It Is Nowhere Near Ending In California
The Financial Times reports on California. “Far away from the sun-kissed beaches and palm trees that make up southern California’s idyllic coastline, trouble is brewing in the Inland Empire. The area is facing a looming crisis, with an increasing number of homeowners delinquent, or failing to make payments on their loans. Delinquency often leads to mortgage foreclosure, or the repossession of the house by the lender.”
“‘It used to be that we would get one call a month from someone needing help [about mortgage foreclosure,' says Vilma Mercado, manager with the Neighbourhood Housing Service of the Inland Empire. 'Now we're getting close to 50.'"
"Riverside County appears to have been most badly hit by the subprime collapse, with mortgage defaults in the first three months of the year up 168 per cent on the same period of 2006, according to DataQuick."
"Ms Mercado says many buyers were not adequately prepared. 'A lot of people moved into these areas thinking they were more affordable, but didn't understand what they were getting into.' The increase in foreclosures in the region, she adds, is 'absolutely overwhelming.'"
"Almost two years ago Sonya Mcphearson and her husband moved from Los Angeles to San Bernadino, where they bought a six-bedroom house for $480,000. Ms Mcphearson works in Los Angeles 70 miles away. She commutes by train but stays with her sister during the week to save money."
"Ms Mcphearson says that the couple were unaware they had taken out an adjustable rate mortgage. 'Our payments went up and we couldn't afford to pay. Now we're three months behind and we've been told we have to leave. I don't know what we're going to do.'"
"'Anything can turn that has doubled in five years,' says Dr Christopher Cagan, at First American Real Estate Solutions. Meanwhile, the Inland Empire 'ran out of new buyers' which exacerbated the problem."
"'What we have [in the Inland Empire] is an explosion of building and an explosion of generous lending. There was no single villain: this was a market phenomenon characterised by 30 years of [house price] growth with very few defaults. There is no one person or company to point to,’ he adds.”
“Any action that California or the federal government takes to resolve the subprime collapse is likely to come too late for the people currently facing foreclosure in the Inland Empire.”
“The increase in foreclosures has ‘come on strongly and quickly and none of us anticipated it,’ says Ms Mercado. ‘And it is nowhere near ending.’”
The Orange County Register. “Several lenders and financing organizations this month said they are developing loan bailouts for some homeowners with subprime mortgages, but many strapped borrowers will not qualify or the help will come too late to save their houses.”
“‘The devil is really in the details,’ says Jeff Lazerson, a Laguna Niguel longtime mortgage expert. ‘They can say all they want about the availability of financial help and want to appear to be responsible corporate citizens, but you really have to understand what they are willing to finance.’”
“The First American Corp. in Santa Ana estimates that Orange County will see 21,000 to 22,000 adjustable-rate loans go into foreclosure by 2012. DataQuick says Orange County is now averaging 174 foreclosures a month.”
“‘When there’s a foreclosure in a neighborhood, it brings down the entire neighborhood.’ said Richard Castro, NeighborWorks America’s regional spokesman. Castro says the group’s hot line has been getting 3,000 to 4,000 calls a month.”
The Hollister Free Lance. “Local home foreclosure rates skyrocketed during the first quarter of this year.”
“San Benito County had 103 foreclosure filings in the first three months of 2007, according to RealtyTrac. That’s more than double the 44 seen during the same period in 2006 and even exceeds the 90 foreclosure filings that occurred here during all of 2005.”
“Meanwhile, sales closed on 75 homes during the first three months of 2007. That means that during the first quarter of this year, there were more San Benito County houses in some stage of foreclosure than there were homes sold.”
“Karl Skow, who operates Pacific Finance Company in Hollister, said the foreclosure epidemic has been caused by buyers who got in over their heads.”
“‘Many people felt values could not stop going up,’ said Skow, who is the president of the California Association of Mortgage Brokers. ‘Nearly anyone could get a loan. Then people started realizing what they’d gotten into.’”
“A number of real estate agents have said the foreclosures are also contributing to the local housing slump. Rick Pennington said that when homes are foreclosed, or homeowners struggling with high payments decide to sell their house, those homes go back on the market and drive housing prices down.”
“There were 427 homes on the market in March 2007, up from 286 homes in the same month in 2006, according to REInfoLink.”
“Economist Cynthia Kroll and Skow both said they’ve heard about many loans that just shouldn’t have been made. But Skow said things have changed, and lenders are tightening their rules.”
“Real estate agent Melissa Mitchell said that it’s become more common for an agent to think they’ve sealed a deal only to discover weeks later that a buyer can’t get a loan.”
The Bakersfield Californian. “A local home appraiser is alleging widespread mortgage fraud in Bakersfield’s housing market, accusing local real estate professionals of artificially inflating prices to generate illegal profits.”
“Appraiser Gary Crabtree said Friday he has alerted federal, state and local authorities to ’suspicious’ home sales in the Bakersfield area. But he said he believes what he has found is just the beginning.”
“‘I think I’ve just scratched the surface,’ Crabtree said. ‘I know there are other people in the real estate industry in Bakersfield that have knowledge of this. They are just not talking.’”
“Crabtree said some of the properties in question may have been ‘flipped,’ purchased and sold for profit, by investors, real estate professionals or so-called straw man buyers whose identities and credit histories were used to secure loans.”
“The cases include what Crabtree said appear to be fraudulently inflated sales prices and buyers purchasing properties with 100 percent financing.”
“Crabtree said he believes some real estate agents and brokers as well as lenders and appraisers may have taken part, while others were taken advantage of in the scheme. Some of the properties have gone into foreclosure or received notices of default, Crabtree said, leaving lenders holding the bag.”
“‘It has falsely inflated values,’ Crabtree said. ‘Foreclosures will follow.’”
“Powers said a relative who earns about $10 an hour was approved for a $200,000 loan and asked to falsify documents to say he made more money.”
“Bakersfield Association of Realtors President Ray Karpe confirmed that his organization received information from Crabtree, but said the potential wrongdoing falls outside the association’s policing authority. He said the Realtors association would wait to see if any punishment was handed down from higher authorities.”
“‘Once some of the investigations go through and people get their just punishment, it will clean things up,’ Karpe said.”
“‘It is an epidemic,’ said Ann Fulmer, vice president of a company that provides mortgage fraud prevention and detection technology and risk management tools to banks and lenders. ‘We don’t have a…handle on how big a problem it is because it is not reported by everyone. Lenders don’t always recognize it. I don’t think we have seen the worst of it yet.’”
“‘When the market was so hot and properties were appreciating quickly, it was more difficult to spot,’ she said. ‘Because the market is slowing down, the fraud that happened in loans that originated in the last two years is like dead bodies rising to the surface.’”
“Crabtree said word is out in local real estate circles that he has provided information to agencies about potential improprieties. He said he has lost business as a result and others in the industry have stopped talking to him for fear of being implicated.”
“But he said he believes it is the right thing to do. ‘I could have just let this gone on and not said anything to anyone,’ Crabtree said.”
After looking at the details on RealtyTrac, the amount of MEW’s on the Central Coast is astounding. I’m glad I finally know how bartenders were affording new BMW’s every two years.
http://centralcoasthousingbubble.blogspot.com/
“The increase in foreclosures has ‘come on strongly and quickly and none of us anticipated it,’ says Ms Mercado. ‘And it is nowhere near ending.’”
Well, Ms. Mercado (which ironically means market), there’s this thing called supply and demand that seems to make its presence felt, much like gravity.
“‘Many people felt values could not stop going up,’ said Skow, who is the president of the California Association of Mortgage Brokers.
I wonder who those people were/are?!? If you could not see this pending doom a few years ago, you’re either ignorant or blind…or both.
If you are in either group referred to above,
I agree, the whole “none of us anticipated it” think is just really odd, coming from apparent professionals in the industry.
The fact that prices had exceeded fundamentals in many areas, particularly places like Riverside County and outpaced incomes 3 to 1 should have server ad a warning sign early on. And this busines of qualifying folks on “stated income” or teaser rates was asking for trouble big time.
Clearly the “no one anticipated” part of this was to say “no one anticipated prices would stop skyrocketing”. I really believe lenders did not care if their loans went bad, as long as the prices were going up, they were the biggest speculators of all in the sorry mess.
http://people.bakersfield.com/home/Blog/schuster80/8274/#-
I am getting numerous emails from local realtors. They are all implicating the fraudsters, the Great Unwinding of this Bubble has begun…
“They are all implicating the fraudsters….”
Realtors claim to be “knowledgeable of local markets, so you would think they would have noticed that the fundamentals never justified these market increases. I think that a lot of RE agents never cared about fraud—all they care about is there pocket book. Higher prices meant more money for them and a new BMW. It was in their best interest to ignore the sham of a RE market that we’ve seen over the past few years. Many of the players in the game are guilty, not just the appraisers and mortgage brokers.
I would say MOST, if not nearly ALL, of the people involved in the RE business in the last two years have been commiting FRAUD one way or another. This whole thing turned into a nasty piece of vomit. Here is what I mean:
1. RE agent needs the commision so he/she will screw the borrower loading him into the biggest loan possible. The larger the loan, the larger the commision.
2. Since RE agent is looking to hook the FB with the largest loan possible, he will contract only with appraisers who will value match-box houses as high as possible. Appraiser needs his paycheck so he acquiesces.
3. Mortgage broker does not care crap about the validity of the application. Why should he? Wall street will eat any $shit thrown its way. All the broker cares about are his fees.
End result: a system optimized for committing fraud.
“‘I think I’ve just scratched the surface,’ Crabtree said.
“Once some of the investigations go through and people get their just punishment, it will clean things up,” Karpe said.
The only thing that will clean up Bakersfield is a thermo-nuclear event. Maybe.
to have a thermo-nuclear event in bakersfield, all you have to do is to light a match. the amount of cows’ gas in bakersfield is just astonishing. i can’t believe people actually live there let alone house price going up. the cows produce more atmospheric polution than all the automobiles combined. talking about stinking up to high heaven.
There are major studies going on about just that issue all over the Valley.
The Chronicles of Cow-Pie
After extensive study, it turns out the great and startlingly sudden “atmospheric pollution” recorded wasn’t the the cows at all…
This just in:
“Researchers have now determined that the source of rancid gases and fetid pollution was not the “bombs of bovines”, as once suspected, but rather, the simultaneous soiling and staining of trousers by thousands of real estate investors Valley wide. Video at Eleven….”
You are hilarious!
And the situation was desperate, as usual.
I could have just let this gone on and not said anything to anyone,’ Crabtree said.”
____________________________________
Finally, someone with the courage to say the emperor has no clothes!
Long-time readers will remember Mr. Crabtree as one of the more sane voices coming out of California.
Crispy,
If you see him buy him a beer for me!
In my neck of the woods (er… desert, SE Utah) I’ve been told apprasiers have a “range” - you can ask them for the high or low end of the range depending on what you need…
So you mean you can request your appraisal with or without fraud? How quaint!
Appraisers are supposed to be independent from brokers and re agents. What you’re describing is called collusion or fraud.
Yeah, I agree, that was my reaction when I was told this (by a realtor) and when I said “isn’t that fraud?” they acted like I was a naturally suspicious-type person.
Appraisal Fraud
Mortgage Fraud
Fake Bidders Fraud
Lots and Lots of Fraud out there
WELL DONE, CRISPY!!!
“Finally, someone with the courage to say the emperor has no clothes!”
Er, un, the Inland Empire has no clothes! Sounds like a ghastly place that was once delightful. This is the part of the bubble that wrenches my gut, the loss of charming places and open spaces to craphouses full of meatheads. If it weren’t for the misery inflicted on the landscape in so many parts of the country, I could just look on all of this as an amusing event.
“Sounds like a ghastly place that was once delightful”
The IE was once upon a time a delightful land of open green pastures and verdant green hllls and vales covered with Orange and lemon orchards but during the first decade of the 21st century the developers and HB’ers have come in and eradicated vast open spaces and put up seamless cookie-cutter tracts and endless shopping malls. The bulldozing and razing of the IE formerly open spaces has been a simple stripping and teardown of rural ranch plots and shacks and conversion into vast arrays of stuccos. No planning, no regard for the environment, just raze and throw up that Housing development.
At least in the south OC they do development more slowly and attempt to preserve and/or incorporate the natural environment into the new communities(E.G. Coto De caza).
Sounds like OC back in the 60s. I remember the orange groves fondly, they were my playground growing up.
Wonderful ag communities are being torn apart all over CA to make these huge crap boxes. The DH and I made the commitment to living smaller and we haven’t a single regret.
What drove the urbanization and razing of Central Valley/IE was Explosive Ca population growth combined with the need for that population to seek affordable housing, even at the cost of 2-4 hr commmutes. The CA Coasts have pretty much been locked out for large scale housing/urban development so the developers have expanded and pushed the rapid urbanization of the Central Valley/IE, where there is still space. The HB’ers pretty much have had Carte Blanc as far as developing the IE: Gov’t environmental rules and city planners are completely under the thumb of the developers in the IE. Have gone all over the IE and believe me what the commercial/Residential dewvelopers have done to scar the IE landscape is astonishing. Large parts of riverside/San Bern metro areas look like scenes out of some post=apocalyptic movie shoot:trashed-out industrial areas, open scarred razed lots, ramshackle ‘Fontucky’ crack shacks, entire communities railroaded into ugly mixed-use zones (E.G., Colton. rubidoux, tri-cities, Romoland,South Moreno Valley, ect).
Some future Historian writing about SCal economic
growth in the 1st decade of the 21 st century should detail the ugly scarring of Riverside/San Bernardino Counties from totally unplanned,rampant, hasty nasty urban sprawl/growth.
Actually, Gary Crabtree wasn’t so bearish a year or two ago. Maybe he is just looking like the good guy now since he knows the house of cards is folding and he was a part of the problem in the early parts of the bubble.
I didn’t say he was bearish, but I can remember when he was one of the few that would even express skepticism about the boom while it was still going on.
Everytime i read something like this I CRY…….I am so desperate for a job, and these idiot Morons just pissed away everything they have …..and they still have a JOB!
Its not right anymore in America.
==================================
“Almost two years ago Sonya Mcphearson and her husband moved from Los Angeles to San Bernadino, where they bought a six-bedroom house for $480,000. Ms Mcphearson works in Los Angeles 70 miles away. She commutes by train but stays with her sister during the week to save money.”
DJ,
I’ve got to ask, why does this women feel the need to have 6 bedrooms. If she has that many kids, why is she commuting 70 miles? SHe should be home with them. And def., she should not be staying with her sister for a whole week, if she has that many kids. Another McMansion bites the dust.
Many of us on this board called the IE right after San Diego. That area experienced waaaaaaaaay too much growth and appreciation in relation to the jobs and salaries available. $15/hour warhouse and $25-$30/hour construction is not going to let you afford a 650K home for long or atleast once the teaser wares off.
Funny, we call them teaser rates, but these morons never understood that terminology. It’s called T E A S E R for a reason. It gets you in and then smothers you.
Oh well, hate to say I told you so about the IE, which is where I used to own, but…
And furthermore……this is only the beginning in the IE. Just wait until summer and the when school starts up again. OH MY!!!!
By summer the IE, Palmcaster, Riverside, OC and Ventura will all be on dooms track. By then LA will be sliding, but people will still claim its different by the beach. (Yea, jobs will be leaving en mass starting in June due to the high cost of living relative to income.)
What’s interesting is that the MSM will continue to report 3 to 6 months behind the curve, so sellers will remain
stupid and ignorantstubborn.But its slowly getting to the point where everyone (and I mean everyone) knows we’re in a bust. Not quite yet, but fear is almost here in California. Close… so close.
I had to smile when driving back from my beach job I went past dozens of open house signs. The “circle house tour park and ride” had me really interested, but there are some things you just don’t check out before a shower. Although I was tempted to ride the bus and do a chorus of YMCA between homes for the FB’s. (Always a crowd pleaser after a 5 mile run.)
Got popcorn?
Neil
I used to say that the Inland Empire would lead Ca in forclosures … but I now think that it has a chance to lead the nation. My brother the Orange County loan broker made so many suicide loans to morons in the Inland Empire - the stories of how they qualified these folks were hilarious.
so how were they qualified? I am picturing a pulse check, and a request to turn around and grab their ankles, which all obviously did without question
“the stories of how they qualified these folks were hilarious.”
You should have traded the word “hilarious” for “fraudulent”. Either way once the police start putting white collar criminals in the clink it will be fun to see who’s laughing then.
I’m surprised why FBI is not all over the fraud that was committed in the past few years and continues on today. From the brainless borrower to the “sophisticated” lender, they all were accomplices in this screwed up game that is going to hurt all. Too many white collar criminals get away with a slap in the rist, if that.
“I’m surprised why FBI is not all over the fraud that was committed in the past few years and continues on today.”
This just in:
“Entire North American Continent has been arrested by the FBI for fraud…. Video at eleven…”
Ok, Ok, we will need to leave a few persons free so they can guard the prisons.
I’ll volunteer to guard the prison as long as someone volunteers to enforce the laws.
Am familiar with YMCA as an abbreviation for “Young Men’s Christian Association,” didn’t know they had a (fight?) song. I’da been singing “99 Bottles of Beer on the Wall.” (Goes with popcorn?)
I thought he was referring to the song by those nice young men, The Village People, titled “YMCA.” (”It’s fun to live at the YMCA…”)
Well the DIRTY verison is YM C**K ASS-HOciation…..
yeah I’m a deejay!
VenCo and NorSD will play out a bit differently. Different, not better. For that matter, OC will play out different still. OC has nearly the critical mass of ethnic populations to be the place all the IE and Antelope Valley (Palmcaster/Victorville) refugees will reverse concentrate. VenCo & NorSD will suffer local recessions and some hollowing out but as long as the SFV, OC and IE keeping pumping out refugees they’ll end up in those two places.
This is what I was insinuating with my comment today in the bits bucket or somewhere else about the proportion of migrants from OC/SD/LA to IE (1 in 5). When the relative house prices shift in OC/SD/LA’s favor, expect the high growth in IE to simmer down, as OC/SD/LA clearly have higher preference for most people.
Does this mean that all those BA people will go back too? *crosses fingers**
I sold my house to a JANITOR 2 years ago in LA county for 670k.
People in flyover states can’t beleive these stories but they are true.
I am myself amazed and I sit here watching it right in front of me.
stories like this are why I *know* that plenty of LA homes will be available in the next few years. Patience… just a little bit of patience…
Got popcorn?
Neil
“patience” - it’s very tough, Neil. I used to be in a stable rental in a fabulous neighborhood, but it was a rental shared among four persons, so was remarkably cheap, with a big swimming pool, and just a couple of blocks from the Ritz Carlton. I do make more money than a janitor (even a government-employed janitor), but don’t know if I can come back to Calif or not. Leaving for AZ and Maine on Tuesday.
OK, the janitor who bought my place was employed by the city of somethin (culver city?) cant remember. I think all city janitors in LA are union. How much could he make? probably same as a Teacher. (take that teachers!)
I am just so shocked anyone would bother to live in the IE. Its just one big patch of ugly desert.
I guess its sunny.
Kind of like what I picture hell looks like.
“I’ve got to ask, why does this women feel the need to have 6 bedrooms. If she has that many kids, why is she commuting 70 miles?”
The Brady Bunch lived in a 3-bedroom house, plus Alice had a small room next to the kitchen. Then when Greg was older he moved into the attic and created a groovy pad.
If Bob and Carol were satisfied with such arrangements, why not Sonya and her husband?
Bob was gay and Carol was sleeping with Greg.
Bob was my godfather.
Yes, really -
It just makes me laugh….and not in a happy way…if its just her and her husband, why on earth do they need 6 bedrooms fer crying out loud? If they have kids, how much are they paying a month for after-school childcare? Sheesh…
OT - but KPCC (Pasadena - 89.3fm) is doing an all day broadcast on the Inland Empire. A very interesting piece on the ‘old timers’ there, who moved in just after WWII, who said that Riverside used to be a sleepy town with streets lined with Victorians surrounded by citrus groves. They compared it with today - mile upon mile of souless tracts of stucco boxes - and how they’re trying to keep alive the last, and oldest, Navel Orange tree in the region.
Worth catching if you’re in the L.A area.
Riverside used to have a world-class race track that hosted Formula 1, Indy car, Nascar, Can-Am, and sports car races (SCCA & IMSA).
In 1989 it was buldozed to make way for a shopping center (including a Lowes’).
http://tinyurl.com/2fsdg2
She commutes by train but stays with her sister during the week to save money.”
If this woman can not afford to commute to work then what business does she have buying a 1/2 million dollar home? ‘nother sheeple bites the dust.
Got 10% down?
The fact that she wasn’t even living in her McMansion 5 days a week tells me that she bought it and decided to flop at her sisters part time until her “investment” increased another 40% in two years when she could sell it and buy something closer to LA.
“Ms Mcphearson says that the couple were unaware they had taken out an adjustable rate mortgage.
i’m so tired of hearing this crap. we didn’t know because we were stupid
They knew.
Details of the financings were obviously “overlooked” in the frenzy of anticipated gains.
“Because the market is slowing down, the fraud that happened in loans that originated in the last two years is like dead bodies rising to the surface.”
Finally a fresh metaphor from the REIC. It seems like ages ago the last time we heard “soft landing”, “souffle”, or “balloon deflating”.
Hmm… “soft landing”, “souffle”, “balloon deflating”, “bloated dead bodies”,… I’m not sure I wan’t to hear what’s next (at least not right after lunch).
The new terms are:
“Bloated inventory”
“Riga mortis Sales”
“Zombie Inventory”
Sorry, but the” fraud that happened in loans that originated in the last two years is like dead bodies rising to the surface. ” inspired me.
Not even interesting yet… Not until salaries halt (recall the Warren act is giving all of those “poor laid off mortgage brokers” 60 days of severance pay). I also expect job transfers out of state to pick up in the following industries:
banking
aerospace
film (e.g. to Albuquerque’s four new studios)
Records (common, sales are to Itunes, cut the staff to sustainable levels already!)
Real Estate (no sales=no commission, game over)
Construction
Equipment rental: This hit our wedding planning as the construction side of the rental business hit the table/chair/glasses rental vendor we originally wanted was forced to close shop as the husband’s side of the business (truck, backhoe, other construction rentals) went into the red really quickly and brought the whole shop down).
Retail
Heck, I’m bearish on California jobs on everything except the Beer plants, bowling alleys, and other low cost entertainment.
Got popcorn?
Neil
I expect blockbuster movie rentals to do well - cheap entertainment.
I’ll agree. Cheap entertainment. Besides, gotta use that plasma before the home is taken away.
“I’ll agree. Cheap entertainment…”
For how bad it will get, not cheap enough…
Invest in who ever makes Vaseline and Ripple
Invest in who ever makes Vaseline and Ripple
ROTFLMAO.
I’ll stick with beer though.
Got popcorn?
Neil
I know people who do nothing but play online games since they are very cheap if you think about it. $15 a month for unlimited entertainment, you eat at home, and all you need is DSL and you can cancel the cable. Going to the movies? nah they’re home killing orcs or something.
You can save an incredible ammount of money brewing your own beer.
Blockbuster chart doesn’t look so good. Hasn’t video rental become an extremely competitive business?
I disagree. Doesn’t Cali have those $1/movie vending machines popping up on every street corner and every store?
Heck, I’m bearish on California jobs on everything except the Beer plants,
CHATSWORTH - More than 100 union workers are striking Rexam Beverage Can North America Co.’s plant here as part of a national strike involving 900 employees in eight states.
So much for the Beer Plants!
ROTFL
Ok, I didn’t count on them shooting themselves in the foot.
Got popcorn?
Neil
talk about hitting Joe Sixpack where it hurts….
As tough as things are, Joe Sixpack won’t stand for beer inflation!
Now we know what will be the ‘flash point’ in the sheeple’s understanding that bad times are ahead.
Neil
I hear ya, aNYCdj. Hasn’t been “right” here for a loooong time, though…
–
Just imagine having 50M+ Americans feeling that way. Give it 3 years.
Jas
“There was no single villain: this was a market phenomenon characterised by 30 years of [house price] growth with very few defaults. There is no one person or company to point to,’ he adds.”
Yeah, this point is a bitter pill it seems. I guess humans just need someone to blame when there is trouble. But seriously, who isn’t to blame? It’s the entire system– from the foreign investors with no notion of risk– only yield, to the bond ratings, down through the repackagers, banks and their artificial earnings-boosting lust for option ARMs, brokers caring about nothing except commission, appraisers and RE agents getting the deal done (only breaking a few little laws), and borrowers who don’t (or can’t) read the fine print on the most important document they’ll ever sign, who decide not to bother with lawyers, and who have no desire to evaluate the risk in their investment.
So it really comes down to risk, top-to-bottom.
A fool and debt are soon joined.
“30 of [house price] growth with very few defaults” - I don’t think so. Does anyone still have a link to that Cagan “Fireburn” piece? I tried to find it through Google but no longer successful. Seems to me the IE came down in the 90’s along with everything else in SoCal.
My parents live in West Los Angeles, near Pico and Sepulveda, where the 10 and 405 freeways meet.
At one point in the late 80’s they were getting unsolicited offers for their house for 750,000. Then, during the early 90’s the offers bottomed out at 435,000 so, prices do drop in real estate despite what the bubble heads say.
It must be 1M+ now. Why don’t they move? ARe they tied to the area?
I can’t understand people that don’t just move with all the loot they’ve made. If house prices do fall, that’s alot of money to be risking.
Move where? Prices are still high all over, and rentals in this area are in short supply. You gotta live some place, and if they’ve been there for a while, they probably have a low tax base.
I’ve been looking for a house to rent in a nice area around here, and the asking rents are $7,000/month and up. Not much of a bargain.
If you want to buy a nice house for about 200K, I would suggest trying Loveland, Colorado.
to sm_landlord.
Where are rents “$7000″? That sounds a little crazy to me, Beverly Hills? Malibu?
She said West LA which from what I’ve heard isn’t necessarily that nice. Can’t you rent a 1M house there for $3,000 a month or so?
Hi Brian,
go here:
http://losangeles.craigslist.org/wst/apa/
and see if you can find a three bedroom house (not a condo) in Santa Monica. You might be able to find a one bedroom bungalow for about $5000.
Here is a 3-bedroom condo for $8600:
http://losangeles.craigslist.org/wst/apa/314781110.html
Oh, wait. Here’s a nice 4 bedroom house in a nice area:
http://losangeles.craigslist.org/wst/apa/313677272.html
Only $13500/month.
What kind of people can afford a $13K rent per month? It will be 162K just on rent. That is totally insane. If they can afford that much for rent, they might as well go purchase. What is the price of a house like this? just wondering.
I’ve this saved. you are talking about that colorful graph correct ?
If you’re answering me about the Cagan piece, it was a whole article with many charts, but any one of them would probably answer my question. Thanks . (?)
http://www.realestateclubla.com/pdf/Cagan_FireBurn_1104.pdf
I googled: Cagan has the fire burned out
and this was the first hit.
I have it saved on the HD as well.
Wasn’t there a single villain? I thought his name was Alan Greedspan.
Yes, but there are no laws against fraud at that level.
“Crabtree”??? isn’t that one of the south park characters.
“Everytime i read something like this I CRY…….I am so desperate for a job, and these idiot Morons just pissed away everything they have …..and they still have a JOB!
Its not right anymore in America.”
I feel ur pain in same boat in Nyc trying to get a job and get turned down but “internal consultants” whom are basically hired to turn people down.
I think it’s Crabapple and that’s the Simpsons.
Otherwise, I believe Crabtree is Little Rascals.
Veronica Crabtree was the school bus driver. She appeared to be suffering from paranoia, or at least was mentally unstable. She had a bird living in her hair and constantly screams “Sit down n’ shut up.
Yes, South Park.
Krabappel, Edna (Miss)
Bart’s teacher. Bart calls her “Mrs K”. Divorced and looking for someone new. Been seen with various men including the Happy Sumo’s head chef…..
Come ONnnnnnnnnnnnnnnnn
Have either of you tried any of the bigger, fee-paid employment agencies? I had several successes with one, and only once had to interview with an employer before being hired. Because I was considered a “contractor,” I didn’t have to abide by stupid company rules. The agency took care of everything, and I made lots of money.
This was in reference to the above comment:
“‘Everytime i read something like this I CRY…….I am so desperate for a job, and these idiot Morons just pissed away everything they have …..and they still have a JOB!’”
Its not right anymore in America.”
I feel ur pain in same boat in Nyc trying to get a job and get turned down but “internal consultants” whom are basically hired to turn people down.
I have question, I am in my 40’s have over 220,000 dollar in my schwab acct. (cash) I have been buying 3-6 months CD’s for last couple of years. don’t want to get in stocks at this point especially now that all real estate flipers and “investaors” have turned to stocks again, I was planning to buy a house but prices are too high, I am renting now and just signed one year lease, my question is what is the best/safest way to manage this money at this time. any suggestions?
FXA
FXB
FXE
They go up as the US dollar crashes plus you get pretty decent yields.
Take 50% of it and divide it among the ETF’s that Jerry mentioned above. Put another 30% into gold, either buy bullion or buy a gold ETF. Put the remaining 20% into CD’s or into an oil fund.
It is likely that when the economy goes down stocks will join realestate. I mean stocks all over the world. No ETF’s, no stocks, no gold, no realestate and no nonsense. You are doing the right thing being in CD’s. Deflation is probably in the cards so everything but cash will be hit for quite a while. The US dollar has far to many bears and should have a decent multimonth advance and then look out.
I am a retired investment advisor and commodity trading advisor and my advice is stay in CD’s. You can not afford to take the chance. This whole economy is about keeping what you have not making a killing.
Sure hope you are right Patriotic and that is the way i have been holding my cards. Still have a good long term physical precious metals position but also a bunch of cash but after last weeks stock blast off globally and with what i see as a total global real estate and credit induced mania everywhere i am getting closer and closer to selling everything and turning it all in to physical precious metals, turning off the lights, the radio and the tv and going on long term leave from all this s**t. Starting to think that old Timothy O’Leary was right after all. (actually i knew it all along………. I just had to compromise and get swallowed up a long time ago in order to keep ahead of the curve). Thanks and take care!!
Sorry, but it is a race to the bottom for the fiat currencies. I would recommend Run keep a significant portion in gold and silver bullion. Compared to the amount of paper that is out there, gold and silver are still cheap. Other than that, Oil and gas. Canadian Royalty Trusts, such as ERF, PGH, PWE, PWI pay a nice dividend, not much downside risk at this point.
My strategy is somewhat related to Jerry’s. Application of my strategy to your situation would dictate moving about $20K per month into Australian government bonds, which pay a little big higher nominal yield than your short-term CD’s, but (mainly) they pay both the coupon and the ultimate return of principal in Australian dollars, which have been rising strongly against USD. None of us can say for sure when the US dollar will stabilize, but the Fed is not giving any sign that they want it to happen soon.
az_lender, a question. After the Icelandic bonds, I am little worried about trusting any fiat currency. Some are predicting that China will slow down next year after the Olympics. If so, Australia’s resource extraction industry (which is big for them) would take a hit. What do you think the effect would be on the $AUS?
China has a crumbling infrastructure that needs to be rebuilt with raw materials form Australia. They also need about 100 nuclear power plants and Australia has the largest uranium mine in the world. China is where the United States was in the 1890’s. They have a long way to go before they have to slow down.
I’m not saying you should hold foreign currencies forever, but as long as the US$ is crashing, the foreign currencies will do you well. Also take a look at the Duetsche Bank commodities ETF’s
sm_landlord: I admit the Iceland bonds took a hit, but the Icelandic krona is definitely higher now (vs USD) than when I bought Iceland bonds late last summer. I am still holding them, and receiving my ISK coupons happily. I think jerry from richardson has the fundamental point: there is no obvious end to USD’s sinking. I believe Bernanke would have to raise rates or something. GetStucco thought that would be the likely scenario. Apparently Bernanke thinks differently.
Jerry,
Is it possible that China is where the US was in 1908?
I suppose so, Blue Skye. Maybe even 1909
We are in for some interesting times. The good thing is that the worst that can happen is we will all die.
Maybe one needs to remember the old “Paper, Rocks and Scissors” game in all of this over time. So far i think we keep getting sucked in to the Paper, Paper hand and for the most part hold no rocks or scissors as that is what the Fed and the rest of the Global Central Banks want and need us to believe. Maybe we should be getting some Rocks and Scissors. I think i am as i have moved away from large cities and i have gathered up some physical precious metals and started an offshore bank account with UBS in Switzerland so i have some assets away from where i live. I have a real hard time trying to game myself trying to justify buying some guys paper (australian) over some other guys paper (say U.S. or British Pounds or whatever). Still it is not an all or nothing game, perhaps it’s just trying to balance out how each of us see and perceive how this thing will work out. Over the long run one can literally never beat compound interest, unless of course one runs in to the situation where there is a default on capital repayment. Any thoughts or comments welcome.
Who’s paper are you buying with the Swiss bank account? The world will have to run on fiat currencies. There is not enough precious metals around to be used as a medium of exchange for goods in any modern society. How would somebody buy a large building, airplane or ship? Would they bring truckloads of gold to the closing?
The only thing we can do is to stay away from fiat that is being devalued at a faster rate than others.
a couple ounces should be enough for a building, an airplane, AND a ship!
Any financial adviser would tell you it depends on your goals, risk tolerance, time horizon, etc etc. Given you seem to be looking for safety I would say this: if you believe Bill Gross of Pimco, Fed will lower interest rates later this year, leading to a rally in bonds. If you believe that, buy some bond funds (Vanguard has a slew of great, low-cost ones). I would stay short to medium-term. If you believe inflation is going to pick up, buy some TIP bonds/bond funds. If you are totally conservative and don’t want any downside risk, just keep buying those CDs (you use the internet, so you know how to shop around for best yield) or look at Vanguard Prime Money Market, which is yielding about 5% an gives you complete liquidity.
Full disclosure: I personally have a diversified portfolio which is in stocks, bonds, cash and real estate (2 houses, one mortgage free, one with 50% equity). Our allocation is set up for both short and long-term goals/needs.
In an environment where the U.S. dollar is in a clear downtrend, I don’t believe that US-dollar-denominated CD’s are the “least” risky investment. Short-term foreign-denominated bonds would probably be less risky, or if short-short terms are needed, there are foreign-denominated CDs.
Bill Gross has been saying the FED would cut rates for over 2 years now. Face it, he is just trying to push his bonds. I give him no credibility.
I am fairly bearish on U.S. equities (holding over 50% of my portfolio in short T-bills) but some of the asset allocations suggested here are outrageous (30% gold??? 20% oil???). It is okay to have 10% or so in speculative investments like these but placing a large percentage of the portfolio gambling that the U.S. will tank big time is exactly that.
IMHO, someone with only 220K or so to play with and in his 40’s shouldn’t be taking exceptional risk. A well diversified portfolio of domestic & international stock and bond funds (e.g. iShares ETFs) should get him to 1M by 65 w/o taking undue risks. For the more conservative, holding T-bills or T-bonds bought through a broker or TreasuryDirect is a good short-term position (but not good for long term due to inflation risk) and better than bank CDs. Recent 6-month T-bills yield over 5% APR and is state tax free to boot (effectively over 5.48% in CA for those in the top bracket).
I, too, was dumbfounded by the speculative dribble posted above about 50% BETTING on currencies, 30% BETTING on gold, and 20% BETTING on oil. What a moron. I ain’t saying I know anything about the future in those areas - but I DO know that a 40something should have no interest
in taking such gambles.
Man, I continue to be shocked how financially well off so many people on this blog are. Me and the wife are in our late 30s, have been saving our asses off for the past 3 years and barely have 40K in cash for a downpayment (when the time is right). Y’all are doing SOMETHING right.
Central Valley Guy–
I’d trade my late 50s and financial assets for your late 30s and 40K any day.
BTW: At your age I was divorced, struggling to figure my life out and, like you, saving as much as I could. By age 43 I bought my first house, putting my life savings of 70K as down payment. Most of the assets my second wife and I have put together have been accumulated since then, through saving and investing. We have always lived below our means.
Good luck!
if I was in my late 50’s I would probably be conservative with 250k….
just me
Nick’s right. Being in your late 30’s with earning power and brains enough to save it is a fine spot to be in.
I think this blog attracts fiscally responsible people, in part because we like to pat ourselves and each other on the back. People that are irresponsible with money aren’t going to be reading this stuff because they don’t want to be reminded. Ignorance is…
40k after three years is a pretty decent rate of savings. Don’t forget that a lot of us on this blog also benefitted from the blind luck of buying a house prior to the insanity, and then had the sense to cash in the chips.
Well I’m older then you with about as much in savings so you are doing better then you think. I was still hip deep in student loans in my mid 30s.
I’m 31. Been saving since I was 13. It ain’t hard. Just need one good parent.
It’s easy to save up $$$ when you’re not paying down a HUGE mortgage. Personally my wife and I pay $1300 a month to live 2 blocks from the beach in SD. If I was to buy a comparable condo where I live it would be around 450k-550k. The mortgage would be 3000-3500 before even considering hoa costs.
I can’t fathom why a person would want to buy right now in SD. My only explanation would be as long as lenders are willing to give out the funny money some idiot will jump through hoops to get it. Even if it will mean an almost certain foreclosure.
Stupidity can be very expensive.
You’re doing better than most of the country. So, it seems like you’re doing something right too.
The important thing isn’t when people started doing what and how much they have. The important thing is that you’ve started something powerful because the ability to meaningfully save is one of the most important paths for building wealth.
I know a lot of people who start saving, get frustrated because they aren’t millionaires within a year, and decide that delaying gratification isn’t worth it. But they’ll deeply regret it 15 years from now.
You’re on the right path, and you have decades to make your mark.
Great post. I never had any very high-paying job at all. The job most useful to me was being a secretary in an investment counsel firm at the ages 19-21, and coming to understand right then the miracle of compound interest. Later BA MA PhD and other pieces of paper and bossing people around and bsbsbsbs, but the habit of regular saving, recently started by Central Valley Guy, is indeed the key to security.
How about a ‘folio of dividend paying stocks that have good potential for long term capital appreciation? Just be patient and buy solid div payers when their div yield is near their historic high. Meanwhile, while you wait for a good div payer to show up on your radar screen, put your money in a Fed money market. The really big names in families of mutual funds have one with a very low expense ratio because of their size, paying around 5% right now. So you are getting 5% and there is no reason to get in a big hurry to put it in div stocks all at once or right away. Just wait and be patient. When the opportunity arrives you buy the stock without paying a penalty since you are not locked in a CD. Works for me.
Got 10% down?
Is that including your 401k balances..?
I am in the exact same boat as you are in. I only see this housing diaster playing out two ways.
The Government keeps it’s hands off and not intervene. Like the total lack of oversight that brought this mess on.
Or, they buy votes with a bailout that they pass on to the future generations to pay off.
What outcome do you think will happen?
Either action will destroy any faith and credit in the US’s ability to maintain any semblence of trust or value in our fiat currency. This will end with badly, it will make the Weimar Republic look like heaven.
The US markets tell us the last 20 years have made us the most prosperous generation. If that is the case why has the dollar fallen all this time.
The Bail Out course is a total crap shoot.
Leaving things to settle out naturally will raise inflation and lower the dollar. I am sending my meager savings on a long vacation. By the time I bring it back it will be worth more than if I left it here. How much, who knows. I have an absolute faith that the government of the United States will screw up residential housing recovery and it’s impact on the economy as badly as everything else they have touched.
Unless you are planning on buying a house in Australia, Great Britain, or the rest of Europe I would stay out of currency funds. They are highly speculative for someone who is saving up for a home to be purchased with US $. Same for gold and oil. I agree with the suggestion of CD’s (don’t bust the FDIC cap) and/or the Vanguard Money Market.
Saying that gold is highly speculative compared to Federal Reserve Notes is like saying you feel safer floating in the ocean 50 miles offshore than you do standing on dry land.
Just remember what happened with the stock correction in February? Gold plunged too, albeit not by as much percentage-wise. Funny money has been diverted to EVERY asset class…gold not excepted. I wish I had the answer to the best way to protect yourself…I just don’t know. We all like to think stocks will tank, but so far, we’ve been proven wrong…despite a slowly economy. Perhaps the devaluation of the dollar will spur greater profits from abroad into the US economy. The point is…just when you think you have this bubble figured out, something else happens. About the only guarantee right now is that one should avoid RE at all costs!!!
About the only guarantee right now is that one should avoid RE at all costs!!!
Amen to that.
Bubbleviewer,
Trouble is that the gold is out there floating on the ocean of limitless credit too. If it comes to the point that you need PM to buy food, I will eat like a king (for a while), but I think “price” of gold is as puffed up as real estate. Real estate is supposed to be on solid ground but it isn’t. If RE tanks like everyone here thinks it will, other credit bubble assets will follow. RE is the smoldering fire in the basement.
Sounds like your going to stick to cash. I hope you are shopping CD’s that Schwab does for free. Also, open a Treasury Direct account that allows you to buy T-Bills, Bonds, Tips etc. directly from the government (treasurydirect.gov)
Buy oil stocks!!!!
demand for oil will also fall as the US economy weakens. There is also a LOT more of the black stuff than the oil industry is letting on.
Insurers Drown Homeowners in “Book of Tears”
http://tinyurl.com/yv6g5h
(I would have posted it in the Florida thread but more will see it here)
“A 52-year-old woman wrote to say she lives on $17,000 and recently had lost 10 pounds because she couldn’t afford to buy groceries.”
~~~~~
It reminds me of a Rodney Dangerfield joke: A bum comes up to him on the street asking him for money - “I haven’t had anything to eat for three days,” the bum say.
“I wish I had your will power,” Rodney responds.
“Eating?… Man, My Wife’s cooking is so bad, the flies chipped in for a kitchen screen door….”
Instead of flipping houses she should try flipping burgers.
I’ve lived on much, much less than that. Millions of Americans do on a regular basis. The vast majority of humans do.
The uncontrollability of insurance costs is a good reason to buy your home for cash only, or else don’t buy it at all. Cash buyers can let insurance lapse during periods when it seems to be better to bet with the House. (I don’t mean YOUR house.)
“The uncontrollability of insurance costs is a good reason to buy your home for cash only, or else don’t buy it at all. Cash buyers can let insurance lapse during periods when it seems to be better to bet with the House. (I don’t mean YOUR house.)”
I don’t agree with this cause:
1. If your gonna buy a house, you might as well get the Tax deduction of the mortgage.
2. The cash in the bank (rather than in the house) is much more valuable as a reserve, should crisis (loss of job etc.) occur.
3. Not carrying insurance, wether you own outright or carrying a mortgage, is, to say the least, dangerously unwise. I’d call it nuts.
4. If you are not going to carry insurance, do yourself a favor and don’t buy a house.
Agree on insurance statements (naturally, because they make perfect sense), but what the hell was Number 1 about? You only should go that route if your money can earn better returns (guaranteed) elsewhere - and careful on just how good the tax deduction is. You get ten grand off the top even without a mortgage.
Cash buyers can let insurance lapse during periods when it seems to be better to bet with the House.
WTF? AZ you have been selling to many trailers. OK, buy your house (trailer in your case) for cash, no insurance, fire burns it down, now what. At least you saved the $800 or so on insurance. It’s not that hot yet in AZ.
If your buying a trailer
Ha ha, I do require my mortgage CLIENTS to have insurance !!! However, the last house I owned I did not insure. The ins co wanted about 2% per annum of the replacement value, and I just said to myself, this house is not going to burn down every 50 yrs. (It had stood 100 years without burning down.)
Wow. They gave an example of a woman whose monthly payment increased $600/month - all from insurance? That’s amazingly high. Although I haven’t paid earthquake insurance in California in a long time. How much is earthquake insurance now?
Put it in aapl and it will double in 2 years
Crikey, I had a bunch of coworkers each buy about 100-200 shares when it was around $10-$11 a couple years ago. I SO should have done that too.
I brought aapl @$8 then sold @$86. Got back in @$60. I’m very skeptical that it can double i.e. it has to go from $75 billion in market cap to $150 billion market cap, a $75 billion in new money! Although, new money from people who have gainws in this housing bubble (smart money?) will go into stock albeit that by much hence smart money!
I brought aapl @$8 then sold @$86. Got back in @$60. I’m very skeptical that it can double i.e. it has to go from $75 billion in market cap to $150 billion market cap, a $75 billion in new money! Although, new money from people who have gained in this housing bubble (smart money?) will go into stock albeit that by much hence smart money!
It doesn’t really need that much “new money” to push it up. It doesn’t need hardly any.
If they open trading and no one is willing to sell for less than $200 a share…then presto, it just gained 75 billion or whatever. No new money coming into it at all.
LOL, if no one is going to sell at or below @$200 then no one is going to make money at @$200. Virtual wealth is just that, virtual wealth; similar to what we see now, stubborn sellers holding out for for a better deal. I don’t mean to sound personal, please take this comment lightly off course.
Well, that’s not really my point. I didn’t say they wouldn’t TRADE at $200, just that they wouldn’t sell below that price.
So Monday AAPL’s first trade is $200. How much money “went into it” to make it increase in value 75 billion? NONE. The market decided it was worth that much…the “value” was created out of thin air, it doesn’t have to come from people “putting” 75 billion into the company. No money is “put into the company” at all really, just investors trading their shares amongst themselves.
Buying pressure from “new money” would, all other things being equal, raise stock prices, I guess.
Sounds close to what happened to make the (global) real estate bubble what it is. Funny how things work when the discipline of gold is taken away from “money” and is overtaken by Fiat Edict as the Powers That Be work so hard to protect you from yourself. Ultimately i think they end up pricing you out of your own market and help to sow the seeds for your eventual destruction as they move forward and try to induce more players in to their Ponzi Game.
I brought aapl @$8 then sold @$86. Got back in @$60. I’m very skeptical that it can double i.e. it has to go from $75 billion in market cap to $150 billion market cap, a $75 billion in new money! Although, new money from people who have gained in this housing bubble (smart money?) will go into stock albeit not by much hence smart money!
Do not put it all in one stock! Bad idea. If you want to bet the house, then don’t buy insurance. If you want to bet your life savings (liquid assets) then go ahead and put it all in one stock and parlay into yet another stock after your “sure” double.
tcm_guy, i don’t think anyone here is implying that putting all your money into one stock is a good idea, nevertheless, you gave a popular and good advise.
The wakeup call for California will be when coastal communities are getting hit hard with reduced prices and foreclosures. I haven’t seen this yet it my area (South Bay of Los Angeles), but I have a feeling it isn’t far off.
More like end of Q2 2008 in south bay. Santa monica could take longer as these people have good “recession proof” jobs! Be patient.
I’m there too… be patient. But the number of homes on the market is huge. As to “recession proof” jobs… maybe. The reality is we cannot hire into the South bay, so we’ll seen 1,000 engineers here and there as the core of a 3,000 engineer team as we’re awarded new projects.
The number of coworkers who have announced (publicly or quietly) to me that they’re leaving before the end of this summer is astounding.
#1 reason? Housing costs. #2 reason? Wife wants a home. #3 reason? Cost of living is too high in the south bay.
I think it will start Q3 2007. Partially due to the shear number of people who borrowed far beyond their income. It doesn’t matter if your income is recession proof if the mortgage is too much. Look at the numbers in Redondo Beach who pulled $150k to $500k out of their homes during this “housing boom.”
Oh, it will take patience… but not Q2 2008.
11.4X income is simply not sustainable. Also, I’ve seen just too many flips on the market for a year+ in Redondo…
But Shendi is right, we must be very patient. As best I can tell the south bay is 15 to 18 months behind San Diego. Let San Diego, Sacramento, and the IE lead as they normally do.
But the small drop in prices is like a cancer patient finally not feeling quite as much pain: Its actually very discouraging as you realize how long its going to take to get back to normal. The press has reported a small drop in prices (given the sheeple hope). When they next post a pro-RE article saying prices are going back up (pain returns, even if temporary), that’s when the exodus starts.
Maybe I’m wrong… if so, I’ll be leaving CA.
But not until 2009.
I think I’ll be able to stay and buy in the south bay.
Got popcorn?
Neil
Neil,
Where do you work if you don’t mind saying (don’t tell if an issue)? I used to work at Hughes Aircraft Co back in the mid 70s-mid 80s in El Segundo off Sepulveda and Imperial Hwy. Bought by GM in the 80s, that location maybe owned by Boeing now? Anyway, they had the same problems attracting engineers then as well. A bunch of younger people out of college were willing to come for awhile, then planned to leave after 5 years. Some did, some didn’t. Older managers were very hard to get from outside the area due to high housing costs. I haven’t been to that area in almost 20 years.
Implosion,
The trend is 100% the same today.
We get the kids from school for 3 to 5 years. Some stay around, some move on. Hiring experienced talent (both RSE’s and managers) is not possible anymore. We’re also hitting a wall in hiring good retired local talent (too many cash out and retire out of state; this is as big an issue as the active retention).
As to my employer… I prefer to only post on the net on my previous employers. It could be a very serious issue due to the position I’ve been able to work myself up to!
Oh… that’s a Boeing division now. (My dad and his buddies often consult there. Very on again/off again work though…)
But employees are far more frustrated than during the late 80’s/90’s. So the rate of the exodus will be more rapid. With no hope of buying homes, replacing managers that are promoted is getting tough. (Too many RSE’s/senior engineers are pulling the rip chord.) Its no where near crisis right now… but in the last four years you can feel the difference.
Got popcorn?
Neil
Sounds good. Enjoy your updates on company migrations in/out of SoCal. Thanks. I worked at another aerospace company until about ‘90 and saw the disaster coming and bailed out of SoCal. Within a year after I left, my entire group was laid off.
just wait til the war contracts dry up in 2009.
I think the end of deficit spending will have same effect as end of cold war.
Clintons will even shut some military bases…. just like b4.
like a cancer patient finally not feeling quite as much pain:
Cancer patient? Sounds “Imus Like”
Sounds “Imus Like”
???? I don’t get the reference.
My company has a showroom near the Redondo Beach Pier. We share a building with a Design Build company. They have almost 30 homes under construction for clients in Manhattan Bch, Hermosa Bch and Redondo Bch (not spec homes). I know this for a fact because we are doing the custom cabinets is quite a few of these homes.
- There is a lot of money in the South Bay.
92648 downtown and coastal Huntington Beach is down 13.7% already!
Sonya Mcphearson and her husband didn’t know they had an adjustable rate mortgage. I have two questions. Don’t these people ever read the loan document? Every one that I have seen, I have had no problem seeing if it was an ajustable rate mortgage or not. And, how can the media always find such pathetic people, like we are suppost to feel sorry for them.
“Don’t these people ever read the loan document?”
Of course they do, right after reading the nutritional information and serving size of the food they are feeding themselves and their kids. This fact explains why the US is a nation of fit, healthy, financially sound individuals.
That’s just their “victim” excuse. They thought they could live in the house for two years at interest-only teaser rates then sell it to a bigger idiot for a nice 100% profit.
So far, every persons story of foreclosure is accompanied by this statement.
During the next frenzy, in the distant future, Lenders will probably be required to play and audio recording of the loan terms. Think it will matter?
“You have the right to remain silent. You have the right not to sign the loan documents. Anything you do sign can and will be used against you in a court of law. You have the right to an attorney. You have the right to go home and just go on renting.” (hows that)
I don’t know about silent, as I have been rather an outspoken bubblehead over the past 4 years, but I did exert my right not to sign loan documents I “understood” I could not afford and indeed rent quite a nice place near the ocean around Del Mar, CA for a couple of thousand a month (less than half the ownership cost)
Considering educational levels at present, perhaps each loan will be accompanied by a graphic novel “Naruro and the brain eating loan documents”.
“‘It used to be that we would get one call a month from someone needing help [about mortgage foreclosure,’ says Vilma Mercado, manager with the Neighbourhood Housing Service of the Inland Empire. ‘Now we’re getting close to 50.’”
Let’s see….50 divided by 1 is what percentage gain? Wow.
That jumped out at me as well. GS will let us know what the annualized rate of increase would be, something like %22,000;)
What impresses me even more is that:
1. The NOD’s are being sent out at an ever increasing rate.
2. The conversion rate from NOD to foreclosure is increasing even faster than the rate of NOD’s. (currently 40% for California IIRC).
Since factor #1 is multiplied by factor #2… it implies a system that is out of control. In other words, the avalanche has started. The only option is to get out of the way; its too late to stop the slide.
Got popcorn?
Neil
That’s what I thought too. Why aren’t people worried about htis?
NOD in March were 30K. First quarter defaults 11K. So that means the foreclosures from March will be 12K (at 40%). Or 36K for the quarter…the record is 15-16K in 1996.
Kind of dumbfounded that this doesn’t like big news.
Kind of dumbfounded that this doesn’t like big news.
I used to be too… Now I accept that if it doesn’t involve a sexy actress/singer or something really bloody, the MSM doesn’t want to carry it unless someone entertaining can sell the sheeple stocks.
I’m really not a cynic… I’m quite the optimist. But dang if I’ve lost faith in the IQ and education of the USA.
Thankfully I know there is a core that still has their heads on! 
Got popcorn?
Neil
“Meanwhile, sales closed on 75 homes during the first three months of 2007. That means that during the first quarter of this year, there were more San Benito County houses in some stage of foreclosure than there were homes sold.”
————————————–
revealing new stat to track: foreclosures/sales
the RE market will not turn up again until sales exceed foreclosures?
Wow! Foreclosures exceed sales. That was quick.
Quick, but expected.
Banks will hold onto the homes until the FDIC reminds them that its illegal for banks to get into Real Estate speculation and forces them to liquidate their holdings.
The big question is when will that occur? For it won’t matter what zip code you live in when Countrywide cannot hold any more foreclosures on its books. Everywhere will go down together as they struggle to get under the FDIC limits. Oh, pick your favorite financial institution… they’re all in this together.
But wait… they aren’t there yet. When? I doubt before 3Q this year. But when it happens… it won’t be a small effect.
Got popcorn?
Neil
–
“the RE market will not turn up again until sales exceed foreclosures? ”
When 80-90% of the Existing Home Sales are forlosure related sales.
Jas
The way the lines keep getting redrawn since the top was put in, perhaps there is every reason to think that the banks will be enabled to keep right on speculating as the rules (likely) change. If that happens it will likely just delay the inevitable but in the final analysis ought to make the decline that much more vicsious as the fundamental decline in the economy and overall consumption patterns come in to sychronization with each other. The Ponzi scheme can only last as long as there is someone to pass the baton to and bring in to the mania. Trying to slow down the exits isn’t bringing a new player to the game.
I think the Central Valley is going to implode as housing is wait out of whack compared to historical norms. Here are a few RealtyTrac stats for some areas I think will fall hard:
Fresno: 1407 pre-foreclosures
Visalia: 308 pre-foreclosures
Bakersfield: 1946 pre-foreclosures
Los Banos: 280 pre-foreclosures
Modesto: 1120 pre-foreclosures
would you want to live in one of these places?
Especially with all the fraud? How long to find an uncorrupted price? Living in an area with rampant fraud just adds more risk imo.
Fresno has a couple of neighborhoods that rival the quality of eg. Saratoga / Los Gatos. Now, I wouldn’t want to /work/ there, but one of the quasi-virtues of Fresno is that it is 3-5hrs from everything (the Sierras, SF, LA, Morro Bay, LV).
Los Banos: 280 pre-foreclosures
Looks like a lot of buyers in Los Banos are taking the baths…
‘Los Banos’ is also Spanish for ‘the toilet’, which is appropriate if you’ve ever driven through there.
So a lot of buyers are *in* los banos.
New to this blog, but saw this article mentioning Crabtree. If this story has merit, the national networks ought to be picking it up in the coming days.
http://www.mercurynews.com/realestatenews/ci_5708208
To compound the problem beyond the individual foreclosures themselves, the inflated selling prices of the homes involved remain “in the system” for use as “comparables” for valuations in the coming months.
This is really no different than the huge compensation of CEOs. Why do these CEOs get tens of millions of dollars a year in compensation, sometimes even 100 million dollars a year or more? “To be competitive with comparables” is what a member of the board on the compensation committee will tell you.
The problem here is that members of the board are other CEOs of other companies. They are all lining each other’s pockets.
Imagine what the cost of police officers would be if only police officers determined what police officers should be paid? (Not picking on police officers, just using this as an example.) The police officers making almost $100g’s in some of the local communities of long island NY would be making half a million dollars a year! Police officers making $25 g’s in other local communities would be earning $125 g’s a year!
Got 10% down?
Like Members of Congress determining their own salaries?
Yeah, kindas.
Got 10% down?
A message to benevolent bankers from FBs: These boots are made for walking
http://www.youtube.com/watch?v=iAdHgwsocRM
Here are the lyrics:
You keep saying you’ve got something for me.
something you call love, but confess.
You’ve been a messin’ where you shouldn’t have been a messin’
and now someone else is gettin’ all your best.
These boots are made for walking, and that’s just what they’ll do
one of these days these boots are gonna walk all over you.
You keep lying, when you oughta be truthin’
and you keep losin’ when you oughta not bet.
You keep samin’ when you oughta be a changin’.
Now what’s right is right, but you ain’t been right yet.
These boots are made for walking, and that’s just what they’ll do
one of these days these boots are gonna walk all over you.
You keep playin’ where you shouldn’t be a playin
and you keep thinkin’ that you´ll never get burnt.
Ha!
I just found me a brand new box of matches yeah
and what he knows you ain’t HAD time to learn.
These boots are made for walking, and that’s just what they’ll do
one of these days these boots are gonna walk all over you.
Are you ready boots? Start walkin’!
I am thinking of purchasing a 2 bedroom/2 bath condo in la jolla so my daughter can live in while attending college in UCSD.
We all know SD is pretty bad this day. What about La Jolla?
Any thoughts on the pricing around La Jolla?
Please advise.
Don’t do it. There is a huge inventory of 2/2 condos in La Jolla.
Better to rent.
Thanks TimberC. Much appreciated.
I agree, stay away from Condos in La Jolla / UTC. The amount of construction in progress there is huge (805 & La Jolla Village Dr. Especially)
Thanks Don. Much appreciated.
I am thinking of purchasing a 2 bedroom/2 bath condo in la jolla so my daughter can live in while attending college in UCSD.
Does she need a choeffer?
If she’s living in the La Jolla Village area she can ride her bike to school.
You folks are too funny. When I lived off campus I rented and walked to school. What is wrong with walking? Why do people have to be so pampered? You are setting your daughter up for “economic outpatient care” for life from the bank of mom and dad. (Got that one from The Millionaire Next Door.)
Got 10% down?
I enjoyed that book. Still trying to get to the PAW state.
One book I picked up early on was “Cashing In on The American Dream,” back in the late 80s. Can get it for a penny at amazon. Apparently never been revised. There are other good ones of course.
I am a PAW
Took lots of sacrifice to get here, but I am here. When I was in college some of my college friends where driving around in fancy sports cars. Where are they now? The cars have been melted down, and my friends are slaving away to pay for child support and the looking glass fairy tale genuine imitation reality TV world they live in.
Late 20’s early 30’s my coworkers where all about this project and that project for their dang house. I always saw it as being no different than what I witnessed growing up.
When I was in grade school there was a guy across the street from the school who had a late model Mercury Cougar coupe, the one with the real long hood with Farrah Fawcett draped over it. This guy did not seem to have a job other than waxing and polishing his Cougar. He did this all day long. He was a slave to his car, and did not even know it. This was in a middle to lower income neighborhood. What little welfare money he had, it was all going into that stupid car of his.
So it is no different with people and their houses. Blah, blah, blah, skylight in the kitchen, blah, blah, blah, new electric circuits for the Christmas lights wars, blah, blah, blah, knocking down a wall for a pool table, blah blah blah.
Late 30’s I left the rat race for good, have never been back.
Got 10% down?
The Millionaire Next Door
LOL written by David Bach serious folks this guys fame was working for East Bay brokers branch at Morgan Stanley. Actually it was another firm which MS acquired. This guy didnt work at Wall Street he was booted out of MS in 2001 for giving buy recommendations on tech companies. Im sure his customers arnt that happy. And now he is some Financial Guru on CNBC. BTW Susie Ormans fame was selling life insurance policies..
Are any these people even real Millionaires?
And now Suse Orman is raking in the millions rehatching whatever she has to say in every new book she writes. How many personal finance books will she author in her lifetime? How many times can you reword what you are saying? Here is the ONLY personal finance book anybody needs to read: The Richest Man of Babylon, originally published in 1926. All other personal finance books after it are nothing more than a rehatching of George S. Clason’s classic.
Got 10% down?
“The Millionaire Next Door
LOL written by David Bach serious folks this guys fame was working for East Bay brokers branch at Morgan Stanley. Actually it was another firm which MS acquired. This guy didnt work at Wall Street he was booted out of MS in 2001 for giving buy recommendations on tech companies. Im sure his customers arnt that happy. And now he is some Financial Guru on CNBC. BTW Susie Ormans fame was selling life insurance policies..
Are any these people even real Millionaires?”
Bach wrote “The Automatic Millionaire.” Stanley and Danko write “The Millionaire Next Door.” Next Door is an academic study of who has wealth in the US. Not a guide to getting it. A very good book that will make you think twice about subsidizing your adult children. Suze did start out in a brokerage and sold products not all of which were good. She made a change and used to give good, basic advice. Unfortunately, the bright lights got to her and now she doesn’t listen to her callers and assumes a 30 second trite answer will solve all problems as she goes on to hock bad products. So,,,,
Millionaire Next Door - read it!
Suze - just read the old stuff - Nine steps and Courage
Bach - no idea.
May be I need to clarify a bit. The condo will be part of an investment as a second “vacation” home. The dorm costs about 9k. Might as well put in another 10K for mortgage payment and can do some tax writeoff on interest.
Purchase your condo and be done with it. I can assure you that you will regret it later, but some can only learn their painful lessons from the school of hard knocks as no amount of reasoning will teach them anything. Perhaps you fall in this category?
Got 10% down?
I owned property since 1986 and has been holding them for almost 4 X gains (and counting….) There is no need to put me down. I have seen the up and down cycle. Yes, the Keating 5, Lincoln Savings, RTC and all that fiasco. I am fully aware that we are in the beginning of the bubble. I am merely trying to see the general opinions of la jolla. Now, I got it. Thanks.
If you want to send her to UCSD and live in La Jolla, Why don’t you send her to Yale and buy her a playhouse in New Haven instead. It would be cheaper.
Go for it. La Jolla is different.
I will. Say 40% reduction. Happy?
You’ll get a much better deal in UTC, plus that’s where most students live anyhow, so she can walk to the theater, mall, etc. Wait til departing students/profs need to sell this summer an you’ll find something better & cheaper than what’s out there now. Just beware of hideous condo conversions and that some of the older complexes have serious mold issues.
People like you are why people like me can’t afford even a 1/1 in the town we work in. By all means, I’d buy and take out a heloc >; )
She should live in a dorm, at least the first year or two. I know of a couple of kids who’s parents/grandparents bought them a condo off campus when they went to college. The end result was that they were socially isolated, and never became part of the campus community. On the other hand, the kids that moved into the dorms had a great time in college and got to meet tons of new people they otherwise would have never met.
Sure, living in a dorm was like living in a broom closet, but it was a blast.
I don’t have kids yet, but in regards to college, I’ve already made these decisions:
(1) My kids will go away to college. They will not go to a college in the same town the grew up in (exception: if we live in a college town with a great University).
(2) My kids will live in the dorms their first few years. I sure as hell won’t buy a condo for them to live in. In the rare event that we are already living in a college town, and they decide to attend that college, they will be kicked out of the house and forced to live in the dorms.
(3) They will not go to a college in a big city. College towns are where it’s at, whether it’s Austin, Champaign, Lawrence, Athens, or New Haven.
“The increase in foreclosures has ‘come on strongly and quickly and none of us anticipated it,’ says Ms Mercado. ‘And it is nowhere near ending.’”
What a bunch of BULL! They KNEW that the stiff earning $8/hr as a janitor could not really afford the freaking loan he was put into. The FB should have know better as well.
–
All recessions and depressions in the US have been un-anticipated by the establishment and sale-side cheerleaders.
Jas
That was not what was unanticipated. The thing is that with 20% annual appreciation, the janitors income really did not matter. What was unanticipated was that the appreciation would stop, much less (gasp) turn into serious depreciation.
“Bakersfield Association of Realtors President Ray Karpe…said the potential wrongdoing falls outside the association’s policing authority.
So asuming that the BAR has a ‘policing authority’ as Mr. Karpe states if realtor fraud doesn’t fall inside it then what on earth does?
So I guess the BAR is under duty to report the complaints of fraud by their realtors to the FBI or police if they can’t police their agents .
IMHO ,2006 was the year of massive fraud deals . Once the REIC realized that the market turned they continued to make transactions by the old cash back deals . You can’t tell me that a agent doesn’t know it when a price has been increased for cash back . It’s just clear when you have so many loans going into default so soon that it was a straw buyer . 6 months ago we had people testifying to the fact that RE agents were offering them cash back if they would be interested in buying .
“The increase in foreclosures has ‘come on strongly and quickly and none of us anticipated it,’ says Ms Mercado.
?
This woman needs to get her own TV Show. The ability to come up with straight lines like this is a rare thing.
Most of the conversations to buy a house go:
Buyer: Your saying I can live here?
Mtg broker/RE agent: Yes, sign here.
Why is it not the buyers responsibility to accept the outcome?
Spent a good deal of time searching the web on other (global) real estate markets today and they truly are totally bloated. The one thing i saw from an overall perspective is that rents literally everywhere are so incredibly “cheap” as and against the expected sale price of homes that there has to a complete global disconnect between the real world and what is going on. IF the (global) banks are financing this mania (and i think they are for the most part), then there is every reason to think that we are way way way past the point of no return and the only (net) buyers left are the true greater fools. The 1926 Florida Real Estate collapse was one of the precursors to the 1929 stock market debacle and from what i have read i think this Mania is at a much much higher degree and of a global nature so it’s ultimate unwind or correction ought to be totally awe inspiring. It would be interesting to see more international real estate bubble news posted to help all of us get some kind of overall perspective on how things may unfold going forward.
Amazingly, my folks place In UK has gone up 20% in the year since they bought it. Incomes seem low here too, so must all be bubble money too. Perhaps russian and saudi oil money flowing into London, and this spreading out in waves … Who knows, but there is some weakness now, and places are staying listed a bit longer.
Not so in Seattle. The RE price here continue to go up, especially in the Eastside (Bellevue/Redmond). We think we are “special”. People keep believing that job growth, population growth, the beautiful pacific northwest are all the reason price is where it is today. A Co-worker told me that she is looking to buy a place in west seattle with 100% financing because they don’t want to be priced out forever. Unfortunately I can’t talk her out of it, her last words were “we’ll see two years from now”. Maybe she’s right, who knows, maybe Seattle is special, but I sold my condo (with 80/20 Option ARM already reset last year), make some money, payoff my credit debt, now I rent, save and wait. I am taking a pretty big risk right now investing in PM, Oil service and Chinese companies, bought a few put on WM as well just for fun.
Not so in Seattle. The RE price here continue to go up, especially in the Eastside (Bellevue/Redmond). We think we are “special”. People keep believing that job growth, population growth, the beautiful pacific northwest are all the reason price is where it is today.
Interesting philosophy people have…since that beauty, etc was there 10 years ago too when the market was crashing.
My wife noticed a home down the street had its for-sale sign taken down recently, after only about 3 weeks listing. We were speculating who might have bought it, but as it turns out, I checked out RealtyTrac and happened across it - it’s scheduled for auction, for recovering the $522k that is owed the bank. (This is Costa Mesa, CA)
Now we can see these crazy loans actually being made right on television, with a new show dated in year 2007 via The Learning Channel on cable
TLC earlier tonight “MY FIRST HOME” their new reality show - they had a married couple with a combined income somewhere between 80 and 90k - buying a brand new condo in San Francisco for around 700k
Now they were both educated, one a teacher the other a post-doc (Ph D) working in a relatively meager job of some type and the show did say they had “saved” for a awhile, however they didn’t look like they had any huge downpayment - nor any huge income prospects going forward.
Apparently they were opting for the interest-only ARM type loan, however I cannot understand how someone with that income level can apparently borrow more than 1/2 million or more
The couple looked at 20 or 30 homes, with the show filiming about 5 or 6, however the show strangely blocked out all prices on the screen, except on the one the couple actually purchased - apparently the selling realtors don’t want anyone to (down the road) learn of the prior listing prices from a TV show - if and when prices are dropped or adjusted at some point
More market manipulation going on
WTF is a post-doc doing buying a house? That’s a temporary position that usually only lasts from 2-4 years until you move to the next level (Assistant Professor or Research Scientist).
OK, maybe it makes sense in flyover country where prices aren’t too inflated (UIUC- Champaign, WashU - St. Louis, Vanderbilt - Nashville, etc.) and a 30-year fixed mortgage on a 3-4 Bdrm house is cheaper than renting a 2Br apartment, but not in San Francisco.
You have to remember; One foreclosure in California is like Three foreclosures, almost everywhere else in the country. 11,000 foreclosures for the 1st quarter in California, as far as dollar amount is concerned, is like 33,000 foreclosures in almost any other state in the country.
If you get foreclosed on, it means that the price you paid for the house you bought, was too much, in almost every case. I thought American shoppers, were the best value shoppers in the world. Apparently, I’m mistaken.
Hey WTF? Why should you people in southern CA have all the FB, NOD, and foreclosure fun? Export some of it up here to the Bay Area!
Anyone care to guess what will happen to places like Glendale, Burbank, Arcadia, Pasadena, Northridge, etc????
People here seem to think it’s still OK to pay $599K for a brand new, 3 bedroom townhome…that’s about $4K a month EVERY MONTH folks. Am I missing something that these current buyers are not?
I have been checking Arcadia. The market is soft but there is no significant drop in sight. I think one of the reasons is the school district. Here in North Cal, no drop in Palo Alto, Cupertino, Mission San Jose, Saratoga. They all have very good schools in them. The market may be soft and take a little bit longer to sell but they don’t drop.
I can understand that people want to live in a good school district but that doesn’t explain how they are able to afford it…ON TOP OF the cost of having children.
Think of the housing valueations as an implosion. The outlying areas will be hit first. $500k for a 3/2 in Beaumont, are u serious? Housing Appraisers are going to find “Religion” again. Voters are gonna want heads to roll. Every DA is gonna try to make a name for themselves in order to become the next Eliot Spitzer. It will be easy pickings. The greedy folks in the industry couldn’t keep up with the work load and hired an army of morons to help. Lot’s of e-mails, notarized docs, faxes, blogs, my space pages full of confessions.
Honesty is the best policy. How quick? Who knows. I hope fast.
It appears that the last 1990 RE correction is about 40% from the peak. Will it be the same this time or worse? Your thought…