It’s Survival Of The Fittest In California
KCBS reports from California. “About 500 Sacramento and Bay Area homes are being auctioned off over the next two weekends, and next month 34 homes in a Manteca subdivision will be on the block, starting at 40 percent below previous prices. The idea is to get qualified buyers off the fence, says Darryl Franks of Pacific Auction Exchange. ‘Are we going to see more of the auctions? Absolutely.’”
From CNBC. “I’ve been waiting for a call back from the press contact at D.R. Horton all morning, and now…I’ve decided to give up. I called the company (three times) to ask for a bit more information regarding an auction of 53 new D.R. Horton-built homes in San Diego this weekend.”
“We’ve been doing quite a bit of reporting on foreclosure auctions as well as big ‘fire sale’ type deals from the big builders, like Hovnanian, but this is the first home builder auction I’ve seen yet, and I’m curious why they’re taking this course, rather than trying to sell the properties at a discount.”
From CNN Money. “For vulture investors, it’s not only about the discounts. In order to hold a real estate asset for the several years it might take to turn around, properties have to generate ample cash flow while they wait.”
“Some of the down markets Redbrick Partners’ Jonas Lee is not considering include the Central Valley cities of California, where prices in places like Stockton soared for several years. Moody’s projects prices there will fall 25 percent.”
“Lee doesn’t like Stockton’s prospects because,’It was so overpriced there and there are few constraints on building.’ If prices start to recover, developers can quickly build again, putting a damper on price growth.”
The Fresno Bee. “Stockton is the foreclosure capital of the nation for one key reason: Families had to stretch financially to buy a house.”
“Families that fled the high-cost Bay Area to buy a house now are losing them at record rates, according to RealtyTrac. Other regions close to high-cost urban centers — Modesto, Merced and Riverside/San Bernardino — are also high up the foreclosure list.”
“About 25% of home buyers in Stockton used risky, or subprime, loans to finance purchases. Many of those transactions occurred between 2003 and 2006 when prices were tripling in some areas.”
“And today, with home values falling and strapped owners unable to sell their properties, a quarter of those who took out such loans are in default at least 60 days, according to LoanPerformance. As a result, Stockton, a haven for refugees from Bay Area prices, had the nation’s highest rate of foreclosures in the first six months of 2007, according to RealtyTrac.”
“Bud Martini took an early retirement, sold his house in Gilroy for $825,000 and used some of the cash to buy a four-bedroom house in Yosemite Lakes in Coarsegold in 2004 for $318,000. He and his wife aren’t alone. ‘We’ve met a ton of people from the Bay Area, Gilroy, San Jose and Sacramento,’ he said.”
“About one of every 27 households in the area was in the foreclosure process in the first six months of 2007, according to RealtyTrac. ‘They couldn’t afford a home [in the Bay Area], and they started pulling themselves out to the Valley,’ McGee said. ‘A lot of people bought houses they couldn’t afford.’”
“Los Banos, too small to make it on national lists but a commuter town for San Jose, also has been hit hard, said Bill Pfeif, a Fresno real estate agent who specializes in finding buyers for troubled properties.”
“Pfeif…is trying to sell 300 lender-owned houses in the central San Joaquin Valley. ‘We’re not really that far behind those guys,” he said of Stockton and the other commuter markets. ‘The numbers continue to rise.’”
“And foreclosures will persist through 2008, he said. LoanPerformance estimates 31% of all the adjustable-rate loans issued in the last three years have ’set’ to the higher rates, with 22% more ratcheting upward before year’s end. An additional 37% will reset next year.”
“‘The pig won’t be through the python until third quarter 2008,’ said Bob Visini of LoanPerformance.”
“A financially troubled Sacramento developer that stopped building a project in Dinuba has been sold to an investor who said he plans to reorganize the company and resume construction.”
“Dunmore Homes announced Wednesday that it sold its assets to Sacramento native and businessman Michael A. Kane, who said he intends to restructure and jump-start development activities.”
“Dunmore fell victim to a real estate downturn that is wreaking havoc in the industry. Builders are cutting staff, trying to sell excess lots and offering concessions to sell houses.”
“‘The recent decline of sales in today’s home building industry has had a devastating effect on most private and public home builders,’ Sid Dunmore said in a statement.”
“Analysts say Dunmore likely won’t be the last victim. ‘It’s survival of the fittest,’ said Robin Kane, a Fresno-based consultant who is unrelated to Michael A. Kane.”
The Sacramento Bee. “Nine months ago, Granite Bay home builder Sid Dunmore predicted local builders like himself would emerge stronger from a housing downturn that was battering the stock prices of the giant national home builders that dominate the Sacramento market. Wednesday, Dunmore announced the sale of the family business.”
“‘During the run-up, we had 17,000 sales a year, and all these companies were here or coming here predicated on a certain amount of volume,’ said Greg Paquin, owner of the Gregory Group. ‘If volume slides to 9,000 a year and you cut that up among the same number of builders, the picture doesn’t look as good.’”
“In an interview earlier this year, Dunmore criticized some of the publicly traded home-building giants that dominate the Sacramento market. He said many kept churning out hundreds of new homes even as the market weakened, and he contended that private builders would survive because they could respond more quickly to changes in the market.”
“But many of the biggest builders also offered discounts and thousands of dollars in incentives, a tactic difficult for private, locally owned builders to match.”
“John Slaughter, (a) Dunmore executive, said the market had changed dramatically from three years ago, when the company’s sales peaked. ‘We weren’t selling as much as we did while costs continue to go up,’ he said. ‘It became necessary, unfortunately, to make this change.’”
The Gilroy Dispatch. “The boom in real estate lasted so long and the downturn came quickly and in a surprising manner. The decline in home sales and its financial repercussions for real estate agents hit South County coincidentally on the onerous date of Sept. 11 when more than 90 agents with Century 21 Premier in Gilroy and Morgan Hill learned they would lose their jobs as the offices announced their closures.”
“Fueled by low interest rates and let’s say a number of ‘creative’ mortgage plans, in hindsight it is clear that some folks who didn’t have the resources were able to become homeowners. It is the American Dream. But sometimes dreams become nightmares.”
The Daily Star. “Some of the former employees of Tucson-based First Magnus Financial Corp. had much more money on the line than a twice-monthly paycheck when the mortgage lender filed for bankruptcy last month.”
“Managers of so-called ‘net’ branches, offices that were operated using managers’ funds, said that when First Magnus filed for bankruptcy, it took possession of accounts, holding more than $100,000 in some cases, that were rightfully theirs.”
“Darrell Giannone, a net-branch manager in California, said he has paid $650 after checks bounced, and expects he will have to pay about $4,000 more. At the time of the bankruptcy filing, he had about $110,000 in a branch account.”
“Financial documents filed with the bankruptcy court on behalf of First Magnus do not appear to include branch managers as creditors.”
“‘Unfortunately, they were using our money and basically stole it,’ said Sue Marshall, a net branch manager in Modesto, Calif., who said she had $118,000 in an account under First Magnus’ control.”
The Voice of San Diego. “With a highlighter, Bill Curtis issued the San Diego housing market a grand ultimatum a few months ago, circling January 2009 in bright yellow. If housing prices don’t crash by then, he’s moving to Wichita, Kan.” “‘You know how much a house costs in Wichita?’ Curtis said. ‘I could get three houses for what I’d pay for one here.’”
“Curtis and his ideological bedfellows…decry the lax lending that kept prices high but have stuck borrowers with ballooning payments and unmanageable terms. Now, as more houses than ever enter foreclosure and some politicians brainstorm bailouts for lenders or homeowners, Curtis cringes.”
“‘Why would they want to support that?’ he said. ‘It’s completely opposite. If the market came down, everybody would be able to afford to buy a house.’”
“Curtis began to research the market. He learned about lending and investment properties and no-documentation mortgages and lucrative commissions for loan and real estate agents and brokers. And he’s grown to detest the news coverage of some of the people who are now facing foreclosure, because he sees himself and others of his ilk as the real victims of the current market.”
“‘The only solution to this whole housing mess is to get prices back down to where an average family can afford to buy an average home to live in,’ he said. ‘Why is that such a terrible goal to work toward?’”
On Kudlow it was mentioned housing is 5 % of the economy, therefore, expect very shallow recession. Nothing to watch here keep on moving.
Yeah, now that we’re on the dark side of the moon, housing’s importance to our economy’s well-being is being poo-poo’d.
I don’t remember “them” saying this 2 years ago.
Figures don’t lie, and (I suspect) liars don’t often figure, either, as lying is easy and math is hard.
Here is some 2006 NIPA data from the BEA web site (all dollar amounts in 2006 dollars at annual rates):
(1) Housing services 1,381.3
(2) Residential fixed investment 764.8
(3) Total of housing items (1) + (2) 2,146.1
(4) Nominal GDP 13,194.7
(5) Housing items share (3)/(4) X 100% = 16.3%
Data source: http://www.bea.gov/newsreleases/national/gdp/2007/gdp207f.htm
Of course, 16.3% understates housing’s importance to the economy, as it is well known that consumption is 2/3 of the U.S. economy, and consumption is toast with decelerating equity shutting down the housing ATM.
PB, why do you try to confuse the issue with the facts?
As long as Mr. Kudlow can keep profits private and any losses swallowed by tax payers, he has a free market economy.
If any Media commentator were to have a show on the financial markets that told the truth, the advertisers would be gone in less than a week.
“Well the market is going up today. And if the Dow Jones were to get to 20,000 this year, it would be back to even with regard to inflation. Although it would still be down compared to foreign currencies over the last 8 years, it is doing better than the US GDP and the average workers salaries which are unchanged over the last 7 years and down if adjusted for currency translations. Etc, Etc. Etc.”
Never happen. I would enjoy hearing it. Mr. Kudlow is just a whore peddling his wares.
in billions of 2006 dollars
Great analysis Prof G S Bear……….hope you keeping well. I guess there are now plenty of falling knives to be caught in SD going by the latest figures.
Grandpop used say liars figure, but figures don’t lie.
Here are some more figures:
(1) Household real estate: $20,997.7
(2) Home mortgages: $10,145.9
(3) Owners equity (2 - 1): $10,851.8 *
This means that every percentage-point from household housing equity figure translates into a wealth loss of $108.518 billion.
How large is $108.518 billion? It’s equal to the year-over-year increase in all U.S. imports:
(1) U.S. imports, 2007-2Q: $2,309.2 billion
(2) U.S. imports, 2006-2Q: $2,227.8 billion
(3) Increase in imports (2 - 1): $81.4 billion **
A several percentage-point decrease in household equity (wealth) has the ability to erase the value of the increase in several years’ worth of imports.
Perhaps this is a source of the dollar’s weakness — U.S. households are increasingly unable to buy imports.
Data source:
* B.100 Balance Sheet of Households and Non-Profit Organizations, p. 102.
** F.107 Rest of World, p. 22.
Flow of Funds Accounts of the United States: Flows and Outstandings, Second Quarter 2007
http://www.federalreserve.gov/releases/z1/current/z1.pdf
Kudlow should be reminded that consumer spending is over 70% of the economy and that much of the consumer spending is driven by expectations of future real estate gains which have now turned negative.
Nothing gets in the way of Kudlow & Goldilocks.
Another gift from New York City. I’ve been re-reading the chapter about The Great Depression in “Modern Times” by Paul Johnson. It is amazing how much this sounds like today.
“The credit inflation petered out at the end of 1928. The economy went into decline, in consequence, six months later. The market collapse followed after a three-month delay. All this was to be expected; it was healthy; it ought to have been welcomed. It was the pattern of the nineteenth century and of the twentieth up to 1920-1: capitalist ‘normalcy’. A business recession and a stock-exchange drop were not only customary but necessary parts of the cycle of growth: they sorted out the sheep from the goats, liquidated the unhealthy elements in the economy and turned out the parasites; as J.K. Galbraith was to put it: ‘One of the uses of depression is to expose what the auditors failed to find.’ Business downturns serve essential purposes. They have to be sharp. But they need not be long because they are self-adjusting. All they require on the part of the governments, the business community and the public is patience.”
Have a good night.
Another excellent book to read is ‘Only Yesterday, An Informal History of the 1920’s’ by Frederick Lewis Allen. This is a book which was written in 1931 right after the stock market fall had taken place and was fresh in everyone’s mind. It is truly amazing how similar the description of people and events parallel today’s society!! I highly recommend picking this book up.
No time for your blog now amigo Ben. Me and the little ones are picking strawberries as fast as we can while the “getting is good !”
OMG. The strawberry pickers are here on ben’s blog. How big a house did you buy?
Strawberry pickers using child labor to show documented income. OMG things are progressing.
Not a bad thing. Here in Oregon, ask any 45-year-old Portlander what they did to make money in high school, and many of them will tell you, “picked berries.” And other crops. Good honest hard work.
That was before everone realized that those are jobs “Americans won’t do”
Amricans on welfare won’t do
Often employers don’t want Americans with “unalienable rights” they are looking for sheep.
the shrubs of which he speaks is medicinal, not a consumer staple, or luxury item say like blueberries
I thought all you Oregonians grew weed in the summer, although I do see that “picked berries” is in quotes. Must be an Oregon thing.
To think that my father and I did volunteer work on a nearby farm. The owner was getting on in years and needed help. And Dad wanted to make sure that the farm wasn’t sold off for development. So, off to help bring in the hay we went.
In Minnesota they used to bus kids out to the fields to do “corn de-tassling”. I don’t think they do it any more. Suburban white kids became too cool to do that kind of stuff. The lawyers probably stepped in, too.
In Illinois, too. It was a hot, dirty, sweaty job. You had to wear long sleeves, long pants, hat, kerchief over nose, and gloves. In the hottest part of the humid summer, in cornfields planted so densely that no refreshing breeze could be found.
And we all WANTED those jobs, and they never came up short for workers, because they paid exceptionally well and you could earn enough in the 2 or 3 weeks that de-tassling encompassed for a semester in college or a decent used car. The kids that got those jobs were the Big Dogs.
Nebraska and Iowa too.
“Bud Martini took an early retirement, sold his house in Gilroy for $825,000…”
The “Garlic Capital of the World” has houses that traded at 8 1/4? I could see it if he had 40 acres of prime farmland out back…
“Bud Martini took an early retirement, sold his house in Gilroy”
Let’s see……do I want a Bud…….or just a Martini now?….decisions….decisions. Wonder if his parents were heavy drinkers?
BottomFisher,
When you make out like that, why not two fist it?
here here
Amen! Let’s party Bud….I don’t care WTF your name is!
“Fueled by low interest rates and let’s say a number of ‘creative’ mortgage plans, in hindsight it is clear that some folks who didn’t have the resources were able to become homeowners. It is the American Dream. But sometimes dreams become nightmares.”
- The true American Dream started by ‘Saving your Money’ for the downpayment. Todays folks thought that it was an Ipod download. I want the damn thing right now!
“But sometimes dreams become nightmares.”
This thought is what most of us should be primarily concerned with. This guy was referring to FBs, flippers, and GFs but truly we all should be very concerned going forward for how stay safe and secure in a world that is truly going to turn into a nightmare.
/GLOOM AND DOOM OFF/
Happy Thursday everyone!
“‘Why would they want to support that?’ he said. ‘It’s completely opposite. If the market came down, everybody would be able to afford to buy a house.’”
I read that whole article. It really struck a chord with me because Curtis’s experience was exactly the same as mine. I too moved to California when prices were still somewhat reasonable, but I was also fresh out of college. The economy was in bad shape and I could only find work in retail, which wasn’t enough to buy anything. So I looked forward to the day that I could crack the 100k mark and hopefully then be able to get something.
But as I was working my way up the career ladder, the prices in my area skyrocketed. When I did crack the 100k mark, it was no longer enough. This happened to a lot of people my age who got caught in the crcossfire of simply being in the wrong place at the wrong time.It simply makes no sense that if you make a 6 figure income, you STILL cannot afford the worst crack house in the hood.
Yes- I totally agree with this guy. There are MANY people just like us who are using none other than sound economic sense to wait for the time that economic fundamentals actually make sense. But given the behavior of politicians and economists, it seems like we’ll get screwed once more.
Same here, I finished college and started my full time career at the end of 2001 and have climbed accordingly ever since. Although I don’t mind the 6 years of renting I have under my belt, it would be nice to be able to buy a house one of these days.
Actually, I don’t care about owning a house anymore, after making an honest attempt in 2005 and realizing how futile it was given then-current (and today not incredibly different) market conditions. I’ve worked in the construction industry for 8 years and I have no problem throwing my money away into rent, as opposed to throwing it away into interest, property taxes, and spectre equity.
Dude, you’re me.
Hey ! Get back to work. Oh yea, nobody is really building anything right now so you don’t really have a lot to do. It’s ok, it will pick up right after the super bowl (in 2011). By the way, it’s not funny because I am probably going to get a poke in the eye, but that is better than the poke in the butt most in our industry are getting right now so I guess that I better not complain. An eye patch is cheaper than, well you know, never mind. So, do something, call a customer, laugh at em for being such stupid arrogant assholes, and before you hang up ask for A/P and beg for them to please pay there invoice’s like I am doing. One of these days we need to just sit and post all the information that we have on all these rat bastard builders and the 2 faced yes men and women that work for them. My appoligies if this did not go right below Adrian’s post as it was meant for him.
spectre equity.
Do you own stock in Cadence?
Though not in California, I had a similar experience. Finished my PhD in 2002, got married to my girlfriend and started my first faculty job that summer. Naturally we started looking at homes and were absolutely shocked at Bozeman, MT prices. I just couldn’t understand how people could afford these homes given that they weren’t making any more than me. I didn’t have expensive tastes by any means, and did not understand why a professor in a rural university town couldn’t afford a basic 3/2 home.
Drove through Montana this summer. The bubble felt almost exactly like California. Why on earth there is such a craze for home building in the vast lands of Montana I just couldn’t understand. At least CA has a shortage of buildable land; MT seems to have an infinite supply of buildable land.
The CA were driving up prices. Look at Jax Hole, WY, Aspen, Vail, all these places were bid up in price by CA transplants, part timers, etc
I can’t tell you how many folks (both from Montana and outside) insisted that we were following the CA model. In a few years, Montana starter homes would be $500k just like in CA, we were just following a few years behind on the same trajectory.
That logic fueled all of the out of state purchases in Idaho, Montana, New Mexico,etc… If homes were only selling for $200k they were a steal, because in due time they were going to be $400k, $600k, and $800k homes. It happened in CA, and it was going to happen everywhere. Get in on the ground floor!
You guys need to look at the un-fancy parts of CO. We didn’t have the bubble here. Prices are very reasonable. And there’s a reason — nicely paying jobs are hard to find.
Imaging being a professor in San Diego! I moved to SD with a Ph.D. and an academic appointment, and sat on the sidelines as the market defied any economic fundamentals (my PhD is not in econ, bu the way). Prices will come down, and that’s mixed news for most people. We really need cheaper housing if SD is ever going to be the kickback place it was in my youth, where regular people could live in regular houses. People got greedy, and are going to be in for some tough lessons - you work, you contribute to society, you save, you buy what you can afford, you take care of your family. You shouldn’t need a PhD to figure that out.
The Voice of SD article mentions “housing market blogs” several times as a source of Mr. Curtis’s education and intellectual support. Would that more people would be reading HBB, maybe it would accelerate the adjustment of prices to rents/incomes.
Probably Piggington.com since they are SD specific.
Yes, it’s true. That’s me in the story. Kelly made me famous!
After she wrote the story about the effects of the housing boom on the homeowners and real estate related employment, I wrote to her and told her I thought she was trapped in the same misguided thinking as the MSM and all their one sided stories about homebuyer “victims”. Well, it turn out she is very even in her reporting after all. She did a great job explaining my (our) side of the story. Everyone should get the word out that Kelly Bennet is the first and ONLY reporter to expose the true victims of this massive housing Ponzi scheme.
And it’s true that Ben’s HBB blog and all the posters really helped me more than they’ll ever know. Also, the other ones we know so well by Rich Toscano, Keith, Aaron Krowne, Patrick, twist, and many others, the whole online community here is VERY knowledgeable and entertaining too.
It’s like I told Kelly before, the blogs are WAY ahead of the curve, and the MSM is learning this fact daily.
The story highlighted one reason why the collapse is going to take a long time. “In the first six months of 2007, 36 percent of all mortgages originated in San Diego County were exotic loans, according to First American LoanPerformance, a mortgage tracking firm.” I hope something happens to accelerate the collapse (assuming you wish to stay in San Diego).
Be careful what you wish for. Try to look at a slower decline as an opportunity to save as much as you can for a larger down payment.
The longer FBs are in the frying pan, the more eager they will be to deal when the wishing prices enter your affordable range. And the drooling will start when they know you are a serious buyer with a serious down payment.
Yeah, you know the irony? If all homes were so cheap as to essentially be free, that would be a good thing, not a bad thing. The only thing ever-more-expensive homes produces are debt slaves.
“‘The only solution to this whole housing mess is to get prices back down to where an average family can afford to buy an average home to live in,’ he said. ‘Why is that such a terrible goal to work toward?’”
The best quote in the whole thread. Housing was NEVER intended to run up like it did and be your primary investment vehicle, it was supposed to be housing. I hope you both get your wish, there is no reason someone earning 2x the national average (100k/year) shouldn’t be able to afford a house somewhere in Cali.
I have a new business scheme to take advantage of the falling dollar. I’m getting U.S. coins and drilling hole in them. Then, I sell them as washers.
So funny you should mention this today, when I just took the time to segregate my pennies into pre-1982 (copper worth more than 1c) and post-1982 (filled with a cheap alloy, I’ll spend ‘em). I felt silly doing it, but hey, it was amusing.
I have a friend that would go around the dorms in college selling sandwiches to get extra spending moneys. e.g. PB&J $0.50 . every night he would sort out his coins into pre-lincoln head pennies, indian head nickels and silver dimes, quarters and silver dollars and then turn in bills to the owner. He would then take his change to a coin dealer in San Jose and doubled his income. I got into the habit of checking my coins - still do it. His biggest score was a $2.5 gold piece given as a penny.
When I was a young aladinsane in the early 70’s, we were up in Canada on a roadtrip, and my dad would give me a $10 bill and
i’d go buy a roll/s of Dimes or Quarters at a bank and we’d pick out the pre 67 ones, which ones were Silver, and worth more than the face value, at the time…
If memory serves, 5 Quarters out of a roll of 40 would be keepers~
An early lesson of Gresham’s Law for me…
–
“‘The only solution to this whole housing mess is to get prices back down to where an average family can afford to buy an average home to live in,’ he said. ‘Why is that such a terrible goal to work toward?’”
Dear Mr. Curtis,
It is with heavy heart that I must inform you that what is good for “average family” is not good for our economic elite, the corporations and the bankers and financiers. As some of them said, “The govt. is looking over us,” referring to Bernanke’s actions.
Jas
Wouldn’t that drown most speculators, dumb buyers last 3 years and the institutions that lent them the money. It makes sense to pray to the sun god and make an sacrafice of hard working citizen with no skin in the game.
I think Bernanke won’t look that bad if we have a hard lending with a wiff of inflation. He can hide behind the fact he tried to stave off hard landing.
Sadly, I am learning that seems to be the truth. Hence, my Plan B to move to Wichita.
It’s amazing to me how the idea of having a housing market where EVERYONE can afford to live seems to be such a dirty word and must be avoided at all costs.
Now that Kelly has covered our side, I hope the national perception will gradually shift back to the side of the regular, average family just wanting to live in a regular home again.
Bill, the problem is, you are not “everyone,” nor are you the regular average family. You make over $100K/yr, you said so yourself. To buy a house, you must make under $20K/yr, preferably $0/yr, so that you will have nothing to lose if the loan turns out to be “recourse.” At your income level, you would probably be planning actually to PAY for the house, i.e., pay back the loan. Wrong answer!!
In this week’s regular post at the Santa Barbara Housing Bubble Blog, I look at how “folks” in Montecito — Santa Barbara adjacent — view the imploding credit bubble (hint: through their always-in-fashion, regulation-issue, rose-colored Montecito glasses). Also in this week’s post: A locally grown economics “think tank” predicts a mere “dip” in South Coast home values from here.
Enjoy your visit,
Saint Barbara
Santa Barbara Housing Bubble Blog
Does the dip include Raytheon pulling out of Santa Barbara?
IIRC, T-minus two months until site shutdown.
Got popcorn?
Neil
Since when do incomes play a part in the value of houses?
Neil, I missed the Raytheon story could you repost - link if possible.
I am showing less than 50 people being laid off at Raytheon Santa Barbara over the last 2 yrs. There are also suggestions that they were looking to hire.
May 6, 2006
“…In March about 30 people were let go; on Thursday the work force was trimmed by another 47. Vision systems, which employs around 900 people and makes infrared sensors, is one of the three business divisions Raytheon runs in Goleta. Overall the company is the largest private employer in Santa Barbara County, with about 1,900 staff. About half of the latest layoffs came from the manufacturing side of vision systems, with the remaining among staff in engineering, the program office and finance. In addition to domestic defense and aerospace projects, Raytheon also has contracts with overseas governments and private parties that bring more business into Santa Barbara County….”
Thanks
Hoz
Neil, do you have a link for your Raytheon info? I posted about 25 minutes ago, but it must have been lost. I only show Raytheon laying off 77 total from 2006.
Thanks
Hoz
No link. As far as I know, there is no MSM story. I just know the guy hired to go in and kick the engineers down south.
No more layoffs. They are being relocated to El Segundo, Tucson, or Pheonix. Employees either took the relocation package or voluntarily quit as part of the separation package.
And yes, this surprised me (Raytheon is moving engineers net to Tucson out of El Segundo… so this is quite a mix-up of moves.)
Neil
Just trying to keep my info current, Thanks duly noted.
San Fernando Valley Business journal $3 from Sep 4, 2007
You found a link?!? I thought they had pulled a stealth move.
“About 500 Sacramento and Bay Area homes are being auctioned off over the next two weekends, and next month 34 homes in a Manteca subdivision will be on the block, starting at 40 percent below previous prices. The idea is to get qualified buyers off the fence, says Darryl Franks of Pacific Auction Exchange. ‘Are we going to see more of the auctions? Absolutely.’”
Are these Absolute Auctions?
Absolutely not.
CBS couldn’t get DR Horton to call them back. Check this out.
http://www.mortgagenewsdaily.com/9262007_Homebuilders_Struggle.asp
The Journal stated that one major home builder, D.R. Horton Inc., is holding an auction of 53 new homes in San Diego this weekend and some units will have starting prices half of prices advertised earlier. On a one-bedroom unit, the starting bid is $149,000, down from a previous price of $309,990.
The company’s CEO Donald J. Tomnitz must have been preparing for this action for months. He was quoted in March by the Associated Press as saying that 2007 “is going to suck, all 12 months of the calendar year.”…
Woohooo-let the fun begin! This might help them tank (prices) a little quicker! A one bedroom @$149 sounds insane to me.
Leigh
…
No we’re talking! Let the masses get a good whiff of that 50% off kinda fear and we’re off to the races. Desperation with DOW 14,000 playin’ in the background - ya gotta love these wacky times.
“Families that fled the high-cost Bay Area to buy a house now are losing them at record rates, according to RealtyTrac.”
Hadn’t given it that much thought, but isn’t that a kick in the pants!! Bay Area people moving to the inland valley to buy a high priced house, incur long drives, no increase in salary, high auto maintenance bills, wasted time away from family and now lose their house. They had no idea that when they inked the mortgage they were in for a proctological reaming.
My wife and I were working in our backyard. Time to pick up trimming. Go and get plastic bags. Said to wife, hey Gary Watts, will you hold the bag? Fitting image - Mr. Watts and his “it is in the bag” and thinking of the folks who are now holding the financial bag by following his foolish advise.
I want a house in “LARD”. What about the auction in “THE TOILET” (Los Banos).
About 500 Sacramento and Bay Area homes are being auctioned off over the next two weekends, and next month 34 homes in a Manteca subdivision will be on the block, starting at 40 percent below previous prices
A little south of Los Angeles, I used to surf at a beach called “Bolsa Chica.” (Fat Chick) That was the official name!
Carrion, oh wayward ones…
“For vulture investors, it’s not only about the discounts. In order to hold a real estate asset for the several years it might take to turn around, properties have to generate ample cash flow while they wait.”
“Vulture investor” Say what?
Sounds like common sense to buy a house BELOW not above actual value and actually HOLD it instead of flipping and OMG, having it actually cash flow??
Don’t these vultures know that you can over pay and flip it to another greater fool in a week or two…
SFH investors are vultures no matter when they buy because they are collectively destroying the “American Dream” by their individual actions that drive up entry costs for people who just want to buy a place to live. IMHO of course.
“Stockton is the foreclosure capital of the nation for one key reason: Families had to stretch financially to buy a house.”
Did their Realtor put a gun to their heads to force them to stretch financially to the breaking point?
Stockton will be small potatoes in the end as socal picks up steam.
The I.E. and Palmcaster will have us all looking back with fondness on “the good ol’ days” when Stockton led the nation in foreclosures.
Palmcaster is getting scary. Desperation has already set in.
The talk of work today was how many people had ever walked away from a home. Survey results:
Under 30 crowd, none (but several are thinking about it)
In the above 40 crowd: about half.
I walked in on that conversation. I think I was called a “lucky bastard…”
Got popcorn?
Neil
I know what you mean. I barely survived the 90s downturn and had several friends who magically bought a newer home in a better part of town. When I asked them how they were carrying 2 mortgages they had to admit they’d let the first house go.
In those dark days (and the days ahead will be darker) there were an abundance of 4+3s renting for $400-500/mo. I’m not talking 1970 here, this was the 90s.
We’ll see that again.
yep I remember that as well, new home bought at the bottom and old home abandoned. I wonder can you still do that and get away with it?
You did tell them that luck had nothing to do with it, didn’t you?
“I walked in on that conversation. I think I was called a “lucky bastard…”
Are you sure they added the word “lucky”?
It was lucky, spelled with an “F”.
Sounds like “acceptance” to me.
Funny, Professor, that conflicts with the image of realtors “getting buyers into houses” by squeezing them. First you stretch, and then you squeeze, I guess.
And this is a surprise? I saw people making $13 an hr buying $850K homes. I am sure they are a foreclosure stat now.
“About 500 Sacramento and Bay Area homes are being auctioned off over the next two weekends, and next month 34 homes in a Manteca subdivision will be on the block, starting at 40 percent below previous prices. The idea is to get qualified buyers off the fence, says Darryl Franks of Pacific Auction Exchange. ‘Are we going to see more of the auctions? Absolutely.’”
The way you do this is to set a reserve price of $0 on each home that is auctioned. Using this strategy, I can guarantee a near-100% success rate in getting qualified buyers off the fence. (A home would have to be a super-duper-fixer-upper to not sell for some price above $0.)
Pfffft!! PB, they’re not just going to GIVE them away!
Sellers have the fear houses will sell for a few thousand dollars. Only single bids might come in.
A savage journey to the heart of the American Dream…
“Fueled by low interest rates and let’s say a number of ‘creative’ mortgage plans, in hindsight it is clear that some folks who didn’t have the resources were able to become homeowners. It is the American Dream. But sometimes dreams become nightmares.”
“I called the company (three times) to ask for a bit more information regarding an auction of 53 new D.R. Horton-built homes in San Diego this weekend.”
I wonder how many months these ‘new’ homes sat on the market before D.R. Horton finally threw in the towel and decided to auction them? That is one question I would want answered if I were bidding on them.
“‘Why would they want to support that?’ he said. ‘It’s completely opposite. If the market came down, everybody would be able to afford to buy a house.’”
“‘The only solution to this whole housing mess is to get prices back down to where an average family can afford to buy an average home to live in,’ he said. ‘Why is that such a terrible goal to work toward?’”
I want to hug this guy. Not one of those long embraces, mind you, but moreso one of those touch-and-go, man-hugs. Not that there’s anything wrong with that.
Haw! That’s funny.
Do you think you would also shed just a small tear at that man-hug time? Not all gushy-like, but just a trace of moisture, revealing your emotional confraternity. Not that there’s anything wrong with that.
“My God, what is this salty discharge? Is this crying? This is terrible — I care!”
Yeah, I’d even throw a sniffle in for even more dramatic effect.
Ha-ha. Hug tentatively accepted.
I love you man!
Just leave that roll of quarters out of your pocket, boy-o.
They were dimes.
“For vulture investors, it’s not only about the discounts. In order to hold a real estate asset for the several years it might take to turn around, properties have to generate ample cash flow while they wait.”
In other words, it is too early for vulture investors to buy, as there is no reason (at anywhere near current wishing prices) to expect homes to generate ample cash flow while the market bottoms out and eventually returns.
not “vulture” but smart, why catch a falling knife that costs you money each month?
This is sour ggrapes, all these FBs and realtwhores hoping that “investors” will bail them out. Sorry but the fake, phony, Trump wannabees are gone. The true investor isn’t going to get out of bed for at least two more yrs.
Exactly…
Well said. Still sleeping here in LA.
The new and improved expanded Inland Empire…
“Families that fled the high-cost Bay Area to buy a house now are losing them at record rates, according to RealtyTrac. Other regions close to high-cost urban centers — Modesto, Merced and Riverside/San Bernardino — are also high up the foreclosure list.”
“‘The pig won’t be through the python until third quarter 2008,’ said Bob Visini of LoanPerformance.”
Don’t forget the other pigs (Alt-A and prime ARMs with resets stretching out to 2010). They also have to go through the python before its bowels clear out.
http://www.nbc6.net/slideshow/news/5064646/detail.html
Holy mother of…. that wasn’t a pig!
I am not expecting the mortgage alligators to come out as well as the one in your slide show.
“Dunmore Homes announced Wednesday that it sold its assets…”
Ah, come on guys…laying down your hammers? Well I guess you’ll be remembered as: Dumore-or-less Homes
This is similar to my story, as there’s lots of California equity refugees that took the money off the table, and downsized things…
“Bud Martini took an early retirement, sold his house in Gilroy for $825,000 and used some of the cash to buy a four-bedroom house in Yosemite Lakes in Coarsegold in 2004 for $318,000. He and his wife aren’t alone. ‘We’ve met a ton of people from the Bay Area, Gilroy, San Jose and Sacramento,’ he said.”
My husband told me this afternoon he wants to go back to California (San Diego).
Okay by me but I wonder ifwe can ever get anything decent in North County under 400K.
Might take a few weeks to get back down to that level…
HBB weeks = 1qtr
nope
I am encouraged by the huge weight of high-end inventory coming on to the North County market recently relative to the value of sales. In our zip code (92127), we had $151m in new listings (102 homes) for August 2007 stacked up against $51m in sales (40 homes). I don’t see how the market can sustain such a large gap between the value of new listings and the value of sales for long without major price declines.
You can get this data here: http://sandicor.com/statistics.html
Patience young lady, all good things come to those that wait.
I’d double that to $800,000 and see if anything of interest exists.
Moody’s projects prices there will fall 25 percent.”
already happened ,dude
Financial Darwinism…
“Analysts say Dunmore likely won’t be the last victim. ‘It’s survival of the fittest,’
The meter is running backwards…
We’re in business
Hey, Stucco: what “should” this go for thereabouts these days? Nice sized place near Balboa Park.
http://sandiego.craigslist.org/apa/433078243.html
Even before the housing crash, I used to be puzzled by people who would live in Stockton and commute 3 hours/day (or more) to get to some Silicon Valley job. Their quality of life would be much higher, I reasoned, if they found a small apartment near work and only spent 30 minutes/day (or less) commuting.
But there’s a certain class of people who feel that they must spend as much as they can possibly extend themselves for. It’s not just the “howmuchamonth” mentality, it extends into how they judge other people and how they think others judge them.
They would never drive the 10-year-old General Motors car that I drive, lest people think there’s something wrong with them…that they’re not “making enough” to qualify for credit for a new Toyota Avalon! (or Hummer H3). Similarly, they would always buy the largest house that they could possibly qualify for on the lowest teaser introductory rate they can find. And every time they meet someone, they look at his car and mentally try to estimate how much he makes, as if there’s any way to correlate the two.
It’s no surprise, then, that Stockton has become ground zero for foreclosures. There’s really no reason for Stockton to exist. Nobody *wants* to live in Stockton. They do it because they can “own a home” and still be able to drive back and forth to their dead-end jobs in Fremont or San Jose.
I am always amazed at the number of people I see in crappy Stockton neighborhoods driving late model BMWs wearing Chanel sunglasses…
And I want to point out it’s not jealousy, sour grapes, or schadenfreude. (That’s what they’d think if we were to question their buying decisions). I own my house in Sunnyvale, and bought it the old fashioned way with 20% down and a 15-year fixed mortgage. And my commute to work takes about 2 minutes.
Ahhh, California. A state full of shallow idiots whose primary motivation is trying to impress other shallow idiots with their expensive material possessions.
Anyone notice how awefully irrelevant the ads that google ad sense shows up on this blog. Most of the time its some ad for custom swimming pools or adelphia headquarters building for 50m.
Advertisers on google must be really wasting their money
They must think that since we didn’t buy in 2006, we must have the cash to buy the adelphia hq bldg.
But since it will be worth less tomorrow, I guess I’ll keep my money in the ole mattress.
Who advertises a $50M building by keyword? Ok, this blog should trigger those keywords… but does that really sell that type of real estate?
As far as pools and such… I talk to coworkers whom are adding pools. So maybe the ads are getting some value.
What will happen to google’s revenue when ad space gets discounted?
Neil
I would argue that the people who REALLY want to know what is going on, they read blogs like this. And smart people would include some deep pocket business owners who might be interested in a building like this.
Was too late to post on the earlier FL thread, so I’d like evryone to google Ocwen and see how many times they have been sued over the yrs. Ocwen serviced VA loans and was fired by the gov’t for failing to accurately post payments, in some cases Ocwen cashed the check but did not post the account. Ocwen was also a bank until they were shut down by regulators.
So be careful about blaming the FB if Ocwen is involved. Because in the past, they did change payment amounts and ppocket cash. Don’t know how they are still in business. All their cash flow has got to be going to fines and damages.
Okay, which one of you is Curtis?
It’s me.
Yeah, true. You caught me.
Check out how it happened in the post above.
LOL.
Comments like that by Curtis is music to my ears. We need a new cheer:
Give me an A F F O R D A B I L I T Y.
What’s that spell? A F F O R D A B I L I T Y.
What’s that spell? A F F O R D A B I L I T Y.
What’s that spell? A F F O R D A B I L I T Y.
Go HBBer’s.
Reuven - I fit the profile of what people in the Bay area should have done. I didn’t want to live in Stockton and commute. I rented near where I worked. I drove an older paid for car (didn’t care what someone thought - it was transportation). I always wondered why a lot of co-workers made those horrid commutes, etc. Instead - I just quietly went to work, lived frugally, and stashed money in retirement accounts. When I went on disability a few years ago, we were able to leave the high cost and go to low cost. We didn’t have the cc, car, and other crap payments. Still have a good sized savings (although want it to grow) and can live OK on a lower income. Had I (and family) got suckered into that mentality we would now be a foreclosure statistic and one of the ‘victims’. Since I didn’t buy into it, I don’t want to pay to bail out those that did think it was road to riches.
Right on, bro!
Neil, don’t forget to include me in spirit at the HBB Cheesecake party. Wish I was there. I will be coming to LA area on Oct 5, but too late to meet my fellow LA area HBB friends. Hoist one in my honor in absentia.
We’ll have a blast. Bummer you can’t make it. I’ll have one you your honor.
Got popcorn?
Neil
Need 3 leave, I’ll have one in your honor as well. I was born where you live now.
DALLAS, Sept. 27, 2007 (PRIME NEWSWIRE) — The Board of Directors of the Federal Home Loan Bank of Dallas (Bank) has declared a dividend in the form of capital stock for the third quarter of 2007 at an annualized rate of 5.25 percent, which equates to the average effective federal funds rate for the second quarter of 2007. The third quarter dividend, applied to average capital stock held during the period from April 1, 2007 through June 30, 2007 and based upon operating results for that same period, will be paid on September 28, 2007.
On October 31, 2007, the Bank will repurchase the portion of members’ excess stock identified as surplus stock as of that date. Surplus stock is currently defined as the amount of capital stock held by a member that exceeds 105 percent of its minimum investment requirement. A member’s surplus stock will not be repurchased if the amount of surplus stock is $250,000 or less.
————————————————————
when money is now the issuance of capital stock, you best not be long the stock.
somebody may need to “update” the black box, if you think a correction is in the cards for this particular bank.
Writedowns coming?
this just smells really bad.
“…As part of its action today, the Finance Board also finalized a provision of the proposed rule requiring that the Banks declare and pay dividends only out of known income.
The proposed rule, which would have established a retained earnings minimum as well as a limit on member excess stock, was published in the Federal Register on March 15, 2006 and was open for public comment for 120 days following publication. The final rule will become effective 30 days after the date of publication in the Federal Register. The Finance Board intends to address retained earnings in a later rule-making….”
Federal Housing Finance Board Adopts Final Rule Limiting Excess Stock
http://tinyurl.com/yppnup
I doubt if it is in danger, since it is only one of 12 Federal Home Loan Banks. Whether FHLB Chicago can buy or merge with Dallas is a different story. The 10Q for June 30, 2007 shows a very profitable bank. The history of the bank is to issue a stock dividend then do a share buyback. “FHLBank of Dallas is focused on providing our members with access to competitively priced funds, while paying dividends at rates that are comparable with low-risk money market investments.”
While driving to work on the freeway today I was singing and noticed a large BMW next to me with the passenger on the phone staring at me. I was kind of embarrased so I let him pass and saw “realtor and sacramento” on the number plates. At which point I decided to try and catch up to him in my Ford and give him a smile. Unfortunately, with the popo on 680 you have to let things go and smile at the realtor as he speeds away.
What do you mean by “Large BMW”? Is that Web slang?
This is the third time in as many weeks that I have read “popo” on the web, and had never seen it before then. I can only conclude that some idiot comedian or celebrity coined the phrase recently and now Americans are doing their usual lemming thing.
http://www.urbandictionary.com/define.php?term=popo
Been around for a long time, humans do that.
WASHINGTON (AP) — Mortgage finance company Freddie Mac on Thursday agreed to pay $50 million to settle Securities and Exchange Commission charges that it fraudulently misstated earnings over a four-year period.
to whom?
The SEC said that the $50 million Freddie Mac agreed to pay will be distributed to shareholders injured by the alleged accounting fraud. The settlement with the company is subject to court approval.
that would be a federal court. or state?
SACRAMENTO, Calif.–(BUSINESS WIRE)–America First Income Strategies Fund, the first mutual fund company to open in the Sacramento area has selected Second Angel Bancorp’s Commercial Mortgage Fund as its first private mortgage fund investment. The Income Strategies Fund, based in Roseville, focuses on providing local investors low volatility monthly income.
and an angel appeared….
Glut: 5.1 million homes for sale.
WOW……..just WOW.
http://latimesblogs.latimes.com/laland/
And that does not even include the FSBO or the houses that people have taken off the market for lack of buyer interest.
All that “pent up” demand out there ought to take care of that in short order.
Hey HOZ,
just thinking about that 5.1 million number…………..
If we assume each house has a 60 frontage………..that means if they lined up side by side they would stretch for 58,396 miles.
hahahaha
(60 foot) frontage
Maybe we should start a “5 Million Home March”?
In catching up on HBB news while gone, somebody posted on newer cars being driven with significant damage. One of my sons friends has a quality body shop outside of Milwaukee and I asked him about this. His comments were interesting.
1) He is not getting the repair work, his business is not doing as well as normally. He is seeing the cars for estimates.
2) The car is not getting repaired.
3) The owners are receiving checks from their insurance companies for 75% of what his estimate is to repair the damage.
4) In Wisconsin, if you cash the insurance check without repairing the vehicle, the insurance company does not have to pay any additional costs.
5) The insurance companies are making a fortune from accident customers. If the customer takes her car for repairs initially, the insurance company is required to pay the bill. So a check for $4000 turns into a $5400 repair. But with fewer people opting for repairs and cashing the $4000 check, the insurance companies make out like bandits.
A simple observation from another HBBer that was verified.
Good work Hoz…
Welcome back~
That was me, thanks for the follow-up. This does not surprise me at all. As I’ve also previously mentioned around here, I’m a slug in the D.C. area. Yesterday afternoon for the first time every I passed up a ride home. The car had a big ‘rejected’ sticker in place of the state mechanical inspection sticker. I had seen one previously, as well; and also saw one while out bargain hunting at yard sales a few weeks back. Before two months ago, I don’t recall seeing any.
This thing is real, even when it’s different here, people are feeling the financial pain.
I’ve had a rejected sticker in VA before - it is not at all hard to get. In fact I think I’ve had two (??).
A sticker in your rear window (against VA vehicle code), a tire with a *little* too little tread, one side brake light out, etc. Or a PCV valve is sticky and you fail emissions inspection.
It can be annoying to get a rejection since the place that is convenient for inspection is not necessarily a good place for repairs. So with a trivial issue, you have to make three trips (one for failed inspection, one for repair, one for reinspect).
Can someone explain the stock market going UP UP UP UP UP. Who is buying as the volume seems light.
http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929
Goldman Sachs warns of spreading economic turmoil
Goldman Sachs has abandoned its ultra-bullish view of the world economy, warning of a likely recession in Japan and mounting risks that US property slump could spread to parts of Europe.
In a new report, “The Global Economy Hits a Crunch”, the US investment bank said it was no longer sure that Asia and Europe would be able to pick up the growth baton as America stumbled. It fears that turmoil is spreading beyond the debt markets to the factory floor.
http://tinyurl.com/yv62be
“warning of a likely recession in Japan”
So just how long is a “long time” in an economy?
Thanks for that. You know in 6-8 months we’ll be reading about how “savvy hedge fund manager Michael Rosenpenis saw the market denying the credit conditions and loaded up on the short side, thereby justifying his $100 zillion dollar fees for yet another year.”
Did I just wake up back in 2004?
http://orangecounty.craigslist.org/com/432875048.html
Join the 1% club of the wealthiest people on the planet. They’re called Real Estate Investor/Business people!
Yha, no person left behind. I think we should mandate that at least the average person be able to reach the 1% club.
this guy’s into everything..
The reply-to email is entrepreneurs@thegame.com
go to http://www.thegame.dom and then ’search’ entrepreneurs for the list of opportunities to get poor.
oops.. din’t mean to post a link, much less a misspelled link ..
samples..
Earn Extra Money Full Or Part Time From The Comfort Of Home.
This is a highly profitable homebased business oppertunity.
With $25 you can finance a small business in the developing world.
Franchise opportunity. Tubs, tile and countertops are worth thousands of dollars.
Bead Store & Jewelry Franchise. Low start-up cost.Great opportunity Birthday parties, Classes, etc.
Serious Entrepreneur Wanted Work at Home
..ad nauseum.
“‘The only solution to this whole housing mess is to get prices back down to where an average family can afford to buy an average home to live in,’ he said. ‘Why is that such a terrible goal to work toward?’”
True That!!