It’s All About The Saturation Level In California
The Orange County Register reports from California. “Former Fountain Valley residents Billy and Betty Lambright moved to this dairy land east of Chino in July, paying $620,000 for a new two-story house. A few months after they moved into their tile-roofed dwelling, the builder dropped the price for the same model by $45,000, plus free upgrades.”
“‘They gave me a good deal, they said. But after that, they dropped the price to $575,000,’ Lambright said. ‘You can’t cry over spilled milk.’”
“The Inland Empire had the biggest percentage increase in mortgage defaults in Southern California and the second highest gain in foreclosures, according to DataQuick. Foreclosures were up 829 percent, compared with 733 percent regionwide. Only Ventura County had a bigger jump in foreclosures.”
“Scott Chappell, a past president of the Multi-Regional MLS, cited statistics showing that the number of defaults ending in actual foreclosures rose from 8 percent in the fourth quarter of 2005 to 32 percent in the fourth quarter of 2006.”
“‘Those are huge numbers,’ Chappell said. ‘We’re thinking we’re going to have the same things we had in the mid-’90s.’”
“People like Lake Elsinore resident Charles Lucas are feeling the effect of that rise. Lucas put his four-bedroom, two-story home near the lake on the market for $499,900. That was in June. Almost a year and 12 price-reductions later, they’re still looking for a buyer, despite a $100,000 price hit.”
“‘(It’s) an expense and quite strenuous,’ he said of the dozen or so open houses and constant impromptu showings.”
“The glut of homes for sale has forced some owners into foreclosure, said real estate agent Pat Crowe of Perris.”
“‘I know of one home in the Perris area, she had over $100,000 in upgrades. Even though she dropped her price $50,000, she couldn’t get anyone to come out and look at it,’ Crowe said. ‘So she had to give it back to the bank. It’s not a good scenario, but she’s not the only one going through it right now.’”
The Contra Costa Times. “Median home prices continued to drop in March in most East Bay cities, with only a few modest gains in unexpected places. Walnut Creek prices dropped 8.6 percent, Concord prices fell 4.8 and Oakland prices decreased 1.2 percent from March of last year.”
“Kathy Thomas, an agent in Pleasanton, said she has seen drops in prices in the Tri-Valley area. San Ramon had a drop of 14.1 percent in median price, from $855,000 to $734,600.”
“‘There’s so much new construction out (in San Ramon); it’s all about the saturation level,’ she said. ‘People are more choosy because they can be and also make lower offers.’”
The San Francisco Chronicle. “As you may know, I’m opposed to any type of taxpayer bailout of subprime mortgage borrowers or lenders. Yet I believe our state regulators and law-enforcement agencies should be doing much more to pressure lenders and brokers to clean up the mortgage mess they helped create.”
“While the problem is usually blamed on an explosion in loans to borrowers with subprime credit, the real problem ‘is the way these loans were structured and sold,’ says Jeffrey Berns, a Tarzana (Los Angeles County) lawyer who is preparing to file suits on behalf of hundreds of borrowers who took out option ARMs.”
“Bob Bishop got an option ARM from IndyMac Bank when he refinanced his condo in San Rafael last year. He says his loan broker, Paul Mikhail, told him that he would get a 2 percent rate and that his payment would be fixed for five years. Mikhail warned him that interest could be added to his principal, but ‘He said the most this is going to increase would be about $10,000 over five years,’ Bishop says.”
“In fact, Bishop says, his principal is increasing at a rate of about $10,000 per year. When he called Mikhail to find out why, ‘He apologized and said this is what we were told by the lenders,’ Bishop says.”
“‘I would argue that if there was no apparent way for repayment down the road after these things started adjusting and it was readily apparent to someone who ought to know, we would investigate, get all the sides. Unless there was some sort of reasonable explanation (as to how the borrower would pay off the loan), I think that’s an actionable offense,’ says Tom Pool, spokesman for the California Department of Real Estate.”
“‘State courts have found that mortgage brokers are fiduciaries in these types of transactions,’ Pool adds.”
The Union Tribune. “The downturn in San Diego County home prices is beginning to show up in a surge of requests to reduce assessed valuations that determine property tax bills. San Diego County Assessor Gregory Smith said about 900 homeowners since January have requested reassessments based on falling prices in their neighborhoods.”
“By the mid-May reassessment application deadline, he expects as many 2,500 requests with 1,800 reductions likely to be granted, more than 26 times as many as last year.”
“County records indicate, for example, that a one-bedroom, one-bath condo on the third floor of Acqua Vista sold for $323,000 in March 2005, while a nearly identical unit three doors away sold in January for $300,000.”
The North County Times. “The signs are literally everywhere, as apartment complexes display banners and notices advertising discounts on deposits and first month’s rent. And some ‘for sale’ signs in front of single-family homes have recently been altered to read ‘for rent.’”
“Over the last six months, the rental market has shifted, giving renters more choices and greater opportunity to bargain for lower rents. In San Diego County, vacancy rates among large rental complexes jumped from 1.84 percent to 4.54 percent during the six-month period from October through March 31, the highest six-month rate since 1995, according to a survey.”
“In line with the countywide trend, the vacancy rate in North County has more than doubled in the last five years, to 4.52 percent. However, the vacancy rate in some North County communities, including Escondido, San Marcos, Fallbrook and Bonsall, spiked in the last six months, to 7.59 percent.”
“John Baker, property manager in Escondido, said that he has fielded an increasing number of calls from people wanting to rent out homes and condos that they own. ‘A lot of people bought condos with the intent to flip them,’ he said. Now that real estate sales in the region have slowed, they are looking to rent them out. ‘They figure they’ll ride out the market,’ he said.”
“Baker said that when he speaks with owners of homes they plan to lease, he has ‘to talk them down’ from the rents they hope to charge. He said last month that he tried to work with one woman but couldn’t because she wanted to charge a higher rent than was realistic. The amount he suggested ‘wouldn’t cover her costs,’ he said. ‘That sank her ship.’”
“Robert Griswold, who manages property, said he spoke with a woman in Temecula who owns three rental properties, two of them vacant. He advised her to sell one or two immediately ‘before the house of cards collapses.’”
‘One of the hardest things to find in Manteca in the spring of 2005 was an existing home for sale sign. This spring, the stockpile of homes being marketed as home-for-sale signs are popping up faster than dandelions. There were 16,194 single family homes within Manteca’s city limits with 78 listed for sale or just over 0.9 percent of the existing 2005 inventory.’
‘Today, there are 17,509 existing single family homes with 551 available for sale through Realtors using the Multiple Listing Service or 3.3 percent of the city’s inventory. The glut is being blamed by Manteca Realtors on a wide array of reasons from buyers who were overextend in ‘creative financing loans’ that are coming home to roost, to a general slowdown in the market, and even a big rush by many long-time owners over 55 who are eager to sell their homes before moving into Del Webb’s Woodbridge at Manteca neighborhood now under construction.’
‘Couple that with the median price so far in 2007 for previously owned homes sold in Manteca being $401,014 as opposed to $433,445 a year ago and some may read it as a sign the market is going to keep going down for an extended period. The median price is dropping in Manteca because there are more homes on the lower end of the market selling in the sub-$350,000 range. Last year at this time, the big sellers were in excess of $450,000.’
‘In Ventura County, notices of default on houses and condominiums jumped to 965 in the first quarter, up 123 percent from 433 over the same period a year ago. Defaults are the first step in a lengthy process leading to foreclosure.’
‘During the first quarter this year, there were 203 foreclosures in Ventura County, up from 17 over the same period a year ago, according to DataQuicke.’
Santa Barbara County NOD’S are up 180% year over year. What a mess.
The thing that burns my ass is our local paper, The Santa Barbara News-Press, ran a story 3 days ago with the headline “Santa Barbara County immune from foreclosures”. What a crock.
Over the last week I’ve found myself having to defend the rights of the paper’s owner, Wendy McCaw, to control the content of her paper and who she hires and fires. The Teamsters and the NLRB are attempting to force a union on her, and I’ve been active in her fight against them. But man, I really have to hold my nose when her paper runs stories denying the housing bubble collapse.
Why are you helping a rich newspaper owner fight unionization. You are helping a rich person get richer at the expense of the working person.
How much is enough money for McCaw. I bet she has lots of money. I bet her workers don’t. I also bet Mccaw didn’t work hard to found her paper. I bet she inherited it from her family, or married a guy who formerly owned the paper.
Either way it’s just another case of the rich trying to get richer.
McCaw got her money from a billion dollar divorce settlement. She bought the paper with that money.
See what I’m talking about. I live about 2,500 miles away, and never heard of the paper of McCaw. But I knew that she didnt earn it. I absolutely knew it.
I knew she just grubbed onto the money somehow. She just used her “feminine” charms to marry a guy with bucks, and then get his bucks in a divorce settlement.
She seems to be a nice person, has a gulfstream over at the airport in her private hanger. Treats the pilots and crew pretty nice from what I saw. Also, the money came from cellular phones. She may not have been the man, but she was there for the entire ride backing him up, therefore she earned and deserved her cut.
Deserved her cut? I must have forgotten that part of the marriage vow.
Deserved her cut? I must have forgotten that part of the marriage vow.
It’s pretty simple. When you decide the “til death do us part” clause doesn’t hold, you just divvy up the money earned during the marriage 50/50.
Seems pretty fair to me.
“I want half Eddie! HALF!”
Eddie Murphy sure was funny once.
Yep, anyone who is foolish enough to enter a legally binding contract without any protection (prenuptual), deserves what they get
Here’s your answer: the newspaper is her private property, just like this blogsite is private property. She has the right to determine who has access to her private property, just the way Ben Jones has the right to determine who is allowed to come on his blogsite. There is no difference between a website and a newspaper as far as First Amendment protections are concerned. If Wendy McCaw or Ben Jones or any other newspaper/website owner wants to get rid of an employee or deny access to someone that is their constititional right.
Please do not turn this into a rich man-poor man issue.
It’s a business, not private property.
Though I’m sure the IRS would be more than happy to tax it as private property if that’s her argument.
It’s a business, not private property.
Since when are businesses not private property?
Okay, and I suppose all the businesses in America that have ever unionized were owned by someone who determined what people would and would not do. In the vast majority of cases I suppose the business owner did not really jump up and down to support the unionization.
Point being that if we used your idea, then we would all just do what the business owner wanted as the business was theirs.
As I recall men such as Henry Ford and the Rockeffellers used violent tactics to bust unions. But they were the business owners so they could do what they wanted.
See what I mean.
If it was private property -
1) she would have to pay CA property taxes at the full value of the paper’s land when she bought it, not at the reduced rate of when the business bought it.
2) No business right offs, including depreciation.
3)etc, etc…
Amost forgot:
Private property = Full Liability
You might want to rethink that strategy Clearview.
To Captain Jack Sparrow,
Let’s talk about violence and unions. On October 1, 1910, the L.A Times printing press building was bombed by two AFL members. 21 people were killed. The AFL (American Federation of Labor, which is the AFL in the AFL-CIO) hired Clarence Darrow to defend the killers. Darrow attempted to bribe several jurors and was caught in the act. The L.A Times’ private detectives then produced a receipt for a box of TNT signed by one of the defendants. Darrow copped a plea deal for the killers, and was run out of the state of California, forbidden from practicing law in the state ever again.
To this day, Darrow and those two killers are heroes to union activists.
Wendy McCaw is attempting to prevent her private property newpaper from being controlled by the Teamsters, an even more violent union than the AFL.
Yeah, the decision of a few dozen writers and editors to unionize in 2006 has a whole lot to do with bomb-tossing in 1910. Really valid logic there. While we’re at it, perhaps we should nuke Japan today because of the Pearl Harbor attack in 1941.
The labor movement in the USA is very weak, but the right to bargain collectively is part of Federal and California law. There is no evidence whatsoever that the NP employees violated any laws in accepting union representation. McCaw most certainly does not have the legal right to walk away from a union vote. Your insistence that she does is without any legal merit. The First Amendment does not give her the right to turn back a union vote. Simple.
Prior unionization attempts were voted down by employees, who found the benefits not worth the costs. The Teamsters’ success in unionizing at the NP is a sign of just how far down the crapper McCaw took her ‘property’.
The employees of the New-Press attempting to unionize the paper are doing so in order to protect themselves from being fired if they refuse to edit or change their stories as desired by NP management. That violates the NP’S First Amendment rights. McCaw has every right to fire a reporter who refuses to obey her directions as to the content of the newspaper. She owns the buildings, the presses, the copyrights and trademarks. It’s her paper, her choice.
uptown:
Not sure what your point is, but you are thinking that private property and business are mutually exclusive statuses. They are not.
Unionization is why you now have globalization and why companies like Ford and GM are struggling to stay afloat. At some point you have to pick your poison. Unionization and the jobs keep disapperaing overseas or Non-Unionization and the jobs stay home. Which one is it going to be?
“Unionization is why you now have globalization…”
Haha you’re joking, right?
Or non-unionization and the jobs still move overseas because most Americans are not willing to work 16 hour days for $.50 cents and urinate in a bucket, and the corporations need a better bottom line so the stock market gamblers don’t flee their stock because they only had a normal, successful, profitable, quarter.
Years ago in college I took a class that specifically dealt with the income gaps between rich and poor. A simple game that involved dividing us into different groups. Each person received a token a certain color then received a starting bonus and salary based on their token color. Everyone had basically the same costs not enough for the poorest to get buy, middle class had a tough time and the golden pieces who made 10 times what anyone else did. By the end of the 10nth cycle everything was owned by a limited high income group, or owed them money. The low income group was no better off than in the beginning, they were still broke. The middle class was gone. We are in cycle 7.
Heaven forbid she would have to actually treat her employees as real people.
BTW - that hire and fire stuff is BS. Most managers hate to fire staff either way, that’s why corp’s have layoffs - gives them a chance to clean house.
Unions are good…California Nurses Association is very good to me…Why do you not like Unions?
My point exactly krills. You are treated good because of your union. I was treated good in my job because of my union. Only the very wealthy or people who are paid by the wealthy do not like unions. Unions are good to average people.
Please… Unions are nothing more than legalized extortion rackets. They are like leeches sucking lifeblood from companies. I’ve worked union gigs before and it’s funny for every so-called benefit they get you at the table their annual fee’s increase to at least suck half of that benefit away.
Work in a hospital with numerous patients to care for and then get back to me about Unions and nurses…mrincomestream..
I thought this was a housing blog, Clearview? Jeez, you get me going on anti-union and if it weren’t for the C.N.A., we would have a much higher patient to nurse ratio than we do now here in California…We already have a problem with low number of nurses.
My sister is an RN. She graduated from The Santa Barbara City College nursing program. She owns her own elder care business. She’s good and she’s nonunion.
Also, the benefits far outweigh the dues I pay…My full coverage family PPO health care is paid for each month,15 paid holidays, 12 sick days, as well as, 21 days vacation. So, I believe, the dues more than pay for the benefits the Union has provided me…
Good for her. What does she pay her Nurse Assistants? And are they provided great benefits?
“…if it weren’t for the C.N.A…”
Sounds about as silly as if one was saying if it wasn’t for the mortgage broker/ realtor/ my inlaw etc etc.. I wouldn’t be a FB. It’s a silly argument no matter how its spinned.
Silly? What do you find so silly? The fact that the Ca. Nurses Association was able to get our ratios down? I wouldn’t compare that to this housing fiasco one bit…
scratched “spinned” I meant spun. Damn Mimosa’s
To Krills,
Yes, this is a housing blog, and it would not exist if Ben Jones was forced by the federal government to hire members of, let’s say, the National Association of Realtors.
The First Amendment protects newspapers and websites from people like the Teamsters and NAR. You’re comparing apples and oranges. We are talking about a newspaper, not a hospital.
I’m done with this debate..Everyone is free to have there own opinion and I will still care for people in I.C.U. the same later this evening..So everyone be safe out there…
No worries clearview, it’s all good…Have a great rest of the weekend and mrincomestream enjoy the Mimosa’s…I’m off to the Oxnard battleground..Better known as St. John’s.
To Krills,
Have a good Sunday evening at work. I’m here in my shop trying to install an engine in a Chevy van. I’m signing for for the day as well.
Weekends…40 hour work weeks…just two examples, brought to you by unions. It sure wasn’t companies volunterring to do this because they cared about the average worker. Caring cost profits.
…or vacation pay, sick leave, maternity and paternity leave, non-discrimintation on sex/race/religion…
Or, more historically, age requirements, enforced work breaks, sanitary and safe working conditions, and a modicum of reimbursment, if you happened to be killed on the job.
All of these things unions made happen - because they sure wouldn’t have happened on their own..
You may not like them now, but they certainly went a long way towards stopping the barons of industry from treating their workers as expendable chattel, back in the day.
Interesting rants!
Unions are like governments. They are started by the people for just reasons of mutual defense. They have a tendency toward corruption when powerful and sometimes evolve as predators, and like government, can destroy what they were founded to protect.
It makes no sense to say that unions are good or bad just because they are unions.
“fee’s increase to at least suck half of that benefit away. ”
Yes but at leat you got the other half as extra.
For most of the history of this country men, women and thier children worked just to make ends meet. You don’t send your kids to work unless you can’t pay your rent and food bill!
The wealthy class is not benevelant. The 40 hr work week, retirement benefits, health care, etc., came from workers organizing and going on strike.
Get a clue man! Because now the wealthy class is stealing your comfortable lifestyle and your retirement!
Every employee today is 100% at the mercy of being fired with 0% repercussion. Take one look at what is happening to the pension systems. How many guys are getting the AX just a few years before their retierment and end up baging groceries at the local market. I don’t trust a company in the slightest, it will always look after its stockholders best interests, not its employees. Game, set match. Until there is the rise of unions again in a major way, good by middle class.
P.S. Check out the dockworkers union, and tell me that is not a good gig?
since we are talking about nurses union, I had the experience of working with both union nurses and non union nurses, while there are good and bad on either side, I almost quit a job at the unionized hospital. one of the worst places I have ever worked in, I do not wish on any one to work in a place that has unionized nurses( I know people are going to say I’m generalizing but in health care there is no place for BS, if a nurse does something wrong they should be canned.
in regards to patient ratios, benefits, I agree unions negotiate some good stuff but like someone mentioned above they tend to get corrupt and defend their member even if they are dangerous.
The idea of Unions was noble, the current situation with most unions is miserable.
Perhaps the unions should lobby for 35 hour workweeks. Then we can be just like France.
In all seriousness, there are plusses and minuses of unions. Let’s leave it at that.
At their best, they give a collective bargaining voice to employees that would otherwise have no bargaining power.
At their worst, they are corrupt and/or get such concessions that they ultimately destroy the jobs they were meant to protect by saddling the company with higher and higher operating costs.
Perfectly put, Rental Guy.
Its a sad fact of human nature that, no matter how altruistic the intitial ideals, power corrupts.
And absolute power - in whichever hands -corrupts absoloutley.
Meh, not enough caffeine….appols, Rental Watch…
I was at a garage sale and I overheard a conversation between tow former RNs. They left because their workload was overwhelming, the pay was not sufficient for the workload, the hospitals did not appreciate their hard work, etc… Don’t know how truthfull these two women where talking, but it does make you wonder about the nursing business in hospitals.
tcm, my husband is a doctor, and I can tell you what’s going on, although I don’t know enough about labor issues to know how it came about. Hospitals are hiring cheaper nurses who barely speak English and overworking them. They are doing it to cut costs in order to keep afloat. The good, well trained nurses want none of it and are quitting. Needless to say, the quality of care is going downhill, and that goes for doctors too, who are forced to see more patients in less time because they are getting paid less and less. So, who are the winners? Insurance and pharmaceutical companies. Who are the losers? Patients and health care professionals in generals. It’s an ugly situation, and it’s going to get a lot worse.
http://www.opinionjournal.com/extra/?id=110006785
There’s No Place Like Home
What I learned from my wife’s month in the British medical system
This is an excellent read about USA health care and the British system.
I am under the growing impression that medical in America is becoming increasingly non-functional. Lots of money is being spent but few are getting healed. I recently heard about a doctor who was bragging about his free cruise he and his wife get every year from a pharmaceutical company. It appears that doctors are now drug pushers for newer expensive drugs that may not work any better than the older drugs. Now it is becoming clearer to me why so many doctors are not willing to talk openly with their patients about side effects, or why they can not give you a generic prescription.
Got 10% down?
I”m a nurse, the CNA never did squat for me except call me 18 times a day just before elections.
Yeah, nurses in California get paid twice what they do in every other state in the U.S.
“The Teamsters and the NLRB are attempting to force a union on her”
Wrong. The employees of the newspaper freely voted of their own accord to form a union, *as is their legal right*, and she’s been using every trick in the book to avoid acknowledging that fact. Including firing staff.
Your spin on that situation is eerily reminiscent of how realtor-speak regarding the current housing climate.
That’s right, the EMPLOYEES want the union, she does not. That’s force, something the thug Teamsters know something about.
The NLRB is attempting to force McCaw to hire reporters who refuse to obey her orders concerning the content of their articles. That violates her First Amendment rights. She owns the printing presses and trademarks, not the employees or NLRB.
I’m not what you’d call pro-union, but there is nothing in the First Amendment about hiring and firing. Unless you want to say “you’re fired” or “you’re hired”. That’s as far as the First Amendment applies to this. However, I am pro-arguing, so everyone have at it!
From the First Amendment:
“Congress shall make no law…abridging the freedom of speech, or of the press…”.
The federal government has no right or power to force a newspaper/website owner to hire or employ a reporter who refuses to follow the owner’s directions concerning the content of the paper or website. Period.
The problem is that what McCaw is doing to the NewsPress affects the entire community. She does have the right to turn it into a laughingstock, but that has a wider effect.
And recently she’s crossed even more lines… just look at what they tried to do to Jerry Roberts. If you’re in town get the latest Independent or check out santabarbarafree.com for more info.
To try to bring it back on topic - the NP has even less credibility than the realtors and mortgage people that they’re printing quotes from at this point…
I’m sorry you had to bring that up. I think the guy’s been through enough without his name being mentioned here. I hope you request his name be removed from your post.
Manteca=Lard
“‘I know of one home in the Perris area, she had over $100,000 in upgrades. Even though she dropped her price $50,000, she couldn’t get anyone to come out and look at it,’ Crowe said. ‘So she had to give it back to the bank.”
How about that? People are giving their houses away in California afterall. This must be some type of new paradigm.
I’ve been giving my work away for over 10 years now, as a machinist. Half the price I was paid 10 Years ago. Wage arbitrage sucks.
” know of one home in the Perris area, she had over $100,000 in upgrades. Even though she dropped her price $50,000, she couldn’t get anyone to come out and look at it,’ Crowe said. ‘So she had to give it back to the bank.”
WHo the F*ck will actually travel 3 hrs from OC/LA one way to look at a McCrapper out in Perris? It is one of the isolated way-off-the-beaten-track Boonie Regions of the IE(take the 15, exit 74 near lake elsinore and go east all way to the 215, thats Perris)
There has been a large amt of new home tracts put up in Perris, as well as nearby Romeland,Menifee, Hemet, SAn Jacinto, Canyon Lake,ect. This part of the IE, or SW riverside county, is extremely hot, dry, scorched barren- earth, pocked-marked scarred terrain with rambling decrepit crack shacks scattered about.
Prices for new MCCrapper Perris stuccos, even substantial 5/3’s , will fall to rock-bottom prices of less than $150,000 very shortly, and even at that think very hard before buying a house out in the scorched/barren moonscape regions along the 74 east of the 15.
she had over $100,000 in upgrades = $10,000 actual upgrade costs + $90,000 “granite tax.”
I use the term “granite tax” to describe the recent trend of sellers to drastically inflate their list price. I’m sure you’ve all seen it before. Genius seller installs cheapest, ugliest granite counter tops, then thinks it’s OK to increase their list price 10 times the amount of that “upgrade.”
As I shop for my first home, the ones that tout the “highly upgraded” line get tossed in the trash. I’m not paying HOA, Mello Roos, and I damn sure won’t pay any “granite tax.”
Genius seller installs cheapest, ugliest granite counter tops, then thinks it’s OK to increase their list price 10 times the amount of that “upgrade.”
This was the whole flipping biz - buy a run down place that needed some surface cleanup - painting etc, and then dump it right back on the market at an easy $20K gain.
Some Yahoo asshats on why debt is good.
The Cost of Peace of Mind
by Laura Rowley
Email this Page IM this StoryBookmark this StoryAdd to your Del.icio.us accountDigg this StoryPrint this Story Good (764 Ratings) 2.9463328/5
Posted on Thursday, April 26, 2007, 12:00AM
Jim Schenke, a 40-year-old writer/publicist for Purdue University in Indiana, is a conscientious saver.
Married with a toddler, Schenke has set aside a full year’s salary in an emergency fund, because he and his wife decided she would stay home after their daughter was born 18 months ago. That cut their $50,000 income significantly.
Where the Money Goes
Their cars and student loans are paid off, and they studiously avoid credit card debt. Schenke also makes an extra payment each year toward his fixed-rate, 30-year mortgage, which has an interest rate of 6 percent. But he doesn’t contribute to his employer’s 403(b) plan; Purdue sets aside $5,000 annually for his retirement.
“The only company I owe money to is my mortgage lender, and I’m going to be beholden to them for as short a time as I can be,” says Schenke, who follows the debt-free philosophy of the late Larry Burkett, founder of Crown Financial Ministries.
But a new study suggests Schenke might be better off putting that extra cash into the university’s retirement plan. Researchers found that at least 4 in 10 homeowners would build more wealth by putting additional mortgage payments into a tax-deferred retirement plan, such as a 401(k) or 403(b).
Please just include a link instead of the entire article.
Please just include a link instead of the entire article.
I’m shocked! In a year and a half of reading this blog, this is the first time I’ve seen Ben admonish someone.
“Some Yahoo asshats on why debt is good.”
Debt is good so long as your friendly neighborhood central banker is using helicopter drops of freshly-printed fiat currency to create inflation. Otherwise, it is not so good.
Central banker’s printed money… What’s the problem? It only cost the banker [federal reserve ] 4 cents to “create out of thin air” per paper dollar regardless of the face amount. More money printed, more loans and debts encored. Banks love it!
Some day the majority will “wake up”. Until then print like mad until the dollar reaches zero. It’s been done before but us Americans thought it just couldn’t happen here. Only the very few know what is happening. Most are caught up in their dreams until “reality” happens. Sad.
Yes, but during high inflation you don’t want to save money. As in the 1920’s Weimer Rebublic in Germany, you spend it as fast as you get it.
Strangely, alot of Americans are spending the money as fast (or faster) than they get it.
Maybe more understand than we give credit for. Maybe.
What is the breakeven point, given that the IRA gains are tax free, and that the interest on his principal is deductible? If he only has to make 5% on his IRA investments to break even, then the article is probably correct.
Tax-deferred, not tax-free, unless he starts a Roth IRA.
The Yahoo writer’s advice is bad…paying down the mortage more quickly is a far better investment than anything that could be invested in through a retirement plan. Reduced principal = reduced interest = guaranteed money in the bank. Always pay off debts first before using cash for investment.
If your total expected rate of return exceeds the total cost of the debt at a risk level you’re comfortable with, then it’s a more efficient use of capital. That’s all the article was about. I don’t understand why folks are so worked up about it.
Just because some folks (well, ok a lot of folks) out there there have a problem figuring out the difference between consumption, speculation, and investment, and what their risk profile is for each doesn’t mean debt itself is intrinsically bad.
*shrug*
Copied from the yahoo home page. Their hope to find a few more GFs that are deaf dumb and blind (with money or ability to borrow?)
Let your mortgage last
Should you pay off a mortgage before it’s due? Some experts say no way. » Why debt can be good
Prices fall as property glut growsY! Real Estate: See what’s for sale
I hear this all the time on the local real estate shows. Basically, from their point of view, any extra money should be put towards buying more properties as the more properties you hold, over time, will increase in value. That might work when there is one or two people, but when you have hoards of them doing this — with all the equity from their primary residence… look out below.
Our market here in Hampton Roads is so loaded with inventory. I took some pictures which I will dig out of my camera later on. Some funny stuff. New neighborhoods that have all of 20 houses in them, and 3 of them are up (1 for rent, 2 for sale). So many for sales it’s not funny.
I’m tempted to go to open houses… and just ask “square footage… current list price… list price originally… 2001/2002 price’ … write it down and leave. This info is needed for comparisons to look back.
Of course, I’m sure it looks good that some young guy is out in front of the houses trying to get the best angle to get the most for-sale signs in a single picture, while they are sitting inside… all alone.
That’s one of Hsieh of CFC famous quotes ” Liberate your equity ,and invest that dead money. ‘
Why don’t these law firms look into another contributor to this mess?
Can you say NAR, David Lereah, Leslie Applehead Young and that guy from OC Gary where are you now Watson for almost guarantying prices never go down. Prices only appreciate. And Larry Cinderella Kuntlow is another one who should be on that list with his story never told and while they are at it CNBC
“Leslie Applehead Young ”
Great one. Thats what im calling LAY from now on, “Applehead.”
Too funny. But it’s funnier than pinhead ,which is what she really is.
I just got to thinking about something. I wish Ben and all the loyal readers would decide on a town somewhere in the USA where we could all move to. We could all infest that location, and then we would all have similar goals, values, ideas etc.
At the company I worked at in Sarasota Fl. all the employees have picked a town in Tennessee, and a town in North Carolina to retire to. This way they all have old friends nearby, and people with similar ideals and values.
I think it would be great if all the people here who have come together in the past few years picked a town to “retire” to.
Could you imagine going to a barbecue at Ben’s house with all our friends like Arizona Slim, Tx Chick, Imploder, NYCity boy there. What a great time that would be.
Ok OK I know thats a little unrealistic. But I know what would be realistic. Each year we could have a Ben Jones housing bubble convention at a hotel somewhere. Maybe in California.
All kinds of people have KISS conventions, Dark Shadows Conventions, Rolling Stones Conventions, NASCAR conventions, etc.
Each year I attend the Baltimore Orioles Fantasy Camp, which is like a convention plus you get to play baseball twice a day also for a week.
Just food for thought for all the people on here who are now pretty much friends.
Could you imagine going to a barbecue at Ben’s house with all our friends like Arizona Slim, Tx Chick, Imploder, NYCity boy there. What a great time that would be.
The only place suitable for that would be Manteca.
“I just got to thinking about something. I wish Ben and all the loyal readers would decide on a town somewhere in the USA where we could all move to. We could all infest that location, and then we would all have similar goals, values, ideas etc.”
You had me interested there for a second…. but then you lost me. What are you? Unamerican?
We should all go to a town, bid up the market for houses crazy high, then leave the “last in” flippers that follow us holding the upside-down mortgages.
Sheesh, you need to figure out how it works in this country.
“I just got to thinking about something. I wish Ben and all the loyal readers would decide on a town somewhere in the USA where we could all move to. We could all infest that location, and then we would all have similar goals, values, ideas etc.”
I’ll bring the Jack Daniels and smart-a$$ comments. Who is going to build, and buy, all of the over-priced housing in our new town? We are going to have to have something to ridicule.
I say we call our new hometown “Rentopia”.
“I’ll bring the Jack Daniels ”
He’s my life coach.
We could be like the John Galt gang!
Ooooo…LOVE the literary reference. I’m in!
(Especially if we can smoke skinny cigarettes our of long cigarette holders and lounge in fur coats on a velvet chaise, drinking martinis and laughing at the peon, home-slave society we escaped!)
Instead of Captains of Industry we’ll be Captains of Renterhood!
- MMAB
Bakersfield
i went to school in sedona where ben lives and dreamed of moving there. guess what….its out of site for commoners.
I wish Ben and all the loyal readers would decide on a town somewhere in the USA where we could all move to.
Doesn’t John Galt live there?
A bit off topic, and sorry if this was posted elsewhere, but this short story is very revealing:
http://www.pbs.org/now/shows/317/index.html
All I could think about was “Are these people idiots?” I have no pity for any of them. Just a bunch of financial fools who helped make things unaffordable for the rest of us.
Here - collapse of a major Bay area artery is really going to help shorten those already hellacious commutes. Glad I am out of that hellhole (and overpriced). Speculations on where it will hit the hardest. There is no good option around this collapse. Only through the surface streets. Freeway alternative is many miles detour on already parking lot status routes.
That should really help the spring selling season. I remember traffic from my days in the Bay Area. I still wakeup crying and soaked in sweat (I think it’s sweat) when I think back on that experience. I can’t imagine what it would be like after something like this.
OAKLAND, Calif. - A section of freeway that funnels traffic off the San Francisco-Oakland Bay Bridge collapsed early Sunday after a gasoline tanker truck overturned and caught fire beneath it, authorities said.
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The heat was intense enough to melt part of the freeway and cause the collapse, but the truck’s driver walked away from the scene with second-degree burns.
No other injuries were reported, which officials said was only possible because the accident happened so early on a Sunday morning. The truck driver took a taxi to a nearby hospital, Officer Trent Cross of the California Highway Patrol said.
Authorities said the damage could take months to repair, and that it would cause the worst disruption for Bay Area commuters since the 1989 Loma Prieta earthquake damaged a section of the Bay Bridge itself.
Transportation officials said they already had added trains to the Bay Area Rapid Transit light rail system that takes commuters across San Francisco Bay, and were urging people to telecommute if possible.
State officials said motorists who try to take alternate routes Monday instead of relying on public transportation would face nightmarish commutes.
The tanker carrying 8,600 gallons of gasoline ignited around 3:45 a.m. after crashing into a pylon on the interchange, which connects westbound lanes of Interstate 80 to southbound I-880, on the edge of downtown Oakland about half a mile from the Bay Bridge’s toll plaza.
A preliminary investigation indicated he may have been speeding on the curving road, Cross said.
The fire melted a second interchange from eastbound I-80 to eastbound I-580 located above the first interchange, causing a 250-yard section of the roadway to collapse onto the roadway below, according to the highway patrol.
Witnesses reported flames from the blaze reached up to 200 feet high.
Late Sunday morning, the charred section of collapsed freeway was draped at a sharp angle onto the highway beneath, exposing a web of twisted metal beneath the concrete.
“I’ve never seen anything like it,” Cross said of the crumpled interchange. “I’m looking at this thinking, ‘Wow, no one died — that’s amazing. It’s just very fortunate.”
The Bay Bridge consists of two heavily traveled, double-decked bridges about two miles long straddling San Francisco Bay. State transportation officials said 280,000 commuters take the bridge into San Francisco each day.
San Francisco Mayor Gavin Newsom said the accident showed how fragile the Bay area’s transportation network is, whether to an earthquake or terrorist attack, and has the potential to have a major economic effect on the city.
“It’s another giant wakeup call,” Newsom told reporters at the California Democratic Party convention in San Diego.
Need the article about the road collapse. Can I drive an incidiary bomb around too?
Transportation is an issue that does not get enough press. I hope this accident and coming congestion will daylight this issue and the need for alternative transportation to reduce the reliance or dependence on single occupancy vehicles to get to and from work.
To those interested, our California legislator and Schwarzenegger are now vetting the state budget for next year and the inclusion of funding for the California High Speed Rail Authority to advance engineering and environmental work, and to purchase critical right-of-way. If that high speed rail were in place it would help relieve some of the massive congestion the Bay Area experiences in the same corridors affected by this accident. But, interested persons that support high speed rail, like the kind in Germany, Taiwan, France, Germany, and Italy should contact their state representative and voice support.
How would you feel if that was a commuter train bridge that collapsed? Would you be calling for increased automobile traffic lanes?
You’re a joke. A modern public transport system would be great for Bay Area. The way people commute here is a butchery.
I’m at a loss, why only the Europeans and the Japanese get to enjoy all the cool toys.
Need2lvca., Anyone who knows that bottleneck of the bay area also knows it to be the worst jam even in the best of times…I shudder to think what a mess it is now.
OAKLAND, Calif. - A section of freeway that funnels traffic off the San Francisco-Oakland Bay Bridge collapsed early Sunday after a gasoline tanker truck overturned and caught fire beneath it, authorities said.
ADVERTISEMENT
The heat was intense enough to melt part of the freeway and cause the collapse, but the truck’s driver walked away from the scene with second-degree burns.
No other injuries were reported, which officials said was only possible because the accident happened so early on a Sunday morning. The truck driver took a taxi to a nearby hospital, Officer Trent Cross of the California Highway Patrol said.
Authorities said the damage could take months to repair, and that it would cause the worst disruption for Bay Area commuters since the 1989 Loma Prieta earthquake damaged a section of the Bay Bridge itself.
Transportation officials said they already had added trains to the Bay Area Rapid Transit light rail system that takes commuters across San Francisco Bay, and were urging people to telecommute if possible.
State officials said motorists who try to take alternate routes Monday instead of relying on public transportation would face nightmarish commutes.
The tanker carrying 8,600 gallons of gasoline ignited around 3:45 a.m. after crashing into a pylon on the interchange, which connects westbound lanes of Interstate 80 to southbound I-880, on the edge of downtown Oakland about half a mile from the Bay Bridge’s toll plaza.
A preliminary investigation indicated he may have been speeding on the curving road, Cross said.
The fire melted a second interchange from eastbound I-80 to eastbound I-580 located above the first interchange, causing a 250-yard section of the roadway to collapse onto the roadway below, according to the highway patrol.
Witnesses reported flames from the blaze reached up to 200 feet high.
Late Sunday morning, the charred section of collapsed freeway was draped at a sharp angle onto the highway beneath, exposing a web of twisted metal beneath the concrete.
“I’ve never seen anything like it,” Cross said of the crumpled interchange. “I’m looking at this thinking, ‘Wow, no one died — that’s amazing. It’s just very fortunate.”
The Bay Bridge consists of two heavily traveled, double-decked bridges about two miles long straddling San Francisco Bay. State transportation officials said 280,000 commuters take the bridge into San Francisco each day.
San Francisco Mayor Gavin Newsom said the accident showed how fragile the Bay area’s transportation network is, whether to an earthquake or terrorist attack, and has the potential to have a major economic effect on the city.
“It’s another giant wakeup call,” Newsom told reporters at the California Democratic Party convention in San Diego.
Need the article about the road collapse. Can I drive an incidiary bomb around too?
The only good news out of this is that the moonbats who insisted the WTC towers could not have been felled by jet fuel fires becauase (it isn’t hot enough to MELT steel) are proven wrong. It just has to be strong enough to WEAKEN it.
Nice try, Brianb, but no, it doesn’t explain a damn thing about 9/11.
It does nothing to explain WTC7, which was not hit by planes, and had only a couple of piddly-ass fires. Oh, were you even aware that a third building collapsed that day? Don’t feel bad. Most of America isn’t aware of it either. It also does nothing to explain how the “terrorists” got their visas from the Jedda, Saudi Arabia consulate, or why four of them received training at US military bases. It does nothing to explain the stand down of the US military. It does nothing to explain the connection between Bin Laden and CIA. It does nothing to explain the complete symmetrical collapse of WTC 1 and 2 at free-fall speed, when the laws of physics tell us that the collapse, if caused by fire-weakened steel, would have been assymmetrical and taken a while because of resistance of floors below. It does nothing to explain why FEMA was in NYC the night before.
Also, the freeway was not pulverized into tiny pieces was it? Even with all the fuel burning in a single concentrated spot. I’ll bet the fire has already cooled already, too, unlike the twin towers, where molten, flowing steel was observed at the bottom of the pile for weeks after the event.
Or that Lee Harvey Oswald was one of the hijackers…..or that FDR and the Trilateral Commission were in radio contact with the Japanese Fleet, and that Amelia Earhart was flying the lead airplane that attacked Pearl Harbor……
Sorry, but I fail to see the link. Distracting people from the questions doesn’t work anymore. If you would like to answer one of the questions I posed, however, be my guest.
Once again, it’s tough to read this blog on the weekends at times. Which is sad because that is usually when I have time for it these days. Some things to note
1) The world is not ending - at least any time soon
2) George Bush is not the Anti-Christ
3) Bill Clinton was not the Anit-Christ
4) The government is not intentionally out to get average Americans
5) Most of the comments here in this particular post seem to have very little to do with housing, the economy or anything 1 degree separated from that. Freedom of speech is grand, so let’s work on the signal to noise ratio please. It will help us all.
WTC 7 was hit by falling buildings. Offices full of carpeting and furniture and papers burn at a temperature more than enough to melt steel. WTC 1 and 2 collapses are straightforward because of the relatively weak design of the core and floors of those buildings. Falling buildings pancake about the same way regardless of what happens with the vertical members which is why structural failures are so threatening to tall buildings. Comparing a gas truck fire to a jet fuel ignited office fire really does not make sense.
Not only do none of your points hold, even more important none of them have any particular relation to the housing bubble. Remember, the brief down period following this national tragedy failed to stop the bubble, and perversely may have even accellerated existing patterns of capital flow.
So sad how brainwashed people are. All of my points hold. You gave the illusion of answering the questions, but instead only offered more distraction.
“Offices full of carpeting and furniture and papers burn at a temperature more than enough to melt steel.”
Oh, really? Guess that’s why high-rises always fall down if they catch on fire. I’m being sarcastic. There are many, many examples of buildings burning like Roman candles for 20 hours or more, and yet, remain standing, because the fires don’t reachh high enough temperatures. A steel high-rise building has only collapsed from fire once. WTC 7.
“WTC 1 and 2 collapses are straightforward because of the relatively weak design of the core and floors of those buildings”
Weak design of the core? Says who? You have to be kidding. The core was comprised of 47 massive core columns of structural steel. For the towers to fall as they did, all 47 core columns would have had to fail simultaneously. Only possible with a controlled demolition.
“Falling buildings pancake about the same way regardless of what happens with the vertical members which is why structural failures are so threatening to tall buildings.”
WTC 1 and 2 didn’t pancake. They were obliterated into tiny pieces, with the lower floors providing absolutely no resistance on the way down. Nothing left but pulverized concrete, which the First Responders breathed in and are now dying of.
Jet fuel is what really got the thing burning at more insanely higher temperatures than usual building fires. That’s why people were leaping to their deaths rather than trying to stick it out.
I’m not familiar with “training at four military bases” that the terrorists received.
Alleged Hijackers May Have Trained at U.S. Bases
The Pentagon has turned over military records on five men to the FBI
By George Wehrfritz, Catharine Skipp and John Barry
NEWSWEEK
Sept. 15 — U.S. military sources have given the FBI information that suggests five of the alleged hijackers of the planes that were used in Tuesday’s terror attacks received training at secure U.S. military installations in the 1990s.
THREE OF THE alleged hijackers listed their address on drivers licenses and car registrations as the Naval Air Station in Pensacola, Fla.—known as the “Cradle of U.S. Navy Aviation,” according to a high-ranking U.S. Navy source.
I could not have made up a better California bashing story than to read about the collapse of such a major artery. They had banned gas trucks from driving through the Caldecott tunnel 20 years ago because of the same thing happening then. They did have a sign allowing them between 2 and 4 in the morning. I guess Arnold and Jerry will have to change that (Is Moonbeam Jerry still the mayor of Oakland?). I have lost touch, since I now have a major aversion for the area.
No he is Ca’s AG now.
So many people don’t like Jerry but you have to respect him for turing down all the luxury and living in a 2 br condo a few blocks from the capitol and driving a plain chevy to work each day.
I’m glad he won AG.
He actually drove a Plymouth…
I stand corrected. Also of all the governs portraits hanging in the capitol, his is one of the only ones I like.
Kathy Thomas, an agent in Pleasanton, said she has seen drops in prices in the Tri-Valley area. San Ramon had a drop of 14.1 percent in median price, from $855,000 to $734,600.”
Gees, when I moved to San Ramon in 1992, an average house was between $150 to 200K. Is there really room for them to fall? And San Ramon is one of the nicest parts of the Bay area. But they ripped down some beautiful hills and replaced them with cookie cutter ugly all look a like housing? What do you know? Will people then want to stay? And now, traffic sucks, and they won’t be able to drive in or out of San Francisco very easily since the freeway in burned down. Hats off to the Molotov Cocktail truck driver who was speeding.
San Ramon nice? If you call bfe nice… I suppose so. There’s no crime or ugly neighborhoods to speak of in San Ramon, but I wouldn’t call it an attractive place to relocate to.
San Ramon is pretty nice. Depends on your situation and where you work. If you worked for Chevron, you’d be in great shape.
Supposed to be good schools in San Ramon (relatively speaking).
Grisly stuff…
“Robert Griswold, who manages property, said he spoke with a woman in Temecula who owns three rental properties, two of them vacant. He advised her to sell one or two immediately ‘before the house of cards collapses.’”
Somebody’s playing with a full deck.
“Robert Griswold, who manages property, said he spoke with a woman in Temecula who owns three rental properties, two of them vacant. He advised her to sell one or two immediately ‘before the house of cards collapses.’”
Telecula is extemely overbuilt with new home tracts, shopping centers,ect, and they still keep building. Temecula is actually one of the better IE areas, but the glut of new homes available on the market will certainly result in a collapsed deck of cards.
BTW, That OC article on the IE housing Market pain mentions
Dos Lagos and Alberto Lopez attempting to sell his home:
“The area is replete with amenities, including new shopping, a golf course, a resort hotel and the Glen Ivy spa and Tom’s Farms a few miles to the south. His Taylor Woodrow home is little more than two years old, but after a few months on the market and dropping his $509,000 asking price by $9,000, there still are no takers, he said…..I’m surprised it hasn’t sold,” Lopez said. “It’s such a beautiful area”
I was on that DOS LAGOS site when they were in mid-construction phase in early 2006. It is off Cajalco rd exiting the 15 about 10 miles south of Corona.
It is an entire self-contained planned community of shops, 4-5 home tracts phased in,golf course,ect. Problem is it is not as beautiful as Lopez states. The golf course looks rather dismal and is completely unshaded and layed out on the slopes of the dry barren foothills. The shopping center is another of thousands of newly-built shopping centers put up all over the iE, all of then exactly alike.
This Dos Lagos planned community is certainly not anything like a resort, tho nearby Tom’s farm and Glen Ivy hot springs are perhaps worth visiting.
A few days ago, we had a thread about FL sellers wanting to be insulted. How about one for CA sellers to be insulted. The lower, the better. Let’s all give Arnold one big insult. What is Arnold going to say about the freeway burning down? Sorry, this is just too funny. I couldn’t have dreamed up something funnier to insult about CA.
A few days ago, we had a thread about FL sellers wanting to be insulted. How about one for CA sellers to be insulted. The lower, the better. Let’s all give Arnold one big insult. What is Arnold going to say about the freeway burning down? Sorry, this is just too funny. I couldn’t have dreamed up something funnier to insult about CA.
WTF?
You want to insult the governor of a state because a gas truck crashed?
Are steel-reinforced concrete freeways in your state immune to gasoline tanker explosions?
Ben, I am sorry if I am monopolizing too much of these threads. I am to be heading your way soon (waiting for a ride to go to Phoenix from Albuquerque).
No problem, just please summarize and link.
Gosh, I didn’t know how much I hated California until just now.
Gosh, I didn’t know how much I hated California until just now.
Gosh, I didn’t know how much I hated California until just now.
Beauty emphasis.
People like you are really quite tiresome. Some of us still believe in this state and are doing what we can to make it better. Enjoy elsewhere and don’t let the door hit you on the way out.
I’m a 4th generation Californian who left in 2005. CA isn’t what it was, but I expect I’ll be back eventually.
“‘They gave me a good deal, they said. But after that, they dropped the price to $575,000,’ Lambright said. ‘You can’t cry over spilled milk.’”
You can buy a lot of milk for $45,000, even with today’s rapidly inflating food prices.
Give the guy some credit. At face value, it sounds like he’s not expecting people to give him a mulligan.
“Lucas put his four-bedroom, two-story home near the lake on the market for $499,900. That was in June. Almost a year and 12 price-reductions later, they’re still looking for a buyer..”
We need a medical study: How many years are taken off your life for every month you try to sell your house.
That there is what you call “following the market down”.
ouch, ouch, ouch………paper cuts.
Lemon juice anyone?
And if you’re married you can double that number. One of the great things about renting is that I don’t even have to contemplate selling another place with my wife. I love her but holy $hit has it been stressful every time we have sold a place. The last experience was so stressful I was finding gray hairs in my private area.
Where is imploder to comment on NYCityBoy’s post? Modesty prevents me . . . . But I did laugh!
“We need a medical study: How many years are taken off your life for every month you try to sell your house”.
lack of sleep will age you quite quickly.
“People like Lake Elsinore resident Charles Lucas, 40, are feeling the effect of that rise. Lucas, who commutes to work in Long Beach, put his four-bedroom, two-story home near the lake on the market for $499,900 when he and his wife decided to divorce. That was in June. Almost a year and 12 price-reductions later, they’re still looking for a buyer, despite a $100,000 price hit.”
I was out to Lake elsinore plenty of times in 2004-2006 and saw all of the tremendous amt of new housing tracts both built and going up along the elevated north and west shores of the lake. At that time homes were overvalued around $550,000-600,000. Even then i saw problems in LE: very tacky areas along the south and east lake margins, marginal slummy old dwtn district already getting swamped with illegals, a frontier boom-and bust aspect, older trailers and tracts being ripped out in a half-ass fashion, ect.
And the lake itself is a stale dead body of water, worthless for recreation.
Lst year LE housing was already in trouble and starting the downslide, as the area had to compete with thousands and thousands of other new SW riverside tracts and homes also on the market. LE was always IMHO somewhat marginal, what with the crappy lake and crapped out older slummmy sections still abounding. This Lucas can’t even sell his home for under $400,000. Newly-built LE homes are probably now worth average $300,000 judging by comparables all over the extremely overbuild and foreclosure-swamped SW riverside area.
TO add to insult, this poor Lucas was commuting 2.5 hrs one way, spending 5+hrs a day commuting to LB and back. What a waste of life and a bad housing decision.
I will do more summarizing Ben. Don’t know why I got the double postings. The Bay area commute between the East Bay and San Francisco has now become almost undoable. This freeway collapse is a big thing as it routes the majority of the traffic onto or off of the bridge in the East Bay. Going to the GG or San Mateo bridges is at least an hour added extra without bad traffic.
The extra 3-4 hour commute aside, imagine sitting in that traffic with fuel at $3.50 per gallon!
“The extra 3-4 hour commute aside, imagine sitting in that traffic with fuel at $3.50 per gallon”
this is really big news all those highly paid folks waking up at 4am to get to market st. invest in Vespa.
“‘They gave me a good deal, they said. But after that, they dropped the price to $575,000,’ Lambright said. ‘You can’t cry over spilled milk.’ ”
You can’t? We see people here every day who cry over spilled milk. They cry so hard they cry to senators, congressman, anyone they think can help them “milk” more milk.
We need a medical study: How many years are taken off your life for every month you try to sell your house.
We will know when they start publicizing their deaths before the sales.
“Over the last six months, the rental market has shifted, giving renters more choices and greater opportunity to bargain for lower rents. In San Diego County, vacancy rates among large rental complexes jumped from 1.84 percent to 4.54 percent during the six-month period from October through March 31, the highest six-month rate since 1995, according to a survey.”
Sounds like rents are going down in San Diego, contrary to propaganda from the SD Union Tribune that suggests otherwise. From “The Front Porch,” a weekly feature in the Sunday SD Union Tribune Home section:
‘”Stricter lending standards following the subprime mortgage meltdown are causing many potential home buyers, who now face a larger down payment and higher monthly payments, to find renting more affordable,” said Delores Conway, director of the forecast at the USC Lusk Center for Real Estate. “As economic activity expands across the region, stead job growth and high home prices bode well for landlords.”‘
“‘There’s so much new construction out (in San Ramon); it’s all about the saturation level,’ she said. ‘People are more choosy because they can be and also make lower offers.’”
I wonder if the REIC spin PhDs at Lusk take the saturation factor into consideration in issuing warnings that suggest renters should “buy now or get priced out forever”?
Good point GS. A real life example, my neighbor to the east is putting his house on the market. He bought about the same time I did. He paid $116K for around 1500 Sq Feet in Escondido. He got married about a year ago, and his wife had a house, so they decided to live in her bigger home and rent this one out. It took them a few months to get a renter. The renter stayed about 4-6 months, and moved out. Granted he is paying a lot less than most folks in the San Diego area, but it is still eating him every month. There are more an more houses in this area sporting “for rent” signs, many of which were “for sale” last year until Thanksgiving.
My wife talked to him this past week while they were working on the house, getting it ready for market. Some additional sad details emerged:
1) His renters never paid a single month’s rent - he had to have them evicted
2) He HELOC’d / REFI’d his $116K house into the $300’s
3) He is hoping to unload it fast, as I think the monthly bite from that ‘gator is causing him some pain.
Did I mention this guy works in construction? He’s a nice fellow too.
That Union Tribune article suggests some good rules of thumb for when to buy a home in San Diego:
“San Diego County Assessor Gregory Smith, who also serves as county clerk and recorder, said about 900 homeowners since January have requested reassessments based on falling prices in their neighborhoods.
…
“But this is nothing like the ’90s,” he said. “We were deluged.”
During the recession 15 years ago, assessment reductions reached a peak of $16.8 billion for 203,001 homes, commercial properties and time-share units in 1997, Smith said. Of that total, 157,686 were residential.”
1) Wait until the economy is in a recession.
2) Wait until at least 150,000 residential reassessment requests are pending.
Unfortunately, if this time plays out as slowly as the last, the peak level of reassessment requests will not occur until 2012 or later, as the market only started declining in late 2005.
And how many people didn’t apply for a lower assessment because they didn’t want to admit that prices might not be what they are wishing for? Next year I think the pride levels will be a lot lower and the reassessment requests will be a lot higher. But I’m sure the Cali cartel, errr government, has made provisions for those shrinking tax revenues. It is going to be so ugly out there.
I read the San Diego paper this morning and the Sacramento paper this afternoon. San Diego houseowners must apply for the reassessment; Sacramento automatically reassessed houses bought since 2005 and notified owners about their lowered property taxes. Interesting that the two cities have approached it differently.
News to REIC - “Buy now and be an indentured servant to a building that will decay and fall apart before you are through paying for it (assuming they actually took a 30 yr fixed payment and not some voodoo it will never get paid loan). “
News to REIC - “Buy now and be an indentured servant to a building that will decay and fall apart before you are through paying for it (assuming they actually took a 30 yr fixed payment and not some voodoo it will never get paid loan). “
need 2 leave ca
I hope your ride shows up soon.
desmo- ditto that, since we have been on double posts for the past twelve entries….
Ditto…
“…he would get a 2 percent rate and that his payment would be fixed for five years. Mikhail warned him that interest could be added to his principal, but ‘He said the most this is going to increase would be about $10,000 over five years,’ Bishop says.”
“In fact, Bishop says, his principal is increasing at a rate of about $10,000 per year. When he called Mikhail to find out why, ‘He apologized and said this is what we were told by the lenders,’ Bishop says.”
If you’re too damn dumb to do some simple interest calculations yourself then you’re too dumb to own a home, fool! I got an excuse, I’m stupid.
Should have paid abetter attention during math…what is this stuff good for in the real world???
“This is disclosed in the note, but the way they describe it, it’s almost impossible to figure out,” says Berns. “They say if your payments are not sufficient you may have interest added to principal.”
That in itself would have stopped me cold. It’s not even a question of doing calculations, don’t these nitwits understand the simple concept of compounding interest? I’ve heard that Americans’ math skills are atrocious compared to the rest of the developed world. These stories are making me a believer.
When I first saw Interest Only mortgages marketed to the average consumer, I thought I was hallucinating. It just didn’t seem real to me. (And I’m no math expert, I’m just a ditsy artist.)
phillygal,
I know what you mean. I was talking to a college graduate and trying to explain to him that %6 mortgage off of a 100k is not just 6k for the life of the loan was like pulling teeth. This guy wasn’t that dumb in my opinion-just not well verse in mortgages.
I think most people are surprised by the fact that loans are things that need to be paid back. They all thought it was free money, like welfare.
NYCBoy: That is so true. I have known many people who don’t seem to grasp the concept that real estate debt is a bad thing. They don’t get it until they’re underwater, or until they realize that they can never retire. I think that there are people like those on this blog, who crave financial security (the “ants”), and those who blithefully assume that they’ll be OK. (the “grasshoppers”). Sometimes I envy them; usually I think they’re idiots.
I have always thought that you cannot really be “Free” in life if you are saddled with extraordinary debt. I think that the huge property bubble was carefully orchestrated to divert the American people’s attention from this debacle in Iraq. Let people feel “rich” and then all they want to talk about is how much their property increased in the last month. They don’t pay close attention to the billions spent each month on a quagmire.
This bubble of course fed on people’s greed. To only suggest one reason is simplistic.
Things will get really bad across all of the USA. Here that L.A!!!!
Typo… meant HEAR that L.A!!!
“‘State courts have found that mortgage brokers are fiduciaries in these types of transactions,’ Pool adds.”
Bwwwaahhhaaa, looks like someone is getting ready to drop the hammer on some folks, my oh my this could get quite interesting.
I would suggest that anyone who thinks they got screwed by their mortgage broker light up the DRE’s phone now it seems the blinders are off and it’s full steam ahead. A lot of new booty will be fresh booty in the penal system it seems.
I love fresh booty…..mmmm-mmmm good!
yes mrincomestream its going to get interesting . I am not surprised that some courts are starting to rule that mortgage brokers are fiduciaries (real estate agents use to be to ).After all lenders use to have a duty to qualify a borrowers and not just pass a liar loan on to the Secondary Market . I just hope the courts know just how much the borrower was in on the liar loan packages . These cases are going to end up in the United States Supreme Court with time anyway .
It was a damn gambling mania party where it was a team effort where alot of eye closing was going on by everybody at the party .
So who is going to pay assuming a successful civil suit? Criminal penalties are one thing, getting some $ is something else.
yea and if you fudged your income/asset numbers or didn’t check them over on the loan app before signing it because you were either too stupid, too lazy or too greedy, make sure you pointthat out as well.
The thing is that if any party to a contract is quilty of bad faith or fraud or breach of fiduciary duty than they might be vunerable to being liable . A contract can be voidable if it is fraudulent or if it’s in violation of the law . A loan can be called if there are violations to the contracts .I think the lawmakers are worried that alot of class action lawsuits are going to come in based on voidable loan contracts .Some courts have already ruled that loan brokers have a fiduciary duty to borrowers . That puts lenders in the position to prove that the borrower lied on the loan application and the lender was the victim .The fact that the borrowers signed the loan application is bad for the borrowers but borrowers can make a case for the fact that the loan agents told them to do it to get the loan . If the bank was in on the fraud or they qualified people on loans they didn’t qualify for they might be vunerable . The REIC is very vunerable to legal attack IMHO .
Really ,having this many people not being able to afford their loans within a very short time means that something is very wrong .
Loan agents and realtors can’t tell people to take a loan because they can refinance out of that loan when the payment goes up . What if financing is not available at the time or what if there isn’t any equity left .
My point is don’t be surprised if in spite of the fact that the borrowers were gambling with these loans that they will sue lenders for allowing them to gamble .
What we need is required classes before a home is closed. The buyer has to sign a document saying he has attended a class on “Risks of buying a home”.
Boy, that would get rid of a lot of lawsuits.
We have that now in Chicago. Well, it will go into effect within a couple months. It’s a controversial rule that requires certain home buyers to meet with an FHA-approved credit counselor (but you are not required to take their recommendations). If you are a first-time homebuyer or are refinancing and the loan is a liar loan, an ARM, a neg-am, I/O, and a couple other nasty ones, off to counseling you go.
This rule went into effect last year but included credit scores and was limited to some sections of the city that were both high fraud areas and high minority areas. There was an uproar about racism so it was suspended, only to come back and apply to the entire city and to all credit scores.
more “counciling” for taxpayers to shell out for
Ben,
Thanks for your blog. I’ve lived in SF for 5 yrs, Flagstaff for 6 and am currently renting in Scottsdale. I’m sure I’ll buy again someday-when Flagstaff prices come back down to earth(might take 15 yrs…but I’ve got time) but I wanted to thank you because your blog is my refuge when dealing with relatives and friends who look at me like I’m a Martian for renting-even in this market. Manteca is toast sadly. A lot of people are going to get hurt up there.
Been lurking on this and several other great blogs since I saw ZipRealty add the “list homes with price reductions only” (june 06 or so). I do believe that housing will be HALF of peak within two years or so. I sold 7-05 (divorce settlement) as I KNEW the 10yr LIBOR option was not smart and I chose to be cash rich and not house poor. Not looking for Kudos or affrimation just wanted to set the record straight before I say that I wish prices would NOT crash! I know some see armageddon as a possible outcome and I don’t have a strong argument to the contrary. This is the end of the world as we know it and no one is going to escape the pain. I have been learning as much as I can about our monetary system and I think IF THERE IS ONE THING that we can do to help our children is this… Educate as many people as we can about the Fed Reserve and central banking hoods. We must try, hard as it is (trust me, I am used to the blank looks and the “chicken little comments”) because otherwise we are doomed and so is the future. Most argue that it got to this point because of loose lending, mortage fraud, flippers, greed, etc. NONE of those are to blame and neither is Alan Greenspan (OOOPS did I say that?) The truth is that Mr. G has been trying to send the message to us for a long, long, time. I learned that debt is NOT wealth lesson in the mid/late seventies when I moved back in with the parents in order to pay off $12K debt/wealth and swore to never live beyond my means again. The ex and I bought in 86′ and either one of us could make the “nut” in the event that something happened. Goated by everyone to go to the max leverage we could, your income will rise, you are at the beginning of a great career, etc. Again, I had learned my lesson. I did not know what I know now but I knew it was foolish somehow to think that things will only go up forever (wheelbarrow full of money to go buy a loaf of bread). Anyway I hope that you will take the time to read this essay by Allen Greenspan written in 1966. It says it all! J6PK may not be able to comprehend the meaning but most of you should be able to. If you choose not to educate yourself to a level that will allow you to understand what has been going on for 50 plus years, you’re part of the problem. Lets start looking to be part of the solution.
http://www.lewrockwell.com/north/north204.html
Google has a couple of good videos on money: Money is Debt and The MOney Masters.
“‘They gave me a good deal, they said. But after that, they dropped the price to $575,000,’ Lambright said. ‘You can’t cry over spilled milk.’”
what a name! is it lam-bright or lamb-right? I bet the developer was trying real hard not to lol while signing the deal.
you just can’t make this stuff up!
“As you may know, I’m opposed to any type of taxpayer bailout of subprime mortgage borrowers or lenders. Yet I believe our state regulators and law-enforcement agencies should be doing much more to pressure lenders and brokers to clean up the mortgage mess they helped create.”
Said by a man after my own heart. California State government leaders ought to go after the Wall Street investment banking kingpins to get them to help pay for the mess they left behind in the California lending market. While they are at it, maybe they could talk to Senator Dodd about having some of his CT hedge fund buddies pony up for the damage as well.
Stucco, it’s good to see that you can still dream. Did you know that President Bush was in my neck of the woods this week? He was at 301 Park Avenue. That is very close to my work. He spent the night raising funds at the apartment of the head of Blackstone, a large hedge fund. They will be going public soon. I’m guessing that they were not discussing getting the hedge fund boys to pay for this disaster. Call it a hunch.
Well, you can’t tell me after the RE crash unfolds that the lawsuits are not going to be a attempt to find the liable parties in this mess .
“Mony Sambath, a real estate agent, also bought a home in the same tract as the Lambright’s and has experienced the same lowered real estate value.”
They say “salesmen make the best clients”
Ponzi schemes, whether intended or by accident, don’t really have any fixes per se.
Greed vs Fear is the basic equation humans constantly deal with. Nothing different this time
Sorry if this is a repost
House Flippers Flop As Market Cools
http://biz.yahoo.com/ap/070429/flippers_flip_out.html?.v=6
The American Inflation:
Where we are, How we got here and Where we are going.
(Check out Heli Ben’s picture on the last page)
Warning pdf file
http://www.trendsman.com/v1/members/archive/pdf/269852696_AmericanInflation2.pdf
footie,
Nice find! I will read it top to bottom when I have time. How bout the rest of you? Interested in what we are REALLY up against?
Proverb……… There are basically three kinds of people in the world…
People who MAKE things happen.
People who WATCH things happen, and
People who say WTF Happened?
My mother called me from Victorville Ca and read me an article that said you a 27% chance of selling your home in the High Desert right now. The forclosures are increasing 100% per month since November 2006.
With more and more illegals out of work this will escalate. Sales will be down in May for California because of Cinco de mayo (May 5th)… because all the Mexicans go home to Mexico for the entire month.
“People like Lake Elsinore resident Charles Lucas are feeling the effect of that rise. Lucas put his four-bedroom, two-story home near the lake on the market for $499,900. That was in June. Almost a year and 12 price-reductions later, they’re still looking for a buyer, despite a $100,000 price hit.”
I lived up there in 1999, and those places were selling at $89K - $129K on the high end. Now fast forward 8 years and he wants $500K?