From Times Of Craziness In California
The Ledger Dispatch reports from California. “For the past three months, Pine Grove resident Michael Scott has been pretty picky. He and his fiance have started to search for an Amador County home to permanently call their own, but it has been a slow process. ‘We’re trying to find the perfect situation both price wise and something that fits both of our needs,’ Scott said. ‘We’re not in any kind of hurry; we’re trying to be patient.’”
“In the last few years, 40 percent of transactions were non-owner occupied or second homes, according to John Bonfiglio, the owner of Argonaut Mortgage Inc. ‘As far as Amador County goes, we definitely have more inventory,’ Bonfiglio said. As a result, buyers have more choice and are subsequently more cautious when selecting a home for purchase.”
“Currently, the buyer’s market includes more affordable housing with some property in the centralized cities of Amador County being sold for under $300,000, Bonfiglio said, which means great opportunities for first-time buyers.”
“‘It’s not a terrible market,’ Bonfiglio said. ‘It’s just things take longer now because we’ve just come from times of craziness. The market was superheated in the last several years and now things have slowed.’”
The North County Times. “San Diego County’s economy hit an unfortunate milestone this summer: job losses in construction and real estate pushed the local unemployment rate above the national rate for the first time in seven years.”
“In California, construction and real estate represented just over 8 percent of the jobs in 2006 and 30 percent of the jobs gained since 2002, more than any other state. ‘No other state came close to California’s reliance on real estate as an engine of growth,’ University of California, Los Angeles, economist Ryan Ratcliff noted in a recent report.”
“On top of that, the San Diego region relies on construction and real estate related jobs more than the rest of the state, according to figures from the state Employment Development Department.”
“In the first six months of this year, 36 percent of all mortgages were orginated in San Diego County required borrowers to pay only the interest or actually allowed the debt balance to increase each month, according to First American.”
“Out of those, the share of such ‘alternative’ mortgages in the San Diego region that were at risk, two months delinquent or heading into foreclosure, was 19.5 percent, just under the Riverside/San Bernardino area and less than Stockton and Sacramento, Chris Thornburg, a principal at the Beacon Economics consultancy, found.”
“In San Diego County, the volume of foreclosures per month has tripled over the past year, according to Default Research Inc. However, the rate per capita over the last four months here is half that in Riverside and two-thirds that in San Bernardino counties.”
The Voice of San Diego. “Local economists are growing increasingly concerned about the effects of the slumping housing market on the health of the general economy, as real estate and construction sectors continue to contract payrolls and consumer confidence dwindles.”
“But of greater concern, they say, is how amorphous the trouble is; government payroll data could only be showing part of the unemployment picture.”
“Among those factors: an assumption that much of the region’s construction work was completed by undocumented day laborers. But more significantly, they consider the fact that self-employed workers greatly populate many real estate related professions.”
“‘Independent agents are probably still considering themselves employed,’ said Kelly Cunningham, chief economist for the San Diego Institute for Policy Research. ‘But if they haven’t had any income for a while, are they still employed?’”
“There were an average 5.81 transactions per San Diego Association of Realtors member in 2000. That figure has dipped to about 1.59 transactions per SDAR member this year, a 73 percent decline. ‘That’s probably not showing up in job loss,’ said local economist Alan Gin, professor at the University of San Diego. ‘They have lost in terms of income but they’re still employed.’”
The Orange County Business Journal. “The outlook for business growth in Orange County for the fourth quarter hit a four-year low, according to California State University, Fullerton’s quarterly business expectations survey.”
“It marks the third straight quarterly drop in the index, and the first time since the 2003 start of the Iraq war that sentiment has dipped below the 50 mark.”
“Survey respondents ‘are more uncertain and fearful,’ said Anil Puri, dean of the College of Business and Economics at Cal State Fullerton.”
The Orange County Register. “Market watcher Steve Thomas at Re/Max Real Estate Services in Aliso Viejo notes the impact of distressed properties in his biweekly summary of housing supply.”
“‘After finding a new way to search for short sales and foreclosures on the market and in escrow, the new findings are disconcerting. Currently, short sales and foreclosures in Orange County account for 12% of the active inventory and 15% of all escrows opened within the prior month.’”
The Press Telegram. “Chances are, if you are a seller, you aren’t ecstatic with either the time it’s taking to sell your home, or the prices you are being offered.”
“It’s a buyers’ market. Some sellers are content to wait things out. Others continue to drop the price on their home to get it sold.”
“But one home seller thinks the down market has little to do with the problems he’s had with selling his home. James Hobelman has a newly remodeled, spacious four-bedroom home atop Signal Hill, a hotbed of real estate activity for the past few years.”
“But Hobelman’s home has been sitting for several months, and he’s had no offers on it. He believes his Realtor is partially to blame. But the agent’s real estate firm has a solid policy prohibiting sellers from breaking their contracts.”
“Hobelman’s agent, Mike Murphy says he’s held seven open houses for Hobelman, and that he’s given the home top billing in brochures, spending thousands of dollars on advertisements and brochures that were in color.”
“He’s also had to put up with Hobelman adjusting the price on his home at least four times, an action that can turn off buyers’ agents by making them suspicious of the sale, Murphy said.”
“Experts say they see growing frustration from some sellers, which is why more agents are starting to turn down listings they think they may have trouble selling in a down market.”
“‘What we’re seeing more is the agents are being a lot more careful in qualifying the seller,’ said Colleen Badagliacco, 2007 president of the California Association of Realtors. ‘Many are turning down listings. There’s no amount of balloons or open houses or banners that can create a sale for a home that’s either overpriced or not meeting the market.’”
The Mercury News. “A red banner stretches across the block wall encircling Paseo West, beckoning bargain hunters into the brand new subdivision a 90-minute commute from Silicon Valley: ‘Anderson Homes AUCTION, 34 New Luxury Homes MINIMUM BIDS from $285,000.’”
“One-third of the houses in Paseo West will go on the auction block Saturday, houses that are sitting eerily empty in tidy rows along newly paved streets, houses that wouldn’t sell even though Anderson Homes cut prices by $100,000 and offered free granite countertops and big screen TVs with surround sound.”
“‘What was that movie? ‘Pleasantville?’ Where everything looked so nice?’ a man within the walls of Paseo West asked. ‘It’s like that,’ he said, then paused. ‘But no one lives here.’”
“When the windy autumn days turn to night, lights flip on in two dozen scattered houses in Paseo West. There, anxious homeowners, many of them Silicon Valley refugees, are staging a revolt.”
“The homeowners, like customers who spent $600 on the first iPhones, are demanding rebates. ‘It’s going to leave us - I can’t say anything but - in the gutter,’ said homeowner Joseph Leon.”
“Builders like Anderson Homes, who have catered to these buyers with homes in the $500,000 to $600,000 range, are stuck with a glut. On Sunday, at the Dolce Hayes Mansion Resort in San Jose, Anderson is also auctioning 25 homes in a Los Banos subdivision.”
“Since the auction advertising blitz of Paseo West was launched three weeks ago, foot traffic at the sales office has tripled, infuriating homeowners who see potential bidders as the enemy.”
“Homeowner Randy Brown tried to scare off investors one day by raising his garage door, pulling out his jacked-up truck painted with green flames, cranking his music and revving up his motorcycle.”
“‘I bought my house on August 16,’ Brown said. ‘If one of these houses goes for the minimum bid, I will have lost $155,000 in six weeks.’”
“Jackie Flores, who moved to Paseo West with her husband and two small boys in May 2006, hates to think what the auction will do to the value of her home. ‘We bought it for - I don’t even want to say,’ she said. ‘$621,000 - ugh - it makes me sick just saying that number.’”
“The minimum bid on the empty house next door is $355,000. And, it’s bigger than hers at 3,310 square feet and loaded with upgrades and a finished back yard.”
“‘After finding a new way to search for short sales and foreclosures on the market and in escrow, the new findings are disconcerting. Currently, short sales and foreclosures in Orange County account for 12% of the active inventory and 15% of all escrows opened within the prior month.’”
In orange county, CA. this is astounding. but i thought everyone wants to live in southern ca, what about the immigrants and population growth, what about they don’t build anymore land, what about…what about…
If he thinks that 12% and 15% are disconcerting, what is he going to think when those numbers reach 20% and 25% or higher? With market time hitting over 15 months and sales in OC falling YOY for around 2 years (with a few more years, at least, to go), I don’t think it will be all that long before we reach those numbers.
The pain is just beginning for FBs. It will get much worse for them. The HBs are leading the way with price reductions. Just wait until the bank regulators start applying pressure to the banks to unload their REO. That’s when the real fun will begin.
Exactly. Sacramento is now 34% distressed inventory and rising. See http://sacrealstats.blogspot.com/2007/10/distressed-properties-update.html
“Just wait until the bank regulators start applying pressure to the banks to unload their REO.”
Meanwhile, I guess we will just have to get used to living near homes with 4 foot tall grass in the yard and green West Nile Virus breeding ponds out back?
Can’t you dump $4 worth of chemicals in a pool once every 10 days? Neighborhood Watch association new task.
Nope…. you can’t just dump in chemcals, the water needs to circulate
you could put stuff to kill the grass and then put oil into the pool. seems kind of dangerous to have unattended pools just sitting around though. doesn’t the bank risk people drowning or getting hurt in that pool like a normal home owner does?
I think once cities start fining banks for not maintaining their properties we will start to see them dumping. Of course we all know the banks know that doing so will result in lower prices and thus more foreclosures. Bottom line they way overextended and loaned a lot more than the homes were really ever worth to begin with.
Portfolio lenders will be subject to the pressures you say. However, I think there might not be as much pressure so soon because the MBS holders are not banks. They are investors and, as we read from the legal document on this blog, they can ask the servicer (e.g., Countrywide) to hold the property for 3 years. Still, you are right that some properties will be auctioned.
It would be very stupid to hold any property for 3 years. There will be no bottom until they work thru all the REO. Every month they hold a house reduces their principal 1%. To quote Mozillo, he said something like “I have never seen a housing bubble correction that was not very painful.”
Another interesting thing is the current inventory. Last year by this time we saw a steady decline in inventory numbers, which is normal. Here we are into the second week of October and those numbers are sticking like glue, even ticking up over the last couple of days. In fact the trend across the State is no seasonal adjustment down in inventory numbers. Uh oh……..
Another good point. In 2006, California markets August to October inventory dropped 6-10%. In 2007, it is dropping 1-2%, if at all. The “must sell” crowd is a huge percent of the market.
Another interesting fact: Asking prices are dropping at a much faster velocity. Sac is down 12% on the year, but down 3% in the last 30 days. San Diego down 9% for the year, but down 2% in the last 30 days. See it all at
http://www.housingtracker.net/
We may be headed into the abyss…..
are sticking like glue…
when one spits a home together…spitting glue to hold the home together…
grr. And they dump this sh*t on uneducated ones!!!
I’d never would have thunk I’d be rooting for RE attorneys!
WOW!
And we will find the brighest of them, if we buy at all!!
Rant Off,
Leigh (soft smile)
Everyone wants to live in So Cal? Yeah…that’s true only until they get here and realize what a dump it really is….sunny days only go so far.
“‘I bought my house on August 16,’ Brown said. ‘If one of these houses goes for the minimum bid, I will have lost $155,000 in six weeks.’”
I think we may have found the greatest fool. Since the minimum bid is 285, that means he spent 425k on his house. The 2005 people bought in for 600k+. He ’snapped up’ his house at 100k+ discount with free upgrades, and is complaining about what the new comps will do to his property value. I’m pretty sure the 2005-6 buyers hate him as much as he hates the auction goers.
Such a gloriously happy moment for schadenfreude.
That last story is a bubble classic. Truly. That one goes into the Hall of Fame along with the squirrels and the Classy Realtor in Florida.
“Homeowner Randy Brown tried to scare off investors one day by raising his garage door, pulling out his jacked-up truck painted with green flames, cranking his music and revving up his motorcycle.”
“‘I bought my house on August 16,’ Brown said. ‘If one of these houses goes for the minimum bid, I will have lost $155,000 in six weeks.’”
What a dork, his actions only reduce potential bidders. “Let’s make the neighborhood ugly so nobody buys.”
I found this amusing as well. What does this clown expect to happen? Scare away new buyers so that your subdivision remains empty? Guess what: your “instant equity” is instantly gone. Looks like you’re “priced in forever” regardless of how much noise you make.
I found Brown’s tactics amusing, as well. If my family was in his situation, however, I think going ZOMBIE would be more effective. You know, scared potential homebuyers asking timidly, “Is there a halfway house in this neighborhood?”
So Randy the knife-catcher looks to be down around 155k, but his neighbor, Jackie Flores, bought for 621k, in May, 2006. So, with a minimum bid for a nicer house next door of 285k, Jackie could be underwater 336K.
The first neighborhood block party should be fun.
Jackie just isn’t going to be the one bringing the fancy food to the neighborhood party.
Another reason to hold on. The FB’s need to get through the emotion of the declining prices.
I do chuckle at him trying to scare away new neighbors.
Got popcorn?
Neil
Growing up, we had some really colorful and genuinely scary neighbors. Randy, if you read this blog, drop me a note. I can give you some sure fire tips that will leave you neighborless for many years to come.
Some (simulated stick on) gang tattoes on his body and some (simulated) bullet holes on home fronts should quickly spread the word and put off any investors. A little help from (simulated) white powder/weed/meth trades on street corners, “trashy” looking women with revealing clothes can add some extra effect.
Yeah….but these are the exurbs. In a few years, they’ll naturally look like that anyway….
Total jerk! I feel sorry for the neighbors he already has, if that’s how he reacts. How would you like to “lose” over $100k *and* have to live next to a jackass like that?
Oh boy that reminds me of the movie “moving” with Richard Pryor and Randy Quaid. Remember that lawnmower Randy brought out of his garage LMAO!!!
I wonder how much he will get for the ‘jacked-up truck painted with green flames’? Doesn’t he know that the aspiring FB should have toys with some resale value?
Er…let’s get rat infested, snake breading, empty homes.
Good plan, dork…Jeesh.
Talk about “single minded”.
Ya just can’t make this stuff up!
grr.
Thats it. I’m lowering my maximum bid. Thanks Mr Brown. Can’t wait to take your bike for a ride and borrow your pick up to run down to the Home Depot. Cool.
My personal favorite part is:
” The homeowners demanded their financial pain be eased: Money back will do it, they said.
‘I don’t know why we would do that,’ Barton said glibly. ‘We don’t ask for money back when homes go up in value.’ And he doesn’t plan rebates when home values decline.”
Ignoring for a moment that these guys ooze of slime, he’s got a great point.
Txchick57,
That is FUNNY !
Quintus: People should know when they are conquered.
Maximus: Would you, Quintus? Would I?
What we all need to remember is that just because a person purchases a home, that home purchase DOES NOT guarantee them an appreciation of their home value. There are no guarantees, none…plain and simple. When you purchase a home you take a chance, the same chance as everybody else. One person’s misfortune can be another man’s pot of gold…..sad but true.
Blasphemer!!
These people obviously never rented Glengarry Glen Ross.
What else were they expecting to happen?
aladinsane,
I remember you saying something about drought and California. Just heard a meteorologist on the Weather Channel say La Nina is showing in their models. The outlook for this year is less rain and continuous drought for California.
From the LATimes today, Aladinsane prediction comes true….
“Responding to the state’s worsening water shortage, the Metropolitan Water District today announced that it would cut water supplies to Southern California agriculture by 30% and that local residents can expect their bills to rise by 10% or more.
The moves come as Southern California is facing both a cut in water supplies from Northern California and is dealing with a major drought locally.
MWD General Manager Jeffrey Kightlinger said that if the record dry spell continues into this winter, local agencies would have to consider mandatory rationing.
This is not the real story. The real story is an unintended consequences of a bizarre federal law known as the Endangered Species Act. Consequently, the water supply to 15m+ Southern Californian humans is endangered.
Politics : California
Smelt is the big fish in California water politics
The diminutive species’ dwindling numbers have been a bone of contention between activists and water managers. Tougher protections could cut exports to Southern California.
By Eric Bailey, Los Angeles Times Staff Writer
September 14, 2007
SACRAMENTO — It’s not much longer than your pinkie, an aquatic weakling that skulks in a single brackish backwater of the West.
Yet the diminutive fish is a big player in California water politics.
For years, the delta smelt’s survival has been a bone of contention between water managers and environmentalists — a subject of lengthy court cases and, of late, defining judicial decrees.
A decision Aug. 31 by U.S. District Judge Oliver W. Wanger requiring tougher protections for the tiny fish pushed the state’s water managers toward uncharted territory in how they manage aqueduct exports out of the Sacramento-San Joaquin Delta, a key source of water for much of Southern California.
http://www.latimes.com/news/local/politics/cal/la-me-smelt14sep14,1,7308158.story?coll=la-news-politics-california
The delta smelt is just a red herring, thrown out as reasoning why nobody did anything about the situation. I knew it was going to be awful in April.
I smelt some C.Y.A. nonsense here~
Contrary to what many of you that live in suburbia may think, your water just doesn’t come from the faucet.
There was literally NO snow in the Sierra Nevada this year…
My mom chaperoned a school trip to Yosemite. At one point she came back from the bathrooms supremely angry because some twit of a teacher was telling her Southern California students to limit their shower times because “they’ve got a drought up here— wait until you get home.”
I grew up understanding about water limits and it always boggles my mind to find people who have no clue about how something so important works. If you live west of the Mississippi, you should have some clue about water and where it comes from.
Mandatory rationing for landscape uses in Long Beach, right now. Can only water landscape 2 days per week.
Maybe you should grow seagrass in your yard and water it with ocean water…
P.S. You would have to have an occasional rain to wash the salt residue out of the yard…
I was going to suggest a xeric garden, but … that’s awesome.
They have had rationing in Glendale this entire summer.
Hooray for rent-controlled apartments, water included
I certainly hope it isn’t true. At least I have the comfort of knowing that I don’t trust any meterologic forecast since they’re wrong so often.
30 Million Californians living in San Diego, Los Angeles O.C., Santa Barbara, San Francisco and Sacramento, might have to move somewhere else, should we get another dodgy winter, with little snow.
Where do you think we get our water from…
The water genie?
This is no drill
Wont you tell me
Where have all the good times gone
Where have all the good times gone
Where have all the good times gone
Once we had an easy ride and always felt the same
Time was on our side and I had everything to gain
Let it be like yesterday (uuuh uh uh uuuh hu)
Please let me have happy days
No hostility. Cali is eyeing the great lakes! OMG.
Water IS a comodity.
Diverting the GL to Cali?? WT heck?
not going to happen - all the great lake states and canada signed a treaty last year agreeing that none of the water would be transported beyond bordering states. plus they’re low too - lake superior is down at least six inches.
Another aspect of the California drought that you haven’t heard anything about…
The Quagga Mussel has appeared all over the Colorado River system, and this invader clings to pipes and leaves the water tasting funny.
“Metropolitan scheduled the 10-day aqueduct shutdown–which begins Friday, July 20–after inspections late last month indicated that quaggas had spread further into the water system and grew in greater densities.”
“By shutting down the aqueduct, we hope to learn even more about effectively containing the quagga by re-examining specific portions of the aqueduct that are most susceptible to invasion, particularly underground siphons, tunnels, canals and pumps,” said Debra C. Man, Metropolitan’s assistant general manager and chief operating officer.”
http://www.allbusiness.com/services/business-services/4550800-1.html
Why has the el lay times told you nothing about this?
Does any of the Californians remember the late 80 drought? Northern California was on water rationing. No washing cars, watering lawns on certain days. Government asking people to flush toliet only when necessary, restaurants not serving water unless requested. Lake Shasta, almost dry. I believe this drought lasted almost five years.
Drought hitting California is nothing new. John Steinbeck wrote about California droughts in East of Eden.
My cousin is one of the leading environmentalists in the state of California. He has been backpacking in the Sierra Nevada for 45 years every Summer and has never seen it so dry. However, by all the dried up lakes can be revealed Indian mortar holes where they ground acorns up to thousands of years ago. So, there’s proof that it has been drier in California in the last 10,000 years.
Wait— there’s natural lakes in California?
If it’s yellow,
Let it mellow.
If it’s brown,
Flush it down.
Conservation?
Can’t still believe how Americans waste water. In countries with frequent rainfall some of the activities like car wash are prohibited. You have to wash your car in a car wash (they do recycle the water) or leave it as is. A dirty car nobody hurts. Also garden watering is allowed with own collected rainwater only.
It is sort of funny how little CA has adjusted to a lack of water. Few cisterns to collect rainwater, and little reuse of graywater. This Old House magazine has an article this month on how easy it is to install a separate system for graywater reuse when doing new construction–about $600. Can then use it to flush toliets, water lawns, etc. But much of this is prohibited in CA.
At least install cisterns for rainwater collection etc. I remember the 80’s drought–it sucked. And from what I read of history, CA is actually in a “wet” phase.
This is one of my pet peeves. With all the new construction in California (and elsewhere), WHY have they not double-plumbed these homes??????? It would have been relatively easy to design the lots & houses to use rainwater and greywater for the landscaping, at the very least!!!
Although those who are new to California might resent this, there ought to be a fee on new, non-native Calif. residents to pay for the additional infrastructure required by the population over-growth. (controversial, I know…)
Wait until you start getting religions using RLUIPA to take over local villages like we have in NY state. No taxes, drive the neighbors out by having 6 families in one house, don’t take out the trash, and don’t cut the grass. You don’t know how good your little bubble is.
WTF?
Man, there is no scam like organized religion.
Best way to run a business is to call it a religion. Tax exemptions up the wazoo and you get uncritical customers.
“In the first six months of this year, 36 percent of all mortgages were orginated in San Diego County required borrowers to pay only the interest or actually allowed the debt balance to increase each month, according to First American.”
This is why house prices will be falling for years to come. The loose lending has tightened up in just the last few months. So we have a lot of bad loans made well into 2007, that will be adjusting in a couple years. I see a high foreclosure rates for a another 3-4 years. If we get a major recession in that time, all bets are off.
Well, there are other possibilities for a quicker drop too - for example, if some of the proposed homedebtor “relief” plans from the geniuses in the legislature were actually enacted and resulted in a quick return to 20% down and 700+ FICO to get financed. That could really be a way to bring on the pain hard and fast!
If some of the proposals are implemented, 40% down might not be unheard of! Seriously, we’ll see 25% down expected soon. There just isn’t enough mortgage money otherwise.
Oh… that pesky savings rate…
Got popcorn?
Neil
i’ve been thinkinig about this..
look into the future.. things have bottomed out.. economy is in a shambles.
Many people who prudently avoided bubblemania, have maintained fine credit ratings, are working and some cash will want to buy homes.
These people will be a distinct minority.
then you’ve got lenders.. They make money by lending it. they will have lots of money to lend..
now we have a large supply of money with little demand for it.
And the market.. it is bottomed out. Prices may reflect those of 1999 or less.. nobody is worried about them falling further.
Do you think the lending conditions will be tight? Will lenders make it tough for responsible people who have jobs and savings and good credit by demanding very large DPs and high interest?
i kinda think lending in 2009 or 2010 may be a lot looser than seems intuitive at this stage of the game.
“then you’ve got lenders.. They make money by lending it. they will have lots of money to lend..”
Seriously, Why will banks have moneys to lend? A lot of banks will be in dire financial distress, if not totally insolvent in three years.
The problem is a credit insolvency issue and it is not just real estate. It is also commercial and corporate loans that are at risk of defaulting. 3/4 of the corporate paper is already rated junk.
JoeyinCalif,
Did you take into account the unwinding of bad fractional banking loans?
I do think they’ll pump the market, but at some point its pushing a rope.
Got popcorn?
Neil
well.. I don’t see this crunch as the end of life as we know it. No matter how bad things seem, they will eventually unwind, and the RE market will arise from the ashes.. and that’s the future date i refer to.
Think about it. Throughout history, lending practices have created credit excesses leading to asset deflation and credit has dried up. It isn’t until you are in a market of cash or very highly qualified buyers, which you correctly point out, and Neil seconds via his comment about the non-existent savings rate, are and will for the foreseeable future be in very limited supply.
After lending with even 20% down and watching the equity cushion evaporate over the ensuing years (thereby aggravating the risk and the record-breaking number of REO’s and retained loans on their boooks) even these dumb mofos’ will avoid lending at precisely the safest time to lend - at a market bottom. (no where to go but up)
Think margin requirements in 1932 - no where to go but up yet stocks were “an abomination”.
Neil, did you take into account Ben B giving the banks whatever money they require to make loans like they are doing right now. Don’t worry folks, the fed’s gotcha.
joey, been here seen this. The lenders will lend, but much tighter than today. Most remember or know of the collapse that started in 89′, but few here know of or understand the bubble that didn’t collapse in the early 70’s till the mid 80’s. Loose money (like now–from borrowing for a war and stupid governmnet) lead to a dollar in distress (inflation in commodities from elswhere.. ie. oil). The highest home appreciation was in 75.. then the fed came to the rescue of the dollar and pushed rate on bonds to over 18% and similiar home loan rates. Due to many factors home prices didn’t fall, they just went sideways for over 10 years. A $50k home in 75′ sold for $100k in 85, but the prices of everything else also doubled. This doubling of inflation masked the collapse of the bubble. Believe me a home not increasing in real value for 10 years is a beating.
The question now is will the fed rescue the dollar(i think they allready gave up) by raising rates or try to inflate the greenback even further. Bernie has allready tipped his hand and told us that he will try to inflate us out. I believe this will crush home prices (back to the 1975 level of $50k?? maybe not, but less than $100k no problem). In 89′ (at the last peak) rates were 11% in 05′(peak) thew were at 7%.
My contention is that dropping rates from 17% to 11% can juice (even overpriced) RE good! 11% to 7% pretty good, but who is going to keep lending money at less than 7% when true inflation is well over 10%.
I just don’t see any more rabbits coming out of the fed rate cut hat. The presant inability of lenders to sell money at rates that surpass real inflation on long term assets (which RE is returning to) will bring a credit crunch the likes of wich most of us has never seen. The credit crunch in 81′ was one of borrowers unwillingness to take 17% money, the coming crunch will be lenders unwilling to take x% on a falling long term hard asset.
The loans that will be available to you, Joey, will have many strings attached. Steady job several years, no move. Very good credit. Substantial down payment (20-25%). Adequate income 2.5-3X entire housing nut and NO DEBT! The bright side is I can’t see rates at crazy 81′ levels, my feeling is that the dollar is toast and just going to burn more and you will have rates much less that 10% and maybe even close to currant levels.
Investment property from bank debt will be out of the question! This is actually funny, because returns on property from rents will skyrocket at property sales prices plummet. Just wait, you will see the total cost PITI to buy a home will be much less than to rent one.. When?? my guess is a real bottom about a year or two after the majority of toxic loans reset and go bad at the end of 10′ putting my bottom guess at around 12′ might be sooner, but I can’t see RE having any investment interest at all at that point. Many here have given guesses and I have been suprised at the speed of this unfolding, but I just learned that Countrywide is still writing stated income loans as a preffered lender for a builder in Manteca, CA. The enormity of the fraud has taken me off guard, I never thought the bondholders could be screwed this long and not notice. They have now noticed, there is nowhere else to go, CW still making crappy loans is an abberation because of the 22b loan they just got. I use to think that CW would make it through this, but am now convinced they are toast.
these dumb mofos’ will avoid lending at precisely the safest time..
i know it is the conventional wisdom.. that lenders have acted stupid and lost money and will wise up and reform… and get tight and act all businesslike from now on..
But this goes against human nature in a couple of ways.
First off, bubbles have happened before and yet happen again, over and over. How can that be? Do we not learn from mistakes?
well, we do learn but we evidently forget.. or the learned ones die of old age and newbies need to re-learn old lessons? For whatever reasons, caution seems to be a temporary state of mind.
Secondly, to say a lender can avoid lending is like saying a grocer can avoid selling groceries, and yet survive. but loans are just a product. Sell the product or starve.
Before someone suggests that interest rates and DPs will be up to the discretion of the cautious lending industry of the future, and borrowers have no say in the matter, recall that up until a couple months ago an individual, prudent lender had virtually no say. S/he either lent at easy terms or the borrower went next door and got the loan from someone else.
That is due to competition.. lenders fight each other for customers.. At this moment they have called a truce, giving them time to gather their forces and cart away the dead, and reload.. but I guarantee it won’t last forever..
I’m just trying to look ahead. Things will certainly be interesting and weird for a while, but i see neither human nature nor the laws of economics experiencing any permanent changes.
(nothing)
“In the first six months of this year, 36 percent of all mortgages were orginated in San Diego County required borrowers to pay only the interest or actually allowed the debt balance to increase each month, according to First American.”
Surely this story is a mistaken reprint of an article from 2005, not really relevant to the situation in 2007? Right???
I know it seems crazy now, but the stuff really didn’t hit the fan until August, 2007.
It is quite bizarre to note how developments which appear to long-time readers and posters here as part of a steady continuum have struck the likes of no less than Sir Alan Greenspan as something of a lightning bolt out of a clear blue sky, at least so far as MSM accounts have reported the story.
The NYTimes (All the News That’s Fit to Print) is shocked, shocked, to discover that loose lending standards to subprime borrowers has resulted in rising foreclosures, according to their editorial today. They recommend “heroic” measures (I’m quoting here) to keep people in their homes.
Of course, they are so muddled, they seem not to have heard of Alt-A defaults, serial refis, multiple cash-out withdrawals, let alone stated income, NINJA loans, specuvestors, cash back at closing, and widespread collusion in fraudulent transactions by buyers and lenders.
Nope, it’s all news to them.
Hey Spike - the appropriate response is to immediatly write a letter to the editor when you see all the slob stories and incorrect information. It’s my hope that if MSM gets bombarded with enough information that doesn’t sound too tinfoil hatted, they might take a second look at what’s really happening.
What is an alt-a default anyway?
I think 7/31/07 was the inflection point recognized by the MSM. I believe that’s when S&P and Moody’s downgraded a ton of mortgage-backed bonds due to high defaults. Seem to recall someone at S&P making the quote that they “couldn’t go on with the charade anymore.” So realistically, we’re only 2 months into the correction….
Greenspan suprised by the housing bubble? I doudt it but also believe he didn’t care too much as long as it didn’t blow up his banker friends.
This blew me away too. 1/3 interest only or NegAm - in a market that was falling quickly anyway (I sold 6/06). We may be at the end of the beginning, but thats it. This will take years to unwind.
I expect a lot of jingle mail.
We’re looking down from the precipice, into the blackness.
I’ve stopped trying to explain this to people. They think because things are off slightly from their all time highs (RE/stocks etc) that the correction has happened and we are ready for lift off.
I keep telling the wife that the moment the sheeple actually get it, really, actually get just how screwed we are, will be something to behold.
This blog and its participants have done wonders for my sanity.
With all these amateur investors going to “auctions” “thinking” their getting bargains, we have a long way to go. This type of activity just shows that’s there’s still a lot of get rich quick mentality out there. It’s just the latest scam aimed at the greedy and stupid.
With all these amateur investors going to “auctions” “thinking” their getting bargains, we have a long way to go….
-HeeHeeHee…. No kidding!
These losers crack me up … ‘Oh, I practically stole that property! I can turn around and sell it for more than I paid!’
These losers crack me up … ‘Oh, I practically stole that property! I can turn around and sell it for more than I paid!’
No, no, of course they can’t. They have to install granite couter tops and paint the cabinets first. That will probably double the value.
It must be true, it’s on HGTV!!
Maybe today’s knife-catcher can explain things to Shukdev Tandod, yesterday’s knife-catcher.
Of course they will make a killing, they got it for ‘below market’…..
Those numbers are for the first half of the year. Pre-mid-March standards were much looser prior to the subprime meltdown. I suspect those percentages were higher for the first few months of the year, then dropped yielding the 36 percent number for the first half of the year. It will be interesting to see how much lower those numbers are for the first half of 2008.
The percentages also undoubtedly dropped as the subprime lending industry quickly vanished from the face of the planet. Subprime sector, RIP.
PB,
IIRC, in 2004/2005 (don’t remember which), I believe 82% of loans in San Diego were interest-only or neg-am. To only be at 36% is quite impressive if you figure the SHTF in July/August.
Here is an excerpt from a BW article in 2005:
“The red lights are flashing in San Diego, Atlanta, San Francisco, Denver, and Oakland. Last year, they had the highest share of single-family-home mortgage loans that require just interest payments — no principal — in the early years. San Diego led overall with 47.6% of home buyers taking out interest only mortgages, up from 1.9% as recently as 2001.”
http://www.businessweek.com/bwdaily/dnflash/jun2005/nf20050616_1189_db016.htm
—————
Found on a link to another blog in 2005:
“The really negative sign for us is the fact that, last year, 82 percent of the purchase loans in the state of California — Orange County being representative — were either interest-only or negatively amortizing loans. We view that not as an economic choice people were making, just simply an I-can’t-afford-the-house choice.”
http://www.readytoburst.com/pop/2005/12/io-option-arms-condos-and-san-diego.html
=============
I do remember the 82% number (maybe total of ARM loans), but a significant portion of these were I/O or neg-am. IMHO, there is so much more to happen in this market, it’s rather frightening.
Sorry if this is a repost, but it sure seems to fit in well on this thread.
Subprime defaults fastest in decade
By Stacy-Marie Ishmael in New York
Published: October 5 2007 03:00 | Last updated: October 5 2007 03:00
US subprime mortgages written during the first half of the year are going delinquent at the fastest rate this decade, according to a report from Moody’s yesterday that analyses home loans used to back bonds. The average rate of “serious loan delinquencies” in the 2007 bonds is higher than those created last year, a vintage considered to be one of the worst-performing ever.
The ratings agency defines “serious delinquency” as loans that are 60 days or more overdue, and includes properties in foreclosure and those already foreclosed upon. Typically, subprime mortgages are used to back bonds sold to institutional investors.
“The early performance clearly shows that the 2007 vintage is worse than last year’s,” said David Teicher, co-head of the Moody’s residential mortgage-backed securities group.
“What the ultimate performance will be remains to be seen.”
Almost 6 per cent of subprime mortgages written in the first half of this year and subsequently used to back bonds went into delinquency within three months of securitisation, Moody’s data showed.
In contrast, fewer than 4 per cent of subprime mortgages originated last year went into delinquency with-in the first three months of being securitised.
Among subprime-backed bonds more than six months old, 2006 was the worst year for serious delinquencies since at least 2000, the ratings agency said.
A high proportion of the worst-performing loans from 2006 originated in California, Moody’s said. It identified falling house prices as a contributor to the overall poor performance of the 2006 vintage, and California has been particularly hard hit by house price depreciation.
First-time or purchase loans, as opposed to refinancings, also showed higher delinquency rates.
“We believe that many purchase loans were made to first-time homebuyers, who may be more susceptible to default than those that have had previous home-owning experience due to their lack of familiarity with managing the costs of home ownership,” the report said.
http://www.ft.com/cms/s/0/e8d40fce-72f5-11dc-b7ff-0000779fd2ac.html
Last year in Bakersfield, a home builder was making the payments for a year for their subprime borrowers. Why do you ask? Because there would be no buy backs when the FBs went into default. I would like to revisit those FBs this year and see how they are doing.
Last year when we discovered that there was a buyback clause in the MBS for a period of 1 year we on this blog debated whether the likes of WF, WM, and CFC would be spared the pain by tightening lending standards just in time such that the old, bad loans would start to default one year after securitization. Now we see that a significant portion of the loans are going bad well before one year, and we can only assume that MBS holders are forcing buybacks. This hasn’t hit the media yet AFAIK, and it is sure to sink CFC. Go go Jan09 puts @ $10.
Thanks for the tip, Captain CC. I haven’t BOUGHT options on anything since 1979, but this seems worth a small gamble.
Last time I bought options I learned to give them enough time to have the events I bet on to transpire. I hope Jan 09 is enough. But the premium for Jan 10 is not that much more. Good luck! We’ll be in the same boat.
Soooo NOT good!!!
I know calling the bottom is mute, the silence is deafening.
Econ, housing, goods, world…no matter what we say, we are bound together…it’s global baby!
Home ownership is a responsibility, not an entitlement. Lack of familitarity? Jeesh. No accountability.
I want you to be CORRECT!! Please, let this air out in a slow fashion…nothing good can come of a fast freefall.
Sigh.
Leigh
P.S. Love your post(s)
Did this say that someone really paid $621K for a house in Los Banos?!? I think craziness is right. Or I would venture to say “insanity.”
Mercifully, it was likely a 100% loan. So only the lender/investor has to commit suicide. Borrower will be safe.
You are probably right. For some reason, Los Banos is thought to be within commuting distance of San Jose, so prices took off. It is crazy since the city is essentially an unsightly farm town in the middle of nowhere. Yet another example of bubble euphoria.
Did this say that someone really paid $621K for a house in Los Banos?!?
Talk about flushing money down the toilet…
One doesn’t have to flush, just throw it out the window.
That may be because of the commuters who live there. It is a nasty place not worth these prices by a long shot, but many who live there work around the Bay Area. Supercommuters are a modern reality. They tend to burn out before three years in this mode, but that does not always happen and there always seems to be someone new ready to take the place of any that give up.
“commuters”
I googlemapped Los Banos. I needed to zoom out six times to figure out where it was.
You Californians crack me up.
A realtor bragged about owning a couple new houses there 2 years ago. Bet he is defaulting now.
actually, she under-stated what she and her husband spent (probably already taking into consideration the ‘rebates’ and ‘discounts’ that the builder ‘helped’ them with. Here’s the truth:
Address: 1643 PAOLA PL MANTECA, CA 95337-8612
State: CA
County/FIPS: SAN JOAQUIN
Seller(s): ANDERSON HOMES
Owner(s): FLORES, JOE L; FLORES, JACQUELINE K
Assessor’s Parcel Number: 224-340-06
Sale Date: 06/30/2006
Sale Price: $640,500
Recording Date: 07/14/2006
Land Use: RESIDENTIAL LOT
Land Size: 11,761
Parcel ID: 22434006
Type: ASSESSOR
Lot Number: 25
Tax Year: 2006
Lender Name: PROVIDENT FNDG ASSOCS LP
Anyone else find it almost too hard to believe that the name of the street is “Payola Place”? Damn funny if you ask me!
BTW: this is why you should NEVER use your own name when talking to the newspaper. There are people out there that has access to public records. (like me, for example).
drkeeler,
Great job !!!
And Payola ……….
Can you work out what type of poison they took - mortgage wise?
Los Banos .. where better to take a bath i ask ya.
I know out in the middle of nowhere. I wonder if they had those crazy prices in the next big town up called Patterson? You can see Patterson off the I-5. I’m assuming they commute to the bay area.
And times of craziness in Las Vegas:
http://www.signonsandiego.com/news/business/20071008-0503-usa-housing-vegas.html
My favorite part:
“Joy Gillen, 60, a casino supervisor, has had her home on the market for nearly a year and a half. She initially listed the home at $597,000 then $539,900 and since refused to budge, even though she paid only $291,000 for it five years ago.”
I wonder whether she’ll budge after another year-and-a-half passes with no offers.
Nah, she’ll just rent it out “until the market improves.”
Good luck with that one, lady.
She is taking her work home with her. She gambling on the hope that it will be a quick recovery.
Aha, you didn’t add the next line of the quote! She has probably HELOCd to her gills and can’t let go without bringing money to the table. She is probably doomed in this roulette.
Somehow I didn’t even see that line. She’s shooting herself in the foot financially no matter which way she goes.
Hopefully not - hopefully she’ll learn that it is possible to lose money in real estate, and that prices do fall, and will make darn sure her children and grandchildren know too.
Economists are undertaking excruciating verbal contortions to say there will be a slowdown but no recession. And BTW, what is the distinction between an “outright downturn” and a recession?
“(Unemployment in) the rest of the U.S. economy will catch up before unemployment in the San Diego region falls back down,” said Chris Thornburg, a principal at the Beacon Economics consultancy in Los Angeles. “It’s because California was on the cutting edge of sub-prime lending.”
…
Mortgage woes spill over
He said he expected California’s unemployment rate to rise to 6.5 percent or 7 percent over the next year before coming down again, with San Diego County reaching 6 percent during that period.
Trouble in the mortgage market hits the local economy in several ways, Thornburg said.
Job cuts in construction, real estate and finance cause the resulting unemployed workers to cut back their spending.
An important but indirect effect, he said, is that people who can’t extract cash out of their homes by refinancing put off remodeling their kitchens or buying new cars.
But so far, the region’s trouble with mortgages hasn’t translated into more general consumer problems, such as more bankruptcies and credit-card delinquencies, several local economists said.
“An outright downturn is not expected, but the possibility of a recession in the local economy is at its highest point in years,” according to University of San Diego economist Alan Gin’s most recent economic forecast.
Could it be that an “outright downturn” is Alan Gin losing his job, while a “recession” is other people losing their jobs?
Isnt’ that the old joke?
What’s the difference between a recession and a depression?
When your neighbor loses his job, it’s a recession. When you lose yours, it’s depression.
Thornberg has a very dry sense of humor and thus its important to watch him speak.
“(Unemployment in) the rest of the U.S. economy will catch up before unemployment in the San Diego region falls back down,”
That sounds like we can expect high San Diego unemployment worsened by increasing national unemployment. Knowing how Thornberg likes to play with his words during small speaking engagement, I really wonder what exactly he said. The press rarely quotes him quite right.
Got popcorn?
Neil
Yep. I couldn’t figure out the difference between an outright downturn and a recession, so I went with the old joke. BTW, two of my favorite quotes about economists:
An economist is a trained professional paid to guess wrong about the economy.
The First Law of Economists: For every economist, there exists an equal and opposite economist.
The Second Law of Economists: They’re both wrong.
Snarf!
Thanks. I have merlot in my nose.
Got popcorn?
Neil
The main purpose of economics is to accurately predict the past…
‘No other state came close to California’s reliance on real estate as an engine of growth,’ University of California, Los Angeles, economist Ryan Ratcliff noted in a recent report.”
Its different here, lol. I think Florida and Arizona may have been right in there Mr. Ratcliff.
And don’t forget Nouriel Roubini’s reports of speculative euphoria in the sky-bound Manhattan condo market. That is a story which still lies ahead of us.
“Clearly I am a victim of Old Timers disease, I forget everything” NOT said by Colleen Badagliacco, but who did say “What we’re seeing more is the agents are being a lot more careful in qualifying the seller”
You should know the seller! You scammed ‘em on the purchase. And now you want to qualify sellers. Self satisfying quente. (see Chaucer)
Not long ago RE folks were offering bounties for listers.
Now they are qualifying them.
LOL.
Chuckle. It must really suck to be a sheeple.
“Qualify the lister” translates to, will you sell cheap enough to get me a quick commission? Aaagh. Greed at its best.
Got popcorn?
Neil
This week I’m on the Outer Banks of NC with a bunch of NYC people. This afternoon one of the NYC people admitted to me that people in NYC are being fired and laid off and that the NYC RE bust cannot be far away.
Good info, AZ, thanks! Hope you’re enjoying your trip.
All of my posts were eaten. All of those “pearls of wisdom” have been lost…
I am 100 percent certain there are more where those came from
LMAO!!!!
I think the servers lost power for about 45 minutes. Sorry.
Like tears, in rain…
“‘What was that movie? ‘Pleasantville?’ Where everything looked so nice?’ a man within the walls of Paseo West asked. ‘It’s like that,’ he said, then paused. ‘But no one lives here.’”
Not sure whether ‘Pleasantville’, ‘American Beauty’ or ‘The Truman Show’ best captures the status quo?
Not sure whether ‘Pleasantville’, ‘American Beauty’ or ‘The Truman Show’ best captures the status quo?
Try, “The Money Pit”..
All other movies to describe the current situation would be unsuited to share here at the HBB.
Dogville, with Nicky Kidman.
‘Other People’s Money’ might also be a good choice.
“Idiocracy”
that guy talks all gay
Come on! Glengarry Glen Ross!
Is it just me, or does that guy have world-class comedic timing?
*pause*
“But no one lives there.”
My vote: Dark City
Nobody will remember precisely how they got so totally fooked.
Well, here in Vancouver, the idiocy continues for some. The denial is still very strong amond the glassy-eyed…”the Olympics are coming!”
Shill realtors still have the respect of a few.
HOWEVER, cracks are appearing. MOI is increasing, along with inventories, and both asking prices and transaction prices are weakening, particulary in the outer suburbs.
Stay tuned.
The Mercury News Article has probably the most comments I’ve seen to date on a Real Estate piece. Not much love for the homeowners wanting rebates from the builder.
“Currently, the buyer’s market includes more affordable housing with some property in the centralized cities of Amador County being sold for under $300,000, Bonfiglio said, which means great opportunities for first-time buyers.”
I had to google map Amador county since it’s so obscure. So tell me, what does a 1st time buyer in the middle of podunk nowhere do jobwise to be able to get that “great deal” on a $300K house ?
Amador County is actually quite beautiful.
Don’t know what people do for work, though.
Yea, this shows how used to equity locust the realtors have become in N. Call & S. Oregon. The only people who consider $300k a “great deal” are folks retiring from the coast somewhere. Wages around there don’t support $150k.
Here is a thought for ya’ll..
One week from today, on Oct 15th., just about $48 BILLION in ARMs will reset, followed by another $50+ BILLION on Nov. 15th.
Somehow, I don’t think a bailout will be in place by either of those dates nor do I believe that Fed. rate cutting will help.
No, but it takes a few months after the reset for the defaults to start to turn into foreclosures. Not holding my breath, but I think 1Q08 will be fairly startling, maybe even to us.
OT but: Eureka! Rented a home in Stafford, VA (30 miles south of DC) that was selling at an asking price of $324,990. I bid $1300 a month for 12 months and got them to put up blinds and go halfsies on a washer/dryer combo. Made 5 other offers and they all declined my lower than acceptable offer. Funny but I looked at some of those rentals that turned me down on the MLS this week and their rental prices seem to have magically gone down $100-150 a month.
Maybe they got the message
Yay!! Congrats on the affordable rental, Mugsy. Wish more renters would lowball on rents like you did. Some morons around here are giving the delusional bagholder/wannabe landlords too much hope.
Re: the seller from Signal Hill.
Perhaps he could find another flyboy to sell his home
Here is something to think about..
One week from now, on Oct. 15th $48 BILLION worth of ARMs will reset, followed by $50+ BILLION on Nov. 15th..
Somehow, I don’t think a bailout plan will in place by either of those dates, nor do I think another Fed. rate cut will save the day.
Some dolt at the FDIC was “suggesting” that the servicers freeze the ARM rates immediately, as if it’s up to them. From what I gathered, they said they can’t do it, even if they wanted to, because it’s up to the investors that bought the notes. Yep, they went into the whole, it’ll save them money in the long run, because re-writing the mtges is cheaper than foreclosing. 1) somehow it doesn’t seem quite so easy, 2) at some point the piper has to be paid and 3) in the end, the FBs still can’t afford to pay back 10x income.
The fat lady is singing…
“The fat lady is singing… ”
Does Sheila Bair have a weight problem?
test
test as well.
“‘I bought my house on August 16,’ Brown said. ‘If one of these houses goes for the minimum bid, I will have lost $155,000 in six weeks.’”
Randy, you’re right. If nobody buys during the auction, your house is worth what you paid. You can keep refinancing and keep spending. It only counts, Randy, if somebody buys a house in the auction. You haven’t lost any money yet, Randy. You’re still the shrewd real estate tycoon who bought right. Do what you have to do.
In the UCLA report:
“Despite the local economy’s emphasis on real estate, the area’s relatively pricey homes could mean the region will avoid the worst of the mortgage troubles, the report says.”
huh?
it aint too big around, but it’s short!
To the best of my knowledge, the first bank-owned property in my general vicinity in LA’s Westside has come in the market. I had seen a couple of short sales, but no bank owned sale. It’s a real POS on a busy street in the worst possible part of an otherwise good zip code (90064). Oh, and, need I even say it, it is overpriced (somewhere over 700K, I’m feeling too lazy to check.
Hey Cassiopeia, wife and I are in 90064. Would love to know the address!
Captain, here ya go. Just don’t tell me you are going to buy, OK? Here’s the listing. It looks like its’ half a block from the freeway. Not good. Oh, and the asking price is 726K (LOL), but it seems they had the gall to list it for over 1M.
2845 westwood,los angeles, CA 90064
Area: (8) Cheviot Hills - Rancho Park
You’ve been waiting for a break like this one! Awesome price–DO NOT miss this opportunity!! BANK OWNED property! Once on the market for over $1 million. Get a large house for little money in a great area! Close to Santa Monica, UCLA, schools, parks, Trader Joe’s, and more!Grab a deal & make it your own. Has big family room, 2 car detached garage, direct access to backyard & lots of space. Don’t be shy–you won’t know what a great chance this is if you don’t see it for yourself!
Ah yeah, I know the area. Right by the mall. We live half a block from the freeway and kind of like it for the easy access. Don’t worry, we’re not buying anything lol. Was just curious.
P.S. you didn’t go to Neil’s party, did ya?
Wow! 726k is definitely more than 5% less than $1 million. I’m gonna jump right on that West L.A. slice of paradise.
“‘I bought my house on August 16,’ Brown said. ‘If one of these houses goes for the minimum bid, I will have lost $155,000 in six weeks.’”
You’re right, Randy. You haven’t lost any money unless the houses sell by auction. If nobody buys, you can keep refinancing and keep spending. Randy, you’re still the shrewd real estate tycoon as long as nobody bids at that auction.
Anybody catch the CBS evening news. “Foreclousres and squatters in Manteca!”
Finally the MSM appears to be catching glimpses of the elephant in the drawing room.
Link: http://tinyurl.com/24netp
“MSM appears to be catching glimpses of the elephant…”
Glad to hear they will soon be taking over my volunteer work.
The MSM missed the elephant.
They’re about to pull up the rug and find its…
“night dirt.”
The elephant has snuck and hidden in the corner. The MSM might find it in August 2008.
Got popcorn?
Neil
The house reminded me of the houses next door to my friend’s home in Stockton. What a person qualifies for is not the same as what a person can afford, as quoted by a talking head.
Air America the liberal talk radio station did a whole segment on how Venice is way up in price, still appreciating, in big demand. What gives.
It is up 1.9% (YOY) according to dataquick with 19 sales avg price 1.06M, it is important to remember that the volume is down and it is not house to house comparison but avg to avg. Meaningless figures with no actual comparisons. More telling is that in Venice there are 21 properties in foreclosure this month. Average foreclosure price appears to be around 750K (3 are above 800K).
Interesting, what is your source?
Hes gonna scare the investors away with his ugly truck and load motorcycle..
Reminds me of the 60s….. when school bussing started in my new york suburb. White were fleeing to outer suburbs. and blacks were moving in.
To speed the process, realtors would pay poor black families to walk up and down the street during the day and the realtor would show up at your door that night with the following message…You are the first I am telling that a Black family has purchased a house on YOUR block. Sell low to me now or you will be stuck in a “black slum” forever. Lots of whites sold low. Then the realtors called a black family with… Now is your oppurtunity to buy in a good white area with great schools, but you better hurry and you will have to pay a premium.
REALTORS, always were a sleazy crew
It played out the same way on the south and west sides of Chicago too. The happy, shiny version of REIC history omits those kinds of details, and the REIC’s role in screwing over just about everyone involved to get their slice of the action. (fleeing whites sold at a loss, blacks were grossly overcharged) One particularly good book that depicts these events is Arnold Hirsch’s “Making the Second Ghetto”.
Bust or boom, it’s something for everyone to always remember when some realtor comes floating by in a hot air balloon with promises of finding you your dream home.
When my parents bought their home here in San Diego there was a restrictive covenant ( I believe that’s what it’s called) on the property. You were not allowed to sell your property to blacks. It wasn’t that long ago either, about 40 years ago.
The Supreme Court ruled in the 40s that those types of covenants could no longer be enforced but they still show up in title searches for properties built in the early 20th century. Some covenants went even further, banning sales to Jews as well.
The good old days weren’t always so good.
It is called block busting and it is illegal. I saw it first hand growing up. They were very subtle about it too. Hi, I’m Joe realtor. I wanted to stop by and introduce you to a few new neighbors you have now. We have a very nice African American family that moved in on 4th street. And then there is Mr. and Mrs. Bubba Smith on 2nd Street. Also very nice people.
Here’s my business card in case you ever decide to sell.
It would clean an entire block out in a matter of months. Better to sell first instead of last.
Completely off track, but fun for me!
Famous games in USC-LSJU history at USC
1933 Nov. 11 ………….L 7-13 H …. 95,000 (only loss)
Ended USC’s 27-game unbeaten streak (first game, Stanford’s “Vow Boys”)
2007 Oct. 8 ………….L 23 -24 H …… 85,125 (only loss?)
Ended USC’s 35 game unbeaten streak at home.
I thought, wow this tech bubble is pretty huge. What bubble can they create now to offset it? They created a housing bubble. Now that it is collapsing what is the new thing?
Oh yes, a currency bubble. By cutting rates they can devalue the dollar and make international growth surge causing stocks to surge here. Why? Because as companies bring home international earnings, it appears larger. But what about inflation? Real or Imaginary? The imaginary inflation is what the FED spits out. Oh, inflation is not a problem lol…
Real inflation is running at about 13%. What if GDP growth were 13%? Now you know why 50% of Americans are poorer now than they were in 2001.
Currency: after firming for a few days the middle of last week against my friends AUD,NZD,BRL,ISK the US dollar is once again sliding further down the drain. AUD may break 90 US cents any minute now. If you are a US Treasury bond buyer, don’t forget you could just as well buy (higher-yielding) Australian govt bonds through any full-service broker.
I’m seeing alot of housing bubble and crash and burn stories in the MSM. Many are now telling me about the housing crash ( ha ) but few will figure out how long or deep its liable to get, or really care as long as they got a job and don’t need to sell? I expect they will start caring in about a year maybe two as the crash bottoms and no rebound is imminent. Divorce? need to move? everybody won’t be able to stay put and wait for prices to return to 2005 levels.
I just can’t get over the fact that nobody in power questioned the high amount of speculators and second home purchases ,when the affordability numbers were so grim regarding loan qualifications between 2003 and early 2007.For the Regulators/Congress/The Feds to allow a global money supply to determine lending standards/appraisals in America ,which created a big fat bubble, is absurd. For the powers to allow global markets ,set up by Wall Street ,to flood America with low down cheap easy money was bad policy .
If global markets are going to produce so much excess money that it keeps creating bubbles in real estate or the stock market ,than it’s not a financial system based on anything local . While the NAR is known for saying ,”All real estate is local”, if the money supply isn’t local than you can no longer say real estate is local .
By all rights a Country that has such a low savings rate should also have low availability of money . This housing bubble did not match the wealth of the borrowers or the savings or the incomes of the borrowers in America.
It cracks me up when the business shows try to explain how we can have a stock market going up when real estate is crashing .Markets are no longer defined by what is happening in American . Only under the circumstances of a global money supply can you get Americans who save nothing being able to purchase so much on credit and have so much of a money supply to do so ,(which might be changing now because of the credit crunch.)
The excess supply of money that was provided by the “global markets” looking for a place to invest explains the excess money supply and that is what is fueling the stock market right now IMHO
i think no one questioned anything because all became opaque when dull, slow real estate loans were fed into a crazy volatile stock/bond market.
the stock market, assuming the loan packages were just another trade, manipulated that MBS stuff as though it’s value were reflected in the prices paid.
This is not the case when it comes to MBS.. mortgages are long term things.. they are not like stocks.. it may take years to know if a mortgage’s value or risk has shifted. It takes only seconds to see a stock’s value change.
value did shift and nobody saw it happening.. they were all too busy doubling down and leveraging up and getting high on high returns.
You are not going to believe this:
Kazakhstan’s third-largest bank yesterday gave warning that it would breach its loan covenants if customers continued with a run that saw 10 per cent of its deposits, or 27 billion tenges (£110 million), withdrawn in July and August.
…
Customers began pulling cash from the bank shortly after the listing, after a panic set off by a drop in the Kazakh tenge and the US dollar. The bank has also been hit by the credit crunch because it uses wholesale borrowing in the international money markets to help to fund its growth. There has also been a crash in parts of the Kazakh property market, where houses in the low and middle-range price brackets has fallen by up to 20 per cent over the past three months.
TimesOnline: http://tinyurl.com/28ox7o
I wonder what that’s doing to the market for gypsy tears? High-Five!
Bring Borat back. He will solve the currency crisis!
“…nobody in power questioned…”
With all due respect, that is the single least surprising thing I have ever read on the HBB.
Apologies, that was meant for Housing Wizard’s post a little bit back up the line.
But I thought the Feds are suppose to control the money supply by raising and lowering rates . Aren’t the Feds in charge of making sure the money supply is balanced ? I have never seen so many powers closing their eyes and sleeping on the job. The Feds certainly stepped up when the money supply went down because of the credit crunch .And what did you get with this excess supply of money but a bogus housing boom in which the money just kept flowing .
My point is that there is a major problem with a global money supply .I’m not trying to be surprising , but I think the MSM needs to address the issues involving global money supply being to much .Now you got the stock market going up based on this excess money supply IMHO .
Oh, I agree with you - it was meant as a rip on the PTB.
This isn’t Mr. Brown’s first turn in the news:
Randy Brown, a Manteca construction contractor, is the newest resident of Paseo West.
He got the keys on his $440,000 house in mid-August, two weeks before finding out about the planned auction. The minimum bid on an auction house such as his is $285,000.
“To put this in the shortest term possible, this sucks,” he said.
He feels the company sold the house to him under false pretenses. He fears the auction will draw in investors, who will rent out the properties and drastically degrade what was sold as an upscale neighborhood.
“Everybody knows what happens to a rental neighborhood,” Brown said.
http://www.recordnet.com/apps/pbcs.dll/article?AID=/20071005/A_BIZ/710050309
‘I bought my house on August 16,’ Brown said. ‘If one of these houses goes for the minimum bid, I will have lost $155,000 in six weeks.’
OK, then all you have to do is get on the horn and start offering some home loans to potential buyers. That’s it!
Oh, wait.
You don’t have any money?…
Oh, well, then STFU.
I think raising your garage door may IMPROVE property values! Potential neighbors can see that there’s no METH LAB in there.
Also, it’s funny how people just found a new way to brag! Instead of bragging about how much (yet unrealized) $$$ they made on their sh-tbox of a house, now they simply brag about how much money they LOST!
He can still feel like some powerful dealmaker toddling around saying “I LOST a HUGE GOB of MONEY” (after all, poor people don’t lose that kind of money, do they?) and his psychological needs to feel like a player have still been met.
“Currently, the buyer’s market includes more affordable housing with some property in the centralized cities of Amador County being sold for under $300,000, Bonfiglio said, which means great opportunities for first-time buyers.”
That’s great, but shouldn’t the price be below $100k, given the extremely remote location in the Sierra Nevada range?
“Homeowner Randy Brown tried to scare off investors one day by raising his garage door, pulling out his jacked-up truck painted with green flames, cranking his music and revving up his motorcycle.”
Neat, he probably knocked $50k off the value of his own house by that little episode.
Fresno, CA. Water tampering / apparent water diversion taking place. Beneath the surface i.e., under the streets, homes, lawns, sidewalks is evidence of a 45+/- yr operation that is now being tied into the “infrastructure upgrade.” Ringleader is Swieso, a former employee of the City of Fresno. This is behind the decades of sewage back spills, forged/fraudulent paperwork, and talk of re-routing water for development at Friant. He personally gave me a tour of the vacant lots he owned in the area where development has been prohibited, and boasted that those who told him it was impossible to get around the water laws, would soon be shocked to see what he accomplished. He has been conspiring with various city employees in overriding the Planning Dept. while plat/parcel maps are altered at title companies to reflect the illegal changes to property lines. This explains the mystery of why Fresno is the shambles it is - it is also why there are no older records.
The destruction of lives, property and businesses that accompanies this is massive, including ID theft and suspected homicide. This also appears to be linked to un-solved murder(s.)
Reporting this to the City of Fresno resulted in great panic - they went as far as to have a Restraining Order issued against me in order to keep this covered up. Kerry Trost (sr risk analyst) has the audacity to call ME a “liar” about the city’s own records, which verify exactly what is taking place!