Right Now Everything Is Going Down In California
The Sacramento Bee reports from California. “Michael Alexander’s departure from the buyer pool puts him among an estimated 30 percent of potential buyers who have vanished from area model homes and open houses as the real estate season reaches its busiest months. ‘It was starting to look feasible,’ Alexander says. ‘It was really looking feasible. We talked to a Realtor a few weeks ago, and that’s when all the credit issues hit.’”
“John and Celeste Wahlstrom recently toured an Elk Grove condominium complex. Its builder had contracted with an auction company to unload a handful of unsold units. The opening bid for a 1,200-square-foot condo previously valued at $259,900: $149,000.”
“John and Celeste Wahlstrom looked one over for their 22-year-old daughter. The daughter and her fiancé can’t yet qualify for a home loan. ‘We’re thinking of buying and renting it back to them,’ Celeste says. ‘But we’re not in a hurry,’ John says.”
“In 2001, the couple bought a house in Elk Grove and more than doubled their investment before selling it. They’re not having the same luck with the value of their new house, bought in 2005.”
“‘Right now everything is going down,’ says Celeste.”
“In a market with 14,000 homes for sale and prices in Elk Grove not rising, they are feeling no urgency.”
“Downtown (Sacramento) high-rise developer John Saca missed a Friday deadline to buy out his estranged partner, the California Public Employees’ Retirement System, throwing the future of his twin condominium towers into jeopardy.”
“The giant state pension fund now has a week or two to decide whether it wants to take over the stalled, debt-ridden project at the entrance to Capitol Mall and move forward without Saca, CalPERS confirmed Tuesday.”
“Construction on the Towers stopped in January. In February, Saca defaulted on the loan he used to buy the prime site at Third Street and Capitol Mall, once the home of the Sacramento Union newspaper.”
“Contractors who worked on the site have since filed liens totalling about $13 million. ‘It can’t get much worse,’ Saca said Tuesday. ‘There’s a stigma on the property now, and it’s hard to overcome that.’”
The Daily Bulletin. “The median price of a home in California hit $597,640 in April, an all-time high, but the California Association of Realtors’ chief economist says that number is at least a little misleading.”
“Although the median price continues to rise, this reflects the fall-off in sales in the lower priced markets of the state where new home inventories and foreclosures are competing with the existing home market,’ Leslie Appleton-Young said in a release.”
“‘Throughout the state, inventory levels have increased to their highest levels in recent years, giving buyers more time to view a greater variety of homes and sellers who set realistic prices an edge in the market,’ said Colleen Badagliacco, CAR’s president.”
“That has been especially true locally, where the prices would-be sellers are asking have been falling by as much as 10-15 percent.”
“‘There is a lot of strength in the $1 million market in Los Angeles,’ said Jack Kyser, chief economist with the L.A. County Economic Development Corp. ‘That makes the median numbers somewhat misleading.’”
“Kyser said it remains a ‘very tough market’ and probably will for the rest of the year.”
“So for now at least, it’s a market in which homes aren’t being built or sold, but they’re still expensive. Does it make sense? Kyser shrugs. ‘I think it will be 2008 before we see anything that could be called stability in the market.’”
The Orange County Register. “The latest Real Estate Research Council of Southern California data, out today, shows that Orange County home values fell 2.4 percent in the last six months and are down 2.1 percent in total over the past year.”
“Across SoCal, the RERCSC appraisers found home values down 2.3% in a year, the first drop since 1996. By county, Santa Barbara was down 10 percent in a year; Ventura was off 6.7 percent; San Diego was off 5 percent; Riverside was off 3.8″
From Bloomberg. “Taher Afghani was working for discount retailer Target Corp. near San Francisco when friends told him about the riches to be made in California’s Mortgage Alley.”
“Mortgage salesmen like Afghani, many of them based in Orange County, near Los Angeles, lie at the heart of the once-profitable partnership between subprime lenders and Wall Street investment banks that’s now unraveling into billions of dollars in losses.”
“Afghani and other subprime veterans say their job was to reel in borrowers, period. Never mind whether customers needed loans or could manage payments. The sales job was made easier with exotic mortgages such as so- called no-doc loans.”
“‘Heavy sales pressure has been part of the most-egregious lenders for a while,’ says Kurt Eggert, a professor at Chapman University School of Law in Orange, California, who has studied the role of aggressive sales tactics in subprime lending and sued lenders on behalf of elderly borrowers caught up in home equity scams.”
“In California, which accounts for about 40 percent of subprime borrowing in the U.S., no one even knows how many people are originating loans, according to an October 2006 report by the California Association of Mortgage Brokers. That’s because while the state licenses individual mortgage brokers, anyone can work for a big lender under the umbrella of a single corporate license.”
“‘In other words, the corporation can hire a loan originator right off the street and have them originating loans that day without any education, licensing or individual accountability,’ the report said.”
“Afghani says he and fellow brokers dispensed with details about rates and fees and instead talked up how borrowers could use home equity loans to pay down other debts. ‘It was easier than financing a car,’ Afghani says of getting a mortgage.”
“A month after leaving Secured Funding, Afghani took a new job at Irvine-based Solstice Capital Group Inc., another subprime lender. HSBC, the same bank that had been buying loans from Secured Funding, bought Solstice last year for $50 million. Afghani quit in April, vowing to find a new line of work.”
“Enough is enough,’ he says, adding the good times are long gone. ‘I’m so rock bottom I had to move out of my apartment in Irvine and live rent free with my girlfriend.’”
“‘It was tough love and a great learning experience to live within your means and not end up like the individuals on the other side of the phone,’ he says.”
The Bakersfield Californian. “Local real estate appraiser Gary Crabtree announced in a letter Monday that he will no longer provide news media with monthly reports that examine the local real estate market, saying that his business has been damaged because ‘industry insiders don’t want to hear the truth’ about a troubled market.”
“For two years, Crabtree has been providing reports that compile single-family home market statistics, including unsold inventory, existing home prices and new home prices.”
“As a result, local lenders have ceased to give him appraisal assignments, Crabtree said in his letter, citing a similar ‘persecution’ during the real estate recession of the ’90s.”
“In his letter, Crabtree wrote that lenders have been asking appraisers to ‘hit’ values in violation of the industry’s ethical standards.”
“‘That is absolutely true,’ said Ted Faravelli Jr., a spokesman for the California Association of Real Estate Appraisers. ‘I’m ashamed to say that.’”
“As a result, local lenders have ceased to give him appraisal assignments, Crabtree said in his letter, citing a similar ‘persecution’ during the real estate recession of the ’90s.”
“In his letter, Crabtree wrote that lenders have been asking appraisers to ‘hit’ values in violation of the industry’s ethical standards.”
“‘That is absolutely true,’ said Ted Faravelli Jr., a spokesman for the California Association of Real Estate Appraisers. ‘I’m ashamed to say that.’”
O, Regulator, Regulator! Wherefore art thou, Regulator?
Why aren’t appraisers being held more accountable for the mess they helped create? In fact, why even have appraisers anymore? They added essentially zero value to the sale through the run up. There are countless examples of specific properties in all bubble markets which were flipped multiple times in less than a year for hundreds of thousands in gains. It was the duty of the appraiser to provide an accurate appraisal to prevent this hyperinflation. They did nothing. They have about as much credibility as realtors and mortgage brokers. Most should lose their licenses.
I don’t think appraisers are to blame. They are there to report the current value of RE. If RE goes up 15% it’s out of their control. I still think it’s the easy money that allowed too many buyers and that drove demand and thus drove prices higher. Take away the easy money and you take away the depand. RE will sit on the market with no buyers. I believe we are headed for significant price declines in all areas in the next couple years. And appraisers will have to adjust to the new values based on recent sales. If your a home owner and need to sell fast you are so screwed.
“I don’t think appraisers are to blame. They are there to report the current value of RE. If RE goes up 15% it’s out of their control.”
Interesting. And where are they getting said values from? Does it not raise an eyebrow when the current home they are appraising sold for 40% less in the past year? Maybe their idea of reporting value is simply noting that there is indeed a structure in existence, and a willing borrower ripe to get fleeced by a seller. In that case, sign me up. With my cell phone handy, I should be able to easily “report” a few dozen “values” per day; an easy living.
wait a second… are they supposed to appraise actual value or just report on sale prices? When fraud and speculation jumpstart artificial price inflation how is that considered value exactly?
wait a second… are they supposed to appraise actual value or just report on sale prices?
Even here on this blog, where most of us are convinced that prices are unsustainable and will decrease substantially, we don’t have agreement whether house prices were “worth” what they cost in 2005.
One school of thought says that the value is whatever the market will bear at that time; others insist that valuation should be based on fundamentals.
I tend to side with the latter camp, but no appraiser is going to agree that houses are “worth” no more than 1998 prices plus inflation when the empirical evidence of the past seven years “proves” that they are “worth” 3x as much.
Wait a second…. actual value is based on other similar properties and their sale’s price. That is an appraisal. How else is someone suppose to come with value. Just pull a number out of the sky. NO, appraisals are based on comps. So, if everyone else is paying $300,000 for a similar ranch, what is an appraiser suppose to say, Oh, No, I think they should have only pay $200,000. Give me a break. If there are not one, not two, more 3 or more buyers that are willing to pay $300,000 for that ranch, then the market has set its value.
It comes down to “Supply and Demand”. When you’ve got people fighting over property and out bidding each other that is a market. We live in a market driven economy.
I bet if you own a home you’d agrue with me until the cow’s came home that your house is worth may more than it did in 1998 plus inflation.
“Why aren’t appraisers being held more accountable”
Because they too are victims. It’s the Nuremberg defense. “I was just doing my job.”
Worse yet, “I was just trying to hold on to my job.” Anybody who tried to appraise honestly risked losing all their business to the guys willing to “hit the number.”
This is one of many reasons why regulation with teeth is needed to stem mortgage fraud.
Excuse me. Your falsely accusing ALL appraisers as particapting in fraud. I’m a licensed appraiser and LOST many a client in the past years because I would not play the game of HIT the Number. Actually, I fired many clients myself for I did not cave into the pressure to hit a value. I told them to beat feet. Many of us appraisers did an honest job of estimating market value. There were many times when my estimate did not come even close to the so called “contract price”. I personally think most of the responsiblity of this bubble lies with the mortgage industry and lack of lending standards. Oh yeah, not to forget the Realtor and there lack of ethics. They guided these blind sheep to purchase knowing that this bubble was bound to bust.
So it was everybody BUT the appraisers?
No, I never said that everyone else was to blame for this mess. I stated that many of us appraisers did not play the game. Most mortgage brokers/lenders would get a second opinion if an appraisal did not meet the client’s so called “target value”. And, yes most times they could find a money hungry appraiser to hit value. The sad thing is the buyer and/or homeowner was never told of the lower appraisal. Therefore, I do put most blame on the lending industry. If appraisal fraud was committed the appraiser should be held responsible.
NYCityBoy-
Shame on you for not paying attention, repeat after me 50 times…
I am not accountable it’s someone elses fault…
Nevermind no deal goes through without an appraisal but I digress. Every industry involved played a part along with the Buyers and Sellers. No one industry is without blame.
“If appraisal fraud was committed the appraiser should be held responsible.”
If?
This is what frustrates me. You might be an honest appraiser. I don’t know. I don’t know you. But you should be screaming at the top of your lungs that your profession went into the dumps the past 5 years. You shouldn’t be excusing the actions of any of these other appraisers that played the game. And even now you still seem to want to excuse their behavior. No way. Accoutability for everybody involved in this monumental fraud is the order of the day.
Do you personally know appraisers that played these games and what are you doing about it? Saying that it was all the fault of the mortage industry is ex post facto bulls–t. Driving the getaway car is just as bad as sticking the gun in the face of the bank teller.
I never excused the actions of the other appraisers. There is no way for me to know what appraiser appraised what property and for how much. BUT, the lender knows. So, let the regulators make the lenders reveal all. Therefore, we all can see who has committed fraud. NYCityboy I sense great frustation and anger from you, have you been burnt in this real estate mess?
“NYCityboy I sense great frustation and anger from you, have you been burnt in this real estate mess?”
dude, he’s from NY… he’s perfectly happy
An appraisal is an OPINION of value. It’s not absolute. The RE guy or lender would be stupid to use an appraiser who wouldn’t play ball. Neither one would get paid. In the frothy past with multiple offers ,if one buyer wouldn’t buy, move along, the next one will.
“have you been burnt?”
Who of us hasn’t? Even if you don’t own, didn’t own, and don’t plan to own, you are still going to be effected by this mess.
I have not been burnt by a bad real estate investment. I am doing just fine. But my country is at big risk right now and your profession did a lot to help put it there.
NYCityBoy,
Well this response from Pismocalm says is all:
“An appraisal is an OPINION of value. It’s not absolute. The RE guy or lender would be stupid to use an appraiser who wouldn’t play ball. Neither one would get paid. In the frothy past with multiple offers ,if one buyer wouldn’t buy, move along, the next one
s it all”
So, the RE or lender would be STUPID to use an appraiser that would not play ball. And you know what they say, “YOU CAN”T FIX STUPID”. Let the RE and lenders get paid by the hour for their work and not by commissions. It’s the commission driven industries that are at the root of this evil.
I too am concerned about the state of the American economy and are general welfare. But, I believe that it’s the STUPID American that got us in this mess. Spending way BEYOND their means, racking up credit card debt, using their homes as ATM’s so they could go to Disney World and not SAVING one red penny as they go. Meanwhile others countries are surpassing us on education and innovation and are SAVING their pennies. Yes, we’re in deep, deep sh***t.
Oh Yeah, don’t forget the mess of the illegal, immoral war in Iraq that our genius President got us into. God Save US.
I agree, the mess is because people are living for today and selling their future with buying stuff on credit. The whole country is printing money and lending it to the stupid who believe the lie that they “deserve” a new car, plasma tv, furniture, big house, computer, dining out and fancy cloths. They are buying the DREAM on CREDIT. They are effectively SELLING their FUTURE to the Interest Monkey. They use their homes and fake run up in value as a fast money FIX only to find out that they repeat the pattern and need to pull more from the home ATM again and again. Soon, the debt load will get too high that they will not be able to pay the miniums and they will loose everything and go bankrupt. Only to start the cycle again, until they are no longer able to work and become a burden on the rest of us paying taxes to feed their sorry excuse for human beings. If you look at the average 50 year old they have less than 50k in Net Worth. They have amassed only 50k in 25 years of work so at retirement they will have around 75k to live the rest of their lives out. What a joke. People wake up it is time to step up. Easy Credit will be the down fall of this great country of ours.
What really scares me is the negative savings rate. If you look at that, it means that people on average are spending more than they earn each month. But think of this, that is to pay the minimums on credit cards. If you took the real decrease in Net Worth from month to month you would see that the actual savings rate is probably more like NEGATIVE 25-30%. People are spending 25-30% more than they earn each year. The system will break down. Low interest rates will rise, homes will be lost and prices will fall. Only the long term people that hold on will see their value stay.
Over the long run, homes increase stay pace with inflation across the board. Pockets do get out of control, but that is generally really localized. If you take into account the cost of Taxes, Upkeep, Mortgage Interest, Insurance you will probably be better just socking your money into CD’s and renting a small appartment. With mortgage payments accounting for 50% of take home in these bubble areas and rents only 1/3 of that? Makes you wonder about the choice of home ownership at all???
I am thinking of Renting and banking my money as I have just sold a home and keeping the freedom with my money in the bank?
WHAT ARE YOUR THOUGHTS ON RENTING VS OWNING?
We too sold our house of 28 years in Jan 2006. We have no plans to buy another house for several years. Maybe 2010 or so.We’ll have to see how this whole thing plays out. In my opinion this housing slump has years to go before it stabilizes. Many more years of depreciation are to come. Not a good time to buy, I would not it advise it to anyone. Good things come to those who wait.
We’ve banked our monies from the sale of our home, we had no mortage, and we’ve saved all of our lives. We sold just after the peak and before the downward spiral. We talk amongst ourselves all the time and can’t believe we sold the house for what we did. We sold it for an insane price, but that is what the market would bear. Still can’t believe that someone would pay that for our tiny little house. We knew it was time to get out. After all , I’ve been appraising for years and knew his bubble was sure to bust. But, NO one was listening. Thank God I took our own advice.
We are completey debt free, CASH IS KING. We plan to wait this storm out.
We watched friends, acquaintances and neighbors just charge, charge, charge away. They used their homes as ATM machines to buy new cars, lots of trips, new boats, and tons of just stuff, etc. Everyone of them is now singing the blues. They want advice from us, image that. A great old wise man once said ” It is not how much you make, but how much you spend”.
We both are semi-retired, self employed, working when we feel like it, debt free. It feels great.
Sounds like you’ve got it right. Rent till this mess plays out and save, save, save. CASH WILL ALWAYS BE KING.
Best Wishes.
See my post immediately above. I wrote it before I saw your post, but your inside take precisely confirms the point I made.
Are appraisers not expected to do any sort of fraud-sleuthing during the course of their job in examining comps? You might not have been chain-smoking on fraudulent appraisals personally, but you’re still in a ripe spot to suck down the second-hand smoke.
Legally speaking, if a broker or relittor mentions a number, they’ve broken the law (is that true?) What, minimally, does an appraiser have to do to break the law?
Appraisers should use comps that where part of an “arms length transaction”. Sure, if a comp has flipped several times in a short period of time I wouldn’t use. That sure would put up a red flag for me. But, you have to remember that the buyers also played a huge role in this mess. In our area they were outbidding each other on properties, offering above list price in many cases. So, it is the buyer’s irrational excuberance that drove up prices due to much easy money.
An appraiser would be breaking the law if they were to hide property defects or mislead the client about material facts. A BAD appraisal is just that, a BAD appraisal. Choosing comps that will help to hit a “Target Value” versus comps that are more comparable is fraud.
Lenders are not suppose to put an estimate of value on their appraisal orders. But, most do. Again, it is the job of the regulators to put a stop to this. I’ve complained to the Appraisal Commission and Banking Commission many, many times. But, nothing changes. I stopped accepting assignments from these type of lenders years ago. And, my business is doing just fine.
As to the Realtor’s, they are not suppose to reveal a pending sales price to other RE or to other potential buyers. That would not be fair to the seller should the deal feel through.
However, if the appraiser is appraising a property under contract they should ask for a copy of the contract. Actually, they are required to ask for a copy of the contract. Contract details are important in the appraisal process.
FYI redfin.com shows the ‘fraud runup’ in ez detail where redfin operates.
This one went from 250k in 89 to 250k in 1998.
Now its 1.9!! Malibu is also ripe for fraud. No one questions value there.
http://redfin.com/stingray/do/printable-listing?listing-id=419679
Better yet, get thee to a private antitrust lawyer. Trebble (that’s 3x for those of you in Rio Linda) damages await…
That’s “treble” for those of you in Mooseville…
The trouble with trebbles, eh?
Dude, you’re getting beamed straight to Hell.
there’s a warped factor on this blog I see
well, resistance is futile.
So weird to see this, as I am right now having a phone conversation with someone who described to me last night’s moment in “Boston Legal” where Shatner in his Denny Crane role says, “I used to captain my own spaceship.”
It looks like some jokes are born pregnant…
O, Regulator, Regulator! Wherefore art thou, Regulator?
down in the bushes, throw me some toilet paper …
“Mortgage salesmen like Afghani, many of them based in Orange County, near Los Angeles, lie at the heart of the once-profitable partnership between subprime lenders and Wall Street investment banks that’s now unraveling into billions of dollars in losses.”
“Afghani and other subprime veterans say their job was to reel in borrowers, period. Never mind whether customers needed loans or could manage payments. The sales job was made easier with exotic mortgages such as so- called no-doc loans.”
No additional comments needed.
“‘In other words, the corporation can hire a loan originator right off the street and have them originating loans that day without any education, licensing or individual accountability,’ the report said.”
I’ll bet they watched a 10 min. video THEN started work . Beer Me Rich
The loan makers say they don’t have accountability but don’t believe it . Any loan agent rep. that conspired with a borrower on a liar loan or change loan application documents is liable for fraud . All sales jobs require that you bring the customers in and sell ,but you cant be fraudulent in order to make the sale .
I believe time will show those who commited fraud have safety in numbers. There are just too many perpertrators of mortgage fraud for the law to pose a serious risk of prosecution to any individual who was guilty.
This is old street school stuff, Drug dealers hire younger Runners as the go between, Get’em the younger the better so the system has mercy on them when caught.
the Mortgage cartel is the same.
“…the Mortgage cartel is the same.”
Investment bankers = kingpins
The Mortgage cartel is different because people will sing when TSHTF. There’s no rep to protect or street-cred for doing time. People that wear white collars will save their white collar asses.
You want to see it get really exciting? Fight fire with fire. Offer up commissions to cops that bag fraud brokers/lenders/appraisers/relittors/borrowers. 6% of assets seized due to fraud take home + taxpayer points on the front. That’s something I’d vote my taxpayer dollars to work for.
That post reminded me that my 21-year-old son told me last year that he was thinking of going to work with his buddies who were selling mortgages last year. I asked him what the hell they knew about it, and he said he didn’t know, but they were making a lot of money. These were ignorant young college kids. Oh lord.
“These were ignorant young college kids.”
I had kids stop attending class because they were working full-time as mortgage brokers before even finishing their degree. I thought at the time it was quite a faustian bargain.
They probably purchased multiple properties as well. The Serin Syndrome.
Stucco,
Where do you teach? I suspect you will be seeing a lot of those kids back in school come the fall…
Afgani
“Downtown (Sacramento) high-rise developer John Saca missed a Friday deadline to buy out his estranged partner, the California Public Employees’ Retirement System, throwing the future of his twin condominium towers into jeopardy.”
“The giant state pension fund now has a week or two to decide whether it wants to take over the stalled, debt-ridden project at the entrance to Capitol Mall and move forward without Saca, CalPERS confirmed Tuesday.”
Great…Once the state pension fund loses a ton of money on this incredibly risky venture, the fine people of Cali can pony up and
pay for the government turds pensions….AGAIN!
what makes you think they taxpayers will pay for this?
first trump and now saca, bad day for developers!
saca sh!t
CalPers seems be getting a bit more conversative lately. I’d guess they are going to pass on this. I think they hope to get another outside developer to come in and buy their share out.
They tried it and no takers so far. That’s one of Saca’s problems. I’m so sick of stupid gullible government officials being taken in by hucksters. Just take them out for dinner and they’ll buy anything with our money. I wish the people on this blog would run for office - there would be no public debt.
CalPers has $25 million in on the project, but that’s a tiny portion of their assets. What’s most interesting is that they may just walk away from the project, even without Saca, which means that it may remain a hole in the ground (with very expensive pilings) for a long, long time. CalPers apparently doesn’t think any project there is worth the money.
The testimony of small fries like Afghani will be critical in correcting the abuses that were routine during the bubble.
“The rich require an abundant supply of the poor”
-Voltaire
Crabtree has always been a whiner. It’s a ‘free’ market. They can give you assignments or not. Why not lower your prices to $100 which is all they are worth. You think you’re a celebrity just because you are quoted in the press. Boo Hoo cry cry
“The median price of a home in California hit $597,640 in April, an all-time high,
How can this be? Am I missing something or is there a house out there that sold for 25 billion dollars to derive this figure?
The bottom end is gone. Only those with cash and good credit are buying, thus pushing up the median.
Only those with cash and good credit are buying,
thus lacking good sense
geez, I may have to move to cali to get in on some of that 170k median household income.
uuummmmm, NOPE.
597K
HEY, IS THIS YOUR BRAIN ON KOOL-AID?
One 25 billion dollar home would not effect the median in the way you seem to think.
A $25 billion home would skew the average home price. Too few low-end homes selling would skew the median. I think this is due to tightening of the subslime loans.
“The latest Real Estate Research Council of Southern California data, out today, shows that Orange County home values fell 2.4 percent in the last six months and are down 2.1 percent in total over the past year.”
“Across SoCal, the RERCSC appraisers found home values down 2.3% in a year, the first drop since 1996. By county, Santa Barbara was down 10 percent in a year; Ventura was off 6.7 percent; San Diego was off 5 percent; Riverside was off 3.8″
So home prices are falling pretty much everywhere in SoCal?
“By county, Santa Barbara was down 10 percent in a year; Ventura was off 6.7 percent; San Diego was off 5 percent; Riverside was off 3.8″
This is exactly what I’ve been seeing in my neighborhood in Santa Barbara. Only two houses have sold all year (out of six on the market) and both have gone for 10 percent less than list. (This is in the $2 - 3M price range.)
“By county, Santa Barbara was down 10 percent in a year; Ventura was off 6.7 percent; San Diego was off 5 percent; Riverside was off 3.8″
In Ventura County, I believe the median sales price has fallen by 6.7% but this is also due to the shift in the mix (high end buyers still buying, low end has disappeared). Price per square foot has probably fallen by 10% or more.
Thanks to everyone here, I get a bad taste when I think about using a “Realtor” when it’s finally time to buy. In fact, an acquaintance got his agent to take a big cut in her fee because, as he said, he was doing all the work; all she had to do was produce some papers for him to sign. So does anyone have an opinion on buying through ZipRealty.com? It makes a lot of sense: If I’m doing all the Internet legwork, why shouldn’t I pay less?
http://www.redfin.com
Go there and use this MLS# K694465. Man something has gotta give and fast. If I had to live there and had to pay that much for this place I would walk straight in front of a bus!!
Redfin isn’t available in Sacramento sadly.
Has anyone here used them to buy or sell?
Why should you pay fees at all?
Try FSBO.
I’ve totally given up on looking at FSBOs for now. Sellers in this market are in complete denial of realistic pricing.
The only pricing I would even consider is on bank-owned properties and on relocation firm properties (boy, are the latter taking a bath).
Ditto. We’ve found FSBO’s to be by far the most egregiously overpriced. A Realtor doesn’t want to waste time and money marketing a house that won’t sell, so they seem to talk a little sense into all of the crazy home owners who insist: “You really have to come see it, I just love this home.”
Aside to my wife: “yeh, she’d better love that home because she’s going to be owning it for quite a bit longer.”
FSBO’s are famous for harboring wack jobs, they tend to have a real problem with reality. I’ve seen FSBO’s sit on the market for years the longest one is 15 years. The guy just does not get it. Not all are wack jobs but the vast majority are…
15 years?! That’s hilarious. What is going on inside that guy’s head? Did he keep raising the price over the last seven years?
Hmmm. And realtors aren’t in denial?
REhobbyist-
Nope same price for the past 15 years, tells you how out of whack his price is…
‘Not all are wack jobs but the vast majority are… ‘
I’ve sold two by owner in recent years and am probably going to work on another this year. It’s relatively easy to find out the market rate ($/sq foot) for truly comparable properties. The rest of the process consists of finding an escrow agent (they do the actual work while Buffy the Realtor tries to pronounce “right of recission”) and filling out some forms you can buy from CAR or get from the California Homeseller’s Kit. In most areas, you still need to pay thousands of $$ to get listed in the MLS through some flat fee agent, but in the age of the Internet this will be less necessary than ever.
“The only pricing I would even consider is on bank-owned properties and on relocation firm properties (boy, are the latter taking a bath).”
During lunch break for jury duty in downtown San Diego today I walked past an auction outside the courthouse steps. About ten folks standing around one dude repeating numbers slowly rising in 100 dollar increments (I believe I heard a 600k+ number). I should’ve looked over someone’s shoulder - everyone had lists of properties - to check what neighborhood they were currently bidding on. Dang it.
600k is still stupid, unless it is beautiful oceanfront!
I agree, but will we ever run out of people willing to take on ARMS to make this wish (600K oceanfront) a reality..?
Have you checked out http://www.buysiderealty.com ?
They look pretty cool to me. I am thinking of using them when I finally buy (way down the road) because I already know the specific neighborhood in which I’d like to purchase.
Cheerio,
MMAB
I have to agree with Stucco. Redfin.
“‘In other words, the corporation can hire a loan originator right off the street and have them originating loans that day without any education, licensing or individual accountability,’ the report said.”
I remember the day i knew my days as a mortgage broker would be numbered. I was driving down the 91 FWY somewhere in Riverside and I see this lowered Honda, you know, with the funky rims, tinted windows, strange shiney metallic trim everywhere it shouldn’t be, the deep base throbbing from the stereo system, and some pimple-headed punk at the wheel. No big deal, right? You see the type every day in So Cal. Except this guy had plastered across his back window, in obnoxious pink vinal lettering, “Ask Me About A Mortgage - Low Rates”. From that day forward I avoided having to tell anyone what I did for work.
Ex-nnvmtgbrkr,
how is your old firm doing, are they still in business? I will try to visit Reno this summer for a little bit of gambling.
I remember a friend mentioning I could do mortgages on the side and it sounded like mulitlevel marketing. I was thinking this has become a financial mania. Sure enough this was just before the top as this happpened in late 2004.
I was the old firm. My license, my company. It is no mas. To be honest, I built the thing with the safety net a being able to bailout when ever I wanted. When the time came I would pull the plug, and that’s exactly what I did. I read the story that Ben covered about the broker in So Cal that is mortgaging everything to keep his biz going. What a complete idiot. Talk about rags-to-riches-to-rags in break neck speed. I saw a window of opportunity and took advantage of it. but all the while I knew that it was just that - a window of opportunity. That window is long gone.
As far as the rest of the brokerages, I don’t think I could come up with an adequate adjective to describe how slow it is.
Ex-nnvmtgbrkr,
thanks for the insight. Glad you had foresight and got out before things got bad. I saw a local RE C21 office that just opened 4 years ago shut down in Fremont, CA. They got too big and then there wasn’t enough volume to pay all the bills.
Maybe the next big thing in RE is auctions and helping the banks sell their REO’s.
I agree that the So Cal broker is about to lose everything. He doesn’t understand that once the market changes dramatically, it isn’t coming back for a long time. In fact, things are going to get really bad till the RE economy comes back.
It happened during the last downturn, the smart ones got into R.E.O.’s and Short Sale’s. A lot of FHA deals were made. This is were the interenet/discount brokers can’t compete unless lenders change their needs which means they also will dry up and disappear shortly. Bankers are not fools they can get a Realtor to run around all day doing the dirty work for free ie: checking up on the property, maintenance oversight, free advertising, weeding out the Carlton Sheets knumbskulls etc etc. It will be bad but not as bad as you think the coin will just flip if you will.
testify.
I knew the whole deal was done when the check-out lady at my grocery store (who never figured out what arugula was) told the bag girl she just bought 3 houses and was going to flip them and get rich.
(I didn’t know either)
Thanks Google!
Arugula is an aromatic, peppery salad green. It is also known as roquette, rocket, rugula and rucola, and is very popular in Italian cuisine.
Isn’t arugula really bitter?
Newman: “Vile weed.” (although, he was talkin’ bout broccoli)
I don’t know if I’d call it bitter…peppery, sharp maybe.
Broccoli rabe is bitter. But if it’s cooked right, it’s dammm good. IMO
I hear the word arugula and my mind immediately goes to Steve Martin in “My Blue Heaven”.
… It’s a veg-a-ta-bul. (emphasis on the sylabuls)
Good stuff.
Try a homemade pizza with arugula, truffles and shaved asiago…mmm…just made myself hungry.
Too bad all I’m having for dinner is leftover Memorial Day potato salad.
ah, my favorite pizza…with a little port wine and black pepper reduction poured over the whole damn thing.
or…mix chopped argula with mayo and spread on turkey sandwich.
There’s really only one thing I prefer shaved - and its not Asiago or ice
LOL…LOL…LOL Can’t stop LOL!
The only reason I know anything about it is because of the Steve Martin movie, “My Blue Heaven”. The supermarket manager asks him if there’s anything they he’d like that they don’t carry, and he replies, “Arugula”. The manager asks him what that is, and he says, “It’s a veg-e-tab-le!” Up until now, that was all I knew about it, that it was a veg-e-tab-le. Thanks for expanding my knowledge!
“I love arugula, it’s like gay spinach!”
Jack, from “Will and Grace”
——-
Jack: That doesn’t look like a salad to me! Where’s the arugula? Where’s the radicchio? Where’s the Rwanda?
Ben Doucette: Jack, one of those isn’t a salad ingredient so much as a war-torn country in Africa.
Jack: I know that! I sponsor a kid in Arugula!
It’s better than spinach. We eat it in place of lettuce all the time.
I grow it, along with my lettuces. It’s easy to grow, and adds a bit of bite.
WOW what a Arugula jag this is…..still LOL
When was that 2002?
Josh
And then there are the United States of Arugula. Something tells me a lot of FBs live in that country.
http://www.amazon.com/United-States-Arugula-Became-Gourmet/dp/0767915798/ref=pd_bbs_sr_1/002-9614308-3320056?ie=UTF8&s=books&qid=1180579490&sr=8-1
“… saying that his business has been damaged because ‘industry insiders don’t want to hear the truth’ about a troubled market.”
Bury your head in the sand at risk of becoming some predator’s tasty snack.
Actually GS, it’s the opposite.
It’s the ones burying their heads in the sand that are crucifying the honest.
this guy can’t get business because he is honest. If I were a bank manager at this point, I’d want to have an honest guy on my team, if for no other reason than INTERNAL appraisals (so I have an idea what is going on with my portfolioo)
Doesn’t it seem odd to anyone that there is no lender who actually wants to know the true value of the collateral underlying their loan? Even now?
Clearly, they are afraid that if they get honest appraisals, then their loan portfolio takes a hit, and they have to restate “earnings” and so on. thus the game continues.
this will only prolong/delay the inevitable.
“(so I have an idea what is going on with my portfolio)”
Wouldn’t that have accounting implications, like ‘Now that I know the value of my real estate inventory has plummeted, I have to report it on the balance sheet and watch my stock price get hammered?’
exactly. (like I posted above)
this is why the game will continue, and why there will be NO quick reversal here.
there are some striking similarities to the “zombie companies” in Japan.
these banks will hold out until the last possible moment, only god knows when that will be.
the game stops when the MBS downgrades begin, then they have to show the losses that many of them already have but don’t have to report until the ratings agencies downgrade the bonds. that’s when the fun begins.
imagine one day you wake up and some big fund suddenly losses a ton of $$ when a bond is downgraded.
If you don’t care if the loan gets paid back, who the hell cares if your appraisal is done well or not? All you want is to be able to check the box next to “professional appraisal completed” so that you can shove that loan into the pool to be sold to some greater fool, make your profit on the sale, pay your mortgage broker his fee, and get onto the next deal.
People respond to financial incentives quite well.
If your choices are 1) make a bad loan that can be sold so you can make a fee and bear little or no risk of default or 2) stand by your principles and not make that bad loan and not get paid a fee, what are you going to do?
The guy choosing #2 found himself out of business pretty quickly, since capital was indiscriminate in the crappy loans they purchased. As long as there were groups willing to buy crappy loans, there were mortgage companies willing to source and sell crappy loans.
Ain’t capitalism great?
Ain’t capitalism great?
That’s right: don’t blame greedy people; blame capitalism.
Leslie Appleton-Young and the phase “is at least a little misleading.” in the same article is hilarious.
- When was she not ‘misleading.’
Median prices are always misleading–it’s price per square foot that matters. LAY’s just trying to avoid another lawsuit. Too late, CAR. Your goose is cooked!
“John and Celeste Wahlstrom looked one over for their 22-year-old daughter. The daughter and her fiancé can’t yet qualify for a home loan. ‘We’re thinking of buying and renting it back to them,’ Celeste says. ‘But we’re not in a hurry,’ John says.”
Why? What is the motivation for doing this? Why does a 22 year old need to buy a house?? I guess I’m just bitter. Mommy and Daddy didn’t have deep enough pockets to buy me a home. They put me through my first year of college and I took responsibility from there. The way parents are subsidizing their kids is really irritating.
“Why? What is the motivation for doing this? Why does a 22 year old need to buy a house?? I guess I’m just bitter.”
The motivation is the HERD MENTALITY. why waste money on renting when you can waste it paying the bank on a depreciating asset. the daughter is only 22, so I dont think she is staying in that place for more than 3-4 years, after that they either sell or rent out. good luck with selling in this market or renting for 1/2 the morg.
now if they are wealthy and can afford paying cash, then good for them, they can afford to spoil the daughter (its a free country). but if they are going to borrow (most likely) then they are making a dumb decision especially in this market, they could help their daughter financially by saving the extra expenses for taxes, upkeep…etc.
JMHO
“…help their daughter financially by saving…”
One interpretation of the negative savings rate is that U.S. citizens don’t believe the Fed will follow through on its stated intentions to keep inflation under control, in which case dollar-denominated savings would get hammered. This is one possible reason to go short dollars and long stocks and real estate.
“What is the motivation for doing this?”
I can think of two possible rationales:
1) They are rich enough so that $200K up or down does not alter their financial situation by an appreciable amount (I know people in this situation in SD).
2) They anticipate high future inflation to offset the Fed’s deflation hobgoblin. If inflation turned out to be much higher than expected, buying a home might look smart in the rear view mirror. But I just don’t see how the Fed could respark inflation without inadvertently adding to the glut of unneeded vacant homes the U.S. already has on hand (2m+ and growing)?
I remember making some dough on a condo in 78-79 just w inlfation -then owning one from 80- to 83 and making $100
In the 1970’s did used cars actually appreciate? Seriously… if they got good mileage….
for the msot part no. Most cars in the 70’s just didn’t last long enough. A large reason why toyota’s and Hondas started takign off. (in addition to the milage thing) A japanese car would last more than 3 years before rusting away to nothingness.
please people! she probably will be divorced and foreclosed within 2 years if they do that for her! WE know that! People who always get something for nothing are immature brats.
Hey, at least you got a year >; )
Where I live, parents used to buy condos and homes for their college-bound spoiled brats all the time. They’d sell the place after graduation to pay for the college expenses and a little extra. Not anymore though, these people are now “accidental landlords”.
There is nothing as quite refreshing as these people completely choking on their investment. I got to overhear a woman in tears in our local Nugget last fall over not being able to unload her precious student’s albatross. In March, I contacted someone about a rental and it turned out the student’s mother was trying to rent a newly vacant house after her daughter flunked out of UCD. I asked why she didn’t sell but it turns out she was upside down.
Hell with the popcorn, pass the cabernet. The show is starting to get good.
There is nothing as quite refreshing as these people completely choking on their investment. I got to overhear a woman in tears in our local Nugget last fall over not being able to unload her precious student’s albatross.
Fantastic! Pass the Milk Duds!
the couple sounds somewhat intelligent to me.
I have done what they are thinking of doing. I bought a condo, and rented it to my brother, nephew, and mother.
in his area at that time, rent for a comparable apartment was HIGHER than total monthly costs of the condo.
thus, during his stay he paid $550/month for a 2 BR condo, when the going rate for a similar apt was about $650/month.
I had him simply pay me $550. Then when he moved we sold the place, I gave him back all the profit.
our feeling: if someone is going to make money by him renting, it may as well be me or him.
This couple may have done this in the past as well, and tried to do it again today.
But now after looking, they stated “‘We’re thinking of buying and renting it back to them,’ Celeste says. ‘But we’re not in a hurry,’ John says.”
Anyway, if I had a daughter who was responsible, and if rents were MORE than PITI, then I would buy it and RENT (not give) it to her.
“……and if rents were MORE than PITI…..”
No where in California. Including all the tax advantages and ignoring maintenance expenses, rents are still at least 50% lower than the tax adjusted ownership cost.
Our youngest son desperately wants to “own” something too. He knows how bearish we are on real estate….. what other 50 something’s does he know who sold their own home to stockpile income while waiting to cash in on this bubble?
More important than that though, is this:
He is 25, graduated from college 2 years ago, and recently moved for the FORTH time in two years. Just helped he and the new girlfriend move into the “J-Lofts” in downtown Sacramento. Real hip and modern…..
He is also responsible (occasionally), and someday we will help him buy (because we can), but with property values falling, who on earth would “invest” in either of RE or their kids wishes, both of which are way too unstable. Right now, I’m concerned about buying him a new toaster for fear it won’t match the next place.
And on a side note…..
I directed my son to the HBB in 2005……2006…..and finally wrote down the website for him about 4 months ago. Told him to read here when he could, just for two weeks. A pretty heady group, along with some good humor….
Have never heard a comment from him about Ben’s site, but continue to hear wanting to own.
Yeah…… while he’s responsible, not nearly ready to take over the “due diligence” reigns of this wagon, if he can’t invest the time to see why this is not the time to buy.
and recently moved for the FORTH
I hope he went to a better college!
> continue to hear wanting to own
Own? Wanting to go into debt?
“….I hope he went to a better college!….”
No….. Chico State. All the moving was after college in Sac. Majored in beer drinking and criminal justice….hey, could be our next president.
skrook, give lefantome a break. he made up for omitting a letter from “fourth” by putting an extra one in “reins”
it’s a tougf croud here…..
‘Majored in beer drinking and criminal justice’
Yep, that’s Chico.
Jesus Christ it’s “fourth” and “reigns” for chrissake.
Half right. It’s “fourth” and “reins,” and it looks like the Cowboys are going to punt.
(Reins are on a horse. Reigns is what a king does.)
He is 25, graduated from college 2 years ago, and recently moved for the FORTH time in two years. Just helped he and the new girlfriend move into the “J-Lofts” in downtown Sacramento. Real hip and modern…..
He is also responsible (occasionally), and someday we will help him buy (because we can), but with property values falling, who on earth would “invest” in either of RE or their kids wishes, both of which are way too unstable. Right now, I’m concerned about buying him a new toaster for fear it won’t match the next place.
He’s not responsible. What’s the worst decision he’s made with money that he wasn’t bailed out of? I was 25 just 5 years ago, and around that time I was conned out of $300 that changed my life. Seriously, the best lesson I’ve ever learned (even considering losing many times that in the tech crash, this instant indellibly aligned greed and edibility in my mind).
See, my generation has grown up with the ’safety net’ mentality… like the ocean is filled with shiny colored fish and coral and *I* am the top of the food chain. When you’ve never needed a sense of finance, you just don’t realize that there are sharks patrolling the waters and your access to money smells like a whole lot of blood.
For me, I’ve hit rock-bottom a couple times, and I’ve learned how to make the decisions to stay alive. You simply can’t learn something until you go out and make some mistakes. So, realize that when you prevent your son from buying, you’re not actually teaching him anything, even if your advice is ultimately bourne out by reality. Put simply, let him gamble with the money that he’s earned, and you might want to take him off your credit cards.
They didn’t really offer to buy a house for their daughter. They were going to buy it for themselves as an investment and then RENT it out to her. The real reason they didn’t end up doing it is probably because she can rent a much nicer place for a lot less money from someone else’s parents.
I think these parents are trying to take way too much credit for actually attempting to fleece their own children.
I disagree and see this as a win-win, but I’m biased. A year ago I purchased a vehicle. I’m 32 - 10 years ago I blitzed my credit over a few thousand dollars, swore off ever borrowing and walked away (seriously I’ve paid cash for everything I’ve ever owned, except about 18 months worth of disposable trinkets a decade ago).
So this car being the first debt I’d ever really considered incurring, I asked my father to look over the only loan I was offerred (terms of which I’m too embarrassed to mention)… When he finished laughing, he drew up the paperwork and made me the same loan at 6%.
Could he have given me a no-interest loan? Of cour… (you don’t know my father…). But is he fleecing me? Nope, he’s doing me huge favor as I see it.
… by the way, if anyone has some sound advice for a 32yo never married with no children, with apparently worthless credit, on how to rebuild that credit such that I might be in a buying position come 2010-2011, drop me a line at train1@gmail.com… I felt like a real idiot for a long time, but after faithfully reading Ben’s blog the past few months I’m hoping to become an accidental genius
Well, that depends on how cute you are.
My grandmother made a car loan to my parents at an interest rate that was right in the middle of whatever she was getting on her money market account and the lower of what the dealership or Mom’s bank would give her. No one felt like they were getting a handout, but both sides profitted (Grandmother with a higher interest rate on money she was “saving for [her] old age”, my parents with a cheaper auto loan than they could get anywhere else).
Good for your dad, and good for you for paying him a higher return than he’d get on a CD (and keeping the interest in the family)!
Brian:
it’s easy.
Get a credit card. If you don’t qualify, get a SECURED credit card. (in a secured credit card, you give the bank money, like $500, and they hold that in case you miss a payment)
If you have issues with controlling your credit, keep the limit very low, like $500.
then I recommned buying ONLY gas on the credit card. (nothing else, just gas). This way you’ll still keep a handle on your expenditures, and won’t be tempted.
The reason: it is impossible to buy too much gas. You simply buy gas when you need it, and not when you don’t.
Set the credit card to pay itself automatically by computer.
You can also get a second credit card, also used ONLY to buy gas.
You can switch them back and forth each gas trip (you likely fill up with gas 2x a month or so?).
This will help you build your credit as you’ll have 2 revolving lines of credit paid on time.
usually after about 2-3 years of this, your credit will improve substantially.
Inspector:
I hadn’t considered the secured CC (well, duh). I have a feeling this is a dumb question, but since I have no shame: is having more than one secured CC beneficial or harmful when rebuilding a credit profile?
I have no problem with credit, except that I gave up on it so long ago. I carry a DoD Amex card (with no limit) which is billed directly to me. Routinely carry balances above $10k (98% work-related and reimbursed) and never miss a payment. My primary method of payment for damned near everything is a debit card that pulls straight from my checking (paychecks direct-deposited bi-monthly). Obscenely low rent gets paid in cash ($300/mo, cough cough), my other 4 monthly bills get paid online. Car note will be paid off by Xmas (2008 Impala, but the no-frills model). The rest is spent on the bad habits of any average bachelor, but with cash already in the bank.
I make $50k/year minimum in a secure job/field (IT Security)… staggeringly wage-depressed south Louisiana no less. I’ve finally lost hope in this region and am working on a transfer (anywhere else, basically), otherwise I’m stuck for another year until I’m 100% vested in my pension. My 401k is fairly new (2 year anni in July) but it’s already worth $13k with me contributing the max my company will match.
Read stuff by Suze Orman, she has a lot of advice on how to rebuild your credit…
I didn’t even get that… I dropped out of high school at 16 and got thrown out of the house (deserved) But… California’s once-proud higher- educational system allowed me to affordably earn a BS in accounting and an MBA. So I guess I should not be jealous.
“‘That is absolutely true,’ said Ted Faravelli Jr., a spokesman for the California Association of Real Estate Appraisers. ‘I’m ashamed to say that.’”
Ashamed to say what, that you’ve ‘hit the value’ every time you’ve been asked to do so?
A bit more on that Elk Grove condominium.
I still really want to know what they sold for. Elk Grove is taking a beating which I find ironic since it was a white flight city wayyy back.
My mom bought a house there in 1988 or so. The subdivisions were just starting then. It broke my heart to visit her and see the beautiful countryside being turned into suburbia. She left there after 5 years I haven’t been back. Then she moved to Menifee (Riverside County). Same horrible transformation of the land.
I almost bought a $290,000 condo from the same builder in Folsom a few months ago, just before the sub-prime implosion. I cancelled my deposit and ran after reading the fine print in the HOA handbook and making the discovery that everything the sales rep said were “lies” unless it was put in writing - this was in the HOA handbook!
I decided to return to my very nice rental situation with a very compatible roomate at the high-rise condo in East Sac.
“In California, which accounts for about 40 percent of subprime borrowing in the U.S., no one even knows how many people are originating loans, according to an October 2006 report by the California Association of Mortgage Brokers. That’s because while the state licenses individual mortgage brokers, anyone can work for a big lender under the umbrella of a single corporate license.”
That would be 40 percent of the subprime loans for 11.7 percent of the U.S. population (35m/300m — gulp!). I am wondering if a similar article to the one on the front page of today’s WSJ will soon be written to describe the California subprime situation?
At any rate, I have a hunch that fewer people are originating subprime loans now than they were in October 2006.
http://ml-implode.com/
and remember, californians are leaving the state so what happens in california won’t stay in california. if you can’t sell your flop in cali you better try in arz, new mexico, utah and wherever else you tried to flip and got flopped.
O.k. here’s a great on the street testimony hinting to the real inflation figure in Hollywood, CA. I was driving along Highland Ave near Santa Monica Blvd., waiting at a traffic light when a homeless guy approached me and asked for TWENTY DOLLARS!!!!!!!!!!!!!! I looked at him with a totally incredulous expression and asked him “What happened with asking for ONE dollar????”
I gave him nothing!
LOL giving him nothing was the right thing to do… I read a report that those guys can average 800 bucks a day in that area all going to the local drug dealer or liquor store. Gotta love that racket…
I did sarcastically follow up with “Do you take Visa?!!”
“Highland Ave near Santa Monica Blvd…”
there was a time, when 20 bucks would get you a heck of a lot more than a “thanks” on that corner…
what a trannyision…
LOL that’s a fact…
“What happened with asking for ONE dollar????”
INFLATION
While we are on the subject, what happened with asking for ONE DIME?
Once I built a condo, up to the sun, glass and steel that shined,
Once I built a condo, now it’s done, brother can you spare a dime?
http://www.library.csi.cuny.edu/dept/history/lavender/cherries.html
He’s got to cover his monthly nut. If he bought 12 houses like some of the valets and grocery store clerks we’ve heard about then, yeah, he needs $20 per car.
“‘There is a lot of strength in the $1 million market in Los Angeles,’ said Jack Kyser, chief economist with the L.A. County Economic Development Corp.”
If this is true you have to wonder how much longer it can last.
It’s true… because houses in areas where one might actually want to live all cost around 1 million and up… way up. So anyone with $$, who is buying a house right now, (because they can maybe get it for 10k under list! What a deal!!!) is paying around a million or more. People who can’t afford that, can’t really buy anything, thus the skewed median.
Oh, and it’ll last until all the buckets of money and boxes of stupid here are used up. Unfortunately, there is a seemingly endless supply of these containers in LA…
No resemblance here to the dot com fiasco, besides the rhyming names of the descriptors (Silicon Valley / Mortgage Alley)…
=============================================================
Subprime Fiasco Exposes Manipulation by Mortgage Brokerages
By Seth Lubove and Daniel Taub
May 30 (Bloomberg) — Taher Afghani was working for discount retailer Target Corp. near San Francisco when friends told him about the riches to be made in California’s Mortgage Alley.
It was 2004, and the U.S. real estate market was on fire. Down in Southern California, a hub for lenders specializing in loans to people with weak, or subprime, credit, Afghani’s pals were making a fortune pushing risky mortgages on homebuyers. After tagging along with a buddy on a company trip to Los Cabos, Mexico, Afghani quit Target, headed south and began hustling loans at Costa Mesa-based Secured Funding Corp.
“I had never seen so much money thrown around in one weekend,” Afghani, 27, says of the Cabo getaway. “It was crazy. All these kids, literally 18 to 26, were loaded — the best clothes, the cars, the girls, everything.” Soon Afghani, who’d made $58,000 a year managing a Target distribution center, was pulling down $120,000.
headed south and began hustling loans at Costa Mesa-based Secured Funding Corp.
wow, they’re using prostitution language to describe mortgage lending. Yep, psychology ahs changed.
In an “alley” no less, adding to your prostitution metaphor….
“‘There is a lot of strength in the $1 million market in Los Angeles,”
this is from all the body shop guys fixing Lindsay Lohan’s cars…
that, and her bar tabs…
C’mon man…give a skank a break.
believe me, I’d like to… come over here Lindsay, let imploder make it all better
imploder, you are so taking the title of this post the wrong way.
“that, and her bar tabs…”
and her drug dealer!
North Park, San Diego: I’ve been watching this house for months, heard through the grapevine it was bank-owned. 2914 Redwood as on zillow Sale History
05/14/2007: $600,000
02/28/2006: $780,000
05/11/2005: $625,000
get a sample where n=30 and track these homes over time. That will give you a statistically valid sample in your neighborhood/ city….
“statistically valid”
Good thought. It might pay to also choose your sample randomly for good measure. I am going to do this for my zip code, to see what happens to thirty of these white elephants over the next couple of years.
x-lent, smithers!!!!
Two days ago when I was driving through Rancho Penasquitos, I saw for the first time a For Sale sign with “Bank Owned” appended to the top of the sign. That sure made me want to pay top dollar to snap that one up!
BURN, BABY, BURN!!!!!!!!!!!!!!!
It’s funny if you read through that linked Bloomberg article about the mortgage brokers you see this guy was making $58K working at Target and heard of the riches being made in mortgage brokering where anyone could work. He says he made $120K while he was mortgage broker. While that salary is nothing to sneeze at it is by no means as rich as those guys think. He talks about how they all had the best cars, best clothes, took limos all over the place, etc. Give me a break. This is what’s at the heart of the problem and the reason for the ensuing meltdown. People live with such conspicuous consumption. As soon as these braindead morons get a few dollars in their pockets they spend it along with a bunch of other dollars they don’t even have. Credit is great when used wisely, but people are using it as free money to support living a fake lifestyle. By fake I mean you have a guy driving around in an $80K Benz when he barely makes that much in a year. It’s the same thing with housing. A big credit crunch for a few years would do the country a lot of good by filtering out all the people who’ve over-extended themselves.
“He talks about how they all had the best cars, best clothes, took limos all over the place, etc. Give me a break. This is what’s at the heart of the problem and the reason for the ensuing meltdown. People live with such conspicuous consumption.”
You have all those TV shows glorifying Paris to thank for that.
Well EASY COME…….EASY GO
You got your $500,000 FREE MONEY capital gains, now hand it back to the “house”!!! LOL!
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“In 2001, the couple bought a house in Elk Grove and more than doubled their investment before selling it. They’re not having the same luck with the value of their new house, bought in 2005.”
People looking for high returns on their money often get tripped up by this investing speed bump. To get your compounded growth mojo going, you have to re-invest your winnings.
But this also means that since you’re putting almost everything back into the game, you only need to do a few really stupid things to screw things up. And this is pretty common for people who confuse luck with skill and have a poor understanding of the risk / reward behind their “genius”.
“That has been especially true locally, where the prices would-be sellers are asking have been falling by as much as 10-15 percent.”
I assume the ‘locally’ referred to in that comment is for Ontario — the source of the publication. I don’t see this in my area (92127 Rancho Bernardo). Our median list price has dropped back a bit since February 1, from a persistently high level of $1,395,000 a couple of months ago to $1,299,999 (no joking!) today — a 6.8% drop in the median over a period when the number of listings has increased by over 30 percent (200 up to 261 as of today).
But the puzzle is how can the median list price stay so persistently high when the median sale price is under $800,000 — $500,000 lower? At first glance, this does not look like a situation which persist for long, especially given the large number of unoccupied brand new homes in 92127 priced above $1m and not even listed on ziprealty.com yet.
“Right Now Everything Is Going Down In California”
Is Paris out of jail already?
couldn’t resist.
Does anyone know the Scottsdale market. I am looking at relocating from the Palm Desert/La Quinta area — which is falling quite nicely now that summer has come. I am shocked that Scottsdale prices seem to be about the same. I am only interested in living in Scottsdale (not the surrounding areas). Any knowledge is appreciated.
Don’t buy in Scottsdale yet, the prices are just beginning to correct. When you come to visit, let me know and my wife and I can take you out and show you some of the neighborhoods and give you some insights into the local market. Take care.
Local observation: This weekend, we looked at 2 apartments in Huntington Beach (Orange County, Calif). One offered $500 off next month’s rent (on the one open apartment). Another offered first month rent of half off.
Today, I got a call from from the latter apartment: They up the ante by $1800 credit with 1 year lease which equates to $150 off from rent per month. [I guess the longer we wait the better deal we can get?]
We’ve been apartment hunting long-distance in LA, and there are almost twice as many 2-bedrooms listed in our preferred neighborhoods and price range as ever before.
The price can just keep on dropping. Thank you, housing bubble!
More good stuff from the Bee
Auction of bank-owned homes planned
http://www.sacbee.com/103/story/199844.html#comments_here
‘Home loan lenders, stuck with rising numbers of repossessed homes, will auction 242 houses next month to bidders in Sacramento, Modesto and San Mateo.’
San Mateo?! I though the BA was different >; )
Okay… do we stay in our two bedroom apartment (1100sqft) in Arden Arcade for $905/month or upgrade to a 1535sqft Elk Grove house (4/2 house, built in 2003) for $1250/month. We could afford it, just means saving $1200-1500 a month rather than $1500-1800 toward our future downpayment (plus moving expenses and the cost of a fridge and w/d for the new place, which we’d probably buy used).
Just my wife, four cats, and me. My commute would be 30+ minutes and her’s about 10 minutes, rather than the other way around. The Elk Grove house would be a much better neighborhood.
Thoughts?
As I see it this bubble is going to take a while to deflate so if you feel that the rental upgrade will make you and the Ms and the felines a happier bunch go for it. You are saving for the buy time already so enjoy yourselves.
This is totally a personal call. If you can sleep easily with the higher cost of living and how it affects your financial planning AND it makes you happy, you’ve done all you can do.
When we moved to Wine Country, we lived in a sub $900 apartment because only one of us had a job. After I found my job, we were pulling in a much larger household income, but we still stayed in that apartment just out of habit.
The landlord was a total cheapskate. The neighbors started off ok but then got trashy in a hurry as replacements came in. One day we grew up and realized that we weren’t starving students anymore. So, we now rent a cute house for $1800 a month in an established neighborhood.
Sometimes I think about that $11K in post-tax dollars that we are giving up per year. But then I think about how now I don’t get angry (or in some cases frightened) when I see my neighbors now. It’s been worth it for us.
We learned that for us, the neighborhood quality is everything. The actual house is a fairly distant secondary consideration. I can spend money on the house to improve it. But you can’t do much with lousy neighbors except suffer.
offer $1100- they might take it
realwhore gets 10% of a rental so just manuver around the whore
Just make sure that the Elk Grove house landlord is financially stable.
I’d look up the price paid for the house, also if you can figure out if there are second mortgages, etc.
It would suck to get in there, and then find out the house is in foreclosure.
Also, make sure your deposit goes into an ESCROW account, and not to the landlord.
If it were me, I’d go for the house. you may be waiting a while until housing prices are reasonable, no reason to sacrifice in a small apartment if you’d prefer a SFH.
good luck
Walt,
Make sure you can handle the commuye in from EG. As a former resident, I can tell you that is LA worthy traffic.
Also, parts of EG aren’t so great as lots of people are moving out of south Sac into EG. Visit the place at various times of day.
And be sure that the LL can afford to rent it out at that price. I’ve run around some people that were days away from sherrif knocking on the door, trying to rent their albatross out.
walt: I vote that you move to the house. It will make the next few years of waiting more pleasant. And your wife will enjoy the shorter commute. Just make sure it’s not an incipient foreclosure first.
Walt - move - enjoy a quality of life improvement for a few hundred extra.
The opening bid for a 1,200-square-foot condo previously valued at $259,900: $149,000.”
LOL!!!!!!!!!!!!!
Suckas…..touche
“Although the median price continues to rise, this reflects the fall-off in sales in the lower priced markets of the state where new home inventories and foreclosures are competing with the existing home market,’ Leslie Appleton-Young said in a release.”
whoooaaaaa!
A little honesty for once since your groupies commissions dropping off to poverty level.
lol!!!!!!!!
“That has been especially true locally, where the prices would-be sellers are asking have been falling by as much as 10-15 percent.”
yeah and another 30% drop is required to get them down to sane levels.