“Ruining The Recent Prosperity” In California
Bloomberg reports from California. “The words ‘New Century’ used to flash several times a day on caller ID at Taleo Mexican Grill in Irvine, California. Reservations were often for 10 or more. Not anymore, said Nic Villarreal, the owner of the restaurant, located two blocks from New Century Financial Corp.’s headquarters. ‘We don’t get any.’”
“In Irvine, where just nine months ago office vacancies approached a three-year low, home prices were at an all-time high, and unemployment was less than the national average, at just 3.6 percent, the unraveling subprime mortgage market is ruining the recent prosperity.”
“Hometown lenders including New Century and Ameriquest Mortgage Co. already have fired more than 3,000 people, house and condominium prices are down 17 percent since June and office vacancy rates are poised to double this year, said John McDermott, regional manager for Orange County at commercial real estate broker Sperry Van Ness.”
“‘It’s a huge engine that has been shut off,’ McDermott said. ‘I don’t know where the new influx of jobs are if you take the lending market out of the equation.’”
“No one from the mortgage industry is shopping for Porsches these days, said Theresa Seradsky, Phillips Auto’s general sales manager in nearby Newport Beach. Instead, they’re putting their Porsches up for sale through the consignment program, she said.”
“‘Two years ago, every other day we had somebody coming in to buy,’ Seradsky said. ‘In the last two weeks, we’ve had nobody.’”
“Before its collapse, New Century had 7,400 employees, compared with 8,600 at the University of California, Irvine, said Jacquie Ellis, president of the Irvine Chamber of Commerce. ‘There are going to be massive layoffs and maybe something worse than that,’ Ellis said. ‘You wonder what impact it’s going to have on other companies as well.’”
“More than two dozen mortgage lenders have closed or sought buyers since the beginning of the year. Irvine-based People’s Choice Home Loan Inc. filed for bankruptcy protection last week. H&R Block Inc. is trying to sell its Irvine-based Option One Mortgage Corp. unit. Accredited Home Lenders Holding Co., based in San Diego, has offices in Irvine, and Ameriquest is based in Orange, just north of Irvine.”
“For Irvine’s 190,000 residents, the median price for new and resale houses and condominiums was $641,500 in February, down 17 percent from last June’s peak of $775,000, according to DataQuick.”
“As recently as last year, loan officers were getting annual pay of as much as $200,000, said Charlyn Cooper, a former manager at subprime lender Secured Funding based in nearby Costa Mesa. Now they’re being offered low-paying jobs in call centers.”
“‘Twelve dollars an hour is not a living wage for us,’ said Jorge Perez, who manages the California unemployment office in Santa Ana. ‘You can’t live here and have an apartment. That’s not near what you need to be making.’”
“Natalie Lohrenz, director of counseling at the Consumer Credit Counseling Service of Orange County, is meeting with about 65 people a month who are seeking help to avoid defaults on their mortgages. It was about 25 a month last year.”
“She said she has counseled people with monthly mortgages of $4,000 and incomes of $6,000 a month. ‘There are plenty of people out there living their lives with two-thirds of their income going to their mortgage,’ Lohrenz said. ‘That’s something we didn’t see a few years ago.’”
“After the collapse of the savings and loans in the 1980s, executives from that industry started subprime and other mortgage lenders, said Melissa Richards, general counsel for the California Mortgage Bankers Association. Their time at savings and loans gave them experience dealing with investment banks, she said.”
“‘You have the developers there, and you had the need for companies to get people into homes they can’t afford,’ said Peter Navarro, a business professor at the University of California, Irvine. ‘And that’s how I’d describe the subprime industry.’”
“Beth Krom, Irvine’s mayor since 2004 and a city council member for four years before that, said…the increase in prices has outpaced incomes, she said. ‘This isn’t Beverly Hills,’ Krom said. ‘It’s not a community where everybody is living next door to a millionaire. Many people couldn’t afford to move back into their homes today.’”
“Ankur Kumar worked in Ameriquest’s fraud-detection department from mid-2004 until last May when he lost his job as part of the company’s layoffs. In his new career as a fitness trainer, he hopes to have an income of $30,000 this year, compared with more than $40,000 when he worked at Ameriquest.”
“Kumar lives in a five-bedroom Irvine house and pays almost $3,000 a month between his interest-only loan payment and taxes. Kumar rents out three of the house’s five bedrooms, which pays for about half his monthly housing expenses. The interest rate on Kumar’s adjustable-rate mortgage is scheduled to go up in October. He plans to refinance. ‘I’ll probably have to do something risky, to be honest,’ he said.”
The Press Enterprise. “Reflecting statewide trends in a slowing housing market, the Inland region in February saw new-home construction starts drop 48.3 percent from a year ago, as builders focused on selling off their existing inventories.”
“The latest February figure was also down 14.1 percent from January. For the first two months of 2007, Inland housing starts were down 40.9 percent, with 3,527 permits issued this year compared with 5,969 a year ago.”
“‘They’re really focused right now on dealing with the unsold inventory,’ said Steve Johnson, a director with Riverside real-estate consulting firm MetroStudy.”
“To move those homes, he said builders are continuing to offer a number of incentives that began to kick in last summer, when the local new-home market began to soften.”
The North County Times. “As the bull market in housing rampaged between 2001 and 2006, Wall Street did not sit idly on the sidelines. It jumped in to enjoy the spoils. Even if you don’t own a home, or have never taken out one of these high-interest mortgages geared for borrowers with poor credit, you might need to think again.”
“You could own a piece of the multibillion-dollar market in risky mortgages, through your pension plan or a mutual fund.”
“Wall Street, with its insatiable need for growth and profits, provided the liquidity, or the cash, to keep the housing market revved up. Some major mutual fund companies, such as T. Rowe Price, American Century and Legg Mason Partners, invested in loans issued by subprime mortgage companies, according to a recent report by The New York Times.”
“At a mortgage investment conference earlier this month at the La Costa Resort and Spa, executives with some of the biggest financial services companies in America were bemoaning that many subprime and other risky mortgages were going bad and could harm investors.”
“Those investors, one speaker noted wryly, ‘are probably your and my 401(k).’”
“Ankur Kumar worked in Ameriquest’s fraud-detection department from mid-2004 until last May when he lost his job as part of the company’s layoffs. In his new career as a fitness trainer, he hopes to have an income of $30,000 this year, compared with more than $40,000 when he worked at Ameriquest.”
“Kumar lives in a five-bedroom Irvine house and pays almost $3,000 a month between his interest-only loan payment and taxes. Kumar rents out three of the house’s five bedrooms, which pays for about half his monthly housing expenses. The interest rate on Kumar’s adjustable-rate mortgage is scheduled to go up in October. He plans to refinance. ‘I’ll probably have to do something risky, to be honest,’ he said.”
You have to pay fraud detectors more than 40K
I guess the fox was guarding the hen house.
With guys like “Mr. Risky” guarding the hen house, no wonder fraud has been rampant….
Since when is “do something risky” NOT part of his daily routine. Buying a 5 bedroom house at 26 on half of the local income is already quite risky. If he takes on any more risk, it’ll be playing Russian Roulette.
Chuck Ponzi
http://www.socalbubble.com
What I think Mr. Kubar had in mind when he said he would have to do something risky was robbing a bank.
I guess Kumar is…Fubar.
My guess is, Kumar will be heading to White Castle!
SHOTGUN AN*S!
LOL. I loved that movie (Harold & Kumar go to White Castle).
I can never figure these stories out - the numbers never seem to make sense. His take home pay cannot be much more than $1,800/month. If he’s paying half the carrying costs ($1,500/month) that leaves $300/month for groceries, transportation, clothing, healthcare etc. I’ll bet there’s more to this story (illicit income on the side).
Plus, how did he qualify for the loan? Fraud?
HELOC to pay living expenses?
People only tell the newspaper reporters the amount they’re paying taxes on, which might be inconsequential.
I was at a dinner party a couple months ago and I guy I barely know announces, “I haven’t paid a dime in income taxes in years.” My wife and I were stunned; we happen to know he makes around $300k from his business, which deals in cash only. I’m sure he’s the tip of the iceberg, which really rankles those of us who meticulously pay around half our income to the taxing authorities.
If it’s possible he owes a million or more the IRS is interested, and will give you a cut.
Report his ass.
http://www.irs.gov/compliance/enforcement/article/0,,id=106778,00.html
Drop the dime.
Those of us who pay our taxes, willingly or not, shouldn’t be subsidizing your buddy’s lifestyle.
Taxes are what they are. Go ahead and vote how you want, if lower taxes are your goal, but until that comes through, and assuming that he’s willing to deal with the level of services that he’s willing to pay for, (yeah, right…), I pay mine, and he needs to pay his.
I bet that the IRS would be very interested in someone who’s making 300K / year and not paying a dime into the kitty. The fact that he’s dumb enough to brag about it just means that he deserves to be thrown under the bus.
–Shannon
LOL
Shannon: I like your style! And I agree, he should report the joker and then we’ll see who’s lauging. He said he barely knows the guy, so who cares?
“I bet that the IRS would be very interested in someone who’s making 300K / year and not paying a dime into the kitty. The fact that he’s dumb enough to brag about it just means that he deserves to be thrown under the bus.”
I don’t know if LowTenant can get a reward from the government if he turns this guy in but I guarantee I will send $50 if Low walks up and kicks this guy squarely in the nuts. Send a photograph of the deed and I will send you a crisp $50 bill. No joke!
I’ll pay $50 PER NUT. And an additional $10 for each inch that said nuts are sent flying upwards toward his chin. Just send me a pic of the guys face afterwards, I’ll confirm the deed by the look on his face.
Good for him. He does better things with his money than the politicians will. But don’t get bitter just ’cause you won’t risk keeping your money.
Paul
If illegal aliens don’t have to pay taxes, why should US citizens?
LOL. If people are driving faster than the posted speed limit, why can’t I?
Ever heard of 2 wrongs don’t make a right?
J F R,
Damn Straight. I’m with you, buddy!
Joe Momma,
I’m down with you also. If its wrong for me to be taxed out the a$$, its wrong for you to be taxed as well. See, we’re on the same team. I have auto insurance, and so do you. If you don’t, I won’t turn you in, though I’d hope you’d be responsible, AND the main reason I have insurance is for those of “the other people” who don’t.
Or maybe (just thought of it) you are so effin brainwashed that you need to lick the hand that slaps you day in and day out, takes your money (what, one third? one half? more?) pisses it away on things that not only don’t benefit you, but actually harm you (fed, fha, fnma, bailout, war?). Go ahead, show your belly. If you wag your tail, maybe you’ll get scratched … or maybe you will get disembowelled.
Oh I’m sorry, its a medical condition.
Where were we?
That’s right: “Two wrongs don’t make a right.”
Can you define your terms? (ie. right, wrong)
Lmfao
paul
Speeding isn’t wrong.
Pass the bubbly,
I think you might see my point.
Speeding isn’t wrong, but recklessly mowing down a senile group of old ladies out of pure negligence is.
If an FB came and forced you to bail him out of his mortgage, at the point of a gun, we’d all know that that is BS. But when he votes for Sen. Dodd, and of course, we gotta pay “our fair share,” well, that’s just Amerika.
I call BS.
I pay my taxes ’cause I’m afraid of the tax man and his guns.
But if it is my children or uncle sam, the line is clear.
What will you do after the collapse?
Paul
As you can see Paul, one doesn’t need to be employed by the government to be a gestapo agent.
The privately owned Internal Revenue Service (Oh? You thought it was a government agency? hahahaha!!!) is very grateful for your voluntary services. Enslaving a nation is hard work and can’t be done without low-life turncoats.
It’s amazing that those who can see a housing bubble (and laugh at/ridicule those who don’t) have fallen for biggest scam perpetrated on the American public.
Organization of the Treasury Department. See the IRS anywhere?
U.S. Code
TITLE 31 > SUBTITLE I > CHAPTER 3 > SUBCHAPTER I
SUBCHAPTER I—ORGANIZATION
§ 301. Department of the Treasury
§ 302. Treasury of the United States
§ 303. Bureau of Engraving and Printing
§ 304. United States Mint
§ 305. Federal Financing Bank
§ 306. Fiscal Service
§ 307. Office of the Comptroller of the Currency
§ 308. United States Customs Service
§ 309. Office of Thrift Supervision
§ 310. Financial Crimes Enforcement Network
§ 311. Office of Intelligence and Analysis
§ 312. Continuing in office
§ 313. Terrorism and Financial Intelligence
Crisrose,
I’m with you in spirit, but the names/numbers don’t make a difference.
Can they get you or not? Gov’t is a parasite. Best argue with you intestinal worms, than go to court with precidents and decisions.
We don’t need to worry about public/private corporations.
Its the people who think that taxes are part of life, yet bitch about the problems with Gov’t that are the problem.
If we could get rid of the obvious cognitave dissonance, the IRS, Fed, etc. would blow away like a fart in the wind.
Right or wrong…Struggling to feed you baby sorts that out real quick,
no more time for traffic fines..
Paul
Oh, that’s easy. The IRS is covered under paragraph 313.
I haven’t paid taxes in years.
The last correspondence I received from the IRS apologized “for any inconvenience we may have caused you.”
It’s easy to get rid of the IRS et al - rescind the contracts.
If someone were to rape your daughter and kill your wife in front of you - and then put out your eyes and set you on fire - you would have no right to call the police or fire dept. (in my book).
Sorry for the inappropriateness, everyone. Need CRISROSE to get it in his head that this is not the place to flaunt such malarcky. Kind of cowardly to do so under the shadow of anonymity, too.
Back to housing…
2007 is going to suck!
-Rent
You do realize the difference between federal income taxes and state income taxes, don’t you? You do realize the difference between federal income taxes and property taxes, don’t you? You do realize the difference between federal income taxes and state/local sales taxes, don’t you?
I’ve only posted what I have done, and what has worked. Those who want to know more, can do their own research.
IANAL, but to me this sure looks like the IRS was created by an act of Congress:
Revenue Act of 1862 (July 1, 1862, Ch. 119, 12 Stat. 432)
Nope - the only office created by that Act was the Office of the Commissioner - neither the Internal Revenue Bureau nor the Internal Revenue Service was created.
US attorneys (in court documents) admit it:
“Denies that the Internal Revenue Service is an agency of the United States Government but admits that the United States of America would be a party to this action.”
http://autarchic.tripod.com/files/irsnara.html
I have a relative who thought the IRS might not notice that he had stopped paying taxes. It noticed.
Yes - he should have realized the Internal Revenue Code is contract law. If you don’t want to pay taxes, rescind the contracts binding you. You can’t benefit from a contract (social security benefits, FHA loans, student loans, food stamps, etc) and not uphold your part of the bargain.
U.S. Constitution: Thirteenth Amendment
Thirteenth Amendment - Slavery And Involuntary Servitude
Section 1. Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.
Section 2. Congress shall have power to enforce this article by appropriate legislation.
‘Taxpayers’ will bail out the FB’s, if that is what is decided by the plantation overseers. Bitch all you want, those who volunteer for slavery (by signing a contract) must do as they’re told.
don’t forget this one crisrose.
Amendment XVI
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.
I’d gladly recince my right to social security etc… if they gave me back what they stole from since I started working, with interest. Shit, I could’ve had a few hundred thousand extra dollars by now.
Nice how it was an amendment to an already working Constitution. Who added that later, some Illuminati infiltrator.
“Amendment XVI
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.”
Wages were never considered “income.” Income was (and is) interest, rents, dividends, etc.
“I’d gladly recince my right to social security etc… if they gave me back what they stole from since I started working, with interest. Shit, I could’ve had a few hundred thousand extra dollars by now.”
Social Security is voluntary - therefore, you have no right to a refund. There is no law requiring you to have a social security number in order to work within the 50 states.
Social security benefits are not guaranteed, there is no trust fund, the terms can be changed at any time.
These kinds of stories make me nervous. I fully expect the implosion to damage all sectors of the economy. At present Mr Alarm any myself are living as poor as we can manage, and stockpiling cash and things that easily become cash (or better). You can point and say I have a bunker mentality about this, but to be honest I come by it honestly.
After the tech bust, I was out of work for almost a year - that is zero income. We lived off of savings and luckily that saved our hide. Since then we have been working hard to re-build them, but they are in no where as good a shape as they were before the bust, and frankly we are worried that we won’t have the funds to weather the storm should it be as big as feared. So we are cutting back now, stockpiling the difference and hoping for the best.
I wonder if other folks might be doing the same to some degree or another, and what kind of effect that will have on the economy. Someone below mentions that getting at table in an Irvine restaurant will be easier now. Frankly, we are avoiding that sort of thing all together at this point.
That being said, I am certain that the firestorm in the economy is really sewing the seeds for the next golden age, and I am eager to see it.
should be Mrs Alarm and myself. Damn, type more slowly next time.
I was going to buy a new car. The Credit Union prequalified me for a huge loan (way more than I would use). I actually used edmunds.com to send out an automatic email to the nearest six dealers. They all started emailing me and calling daily.
But I thought about it some more and concluded that with the housing-bust finally happening, there should be real good used car deals coming up.
I bought 2 later model used cars recently from Florida. I did a nationwide search on Autotrader.com and FL cars kept coming up as the best deals. I’m sure the bust had a lot to do with the deals. A couple of tips for buying an out of town car- do a Car Fax and have it checked out first either by a dealer or by someone like carchex.com. I saved about $2k-3k per car doing it like this.
I have been in cost cutting mode for a while now. The tricky part is the unexpected expenses that cut into the savings contributions. The tighter things get, the more I see it as an opportunity to relearn thriftiness.
Definitely got the right plan. I’m doing the same, and waiting for a good opportunity at REASONABLE prices. I do note the irony, though, that if every American did what I was doing, we’d be neck-deep in recession due to lack of consumer spending.
He’s Indian… probably eat a lot of beans and curry. He can live on just $300 per month. Kumar will be alright… DON”T WORRY!
imploder eats a lot of beans and curry
Love means never having to say you’re sorry. Curry means always having to say you’re sorry.
“imploder eats a lot of beans and curry”
Hence the name “imploder”….
“Windtalker” to hard to type…..
The loan officers at Ameriquest were the fraud facilitators. Not sure why they needed a fraud detector there. Well, even thieves need protection from other dishonest people.
They had a fraud detector.
He noted the fraud.
Then he hit the bar…
started again.
Mission accomplished!
Got popcorn?
Neil
They should of paid the fraud detector a commission for each fraud detected and than boy you would of seen some action .
A fraud detector at Ameriquest the 21st century equivalent to the lonely Maytag repairman. I wonder what he actually did all day. Solitare starts to drag after a couple hours worth.
Uhhhh…. Yea, Kubar… hummmmm I’m gonna have to ask you to move your desk again……
and have you filed your TPS reports?
…Never mind.
PC Load Letter?!? WTF does that mean?
Actually, I think that the better analogy is the compliance monitors from Boiler Room.
Classic movie. “Umm, yeah, I’m going to have to go ahead and….”
I agree, especially since loan officers were being paid 200 K
well, they had to start him out low.
You never know when someone turns out to be a fraud!
Geez, no I don’t want Fries with that. Give me a nice baked potato, oh and can you refill my ice tea please……..
Like I said over a year ago. A soft landing is when your realtor has to eat at the Olive Garden. A hard landing is when your realtor has to wait tables at the Olive Garden. A crash is when she has to sleep with the pervy manager to get shifts.
That’s funny.
There was a really funny ‘before and after’ email floating around after the dotcom bust put the netbabies out of work. It had stuff like:
Before: Four bedroom house, one occupant
After: One bedroom apartment, four occupants
Before: Driving a Porsche Boxster
After: Living in a cardboard box
“I’ll probably have to do something risky, to be honest,’ he said.”
Having an income of $40K a year with a $3K a month mortgage wasn’t risky, but now that he’s taken a $10K pay cut it is???
What a bunch of BS. He could make up the $10k with some part-time work. Not sympathetic at all.
In Sacramento at the local housing agency they have a program to help low-income people buy a home - they’ll allow 40% of gross income to go towards the mortgage payment and you have to make less than 30,600 a year to qualify! How Ironic - people think the govt should have known what was going on and stopped it? The Govt was in the game!!! LOL
The ironic part is there is nothing you buy in the area with an income restricted to 30K outside of the worst of South Sac or Oak Park. Was this program on the books so the agrency could look like it was trying help while essentially doing nada?
No, they were putting these people in $600K housing and you and I are picking up the tab.
Which program? Please tell me they were buying in Anatolia or Serrano. That would be priceless!
there was an article here last year telling a similar tale, only down in Santa Cruz. The County was “helping” lower-income buyers get into a home with little to zero down. Gee, thanks for the help guys! I hope the county gave them a free set of scuba gear with the loan because they are all underwater now. Government tends to screw up just about all they touch.
CA Guy,
I sense a disconnect here. “Gov’t tends to screw up just about all they touch.” But a few posts ago, you were cheering turning in a tax cheat for not paying his fair share.
Why give gov’t more money? So they can do a more thorough job of screwing up? So they can screw up by orders of magnitude more?
I see a bucket full of crabs. Just as one manages to crawl to the rim and almost gets free, the rest pull him down.
With the rampant fraud, corruption, waste, and debt invovled in gov’t, there is no way you can ever say you (the posters in general, not just you, CA Guy) are harmed by the failure of one person to pay taxes. So I suggest everyone get over it. If he gets caught, that’s the way it goes. If he gets away with it, he’ll spend his money better than the gov’t will.
Paul
40% of $30,000 is $1020/mo. That will pay for about $150K worth of house. I don’t think you could buy a tool shed in Sacramento for that amount.
“I don’t think you could buy a tool shed in Sacramento for that amount. “… YET!
$150K is still a lot of $$$$. Just doesn’t seem that way when credit is juiced up on nitro. Once credit vanishes that $150K will look like a lobster tail to hungry sellers and they’ll be crawling over broken glass on their hands and knees to get at it…
Okay, I know I’m going to take some serious heat for this but here it goes anyway. Why is it that when someone like “Ankur Kumar” buys a five bedroom house in Irvine on a 40K yearly salary with an interest only loan, renting out 3 of the bedrooms to others to help pay the mortgage, almost all responses concentrate on the financial aspects of the deal (why it obviously doesn’t make sense, he should have known better, etc.).
But change the name to “Jorge Morales”, and all of a sudden, out comes the illegal immigration discussion as if anyone with a latin surname is suddenly guilty until proven innocent.
Just switch the name and I guarantee the discussion would have bent a different way.
Don’t get me wrong, I know we have a huge immigration problem in the US but shouldn’t we be an equal opportunity race basher?
And for disclaimer purposes, I am a US citizen of Mexican decent. I know many people have their own personal prejudices, but it just seems that lately this blog has had an unusually large anti “Hispanic” tone when everyone from all walks of life seem to be pulling the same crap when it comes to the housing bubble.
55 comments and counting…not a peep about immigrants.
I sympathize, but assuming anyone is illegal, or even that they’re an immigrant, simply because of their surname is pushing it a bit. I know plenty of basically-white, 2nd/3rd generation Americans named Garcia and Dominguez. I don’t know any white Kumars, but I’m sure they exist and I still wouldn’t assume they weren’t citizens.
The “discussion” you refer to comes out because the US illegal immigration problem, by and large, originates in Latin America. “Kumar” sounds Indian to me, and Indians are not organizing mass boat lifts and landing on the Oregon coast in the middle of the night. Hispanics make up by far the largest percentage of illegal immigrants. It is very difficult (I would say impossible) to even discuss the issue of illegal immigration without focusing on Latin America.
probally a repost but I’d like it early enough for you to read it.
If he’d been speaking through an interpreter, as in many of the Latino stories, I bet it would have come up right away….
Not to criticize, but I have been a contributor to and a reader of this Blog since September of last year. I have not witnessed discussions such as you have described. There have been occasional discussions re illegal aliens when news stories have interviewed low income hispanics who are facing foreclosure after buying a home based on questionable income levels. As pertaining to my disclosure purposes, I am married to a hispanic (100%) and my kids are bi-lingual. As far as the “anti-hispanic tone” you are alleging re this Blog, I would like to remind you that illegal aliens are overwhelmingly comprised of Mexicans. The fact that certain sectors of the business community (like Bank of America and Western Union as well as sub-prime lenders) caters to them is no secret to most Californians or to readers of this Blog. Any comments or criticisms of these business arrangements is fair game.
~Misstrial
amen, sister…. said it better than me…
1) Just this week, the contributors here assumed articles with borrowers that spoke via an interpretor were “illegal”.
2) It is laughable to read commentary that blames poor, illegal Mexicans for the housing bubble.
“blames poor, illegal Mexicans for the housing bubble.”
not “blamed for the housing bubble”…. they were willing participants along with everyone else. Or do illegal immigrants walk on water…
Elo-
You make a good point. But let’s not put blinders on. Here’s an example: I recently had to do eviction on one of my complexes. A gentleman rented the place about a year ago. Before I started the eviction process I scoped out the 2 bedroom unit to see what would be the best time to catch him to have the three day notice served. I counted 6 cars and at least 15 people using one 2 bedroom apt. I have heard stories of 20 people at a time using one single in Downtown Los Angeles. I can understand your sensitivty but not many “Ankur Kumar’s” or “Quan Lee’s” pack a place like that. Just from my experiences.
Don’t forget to do a “Prejudgment Claim of Right to Possession” (PJRTP) form. Many LL forget or do not submit this form with their other UD forms, and the ommission of this document can delay your right to evict. Prejudgment Claim is great because it gives you the right to evict “any unnamed person who appears to be or who may claim to have occupied the premises at the time of the filing of the action.” This legal instrument shifts the burden of the unnamed occupants to add themselves as defendants to the UD action by timely filing the PJRTP.
All the best to you.
~Misstrial
Yeah. Arrieta claims are a major hassle to go through during the eviction process.
Are these crammed residences driving up real estate values?
We had 9 white guys from Ireland living in a condo next to ours a couple summers ago. They were tourists enjoying the summer at the beach. They also never adjusted to our time zone, getting up in the evening, and still going strong at breakfast.
I would have rather had 12 Mexican immigrants who were working and were too tired to be skateboarding past my bedroom window at 4:00 AM.
I’ll boil it down for you…
An escalator.
One side goes up as the other side goes down
Immigrants are going up and Dumbmericanos are going down
We are at that awkward meeting in the middle stage.
Immigrants have calloused hands.
How soft are the other pair of hands?
55 comments and counting…not a peep about immigrants.
My family has had nothing but trouble with immigrants ever since we came to this country.
good one, Sammy
I’m not anti-immigrant at all. My wife is a Colombian immigrant who was naturalized as a U.S. citizen about a year before we were married.
Comments in forums like these are hardly fair and objective. Most comments are interpretations of news that were posted. Other comments are anecdotal and may be overgeneralized or stereotypical. And then there are those that are just satircal. Just the nature of the game here. I’m not offended.
Because in all likelihood Kumar is a legal resident, even if he is stupid. Get over it.
Until you. Imagine that.
If you want to commit Fraud HIRE THE DUMBEST PEOPLE YOU CAN FIND AND PUT THEM ON YOUR FRONT LINES!!!
ankur would fit that perfectly….Airheard, Buff, Tanned and probably has a few plastic boob babes to boot!
He could have gotten a job on the side at Circuit City too but that’s not going to happen now…
“Circuit City to cut more than 3,500 jobs
March 28, 2007: 10:44 AM EST
RICHMOND, Va. (AP) - Circuit City (NYSE:CC) Stores Inc. said Wednesday it plans to cut costs by laying off about 3,400 store workers and hiring lower-paid employees to replace them, and by trimming about 130 corporate jobs.”
ITS DIFFERENT IN RICHMOND!
I FLEW TO BOSTON THIS MORNING AND SAW ONE OF THE CIRCUT CITY EMPLOYEES - DONT KNOW IF HE WAS ONE THAT IS FACING THE GALLOWS.
“You’re not going to make me face the firing squad. Are you?”
“No. You can face the wall.”
“Kumar lives in a five-bedroom Irvine house and pays almost $3,000 a month between his interest-only loan payment and taxes. Kumar rents out three of the house’s five bedrooms, which pays for about half his monthly housing expenses.
of course Kumar is reporting the rental income he receives on his tax returns.
sure he is
Kumar is a loan liar and a tax cheat so the Company wants someone like him detecting fraud .I wonder how much fraud a guy like him detected while he was employed by that Company ?………..I bet none .
“to be honest.”
Yeah, for the first time ever.
Sorry I respond off topic near the top…
I think that a topic for the weekend should be a discussion of mutual funds that have significant exposure to subprime and MBS in general.. I think the participants of this blog would like to know whta funds to stay away from…
“You have to pay fraud detectors more than 40K”
Don’t forget Credit Managers like me
Seriously, you need to pay EVERYONE with an education more than $40K in SoCal.
OT……but just to put everyones mind at rest.
Here it is……..no need to worry
Paulson: Housing damage ‘contained’
http://money.cnn.com/2007/03/28/news/economy/paulson.reut/index.htm?postversion=2007032813
Coincidently, other top policymakers are also talking about subprime “containment”…
—————————————————————————-
Although Mr Bernanke sought to reassure markets by saying that the Fed believed the fallout from the crisis in the sub-prime mortgage market seemed “likely to be contained”, economists said poor sales of durable goods in the US suggested that the economy was weakening.
http://business.guardian.co.uk/story/0,,2044889,00.html
GOOD!
The More statements like this from this type of expert official, the less likely a bailout.
“…economists said poor sales of durable goods in the US suggested that the economy was weakening.”
Did the HELOC shutdown affect the “durable goods” numbers?
‘Contained’. A well chosen word. Isn’t that a term used in nuclear reactor design, like ‘Containment wall’? And “China Syndrome” might take on a completely new meaning.
More like a hollow cylinder with one open end and one hemispherical end, placed over the core and other components.
I thought the same thing. The Soviets said Chernobyl was a minor accident and had been contained early on. The reality is that it could easily have wiped out much of the population of Europe. One little breeze and the subprime fallout will take out most of California.
How does that joke go about the “Polish sperm bank?”
The “Polish Plumber”?
http://en.wikipedia.org/wiki/Polish_plumber
ex 2nd World Knowhow
The daughter said to her mother “I think I’m pregnant” . The mother replied “Are you sure its yours.”
Thank god it’s over. It must be because he said it is. I wonder if Suzanne helped him research this? Totally disregard the fact that he’s the head of Goldman Sachs too. If he says it’s over, it’s over. Everyone back to bidding up houses. Chop chop.
This explains everything.
“After the collapse of the savings and loans in the 1980s, executives from that industry started subprime and other mortgage lenders, said Melissa Richards, general counsel for the California Mortgage Bankers Association.
The owner of Ameriquest had a failed S & L and transformed that into Ameriquest. Definitely survivial of the fittest in the business world.
what will they do next?
Maybe about 8-10 at the state pen?
Well, he is the US ambassador to the Netherlands.
He should be the U.S. ambassador to San Quentin.
This is what happens when the government rewards negligent, irresponsible, and in some cases illegal, behavior with bailouts. You get more of that behavior!
I remember back in the early 90s when I was working for..umm..a very large S&L, the CEO gave us a speech.
In it, he said the most important change for the company had been the advent of the ARM loan. He likened it to the monolith appearing in the movie 2001 A Space Odessy.
I remember thinking that this must be something that only benefits the company and not the borrower.
brings to mind the opening scene of Mel Brooks’ “History of the World Part I” which parodied the apes scene in “2001.”
This whole thing has been one big circle jerk.
Just sit down here and get to work. If the music stops before we get to you don;t worry: you can just refinance.
“Those investors, one speaker noted wryly, ‘are probably your and my 401(k).’”
Let the lawsuits aimed at pension fund fiduciaries begin! I suggest that anyone contemplating such action consider whether the list of fund choices gave participants any “low-risk” options that did not expose them to the predictable high-risk MBS fallout. I know from a couple of friends and relatives that in many cases, the answer is likely “No.”
GS,
If there is to be any sort of bail-out, the 401(K)s is the only place it should take place…….JMHO
Why should a 401(k) investor get bailed out and not a homeowner. Both should now the risks. If you own a fixed income mutual fund that’s not purely treasuries take a look at the underlying holdings - good chance a large part is residential MBS. I vote NO on 401(k) bailout. But the fiduciaries will be grilled. If you are your own fiduciary in a self directed plan you have no one to blame but yourself.
By the way I just had a meeting with reps from a mutual fund and 5-6 fiduciaries for a pooled plan. I asked the reps if my calculation that 40% of the supposed AAA fixed income portfolio was really residential MBS. They had to admit the truth when I pushed them. When asked if they were sure all was AAA they balked. We fired them. If you want fixed income and don’t wan’t MBS read the financials or buy treasuries. If not gold or cash.
Because often the employees have no control over the funds. I’m invested in UCRP and I have zero say as to what they do with that cash. In fact, the unions have gone after the fund manager to try to get an accounting from them and UCOP works to block it each time.
Now I also have a traditional 401K with Fidelity along with the established pension and that I do watch like a hawk and move around to cover myself.
I have to agree with no on the bailout. You do have a choice as to where your unions decide to invest your pension funds, it’s called elections. You elect your union management, also you can get your union members educated enough so that they don’t place your future in shaky investments.
I recently had to sit my sister-in-law down and explain this. She is a teacher in Illinois and the teachers pension fund is already 40 billion underfunded and wanted to jump into housing hedge funds. Their elections are coming up and I explained it would be in her best interests to get rid of such shameful people that are “watching over” her future.
I’m running for the UCRP advisor board this year. Collecting signatures for my petition. My platform is to get an assessment of risk exposure to MBS and to protect us from MBS.
My wife and I both work for UCLA. In December 2006, we transferred 90% of our 403 and 457 to UC Insurance Company Contract, paying 5% per year. That’s a stable income fund - not sure if it will be affected by the housing crash. Looking at the Savings Fund, which is US treasuries and money market. 10% in Fidelity Natural Resources and Select Utilities Growth.
This is especially scary considering unions are now lobbying congress to eliminate secret ballots, ironically calling it a “free choice” provision. If this passes, union members won’t even have the ability to vote against the majority leadership.
Are they restarting contribution routing to UCRP instead of the DC Plan in July?
That’s being discussed. I have no problem contributing to the fund. I just want it to be manager responsibly. If you’ve ever dealt with UCOP, you know I’m asking for the moon. They make hedgefund managers look ethical.
The DCP plan and the 401/403 plans run by Fidelity are totally different than the UCRP pension plan–which we have no idea of the portfolio. AFAIK at this point in time the governor is not going to give UCOP their share of the contributions as long as the UCRP is overfunded (currently like 103%). UCOP won’t ask us to contribute if the state isn’t going to. I doubt we will start up the recontribution in July 2007.
Interesting. I know that the DCP and the Fidelity funds are completely separate. It’s people outside our system who think they are the same. And I don’t have a problem with funding both >; )
We will know more in the May revised budget. Stay tuned! But my money is on no contributions for at least another year. Fine with me–I’d like to get vested and bail out of it with a nice cheque.
According to Moody’s and S&P, the CDO’s composed of subprime loans are AAA rated. The fraud and risk is system-wide wherever real estate is concerned. The appraisers, borrowers, lenders, bonds, ratings agencies, and brokers are all corrupt to the bone.
100%correct. STABLE VALUE OPTION in my 401k - the “safest” fund in the portfolio of options is AAA rated and nearly THIRTY PERCENT INVESTED IN MBS.
I HAVE NO PLACE TO SWITCH IT TO….. WHAT TO DO?????
Do you guys understand how this works? It’s not that MCO and S&P are dumb enough to say “hey! these subprime loans are frikken gold man!” They estimate that a portion say 8% will ultimately default with no recovery (or perhaps 15% will default with 50% recovery).
Then they assign rankings to receive the cash flows(interest and principle) in a certain order (the most senior trust would have to have something like 60% of the mortgages default to not get all their cash flows (and if that happens nothing will be paying). The next senior might need 55% (this trust is to reduce prepayments), third trust 30% fourth trust perhaps 25%. Those are the only trusts that will get AAA ratings. Then the subsidiary trusts take what’s left and move down quickly to what’s called the equity tranche which is essentially expected to fail (the street term is toxic waste). This might be the last 2-4% of the cash flows (most of the time there are say 101% of the mortgages sold backing all the trusts. Hedge funds that want to take the risk can buy that tranche or the issuer keeps it (this is why the liquidity crisis is so damaging to sub prime lenders–their equity tranches were beginning to default at the same time their pre-securitization lenders pulled the plug on their loans. There’s a slight risk that 60% of the loans will default but if they do, most AAA credits will probably be in default as well. The rating agencies were probably quite a bit tight on the subordinate trust ratings (requiring too little equity to protect them, but that’s common to every single credit cycle). It’s overrated the BBBs and As that burn you 90% of the time.
“Why should a 401(k) investor get bailed out and not a homeowner.”
401(k) investors are at the mercy of Pig Men on Wall Street and Pig Men in fund management positions who both profited by loading up fund choices with risky MBS. I guess you can argue that anyone who wants can opt out of their 401(k) plan, which is what many Americans have apparently done…
Great, even more money for party animal boomers that didn’t save and continue to want to live life like an endless Fidelity comercial that celebrates all the many hats they’ve worn over the years.
401(k)’s will be hit but most of the damage will be in hedgefunds and regional banks. It’s ironic how it works. The big brokerages get rid of the sh(*&T as fast as possible. THey might be left with some residual buy-backs that couldn’t be bought back due to bankruptcy. The mutual funds and pension plans will have the A and B tranches and will get burned. The hedge funds will have the C tranches and a few of them will be toast along with a lot of regional banks who hold both toxic MBS and cr&*(P loans. The regional banks will be the hardest hit. They will be the last to mark to market, they’re leveraged 15 to one and by this summer virtually all in Florida, California, and Arizona will be insolvent on a true markt-to-market.
Thanks for insights, wtl. I’ve been curious about the identities of those foolish enough to buy toxic MBSs during the last few years. Any idea why the regional banks have loaded up on these things? Simply a matter of less-than-savvy management, or is there something more systemic at work?
Are you implying that mindless optimism and stupidity isn’t systemic?
“Natalie Lohrenz, director of counseling at the Consumer Credit Counseling Service of Orange County…has counseled people with monthly mortgages of $4,000 and incomes of $6,000 a month.”
Man, these are priceless quotes. I wish I would’ve had this stuff in print a few years ago while arguing with the ultrabulls. I was a broken record simply stating “People cannot afford these prices!”
” I was a broken record simply stating “People cannot afford these prices!”
This has been my reasoning all along, and tried to preach it to whoever would listen.
“People cannot afford these prices!”
Bear, since I was completely clueless about the financing side of the bubble I simply wondered aloud many times “how many people make 30K per month so they can afford a million dollar house?” I got weird looks and I didn’t understand because I didn’t know they were not really making that kind of money. Oops…
These things are weird…
I was explaining to a coworker how people we knew were living it up by borrowing on property. We have a technician who has *spent* over a million $$$ over the last five years “living it up.” Now? His last refinance took his condo to 15X base pay (probably only 7X total pay due to OT).
Oh… he switched programs the week we had to cut overtime… hmmm…
Got popcorn?
Neil
Neil:
I wonder will your boss fire him if he walks away from the property and files Bankruptcy?
That would be the ultimate middle finger to guys like me who desperately need a job, and are scaping by by selling everything i own. And by paying my bills on time.
aNYCdj,
Actually… his job requires an occasional pull of his credit report. Can he keep his job if he files BK? Probably, but only if he does all the paper right. (Reports financial trouble before it shows up in the credit report, tell the company within 14 days of filing BK… etc.)
I hope your situation gets better soon,
Neil
People forgot the value of a dollar, people forgot that only five years ago 150,000 was the price of a really nice home in Florida. Now 150,000 is quoted as “starter home”. Simply ridiculous.
To me 150,000 is still a lot of money, I have not spent that yet and I have owned four homes I am 43 years old.
My next home I do plan on paying 150,000 ( cash) in the Fall of 2008.
SKB
As far as I was concerned, whenever I heard the phrase, “creative financing”, I suspected something untoward was going on.
If there’s a time-honored, proven way to go about some task or purchase, and something “creative” (read: “different”) is tried, as far as I’m concerned two things are going to happen - it’s either going to work or it won’t.
it didn’t.
–Shannon
It did work….until it didn’t.
This is way better than an income of $4000 and a mortgage of $6000! We’ve seen plenty of examples on this blog, including our friend Kumar.
I will dare to say that paying 2/3 of your take home pay is the norm in Irvine, at least for people who bought in the last 3 years. Nothing new under Sun. Just add to this Molotow coctail, the HELOC, ARM reset and no refinance in sight and you get $4000/$6000 inverted.
““Hometown lenders including New Century and Ameriquest Mortgage Co. already have fired more than 3,000 people, house and condominium prices are down 17 percent since June and office vacancy rates are poised to double this year, said John McDermott, regional manager for Orange County at commercial real estate broker Sperry Van Ness.”
This is so similar to year 2000 with the Tech implosion of Northern California. Striking, very striking!!
I’m shocked, shocked to find gambling going on here.
Thornburg said it best: “OC is different, its going to get hammered.”
There are (according to following) 51,200 mortgage jobs in OC. So the 3,000 lost… are nothing. This could get interesting.
http://www.realestatejournal.com/propertyreport/office/20070319-dougherty.html
From above:
Financial services and construction have been the drivers of economic growth in Orange County. Today the two sectors account for 240,000 jobs in the county’s work force of 1.5 million,
Wait a second… One in 6 jobs are in the two bubble industries?!? Since construction is expected to take it in the shorts in April and May… OC could be interesting to watch.
Got popcorn?
Neil
Other notable OC mortgage layoffs - Fremont General and ResMAE in Brea and People’s Choice Financial in Irvine. Option One in Irvine is probably next. The hurting the REIC is feeling is going to get worse and likely spill over to the rest of the economy.
And the fallout from that stupidity was short circuited by the fed dropping interest rates causing the easy credit which fed this frenzy. The worst is yet to come.
“For Irvine’s 190,000 residents, the median price for new and resale houses and condominiums was $641,500 in February, down 17 percent from last June’s peak of $775,000, according to DataQuick.”
17 percent down over 8 months represents a 26.5 percent annualized rate of price decline. I am afraid the falling knife has cut a few recent Irvine home buyers.
There must be something wrong with their data, because house prices never fall, remember ?
Dude,
People are panicing. The time to buy is NOW!
Ugh…
While funny. Anyone who buys pre-fall of 2008 is leaving a fortune on the table.
Got popcorn?
Neil
Here on the East Coast it is definitely time to buy. I heard that yesterday while walking down the hall at work. The woman is looking for an $800,000 house in Westchester. She works in lending and is clueless. Sorry, California, but you definitely don’t have the “Stupid” market cornered.
She was part of our release program. Please check to make sure her tracking device was still attached and report any distruptive behavior promptly.
Neil,
So you believe by and large fall 2008 prices will have leveled?
I’m not Neil, but I wouldn’t be suprised if most of the excess is blown out of the system by then. Considering how quickly things are falling, summer 2009 might not be a bad time to buy. Sure, prices may continue to decline, but the majority of declines are past. Yep, 2012 would be better, but if you don’t mind “losing” 5-10% in value (actually unrealized gains), and you’d like to have your own house, then 2009 might not be too bad.
ISTR seeing a chart that showed that max resets on ARMs hits ~DEC this year. Add a couple of months for the FBs to try and refinance and then they list at a wishing price Spring ‘08. Add a few months trying to sell,, mabye getting 90 days late, foreclosures won’t peak ’till Summer at the earliest. Desparation on the part of FBs and those with REO might peak next Fall, but no earlier IMHO>
That knife seems to be falling awfully fast. And the “experts” said that prices in RE aren’t like stocks and can’t fall quickly. Looks like the “experts” were wrong again. Down 17% is going to make it difficult for a lot of folks to refi without having to bring some money to the closing in order to get their LTV below the new limits.
Didn’t Irvine just recently become majority Asian. Maybe that will spur foreign investment from Korea, Taiwan, Hong Kong, Singapore, China.
do you have a link for this?
Oops, its only 36.7% Asian. Here is a link to the article that I was thinking about.
—————————–
http://overseaschinese.blogspot.com/2007/03/us-asians-drawn-to-life-in-irvine.html
U.S. Asians drawn to life in Irvine
Good schools, low crime rates, well-paying jobs lure many, especially Chinese Americans.
By David Kelly, Times Staff Writer
October 29, 2006
Soon much of coastal CA will be just like Irvine. Highly educated and competative, besides China has lots of US dollars to re-invest. High tech start-ups , banks, all kinds of things. And no it won’t be in Texas.
“Ankur Kumar worked in Ameriquest’s fraud-detection department from mid-2004 until last May when he lost his job as part of the company’s layoffs. In his new career as a fitness trainer, he hopes to have an income of $30,000 this year, compared with more than $40,000 when he worked at Ameriquest.”
“Kumar lives in a five-bedroom Irvine house and pays almost $3,000 a month between his interest-only loan payment and taxes. Kumar rents out three of the house’s five bedrooms, which pays for about half his monthly housing expenses. The interest rate on Kumar’s adjustable-rate mortgage is scheduled to go up in October. He plans to refinance. ‘I’ll probably have to do something risky, to be honest,’ he said.”
Isn’t it ironic that the people who should’ve known best may suffer the worst consequences? Many in the industry were, in fact, the largest consumers of the Kool Aid. There are countless realtors, brokers, and the like, caught in this web.
I was going to say, a few more people in that house and he can have “The Real World–Irvine.”
How was it possible for Kumar with $40K income to qualify for a loan for 5-bedroom house in Irvine? working for fraud department, hah?
Perfect job for Kumar, because takes one to know one, right?
I spoke at the Opal San Diego Conference. One Wall Street panelist stated he expected a 30-40% drop in SD real estate. AND NO ONE WROTE ABOUT IT!!!!
Stupid f’ing journalists.
May not be the beat journalists. More likely the blame lies with the editors who control content.
If I am doing my math correct, Irvine has probably lost 3% of their jobs or more. He quotes 190,000 residents - 8000 for New Century - all the other mortgage companies. I bet all of the residents don’t even work. Probably only 125,000 of them actually work. Wow!! I thought a housing bubble couldn’t collapse without a job loss!!
“…it’s ruined the recent prosperity…”
You bunch of nosy SOB’s!!! You’ve wrecked everything!
And yoooooooooooou, Ben Jones! WTF did we do to you, creep!
As for the rest of you sorry sacks of crap, I hope you’re happy!!!
God, now I’ve got to go back to pole dancing at the “Happy Hand” nudie bar.
and if it wasn’t for those meddling bloggers we would have gotten away with it……..
new’s ceo after being arrested
Great Scooby Doo ending.
new’s ceo was actually old man Jenkins, trying to scare aware the tourists from the secret gold mine.
Actually, I’m not happy yet because prices haven’t dropped much in 90275. I’m starting to get impatient…let’s get it on! Where’s my 60% drop already! Gheez!
another house on my street here in Ventura on the market today for 520,000. House across the street from this house sold last year for 640,000. House next door to me still For sale and they had an offer for 480,000. Prices are falling almost to 2004. Need to fall to 2001-2 price to be affordable.
All a buyer has to do is get on zillow.com and look at the five year graph for any property. The only comment one can muster when you look at the graph is “you’ve got to be kidding me.” How can anyone possibly believe that a house that goes from 400k to 1.4m in less than three years is a permanent price appreciation? It’s going to be amazing to see the price implosion over the next 2 years. People have no idea how bad it’s going to get.
You’re not looking hard enough. That zip is for Palos Verdes and the prices are dropping while the inventory is increasing. Not too long ago I saw 2100 sqft with 2 acres for 900k. At the height of the bubble no way would that be sub 1m. But granted they have a long way to go. The price drops are going to wipe out a lot of the Realtor(harvesters) real bad.
Are you watching PV also? My wife and I simply shake our heads when we look at the five year graphs. How any of those PV homeowners could possibly sit on their properties is beyond us. If people will believe that 400k-1.4m is normal and sustainable, then I suppose they will believe anything. What kind of percentage haircut do you think we’ll see in PV?
Seems as though this mindset comes from the fact that most people are scraping by, but they constantly see lavish lifestyles on TV, then a neighbor or two buys as BMW or something on credit, so they assume everyone except them has money. Collectively, all of these people assume everyone else is rich but them, and the way to apparently get rich is to buy RE. All they had to do was look at the census figures to see what everyone else is making. That’s the first thing I did when it first occured to ask the question “how are all of these people affording this stuff? Here I am thinking I’m earning a good living and it seems like everyone else is out buying 2nd homes and whatnot.” THen I check the numbers and realized it was all on plastic. I didn’t realize til later that mortgages like interest only etc… were available, and that sealed it for me that this was nothing more than a huge bubble.
frcp,
Where, exactly, are you looking?
God, now I’ve got to go back to pole dancing at the “Happy Hand” nudie bar.
I thought I recognized you!
Hmm… maybe it’s just me but this article reminds me of the Silicon Valley circa 2002-2004.
Look at the bright side: Getting a seat for lunch in Irvine will now be a cinch!
OT: Saw a Reuters story today bemoaning the fact that newspapers will be cut out of tens of millions of dollars in revenue now that the REIC is tanking. I think we beat that horse to death here a long, long time ago.
except in the old city that never sleeps
everyday in the ny papers there a full page ads for condo’s and any type of mtg product j6p desires
i still ask when will it hit nyc hard?
so far only the sububs and the boro’s outer ghettofied reaches are feeling any real pain
I imagine NYC will be stubborn like West LA. But, they gotta go down at some point! And, I tend to believe that people with money, are generally responsible with it. Buying at the peak doesn’t make a whole lot of sense to most of these people. Not every millionaire wants to take a bath like Agassi did on his SF property.
“I imagine NYC will be stubborn like West LA. But, they gotta go down at some point! And, I tend to believe that people with money, are generally responsible with it.”
Bwahahahaha. Oh, quit it. Bwahahahah-ho-ho-ho. Oh, geez, Bear you are killing me. Ha ha ha. That is the funniest thing I’ve heard all day. Most of the people with money in this area either inherited it or stumbled into it. Even these jerks on Wall Street usually just fumble onto it. And those in the legal profession are awful with money. If cluelessness was gold, Manhattan would be Fort Knox.
I don’t think I made myself clear with that post. I do believe that wealthy individuals who got that way through hard work tend to make smart business decisions regarding money. They are more inclined to consider facts and figures rather than blindly jump in like a lot of the FB’s. But this is not entirely why I believe NYC and West LA will take some time to crack. I believe they are two of the most desirable locations this country has to offer, and will be the last to suffer from a glut of inventory, and lack of demand. Maybe I’m wrong.
Bear, I agree with you. Unfortunately for me, they will fall last and recover first. Damn…
NYC (or at least Manhattan) is a little insulated (for real) because co-ops (most of the Manhattan market) never allowed 100% financing - 80% at most and a heck of a lot less than that at the high end. The effect in NYC will be from kids whose parents can’t front them downpayments (on the low end) and Wall Street types whose bonuses evaporate when the overall economy slows down and the MBS (and other asset backed)business disappears.
And don’t forget the most important fact. The fact that prices get to start that downturn from a pinnacle of $1,200 per square foot. Oh, sure, it’s different here.
“‘It’s a huge engine that has been shut off,’ McDermott said. ‘I don’t know where the new influx of jobs are if you take the lending market out of the equation.’”
If?
Ok, think New Orleans during the oil bust in the 1980’s. I was there. The city lost almost 150,000 people. It was never the same. The oil business went to Houston. That is what is going to happen to California. People will just walk away and leave the keys on the granite kitchen counter with a note. That engine shutdown is going to spread.
Roidy
shut off my arse…more like seized up!
Hi San Diego Bubble Watchers:
Just a quick note that Bruce Norris will be presenting at the SDCIA meeting in April and that the meeting has been moved from its usual 2nd Wednesday of the month to Wednesday, April 25th. A great bargain at $15!
For more info:
http://www.sdcia.com/
I’ll post again closer to the meeting date but if you are in the San Diego area mark your calendars.
I never read that board, unless of course someone provides a link to some priceless “Pine Box Boy” comments. I’d love to hear if he’s been exposed by the rather low tide, yet…
This sounds like spam
Please only notify us when “Chuck” Norris is presenting….
Bruce Norris is a very well known bear who has been predicting the downturn a lot longer than most of the people who joined this discussion in the last few months when the downturn became obvious and suddenly they “knew” all along.
Furthermore the discussion board has NOTHING to do with the meetings and speakers such as Bruce and Robert Campbell and especially the founder, Bill Tan, who has been telling me (and the group) to get the hell out of real estate for years now.
I have never said anything on this blog that is “spam” and I find it depressing that uninformed bullies who have no idea what they are talking about are taking over this blog, eager to flame erroneously when their ignorance is so great.
Will the educated people who have seen Bruce Norris, Robert Campbell, Bill Tan or been to an SDCIA MEETING in the last two years please provide some illumination into the truth? Or have the moderate voices been completely wiped out and the truth no longer matters here, only who can spew the most crap?
BTW, there is no way the people who post on that discussion board come to the meetings because all the latest speakers (the two years I’ve been attending) have been talking about the coming downturn, how to profit from it, when and how to buy foreclosures, etc. Not one speaker is saying we are anywhere near the end of the cycle, nor that now is the time to do anything but run from real estate. (The gold bugs especially would have appreciated the Robert Campbell presentation.) The people on the discussion board would be suicidal after a monthly meeting – no good news for them for a long, long time. But posting on the board is a different story – like here anyone can pretend they know what they are talking about no matter how far up their ass their head is.
And I am so angry because a great housing downturn resource (Bruce Norris), who is a dynamic speaker and will give the audience lots of figures and a clear argument why housing will NOT recover anytime soon, is being maligned. Like I told this group when I saw him speak a few weeks ago - he is a great speaker to bring the RE bulls in your life to – if they can be optimistic about real estate after listening to him they are hopeless and there is no way to save them. I hope if you are in the San Diego you will consider going in spite of the negative comments. Of course, if you think Chuck Norris is someone you should look to for financial advice I would prefer you stayed away.
Thank you…….I appreciate your post
I appreciate that your original post was genuine and not spam… but surely you can see how it could be construed that way. I click your link and the first sentence that pops out is “If you buy, sell, rent, flip, lease-option, loan, etc, this is your club!” with lots of blinky and scrolling text. And your claim “A great bargain at $15!” without anything to support it. It smells like the same crew that offer “RE seminars” to make you rich rich rich $$$.
Like I said, it’s not really the case. But surely you can see it now in retrospect… and then this kind of self-righteousness really sets off fraud-dar: “uninformed bullies who have no idea what they are talking about… eager to flame erroneously when their ignorance is so great.”
I know. I should never post after a really bad day and before I reread the response a day later. And it was a bad day yesterday. But my two last important posts have been flamed royally and after three years of taking major crap from the general public for being too bearish (I have thought and still believe average prices in San Diego will drop by 40% from the July 2005 prices) now I am being slammed for being too bullish on this blog! :O
This used to be a good place to be with like minded people and now I see people getting flamed for obvious sarcasm that people read as the person’s opinion. And I have seen a lot of bullying. Heck, Ben was flamed for expressing in an interview that he didn’t think the market would go down as much as some of his posters. Come on folks - if you don’t know who Bruce Norris is - ask before you assume. And if you see someone getting unfairly flamed speak up. I think that is what upset me most of all - at least a few hundred people who know who BN is did not bother to enter a defense - why? My guess is because lately the extremists make the punishment too harsh.
SD RE Bear,
Thank you for your post. Unfortunately, I’m one of the “late” posters, but try to stick up for the long-timers whenever I see them being flamed by newbies. Sorry I wasn’t able to defend your post.
I appreciate your letting us know of the SDCIA meetings, and will try to make it there.
Thank you!!!!!
“Kumar lives in a five-bedroom Irvine house and pays almost $3,000 a month between his interest-only loan payment and taxes. Kumar rents out three of the house’s five bedrooms, which pays for about half his monthly housing expenses.”
Mr. Kumar, are you reporting that extra income on your IRS form?
And, Kumar, is your house listed as a rental for property tax purposes? Or is it listed at the lower tax rate for residential owner-occupied?
like helicopter ben bernake said,
“Report his ass.”
http://www.irs.gov/compliance/enforcement/article/0,,id=106778,00.html
Better, yet, do you report the rent paid to you as income so that you can pay income tax on it?
Credit contraction…….oh my……….
http://research.stlouisfed.org/fred2/series/TOTBKCR/chart?fred_user_graph_id=&fred_user_graph_category_id=&ct=&pt=&cs=Medium&crb=on&cf=lin&range=Custom&cosd=2006-10-01&coed=2007-03-14&asids=+%3CEnter+Series+ID%3E&cg2=Refresh+Chart
Am I the only one who saw this:
“After the collapse of the savings and loans in the 1980s, executives from that industry started subprime and other mortgage lenders, said Melissa Richards, general counsel for the California Mortgage Bankers Association. Their time at savings and loans gave them experience dealing with investment banks, she said.”
“‘You have the developers there, and you had the need for companies to get people into homes they can’t afford,’ said Peter Navarro, a business professor at the University of California, Irvine. ‘And that’s how I’d describe the subprime industry.’”
What about Alt-A? That is no different than subprime. The whole idea was to get people in over their heads. I talk about Alt-A being the next mess and I get the same looks at work that I did 6 months ago when foretelling of the coming subprime meltdown.
Fast forward 6 months: NYCityBoy looks like a genius and talks about the mess in prime loans that is on the horizon. Co-workers laugh.
I told my boss today, “you people have sounded like idiots to me for the past year. I’ve been laughing at you every night I go home.” Damn, did it feel good.
Good career move!
I’m a responsible renter with money in the bank. I fear the loss of no job. Just say no to wage slavery!
I looked at the RESCAP criteria for alt-A. You are ok if you haven’t had a bankruptcy in 3 yrs. You can buy a house as a freshman in college, and if it doesn’t work out, no problem. By the time you are a senior you’re good to go again.
You should have told him “I’ll give you whatfor,” and when he said “What’s a whatfor?” you jam your thumb into his nizzuts and say “That’s what for!” That’s usually good for a extra 2-3% raise.
I wouldn’t try it. The boss might like it and it’ll end up on your job description.
NY, that should be:
Co-workers laugh…at him. He must have gotten lucky with his predictions (yet again) they think. “He’s still a kook” they say, as they get ready to go out for an expensive dinner.
Almost no one will tell a bubblista “Hey, you know what, you were RIGHT!” What they will (and do) say is “whew, I’m glad that’s over”…all the way to the bottom.
NYCityboy, I have a relative that has been telling me I’m wrong for over a year. Now that the stories are in the MSM she still says the bloggers wouldn’t exist w/o the media.
????????!!!!!
If they want to deny the truth, they will suspend all common sense to cling to that “happy place”. At this point I think she enjoys being adversarial. People never like to admit they were wrong especially if you’ve been strong in your message.
Am I the only one who saw this?
“After the collapse of the savings and loans in the 1980s, executives from that industry started subprime and other mortgage lenders, said Melissa Richards, general counsel for the California Mortgage Bankers Association. Their time at savings and loans gave them experience dealing with investment banks, she said.”
“‘You have the developers there, and you had the need for companies to get people into homes they can’t afford,’ said Peter Navarro, a business professor at the University of California, Irvine. ‘And that’s how I’d describe the subprime industry.’”
Up in Eureka, California, the local newspaper had an interesting if not misleading take on the housing market:
“Housing Affordability Rises” was the headline, rather than “Property Values Falling.” It seems like they’ll do anything to try and convince people that now is a great time to buy, the economy is looking up, etc, etc.
Now is almost as bad of a time to buy as two years ago…at least in my hood, price falls have been negligible as eldery Los Angeles area Boomers come up here to prop up the market. Can’t understand what is so fascinating about it here to drive people from sunny, mild Southern California to this place…where we’ve had snow on the beach several times this year, routinely have 50-70 mph winds in the winter, and frequently go several consecutive weeks without seeing the sun. I don’t think it is worth it to live here even if prices fall 40-50% from their ridiculous current values.
Well affordability does rise when prices fall. That’s why its a good thing. After all, houses are a consumer good you use, not an investment.
What, houses are not an investment?? Too true. After decades of being told we’re too conservative, and that we should “invest” in real estate, my wife and I can now smirk as we enjoy our two California homes (one is paid off) which we bought as consumer goods when prices were sane. But if we were bewitched by paper gains, we would be lamenting the decline in prices. Even a 50% decline would be OK with me, since my kids would be able to buy.
After all, houses are a consumer good you use, not an investment.
Wrong. Houses are depreciating capital goods, just like factories or commercial real estate.
An investment is not “something that is guaranteed to make money”. It is any capital good that produces a yield (which may be cash, or marketable goods or services) over its lifetime. The yield from a house is, obviously, the value of the accommodation it provides, whether used by the owner or rented out to someone else.
A “consumer good” may be a consumable (like shampoo) or a consumer durable which provides a non-marketable service over its lifetime (like a hair dryer).
Should it really be necessary to point out such basic economic concepts on this forum?
The different thing with a house is, unless you follow Kumar’s lead and rent out rooms, you consume 100% percent of it’s yield. You can’t reinvest it or chose to spend it on other things. So, ultimately the amount of housing that you should buy should be set by the amount of housing that you wish to consume and how much you’re willing to spend to consume it. Increasing you leverage to buy buy more just means that you will consume more housing..
Good grief your weather has changed in the last 30 years. I went to Humboldt from 68-70 and never saw any snow nor was there much in the way of high winds. Weather wasn’t at all bad then.
That time probably coincided with a large el nino that produced a very mild winter or two. This was before el nino was identified as such, but from my reading of various accounts of weather back then it appears that 1969 saw a very strong el nino.
Oh, and I forgot to mention the lack of hospitals and the fact PG&E can’t keep the power on for any number of storms we get here. Only in isolated coastal NW California!
Your and my 401k and public employee pension funds. Exactly.
I’ve only got Fannie and Freddie and Ginnie in the funds I’ve chosen, which means I’ve only got conforming mortgages.
But what about college savings? It’s an age-related allocation that shifts toward bonds as the kids get older. My kids are 13 and 14. So what kind of bonds are being held?
You know in 1990 or 2000, Wall Street almost talked the NY State legislature into changing 527 the plan to push people more into stocks? I wrote and threatened to sue, saying I had decided to go with the plan because it was heavily bonds and stocks were overpriced. Like residential real estate today.
Be Like Auric…
“Gold:
All my life, i’ve been in love with it’s color
It’s brilliance
It’s devine eminence
I welcome any enterprise that will increase my Stock.”
Auric Goldfinger
““Ruining The Recent Prosperity” In California”"
This entry is the best worst news I’ve heard to date!. The slide continues to gain momentum while its wide-ranging effects and influence becomes more apparent in the public eye. It’s getting increasingly harder for RE spinners now to deny the obvious downward trend of housing prices when many people around (perhaps even oneself) are losing their jobs or receiving paycuts.
Foreclosures are climbing, adjustables are adjusting, re-fi’s aren’t as EZ to get, deposits are walked away from, RE projects are cancelled, condo’s are converted to rentals, property taxes are climbing, home prices are dropping, inventory amounts are staggeringly high …and growing. As Borat would say, “Is nice!”
As a sidenote; I can’t believe the obscene dollar amounts most RE people were pulling in. I guess it’s just a form of poetic justice to know now that many RE people are in the same FB boat as the people they put in it themselves.
They better pray nobody recognizes them!.
Speaking of hosed Realtors, I know of several that were buying properties to flip in volume. One I know had 5 homes. And just like a gambler, they kept upping the ante with each gamble, until they got caught. It is easy to see why they were doing it. They got to look at the inventory first, so they jumped on the best deals. But as the game got later and later, many decided they should just hold them longer. They saw the homes they flipped last year go for a lot more, so they figured if they held longer they would capture all the profit.
They are toast. A member of our family is in this boat. They are trying to unload 2 house now.
Good luck!
In sonoma, Calif my little development we have at least 8 homes that were purchased by Realtors in 04-05 then did a remodel and put on the market. None have sold. Way to expensive, many sat on the market all 06. I think one on my street is going into foreclosure. Could not happen to a better group of pigs.
Chance the Gardener:
“I like to watch”
yeah, but he didn’t bring any popcorn for Neil.
There’s an old saying: “salesmen make the best clients”
Now were seeing many of these real estate brokers sinking in the same ships they’ve been pedaling
“Proposed “twin towers” shrink”
http://bakersfieldbubble.blogspot.com
“It shrinks?” (c) Seinfeld
lol
http://money.cnn.com/2007/03/26/real_estate/Dodd/index.htm?postversion=2007032709
“Dodd, a presidential hopeful, admitted that he did not know what sort of bailouts were realistic for as many as 2.2 million subprime borrowers at risk of default, but said that “we need answers very quickly.”
To that end, he said he planned to meet soon with Wall Street banks that buy the loans from mortgage lenders and repackage them into securities, as well as others, in order to come up with some solutions. (See correction).
His goal, he said, is not to deny low-income people access to capital or scare investors away from the subprime market altogether, but rather to find some way to help consumers meet their mortgage obligations. ”
WTF is Senator Dodd thinking? These people bought in over their heads either because of stupidity or greed. Any attempt to bail them is outrages. I’m really scared when I hear that this wantabe presidents want to be the prince in shining armor running to the rescure of the brainless subprime losers.
Don’t worry. Senator Dodd is a Dud.
I hope he gets nowhere fast in his presidential bid. He and every other wantabe president who thinks he/she can make political gains by doling out largesse in the old roman way to greedy flippers should be kicked in the rear as early in the campaing as possible.
I agree. But judging by the reaction of many on this board, myself included, any serious candidate who even MUTTERS anything about approving a bailout will turn himself/herself into the primary focus & target of a very intense, painful and stifling RAGE.
any serious candidate who even MUTTERS anything about approving a bailout will turn himself/herself into the primary focus & target of a very intense, painful and stifling RAGE.
Yes, a lot of rage and no votes from the folks in here.
Let them all burn. No pity. I’m clocking more and more evil laughs every day. And starting to really enjoy it. Should I be worried? Is there such a thing as schadenfreude addiction? This mess is the tale of the grasshopper and the ant writ large. the grasshoppers are getting squashed and now the ants are marching…
…down…to the ground…to get out of the rain, boom boom boom boom.
It’s not a bailout for subprime losers - it’s a bailout for the banks. Our tax dollars will go to help those FB’s pay those banks at subprime rates, so that the banks won’t have to take losses on their bad loans. It’s a blatant transfer of wealth from the working class to the bankers. This housing bubble was the biggest transfer of welath and financial enslavement program in the history of this country. Anyone who took out a mortgage the past few years is now an indentured servant. Now they are after those of us who were smart enough not to buy or HELOC the past few crazy years. They are working through our government to get to our money in the guise of helping out the FB’s that they just screwed. Our government at work.
it’s a bailout for the banks.
I think this is more than a bank bailout, but rather an effort - if it happens to prevent millions of homes being dumped at the same time. Obviously, the government is not going to sit back and make millions of $2K - 5K loan payments month after month for dead beats, but they could break up the tsunami into a series of much smaller waves over a longer time period. IMO the end result of this meddling will be disasterous, but …
“Dodd, a presidential hopeful, admitted that he did not know what sort of bailouts were realistic for as many as 2.2 million subprime borrowers at risk of default, but said that “we need answers very quickly.”
If the idiot has no idea as to how an otherwise ill-advised bailout would be pulled off, why is he shooting off his mouth?
“Dr. Grammy claims prices will rise 2.5% in 2007 ”
http://bakersfieldbubble.blogspot.com
Dr. Grammy should stick to his specialty; veterinary medicine.
“Dr. Grammy should stick …”
For a minute I thought you were going to say that Dr. Granny should stick his specialty where the sun don’t shine.
I think the window of opportunity to grab a seat before the music stops is quickly approaching. If you have cash, you need to spread it around, and diversify it.
Run, don’t walk.
This is pretty sad: In Long Beach, CA, one of the Galaxy Towers (luxury condos) had a major fire. At least one person is dead.
http://tinyurl.com/2wwsfn
$641K for a condo?
Who is the FOOL that paid that price?
we have at least 40-50% downside on these stupid prices!
“After the collapse of the savings and loans in the 1980s, executives from that industry started subprime and other mortgage lenders, said Melissa Richards, general counsel for the California Mortgage Bankers Association. ”
Nuff said.