September 24, 2007

It Started Off Innocently Enough In California

The Fresno Bee reports from California. “Hovnanian was the latest home builder to have a blowout special or hold promotions in the central San Joaquin Valley, but isn’t likely to be the last. A sluggish real estate market is prompting companies to pull out all the stops, giving discounts, cutting prices and even offering such special promotions.”

“Jonathan Dienhart, director of published research for market-tracking firm Hanley Wood Market Intelligence, said some of those deals are likely to fall through because buyers can’t get loans or sell their first house.”

“‘It doesn’t do any good to save 10% on a new house if you have to cut the price of your existing house 15% to move it,’ he said.”

“Like most builders, Hovnanian, a public company, is not buying any more land. Builders throughout the Valley have lots for sale, but buyers are few. ‘The price of land may come down further,’ explained Terry Mangum, director of Hovnanian’s Fresno-area division.”

The Recordnet. “The sea of foreclosed homes in San Joaquin County and its flotsam of tall weeds, partying teens and green pools are testing neighbors’ patience and code enforcers’ limits.”

“Auctions of houses owned by people who failed to make their mortgage payments are held at weekdays on the steps of the San Joaquin County Courthouse. Most of the sessions, though, there’s nothing to do because there are no bidders.”

“And while those houses await a buyer, or change of ownership, they’re often empty. And sometimes even if the property is occupied, it isn’t maintained.”

“‘It’s a real sticky situation in making sure our code enforcers aren’t overworked. It’s very difficult for our staff to track down the folks who are taking off,’ Tracy Spokesman Matt Robinson said. ‘They’re just walking away from their homes.’”

“Ossie Chapman said she remembers when neighbors of neglected homes would pitch in to maintain its appearance. ‘That doesn’t go now, apparently,’ she said.”

“Lathrop’s two-person code enforcement team now has 120 active cases at foreclosure properties alone, said city Spokesman Mike Esau. Tracy is faced with more than 700 foreclosed properties, and about 1,100 other properties are headed that direction, according to Realtytrac.”

“One burning question these days is: Why have foreclosures sledgehammered the Stockton metro area more heavily than about any place in the country?”

“There is no simple answer. Instead, there are several interwoven reasons why in the beginning, a search for affordable housing by Bay Area workers at the turn of the decade created a flurry of buying and surging prices that ultimately led to the huge market ‘correction’ of today, according to interviews with economists, real-estate experts, agents and brokers.”

“A real-estate boom in the Bay Area beginning in the late ’90s sent prices there sky-rocketing. Multiple offers at tens of thousands of dollars over listing prices made headlines. By 2001, Stockton real-estate agents reported that eight out of 10 home buyers were coming from the Bay Area. Sales prices began soaring in San Joaquin County communities by 20 percent to 40 percent annually.”

“‘And then when prices quit going up, it was like musical chairs, and there was no place to sit down,’ said John Knight, professor of finance and real estate at UOP’s Eberhardt School of Business.”

“One usual wisdom when buying a house for investment says that potential rent should cover the monthly mortgage requirements, Knight said. With investors quickly flipping in a soaring market, that evaporated, he said.”

“When prices got so expensive that the market slowed and prices started slipping, homeowners and investors who bought late in the game - in 2005 and 2006 - found themselves unable to sell at a high enough price to cover their mortgage debt, if they could sell at all.”

“‘It started off innocently enough with fundamental reasons for price appreciation,’ Knight said, ‘but once price appreciation started and there was more oxygen to the flame, so to speak, the rest kind of created itself.’”

The Pacific Coast Business Times. “The Federal Reserve’s bold move to reduce short-term interest rates by 50 basis points gave a temporary lift to publicly traded companies in the Tri-Counties. But it left area experts worried about the prospect for slower economic growth in the United States, the Golden State and the Tri-Counties for the balance of the year.”

“The problems of housing, particularly in Ventura County, in north Santa Barbara County and for entry-level sales across the region, won’t go away overnight said Bill Watkins, head of the University of California, Santa Barbara Economic Forecast Project.”

“‘It’s going to help some individuals whose rates were going to adjust and it will help some developers carry projects for a little longer,’ he said. But, he added, the problems of two major employers, Amgen and Countrywide, are having a large impact on Ventura County that can’t be eased with a single rate cut.”

“‘These are idiosyncratic problems,’ he said.”

“As much as the Fed’s move might cheer the markets in September, that optimism could fade if inflation returns. ‘The flip side is that we are already pushing the boundaries of inflation,’ said Watkins. ‘Given the first opportunity, they are going to take this away.’”

“Watkins warned that Countrywide may be forced to sell to Bank of America or another suitor. ‘I am not very confident that Countrywide will remain an independent company with big operations in Ventura County,’ he said.”

The Voice of San Diego. “To a frustrated home seller in the current real estate market, it sounds like an offer from an alternate, utopian universe: A buyer offers to pay as much as you’re asking — plus 10 to 30 percent — and you just kick the difference back to the buyer in cash after the deal closes.”

“But it’s a scam that can defraud the lender, artificially inflate values in entire neighborhoods and leave an economy reeling from the effects of foreclosure.”

“But so far, federal law enforcement appears to have been silent locally on the phenomenon. Cases have come forward in Riverside and Orange counties, but in San Diego, no charges have been brought on cash-back cases like these.”

“Todd Lackner’s Mission Valley office holds boxes and boxes of printouts on deals he says match the cash-back scheme, most since January 2006. (The) San Diego mortgage fraud expert said it kills him how little it takes to buy off one of his fellow appraisers on these deals.”

“‘The key is on all of these, no matter what, there’s a fraudulently inflated appraisal,’ he said. ‘And they’re not usually getting more than $350 an appraisal, the normal fee. They’re just getting work — and that’s how slow it is right now.’”

“Many of the lenders that allowed the price to be adjusted have gone out of business. In fact, Lackner has observed that the implosion in recent months of dozens of mortgage lenders that specialized in the zero-down, no income verification loans used widely in these cases has begun to dry up the occurrences of deals that look like fraud.”

“But so far, a crackdown on such schemes in San Diego has remained elusive, he said. ‘There’s just no enforcement in California,’ Lackner said. ‘That’s unfortunate, but what can you do?’”

“Tom Pool with the state Department of Real Estate said the number of complaints against licensed agents or brokers for particular transactions, the category under which mortgage fraud complaints would fall, is growing. And, he said, wherever the DRE investigates and suspends or revokes licenses, law enforcement officers are often close behind.”

“‘The feds have been on the heels of a number of accusations that we’ve filed,’ Pool said, referring to some cases in Northern California and Bakersfield.”

“For Lackner, the calls come from everyone ranging from real estate professionals to neighbors suspicious of the deal down the street. He shows files to governments and public agencies. And he hopes that one day, the schemes will be busted open and the market will heal.”

“‘It’s my goal to get every one of these people busted,’ he said. ‘I just don’t know how they sleep at night.’”

The Union Tribune. “Thanks to the nearly flat-lined downtown real estate market, what was supposed to be a luxury condominium tower is morphing into a landmark low-income apartment project.”

“Goodbye KB Homes…got approval in April 2006 for a ritzy 184-unit condo design on B Street. Enter a San Diego firm planning to tweak that blueprint into 226 apartments for families who earn less than $42,000 a year.”

“The developer, San Diego-based Affirmed Housing, got the land at the bargain-basement price of $4.4 million, or $202 a square foot. The current per-square-foot average is $250; the average was $350 during the market heyday two years ago, said one real estate economist.”

“The area is on the edge of the downtown renaissance, with new residential towers popping up all around.”

“Across the street, a new condo complex is halfway finished. Vantage Point is selling at market prices, with one-bedroom units advertised at $350,000 and up. Two other new market-rate condo buildings, Smart Corner and Aria, are a few blocks away.”

“While acknowledging the need to accommodate people with modest paychecks, a few members of the Centre City Advisory Committee, an elected board of downtown residents, said the financial investment for the city doesn’t look so hot.”

“The Centre City Development Corp.’s loan will be paid back over 60 years at 3 percent interest. That’s well below market rates.”

“‘We’re getting hardly anything for our investment,’ said Paul Robinson, an advisory committee member, adding that a 60-year-old building will be more of a liability than an asset.”

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Comment by Ben Jones
2007-09-24 13:22:33

‘O.C. real estate and finance boss have trimmed their payrolls by 6,800 workers in the year ended in August. Fresh state job stats revealed the seventh straight month of year-over-year job losses in these property-related niches showed the biggest year-to-year employment cut since January ‘93. (And the state’s count does not track the self-employed or the off-the-books workers, which have been hard hit, too.)’

‘All told, real estate/finance is off 7,400 jobs (3%) from its September ‘06 peak but still employs 16.7% of all O.C. workers. It had added 127,100 workers (94%) off its January ‘95 bottom.’

Comment by rellimgerg
2007-09-24 15:35:32

My sister-in-law is a loan processor working for WAMU in OC. Yesterday, she told me that they had recently cut their hours back to 38 to prevent having to lay people off. It’s just a matter of time and she knows it. Fortunately for her, she lives at home and has been saving throughout this whole thing.

Comment by MattR
2007-09-24 16:15:11

Which means that at the end of this debacle she’ll have nothing — no house, and also no savings.

A special shout out to the Fed and the Republicans for raping us savers twice — first with the housing bubble and now with inflation. Guess it’s too hard to actually conform to your economic theories, and easier just to print more money.

Comment by jungle_man
2007-09-24 16:29:08

Im also getting anecdotal testimony from friends around the WAMU situation……..its starting to snowball.

Comment by Neil
2007-09-24 16:43:25

It had added 127,100 workers (94%) off its January ‘95 bottom.’

There seems to be a lot of room left to snowball. ;)

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Comment by vozworth
2007-09-24 18:09:34

this may be the crushing blow.

When these guys start laying off the way Countrywide did….its gonna leave a mark. The lone rock debacle is just the beginning of something that is getting frightfully dangerous.

The long end of the treasury yield is also not taking off in ernest in the US……this spells deflation, and the PTB just cant have that.

I know I know everything we need is getting more expensive, but in reality, people are just doing with less, and that again spells trouble for the “REAL” economy, which is a pure falacy.

The real economy is the “Thing that is so”. The thing that is so always turns out to be false. Resulting in the lack of belief, punishing the the “This is so”, and then we are back to the “This is so” part deux.

Nobody can figure out the “This is so”, and the Euphoria has not returned. It may never return.

Comment by ExNorCalNative
2007-09-24 17:32:51

” Fortunately for her , she lives at home”.
By that do you mean she lives with her parents? I live with my wife and children and I consider that ” at home”- ie. at MY home. I’m glad she is saving, thank god it sounds like she is not saddled with a mortgage.

Comment by shelly
2007-09-25 04:28:25

My sil is a processor in south fl. She hasn’t worked in 2 months.She just got a job as a hostess. She said she heard it will pick up in 8 months.

Comment by GH
2007-09-24 23:14:03

Of course this is what many of us have been saying in regards to those who say it is “different this time” because we don’t have the job loss of the 90’s. We do have job loss, which ironically is related directly to the real estate bubble collapse and each is feeding on the other at this point. I lived in Mission Viejo through the first 7 years of the 90’s and saw prices fall 30 - 40% between 92 and 96. There were brown lawns and notices all over the place. My friends brother just declined an offer in Mission Viejo a couple of weeks ago. I believe he will come to see that as a huge mistake.

Comment by Professor Bear
2007-09-24 15:31:00

“Like most builders, Hovnanian, a public company, is not buying any more land. Builders throughout the Valley have lots for sale, but buyers are few. ‘The price of land may come down further,’ explained Terry Mangum, director of Hovnanian’s Fresno-area division.”

Hasn’t HOV heard they aren’t making any more land?

Comment by unreal_estate
2007-09-24 15:38:06

“Like most builders, Hovnanian, a public company, is not buying any more land. Builders throughout the Valley have lots for sale, but buyers are few. ‘The price of land may come down further,’ explained Terry Mangum, director of Hovnanian’s Fresno-area division.”

Hasn’t HOV heard they aren’t making any more land?

This caught my eye too. Maybe we should start our own talking point and see if it catches on: “They aren’t BUYING any more land.”

Comment by Sobay
2007-09-24 15:49:00

I am sure that they still have options that have not expired.

Comment by returntothemotherships
2007-09-24 19:34:46

Awe Intrinsic value! To bad it’s only worth something in the future. This future don’t look so good I’d say sell now instead of expiring worthless.

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Comment by Big V
2007-09-24 16:29:03

As a matter of fact, I think they ARE. If a builder is selling it undeveloped, then it’s being added to the market, i.e. “made”.

Comment by Professor Bear
2007-09-24 15:33:33

“To a frustrated home seller in the current real estate market, it sounds like an offer from an alternate, utopian universe: A buyer offers to pay as much as you’re asking — plus 10 to 30 percent — and you just kick the difference back to the buyer in cash after the deal closes.”

“But it’s a scam that can defraud the lender, artificially inflate values in entire neighborhoods and leave an economy reeling from the effects of foreclosure.”

I’m guessing it’s also a scam that can add a 10 to 30 percent fraud premium priced into the comps. Any comments?

Comment by combotechie
2007-09-24 16:14:01

It should add 10 to 30 percent fraud premium to the comps for EACH WAVE of sales. Add up all the waves of repricing the comps and the fraud premium really swells up.

Comment by Professor Bear
2007-09-24 16:56:58

I am just delighted that our D-ratic Congress is hastily cobbling together multilayered bailout measures to permanently lock in these compounded waves of fraud premium, in order to price out would-be California buyers forever.

Comment by Statsman
2007-09-24 16:20:51

Think about this for a second …

What would the typical person do when offered 10-30% over asking price if they are locked into a house that they cannot sell and have zero equity? They would take the deal. They would not care if the lender is defrauded. They are only in this to protect themselves and their credit/assets.

This is what is really going to add fuel to the fire. It is one thing for a lender to have a house lose 10-50% and have to foreclose and sell at a discount. It is another when you add the $100K or so kickback to the tab. Why would anyone purchase our mortgage bonds again? The toxicity is spreading as the greed and panic gets worse.

Forget popcorn … got guns?

Comment by Leighsong
2007-09-24 16:54:52

ooohhh. Hi Statsman. Guess where hubby took me yesterday?
To the gun show!!wheeeeeeeeee.

Guess what we bought? (she’s purty)

SKS sniper and a case of her bullets…LOL.

We are going to another show in October. Got a long list of *wants*.

My hubby loves me…a lady that likes guns. wahoo.


Comment by Leighsong
2007-09-24 17:42:21

P.S. We do not shoot people!!! Lawd.

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Comment by Doug in Boone, NC
2007-09-24 19:46:15

Forget popcorn … got guns?

A whole house full of them, plus about 10,000 rounds of ammo!

Comment by Thomas
2007-09-24 17:08:17

On this topic, anyone who likes to read absurdly long posts can check out the following, which I recently submitted as a prospective column to a SoCal newspaper:

Yo ho, yo ho, a pirate’s life for me.

As financial markets reel from the biggest credit contraction in at least a decade, the world is getting a good look at just how buccaneering a business the mortgage industry got to be during the late boom. Amid the general fingerpointing, a basic truth is emerging: The real estate market can handle stated-income loans, or teaser-rate mortgages — but not both.

Stated-income loans, in which the borrower’s income isn’t verified, aren’t called “liar’s loans” for nothing. Until recently, though, financial reality placed a limit on how shameless cheaters could get. Since mortgages generally had to be fully serviced from the beginning, if a borrower’s ability to make the payments was overstated, he tended to default quickly. However, when stated-income loans are married to low initial “teaser” rates, a monster is born. Because only a minimal payment must be made at first, deceptions are masked, and the dishonest borrower can coast along for a year or so before his inability to fully service the loan comes into play. In that time, the originator of the mortgage can sell the loan into investment markets, offloading much of the default risk. The borrower, for his part, expects his property to appreciate rapidly, allowing him to refinance or sell at a profit before the payment adjusts beyond his ability to pay. Everybody’s happy — until appreciation stops. Then things get ugly.

Studies and anecdotal evidence suggest that this kind of activity was widespread during the past boom. Fraud ranged from simple exaggeration of income, either by the borrower or an unscrupulous mortgage broker, to sophisticated collusions between borrowers, brokers, agents, appraisers, and sellers to secretly kick excessive cash back to the buyer upon closing. The result is innumerable loans obtained on false premises, where the expiration of teaser-rate periods is exposing the disparity between what borrowers stated as their income and reality. Real economic destruction looms, as a result of this vast misallocation of credit resources.

Mortgage fraud is a federal crime, punishable by imprisonment. Unfortunately, law enforcement resources are limited, and the authorities can’t investigate a fraction of the offenders. General civil remedies may also be inadequate, since the parties most directly injured may have incentives to avert their eyes from fraud in loans sold to investors, lest contractual duties to buy back tainted loans or mark down their value be triggered.

Interestingly, the government sometimes enlists the help of private citizens to combat some kinds of fraud. The federal False Claims Act provides a procedure for private citizens to bring so-called “qui tam” suits (in which the citizen sues on behalf of the government) against perpetrators of fraud in government contracting. If they prevail, they share in the government’s recovery.

Many states, including California, have enacted similar laws. Intriguingly, California law also allows “qui tam” suits against perpetrators of insurance fraud. Thus, “qui tam” suits are not always limited to cases in which the government is a direct victim. They have also been authorized when private frauds have such a damaging effect on the general economy that the government is willing to essentially “deputize” citizens — and provide them with healthy financial incentives — to assist with enforcement that the government cannot handle alone.

In the golden age of piracy, governments often resorted to issuing Letters of Marque and Reprisal, authorizing privately-owned vessels to cruise as “privateers” against hostile shipping. The recent golden age of mortgage buccaneers calls out for a new birth of privateering. The federal and state governments ought to seriously consider authorizing qui tam suits against participants in mortgage fraud. Downsized employees of mortgage boiler-rooms, honest brokers, Realtors, and appraisers who lost business to corrupt competitors, and sharp-eyed amateur analysts would make excellent qui tam plaintiffs. Turn these citizen privateers loose upon the mortgage pirates, and watch how fast the bad actors shape up.

[My name] is a [lots of high-falutin' credentials]

Comment by Blue Skye
2007-09-24 17:46:23

Interesting take on the fraud Thomas.

Comment by palmetto
2007-09-24 18:57:29

I like it, Thomas, I like it a lot. As many of us have been the aggrieved parties as a result of the fraud, I say, let us loose on the creeps.

Comment by pos_dude
2007-09-24 19:13:20

I think the point is that once there is damage the scoundrels can be found. The honest brokers and honest homeowners are victims? The world of investing always has traps for the unwary. When only 20% of the population can afford the median house, alarm bells should have gone off in the real estate heads.

The home owners should have sold at the peak and I have no sympathy for those who did not sell. The Agents who lost business to the pirates should have trained for a new profession. The Agents were close to the action and if there greed did not fog their logic they would have left the profession years ago.

Comment by Leighsong
2007-09-24 22:19:02

Plageism isn’t tollerated, but easily concealed. Sigh.

Comment by Thomas
2007-09-25 09:37:04


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Comment by Leighsong
2007-09-24 17:12:00

Mean people are making it so very hard for the honest of us…what is the alternative to jail?

Community service (from what I’ve seen) is a joke. If there were a way to make these clowns perform a useful service and become humble:

Clean up roadsides/beaches/parks
Classroom assistant
Any form of charity or public service insert your choice______

The problem is that most of us honest folks already volunteer, as we are compassionate toward others.

I must be missing something, but I do know building more prisons is not the answer. Sigh.

Comment by M.B.A.
2007-09-24 18:24:02

tattoo “CRIMINAL” on foreheads

Comment by Leighsong
2007-09-24 18:57:44

Love it M.B.A.

The possible downside may be that the dolts will do it as a fashion statement.

Ya just can’t make this stuff up!


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Comment by Housing Wizard
2007-09-24 19:49:43

Good post Thomas . Where do I start at how much this fraud/cash back/liar loans /appraisal fraud/lending fraud/speculator demand/flipper frenzy has cost America, and how much it pumped up the prices ,and contributed to this crash in prices .

First , I don’t know when lending institutions decided it wasn’t part of their duty to prevent fraud and even contribute to it . Why do you think loans are underwritten ,and why do you get an appraisal ? When lenders started seeing absurd increases ,that was the clue to pull the reins in and make the borrower put their money where their intent was for the property ,and require greater down payments /greater qualifying .

But when you have Wall Street rating high risk loan notes (based on faulty appraisal and underwriting ) as good stuff ,what is going to stop it ? Certainly the commissioned salespeople were not going to stop it , including the the Wall Street kind. Didn’t Wall Street know that commissioned salespeople won’t police themselves given half a change to make a deal,and either will borrowers .

All this fraud became so commonplace ,that we have had posters testify to the fact that realtors were coming to peoples doors asking them if they wanted to make 100k cash back with buying a house . What about the advertising on the telephone poles about the investor looking for a helper with a potential to earn 20k a month .
How about all the real estate seminars during the boom that taught people how to get in to the real estate game using other people’s money .And on top of that ,the big criminal rings were having a field day .Fraud is what you get when you have anarchy in lending where the risk is passed on .

Check and balances went out the window . The crooks of the industry are still in operation ,therefore I object to FHA making any of those clowns approved underwriters .As far as I’m concerned the whole real estate industry needs to be purged ,kicked out ,your fired .

Comment by reuven
2007-09-24 22:33:27

Re: Liar Loans.

I wish some legislator somewhere would start looking into this as a source of guv’ment income! Anyone who got a liar loan for a government backed mortgage should be liable for the income tax on that stated income. The government could raise billions by examining the estimated 50% of all subprime applications that were fradulent.

Also, it may be fun to sue your foreclosing neighbors based on this theory:

1. Your house value, for tax purposes, was based on “comps”
2. Their house was unfairly overvalued because they didn’t really qualify for the loan. If there was, in fact, no buyer at that price then the house was worth less
3. If the house was worth less, then your house was assessed too high, and you should get a refund on your property tax.

Sue your neighbor for it.

Comment by Housing Wizard
2007-09-24 23:03:20

Now that is the hidden cost of fraud regarding this boom that nobody likes to talk about.Liar loans created false demand which raised comps which raised property taxes .I want a rebate .

How about people who bought into neighborhoods that the price went up because of fraud comps ,and the borrower thought they were getting a valid appraisal, and they thought all the other people qualified .

How about all the people that bought a high priced property ,only to have a house next door to them that will be boarded up ,or a pool that might cause a health hazard to their own child.

The damage that these borrowers/lenders did with their liar loans and fake appraisals is horrible ,and the nerve of the government wanting to bail these people out . The government should be cutting checks to the people that were harmed by these FB’s. In fact , the more I think about this ,we should be talking about what penalty we are going to charge these FB’s and their Lenders for reeking havoc in the neighborhoods .The nerve of even suggesting a bail out that will be paid by taxpayers or FHA offering a favorable loan to these creeps in default .

Comment by reuven
2007-09-25 05:43:32

Any suggestions on how to get started getting the word out?

It’s very tricky writing letters to legislators when you have a “complicated” point. You’ll end up getting the wrong form letter back indicating that they didn’t get your point.

Comment by Housing Wizard
2007-09-25 08:08:45

renven ….I have been bringing up this point since I found out about the liar loans raising prices and the connection with unfair taxes etc. . The government doesn’t want to aknowledge the price it cost the society for all this fraud ,because ,for a while anyway ,they got increased funds from the inflated property values .How can the power bail out this puppy if they acknowledge the harm that it did to people who didn’t contribute to the fraud .
They have chosen to make victims out of the criminials ,rather than face what heppened and call a spade a spade . I’m just hoping a smart lawyer will bring up these points in a class action ,so this bail-out talk goes by the wayside .

Comment by aflurry
2007-09-25 14:48:11

i don’t know Housing Wizard, some of those supposed liar loan liabilities fall under standard caveat emptor. the buyer who bought at the inflated price on an honest loan contributed to further price inflation as much as the liar. it took a little forethought but there were plenty of other signs that pricing was too high.

not to mention it’s all so much blood from a stone. all this talk of suing your neighbors gets you is wealthy lawyers and a bunch of creeps posting about stockpiling guns. gives me the adjeda.

i’m more interested in the fraud that took place in the repackaging of bad loans into highly rated investments. it’s really the loan originator creating the problem, as i see it. if they weren’t planning on selling off the loan they would damn sure get verification. so just when they know they are going to turn around and unload the things with a bow on them, that’s when they get sloppy about checking on the docs? but i figure that lawsuit is up to the investors who bought the CDOs.

Comment by Slewfoot
2007-09-24 15:34:43

The wife and I took a stroll around San Ramon on Sunday to look at some new developments there. Honestly, prices didnt seem all that much lower than when we looked a couple years ago, about 1.2 mill for a 3200sqft house.

The sales offices were fairly quiet, the only people there were extended asian/indian families. I’d hate to buy into a neighborhood with million dollar homes, and have each of my neighbors with 10 people in each house.

Comment by Arizona Slim
2007-09-24 15:55:16

Not to mention the visitors to said families at all hours of the day and night. And if you so much as DARE to politely suggest that they keep their noise down, you’ll be accused of racism.

Comment by jason
2007-09-24 17:00:41

You are implying that asian/indian families have visitors at all hours of the day and night; and you are implying that they are noisy. If this is NOT racism, what is?

Comment by Premature Curmudgeon
2007-09-24 18:28:47

What if the statement were empirically validated? Is it racist to point out something that is indeed true?

I suspect that people who raise these sorts of comments may have prejudiced views, but I have no idea whether my suspicion is correct. I also tend to think that making statements of this sort without facts is promoting baseless stereotypes. But I wouldn’t accuse someone of being a racist based only on that person’s statement that is purportedly relating a fact.

If you think the statement applies to all people (and that the person is therefore targeting a race), that the comment is false, or even irrelevant, then maybe your assertion is warranted. If you think anyone who attempts to point out an empirical fact based on race is a racist, you are perhaps being narrow minded yourself.

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Comment by jason
2007-09-25 08:42:09

“What if the statement were empirically validated?”
That is a big question mark. Before it is proved, that kind of negative statement by Arizona Slim is prejudiced to say the least. Furthermore, it cannot be proven true to ALL asian/indian people, as there are numerous counterexamples to such statement. It is worth to point out that Arizona Slim was not talking about some specific neighbors he had in Arizona, he was talking about the general asian/indian families in San Ramon California. Lastly, his comment is totally irrelevant to Slewfoot’s post or the housing bubble.

Comment by jjinla
2007-09-25 11:34:22

I don’t think that it is racist to state that certain nationalities, such as Indians, Asians and Latinos tend to live with their extended families more so than whites. They do, let’s not sugar coat it. Family means little to us compared to many nationalities. When our parents get old, we send them to nursing homes.

Immigrant households are generally larger for financial reasons (immigrants tend to have lower wages) or cultural (it is considered unseemly for some women to live on their own before marrying, and many husbands are then expected to support the woman’s extended family). Do more people make more noise in general? Of course. Don’t know about people coming in the middle of the night, but otherwise it was a valid assessment.

Comment by pismoclam
2007-09-24 18:56:24

Sc– w you Jason. Enough of this PC crap.

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Comment by jason
2007-09-25 08:54:23

Can you say something substancial? I welcome meaningful comments such as Premature Curmudgeon’s, but your kind of empty statement brings nothing to this board.

Comment by Leighsong
2007-09-24 19:06:17

Perhaps it is an observation and not racism. Not everyone can live homogeneously–not because we are biased, but perhaps we flock…like birds to a feather.

I mean no disrespect when I say I prefer to farm vs live in NY.

I am not for or against–just prefer.

Lawd, the PC police are building fences…

Ya just can’t make this stuff up!

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Comment by pressboardbox
2007-09-24 19:20:06

dont they also smell bad?

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Comment by Leighsong
2007-09-24 17:05:07

Slim…are noise ordinances statues in existance?
If so, call the law…they usually carry fines after a call or two.

Comment by Arizona Slim
2007-09-24 17:10:29

Funny you should mention noise ordinances. I just had to hire a lawyer to get some neighbors with robo-barking dogs to control them. (Tucson’s animal noise complaint resolution system is a joke. I’ve been through it with other neighbors, and I’d rather not do that again.)

The lawyer’s letters to the neighbors — and their landlord — seem to have done the trick. I’m REALLY enjoying the peace and quiet.

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Comment by Leighsong
2007-09-24 17:16:14

Yeah to you Slim!!!!!!!! Nothing like action to restore relative peace.

Best Always,

Comment by sartre
2007-09-24 18:03:52

Would be nice if racist comments can be filtered in future.

Comment by Leighsong
2007-09-24 18:05:04

Slim, I am happy for you, but I missed the main point.

YOU had to hire an attorney to restore some semblence of peace, BTW, is not an expense you should incur.

Forgive my ignorance.


Comment by ex-nnvmtgbrkr
2007-09-24 18:47:28

Why don’t you just borrow Leigh’s new “toy” and blow the worthless canines into the next county. The SKS should allow you to take them out at a comfortable distance.

Comment by Leighsong
2007-09-24 19:07:57


Comment by Leighsong
2007-09-24 22:27:42

Tears leaking! We don’t shoot criters either. Great visual. Tooooooooooo funny Exbkr!

Laughing…stop it!

Comment by Ernest
2007-09-24 22:32:47

“would be nice if racist comments can be filtered in future.”

Excuse Me? Are you the thought police?
Who gets to determine what we can and can not say. You?
Calling or saying something or someone is racist doesn’t make it so.

Comment by anachronist
2007-09-24 17:21:35

Do you realize the irony of your statement that just because someone is of a different race that they would accuse you of racism?

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Comment by Big V
2007-09-24 17:15:36

If law enforcement refuses to ticket your neighbors and confiscate their equipment (as is their job), then you can sue them in civil court. Just make sure to file a police report every time they bug you. Record them too.

Comment by Norcal Ray
2007-09-24 16:11:00

Yep, prices are not much lower. But the builders have been giving incentives over the last year. They need to at least 20 to 30% lower to be reasonable.

Comment by Hailey
2007-09-24 18:24:16

Yes, but in our area, as is our lot in life no matter where we live it seems, all the builders are offering great incentives, except for the ONE that we are interested in. They seem to think they are better than everyone else and refuse to budge an inch. :(

Comment by kThomas
2007-09-24 16:56:03

That’s a very nice area, good schools, jobs. I live close.

Though prices have not gone down much, sales are really slow to dead. Also, alot of people who live in the area are very very stressed out, just making their mort payments. You would not believe what people are paying to live in that area….it’s pathetic. Don’t ask me how they do it.

I don;t think we’ll see a serious correction for a while in THAT area….but it will come. It’s inevitable.

Comment by Slewfoot
2007-09-24 19:36:49

Yeah it’s kinda weird. We wanted to ask what these people what do they do to afford these homes. My wife and I are both doctors and we’re wondering how we can afford it.

The retail homes were more varied in pricing, we saw a 4100 sqft with an asking of 1.3 mill, this area looks to be maybe a year or so behind us in Sacramento, hopefully prices will drop by the time were ready to move in 2009.

Comment by palmetto
2007-09-24 15:35:57

Not to horn in on the California thread, but this just in from Florida, a judge in Leon County (where the capitol, Tallahassee, is located) has struck down the proposed “Super Exemption” from the January ballot, on the grounds that it is misleading.

I knew it was a bunch of hooey designed to put one over on Floridians and get them to give up the Save Our Homes provision, which prevented many from losing their homes as a result of the bubble. Glad the greedy tax shills in Tallahassee got caught with their pants down.

Thank you for bearing with me, fellow bloggers. Just wanted to alert any Floridians who happened to wander into the CA thread.

Comment by Big V
2007-09-24 16:37:07

Good. I don’t even live in Florida, but I’m glad you guys have judges looking out for the law down there. Even if you did cause Northern Rock to collapse (or whatever they’re called).

Comment by desmo
2007-09-24 16:40:49

At least you mention Tebow.

Comment by desmo
2007-09-24 16:40:49

At least you mention Tebow.

Comment by Leighsong
2007-09-24 16:59:55

Congrats palmetto and to all my FL friends…I miss FL, but I don’t regret leaving. We plan to vacation and see our friends in the near future.

Glad the greedy tax shills in Tallahassee got caught with their pants down.

I’m glad someone with an ounce of common sense overturned this bugger!


Comment by Not Mssing It
2007-09-24 15:38:56

“Auctions of houses owned by people who failed to make their mortgage payments are held at weekdays on the steps of the San Joaquin County Courthouse. Most of the sessions, though, there’s nothing to do because there are no bidders.”

And if anyone here does decide to do this make DANG sure you pay the $200 to $400 for a title search on these courthouse step sales. MAKE SURE!!

Comment by crispy&cole
2007-09-24 15:41:48

“‘The feds have been on the heels of a number of accusations that we’ve filed,’ Pool said, referring to some cases in Northern California and Bakersfield.”

I wonder what he is talking about? LOL

Comment by crispy&cole
2007-09-24 15:43:08


Comment by stanleyjohnson
2007-09-24 15:58:17

mid may was 799,000
6/10/06 was 836,471
6/14/06 was 840,935
6/17/06 was 846,120
6/20/06 was 850,317
6/22/06 was 855,892
6/24/06 was 860,647
6/29/06 was 866,037
7/01/06 was 858,675
7/09/06 was 870,854
7/11/06 was 882,239
7/13/06 was 886,055
7/14/06 was 890,896
7/18/06 was 895,022
7/21/06 was 900,000
7/25/06 was 905,170
7/28/06 was 910,001
8/01/06 was 903,718
8/12/06 was 915,336
8/19/06 was 920,755
8/26/06 was 925,176
8/29/06 was 951,242
9/15/06 was 955,352
12/1/06 was 925,170
12/2/06 was 915,258
1/01/07 was 857,760
1/20/07 was 900,302
2/14/07 was 932,055
4/21/07 was 1,148,456
4/27/07 was 1,171,189
5/11/07 was 1,192,290
5/18/07 was 1,202,413
5/25/07 was 1,238,121
6/14/07 was 1,256,361
7/28/07 was 1,300,943
8/27/07 was 1,365,670
9/24/07 today 1,405,798

Some of you may have seen this list every so often on dates above. Numbers keep going up for what it is worth.

Comment by Neil
2007-09-24 16:49:09

I’ve been doing the same tracking, plus quite a few more detailed (Los Angles, Redondo Beach, DC, and a few others.) I cannot help but notice the slope for 2007 starting 9/12/2007 has gotten unusually steep in the upward direction for National inventory.

Touring open houses last weekend (hadn’t done it in months) resulted in a discovery, almost all of them had fallen out of escrow. Hmmm…

Got popcorn?

Comment by az_lender
2007-09-24 19:03:39

Just to point out the obvious…the big dN/dt in stanleyj’s data is the 2000 listings per day that were added between late July and late August. But of course I am not seeing the daily/weekly data for September, which might bear out Neil’s point. Did something happen on Sept 12 that might’ve accelerated the drive to sell? What I do remember about July 27 is, that was the previous temporary low of the USD, which then firmed for a few weeks before resuming its dive. I don’t conclude anything in particular about the coincidence of this with the “worst” period in the stanleyjohnson data-list.

Comment by tomthumb
2007-09-24 21:42:22

i would like to this gives a good idea to the number of homes for sale BUT i think there are sources of error.

I do not see a number of homes that I know are in the MLS for sale. I do not see foreclosed properties. I think it works like zillow/trulia where you have to list on the site for it to register. So numbers may just be going up as the site grows in popularity…..just a thought…comments?

Comment by Arizona Slim
2007-09-24 15:58:26

Speaking of foreclosures, a Tucson-based firm that specializes in such things is shutting down:

Comment by Arizona Slim
2007-09-24 16:00:08

Oopsie-daisy. I should have said that they’re filing for bankruptcy, not shutting down. I had them confused with:

which fired most of its employees, declared bankruptcy, and still has yet to issue final paychecks to the now-jobless ex-employees.

Comment by ex-nnvmtgbrkr
2007-09-24 18:52:30

Oopsie-daisy?!! That’s strike one, Slim. Three strikes and you’ll be on the receiving end of one of my Joshua trees.

Comment by rellimgerg
2007-09-24 15:59:35

“‘It’s my goal to get every one of these people busted,’ he said. ‘I just don’t know how they sleep at night.’”

The sleep very comfortably on mattresses stuffed with hundred dollar bills.

Comment by SDGreg
2007-09-24 17:13:33

“There’s just no enforcement in California,” Lackner said. “That’s unfortunate, but what can you do?”

Maybe if they weren’t busy raiding medical marijuana clinics, they could crack down on obvious mortgage fraud. Some of this is very uncomplicated. Lackner hands it to them on a silver platter and they’re still not interested? Are some of them profiting too or are they afraid of ensnaring friends/donors?

Comment by giantaxe
2007-09-24 16:03:34

One of the Stockton area towns that has seen foreclosures go through the roof is Mountain House. Digging through my email last week, I came across this comment from a REIC clown back in Dec ‘05:

“The East Bay is unique, it can be its own economic micro-climate,” said Christopher George, president of CMG Financial Services, a San Ramon-based firm that provides mortgages and other services.
“You have what are essentially new towns that have sprouted in the East Bay, like Brentwood,” George said. “You’ve got Mountain House. The East Bay will not see nearly as severe a downturn in housing “.

Comment by crispy&cole
2007-09-24 16:07:40

Do you have is email address? I might have to give him a piece of my mind!

Comment by Ziggy
2007-09-24 17:20:17

One of my friends just bought a place there. Oh, he works in Mountain View. Wonder what the commute is like for him.

Comment by giantaxe
2007-09-24 17:37:08

A commute from hell just to live in a place with mounting foreclosures. It really is a repeat of the early ’90’s. I had friends back then who bought near Stockton. They ended up walking away from their house after they couldn’t stand the commute any more and the house had depreciated in value way below their mortgage.

Comment by norcalray
2007-09-25 00:03:47

1.5 hours to 2 hours one way, is a tough commute.

Comment by joe momma
2007-09-24 16:18:58

OT: I fully support the UAW. This country needs a good old fashion strike.

I hope the strike spreads to other industries. Enough of this fascist corporate BS already.

Show these people who REALLY built this nation.

Comment by Inland Empire
2007-09-24 16:57:48

I hate unions!

Comment by Arizona Slim
2007-09-24 17:07:51

I have mixed feelings about unions.

On one hand, my mother was a member of a teacher’s union. Still is, in fact. Her teaching salary helped put me through college. Then it helped to support her and my father while he got his business going.

OTOH, I’ve seen what unions have done to the American steel and auto industries. Not a pretty picture.

Comment by Neil
2007-09-24 18:27:38

I work on a site represented by 3 unions and a non-union force. When they go at grievance wars with each other it makes you realize the absurdity in many situations. But 73,000 hourly workers cannot support over 330,000 retirees. That just isn’t possible.

This is a snapshot of the US future. Like it or not, people are going to have to work later in life. Partially because we live longer thanks to that expensive health care.

GM isn’t doing so hot. I fail to see how a strike will change that situation. :(

I hope it is resolved soon. I see nothing wrong with standing up for one’s rights, but skills should be portable job to job. If my employer treated me poorly, I’d shift employers or even industries. Its modern life.


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Comment by joeyinCalif
2007-09-24 18:49:16

But 73,000 hourly workers cannot support over 330,000 retirees.

Workers are not supporting those retirees. We, the consumers, do all the paying and supporting.

Comment by az_lender
2007-09-24 19:10:11

With all due respect to Slim’s mother, my own experience as a member of a teachers’ union (Florida, 1970’s) hardened my contempt for unions. All this claptrap about caring for the pupils — but if it ever came to a choice between smaller classes and bigger paychecks, the paychecks won out every time. Plus the erection of artificial barriers, making you take a lot of bulls**t “Ed” courses devoid of any content at all, when the history teacher couldn’t convert fractions to percents, and one of the math teachers never heard of Picasso. (Okay, I know someone on this board is going to make a joke about Picasso Who.)

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Comment by dwkunkel
2007-09-25 08:23:23

A friend of mine is a math teacher in one of Cupertino’s vaunted High Schools. His view is that most teachers richly deserve their low pay.

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Comment by flatffplan
2007-09-24 19:31:57

fck unions, especially gov worker unions
less work, more pay formula isn’t good

Comment by anachronist
2007-09-24 17:26:24

Imperial capitalist landowners?

Comment by joeyinCalif
2007-09-24 17:36:08

lemme guess.. You manufacture or sell robots and automation tech?

Comment by Anonymous
2007-09-24 17:59:54

I applaud the GM autoworkers for taking a stand… their future depends on it. It’s not just about the 51 billion in retiree health coverage, but, securing jobs here in America.

Having representation (a union) is a bad thing, huh? If the industry you worked in was all of a sudden sent overseas, you’d wish that you had representation.

Comment by Mike
2007-09-24 18:51:50

I come from a family who were all union members. I’m also a liberal. Unfortunately, the writing is on the wall for all those US based jobs which provided good benefits like pensions and health care in the past. That way of life for the average Joe Sixpack has gone and it isn’t coming back.

Worse, GM and Ford would now be out of business if it didn’t sell trucks and other vehicles to the Federal and State governments and the military. GM and Ford survive on indirect welfare from those entities mentioned above and their product (vehicles) are bought with US tax dollars but the tax payers have no say in the matter. Blame it on globalization. Unionized US workers making $55 an hour + health care + sick pay + pensions cannot compete with a Chinese or Indian car worker making $3 an hour with no sick p[ay, no benefits and no pension. THAT is a fact. I suspect the plan is to eventually, over 20 or 30 years, increase the Chinese and Indian pay to $20 and hour and reduce the US workers pay to $20 an hour. Both with limited benefits. It isn’t going to happen over nite but it will happen. Of course, hammering the dollar until it’s worth 50% of what it’s worth today will help the corporations (which run the world) and their servants (the politicians) achieve their goals. Trying buying a $600,000 tacky stucco crap box on $20 an hour.

Comment by DAVID
2007-09-24 20:47:00

Worse, GM and Ford would now be out of business if it didn’t sell trucks and other vehicles to the Federal and State governments and the military.

Chad perfers Toyota’s

Small groups of Toyota desert vehicles, with 106-mm recoilless rifles mounted at the rear, wheel and charge like cavalry in the vastness of the Sahara. Outriders hang from the sides, firing their AK-47s with deadly grace. Very young and therefore very brave, the men of these small fighting units, or escadrons, whip their Toyotas’ flanks until the vehicles seem to snort and froth at the bit like fine-blood Arab stallions. The young soldiers move silently, without war cries except for the high-pitched scream of their engines.

These men are part of the first and second regiments of the Chad army, which is fighting a daily game of no-prisoners with the rebels who infiltrate from Libya to the north and Sudan to the east. The enemy also uses escadrons of Toyota vehicles, usually along with a 22-ton Mercedes truck for support. Some of these get through government lines, mine the roads and frighten the local population. When they do engage the army, they usually get the worst of it. In the battlefields of what has come to be called the Great Toyota War, the desert is littered with dead vehicles.

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Comment by peter wiener
2007-09-24 22:55:36

your post summarizes quite well why buying a house in the past 4 or so years was probably the worst timing anybody ever could have had in modern times to buy a home in the U S or the Western world. note I said worst time to buy, it has been and still is a hell of a time to sell, take the money and run.
Also, the wage cost as reported per production employee on the line I believe in the Notes to the financial statements for 2006 for GM were US $78.00 per hour including benefits, pensions, etc.

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Comment by jcclimber
2007-09-25 15:42:46

Of course, Toyota builds plants in the US, hires US workers (even unionized), and continues to make a profit.

Toyota has restrictions on their unions, and more importantly, doesn’t strike deals with them which are short term profitable but long term financially imbecilic. Unlike some other companies who shall remain nameless….

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Comment by Leighsong
2007-09-24 19:46:35

I too have mixed emotions to unions. I do (NOT) know how old you are, but I was born in Pittsburgh PA.

I do know what I believe, which does NOT fit any model, but my own.

Greed is not good for the economy or it’s citizens…20% profit (minus overhead) is generous clearance. Dang–that just makes too much sense.

Power tends to corrupt; absolute power corrupts absolutely.
-Lord Acton

The union(s) do not represent people…hence, the anger towards greed.

Perhaps the question, Anon, is how do *we* achieve checks and balances?

All input is well received.

Comment by pismoclam
2007-09-24 19:15:49

The buyers and the sellers are on strike now! If they keep it up they will have to bring in a mediator . hehehehehehe

Comment by Housing Wizard
2007-09-24 21:01:56

Its seems to me that all the advances that America made in the last 100 years has been undermined by this global economy and global work force .(I don’t care how wonderful CNBC stock channel thinks globalism is ).

I don’t know what profit margins corporations use to make in the past ,but it would be hard for Americans to compete with cheap labor from across the sea these days .I question why Americans have to compete with cheap labor forces from across the sea .If a American Corporation went outside America ,they should of been taxed on anything they brought back in .Or better yet ,they should be taxed on the difference in wages they should of paid a American.

But anyway ,my greatest fear has always been ,(from the time I was young ),was that America would turn into a Global economy and the middle class in America would be destroyed .
A strong middle class is what made America strong ,including decent wages for Americans . Whenever the Unions would get increased wages for workers the corporations would just raise prices to cover for it .Now maybe the Unions went to far with the workers benefits and it made the corporations seek different options (like a foreign work force ,and location ),but now the balance scale is tilted in the other direction .

Americans can’t compete with 3 dollar a hour wages in foreign countries . I’m getting sick of talking to foreign people when I have a problem on a account . I don’t care what you say ,I can’t understand them .

What about the fact that a foreign worker has no stake in goods shipped to America . What about the concept that a American worker has a stake in the product they produce for other Americans .Look at the problem with this toxic stuff from China .

America made alot of inroads in the last 100 years regarding individual rights and the protection of them . How can you have foreign countries( like China) ,who have a different set of rules regarding human rights ,controlling our economy and our wage structure .

I firmly believe that the rest of the world has a love/hate realtionship with America and they consider Americans the pigs of the Universe . Its called the battle between the haves and the have nots .

Comment by Ernest
2007-09-24 22:29:15

Well said Wizard! People act like we have no say and that something like the “Economy” just is. Like we can do nothing to alter, compete or direct. All of which are false. Just because greedy bastards put us in this position does not mean we have to stick with it nor fix it. We don’t have to be globalist nor accept that we must lower our standards to bring up the world. It is time we Americans remember where we come from and grow real backbone like those before us and fix what needs to be fixed no matter what it takes or where it leads us. I assume all here no of the sacrifices that all of our ancestor have endure to make American what it was. Well?

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Comment by Housing Wizard
2007-09-24 23:35:58

Well,thanks for the suppost with my post . I thought I was going to get beat up because I wasn’t thinking like a “new age” person should think .

Mine you , I don’t think there is anything wrong with trading goods with other countries ,(thats been going on for eons ),but now I have to compete with a worker in another country that makes a dollar a hour because a American Corporation decided they could make more profit by having slave labor (something this country took years to get rid of ).

Also the money supply has become Global ,and there is just something that can be really dangerous about that .
When I hear Wall street acting like the plight of the average American doesn’t matter because the Gobal markets are good and emerging ,I’m in shock .

I really think that the loss of good jobs and lack of wage increases and rising costs for Americans was part of the reason why Americans became vunerable to a real estate ponzi scheme .

There has got to be something that can be done ,as you say ,to restore America to a viable country again, with all the values in tact that America fought for .


Comment by Leighsong
2007-09-25 00:07:11

What about our children?

We had an industrial base–what do our children have?


We have only one child, and educated, trying to find his way in life. So many times I hear *they* don’t know what *we* went through in life.

I wonder what their eyes see.

Comment by Housing Wizard
2007-09-25 00:50:55

I’m really worried about the younger people ,and my own children/grandkids . Your right Leighsong ,I wonder what their eyes see .Do they even see a future ?

Comment by jtie
2007-09-25 04:41:06

Funny. I like that.

Comment by VT Dan
2007-09-24 16:21:47

I just put up an article about how the falling dollar will result in lower home prices (instead of canceling losses). Inflation will lower, not raise, home prices!
When measured in dollars, the median home price from 2000 to 2007 has soared by 60% across the United States with some areas seeing more than 100% gains. If we instead measure home prices by the dollar index (a basket of other currencies), we see that todays home prices are only up by 14% from 2000 levels. In the same time period, median household income is down 19%. When compared to gold, both home prices and income are down significantly.

For every 1% the dollar falls without a coresponding increase in wages, the median home price across the nation must fall by $1500. At the current rate of the dollar’s decline (10%/year), that represents about $12,000 per year or $1000 per month.

Please give me your thoughts!

Comment by Nightowlsix
2007-09-24 16:31:48

To start with - tomorrow is the release date for “existing home sales for August.” Should be a peachy-keen read in the AM…! Priced in Gold or via the Dollar Index is the way to do it… but sheeple have no idea how since the MSM doens’t either. Over the long run the only money that should be offered up as mortgage loans is that which is saved by prudent, conservative, thoughtful renters. The faucet has been slowed from full-blast to a moderate stream, but the pricing effects have only begun.

Got Gold?

Comment by combotechie
2007-09-24 17:13:55

“Inflation will lower, not raise, home prices!”
“Please give me your thoughts.”

Inflation will cause interest rates to rise. This rising of interest rates will act to make houses more expensive to buy; it will increase the monthly payments. The only way to get the monthly payments down to affordable levels is to lower the price of the house.

Thus inflation will act to lower home prices.

Comment by VT Dan
2007-09-24 17:26:04

Also a good point; however, it seems like low interest rates from the central banks are what is causing this inflation. Interest rates on bonds will be affected by preceived inflation (vs actual inflation). So we are seeing a double whammy, higher treasury rates and lower dollars. At some point the treasury rates would have to exceed inflation inorder to stop the madness, but by then the dollar will likey loose its “reserve currency” status.

Comment by VT Dan
2007-09-24 17:28:57

And by losing the reserve currency status the dollar will fall significantly against all other currencies and further trashing house prices in the US. It will be a great buying opportunity for foreign investors, but I doubt they will invest/move over here in large enough numbers to matter.

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Comment by combotechie
2007-09-24 17:37:08

“It will be a great buying opportunity for foreign investors, …”

I forsee China buying up U.S. farmland, coal mines, etc., maybe transportation infrastructure - anything that will supply raw materials to their National Finished Goods Production Machine.
I don’t expect them to buy U.S. houses.

Comment by returntothemotherships
2007-09-24 19:29:32

Why would they buy here? So they can import chinese people to work at $10 an hour instead of a dollar a day? Have to find an enviromentally safe place to dispose of toxic waste? They own the Panama Canal. They will buy Mexico and import their cheap sh!t through Nafta to America via Mexican truck drivers there by avoiding U.S. tariffs and any other restrictions they would have being based in America. Wake up! Americas kinda funny that way. Yea and now your funny to.

Comment by Leighsong
2007-09-24 19:58:20

I see dead money…globally. gold-oil-currency–gone in sixty seconds.

Ya just can’t make this stuff up!

Comment by combotechie
2007-09-24 20:20:31

“Why would they buy here?”

Because we have raw materials they want and they have the money to pay.

Comment by pismoclam
2007-09-24 19:27:10

Inflation has been running at 7-8%. Forget the phony CPI. That’s a measurement concocted by the BLS to keep the transfer payments (welfare-SS) down. Start at 2000 and 7% compounded to 9-2007 is about 55% give or take a bit. My head hurts when I have to do numbers.So, a house at $200K in 2000 should be ‘ worth’ $310k now.I’m going to stop ’cause I need some single malt.

Comment by friar john
2007-09-24 16:27:11

“While acknowledging the need to accommodate people with modest paychecks, a few members of the Centre City Advisory Committee, an elected board of downtown residents, said the financial investment for the city doesn’t look so hot.”

“The Centre City Development Corp.’s loan will be paid back over 60 years at 3 percent interest. That’s well below market rates.”

Instead of America’s Finest City, San Diego shall now be known as “Well on our way to becoming America’s Section 8 housing leader”. Would hate to be an owner in the other condo towers next to this POS.

Comment by SDGreg
2007-09-24 16:52:49

Is San Diego finally getting its own KaBrini-Green? San Diego - America’s Finest Slum?

It looks like another typical city of San Diego deal. The developers clean up and the citizens get very much less for their money than they should have. How much more lower income housing could have been provided with the same amount of money in locations closer to schools, services, etc.? This looks more like a bailout for a developer than a meaningful effort to provide lower income housing.

Comment by tcm_guy
2007-09-24 21:15:48


Because of the proximity of these condo towers, when one goes section 8, they all go section 8.

The clutters of condo towers in Florida will also become pockets of section 8 housing.

And pockets of crime, disease, illegal immigrants, gangs, “trapped” seniors on fixed pensions, etc… The only way to fix it will be to bring down these condo towers. But this wont be happening any sooner than at least one generation from now.

Got 10% down?

Comment by JayInMD
2007-09-24 21:36:27

That’s why the guvmint been tearin’ down all the public housing. It will replaced by brand new waterfront condos

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Comment by az_lender
2007-09-24 19:19:10

I had to laugh at the SD story, wherein housing for families making less than $42K/year is across the street from a building where 1BR condos are offered at $350K and up. Let’s see, to afford the $350K condo you should be a single person making $140K/year. Across the street are the families (of four, presumably) making $42K/year or less. Now where does that leave all of us who make between $42K per couple and $140K per person? Which must include a lot of us here (certainly me). I guess we cannot live in SD. Duuhhh, guess I already knew that.

Comment by John Law
2007-09-24 19:44:28

you can rent, it’s cheaper. plenty of condos!

Comment by droog
2007-09-24 16:27:11

Do you think Todd Lackner is our own Paladin? I’d like to give that man a cigar!

Comment by vmaxer
2007-09-24 16:41:09

I was thinking the same thing.

Comment by beachhunter
2007-09-24 19:51:25

he is a great guy and I worked with him for many years before I sold my company..

Comment by lainvestorgirl
2007-09-24 16:51:50

San Fernando Valley RE market is totally dead, this weekend: open houses everywhere, no activity. Prices still high but how long can that last. West LA not nearly as weak, but probably will follow. I barely have time to post now, I can’t keep up with all the properties for sale coming up on the different REO websites I track. Pretty funny watching all this inventory piling up and lenders trying to hold the line on unrealistic prices.

Comment by lainvestorgirl
2007-09-24 16:53:59

Speaking of REO prices, I figure all we need is one lender to crack (drop the prices and kill the comps), then all the others will have no choice but to follow, then race to the bottom.

Comment by Professor Bear
2007-09-24 17:06:52

Why wouldn’t they rationally just hold on for dear life until Congress & the Treasury get the U.S. taxpayer on the hook for guaranteeing Jumbo mortgages? Maybe a law could be passed to encourage flippers to get back into the game and reflate the bubble? It seems worth waiting out the policy uncertainty if at all feasible…

Comment by Leighsong
2007-09-24 17:40:09

Please P’Bear tell me that was sarcasm (sniff). I don’t like to admit your view seems quite plausable.

Going for aspirin.

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Comment by joeyinCalif
2007-09-24 18:21:18

plausible that prices would go up forever and ever?

Comment by tj & the bear
2007-09-24 17:45:13

What good is a guarantee if you can’t qualify?

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Comment by mrincomestream
2007-09-24 17:19:29


Comment by Leighsong
2007-09-24 17:53:13

GMTA…this is going FAST.

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Comment by palmetto
2007-09-24 18:48:13

That’s the moment, mrincomestream. We’re better at predicting than Greenspin.

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Comment by droog
2007-09-24 17:53:09

I liken it to the Prisoner’s Dilemma - as long as all the banks hang together, no one has to write down their inventory. As soon as one bank bolts, the remainder are scr3wed.

Comment by az_lender
2007-09-24 19:24:07

But the builders are already “bolting” so maybe the REOs must follow. (?)

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Comment by Housing Wizard
2007-09-25 00:20:05

Maybe the lenders will change their rules and start renting out REO’s ,instead of unloading them . In fact maybe the lenders will make a deal with the FB’s that they can rent the foreclosed property .

Comment by lainvestorgirl
2007-09-25 00:58:33

If they do rent them out, it will be negative cash flow, same as if a specuvester were doing the same.

Comment by LA HouseRenter
2007-09-25 09:08:35

lainvestorgirl, have you noticed that finally we are getting some SFHs in Sherman Oaks for under $600k? They are 3Bd 2Ba short sales. I think this is the beginnings of a crack in prices in the SFV. (btw, I love the new “Show short sales only” feature on ziprealty)

Comment by lmg
2007-09-25 08:43:27

Hmm! Sort of like all of those foreign holders of U.S. dollars.

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Comment by UnRealtor
2007-09-24 22:50:46

Been watching an REO property for over a year. Seems the bank doesn’t care if it ever sells. The roof leaks, there’s mold growing, and the price remains out of sight.

Comment by Auction Heaven in '07
2007-09-24 17:02:44


(and of course, Ben Jones.)

Hey Ben, maybe Todd Lackner could be your Vice Presidential candidate when you run for office? Hmm…

Comment by crispy&cole
2007-09-24 19:05:02

Where the hell have you been?????

Comment by Auction Heaven in '07
2007-09-24 21:16:51

I been lurkin’.

Nice job on the crisp & cole thing, by the way.

You called that a long time ago.

Comment by az_lender
2007-09-24 19:26:15

I second C&C’s question, and would also like to know whether any of the Auctions you’ve been to are truly Heavenly (i.e. no reserve)

Comment by Auction Heaven in '07
2007-09-24 21:20:20

You couldn’t pay me to go to an auction.

I just picked that name last year to shock all the kool-aid drinkers who were predicting 15% appreciation.

Got ‘er done.

Comment by need 2 leave ca
2007-09-24 17:04:23

The East Bay is unique, it can be its own economic micro-climate,” said Christopher George, president of CMG Financial Services, a San Ramon-based firm that provides mortgages and other services.

While I was working at the major telecom provider in Pleasanton CA, I remember having to look into the telephone bill for this company. They were deadbeats skipping on their phone bill back in 2004/5 timeframe. They must really be hurting now. Bunch of deadbeats.

Comment by need 2 leave ca
2007-09-24 17:08:01

Is this now the airlines war? One lowers, and all have to match? Of course, buying a plane ticket for $100 or $200 is one thing. A house for hundred of thousands is another. Will fly more than once. Only need one house. Already got it.

Comment by dan
2007-09-24 17:40:09

“As much as the Fed’s move might cheer the markets in September, that optimism could fade if inflation returns. ‘The flip side is that we are already pushing the boundaries of inflation,’ said Watkins”

Please. Weve already PENETRATED the boundaries of inflation and are currently on a mission to explore new galaxies where no national debt has ever gone before. You dont need to be an expert to assess it, just a wife. Ask her to show you how much she brought home in groceries for the week and after the shock of hearing the price ask her what she USED to be able to bring home for the same amount a year ago.

Comment by Brad
2007-09-24 17:47:08

from John Mauldin’s newsletter today (he argues that the velocity of money has recently his a wall):

“Since 1970, most cuts by the Fed (1970, 1974, 1985, 1989, 2001) were followed for at least two years by massive declines in the inflation rate. There were, however, exceptions: 1980 (which was quickly taken back by Mr Volcker) and 1998 (which was also quickly taken back).

Which leaves us with the following question: Will the recent Fed cut prove to be right? Or will it be, like 1980 and 1998, a mistake quickly taken back? We tend to believe that the Fed was right to cut and that, given the massive collapse in velocity, commercial banks will need a steep yield curve in order to recapitalize their fragile balance sheets and avoid a Japanese-style deflationary bust.

However one puts it, we can’t escape the conclusion that Milton Friedman was (once again) right: In recent years, the Fed has been more broadly right than wrong (five out of seven). Better yet, when it has been wrong, it was quick to change its course and adjust to the underlying realities. Can the perma-bears claim the same batting ratio and the same intellectual flexibility? “

Comment by rentor
2007-09-24 17:46:19

I understand how Bay Area speculators drove up Stockton & greater Bay Area RE. Now I am wondering ifi the retracement is going to implode form Greater Bay Area or simply everything crumbles at once.

Comment by joeyinCalif
2007-09-25 02:10:30

It won’t be everything at once around the bay area.. Regarding any particular local area, I think there are two major influences that will determine the correction time line:

One factor is local wage-to-price ratios. Defaults happen sooner and in greater numbers where paychecks are stretched the farthest.

The other factor is an area’s supply / demand ratio.
Those areas that had vacant land and filled it with new speculative building should correct sooner just because oversupply inhibits demand and drives prices down.

Those areas which were already well established, densely occupied, highly desireable, healthy and wealthy before the bubble will be able to resist a downturn the longest, and will be the last to fall, imo.

Comment by Potential Buyer
2007-09-25 11:31:27

My friend owns a 4/2 fixer upper in San Jose. Over the past year I’ve seen zillow inflate its price $100k - to $700k. If today’s buyers go off that site, they are going to be in for a world of hurt. How can property in this market go up $100k in less than one year?

Comment by bubbleswamy
2007-09-24 17:49:00

So why is it that the developers in Santa clara valley or other areas like San Ramon are not really dropping the prices for the new homes/townhomes? Are there still buyers buying at the exisiting price levels? This is what one of the companies advertized in their website for a town homes in Santa clara “Home of the Week Special! Plan 1559 offered at $776,950″ Is this worth it?

Comment by SGA
2007-09-24 20:31:02

Because people are packing more income earners into the house.

Comment by SGA
2007-09-24 20:32:48

Let me add San Ramon is the HQ for Chevron Oil. Oil is very profitable these days.

Comment by M.B.A.
Comment by Leighsong
2007-09-24 21:57:12

A rare few will believe me when I say Tehran was actually an oasis where US citizens were welcomed. How fast time flies.

Comment by JayInMD
2007-09-24 22:05:59

We were welcomed in Tehran until the day Dummy Carter “spit in the Shah’s face” at a state dinner and the islamic reveolution started within a week or so.

Let’s see, the shah was a bad guy (locking up political prisoners and all) so let’s get rid of him and get the Ayahtollah’s who lock up political prisoners, deny women their rights, behead infidels, export terrorism, …..

Yeah, that was a good trade! Ranks right up there with Bosox trading Ruth.

Comment by sartre
2007-09-24 22:57:51

A rare few will actually know where Tehran is…..

Comment by OC_Stomp
2007-09-24 18:07:44

Do you guys think this is a short sale ;-)

The HELOC gremlin did his work. House was purchased for $720k in 2004, yet a $823k list prices is a short sale… At least you get granite counter tops and those trendy sinks in the master bedroom.

Comment by Mike
2007-09-24 18:10:14

Why is it that sensible people on this blog continually qote government numbers on unemployment, inflation, wages, etc, as if they meant something. I’m not sure if governments always cooked and manipulated the numbers because we never got to see as much information (via the internet) as we do now but I do know under this administration EVERYTHING that comes out is either fake or twisted or the reslt of spinning. Be it weapons of mass destruction to inflation to employment or generating fear with the terrorists stories so they can change the laws to curtail freedom of speech. It’s lies piled on top of lies. Worse, people fall for the b.s actions the SEC or the Fed take which are supposed to protect or benefit Joe Sixpack. The latest Bernake fate cut for instance. It isn’t going to help ANYONE except the banks and the Financial Gangsters of Wall Street.

Even those as*hole politicians only jump on a “cause” if it suits their purpose. Example: Barney Frank and Christopher Dodd were NOT a mission to Mars for the last 6 years. They were here on earth and in the US. They saw the Ninja loans being given to people who couldn’t pay the price - yet SUDDENLY they are all over the place, looking holier-than-thou, and “Shocked at what’s been going on,” and “Determined to help these people who were taken advantage of….” It so happens that I’m a liberal and I would NEVER vote Republican but Barney Frank and Christopher Dodd are both Dems and they are nothing but photo-op bums. People need to fold the flag neatly away and stop trusting and listening to these as*holes. Personally, I have been putting Bush on “mute” when he appears on tv. I have no interest in anything he says because it’s almost a 100% guarantee there’s a hidden agenda behind anything he says.

Comment by Leighsong
2007-09-24 21:17:33

Mute…Thank g*d for dvr or Tivo…jeesh.

Mute Bush! I don’t put bumper stickers on my vehicles, but that is tempting!

Finacial gangsters. What an astute observation.

Mike, you are a gentleman with an acute insight. Thank you.

Christoper Dodd is on a mission:
-Banking committee
Married Bianca Jagger? Ladder Day Saint? Director of Blockbuster?

OH…pro-Chavez…good night Irene.


Comment by JayInMD
2007-09-24 21:31:43

And there’s a hidden agenda behind evrything Hillary says, so be careful of who you vote for. Vote the best person, not the D or R after their name.

Comment by ca_realist
2007-09-24 18:12:16

Ok …don’t laugh your asses off now :-)

In San Jose Real estate is so bad, I heard of one inspector today who was happy to crawl through attics and sub area of houses to collect dead “RATS”. So its really not “TRUE” white guys won’t take jobs even illegals don’t want. The same Inspector told me he is inspecting about 60% REO’s lately. I heard about another hot shot broker “28 years old” who is putting his $1.8 Mill -Mc Mansion up for a short sale and praying for $1.3 or $1.2 mill. He already had to sell his Ferrari :-)

Maybe some of you guys can advertise on Craig’s list for rooms to rent to homeless ex Realtors :-)

Comment by sartre
2007-09-24 18:18:41
Comment by Neil
2007-09-24 18:33:32

From link:
arget reduced its growth projection to a range of 1.5 percent to 2.5 percent, versus a previous forecast of 4 percent to 6 percent.

That’s not good. Its less than inflation (official inflation too!).

Lowes and Home Depot are going to be tied to the housing boom… so their small drop in projected earlnings is a yawner.

I posted it a while ago, but it looks like we are on track:
Christmas 2007 is going to suck.

Comment by M.B.A.
2007-09-24 18:48:13

no it won’t… you can string popcorn!

Comment by OCDan
2007-09-24 19:35:16

Bah, humbug!

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Comment by Leighsong
2007-09-24 20:25:01


If anyone wants to buy (needless) toys, the day after Thanksgiving is the day to do so…I’m not inclined; ones that desire GPSs; computers; gold; toys; insert desires here_____

The best deals (if you are so inclinded) are the day after Thanksgiving….funny…a time to give is a market for the time to buy.


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Comment by Dazed&Confused
2007-09-24 18:50:34

“Following adoption of comprehensive policy by the NAHB Board of Directors on Sept. 8 calling on the Federal Reserve Board, the Administration, Congress and federal regulators to take prompt action to address further erosion in housing and prevent a full-blown economic recession, significant steps were taken in Washington last week to stabilize the financial markets, restore the mortgage markets to health and develop solutions to the subprime and foreclosure problems.”

“I am pleased to report that less than two weeks after we left Seattle, we have seen important progress in all these areas as Washington policymakers have responded to our concerns,” NAHB Brian Catalde said in a Sept. 21 memorandum to the association leadership.

“The Federal Reserve Board has cut interest rates, some needed reforms are moving through Congress and federal regulators are providing Fannie Mae and Freddie Mac with more flexibility to address the subprime crisis,” Catalde said. “I want to emphasize upfront that these developments are an important first step in our battle, and that your association will continue to work tirelessly until the housing market turns around.”

National Association of Home Builders, great source for a look at the housing market from the builders’ perspective.

And, oh yeah, on a different note, Ron Paul for Pres…

Comment by M.B.A.
2007-09-24 18:51:47

I just looked at realty trac in my town and I was shocked at how many lis pendens and reos there were within a mile of my house, considering I do not live in a dense area. I wish I could put it in as a %. Anything else is meaningless for comparison purposes.

Comment by aeyra
2007-09-24 19:09:39

I can believe that this mess started in California. You’d be looking at around $600 billion in losses if housing reverts back to 2004 prices just in the West coast states (CA, OR, WA). That’s over $14,000/person in those three states. Makes a bit of a dent in your personal finances, no?

Comment by pressboardbox
2007-09-24 19:26:45

Helicppter ben drops that much cash before he takes his morning dump. Dont worry, all is well - the Fed’s gotcha’.

Comment by dan
2007-09-24 19:51:25

Imagine the dent if the market goes back to 2001 prices then. Its a strong possibility.

Comment by Buy in 2009
2007-09-24 20:04:36

No dent in our personal finances at all; we’re not homeowners. It does make our down payment look like it will have less competition from equity locusts.

Comment by jtie
2007-09-25 06:12:20


Comment by jtie
2007-09-25 06:12:59


Comment by aladinsane
2007-09-24 19:25:36

Love the kids game metaphors…

“‘And then when prices quit going up, it was like musical chairs, and there was no place to sit down,’ said John Knight, professor of finance and real estate at UOP’s Eberhardt School of Business.”

Comment by max4me
2007-09-25 05:21:26

I went to UOP and its a shame that the academics are on top of this. how can you guys call all this and they just stick their head in the sand.

Comment by flatffplan
2007-09-24 19:29:56

yoiur shtin me
16% of all workers ?
real estate/finance is off 7,400 jobs (3%) from its September ‘06 peak but still employs 16.7% of all O.C. workers.

Comment by jtie
2007-09-25 05:59:06

finally, a little bit of sanity

Comment by rex
2007-09-24 20:16:15


SAN FRANCISCO (MarketWatch) — Even managers at BNY Mellon Asset Management admit to being surprised at the opening-day reception for their newest mutual fund. Within hours after launching on Sept. 13, their Southern Global Enhanced Balanced Fund sold more than $2 billion in shares, and by day’s end, it had attracted some $8 billion.
The biggest surprise: Shares were only sold in China. It was touted as the first time a mutual fund featuring an all-stock portfolio of companies from around the globe — and more importantly, from outside of mainland China — had been widely offered to Chinese investors.

Comment by Neil
2007-09-24 21:23:33

We’ve got to soak back the $1 Trillion of cash they have some how.

Now we know how.

Sell them the builder’s stocks. ;)

Got popcorn?

Comment by Housing Wizard
2007-09-25 00:43:02

LOL. Your funny Neil .

But on a serious note ,there is something that is bothering me about global funds and global investing . Had many investors from around the work not invested in CDO’s ,the funds would not of been available for the housing boom . If America had based the loans funds on the savings rates of Americans ,than loans funds would not of been in such a excess supply .

Lending when it started was based on local communities and the local savings from the local banks . So, a community could not overreach more than the health of the community .

I’m just saying only under circumstances of excess funds looking for a place to invest from around the world can you get a circumstance where absurd developments were built ,out in the middle of nowhere ,where there wasn’t even jobs .

Comment by rms
2007-09-24 20:23:25

“And while those houses await a buyer, or change of ownership, they’re often empty. And sometimes even if the property is occupied, it isn’t maintained.”

Back when I was repossessing automobiles I’d often located my deadbeat’s address simply by looking for the waist-high weeds in the front yard. Their mailboxes were usually crammed with other collection notices, so it was clear that nobody was being paid anymore.

Comment by observer
2007-09-25 04:58:42

Why should the neighbors pitch in to fix the green pools? Let Casey Serin do it!

Comment by NoVa Sideliner
2007-09-25 11:26:44

Well, I can see why neighbors would pitch in to maintain the lawn of a completely empty house, which is easy. Pools, no, but a 30×100 front lawn is what, five minutes of mowing once you’ve already got the mower out to do your own patch? Even doing both front and back are not too bad, and it keeps the neighborhood from looking wrecked and nasty, and it keeps the varmint population down.

Then again, maybe they want to keep it ratty these days to present the proper appearance to the property tax assessor!

As for an abandoned swimming pool, who had the idea for Casey’s pools to cut the mosquito breeding capacity by using the pool as a used motor oil repository? I guess that would work.

Comment by VT_Dan
2007-09-25 06:41:15

Except that we know incomes didn’t actually grow. Hence, prices should actually be down.

Comment by peter m
2007-09-25 07:27:09

There is a foreclosed property just down the street from me, a large corner house. Yard is a mess with garbage strewn about, weeds overgrown, exterior walls & eaves peeling, and filthy patio. It seems the bank dosen’t care about the condition of the property or how it contributes to neighborhood deterioration.

This is in West Long Beach 90810

Comment by peter m
2007-09-25 07:30:02

There is a foreclosed property just down the street from me, a large corner house. Yard is a mess with garbage strewn about, weeds overgrown, exterior walls & eaves peeling, and filthy patio. It seems the bank dosen’t care about the condition of the property or how it contributes to neighborhood deterioration.

This is in West Long Beach 90810

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