

They neglect to say there is still a ton of lost market cap wandering around the Milky Way somewhere.

 
Comment by the_economist
2007-03-06 17:13:54

There was a ton of other bad economic news today that the market shunned…Irrational!

Comment by tweedle-dee (not dumb)
2007-03-06 18:43:35

I agree !

 
 
Comment by mrktMaven FL
2007-03-06 17:24:03

Delusional bulls — the stock is down 90 friggin pct and still they spin. It never ends. Freaks!

 
Comment by AKRon
2007-03-06 19:00:55

Maybe the stock rallied a bit because it seems that fools (ahem) are buying loans at good rates: for instance Citadel offered 98.5 cents on the dollar for ResMae’s loan portfolio (why!?!?!). So, the company might be going under, but there will (they dream) be some cash left after selling the carcass.

 
 
Comment by Brad
2007-03-06 15:49:50

look for the fan-splatter to get heavier on May 1. April 15 income tax followed by April 31 Cali property tax

Comment by Hoz
2007-03-06 16:55:47

A most excellent point. But the fan splatter should start when they receive the property tax bills.

 
Comment by mrktMaven FL
2007-03-06 17:18:40

I’ll remember to walk with my raincoat….

 
Comment by technovelist
2007-03-06 17:52:52

I wish our RE tax due day was April 31st. Of course, it’s a bit hard to get the payment postmarked that day.

 
Comment by implosion
2007-03-06 17:58:28

April 31? It’s all good.

Comment by Neil
2007-03-06 18:42:54

Can I borrow $1 milion? I’ll pay a 20% interest “bonus” and I promise to pay it all on April 31st. :) Only on April 31st though. ;)

Seriously, the April 15th tax deadline is going to crimp a lotta blingy lifestyles. As to property taxes… I expect quite a few will just “forget” to pay…

Got popcorn?
Neil

 
 
 
Comment by Sammy Schadenfruede
2007-03-06 15:51:49

Strapped homeowners struggling to make payments could sell their properties at below-market prices to avoid foreclosure, affecting the values of their neighbors’ homes.”

Allow me to point out that those “below-market prices” will then represent the NEW market price. Until an even more desperate FB or foreclosure sale drives the price even lower, that is.

Comment by B-hamster
2007-03-06 16:09:42

I too am amazed how they’ve bastardized the meaning of ‘market price.’

 
Comment by Jingle
2007-03-06 21:35:15

“…..represent the NEW market price…..”

You must mean NEW as in the symbol for New Century? That would be $50/share a year ago to…………well, it went UP today….to $5.00! Priced at 10% of a year ago. That works for me!

 
Comment by Ghostwriter
2007-03-07 05:53:05

Sellers really do not get it. Market price is established by what people around you pay for a similar house. Guess what your dreams of making a killing are over. The buyers that you sneered at a few years ago will now determine the price of your house and others in your neighborhood. They do not care what you paid, what you did to it, how much you owe on it, or any of your other problems. They only care about what they have to pay for it and how much it will cost to finance. They are not going to pay you more because you made a stupid mistake. Figure your own way out of it.

 
 
Comment by Mr Vincent
2007-03-06 16:57:06

“Luke Currier has an option-ARM because of what he calls ‘cash flow reasons.’ Currier, a loan consultant, is self-employed and his income is based on commissions, making him an ideal candidate for the high-risk loan.”

You would think a loan consultant would know better, but he, I guess, suckered himself into this.

If you cant use a 15 or 30 yr fixed rate loan then you should be renting until you can afford this type of loan.

Comment by Bear
2007-03-06 17:22:35

You’re right, option ARMs have the highest rates out there, they’re linked to 1 year Treasury moving average, due to inverted curve it’s the highest rate you can get.
Also the margins are high as well. Only a mortgage guy can be that dumb!!

 
Comment by implosion
2007-03-06 18:02:57

I imagine this guy’s father wishes he had pulled out sooner.

Comment by Neil
2007-03-06 18:44:28

implosion,

Dang you! There is no apple on my laptop. Grrr… :)

Got popcorn?
Neil

 
 
 
Comment by Lo in Nor Cal
2007-03-06 17:05:01

everyone is full of jokes today..lol Thanks for the laughs!

 
Comment by Dimitris
2007-03-06 17:05:56

I wrote a small script that goes out to country-wide website and parses how many homes they have for sale due to foreclosure. I’ve been following their site for the last year or so and the listings have more than doubled. I will try to automate it so that it parses country wide website and posts to blogspot. Here’s the link for anyone interested: http://countrywide-foreclosures.blogspot.com/

Comment by August
2007-03-07 01:02:13

Nice!

 
 
Comment by ylekiot1
2007-03-06 17:07:54

Guess the only person he could sucker (and get a comission) was himself. lol
–I have gone to fund myself. If I default before I get back, please ask myself to pay.

 
Comment by Bill in Carolina
2007-03-06 17:37:37

So now even people with good credit are taking out toxic loans. Wow, that means high foreclosure rates are here to stay. If that’s the case, the housing market will NEVER recover. The neighborhood comp will always be the latest foreclosure sale.

I always thought the doom-and-gloomers here were far too pessimistic. Not any more.

 
Comment by txchicK57
2007-03-06 17:42:16

From Creditslips:

Bankruptcy Filings Up 18% in February 2007
posted by Bob Lawless
The folks at Automated Access to Court Electronic Records or AACER regularly collect data from all the bankruptcy courts for creditors and attorneys. They have a wealth of information that does not show up in the mainstream media. Most recently, they tell me that there were 58,640 total U.S. bankruptcy filings in February 2007 as compared to 55,088 total U.S. bankruptcy filings in January 2007. OK, that looks like a slight increase, but looks are deceiving. It’s actually a fairly hefty increase. The February filings were spread over only nineteen business days while the January filings were spread over twenty-one days. On a daily basis, the February filings were up 17.7% as compared to January.

Certainly, one month’s worth of filing data does not a trend make. Also, these number are for total bankruptcy filings, not consumer filings alone. Remember, however, that according to the government, business filings are a minuscule percentage of total bankruptcy filings, and that problems with the way the government counts business filings may make total bankruptcy filings are more reliable data point anyway, as I have discussed previously. With those quite important caveats about the data in mind, there are a few things that strike me about AACER’s statistics.

First, the increasing numbers of filings are completely consistent with the “word on the street.” Privately, bankruptcy attorneys have told me they have seen increased numbers of consumers seeking bankruptcy. Although the 2005 bankruptcy law substantially lowered the number of bankruptcy filers in its immediate wake, we know that filings have been on a steady increase since the law’s effective date, and these latest numbers are further confirmation of that fact. I do not predict that filing levels soon will return to the same numbers as they were just before the 2005 bankruptcy law was enacted (about 1,500,000 per year).

Still, we are on a pace to see substantial increases in the number of annual bankruptcy filings. If we apply the daily filing figure from February throughout the remainder of the year, make the conservative (and likely unrealistic) assumption that there will be no further increases in the filing rate for the rest of the year, and then add the numbers we already know from January and February, there will be approximately 765,000 total bankruptcy filings in the U.S. during 2007. The AACER folks tell me there were approximately 585,000 total bankruptcy filings in 2006. (As of this writing, the government figures have not been released.) Thus, we are on a pace for a 30.7% increase in bankruptcy filings during the 2007 calendar year. If the bankruptcy filing rate continues to rise beyond the daily rate in February, U.S. bankruptcy filings for 2007 could come close to or top 1,000,000.

March 6, 2007 at 11:55 AM in Bankruptcy Data , Bankruptcy Generally | Comments (0) | Permalink

Comment by Chrisusc
2007-03-06 17:59:31

Interesting article.

 
 
Comment by WT Economist
2007-03-06 18:08:53

Lots of people commented here about the dependence of newspapers on real estate ads, having lost auto and help wanted classifieds, and how that might affect coverage. Well, evidently the bust in slamming real estate ad revenues. See here:

http://therealestate.observer.com/2007/03/housing-woes-cut-into-newspapers.html

 
Comment by Brad
2007-03-06 18:12:34

ABC World News is going to do a segment on the housing bust and it’s effect on the economy in a few minutes

 
Comment by dan
2007-03-06 18:15:35

I just wanted to take a moment to highlight the fact that certain forces are currently operating within the ‘greater scheme of things’ which WILL have a direct effect on property values. In fact, the survival of American real estate per se is at play.
It turns out that while we’re here discussing how this bubble thing is going to turn, our country is being run into the ground by an moron who despite exhibiting an IQ of 91 has nevertheless managed to finnangle control over the destinies of EVERYONE on this planet.
On todays’ news: He has now pissed-off the Russians and singlehandedly re-started the Cold War. Putin now wants to re-arm Russia and regain Russia’s superpower status. The Russians have vowed to bomb any American missile-launch installations in Poland if the US tries to install them (which Georgie wants to do) They have also decided to INCREASE their stock of medium-range nukes. Way to go. We needed more enemies. We were running kinda low what with only the Iranians, the Arabs, the Chinese, the Europeans and the Latin Americans to hate our guts.

And you people worry about the price of real estate. My doubt is; with two more years left to this douche-bag ..will there even BE any real estate? After all, radioactive fallout DOES tend to scare-off buyers.

Comment by Brad
2007-03-06 18:29:56

wrong site for a political rant

Comment by Louie Louie
2007-03-06 19:16:30

Not sure … You may recall Greenspan said home prices went up 200-300% because the Berlin Wall came down.

LOL! I really mean this .. he did say it…

 
Comment by Troy
2007-03-06 19:24:47

agreed. As a sufferer of BDS I come here to get away from that stuff.

 
 
Comment by Carlsbad Renter
2007-03-06 19:40:20

You might try posting this on Craigslist Rants-and-Raves section.

 
 
Comment by dan
2007-03-06 18:17:56

Ooops, I meant an IQ of 19.

I know, I know; now I look like a moron too!. To which I reply;
I’m STILL right, cause it takes one to know one.

Dasveedanya

Comment by lefantome
2007-03-06 20:01:48

91 was so high as to require a correction?

Comment by sartre
2007-03-06 20:54:46

So where does Lereah land?
Over 140 - Genius or near genius
120 - 140 - Very superior intelligence
110 - 119 - Superior intelligence
90 - 109 - Normal or average intelligence
80 - 89 - Dullness
70 - 79 - Borderline deficiency
Under 70 - Definite feeble-mindedness
http://wilderdom.com/intelligence/IQWhatScoresMean.html

 
Comment by Troy
2007-03-06 23:41:19

yeah, 91 is the danger zone where you don’t know you’re a moron.

 
 
 
Comment by tweedle-dee (not dumb)
2007-03-06 18:41:59

The most surprising thing about today is the mass denial over problems in the economy and the housing sector IN SPITE of tremendous news otherwise !

Somehow all the analysts and economists haven’t figured out that about 25% of the buyers aren’t going to be able to afford to buy a house anymore due to needing 10-20% down and the cash flow needed to qualify for a regular mortgage !

Doesn’t anyone realize what this is going to do to the demand for houses and subsequently, their prices ? WAKE UP PEOPLE, the game has just begun !

The cat is out of the bag now. China sees what is going on. They aren’t going to buy the MBSes anymore. With 25% fewer buyers, housing is going to COLLAPSE ! The US consumer is going to slow way down. China is going to slow way down.

Its like everyone has their head buried in the sand.

I love how Paulson runs around the country telling everyone it will be fine. Sure it will. Care to put that in writing and pledge your personal assets to it ?

Comment by mrktMaven FL
2007-03-06 19:30:22

Amen brother! You hit the nail on the shizzle.

Comment by tweedle-dee (not dumb)
2007-03-06 19:53:18

Thanks.

But man its just astonishing to watch this all unravel and see how right this board has been vis a vis everyone else. They STILL don’t get it !

Its funny that a major news center hasn’t quoted this board because it is way, way more accurate than anything else we have seen out there, save Shiller and the one guy from California. I think even Shiller under estimated how things were going to go.

Comment by Loiue Louie
2007-03-06 22:31:07

Shiller stated a 40% decline back in 2004-05. I can see this happening in Northern California both inland and near the coast. Im in Santa County Valley. But now its up to 50% correction.
It just makes sense in order to get back to mediam long term trend. SF Bay Area will be blood bath due to all the refi-cash outs. Cash is king.

(Comments wont nest below this level)
 
 
 
 
Comment by HarryD
2007-03-06 19:04:24

“Luke Currier, 34, has an option-ARM because of what he calls “cash flow reasons”

This is too funny: a sub-prime pusher who has personally taken out an negative amortization option ARM for 500k - which he probably won’t be able to pay for the same reason probably most of the loans he sold to other won’t be able to pay

THEY BORROWED TOO MUCH MONEY and have insufficient income to pay the loan back

 
Comment by waiting_in_la
2007-03-06 19:08:30

Just another bottom called, that’s all.

oops, I meant FALSE bottom.

Wake me up when I can safely plunk down 20% in SoCal.

 
Comment by Louie Louie
2007-03-06 19:14:05

“His $520,000 loan for a Pleasant Hill home in Gregory Gardens works because he pays more than the minimum payment and sets up bimonthly mortgage payments.

PH typical home very nice list at under 200K in 1997. We will test those lows once again at around $250K-300K. $500K is way too much.

Comment by Troy
2007-03-06 23:39:35

disagree since rents support $1000-$1500 for 1BR easy. Unit across from me vacated today so I’ve now got a good index starting on the heat of the present rental market.

 
 
Comment by crispy&cole
2007-03-06 19:26:53

Wells Fargo, real estate does go DOWN! :

http://bakersfieldbubble.blogspot.com

Comment by Jingle
2007-03-06 21:12:29

I happened to see that coming. I know of 4 houses Wells has in NOD or foreclosure in one subdivision of Sacramento. 95% loans. Wells did not do 100% financing that I know, but the 15% drop in Sacramento has wiped out a lot of their 95% loans. Good credit with investor flippers is going to prove a big problem to them. Of course, they looked the other way when the “owner occupied” box was checked. Defaults within the first 12 months. No lender is immune from this market!

 
 
Comment by Housing Wizard
2007-03-06 21:10:26

Loan agents and realtors telling these borrowing fools that they could always refinance out of these junk loans was just wrong .

DId the REIC tell these fools that in a tight money market a loan might not be so easy to get ? Did theREIC tell these fools that you must have equity to refinance ? Did they tell these fools that it’s expensive to refinance (especially if one has a pre-pay penalty) and it re-sets the terms of the loan ?

When you figure the real cost of money ,these sub-prime loans where a joke . The buying and borrowing was all based on real estate going up with the sub-prime lenders and realtors taking a big piece of the action with every sale or refinance .

I really don’t care if the whole RE industry comes to a big fat standstill because of the sub-prime lending because the market has to go back to loans based on ability to re-pay .

I think the seller carry-back purchase money second is now going to become popular ( for sellers who have some equity to be able to do it ).

Comment by az_lender
2007-03-06 22:01:41

Smart buyers pay cash, so they can carry a first when they sell.

 
 
Comment by tweedle-dee (not dumb)
 
Comment by bubblicious
2007-03-06 21:23:56

Any words of consolation for exhausted Canadians who watch with relief the house of cards start to crumble Stateside only to see a deus ex-machina “Spring Bounce” reported in our own blow-out bubble cities?
We are just as tired of waiting and getting deeply disheartened. Can anyone explain why the bubble is taking so long to pop here? Vancouver just reported benchmark home prices of $750,000 in February. We had a lull and a rise in inventory this winter … and now we’re back? With our US neighbours imploding? It’s madness, it’s unsustainable, but it seems to keep going and going and going … reassurances? Anyone?

Comment by az_lender
2007-03-06 22:04:07

This isn’t a reassurance, just a question. What fraction of the recent mortgages in Canada were ARM, IO, neg-am, etc. ? If your population is as tapped-out as ours, you too will experience near-term implosion.

Comment by Patiently Waiting
2007-03-07 00:51:19

We don’t have the nearly the subprime issue, but our fundamentals are horrifying. Vancouver wageslaves make less than those in most other Canadian cities. I honestly don’t understand how our prices got so high. There must be some kind of crazy lending. Toronto prices are about two-thirds of Vancouver prices.

 
 
 
Comment by Ghostwriter
2007-03-07 06:14:16

Some of these economists are idiots. I took more than my share of economic classes in college. The point is if housing sustained the economy for the last for 6 or 7 years up until late ‘05 and kept the 2000 recession from being worse than it was, it’s definitely going to drag us into a recession now that it’s nosediving. Remember that’s all we heard about from ‘99 on that housing was holding up the economy. What holds something up also brings it down. Maybe they took different economic classes than I did. Possibly more spin classes.

 
Comment by cyppok
2007-03-07 06:55:39

I tried being a re agent about three years ago. I figured why not try it but after a week it wasn’t for me. In “Re school” I was listening to this guy flaunt his 5 lot investment in florida and he kept gushing how it will go up and he will make a killing to which I replied “what if it doesn’t go up? what then?” he just got red and flustered and angry looking at me like I said something offensive.

Basically RE is like a cult and appreciation is your god. It seems euphoric when everything is peachy and when it turns you hope and hope and pray to the little appreciation angel to come through for you.

The first thing planned in an investment is the exit how would you get out in adversarial conditions.

 
Comment by RTC canidate
2007-03-08 02:58:20

People in Real Estate always always forget the drug dealers oath
“dont get high on your own supply”

 
Comment by Paul
2007-03-08 21:57:03

One way in and One way out.

Lots of comments on this. Mostly negative.

But, if I were to try to revitalize an area, I’d cut down drive thru access. Here in San Diego, (and I’d bet GetStucco would agree) some of the best neighborhoods are very limited access. Kensington has basically one way in and one way out. La Jolla has the 52, la jolla blvd, and torrey pines. Del mar has el camino and del mar heights. Rancho Santa Fe has basically two roads, but they escape my memory.

OTH, City Heights has the 8, the 94, the 15, the 805, El Cajon Bl., University Ave, Euclid, Home Ave, etc.

Don’t get me started on on Nat’l City, or “old” Chula Vista.

Back to decent, Tierrasanta has no through streets, just exits east of 15. Pac Beach/Mission Beach - Ingraham, Garnet, Grand. Mission hills has reasonable access through Hillcrest, but very few exits into old town or mission valley.

San Diego is split by mesas, arroyos, and freeways. typically where access is restricted, the neighborhood is better. Where not, bad.

Access restriction is no guarantee, but it give better odds.

Paul

 
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