Is The Sky Falling In California?
The LA Times reports from California. “Southern California home sales tumbled to a 15-year low in August but the median home price continued to rise despite mounting industry woes, data released today show. Sales last month were the worst since 1992, according to DataQuick. In August, 17,755 homes were sold in the six-county region, compared with 27,875 a year ago, for a 36.3% drop.”
“‘Things are slow, but the big question is, ‘Is this a normal post-cycle lull or is the sky falling?’ I don’t think we know yet,’ said John Karevoll, DataQuick’s chief analyst.”
“What seems like a baffling combination of statistics, a plunge in sales but a rise in prices, is really a function of what kinds of homes are selling, experts say. But the story is different in lower-cost areas, especially in outlying communities that attracted first-time home buyers during the recent boom. Not only are sales falling faster, but median prices are declining.”
“Last month, the median price in Riverside County fell 6.1% to $394,523 and sales plummeted 46.4% compared with August 2006. In San Bernardino County, the median price fell 1.6% to $360,000 while sales tumbled 47.2%.”
“Elsewhere in Southern California, San Diego County’s median price fell 4% to $475,000 and sales fell 19.4%. In Ventura County, the median price fell 4.2% to $575,000 while sales fell 31.2%.”
The Press Enterprise. “In Riverside County, 2,834 homes were sold in August at a median prices of $394,523. It marks the first time the median sales price dropped below $400,000 since November 2005.”
“‘It looks like we’re pretty close to a ’floor’ level of purchase activity right now,’ DataQuick president Marshall Prentice said. ‘Market uncertainty has squeezed out most discretionary buying.’”
The Union Tribune. “The price of a home in San Diego County tumbled to a median $475,000 last month, down $20,000 from a year ago and $14,000 from July, as the number of sales continued falling, DataQuick reported Wednesday. There were 19.4 percent fewer sales than there were a year ago.”
The Orange County Register. “It’s official! O.C. home shoppers have failed to meet the year-ago buying pace for the 23rd straight month, eclipsing the previous longest losing streak back in 1989-91. The sales slump decidedly worsened in the year’s middle third: May to August, a typical year’s prime selling season.”
“DataQuick reports that 2,285 residences of all types were sold last month. That’s down 33.9% from a year ago and 48.9% below the average August in DataQuick’s 20-year history of O.C. sales data. August was so slow that it was the slowest August in DataQuick’s records back to ‘88 and the 11th slowest month overall.”
“Foreclosures in Orange County spiked last month to their highest level in nearly a decade. Banks foreclosed on 469 homes in August, the highest since October 1997, reports DataQuick.”
“And lenders sent out 1,476 notices of default last month, the highest in nearly 11 years. Default notices rose 26.5 percent from July and 196.4 percent from a year ago.”
“Who’s more to blame for the rise in foreclosures, overstretched working families who may have been preyed upon by predatory lenders, or speculators who bought homes for investment purposes? Economist Ryan Ratcliff of the UCLA Anderson Forecast analyzed the data and concluded that it’s the former.”
“More from Ratcliff: ‘(T)he lack of wider financial distress in the economy suggests that this spike in foreclosures is fundamentally different than previous cycles, the days when homeowners ate Top Ramen and let the repo man take the car before missing a mortgage payment may be a thing of the past.’”
“‘But this need not imply that today’s homeowners are somehow less conscientious about their finances. It may be that the mortgage payment has become so large that Top Ramen makes little difference, or that the lack of refinance opportunities and the adverse incentive of a huge prepayment penalty if you do refinance simply make foreclosure the least terrible of a set of terrible choices.’”
The Daily News. “The slumping housing market and rising foreclosures will continue to erode California’s economy until late next year or early 2009, but UCLA forecasters still maintain it will not tug the state into recession, according to a report released this morning.”
“‘With housing as weak as it is, the rest of the economy is going to keep its head above water. This is the glass is half full kind of a take,’ said University of California, Los Angeles, senior economist Ryan Ratcliff, author of the California report.”
“Ratcliff said that the forecast takes into account the mortgage sector turmoil that has so far resulted in thousands of job losses and some major players going bankrupt or closing down.”
“He also offered this caveat during an interview. ‘If it gets significantly worse than it’s been then maybe that’s enough to push us into recession without another source of weakness,’ he said.”
“Leslie Appleton-Young, chief economist at the California Association of Realtors, agrees that it will be at least until 2009 before the residential real estate market experiences anything resembling a rebound.”
“She also expects prices to fall by various amounts depending on the severity of the foreclosure situation. ‘I don’t think we’ve bottomed out yet. I think that will happen in 2008,’ she said.”
The San Francisco Chronicle. “The Bay Area should fare much better than the rest of the state, according to a widely watched forecast. ‘We still think we’re just going to get grazed by the bullet,’ UCLA economist Ryan Ratcliff said.”
“Local builders are hunkering down. ‘We’ve cut back, and we’re still in the process of cutting,’ said Kile Morgan, chairman of Ponderosa Homes in Pleasanton.”
“A few years ago, Ponderosa was building 250 to 300 single-family homes a year, with a median price of about $850,000. Now it’s down to fewer than 150 homes and has slashed its workforce to 50 from about 65, Morgan said. Its subcontractors, who do actual construction, have shrunk similarly.”
“‘Everybody’s looking for where the bottom is,’ he said.”
“Wells Fargo & Co. economist Scott Anderson stresses the risks of a statewide economic downturn more than UCLA forecasters do, pointing to how vital construction and other housing-related jobs have been to the state’s growth in recent years.”
“‘The odds of a recession (in California) are closer to 40 percent, given the outsized dependence on housing,’ Anderson said.”
“Both Anderson and UCLA forecasters stress that the biggest risk to California’s economy is that the housing slump will prove worse than they predict. ”
The Mercury News. “So far, the impact has been relatively small, according to the UCLA forecast and one released by the University of the Pacific Business Forecasting Center.”
“‘The consumer continues to spend,’ said Sean M. Snaith, who helped prepare the University of Pacific’s California and Metro report, which foresees a decline in housing prices through 2008 that ‘will not remotely resemble a bursting bubble.’”
“‘No question about it, we’re slowing a little,’ said Stephen Levy of the Center for Continuing Study of the California Economy. But the valley’s economy is ‘carried by the world, so the U.S. recession will hurt us, but will not take away the luster.’”
“‘By and large the soft landing is still the story,’ the UOP’s Snaith said. ‘It’s been a more turbulent landing that we would have liked, and it’s going to be little longer before we take off again.’”
“UCLA’s Anderson Forecast on the California economy also found ‘little evidence that mortgage defaults have led to wider financial distress for consumers.’”
The Central Valley Business Times. “A total of 9,477 properties, with a total loan value of $3.86 billion, were sold at auction in California last month, a 10.4 percent increase over July, according to a Discovery Bay-based foreclosure information service.”
“Speculator-owned properties (non-owner occupied properties) accounted for $1.71 billion of that total and represented 44.3 percent, or 4,199 of the properties sold at foreclosure auction.”
“CEO Sean O’Toole says the subprime market took the first hit as those borrowers had the least to lose when they walked away. ‘Now that nearly half of foreclosures represent non-owner occupied properties, it is clear that speculators are walking away too,’ he says.”
“Almost all (90.3%) of all foreclosure sales in California in August were for homes purchased or refinanced in 2005 and 2006. Of properties sold at auction, 95% went back to the bank, for a total of 9,015 properties with a loan value of $3.7 billion.”
From KGET.com. “FBI agents and other federal authorities were searching the home and offices of real estate agent David Crisp and his family and associates Wednesday morning.”
“On Monday, the California Department of Real Estate issued a formal accusation that said Crisp acquired homes in the area, then dramatically raised the prices of the properties.”
“Several of the homes already are in default. If they go to foreclosure, the mortgage company will sell them, but stand to lose hundreds of thousands of dollars because, experts say, the loans were made for more than the properties are worth.”
The Bakersfield Californian. “The home of Crisp’s mother was searched by FBI agents. And at around 11 a.m. Wednesday, two men were seen being led from the home in handcuffs and into a Bakersfield Police Department vehicle.”
The Press Democrat. “Owning a home means paying down a car loan, giving up dinners out and other scrimping for Reyna and Richard Jackson. The Santa Rosa couple, who bought their first home this summer, spend nearly half of their income on their monthly mortgage payment.”
“‘It is a big chunk,’ Reyna Jackson said. ‘It’s hard, it’s stressful. So far, so good.’”
“‘The thing that drove people to say ‘I’ll pay that’ was the fear of not getting in the game and never being able to buy a house,’ said Randy Blankenbaker, regional manager for Chase Home Mortgage.”
“During the run-up in home prices, houses increasingly were viewed as investments instead of shelter. ‘That was certainly the gamble. They weren’t thinking of it as a place to live, they were thinking of it more as an investment,’ said Darren Seliga, owner of Seliga Financial in Santa Rosa.”
“Many loans were made without requiring buyers to document income or assets. ‘Any loan officer can add and divide to come up with the figure to qualify. There’s no question that everybody may have overstated incomes,’ Blankenbaker said.”
“But the housing boom was not sustainable. High prices pushed out more buyers and made others wary of purchasing homes. The market peaked in 2005, followed by a slump that has seen prices fall the past 13 months. The county’s median home price is $575,000, down 9.3 percent from its August 2005 peak.”
“The Jacksons didn’t want to wait longer to purchase their first house. After a year of looking and watching prices fall, they bought a three-bedroom house in southeast Santa Rosa in July for $395,000 that originally was listed in February for $482,000. The deal went through after the seller’s lender approved the sale for less than what was owed on the mortgage.”
“‘We were nervous about getting into a house because of the mortgage payment. But we had to just do it. Even if the home prices went down more, lenders are getting more strict and it could be harder to get a loan,’ Reyna Jackson said. ‘A year ago, there was no way we could afford a home. It was definitely worth the wait.’”
“The Jacksons’ monthly housing costs jumped from $1,300 in rent for a Windsor house to $3,092 for their mortgage, taxes and insurance. To make ends meet means fewer new clothes, more frugal grocery purchases and other cutbacks.”
“‘I combine our errands so I don’t waste gas,’ she said. ‘We definitely live a different life.’”
Just missed getting hit by a pomeranian, and what looked to be a cheshire cat…
But no Chicken Littles in sight
Where is TxChick when you need her?
Out buying a Bay Area condo.
Haven’t heard “soft landing” for awhile. More like “crash”.
“Both Anderson and UCLA forecasters stress that the biggest risk to California’s economy is that the housing slump will prove worse than they predict. ”
this shouldn’t be hard…their brainpower has been lacking of late
“‘Things are slow, but the big question is, ‘Is this a normal post-cycle lull or is the sky falling?’ I don’t think we know yet,’ said John Karevoll, DataQuick’s chief analyst.”
Yes, John. 36% drops are perfectly normal.
Sheesh!
OK. We’ve all seen the spin coming from academia and the memberships of the boards of the “real estate centers” at UOP, UCLA, USC, Harvard, etc. So Snaith et al. pablum isn’t surprising.
That said, someone needs to let the minions know that they aren’t supposed to let on that they are following an agenda. Quote below is typical of the slant: “Hey REIC, we’re on your side and trying to keep the panic to a minimum. Keep checks coming!!” I’m offended that they can’t at least adhere to the fiction that academics are objective.
UOP’s Snaith said. “‘It’s been a more turbulent landing that we would have liked, and it’s going to be little longer before we take off again.’”
it IS offensive - that’s why you’re offended
Man, and why exactly are these “financial experts” paid? The bottom line is that they are high paid cheerleaders whose job is ALWAYS to talk UP the market so that the MASSES follow. They do this so the elite can SELL at highs and pocket tons of money…. Mozilo anyone!
Comrades
pssss…
Careful, I think Cagey B is listening
Ochen nye horrorshow.
http://en.wikipedia.org/wiki/A_Clockwork_Orange
“I’m singing in the rain
Just singing in the rain
What a glorious feeling
I’m happy again”
We renters sing that tune all the time while we are bashing these so-called “owners”.
Careful, NYCity, hubris is a painful, bloody experience.
The worm is turning in Santa Barbara, and my Santa Barbara Housing Bubble Blog is now up and running. Initially, I’ll be posting once per week, on Mondays. In addition to analyzing South County sales and inventory trends, I’ll be highlighting specific properties, summarizing and commenting on local MSM reports, relating stories and anecdotes, and reflecting on the unfolding debacle from sociological, historical, and philosophical perspectives.
My first post (Monday, 9/10) follows up on the 2006 story about the refusal on the part of the S.B. Association of Realtors to share its price and inventory data with the local newspaper. Many of you may recall the story, as it was widely discussed at housing-bubble blogs everywhere.
Feedback from Ben’s minions is more than welcome, and I’ll be contributing here on Ben’s blog from time to time as well.
Bless you all,
Saint Barbara
Great! Congratulations! I have you on my Toolbar.
Here’s some feedback: think about choosing a different pseudonym, and a different tagline. I’m not a practicing Catholic anymore, but already I’m turned off by this little bit of “cleverness.”
holy crap. now i’ve heard everything. at least you didn’t say it was ‘constructive’ feeback.
Saint Barbara:
Several are buried face down in front of the Trump Towers….
Coincidence? I think not!
I had no problem with it and in fact thought it was very clever.
What the hell do you think “Santa Barbara” means?
uhoh…Barbara…stranger from a distant land (no disrespect intended)….
Check out willow Creek in Goleta — laff riot.
“‘Things are slow, but the big question is, ‘Is this a normal post-cycle lull or is the sky falling?’ I don’t think we know yet,’ said John Karevoll, DataQuick’s chief analyst.”
There is historical precedence for this sort of analysis…
http://en.wikipedia.org/wiki/Know-Nothing_movement
“Speculator-owned properties (non-owner occupied properties) accounted for $1.71 billion of that total and represented 44.3 percent, or 4,199 of the properties sold at foreclosure auction.”
44.3%?! How can any politician back a bail-out for these clowns?
I guess it depends on how much of said politician’s base consists of the lenders who financed the clowns.
actually you guys have the bailout story wrong. they aren’t making loans to anyone. from all I’ve read you need good credit and etc. and they put you in a fixed loan. very few people will qualify and it’s probably not speculators.
Which bailout story? I am concerned about the one to expand the GSE limits north of $500,000.
My wifes receptionist, was just approved today for a zero down 30yr. fixed rate mortgage, amount $200,000.00 FICO score 620 yearly income of $28,900.00 by B.O.A.
You might ask to see the paperwork. Is it a no-doc? That would answer the income issue. And what is the interest rate?
Did you just buy some BAC puts?
I’d be curious to see if the loan goes through. Lots of people are being “pre-approved” and the deal falls apart before closing.
Get your money out of BofA if they are continuing doing this crap.
I got my money out of B of A the minute they started giving credit cards to illegals. I’ll be damned if I’m going to support a company that spits at our national immigration policy.
Relax, the program is for low to moderate income home buyers & homeowners w/c is available throughout CA & certain states. 100% financing, 1 loan, no PMI, full doc only (allows the use of undoc income of $1200 monthly but must be verified by housing counselor) no minimum credit score, 2×30 day lates within 12 months max, collections, charge offs, liens have to be paid prior to close. $200k, 30 yr fixed, 5.75% at 2.436 discount points, PITI payment $1,417. If she was able to get 3% seller contributions & qualified for another 3% from an assistance program, most of her closing cost would be paid. Minimum contribution from own funds $500. Some of the assistance programs are deferred payments & only need to be paid off when they sell or refi their home. Max seller contribution by the way is between 3%-6% depending on LTV. Salary of $2,408 + $600 (child support, part time job, boarder income, etc..) would give her total income of $3,008. If her existing liability is $0, her debt ratio would be at 47%. Max allowed is 48% w/ 6 mos verified seasoned reserves (401k, deferred comp, savings). So yes, it is possible for your wife’s receptionist to not just get preapproved but close as well. She may even have a better loan than most people. Besides when was the last time BofA was mentioned in the news negatively? They’re in the business of putting people in homes, not taking it away. Just compare the amount of foreclosed properties BofA has compared to the other lenders.
They’re in the business of putting people in homes, not taking it away.
AND:
Max allowed is 48% w/ 6 mos verified seasoned reserves (401k, deferred comp, savings).
—————————-
With 48% DTI ratios, there is NO WAY you are going to “keep them in their homes.” Quite frankly, it’s horrifying that a lender is so willing to put people in that kind of position. And this, after the credit crunch has begun? We have a long, long way to go.
If they couldn’t keep their homes why does BofA have only 50 REO properties throughout CA & Countrywide 2,817. This not a new loan program, it’s been around for over 2 decades. Standard DTI ratios w/ no reserves is 38%. Not everybody that qualifies are going to be at 48%. Higher DTI ratios are reserved for borrowers who do have SEASONED liquid assets, who have a proven history of saving, who have a history of being fiscally responsible. Max income limits are different for each county for this program. Sacramento, Yolo, & Placer is $94,080. Majority of borrowers who qualified under this program are A paper w/ good income. Quite a few actually put money down. This program requires borrowers to provide proof of their income, have no more than 2×30 day lates within 12 mos, provide only fix rate loan programs, will only lend within the borrowers means. You’re horrified at that?
I just posted a comment & for some reason didn’t show up…anyway…If they they couldn’t keep their homes, why is it that BofA only has 50 REO properties throughout CA compared to Countrywide’s 2,817? This is not a new program. It has been around for over 2 decades. Standard DTI is 38% w/ no reserves. Higher ratios are reserved for borrowers who have verified seasoned reserves. This is not a subprime loan. There are a number of borrowers who have fico scores of 700+ that applied for this loan. Some even have money to put down. Borrowers have to provide proof of income, loan programs provided are fixed, credit history cannot have more than 2×30 within 12 months, can only borrower within their means. What is so horrifying about that?
The Shrub will veto any proposal to bail out speculators and people who just can’t afford their houses, especially the proposal to raise Fannie and Freddie limits. It’s all posturing.
’ssshrubery?
strategery
The Merc and Chronicle seem to think that this mess is going to bypass the bay area. Totally ignoring the fact that Fannie and Freddie’s limit aren’t remotely high enough, and never will be, to bail out our distressed FBs. We don’t have any property for $417k.
You will soon!
How about $362.5k for FHA limits?
Yes, but the Bay Area is the only region with tens if not hundreds of thousands of “average” folks who have several million dollars from vested stock options. Unlike Manhattan where the masses remain because of rent control, in the peninsula areas that are core to Silicon Valley, a large fraction of the households have millions by sheer dumb luck, doing the same jobs that many do around the country, getting paid the same salaries, but with those outsize freebies - options. In Manhattan, it’s just a small group of Wall Street folks who made big money in the last few years. I wouldn’t bank on getting more than a 10% discount off 2006 prices on homes in towns like Menlo Park, Palo Alto etc. As a renter, I’d love to see it all crash by 90%, but I really think there’s enough people who bought in the 1970’s or earlier and others with option money who bought in the 1990’s and 2000’s who will be fine.
test
Dear OhMy:
There are not tens or hundreds of thousands of people with millions of dollars from stock options. Only 1 in 10 startups ever makes it, and only the top executives from those companies actually get millions of dollars. The rest of us are lucky to get $50 k. Employees of the other 90% of startups just get layed off.
Menlo park is a ghetto full of mostly Mexicans.
The average household income in Palo Alto is $130,000.
The average household income in San Jose (San Jose = Silicon Valley) is $83,000
Just because someone bought their house in the 1970s, doesn’t mean that they can sell it for more than what a buyer is willing/able to pay.
Obviously, there were enough people getting ridiculous loans to cause a huge runup in prices, so there are enough of them to where, when they all get foreclosed on or sell, there will be a huge drop in prices.
Now can you see why it’s a fallacy to think that the millionaires are going to save the Bay Area?
Dear OhMy:
I keep trying to post this, but it just won’t go through. What am I doing wrong?
There are not tens or hundreds of thousands of people with millions of dollars from stock options. Only 1 in 10 startups ever makes it, and only the top executives from those companies actually get millions of dollars. The rest of us are lucky to get $50 k. Employees of the other 90% of startups just get layed off.
Menlo park is a ghetto full of mostly Mexicans.
The average household income in Palo Alto is $130,000.
The average household income in San Jose (San Jose = Silicon Valley) is $83,000
Just because someone bought their house in the 1970s, doesn’t mean that they can sell it for more than what a buyer is willing/able to pay.
Obviously, there were enough people getting ridiculous loans to cause a huge runup in prices, so there are enough of them to where, when they all get foreclosed on or sell, there will be a huge drop in prices.
Now can you see why it’s a fallacy to think that the millionaires are going to save the Bay Area?
Dear OhMy:
Your argument is incorrect because there are actually only a few millionaires in Silicon Valley. 90% of all startup companies fail. From the remaining 10%, only the top executives get millions of dollars. Menlo park is a ghetto. The median household income in Palo Alto is $130,000. It’s $83,000 in San Jose (the true Silicon Valley). It doesn’t matter that there are people here who have owned their houses for 30 years. There are people everywhere who have owned their houses for that long. What matters is that there were enough people who financed recent purchases with ridicuous financing to cause a huge runup in prices, so it stands to reason that those people can also cause a huge drop when they sell/get foreclosed on.
“The slumping housing market and rising foreclosures will continue to erode California’s economy until late next year or early 2009, but UCLA forecasters still maintain it will not tug the state into recession, according to a report released this morning.”
CLICK!
Well, that’s because we’re already in said recession.
Well, that’s because we’re already in said recession.
Checkmark. This is already ugly. Talk to anyone whom is hourly. Their lifestyles, with rare exceptions, are taking a fast turn for the worse.
Neil
Neil, oil at $80 per barrel should help them out. Larry Kudlow, that supply-sider, would point out that profits from the oil companies will help all. And he should know the benefits of having good suppliers.
Can I have a Hummer????
Interestingly, when they came out, they were worst-rated in initial quality. Lots of plastic parts fell off, and new owners COMPLAINED ABOUT THE LOW FUEL MILEAGE!”
What a wonderful nation, where someone so dense can actually control (I didn’t say “own”) a $50,000 SUV.
I was driving up Newport Boulevard about a year ago, and then what should to my wondering eyes appear but a big old wheel bouncing down the road. Nearly clobbered a pedestrian as it hopped the curb and fell over.
Then I heard a gnarly screech and looked over to see an (apparently) new Hummer H2 grinding its rear axle down to a nice fine point in a trail of sparks.
Not that I was in the market for (that kind of) Hummer, but it wasn’t exactly the best advertisement for the brand in the middle of a busy street.
Maybe two summers ago, someone here linked to a blogger who photographed acres and acres of unsold Hummers that a California dealer had allegedly tried to hide from public view, so as not to spook the market.
RE: Acres of Cars That Time Forgot..
..anyone who is familliar with Ohio, between Barrington and Sepulveda, in West L.A….on the Veteran Hostpital side (left), going east just before the 405 underpass - there’s a netted area of over an acre, chock-full of unsold Pacific Cruisers.
They’ve been there, in varying quantities (50 - 250ish) for the last 3 years.
“Talk to anyone whom is hourly. Their lifestyles, with rare exceptions, are taking a fast turn for the worse.”
Except for hourly professionals who cashed out (sold) their housing gains and rented. These people are the exceptions, my household included. My wife has started to get disillusioned when house prices would not budge and then the market ka-boomed earlier this year.
“If it gets significantly worse than it’s been then maybe that’s enough to push us into recession without another source of weakness”
Gee, ya think? Another dim-bulb remark from an “economist”, this Ratcliff joker is from UCLA.
And then there’s…
“‘By and large the soft landing is still the story,’ the UOP’s Snaith said. ‘It’s been a more turbulent landing that we would have liked, and it’s going to be little longer before we take off again.’”
Yessirree, folks! Yet another economist setting up his stunned and amazed mea culpa…’But nobody foresaw this coming!’
It’s harder than a soft landing, but softer than a hard landing. It’s a Goldilocks landing!
LOL… And then the bears ate the economy.
OFF with the Rolex..ON with the Handcuffs !
You have got to Love this Country..because you Sure as Hell…CAN’T Leave
And that dude’s in STOCKTON!!! Open your window and look outside, Holmes!
Yeah, well, now that Anderson is gone, you can say that. If my friend Anderson were still there, he’d tell you that it’s not only gonna get a lot worse, but you’ll get nothing and like it. Ha!
I hope he did not graduate from UCLA, It would be a real embaresment to UCLA’s educational system.
Well, that and apparently their English program…
Why you gotta break balls? Dennis don’t give a rat’s ass how you spell imbarasment. As long as we now what he ment.
Where were you when I needed a spelling hug?
The spelling police are a pain. Hope they never read the unedited version of the founders - they couldn’t spell either.
English spelling was very fluid until the end of the 18th century. (Noah Webster’s dictionary was one of the first attempts to establish standard spellings for English words.) In earlier centuries it was even worse–Tudor scribes prided themselves on the number of different spellings for the same word in a single document. Most often we can correct for typos. I’m more concerned about people who have completed the third grade who can’t distinguish between there, their and they’re.
Also the people with MBAs who didn’t read, or if they read and didn’t understand, the statement in 24 pt. type on the front page of the loan docs which said,’This is an Adjustable rate Mtg’. Another example of the failure of the public screwel system.
“Another example of the failure of the public screwel system.”
There’s an old saying “You can lead a horse to water but you can’t make him drink.”
He is a Berkeley graduate, though clearly not a Bear.
hmm,move from windsor to SW santa rosa.from middle class with decent schools to gang territory.and pay twice as much.mmm,can i think about it?
I had the same thought. I’m a former RPer. My kids went to private school, so the featured home”owners” can add about $10k per year on top of that mortgage. Is it any wonder I don’t live there anymore?
I am addicted to this blog! Everything everyone has predicted has come to pass. This blog is like looking into a crystal ball. Thanks Ben for keeping me from drinking the Kool-Aid! Ben rules!
Don’t go anywhere, Blondie, ’cause you ain’t seen nothing yet. The overture has just finished and the opera is about to begin.
I believe the opera to be performed is Wozzeck.
http://en.wikipedia.org/wiki/Wozzeck
Not Gotterdammerung?
rotfl
from:
http://en.wikipedia.org/wiki/G%C3%B6tterd%C3%A4mmerung
The title is a translation into German of the Old Norse phrase Ragnarök, which in Norse mythology refers to a prophesied war of the gods which brings about the end of the world.
After also reading about the finale… I’ll have to catch a show! I’m impressed folks, I’ve been to two operas in my life.
Got popcorn?
Neil
Stay with it. For years now it’s been a wild but uneventful ride in fast, deep waters. But the first rocks are visible - and the Cat 5 ass-eaters are miles ahead. Honestly, it’s been easy to predict this mess to now. The real work of its fallout and effects is about on us.
The funny thing is that people at work are actually starting to ask me what I think is going to happen. Of course, when I tell them what I think, the homeowners among them are still laughing in my face, telling me not to hold my breath, the usual. But there are quite a few here who are beginning to show their fear. Also, there are a few renters who seem scared to admit that they totally agree with me.
We may not have reached capitulation yet, but the battle has surely turned in our favor. I knew that all a social soldier really needed was a stockpile of diet Coke and a reliable internet connection.
Ah yes, and people will say there was a prophet among us. Just wait, it won’t be long before folks start asking you to bless their babies.
Then again, maybe some will want you to make their babies.
Even better.
Most red-blooded religious prophets try to do a bit of both. Charisma and heroic sexuality tend to go hand in hand.
“Of course, when I tell them what I think, the homeowners among them are still laughing in my face,”
All you need to do is be a good sport. Pleasantly remind them that slow and steady wins the race and then kick them in the balls. It’s the sporting thing to do.
I like your style.
Blondie: sign in a local pub: Caution blondes thinking!
Hey, you!
“Several of the homes already are in default. If they go to foreclosure, the mortgage company will sell them, but stand to lose hundreds of thousands of dollars because, experts say, the loans were made for more than the properties are worth.
—————-
Every one of these loans was made based on a signed apprasial. Where are the appraisers, and why haven’t the banks gone after them?
appraisals are for what is the property worth “NOW”. And properties were going up so the appraisals were correct based on sales and that’s what appraisers go buy recent “comps”. So if the comps are out of whack, so is the appraisal. Yes, basically, appraisals are worthless,
Thus the need for 20% down.
Recall that previous thread about my former landlady buying a foreclosed property on the Pima County Courthouse steps in December 1998. The previous owner had, at one time, been one of Tucson’s major players in property management.
According to some of his tenants, his company was dependent on his wife’s expertise, and wouldn’t ya know it, wifey left him. (She seemed like a nice person, but even nice people can only put up with so much.) After wifey hit the trail, his property management company began to fall apart. I saw furniture being moved out of the office at the end of September 2001. Was hard to keep a straight face as I pedaled past that scene.
Oh, after my landlady bought the property, I helped her with some of the cleanup. That included going through the papers that the former owner left behind. People, there wasn’t a bank account that he (and his family) couldn’t overdraw, a credit card they couldn’t max out, and they were even behind in paying the dentist. We sure had fun reading those papers.
After the property management company bit the dust, he got a job with a local real estate appraisal firm. In more recent years, I’ve heard that he’s been an independent appraiser. Knowing him, he’s probably one of the most crooked appraisers in town.
So, if the banks go after him, my former landlady and I would be happy to help them out with some history of his previous business conduct.
These anecdotal reports are really the life-blood of us HBBers.
If the data is what nourishes our collective HBB body, it is the stories that nourish our soul.
3 up and 3 down..another inning of shut out ball.. don’t sit next to or talk to the pitcher… he’s got a perfect game at the end of 3. Still a long long way to go.. talk to me at the 7th inning stretch. Can you believe two pitchers going head to head with a perfect game.. no assets are safe.. at least what I’ve seen.. maybe gold, silver and dividen stocks outside the USA.. I lived in brazil not a problem living in a third world as long as you can dance and drink beer.
Book em’, Don Ho
Not so tiny bubbles
“The home of Crisp’s mother was searched by FBI agents. And at around 11 a.m. Wednesday, two men were seen being led from the home in handcuffs and into a Bakersfield Police Department vehicle.”
“‘The consumer continues to spend,’ said Sean M. Snaith, who helped prepare the University of Pacific’s California and Metro report, which foresees a decline in housing prices through 2008 that ‘will not remotely resemble a bursting bubble.’”
CLICK!
CLICK! CLICK!!
Might it resemble a python that tried to swallow a 6′ alligator?
“Might it resemble a python that tried to swallow a 6′ alligator?”
It will more likely resemble Paris Hilton on a first date.
California Sales:
O.C. 48.9% below the average August
Southern California a 36.3% drop
Riverside County sales tumbled 47.2%
San Diego County sales fell 31.2%
Central Valley 44.3 percent sold at foreclosure auction
Nope, nothing resembling a bursting bubble here.
Wasn’t Snaith skewered here a few months ago for some other really stupid comment?
Yes, Snaith is the idiot with the souffle comment that was ruthlessly skewered.
How can anybody even consider interviewing a guy named Snaith? That should be the first rule of journalism. “Never interview a guy named Snaith.”
Is his cousin Prof. Snape? If so, I wouldn’t interview Snaith, either!
That rule would be #2, first is that all people on the internet are nutjobs.
Try to stop with the bad stereotypes.
Wasn’t he one of Harry Potter’s professors at Hogwarts?
First rule of sexual harassment lawsuit avoidance: Never employ a man, surnamed Butler, who goes by the nickname “Rhett.” This is from a client’s unfortunate experience.
Do the bloggers on this site TRY to find the most ridiculous names to use when posting articles? Names like Snape, Snaith, or even Smeltzerson seem comonplace. Try Yu, Lloyd, Lay, or Lereah! Keep those cards and letters coming.
I like to adhere to Harpo Marx’s wise words:
“Never trust a man who walks on a bias”
What’s Popping?
“‘But this need not imply that today’s homeowners are somehow less conscientious about their finances. It may be that the mortgage payment has become so large that Top Ramen makes little difference, or that the lack of refinance opportunities and the adverse incentive of a huge prepayment penalty if you do refinance simply make foreclosure the least terrible of a set of terrible choices.’”
- Here in So Cal we would rather walk away than give up our personal luxuries that we are entitled to. And don’t ask us to give up Starbucks for Top Ramen … wait, my producer is on the phone and confirmed studio time to cut my new Rap Cd …gotta go!
‘By and large the soft landing is still the story,’
Wow, I haven’t heard “soft landing” in awhile…thought that went the way of the “Goldilocks” economy.
Sure, soft landing: that is why oil and wheat both reached record highs, gold not far behind, and the USD is crashing through key support levels. Everything looks good from here.
BTW, all of this has convinced me to reallocate money to PMs, specifically silver, and to “lock in” interest rates on CDs at my local credit union (which is, so far, continuing with sold performance). Of course, if things turn bad, I can always break out of the CD with only 3 months interest penalty.
Tuesday will be interesting, that is for sure.
Tuesday will be interesting, that is for sure.
I cannot WAIT for the reaction if the Fed doesn’t cut. If you’re walking down Wall Street, make sure you keep an eye out for falling bodies!
I prefer to visualize a bunch of floor-traders dropping their pants and grabbing their ankles. Just as messy, but nobody has to die.
ex-nnvmtgbrkr,
Why do I know you’re also visualizing the potted Joshua Tree and what duty it has to perform? Hmmmm?
Got popcorn?
Neil
Potted Joshua tree?? No, no my friend. You fail to see my method. I prefer to let them die and dry out. That way I can drive ‘em home and snap them off clean once they’re firmly lodged. Tossing the remaining stump at their feet as I walk away is the final touch.
Well, that was vivid, wasn’t it children?
I so hope they don’t cut rates. How can they abandon the US dollar? I don’t understand why everyone keeps saying that there is a 100% chance that BB will cut. Can’t they see the obvious drawbacks? And he hasn’t said a DAMPD THING to ensure said cut.
Argh.
Bernanke has a “conundrum” that I don’t *think* Greenspan ever faced. Crashing dollar and inflation - well, you know the drill - raise interest rates. But *wait* - the banking systems and the markets are in serious trouble thanks to defaulting loans and what looks like a looming recession - it looks they need liquidity. Well, crud, now what??
I say that the Fed has been painted into a corner by their own willingness to create assest bubbles. It will be interesting to see what our friendly central bankers decide to do. My money (I’ve got that nickel around some where…) is on a very minor decrease with an increase as soon as possible. But I’ve been wrong alot so I’d just wait until Tuesday.
The way I figure it, the Treasury cannot run out of money which at this point requires foriegn investment. Lower interest rates too much and everyone disappears. Too much official inflation also means higher entitlement payments.
If the Fed loses government support, the policians may wake up and realize they should take back the power to print the money. Then everyone at the Fed is out of a job. There’s really no interest like self interest.
The banksters may be talking to BB through the media, but I’ll bet foreign central bankers are talking to him though the really private red phone. No guarantee he’s hearing the same thing from all — likely the opposite.
Got Tums?
They will cut by .25, at this point the Fed simply has zero choice. Though that may be nearly as ill-received as nothing at all, as many are buying to a 50bp drop. It’s the November meeting that will call the ball, what with a vertical dollar and 800 buck gold. At that point maybe Ben blinks, say b*llsh*t to this and holds firm. Could be a really bad day for street cleaners.
Can you please explain to me why Ben has no choice but to cut the rate?
Simply put, given the current level of expectation for a 50bp cut, a hold would be a market price disaster. He will cut till he can’t. At current central bank rates I’m guessing he’s got 1 or 2 at best. More than that and we don’t have dollars, just some worn out paper. Just my poor guess, nothing more.
I tend to concur with you on the 1/2 pt cut. It will be played up in the MSM as a totally unexpected shock, in order to drive the DJIA up in a recession-defying rally.
I wasn’t clear. I’m seeing a .25 cut, with only one or two of those total. I’m thinking this October/November is one to watch, sort of a “Yeah, kids, I was there” moment.
But it isn’t the Federal Reserve’s job to prevent stock prices from falling. It’s their job to prevent the financial system (a.k.a. banking system) from failing and to control inflation.
Their job appears to be whatever the freak they want their job to be. We’ve all had co-workers like that. They sink departments and sometimes even companies. But hey, the Fed should do just great.
I guess the FED will cut rates and we will continue to have a commodities bull market with Home price deflation.
I don’t believe that the Fed can cut rates. Why? Look at $80 a barrel oil. The rise is directly related the the decline in the US dollar. Oil feeds inflation…. The US imports practically EVERYTHING…
However the biggest thing against a cut in interest rates is that the US is totally dependent upon Foreign governments buying this country’s debt.
It’s all very nasty and I CAN’T BELIEVE those so called financial EXPERTS didn’t know what road they were leading this country down..
Hell, I’m an ARCHITECT. How come I can see the writing on the wall?
We’re heading for a depression, Big V. The fed funds rate will be dropping like Joe Frazier after a George Foreman uppercut.
Oops, I’ve just dated myself…
We’ve been talking about this point for a long time now. It’s a choice between defending the dollar internationally and defending the domestic economy. If he cuts where will we borrow to fund our little wars, demand for dollars will drop. If he keeps it level, the credit market takes it on the chin.
I think it’s a 25 pt cut.
In an ideal world, Bernanke calls Volcker and asks him what to do. Paul tells him, and Ben acts like a man and hikes the rate.
The dollar is defended, Weimar is avoided, and all the greedheads cry themselves a river.
From your lips to God’s ears, spike. I’m gonna go to church and light a candle…
I’m inclined to think he won’t do a thing. The Int Bank of Settlements members told him flat out that no other CB will print money to save our arses. Time to see who is bluffing.
$80 oil says no rate cuts
50 bp cut is baked in, with two more to follow in October and December. Anything else is a wishful thinking.
The fed will bet on foreign buyers having nowhere to run, and unable to call this bluff.
Dear Ubaldus:
Why is 1.50 bp by December baked in? What I’m looking for is an explanation of the logic that brings you to this conclusion. Also, if you have any data that goes with your logic, can you please reference it?
Thanks,
Big V
What makes you think he does NOT want inflation?
The central banks have already hedged against the dollar’s decline. They’re investing in Euros, Yen, Pounds, and Rupees. There’s no real pressure from inside the fed member banks to curb inflation.
Inflation is the only thing that’s going to make any real impact on the national debt.
On the bright side, 10 years of 10% inflation will make house prices start to look rational again.
only if wages keep up with inflation. Why would our corporate overlords start raising wages now?
I’m guessing most of the rate cut will end up in commodities. (food and fuel) Foreigners are going to put those declining dollars to work. Agency bonds will be toast.
I say let’s go for it and raise tariffs on Chinese products. And then let the other central banks plug the holes in the SS Globalization as it slides beneath the waves…
“The Jacksons’ monthly housing costs jumped from $1,300 in rent for a Windsor house to $3,092 for their mortgage, taxes and insurance. To make ends meet means fewer new clothes, more frugal grocery purchases and other cutbacks.”
“‘I combine our errands so I don’t waste gas,’ she said. ‘We definitely live a different life.’”
Why are people so willing to take it up the a** for a house and give up everything else. These people won’t last 18 months.
Because they can hang a picture on any wall they want. That’s worth an extra 2 grand a month, isn’t it?
The sad part is if you are willing forgo the security deposit, you can hang a picture on any wall you want and paint the walls purple with orange polka dots. If you are willing to do about a day or two worth of work on the way out (or pay someone else to do it) you can have the polka dot walls and the security deposit.
Either way, you’re looking at only 1 month of “ownership premimum” *and* money in the bank *and* the landlord fixes stuff when it breaks.
Toothpaste makes an excellent nail-hole filler (handy tip from my dorm days. By now the walls are probably 50 percent toothpaste). After one party, a guest put a nice little hole in the wall with his head. So I just glued a switchplate over said hole. Fix accomplished.
“Toothpaste makes an excellent nail-hole filler (handy tip from my dorm days. By now the walls are probably 50 percent toothpaste). After one party, a guest put a nice little hole in the wall with his head. So I just glued a switchplate over said hole. Fix accomplished. ”
Hey, you build homes for Toll, don’t you?
BTW, I want to party with you if I come to Alaska.
Agreed Vermonter. Wifey and I just hung 10 nice framed posters from Sequoia and Yosemite. Sure is a helluva lot easier than painting. I am getting too old for that and it is a lot easier to change the pictures when you want. Just put some Dap in the holes or put pictures over the holes. Painting a second and third, etc. time is so passe at my age and I am not that old. Just tired of the mundane house upkeep.
But… oh ya, we are cutting back and can’t afford to buy pictures to hand on the wall… or even paint them for that matter.
“That’s worth an extra 2 grand a month, isn’t it….”?
Without knowing their income/financial picture, and omitting the boring tax advantage math, I’m going to guess a $700 – 1,000/month real increase.
But….. if “Values” conservatively drop 5%/year over the next 5+ years, the real loss is more like 2.5-3k month. Got Income?
Income, the new Messiah.
(To make ends meet means fewer new clothes, more frugal grocery purchases and other cutbacks.”)
that is some life to live. doesn’t seem like it’s something I’d put up with.
homeownership has it’s privileges.
“The Jacksons’ monthly housing costs jumped from $1,300 in rent for a Windsor house to $3,092 for their mortgage, taxes and insurance. To make ends meet means fewer new clothes, more frugal grocery purchases and other cutbacks.”
“‘I combine our errands so I don’t waste gas,’ she said. ‘We definitely live a different life.’”
Who wrote that song… “teach your children well” Crosby&Stills? Well it didn’t stick. They are screwed!
Um, here in coastal Maine, we also combine our errands so we don’t waste gas. It makes sense to do so, since the nearest grocery store is 15 miles away. Doesn’t seem like a hardship to me. I guess I am not a good American.
“Um, here in coastal Maine, we also combine our errands so we don’t waste gas. It makes sense to do so, since the nearest grocery store is 15 miles away. Doesn’t seem like a hardship to me. I guess I am not a good American.”
You’re not a proud patriot unless you do that 15 mile round tripper in a 12 mpg mega monster truck with several sets of peeling GW bumperstickers and the perfunctory magnetic “Made in China” I support the troops
sticky. Don’t forget the Ding Dong 48 pack, you’ll have to waddle back in the store if you forget them.
I’ll drive 15 miles for a lobster roll anytime.
“Who wrote that song… “teach your children well” Crosby&Stills? Well it didn’t stick. They are screwed!”
Nothing like child-rearing advice from a raging cokehead and a guy that drank so much he needed a new liver and then donated sperm to Melissa Etheridge.
“‘I combine our errands so I don’t waste gas,’ she said. ‘We definitely live a different life.’”
She should have said “All I eat is Ramen now”.
Now that’s a commitment.
And be prepared to suck up to the boss.
I ran into a couple with two kids under 3 that both commute 3 hrs RT (not together) from the Sacramento area to SJ just so they could buy a home. They get up at 4 AM everyday damn day. That’s the life..the New American Dream
I used to commute from Sacramento to Emeryville and kept the same hours. Did it for 1.5 years during the tech boom. Slept on the train.
In the end….no house! But, a wad (small but big enough) of cash. Just from paychecks, no stock options thank you very much. Also have peace of mind knowing a job loss would be nothing more than an opportunity to try something new or different thanks to cash in the bank.
How many FBr’s have THAT kind of flexibility?
Because Suzanne researched it!
“The home of Crisp’s mother was searched by FBI agents. And at around 11 a.m. Wednesday, two men were seen being led from the home in handcuffs and into a Bakersfield Police Department vehicle.”
MoFo!
Has anybody heard from Clouseau?
No. Thinking back, I vaguely remember him announcing a name change. Was it Housing Wizard, or is that someone else entirely? Somehow I get the feeling that he just went cold turkey trying to shake the addiction. Probably a wise choice.
We haven’t had a post from Clouseau since the bridge collapse in Minneapolis, which is where he lives.
Yeah, he lives in the Lakes Area of Minneapolis. He’s probably on vacation or something. Let’s not think the worst. But just in case, Ben should have his email address. Maybe you could contact him, Ben, to see if he’s okay.
No, he lives in San Francisco.
Dear Ben Jones:
If you’re reading this, can you try to find that post where HIC told us the story about being bitten by a bat? I think it was there where he told us where he lives. I could be mistaken.
It’s definitely near Lake Calhoun or Lake of the Isles in Minneapolis. He moved from San Francisco.
Really? I thought the bat incident happened in SF. Did he move after that? I just don’t remember him saying he moved. Do you remember him saying he was gonna change his name? I can’t remember what to. Was it Housing Wizard or something like that? I know we have a Housing Wizard now, but the content of HW’s posts is different from the content of HIC’s posts.
I was wondering the same thing. Enjoyed his posts which stopped a few weeks before the collapse. Thought he would post something about it - but never saw anything.
OK, I just e-mailed BJ to see if he can e-mail HIC to ask him if he’s alive. I also asked BJ to help me figure out how to search old posts to verify that HIC lived in Minneapolis, just in case BJ doesn’t want to bug HIC by e-mailing him.
I’m pretty sure that Clouseau is not Wiz, and that Closeau is a medical practitioner — I think a doctor.
‘We were nervous about getting into a house because of the mortgage payment. But we had to just do it. Even if the home prices went down more, lenders are getting more strict and it could be harder to get a loan’
…which would cause prices to fall even further. Whoops!
all they had to do was rent, build up credit, a down payment and just wait.
I got popcorn.
all they had to do was rent, build up credit, a down payment and just wait.
It saddens me how many people will not delay gratification.
Anyone else notice the bars are a LOT less crowded? Ok, maybe only the bars attached to restaurants (ok, I’m boring), but at Islands, I can recall seeing four bartenders doing duty on Saturday nights. Now? one. Hmmmm….
Got popcorn?
Neil
Hey Neil, maybe the Jacksons’ have been closely monitoring the opinions of those famous economists…Swonk, Retsinas, the rocket scientists at George Mason U and the wizards at UCLA. Based on their expertise, what choice did the Jacksons’ have…should they listen to a bunch of yahoos on an internet blog who insist on rational analysis and fundamental value?
Hell no. Economists and lawyers, that’s what’s keeping this “fundamentally strong economy” humming right along. Bank on it.
“It saddens me how many people will not delay gratification.”
It’s a cultural disease. It comes from dealing with your life like a video game, where you “just do it” and make the right play at the right moment; much more exciting than planning to work hard and save.
Another part of the problem is the expectation that everyone ought to own a house. In truth it’s just not in the cards for some people, and they will happier without the financial burden.
“It comes from dealing with your life like a video game,
Hey, I used to love video games. (But I always worked hard.) People want instant recognition. Instant gratification.
I do agree. Some people shouldn’t buy. I see people near the end of two year assignments who are going to have to sell… oops!
Got popcorn?
Neil
“‘It looks like we’re pretty close to a ’floor’ level of purchase activity right now,’ DataQuick president Marshall Prentice said. ‘Market uncertainty has squeezed out most discretionary buying.’”
Since when has buying a house been considered “discretionary”? I thought that term was reserved for nights out, bubblegum, and such.
Floor level? Apparently this “expert” has not looked at graphs from previous recession. Home sales never quite drop to zero, but they can be cut in half again.
Got popcorn?
Neil
Ok, this was the final-straw ‘got popcorn’ for me. Envisioning ingesting a big bowl of buttered popcorn while getting my daily HBB fix, I head into the kitchen, only to find… I don’t got popcorn!
Its ok to have metaphorical popcorn? Tonight I’m not really having popcorn, but rather a Merlot.
Just spread the word. It annoys me how uneducated people are about this economy. Yes, I’ve made HUGE mistakes in my predictions; but at least I’m trying to find out more!
Got a clue?
Neil
Hit your URL in hopes of *got popcorn* talk. Not kidding…my son makes THE best air popcorn in the world. (Low calories, no real nutrition).
Everytime I read *got popcorn* I demand (yes demand) my son’s secret air popcorn in a large silver bowl!!!!
Gawd…yaa just can’t make this up!!!!!!!!
Neil, I kid you not (kid). My son does make the best dang popcorn I’ve ever eaten!!!!!!!
I do demand he makes it for mom. : )
I smile so much on *got popcorn*–my son asks what the heck has me chuckling.
Waaaaaaaaaaaaaaaaay over his head…
Send some my way.
Big V, that statement by Prentice caught my eye too. Far as I know, ALL house-buying is discretionary. Have we heard of any cases of petty pilferers sentenced by a hanging judge to make an unaffordable house purchase? “Ha! You were caught with an ounce of marijuana! Your punishment is, you are now the owner of a house in Hemet with a $400,000 mortgage!”
“Leslie Appleton-Young, chief economist at the California Association of Realtors,‘I don’t think we’ve bottomed out yet. I think that will happen in 2008,’ she said.”
Hey Leslie Simpleton-Young, Do everyone a favor and stop thinking, you are not good at it!
WMBZ, stop that. You’re making me laugh so hard that… Oh, never mind.
More like, “Stop thinking and go lay down. You might hurt yourself!”
Lislie would never FIND her own bottom if her head WASN’T attached IN IT
Somebody needs to buy that militant little dominatrix a red ball, shove it in her mouth, then hit her with the ball.
wmbz: caution Appleton-Young thinking
So the coast is not going to fall…hmmm, then what’s this?
http://tinyurl.com/2t8t6k
People are offically retarded in my area
We dont drink the Kool Aid in Brea
We swim in it
92821: Brea
Median sale price
August 2006 August 2007 Change
$695,000 $668,750 -3.8%
Number of transactions
August 2006 August 2007 Change
23 27 17.4%
‘We dont drink the Kool Aid in Brea
We swim in it’
It’s got electrolytes!
“Leslie Appleton-Young, chief economist at the California Association of Realtors, agrees that it will be at least until 2009 before the residential real estate market experiences anything resembling a rebound.”
“She also expects prices to fall by various amounts depending on the severity of the foreclosure situation. ‘I don’t think we’ve bottomed out yet. I think that will happen in 2008,’ she said.”
My aren’t we optimistic…some never learn.
CRISP and Cole video:
http://www.bakersfield.com/multimedia/
That is fantastic, and hopefully the mere tip of the iceberg.
More video:
http://www.kget.com/mediacenter/local.aspx
Wow! What a crappy little strip mall office. I was thinking more along the lines of a tower suit of offices with gargoyles and guards and such.
At one time he had three offices in town and a new building, however, he was evicted out of all of those and now is in this little strip mall…
Did you see his mansion, er… former mansion..?
No, please send a link. Didn’t he have body guards and G5’s?
Hope they enjoy biting the pillow.
http://bakersfieldbubble.blogspot.com
More stuff here also:
http://www.bakersfield.com/
Lot’s of people here predicted the FB’s would eat Top Ramen. Well, that prediction may be wrong, according to the above. It’s too serious even for that.
“The San Francisco Chronicle. “The Bay Area should fare much better than the rest of the state, according to a widely watched forecast. ‘We still think we’re just going to get grazed by the bullet,’ UCLA economist Ryan Ratcliff said.”
If it wasn’t so sad it would be funny. These UCLA guys are delusional.
Too bad the bullet is a Howitzer shell.
Or a MOAB!!!
http://en.wikipedia.org/wiki/MOAB
Nothing tells someone just how much you love live like a MOAB.
Seriously, whatever is hitting nearby is going to leave a mushroom cloud. A MOAB leaves a baby mushroom cloud. I really hope its not the neutron bomb. I still believe this is bad… but not horrid. But its going to take a year to tell.
And then I realize its so late almost no one will read this…
Neil
One did.
Ditto.
Y’all are totally on form tonight -
Ha, Ha. The Big V never sleeps. Or is that big brother? Whatever.
I was stationed at Eglin…shhhhh…might have to MOAB you if you ask questions : )
Leigh
There are stories from the age of wooden navies of sailors being killed by cannonballs that missed them by several inches. The concussion of the passing shot was enough to do them in, without leaving a mark on them.
So being “grazed” by a thirty-two pounder may not be all that nice after all.
And yet, yesterday the SJ Mercury News had this tidbit from the CAR:
East Bay primed for housing slump
Market is particularly vulnerable to a downturn that could be the worst in 25 years, economist predicts
That was yesterday, Let me remind you how this starts:
yesterday all my troubles seem so far away.
In the last 24 hours 6 or 7 shootings in Richmond, Contra Costa.
This is part of the downward spiral. A higher rate of shootings tends to make $400,000 condos in Richmond quite a bit harder to sell.
mrincomestream,
This bust seems to be unravelling faster than previous downturns…………would you agree?
I would…these blow the sunshine up the ass guys are really grasping for straws. One of the things I find interesting is just how out of touch MSM is with regards to what’s happening in the real world. There are a lot of nervous critters out there and they all not all REIC or FB’s.
Why are people so willing to take it up the a** for a house and give up everything else.
embedded in the dna. home ownership=security.
Amazing, no? I know of a 1 income family absolutely *determined* to buy a house (3 kids, #4 on the way). They’ve saved a significant downpayment but I can say for certain currently in VT in the area they are looking, the payment will be crushing. (Prices for half decent SFHs are currently above $225K - professional incomes are $35k-$40K)
I want so somehow send the message to just frinkin wait but it’s impossible. (This is a friend of a friend…) They’ve rented for the last 7 years but I guess they aren’t a “grown up” family until they’ve overpaid for a house. *sigh*
Pretty hard to hide from friends/family/cow-orkers that you lost your house. I mean you show it off, new truck, new Boobs on the wife… suddenly you are moving from 3200 square feet to 1300 square feet and renting?
The MSM is so misleading. When I read the UCLA forecast report article last night, it said we were teetering on the edge of recession and any other little thing that happens will put is over the edge.
I think that “any little thing” happened today: $80 oil.
Not to mention the new record low on the U.S. dollar versus the Euro:
http://www.ft.com/cms/s/0/6c952914-6154-11dc-bf25-0000779fd2ac.html
Exactly. And any reasonable person can see that “any little thing” keeps happening every other day, so the conclusion is that we are most like headed into an official recession by 2008.
The August numbers for CA RE will be very poor - the Sept, Oct, and Nov versions will simply stun these maroons to silence ( Oh, hope, wicked hope. A faint stir near the heart…then nothing.)
They simply have no models, no experience, no history to guide them these days. And so instead they fall back to old habits, saying foolish things and hurting the unaware again. I really hope that they and their associations are made to answer for this crap.
Meanwhile, the Tucson version of Enron continues to unravel. The latest story features our local real estate colossus stuck in bed with ‘em:
http://www.azstarnet.com/business/200921
If you can’t get enough of this story, go to:
http://www.azstarnet.com/sn/firstmagnus/
What is the requirement for being stupid?
Economist=’s STUPID
So this guy who disagrees with my petition thinks the government should bailout homeowners. This is his reasoning. BTW, he says he can afford his home.
OK, this guy is just annoying enough to get me going.
Hey, guy:
THE BEST THING THAT COULD HAPPEN TO US IS TO HAVE A RECESSION RIGHT NOW. OTHERWISE, EVERYTHING WILL BE MUCH, MUCH WORSE ONCE THE PROBLEM GETS SO OUT OF HAND THAT NOT EVEN THE GOVERNMENT CAN HOLD IT BACK ANY LONGER. IT IS NOT POSSIBLE FOR OUR COUNTRY TO LIVE OFF OF DEBT FOREVER. YOU ARE A MAROON.
Never listen to anybody who spells definitely with an “a.”
testing, testing
What a moroon. He should be told that the US can’t live off of debt forever, and it’s better for us take our lumps now then to enable the problem to grow.
Besides, unaffordable housing is an even worse problem that foreclosures by people who couln’t afford the houses they bought.
There.
Economics majors are good for only one thing: economics shills. Outside of that job, they might as well be degrees from Hamburger U.
You’ve got that right! (Yes, I do have a degree in econ. But the prospect of becoming an academic or a shill didn’t appeal to me. So, I’ve never “used” that degree.)
if you haven’t surfed over to the sacramento flippers in trouble site lately then please do so. the losses are absolutely staggering. the top few page view alone are average 30 - 40%, 250 - 350k.
nope, there’s nothing to see here people. let’s keep moving please.
aeyra, you are not accurate on that classification. Robert Shiller was spot on for this and he is an economist. Economic theory is what predicts this bubble burst, ie supply and demand. “RE Economists” are paid marketeers.
People who are saying “economists are stupid” base their opinions on MSM quotes. Anyone with half an ounce of motivation can figure out in short order that many economists saw this bubble as early as 2002 and earlier, before Ben’s blog was even born.
Please name a few.
Gary Shilling is one of them.
Marshall Vest at the University of Arizona. Back in March 2002, I heard him sound a warning about a housing bubble.
Dean Baker from Center for economic and policy research
The Economist magazine has been calling it for many, many years…
Peter Shiff, Dan Denning of Agora Publishing, and the late, great Austrian economics professor, Dr. Kurt Richebächer. In fact, is was Denning’s constant emails hounding me to subscribe to his newsletter back in ‘03, and reading that newsletter that prompted me to sell and rent.
IF ANYONE IS INTERESTED
There will be an HBB party at Arguello Park in Belmont on Saturday, September 15th at noon. I will bring potato salad and a purple frisbee. We will migrate to a drinking establishment afterward. No one has commited yet, so if you wanna go, then please post here.
I might actually go if we crash open houses.
That’s too much effort for me. I mean, renting a bus? I’d need everyone to contribute upfront for that expense. Besides, we’d have to find out about all the open houses first and know which ones are giving food. I might do that with a couple of people that I already know, but way too hard to organize over a blog.
I’ll try to make it. Thanks.
Bay Area hasn’t seen an improvement in earnings in the last 7 years. But Home prices are 70-100 % and in some slums even more. Therefore, either expect 70-80 % pay raise in the next 24 months or expect a flesh wound from the grazing bullet.
You doods see this?
http://www.itulip.com/forums/showthread.php?p=15004#post15004
We have a friend who is in this position — already bought a retirement home across the country, and still holding out hope (a year into the sales effort) to cash out big time on the coastal California bubble premium. It is really very sad, as I am quite sure the eventual sale price will be $500K (minimum) below the wishing price.
That was pretty cool. I actually hope it doesn’t take 5 years to bottom out, though, just because I’m so sick of renting.
I mean 10 years.
Me too, but you know it’s not a V, it’s a continent-wide L. We’ve got demographic trouble looming around 2011-2012, the begining of permanent atrophy of the 39-54 spending cohort. So like me, you’re going to have to chose your entry point based on what you can sustain over a long tough haul. Personally, I’ve been down a few times, hubby died young, 9-11 wiped out my career, and what you think you have to have to be happy is right in front of you already.
“what you think you have to have to be happy is right in front of you already.” Your words resonate deep down inside… wise post, Time Traveler.
“Last month, the median price in Riverside County fell 6.1% to $394,523 and sales plummeted 46.4% compared with August 2006. In San Bernardino County, the median price fell 1.6% to $360,000 while sales tumbled 47.2%.”
There go the plankton….
I’m hoping Ben does a story on what the local rag (Arizona Republic) had on the front page today “Home-affordability problem spreading”:
“Housing affordability is a well-documented problem in Arizona’s metro areas, but new state figures show that even rural housing prices are outpacing incomes….
The Arizona study on the disparity between incomes and housing prices across the state will be presented today at the annual Governor’s Housing Forum. Overall, Arizona’s median home price climbed 85 percent since 2000 to hit $260,000 at the end of 2006, while the state’s median household income increased only 15 percent to reach $54,900.”
– guess they are just figuring out there just isn’t any way anyone can afford anything based on wages…
“The slumping housing market and rising foreclosures will continue to erode California’s economy until late next year or early 2009, but UCLA forecasters still maintain it will not tug the state into recession”
————————————————-
Wait… Haven’t we heard this before?
Sure sounds a lot like the, “Subprime is contained,” and “Real Estate never goes down,” lines we heard just a short time ago.
Reyna and Richard are learning the meaning of the words, “house-poor.” Somehow, this sounds like a Suzanne Researched This story, to me. I’m just saying…
I’m hoping Ben does a story on what the local rag (Arizona Republic) had on the front page today “Home-affordability problem spreading”:
“Housing affordability is a well-documented problem in Arizona’s metro areas, but new state figures show that even rural housing prices are outpacing incomes….
The Arizona study on the disparity between incomes and housing prices across the state will be presented today at the annual Governor’s Housing Forum. Overall, Arizona’s median home price climbed 85 percent since 2000 to hit $260,000 at the end of 2006, while the state’s median household income increased only 15 percent to reach $54,900.”
guess they are just figuring out there just isn’t any way anyone can afford anything based on wages…
In 2002 onward it was already apparent that affordability had reached a peak .It would of been pushing it going up another 25% in housing prices from that point onward .
So, my point is why are they talking about affordability after the fact ? Affordability was reached years ago and should of been a big fat red flag regarding these absurd price increases .How could the lenders/realtors of had a banner sales year in 2005 if the affordability factor was so low by that time ? Fraud in lending ,that is how .To think that nobody with the Feds ,or lenders ,or the main stream news or business programs with any clout was questioning this loan affordability issue is absurd .How could everybody be sleeping on the job to this degree ?
Is Wall Street , the NAR and the advertisers that powerful that they could convince everyone (except guys like Ben Jones )that these price increases were justified ? Where were the checks and balances ? There needs to be some serious discussions about the advertisers and special interest groups gaining to much power .The commissioned salespeople and the cheerleaders were in control of the minds of the Nation.
I might give you $398K Zimbabwe dollars for some of the IE houses. (roughly around $3.50)
BTW, most economist positions are shilling jobs anyways, or at least 90% of them. They may be shilling for housing or gold or weird financing or PR stunts like Lereah, but most of them are selling something. I don’t personally see anything useful for most of those degrees other than showing off and much of the stuff they are telling you is easy to figure out. I can tell you that we’re going to run into deflation sometime in the future. An economist who thinks gold is going to shoot to the moon probably isn’t going to tell you that stuff will deflate anymore than your Lereah types. Why I think we will see deflation in everything is because most people don’t have any liquidity. Even if they sold off their 401ks (assuming those are still around) we don’t have enough cash in the USA to support the prices of our assets. If you have only $1 trillion in money but your houses are valued at $10 trillion, if you have a banking crisis no one is able to lend money and all what’s basically left is cash. That’s what happened in the Great D and could happen again.
The price of a home in San Diego County tumbled to a median $475,000 last month, down $20,000 from a year ago….
What? A measly 4% is not a tumble. Sheesh.
1% - blip
2% - dip
4% - drop
8% - tumble
16% - crash
32% - reality
1% - blip
2% - dip
4% - drop
8% - tumble
16% - crash
32% - reality
32%-55% - strong probability
There is alot of talk about inflation, even if there was a major cut by the fed how much would the dollar drop in value in percent value. In all likely hood how much would it effect someone like me who is young and is trying to save money. Should I invest in some gold coins with my savings or should I keep my money locked up in CDs?
If I were young and contemplating how to decide between those two places to put my money, it would be 5% (10% tops) in gold coins, as the hedge, and the remaining 90-95% in CDs.
This is our investment strategy. (We’re 33). It’s possible that we’re going to have deflation in a lot of areas that are unneeded and/or overbuilt (computers, houses) and inflation as the Fed quietly tries to print dollars to counteract bad loans, governement debt, and massive entitlement programs. I think we’ll also more have “honest” inflation (as in actual supply and demand) for minor items like water and oil.
“Speculator-owned properties (non-owner occupied properties) accounted for $1.71 billion of that total and represented 44.3 percent, or 4,199 of the properties sold at foreclosure auction.”
“Almost all (90.3%) of all foreclosure sales in California in August were for homes purchased or refinanced in 2005 and 2006. Of properties sold at auction, 95% went back to the bank, for a total of 9,015 properties with a loan value of $3.7 billion.”
BILLION…BILLION…WTF?
Is California the ONLY place on the planet that can account for this kind of absurity? Seriously?
Gawd, gag me with a spoon full of fake boobs, fake tans, too fit (oh we are not fat), and the all so most beautiful, most deserving ones on the entire planet. (exception to those who do not ascribe to the center-of-the-universe thinking).
Look, I’m as American as any of my brothers or sisters…seems to me like CA is ENTITLEMENT center of the universe.
This is a global crisis, agreed, just a bit peeved at CA (for the moment).
Reaching for aspirin…I’ll be so nice after the whittlebark kicks in. : )
The stats you posted is just more proof of how much fraud in lending took place during the big real estate investment scheme period . No bailouts . If people only knew just how bad those foreclosure numbers are verses prior lending cycles ,they would be shocked . These numbers are just unheard of and absurd and the main stream media better start pointing out just how bad these numbers of foreclosures are regarding liar loan speculators .
Leighsong:
There is a lot of industry here, it’s expensive to live here, and people get payed more. However, the cost of living is still high compared to wages.
I have always had a problem with the fraud in lending aspect of this housing boom .Borrowers talk about not being able to afford their adjusted up payments ,but a huge % overstated their income by 50% or more . We had a thread today that talked about over 40% of the foreclosures being speculator loans in parts of the Country .These are all fraud deals because the borrower had no intent to occupy the dwelling and income was inflated .
I just want to bring up the point that the mortgage broker or direct lender is a agent for Wall Street or the Hedge funds/MBS funds ,so IMHO these agents or borrowers are not off the hook .
How can the gov. even talk about bail outs when we have a massive crime/fraud in lending issue with borrowers or loan agents/lenders/appraisers and some real estate sales agents ?
If a government bails out fraudulent parties on any level ,than its a crime in itself .Just because the lending fraud became so commonplace is no excuse . It’s like saying just because cash-back and incentive deals became so commonplace in 2006 it’s OK .
I believe that all the attempts to bail this puppy out is in fact a attempt to cover up mass fraud by the REIC and the Wall Street money supply side ,not to exclude the fraud from borrowers and builders .
Why nobody questioned how people were able to afford these loans and why there was so much demand when we had such a high ownership ratio already in the United States is interesting .
What is the biggest problem people are having with the loans . It’s being able to afford the payments in spite of not losing the job they qualified for the loan with .
What about the fact that there was no disclosure to the borrowers that once their payment adjusted up ,they would no longer be able to afford their payment (regarding loans in which they were allowed to qualify based on the teaser rate ). It’s not enough that the agents stated verbally that they could refinance .
To talk about a affordability in loan problem after the fact is evidence of mass fraud in lending and the whole issue is being avoided by the MSM and the government .Borrowers for what ever reason were willing to commit fraud on loan applications or maybe the applications were changed by the loan reps . I tend to think it was a combined effort with the borrower and the loan reps and real estate agents knowing very well these borrowers didn’t qualify .There just isn’t enough talk about this mass investment real estate scheme that was financed by fraud .What about the people that were minding their own business and got priced out of their long term homes by property taxes going sky high in these fraudulent appreciation areas due to fraudulent loan package demand ? This housing boom wasn’t just a mania ,it was a fraudulent lending housing mania . If the people in the news do not address this issue ,than it’s just a big cover-up .
Please, someone be awake and report this tomorrow…I know it’s going to get burried!!!!!!!! Ben works hard and I’ll probably be asleep…keep this alive…gawd knows they will not!!!
http://tinyurl.com/2qg8gq
September 12, 2007
In a move that should further bolster the appeal of the private placement market for companies looking to duck the burdens of being public, Bank of America, Credit Suisse and UBS are joining the private placement trading platform being launched by Citigroup, Lehman Brothers, Merrill Lynch, Morgan Stanley and Bank of New York Mellon.
The system, called Open Platform for Unregistered Securities, or OPUS-5, is a rival forum to the one launched in May by Goldman Sachs and another launched by Nasdaq last month. OPUS-5 is set to launch later this month, according to Ron Sommer, a spokesman for Bank of New York, which is developing the platform and will act as its administrator.
The platforms manage trading of privately offered equity securities transacted under Rule 144A of the Securities Act of 1933, which allows companies to avoid the regulatory burdens and scrutiny of being public.
The addition of the banks “will further promote liquidity and efficiency for qualified institutional buyers who trade 144A equity securities and enhance issuers’ capital raising efforts,” the group said in a statement.
Though private placement is becoming a more popular alternative, liquidity is much more limited than in the public markets. Trading in the 144A market is restricted to large institutional investors with at least $100 million in assets. Additionally, a company can only have up to 499 investors or else it must register as a public company.
Still, private placement offerings raised $162 billion in the 144A market last year, more than the $154 billion raised by Nasdaq, New York Stock Exchange and Amex IPOs combined.
Please do not let this one go…this is beyond criminally insane.
Need valium…leigh
Yes, and right after the Federal Reserve raised the limit on how much deposit money can be funneled to a bank’s investment branch.
This is ridiculous.
Could you please explain the significance of this?? Thanks in advance.
Big V,
I’m counting on you. Wish I could fly out to the HHB party. I’ll be there in spirit. (flying frisbee, tasting that tatersalad, I’d bring veggie tray!)
Best,
Leigh
Who’s more to blame for the rise in foreclosures, overstretched working families who may have been preyed upon by predatory lenders, or speculators who bought homes for investment purposes?
What a ridiculous way to frame the question. I reworded it so it will reflect reality: “Who is more to blame for the rise in foreclosures: (a) greedy speculative borrowers who knowingly took loans that they could not afford, often committing fraud in the process by lying on their applications, and then reneged on their obligations the minute the market turned sour; or (b) the lenders that the speculative borrowers defrauded?” Anyone who votes for (b) is obviously not an impartial observer.
sorry - this one is worth repeating, again and again… (thanks jbunniii)
Who’s more to blame for the rise in foreclosures, overstretched working families who may have been preyed upon by predatory lenders, or speculators who bought homes for investment purposes?
What a ridiculous way to frame the question. I reworded it so it will reflect reality: “Who is more to blame for the rise in foreclosures: (a) greedy speculative borrowers who knowingly took loans that they could not afford, often committing fraud in the process by lying on their applications, and then reneged on their obligations the minute the market turned sour; or (b) the lenders that the speculative borrowers defrauded?” Anyone who votes for (b) is obviously not an impartial observer.
I’m very impartial; I say that both “investor” and lender were equally greedy and speculative, and isn’t it clever how they both may manage to walk without sharing the burden of the ultimate patsy bag holder.
Too many working families, meanwhile, continues to believe that job #1 is to Hold Onto The House At All Costs. Saw another news blurbble this morning hammering home that ditty. MSNBC had Michael McAuliffe, President of Chicago’s Family Credit Counseling Service. Oh, and this guy is a peach.
Dismayed that most credit counselors would remove the tithe from the budget of those in need and, in many cases, refuse to work with those that would not agree, he helped form a non-profit credit counseling agency based on Biblic-l teaching.
Yeah, because G– forbid that donations drop and the preecher’s poodle not get his 6 figure dog house addition. (Sorry, but I live in a part of the country where the palatial compounds of charismatic clerics stand in stark contrast to dangerous and crumbling schools and hospitals. It. Bugs. Me.)
But back to McAuliffe’s interview. The topic:recent headlines that more FBers are “mysteriously” letting the mortgage default while still paying off the credit cards. McAuliffe made quite a compelling argument that a person should NEVER do that.
I wanted to shove the anchor out of my chair and grill this guy. “What if the person is sitting on potentially decades of negative equity in a market where “values” have lost all connection to long-term prospects of affordability? What if they’ve come to terms with the fact that they Can’t Sell It and Can’t Pay For It, either? Maybe in that situation it’s SMART not to run up the revolving debt?” (Okay, in a perfect world it would be considered responsible to pay at least what you can pay; but maybe not this one.)
I’ll keep repeating so long as 03-06 buyers get tarred As A Group as greedy liars (probably all illegal immigrants or shrill harridans to boot): A lot of the “little people” just bought into that “American dream” promise of financial stability. They weren’t looking to make a fortune off the house. Even today, with all I know from this blog, I wonder if it was stupid *not* to buy, particularly in my not-quite-so-bubbly-market. This, because maybe stupid is going to be rewarded - say, reworking of loans for stranded home debtors and who knows, maybe stripping of seconds and all other kinds of fun for a huge voting block that DEMANDS relief. Maybe it will never make sense for our family to own a home now, and it’s just too bad that we won’t be able to fully enjoy the rewards of making the intelligent choice because of “something in our DNA” (thanks to Melvin Frumph Hoppe @15:45 above) that wants a little more permanence.
If anyone from CA is still reading this topic…
Which, if any, communities north of SF would you recommend as a retirement location? At most 2 hours from SF. Looking mainly for moderate weather and little crime, if that’s possible. This is a number of years off… just collecting names of places to visit for now.
Thanks,
BIll
If no one posts here, try on tonights CA post. Ben sweeps the country like the sun, starting in the East and finishing in the West - there will be another CA-related posting this afternoon.
How could there not be?
So little time, so much to say…
No kidding.