At The Beginning Of A Sustained Downturn In California
The Recordnet reports from California. “The existing home sales market is down about 40 percent from a year ago, said (broker) Jerry Abbott. The number of houses for sale jumped, likely because of foreclosure listings, from 4,119 in February to 4,580 last month. ‘It’s been disappointing when comparing to the year before, and last year was a bad year,’ Abbott said. ‘Nobody expected it to turn down this far.’”
The Ventura County Star. “Ventura County’s median sales price for new and existing homes and condominiums plummeted 6.9 percent in March to $566,750, Southern California’s biggest year-over-year decline,.”
“Closed sales were off too, down 24.7 percent to 999, according to DataQuick.”
“Tony Deleo, broker in Ventura, said he thinks DataQuick’s estimate of a 24.7 percent sales volume decline is too conservative. ‘My estimate would be 40 percent,’ Deleo said, ‘and I believe the median price is off way more than 6.9 percent.’”
The San Francisco Chronicle. “The median price paid for a Bay Area home in March was up, but the chorus still isn’t singing ‘Happy Days Are Here Again.’”
“‘We had such a large run-up (in home prices) in the state as a whole in the last four years and now there is excess inventory in unsold houses, in San Diego, Sacramento, Orange County and the Central Valley in particular,’ said Ken Rosen, director of the Fisher Center for Real Estate at UC Berkeley. ‘Usually, the reaction time to an overheated market is two to three years.’”
“‘I think prices will come down over the next year or so,’ said Stephen Levy, director of Palo Alto’s Center for the Continuing Study of the California Economy. ‘Because I think there are more people under pressure to sell now than there were a year ago and there are fewer buyers. I think we are at the beginning of a period of a sustained downturn.’”
“The husband and wife work as strawberry pickers in the fields around Watsonville, and each earns about $300 a week. They have three children. Not only did they dream the impossible dream, they managed to finance it.”
“How did a strawberry picker earning $15,000 a year qualify for a loan of $720,000? The answer, say the experts, lies in a lending industry that got too innovative for its own good.”
The Mercury News. “Brent Maier and his wife, Mari, were looking at townhouses in Cupertino and surrounding towns in February, with the hope of moving from their current home in Fairfield. But ‘in our area there are a lot of houses for sale,’ Maier said.”
“If they’d sold their four-bedroom house six or seven months ago, he said, they might have gotten $515,000 for it, but now, he said, the value is in the $460,000-to-$470,000 range, and some homes in the city are sitting on the market for months.”
“In Solano County, which includes Fairfield, the median house price fell in March to $439,000, 3.4 percent less than a year earlier, according to DataQuick. Along with Solano County, only Napa and Sonoma counties experienced median price declines in the Bay Area.”
“‘We don’t want to be in that situation where we’re letting it languish,’ Maier said So he and his wife have reluctantly put their South Bay home search on hold for now. ‘The desire, for us, is still there, but the reality is causing us to pause.’”
The Sacramento Bee. “For two months, it looked like Sacramento might finally be climbing out of its housing slump. Then the bottom fell out of the subprime loan market and threw home sellers a curve. DataQuick reported that the median price of homes fell from February to March in five of eight area counties.”
“‘It’s kind of a tough market,’ said Pradeep Gosai, who relisted his $529,000 house in Natomas this week after turning down offers last year that were ‘different from what we wanted. Now it’s a lower price than last year. I hope we make it,’ he said.”
“Sacramento real estate agent Carey Covey said many first-time buyers no longer qualify for today’s more demanding loans. ‘They actually wanted the buyers to have a pretty good credit history and a job and some income coming in,’ said Covey, who now is trying to sell 42 properties repossessed by the banks.”
“‘Certainly, (sales) dropped in March, and we haven’t actually seen a comeback yet in April,’ said Mark Levens, VP of Newport Beach-based John Laing Homes.”
The Contra Costa Times. “Michael Tacconi, a mortgage broker with Meridian Financial in San Ramon, said several sellers and builders are often paying closing costs and loan fees rather than lowering the actual costs of homes, something that keeps the neighbors happy.”
“‘In the East County, there has been Pulte Homes offering $100,000 towards closing costs,’ he said. ‘Sellers and builders are doing whatever they can to sell.’”
The Orange County Register. “The spring home-selling season is off to a slow start in Orange County, with local home sales down 25.5 percent and prices up just slightly from a year ago. It was the slowest March since 1995, and sales had fallen 44 percent from the March record of 5,577 homes sold that was set two years ago.”
“‘This spring is not as busy for most agents,’ said Les Fujimoto, an agent in Yorba Linda. ‘Our office as a whole sold over 30 homes last month. It was better than March 2006. But if you take (into account) January and what April’s starting to be and eeeee, it’s scary. I don’t think (the market has) turned around yet.’”
“‘January and February were fantastic,’ said Carla McKendry, a real estate broker in Yorba Linda. Then, she said, ‘right around March 15, the bottom dropped out. Everything came to a screeching halt. It’s probably because of all the bad press on the subprime market.’”
The LA Times. “In the Inland Empire, things aren’t looking so good. Gretchen Barrantes, a Moreno Valley agent, did eight deals in the first quarter of 2006. This year she’s done 14. But all were either foreclosures or short sales in which the sale price was less than the outstanding mortgage.”
“People don’t want to compete with foreclosure prices, she said, so they keep their homes off the market. ‘I haven’t had a regular sale in a long time,’ she said.”
The Daily Press. “Despite a rebound in residential sales in March, home prices fell in the Victor Valley as the single-family housing market sustained an ongoing slump.”
“March closing were down 54.6 percent year-over-year, while prices registered a decline of 9.4 percent, according to Century 21 data. ‘There’s no question that housing prices are too high in the Inland Empire and throughout Southern California,’ said economist John Husing.”
“The recent trend toward adjustable-rate and interest-only mortgages raises concerns over a surge in repossession activity, which could deflate prices even further. ‘There are likely to be more foreclosures and short sales in the near future,’ said Jim Philips, a broker in Victorville.”
The Press Enterprise. “Last month, Riverside County’s 3,680 sales were down 47.3 percent from a year ago, and San Bernardino County’s 2,476 sales marked a 46.6 percent drop.”
“The Inland region has so far avoided actual price declines, which has been seen in recent months in San Diego and Ventura counties. But experts said it’s just a matter of time before the numbers turn negative.”
“‘If you look at the historical norms, when the patterns trend flat for several months, they generally go negative eventually,’ said DataQuick analyst Andrew LePage.”
“On April 1, Mission Viejo-based builder Prosperity Homes had a live auction for condos available in San Bernardino.”
“‘It was a good response.’ Prosperity CFO Rob Wallstrom said. ‘We auctioned 23 condos and sold 23 condos at an average discount of 15.3 percent’ off the original asking prices, he said.”
“Nobody expected it to turn down this far.” - Nobody who? Guess he wasn’t reading HBB.
If he thinks this is “far”, wait til this time next year.
Guess it depends on how far, far is.
Ask Clinton
“Nobody expected it to turn down this far.”
Speak for yourself Mr. Abbott.
ROTFLMAO! Abbott needs to get his head out of the sand. What did he expect, peak and plateau? Look at a revenue curve, tool!
“nobody”=”me and all the people who depend on unsustainable appreciation”
“Hey, Abbot!”
http://www.signonsandiego.com/news/business/20070413-9999-1b13sales.html
Dataquick’s newest spin: “Most of San Diego’s declines, if not all, are behind us,” with the rest of the state likely to mimic the county’s trendsetting pace, Karevoll said. ”
Sent this link to you just now Ben.
“We don’t make predictions.”
DQ
Why do “people’ (agents, brokers..MSM) confuse prices with changes to the median. Just because statistically the median has moved up, doesn’t mean house prices have moved up. I can understand agents and brokers wanting to confuse, but MSM?
It involves mathematics and journalism majors, do you need any more ’splaining?
http://www.cnn.com/video/player/player.html?url=/video/business/2007/03/23/kathleen.madigan.subprime.cnn&source=money Here’s a good video
There was a pretty good article about this in Marketwatch.com about a year ago:
http://www.marketwatch.com/news/story/if-housing-weakening-why-prices/story.aspx?guid=%7BA4434D59%2D303E%2D4D85%2DBB20%2D334256808B1C%7D
I was actually unaware of the full meaning of the “median prices” figure until reading that.
I notice that the Case-Shiller House Price Index that is published by Standard & Poors has gotten some media attention in the last couple of months. That index is much more meanigful since it compares same-house prices. It often shows prices going down in the same markets where the “median price of houses sold” is going up.
Unfortunately, the “median price” still gets bigger headlines and more coverage.
Every month the “preliminary” numbers come out and it appears that prices have started moving up again. And every month the medians are quietly revised down later. If you look at a monthly chart of the price activity it always shows a blip up for the current month. I have started ignoring the current month and just looking at the trend up till last month.
Another interesting numbers game is to multiply the average price by the number of sales for the total sales activity. This gives a clear indication of how much total money people are willing to put it, plus how much realtors and mortgage brokers are making on comissions. If the average price is up 2% but the sales volume is down 20%, realtors in aggregate are making 18% less comissions and people are willing to put in 18% less total dollars.
Here’s a link to a San Diego realtors blog which shows weakness in the area market, and a high percentage of short sales with hispanic surnames.
http://www.bubbleinfo.com/journal/
“March home sales turned in their biggest year-over-year decline since 1995, but the region’s median sale price rebounded to $490,000 in a possible sign that San Diego County’s housing slump is easing.”
It’s funny. I ran a median of 10 imaginary houses, priced $100k to one million, and got a median of $550k. Then I chopped off the lowest five prices and reduced the prices on the remaining five by a full 30%. Y’know what I got for a new median? $560k. Hooray! The median price went up! The dark days are, indeed, behind us…
The San Diego holding steady mimics an OC Register article that says the same thing about Orange County prices. The OC Register also took the average of [-1.4%, -0.4%, and -3.2%] and came out with 0% appreciation. I think they’re cooking the books to keep the RE advertising cash.
See http://www.ocregister.com/ocregister/money/housing/article_1644356.php
There seems to be some confusion here. If we’re talking about price then I have to ask - what down turn? I think the quote refers to sales volume which doesn’t concern people here on HBB too much but is kind of critical to RE agents.
Sonoma County Data
MLS: 3464
(norcalmls)
Price Reduced: 1038
(ziprealty)
Foreclosures: 1632
(realtytrac.com)
47% of Sonoma County homes on the market are in some stage of foreclosure
Sonoma Valley Data
MLS: 341
Price Reduced: 111
(ziprealty.com)
Foreclosures: 89
(realtytrac.com)
26% of Sonoma Valley homes on the market are in some stage of foreclosure
hmmm… and of course the local papers are massaging the poo they use for data into it’s all looking better and better and we are not in freefall any longer. :-/ WTF? We haven’t even started the freefall YET. But with numbers like these we will get there soon.
Are you sure about the number of foreclosures? In tracking my area, I’ve found that Realtytrac sometimes double lists the same property. Nonetheless, that is a scary scenario.
“It’s been disappointing when comparing to the year before, and last year was a bad year,’ Abbott said. Nobody expected it to turn down this far.’”
Uh, I did!
I think you speak for most on this blog. At some point, prices went from high to absurd and nobody (here) expected it to last. Wait till 2008 though. Even realtors will have to invent new woprds to describe the mess.
WOW if feels good to be right, eh guys?
Homebuilder stocks beginning to crumble.
It’s a bad sign for the builder stocks when the DJIA always goes up and they do not.
Speaking about a bubble.
Did someone say bubble?
If you didn’t know this stuff was real, you’d think it was purposely written satire. That’s how loony it all was. When the sane feel that they’re the crazy ones, something is not right.
I’m also feeling maximum frustration watching this garbage in the other market, reminds me a lot of the last couple of days leading up to the February dump. Let’s hope.
“How did a strawberry picker earning $15,000 a year qualify for a loan of $720,000″
What a country! I know what you mean. That will go down with some of the loonier dot.coms and the Toronado Loan in Funny Money.
Boggles the mind, doesn’t it? The number of incoherent real estate “investors” is startling. Some are still trying to get in the game. I’ve come to the conclusion that most people are frighteningly stupid. It was easy pickins’ for the lenders.
Them pickins’ is startin to turn mighty sour … just ask the fellas over at New Century.
It wasn’t ONE strawberry picker, it was two. Makes all the difference in the world…
Actually, there was another family involved that picked mushrooms. Given the fact that the loan was from New Century, I’m wondering why this strawberry/ mushroom picking group didn’t go for a 1.5M Toll home. Damn fiscal conservative pickers
I still don’t understand how even with the combined earnings of the berry pickers (who have 3 kids) and the mushroom pickers (who also have 3 kids and make money “when there is work”) came up with having $3000 a month to spend on the house. That was the number they came up with on their own, before they even met Maria Avila.
Sheesh..Strawberry pickers can afford $720k shacks ?
I don’t know whether we should laugh, cry or CALL Smuckers for a JOB over THAT one!
At least they were STRAWBERRY PICKERS! Casey Serin got 2.2 mil in mortgages just dicking around and sitting on blue balls!
yeah, but it was a BIG blue ball
Strawberry pickers DESERVE houses too ya know!
“We cannot allow these people making 15k per year to have their 700k house taken away from them! Something MUST be done to SAVE THEIR AMERICAN DREAM!”
Dodd, Hilary, Shumer, Frank, Sharpton, Jackson, etc., etc.
How did a strawberry picker earning $15,000 a year qualify for a loan of $720,000 ??? how it’s all Fraud, Fraud, Fraud.
I tell you, I went to high school in this area ( I am now in college in the silicon Valley Area @ 25 years old) I went back home and recently found out from my Imcome Tax advisor who happens to be a long time friend of the family that a couple of chuckle heads that I went to school with are now RE agents (high school grads only) and my tax friend showed me theirs last 2 years returns and they made around $380,000 - $3580,000 in commisions selling houses to mostly poor people who can’t afford them, and are going to lose them anyway.
Everytime I see a T.V. add from RE people asking people to come “” will make your dream come true, we can make it happen, blah, blah, yada , yada” Makes me so FU@#ing angry makes me wanna baseball bat these RE in the mouth till they can speak no more.
I am no affected by this but it makes me mad ’cause
they’re screwing peoples lives 600,000 to 850,000 CAN NOT be bought with incomes of $100 000 much less w/ less…. aahhaha
AMERICAN DREAM” yeah right , it’s more like AMERICAN NIGHTMARE!
They should go to Detroit, where you could buy a house for 9K or so. Even welfare recipients could afford that.
The American Dream™ is the biggest lie ever told on the face of the earth.
ehawk: I empathize with your feelings. On a practical note, I might think twice about working with an accountant who shares other clients’ returns with you. This is an ethical lapse. One ethical lapse may lead to others.
totally not OK to show someone elses tax returns
“Fraud, Fraud, Fraud.”
Bailout proponents are interested in making sure that those who committed fraud have a right to hold on to their ill-gotten personal gains.
You have a tax guy that shows other people’s tax returns to you? Yeah, I would trust that guy as much as I would trust D. Pinnochio Learah.
Txchick,
I know you’re awfully busy following the RE & broader markets, but I’ve decided, after careful deliberation, that you’re an ideal candidate to have my baby. Please set aside some time to make the necessary arrangements.
Send me a picture of yourself in a speedo and don’t worry about that “candy” I eat before we do it.
LOL. So, it might take multiple attempts….
get a room please.
“….Send me a picture of yourself in a speedo….”
The visual of that “real man” is getting complex.
Needless to say the hereto “produced” offspring would have a strong possibility of being a tad Cynical in nature…
txchick57-Are you still holding that 3% body fat?
Forget that. Are you still holding your gold? Up ten bucks today!!!
Yes.
“How did a strawberry picker earning $15,000 a year qualify for a loan of $720,000?”
…is straight out of The Onion.
Immigration: The Human Cost
Immigration: The Human Cost
The Onion News Network’s Jean Anne Whorton looks at how immigration has affected one former corporate executive.
America’s immigration problem: this controversial issue is often reported with facts and information that are very difficult to relate to. Our Jean Anne Whorton filed this report on the human cost of mexicans. Bring us your tired, your poor your huddled masses yearning to breathe free. these are the words enshrined at the base of the statue of liberty and in the hearts of every true american. But those words were written thousands of years ago, and as millions of new immigrants flood across our borders each year, the American worker is paying the price. Until july of last year, Raymond Boyle was a senior vice president of business development at Lucent Technologies headquartered in Dallas, Texas. “I never thought this would happen to me.” The man who took Ray Boyle’s job is Alberto Fuentez who illegally crossed the Arizona-Mexian border in the back of a melon truck two years ago. “Having a job gave me a sense of pride. Every week I brought home a check; I was able to feed the family.” “And how much were you making?” “Eight hundred and forty thousand and a half percent share in the company.” An internal memo leaked to The Onion News Network revealed that Fuentez was willing to work for significantly less. Boyle was forced to sell his Texas estate and move his family into his summer home in the Hamptons. “Unless you’ve gone through it yourself, you can’t imagine what it’s like — living year round in your summer home. I don’t know what we’re going to do.” “I refuse to work, so it’s been very hard for us.” Fuentez, who speaks no English and has no formal business training, has spurred double-digit growth since last quarter. His supervisors say it’s his ability to put in long hours without taking vacations. “I hope that Mexican man is happy with daddy’s job.” So Raymond Boyle and thousands of other americans just like him face an uncertain future. “It’s a difficult adjustment, no doubt about it. I’m working long hours, and the waitresses make a lot more because they get the tips, and I don’t. It’s unfair. The whole system is really unfair. For the Onion News Network, I’m Jean Anne Whorton.
Recent Videos
The Onion News Network has set the standard for globe-encompassing 24-hour television news since it was founded in December, 1892. The network boasts channels in 171 languages and can be viewed in 4.2 billion households in 811 countries. Now get the only news you need on the web and from our esteemed media partners.
Video link The Onion
http://tinyurl.com/2rjnwt
Most of time, I think I’m reading “The Onion”
Just waiting for the South Park episode on strawberry pickers buying houses.
“Hee tuk maa jaub!!”
You are right, it is Kafka-esque…let’s list the insanities:
-farmworkers want to live in a beach town near the SF Bay area
-the realtor helped make the first few payments on the house she sold to the farmworkers
-the farmworkers didn’t bother to read the documents they signed
-real estate transactions are exempt from translation requirements
These people got greedy and got bit.
“‘In the East County, there has been Pulte Homes offering $100,000 towards closing costs,’ he said. ‘Sellers and builders are doing whatever they can to sell.’”
I am guessing this means these homes have fallen by $100,000 in value, and Pulte is conning the buyers into financing the $100,000 in closing costs on their mortgage loan. But what lender is still willing to play along with this scam?
Un*******believable. $100,000 in closing costs? That must mean the house prices were well into 7 figures. Who do they think can buy this stuff? Why they think anyone who CAN would do so now?
I’m pretty sure that is sloppy reporting, and it’s $100K in incentives, as we’ve been hearing about for 6+ months. The “journalist” probably doesn’t know the difference.
You’re probably right.
I just read the article and it’s a quote from a mortgage broker. He probably doesn’t know the difference either.
That’s funny.
Or the seller is paying points towards the buyer’s mortgage.
“Sacramento real estate agent Carey Covey said many first-time buyers no longer qualify for today’s more demanding loans. ‘They actually wanted the buyers to have a pretty good credit history and a job and some income coming in,’ said Covey”
——————————————————————————-
I had to re-read this quote from Covey a few times because for a minute there I thought I was listenting to an episode of the “Twilight Zone” - you know the one, where lenders are giving out hundreds of thousands of dollars in RE loans to strawberry pickers who make $ 15k a year!
I think the editor toned down the original version, which probably read, “‘They actually wanted the buyers to have a pretty good credit history and a job and some income coming in,’ said Covey, his voice dripping with sarcasm.”
It feels to me like an episode of “Short Attention Span Theater” with all these expectations of a one-month market turnaround. Have some perspective, ferpetesake.
Egon,
I doubt there was any sarcasm in the orginal quote, you give Realtors TM way to much credit for being intelligent or human.
On second thought, maybe I misread it. It’s the “actually” that threw me off. How about this?
“‘They actually wanted the buyers to have a pretty good credit history and a job and some income coming in,’ said Covey, his eyes wide and his palms upturned. ‘Can you believe that? It’s so draconian. Don’t these people deserve a home at any cost? More importantly, don’t I deserve my six percent?’”
Thats right through the twilight zone into the outer limit.
“… for a minute there I thought I was listenting to an episode of the “Twilight Zone” - you know the one, where lenders are giving out hundreds of thousands of dollars in RE loans to strawberry pickers who make $ 15k a year!
I saw that one! It ended up with the strawberry pickers’ kid turning the Realtor® into a jack-in-the-box head.
Very funny!
“VERY BAD FBer!”
Ventura County - I had friends who bought a 2 bdrm house near what passes for the beach in Oxnard. They paid $550K and their realtor told them a couple of months after escrow closed that it could now sell for $710K.
I thought…. 30% appreciation in three months? What was I missing? Such joy when I now realize it wasn’t me minus the marbles… I can’t talk to them now because I might feel compelled to rub it in.
A real estate agent I’ve used a few times in the past bought a duplex in 2003 and told me approximately two weeks later (maybe 17 days later) “It’s now worth $1.3 million.” They paid $1 million for it. And she was dead serious.
Have a good weekend everyone. And that includes you greedy specuvestors.
“The husband and wife work as strawberry pickers in the fields around Watsonville, and each earns about $300 a week. They have three children. Not only did they dream the impossible dream, they managed to finance it.”
“How did a strawberry picker earning $15,000 a year qualify for a loan of $720,000? The answer, say the experts, lies in a lending industry that got too innovative for its own good.”
They question that now? They had nothing to lose. That’s how it happened. A dumb realtor, mortgage lender, and 2 scapegoat lendee’s.
Go ahead, bail them out. See how far that gets everyone else. No matter how many bailouts or how hard they try, prices are coming down.
You can only refinance so much. If you can’t afford the initial payments, well, your screwed.
That’s the thing: these people can’t be bailed out.
- The government can’t give them $700k.
- The lenders can’t let them refinance to 0%.
- If they suddenly get paid $3k per week for picking strawberries (the overnight hyperinflation scenario) then the US economy will be an apocalyptic wasteland.
The only “bailout” that we’re likely to get are stricter standards for loan documents, to try to head off this sort of colossal failure in the future. That’s all.
Hey, all they need to have happen is for the price of strawberries to shoot up to gold’s territory, around $600/ounce. That should get them closer to covering their monthly nut.
OK, this is where we start hearing stories about people snorting strawberries.
…snorting strawberries, or shorting?
cause if you’re snorting them, stranger things have been tooted:
from an interview with Keith Richards:
“However, when asked what is the strangest thing he has ever snorted, he said “The strangest thing I’ve tried to snort? My father. I snorted my father. He was cremated and I couldn’t resist grinding him up with a little bit of blow.”
The new bubble is strawberries!
“For a number of months Avila, who arranged for the loan with New Century Mortgage, paid the difference between what the buyers had said they could afford — $3,000 — and the actual loan payment. According to the buyers, this arrangement was supposed to carry them over until the group refinanced. ”
Here is another excerpt from the strawberry story. How does THIS happen? I don’t understand an arangement where the broker pays your mortgage for you.
The title of the newsarticle is “Minorities are the emerging face of the subprime crisis.” Another o woe is the victim story. Be still my bleeding heart. And those “initial payments” was an additional payment. The loan had a teaser rate for ONE MONTH.
Check out the link, interesting story. This part seems at odds with the article posted some time ago about (RE) documents required to be in a language other than English…maybe a lawyer can explain the reason the others won in court because the docs weren’t in Spanish?
“Indeed, the Ramirez family exemplifies a type of new buyer that didn’t exist a decade ago. Neither Rosa nor Alberto speaks English, so they were completely dependent on their real estate agent and their mortgage broker for advice and to translate and educate them about the process. “In other business transactions in California, if you negotiate in Spanish, you are required to provide translations of all documents. But real estate contracts are exempt from this,” explains Simmons, who currently has 30 active cases and sees her potential caseload growing by the day. “There’s a large increase in the amount of borrowers reaching out to lawyers with subprime loans. I’ve gotten to the point that I have to say to a lot of people, ‘I can’t represent you, I have too many clients.’ It’s astounding to me. I neither expected nor have I seen anything like this in all the years I’ve practiced law. It’s as if in real estate it’s gone back to the Wild, Wild West of San Francisco in the 1800s.”
Every other legal immigrant community managed to prosper and conduct their business in English, no matter what their native language. The illegal immigrants are making their countrymen seem congenitally stupid, as in we no habla ingles we no can habla ingles, etc. etc.
“There’s a large increase in the amount of borrowers reaching out to lawyers with subprime loans. I’ve gotten to the point that I have to say to a lot of people, ‘I can’t represent you, I have too many clients.’
How is this attorney going to be paid by these deadbeat FBs? Does he put a lien on their minivan-house?
Attys out there, what do you do when you have insolvent clients?
Warning first:
I never took a class in personal bankruptcy. I’ve never represented a bankrupt client. Bankrupty laws have changed recently. And, my corporate workout class was a long time ago.
That said, my recollection is that lawyers are granted priority in getting paid in many circumstances. The idea being that nobody can get paid if the bankrupt party doesn’t have representation and lawyers won’t represent them if there isn’t some guarantee of compensation. Also, a lot of lawmakers are lawyers and there is some look out for your own going on. And a judge has to approve the expenses just like (s)he has to approve anything other payment in a bankruptcy.
However, in a corporate workout there are almost always assets around. The strawberry pickers might have nothing but used clothes and furniture. They sure don’t have any equity in that house. I don’t know if the lawyer has any right to trump the bank’s interest in the house…
I could not find Maria Avila’s email but found the agencies email:
Sales@RanchoGrande.Com
Feel free to email comments, thoughts, etc.
I am sure mgt will appreciate any feedback us nice people have on Maria’s job performance.
“How did a strawberry picker earning $15,000 a year qualify for a loan of $720,000?”
Bubbles are made from examples like this.
Feed id!
Ironically, those 700K houses probably displaced strawberry fields and strawberry pickers.
Ironically, those 700K houses probably displaced strawberry fields and strawberry pickers.
Sad but true. Its not like California has enough water anyway. Oh wait, we subsidize cotton and rice production in the desert! Grrr…
At least they were strawberry pickers. How did Casey Serin get loans?
Why by using the “Sweet Deal™” Team Casey Method
(paperback 2008)
With Introduction comments by David Leherah
Imploder, don’t give him any ideas.
Don’t worry. He doesn’t take well to free ideas or good advice. He only wants ideas that cost $10K or more in seminar-form.
Quote of the week:
“Sacramento real estate agent Carey Covey said many first-time buyers no longer qualify for today’s more demanding loans. ‘They actually wanted the buyers to have a pretty good credit history and a job and some income coming in,’ said Covey, who now is trying to sell 42 properties repossessed by the banks.”
Good credit?, a job?, some income?
This guy is being sarcastic, right?
“Good credit?, a job?, some income?”
I was under the impression those things were so 20th century? RIP, new paradigm.
how tight have lending standard gotten in the past few weeks, can anyone help with this, will it affect prices in the summer or is funny money still well and alive?
The funny money is still alive in OC. Radio ads, print ads and I even had an agent email a listing last week and tell me I could get 100% financing through his lender.
its not the 20th centuey, its a “New Century”
The nerve of these fraidy-cat lenders …
Yeah emcee, that’s how I read it too. Sounds like he is spiteful that the lenders would have the audicity to impose basic lending standards again.
“January and February were fantastic” said Carla McKendry, a real estate broker in Yorba Linda. [and then she goes on to argue that only the subprime problem dragged things down in March]
Oh pulleeez. According to dqnews, Orange County prices in Feb 2007 were down (small single-digits) from Feb 2006. If that’s “fantastic,” what does the future hold?
“Fantastic” to a real estate broker = sales volume. It doesn’t really matter to them if the seller is losing money on the deal, because they won’t be.
I have to agree, all Realtors ™ care about it the commission check.
Can’t afford the mortgage more than 3 months? That’s ok (if your check cleared).
House suddenly implodes? Did the commission check clear? ok.
I have to agree with you Az_lender, the REIC trying to make this year sound good is… just stupid to anyone who knows even 5% of the facts.
The fleecing of any more sheep is just going to make this worse. Yet coworker after coworker things that RE will keep going up. But wait… we also have coworker after coworker getting ready to move out of state. I bet everyone on this blog can guess who owns and who doesn’t.
This… will get ugly.
Got popcorn?
Neil
“Gretchen Barrantes, a Moreno Valley agent, did eight deals in the first quarter of 2006. This year she’s done 14. But all were either foreclosures or short sales in which the sale price was less than the outstanding mortgage.”
Look! It’s a growth opportunity for realtors.
Does this mean foreclosures will show up in the NAR stats?
After lender REOs are listed with realtors not when they are taken from homedebtors at courthouse auction.
That does explain why sales volume hasn’t fallen to zero. It has fallen to zero except for essentially forced sales.
Moreno Valley School District has been closing schools, enrollment declines.
Not to worry, most of those “students” wont miss those closed schools. I doubt they were learning much in that city’s schools anyhow, other than whether they should join the red, blue or mex gang…
They are just growing in a new direction! Always keep a positive outlook if you are a Realtor ™
“The husband and wife work as strawberry pickers in the fields around Watsonville, and each earns about $300 a week. They have three children. Not only did they dream the impossible dream, they managed to finance it.”
“How did a strawberry picker earning $15,000 a year qualify for a loan of $720,000?”
————————————————
I did this one summer in Salinas.
I bought a new Sting-Ray bicycle with my earnings.
My dad borrowed money from me and didn’t pay it back for a long time.
I was in elementary school.
It was 1964, the feds had just ended the Bracero program, temp immigrant labor. We lived in San Jose. 1 hour ride on labor bus, had to wake up at 4 a.m.
“I bought a new Sting-Ray bicycle with my earnings.”
At least you bought something that held it’s value, As they are now collector items. These poor people bought a house that’s losing value daily.
“I bought a new Sting-Ray bicycle with my earnings.”
LOL!!! From bicycle purchasing power to house purchasing power from the same job, look how far our economy has come!!!
But at least the bicycle was fully paid for! A foreign concept to those trying to rent the American Dream™ nonsense.
“Tony Deleo, broker in Ventura, said he thinks DataQuick’s estimate of a 24.7 percent sales volume decline is too conservative. ‘My estimate would be 40 percent,’ Deleo said, ‘and I believe the median price is off way more than 6.9 percent.’”
Finally, an REIC guy who sees the light. There is hope people. Wait, the politicians want to bail-out FBs? Crap, just when I was feeling optimistic.
LA Times reports that the median price in LA County is up. It’s different in LA County, too many FBs with too much money.
It’s different in LA County, too many FBs with too much money.
What’s sad is the distribution of their status. About 35% of the homeowners I know in LA are fine. About 15% will have it tough but will be ok. The remaining 50% have to sell within the next 3 years.
Not to mention the incredible amount of California wealth invested in other states. I’m not sure if New York or Califonia is the most over-leveraged in real estate, but I’m betting that the “California locusts” are going to get quite a haircut.
We are not a rich enough country to do a large enough bail out to matter. Its gone too far this time. Besides, who will pay their mortgage once its known that the government will do it for you?
That’s not a good omen for the banking/financial/wall street systems.
Peaked at 11.4X times income. Bottom at?
Previous cycles bottomed at 6X income. But due to MEW I believe it will be lower. But what? 5X? 4X? Certainly not 3X. At that point the midwest depopulates to live out here.
Idle speculation. It won’t be worth buying for at least 18 months. I can consume a lot of popcorn in that time.
Got popcorn?
Neil
Neil,
You have to pass some of that popcorn, with some butter please. I thought I was buying later this year. Looks like it will have to wait another year or so. Thankfully the wife has agreed with the postponement.
This might get the market’s attention eventually. If business capex is fading, can that be good for the housing market since it depends on jobs?
http://bigpicture.typepad.com/comments/2007/04/read_it_here_fi.html
“The husband and wife work as strawberry pickers in the fields around Watsonville, and each earns about $300 a week. They have three children.”
———————————
these children and millions more like them will be paying our Medicare in 20 years. unless someone has a better idea.
In case no one has noticed, white women don’t do the children thing anymore
Not true its cyclical
Baby boom going on here in SM. I saw a white woman with TWO kids. Woohoo!
“In case no one has noticed, white women don’t do the children thing anymore”
Nah…
it’s just that the white women have faith in God, but an understanding of contraceptives…
Funny, half the guys I work with have knocked up wives, age ranges from 22-50 too, and I work in IT, an excruciately white environment… and if one more them skips meetings to go to an ultra sound I am going to lose it..
men go to ultrasounds?
This man does.
Bwahahaha! Ever been to Utah?
You’re a total goof! I think what you really mean is that most white women aren’t doing the baby factory thing these days.
Ever been to Southern Cal? The majority of white women in their 20s are childless. The white birth rate is less than the 2.1 replacement rate. Ever drive by a local school when it’s getting out? What colors are the kids?
Look at Europe. The muslim immigrant population is fast overtaking the white population, birth rates are about 1.4.
Anecdotal evidence is not admissable.
The only reason I mention this is to point out who will be paying for my SS and Medicare in 20 years.
You’re right that this country will be a lot browner in 20 years, but I doubt they’ll be paying YOUR medicare, on the other hand, YOU might be paying for THEIR baby deliveries, public education, incarceration, etc…while you survive on Alpo.
If you can see the train coming, it’s much easier to get out of the way.
Wait, is Southern California still part of the United States? I thought that billboards down there said that Los Angeles was in Mexico?
I really don’t care what “race” a person is. What makes me such a horrible person in America these days is that I want everyone to be able to communicate in English and English only in the work place. Good lord, I’m an ogre aren’t I?
P.S. Getting rid of Medicare and Social Security would certainly solve a lot of your worries wouldn’t it?
All this is why you fight hard for the Fair Tax (Neal Boortz/John Linder). READ THE BOOK, then write your congressmen every month or so until they act. If we don’t hurry up and get rid of Medicare and Social Security, what’s happening now in real estate will seem trifling.
Who is going to have the money to buy houses with Medicare and Social Security taxes accelerating? Folks that carry an average $12K in credit card debt? Those who have $75K in college debt? Those $100K in hock to their local hospital for hang nail surgery? Those 55 to 64 year-olds who on average have a tad more than $100K in total assets to their name (2006)?
Does anyone here really think that Generations X and Y are going to have the means to purchase $500K+ properties? Yes, there’ll be some, but there will never be as many of them as there were baby boomers who could afford to do the same.
What many boomers in fancy McMansions still don’t seem to realize is that the demographic gravy train they rode most of their lives to easily-had riches is just about over.
I feel bad for them, I really do. For many, their 25-plus “golden” years will be surprisingly bad. Few will be able to maintain lifestyles they’ve spent the past 40-50 years thinking they deserve.
FYI - IMO, boomers were born from 1938 to 1954, not from 1946-1964. Those born from 1955-1964 have a vastly different life experience than those born from 1938-1954. The 1955-1969 cohort forms its own generation, between boomers and Generation X.
Well, we could always convert the dollar to a strawberry backed currency. And if that doesn’t work, we could try spinach as the inflationary pressures could be wiped out with one good e-coli outbreak!
That would be far more robust than the current nothing-backed currency
Yes, but then money really would grow on trees.
Or bushes. Vines?
Trivial but interesting, The Book of Mormon describes a monetary system in ancient america backed by 4 things, gold, silver, wheat, and barley
giving new meaning to the phrase “beer money”
we’d never have hyperinflation, becuase people would be constantly drinking the money supply away
“gold, silver, wheat, and barley”
I guess ancient America had no quasi-government entities with a giant printing press?
BTW, are you familiar with Marriner Eccles?
http://historytogo.utah.gov/utah_chapters/from_war_to_war/marrinerseccleshelpeddesignfdrsnewdeal.html
There won’t BE Medicare in 20 years. Better start saving for your own senior medical care.
Already posted in the bits bucket, but SD’s YOY sales decline was the 34th straight (approaching an unbroken string of three years) and the biggest YOY decline since near the end of the last bust (1995), while the median sale price blipped up to $490K. DataQuack’s Karevoll says it’s all good, and that both sales and prices are headed back up later this year. He risks becoming the Gary Watts of the SD County market. (Good for Karevoll that he did not say higher prices are “in the bag.”)
=============================================================
March home sales down, but prices go up
All categories show cost gains
By Roger Showley
STAFF WRITER
April 13, 2007
March home sales turned in their biggest year-over-year decline since 1995, but the region’s median sale price rebounded to $490,000 in a possible sign that San Diego County’s housing slump is easing.
Graphic: March housing prices for the county
A 26.3 percent dive in sales volume made March the 34th straight month of year-over-year sales declines, according to figures released yesterday by DataQuick Information Systems. It was the biggest March downturn since a 31.3 percent pullback in 1995.
But while sales slowed, all housing categories showed price gains. Resale houses rose $20,000 from February to $560,000, the same as a year ago. Resale condominiums were up $7,000 to $385,000, and new homes and condo conversions were up $10,000 to $420,000.
The overall median price of $490,000 was up $10,000 from February, but still 4.9 percent below the median a year earlier.
On balance, the March figures painted an optimistic picture in the mind of longtime DataQuick analyst John Karevoll. And not just here. The statewide median price of homes set a record of $484,000 for the month.
“Most of San Diego’s declines, if not all, are behind us,” with the rest of the state likely to mimic the county’s trendsetting pace, Karevoll said.
CLICK!
http://www.signonsandiego.com/uniontrib/20070413/news_1b13sales.html
And you wanted me to believe that San Diego was worse than Dallas! Ha!
The high prices for new houses or existing homes in san diego
prices most middle-class workers out of the market. I’ve seen new houses for sale in La Mesa starting at $700,000. The mortgage on that per month would run you at least $3K+. So anyone with some common sense living here would just rent rather than put up with paying such high prices. Sure - you could buy an affordable house for around $340K that is new but located out in Alpine (1.5 hour drive east of San Diego) but then you would have no time after commuting to enjoy anything except your bed to sleep on.
“I’ve seen new houses for sale in La Mesa starting at $700,000. The mortgage on that per month would run you at least $3K+.”
D’oh what should I do — rent a nice home in Rancho Bernardo for $2500K or buy a POS home in La Mesa for a mortgage of $3K / month and live my life on the freeway while the value of my home drops back to affordable levels?
I’m confused, wasn’t this same crowd calling a bottom to the market about 2 months ago? Maybe I should contact the NAR for clarification. LOL
The good news just keeps coming. 1 year ago we were all pining for the bubble to burst. Now that it has, we can enjoy the slide for the next 10 years a la Japan.
Yep, yr 1 down at least 9 to go.
“The husband and wife work as strawberry pickers in the fields around Watsonville, and each earns about $300 a week. They have three children. Not only did they dream the impossible dream, they managed to finance it.”
Well, actually they COULDN’T ‘manage to finance it’ which is exactly why they’re LOSING THE HOME.
Which brings me to another topic; these assholes are responsible for uselessly driving up the prices of homes thanks to this easy cash being thrown at them for free.
It’s like going to an auction with $500 REAL CASH in your pocket only to be outbid by some homeless (foreign, to boot) asswipe who can’t speak English, has not a f@cking dime to their name and yet drives the price up insanely because they’re being financed by the Wizard of Oz and His Bottomless Pockets.
These people deserve NO MERCY or help whatsoever. Their wanting to get into a $720K home on $15K a year is as UNREALISTIC as my wanting to have my own 747 jetliner on a $50K a year salary.
I’ll buy a home in this country when prices drop 70% MINIMUM because I’m NOT GOING TO PAY MORE JUST TO COMPETE WITH THESE ILLEGAL IMMIGRANT DEADBEATS.
I seriously doubt the runup was due to illegal immigrant field hands.
Blame the speculators, realtors, and investment clubs…the bulk of the blame lies with them.
AMEN!
on 2nd thought, they should be deported
Does all this mean the price of strawberrys is going up?
And the quality way down.
No, they will just be selling much smaller strawberries at the same price so they don’t show up in the inflation numbers.
Like the thousands of people who snapped up American Business Financial Services Inc.’s notes yielding 10 times the going rate on Treasury bills, Meyer had no idea that the company was on the verge of bankruptcy. He wondered how something so celebrated as “a kitchen-table startup” by the Philadelphia Business Journal and so lucrative that it paid $50 million in fees to the four firms for its burgeoning credit, could default on his money.
“At what point did it become a Wall Street Ponzi scheme?” said the 52-year-old Meyer, who almost wiped out the nest egg he received from selling his home in Doylestown, Pennsylvania, six years ago.
We need to bail out these investors as well as home buyers who were tricked into buying homes with no money down.
Not.
“At what point did it become a Wall Street Ponzi scheme?’’ said the ‘52-year-old Meyer, who almost wiped out the nest egg he received from selling his home in Doylestown, Pennsylvania, six years ago.
‘Wealth obtained by fraud dwindles, But the one who gathers by labor increases it.’
— Proverbs 13:11
Good quote.
“People have so much money, there’s so many more billionaires,” she said. “Across the board, there’s no inventory. If you have a ‘done’ house”— one that has been updated and upgraded — “it will fly out the door.”
Oh, it’s the billionaires that are going to save the market.
Sellers do not want to compete with foreclosure. Tese dopey foreclosure set the new prices to bad and prices are going south quickly. lol!
Going to bid really low. I will not save some fools equity.
The whole state is going to be foreclosures
http://bakersfieldbubble.blogspot.com
Pradeep Gosai, “I hope we make it.”
One thing I learned early on and through hard experience as a speculative investor is that when you say, “I hope I make it.” it’s time to cut your losses and GET OUT.
Pradeep (excuse me) is going to ride this train with a missing center span all the way to the bottom of the gorge.
I know owning home seem to be the goal of the American Dream, but something clearly went awry when people didn’t look at the economics of ownership AND the extremely lax lending standards. It’s like playing with monopoly money and gambling. It’s unfortunate the run lasted so long and the underlying economics did not make it sustainable. There had to be a LOT of low boats to keep the high boats up and once they’re gone, there’s nobody else. Reality is prices will go down and to whine and want “government” bail out is irresponsible for everyone. Any home purchase is a risk, it’s basic fundamentals.
No, the “American Dream” is not owning your own home. The American Dream is that if you work hard and save hard you have the opportunity to earn the ability to own your own home- that unlike serfs of old you are not beholden forever, and therefore have the opportunity to move yourself up by your bootstraps. In other words, America provides the ability to dream and to meet lofty goals- the house being merely a symbol.
The American Dream is not and never has been I want it, and voila it is all handed to me automatically right now. Except of course in pieces written by journalism majors whose work area includes an entire bookcase full of all editions of Bartlett’s General Cliches, and Roget’s Sophomoric Assumptions.
“They actually wanted the buyers to have a pretty good credit history and a job and some income coming in,’”
————
sounds like the mantra after the dot.com crash: “People still like to actually go to the store and buy stuff…”
or Bush after 9/11: Go, go GO! Go shopping, take your kids to Disneyworld!
Or like Casey Serin: “itsallgood”
‘Nobody expected it to turn down this far.’
Keep right on going. A little free-fall wouldn’t hurt….
Someone on “Kudlow & Co” talked about sub-prime being a problem and the Strawberry pickers 720K cherry topped ice cream
It will come as a shock for Americans to realize that virtually all of the RE gains over the past 7 years were because of too-loose lending standards, not because their houses “gained value.”
Over 7 years, homes located near the growth of well paying jobs are gaining value and others have lost much more value rather than holding their own.
A home in Detroit is losing value form 7 years ago. Fewer jobs.
Homes in SF and Silicon Valley, in select locations, have gain a lot of value.
Homes and communities that depend on cheap oil - mcmansions in the extraburbs and area that depend on long distance auto commuters are probably net losers. Places closer to infrastructure, net winners.
There hasn’t been much growth of well paying jobs in Silicon Valley. In fact, compared to the dot-bomb bubble days, there’s been a net loss. Just drive around and count the empty office buildings.
Please go to the referenced article on the strawberry picker home buyers. There are several items mentioned that are key to the sub-prime lending situation. First is that they qualified by lying about their income on a 100% loan. This was done with coaching from their mortgage broker.
That the broker was able to subsidize their payments is evidence of the huge overages paid to brokers for things like high margins and prepayment penalties. You can bet this loan had those.
Regarding the new lower value of the house. Prices did not drop that much which means they overpaid. This indicated the inherent problem with mortgage brokers choosing and influencing appraisers. At my bank and many others, the loan officers cannot choose or contact the appraisers, and this is a big protection for the borrower and the bank. In recent years, I have three examples of appraised values coming in below sales price. In all three, the buyers canceled, found other houses, and thanked me for not overpaying.
Regarding minorities relying on agents and mortgage brokers of the same language, they need to choose one they can trust because I have seen cases of being taken advantage. They may need someone to translate, but that person needs to be ethical.
The referenced study showing that 50% of borrowers pay more than they should for a loan is very true in my observation. Too many people rely on the recommendation of their RE agent. My experience is that the majority of agents do not care if their clients get the best rate. They want the deal to get done even if the rate is higher, and the loan broker gets the appraised value needed. I often see prime A+ borrowers pay points, rates .25% to .375% higher, and prepayment penalties when they should not.
My recommendation is to shop for rates, apply at your bank first. At many banks like mine, loan officers are not allowed to get overages or charge borrowers more rate. When you get turned down by a bank, first consider if your really should buy, then go to a mortgage broker and get the loan for a higher rate.
(This may sound self serving, but I have been in the loan business for 30 years, have worked for brokers, banks, savings banks, and other related companies and had my own company.)
Excellent information Sensible Lender. Thank you.
Anybody here those radio ads for Centex Homes “Hero’s” program? If you’re military or a police office, fireman or teacher(?) they’ll give you a whole three (yes, 3!!!) percent off the price of a new Centex home. Sheesh!
Ahem, I (obviously) meant “Anybody hear those…”.
What really pisses me off about the story of the strawberry pickers is the statement that they were left “holding the bag”. Someone please explain to me in what way they will be negatively impacted? They got to live in a nice house they couldn’t afford for a while and now they will go back to living in a rental. Is it that their credit score will be impacted? Don’t make me snort milk out my nose!!! How could a credit score even be important to people who are 1) here illegaly, 2) don’t speak english, 3) make $300 a week
By the way, call me crazy, but I believe anyone who thinks that they should be owning a home should also be paying taxes. These people should not be portrayed as victims, they should be portrayed as co-conspiritors!
Must be a weekend for rants per the email I sent the author of this article
Ms. Lloyd,
What really chaps my hide about the story of the strawberry pickers purchasing a $720,000 home and now being foreclosed upon is the statement that they were left “holding the bag”. Someone please explain to me in what way they will be negatively impacted by this process? They got to live in a nice house they couldn’t afford for a while and now they will go back to living in a rental. Is it that their credit score will be impacted? Don’t make me snort milk out my nose!!! How could a credit score even be important to people who 1) don’t pay taxes 2) don’t speak english, and 3) earn $300 a week ‘when there is work’. So a group of people decided that since a bunch of people are making a fortune just by owning real estate as portrayed by journalists such as yourself as recently as a year ago, why the heck shouldn’t they be in on it. Not having the witherall to seek free legal adive before they entered into a contract but plenty of it afterwards bought a house that they very, very knowingly could not afford (afterall they freely admit in the article that they signed a contract to make $4800 payments and were concerned about the price of the house).
Please don’t insult the intelligence of these people just because they are “minorities”. Afterall, the mortgage broker explained to them that although they couldn’t afford the house, in time the house would be worth more, after which they could sell it for profit or refinance also as implied by your article. This greed was obviously the impetus for their signing on the dotted line despite their reservations. These people should not be portrayed as victims, they should be portrayed as co-conspirators in this fraud!
It is articles like this that have motivated senators such as Chris Dodd to put forth ideas like bailouts that would cost actual taxpayers such as myself (vs non-taxpayers and non-bagholders such as those portrayed in the article). Where are the articles about people like me who prudently and mystically went against the tide when people like this are commonplace? Talk about surreal.
Disgustedly,
xxx
Saver and Renter
ahem and I meant “wherewithal” not the non-word “witherall”