August 29, 2007

Everybody Is Waiting For A Better Opportunity In California

Reuters reports on California. “Sheila Hill is no closer to making a down payment on a house than she was a year ago, when she began shopping in the San Diego area, even though prices on some of the single-family homes she has seen have fallen $200,000. ‘It’s kind of an awkward time right now to be a buyer,’ Hill said. ‘I have the credit, but with the market slipping down so much it’s hard to know when to jump in.’”

“‘They are terrified to purchase a home and have it decline in value,’ said Steve Johnson, director of the Southern California region for Metrostudy. ‘We haven’t seen this kind of buyer apathy in regards to committing to real estate in 15 years.’”

“Prospective buyers like Hill and Chanette Duplessis, would rather sit on the sidelines for now.”

“‘I’m a little hesitant to jump right in immediately, because I think that prices are still going to go down,’ said Duplessis, who has been paying $2,600 a month in rent since she sold her last home in the city of Inglewood near Los Angeles a year and a half ago.”

“‘I’m not at this point too anxious,’ she said. ‘You know why rich people are rich? Because they shop around.’”

The Orange County Register. “Mike Borja has witnessed diminishing house prices first-hand since putting his home up for sale this summer. While he had to lower the price by almost $50,000 to adjust to the market, he says he can still make a fair profit on the home he bought for $276,000 in 1999.”

“‘I appraised my home last year and it was worth $552,000,’ Borja says of the three-bedroom condo in Terracina, one of Rancho’s newest communities. ‘I’m now selling it for $519,000.’”

“Borja is not alone in wanting to sell his home before it further depreciates. Of the 12,723 owner-occupied homes in town, according to the 2000 U.S. Census, about 365 of them are on the market, according to Rancho Realtor Laurene Davis. The median home price in Rancho is $594,500.”

The North County Times. “The pace of home building in Riverside County, the epicenter of California’s recent housing boom, has slowed to less than half what it was a year ago, a report released Monday by the California Building Industry Association shows.”

“‘We’ve been on this trend for a number of months,’ said Borre Winckel, executive director for the Riverside County Chapter of the Building Industry Association of Southern California. ‘We’ve been trending fully 50 percent below last year.’”

“Winckel said area residents can expect that trend to continue through 2008, accompanied by a moderate decline in home values.”

“Analysts say many buyers of existing homes are refusing to make purchases unless sellers offer steep discounts, and sellers are refusing to budge on prices, in the hopes of getting what their neighbors did at the height of the boom. ‘We have this curious phenomenon, where everybody is waiting for a better opportunity,’ Winckel said.”

“Winckel said the downturn is concerning because home building accounts for about one-third of Riverside County jobs, either directly through construction or indirectly through sales of appliances, lawn mowers and other items used in the home.”

“Winckel said builders also are concerned about their livelihood. ‘We’re not looking to go from bust to boom again; we’re just looking to get back into the business,’ he said.”

“Winckel urged potential buyers to…take advantage of the swelling inventories of for-sale signs in neighborhoods all over the county. Economist Robert Campbell predicted most buyers won’t. ‘We’re in a hurricane right now. The leading edge of the hurricane is hitting us with full force,’ he said. ‘You think people are going to jump back into this market after what’s happened the last year and a half? No way.’”

The Daily News. “Foreclosures soared an annual 246.8 percent in the greater San Fernando Valley during July as trouble with adjustable rate loans continues to mount, a university research center said Tuesday.”

“‘This is an ominous sign,’ said Daniel Blake, director of the Economic Research Center at California State University, Northridge. ‘There are a lot of possible (loan) resets out there, and we don’t know the extent of them.’”

“In all, 263 homeowners lost their properties last month. In July 2006 just 47 homeowners from Glendale to Calabasas lost their homes. At the current rate, foreclosures alone could account for 4,700 homes on the market next year.”

“‘That could bring enough housing on the market to upset the price stability we’ve seen here,’ Blake said of the market from Glendale to Calabasas.”

“Jim Link, executive VP of the Van Nuys-based Southland Regional Association of Realtors, said that it may even bring a buying opportunity because prices have yet to fall by a large amount.”

“‘Roughly 20 percent of the market (sales) being REOS (foreclosures) I think … would definitely have an impact on prices,’ he said.”

“Malaise continued in other markets, too, including the Santa Clarita Valley. Sales of previously owned single family homes fell 18 percent to 194 transactions. And the median price declined 5.8 percent to $570,000. Condo sales fell an annual 32 percent to 83 properties and the median price slipped 4 percent to $359,000.”

The LA Times. “More than 100 houses a day are being foreclosed on in Southern California, up from 13 a day last year. That’s still a relative handful for such a populous area, but even the optimists predict that the problem will soon get much worse.”

“In a Los Angeles cul-de-sac off Coldwater Canyon Drive near Beverly Hills, there’s a foreclosed house that should be empty and isn’t. The mansion in question was bought by a man in early 2005 for $1.4 million. By last fall he was gone and the property was in foreclosure.”

“Authorities and real estate agents say similar problems arose during the wave of foreclosures in the 1990s, when houses stayed empty for months.”

“Chris Ragsdale, the Los Angeles Police Department’s senior lead officer for Westwood and Bel-Air, recalled one case from the end of that era in Pacific Palisades. The squatters changed the locks, turned on the electricity and brought in furniture. When the agent trying to sell the place showed up, they maintained that they had a lease.”

“‘If you know what you’re doing, you can get six months in a place with a kick-ass view,’ Ragsdale said.”

The Bakersfield Californian. “Once-prominent real estate salesman David Crisp last week received two new default notices on the Stockdale Highway offices he bought in April and was named in a lawsuit demanding repayment of more than $160,000.”

“More than 85 local properties associated with the former Crisp & Cole Real Estate company have defaulted since the beginning of the year, according to an ongoing Californian tally.”

“Also last week, Chicago Title Company filed a lawsuit against Crisp, his wife and Crisp, Cole & Associates. The lawsuit seeks more than $160,917, alleging Crisp failed to repay a line of credit on a property he bought at 1215 L St.”

“Crisp bought the home, took out a $149,500 line of credit from Wells Fargo Bank and gifted a 99 percent interest in the property to Crisp, Cole & Associates before selling on November 10, 2006, according to the lawsuit. Crisp received $235,000 in proceeds from the sale.”

The El Dorado Hills Telegraph. “Folsom and El Dorado Hills are located in the ninth worst market - the Sacramento metropolitan area - for home foreclosures nationwide, but they’ve been spared the carnage somewhat.”

“Sacramento County saw 3,840 notices of default filed between April and June 2007, a 184 percent jump compared with the same quarter in 2006, reported DataQuick. El Dorado County, with 222 notices filed, saw a slightly smaller increase of 158 percent.”

“Jim Foster, who works with JM Morgan Funding in Folsom and lives in El Dorado Hills, said neither area was as hard hit as regions like Elk Grove, Lincoln, and South Sacramento.”

“Like any game, Foster said the market is psychologically driven. ‘Even if you’re scraping by making a payment, if the house you bought for $500,000 is now worth $600,000, you have more invested,’ he said. ‘You’re going to find a way to make it work. But when (the value) goes down, frankly people just divorce themselves from the house and walk.’”

“El Dorado Hills is a slightly different animal, Foster said. On his own street, Powers Drive, Foster has watched foreclosures on at least two $1 million-plus homes in the past six months.”

“EDH took a more industry-specific hit than Folsom. ‘A lot of these people were dialed into real estate as mortgage brokers or builders and this industry has taken a big hit,’ he said. ‘Some are making one-tenth the money they made before.’”

“‘When foreclosures do occur in Folsom, they’re mostly among younger couples who financed their house with no payment down and adjustable-rate mortgages, the phenomenon that’s rendered fast-growing areas like Elk Grove rife with lost homes.”

“Interest rates went up, payments went up, and with the lack of appreciation the market is seeing, homeowners no longer have the equity to pull out of their house to make payments,’ explained Tom Pellegrini, of Norcal Foreclosure Services in Folsom.”

“Foster knows of two or three Folsom couples in their 20’s who allowed the bank to foreclose on their homes, opting to rent instead.”

“‘They weren’t even behind on their mortgage,’ Foster said. ‘They just figured they could rent a house for half the payment, and twice the square footage.’”




RSS feed | Trackback URI

280 Comments »

Comment by aNYCdj
2007-08-29 15:14:47

I wonder how all those Kali4ni Equity Locusts are paying their electric bills on the McMansion in Queen Creek?

John Faherty
The Arizona Republic Phoenix:
Today should be the day that allows us to tell our grandchildren that we were here in the summer of 2007.

Sometime late this afternoon, the temperature is expected to hit 110, and we will have set a record for misery: 29 days of at least 110 degrees in a year.

On Tuesday, we tied the record of 28 days, and the National Weather Service is predicting that we will get to 111 degrees today.

Comment by az_owner
2007-08-29 15:45:13

I still spend far less money on far fewer kilowatt-hours cooling my Arizona house than someone spends heating an upstate NY or Minnesota house. I need to lower the indoor temp by 35 degrees to be comfortable when it’s 110 out. In the snow belt, you sometimes need to add 50 to 80 degrees, depending on the wind chill, and heat rises up through every little crack in the attic.

Comment by SLO Bear
2007-08-29 15:51:24

If you were feeling wind chill inside your house - that is a big problem.

I don’t care what you say, 110+ for a month is sheer misery. But I guess that is why everyone wanted to live there.

Comment by az_owner
2007-08-29 16:00:08

The convection cooling of a house from wind is much worse than static cold air.

110 for a month is bad, just not as bad as 10 for two months, and I’ve done both.

(Comments wont nest below this level)
Comment by SLO Bear
2007-08-29 16:21:32

Point taken.

 
Comment by Hoz
2007-08-29 16:35:49

I have crossed the Sonora desert on a horse in June and I would rather spend a week in sub zero for every day I was in the desert (The desert is incredibly beautiful. Chaque a son gout.)

 
Comment by az_owner
2007-08-29 16:49:22

Did the horse have no name?

 
Comment by Hoz
2007-08-29 17:07:31

Probably, I know that in 1974, I was stupid enough to do this. I came in draped over the saddle like the dead guys in the oaters. Pain and sunburns and the sorest bottom. It still hurts! I came in to my friends ranch and her whole family was outside laughing at me, I did not leave the house again for 3 days unless it was to lie in the pool. I had no pride left.

 
Comment by Misstrial
2007-08-29 17:18:12

“Did the horse have no name?”

lol

~Misstrial

 
Comment by NYCityBoy
2007-08-29 18:18:30

“and the soarest bottom.”

What the heck did the horse do to you when you passed out?

 
Comment by Hoz
2007-08-29 18:41:21

Laughed at me. I am not a rancher, I think I should have turned the horse into coyote chow. Of course I was ready to turn my friend into coyote chow also. She was real cute - that saved her. But on the second day out when she said we only had 20 more miles to ride this day and her younger brother kept picking up and playing with scorpions, that scared the crap out of me, I should have gotten off the horse and walked away. Welcome to the FFA (Future Farmers of America).

 
Comment by DarthRealtor
2007-08-30 05:52:26

Did the horse have no name?

az_owner…you’re killin me. That was perfect. I wish I’d said it.

 
Comment by Mike G
2007-08-30 10:52:52

“Giddyup, uh…Horse”. :-)

 
 
Comment by scdave
2007-08-29 16:26:28

We just got back from the State Fair in Sac…..The heat was completly unbearable for the wife and I….Outside for a hour required a couple of air conditioned hours to recoup…

(Comments wont nest below this level)
 
Comment by pismoclam
2007-08-29 17:25:46

But - it’s a DRY heat! hehehehehehe

(Comments wont nest below this level)
 
 
Comment by aNYCdj
2007-08-29 16:30:45

But Homes in NY and Minnesota are probably 1/2 the size of the 3500sq ft. Queen Creek McMansions.

The AC has to be all day and night for months….low temp tonight maybe 86 …. sure just open the windows

Comment by NYCityBoy
2007-08-29 18:20:09

“But Homes in NY and Minnesota are probably 1/2 the size of the 3500sq ft. Queen Creek McMansions.”

You’ve never been to Apple Valley, Eden Prairie, Woodbury or Wayzata. Minnesota homes aren’t small any more. Heating them is a fortune.

(Comments wont nest below this level)
 
Comment by SteveH
2007-08-30 02:58:14

One thing you have to remember is that every single light bulb that is glowing is adding to the heating effect. Most of the energy of a light bult (filament type) is heat. As a matter of fact, everything that you do that requires energy eventually turns to heat. Every time you bend over and use calories you are generating heat. Every time the fridge runs, it is generating heat. Every time you run the computer, it is generating heat. The entropic drive of the entire universe is towards a minimum constant temperature from all the potential energy sources towards heat. What I am saying, is that all the things you are doing in your house, heating hot water, cooking, lighting, fans running, your body staying alive, generates, ultimately, heat. Even air conditioning, in the end, creates more heat than cooing. What can you do? Nothing. We are all tending towards some ultimate universal temperature, the heat death of the universe. All the nuclear reactions that produce energy from stars are temding toward the final state of matter, Iron, where no energy can be extracted from either fission of fusion. When all the gravitational energy has been dissipated, when everything is at a steady state and there is no more potential energy to be extracted, then we will know the end of the universe. And that end is something like 1°K, -273° C. Nothing will move, nothing will glow, nothing will have heat, nothing will live. Then you will experience the ultimate winter. For ever and ever, till the end of time. So don’t complain about a bit of snow and wind. Rather, thank your luck stars you have never spent a February in London.

(Comments wont nest below this level)
Comment by M.Dodge
2007-08-30 07:14:25

Who peed in your Cheerios today?

 
Comment by SteveH
2007-08-30 12:15:07

Well, sometimes we have to look at the bigger picture. It’s a beautiful day here in Napier, NZ and the birds are singing like crazy.

 
 
 
Comment by Out at the Peak
2007-08-29 16:46:58

“Due to the extreme heat today, PG&E has issued a Stage 1 Emergency Alert, which indicates the operating reserves in the real-time market are forecasted to be less than the Minimum Operating Reserves. Customers are requested to VOLUNTARILY curtail nonessential electric loads. The Alert is in effect until 8PM this evening.” (I’m in Northern California)

 
Comment by 45north
2007-08-29 19:45:32

az_owner: kilowatt-hours - every swimming pool has a 1 horsepower electric motor that runs 24 hours/day which doubles the electricity used which doubles the cost.

 
Comment by jonaskinny
2007-08-30 09:54:10

When your heater fails you can put on a parka and hack it… I’ve done it in Boston when I was a kid.
What will you do in Phoenix when your AC fails? Once you are naked there’s nothing left to take off. My inlaws just faced this is Scottsdale last year. They needed a $5 part but because it took a few days they had to move out. They are very lucky their antique furniture did not split. I’ve heard of wall paper sliding off walls etc. when this happens and you are out of town.

 
 
Comment by returntothemotherships
2007-08-29 15:49:48

You know these guys have a neg am interest only or maybe not even full interest loans. I have lived in California all my life and was a loan agent in Ventura,ca and Santa barbara,ca during the 90’s when people actually had to qualify for a loan and even with the lower prices it was difficult to get people with great jobs and credit a loan. A lot like it’s going to be again. When these loans here reset these people will be screwed and L.A. ink Tatooed.

Comment by bozonian
2007-08-29 21:28:57

No kidding. I went through that 90s crash in Los Angeles and saw my parents house in West LA go from 750k to 400k in value. And that recession pales in comparison to what is coming. I think if we aren’t already in a depression, the sinking of Los Angeles will certainly bring it about.

 
Comment by jonaskinny
2007-08-30 09:57:19

Yep I originated for Citibank in San Marino, South Pasadena, La Canada etc in the early 90’s. We had no income doc loans but you had to have stellar credit, 20% down, prior home ownership and seasoned cash…. even then it was not a slam dunk. And by the way some of those loans went bad too. This is going to be a catastrophy

 
 
 
Comment by SoBay
2007-08-29 15:18:09

“Winckel said the downturn is concerning because home building accounts for about one-third of Riverside County jobs, either directly through construction or indirectly through sales of appliances, lawn mowers and other items used in the home.”
“Winckel said builders also are concerned about their livelihood. ‘We’re not looking to go from bust to boom again; we’re just looking to get back into the business,’ he said.”

- Finally a shill confesses that the construction employment accounted for 1/3 of the work force directly / indirectly.
The kettle gets blacker when you factor in all the illegals in Riverside County - construction related employment could be 50%.

Comment by Neil
2007-08-29 18:11:57

SoBay,

No one ever counts the illegals. Just as another part of the workforce wasn’t counted in 1929. Unskilled labor suffering leads the recession and ends after everyone else is back to being ok. Its just how it is.

Now as to them realizing if the building stops so does the music… I give a big *REALLY*, it only took you this long to figure that out?!?

I doubt they’ll lose 33% of the jobs though… (Sorry, but little Peter let go selling mowers at Sears will find some other low wage job to bide the time.)

This is Buffet’s famous “tide goes out” scenario. Who was swimming with a suit on and who was naked. We’ll find out quick.

Neil

Comment by sartre
2007-08-29 19:43:16

Ah..the dot bomb days when waitresses, receptionists, plumbers became IT recruiters, made tons of money for about an year. So many bubbles, so little time….

 
 
 
Comment by Lander
2007-08-29 15:18:52

http://www.sacbee.com/101/story/349580.html

Rachel Brandon of Sacramento…shook an emphatic “no” when asked Tuesday if she is better off than she was in 2005. “My career for the past 10 years was in the mortgage industry,” said Brandon, who is 39. “I have a license to do loans. Two years ago I was making lots of money — I was making deals in my pajamas from home. Now I’m waiting tables at Denny’s for $8 an hour.”

Still, she’s optimistic. “I really like my job at Denny’s,” she said. “I’m learning quite a bit, and someday I’d like to have my own cafe. But, two years ago if you asked me if I’d be working for $8 an hour today, I’d have said ‘God, no way.’”

Comment by Arizona Slim
2007-08-29 15:46:16

You simply can’t make this stuff up! Great day on the blog, Ben.

 
Comment by Chrisusc
2007-08-29 15:46:28

So the question is: what did she do prior to 10 years ago… I am sure it was a lot closer to the $8 an hour she makes now. LOL

 
Comment by bob
2007-08-29 15:49:05

waiteressing is honest work. Also, if you do a good job and are pleasant, you will get a better tip.

Comment by NYCityBoy
2007-08-29 18:24:35

If you are a waitress that does a good job and is pleasant, get your a$$ to New York City. You are in short supply here. I’m tired of the snotty little bitches that generally wait tables here. They are pi$$ed because it is cutting into their acting career.

 
 
Comment by az_owner
2007-08-29 15:57:04

“someday I’d like to have my own cafe”!

Well, she’s an optimist.

I wonder how much money she saved from the boom times two years ago?

Oh yeah, she’s working at Denny’s now, so I guess the answer is none.

As my wife and I raise our daughter (just 9 months old now), I will make sure that all those childhood fables such as the “Grasshopper and the Ants” are drilled into her head like the ABC’s. The life lessons from those stories may be more important than 99% of the “social studies” they teach in public school.

Comment by jerry from richardson
2007-08-29 19:00:33

Those social studies students will vote to take away your daughter’s savings to pay for their debt

Comment by edgewaterjohn
2007-08-29 20:59:38

No doubt they will want to, and no doubt they will probably even try - but stopping them is what this good fight is all about.

(Comments wont nest below this level)
 
 
 
Comment by crispy&cole
2007-08-29 16:00:14

OOPS - I posted below.

 
Comment by pismoclam
2007-08-29 17:29:24

Slip your top down a bit Rachael and you’ll be up to at least $25/hr. Eh?

Comment by 45north
2007-08-29 20:03:28

Pismoclam - spoken like a true Raiders fan!

 
 
Comment by az_lender
2007-08-29 21:08:30

“career in the mortgage industry” … “license to do loans”
Hey, sister. You wanna REAL license to do loans? I’ll tell you what a license to do loans really consists of. It consists of having the actual money and being willing to lend it. Your participation in the scammy scheme recently known as the mortgage “industry” was misguided, since that scammy scheme was not an industry at all. Industries produce an actual something, not a zillion-dollar piece of paper. Heck, I’m a REAL lender and yet I still wouldn’t dignify my business as an “industry”. I don’t produce a darn thing, just facilitate other people’s paying up for their own failure to accumulate any savings. PS, can still brag none of my clients are in default. {Okay, grammar purists, none IS.]

 
 
Comment by snake charmer
2007-08-29 15:20:17

“‘If you know what you’re doing, you can get six months in a place with a kick-ass view,’ Ragsdale said.”

LOL. Pair that up with “I’m a classy realtor,” and today has some of the best quotes ever seen on this blog.

Comment by snake charmer
2007-08-29 15:27:35

I forgot “every office we have here has a box of Kleenex because it’s a tough situation,” from the preceding group of articles.

Comment by Arizona Slim
2007-08-29 15:34:58

Hey, wait a minute! What about that agent’s quote about people not needing vacation homes?

 
 
Comment by Pete
2007-08-29 15:32:59

I’m sure the banks are just loving that. Having an officer of the law telling professional bums how to get a kick ass place for free at the bank’s expense.

Comment by Chrisusc
2007-08-29 15:39:57

I was thinking that myself. Either he is incredibly stupid or is thinking about doing it himself.

Comment by mrincomestream
2007-08-29 15:46:55

I’d go with stupid after all you are speaking of the L.A.P.D. Who have decided not to tow the cars of illegals caught driving without a drivers license.

(Comments wont nest below this level)
Comment by SoBay
2007-08-29 15:54:19

I don’t think that the cops are allowed to even ask if they are illegal in CA. Our liberal gov’t here abides by ‘Don’t Ask -Don’t Tell.’

 
Comment by Thomas
2007-08-29 16:25:04

Maybe it’s a cop who doesn’t particularly like banks. Maybe a foreclosee from the last time down.

 
Comment by jerry from richardson
2007-08-29 21:05:44

If you are a citizen or legal immigrant driving without a license, you will end up in court or jail.

 
 
Comment by implosion
2007-08-29 21:21:09

Sounds like he was speaking about how it’s just the way it is.

(Comments wont nest below this level)
 
 
Comment by Olympiagal
2007-08-29 16:28:23

Maybe he just says what he feels like saying. What has he got to lose?

 
 
Comment by Mr Vincent
2007-08-29 15:40:17

House goes into foreclosure.

Realtor loses job.

Realtor becomes squatter and moves into foreclosed house.

Priceless!

 
 
Comment by DoctorPresumeWatson
2007-08-29 15:23:57

‘It’s kind of an awkward time right now to be a buyer,’ Hill said. ‘I have the credit, but with the market slipping down so much it’s hard to know when to jump in.’”

Buyers here in San Diego hide their faces so people don’t know what fools they are

Comment by Dave
2007-08-29 17:44:25

“San Diego has the best climate in the country”, “we don’t have the snow, we have the ocean, etc” bla, bla, bla, How’s that climate working for you now sellers?

Comment by bozonian
2007-08-29 21:41:39

San Diego is better for bubble house owners because after you lose your house and you’re living on the street, the weather is nice.

 
 
Comment by az_lender
2007-08-29 21:24:33

“hard to know when to jump in”
Nope, it’s easy to know. Jump in when buying is cheaper than renting. Duh.

Comment by Big V
2007-08-29 22:47:34

That’s what I was thinking. Oh well, as long as she doesn’t buy and contribute the resistance, then I don’t care how dumb she is.

Comment by Big V
2007-08-29 22:48:19

contribute to the resistance!

(Comments wont nest below this level)
Comment by sleepless_near_seattle
2007-08-29 22:51:16

 
Comment by Big V
2007-08-29 22:52:13

 
Comment by Vermonter
2007-08-30 03:47:42

 
 
 
 
 
Comment by vmaxer
2007-08-29 15:25:35

“‘They weren’t even behind on their mortgage,’ Foster said. ‘They just figured they could rent a house for half the payment, and twice the square footage.’”

If that kind of thinking gets around, look out out below.

Comment by ex-nnvmtgbrkr
2007-08-29 15:37:45

Oh, it’ll be happening big-time. My wife ran into a friend that she knew was in trouble. The friend told her that the lender had been calling leaving messages sayingthat if they needed help working things out they could help. Friend says to my wife that they’re ignoring the calls and letting it go back to the bank. The house is upside down 50K and they don’t want it.

I really want someone to finally come up with a bailout plan they think might actually work, see them get all excited about implementing it, only to find out no one wants to be bailed out. Hilarious!

Comment by az_owner
2007-08-29 16:04:27

I know somebody doing the exact same thing - ditching a 1700 sqft house with an $1800/month payment for a 2500 sqft with a $1500 rent. Credit will be bad but they don’t care.

Comment by Cinch
2007-08-29 16:28:26

I’ve been trying to tell this to a friend who happens to be a Realtor with two houses. Walk away and rent. Your FICO score doesn’t own you. I think FICO score is invented by the credit industrial complex to enslave us. The higher your credit score the more debt you can carry, that is how i see it.

(Comments wont nest below this level)
Comment by Johnny B. Good
2007-08-29 17:12:16

And when the credit crunch & recession really hit lots of people will be locked out from buying on credit because their scored are poor.

Poor credit card companies. Their best clients have no money, have stiffed them through bankruptcy, and can’t get anymore credit ‘cuz of a bad score. What’s a company to do?

Oh, change the scoring system. By 2012, FICO will be really challenged, IMHO.

 
Comment by Cinch
2007-08-29 17:18:51

I think if you are frugal and modest in big purchase like a car or a house, your income for the past three to five years should be all that the bank or lender needs.

If you are frugal chances are that you have low debt to income ratio.

I think you are right, FICO will be challenged in every sense of the word in coming years. I just don’t think it is necessary for underwriter of loans to make most if not all loans.

 
 
Comment by bozonian
2007-08-29 21:46:18

bad credit?? Bad Credit???? I’m sure the didn’t stop them getting the house in the first place.

(Comments wont nest below this level)
 
Comment by AndrewHac
2007-08-30 12:36:11

Who gives a RAT-ASS about credit ? I don’t… The only thing that I will be buying with credit is another house which is not happening for a long time. Credit is what blows this country up into a freaking puss Toad.

(Comments wont nest below this level)
 
 
Comment by vmaxer
2007-08-29 16:52:22

“I really want someone to finally come up with a bailout plan they think might actually work, see them get all excited about implementing it, only to find out no one wants to be bailed out. Hilarious!”

Yeah, most are beyond help and those that might be helped, would just be miserable for years throwing more money at an insurmountable burden before letting go.

 
Comment by SimpleSimon
2007-08-29 16:58:30

What’s with all this bailout talk amongst Bernanke and Capitol Hill anyhow. They have this myopic notion that the problem is still in low-medium income earners who were victims of predatory lending with subprime loans. What will they say when the next tier begins to falter, folks who are in the top 5-10% income earners. We are heading into a crisis of epic proportions with our nation’s leaders with their heads up their proverbial arses..

Comment by pismoclam
2007-08-29 17:35:50

Borja sounds like another pendejo seller. Lower the price you stupido and you’ll sell it! Why won’t they just read this blog before they list it with the shills. Then, they could FISBO it and at least break even. Who cares what the appraisal was last year.Sellers in denial. Good title for a movie, don’t you think?

(Comments wont nest below this level)
 
Comment by WaitingInOC
2007-08-29 17:38:31

“We are heading into a crisis of epic proportions with our nation’s leaders with their heads up their proverbial arses.. ”

Nothing new there. Seems that this head location is a requirement to get elected.

(Comments wont nest below this level)
Comment by SimpleSimon
2007-08-29 21:20:11

“Nothing new there. Seems that this head location is a requirement to get elected”
Lol. Seriously though, the ridiculous way they are handling the situation is having an ever more bearish affect on my outlook. Not saying I’ve got the answers but how can the country even begin to get on track if we don’t start to at least ask the right questions. HOW ARE WE GOING TO PUT MILLIONS OF AMERICANS TO WORK IN JOBS THAT CAN SUSTAIN A DECENT LIVING? Any attempt to dance around that issue is pointless. This is the twilight hour here, housing crisis is just a symptom of a much larger problem which is US IS NOT A VIABLE ECONOMY. Movie analogies of spring to mind. It’s like the Poseidon Adventure, the ship is upside down and filling with water. Our leaders are telling us all is well, the economy is strong, don’t panic, trust in the Fed and the Gov’t to save everybody. Meanwhile, the real answer to is to acknowledge the situation were in, and come up with a plan to climb out of it. Jeez. Rant off..

 
 
Comment by wittbelle
2007-08-29 18:06:34

I don’t see the problem with Bernanke’s strategery of printing more money and lowering the interest rate. It goes along with my banking strategery of, “How can I be out of money if I still have checks?”

(Comments wont nest below this level)
Comment by gab
2007-08-30 10:43:48

Bernanke has yet to “print more money” and “lower(ing) the interest rate.” He has cut the discount rate, by 50 bps but that rate is still 50 bps higher than the Fed Funds rate. AND, he’s talking like he might not ease at their next meeting. See Greg Ip’s column in the WSJ today. I’m pretty sure he didn’t write it without some input from his contacts at the Fed.

 
 
 
Comment by FutureVulture
2007-08-29 17:49:47

the lender had been calling leaving messages saying that if they needed help working things out they could help

I met a gal yesterday, mid 20’s, who’s losing two of her houses via short sale, knows she will soon declare bankruptcy, and was surprisingly upbeat about it all. (I wish I’d asked how many houses she has.) And she’s now working toward her realtor license. Anyway, she said lenders are offering 12 months grace periods to FB’s and tacking the missed payments on to the loan. It’s not publicized, she says, “but the realtors know about it”. Denial abounds, including banks denying losses from their balance sheets.

Comment by Chrisusc
2007-08-29 18:45:33

“she said lenders are offering 12 months grace periods to FB’s and tacking the missed payments on to the loan”

LOL. That only works (IMHO) when the economy is doing well and the FB’s can work themselves out of their situations by tightening spending, etc. Hard to do when economy is slowing and job losses increasing. Just prolonging the inevitable and keeping the bank execs employed for a bit longer (and their stock options in play a little longer due to phony FASB accounting).

(Comments wont nest below this level)
Comment by FutureVulture
2007-08-29 21:00:19

I agree, Chris

 
 
Comment by az_lender
2007-08-29 21:30:05

Ha ha, the lenders are too late with this trick. I used to do that “grace period” trick when times were easy. The only trick that works now is to have only borrowers whose property is worth more than what they owe on it. So far so good …

(Comments wont nest below this level)
 
Comment by implosion
2007-08-29 21:32:49

FV, is there really any downside? Especially in CA?

We’ve talked about it here before: Do you really want to be the only person in the neighborhood who has skin in the game?

(Comments wont nest below this level)
 
Comment by Big V
2007-08-29 22:57:19

How would the realtors know about it? Does the FB call them up and tell them when it happens? That’s weird.

(Comments wont nest below this level)
 
 
 
Comment by sparkylab
2007-08-29 17:06:20

Symptomatic of a lack of personal responsibility that’s rife in our culture. It’s always got to be somebody else’s problem.

And yes, look out below, indeed if this get popular.

Comment by ex-nnvmtgbrkr
2007-08-29 17:44:31

Popular? I predict that 12 months from now the water-cooler talk will be “So how many foreclosures does that make for you now……….only two? Ahhhh, you’re a lightweight!”

Comment by FutureVulture
2007-08-29 17:53:21

LOL, see my post just above. This gal losing two of her houses seemed almost proud of it. (This was in L.A. by the way.) So I think you’re right on, ex.

(Comments wont nest below this level)
 
Comment by HARM
2007-08-29 17:55:29

Piker! :lol:

And let’s not forget txchick57’s original stroke of genius: “Broke is the new black”.

(Comments wont nest below this level)
Comment by Neil
2007-08-29 18:22:20

Great, I can see them in 40 years already:
Well, back in my day I lost eight houses!

“Broke is the new black” is definitely a stroke of genius.

Got popcorn?
Neil

 
Comment by Chrisusc
2007-08-29 18:49:20

“Well, back in my day I lost eight houses!”

That is truly funny. LOL

 
 
 
 
Comment by Army No. Va.
2007-08-30 07:04:30

This happened big time in Austin in the late 1980s…

 
 
Comment by Deon
2007-08-29 15:27:05

While he had to lower the price by almost $50,000 to adjust to the market, he says he can still make a fair profit on the home he bought for $276,000 in 1999.”

“‘I appraised my home last year and it was worth $552,000,’ Borja says of the three-bedroom condo in Terracina, one of Rancho’s newest communities. ‘I’m now selling it for $519,000.’”

Who did the math, the reporter or the realtor? Since when is $33K “almost $50,000″? Unless he was trying to sell for $17K above last year’s appraisal at thebeginning of a down market.

Comment by Arizona Slim
2007-08-29 15:35:49

Depends on the units of measure.

 
Comment by sfbubblebuyer
2007-08-29 16:13:06

I’m sure when it appraised at 552, he listed it for 569.

If he offered it at 417, he’d get a ton of interest. ;)

Comment by aNYCdj
2007-08-29 16:21:53

I think you will see LOTS of $417K homes in the near future…LOTS of them

Comment by JimmyB
2007-08-29 20:04:57

This is a huge misconception. The mortgage may be $417k, but with a 10% down payment the house should sell at $458k.

(Comments wont nest below this level)
Comment by Big V
2007-08-29 23:04:06

I wonder what all the fees would bring it up to.

 
 
 
Comment by Hoz
2007-08-29 16:24:20

and he might sell it at $379.

 
 
Comment by az_lender
2007-08-29 21:33:17

I also like the part about “now selling it for $519,000.” I think what he means is, listing it at $519,000. Selling it for $519K might be just another pipe dream.

 
 
Comment by San Diego RE Bear
2007-08-29 15:27:07

Ok Guys - I need help!

About two months ago I talked about a house I had jokingly told the realtor I’d pay $400,000 for. (It was listed for $689,000 to about $740,000.) The point of my post was I might have been serious about this house, but hadn’t done any research on it - had it been a real offer might have bitten me in the butt because I found out the identical home on the next street over sold for $500,000 in November, 2006. (This seems low and there may be a story behind it which I will have to research.) Also, I found out the owner (a realtor and that will become important in a moment) paid $317,000 for it in July of 2003. With my belief that we are going back to 2001 prices (plus inflation) my joke $400k was obviously too much.

So here’s the kicker - the house sold on 7/26/07 for $695,000!!! Other comps in the neighborhood - the $500,000 identical (larger lot) and $640,000 in December for a home which is over 300 square feet larger but on a smaller lot and no pool.

It is NOT a $700k home and I suspect some heavy mortgage fraud. I plan on watching it to see how quickly it goes into foreclosure, but if it does - what are my options for blowing the whistle? I am so tired of the comps of neighborhoods I am interested in being skewed by fraud. And there is no way a realtor did not know fraud was going on, if indeed it was. (She may also have simply browbeaten a nice client into buying it. :( )

Any advice or help is greatly appreciated. I’m angry enough about this that if it is fraud I want to see the Realwhore in jail. I just need to know what sort of data to send (anonymously or not) to the lender if it goes into foreclosure.

Thanks so much!!!

Comment by Chrisusc
2007-08-29 16:05:58

Its not very hard to determine if there is fraud (by those involved in the transaction). The realtor doesn’t want to know (or is part of the fraud), the mortgage broker is in on the fraud, the broker’s boss doesn’t want to know (or is in on the fraud), the wholesale lender doesn’t want to know (but could easily find out from doing normal post-closing audit of things like paystubs, VOE’s, IRS, etc.), the marketer of the debt backed securities doesn’t want to know. And finally, the FBI whose job it is to investigate such crimes definitely doesn’t want to know and has been (IMHO) ordered not to investigate for fear of how many of the above people, plus J6P’s and soccer moms, who would all be in jail.

I am sorry this doesn’t answer your question, but it frustrates all of us to no end (the fraud). But just sit back and wait until the dust settles (in the next 12 to 36 months) and then get the home for $250K to $350K which is probably what it is really worth.

Comment by aNYCdj
2007-08-29 16:27:00

This is exactly where my idea to force all the participants to return all their commissions and fees to the bank if it forecloses within 2 years.

Comment by San Diego RE Bear
2007-08-29 20:32:43

I think this is a great idea but also think most of those commissions are spent before they are earned. :D

(Comments wont nest below this level)
Comment by az_lender
2007-08-29 21:36:51

“spent before they are earned”
you mean spent before they are stolen

 
 
 
Comment by Incredulous
2007-08-29 16:32:09

The other involved party in this fraud is the appraiser. I’d start by sending him a few nastygrams, drawn up by a lawyer, with “cc: FBI Fraud Division” below the signature.

Comment by sparkylab
2007-08-29 17:37:08

“cc: FBI Fraud Division”

Love it.

(Comments wont nest below this level)
 
 
 
Comment by BSR
2007-08-29 16:55:29

I on the other hand (secretly) cheer at these transactions. Once all the CMO dumbvestors figure it out, there won’t be money for mortgages. Less debt in society. Let the “housing market” and economy go to hell. I would rather have a poor country than an enslaved nation.

Comment by VT Dan
2007-08-29 18:28:06

What if you end up with a poor and enslaved nation? I think that is where we are heading.

 
 
Comment by auger-inn
2007-08-29 17:44:18

How about sending an anonymous letter to the realtor referencing the property address and explaining that cash-back sales that aren’t disclosed to lender are fraudulent and that the realtor will be held responsible as party to the deal. That might blow it up if that is what is going on.

Comment by San Diego RE Bear
2007-08-29 19:58:59

The sale has already been listed in Zillow so I am assuming it is a done deal. Now it’s just cleaning up the mess. But it does remind me I do know an FBI agent who used to work in fraud - he might be a great starting point.

I’m just wondering if I gave the lender who got screwed a bunch of info - real comps, parties involved including professions etc., proof house never being occupied - if it would give them the incentive to go after this particular person?

Comment by mrincomestream
2007-08-29 20:12:22

Honestly depending on the lender they probably really don’t want to hear about it. I would start with a bored AG I’m sure you’re FBI friend can direct you to one.

(Comments wont nest below this level)
 
 
 
 
Comment by Johnny B. Good
2007-08-29 15:27:43

‘We haven’t seen this kind of buyer apathy in regards to committing to real estate in 15 years.’

Apathy (as in lack of concern, feeling, or interest)? Sounds a lot more like active fear, concern or smarts, just the opposite of apathy.

These RE types should keep their mouths shut.

Comment by Arizona Slim
2007-08-29 15:36:38

But they CAN’T keep their mouths shut. It’s something they’ve never done before.

 
Comment by implosion
2007-08-29 21:50:34

I dunno Johnny, I’m feeling pretty apathetic (as in concern, feeling or interest) about buying these days.

Maybe I’ll get more into it after I watch “Deliverance” again. F*n’ kid on the banjo probably got a loan for a McMansion.

 
 
Comment by SKB
2007-08-29 15:32:00

“Borja is not alone in wanting to sell his home before it further depreciates.”

How many new suckers do they actually think are still out there?

Comment by Neil
2007-08-29 18:31:02

“Borja is not alone in wanting to sell his home before it further depreciates.”

Now if that logic becomes common, we’ll have full panic before Christmas!

Got popcorn?
Neil

Comment by 45north
2007-08-29 20:52:03

Neil: we’ll have full panic before Christmas! Borja is sitting on 8 years of equity, he is hoping for a difference of $241,000 (between buy and sell prices) but he hasn’t made a dime yet. $33,000 reduction? chasing the market down.

 
 
 
Comment by mrincomestream
2007-08-29 15:32:33

Reading these articles has become like reading the comics in the morning…funny stuff

 
Comment by mrincomestream
2007-08-29 15:34:09

“‘If you know what you’re doing, you can get six months in a place with a kick-ass view,’ Ragsdale said.”

You can bet the farm on that…

Comment by Hoz
2007-08-29 15:47:09

And if you do it wrong, you can get 5 years in a place with a nasty roomie. Nice advice from a cop.

Comment by mrincomestream
2007-08-29 15:53:58

“And if you do it wrong, you can get 5 years in a place with a nasty roomie”

The chances of that happening in Los Angeles are none and none. You have no idea how draconian tenant laws are here. If they are really good they can stall an eviction for a year…no sweat.

Comment by Hoz
2007-08-29 16:12:45

LOL, I agree in spirit, its just illegal, it is fraudulent and to have some cop advocating an illegality bothers me.

Reminds me of a regional head of Ducks Unlimited that was busted for hunting out of season a few years ago.

(Comments wont nest below this level)
Comment by Thomas
2007-08-29 16:39:09

Somehow I don’t think arguing that he thought “Ducks Unlimited” meant he got to shoot unlimited ducks would have gotten him too far….

 
Comment by HARM
2007-08-29 18:01:06

Maybe that cop had some previous bad dealings with banksters or flippers and is just enjoying the poetic justice of the situation.

Oh, and for the record, “adverse possession” is not necessarily illegal –if done “right”. In fact, you can even take legal ownership to the property/deed if you can hold out long enough.

 
Comment by REhobbyist
2007-08-29 21:07:05

I think it’s just dark humor on the cop’s part. When you work that kind of a job you get a little sick and think that awful things are funny - kind of like HBB bloggers!

 
 
Comment by auger-inn
2007-08-29 17:49:16

Exactly MI, It is the new scam to cut and replace lock boxes then lease home out to unsuspecting renters.

It would be no trouble to gin up a fake lease and claim that you (renter) were duped by one of these scammers. I doubt any prosecutor could even be bothered.

(Comments wont nest below this level)
Comment by Hoz
2007-08-29 17:53:28

How do you get utilities turned on?

 
Comment by auger-inn
2007-08-29 18:01:27

Fake lease and ID? Don’t know since I’ve never done it. Doesn’t seem insurmountable though and it seems to have been done according to this story.

 
Comment by HARM
2007-08-29 18:03:27

Easy - new renters simply call the utility company. As long as they aren’t in arrears and credit history checks out, no problem. Utility companies are in the business of selling utilities, not policing squatters.

 
Comment by FutureVulture
2007-08-29 18:31:44

What’s to stop the owner from just busting in the door and shooting me, and claiming that *I* busted in the door (or that I was attacking him, or whatever). It seems like with no witnesses, it would be hard to prove he did anything illegal, since it’s his house. The whole thing seems pretty dangerous to me.

 
Comment by auger-inn
2007-08-29 19:10:59

I suppose if the house is full of the squatters clothes and furniture it’d be pretty tough to claim a break-in.

 
Comment by mrincomestream
2007-08-29 20:07:24

FutureVulture-

We’re not talking about second or vacation homes we’re talking about foreclosures. Most of the previous owners have taken off with their mattress on the hood never to be seen again. Hell would probably freeze over before you’re scenario came to fruition.

 
Comment by FutureVulture
2007-08-29 21:04:44

Okay, thanks for the tips, guys. I know of a 12 million dollar foreclosure in the Hollywood hills, so I’m off to set up my clothesline and cot. Wish me luck :-)

 
Comment by REhobbyist
2007-08-29 21:09:53

Vulture: Enjoy your view! LOL.

 
Comment by Home_a_Loan
2007-08-29 21:36:32

“What’s to stop the owner from just busting in the door and shooting me, and claiming that *I* busted in the door (or that I was attacking him, or whatever).”

Install an alarm system, some video surveillance, and a dog. :)

 
 
 
 
Comment by JimmyB
2007-08-29 20:07:21

Sounds like Alcatraz to me.

 
 
Comment by crispy&cole
2007-08-29 15:34:24

From Lander - http://sacramentolanding.blogspot.com/

The downturn in the housing market — with job losses in the industry really kicking in during 2007 — is starting to hit the region’s breadwinners. “Job growth has slowed down quite a bit in the first months of 2007,” said Howard Roth, chief economist at the California Department of Finance. “Construction, home sales — it’s all going down.”

Which is not news to Rachel Brandon of Sacramento. She shook an emphatic “no” when asked Tuesday if she is better off than she was in 2005. “My career for the past 10 years was in the mortgage industry,” said Brandon, who is 39. “I have a license to do loans. Two years ago I was making lots of money — I was making deals in my pajamas from home. Now I’m waiting tables at Denny’s for $8 an hour.”

Still, she’s optimistic. “I really like my job at Denny’s,” she said. “I’m learning quite a bit, and someday I’d like to have my own cafe. But, two years ago if you asked me if I’d be working for $8 an hour today, I’d have said ‘God, no way.’”

http://www.sacbee.com/101/story/349580.html

Comment by KirkH
2007-08-30 00:15:13

““I’m learning quite a bit, and someday I’d like to have my own cafe.”

I’m actually looking forward to the day when all of the talented people that got wrapped up in bubble related industries start up interesting businesses down the street from the house I’m going to buy for pennies on the dollar.

 
 
Comment by dl
2007-08-29 15:34:58

Something just dawned on me. Given the following scenario: if an FB owed $500,000 and the house was worth $450,000 and FB had to sell because FB’s salary was not enough to pay for the monthly mortgage. Also, FB had used up all his savings. Assuming there is a buyer, I don’t think FB would be able to sell it because FB had no money to pay for the closing & commission, unless of course the realwhore is willing to do it for free or the seller is willing to pay all closing. FB is more toast than I thought. I mean it is not just about whether or not to short-sell. Short-sales isn’t even possible without the help of buyer & realwhore.

Comment by returntothemotherships
2007-08-29 15:59:10

Thats called bringing money to the table. Or give the keys to the bank. There is no other choice. Reminds me of a how realestate was in the good old days.

 
Comment by WaitingInOC
2007-08-29 17:41:55

Not my area of expertise, but I thought that it was possible to get the bank to agree to pay the closing costs and real estate commissions in an approved short sale.

 
Comment by autechre78
2007-08-29 22:31:47

I’m sorry for my ignorance guys, I found out what j6p means thanks to wikipedia. But what does FB mean? Thanks. Great thread this time everyone. Google “Altura Villas” in Folsom, CA if you want a laugh. I used to rent at that place, those “20 somethings” that the article referred to? They were my neighbors. Who the hell knows what they’re up to now. I just know that the couple also parked a brand new Dodge Magnum in their covered parking space (yeah, no garage with these condopartments.) What amazed me the most is how often these people were home, and how they seemed to forget that your neighbors can smell the bong hits when you blow them out the window.

Comment by Big V
2007-08-29 23:29:57

FB = f@cked buyer

Comment by autechre78
2007-08-29 23:33:35

no wonder i couldn’t find a definition online. that’s awesome. thanks V.

(Comments wont nest below this level)
 
 
 
 
Comment by Deon
2007-08-29 15:37:15

And, just because I haven’t seen anyone comment on it yet, Larry Kudlow has a brief post at NRO about his on-going campaign to get the Fed to pour in money to stop the evil deflationary trend. Best quote:

There’s housing price deflation: The Case/Shiller home-price index is off 3.5 percent over the past year.

There’s commodity deflation: Gold prices are off nearly 15 percent from their 2006 highs. Stock prices for materials are off nearly 13 percent since July 19, while metal and mining shares are off 16 percent.

There’s the deflation of loan values, both CDOs and CLOs.

And there’s the deflation of the Treasury bill rate from 5 percent to 4 percent.

The Fed needs to stop this deflation by pouring in new cash.

Since when does the stock market count as a commodity? Or debt? I hope someone savvier than me has some insight…

Comment by StarveThe Agents
2007-08-29 16:03:32

I was watching this turd about an hour or two ago. He had a guest (forgot name) he belittled when the guest was talking about the money supply and M3, where Larry basically said those metrics don’t matter…

This Larry Pudblow, should have someone lodge something in his throat to shut him up….

Comment by scdave
2007-08-29 16:32:28

Kudlow is a moron IMO…..He is a big front runner….If he’s right he says I told you so….If he’s wrong, it was someone else’s fault….

 
Comment by pismoclam
2007-08-29 17:43:54

We’ll ask Senator Craig, R, from Idaho to lodge something in his throat. Or, Barney Frank, D, for that matter. See, I’m an equal opportunity basher. hehehehehehe

Comment by palmetto
2007-08-29 18:21:12

LOL, pismo, that’s the problem with CONgress these days, it is a wonder they can get anything done. What a bunch of clowns. Who cares what your sexual preference is? Just keep it zipped and do your work.

(Comments wont nest below this level)
Comment by Talon
2007-08-29 19:26:44

“Just keep it zipped and do your work.”

Or, if you must unzip it, have enough class not to do it in a public toilet stall.

 
 
 
 
Comment by ajas
2007-08-29 16:19:19

I think he’s talking about stock prices of companies that produce commodities– the “materials” sector. But this is really a disingenuous way to make that argument, because he picked the only date from when-til-now the sector is underperforming the S&P500!

It’s kind of like arguing that we’re seeing general deflation because the stocks of the institutions that produce the money are down. Interesting idea, but wrong. Not that it couldn’t happen… it just isn’t.

And the argument regarding CDO and CLO– okay sure they’re victims of deflation, loans defaulting by the truckload… well just remember the HUGE money supply expansion that went IN to producing those in the first place. It’s like they’ve made it back down to base-camp from the summit on everest.

And he wants the Fed to pump in money in order to jack up treasury yields? Is that REALLY what I’m reading?! What universe is this guy from?

Comment by Hoz
2007-08-29 16:51:41

Why are CDO andCLO victims of deflation, I am serious? Not one payment has been missed and they pay higher rates of return than US Treasuries.

Comment by ajas
2007-08-29 22:34:07

the value of the CDO isn’t just the amount of money that has been paid. Its the expectation of full repayment on principle and interest against the interest of a risk-free security.

The only way to judge that expectation is to either sell the thing on the market, assuming the market could judge fairly, or to buy credit-default swaps against it, which are reeeally expensive.

Lots of people are still making mortgage payments, for example.

(Comments wont nest below this level)
 
 
 
Comment by Thomas
2007-08-29 16:49:51

Let me get this straight: The Fed isn’t supposed to pay attention to insane runups in housing prices, because that isn’t “inflation,” it’s asset appreciation — and the Fed doesn’t pay attention to asset prices or try to prevent asset bubbles.

On the other hand, let assets deflate, and it’s man the barricades and lower the rates.

In other words, the Fed isn’t supposed to care that its monetary policy is inflating asset prices, but it should care a great deal if its monetary policy is failing to prevent deflation of asset prices.

I like NRO well enough, but this sounds about as close to “privatize the profit and socialize the risk” as anything I’ve ever heard.

This only furthers my developing conviction is that asset bubbles are nothing more than inflation for rich people. Ordinary people, when they get more money, buy more goods and services, causing their prices to inflate (in the absence of correspondingly increased production). Wealthy people, when they get more money, devote a greater percentage of each marginal dollar to investment vs. consumption than the less wealthy. If inflation is a function of too much money chasing too few goods, then asset bubbles are a function of too much money chasing too few promising investment opportunities.

The root cause is the same: too much money. The Fed should absolutely, positively, not just give another “coup de whiskey” to the stock market, and further goose an already overextended credit bubble.

Bubble delenda est.

Comment by Hoz
2007-08-29 16:57:31

OOh a great name for my new condo development “DeLenda Est”

Sorry Thomas could not resist since the Carthiginians already stole the name.

Comment by Thomas
2007-08-29 18:03:27

I had to go look up “bubble” in a Latin dictionary to complete the phrase, which I’d use for a tagline if it didn’t make me look so much like a Neil wannabe.

Make it “Bulla delenda est.” The bubble must be destroyed.

Seems “ebullient” comes from the Latin word for “bubble.” Cool.

(Comments wont nest below this level)
Comment by Neil
2007-08-29 21:34:48

Hey, wait a second… I wasn’t the first with a tagline. So by all means pick one of your own! In latin, you put me to shame. Its fun and very “educated.”

Si hoc legere scis nimium eruditionis habes

Sum, ergo edo Popcorn
Neil

 
Comment by Jim
2007-08-30 08:32:46

Buca di Beppo. :D

“I eat meatballs, therefore I am.” :D

 
 
 
Comment by Jim
2007-08-30 08:25:43

Amen. I thought the same thing a couple of days ago, after seeing reports citing the Fed minutes from its last meeting.

When I read stories (’Maestro’) about Alan Greenspan’s army of economists poring over commodity and price data, looking in vain for price inflation in pork prices and wage increases in Lincoln, Nebraska, like a hermeneutic trying to find hidden meanings in some religious scroll — all the while TWO ginormous asset bubbles inflated under his watch, equal to perhaps $1-2 trillion — I shake my head incredulously.

I’m amazed at how upper-middle class people now have a sense of entitlement to asset price inflation, either in the stock market or the housing market. Makes the greedy union bosses agitating for wage increases in the ’50s, ’60s and ’70s look like pikers by comparison.

 
 
Comment by WaitingInOC
2007-08-29 17:34:19

“And there’s the deflation of the Treasury bill rate from 5 percent to 4 percent.”

Who talks of deflation of interest rates? Oh, and of course he leaves out that there had to be a corresponding inflation of the price of the Treasury bills, since price and yield move in opposite directions. And, he lists the “deflation of loan values” as an argument (again, like Treasury bills, if the price went down, then the yield should have gone up). So, he has listed two exact opposite bond measurements (price and yield) to try to make his case.

The man obviously has no morals if he’s trying to pull this type of crap (I am giving him the benefit of the doubt that he actually knows his plea is disingenuous).

Comment by gab
2007-08-30 10:55:09

Keep in mind Kudlow used to be chief economist at Bear Stearns until they canned him because he couldn’t get to client meetings on time. Something about a problem with his sinuses and nasal passages, if you know what I mean…

 
 
 
Comment by Chrisusc
2007-08-29 15:44:50

“Borja is not alone in wanting to sell his home before it further depreciates.”

Uh - too late!

Comment by BubbleWatcher
2007-08-29 16:07:41

Not really. Since it will be depreciating for years now, selling at any point will be selling “before it further depreciates”. :-)

 
Comment by Hoz
2007-08-29 16:19:53

Ha Chris it must be grinding on your nerves to know that Mr. Cramer is going to be teaching at USC next week!
On Cardinal!

Comment by hwy50ina49dodge
2007-08-29 18:08:18

Somebody should stand outside his “USC-Pay-The-Fee-Get-The Degree” classroom and reenact his tirade about the no nothing Fed…and bring along a youtube director & camera crew. :-)

Comment by Chrisusc
2007-08-29 19:03:32

“USC-Pay-The-Fee-Get-The Degree”

Hey hwy, don’t be a hater. LOL Fight on!

(Comments wont nest below this level)
Comment by hwy50ina49dodge
2007-08-29 22:23:48

Sorry chrisusc,
This might help explain things…
I’ve been a… U.C.L.A. fan for 43 years… :-) ;-) :-0

Think Lew Alcindor… ;-)

I love your posts…I forgive you, that you …”had” …to go to USC… ;-)

 
 
Comment by Central Valley Guy
2007-08-29 22:07:35

I work at USC and that’s an old canard. It’s one of the most competitive schools in the nation now.

That being said, I want to drop in on Cramer’s class and talk a little about Armageddon. Like how he is the Beast. Or the Wh0re of Babylon.

(Comments wont nest below this level)
Comment by goirishgohoosiers
2007-08-30 05:23:18

One of the most competitive schools in Los Angeles, perhaps.

Go Irish

 
Comment by Chrisusc
2007-08-30 08:22:18

Hey Irish, I am trying right now to figure out a way to convince my wife to let family go to ‘SC / Notre Dame game at Notre Dame. Never been there before, but I hear that it is one big weekender party whoever wins.

 
 
 
Comment by Chrisusc
2007-08-29 19:04:26

I am embarassed to say the least.

Comment by Hoz
2007-08-29 19:14:59

No need to be embarrassed just stick your head proudly in his class room and ask him “When you were manipulating stocks, did you ever think you could manipulate the Federal Reserve?”

(Comments wont nest below this level)
Comment by Chrisusc
2007-08-29 19:18:52

“When you were manipulating stocks, did you ever think you could manipulate the Federal Reserve?”

That’s pretty funny.

 
 
 
Comment by implosion
2007-08-29 22:19:28

What’s he “teaching” for a whole week? Who knows, maybe he’ll wander off campus if you’re lucky.

Comment by hwy50ina49dodge
2007-08-29 22:38:35

It would help greatly if his gps compass pointed: due… East ;-)

(Comments wont nest below this level)
 
 
 
 
Comment by Brandon
2007-08-29 15:45:33

It’s been a while since I have posted on a regular basis, but have a good story that illustrates the current condition of the Idaho market. A husband and wife RE agent team lived a few blocks from me. They were a portrait of the housing bubble: new McMansion on tiny lot, Jeep Liberty with customer wheels for wifey (RE agent logo on the windows), Nissan Titan for hubby, and 2.4 children. I noticed I had not seen any activity for a while—the grass was dying, weeds in the yard, kid’s bikes in the same spot in the driveway. Then one day, posted on the door: NOTICE OF TRUSTEE SALE. I think this husband and wife real estate team abandoned their home—they literally walked away leaving toys and BBQ in the yard and curiously enough, a kitchen table in the driveway. I just find it so ironic to see a home owned by RE agents go into foreclosure.

To add insult to injury, the house next door and the one across the street are already in the foreclosure process.

Comment by Arizona Slim
2007-08-29 15:48:41

Think you could take a picture and have Ben post it in the HBB Photo Gallery?

Comment by Brandon
2007-08-29 16:02:05

I’ll take some pics over the weekend. The whole neighboorhood is honestly going to crap—a lot of weeds in the yards and half dead lawns. The bubble has created a lot of rentals and yard care does not appear to be a priority (the association cuts my lawn). I feel sorry for the committed homeowners who now have to pay the price.

Comment by arizonadude
2007-08-29 16:48:28

Maybe the great senator of Idaho can save everyone after he is done serving time for lewd acts in a bathroom stall.

(Comments wont nest below this level)
Comment by auger-inn
2007-08-29 17:58:29

Ya know, a man can design and build a thousand bridges and never be known as a master engineer.
BUT, he sucks one little di*k and he’s a c*cksucker for life! :)

 
Comment by txchick57
2007-08-29 18:21:57

Their Own Private Idaho.

Somewhere, Auger In is laughing.

 
Comment by VT Dan
2007-08-29 18:59:57

not that I support lewd acts, but if I understand it correctly there was some informal signals (communication) that effectively asked for permission.

Any two “consenting” males who engage in such acts freely without disturbing others is no business of mine (even if I disaprove of it)

The fact that a cop was there participating (sending return signals and thus esclating the situation) is entrapment.

I guess it is along the same lines as a cop posing as a prostitute. While I don’t support prostitution, I don’t see how it is much different than picking someone up at a bar and having a one night stand.

We need to seriously conder the right of “free association” with other people. If the senator wasn’t forcing himself on the cop then there should be no crime and this should be a “non issue”.

 
Comment by Chrisusc
2007-08-29 19:08:12

“BUT, he sucks one little di*k and he’s a c*cksucker for life!”

Lucky no water in mouth. LMAO

 
Comment by Talon
2007-08-29 19:35:21

“The fact that a cop was there participating (sending return signals and thus esclating the situation) is entrapment. ”

I don’t think it’s entrapment as long as it’s not the cop initiating the contact. Also, my understanding is that for something to be considered entrapment there has to be a repeated attempt by a law officer to get someone to do something he otherwise wouldn’t (ie, an undercover cop badgers you repeatedly to buy drugs, rob a convenience store, etc.)

 
 
 
Comment by REhobbyist
2007-08-29 21:17:17

Yes, I want to take a look at the .4 child if they left him there.

 
 
Comment by Chrisusc
2007-08-29 15:53:11

Wow, great story, sad, but great.

 
Comment by sagesse
2007-08-29 15:55:49

Disgusting, leaving the yard littered.

 
Comment by cereal
2007-08-29 15:57:52

see if you can find me one of those larry “widestance” craig snowmobile models as long as you’re sifting through junk up there in idaho

Comment by crispy&cole
2007-08-29 16:30:36

LMFAO!!!

 
 
Comment by Jen Bones
2007-08-29 16:22:42

I’m concerned about that poor .4 child. How is it going to get around without a bike?

Luv,
Jen

Comment by Olympiagal
2007-08-29 16:38:11

One thing I admire about you, Jen, is your humanitarian spirit and social conscience.

 
Comment by are they crazy
2007-08-29 17:18:49

Since you mention kids - there are millions of kids that are going through all sorts of truma of living in a sinking ship home. I wonder what the long term trickle down will be with this generation of kids. I can only imagine the life lessons the parents are teaching them - I was a victim, I was just trying to provide a good life for our family, etc.

Comment by Vermonter
2007-08-29 18:19:39

I have faith in kids - far more than “mature” adults actually. Some of them will follow in the same path as Mum and Dad. Others, though, will see their folly and do choose something different as adults.

For better or worse, much of Gen. X’s attitudes on things can be seen as the reflection of the perceived follies of their parents. My parents spent their lives mostly paycheck to paycheck - I’m not rich but I haven’t been at that point for several years. I save at a rate much higher than either of my parents.

Some Gen. Xer’s I know are dual income. But several, for better or worse, have decided on a single income while their kids are young. The current growth in homeschooling requires families that have someone home at least part-time.

Sometimes negative lessons have a greater impact than positive ones.

(Comments wont nest below this level)
 
Comment by Jim
2007-08-30 09:05:30

Life lessons:
* Daddy and Mommy are business criminals. They shyster consumers and banks out of their money.
* Don’t pay your bills. Walk away. Society owes you everything; act indignant. But you owe nothing to your creditors; blame someone else.
* Society owes you a Nissan Titan and 3000 sq. ft McMansion. Anybody who disagrees is subhuman (like renters). Feel free to use them to your own ends.
* You are what you own. Therefore, get more stuff, any way that you can. Renters don’t own, therefore they are lesser humans. (See above.)
* Theft and fraud are legal if everyone else is doing it.
* Adopt a meathead pop icon figure to emulate: Tony Soprano, Donald Trump, Jim Cramer. Nevermind that they are, respectively: a fictitious mob boss, a middling casino operator, and a stock-jock who perenially lags the market.

(Comments wont nest below this level)
 
 
Comment by FutureVulture
2007-08-29 18:45:08

Hell, I’ll make a donation just to see how it gets around WITH a bike.

 
 
Comment by desmo
2007-08-29 16:25:41

To add insult to injury, the house next door and the one across the street are already in the foreclosure process.

To add even more insult and more injury, the house next to the house across the street is Senators Craig’s house.

Comment by crispy&cole
2007-08-29 16:27:21

BAHHAHAHAHHA

 
Comment by 45north
2007-08-29 21:28:42

desmo: Senator Craig: Reminds me of the scene in The Great Santini when Bull Meacham attacks the guy in the stall. Something like “you’re a marine and you must be prepared for attack at all times”.

 
 
Comment by Olympiagal
2007-08-29 16:31:52

Was it a cute kitchen table? That the fleeing REtards left in the driveway?
You left out the most pertinent detail, to my mind.

Comment by Brandon
2007-08-29 16:48:10

not really- looks like it’s from Oak Express, but it does accent the driveway and the brown lawn nicely.

Comment by hwy50ina49dodge
2007-08-29 18:16:26

You should tape a BIG sign to the table:

“Never a better time to buy a house!” : NAR
1-800-becomeaFB

(Comments wont nest below this level)
Comment by implosion
2007-08-29 22:48:40

I thought it was buy or sell?

 
 
 
 
 
Comment by SoCalRugger
2007-08-29 15:51:47

“‘I appraised my home last year and it was worth $552,000,’ Borja says of the three-bedroom condo in Terracina, one of Rancho’s newest communities. ‘I’m now selling it for $519,000.’”

Sorry sparky, but you’re not selling it for $519. Making that statement would require you having a buyer, and they’re harder to find than Paris Hilton’s panites on any Saturday night after her first drink.

Comment by Mo Money
2007-08-29 16:24:15

Why doesn’t he bother to get it appraised this year and get the *gasp* latest price.

Comment by Hoz
2007-08-29 16:27:43

What, are you suggesting some seller use common sense? His Realtor, Suzanne researched it.

 
 
 
Comment by Professor Bear
2007-08-29 16:00:38

“‘They are terrified to purchase a home and have it decline in value,’ said Steve Johnson, director of the Southern California region for Metrostudy. ‘We haven’t seen this kind of buyer apathy in regards to committing to real estate in 15 years.’”

Apathy is not an emotion which should be confused with fear.

Comment by ajas
2007-08-29 16:35:02

Yeah, Steve was probably shooting for “Ambivalent”… Now that there’s an angel on the other shoulder to counter the propaganda-devil that’s been jabbering for years.

“It is a minefield out there– Yes, come to bubble blog, young one. We will treat you with warmth and empathy. We can lend you wisdom, if you can repay with wise decisions.”

 
Comment by AUA
2007-08-30 06:59:08

I’m terrified of purchasing a home and having it decline in value . . . I’m actually quite apathetic about the whole thing.

Nah, I fall somewhere in between. I know that homes are overvalued and I would feel like a moron if I bought now and watched it decline in value. That’s neither apathy nor terror. It’s called “common sense” and the industry wouldn’t be in this mess if a little more of it were exercised by everyone else.

 
 
Comment by Professor Bear
2007-08-29 16:03:47

“‘I’m not at this point too anxious,’ she said. ‘You know why rich people are rich? Because they shop around.’”

I would guess most rich folk avoid catching falling knives.

Comment by Arizona Slim
2007-08-29 16:06:28

Rich people also tend not to be spending fools.

 
Comment by hwy50ina49dodge
2007-08-29 18:24:05

“‘I’m not at this point too anxious,’ she said. ‘You know why rich people are rich? Because they shop around.’”

Yes, sireeeee….I’m seeing more Lexus & Cadillac Escalante’s in Dollar parking store every week now. ;-)

 
 
Comment by Rintoul
2007-08-29 16:14:17

What bugs me about these “buyers are afraid to buy because they think prices might go down further” stories is that they fail to mention that most of these “buyers” they’re talking about probably could get a 30 year fixed and make a 20% down payment anyway! Most of the “buyers” they’re probably referring to are still the same idiots who nearly bought a year and a half ago with a neg-am loan! I mean, it’s progress, but it still leaves a lot of holes in the story…

Comment by Rintoul
2007-08-29 16:14:50

I meant “couldn’t”

 
 
Comment by Jen Bones
2007-08-29 16:14:24

“‘I appraised my home last year and it was worth $552,000,’ Borja says of the three-bedroom condo in Terracina, one of Rancho’s newest communities. ‘I’m now selling it for $519,000.’”

No, you’re not.

Problem: You’re modeling your pricing strategy on Rancho’s topography.

Solution: Think “bluff” — not “terrace.”

Luv,
Jen

Comment by HARM
2007-08-30 01:48:39

Nice one ;-)

 
 
Comment by Brandon
2007-08-29 16:20:12

Another sign the bubble is over: Owners of the Saddle Butte Mobile Manor have dropped plans for a housing construction project that would have displaced residents of at least half of the park’s nearly 300 spaces.

http://www.oregonnews.com/article/20070828/NEWS/70827046

I guess trailers sound a little nice than a failed subdivision.

 
Comment by Forsakencraft
2007-08-29 16:31:52

THE HOUSING CRASH IS ON!!! TELL ME CAN YOU FEEL IT!

http://www.youtube.com/watch?v=lEj80hTVHyc

Comment by jtie
2007-08-29 17:41:29

Funny

 
Comment by Hoz
2007-08-29 17:50:15

This is a nice collection.

Thanks forwarded to friends and family.

 
Comment by mrincomestream
2007-08-29 20:26:57

Outstanding!…

 
Comment by az_lender
2007-08-29 21:54:12

Great! thanks

 
 
Comment by lineup32
2007-08-29 16:42:00

Was in a small northern Calif town called Sebastopol yesterday, the local realtor told me inventory was at a ATH but that morning when he did his morning scans 45 new listings came on the market. He could not understand what was happening.

Comment by alta
2007-08-29 18:54:04

“He could not understand what was happening.”

Time for him to get IQ tested …

 
Comment by Cmyst
2007-08-29 20:00:09

I lived in a warehouse in Sebastopol for about six months in the 80’s. Great apples there, best I’ve ever had.

 
Comment by 45north
2007-08-29 21:56:01

lineup32: ATH: Around the Horn?
http://tinyurl.com/3bk67v

 
 
Comment by Neil
2007-08-29 16:48:34

“‘That could bring enough housing on the market to upset the price stability we’ve seen here,’ Blake said of the market from Glendale to Calabasas.”

This is the first thing I read that put a smile on my face. Like its a bad thing that prices are going down.

That said, I’m really down today. One pair of friends (couple), that I previously regarded as more sensible with money than myself (saved but spent that little extra that can make a difference), are in financial “stress.” Long story short, this wasn’t one of the five couples I expect to see in trouble over the next year (previously commented in post on this blog). yea… their issues were amplified by medical expenses… but that was the straw that broke the camels back not the root cause. Travel and “collectibles” are the money pits that removed their “cushion.”

sigh… We knew this would happen… still got me down.
Neil

Comment by Jen Bones
2007-08-29 17:00:34

“…their issues were amplified by medical expenses… but that was the straw that broke the camels back….”

Yes, veterinary bills can sure add up. Cheer up, Neil.

Luv,
Jen

Comment by returntothemotherships
2007-08-29 17:09:51

They must have been from the midle east.

 
 
Comment by sfbubblebuyer
2007-08-29 17:04:14

I have in-laws who might lose a house AND business thanks to monetary lunacy, recession, and medical bills. I’m pretty sure it all could have been avoided if they’d not purchased the ‘dream house’ in 2005. *sighs*

Comment by returntothemotherships
2007-08-29 17:14:39

That would be middle eastern straw buyers.

 
Comment by Neil
2007-08-29 18:05:11

sfbubblebuyer,

Yea… sad. You win. My friends will keep the house (its not the driver in this case).

Funny thing is, this guy has always been financially prudent. Good savings… an excellent business plan… Actually we’ve been role models for each other for decades. At age 30 we compared savings and he (husband) kicked my butt! (That good of a friend.) I had just called as his wedding gift to me wasn’t delivered timely and we needed the tracking number. A gift identical to what I gave him for his wedding… (per an old agreement)

Oh, the vet bill thing by Jen Bones was funny. ;) And no, it wasn’t the gift to me. I can pull one or many purses, blindfolded, out the the woman’s closet that cost as much.

Neil

ps
I won’t blog this on my own blog… people who know whom I’m discussing. (Family lurks) Not here. ;)

Comment by Vermonter
2007-08-29 18:34:09

I remember reading a remark by Warren Buffett (??) that much of the effort in wealth accumlation lies in not making major mistakes. People always make mistakes but the primary focus has to be on not making that one big screw up (or series of related screw ups) that sinks the ship. And if you do have a major screw-up, hopefully you had the good fortune of having it occur at a young age. :)

Travel and collectibles are “easy” to justify even if you are frugal, unfortunately. They probably would have been better off treating themselves to Starbucks each day instead. :(

(Comments wont nest below this level)
Comment by Neil
2007-08-29 21:38:52

Vermonter,

A great bit of advice from the oracle of Omaha.

And hey, I love my coffee! Nothing wrong with starbucks! I’m there 10 to 12 times a year. ;)

Sum, ergo edo Popcorn?
Neil

 
 
 
 
 
Comment by Andy
2007-08-29 16:53:01

Oh, those poor hopeless Californians… THE GOLD RUSH IS OVER!

 
Comment by crispy&cole
2007-08-29 17:04:39

MORE REPORTS OF DENNY”S hiring:

Denny’s Manager Shelba Rayburn said, “The job force in Ardmore seems to be, as you said, more jobs than there are people

http://www.kten.com/Global/story.asp?S=6944822

Comment by Neil
2007-08-29 18:17:01

They’re either not qualified or way under qualified.”

Sounds like people are applying, just not getting “information society” types.

Workforce Texoma is testing a project to assist people who can’t pass a pre-employment drug screening.
ROTFLMAO.

I’m getting into my normal happy mood after reading that quote!

Got popcorn?
Neil

Comment by implosion
2007-08-29 23:13:27

“Workforce Texoma is testing a project to assist people who can’t pass a pre-employment drug screening.”

Uhhh, would that be giving them a “Just say no to drugs” pin?

 
 
 
Comment by need 2 leave ca
2007-08-29 17:13:42

45 listings in Sebastopal? I didn’t even think that there were 45 houses there total? Been a few years since I passed through there. Very rural and not much in houses. Is the whole town for sale? What is the outlandish ave asking price?

 
Comment by Lisa
2007-08-29 17:13:42

“Foster knows of two or three Folsom couples in their 20’s who allowed the bank to foreclose on their homes, opting to rent instead.They weren’t even behind on their mortgage,’ Foster said. ‘They just figured they could rent a house for half the payment, and twice the square footage.’”

Here’s a new wrinkle for Wall Street. How many recent buyers are going to simply decide they no longer want their house, thank you very much, now that its value is less than they paid for it. I think 2008 will be massive in terms of foreclosures, both from people who have to and people who choose to walk away.

Apparently, being a debt slave isn’t fun if there’s no pot of gold at the end of the rainbow.

Comment by HARM
2007-08-29 18:10:19

Amazing how the end of “20%/year forever” has the amazing power to restore people’s ability to do basic math calculations.

2X sq. footage + 1/2 monthly payment = screw it, I’m outta here!

 
Comment by auger-inn
2007-08-29 18:12:55

This sounds like it’ll be a big deal. Folks just aren’t going to stay with their mortgages if they go underwater unless there is a severe penalty to be paid. Right now it doesn’t seem as if there is any perceived negative repercussion from going into foreclosure.

Comment by Neil
2007-08-29 18:25:28

Hey, where have you been Auger-inn? I haven’t seen your posts for a bit. Was I sleeping at the wheel?

Right now it doesn’t seem as if there is any perceived negative repercussion from going into foreclosure.

Almost. So close. We’re still in fear going to desperation. Or perhaps we’ll jump straight to capitulation? This will be interesting!

Got popcorn?
Neil

Comment by auger-inn
2007-08-29 19:19:22

Hey Neil! I’ve been around a bit here and there. Gettin fat from all that popcorn I’ve been eating and wondering how my life has been taken over by a computer. :)

(Comments wont nest below this level)
Comment by Neil
2007-08-29 21:40:35

ROTFLMAO

 
 
 
 
2007-08-29 18:16:22

Good thing they don’t live near the beach, we rent for 1/4 the price of owning the same size place.

Comment by az_lender
2007-08-29 21:59:16

Agree, the “ownership” premium is greater in resort areas.

 
 
Comment by mrincomestream
2007-08-29 20:19:07

Think about it. Let’s say you’re 23 years old, in 7 yrs it’s off your credit report you’re only 30. I mean come’on that’s a no-brainer.

Comment by sleepless_near_seattle
2007-08-29 22:47:12

And you get your 20s back. A time no one should spend owning a house, IMO.

 
Comment by implosion
2007-08-29 23:18:48

mis, believe me I’d do it if I could, but I’m homeless.

 
 
Comment by Bloz
2007-08-29 20:30:35

In Folsom, I bought a brand new 4/3 for $238K base + 20K in options (back yard landscaping, etc) in 2001. That was after the price had gone up on that model from $226K during the opening phase.

According to Trulia, prices are running about $450K - $500K for approximately the same features. While Folsom has a lot more going for it than surrounding areas - there is tons of shopping and Old Folsom along the American River is actually pretty nice, it is easily going to move to 2002 prices. Lets say $250K - $300K for a 4/3 built in the last 10 years.

 
Comment by sleepless_near_seattle
2007-08-29 22:49:40

These are the people who I feel should be banned from buying another house for 15 years. Anyone who fraudulently bought a home or is foreclosing, not because they can’t afford it, but because the value of the house has gone down. That’s BS.

Comment by sleepless_near_seattle
2007-08-29 22:55:33

At the very least, I hope they are still served with a deficiency judgment or 1099.

 
Comment by yogurt
2007-08-30 00:35:39

It’s not BS at all. California is a no-recourse state. That means lenders ONLY have the right to take the house back if the “owners” decide to stop paying. If you don’t like the rules, don’t play the game. The lenders deserve to get hosed - they were the ones who enabled this ridiculous bubble. If they had wanted protection against walkaways, they could have demanded a down payment - remember them?

And if lenders decide not to loan to someone who has previously walked away from a house, fine and good - it’s their money and their choice.

Comment by sleepless_near_seattle
2007-08-30 01:55:42

Gee, call me old school. I believe in paying the debts that I sign up for.

(Comments wont nest below this level)
Comment by yogurt
2007-08-30 03:32:00

A no-recourse loan isn’t a debt, because the borrower isn’t personally responsible for paying it back. It’s just a contingent ownership of the security on the part of the lender.

Anyway I don’t live in a no-recourse jurisdiction, so the issue is moot as far as I’m concerned personally. Neither a borrower nor a lender will I be :-)

 
 
Comment by AUA
2007-08-30 07:06:40

Not the lenders so much. NAR is the one who has spent $30M lobbying for no lending oversight.

(Comments wont nest below this level)
 
 
 
 
Comment by are they crazy
2007-08-29 17:14:56

Lets face it - if you timed it right and played it smart, the boom was a time of great opportunity - many people bought houses on no interest loans, sold for huge profits and could have been set for life. What’s frustrating to me is how many of them had the opportunity, took it and then blew it. I said to lots of people - this can’t go on forever and they treated me like I was black helicopter crazy. I don’t begrudge those that used the opportunity and did well - score one for the little guy (not talking specuvestors).

Comment by peter
2007-08-29 19:33:58

“Lets face it - if you timed it right and played it smart, the boom was a time of great opportunity ”

I agree. This was quite an opportunity for the little guy to score big. For example, about 5 years ago houses in the IE (CA) were going for around ~100K and some even less. During the bubble craze, these same type of homes went for around $400K. Anyone who bought a few years before the gold rush and sold at the top made several $100K in profit!. This is way more than the average Joe can dream of saving for retirement. Imagine those lucky few how actually scored big on more than one such property and sold at the right time. WOW! Most people that I know, however, felt that investing in houses was a can’t miss proposition only AFTER the top of the bubble. Some bought several houses not more than 12 months ago! Poor fools.

Comment by Lionel
2007-08-29 21:31:11

peter, that’s assuming the little guy was good at saving his profits. I worked for a PI law firm shortly after college. Early on, the lead attorney had a big score, winning 500K or so for a family. The other attorney, who was in charge of research and setting up trusts for the clients, shrugged when he heard the news. He told me they’d lose it all within a very short time. Some of them must do alright, I responded. He shook his head. Every one blows it. He had even set up a trust where the client was doled out a certain amount over a twenty year period. The client blew through it in two years, borrowing against the future, then sued the attorney for not making it harder for him to get to his own money.

 
 
 
Comment by george mccain
2007-08-29 17:45:08

I wonder with all the foreclosure going on if associations are missing the $$$ needed for maintenance and other needed repair work. I remember reading something early on (feb/march) on this but have not heard much since.

 
Comment by Dan
2007-08-29 18:13:49

“‘They are terrified to purchase a home and have it decline in value,’ said Steve Johnson, director of the Southern California region for Metrostudy.”

More than that, buyers are terrified of taking on 600K loans on 40K salaries. Specially now that lenders have actually started asking for supporting documentation. The nerve, huh?.

 
Comment by txchick57
2007-08-29 18:14:37

I’ve got a dumb question, having been completely uninvolved in the market throughout this whole bubble.

In the EZ money days, could you get a fixed 30 year loan at a low interest rate with no documentation? Or was the quid pro quo that you had to sign up for punishing (suicide) terms to get the no doc thing?

Comment by Hoz
2007-08-29 18:45:57

Yes 0.75% interest rate higher than full doc. So in 2003 when a conforming 30 year fixed was 5.00% and a Jumbo was 5.375% add 3/4 of a pt. But Mr. Greenspan said (not verbatim) ‘A borrower is better off in an ARM’.

Comment by Vermonter
2007-08-29 18:59:21

I thought I read in a criticism of that remark at the time that Greenspan’s own mortgage was a fixed rate.

 
 
Comment by mrincomestream
2007-08-29 20:14:49

Yes

 
 
Comment by ChillintheOC
2007-08-29 18:42:59

I’m not worried. Gary (”It’s in the Bag”) Watts will be issuing his quarterly review very soon on Orange County housing. We’re just experiencing a bit of a dip.

(sarcasm off)

 
Comment by Dan
2007-08-29 19:12:15

Brethren, I believe we are on the eve of TMOAB (the mother of all bubbles’) popping. From following these reports & the news it’s clear that it’s accelerating, gaining momentum and starting to snowball effect. RE and governments spokespeople are doing everything possible to downplay it (and have already been doing so for the longest time) but since this situation got SO far past it’s natural tipping point ..there’s no hiding the reality now. This financial corpse has been artificially propped-up for too long already; it’s starting to fall apart at the joints now. And it’s stinking-up the place.

If this bubble had been permitted to run its natural course we would have simply had an economic slow down. Now we’ll be talking recession. Like in MAJOR recession. Let’s take a look at the U.S. economy in general;

- there’s been rampant fraud in both the RE and stock markets, which have been manipulated like the cheapest whore you could possibly hope to find. Speculation spread to even the middle and lower working class class levels of society. This has led to the ridiculous situation of having median-priced homes of 650K in a nation of people who make 55K median (and who BTW haven’t really seen a raise in YEARS), or stocks that continue to ‘rally’ no matter what the situation is; oil is up?. Rally!. oil is down?. Rally!. spending is up?. Rally!. spending is down?. Rally!. It’s become risible and the giggles have already started; ..”the emperor has no clothes!”.

-our national savings levels, recently historically low, are now actually in the negative (background music here with theme from JAWS)

-we’re paying for Herr Bush’ War on Terror, War on Iraq and -coming soon to a deployment center near you- War on Iran. As a sidenote on this: I hear many police depts are low on ammunition stocks because they’ve been all transferred to the war effort in the Middle East. Cops are starting to save the last bullet ..for themselves, in case this gets uglier!.

-we’re still paying (kinda) for Katrina. You know, the free credit cards, travel expenses and other useful ‘emergency aid’ that was handed out.

-the Chinese hold us FIRMLY by the scrotum. Financially speaking, that is. They could probably foreclose on at least 21 U.S. states if they wanted to. Imagine buying Montana in an auction!. Just make sure to bring yen.

In short, this administration has chosen to solve everything by simply throwing money at it; Homebuyers have no cash?. Give them outrageously free loans! Bunch of people got hit by a hurricane?. Send them MasterCards! Some guy in Iraq wants to waste our presidents dad?. Invade him on our dime!.

I don’t see how this situation could get any worse, unless Uncle Sam tries to throw another invisible sweater on the naked emperor.

Comment by autechre78
2007-08-29 23:02:27

well said, thanks for that. I just saw this on housing doom, does anyone else know about this? My apologies if it’s a duplicate:
http://biz.yahoo.com/ap/070829/ginnie_mae_va_loan_cap.html?.v=2

 
Comment by AUA
2007-08-30 07:12:37

Wrong on the ammunition. The article was a confused hit piece; re-read it pretending that Lereah wrote it and put your BH hat on. The Military has a dedicated ammo plant and doesn’t procure from the same sources as law enforcement and civilian ammunition.

Everything else sounds spot-on to me :-)

 
 
Comment by are they crazy
2007-08-29 19:23:41

RE even invades the gossip columns: TMZ has learned the house did not appraise for the sale price. Although there are reports it went into escrow for $4.2 mil, Paris’ realtor, Mauricio Umansky from the firm Hilton & Hyland, tells us the purchase price is just under that amount.

Umansky, Paris’ uncle, acknowledged the highest appraisal the buyer got was $3.6 million. Here’s where it gets kind of interesting: Umansky says the purchase price includes furniture and chandeliers totaling between $600,000 and $700,000. He said one chandelier is made by Baccarat — and only 12 were made. That piece alone is worth 40K.

Umansky says the buyers, a married couple from Texas, will pay the agreed-upon purchase price. He says they’re paying mostly cash — the loan is for $1 million. As a result, Umansky says the appraisal doesn’t really mean squat. Umansky tells us the couple will get the keys next week.

 
Comment by c
2007-08-29 19:50:40

“Six Months With A Kickass View” is a good name for a band.

Comment by JimmyB
2007-08-29 20:41:05

Or the title for an ad for a short-term rental overlooking the Grotto at the Playboy Mansion.

 
Comment by Pete
2007-08-29 20:50:28

Dave Barry, is that you?

 
 
Comment by mrktMaven FL
2007-08-29 20:36:23

Australian Basis Capital files for BK protection in the Caymans:

Aug. 30 (Bloomberg) — Basis Capital Fund Management Ltd., the Australian firm that invests in collateralized debt obligations, filed for bankruptcy protection for its Basis Yield Alpha Fund, stoking concern more hedge funds face collapse.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aBvudpMqHVnU&refer=home

Comment by Neil
2007-08-29 22:01:55

There are worse places to be in BK.

Sit in a beach chair, enjoy the ‘rum punch’ and the sun. Of course, Scuba dive before drinking.

I’m surprised at the long pause between hedge fund failures. Anyone expect a ramp up in their failures soon?

Got popcorn?
Neil

Comment by returntothemotherships
2007-08-30 00:57:33

Big time ramp up. Between 5 and 10 trillion of worthless notes.

That would have bought a lot of popcorn!

 
Comment by Silverback1011
2007-08-30 05:16:04

You know, maybe I’m as dumb as a stump, but boy I’m glad I got a rider on our retirement accounts which allows the profits we’ve made on them this last year to be locked in ( guaran-
teed ) by an added rider - worth it - didn’t have to pay extra for it. And also, boy am I glad we’re heavily invested in CD’s and that we got rid of 2 out of 4 properties that we had 3 years ago. They sold at good enough prices. The two retirement accounts that I’m currently contributing to ( 401k & 403b ) can’t be locked for profits, so I simply moved the $$ to cash instruments within their fund families ( TIAA-Cref & Fidelity ). Everyone says not to move out of stock funds but I thought it over and am not so sure. This all was done around the 3rd week in July. Haven’t lost any $$ so far, at least that way. Also, an interesting side note - I recently bought a beautiful set of sterling silver flatware that was my late mother’s pattern. I’d been thinking about getting it for a long time. I paid $756.00 for 8 place-settings of 6 pieces each, plus some serving pieces. Right in the case, when it arrived, was a tag from an auction - the seller had bought it at auction for $1025.00 ! Amazing. Note - 4-piece place settings in sterling are selling new at $340 from the same manufacturer - each. No, I didn’t charge it. There are a lot of overly-optimistic people out there.

 
 
 
Comment by autechre78
2007-08-29 23:24:25

I feel like there’s so much I have to catch up on every day, so many blogs so little time. I was reading a Time Magazine online article tonight that was published on the 23rd of this month. This last quote stuck out to me, I thought I’d share it with you:

“Genuine tragedy deserves sympathy and help, even if it is the result of your own foolishness. But when we do not even guarantee basic health care, it would be nuts to think about making protection against real estate losses part of the social safety net.”

I’m a future first time home buyer, I clock around 25-30 hours of overtime and we barely cover our bills. But we’re always on time, you can bet your ascot we are. Nothing makes me angrier than thinking about having to pay for someone else’s irresponsibility and ignorance. That’s all I have to say. Hasta manana mis amigos.

Comment by autechre78
2007-08-29 23:25:45

I was so pissed writing the last part that I forgot to include the link to the article: http://www.time.com/time/magazine/article/0,9171,1655723,00.html

 
 
Comment by Big V
2007-08-30 00:31:54

Last post!

 
Comment by aeyra
2007-08-30 09:07:08

650K median price

55K median income

Might we have problem here if you are going by the 3x income rule?

 
Name (required)
E-mail (required - never shown publicly)
URI
Your Comment (smaller size | larger size)
You may use <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong> in your comment.

Trackback responses to this post