“The Boom Ruined Everything” In California
The Contra Costa Times reports from California. “Contra Costa County home sales in February dropped nearly 20 percent from last year, a 10-year low, while prices also dipped 5 percent, from a median of $568,000 to $537,000, a Dataquick reported. Several East Bay real estate agents and brokers said they think February and even March statistics will be lower than anticipated because of a drop in lenders and limitations on 100 percent financing.”
“‘Lots of lenders are closing their doors and pulling loans in the middle of escrow,’ said Griselda Quezada-Chavez, an agent in Benicia. ‘It already has had a little bit of an impact.’”
The San Francisco Chronicle. “In the past two weeks a series of events have cast doubts on the possibility of a quick rebound in the housing market.”
“‘The problems with the subprime loans have nothing to do with today’s sales numbers,’ said David Shulman, a senior economist with the UCLA Anderson Forecast. ‘The subprime meltdown is two weeks old. In all likelihood, what’s going on in the subprime market will make things much worse in terms of both volume and prices.’”
“Prices fell most steeply region-wide for new homes, as builders continued to slash prices to clear inventory. The median price for a new single-family house fell 13 percent from a year earlier to $595,000, according to DataQuick.”
The Modesto Bee. “Home sales in the Northern San Joaquin Valley last month tumbled to their lowest levels for February in nearly a decade, and median prices also slid, a real estate research firm reported Thursday.”
“In Stanislaus County, the number of homes sold declined by 40.4 percent and median home prices dropped by 9.4 percent last month compared with a year earlier. Sales in San Joaquin County were off by 44 percent and prices by 6.7 percent, while Merced County sales plunged 54 percent and prices 14.2 percent, according to DataQuick.”
“‘There’s at least as much uncertainty as there was a year ago,’ said DataQuick analyst Andrew LePage. ‘I think we’re closer to a normal market now than two years ago, but normal has to be redefined.’”
The LA Times. “In California, Perris is at the epicenter of mortgage problems. From November to January, 177 homes in Perris’ central ZIP Code have received notices of default, the first step toward foreclosure.”
“The trouble stems partly from a proliferation in recent years of so-called sub-prime loans to borrowers with shaky credit or erratic income. The Inland Empire is full of new and almost-new homes and commuters who often travel great distances to jobs to pay for them.”
“The billboards on the way into town extol 11 active developments. Signs on the city streets point visitors to them. But many intersections tell a more downbeat story. Telephone poles are festooned with signs that say, ‘Behind in payments? We can help.’”
“Lily Quinlan just sold her three-bedroom house on a cul-de-sac in one of Perris’ older developments. It went on the market last June, for $395,000. Her first agent reduced it to $383,000, then $375,000, then $369,900. Her second agent dropped it all the way to $333,000, where it finally found a buyer.”
“While the price was descending, Quinlan’s ability to pay the mortgage was becoming intermittent. World Savings, their mortgage company, started sending default notices.”
“The couple bought in 2002, as the boom was beginning. At its peak, the house was worth more than three times what they paid for it. But they refinanced and took cash out to do upgrades on the house, and then they refinanced again because — well, Quinlan isn’t sure why.”
“She’s learned this about lenders and loan agents: “They make it look like they are trying to do all this for you, but the reality is that it was mainly for them. They got their chunks out of you, and then they put you out to the wolves.’”
“Even when she was in default over the last few months, the offers continued. ‘They kept calling and calling, saying, ‘You won’t have any payments for two months.’ And I’m like, ‘Dude, the last thing I need is another refinance.’”
“She’s sorry to be leaving for Florida. If their house had not increased in value, if it was still worth exactly what they had paid for it four years ago, they could afford to stay. But the boom ruined everything, and so Quinlan was selling what she could at a yard sale before packing for the movers.”
“Her neighbors house went on the market this week for $369,900. ‘The price you got is going to drag down our price,’ Ron Blacic tells Quinlan.”
“‘Thanks, Lily,’ cries Dawn Blacic as she pretends to punch her.”
“The Blacics, who are moving to Yucca Valley, owe $372,000. They refinanced once, taking out cash to pay for their wedding and other bills. ‘We figured the value would go up and up, and it didn’t,’ says Ron.”
“After the agent’s cut, the couple will need to bring a check to the table for $22,000 or so to avoid destroying their credit. ‘We want to purchase another home,’ explains Ron. ‘We don’t want to wait 10 years until our record is clean again.’”
“If the house sells for their asking price, the Blacics will come out about even on their first real estate venture: First the house dispensed money, then they had to give it back. For them, it will be as if the boom never happened. On the other hand, if the house doesn’t sell immediately, they’ll have to rethink their plan. They can borrow only so much.”
The Union Tribune. “San Diego’s leading economic indicators fell for the 10th month in a row in January. ‘The interesting thing is the impact of housing on the economy,’ said economist Alan Gin, who compiles the indicators. ‘In employment, not only construction and real estate are down, but you’re also seeing an effect in the retail sector.’”
“Peter Schiff, who runs Euro Pacific Capital in Newport Beach, said the real estate decline will be an impact on the economy for quite some time.”
“‘Think about all the mortgage debt that was assumed by San Diegans in the last few years,’ he said. ‘All they’re going to be doing is paying interest on that money. Instead of buying a new car or going shopping, they’ll be paying down their interest on interest-only loans. And there are so many people who bought homes for zero down payment, they will just be going to be walking out of their homes, if they haven’t already, since they have no financial incentive to stay. This is a real disaster.’”
From Reuters. “Unlike many borrowers who took out subprime loans, Andy Sobel had good credit, a decent job and modest savings, but he needed to stretch to buy a home in the white-hot San Diego housing market in 2004.”
“Three years later, Sobel has lost his home and his savings, and he faces a big tax bill as a consequence of a failed subprime mortgage held by Countrywide Financial Corp. he says he should never have been written.”
“He knew payments on the loan could rise, but was told he could refinance. His broker advised him to take out a negative amortization loan that would add $300 each month to his principal and ‘ride it out for a few years’ until the market recovered.”
“‘I said, ‘Are you crazy?’ I started really worrying,’ he said.”
“For Sobel, the banks began foreclosure proceedings in December. Both lenders have agreed to allow Sobel to sell the condo at a loss of $60,000, on which he has to pay taxes.”
“‘You never think that this could happen to you. You feel like an idiot,’ said Sobel, who has a doctorate in education. ‘You fall down and they stab you.’”
Looks like CORS bought a BUNCH of shares of FMT.
“On Friday, Santa Monica, Calif.-based Fremont said that it secured a larger credit line from Credit Suisse Group, propelling Fremont’s stock to $8.72, up $1.32, or 18 percent, in early afternoon trading on the New York Stock Exchange.
However, that’s still below the average of $12.73 Corus paid for each Fremont share. After jumping Friday morning, Corus’ shares rose 6 cents to $17.36 on the Nasdaq Stock Market.”
Is the investment banking sectors’ bottomfishing expedition into subprime coordinated? Wouldn’t that be a form of collusion?
But it’s for the “greater good”. Just throw that line around in California, and all doors that were closed will now be open to you.
Here it comes:
Housing mess risks recession unless Fed cuts: Merrill
They needed a lever, the housing mess looks like a handy one.
Not sure Rosenberg understands that a lower FF rate can be inflationary. If the Fed cuts now, the dollar is toast, and long term T-bond rates could lurch higher (at least if market forces are not tampered with by govt price manipulation), driving mortgage rates up in tandem
Hey GS, why does it even matter when the FF is still above the 30 year?
Mortgage rates move in tandem with long term bond yields. If inflationary expectations rise, then long term bond yields will rise, even with a lower FF rate.
Actually, only the 30yr fixed mortgage rates move in tandem with LT bond yields. Many ARMS are indexed to the 11th District Cost of Funds (COFI) 6-month moving average, or to 6-month LIBOR.
Recessions happen. They drain the excesses out of the market so that future growth can occur. Let the damn correction happen. I am getting a feeling these guys are going to make this much worse than it needs to be.
“Dude, the last thing I need is another refinance.”
Perfect T-Shirt or bumper sticker…
Sacramento Area Licensee Population Plunges 20%
wounder if LIErah will have to move to anouther bubble
stocks 2000
RE 2005
?
soup bowls 2009
Bankruptcy firms 2007
Maybe beanie babies will make a comeback
anyone know what the dues are ?
most RE agents hang in forever even if they don’t sell anything
“You’ve got this enormous amount of inventory … and it will go down — it will go down by spring, significantly.”
A look at how John Karevoll’s “statement” on Sacramento inventory has fared. (Note: DataQuick does not make “predictions” about future market conditions.)
Nice work Lander. That comment made no sense when he made it, as inventory traditionally goes up in Spring. It reminded me of Gary Watts’ silly and unsupported claim that 2006 was going to be an “inverted” year with more sales in the last half of the year than in the first half.
I think he was misquoted. They printed “inverted” when he said “bent-over the table”.
Note: He said inventory would go down “by” spring, not during spring.
You misunderstood… he was talking about the Sub-prime lending market….
“Real estate always goes up” may need to soon be modified to “real estate inventories always go up.”
Isn’t spring less than a week away?
Looks like early morning next Thursday. Hold your breath for massive inventory reduction.
yeah cuz noone shops for homes in SoCal in February and March cuz the weather is so awful…
“‘You never think that this could happen to you. You feel like an idiot,’ said Sobel, who has a doctorate in education.
It seems we are really starting to figure out that a majority of the people are idiots. which reminds me of this lady on “r u smarter than a fifth grader” she had no idea what country was north of the US. man there are some stupid people out there…imo this is going to be worst than the recessions of past.
A doctorate in education? I can recall my mother (a longtime teacher) saying that the degree wasn’t worth the paper it was printed on.
This is why I believe ALL college majors should have at least some finance/accounting/econ classes as part of the mandatory curriculum. I happen to have majored in business, but I can understand that people don’t want to be “business” types. Still, you meet a lot of the liberal arts/social science grads and they are absolutely clueless about anything to do with money. And money is something everyone has to use!
the saying at scouts is ” if you want to go to LA school , you have to pay”
I majored in economics. And I earned my business degree from the University of Hard Knocks College of Business.
I’m an engineer with a minor in economics…but I think I have gained more real-world economic knowledge while lurking here for the past year than I ever did in school. Donation to Ben’s paypal account forthcoming.
Hear, Hear! Thank God for people like Ben and all the amazing posters here.
Economics grad here as well.
How in the world did I end up in a computer career?
I was so facinated by the stock market bubble in the late 90’s, that I went and got my MBA in a full-time program at a major university. It has paid for itself about 3 times over in the past 10 years.
Hey SLO Bear, I’ve been thinking about going for an MBA here at USC ever since I started reading Ben’s blog and reading endlessly about the coming downturn. Seriously, the “economists” we hear from most often are absolutely deranged idiots with no grasp of reality *ahem* Lereah *ahem*. I’m just sad we have this Casden Institute here on campus that seems to be nothing more than a huge university-allied shill for the RE industry.
I can assure all of you that most EU economists are also among the most clueless people on the planet when it comes to economics; and obviously a lot of them have ties to the RE mob. Apparently it is easier for them to make money by predicting in their reports that RE will always go up than by starting a real company or investing in the stock market.
Doing really, really well in HIGH SCHOOL math probably profited me more than all the diff eq’s, topology, statistics, field theory, etc. However, high schools now teach 4th-grade math, which is insufficient.
AZ LENDER,
That’s not accurate at all.
The California High School Exit Exam tests math ability up to the 8th grade (basic algebra). Though, admittedly, the vast majority of the questions are based on fractions and percents. Oh, and you only have to know about 1/3 of what is on the test to pass. Guess on the remaining 2/3 (at 1 in 4 chance) and you break the magical 50% barrier.
50%.
Passing.
My district takes two weeks off of the regular curriculum for all 10th graders to prep for next Tuesday’s first crack at the test. We are considered a “California Distinguished School” (only school in the district), but you would - or, perhaps, would not - be surprised at how many of our sophomores will not pass.
I guess to sum up
, we TEACH high school math. Well, junior high math, too. But the students are CAPABLE OF only around 5th grade. It doesn’t help that not more than 3 in a 100 could hold a flame to the efforts their asian counterparts put into learning.
2007 is going to suck. So is 2027 for that matter.
-Rent
The American motto: If at first you don’t succeed, pretend you didn’t even try.
Also, informal education can be the best you can get because that often times involves real world situations as opposed to just sitting in a classroom and bookwork. Today, we have the internet which is a fantastic information source. Why don’t these people get on the internet and do some research? I don’t get it. It’s like we have more access to information than ever before but yet people are making poorer decisions.
Yeah. Someone just told me that MIT offers their classes for free online. No grades or diploma but the info is there.
Yeah. I even here that there is this place called a library. It has these free things called books will all this knowledge in it.
Sorry for the sarcasm, but everyone somehow thinks the MIT stuff is different than books. Lecture notes and exercises are nice. And really, really good students can get by on them alone. But us teachers (I am faculty at Cornell University) do provide some value add to our courses beyond the material.
Bleh. I tell everyone I am Cornell faculty and I mispell “hear” as “here”. Pardon me while I go hide in the corner.
Wasn’t stacking the MIT books on top of Cornell’s.
Just mentioning that the info - even info that college’s want you to think is special - is out there.
Perhaps you misunderstood me. Not sure if this is the forum for this.
You could always get stuff from MIT in books. You have to pay for them, but you could get them in any good library. The only thing the Internet does differently is help people who don’t live near good libraries. But a lot of people who talk about the MIT initiative seem to think that it is something really special — that it is somehow different than a library and that you are going to magically learn from it in ways that you could not from reading books.
Walker,
You also misuse faculty as a singular noun! I can’t stand it when all our faculty members run around claiming they are an entire teaching body! “I am faculty! I am faculty! Here [sic] me roar!”
LOL =)
I never said that MIT’s books were magic or special. I just pointed out that the information from a top school is readily available to anyone with a mouse, and is certainly easier to access than info at a library.
Why you are championing libraries over the interent I don’t know as from where I’m sitting I’d bet
magazines at Savon are good source, just watch out for manager… after 2 hours they always try to make me buy something…..
BM, Perhaps Walker was using “faculty” adjectivally. I don’t see it as an adjective in on-line dictionaries, but one can imagine such a meaning.
Hye BM,
It’s long been known by any staffer that a single faculty member has the equivalent ego of faculty >; )
Sac Bee had a continuation piece on the UC seed money loans, carefully buried in the Friday edition. We’re breaking ground on a 1000 unit development now for faculty and staff. Lots of pissed-off staff here as they’ll pretty much be locked out of the development - no seed money for us and bigger downs required while faculty are getting portions of theirs waived.
About the internet vs book thing–the electronic files if they are of the proper format should be fully searchable for instant access to any part.
A book needs a good index for that, and sadly, few of them do.
Another point–it’s easy to increase font sizes and adjust contrast on your computer screen. Forget about it with a book.
Plus, cost.
I agree, CA Guy. I teach in a progressive high school and when a program for seniors about learning how to handle credit responsibly came across the principal’s desk, she got furious at the idea that anyone would expect 18-year-olds to have to worry about something as banal as money!! Personally, I thought it was a good idea, especially after reading recently that the majority of young adults owe more and save less with each passing year.
How much do you thing that principal knows about money?
Enough said.
It makes me sad to think that a principle didn’t see the value of teaching students how to handle credit responsibly.
One more point for the idiots.
in the Netherlands there is a new initiative to teach this kind of household economics early in high school. But with the current neocon government I’m afraid it will teach people that the best way to get ahead in society is by running maximum debts, begging your neighbours and putting a higher value on money than anything else in life.
Big business is NOT interested in educating consumers about certain things. Some household economics education could be a good idea, but it really depends…
Funny…as a kid we all had to take “Home Ec” courses. The “ec” was for “economics” but by the time I took them there was very little left of the true economics part. I have (much) older friends who said they learned about balancing budgets in Home Ec in their day (of course, it was balancing their grocery budget from the allowance their husbands gave them, at the time). Still, money was discussed. Now kids get practically nothing in the way of money education…ever.
Now they get financial education from Suze Orman, who accepts people’s perpetual indebtedness as an axiom. She does tell people to pay down their debts, but there is no suggestion that mortgage debt and student loans should’ve been avoided in the first place.
Someone please edumacate me. Why would anyone major in history in college? Isn’t all of history ( and more )available and easier to access on the internet? Please don’t tell me it is because of their “approved” text books.
“How much do you thing that principal knows about money?”
so the principle is paying no interest?
“Why would anyone major in history in college?”
Well, I married a history major, and given the teachers at our college I don’t blame him. The majority of his courses were taught by some incredible people— sadly, the best and brightest one (who took my one-semester survey course from the 1600s through Ronald Reagan with four novels— including a Tolstoy!— and incredible, in-depth tests with open-ended questions such as “Explain the 20th century” (take as much time as you need… four hours was not unusual)) died of undetected cancer.
I’m STILL unhappy about that.
But that professor was responsible for an incredible number of history majors, because he provided exactly the kind of teaching experience everybody should have. He was a human dynamo, plowing with incredible speed into the hows, whys, and wherefores, and he loved it when students presented him with a good argument, even if he disagreed with it.
You can’t get that kind of experience on your own. The man had fire.
Well, you did ask…
The major in college doesn’t matter. I know three of my friends, otherwise smart, with degrees in accounting, finance and engineering bought right at the peak late 2005 and early 2006. On the other hand I know people that live on daily wages (starbucks etc) thought about the repurcussions and decided that they could not afford. Period.
Greed cannot be overcome with education it needs restraint.
Not worthless. If you want to go into academia or high level administration, it is probably a plus. Of course, the cost in lost salary to pursue the degree would have to be weighed in.
I personally think education is among the most important things we should study, so I am glad at least some folks are taking it to the highest level.
Good point. I was a typical cloven-hooved liberal in college. I wanted to save the world, starting with the plant and animals. I felt that focusing on money and economics was crass and shallow.
However, there is no getting around it. One must master money to master life. I think an understaning of compound interest is at least as relevant as a grasp of beat poets, reggae rhythms, and Pavlov’s experiements with dog drool. Ok, maybe not reggae rhythms…
I felt that focusing on money and economics was crass and shallow.
Same here, Fester, but I’ve come to realize that understanding compound interest is as important as understanding Dante or having read Virgil. I’m doing the crash course on this blog…
Dated a guy in MN (former national merit scholar) who mastered in Econ - emphasis on developing countries. He was freaking brilliant. It’s my friends with a PhD in engineering and biology that need help tying their shoes.
“…she had no idea what country was north of the US.”
Well in all fairness, she thought she new, but she cheated off one of the grade school kids’ papers just to make sure of her answer…
Good God. So far on a map, my 15 month old can find :
Hawaii; New Jersey; Cochabomba, Bolivia; Colombia; Mexico; Drake’s Passage; Africa, China; and Australia; and couple other specific animal homes.
Once the financially retarded can’t get access to easy credit I’m thinking the custom rim business is going to plumet. Am I the only one that hates the custom rim craze? When did gaudiness come into style?
Quite a while ago - sadly.
I used to be a big Coach fan. I went to look at a new bag in our Sacramento yuppie mall and it was wall to wall with 20 somethingm bottom of the economic rung blingsters. This used to be a staple of the conservative soccor mom. I remember asking my friend when did Coach become gangsta? I also noticed while there that almost every transaction was cash.
Amazing how times have changed. Coach is now classified as ‘ghetto’ as is Cristal.
That’s why under the Mayans or the Romans or the Greeks or the Tribes everywhere the laymen didn’t have access to the same info or riches the upper class and the priests enjoyed…
And in all of humanity’s history, the social structure is ALWAYS 98% lower class, 1% nouveaux riches, and 1% upper class…
The temporary dis-balance in the US is now on fast track to normal, after the environment and natural resources bubble and as the land finally gets saturated with people at same densities as the rest of the planet.
I wouldn’t call it even depression or “third-worldization”, just readjustment.
“man there are some stupid people out there”
I perfer the term: drugged (legal drugs too) and hypnotized!
Oh and let’s not for get food aditives like aspartame and Monosodium Glutamate!
and who can forget flouride!
‘We want to purchase another home,’ explains Ron. ‘We don’t want to wait 10 years until our record is clean again.’”
Talk about an inability to learn from experience….
Maybe negative conditioning would work - electrodes taped to sensitive body parts, show them a loan document, if they reach for it, ZAAPPP!!
This from the HGTV buying and selling forum that has supplied so many gems lately. Now they are whining because people have begun to post bad news…
http://tinyurl.com/2pnz4g
Do not read this while eating or drinking
Those people have their heads so deep in the sand they can see China.
One of my favorite topics: the antipodes of California is not near China. It’s in the southern Indian Ocean, somewhere southeast of Madagascar. If shadash is correct about people’s heads being buried deep than one earth radius, these people are literally Under Water.
I was thinking there heads were in deep, but not in the sand.
Ben posting news clips on HGTV forum…
thats like Gangis Khan sacking Rome.
Not much will be left alive.
Why do so many of them clasify news on the current business cycle as, doom and gloom? I guess, ignorance is bliss. And by the way, it’s “gloom and doom”. Gloom always comes before doom. Not the other way around.
Definitely a lot of koolaide drinkers and r.e. shills over there at that HGTV blog.
Ah, the sense of entitlement. The general public needs to understand that, indeed, home prices can go down. The “I only want to play if I win” mentally is too pervasive.
In general I don’t hope for a recession/depression, but comments like this make me think the only way it’ll go away is if we have a major correction.
“‘Lots of lenders are closing their doors and pulling loans in the middle of escrow,’ said Griselda Quezada-Chavez, an agent in Benicia. ‘It already has had a little bit of an impact.’”
Wait until the March #’s come out…
And April will be even worse. Some FBs were still able to get the 100% loans in early March. By April, those loans should be gone, taking out almost all of the first time home buyers, which takes out the move-up buyers (except those who are stupid enough to buy another house before selling their own house). Plankton theory at work. Spring will be a major bust for sales, but inventory and foreclosures will still be accelerating.
Speaking of stupid enough to buy another house without selling their own first, I have neighbors who did just that. I know their agent, and boy, do I remember what he said last August:
My now-former neighbors would have NO PROBLEM selling because their house sits on a double lot.
Well, fast-forward to now. Those neighbors moved out a little over three months ago, and their now-former house is now in its seventh month on the market. So much for the “NO PROBLEM selling” idea…
There are tons of those people out there and I guess they are not counted as subprime.
What I do not get is having the resources to pay for 2 mortgages for any length of time. Must be a lot of high paying jobs!
I have a friend who is about to buy a second house before selling the first. The old “easier to move my stuff gradually” thinking. I pointed out some possible problems, but the answer was that they owe so little ($120K) on the first house that they could easily cover the expenses by renting it out. They don’t seem concerned about the possibility that the asset will depreciate.
There will be a bloodbath.
Oh boy, Lily’s coming to Florida. Roll out the Stupid Mat.
LOL but I expect her to surf the renting market if she’s smart - oh wait…
I’d like to give you all of our (CA) idiots, but I don’t think you’ve got room in FL for that many people. Sure would be nice, though. Traffic would disappear here.
She is in for a surprise.
She’ll be like, “Dude, the last thing I need is a Haitian coke dealer in my neighborhood.”
In her defense, a lot of stupid people live in Florida.
“‘You never think that this could happen to you. You feel like an idiot,’ said Sobel, who has a doctorate in education. ‘You fall down and they stab you.’”
You are an idiot for not thinking. I wonder if he got his doctorate from one of those spam mails I get every-other day…
The timing is classic… fresh from the inbox:
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This line is priceless:
You?ll than kme later?
“You?ll than kme later?”
this is Engarish freudian slip translates:
You’ll then kill me later….
Now he’s getting an education from the world of hard knocks. It’s a much better education - one that he isn’t likely to forget a week after he finishes the class. (Not to say that he might not forget this lesson at some point. Some people need a few knocks before it fully sinks in.)
Ben Franklin said “Experience runs a dear school, but some will learn in no other.”
The more things change the more they stay the same.
Talking about being stabbed, we had a major gang fight in downtown Santa Barbara on Wednesday. Over 100 gangmembers converged on the intersection of State and Carrillo. One banger was stabbed to death, with as many are 5 hoods holding him down while another hood perforated the little gansta.
The people and civic leaders are in denial here- we don’t have enough parks, we don’t have enough youth centers, we need to increase the minimum wage, yada yada yada.
I’ll have more tomorrow on local observations.
“we don’t have enough parks, we don’t have enough youth centers, we need to increase the minimum wage, yada yada yada.”
bullets are cheaper
What? You have those whines in Santa Barbara? I thought they were just local whines here in Tucson!
On State street? wow
Did you see the piece California Connected did on SB employees living in their cars because no one can afford to live there anymore?
Gangfight in downtown Santa Barbara? What’s this world coming to? Send them back down here, another couple hundred won’t make a difference.
I was in SB about 6 months ago and saw the same thing. It was weird all the white people were in the bars and there was 5-6 latin bangers fighting in the middle of the street. The cops didn’t get called…
Hanging out with different people in the bars I definately got the feeling drugs (coke, e) were all over the place.
If I was in a gang this is the place I would want to work.
1. Cops are non existant
2. People have massive amounts of $$$
3. Housing prices are/were soaring = lots of stupid people with money to burn.
I went to college there in the late 90’s, I was surprised to see so many gangmembers the last time I went to visit a year ago for their annual Fiesta celebration the first week of August. It was like a war zone on State street, nothing like when I was living there. Police barricades everywhere, police on horseback, towers of lights errected to turn the street into daytime. I felt like I was in prison or something. SB might have been a sleepy town but their wealth disparity is creating social unrest there now.
the majority come in from out of town. there is a local element to the problem, too, but the majority are from Ventura and other cities coming in for the day for their own form of “touristing.”
Deadly gang brawl stuns Santa Barbara
“The city is reeling after violence erupts on the streets, leaving one teen killed and another charged with murder.”
Just wait until the downturn actually kicks in in beach communities like Santa Barbara. Here in Santa Monica, we now have to put up with helicopters chasing the gangsters around at night, and we haven’t seen significant declines yet. Once all of those soccer moms have to get jobs to make the newly reset mortgage nut, I expect things to get quite a bit worse.
“Deadly gang brawl stuns Santa Barbara
The city is reeling after violence erupts on the streets, leaving one teen killed and another charged with murder.
By Steve Chawkins, Times Staff Writer
March 16, 2007
SANTA BARBARA — Residents and tourists here were stunned Thursday in the wake of a daylight gang brawl that left a 15-year-old boy stabbed to death, a 14-year-old charged with his murder and downtown’s main commercial strip shut down for more than eight hours.
“Everyone’s saying, ‘This isn’t supposed to happen in Santa Barbara,’ ” said Police Chief Cam Sanchez. “Well, it isn’t supposed to happen anywhere.”‘
This is another big advantage that may come about with the end of subprime lending. Places like Santa Barbara won’t have to worry about gang violence muddying their tony image if the absence of subprime lending prices gang parents out of the market.
My guess is that the absence of subprime will send a tidal wave through the real estate markets causing values to drop by 50% or more over the next few years.
This will lead to a huge drop in tax revenue, which means civic services including police will be cut. The truly well off will flee to safer areas and the gangs will prosper as social cohesion frays.
All we hear about right now is subprime. But what about the millions of people who are one or two steps up from subprime? They are no longer going to be able to get the 100% loans and they certainly don’t have any savings for a down payment.
And what about all the people with pretty decent credit? They also don’t have any real savings and are accustomed to living well beyond their means. What are they going to do when it sinks in that they are stuck with hundreds of thousands of dollars in negative equity?
So I don’t expect the gang bangers to hit the road once mommy and daddy can’t get loans. Vacent mini-mansions make great gang pads and there are plenty of them to go around.
“Meanwhile, parents, many of whom work multiple jobs to make ends meet, have been clamoring for solutions”
Try vasectomies and tubal ligations.
OK, so maybe that comment was a bit harsh, but what gives with the idiot parents “clamoring for solutions”? If they can’t support or control their children, they shouldn’t be having them and then demanding that others come up with solutions for their little criminals.
Frosts my patootie. Basically, these people are raising terrorists. There’s no other word for it when their devil spawn make it so neighborhoods aren’t safe. The birth rate would go way down if parents were prosecuted for the crimes their children commit, including murder.
“Vacant mini-mansions make great gang pads”
from “Vacant” to”Vato” odelay pronto!
Palmetto, a good buddy of mine is a juvenile detective in culver city (just so we’re clear, he himself is not a juvenile). He had a liason with Santa Monica juvenile detectives because of all the crime problems they were having in the Sunset Park area. During a meeting with parents in Sunset Park, when it was suggested (along with supporting evidence) that their own kids were committing the majority of the crimes in their own neighborhood, he claims all hell broke loose, with lots of yelling and posturing, to the point that the officers had to let the subject drop. Much denial, no chance at any solutions. Sad and pathetic.
Lionel, I just now saw your post. I hear you, the denial is the same in Florida. Maybe even worse. Formerly nice, middle class communities in the Tampa Bay area, like Town & Country, have become gang-banger havens.
Same in NPB,helis flying over my house at least 2-3 times a week. No illusions here though, the COPS are well mobilized to keep order here. This is what’s coming to SB shortly. Too bad. I was thinking of getting out of OC in a few years and head SB way; may be just more of the same thing by then.
“Just wait until the downturn actually kicks in in beach communities like Santa Barbara. Here in Santa Monica, we now have to put up with helicopters chasing the gangsters around at night, and we haven’t seen significant declines”
I am amazed that most of the clueless and uninformed haven’t a clue that Santa Barbara and Santa Monica have problems with gangs, or that there are ragged ghettoized latino slum districts in the hollister/goleta area of SB, and in such LA westside districts as Mar vista/Palms, and even in the east sections of SM along Pico blvd. Venice had some serious gang problems some years ago, with gang fights and shootings even along the venice boardwalk some years ago.
With the inevitable collapse of westside home prices,accompanying recession. and with declining city revenues/reduced police services and the continued flight of stablizing middle class families out of LA, look for lower-class mainly latino hoodlums and gangbangers to take over entire local neighborhoods, staking claims to selected westside turf to control natcotics dealing in their’territory’.
LA has an exploding gang problem, and not just in cudahy/compton/maywood or other inner LA s*ithole. The gangs are spreading out(grabbing up turf. parceling out new territories)in even supposedly safe coastal communities such as SM,Venice,South Bay,Redondo B,Torrance,Westchester,Playa, ect.
“The people and civic leaders are in denial here- we don’t have enough parks, we don’t have enough youth centers, we need to increase the minimum wage, yada yada ya”
Total BS. I worked in Carson, a solid middleclass suburb in LA/Southbay. Lots of parks/youthcenters/plenty of jobs. Yet Carson had severe gang problems back in the 80’s/90’s. There were Samoan gangs,black gangs.latino gangs/Islanders.white trash gangs. Often the gangstas were wannabees from middle class backgrounds. There was warefare among rival latino gangs from east Torrance, Carson,Wilmington, which were quite bloody affairs. One east Wilmas homeboy was dragged out of a bar, held down while another gangsta shot him in the throat. Another Carson teen gangbanger was stabbed in carson high school by some E Wilmas rivals(both victims died).
Gangs and fights among latino immgrants is rooted in the culture. Machismo, drinking,braggaddo,boastfullness and short-temperedness is part of it. Latino immigrant working/lower class males as a rule practice machismo to the point that even a wrong stare or something said in jest at a bar or party may quickly escalate into arguments,taunting,and then knives, flying chairs and guns. Not to mention fights over woman.
Gang fights/stabbings/shootings take place far more often in slum areas than in middle class areas such as Carson or Santa Barbara, but gang activity/gang culture in supposedly safe areas of SCal is more prevalent than is realized, though it dosen’t flare up out in an open public street like that Santa Barbara scene. It is usually kept underground, for organized gangs are usually adept at maintaining a low profile for obvious reasons, like not getting nabbed by the police and justice system. Negative publicity is as bad for gangs as it is for politicians. it disrupts their main business, narcotics traffiking.
some posted in calculatedrisk that soble, had a line of credit —> converted to loan(refi)—> another line of credit before this happened.
Not sure about the accuracy.
but believable
I liked this quote from the LATimes article:
“At the top of his street, next to the charred shell of a house that mysteriously burned a few months ago, is a house for sale. The house immediately next door is on the market too. A few doors away from De Leon’s home in the other direction is a third house looking for a buyer. Some owners are trying to rent their places out, advertising with little signs on the front lawn.”
Sounds like the insurance fires have begun…
Funny you should say that. I’ve an acquaintance who is a retired fire chief. He likes to fish. He is upset, because, insurance companies are starting to call him with notably increasing frequency to do “for-fee” arson investigations. He says the money is dynamite, but, like I said, he is upset, because he likes to fish. My hunch his reel doesn’t see much action this year.
Or next.
He he - time to buy firefighter equipment manufacturers’ stock. I think we’ve found our next bubble.
I think if we pool our money together then we can corner the market and live like Kings and Queens.
Just wait till the FB’s get the check. The insurance companies usually only pay replacement cost, and they certainly won’t pay you for the land which was a huge part of the problem.
In Carson near Edmonds a gawd awful looking McMansion being constructed out of fireproof materials mysteriously went up in flames a few months back. It burned before the electrical was even turned on. Hmmm…
Maybe it was an act of God, who just couldn’t take another god awful mcmansion.
Just wait until all the flippers find out that homeowners insurance typically doesn’t cover vacant property. Coverage for vacant property is 3-4 times the cost of occupied property.
‘The interesting thing is the impact of housing on the economy,’ said economist Alan Gin, who compiles the indicators. ‘In employment, not only construction and real estate are down, but you’re also seeing an effect in the retail sector.’
Well, duh! Alan, are you just now figuring this out? Or are you just finally admitting it because the numbers are too obvious to spin any longer?
The latter.
Alan Gin has made so many b.s. “forecasts” that have been featured on this blog. Must be nice to make a big salary for spouting absolute nonsense that only a retard could believe.
Alan Gin has no credibility in my book but all the same I think it is very noteworthy that he has now turned negative.
Fasten your seatbelts as we are entering the black hole from which nothing can escape. Not even light.
Are you suggesting we are at the event horizon? I miss my telescope
Maybe I can score one from a desparate FB.
Funny story. A few years back, I was reading a paper about the consequences of black holes on legitimate space travel; the whole paper was essentially, “what would happen if you flew a ship into a black hole?”
Above the event horizon (the point around a black hole at which not even light can escape the massive gravitational force) there’s another point which is essentially the event horizon for physical matter.
The gist of the paper was this: before your ship hit this point, you would actually see the ship beginning to stretch, as the atoms at the front of the ship would be undergoing a much larger gravity field than the atoms at the back of the ship. At this point, no matter how hard you could apply reverse thrust (trying to back up away from the black hole) your ship was doomed to rip itself apart and take you with it. Also, there would be a point in space just after that where the pieces of your now-stretched-to-infinity ship would appear to completely be obliterated; this is due to the force of gravity being stronger than the bonds of the atoms themselves.
To an outside observer, this whole process would look almost instantaneous due to the gravitational force: your ship, your body, and everything about you would turn into one gigantic line, up to the wall at which the atoms themselves would get torn apart.
Interesting reading, and also somewhat appropriate. The serious damage happens well before hitting the actual black hole.
Appropriate but chilling.
“The couple bought in 2002, as the boom was beginning. At its peak, the house was worth more than three times what they paid for it. But they refinanced and took cash out to do upgrades on the house, and then they refinanced again because — well, Quinlan isn’t sure why.”
She isn’t sure why? SHE ISN’T SURE WHY?
sounds like those housing upgrades lowered the value instead.
The copper-plated koi pond didn’t turn out like the saleman said it would
“The couple bought in 2002, as the boom was beginning.”
The conventional wisdom/MSM spin says that only FB’s who bought in ‘05 and ‘06 were at risk. Nice to see that notion starting to be stomped into the ground.
Agreed. Anybody who re-fied all or most of thier equity is soon to be a “FB.”
So you’re saying we won’t be able to choose from 20% of the homes?
Got popcorn?
Neil
Of course she’s sure why. She just dosn’t want to say: … “for play money.”
Which do you all like better:
“She’s learned this about lenders and loan agents: “They make it look like they are trying to do all this for you, but the reality is that it was mainly for them. They got their chunks out of you, and then they put you out to the wolves.’”
Or
“You never think that this could happen to you. You feel like an idiot,” said Sobel, 48, who has a doctorate in education. “You fall down and they stab you.”
Munch munch munch…next cartoon before the feature film: Woody Woodpecker
“Hey Neil, get the large bucket”
Boo frickin hoo. No sympathy, no mercy for any of these fools. Foreclosure is the new black. Take all the greedy, irresponsible and stupid FBs to the wood shed - severe pain is needed. And for the brokers/lenders/RE agents/title reps who commited fraud, throw the book at them - they deserve to take the perp walk and be sued in civil court as well.
I am sick and tired of these “poor me” stories and we are still in the 2nd inning of the game. Wow..thank god it’s Friday. I’m heading out of work here in a little bit for a cocktail - it is time to cool down.
I had 12 equity lenders a week wanting me to take out a equity loan during the boom . Has anyone heard of the word “no”.
The “You fall down and they stab you” comment is perfect. Yesterday was the Ides of March.
That’s almost too perfect!
i did mention Ides of March on one of yesterday’s threads - didn’t know about the stabbing incident then - thanks for pointing out significance
Opps didn’t mean to step on your toes. The ides always stick in my memory since my B-day falls right after it.
I knew Caesar…he was a friend of mine. And Sobel, you’re no Caesar!
Senator Dodd to the RESCUE !!!
” But they refinanced and took cash out to do upgrades on the house, and then they refinanced again because — well, Quinlan isn’t sure why.”
Am I the only one who finds the statement “took cash out to do upgrades” a piece of crap? I know this is what their loan officer or friends probably told them to say by I get tired of seeing it as a mantra of MSM sob stories.
The house was BRAND NEW! You can’t even see a picture of it on Google Earth yet!! Why did it need to be “upgraded”?!?
The house was BRAND NEW! You can’t even see a picture of it on Google Earth yet!! Why did it need to be “upgraded”?!?
It’s ignorant people listening to the freakin’ advertising. I’m sitting here reading with CNBC in the background, and there must be a dozen DITECH/Countrywide/etc refinace commercials every 30 minutes. It’s always easy and fun to refi your house so you can buy the crap you need to get you through life.
The “smaht man” who advertises the “smaht loan” on the local radio station suggests you should pull money out of your house to pay for:
• your daughter’s wedding
• your federal and property taxes
• your credit card balances (so you can get out of debt!)
• bail to get you out of prison
And I believe him because he attended college and has a “financial” talk show.
Well, the upgrades probably included a Plasma TV, leather sofas, a SUV, and other essential household items.
What about saving up and then doing the upgrades? I upgraded to a brand new car - cash of course.
“‘Think about all the mortgage debt that was assumed by San Diegans in the last few years. Instead of buying a new car or going shopping, they’ll be paying down their interest on interest-only loans. And there are so many people who bought homes for zero down payment, they will just be going to be walking out of their homes, if they haven’t already, since they have no financial incentive to stay. This is a real disaster.’”
I am convinced that the recovery of the NYC economy from the 1980s bust was retarded for this very reason. The bubble-priced sellers took their money and retired to Florida, to be replaced by the permanently house-poor. No wealth was created but a huge amount of wealth was transferred, and it left the Northeast. The result — long-term damage to the consumer economy.
This time, it could be going nationwide.
And this is one of the reasons that Sen Dodd’s proposal would ultimately doom the economy, it is better for the markets to clear with foreclosures than to prolong the pain by “keeping the dream(nightmare) alive by subsidizing people in ridiculously overpriced homes.
Um, I dunno about that. I remember a day called “Black Monday” in the late 80’s that didn’t do NYC a lot of good, either.
Besides, the one’s that sell at the top and take off to Florida, or anywhere else, are very rare. Most of the “wealth” created in a bubble exists on paper - it was never “created” to begin with.
Heck I am transfering my wealth to Canada and Europe!
to Europe: good idea, do it before the EU crash that will probably be even bigger than the US (because of the even bigger home appreciation over here)…
““She’s learned this about lenders and loan agents: “They make it look like they are trying to do all this for you, but the reality is that it was mainly for them. They got their chunks out of you, and then they put you out to the wolves.’”
Yes, those evil doers dragged you kicking and screaming into their office and tortured you until you signed. And of course when you left their office you reported them for all their wrongdoing! I have no, none, nada sympathy for your ilk as nothing could have kept you from signing for what you felt you were entitled.
Everyone should be able to buy what they can’t afford. Isn’t that
what this is all about…leave no one behind!
When I was applying for a loan, the officer I worked with was all excited about getting me into an ARM because it would give me a low! monthly! payment! Well, I’d done my homework on ARMs and fended him off with one simple word:
No.
I insisted on a 30-year fixed-rate mortgage, and that’s what I’ve got.
REFINANCE —- its about to become a very very dirty word, like one of those that raise the hair on your back, and you have an instant reaction of clobering the person who would suggest such a thing…
Refinancing can be a good thing. I refinanced a low interest rate mortgage into a really low interest rate mortgage (40% down, 15 year fixed at 5.0%) with no cash back. I carefully ran all the numbers and found that even after rolling the points into the loan, my monthly payment would go down. THAT is what refinancing is good for. These clowns just got greedy.
my friend, you are an exception to the rule. All these sob stories have one thing in common, naive/idiot/greedy homeowners refinancing cause they think its a free lunch.
All the financial instruments available have a good reason for being offered, and can be useful and worthwhile for a sophisticated ( a person that has a few or more neurons firing) investor. The reason ARMs and I/O were limited before the money spigot was let loose was because they are not for j6pack or j0mom, they are for ppl. who can understand a contract, run the numbers on their own and come to a decision without any of the touchy feely things involved.
got cash?
I refinanced out of a 30 year fixed into a HELOC. I used the HELOC to pay off the balance.
No points, appraisal, closing costs were low.
The HELOC was 4% at the time, I paid it off over the next 2 years (about 80K total) and probably averaged 5% interest.
Ron and Dawn Blacic…I think I’m going to be sick.
(I wonder if they wear matching outfits.)
Hey at least its not Biff & Bev - Have a great weekend all!
And these are the people that Doddering idiot wants to bail out with our tax money.
Remember darling, “We’ll always have Perris”…..
“I’m not fighting for anything any more except myself.
A low monthly payment is the only cause I’m interested in.”
“You fall down and they stab you”
Oh please, this is the centuries-old cry of the irresponsible debtor: Where somehow the lender is “evil”.
In this case he’s hardly being “stabbed” — he’s being asked to show responsibility.
in this case a gamblers cry - they took all my money - poor me
“The couple bought in 2002, as the boom was beginning. At its peak, the house was worth more than three times what they paid for it. But they refinanced and took cash out to do upgrades on the house, and then they refinanced again because — well, Quinlan isn’t sure why.”
CLASSIC!!!
Losing your house because you refinanced for no apparent reason?
Priceless.
And I have to agree with the person above who wondered about all the “upgrades” people do on new homes. WTF is that all about? And it’s not small stuff either, people are tearing out entire kitchens! People’s expectations sure have changed in my short life time of 32 years!
My parents have the same kitchen that was installed in their house 40 years ago. The only improvement they ever added was a double oven. And that was back in the 1970s.
People believed the propaganda that said the way to riches is to improve your house, which will ultimately be worth millions. Hah.
I love how the MSM portrays the homeowner as the ‘victim’ of unscrupulous lending (politicians, too, are already jumping on that bandwagon). These people heard just what they wanted to hear, spend-thrifts and cretins alike, and surfed the cash-out wave as far as they could. Now that it’s time to pay up, they cry ‘foul.’ No responsibility is accepted. Well, I have no sympathy. I hope the outcome is truly darwinian — cold, cruel, and final.
have any GOP followed dodd and hilary on bil offers ?
lenders have to stand in the corner while debtors get a “time out”
The Federal Housing Administration could have hundreds of thousands of subprime borrowers if Congress passes an FHA reform bill, but if not, the agency will raise its mortgage insurance premiums, Housing Commissioner Brian Montgomery has told Senate appropriators.
http://www.nationalmortgagenews.com/washington
“There will be growth in the spring!” Chance the Gardener
I just moved out of a condo I was renting in San Diego. It was owned by a Doctor who had bought three condos in 2004. His cash flow situation must be dire because he begged me to cooperate in getting the condo prepped and shown while I was still living there so that there wouldn’t be any interuption in occupancy. He actually wanted me to move out on the same day the new guy was moving in, with the cleaning lady working underfoot as well! He tried to get me to buy one of his condo’s but he was undercut by his own property manager who offered me one HIS condo’s on the side along with an interest only ARM.
The poor doctor had spent Christmas 2005 vacationing in the South Seas.
“San Diego’s leading economic indicators fell for the 10th month in a row in January. ‘The interesting thing is the impact of housing on the economy,’ said economist Alan Gin, who compiles the indicators. ‘In employment, not only construction and real estate are down, but you’re also seeing an effect in the retail sector.’”
Interesting, yes, but hardly qualifies as news. How many years ago did posters on this blog predict all of these developments in the San Diego economy at the end of the bubble?
Let’s say a debt serf is granted a short sale by his lender, which then sends him a 1099 for income due to debt forgiveness. The debt serf now has a big tax bill but has no cash and can’t pay it. What happens when you don’t pay your tax bill?
You have a very good friend with the initials I-R-S. And that friend will be an intimate part of your financial life for years.
How do I know this? Because I have a good friend who refused to pay federal taxes to support the Vietnam War. The Feds caught up with her, and she had to pay back taxes, plus interest.
She’s now quite elderly and not very well off. Part of her poverty stems from that decision to be a tax resister.
Tax forgiveness is going to be really hard to get. Sure they’ll arrange payments and you get hit with interest, penatlies, etc. but even taxes and student loans don’t get forgiven in BK.
Maybe all the interest on those 1099s will be what bails the US out of it’s debt down the road. Add the taxes on cash-back “income” the IRS is now going after and it could end up being real money someday.
The feds will always get their share, the only difference is how soon.
penalties and interest accumulate
You setup a payment plan. They charge interest. Tea party, anyone?
You get hit with ongoing interest and penalties. Depending on the type of tax, the interest may be reasonable (US Fed rate) or ridiculous (assessed monthly). Eventually the IRS files liens against any other property you own, attaches your bank accounts and garnishes your wages.
However, you won’t end up in jail simply for failing to pay (unless you’re secretly hiding money somewhere). Jail is reserved for tax evasion or fraud (lying on your tax return).
Yep, my dad got sent to the slammer in Lompoc for five years for conspiracy to commit tax evasion. And this was small-time stuff, altogether much less than 100K. But he was helping other people avoid taxes. Don’t F*** with the IRS.
Of course my wife knows someone in the home town who makes about 250K a year and “turned in his social security card” and hasn’t paid taxes in about 15 years. I just don’t understand how that works. When the IRS catches up to he and his wife, they are going to be in such a world of hurt.
Your wife’s friend will meet Bubba… and get a lesson in the meaining of BOHICA…
Bend Over, Here It Comes Again!
You said it… “Dont F*** with the IRS!”
–Shannon
It’s called contract law - IRS is private (contract) law and is only applicable to those who volunteer (by opening a social security account). The benefit derived from the contract is social security (disability, retirement, burial) - rescind the social security contract and you are not obligated to pay income taxes.
Something all the ’something for nothing’ tax ‘protesters’ sitting in prison forgot to do.
You can’t have your cake and eat it too - you want benefits - you better pay for them.
You enter negotiations with the IRS. It’s not the end of the world, they will generally enter into some kind of payment plan, and may even adjust the balance due. Their job is to squeeze as much money from their victims as possible, but they’re a good parasite, they try not to kill them.
The IRS makes the syndicates look like choir boys. I’m always amazed at the people that have the cojones to try and pull one over on the largest mafia on the planet. Me? I render unto to Caesar…..
Said with best Joisey accent:
“Look … we don’t want to hurt you,
WE JUST WANT OUR MONEY”
This question got me to thinking that if congress was able to pull off some kind of ridiculous bail out plan for dumb borrowers that this might be what it is - an exemption for debt relief income from short sales.
Time to move to Mexico!
“I survived the housing bubble, and all I got was this lousy T-Shirt… to go with my huge bank account!”
If there’s going to be bailouts of these idiots, lets at least be fair about it and cut a check for 100-200K to every person who did not take out an equity loan in the last 5 years.
Oh yeah, we’ll have to get rid of the mortgage tax deduction too - that way when taxes are raised the homeowners can pay for it as well as the renters.
Exactly,
The only way we can defeat the coming bailout is by blowing it up so big that it becomes unfeasible.
How about this: we form a shadowy organization of people with no debt and good credit and threaten to all get big mortgages and default simultaneosly if the bailout goes ahead.
You go first!
I’m a homeowner with a mortgage and I agree with axing the mortgage interest deduction. It’s stupid. A lot of this HELOC crap would never have happened if they couldn’t sell the tax deductability scam.
What kills me is the number of people not claiming their cash back deals as income. I know of 2 people who did this because if they did, it bumped them up into the AMT range and that would effect their mortgage interest deduction. They are just hoping the fed doesn’t notice.
It’s not income. It’s just borrowing. If you have to pay money back, it’s not income.
I agree with climber. Let it go. But then, because we bought an affordable house in a non-bubble area, our mortgage interest deduction doen’t even come close to kicking us up above the standard deduction anyway.
Of course, with people defaulting on houses that have a $5,000/month payment after the ARM resets, I get to sleep at night knowing that for that kind of money, I could pay almost an entire year on my 30-year fixed. And you know what, we both have a roof over our heads, so who’s getting better value for money?
Exactly! Why should the fools be rewarded while those of us who resisted the sirens’ call of (heavily financed) bling get the shaft?
Here’s another option–they get to walk away from their debts and the house they could never afford–and hand the keys to someone who acted responsibly (i.e., one of us). That way the gov. doesn’t have to pay anything, the idiots get away without major pain, and those of us who have done the right thing for so long get rewarded.
Just a thought…
Have said this before, but it always bears repeating. The reason I became a mortgage lender (real lender, not “loan originator”) was that I wanted to stop being pissed off with the mortgage tax deduction. I find that in real life, my clients are not too unhappy to pay my 9%+ rate, because they are focused on their pitiful tax deduction. Me? I take the standard deduction most years. Of course I do have to pay tax on the mortgage interest that people pay to me, but I consider it my salary even though I report it on Schedule B.
“Even when she was in default over the last few months, the offers continued. ‘They kept calling and calling, ”
——————————————————
ya think? now there’s a clue for the clueless
“Peter Schiff, who runs Euro Pacific Capital in Newport Beach, said the real estate decline will be an impact on the economy for quite some time. ‘Think about all the mortgage debt that was assumed by San Diegans in the last few years,’ he said. ‘All they’re going to be doing is paying interest on that money. Instead of buying a new car or going shopping, they’ll be paying down their interest on interest-only loans. And there are so many people who bought homes for zero down payment, they will just be going to be walking out of their homes, if they haven’t already, since they have no financial incentive to stay. This is a real disaster.’”
It might not be that bad, Peter. Affordable housing is a seemingly intractable problem in San Diego, and for the first time in years, it looks like the picture may be about to brighten.
It is really hard to argue with foreigners when they say Americans are the stupidest people on the planet. Really hard to argue.
Just watch this video.
http://www.youtube.com/watch?v=fJuNgBkloFE&NR
There are stupid people everywhere. In less developed countries they either end up on streets, in jail or dead. In US, however they get their own reality show.
Of course but we have a major surplus!
yes, because theory of natural selection stops operating in a welfare state.
Huh? Sexual selection still works fine, and nature took care of survival of the fittest a long time ago.
What’s bizarre about our society is that people too greedy/stupid to bear during their peak child bearing years can get fertility aids and selectively abort until they get a relatively less deformed fetus, lol.
We should want people to have their children young (as long as they’re healthy, stable, well-fed ie no vitamin deficiencies, and no drug addictions), you get a better gene pool.
That’s arguing from biology … from evidence looks like the later mother’s children actually do well in school.
Maybe the rate of genetic mutations isn’t everything.
“‘You never think that this could happen to you. You feel like an idiot,’ said Sobel, who has a doctorate in education. ‘You fall down and they stab you.’”
I’D LIKE TO STAB YOU AND THEN KICK YOU IN THE NUTS FOR BEING SO STUPID. AND THIS MORON IS EDUCATING OUR KIDS?
Usually, the Ph.D’s float up to the top. Think principal or superint.
On top of an el lay housing crash, coming down the pike, this spring/summer, there is the sticky little problem of very little snowpack in the High Sierra, what little there is, is rapidly melting. (it was 71 degrees @ 5100 feet, here yesterday, and a friend in Bishop, Ca told me it was 84 degrees @ 4800 feet)
So get ready el lay:
Your housing market is tanking, along with your fresh water supplies.
It’s going to be a long hot summer. You’ll not forget it soon~
My thinking is that the subprime meltdown, at least initially, will have the largest impact on home pruchases at the lower end (in California). That is, subprime buying is/was skewed at the lower in of the market. Assuming this is true, is it possible that the median home purchase gets moved up or at a minimum, resist moving down becuase more lower priced homes (versus higher priced) are not selling? No idea how this will work out but just a curious thought I had.
Yes, I’ve thought that as well. Sales will plunge, but the median home prices will rise. The NAR will say the tide has turned.
I think this is already happening. In the expensive areas near the coast, I see no sign of prices falling yet. Once the crack houses and desert dwellings stop selling, the median almost cannot help but rise, at least until the high end falls significantly.
I found a few local price decreases, nothing to get too excited about:
Price Change - Decrease $1,299,000 2 Beds 1.00 Baths
MLS Number
06-035595
924 amoroso pl,venice, CA 90291
Area: Venice
Classic walk-street Craftsman house. First time on the market in over 30 years. Great yards, patio, deck and lush landscape that creates a wonderful private garden . Originally a 4 bedroom it is currently a two bedroom with many upgrades including bath and kitchen. Two car garage with a pad for two additional autos. Hardwood floors, wood burning fireplace, wine frig, stainless steel appliances, granite countertops, re-modeled tile bath with huge tub. An entertainers delight! Now vacant.
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Property Type: Residential-Single Family
Rooms:Den,Living,Patio Open
Equipment:Built-Ins,Dishwasher,Dryer,Garbage Disposal,Hood Fan,Range/Oven,Refrigerator,Washer
reporteddate: 2007-03-15 12:51:19Price Change - Decrease $1,139,000 5 Beds 3.00 Baths
MLS Number
07-154193
2439 louella ave,venice, CA 90291
Area: Venice
Owner updated main house again 03/07. New pictures will be posted 3/20. 2Units/Homes on lot - 5 Bedrooms & 3 Bathrooms. Front house has 4 bedrooms & 1.75 bathrooms, spacious kitchen, hardwood floors, Central Heating, 3 water heaters, attached garage w/ private work room, 2066 square feet and much more!! The back 1920’s cottage has 1 bedroom & 1 bathroom, lviing/family room & kitchen, 483 square feet. Income opportunity–buyer to verify.
——————————————————————————–
Property Type: Residential-Single Family
Rooms:Breakfast Area,Living
Equipment:Ceiling Fan,Garbage Disposal,Satellite
reporteddate: 2007-03-15 11:04:46Price Change - Decrease $1,179,000 2 Beds 1.00 Baths
MLS Number
07-169523
910 superba ave,venice, CA 90291
Area: Venice
Charming 2 bedroom, 1 bath cottage with hardwood floors + detached architectural studio with high, vaulted ceilings, bamboo floors, slate bathroom. Great location, sprinkler system. Excellent live/work space.
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Property Type: Residential-Single Family
Rooms:Breakfast Area,Living,Loft
Equipment:Cable,Garbage Disposal
Price Change - Decrease $1,179,000 2 Beds 1.00 Baths
MLS Number
07-169523
910 superba ave,venice, CA 90291
Area: Venice
Charming 2 bedroom, 1 bath cottage with hardwood floors + detached architectural studio with high, vaulted ceilings, bamboo floors, slate bathroom. Great location, sprinkler system. Excellent live/work space.
——————————————————————————–
Property Type: Residential-Single Family
Rooms:Breakfast Area,Living,Loft
Equipment:Cable,Garbage Disposal
Thanks, lainvestorgirl. It’s good to see a bit of movement, even if slight. But…
I happened to drive through Venice a few weeks back, and turned off Lincoln Blvd into a neighborhood to avoid some gridlock. The neighborhood I turned in to was the area just south of Penmar and east of Lincoln, where there are probably fifty boarded up apartment buildings - it looks like they are scheduled for demolition. There were a few gangsters hanging around, but nothing like what it used to be. I thought to myself: “self, maybe Venice can be redeveloped and present an opportunity.” Maybe property here could pencil out as an investment…
Fortunately, I had a clue stick in the back seat. After flogging myself about the head and shoulders, I splashed some cold water on my face and continued on my way.
smlandlord, Venice will eventually be redeveloped. Unfortunately it will be after an earthquake, as most of Venice lies on landfill and will liquify a la the Marina in San Francisco.
yes, some people think this has been happening in the most bubblelicious parts of Europe too over the last year or so. The top 2% or so of society is doing extremely well at the moment, and they are still trading homes while the lowest incomes are gradually priced out of the market (despite all the subsidies etc.). But home price statistics are so heavily manipulated that it is very difficult to tell what is really going on.
One example is that in the Netherlands the amount of living space in many homes - as reported by realtors and appraisers - miraculously increased by sometimes more than 50% over the last 10 years. But nothing has changed in these homes, so this strongly distorts the statistics about average price per sq ft. Also the definition of ‘average home price’ has been changed at least three times over the last five years, and there are new rules from time to time about what is and what isn’t included in the housing statistics.
“they refinanced and took cash out to do upgrades on the house, ”
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remodeling was called “investing” during the boom, everyone was convinced they would get back more than they spent when they sold, plus get to enjoy it in the meantime.
so they paid for the upgrade, with added interest and refi fees. incredible!
From Bloomberg: PIMCO predicts subprime meltdown to spread to Alt-A and Jumbo.
http://www.bloomberg.com/apps/news?pid=20601087&sid=auhE5bdvvZR4&refer=home
And JP Morgan Chase tells its customers not to invest in the CDOs it has underwritten:
http://www.bloomberg.com/apps/news?pid=20601087&sid=ajvSJ8aBMVt8&refer=home
That’s just on their front page!
“In Walnut Creek, agents said that the low inventory is leading to quick deals. It took just a week to sell a $895,000 home that she listed March 5, said Joan Pancoast, an agent for Coldwell Banker.”
The same is true for the SF Peninsula. The good stuff is snapped up quickly. Overpriced junk sits. Inventory is still lean. Locally there is some evidence of a slowdown but no evidence of a protracted downturn.
Correct.
I’m told the weekend after the Superbowl, the market began to heat up and in places where I am looking to move, (e.g. Cuptertino) it’s gotten more competitive with over-bids on homes.
I would say builders may be planning more Apts than Condos in the SV but I doubt any builder having to cut the price on a single family home or townhouse. Units are going up next to freeways and most all are three story with garage.
FYI As an indicator of the local economy: New car sales in CA are down 5% statewide but up 2.5% in only one country, Santa Clara. Sales were down 0.8% in Contra Costa Co.
With subprime meltdown how do you qualify for a loan without any gimmicks. If its based on stated earnings and savings for downpayment things will adjust downward. In RE once the trend is set it will be your friend for a long time just look at the expansion we had.
Wait for the ARM resets… the highest in the nation is SF down to SJ… Look sharp…
I’m on the Peninsula, and that’s what I’m seeing. Zero to 2 SFH listed in my neighborhood at any given time, get snapped up in a week. Prices may be down as much as 10%, but they’re still around $1M. How can this be? The buyers don’t need to borrow anywhere near 80%, much less 100%.
“‘There’s at least as much uncertainty as there was a year ago,’ said DataQuick analyst Andrew LePage. ‘I think we’re closer to a normal market now than two years ago, but normal has to be redefined.’”
I think normal has to be defined as where the market ends up after prices have retracted to affordable levels. The elimination of liar loans, suicide loans, etc. is an important first step, but it will likely take many years for prices to return to normal (aka affordable) levels once the lending mania is over. And if Senators Dodd or Clinton manage to get their bailout programs adopted, the correction will play out even more slowly.
“177 homes in Perris’ central ZIP Code have received notices of default, the first step toward foreclosure.”
Is it just me or have you guys noticed recently in the media that any statistic involving “notice of default” is always suffixed with “THE FIRST STEP TOWARD FORECLOSURE”?
“In California, Perris is at the epicenter of mortgage problems. From November to January, 177 homes in Perris’ central ZIP Code have received notices of default, the first step toward foreclosure.”
I personally believe that the Inland Empire will at some point lead the nation in foreclosure’s. My brother who is a Loan Broker in Irvine made a career for 4 years making crazy suicide loans to folks in the Inland Empire. Somehow, the I.E. seems to be lurking under the radar - but at some point it will roar to the forefront.
- Most of the buyers out there would never qualify for a home loan requiring a down payment and doc’s.
I don’t think all the faux Italian shutters in the world, could shut out the pain coming to the i.e.~
I see a lot of i.e.d.’s (Inland Empire Defaults)
It’s $3.37 for a gallon of regular gasoline. CA had a cold winter causing unusually high heating costs and now these high gas prices are going to rock people’s budgets.
The Titanic has hit the iceberg and the lifeboats have been released and there are people still on the deck of the Titanic thinking that the ship is still going to make it to New York City.
I can’t what for the sequel!!!
Where is that popcorn?
Folks, please give those juicy quotes in their entirety. On this Schadenfreude Friday, I bring you the full quotes, and will throw in the “feed the squirrels” story as a bonus. Now if I could just figure out a way to work the “15% is in the bag” part into it…..
Might as well list the links to the bios of the two
moronsgeniuses quoted in the NYT above:Diane Swonk - proving that a moron with an MBA from a topnotch school is still a moron
Ron Shuffield
Looks and first impression go a long way. Thats why she thrives, no one asks serious questions of her.
What are you talking about?! She looks “touched”.
” $116,000 over the asking price”
Stop. I’m having nightmare flashbacks. This quote reminds me of a house in my neighborhood (Arlington, VA - just outside DC) that sold in April 2004 for $258,000 over its $550,000 asking price. Now that’s what I call a “no-limit-escalation-clause-you’ll-never-forget.”
Thanks for those quotes. They were great. I could read pages and pages of that nonsense now and get so much satisfaction from it.
10-1 Ms. Butler will be really glad that she kept up a good crop of fat squirrels. She will be able to eat for free and use the extra money on her mortgage payment.
Some Ameriquest carnage: My wifes cousin worked at Ameriquest as an IT guy, he just got laid off. Talking to him last night he said he knew the layoffs were coming last week, because him and his crew were getting ready to lock out the computers and files of the pink slip victims. He said that they were assured that their jobs were still vital to the company and they still had jobs. Well I guess not… All his peeps that were dropping the electronic axes got axed too. One higher up IT manager told them at the laid off that they were a huge liability because of the havoc they could reek on the company if they knew they were next or the company was going down hill. This will be interesting because almost everyone at Ameriquest is a big partier, out to lunch everyday, spend happy and most own stucco boxes.
I have a friend whose son did an IT temp gig at American Express in Phoenix. He’d come in around 5 a.m. to start working. Why? Because once the regular employees came in, it was hard to get anything done. They were too busy planning where they were going to have lunch.
In one of the big now bankrupt former employers of mine. If you got there early and your log on info didn’t work and no one in IT would return your calls, you knew that your last day had arrived.
check this link out.
http://www.autodogmatic.com/forum/viewtopic.php?t=235
here is a quote form that page
kittygirl writes:
“Nobody in the Alt-A world is safe, take it from an insider waiting for my walking papers.”
More from kittygirl (I like her already):
“Wall Street investors are skiddish…they are scratching their heads trying to figure out what is going on, THEY have no understanding of the mortgage biz..most of them too young to have gone through the ups and downs in the 80’s and early 90’s… (We all know we made loans based on the notion that we would continue to see huge inflation in re….now we have a soft market, the option arms, short term arms coming due…cashout with not limit programs are catching up to us) ..meanwhile we can’t unload the funded loans (hence NO NEW $$ to lend)….2nd td’s at 100% are the big issue, nobody will buy them, if they are willing to buy them they are buying them at anywhere from 25-50% of loan amt, (lenders can’t afford to sell them at this cost)…that is why the sudden halt you saw in the last few weeks from a few ALT-A lenders…and now restricting guidelines to 90 or 95% cltv to cushion future losses if the market continues to decline…. “
“THEY have no understanding of the mortgage biz..most of them too young to have gone through the ups and downs in the 80’s and early 90’s”
Gee, she’s a real rocket scientist. We were saying that 18 months ago.
Good old Perris. I am glad this is happening. No home in Perris, Ca, except for maybe that evil rock castle, should be over $ 300,000. Many of these people moving to Perris think they are rich, because they “brought” a five bedroom/4 bath house and have plasma TVs and Hummers. My dad built the house I was raised in for $8,000 back in 1964. Two bedrooms, one bath. It would have been nice to have had an extra bedroom, but we got along.
I agree with the poster above regarding the Inland Empire. So far not much has happened. I track listings and foreclosures in four zipcodes and the numbers have stayed fairly steady since December. I keep hoping for a huge spike at some point.
Anecdotel wierdness: My wife and I sold our house two months ago and are now renting. The people who bought our house were the sterotypical 100% finance type with an 80/20 loan. Two months after the purchase and they still have not moved in…very strange!
Has anyone else noticed that all these distressed FB’s has led to a glut of cheap used cars on the market? I picked up my local recycler and it looked like a phone book, and that’s just for my County. Thinking of picking up a nice used BMW for 5k off market value.
Not surprised at all. That’s how a friend of mine got a dirt cheap SL320 Benz back in 2001 or 2002….dot com bust. A lot of people HAD to give back their trophy cars…either that or they were repo’d anyway.
BayQT~
I love the SLs, and am itching to buy one. But I must wait…. the stock market is showing promise recently.
I love reading this blog. My wife and I were thinking about buying a house in 2004 (my wife had actually started working at Countrywide). We sat down and started crunching numbers … and it became increasingly clear that we couldn’t afford to buy … if we got an ARM of course we could … but basic logic indicated that this was just a short term solution soon to blow up into a long term problem. I’m not a financial guru … it just made sense …
I have no pity on anyone who didn’t have the same wherewithal to see what they were getting into. I too, will gleefully sit back and watch teh housing market tank (unfortunately, I’m sure that it will have a consequence on the economy and my investments … but hey … it’s worth it !!!)
****A funny side note. I often used to go with my wife after work hours around San Diego with ‘re-fi’ loan documents for people to sign. We would regularly pull up to a small condo ($850,000) that had a couple of BMW’s in front … and my wife would go inside for the signatures. She would return with a smirk on her face and say “You were right honey …. only an Ikea couch, coffee table and small TV in the living room … the rest of the house was deserted.” I know when you buy a home . you may feel a little ‘house poor’ … but most of the places we went to were completely barren … except for the driveway …. always a nice couple of cars there !!!
Am I the only person who thinks that you should talk to a lawyer when dealing with legal matters? Did no one else read the stuff about interest rates being at historically low rates? Are we truly supposed to feel sorry for folks who bought houses they couldn’t afford, refinanced to buy a bunch of crap they couldn’t afford and now can’t find anyone stupid enough to give them big piles of money for the same house?
The worst thing is that this speculation drove up prices for people who wanted to buy a house to live in. The collapse of the bubble is also going to hurt people who bought their house pre-bubble and now genuinely need to sell.
“If their house had not increased in value, if it was still worth exactly what they had paid for it four years ago, they could afford to stay. But the boom ruined everything”
ok, does not compute. Everyone else was banking on housing going up in value; they are wishing it didn’t.
“‘Think about all the mortgage debt that was assumed by San Diegans in the last few years,’ he said. ‘All they’re going to be doing is paying interest on that money. Instead of buying a new car or going shopping, they’ll be paying down their interest on interest-only loans.”
So let me get this right. No one prepared for people to ever pay back a mortgage loan in the first place? Arent you supposed to pay down your interested on an interest only loan?
I think I need to start complaining that I have to fill my car with gas. What were the car companies thinking? I should never have been able to sign the paperwork to buy a car!!