Entering Uncharted Waters In California
The Santa Cruz Sentinel reports from California. “When Howard Little got a call last year about refinancing, he decided the time was right to pull money out of his home in Boulder Creek to invest in real estate. He bought a house in Sacramento and figured he’d have steady rental payments to supplement his disability income.”
“Instead, he lost the property in Sacramento to foreclosure, and fell behind on payments for his own home. His credit rating dropped and he couldn’t refinance. He put his five-bedroom, two-bath Boulder Creek home on the market, but with listings at all-time highs he hasn’t found a buyer.”
“He’s dropped the price from $680,000 to $650,000 and now $630,000. ‘Where I’m going from here I don’t know,’ he said.”
“Little is not alone. So far this year in Santa Cruz County: 301 property owners fell behind in their mortgage payments. 149 properties have gone into foreclosure. 70 properties have been sold at foreclosure sales.”
“While conditions are more severe in neighboring Monterey County, Santa Cruz County is feeling the pain, too. Mortgage delinquencies have doubled compared to last year; foreclosure proceedings have tripled and the number of foreclosure sales is seven times what it was.”
“‘The people we see can’t get a loan because their property value has gone down,’” said Soquel attorney William Purdy, who said his office receives a half-dozen mortgage complaints every few days. ‘A cruel vise is starting to reach a lot of people.’”
“As the number of foreclosed homes grows, there is a domino effect, with each one depressing the price of every other house in the neighborhood. ‘In some areas, prices are spiraling downward,’ Purdy said.”
“Rod Quartararo, mortgage lending manager at Bay Federal Credit Union, found eight months ago that adjustable rate mortgages comprised more than 65 percent of the loans in the past two years. Many of these mortgages came with risky features like interest-only payments, rates that jump and loan balances that grow.”
“‘I am afraid we are only seeing the tip of the iceberg at this point,’ Quartararo said. ‘The buyers that were created with these types of loans no longer exist to support present values. We may have buyers for $400,000 homes but not for $700,000 homes.”
The San Francisco Chronicle. “The Bay Area real estate market has become a giant game of chicken. Just 18 months ago, buyers swarmed open houses waving piles of cash. Now they are staying away in droves, waiting for prices to fall.”
“‘Buyers don’t want to buy until we’re at the bottom of the market,’ said Dean Wehrle, VP for Northern California of the Sullivan Group Real Estate Advisors. ‘It’s the converse of 2003, ‘04 and ‘05, when people would jump in the market because of the frenzy, thinking that they had to get in now because appreciation would go on forever in the double digits.’”
“Reduced asking prices have become commonplace, with anywhere from 20 to 50 percent of listings in Bay Area counties reporting price cuts, according to a ZipRealty analysis.”
“‘People are trying to time the market,’ said Patrick Duffy, managing director for Hanley Wood Market Intelligences. ‘Before it was fear-based: If I don’t buy now, I may never get in. Now the fear is on the opposite end: If I buy now, the price could decline in the short run.’”
“In the Bay Area, new home sales are down 59 percent for April compared with a year earlier, according to Duffy from Hanley Wood.”
“Brian Catalde, president of the National Association of Home Builders, said that until a year ago, customers used to make two visits to sales offices before buying. ‘Now they’re making eight to 12 visits,’ he lamented. ‘Why don’t they want to pull the trigger?’”
“Catalde hired a pollster to ask buyers that question. Of 1,000 people surveyed, 725 said they’re afraid the builder will lower the price so they will ‘lose’ their down payment because their house is worth less.”
The Fresno Bee. “Sales of new homes in Fresno County slid 16.7% in April as the real estate market continued to struggle, according to figures released Friday.”
“Builders sold 284 houses in Fresno County in April at a median price of $304,950, down about 10% from April 2006, the California Building Industry Association reported.”
“Gregory Paguin of The Gregory Group consulting firm said developers in the central San Joaquin Valley are struggling with excess supply. ‘There are more projects on market, more inventory and more pressure,’ he said.”
“‘We thought [the market] was bottoming in the first couple months of this year, but then the subprime issue hit and now buyers are on the sidelines a little bit,’ he said.” “In Tulare County, sales were down 37.1% for the month, and the median price was off 5.8%.”
The Orange County Register. “As the Orange County-based subprime lending industry melted down this spring, lawmakers in Washington and Sacramento sounded the alarm.”
“Last week, as the Legislature passed its midyear mark and the deadline for bills to exit their house of origin, Machado sounded disappointed. ‘There’s been some concern, but there hasn’t been a lot of action,’ said Sen. Michael Machado, sponsor of two lending-related bills that survived the Senate and now face the Assembly. The story in Congress has been similar.”
“The need for consumer help is mounting in Orange County. Through April, 3,499 homes received default notices, according to DataQuick, a 136 percent jump from 2006. Over the same period, DataQuick reported 755 foreclosures in Orange County, compared with just 89 foreclosures a year earlier.”
“Natalie Lohrenz, director of counseling for the Consumer Credit Counseling Service of Orange County, said people facing financial distress because of home payment problems climbed to 40 percent of her agency’s visitors, up from the usual 20 percent.”
“‘It’s going on everywhere, but most places not as severely as here,’ Lohrenz said. ‘People here had to contort themselves into pretzels to qualify for loans.’”
“‘What we’re seeing in the subprime market, to a large extent, is unprecedented in terms of increases in defaults and foreclosures and the sudden change taking place,’ said Kurt Eggert, a law professor at Chapman University and member of the Federal Reserve Board’s Consumer Advisory Council. ‘I think we’re entering uncharted waters.’”
“There’s concern about legislation having unintended consequences on the home-finance system. Proposals to eliminate stated-income loans, 100-percent financing or interest-only loans could inadvertently foster more foreclosures by preventing current subprime borrowers from refinancing, said Sen. Lou Correa.”
“‘We’re always doing the last scam, trying to catch up,’ Correa said. ‘You figure them out only after a lot of people have gotten hurt.’”
“The need for consumer help is mounting in Orange County. Through April, 3,499 homes received default notices, according to DataQuick, a 136 percent jump from 2006. Over the same period, DataQuick reported 755 foreclosures in Orange County, compared with just 89 foreclosures a year earlier.”
Nothing to see people. Everything is okay in the OC. We are one of the richest counties in the country.
Yeah, right!
“The need for consumer help is mounting in Orange County.”
Big Brother Gov should protect everyone who bought a house they cannot afford, right?
“The need for consumer help is mounting in Orange County”
It is so true … the folks who thought that they could afford homes 700k and up do need help - like medicine for delusions.
“The need for consumer help is mounting in Orange County.”
Acually they just got the order of the words wrong:
There is need to help mount the consumers of Orange County.
Actually, only one small area of OC is truly rich-newport coast/laguna/newport beach. People who live 2 blocks from the sand. The rest of the OC is middle class- except Santa Ana, the ghetto. So they need help like anyone else. If there is going to be government money, I want to get in line for it.
Aren’t some of the hill areas still doing ok? I remember all the swank homes in the mid 80s in Lemon Heights, Tustin Hills etc.
Yeah, the hill areas are still high priced. My former boss lives in Santa Ana Heights, and the houses up there are still well above the median. Not too much has changed since the mid 80s, with the exception of quite a bit of building in South County.
“So they need help like anyone else.”
I’m assuming you’re being sarcastic. What “help” were they planning to offer anyone else when they made the big financial score from the appreciation on their house?
You mean they were going to keep the profits for themselves?
Well, they get to eat their losses on the downside.
“So they need help like anyone else. If there is going to be government money, I want to get in line for it. ”
Wish the gov’t would hand me some money to grab a house in Garden Grove 92845(or adjoining Cypress 90630).
Yeh, i know GG gets trashed on this site but GG 92845 north of the 22 fwy between Valley view and Knott ave is a tiny well kept little-known middle class enclave of NW OC. Great place to raise a family, nice parks, schools, no riff=raff.
Problem is, this area needs to become affordable for up and coming middle class families. The times i drive thru there on way to and from work there is a dearth of young families: the clean well-kept parks and even the school athletic fields seem virtually empty.
This tiny middle class oasis is tucked between the less desirable communities of Stanton, Westminister.and Buena park. Adjoining cypress is OK more or less.
Keep your powder dry and primed: if prices fall 25%-40% in NW OC for ave-sized clean SHF’s in desirable areas this area is worth a look. Average SFH is this area probably runs around $500,000 at this stage of the bubble(10% off peak). At $350,000 or perhaps even $400,000 this would be a a good deal for families with over $100,000 yearly income. Very accessible to all LA/OC jobs markets.
peter m:
I enjoy reading your comments because without fail, you have accurately depicted each and every area that I have seen you report on.
Having lived and traveled *extensively* in LA & OC, I can attest that what you’re posting is correct.
All the best to you,
~Misstrial
All the best to you,
~Misstrial
Thanks!
I have traveled all over LA/OC/IE and have a pretty good locational knowledge of the physical/demographics/RE/industrial infrastructural developments of the 4- county area. My on-the-ground observations of the deterioration of former tidy middle class suburban areas into exurban ghettos is based upon extensive drives into every neighborhood in LA county, and also a good deal of travel into the OC and the IE, and i even have an actual close-up view in my own deteriorating hood, long Beach 90810.
“The rest of the OC is middle class- except Santa Ana, the ghetto.”
If prices ever get down to sane affordablity levels
These areas of NW OC will be good decent areas(not perfect but relatively decent middle class):
Fullerton(north of Chapman ave)
Brea
Placentia
Yorba Linda
Cypress
Garden Grove 92845
Most areas of Tustin
Huntington Beach
Most of fountain Valley
East Anaheim/Anaheim Hills
Stay away from Old central /west Anaheim, Orange, Santa Ana, most of Garden Grove, Westminister, La Habra, Stanton, Buena Park, La Palma, South Fullerton Edge district(next to 91 fwy). These areas starting to look more and more like LA-type Hispanized apt zones or slummified suburban ghettos. Similar to what is happening in the central/eastern/north parts of the SFValley: formerly clean tidy middle class districts becoming slummified suburban immigrant-impacted zones.
What about Rossmoor area in Los Alamitos or Seal Beach?
“What about Rossmoor area in Los Alamitos or Seal Beach”
Haven’t been thru there but being tucked right between the 605 fwy/El Dorado park area of East Long Beach(zips 90815-90808) and Los Alamitos this entire area has always been generally solid middle class. los Als very small with few homes but adjacent Rossmoor,Cypress, East LB,Seal beach,Lakewood and GG 92845 have long been solidly middle class and well-kept up communities.
formerly clean tidy middle class districts becoming slummified suburban immigrant-impacted zones
What makes you think that the same thing won’t happen to any or all of the “good decent areas” you listed? In my opinion, I wouldn’t feel comfortable buying a house in any neighborhood that was at risk of turning into a slum within the next 20-30 years - after all, who can time such things precisely? - and that would certainly include any neighborhood that is adjacent to (say, within 2-3 miles of) a current slum. For me that certainly rules out places like Fullerton or Anaheim, which remind me quite a bit of what places like Norwalk or Downey or even Compton “used to” look like.
“and that would certainly include any neighborhood that is adjacent to (say, within 2-3 miles of) a current slum. For me that certainly rules out places like Fullerton or Anaheim, which remind me quite a bit of what places like Norwalk or Downey or even Compton “used to” look like. ”
Or large parts of the East SFValley, which have rapidly deteriorated. Ditto for Inglewood, Pomona, Hawthorne, lawndale, Gardena, East Torrance,Buena park, North.central Long Beach, Whittier ect. Slummification of middle class suburbs can be observed all over LA County. Generally older retirees let their properties deteriorate, or owner rent out to riff-faff, or weedy foreclosures spring up , or City downzones to -r-2. r-3 with catastrophic results. Soon an ugly mismash of mcmonsters, cheap apts- condos, dups-tris springs up in the former clean tidy hood and presto, suburban ghettos.
“These areas starting to look more and more like LA-type Hispanized apt zones or slummified suburban ghettos. Similar to what is happening in the central/eastern/north parts of the SFValley: formerly clean tidy middle class districts becoming slummified suburban immigrant-impacted zones.”
I’ve been spending time in Orange, and I’d always thought it was like the Orange circle, cute houses, etc. I didn’t know about the 100% spanish speaking areas, including households and businesses. Total ghetto/drug dealing/poverty stricken living at its finest. No different from LA, just the businesses are newer construction so they look better at this stage of the game. Give it time.
City of Orange old town square used to be the NW
OC showcase slice of turn-of century
Americana. It still has some activity, but mainly from the college kids attending Chapman College, and a few older retirees still living in Orange. Generally, that immediate area especially to the north is seeing pockets of deterioration similar to Santa ANA area around the old SA civic Center.
Orange is about half-way toward becoming another Santa Ana-type NW OC suburban ghetto.
Heck, even a lot of people living near the sand aren’t rich. The Balboa peninsula, for example, has a lot of apartments and subdivided houses for rent at prices that are very cheap compared with buying. These are within reach financially for almost anyone who doesn’t demand a lot of space or amenities (including parking), especially those willing to live with a housemate or two. This is precisely why a lot of underemployed beach yokels, and “college students” who seem to spend most of their time in bars, tend to live there.
Apologies if this is posted elsewhere but it is a “must read” from itulip on California Foreclosures. A real eye opener!
http://www.itulip.com/forums/showthread.php?t=1447
Wow!! Here is a quote:
“The loan value of foreclosed homes returned to lender at auction, the measure of foreclosure activity that we have been tracking with FR since September 2006, increased from $420 million per month in September 2006 to over $2 billion in March 2007. After leveling off in April at just above $2 billion per month, it picked up again in May, reaching $2.8 billion. Foreclosure activity is accelerating, not “leveling off” as some in the real estate industry have reported. More than $12 billion in loan value in total has been returned over the past ten months.”
I love this quote. Those numbers track closely with my own local data (93552). I also saw a slight dip of NODs in April but that has been reversed in May in a big way.
I had theorized that this dip could be attributed to the difference in behavior of investor/dice roller vs. GF/J6P. The gambler knew earlier in the cycle that the jig was up. They weren’t living in the home so they just let it go and started looking for the next scheme (meth anyone?)
J6P, on the other hand, bought in to the notion of “buy now or be priced out forever”, he got the teaser rate and now is realizing he can’t make his monthly nut.
In reality, investors were a much smaller slice overall of this bubble pie, J6P and the little woman were the real drivers. As the resets get rolling in earnest into the final half of this year the numbers for NODs and foreclosures that we see today will be looked at as “the good ol’ days”.
Got cash and a years supply of food?
“Got cash and a years supply of food?” LOL. Yep, that’s my strategy too. Plus quite a bit of wine and TP.
Don’t miss the crash video at the bottom.
Love the 100% financing sign under Bank Repo picture in the OC article.
NPR had a report this morning on the record # of people leaving California. Apparently moving companies that rent out hauling trucks have slashed their prices for people coming INTO California in order to attract more business. Report said most people moving to areas that are perceived as being cheaper, namely Texas and Arizona but also (for retirees) Nevada and to some degree Washington and Oregon. Also interviewed one woman who left Irvine for Florida and was laughing at her neighbor’s complaints about rising cost of living by comparing it to Cali.
‘The buyers that were created with these types of loans no longer exist to support present values.’
…ah yes, the inverse of not making anymore land….’not creating anymore buyers’
“creating buyers”..what an interesting concept
That would be the job of the “Federal Reserve” and they seem to have been caught in a “Conundrum” at the moment… Housing vs Dollar. Oh shit!
Here’s a thought. Why don’t the government pay off the loan for homeowners who can’t afford their house anymore, thus resulting in zero foreclosure rates and happy more happy homeowners. With this solution the government need to increase the income tax rate to 80% for everyone in America. You pay for my house with your income tax and I’ll pay for your house with my income tax. Another thought would be for homeowners, who can’t afford their house anymore, to rent. FOLK, THERE’S NO SHAME IN RENTING YOUR SHELTER! Look at foreclosure as a temporary negative adjustment to your lifestyle. Get out there, work 1, 2, or 3 jobs, save up some money and buy another house. And please, STOP CRYING FOR MORE HANDOUT PROGRAMS! Also, there’s no shame in asking family and friends for help with your mortgage payments. That’s when you can tell who your real family and friends are.
“‘What we’re seeing in the subprime market, to a large extent, is unprecedented in terms of increases in defaults and foreclosures and the sudden change taking place,’ said Kurt Eggert, a law professor at Chapman University and member of the Federal Reserve Board’s Consumer Advisory Council. ‘I think we’re entering uncharted waters.’”
yeah. for sure uncharted. I just saw sandiego foreclosure stats. May 07 topped Sep 92 by 2x the number of trustees deeds(600 vs 300) and had 40% selling vs 38% selling in 92. That means this shitstorm is ALREADY as bad as the downturn in the early 90’s in San Diego, and we haven’t even started to hear bad economic news. What is going to happen when consumer sentiment, and then spending decline due to the poor job market competing with all those OOW relators and mort. brokers? Where is there a SINGLE mainstream reporter in San Diego comparing these numbers?
“What we’re seeing in the subprime market, to a large extent, is unprecedented in terms of increases in defaults and foreclosures and the sudden change taking place”
I love the comment “to a large extent, is unprecedented”. I believe I have seen this expression in every bubble over the last 30+ yrs and there have been a lot of bubbles in that time span.
Heard mumbled by the ‘Flying Dutchman’ as he roams the seven seas forever:
“Who would have ever thought that people would have stopped buying tulips?”
Good thing all these OOW loan processors are largely idiots and can’t really compete with me in the job market. Maybe I’m being mean, but I’m just loving this whole implosion. Anyone else?
We haven’t traveled far enough down slope to know yet. We may all be really hating the implosion before it’s over.
Bread lines anyone?
I believe this will test the metal of America as a nation to handle, I fear this Country is not made of the same metal it once was and the knock down and bounce back to your feet hardworking section is long gone. Not to mention when we were tested before our nation had reserves to employ the masses and get back to work….now not so much thanks to the Senate, Congress and our fearful leader working in unison.
I fear what is coming is unavoidable and dreadful, and we will see some terrible times. However, on a brighter note we have many homeless people who are ready to teach the newcomers the ropes, whole new career training. I wonder how ironic it will be when those who looked down their noses at homeless have to be with them and ask for help. This has just started and it is already scary….buckle in fellow citizens crazy times ahead.
Scary thoughts, but could be true. I own very little - in the eyes of my neighbors and relatives. I want to keep it that way. There were occasions when I opened my wallet and treated relatives to upscale vacations. There will be more times like that. I coached all those I loved over the years to S-A-V-E. They did not follow my suggestions and they have nothing to their name. Seriously my life has been very painful, not because of my own decisions, but because those I love have financial hardship. Joy is from averting my attention to other things.
I’m the youngest in my family. Usually the oldest sibling of any family is the most financially independent. I am the one who is the most financially independent.
Depending on how bad off America could get, I will do my best to help my siblings. Kind of a Marxist deal - from each according to his ability to each according to his irresponsibility. And I’ll be the fool, but a fool less stressed.
Sorry to be pedantic, but it is “mettle”, not “metal”.
Wikipedia… “Being referred to as a pedant, or pedantic, is generally considered insulting. However some people take pride in being a pedant, especially with regard to the use of the English language. In an attempt to avoid censure, people who wish to make a correction often preface it with “not wishing to be pedantic, but …” or “without being a pedant, …”.
The Fed and media have a similar role. They just flat out lie to keep the masses placated and excuse it with talk of the dangers of self fulfilling prophecies. We can’t handle the truth apparently.
Oh, and when they’re inevitably wrong they use phrases like “Nobody could have anticipated…”
‘Before it was fear-based: If I don’t buy now, I may never get in. Now the fear is on the opposite end: If I buy now, the price could decline in the short run.’”
What are they afraid of? The price can only decline in the SHORT run! hahahahahahahahahah
Even in capitulation they remain in denial.
Yes. There was also this: they’re afraid the builder will lower the price so they will ‘lose’ their down payment because their house is worth less.
Why is “lose” in quotation marks? They will, in fact, lose their down payment.
In the long run, they will get it back. That is why they used quotations. But it will be 20 years.
In the long run, they will get it back. That is why they used quotations. But it will be 20 years.
If you factor in opportunity cost and inflation over 20 years, I think they’ll still lose it in real terms even if they get it back in nominal terms.
Buy now and be priced in forever.
“Brian Catalde, president of the National Association of Home Builders, said that until a year ago, customers used to make two visits to sales offices before buying. ‘Now they’re making eight to 12 visits,’ he lamented. ‘Why don’t they want to pull the trigger?’”
unbelievable..it can’t be that difficult to figure it out…
Here is your solution, Brian. Have the builders agree to refund any value that the buyer loses over the next five years or offer to rebate the difference between what someone pays and each subsequent sale, should prices go down or other concessions be made.
Testify, Pen. I, too would be scared to death to pull the trigger on a 500K house, let alone one that may only be worth 300K next year. Holy moly, these guys are dumber than dirt.
“Mo, why don’t people want to buy any houses? They are so nice.”
“I don’t know Curly, you’d think people would think that 400K is a steal for one of these.”
SOYNTENLY……yuck, yuck, yuck…..
It would be better to make the builder to hold a 40% second mortgage on the property that is void if the builder either lowers prices, makes valualbe concessions or upgrades, or goes bankrupt in 5 years or whatever the legal home defect liabilty period is. Once the builder actually gets the money it will never, ever be given back for any reason.
fine with me, as long as he sell it off to someone else and as long as the legal docs are in place and enforceable
Obviously Brian Catalde is either an utter moron or a liar. I can just imagine him stomping his feet like a spoiled child, and lamenting the fact that the supply of greater fools has nearly dried up. Sorry Brian, but it was too good to be true. Times were good, but your industry is hosed. Truth be told, I refuse to believe that these industry big shots do not realize that prices are still insanely disconnected from economic reality. How can they say this crap and sleep soundly at night? God I hate them!
Agreed. They will lie and cheat to continue eating (and eating well) and driving nice cars. The heck with everybody else.
The funny thing is that “they” (all the people who have been raking in the play dough from RE lately) walk around acting like they’re sooooo superior to the rest of us. Us and our inferior reasonably-sized cars, reasonably-sized and priced rental units/long-owned houses, modest vacations. We’ve been like the missing link in their eyes for the last 3 years.
Well, Mr. RE bigshot, who’s the missing link now, huh, WHO IS IT? It’s you, that’s who. If you know what’s good for you (and you don’t), you’ll take whatever profits you made and get out of this business fast. Do anything other that what you’ve been doing. Go back to living beneath your means. Go back to being an admittedly undereducated delinquent and just be happy that you got anything, anything at all out of your mostly useless, drivelling life.j
AAAAAAAAARRRRRRRRRGGGGGGGGGHHHHHH.
Wow, I feel much better now
Friends of two different people I know are mtge brokers, real bottom feeders, they think they are real wheelers and dealers (movers-n-shakers). Acting like world class financier’ types. What they don’t realize is that they are order takers that depend on an re boom to be successful. I actually think they believe their own bullcrap. Especially when they talk about the merits of exotic financing and how only sophisticates realize the value of IOs, neg, amort, etc.
They are so nasty, that I don’t even visit my friends, if I know the brokers are going to be there.
Well, if they are so sold on the idea that only sophisticates realize the value of these loans, then how do they justify pushing them to people with little or no capacity to understand even the basics of personal finance? From what I’ve seen, most of these “sophisticates” have been illegal immigrants, African Americans, and house painters.
The next time this friend has a dinner party, you should drop by and, when the friend is in the other room, purposely pick a fight with the brokers. Try to get them to punch you. Then your friend won’t like them anymore, and you won’t have to tolerate them.
“From what I’ve seen, most of these “sophisticates” have been illegal immigrants, African Americans, and house painters.”
That my friend would be the wrong assumption…
“That my friend would be the wrong assumption… ”
Agreed. Ben’s blog over the last 2 years has posted numerous examples of deluded and innumerate folks of all ages, educational and professional backgrounds, ethnicities and income brackets.
Brian and his company (Paragon Communities) are clients of mine. It will be interesting to see if/when they cut down on their IT budget. They have been pretty conservative (responsible) in their overall corporate spending the past 5 years, so it will be interesting to see if they can weather this storm.
Cool, maybe they will want to sell off some of that IT equipment to my company? =)
“He’s dropped the price from $680,000 to $650,000 and now $630,000. ‘Where I’m going from here I don’t know,’ he said.”
Well I do! Try 400,000 and see if you get any takers!
How would you determine if even $400k was the right price to pay?
There are some homes in the area that I would like to buy in priced around $650k, that if dropped to $400k, I would buy in a heartbeat. My only question at that point would be, “who do I amket he check out to?”.
Ummm - that could be. But I would not assume that this is one of those houses. The odds are it is Lennar POS or some such thing!
I would still hesitate to write a 600k check - unless it was oceanfront mansion in Montecito or something where someone would say “Yeah, right, dream on!”
you got that right…there is no way I would buy a national builder built home.
Luckily, the nationals don’t do all that much in my area. Mostly local builders. Not that they can be completely trusted, but I do think their homes are better.
The unquoted part of the article claims that Howard Little has been living in his house since 1956 — so the house is clearly not a Lennar POS.
The article also says that Little is retired and suffers from epileptic seizures, which is why he couldn’t drive to Sacremento to “track down what went wrong there.” Why would he buy the house in Sacramento if he didn’t have the money to do it and also couldn’t take care of it because of his ailment? Oh… and he’s retired and disabled — not in any great position to take risks. Sheer madness! And now he’s appealing to the California Department of Real Estate (is there such a thing?) to “investigate his case”??
Apparently he’s buttarded too.
“And now he’s appealing to the California Department of Real Estate (is there such a thing?) ”
Yes, there certainly is. http://www.dre.cahwnet.gov/
and they’ll all get raises !
BIG GOV is perpetual
What would they be investigating…
Santa Cruz native here. Luckily I escaped. That house is in Boulder Creek; an isolated, heavily wooded area in the hills. Historically it has been quite a bit cheaper than the “prime” lots down near the coast. Let’s just say that Boulder Creek has never been known for its architectural gems. The area is dark and damp due to all the trees. The fact that it was built 50 years ago leads me to believe it is a pile of dung that is rotting away. $630K!!! Good luck with that.
“Let’s just say that Boulder Creek has never been known for its architectural gems. The area is dark and damp due to all the trees.”
Sounds a lot like Eureka, California. Unfortunately, there are greater fools still buying. My landloard wanted to raise the price on my rental…so I’m moving to another part of town and getting $150/mo less rent than before.
Santa Clara Native here…
I concur… as I recall those log cabins were only 95-100K .. its something else to see them sell for 400Kplus…
Loony… just Loony
“There are some homes in the area that I would like to buy in priced around $650k, that if dropped to $400k, I would buy in a heartbeat.”
The funny thing is that in 2002 or 2003 you probably could have, but at that point you might have said “…if dropped to $250K…”
In 2002/2003, the houses were around $600k, which I couldn’t afford comfortably at that time. Now, I could comfortably afford one at $600k, but would really, really like to pay $400k for one.
What was your typical price in your area … say 2000 sq ft 3/2 2car garage… in my area it was around 200K in 1999.
So $100/sq ft… today its more like $350/sq ft.
Long term appreciation is around inflation… 4-4.5%
So YoY NORMAL appreciation is 4.5% at best…add appreciation
since 1999 I would say the entry point would be around 300K, that indicates near 50% drop…
This may look ugly format but I will try…
YR Prior Yr Apprec% Apprec $ Ending
1999 200 0.045 9 209
2000 209 0.045 9 218
2001 218 0.045 10 228
2002 228 0.045 10 239
2003 239 0.045 11 249
2004 249 0.045 11 260
2005 260 0.045 12 272
2006 272 0.045 12 284
2007 284 0.045 13 297
Say 297~300K entry
Current $650K
Overvalued $353
It would take 50% drop to make this home rentable with poss cash flow based on current rental market.
I live in Santa Clara, CA
I have some but not much, empathy for someone speculating. I’ve “invested” some money I gained on stocks on commodity option trading thinking I was “smart” and lost it all.
However, mine was made when I in my thirties, was ~30K$ and not my livelyhood, and thanks to mr IRS, I gained some of it back by filing capital losses over a few years. (Thank you Uncle Sam for subsidizing my gambling
)
At Little’s stage in life (58), he is pretty fecked. He should have been more conservative. For example, if he is claiming disability income, why did he still want a 5 bedroom house with no kids at home? He should have downsized.
Idiot.
“While conditions are more severe in neighboring Monterey County, Santa Cruz County is feeling the pain, too.”
This statement is interesting because they are hiding the truth very well here in Monterey Co. Plus, any property for resale is at all time wishing prices as are rents in Pacific Grove, Monterey, and Carmel. School’s out so let’s see how many play muscial chairs during the summer. The key will be school enrollment figures in the fall.
Monterey and Carmel, where only the idle rich can afford to live. It is too far to commute to SV I would think.
Back in the 70s to mid 90s there werent that many rich folks living in Carmel to support high prices. Prices were actually cheaper on the coast due to no jobs and small industries that dont pay that much. Places like Santa Cruz I do see $1M 2000 sq homes which sold for 300K back 10 years ago. Even today, there just isnt any jobs to support that kind of price.
But weird stuff happens…
Strawberry Picker Buys $720,000 House on $15,000/year Income
http://patrick.net/wp/?p=438
“This statement is interesting because they are hiding the truth very well here in Monterey County”
There is an 1910 Victorian for sale up the street here in Pacific Grove that was listed two months ago at $779,000. Now there is a new realator sign in front with a “Back on the market” tag underneath it.
New listing price is $695,000.
and sold 10 years ago for under well under 200K …
Zillow up some PG or Carmel homes price histories…
Some people are paying 500% over 10 year old prices…
Yea like this is Argentina of the 70s with inflation! I dont think so!
Greedy home seller Howard Little-”…where I’m going from here I don’t know”
You’re going down, baby. So sorry (ahem) that you took a second out on your home to speculate like a gluttonous pig on real estate. Too bad (cough) that you’re speculative property was foreclosed on and that investment was you’re retirement.
Hey, write a sob story letter to Chucky Schumer. Maybe he’ll rape some taxpayers and get you some dough.
sorry, the last to “you’re’s” should be your.
Sorry, your “to” should be two.
I’m tired.
“There’s concern about legislation having unintended consequences on the home-finance system. Proposals to eliminate stated-income loans, 100-percent financing or interest-only loans could inadvertently foster more foreclosures by preventing current subprime borrowers from refinancing, said Sen. Lou Correa.”
“‘We’re always doing the last scam, trying to catch up,’ Correa said. ‘You figure them out only after a lot of people have gotten hurt.’”
Yep…….just what’s needed…….another scam
NFN…but, eliminating the stupid loan products would do nothing but help 95% people in the long run.
I agree. And two of the foulest IMHO were:
1) Teaser rates for Alt-A/high LTV mortgages. Does this have flip written all over it? Or else “Look, you can afford the payment. Just refi when the rates go up”. Burn these.
2) Prepayment penalties on subprime. First you stick the FB with a high interest payment, then you keep them from refinancing after they have made payments and raised their FICO. Good job, subprime CDO holders, now you get to ride the mortgage train all the way down…
———————
I do thing there is a place for Low Docs and high LTV loans, but teasers… this is a mortgage, not a credit card… ;(
the low docs and high LTVs fall into that other 5%..
recent medical, law, etc. school grads, people with lumpy income, people with lots of non-re assets that they don’t want to liquidate, etc.
” people with lots of non-re assets that they don’t want to liquidate, etc”
That’s a good point - most home buyers get the down payment from equity from the sale of their last house, but some may not. But if they have big money in stocks, bonds, T-bills or something they will always be able to get a loan on a house. Banks love to lend money to people who don’t really need it - very safe.
Banks prefer lending to people that are high risk, not very safe.
Making very safe loans means very small margains and fees. The big bucks come from lending to the risky people. Sure, in the long run small gains are better than massive losses, but who is worreid about the long-term? It is all about this quarter’s income statement!
You’re right - I forgot the new paradigm.
“The Bay Area real estate market has become a giant game of chicken. Just 18 months ago, buyers swarmed open houses waving piles of cash. Now they are staying away in droves, waiting for prices to fall.”
Nothing like the MSM. “Waving piles of cash” when we know that most of these loans were no down subprime. No, they weren’t ‘waving piles of cash” they were just outbidding the next GF.
Salinasron, so right. Even more so, these loans were just numbers on a computer screen, stored on a hard drive/disk, and printed out on papers. These banks and/or fools had no 750K in a steel suitcase. What a crock!
Exactly. There was no cash waving. It was more like a no-doc, stated income, ARM pre-qual letter. Woo f***ing hoo.
“buyers swarmed open houses waving piles of cash”
no..they were waving their “pre-approval” letter from Churnem, Closem and Burnem Mtge
LOL
It was cash to the seller–I know, because I was one of them, and the cash was quite real when it hit my bank account
Speaking of sales being down in the BA… I was in and around one of the juciest, most expensive part of the Oakland Hills this weekend. I wish I had brought along my camera because virtually every single intersection had so many open house signs that you couldn’t even read them nor tell which sign was pointing which way. Some were more clever, with balloons floating above. It was almost bizzare. I’ve NEVER seen that many open houses. This is by the way in a neighborhood full of million dollar homes.
Another interesting observation I made was that the semi-luxury development near where we rent has had these Mcmansion-type homes for sale for around 3 years. 2 years ago, I stopped in out of curiosity. back then the 6 or 7 models in the ’showroom’ area were crammed with people. To me, these homes look like cheaply constructed stucco boxes with really nice fridges and bathrooms. The cheapest is around 800k. I went in a few weeks ago again. I was the only person there. What’s more, there are many off the previously sold units now for sale. They do not show well at all, and one specimen was MORE than the suggested price from the models I had just toured.The owners had owned it for a grand total of 8 months and had painted the living room PINK.
Ahh… these are grande days.
Yep. I actually saw a sign twirler for an open house in Costa Mesa yesterday. Sure, I’ve seen plenty of sign twirlers in So Cal for new developments, but this was for a single open house for a used home. I haven’t seen that before.
Definitely have never seen that before or expect to in the future.
Well, the seller has to be out of the house for a few hours anyway, might as well make himself useful.
That’s pretty funny.
“Well, the seller has to be out of the house for a few hours anyway, might as well make himself useful.”
Ha, Ha!
Soon whole family will be out there… It will look like one of those fund raising car washes…
I saw a sign twirler in Santa Monica and laughed my a$$ off. I took a picture with my phone to post on the HBB picture gallery, but he was twirling so fast it didn’t come out well. Plus it was on the corner of Colorado and Pacific right by the SM Pier. Awsome!
http://www.youtube.com/watch?v=KIQgkc8VFr4
Well let’s do the math (or, in some areas, meth) as to why SO many for sale. If you have a fixed rate of 6% for 30 years, you pay $600/month for every $100K borrowed. Let’s assume some of these ‘po folk had at least $100K for a down, that means a whopping $5,400/month on the remaining $900K. Furthermore, your tax on that baby is 1.1% or about $11K/year or almost another $1K/month. Well, now the payment is $6,400/month. Now, let’s add in mortgage insurance, with a $900K you gotta have that and at that amount, you are talking about $250 a month, min. Throw in another $500/HOA. This is a glity area, not Compton. You are now at $7,150/month. Lastly, maintenance and utilities have got to be another $750/month, min. Grand total at min. best, $7,900. Okay, round it to $8K/month. Ouch! Assuming even a generous 50% of take home, you should have an income of $16K/month, which means about $25K gross/month or $300K/year. Okay, how many of us here make that as a salaried person? Don’t all raise your hands at once. Furthermore, how many of us think that more than 25% of those who bought into this ‘hood actually have a household income of that? Please, don’t all answer at once.
“Okay, how many of us here make that as a salaried person?”
What, am I the only one!??!
yes.
I’m deafened by the uproar.
Uhm, Does monopoly money count ?
That’s why I think that “the New Irvine”, er Scottsdale, will be crashing soon as well. At least with the real Irvine, I can get on my bike and eventually get to the beach, or even better, drive there. Over here (in AZ) there is no relief from the heat.
In both areas, the median incomes are about $65,000 to $85,000, so someone, somewhere is frontin, big time. In the next 12 months, we may break $200,000 and I still wouldn’t pay over $350,000 for too much in Scottsdale or Irvine (let alone Mission Viejo, RSM, Aliso Viejo, etc.).
An area of million dollar homes? You must’ve been in the ghetto.
Jetson: i rent in the rockridge area of oakland. VERY curious about what part of the oakland hills you are looking at (can you give me directions?). Not that I’m going to buy anytime very soon, even though i could :>, but what to see what is happenin’ in my ‘hood. will take pictures next weekend of the signs + send them to ben.
“When Howard Little got a call last year about refinancing, he decided the time was right to pull money out of his home in Boulder Creek to invest in real estate. He bought a house in Sacramento and figured he’d have steady rental payments to supplement his disability income.”
“Instead, he lost the property in Sacramento to foreclosure, and fell behind on payments for his own home.
—————————————————————————–
Looks like Howard rolled sevens on this retirement strategy! What a dummy, deciding last year (already well into the RE bust!) that he needed to “invest” in real estate.
The guy is totally screwed.He should have went to reno and tried his luck.
We need a t-shirt:
I survived the the greatest ponzi scheme the world has ever seen, but don’t give any shirts to fb’s or non readers of the blog!!
Well, maybe he thought the rental income would be his hedge against property taxes eating him out of (his already owned) house and home.
Oh yeah. Prop 13 keeps Calif property taxes down. Not that then.
It may be a bit petty to mention, but it seems odd in the photo with the article, that his kids’ pics have - what is that? - blown up dollar bill scans under the portraits. Sometimes a little detail like that can be telling. I wonder where the kids are and if they had the wherewithall or inclination to try to talk some sense into Dad?
Also, notice no mention of his wife - deceased? divorced? This is not a sexist thing on my part - just a reflection that more seniors I know that have made really BAD financial decisions have done so after a divorce or loss of a spouse - usually there is one in every couple whose job it is to say, “are you nuts!?!” and snap the wallet shut.
Yea, the dollars on the picture I assumed were the first dollars the kids made. Which means he was probably a real ass to the kids when they were growing up in regards to money. Funny how the wagon has circled. I find it interesting with all those kids on the wall that none of them are trying to help him out and he trying to figure out where he’s going to go. Reading between the lines this guy appears to be a real pinhead.
Prop 13 was never ment to keep Calif property taxes down.
It was ment to be predictable… can you predict CA property tax vs other state? Yes! every time under prop 13!
As a future home owner I will benefit knowing what my prop tax will be each year… No one outside CA can make that statement!
Prop 13 was never ment to keep Calif property taxes down
Right, it was meant to saddle new buyers with all the tax increases. But that only works as long as prices keep going up.
There is only one way to keep taxes under control in the long run, and that is to keep spending under control.
Try electing governments that spend less money. It really works. That’s what people who live in MVA jurisdictions do, because they can’t pass the buck to someone else.
Prop 13 was intended to permanently lower the taxes paid by large corporations who own vast amounts of real property in the state and gradually transfer the tax burden to homeowners over the years. Business-owned property rarely sells, and it is the transfer of ownership that triggers re-appraisal and a higher basis for taxation under Prop 13. Houses sell every seven years or so. Business-owned property sells much less frequently. Companies such as Chevron and Southern Pacific made out like bandits under Prop 13.
New homeowner? Have a nice day.
My question is, Who are these buyers that are waiting to buy? didn’t everybody buy already? except the people in here ofcourse, but who else can buy if the people who can’t afford it before bought already?
*sighs*
I bet that many of the buyers that are waiting are people that can’t sell the house they are currently chained to.
OT–Can someone please provide me the link to the San Diego/SDDT NOD/Trustee chart that goes back to 1982? I am on vacation in Pensacola and am missing a few of my “favorites”. Thanks!
http://www.sddt.com/Finance/EconomicIndicators.cfm
“In the Bay Area, new home sales are down 59 percent for April compared with a year earlier, according to Duffy from Hanley Wood.”
Does it mean 59 % fewer homes are being built? Or are builders building as fast as they can? Because if they don’t someone else will.
Welcome to the new America where fast food employs mostly illegal who will eat your retirment lunch. And these people who signed on the dotted line to buy a piece of America.
There should be a employer tax on these fast food joints and other companies as the illegals working there don’t get benefits and the taxpayer gets stuck with the bill. If the companies have to raise prices, go ahead and do it.
“There should be a employer tax on these fast food joints and other companies as the illegals working there don’t get benefits and the taxpayer gets stuck with the bill. If the companies have to raise prices, go ahead and do it.”
I agree. Companies are now just blatantly hiring illegals without a care in the world. Nice.
Yes, obviously increasing the price of smoking had little effect to stop people so I agree since I’m not one to frequent those fe·ces farms
Actually SF Bay Area has seem more home construction over the past 5-6 years then I have ever seen before recalling back to the early - mid 70s. Our last building boom was around the early 80s.
Then it started over again in 5-6 years ago. Oddly in Silicon Valley our workforce which is about the same as back in 1991 which stands at 840K. So more homes for who i ask? As prices have increased well above income and into over debt, many employers have been pushing jobs overseas or other states to keep costs down? Double whammy! It just doenst take 1000 engineers earning 100K each year to make and Ipod or any high tech product.
Eventually a good patient saver will be well rewarded after we see some real blood letting in the streets. And bloody it will be.
>>Just 18 months ago, buyers swarmed open houses waving piles of cash.
“Just 18 months ago, buyers swarmed open houses waving piles of cash.”
No. they were waving falsified income statements, eager to commit a felony as long as there was a fast buck to be made.
18 months is a long time my friend. It took Paris Hilton 3 days in the slammer to find gawd.
Can’t wait to see the reality show which follows.
“Just 18 months ago, buyers swarmed open houses waving piles of cash.”
now they all just have “piles”
“‘We thought [the market] was bottoming in the first couple months of this year, but then the subprime issue hit and now buyers are on the sidelines a little bit,’ he said.”
A litle bit?
”You can put this one in the refrigerator. The door’s closed, the light’s out, the eggs are cooling, the butter’s getting hard and the Jell-O is jiggling.”
Nice. Haven’t heard the Chick Hearn (RIP) line in awhile.
Just a quick comment to those of you talking about the “sign twirlers” - You just reminded me, last weekend I was driving down wolfe/el camino area (sunnyvale,ca) and I noticed a sign twirler spinning away for an older used home. I thought it was kind of funny…because I’ve seen them many times for new houses..but never for an old established house (at least 20 years). Is this why the real estate agents are worth 6%? LOL “yeah just put another sign twirler on the street, that’ll sell em!”
Sign twirler on 237 near 880 for KB Homes in Milpitas. They have huge townhomes for sale.
450K for 850 sq ft condo … no thanks
This is what i sent to the reporter Jondi:
Talk about one SERIOUSLY STOOOPID MORON.
He Can’t drive so he buys a house 2-3 hours away, ( NOT 2-3 BLOCKS AWAY!)…..and then Has no one to check on it weekly.
WHERE THE HELL ARE HIS TWO KIDS TO KEEP THE OLD MAN OUT OF TROUBLE? Or like um drive him?
Plus he looks 78 not 58!
I recall some posts from last year about children of baby boomers convincing their parents to tap the equity in their future inheritances in order to buy houses to flip and get rich sooner. Lots of greed out there folks.
SM landlord, you around today? Wondering if you saw the sign twirler on the corner of Ocean Park and Fourth…he was doing some real neat tricks with that thing today. Down the street, you can see the townhomes I guess he’s hocking, it’s got more flags on it than half the used car lots on Lincoln Blvd.
Sign twirler aside, the LA market is still really strong, which makes me wonder why the BA is apparently falling faster, I would think the two are comparable in desirability and local economies?
You’re not checking the sheets… I just came back from an appointment on the Westside, old client of mine. Mortgage broker raked him over the coals something awful. I really thought he was smarter than that… He goes to sale next Wed. His only option left is BK. He pulled out 300k last year has no idea where it went. I do suspect the brand new BMW 7 in the driveway might have had something to do with it. But he can’t figure it out… henh… go figure.
a new 7 Series BMW…
is what? about 85 - 100Gs?
Last week, maybe the week before, I posted about six figure cars…
How much do you have to make or be worth, before a six figure car is parked in the garage?
He has the 760 model, easily 150k with tax. Love the car hate the price.
Ug. So much good could be done with that money, instead of paying for nice german engineering…
“He pulled out 300k last year has no idea where it went.”
I would just like to say that 300k is a freaking lot of money.
If I spend 300 bucks, I can pretty much guarantee you I know where it went.
To each his own, but if you are asking me personally how much I would have to make before I would spend 100K on a car, the answer is I wouldn’t even if I were Bill Gates. For me, it shows a disrespect for money. I’d rather spend a reasonable amount on a sporty, safe used car and do as JP insinuated…spend the money doing something useful…like this:
http://wheelchairfoundation.org/travel/?gclid=COexicrQ1YwCFRs_ggodwHrMtA
$75 buys someone a wheelchair! how many for 100k?
“If I spend 300 bucks, I can pretty much guarantee you I know where it went. ”
You and me both… Although I love that car and could probably afford it. I would never have the “juevas” to pull the trigger on a purchase like that.
As crazy as that guy sounds he was not the worst scenario I came across today, for the first time in my career I came across a deal where a broker should be jailed… actually two. These people are losing their home from just pure unadulterated greed of the brokers no more no less. I in my entire career have seen nothing like what was done to these folks. I was debating as to whether to encourage them to call the authorities. Someone should lose their license for what was done to these folks. I haven’t decided yet. It was shocking… made a victim of predatory lending look like a Paris Hilton-like whine baby.
Don’t ask for details, not going to happen. However, I will say this if this was any indication of what has been happening out there in the past five years an enema with a spike strip will be considered a good day compared to what’s coming down the pipe.
Flash forward to 5 year from now… plastered all over the MSM “Who knew this was to happen”…. sigh
or “why didn’t the government protect us from our stupidity”…
Speaking of smart people, there’s this couple I know in the Studio City area, the husband always presented himself as this big shot real estate developer, and syndicator of real estate deals, whatever that means, he even had the full velvet smoking robe that he wore to dinner when we came over. He actually gave an interview to a local newspaper that ran a two page story about him, how he was making over 750K per year and was so successful at such a young age etc. etc. Drove a shiny Mercedes around, the wifey had the Infiniti SUV.
So now they’re getting divorced, it turns out they have no assets and their house has been refinanced about every year and while they do have equity in it, it won’t be all that much once they pay closing costs and brokers fees. Maybe 200-250K for each of them.
And here I was sort of intimidated by the guy all these years thinking he was this bigshot real estate mover and shaker, and I was just this saver/slumlord, and as it turns out I’m worth more than them. As the world turns.
Every person I know that is truly wealthy, pretty much keeps their quiet about it. I know many 7 figure folks and a few 8 figure folks. The eight figure folks work at their own businesses, the 7 figure folks are professional types. Neither group ever brags about their wealth. Only the 8 figure folks really show their wealth. Not to flaunt it, but because the enjoy it. Only these folks wear Rolexes, Pateks, drive big MBs, BMWs, etc., the rest invest, save and live well, but not TOO well.
Proving once again that those on the fringe, the wannabes, always make the most bluster.
The richest guy I know is in his 70’s, drives a Honda Odyssey, and is usually covered in dirt–he’s the head volunteer gardener for Riverside Park. Made a mint in the early 80s doing coop conversions of major buildings all over the West Side. He’s the only guy in the city who can park his van anywhere in Riverside Park any time–a perk from the city for pouring mega-bucks into refurbishing the place.
“it won’t be all that much once they pay closing costs and brokers fees.”
well Artie Shaw (the Edie Van Halen of his day) spent his last years in Sun Valley ( and I don’t mean Utah) and he was married to Ava Gardiner…
My buddy drives a ten year old Japanese economy car - his only car - and has assets of about $1.5 million.
My father knew this elderly couple in the 1970s who loved to socialize with people in their age group - at senior citizen events. These people were earning $30,000 per month interest on their California municipal bonds. I do not know what the interest rate for the typical California bond was in the 1970s but I figure somewhere between 5% and 10%. That would amount to $3,000,000 to $6,000,000 invested in those bonds - in the 1970s. The man drove an old pickup truck.
That’s the extreme side. If I had the at least $5,000,000, I would consider the car I dreamed of since I was a teen - a Porsche 911, but I would buy a 5 year old one
We all know people who are wealthier than they look, and people who look wealthier than they are. My dad has a pretty simple way of summing it up: Everyone gets to choose to either look rich or be rich, but not both.
Bill in Phoenix, I have the same dream car. Here’s one that’s 11 years old that would suit me just fine:
http://cgi.ebay.com/ebaymotors/29k-Miles-Nice-Example-Bilstein-HDs-Hollow-Spokes_W0QQitemZ180129258351QQihZ008QQcategoryZ10156QQrdZ1QQcmdZViewItem
I’ll probably buy one of these when the kids leave the nest. Drive it hard for a year, get it out of my system, and sell it to the next dreamer.
Wow! They babied that one. Only about 28,500 miles on it and 11 years old. That would be a good one! And you are right. Drive it until you get it out of your system. I know a fellow who used to own one. He said the maintenance costs are very high and that’s why he got rid of it. But he indicated he had fun with it and must have gotten “it out of his system.”
Just gonna mention that I worked with a half dozen millionaires-Teamsters, of all things-and you’d *never* guess they were loaded by their looks. Well, except for the one that paid cash for his last ferrari, but even then he was still wearing a dollar shirt from a sale at Thats A Wrap(used clothing wardrobe from tv/movies) and he usually drives an old f150.
I have a sneaking suspicion that there are a whole lotta folks like your friend in this town. Feels to me like the end of a game of Jenga. The tower is standing tall, but when that one key piece gets pulled… game over.
Coke will do that.
I think BA has a better economy than LA. That just points up the fact that this downturn has nothing to do with local economies, rather nation-wide lending practices.
Back in the late 90’s lots of stock options were given away and then sold for huge multiples… I know a few who paid cash for 100K cars and $2M homes (when there were no such thing as $2M homes a year earlier!)
— they were young and not very bright!
That game is over and stock options are rare find due to expensing requirements and no IPOs to be found.
As for the Local Economy! Ever wonder why next products made in BA teck land will be better than last years model and will sell for less. Wanna buy a 2009 MBenz at 3/4th the price of the todays 2007 model…. but if you wait 2010 model will be half that of 2007 cost. Thats called a deflationary economy…Its been like that since 1980s.
“I would think the two are comparable in desirability and local economies?”
North and South are as different as night and day. May do find Socal desirable more than North… But when did dinky towns in NorCal become more expensice then Beverly hills or Malibu?
Historically Socal was more expensive. The Econony is vastly different … prices of goods and services always increases… vs declining in Tech Ladden NorCal… how much more as % do you pay for a Hollywood movie today vs yesterdays… producers inflation… I would say a movie ticket is now 2x over 10 years age… highly inflationary… Tom Cruise isnt cheap.
How much does tech products like a laptop cost today…
about 1/10th of what it cost 10 years ago… highly deflationary.
No the two are very different!
“I would think the two are comparable in desirability and local economies”
oh now come on girl. you’ve been around this board too long to think this bubble has anything to do with the economy. easy, sleazy money….and it’s gone!!! just wait……
“He’s dropped the price from $680,000 to $650,000 and now $630,000. ‘Where I’m going from here I don’t know,’ he said.”
I do know. From the look of things I’d say you’re going to foreclosure.
Love this ad on top of Yahoo home page.
$425,000 Loan for only $1,417 /month. No social security number required.
http://us.ard.yahoo.com/SIG=12llovteq/M=571036.10848263.11448502.9641268/D=yahoo_top/S=2716149:HDLN/_ylt=ArlO0FPTCvQ5ZHAewqr5JVz1cSkA/Y=YAHOO/EXP=1181616257/A=4641976/R=0/SIG=14e1mpohe/*https://www.getsmart.com/refi/qform.asp?bp=ltquickmatch&esourceid=909800&promo=00239&num=1-866-262-6895&AdType=2&version=43&disable_popups=1
Which group do you think this caters to? Criminal conduct right out in the open.
bait n switch
We are in Ohio and I have never seen a “sign twirler” What do they do? Do the twirl the sign like a baton?
yep
Oh, you’re missing out…think of playing frisbee with yourself for about eight hours in the hot sun, with a sign shaped like an arrow taller than you are, and you’ll get the idea.
Twirling is good exercise. Do a few high leg kicks at the time.You can even add light weights for more physical benefits. Number 10)Another reason the Housing Bubble Bust is good. Call Letterman for my prize. hehehehehehe
Little anecdote… was browsing foreclosures for fun
and came across a house in the Hollywood hills that was scheduled for a sale, but postponed by bankruptcy. Not unusual I guess but… the owner is a well known LA TV personality. (or has the exact same, kinda unusual name) Nice to know that even in LA’s “hot, never goes down” RE market, a high income quasi celebrity can lose a home…
Haven’t seen that… Spill the beans who is it?
Well, not sure if it’s her, so I won’t post the name. However, the property is at 2016 N Gramercy Pl. 90068. California Reconveyance is the trustee
LOL that’s her, I thought she was still on T.V., Or was she the one that got bounced because of age and decided to retire. If so, she was supposedly retiring to the midwest after a recent fiasco. Wow… That’s interesting.
Let’s see if this comment gets through… on some other bubble blogs dissenting comments seem to not show up.
I’ve been looking for a place in Los Altos, Saratoga, Cupertino, or Los Gatos for about 3 years. This year I was outbid by $100k twice after offering ~$50k over asking. I went to an open house yesterday in Saratoga, jammed, house is sold today. For most houses in a reasonable location (not by the freeway, not in the mountains, not under a power line) they sell after one or two open house weekends. My co-worker saw a place in Palo Alto, and he literally had to wait in line to get into the open house.
I hate to say “it’s special there” but it sure is different from the rest of the US.
It definitely is school district related - a house in Los Gatos but not LG school district will take 3-4 weeks to sell instead of 2.
Well, we’ll see what happens. Barring a recession or earthquake it’s hard for me to see a price decline of more than 10% (nominal, real would be worse) in these areas; there’s enough tech folks earning $120k + stock so that a two-income couple can buy a $1m+ house without too much drama. and there’s really not that many SFHs in PA, Los Altos, Saratoga, and LG. Those cities don’t have the swaths of hundreds of new homes that you see in the Central Valley. And frankly, even if I could live in Los Banos for free I would not do it. So it doesn’t matter that much how overbuilt the Central Valley is.
Also, the Asian immigrant population puts a high value on owning vs renting, so the rent vs own calculus is a little different. As long as I’ve been here (15 years) it’s always been cheaper per month to rent, but there’s a lot of people who prefer to own.
I want a lot of things that I don’t get.
Local recessions in tech are very common and more frequent then national ones. Whole industries turnover as is shown in past history. So paying 50K-100K over asking is sheer stupidity.
More employers are being bought out over the past 5 years than new companies going pubic and growing. We can add international competition which takes market share due to cheaper costs. To make 120K will needs 10 plus years of experience, and those jobs are limited. To add to that you dont need employers locally anymore. Hire out side of state. Borland is closing shop in Cupertino and moving to cheaper areas… Austin. Its too expensive to pay 120K when you get same for under 80K plus tax breaks from other states. If you cheak the Map of Misery…why does our area have the highest percentage of ARM loans. … http://www.businessweek.com/common_ssi/map_of_misery.htm
If salaries are that high why did 35% (more by other measure) use ARM loans..?
As for earthquakes… dont sweat that.. never an issue.
http://www.community-newspapers.com/archives/lgwt/05.22.02/propertyvalues-0221.html
In Los Gatos, 730 properties declined a total of about $143 million, or 18.6 percent. In Saratoga, 695 properties declined a total of about $278 million, or 22.4 percent. Those two communities are among the county’s top five to have the highest percentages of decline.
You can go back to 1994-5 and find articles showing price declines of 35-40%. LOL… its not going to be pretty this time around.
Nothing is significantly different than 10 years ago, so the prices will revert to mean. Don’t be holding the bag when they do.
check out mls # 716080 in san jose…friend of mine owns it. identical house sold for $815K in 2006. he is asking $699K. there are deals…you just have to know where to look.
Hi,
yes, it’s true that in Evergreen prices are falling. However, Evergreen doesn’t really compete with the 85 west corridor due to schools and proximity to employment.
well at least I have convinced my wife that RE is not a good investment. She was convinced that it is a good long term investment, but I doubt it compared to stocks. So if we buy it will be strictly for quality of life. We already own in SJ so it’s not like we are jumping from renting to owning now. Selling and renting is not really an option, with a family I prefer the stability of owning vs the possibility of having to move frequently. but I do understand that for a single or DINK the possibility of frequent moves can be attractive!
Hey, there’s nothing wrong with a contrarian view. Even I have my moments of doubt, despite STRing a couple of months ago.
But be careful not to catch a falling knife - interest rates are rising really quite rapidly, and therefore affordability is getting worse, and it doesn’t matter how nice the area is, these macro economic factors will still matter.
Also, bear in mind that a 2 income family has child care to pay for, which makes it more like a 1.25 income family, so afforability only works for DINKYs.
Good luck.
Loafer
Very interesting.. Definitely the tale of 2 market in the silicon valley. Where I sold my town home in San Jose, the market is much, much slower than you are describing. Where ever the 120K+ engineers want to live is where u see that + price pressure..but this is a much bigger market than that… cant soak up all the engs like me.
“As the number of foreclosed homes grows, there is a domino effect, with each one depressing the price of every other house in the neighborhood. ‘In some areas, prices are spiraling downward,’ Purdy said.”
As much as I have anticipated that home prices would eventually correct from their recent quasi-permanently-high plateau, reading about prices spiraling downward makes my head spin in disbelief. I have this disturbing mental picture of a WWI Flying Ace shot down from the sky and circling downward in flames, leaving behind a trail of black smoke.
“‘What we’re seeing in the subprime market, to a large extent, is unprecedented in terms of increases in defaults and foreclosures and the sudden change taking place,’ said Kurt Eggert, a law professor at Chapman University and member of the Federal Reserve Board’s Consumer Advisory Council. ‘I think we’re entering uncharted waters.’”
Nonetheless we can all rest assured that the problems with subprime are contained, right?
‘A cruel vise is starting to reach a lot of people.’”
And guess what part of the anatomy it’s starting to squeeze.
The crown jewels ?
For FBs, it the cubic zirconia
“When Howard Little got a call last year about refinancing, he decided the time was right to pull money out of his home in Boulder Creek to invest in real estate. He bought a house in Sacramento and figured he’d have steady rental payments to supplement his disability income.”
You just gotta love the data mining of public records. Find people with lots of equity, gorilla market them until they finally break. I’m not absolving the borrower here, but I imagine that eventually the temptation of riches becomes just too great for many folks. Not long ago, the equity data would have been to get at easily and in large quantities, now that everything is electronic, it probably takes less than a hour to assemble this info on large numbers of people and then the calls/letters start.
My insurance lady / financial advisor tried to get me to buy an annuity. I looked closely at the details and would have had to pay 3% annually! Of course I turned that one down. She manages a good chunk of my nest egg, but is unaware of the remainder. I’m foolishly paying 1.48% expenses on municipal bonds, but will be moved to Class A of that fund, with half the expenses and a Morningstar 4 star rating starting in the winter of 2008. I’m into Vanguard index funds also, and go for low expenses. Gotta do that to make up for the insurance gal’s management. I’m doing okay with the investments she is managing, but I only balk about the expenses. She’s a friend anyway.
I have rejected a lot of extra personal financial deals from her because I am more wary of expenses these days than before. The handicapped guy in the article is a loser. Forking over his freedom to a bank, what freedom he had left, basically. What a shame. Where’s his self-dignity?
“it probably takes less than a hour to assemble this info on large numbers of people and then the calls/letters start.”
Which is why I no longer answer my land line nor have an answering machine. Anyone who really needs to get a hold of me has my cell number. The cold callers get to hear my phone ring.
‘Why don’t they want to pull the trigger?’
Because the barrel of the gun is in their mouth?
‘It’s going on everywhere, but most places not as severely as [in Orange County],’ Lohrenz said. ‘People here had to contort themselves into pretzels to qualify for loans.’
A transparent lie - people had merely to breathe in order to qualify for loans. That is the problem.
“Sales of new homes in Fresno County slid 16.7% in April as the real estate market continued to struggle, according to figures released Friday.”
Hey its F-R-E-S-N-O!!! It is not Sun Valley or Telluride.