Local Market Observations!
What do you see in your housing market this weekend? An auction? “Laguna Oaks Condo development is the latest to take the auction route. On November 4th, 50 units will go to the highest bidder in the space of two hours. The two bedroom units will open at $145,000, the three bedrooms open at $165,000. That’s about half the normal asking prices.”
Slower sales? “Chilliwack home sales in September were down 20 per cent from the same time last year, and by about 30 per cent from the ’sizzling sales’ recorded just a month earlier in August.”
“Trude Kafka, president of the Chilliwack and District Real Estate Board says she was ’shocked’ when she saw the September sales figures. The sales dip isn’t confined to housing, she adds, ‘it’s all across the board’ from single-family homes to townhouses, apartments and even houses on acreage.”
More defaults? “Creditors launched 1,778 new foreclosure actions in Wisconsin last month - 30% more than in September 2006, ForeclosuresWI.com reported.”
“In Wisconsin, last year was bad - 16,473 foreclosure actions statewide - but this is worse, figures show. In this year’s first nine months, 14,733 foreclosure actions were filed in Wisconsin, a 27% increase in households facing the loss of their homes to unpaid debt than in the same period a year earlier.”
Or contingencies? “Sanghomitra and Upayan Sengupta put a bid in on a two-bedroom condo in St. Francis for about $100,000 more than the asking price of their current one-bedroom place, about $189,000.”
“‘There are a couple other condos up for sale in our complex - the one just across from us, for almost a year. Our house has been on sale for about a month, and hasn’t had much traffic,’ said Sanghomitra Sengupta of their downtown Milwaukee home.”
“‘The contract says we have until December, but if worst comes to worst, we might just give it up,’ she said.”
Or financial news? “The downgrade of three home builders into junk territory by Moody’s Investors Service may only be the start of a rash of cuts of high grade builders into high yield, which may present funding challenges for some companies.”
“‘The fact that Moody’s would even consider — let alone act upon — a two-notch downgrade for an investment grade builder signals some serious worries that the current downturn has eroded debt protection measures to very uncomfortable levels,’ according to analysts at CreditSights. ‘We would not be surprised if S&P and Fitch came out with similar assessments in the upcoming months as there is now a two-notch disparity amongst the agencies,’ they said.”
Or cancellations? “Comstock Homebuilding Cos. of Reston yesterday reported that even though it sold 81 houses in the third quarter, 78 sales were canceled, a net of just three sales in three months and a striking reminder of the building industry’s deepening troubles.
“‘Market conditions have continued to deteriorate throughout the year,” CEO Christopher Clemente said in a statement.”
“In the Washington region, the cancellation rate for newly built homes shot up to 48 percent in July and August from 18 percent at the comparable time last year, according to Hanley Wood Market Intelligence.”
“The most dramatic rise was among condominiums, where the cancellation rate jumped to nearly 124 percent from 13.5 percent a year earlier, which means there were more cancellations of previous sales than there were new sales.”
In 2000, Atlantic magazine writer Virginia Postrel owned two houses; one in LA and one in Dallas. Seven years later, the value of her LA home has doubled, while her Dallas home sold for $6,500 less than the purchase price. That comparison kicks off her looping but interesting essay on red states vs. blue states, land-use restrictions, “supercities” like Los Angeles, and why the hell we put up with this goddamn city. And here’s your answer to why everyone looks like you:
“The unintended consequence of these land-use policies is that Americans are sorting themselves geographically by income and lifestyle—not across neighborhoods, as they used to, but across regions. People are more likely to live surrounded by others like themselves, creating a more-polarized cultural map.”
· A Tale of Two Town Houses [The Atlantic]
This is for txchck.
LOL. I keep saying it but nobody believes me. Dallas is where Clownifornia money goes to die.
At least the portion of Clownifornia money that did not dry up in some desert southwest McMansion tract home development…
non union states grow economically while union states sck wind
Florida is a union-busting state, and it’s bending over and spreadin’ ‘em right now …
Non-union state means you hire illegals who blow away with the wind when the money dries up. What, you say they didn’t invest their earnings back into the local economy?
Note to Deep South: once on encomienda system, always on encomienda system.
Whats the big deal? America has always been that way, i grew up in an Hungarian neighborhood that had 2 Catholic masses in Hungarian and one in English on Sundays.
Places Like Greenwich Darien Westport have had land use restriction like no 2 family homes or rental apartments since i was a kid.
I think the Atlantic article is too narrow in its time perspective. What if the author had bought in, say, Van Nuys in 1989 and tried to sell in 1995? The root cause of that crash was the decline of the aerospace industry. The Lockheed plant in Burbank, where men and women of incredible talent helped the Allies win WWII and designed and built many of the 20th centuries iconic aircraft, is gone. In its place–a shopping mall.
Think L.A. real estate can’t crash again? Maybe, now that it’s tougher for someone with a $60K income to get a loan for a $500K shack, the next downturn has already started.
http://www.theatlantic.com/doc/200711/housing?ca=ESvWwPnBV9MsLpmB4%2BUR1pcurle7EeL7lbOKT0az%2BBg%3D
It’s not that we bought into a declining Dallas neighborhood: Uptown is one of the hottest in the city, with block upon block of new construction. But the supply of housing in Dallas is elastic. When demand increases, because of growing population or rising incomes, so does the amount of housing; prices stay roughly the same. That’s true not only in the outlying suburbs, but also in old neighborhoods like ours, where dense clusters of town houses and multistory apartment buildings are replacing two-story fourplexes and single-family homes. It’s easy to build new housing in Dallas.
and yet they keep building and building in every square inch of urban Dallas and continue to price higher and higher, which generally the population around here can’t afford. I think they’re building this junk for the California market which they are all sure will never stop coming here.
“….the California market which they are all sure will never stop coming here.”
That’s how we in California have felt re “the influx” from other states which in turn drove up our home prices. Thought: maybe many of the ‘California market’ are returning Texans.
~Misstrial
my hood 22151 N VA cracked the 400k mark - 399 on a short sale
we were around 575K in 05
Any comments on the condition/location? I’m very interested in that area.
And yes, I travel a lot, so I might have three locations to chose from to live.
Got popcorn?
Neil
In my local paper this morning
Carlsbad not following housing trends
http://www.currentargus.com/ci_7165069
Residents finding profit in renovating houses
http://www.currentargus.com/ci_7165078
Just so ya’ll know it’s very different here.
LOL
–
>>
Do these prices make any sense? Is this guy Dunagan smoking something?
Jas
–
Sorry, I just realized that it is not Carlsbad, CA (N. of SD)) and it is Carlsbad, NM. The difference seems to be 5:1 or more.
Jas
“Hensley has worked for Pettus Construction for four years. Three years ago, he bought a house for about $68,000…”
Yup, 68 grand wouldn’t buy a decent dog house in Carlsbad, CA>
$68k doesn’t sound like a bubble. I could believe people are retiring to such locations.
Got popcorn?
Neil
Carlsbad, NM ? where all the alien spacecraft fly around ? I was told the West texans take there Alien sightings very seriously. Well Ok then
Oh cactus,
it’s those people up in Roswell that have the aliens. down here in Carlsbad we have skyrocketing real estate and local leaders that assure us the national housing bust won’t affect Carlsbad cause it’s different here.
lilly
That’s what Las Cruces, NM realtors are insisting (”it’s different here”).
Of course, just ignore the 1500 houses on the market in LC; lol!
~Misstrial
I overheard a realtor talking to a couple looking for lots in Flagstaff last night. One of his clients turned down $290k (!!) about 6 months ago and now has the same lot listed for under $280k. Peak views indeed.
Ben, any idea what’s happening in Flagstaff and environs?
I have a friend (ex Realtor, yeah, I know…) who is looking to move out of L.A - any point in looking for places in Falgstaff yet, or is it still delusional?
I really worry about Flag. The prices here are just as out of whack with incomes as LA, maybe even more so. The problem is the local economy is much more vulnerable due to being isolated, unlike a big metro. The local realtors aren’t doing any favors to the market by refusing to push sellers to get real. They will eventually, I am sure, but right now they seem to have closed ranks.
It was like that 15 years ago in Flag too. Very very expensive.
Thanks for the info, I’ll pass it on.
I, too, would love to live in/near Flagstaff. But I can wait…
No industry in Flagstaft ? I thought thats where all the dental floss comes from :-0 It is pretty there with the Mountains.
Flagstaff/Williams is very pretty.
During family vacations to lake powell, we used to stop and stay in that hotel on the south side of 40 near the deer farm. We considered moving there when we relocated but ruled it out beacuse of lack of water. It seemed crazy to me to see lots for $40-100k where you had to haul in water.
It is crazy because much of that land sold for a thousand an acre just a few years ago.
Dutch bubble news:
Robert Shiller says in an interview with Dutch newspaper NRC that he thinks the current US housing crash will be the worst since the Great Depression, and that Dutch homeprices are likely to decline as well as a result, based on rent/income ratios and bubble price gains (which are even higher than in the US). Dutch realtor organisation NVM is still convinced that homeprices will keep rising, current expectation is +6-8% for 2007 and +8-10% for 2008.
Interesting that it takes an American to mention this in the newspaper, I have not seen any such views in the last 6 years or so. Also funny because much of Shillers original research regarding housing bubbles is based on the Dutch ‘Herengracht Index’, a record of homeprices in a wealthy area in Amsterdam from the 17th century until 1975.
socializing the loss and the gains - EU = scary
Bad news brought by an outsider is always easier news to digest.
yes, I think they consider it harmless this way … probably less than 1% of the readers of this high-profile newspaper know who Shiller is.
psych 101, in any language
“…and that Dutch homeprices are likely to decline as well as a result”
The Dutch house prices need help to decline?
definitely, they have been climbing for more than 15 years and despite 600-1100% gains no end in sight yet. Nearly everyone here still thinks homeprices can only go up; fundamentals don’t matter anymore (of course, unlimited government support does help). But psychology can make a difference … news about heavy losses in the US housing market (maybe in 2008?) might finally break the Dutch bubble psychology.
Repost. I’m seeing some anger at KB Home.
http://tampa.craigslist.org/rfs/447007202.html
Actually, what I find interesting is that the post hasn’t been flagged for removal. Maybe there’s some agreement about KB?
post was deleted. what’d it say?
“‘Market conditions have continued to deteriorate throughout the year,”
Expect to hear this for the next couple of years at least.
Although the housing market in Charlotte is a little soft, it isn’t making people squirm yet. But what is getting attention is the drought. Now there is beginning to be worry about economic impacts of that.
Charlottre Observer Article
.
“But what is getting attention is the drought”
A good, soaking tropical system is what is needed. There’s an outside chance of one, considering Wilma came through at the end of October. Keep your fingers crossed. I’m hoping for a little more rain here in Fla, on account of the dry season could weed out a development or two. Much as I hate to see the developments, I would not like to see wild fires level them, because I don’t want to see the misery of the residents.
OR this weather event:
Interestingly this oddity does not apply for mid Atlantic snowstorms. For example the January 24 25th 2000 severe Noreaster which dumped some 21″ snow in Charlotte and greater than 6″ of snow in much of South Carolina…15″- 18″ in central Virginia and 12″ s of snow in DC…only drop 6″ in Philly New York City and Boston… and it was a Monday Tuesday eve
i don’t think the longterm implications of potential drought across huge areas of america’s fruited plain can be underestimated. areas like the northeast — where there seems little likelihood of imminent drought — could indeed “be different” and, hence, much more desirable if huge swaths of the southwest (and southeast, e.g. atlanta) do indeed run out of water. even the midwest’s essential ogallala aquifer, which extends from texas to nebraska, said to be in danger of dessication (as well as pollution) to the point of taps running dry, or too dirty to drink in the not-too-distant future. it could give the old saw ‘dry’ counties — and states — a new and all-too-familiar meaning. considering that this real estate bust is likely to last for more than a decade, who knows what effects such natural phenomena might add on to mix things up beyond the wildest dreams and nightmares of the generally prescient bubblonians on this board……….
I grew up in central CA in the middle of farm country. My great aunt and uncle, who settled there in 1902, used to tell me about how they’d hire the dust bowlers during the depression to pick fruit. With the current economic climate, and drought climate, it seems history is (like Mark Twain commented) “rhyming.”
The drought has been big news this week in Atlanta too. The Atlanta Journal had an article that said the 2 lakes that provide drinking water for the metro area could run dry in 90 DAYS.
I also saw on a local TV news report that state officals may require water saving plumbing upgrade installation in every house, at an average cost of $5500 per house. The news station interviewed a realtwhore who said if the requirement goes into effect, what is left of the housing market will be toast.
As I reported in the Florida thread, Metropolitan Ministries, the major urban food bank and charity organization in the Tampa area has bare cupboards and is running news stories in the hopes that they can spur some donations. They report more in need, fewer donors.
I’ve seen too many people first hand who ask for handouts… without giving up the 2005 SUV they have (go get yourself a 2001 that is smaller)… or giving up their cable TV or cell phone service cut backs.
J6P is so focused on paying monthly bills, that they just can’t see a change in the trend. they can’t even seem to be able to understand the concept of bad times / rainy day.
WHOA…..for some of us, the only way we make an money today is by having DSL/Cable and unlimited cell phone plan.
But i fully agree on the car, nobody NEEDS an SUV unless they can write it off as a business expense. A couple of nice mid-size Plymouth station wagons served our family fine for 40+ years. I drive a 11 yr old 4cyl Ford Escort SW, all i did was downsize/modularize my DJ equipment to fit in the car.
check out my link….a 70 year old DJ, cool guy
aNYCdj,
I have a 1982 Oldsmobile Custom Cruiser station wagon. This baby rides like a limousine. Love taking friends and family for drives in this. It is on its second engine. It has the 3rd row seat that faces towards the rear of the station wagon. Nieces and nephews love that 3rd row seat.
“nobody needs a SUV”
I thought so too, until I moved to a rural area with a lot of dirt roads. We fought it for a while, even replacing the front end of my wagon when I hit a big pothole. Can’t write it off, but bought one because we NEEDED a four wheel drive with enough seats for everyone in the family.
That may be true, but are you going to punish the children because the parents are dolts? We’re not talking about giving JJUL6P (Joe & Jane Ultra Light Six Pack) a free SUV. We’re talking about giving them dry goods so they and their kids don’t starve.
Many of us have spent at least one year of our childhood below the poverty, but most of us aren’t poor. That’s because we were influenced by the example of others in our communities to reject the path taken by our parents.
My mother blamed getting pregnant with me for never finishing school and starting a career, when I was little. I barely dated and didn’t have sex until I was 22 because I was so afraid of ending up like her. Never underestimate the power of aversion.
Here’s another example: we were a big family, and it was difficult to make ends me. Other mothers gave us hand-me-down clothes cast off by older siblings for us to wear. My mother was mortified (but accepted). Guess what, I’d rather shop in thrift stores than retail stores today. I learned from those other families–even though I never spoke to them–the value of thrift, recycling, and that used goods were just as good as new. I learned that by being thrifty, you put yourself in a position to be a giver.
I donate to clothing and food drives because I want to make a difference in a child’s life. Of course, if the parents are taking food aid but keeping their kids undernourished (or selling the food stamps for crack–they still use paper food stamps in Gville, I can’t frigging believe it) and you know about it, time to call child protective services. Some parents are unfit.
Some parents are unfit.
And sometimes all the welfare in the world won’t change them. They have made a career of looking for the next smuck who will give them handouts. I witnessed this first hand when some friends and I tried to help one family with 3 children. We gave them food, clothes, paid their children’s school workbook fees, helped them get free medical care, food stamps, cheap housing, etc. Later we found out they had cable, cell phones (2 for the adults and one for the 13 yr old & none needed for a job). They had a house phone. They bought a 2 different game systems, tons of video games, DVD’s, MP3 players, you name it. They bought this with the money they earned from their jobs, because they didn’t have any regular living expenses to pay for. It was all donated. Plus they ate out about 3 times a week. Unless someone’s house burns down, I don’t offer to give anything. I’ve seen too many who know how to milk the system.
I now donate my money to things at school, like sending a child to camp, buying their workbooks, paying for them to go on field trips, etc. Things only a child can benefit from. Their parents can fend for themselves just like the rest of us had to.
A most amazing editorial appeared In the local paper the Bozeman Daily Coverup. It was by Leon Royer, who is presedent of American Bank of Montana. He tells the truth about Bozeman Montana’s real estate market. http://www.free-eco.org/articleDisplay.php?id=579
Great link, Duane. The guy speaks sooth.
“Who is going to live in all of those newly constructed vacant houses in Bozeman and on the 4,000+ lots in the planning phases in Gallatin County? What is going to happen when the true impact of the construction downturn is fully realized?”
And I’m sitting down here in Fla wondering the exact same thing about all the houses and condoze built around here. I am going to be very curious as to how local communities are going to deal with the ghost developments and squatters.
I am especially intersted in what comes of the higher/high end condos in our area. Like the 300-500/sq/ft monsters they are building in Gardens, or some of the intercostal front condos in the WPB area.
What will come of these units? Is there enough demand to even support 50/sq/ft? And if so, does that demand have the HUGE HOA/condo fees (some are well north of 1000/mo) that these types of places require. Full time valet; door service, concierge, etc.. All this stuff costs money, even if the condo is free, is the demand there?
And if not, what comes of these units? Anyone with more experience in a crashing market, feel free to speak up… But, I am very curious, especially for units where there really was no demand at all (downtown highrise condos in WPB come to mind), what are they going to do with them?
“But, I am very curious, especially for units where there really was no demand at all (downtown highrise condos in WPB come to mind), what are they going to do with them?”
Yes, is there any precedent to follow? I think Ben mentioned something about a development in AZ being bulldozed back in the 80s?
It was in Dallas Texas, the I-30 condo sandal. Near Lake Ray Hubbard. When Empire Savings and Loan failed. That was the begining of the S@L crisis.
Thanks, Duane. I’m wondering when we’ll see one of those events.
In 1982-83 condos in the Phoenix area were listed at $20- per sq. ft. and up. Factoring in inflation that’d be $40- per sq. today?
But this downturn will be much worse, I think.
Visited Bozeman this summer. Last time when I was there, in 1986, it felt like a small cow town. This time, it was more like Southern California - miles and miles of subdivisions filled with empty houses for sale. I might have spotted at least a few thousand empty homes. All fairly high priced, mind you. It was so eerie. To come away from SoCal and be there again.
1986 was near the bottom of the the last housing bust. The prior boom last from 1969-1979. During the the 70’s Bozeman was basicly a college town with no other industry other than house building. The housing market failed in 1980, MSU enrollment peaked in 1983, and declined. During the 1980’s, when the economy was terrible, there were multiple For-Sale signs on every block. Now, when the economy is booming, There are multiple For-sale signs on every block.
Thanks for the post Duane,
It seems that word is finally getting out that Bozeman is screwed. Even as late as May, my old friends and colleagues insisted the market was just “a little slow.” Now they universally agree there is a serious problem. No one quite realizes how severe the correction will be, but at least recognizing that there is a problem is a step in the right direction.
4000 lots in the planning stages! Wow, wow, wow… THere are a thousand lots on the GV MLS right now, with probably less than a dozen selling each month to someone other than a spec builder.
I’m guessing that Bozeman homes are going to be DIRT cheap when all this collapses. There is just SO much more supply than demand that in 5 years you will be able to buy a home for half the construction cost. And no amount of Fed rate lowering is going to change that fundamental dynamic.
I guess this episode is rather ironic, then.
(That was Kelsey Grammer?)
Plot summary: it’s Ground Hog Day, TNG style, as the hapless USS Bozeman is forced to repeat the same emergence, crash, and explosion over and over again for eternity.
You are right, it is ironic. Bozeman is in a time loop, It’s economy gets wreaked for the same basic reasons. The Emergency is over building. The crash is when the money stops flowing. The explosion, is the economy tanks. The memory is lost because people move out, and the locals don’t want any memory of the crash. After the long depression, 1957-1969 and 1979-1991 the time loop starts again.
The final gut punch will come when the state institutes draconian budget cuts for MSU as income tax revenues for the state fall off a cliff. The only “permanent” leg of the local economy (MSU) is in fact dependent upon a capricious state legislature that is dependent upon all of the recent “growth” for tax revenues. In a state like Montana, where there is so little in the way of an economic base, this real estate crash will have a dramatic impact.
And like Duane has pointed out, this has happened before. MSU is notorious for cutting faculty salaries and laying off staff during the down cycles. Even during the best of times that university gets by on a shoestring so there is little fat to cut when things go bad. (As of a year ago, the university’s total debt was roughly equal to the total endowment. In other words, MSU is just barely solvent.)
Just wanted to throw out a few details of an auction I just went to. Thought you California folks might find it interesting because of what was offered and the dollar amount.
West of the western Detroit ‘burbs: small town (1-2,000 residents). 4 bedroom brick ranch; huge office could be made into another bedroom. 2 full baths, spotless, 1 acre, quiet neighborhood. Great house, great place if you like being a little out in the country a little.
Homeowner is selling, as they had been talked into buying another place before selling this, and now they’re hurting. House has been listed about 1 1/2 years. Reserve price was 255K. Auctioneer was very open with me about details.
The house didn’t sell. Not because bids didn’t meet the reserve, but because nobody even bothered to show up. I was the only one there besides the sellers and auctioneer. Auctioneer had had an open house the prior weekend during the apple festival, and had 5 people walk through. Sellers can hang in there about 3 more months she says ’til they throw in the towel. She only did a reserve auction as a favor, normally they’re absolute. Turned out to be a total waste of time.
Wow, that’s depressing. What price do you think would have moved it? $150,000? That’s what I’m thinking.
This business of buying another house before the other is sold is something that seems to have happened a lot during the bubble. I never bought a house without selling the current residence first. A little nerve-wracking, but less so than having to carry two places, IMO.
Yeah, the thought of carrying two mortgages for an indefinite period is terrifying. At least it should be.
I could see it going maybe 150, but would the sellers accept AND the bank short it?? That’s the 64K question.
I meant the auction was a waste of time for the sellers and auctioneer, not me. Rose (the auctioneer) was very open and friendly about anything and everything. I wasn’t expecting that, frankly. She did say that in her opinion banks were loosening up and that she’s done some decent short sales, at least in our area. I’m going to her auction next weekend in that it’s absolute, with no reserve, to see what kind of bids they’ll get. That is, if anybody even shows up to bid.
I don’t even have a mortgage anymore, but the thought of 2 insurances, taxes, utilities, plus upkeep is enough to make me not do it. We’re making close to 90k a year, which is a good salary in Ohio, and I wouldn’t want the responsibility, financially, plus the headache of taking care of two properties.
Blano
I would buy that house. Living in California is starting to get to me with the high taxes, illegal immigrants sucking money out of the economy as they breed 5, 6, 7, 8 kids, dumping used diapers in the street, all their health, education and welfare paid for by the State of Califonia taxpayers. Let’s not get into the California jails crammed with illegal immigrant criminals which cost (I hear) about $80,000 per inmate a year.
Then there’s the traffic congestion. Then there’s the air pollution. How about the State’s continual quest for more and more money. The State of California needs a new motto. How about, “We Are Financially Squeezing Business and American Citizens Until They Scream.”
Vehicles are a prime target for topping up the state coffers. Park 1″ over a red curb and it will cost you big time. Motorcycle cops hiding everywhere trying to catch people so they can collect BIG traffic fines (hidden taxes). The slightest infraction will cost BIG bucks. My wife got fined for a rolling stop recently (she didn’t stop dead on the line at a junction but rolled slightly over it) and it cost her $300.00. Don’t fool yourself into thinking you can win in court. The State wants the money. YOUR money. They need it. When it comes to collecting hidden taxes (a.k.a trasffic fines) the chances of you getting off are close to zero.
That said, how many days does the sun shine in Michigan? The sight of rain and snow depresses the hell out of me!
You mean stuff like this, Mike?
http://www.signonsandiego.com/news/state/20071012-9999-1n12illegal.html
Way to go, AHHHHnold. Aren’t landlords allowed to do criminal background checks? Credit reports?
Here’s another CA real estate success story. I’m tellin’ ya, the hits just keep on coming. I’d give you the original LA Times link from which this was taken, but I’m not registered, so you’ll have to put up with digger. Just ignore the extraneous stuff.
http://www.diggersrealm.com/mt/archives/002512.html
The stories on Palm’s links are much, much more (m)saddening than rain and snow.
You’re right about CA looking for cash anywhere they can. I briefly filed for CA unemployment in 2002… I think I only claimed about a few thousand of the benefit amount… left most of it behind when I moved to Charlotte.
Well, in 2007, they audited me and back billed for $300 of overpayments. I really have no idea if they are right, I was working two part time jobs with odd hours back then. I certainly don’t have pay stubs from 5 years ago lying around. Trying to stay in contact with them from the other side of the country and solve it is too much hassle.
So I’ll probably cough up $20 a month for a while (just to make them waste money on postage) until they quit billing me.
But lets get serious. How badly is the state hurting for cash to be auditing unemployment records from 5 years ago and chasing down a few hundred bucks? Or spending money on the salaries of clerks to do this?
But I mean… for real… how much
California sent me an income tax bill when I didn’t even have any income in the state one year. they took the amount of mortgage interest I paid, figured I’d made at least three times that much, and sent me a bill for income tax on that amount.
Eventually they got to the point of garnishing my wages - hah! I didn’t have a paycheck!
After that, when the state was going to yank it straight out of my checking account - I’d made the mistake of having my money in a California based credit union - I followed up and did the requisite paperwork to have the bill tossed.
California is voracious.
When we moved from CA to CO (early in the year), we were taxed by California for not paying enough taxes for the 3 months we lived in the state. I couldn’t believe it.
They need to send those cops to Gainesville, FL. Spread the love … Red light running has gotten so bad here that I don’t even look at the signals (VERY bad habit, yes), I just wait for the intersection to clear, then quickly check (if I remember!) if I have a legal indication before proceeding.
Two months ago a bus driver was very badly hurt when she proceeded from a stop when the light turned green and a van driver on his cell phone ran the red. He hit the side of the bus, which spun around and impacted again. She was badly concussed and was out of work for a couple of weeks.
Sick.
I expect fewer and fewer individual buyers to show up at auctions, because of the dawning perception that auctions are fake. From reserve prices, secret reserve prices, and shills, the perception is that it is wired against the individual, and is just a gimmick to increase traffic.
How is a reserve price any different from an asking price at a standard offering?
Auctions only “work” in a rising market. An auction with a reserve in a falling market is a waste of time.
Blano, I’ve spent a lot of time in the Detroit area. The city is one thing but people just don’t realize how nice the outlying surburban areas there are. There are some wonderful places around (and away from) the city. Its really too bad the problems they are going thru today. Hopefully, at somepoint things will begin to improve there.
Very interesting development in our zip code (92127 SD — Rancho Bernardo W): Sandicor.com shows September median SFR sales price of $850K and median list price for new SFR listing of $835K — the first time I have noticed new listings at a lower median level than contemporaneous median sales price.
By contrast, there are 270 used SFRs on the MLS (at least what shows up on ziprealty.com) with a current median list price of $1,250,000 or so — $400,000 above last month’s median sale price and even higher than the median list price of new SFR listings.
My take on this: We may be seeing an incursion of REO properties priced to sell which will make it quite hard to move inventory priced to sit on the market until a greater fool with bank comes along to snap it up.
Remember the “Real Housewives of Orange County”? Maybe they should have called it “Living Beyond Your Means in Orange County”. According to realtytrac.com Slade Smiley’s (lived in a 4,000+sq ft house, drove a Hummer, bought his fiance a huge rock) house is in forclosure. I came across this information as TMZ broke that he was not returning to the next season.
http://tinyurl.com/ywv32c
Interestingly enough, the home was “purchased” in 2002 for $822,000 (http://tinyurl.com/29zdcr), yet the outstanding loan amount is $1,408,662 (per realtytrac.com) and the home is up for auction. You could say that he was duped into taking out more lines of credit by those evil mortgage brokers, but he was one himself.
These people are the poster children for excess and living beyond their means.
Merritt,
I saw part of that show once, the aging housewives were acting like feckless teenagers, with sagging faces and rock star dreams. The daughters were trampy looking bleach jobs with tattooes. All of them seemed unemployable, but loaded with bling, so they must have been in RE.
Not one of them seemed a decent human being…and none could work at a fast food joint–what, show up every day, on time, and do an honest day’s work? Really, what a crew of aging parasites, living on America’s economic carcass.
I saw a few episodes. It was disturbing to watch.
Well put, spike66. I’ve never watched that show, and never will. How people can watch that garbage is beyond me. What a hideous waste of time.
I can’t believe entertainment is so sparse that anyone would even care about how the h*ll someone else is living. TV is really scraping the bottom with these reality shows. Except for those and a a gadzillion home shopping channels, I’m really thinking about cancelling my cable.
Agree with you spike. As far as I’m concerned, these “Housewives of Orange County” and their daughters all look like white-trash wannabes. Unfortunately, the real estate run-up allowed a lot of people to move up to another level that they did not earn through talent/achievement/education/innovation/contributions to society.
One example: A pic of one of these women was on a website with one hand white and the rest of her a TANgelo M. shade of orange. Obviously, she had applied self-tanner herself with the one white hand. Really low rent.
~Misstrial
Spike66, I couldn’t agree more! The scary thing is that people ASPIRE to have that lifestyle because it’s glamorized on TV. People need to know that it’s all smoke & mirrors (fancy cars, flat screens, etc). I spoke to a Buyer at a Regional Department store in Central California the other day. They aren’t able to sell the basics/necessities, but the frivolous tech items are still selling like crazy. People (in Modesto, Stockton, Bakersfield…forcosure capitals of the country) are going to lose their homes, but still living beyond their means and buying sh*t they don’t need.
People who come from crummy homes think that the family strife they see on reality shows is completely normal, except that the people on the shows consume on a higher level. Since consumption is often a substitute for love and nurturing in these households, of course the bling is desireable.
Is it any wonder that so many kids from broken homes put all their energy into “win the lottery” style aspirations (American Idol, sports, rap production companies, whatever), and, when they get to the top, spend everything they make and more for a few ‘fat’ years, then dissolve into decades of drug use, some even becoming vagrants. STUFF didn’t buy happiness.
The really sad thing is that many neglected children are raised by television, and we’re not talking about Mister Rogers (who was all about nurturing). TV teaches one thing: STUFF is your substitute for all of life’s (and your) shortcomings. STUFF makes you happy.
I used to live in a very tony area of OC. I thought it was funny when I put the “Yorba Linda - Land of Gracious Living” license plate frame on my 77 volvo wago. My neighbor regularly asked me to park my car in the garage when she had parties/gatherings. A policeman knocked on my door once because I had underwear on my clothesline that was visable from the street. After living there a dozen years, I only had one true friend in the neighborhood. The rest were so shallow and phony that I didn’t bother. The only thing I learned was the more you make the more you spend…
“Comstock Homebuilding Cos. of Reston yesterday reported that even though it sold 81 houses in the third quarter, 78 sales were canceled, a net of just three sales in three months and a striking reminder of the building industry’s deepening troubles.
“‘Market conditions have continued to deteriorate throughout the year,” CEO Christopher Clemente said in a statement.”
Now batting cleanup for the Comstock Load, with a sparkling cancellation rate of .963
Christopher Clemente
That’s CCCChris-topher CleMEEENNNteeee!
(Too busy for baseball this year, too busy making money. It’s the one thing I regret not being able to follow in entertainment this year. Oh well, at least the Yankees lost.)
Finally, The NYTimes weighs in on bargain hunting in Brooklyn. Price cuts, builder concessions, some discounting. Some difference in neighborhoods, but finally, a little aknowledgement that “it’s not different here”
It starts in Brooklyn for former and would-be Manhattanites who have been priced out here and sent to Brooklyn.
Queens is another world–so many Balkanized, immigrant neighborhoods, where Manhattanites would be not be willing to live.
http://www.nytimes.com/2007/10/14/realestate/14cov.html?_r=1&oref=slogin
You must be nuts to buy anything in Williamsburg at any price unless you are a drug dealer or don’t mine getting robbed at noon.
“Queens is another world–so many Balkanized, immigrant neighborhoods, where Manhattanites would be not be willing to live.”
Yep, the melting pot, isn’t anymore, because someone forgot to throw in the binding ingredients, law and culture.
What’s wrong with Flushing?
Today’s San Diego Craigslist find.
http://sandiego.craigslist.org/rfs/447963737.html
Another little slice of paradise in Carmel Valley. This one was purchased in March ‘06 for the absurd sum of $805K. Needs repairs, but it has the requisite granite! The garage door looks like two rows of teeth, with two eyes above it on the second story.
Fast forward a year and a half to $116K of evaporated value (so far). New asking price of $689K in an area where people insist this sort of thing just doesn’t happen.
“$116K of evaporated value (so far).”
Poof! Vaporized!
Pretty soon, people will be taking homes for granite.
I liked that!
Talk about a flip!
This CNY home was purchased on 8/10/2005 for $249,900 according to tax records.
Its land is valued at $57800.
The property is assessed is $230k.
And the total market value for tax valuations is $283,591.
So I can’t for the life of me figure out why it’s on the market for $1,300,000. This is not waterfront property.
http://cnyhomes.com/Listing/Search/info.cgi?mlnum=181474
………So I can’t for the life of me figure out why it’s on the market for $1,300,000.
That’s easy. The owner has been watching all those millionaire shows and wants in on the big score.
Why not? Maybe some scammer will work out a buy-back scheme where they can both walk away with the banks money.
this is OT, but interesting. is this the gun that will be held to the heads holders of mbs notes to force them to revalue their underlying mortgages???
————————————————————————-
——-
October 13, 2007
I.R.S. Looks at Mortgage Securities
By LYNNLEY BROWNING
The Internal Revenue Service is checking out dozens of participants in a financial arrangement to see if they are reaping illegal tax benefits by underreporting income on mortgage-backed securities, which make up the bulk of the multitrillion-dollar market for asset-backed securities.
The inquiry, which an I.R.S. official said yesterday was in its early stages, concerns the use of arcane but powerful investment entities known as real estate mortgage investment conduits.
Remics, as they are called, are a complex legal entity through which the vast majority of mortgage-backed securities are sold.
The I.R.S. is looking at whether companies and firms that set up remics — including the giant housing agencies Fannie Mae and Freddie Mac, as well as Wall Street investment banks, commercial banks and other mortgage originators — have undervalued the interest earned on those securities and thus underpaid their federal taxes, according to a senior I.R.S. official, Barry Schott.
Mr. Schott oversees the financial services unit of the I.R.S. division devoted to scrutinizing large and midsize businesses.
Mr. Schott said the I.R.S. had looked “at a couple of cases and discovered some issues, and we’re expanding this to look at other cases.” He said he thought that “less than hundreds of billions of dollars” in interest income had been underreported, but he declined to be more specific.
He added that the I.R.S. did not want to suggest that abuses were widespread “because there’s a very sensitive market.” While he said that approximately 20 to 30 companies involved in remics were under scrutiny, he declined to give their names, citing taxpayer confidentiality rules.
Mr. Schott said that the scrutiny, which was first reported yesterday in Tax Analysts, a prominent trade publication, was not related to the recent turmoil in the mortgage markets. The issuance of mortgage-backed securities has been all but frozen because of those problems, and large banks and hedge funds have taken big losses on investments in the securities.
A remic is typically a tax-free trust set up to issue and sell pools of existing mortgages, both residential and commercial, to investors.
A trust is set up by a bank or other company — called a sponsor — which sells or transfers mortgage pools to the trust. That move is taxable to the sponsors.
They then use the remic to carve those pools into slices, bearing varying degrees of risk, for sale to institutional investors — typically other banks, hedge funds, insurance companies and pension funds.
The investors who buy the slices pay taxes on their investments. Often the sponsors themselves retain a slice of the mortgage pools in the remic.
First created in the 1980s, remics have ballooned in popularity in recent years, and now account for an estimated 50 to 70 percent of the multitrillion-dollar market for asset-backed securities.
Securitization has allowed home lenders over the last decade to vastly increase the amount of money available for home loans, by moving existing loans off their balance sheets and freeing up cash. The market for mortgage-backed securities now exceeds that for United States Treasury bills, one of the world’s largest markets.
Remics are a crucial component of that process. Their profits or losses flow through to the investors who buy the mortgage pool slices, and are taxable to those investors. Remics, which are themselves tax-free, thus allow investors and sponsors to avoid double taxation.
Remics that violate the tax code, however, can lose their tax-free status, potentially causing either their sponsors or their investors to face a big tax bill.
Mr. Schott said that the I.R.S. was looking at whether sponsors of remics were deliberately underreporting the income they earned from regular and residual interest on securitized mortgages sold through remics.
The sponsors typically set the value of the interest according to complex calculations involving when and how borrowers are likely to pay off their mortgages.
The inquiry stemmed from some of those interest calculations, which the I.R.S. believed estimated the interest to be paid over time incorrectly.
Any underreporting could also affect the buyers of the mortgage slices, because they could unwittingly be paying too little tax on their investments.
“If there is general noncompliance, it’s going to cut across all of those pockets,” Mr. Schott said.
A spokesman for Freddie Mac, which has issued tens of billions of securities through the remics that it sponsors, said yesterday only that “our remic program is a key component of our securitization business here.”
Fannie Mae, one of the largest issuers of mortgage-backed securities and users of remics, did not have a comment on the investigation.
“Fannie Mae, one of the largest issuers of mortgage-backed securities and users of remics, did not have a comment on the investigation.”
Comment?? How could they? They can’t file a timely financial statement, haven’t for years, and you think they know what is going on in their own shop….If there were an intergrity to our financial system, Fannie should have been delisted years ago. It’s a black hole.
“If there were an intergrity to our financial system, Fannie should have been delisted years ago. It’s a black hole.”
The rules are, there are no rules, except for those that someone may wish to apply on an arbitrary whim.
“The rules are, there are no rules, except for those that someone may wish to apply on an arbitrary whim.”
A fact which makes April 15 all the more humiliating.
A system where people who play by the rules perpetually get punished is not sustainable.
You know, I’ve always been indignant that earned income (the sweat of the brow!) was taxed much more heavily than unearned income, but maybe it was a subtle hint from the government that we should be saving and investing?
I know it motivated me … although (being a former Catholic) I was held back for some years by the idea that somehow the whole enterprise was somewhat slimey.
It really helped to learn that when you save and invest you now have money to help others … and don’t become a burden on anyone else. You can live like the mendicant monk without being the beggar.
“The I.R.S. is looking at whether companies and firms that set up remics — including the giant housing agencies Fannie Mae and Freddie Mac, as well as Wall Street investment banks, commercial banks and other mortgage originators — have undervalued the interest earned on those securities and thus underpaid their federal taxes, according to a senior I.R.S. official, Barry Schott.”
This could get interesting. Remember that it was not the police nor the FBI, but rather the IRS which eventually put Al Capone behind bars.
“the IRS [which] eventually put Al Capone behind bars.”
yup. the irs is a mighty big hammer, and it can make almost anything look (and feel) like a nail.
I’m fascinated with the apparent thinking of sellers who make Wal-Mart style incremental price reductions when their asking doesn’t work. Here in Jefferson County, CO, I have been watching one particular house purchased new in 2003 for 445K that has sit on the market for 535K, down from 549K when it was listed at least six months ago. The homeowners have long since moved out of the country, and the price dropped a whopping 4K when they apparently hired a new realtor. Also humorous is that the listing on the NAR website says “NEW this Week!” whenever there is a price drop on that old listing. It continues to sit.
“I’m fascinated with the apparent thinking of sellers who make Wal-Mart style incremental price reductions when their asking doesn’t work.”
= sale by glacial Dutch auction
I know - as if someone who really wanted to buy your home wouldn’t just offer 4,000 less if that was all that was stopping them.
I looked at homes today that had 50K price reductions (in 5-10K increments over the course of months.) And the realtor told me I’d “never see that price again” when I told her what I would pay. How do you know, beeyotch? If it can fall 50K in three months I don’t see why it can’t fall 150K, do you?
“never see that price again”
She must have meant it will never again be that high (at least in real terms). Nominal prices always go up, but not real ones.
Had some electricians show up, they’re on the front lines. We started talking about the economy. They said it was nice to talk to someone who acknowledged there was a problem. Apparently a lot of rich people are completely oblivious to any issues normal people may be having.
Off topic but I’m launching a .com. I know a lot of you on this blog are involved in your communities so you might get a kick out of this.
HoundWire.com keycode is woofwoof
sweet! this is great, because my local rag’s website is horrible–slow, loads too much bad code, crashes the browser, pushes stuff on you that you don’t want … generally awful.
For NorthEast Indiana, check out the Sept. RE sales….You can still get that 3 bedroom/2 bath with a garage on a quarter acre for less the 100K. Now if we only had some jobs…..
http://ims.fwaar.com/publish/mls/stats/monthlystats.html
Lots of minuses on that chart, Hoosier. It’s national alright.
Hey, I just got a job there! And it pays fairly well.
But you’re right about the house prices - I showed them to friends in California and Chicago and the immediate reaction was always a guffaw.
From Chicago’s lakeshore…my friend told me last night that he has been sent home from three closings on his condo because the buyer could not get financing. He is selling a lakefront condo that he bought in 2004 for $95k. It took him two months to get an offer - and only A offer - for $122k - listed at $135k.
It is troubling because of the relatively small purchase price involved. The buyer’s most recent financing attempt was through CFC - the fourth attempt will be with Wamu.
His RE lawyer is a fella I’ve dealt with in the past - he does a lot of work with the county gov’t - and has told him that sales activity in the city has fallen off a cliff.
Chicago, as usual, lags behind the coasts - but it appears that by October next year things might be decidedly worse here - this winter will tell us alot. The condo glut is huge with developers dumping new buildings all over the place - in virtually every single neighborhood.
Not only are developers dropping new condos into the market at a steady rate, there’s a rather alarming number of buildings still in the pipeline. I see plenty of units that won’t be completed before next spring or summer, and there are also many projects that seem to progress in fits or starts — because the developers are playing three card monte with their money, I presume.
I can’t imagine who will pre-buy in this market and keep the cash flowing to developers. Not only will the winter tell us a lot — it should kill off a number of developers with precarious financing.
At this stage in the game who would even make a pre-construction loan on a condo? Surely by now Chicago area lenders can connect the same dots we have been connecting. Anyone with some spare time and access to basic resources should be able to see the multifamily home meltdown that’s coming here.
And: I’ve noticed a decided uptick in the number of rental units that appear to be newer condo construction or conversions.
(Sometimes the landlord or listing agent cops to it, but the more common euphemism seems to be “condo-quality apartment with updated kitchen and stainless steel appliances” or some such hoohah.)
Realtor in our office (West Chicago suburb) just came in excited about hearing a rumor(?) that there is a possibility that the government is going to step in and allow people to maintain their “teaser” loan rate in order to keep their homes from going into foreclosure. The ARM increases will “go away”.
Has anyone else heard that and what does it mean???
The only way the FBs would be allowed to keep the teaser rates is if the principal were increased and the term of the loan was, say, doubled.
Love this forum
Wonder why she failed to mention that rather critical point? Have you found anything in print that addresses that specifically? Some of these realtors around here need a reality check….it would be nice to slip a little wake-up call into their inboxes!
Sorry, N2S, haven’t seen anything to the effect that it will actually turn out that way. It just /seems/ that it’s the only way to satisfy everyone’s interests. The US hasn’t got enough money to bail out all the bad RE debt swirling around the bowl right now, plus the rest of it that’s still in the pipe.
All those loans will simply have to be repackaged for lower minimum payments and longer payment terms, is all. Heh, FBs will finally learn something useful about the financing of their overvalued roadside entropy bunkers.
I went to an estate auction today 5 doors down from a friends house. The dozen townhouses within 1/2 mile of the auction are listed from 130 to 166 and the one at auction just sold for 96K. The builder is still building dozens of new ones. My friends had an offer on their place 2 months ago for ~140 to 150 but turned it down because it was 10K too low. I have 4 friends in this neighborhood all of whom bought about 2 years ago and are now underwater as current asking prices are lower than what they paid. These are the same friends who thought I was over reacting by selling our house… which I managed to sell for 5K under appraisal!
Congrats to you for seeing the light, Dan. Those numbers are pretty scary.
Checking out an ad in the paper from 1891 (from the auction) they were selling land for $5/acre. They had actual real journalism back then too! It is amazing to read these old news papers!
Back then 30 dollars was convertable to an ounce of gold. So an acre cost 1/6 of an ounce. That would be $125 an acre in today’s terms. Still pretty cheap, though.
The US dollar was 1/20 of an ounce of gold, or $20.67 from 1879 untill 1934. It was devalued to $35.00 an ounce in vain attempt to inflate the US economy out of the depression.
News from Los Altos Hill and Palo Alto (in CA)
Friend has high priced house for sale in Los Altos Hills. No nibbles. Nada. Is planning to take off market and put back on market in the spring.
Went to dinner with 3 friends last night on Univ Ave. in Palo Alto. All 3 have houses in Palo Alto. All three emphatically stated that “it’s different here, PA is special, houses have 25-30 bids on them, prices are going up, up, up”. I cannot say whether this is true or not, but that’s the view from the PA homeowner.
I am visiting other friends later today in San Jose and Saratoga. Will report back if I hear anything interesting.
I don’t know? Do those 3 people who live in Palo Alto have homes for sale? If you look on zillow.com there are A LOT of homes in PA for sale, many of which have been on zillow for up to 150 days. If people are really bidding like they claim, then why would these houses still be on the market? For example, the house below has been listed for at least 60 days and is listed for $1,000,000 less than it’s “zestimate”.
http://www.zillow.com/HomeDetails.htm?zprop=19496295
N San Jose prices are trending down, not up, but are still sticky. Nothing’s moving at these price levels, but both sides are now stocked up & prepared for the looong staredown.
Report from W. Colorado - a friend has a realtor friend who says nobody’s selling anything, except in the lower price ranges (under 250k), and even that’s slow. My niece in Colo. Spgs is becoming stressed out, their ARM is resetting and they can’t refinance, even though her husband had a realtor tell him the house has appreciated 12% in the past year.
Craigslist is now being clogged up by realtors trying to sell million dollar homes. I like this one in Aspen (only 9.9 mil BEFORE the remodel): Amazing Starwood Estate Property With Tennis Court, Indoor Pool, Extensive Landscaping, Numerous Outdoor Areas For Year Round Enjoyment And Perfect For Entertaining. Price Includes New Remodel Plans (Complete Interior And Exterior Renovation) From Cc&Y Architects, Building Permit From Pitkin County And All Starwood Hoa Approvals. Once Remodel Begins Price Increases To $15,900,000 For Completed Remodel. http://tinyurl.com/ytbyep
What’s a 9,900,000 home doing on craigslist?
Good question. In San Diego, we ask ‘what are sign twirlers doing trying to peddle $1m+ McMansions?’
No significant wishing price movement in 92627 that I can see.
More popcorn please.
The apparition of arthur anderson and the distinct sound of reputation being shredded…
Can neither be seen or heard, by this herd.
“‘The fact that Moody’s would even consider — let alone act upon — a two-notch downgrade for an investment grade builder signals some serious worries that the current downturn has eroded debt protection measures to very uncomfortable levels,’ according to analysts at CreditSights. ‘We would not be surprised if S&P and Fitch came out with similar assessments in the upcoming months as there is now a two-notch disparity amongst the agencies,’ they said.”
I’ve been tracking sales of homes in my fairly large subdivision in Bradenton, FL since last December. Sales had gone from about 20 in 12/06 and tapered down to around 8-12/month through this past August. I was seeing 1-2 Foreclosures a month starting this past summer and I just checked September numbers….1 sale and 2 foreclosures. Looks like the mortgage crunch is finally starting to show it’s fangs……
Here is a gripping, lurid cautionary-tale about the hazards of life in a California land slide hazard zone.
U-T SPECIAL REPORT
Residents pleaded for help before landslide
Records show months of warning signs, repairs
By Jeff McDonald and Ruth McKinnie Braun
STAFF WRITERS
October 14, 2007
…
Burke and Crabbe were packing up. Hany Girgis had gone to work, but Summer Girgis told Hawk she wanted to take a shower before leaving.
Just before 9 a.m., Hawk was outside Burke’s house when telephone poles started creaking and concrete began to crack. Helenschmidt contractors working nearby started shouting, “Get out! Get out!” They raced into the street to stop cars from driving into the collapsing roadway.
Hawk rushed back to the Girgises’ home and banged on the door. Summer Girgis answered wearing a bathrobe, her hair wrapped in a towel. Hawk scooped up 3-year-old Isabella Girgis, who had started to cry. Girgis grabbed a sweat suit and they ran.
Minutes later, the house collapsed in a heap of rubble and earth.
http://www.signonsandiego.com/uniontrib/20071014/news_1n14toolate.html
This article offers fascinating insights to the evolution of a slow-motion disaster. I suspect similar insights might eventually apply in a metaphorical sense to the housing bubble’s burst.
Below I propose lessons to be learned based on a few salient details from the article.
Debate over what caused the landslide began almost immediately. Did breaks in the water and sewer lines beneath Soledad Mountain Road saturate the ground and push the earth down the hill? Or did shifting soil on the notoriously unstable slope break the pipes?
One can probably never sort out the ultimate cause of this disaster.
Q. Would the slide have occurred if the homes had never been built? A. Yes, eventually, but probably not as soon.
Q. Could the City have stopped the slide if they had not been negligent?
A. The article suggests the City was quite responsive to the situation, and took a number of reasonable measures to contain it. One cannot rightfully conclude from the ultimate failure of such measures that the City was to blame.
Q. To what extent are mother nature, the original developer of housing in a slide hazard zone, home owners or City govt responsible?
A. I am glad I am not responsible for trying to answer this question. (Although this would be an interesting case on which to participate as a member of the jury!)
The answer will probably be decided by a jury. What can be documented now, however, is the slow-boiling concern throughout the hilltop neighborhood – and within City Hall – as more and more went wrong.
A similar slow-boiling concern is brewing with respect to the collapsing housing bubble, even as finger-pointing has begun to play out.
What is most interesting about the landslide is that both area residents and city officials foresaw the problem, and recognized that it was progressively getting worse. Moreover, the city responded to reports of leaks in a timely fashion. Nonetheless, the forces of nature ultimately overwhelmed efforts to intervene.
I believe we bloggers are witnessing an analogous unraveling of the housing bubble in the face of futile intervention measures from the Fed and other govt agencies.
City geologist Robert Hawk made his first visit to the neighborhood five days later, on July 24. Hawk, who has worked for the city for 19 years, stayed an hour, observing the street’s condition, taking pictures and talking with Crabbe.
“I concluded that there was no discernible evidence for a major landslide,” Hawk wrote to his supervisors that day. The latest crack was probably the result of settlement along the utility trench, he said.
His assessment may have been entirely reasonable based on what he saw. One should not judge expert judgments too harshly in the aftermath of black swans.
The situation on Mount Soledad kept deteriorating.
Another gas line failed Aug. 8. Worse, a new water-main break showed up two days later – this one more serious.
Anyone who lives or works in a land slide hazard zone should pay close attention to frequency of broken gas lines and water-mains, as they may clearly be harbingers of worse things to come.
On Sept. 19, a draft of the letter was circulated among public officials. Deputy City Attorney Mark Mercer was already thinking about the city’s potential liability.
“I think we should keep the cause of the water leak out of the letter,” he wrote in an e-mail to committee colleagues. “It could be an indication that our water line caused the leaks.”
It is essential in these times to be very careful of what gets written into e-mails, as anything you write may be held against you in a court of law (or of public opinion if MSM reporters gain access to the e-mail).
On Sept. 9, the day the Chargers beat the Chicago Bears in their National Football League season opener, Yolanda Braunagel wrote to Hawk again. The latest patch in the street appeared to be sinking. A sewer line had ruptured, too, she said, and the neighborhood smelled of sewage.
The next day, Hawk wrote the Braunagels that wastewater workers had sent a camera into the sewer line in late July and found it “completely filled with roots.”
He told the Braunagels they were responsible for the repairs.
Cities need mechanisms to press homeowners in land slide hazard zones to quickly undertake repairs to sewage lines, as leaks can clearly contribute to slide risk.
City officials decided to alert residents.
A letter was hand-delivered to homeowners on Soledad Mountain Road and Desert View Drive, telling them of increased cracking and emergency repairs in their neighborhood.
A different letter was delivered to four particularly vulnerable property owners, urging them to evacuate. “You should not sleep in your homes effective immediately.”
At about 7:30 a.m. on Oct. 2, Robert Pavey, a retired insurance agent, was headed to his regular breakfast at Denny’s in Point Loma. He noticed an unusual dip in the road as he steered his Jeep down the mountain.
The next morning, when he made the same trip, the dip was even deeper. He passed a collection of work trucks and inspectors, but he wasn’t concerned. The crews had become a staple in his neighborhood.
But the city was in full emergency mode.
Hawk arrived about 8 a.m. He was worried because three of the four homeowners who had been told to evacuate had ignored the city’s warning. He immediately checked on Burke, Crabbe and the Girgis family.
Burke and Crabbe were packing up. Hany Girgis had gone to work, but Summer Girgis told Hawk she wanted to take a shower before leaving.
Don’t take evacuation orders lightly. Hawk should be commended for saving this young lady’s life. He is not an emergency worker, but his heroic act at the moment of need likely saved two lives.
2 weeks ago I was in the local Home Depot. It was in the evening and the place was dead. I made a comment about it to the plumbing guy and he proceeded to tell me that because the store was so slow they had cut everyones hours. He was cut from 40 to 16!
Then on Thursday night wife and I were at Lowes, same thing, the place was dead. The only checkstand open was at the service desk. I told the checker that the place was a morgue compared to recent months. He pretty much unloaded about how slow things were and that sales were down from around $1Million per week to ~$500-600k. He also said that all F/T employees went to 39 hours to have benefits cut.
I laugh at the Californians who move here because they “heard” things were better here. Two years ago the official employment numbers for this county was 42% or 48% (cant remember exactly) contruction and R/E related. The people who relocated here (especially contractors)because houses were less expensive better get used to eating beans and rice.
Yeah, my Home Depot was completely dead last Saturday. Of course, there were a bunch of employees just standing around and I STILL could not get any help…..
Since we were talking about crazy prices in the Chicago exurbs in the Bits Bucket, I thought you’d like to see a flip a little closer to the city. The seller was asking $685,000 for this a few months ago. It is on a busy 4 lane street.
http://tinyurl.com/2chpwp
for that piece a crap? There are some NICE places in Elmhurst a lot cheaper than that… crazy.
This isn’t so much a market observation as a related industry observation.
My insurance rep (who I really, really liked if you can believe it) of about 5 years came down with cancer and closed her business. Since then, my account has been transferred to three other reps.
Each successive rep has quit after about 3 months. Anybody else seeing frequent turnover in the insurance industry?
http://www.redfin.com/stingray/do/printable-listing?listing-id=1102051
I used to live in the neighborhood, and know this home well. After paying over 1 mil for it 2 years, ago the seller listed it higher, then began reducing his price. When I saw it a few weeks ago I was flabbergasted. Today I see they are taking back up offers at $790k.
For comparison, I sold my house located nearby for $825k 2 years ago. That was a 1580 sq ft 2 bed 1 bath. I then moved to Utah, where I bought a 4800 sq ft home for $335 that is now worth $450 - $500. (it was a fixer, and I’ve put in about $30k.)
“Creditors launched 1,778 new foreclosure actions in Wisconsin last month - 30% more than in September 2006, ForeclosuresWI.com reported.”
“In Wisconsin, last year was bad - 16,473 foreclosure actions statewide - but this is worse, figures show. In this year’s first nine months, 14,733 foreclosure actions were filed in Wisconsin, a 27% increase in households facing the loss of their homes to unpaid debt than in the same period a year earlier.”
Wisconsin foreclosures through August =
14,733 - 1,778 = 12,955
Wisconsin average monthly number of foreclosures through August =
12,955 / 8 = 1,619 (the September rate of 1,778 was 10 percent higher)
Projected number of foreclosures through year-end assuming September rate continues through fourth quarter =
14,733 + 3*1,778 = 20,067.
Has Wisconsin ever experienced 20,000 foreclosures in a single year? (My guess: NO.)
One more little hypothetical illustration. Suppose Wisconsin did end up with 20K foreclosures in 2007, and it turned out their foreclosure rate was the exact average for all 50 U.S. states. Then the entire country’s foreclosure tally for year 2007 would finish at 1m (= 50 X 20,000). I am not sure how Wisconsin’s foreclosure rate compares to the U.S. average, but since I have never mentioned it as one of the problem states for foreclosures, I am guessing the average might exceed 20,000?