The Money Was Too Easy To Get In California
The Sacramento Bee reports from California. “It was two years ago this month that some housing experts began seeing the first signs that the Sacramento region’s housing boom had begun to peak. ‘The bell has tolled,’ said Lyon Real Estate owner Mike Lyon in August 2005, declaring that the era of skyrocketing home values and sales may have hit its high-water mark.”
“Ever since, the ride for Sacramento’s housing market has been bumpy and it got no better last month. The Sacramento region’s 2,906 closed escrows in July 2007 were the lowest for a July in 11 years. Sacramento, Placer and Solano counties also showed some of California’s biggest declines in median sales prices from the same month last year, according to DataQuick.”
“July 2007 ended with a record inventory of 15,927 houses for sale in El Dorado, Placer, Sacramento and Yolo counties, reported TrendGraphix. In the past two years, ‘The inventory (of houses for sale) has more than doubled and the (sales) transactions have halved,’ said Lyon.”
“Rocklin real estate agent Maxine Sunada toured a client through existing homes on Alder Creek Court in Lincoln. There, six of the street’s 18 houses, built in 2004 and originally priced in the $500,000s, were for sale. Many had dead lawns and two bore signs saying ‘bank repo.’ Prices ranged from $429,000 to $459,000, a drop of about 10 percent to 15 percent in three years.”
“‘People bought in the $500,000s and the values went down,’ said Sunada, who saw a similar boom-and-gloom cycle in the 1990s.”
The San Francisco Chronicle. “The protracted waiting game between home buyers and sellers continued in July, as Bay Area real estate sales slowed to a 12-year low while prices edged up, according to a report. The median rose because a greater proportion of expensive homes were sold, said Andrew LePage, an analyst at DataQuick.”
“‘If you yank out a bunch of low-cost sales, then guess what happens to the median?’ he said. ‘Things could change, even if temporarily, in August because of the credit crunch.’”
“Jillian Wilkowski, who wants to sell so she can move to a less expensive area. Interest in her sale ‘has been really quiet; it makes me a little anxious,’ she said. ‘From my house, I can see six other houses for sale, and all except one have been on the market a longer time.’”
The Mercury News. “Santa Clara County’s housing market continued in fire and ice mode in July, with expensive homes selling briskly while more affordable ones languished as lenders tightened their standards. But the numbers released by DataQuick reflect sales initiated before the recent turmoil in the mortgage market, which has real estate agents nervous.”
“Sales of single-family homes in Santa Clara County fell nearly 11 percent in July. ‘This is not the beginning of some long-term debacle. We’re just priced a little over our heads right now,’ said Stephen Levy of the Center for Continuing Study of the California Economy in Palo Alto.”
“‘We’re at record high volume of inventory of homes available and record low sales,’ said San Jose real estate broker Richard Calhoun, ‘and it does not take that much to understand that this does not bode well for the industry.’”
From KCBS.com. “More bad news for the battered Bay Area housing market. KCBS’ Matt Bigler reports that a huge number of houses on the market are in the Silicon Valley.”
“Stephen Levy explains a huge number of potential buyers have simply vanished. ‘Either they don’t want to buy at this price, they can’t get financing, they don’t think housing prices are going to go anywhere but down,’ Levy offered. ‘So it’s the absence of buyers.’”
“Despite the slump, Bigler reports that home prices rose in the region last month by 7.4%. ‘The subprime market has melted,’ One San Jose realtor further explained.”
The Recordnet. “San Joaquin County almost topped the nation in home-foreclosure activity during the first half of the year. The number of Stockton-area properties in foreclosure action, 4,239 in the first six months of the year, was more than twice the number of properties reported in the previous six-month period and more than triple the number reported in the first six months of 2006.”
“Kevin Moran, a real estate agent in Stockton, predicted the foreclosure picture will darken. ‘It’s the tip of the iceberg,’ Moran said.”
“Moran, who specializes in foreclosure properties, said that in San Joaquin County, most foreclosures are found not in older, established neighborhoods but in new subdivisions. He said there is one positive aspect to foreclosures: The flood of foreclosures on the market is increasingly putting heavy downward pressure on all home prices.”
“‘What we’re finding out is that across California - Southern California included - there were greater numbers of investor buyers than we ever thought,’ said Greg Paquin, president of the Gregory Group.”
“‘The foreclosures are going to get worse before they get better,’ he said.”
Th Modesto Bee. “Home sales prices plunged again in July, pushing median prices down more than 13 percent throughout the Northern San Joaquin Valley compared with July 2006. In Stanislaus County, for instance, 371 homes sold in July compared with 706 for the same month last year and 519 in June.”
“Stanislaus County Assessor Doug Harms said the dramatic decline in overall sales ‘indicates the market is doing very poorly.’”
“Harms said home value declines are widespread. ‘If you bought your house within the last three years, it’s probably worth less today,’ said Harms, whose office is reassessing home values to potentially lower property taxes for thousands of homeowners.”
“Harms said his office has lowered assessments on about 6,000 Stanislaus County homes, and he knows more need to be lowered.’We’ll probably review every property that (sold) after July 2003,’ Harms said.”
“Homeowners aren’t so thrilled when real estate agents tell them they can’t sell their home for as much as they had thought it was worth. ‘We have to inform our sellers to be realistic and lower their price, but not all sellers are willing to do that,’ said John Christiansen, who is chairman of the Modesto Council of the Central Valley Association of Realtors.”
“The number of homes for sale continues to rise even though buyers are tough to find. In Modesto, about 1,950 homes were listed for sale by Realtors as of last week. But since the year began, Realtors have sold about 1,000 Modesto homes.”
“But home prices aren’t low enough to be affordable for most Northern San Joaquin Valley families, according to Darryl Rutherford, a researcher for the California Coalition for Rural Housing.”
“Considering Stanislaus County’s median-income family earns about $54,000 a year, Rutherford said median home prices would have to drop to about $185,000 to be affordable.”
From KGET.com. “Bakersfield earned the dubious distinction of being eighth in the nation for foreclosure activity. ‘I think the money was too easy to get,’ said Ray Karpe, Board President of the Bakersfield Association of Realtors. ‘People were qualifying for loans they should not have been able to qualify for. We were the hottest market in the country for a couple of years, so no, that doesn’t shock me.’”
“Karpe said the Bakersfield statistics are severe, and…the victims of the foreclosures will be widespread. ‘It hurts the value of the people who aren’t in foreclosure,’ Karpe said. ‘The family is trying to move up, move down, move out of town, and that’s part of the shame of this, too, innocent people are going to get damaged a little by this.’”
The Daily Bulletin. “Prices are down, interest rates are low and there are plenty of homes on the market. But sales of homes in the Southland were at their lowest level since 1995, according to DataQuick.”
“Sales in San Bernardino County were off 42.6 percent in July from a year ago, a level even worse than the six-county Southern California decline of 27.4 percent. Sales all around the Southland were not only off from a year ago, they were down 11.4percent from the previous month.”
“‘It’s fear,’ said regional economist John Husing of Redlands. ‘People just flat don’t understand this market. If you’re thinking about the biggest purchase of your life and you don’t understand it, you don’t buy.’”
“‘We’re coming into a rough period,’ said Bill Velto, manager of Tarbell Realtors in Upland. ‘With the realities of the subprime market and the problems people are facing with interest-only and adjustable-rate mortgages resetting, we are definitely seeing increased uncertainty.’”
“Whether it’s fear or indecision or the inability to get loans, Husing said what’s going on is simple. ‘The buyers are on strike,’ he said. ‘It’s not at all surprising to see the price decline. I’m really surprised they were not down before this.’”
The Wall Street Journal. “Nearly two years ago, Mario and Leticia Montes found a home they loved, a gray stucco bungalow with a hot tub in the backyard in a middle-class neighborhood of Orange County.”
“The price was a major stretch at $567,000. But the couple, who had sold a home a few years earlier to move to a better area, was tired of renting.”
“‘We agreed we wanted to be homeowners again,’ says Mr. Montes, ‘even if it meant the end of vacations and not eating out as often.’”
“Like many people who jumped into the rising housing market in recent years, they had little money for a down payment and chose a loan that would…’reset’ to a much higher level. Mr. and Mrs. Montes say their mortgage broker assured them they would be able to refinance in a couple of years to keep their payments affordable.”
“With a December ‘reset’ on their loan looming, however, the refinancing option now looks impossible. A loan officer called with some bad news this week: Similar homes in their area have been selling for $535,000 to $565,000 recently. That means the Monteses’ loan balance may exceed the value of their home.”
“‘We have a disaster on our hands,’ says Mr. Montes. He fears he won’t be able to handle the payments after the December reset and wonders whether the family can avert foreclosure. ‘At this point,’ he says, ‘we really don’t have a plan.’”
“‘It’s getting worse and worse,’ says Jeff Lazerson, chief executive of a mortgage broker in Laguna Niguel, who tried to help the Montes family last spring but concluded even then that they couldn’t qualify for a new loan.”
“He says: ‘It’s either work 24 hours a day to make ends meet [with the existing loan] or mail the keys back to the bank.’”
“To bring in a bit more income, Mr. Montes two weeks ago found a weekend job. He says he might be able to take on a third job.”
“‘Bottom line, it’s our little home,’ Mrs. Montes told a visitor one evening in April as tears welled in her eyes. ‘We’re going to keep it. Hopefully, we won’t go down and if we do, we’re going to go down with a fight.’”
All the gold
in California
is in a bank in the middle of Beverly Hills
in somebody else’s name
http://www.foreclosureradar.com/press_release_070815.php
ok, who is the artist?, I can hear the tune but can’t remember the name and it will drive me insane.
Larry Gatlin. Ya can’t live in TX and not be a C&W fan.
What a great day, week. WD Tx
Today was a lot of fun.
You think thats fun? I’m in need of some cheap office furniture, lets see, yellow pages, Countrywide
Don’t you know Countrywide is solvent. They are one of the 21 conduits to the Federal Reserve. They have a $160B LoC.
Just noticed on Bankrate’s CD sheet that they changed Countrywide to “U”, versus whatever number of “rating” stars it had previously.
“The Fed would not react to bail out Countrywide, but it would have to react to the possibility that the fate of a company like that could bring the economy to its knees,” Lyle Gramley, senior economic advisor with the Stanford Group Co. and a former Federal Reserve governor, told Reuters.
and
“..Unfunded commitments for leveraged buyout financings and substantial exposure to commercial paper backup lines could both place demands on banks’ liquidity, said Chris Mahoney, chairman of Moody’s credit policy committee. However, central banks will do whatever is necessary to assure the banks have necessary liquidity, Mahoney said…”
The Bernanke Put
http://mediabiz.blogs.cnnmoney.com/2007/08/16/countrywides-internet-ad-spending-spree/?source=yahoo_quote
Countrywide’s Internet ad spending spree
The mortgage meltdown that’s wreaking havoc on the markets might have a ripple effect on companies whose livelihoods that depend on Internet advertising. Huh, you say? Well, check out this nugget of information from the most recent figures from Web tracking firm Nielsen//NetRatings.
According to Nielsen, the fourth largest online advertiser during the month of July was the troubled mortgage lender Countrywide Financial (CFC). Nielsen estimates that Countrywide spent $34.8 million on Internet ads during July. Another mortgage-related company, information site Low Rate Source, was the top spender, buying $46.3 million worth of online ads.
Just one month was almost 50M …
My, you are a sadistic sob…:)
Moi?
Maybe a curmudgeon or a fossil, but sadistic - never! An sob - that is an accident of birth.
Per Wikipedia:
“Curmudgeon - (1) A miser. (2) An ill-tempered (and frequently old) person full of stubborn ideas or opinions.”
“Miser- A person who hoards money rather than spending it; a skinflint or scrooge.”
“Skinflint - a tightwad.”
OK, you tightwad you, I take it back …
Accepted with much amusement.
9:20pm and so far 1,245 posts for the day on all threads………very impressive indeed.
Very impressive.
Ben, thank you for creating this blog.
Neil
It takes a ‘VILLAGE’ to bring down these outrageous prices in CA…..and….NO….I’m not voting for HC!
“‘It’s fear,’ said regional economist John Husing of Redlands. ‘People just flat don’t understand this market. If you’re thinking about the biggest purchase of your life and you don’t understand it, you don’t buy.’”
Ohhhh, I beg to differ…I think the fact that people ARE starting to understand the market is the reason for the collapsing sales numbers. Regardless, the herd mentality many of us bemoaned during the huge price run-up will likely contribute greatly to an overshot on the way down.
Psychology and greed got everything to do with it. Doesn’t matter how much the ‘experts’ cry; people won’t buy, they won’t buy. I agree that herd mentality is strong either way, up or down. I am just glad I haven’t bought yet.
Where do they find these “economists”? Rent a shill?
He MUST be talking about the realtors. THEY flat out don’t understand the market, and THEY are full of fear.
Oh, and the FBs. The FBs are full of fear and flat out don’t understand the market. If they understood the market, they’d slash their price to the walk-away level, and if it sells for more, count themselves lucky. If it doesn’t sell, walk away.
Buyers that aren’t buying? No fear there.. knowledge of the market!
Yep. I’d say future buyers are looking on with glee as they look forward to the resolution of the “affordable housing crisis”.
They didn’t understand the loans and took them anyways, right?
looks like they understood just fine.. problem was they believed the broker’s suggestion that they could refinance..
“No problem. You’re building equity. Come see me around August , September ‘07.”
from the article “They in effect bet that the boom in housing prices would continue.”
This guy is a tool! He’s made nearly as many stupid comments as Leary and Yun. Of course we understand this market. Let me just double check… Serious affordability issues, skyrocketing foreclosures, sinking prices, rising mortgage rates (if you can still qualify), credit meltdown and more inventory than we can burn through in a decade. Did I forget anything? Why don’t you post those in your next article Mr. Husing. Then everyone will understand the market and things will once again be all peaches and cream.
“He says: ‘It’s either work 24 hours a day to make ends meet [with the existing loan] or mail the keys back to the bank.’”
“To bring in a bit more income, Mr. Montes two weeks ago found a weekend job. He says he might be able to take on a third job.”
“‘Bottom line, it’s our little home,’ Mrs. Montes told a visitor one evening in April as tears welled in her eyes. ‘We’re going to keep it. Hopefully, we won’t go down and if we do, we’re going to go down with a fight.’”
now this is a great way to live. if two jobs don’t cut it, get a third. i’ll be at the beach this weekend.
the bold’s not my fault…..
Any wife who expects her husband to do this to “own” a loan is probably not worth having.
“probably not worth having”. Good one … Only problem is, p_ssy is powerful stuff.
My read was far different. The Montes’ are probably typical of the massive number of walking wounded this bubble has produced. Their ‘plan’ may not work, but the implications of millions of families pulling in all expenses to save the house is much less visual than sheriff evictions yet far more damaging to the economy than foreclosures. Repo’s will be sorted out; but consumer spending affects all things.
“Foreclose, or the terrorists win!”
I sense a new campaign slogan for the libertarian party!
Libertarian? Libertarians are against foreign entanglements and would never start a war against something like “terrorism,” whatever the hell that abused term means.
Let’s stipulate that the Montes were foolish, but I can’t help feeling for them. The problem is that the $#%# speculators, enabled by the %#%^# lenders, have altered the market to the point where what used to be an ordinary part of American life — buying a humble little house — into a reckless gamble. It’s Fullerton, for Zeus’s sake. The idea that a family that’s capable of servicing a $3,000 mortgage can’t find something there without resorting to exotic financing is obscene.
Sometimes I wish we could borrow China’s system for a couple of months — just long enough to stand some deserving people against the wall and bill their families for the ammunition expended.
A little background here — I know what it’s like to lose a house you really like. The upside of renting is that you don’t bankrupt yourself. The downside is that you don’t control whether you stay or go. I rented a nice little East Costa Mesa house for awhile. My kids loved the huge backyard. My four-year-old daughter, in particular, loved to climb around inside a giant honeysuckle bush, and swing around like a monkey between the canes.
When we had to leave, she took it pretty well, but the day before we left, I saw her just standing out in the backyard looking at the honeysuckle bush. I’m probably making more of it than she did, but it’s not fun to lose your little house.
That said, if anyone even breathes a word about bailing the Montes out, I want them to get the full Joshua tree treatment.
I always miss the trees more than the houses myself.
NBA referee may get up to 25 years for gambling. Oh, please!
While a bunch of white collar crooks are eating caviar on their big yachts laughing all the way to the bank. The NBA is a joke and so is David Stern.
I must be missing something. Don’t you mean Wall Street/Fed is a joke and so is Henry Paulson?
Sorry Ray, I misinterpreted what you were getting at. I was thinking of all the OTHER white collar crooks. On the other hand, they’re probably one and the same! Ba$tard$!!!!
NBA referee may get up to 25 years for gambling. Oh, please!
While a bunch of white collar crooks are eating caviar on their big yachts laughing all the way to the bank. The NBA is a joke and so is David Stern.
http://news.yahoo.com/s/time/20070816/us_time/undueinfluenceatthesec
Once he got his chance at the SEC in September of 2004, the rookie was handed a case involving suspicious trading activity possibly based on someone tipping off Pequot Capital Management, Inc., a $7.4 billion Westport, Conn., hedge fund, to an impending General Electric purchase of Heller Financial. That someone, Aguirre soon believed, was most likely none other than John Mack. Pequot’s CEO Arthur J. Samberg, according to the Senate report, was one of the first people Mack contacted after returning from Switzerland in late June of 2001, where Mack had interviewed to become CEO of Credit Suisse First Boston (now Credit Suisse), which happened to be advising Heller on the GE acquisition. (Morgan Stanley, where Mack had served a first stint as CEO until March 2001, was working the other side of the deal advising GE.)
Mack told Samberg he wanted to invest $5 million in a closed Pequot fund, and he was also able to invest in another equity fund (Fresh Start), the only individual allowed to do so, according to the Senate report. Within days Pequot, at Samberg’s direction, started aggressively buying Heller stock, while shorting GE. In a matter of a few weeks, and after the acquisition was announced on July 30, 2001, Pequot had scooped up $18 million in earnings, a performance that caught the attention of the New York Stock Exchange.
http://news.yahoo.com/s/time/20070816/us_time/undueinfluenceatthesec
Once he got his chance at the SEC in September of 2004, the rookie was handed a case involving suspicious trading activity possibly based on someone tipping off Pequot Capital Management, Inc., a $7.4 billion Westport, Conn., hedge fund, to an impending General Electric purchase of Heller Financial. That someone, Aguirre soon believed, was most likely none other than John Mack. Pequot’s CEO Arthur J. Samberg, according to the Senate report, was one of the first people Mack contacted after returning from Switzerland in late June of 2001, where Mack had interviewed to become CEO of Credit Suisse First Boston (now Credit Suisse), which happened to be advising Heller on the GE acquisition. (Morgan Stanley, where Mack had served a first stint as CEO until March 2001, was working the other side of the deal advising GE.)
Mack told Samberg he wanted to invest $5 million in a closed Pequot fund, and he was also able to invest in another equity fund (Fresh Start), the only individual allowed to do so, according to the Senate report. Within days Pequot, at Samberg’s direction, started aggressively buying Heller stock, while shorting GE. In a matter of a few weeks, and after the acquisition was announced on July 30, 2001, Pequot had scooped up $18 million in earnings, a performance that caught the attention of the New York Stock Exchange.
Darn it I was in the wrong hedge fund!
“I earn money the old fashioned way, I con it!” Said Mr. Samberg stealthily.
You both (Thomas and turnoutthelights) have good points. My point is more along the lines of.. how can you subject your spouse to that kind of pressure for just a house? it is still just “stuff” (a la George Carlin) and “just stuff” is not worth giving up a decent quality of life.
You’re right too, but a house for many people isn’t stuff, it’s home. and for many that is worth giving it up for - vacations, dinners and a life. The Montes are anchored on their home, and that attitude spells trouble for them and the economy.
exactly so. Whatever happened to homesteading;-) can we reinstitute it with some of the REO’s coming on the market? clean it up and live there and pay taxes, you get to keep it?
Actually to me this points to a psychology shift among our work class populations.
A owning a home has always been associated with security. What we have now is owning a home _at any and all costs_ and that speaks to a desparate need for security.
good point, according to some statistics 25% of the us population moves each year, and while mobility can be a good thing, maybe the idea of long term leases could also be beneficial to both property owner and renter? along with consumer education which has been sadly lacking… just think student loans…
I can’t help feeling for this couple too. Only what I feel is loathing. The Montes are just your typical whining FB douchebags. In their own words “My wife and I make pretty good money” Well despite making pretty good money and even recently selling a home these idiots had little to put down and so-so credit. Now why did the Montes have crappy credit and no money down? I’ll tell you why because they were busy blowing every dime they made, on vacations, piano lessons, eating out a couple of times a week, etc.
I busted my butt putting money away to buy a house on a salary much less than the Montes. I had my 20% in 2002 but by end of the year houses in my hood were 100k more expensive and I was priced out. No sympathy at all here, none.
“It’s Fullerton, for Zeus’s sake. The idea that a family that’s capable of servicing a $3,000 mortgage can’t find something there without resorting to exotic financing is obscene.”
The article describes it as a little stucco bungaloo with a backyard hot tub. Probably overpayed by quite a bit in Fullerton, which is a strictly average ordinary middle-lower middle class, respectably kept-up North OC community. I think average medians are down to around $500,000, and will drop precipitously next several years. Fullerton starting to deteriorate in the south margins near the 91 fwy. Lots of lower working class immigrants along the south and east dense apartment marginal areas near the industrial zones between the 91 and up to commonwealth/chapman aves.
North of Chapman Ave it still looks fairly kept up and solidly middle class but Fullerton, like City of Orange, buena Park, Westmonster, Anaheim,La Palma, and large parts OF GG, looks like it may be slowly transitioning down from clean middle class to deteriorating lower-class exurb.
The rot not quite as bad as what i’ve seen in the East San Fernando valley, Santa Ana, Baldwin park, La Puente, Wilmington, East Torrance, Norwalk, Inglewood, Hawthorne, North/Central Long Beach nor in large parts of inner LA exurbs, but the seeds are starting to sprout. Once communities lose their firm middle class pliiars/foundationss due to factors such as unaffordability, bad schools, crime, rising no of units being rented to undesirables, invasion of illegal immigrants, ect, then the rot accelerates and presto, you end up with deteriorated suburban slumzones.
Tell the wife to get a job.
Like that really funny commercial where the wife is dressed up like a taco, to go to her second job.
Am I first to comment that what we have here is another F’B set up by Suzanne?
Cereal.. you’re such a bitter renter!
but oh so funny a response.
I have no sympathy whatever. We live in the LA/OC area, not far from Fullerton.
We’ve been priced out of the market for years thanks to people like the Montes family. Thanks to the seemingly limitless supply of very stupid people here in CA, we’ve been stuck in a crappy apartment for over five years.
Where are the tears for my children? Where are the sob stories about how the hard-working Schmoe family is crammed into a slum apartment, with no backyard for the kids to play in, all because housing prices have escalated beyond the point where a “middle-class” family can afford a home?
And while I, like many here, am far better educated than Mr. and Mrs. Montes appear to be given their job descriptions of secretary and warehouse foreman, you don’t need an Ivy League education to realize that $500,000 is a whole lot of money, more than you can possibly afford.
There are plenty of blue-collar families with children here in SoCal — we are friends with several — who have NOT purchased houses that they cannot afford. Those who are existing homeowners have not drained every cent of their equity with HELOCs.
That’s right, it is really is possible for average, working-class families to realize that they cannot afford to spend half a million dollars on a house.
Nor does a family with children “need” a single family home. Our apartment building is filled with families with children. There are eight units in the building, and when I began living there as a single man in 2001 none of the apartments were occupied by families with children. Today, 6 of the 8 apartments are occupied by families with children. So yes, there really is an alternative to owing a single family home. I’m sure all of our neighbors would prefer to live in a house, but no one is stupid enough to pay today’s prices for one, even though two of my neighbors are recent immigrants, and even though most have low-level blue collar jobs.
The market swings caused by the housing bubble have been unfortunate for many people, me among them, but I will never shed a tear for fools like Mr. and Mrs. Montes. They were stupid — it’s that simple.
really interesting. We purchased a small company (about 200 folks), and moved 1/2 of them up from LA in 2005/6. The market was still strong there and 60-70% that had houses held on to them renting them out. It will be interesting to see how this works out in the next year.
I know many people who kept houses and rented them out when they bought something else. People still have no concept that they will be holding onto a depreciating asset. I know a builder who is stuck with three properties in the SFV. Instead of dropping the prices sufficiently he is now preceding to rent two of them and wait for the prices to go up again. He’s had these properties on the market for close to a year. You don’t want to know how he financed them! Typical lax / fraudulent lending.
Ditto what Joe Schmoe said (although, completely tired of not having a backyard for my son, I did move to a townhouse rental 2 months ago).
Not to belittle the Schmoes, but didn’t Al Capp have something to do with schmoes?
Al Capp had a “Shmoo” . Lil’ critters that had no bones an tasted like any meat you liked.
I couldn’t have said it better myself - really, I couldn’t!
I have to agree with this sentiment. Though, for us, we were lucky enough to get into a rental house (read: crappy windows, same carpet since 1975, no c/a, horrible yards but for what my husband and I do ourselves, etc.). We’ve been talking about buying for years off and on, but just weren’t quite ready yet. Now? I couldn’t be more thankful that we held off.
But now I’m wondering, with all this talk of needing 20% down (yes, we have the good credit), will we ever be able to qualify for a loan for our needs (wants)? How does one live day to day, week to week, month to month, etc. and afford to save what would amount to 20% on a 4/2 in So Cal? I just can’t see it….yet.
Mama needs a cut in housing prices.
Amen, Joe!
We’ve also been renting for a few years now. No way we’d put our money & credit against the 100% LTV, no-doc, neg-am morons.
Like you said, where are the tears for our kids? They’ve been “homeless” for most/all of their lives (according to what the MSM implies when stating that renting after foreclosure is equivalent to being homeless).
No sympathy. People made stupid, stupid choices & now have to suffer the consequences. The repercussions were obvious many years ago.
I couldn’t agree with you more. I live in Queens, New York and although my husband and I make a decent living we are totally priced out of the housing market even here in the boroughs. I know I cannot afford to pay the prices they are asking for Archie Bunker’s house. I’m a native New Yorker and I never thought I’d see the day when there were no houses available to middle class people in this city. A 20% downpayment on a $500,000 house is $100,000 and there aren’t many $500,000 houses available even in the worst neighborhoods. The rents are high so saving is very difficult. Some friends and relatives were telling my I should by because rates were low. I kept telling them if rates were zero I couldn’t afford a $500,000 house.
“‘We agreed we wanted to be homeowners again,’ says Mr. Montes, ‘even if it meant the end of vacations and not eating out as often.’”
Duuuuuude….you mean can have three jobs, work 7 days a week, be in debt beyond my wildest expectations, and all I have to do is give up my vacations and eating out?………….oh my god!!….what a dream come true! Where do I sign up?!!
“Bottom line, it’s out little home,” Mrs Montes told a visitor.
Nope, not your little home. The lender’s little home. You, Mrs Montes, would be better off renting a little home, undoubtedly at a lower monthly cost.
F-ing good! Maybe people will f-ing realize that your f-ing home is wherever the people you love are! I’m so f-ing sick of this f-ing sh-t where people talk about a particular pile of sticks like it’s their personal f-ing messiah! And I’m supposed to cry for them because they have to move into a different pile of sticks? I’ve been moving around for years, and it’s not that f-ing tough!
Rant f-ing off.
F-ING AYE BUBBA!!
Damn, I feel lucky that my wife’s brain overtakes her nesting instinct.
We could buy a comparable place to the one we are renting AND effect how we live (travel, eating out, etc.), like the Montes, OR rent, and have a fantastic quality of life.
We chose quality of life. I walked to work today. Rather than figuring out how many jobs we need to have to make ends meet, we’re deciding whether my wife wants to work at all.
People overestimate the value of stuff, and underestimate the value of living a stress-free life. As I told my wife (and she has latched onto), if we get tired of the house we are in, and need a bigger one, we can always rent a bigger and better house–and still be better off.
“‘It’s fear,’ said regional economist John Husing of Redlands. ‘People just flat don’t understand this market. If you’re thinking about the biggest purchase of your life and you don’t understand it, you don’t buy.
- Sorry John, people DO UNDERSTAND the market and Juan Sixpack is sobering up. It’s toast.
“Whether it’s fear or indecision or the inability to get loans, Husing said what’s going on is simple. ‘The buyers are on strike,’ he said. ‘It’s not at all surprising to see the price decline. I’m really surprised they were not down before this.’”
Interesting metaphor, as unions are mostly dead and gone in this country~
Home Buyers Union, local 626
As opposed to Home Sellers Union, Local Deep6
For members of the Union, local 626
Please send your monthly dues to:
Union Local 626
c/o Aladin Sane
The Other side of Nowhere
Somewhere, California
No Credit Cards or cash:
Gold and other Precious metals only.
“… unions are mostly dead and gone in this country.” As is our middle class. We need a Revolution!
Is the 626 a reference to one of my former telephone area codes (Pasadena, Arcadia, San Gabriel) ?
Yes,
I was born and raised in the 626, if you will…
714. It scarred me for life.
“‘We agreed we wanted to be homeowners again,’ says Mr. Montes, ‘even if it meant the end of vacations and not eating out as often.’ … “‘We have a disaster on our hands,’ says Mr. Montes. He fears he won’t be able to handle the payments after the December reset and wonders whether the family can avert foreclosure. ‘At this point,’ he says, ‘we really don’t have a plan.’”
Uh, I think you did have a plan from the very beginning. It’s called “I want to be a homeowner so bad that I am willing to risk everything.” Guess what, your plan worked. You risked everything!
“Honey, let’s buy a house!”
“Okay! But sweetie, we’re already spending everything we make. How can we afford it?”
“Well, we’ll give up vacations and eating out. That ought to clear up an extra $1000 a month.”
“But sweetie, we’ll still be spending every penny we make. What if our mortgage payments readjust upwards or one of us loses an income?”
“Well, we can sell the children for medical experiments, or eat the dog. Or we’ll adopt a homeless man, take out life insurance on him, and run over him with the car.”
“Those are great ideas! Can you imagine the idiots who make these decisions without doing any financial planning beforehand.”
“That’s why I love you sweetums!”
ROFLOL, exactly!
Superb!! Finally there is someone with a solution to the homeless problem in San Francisco!!
“I love that house! What!? You wanna tangle? Suzanne researched this!”
Good thing my wife is a shopaholic.. 2 years ago, we were gonna buy this 480K house (she wanted to).. when i did all the calculations for her and she saw that she would have less than $500 a month left to shop, she never mentioned owning a home again
Hey hey! Don’t give them any ideas! It’s cruel and inhumane.
They thought it was going to make them rich. Just like every other fool who levered themselves up, beyond reason. Now they are going to put themselves through agonizing misery, only to delay the inevitable. Life is to short to live like they are planing.
It doesn’t sound like these people were out to get rich, I think they just really wanted a house, to live in.
They may not have wanted to get “rich” but they sure wanted to live above their means. They’re still greedy and deserve what they’re getting.
What’s annoying is that these people had the means to service a $3,000 mortgage — and because of the insanity of the past five years, that only gets you a modest house in in plain-Jane Fullerton.
There is absolutely no fundamental reason why this should be so — except that a lot of Wall Street types and speculators discovered the latest way to get obscenely rich in making the common, understandable dream of homeownership only available to people who were willing to play their rigged three-card monte game. Bastards all. Ca ira.
My take on it to, La-Girl
I’d say they are like most of the fools who bought at the height of the market; saw the one chance they’ve ever seen to be a homeowner and bought all the mortgage broker and Realtor cr*p. “Buy now or be priced out forever”. Yes, they were fools and took the bait, but these are the people I can’t help have empathy for.
Yeah. Right.
I’m these guys need to refinance and are underwater? The comps in the hood are not that far from where they started? So, that sounds like zero down. Big tragedy there.
Then they took out a speculative loan. So they should have been scrambling to get more income for the past year, right? Doesn’t sound like it.
No. They decided to gamble with some knowledge of it.
They aren’t stupid or children people. Grownups play grownup games with grown up consequences.
I get my ass handed to me on options trades. They can take theirs on house gambling.
F-them
If I have to spend so much time working to pay for essentials, that means something has gone wrong with either: 1) my planning 2) the system
or both 1) & 2).
Some times life throws you an unexpected curve & you just do the best you can to stay in the game. However, when people like the Montes spend way more of their precious time just working for a house than having any chance of a regular life, well . . sometimes it’s just better to do what that loudmouth says and walk away from then neverending, no way out, horror to regroup for a better time tomorrow.
I’m not a quitter but lordy, sometimes you have to cut yer losses.
“Karpe said the Bakersfield statistics are severe, and…the victims of the foreclosures will be widespread. ‘It hurts the value of the people who aren’t in foreclosure,’ Karpe said. Karpe said. ‘The family is trying to move up, move down, move out of town,…”
Jive talkers — Bakersfield’s full of them. And isn’t the value of people somewhere around $2 if you melt them down — depending on the spot price of silver?
Luv,
Jen
$2?
That’s robbery!
No, no. The spot price of gold (teeth). LOL
That’s pretty funny.
didn’t gold go down today;-)
I’m so glad I rent.
“Whether it’s fear or indecision or the inability to get loans, Husing said what’s going on is simple. ‘The buyers are on strike,’ he said. ‘It’s not at all surprising to see the price decline. I’m really surprised they were not down before this.’”
Strike? Just not interested (at these prices).
Got popcorn?
Neil
Why can’t this guy (Husing) and other so-called “economists” just tell it like it is: We had a massive real estate bubble of historic proportions and the bubble has popped.
Buyers might be striking, but plenty of people are still crossing the picket line. You truly have to wonder about the people going through escrow this month in LA, SFO, Sac, SD.
I hear ya! Transactions are down, but I still see some houses going for “sucker” prices. I guess they have not gotten the memo yet.
There are still people who think this will turn in a week or two. J6P has been conditioned to think of homes like stocks… so they do.
I’m very curious to see the sales figures for the rest of this year! Can someone go forward in time and send back the 2007 sales statistics?
Got popcorn?
Neil
“Can someone go forward in time and send back the 2007 sales statistics?”
We could ask the two scientists (Brits?) who just claimed to have accelerated some particles beyond the speed of light.
And send me the next 5 years US population migration data.
I know THREE people that are trying to get a loan… despite everything that is going on around them. They still want that loan to buy that condo. I don’t get it. But to each his own.
My best friends (a married couple) are looking at buying a condo right now too. Their combined income isn’t much more than mine by myself and they are looking at a 350K ceiling.
When I tried to talk them out of it, they actually got pissed at me and seriously offended (maybe because I was basically calling their ‘brilliant’ new idea stupid)
She can be a little hot headed, so I pulled him aside later and tried to talk him out of it. He said no way. His reason for wanting to buy; “Renting sucks.”
Renting from the bank at a higher price (about 1200 more per month than he pays his landlord right now) while I am in a house for the same price he paid for his condo will really suck (a few years from now of course).
I always say this: get new friends.
But nobody ever listens. LOL
This Husing guy is used to the day when most of the Inland Empire was orchards and wide open for development. But now in the early 21st century….uhm well…..maybe he hasn’t heard about the interaction of the present day market segments. Oh well.
“Bottom line, it’s our little home…We’re going to keep it. Hopefully, we won’t go down and if we do, we’re going to go down with a fight.”
Not to be too cold hearted, but the emotions related to owning a home sometimes reminds me of:
“Yesssssss, we will buy my precccciosssssss, and then we will keep my precccciosssssss, no mater what I have to give up, my precccciosssssss will be mine!”
Maybe they can keep it in their pocketses?
At least the ring was magic. The only thing their house will make disappear is their money.
Does that make Alan Greenspan Sauron?
Greenie just got a job with Deutschebanke. How’s them sub-prime apples?
Technically it’s the bank’s home once you can’t pay the mortgage
I seem to recall the ring was evil and ended up being lost anyway after much pain it caused…. Kindof like trying to keep a house that is not yours.
“The Sacramento region’s 2,906 closed escrows in July 2007 were the lowest for a July in 11 years.”
That gets you back to 1996 — the end of the previous CA housing bust. I guess Sac has a ways to go down from here?
Hi Prof G S. Bear, Do you remember the most closed escrows in a month in sacramento? Why does 8,300 seem familiar?
We’re working on it. People know they are screwed but the massive influx of healthy folks from the BA are going to save them… yup, anyday now.
The cargo cult at it’s finest.
Gwynster: previously owning a home has always been associated with security. What we have now is owning a home _at any and all costs_ and that speaks to a desparate need for security. 6 million Americans are in the same boat! What happens to the American political system when they collectively realize they have lost security?
We went to get popcorn for the show but we looked up and saw that we were on stage.
“Nearly two years ago, Mario and Leticia Montes found a home they loved, a gray stucco bungalow with a hot tub in the backyard in a middle-class neighborhood of Orange County.”
“The price was a major stretch at $567,000. But the couple, who had sold a home a few years earlier to move to a better area, was tired of renting.”
…
“‘We have a disaster on our hands,’ says Mr. Montes. He fears he won’t be able to handle the payments after the December reset and wonders whether the family can avert foreclosure. ‘At this point,’ he says, ‘we really don’t have a plan.’”
So instead of continuing to throw away their money on rent, they decided to get stucco?
alt-A ego off
I get it Jen. funny
They simply believed the lies that real estate always goes up, that if they didn’t buy now they’d be priced out forever, and they’d surely be able to refi for a better loan in a few years.
Well’ at least they’ll be able to rent the place back for a low low price after the new RTC dumps their neighborhood back on the market for fifty cents on the dollar - in 2009.
How about a pool on what they’ll name the new RTC?
FBRC - Fscked Borrower Rescue Program
APRA - American Patriot Recovery Administration
LOAA - Loan Owers Assimilation Association
Any others?
You have to use “Freedom” somewhere in there, these days. “Security” is a good one too. How about:
Housing Freedom and Security Act/Administration
now, who’s going to vote against that?
You could name a housing bailout the Patriotic Love Your Mother And Her Apple Pie Act of 2008, and I’d crawl six miles over lemon-marinated broken glass to vote against it.
NRT returns as the…
Urban Patriot Administration Security Service!
UP-aSS.
Where is auger Inn when you need him?
Got Popcorn?
Neil
Don’t worry they can dollar cost average by buying another house and when Real Estate goes back up, they’ll make out just fine.
The Montes are going to sit tight in their little hot tube until they are boiled alive frogs… They need to give the bank the Full Monte
“‘Bottom line, it’s our little home,’ Mrs. Montes told a visitor one evening in April as tears welled in her eyes. ‘We’re going to keep it. Hopefully, we won’t go down and if we do, we’re going to go down with a fight.’”
What are they going to do? Set wild boars loose inside the home if they are forced to leave it? That recalls to mind a cherished bubble story…
Man uses pigs to trash own house after foreclosure
01:12 PM PDT on Sunday, May 27, 2007
By NICK BRADSHAW, kgw.com Staff
Police in Clackamas County are looking for a man they say locked three live pigs in his house in the hopes that they would trash the place. All because he was upset the home went into foreclosure.
http://www.kgw.com/news-local/stories/kgw_052607_news_pig_house.12e66bfa.html
There is a must see video clip in the above story! Catch neighbor Pat Bradshaw’s assessment of Shane Lovett’s revenge. And the news reporter’s comment that “this kind of situation is what leads banks to raise interest rates” is almost prophetic, given the state of the mortgage lending market a couple of months later.
Wow. The neighbor sure has a sense of humor about it. I’d be pissed living next door to that. Did you notice the other statement, that he’d turned down offers for the house and could have salvaged his $50k down payment?
Homer Simpsons’ three:
Homer: I want to share something with you: The three little sentences that will get you through life. Number 1: Cover for me. Number 2: Oh, good idea, Boss! Number 3: It was like that when I got here.
tee hee …
They were just trying to outrun the wolf who earlier blew down their house of straw. Next stop is a brick house.
Wouldn’t it be funny if the pigs installed granite countertops and made the guy pony up 50 grand to come back in the house?
good news. Fannie Mae keeps buying more subprime loans. Better yet, Freddie Mac announced yesterday that they will begin to buy Alt-A loans. Isn’t it nice to see the government prop up the housing bubble to make sure Americans remain deeply in debt to the banks?
By Patrick Rucker
WASHINGTON (Reuters) - Fannie Mae, the nation’s largest source of home loan funding, increased its holdings of risky subprime loans in 2006 while its profits fell that year, the company said on Thursday in a long-delayed report.
As the U.S. volume of higher-risk subprime loans increased from 2003 through mid-2006, Fannie Mae said its “purchase and securitization of loans that pose a higher credit risk … also increased.” It added that its holdings increased to a lesser degree than many other institutions.
Even better news: Fannie Mae’s stock always goes up, even after a 36% drop in 2006 earnings and a far more dire outlook at the present!
Related Quotes
FNM 65.15 + 3.70
Among the earnings stories for Thursday, Aug. 16, from AP Financial News:
Top stories:
WASHINGTON (AP) - Fannie Mae (nyse: FNM - news - people ), the largest U.S. buyer and guarantor of home mortgages, reported Thursday that its profit dropped 36 percent in 2006 and said it expects higher delinquencies and credit losses this year from the turbulence in the mortgage market.
Link to the above:
http://www.forbes.com/feeds/ap/2007/08/16/ap4028180.html
Wow, profit dropped 36% BEFORE the mortgage meltdown. Anyone want to guess at the 2007 numbers… negative profit perhaps?
Fan and Fred were losing market share to the subprime hustlers throughout 2005 and 2006. Who would want a conforming loan when you could get liar loan for 110% of the assessed value at a low teaser rate? Instant Equity, Cash Back, and all that. Fan and Fred weren’t playing that game as far as I could tell.
True. IMO, they haven’t been major players since late ‘04, IIRC.
People are clamoring for Fannie and Freddie to start taking the risky mortgages off the institutions hands. Fannie and Freddie aren’t in bad enough shape, talking heads like Kudlow want want to dump the junk on them and let the tax payer foot the bill. You know the institutions would stick the government, Fannie and Freddie with the absolute worst of the junk.
Why don’t people just get a house as another entitlement, like social security or medicare, with gov’t dispensed funds and be done with it, it would be a lot cheaper than this circuitous BS route to taxpayer-funded homeownership. This would have the added benefit of speeding up the inevitable bankruptcy of the entire country.
Remember when the guv handed out all the surplus cheese? Soon it’s going to be houses!
…Yes sir, sign here, and here…ok that’s it! You now own a house. Do do want cheese with that?
If they could pay the taxes based on original purchase price as well as the home owners association dues, they might do such a thing.
Government-provided houses…? Oh, I think we are almost there. Long term trends are deflationary not inflationary. Birth rates in developing countries are dropping as they become informationalized. Ghost towns, ghost nations, ghost worlds…
vmaxer, this is my greatest fear in the “great unraveling”. Those who profited from this nightmare should suffer the losses. If the middle class ends up bailing out Gordon Gekko once again, I will organize a militia and personally begin the Revolution that is so badly needed.
Better watch it, if the FBI is watching here, you could be targeted as a domestic terrorist.
oops …
You’d think that if the FBI were watching here, they’d be catching a heck of a lot more mortgage fraudsters based on the anecdotes and specific tips that have been posted.
Wonder how Paladin’s doing with his tracking.
I wouldn’t be too worried unless we had some younger kids suspiciously start getting interested in the housing bubble…
Or so the saying goes:
“The Internet– where men are men, women are men, and children are FBI agents.”
Anybody up for a return of Jimmy Carters’ ‘malaise’? At some point soon, it will occur to even the most foolish buyer that home prices are going down to an unknown depth, that the economy is feeling the pain, and it just ain’t as much fun as it was. A recipe for recession.
So another “muddle the way through” recession. I hope so, it would be far better than what I think is going to happen.
I agree. I would take stagflation over depression. Let the malaise begin. At least savers, those who still have a job, can get double digit returns on CD’s and bonds.
Malaise forever!
“He’s history’s greatest monster!”
Name the reference.
People SHOULD be fearful of a large purchase, perhaps the largest most single purchase in their lives. They should be fearful, cautious, careful, research the hell out of it, mull it over, ask experts, even ask yer uncle who’s movin kinda slow at the junction what he thinks.
Problem is that people have been to quick to buy a house without giving it more than a passing thought. Like a cup of starbucks bought on impulse to be seen as cool. So many stories online about numbnuts & their giggly quotes of how they just bought a house for the heck of it !!
So another realtor trying to bait or cast some bullsh*t scorn on people because the dumb buyers are already in houses, and the only ones left are prudent ones aint gonna do nothing but make him look like a whiny nancy-boy stomping his tassle loafers !!
my 2 ameros worth anyway.
I had many sleepless nights and more than one fight with the wife before we bought our first house. I had an entire notebook of scribbled equations, pencilling out the budget and cashflow. We were so worried that we actually made a point to pay less than our mortgage pre-approval. And after seeing 16 houses, we made our decision by settling on the cheapest one! We bought our house back in the mid-90s, and our mortgage was only 2x annual income. That seems awfully quaint now.
“That seems awfully quaint now.”
The longer I follow Ben’s blog, the less I want to pay for a house, relative to my $-amount ability to do so.
True for us as well. For some reason, I feel more and more inclined to become more miserly and hold on to what we’ve got. Looks like some tough years ahead of us.
But the couple, who had sold a home a few years earlier to move to a better area, was tired of renting.”
“‘We agreed we wanted to be homeowners again,’ says Mr. Montes, ‘even if it meant the end of vacations and not eating out as often.’”
“Like many people who jumped into the rising housing market in recent years, they had little money for a down payment and chose a loan that would…’reset’ to a much higher level.
I am sorry but what happened to the money that you got from selling your previous house? How do you not have that much money to put down? They should of kept on renting. Now once they get foreclosed on, they will be renting the rest of their lives
Two stories from the “World of the REIC”…
story #1:
I have a buddy who is a new realtor (ROTFL I tried to warn him…good news though after 3 mos he is moving on to his next career - still TBD). Anyway, his broker told him last week the sh*t is hitting the fan and that he might have to look for another job to support his family of 4. His monthly nut on mortgages and cars is $12k. He has yet to sell a house this yr (in fact the first just fell out of escrow). Making matters worse, him and another partner doubled down several yrs ago and bought a spec lot in Glendale. They ran into construction problems (imagine that) during their attempt to build 4 spec houses. Well finally they are close to completion but the market has …well we all know the rest. His asking price for each unit is now at break even. 4 sets of jingle mail soon to be arriving at the lenders mail box.
Story 2 (please step away from any sharp object):
So a title rep walked into my office yesterday (commercial lending for a bank here in LA). We start talking about CFC. She goes on to tell me she just came from a CFC branch in Bev Hills. The CFC branch mgr there asked her to handle her short sale on her condo in Red Bch. She is “getting rid” of it for $40k less than she bought it for 1.5 yrs ago. The title lady asked her how she felt about losing her home:”I am really relieved and happy. That thing was too expensive for me and I am so glad to get rid of it. Plus, now I can rent for much cheaper than my mortgage. Hey I did not put anything down when I bought it so it wasn’t that hard.”
So Cal is going to fall hard - it will be very ugly very soon. And no the coastal communities ______ (fill in the blank here) will not be immune. In fact, if you look at Bruce Norris’s analysis of the early 90’s crash, much of the coastal communities were pummled just as hard if not harder than some of the inland communities. And that includes “West LA” which took it harder than the So Bay, OC Coast, etc.
Oh boy here comes the pain…
You should start a blog. I could use a few more laughs (the horrified kinds of laughs, that is) that your post just gave me.
Lost Angeles,
“ His monthly nut on mortgages and cars is $12k. ”
Da WHAT?!? $144k a year on mortgages and vehicles?!?
Did he and his partner incorporate? Time to walk.
The CFC branch mgr there asked her to handle her short sale on her condo in Red Bch. She is “getting rid” of it for $40k less than she bought it for 1.5 yrs ago. The title lady asked her how she felt about losing her home:”I am really relieved and happy. That thing was too expensive for me and I am so glad to get rid of it. Plus, now I can rent for much cheaper than my mortgage. Hey I did not put anything down when I bought it so it wasn’t that hard.”
Ooof… now will she still have a job before she’s out of the place?
In fact, if you look at Bruce Norris’s analysis of the early 90’s crash, much of the coastal communities were pummled just as hard if not harder than some of the inland communities.
Where I want to buy was the 2nd hardest hit area. Alas, I’m not sure they didn’t shake out the driftwood last time (lots of retirees).
Do blog.
Got popcorn?
Neil
“Did he and his partner incorporate? Time to walk.”
It wouldn’t surprise me if the words “joint and several personal guarantee” are part of the housing deal. Incorporation wouldn’t help…
LostAngels — given your “insider” status in the credit market, I’d enjoy reading more anecdotes from your observations of blood on the floor.
Speaking of observations on the ground, a family friend has had her house for sale in Palm Desert for about a year. Original list price: 2M. Reduced to 1.5M. Turned down an offer for 1.1M.
Just sold it for 800K.
The line ” so a title rep walked into my office yesterday . . ” so much reminded me of ” so a priest walks into a bar ” .
(Its probably just me. I’m nuts, but if I strike it rich again you can call me eccentric).
I’m looking forward to seeing West LA eat some humble pie! Even now all of my West LA friends scoff at any notion of prices coming down.
“Even now all of my West LA friends scoff at any notion of prices coming down.”
The level of denial is incredible isn’t it; hello…information age?
I’ll never forget looking at foreclosures in Malibu during the last downturn. Saw so many really good buys, but no way to qualify. Promised myself I’d not let that happen the next time.
Hopefully, we’ll be ready this time.
All of those resetting ARMs in California, and rates on jumbo loans have soared. It’s going to get real interesting here as people try to refinance and find that loans are either unaffordable or just not available.
WOC,
Yea and it’s not just the OC (God I love it there). Here in AZ I talked to a business man the other day and he had a large $700K home on an Interest Only mortgage. Told him about the Jumbo loans going to 8-9% and he said, “Oh No! better call the mortgage guy today”.
Yes, there are a lot of folks all over that are going to be in a heap of trouble.
“Told him about the Jumbo loans going to 8-9%…”
Just ruined the next ten years of his life, LOL!
Keyboard alert
http://www.thestreet.com/s/jim-cramers-stop-trading-dont-sell-countrywide/funds/stoptrading/10374792.html?puc=_tscwrap
CFC* headquarters in Calabasas is the former Lockheed Martin home office. I know because Jane Wells researched it.
* CFC = Centucky Fried Chicken, right?
–
Century’s Fraud Captain.
interesting question, after the dust settles, some of the mortgage companies will surive, who do you think it will be?
That seals it, they’re toast.
Very telling, thanks for confirming who the weakest links are - in case anyone missed the news. The guy with squeegee (sic?) at the end of my expressway off ramp has more dignity than that guy.
There is a quick and simple way to force housing cost down to affordable levels. All home owners with mortgages, form a union. The union then makes demands in the name of all members, to re-negotiate their loans…ie if reasonable demands aren’t met, all union homeowners stop making payments. In effect, they can’t forclose on everyone at once… there is strength in numbers…as we’ve seen in the past few months, what a percentage of defaults can do, just think if we made the percentage around 75% . talk about a rout in the market…the big boys would just crap their pants…..
It sounds illegal, and may invoke the Riot Act. Other than that, I see no problems with your idea.
“…invoke the Riot Act”.
“The Riot Act of 1714 was an act of the Parliament of Great Britain introduced to allow the local authorities to declare a group of more than twelve people to be unlawfully assembled, and thus have to disperse or face punitive action.” Yeah, Professor Bear is probably right, but I love your idea.
TERRY FOR VICE PRESIDENT
Hey, Parliament is still angry at us; they would use any excuse to repossess their “lost land.”
Got popcorn?
Neil
I’m not sure there would be any criminal wrongdoing involved there. At most, the homeowners would be breaching civil contracts by stopping payments on their mortgages. Also, the organizers might conceivably be civilly liable for intentional interference with contractual relations, or inducing breach of contract, or whatever the tort is called in various states.
Just make sure the front men are judgment proof (i.e. poor as church mice, at least on paper) and that takes care of that, more or less.
Count me in! Wait, we don’t have a mortgage.
Better yet, let’s get all the people who can’t afford the homes they are in out of them ASAP, so the market can find bottom, we get to affordability and the economy can recover.
How to do that?
1) Forgive income tax on short sales for the rest of 2007.
2) No credit rating hits for short sales on OO homes in 2006-7.
3) Use tax code to “encourage” banks/etc. to move REO property within 60 days of possession. For whatever price.
Sure, it smells like a buy-out to FBs. But they still lose their homes. It’s too late for those financial penalities to keep the FBs from taking their suicide loans, so the tax and credit penalities are actually serving to *keep* FBs in their homes longer, delaying the market’s inevitable fall.
My $.02.
Excellent idea. Also, revoke the mortgage interest deduction for second (i.e. “investment”) homes. And expand the coverage of the False Claims Act to include mortgage fraud. Turn those qui tam vigilantes on something useful for a change!
That’s insane. Investment homes are a business and interest costs are a legitimate business expense.
Net effect would be to greatly decrease the amount of rental housing available which would push up rents substantially. Poor people would suffer the most.
What’s needs to be done is to eliminate the interest deduction for owner-occupied housing, because it’s not a business expense.
Investment in single-family flips is not an investment that should be favored by tax policy. I have no problem with deducting mortgage interest on multi-family, built-to-rent housing; as you pointed out, that serves an important need. I do have a huge problem with tax policy subsidizing the so-called “business” of buying a house, letting it sit for a year, and then selling it to a greater fool. That is a colossal misallocation of resources, and it should be actively discouraged by tax policy. It should not be treated equally with legitimate investments.
You don’t think that letting people walk without penalty isn’t a form of a bail out . I’m not in favor of this unless there is proof that foul play was involved .
I know someone that wants to walk on a second home purchase and they have tons of money in the bank and they just don’t want to bring any money to the table .
Oh, there’s a penalty. For OOs, losing your home is a massive penalty. Personally, I’d prefer to limit the tax forgiveness to OO homes, but we need to get the spec homes on the market, too, and sold, fast, to reach bottom. Maybe a sliding scale on the tax forgiveness for 2nd, 3rd, etc. homes sold before the end of the year.
But definitely let spec home and 2nd home short sales show up on seller’s credit reports. Those folks need to be kept from buying again for a good long time. No credit report break for them.
Sounds good except I’d suggest they take the credit hit. They made their choices & need to endure some pain — and no, losing a “home” isn’t nearly enough, as that home is more like an albatross around their necks. They’ll be glad to be rid of them shortly.
Oh, there’s a penalty. For OOs, losing your home is a massive penalty.
If they owe more than the place is worth, it’s no longer “their” home to lose. What “penalty” is there in borrowing more than your house is worth, spending it all, and walking away?
Just wait until Countrywide starts aggressively pricing the 2400 California REO homes they are holding and competing with FBs and Fd homebuilders. When the ARM resets accelerate, it will get even uglier. http://www.countrywide.com/purchase/f_reo.asp
I don’t think those 2400 houses would sell for enough to make a dent in Countrywide’s problems.
I heard someone on NPR today speculating that Countrywide is “Too big to fail”, which means that the lobbying for a government bailout has begun.
I don’t get why Countrywide has so many REO’s listed, when other bank reo websites only have a few. Are all the other banks still hiding the problem and only Countrywide being “honest” about how many they have?
–
“The Money Was Too Easy To Get In California”
That is because California was the home of the most reckless lenders in the world, not just the US. California’s housing problems are country-wide and ocean deep.
What if the default rate in California tracks the divorce rate since the end of the WW II, with a scaling factor?
Jas
Goody, a hypothetical. I’ll take this one.
Answer: I’ll stock up on Calamine lotion.
You punny…
The way I see it there is little downside on the people who bought 2 years ago with no money down. Now that interest only is resetting to an unaffordable level there is an option of walking away from the loan if it cannot be refinanced. Most of the downside as we see it now are in the hedge funds who bought these packaged loan.
I think there’ll be a downside. If all lenders do what i suspect they will do, the world of zero-down will morph into the world of zero credit. .. a world where there are no more monthly bills in the mail because the perp paid up front.
Australia -58.20(-1.02%)
NIKKEI -245.39 (-1.52%)
Seems not everybody swallowed the Dow comeback.
Do you mean that Asia ignored the memo?
So much for the global economy.
It’s every market for themselves.
Australian home prices are even more expensive than Los Angeles, especially when you consider the average salary and taxes.
I love the article from the “Daily Bulletin.” They should rename it the “Daily Bull-sh**-ton.” They call a 3.9% YOY price decline in San Bernardino County “significant” and can’t understand why people aren’t buying? Must be FEAR.
I guess you would call 7 straight years of 20% annual price INCREASES nothing to write home about. But a 3.9% drop, wow, look at that.
When these people were going in with squat for INCOME they banked on increases. They were looking at 20% on their principle as money in the bank.
Eggs don’t always give you chickens.
“Believing in progress does not mean believing that any progress has yet been made.”
Franz Kafka
LMFAO!!!
Listen to this:
http://bakersfieldbubble.blogspot.com/
My ears are bleeding. Thanks a lot.
Question….People keep saying that housing prices are getting back to normal. What is normal? Meaning, has there ever been a time when incomes were in line with house prices?
Why…yes, yes there was. My guess is that “normal” means a regular, middle-class family will be able to buy a house without having to get second jobs, live on ramen, etc.
Bring back the “normal” market!!!
President this, Officer that…
Why do Realtors always give one another mock militaristic/presidential titles?
Pfc. Aladin Sane report to your cabin! Double time, March!
Yours not to reason why
yours but to spend and buy
into the valley of debt
rode the homebuyers.
Which is why a nation of consumers simply cannot ever have a military draft - every warm body possible is needed to man the positions at the malls, car dealerships, and model houses.
Now that is funny………how true
Someone had blunder’d.
–
“‘We have a disaster on our hands,’ says Mr. Montes. He fears he won’t be able to handle the payments after the December reset and wonders whether the family can avert foreclosure. ‘At this point,’ he says, ‘we really don’t have a plan.’”
That is why we are there for you, Mr. Montes. Stop making the payments ASAP and when you are forced evicted move on. Let the bad banker eat the mort-gage (dead hand, literal meaning of the French words).
Jas
not speaking much french, i hadda look it up. wiktionary.
mortgage
etymology: Old French, mort + gage (”dead pledge”)
gage
etymology: From Old (and modern) French gage (noun)
Alternative spelling of gauge. To measure.
(obsolete) To give or deposit as a pledge or security; to pawn
(archaic) To wager, to bet.
Can’t tell you how I know, but WAMU is next. 2/3rds of their entire portfolio is neg-am/teaser loans with deferred interest that WAMU is counting as income on their books, which accrual accounting allows them to do. They will be issuing restated financial statements, and then things will REALLY get ugly : (
Hey Happy, where have you been?
I’m seeing the return of some older posters. Think everyone’s going to be coming back to watch the show.
Neil better have a lot of popcorn ready!
What’s everyone’s take on the direction of the market tomorrow?
I don’t think it’s tinfoily to suspect that some major institutions were actively trying to stop a steep dive in the last hour, kind of like what’s-his-name did in 1929. (Too lazy to refroogle my memory as to the guy’s name — and yes, I just invented that word, and expect everyone to start using it.)
If that was the case, might they have shot their bolt? What happens tomorrow, when everyone wakes up and the same problems are still staring everyone in the face?
That’s what the hack cheerleaders just don’t get - that the uncertainty isn’t going away anytime soon - and more and more folks realize it.
I’m unsure of tomorrow’s market due to the expiration of options. Some have commented that that could dampen trading.
Thus, I have no good prediction for tomorrow. However, Monday…
bombs away.
Got popcorn?
Neil
We know something’s up - we just don’t know when. For all the blather about fear and herds by the shills - has a recession ever really been prevented? Seems like they just get delayed a little - so what we might be seeing here is a fighting retreat - a covering action to allow the stragglers to get behind friendly lines.
great observation.
I know this is premature, but at what level would you get in long on financials (B of A, Citigroup, etc.)
I am averse to uncertainty and any bank is an uncertainty. I would rather buy a bank 10 points higher than buy now.
from the Guardian
Rein in big finance
“Those who say this is just a stock market wobble that will soon blow over, are in denial.
“…Merrill’s comments underline the seriousness of the situation, because Countrywide is not just any old company; it is the US’s biggest home loan provider. So when you hear over the coming weeks, as you will, that this is just a market wobble that will soon blow over, take it with a pinch of salt. Those who say such things are either lying or in denial. Two months ago, these same experts were saying that the problem in the US sub-prime market was contained. That was before stock markets fell by more than 10% and reports of institutions in trouble surfaced in Australia, France, the Netherlands, Britain and the US. The relevant C-word here is not containment but contagion….”
16 August 2007
http://tinyurl.com/2jrxjj
I would like it to be up about 300 so I can sell.
Whether the market is accommodating is another thing.
The market will do, what it can do, to cause the greatest amount of pain, to the most amount of people.
Looks like you got your wish, thanks to the Fed.
–
“The Mercury News. “Santa Clara County’s housing market continued in fire and ice mode in July, with expensive homes selling briskly while more affordable ones languished as lenders tightened their standards.”
The tale of two “cities” — the NW corridor and the rest of peons who must work for a living. Median price YoY gain is heavily distorted, as much as 20%.
Jas
–
‘It hurts the value of the people who aren’t in foreclosure,’
That is why bad neighbors should be avoided. When bad neighbors start to move in you move out.
Jas
Sound advice. I remember my father doing that in the early ’60s. Turned out to be perfect timing.
‘It hurts the value of the people who aren’t in foreclosure,’
I disagree. I’m not in foreclosure and it doesn’t hurt me. Of course, I’m a renter so…
Bear Stearns Cuts in California…
Bear Stearns Cos., the second-largest underwriter of mortgage bonds, is cutting about 240 jobs at two home-lending units because of a decline in demand, said a person with direct knowledge of the matter.
Encore Credit, based in Irvine, California, is eliminating 100 positions, and the Bear Stearns Residential Mortgage Corp. division in Scottsdale, Arizona, is reducing its workforce by 140, said the person, who declined to be identified because the number of jobs isn’t being released publicly. (per Bloomberg).
And, up here in Canada, CBC News leading with statements from Canada’s Finance Minister that essentially, all is fine, liquidity is not a problem. And sidebar interviews with local brokers who counsel everyone “should just ride this out”. It is just a stateside problem.
Meanwhile, the Nikkei is tumbling midday, down 300+.
On the bright side, weather here is great.
More from the Fannie Mae School of Accounting.
– Dell Inc. said Thursday it will restate more than four years of financial results after “errors and irregularities” were discovered during a review of past accounting and reporting practices.
The irregularities included manipulation of numbers at the request of senior executives in order to artificially hit financial targets, Dell said after the markets closed.
The Round Rock, Texas-based PC maker’s “audit committee has determined to restate the company’s financial statements relating to fiscal 2003, 2004, 2005 and 2006 … and the first quarter of fiscal 2007,” it said in a written statement. (per Marketwatch)
You for got about GM’s fiasco tonight
The workers contracts are coming up and they are threatening to strike. Mr. Lutz informs the world that GM is having a great August and the subprime meltdown is not affecting the company sales.
So, do you think, since we had such a great rally, that CNBC talking heads will give Ben B. a break and stop calling for a rate cut? Really, since the boo-boo is all better and they have acknowledged inflation on food, at least, they should be calling for a rate hike, right? SAVE THE LITTLE GUY!!!
I assume so since there was great talk of the bulls buying now who will be millionares five years from now.
Funny thing though, Cramer (who I watch as penance - alright - he is a bit funny) is now telling not 7 million homeowners (that was the last number I heard him use) to walk, BUT TELLING 14 MILLION FBs TO SQUAT.
I kid you not.
The guy is on the verge of a nervous breakdown and is trying to sell the “I’m the little guy, I care about average homeowners” with a fake look that only can be imitated by a child who is lying.
I become more cynical by the day. I became cynical about politicians no matter which party, trying to do the right thing, within a year of moving to DC.
Since then, I didn’t really believe the financial pundits were looking out for J6P, but the obvious bailout the buddies hysteria over the last week pours oil on the fire.
Late vent.
Good luck y’all.
Telling people to squat is not a bad idea actually. It is better than telling them to get a second or third job to make ends meet.
Cinch
My tenants that are under eviction try that squatting thing, it generally works until the Sheriff comes
i’ve heard stories that go something like this..
A somewhat savy CA tenant, with a bit of cost free aid and advice of a compassionate RE attorney, postpones the sheriff’s arrival by about 8 months or thereabouts.. then leaves.
The LL, on the otherhand, pays for his lawyer.. and “pays” 8 months rent by subtracting such from this supposed “income” property’s bottom line. I doubt there is a smiley face on him.
Repost - coz I really want to know everyone’s theories and or knowledge on this….
I don’t get why Countrywide has so many REO’s listed, when other bank reo websites only have a few. Are all the other banks still hiding the problem and only Countrywide being “honest” about how many they have?
my thinking.. when i read this Q the first time up there.. was that Countrywide kept it’s mortgages in house, instead of selling them off at a discount (?) to Wall street or whoever.. with the intent of making more money.
However, the wisdom of staying on the hook for all this money hinged on steady payments from a bunch of people who bought more house than they could afford in a market that was expanding beyond all reason.
I might be wrong but vaguely recall reading something like this a few days ago.
So who will be listing them and when - does anyone know?
Countrywide has a lot of options if and when it decides to sell.. Call.. make an aquaintance.. and ask? Leave your name ‘n number. Hopefully this new friend won’t be laid off anytime soon.
imo, it’s premature to approach lenders with REOs.
The new code word for bailout is mitigation. Be a lookout for this strategy particularly with academic economists in the coming weeks and months. Politician will use this word just as well
Cinh
Nikkei 225 -375.02
Hong Kong Hang Seng -230.17
still bleeding
Update……………
NIKKEI 225 -559.72 -3.47%
HANG SENG INDEX -706.30 -3.45%
Looks like a race to the bottom
They know it was shorts covering. That’s the only reason for the rally along with Federal Liquidity.
at 14:30 Japan time, Nikkei down 687.93. Can we say “Blood in the streets?”
I knew you could!
874 down with 45 mins to go.
No PPT on Friday
…… Nikkei “down and out” for the…. weak…. (week)….. now down 812…..
“George? I think…it’s hog-boiling time.”
“No, Condi, it ain’t cold enough.”
“It’s hog-boiling time, big George?”
“Uh-huh?”
“….When is that barbecue gonna be ready?”
“It’s gonna be ready any time now.”
“Smells so damn good I just can’t wait to get me some.”
“Now, don’t you forget to call me when that’s ready all right.”
“Here you go.”
“Miss Condi, Smokey Rove left town.”
“Yeah ?”
“I thought it’d be best under the circumstances. He asked that you tell Dick and BB good-bye.”
“Shame he had to go.”
“Why, this is about the best barbecue I ever ate!”
“The secret’s in the sauce.”
(secret’s in the sauce…or so I’ve been told…. BBQ’d FB’s…..)
“Karen Olney, a equity strategist at Merrill Lynch, said compared with the Russian financial crisis in 1998 there was a lot more confusion now.
“Banks are scared of lending to someone, because no one knows who holds the disaster this time round,” she said.
This clampdown on credit could lead to a widespread knock-on effect.”
Aug 17
Sydney Morning Herald
http://tinyurl.com/ytsfev
I lost a lot of moneys in the Russian financial crisis and it is why I do not have any positions in Russia now. If there is “a lot more confusion now”…
Holy cow. Japan is down more than 4 %.
http://finance.yahoo.com/intlindices?e=asia
Fortunately, they are only down 2.45% now (11:02 PM, PST).
lots of volatility…
Wow!!! Just refreshed and Nikkei is down 5.29% now!
Nikkei closes down 874 and change. The flood waters are riiiising!
It is 11 PM in CA, and I am still up.
My shorts on HB are doing great.
NIKKEI 225 - 838.60 -5.21%
Way to go guys
Dow up 300pts tomorrow………hehehe
Yes man nothing less than 300pts.
where is my BEER ?
I thought things were going to settle down but damn. Guns and… butter on my popcorn.
“Japan’s Nikkei 225 ends Friday with 5.4% loss, largest one-day fall in seven years”
FTSE Futures showing -4%
OMG!!!! Down 867! 2:20 AM EDT.
Lets have a Beer together
Sure… You’re on.
Run on the bank at CFC:
http://bakersfieldbubble.blogspot.com/
You see what’s going down in Asia. My God! It’s becoming undone.
Yes!!!
Normally I would be in bed, but CNBC Europe has me up. Nikkei is DOWN.
YEN carry trade is carrying out some dead bodies - LOL
That’s not good.
Got Spam?
Guns and Ammo!
Late post…humble appology.
10 whantabee buyers=2 qualified=100 houses=how many purchases?
“Stephen Levy explains a huge number of potential buyers have simply vanished. ‘Either they don’t want to buy at this price, they can’t get financing, they don’t think housing prices are going to go anywhere but down,’ Levy offered. ‘So it’s the absence of buyers.’”
“Despite the slump, Bigler reports that home prices rose in the region last month by 7.4%. ‘The subprime market has melted,’ One San Jose realtor further explained.”
Good Lawd…does everyone live in California?
I do not care where one lives…this thing is global!
Got milk?
Better yet, got money? (popcorn?)
Leigh
I am sorry “Either they don’t want to buy at this price”, buying what ?
“Sales of single-family homes in Santa Clara County fell nearly 11 percent in July. ‘This is not the beginning of some long-term debacle. We’re just priced a little over our heads right now,’ said Stephen Levy of the Center for Continuing Study of the California Economy in Palo Alto.”
A little? How about A LOT?
“A little” meaning “slightly less than 50%.” More than 50% would be “a lot.”
“At Beazer’s Ardrey Woods, also in south Charlotte, agents declined to discuss sales Thursday, as landscapers spruced up gardens and a family toured the model homes. A sign out front encouraged buyers: ‘Save Thousands Now!’”
“At Cunnane’s Ardrey, Sandy Gay was choosing colors for her new home on Thursday. She and husband Mike expect to move from Florida in March. ‘We don’t expect to have any problem selling our house,’ she said.”
Oh dear! Right…right….