Buyers Can Hold Out For The Best Deal In California
The Tracy Press reports from California. “The number of houses on the market in Tracy and Mountain House is still climbing, while prices either remain flat or have dropped since the beginning of the year. The latest numbers from the Central Valley Association of Realtors show 930 houses for sale in Tracy, Banta and Mountain House as of the end of April, though only 249 houses actually sold during the first four months of 2007.”
“The median sale price of homes has dropped from the same time last year, from $560,000 to $520,000. Meanwhile, the median list price, which was $580,000 at this time last year, is down to $530,000.”
“Buyers have so much to choose from that they can hold out for the best deal. ‘It’s almost like a standoff between buyers and sellers,’ Tracy real estate broker David Ormonde said.”
“The most dramatic example of the drop in home prices is in Ripon, where the median home price was $550,000 a year ago, compared with $440,000 today.”
The Union Tribune. “Troubled subprime mort-gage originator Accredited Home Lenders said yesterday that it expects ’significant losses’ during its first quarter and that it has slashed 1,300 jobs nationwide so far this year.”
“The San Diego company, which specializes in loans to borrowers with poor credit, revealed the cutbacks and other information in a filing late yesterday with federal securities regulators.”
“Because it expects heavy losses, Accredited said it has taken steps to cut costs, reducing its work force by 30 percent from 4,200 employees to 2,900 since Dec. 31. Company spokesman Rick Howe declined to say how many workers had been cut in San Diego.”
“Accredited gave no estimate of when it expects to file its annual report and first-quarter financial statements. Accredited originated $1.9 billion in mortgage loans during the first quarter, down 47 percent from $3.6 billion for the prior year.”
“Delinquent loans made up 8.96 percent of the portfolio of loans the company services, compared with 2.85 percent during the same quarter last year.”
The Orange County Register. “Mortgage industry woes are rapidly spreading beyond the subprime sector as LendingTree, a major presence in Orange County, laid off 20 percent of its workforce nationwide Friday.”
“Although a majority of the company’s 2,200 workers are in Irvine, the layoffs are evenly distributed among operations in Irvine, Charlotte, N.C., and Jacksonville, Fla., said Rebecca Anderson, a spokeswoman for the lender.”
“It’s the second large layoff announced by an Orange County lender this week. ImpacMortgage Holdings Inc. said Wednesday that about 100 workers got pink slips, including 70 at its Irvine headquarters. That follows more than 3,000 other mortgage layoffs in Orange County so far this year.”
“The announcements this week, however, were the first among large lenders that fund loans to more creditworthy borrowers, suggesting the problems in the industry won’t be confined to the riskiest subprime market.”
“Scott Anderson, a senior economist at Wells Fargo (and no relation to the LendingTree spokeswoman), said the fallout from the once-hot mortgage industry is just starting as fewer borrowers can qualify for loans.”
“‘It’s not just subprime, it’s across the mortgage spectrum,’ he said. ‘It’s going to get a lot worse before it gets better.’”
“Wayne Clemons Jr. was among the LendingTree workers in Irvine laid off Friday. ‘It was a total surprise,’ said Clemons.”
The Orange County Business Journal. “Shares of Irvine-based Impac Mortgage Holdings Inc. dropped Friday after the mortgage investor reported a first-quarter net loss of $121.7 million a day earlier.”
“Impac let go of 120 local workers earlier in the week, the result of housing and mortgage slowdown.”
The Associated Press. “New Century Financial Corp., will not file its first-quarter financial results on time and may never be able to file any of its outstanding financial statements, the collapsed subprime mortgage lender said in a regulatory filing Friday.”
“New Century, which sought Chapter 11 bankruptcy protection last month, said it would be unable to file its first-quarter results ‘without unreasonable effort and expense.’ The company also said it is ‘uncertain as to whether or not it will ever be able to file its financial statements.’”
“New Century had been the second-largest provider of home loans to high-risk borrowers, but it collapsed after a spike in mortgage defaults led its lenders to pull funding and demand that it buy back bad loans.”
“The company stopped trying to make new home loans in March due to lack of funds. It has since laid off more than 5,000 employees, retaining less than 1,000 to handle the process of liquidating its assets.”
The Ventura County Star. “Plenty of house-hunters turned out last weekend to tour area homes that will be sold to the highest bidders on May 19 at the Los Angeles Convention Center.”
“At the coming auction, which includes nine Ventura County homes, the winning bidder will be whisked off to sign paperwork as soon as the bidding is over. The lender-owned properties are all foreclosures that did not sell at a previous auction. They will be on the block along with hundreds of homes in Los Angeles and Orange counties.”
“There haven’t been many auctions in Southern California in recent years, but the meltdown in the subprime loan industry, where lenders provided high-rate mortgages to high-risk borrowers, has increased the number of foreclosures.”
“Notices of default for the first three months of 2007 increased to the highest level in almost 10 years in California, according to DataQuicks. A year ago, 9 percent of homes that received notices of default went into foreclosure in the first quarter, DataQuick reported. This year, it was 40 percent.”
“Foreclosures totaled 11,033 for the first quarter, up 81.5 percent from the last three months of 2006. There were only 1,223 in the first quarter of 2006. In Southern California, notices of default were up 139.2 percent from a year ago, with 26,748 notices in the first quarter.”
“‘Now that the market is down a bit, we’re starting to get busy again,’ Robert Friedman said of his auction business.”
“Tom Pool, spokesman for the California Department of Real Estate, notes that the homes were foreclosed on for a reason, and they are owned by the lenders because no one made an offer that exceeded what was owed.”
“Felix Babka of Burbank, said the auction makes him nervous, in part because there is a reserve price. That means the seller doesn’t have to sell the home if the highest bid isn’t as high as the seller wants.”
“Last weekend, Babka visited Oxnard to look at a home on Piedmont Street. He has been renting since he sold his family home for $440,000 and is looking for a place to retire. He said the housing market ‘has slowed down a little bit, but the prices are still too high.’”
- The lender-owned properties are all foreclosures that did not sell at a previous auction. They will be on the block along with hundreds of homes in Los Angeles and Orange counties.”
- The banks seem to be sitting on a lot of inventory. If they don’t get their price, they just play a waiting game that they can not win.
I drove around Torrance Ca and saw several bank properties that are still sitting unsold.
Holding onto foreclosures is the keystone holding up the avalanche right now. People are taking their houses off the market waiting for conditions to improve. Once they wake up and relize the market is nothing but down, they’ll cut as much as needed to get out. Then it is an avalanche of people that realize they’ve way overpaid that want out for any price.
“Once they wake up and relize the market is nothing but down, they’ll cut as much as needed to get out.”
Unless of course they can only cut so much without going under water.
What do you think people will do then?
Matbe turn it over to the banks. What will the banks do?
I think after this spring, the banks and people will wake up and flood the market. But it may not happen until next spring. But sooner or later…
If they can get out without a loss, they will. If not, they’ll live rent free for 3-6 months, then return to renting.
Let’s see…
Nov,Dec,Jan,Feb,Mar,Apr,May-
I got a buddy who hasn’t paid since October. He’s just waiting to come home to a sign on his door.
But many will no be able to get out at any price as the heloc’ed goods are only worth pennies on the dollar. Therefore they will not have the money needed to close on the house. They should just get their stuff out of the house and leave the keys on the countertop.
“Holding onto foreclosures is the keystone holding up the avalanche right now.”
I agree with this. How else can you explain the remarkable price stickiness in SoCal markets that have undergone a drastic inventory correction (6X the inventory of spring 2004 in SD)?
how else? Denial is not in Eqypt
Egypt :-/
There is a lot of bailout legislation moving forward in Congress and the state legislatures; I wonder if this is causing many lenders and borrowers and sellers to try to hold on longer than they would have otherwise. Maybe they’re thinking they can dump some of their losses on the GSEs or con the FHA or get into some of the state bond funds. At the very least they’ll be hoping any level of bailout will help the market recover.
“…to try to hold on longer than they would have otherwise.”
Good observation, and I agree 100%. In fact, even if you knew your bailout proposal would either be too small to have real effect, or not have a good chance of passing through the approval process, a bluffing game could buy time, although it could also inadvertently spark a worse flood later, as more water has meanwhile piled on to the upstream side of the dam.
The problem with this strategy from a banking standpoint, is that banks and lenders are responsible to their shareholders. Holding a huge inventory of defaulted houses may keep prices from falling as fast, but ultimately will result in ever greater losses to the banking industry as it holds devaluing houses. I am not clear how long they can hold these homes for, or at what point they too will be forced to liquidate to honor debts and obligations.
I think the banks might be relying on the Fed or Congressional put.
It may be the reverse of the usual ‘bank run’ scenario.
If one bank decides to ‘mark to market’ by aggressively cutting pricing on its owned real estate until it clears, then it will incur a large, and industry-abnormal loss now.
Shares plummet, and executives in that bank lose their jobs.
Other banks say in little footnotes that their REO portfolio isn’t exactly ‘marked to market’ with other comparable recently sold homes; usual excuses in technical language but homeomorphic to “it’s different here”, “real estate is illiquid, don’t you know?” , “distressed sales don’t really count, the market’s healthy….”
But if all the banks all lose all at the same time, then it’s nobody’s fault, it’s a “systemic crisis” and they get free cash and a fresh start.
This is the same principle why fish swim in schools when there’s sharks. Odd fish out of the pack is sharksnack.
“How else can you explain the remarkable price stickiness in SoCal markets that have undergone a drastic inventory correction (6X the inventory of spring 2004 in SD)?”
It is called INFLATION….14% increase in the money supply right now….EVERYTHING not made in China is exploading. The REAL inflation rate is currently at 10%…the CPI is one of the biggest frauds to the American people EVER….2.5% give me fucin break.
Yes, inflation is BY FAR the biggest reason housing has not cratered in some areas, I look for this to continue. Although inflation in itself cannot save the housing market, it will keep prices from dropping another 40% or more.
Jim Puplava, whom I highly respect, has been saying this same thing recentley, although I disagree when he says prices will bottom next and may even start to rise.
IMHO housing will not bottom until 2009-2011, and we will see small decreases until then…. maybe 5% max or so a year., with some years of stagnant, flat prices. Maybe even be a dead cat bounce or two along the way.
RE is normally a fantastic hedge against inflation…..but not after we just witnessed prices rising by 300% in the biggest housing bull market ever- I feel sorry for the poor bastards who are proud of their 6.5% CD they locked into last year….they are losing $$. Buy commodities, preferably Pm’s
Gotta disagree, jdog — people aren’t seeing inflation in their paychecks.
We haven’t seen the bottom fall out because people will exercise every option they have before folding. Why wouldn’t they? Wall Street & DC are still partying, so even if personal situations are bad there’s still a pervasive sense that things will work themselves out. Once that’s gone, well, look out.
I was talking about price inflation. Wage inflation has been contained so far, but that may change.
TJ we are in a recession now…which would be clear if the GDP # wasn’t faked, and the housing crises is still only in the 3rd inning.
With elections coming next year, the cabal is not going to give up the throne without a fight, they will play the “strong econony” card for all it is worth…..and that means they will have print even MORE money up, causing hyper-inflation. That is when the real fun begins, but we are a few years away from that happening. In the mean time, housing prices will slowly wither away on the vine.
Yes, we’re definitely in agreement on inflation and GDP. I just don’t think inflation had anything to do with housing prices. We’ve documented ad nauseum the forces behind the boom, and inflation wasn’t one of them. If anything, inflation will be a factor in bringing prices down, since higher prices for consumables will leave less money available for housing.
some postings on banks NOT issuing 1099’s and other foot dragging
“Last weekend, Babka visited Oxnard to look at a home on Piedmont Street. He has been renting since he sold his family home for $440,000 and is looking for a place to retire. He said the housing market ‘has slowed down a little bit, but the prices are still too high.’”
This man is an example of a group that could really set the avalanche off. FB and banks are slow in selling because they will get more than they are owed, making prices ’stick’. Builders are a group that are likely to seriously undercut prices, but they too have debts from buying the land. But long-time homeowners who are thinking of retiring in the next couple of years, and who have paid off houses, will sell now rather than later in order to maximize their income in a falling market. If they need to undercut the FB by 10% or 20% to get their cash now, they will do it rather than sell at 50% off two years from now.
“FB and banks are slow in selling because they will get more than they are owed, making prices ’stick’.”
Man, I need coffee. This should say ‘FB and banks are slow in selling because they will get LESS than they owe…’ Caffein time…
Builders probably have at minimum 25% profit in a house. About ten years ago I when I was a Real Estate agent I called another agent who represented Ryland homes. I needed to get some paperwork faxed to me so that I could close the deal. He faxed that and also another page that showed the complete breakdown on the house that my client bought. Even after a $10,000 price drop they still made 25%. That included the house, land and the development costs of the whole neighborhood. The other reason that builders can cut price now is that copper and lumber is down by more than 50%. So the house they have been building since last October is a lot cheaper to build than before.
Engineering News Record publishes a cost guide.
For a standard 2 story 1900 SF home. $105/SF in Orange County.
Don’t kid yourself on the cost of materials. I buy materials and hire subcontractors to build tracts in So Cal. Lumber is down maybe 25% from early 2006 prices (call it $4k-$5k per your typical home) but copper is still high, concrete continues to go up and drywall is down maybe just a bit. Where I’m seeing most savings is through my subs, who are willing to cut their prices just to have work.
Builders are able to trim sales prices a little due to lower costs but it’s not the major component. They’re giving away options (and telling the subs they can’t charge for them) and they’re just taking dollars right off the top. Commodity prices have little to do with it.
Ah. So this is as described: commodity inflation times wage deflation.
Otherwise known as “swapping living standards with 1990 China.”
Unfortunately these are reserve price auctions. We won’t see the real values until they are absolute auctions. We all followed the ‘big’ auction in Florida a little while ago, and it was a bust because no one bid to the reserves. At what point will the banks pull reserve prices? There always seem to be negotiations after the hammer falls. Another question - will the sales, if they happen, be calculated into median sale prices? I suspect not.
The thing with “auctions” right now is that they are just another marketing scheme, mostly. You’re right…not until the rubber meets the road at an absolute auction, will these phoney baloney auctions go away.
These pissant auctions (in no sense of the word is a reserved auction, really an auction) are just another bit of consumer selling schadenfreude, not unlike last year’s gm employee pricing program, which used to be rebates, which used to zero interest rates, etc.
I’ve stated before that auctioneers have an uncanny ability to acertain markets, and once the word gets out amongst the trade what a white elephant houses are, watch them have a rather sudden lack of interest, in getting involved…
If the banks sell them at less than their ‘book’ they have to make up the loss by increasing their capital account. If their capital account gets too low or goes neg the FDIC closes and sells the bank. Too simple an explanation excuse.It will be some time before the banks get real.
Leading OC Brokers take on the market…..
http://blogs.ocregister.com/lansner/
Another cheer leader; but we knew that didn’t we. Same old story. Buy now, don’t rent; tax advantage of up to 33% on payment. Sounds like Liar Lereah or LAY.
An interesting post @ HP “New geometry of debt securitization” http://tinyurl.com/33a6br
Max, it’s interesting, but I don’t know if I agree with it. Certainly the disconnect between loan originators and note-holders encouraged the expansion of crazy credit, but I am pretty sure this house mania would’ve happened if the only element missing were the slicing and dicing of mortgage tranches. What do you think?
Maybe you’re right, tranching has been around for ages, so it isn’t always an enabler of outright recklessness. But it seems to me, that this time it helped pushing the risk in the whole new dimensions. It used to be that the banks assumed the risk, now - who knows.
I’m thinking of putting my cents to the Merk Fund.
Empirically, I noticed that banks which held their mortgages survived the big crash in Alaska (mid 80s) better than banks which sold their mortgages. Those that held them were much more conservative with lending.
“Maybe you’re right, tranching has been around for ages…”
CDOs were nonexistent in the early 70s. They only became significant in size in mid to late 1980’s. BTW a very good history (some congressional testimony on CDOs) is at
http://financialservices.house.gov/media/pdf/110503cc.pdf
Explosive growth in the CDO market dates only from 2000-20001. As a major mover of world finance, CDO really only matter since the beginning of the century, and the growth has been exponential over that time (primarily in non-commercial, though about 30% of commercial RE has been securitized. Past history is not a guide at all to what could evolve (devolve) from these highly-leveraged and abstract moieties. In complex systems theory (and evolutionary ecology, etc.) a general rule is that highly tuned, interconnected and complex systems are usually the ones most likely to collapse spectacularly from an unforeseen event. I think the worldwide derivative/securitization system will end very badly. And it has been noted that IN ALL COUNTRIES lately, investors have been discounting risk much less than any time in the past. Stock up on the ramen
AKRon,
That tends to be the case that a system highly tuned to be optimal under a given set of conditions will degrade in performance as it moves away from those conditions. In some cases very quickly. I think many believe the system is robust in the sense that performance will degrade gracefully. I’m skeptical of that opinion.
Implosion; hat tip, that’s a very very good point.
Similar to how ‘just in time’ manufacturing reacts to a strike or other disruption (the Kobe earthquake comes to mind). Badly.
Thank you Max and AKRon for educational materials you provided. Sounds like Mr. Cowan and his ilk were effective in their testimony in 2003 that prevented regulation of COD. We couldn’t prevent predatory lending - that would stifle a booming business that allowed the bubble to continue unabated for another two years. Now it all makes sense. What a mess.
“Wayne Clemons Jr. was among the LendingTree workers in Irvine laid off Friday. ‘It was a total surprise,’ said Clemons.”
I guess he thought that lending money to people who could never pay it back would go on forever. Well welcome to reality Wayne!
Well welcome to reality Wayne!
Party on Garth.
You know, when the tech bubble was about to pop, a bunch of us sat around talking about “what next”? All I’ve done since getting out of college is programming and QA automation. If I can’t get a computer job, I’m looking at a 50% salary reduction. Fortunatly, I’ve been able to get jobs.
How many of these people in the lending business were making good money, and are now sitting at home thinking “now what?”.
All the new Realtors? When housing is down to 2002 levels, and starts selling again, their income will come back some, but it won’t be enough to spread around between everyone now in the business.
Many of them will do something else like I do now - of course I had a teaching license to fall back on. Many of these folks will not flipping houses anymore. Oh they still will be flipping, but this time it will be burgers!
Yeah, this is one the permabull arguments actually. It goes something like this: jobs will keep the RE prices up and if jobs within the REIC begin to fallout, then these people will just go back to doing what they did before.
That is a load of crap. I’m in the finance and project management arena and I can tell you that if I took several years out of the respective fields, I would be screwed from a compensation standpoint. No employer is going to hire someone at a sufficient level if they have been out of the game for several years. I have to imagine that this issue is even more dramatic for those in technical fields where skillsets can be lost over several years.
Those high-paying RE jobs that were commission based are going bye-bye and those who are losing them are not going to go back to their old jobs. Those old jobs don’t exist anymore in a lot of cases or they’ve morphed into something else that will require experience or training to do. All of this not even considering the fact that we may be in a full blown recession soon where the private sector is not hiring as many people as they were several years ago.
“How many of these people in the lending business were making good money, and are now sitting at home thinking “now what?”.”
I have a suggestion: I think there will be a big business in buying, selling and exporting “collectable” cars. All of those restored mid-sixties muscle cars like Cobras, Mustangs, and Vettes that people have been bidding to the moon with HELOC money will be on the market. There is a big export market for those things, even for old Mercedes cars in good condition, especially gull-wings.
In knew a guy who was doing this during the 90’s downturn in California, and he seemed to be doing pretty well at it.
Unbeknownst to many…
Demand for 60’s & 70’s muscle cars, has been in Japan, for some time now.
So there’s this mysterious guy who rents the house up the street from me. Recently, we’ve been waking up to find a huge shipping container (the type that hitches to a big rig) dropped in front of his house. This is in a very nice lakefront suburban community with pretty strict HOA rules. It’d be there about two and half days and disappear. About a month to six weeks later, it’d happen again. This last time there were two mint condition Cadillac Coup de Villes in the driveway. One with the exaggerated tail fins (’58?) and the other about a ‘63. Turns out he exports classic cars back to his native Spain.
Collector car market is extremely volatile and has been subject to severe crashes. It crashed hardcore in the early 1990’s. One might rightly conclude that it tracks financial system bubbles. Current collector car market is absolutely insane, with vehicles going regularly for seven eight digit sums. For kicks, watch the Barrett Jackson auctions on Speedtv some day.. total insanity. This will end soon and a lot of buyers will be burned.
You are correct sm landlord! I have some relatives in the UK who imported used farm machinery from the US the last time the pound went over $2.00 (there now). Made big money. We need to Volker the interest rates. Let’s shake out this puppy and get the RECESSION over.
Well, sm landlord, that might help about 100 guys. I read an article yesterday about the projected need for long-haul truckers in the future. They profiled a couple of retired couples who needed money and drive trucks cross country. They make $100,000 combined. Who would you rather have driving a big truck: a 65-ish husband and wife or a young guy?
Anyone have any idea what the typical rank and file “lender” made at New Century? I just found out this weekend that a friend of the family that was working at New Century in Dallas lost his job about 8 weeks ago. When I talked to him about lead to a job paying ~40k, he said he couldn’t afford to work that cheap.
Did those guys really make more than 40k for filling out loan paper work??
I know of a woman in her early 20s at Countrywide, made 750K in at least one year that I know of (sometime between 2003-2005). Don’t know what she’s making (or not making) now.
The dude at quiggleme.com was supposed an ethical mortgage broker at New Century and cleared $500K for a couple of years.
That is about like hitting the lottery. I know of a couple of former Enron sales reps that hit the same lottery before the crooked E went BK.
Hmm… seems like history repeats itself.
What is the next bubble? Or is deflation and a resetting unavoidable?
I really think these people were making over $100k in SoCal. My girlfriends friends boyfriend makes around $150k supposedly and is 25 in San Diego doing this stuff. I would say its great money, except your job can only last probably about 5 years every so often. At that point that job kind of sucks. How many can get used to going back to a normal job since these people have no real skills.
For Jury Duty they called in a realtor with 20 years experience as an expert witness and the defense ripped her apart. What are those people going to do that just started only in the boom???
Lots of unskilled jobs making lots of money are about to go away.
I think the stink of having “loan officer at New Century” or any of the other newly-vanquished mortgage loan companies on your resume would pretty much scotch any good job offer in the future. This would tell the prospective employer two things - 1) This person has made an obscene amount of money doing very little 2) They are comfortable with working in a very unscrupulous industry.
This would give the potential employee the street cred of being, say, the past CEO of Pets.com, or perhaps the CFO of Excite.com.
Maybe they can go to law school!
It’s not like these fools banked any of it, too. Like those self-absorbed dot-commers, they figured it would last forever.
Guess what, they invested in RE ! More foreclosures
coming. Just like margin in stocks.
What does the average loan officer make on the average loan? I always thought that LO’s were kind of like real estate agents in that they would make loans (or sell houses) to friends and family and then the pipeline would dry up.
That said, a lot of loan companies had crazy advertising campaigns (especially on radio) so the pipeline of potential clients was coming in pretty hard.
“That said, a lot of loan companies had crazy advertising campaigns (especially on radio) so the pipeline of potential clients was coming in pretty hard.”
Brings to another point I’ve been thinking about. How much advertising is going to go away with the sub-prime bubble. About half the web pages I visited were running ads for “refi now”…..
“The announcements this week, however, were the first among large lenders that fund loans to more creditworthy borrowers, suggesting the problems in the industry won’t be confined to the riskiest subprime market.”
(Shuts eyes tightly, plugs fingers into both ears, and loudly recites):
SUBPRIME IS CONTAINED!
SUBPRIME IS CONTAINED!
SUBPRIME IS CONTAINED!
…
I doubt credit score is as relevent as income verification, and I doubt much income verification was going on for the last few years. No one would have been approved for much of anything.
“The Union Tribune. “Troubled subprime mort-gage originator Accredited Home Lenders said yesterday that it expects ’significant losses’ during its first quarter and that it has slashed 1,300 jobs nationwide so far this year.”
It that’s smell, that credit contraction smell…smells like….victory.
Smells like HELOC Spirit.
Since everyone is sharking around the realtytrac, I have a question about certain FC or pre-FC listing. When a listing says the loan balance is around $35K what does that mean (the property could sell say for $600K or more) ? Second loan, a cash-out refi?
Do you SD guys think that the special status of SD as foreclosure capital of the universe is due to proximity of Mexican border? (Honest question.)
I only have anecdotal experience on this. I have witnessed many RE closings/signing loan documents in Starbucks and Borders around SD where a Spanish to English translator was needed. You draw your own conclusions.
We used to own in EastLake, a nice subdivision in Chula Vista (San Diego). When we sold in 7/05, we sold to a Mexican family. Two years later so did our former next door neighbors and since then, I have had three gal pals move out of the area and the ALL sold to Hispanics. There was an article about three months ago that ran here in the Miami Herald but was datelined Chula Vista that talked about wealthy Mexicans buying in Chula Vista. There is so much crime and kidnappings in Tijuana that many wealthy and middleclass Mexis felt safer living en los Estado Unidos and communiting to work south of the boarder.
I don’t think so, but since I don’t live there, I’m no expert.
But I do know that as the dot.bomb implosion was sinking in, several people I know who became unemployed in Silly Vally moved to San Diego because they were able to get jobs there. That would explain some of it, anyway - they were selling overpriced shacks in Palo Alto (for high prices) and buying condos in and around SD.
Stop it! You made me spit out my Perfect Manhattan that I was sipping. If you had a pulse you could buy a house - now mix in illegals and the answer is obvious.
anybody who sold any home in san diego made tons of money. this goldrush mentality was all it took for regular san diegans to buy multiple properties and sell. oops they got stuck and they can’t sell.
The border is locked down pretty tight. There is a real wall along most of the county and tons of agents “reinforced” by unauthorized auxiliary outfits. From what Ive read, Arizona is the weakest link.
One of the foreclosure causes here is the new Ballpark and the subsequent insane condo buiding and flipping frenzy downtown. Its like “A Bridge too Far” — the concept was okay but they overdid it. Now we have some projects out on the eastern fringe surrounded by homeless and mentally disturbed people — its going to end up like Dien Bien Phu or Khe Sahn.
A wall? Wow, we are really pulling out all the stops.
The analogy this housing bust is like a neutron bomb that spares the house but destroys the FBs is a good one.
These DebtSlaves can run but they can’t HIDE and as usual, the FEDS and “Duck n Cover” ISN’T GOING to SAVE Anyone.
BOMBAY DOOR IS OPEN SIR ……
Sheesh…If they lose any more jobs in Irvine, the ONLY thing that will be working will be the the traffic light ….on the way OUT of town.
The Tracy Press reports from California. “The number of houses on the market in Tracy and Mountain House is still climbing, while prices either remain flat or have dropped since the beginning of the year.”
Was just in that area last weekend (zipping down Byron Hwy) and amazingly enough, there is still active building going on - homes can be seen in various stages of construction.
Er, in Mountain House. Tracy itself seems to be in a bit of a holding pattern.
I’m surprised that there are almost 1500 pre-foreclosures in my hood (East San Jose I-680 corridor). I’ve heard that the rich Asians are buying-up these from the broke wetbacks, and seriously remodeling these, blah-blah-blah. I’m curious see how many rich Asians there are to absorb it all.
Don’t worry, they’ll bolt at the first break-in.
Joe Isuzu would love you, sire…
“‘Now that the market is down a bit, we’re starting to get busy again,’ Robert Friedman said of his auction business.”
“‘It’s almost like a standoff between buyers and sellers,’ Tracy real estate broker David Ormonde said.”
That is one astute observation there, David.
Just now I saw an ad on TV to “come visit California” opening with Arnold/Maria walking on the beach and ending with Clint Eastwood.
I have NEVER seen an ad begging people to come visit CA before.
Interesting….VERY interesting.
The first thing that goes when a recession is coming are all the “non-essential” expenses:
1) Jewelry Stores
2) High End Autos
3) Travel
Time to refi those gravity defying homes and tap into your “equity”…..LOL
I have been looking into vacations, and am very surprised by the prices for nice trips. For example; 6 days on Kauai rangeing between 3-5K includeing Airfare for a family of 4. The 5K is the 5 star with beach view and the 3K is just plain cheap. This is of course for off-season, still were 30% below last year.
Looks like the Houseing ATM is running dry.
Cars are cheaper. Specifically Prius and Tacoma by 2-4K.
I am casually interested in a cruising sailing catamaran.
I checked prices recently compared to 2 yrs ago, prices are off by 50-75K.
Lagoon & PDC 36-38 foot sailing catamarans.
Check out the rentals on time shares…..people are renting them cheap just to pay their maintenance assessment.
The last things to go in a recession:
1) Smokes
2) Liquor
3) Hair Stylist
People don’t give up smoking, but they do switch from Marlboro and Winston to Native and Skydancer. (The latter available at $9.99/carton from 1-888-437-9797.)
“Come to Jamaica,” yes. But “Come to California???”
I see this commerical all the time on HGTV. It’s been out for about 4 months.
Those commercials have been running here in south Florida for about a year now. They always make me kind of teary and homesick (sniff)…
SM, I saw that commercial about a month or two ago here in NM. Thought the same thing.
If decent houses in CA cost $700,000 - $1 million at the peak, then I can see why banks might not be dropping the prices on REOs. Even assuming some of the recent buyers were move-up buyers, that’s a lot of loan on a house for a bank to just swallow and take a loss on. Maybe the banks just have to keep the REOs high because it would be a disaster for them to do otherwise.
The banks can’t hold on very long. They are not in the RE business, and won’t hold depreciating assets on their balance sheets very long, IMHO.
Enough with the “illegals fed the bubble” posts. Sure you can find an example here or there of a newly minted citizen–or, yes, an illegal–taking out a no interest, liar loan to buy a house they can’t afford, but the bubble was made in Wall Street and Washington not Jalisco.
Terence,
True, but Strawberry pickers earning 15K a year in Gilroy shouldn’t be buying 750K houses as was noted in the Wall Street Journal.
Check out the rising foreclosure rates in Santa Ana, illegal central, and you will begin to get an idea that they were a major part of this, especially in the lower income areas
Did Arnold and Maria show the levies that are at risk for breaking, unprepared for the earthquakes, potholed crowded freeways, etc? Great selling points for CA.
C’mon, everyone knows that California is nothing but beaches, Disneyland, Yosemite and wine country!!
Anyone know if the shot with Clint Eastwood was him playing on his private golf course?
“New Century Financial Corp., will not file its first-quarter financial results on time and may never be able to file any of its outstanding financial statements, the collapsed subprime mortgage lender said in a regulatory filing Friday.”
Should we expect to read similar news about Fannie Mae before we are through the tunnel?
Should we expect to read similar news about Fannie Mae before we are through the tunnel?
That would indeed be huge. Them and Freddy. These institutions will be looked on historically as a failed experiment, and a disaster to the economy, given their sheer scale.
I think F&F are much better run than a boiler room like New Century. (Rather 19th century, I’d say). They have problems but insane fratboy juvenalia isn’t part of them.
In fact, I’d bet that F&F will be nearly as solvent as the best banks; most of the problems come from really rampant entirely private lending.
In hedge fund terms, these private subprimers etc had the delusion they were printing alpha, but they weren’t, they just bought beta.
Fan and Fred dont’ need to do that stuff, they have a government ogilopoly. They just have to not seriously blow up in a fundamentally profitable and low risk business. Regulated utility versus Enron. (And besides, there’s 2 of them—Freddie CEO seems rather serious and capable, and if Fan blows up there’s probably an emergency plan for Fred to assume management)
In an issue which must surely resonate in CA, a Dallas suburb has voted overwhelmingly in favor of a measure that would make it illegal for landlords to knowingly rent property to illegal aliens.
I’ve been heavily involved in one of the Dallas races (not as a candidate, lol, I’m not totally insane) and it has been an eye opener. I’d say the turnout will end up being no more than 5-6%. Sad, really. A lot of time, effort and money go into winning the votes of 10,000 people in one of the largest cities in the U.S.
I’m at the “watch” party - what a joke that is.
That’s OK, those illegals who can’t rent in Dallas can come to SF and Oakland, which have declared themselves sanctuary cities for illegals.
txchick,
My wife and I were the 10th and 11th people to vote at our precinct downtown at 10AM. There was no one else even close to the building. The local press said it was because people were too overwhelmed with so many choices - what a crock of $hit.
And if they never file their numbers then the regulators, the cops, the politicians and investors will never learn the extent of the crimes committed by these companies and their executives. Heck, if it’s too expensive for the company to crunch the numbers do you real expect the regulators and cops to spend the millions to do it in order to imprison the bad guys and recover the stolen loot?
These crooks will have marching orders to just disappear and all will be forgiven. The crimes will be too big and complicated and ubiquitous to even bother with. Especially if they arrange for the economy-wide blowup to occur just as another war or terrorism security concern erupts.
Blanket amnesty for illegal aliens, and for Wall Street crooks!
A couple I know have tried to buy two differnet homes in San Diego this year, can’t get the loan a 0% down. So loans really are tightening up, good.
Random question:
Palo Alto, CA
What is the bubble status for housing within a 30 minute commute of Stanford?
For example, San Diego is leading the charge downward for So Cal.
I know that Sonoma is off quite a bit YOY, what about the Palo Alto area. How stiff is the delusion?
It’s definitely a bubble zone, where else can you can get a glorified shack for 1.5 mil. I don’t think prices are coming down any time sooner in Palo Alto, Los Altos or in Cupertino. Places like So. San Jose and even Santa Clara has to go to dumps before we see significant price cuts. Unfortunately, in my personal experience, house prices have gone up a lot in Silicon Valley from last year and decent homes are selling fast.
thanks
PLEASE WATCH 60 MINUTES THIS SUNDAY, MAY 14 AT 7PM EASTERN AND PACIFIC TIMES.
‘ Wayne Clemons Jr. was among the LendingTree workers in Irvine laid off Friday.
“It was a total surprise,” said Clemons, who joined the company in 2005 and handled customer problems.
He said he and nearly 25 other workers were called into a conference room a little after 9 a.m. for an unannounced meeting and were told the bad news.
Employees were not allowed to go back to their desks. Executives escorted workers out of the building one by one and handed them a plastic baggie with the personal items that they would need immediately, including car keys, Clemons said. Clemons didn’t get a plastic bag but was handed his briefcase.
He said employees were told they will get the rest of their belongings Monday at a hotel to be named later.’
Wow, so inhuman.
In Silicon Valley, one gets 10 minutes to collect personal belongings,
then they’ll walk you out.
The reason they weren’t allowed to go back to their desks is because management was afraid they might copy or take home evidence that would convict their criminal asses.
Here’s a hint- Lendingtree is as much of a scam as Enron was. Hell, 90% of the mortgage origination firms are Enron clones and will be bankrupt within the next 12 months.
think about that.. 90% of the entire industry will be gone in less than a year due to fraud. the execs of course have cashed out by now and could care less..