Sellers Must Abandon 2005 Mentality In California
The California realtors report on Sptember sales. “Home sales decreased 38.9 percent in September in California compared with the same period a year ago, while the median price of an existing home fell 4.7 percent, C.A.R. reported today. ‘While it is typical for the median price to dip seasonally as we move from August to September, this decline, which was both the largest month-to-month percentage decline on record and the first year-to-year decline in more than 10 years, was mainly the result of the credit or liquidity crunch, which also drove sales below the 300,000 mark,’ said C.A.R. President Colleen Badagliacco.”
“Statewide home resale activity decreased 38.9 percent from the 444,780 sales pace recorded in September 2006. The median price of an existing, single-family detached home in California during September 2007 was $530,830, a 4.7 percent decrease over the revised $557,150 median for September 2006, C.A.R. reported. The September 2007 median price fell 9.9 percent compared with August’s $588,970 median price.”
“‘The impact of the credit crunch spread throughout all tiers of the market in September,’ said C.A.R. Chief Economist Leslie Appleton-Young. ‘While the entry-level portion of the market has been adversely affected by the subprime situation and tighter underwriting standards for much of this year, the high end of the market also saw a decline in sales, as even well-qualified buyers were affected by the lack of funds available for jumbo loans.’”
“C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in September 2007 was 16.6 months, compared with 6.4 months (revised) for the same period a year ago.”
“In a separate report covering more localized statistics generated by C.A.R. and DataQuick, 17.3 percent, or 50 out of 289 cities and communities, showed an increase in their respective median home prices from a year ago.”
The Desert Sun. “Shifting market conditions in the Coachella Valley’s real estate scene mean agents, brokers and sellers must adjust how they do business.”
“‘A year and a half ago, we were doing deals in our sleep,’ analyst Patrick Veling told hundreds of industry watchers Tuesday. ‘We had to show up to collect the commission check only. Those days have now passed. They were a gift from God, let’s move on.’”
“Home sales are down 54 percent in Desert Hot Springs and Indio over last year and are down 36 percent in Cathedral City.”
“Many valley cities have home and condominium inventories that would take one to two years to exhaust at the market’s current pace. Desert Hot Springs has a 51-month supply of condominiums in the $200,000 to $300,000 range and a 40-month supply of homes in the $500,000 to $600,000 range.”
“But the market level-off and cool-down is a good thing, Veling said.”
“‘Further rising prices would have collapsed our market under its own weight,’ he said. ‘Increasing inventories has an upside: It means more choices for buyers who were frustrated by the lack of choices as early as a year, year-and-a-half ago.’”
“Sellers must be willing to abandon a ‘2005 mentality’ and change their expectations in light of the current market, Veling said.”
“Sellers need to hear that ‘unless you are prepared to allow me to aggressively position your home for successful sale, I will not take your listing,’ he said, drawing applause from the audience.”
The Associated Press. “Centex Corp. cut prices on many of its homes and shifted to offering more traditional mortgages this summer, executives say. In some places, prices were slashed 20 percent, executives said.”
“Write-downs of $983 million reflect the lower value of Centex’s unsold homes, land and other assets in a sinking housing market. Chief Financial Officer Cathy Smith said Wednesday that the write-downs were concentrated in California, Arizona, Nevada and Florida, where price cuts were most common and where foreclosure rates are higher.”
The Street.com. “Standard Pacific might be worth more dead than alive. That’s why some are predicting the homebuilder’s lenders will eventually force the company to file for bankruptcy to restructure its hefty debt load.”
“Standard Pacific’s issues may be the worst of any among the major public building companies. It has heavy exposure to the dismal California housing market, a hefty debt load and hidden dangers lying in its joint ventures.”
“Last quarter, Standard Pacific paid $25 million to two of its Southern California joint ventures to help fund a margin call from a lender. The company also spent $81.6 million to pay off the debt in conjunction with buying out its partner’s interest in a Northern California joint venture.”
“JPMorgan analyst Michael Rehaut said ‘the company is in a solid position to pay down its revolver and stave off a negative liquidity event.’ However, Rehaut’s thesis rests on a risky assumption: that Standard Pacific can manage to work down its housing inventories and sell homes fast enough to pay down debt.”
“The company had about $1 billion of homes under construction at the end of the second quarter.”
“‘It’s a matter of time. If Standard Pacific continues on this path, they won’t be too far way,’ says CreditSight analysts Frank Lee. ‘The JV’s continue to bleed, and they have to support them.’”
“Countrywide Financial Corp., the nation’s largest mortgage lender, said Tuesday it will begin calling borrowers to offer refinancing or modifications on $16 billion in loans with interest rates set to adjust by the end of 2008.”
“‘People are talking about it, saying it might be necessary, but there’s not a lot of it going on,’ said Guy Cecala, publisher of Inside Mortgage Finance.”
“Despite industry efforts, relief remains out of reach for many borrowers such as Carlos Ortiz, who says he’s on the verge of losing the four-bedroom home he bought for $580,000 in suburban Rancho Cucamonga, east of Los Angeles.’
“Like other buyers at the height of the housing boom, he got a loan that kept his monthly payments low for two years and counted on being able to refinance before the rate adjusted sharply higher.”
“When he didn’t qualify for a new loan, he tried to get his mortgage servicer to restructure his existing one. ‘I told them I cannot afford it, you have to help me to refinance or modify my loan,’ Ortiz said. ‘They don’t want to work with me.’”
“Kevin Stein, associate director of the San Francisco-based California Reinvestment Coalition advocacy group, said the best way for lenders to help distressed borrowers is to lower long-term interest rates before they adjust higher. Rate cuts for a year or two are little help, he said.”
“‘That’s akin to getting another bad loan that’s going to adjust in a year and be unaffordable,’ he said.”
The San Francisco Chronicle. “Nearly 4,800 subprime loans made to Bay Area borrowers in 2006 are likely to fall into foreclosure in the next couple of years, costing homeowners, cities and lenders as much as $1.5 billion, according to an advocacy group for lower-income families.”
“Liz Wolff, ACORN research director, pointed out that the interest rates on many subprime loans taken out in 2005 and 2006 will not reset until next year or 2009 - and almost certainly soar higher. ‘We’re just at the beginning of this mess,’ Wolff said.”
“Using lender and federal home loan data and nonprofit research on foreclosures, Wolff found 617 homes in San Francisco and San Mateo counties with high-cost loans made in 2006 that are in danger of repossession, amounting to $210 million in costs to the homeowners, lenders and investors and local government and in lower home values for neighbors.”
“In Santa Clara County, the group said 1,124 high-cost loans are likely to go into foreclosure, amounting to $370 million; and in Alameda and Contra Counties, 3,021 loans are at risk, amounting to about $875 million.”
“Giselle Quezada hopes her home in San Francisco’s Ocean View neighborhood doesn’t become one of those.”
“She recently refinanced the home she has owned for 28 years in order to pay down debt and help her son and daughter buy a home together. Although the loan was sold to her as fixed, Quezada said it quickly became an adjustable rate, forcing her payments from $600 a month to $1,900 a month. Now, the telephone technician lives check to check.’
The Contra Costa Times. “The mortgage meltdown has claimed the jobs of at least 300 people in the East Bay this month, an indication that the housing recession has yet to run its course. Diablo Funding Group, BNC Mortgage LLC and Option One Mortgage Corp. are cutting a combined 325 jobs in the East Bay.”
“Diablo Funding has 22 branch offices and operates in four states, according to its Web site. ‘We are closing down,’ said Anthony Battagello, Diablo Funding’s CEO. ‘It’s because of the credit crisis.’”
“The housing-related job cuts during October are significant and affect multiple East Bay communities. Diablo Funding said it would eliminate 100 jobs because of its shutdown. BNC Mortgage is cutting 175 jobs in Concord. Option One Mortgage has jettisoned 50 jobs in Pleasanton.”
“The demise of Diablo Funding stunned some local realty executives. Founded in 1992, Diablo Funding was one of Northern California’s biggest independent mortgage companies.”
“‘That was a surprise to me,’ said Don Morton, a real estate consultant. ‘That was a little scary. Diablo Funding has been around for a long time, and they seemed to be pretty successful.’”
“Battagello said he believes the current slump is unprecedented. ‘By far, this is the worst downturn I’ve seen,’ Battagello said. ‘It is very sad what has happened to this industry. I don’t see starting any mortgage companies in the near future.’”
“The shutdown of Diablo’s operations also was described as unexpected by some key executives at the firm.”
“‘This caught me by surprise,’ said John Hollinger, an executive VP who joined the Diablo team in 1994. ‘I was told that I don’t have a job effective immediately. I was told I’m a free agent.’”
‘the first year-to-year decline in more than 10 years’
Has a nice ring to it!
‘As of early October, at (Centex’s) Fifty-One development — the former Del Monte canning plant in San Jose that’s being developed into condominiums — the company had 12 canceled orders for condos since the beginning of the year.’
‘Buy Homes! By Connie Butt, La Mesa’
‘Wednesday, Oct. 24, 2007 | Think about it! We are consistently increasing our population — and the need for additional housing. No matter how you slice it, there is always going to be a demand for housing, and California with its benign climate, is just too compelling to becoming a ‘ghost town’ in any sense of the term.’
‘I’ve been a Realtor here in the San Diego market since 1972. Every down cycle I’ve experienced over this 35-year period has been followed by increased demand and a “seller’s market.” Anyone who has purchased a home in San Diego County and held on to it for five years has profited dramatically as a result of this investment. Can anyone tell me why that process should reverse itself?’
–
You would live to see a down cycle you have never seen in your life-time, Ms. Butt. Have you ever thought of that?
Jas
Black swans are real after all.
“Anyone who has purchased a home in San Diego County and held on to it for five years has profited dramatically as a result of this investment.”
Did a home purchaser at the peak of the last bubble (say 1990) “profit” by 1996? I think in Orange County, peak purchasers were underwater until 1999 or so. But, hey, this woman has no incentive to paint a rosy picture, only her paycheck and livelihood depend on luring in suckers.
why dont you ask the CEO of B of A who just fired 3000 unneeded clowns. by my arithmetic I see 3000 more potentiaaly bad loans added to the mix.
He should have fired himself and a few executives.
“Can anyone tell me why that process should reverse itself?’
Sure, Einstein. Take the median income and multiply by 2.5 or 3 if you’re feeling reckless. That’s the affordability level for housing.
Simple enough even for a realtor. Be sure to add in associated costs like property taxes, utilities, maintenance and HOA fees.
Now that you have that number, look at your market. How many houses are priced to meet the the affordability level?
As for potential buyers, how many have fully documented income, 2 years (at least) of pay stubs and income tax returns, 20% downpayment, and 6 months additional reserves saved, as well as a Fico north of 700?
None, you say? Well, there’s your problem. And until you do, you can starve.
Can anyone tell me why that process should reverse itself?’
a better question is why would anyone bother to tell you anything.
lol
Amen. No response necessary. Just a moment to give her the proverbial “bull staring down the bastard calf”, and then walk away.
“bull staring down the bastard calf”
Is that a new euphemism for “Joshua tree”?
Grouchy, aincha? Me, too. Bang them on the head first, and ask questions later, is my new motto.
Bubble Boomers. They have been net buyers for 40 years. Now they will begin to unload these “investment” homes. They also have little savings and need to fund retirement.
10,000 Boomers retire each and every day. This will only last another 2 decades!
It really is different this time.
Exactly, the baby boomer’s have been a macro economic trend for decades . That trend is now entering a new phase, that will last for decades.
You are in tune with what Harry Dent is saying. I think the best career move for anyone is to keep the anchor raised, give away / sell / throw away material possessions and become footloose. If you normally make $70,000 per year and have tenacious roots in a community but become unemployed, you make $0. If you have no ballast, you can make $70,000 elsewhere. Consider how difficult it is for your investments to make $70,000 per year. Then you will appreciate the idea of being unemcumbered. Case in point: I’m working in Maryland now but normally live in Phoenix. Competing jobs in Phoenix paid lower and made the Maryland move worth it.
I wouldn’t take financial advise from Beavis or Connie Butt-Head.
“Anyone who has purchased a home in San Diego County and held on to it for five years has profited dramatically as a result of this investment.”
What about the formerly proud but now hapless former owners of a McMansion that just burned to the ground? Have they profited dramatically??
The Santiago fire in Orange county is offically declared an arson. Makes you wonder.
Makes you wonder if some local builders are looking to drum up business?
I mean, it wouldn’t make sense to burn a devaluing home down for insurance, would it? It’s the timber that’s insured, but the dirt below the house is the part that’s sinking in value.
–
October 24, 2007
DataQuick Report for CA Sep’07
Change From The Peak (Prices peaked at different times in various counties and cities)
Santa Barbara County -37.0%
Merced County -31.6%
Yolo County -24.7%
Stanislaus County -23.5%
El Dorado County -23.1%
Placer County -22.0%
Sacramento County -21.0%
San Benito County -20.7%
Monterey County -18.8%
San Joaquin County -18.7%
Napa County -18.5%
Santa Cruz County -17.2%
Madera County -17.2%
Kern County -15.7%
Marin County -15.6%
Solano County -15.4%
SanLuisObispo County -15.1%
Ventura County -14.6%
SanBernardino County -14.5%
Tulare County -14.5%
Sonoma County -14.2%
Nevada County -14.2%
Fresno County -13.3%
Riverside County -12.6%
San Diego County -10.5%
Alameda County -9.6%
Orange County -9.3%
San Francisco County -7.8%
Contra Costa County -7.3%
San Mateo County -6.8%
Los Angeles County -4.5%
Santa Clara County -2.8%
Data:
http://www.dqnews.com/ZIPCAR.shtm
Jas
“Yolo County -24.7%”
Riding into work today I saw 3 brand new NODs taped to front doors. -24.7 is optimistic.
Optimistic? Or Trailing statistics.
Thanks for the September link. Let’s see… the mortgage market tanked on about August 13th. We struggled through September… and October has unusually high inventory (we might peak in October! Both locally and nationally).
I believe the Santa Barbara number. My old boss is up there to shut down an engineering plant. Why? No hope of replacing retirees at those home prices. So ship the jobs (in this case just a little south to El Segundo, but El Segundo is making room by shipping jobs to Phoenix and Tucson).
If there are any doubts, look at the cost of renting a U-haul to get out of the worst of the bubble markets.
But hey, this is all old news. (Yea, I was a little later to the game than most here… but early enough to state that.)
And this is *before* we go into recession. Yea ha! The roller coaster is gaining speed. (Please e-mail me at wannabuy3@gmail.com if the real estate roller coaster video is updated.)
Got popcorn?
Neil
Neil,
Check out the CA inmigration numbers for Sac and Humboldt below, courtesy of the USC pop est. tables by county. 2007 data is going fun to chew through.
Thanks. Interesting. Very interesting. The tide is going out…
You work for R……..n I guess ? Big presence in Tucson. By Vail were its cheap to live compared to Santa barabra or El Segundo but a little bleak unless you like the desert.
Nope. ‘The customer’ forced upon R an outside auditor for a program.
Got popcorn?
Neil
Damn, government. Meddling in the affairs of defense contractors.
I subscribed to “trulia alerts” for Davis, homes 3br and above, ten days ago. So far the result is: two properties sold and 39 new properties on the market. Even assuming that a majority of those 39 were simply relisted with a lower price, the picture is clear. Cool
Only wish these losses were true for Humboldt county, CA. Prices here are only down about 5% from the peak, and people still buy. With the wildfires in southern California, I’m sure some of these people will take the insurance proceeds and move up here where they are immune from fire.
They may be immune from fires, but there is still a LOT of smoking in Humboldt county if it’s only -5% from its peak.
Just out of curiosity, what reason do Realtors give for “it being different here”? Proximity to downtown? Beaches? Top ranking universities? Or is everyone just too stoned to know that they are getting ripped off?
There was a huge article about housing prices in the Eureka Reporter about two weeks ago. The realtors’ take was that Humboldt was “different” and although prices may drop 40% in Sacramento or Redding, they would not decline any further because of the unavailability of land, the retirees, and being that “everyone wants to live here.” Essentially, the same garbage you used to hear in the Central Valley (except, at least they have population growth).
But, their calculations of housing dropping only 5% since 2005 appear right on to me, as very few homes sell and those that due are often high priced properties purchased by equity locusts with cash from down south. It is amazing to me (but not unexpected) how much housing prices are crashing elsewhere in the state, but aren’t yet here. Please convince me that the bloodletting will start soon!!!
“Essentially, the same garbage you used to hear in the Central Valley (except, at least they have population growth). ”
Ok I took this as a challenge >; )
Changes in Pop, comparing 2004 and 2006 by rate of increase (from estimates)
Humboldt County 0.45%
Sacramento County 3.36%
Births and Deaths were pretty stable and in line with each other but this little gem jumped out
International Migration
Humboldt County Up 10.87% from 2004 to 2006
Sacramento County, only up 1.55% from 2004 to 2006
Similiarly interesting:
Inmigration, 2004 2006
Humboldt County 179 -472
Sacramento County 4078 -7458
Those are some pretty big changes at the bottom. 2007 estimates could be downright significant, and stuff.
That’s easy. Humboldt has the primo weed. Or at least it used to.
Bubble, since you seem to know where the primo weed is, I am single and gender neutral.
Please call me.
Ummm. A fascinating post. Tell us all more, please.
Yes but those people are still dependant on jobs and much as I love the northen part of the state, jobs are not their strongest suit.
This is assuming there are ins. proceeds which is a whole other topic. One of my best friends who underwrites commerical lines said “don’t bet the house on it”.
That said, please don’t send them here. We’re just now beginning to get rid of the BA knob bonnets in Sac.
Oh, jobs be fooked. You have spent too much time with the suits, Gwynster.
For did not the sweet Baby Jeebus proclaim to us all, ‘Verily, I didst not send you here to be wasting your time with stupidness, whilst dressed in a dumb white 100% Egyptian cotton shirt’?
I believe that’s Revelations, or something.
“whilst dressed in a dumb white 100% Egyptian cotton shirt’”
ROFL! It’s actually in TGunn, verses 15:25 to :89
That’s said, I have a thing for long staple 100% egyptian cotton as long as it’s the real stuff. Much of what is being peddled as EC is really so-so long staple grown in the central valley out near Crispy’s house.
Anthony, I’m a little “higher” (just kidding, don’t touch the stuff) North than you here in Del Norte County. The realtors here believe “it’s different here, because we are the cheapest price on the coast”, to which I reply maybe that’s because the tsunami can hit at anytime. The last open house I went the realtor was trying to convince me “it’s a good time to buy”, because the coming prison expansion should bring in 500 more jobs. I told him they already can’t fill the vacancies they have now how will the 500 jobs help? And even if they wanted to move here as a transfer they wouldn’t be able to sell their homes down south to do so. He seemed a little annoyed at me by the time I left. I don’t know why I go to these open houses must be something evil inside of me.
Ha ha, everyone in Del Note is in jail either in a literal sense or a figurative one (trapped in an overpriced house that won’t sell).
Immune from fire… not immune from rain. Do Humboldt and Del Norte counties still have the state’s highest alcoholism rates?
I think it has the highest suicide rate. But everyone wants to live (and die?) here.
Interesting to get the report from Humboldt. The North Coast seems to parallel the Rogue Valley quite closely. Equity locust is absolutely the driving force. Around here, many of the smaller cities in the valley are falling very fast. Ashland is lagging, because we seem to be a particular magnet for the flush locusts from Cal. However, I believe strongly we will tank, just a bit later. I think the same will apply to Humboldt. The big unknown in the long-term is our attractiveness to retirees, which remains high and unlinked to the local job base.
Really? I like them even more, now.
How did you get these numbers? The link you provided only lists year-to-year declines, not declines from the peak.
Irvine down nearly 20% in one year, that must smart. I lived down there a few years ago when the punch bowl was seriously spiked. I was assured by nearly everyone that prices there could never drop. Viewing the carnage, even if only in the form of numbers in a chart, is more gratifying than I can describe.
“Irvine down nearly 20% in one year, that must smart. I lived down there a few years ago when the punch bowl was seriously spiked. I was assured by nearly everyone that prices there could never drop. Viewing the carnage, even if only in the form of numbers in a chart, is more gratifying than I can describe. ”
fasninating because Irvine (south OC)is always
near top of lists for best community to live in. It is a pretty clean safe organized community with a large modern commercial/industrial belt and clean well-tended parks. Irvine is an ultra-planned geometrically perfect community but not ultra-wealthy. No old wealth, and not much new wealth for that matter, as in Brentwood,bev hills, San Francisco, parts of Pasadena or San Marino. Hard for homes to have stayed at $600-700,000 peak levels in this mostly middle class community.
The overall drop of 9.5% in OC is a bit surprizing as OC, and especially S.OC, is overall a better cleaner more organized county than LA. MY theory is that LA’s prices were bouyed up by massive fraud in the inner shitzones and even fraudulent prices in the better coastal LA enclaves. Most of LA county, and especially the south and eastern sections, are really crapped out deteriorated exurban slums inundated by illegals.
This LA fraudulent RE runup is now about to crack in a hideous fashion as LA prices in the inner shitzones, as revealed in the Sept Datquick figures, are dropping precipitously.
“.. more organized county…” Are we talking about the Orange County that declared bankruptcy in ‘94? That more organized county? They were so effin’ organized they let their county treasurer leverage up the investment portfolio 3:1 and buy the worst sort of crap.
Seems pretty organized to me…
Bakersfield prices down 20% from peak
http://people.bakersfield.com/home/Blog/Bakersfieldbubble/16441/
‘Right now we are seeing 150-200 notices of default per week, sales are down 85% from the peak and credit has tightened. All of these things were predicted here on this crappy blog at the beginning of the year and over the last few years on all the other bubble blogs. Those who listened, you have been spared the misery and all those who didn’t listen, good luck.’
I just tell it like it is.
Crispy, you are blogging for the local paper???
WTF????
LOL!!
No.
They just let us post on their blog. The newspaper is stepping into the 20th century…
“Sellers need to hear that ‘unless you are prepared to allow me to aggressively position your home for successful sale, I will not take your listing,’ he said, drawing applause from the audience.”
Sounds like something else people here suggested….about a year ago.
Getting close to a little realtor anger at falling incomes due to the sellers…
Brokers that convinced the FBs they should buy RE on the rise because prices always go up are now telling FBs sellers to chop their prices because prices are going down.
No wonder the FBs are pissed.
Here’s where most Bs finally, finally realize they’re F.
baselle
Good to see you again!
SPF is building like there is no tommorow in Bakersfield. They are toast and dont even know it.
Also DHI abonded their local offices and left all their brand new furniture and turned off the lights!
The Street.com article makes it pretty clear what they are up against. Again, why price supports won’t work; these guys will simply build the market into a disaster in an attempt to stay alive.
Never gave that much thought Ben….They are going at eachother as if its a boxing match ?? I am going to knock you out ??
‘In a separate report covering more localized statistics generated by C.A.R. and DataQuick, 17.3 percent, or 50 out of 289 cities and communities, showed an increase in their respective median home prices from a year ago.’
Oh, dear…
These are localized statistics:
· Coen Company Inc. is closing down and laying off 51 employees at 1510 Tanforan Ave. in Woodland and 16 employees at 100 Foster City Blvd. in Foster City on Nov. 1.
· College Loan Corp. is laying off 145 employees at 14303 Gateway Place in Poway on Nov. 12.
· Con-Way Freight Inc. is closing down and laying off 90 employees at 6301 Beach Blvd., Suite 300 in Buena Park on Nov. 1.
· Countrywide Capital Markets Division is laying off 66 employees at 4500 Park Granada in Calabasas and 95 employees at 1900 S. State College Drive, 4th floor in Anaheim on Nov. 12.
· Dan McKinney Co. is closing down and laying off 182 employees at 1455 East Riverview Dr. in San Bernardino on Nov. 1.
· Meade Instruments Corp., a leading designer and manufacturer of telescopes and riflescopes, today is planning a reduction in headcount at its Irvine manufacturing facility at 6001 Oak Canyon.
· The Impac Cos. is laying off 122 employees at 19500 Jamboree Road in Irvine on Nov. 10.
· Washington Mutual is laying off 90 employees at 8954 Rio San Diego in Camino De La Siesta on Nov. 14.
· Wells Fargo Home And Consumer Finance Group is laying off 50 employees at 24 Executive Park in Cypress on Nov. 13.
· Western Sequoia Corp. is laying off 113 employees at 401 South Prairie Ave., Suite 105 in Inglewood on Nov. 1.
· Zapp Packaging Inc. is closing down and laying off 77 employees at 200 North Berry St. in Brea on Nov. 1.
Good stuff Hoz…and I like the condenced version…
Hey Zapp Packaging is right down by my office
not any more!
Your data is the only one that counts right now to give us a clearer picture of what’s happening out there. All the MSM sob stories amount to nothing and the security mortgage freeze is already a done story. Thanks.
All recessions are local.
tee hee, good one.
SUPPORT YOUR LOCAL MILITIA!
Hoz,
Zapp Packaging is not closing down. It is being merged and moved into Orange County Container Corp because what they produce is primarily consumed by the OCC Group.
We were able to reduce redundent admin functions. No sense in having two separate corporate entities with duplicate functions.
Hi Ben,
You seem to be a tad bit more robust! (laughing) Good for you!
Someone commented on it earlier, and I can’t agree more.
Best,
Leigh
It’s fall in Flagstaff…he’s all frisky! LOL!
You got THAT right!
Dude!…..you are all wound up! You just might be ready to administer your first Joshua tree treatment (Ah, the first one is always the best. Sweet release.) Shall I ship you a specimen?
LOL! I’ve noticed Ben’s spunkier attitude over the past few weeks/months. Maybe it’s because things are FINALLY happening just the way it was described here, AND it’s finally going mainstream.
A bit of shadenfreude, no?
And in a separate separate housing bubble blog report, 82.7 percent, or 239 out of 289 cities and communities, showed a median which was either the same or a decrease from their respective median home prices from a year ago.
“And in a separate separate housing bubble blog report, 82.7 percent, or 239 out of 289 cities and communities, showed a median which was either the same or a decrease from their respective median home prices from a year ago.”
Checked out LA zip data for sept and there are am awful lot of negative YOY’s, about the same percentage for All CA. Best thing is that finally the inner LA shitholes are finally revealing their true colors and are in freefall. The massive overappraisal fraud, seller kickbacks, $500,000 pos’s in comptom Imglewwood, Pacoima, SCental LA have been revealed stark naked as the fraudulent sales they always were.
The perpetrators who profited from the fraud will either flee south across the border or hide under a rock from the IRS.
Now these innor crapholes will see ravaged/trashed out neighborhoods as all those foreclosures will be painted with graffii, vandalized, looted, stripped, sqquatted by homeys or turned into crackdens. LA city does not care if poor neighborhoods become trashed-out by foreclosures and abandoned units-they just let the shit pile up till someone makes a strong complaint.
The Devil is in the details…
“The mortgage meltdown has claimed the jobs of at least 300 people in the East Bay this month, an indication that the housing recession has yet to run its course. Diablo Funding Group, BNC Mortgage LLC and Option One Mortgage Corp. are cutting a combined 325 jobs in the East Bay.”
Hmm, makes me wonder if a co-worker’s husband was part of that cut?? Reasoning, during the last 5-7 years, wife was sporting the bling, talks of vacations here and there. he drove a range-rover, her a MB suv. Just this week she comes into work with a Honda LX. I said,” MB in shop?” Her, No, Husband thinks we should cut our spending and SAVE.” I about choked. You mean the light bulb finally lit up. Or was someone’s job axed?? Oh, husband works in the loan business in East Bay.
“Diablo Funding has 22 branch offices and operates in four states, according to its Web site. ‘We are closing down,’ said Anthony Battagello, Diablo Funding’s CEO. ‘It’s because of the credit crisis.’”
“Diablo Funding” — LOL! For those who didn’t take ESL (Espanol as a Second Language), “Diablo” is Devil. Too rich!
The devil is out of business…reaching for phone to God. Dear God, Leigh here, did you know Lucifer wants to come home now?
Speaking of God.
“‘A year and a half ago, we were doing deals in our sleep,’ analyst Patrick Veling told hundreds of industry watchers Tuesday. ‘We had to show up to collect the commission check only. Those days have now passed. They were a gift from God, let’s move on.’”
Oh, while I have You on the line, would you explain to me why You were handing out generous commision checks to Lucifers minions. Inquiring minds want to know. What’s that?
OK, I thought so. God says this place is the armpit, and He has others in charge of managing it.
OK. Baby Jeebus is praying for my eternal soul. That’s always good to know!
Amen.
Leigh
“‘A year and a half ago, we were doing deals in our sleep,’ analyst Patrick Veling told hundreds of industry watchers Tuesday.”
I really hate when these types use that “doing deals” line as though they were truly structuring deals. They really think they are financial wizzes, don’t they?
I hate to tell them, but a mid-level drug dealer has more business acumen than they do.
“…mid-level drug dealer…” tee hee, now THAT’S funny.
But I bet he can’t spell acumen.
“Diablo Funding” — LOL! For those who didn’t take ESL (Espanol as a Second Language), “Diablo” is Devil. Too rich
Yeah, California has a way with that. They even have the Diablo Canyon nuclear power plant. The oddest was a regional motor oil distributer called Bay Area Diablo, or in 80s speak B.A.D. oil. The connotations must have lost them business, for they changed the name.
We have Teufel Nursery here in Portland… sprechen sie Deutsch?
The favorite oath in Tintin!
Warum wohnt der Teufel in Portland?
Auf dem Pearlen District.
I think he asked why, not where
“Diablo Funding has 22 branch offices and operates in four states, according to its Web site. ‘We are closing down,’ said Anthony Battagello, Diablo Funding’s CEO. ‘It’s because of the credit crisis.’”
tons of ‘Diablo’ funding to naive hispanic immigrants in EL LEY.
Bank of America slashes 3,000 jobs…
http://www.reuters.com/article/businessNews/idUSWNAS809120071024?feedType=RSS&feedName=businessNews&rpc=23&sp=true
It couldn’t happen to a nicer bank……..
A.P. Giannini has been rolling in his grave, for many years now…
Back in the old days, we used to call their logo “the sign of the flipped bird.”
Yep, I’m a former customer of that bank. Don’t miss it at all.
You and me both, Slim. Good riddance, BofA
Har! I was thinking the same thing.
I hate BofA, but they do have a lot of ATMs everywhere and I do mean everywhere. So I keep $1,000 in BofA just to give me a cash machine everywhere.
Didn’t BofA promote checking accounts with NO social security number or Drivers License? Good Move.
Yep. Aimed at illegal aliens. Now when I get a BoA credit card pitch I send it back with a note explaining why me & my family will never do business with them, ever.
the only major bank that I’ve found that DOESN’T do this is Schwab.
“They were a gift from god.”
No, these were from… the other place.
Ms. Butt?
Elwood: “We’re on a mission from God. It’s 106 miles to Chicago, we got a full tank of gas, half a pack of cigarettes, it’s dark, and we’re wearing sunglasses.”
Jake: “Hit it.”
“‘This caught me by surprise,’ said John Hollinger, an executive VP who joined the Diablo team in 1994. ‘I was told that I don’t have a job effective immediately. I was told I’m a free agent.’”
Received severance pay of $666, so he’s good to go for a week or 2~
so the diablo guys get the old 666? seems fitting
‘C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in September 2007 was 16.6 months, compared with 6.4 months (revised) for the same period a year ago.’
Wasn’t the inventory just 11 months on the last report? Sounds exactly like what happened in Massachusetts.
Recall that anything over 6 months was bad for the market. LMAO!!!
16.6 months is insane…
BEN…..Go here and read the first post….Quite interesting….
http://www.renorealtyblog.com
And it gets better (laughing)
I really do love this blog.
http://www.bloodhoundrealty.com/BloodhoundBlog/?p=2053
Reporting in from MA..
The way see it, we are at about 13 months in inventory in the $500k - $600k range (the price range that I am watching for myself).
There are approx. 55,000 SFH, Condos and Multis on the market right now. This has been about the same number give/take 500 (1%) for what seems like forever. It’s like being in line at a bar..one in, one out.
Did Leslie Appletin-Young ever come up with a “new moniker” to replace “soft landing”? She said she was looking for one, but then again David Lereah said he was going to buy an investment property in Las Vegas. (liars)
I don’t know, but the phrase “kamikaze flight instructor” comes to mind. With realtors demanding sellers to lower prices, it seems that LAY is willing to sacrifice thousands of indoctrinated followers for the greater good (6% commissions).
I suggest “California real estate always goes down.”
“new moniker” to replace “soft landing”?
An alias for disguise? Lawd, there’s a song here…tell me lies, tell me sweet little lies, tell me, tell me lies : )
Let us not speak of the demise of our economy?
Ya just can’t make this stuff up!
Leigh
“new moniker” to replace “soft landing”?
I’d say that famous pic of the hindenburg zepellin crashing in flames would be an apt description.
“Battagello said he believes the current slump is unprecedented. ‘By far, this is the worst downturn I’ve seen,’ Battagello said. ‘It is very sad what has happened to this industry. I don’t see starting any mortgage companies in the near future.’”
Give it a couple years…they’ll be selling ‘em out of the back of cars again - you watch.
I have got to be honest here folks. I am considering jumping into the Mtge Biz at the beginning of the next bubble.
Why? Because I’m sick of getting “beat” and not rewarded for doing the right thing, so why not jump in, screw a few hundred people, make a million in 2 - 3 years.
I figure why not? Those that I’ll be screwing are just going to get bailed out anyway. right? so why shouldn’t I make a bundle along the way?
If the timing works out, it be just as I’m ready to call it quits at job #1.
How’s that for bitter?
pretty darn good!
Bitter, but sweet.
Bitter, but it’s the jumpimg out that’s tough. When this thing is finally anaylzed, the largest percentage losers will be in the real estate industry, and especially realtors. Too close to the flame.
Yep, that’s why I hope to do it after retiring from career #1.
Pen:
The next bubble probably won’t be in RE. Betcha it’s gold.
Buying a house, circa 2002-2006…
Fog a mirror, lie about your income, put zero down and it’s yours (temporarily)
Buying an ounce of Gold, anytime…
Pay in full, with cash or cashier’s check, for physical delivery.
Could you sleep at night? There’s more to life than money. In three years do you think the average realtor/mortgage broker will be loved or hated? My guess is the late night jokes will no longer focus on used car salesmen. Integrity has a value and if you didn’t have any you wouldn’t be questioning this plan. Even in retirement you gotta sleep well.
Why don’t you just send out your resume to the S&P500 companies along with a note describing your career as a toady on various board of directors positions? Then you make millions without having to work. It worked at Merril
I guess one good reason not to do that would be karma. I’m sure there are others.
“‘The impact of the credit crunch spread throughout all tiers of the market in September,’ said C.A.R. Chief Economist Leslie Appleton-Young.”
Translation: “People can’t seem to get toxic suicide-loans anymore.”
The impact of the crunch in the family jewels has caused tears of pain to spread throughout the central nervous system.
I finally understand the purpose of the SIV superfund
http://bloomberg.com/apps/news?pid=20601039&sid=a6dgIOAfMIrI&refer=home
a bank sponsor in deteriorating credit markets feels it is necessary in order to protect its reputation to provide an implicit guarantee of additional support to a VIE, and that additional support would make it the party that is expected to absorb the majority of losses, then the bank sponsor should be consolidating the VIE,” Linsmeier says. Linsmeier and Herz declined to comment on Citigroup specifically.
It’s also possible for a VIE to have no primary beneficiary. That seems to be part of the attraction for banks looking to pony up money for the Master Liquidity Enhancement Conduit that Citigroup is trying to organize, with help from the U.S. Treasury Department.
The megafund would shore up SIVs by buying their assets and preventing fire-sales. Because no one bank would be at risk for a majority of any losses, no bank would have to consolidate the fund, (ie report losses).
So, the proposed cure for Citigroup’s off-balance-sheet SIVs is more off-balance-sheet accounting. There’s no surer sign that Citigroup is worried about its potential SIV losses.
Bottom line it get’ s the crap off their books.
Now my only remaining question is how are they going to get people to buy the commercial paper for this venture, and how is the gov going to get involved. They organized this meeting
I read in the WSJ today, that the super-fund would only buy the highest rated loans (hahahahahahahahaha)…rated by who? Moody’s (should be named Shoddy’s), Standard & Poor (should be named Poor Standards), or some other POS ratings agency?
Only buying the “highest” quality rated instruments..So unbelievable that I had to write it twice.
Will they have to create a Superduperfund for the toxic sludge loans that are left after the highest rated toxic loans are pooled into the Superfund?
After today’s stunning writedowns from Merrill, SuperConduit M-LEC’s survival chances are slim to none. Imagine the amount of junk out there waiting to be written down. It was the subprime writedown heard around the world.
I guess that pretty much sums up the main reason for the afternoon rally which brought the slumping DJIA back to the opening bell level?
http://www.marketwatch.com/tools/marketsummary/
Don’t get me started on the rate cut rumor. I ranted enough already. Arggh!
I posted this in a thread on my blog the other day:
I think what you wrote is generally correct about the Super-SIV. It does allow the banks to prop up the prices of their mortgage-backed securities (MBSs) that are under-valued on the open market right now.
However, I thinkit also has a lot to do more to do with accounting standards than is being covered in the general press.
The Financial Accounting Standards Board (FASB) puts out rules on how companies much account for certain transaction.
FASB passed one of those rules, FAS 140 (Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities), late in 2000 — not entirely coincidentally the beginning of the housing boom. This standard allowed banks to transfer MBSs off their balance sheet and recognize the associated profits from the sale.
The problem with FAS 140 is that in order to remove the asset from its books, the bank “not maintain effective control over the transferred assets.” This wasn’t a problem as long as the borrowers were paying their loans.
However, once people started to default and/or ask for restructing, the banks, who were often still servicing the loans, needed to start “maintaining effective control” or risk having all those mortages end in foreclosure.
So, the banks are now stuck between a rock and a hard place. They can either: (1) Maintain control over the assets by allowing borrowers to restructure and adding the assets back on their balance sheets as required by FAS 104, or (2) Keep the MBSs off their balance sheets and watching them go down in flames.
The solution to this problem is the Super-SIV. This will allow the banks to transfer all these MBSs to a new entity. The Super-SIV will be able to service the loans (similar to the way Freddie Mac and Fannie Mae manager their portfolios). The Super-SIV will maintain control. So, they will comply with FAS 140, which means they will be able to keep all these crappy mortgages off their balance sheets.
It’s all pretty brilliant if you ask me. It preserves the price as you mentioned. It allows the banks to actively manage these mortgages. And, it keeps the underlying assets off their books.
Still, in the long run, the bank will have to recognize the lossed value of the MBSs. However, rather than taking one-time, massive write-off, they can write the MBS slowly over time as they become progressive worthless.
It’s enough to make you head spin. The pace of the developments are amazing.
For those that are interested, I posted some good links on SIVs and the Super SIV on this thread:
Other thread on SIVs
Also, here’s the best explanation of FAS 140 that I have been able to find:
CPA Journal: “Securitization: A Platform to Debate Accounting”
Hello M. Easton!
I was scratching my head in mid September trying to figure this one out (mind you, most of my head is box of rocks, sometime others think this, because hit’s brain falls from face syndrome (HBFFHS).
See if you can find any similarities…I eagerly await your input : )
P.S. thank you for the link : )
Leigh
http://www.financialweek.com/apps/pbcs.dll/article?AID=/20070912/REG/70912006/1036
It sounds like a vehicle to further consolidate wealth in this country and abroad. No reporting of who owns what, and less regulation
Companies get cash without the paperwork and accounting that goes with going public.
Investors get companies with lower overhead, although I imagine this is small. More importantly they get anonymity, ? foreigners buying up US corporations, or Berkshire not wanting people to see it’s attempts to aquire or sell large #’s of shares. Not sure what the investor gets. Do they give up regulation, seems to me that might lead to more ENRONs??
3,000 workers pay the price for Bank of America’s bad investment in Countrywide and no, Ken Lewis is not one of them.
http://biz.yahoo.com/ap/071024/bank_of_america_job_cuts.html
“Kevin Stein, associate director of the San Francisco-based California Reinvestment Coalition advocacy group, said the best way for lenders to help distressed borrowers is to lower long-term interest rates before they adjust higher.”
Here I go again,……..Jeez! Where do they get these guys? What do you want, Keven!We’ve got long term rates right at 6% even. How much better does it get? Oh, I see, you want some more of that free you got used to over the last few years. Go look at some stats and see where 6% falls historically. Mighty low.
You have an over-priced housing issue, Kevin, not an interest rate issue.
Correct. And what Kevin fails to articulate is that, in order for long-term rates to go down, short-term rates have to go up in order to compensate for inflation. I refuse to believet that Kevin doesn’t know all this. I believe he is positioning himself to say “I told you so” at a later date no matter what happens.
“Kevin Stein, associate director of the San Francisco-based California Reinvestment Coalition advocacy group, said the best way for lenders to help distressed borrowers is to lower long-term interest rates before they adjust higher. Rate cuts for a year or two are little help, he said.”
NFN.. but I think you could give many of these FBs a 6% rate and they’d still be F’d. It isn’t just about the loan pmt. It is also about the serial refinancing that took place and the high debt to income ratios out there.
Also, what do they not get about it not being up to the lender to set rates, but it is more so up to the market/investor?
Just an update: Well, as NONE of you know, my wife works in the mortgage lending business. They are closing her office at end of this month.
We have no issues financially - I have been planning my financial future since I was a wee lad. The point here is that one of the main job growth engines of the last several years for Cali is vanishing.
Good luck Mr. and Mrs. Vincent. Sorry to hear about the job loss, but it is good to hear you are prepared.
The REIC was the primary job growth vehicle for California since 2001. I expect ALL of the new jobs to be erased. Let’s face it, the real estate market is going to drop its transaction volume below 2001 and thus staffing levels will drop below 2001 requirements. Do note, I assume Countrywide and others will move jobs out of state to reduce costs down to what is sustainable on conforming loans (a relatively low profit margin product).
Got popcorn?
Neil
“The REIC was the primary job growth vehicle for California since 2001. I expect ALL of the new jobs to be erased.”
They can compete with illegals for jobs at the local jack in the box. Functional skills for fast food manager/ assitant manager/MIT’s are compatable with the reality profession: ability to use a 10-key calculater and public interaction skills.
My brother is a loan underwiter in Orange County and help fuel the fire when it all began. He would tell me in 2004 that it was a ‘house of cards’. The deals that he put together were hilarious!
- He told me yesterday that they are still funding loans, but they are 95% LTV with credit scores of 700 with income and asset verification.
This was the old kind of industry wide filter that always kept the market from creating artifical demand.
Sorry about your wife’s job loss, Mr. Vincent. But everytime I’ve lost an opportunity, a better one presented itself. It must have been depressing for her for the past year or so. Now she can find something more enjoyable, I hope. Best of luck to her.
Mind if I round your “write-downs” up to a Cool Billion Dollars?
“Write-downs of $983 million reflect the lower value of Centex’s unsold homes, land and other assets in a sinking housing market. Chief Financial Officer Cathy Smith said Wednesday that the write-downs were concentrated in California, Arizona, Nevada and Florida, where price cuts were most common and where foreclosure rates are higher.”
This is hilarious.
Developer gets approval to build 7,000 homes in North Port Florida.
This area has the highest percentage of inventory rates and foreclosures in the state and the commission wants to keep building?
http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20071024/NEWS/710240404
It’s the old ‘I’m losing money on each sale. I got to sell ‘em faster…’
“Call me crazy,” said Englewood resident Kellie Pearson, “but I don’t see why we need another 6,000 homes.”
I don’t either, Kellie, but that’s how screwy matters have become. You’re crazy if you want to do the sensible thing. Personally, I think the people ought to be able to declare the nutbags on the commission under the Baker Act, on the grounds that they are harmful to themselves and others.
Larry Kudlow says that the Fed will cut rates another 50 basis points and that is why stocks rallied towards the end of the days.
Screw rates, look at the dollar… do these people get it? People have to spend more on food and gas, do you think they are going to go out and buy crap and make their mortgage payments with a shrinking amount of leftover money?
did Pudlow cream in his pants as he said that?
No but I think he did some more coke.
He is amazingly clueless.
I watched a segment of his show that initially cheered me, then depressed me. First, a panel of four experts were discussing affordability, and Kudlow concluded that prices “should be slashed.” Yay! Then he interviewed a group, NACC? who have convinced Countrywide to in turn convince investors to take lower interest rates from FBs to enable them to stay in their houses. Boo!
Trouble with getting investors to take lower rates is that they are better off just selling for a loss right now and investing their $$ elsewhere. If you go to an MBS holder and say “You need to cut your profit by 50% in order to reduce your chances of going belly-up by 25%”, most of them will say “Hey, I think I’ll sell right now and just take my 20% hit, then invest the remaining 80% in something that will make up for it.”
The reason the MBS holders are doing this is because it is 50% reduction in profit vs the average 54% reduction in the MBS market. If they can find someone to buy the security. There is a complete disruption in the market.
I sort of enjoy his show and the other ones like it…
Why? Because it helps remind me how little the “experts” truly know. For example, the Monday night someone was talking up Amazon, then today, Amazon gets whacked. It happens all the time and more often than not, I believe. What I find even more entertaining is the thought of how many sheople invest $$ based on these shows.
I am not claiming to be more astute than they are, but I’m not on National TV claiming to be either.
I agree. Many people buy on Cramer’s recommendations even though he has lagged the market average in each of the last 5 years? Many people also buy on the data put out by the government like CPI. The same people also buy on interest rate rumors (see the last hour of trading today).
Cramer’s doing a bang up job on ISRG…that chart is so nutso. Up $80 in a week. He’s foaming at the mouth CHEAP, CHEAP, BUY, BUY. Gawd, it’s enough to make me want to sell my position and short the heck out of it.
I’m beginning to think that stocks will beat holding money in a money market. 5% interest is bad when you consider food costs are jumping 20% a year. Plus, with the current bailout mentality, they will do whatever it takes to keep stocks rising. And, when you consider that the US stock market was among the worst performing this year (and still was up 5-10% more than your average money market), international funds and US businesses that do a lot of selling abroad may do quite well.
I don’t like any investment alternative right now. I want to come out several percent ahead of inflation. That is certainly not happening at my credit union; US stocks are risky; I’ve been waiting for a correction in gold but it too gains at least 1/2% a day. You tell me what isn’t speculative these days?
Gold will soon be the ONLY honest financial instrument, without taint.
How does one place a value on that?
Gold is absolutely useless in industry and agriculture.
Ultimately, it will also be worthless.
IMHO.
Gold has always and forever been absolutely useless in industry and agriculture, yet somehow it’s never been worthless. Go figure.
Agree w/ tj. 4000+ years of civilization and gold has retained consistent position as a measure of wealth. I doubt we’ll see that change in our puny lifetimes.
I use forex.com and have a lot of cash in Euros. So far I seem to be kicking the Dollars arse.
Yeah, as a newbie Forex speculator, I need the Fed’s rate cut just as much as Kudlow’s stock speculators need it. My big AUD position is about to break through its high of a few weeks ago if people keep believing there will be another Fed rate cut. The trouble with Euros is, how do you get any yield? (Just asking.) AUD govt bonds pay about 6% in AUDs, ISK and BRL govt bonds pay at least 9% in ISK/BRL. I don’t see any euro bonds paying even 4%. ???
I’d be happy to match inflation, because housing will be deflating and I want to buy a house. I agree, though no appealing investments. I’m sticking to a Hedging plan. Short domestic consumption, matched by long positions on global stocks. Throw in some foreign currency and gold and money market cash.
Cheap cash forces you to invest, that’s the idea behind the continued rate cuts. Getting you out of your FDIC insured money market.
Mark Faber was on Bloomberg yesterday, great segment. He summed it up perfectly. The bubble is going to burst. You can’t say when so you are not speculating on the stock. You are speculating on when everyone decides to bail. It’s either play Russian roulette with Gold stocks oil (you might live to be 100)or smoke 4 packs a day in a money market.
Increases in food and gas prices are temporary fluctuations and should be ignored. Another half a point and this economy will continue to roar.
…should be ignored.
…continue to roar.
John Keating: “Congratulations. You may have just written the first poem to get a negative score on the Pritchard scale.”
You know the Treasury and bank examiners decide things are out of hand and the Fed move is irrelavent.
Basically they examiner walks in and says increase loan loss provisions. Poof credit contracts.
The Treasury might get a little miffed about rates on bonds getting pushed up and decide to contract the supply of physical dollars and poof the Fed gets a contracting money supply.
I think the Fed fears a negative reaction from the Treasury and everyone else. Probably a 0.25 cut or neutral for another quarter. Losses are substantial but many of the banks are just setting aside loss provisions so its not really hitting yet.
They might save the cut for later.
Kudlow has lost his mind. The bulls are beyond desperate now. They ginned up a rumor around 2:00 pm that the Fed was going to imminently cut rates at the discount window to stop the market from plunging. What will they think of next?
http://www.reuters.com/article/businessNews/idUSWAT00835320071024
Can we start a rumor that they will hike them? : )
bubba, that dog dont hunt.
welcome to the dollar.
Ill tell ya somethin else.
bubble boy is trying to be encited, but nobody can figure out what its gonna be.
the precious? alternative energy?
nobody, even myself cannot get out of the way fast enough…pay your debts, invest in education, consume lesss bullshit.
and by all means play the market.
I LIKE the sound of the notion of *Rates are going up*
Psst…pass it along! (Dang, I even e-mail these genius’s of said rate hike are beneficial!)
Do they listen? Noooooo. Rest asured the other free nations are raising rates in their economic interest. grrrr. Are we the banner children for failure of Econ 101?
Dang.
Leigh
I’ve been watching cnn quite a bit, as the inferno rages…
cnn’s idea of news is to find somebody that lost their home, stick a microphone in their face at the person’s most vulnerable moment, and ask them “how does it feel to lose your home?”
Real questions, like with 6 months advance notice of the drought and less than 3 inches of rainfall, why wasn’t more brush cleared?
Haven’t been uttered…
Clearing brush is hard physical work of the sort most non-immigrant Californians would never suffer the indignity of doing.
They can thank thier local tree huggers for the brush. They forbid it because it would disterb the homes of spiders and mice. Same reason they never did any controlled burns to prevent such a disaster.
Real questions? Oh you mean like why 14 military helocopters were sitting on the ground here because Cal Fire wouldn’t let them fly?
The median price of an existing, single-family detached home in California during September 2007 was $530,830, a 4.7 percent decrease over the revised $557,150 median for September 2006, C.A.R. reported.
Why do they insist on reporting only the used detached house figures? Probably because new houses and condos have declined far more sharply in price?
Trust me, detached prices are down by far more than 4.7%, IMHO.
We just sold my mother’s house at a 28%+++ discount from peak price. Granted, I’m a long-time HBB’er, and knew how to sell rather than list, but the trend is decidedly down.
“You have destroyed all that which you held to be evil and achieved all that which you held to be good. Why, then, do you shrink in horror from the sight of the world around you? That world is not the product of your sins, it is the product and the image of your virtues. It is your moral ideal brought into reality in its full and final perfection. You have fought for it, you have dreamed of it, and you have wished it, and I—I am the man who has granted you your wish.”
John Galt
“Sellers need to hear that ‘unless you are prepared to allow me to aggressively position your home for successful sale, I will not take your listing,’ he said, drawing applause from the audience.”
Absolute music to my ears. To get from the peak of ‘05 to the blood in the streets trough of ‘08/’09/’10 (i.e. whenever it does truly bottom out), these are the kind of milestones we need. The open acknowledgement of the subprime mess, the meltdown in MBS’s, CDO’s, etc., stats disasters in inventory/prices/DOM, etc., all are signposts.
If the “eyes wide open” attitude expressed by this particular realtor goes viral in that snake infested community, I’m looking forward to another 15-20% whack this winter on top of the 20% we are already off the peak here in Central CA.
The last 20% or so should then come the following winter or two, as the last holdouts finally capitulate.
Capitulation from Bank REO’s in Las Vegas right NOW! Countrywide has over 200 REO’s in their inventory, but only 30 listed in MLS. The last couple of days, I have seen REO price reductions $10,000 below other comp listings. That’s $10,000 below listings, not previous sales. There is one condo complex near the strip where there are 5 lisitngs over 2 months oldfrom $129,000 to $145,000, and then comes an REO in the same building at $112,000. Crash, Boom, Bah!!!
I just saw a Countrywide forclosure go into escrow recently
1500 block of Ocean Blvd. Long Beach, CA
Seller purchased for $775,000 Summer of 05, 100% finance
Pending Sale $549,900, about $238 per sq. foot. Most of those condo’s on Ocean and Bluff Park were selling about $400-500 Sq. Ft.
Nice Haircut!
“‘This caught me by surprise,’ said John Hollinger, an executive VP who joined the Diablo team in 1994. ‘I was told that I don’t have a job effective immediately. I was told I’m a free agent.’”
Where has this guy been…?
I’m sure the sunrise surprises the heck out of him every morning as well.
“This caught me by surprise,” said John Hollinger. Hey John , I’ll buy you an ostrich burger with a side of denial.
When will housing hit bottom?
WASHINGTON (MarketWatch) — The housing market is just getting worse. Home resales tumbled 8% in September to the lowest levels in this decade, prompting the obvious question: When will it all end?
The honest answer is no one knows. Optimists have been saying for more than a year that the worst is behind us, while the pessimists have been saying recovery is still a year, or years, away.
http://www.marketwatch.com/news/story/housing-hit-bottom/story.aspx?guid=%7B0311E781%2D648B%2D4EE5%2D96AF%2DD35180E12295%7D
Cally is getting slammed on this blog as of late - have you forgotten that everyone wants to live here?
I hate to say this, but…
The last few days in the High Sierra have been picture perfect, and the oak trees are turning 22k gold, in appearance.
In ‘64 when I was 5 years old in the Madera County foothills community of Oakhurst, the Harlow fire on Deadwood Mountain was the big deal. Be careful. Dry trees burn fast, whether in southern Cal or in the Sierra.
How does reporting factual information about falling prices qualify as “slamming Cally?”
Cally’s in for a big treat now. Every illegal who can, will be vying for the San Diego construction work. Don’t say I didn’t warn you. I read a report today on one of the other blogs about human smugglers trying to get these folks through the burn zone. But, who will pick the fruits and veggies?
Cnn did a report on Cubans being smuggled into the US via Mexico…20k plus a year. Remind me again, is Mexico an ally of the US?
“is Mexico an ally of the US?”
Never has been. But it wants badly to merge with the US and the globalistas would love it, too, since that would make the US more like China.
I don’t mind the Cubans. I lived in Miami/Ft. Lauderdale for a long time. Cubans, upon becoming Americans, pretty much did their thing, got educated, became professionals and assimilated. In fact, they gave new life to Miami and made it fun in many ways. You oughta hear how much the Mexis in this part of Fla resent the Cubans. Wheee-O! Here’s one: “Why should they be allowed citizenship just because they floated across the water? I walked through the desert”. Of course, then you have to explain the politics of the whole thing, which they just don’t understand.
Is ANYBODY an ally of the US? Spreading billions in foreign aid and “security assistance” around hasn’t bought us any genuine friends, that’s for sure.
I’m hoping they’ll clear some of the backlog out of the SF area. I’d love to see them all shipped to the SOUTHERN end of Mexico.
“I’d love to see them all shipped to the SOUTHERN end of Mexico.”
That’s what Eisenhower used to do, back in the day. They’d round ‘em up, put ‘em on ships and give them a wild ride down the coast to the very southern end of Mexico and unload them. No sending them back across the border, nossir. Dang, those Navy guys must’ve had a blast. “Hard ‘a port! Hard ‘a starboard!” From what I read, the illegals didn’t much like their free cruise.
LOL!
For the good ol’ days…
Should be a breeze for the smugglers now, all the National Guardsmen have been pulled off the border to protect the burn areas from loooting.
“Cally’s in for a big treat now. Every illegal who can, will be vying for the San Diego construction work. Don’t say I didn’t warn you. ”
Good opportunity for ICE to do a roundup. The border is one hr away and the cost for deportation would be cheap for the taxpayers. Of course the ilegals would just hop back across after getting a taxpayer-funded joyride back to Mexico. US border security still a joke.
“slamming Cally?”
Why that’s just a new sport.
not only is the border open, but picking things up on the way north is just part of the migration.
Ahem. Everyone is a finite statement in an infinite world (universe?).
Uh oh,
Everyone : )
OT..two thoughts to ponder..
1 - If I take a mtge for $350k and leave $100k in reserves (cash/mmkt, etc.) & (truly in reserves, not to be spent) and assuming I can pay the P&I, is that better than taking a much smaller mtge and leaving much less in reserves? I figure that it is. I figure the extra interest on the mtge less the tax deduction is about a wash with the interest income less the taxes on the interest income. The way I see it, the $100Gs in reserves would go a LONG way towards covering the mtge pmts in the event of a income issue. Also, let’s say I locked in a 30yr mtge at 6%, at some point (soon) rates could likely spike up and the reserves could even earn more. My intention would be to aggressive prepay the principal until it is down to $100k, then I’d take the $100k and pay the mtge off.
Any feedback on that?
2 - When the time comes to buy, are you folks thinking of buying up or buying down? By that I mean, if you can afford to spend, say $500k now, will you buy the $800k home that becomes a $500k home OR will you buy under your means and get the $350k home that was $500k. Let’s assume that either is being bought with a 30yr fixed, large downpayment, reasonable front/back end ratios, etc. and difference in taxes aren’t a concern..
Thanks.
Pen
I plan to use Gold’s power, vs the Dollar’s weakness.
Once real estate drops 30-40%, and the Dollar gets whacked by 30-40%, I’ll buy and put 20% down on selected pieces of property.
As the greenback continues it’’s ride into oblivion, every monthly fixed payment will be less and less.
I might end up paying a Cent or 2 on the Dollar, compared to current quoted “values”…
Care to play through, with me?
–
We have a resident genius in town who bought 4 lots during the past 2.5 years, some with HELOC. I pleaded with him not to bet everything on land, especially, at the peak prices. Two years ago I told him to sell at least one lot and but gold with that money. Gold was $450 at the time. The Lot is unsellable currently but it has probably dropped 50%.
The best compliment I got during the last visit was: “I was talking to K (his wife) that we shouldn’t invite Jas because he is always right.”
Jas
1. Seems like a lot in reserve to me.
2. I’ll always buy under my means.
As for Question #2 I will be “buying down.” The house I sold had a peak value of about $460k while the house that I will buy had a peak value of about $250k. The difference is due to regional differences; I moved from a high-cost market to a low-cost market. I explect to buy either in 2009, the false bottom, or after 2012, when all of the ARM/balloon resets will be over and done with. I’ll buy in 2009 if I think that Fed panicking will trigger major, monetary inflation.
As for Question #1 the answer depends on interest rates, investment yields, income tax rates, and property appreciation rates. Who can predict those without resorting to uselessly wide ranges? If you’re really worried about unforeseen, personal catastophies just buy a cheaper house. Then it won’t matter if you borrow 90% or go all cash. You’ll either have very large reserves and manageable expenses, or decent reserves and very low expenses.
Hi Pen. I would suggest leaving $50 in reserves and saving $3000 per year in interest payments. Reserves are very nice, but if you make so much money that you can aggressively pay down your mortgage, you’ll do it a lot faster for a $300K mortgage than a $350 mortgage. Of course, if you wait until 2009 to buy, you’ll get the same house for $100K less, which will mean a $200K mortgage, which you could pay off in five years.
Cash in any form is king! Get a 100% mtge if possible.
No, it’s not really financially smart. It is better in my opinion to sink all of your cash reserves into your mortgage thus lowering your interest payment and increasing your principal payment. If you truly think you might need the cash reserves then open a heloc of 100K on the home NOW so you have access to it even if you have a problem financially. I personally dislike heloc’s and I would take the money I’m saving from the lowered mortgage and save that to build back my emergency fund.
Of course all of this assumes that you have a great deal of self control and live on a budget so you don’t do stupid stuff, but I assume you don’t do stupid stuff or you wouldn’t have been able to save 100K.
Hyphenated Leslie utters some truths, what’s up?
“‘The impact of the credit crunch spread throughout all tiers of the market in September,’ said C.A.R. Chief Economist Leslie Appleton-Young. ‘While the entry-level portion of the market has been adversely affected by the subprime situation and tighter underwriting standards for much of this year, the high end of the market also saw a decline in sales, as even well-qualified buyers were affected by the lack of funds available for jumbo loans.’”
She’s making a case for rate cuts. If you thought Bernanke was Wall Street’s bitch, then what is he to LAY?
‘C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in September 2007 was 16.6 months, compared with 6.4 months (revised) for the same period a year ago.’
This looks like 1995 all over again in regards to inventory; however this time it will be three times as bad now that we are facing the biggest foreclosure crisis of our lifetime. When will we reach 25 months worth of inventory?
“Nearly 4,800 subprime loans made to Bay Area borrowers in 2006 are likely to fall into foreclosure in the next couple of years”
How does Liz Wolff define “likely”? She’s probably just counting up all the homes that are 90 days late right now. What about all the people whose rates haven’t reset yet? What about those who got loans in years other than 2006? What about all the people who haven’t depleted their savings yet? What about all the people who will be in danger once they realize that the value of their house is now 10% less than they thought it was. What all the people who will be in danger when that 10% goes to 20%, and that 20% goes to 40%? I don’t think Wolff realizes the extent of this downturn.
“How does Liz Wolff define “likely”?”
Like, I think you, like, might have, like, misunderstood her, like, ya’ know..the borrowers are like, fallling behind, like there will, like, be more foreclosures, in the the, like, coming months, due to the, like, sub-prime, like, you get the point, fur-sure
On Ventura, there she goes
She just bought some bitchen homes
Tosses her head n flips her hair
She got a whole bunch of nothin in there…
Okay, fine…
Fer sure, fer sure,
She’s a Valley Girl…
And there is no cure.
Now this makes me laugh…….What about your own backyard Hank?
“Paulson: India should speed economic reform”
http://money.cnn.com/2007/10/24/news/economy/paulson_india.ap/index.htm?postversion=2007102413
“If India slows its pace now, it risks losing the ground it has worked so hard to gain,” Paulson said in a speech to the Council on Foreign Relations in Washington.”
First of all, you’ve gotta be kidding me. First he wags his finger at China, now he’s doing the same with India? But I forgot his connection to the Council on Foreign Relations. Don’t ever drop the soap when one of these CFR types is around.
I love how while our economy is going down the tank, Paulson is busy telling other countries how to run their economies.
Doctor, heal thyself.
http://www.businessweek.com/bwdaily/dnflash/content/oct2007/db20071019_946332.htm
The article talks about the drop in home the ownership rate.
I disagree with the notion that home ownership is falling. As far as I can tell, it is increasing.
For example, I bet Countrywide owns more homes now, than it did a year ago..oh, they didn’t mean bank owned..oops sorry..my bad…
“…costing homeowners, cities and lenders…”
Why do “cities” get thrown into this grouping?
Falling property taxes are going to be very painful for municipal governments throughout the bubble areas.
OT but regarding the markets today. There was blatant market manipulation.
Check out this video that shows it and then sign the petition.
http://market-ticker.denninger.net/
http://financialpetition.org/
http://bigpicture.typepad.com/comments/2007/10/markets-rally-o.html
And email enforcement at SEC.gov … I did.
Think I’m going to call my senator again tomorrow. Last time the staffer didn’t really understand what I was talking about … so many morons, so little time.
i commented below.
bankers bid, plain and simple
BTW: I can’t agree with this petition.
“Congress must prevent lending against unverified (“stated”) income or assets,”
I wouldn’t want to see a ban on Stated Income loans, it’s just that they should require 30% downpayment.
In the good-old-days, stated income loans were used by people trying to appear POORER than they really were! They proved their ability with a high down payment with no questions asked.
It’s only a perversion of recent times that people would claim on an official document that they made MORE than they really did! What kind of IDIOT would do that? I think the IRS should look at stated incomes on mortgage applications and start collecting tax on those stated incomes.
So, no stated income loans without say, 1/3rd down. A “no money down” stated income loan is idiotic.
About how idiotic it is to say you make MORE than you do…about 30 years ago I interned for a company that ran the “reader service” surveys for magazines. We asked readers on little “blow in” cards what their hobbies were, how often they bought a car, how much money they made.
We got higher average income from “Popular Mechanics” than we did from “Forbes!” Why? Because the Forbes people would routinely check the lowest box “Below $12K/year” on “household income” and the “Popular Mechanics” folks would always check the highest box! Neither group was telling the truth, of course.
‘I told them I cannot afford it, you HAVE to help me to refinance or modify my loan,’ Ortiz said. ‘They don’t want to work with me.’”
Damn, I still get mad when I read this crap in the MSM…you HAVE to help me. We will, we will remove you from the rolls of homeowners! Idiot!!
Yesterday I was ticked off because someone who couldn’t speak English held up the line at the Post Office by having the clerk fill out the paper work for renting a PO box. I got ahold off the Post Master and voiced my complaint.
Mortgage Lender: “Mr. Ortiz, you owe us 6 hous payments at $2562 each plus late payments and interest.”
Mr. Ortiz: “But I don’t have it, you have to work with me.”
Mortgage Lender: “Well, if you can give us 3 payments, we can put the other 3 at the end of the loan.”
Mr. Ortiz: “But I don’t have it. My payment used to be $700 per month, I can give you that.”
Mortgage Lender: “But that was at 2.5% interest Mr. Ortiz, that is a loss for us, how about 6% which makes your payment around $1800 per month.”
Mr. Ortiz: “But I can’t afford that with rising food prices and gas prices, I only have $900. You have to work with me.”
Mortgage Lender: “Mr. Ortiz, I need at least $1500, can you do that.”
Mr. Ortiz: “Damn, you people don’t want to work with me!”
Mortgage Lender: “I am trying but I can’t give you the house for free, I need to at least break even on the loan instead of dying a slow death.”
Mr. Ortiz: “Well that isn’t my problem, you put me into this loan. I can pay you $900 per month at the most.”
Mortgage Lender: “Mr. Ortiz, we have an REO trailer we can put you in at $900 per month.”
Mr. Ortiz: “I did not come to this country to live in a trailer.”
Mortgage Lender: “Mr. Ortiz, what kind of work are in you in?”
Mr. Ortiz: “I work in construction but right now there is no work.”
Mortgage Lender: “So where are you getting $900 per month?”
Mr. Ortiz: “I steal appliances and copper from houses and recycle but there is only so much I can steal.”
Mortgage Lender: “Sorry Mr. Ortiz, but we are going to have to foreclose.”
Mr. Ortiz: “Damn, you people gotta work with me!”
Thanks, tom! This is EXACTLY the conversation I imagined.
If this guy can’t afford PITI if the loan were, say, a 6% 30-year fixed then he essentially committed fraud when he assumed financial responsibility for the loan, regardless of the teaser rate.
According to my mortgage calculator, 580,000 at 6% over 30 years is a 3477 monthly. Add $150/month for “PMI” and, say, $200 month for minimum insurance that’s $3727/month. And that’s at a very generous interest rate for a jumbo in 2007 with no money down!
Do these people really expect to “own” the 580K house over time if they’re not paying $3727/month toward it? What kind of help does he want? He’s already getting government handouts in the form of mortgage deduction and now PMI deduction. (While careful savers like me get reamed up the a$$).
“Yesterday I was ticked off because someone who couldn’t speak English held up the line at the Post Office by having the clerk fill out the paper work for renting a PO box. I got ahold off the Post Master and voiced my complaint.”
Good for you, Salinas. I try to do the same whenever I see one of these dip$hits mucking up the works.
The chickens are coming home to roost around here. A local cell phone store just got knocked over by a couple of our out of work “guest workers”. LMAO! I’m sure the store was only too happy to do business with them while they were hammering nails, serves them right. And, a local retirement community whose residents have been pandering for years, handing out baskets of food and giving the old “kootchy-koo” to the anchor babies, is now having their businesses broken into and mariachi music disturbing their sleep at night. What did they expect, gratitude?
http://bigpicture.typepad.com/comments/2007/10/where-was-the-b.html
this is part of the essence of the liquidity trap,
why is Hoz straddling the rate cut?
it really is all 6’s and 7’s
market rallied at the end of the day on the Bankers Bid, no buyers here. No money here…just debt and percieved consumption.
“Diablo Funding” - ha, I bet that was a big hit with their Catholic Latino customers! That’s about as big a blunder as in the 1960s, when Chevrolet tried to market their new car, the “Nova,” in Mexico.
There’s a mountain named “Mt. Diablo” in the region. Below it, the Diablo Valley. Nothing else to it.
Remember when Countrywide, Citigroup, and Bank of America all wanted to leand to illegals and people who didn’t have social security numbers?
How is that working out for them now?
No tengo dinero. ¿Puedo pagar en la mañana?
Although the loan was sold to her as fixed, Quezada said it quickly became an adjustable rate, forcing her payments from $600 a month to $1,900 a month.
Ah yes - I’ve heard of this inexplicable phenomenon, whereby words and letters on signed contracts mysteriously re-arrange themselves of their own volition to change the terms of the loan.
Good one Sammy !
Here you go. Meet Christopher Ricciardi. The grandaddy of Merrill’s CDOs. Don’t use it all in one night. Save some for tomorrow. From the Journal:
Mr. Ricciardi’s role is emblematic of the drive that so often pushes Wall Street to extremes. Long after signs of housing troubles first emerged in mid-2005, he and his colleagues at Merrill were setting out to smash records by issuing ever more CDOs.
From the manicured lawns at the exclusive Sleepy Hollow Country Club to the ski slopes of Jackson Hole, Wyo., and wood-paneled rooms of Manhattan’s Harvard Club, they courted investors with promises of well-managed risk and outsize returns. They helped to build a small army of a new sort of finance professional, people who manage the mountain of complex debt instruments being created.
http://online.wsj.com/article/SB119326927053270580.html?mod=hps_us_whats_news
I heard on MSNBC this morning that Merrill Lynch announced a 19% write down on AAA rated SIVs! I figured if this were true, the lie of the “subprime” collapse would start to unravel and then within an hour the market was tanking. Then I was in a meeting all day and emerged to find the market had recovered. Are traders smoking something I don’t know about?
“‘Further rising prices would have collapsed our market under its own weight,’
higher unaffordable prices are collapsing prices. Prices are collapsing dummies.
“When he didn’t qualify for a new loan, he tried to get his mortgage servicer to restructure his existing one. ‘I told them I cannot afford it, you have to help me to refinance or modify my loan,’ Ortiz said. ‘They don’t want to work with me.’”
Look you freeloader you cannot afford this house. You are the problem. You bid the prices up to stupid levels. Good bye!
You bid the prices up to stupid levels. . . .
YOU are the “Weakest Link” . . .
Good bye!
If the lender thought there was any chance in hell that this guy could actually pay for the mortgage under any terms, they’d probably work out *something*.
Fact is, the only scenario that could have ever worked for buyers like him are
1. Get a mortage for the home
2. Find a greater fool and sell!
3. Take your profit and RENT (i.e., don’t try to repeat steps 1 and 2)
Don’t these people realize that, even with the magic of “ever increasing property values”, if there’s no way you can really afford to pay for the house, it just isn’t going to work?
“She recently refinanced the home she has owned for 28 years in order to pay down debt and help her son and daughter buy a home together. Although the loan was sold to her as fixed, Quezada said it quickly became an adjustable rate, forcing her payments from $600 a month to $1,900 a month. Now, the telephone technician lives check to check.’
OMG! What a dumbf**k! BTW: This loan wasn’t sold to her as “fixed”. If it were, it would clearly say that in the terms.
Also lending money to help a family member get into debt is extremely dumb! Give them a gift of $12K if you can (the IRS limit on gifts), but loaning someone money you can’t afford to lose to help them *borrow* for something is a sure way to dig yourself into a hole.
You’d think a grown woman who has owned a home for 28 years would be able to know the basics of how to finacially manage a household.