The Real Estate Heyday Is A Past-Tense Phenomenon
The Mercury News reports from California. “The housing meltdown and resulting credit crunch have unleashed new calamities on consumers, loan companies and home builders on an almost-daily basis. ‘Customers are looking for loans that no longer exist,’ said Christopher George, president of San Ramon-based CMG Financial Services, a mortgage vendor. ‘A year ago they would have qualified for loans. Now they no longer qualify.’”
“Amer Faraz, VP of Fremont-based Green Valley Funding, said his company is…doing about 10 percent of the loan volume it did a year ago, Faraz said. ‘This is brutal,’ Faraz said of the current market conditions. ‘Our company is in a building that had 15 mortgage companies last year. Now we’re the only one left.’”
The Malibu Times. “While Malibu has its share of property owned by people who ‘don’t even need a mortgage,’ there is plenty of vacant land, smaller homes and condos that are being foreclosed upon, said a source, who is a real estate investor and did not want to be identified.”
“‘Typically, foreclosures will be auctioned at a price well below market norm, so there’s a lot of bidding,’ Kyle Speer, a trustee sale auctioneer who overseas auctions of L.A. County homes at the Norwalk Superior Court, said. ‘But with the number of foreclosures going up, I’m seeing lots of houses whose bid price is higher than its real equity, so no one’s bidding on them.’”
“‘Probably 80 percent of foreclosures coming up for auction these days go to REO,’ Speer said. ‘There are still properties that have good equity, but if REOs flood the market, I think housing prices are going to go down.’”
“‘The REOs we’re seeing are due to a lot of people who took out their loans in ‘05 and ‘06 when the market was high and who can’t make the rising mortgage payments. There’s not a lot of equity there and the bank’s have less investment capital,’ Speer said. ‘So I predict that we’ll see a rise in foreclosures, which will ultimately make property values go down.’”
The LA Times. “It’s not just sub-prime borrowers who are having trouble getting affordable home loans. Creditworthy borrowers are getting hammered if they want mortgages with payment options or the ‘jumbo’ loans used routinely in Southern California and other high-priced home markets.”
“Rancho Palos Verdes marketing consultant Steve Ammons discovered the new jumbo reality after he began shopping for a mortgage on a Manhattan Beach home that he and his daughter own and rent out.”
“Ammons and his daughter have credit scores of 750 to 760, he said Wednesday, making them prime borrowers. What’s more, the house is worth an estimated $1.6 million and has a current $650,000 mortgage, so there is plenty of equity to serve as a cushion for the lender.”
“Ammons is looking for a 30-year, fixed-rate mortgage, but with a twist, the option to pay only the interest on the loan during the first 10 years. Such loans have been widely used by landlords seeking to maximize their cash flows. Ammons said a jumbo loan with an interest-only option that he took out just last year on another rental property had an interest rate of 5.5%.”
“But the story was different this time: A loan officer at Washington Mutual Inc. quoted him a rate of 9.75%, saying that the lender ‘had to charge such high rates so that they could sell off the loans,’ said Ammons, who has since put off refinancing.”
“‘It’s rough out there,’ said Doug Duncan, chief economist for the Mortgage Bankers Assn.”
“This week, borrowers were paying a full percentage point more for jumbos than for smaller loans, said Laguna Niguel mortgage broker Jeff Lazerson. In the sub-prime market for people with poor credit, fixed-rate mortgages that were in the 7% to 8% range six months ago can still be had, but only at 9% to 11%, Lazerson said.”
“And anyone with a credit score under 620 ‘is now automatically sub-prime,’ he said.”
“In June, 15 of the 20 U.S. markets tracked by the S&P/Case-Schiller index fell, including declines of 4.1% in the Los Angeles region, 7.3% in San Diego and 4% in San Francisco. In Southern California, the residential real estate market is skewed somewhat by stronger demand for higher-priced homes.”
“‘We’re getting different pictures as to how dire things are,’ said Raphael Bostic, an economist and USC professor. ‘I think the general picture says that things aren’t great, but that the sky hasn’t fallen in quite yet, certainly not in Southern California.’”
“‘These short-term fluctuations, while significant, won’t touch people on a day-to-day basis,’ Bostic said. ‘For the average homeowner, if you’re not looking to sell, try as much as you can to not think about this stuff.’”
From MSNBC. “After years of double-digit returns, sellers are apparently having a hard time adjusting to the market’s new pricing realities.”
“‘They haven’t got it yet,’ said John Young, a homebuilder in southern California. ‘We’ve had such nice equity run-ups, and you get accustomed to that. I think most sellers haven’t got the idea that to really sell their house they’re going to have adjust their price down.’”
“Young says his cancellations are running about 40 percent — double normal levels. Young, who builds mostly entry level homes in Riverside and San Bernardino Counties, says it will be at least another 12-18 months before the market recovers.”
“‘We think its going to take all of next year,’ he said. ‘And we think we’ll see some normalcy in the supply demand mechanism in the first or second quarter of 2009. That’s my best guess.’”
The Daily Bulletin. “Housing starts in the Inland Empire have plummeted in 2007 and are down nearly 50 percent for the year to date. Numbers released this week by the CBIA show the San Bernardino-Riverside-Ontario area as the hardest-hit in the state, with just 12,274 starts for the first seven months of the year compared with 24,451 for the same period in 2006.”
“That’s a 49.8 percent decline, and it has been getting steeper. In July, local housing starts were off 55.4 percent from the same month in 2006.”
“Economist Eduardo Martinez said demand in the region had basically ’stopped in its tracks.’”
“‘For the last two or three years, you had these new financial products - adjustable- rate mortgages, no-document loans - that became commodities,’ he said. ‘They were bundled and sold on Wall Street, and the market didn’t have enough sense to assess their real value. It was like driving a car on souped-up gas. Once you burn through that …’”
“With record levels of housing available, Martinez said, supply has outstripped demand. ‘When that happens, you either have to increase demand or eliminate supply,’ he said. ‘They can’t pull these houses off the market, so they have to slash prices to sell them.’”
“Statewide, single-family permits were down 35 percent for the first seven months of the year and multifamily starts were off 23 percent. Alan Nevin, chief economist of the CBIA, said the relatively minimal decline on the multifamily side was due to a shift from condominiums to rental properties in several major projects.”
From ABC News. “Joe Morse has bought a 40-foot motor home that he plans to drive across America over the next several years. But Morse hasn’t been able to take off on his grand tour because he hasn’t been able to sell his house in Cerritos, Calif.”
“‘I had hoped the house would sell almost immediately,’ said Morse, who retired in April. But his open house drew few visitors, and there have been no bids in the two months it has been for sale.”
“‘Now I may have to take it off the market and wait until spring,’ he said. ‘It’s frustrating, because I’d like to get on the road.’”
“Phillip Cook, a certified financial planner in Torrance, Calif., who has worked with Morse, said that anyone developing a financial plan has to consider that there are ups and downs to the economy, including the housing market.”
“‘Real estate has its cycles just like everything else,’ he said. ‘After the kind of run-up we’ve had … people think it won’t slow down, won’t go down. But it does.’”
The Voice of San Diego. “This decade, the city of Chula Vista caught a bad case of housing fever. With sparkly new neighborhoods, and more where that came from, appearing as if from thin air, the city partied.”
“But now, with many of its sprawling suburban neighborhoods caught in the vortex of foreclosure, with unsold homes piling up, and with home prices dropping, it’s as clear in Chula Vista as it is in much of the county that the real estate heyday, and its accompanying spending power, is a past-tense phenomenon.”
“‘It’s pretty bleak,’ said Maria Kachadoorian, finance director for the city of Chula Vista. ‘The reality of the market as it is today is … we’re hit a little harder than most. The biggest shift is that the assumptions of growth clearly can’t be there.’”
“Lew Feldman, chairman of the Los Angeles office of law firm Goodwin Procter, likened the phenomenon to the state’s reaction to the dot-com boom. ‘It’s like Gray Davis, when he assumed that the dot-com boom would continue and spent 30, 40 percent more from the state dollars than were coming in for state income,’ he said. ‘It’s like anything — what goes up, must come down.’”
“Kachadoorian called the tapering of the sales tax revenue the ‘domino effect’ from the real estate slowdown and the increasing numbers of homes in foreclosure, and from the delay in opening State Route 125. ‘If you can’t afford to save your house, you can’t afford to go out and buy furniture,’ she said.”
“Tom Haynes, fiscal and policy analyst for the city of San Diego, said more than a slowdown in property tax revenues, he’s concerned about the ’spillover impacts’ of the housing downturn on the economies of the city of San Diego and the rest of the county.”
“Job growth in real estate, construction, finance and retail like furniture and home furnishings is slowing, he said. The ‘wealth effect’ that stemmed from skyrocketing home values has vanished, tightening the spending of some homeowners, he said.”
“‘When we start seeing disposable incomes decrease, that’s kind of a scary situation,’ he said.”
“‘I’d say they’ve been extremely cavalier in ignoring the warning signs in San Diego and they’ve been spending like drunken sailors,’ said local political consultant Scott Barnett. ‘They could become San Diego South here.’”
‘Monterey County is experiencing an unusually high rate of foreclosure activity, according to statistics tracked by the Santa Cruz Record. This year, notices of default have been issued to 1,517 borrowers for missed payments — approaching the 2,080 deeds recorded for property sales in the same period.’
‘Only half those borrowers rectified the delinquency, leaving 768 of the properties in foreclosure. That is five times the 152 properties in foreclosure a year ago.’
‘Defaults are up in Santa Cruz County, too, with 525 notices issued for missed payments. Of that total, 262 properties are in foreclosure, triple the 79 properties in foreclosure a year ago.’
‘In the tri-county area, Monterey, Santa Cruz and San Benito, 692 homes have been sold this year at foreclosure auctions, up from 70 a year ago. Monterey led the area in sales with 450, followed by Santa Cruz with 132 and San Benito with 110.’
‘Although MTV focuses on the glamorous lifestyle of youth in Orange County, a recent study shows that 25-34 year-olds are migrating out of the county, as many find area housing too expensive.’
‘The cost of housing and traffic congestion is forcing young workers and families to migrate outside of California,’ Lucy Dunn, president of the Orange County Business Council said. There has been a drop of nearly 59,000 people of this age group between 2000 and 2005, according to the OCBC. ‘
‘Although MTV focuses on the glamorous lifestyle of youth in Orange County, a recent study shows that 25-34 year-olds are migrating out of the county, as many find area housing too expensive.’
‘The cost of housing and traffic congestion is forcing young workers and families to migrate outside of California,’ Lucy Dunn, president of the Orange County Business Council said. There has been a drop of nearly 59,000 people of this age group between 2000 and 2005, according to the OCBC. ‘
Ok… I actually dislike responding to the first message, but we’re seeing this everywhere. However, I would move the age range up to 28 to 38. Not just OC, but bubleville California. I know all of the aerospace companies are having to do added retention programs for that age range (most likely time to buy in So-cal).
How do we normalize for the greying of the state? eh… its own topic.
I couldn’t help but notice almost all of the comments were people saying they were leaving the state…
Neil
The high price of housing in San Diego was the reason my oldest daughter decided to remain in Texas after leaving the military. She’d like to come home now that she has a child but realizes she may not be able to sell her home there.
I’m in your 28 to 38 range (not for much longer, but I still qualify). I was born and raised in OC, lived in LA for while attending college and law school, and then a few years of work there before moving back to OC. Growing up, I never would have thought of moving out of So Cal; but, I admit that I give it quite a bit of thought these days (having to take the bar exam in another state is a bit of deterent - I just don’t want to have to study for another bar exam; once was enough).
But, with property prices so unreasonable, traffic getting worse every year, congestion at shopping centers, restaurants, etc. making everyday chores more of a hassle, and all of the other similar problems, I am seriously considering a move. I also worry that as others in the 28 to 38 range move, that this is going to significantly hurt the tax base, and is only going to lead to even higher state taxes (9% state income tax and 7.75% state sales tax are high enough). Still, all of my immediate family is in California, and that does matter to me. But I’ve got to admit that I still seriously consider moving, and I’m sure that there are many others like me who are doing the same. As you said, the greying of the state is worrisome.
I left California this year for North Carolina (Charlotte). Best move I ever made. Not as crowded, nicer people, better schools, better everything. Oh yeah I also got a house here for 226,000. The same house in OC would have cost three times as much. Do yourself a favor, look at a North Carolina real estate site, pick your jaw off the floor after you see the prices, sit the bar exam and get yourself a much better life.
I lived in N. Carolina for a few years also. There were some spots I liked a lot too. I was impressed with the area around Charlotte.
More recently, I was in Wichita KS on a business trip. In the week I was there, I was impressed by the people, relaxed atmosphere, and low cost of living. Now I still research Wichita from time to time. I found many, many high tech engineering opps there. A short list would include Raytheon, Cesna, Boeing, Beechcraft, and Spirit Aero. Plus there are many, many nice houses in Wichita for 1/3 the cost of San Diego.
I plan to give San Diego a chance to keep me here for about 1.5 more years. During this time, I’m improving the resume and engineering experience. So if by 2009, San Diego is still unwilling to work with me on a decent SFR at a livable payment…
You will see me logging in to HBB from Wichita.
I would encourage you to spend more time in Kansas before deciding to move there (or virtually anywhere in the Midwest). I grew up in average, suburb towns in Illinois and Missouri. And now I live in San Diego.
Trust me, San Diego is 100 times better, from the weather, to the culture, to the diversity, to the wide array of entertainment and activities… The Midwest is cold as all get out in the winter, muggy as all else in the summer, and except for a very few set of places (Chicago, most notably), there is very little to do and most people’s nightly routine is getting home from work, eating dinner at home or Olive Garden, and watching TV.
I’m not saying that I’d never leave San Diego, but I don’t see me leaving here to return to the Midwest (except, as aforementioned, for Chicago).
I have a plethora of places that should be on the list to look at for smart californians fleeing the state. Lawrence, KS and almost anywhere in North Carolina are tops on my list.
ps. anyone in the hiring depts for U of Ks, Duke, or UNC who are looking for a top notch sponsored programs analyst, I am your huckleberry >; )
I would encourage you to spend more time in Kansas before deciding to move there (or virtually anywhere in the Midwest).
Yep. Its personality. I found Wichita to be too slow for my taste. However, multiple coworkers are relocating there. Its for the standard of living and more relaxed lifestyle. So to each there own.
I spent quite a few months of 2007 in Wichita… So my opinion is pretty set. However the right neighborhoods are great! I did a few week pass at a health club that put any California health club to shame. Good people, nice… But at work… could never get the pace up to what I’m used to. (I’m officially an “adrenaline junky.”) They have high tech work, but too much is done under imported Seatle or SoCal engineers. But hey, its only my opinion. But they certainly need more jogging paths…
Neil
I moved to Raleigh, NC from Orange County last year. I bought a great house for less than half what I sold my Irvine home for. Basically I got a 4000 sq-foot brick beauty on 2/3 of an acre for 1/2 what I sold a 2000 sq-ft stucco box in Irvine on a 5500 sq foot lot. It is pretty cool here, there are a lot of cultural activities and lots of natural spaces to explore. It is true the weather sucks compared to SoCal (everywhere sucks compared to SoCal in that department), and if you leave the Raleigh/Durham/Chapel Hill area you have a few toothless racists running around, but the city is pretty cosmopolitan here.
The cost of living is good. The restaurants are nothing compared to SoCal, but I’m slowly finding a few good ones. (I know, I know, the restaurants suck in OC too, but I used to go to LA a lot).
For what its worth, I’m an Analog IC Design Engineer, and I only took a 5% base salary pay got to come here. With bonuses, I’m actually making more money in Raleigh than I was in Orange County. One thing I’ve noticed is the work pace is a bit slower here. I still work hard, but I’ve only come in one Saturday in a year, when in SoCal I worked every other Saturday.
Keep waiting, Waiting. What went up will certainly come down. Living near family is important.
I’m an aerospace engineer (BS+MS) in California, squarely in the 28-38 bracket. We are living with family, saving quite a bit of money (in an arrangement that would drive almost any of my co-workers crazy). My wife and I have amassed a decent pile of money, and right now, we have no places on our active watch list in the state of California. We check around about once a month, but there needs to be a lot of movement before California enters our top 10 locations. In the meantime, we’re both increasing our portable skillsets, collecting California wages, and enjoying the weather and natural resources while we’re still young. In another couple of years, my employer will have to find a replacement for me, and I’ll be able (and probably willing) to afford to work for somebody out-of-state for about half my current income.
I’m an OC native. there’s a reason I now live on the other coast. I was just back at mom’s last weekend and every time I go back I think “WTF do people see here? horrendous cost of living, traffic, smog, strip malls & retail hell, shallow poseur assholes with too much credit, etc.”
even if I wanted to do it there’s no way I could justify moving back there, not at those prices. sure Mom bought low in 1971 but those days are looooong gone. there was once a time when nobody wanted to live by the beach in south OC, believe it or not, cos it was too far away from stuff and that’s when the ‘rents bought that place in Dana Pt. for nothing.
yeah the weather’s nice but I’ll take four seasons and a sane cost of living, thanks.
“shallow poseur assholes with too much credit, etc.”
Well that about sums that one up. LOL
“greying of the state” - an obvious corollary of Prop 13. Seniors in Pasadena paying $1,000 annual property tax while their neighbors with similar houses pay $10,000 or more.
I’m 37, married with one child. Funny you should bring this up. We just started looking at places to move like New Hampshire, Michigan (of all places), Colorado, Florida. I can actually do the same job at the same pay with the same company at any of these places. We are native SoCal’s, lived in the Northeast for a few years while my wife was getting her PhD, and now we’ve got some money saved up and look at our real estate options here. Hmm…we can really stretch, eat Ramen several nights a week, and live in a nice condo or townhouse in Laguna Niguel…or…we could live well below our means in a very nice house on an acre of property outside of SoCal. You know…sort of like our parents did when they bought their homes in the 70’s minus the acre of land.
I love the SoCal beach lifestyle, I love the beach, I love the weather. But one option means being able to save for retirement and leading a decent life, and the other means an uncertain future, few vacations, no savings…unless I get a significant wage increase. (Which is possible…it’s that nasty “P” word…Potential future income.)
Just renewed my lease for another year…but we may leave in 2008 if real estate prices aren’t obviously getting any better out here.
‘The cost of housing and traffic congestion is forcing young workers and families to migrate outside of California,’ Lucy Dunn, president of the Orange County Business Council said. There has been a drop of nearly 59,000 people of this age group between 2000 and 2005, according to the OCBC. ‘
This is an understatement if anything , despite admitting to a problem many Californians don’t see. The fact is that even with a slight dip, prices would need to come down at least 30-40% for anyone making a decent salary and no current home to sell just to get started. You ask any of my friends who are ALL in the 25-35 year old bracket and NONE of them have any plans on buying a home here. In fact, it seems like most don’t even consider it a real option. This sort of sets off a whole attitude in which people in this age bracket can work all they want, make all the money they can, yet at the end of the day, what good does it do if you can’t even afford the cheapest home in town?
This is totally ridiculous. I’m sure many older Californians really don’t care. Perhaps some would rather see the younger generation leave. But I do wonder what longstanding impact draining your future brains and workforce away will have?
” But I do wonder what longstanding impact draining your future brains and workforce away will have?”
That happens now in some states . WV is a great example. Kids grow up there, move out of state to work, to raise a family, and then come back to retire.
I miss my friends in California. I will miss the skiing at Tahoe this winter. The rest of it? Nope.
You didn’t miss skiing because there really wasn’t anything worth skiing this winter….bad snow year.
I’m giving myself another year before I expect to start looking to move. I know the company I work for is trying to hire professionals in the mid-level of experience. Can’t get anyone outside of San Diego to come to work for us because nobody wants to sell their house outside of state and move into a small condo/apartment. So we have a bunch of senior level (who already bought in the mid-90’s) or newer professionals (who rent) in our workforce.
I’m sure many older Californians really don’t care. Perhaps some would rather see the younger generation leave.
Hammer, nail, head.
Why-O-why would California Greedbag McBoomer give a rat’s ass about his children and grandchildren leaving the state in droves? Who the hell cares when you’ve GOT CONDOS! And 20%/year FOREVER!!
Shit, JB, he probably won’t even notice them gone, what, with all the low-low-priced “guest workers” scurrying about the house, fixing his meals, doing his chores, wiping his flabby ass, restocking his private ’stash’, etc. In fact, having to put up with all that annoying Gen-X whining was such a drag, man: “Why can’t I afford a 2Bdm crackerbox under the freeway overpass? Why am I grossing $75,000 a year and economizing, but I still end up with $0 savings? Why can’t I afford health insurance? Blah-blah-blah…”
‘Ol Greedbag’s much happier without those annoying distractions around, ‘cuz it’s all about HIM and his groovy FAT STACKS, man! Too busy countin’ the loot to care, bro’.
Only one thing that worries him, though: those busy little brown people are starting to make grumbling sounds, and some of them even went on a couple of ‘protest’ marches, making ‘ol Greedbag wipe his own ass for once. But, hey, the flood of “diversity’s” good for us, right? Helps keeps wages down and housing prices & rents up. And it’s not like they think this is *their* country and might want it back some day or anything, right?
Ahhh… life’s good for the ME generation. Where’d I put that bong? No problemo, I’ll just get the little brown people to find it for me.
Elroy, it is ridiculous. But of course house prices will fall hard.
We’ve got a lot of depressed people here today. You’ve got to hang in there.
From the article:
“Dunn says one of the best ways to retain young workers is to create a greater proportion of affordable, multifamily housing developments, instead of single family homes, to house more people in denser areas. ”
What a horse’s ass. When she made that statement someone should have asked her where she lived. Incredible…
“‘They haven’t got it yet,’ said John Young, a homebuilder in southern California. I think most sellers haven’t got the idea that to really sell their house they’re going to have adjust their price down.’”
“Young says his cancellations are running about 40 percent — double normal levels. Young, who builds mostly entry level homes in Riverside and San Bernardino Counties, says it will be at least another 12-18 months before the market recovers.”
- Hey John, while you are waiting for the market to ‘Rebound’ - you could sign up for next years ‘Ice Road Truckers’ run. I think that you will make more money at that instead of hoping for a recovery in the Inland Empire.
Hey that’s a pretty good show. The History Channel a couple of weeks ago had a marathon of Ice Road Truckers. Got hooked into the show.
“‘It’s pretty bleak,’ said Maria Kachadoorian, finance director for the city of Chula Vista.
Ben, are you making these names up, or what?
I don’t have to!
I thought this one was another Ben special as well
bleak - “gloomy and somber. depressing.”
Yep…
Don’t lecha doorian kach you on the butt on the way out….
heh, I was thinking more like “Kach… if don’t adoor it now, you’d better learn to.”
I know, I know, this is a family site.
Most likely an alternate spelling of Kachaturian, the most famous bearer being the composer of the ballet “Spartacus”. It’s an Armenian name.
spelled “Khachaturian” in most references
…guess you don’t have an Armenian population in your town…
Now I may have to take it off the market and wait until spring,’ he said. ‘It’s frustrating, because I’d like to get on the road.
He’s kidding himself if he thinks next spring is going to be any better.
This fall and winter many houses currently for sale will be pulled of the market until spring, and many people currently contemplating selling will wait until the spring to put their houses on the market. This spring is going to show an unprecedented volume of houses on the market. Gonna be ugly.
This guys predicament is really no different than someone who buys their next home before selling their existing one. A 40 footer can cost some serious change, as much as a house in some parts of the country. The only thing this FB has going for him is its a lot harder to foreclose when the collateral is on wheels.
A 40 footer can cost some serious change, as much as a house in some parts of the country.
Some are more than others ($200K vs. $800K). One thing is for sure, an RV doesn’t go up in value.
No, no what he meant was, “Now he has to take it off the market and wait till spring of 2013.
I’m assuming that he has a house that he paid half as much for as he’s trying to get now. That greedhead will deserve what’s going to happen in the spring.
Mikey 2:
You said:
Now I may have to take it off the market and wait until spring,’ he said. ‘It’s frustrating, because I’d like to get on the road.
He’s kidding himself if he thinks next spring is going to be any better.
That’s a big part of the present problem in a nutshell. Mr. 40 footer still clings to the hope that he will make the planned upon megabucks from his 3/2 on a cul-de-sac, “in the spring”. In the spring, he will be holding out for that sure thing, the “autumn surge” etc., etc. etc.
“Hey, the guy across the street sold his in 2005 for more than I’m asking, and I have gold plated toilet seats and a talking doggie dog. (“Fido is in the house”). Why should I give my house away???
Because in 2005 this was a different planet. We live on post bubble earth now. The alien mind ray that made the feeble minded, vulnerable FB’s think real estate appreciates 20% per year has been turned off.
Wrap your head in tin foil, 40 footer dumb ass. Look at the market. Do some math. Do some research.
Sorry guys. I kinda lost it. Why do these morons make me want to curl up in a fetal position and suck my thumb?
Where have I heard all this before? Oh yeah, last year!
Still waiting for one of these silly reporters to actually report what the real problem is… ridiculous prices that nobody can afford.
They don’t have to go far to find a good interviewee: their neighbor, the rookie journalist in the next cubicle, or even themselves.
What’s the average price of a house in San Diego, something like 12 times the average income?
But the “problem” is, time and again, no buyers.
I went to J-school and know that newspapers are written at 6th grade english. But that doesn’t mean you write like you’re addressing a 6th grade class, does it?
“But the “problem” is, time and again, no buyers.”
Yes, we buyers are not doing are part… I’ve noticed that they aren’t just saying there are “No Buyers”… but they are saying it with venom. Wonder how long until a potential buyer gets assaulted for one of those “low-ball” offers.
Sounds like a good idea: Go around making low-ball offers, and sue the house out from under the first guy who decks you.
Wear a mouth protector. Gotta keep those pearly whites so you can grin evilly as the sheriff evicts your judgment debtor.
Thomas,
Good idea, but tooth damage might sway the jury. Then again, what equity will they have left when it goes to trial? I assume you were thinking go for the quick “hit to the pocketbook” that breaks their finances and puts another REO on the market.
Got popcorn?
Neil
Why risk it? Just wait for the sheriff sale.
The reason that there are “NO BUYERS” is because the prices are still so ridiculously high that people aren’t even bothering to look. There needs to be a serious erosion of listing prices to even entice buyers back.
It’s really not ROCKET SCIENCE!
“I went to J-school and know that newspapers are written at 6th grade english. But that doesn’t mean you write like you’re addressing a 6th grade class, does it?”
Apparently, it does. Refer to the attached quote and tell me they don’t need a new copy editor.
“who overseas auctions of L.A. County”
‘They could become San Diego South here.’”
I prefer “Tijuana Norte”
AKA Chula Juana
“For the average homeowner, if you’re not looking to sell, try as much as you can to not think about this stuff.”
A brave statement when people are driving home and there are no lights on in any development, when the talk at the water cooler is who is being foreclosed, when the news is will the company be in business this Christmas. IMHO the comment should be: Will the last one out of the subdivision please turn off the street lights?
“‘These short-term fluctuations, while significant, won’t touch people on a day-to-day basis,’ Bostic said.
Statements like these from “Ivory Tower” economics professors are clueless beyond belief. Advising people to put their head in the sand and not be aware of a rapidly changing, MAJOR, economic fundamental (and put it in perspective as to how it might effect their own lives/livelyhoods) is about as irresponsible as you can get.
Can Bostic be any more arrogant? “Don’t try to understand this you dolts, you’ll just get dizzy. I’ll tell you when to worry”.
Jackass.
Did the developer even get that far, putting in street lights?
Holy $hit - off topic to the California thread.
I just got home and turned on the NewsHour. They were interviewing Karl Case of Case/Shiller. He was laying out the entire mortgage mess. PBS was letting him do it too. He explained how it was the securitization run amok that had caused the current problems. At one point they spoke about the fact that people taking high risks now had a lot of problems. Kase said, “the higher you fly the further you fall”.
The PBS guy, I don’t know his name but I’ve seen him before. Older guy with a mustache. He said the housing boom is bust and it is going to be a huge mess. Not once did they mention victims or a bailout. I was incredulous. This is great.
The truth is getting out. And the truth is the enemy of any dumba$$ bailout scheme. Eat that Dodd and Hill, you buffoons.
Trust me. If it’s PBS, they’re teeing up the Republicans to blame for the mess.
Trust me. If it’s PBS, they’re teeing up the Republicans to blame for the mess.
Better yet, send as many of those crooks to jail as possible.
And guess what?
It Really Is Their Fault!
It’s OUR fault for electing the greedy sons of bitches. But it’s not just republicans… democrats play the game just as well. We need term limits, fresh ideas, and desperate voters.
I was going to say. . . what does it matter who we vote for? They’re all greedy sonsabitches anyway. . .
BTW, Bush gave a speech outlining “bailout”. Not monetary, rather reforms to the system.
If it’s PBS it probably is dead accurate. And the Republicans should be blamed! They could screw up a wet dream!
I think Larry Craig just did.
Good thing you’ll be getting the Dems to save the day, they are so good at it. I’m sure old Hil&Obamy have a perfect plan. I say throw out all of the bums… Both parties.
Tx….the Republicans made certain awhile back their viewpoint got out…. Can’t watch/listen without AEI, Hoover, et al pontificating to the pseudo-elite. I’m open to any point of view, long as it isn’t projectile vomited by an ideologue. Any ideologue.
Holy $hit - off topic to the California thread.
Now now… you know our threads are sacred while everyone else’s threads are ours.
Got popcorn?
Neil
Yeah, PBS is pretty good about exposing commercially unpalatable facts.
The anchor was Paul Solman. I normally always watch the Leher News Hour, BBC, News, and the Nightly Business News and the one night I go out to gorge on sushi, I miss something I’d really like to see. I hope someone got it on You Tube.
The Podcast doesn’t do it justice as he explains how the MBS tranches are divided up. The piece was on how we got where we are and I didn’t hear any blame being tossed around. I was impressed.
http://www.pbs.org/newshour/bb/business/july-dec07/subprime_08-30.html
I know San Diego is going through a lot right now and it will definitely be good to see prices come down. I’ve never lived there, but when I visited, I was very impressed with the city. This was back in the early 1990s. SD was clean, and it sparkled. People on the streets and in the stores seemed to be rather happy. I can’t tell you how impressed I was with the weather. If ever perfect weather existed anywhere in the US, San Diego was the place, IMHO. I sort of felt the weather had a lot to do with the mood of the people. Coming from Florida, where people get very grumpy and downright nasty due to the heat and humidity, SD seemed like heaven. Nice beaches, too. It was great to swim in water where the temperature wasn’t like soup. Definitely seemed like a great place. What Miami wishes it could be, but never will.
LOL, I was thinking about my post in bits bucket about getting a good dressing down from that European lady. And then it occurred to me, if you took the US and compared it to the globe, where the US is the leader and many countries look up to the US, I kind of feel that way about CA, sort of being the top dog state to the rest of the US. So, citizens of CA, take back your state!
And this: ‘It’s like Gray Davis, when he assumed that the dot-com boom would continue and spent 30, 40 percent more from the state dollars than were coming in for state income,’ he said. ‘It’s like anything — what goes up, must come down.’”
Interesting that Ahhnold became governator by stepping all over Gray Davis. From where I sit, doesn’t look like he’s doing that much better of a job. How do Californians feel? Seems like he’s repeated some of the same mistakes.
How do Californians feel? Seems like he’s repeated some of the same mistakes
- Gray Davis was a loser! A loser along the lines of Jerry Brown.
The sadest thing for our state concerns the US Senators, Boxer and Feinstein. They are like another relic that we were saddled with for 40 years, Alan Cranston.
I’m actually not all that annoyed by Senator Feinstein. Although I disagree with her more often than not, she at least has some native intelligence.
Draw whatever conclusions you will from the pointed omission of reference to our shorter senator in the above paragraph.
And, at least their tap dancing is on the Senate floor, not in an airport restroom.
“And, at least their tap dancing is on the Senate floor, not in an airport restroom.”
Ya, there has been a long line of them now. I’m begining to think its the “behind closed door” platform of the party.
California has had a lot of goofballs, but my favorite was Senator George Murphy.
Murphy had stated that Mexicans were genetically suited to farm labor; because they were “built lower to the ground”, it was supposedly “easier for them to stoop”.
George Murphy was right, they are. Favorite movie he was in was ‘Battlegound’, about battle of the bulge and Bastone.
“I come from California and meant absolutely no offense,” he said. “I have the highest regard for the congress of Colombia and I simply wanted to demonstrate my warm feeling and affection.”
Congressman Rep. David Dreier, a Republican from Los Angeles
Aug 30, 2007
Another fine California representative
Ever since Senator Carol Mosely Braun was retired from Illinois, us simple folks in Wisconsin had nothing to politically amuse us. Even though California is a lot further than Illinois, your politicians are better than SNL.
Hoz,
Been meaning to ask you about that 80% drop in housing, but I’d rather ask
Are you going to the Badger game in Las Vegas?
Davis’ mistake was to not take seriously enough the hit job that was put on him by a handful of right-wing political consultants, allied with right-wing talk radio hosts. He didn’t raise hell like he should have when Enron, et al, gamed the California energy markets, screwing businesses and consumers all over the state. The right wingers riled the public, which was inclined to distrust Davis after the dot-com bubble burst revenues and the electric grid melted down. Add Arnold’s fame and the novelty of a recall campaign and Gray was a sitting duck.
Arnold was a tool. But when the propositions his right-wing consiglieres put on the ballot all went down in flames, he decided, like a good Hollywood veteran, to screw the agents and save his own rear end. Right now, he’s governing just like Gray… on steroids.
Oh please, it’s not all aright wing conspiracy. Davis SUCKED and the republicans saw an opportunity and took it. DAVIS screwed up first.
Next, your power problems were NOT caused by Enron or anyone other than yourselves. CA uses more power per person on average than any where else, demand is going up every day AND you absolutely refuse to build new power plants in CA. SO lets see, demand UP, supply DOWN, econ 101 says prices do what????? That’s not a Rep conspiracy, its simple economics.
Not only that, the environmental regs in cali make it damn near impossible to build a new plant. If i recall correctly, there has been one plant completed and now operational since Enron/the recall election.
// i worked on the environmental compliance study for that one plant.. have also worked on the application & siting process on 7 others that will probably never be built.
“CA uses more power per person on average than any where else,”
“you absolutely refuse to build new power plants in CA”
Lies.
http://tonto.eia.doe.gov/state/state_energy_profiles.cfm?sid=CA
“Although California is a leader in the energy-intensive chemical, forest products, glass, and petroleum industries, the State has one of the lowest per capita energy consumption rates in the country. The California government’s energy-efficiency programs have contributed to low per capita energy consumption.”
http://www.energy.ca.gov/database/POWER_PLANTS.XLS
During the dot com boom, what was the rate of increase of power consumption? 2 percent per year. That’s right, TWO.
Dear Jay:
I think our power problems were caused by deregulation, which Davis opposed. The voters demanded it, but they turned out to be wrong.
“People are screwed.”
-Big V
Becaus ethey crewed up the dereg just like here in MD. Yes, it was Wilson. But the simple econ still applies. Y’all wany=t power but not the plant. And then complain about costs, etc. Just like here in MD, CA keeps making the wrong choice over and over and can’t figure out what the porblem is. CA residents say its ok because of the weather/ocean and we do the same here in MD, the answer to all our problems is more guvmint and oh yeah, eating blue crab by the Cheasapeake Bay. (yes a good time, but not a solution to our problems)
CA uses more power per person on average than any where else
Jay, you are wrong. California has the fourth lowest per capita energy usage of the fifty states.
Can you say “right-wing” a few more times?
Well put Malibu. The similarities between Arnold and Davis should make the whole state nervous.
Gray Davis was unfairly blamed for the Enron debacle, which was caused by former Governor Pete Wilson. Wilson rammed through the electricity deregulation which allowed out-of-state companies to shut down California power-generating plants in order to create artificial shortages. I believe that Gray Davis should have used the National Guard to seize the plants, but it’s foolish to blame him for Pete Wilson’s folly.
Schwarzenegger was extremely unpopular until he realized that he was the governor of a Democratic-leaning state (about the time every one of his initiative measures got shot down by voters). So, he adopted a pro-education and pro-environment stance and started working with the legislature, instead of demonizing them. Arnold is a bigger fund-raiser than was Gray Davis, which is disappointing, because he promised that he would be his own man and not have to raise obscene sums of money.
SD is a cool place, however you must have not traveled out of the valley too far. Did you try the drive on 15 up towards the San Bernandino area? Temicula — IS TOO DIE FOR. OH I CAN’T WAIT TO GO BACK TO SAN B. Oh and the ohhh sooo many trees that I saw, just breath taking.
Southern California has some, I repeat some nice areas. I would recomend traveling beyond CA and FL. The world if a very large place.
Who whizzed in your Wheaties, OK? I was just saying that I liked what I saw of the area when I was there. I was impressed, is that ok with you? You want to consider me a rube, fine. Hope your “clever” put down made you feel better.
Hey Palmetto, you forgot SD has the Chargers. The Bolts road to Glendale, AZ starts on the 9th vs da Bears. Rexy throws a few picks and the Bolts roll.
Go Bolts!
LOL, we got the Bucs. Poor Bucs. A moment of glory and then into the crapper and they can’t get out.
The name “Chargers” in San Diego has a little irony to it these days. The problem is that the whole blessed city just charged everything to their HELOCs.
You DO know how the Los Angeles Chargers got their name, yes? Conrad Hilton, the hotelier, owned them, and was introducing a charge card. So - Thomas - more irony indeed.
I like SD as well. What’s not to like?
Yeah, San Berdoo is kinda like Oklahoma, without the tornados.
Hahahahaha
Dude: OK Landlord:
Just because somebody happens to think SD is the best city in the world (as I do) doesn’t mean they haven’t traveled. It is most likely that said individual has traveled extensively and knows from experience that it doesn’t get any better than San Diego.
Temecula is actually a quite beautiful town with a number of wineries dotting its eastern hills. Previously known by a billboard proclaiming the area “Rancho California”, Temecula’s only fault from my perspective is that they located most of their job centers on one side of a major freeway and placed their housing on the other side.
Palmetto,
SD in the 90s was that place. The city has gone nuts with subdivision building, and the traffic is now on par with L.A. I have so many fond memories of San Diego that it kills me whenever we update our places-to-live list. My wife and I just sigh wistfully, and move on to the next place. We’ll probably try to take a trip there this weekend, but purely to visit friends. I doubt we’ll see anything to put SDback in consideration, but who knows [sighs wistfully]?
“People on the streets and in the stores seemed to be rather happy.”
– they are all on meds.
I only have questions and no answers:
Wonder how much sub-primo exists in Montery?
When will Zillow reflect reality?
Any FB out there who would like to comment on “How it feels to be in denial?”
IMO zillow has become more and more useless. At first, it was just that their prices were wrong. Then they stopped showing the history graphs. Next, they stopped exhibiting dates on the supposedly comparable sales. Zillow must be run by trolls.
AZ Lender:
The history graphs are still on there, but you have to type in the security code (just regurgitate the sequence they show you) to get to them.
Monterey? Not much.
I will agree that it will get ugly. I’m not really sure if we can compare this bubble to what happened in the Great Depression. My understanding is that the GD was caused by the aftermath of a stock market meltdown and overseas economic stagnation. There was a real estate bubble but I don’t think it was widespread, and the world economy at the time was configured much differently than today. I would say we are sailing into unknown waters right now. I don’t think we will have an economic meltdown as long as the GD was, but I am sure it will be of a greater magnitude in a much shorter timeframe (probably around 6 months to a year is how long I expect the worse to last). Now, the USA, while we still have a considerable amount of manufacturing and agricultural activity, has basically hyperinflated its currency and money supply primarily by derivatives. My belief is that these derivatives and similar ventures are what is responsable for the rapid growth of house prices and other commodities in the USA. I don’t think we will see hyperinflation similar to what happened in Germany in 1922 since the USA is much larger and yes more industrialized than Germany was (after WWI Germany’s industrial territory was taken from them by the Allies). Also, I think it would be too obvious to the public if hyperinflation started on food and fuel that something is wrong.
The other issue is fraud. I would say that the derivatives market is responsable for 20% of the real estate growth as in some type of spillover from that industry. Jobs and demographics are responsable for maybe 5 - 10% of the growth. The rest is fraud. YOu’ve seen it in the pumped up appraisals, the zoning laws stretched or ignored by both private groups and governments, mortgage fraud, and so forth. As with any fraudulent venture, it eventually collapses. There is no honor among thieves, and this will eventually come. You can see the finger pointing right now, and it will eventually lead up to your politicians at all levels. I think the fraud in our economy is a result of the derivatives market since all of that “growth” is basically gambling. You cannot sustain a country on gambling at all, if you doubt me look at your Native American reservations and many of them have gambling as a primary industry yet most of those people live poorly. Finance is NOT an industry, it is a support industry like retail and hospitality. Along with the “housing economy” the derivatives market will probably disintegrate over the next few years mostly because it is all virtual finance.
Virtual finance = make believe finance = 0.00 finance
THIS IS UNIQUE!
The housing market is collapsing in a low employment economy! The great depression and lack of employment caused the housing market to collapse in the 1930s.
Now the housing market is collapsing with 4.5% unemployment.
There is no bailout, New Orleans is not even rebuilt and this problem is 100X the size of New Orleans problem.
“There is no bailout, New Orleans is not even rebuilt and this problem is 100X the size of New Orleans problem.”
Oy, New Orleans. It was a tragedy what happened there, but I just don’t think a city that was already below sea level should be rebuilt. Move it further inland first.
And sinking about 3 inches a year.
You make a good point. New Orleans is way more important than bailing out greedy flippers and stupid lenders.
Really? only 4.5% unemployment?
Um. Excuse me, besides the burger-flipper at MickyDees, where are the jobs? My daughter, a recent college grad, is looking. When you have 3,000 applying for 125 openings, it seems like the unemployment rate is misleading right now.
Magic,
I wholeheartedly agree, but I cannot pick and choose numbers from the Government that happen to disagree with my opinions. I try to stay consistent. The problem with your daughter and my children is/are the U-7 figure(s) for underemployment. These figures suggest that there are a lot of MBAs flipping burgers.
“ it seems like the unemployment rate is misleading right now ”
Oh… we’ve had a few discussions on that. We’re heading into a period of underemployment. Not to mention, 1099’s who lose their job do not count. So engineering contractors who are not renewed? Don’t count. Realtors ™ well, we’re ok with that. Many mortgage brokers? Same thing. Day labor? Doesn’t show up anyway. Construction? That’s mostly 1099. (Don’t you love how far construction can fall while still technically employing 95% of the peak employment? Believe that? Let me sell you some insurance then…)
Its getting interesting.
Got popcorn?
Neil
She might have taken the wrong major. My son has a job waiting for him and he just finished his junior year. He also received a signup bonus that will help get him through last year in college.
Tell her to go to monsterdotcom and look at engineering jobs. Oh - what’s that, a liberal arts degree, because math was “too yucky”? Sorry.
Who are you? And how do you make these assumptions?
In addition, I don’t recall ’sarcasm’ classes being offered at my university.
Here is my opinion on such things: and I am a computational mathematician.
Try this again:
http://interface2037.com/index.php/2007/07/18/value-of-an-art-education/
I agree. These unemployment figures are rigged. And they don’t reflect job “comp values” for the jobs lost and replaced.
I don’t think unemployment is likely to go up much. We have enough bandwidth by evecting illegals. Unemployment won’t reflect true pain of this fiasco.
Mexico & Wal Mart are different stories.
This really isn’t true. Housing was in big trouble after the Great War and the aftermath of the Florida swampland bubble in 1926 sent the market to the bottom.
I’ll tell you what, take a look at this graph and see if any similarities jump out at you?
warning: pdf
http://comstockfunds.com/files/NLPP00000%5C292.pdf
This was in reference to the 1929 debate.
Well, that was depressing. Informative, but depressing.
Geez.
Something strange here: That chart shows the ratio skyrocketing AFTER 1930. Rather than before. Implications?
That is the debt explosion that occurred when FDR cranked up the New Deal programs and then started gearing up for war. At the time such lending at a time when the economy was down caused quite a stir and got everyone talking about Keynes.
Yeah, but the only thing that made the fraud possible was the derivatives. Kind of hard to defraud a bank if it cares to check on you.
EYE ON AMERICA
Your move, Mr Bernanke
By Walter T Molano
There is a consensus in the northern latitudes of the Western Hemisphere that the US Federal Reserve under chairman Ben Bernanke will magically solve the markets’ woes. Asset prices rallied last week, as television commentators debated whether the US central bank would cut interest rates by 25 or 50 basis points. Politicians from both sides of the aisle called for a reduction in rates and an increase in liquidity.
Although the United States insists on central-bank independence
as a precondition for multilateral assistance, it does not feel it should be held to the same standard. The televised assurances by senior politicians that the Fed would ease interest rates made a mockery of the nation’s monetary authorities. Moreover, the notion that a reduction in interest rates would solve the ongoing credit crunch was a naive understanding of the damage that has been done.
http://www.atimes.com/atimes/Global_Economy/IH29Dj01.html
WOW, some more good nuggets in there:
“As a result, no one can move the paper off their books. Last week, a European financial institution sold a AAA tranche at a price of 78, forcing it to assume a huge writeoff.”
“Banks are slashing lines of credit, paring back trading positions and refusing to roll over commercial-paper obligations because they must husband their cash. That is why a 50-basis-point cut or a 400-basis-point reduction in Fed Funds will not do anything to restore confidence.”
haha even commercial paper is bad!
“The epicenter of the crisis is in the US, but the reverberations are global - thanks to the universal implementation of the Basel Accords. In retrospect, the accords were a stealthy virus that contaminated the global financial system.”
another haha. Some irony here in the “near universal” bit.. what did the FED just do but jack up the the amount of lending that banks can do for their brokerages, and start accepting MBS as collateral for their discount loans! Helooo? Mr Basel? Anyone home?
“While Malibu has its share of property owned by people who ‘don’t even need a mortgage,’ there is plenty of…smaller homes and condos that are being foreclosed upon….”
DEE DEE:
I know how we can keep that awful man at the bank from taking away our love nest. Let’s put on a shindig! Maybe Fabian will show up and sing for us; all the girls think he’s the most! We can charge admission and make plenty enough dough to pay the bank what we owe.
FRANKIE:
That’s the swingin’-est! You call Animal, Donna, and Patti. I’ll invite Thornburg and Lehreah. Oh, yeah…and Appleton-Young, too. Me and Bonehead had better start waxin’ down our boards.
DEE DEE:
Okay, but stay away from Leslie. You’re mine, you know.
Ooh is Annette coming?
Gidget can make it!
Annette’s were bigger.
Don’t forget to invite ‘Cookie….Cookie….lend me your comb!
Hey, I heard they just built Malibu to backdrop that movie, but never tore it down……..my bad.
Ha ha ha.lol
“While Malibu has its share of property owned by people who ‘don’t even need a mortgage,’ there is plenty of vacant land, smaller homes and condos that are being foreclosed upon, said a source, who is a real estate investor and did not want to be identified.”
I never really “got” Malibu. I guess the swells like to have a beach colony, but it always looked sort of precarious to me, like the houses would eventually be swallowed up by the ocean.
And they burn down about every 5-10 years.
“It’s not just sub-prime borrowers who are having trouble getting affordable home loans.”
Nope, the loans are still affordable…it’s the housing prices that aren’t.
OT - Centex Homes Clearance Sale save up to $244K
All over TV and Radio here in Naples, FL
http://centexsummerclearance.com/?divisionID=1343
From the disclaimer: Get a load of the very last word.
*Example assumes a 20% down payment on a 7/1 interest-only ARM for qualified buyers. Finance example is only available if customer chooses to use CTX Mortgage Company and Commerce Title Company. **Commission applies to sales of inventory homes in Collier, Lee and Charlotte counties that close by September 30, 2007. This offer may by changed, cancelled or revoked at any time by Centex Homes without notice or obligation.
I guess that must have been the mosquito sound I heard at the end of the commercial!
Hurry….sale ends next severe tropical cyclone, usually with heavy rains and winds moving a 73-136 knots.
There are 33 new foreclosures in Malibu per Realtytrak. About half are a result of property tax bills which will be paid late, but NODs went out to the rest. I am sure there are better sources, just a quick scan out of curiousity - since Malibu seemed immune.
“Joe Morse has bought a 40-foot motor home that he plans to drive across America over the next several years. But Morse hasn’t been able to take off on his grand tour because he hasn’t been able to sell his house in Cerritos, Calif.”
HAHAHAHAHAAAAA!! Joe will get a far as Bullhead City and set up permenent residence at the El Rio Waterfront Resort & RV Park
Are you sure he isn’t taking the I10 to Quartzsite? Way cheaper there than Laughlin.
Well it is a 40 foot’er so I figured he must have some play money
There’s always “Slab City” lots of snowbirds there.
Quartzsite is such a pit that when I drive from LA to PHX I don’t even get gas/food in Q. Just use Flying J Ehrenburg and then ignore everything on left and right till I’m over the hill past Q.
Looks like a golfer; Kingman, AZ is my bet.
Possibly financed the purchase as a second home. Stuck with two mortgages and has to still work.
Radio commercial in Seattle on sports radio. From Investment Recovery Company - if you were invested in a fund that promise low risk CMOs (sp?), call them at once - you might be able to get some or all of your $ back.
Ha Ha - its long gone. Who are they goign to sue?
From EconomyinCrisis.org
comments section:
guest says “The “signs” were not missed.” on 08/30/07
“I am a review appraiser for a major lender. We were talking about this 2 years before it started. We didn’t know when it would start but we know when it will end. It will start bottoming late July and the 4th quarter 2008. But it will recover only very slowly. The 3/27, neg. am. loans,payment option, variable rate, stated income or “liar loans” will help keep it down as we blow them out of the pipeline over the following 3 years. As they become a lower and lower percentage of the overall market, the prices will begin to recover. Miami-Dade condos will be the last product and location to recover. Keep my post. It will be accurate.”
Kind of silly to think that prices will go up as the enabling loans disappear. Seems to me that without the pay-option ARM, prices can’t get any higher than 3-4 income.
“People are screwed.”
-Big V
Yeah they keep leaving out that prices are based on what people can afford. And the outsourced, insourced, cut costs anyway you can, US economy does not look like its going to create a large number of buyers who can afford high priced RE.
“‘These short-term fluctuations, while significant, won’t touch people on a day-to-day basis,’ Bostic said. ‘For the average homeowner, if you’re not looking to sell, try as much as you can to not think about this stuff.’”
What if you were planning to liberate your home equity wealth through the home equity ATM machine?
I still have all my teeth, and so I’m going to stop flossing. I won’t even think about periodontitis. After all, I’m not looking to lose my teeth.
The average homeowner may have been more dependent on the value of her house than the author assumes. So many HELOCs, so many speculators, so many folks just hanging by a thread. What exactly does the average homeowner’s situation look like anyway? We need current statistics. Where can we get them?
There is a whole literature on the home equity wealth effect on consumer spending. I assume the drops in spending when home equity decreases are of comparable magnitude to gains in spending when home equity increases?
This post got eaten by the software, but I’ll post it here:
‘openwater747 Date: August 30, 2007
Regarding the ebonics debate. I’m originally from Oakland and was dismayed when the whole ebonics thing came about. I asked my folks about it, they still reside in Oakland, and what it bolied down to, was the Oakland Public School Board was attempting to get funding from the state by classifying “ebonics” as a distinct language from English. No one really believed it was, it was just a tool, a dumb shot in the dark ( very lawyerly I might add) to get extra state funding for another language to be taught ( after English and possibly Spanish). I’m sure those board members would love to go back in time an take a mulligan on that one. What a black eye for my home town( no pun intended, really)’
Ben, have you been drinking again?
I think you meant to post this in the bits bucket, Benjamin.
Bad schools get more money. The more “programs” the more money, the more jobs, the more……
Bad schools have a ready made excuse for the failures of the teachers, admin, boards, etc. So no one gets fired or held accounatble and the kids continue to get the shaft. The parents are told that the school will do this or that, then the school turns around and says not my job. Can any one remember when teaching was a calling and not some guaranteed guvmint paycheck leaching job?
Can anyone remember when parents actually cared enough about their children to keep them out of $hitholes (that now include government schools)?
You get what you deserve - you leave your children to languish in government run brainwashing centers for sheep, don’t be surprised when you end up with an 18-year-old brain dead dimwit.
Actually, there is support for the Oakland school board position. A professor of sociology at CSU San Bernardino came to the same conclusion. The professor told a school board that they had made the right choice when they decided to teach Blacks in Ebonics-speaking classrooms (i.e., as foreign language students).
No surprise to me. CA school boards run there own countries, believe it or not. Here in San Diego, they have catered to…. and are a magnet for the illegals so much…. I just want to puke. That need to have their kingdom powers removed …..and given 500 lashes.
“Amer Faraz, VP of Fremont-based Green Valley Funding, said his company is…doing about 10 percent of the loan volume it did a year ago, Faraz said. ‘This is brutal,’ Faraz said of the current market conditions. ‘Our company is in a building that had 15 mortgage companies last year. Now we’re the only one left.’”
Maybe if you and the aholes in your building hadn’t acted in a crazy way you might still have businesses.
You reap what you sew!
http://online.wsj.com/article/SB118851742988914064.html?mod=hps_us_whats_news
W to the rescue?
This FHA measure will only help a few people, and those will be the ones who were least at risk to begin with. I doubt they will ever get FHA to raise its conforming limit (but they might). I really don’t thing the Shrub is about to bail out a bunch of morons who bought houses they couldn’t afford. This will help the people who have been paying their entire mortgage (including principal) every month and who actually WANT to keep the monkey on their backs.
“People are screwed.”
-Big V
Interesting…I heard an ad for FHA for refinancing on a radio station (Metro Detroit) yesterday and thought WTF?
For a very few individuals, and no help to California. I hope it actually can help those that wish to stay in their homes and that these are unfortunate individuals that got stuck in an ugly subprime loan.
It will not help speculators or second home owners or people that are upside down. Nor will this deter the collapse in Florida or Arizona or Nevada or the rest of the US.
Watch how fast the institutions figure out the loopholes to stick their problems on to tax payers, via the government.
It is not a massive “bailout”, it is an attempt to take some semi responsible individuals that could not be FHA (FICO
And to think, W was about to make the first correct move in his presidency and he blew it. To be honest, I’m thinking of buying a home just for a tasty bit of that bailout money…. “I’m an engineer but I had no idea about all this financing stuff, please give me money so I can live like I DESERVE to”
You gotta be f-ing kidding me!!!
Migrant workers get Mcmansion bailout - tomorrow’s headline
I wish I could say I’m surprised that the Decider is planning a symbolic bailout. But that would mean that I hadn’t noticed the Medicare drug debacle, his failure to veto pork for the first six years of his administration, and hundreds of billions to Iraq. He is a disgrace to true economic conservatives.
Yep. From Bloomberg:
Aug. 31 (Bloomberg) — President George W. Bush today will announce steps the administration says will help people with subprime mortgages keep their homes.
Bush will let the Federal Housing Administration, which insures mortgages for low-and middle-income borrowers, guarantee loans for delinquent borrowers, allowing them to avoid foreclosure and refinance at more favorable rates, according to an administration official.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a8JBKPbJkWac&refer=home
INSIDE
REAL ESTATE
Jumbos Suffer Amid Mortgage Mayhem: Relative Cost Rises
BY JOE GOSE
FOR INVESTOR’S BUSINESS DAILY
Posted 8/30/2007
The chaotic credit market and sluggish housing environment are meting out punishment high and low.
The climate dogging subprime borrowers for months now is making it tougher for wealthier homeowners, and owners in high-priced housing markets, to refinance as well as get loans on new properties.
Rates on mortgages have risen lately for this group and large loans are becoming harder to get, as financers — buyers in the mortgage-backed securities market — shy away from risk.
“It’s a crisis of confidence more than anything. It’s not rooted in delinquencies,” said Greg McBride, senior financial analyst for rate information firm Bankrate.com.
The average interest rate for 30-year fixed jumbo loans failed to budge this week from a relatively lofty 7.4%. By contrast, the average for smaller “conforming” 30-year fixed mortgages fell 15 basis points to 6.43%, Bankrate.com says, citing housing market weakness.
Jumbo rates have climbed roughly 40 basis points since the end of July. Homeowners refinancing a $600,000 jumbo mortgage now vs. then face paying $162 more a month.
Meanwhile, rates for superjumbo mortgages (typically more than $1 million) have shot up about 200 basis points over the last several weeks to 8%, says Michael Covino, president of Luxmac Covino & Co. in Tarrytown, N.Y., which provides loans for $750,000 to $40 million.
http://www.investors.com/editorial/IBDArticles.asp?artsec=27&issue=20070830
Some analysts feel that the Wall Street article stating that the White House plans to announce later today steps to relieve stressed US homeowners might give a lift to US asset markets and in turn to JPY-funded carry trades. The White House plans include allowing the FHA to guarantee loans for delinquent borrowers and to call on Congress to temporarily suspend a tax provision that is leaving some distressed homeowners with large tax bills. The WSJ says that Bush will announce an initiative, to be lead jointly by the US Treasury and Housing and Urban Development departments, to identify people who are in danger of defaulting over the next two years and work with lenders, insurers and others to develop more favorable loan products for those borrowers.
Fears that as many as 2 million Americans may lose their homes over the next two years have been hanging like a dark cloud over the asset markets and these modest steps might be seen as the start of a concerted effort between the government and the Fed to address those concerns. Analysts also feel that there might be a coordinated effort by US authorities to ensure that this Friday won”t be a “black” or even dark Friday before the long weekend in the US. To this end it is likely that Bernanke will make an effort to soothe market fears in his speech at Jackson Hole later today. –
I am now actually thinking about buying a home. If I get myself over my head I’ll just get a piece of that sweet sweet bailout money. I just need to practice my acting. “But…but…I had no idea that my investment wouldn’t keep increasing at 20%/yr. I just wanted to be rich like everyone else and live the life I DESERVE”
unreal
I am now actually thinking about buying a home. If I get myself over my head I’ll just get a piece of that sweet sweet bailout money. I just need to practice my acting. “But…but…I had no idea that my investment wouldn’t keep increasing at 20%/yr. I just wanted to be rich like everyone else and live the life I DESERVE”
unreal
I am now actually thinking about buying a home. If I get myself over my head I’ll just get a piece of that sweet sweet bailout money. I just need to practice my acting. “But…but…I had no idea that my investment wouldn’t keep increasing at 20%/yr. I just wanted to be rich like everyone else and live the life I DESERVE”
unreal
test
Attorney I know, now representing client selling a house in Calabasas, was listed for 2.2M, now dropping price to 1.85M, probably with more drops to come. Also, I have a friend who just moved out of CA and his house is for sale, just dropped the price 50K. Houses in LA are just not moving, open houses are empty houses. I would say this started fairly recently when the jumbos became difficult to get. And prices are just STARTING to drop.
I, for one am glad I left California. For the same reason as already mentioned. Cost of housing and rest of the things were just way too high. Two working professionals who should have been able to buy a home in a decent neighborhood, but refused the suicide financing. We voted with our feet and headed east on I40. New Mexico is much friendlier overall. At least suits our situation. No missing of Arnold and Company. No missing the traffic, crime, corruption, etc.
and CA prices have a lot farther to drop. If they doubled in 3 years, they can go back to the previous level in a short period of time when the fools are gone (which they are now).
I remember hearing the name CMG when I was at the telephone company. They were deadbeats when it came to paying the phone bill.
Why would any lender want to make a loan right now because a major correction is underway ? Maybe if they ask for 25 to 30% down the lender might be safe .
Look , the lenders made loans based on real estate going up and that model was false ,so now it’s back to the drawing board .
It doesn’t matter how good the borrower is ,if real estate is correcting downward all low down loans are at risk ,even 20%.This goes back to the value of the appraisal being solid and the appraisal is the most important aspect of a loan . Because the real estate industry is coming down from a period of “hit the market ” appraisasl in which they were just making up value because the buyers were in a frenzy ,making any loan is high risk .
IMHO ,the lending industry is in a wait and see mode . The REIC can’t make loans based on falling values . It really doesn’t matter how much you charge for a loan ,if the appraisal is under risk in a falling market ,you got a loan that is high risk even if the borrower put 10 to 20% down and shows ability to pay with good credit .
20% down is the very least the lenders should be requiring during this correction period and current appraisals are not stable ,(especially when you have foreclosures and massive supply right now .) Credit scores are the last thing that is important in a market like this .
current appraisals are not stable ,
Actually past apprasials for the last several years has been full of fraud.
odd have many missed this one…
Concerned Real Estate Appraisers from across America
Submit the attached petition (Which was posted on appraisersforum.com):
To: Mr. Ben Henson - Executive Director
Appraisal Subcommittee (ASC)
Federal Financial Institutions Examination Council
email: benh1@asc.gov
cc: Other state or federal agencies with authority in the following matter
“The ASC’s mission is to ensure that real estate appraisers, who perform appraisals in real estate transactions that could expose the United States government to financial loss, are sufficiently trained and tested to assure competency and independent judgment according to uniform high professional standards and ethics.” From the ASC website.
The concern of this petition has to do with our “independent judgment” in performing real estate appraisals. We, the undersigned, represent a large number of licensed and certified real estate appraisers in the United States, who seek your assistance in solving a problem facing us on a daily basis. Lenders (meaning any and all of the following: banks, savings and loans, mortgage brokers, credit unions and loan officers in general; not to mention real estate agents) have individuals within their ranks, who, as a normal course of business, apply pressure on appraisers to hit or exceed a predetermined value.
This pressure comes in many forms and includes the following:
the withholding of business if we refuse to inflate values,
the withholding of business if we refuse to guarantee a predetermined value,
the withholding of business if we refuse to ignore deficiencies in the property,
refusing to pay for an appraisal that does not give them what they want,
black listing honest appraisers in order to use “rubber stamp” appraisers, etc.
We request that action be taken to hold the lenders responsible for this type of violation and provide for a penalty on any person or business who engages in the practice of pressuring appraisers to do dishonest appraisals that do not provide for independent judgment. We believe that this practice has adverse effects on our local and national economies and that the potential for great financial loss exists. We also believe that many individuals have been adversely affected by the purchase of homes which have been over-valued.
We thank you for your cooperation and assistance.
http://appraiserspetition.com/
McGraw-Hill fires S & P president:
NEW YORK, Aug 31 (Reuters) - Publisher McGraw-Hill Cos Inc (MHP.N: Quote, Profile , Research) is replacing the president of Standard & Poor’s, the company’s financial services division, effective immediately, amid questions about the role of credit-rating agencies in the subprime mortgage crisis.
http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2007-08-31T041602Z_01_N30212906_RTRIDST_0_MCGRAWHILL-S-P.XML
how does this hit Canada? Really need to know.
How will Republicans reconcile this? They always bitch about Dodd and the Dems. But now their own party boss is going for a bailout.
We shall see a lot of anger towards Bush now, right “fiscally conservative” Republicans?
I’m not holding my breath.
Well, with a bailout coming from our f*ckwad commander and their looks like a good time to stop paying the illegal income tax me thinks.
Hearing this news is the final straw for me and perhaps even wanting to stay in the country.
Fiscal responsibility and prudence is punished while irresponsibility and excessiveness is rewarded. I never thought it would come to this but this county is more and more the white trash capital of the world. Not that it wasn’t before.
Any suggestions for places to immigrate?
Is anyone reading the MSM? Bush offering a bailout for subprime. I thought I had seen it all. Un freaking believable.