“The Worst Of It Is Still Yet To Come”
The Times Mirror reports from Virginia. “They are a fairly typical Loudoun family. He is a 35-year-old engineer for a technology company in Fairfax, pulling in $80,000 a year. His wife teaches yoga. College-educated, they have two daughters. In August 2005, the housing market in Northern Virginia is piping hot. The couple buys an 1,100-square-foot condo in a brand-new Ashburn community for $336,000, using two interest-only mortgages.”
“This family would not allow their names to be used because of the sensitive nature of the situation. After a year of spiraling financial problems, the man said, the bank foreclosed on their condo, and now banks, collections agencies, hospitals and homeowners associations are after him for tens of thousands of dollars.”
“‘The knife is falling and I’m not trying to catch it. I’ll wait until it drops, then I’ll react,’ he said.”
“In fall 2005, life is good. Not for long. First, the car breaks down. They dip into their home’s equity line of credit to buy a second-hand car. Then they spend $3,000 on furniture, using credit cards. Then his wife gets pregnant.”
“As 2006 wears on, the expenses continue to mount. Next up: The housing market fizzles. The couple watches as neighbors’ identical condos sell for $315,000 and less.”
“In June 2006, he calls the mortgage lender. He knows he will soon be unable to pay the monthly payments, especially since the adjustable rate mortgage has just adjusted upward.”
“The woman at the bank tells him ‘that I was unorganized, irresponsible, that I needed to get a second job, and that my pregnant wife needed to work,’ he says.”
“Eventually time runs out. The bank repossesses the house and puts it on the auction block. Now they live in a rented house in Gainesville that his wife’s brother owns. His credit rating has dropped to below 500, from 760 before this all began.”
“‘The dream of homeownership,’ he says, ‘is a lie.’ The property he paid $336,000 for in 2005 was auctioned off on Feb. 20, and the bank had the highest bid: $277,973.”
“Jim Stasiowski, a mortgage consultant for Countrywide Home Loans in Leesburg, said his company, like many nationwide, is dealing with a major spike in foreclosures. ‘The worst of it is still yet to come,’ he said.”
“He said one of the problems is there are no licensing requirements for mortgage brokers. ‘You can be a shoe salesman one day and the next say, ‘I’m a mortgage broker.’”
“‘To an uneducated buyer, these things sound great. … The thing is — it was too easy,’ said Stasiowski.”
“A few years back I was at a photo shoot for a house featured in our real estate section. I knew the real estate agent, and asked her what the house was listed for. ‘$535,000,’ she said.”
“‘That seems pricey,’ I replied. ‘Maybe, but it should sell quickly.’”
“The house was nice and all, but it didn’t seem half-a-million-nice. I asked her how people could afford it. ‘You don’t have to put any money down,’ she said.”
“‘How’s that?’ ‘You get a first mortgage for 80 percent, and a second for the other 20 percent, and you can get in without putting up any money. My 22-year-old son just bought a house for $450,000 with no money down. It’s an interest-only loan.’”
“I left there knowing that the housing situation was in bad shape, only nobody seemed to notice at the time. How will this bubble end? Badly, I’m afraid.”
Thw Washington Post. “One in 30 homeowners in Philadelphia has been hurt by predatory lenders who target people who live in moderate-income neighborhoods and whose homes are often their only asset.”
“The study by the Reinvestment Fund, a community-development group in Philadelphia, analyzed the sales and mortgage histories of 15,500 Philadelphia properties.”
“The fund found that the likelihood of becoming victimized by predatory lenders is one in seven for borrowers who have refinanced their homes multiple times. Any mortgage creates a public paper trail that documents a borrower’s financial situation.”
“A recent study by the Urban Institute, citing federal data, found that 17.6 percent of all conventional home-purchase and refinance loans in the Washington area were made by subprime lenders in 2005, a new high for the region.”
“The Philadelphia study concludes that predatory lenders are not targeting the poorest neighborhoods. Rather, they’re seeking moderate-income neighborhoods where they can squeeze the equity of a house.”
“‘A lot of these guys are not going to the bottom of the market,’ said Ira Goldstein, the study’s author. ‘They’re trolling up a little bit because there’s more money to be had there.’”
The Times Mirror reports from Virginia. “They are a fairly typical Loudoun family. He is a 35-year-old engineer for a technology company in Fairfax, pulling in $80,000 a year. His wife teaches yoga. College-educated, they have two daughters. In August 2005, the housing market in Northern Virginia is piping hot. The couple buys an 1,100-square-foot condo in a brand-new Ashburn community for $336,000, using two interest-only mortgages
I don’t get it, that’s probably just the old-fashion 3x income loan
How come I can’t live in a world where I get to borrow and spend money, then claim I’m a victim? They hate savers more than they hate renters. My god, some of us must be truly evil — renters with savings accounts.
what a bunch of bullshit. I see preggos working right up until the day they pop. Very irritating story, let the idiot and his type burn.
Damn straight. My water broke right in my office chair! (Sorry, too much information…)
“The woman at the bank tells him ‘that I was unorganized, irresponsible, that I needed to get a second job, and that my pregnant wife needed to work,’ he says.”
Well, alright! I love this “woman at the Bank”.
Someone on this blog, maybe?
If he is working at a technology company here in Northern Virginia why doesn’t he have health insurance? I’ve never heard of any of the tech companies not offerring health coverage….
Something is odd about this article.
but is it good health insurance? Medical bills can get unbearable really fast, even on a plan that pays 80% of cost, plus he may have a deductible. You also don’t know his employment history; he has a good job *now* but he might have had no health insurance and a big bill not too far in the past.
I’ll admit that something seems a bit fishy here, like maybe there’s a bigger HELOC/ATM than he’s admitting.
“…like maybe there’s a bigger HELOC/ATM than he’s admitting…”
There has to be, no way does his scenario make him lose his house. Granted it may have been uncomfortable for awhile but he could have cleared the situation with minimal damage to his credit and still retained the house. It doesn’t make sense.
He could be considered smart. Why not just sell the house to the bank with their steroid junky appraisers? Beats having to list it or FSBO. Basically what he did. People in droves are actually selling their homes near appraised value to the banks!
Yes, this story is rotten. More than meets the eye, I’m sure. I also doubt his paraphrasing of the bank rep. They probably advised him on ways he could find some extra money, but he has now twisted it around in his FB mind.
The 2nd-hand car was an off-lease 2005 540i.
This sounds fishy to me too. The DC area needs IT workers and companies provide good health care insurance. This is another case of a reporter with no analysis skills.
No, there is a surplus of IT workers in DC area. The IT market has never recovered from the Dot com bust. NoVA had the most IT workers on the East Cost, and had many IT companies. Since 2000, most of the work was outsourced to India and only a few truly good positions remain. The demand for IT here is only fueled by the government: contractors for DOD, DHS, or many other federal agencies. Private industries almost do not hire here. I am in IT field since early 90’s and had seen the collapse of IT industry and very aware of IT job market here since this is only thing I enjoy doing. Even universities do not offer variety of IT and engineering programs like they did in the 90’s and I have hard time to keep up certifications since there are fewer places to obtain them. Fewer students are applying for IT programs and the school attendance is well bellow 1999 peak. Some schools scraped IT classes all together, and replaced them with various MBA. When I went to IT fair, there are literally thousands of people for a few openings and all of them pay less than I would accept. You will hardly see anyone under 25, since no new generation of IT people entered the job market. Many companies do not offer health insurance and I had to pay mine for a while as well. 80K per year is normal pay for a job without benefits. 60-70K are IT jobs with benefits. Many of my friends are grads from U of MD, VT, or Penn state, and they do not make more then 75K with 10-15 years of experience. The story is believable, but it is unbelievable that someone could not live on that salary… The guy must be a moron.
Any moron can call him an “engineer” nowadays. Try to call yourself a physician and you can go to jail for false pretenses but “engineer” is alright.
In Europe engineers are highly regulated and need to belong to specific organizations after grueling schooling (6+ years) and selection. Here they would qualify as “trained technicians” at most…
Ooops meant any “engineer” from here would be at most a trained technician in germany.
Marry me.
Who, Mr. Incomestream? LOL
txchick57-
yer killing me… LOL
I once worked for a lady who was in the office up until the day before she had her second child.
That’s nothing. In Las Vegas, I’ve seen pregnant strippers and cocktail waitresses work until their delivery date. Scary, but true.
As long as her doctor doesn’t put her on enforced bed rest during her pregnancy, this lady needs to get her pregnant ass out to work. And a yoga instructor, there is no reason she should be out of work, what with all the “yoga during pregnancy” videos and classes I’ve seen being offered.
Of course, she might have considered not getting pregnant at all if her family was having financial trouble; there is no excuse for that. Its not like she’s living in a real Third World country where women have NO access at all to birth control or sex education.
*rant off*
I had a professor once who had a student whose water broke on the professor’s nice easy chair in her office! Baby was born 4 hours later. And I knew a professor’s wife who was in labor during her chemistry final; she got the high score but does not remember taking the test at all. Baby was born about 6 hours after she left the lecture hall.
What’s more amazing to me are the women who come right back to work within a week of giving birth. I had two professors who did that (one came in 3 days after, though the class was taught by a guest lecturer.)
(OK, enough OT from me!)
A college basketball coach just recently came back after a few hours of giving birth. Have to say i was impressed when I read that.
Relevant to the news today, I believe Pat Summitt of Tennessee, when nine months pregnant, took a charter flight to a recruits’ home, gave the pitch, jumped back on the plane, had her water break on the plane and gave birth shortly after landing.
Then again, she has seven national championships. The Yoga Instructor mentioned above has a foreclosure, but I bet she’s really in tune with how she feels about the whole thing.
You’re right. What are they thinking? Obviously they’re embarrassed and ashamed (they didn’t give their names.) But they don’t have enough pride to just find some employment and work the debt off. People think they’re too good to do menial work today. I’ve washed dishes, waited tables, typed, and stocked shelves. They should try it - it’s not so bad.
It’s not bad to work when you’re pregnant. Why sit around the house and feel bloated? I turned off my pager 10 hours after going into labor the first time. I do regret going back to work two weeks later though; I was trying to be macho and should have taken off more time.
You should have seen my wife as she intensively blackberried between contractions . I had to pry it from her fingers after the narcotics took effect.
My wife quit a month before our first child was born, at my insistence. It happened a few days after some idiot gabbing into his cell phone rear-ended us at a stop light. No harm done, thank God, but I felt a lot better once she was safe at home. She has been a stay-at-home mom ever since, and oddly enough, we have always managed to make ends meet AND put away money for a rainy day AND amass a nice down-payment on a house AND remain debt-free. Not sure why this seems to be so difficult for some people.
“My god, some of us must be truly evil — renters with savings accounts.”
You are the enemy in the government’s War on Savers. You must be stopped at all costs from saving (including a perpetuation of “uncomfortably high” inflation), lest a consumption slowdown sends the weary bull market into hibernation and ushers in an overdue recession on the heels of a 40% residential construction slowdown and the collapse of the subprime lending sector. And that would be ba-a-ad.
“My god, some of us must be truly evil — renters with savings accounts.”
Even more evil: renters with municipal bonds, platinum bullion and gold bullion.
That’s my thought as well. A family of four can live in 1,100 square feet long term if they have to. They certainly do in New York City. And three times income is not so bad with low interest rates.
These folks could have paid, but didn’t want to be stuck with a bad “investment” they have to sacrifice their standard of living to keep. So they simply decided not to. If they had a problem, it was a lack of health insurance.
I wonder if a lot of this will happen if prices are underwater. People who could have paid don’t, along with all the people who couldn’t pay.
That’s what happened in Texas. Especially when everyone found out nobody can make you pay.
Of course the new bankruptcy laws changed that at least a bit which is why expect to see attempts to roll them back and it to become an election issue.
For want of a $1 condom, this idiot ended up in foreclosure. Sorry to be so blunt but that’s the truth of it.
“For want of a $1 condom, this idiot ended up in foreclosure. Sorry to be so blunt but that’s the truth of it.”
Exactly. If only his parents would have used it.
There has GOT to be more to the story than that. With an $80k salary, his take-home should have been about $5,000.00. Even with a mortgage of one-third of a million dollars for a condo (which I have said to many people is an absolute joke of a price) his mortgage should only have been about 2,235.00 P&I. With taxes and insurance, perhaps $2,500 or $2,700.00 with condo fees. Even if you round it to $3k, the guy still should have had $2,000.00 to play with each month. $500 to $600.00 for food and another $500.00 for a car leaves a spare grand lying around. What happened to that?
I don’t know. I post at a Disney site and a couple of months ago a woman posted that she and her husband had just lost their home and declared bankruptcy. She said it’s possible they could have stayed in their house and avoided bankruptcy but it would have meant changing their lifestlye too much.
I searched her posts and found out she planning a Disney vacation with premium passes and staying at a nice Disney resort. I thought, B***h. No wonder Disney is able to keep raising their prices sky high.
Perhaps he’s still lying about his income.
“There has GOT to be more to the story than that. With an $80k salary, his take-home should have been about $5,000.00. Even with a mortgage of one-third of a million dollars for a condo (which I have said to many people is an absolute joke of a price) his mortgage should only have been about 2,235.00 P&I. With taxes and insurance, perhaps $2,500 or $2,700.00 with condo fees. Even if you round it to $3k, the guy still should have had $2,000.00 to play with each month. $500 to $600.00 for food and another $500.00 for a car leaves a spare grand lying around. What happened to that?”
Unfortunately, he’s probably taking home closer to $4600. Personal property taxes on his car, gas, car insurance are probably close to $300 more. Then there’s going out to eat, etc … I can see how he’d get overstretched easily if he doesn’t pay attention (and it sounds like he didn’t).
Bottom line is that $80k does not go far in the DC/VA area and buying at 4x income was stupid.
A spare grand - easily going to CC debt.
The maximum this guy should have spent on a house is $200k. My husband and I bought a $207k house in ‘97 at 6.25% on an $85k annual salary. We put 10% down, and had very little on our credit cards. It was a reasonable debt load, but there were tight months. I can’t even imagine having stretched for another $125k, even with a lower interest rate. Ouch!
I make about what that guy makes and I don’t take home 5000 a month. I’m sure he had more of a tax deduction though.
Its not as bad as someone paying 600K on a 35K salary, and if he had no other debt and lived frugally he could have paid his mortgage, but bottom line is this:
1. People with 80K salary should not buy 335K condos
2. 1100 SF condos should never cost 335K.
“That’s what happened in Texas. Especially when everyone found out nobody can make you pay.”
Bingo! Ben gets the Mitch & Murray leads plus the Cadillac. People are going to get tired of lenders twisting their ARMs; as a result, they’ll walk. What’s the lender gonna do?
Who cares? The lenders helped drive this mania, let them eat their bad decisions. Let them all loose.
You mean let the already strained state and local government pension funds eat the losses, since they’re the idiots with high-yield MBS in their portfolios.
Yes, let them eat the losses. They’ve shouldn’t have bought this garbage. An alternative suggested on CNBC this morning by some do-gooder (??!!?) was a moratorium on foreclosures. Ha ha ha. Who then would lend, at all.
What’s the lender gonna do?
The Lender can’t do anything. All the execs have already raided the warchest and bonused/golden parachuted themselves into another job. The companies will go bankrupt and taxpayers will end up picking up the tab.
Bantering Bear: that was hilarious!
I don’t think the bankruptcy law will become much of an election issue because not that many people file for bankruptcy and the public generally doesn’t really feel sorry for those people.
My family of 6 grew up in 1200 sf. I don’t want to hear about it.
Really, family of 5 - 1250 sq ft.
“No, I no wanna hear ’bout it.”
Roidy
“I wonder if a lot of this will happen if prices are underwater”…
Reminds me of an old JP Morgan story. He was asked (I believe by some congressional committee) what criteria on which he based his loans.
“Character” he replied. The simple fact is (and I bet everyone here can recall such an episode in their lives); no matter how much “collatoral” someone might appear to have, if they don’t have the character to repay the loan, they won’t if it is inconvenient for them. On the other hand, someone who has integrity, will kill themselves to pay the loan back.
I’m afraid the character of all too many of the people who happily took out subprime loans (on the assumption housing “always” increases in value) will be found unusually wanting in this RE debacle.
This, of course, will “surprise” Wall Street and other “experts” on the repayment of mortgages.
The kind of “character” that JP Morgan espoused is virtually non-existent in today’s corporate culture, so it should not be a surprise that it is equally absent in people’s personal lives.
Market forces selected against “character” a long time ago …
It is at least 4x. The yoga teacher makes, maybe $50 a week teaching two classes I bet. Real yoga teachers don’t get pregnant by accident - they can’t afford it. My yoga teacher (a guy), does 5 or 6 classes a day, just on Sundays. That isn’t the middle class life style this couple was living.
There’s a yoga studio owner up the street from me. I don’t think she can afford to get pregnant either.
My favorite yoga guy has been bankrupt twice
http://www.wholisticfitness.com
(in Flagstaff, Ben, lol)
They pay yoga teachers at my local ymca about $3/hour.
He is a Highly edumakated MORON, who gets the wifey PG after dipping into saving for a used car….
Who on earth hired this MORON for $80K ayear….shoot i would be in hog heaven for 1/2 that pay!
I can remember my parents driving used cars for several years after I was born. In fact, I can remember watching the road through the holes in the floor of our old Ford.
Arizona, we had one of those that had holes in the floor. We called it our “Flintstones” car. Remember how Fred started his car by running?
“shoot i would be in hog heaven for 1/2 that pay!”
Unless you live with your parents or are 14 years old, you’re full of crap.
Reluctant, that’s harsh. What do you mean? That $40K is not enough to live on? Half of the population does it.
NO i’m cheap…….anyone can live on $40K and save money…..
Where do you live, the YMCA?
$336,000 is a lot of money. Also, people incur a lot of other costs in addition to homeownership. Even those who live reasonably prudently.
IMO even some of us bubbleheads don’t really appreciate this fact. Life is expensive. If you finance a Toyota Camry over 5 years it’ll still set you back $400 per month. Add gas, maintenance, insurance, etc. and you are looking at $900 easily. Add a second used car into the equation and now you’re looking at $1,400. If you pay $1,400/month in rent and another $200 in gas/electric/phone you are looking at $2,800 right there.
If you make $80,000 per year and your take-home pay is @$5,500/month, we are down to $2,700. If you fund your 401(k) at the max you are now down to @$1,450 per month — before your family has eaten a single meal, bought so much as a stitch of clothing, paid a single medical bill or, most importantly, saved for a down payment. (at $500 per month it is going to take the average $80k family a long, long time to save up 20% for the median SFH in most bubble regions). And if you’ve got student loans — and these days, many people do — money gets even tighter.
Once kids come into the picture? Sheesh. While kids are not that expensive, especially when they are young, all of those little costs certainly do add up. Pampers, new clothes, copays for doctor’s visits, dentists’ visits, etc. — these things cost money.
A family can live perfectly comfortably on $80,000 per year. But let’s not kid ourselves, that kind of salary will not support a high-end lifestyle.
Sure, you can quibble with some of the above assumptions. Not every family has two car payments at the same time, and in some parts of the country you can rent a decent apartment for $800 per month instead of $1,400.
But I think the main point — that someone making $80,000 per year simply can’t afford a $300,000 house, or can’t do so without exposing themselves to enormous risk in the case of job loss, illness, etc., holds. Even though a $300k house is just over 3.5x income for such a family, it is simply too expensive.
In my opinion, a family making $80,000 per year — and that kind of income puts you solidly in the middle, if not the upper middle, of the family income distribution — can’t really afford a house worth more than $150,000. $200,000 at the very most.
This is why I think that many people are not pessimistic ENOUGH about housing prices. It is also why I believe that we will see greater than 50% declines in many areas.
$300,000 is a LOT of money. The average 30-something couple with two kids and a household income of $80,000 should NOT be able to afford a $300,000 house, not really.
IMO a starter home in a generic middle class neighborhood should cost $150k; a McMansion $300k. A $500k house should be the kind of place a successful, 50-something business owner, doctor, or lawyer lives in. Not a mansion, but not a McMansion either; we are talking about a very nice house in a very nice neighborhood.
Sure, these numbers will vary from region to region but IMO people, even bubbleheads, continually estimate how much the average family can really afford. I’m not surprised to hear that the man described in the article is in foreclosure.
“A family can live perfectly comfortably on $80,000 per year. But let’s not kid ourselves, that kind of salary will not support a high-end lifestyle.”
That says it all right there, the article doesn’t suggest a “high-end” lifestyle. His problems could have been solved with a few garage sales, a bus pass, and a weekend job delivering pizza’s.
I’d say laziness was his main problem.
$80,000 a year isn’t squat in Northern Virginia. Sad but true.
I call BS JS
It would only take about 7-8yrs to save up a substantial downpayment.
6K per year for a measly five years is 30K or 10% down. Put that in to a Roth or some minor investment and its up to about 33K.
In ten measly years its almost 75K down.
This is just a speculvestor walking away as convient because he’d have to actually pay for his mess.
Call me old school, but the wife should not go back to work, if she has such young kids they need to be taken care of, day care will most likely eat all of her income if not more.
THEY NEED TO LIVE WITHIN THEIR MEANS, PERIOD.
he could have rented for half as much, bought health insurance if he did not have it first before freeking thinking about a house.
WHAT IS WRONG WITH THESE MORONS?!!!!!!!!!1
Sorry, but she does need to go to work. There’s more to this story. Maybe I’m old, but it seems to me that 30-somethings seem to have all the answers… until they step in a big pile of poop. Anyone else see this too, or is it just me getting old (48)?
Definitely it’s just you getting old. Every generation hitting 50 has bemoaned how the latest generation is going to hell in a handbasket.
My favorite quote from Mark Twain doesn’t match the ages, but certainly the sentiment:
“When I was a boy of 14, my father was so ignorant I could hardly stand to have the old man around. But when I got to be 21, I was astonished at how much the old man had learned in seven years.”
I’m a 30-something and I wouldn’t disagree with you. The most troubling thing I see is a keeping up with the Jones’ mentality that is rotten to the core. Unfortunately, it is readily apparent in a few of my own family members. Since we were raised under the same roof, it is hard for me to understand what happened to them.
But I also see 20, 40, 50 and even 60 somethings blinded by greed and mortgaging their future for a piece of the action. While I don’t like to see people struggle mightily, a good hard recession might restore some much needed values in the minds of many.
I’m over 60, but I see the problem as some public sense of entitlement that says everyone with a college education deserves a cute suburban house w/ stay-home mom and a couple of kids. Sorry, not no more. Maybe one of the problems was the 1960’s push to send “everyone” to college. As if that would give “everyone” a wonderful living standard. This country has never been able to provide Everyone with a comfortable living standard. People who used to be live-in servants now “own” houses, but not really.
Az_: I can’t agree that the push to get people to go to college is responsible for peoples’ sense of entitlement. But there’s no doubt that that materialistic entitlement has grown. There are probably lots of factors: the availability of cheap designer clothing and electronics, the growth and sophistication of advertising, and peoples’ unwillingness to do menial jobs. When I was in college students worked as busboys and dishwashers. Nowadays the illegals do the work “we won’t do” but should.
I’m about to turn 50 and I agree with you. I deal with mostly 30-somethings in my business, and they have all the energy of youth UNTIL the excitement level drops below that of a video game - then they’re off for a long lunch and leave others to finish what they started.
Sorry, but I think that maybe this attitude added fuel to this latest housing crisis: that is, the concept that the rewards of life are not the result of hard work and persistence, but simply a function of gamesmanship.
Obviously this is a generalization, and I would not it apply it to everyone of that age.
About the only thing separating me (50’s) and some of my house-stressed nieces and nephews is the fact that in my time butt-stupid loans weren’t available. I would have probably been a statistic too - just the times and the lending were different.
You may be right, perhaps it is a function of the loans available. When I bought my first house, in my 30’s, it never occurred to me to buy more than I could safely afford with a fixed-rate mortgage; but then my parents, who were lending me part of the down payment, would not have tolerated anything riskier!
Giacomo, you are spot on. I’m turning 48 soon and the guys around 30 years old are mostly that way you describe. Their enthusiasm is in short bursts and they lack the persistance that the older ones have. They have higher priorities than work. But the 20-something engineer in the next cube is very professional and hard-working - a gun-toting libertarian chock full of ethics. So there are some good young people.
Whoa, I know PLENTY of boomers with a sense of entitlement that has been cultivated over decades. Its not the age that matters, its the character.
Yeah, many of us GenXers (1963-1979) are living frugally like our grandparents and common sense told us we should and we see the boomers as the narcissistic spoiled babies!!
I can agree on that, but I do not want to generalize… I see all the time 50-something paying groceries with their CC and whine when their CC is maxed. Go to any shopping mall, dinner… it is packed with baby boomers; you do not see old people or young families with children.
It says that it adjusted upward. Also, when I look in the DC area I see *lots* of companies that want to 1099 (Self employment) and what not. Kids.. who knows how much a yoga person gets paid. I worked for almost 2 years with no insurance. Basically, the company said 1099 for 6 months trial… then they delay… then they delay… carrot on a stick. Now they are abou tout of business or something
They laid me off right before I was about to quit.
I once had a headhunter who was trying to recruit me for a new job. Once I find out that its a “contract-to-hire” I tell him I’m not interested. He counters that “this is that way its done now”. Again, I tell him no thanks. He gets mad at me. So I tell him: “why should I quit a full time, benefitted position for a short term contract with no benefits and no guarantee that it will become full time? Oh, and let me guess, the hourly rate is no better than what I am getting now, right?”. Now he gets really angry. The coupe de grace: “I want a recruiter who has my best interests in mind, not his”. Never heard from him again.
What the hell?
Recruiters call me but at least the paychecks would be substantially larger.
recruiters are full of b.s. I have not met an honest one yet. The “contract for hire” is b.s. If I wanted to get hired, I would do that right away. I only consult for now. I am doing much better than being an employee with bennies. Screw the bennies and demand a higher rate instead. My health insurance is $101 per month. What expensive health care? You can turn the tables on the stupid contract-to-hire situations by walking out as soon as they want to hire you. There are plenty of gigs out there where you can negotiate anything. You can walk away from bad offers and go with the gems. I do. I am willing to work in 49 states if the money is good and can leave in a week. But I have a good thing going in Phoenix for now.
My girlfriend is a big time Yogi and she makes 30-40 dollars (CAD) per class.
She is lucky to do one class a day.
So that’s why they’re always stealing picnic baskets…they can’t afford to buy food.
I wonder if this guy has a security clearance so he can get his ass lit on fire.
“‘The knife is falling and I’m not trying to catch it. I’ll wait until it drops, then I’ll react,’ he said.”
I’m thinking he already caught the knife and was cut pretty badly.
Yeah, I think he needs help with his metaphors. What I think he is really saying is that he is going to be an ostrich and stick his head in the sand for awhile, then try to deal with all of the problems later (likely by declaring BK). He just wants to make sure that he knows who ALL of his creditors are before filing BK.
I think he caught it in the neck…or doesn’t really get what the expression means.
I am in Charlottesville to the south of Loudon, but we’ve seen the exact same insane runup. There is a piece of land adjancent to land I already own (outright) further south of Cville which I’ve been trying to put my hands on for a while - sold for 60k in late 2002 - in 10/06 I tried to purchase for $100k which struck me as an insane runup, particularly given that the market had already started declining. The owner turned me down with the ususal “something is worth what someone will pay you for it”, because he expected to get closer to $150k. I figured 6 months or so on the market would soften him up. Instead, some idiot bought it for $140k as a flip and has now listed for $350k. This is an area which has had a recent runup from people who wanted a little farm in Loudon/Faquier but couldn’t afford it, but could sell their Loudon/Arlington/Fairfax place for enough to buy land and build out here. I think that market just ran dry.
Not getting what you want can feel very dissappointing, but generally, walking away from an uncomfortable deal nearly always feels better in even just a short while. The WSJ map of sub-primes shows that we are really going to hurt here in VA shortly.
Wow, down there too? Why am I surprised…
Do banks lend for land alone? Or do you generally have to pony up cash for it?
You generally have to pony up cash - in some situations you can get land loans but never less than 50% down. However, I wouldn’t be surprised if they didn’t cash out some of the value of their home to help do this deal.
I’ve got some friends who were doing well with tech jobs and looking to buy land out that way, not to live there but to have it for weekends or holidays. And with their DC incomes, people like them can drive the prices in places like Charlottesville sky high.
Fortunately (though they say unfortunately) they got very nervous at the higher and higher prices on land they were looking at, and in the end settled for just a new kitchen instead.
As for banks lending money for enpty landlike that, these friends had no need. They have “plenty of equity” in their house that they can borrow against!
Keep us posted on whether the $350k flip actually goes for anything close to that — or if it goes at all.
Just curious:
What makes incomes in Virginia higher than national averages? Is it Federal Government employees? Some industry that I don’t know about? I’m not familiar with that area of the country. Thanks….
Tech employees employed by government contractors are the economic drivers, but you’ve also got all of the associated professional-types that go along with a tech economy. The median household income in Fairfax County is approximately $100k, so this family was not “upper-middle” income by local standards.
Fairfax and Loudoun counties have the highest per median household income in the nation 94K and 98K. They attracted the well-to-do Washingtonians, while DC had one the highest poverty level in the nation. There are a lot of federal agencies and contracting jobs, and very little manufacturing and horrible, insufficient, spare service sector. The real estate was one of the main sources of wealth, since people were flipping properties from each other. I am in Reston every week, and I would never live there since it has the worst traffic in the nation, I believe far worse then LA. There is very little entertainment, shopping, and bookstores. Downtown of Reston have four high-rises with garage in the middle and not very appealing like Alexandria… Alexandria is the nicest place in NoVA with many nice neighborhoods, coffee shops, and pedestrian zones. However, infrastructure in NoVA has not much changed there since JFK and no new bridge over Potomac was build since 1957. Route 7 is far the worst on the East Coast, NYC/LI/NJ/ included, but there is almost no supplemental route to go through from Alexandria to Fairfax.
NoVA has a lot of tech. I haven’t kept up, but AOL and MCI were/are headquartered here, as well as some other big names.
Otherwise, it sucks. Bad congestion, no culture. I only know of two bookstores in Fairfax county. Fairfax and Loudoun are two of the highest educated counties in the country, but there are no friggin’ bookstores! Hell, there are no drive-through ATMs, drivethrough restaurants are almost nonexistant, and there are almost no carwashes. Seems like all we have are houses, more houses, two big malls, and a variety of ratty strip malls. No coffee shops, no carwashes, no bookstores — none of the little things in life that you take for granted.
And as virginian pointed out, the infrastructure sucks. There are no backroads or alternative routes.
Ok, I am keeping an eye on it…a very close eye…I think these folks will wind up either sitting on it for years until inflation catches up, or they will take a hit if they’re forced to move it.
The other option than buying land for weekends or holidays is to just take 3 months off and spend time in, say, Rio De Janeiro or Thailand, renting in a deluxe hotel. I know of contract engineers who do that between engineering gigs.
i’m sorry, but i have to laugh at people who say there is “little shopping” near reston, and ‘not enough drive through ATMs”? bizarre. this place has more shopping malls than you can shake a stick at. and the traffic is bad at rush hour, but not like LA.
NOVA has many companies headquartered here. sprint, aol, etc. add in the government jobs and government contractors and there is a rich employment market.
Where is a drive through ATM? I’d like to know where one is. I’ve lived here since 2002, and haven’t seen a single one.
Scott,
Land is being reduced in Fauquier, as of about 1 year ago.
A couple I know bought 30 acres in Northern Culpeper County (Near Fauquier line) for $130K in 2001. It had a huge runup since then, but now builders don’t want it, which helps.
Yes, it’s easy enough to get a land loan. Our local bank requires 25% down.
The folks we’ve seen are actually generally gov’t retirees (like the ubiquitous GSA 15/16s) who sell the suburban split level they bought in the 80s and then can afford both the extra land and the cost of building a rather nice house. This is Nelson County - and it’ s a 15 acre parcel I’m discussing - Culpepper is much closer to NoVa and ‘civilization’.
I normally prefer to forgo Schadenfreude, but these idiots really deserve to take a bath - stupid greedy.
That Virginia story in the Times Mirror sounds like a fabrication of the reporters mind or these people weren’t being entirely honest.
Below is a post from today’s AskFleck, which is the question/answer section of Bill Fleckenstein’s site. This is kind of disturbing, they won’t stop until everything literally crumbles…
“Dallas / FW Land Developer and Homebuilder. Update from the front line. In response to the sub-prime collapse, the mortgage community is rolling out the following program: Builders can now pay the first six months of the mortgage payments to get people into the home. 6% of the total first mortgage (standard) and now an additional 3% of the second mortgage can now be paid by the seller. Mortgage Broker is offering to come train my sales staff on selling this program. Live for free for six months, courtesy of the Seller. Program is coming from Arizona and CA, now available in Texas.”
Just when is this kind of nonsense going to stop!
You can;t blame them for trying. Still, what fool would buy in this market, esp. when so few fools remain.
The party……is OVER!
Oh, so that’s the scam! I see ads for mortgage brokers in Dallas to get into a “whole new paradigm”. That must be it. Unbelieveable.
My first reaction to that program was, “Huh?” This reaction was quickly followed by that old adage, “Don’t buy things you don’t understand.”
I think this is set up so the lender does not have to buy back the loan when it defaults 6 months must be past the buyback period. I’m bet eventually the credit line provider will get interested in this arrangement.
My reaction when I read this was “Just drop the freaking price loser!”
If our politicians want to make themselves useful they should concentrate on regulation, and eliminating these sorts of predatory lending packages which squeeze people into homes they can never even dream of affording.
When regulators close some builders down.
They’re doing a bit of this in Portland, OR too. “What kind of house can $950 a month buy? the ads read. This 3,600 SF house in..”
Don’t panic. They tried the same kind of promotion here in bubbleland FL without much success.
The jig is up; nobody wants to be a loser; buying a house makes you a loser.
Speaking of weird promotions in Florida, I got some junk mail yesterday from a builder down in Florida. Seems that with 20% down, I could buy 5 units in their development for about $1.3 million. They’d be nice enough to pay HOA for 2 years, guarantee rents for 2 years, and offer about 100k in “bonus money” for 2 years.
They trumpeted the 2 years of doing nothing and earning a 20% return, 33% when appreciation was factored in. I didn’t believe their numbers so I ran them. Yep, if I used a 30-year I/O @ 6 % (does such a thing actually exist???) I would certainly earn 20% the first two years. Sign me up?!? Oh wait, how about I run the numbers for year 3…
Using their rosy numbers, there was absolutely no possible way to avoid losing money in year 3. I mean, seriously, using their appreciation numbers, I’d have to bring money to the table to sell. I’d also take a loss if I were to continue renting out the units in this development, even at 100% occupancy and if nothing ever broke.
I just couldn’t help but wonder what kind of person with 260K in actual cash-in-hand to invest wouldn’t bother even wondering what happens the next year.
It’s brilliant. Get someone into a 200K house and give them the downpayment and pay the first 6 months.
People will love it as they are living “rent free for 6 months” after which they can blow out. The builder is in the same position…he just ups the price 10%. Wonder if the banks would catch on that there isn’t really a downpayment.
Also, as someone posted below, the mortgage CAN’T default in the first 6 months…so no ‘buybacks’ forced upon them. Brilliant.
It just postpones the day of reckoning for a while more. I wonder if the lenders are going to figure out the scam and not allow it?
Live free for 6 months, then rip out and sell the copper condenser and evaporator coils from the a/c, and also remove/sell the appliances before you walk away. That would about cover the utility bills you’d have to pay for the first 3 months.
Does this offer also cover the tax and insurance escrows?
It’s too late for it. The dry-up isn’t lack of demand on the buying side but on the lending side. Behind every GF has been an even GerF lending them money, until now. Unless the builder is actually lending and trying to resell the loan within 6 mos. Everyone’s eyes are wide open… Beazer’s on the chopping block, investigators are sniffing all around.
Already we’re waist-high in greed and desperation and not even in the channel yet. The current runs ever quicker.
Good point. There was plenty of greed to go around, Buyers, Lenders, US govt., Chinese govt., American public. Lots of people felt they were benefiting from the bubble.
This is part of the price support program the builders have to have. The illusion that prices are holding is vital to their success in dumping their properties, thus they subsidize the price.
In effect they are cutting the price without officially announcing a price cut.
The buyers are happy (at least for a while) because they get to experience the illusion that they got a “great deal”.
For many folks Price = Value.
If the price of something is percieved to always go up then it makes good sense to get it at a discount or with a rebate.
A mania will continue till it can’t and since this mania is of at least intergenerational proportions one ought to expect literally anything to be used by the manic lenders and borrowers as they haven’t learned anything yet and are still out there in the twilight zone of greed and exuberance. Once they see Chicken Little running around long enough calling out his clarion call and once they start to feel the real bite of credit deflation, this manic acting out will likely start to change.
“The fund found that the likelihood of becoming victimized by predatory lenders is one in seven for borrowers who have refinanced their homes multiple times.”
Is every newpaper reporter writing from the same talking points? From coast to coast, it’s all about predatory lenders who hunted down their victims, house by house, and forced them to refinance multiple times.
I realize most reporters don’t have an econ or biz background, but have none of them any common sense? Nobody is forced to refinance, or to take a heloc, they choose to do so. And with greed running wild, the FBs couldn’t line up fast enough for the easy money. Now suddenly, they’re not RE moguls, they’re helpless victims, they have no recollection and certainly no responsibility for the mess the find themselves in. If I read one more of these BS anecdotes, written by the same dopey reporter who apparently works nationwide, I’m gonna have to start rooting for the lenders. At least those clowns aren’t pretending they weren’t in it for the money.
I really think that the analogy of the pusher and addict is quite appropriate when talking about lenders and seriel refinancers.
I agree with you. On a much smaller scale, it’s like all those fantastic credit card offers that come in the mail. Nobody is forced to sign up for them, yet many will. And then they will cry the blues when they are up to their eyeballs in credit card debt. Well, duh, why’d you take the card in the first place?…
(Of course the irony is that they will then HELOC their homes to pay off these credit cards. Stupid, stupid people.)
Just say no.
Reporters covers stories with an angle. They decide beforehand what angle of presentation will be most advantageous to them then cull and shape the facts to support this angle.
‘The dream of homeownership,’ he says, ‘is a lie.’
Actually, no it’s not. Assuming of course that one buys a house that he/she can actually afford.
“The woman at the bank tells him ‘that I was unorganized, irresponsible, that I needed to get a second job, and that my pregnant wife needed to work,’ he says.”
Ha ha, she’s absolutely correct and you know it.
But Pure, that lady at the bank was MEAN to him!
Yeah, since when is pregnancy a disability? Man, that story hit all my hot buttons.
I hate to sound all pioneery, but my grandmother raised 14 kids while running a cattle ranch and feeding 6 ranch hands 3 meals per day, plus made all the clothes, plus grew all the vegetables, canned, slaughtered beef, etc. Her husband died when she was only 32, and she somehow did it all, in a farmhouse about 1800 sq ft. in size. And she home schooled the kids. She was an awesome person. Never complained.
I’d like to think if she was alive these days she’d laugh her ass off at all these weak sisters. Then slap them silly.
I bet she could give a lot of people a valuable lesson in time management.
Incredible, I’d pay to be able to watch her get all that done in a day.
FWIW, pregancy can be legally considered a temporary disability.
Yeah, and that irks me, too. I’ll bet she wasn’t like that at all. What a wimpy man.
Another choice quote:
“We wanted another child, but not this soon,” he says. “Such is life.”
Condoms, the pill, withdrawal, and most effectively, abstinence, must be foreign concepts to this guy. Maybe your wife can’t teach yoga when she’s pregnant. Can she answer a phone? Type?
The lady at the bank was right.
The comment, “such is life” when it comes to something like that tells you everything you need to know about this guy.
Responsible people plan for life changing events like this.
Others can have chemical or ordinary castration…
Actually, this is close to what the U.S. Supreme Court said in “Roe vs. Wade.” The court referred to the “vicissitudes of life” to explain unplanned pregnancies. I have a four-letter word with a three-letter suffix (”ing”) that works a lot better and is simpler to pronounce.
I’m sure she could keep teaching yoga. They say yoga’s ok for pregnant women - in fact in can be very good. The later in the pregnancy you are, the fewer poses you can do. But you can still teach it. Have someone do the poses in the class for you. Sounds like spoiled woman syndrome.
These folks think yoga is fine for pregnancies:
http://www.healthandyoga.com/html/preg.html
Maybe she could have taught a yoga class designed specifically for pregnant women?
Bet he ain’t gettin any now if he can get it up at all with the phone ringing all the time. losinurassinterruptus
That type of work is beneath her. She’s an ARTIST!
Geez
‘The dream of homeownership,’ he says, ‘is a lie.’ Not true - it is available for those who thoroughly assess the situation and have contigency plans when “things” happen, instead of being like this nimrod who basically gave up and blames others (loan officer, car manufacturer, condom vendor) when the chips are down.
And where will the fallout be seen in the overall economy.
My mother talks about Home Depot and furniture and obviously home related stuff.
People on this blog have, very rightly added luxury cars and vacations purchased on HELOCs and refinancing.
I’ll offer a few more things that seem to be part of a middle class lifestyle these days and never were a decade ago:
$40K per year private college tuition/expenses
Lasik surgery
plastic surgery
luxury spirits and wine
outrageous Vet bills for dogs, cats and other pets
Anyone want to add to the list?
I can’t imagine private colleges lowering their tuition, but the loans students can get directly just don’t cover the cost. Parents are digging into home equity to cover it.
I plead guilty to the outrageous vet bills. I think I bought my vet his latest Cadillac but have no kids, so it’s a fraction of what that would have cost.
This is what annoys me most about people who don’t have kids. They just get pets, and then they treat their pet like it’s a child.
Why does that annoy you?
Wow. You are easily annoyed. At the very least, you could direct that hostility towards those irresponsible people who DON’T “treat their pet like it’s a child”.
Or treat their children like pets.
I plead guilty. My cat Brian is my only child. I won’t buy an overpriced house, new car, or anything associated with luxury (except gold), but I’d pay any price to give Brian the best care he can get.
I’m on record as saying if I ever have a kid I’ll treat him like a pet (which is pretty good). No diaper changing for me.
Me: Boy, why can’t you just use the litter box like your older brother Brian?
Kid: Ok dad. (scratch,scratch) Ooh, tootsie rolls!
Doesn’t annoy me but I sure think it’s dumb. I have a dog and it has never been to the vet. Sink or swim. As long as it’s healthy I’ll continue to feed it and otherwise take care of it. When it gets sick enough to go to the vet and it’s suffering [I don't want to see it suffer], it’s a 1-way trip. It’s a pet, not my kid.
Gee, you are pretty callous. You are going to kill your pet once it gets an easily preventable disease. Do me a favor and don’t get anouth pet, m’kay?
If you view your dogs life so flippantly (”sink or swim”) why do you have one? Burglar alarms are probably cheaper from the store.
just sayin’
Maybe it would be best when after your pet dies prematurely because you failed to provide basic preventive care you’d just get a stuffed animal.
I love my dogs. Your kids, not so much.
However, I am forced thru taxes to pay for everybody’s kids.
My dogs are solely my financial responsibility,and I am happy to spend bank on them.
Justin, they shouldn’t annoy you. They love their dogs. What’s the big deal? My husband loves his dog and it makes him happy. And not everybody should have children.
Me too.
Oops, Justin cut in. I agree with txchick. What annoys me is people that have kids and them treat them poorly. Or turn them into insufferable brats.
Same here, just spent $1300 on one of our dogs that got bit by a Rattlesnake….but that dog brings us so much joy, she is part of our family, and we dont have children.
I spend a fortune every year on pets; yes, the vets have become as greedy as other physicians, but what can you do? I certainly don’t believe I’m wasting money. I think buying unnecessary crap for human children is far worse, and we can see the results in our everyday lives. There is a store here that sells thousand-dollar miniskirts, and teenage girls buy them all the time with their parents’ credit cards. My animals, on the other hand, never ask for anything other than food, water, and attention, but what they give me is beyond price.
I remember when I was a kid all our dogs ever got were shots (mostly for rabies). Now there’s heartworm medication, teeth cleaning, RFID inserts, etc.
Even the shots are expensive now (maybe $140 a year, including exam), and dental work can be very expensive. But, animals are living much longer and healthier, and a lot of things we had to deal with long ago (such as fleas) are no longer problems.
I have no problem with people buying what they can afford. This is America, for goodness’ sake. “Pursuit of happiness” is a goal. Everybody has something that makes them happy, so it’s ok for them to buy it, as long as they have the money, or at least can pay back what they borrow to get it.
lattes, groomers,personal trainers,nail salons,spas,club memberships, personal shoppers, closet oganizers, stagers, interior decorators in 200k houses, specialty stores with one thing like chocolate, do nothing PA’s, maids and cleaning services, nannies cause someone lost a job.
Implants!
Tanning salons!
There is something about paying money to lay under artificial light somewhere in a strip mall that screams “this-society-is-goin’-straight-to-hell”
Not sure I agree with that one. Low end cosmetics are counter cyclical - when a woman can’t afford a new pair of high-end shoes, she might go for a $10 lipstick. I think tanning might be more like the $10 lipstick than the $300 shoes. Not positive, since I haven’t ever priced tanning, but it might be.
Home tanning beds from the Sharper Image are right out.
The botox to fix the damage done by the tanning also might be right out.
If person is without health insurance, check for skin cancer caused by the tanning bed also might be out.
I was wondering… for the implants… especially boobs…
Don’t they need to be changed after a few years?
And what if there is no more to heloc or mew.
There will be a lot of do-it-yourself surgery, the next few years…
Bariatric surgery (stomach staple, LapBand, and the like) because they’re tired of dieting. Yes, I know people who have done this with their home equity.
Kids’ one-upsmanship birthday parties requiring things like rented inflatable play equipment with mandatory appearance by child’s favorite tv or video characters, and lots of expensive gifts from Mom & Dad.
You can get great wine for 4-7$ per bottle. Shop around and buy up some cases to age in the closet.
I guess people are doing something silly for wines?
Still remember at a fancy birthday dinner for the wife. Saw a bottle of wine on the menu for about 80-120 dollars… was an italian wine that friend would bring over on a regular basis. Asked him about it… bought ten years ago for 32-3$ per bottle!
2 buck chuck?
Yes, you can get good wine for very good prices. Why do you think French people drink so much of it?
The only thing I wanted to point out is most wines, especially lower-priced wines, are not meant to be aged and taste better when consumed within a year or two. I think I read somewhere that if the wine label says it contains sulfites, you shouldn’t age it.
I offered private university to our son and he was concerned about the cost and the location and was happy with a public university close to home. He was ill and it took him about a year to recover and we’re late with applications and tests. I made enough last year to cover four years of private university and I guess he can have the difference if he wants it when he gets out.
Sounds like you did a good job raising him. I hope he’s well now.
Nothing wrong about a state college. We pay taxes for it anyway. I noticed the textbooks at state colleges are most often written by professors at top colleges. So you learn the same material. You get the same substance but have less of an image at state colleges. You are more likely to be a humble and frugal adult after graduating from a “lowly” state college than from a big name school.
I did the Lasik thing years ago. I went from thick glasses to 20-20 left, 20-16 right overnight. Top 3% of Lasik results. It was the best $2,700 I ever spent on myself, and I paid cash.
Got 10% down?
I really do not understand all this business about “victims” who were given a loan for the amount of money they asked for even though the bank should have known that the poor helpless borrower could not afford the payments. These same people would probably consider themselves equally victimized if no lender was willing to give them a loan.
Word of Advise to the guy foreclosed on:
You would not be in this problem if you kept three things in your pocket: You pen, your credit card and you know the third!
LOL!
Isn’t the third thing going to feel a little uncomfortable in a pocket?
Why? That’s where I keep mine!
It’ll be more comfortable in a pocket than in his wife’s purse.
i’m getting tired of reading about the “woe is me” from people who are getting burned as the market crashes. Many of these people are the same ones bragging about the killing they were making (or so they thought) as the market went up. They were financial genuises as they sucked the equity from their homes in a race to keep up with the Jones with new cars, plasma tv’s, boats, campers, etc. Now the time has turned and their greed, needless consumption, and load of debt is biting them back. We are supposed to feel sorry? You’ve got to live and learn!
Who are the Joneses, and why is everyone trying to keep up with them? Has anyone ever met them? Do they actually exist?
Toast, I have asked that very question numerous times. I have yet to get any answer.
Ben Jones, and no one can keep up with his blogging pace.
true
They only exist on TV. Where everyone has a Mac Laptop or Mac Desktop with a 30 inch Cinema Display. And a Motorola $300 phone for everyone in the family including the dog. And a MiniVan and an SUV. And a big-screen television. And a Harley. And a four-bedroom 3200 sq ft house. And no money problems.
What amazes me are the CSI type shows where they have these huge LCD displays all over the place. Along with the software to do all of the fancy graphics. These are government agencies that do not have money coming out of their ears.
My Mac laptop cost less than my wife’s Dell laptop. Just because it looks more expensive doesn’t mean it is.
You can certainly load up a Dell notebook. But you don’t have to.
Every once in a while, you can buy a $400 laptop from Dell or HP. Can you do that at Apple?
I also priced out one of the new 8-core Mac Pros (we have a PowerMac G5) configured the way I like it. $15,537.
The only ‘Jones’ I know works for Golden Slacks. No way I will EVER keep up with him!
(He is bitter because he is not in the elite subgroup there that makes the really, really big money. Such is human nature.)
I love those comments from the woman at the bank who told the guy he was “unorganized, needed to get a second job and his wife should work.” 2 years ago she was probably all smiles and ready to ask this couple over for dinner. I think it was Will Rogers who said, “Banks are places where they offer you an umbrella when the sun is shining - then ask for it back when it starts to rain.” Never truer words spoken.
“He said one of the problems is there are no licensing requirements for mortgage brokers. ‘You can be a shoe salesman one day and the next say, ‘I’m a mortgage broker.’”
This is soooo true! I know one such former shoe salesman who now is a broker. He joined The Mili Group and bought into the idea of getting all the equity out of their house to buy additional houses or invest with the Mili Group. He will soon find out the foolishness of his ways since he bought a house not a year ago for over 600 K with variable rate. He still does not get it but time bomb is a ticking.
Is his name Al Bundy?
Sorry, couldn’t resist that one.
No, it would be more like Alberto Bundiola. Know anything about The Mili Group?
I do now
In the DC area (Fairfax Cty here) as much as i’ve learned about the bubble i’ve still never understood WHY anyone would buy a condo in this area.
Prices are still all over the place with them, 250k-500k but when you look closer at those lovely “condo fees” they get you for another few hundred bucks at least! Aside from making a profit on your water and electricity are these fees just prestige-fees? THAT always seemed like a complete waste of more money…
If you want to live in a building how can you NOT go for a rental? Lovely management companies, even if utilities aren’t included they would be a fraction of a condo fee… i still scratch my head about condo buyers.
f you want to live in a building how can you NOT go for a rental? Lovely management companies, even if utilities aren’t included they would be a fraction of a condo fee… i still scratch my head about condo buyers.
You get to paint the walls if it’s a condo. (But your blinds/drapes still need to be white outward facing)
Yeppers. Just foreclosed a condo this afternoon at the Fairfax Courthouse (and its’ lovely $166 million dollar expansion, which I’m told won’t be finished until summer 2008). It was a February, 2006 loan for over $350k, and nobody wanted it for that price. Imagine!
join up
http://www.fcta.org
Sorry, I’m a little more radical than that. I have this antiquated belief that when you fall into a pond full of leeches, you don’t try to negotiate with them for less blood loss, or wait for them to get tired of sucking you dry. You put salt on them, burn them, or pry them off of you. Then you stomp on the vile little beasts so they can’t breed and come back. Then you stay away from that pool.
Am I being too oblique? Perhaps. But the idea of putting pressure on politicians to decrease government spending or to decrease taxes seems to me like trying to out-squeeze a boa constrictor to get it to give up its meal (which is, of course, the taxpayer). Once it’s already wrapped around you, it’s pretty much too late to try to put pressure on it!
What makes it worse is that there are condo high-rises still under construction all over the place.
And the people that have already bought may discover another ugly fact. Many of the condos will be rented out, but once the percentage of renters in a particular development gets high enough, it is damned near impossible to get a new mortgage on a unit in that development. It is sort of a catch-22 - in a way you would want people to be able to sell to reduce the number of renters, but the obstacles make it harder to sell the things.
Interesting visual on historical real estate prices.
Let’s try that again….
http://bigpicture.typepad.com/comments/2007/04/real_estate_rol.html
That is FANTASTIC! I love it.
OT observation.
I work in Mesa, AZ (Phoenix suburb) in a 16 story building - the only tall building in the area. I work on the 11th floor and sometimes I talk with the folks in the elevator as I go up and down.
For the past year and a half, it appeared that most of the tenants were mortgage companies; some were title and insurance companies - so almost all related to the REIC. Few attorney offices and “wealth management” offices as well. The first floor is occupied by Bank of America.
Up until last year, the parking structure used to be filled - it was impossible to find parking (even the assigned space were taken up by visitors) if you came in after 9.30 am. Some days, I’d come in at 7.30 am just to secure a parking spot.
Since the beginning of this year, parking is available widely. I sometimes come in at 11.00 am, and there are still plenty of visitor spaces open.
Also, you would see nicely dressed men and women outside the building on a cigarette break; very few this year. There are also fewer higher end cars (Mercedes, BMW, humungous pick-up trucks raised even higher on the fancy wheels) this year as compared to last year. Fewer women dressed in the latest fashionable clothes with fancy hand-bags. It all seemed to change to suddenly.
There ought to be some good deals soon, assuming you want any of that stuff.Thanks for the anecdote!
Speaking of anecdotes, the Arizona Slim Ranch refrigerator is getting on in years. So, I’ve been shopping for a replacement. Been to Home Depot already. Boy, was that place un-busy.
This past Saturday, I went to one of those locally owned, in business since the Pleistocene Era appliances stores. I swear there were more sales guys than customers in the place. On a lovely afternoon in Tucson!
More evidence that the housing ATM is 404…
Excuse me. It was an appliance store. Singular. Not plural.
I’m a Phoenix guy too. I have been commenting to my wife about all the fancy new mortgage offices going up in Scottsdale along the 101. My bet is that commercial RE will take a big hit here due the slowing mortgage business.
I wonder about who’s actually in those mortgage offices lining the 101. There’s got to be about 100K sq ft sitting empty. At least. Seems like they got built too late….and I hear that there is huge commerial vacancy all along Camelback, between 40th and Scottsdale.
You work at the bank of america building on Southern/Alma School? I’m sort of glad that the whole north side of Southern across from Fiesta Mall is being torn down to make room for Condo Towers (Taller than the BoA building).
Other than the fact that no one will buy those, it will be nice to get those slum buildings (circuit city) out of there.
Yes, that’s were I work. I had no idea about the Condo Towers going up.
On the southern side, there is CompUSA (store closing soon), Best Buy, Marshalls and Borders.
I went to Best Buy over the weekend - was shocked to see so many folks standing in the returns section. There were 8 people in the returns line; 1 in the purchase line. As I was walking out, I saw more folks bringing in big TVs and other gizmos back. Talk about buyer’s remorse!
CompUSA had a 40% off everything sale ; went in and came out empty handed. I don’t “need” another high-tech gizmo or a HDTV. I don’t even have cable at home.
Went to Sur La Table on the other end of Chandler (near Ahwatukee) last week - empty. Purchased a bread-maker to make bread at home so I don’t have to pay Whole Foods prices. I am my own Whole Foods now!
Take it back. You can make great bread with a bowl and a bag of flour. Really, read this. I make 4 loaves a week:
http://forums.egullet.org/index.php?showtopic=95345&hl=
Thanks for the link. I never made bread before I purchased the bread-maker. I am going to make some tonight by hand. And if I can do it, then I am going to take the bread-maker back to Sur La Table.
The TVs may have been coming back, because “March Madness” is over. Evidently, a LOT of people buy big screens/plasma/LCD TVs during Bowl season, then bring them back for refunds when they are done. Best Buy will make you a heckuva deal on the returns. Just look for a bunch of them back in the TV department a week or so after Thanksgiving, January 1, or the Super Bowl.
They can certainly afford to, after charging the “renter” a 20% restocking fee.
About a year ago, I posted that all this craziness in the housing market would only be over when people were gagging real estate. Starting to that happening. Now comes the real crunch!
correction to my post. The gagging is starting to happen.
“They are a fairly typical Loudoun family. He is a 35-year-old engineer for a technology company in Fairfax, pulling in $80,000 a year. His wife teaches yoga. College-educated, they have two daughters.”
Translation: She has some degree that isn’t worth all that much, and moneywise, she doesn’t make squat.
“i have a degree in religious studies!”
Or Womens’ Studies, or Education . . .
Art history major? Usually folks with unmarketable degrees had their parents pay for them. If you were paying your own way, you’d want something of a return when you got out.
“‘The dream of homeownership,’ he says, ‘is a lie.’
Yes, it is. When you have zero equity and no savings for a rainy day, homeownership is no dream. How much worse does this have to get for the sheeple realize this?? For the banks to realize this??
But the dream of winning the lotto lives on!
Damn, I should’ve been a mortgage broker!
I must’ve missed that infomercial……….
Geez
Hey, don’t knock lotto–I bought the first ticket of my life a couple of weeks ago. It had gotten high enough that the expected value of the ticket (even considering the 50% reduction for taking lump-sum) was worth more than the purchase price of the ticket, which is my definition of an investment.
It was a near-infinitely-risky investment, but an investment none-the-less!
SO WHEN ARE THE PRICES GOING TO CRASH ?
We read story after story about FBs, late notices, mortgage company failures, skyrocketing inventory levels, etc. Yet the housing prices aren’t falling ! Something isn’t adding up here !
The same thing happened before Christmas… it didn’t add up. Not a word from the mortgage community, yet you knew that sooner or later things would go sour there. And they did ! I think home prices are next. Easter will come and go, sellers will watch each other for price movement and then boom… all of a sudden we are going to have house prices in a freefall ! I figure prices need to fall by 50% to start clearing the inventory and I figure there are a ton of FBs out there that HAVE to get out, they don’t have any choice.
So when does the STAMPEDE start ? I say 3 weeks What say you ?
tweedle, it has to start soon in South OC. I wrote on Monday that I saw at least 40 open house signs this past Sunday. The week before, maybe half that many. Reckoning time is coming. Also, one of the open house signs was for a condo that listed its price at 335K. Now that is still waaay too much, but as we drove by I couldn’t help making the smug remark to may wife that what was that worth last year, 600K? Hope you didn’t buy at that price. Needless to say, she sometimes gets frustrated at my smugness. However, as I stated on the previous thread, I am so sick and tired of this economy. Crash, burn, and sdtart over, puhlease!
Tweedle, relax. They are not going to “crash” in the traditional sense. There will be no TV cameras with hysterical correspondents waiving their arms and yelling. It will be a fairly slow process that will likely bottom only when banks capitulate and move REO at a discount. Ain’t gonna happen in three weeks time. Three years, maybe….
I think you are wrong. I don’t think its going to be slow. I think there is a tremendous amount of pressure on homeowners right now to do something about their dire financial situation. Somewhere there are investors on the other end of these transactions. We’ve heard lots about the mortgage companies, but we haven’t heard anything about the MBS investors. Not a peep.
Well, you can let Joe SixPack default all you want, but sooner or later it burns the MBS holder. So do we have MBS holders that don’t care about their returns ? I don’t think so. So *SOMETHING* has to give, somewhere.
I’m waiting for the next shoe to drop. I don’t know what its going to be yet or where its going to happen, but something is going to give. Sooner or later all the delinquencies and such have to be taken care of and those house have to come back on the market and get resold. Banks can’t afford to carry them and we’ve already seen that the mortgage companies can’t. So they are going to get sold, for whatever price they will. That has to happen !
We can’t have a country full of empty houses owned with borrowed money unless the MBS investors aren’t worried about getting paid.
Like I said, I give it 3 weeks before we have a blow up. Ben, mark this post because I may want it back.
“I think there is a tremendous amount of pressure on homeowners right now to do something about their dire financial situation.”
SOME homeowners are under tremendous pressure. The question is - how many? You guys make it sound like everyone in the country went out and got a neg-am loan or HELOC’d all of their equity. I say it is a small and manageable fraction of the total homeowning population.
All this doom and gloom stuff reminds me of the run up to Y2K. I wonder how many here swallowed that one hook, line and sinker? An apocalyptic mindset seems to be firmly embedded in the American psyche.
I live in Northern Virginia. Inventory is up, prices are down, but well priced homes are still moving. No apocalypse now, or tomorrow.
“SOME homeowners are under tremendous pressure. The question is - how many? You guys make it sound like everyone in the country went out and got a neg-am loan or HELOC’d all of their equity. I say it is a small and manageable fraction of the total homeowning population.”
I’d say 20% or more of all homeowners bought a house in the last few year or did a refi. Heck I’d say that over 20% of all homeowners are now under water. How far under water do they have to be before they abandon ship ?
I didn’t fall for Y2K and this has nothing to do with Y2K. Y2K was a computer problem, easily fixable by looking at your software. This is a financial problem. Not so easily fixable.
“I’d say 20% or more of all homeowners bought a house in the last few year or did a refi. Heck I’d say that over 20% of all homeowners are now under water. How far under water do they have to be before they abandon ship?”
20%? Based on what?
“I didn’t fall for Y2K and this has nothing to do with Y2K.”
The kooky end-of-the-world mindset you are espousing is precisely the same.
FWIW this is how I see things playing out: In some of the exurbs, where it never made sense to build in the first place, prices may decline 50%. Condos in areas where they were overbuilt may drop 40-50%. Desirable single family homes in good areas may drop 20% - and then prices will stagnate for 5-7 years. Yes, pain for some, but hardly the end of the world as we know it.
Empty houses owned with borrowed money? Tweedle, you’ve just described much of the “for sale” inventory in central Tucson!
3 weeks is way, way too short of a timeframe.
We haven’t yet gotten the stories in the newspaper about underwater buyers pulling money from their retirement accounts.
We haven’t yet gotten the admission from the NAR, CAR, or others that prices are too high.
“Flip That House” is still on television.
The search results on Craigslist for “short sale” still return double-digit results (rather than four- or five- digits).
I agree with you that when the end comes, it will be like an avalanche, picking up steam very quickly, but we aren’t nearly close enough for that to happen yet.
DC, I know you’re in my area too right? I don’t know if you watch prices of specific houses or areas, but I would say it’s beginning to happen outside the beltway. There is no rhyme or reason to pricing right now, i’m seeing big price disparities for similar houses in the same neighborhood.
I saw a great chart illustrating the bubble somewhere, price inflation begins at urban centers out… prices fall on the outskirts in…
With that said, I still see nutjobs who want 100% profit but there are some prices that are coming down…. they almost look good, until you realize that 400k bungalow was bought for 250k a few years ago.
I came here just about 4 months ago and i’d say within that timeframe the change has been amazing. With resets about to ramp up, this year is going to get uglier quicker.
2001-2002 prices by end of 2009!
I had noticed that the prices were declining on the outskirt of DC (Fairfax, PW, Spotsylvania), but more homes are on sale in DC. The housing market here will collapse if DHS and DOD would cut workforce, since no other job creation occured in DC. Private sector does not create jobs here. Last fall i posted link, where DC had one the lowest job creation rate in the nation, about 1.8%. New administration after 2008 and the end of war in Iraq will shake DC badly, since entire city depends on these funds. There is nothing to supplement these cuts: no research, international business, commerce, finances…
Here is where I agree with maybe this thing unraveling faster than anticipated. Back in the 90’s, you could go down the street to your S&L or bank and actually sit across from a body, and discuss your financial situation; maybe work something out, maybe not. Today, mortgage transactions are very impersonal, I don’t give a sh#t about these loan modification teams(Nothing but a BS public relations move IMHO), looking to help out struggling homeowners. Ultimately, if the holders of these mortgages need to cut losses, they will cut them by forcing into FC. Especially if the writing is on the wall and the market is going down (pretty much conceeded by all) - get out while they can.
I live in OC, anyone that bought since 2004 is pretty much hosed if they didn’t put 20% down and run into financial problems, although I have many friends with Mom and Dad waiting to “help out” if it gets too rough. There is an amazing amount of wealth here regardless of the OC “live beyond our means mentality”. Mommy and Daddy bailouts happening every day in my area.
Very much agree with the titanic analogy, we’re dun hit the iceberg, and now the lower compartments are flooding. the captain and officers know it - they’r just not telling.
As far as the underwater homeowners stampeding to the exits… not gonna happen, you don’t expect them to actually bring a cheque to the closing do you? they are gonna mail in the keys to the bank.. and the foreclosure process takes about 3-6 months at best.
The next shoe is gonna drop when the banks have to disclose the REO’s on their books and then we’ll see an stampede to get rid of these properties, and my fellow bloggers, that would be the time to make a 80% off peak offer on these houses.
So hit that snooze, and wake me up around spring 2008.
got cash?
I’ve been anxiously waiting for this as well. However, because the initial time period where buyer can pay only interest rate last upward of a few years and many of the loans have cascading reset dates, this stampede is slow in coming. BUT IT WILL GET HERE!! It has to since people just don’t make the money to afford current house prices. Prices were inflated beyond reason and they have to crash! Maybe by Christmas the stamped will begin.
“They are not going to “crash” in the traditional sense.”
The best analogy I can come up with is the Titanic. When it first hit the iceberg, hardly anyone paid attention. It was still Party On. Then it began to list, and the lower (subprime) compartments slowly filled with water. After a while the higher decks (Alt-A) also submerged, but the hoi polloi (prime) managed to scramble to the now-vertical stern and stay dry until the very end.
And just like the Titanic, this housing debacle will also have survivors.
Good one Bill. I might use that in polite conversation myself.
The thing that gets me is we aren’t hearing from the MBS holders yet. They are surely going to take a bath. Before Christmas we didn’t hear about the mortgage companies a lot.
Look at all the factors at work here.
- FBs over their heads with payments
- gas prices high and its not even summer
- lots of layoffs in various regions (autos, mortgages)
- House prices declining.
- Subprime financing is gone
- lending standards have tightened
- inventory has skyrocketed
- impossible to sell your house quickly, unless its for a significant discount
So whats keeping the price up right now ? What happens when banks have to foreclose on FBs and then they have to put that house on the market and convert it to cash ?
Housing prices asked for by OWNERS can be sticky. Banks don’t have the option of holding empty houses in their portfolios. I think there is going to be a bunch of foreclosure auctions by banks trying to stay ahead of the wave and these will cause prices to plummet.
Basically right now the market handles the inability to sell at current prices by… not selling. What happens when the MBS buyers want those houses sold to keep the portfolio up to date ? Then they have to sell at whatever price they will garner ! That has to be 25% lower than where we are now. That has to cause some panic for the FBs that need to get out. They will surely take -20% instead of holding on for -50% !
When it happens, it will cascade. Its greed and fear, remember ? We had greed. Now we have denial. Fear is next.
I’ve heard that loans begun in February were allowed to go thru inn March. Anything begun in March was subject to the tighter guidelines. The April numbers reported in May will be the crushing blow to the RE market.
LMFAO!! Shoe salemen then broker then __________ (fill in the blank)
Congressional candidate?
President of the US?
FB!
Payless shoe salesman
“Northern Virginia is piping hot. The couple buys an 1,100-square-foot condo in a brand-new Ashburn community for $336,000, using two interest-only mortgages.”
“The bulk of the cost of their condo was paid for with a fixed-rate mortgage, the rest with an adjustable-rate mortgage. During the 14 months they lived in the condo, they paid $2,600 a month in mortgage payments, condo fees and homeowner association fees”
and his credit score was 760
As said above his wife didn’t bring home much from her job so his MAX house price should have been ~$240k, but why the I/O fixed and I/O arm. It seems the payment (including taxes and fees) would have been about the same with a regular loan.
“So when does the STAMPEDE start ? I say 3 weeks What say you ?”
I think prices, especially in previously steady places like Bay Area, CA, will start really softening after the long summer months of extremely slow sales and further resets. By that time, extensive mainstream media coverage of RE problems will insure that the sweet taste of RE as an investment will turn into the sour taste of dog turds.
So dog turds are sour?
Perhaps the dog likes to eat lemons!
hypothetically, I would think so. Don’t think they’d be sweet—they’d probably just taste like sh*t.
I believe the most interesting point is the price point at which the condo traded in the foreclosure auction. Down about 20% from original purchase price. What I have found surprising in several of these types of stories is how small a discount it has taken to “clear the market.”
Perhaps it will take a bigger discount as the market weakens further, but I had thought it would have taken more of a selloff to attract buyers.
The bank bought it. That’s not a discount. It’s their wish price, as in ‘I wish we hadn’t loaned so damn much money’.
Don’t know if anyones posted what John Edwards wants to do to help out FBs (scroll down):
http://news.yahoo.com/s/ap/20070404/ap_on_el_pr/on_the2008_trail
“His plan on lending would include matching what low-income Americans are able to save in what he calls “individual development accounts,” regulating fees that lenders can charge and allowing people who declare bankruptcy in dropping housing markets to cut their mortgage to the current market value.”
I think that that last one would dry up *any* lending for sub prime for the next 5-10 years.
There aren’t enough bankruptcy lawyers in the world to handle the flood of work that would ensue.
He truly makes me want to hurl. Elitist scumbag. Maybe he can let all the FBs bunk out at his new 38K square foot hacienda.
This can’t be legal in any sense. To tell lenders they have to swallow the difference is insane, and no lending institutions would stand for it. If I buy something on a credit card, can I reduce the amount I pay a month later because the item I bought isn’t worth as much as when I bought it? John Edwards is a personal injury lawyer, and it shows.
Edwards is clearly playing to the lowest common denominator.
Unfortunately, there are a lot of them.
“allowing people who declare bankruptcy in dropping housing markets to cut their mortgage to the current market value.”
So, you’re bankrupt and you’re offered the choice to hitch your financial future back onto the vehicle that helped you crash in the first place. What do you do? What DO you do?
Somehow I don’t see all that many BKs accepting a deal where they’re stuck back on a tar baby that is continuing to decline in value. And exactly who is going to eat the difference between the old mortgage and the new, “market rate”, mortgage?
And who is going to be the “expert” who will determine the new “market value”? Somehow I see those with government “connections” getting much sweeter “market values” than those without such friendships.
That launguage may make me vomit..
Cut the mortgage, Why not just call a “Do-Over”?
language, i misspell when I get pissed
Is there even one Democrat Presidential candidate who doesn’t want a bailout for the borrowers/banks? From what I’ve read here, even those farthest to the left are against a bailout, because it would only be a transfer of wealth from the poor and middle class to the banks. Let the foreclosures begin and the banks eat their losses with 50% discounts on REO’s. The FB’s can go back to renting for a few years while they rebuild their credit and savings to buy a cheaper REO from the bank. Maybe they will be a little smarter next time.
Jerry,
the republican candidates…do any of them have a position on the housing bust/foreclosure bubble? I don’t follow repubs, but are there any with a sense of fiscal responsibility?
It’s just talk. The Democratic presidential candidates just like to point out how bad things are now. If there was a Democratic president, the Republican candidates would do the same thing. They always emphasize the shortcomings of the other side. Remember the “misery index”? “are you better off now than four years ago”, etc?
Hey AG - stop by for a visit at the Central Coast Blog I set up. Just click on my screen name.
Going right now!
Y’know, this family really isn’t in particularly bad shape:
-They’ve currently got a very affordable roof over their heads.
-He’s got a lucrative job and probably some kind of insurance
-Their debt is in the tens of thousands but could probably be wiped out through some bankruptcy workout plan fairly quickly. Bankruptcy shouldn’t be a big dilemma since their credit score is already in the toilet.
If they were to adopt even minimally reasonable living habits, they could be out of the financial doghouse in 10 years, maybe 5 if they pushed it.
Not that I’m guessing they’ll do that.
Homeownership in the NoVA area has become an impossible dream for most middle class folks. You cannot get a decent CONDO for under 300k in several counties surrounding D.C. The fact that this happened in a period of 4 years is alarming. It also happened at the same time a major industry here (technology/internet/telecom) imploded. So, what replaced it?? Real estate and defense companies - both vulnerable to cyclical downturns.
Back to homeownership, saving up 60k for a downpayment is not easy as some here seem to think. I don’t know too many people who have been with the same employer for 10 years. Unemployment gaps are a reality nowadays. Also, how many people enjoy perfect health for 10 years? Insurance is for the most part only for healthy people. If you’re too sick to work, you get no insurance. MS, Fibromyalgia, Chronic fatigue, depression, etc are affecting people in their 20s and 30s nowadays. All these factors are beyond the individuals control. And assuming all goes well for 10 years and you are able to sock away 60k for a 20% downpayment you only get a 2 bdrm condo in a suburb. A house with a yard for your kids to play??? Not in No. VA .
Very well said, it is the reality of living in DC. I am planning to move out for this reasons after my assignment is over. DC was cheaper than New York, NJ, or Boston. Now we have higher gas prices and utilities than them and of course, housing is catching up the Manhattan price level, while income is still counted for many, as if it is a Deep South. My partner and I make together well 125K, and the prices for townhouses are still out of reach if we want to do the traditional way, with 20% down payment and 3.5x of yearly income. No plans for kids, but we decided not to buy, since it will ruin us financially. What you see here for new homes is a joke; made from the cheapest material available…The older homes are depilated and they ask 500-650K, where the pipes remember the FDR. DC has some nice old homes, but I do not feel safer there like here in NoVA. The crime is bad even in the revitalized neighborhoods. Around new condos on MA avenue you see burned cars, and car frames.. You pay 500K for condo that is smaller then my rental. Waste of money.
DCRenter - We hear from Calif friends so often that I’m pretty inured to those kind of #s. Still, where I am, 60K is 20% down on a reasonably maintained 25 year old home in the cul-de-sac on 1/3rd acre. Trade up by half again and there’s a good chance that together, your power and water bills will rival the mortgage. (Disclaimer: we also have one of the most corrupt utility authorities in the country.) The kids don’t lock their bikes around the corner at the school - figure that’s good for about 1 more year before Memphis realities knock us on our collective suburban keister. Rents suck relative to market value, but you can’t have everything.
No beach, but look at what you can get for $1.3 mill here:
http://tinyurl.com/yofezc
(Would make one hell of a B&B. Say! If they start entertaining offers in the high five figures…well, a girl can dream.)
“The couple buys an 1,100-square-foot condo in a brand-new Ashburn community for $336,000, using two interest-only mortgages.”
In my opinion these people bought this condo in name only. Actually they are renting it with an option to buy (IF the price keeps going up). Otherwise, they have no money into it, and if the value falls and they can’t make the payments they’ll just walk….losing nothing but their credit rating.
No down payment mortgages shouldn’t be available. Make people save at least something for a down payment (5% at the very minimum) before they can buy, and also make them prove they have enough left in the bank to make a minimum of 3 monthly payments. Those restrictions would have kept demand more normalized and prices wouldn’t have reached the truly stupid levels they were at in 2005 at the peak.
The Denver Post has done a series of articles about all the foreclosures in the Denver area and some buyers never made even the first payment on their mortgage. Not one!
Chris O said:”If they were to adopt even minimally reasonable living habits, they could be out of the financial doghouse in 10 years, maybe 5 if they pushed it.
Not that I’m guessing they’ll do that”.
I don’t either. Most of these FB’s don’t want to tighten their belts, or get second jobs to pay for their deflating assets. They still want to go shopping, out to dinners, lattes…when bad news is everywhere about the RE market, no one underwater wants to continue paying.
Chris O said:”If they were to adopt even minimally reasonable living habits, they could be out of the financial doghouse in 10 years, maybe 5 if they pushed it.
Not that I’m guessing they’ll do that”.
I don’t either. Most of these FB’s don’t want to tighten their belts, or get second jobs to pay for their deflating assets. They still want to go shopping, out to dinners, lattes…when bad news is everywhere about the RE market, no one underwater wants to continue paying.
Sorry about the double post.