Recognizing The “New Reality Of The Market” In California
The California realtors report on February sales. “Home sales decreased 9.6 percent in February in California compared with the same period a year ago, while the median price of an existing home increased 5.7 percent, CAR reported today. ‘Next month’s report could tell a different story since sales last year peaked in March,’ said C.A.R. President Colleen Badagliacco.”
“‘Statewide, the number of homes for sale increased slightly in February and remain just above the long-run average,’ said C.A.R. Vice President Leslie Appleton-Young. ‘The unsold inventory index stood at 8.8 months in February.’”
“In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 37 percent, or 129 out of 349 cities and communities, showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information.”
The Orange County Register. “The median price of an existing single-family home in Orange County was down last month, making February the sixth of the past seven months to see year-over-year price declines, CAR reported today.”
“The median price was $692,820, the association reported, down 3.9 percent from February 2006.”
“Because the Realtor group derives its median prices from a different source than DataQuick, its figures differ slightly. DataQuick reported last week that the median price of an existing single-family home was $675,000 in February, which was down 2.2 percent from the median in February 2006.”
“Joe Areias knows all about the pitfalls of subprime loans – both as a lender and a borrower. Over the past 10 years, the loan officer made a good living in the mortgage business, earning enough to buy his own Garden Grove condo four years ago.”
“But Areias got behind financially last year after taking time off from work to care for his ill wife and new baby. As the mortgage business slowed, he struggled to make the payments on the subprime loan he refinanced into two years ago.”
“In August when he was unable to refinance again after the teaser rate on his loan ended and his payment adjusted higher. This month when the only deal he had going with a client fell apart after a major subprime lender in Brea cut off its lending. On March 1, Areias received a foreclosure notice from his lender on his own condo.”
“‘Don’t think you can just turn over your keys and walk away,’ says Norm Bour, a Laguna Niguel mortgage expert.”
“With home sales slowing and prices dipping in some areas, many desperate home sellers may face a so-called short sale, which is when the house is sold for less than the mortgage. Homeowners who have refinanced, however, face a different situation. A refinanced loan is considered a ‘recourse’ loan, meaning the lender can come after the borrowers personally for payment of any difference between the mortgage and the sales price.”
“It’s just like on a car loan,’ says Bradford L. Hall, an Irvine CPA. ‘You can hand over the keys to your car to the dealer, but you still have to pay off the loan.’”
“Many lenders opt not to take a homeowner to court to recover the money. Instead lenders write off the loss and send the IRS a Form 1099 for the so-called deficiency.”
“The IRS treats the shortfall as income so the borrower will not only be out of a house, but will owe income taxes on the difference. And it is taxed at the ordinary income rate, not the typically lower capital gains rate. ‘It adds insult to injury,’ says Bour, the mortgage broker.”
From KPIX 5. “The collapse of the subprime lending market is far from over, an Emeryville mortgage broker told a U.S. Senate committee holding hearings on an industry where banks have ordered some brokers to stop making loans altogether.”
“‘It will be more than a couple of days or weeks. It could go on for a few months,’ said Cory Reid, past president of the East Bay chapter of the California Association of Mortgage Brokers.”
“‘There’s still a number of non-performing loans out there, and companies who really shouldn’t be around,’ he said.”
From Reuters. “Many subprime borrowers are in default or foreclosure because interest rates on their mortgages have reset following low initial levels. California may be hit hardest because higher loan payments are kicking in amid slowing home sales and flat or slipping home prices, experts say.”
“‘Outright price deflation is a risk factor that will drive defaults,’ Glenn Costello, co-head of U.S. residential mortgage-backed securities at Fitch Ratings, said.”
“‘Our concern today is that the low home price appreciation environment is going to make it more difficult for borrowers to refinance,’ Costello added.”
“At the end of December, a fifth of mortgages in California were loans to subprime borrowers. State Attorney General Jerry Brown’s office is keeping a close watch for reports of mortgage rescue offers to distressed mortgage holders, said Al Shelden, chief of the office’s consumer law section.”
“‘It’s certainly an interest of the office,’ Shelden told Reuters in a telephone interview. ‘We are worried there will be more of these as foreclosures increase.’”
“‘There was a large uptick in these in the early ’90s, the last time there was large increase in foreclosures,’ Shelden said.”
“‘It’s conceivable the lender will want to work with them,’ Shelden said. ‘Most lenders don’t want to end up with a stockpile of 500 homes because for those that are federally regulated it will affect their ratio of good loans to bad, which is looked at as financial stability criteria.’”
“Homeless advocates expect more people to hole up in their cars as they lose homes due to the current subprime mortgage crisis. ‘The subprime meltdown is the kind of situation that pushes people into cars. It’s a very common story,’ said Ruth Hollman, executive director of a non-profit in Los Angeles.”
“‘It’s an old saying in the social services world that most people are one to six paychecks away from being homeless. But if you can’t make your mortgage, it’s more like a month or two. It’s really fragile out there, particularly with the subprime situation,’ said William Wise, a spokesman for (a) relief agency.”
The Bakersfield Californian. “KB Home sold about 100 homes in Bakersfield last year. The company hopes to top that number this year despite a slowing market, said Augie Dent, president of KB Home’s south valley division.”
“‘We need to recognize the new reality of the market and reposition ourselves accordingly,’ Dent said. ‘Our pricing is a function of the market.’”
“‘We are actively pursuing other new communities,’ Dent said. ‘But we need to find them at a price level that makes sense with current market conditions.’”
From KERO 23. “Bakersfield is in it’s first housing slump since 1998. Apraiser Gary Crabtree said Bakersfield has seen high levels of sales for the past four years, and now the market is correcting itself.”
“He is confident prices on houses will go down. One reason for the surplus of homes on the market is an increase in foreclosures, Crabtree said. Crabtree said that comes from buyers using what are called ’sub-prime’ loans.”
Here is the CAR/DQ table.
‘On March 15, 30 Fallbrook Union Elementary School District teachers received warnings of reassignment or layoff. For counselor Dee Jarvis, who works four days a week at Fallbrook Street School and one day at La Paloma, the Reduction In Force (RIF) warnings are ‘business as usual.’
‘For the last two or three years, Fallbrook schools have experienced a two- to three-percent decline in enrollment. This is perhaps a result of escalating housing prices which makes buying homes in Fallbrook difficult for young families, suggests Jim Whitlock, assistant superintendent of the district.’
IMO, someone should ask CAR why all these defaults are occurring if prices haven’t fallen.
Isn’t it sickning? Does all it take is for 3 homes to have a 5.7% increase from one year ago for the CAR to claim an a median? I know for a fact that everything around Visalia, Ca is dropping 10%+!!!
People unfortunately confuse changes in the median with changes in the market value. You could have the market value drop by a large amount and completely miss it in the median due to (1) sellers who unrealistically list too high (explaining why only 3 sold); (2) changes in the composition of what is selling (e.g. if flippers holding on to large McMansions suddenly get cold feet, you could see a rising median at the same time the high end experienced a large drop in market value).
And one main cause of this confusion is wording such as:
“while the median price of an existing home increased 5.7 percent”
This should say “the median price of all homes sold . . .”
Here is one that will not outlast the subprime sector for long. San Pablo is subprime city.
“San Pablo $461,500.00 $462,000.00 -0.1%”
I wonder if the Bressi Ranch LA-attorney-investors are still eating massive capital losses?
“Carlsbad $607,000.00 $770,000.00 -21.2%”
http://www.bressiranch.com/
(Lennar might also be eating some…)
I have to wonder what the $/sq. ft. delta is for Carlsbad…
Is just me or is the CAR link crashing my computer?
RIF, RIF, RIF, RIF…aaahhh. Shades of the dot.bomb days. Getting riffed in 2001 myself was no fun. I hate to see anyone, especially those in education, getting riffed but I have a feeling many more people will become very familiar with the acronym “RIF” over the next 3-5 yrs.
Perris, which was recently profiled in the media as “foreclosure central” is up 3.7% from 2006! Do the recent buyers not know what is going on? Or is it the case that we have a significant level of fraud - straw buyers at inflated prices, cash back deals etc.
A town right on the default line:
Foreclosure notices are painfully common in Perris, where easy money built a suburb.
http://www.latimes.com/business/investing/la-fi-perris16mar16,1,1043139.story?coll=la-headlines-business-invest
My guess would be that interior CA is crashing harder than coastal (both crashing), which would tend to skew their statewide number, which is meaningless. Since coastal prices are higher than interior, hence the skewing.
Got diversified assets?
I have been looking for a high end house in Berkeley and Oakland, and I am seeing prices just as high as 2005 with offers over asking.
My roommate (the PhD student with no income) is looking for a low end condo and is finding lots of inventory and deals. Some of the low end condos in Richmond and West Oakland are half their peak prices with price reductions and lots of inventory.
Based on what I can see, lots of reductions at the low end; high end hasn’t budged at all. Lots of nice rental houses listed on Craigs List for about 40% of the cost of owningl.
“The median price of an existing single-family home in Orange County was down last month, making February the sixth of the past seven months to see year-over-year price declines, CAR reported today.”
Where is Gary Watts, stalwart defender of the OC bubble, to explain away all these incongruities with his riveting economic insights? What’s “in the bag” for 2007?
Gary Watts is in a body bag
“Gary Watts is in a body bag.” Cuddling with Leslie Appleton-Young.
eeewww
Gary is predicting a 7% price increase for 07.
The shadow knows.
Rick
“‘It’s an old saying in the social services world that most people are one to six paychecks away from being homeless. But if you can’t make your mortgage, it’s more like a month or two. It’s really fragile out there, particularly with the subprime situation,’ said William Wise, a spokesman for (a) relief agency.”
This is generous. US Personal savings rates are very low - actually they were negative in 2004 & 2005.
Consumer finance experts recommend 3-6 months of cash on hand for emergencies, the rest of personal savings can be in less liquid investments. I doubt most people have that much on hand and instead rely on credit cards and that HELOC check book to bail out of high balances and consolidate debt.
That and “Payday Loan” shops. There are a ton of them in AZ and I’m starting to notice them popping up in the least likely places, like my own neighborhood.
Recently I read somewhere, darned if I can’t remember where, that around 1990 there were some 300 payday loan outlets in the U.S. By 2005 that number was over 20,000. Does anyone else remember seeing something on this exponential growth in payday loan outlets?
Go to prosper.com and read up on the Payday Loan losers. These people borrow $650 and then have to pay $150 every two weeks until the principle is repaid. These people go to twenty different outlets and have $6000 in payday loans. They should arrest those payday lenders - it is usury plain and simple. Why do the rich people in this country have to keep taking it out of the hide of the poor. In no country in the history of the world have the poor people been ridden so hard by the wealthy.
Except when the “poor” people are slaves, or serfs bound to the land, or untouchables, or…
I have to disagree, there are many country in the world right now that have rich dictators that ride the poor much harder than the rich do here. It is much worse now than its ever been in our history but its definitely worse in other places. The problem now in our country is the poor allow themselves to be ridden.
On our roadtrip of the Southwest, my wife and I did some laundry, in Hurricane, Utah…
I walked the streets of the town and there was a predatory lender and this being Ut, a little more honest about things, than say a similar charlatan in Vegas.
They were proudest that of all the ripoff joints in Utah, they had the lowest a.p.r. of 365% and had clipped an article from some SLC newspaper, that heralded this achievement.
The highest A.P.R. in the land of the MoMo’s?
912%
Does anyone else remember seeing something on this exponential growth in payday loan outlets?
One reason is probably illegals.
Maybe the payday lenders are just following the same trends that mortgage lenders have. We used to have pawn shops where you pledged good against the loan. Now you just go to a payday lender and get the loan with no collateral…
Patch, there is collateral. The lender verifies the FB’s employment, and gets a post dated check from the FB. FB bouncing check is a crime, threat of the cage (and the nasty things that go on in there) is the collateral. FB won’t be able to open bank account in future either if he goes to different lenders.
Patch, there is collateral. The lender verifies the FB’s employment, and gets a post dated check from the FB. FB bouncing check is a crime, threat of the cage (and the nasty things that go on in there) is the collateral. FB won’t be able to open bank account in future either if he goes to different lenders.
Check out the movie Maxed Out. Turns out that the exponential growth is due to the fact that every payday lender chain is underwritten by banks - Wells Fargo in particular.
Got wagon?
“‘Our concern today is that the low home price appreciation environment is going to make it more difficult for borrowers to refinance,’ Costello added.”
Duh, you think so? A strategy of buying a house with the intention of refinancing it within a short period of time is foolish. It is hard to believe how many brokers and buyers bought into this crap. And all of a sudden, caught with their pants down, they’re looking to assign blame elsewhere, instead of owning up to their own stupidity.
Excellent point. I’ve thought of this in the general sense, but you put it very straight-forward “A strategy of buying a house with the intention of refinancing it within a short period of time “
“In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 37 percent, or 129 out of 349 cities and communities, showed an increase in their respective median home prices from a year ago.”
Or reported differently . . . A whopping 220 out of 349 or 63% were flat or showed a decrease.
DQ: “The glass is over 1/3 full…”
That’s right. Independent, unbiased & reluctant to make predictions — DQ.
Of course you wouldn’t want to drink it, it’s probably backwash
And since the CAR pushes housing as an investment, how many of the 129 “up” in median prices were so after adjusting for inflation?
And using inflation as calculated using the old CPI method? (the actual inflation)
50 communities? 25? 10? Zero?!
http://www.dqnews.com/ZIPSDUT.shtm
I took the San Diego data from DQs website and pasted it in a spreadsheet. For single family resale homes, of the 84 neighborhoods with data, 59 (70%) had drops in the median price. The median neighborhood decline was -9.9%. For the 23 neighborhoods(27%) with price increases, the median neighborhood increase was +3.6%. Two neighborhoods had no change.
For the neighborhoods where price went up the median neighborhood price is $543,500, while for those that went down it is $535,000. Not much difference. I was thinking the wealthy neighborhoods would all be up and the poorer ones down, but Coronado is among the big losers and Paradise Hills, San Ysidro, Imperial Beach are up with the gainers.
In terms of average price however, there is a bigger difference (678K vs 590K) between neighborhoods with median price increases vs those with price declines.
Also note the “Change in Statistics Methodology” http://www.dqnews.com/RRStatChg0207.shtm
February 14, 2007
“Note to the news media and others: We have made a couple of changes in the way we generate our sales counts and median sale prices. These changes, which reflect the use of new tools that allow us to provide the best data possible, will take effect starting with our published January 2007 sales statistics.”
“Sales counts: Changes in our methodology to determine the number of sales transactions have resulted in a roughly 10 percent increase, on average, in our historical monthly sales totals. In most cases this has little if any impact on the year-over-year increase or decline in sales.”
——————————————————-
I’m curious about the changes in calculating sales and prices. Its not clear from their website whether they have gone back and revised all 18 years of sales upwards or if they are just doing it for data starting in Jan 2007. Why don’t they provide an example of the two methodologies and let us compare the impact on sales and price trends.
This is absolutely sickening. The median is the median is the median. How does one change that? They couldn’t possibly adjust only the numbers staring in 2007 could they? Of course they could. And the fact that they do not divluge their new methodology is ridiculous. It certainly looks like they are cooking the books to me.
“It certainly looks like they are cooking the books to me.”
With the new statistical method it’s easy to “puff-up” the market. Here’s a snippet from today’s WSJ: “The bulls ran away with the markets this week, as the Federal Reserve’s rate decision and strong housing data pushed stocks upward.”
“In most cases this has little if any impact on the year-over-year increase or decline in sales.”
I am absolutely in awe of the ‘balls’ to change methodology and announce it in a blurb that is little read. I would like to know which cases it did impact! Most could be 50.1%, what happened to the real 49.9% and where are they located?
So now we understand the national sales increase.
I think realtors are doing everything they can to keep prices up. I can find no other explanation for the plethora of overpriced SFR’s languishing on the market. I think they honestly believe that buyers will finally cave. Most surprising to me, is the staying power. I am seeing homes for sale which are coming up on 2 years. Is this normal? I cannot imagine being a seller and waiting that long. Who are these people?
I’m not sure its the realtors trying to keep prices up. Some of them have to be getting hungry and are probably pushing for price reductions. 6% of something is better than 100% of nothing. I blame the owners/sellers/bagholders for the stare-down.
I agree about the staying power . . . puzzling. I guess they can tolerate bleeding a little each and every month rather than chewing off their leg to save the rest of their hide.
I’m told sellers aren’t bringing the price down because they can’t without losing their shirt and having to bring cash to the closing. If your house was “worth” $350k; you owed $150k you HELOC’ed the $200k .. bought some four wheelers, granite counter tops, bamboo floors and took the family to Disney Land all the money is gone. Poof! Now the ARM is making the payment go up — what to do? Sell. But it’s not worth $350k now — no matter; leave it on the market and pray while shouting: I’M NOT GIVING IT AWAY!!! That’s why houses are sitting on the market forever at those ridiculous prices.
“I’m told sellers aren’t bringing the price down because they can’t…”
Exactly! The MSM has yet to make this point clear.
“Cave,” huh?
“Cave” implies that buyers are just sitting on wads of cash, thinking (ever so irrationally, because REAGU*) that they’ll get a better deal tomorrow.
Guys, wake up and smell the carrion. It’s not that buyers don’t *want* to buy, it’s that they *can’t* buy at your inflated prices. I’d be happy to buy a house, at a reasonable premium over my cost of rent. But I can’t. You can only stretch low seven figures so far, and the price of a suitable house in a decent neighborhood is more than that money can carry me. (Especially with credit tightening up, in the event I were inclined to abandon my senses and sign up for a suicide loan.) So renting it is. Sucks, but that’s that, until the speculative excesses get purged.
Low seven figures? What’s that, like $1.5M? Hmmm, I guess affordability is an issue now….
commas and decimal points do not count as “figures”…or any numbers after the decimals…
“commas and decimal points do not count as “figures”…or any numbers after the decimals…”
Huh? Seven figures start at 1 mil. Or are you making a joke that I just don’t get? If so, I apoligize.
yeah a joke…if Thomas is really complaining about affordability with >$1M salary, i definitly dont feel for him. my guess is he meant low 6 figures?
That was my guess as well. Or should I say my hope.
He’s using binary numbers:
$1010010
I do not have specific examples, as a buyer or seller, but I remember the early 1990’s well enough to recall that many houses in coastal states languished for multiple years.
It didn’t matter how they were priced - there were simply no buyers.
Nonsense of course, you lower the price enough and you’ll get a buyer, unless you’re somewhere like central Detroit or E. St. Louis.
If a house can be rented out for more than the cost of mortgage, taxes, etc. it’s a going investment and someone is going to be willing to buy it - at the right price. Try 100 x rent or so.
I may be realtors with an insane market perspective, but don’t discount the reluctance of sellers to lower their asking price. Every seller out there knows of a “neighbor” or “couple across the street” that got X amount in 2005. In their mind their house is still worth what comps sold for in 2005. Many folks seem to have a hard bottom line and if their place doesn’t get that, they rent it out.
If you owe $450,000 on the house, and you have $720 in the checking account and have to pay the realtor to sell it, then you can’t lower your price below $465,000. That is what is locking the market up. Remember, prices go up naturally, but you need foreclosures to take them back down.
goecam, You are wron there. People can too lower their price to sell. They would just have to dip into their checking account to access some of their own money to sell. With your example of 700,000 in checking and a 450,000 house one may need to spend one’s own cash. What you are trying to say is that the sellers don’t want to use their savings to sell the house.
I don’t mean to speak for geocam, but I think he meant $720 in the checking account, not $700K. So, in that case, those people can’t lower because they have no savings to dip into. I figure there are lots of people in that situation.
i think people willing to hold on longer than a couple months fall into one of a few categories:
1. delusional - can accept a slow bleed now knowing prices will go up
2. screwed no matter what - have no equity in the house anyway, need to sell but not at a lower price, will try short selling, eventually will be in foreclosure
3. longtime owners - bought well before or early into the boom, have plenty of equity (or believe they do) and are oblivious to the current market. they remember the high price a similar home sold for near the peak and are waiting for a dumbass to come buy it. dont really need to sell, so they will sit on their wishing price until its obvious to everybody that house prices are only headed down
i think there are a lot of #3 sellers out there, the magic question is did they heloc or refi along the way?
How many realtors bought real estate themselves as investments, those that did may be in the same boat as the other homebuyers that just can’t lower the price because they would have to bring money they don’t have to the table in order to sell.
“Homeless advocates expect more people to hole up in their cars as they lose homes due to the current subprime mortgage crisis…”
Another group that just doesn’t get it. Why should the homeless live in their cars when they have a large selection of REOs to squat in? If they cut the grass they may even be welcomed by their neighbors.
Not only that, but I expect many vacant homes will be set up as home businesses (meth labs, pot farms, etc.).
I let a homeless woman and her kid live in our garage in San Diego. It horrified me that they would do it but they had nowhere else to go. It got really weird though. By the time they left, I was serving them meals several times a day.
Thank you for feeding them. That was kind. Where did they go?
I’m not sure I buy the ‘living in cars’ argument merely because of foreclosures. Folks were living somewhere before they fogged a mirror and got a home loan. (Of course, there was that homeless guy who ended up with several houses in Florida . . .) I also imagine renting is an option for most of theose folks.
We’ve been van shopping lately, and I’m kind of amazed that it will cost us no more to buy a nice minivan than it did in 1999. Houses, on the other hand . . . Maybe the minivan *is* a better option for us than a house. Or maybe an RV.
If you read Cramer’s first book, when he was fresh out of school and working as a reporter in LA, his apartment was looted and so he became homeless and had to live in his car for 9 months.
I never believed this - I think he had a gambling problem or something that screwed up his credit and sucked up all his income
You are sounding more and more like my sister everyday. Are you sure you’re name’s not really “RhodeIslandchik”?
If you squat and cut the grass at one of Casey Serin’s houses, you’re a thief! He’ll call the police!
One of my favorite posts from the up-and-coming young magnate.
At least here in So Cal it is likely to be a roomy Hummer or other gas-guzzling SUV,larger than my first studio apartment and can be parked near the beach.
Time to say it again: You can live in your car, but you can’t drive your house.
“‘It’s an old saying in the social services world that most people are one to six paychecks away from being homeless. But if you can’t make your mortgage, it’s more like a month or two. It’s really fragile out there, particularly with the subprime situation,’ said William Wise, a spokesman for (a) relief agency.”
We really need a program of basic financial education in this country. Too many people get caught up in the struggle to show how rich they are, and impoverish themselves in the process.
It would also be useful to have a Federal Reserve that does not prosecute a war on savers, where U.S. citizens collectively say “what’s the use” to the idea of saving for a rainy day and consequently let the national savings rate go to negative levels. We can chalk this up to their subconscious or conscious realization that their fiat currency-denominated savings can easily get printed away at the whim of the Federal Reserve Board’s discretion, and a failure of the Federal Reserve Board to make a convincing case that this is not their intention. Propaganda remarks to criticize Asians for saving too much do not help the situation one iota.
It’s called personal responsibility, a rapidly vanishing concept. Everyone expects the government to fix all their problems. No one wants to blame themselves for their stupid or ill-informed choices. If people really cared to make informed choices they could head over to their library or even just surf the Internet. But why “read” when American Idol is on?
I’ve proudly never seen even a scintilla of a.i.
A fiscally saavy populace is the last thing any politician would ever want to see. Can you just imagine the implications? and the indictments?
I don’t know if the US penalizes savings. I doubt people think they’ll be printed out of debt - inflation isn’t part of our collective lexicon as it was in the 70’s and 80s. Sadly, saving just isn’t as well respected as it once was. Borrowing for consumption isn’t frowned upon.
There are goods kinds of debt, like a student borrowing for education and to buy a computer to be competitive in college.
I do think consumer credit is issued too easily and the crummy bankruptcy bill passed last year encourages more risk by shifting burdens off lenders & credit card companies onto consumers. Lenders have responsibilities to manage risk, not just shift it.
I think its not enough that the poor should be used as financial fodder for the rich. I think we should let rich people hunt poor people with high powered rifles. Since the rich are going to deny them health benefits, screw them at every turn if they do manage to make any money, deny them shelter, then why not carry it to its logical conclusion and let the rich mow them down with firearms?
I think it would be simpler if we just feed the homeless to the hungry.
The cost of living is so high in SoCalif, and the cost to own and maintain a house is so high, that large numbers of people have been living on their equity these past several years. In 2001, when home prices finally got back to their peak of 1990 prices, I thought they would level off because of the cost of living increases and incomes not increasing. I thought these factors would put a lid on prices, not expecting the rise of subprime, 100% financing and artifically low unsustainable payment loans (Option ARMS.) Maintaining a decent livestyle is very expensive, and will get more so when loan payments adjust and start amortizing. It will be impossible for large numbers of people. I see credit reports and analyze debt and income of people every day. Its understandable that so many have given up on buying their first house, and many are looking to move away from here.
Problem is that the population in California is so high, it will not help the price decline but stablize it. Population may decrease a bit, but still California is way overcrowded just look at the freeways. No matter what you do CA real estate will not drop by more than 10 percent.
10% is in the bag already. Five million illegal immigrants does not a demand for mortgages make, especially as lending standards tighten. You have to have “qualified buyers” with downpayments and those are like leprechauns nowadays.
BTW- I work in a government agency that oversees the suspension of CA licenses, including RE licenses. I had a guy come in today claiming to be unemployed, who absolutely needed his RE license released so he could “make some money.” I just gave him a blank stare and thought “good luck with that financial plan buddy.”
Keep it up!! Good Job!!!:)
Down 12% in Humboldt County CA (250 miles north of San Francisco): “The median sales price of a home in the county also declined $7,000 since December 2006, or 2.2 percent to $308,000. January also marks the ninth straight month of year over year depreciation in housing prices on an inflation adjusted basis, and current prices are off 12% from their spring 2006 peak.” Humboldt State Econ. report.
“No matter what you do CA real estate will not drop by more than 10 percent.”
LOL! That’s good stuff! I believe that certain areas like Sacramento have already declined by that much, if not more. Nice try though.
Thanks for the reminder. I have already seen 25% drops in my own zip code. I wonder where stockmarketguru gets his data? Mine comes from ziprealty.com and the county assessor’s office.
Exactly.
If you were buying a house cash in the beach cities you’re out of pocket expenses are already down 10% YOY (for a mid-range property).
California is overcrowded. But it takes an income to purchase property. As IE fencesitter noted, its going to take finding a leprechaun to make a sale soon.
Just think, mortgages tightened during the beginning of March. We’re hearing the hedge funds are going to force a further tightening in April. But home sales are recorded via closings which occur 30 to 90 days after the paper if first signed. So I don’t expect the sheeple to really notice prices are falling fast until June.
By June, I’m hearing a few more company relocations will be announced. Not enough to really matter, but still interesting.
Every 15 years California takes it hard in the shorts. We’re due for our pounding.
Got popcorn?
Neil
“Problem is that the population in California is so high”
Not just the population, my friend. Two hits is enough guru,… time to step away from the bong.
Venice has already declined 24%, for all that number is worth, according to DQ, and that’s one of the super-in-demand areas on the beach where everybody wants to live
Downtown and coastal Huntington Beach (92648) is off 22% as well.
In my best Nelson voice, Ha Ha!
Population alone is irrelevant. Demand consists of population+money. Absent irrational financing (which is ending), a person with a $40,000 annual income has zero impact on the demand for a $700,000 house.
California real estate will drop by whatever amount it takes to bring prices down to the point where a family can service, at minimum, the full interest costs of the mortgage. Population pressures may require Californians to devote a greater share of their income to housing than is done elsewhere — we may have to eat more Kraft mac’n'cheese — but non-housing expenses can only be cut so far.
There are simply more properties in California with high prices, than there are Californians with the financial means to buy them.
Recall the post yesterday where the population in SD County dropped? “Since 2000, the net number of people who moved out of the county is even more staggering – 119,636, a figure greater than Carlsbad’s population.”
Not only do you have declining availability of stupid loans, but you also have a declining population.
Housing coming on the market in the SF Bay Area is LISTING for 10% or more off the peak prices, and they still sit.
10%….Cute.
“California real estate will drop by whatever amount it takes to bring prices down to the point where a family can service, at minimum, the full interest costs of the mortgage.”
Wall Street doesn’t understand this concept!
“No matter what you do CA real estate will not drop by more than 10 percent.”
We had 100%+ appreciation in SoCal since 1998 but will only give back 10%, even with a sudden dearth of subprime lending to drive a massive wedge between wants and means? CA real estate dropped by more than 10% in many places during the early 1990s, without nearly as much crazy lending. I don’t care how many people are around; if very few of them can afford $800K McMansions, then very few McMansions will sell for $800K.
BTW, where does a stockmarketguru come up with his numbers? Or does he make them up?
100%?? Try 300-400% in my area.
The same 1600 sq. ft. POS 1950-built SFHs that sold for $200K in 2002 are pushing $800-1M in my zip code. Astounding!
Must agree - when people refer to 100% increase year 2k to present in S CA - they are really not seeing the epicenters of the bubble. In many areas you could take year 2000 prices and just add $1M to get today’s price. Ex. 2000 $300k house in Seal Beach, Venice, Manhattan Beach… = $1.3M today.
where is the money or who has the money to pay for these “stablized” prices ?
Uhhh, in many places it already has. Please go back to the Craigslist forums. Really, you’ll have more fun there.
Prices will drop by more than 10%. There is a high probability of that. The price/income ratio is too high and affordability level is too low. The affordability level goes in cycles and this indicates prices will drop by 20 to 30% at least. Some parts have already dropped 10% and the downturn is just getting started. This isn’t the stock market but it is an asset market too and will have a big correction.
I have to agree with stockmarketguru. I am supremely confident that my 6 vacation condo investments in Fresno, Paso Robles, Modesto, Redding, Fontana and Fawnskin have/will not drop more than 10%. These are all areas with little buildable land and high pent up demand or so my realtor-brokers have told me.
Everybody wants to live in Fresno.
I have heard that Modesto has beautiful beaches, and the ocean view homes are truly spectacular.
LOL…vacation condo in Fontana.
Fontana condo for when you feel ghetto and just feel like hanging out with the homeboyz.
I just “snapped up” 5 luxury condos in Merced!
In Fawnskin you can take a “working vacation” and cut down trees killed by bark beetle infestation.
Bring lots of oil for that chainsaw.
Sounds great, ‘taco. I guess everyone wants to live there, too. Those places are completely unique.
I’m sure that all the buyers are just waiting for the bottom, then they’ll spring into action. DL tells us every single month that we are at the bottom, but I guess no one is listening.
If only the damn MSM would stop printing all those stories about the bad RE market and lending market. They are scaring away all the buyers.
Oh, by the way, Ben, don’t you think you’ve wasted enough of your time working on this blog? I mean, really, it’s been 2-1/2 years, and there’s still no sign of a bubble - any kind of bubble. Can’t you see when enough is enough?
Fresno, yes, that’s quite a lovely area. I think they even had a miniseries about it because of its charm. No, wait, now it’s coming back to me. Fresno, yeah, that’s the place where a good friend of mine grew up. Dangerous as hell. While young and stupid, we used to go shoulder tapping for liquor in an area called Pinedale. That’s because the cops didn’t care to hang around there. I am reminded of one particular evening, at the same liquor store, a man who was quite relaxed sitting on the front bumper of his truck. Upon further inspection, he had a bullet hole through his forehead. Yeah, Fresno, lovely. Everybody wants to live there. (My apologies to the good folks who live there, as there are plenty).
LOL! I used to take a shotgun with me when going to Pinedale. It’s a pretty rough place. Weekend nights there were guys just standing on the street, a couple deep, waiting to sell drivers a dime bag. The cops wouldn’t even go there.
yeah but the new walmart there has classed the place up. . .
I disagree. You can only sell an item for as much as someone is willing and capable of paying. We have the willing, but obviously they are not capable. It will drop until it reaches a point where capability sets in. Far below what it is now. Look at Japan for example.
So what happened in Japan. I’ve heard references to something but do not know what.
http://en.wikipedia.org/wiki/Japanese_asset_price_bubble
Minus 32% between 1997 and 2006. Real estate has been declining in Japan since 1990/91 so the overall decline is higher. Other articles in The Economist mention commercial property down 60%, with Tokyo -80%, over the lost-decade-and-a-half that started in the early nineties in Japan.
Y’all are missing stockmarketguru’s point: California has a really really really high population. This “Japan” place you speak of, isn’t that, like, in flyover country?
Based on my observation, prices in cities like Alhambra and San Gabriel haven’t dropped a bit. How many of you think that prices will drop less than 10% within next 12 months in these cities and how many think more than 10%? I would vote for the former.
Yeah, we are over 10% decline (at least) from the peak a year ago. But we are not in a great location; we are in one of those California coastal areas (9 minutes to Pismo Beach), and those don’t tend to command much of a price premium, eh?
I would say the most on the Central Coast are in the neighborhood of 12-15% off. You can negotiate about $100K off a $600K house from a builder.
Check out the Cypress Ridge golf community. There are 3 recent forclosure sales at about $650K each. The comps for the recent non-foreclosures are about $850K.
That’s 24% off! And this thing is just getting rolling.
Santa Maria is far worse. Foreclosure sales are about 35% off peak selling (2005) price.
Houses where I am at (91355) are already down $100k from the peak last year! I am still waiting for more as this thing is only getting started!! Read this article: http://www.marketwatch.com/news/story/lemming-loans-drive-us-economy/story.aspx?guid=%7B1F050B96%2D5BA3%2D494D%2D9D92%2DFB882963206C%7D.
How in the world can prices only drop 10%? Wake up and smell the foreclosures!! People are not going to QUALIFY for loans anymore so how can these people in So. Cal afford these vastly overpriced homes? Most people make less than $100k a year family income. I see much more of a decline!!
“91355″
So much building going on in Santa Clarita…I’d like to see some drops in the LA Basin proper.
Oh how I know!! And such poor quality! I am renting one of the $600k sh*tboxes for $2500/mo. Build, build, build!! Take a look at the site http://www.valencia.com. More building is on it’s way!!! Oh the price declines I see coming our way!! This is HELOC heaven out here!! How can everyone here afford a newer Mercedes or Bimmer (both our 100k mi. Bimmers are paid for!)? And all the HELOC small businesses here in Valencia (remember the guy who took out a second on his house in Sun Valley to finance his ice cream business or whatever)! Only so many of these “day spas” and fancy eateries can stay in business with the absence of rising house prices!
Yeah, they’re still building here in Valencia — scraping all the scrub off the hillsides, polluting the air, making way for more McMansions . . . and in the meantime the inventory is going back up. In the 91355 area code alone, inventory was at 184 on 1/12/07. Today it is 359. Add the inventory from 91354 and you get 688. It’s going to be a long hot summer here for some folks who are going to get burned big time!
But yet here in my crap-box subdivision a 2000 sq. ft. house just sold (sale actually closed!) for $679k! I guess they had a heck of a time “hitting” the number, but it has GRANITE countertops and travertine floors (let me barf)!! Up go the comps for now! We had a foreclosure here earlier in the year (people are still living in it though??). I was hoping the sale would fall through, but me neighbor said it has funded and has closed.
“Yeah, they’re still building here in Valencia — scraping all the scrub off the hillsides, polluting the air, making way for more McMansions”
Still, that is pretty impressive. I saw on Fox that Valencia was the scene of a nuclear bomb detonation.
“Most people make less than $100k a year family income. I see much more of a decline!!”
Suddenly MBS investors are much more worried about losing money these days. That fact, coupled with falling prices, imply downpayment requirements are going to make a come back. More than 10% losses will result, merely do the the fact that requiring a 10% downpayment would price out almost everyone who bought in California last year.
How many people have we heard of who live paycheck to paycheck and have zero savings? How in the hell are they going to magically come up with a $25,000 down payment at least? Rich relatives, drug sales, coyote running across the border (even that’s becoming more difficult!)??
Ever been to Italy?
Common to see extended families living together.
All part of “The New Rules”
california had net OUTmigration last year for the first time in years…
cant find the exact story (mercury news doesnt have it on their site anymore), but this one is close
http://money.cnn.com/2006/04/19/real_estate/net_migration_tilts_south/
before anyone explains why prices are stable or will not decline precipitously, how about an explaination in “fundamentals” as to how we got here?
US census always has some quick data tables you can get.
I took a look at Sacramento population totals and we’ve slowed way down. California’s growth is down to .8% as of mid 2006 estimates.
No matter what you do CA real estate will not drop by more than 10 percent.
Unless there’s an earthquake, or rising black-on-Hispanic racial tensions explode into open warfare.
Okay, enough of the cheap debate tricks …….
Which one of you is stockmarketguru?
Something tells me Mr. stockmarket guru is an FB. If so, bad news for you, Mr. stockmarket guru. No down loans are almost gone, no first time buyer, no move up transactions. My prediction is overall 40% decrease, with about 1/2 of it nominal and the other half stealth inflation, as price of everyday living skyrockets. Anyone with an ARM resetting during the next 5 years is toast. 5 years from now housing prices down 20% while cost of living up 20%. Ouch to the FBs.
Got diversified assets?
Got diversified assets?
puhleez!
California has a history of housing bubbles for the best forensice analysis see Cagan’s Fire Burn PDF.
A bit OT (sorry):
Freddie Mac Reports 2006 Financial Results
(excerpt)
“Freddie Mac also continued to fulfill its important public mission,
marking a major milestone in its history by making a decent, affordable home possible for the 50 millionth time,” Richard F. Syron, chairman and chief executive officer said. “All of us at Freddie Mac are proud to have been a part of that achievement and are focused
unwaveringly on serving our next 50 million families.”
Did I read that correctly? Every one of the 50M home purchases Freddie Mac has made possible has been decent and affordable?
The story of the broker having the foreclosed mortgage reminds me of a pusher getting hooked on his own junk.
It’s pretty wild, after four years of selling the stuccobox and parking the generous proceeds into a chunk of real money (PMs), to see the pot finally boiling and the paint finally drying. That is to say, the pot is bubbling and the paint is tacky. 12 - 24 months left to go before those in the pot are thoroughly cooked, and the paint is safe to set something down on.
One thing to consider, is that where we’re at (SLO area, Cali central coast), the paint actually shows signs of drying. The folks in LA, however, are looking al the glistening paint saying “I know it has to dry SOMETIME” while big ‘ol drips keep running down.
Let’s see what the credit tightening does to LA inventories and sales…
yup. All I’m thinking at this point is that the incredible stubbornness for prices to finally drop will only ensure a NASDAQ style collapse when the dam finally does let go.
I’m telling you guys - it’s already happening in Santa Maria - only a matter of time before we get to watch it first hand.
“Many subprime borrowers are in default or foreclosure because interest rates on their mortgages have reset following low initial levels.”
It was posted yesterday that Chris Thornburg made a comment that it isn’t a subprime issue, but an ARM issue.
I don’t even think that’s true…yet. A lot of the current defaults are on mortgages that are still in the fixed portion of their terms. People are defaulting right now simply due to their inability to afford the home in the first place.
“These recent foreclosures reflect large numbers of early payment defaults — that is, homeowners defaulting before the fixed-rate periods on their loans expire and the adjustments kick in.”
http://www.npr.org/templates/story/story.php?storyId=9083504
I saw that too, but really didn’t connect the dots. Basically, these early defaults are of the ‘it’s different this time’ variety, as they seem to be coming from the truly money management challenged - the absolute bottom of the barrel types. we are still miles from the defaults of the more prudent ones, those with just enough sense to not stick their tongue in a light socket. But for all this, I am amazed at the lack of interest by the Street. Bloomberg headlines today that the worst is over, that subprimes have been contained. This coming massive wave of defaults will leave them stunned - ‘No one could have known!’ The rot is so finely dispersed, as in everywhere, that the sudden (not) collaspe of housing will be startling.
Banks did not arrive at the monthly payment = ~30% of gross income guideline by random chance. Banks know that if folks pay more than that, they are more likely to default.
If you are paying 40%, 50%, 55% of your gross or more, a car repair could cause you to miss a payment. Minor surgery could cost you your house. Lost your job? Clean out your car’s back seat, that’s your new bedroom.
Toxic loans are aptly named.
LA Times reply on Ms Sharon story couple of weeks ago
Thank you again for bringing this to our attention. Editors and
reporters at the L.A. Times take charges of inaccuracy seriously, and
have looked into questions raised about the March 10 article about the
implosion of the business of sub-prime mortgages. Much of the
information disseminated about the Times article after it ran seems to
be speculation. The facts about ShaRon Lewis that were printed in the
Times story are accurate. As was reported, she is indeed “facing a 50%
hike in the payment on her adjustable-rate mortgage next month,” and she
also, as the story detailed, “can’t qualify for a new loan with payments
that she could afford.” And her story does represent what a number of
other homeowners face now.
Thank you for taking the time to write.
Jamie Gold
Readers’ Representative
Unreal. Looks like the Times opted to take the easy way out and turn a blind eye to what this “victimized” woman actually did to get herself into her current problems. Maybe they will be more careful in the future when they trot out their next requisite victimized borrower. Right.
“The facts about ShaRon Lewis that were printed in the
Times story are accurate.”
The problem is that you didn’t print ALL the facts!
Bwah-hahahahahahaha!
The La Times may also like to point out that some people really did think that Adolf Hitler was a “swell” guy, and that he really did help Germany modernize it’s infrastructure, so thanks for bringing up the point about his “Final Solution to the Jewish problem”, but the article entitled “Adolf helps Germany” is factual as written.
arro,
good one!
“Much of the information disseminated about the Times article after it ran seems to be speculation.”
yeah, it only came from the public records, which the Times doesn’t bother to check.
The price of living in your auto is going up. Here in the Inland “Empire” the price of gasoline was $2.559/gal on Feb. 18. Yesterday it was $3.13. That’s a .53 increase with no end in sight (especially now that Iran is entertaining the British navy).
I’ve been reading on how West coast refineries just haven’t bought enough oil for the summer anyway. It doesn’t take Iran vs. Britain to create $4 gas.
Got popcorn?
Neil
My bet is on at least $4.50 gas this summer here in San Diego, if nothing happens in the Mid-East.
http://www.sddt.com/Finance/graphs/b5888febbd1ff1524351e483cdb.png
Draw a line through the maximums for each year….
Not to mention the recession that’s due to hit just around summer time. $4.00 gas and a recession. This country’s going to have it’s own revolution.
Gasoline is murder. Luvkly, there is a lot of room to economize by switching from the ever popular SUV or Truck to smaller sedans. The Corolla with 29 over all mileage and 38 EPA HW is now the #3 selling car in CA.
Per capital, California uses the same amount energy as in the 1970’s. CA instituted a great program where the utilities pay consumers to upgrade to energy star appliances, replace older doors with insulated doors and also subsidize compact florescent bulbs.
Mc Mansions in the extraburbs are another story.
LOL…Extraburbs….you mean extra as in not necessary?
Yeah, the government has a plan. Hike up gas prices to find the breaking point and then back off. In the process you’ve just kicked new car sales in the ass to help bolster the economy. But the flaw in the ointment: where are the buyers going to get the money since their CC’s and HELOC’s have been maxed out.
I hate gas prices as much as the next guy.
But when I moved to California in 1998 gas was around $2/gal. I don’t think I ever saw it below $1.80. It was a big shock for me since I grew up in the South and never paid more than $1.30 or so.
Now we’re at $3/gal ($3.20 where I live). That’s, roughly, a 50% increase in 9 years. Am I the only one who sees this as a fairly modest increase, considering the economic (inflation) and geopolitical (war & terrorism) events of the past decade?
Gas in TX was 99 cents in late 1998. I remember well because I bought an SUV and by summer of 1999 prices were over $1.50
I was stunned and now it’s headed to $3 again this summer and my SUV is long gone.
“Now we’re at $3/gal ($3.20 where I live). That’s, roughly, a 50% increase in 9 years. Am I the only one who sees this as a fairly modest increase, considering the economic (inflation) and geopolitical (war & terrorism) events of the past decade?”
Welcome to the Matrix. Home ownership, personal transportation, the college degree and your healthcare costs are not counted in “the basket of goods”, which says that there hasn’t been any inflation. Remember, there is no inflation, there is no inflation,…now go back to sleep.
Someone posts this today on Elite Trader blog, I read it and wanted to share:
I don’t mean to be a jerk, but I’ve been waiting seven years for this to happen, so I’m gonna brag.
I just bought a $900,000 house on 7 acres 30 minutes from Boston for $196000.
It was me, the auctioneer, and the lawyer. I was the first and only bid. The auctioneer was speechless. The lawyer offered me $600000 cash for the house.
I looked like an idiot for the past seven years because I refused to buy a house. I rented an apartment for $725/month.
My two mentors told me to wait. “Be patient”, they said. ” This is going to be a disaster.” Well, they were right.
This is only the beginning.
If this is true. What an Imposion!
If this is true, what an implosion!
Dont believe anything from a daytrader. They are trying to influence the stocks they are trying to manipulate. There is no way only 1 guy showed up to an auction, the vultures are out in force everywhere.
I call BS on this. It sounds impossible. I’d like to see proof.
I call BS on this one too.
If I bought something for roughly $200K, and the lawyer offered me $600K, I’d just “toss him the keys” (*)
(*) subject to the usual common-sense tests.
The title from this post
Recognizing The “New Reality Of The Market” In California
says it all. What is truly amazing is the rate at which homes are being foreclosed on in California! Check out my graph at and current total count of foreclosures from Countrywide Financial.
http://countrywide-foreclosures.blogspot.com/
If you want to investigate more, you can click on the state for details and go to zillow and see at what price Countrywide bought the home back for and what they are trying to sell it for.
Called the Countrywide broker in Bakersfield. They are still in denial and won’t come off their prices. Give them six or eight more months for reality to sink in. Maybe Mazullo says ,’play hard ball’.
Yeah, by that time their listings will go from 6700 to who knows where.
“What is truly amazing is the rate at which homes are being foreclosed on in California!”
And the second quarter of 2007 hasn’t even started yet.
from the DQ table
Santa Clara (city) $645,000.00 $700,000.00 -7.9%
this is the first significant Y-o-Y price change i have seen, of course someone will be sure to explain it away as “more condos sold than SFH” or some such garbage without any data to back it up.
in my complex of approximately ~ 210 condos there are currenly 8 for sale. not a huge figure, but for the 2+ years i have lived there i have never seen more than 3-4 for sale at a time, even at the peak.
just checked out the DQ site for the most recent SJ Mercury News Zip Code table - 4 weeks ending 03/07/07 and did a weighted average of median prices in Santa Clara zip codes and this is what i got:
2007: $641,533 #sold 75
2006: $707,039 #sold 99
% chg -9.27% -24.45%
not only are prices declining, but at an accelerating pace; 7.9% as of Feb 28, 9.3% as of March 7!
10% (down) is definitely in the Bag Baby!
Good information - thanks for posting!
“But Areias got behind financially last year after taking time off from work to care for his ill wife and new baby. As the mortgage business slowed, he struggled to make the payments on the subprime loan he refinanced into two years ago.”
He should threaten to sue himself.
The story of this guy Areias reconfirms my belief that a lot (not all, a lot) of these guys were not completely evil, in that they actually believed that they were selling a product that would give “great cash flow” and which “could be refinanced later”. One that they would use themselves.
I know one mortgage broker here for sure who has one of these very similar loans. He was very determinedly trying to talk me into such things back in 2005, and he really believed in his product — or at least, what little he actually knew. Sadly, I could tell he wasn’t sharp enough to put all the pieces together, and so when I heard later that he’d (over) bought a really nice house using one of his own products, I cringed.
Last time I saw him (late last year) he was looking rather glum and didn’t really want to talk about mortgages. Since Christmas, nobody’s seen him at any of our usual social events. Not good. Maybe it’s hard to get out to weekend parties when you have that second job delivering pizza.
If the youtube videos we’ve all seen of mortgage brokers “hard at work” are any indication, the group’s average IQ is about 95 and the average emotional age is about 14.
Don’t pity this aHole. Thanks to aHoles like Aerias, I had to buy a house in 2005 to defend myself against rising prices in Portland due to equity locusts from CA bidding up Portland with monopoly money. I hope he and his wife divorce after the BK, and he ends up on the street broken and devastated. Only feel sorry for their offspring. Am I bitter? Damn right I am.
Got diversified assets?
“Am I bitter? Damn right I am.”
Thanks for the reality check!
At least the year-over-year median is now negative in Venice and Santa Monica:
http://www.dqnews.com/ZIPCAR.shtm
Area, # sold, Feb 2007 Median, Feb 2006 Median, % change:
SANTA MONICA 32 $775,000 $879,000 -11.83%
VENICE 11 $955,000 $1,100,500 -13.22%
(Remember, your maillage may vary, as the median can get skewed all over the place).
Yeah, but Encino is booming!
ENCINO 42 $1,135,455 $595,000 90.83%
Unless you know how many houses sold last year, what percentage were condos, etc., etc., etc., these #s are practically worthless. We saw 10-15% declines in Santa Barbara reported two years ago, but again that was only looking at one month’s worth of data.
“Unless you know how many houses sold last year”
[arroyogrande gets out his archived DQ data, flip flip flip...]
Well, I don’t have a year ago for Encino, but I do have 11 months ago. The answer is 24.
24 sold MAR06, 42 sold FEB07.
Here comes the cavalry to rescue all the stupid people who bit off more than they could afford. The government in this election cycle will try to be the good guys and aid these people to get out of something they did to themselves.
Just as there has been a warning labels on cigarettes telling people of the danger of smoking for the last 40 years and still suing when they get sick, common sense doesn’t seem to have any weight on people doing themselves financial harm. They just need to have someone else to blame for their greed and stupidity.
I am so tired of reading how it’s not the people who signed up these toxic loans fault, but the people who only gave them the opportunity to do so. Just as I don’t care about those in the business who are now losing their asses because they wrote these stupid loans in the first place.
I’m getting ready to roll my 401k into bonds soon because I’m starting to sense the same feelings I had right before the dot com crash. I’m wondering how long until we revisit 10,000 or lower on the Dow. If it keeps going the way it is I don’t think it’s that far off.
Maybe the government bailout will be like cigarette warnings.
Warning: Inappropriate and stupid use of ARM can cause loss of shirt, bed, spouse, dog, etc. Take at your own risk, Dumb Donkey.
Let them all point fingers…..
The subprime meltdown is a small percentage of total loans, but a large percentage of the underpinning of the market, and the market going forward (as in upward). Bail’em out…. I don’t care (kidding…. I do, but the cost is nominal). These people will never learn, or care what went wrong. You want my share Senator Dodd? I’ll write my check right now.…….
Either help the downtrodden FB or throw them into the street….. either way it will not change the course of this bust. The unstoppable reality is RE is returning to the fundamentally affordable levels we have seen throughout our history. The cost of helping that “defaulting fool” is a cheap price to pay IMO.
What you can’t change Senator, is that 800K house returning to 550k.
You can ignore the allowing of the unworthy to purchase it at 800k, and now support the institutions that provided their ability to do so, but in the end, you can never make me buy it at anything over the real utility value…… which is 550k.
I really hate to see homelessness, which has grown a lot in this country ever since the mid 80’s. I think a lot of people who end up homeless, get there through no fault of their own and I’ve got no lack of compassion and no problem extending a helping hand.
But people who went out and bought an overpriced home with a stupid adjustable rate loan and now cannot deal with the situation?
It pi$$es me off to see this “homeless dvocate” putting these stupid homedebtors in the same category as people who wind up homeless for reasons not of their own deliberate doing.
And claiming they’ll be living in a CAR? The only reason that would happen is because they don’t gave the sense God gave turnips.
Geeze, it may not be pretty but just live free in your soon to be foreclosed place for a few months (screw the lender, they were an accomplice anyway), save the money and put it down on a rental. If they can’t plan ahead a few months for the inevitable, $crew ‘em.
Let’s not confuse these stupid and/or greedy homedebtors with people who got into a bad place through no fault of their own.
And let’s use this as a lesson on the consequences of turning homes into “get rich quick”/stock market schemes. I think we all knew long ago where this would lead and low and behold, that’s where we are.
The realtors, lenders and politicians were all enthusiastic about it til recently.
Yep , and in most cases these people still will have a job ,so its likely that they have enough money to rent verses living in a car .
While it’s true that many of these FB’s bought into the real estate myths and they really believed real estate going up would cover their risks ,they now have to learn the lessons of risk of debt .
“..they now have to learn the lessons of risk of debt”
Exactly. A no damn fool politician better even THINK about making we who stayed out of this pay for their ’schooling’.