A Trend Expected To Continue In California
The Associated Press reports on California. “Russ Valone, the CEO of (a) research firm, said speculators in San Diego were putting deposits on downtown condo units under construction, assuming they could sell them at a profit when they were finished. ‘There were guys out there that were rolling the dice just as if they were going to Las Vegas,’ Valone said.”
“When the market slowed, many buyers forfeited their deposits, or let their properties get repossessed by the banks. As a result, the inventory of unoccupied condo units downtown since early 2005 has soared fivefold, he said.”
“Jason Beaver, a Sunnyvale, Calif.-based Apple Inc. programmer, got caught up in the talk of the hot housing market from friends. His name was drawn in a buyers’ lottery in the Solera subdivision and he put $35,300 down on a $353,000 home in February 2004. The community is restricted to people age 55 or older; the 37-year-old Beaver had no intention of moving in.”
“That summer, the housing market began to soften. He nervously put the house on the market for a break-even price the same day escrow closed. He got no offers.”
“A tight market had suddenly become flush with resale homes as investors sought to cash out. Pulte was one of several builders to slash new home prices, in some cases by as much as $80,000 in a single day. Beaver and others are suing, but the company has said it was simply reacting to new conditions in an overheated market.”
“Beaver has been renting the home out for about a $1,000 a month, despite monthly expenses around $2,000. And the supply of available homes is growing.”
“Beaver figures he has spent $50,000 on his investment home, and will have to come up with $30,000 more to pay off the mortgage after he sells it at a loss.”
“While he’s not completely sworn off real estate investing, Beaver said next time he’ll try a more traditional approach, to buy and hold for the long term. ‘The fast-growth, make-a-quick-buck real estate investment, I don’t think I’ll try again,’ he said.”
The Union Tribune. “A record number of San Diego County residents lost their homes in the first three months of the year as default and foreclosure activity rose throughout the state.”
“In San Diego County, 1,182 foreclosures took place from January through March, according to DataQuick. The first quarter also recorded 3,931 notices of default, the first formal step in the foreclosure process, DataQuick reported.”
“Most loans that went into default in California during the first quarter were originated between April 2005 and May, as a peak of nearly 78 percent of all first trust-deeds were being financed with adjustable-rate mortgages.”
“First-quarter foreclosures in Riverside County rose 166 percent compared to same quarter last year. A total of 9,407 foreclosure filings were reported in Riverside County, compared to 3,539 in the first quarter of 2006, according to RealtyTrac.”
“Taken together, Riverside and San Bernardino counties represented the third-highest-ranked metropolitan area in the nation for foreclosure activity. Combined, the two counties experienced a total 17,499 property foreclosures between January and March, RealtyTrac said.”
“‘Certainly the surge in subprime defaults has contributed to the overall rise in foreclosures,’ RealtyTrac CEO James Saccacio said. ‘We estimate that more than 50 percent of the foreclosure activity we charted in the first quarter was from subprime loans. However, it’s not just low-end homes that are going into foreclosure; we’re seeing a rising percentage of foreclosures with an estimated market value of more than $750,000.’”
The Sun Post. “Foreclosures have picked up speed in San Joaquin County, where the number of homes to hit the auction block has reached more than 12 times last year’s levels. Through March 2007, 539 homes were sold in the county’s courthouse auctions. Compare that with just 44 in the same period in 2006, according to a tracking service based.”
“And with the biggest rise of the past two years coming in March, when auctioned homes jumped from 172 to 234 per month, a trend expected to continue. ‘We don’t see any signs of a peak at this point,’ said Sean O’Toole, a real estate consultant who has followed the foreclosure market the past five years.”
“When prices stopped climbing last year, many buyers found themselves stuck with loans they could never afford in the long term. It’s a situation some lenders had ignored the past several years because the housing market was able to satisfy everyone, said local mortgage broker Deborah Romero.”
“‘A lot of common sense went out the window when real estate became so valuable,’ she said.”
“Judy Thompson, a housing counselor in Stockton, said that lack of common sense has meant that a lot more people show up at her office in a disastrous financial state. She said she now deals almost exclusively with people who took out sub-prime loans.”
“‘What I find is that people that have got into some of these predatory-type loans have no idea what they got in it,’ Thompson said. ‘They listened to their lenders, and their lenders say, ‘Don’t worry, you qualify for this loan.’ And they’re shocked when they find out they now owe thousands of dollars.’”
“Some of her clients face mortgage payments nearly equal to their income, while at the same time, their houses have gone down in value. At that point, there’s very little that can stop the property from going to auction, Thompson said.”
The Bakersfield Californian. “Local law enforcers and real estate professionals say mortgage fraud litters Bakersfield’s housing market.”
“‘It is very prevalent and it will become more prevalent,” said Detective Frank Wooldridge, who handles real estate fraud cases and other financial and white-collar crimes for the Bakersfield Police Department. ‘There is real estate and mortgage fraud going on in this town. To say it is not, you are just missing the boat.’”
“Last week, local appraiser Gary Crabtree told The Californian that he has documented about 20 suspicious local home sale transactions in the last year, and that the number has since grown to more than 50 as news of his allegations spread.”
“‘We’ve been presented with offers for well in excess of the sales price, asking for us to cut back to the buyer large amounts of cash,’ said J.R. Lewis, sales manager with Watson Realty ERA.”
“‘The lenders are totally unaware they were defrauded until the property goes into default,’ Crabtree said. He added that mortgage fraud has contributed to foreclosure activity that is now five times as common as it was last year in Kern County.”
“‘We get calls from a lot of people asking if we can do an appraisal and ‘hit’ a number for them,’ said local appraiser Michael Burger. Burger said he tells the callers his business won’t participate in such activity and they go elsewhere.”
“Kern County homebuyers are running into mortgage trouble at three times the national rate, the eighth-worst track record in the country, new data show.”
“‘We appreciated way too fast,’ said local appraiser Michael Burger. ‘We had too many flippers, too many investors coming into the market.’”
“Kern County had 2,779 properties enter some stage of foreclosure in the first quarter of 2007, RealtyTrac reported. That represents a 106 percent increase from the previous quarter’s totals and a 424 percent jump over the first quarter of 2006.”
“‘The last time we had something like this was in 1993, but it wasn’t like this,’ said Betty Byrom, owner of People Realty, who has been in the real estate business for 31 years. ‘We’re gonna have a lot more. It’s gonna get worse before it gets better.’”
“Leslie Appleton-Young, chief economist for the California Association of Realtors, said inland areas of the state, such as Kern County, experienced some of the highest levels of new construction during the boom.”
“But many bought with adjustable-rate mortgages that have since reset at higher interest rates. Some homebuyers who had planned on ‘flipping’ properties were caught when the market turned downward.”
“Appleton-Young said areas such as Bakersfield have too small a population base and lack an economy with sufficiently high-paying jobs to absorb the current oversupply of homes.”
“‘That is why we are seeing an adjustment,’ she said. ‘Right now there is an oversupply. Long term, we can be very bullish in areas like Bakersfield, but in the short term it is going to take time to absorb all the supply.’”
“There were about 3,520 houses for sale in the Bakersfield area in March, according to the most recent single-family housing report by local appraiser Gary Crabtree.”
“Byrom, the local broker, said there is now more than two years of inventory on the market. ‘There’s so many listings out there that you can pick what you want,’ she said.”
http://tinyurl.com/23elhj
One, unsurprisingly, is legendary value investor Jeremy Grantham –Grantham, chairman of Boston firm Grantham Mayo Van Otterloo, has been a voice of caution for years. But he has upped his concerns in his latest letter to shareholders. Grantham says we are now seeing the first worldwide bubble in history covering all asset classes.
Everything is in bubble territory, he says.
Everything.
——————————————————————————–
‘The bursting of this bubble will be across all countries and all assets.’ — Jeremy Grantham
Schiller, Krugman, DeLong, and a few other notable economists have been warning about this for the last 4 years. Durable goods and raw material orders are dropping. Growth in China and India is offsetting any drops in the raw material markets, but eventually, they will have to get realistic….10% annual growth is NOT realisitic. At that point, the bubble will trully burst.
Quick question; If every asset is in a bubble phase wouldn’t that imply that there is an existing equilibrium in the markets and that equilibrium is predicated upon an ever expanding monetary base?
Could it be that Grantham just can’t say worldwide inflation and there is no willpower to stop it from ever expanding?
BINGO!!!!
We have a winner!!!!
Yes,
a race to the bottom… no value for the fiat currency.
Chuck
http://www.socalbubble.com
Like all cartels, the worldwide central banking cartel will be brought down by a few “cheaters” who see a big advantage in not following the lead of the inflationists down the path of planned fiat currency obsolescence.
GS - interested to know where you think that will originate (i.e., cheaters)…
Grantham, chairman of Boston firm Grantham Mayo Van Otterloo, has been a voice of caution for years.
Not to imply that he is wrong, but “years?” He’s missed a hell of a rally. It may pay off for him long term if the markets he’s describing as bubbles actually burst, but he’s had to have cost his clients a boatload of money in that intervening period.
When I was trading bonds, my old boss used to say, “being early is the same as being wrong.”
i own a global asset allocation fund managed by gmo… over 12% compounded return since 06/03. i’ll take it.
your operative word is “trading.” when your time horizon is more than a nanosecond, being early is smart. check out grantham’s returns in 1998 and ‘99. you’ll see he was early. then check out the following 3 years. betting against him in the long term would have been very costly.
After pondering on your comment, “being early is the same as being wrong,” your boss is actually right. Missing four years of this rally (real estate and equities) is a ton of lost opportunities. Ken Heebner (CGM Funds) is as close as hitting the markets on timing. He bought and sold housing and energy at the right times. He also shorted tons of tech stocks during the tech bubble. I noticed that and that’s when I invested in CGM Focus. Hedge fund for the poor, they say.
And in light of that doesn’t it worry anyone that world banking mergers seem to be the next bubble?
Bakersfield, or better known as “The cow’s toilet”, is an amazing place. I was looking on the realtor.com and there are many house over 1 million for sale. amazing. pay a million to get emphysema. no wonder the only way to make money there is to commit fraud.
Byrom, the local broker, said there is now more than two years of inventory on the market. ‘There’s so many listings out there that you can pick what you want,’ she said.”
Wow, being able to pick what you want-that is drastic.
I think she meant to say, ‘There’s so many listings out there that you can PAY what you want’.
It’s basically going to play out like that no matter what she thinks…
“‘There’s so many listings out there that you can pick what you want,’ she said.”
I don’t think she was quoted correctly either:
She meant
“‘There’s so many listings out there that you can pick what you want, be it strawberries, lettuce, or tomatoes, we’ll get you qualified no problem.’ she said.”
That’s funny.
Amy:
You are right. I spent three months in the dead of summer out there on litigation document discovery in 1996. Then you could get a house for 30k if I remember correctly. I was 30 miles outside of Bakersfield at a chemical plant. I feel sorry for the people who live out there who had to deal with prices that high. It’s unbelievable. How do the people out there afford anything?
Novasold
Taft is not Bakersfield.
The old joke in the Central Valley is, if Fresno is the armpit of California, what does that make Bakersfield?
And up in northern CA, the standing joke was “if you were to give California an enima, the hose were go in in Yuba City/Marysville”.
“A tight market had suddenly become flush with resale homes as investors sought to cash out. Pulte was one of several builders to slash new home prices, in some cases by as much as $80,000 in a single day. Beaver and others are suing, but the company has said it was simply reacting to new conditions in an overheated market.”
Just like those other idiots in Garden Grove (in the ‘OC), if they had made money no one would be complaining. But since they lost, now they are sore losers and want to sue. For what and under what rule of common law?
You can sue for anything. You won’t win. But, you can sue for anything.
He could try a fraud-in-the-inducement claim. If the stakes were small enough, the company might settle just to avoid the litigation costs. Of course, his contract with the builder probably had a loser-pays attorney’s fees clause, so the builder may have an incentive to crush the guy’s obviously weak case, pour encourager les autres, and stick him with their own attorney’s fees. Of course, that’s assuming he’s got assets to collect from, which most FB’s don’t.
Let me get this straight. They are suing the builder for lowering prices. That’s supposed to be illegal? The only law being ignored here is the “owners” attempt to ignore the law of supply and demand. But, unlike puny laws written and rewritten and rewritten again by legislators, sometimes enforced and sometimes not, this law has a way of enforcing itself whether we accept it or not. Good news that.
IAT
Can you imagine walking back into the sales office a week after you purchased there and seeing the price of your home cut by $80,000?
That would hurt.
Reality hurts.It is laughable to sue a builder for lowering prices.I think the builder should sue these @ssholes for lawyer fees and incompetence.Builders should not have to waste their resources in a courtroom full of brain dead FB’s.
Hey I saw that movie fracture yesterday and if you want to see some good courtroom drama check it out.Pretty good movie I think.
$80K is nothing … Shea is offering $150K here on the Central Coast.
http://centralcoasthousingbubble.blogspot.com/
I hope it does hurt. I wonder how many people walked into a sales office in the last few years a week after not buying and seeing the price raised by $80,000?
I bought a pair of jeans once for $35. I went back to the store the following day and they had a sale on for $30. Boy was I pissed.
Sometimes you overpay for stuff. Tough. Deal with it.
Most places that sell jeans will give you back the difference to keep you as a customer.
Interesting you don’t need a contract to buy a pair of pants, huh?
I guess there’s a reason you should read the contract.
Chuck Ponzi
http://www.socalbubble.com
Maybe they will lower the price $20K for every 5 person that walks into the sales office. It worked on the way up maybe it will work………………..Maybe not.
Geez
Yeah, just for laughs, we attended a “seminar” recently for Richmond homes. They actually said that back in the boom time they would raise the price of their houses after third sale, by something like $5,000! We didn’t think quick enough, but we should have asked them, “So, let me get this straight. You just said, out loud, that the more houses you sell, the more you screw the buyers?!” But yeah, that was their operating procedure.
I’m glad it’s all coming home to roost.
*after every third sale.
(This board really needs an edit feature)
Garden Grove a.k.a. “Garbage Grove”
Let’s face it, Southern California is no longer the same place the Beach Boys were singing about.
“Garden Grove a.k.a. “Garbage Grove”
There is still a small Corner of GG, zip 92845(north of the 22 off Valley Blvd), which is fairly kept up, solidly middle class and not overrun with illegals and dense apt slums. Problem is there are few decent middle -class young families left in this clean area of decent schools and parks. The schools and parks i pass by on my way to work seem empty and devoid of kids and stay-at-home Mom’s.
This is the problem with lots of still respectable clean burgs i notice throughout LA and the OC such as Tustin, North Fullerton, Placentia, Irvine, West Torrance, La Mirada, parts of Downey, Huntington beach, Cypress, Brea, ect. Lack of affordabilty for young growing families with decent middle-class incomes able to afford $500,000-$700,000 SFH’s at affordable prices in still-decent kept-up LA?OC burgs, which BTW there are still a few places out there if you pick your spots carefully.
Ah well…there’s a company in Aliso Viejo that wanted to interview me today, so I drove down there early this morning and met with them. NICE PLACE, if not horribly plastic and overpriced.
Man, they’ve got some good looking women there. Is it surgery or genetics? Or just money?
I lived in Aliso Viejo (sold there in Aug 2005). Renting in MIssion Viejo since.
There is not alot of money there (unless you count HELOC debt), just alot of good looking women.
one has to wonder how long the world economies can continue to prop things up? With so much dinero out there, could this thing go on for a long time?
The “dinero” of course comes from the expansion of credit markets. The vaporization of trillions in home equity will lead to a credit crunch. It is deflationary as it plays out.
“A tight market had suddenly become flush with resale homes as investors sought to cash out. Pulte was one of several builders to slash new home prices, in some cases by as much as $80,000 in a single day. Beaver and others are suing, but the company has said it was simply reacting to new conditions in an overheated market.”
Good luck with suing. This is a free country with a market economy. No one forced you to buy houses for inflated prices. What a joke. Are these guys children playing with monopoly money.
LMAO,
Yes!! Haven’t you been paying attention here!
You get a ruler whack on the knuckles for that one.
The only difference between Monopoly money and Fed Notes is that one is backed by really big guns.
But that’s a BIG difference. Face it, almost all assets are just pieces of paper backed up with guns. Heck, if you own lots of gold and keep it in your house, you better get a gun…
Agreed. That’s why its important for the powers-that-be to manufacture a war every now and then - to remind people that the U.S. (along with the other European -along-for-the-riders) is still in the driver’s seat…
If his neighbor selss $80,000 under current “market value” will he sue him too?
He will just beat the sh@t out of him for lowering the comps.I’m sure we will start seeing more violence from all the stress.
>> This is a free country with a market economy
O RLY?
A true market economy would have no central bank.
ouch that’s gotta hurt. Heck I hate it when I buy a hand tool at sears ony to see it drop by $20 the next week.
The late 80’s early 90’s housing bubble is going to pale in comparison to how things are going to unwind this time.
very true.
i owned in the 80’s and i sold in the 80’s. west hollywood prices stayed the same for years.
i never got over the insomnia i had from owning and trying to sell so i avoided this whole run up this time.
who would have guessed that having money meant not being able to buy a shack in socal? perplexed and furious.
“Jason Beaver, a Sunnyvale, Calif.-based Apple Inc. programmer, got caught up in the talk of the hot housing market from friends. His name was drawn in a buyers’ lottery in the Solera subdivision and he put $35,300 down on a $353,000 home in February 2004.”
“That summer, the housing market began to soften. He nervously put the house on the market for a break-even price the same day escrow closed. He got no offers.”
“Beaver has been renting the home out for about a $1,000 a month, despite monthly expenses around $2,000. And the supply of available homes is growing.”
“Beaver figures he has spent $50,000 on his investment home, and will have to come up with $30,000 more to pay off the mortgage after he sells it at a loss.”
Beaver is the epitome of an FB. He is burning cash, with little hope of stopping the bleeding short of trashing his credit, losing the house, and possibly going BK. People like him are directly responsible for creating the bubble.
This dude deserves to burn. He bought into a senior community with the hopes of profiting off of an elderly person. Now he has the gall to try and sue the builder for lowering its price? What a d#ck!
HAHAH,
Didn’t see the screwing old people part!
Great observation..
Where is Vad Dracula when you really need him.
It would be great to see all these FBs impaled next to the “Investment Property” they bought.
Not literally, but that is just about where many of them are.
Vlad!! not vad=(
This guy doesn’t even have the option of living in the house he bought and riding out the storm due to age restrictions in the senior community. A person needs to be 55 to live in the senior community and bonehead is only 37.
What’s even funnier is that he actually thought old people have money.
“boomers were supposed to buy in sunny sandiego ” Liarah/Young, no ?
As long as he doesn’t name is kid “Harry” I think everything will be ok - uh minus the $80k he lost.
“…..A person needs to be 55 to live in the senior community….”
Maybe not. Many of these communities only require one of the owners/residents be 55, so there could be another option for Bonehead…..
I’m envisioning Jason setting on the family room floor, sanding the corns off the toes of his 64 year old wife, as he mutters to himself….(only 18 years to go before I can dump this hag and live here alone). The little misses is wearing a house coat and eating bon-bons, switching the TV channel between Oprah and the new Rosie show…..
“And when you’re done with the feet, that laundry ain’t gunna do itself, skippy”!!
you will be 64 some day.
“It would be great to see all these FBs impaled next to the “Investment Property” they bought.”
Or we could just put em up planet of the Apes style on great big wooden X’s.
Im always amused when I get such a nice dose of “Idiot California Real Estate Investor getting kicked in the sack” on the California thread……especially this one.
Preying on the elderly is absolutely horrible, and this guy deserves all the trappings of the bubble.
Nice to know Apple Computer is hiring incompetent and unethical employees. Who isn’t? This guy is probably making $200K+/yr and yet is so outraged by losing a few tens of thousands on a poor bet.
Get over it!!!!
Yeah, he is soo stoopid that he dragged Apple into it.
Gee, that kinda seems like a career limiting move!
Don’t worry, the way the economy is headed (and outsourcing) his $200K days are numbered…
Kinda reminds me of a Beaver I knew as a kid. On TV.
Well gee Wally, Eddie said I’d make all kinds of money off that lemonade stand he sold me.
That’s pretty funny.
Think about this… Programmers usually lose their job once every 3-5 years. It’s just how the computer market works. Most of the computer people I know if they’re good survived the dot com blowout. If they survived the dot com crash they’re smart enough to keep a fairly large chunk of change available in case things go wrong.
This guy is probably just young, dumb, and full of easy money. Not realizing that programmers make a bunch of cash because they need to have something to fall back on between gigs.
Speculation pure and simple.
You forget that he’s a programmer for Apple which means that “common sense” was left in the lobby before entering the building.
An OS/2 programmer would never have fallen for this trap.
Most of the computer people I know if they’re good survived the dot com blowout.
Don’t forgot a lot of smart OLDER engineers were forced out by H1B & L1 visa holders.
He’d have done better buying call options on his own company’s stock. Damn.
Gotta figure he’s making so far over the median that his only BK option would be a 13. Any way you cut it, he’s on the hook for every dime.
He’ll probably wait it out and turn a five-figure hole into a six-figure canyon.
Jason Beaver won’t be catchin’ much of said article, if he was counting on money to boost his chances.
Oops
sorry.
IAT
I would love to see Beavers loan application . Did Beaver get a owner occupy loan when the CC’and R’s restricted him from being a owner-occupant ?
If you want to sue a builder over a investment buy I don’t think you will get any empathy from a Judge or Jury if you submitted a liar loan or it’s proven you were a speculator who was looking for a quick flip.
I guess with some of these cases the FB is claiming that the sales staff of these builders promised gains for these investments . I don’t know if these oral promises are going to hold any weight in Court or not but it seems to be the angle some of these FB’s are coming in on . Also I guess some of the FB’s think that the builder should reduce the price for the FB that they slashed the price to on the premise that they slashed prices so shortly after the FB’s bought that they must of had prior knowledge of the market conditions and lower values .
The court cases will be very interesting because I wonder how Courts will rule regarding behavior during a mania ,especially when the market turned so abruptly .
According to Kübler-Ross, there are five stages of grief we experience after a loss, be it the loss of a friend (money) or the losses associated with a chronic illness. (Delusional Purchases of Overinflated Real Estate.)
1. Denial
2. Anger
3. Bargaining
4. Depression
5. Acceptance
When (not if) all current Sellers, including Homebuilder-Sellers, find their way through these steps, we will have reached a turning point…..IMO
I think based on what LA-Y had to say…..all that short term long term econometric mambo-jahambo…..she’s currently bargaining.
Leslie Simpleton-Young’s five steps:
1. Denial - A slight softening of reality perception.
2. Anger - A bit of air leaking out of the happiness soufflé.
3. Barganing - If I keep repeating ‘soft landing’ please God make it come true.
4. Depression - An increase in negative elation.
5. Acceptance - I’m a lying windbag.
I think most people are vacillating between the Anger and the Bargaining stages - and then lurching into the Depression stage when their “reduced price” home still doesn’t get an offer.
I haven’t seen much of the Acceptance stage - these early-days foreclosures are still too over the top. As I read recently on another real estate board, “don’t load up on the salad because the main course is still coming.”
Got forks?
In San Diego they’re still in the Denial stage. At the end of this summer they will have moved into the angry stage. With lawsuits flying in all directions. By fall they will be in the bargaining stage.
Spring 2008 will bring hopeful talk from sellers. In the summer they will go immediately to the bargaining stage. 2008 fall will bring depression and acceptance.
certain parts of L.A. are in denial too…I know my friends there still are….
Got crazy money?
Just a microsopic look into the westside Housing Bubble:
On 2100 block of Federal Ave just north of Olympic ave 4 spankin-new detached homes(they are townhomes)for sale. Lost the website info but they are hi-end 3 bd/3.5 baths which share a common driveway. The SHF Next to these units is for sale, probably because the owner just got f*cked by the value of his property reduced due to the tall shadows cast by the 3-story townhomes, blocking his sun.
Across the street are a row of dilapidated 80-yr old chicken-coop clapboards,in a sorry state. Yes-this is the westside of LA. Just up the street on Mississipi/federal a brand-new apt blvd in process of being put up in place of a teardown.
This area off Olympic just west of the 405 is a mismash of commercial blds and newly-constructed housing units, with some older semi-industral, commercial operations across the street down toward the Exposition blvd/railroad industrial zone.
Just down the street near Centinelia/Pearl in Mar Vista area a new large apt complex is going up. The owner of the SFH next to these units has his rather shabby property for sale, again because the apt unit just devalued his holding and altered the SFH tidy ambience of his westside hood.
These scenes are no doubt being played out all over the Westside as well as rest of LA as the current trend toward constuction of Multi-unit complexes in downzoned SFH areas continues at a brisk pace. See lots of this in Santa Monica, Mar Vista, Palms, Sawtelle District, ect. Anyone else seeing this in other parts of the Westside?
I agree on the lawsuits becoming more common. Usually whatever silly trend starts in L.A. (or SoCal) branches out to the rest of the country…
we are far far away from the acceptance stage.
“Beaver figures he has spent $50,000 on his investment home, and will have to come up with $30,000 more to pay off the mortgage after he sells it at a loss.”
It sounds like California real estate has been a little hard on the beaver.
Yes, and he calculates his monthly expenses at $2,000/mon. He must have a neg am option arm and is accruing another $1000/mon to principal. Which he can did for when he sells. Or pay tax on when he is 1099′d!
My favorite quote: “‘The fast-growth, make-a-quick-buck real estate investment, I don’t think I’ll try again,’ he said.”
Once that phrase has been repeated 20,000,000 more times, we will have a market at equilibrium and a year later, we can buy houses at below the mean…about 2011.
Whatchoo talkin’ about Willis?
I was in SD this week.
Still WAY overpriced. We got a LONG LONG way to go.
Also, the disparity between rich and poor has become so much more obvious. You can feel the anger there.
It’s a noce place, no doubt, just not THAT nice.
“Also, the disparity between rich and poor has become so much more obvious. You can feel the anger there.”
I think you’re confusing prosperity and FB. The SD housing market went crazy the last 4-5 years. People broke their neck just to get a chance at the “free money” all their friends tapped into.
Unfortunately the reality is that many can’t afford the house they’re living in and they can’t sell it either because nobody is buying. But, that appraisal they got last year from “Crazy Stan’s overpriced home evaulations” allows them to pull money out of the HELOC. This provides a glimmer of hope that if the owner can just hold on long enough the housing market will turn around again.
The sad truth is that the housing market is going to be in the toliet for a long time.
All the “rich” people you saw are just dead men walking.
To respond to the second part of your statement…
Yes, people are pissed in San Diego right now.
“Crazy Stan’s overpriced home evaluations”
LOL, very fitting. Appraisers have shown they have zero credibility, or value for that matter. There needs to be serious reform in that field, at the very minimum. Their rubber stamping made all of the funny money sales possible.
Some of the rich people are really rich, or at least bought their houses 20 years ago and may own them free and clear or close enough.
“Also, the disparity between rich and poor has become so much more obvious. You can feel the anger there.”
As I have stated here numerous times, SoCal will turn into something akin to a third world metropolis. There will be no middle class, just haves and have-nots. But the have-nots will be pissed and always trying to rob, rape and assault the haves. I would not want to own r.e. in L.A., North OC or San Diego (too close to a porous border). You have seen how liberal a Repub Pres can be, imagine the lack of policing if a Dem gets into office.
Some people are going to view beachfront property at half price as a bargain, but I see it as a dangerous proposition.
More than a few books I’ve read strongly suggest living conspicuously *beneath* your means — i.e., inexpensive cars, clothing, etc. — so as not to invite unwanted attention.
ppl are still spending…look at the clothing stores this weekend.
spending like $ are forever flowing
Nothing to worry about. Aging Baby Boomers will step in and prop up the RE market.
Uh, maybe not: http://www.msnbc.msn.com/id/18335371/
(Baby boomers going bankrupt at faster rate)
Mark my words: the grandkids of boomers are going to compose one of the most financially savvy generations this nation has ever seen. They are going to witness first-hand the widespread economic destruction of their parents and grandparents and vow not to make the same mistakes.
To every generation their own mistakes.
unfortunately, as their attention spans rival those of a gnat, they are destined to the same failures.
no offense to you toasty, but most of those kids are glued to the playstation while listening to the ipod, huffing glue, and they cant find the cell phone thats ringing, all while porn reigns supreme on their high speed internet.
Casey’s losing his last house today.
http://donthatecasey.blogspot.com/
I am very saddened to hear that.Time to pop a cold beer and celebrate.
For someone not in the know, how about a 20 word explaination of who Casey is?
The poster boy for mortgage fraud, flips gone bad, foreclosure, FICO annihilation, and how NOT to speculate in real estate.
bubble boy
lol
http://www.iamfacingforeclosure.com
Wow, if that guy could buy that many houses at that age, we’re SOOOOOOOO screwed.
A failed twentysomething “real estate investor” who is the epitome of what happened the last few years in real estate
20 words is tough
http://www.iamfacingforeclosure.com
A fart from a rat in Bangladesh
also, see Suze Orman repeats to see the fool
did you see at the same time Casey had his car broken into and the stereo stolen….and no insurance due to non-payment. SWEET!
“While he’s not completely sworn off real estate investing,”
I reckon if I lost ~$80K on my 1st attempt at Real Estate Investing I’d go find another thing to invest in.
I love how the idiot flipper in the AP article is a ‘LIFE COACH’ — a self-appointed title, no doubt. What gall
From the first article:
“Schwartz, a 44-year-old life coach, said he “narrowly escaped financial disaster.” But the effects of the housing crunch would reverberate for years, he said, something he expects to see among the clients he coaches to succeed in their lives and careers.”
“The day Schwartz reserved his home, the sales staff was raising prices $20,000 after every fifth buyer came inside. The $500,000 house he and his wife were eyeing had shot up to $540,000 by the time they sat down. Somehow, it still seemed like a good deal.”
So, this guy advises people on their lives and careers, and yet he somehow thought that everything was fine and he was getting a good deal when the HB was raising prices $20K after every 5th buyer? Sorry, but gut instinct should have told him that something was not right. While, for the life of me, I cannot understand the concept of paying someone to be a “life coach,” even if I did I would not want it to be someone like Schwartz.
What exactly is it that qualifies one to be a life coach? Living a life? Breathing in and out?
Its what Dr. Kevorkian did in his younger years before he found his true calling.
This is how:
http://tinyurl.com/37bvyn
I’m a death coach. Business is really booming!
Could I deduct a megaphone as a business expense!
Geez
Beaver figures he has spent $50,000 on his investment home, and will have to come up with $30,000 more to pay off the mortgage after he sells it at a loss.”
“While he’s not completely sworn off real estate investing, Beaver said next time he’ll try a more traditional approach, to buy and hold for the long term. ‘The fast-growth, make-a-quick-buck real estate investment, I don’t think I’ll try again,’ he said.”
Let’s break out the world’s smallest (or largest) violin for Beaver and all of the flippers like him. If it continued to go up (obviously couldn’t continue indefinitely to all except the complete idiots or blind). Another bagholder whining to the media about how ‘unfair’ it is. What was his plans for having his GF deal with the squirrels? And what was the letter criteria?
Off italics? Sometimes it works, sometimes it doesn’t.
“Taken together, Riverside and San Bernardino counties represented the third-highest-ranked metropolitan area in the nation for foreclosure activity. Combined, the two counties experienced a total 17,499 property foreclosures between January and March, RealtyTrac said.”
Every week we draw closer to the Inland Empire being the number one area in America for forclosures. Yesterdays LA Times had a very nice article regarding illegal construction workers sending money home to Mexico … it had dropped 30% from last years totals. The stats are probably lagging the real truth.
While the IE will certainly be a foreclosure wasteland (and rightfully so), check out this stat from the first article:
“In Clark County, which encompasses Las Vegas, one of every 30 homes began the process toward foreclosure last year.”
One out of every 30 homes? Last year? What is that stat going to be this year?
This year? Dunno. Next year: One out of every 30 homes managed to avoid foreclosure…
Yesterdays LA Times had a very nice article regarding illegal construction workers sending money home to Mexico … it had dropped 30% from last years totals. The stats are probably lagging the real truth.
This is going to be a huge problem. Most illegals laid off from construction cannot collect unemployement, with no work here or Mexico what are they going to do? You won’t be able to go to the hardware store without them jumping on your car.
Illegals sending money home has been touted as the greatest foreign aid program America’s ever engaged in, and all w/o any “plan” - the Mexicans will be hosed…
Everyone will be hosed. Large concentrations of unemployed young men creates ugly situations. The lower the education level of the concentration, the uglier the situation.
But Mexico will hit the wall harder than we will. Their economy is so corrupt that without those payments they cannot meet their dollar obligations (even with oil).
There is a reason the Peso is not a reserve currency.
Got popcorn?
Neil
“Taken together, Riverside and San Bernardino counties represented the third-highest-ranked metropolitan area in the nation for foreclosure activity”
I was out in a part of Corona, which is called Coronita District(Off Serfas Club Drive). This is actually one of the better parts of Corona, but there is definitely panic in these parts. Lots of for sales signs, and this on a Friday. Also lots of properties with brown unwatered lawns, some quite weedy.
Keep in mind this is a relatively upscale neighborhood of quiet shady large SFh’s, with the MT view country club golf course running thru it. But a short drive onto sixth st going east toward The Corona Central District one see’s evidence of real dilapidation such as numerous liquor stores, a growing homeless presence, numerous illegals inhabiting the abundant nearby tenement apts, shabby ill-kept streets and business fronts, ect.
This scene repeats itself all over the shabbier parts of the IE-which are quite abundant-and provides evidence of a real housing /economic downturn being played out in the IE, with the foreclosures being the most visible part of the process.
“Beaver said next time he’ll try a more traditional approach, to buy and hold for the long term. ‘The fast-growth, make-a-quick-buck real estate investment, I don’t think I’ll try again,’ he said.”
This is why buying isn’t a good idea for a long time. I’ve been on two very recent plane rides where the person next to me has flipped a house and had it go bad (lost a some money or barely broke even) and stated they learned something and can’t wait to do it again as real estate “is the only real way to financial independence.”
I’m getting the same vibe when I read this article about the Beav. When guys like this and my fellow plane passengers say they will never invest in real estate again, I’ll know it’s time.
Isnt that funny? How about working hard and saving $s. You dont need that brand new BMW
Maybe I am offbase but BMWs and their ilk fail to excite me - dime a dozen at this point…
get a Ford and stand out in the crowd!!!!
“Jason Beaver, a Sunnyvale, Calif.-based Apple Inc. programmer, got caught up in the talk of the hot housing market from friends. His name was drawn in a buyers’ lottery in the Solera subdivision and he put $35,300 down on a $353,000 home in February 2004. The community is restricted to people age 55 or older; the 37-year-old Beaver had no intention of moving in.”
“That summer, the housing market began to soften. He nervously put the house on the market for a break-even price the same day escrow closed. He got no offers.”
I’ve done this! Cep’t the only difference was It was a dollar and a shiny metal machine with lots of lights, pretty fruit symbols, and three 7’s
Yep, lots of gambling done in Vegas.
And this gambling…
“When the [San Diego] market slowed, many buyers forfeited their deposits, or let their properties get repossessed by the banks. As a result, the inventory of unoccupied condo units downtown since early 2005 has soared fivefold, he said.”
Hence… “San Diego condos for everyone!!”
Hence… “San Diego condos for everyone!!”
I’m already saving up my S&H green stamps.
(gotta be old to remember those).
So true… I remember saving them hoping to be able to get one of those rubber inflatable boats…. Somehow I don’t remember getting anything nicer than a snorkel and scuba mask that leaked like a sieve.
Remember the Brady Bunch episode where the kids fought over what to get??? Oh, I’m sooo old.
there are lots of us here who watched Brady Bunch before syndication!
Hey, what happened to Greenlander? He(?) was always throwing out the “Free (fill in the blank) Condos for Everyone” line.
Wait, I’m confused….
http://money.cnn.com/2007/04/27/real_estate/bc.washingtonmutual.mortgages.reut/index.htm?source=yahoo_quote
First these two quotes:
“The largest U.S. savings and loan said Friday it is also significantly reducing loans that require little documentation of borrowers’ income or assets and second mortgages that let borrowers buy homes with little or no money down.”
“Beck said WaMu has reduced “piggyback” second mortgages and “stated-income” loans, sometimes called “liar” loans, because they require little documentation and can lead to fraud.”
From what I’ve heard, these “little documantation” loans and “stated income” loans are called Alt-A. A credit, but alternate because of the lack of documentation.
So, I was confused when I saw this later in the article:
“The thrift also expects to boost “Alt-A,” or “Alternative-A,” lending, which falls between prime and subprime in quality. First-quarter Alt-A loans rose 49 percent to $7.6 billion from $5.1 billion, the thrift said.”
Scratcehd head….. What gives. What are they REALLY doing? More negative amortization?
Went to a conference the other day, for what it’s worth, some different folks involved in the funding of residential (very credible) said:
First - It’s going to be bad for at least 12-24 months…we haven’t seen the worst yet in many markets.
Second - One guy thought in the most bubbly markets, we’ll see home prices fall close to 30%. This person spoke for about 20 minutes on the topic, and as I heard him speak, I quite frankly wouldn’t be surprised if he spends some time on this blog.
The NAR may be cheerleading in the MSM, but the realistic folks behind the scenes don’t see things all that differently than the people here.
I work in a building that has a NovaStar finincial office. Big office with enough room for 20 at least. Since Feb I’ve only seen one guy in there.
In fact, the sign on the door is made out of little sticky letters, and someone peeled off enough letters to change the name to “No Sta”. Took me a bit to get it…. Make the A hard and say it.
It has been like that since February at least, and they haven’t bothered to fix it…. No Stay indeed.
Next to NOva STAr is a Title Company. Lots of activity in there back in February, but now pretty dead. Down from over a dozen people to 2-3 in there most of the time.
Hmm, even the Mortgage Bankers Association is bearish. Trouble brewing…
“This week’s reports suggest that the home building industry is far from reaching bottom. Although housing starts edged up 0.8 percent in March, the gain was entirely in the Midwest, which experienced unseasonably warm weather during the month. Despite the increases in February and March, starts have reversed only about half of the 14.3 percent drop in January. Both single-family starts and multifamily starts have declined significantly over the past year. Year-to-date single-family starts were about 32 percent lower than those in the first 3 months of 2006. Year-to-date multifamily starts with 5 units and over were about 21 percent lower than those last year.”
“Builders’ deteriorating confidence suggests that the rebound in activity will likely be later rather than sooner, according to the National Association of Home Builders (NAHB) Housing Market Index, which declined by another 3 points in April. The cumulative 6-point drop in the index during March and April suggests that recent tightening in lending standards has worsened the housing slowdown and will likely delay the recovery of the housing market. Builders explicitly commented in the NAHB survey that tighter lending standards have hurt current sales and cancellations rates. The latest Mortgage Bankers Association Weekly Survey of Mortgage Applications suggests that home sales should also moderate further, with the purchase index trending down from high levels experienced at the beginning of the year to the lowest level in 8 weeks. The main driver of the weakness in the index has been a significant pullback in adjustable-rate mortgage applications to the lowest level in over 4 years.”
(http://www.mortgagebankers.org/NewsandMedia/PressCenter/53761.htm)
———————-
I just read that first thing about the Beaver getting his lucky name draw in the lottery.
Oh, how funny is that. A lottery to buy a home in this vast country of ours.
Dumbass!!!!!
A very strange lottery indeed, where the winners (over time) are the ones that DON’T get chosen.
I have a friend who got put in a lottery to buy a downtown condo circa 2002 - she had to borrow thousands to make it “look” like she had the down payment - I was aghast that she was borrowing the money but she was so sure she would make a ton of money that she could repay it easily.
She didn’t get the condo and I learned again that wonderful saying - “Neither a borrower nor a lender be.”
‘All in all, it was a weird, weird lottery.”
Got stones?
Not to mention that he isn’t even eligible to live in the friggin’ house! What kind of lottery is that? Do ya think Pulte would need to hold lotteries if they actually restricted who can buy the houses to people who actually wanted to live in them? Crazy.
Back around 1998 I was looking for a place to live in the SF-bay area and found some cute townhomes being built in an ok (not good but ok) location. After walking around checking out the construction and the floorplans I went back to the sales office and it was packed. People who wanted to buy were asked to put their name into a hat. At that time I was fully intending to buy even though prices weren’t set and were expected to be in the 400k range. I froze, watching the proceedings as a man in a police uniform dumped his name into the hat, then some ugly woman got excited when her name was chosen. I just couldn’t bring myself to play a lottery at a chance to purchase a random townhouse for whatever they chose to charge me later. It seemed too stupid to me so I walked out. Now those same townhomes are “worth” 700-800k. Renting, I have always been able to live within a few miles of where I worked (3 different jobs since then), and I hate driving, so I am still happy with my decision in retrospect. At that time in the BA it was how things were done and if you wanted a house you had to put away your pride and play their stupid game. But homie don’t play dat.
posts not going thru….
So earlier this week I overheard a mortgage broker/realtor bragging about how he got a landscaper on $15/hr into an $800k house in OC. How? The landscaper has 5 illegals living with him, charging them $1000/mo each to make his $6000 mortgage.
He then turned to me and said, ”I would never put someone in a house if they were going to lose it. Be sure to come to me when you’re ready to buy.” I went home and took a shower immediately.
‘’I would never put someone in a house if they were going to lose it. Be sure to come to me when you’re ready to buy.’’
LMAO!
A builder friend I know bought numerous properties in the SFV. BOught too high and has been unable to sell them for months. He’s in a pickle because he’s already a couple of months late on the mortgages.
I’ve also noticed other properties in my neighborhood bought 9 months ago, fixed up (cheaply) and listed at $900K (approx. $200K more than they were bought for). Listing prices just keep increasing, YET nothing is selling. The only thing increasing in the pre-foreclosure rate.
The amount of FRAUD involved with all of the LIAR loans is truly staggering. It cannot end in any way other than BAD!
where are u in SFV? SO?
Anyone idiot enough to hire that “Life coach” - deserves their upcoming lifelong poverty and begging
Jason Beaver, a Sunnyvale, Calif.-based Apple Inc. programmer, got caught up in the talk of the hot housing market from friends.
Dumbass!!
Hi, I’m a Mac.
And I’m a FB.
Hey FB, want to go on a cruise I’m booking on Safari.
Sorry Mac, I’m 30 grand in debt for a condo I can’t even live in.
Damn FB, you’re dumber than Vista.