Steering Away From The Train Wreck In California
The Guardian reports on California. “Alvin and Debbie Clavon have been caught up in the American sub-prime mortgage crisis that has rocked financial markets across the world. They bought their first home in south Los Angeles in April 2002 and in September 2005 refinanced to a mortgage at a fixed rate for 18 months, changing to a standard adjustable rate.”
“They are now selling, having to take a loss on the house, and moving to Alabama. Alvin explained what happened to them. ‘We were originally looking for a 30-year fixed-rate mortgage. The kind of loan that we ended up getting was adjustable rate, interest only. I should have gone back and found a new loan with a different company.’”
“‘If I’d read the fine print maybe I would have been able to steer away from this train wreck.’”
“‘We figured we’d refinance out of it as soon as possible. But then we found out about the penalties, and then I lost my job last July. We were still making payments but the adjustment was on its way. Right about then the company went under; they stopped communicating with us.’”
“The loan was 60% of the original value of the house. ‘At the beginning of this year the house was valued at $525,000. It’s a neighbourhood which is mid to lower income. Most of the buyers are going to be first-time buyers, so the area has been heavily impacted by the number of foreclosures.’”
“‘Morally, I think the broker absolutely is responsible. Legally it becomes a bit more grey. The lenders are supposed to be the ones to keep the brokers in check. The broker did some things and the lender just moved it through.’”
“‘It’s a socio-economic thing. I don’t believe it was racially motivated. The only colour they really see is green. They were just greedy at a time when so many people were getting new loans that they weren’t responsible in their lending. They would have taken advantage of anyone.”
The San Francisco Chronicle. “Some lawmakers are calling on Congress to stimulate the moribund jumbo-loan market by letting Fannie Mae and Freddie Mac purchase substantially larger loans on homes in high-cost metro areas.”
“Higher jumbo-loan limits would help borrowers in the Bay Area, where the median price for homes and condominiums in July was $665,000, according to DataQuick. In the first half of this year, 62 percent of home-purchase mortgages in the Bay Area were jumbos. In San Francisco, San Mateo and Marin counties, about 78 percent were jumbos.”
“Outside of the pricey coasts, higher loan limits could run into political opposition. ‘Does a reasonably wealthy American who can afford an $800,000 to $900,000 homes have a right to cheaper mortgage financing than the private market allows them? Do they deserve a mortgage subsidy?’ says Keith Gumbinger, a VP with HSH Associates.”
“If Congress doesn’t act soon, the conforming loan limit could actually go down next year. That’s because it’s indexed to home-price inflation nationwide and prices in many parts of the country have gone down.”
The Sacramento Business Journal. “Existing home sales dropped last month in the Sacramento region, and the median home price fell in three of the four counties, according to a report released Monday.”
“It was a mixed bag of mostly disappointing news for the hard-hit housing market, as home prices and sales dropped, and the number of homes listed overall reached a record in July, according to Trendgraphix.”
“All four counties have at least nine months of inventory of homes, with Sacramento topping the list at 12 months.”
“The median home price plummeted to $437,000, compared to $466,000 in July 2006. Elk Grove and Natomas have 20 percent-plus drops in value, said Mike Lyon, CEO of Lyon Real Estate. The county’s median-home price (was) off the $374,000 in July 2006.”
The Merced Sun Star. “The Merced City Council took aim Monday night at a growing nuisance: foreclosed properties falling into disrepair and blighting city neighborhoods. The move comes as Merced and other Central Valley cities top nationwide lists of communities with the biggest increases in foreclosure rates.”
“In the first six months of 2007, Merced County has seen a tidal wave of foreclosure-related activity that shows no signs of slowing. The county recorded 2,509 foreclosure-related filings during that period, an 850 percent increase over last year, according to RealtyTrac.”
“In the second quarter of 2006, a total of seven homes were lost to foreclosure in Merced County. During that same period this year, 240 homes met the same fate, according to DataQuick.’
The Voice of San Diego. “For my story today on foreclosures around the county, I spoke with a few local Realtors who sell homes that have been repossessed by lenders.”
“Bank-owned specialist Kristian Peter said all of the foreclosures in Chula Vista will mean two to three more years of price declines. He forecasted five to 10 more years before prices turn up again.”
“‘[Lenders and owners of] bank-owned properties and short sales really don’t care what price they sell at as long as they sell,’ he said. ‘It might sell for 10, 20, 40 percent less.’”
“Peter’s sense is that we haven’t seen ‘huge price reductions’ yet. ‘When do consumers feel it’s worth it to me to buy a home?’ he said. ‘We’ve got 30 percent [price decline] at least, especially in the Chula Vista area, before we hit that.’”
The Press Democrat. “North Bay home lender GreenPoint Mortgage is closing, a move that will eliminate 600 jobs in Sonoma and Marin counties as it becomes the region’s largest victim of the mortgage meltdown.”
“The layoffs impact 450 employees at the Novato headquarters, 94 workers in Santa Rosa, and another 60 in Larkspur. There are an additional 340 employees in seven other California cities, all of whom will lose their jobs, said Tatiana Stead, spokeswoman for Capital One.”
“GreenPoint’s demise surprised longtime mortgage brokers in the North Bay and is another blow to the region’s real estate industry.”
“‘It’s absolutely horrible. This was a pretty strong player,’ said Marty McCormick, owner of a Santa Rosa mortgage broker. ‘It’s going to hurt Sonoma County. That’s more jobs lost.’”
“The loans GreenPoint specialized in include Alt-A mortgages to buyers who don’t fully document income and assets, Jumbo loans that exceed the $417,000 limit set by national lenders Fannie Mae and Freddie Mac, payment option loans and other alternative mortgages.”
“‘They’re pretty good size. That is a surprise,’ she said. ‘That shows you how quickly these things can happen. It’s going to get a little bit worse before it gets better and we’re going to see more of these failures.’”
The Union Tribune. “Damage from the nation’s slumping housing market is evident throughout the economy and permeates financial markets. Add real estate agents to the growing list of victims, although they know few tears will be shed for them.”
“The National Association of Realtors expects membership rolls to decline this year for the first time in a decade. The group ended 2006 with nearly 1.4 million members – almost double the roughly 716,000 it had in 1997.”
“The California Association of Realtors is expecting its first decline since 1997, forecasting a year-end tally of 185,000 members compared with more than 199,000 last year.”
“Colleen Badagliacco, president of the California group, says many agents joining the last three years wanted to cash in on a hot market but weren’t prepared to endure what she calls the ‘ugly perfect storm’ that attracted more agents than a sagging market can support.”
“In California, applicants can get a conditional real estate license after taking one class, a loophole that will close after Sept. 30 when three classes will be required.”
“‘You had very inexperienced people doing very expensive transactions,’ Badagliacco said. ‘There is the opportunity to make a lot of money, but the downside is there are a lot of fixed expenses whether you’re earning money or not.’”
“Badagliacco said she knows people like to ‘poke fun at the Realtor in the nice car,’ but she expects there to be fewer objects for pokes and jokes in coming years.”
‘The California Association of Realtors will continue pushing for higher limits. ‘If there’s a silver lining to this, I think it points to the critical importance of having a consistent level of quality mortgage products available to all qualified buyers,’ says Colleen Badagliacco, president of the (CAR).’
‘If Congress doesn’t act soon, the conforming loan limit could actually go down next year. That’s because it’s indexed to home-price inflation nationwide and prices in many parts of the country have gone down.’
So if they don’t act soon, prices will fall even further. IMO, all these measures don’t have anything to do with loans, it is propping up prices. And there isn’t anything the GSE’s can do about price to income levels, which will set the market in the end.
This isn’t a credit crunch, or a subprime melt-down, this is the housing bubble bursting.
Here is a petition a HBBer put together today:
No To A Bail-out
What are the chances of congress passing any kind of legislation at all, particularly regarding FB bailouts? I’d say slim to none, given the slight Democratic majority and the Republican president. Lower loan limits here we come.
Besides, public sentiment is against it. CNN did a poll last year, and 80% of people said hell no to a bailout. Also, this topic has started getting popular, and common bulletin boards express a no-bailout attitude (see link in the bits bucket).
I’m afraid that people in the end will be against a bailout until they themselves need a bailout.
Yeah, but only the minority need one.
I have a new signoff lign.
“People are screwed.”
-Big V
“Besides, public sentiment is against it.”
When has public sentiment stopped politicians?
Besides, public sentiment is against it.
Well that and a quarter can get you a cup of coffee.
Dude… and four bucks gets you a latte at starbucks.
Big V — with all due respect, when has an 80% opinion rating among the prols ever mattered to congress-drones whenever their vital intere$ts were at stake?
Au contraer Pete! Just read on the ml-implode site that Daddy Bush’s Carlyle Groups hedgegee is in trouble and that they had to drop a $100 million bill to prop it up. You don’t think GW will help his daddy out with a bailout???? Huh? Huh?
I hope they promise everything but then do nothing and blame the other side for “logjamming” the process. Perfect. As originally designed our system keeps the government fighting itself, out of our hair.
Please sign the petition and pass it on to those you know. The more people that know about this and are aware of what is going on, the better.
http://www.petitiononline.com/bailout/petition.html
Petition online is useless. If you want to have any effect, use your cell phone minutes and call your congressional reps.
Be memorable on the phone.
True. It is over 250 and growing. Tomorrow will give a better idea of where it stands. Either way, it only takes 30 seconds. Please take the time and sign. If you can do more like call or send a letter, excellent!
Did it. Relatively few others did - roughly like one mosquito off a big lake. Finnman probably is right, unfortunately.
Yes, why lower prices wouldn’t be a bigger help to the market than just making even more outrageously sized loans available is one they seem to miss. Sooner or later even those Jumbo loans won’t prop up the market.
Remember the movie line…’I love the smell of naphalm in the morning’ ?
The Bay Area needs mortgage help like I need a neg-am loan. This is simply the fear of the entitled, realizing that their ‘it’s different here’ beliefs are melting like fog in sunshine. Nothing changes, does it? The special people demand special treatment, whereever they are - and besides, if the bankers of Wall Street can get a pass why not them?
People will get their rate reduction. Bay area homes will not take the 50% hair cut that is justified, but those who bought at $650 K aren’t going to see their $1.2 MM flip. Enjoy the mortage pain/payment in a flat housing market. I’ll enjoy my life paying 1/2 in rent. Rent don’t buy.
I’ll enjoy my life paying 1/2 in rent. Rent don’t buy.
That’s not sustainable long-term. Either rents rise or prices come down. As rents are driven by incomes and not funny-money loans, my money is on prices coming down. But either way, the huge cost gap between renting and owning can’t last indefinitely.
Badagliacco? I remember someone named Gaylord being president. We all had a good chuckle over the name. Is he gone already?
Aren’t Fannie Mae and Freddie Mac supposed to be all about helping low income Americans afford a home purchase? In what sense does increasing the conforming limit upwards from $417,000 help with affordability? If anything, the consequence would be to help drive California coastal prices even further out of reach than they already are.
It appears to me that the real purpose behind this proposal is to offer Main-Street-financed welfare for Dodd’s rich campaign supporters in the banking and hedge fund industries.
Right…..Anyone who wants the limit raised has a vested interest in the price of housing to rise, regardless of the economic logic or impact.
The bailout will be positioned as helping average Americans who got into trouble, but will really be to help the banks & lenders. In any case, those who were conservative with their financial future would get screwed by a bailout.
“The bailout will be positioned as helping average Americans who got into trouble, but will really be to help the banks & lenders. In any case, those who were conservative with their financial future would get screwed by a bailout. ”
SPEAKING OF BAILOUTS THERE WAS An LA CITY COUNCIL MEETING today as reported on AM 1070 radio on proposals to meet the LA city/National RE crisis, subprime meltdown, exploding foreclosures, yada yada!The chief exponent for aggressive fed action seems to be councilman Alarcon, who is callng on fed action to lower rates, calling for investigations of fraudulent lenders, proposing a $5 million $ bailout to assist the ‘poor duped’ LA homedebtors about to be foreclosed on, ect. Did not get much more details but look for LA City to come up with some hair-brained idiot proposals to bail out Fked borrowers here in LA,
I guess that would include the 1000s-10,000’s(?) of mortgage fraudsters/scammers/crooked realtors/brokers who screwed the lenders/MBS out of billions taking cash backs and hugh equity withdraws on fraudulently overappraised $500,000 POS 2/1 800 sq ft crackhouses in gang-infested South LA bullet-ridden barrios.
The NAR and CAR want the bail out (prices to rise). When did these two groups ever care about anyone but their self. Just like the Dems and Rep pols.
Lenders don’t need a bailout. Everythings already sold to bond holders. Last month lenders kept the loans, and credit is actually pretty good. No, No doc loans, higher down payments tec. Bailout is for instutional bond holders…they have a bond that they can’t price. Fed should leave interest rates alone, but they wont. Shame. Affordability of homes is locked out for millions of middle class familes without huge monthly payments. Have a life or house. Hope people come to their senses and choose a life.
Frankly, I doubt many of the borrowers would want their transactions looked into. Whoever “qualified” for these outrageous loans and then was unable to pay probably lied on the application.
I think the politicos will just yap yap yap about the situation but do nothing for as long as possible. Don’t look for a solution any time soon.
“IMO, all these measures don’t have anything to do with loans, it is propping up prices.”
BINGO!
It is a non event.
The can pass all the laws that they wish and it will only get worse. The damage has been and is being done.
The hopes of being able to buy a house has vanished along with the jobs. Jobs are disappearing in every industry in the US; in every county, parish and state in the US, there are foreclosures. The best picture imaginable is that as opposed to a depression, we muddle through.
I personally hope that the government does get involved. The government can only accelerate the collapse of this housing bubble.
Either way, the housing market is toast - and as one my friends here writes.
“Stick a fork in it”
“The government can only accelerate the collapse of this housing bubble.”
Hoz –
I promise to buy you a drink at the first HBB’ers reunion if the govt gets involved and the carnage accelerates as a result.
I have noticed one unintended consequence of high-profile announcements about possible bailout measures: Such news tends to heighten the sense of panic in the sheeple flock. Of course, it does not help the situation to have Cramer ranting on TV like a crazed baboon who forgot to take his meds.
“Cramer ranting on TV like a crazed baboon ”
This is unfair to baboons everywhere.
I hear a Cramer cut while waiting in the car at a supermarket today — he sounded totally stressed out, sort of pre-Prozac. Do0n’t know enough about him to comment further, but it was really whacky, considering it was stock radio in the middle of the afternoon.
“Jobs are disappearing in every industry in the US; in every county, parish and state in the US, there are foreclosures.”
As part of my job i go to some shuttered industrial plants located all over the southland-Scal. A former papermate plant on olympic amd 26th st in Santa Monica which must have employed st least a 1000 folks has been shuttered over a year. Several facilities in the old industrial strip in gardena have been closed recently. A former price phister plant was cloised in pacoima. A large machining factory just shut down in city of industry.
Another really wasted former factory was closed down in fullerton. And so on. These are mostly older industrial plants located in the bombed out older industrial strips of inner LA, East SVF,east LA south LA, alameda corridor, city of industry, southgate, gardena,compton, ect.,from a bygone turn of century era using old industrial processes, which have for the most part been offshored to china or sent to mexico.
Was that “Papermate Pens?” Wow — I remember those well from my early-school years. They came in the same pastel colors as the hot cars of those days, as I recall. And the worked well and were durable (like the competition, Parker T-ball Jotters, which seem to be produced even now).
‘If Congress doesn’t act soon, the conforming loan limit could actually go down next year. That’s because it’s indexed to home-price inflation nationwide and prices in many parts of the country have gone down.’
The sooner the conforming loan limit goes down and realigns with California incomes, the sooner affordable housing will return to California.
The sooner they tie the loan limit to 2.5 median household income, the better. That’ll slow down future bubbles unsupported by wages.
I would be willing to allow 3X, but any reasonable level is fine as long as it is consistent.
And consistent with the locale. It makes no sense to have the same conforming loan limit in rural Alabama as in downtown Seattle.
Well, if they go to 3x, they better have a better downpayment standard than 3%.
Buy now before the Jumbo loan limit goes down!!!
Best post I’ve read so far.
PB — I wish.
Can’t remember the last wish of mine that came true, but I keep wishin’.
“If Congress doesn’t act soon, the conforming loan limit could actually go down next year. That’s because it’s indexed to home-price inflation nationwide and prices in many parts of the country have gone down.”
Unless they get a lot of cooperation from BB with his “many available tools” for behind the scenes support of asset prices, I don’t personally see how action to increase the conforming loan limit will be enough to respark high rates of housing price inflation, or to even keep prices on a permanently high plateau.
Have any of these East Coast policy wonks even bothered to have a look around at the vastly overbuilt McMansion housing stock around the entire Southwestern region of this country??? Because their reflation efforts may well add to the excess supply of homes which is already a deflationary drag on Southwestern economies.
However, I do see how Dodd’s bright idea could tempt lots more low income households to buy more house than they can afford, and put them in the paths of future foreclosures. Is this part of the D-ratic prezidential campaign platform?
Unfortunately, these clowns are only thinking about the next election. None of them can see past the next election.
And the next election is the reason they won’t give a meaningful bailout. To get a bailout through it would need to benefit business more than individuals, but that’s not a good election position in a tight race. The mess is too complicated to draft simple legislation, so the unknowns will be too great, and pols do not like things that are unknown.
They will hold hearings in the Fall & pass some crappy bill in January that does little to help, but will do no damage to the campaign.
It will, however, be a BIG election topic. But it will be a part of the larger topic about how poorly the economy is doing and whos’e fault it is.
Happy thoughts for 2008.
It looks like it has become part of their platform, but I don’t see how they can do it. The contract on the loan was signed under certain legal terms, and those terms can’t be altered retroactively, can they? I’m checking out Obama’s site to see what he says.
Obama’s site mentions nothing about it. Edwards is a bailer-outer. So … Go Obama 2008?
Ever considered Ron Paul?
one good fiscal policy does not a total candiate make
Gwyn - agreed, but other than global warming, and IRAQ, is there really any other of substance?
The only candidate R or D that actually understands what is going on in housing and the credit markets and in the economy is RON PAUL.
“IMO, all these measures don’t have anything to do with loans, it is propping up prices.”
Dead on!
Off topic: Came across a great article on moral hazards of bailing out bankers and hedge funds: http://www.isn.ethz.ch/news/sw/details.cfm?ID=18002.
“Hug a hedgie.”
Off topic: Came across a great article on moral hazards of bailing out bankers and hedge funds: http://www.isn.ethz.ch/news/sw/details.cfm?ID=18002.
“Hug a hedgie.”
Only 200+ signatures as of near-midnight EDT — c’mon folks. Use a pseudonym, if necessary, but vote against this bailout.
dqnews.com
Holy cow! The July numbers are out, and they are horrific!
West LA 90025 -20% YOY
Ouch but everyone tells me the West Side is different. Isn’t it?
Where is LaInvestorGrl?
No kidding, I would think she’d be doing backflips right now, or woofing cookies, I never can tell with her.
Bailing out her tenants.
The westside is different. When it goes down they don’t take the blame and you get to walk away with all the HELOC plastic surgery.
Got popcorn?
Neil
ps
I think its too late… new mortgages by the same people who were outbid by all the private investment banks? Ugh uh.
you get to walk away with all the HELOC plastic surgery.
You can’t foreclose on Dow Cornings?
Playa del Rey — 1 house sold ni July for $875K. There are currently 23 Playa del Rey homes available on the MLS — 23. The cheapest is — coincidentally? — $875K. Wow. Just…wow.
I live in the Marina but I really like Playa del Rey. PDR has a really nice beach. It’s a nice little beach community too. I’m hoping for a 40-50% haircut there in 2 yrs so I can buy there.
You must have a fondness for airplanes…
I’m with Income……I’m sure you could tell us how many rivets adorn the bottom of a 747.
Back in the day, Playa was where the stewardesses had their shared west coast pads. Back when there were stewardesses instead of surly flight attendants. Playa is as far past its prime as most of the flight attendants.
Even in the condos on the beach there - Vista Del Mar, your TEETH RATTLE. I know. I have been in them. If you could take out the LAX runway, you would be fine.
We live in PDR just north of Manchester, and after about a month you don’t even hear the planes anymore…kinda scary, but true
$875k. What, that’s good? Man, as a Floridian, these Cali prices freak me out.
875K isn’t cheap…in fact, it’s obscene…but I think it’s interesting that in this zipocde in particular, which used to be considered cheap compared to neighboring MDR (for example) or any of the southbay cities, it’s only the low end of the scale that’s being propped up.
I kind of like Playa del Rey, too, but being under the flightpath for LAX would probably drive me nuts.
Speaking of those South Bay cities, I get the feeling that a lot of stuff for sale in Hermosa Beach & Redondo has been pulled off the market. How else do you explain less than a one month inventory of SFRs in each city based on MLS numbers and July sales?
…and in the meantime I’ll stay in my $1500/month 2-bedroom PDR rent-controlled apartment!
…and in the meantime I’ll stay in my $1500/month 2-bedroom PDR rent-controlled apartment!
Damn! $1500 apartments, Smog, traffic, earthquakes, people, crime, people..
Where do I sign up?
LOL, yup, us SCALers get to brag about “only” paying $1500/mo. on modest sized apartments and we really mean it too! ‘Course, just do the math on an $875K mortgage and you quickly see why we’re bragging.
Don’t suppose you’d like to share which neighborhood you found your $1500 two-bedroom in? The husband and I were just in town apartment hunting this weekend.
The air quality is quite good by the beach, and PDR has no traffic (until you need to go somewhere else lol) and very friendly down-to-earth community feel. I know you are just giving me a hard time notmssinit, but I have to give props to my ‘hood. AHinOH, our $1,500 rent-controlled rate is just about impossible to find in Playa del Rey now; the older buildings start at $1,800 and newer buildings are well over $2,000. There is a new large apartment complex that just opened up a few months ago that said they started at $2,000/month when I went to check out the building after it just opened — Del Rey Club Apartments at 8000 W. Manchester. Craigslist is a good place to look to (and where we found our place). Good luck!
Thanks - we’ll likely be out looking again in a couple weeks, and I’ll add PDR to our “possibles” list.
And Craigslist is indeed a god-send, for jobs and real estate, esp. from 2,200 miles away.
could this be the new playa development in the old wetlands with only 1 sale? they are putting the wraps on hundreds of new units about to hit the market.
i work across the street from the development. everybody and i mean everybody who is old time west LA hates this place.
That’s Playa Vista, not Playa del Rey (just north of LAX and west of Westchester)
Speaking of Playa Vista, no SFR sales, 9 condos, prices down 5% yoy. They do have single family houses in that development, too.
Playa Vista is a big advertiser here at the HBB courtesy of Google - just look at the top right side of the page. Playa Vista touts the “New Urbanism” model of development which is another justification for high priced condos.
Yea, I’ve been watching that ad for weeks. One thing I will admit I like the seclusion of the development. But watching a special on PBS and seeing methane gas bubbles come up during the rain and exploding plastic bag fireballs, nevermind the gas meters to check the levels, well it kind of turned me off from the place.
“could this be the new playa development in the old wetlands with only 1 sale? they are putting the wraps on hundreds of new units about to hit the market”
The western half of playa vista has been up for almost a year. Very canned block-style units placed end-to-end along rows like a kids building block set. Area ok and out of the way from the inner LA Shitholes but not particularly stylish units.
The eastern of PV still is being worked on and barely out of grading stage. One -half of the activity seems to be centerd on the restoration, preservation, film achival shooting of the old howard huge aircraft hangers. I wonder if there are plans on turning that large hanger into a movie studio set. Seems like a lot of hollywood industry folks out there.
One thing few people realize when buying in Playa Vista is that the rentals there are almost nothing but Section 8. Thanks, but no thanks.
“Playa del Rey — 1 house sold ni July for $875K. There are currently 23 Playa del Rey homes available on the MLS — 23. The cheapest is — coincidentally? — $875K. Wow. Just…wow.”
Playa Del Rey is a really tiny community tucked right on the morthwest corner of LAX and just southwest about a mile from the new Playa Vista village. Number of SFH’s very limited, and it looks as if there has been some multi-housing tracts put up along pershing blvd.
Playa Del rey mirrors it’s virtualy identical twin sister El Segundo which is located on the southwest edge of LAX. Both are decent tiny burgs adjacent to the Beach, but the beach not all that impressive due to factors such as nearby hyperion waste plant and the huge scatterpood power generation facility, plus the impacts of lax flights. Doing the Beach bike path or lying on the sand OK but i would not swim in that water.
SHF’s in both tiny burgs in very limited supply, and there is little room for housing expansion in these parts. Nice little pleasant communities well away from the LA inner hellholes except for the LAX noise/jet fume factor.
Santa Monica had 2 zipcodes with only 1 sale each. There was 1 zip with no sales.
Yup, I reported this last weekend.
90401 hasn’t had a sale in months. 90402 had 7 last month. Of course the median price was up 97% YOY due to the subprime effect. 90403 and 90404 had 1 SFH each. The market has frozen up almost solid here.
Now for the SFH prices to start falling. Maybe by this fall or early next year. Condos are already falling in all five SM zips.
http://www.dqnews.com/ZIPLAT.shtm
I’m shocked at zero sales in 90401.
I only see 7 for sale on ziprealty in what I think are the zip code’s boundaries (going by calibrated eye). 311 for sale in Santa Monica… 21 sales… So in Christmas of 2009 we would expect to see the last of these homes sell and then only be able to choose what’s come on the market since then.
What you say, credit crunch? Slowed sales further in August?
Why that would mean…
Got popcorn?
Neil
I’m not even sure that there are any SFHs in 90401. 90403 and 90404 don’t have a lot of SFHs. 90405 is still cooking, very few listings and most/all of the not insanely priced ones sell.
“90401 hasn’t had a sale in months. 90402 had 7 last month. Of course the median price was up 97% YOY due to the subprime effect. 90403 and 90404 had 1 SFH each.”
Does everyone who owns a SFHunit in SM think that their home is automatically worth several millions? I know that SM has 80 % year round balmy temps and a decent running park along the bluffs(when it is not overrunby the homeless), but come’on , santa monica is not the French Riviera. It is not exactly a posh upper-crust exclusive resort beach: more like middle -class area attemptimg to parade homes at brentwood /bel-aire/beverly hills prices. Maybe SM north of Montana which merges into Brentwood might be worth million $+ but rest of SM just middle class average, maybe slightly above middel class.
Agreed. And the traffic is a nightmare. That, plus the fact that the entire town is run by the most extreme liberals that I’ve ever encountered. Until all new building in SM is limited to those making under $20K a year, they won’t be happy.
Any time you have RENT CONTROL you will have few sales. Need to evict the freeloaders and let the market take over. Oh Oh, they’re coming to get me and they’re singing the ‘International’ with RED arm bands on.
link?
dqnews.com
Sounds like they are getting screwed in the front and they are getting screwed in the back.
Are these the numbers for the whole state? Maybe I am dumb, I can’t find the details on their website.
THanks
Sorry, I don’t play well with tinyurl.
Go to dqnews.com and click on LAtimes chart. It has data for all SOcal counties.
Laguna Beach -17/1%
http://www.dqnews.com/ZIPLAT.shtm
Statewide numbers come out Thursday on the ‘CA City Charts’.
–
I don’t see the July data by zipcodes. Just summary report for Jul’07.
Sales are down more than 50% from the peak in July 2004. This shoud have impact on the broad economy.
Jas
These numbers are going to cause brownouts all across Socal.
Wife to husband, “what do you mean we just lost $150K in paper equity over the last year?”
Husband to wife, “you said Suzanne researched it!”
Funny!
I think Suzanne was too busy researching her $50k check!
And now I bet Suzanne is researching between the couch pillows to find change for a pack of smokes.
Here they are…
All Homes No Sold
Jul-06 No Sold
Jul-07 Pct.
Chg Median
Jul-06 Median
Jul-07 Pct.
Chg
Los Angeles 8,844 6,809 -23.0% $520,000 $547,500 5.3%
Orange 2,982 2,391 -19.8% $640,000 $640,000 0.0%
Riverside 4,763 2,769 -41.9% $415,000 $399,000 -3.9%
San Bernardino 3,500 2,008 -42.6% $366,500 $355,000 -3.1%
San Diego 3,584 3,106 -13.3% $500,000 $489,000 -2.2%
Ventura 941 784 -16.7% $614,000 $582,500 -5.1%
SoCal 24,614 17,867 -27.4% $487,000 $505,000 3.7%
Source: DQNews.com
Notice, if you will, the % change of home sold YOY in San Berdoo and Riverside counties. WOW! We called this as Ground Zero for the bubble.
I would also like to comment on this statement in the Ben’s article…
‘At the beginning of this year the house was valued at $525,000. It’s a neighbourhood which is mid to lower income. Most of the buyers are going to be first-time buyers, so the area has been heavily impacted by the number of foreclosures.’”
My Gawd, if this is a lower-income ‘hood, I would hate to see the
upper middle and wealthy class homes. What, 1.5-2 mil to start. This is why this bubble is going to keep going until it leaves a crater the sixe of the Grand Canyon. What nitwits are buying for the first time in middle class neighborhood for more than 1/2 a mil?
No pity here. RENT!
Yeah, but SF is still hanging in there. WTF
All Homes No Sold
Jul-06 No Sold
Jul-07 Pct.
Chg Median
Jul-06 Median
Jul-07 Pct.
Chg
Alameda 1,665 1,577 -5.3% $590,000 $605,000 2.5%
Contra Costa 1,747 1,328 -24.0% $575,000 $599,000 4.2%
Marin 309 306 -1.0% $779,000 $887,500 13.9%
Napa 138 85 -38.4% $598,000 $614,500 2.8%
Santa Clara 2,059 1,910 -7.2% $682,250 $700,000 2.6%
San Francisco
542 sold July 06 median: $775,000
564 sold July 07 Median: $799,000
They say the change is due to pricier houses still selling somewhat. In San Jose, the price is down. I guess we just have to wait longer for the high-industry places a little longer.
At the beginning of this year the house was valued at $525,000. It’s a neighbourhood which is mid to lower income. Most of the buyers are going to be first-time buyers, so the area has been heavily impacted by the number of foreclosures…”
Did read that article and it does not say exactly what part of South LA, no address, no numerical analysis nor details, no ifo as to prices of neighboring homes, ect.
South LA? Which area is the writer referring too! South- central LA? Most long-time bloggers here especailly CA_LA area bloggers know what SCentral LA refers too. It is the hellhole region from just south of dwtn all way to 105 or 91 fwy and from just west of the 110 harbor fwy east to the 710 LB frwy.
Ths writer/article does not know S*it about scentral or south LA? If it is the Guardian, is this not a British Periodical.newspaper? What do they know about the average prices of Scentral LA homes? Or the actual bombed -out fallullah-like aspects of these LA inner hellholes.
Do they not know that the Scent LA prices were?are being propped up by massive overappraisal fraud, toxic 100% financing mostly to naive(or equally duplicious immigrant first-time hispanic famiies) and that the entire SCentral LA market is going to drop 50-70% next 1-5 years, and Scentrl ghetto shacks will be REO marked to market for under $100,000 in 2008-2010.
The entire scental La housing market was nothing but one gigantic ponzi scam and overappraised fraud runup, with home prices at 10X median income for that area. (The real media income is $40,000-$50,000- not the lying stated incomes of $100,000 put down by hispanic immigrant I/C’s and/or ’self-employed’ construction workers in order to get into inflated 1/2 mil $ POS stuccos in Compton, Maywood, bell, Southgate, lennox, harbor gateway, Wilminton, Inglewood, Huntington Park, or other Scentral LA S*ithole burg.
South Central LA was officially renamed South LA through City Council due to the negative connotations associated with South Central…
Tell us how you really feel!
Great post. Right on the money. But did you really have to insult fallullah?
Cupertino just got officially kicked out of the Bay Area :
CUPERTINO 72 $804,500 $1,000,000 -19.55%
Ouch!
I am so cryin’ for those people.
LOL!
“Please return your cards that say ‘It is different here’ and get in line for the wallet vaccuum. Thank you, and have a nice day.”
LOL
What about the iPHONE!?!
Phew, at least Needles still is cheap.
California, here I come!
“Higher jumbo-loan limits would help borrowers in the Bay Area, where the median price for homes and condominiums in July was $665,000, according to DataQuick.”
Does anyone have any data on median household incomes in the Bay area? I’m curious if incomes in the area can even support a higher loan limits for Fannie Mae?
not without liar loans. With the exception of Google millionares median income is still only around 80K in Bay Area.
80K each right ??
Nope. The Alt A bay is not unlike LA is that you have the very wealthy and the very poor.
San Mateo Co. household median 76K/yr..Santa Clara Co. household median 77K/yr
Median income varies with the region in the “Bay Area”. In San Jose, median household income is about $73,000. Yet the median house price is about $700,000. That’s 10x income, and can’t be sustained,
it boggles the mind that loans were made on $700K homes on that type of income. The numbers simply don’t/can’t work.
That is the bubble, right there in your post.
Not to harp too too much on our stupid President, but he was calling this the Ownership Society. Maybe he meant the creditors owning Americans…..
Yep, his Wall Street and banking buddies own Joe and Jane6pack.
No problem, you own a loan which will crush you. The real meaning of the “ownership society”.
Exactly.
not really..
“Ownership Society” referred to and addresses control over decisions about one’s healthcare, one’s children’s education, and over how one’s retirement savings was being invested.
..also addressed the unfairness of Death taxes.. and of course it leaks into home/property ownership being favorable to renting…
“…if you own something, you have a vital stake in the future of our country.” GW Bush
It’s kinda like these no-doc 100% loans..
Got to have some skin in the game or you have no reason to give a rat’s ass about anybody but yourself..
But why a President would care about the country’s future? Who knows.
Especially when he’s already moving his crew to… where was it, Panama?
Paraguay… yes really.
um, I don’t need to own anything and I still get control over all those things (employer pays health care so I guess I don’t really have a choice in that…)
Obviously there’s an implicit “home”ownership, nothing else makes sense. As for Death Taxes– inheritance is probably the single most serious cause of America’s entitlement attitude. Luckily the problem has become self-correcting… most of it is tied up in real-estate, haha!
the inclusions and the definition of “ownership society” it’s not a matter of making sense .. it’s just the (unfortunate, imo ) title of a particular political policy.
http://www.whitehouse.gov/news/releases/2004/08/20040809-9.html
As far as our “entitlement attitude” being caused by inheriting something from dad, we must assume that poor people cannot and would not have a sense of entitlement.. and that rich “dad’s children have not developed the entitlement attitude prior to his death and their subsequent inheritance…
i know both to not be the case.
“The rich rule over the poor,
and the borrower is servant to the lender.”
Big V answered my question…
I thought my Turbo Tax audit flag said average median family for SF was $74 K, but that’s not a promise. April was along time ago.
I have a question for residential mortgage people reading this blog. I just spoke to a residential broker (he is in Valencia, CA which is a suburb of LA north of the SF valley) and he told me that not only is Greenpoint done he also said Option 1 is no longer doing any non-prime loans greater than $417k (fannie max). He went on to say he knows of no lender out there doing non-prime loans greater than $417k. Is this true? He said even if you have $1m equity and want a $500k cash-out refi, unless you can go full doc you can not get a loan.
Also, he said 1 out of 4 mls listings in Santa Clarita is a short sale.
If you’re standing in a puddle of your own urine, then you should’a sold two years ago.
I do very little residential, but from the emails I’m getting it sounds about right. I also wouldn’t be surprised about Santa Clarita. That’s not too far from Palmdale/Lancaster. That whole area is a pit. I sold a lot of foreclosures in that area during the last downturn. I could never figure out the attraction to a place like that.
santa clarita is a lot nicer (and closer) than palmcaster. 1 out of 4 seems excessive.
Yeah and Mark lives there or is it Brain?
Oops. That would be “Br>b>ian”
Oops. That would be “Brian”
Tons better then Palmcaster though it’s still a pit. It’s only bright spot is that it’s the creative birthplace of Tim Burton and Ross Bleckner and lowly moi.
It used to be cheap. There is no other explanation, everything about that area is miserable or awful; take your pick. Oh, and some of it s***s.
Valencia is a very desirable place to live in terms of crime (very low), schools (very good) and amenities such as paseos, bike paths, etc. It is not a pit like Lancaster & Palmdale. A lot of people in the entertainment industry, firefighters and police officers live out here. But the growth out here has been rampant and people were speculating like crazy. I’m watching foreclosures and they are up here. Many townhomes for sale in our complex have been sitting for a long time; one of them is being advertised as a short sale.
Also, friends of ours moved to Colorado back in April. They thought they would rent their house out. Three months later they hired a lawyer to get the renters out (because they had a pitbull) and put the place up for sale. It’s been on the market for about a month now. No renters and two mortgage payments . . . They’ve dropped their price from $689,000 to $679,000 (they bought it for $500,000). I’d like to tell them to drop it $100,000 and run for the hills, but I’m sure they wouldn’t listen to me . . . I am a mere renter!
I did two projects for Hymax Builders in a gated area in Valencia. The cabinets were about 150k and 92k respectively. The area is nice but not even in the same league as my ususal areas of the Manhattan Beach / Palos Verdes areas. It is HOT AS HELL OUT THERE!
I totally agree! I have lived in Valencia for 3 years (after living in Glendale) and love it! The people are great and the crime is very low or non-existent! You could not pay me enough to live in LA or any of those other crowded places with dirt and filth! It is nice and peaceful out here. It is DEFINATELY NOT Palmcaster!!!! Granted, it does get hot here, but it is no where near Palmcaster!!!! I hate that place! I spoke to a realtor Sunday who told me to wait about 2 years to buy out here. I imagine by then we will have seen many more foreclosures! BTW… In my small, gated neighborhood we currently have 3 foreclosures and 5 houses for sale! All of the houses are in the upper $600’s. These people are dreaming! I can’t wait for the banks to start offering fire sales on these forclosed homes!! I would tend to agree with the statement that 1 in 4 homes are forclosures from what I have seen in my own neighborhood and on Zip Realty.
Valencia I used to work out there big earthquake country but otherwise nice it has lakes , mountains and hwy 126 to the beach. Hot? Valencia is a day at the beach compared to Phoenix.
“A lot of people in the entertainment industry, firefighters and police officers live out here.”
I call b.s. on this one. Yes maybe there are middle class government employees searching for better for their families, but the only entertainment types are also low-level nobody’s (cameramen, makeup artists, etc.) I don’t think anyone higher than associate producer level lives in Valencia. Further, there aint much there worth over $400,000 on a good day.
Of course, this is IMHO.
“…Of course, this is IMHO…”
Which just happens to be spot on…
Once you graduate from Cal Arts, you hightail it out of there. But many do work in the industry while in grad school. I sure did so did lots of my classmates.
Market is dead between 600-800K. We currently have our house listed for sale for the last 2.5 months. 1 house has entered escrow in our immediate area and price range in the last 4 weeks. That being said, our realtor showed a client around a couple of weeks ago and 1/3 of the properties were short sales but those aren’t moving either.
I wish you and any seller the best of luck.
You lie, Hoz!
isn’t Six Flags there? Weren’t they going to shut it down because families were sick of the gangs that roam the park? That Valencia?
I thought they were going to sell it to a developer to build more houses. Heck, they are already going to build over 20,000 more houses North on the 5 at Newhall Ranch. This will really help housing prices and traffic!
Wells Fargo is offering jumbo loans or at least that is what their web site says.
But they’re pricey
You better believe it. Very very costly.
Do you mean that this housing crisis is hitting the higher end?
But they told me it wouldn’t happen?!!
Agreed. The way non-conforming is priced right now it might as well be unavailable. Kinda like if gas hit 20 bucks a gallon we’d all stop driving.
I would be thrilled at $20 a gallon. Nice empty roads, not jams. Higher the better as far as I am concerned.
Yha, but on Monday WF wouldn’t let me withdrawal cash from a savings account - they claimed nationwide computer glitch.
I know a source for jumbo loans in Calif to $2million, stated income, $1.1Million No-Ratio/no-Doc/no-4506. Got to have good credit (720+), good equity (20-40%) FIxed-rate and payment(interest only if you want) for 5 to 10 yrs, rates in the 6.25 to 6.50% range, no points, no prepayment penalty. Check your local banks and CUs, but not the big names.
Ahhhh but the kicker…20-40% equity. Not much of that around these days…
If someone puts 20-40% down that provides a pretty big cushion before the bank is left holding the bag. Even on this blog, there probably aren’t too many who could step up to the table with 20% on a loan of $600k plus. This is the banking version of giving you the sleeves off of your vest.
I don’t know any larger lender’s doing no doc loans right now. Will need to wait for Christmas or New Years.
This is the way things should be. You want to borrow money, prove you can pay it back.
Where we are going from an underwriting and approval standpoint is not exceptional, it’s the norm. The past 6 years have been exceptional.
As a potential Bay Area home buyer, what I want is lower prices, not higher conforming loan limits.
–
Be patient. Lower prices are coming. 2008-10 should have bargains galore. Wait until recession is admittted by all. Then wait until the talk of depression become common in MSM.
I know that could be a long wait but it would be worth it. Until then rent and be happy.
Jas
But…Are you willing to accept lower prices with higher interest rates ??
yes, mortgage interest is still deductable, I have a large downpayment and sooner or later rates will come down.
mortgage interest is still deductable
Maybe not for long. I’d be vigilant about the AMT –it’s about to trap a sizeable chunk of the non-rich middle/working class.
Me, yes. Two reasons:
It is possible to refiance lower when rates go down and I can save to make a big downpayment to make the loan as small as possible.
But…Are you willing to accept lower prices with higher interest rates ??
Double click sorry…
Yes. I can always get a lower interest rate at some point. As has been said here before. However, you can’t renegotiate your buying price. Once sold, it is done.
Besides…look at at this way…
500K @ 6% interest is 30K for first year.
150K @ 15% interest is 22.5K for first year.
“The greatest No Brainer in the History of the Freakin’ Universe,” if you ask me. Lower cost and less interest. And, I still might be able to get that second rate lower in the future!
You said it, a lower price is always the better deal. Plus, an industrious person making say $50k could pay down principal on the $150k loan quite quickly - but on a $500k loan? Forget about it, you could hunker down for a few years and still owe $400k plus.
And don’t forget that property taxes (in CA) are calculated based on the purchase price, not on the monthly payment. It’s much better to have a high interest rate on a low principal (thus paying low property taxes) than paying the same monthly payment with a low interest rate on a high principal (thus paying a higher property tax rate).
The equation is like this:
(interest rate) x (principal) + (principal x tax rate)
anyone notice they are much more serious on CNBC these days? some of the people who come on look like they’ve seen a ghost. I can’t help but get the felling that things are really going wrong behind the scenes and certain people know it.
peter schiff seems to be getting a bit more respect these days.
WE know it.
Exactly, It’s probably a little unnerving to them, that they can’t correct the slide with happy talk.
Here is a poem to celebrate the demise of the housing bubble
Ode to the house bubble.
Oh, my beautiful home,
Sweet home of mine
Whose A.R.Ms are like
Noose around my neck
Hanging me over its wooden beam.
Oh, housing bubble
Like champagne
Sweet and lofty at first
Now bubbling as waste water
Foul under street sewer
More deadly than
The froth of the most
Rabid dogs
Oh, grim broker
With no scruple in your heart
With pen in hand
Grimly reaped
Ill gotten gain
And left me
Eternally in financial pain.
I used to live next door to a 19-year-old mortgage originator. He was also a drug dealer and a punk whose nose had “punch me” written all over it. It will serve him right to go bankrupt by 21. Ha!
He won’t learn though. He’ll go to some Tony Robbins-Oprah WInfrey-Covert Bailey seminar to regain his cool and confidence to take on the world again. This is partly why bubbles keep coming at us.
Yeah, but by the age of 28 he can have an 800 FICO again!
Won’t take that long…
speaking of fico score. If one house/foreclosure is a big ding to the credit report. What’s it going to look like when the two or three house speculators go BK? Is multiple homes worse or same (negative) on the report? A bad $600K BK vs $1.2M or vs. $1.8M ? which is worse?
Basically the same effect if it happens in close proximity. It doesn’t continue to go lower and lower as each shoe drops.The money figure really has no bearing
That is just a super exquisite poem, Repo gal. I wish I had a glass of Chablis and some stinky cheese perched on a little stick to go with my learned expression of admiration. Oh, and a few weedy academic types standing around, instead of a bunch of ignorant and chubby raccoons, because then it would be just like a super elegant poetry reading over here at my place.
(“The loans GreenPoint specialized in include Alt-A mortgages to buyers who don’t fully document income and assets,)
does that count against containment? it doesn’t matter how good your credit score is if you can’t afford the payments. unfortunately, it’s all probably subrpime, or at least enough is.
““Badagliacco said she knows people like to ‘poke fun at the Realtor in the nice car,’ but she expects there to be fewer objects for pokes and jokes in coming years.””
Oh, believe me, we’ll be poking the Realtors all the way throughout their death agonies. And then we’ll keep jabbing the corpse for a long time after that.
But there will be fewer of them in nice cars, so they will be camouflaged like those infected people on Star Treck with the worms sticking out of their necks.
Lol! That episode gave me nightmares as a kid. Mostly because of the Troi-as-a-cake scene.
Good times.
Now, THERE’S a nice vivid and mind-stretching simile, such as I love to read on this blog. I must have missed that Star Trek episode, which I would not have believed possible, unless it is one of those new stupid Trek ones which I don’t watch because the girl captain has such an annoying squacky voice.
Anyway, I don’t think realtors will be adequately camouflaged by the worms sticking out of their necks.
I believe they will be camouflaged by their cardboard signs, reading ‘Will work for food’.
If she wants to keep that nice car, she’ll be doing plenty of poking in it.
New broker bumper sticker:
Don’t Come a-Knockin When This Benz Is a-Rockin!
I’m sure many California home owners are going to feel like the family in Poltergeist soon enough.
“You just moved the headstones and left the bodies!” 1982
“They just lowered requirements and added More bodies!” 2007
Jim Cramer and Senator Conrad is asking for Bill Poole to resign?
This idiot congressman is saying they should give a bailout because of all the bad news.
But, I thought the economy was fine????!
Jim Cramer says, “Why didn’t he warn us about these teaser loans?”
We tried to Jim, we tried to. You knew what was going to happen. Stop playing stupid. oh wait, maybe you are?
No. Ignorance is no excuse. All these a$$hats knew what would happen. My mantra for the last several years other than debt is that you CANNOT lend 850K to a family or person making 75-90K and expect the loan to be paid back.
Consider…850K for loan, add in 1.75 million for interest (you normally pay once for loan and 2X for interest on 30 years) and you have 2.55 million. Take that and divide by 100K salary and you get 25.5 years. Nice! 25 years of everything without witholdings going to the mortgage.
Cramer and Kudlow and the whole gang knew this would happen they just chose to whistle past the proverbial graveyeard since they were making money on this whole house of cards. Bottom line is GREED!
Come on, what did all these yapping heads think would happen. Jim and Jane SixPack were really going to stay long enough to build equity and maybe even some pay it off, esp. with all their other debt?
RUBBISH! PURE RUBBISH! Nothing less.
“Come on, what did all these yapping heads think would happen. Jim and Jane SixPack were really going to stay long enough to build equity and maybe even some pay it off, esp. with all their other debt?”
I was trying to consider what if people DID pay these inflated mortgages. Holy cow! arm resets, people kept paying… Can you imagine how big the economy would be if those finance models actually worked! Scary stuff.
I agree that they all knew but I don’t think it was all greed. I think there are some political machinations at work because they all knew it would end in a bust. I just have a hard time believing that Bernanke is out to steal money from poor people.
Maybe it’s more like that scene from AI where the super intelligent machine says “My logic is inescapable, we’re here to protect you from yourselves which requires the sacrifice of some freedom.” And after the financially illiterate get burned by the housing bubble, they might just agree.
Or maybe I’ve been reading too much Asimov again.
“Why didn’t he warn us about these teaser loans”
Tell that bug-eyed Cramer the first rule of capitalism–caveat emptor. And as for “us”–who’s he talking about? Is he so far removed from reality he never saw a mortgage ad on the net?
Is this is his new persona–an embattled “little guy” too dumb to read the loan docs and too innumerate to figure out the costs?
Wow, I read “too innumerate” as “too immature” the first time.
“Jim Cramer and Senator Conrad is asking for Bill Poole to resign?”
If these guys keep it up, the Fed will soon be run by mob rule.
I guess I was wrong! I posted earlier, “I suspect that his theatrics will be for the Federal Reserve to do something to save his friends jobs.” I never thought he wanted to save the stupid home buyers. I am shocked.
(mockery off)
The Wall Street crowd is trying to scare people like Poole and Bernanke into doing what wall street wants. All these clowns are trying to threaten and game the FED. I hope the FED officials see this for what it is. People like Cramer and Kudlow have don’t nothing except go on TV every day and try to cause panic in the markets, to force the FED into lower rates, keeping the Wall Street party going.
“People like Cramer and Kudlow have don’t nothing except go on TV every day and try to cause panic in the markets…”
It seems they are doing a pretty good job of it so far.
Um, I think you should know that Paulson and Bernanke are in on the game. Paulson IS Wall Street. Bernanke dances to the tune of the Fed. Surely you don’t think the Federal Reserve Bank is “independant”. Paulson is one of Wall Streets Financial Gangsters. Bernanke is a Washington hack like Greenspan who does as he’s told. Outside of that, they are simply public relations shills who trot out the phrases they have been told to repeat. “The economy is strong.” “We are working hard and making progress.” “The USA economy is the envy of the world.” Sad sack Snow, the shill before Paulson, was no different. Their reward? When it’s over they are handed plum jobs in the private (sometimes government sector) for their loyal service. After all they sacrificed a lot by becoming a government “shill” - ooops - I mean public servant.
My guess is that the FED is looking for cover to lower. Ergo we have Cramer and company whipping up sentiment to lower so that it looks like the correct move when it happens. Just a guess.
Agree 100%. You understand how the Wall Street Gangsters work.
The kind of people running Wall Street are risk takers who know no self control. Give them an inch, they take a mile. There should be no bailout because most of them will simply exploit whatever slack they’re given and just get into trouble again.
Who the hell does Cramer think he is to call for the resignation of someone who doesn’t pander to him and his cohorts. I call for the resignation of Cramer for trying to sway the FED, influence the markets, and being probably the most annoying person on this planet.
I second that.
“The loan was 60% of the original value of the house. ‘At the beginning of this year the house was valued at $525,000. It’s a neighbourhood which is mid to lower income. Most of the buyers are going to be first-time buyers, so the area has been heavily impacted by the number of foreclosures.’”
“‘It’s a socio-economic thing. I don’t believe it was racially motivated. The only colour they really see is green.
- In So Cal our ‘Mid to Lower’ income J6P feel that they are entitled to homes in the mid 500k range. It’s a California thing … we’re cool. And of course we are influenced by the color ‘Green’. It’s the
color of our birthright.
What I took away from his statement was you purchased in 2002 and refied in 2005….Why ?? Sounds like he needed the money (in debt) or saw easy equity extraction to me….
LOL, the reporter should have mentioned what was pulling the u-haul…
I don’t like the line of questioning. To elicit that response the question must have been “So do you think it was racially motivated”. Isn’t this was a lawyer would call leading a witness. Just seems like they are trying to fabricate a story where there isn’t one.
Didn’t anybody notice that the loan was 60% of the “value,” and he STILL took a loss?? Doesn’t that mean a 40% drop from it’s peak value, or am I reading that wrong??
“The loan was 60% of the original value of the house. ‘At the beginning of this year the house was valued at $525,000. It’s a neighbourhood which is mid to lower income. Most of the buyers are going to be first-time buyers, so the area has been heavily impacted by the number of foreclosures.’”
Mid to lower income at $525,000 ? Well there you have it! The world is upside down, gravity will kick in soon and suck these numbers back to reality. This will not be a correction it will be a crash. Step back and watch, I would say enjoy the show but there will be a lot of carnage, best watched from a distance.
Mid to lower income housing in my town on Long Island is between 400k-550k. The median salary for our town is 80k.
Trust me, this is not limited to only california. I can’t help but wonder what my town will look like in a couple of years because right now it seems like everything is moving along with the status quo.
Had a conversation with a bone-o-fide low to middle classer yesterday. A poor area of the Central Valley, but…said their payed-for house was recently appraised at 230K, following a re-fi that pulled out 120K. Tried to sell it for 6 months, and have recently worked a deal to dump it for the re-fi total. Their reason? They believe CA is headed for a complete meltdown and are heading home to Kentucky. Way tin foil hatted, but when the most unsavvy see the light it’s time to get out of the road.
I’m still looking at the Northwest corner of S. Carolina. Call me tinfoil, but there is too much nuttiness in Klownifornicationland for me.
BTW, do we even have a state budget yet? Just askin, ya know. I don’t think the banks will take too kindly to IOU slips like they did several years ago.
Yes on state budget. http://www.sacbee.com/111/story/337058.html
YEs, possibility of a class/race war (mainly illegals & La RAZA against everybody else) is increasing by the day. They are going to take back CA, AZ and most of TX one way or another. As much as I love SoCal, I think its days may be numbered and I may never own a nice home overlooking Pacific Ocean.
Its only a few steps from ripping off your neighbor via fraudulent lending and r.e. ponzi TO robbing, raping and killing said neighbor when times get really tough.
Let us not forget that some of those toxic loans had low payments for 2 or 3 years ,so alot of neg. amortization was added on to the loan balance because the borrower was paying a lower payment . I think that on alot of those loans the lender can recast the payment if negative amortization exceeds 25% of the original loan balance .
So, what you have in those loan cases is a loan balance increasing monthly + interest because the borrower wanted low payments .
Exactly Wiz exactly…
I can’t even read about sports without hearing about the housing crisis:
“The mortgage industry is suffering an unprecedented crisis with a credit crunch and skyrocketing foreclosure rates, directly affecting the bottom line of giants like Quicken Loans, the primary company of Cavs owner Dan Gilbert.
These two statements are facts, but they are not related. That’s something that comes from Gilbert himself.
”There is zero connection between any current events in the mortgage markets with the strategy, tactics and payroll of the Cleveland Cavaliers,” Gilbert said in an e-mail message Monday.”
This guy was on CNBC just two months ago denying the bubble. In fact he laughed it off as a total joke.
Amazing all these top RE investors, CEO’s having been denying the existence of any bubble all these years. All the while they have been selling stock like crazy. Very similar to the Hi Tech boom and bust. Joe and Jane6pack get F___d again.
“Joe and Jane6pack get F___d again.”
As always…
Right now the city of Detroit is so desperate to get Gilbert to move their offices from the ‘burbs to downtown that he’s been played up in the media here as a corporate hero who will help revive the city. Their local ads have disgusted me for a couple years now. First it was all those goofy loan payment plans, now it’s “we can determine the value of your home in a 5 minute phone interview.” Always pandering to the masses.
“Bank-owned specialist Kristian Peter said all of the foreclosures in Chula Vista will mean two to three more years of price declines. He forecasted five to 10 more years before prices turn up again.”
Translation: Buy now if you want to catch a falling knife and hang on for twenty years before you resurface…
Those numbers work for me.
Three years of real 15% declines and 5% inflation, compounded:
$500k * 0.8 * 0.8 * 0.8 = $256k
Followed by 10 more years of flat prices (not rising with 5% inflation):
$256k * (0.95)^10 = $154k in 2007 dollars, a good price for a middle class family house.
Uh, 15% Real Decline with 5% inflation means nominal prices only drop by 10%.
“five to 10 more years before prices turn up again.”
That jumped out at me. I know. You all know it. But just to hear someone admitting it…..
Also, 5-10 years is the guts of the next two presidential terms of office.
7 to 13 years before appreciation?
What’s his name on this blog!
It would really suck if we were the optimists…
Got popcorn?
Neil
“Damage from the nation’s slumping housing market is evident throughout the economy and permeates financial markets.”
and
‘It’s absolutely horrible. This was a pretty strong player,’ said Marty McCormick, owner of a Santa Rosa mortgage broker. ‘It’s going to hurt Sonoma County. That’s more jobs lost.’”
I remember, I remember
the house were I was born
the bankers over every day
my daddy drunk in the morn’
The layoffs never bothered me
I was to young to care
but mommy doped out on the bed
gave me quite a scare
I remember, I remember
the school bus that I rode
I was the only child then
from a foreclosed abode
I remember, I remember
the walls so pale and white
that offset the murky green pool
in a neighborhood of blight
I am so glad I have these memories
that launch my heart on wings
and now that we’re thrown out of the house
what shall I do with my things?
Yours?
“The median home price plummeted to $437,000, compared to $466,000
WEEEEEEEEeeeeeeee!!! Can we go again daddy? huh? can we daddy? can we, can we daddy? Can we ride it again? PLEEEEEEASE!!! can we
I wouldn’t have used the word “plummeted.” That’s only a 6 percent drop. What word will be used once it drops another 20??
Per capita income in US (2006) = $35K
Median Home price 2006 = 227,500
Is it just me or do we have a problem here if the average house is 6x the annual income?
It needs to be household income, so it’s not really 6x.
However, household income != 2xper capita income.
There’s your problem… marriage!
Also, remember, someone making the median income does not need to be able to afford the median house price.
Why? Because the bottom {25-45}% on the income scale do not historically, as a generalization subject to the obvious caveats, own homes. Most simplistically, if we revert to consistency with this precedent, the median home price should be affordable to someone at the {62.5-72.5}th percentile on the income scale. I think. (More careful thought perhaps warranted here.)
That’s true. OK. Let’s say that the median house price should be 3 x (median income *1.25) = 3.75x.
When will people wake up to the fact that state governments couldn’t give a sh*t about the qualifications of the person applying for a licence. They want the money. In this case the annual licence fees for realtors, brokers or anyone else needing a “licence”. They make it real easy to qualify. The tops off two cornflake boxes and the application form would suffice but then we would know for certain they are only in it to collect the fees so they make it legal by having applicants fill in government forms and take a test a reasonably intelligent 9 year old could pass. This isn’t the USA of the 50’s, 60’s, 70’s folks. This is the new world of greed and state and federal governments are as greedy as scam artist brokers and realtors and credit card companies.
Thank you for the link to the petition. I know asking Dodd and Clinton to do the right thing is like spitting in the wind and not expecting to come back in your face..futile..but it felt good.
Does anyone believe these two people?
“Bush Tries to Calm Investors, As Fed Bolsters Markets With Cash Infusion.”
“WASHINGTON (AP) — President Bush sought to calm nervous investors Tuesday as the Federal Reserve plowed $3.75 billion into the financial system, the latest efforts to stanch a spreading credit crisis that has unhinged Wall Street.
Wrapping up a summit in Montebello, Quebec, with the Prime Minister of Canada and the Mexican president, Bush took the opportunity to point out that the U.S. economy remains in good shape and should be able to weather the financial storm.
“The fundamentals of the U.S. economy are strong,” Bush said. “The fundamental question, ‘Is there enough liquidity in our system?’ And the answer is `Yes, there is,’” the president declared.
Treasury Secretary Henry Paulson also tried to strike a reassuring tone.
“We’re going to work through this problem just fine,” Paulson said in an interview with CNBC. He urged patience as investors reassess their appetite for risk, saying: “There’s not going to be a quick solution” to some of the problems. “I think what the American people need to understand, these things take a while to play out.”
http://biz.yahoo.com/ap/070821/credit_crisis.html?.v=26
I’m from the government, ….I’m here to help!
““The fundamentals of the U.S. economy are strong,” Bush said. “The fundamental question, ‘Is there enough liquidity in our system?’ And the answer is `Yes, there is,’” the president declared.”
Heavy sigh. Ok, Mr. President. We will go through this one more time. Liquidity is not increased just because the people are Wall Street are peeing their pants. (And skirts
)
Hey! Mr. Subprime man, loan again to me
I can fog a mirror and sign anywhere you want me to
Hey! Mr. Subprime man, loan again to me
If you can jingle jangle it for me, i’ll come followin’ you
Take me for a trip aboard your magic subprime ship
All my finances have been stripped
New equity I wish to grip
My toasty credit slips
Wait only for helocing, to be plundering
I’m ready to buy anywhere, i’m ready for to invade
Into my escapade, cast your loaning spell my way
I promise to go through with it
Hey! Mr. Subprime man, loan again to me
I can fog a mirror and sign anywhere you want me to
Hey! Mr. Subprime man, loan again to me
http://www.youtube.com/watch?v=jbj8tZl3pMc&mode=related&search=
Once again, I salute you.
If you watch the “Fly Jefferson Airplane” DVD, Paul Kantner, who hung out a lot with David Crosby of the Byrds, makes the comment, “There was a time in 1966 where literally anything you wished for came true, you know, like wish upon a star kind of stuff.”
I think for the FBs, there was a time in 2004-2005 where anything they wished for came true. Million dollar houses, as much money as they asked for, new Escalades, granite counters, and of course the patio barbecue set.
Summer of Love didn’t end so well; either did the housing bubble.
Why couldn’t I buy a house in the last five years?.
Because I was competing against schmoes who made HALF the salary that I make, had 0% cash to put down, had dubious credit ratings, lied thru their teeth on the loan app, could barely even afford the (soon to be adjusted) monthly mortgage ..yet were the same people starting bidding wars over homes and driving prices out of range for REAL buyers like myself. People who can actually PUT DOWN at least 20%, have good credit ratings, steady jobs & savings. People who want a house AS A PLACE TO RAISE A FAMILY, not a stock bond option.
These schmoes on the other hand bought homes because they SPECULATED in complicity with the broker AND the lender that APPRECIATION would make it ‘pay for itself’. Others siphoned all the equity out of their already almost-paid-off homes in order to afford toys & upgrades.
RE had CLEARLY already become a typical PONZI-esque scheme in nature by 2005. Yet the games went on ..PLAYED WITH THE COMPLICITY OF ALL INVOLVED.
Now, SCREW ‘EM. Just my feeling.
I 100% agree.
I cannot wait until I only bid against those with a down payment and verified income. Let’s be nice about it and tell each other our user names. Maybe meet for dinner and do a Dutch auction. Only let the “winner” bid. Say 10% to 20% below what was agreed for at dinner?
Bwaaa haaa ha!
Got popcorn?
Neil
“I cannot wait until I only bid against those with a down payment and verified income. Let’s be nice about it and tell each other our user names. Maybe meet for dinner and do a Dutch auction. Only let the “winner” bid. Say 10% to 20% below what was agreed for at dinner?”
Neil, I wouldn’t worry. Somehow, I think there will be more than enough houses to go around for those of us who can actually qualify to buy one -); We could all just have dinner and share pictures.
lol
There will be a time when having 20%+ down, documented income, approved loan, AND don’t need to have your purchase be contingent upon another home selling will be a HUGE plus in negotiations.
I’m looking forward to going shopping when buyers like me are a rare find…
I also agree. There is no upside to playing poker with real cash when everyone else at the table is using Monopoly money. Bring on the loan requirements!
Our govt prefers to encourage schmoes and profligates at the expense of financially responsible savers. This is not a sustainable policy, and will cost the entire nation dearly when it ends (a process which is currently in full swing!).
Exactly.
Which means that all my (and your) precautions, financial responsibility and playing-by-the-rules was MEANINGLESS all along; we’ll STILL get screwed when the value of the dollar TANKS, thanks to this BUBBLEBURST (which many “knowers” denied EVEN EXISTED).
A bubbleBURST so big it will affect previously onthought of sectors of the economy.
Yes, but as we’ve gutted our manufacturing base and opted for the consumer/service model - this economy simply cannot tolerate savers. And no, it is not sustainable, but nevertheless many pols and playas insist on clinging to it because they aren’t bright enough - nor brave enough - to contemplate real solutions.
I remember standing in a crowd of people at a new development (Anatolia) in Rancho Cordova, near Sacto, and watching as bozo after bozo had their name drawn in a silly lottery. I was standing there and had enough cash to easily put down 75% of purchase price. But I got the distinct impression that they didn’t want to deal with me. More money (at least in the short term) was to be made by dealing with the bozos. I was at a distinct disadvantage. That’s when I decided to move the family to New Mexico. I didn’t really want to, but I knew I had to get out of CA, given the insanity that I was witnessing.
Knows what nuts? You can easily rent one of the 4 or 5 bedroom lotto tickets from the bozos now for 1500 to 1950 a month.
Regarding the conforming loan limits of FNMA and FHLMC: I remember in the past that there were two times where the formula used to set the limit showed a decrease from the previous year. In one case they lowered the limit, in the other, they kept the limit the same. I believe they still have this choice. This may be another year where the indicated change may be downward from 417,000.
There is a movement among Realtors and Loan Brokers in California to have the limit raised to the 150% level that is in place for Hawaii, Alaska, VI and Guam. This is a political issue that will get more press in the next few months. This 150% level is $625,500 and would mean permanent unaffordability in California. It is 80% of a purchase price of $781,875 and would require a monthly housing expense of $4,864, and requiring an annual income of $176,871 to qualify (33% housing ration on 6.5% 30 yr fixed, 80% loan.) Homes will rise to this level. No problem it you make enough money.
I’m not sure raising the conforming loan limit in California would necessarily have such a huge effect on raising prices. The key is that conforming means no stated income and conservative ratios. How many people in California could qualify for a $625,500 loan based on the ratios you cited? How many people have an annual income of $176,875? Remember that over 60% of recent California purchasers used exotic financing — and most of the rest were putting down giant down payments from selling their previous homes at inflated prices to people who themselves used exotic financing.
A quote from a letter from Kyle Bass of Hayman Capital. Sorry of this has already been posted, but this paragraph belongs in this thread. Of course, this will not surprise most of the denizens of this blog, but here’s how it looked to someone from TX:
“Last week, I spent some time in the “Inland Empire” of California on a diligence trip to survey the actual damage. As many of you already know, 55% of all Subprime loans were made in California and Florida. The inland empire of California can be described as the central valley that extends from the southern part of the state all the way to the northern part of the state at least 1-hour inland from the coast. Let me start by saying it is MUCH WORSE than even I thought it could be. I met with various mortgage lenders, originators, economists, and capital markets professionals. The overriding theme that I got from them was that “Everyone committed fraud and everyone is responsible for the problem”. They told me that they believe that 90% of all Subprime loans that were made contained some kind of fraud. Either borrowers lied about their incomes or mortgage brokers fudged numbers on the applications to make them pass muster with the needed ratios in order to get loans approved. They also said that of the borrower frauds, 50% of applicants overstated their income by MORE THAN 50%!!!”
Clearly he mis-defines the Inland Empire, he seems to be talking about the entire interior of that state. Even worse…
Anyway, here the link to the whole letter on the FT’s Alphaville.
“Money is the barometer of a society’s virtue.”
Ayn Rand
http://www.youtube.com/watch?v=4eI6lUyOcIE
OT: First Magnus goes bye bye.
TUCSON, Ariz. - First Magnus Financial Corp. filed for bankruptcy Tuesday, less than a week after the Tucson-based national mortgage lender suspended its operations.
http://www.forbes.com/feeds/ap/2007/08/21/ap4041497.html
In the heat of a summer night
In the land of the dollar bill
When the credit died
And they talk about it still…
http://www.youtube.com/watch?v=p-L0NpaErkk
Don’t forget “Billy, Don’t be a Hero” by Bo Donaldson and the Heywoods
Billy, don’t get a mortage, don’t be a fool with your cash
Billy, don’t get a HELOC, the market’s due for a crash
And as he started to sign she said, Billy, this is my plea
Billy, don’t be a moron, please keep rentin’ with me
I would pay MONEY to see some of you guys at an open mic night with a guitar & bar stool after a few drinks !
On Marketwatch the cases for the Fed to cut or not to cut.
The comments following each argument are very interesting………no support for a cut and no support for bailout.
http://www.marketwatch.com/
Do full-paged ads reassuring the world that “all is well” at CFC unintentionally signal that all is not well?
Countrywide said to begin layoffs
By ALEX VEIGA, AP Business Writer Mon Aug 20, 6:17 PM ET
LOS ANGELES - Countrywide Financial Corp., the nation’s largest mortgage lender, sought to reassure customers Monday that the liquidity problems dogging its mortgage operations were not affecting its banking unit. The assurance came amid a report that Countrywide has started laying off an undisclosed number of employees as it tries to ride out the credit crunch that has rocked the home loan industry.
The job cuts occurred in Countrywide’s Full Spectrum Lending unit, which handles mortgages given to customers with minor credit problems or who can’t provide full income documentation required for traditional prime loans, The Wall Street Journal reported, citing an internal e-mail sent Friday to employees of that division.
Countrywide Financial spokesman Daniel Weidman did not immediately respond to a phone message from The Associated Press seeking comment.
The Calabasas-based company ran full-page ads on Monday in U.S. newspapers, including the Los Angeles Times and Detroit Free Press, in which it asserted “the future is bright” at Countrywide Bank FSB.
http://news.yahoo.com/s/ap/20070820/ap_on_bi_ge/countrywide_mortgages
“Fundamental question: Is there enough liquidity in our system as people readjust risk? And the answer is, Yes, there is,” Bush said.
Yes, there is and its being flushed down the toilets along with the jobs.
I saw that ad in the San Diego Union Tribune. Full page. Page 7 or 9 or something, probably one of the most expensive pages.
Funny thing was they couldn’t help but try to sell their 5.51% 6 month CD. No thanks, I prefer 0.5% less. Nobody is paying me interest while I wait for the check from FDIC.
Watching CNBC, Asia stocks are rebounding, “factoring in a US .50% fed funds rate cut.”
News around the world is about liquidity injections to “save the economy.”
From the WSJ:
http://online.wsj.com/article/SB118773982869404682.html?mod=hpp_us_whats_news
Credit Crunch Moves Beyond Mortgages
snip:
Doug Eddings, a 35-year-old small-business owner in Portland, Ore., says three of his credit-card issuers all took steps in recent weeks to tighten his credit, either by raising his interest rate, halving his available credit or freezing his accounts. First, he received a notice from Chase in June, notifying him that it was going to raise the interest rate on his Chase Amazon card to 29% from 17%. Soon after, another lender, HSBC Holdings PLC’s HSBC North America, dropped his $5,000 credit line on his Best Buy store card to $2,105 — just $5 above his current balance.
“When I called them up, they didn’t have an answer for me but said it was something in my credit file,” says Mr. Eddings, who had recently used the card to buy a refrigerator for his new home.
He also got hit with a “financial review” this month from American Express Corp., which froze his accounts until he could send in additional tax forms from the IRS for them to look at. Although Mr. Eddings, who has a high credit score, says he hasn’t been late on any payments, he recently requested a credit-line increase on his Delta SkyMiles card, which American Express raised to $15,000 from $5,000.
In addition, he took out an interest-only mortgage this past spring through a local broker to buy a new home. His mortgage was originally offered through American Home Mortgage Investment Corp., which recently shut down its lending operations and was then sold to Countrywide Financial Corp. “I don’t know if it has anything to do with the mortgage industry, but it does seem coincidental,” Mr. Eddings says.
and,
Nationally, credit-card delinquencies are relatively low at 4% and haven’t risen significantly in the past three years. However, in certain markets, especially those that have been hit hard by a decline in home values, delinquencies have spiked higher. In Fort Myers, Fla.; Port St. Lucie, Fla.; and Stockton, Calif., for example, delinquencies have jumped about two percentage points in the past year to as high as 5%, according to an analysis by Equifax Inc. and Moody’s Economy.com.
“If [lenders] see a household start to go late on payments, they’re going to be much quicker to respond,” says Mark Zandi, chief economist at Economy.com. “They may reduce the size of the credit line or may raise the interest rate. They’re responding much more quickly to any signs of stress.”
Patti Powell, a 49-year-old child-care provider, got a notice from Barclays PLC’s Juniper Bank last month telling her that her account, which she had for several years, was being closed. The Lovington, N.M., resident says she wasn’t late on any payments and mailed in more than the minimum payments each month. But in recent months, she started to use the card more, and her total balance had climbed to about 80% of her available $3,000 credit line, from about 22% previously. In a separate move last year, American Express dropped the credit lines on two of her cards, she adds.
Holy bejeesus. Are there no usury laws in this country? Charging 29% on credit card debt is staggering. Oh well, he can take a cash advance, invest in housing, and then heloc to pay off his credit card debt.
According to the foreign markets the cut by the FED is a done deal so maybe there is some relief here.
I must say, that I’ve never listened to to market commentary from overseas until the last few weeks. I’ve followed the indexes but not the commentary.
It’s stunning really.
All of the commentary from EVERYWHERE around the world are basing a saving of their particular market on 1) a fed funds rate cut and/or 2) no recession in the U.S.
Subprime is contained? Give me a break
They are all quoting Dodd from every market. Maybe he will be on the board of an international bank in 6 years.
All of the return to confidence in liquidity is based on “unnamed investors” stepping in.
Are the banks marking to market to a degree for some bigwigs?
Who or whom are they? That would be interesting to know.
I agree with you about “unnamed investors”, I have heard and read more rumors - This mornings BS, Mr. Buffett is buying Countrywide. I felt that rumor had to come from somebody that was important enough to believe and yet would have no personal interest or profit motive to cause suspicion to the news reporter (your guess is as good as mine). If the rumor said that Radian or MGIC fits with Berkshire’s insurance and Berkshire is buying one or the other or both - no problem. Mr. Buffett has not bought into a company that comped the CEO as Mr. Mozillo has been comped. Why would he start now? Berkshire buys management, not highly paid CEOs receiving hundreds of millions of dollars in stock options.
The only company that would like to buy assets here is the China company and congress is trying to prevent China from buying any US companies without going through review.
Notice most credit card companies incorporate in Delaware? I recall S or N Dakota was once the usury law override incorporate state, but Delaware wanted the jobs, so they passed an even better deal for the cc companies. PBS has a great online documentary on it.
And thus it begins. Yet another sign shoring up my gut instinct to get that damn credit card debt paid off before October.
Regarding the above: the whole world is trying to bully the FED into a cut in the fed funds rate sooner or at the next meeting.
What’s the problem? This is just a correction right?
The very fact that there are today - simultaneous calls for relief mixed with proclaimations of strength - should answer your question.
Put another way - no one knows anything for certain - except that they sure are scared about it.
“At the beginning of this year the house was valued at $525,000. It’s a neighbourhood which is mid to lower income.”
Wow. Half million dollar houses in lower income neighborhoods. Ain’t America great?
“Wow. Half million dollar houses in lower income neighborhoods. Ain’t America great?”
It sure WAS.
It is amazing how quickly America went from great to subprime. I am truly saddened by what I see all around me. I guess it is all part of the whole empire cycle thing.
Talk about an uncanny experience… while reading the HBB, I got a call from Countrywide- first a woman came on and told me that I could use equity to ‘access cash, reduce payments’ and then connected me up with a consultant. The consultant was actually rather decent. He first said that he had been talking to callers in CA, Ohio and Michigan whose house prices are dropping rapidly (what a shock). Then, after reviewing my file, he actually said that I was in a good position and he did not have any recommendations for me. I was shocked- whoever they used actually gave good advice and no hard sell! Of course, he saw that I had about 40% LTV left (15 year fixed at 5%) and a line of credit with a balance of zero (never used it), so perhaps he put me down as a hopeless case…
he saw that I had about 40% LTV left (15 year fixed at 5%) and a line of credit with a balance of zero (never used it), so perhaps he put me down as a hopeless case
The banksters have a term for people like you (and me): “deadbeats”
http://www.petitiononline.com/mod_perl/signed.cgi?bailout
Hey All,
Here’s an online petition protesting any kind of bailout. It’s directed to Sen. Clinton, Dodd & Company.
I attended Commercial R E Mtg this morning at the local board. The commercial lender speaker (MBA) blamed the media as the catalyst for a lot of the doom and gloom (and most of the audience bought it), then proceeded to say that underwriting has tightened, and things have changed. But not to worry, everything would be OK. Just a speed bump, and the sky wasn’t falling.
He blamed residential and made no mention of this being the other side of the bubble, and the inflationary cycle. First the gain, then the pain.
Most of the so called professionals weren’t. If you injected anything other than subjective mental masturb*tion they didn’t much appreciate it.
One lady wasn’t sure who Greenspan was for sure. Nuff said.
Oh, and on the commercial side, lenders are looking at cash flow, cap rates, and reality again. My specialty is shopping centers since 1986.
OPEN HOUSE -Asking $939,000 in a $225,000 neighborhood- that’s what I experienced today. The kitchen had the Viking stove, granite, and new cabinets, and the ba’s were nice, 3 sm bedrms,but the house is worth under $250,000 in the real world. North Hollywood (Ca.) in a first home neighborhood. The listing agent and I were from different planets. LSW level thinker - (I think that was her major). Mine - Accounting.
They’ll be chasing this market down. Who’s going to qualify, and what about the appraisal. Dream on.
In the old days of lending a over-improved property never hit on the appraisal . Buyers would have to put a great deal more money down if they wanted to buy a over-improved property for the neighborhood .
What is with all the oversized mcmansions? Families of 4 living in 4000 sf and good luck finding a new home under 2000 sf? The energy costs alone are sky high just to heat or air condition. What about all us dreaded boomers who want to downsize now that all the kids are gone, but don’t want to live in a condo - like I want to buy an apartment - maybe I could trade in my furniture for some block and board shelves while I’m at it. Here in the Palm Springs area, air conditioning for those behemoths can cost $600 a month or more for nearly 6 months of the year. It’s all part of the attention whore mentality that has taken over - look at me I have a huge house, look at me I have a fancy car, look at me I’ve had plastic surgery, look at me I wear fancy clothes and pay to advertise someones logo, look at me I go on fancy vacations and go to fancy restaurants. And god save me from one more kitchen with granite countertops and stainless steel appliances!
http://money.cnn.com/2007/08/21/markets/spotlight_hcbk/index.htm
Check out this mortgage company:
“Hudson weathered the recent storm by focusing exclusively on the prime mortgage market - borrowers who have strong credit histories. It is very conservative in who it offers loans to, and as a result has only written off $557,000 in loans over the last 10 years - a remarkable statistic considering the major write-downs that subprime lenders are taking now.
And it is a true thrift lender, whose only investments are mortgages.
“We call our product ‘dull and boring,’” Hudson City CEO Ron Hermance told CNNMoney.com. “Our main concern is credit quality. We lend money to people who almost don’t need it.”
Accordingly, Hudson doesn’t - and has never - issued subprime or low down-payment mortgages. And unlike many other lenders, they hold onto all mortgages they originate rather than selling them on the secondary market.
While other lenders offered exotic loan deals, sometimes for the full value of a house, Hudson says its average borrower put down 42 percent of the home’s value the last two years and financed the rest.”
Funny…, is this your grandpa’s mortgage company or the future?
Bzzzzzt!! Wrong answer. Thank you for playing.
Screw inflation, they can mess with housing but now I’m gonna feel the pain.
“Lindt and Sprüngli warned today that the price of chocolate is likely to rise in the months ahead.
The Swiss chocolate maker explained that the recent increases in the cost of materials such as cocoa, cocoa butter and milk would have to be passed onto consumers.
“In view of the massive increase in commodity prices of recent months - particularly of the cocoa so important for Lindt & Sprüngli - adjustments to the prices of products are increasingly more likely,” Lindt said in its half-year results….”
Guardian UK
OMG. That’s the worst news of the day. I think I’ll have to hedge against this with a gigantic stash in the basement. Only I will probably not be able to control myself in the presence of massive quantities of Lindor truffles and then I will be both poor and fat.
Well at least I won’t be a homeowner with a loan I can’t afford.
Anyone know where I can buy some chocolate futures? I want to secure at least 500 lbs at today’s price as I wait out the housing meltdown.
i think cocoa futures contracts start at 10 metric tons, with sugar the same..
Any NYBOT broker will be happy to help you.
Storing manufactured chocolate longterm is kinda difficult.. Even after it’s wrapped (which prevents absorbtion of flavors floating around in the air) it’s gotta be held in a temperature / humidity controlled environment..
On the otherhand, it’s really handy to have some around in case you run into Dementors.
I can help. I construct chocolate cellars that maintain the proper temperature and humidity. Wine cellars are very pre-2006.
wow…yes, my family and I are in trouble now too lol.
But I’ve been off the lattes now (the dollar brews at McD’s are just fine), and seduced by the seemingly never-ending array of new boutique single-origin-bean chocolates, plain and infused with spices or herbs or nutraceuticals, promising me health benefits and pleasures of all kinds. Hardly ever look at the price tags; it’s awful.
I wonder if some people are buying chocolate with HELOCs…
I get the senior coffee at McDs for 63cents (incl. tax).
Talk about Desperate times: someone making $150k a year and can’t afford to make mortgage payments
http://www.cardratings.com/forum/viewtopic.php?t=13651
Here is a breakdown of my situation,
I need expert advise, I asked my bank for help but they didn’t know.
and I need to know if I Should file for bankruptcy or work with credit counseling.
I don’t care about keeping my car or my home.
I have a mortgage, I owe 180k on (I have no equity due to a home equity loan)
I have a 30k home equity loan that I already spent.
I have a 20k loan secured on my car.
I have about 60k in unsecured credit card debit. ranging from 20 to 30% apr.
I have about 40k in unsecured loans from banks at 15% apr.
I make about 120k/year but ran into a lot of gambling issues and can’t even make min payments now. Due to what i owe bookies and marker lines at casinos.
I bring home about 5k in cash after taxes and health insurance and 401k retirement contributions.
i am thinking of ditching the home, don’t know if that is a good idea. people told me to try and sell it rather than have it goto foreclosure.
but I Don’t think i can get 210k to 215k for it. because there others on my block that are nicer at that price and they can’t sell it for a year now. if i find a buyer for 180k, i think i have to come up with the 30k in loans i took against it, which i dont have.
So I bring in 5k
the mortgage is 1700,+ 250 for condo association + 300 or so for utlilties
about 1k to pay the bookies and markers each month.
leaves me 2k to make min payments on everything else for who knows how long.
I am thinking of just filing bankruptcy and move in with 2 friends of mine so i would be the 3rd room mate, rent for me will be 333.00 a month. my living expenses will be under 1k each month and i can save 4k every month to buy another home in cash maybe 7 years later.
I am worried can they still come after me for my money after i file for bankruptcy then it will be pointless. or can they garnish my wages if i file bankruptcy? If so, then it may make sense for me to just going with credit counseling and try and pay everything off.
all in all i have about 100k or so in debt all over the place, but the legal debit is just the cards and unsecured loans and secured loans against my house and car.
I got myself into a real mess with gambling and just looking to start from scratch, I just dont know if filing for bankruptcy will be effective enough for my goals.
I plan on making about 150k/year next year in 2008, so i just want to get my life back together and need advice on how to do that.
I am 27 years old and single with no kids. I just own a ton of stuff i don’t need that i accumulated after i bought my condo 2 years ago, but I don’t think i can afford this condo anymore.
Thank you reading, and your help in advance Embarassed
“Ran into a lot of gambling issues”….
Was that an accident??? Omigosh, what an idiot.
OT, but I just came across a local realtor blogger who reported that things are still crud here in Ann Arbor MI, but that the silver lining might be that listings aren’t coming on quite as quickly as they had been (how they’re managing that with the flood of homes from pfizer transferees I have no idea), but that the one category of ‘brisk’ interest is in homes priced at roughly their *2001* levels!
that made me smile sorta
Isn’t Google or somesuch coming to AA and will that offset the Pfizer losses? Talk about a place that thinks it’s special and that everyone wants to live there. College towns can be fun places to live in, but it also means you have to put up with college students everywhere you go. Nothing like running into a bunch of entitled spoiled little sh*ts who thing they’re great because mommy and daddy have bucks (or think they do).
yep, the sounds of 30,000 college kids talking to each other on their cells over the pitter-patter of 60,000 feet in flip-flops will soon be heard once again in town lol.
Google is coming (taking over some space already downtown, and taking some of whatever charm the town still had with it, blech. chain eateries and bars to separate the googlers or whatever they call google-employees from their pay), with I think a promise of half the jobs pfizer took away. But the pay for those will be an average of 40K, as opposed to the well-paying jobs pfizer had; it’s google’s adwords division that is coming, so its mostly entry-level marketing service positions. It might encourage some UM grads to stay on for one of those jobs I suppose.
My opinion is that listings aren’t coming in as quickly because the houses are just going right to the bank. Whenever I drive around knocking on doors of preforeclosures which MIGHT have some equity (generally a waste of time, I might add) I notice many, many abandoned homes that aren’t listed or FSBO…they’re just sitting there, and lately seem to sit there longer before some REO agent sign shows up on the lawn.
You all are a bunch of smart people. Could you give me some advice? Bought a home in 2005 in an area that has thus been shielded from this madness but it’s just starting to happen here too (Boise, Idaho). We are expatriating anyway. Should I sell now or wait until March? If I wait, will my potential losses be that much greater? I just want to get what I put into the house (a 30k remodel) plus 20k profit. Bought for 150k, want to sell for 200k. Definitely not a flipper. Just decided to get out of this country and live the simple life, build a nice concrete house in the jungle for 70k.
The trend is generally downward. Most people I talk to believe it’s going to get worse from here, and it will take a while for us to hit bottom.
So, if you believe that, sell now.
One significant source of the pain is ARM loans adjusting, and people falling into foreclosure because if the adjustments. Do a search for “Credit Suisse ARM Graph” in Google and click on the first link. This is what is in front of us–more ARM resets, more foreclosures, more homes on the market.