There’s Nothing Moving In California
The Union Tribune reports from California. “Home builder D.R. Horton has clamped down on public attendance and media coverage of a planned auction today of condominium units at two San Diego developments amid a growing national interest in its marketing strategy. ‘We are going to be closing the auction to the press tomorrow,’ said Michael Schack, senior VP of REDC. ‘We are only allowing registered bidders in. We are not allowing cameras, photography, press, media. It is not our choice.’”
“Earlier, Schack had said anyone could attend but bidding would be limited to registered participants. Schack declined to give a reason for the new restrictions but said they were the decision of D.R. Horton.”
“Builder Michael D. Pattinson, who heads Carlsbad-based Barratt American, contends that such auctions could cause consumers to wait on the sidelines for deeper price cuts.”
From NBC San Diego. “This weekend, there’s another auction, but this one has a twist. Fifty-three condominiums in North Park will be on the block. The units are not foreclosures; they are brand-new units…built by developer D.R. Horton.”
“The homes have previously been valued at $309,990 will have starting bids of $149,000. Bidding for units previously valued at $546,900 will start at $249,000.”
“Bob Green already lives in the La Boheme units in North Park. He said he has mixed feelings about the auction.”
“‘The gut reaction of course is I don’t want my unit to be devalued because of it. That’s my gut reaction. But I also understand that there’s nothing moving in this market place,’ Green said.”
The Sierra Star. “Scott Runtzel is a local broker who is also a licensed appraiser and has worked on the lending side of the industry. Runtzel gave several examples of how the mass of foreclosures are affecting local Real estate prices.”
“‘There is a beautiful three-bedroom, two-bath house listed in the Yosemite Lakes Park area for $325,000,’ he said. ‘But just around the corner is a three-bedroom, two-bath foreclosure house, listed at $233,000. Which would you choose?’”
“Runtzel said he also has a four-bedroom, two-bath home, with a two-car garage, horse arena and five fenced pastures in Raymond. ‘It has been on the market for $760,000,’ Runtzel said. ‘It went into foreclosure, and I now have it listed at $544,900 with no offers yet.’”
“Runtzel said some houses will go for a ‘fire sale’ compared with what they would have cost two years ago.”
“‘It looks bad now, but it is going to get a lot worse,’ he said. ‘I’m not sure what some of these people were thinking, but the two-, three-, five- and seven-year ‘teaser’ mortgages all have escalating payments. We have seen the foreclosures for the two- and three-year escalations but the five- and seven-year ‘teasers’ have yet to hit. This is just the tip of the iceberg.’”
“Nevertheless, Runtzel said all of these foreclosures do not mean the real estate market is unhealthy.”
“‘When you get a flood of foreclosures on the market it does have a slight tendency to bring the overall market down,’ Runtzel said. ‘However, this is still a healthy market. The market in 2001 to 2003 was abnormally high. The market today looks bad, only if you are only comparing it to that abnormal high.’”
“Linda Cavalla, trustee sales officer for Chicago Title, said she has seen a huge upswing in the local foreclosure numbers. ‘We used to open an average 25 foreclosure proceedings a month for our company,’ Cavalla said. ‘Since last October that has been increasing, and we now open at least 35 to 70 each month. We have been quite busy.’”
The Sun Post. “Housing speculators share the blame for a growing portion of the foreclosures in Manteca. In August, 41 percent of the Manteca homes sold at courthouse foreclosure auctions were owned by people who never lived in them, according to an online foreclosure tracking service.”
“According to the service, the foreclosures on investor-owned properties have skyrocketed since four months ago, when just 5 percent of the houses sold at auction were owned by people who did not apply for a tax break available only to those who live in their houses.”
“Deborah Romero, a loan officer in Ripon, said she looked at auctioned homes in Manteca during the first two weeks of September and found only 16 percent where the billing address for the mortgage did not match the address of the home. However, Romero said she wouldn’t be surprised if another 10 percent had lied about their residence.”
“The national Mortgage Bankers Association’s chief economist, Doug Duncan, blamed investors for fueling excessive home building and then walking away from their bet.”
“‘Rapid price appreciation attracted both speculators and home builders, a volatile combination that led to an over-supply of homes,’ Duncan said. ‘When this over-supply became apparent and prices began to fall, many of these investors simply walked away from their mortgages.’”
“Besides the real estate agents and mortgage companies that have been stung by the rising foreclosures and falling home sales, sellers of big-ticket items — such as furniture stores and car dealerships — are also seeing a downturn.”
“The problem, according to local retailers, is that buyers relied on rising home prices and easy access to borrow cash from home equity lines of credit to make big purchases. Forced to operate on a smaller budget, those people are sticking to the necessities.”
“Sam Guedoir, owner of Century Furniture in downtown Manteca, who has run the furniture store since 1995 out of a building he owns, says his sales have been down significantly during 2007. He’s been forced to sell furniture at lower prices to ride out the slump.”
“‘I usually work on clearances — try to make stuff more affordable for people,’ Guedoir said. ‘We’ve started selling more small-sized furniture because people are moving back into apartments.’”
“‘We have left most of our eggs in one basket,’ Guedoir said. ‘Manteca is in many ways a bedroom community. If the bedroom is affected, the whole community is affected.’”
“Car dealers face similar problems, even though their business is not directly related to having a place to live. Mike Naranjo, who runs a used-car dealership, said his business has performed ‘just like the housing market.’”
“His sales are down 30 percent, he said, the worst sales clip he has seen during his seven years operating the dealership. ‘I’m just trying to squeeze,’ Naranjo said. ‘What would you do? Get a car for $2,000 or make your house payment?’”
From KCBS. “Residents in East Contra Costa County, which is considered the center of growth in the East Bay, are worried about what the next two years might bring for homeowners.”
“Foreclosures and delinquency notices have been making life miserable for many homeowners in east Contra Costa who thought they were riding the coat-tails of a booming housing market.”
“‘It’s true that Contra Costa is probably the worst region in the Bay Area,’ said economist Christopher Thornberg. ‘In a large part it’s because of those new housing developments that have been forming here over the last few years.’”
The Daily Bulletin. “A softening housing market cost the county $70 million in anticipated property tax last fiscal year, and county officials are concerned that it could cost millions more this year. Property taxes represent about 60 percent of the county’s discretionary revenues, and brought in $2.39 billion for 2006-07, according to the county CEO’s office.”
“But that was $70 million less than expected, Supervisor Gloria Molina said this week. And the county is bracing for another hit, said Molina spokeswoman Roxane Marquez.”
“‘The big question is, what will be the magnitude of the hit?’ Marquez said. ‘Will it mean that we just don’t enhance services? Or does it mean we have to cut services?’”
“As home values in the county continue to decline, a wave of homeowner-requested property reassessments could result in a similar shortfall for fiscal year 2007-08, which began in July, officials said.”
“A wave of reassessments is already on, as property owners are ‘lining up’ at the Assessor’s Office, county CEO William Fujioka told the supervisors Tuesday. Many are seeking to have their home values reappraised to bring them in line with the declining market, he said.”
“Property-tax bills are also based on the previous January, Assessor Rick Auerbach noted, meaning that people’s property-tax bills will not go down, and their home values will not be reassessed down, unless the homes were cheaper in January 2007 than their October 2007 property-tax bills show.”
“‘The housing values in L.A. County didn’t start changing much until after January,’ Auerbach said.”
What do you have to hide, D.R.?
“Home builder D.R. Horton has clamped down on public attendance and media coverage of a planned auction today of condominium units at two San Diego developments amid a growing national interest in its marketing strategy. ‘We are going to be closing the auction to the press tomorrow,’ said Michael Schack, senior VP of REDC. ‘We are only allowing registered bidders in. We are not allowing cameras, photography, press, media. It is not our choice.’”
“Builder Michael D. Pattinson, who heads Carlsbad-based Barratt American, contends that such auctions could cause consumers to wait on the sidelines for deeper price cuts.”
What exactly is DRH hiding - except the obvious bad market.
Does anyone have thoughts on the best way to figure out the auction results?
Check out the relevant DR Horton / La Boheme thread on piggington.com. My neighbor had signed up to go and I just asked him how it went but he said he backed out at the last minute when he realized how high the HOAs were - $350 plus for the smallest unit I believe.
Hard to justify that when his rent is $850.
Link: (there’s already over 100 comments but no one’s back from the auction yet)
http://piggington.com/la_boheme_north_park_dr_horton_public_auction
You know some blogger will spill the beans.
I’m incredibly curious to know how many units didn’t sell.
But with that HOA… its just knife catchers. But that is ok. We need comps.
And LA will follow San Diego with a time lag.
Got popcorn?
Neil
If you actually visited the area, you’d know it’s more like chainsaw catchers.
plasma-cutter catchers?
you guys talk about high taxes in the Northeast but we aren’t dumb enough to pay $350/month on HOA fees.
I’d rather have cops and good schools for my taxes than a min. wage gate security guard and condo board nazis for an hoa fee.
That blog was a riot! Newbie got chewed up and spit out. I loved the comment from Herewego to drunkie: “Now, now, I hear the lights of tijuana are most impressive.” Touche!
Try this:
http://tinyurl.com/3xmyta
Wow, thats a median price drop of 31 %.
so who wants to be magic person to put Ron Paul over the top tonight? Check out history in the making!
http://www.ronpaul2008.com
We are going to be closing the auction to the press tomorrow,’
you gotta think that at least 10 reporters are gonna “register” and “qualify” and sneak in as buyers.. which makes me think this is just another advertising ploy to get even more coverage than usual.
No reporters alowed.. we want to do it in secret.. yeah.. sure.
“Bidding for units previously valued at $546,900 will start at $249,000.”
Hey, they aren’t going to give them away, you know. Seriously, most Americans have most of their “wealth” tied up in their house. This has got to feel like a punch right in the gut. But I’m sure it won’t affect consumer spending. Ha ha.
I bid $ 249,000.01 and not a penny higher! Also, can I have some of that 3% financing with a 50yr payment with a full furnishing of furniture and you take care of the HOA fees for the first 10yrs. Also, that is with all the upgrades…right.
Aladinsane,
What part CA do you live in?
Just the other side of nowhere…
Comps, i.e. Comparison
The real death knell to the housing bubble~
“Bob Green already lives in the La Boheme units in North Park. He said he has mixed feelings about the auction.”
“‘The gut reaction of course is I don’t want my unit to be devalued because of it. That’s my gut reaction. But I also understand that there’s nothing moving in this market place,’ Green said.”
“‘There is a beautiful three-bedroom, two-bath house listed in the Yosemite Lakes Park area for $325,000,’ he said. ‘But just around the corner is a three-bedroom, two-bath foreclosure house, listed at $233,000. Which would you choose?’”
Ummm………..uh………………..
Give me a minute, I’m thinking!
Sorry you took to long. There is a wonderful 4 bedroom, three bath with a pool around the corner from that corner for 195,000. now hurry up before the one around the corner from that corner goes for …..
Runtzel said. ‘However, this is still a healthy market. The market in 2001 to 2003 was abnormally high.
‘The market today looks bad, only if you are only comparing it to that abnormal high.’
- Wake up Mr Runtzel! Juan Six Pack can hardly remember last night, let alone trying to remember “comparing it to that abnormal high.’
What a jackass.
And the economy looks great … compared to the Great Depression … for now.
And employment is great.
As long as you ignore all the 1099’s looking for work. But hey, they do not get unemployment insurance.
Got popcorn?
Neil
“When you get a flood of foreclosures on the market it does have a slight tendency to bring the overall market down”
Gee, ya think? And a “flood” causes only a “slight tendency”?
Hey Spike,
Don’t know if you’re still roaming…caught your post on BB. I’m parked in USAA too.
Best,
Leigh
It’s very telling when the last avenue available to off houses & condos for the homebuilders, is the dodgy auction route…
They have just this one last way out, and then it’s game over.
And too many people are hep to what these auctions are really all about, thus the subterfuge…
?? did rentx = ever over 130= price… in the last late 80’s boom?
my hood is still 180to 195 x times rent
I would say yes, prices in 1990 were in some places more than 130x monthly rent. Not much more, though. Can’t think of any evidence that they were ever over 150x rent. And if they were over 130x, it didn’t stay that way for long, did it.
Another question. When you calculate the rent-to-own, do you count the whole price of the house or just the mortgage?
Forgive me, I’m from Sacramento so I don’t understand the question. How could the price of the home not equal the balance of the mortgage?
Count the mortgage at the actual mortgage interest rate. Count the equity at the rate you would be receiving on tax-free bonds if the down-payment or the equity were invested in tax-free bonds instead of in a house.
Don’t forget to add property tax, insurance, HOA (if any), and average maintenance/repair cost.
Of course if you are calculating price/rent ratios as in the discussion started by “flat,” count the whole price.
Anecdotally: still watching Morro Bay. Just now I went through the 75 listings under $1M there, and found two sellers were so proud of the rents they collect that the rents were published in the ads, making a price/rent calculation possible…the seller at 540 Avalon Street is asking only (???) 250x rent, and the one at 2836 Fir Ave is asking only 470x rent. Maybe I oughta bid 130x.
“‘It looks bad now, but it is going to get a lot worse,’ he said. ‘I’m not sure what some of these people were thinking, but the two-, three-, five- and seven-year ‘teaser’ mortgages all have escalating payments. We have seen the foreclosures for the two- and three-year escalations but the five- and seven-year ‘teasers’ have yet to hit. This is just the tip of the iceberg.’”
Old school term: Balloon Payment
New school term: Teaser
*Repost for the weekend crowd*
ATTN CALIFORNIA RENTERS & OTHER INTERESTED PERSONS
If you have suspicions regarding a landlord who may not be reporting rental income on his/her property, please call this toll-free number to place an anonymous report. The more information you can give the better: CA State Franchise Tax Board Tax Fraud hotline: 800.840.3453
This also applies to property owners who are renting out individual rooms in their home.
Thank you.
~Misstrial
Edited to add: Please note that you do NOT have to be renter to anonymously report suspect activity to the FTB.
I respect your intentions here, but lets consider that the income tax is unconstitutional and that the government is corrupt. I know you pay your taxes because of the threat of the IRS, but the government is breaking the law by collecting these taxes from people outside of DC and US territories. If they are caught so be it, but don’t be an agent of government corruption.
I agree. I also thought the spamming had been stopped.
Timely post. I caught this on the local access channel last night. Ron Paul represents during the second hour. Sorry if it’s been over posted here before, but I hadn’t seen it. Very eye-opening to me.
Aaron Russo’s America: Freedom to Fascism
http://video.google.com/videoplay?docid=-1656880303867390173
Nope - the income that was originally (and still is lawfully) the only taxable income is passive income - rental receipts, interest, dividends…
It is the taxing of wages that is unconstitutional.
“Neither the U.S. Supreme Court nor any other Federal court has ever ruled that any Federal income tax imposed under the Internal Revenue Code of 1986 is unconstitutional.”
..and according to the Constitution, only the courts can decide what is constitutional and what isn’t.
The issue is not whether some tax (in this case, the IRC) is “constitutional”, but rather, to whom it applies and who is “required” to pay the subject tax.
My state taxes are constitutional, but I bet you don’t pay them.
It’s a tale of 2 Inland Empires, north and south…
The closest, cheapest alternative to either San Francisco or Los Angeles, for fools to “invest” in.
Oh well… SF in particular, needed a smug enema in the worst way.
“Housing speculators share the blame for a growing portion of the foreclosures in Manteca. In August, 41 percent of the Manteca homes sold at courthouse foreclosure auctions were owned by people who never lived in them, according to an online foreclosure tracking service.”
“smug enema”
Good one!
And not a moment too soon for the Alt-A Bay Area.
This place was unbearable during the dotcom shenanigans and then it peaked again in 2005/06.
Thankfully, in polite circles here in the Alt-A Bay Area, former Kool-Aid drinkers bring some rational perspectives these days.
Others? Well, not so much.
But at least the enema has begun.
lol
I live in the bay area and would love if you would get here and give that smug enema. this place is crawling with entitled yuppies. HELP!
Enemize away! Just make sure none of the overflow splashes up our way (S. Oregon). We have had enough of the eternally superior SF types for years….
“The national Mortgage Bankers Association’s chief economist, Doug Duncan, blamed investors for fueling excessive home building and then walking away from their bet.”
Translation:
Doug Duncan, Pit Boss for the M.B.A., is pissed off because the gamblers welshed on their bets.
I wonder who promoted and dished out the 100% LTV liars loans that enabled the investors to place bets with somebody else’s money
They should let the mob be the mortagage enforcers. You would know who the gablers are by the broken arms and leggs.
“‘The big question is, what will be the magnitude of the hit?’ Marquez said. ‘Will it mean that we just don’t enhance services? Or does it mean we have to cut services?’”
Let’s get into our time machine and travel back to…oh…95.
How were the services then?
Why does this question always come up? Because they allowed developers to skate on all the infrastructure, hoping the tax revenue would pick up the slack? Yeah, that’s a good plan.
Exactly. There is no excuse to provide worse service than say… 2000. Do they need to cut? Do they need to re-prioritize towards the expenses that the middle class cares about? Yes!
Police, Fire, transportation (roads, busses, anything to stop the time tax of the commute), schools, parks, etc.
In other words, get back to a “everyone sings for their meal” economy. I know… a dreamer. But we cannot afford to pay for all the retirees unless we bring a lot of the idle back into the workforce.
Oh wait, isn’t that why they let people invest their 401k’s into real estate.
Got popcorn?
Neil
Neil,
You forgot the many, many perks that were given to government workers in the last two bubbles, including some pretty decent retirement packages.
Local governments spent way too much on their employees, and they will be saddled with long-term commitments.
Yes, CA gvt employees have platinum-plated benefits and retirement plans, mostly all approved during the heyday of the dotcom era. Arnold tried to trim them back and was met with near riots from the unions. Now that the RE gravetrain has derailed I have no idea what The Terminator will do to appease the greedy unions this time.
ler
I was shocked to hear the govt benefits for someone in my similiar civil engr position. If I max out my 401k and Roth IRA at my highly paid job, the retirement plan at the normal govt paid job beats this. They pay some rediculous percentage of your highest pay during the time you worked there. I can’t believe any of that will be available to those who retire in 30-40 years.
I think there is so much govt to cut its insane. And some of the plan check departments we go through don’t have enough people and are actually trying to get us to do part of their work for them. What is wrong with these places? Stop hiring the lowest of the low.
I’m a State gov’t employee (not in CA, unfortunately). When I was younger it was part of my financial planning to get a gov’t job, work for 20 years and retire with a pension. We all have choices. I chose to avoid the corporate world to make less income in return for the pension in the future.
Hey Neil! How the outing go?
BTW, I wholehearedly agree with every word.
Best Leigh
How about a European housing bubble thread? I hear the UK, Spain and Italy have bubbles that dwarf ours. I also read about some of the former Soviet satellite states had RE prices increase double digits each month.
I wish there was a downunder HBB for Aus/NZ. On the other hand, the lack of any such blogger community seems to be why things have gotten so far out of control. People here are incredibly naive. “It’s different here.” I know it will end badly, but when? Unlike the US where big comfy houses can be rented, the largest rental house is usually an older 3/2, unheated, and costs upwards of $400 a week to rent.
I have just started one here in Australia…………e-mail me at john.doylenet@bigpond.com and perhaps we can do a combined AUS/NZ situation.
I’d also like to comment on the real estate market in Australia. I actually was there for six months in 2005. My husband and I were planning on buying property. I can’t tell you how frustrating a process it was. Information was not nearly as transparent as here in the states. It is definitely a “Buyer Beware” attitude and everyone just accepts this. Prices are ridiculously high yet everyone there thinks that this is o.k. because property never goes down. It took me a long time to figure out why this attitude is so pervasive. It’s because property is the one thing that people generally aren’t taxed to the hilt in. Also people are brainwashed with the whole “Negative Gearing”.
Also, the auction process is just awful. The realtors are worse than those here in L.A.!!!
Thanks for your comment,LA-A. Yes, like California, a larger price/income ratio seems to have become institutionalized. There have finally been some declines in the prices of small Auckland condos, so declines can happen. But who knows what a “normal” price/income ratio will be when it is over?
I am moving to Melbs, Aus and would love any info on housing and rental markets
There are 3 building contractors living on my street and a guy who supplies contractors with equipment and spare parts service (cement mixers). The other 3 are electrical, plumbing, heating and air conditioning contractors. In the past 5 years, I’ve seen them buy “toy” after “toy”. R,V’s, boats, ATV’s, dirt bikes, Harley’s, etc, because business was booming. Actually, they are all nice guys and they bought their houses long before the boom began so they didn’t make their money flipping or speculating. They are simply average Joe America who were making good money and indulged their fantasies and bought what they liked. So, I was walking my dog last night and I asked one of them how was he doing work-wise. He said business was totally dead. He was still surviving financially because he has a couple of contracts to complete but he then said that the other guys who are contractors have NO business. Zero business. One employed four workers. He has let them all go. The electrician is also finishing off one more contract for a new house but has nothing in the pipeline after that. Then I stopped to talk to the guy who supplies contracters with equipment and spare parts. He said EVERYONE he usually deals with is dead in the water and he’s having trouble collecting bills off people he supplied. They are asking for 90 day extensions.
Why am I relating this? Well, you can be sure the government (especially THIS government) is going to put the “fix” in where the unemployment numbers are concerned and make them sound better than they are but the truth is, unless a magic fairy appears and waves her magic wand - we are going into a recession AND it ain’t gonna be pretty.
Mike,
I think you make a great point that the problem is not “all about” the mortgages. Extrapolating from yout comments, one could see a lot of people put in financial straits simply from their belief that the party would go on. Suppose that these contractors had already paid off their homes. The bills from the “toys” and lifestyle are likely to continue even after their livelihood dries up. That will force these individuals to look for sources of income, including the sale of their home. Your story hits the point about the economy tanking due to the fallout from the mortgage problems.
Thank you for posting.
Thanks for the anecdotal evidence- I enjoy these posts a lot. This sort of information is much more reliable than some bloated talking heads TV diatribe.
Those guys are contractors not employes, they wont be listed as unemployed. They cant get unemployment pay and dont count to the goverment. The undocumented workers are in the same boat.
I’ve had it up to here with all the B.S. Orwelian language, one has to hear nowadays…
“‘The big question is, what will be the magnitude of the hit?’ Marquez said. ‘Will it mean that we just don’t enhance services? Or does it mean we have to cut services?’”
Nothing is moving around here. The guy down the street that put his house up in May re-listed it twice and finally decided that a fresh coat of paint would do the trick. Now it’s a giant ugly beige POS.
As a Canadian watching this housing price collapse I was wondering…If house values have fallen, lets say 5% to 10% on average across the States; and since most Americans don’t “save” as such but rater “invest” in “assets;” and since the value of their “assets” has now fallen; surely this has got to have a significant down stream effect on US wealth and spending…so how come consumer spending is so rebust? Are people just whistling past the graveyard or is htere some other major factor at work here?
By the way, I love your site. Keep up the good work.
’so how come consumer spending is so rebust? ‘
- Northern Neighbor, they are using credit cards.
I am also amazed at the number of teenagers throwing money around at the malls!
real estate is a slow business.. when the momentum shifts, changes are not immediately reflected in the economy and usually don’t appear for years.
This time around there were a few quickly apparent effects, mostly due to the popularity of mortgage backed securities and the faulty ratings thereof, and the stock market, being an extremely efficient market, reacted instantly.
But most of the RE fallout is still floating way up in the stratosphere and it’ll be some time before consumer spending chokes on it..
I wondered the same thing. I think SoBay is right. The other night in the express line I noticed the guy in front of me using a Mastercard to pay for his meager groceries, some bologna, bread, some orange juice. I wondered who would do that? Then I thought about the state of the economy and thought, who isn’t, (except, well… me). It’s kind of like the meth addict neighbor that I used to live next door to. I kept calling the cops on him and he kept bailing himself out of jail. I thought eventually he’d run out of money or credit or whatever he was using to post bond. It took 2 years and I had already moved! It’s just amazing how long people can keep their heads above water…robbing Peter to pay Paul can buy quite a bit of time.
“I wondered who would do that?”
I would. On average I carry about $20 in cash. I don’t like to carry my debit card around. I use my (low credit limit) cc for just about every purchase. I pay it off weekly.
Who would pay cash? I like making money off my credit card companies, thank you very much.
wittbelle…..why pay cash at all? If you get a cashback card (such as Amex), and pay off the transactions on time every month, you don’t pay interest and you actually make money off them! I made 222.00 off Amex this year…didn’t pay a red cent in interest either. They don’t like customers like me….so they always send me offers for cards that are much worse: no cashback, yearly membership fee, etc.
I just ran end-of-month numbers for Butte County, CA; Chico closings down 60% month over month. Can’t wait to see national September numbers.
If I was a little more crass I would say we have witnessed Butte crack.
Good thing you are not that crass.
My guess……………..they will really suck, but will probably send stocks higher…………….why?………….well who knows.
since the stock market is now going up on both bad and goods news, there is no reason for it to go down at this point. Also if they really are going to cut the rate again, then it will definately go up. I bet it now goes to 15,000 or 16,000 before it starts to actually crash. Isn’t that kind of how it went in the great depression? It went down for a period, and then came back even stronger and then bam! bam! bam! oh sorry i am eating.
I think there are only a couple of events that can make it crash before that point. 1st: a major earthquake in the Los Angeles or SF area under a major city. 2nd: Some war out of nowhere. 3rd: some really crazy weather in the US.
the full effects of the lender pullback are beginning to be felt….
Sept is the first full month of the credit crunch
have rents in any markets gotten to 130th of the local SFH price ?
still running about 180+ in my hood
Flat, the question to me is: 130th of what price? Right now, in my fancy neighborhood in LA, there are 4 SFH’s for rent, not counting the condos. The SFH’s all have an asking price of btw $4,600 and $4,900. That would make the houses worth somewhat above 600K. No house has gone in this particular microcosmos for less than 1.3 million in a long time, and the lowest for sale asking price I have seen listed is $1.399. The funny thing is those places are not even renting. One of them has had a sign since before the summer. Just last week I stopped by a newly advertised rental. They had lowered the price to $4,600 and that was for a very basic 2bed + den. Renting is much, much cheaper than buying, but (maybe due to the much vaunted “psychologic” effect), it still seems to me too expensive to even rent. For the moment, I’m staying in my rented condo until someone kicks me out :-).
OT, but a good article.
There’s No Inflation (If You Ignore Facts)
http://www.msnbc.msn.com/id/21047604/site/newsweek/page/0/
Yes, houses went up 300% for no apparent reason and there is no inflation in this “Great” country …
First bank goes belly up. Get ready for a run on the banks. Couldn’t believe this didn’t get more attention. HOpe you didn’t banks with these guys. Remember to keep your deposits under 100k in any bank per FDIC rules.
http://www.netbank.com/
FDIC rules state that in fine print, your money is insured.
BUT in the fine print…they do NOT have to GIVE it to you for a minimum of 7-10 yrs. I forget which, Either one would put a dent in your wallet for a long time.
Yep it is insured, but they don ‘t have to GIVE it to you. It is Safe in THEIR bank.thank you.
the FDIC has never failed to cover a failure in hundreds of cases .. nobody would allow it to happen.. nobody would allow there be even a hint that FDIC would take a long time or fail to cover.. To do so would be economic suicide.
Netbank’s deposits which are above FDIC limits were tiny and will be covered by the assets of the failed bank. This part may take some time as assets are sold off. The rest has been taken over by another bank, and it’s business as usual for netbank’s customers.
the only thing to fear is fear itself.. Well, in this case, lets just say that fear is as likely to cause people to do something really stupid, which can kill ya as quick as anything else.
netbank has .. had.. only $2.5 billion in assets ..
Wells Fargo bank has something like $500 billion, but i think this number only accounts for the Wells Fargo Capital division.
CNNMoney:
(FSB) — After NetBank Inc. was shut down by federal regulators Friday, the founders of Applied Cognetics feared it could force their young firm into a cash crisis.
Applied Cognetics, a software development and online marketing firm based in Brooklyn, N.Y., has about $1 million in deposits in NetBank….
http://tinyurl.com/362sqw
Cognetics.. cool name.. I guess the name’s root is the word cognition..
Cognition: The process of knowing.
We gotta go up to bearman’s post where it says “Remember to keep your deposits under 100k in any bank per FDIC rules.”
Assuming the brains at Cognetics, which no doubt skated past the MENSA entrance exams.. may have aced a couple.. parked $1 million in Netbank and maybe 900K is not covered by FDIC, well.. wtf am i supposed to say? Were they trying to squeeze that last drop of return from the money? They just too busy to spread it around a little? hmm.. my daddy used to tell me if i got nothing nice to say, keep your mouth shut.. and i’ve said enough.
FDIC is insured with money in THEIR bank. In the fine print, the money doesn’t ever have to be released for a minimum of 7-10 yrs. which would put a dent in your/our wallets.
That article from the Sierra Star (my father co-pioneered that newspaper or at least gave it the name) is encouraging. Home and land prices in the mountains of Madera County have been insane for too long. It’s on my short list of places where I hope to buy up land and put a house on.
(Los Angeles, CA) — As the value of Countrywide Financial stock fell, Chief Executive Angelo Mozilo reportedly cashed in stock options valued at 138-million dollars, while his shareholders watch the value of their stock plunge in value. The “Los Angeles Times” reports Mozilo and other Countrywide executives are already the target of shareholder suits that claim they misled investors about the company’s financial condition. Severely impacted by the mortgage-loan crisis and the slump in the housing industry, Countrywide has announced the layoff of 12-thousand of its 54-thousand employees. It’s stock is now trading at 19-dollars a share, down from 45-dollars eight-months-ago. Countrywide executives say Mozilo did nothing wrong in cashing in his stock options.
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Couldn’t happen to a nicer guy! LOL
This entire housing (asset) inflation, I believe, is based specifically upon the argument that the prices will go up. The home owner and the end purchaser of the mortigage instruments (CDO, MBS) would not have gotten involved, otherwise. So, who was selling this line of bull! Guess what, it was the realtors. Everyone one making a fee was along for the ride since they were not exposed. Unfortunitely, as we have discovered, they thought they were off the hook, however some of these parties (banks, loan companies) will be stuck with part of the bill because of their stupidity.
So, as I said, the Realtors are the primary cause. The enblers, MSM sold their bull to the public. As a member of the public who does not pay attention to housing (average time in a mortigage is 7 years) relies on the public media and friends as to what is going on.
If I hate anyone, its the realtors.
If I am wrong, please let me know without being snide!
“Car dealers face similar problems, even though their business is not directly related to having a place to live. Mike Naranjo, who runs a used-car dealership, said his business has performed ‘just like the housing market.’”
I quit taking the shortcut to the mall, by walking through a car dealership’s car lot, because lately I’ve been approached by desperate salesmen, who see me as a potential customer!
Bank urged to cut rate by half a point
THE Bank of England’s monetary policy committee (MPC) is being urged to cut interest rates this week to head off a sharp slowdown in the economy.
http://tinyurl.com/37y4b7
The Fed has forced their hand…
“Nevertheless, Runtzel said all of these foreclosures do not mean the real estate market is unhealthy.”
WTF!
Recent bank owned sale - Lincoln crossing (Sac): 380k for almost 3100 sq ft., no mello-roos http://www.centexhomes.com/Sacramento/356458_Plan.html, currently priced by Centex at $497k. I know the buyer personally, went to go look at the model just for fun. The place is huge, when it becomes more affordable, we’ll definitely buy in that area.
From the LaTimes: Countrywide CEO sold big as stock dropped.
Quick changes in Mozilo’s trading plan raise red flags, experts say. The mortgage firm says the sales were in line with company policy.
http://tinyurl.com/2ry7p3
possession is nine-tenths of the law…
Sounds like the hi-tech executive stock sales in 1999, 2000. The little guy ends up holding the bag again.
I remember those days. The C suite guys talk a line of …. spending money on perks like mad and the programmers burn up 60 hour work weeks — and are laid off for their efforts while the CEO drives off in his Porsche.
Wow. Manteca? Ripon? Yosemite Lakes? These are nothing but speck sized towns and exurbs. The bust is really spreading to every corner of California. Interesting to see how this news is not just housing related, either… other business people are getting pinched.