No Clear Historical Precedents In California
The Herald News reports from California. “Now that the housing market is undergoing many difficulties nationwide, how will that affect Fontana? Fontana City Manager Ken Hunt said the situation is not good, but there’s no reason to panic right now. ‘The economy is going through a cyclical correction period,’ Hunt said. ‘How long will it last? How deep will it go? We don’t know.’”
“John Husing, a prominent area economist, said that there is no question that the Inland Empire’s residential real estate markets have joined those throughout Southern California and the nation in experiencing a major downturn.”
“‘The issues are what it will mean for prices and when will it end,’ Husing said in the report. ‘Here, there are as many theories as analysts. Why? Because the current housing situation has no clear historical precedents.’”
“In the short term, however, home sales have declined significantly in Fontana and elsewhere as prices remain high. ‘So far, the sales declines show no sign of abating as buyers have reacted to high prices and a belief and/or hope that they will fall significantly,’ Husing said. ‘Even with lower prices, buyer skepticism and higher rates will push the return to normality into mid to late 2008.’”
From Inman News. “In Hemet, a Southern California community that is about 90 miles east of Los Angeles, the market has hit a near-standstill, said John Occhi, a Realtor for Mission Grove Realty.”
“‘The market started to change back in March,’ he said. ‘Since then we have been a seeing a decline, decline, decline.’”
“‘I wish I could tell you about the buyers — I haven’t met one yet. Everyone is pretty much holding back and waiting to see what happens. Everyone is being cautious,’ Occhi said.”
“Prices in the Hemet area have dropped to about 2002 levels, Occhi said, and he expects investors to reinvigorate the market. The housing market downturn will likely have a large ‘ripple effect,’ Occhi said. ‘It’s a vicious, vicious place we’re in now.’”
“Meanwhile, in Long Beach, Calif., Chun Liu of Keller Williams Coastal Properties said, ‘Many people who were poised to be purchasing homes at the beginning of this year can’t now because of the new requirements.’”
“And in the Northern California community of Santa Rosa, Ron Street of RE/MAX Central said he had one house under contract three times ‘and then the (buyers) just disappeared off the planet. I think a lot of this is driven by fear more than anything else. I’ve seen people who are ready, willing and able to buy. It’s like there is some immediate change in them. I think everybody is afraid that they’re going to make a mistake.’”
From KGET.com. “Local troubled real estate has been making the news lately, but what about mortgage fraud? In Bakersfield’s super-heated real estate market several years ago, public records indicate there was a lot of property flipping going on, among other things.”
“Appraiser Gary Crabtree said there’s been incredible pressure exerted on appraisers in the last several years to ‘hit the number’—appraising homes far above their actual value to bring additional profits to the players.”
“‘A lot of the appraisers are actually employed by the lenders, or are threatened by the lenders that if they don’t hit the number, they won’t get any more work,’ Crabtree said.”
“‘I intend to ask Sen. [Mike] Machado, who chairs the Banking Committee, to come to Kern County in late September to hold a true oversight hearing on lending practices here,’ said Sen. Dean Florez. ‘We need to hear from the Crisps and Coles, from folks who need to come out in the open and talk about how we got to where we’re at.’”
“Crabtree said he would love to be part of that discussion, and said the system is broken. According to the Department of Real Estate, there is one enforcement officer for every 3,000 realtors. On the appraisal side, there is one officer for every 2,500 appraisers.”
The Orange County Register. “A global credit crunch continued to roil mortgage companies Wednesday, with Lehman Brothers shuttering its Irvine-based subprime unit BNC Mortgage, and Impac Mortgage Holdings, also in Irvine, cutting about 44 percent of staff.”
“The investment bank said market conditions have forced ‘a substantial reduction in its resources and capacity in the subprime space’ and it’s closing BNC as a result. BNC stopped funding loans, except for those already approved.”
“‘We are not in the ninth inning of this game; we are not even in the seventh inning,’ said Susan Wachter, a professor of real estate and finance at the Wharton School at the University of Pennsylvania.”
The Mercury News. “Erin Murphy thought last week that she had a good shot at landing a job to process home loans, until she found out she was one of 60 people who had applied for the post at a local company.”
“Murphy is one of more than 600 workers who have lost jobs in the East Bay’s mortgage industry this year. Until Aug. 3, Murphy was working in the Concord office of American Brokers Conduit, a unit of American Home Mortgage, and she has been hunting for a job in the mortgage industry since.”
“‘Out of the 30 people in our office when it closed, I think only two or three of them have found jobs,’ Murphy, a Brentwood resident, said Wednesday. ‘And I don’t think the jobs are in the mortgage business.’”
“The East Bay’s mortgage-related job losses are so severe that the Alameda-Contra Costa region has become a hot spot in the nationwide mortgage meltdown. During the 12 months ended in July, the East Bay lost 1,500 jobs in an industry called credit intermediation, which primarily consists of loan officers, underwriters and mortgage agents.”
“Veterans of the local home-loan business said they have not witnessed a downturn this severe in their industry in at least a decade.”
“‘We have never seen anything to this extent with entire lender business lines being closed and companies shutting their doors with 15 minutes’ notice,’ said Ginny Ferguson, CEO of Pleasanton-based Heritage Valley Mortgage.”
“Industry insiders say they have no idea when the turbulence will be over. ‘It’s like we’re in the eye of the storm, but nobody knows which direction the wind is coming from,’ said Christopher George, president of San Ramon-based home loan vendor.”
From KCBS.com. “Many Bay Area real estate agents are feeling the squeeze. When the housing market was hot, some people abandoned their jobs to get a real estate license.”
“‘The sad thing is I also have lender friends and title and escrow friends who have lost their jobs that are out looking for full-time jobs,’ said American Canyon realtor Erin Heeley.”
“Things are tough even on the pricier Peninsula, where realtor Mike Karamitas sold his software consulting company four years ago after the bottom dropped out of the tech market, only to find another bubble bursting in housing.”
“‘I know there’s people in our office who are really really in trouble. I’m in trouble. I’m almost living hand to mouth. Some months it’s very lean,’ he said.”
The Daily News. “Six new million-dollar homes that have languished on the market for months will be auctioned off, at discount prices, as the developer tries to shake off the effects of a nationwide real estate slump.”
“Bargain hunters may anticipate cut-rate deals, but those in the know say the auction amounts to a turbocharged sales pitch.”
“‘We’re trying to focus and highlight our project over anything else in Santa Clarita,’ said Rhett Winchell, president of Kennedy Wilson’s Auction Group of Beverly Hills, which is handling the sale. ‘We want people to bid competitively.’”
“One home recently fetched more than $1 million, developer Mike Mitchell Jr. said, leaving six on the auction block. The minimum bid and reserve price for each is $595,000, about 60 percent of the original asking price.”
“‘We don’t think they’re going to go for that minimum bid,’ he said, declining to speculate on the ultimate price.”
‘We are not in the ninth inning of this game; we are not even in the seventh inning,’ said Susan Wachter, a professor of real estate and finance at the Wharton School at the University of Pennsylvania.’
I wish the OCR had asked Ms. Wachter what happened to her pom-poms, because she was cheerleading for the REIC not that long ago.
Ben, this is what is also exacerbating the problem as well as making me mad. Almost every last one of these REIC people was a cheerleader last year. Now, they are all know-it-alls.
Boneheads. You knew it was coming. You just hoped to get out before all the fools. Few with any foresight didn’t see the economic tsunami that all this crap mortgage debt created was going to wash up eventually.
Amen!
That is why I have said all these stupid quotes.
When need to show these people what they were saying before this thing blew up!
–
Yes, I have her on tape when she was on CNBC 6-8 months ago. her tone kept changing on every subsequent appearance. Emphasis on appearacne.
Jas
All the prominent experts are prominently pretending at this point that they saw the bust years ago.
Yes, and you know they were all holding property. Can you say “conflict of interest”, boys and girls?
They did see the bust… they simply ‘forgot’ to tell the media about it.
Yeah, they saw the bust (as something to PROFIT FROM, that is). Jerks.
“People are screwed.”
-Big V
For those who have been claiming for awhile that housing was a bubble, the idea had to go through the three stages for new ideas: First, they’re ridiculed. Second, they’re violently opposed. And finally they’re accepted as self-evident.
At least we’re finally to the self-evident point, where the correction can finally start in earnest. Oh, and we’re only in the bottom of the second or top of the third inning IMHO. I’m just hoping we don’t go into extra innings.
Around our office, we view this whole mess as unwinding in two parts.
Part one is the violent snap back to reality when it comes to underwriting loans. I think in this case, we are probably in the 6th inning, and at the pace things are changing, we might have the end of the game by year’s end.
The second part is the effect of reality re-appearing in underwriting standards on the rest of the economy, including consumption, employment, housing prices, and leading from that, GDP growth.
For this second part to really progress, the first part needs to come to some conclusion–people won’t get realistic with pricing until they have accepted the new methods of finance going forward, and realize that there’s no going back to 2005. Right now, while we on the HBB know that lending standards won’t go back to the financing world of 2004-2006, the market is pretending that this blip in liquidity is temporary and the party will resume in the Spring.
It won’t.
For this second part (broader economic ramifications), I agree, I think we’re in the second or third inning.
Cannot wait for the 7th inning stretch! That is where total melt down occurs. Sellere that should have sold last year for 30%off now have to sell for 50% off.
Neil where is the sale on popcorn?
Chuckle…
I’m hoarding… forming my own cartel.
Got popcorn?
Neil
Thanks for supporting the price of corn. It’s only up something like 53% yoy.
ninth inning.. 7th inning..
More like the local highschool band is still belting out the National Anthem… somewhere near the rocket’s red glare, bombs bursting in air part.
…and then the opening kickoff dribbles off the punter’s foot. The crowd is silenced. The band desperately tries to rally the crowd with “Happy Days Are Here Again”, but only a few squeeky clarinets and a single thumping tuba are heard. The cheerleaders stand mute, vacant eyes shimmering along the sidelines. The head football coach swears under his breath and throws his towel to the ground.
Suddenly . . . from high up in the stands . . . a lone voice cries out. “U-S-A!! U-S-A!! U-S-A!!
The crowd rustles and gradually the energy returns. Swelling from a dark murmur to a full-blown roar, as one unit they turn back to the lone voice and shout,
“Shut the $#%@! up!”
housing busts last something like 99 months, I don’t know if we’re even 20 months in.
It took 30 years for a house bought at the peak of the bubble before the Great Depression to regain its original value.
Oh, I forgot again.
“People are screwed.”
-Big V
Nice BigV, but that was only because of deflation… Oh! did I drop a D-bomb?!
I think you should change your quote to :
“People are worried.”
–ditech
haha, or “Lost another house to Ditech!”
It still claws at the soul of the FB without confronting them into denial. By the way they are GMAC I think, so if there’s news about Homecomings or rescap… cerberus even, perk those ears up.
And, then ,Brett Farr throws another interception and the crowd sit down stunned and silenced. hehehehehehe
NO BAILOUT FOR HOMEOWNERS, Pres Bush said today.
http://www.forbes.com/feeds/ap/2007/08/09/ap4006038.html
I love this pres. By the time he leaves office in Jan 09, it will be to late to help!. Veto baby!
With foreclosures expected to top 2 million this year, and 2 million vacant houses already, who’s left to feed the squirrels? Maybe the squirrels can HELOC their nest to buy enough nuts for this winter anyway. They can worry about the ‘08-’09 season later- the Fed will bail them out for sure…
I rent and I still feed my local squirrel. He’s the one with the frumpy ear. He’s so cute.
One of my coworkers used a shotgun on a squirrel. Not so cute after the fact.
Was it a coworker or was it you?
A story about squirrels.
Not long ago outside the entrance to the plant I work in there lived many a squirrel. They seem to get along just fine among themselves and managed to feed themselves ok by what nature provided. People though, those animal loving co-workers, began to feed them nuts and other goodies. Soon the squirrels began to fight among each other. They went from “working” for their food by digging and finding whatever nature provided to standing by the walkway harrassing all those who walked nearby to try to get more free peanuts. But the animal loving co-workers continued feeding them. Soon, in addition to fighting among themselves, the squirrles began to multiply like crazy. It was not long after this that due to their violent behavior and their aggressiveness in requesting food from passerbys that the company put out pest control devices (poison) and nearly all were killed. All this would probably not have happened if those squirrel loving folks would have mind their own business and left the squirrles alone.
Another petition. Let’s ask for her to be fired!
LOL jk
“Crabtree said he would love to be part of that discussion, and said the system is broken. According to the Department of Real Estate, there is one enforcement officer for every 3,000 realtors. On the appraisal side, there is one officer for every 2,500 appraisers.”
Or in essence, there was no enforcement whatsoever.
Homer: Oh, everything looks bad if you remember it.
Homer is a man’s man..
“Men live by forgetting. Women live on memories.”
— T.S. Eliot
Nice one, Joey… Hadn’t heard that one. But so true…
“Men are more sentimental then women. It blurs their thinking”. RAH
Had to find my threadbear copy of Time Enough for Love for that one.
funny.. i almost bought a copy of Stranger in a strange land the otherday.. wanted to read it again.. was cruising Barnes and Noble mostly for audiobooks but no audio version in the store. (it’s online tho)
finally walked out with the audio Moby Dick, $20… very well done, imo… the audio reading exposes Melville’s sense of humor, which i’d missed completely.
Can’t beat Moon is a Harsh Mistress. I dream of hurling large rocks from space at prominent Bay Area real estate buildings.
Gwynster, another GMTA moment. I haven’t read him in years, but I used to love Heinlein. He made my brain hurt.
So far, the only thing I can’t relate to in your postings is your shoe obsession.
Have you read Friday? The description of CA certainly seems appropriate, especially now with all sorts of bailout legislation proposed.
“enforcement officer”? What the hell is that? The guy who makes sure all the forged stated income forms are filled out before escrow closes?
enforgement officer
Laughed out loud, hard, at that one… classic…
tee hee!
Off Topic :
I had an interesting exchange with one of the realtors quoted in Ben’s article yesterday, and she asserted that the builders she works with won’t lower prices any further, and instead are looking for tennants now!
Builders becoming Landlords :
>> Brandon,
>> The quote in the paper was not written in its
>> entirety. The quote was with
>> respect to my new construction builders who cannot
>> go any lower.
>I think they’ll find that bankruptcy allows them to
>sell those units at still lower prices. Anything
>completed at BK time will be liquidated to try and pay
>back creditors.
>
>Even without BK, they can’t afford to keep homes on
>their books for years while the market tanks around
>them.
>
>When they are selling those houses for 120x monthly
>rent, they’ll be worth buying, not until. And with a
>recession all but guarenteed at this point, rents
>aren’t going to magically shoot up to support the
>inflated housing prices of the last few years.
The builders I work with have some pretty deep pockets to get them through the market adjustment period, however they also have a breaking point.
Since the builders I work with have told me they will not absorb any more losses on their houses, they are putting tenants into them. Thanks for giving me a chance to respond.
How practical is it for Builders to rent what they build? I was under the impression that they used more hard money for their costs, and didn’t have anything nearly as nice as a regular mortgage rate for the money they’re out.
Also, without cash coming in, how are they going to build more?
Renting only solves part of the problem…It may stop the hemorrhaging but its not going to stop all the bleeding….
I have to disagree at least partially, all those people losing homes have to live somewhere and since corporate owned apartments are out of the equation it means increased competition for privately owned housing stock. Rents may well increase in that sector.
It is impossible to finance a single-family rental on a high-rate, short term construction loan. Apartment complex make it by square footage and footprint. At best those builders are upside down on the note.
and If I already own that property built years ago ?
Then you aren’t a builder trying to rent out new houses built on hard money in a declining market.
And that was never my arguement.
But that was the whole point… can builders effectively stay solvent being landlords?
Building houses for rent is not a successful business strategy. Why do you think they have been building apartments instead of houses for rent the past few centuries? It might delay the inevitable, but the end result will be to lower home prices to match with incomes.
The other side to this is who is going to rent them if the prices increase.
Homeowners can’t respond to local inflation like a renter. A renter can feel the heat being turned up and can easily jump out of the pot.
The next question is whether the landlord collective can afford to turn up the rental rate if there is surplus inventory in the area.
But they can forgo their “profit”, convert their short-term construction loans to long-term commercial loans for their cost of ownership, and try to ride it out at a slow bleed. That is, if they can convince a bank or some lender to make the commercial loans at a reasonable rate. That might be possible as they will only be financing their cost, not their forgone profit.
If they were so inclined, they could try it. Of course, convincing the bank to loan them money at a reasonable rate might be a little difficult, especially when the bank looks at the expected cap rate for these alligators.
I hear getting new loans is easy. Should be a piece of cake. The cp market is rocking.
This doesn’t make any sense at all. The whole economic model of builders is booking sales, they’re not going to become landlords. They’ll firesale it all first.
That’s what I thought. Unless they expect the downturn to be a few months before it comes roaring back, this seemes like them cutting their own throats.
I don’t think it would be applicable to bigger builders but maybe the smaller guys…
Totally agree. Builders are not in the landlord business, and know nothing about it. Also, the numbers still don’t make sense for them, since the rents won’t cover their holding costs (even assuming that their lenders would allow them do rent these houses - they are dealing with short term construction loans here); so, they’ll end up with alligators plus the headache of trying to be a landlord. Furthermore, putting a tenant into the property will lower the value of the property, since the builder can no longer sell it as a new home. Finally, I’m not sure that collecting rent is going to do anything to help their financial situation, as their business model is dependent upon them selling the homes, not just collecting a pittance in rent each month. Sounds to me like the realtor is just trying to convince people to buy now (because prices won’t go any lower).
Sounds to me like the realtor is just trying to convince people to buy now (because prices won’t go any lower).
That was my thought too. I’d respond with something like: “Since these are not going any lower, I won’t be buying, so I’m glad to hear they’re offering those for rent. Please send more info on the 3/2 rentals in the area of xxx”
Then they’ll sell it cheaper, like a “dealer demo” house. Just used it for a few test drives.
Excuse me but if a property becomes a rental then you have a different tax going on here and depreciation.
C’mon you guys…. step over bull sh*t, don’t discuss it.
The lender will convert the construction loan to a neg am balloon loan with monthly payments equal to rent minus taxes and insurance. The lender will do this to avoid taking back the property as REO.
Froody! That means rents will come down even further, therefore accelerating the bubble.
“People are screwed.”
-Big V
The Mechanic Liens filed by the subs will force them to sell to generate cash or file BK to stop the forced sales by the subs.
“John Husing, a prominent area economist:‘Even with lower prices, buyer skepticism and higher rates will push the return to normality into mid to late 2008.’”
Now this fellow is a “prominent” so called economist and admits he has nothing really to base his projection on but pulls this same old mid2008 right out of his azz. Why oh why do the note takers from the press keep repeating this crapola. This guy is really clueless along with the rest of them. They are trained to believe that there can never ever be a serious correct, because “they” won’t let it happen. This time may be different, and by George they’ll have a “model” to work from next go round.
He’s also the one (IIRC) who a year ago was basically calling the IE bubble proof. Yeah, let’s go back to him for more of his sage wisdom.
Bet he’s all but ready to do a Gary (The Invisible) Watts. Whatever happened to that guy? His kool-aid must have been too strong even for the California press.
Hey wouldn’t it be great if he was a regular, super-bearish poster on this forum? Maybe it’s part of his 12-step therapy, making amends to all those he has harmed.
Let’s not forget that this was not Hurricane Katrina. This came about through indifference, incompetence and greed on the part of legislators and regulators.
I’m sure someone has posted that politically, plenty of elected reps are sweating bullets right now — especially those on Banking And Finance committees. It happened on their watch and if I was advising a potential candidate right now, I’d go for the throat with a rusty beer can. Some of these Reps and Senators will go down for this, that’s my call.
I think they hope prices will come down 60% till mid 2008…
Prices will come down to the 1996/1997 prices and all this inflated smoke will be one big bad dream. To those who were wise they will still have a home. Others, smoke a joint and leave the keys on the kitchen counter with garage door open.
He’s a DOF (dumb old faculty). This is what I started calling our older, mostly sensile faculty that just won’t flipping retire. They wonder around the departments spouting data that is horribly outdated. We do our best to keep them away from the undergrads.
This guy is a complete tool. I can’t figure out if he’s just a mouth piece for NAR or just a senile old fool. He obviously lives in a bubble of his own if he thinks that home builders lowering the prices to $380K will get people buying again. Hello…Mr Economist, the average income in the IE is $52K which puts that house at 7.3x the median income. What lender these days is going to fund that?
“We need to hear from the Crisps and Coles, from folks who need to come out in the open and talk about how we got to where we’re at.”
Don’t hold your breath on that one!
They are not talking to anyone right now…
Watch the video that goes with this. All the local authorities are just burying their head in the sand…
I think the only thing we would hear from Crisp and Cole at a hearing is: “On advice of counsel, I respectfully decline to answer that question on the basis of the Fifth Amendment and my right of personal privilege that any answer I may give may tend to incriminate me.”
“. . . WILL DEFINITELY incriminate me.”
Damn I want more Crisp drunken meltdowns! Someone needs to follow this guy and post the dirt on YouTube >; )
“‘So far, the sales declines show no sign of abating as buyers have reacted to high prices and a belief and/or hope that they will fall significantly,’ Husing said.”
It is time to lay this tired and flawed analysis to rest. Husing’s remark reflects the oft-repeated opinion that prospective buyers are somehow in the drivers seat, with many of them are waiting in the wings to jump in to the market at the first sign the prices are starting to soften. This completely ignores the credit bust which has sucked all the easy money away from the housing market, a over one hundred lenders who were making crazy loans this time last year are out of business. It will take a large price drop from here to realign home prices and incomes sufficiently to enable buyers with traditional financing qualify for loans under traditional underwriting standards, by which I mean the sort that does not lead to foreclosure crises.
There will not be nearly enough buyers to absorb the foreclosures, and certainly not enough to buy the foreclosures and new construction, both of which will likely be undecutting all but the most under-market-priced houses.
I think after the mortgage melt-down of last week, comissions will be VERY few, and VERY far between.
I suspect in most CA markets the numbers of buyers will drop from thousands a month into the low hundreds. Rare is the person who can qualify for the gigantic loans necessary to buy even a modest home anywhere in So Cal, and rarer yet one with 20% down (120K) + money left over for expenses.
We are entering a period of time when there will simply not be any sales, until banks are forced into dumping their foreclosures and are forced to price them at a point where sufficient buyers qualify for credit to do so.
Just cuz yur right prof, don’t mean a respected ” prominent area economist” (WTF is a prominent area economist?) is completely wrong, maybe he is talkin abot a baitin his fishin hook.
He’s a DOF (see above)
And a tool!
Bill Gross wants to bail out the deadbeats:
http://www.forbes.com/2007/08/23/gross-mortgages-update-markets-bonds-cx_af_0823markets37.html?partner=yahootix
The outspoken Gross called for help from the White House because of its history of bailing out financial failures: “Why is it possible to rescue corrupt savings and loan buccaneers in the early 1990s and provide guidance to levered Wall Street investment bankers during the 1998 Long Term Capital Management crisis, yet throw 2,000,000 homeowners to the wolves in 2007? If we can bail out Chrysler, why can’t we support the American homeowner?”
Free houses for everyone! Everyone’s mortgage should be forgiven! Yeehaaaaa!
Actually, if eveyone’s mortgage was forgiven, then sellers would be free to cut prices below their old mortgage amount. It would all be pure profit. Prices would fall a lot I would think.
Now taking bets on how soon Gross starts backpeddling after thousands of angry customers take their business elsewhere.
Mr. Gross was happy when he was making big money when rates where down, he never talked about housing inflation then, now he wants to bail out himself, not home owners.
Not true. Go to PIMCO and look up Mr. Gross’ archive.
Dear Mr. Hoz here is what Mr. Gross says now ” A 10% “hook” in national home prices is serious business indeed. It’s little wonder that Fed, Treasury, and Congressional leaders are shifting into high gear.”
I never heard him saying anything when prices went up 200 to 300% in last five years. Why is he so concerned for only 10% decline now. There were no economic fundamentals to artificially raise house values, bonds values even stocks values, in making people like Mr. Gross very rich, when middle class peoples salaries went down because the dollar lost its real value. Fundamentals should comeback were they should have been ….
“ Fed, Treasury, and Congressional leaders are shifting into high gear” because they are belong into the same “team” as MR. Bill Gross, they are afraid of loosing their accumulated riches…
i’m still having a hard time believing he actually said this in public..
Must be stress.. a man’s true character exhibits itself in bad times. Evidently, Gross is a commie at heart.
I will take the other side in this argument, “a man’s true character exhibits itself in bad times.” Maybe, he just has some compassion. I am sure he is not going to be hurt. I have listened to him a few times and read some of his stuff. I am not smart enough to figure when he is “talking his book” but I would bet he has a better feel for this me. One question comes to mind, does this country really have the financial strength to withstand the bursting of the housing bubble?
Where does Gross get off volunteering my money to help soothe his feelings of compassion.. or is it guilt?
He’s got about $1 Billion to spare without suffering personal discomfort. Let him start with that.
If he needs more, he can ask me directly to contribute, instead of going over my head with an impassioned plea to Govt to confiscate the money..
As far as our strength goes, this country is a sleeping giant that nobody should underestimate. One way to wake it up in a foul mood is to try and pick it’s pocket.
I will take the other side in this argument, “a man’s true character exhibits itself in bad times.” Maybe, he just has some compassion. I am sure he is not going to be hurt. I have listened to him a few times and read some of his stuff. I am not smart enough to figure when he is “talking his book” but I would bet he has a better feel for this me. One question comes to mind, does this country really have the financial strength to withstand the bursting of the housing bubble?
He wants taxpayers to buy idiots overpriced homes.
Here is the only way these idiots should get to keep their homes :
1) The gov’t buys their mortgage out, and cuts the sales price in half, and that’s the new “bail out” principal. They can have a 6% interest. The gov’t pays the bank 85% of the loans value (estimating they’d take a 15% loss in foreclosure, and as a malinvestment disincentifier)
2) When the house is sold, if there is any principle left on the “bailout” mortgage the entire sales price goes to repay the taxpayers. The FBs get exactly zero.
3) If the FB pays off the “bailout” mortgage in full, they can the buy the rights to the house for, you got it, the 50% of their original mortgage that got knocked off. This they can do by getting a mortgage for the amount.
4) If the buyer can pay in CASH the other 50% of the original mortgage while demonstrating no other debt beyond 1% of what is owed on the “rescue” mortgage, they can convert the bailout mortgage into a regular mortgage, where they can keep any profits from selling.
I suggest big money private outfits in the financial sector (PimpCo, etc.) should step up and create a bailout pool, if that is what they think is best. Leave the much maligned U.S. middle class out of it.
I don’t want a bail out, but if one comes, it better still punish people for being retards. And I doubt we’ll EVER see housing prices this high(adjusted for inflation) ever again!
Making them pay the full principle and forgiving them interest on half of it for awhile might let some of them keep their overpriced crapshacks, but still at leasts makes them eat some of that cost. Yah, the taxpayer loses to inflation, but that’s better than losing completely.
Why are we even discussing certain bailouts that would be “OK” with us? We should be taking a much harder stance here. I insist that all parties involved lose whatever money they risked.
When I was a kid living in Vegas, my dad said “People who win deserve to win, and people who lose deserve to lose.” That’s my new mantra and I’m stickin’ to it.
“People are screwed.”
-Big V
Why do we even pay these people any heed? This bailout will not happen, and wouldn’t make a difference even if it did.
“People are screwed.”
-Big V
Bill Gross wants to bail out his own azz. He doesn’t give a rat’s eyelash about J6P. He knows that his bond fund holdings are already in dire straits… his MBCommercial Paper is nearly worthless. His customers are going to run for cover and cash out. His 950 billion dollar fund will be decimated.
Don’t think for a second he gives a hoot about the FB’s. He’s an assbite, just like the thousands of scum who are intelligent, well educated and knew darned well what was transpiring.
It’s one thing to listen to the RE brokers and mortgage lenders and codger professors say, “We didn’t know this was coming.” For them, that’s true. They’re incompetent.
But when Billy gets up and saws his fiddle to pull a tear from us, he’s a ruthless, self-serving SOB and he will pull no wool over any thinking person’s eyes.
In fact, Bill’s fund should be investigated to see if he has marked his bonds and ABCP to market! Bill is probably holding a fund that has lost a lot of money because of his erroneous judgment.
Go ahead Bill. Scream at the top of your lungs for us to look the other way. We know you. We know you.
–
“No Clear Historical Precedents In California”
Only for those who have short historical memories. How about going back 70-150 years in time.
Grandfather of a friend who grew up in Santa Barbara bought a 4Br home in LA for $2,000 cash during 1930s.
Jas
I think it was in the 1940s that teachers could buy houses on Balboa Island in Newport Harbor for about $4000. Check those prices today.
In reality, this doesn’t say much… What did $2,000 turn out to be after inflation nowadays? In other words, how much is a 1930 dollar worth in 2007 dollars? I’m sure it was a decent price, but that statement isn’t really meaningful.
–
Inflation has gone up by a factor of 16 since 1931-33. Therefore, the $2,000 in 1930s were same as $32,000 today. I bet that the land that the home was on is worth $640,000 now. This means gain of 20 times after adjusting for inflation in price alone. With all the rents and reinvested gains, after expenses, would come to 50-100 times after adjusted for inflation. The key is buying when no one wants to, or when very few have cash to buy.
Jas
2000 after inflation, from 1930? About $20K.
Okay - ran through an inflation calculator. $2K after 77 years of inflation (through 2006) comes to: 22783.40. Yep, bought a house for $23K. I’d go for it.
LOL - looks like everyone else did, too.
Lets see, 2,000 in 1930 is roughly 80 years. At 5% inflation your money would need to double every 20 years. That would only be $32,000. Ouch! Housing could fall a lot…..
That’s nothing. My friend’s uncle’s great-great-great grandpappy purchased an 8 bedroom/7 bath w/ granite and hardwood in Rancho Sante Fe for $50.00 cash in 1850!
–
The whole point was that prices probably dropped a lot between 1928-29 and 1932-34.
San Diego prices once dropped 89%, from peak to trough, and another time more than 70% during the second half of 1800s. The WW II was the biggest boon to the CA RE. That up trend since 1940s, with corrections along the way, is coming to an end.
Jas
I’ll play.
In 1963 my parents bought a new 4 bd 2 bath house in Westminster for 13,000.00. 4 kids, one job, one car
happy times
That’s nothing, my great-great-great grandpappy purchased 5,000 acres of Santa Rosa ranch land for $0.20 / Acre. The sale occured at gunpoint, the guns were pointing at the Spanish lord of a huge land grant.
My coworker’s grandpa bought a house for $19,000 in 1929. He sold it 30 years later for $1900
I mean “he sold it 30 years later for $19,000″
Sorry, I have splint on my finger.
I have a splint on my finger!!!
I wish there was a transcript of Ronn Owens show from AM radios KGO’s newstalk this morning, lots of long time Mortgage Brokers & Apprasiers calling in to tell how the industry had gone to hell and was rife with fraud. They did a poor job of describing how a 1099 after a sort sale would affect you though.
‘It’s like we’re in the eye of the storm, but nobody knows which direction the wind is coming from,’ said Christopher George, president of San Ramon-based home loan vendor.
Well here’s another retard that can’t figure out which way the wind is blowing. Here’s a hint Mr. George it’s a head wind and it will keep increasing it’s strength, so batten down the hatches or be blown away.
“it will keep increasing it’s strength….”
Don’t think so, not w/ Bennie Bernanke and his helicopter drops. Inflation, here we come!!!!!
na.
My grandpappy always said,” If you see a man pissing into the wind, make damn sure you’re not standing downwind of him.”
“Things are tough even on the pricier Peninsula, where realtor Mike Karamitas sold his software consulting company four years ago after the bottom dropped out of the tech market, only to find another bubble bursting in housing.”
“‘I know there’s people in our office who are really really in trouble. I’m in trouble. I’m almost living hand to mouth. Some months it’s very lean,’ he said.”
Time to return the Mercedes S550 back to the dealer and get a real job that pays 1/5 of what you were making a couple years back. Boo hoo.
“‘I know there’s people in our office who are really really in trouble. I’m in trouble. I’m almost living hand to mouth. Some months it’s very lean,’ he said.”
This reads to me that they did not save their money while they were making it… remember that “rainy day” our parents always talked about? Well, it’s not even here yet and they’re in this much trouble?
I’m not so certain I can feel sorry for them.
I am certain I cannot feel sorry for them.
Coming soon to a neighborhood near you: lower standard of living
yes… the only question is how low will it have to go before the Revolution starts?
SUPPORT YOUR LOCAL MILITIA!
Lower is relative, but not such a bad thing IMO.
Victory gardens and chicken coops back in fashion. Reading books (for some). Developing worthwhile skills. Cooperating and bartering with the neighbors instead of waving at them as the garage door goes down. Living simply and humbly. I kinda look forward to it.
The sipping-on-my-Starbucks-half-caf-mocha-latte-triple-shot-grande-while-chatting-on-my-iPhone-and-flying-down-the-freeway-in-my-H3 crowd will someday become the historical equivalent of Nicolai Ceausescu and his wife Elena.
Master Of The Universe . . . meet Country Boy!
Very poetic, thank you for that. Just got to work and needed a good laugh… or is that funny?
If the builders start renting out the homes they can’t sell, do you think they might lie awake at night wondering about the quality of their construction? - Since they now have to maintain them?
tee hee! Ummm, no.
builders as property managers.. no way.
it’d be like telling the cook to go out and wait tables.
“Appraiser Gary Crabtree said there’s been incredible pressure exerted on appraisers in the last several years to ‘hit the number’—appraising homes far above their actual value to bring additional profits to the players.”
“‘A lot of the appraisers are actually employed by the lenders, or are threatened by the lenders that if they don’t hit the number, they won’t get any more work,’ Crabtree said.”
“‘I intend to ask Sen. [Mike] Machado, who chairs the Banking Committee, to come to Kern County in late September to hold a true oversight hearing on lending practices here,’ said Sen. Dean Florez. ‘We need to hear from the Crisps and Coles, from folks who need to come out in the open and talk about how we got to where we’re at.’”
“Crabtree said he would love to be part of that discussion, and said the system is broken. According to the Department of Real Estate, there is one enforcement officer for every 3,000 realtors. On the appraisal side, there is one officer for every
LMAF…”appraiser’s employed by the lenders…”no conflict of interest here. And these pigs want a taxpayer funded bail-out!
This BS has gone on now since the Feds implimented bogus licensing programs.
Millions of dollars spent by appraiser’s on the licensing process and mandated continuing education requirements and the system is in a virtual shambles.
Interesting how with all the handwringing nobody offers the simple solution which is to make it a Federal felony to influence or coerce a state licensed and certified appraiser involved in providing valuations for federally related transactions.
That’s it…bottom line.
However, it’s really way to late to save anything now.
Bank borrowing from the Fed surges
Top-rated banks borrowed an average of $1.2 billion per day from the Federal Reserve during the week ended Aug. 22, the highest level since September 2001, Fed data showed Thursday.
http://tinyurl.com/2o54qp
Yep, Heli-Ben is doing his thing, trying to achieve a soft landing.
I thinking inflation is going to get out of control over the next couple yrs. Injecting liquidity, now probably lowering rates.
I maintain that these billions won’t even begin to offset the trillions that have been lost so far and the trillions that will be lost in the not so distant future.
Inflation is not in the cards; deflation is.
trillions will be lost by foreign investors, who will no longer buy mortgage debt from wall street. we killed the goose that laid the golden egg.
There won’t be as much mortgage debt to buy, so the decreased demand from abroad will not be a factor.
the highest level since September 2001,
Ummm… In September 2001 there was an extraordinary reason for banks to go to the Fed (Like everyone just sat in front of the TV for a week… economic stall extreme.)
What’s the reason now, the super-bowl is too far away to sell enough HDTV’s?
Got popcorn?
Neil
Say, what gives? I thought this economy was rock solid? Why does a stable economy need to be stabilized? Their actions don’t square with their words - something is up. What that consumer spending, and watch it good. They’ll cook the numbers - but when their crap stops selling they won’t be able to hide it for long.
Do rocks fly? I didn’t think so.
“People are screwed.”
-Big V
Are you people out of your minds?!!! Didn’t you see the stock market?! The Dow came ALL THE WAY back to its 200 day moving average! For Pete’s sake, it retreated a full 10%, don’t you realize that sank its 12 month return to under 30%???? SOMETHING HAD TO BE DONE!!!
dipshit\off
With the situation with the stock market, there must be some great bargains out there. Unlike the wimps who cannot tolerate stock price fluctuations, I purchase those stocks from those wimps at bargain basement prices and hold on to those stocks.
Yep. At first the consumers can’t pay for houses so they borrow the money. Then the consumers can’t pay back the banks, so they default. So the banks turn around and borrow the money from the Fed.
Next Up: The banks can’t pay back the Fed so they, in turn, default.
Then what do you think happens?
We are still in the bottom of the 3rd inning and there are no outs.
IMHO top of the 2nd. Sorry - there is a long way to go.
I agree…Its early in the game…
very early. But I’d say bottom of the 2nd… nitpick, but I think the next thing we’ll see is the “visitors” bat around.
Got popcorn?
Neil
Ok, maybe the bottom of the 2nd - who’s pitching, again. I forgot. Is Bernanke still in play or is there any body else to play short stop? Oh, yeah whassis name Perilous Paulson! Cool
Is this going to be like the Rangers over the Orioles, 30-3 (after the O’s led 3-0)?
Tomorrow is pitching and I Don’t Give A Damn is on short stop.
Stop the baseball metaphors! I’m completely jonesing to go to Chicago for a Cubs game and y’all are making it worse >; )
It’s pre-season. Neil has the seasoned popcorn and he isn’t sharing till the game starts.
lol
At what point does the fat lady sing?
She has a part in 5 acts (4 intermissions).
This is going to get scary.
Got popcorn?
Neil
the fat lady is choking on her popcorn.
got water?
luvs, are you watching movies from the fetish section of the adult video store again?
I haven’t even opened my bag of flour yet…
Fontana is an absolute pit. There is going to be horrible pain in that area and all the way up to the High Desert (where there is currently a 2 year supply of homes).
A home near my mothers house in Victorville was first listed at 307k last Dec and is now listed at 214k …. not a buyer in sight anywhere.
For those of you wondering how prices in Compton, etc. hit $500,000 check this out:
http://www.cityofla.org/LAHD/LIpurch.htm
Pretty slick, you only need to pay for a $264,000 mortgage but you get an artifically inflated $500,000 house! Thanks, City of LA!
With sub-prime and alt-A in the tank, and most jumbos history, expect the median to increase for next few months. With few if any sub-median houses selling the average price can’t help but rise. Of course, November/December ‘07 looks to be an absolute, total, hide-the-good-china and lock-up-your-daughters de-zass-ter.
Are you assuming that Jumbos will become available at a reasonable price again? I’m thinking we finally start to see both medians and averages (arithmetic means) fall this Fall unless Jumbos make a comeback. Even the very rich who pay cash will stop buying if they think prices are going to fall.
I agree, although I don’t think that there are enough cash buyers out there to make much of a difference in the median. The fact that jumbos are pricier and harder to get, combined with the fact that many lenders are requiring much larger down payments, will mean that the upper end is going to finally start to get squeezed. (The lower end has already been squeezed since subprime and Alt-A got hammered earlier). This could lead to some pretty big swings down in median prices, especially in high priced areas (like 95% of California).
Yeah and besides, prices have gone up so much that even rich folk can’t afford to buy nice houses with cash. They could buy crappy ones, but why?
“People are srewed.”
-Big V
The only people who may not get squeezed are those people who qualify and only need to get a prime conforming (non-jumbo) loan and are making at least a 10 percent down payment. However, since prices probably will continue to decline (at least somewhat), people who can get a prime conforming loan probably should wait for a while. As a former homeowner and a current renter (for slightly more than three years), I plan to wait for a while before I become a homeowner again.
“‘The sad thing is I also have lender friends and title and escrow friends who have lost their jobs that are out looking for full-time jobs,’ said American Canyon realtor Erin Heeley.”
All these poor, pitiful Ponzi-scheme operators forced to abandon the scam and seek gainful employment - forgive my misty eyes.
It’s interesting to track the volatility in the job market along with that on Wall Street.
These people are chasing the hot market just like speculators chase stock returns.
Howzabout figuring out what you like to do for 40 hours a week and sticking with that.
Nothing wrong with chasing a hot job market.
My mom did that during the dot-com boom. However, she worked a bunch of overtime to keep her feet wet at a part time job. After the dot-com meltdown she did the part time work a bit before retiring. (It allowed a home remodel to be cash flowed.)
That said, what are a bunch of unskilled sleezebags going to do? No education.
If they don’t already have a drinking problem, you know they had no conscience to kill.
Got popcorn?
Neil
“If they don’t already have a drinking problem, you know they had no conscience to kill.”
I gain more insight and wisdom from this blog than from a thousand libraries.
That’s what is so funny. These idiots actually feel that they DESERVE to make more than Doctors, while they are defrauding everyone dumb enough to fall for their lies. Now that the scam is exposed, they don’t just slip off to obscurity with their loot. Oh know that was spent on Hummer lease payments, parties, trips to anywhere the rich and famous would find acceptable. They are just as broke as the poor idiots they screwed over…..
Karma….It sucks sometimes, and then again other times, it is pretty neat to see it in action.
No worries… maybe they’ll have an epiphany and become day-traders like TxChick. THEN, they’ll REALLY start contributing to the future of our great country and their fellow mankind…
LMAO!!
I know, I know… as Chris from Family Guy would say, “Why you gotta break balls?”
You wouldn’t know them if you saw them.
Oh, balls I have. It’s a penis I need more of! Then maybe I could get rich chicks like you…
Ahhh, for want of a few inches a film career was lost.
lol
Sub-prime slime is oozing out everywhere from the US -where will it spread next?
SUB-PRIME slime, the American-spawned menace that has shaken banking giants and rocked share and bond markets, has invaded our shores.
The extent of the threat that this fearsome creature could pose to our housing market has yet to become clear, although some early effects are already being felt………..
Bwhahahaha
http://property.timesonline.co.uk/tol/life_and_style/property/article2313499.ece
The slimy plot thickens…
sub-prime slime…
Its a catchy headline!
“It Came From Orange County” - Now Playing
The thot plickens… tig ole nitty bipples!
I noticed Ben’s blog got a mention.
“Things are tough even on the pricier Peninsula, where realtor Mike Karamitas sold his software consulting company four years ago after the bottom dropped out of the tech market, only to find another bubble bursting in housing.”
He should just hope we get through October without having a big quake along the San Andreas fault line running right underneath all of those overpriced houses on the penninsula. Just think what it will take to sell a house over there if the San Mateo bridge is out of commision for awhile or all the idiot who have moved here since 1989 find out what it’s like when the ground shakes.
The think there tremors running through the mortgage industry right now…they haven’t seen anything yet.
PS: The same thing can be said for the 580 corridor from the central valley into the Tri-Valley getting shut down from the Calavares fault like it did in 1979….
Hey Ray,
Don’t forget about the Hayward fault, which is supposedly due, and could put BART and I-680 through Fremont out of commission.
Southern California also is not immune to another earthquake. It was only 13 1/2 years ago that the huge Northridge Earthquake struck the Los Angeles area. When the ground shakes, sometimes it shakes very strongly.
Buyers are very far and few between. Buyers who are able to get financing are really holding all the balls,”
And squeezing hard if they have good sense.
Lol. I’d say buyers are still only applying ‘gentle pressure’ at this stage. The REAL squeezing is yet to come.
Meanwhile I’m working-out with my GripMaster in preparation.
ROTFLMAO
Diet coke became airborne. Thanks Dan! GripMaster…
Do we have the next thread to compliment the Joshua tree?
Got popcorn?
Neil
a jar of Bengay might produce results
I have the vise from Casino all cleaned up and ready to go.
“ Fontana City Manager Ken Hunt said the situation is not good, but there’s no reason to panic right now. ‘The economy is going through a cyclical correction period,’ Hunt said. ‘How long will it last? How deep will it go? We don’t know.’”
You don’t know how long it will last or how deep it will go?. Then I’d say that for FB’s ..IT’S DEFINITELY TIME TO PANIC!
“………but there’s no reason to panic right now.”
I’m sorry, but if I lived in Fontucky, I’d be panicking about now. Who the freak would voluntarily choose to live in Fontucky? Seriously.
He’s actually right about that cyclical correction. Of course, it’s an almost 80 year cycle…
“And in the Northern California community of Santa Rosa, Ron Street of RE/MAX Central said he had one house under contract three times ‘and then the (buyers) just disappeared off the planet. I think a lot of this is driven by fear more than anything else. I’ve seen people who are ready, willing and able to buy. It’s like there is some immediate change in them.”
Yeah, the ‘immediate change’ is that lenders are NO LONGER willing to loan $750K to shmucks who only make 30K a year.
The clock suddenly struck 12 and the MAGIC that made your buyers ‘ready, willing and able to buy” is GONE. They’re back to being what they really were all along; deadbeat pumpkins.
I bet its the DOWN PAYMENT requirement scaring them off. They are probably speculators. Sounds crazy huh, there are STILL flippers who ‘want’ to buy but cant get 125% purchase loans so the deal dies.
MAN-you are on roll!!! I am about to wet my pants.
if by “one house” you mean “a pen1s with warts” … then the rest of the analogy pretty much works itself out, I guess.
And makes sense too, in the current environment. That’s the key.
“One home recently fetched more than $1 million, developer Mike Mitchell Jr. said, leaving six on the auction block. The minimum bid and reserve price for each is $595,000, about 60 percent of the original asking price.”
Well I hope the million dollar buyer is like 3 years old cause it’s going to be awhile before he has much in the way of equity.
Or neighbors!
This is a FREAKING CLASSIC!
See “Voldemort Classics” - second post down
http://tinyurl.com/25b2p9
TX Chick:
If you’re still there, can you tell me what this article is getting at? They are saying NOT to short the market? Earlier, you alluded that the 18 month ban on CFC-shorting by BAC wouldn’t do anything to stop them. How can they get around it? Me confused.
She’s pointing out the irony that Cramer, who wrote the Voldemort piece originally while dot.coms were bombing across your entire periphery with this kind of financing… that same guy comes on 7 years later and says, faced with the exact same scheme “Oh my bad, Fed’s got it. We’re going to the moon.”
It’s a little duplicitous, dubious, and delirious if you ask me.
(Sorry, previous post delayed… PPD should be an acronym around here when replying to yourself!).
No, just the opposite. The ‘18-month Ban’ is a little overwrought, like telling someone “I love you!” in the 7th grade. Yeah ok, til next week. BAC is not going to go on their E*Trade account, enter 111,000,000 short shares and click “Okay”.
The FREAKING CLASSIC! part is because it’s Cramer (!!!) that’s pumping it, like he’s never seen a deal as good as this!
The powers that be have been caught at what they’ve been doing for quite some time now, selling packaged air.
Many of the hedgefunds had leverage of as much as 200 to 1, on each Dollar they had in a given fund.
What now, brown cow?
Yes, by George, you’ve got it.
Not only are they and their cow dead, but their best friend investor and their herd of cows are dead, and so Mad Cow Disease was born.
The fact is that here in the US, the markets have MCD and the only thing to do is to round them up, dig a pit, and…
Off to watch my beloved Packers!
To those unemployed appraisers and people working in mortgage biz. I hear Zillow is hiring people who know how to serve the Kool aid.
“I think a lot of this is driven by fear more than anything else. I’ve seen people who are ready, willing and able to buy. It’s like there is some immediate change in them. I think everybody is afraid that they’re going to make a mistake.”
People are afraid, alright. Afraid of catching a falling knife. And, for those who aren’t afraid yet (some of the bulbs aren’t too bright), most of them can no longer qualify for a loan.
Damn right about “qualifying for a loan” I am a renter and I have a preference for the house I want and what it is worth. Currently I qualify for a stucco box. But if I stay patient and politicans don’t try and engineer a soft landing with a bailout I know houses will return to reasonable valuation.
Ben,
I know you and others here are probably pretty tired of the obvious, but when things weren’t so obvious, you stuck it out…pure genious. There is no doubt it is all over. btw the ECB will raise rates next week…this is going to be like 30 years ago…I applaud you all. now, let’s all buckle up…neil?
crush
I’m not sure if you’re asking me or Neil T…
But I’ll answer anyway. I think we’ll really need to buckle up soon; but as I’ve noted earlier, things should basically stick together until mid-September. After that… it will be such a brittle system that everything will fall apart.
I’m actually worried at it will fall apart in the next 3 weeks. Why? There is a seasonality to stock market corrections/crashes. Have one out of season would imply things are far worse than I can ascertain. Yes, things are bad… but to find out they are worse than I expect… would be scary.
That said, an ECB rate increase would be a silver bullet into the dollar.
Got popcorn?
Neil
..to find out that things are as bad as I expect…would be scary.
Hyperinflationary Depression. HD
“Many Bay Area real estate agents are feeling the squeeze. When the housing market was hot, some people abandoned their jobs to get a real estate license.”
My dad knew one of these people. This lady was in a fairly decent paying position for not having a college degree. She decides that real estate is her future (in 2005) and leaves her job for it. My dad said that she will have a difficult time getting back to her old status because normally those positions are filled with college educated people.
I remember running across brand new RE agents on MySpace around the same time. I should have bookmarked them to see how they are doing now.
“Until Aug. 3, Murphy was working in the Concord office of American Brokers Conduit, a unit of American Home Mortgage, and she has been hunting for a job in the mortgage industry since.”
American Brokers Conduit: After the subprime lenders that approved 150% LTVs in California went bust (Ownit, New Century, First Franklin, etc., etc., etc.) all went bust, there was American Brokers Conduit funding the $500,000 sales with $750,000 loans. Now I realize they were a unit of American Home Mortgage. Whoever holds their paper is on a fast track to 75% losses. Those $500,000 houses are soon going to be selling for $300,000. After foreclosure and selling costs, RMBS holders of the AAA paper will get $250,000. The AAA tranche probably had a value of 92% of the original $750,000. So presto-bingo $690,000 in securities is $250,000 in 2008-2009. $440,000 loss over 3 years. Hmm, can you say negative 21% return/year! Sheesh.
“It’s at the borders of pain and suffering that the men are separated from the boys.”
Emil Zatopek
You simply MUST go to Seattle Bubble and listen to the Dr. Laura segment. Even if you hate Dr. Laura.
hmm.. a “Falling Down” moment..
need a sequel.. a violent thriller.. Prices Falling Down.
http://seattlebubble.com/blog/
You gotta watch the Suzanne Researched This commercial before playing the radio clip, makes it 10x funnier.
Man that commercial bugs me when the husband is waning and like the voice of the devil comes out of the speaker phone : “come on, do it you loser, buy the house, pay me my 6% for 10 minutes of research.”
Wow, that should be a trailer for the Suzanne commercial every time it plays. The problem with residential bubble markets is they screw with peoples lives to such an extent that the pain becomes unbearable. There will be headlines about FB’s flipping out in 2008 & 2009.
Been reading this blog for a couple of months now. I’ve been saying this for 18 months.
I am a 15 year vet in the RE biz started as a loan officer(back when you had to qualify) and am currently an independent broker in the Antelope Valley. I hate most agents, don’t socialize with them at all. ( I’ve always tried to be a professional at my work, so some of us are not sleaze bags)
Sales are down 60%+ in the AV.
I also sell in the Santa Clarita area. “Northbridge” area of SC 43 actve listings, not one accepted offer this month, only one put into escrow last month.
Simi Valley, 546 active listings, 15 accepted offers this month. (All MLS Numbers)
This is going to be biblical, no doubt in my 15 year experience mind.
I am now SELLING popcorn to earn a living.
checkout catalysthomes.com, toaks area shows only one sale for last month for 300K - 500K range. there is more than 50 homes listed
Will the last Californian to sell a house, please turn off the lights?
This elicit a few chuckles…this should sellers still living on planet Pluto…
Keeping the faith… These home selling tactics may be unconventional, but some swear by them…
At the suggestion of their Realtor, Brandi Benson, they brought in a stager who refocused the home using the concepts of feng shui. Tammy Winfield also addressed the reasons why she was having a tough time detaching from the home, possibly causing buyers to stay away. And then there was the little matter of burying a statue of St. Joseph in the yard, a ritual she learned about from her Catholic friends.
Feng shui staging
When Benson suggested using feng shui to stage the Winfield home, there wasn’t immediate acceptance of the idea by the owners.
“I was somewhat skeptical. My husband was more so,” Tammy Winfield said.
At its heart, feng shui staging involves adjusting a place’s energy and enhancing the perception of space, often done by reconsidering furniture placement, said Christine Ayres, who staged the Winfields’ home and also co-wrote the book “Sell Your Home with Feng Shui.” Visit the book’s Web site.
It’s a technique that has been around for hundreds — and some say thousands — of years, she said. And while the concept has long thrived in China, it’s only recently that it has been embraced in the United States.
A home with a good flow of energy is one that makes someone feel comfortable immediately; a home without it, on some level, makes a person want to leave, she said. Feng shui can also be used to create a clear path to a home’s “room of first impression,” the room that will make the biggest impact on a buyer, Ayres added.
“Most Realtors are very open to it. They’re going to use any tool possible to help market the property,” she said. There’s also little cost involved, she added.
Some tips to consider for those who want to try using feng shui to sell their home:
Furniture shouldn’t be placed in the direct path of the entrance of the room, said Cynthia Chomos, a feng shui consultant, speaker, teacher and founder of the Feng Shui School for Real Estate Sales, in Seattle. For example, if the back of a couch faces a room’s entrance, the piece of furniture can cause a person to “ping pong” back to the door, Ayres said.
Chomos also advised having a solid wall of support behind a key piece of furniture — a rule that makes it a bad idea to place a bed under a bedroom window. The front door, “the mouth of the house” should get special attention because “it’s where the house inhales its vitality and brings in the buyer,” Ayres said. Spruce it up with a fresh coat of paint, replace scratched hardware or frame the door with matching pots, which has the visual effect of widening the door, she said. If potted plants flank the house, the plants shouldn’t have sharp, pointed leaves, Chomos said. A plant such as a palm can appear aggressive and ward buyers off, and “the last thing we want are sharp points pointing at (a buyer’s) stomach,” she said.
Ayres also suggests hanging a wind chime at the front, right corner of the home. That area is the buyer’s area, she said, where decisions regarding the sale might be made.
The feng shui techniques used by the Winfields “opened the house up a lot,” Tammy Winfield said. However, she still isn’t sure she’s a feng shui believer. But Benson, her Realtor, is — after the success of two sales with feng shui makeovers, she applied the concepts to her own home.
Hey, people from that part of the country understand that ancient ways have a lot to offer to the open and accepting consumer.
Besides feng shui, a significant fraction of the overly wealthy also believe that warriors from 35000 years ago have ancient wisdom directly applicable to modern life. BB should call JZ Knight to ask Ramtha’s advice for the best way to behead recalcitrant bankers.
http://en.wikipedia.org/wiki/Ramtha
Actually, It occurs to me that Ramtha may have defeated the Atlanteans by creating a “Liquidity Crisis”!
Local talk show host had on his regular broker/Realtor guy, who repeated that Central California Coast house prices won’t go down much if at all because “of the great weather, the great environment”, etc. In other words, ‘everyone wants to live here’. A week ago the same station had on a mortgage guy saying almost exactly the same thing. The funny part is that both of them admit that lending got way out of hand, “people that shouldn’t have gotten loans, got them anyways”, and that the excess demand is what drove up prices. But take away that demand by re-tightening up loan standards, and without wage increases/afford-ability adjustments? Wellllll, prices magically stay up. After all, everyone wants to live here.
I actually called in last week and made the standard logical points, and got the standard “you are right, however, it doesn’t matter, everyone wants to live here” answer. This week I decided that there was nothing for anyone to gain by my calling in. So I didn’t.
This *is* a nice area to live. But I don’t see magical unicorns riding in to save this or any other market.
Thank God St. Joseph is going to help home owner sell…you see…all you need to do is bury a statue in the back yard and St. Joseph take care of the rest…
According to Phil Cates, owner of the online retailer StJosephStatue.com, sales of figurine kits have risen about 100% every year since 2004. For $9.95, the statue comes with a burial bag and an instructional booklet, all packaged in a cotton tote bag with a logo of St. Joseph on it, Cates said.
Orders to the Modesto, Calif.-based company come from across the country, although states with troubled markets — including Florida, Michigan and Ohio — seem to be ordering the most nowadays, he said. Believers and skeptics are invited to submit their stories on the Web site. Visit St. Joseph Statue customer feedback.
St. Joey is the patron saint of workers, not gamblers.
Here’s what they oughta be burying.
Lol. Very funny
Kay tells us that people are making a lot of money in Manhattan Beach, Hermosa Beach, Redondo Beach and El Segundo (California), and that’s why house prices will stay high:
http://activerain.com/blogs/sthomkay
There is this idiot RE enabler on the HGTV forums that gushes over beaches area. She makes me nuts. But if someone has catching the falling katanas there, I’d rather it be her.
I just compared a zip code in Houston 70762 versus redondo beach 90277…
A little less income in Houston… (10% drop)
Houses in Houston were less than a quarter the price of homes in Redondo beach.
More land per house.
A tiny amount more crime…
And yes, hotter summers/cooler winters.
Otherwise similar (education, activities, commute (Redondo is a short commute to industry in the south bay), etc.)
We’re screwed here in California.
I think people will be able to borrow enough to fake Christmas, but it will be a sucky sales year…
Got popcorn?
Neil
It is true that home prices in desirable areas, such as the coastal parts of Los Angeles County, will remain high. These communities have been established for years and are in high-employment and urban/suburban areas. If I could afford to live in one of these areas, I would do so. In the meantime, even though I made a lot of money from the sale of my San Fernando Valley area house just over three years ago, I decided to continue to rent for a while longer. I live beneath my means and am quite content.
OCC says 2 billion dollar Bank of America investment is a friggin loan. Hat tip CR:
WASHINGTON -(Dow Jones)- Bank of America Corp. (BAC) can’t convert its $2 billion investment in Countrywide Financial Corp. (CFC) into common stock, the Office of the Comptroller of the Currency said in its letter approving the investment….
The OCC said that despite the investment being labeled as a purchase of preferred securities, the agency would treat it as a purchase of debt instruments….
LMAO!!! Aha! Ha! Ha! The PigMen have been exposed. Got Bacon?
http://money.cnn.com/news/newsfeeds/articles/djf500/200708231758DOWJONESDJONLINE000835_FORTUNE5.htm
Is there hope, after all?!
The PigMen are trying really hard to keep this turd afloat. First, they floated the Buffet rumor. Then, they tried to spin a loan into an investment and confidence building maneuver via the WSJ last night. Today, the strategy continued on CNBC with an “exclusive” one on one with Tangelo. However, according to the article it’s a loan:
“In numerous other instances, the OCC has looked to the nature of an instrument instead of its label to assess whether it is a debt obligation or equity,” Williams wrote. “Consistent with the OCC precedent discussed above, the securities at issue here possess characteristics typically associated with debt instruments, rather than common stock.”
If this article gets any airtime, it will embarrass a lot of people.
Will BAC still go through with the deal now that they can’t convert to stock? If they pull out, the stock market will freak. This is better than popcorn; I love it!
“People are screwed.”
-Big V
Don’t underestimate the management of Bank of America Corporation. They are a lot smarter than you realize.
“‘The sad thing is I also have lender friends and title and escrow friends who have lost their jobs that are out looking for full-time jobs,’ said American Canyon realtor Erin Heeley.”
AKA: REAL jobs. A job where you actually DO something in exchange for thousands of dollars a pop. Hope all these people have other applicable job skills BESIDES screwing people.
“‘A lot of the appraisers are actually employed by the lenders, or are threatened by the lenders that if they don’t hit the number, they won’t get any more work,’ Crabtree said.”
Let’s see now, when prices were beyond belief I did not see any County Assessors willing to assess homes at a lower rate. No, they took every penny they could get. Greed is every where and not just confined to the mortgage industry.
“‘The market started to change back in a March,’ he said. ‘Since a then we have been a seeing a decline, decline, decline.’”
So a now we just a do a little a polka. wonderful a wonderful.
I have a house on the South Shore of Boston, MA I need to sell in the fall. My grandfather paid $2k in the late 1930s. It assessed for $305k. The current Zestimate on Zillow.com is $324k. In 2005, the Zestimate was $422k. My plan to sell it for $275k-$285k this fall if I’m lucky.
Everything in this town is selling for below the assessment. I wonder how long the assessments will be “underwater”? I figure the next 5 years at a minimum or they may never return. I am very pesimistic about price in this town. They can easily decline to 1998 (or below) levels. My houses? $124k.
I love to root for the renters on this board who saved up down payment money while avoiding the housing Ponzi scheme. I knew from the start that prices were being artificially inflated. But I had no idea it would take 7 years for reality to set in! Now it’s time for the lawsuits and prison sentences for those involved! Americans cannot expect a tax payer bailout. What the government needs to do is protector the borrowers from predatory lenders of all kinds, in the future. They are criminals! It called white-collar loan sharking.
Almost 1000 names folks :). In less than 3 days, all I can say is WOW!
http://www.petitiononline.com/bailout/petition.html
Please sign and pass it on if you have not already done so.
Actually I started late Tuesday Night so I would have to say it’s a little over 48 hours.
Not only did I sign, I have no less then 22 letters going out tomorrow to various politicians explaining my objections to the bailout proposals.
Hey Tom
Spinning a sign with yer petition in large font in front of some builder models this weekend here in Sacramento. The arrow wll point to Gwynster, who so graciously volunteered to wear a bikini with another sign saying ” EVERY SIGNATURE GETS A FREE KISS” !
Can I count on you to watch my back for the sales crew zooming out in golf carts? Dont worry, those out-of-shape former football jock salesmen are so bloated they’ll get winded after a few punches, and the Cookie Lee crew will need to light up a Virginia Slim after some shrieking.
The world is watching.
CNBC paid streaming is down. They have a rolling transcript up there. They are pimping Gross.
Well that last typed sentence tells it all.
Land loans generally don’t exceed three years, and the buyers were speculating on appreciation.”
“That hasn’t happened and many of those land owners are finding themselves in similar situations as homeowners as evidence by the high rate of foreclosures, Cherney said.”
“‘They are either going to have to cut their prices or give them back to the bank just like homeowners,’ Cherney said.”
“Many loans will expire by the end of 2007 and into 2008 and 2009. If the banks take them over, they will be aggressive in their pricing, Cherney said. With that in mind, he said he expects the price per acre to fall to the high $500,000s by the fourth quarter of 2008.”
I have been lurking here for about a year and a half and I don’t remember much talk about vacant land and it’s bubble bursting.
But… but…
They’re not making any more land!
They are making lots of cookies, though. Now, if they could only figure out a way to make some land dough from scratch, bake it in the oven, and produce ocean front property. Toll Brothers tried and failed. Maybe Pulte can figure it out.
By the way, land wasn’t in a bubble. $800k for desert is rational. Reminds me of FL with swamp land. Bog is priceless.
LOL!
Husing cautioned that when markets are near a peak or trough, there is a tendency to over-forecast current conditions.
“This was seen in the excessive housing euphoria of 2005 and in the current gloomy outlook,” Husing said.
Yes, the situations are perfectly symmetric. In 2005, house prices had just finished roughly tripling in the space of about seven years. And now they’ve come down about 2-3%. Yes, clearly we shouldn’t project the current doom and gloom forward - we’re obviously about to hit the trough.
Sacramento here. Wanted to tell you guys how much I appreciate all your comments. I have learned ALOT.
My wife and I went out to check out some Pulte homes in an area called “West Roseville” recently. When we pull in to the development, we drive right by this heavy-ish older guy holding one of those stupid “buy me” signs. Except it’s in the middle of a totally remote intersection (at a stop sign), and he’s standing in front of a Dodge Big Horn Dog Ram Edition truck. Construction worker? Are they holding up signs now? Anyway, we finally get out to the Pulte Danby Park development. It’s pretty bare, there’s one section of model homes up, and not much else. Sales guy hands me a price sheet that has “SOLD” written in big letters over every model they had, then starts telling me that they’re “releasing” more soon. As if. What I’m supposed to be thankful? I know they have to play it up, and obviously it’s their job to sell. But don’t treat people like fools. Have fun “releasing” your homes you stuck up hack.
By the way, anyone that wants to see the Sacramento housing market at it’s worst, I’ve got one word for you. Lincoln. The only shade you’ll find there is from the billboards advertising brand new houses that aren’t selling. The best part is the MLS pictures I’ve come across with the lawn furniture in the living room. These people couldn’t even afford furniture, much less a brand new 5 bedroom with HOA’s and Mello-Roos.
Smithers, Release the Hounds!!
Told you there would be 90% declines!
Forbes Magazine is doing their share of appeasing their advertisers. They stated that San Jose’s median price is up 8.8% - this spun in such a way that San Jose is one of ‘the best housing markets’ - hell even Zillow is getting it right finally and lowering property values in San Jose, where a fixer upper ‘used to run’ for $650!
Its MEDIAN Forbes, MEDIAN — come on, tell it like it really is………..