It Really Amounts To Prices In California
The Sacramento Bee reports from California. “Few places in America benefited from the housing boom more than the Central Valley. Now, housing starts are down 20 percent to 50 percent. ‘We’re concerned because so much of the employment was due to construction,’ said Rollie Smith, head of a federal task force on economic development in the San Joaquin Valley.”
“It seemed everybody wanted to buy a home in Merced, even people who didn’t want to live here; at the peak, nearly one in five homes sold went to investors, according to LoanPerformance.”
“Hai Nguyen was one of those investors. The former San Jose resident bought a $420,000 home last year in a new development near UC. But the rental market was weaker than he thought. Now living in Arizona, Nguyen has the home up for sale, and is throwing in a $40,000 Cadillac Escalade as a sweetener.”
“‘I’ve learned a lesson,’ said Nguyen, who holds a real estate license. ‘I’m stuck.’”
“Nearly 22 percent of all Merced home mortgages as of December were subprime loans, the highest in California and seventh highest in the nation, according to First American LoanPerformance. Already, for the first three months of the year, nearly 5 percent of Merced and Stockton homeowners, and 5.6 percent in Modesto, are delinquent on their mortgages, according to Equifax and Moodys.com.”
“‘There are a lot of people in a lot of trouble right now,’ said Martha Lucey, head of (a) Fresno office of credit counselor.”
The LA Daily News. “Home sales continued falling across the San Fernando Valley during the first quarter of 2007 as the median price slipped under the year-ago level for the first time in 10 years, a trade association said. That’s the first price decline since the first quarter of 1997.”
“‘It’s a stale market,’ said Daniel Blake, director of the San Fernando Valley Economic Research Center at California State University, Northridge. ‘And weakness is developing in prices.’”
“Blake notes the rate of inflation is 3.8 percent. Housing ‘is losing real value right now even if the price edges up by a few thousand dollars.’”
“At the end of March there were 5,680 properties listed for sale across the Valley, up 20.3 percent from a year ago.”
The Voice of San Diego. “Despite ’storm clouds’ of near-record foreclosure and default rates, weakness in the real estate market won’t be enough to trigger a recession locally, at the state level or nationwide, a team of California economists say.”
“Ryan Ratcliff, the economist responsible for the San Diego County and California sections of the University of California, Los Angeles Anderson Forecast, said the fallout from mortgage defaults will prove a ‘major wild card’ in the next two years.”
“And the crunch and subsequent tightening in the mortgage sector over poor-credit, subprime loans will most likely sap the region’s housing market of any quick rebound.”
“‘The reset crisis is really going to hit its peak early this summer,’ Ratcliff said. ‘Then we’ll see how bad this is going to get.’”
“The impact of the real estate slowdown on jobs is just starting to be seen, the report says. Just 1,800 construction jobs were added in 2006, compared to 3,100 the year before. And financial institutions, such as those providing mortgages or other credit to homebuyers, lost 900 jobs, versus the addition of jobs in 2005.”
“Home prices are now at about the same level they were in 2004, a 5 percent decline from the peak in 2005. Ratcliff conceded that tightening lending standards will ensure continued weakness in the first-time buyer market in San Diego, and the weakness depresses the number of homes selling ‘all the way up the food chain.’”
The Union Tribune. “‘The hiring pace has slowed considerably,’ said University of San Diego economist Alan Gin, who joined Ratcliff in compiling the Anderson Forecast’s report.”
“Making matters worse, 40 percent of the jobs created during the past year have been in leisure and hospitality, the lowest-paying job category in San Diego, paying an average of $376 per week.”
“Stan Sexton, who heads New Horizons Realty in La Mesa, said the sluggishness in hiring is already having an impact on sales.”
“There’s a lot of unemployment and underemployment, especially among real estate agents,’ Sexton said. ‘When the market was hot, a lot of the agents took on a lot of debt and used their newly found wealth to buy million-dollar homes. I would think a lot of them are sucking wind right now. And, in general, demand is so low that we’ve all felt it in the business.’”
“At the same time, foreclosures and defaults have risen dramatically. In the past year, notices of default more than doubled in San Diego County, jumping from 1,533 in the first quarter of 2006 to 3,931 in the first quarter of 2007.”
“‘Default and foreclosure rates in Southern California are rapidly approaching levels only seen during the worst of the 1990s,’ Ratcliff said. ‘We’ve only seen the very tip of the iceberg’ in foreclosures, warned Ryan.”
“‘The bigger number is the people who are on the edge right now, getting help from their parents to pay off their mortgage, or forgoing vacations and cutting back on expenses to make ends meet,’ said Gary London, who heads San Diego’s London Group Realty Advisors.”
“London said that if home prices decline sharply or the housing slump lasts a long time, those people may not be able to get out from under their mortgages.”
“‘Then, all bets are off,’ he said.”
The Orange County Register. “Both construction and sales of new homes in Southern California declined in the first quarter of 2007 from year-ago levels, Metrostudy reported today.”
“The research firm reported that there were 10,035 new single-family homes started in the Southern California counties of Orange, Los Angeles, Ventura, San Bernardino and Riverside. That’s 30 percent fewer starts than in the first quarter of 2006, Metrostudy reported.”
“Meanwhile, new home sales fell by 30 percent over the first quarter of 2006, to 10,765 homes, the report said. Inventory of unsold single-family homes increased by less than 1 percent to 39,842 unitsd. It would take 9.3 months to sell off those homes at the current sales pace.”
“‘The Southern California regional housing market, both new and resale, has been slammed, first by the bubble talk of 2005, second by the withdrawal of speculators in 2006, and third by the change in lending practices and the abandonment of subprime loans in 2007,’ Metrostudy’s Steve Johnson said.”
The Press Enterprise. “The home-buying season got off to such a weak start in Inland Southern California this year that homes are still being built faster than they are sold, according to Metrostudy.”
“Metrostudy reported 5,414 new home sales in Riverside and San Bernardino Counties in the first quarter of this year, a 50 percent decline from the same period a year ago.”
“‘I had hoped we would have seen more decline occurring in standing inventories. I was surprised that we are not digging our way out of this,’ Steve Johnson said. ‘Spring has been very disappointing throughout the new-home industry.’”
“Construction began on 4,504 homes in the first quarter of this year, down from 7,605 a year earlier, Metrostudy reported. Johnson said that will create a glut of land in various stages of development that builders will not be absorbing as quickly as anticipated.”
“Johnson said at the end of the first quarter there were 15,623 vacant lots ready for development in the two-county area, up from 23,131 a year ago, and another 51,904 lots were still being prepared for builders, up from 31,383 lots in the pipeline a year ago when the market was more robust than today.”
“Once land development gains momentum, ‘it is like a freight train. You can’t stop it,’ Johnson said.”
“It is unprecedented, Johnson said, to have a declining housing market in an economy that is still strong and with mortgage rates historically low. ‘It really amounts to prices,’ he said. ‘The buyers just found a ceiling and decided they weren’t going to go any further.”
‘Pat Romano said she was just trying to make a little extra money when she and a friend got lured into a real estate scam. KCRA 3 found the overwhelming majority of fraud involves the sale of 20 homes in Elk Grove. All 20 homes are now in default, many of them are in foreclosure.’
‘Martin also listed Romano, a retired nanny, as an employee of VFM Investment Group. Romano said she never worked for Martin. Her loan application lists her as a financial executive making more than $9,000 a month.’
Multiply this scam by the thousands in the Central Valley. We are in for a whole lot of pain…
The Central Valley is toast. I’m just hoping the contagion spreads up to the North Coast of California.
Hey, can we have a little down here?
“Financial executive making more than $9000 a month” sounds like San Diego’s budget verses “true hidden debt”. Not much longer and the truth will soon come to light as it always does and the game will be over as the bankruptcy papers are filed.
The BKs are a’pumpin and will continue to do so over the next few years. Still LOTS of denial though as we SLOWLY move through this cycle. RE cheerleaders’ can close their eyes, click their heels and chant “there’s no place like home” all they like. Reality is NOW. . .
I think the next time Ms Romano thinks about making some extra money, she’ll go to the nearest Starbuck’s and apply for a PT barista position.
I just hate it when people don’t think for themselves.
BayQT~
I would bet they only looked at about 30 transactions if the majority of the fraud was contained to only 20 houses. I would hazard to guess if they looked a little harder they could find a bunch more.
True, remember that Elk Grove is also the pot house capitol of northern CA. If all they found was 20 houses, then they were looking while blindfolded.
Elk Grove? a few pot houses maybe, but not the big growers.
Huh?
http://sacrealstats.blogspot.com/2006/08/elk-grove-pot-houses-and-flipper-effect.html
Sure Natomas had a bunch too but the EG busts were huge.
My wife and I drove by two of the Elk Grove houses (one priced at $380k and the other $400k). Nice homes, nice neighborhoods. I can only imagine the condition that they are in. The mold issues alone would probably necessitate $100k+ in remodels before the property would be habitable again.
” I would think a lot of them are sucking wind right now”
bahahhahahahahahahaha
“Making matters worse, 40 percent of the jobs created during the past year have been in leisure and hospitality, the lowest-paying job category in San Diego, paying an average of $376 per week.”
Not on the high salaries paid to these wonderful buyers.
Cool! How much house can you buy on $376 a week? And, after you make payments on your new house, how many groceries will you be able to buy? What about utilities? Maybe payments on a small car? Gas? Insurance?
Welcome to the new America! The majority of jobs now pay only enough to let you live with a room-mate in a ghetto rental, ride the bus to work and eat at McDonalds.
“paying an average of $376 per week.”
Last year you could have bought a 749K new home with that wage.
outrageous! that wage should get a refrigerator box!!!
Binko:
Your comment made me think of an article I read about the current administration has “proposed” adding hamburger flippers to manufacturing employment..and subtracting “i hope” from service jobs, under the thinking making burgers or fries is part of a process…
Now, this continues the Alan Blinder legacy of obscuring every thing in the “CPI”, with substitutions.
Now my question is, Are we {americans} this stupid? Or is this g overnment really this desparate?
I think the answers are yes and yes.
both
And ketchup is a vegetable!
beer is a food group!
I’ll drink to that..
{][}
That’s two beer mugs clinking together.
$376 a week?!? Good Lord! I make 5 times that much, have a fixed mortgage with a PITI of under $1200, no other debt, and I can barely make ends meet. This is what passes for a good economy nowadays?
We are truly screwed.
I’m floored, I could survive off $376/week (assuming no medical expenses)… but I wouldn’t like it. (Been there, done that; even saved money. But that was grad school! Note: Talking in inflation adjusted terms.)
California and Florida are going to do wonders to the national credit market. No matter what the Fed does… credit will tighten.
This market is so unbalanced that it cannot take anything but acceleration or it will fall over…
The construction guys who earned their money and are now losing their jobs have my sympathy. The builders, mortgage brokers, Realtors ™ , and flippers?
I say:
Got popcorn?
Neil
“$376 a week?!? Good Lord! I make 5 times that much”
I want your job!
When will stated income on liar loans be counted as real statistics in the bogus economic indicators we already have?
True inflation is 15-17% per year, true unemployment (counted european or canadian style) is 13-14%, true economic growth is -.5%, etc…
BUT in the fed’s world, inflation is 1%, unemployment 4%, economic growth 4% and soon average wage will be 70k per capita…
“and soon average wage will be 70k per capita… ”
Massive inflation, coming to a theatre near you!
Some of them are probably sucking something else right now too…
Lereah Leaving the NAR for the Minor Leagues
By twist
“David is an expert on real estate and the economy, and his stature and expertise enhanced NAR’s position as the most credible source on economic and policy issues affecting the housing industry in the United States and abroad,” said Dale Stinton, NAR executive vice president and CEO. “We wish him the greatest success in his new endeavor.”
Ben, did you see the article this morning about how New Century executives are moaning because their “top hat” retirement funds aren’t protected under bankruptcy, unlike their 401Ks? They’re boo-hooing and suing for a bailout because they’re being treated unfairly. Give me a break.
Ben, did you see the article this morning…………..
More and more azzz kissing each day.
Give me a break, desmo. If I posted the article, you’d be blaming me for stealing Ben’s thunder. The article is relevant to the blog, and I wasn’t sure if he wanted to post it or not.
I saw it, and was cheered. The creditors are going after the exec’s deferred compensation. Good for them. Maybe there is some blood in that turnip.
I can’t wait to see what sort of mealy-mouthed comments Leslie Applehead has to say about this!
MMAB
“…to have a declining housing market in an economy that is still strong…”
Not true!
My own on the ground reporting in my area, shows things have slowed dramatically! Especially among local retailers.
Same here in Ventura….Had a Door-to-Door Realtor knock on my door about 5 minutes ago as I was reading this Blog…Went to answer the door and thought, hmmm suit and tie holding some papers, Jehovah Witness? Nope. He asked, “do you know anyone interested in buying a house.? Nope, they’re over-priced and unaffordable and he said, But the next street over there is a house that dropped 50,000 to 499,000 last week. I said, no thanks, these prices have a long ways to go… Anyway, that house for 499,000 has been on the market for over a year and was first priced at 619,000. House next door had an offer of 480,000 short-sale fall through and it was 620,000 18 months ago last sale…Got Foreclosures?
Did the dude carry a gun to force you to sign the papers
Looked desperate…
Same here in Santa Barbara. I just went out to check the mail and found a flyer from Sotheby’s in the box, alerting us that a house in the neighborhood was about to come on the market. This has never happened before the 10 years (off and on) we’ve been renting here.
I noticed this too when I visited Visalia.
The Packwood Creek shopping center, with all its restaurants, Lowe’s, Best Buy, was nearly empty when I went…and this was a Saturday afternoon. Very different from the heydey of 2004, when one could expect a wait of an hour for the “privilege” of eating at Red Lobster, Olive Garden, Applebee’s, et al. Plus, unlike now, you didn’t have to look out the window while eating and see all the Centex and McMillin homes sign spinners!
I’m just praying this all spreads to the coastal areas soon.
I have even noticed parking lot at a local Safeway is empty. Heading south.
Did everyone notice Circuit City and Walmart reporting a drop in high end TV sales?
Reduced car sales in Japan hurting Honda (Japanese wide, not just Honda. But Toyota just shifted production apparently…)
This is happening fast. The MSM won’t catch on until everyone knows… but look at restaurant stats for last quarter, they weren’t good. (e.g., commentary on CAKE).
Expect some very rude anon’s to try and convince this and other boards to change our tune (blogged it).
Got popcorn?
Neil
Not sure if this link will work. But, LAinvestorgirl here is a huge drop in price, fraud, in Avenue area, Ventura.
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=702045&page=3&property_type=SFR&mls=mls_so_cal&cKey=x924f4z3&source=VCR
Not sure if this link will work. But, LAinvestorgirl here is a huge drop in price, fraud, in Avenue area, Ventura.
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=702045&page=3&property_type=SFR&mls=mls_so_cal&cKey=x924f4z3&source=VCR
I see a lot of help wanted signs around SM, but I think that’s more a function of retail people not being able to pay the rents around here and the commute from cheaper areas is ridiculous…
Cool it worked, check it out. this will make you go hmmm.
Bought in 06 for 756,000 in the arm-pit of Ventura
Expect some very rude anon’s to try and convince this and other boards to change our tune
I hear that, Neil. Over at the Dr. Housing Bubble blog I just got lambasted by some Anon too chickensh!t to identify - just for sharing my situation.
He told me that “grownups” who want to buy an affordable house, move to a different state…they don’t bitch about CA affordability on a blog.
Honestly!
MMAB
italics off?
Italics OFF.
close
LAIG:
There are always help wanted ads around here for low-paid jobs. The retailers seem to think they can pay Melrose wages at Montana shops, for example. Good luck with that.
The rich folks used to get away with paying their housekeepers so little that they could not afford to drive to work. Those days are long gone. To keep a housekeeper out here now, you have to provide parking, not to mention wages well above minimum.
So, “sign spinners” is the term of art? I was in Desert Hot Springs this weekend for the Coachella Music Festival and saw these guys in action for the very first time, flogging the horrible developments in that hell hole. (It was 103 degrees!) My husband and I were thinking of what to call them and came up with “sign wagglers”.
My wife and I call them idiots who cannot get a better job. And those that hire them? Bigger idiots that cannot come up with a better marketing plan.
big LA Times article on sign twirlers this weekend.
Apparently its a cut throat business with employers driving up and hiring them right off the curb.
The flashy ones make $20 + an hour.
They even have “boot camp” for training - woo hoo!
I will check on retail sales in my town re: asking merchants. Parking lots downtown have been full however.Don’t know about SLO.Mostly yuppies and bappies and OPM Cal Poly kids shopping there.
“Hai Nguyen was one of those investors. The former San Jose resident bought a $420,000 home last year in a new development near UC. But the rental market was weaker than he thought. Now living in Arizona, Nguyen has the home up for sale, and is throwing in a $40,000 Cadillac Escalade as a sweetener.”
How much you wanna bet that Escalade is not brand new, and he’s upside down on it as well. Trying to dump two anchors at once. Stuck indeed.
Mr. Win is taking a page from the homebuilders playbook, and odds are….he’d throw in the wife and kids if it got him off the hook on this deal.
gmae,tse, mtcah……my vietnamese is rusty.
“But the rental market was weaker than he thought.”
I love it. These unwitting speculators thought they could just rent the house out, no problem. How you doin’, Nguyen? Bwahahahahahahahaha!
“But the rental market was weaker than he thought.”
It seems every FB in California had the same idea - that they were going to get rich renting to students attending UC Merced (which just opened last year), all with visions of the astronomical rents commanded by flophouses around UCLA, UC Santa Barbara, UC Berkeley, etc.
Except there are only about 1000 students so far, and Merced doesn’t look like being a leading institution or in-demand party school.
“Hai Nguyen was one of those investors. The former San Jose resident bought a $420,000 home last year…”
This guy is the greatest fool. A deeper look into listings in the bubble areas quickly reveals that a lot of the houses for sale were purchased in the last few years.
Investors…I HATE that word. Why won’t the MSM just call them what they really are: greedy SPECULATORS who lost badly! Or, BAGHOLDERS!
Actually, I prefer the term GAMBLERS.
How is this any different than going to Vegas and betting everything on black and 18 or playing Blackjack for 5K a hand and trying to “get lucky”?
You actually need 5k (money) to do that.
Gamblers is indeed the correct term for these speculators. I’ve used that term for the last couple years in my references to them. Their actions are nothing close to resembling the correct use of the term “investing”.
Our culture no longer has any idea that “invest” and “speculate” are not the same thing.
A vietnamese investor bought a little mid century duplex next door to me in 2005 for 605k - the guy rents it out at 1100 each. I don’t think that comes close to the PITI on that place. This is after he raised the rent on it - ouch
How long can people last with negative cash flow like that?
Why not just go spend the money and have some fun instead of feeding an alligator and the realtors.
He bought it to be a rental. That’s what I don’t get.
Nobody buys it to be a rental at that price (compared with that income), the truth is he bought it hoping for price appreciation, and wanted to use the rent to defray some of the negative cash flow in the meanwhile.
Well he’s only about 5′1″ on a good day. Maybe he’s just getting too much oxygen at that altitude.
nice
Back in 2004, everyone in my family was telling me I was stupid for throwing money away on rent. Now the last one finally gave in and admitted that housing is going down. I’ve talked to people like doctors and MBA’s who have no clue what is going on with housing and the credit bubble. I hope things don’t turn out too bad for the sake of the working people, but I know it will be tough the next few years no matter what happens.
A “Sticky” kind of stuck…. We were told by experts that RE is sticky from the top. Owners will hold and keep prices elevated with decreasing prices. No where in the past did they include “incentives’ like cars and yet this isnt working either. Old Hai is already out 40K on buying and Escalade… which shows just how stupid these RE investors really are.
HEY STUPID YOU ARE ALREADY OUT 40 GRAND!
DO YOU FREAKING HEAR THAT? TO YOU GET THAT?
Louie Louie, your blood pressure!
I laugh out loud every time I see one of those pull into the gas station. We have the highest gas prices in the US.
Try No. Cal coast over $3.50/gal.
Anybody beat that?
$3.57 today in Sili Valley.
Regular is about 1.38 EUR/liter right now, which is a neat $7/gallon.
Yet Germans seem to have fallen in love with SUVs. No better way to show you’re loaded. A BMW 7 series means you saved up for 20 years. A big American SUV means you make so much money, you don’t CARE what gas costs.
> We were told by experts that RE is sticky from the top.
The “sticky” part of the price is what it will keep them from falling below 2002 levels.
Crappy POS plus a gas guzzling paycheck hog suv - nice deal!
On the way to work I used to always be passed by the SUV’s…
Now? Everyone is driving slower (to save gas) except for those with a Prius. (Umm… 85+ in California isn’t smart, no matter how good the fuel economy.)
Oh, I get passed by the occasional “road rage SUV;” But once upon a time it was usually the “holier than thou SUV.”
Got popcorn?
Neil
I can’t imagine spending $300/wk on gas - but lots of them MUST be!!!
Lots of them are. I routinely drive up to pumps here and see $70+ on them left by the previous person driving some Hummer/Escalade/Suburban/whatever. I just smile, put 9 gallons into my trusty 2000 Honda Civic, and drive off for another week.
My Explorer costs $50 to fill up 3 times a month, and I feel guilty about driving a truck when a very small car would be more fun and moral. But it’s paid for and I drive 6 dogs to the beach (have to take the neighbors dogs too - they NEVER get out otherwise) and a Prius is not going to hold 455 lbs. of slobbery dog meat.
I’ve got a good one, too. Drove up to the gas pump in my 1998 Honda Accord, looked at the last sale amount…$100! I stare at it again….real hard…yep, a 1 and 4 zeros alright. All I could do was shake my head, give my baby a drink, and like talon, drive off for another week (and a half).
(short commute to work…10 minutes, city streets)
BayQT~
$10/week. 7 minute commute, city streets. And i drive home for lunch every day. Life is good.
Have you thought about walking or biking? Things look really different when you go slowly.
I moved out of California to Toronto and I walk everywhere. Saving money, losing weight.
at 85 mph in so cal….you go, maybe 17 miles in an hour?
got traffic?
The RE gangs in San Jose advertised and organized trips for the idiots to
Las Vegas, Arizona, Merced, Indiana …
Everyone bought 3, 5, 10 homes each. The loan gangs would take care of the loans, making sure they all closed at the same time.
Frauds and speculations were everywhere, in all ethnicities. And the bankers, builders, regulators were happy to help.
Heard about several people doing that… all that was possible with the help of ‘Crazy Credit.’
it’s CRAZY, I tell you - CRAAZZYYY!!!
Finance it!
next
I’ve mentioned this before (last year), but I knew things were really out of control back in 2004 when the pastor at the local community church (San Diego area) was leading a group of “investors” (gamblers) out to Las Vegas to speculate on homes. Insane.
At $4 a gallon, they wouldn’t be able to pay me to ride that crappy SUV anyhow…
Why buy far and drive when you can rent next to work and be back home in 5 min? THAT’S QUALITY OF LIFE!!!!
Amen!
We’re 10 minutes from work, no debt, money in bank, nice neighborhood and WE RENT!!!
Sacramento isn’t a bad place to live, but the rest of the Central Valley is an armpit. And Bakersfield? Ugh. Only a mania like we saw would lead people to buy homes in these god-forsaken places. Now they’re all sorry.
Wait until the commerical market gets turned upside down in the Valley. That is the only thing keeping us afloat right now…
Meth Valley
I just sold my home in Stockton in Dec 06, 635K to start in Feb 06, let it go for 490K and I thank the lord for that.
Some of you have seen the new home projects in Meth Valley have been trashed already. Many home abandon, knee high lawns, for rent signs and garbage everywhere. While the likes of KB Homes continues to build these once 600k homes right in the middle of the carnage. I wouldn’t pay the property taxes to live in one of those neighborhoods. If so many people weren’t so badly hurt(by their own greed mostly) it would be laughable.
How can the Big Home Builders NOT go broke?
“How can the Big Home Builders NOT go broke?”
Considering the sky high prices they paid for land, and their penchant for $600k “starter” homes, I am not sure it’s possible.
PICTURES PICTURES PICTURES
The MSM will NOT believe you without PICTURES
We need too publicize these Meth Valley homes so all can see
Esquire magazine ran this set of before and after photos of meth addicts a few years ago…
Mugshots of Oregonian tweakers from the Multonomah p.d.
Should really be on billboards, across the land.
http://www.drugfree.org/Portal/DrugIssue/MethResources/faces/index.html
Those “five years later” comparison photos look like “two years later” photos of people who bought homes in 2005 and are trying to sell in 2007.
I looked at those “before” pictures and thought to myself: “before what?”
What a bunch of ugly mugs.
Wow. That’s hard-core. Very, very sad.
I have lots of images but don’t know how to post them, I emailed these 4 low quality images to a guy who posted them. These are in a less than 2 year old KB homes section of a much larger new home project in Lathrop, ca., all of it trashed. I have much better images-horse trailors,cop cars, new homes being built next to new empties etc etc. http://loudoungroup.com/
Its the cost of the land if they bought early enough they desperately will try and unload with a house or more likely a townhome on it.
If they paid deposit on the land they will walk away.
“How can the Big Home Builders NOT go broke?”
A bottom won’t even be in sight till a major builder goes under. They will build till they can’t. Even though starts are down, they continue to add inventory to a glut.
This is very true. Every bottom in a boom/bust cycle will have one major player go BK. This is after a lot of the smaller guys already went BK. Remember Olympia Holdings of Toronto in 1992 in the commercial RE bust. Three brothers with a net worth of $ 10 Billion knocked down to $ 300 Mil.
yeah, to have to live on only a 100 mil per brother.
those guys got hurt.
WTF?
I noticed that Lennar has a significant lending arm. They have 9000 employees in construction and 3000 in lending (Of course they must subcontract out most of their construction labor). If most builders have lending branches, they will get double hosed (slowdown in housing, loss of money on land owned, lenders going underwater).
“Meth Valley
I just sold my home in Stockton in Dec 06, 635K to start in Feb 06, let it go for 490K and I thank the lord for that.”
Good for you that you got out. I’m from the area–and what really really blows is that builders could have built QUALITY single story homes on nice lots that might actually be desireable to own after this carnage plays out. But no!! They build rows and rows of crammed together oversized pieces of s**t that no one will want. Stupid greedy ass builders grinding every last buck. I drove to Fresno on Highway 99 from Sacramento and was appalled at the quantity of crappy tract housing that’ll just sit and sit. Mc Mansions and Hummers will go down in history as the two most idiotic, energy wasteful overproduced items in US history. What a frickin’ embarrassment.
Rant off.
DOC
Crap McMansions have Hummers beat hands down. At least you can drive a Hummer, and they’re pretty well made.
“At least you can drive a Hummer, and they’re pretty well made. ”
Compared to what, a Yugo?
what really really blows is that builders could have built QUALITY single story homes on nice lots that might actually be desireable to own after this carnage plays out. But no!!
———————————–
I think this is the case all over CA (and, quite possibly, the nation). The overbuilding wouldn’t have been so bad if they actually produced something likable. God forbid builders actually sold the (better-sized) lots and offered to build custom (quality) homes for the buyers.
Those two-story tract McMansions on postage stamp-sized lots will be the bane of RE in the future years. Nobody will want them.
I was in Stockton for the Asparagus Fest. Getting to the waterfront involved going through some fairly scary neighborhoods and yet they were building high rise condos with more to come in the “Redevelopment Zone” starting at $300K.
The 3 story townhomes have become a staple in Bay Area. Only thing people can afford to buy.
I say why bother.
Why bother? Good exercise, 3 stories = built in stairmaster.
“3 stories = built in stairmaster.”
3 stories = only for the young and healthy
Don’t forget the suicidal
“Getting to the waterfront involved going through some fairly scary neighborhoods and yet they were building high rise condos with more to come in the “Redevelopment Zone” starting at $300K.”
Sounds like Cancun.
sorry, i disagree - corregated steel porn station in the middle of nowhere
How do you say “feed that gator” in Vietnamese?
LMFAO!!!
Or how about “cornholed”?
He is Cornholio.
Beavis!
“London said that if home prices decline sharply or the housing slump lasts a long time, those people may not be able to get out from under their mortgages.”
“‘Then, all bets are off,’ he said.”
No, that’s when my bet comes on. In fact, if it doesn’t happen, my bet will stay off.
“a team of California economists say.”
Soooooo glad they got a “team”. Once again, throw the football to the horny monkeys.
you got me on that one, diet pepsi through the nose, that hurts
ex-nnv you’re making a lot of horny monkeys very happy (they got the football in SD, too). I’m not sure what it is about that phrase, but it sure makes me LMAO.
I was just called a “renter”!
So the new owner of the house next door just swung by to check on his investment. The only reason I noticed his arrival was his SPEEDING up the cul de sac and damn near screeching to a halt in front of my drive.
He slams out of the truck and right behind him arrives his buddy the “contractor”. They start spreading their arms, pointing and waving, gesturing their BIG IDEAS like Saruman incanting a new deck or somesuch.
I can’t help myself and stroll on out to see what evil these two wannabees have in mind. Well, a few pleasantires and it seems they have ME all scoped out and dismissed as just a renter. I can’t really DO ANYTHING to slow their grand plans if I am just a renter.
Ohh, so naive, so cocky these two are. They will see what a renter can do. A renter with nothing but time on his hands to go to council and planning board meetings. A renter who has a bug up his ass now.
The Summer just got interesting….
Do report back, this sounds like it could be a good story line.
“right behind him arrives his buddy the “contractor”
His “buddy will soak him for all he’s worth.
Person living in the same complex I live in caught me in the parking lot and started talking, asked if I owned the place. I said no, next question “I hope you don’t mind asking but how much rent do you pay”?
He bought the place early 2006 needed to move out decided to rent according to Zillows the place has not apprecitaed in 14 months. But Zillow is behind the curve.
Give them Hell. The valley is covered with pretentious pricks like these.
“Saruman incanting a new deck” LOL!
Make Sure The have ALL legal permits, and make sure they follow Noise ordinances, Report any wetbacks……
and They cant use your yard to store anything or run their tractors on
It would violate your lease with your LANDLORD and he might just lose a good tenant. Or have to lower your rent even more.
They can’t change the drainage in their lot so it effects yours. They need to prevent soil eroison from wind and rain (no dirt goes into the street drains)! Call the city/county building inspector often to complain. No oil from leaking equipment in the street or in their lot. No concrete waste deposited in streams, creeks, drains in the street, etc.
You don’t have to do anything except sit back and watch him twist in the wind.
See OC Fliptrack’s gravatar.
One neighbor had an issue with another in the Phx area.
So the vent under the peak of the house gets decorated as a saguaro cactus with the arms creatively displayed to give the protesting neighbor the bird.
Umm… this was actually here in Utah, not PHX.
http://www.snopes.com/photos/risque/ventcover.asp
I have a question and maybe someone can answer this. I am tracking 3 zip codes in DC area using a price range from 300k - 1 mil. I came up with 264 listings. Of those 264 listings 40(15%) are under contract. I am wondering what percentage of listings during the boom times of 04 and 05 were under contract at any given time. It seems 15% is a very low number and I wonder what the % would have been in boom times for a typical bubble market - this is tough to determine, but if anyone would have access to that type of data, I would appreciate.
I can’t give you numbers on that, but here’s an anecdote.
Friends of mine had to leave DC in July or so of 2005 - standard northern Virginia town house, nothing special and, though I love ‘em dearly, they were slobs with a hyper 6 year old. They put the house on the market on a Friday, showed it Saturday and collected a number of offers and picked one on Sunday. Entire process took about 60 hours. And that was their plan from the get go. That was typical for their neighborhood.
That help at all?
july 05=60 hrs
wonder what July 07 might be?=perhaps; 60 days, Just Reduced?
“It is unprecedented, Johnson said, to have a declining housing market in an economy that is still strong and with mortgage rates historically low. ‘It really amounts to prices,’ he said. ‘The buyers just found a ceiling and decided they weren’t going to go any further.”
These are the same lines they fed to buyers before.
Now look at the current housing market.
Now if we can just include the Automobile and Diamonds in there…
“found a ceiling” - is this guy hullicinating?
they got smacked against the ceiling once the sub-prime carpet ride ran out of gas. notice that was right after the big wallstreet bonuses in december.
so when do they dole out bonuses to the bankers? we might see some REO dumping right after the payout.
got cash?
I am wondering when all the neg am loans/ REO start to show up on the books as well.
Should ask Tanta over on CR.
Definitions of further on the Web:
to or at a greater extent or degree or a more advanced stage (`further’ is used more often than `farther’ in this abstract sense); “further complicated by uncertainty about the future”; “let’s not discuss it further”; “nothing could be further from the truth”
Further is a bus from the 60’s….
Once again, we cant talk about high prices, high prices are bad umkay.
furthur, I think.
Merry pranksters and such.
Lereah’s presentation august 2006
http://tinyurl.com/mefvp
Lereah, Liar pants on fire. He knew this was coming to an end eventually.
“Johnson said at the end of the first quarter there were 15,623 vacant lots ready for development in the two-county area, up from 23,131 a year ago, and another 51,904 lots were still being prepared for builders, up from 31,383 lots in the pipeline a year ago when the market was more robust than today.”
The photo in the link belos shows a development in Florida, but add some hills and it would also look like California.
http://daytona.craigslist.org/rfs/321554057.html
Those are some big numbers. And I was concerned about the hundreds of lots in the pipeline for our little town of 27k (9k non-student permanent residents).
for a preview of what some of these Central Valley developments will look like in a few years:
http://www.ghosttowngallery.com/htme/bodie.htm
Hey at least those structures are still standing a century later, not going to find that level of craftsmanship in these bubble homes.
Well, just a little over the top. The Central Valley will be just fine when the last of the specuvestor carpetbaggers from the Bay Area and LA Basin lose their greedy little butts. Chop all the prices in half, watch Mr. Nguyen bleed money, and the valley will end up with what it started with: Ag, too many illegals, dust, and heat - and a few more houses.
Wow! I visited Bodie YEARS ago, and took pictures. (gotta dig those pics up) Loved that place. I had flashbacks of Gunsmoke…
BayQT~
Bodie is a bonafide ghost town…
About 20 years ago Professor Roger McGrath wrote a book about Bodie and as he had complete acccess to a complete run of newspapers from the town, he was able to discern just how violent this supposedly hell on earth was.
It wasn’t.
It had a crime rate that was a tiny percentage, per capita, compared to Boston, New York and Chicago.
The myth of us being violent people started in the west.
Bufffalo Bill, Dime novels, movies and television turned the myth into some sort of reality.
I urge you to read this book.
http://www.amazon.com/Gunfighters-Highwaymen-Vigilantes-Violence-Frontier/dp/0520060261
“in an economy that is still strong”
So, define “strong”. If 40% of the new jobs are in hospitality and leisure, at an average around $375, I’d call that weak, or at least second-world. And how much “leisure and hospitality” are underwater FBs going to require in the future? That 40% is looking mighty weak.
Local RE moguls HQ for sale:
http://bakersfieldbubble.blogspot.com
http://people.bakersfield.com/home/Blog/Bakersfieldbubble
A little off the subject, but just wanted to take an informal survey of what people are doing investment wise…
I see the DJIA set yet another record high–when will it end, or is this just inflation rearing its head, making profits look “better” despite fewer product actually being sold?
Gold, silver, oil?
High yielding money market?
I have to say I’m about 75-80% money market, with a fraction in PMs and international stocks and value stocks make up the rest. I’m getting more worried about inflation, despite the slowing economy and lower house prices (which should be deflationary). I just don’t see deflation when I see the price of gas ($3.60/gal low grade in Eureka), go to the grocery store ($10.99/lb for NY Strip that cost $3.99 in 2003). Any suggestions?
the $3.22 tag on Oil, and corn being sucked into the ethanol craze got me thinking along those lines. Its bad enough that transportation cost were going up, now we have to contend with the livestock and produce getting expensive on account of the corn demand.
Can the prices still rise (inflation) while the demand fall off (recession) ?
got cash?
“I’m getting more worried about inflation, despite the slowing economy and lower house prices (which should be deflationary).”
If Paul Volcker were Fed chairman, you wouldn’t have to worry, would you. But with the guy in office doing little to dispel worries that he will drop freshly printed money from helicopters at the first whiff of deflationary pressure (say from falling housing values), you would be wise to worry.
I wish we had Volker instead of pansy-assed Chicken sh@t bend-overBernanke. He’s representative of the direction of polititions in Amerika. We need a hero, and something tells me it aint going to be Ben.
I wish we had no one at all.
For once I have to go against my own advice. Cramers program was good today he talked about Telocs being only safe investment. I only saw part of the program had to get back to my job. He also mentioned retail being bad and RE being bad.
money market
401k in stable value…i have no great options there….
quite frankly CDs don’t look too bad to me at this point- use a bank that wasn’t writing tons of crazy loans
Energy will probably do OK in the long run, everybody needs it, few people make it (oil, nuclear, alternative). Anything to do with farming (pork bellies, John Deere stock or good farm land) will probably do well as long as we try to grow food/fuel for our SUVs. Precious metals in case Helicopter Ben arrives on the scene.
Money market for the short term, but I’d stay away from long term CDs. Once inflation heats up your money is toast.
You sound like you’re on the right track, IMO.
Agreed. Good advice. I think we will have a period of inflation and then a period of deflation. We are in the inflation period now. It is amazing to me, given how most of us go around chasing the dollar all of our lives, but, (1) Don’t know what money is (the present fiat system is created out of and backed by NOTHING!), (2) People have no clue about the time value of money (inflation falls under this, payments etc.)
It seems to me people don’t understand inflation is a silent tax, it’s not rising prices, although that’s what the MSM implies, inflation is your money is worth LESS! This is caused by the FED.
Thing means that thing you work so hard for is falling in value all the time! The whole monetary system is a scam to suck the wealth from the working people who actually produce something.
This housing bust is another way to suck wealth, but this one will bust the whole middle class. Remenber Greenscum pusching the virtues of adjustable mortgaes right before the housing went bust. We are being set up!
OK wait a minute. So are you saying that we are being taxed by the Fed without any representation? I thought I read somewhere that that happened here in Amerika a couple hundred years ago.
I wonder how they dealt with it back then?
Oh, I thought everyone would like this:
http://countrywide-foreclosures.blogspot.com/
Countrywide now has just under $1/2 BILLION in FB homes in California alone.
That’s interesting the vast majority of their foreclosures are up North.
I think that chart reads about 1,200 homes with about $500M in value for CA.
That’s $500M in Asking Price for CA. Value is much less.
Has anyone ever noticed that the Countrywide office on the 101 in Ventura is shaped like an upside down pyramid?!
Well, if the remaining amount left on the loan were $650K, then that would only be 770 houses. THIS PROBLEM IS GOING TO GET MUCH BIGGER. When they hit 1/2 TRILLION, let me know.
“‘The reset crisis is really going to hit its peak early this summer,’ Ratcliff said. ‘Then we’ll see how bad this is going to get.’”
ZED:
Bring out The Gimp.
MAYNARD:
I think The Gimp’s asleep.
ZED:
Well, I guess you’ll just wake ‘em
up then, won’t you?
Fabienne: Whose motorcycle is this?
Butch: It’s a chopper, baby.
Fabienne: Whose chopper is this?
Butch: It’s Zed’s.
Fabienne: Who’s Zed?
Butch: Zed’s dead, baby. Zed’s dead.
Which movie is this from?
“One asshole goes in another one comes out”
And who does it apply to?
“One asshole goes in another one comes out”
“Willy Wonka and The Chocolate Factory”?
Don’t know the movie, but applies to Lereah?
Bruce Willis in Pulp Fiction
Has there ever been a lead story on housing with a greater divergence between the upbeat headline and opening paragraph versus the ugly truths revealed in the details? I think the answer must be NO.
“Housing may have hit bottom
Prices to start rebound next fall, forecast says
By Dean Calbreath
UNION-TRIBUNE STAFF WRITER
May 1, 2007
Despite a surge in home foreclosures, the worst may be over for San Diego County’s beleaguered housing market, according to a study to be released today by UCLA’s Anderson Forecast, one of the state’s leading economic think tanks.”
Calbreath asserts (through reference to the Anderson Forecast) that “the worst may be over” for San Diego housing, but this reconciles very poorly with most of the evidence presented in the article. For instance, how are leisure and hospitality workers going to prop up prices in a market where lots of SFRs currently on the market, coming onto the market or under construction are new and priced above $700,000, and almost no SFRs are currently priced below $400,000? Come on, folks, it ain’t going to happen!
“Making matters worse, 40 percent of the jobs created during the past year have been in leisure and hospitality, the lowest-paying job category in San Diego, paying an average of $376 per week.”
someone left the Union Tribune out at work today on the counter and I saw that front page headline. I snatched it up thinking the insanity was about to resume here in San Diego. After reading the whole thing, I can see we are just getting started. I hope I wasn’t the only one that read the whole thing, some people might have thought the pain is going to subside in 2008, far from it, the pain will just be starting.
I guess you need to leave UCLA to be able to take the gag out of your mouth… what stupidity in that ‘think tank’
“Has there ever been a lead story on housing with a greater divergence between the upbeat headline and opening paragraph versus the ugly truths revealed in the details? I think the answer must be NO”
Ummm. hello, didn’t you catch this gem from the prior blog entry.
http://www.eastvalleytribune.com/story/88852
“Housing market trend is upward, analyst says
Misty Williams, Tribune
Valley developers took out more home building permits for the fifth month in a row in March, ”
“Some 3,737 permits were issued in March, up from 3,630 in February but down 21 percent from the year ago period, the latest Phoenix Housing Market Letter from analyst RL Brown shows.“It’s a positive sign that the trend is upward,” Brown said.”
The bulk of the article is that new homes sales are off 20%, and existing are off 18% yoy for the first quarter.
Of course that is all prior to the sub-prime melt down.
About that he says:
t’s becoming tougher for everybody to obtain financing, not just for first-time homebuyers, Brown said. “I think that’s the dark cloud that’s on the horizon,” he said.
How do you start off saying “positive sign that the trend is upwards”, then end with something equivelant to “we’re so farked now that the foundation of the market has been yanked out from under the house of cards”?
February: 28 days, 129.6 permits/day
February: 19 business days, 191 permits/day
March: 31 days, 120.5 permits/day
March: 22 business days, 169.9 permits/day
Well spotted!
Holy crud. What does that say about pending homes being off 4.9%!!!
You can see the ARM resets will keep rolling in… the economy will keep pressing downward..
People are going to holding on and clawing to survive for a while but the economic shocks will happen and cause more and more to drop out. The IO/ARM buyers will have zero equity cusion to fall on… Then as the carnage looks to be settling down the second wave hits.
Seems like everyone from 2003 on will be underwater by the end of 2007…
Wow. I wonder if push back to 2000 prices? I could see it easily happening in LA. Such a high premium is insane.
James, are you kidding?Prices pretty much DOUBLED in LA btw 2003 and 2006. Maybe by 2009 they’ll all be underwater but the median has only fallen 1K in the SFV.I wish it wasn’t true. But it is.
The REO and resets are just begining.
What is about to happen is unstoppable.
Right now it seems unthinkable that prices will fall so far. Soon it will only amaze us that they were that high.
Leverage on the way down bites you back double
Well, I must say that I hope you are right. I don’t think you are…but I hope you are.
Yes, but alot of them HELOCed away their equity. You are only safe if you bought in 2003 and did not refinance with cash back.
Anderson’s Ratcliff basically said “2007 pricing = 2004 pricing” and 2005 was the peak, so I think you are spot on with your guess that year-end 2007 pricing will look like 2003, with all the 100% financed GFs from 2003 onwards underwater.
Then we move on to 2000 pricing.
You read it here.
“‘The reset crisis is really going to hit its peak early this summer,’ Ratcliff said. ‘Then we’ll see how bad this is going to get.’”
He is only addressing the subprime resets. Someone posted a fantastic chart here a few weeks back that indicated prime and Alt-A resets will not peak for about four more years.
“He is only addressing the subprime resets. Someone posted a fantastic chart here a few weeks back that indicated prime and Alt-A resets will not peak for about four more years.”
With all the subprime resets, the Alt-A’s will see the writing on the wall. I bet they start heading for the exits as well before the reset is upon them. Another potential flood of inventory.
When the Alt-A’s start going belly up or exiting en masse, the inventory will be sooooo great that 50% in many areas will not seem so incredible. Yes, even in South Orange County. With the continual build by the builders, the inventory is only going to skyrocket.
I highly doubt many Alt-A will survive long enough to reset. Why go no doc unless you are flat out lieing about your income? When they find they can’t flip them in a few months, and are in fact, already far upside down, they’ll walk away without having negative cash flow for 4 years waiting for the reset to bring down the axe.
“…Pat Romano said she was just trying to make a little extra money…”
These sob stories are starting to wear thin. Is there no more accountability in this country? It seems as if everyone is a friggin victim. The illegals and there kids, the nanny who wants to make an extra buck but commits mortgage fraud in the process. WTF pretty soon you’ll be able to commit murder in this country if someone steps on your toe, WTF.
Is there no more accountability in this country?
what’s that?
What are you talking about? These folks are sobbing because they’re paying for their stupidity. What more accountability do you want?
Accountability as in quit trying to pass the buck. What you don’t understand is that if they can pass the situation off to someone else via lawsuit or something else. the damage from their credit report can be erased and no more problems. that’s why you see this incesstant whining. Most of the folks you see whining went in with eyes wide open with a big dumb smile on their face.
If they get a police report/lawsuit they can get it erased.. so no accountability… get it.
“‘I’ve learned a lesson,’ said Nguyen, who holds a real estate license. ‘I’m stuck.’”
Your “lesson” isn’t finished! You still have not sold the house. And now you are living far away and unable to check on the place.
Plan on waking up in the middle of the night in a cold sweat for a while pal.
“Your “lesson” isn’t finished!”
LOL, when I was a kid and got in trouble, I’d tell my parents that I “learned my lesson.” I hadn’t yet lived through my punishment and yet there I was with my forward looking statements. They never bought it.
Perhaps Nguyen is doing the same thing, hoping the real estate gods will end his punishment.
Nothing a planted upside down plastic statue of Ho Chi Minh couldn’t fix…
I bet he just gonna walk. Was it a zero down, interest only loan?
Stick it to the bank.
Nah, he’ll just drive off in the Escalade.
Hope he doesn’t leave the Escalade in the carport too long. The Escalade is the most-often stolen luxury car:
http://www.autoblog.com/2007/04/26/escalade-ext-tops-list-of-most-stolen-luxury-vehicles/
We interrupt the California thread to bring you an urgent bulletin from Massachusetts, courtesy of Pen in the preceding thread. The below is the most mind-numbingly awesome post I’ve ever seen on this blog, bar none. The ramifications are huge. Would the Terminator have the balls to do this? I don’t think anything like this has happened in the US since the depression. Read it and weep:
“BOSTON — Massachusetts has become the first state in the country to declare a moratorium on foreclosures stemming from predatory lending.
Homeowners will now be able to submit a complaint to the Division of Banking.
The division will then call the lender and ask them not to foreclose.
The move comes after dozens of homeowners marched on the State House last week, demanding a meeting with Gov. Deval Patrick.
The state secured 60-to-90-day freezes on foreclosure for most of the protesters.
Homeowners having trouble will also be provided with housing counselors.”
Will Taxachussetts taxpayers be asked to make the lenders (and their MBS creditors) whole in light of mandated forebearance costs?
I dunno, GetStucco, I don’t think this Deval Patrick has thought this thing through at all. Really BAD move, IMHO. If I lived in Masshomeless right now, I’d be looking to bolt big time. I don’t think the folks up there can take much more in taxes. Oh, and is he mandating a moratorium on taxes, I’d like to know? What a nightmare. How do they determine who is being foreclosed because of predatory practices? He will be left with a state full of nothing but victims. Free squats for everyone, whoo-hoo!
P.S. Is it too late to buy a home you can’t afford, in order to get in line for foreclosure bailout protection? There must be a scam opportunity in there somewhere (I don’t think like a criminal, or else I would explain it to you…).
My friend you must leave the country and cross the desert with the help of Cayotes.
Probably not, what do you want to bet there will be a number of real estate closings that won’t go through over the next few weeks. Must really suck to be a realtor in Masshomeless.
maybe something near Tanglewood would be nice
… this is a joke, right? They have no power to do this. Lawyers here…what are they violating? Must be something. Commerce clause?
Article I, Section 10, Clause 10 of the US Constitution. “No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”
Here, it would be passing a law impairing the obligation of contracts. I’m not an expert in constitutional law, but it appears that any mandated moratorium would violate this prohibition. I think that’s why they’ve decided to “ask” the lenders to halt (on a case-by-case basis) the foreclosures for a limited time, rather than trying to impose this on them.
gracias, dude!
Please tell me that is a joke.
No joke.
Taxachusetts just voted itself out of the national mortgage system.
Seriously, who is going to lend money there without buyers having some serious meat in the game?
The credit tightening just went up two more notches in MA.
Got popcorn?
Neil
they are interfering with the right to pursue happiness there - for all the decent people, that is, i.e., non-flippers, people with regular mortgages, etc….
Good Riddance
Wow. ill advised policy from the depression revisited.
Its good to hear that they have decided to commit some kind of economic suicide.
nip it in the bud or it can spread like cancer….W should tell him he’s smoking crack
Interesting article will any other governors think about doing this…..
http://www.mtgfoundation.com/2007/04/massachusetts-governor-attacks-mortgage-fraud.html#more-3239
Figure it’s 3 mos free rent a this point. Presumably the freeze is voluntary by the lenders.
My reading of this was that there is not a mandated moratorium (it’s unclear to me whether the govt could order a blanket moratorium, as it would be, in effect, invalidating contracts between private parties); just that FBs can file a complaint with the Division of Banking and the Division of Banking will then review each complaint on a case-by-case basis and, if appropriate, “ask” the lender to halt the foreclosure proceedings for 60-90 days.
Now, I don’t know how much coercion is involved in the “asking.” And, it will be interesting to see how the Division of Banking and the lenders each react if there are thousands of complaints filed. This could get interesting, or could turn out to be nothing. Also, the state better beware of unintended consequences - lenders starting foreclosures earlier than normal; lenders leaving the state (thus making it harder to secure financing or refinancing, resulting in lower demand and, thus, lower prices, which push more FBs underwater and, ultimately, resulting in more foreclosures).
thanks OC - i knew it wasn’t kosher
Nothing more than a NYC form of rent control! Gotta lov it! The local village idiots are going to try and keep their fannies in office with this?
NOBODY UNDERSTANDS RENT CONTROL
You base you price on the yearly rent roll, if it is controlled the price is much lower then a unregulated house.
Plus you get RE tax breaks per regulated apartment, and still make money
The BIG $$$$ is when they die and you can double the rent to market rates….some landlords do this Illegally putting college kids next door to an 80 year old. and have them play loud music….or far worse….
Or you pay them to move…just like any other tenant with a lease….
AND THE VALUE OF THE BUILDING GOES UP PROBABLY DOUBLE OR TRIPLE WHAT YOU PAID THE TENANT TO LEAVE… so there agin Legally you made money
Rent control is not evil, just a restriction on the building. If you didn’t like it then why did you buy it?
How about if they f@cked after you already owned it?
(raises hand)
I have been subsidizing some old-timers for almost 30 years now. I will never make that back. I am this close to wishing them bad health. Last year, I finally got to triple the rent on a unit where someone died. I will never ever recover the damage that rent control did to my investment, all I can do is take the unit up to market and write off 30 years of massive losses.
Rent control is the spawn of the devil.
Excelent work as usual Palmetto. However, this will only tighten the banks standards. If they know that they can’t forclose and will miss 2-3 months, at least, of payments, then it is going to be 20% down at least, as Neil always points out. Then again, it could go even high as he likes to mention. If this becomes the nationwide model for bailout, rather than actual cash payments, I think we will see unprecedented down payments required. Let’s just say that 40% wouldn’t be too high. This, in turn, will only exacerbate the market since sellers will have to capitulate and drastically lower prices to fit would be buyers’ down payments.
No matter what happens this market is toast.
THIS JUST IN — Wall Street has just passed a moratorium on the purchase of all Massachusetts municipal bonds and other debt instruments. Also, banks incorporated in the state have declared a moratorium on the payment of state taxes. “What are they going to do? Forbid us to do ‘business’ in the state? BWAHAHAHA!”, stated an unattributed source.
tango, that’s probably truer than poor Deval realizes. Whew, this guy has no idea what can of worms he’s just opened. We in Florida know how vicious business can be when it wants to “punish” a population (as in insurance). I think the guy has such a background in “helping the poor” he knows no other way than to appeal to victims. Unfortunately, by definition, a victim is a down and outer. And down and outers don’t fill state coffers. They NEED help, they don’t give help. Unlike Gonzo, I think Deval means well and is sincerely trying to help, but clearly he did not think things through. I think this one well meant but disastrous action will damage Masshomeless severely for many years to come.
If memory serves, Masshomeless was the first state to go supernova bubble. I seem to remember it took center stage, even over California, as being the first with massive price increases about 3 years back. Constantly in the media. So maybe after all, it will be the true ground zero for the supernova bust.
“Ryan Ratcliff, the economist responsible for the San Diego County and California sections of the University of California, Los Angeles Anderson Forecast, said the fallout from mortgage defaults will prove a ‘major wild card’ in the next two years.”
Did Ratcliff give a single reason whatever for why he doesn’t expect SoCal prices to crater with the subprime implosion? Because otherwise, I will have to suspect that his comments are heavily biased by the implicit contract with REIC constituents who fund the Anderson School Forecast. Small wonder Thornberg left the scene; credibility is more valuable than prostitution fees.
As I recall, in the last Anderson forecast, Leamer basically said that their models signaled a recession was coming, but his “gut” told him it wouldn’t happen and he was going with his gut.
That part of the story was lost in translation by the SD Union Tribune.
When the guy who signs your check slugs you in the stomach, you tend to go with your gut.
oi
“‘The Southern California regional housing market, both new and resale, has been slammed, first by the bubble talk of 2005, second by the withdrawal of speculators in 2006, and third by the change in lending practices and the abandonment of subprime loans in 2007,’ Metrostudy’s Steve Johnson said.”
And fourth by the return of speculators in 2007 — as sellers.
And fifth by record-high foreclosures in 2007.
6. Housing sales that resemble discount car salseman on the radio in 2008
In case no one has posted this yet:
Moral hazard is part of mortgage mess
Very nice, concise article on the moral hazard of bailouts. If only govt would heed the warnings.
And Deval Patrick, The Governator of Masshomlesschusetts, just fired the shot heard ’round the world. Get ready for the same in Cali, it’s gonna be awesome.
All hell is going to break loose.
Barn door is open
All the horses are long gone
Slam the door shut now
—————————————————————————
Tuesday, May 1, 2007
Lenders say many won’t be helped by foreclosure delay
By JAY LINDSAY
Associated Press Writer
BOSTON— Some on the brink of losing their homes will benefit from the foreclosure delays advocated by Gov. Deval Patrick, but many are so financially troubled that a delay won’t make a difference, the state’s top lenders association said Tuesday.
Despite their portrayal by some housing advocates as “predators,” subprime mortgage lenders want to help homeowners find better loans because they also lose money on foreclosures, said Kevin Cuff, executive director of the Massachusetts Mortgage Bankers Association.
But by the time many cases reach the foreclosure stage, it’s often too late, “whether we wait 60 days or not,” said Cuff, whose trade group represents about 300 lenders.
Patrick should use his influence to bring the nation’s largest lenders, which hold loans on much of the state’s foreclosed properties, into discussions on how to address the state’s high numbers of foreclosures, Cuff said.
http://www.telegram.com/apps/pbcs.dll/article?AID=/20070501/APF/705011765
“Patrick should use his influence to bring the nation’s largest lenders, which hold loans on much of the state’s foreclosed properties, into discussions on how to address the state’s high numbers of foreclosures, Cuff said.”
Oh, boy, here it comes! Wow! Taxpayers of Masshomelesschusetts, bendova! Or bolt, as fast as you can. Oh, lordy, what a disaster. This Deval is one accident just waiting to happen. I think this Cuff guy has his number, too. Stroke, stroke.
Reminds me of these laws they keep passing in LA to delay the eviction process…as long as the day comes when they have to get out, the result is the same, it just adds increased costs to the lender / landlord which get passed on to non-deadbeats.
Sounds just peachy…..People’s Republic of California followed by the People’s State of Minnesota…..great…I could stop making payment and squat for the rest of my life….
No telling what it will do to bonds, banks, subprimes, Alt-A, etc. doing any business in those states…..
All sorts of fun mischief going to happen this summer…..mwhahahahaha!!!!
“It is unprecedented, Johnson said, to have a declining housing market in an economy that is still strong and with mortgage rates historically low. ‘It really amounts to prices,’ he said. ‘The buyers just found a ceiling and decided they weren’t going to go any further.”
It is not about buyer decisions. It is about the gaping chasm between home prices and incomes which is no longer bridged by subprime lending.
Is this really hard to understand? The only way you can get end-user affordability* below 10% (as California had statewide at the bubble peak) is if lenders willingly make loans which are only likely to ever be repaid if home prices are going up quickly enough to offset negative cash flow. With 60 fewer subprime lenders in business and falling home prices, that is happening with far less frequency these days.
*Defined as home sale prices where the buyers can actually afford to pay off their mortgages without a spectacularly unlikely run of good fortune.
Whaddya mean? My plan is to pay off my mortgage with my lottery winnings! And thanks for reminding me, I gotta run down to the liquor store and buy that winning ticket before the next drawing, cuz my payment is due….
Yikes!
“my lottery winnings” = small but non-negligible risk that FBs will get bailed out, either by the loading up of Uncle Sam’s balance sheet with toxic mortgage debt backed by taxpayer-provided insurance, or by “higher-than-expected” inflation used to reduce real debt balances at the expense of savers, creditors, U.S. long term bond investors, retirees on fixed income streams and anyone else long future dollar payments.
About 10 years ago my bank hit a $17 Million Cal lottery, split between 18 people.
They took the 26 year payments and the most anybody could get on an immediate cash out basis, was around $225k.
Subtract taxes and it turns into a $150k payday.
Not the $965k payday, it seemed to be at first.
Whaddya mean? My plan is to pay off my mortgage with my lottery winnings!
Ya right! You and the state of Florida……….:
http://www.sptimes.com/2007/05/01/State/Tax_relief_Try_gambli.shtml
I see a lot more “unprecedented” in the future.
“The buyers just found a ceiling and decided they weren’t going to go any further.”
Happens with every Ponzi scheme. Shouldn’t surprise anyone.
Just posted on this point, but to reiterate, I don’t think the housing market has run out of dumb bunnies who are perfectly willing to use other peoples’ money to buy homes they cannot afford. Rather, I think the lenders have shut off the spigot, in light of the growing risk that they will end up holding foreclosed REO in a falling-price market. The Taxachussetts bailout plan will additionally ask lenders to let FBs who stop paying on their mortgages a 60- to 90-day moratorium on foreclosure. That ought to encourage more subprime lending .
“I don’t think the housing market has run out of dumb bunnies who are perfectly willing to use other peoples’ money to buy homes they cannot afford.”
Testify, brothah! I think the bubble would go on and on if it weren’t for the foreclosures.
if lenders continue to do that they should be handcuffed - or at least thrown in front of their cos. shareholders to be stoned to death…
So I guess the next law that will come to pass will be 25% of loans by any lender HAVE to be subprime, to low-income borrowers, wonder what that would do to the fees and rates that responsible borrowers pay.
my tax rate will soon be 60% gotta love it!
wtf
You already saw the results of that, it was the targeted loans program, anti-redlining lws, etc.
GS, I agree that there are still GFs out there that would be willing to buy, and that the lenders are shutting off the spigot (I don’t think it’s shut off completely yet). But the number of GFs was declining prior to the subprime implosion, as shown by the declining sales figures that topped out in 2005. The lenders shutting off the spigot accelerates this process, so that they work together.
Bubbles depend on credit. Ponzi schemes depend on more people joining. The RE market was a both a Ponzi scheme and a bubble, so it relied both on more people joining in and on easily available credit. We are seeing both of those disappear.
I agree with your basic point. I was merely quibbling about the factor currently driving the credit tightening. Having recently had conversations with some move-up buyers, I am skeptical that the market has run out of GFs. But the legs have been kicked out form under the bubble pricing by the subprime implosion. It is only a matter of time before this trickles up, IMO.
A little Beat Farmer action in the late afternoon?
http://www.youtube.com/watch?v=lL0eIVlx9i4
Interestingly the San Diego Union tribune again ran a story indicating the housing market had “bottomed out”, going on to say increases were expected by fall… This according to UCLA’s Anderson forecast…
Do these morons really believe they can breathe fire into a housing market made dead by overpricing, large scale foreclosures and tightening credit? I suppose they may succeed in suckering a few idiots into buying, but frankly anyone who buys right now can probably afford to take a bath, because they are not giving away money any more, and no matter which way you try and paint this picture, such individuals are few and far apart.
Don’t forget outright fraud.
I rent in Palo Alto. I got some depressing news today from my landlord - he is increasing rent on my single family home (not an apt) from $3100 to $3900 in one go. I hope the housing market doesn’t normalize by rents skyrocketing. Of course, Palo Alto is “special” because mighty Google is hiring like crazy …
I would move and then hope he gets a really “good” renter.
renting at 3900, astonishing.
I would have to be making about 22k a month……
your world is both confusing and frightening.
I agree.
$3100 to $3900 per month is quite an increase. A check of mlslistings.com shows an inventory (active not pending) of 37 SFRs in Palo Alto, only 3 of which are listed for under $1M. Even a generous 20x multiple on $3900 rent equates to a $936k house, never mind the property tax. Sounds like you’re still getting an OK deal relative to buying.
http://www.nytimes.com/2007/05/02/washington/02wolfowitz.html?ref=world
Two former top officials at the World Bank have issued new statements disputing the contention of Paul D. Wolfowitz, the bank president, that they and others knew about his actions on behalf of his companion, who was employed there when he joined the bank in 2005, according to testimony released Monday night and Tuesday.
The officials’ testimony, providing new details of their conversations with Mr. Wolfowitz two years ago, laid bare the extraordinary discord at the highest levels of the bank after Mr. Wolfowitz became president.
At issue was how Mr. Wolfowitz should handle the possibility of a conflict of interest resulting from his relationship with Shaha Ali Riza, who had been with the bank for seven years when he arrived.
Mr. Wolfowitz ended up helping to arrange a pay raise, promotion and transfer to the State Department for Ms. Riza, along with a path toward future promotions and salary increases, causing a furor among bank officials who charge that these were arranged without regard to normal bank rules.
Read between the lines and notice the world has changed when “Corrupt” politicans (Applies to both parties Dems & repubs) became bankers the greed factor is unimaginable.
http://www.nytimes.com/2007/05/02/washington/02wolfowitz.html?ref=world
OT - look at the first photo posted a couple of days ago - the Chase help wanted ad…. too funny!
How about something uplifting?
http://www.youtube.com/watch?v=JOqu-Kxz3ww
5,000 Meters Olympic Race 1952.
Emil Zatopek has led most of the race and gets passed by 3 runners in the final lap of this nearly 3 mile long footrace.
Watch what happens~
You’ll never see an athlete the likes of him again.
Thanks, that was worth it.
As a former runner myself, at that point in the race it is all about mental toughness.
There is no finish line!
Who’s Carrying the Economic Baton?
The Consumer?
http://www.financialsense.com/Market/cpuplava/2007/0425.html
May Day! May Day!
179 new listings showed up on ziprealty.com’s San Diego used home for-sale inventory this evening. The most homes I can see on their interface is 200, and I can’t wait for the first day that more than 200 new listings show up.
another fed to keep his job
watching the others suffer
said Rollie Smith, head of a federal task force on economic development in the San Joaquin Valley.”
Housing Inventory Surges
In March Across the U.S.
A sharp increase in homes offered for sale last month suggests that home shoppers will find plenty of choices this spring.
The number of homes listed for sale in 18 major U.S. metropolitan areas at the end of March increased 6.5% from a month earlier, according to data compiled by ZipRealty Inc., a national real-estate brokerage firm in Emeryville, Calif. The data cover listings of single-family homes, condominiums and town houses on local multiple-listing services.
http://www.realestatejournal.com/buysell/markettrends/20070405-hagerty.html