It’s Going To Be Shocking In California
The Sacramento Bee reports from California. “Beth Flure thought last week was overwhelming when some East Coast banks sent her 11 new foreclosed houses to sell. Tuesday a Denver mortgage servicer handed her 42 houses to unload. Then came four more. ‘That’s just astronomical,’ said Flure, a Sacramento real estate agent who markets bank repossessions. ‘There’s tons, and we’re going to see far more. It’s not going to stop for a while.’”
“Home loan defaults and foreclosures spiked to unprecedented highs across the Sacramento region, DataQuick reported Friday. Statewide numbers also broke records.”
“At least 6,638 homeowners in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties received notices of default from their lenders during the three-month period. The default notices are gaining on sales. DataQuick said 7,791 new and existing homes closed escrow during the same period in those counties.”
“With slow sales come more downward pressure on home values. Median prices have fallen by as much 21 percent from their 2005 highs in Placer and Sacramento counties.”
“Statewide, 24,209 homeowners lost their homes during the quarter, the firm said, the highest number since it began keeping statistics in 1988.”
The Press Democrat. “Foreclosures shot to record highs in Sonoma County this summer. Lenders began foreclosure proceedings against 749 homeowners in the third quarter, up from 462 in the second quarter and more than triple the number from a year ago, according to DataQuick.”
“Statewide, 54 percent of those in default lost their homes, up from 19 percent a year ago.”
“Like many homeowners, Anthony Lessnau didn’t figure housing would swing downward by the time the loan he took out two years ago adjusted to a higher payment in June. But the furniture maker couldn’t refinance because he owes more on his loan than his Larkfield town home is valued on the market.”
“‘I would love to keep my house,’ he said. ‘But I saw the writing on the wall when it (my monthly mortgage payment) jumped up. I had a feeling I was in for something bad.’”
“Lessnau has listed the town home for sale at $249,000, less than the $315,000 he owes on the loan. The lender has agreed to the so-called short sale, but Lessnau still could eventually face foreclosure if he can’t find a buyer.”
“Rigzin Vassallo, the Prudential California Realty agent trying to sell Lessnau’s town home, has 22 short sale listings. ‘He’s a typical case. The timing was horrible but he’s not alone,’ Vassallo said.”
The San Francisco Chronicle. “Lenders foreclosed on a record 3,242 Bay Area homes in the third quarter, a 622 percent increase from the same time last year, and there’s no sign of relief ahead, according to a real estate report Friday.”
“A fairly typical case is that of Kathy Quintanilla, who bought a two-bedroom home in Oakland’s Fruitvale district two years ago with 100 percent financing. When her mortgage reset in August, her payments went from $2,800 a month to $3,500. It is slated to reset again in February.”
“‘I’m finding I can’t refinance,’ said Quintanilla, who said the home is now worth about $350,000 - $48,000 less than she paid.”
“She is thinking about a short sale. ‘The IRS would come after me for the difference,’ Quintanilla said. ‘But I’m considering it - is a short sale the best option for me, is it a way out?’”
The Contra Costa Times. “East Bay defaults were high: Alameda County recorded 2,126 notices of default, up by 164.8 percent compared with the third quarter of 2006; Contra Costa County had 3,216 notices, up 217.8 percent in the same period; and Solano County rose 196.7 percent to 1,513.”
“San Joaquin County had some of the highest rates of foreclosure activity in the state. Notices of default more than tripled to 2,961 in the third quarter.”
“Most of the loans that went into default last quarter were originated between July 2005 and September 2006 with a median age of 18 months. Loan originations peaked in August 2005, and the use of adjustable-rate mortgages for first mortgages peaked at 77.8 percent in May 2005.”
“Dave Konesky, a broker associate in Tracy. Although Konesky said his office has seen sales pick up in recent weeks because of prices slashed hundreds of thousands of dollars, he said there are few options for sellers in a ticking clock heading toward foreclosure.”
“‘I’m hoping to see more loan products coming out to help people in foreclosure,’ he said. ‘Otherwise, people are going to wonder, ‘Why should I keep paying on my $600,000 home when it’s worth $400,000? I should just walk away.’”
The Mercury News. “‘Where we’re seeing the biggest increase in defaults is in the Central Valley, the Inland Empire’ and in Contra Costa County, said Delores Conway of the Lusk Center for Real Estate at the University of Southern California. Defaults rose 49 percent in San Joaquin County last quarter, for example, from the previous one.”
“In Santa Clara County, 1,655 notices were mailed to borrowers last quarter, up 30 percent from the second quarter and 147 percent from the third quarter of 2006.”
” Krysta Dodd and her husband bought a four-bedroom home in Patterson, about 80 miles from Santa Clara, in Stanislaus County. Like many buyers in recent years, they used a first mortgage equal to 80 percent of their home’s $439,000 purchase price and a second mortgage to make up the other 20 percent.”
“In August, the interest rate on their first loan went from 5.85 percent to 7.375 percent, and their combined payments for both loans went from $3,091 a month to $3,843 a month. With rate increases still to come, they want to refinance. But with no equity in their home, which Dodd says is now worth about $350,000, they may not be able to. With more borrowers in default, few lenders will make ‘100 percent financing’ loans now.”
“‘We want to stay put,’ Dodd said. She and her husband are both working overtime at their jobs to stay current on their payments. In the long run, she thinks her house will be a good asset. ‘We’re just hoping and praying that the market turns around.’”
“‘If there are foreclosures in the area, that changes home prices and it changes buyers’ expectations,’ Conway said. ‘They sit on the fence even longer.’”
The Press Enterprise. “There were 9,250 default notices in Riverside County in the quarter, more than three times the 3,040 recorded in the same quarter of 2006. In San Bernardino County, 7,038 notices were filed, up from 2,548 in the third quarter of 2006.”
“‘Defaults were up in every California county, but about half were in the Inland region or the Central Valley, where buyers with weak credit histories, desperate to catch on to the real estate boom of a few years ago, bought homes using mortgages with adjustable rates. Now, many are unable to make the payments because the rate has been adjusted upward.”
“We know now, in emerging detail, that a lot of these shouldn’t have been made,’ said Marshall Prentice, DataQuick’s president.”
“In a separate report, the California Building Industry Association reported Friday a 46 percent drop in building permits issued statewide in September from the same month in 2006, as new-home developers concentrated on trying to sell off existing properties.” There were only 711 residential building permits issued in the past month in the two Inland counties, down sharply from 2,403 in August.”
The LA Times. “In California, foreclosures are concentrated largely in outlying areas such as the Inland Empire, the Antelope Valley and the Central Valley.”
“But data released Friday show that the pain is spreading to higher-priced neighborhoods in Los Angeles and Orange counties and is even trickling into wealthy communities.”
“In four Newport Beach-area ZIP Codes, for example, there were 11 foreclosures in the third quarter, up from just three in the same period last year. There were seven foreclosures in Bel-Air, and none a year ago.”
“‘It’s definitely increasing,’ said Joyce Essex, a real estate agent based in Beverly Hills who specializes in selling foreclosed homes.”
“Essex said most of her properties were in the San Fernando Valley and South Los Angeles, but about 10% of her listings are now in a more affluent part of town. ‘It’s working its way to the Westside. The Westside is always last to get hit,’ Essex said of the foreclosure wave, based on her experience in the 1990s downturn.”
“In the last six months, Essex’s staff has grown from four to 14 to handle the volume of foreclosure work.”
“At the high end, Essex said, foreclosure victims tend to be ‘people who kept pulling money out of their houses, using equity [loans] to pay credit cards, buy cars, go on trips. They used their homes to get cash and kept pulling equity out,’ she said.”
“Laguna Niguel broker Steve DeVre said he had shifted more of his work from sales to foreclosures, including evaluating troubled properties for banks. ‘I’ve been barraged in the last 30 days’ by foreclosure work, he said.”
“Foreclosures are expected to continue escalating as large numbers of variable-rate mortgages reset upward in the next year, leaving homeowners with payments that are higher than they can afford. That could flood the housing market with discounted, bank-owned homes — possibly stalling a recovery for several years, some analysts say.”
“Even if the Federal Reserve continues cutting interest rates, ‘it’s still going to be shocking,’ said Edward E. Leamer, director of UCLA’s Anderson Forecast.”
“The third quarter saw a combined 13,314 foreclosures in the seven Southern California counties of Imperial, Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura. That’s up from 1,960 in the third quarter of last year — an increase of 579%.”
“Los Angeles County led the way with 3,627 foreclosures, many of those in the Antelope Valley. Riverside was a close second, with 3,462 foreclosures.”
“In addition, 41,062 Southern California homeowners received notices that they were in default on their loans.”
“In the Inland Empire and Central Valley, foreclosed properties have been selling for about 10% less than other homes in their areas, DataQuick said.”
“Steven Thomas, president of Re/Max Real Estate Services in Aliso Viejo, expects foreclosures to hurt prices in his area next year. Foreclosures and short sales account for 10% of Orange County listings, Thomas said. That has kept inventories up now, even though they traditionally fall this time of year.”
“‘We can’t come off those highs [inventories] when we keep getting more bank-owned listings,’ he said.”
The San Diego Business Journal. “San Diego had 2,221 filings in August before climbing in September, according to Default Research. Default reported 422 local foreclosure filings in September 2006.”
“The top cities within the county with foreclosure listings were San Diego with 740, Chula Vista with 306, Oceanside with 175, Escondido with 139, El Cajon with 116, Spring Valley with 82, and San Marcos and Vista, both with 78.”
“‘Foreclosures have had a negative rippling effect on the California economy,’ said Serdar Bankaci, CEO of Default. ‘With housing inventories high and foreclosures still on the rise in California, home prices are declining in a place where the cost of a home was once an average of $593,000.’”
At the high end, Essex said, foreclosure victims tend to be ‘people who kept pulling money out of their houses, using equity [loans] to pay credit cards, buy cars, go on trips. They used their homes to get cash and kept pulling equity out,’ she said.”
I would hardly call someone under this definition a ‘victim’. They are foreclosure candidates due to very poor financial decisions to use their home as a personal bank and now finding themselves unable to pay back their obligation. A victim would be someone like a person who unfortunately lost their home in the recent So Cal fires. They are suffering the effect of something they didn’t create. Those are the people to have sympathy for, not overspenders. I pity the overspenders, but don’t consider them victims.
I don’t “pity” anyone in this aftermath, especially “overspenders.” These people pissed me off just as much as the jackasses over at SDCIA during the run-up. New cars, boats, trips, electronics, etc…I hope they choke on them…
Can you tell i am having a fine day???
Speaking of SDCIA, take a gander over there. Some brain surgeon wants to go to Miami and buy condos since he adjudges that the bottom is here.
Brain surgeon my a$$…..his brains are in his as well….but send him on down and we will his little ol’ wagon right up.
Dukes, sounds like your still bitter that they kicked you off the SDCIA site. I remember when you and another went trolling there some time ago. There is not much going on there now, however.
Not bitter…just amazed at the stupidity that I used to read over there.
What ever happened to “Taco Bell Jeff”? Had tears in my eyes laughing at that story and its comments.
“Foreclosure carrion” would be more fitting.
I now understand that the majority of Americans are morons. But why do houses have to raise in value, otherwise people have issues? I don’t see anyone getting upset when their car drops in value. They keep paying the loan. Do people just walk away from their car the minute it drops in value when they drive the stupid thing off the lot? No! So whats the difference with a mortgage?
I hope they change the laws on how people are so easily able to walk away from a house all the while living in the place for free for months and months. This country is truly disgusting. Mainly California though. What a dump.
I received an email from a friend who “advised” me that the bottom of the housing market is here and now. I replied flat-out that she was wrong and she oughta revisit her analysis and where exactly she gets her information and advice. She bought a condo at the beginning of 2005. I suppose that decision automatically makes her a de facto expert in real estate finance and investment.
There’s no need for me to explain to her anymore - I don’t have the time or patience anymore to explain what is so obvious to us to these self-styled mavens of real estate wisdom. And guess what? She’s a lawyer…
Like many homeowners, Anthony Lessnau didn’t figure housing would swing downward by the time the loan he took out two years ago adjusted to a higher payment in June.
Hey Anothy. Do you know what assume means? Makes an ASS out of U and ME.
Also, “Loan originations peaked in August 2005, and the use of adjustable-rate mortgages for first mortgages peaked at 77.8 percent in May 2005.”
This speaks to Mr. Lessnau and almost everyone I know who took out a loan between 2003 and now -they couldn’t afford the house they bought, but creative financing allowed them to buy it anyway. This is NOT a subprime problem - I remember in SD when like 80% of loans were ARMs. When journalists repeatedly call it a “subprime” problem, it seems to put a global financial crisis on the shoulders of poor people who have bad credit. Almost EVERYONE got greedy - middle class, wealthy too. This is a price problem, as many on this board point out.
Sure, most of the ARMed people I know are college-educated, and have “professional” jobs. (Jerks…!)
Oh, P.S. … then there was the young Caltech professor who bought in ‘03 and asked me if he should use ARM or fixed rate. This person is in his early 30’s and financially inexperienced. He has a PhD from MIT. I told him to take a fixed-rate loan, and he did. I’m AZ_LENDER, right? and was NOT the one making the loan to this dude. Being quite bright, he took the advice of someone who looks old and solvent (me).
Looks like Anthony’s house is worth Lessnau.
(ducks)
I am concerned with the effort by Barney Frank and such people forcing lenders to cut breaks in percentage points on resetting loans.
Will this curb the decline in prices to affordable levels? I sure hope not.
Prices are way to high! Remember healthy growth in prices should reflect
wage and inflation growth compounded 4-5% year over year. Anymore and you are paying too much.
Artifically high cost mean high taxes and high insurance. Do you want to throw your money away? Worse .. do you want to be a knife catcher?
So … will this Barney Frank “save the idiot ARM mortgage holder” program mean the housing prices will continue to go up and every one will party like its 1999??
Any ideas?
This thing has moved away from the politicians so far, so fast, that I’m in agreement with Ben on this one. We haven’t seen any bailout yet and billions upon billions have already been lost (Merrill writes off $7.9 billion for example). They can keep talking about bailouts, and the devils like Paulson will push as hard as they can, but until I see it I won’t believe it. The whole situation is screwed.
Foreclosures, ABCP, SIVs… the hits just keep a comin’. The politicians can’t even find their own ass with two hands and a flashlight, so it’s damned unlikely they’ll be able to do anything but hold press conferences while the economy burns down around them.
spin, spin, spin
And even if there was a “mandatory” debt forgiveness/restructuring:
The home loan structure would then evaporate as we know it, because no bank would be willing to lend money ever again with the possibility that forced restructuring could happen again.
As someone put it, a foreclosure moratorium means a lending moratorium.
No bank and no private citizen either!
According to articles on this site, the peak in ARM-resets will occur during March 2008. Do you really think Barney Frank or Hank Paulson are going to be able to do anything between now and March 31, 2008? This train wreck has already started, and the only thing to do now is try to stay out of the way! Any article about Barney Frank talks about his attempt at increase mortgage regulation and predatory lending…ah, I think your a little late, Barney! By the way, I live in Northwest Indiana, where we are forever tied to the steel industry and oil refineries. We’ve been in an economic depression for the past 30 years; it’s about time the rest of the country caught up to us! LOL
The only think Barny Frank and his ilk are going to do is prolonge the crisis. It won’t raise the prices of homes because they will make it harder and harder for anyone to get any type mortgage. What he want done is what was done in Japan in the 1990’s. It resulted in a long deflaition, prices for real estate droopped 60-80%.
Oh yeah,that huge Japanese real estate collapse from 1990-2006. That’s all the way from the floppy disk to the blue-ray/hd dvd. Good thing it can never happen here in the US due to super ‘transparency’ in the banking sector.
Like most plans that have our government act as surrogate parents to its citizen-children, it’s a bad idea that can be counted on to intended consequences.
As you suggest, by giving aid to one group of “victims,” you harm another group. It this case, you would be rewarding those who make bad decisions and penalizing those who were more prudent. Supporting prices which disconnected from income levels effectively locks out those who are not “house-holding” at this moment. How is that fair?
Sorry, I meant “counted on to have unintended consequences.”
“The following summer, there were no ants to be seen at all. Only grasshoppers. And winter fell hard.”
It’s not fair. It’s votes and bribery.
dodd, hilary,rangel,frank it’s a long list
“dodd, hilary,rangel,frank it’s a long list” And what’s the name of that guy who thinks spending 1 Trillion dollars (that’s Trillion with a “T”) on a fiasco in the middle doesn’t effect the economy? What’s that guys name???
I take it you meant “middle East” ?
Middle Earth?
I don’t see how that fiasco in the middle is tied to this fiasco that Congress is trying to push on us. Isn’t one fiasco enough or do you want two?
I thought it was Paulson that wanted to pressure the mortgage companies to cut a break for the FBs? I think Frank wanted to give direct help to the homeowners - not that it’s much better. At least he seemed to want to help the homeowners themselves, not the banks.
You are too casual with the term “homeowner,” IMO.
I prefer “Credit Whore” for a majority of these folks.
MA: Both Frank and Mitt Romney favor bailouts, you’re forced to buy health insurance, but scalping a few Red Sox tickets will land you in jail. There’s your lovely Massachusetts free market philosophy. I’m surprised the population of New Hampshire isn’t 3 million.
Thanks, Paul, for pointing out that Mitt Romney is no kind of libertarian, i.e., no kind of old-time Republican. Vote Ron Paul
I second that…vote RON PAUL (and donate, too).
http://www.ronpaul2008.com
I third that. Remember the 5th of November!
http://www.thisnovember5th.com/
“am concerned with the effort by Barney Frank and such people forcing lenders to cut breaks in percentage points on resetting loans.”
This is a blantant attempt by politico hacks to alter private contracts entered between Borroers and lenders. No one political hack will come to my aid if i cannot pay my auto loan, home equity loan, or if i launch a business venture and end up BK(which BTW i went thru in the 80’s).
The bombastic self-serving politician-hacks are simply
responding to heat put up by such groups as ACORN and other mostly leftist anti-business so-called consumer-aid groups who are in turn screaming that all the subprime borrowers are ‘victims’ of predatory evil lenders and that the lenders and banks should alter the contracts- E.G. interest rates and terms of the loan- downward because the borrowers are innocent victims of evil corporations who screwed over the home buyers/borroers.
Ths is total BS!
Hyman Minsky described three types borrowers:
1. Ponzi Borrowers: Cannot pay interest NOR principal. Relying solely on appreciation and GFs to get out from positions. These people are now completely effed. Mortgage standards are tighter and rates are higher.
2. Speculative Borrowers: Can make interest payments on their loans. But cannot make principal payments. This is the majority of recent home owners. These people are effed — because they cannot sell NOR can they refinance their homes. But they CAN continue to make payments.
3. Hedge Buyers: These people can make BOTH interest and principal payments. These people are okay.
I think until a recession forces the speculative borrowers to sell — as a result of job losses most likely — housing prices will remain stubborn in may areas.
What about re-buyers: people who bought pre bubble and cash out refinanced or took large home equity lines of credit
Depends on when, how much, and what they cashed out into. If they cashed out into a fixed 4% full amort in 2003, they are probably OK. If they pulled every penny to buy toys into an I/O..ARM…neg-am, they are really effed.
BTW, the FB’s in these news articles don’t often sell for the traditional reasons (medical, job loss, divorce, relocate etc). No, they are selling only because “their payment is going up,” or no reason is given at all.
Speculative Borrowers:
I think that is almost half the market. It doesn’t matter if they bought high or HELOC’d up everest. They’ve run out of oxygen and its only a matter of time until they fall. But it will take time. We’re heading to recession.
I know dozens of coworkers who are toast if the overtime were to be cut (not likely in the next 18 months) would lose their homes. But I do know a large (multi-thousand employee) group at another company that will go to zero overtime for 12 months soon. (I work a multi-company project so there is an amazing amount of information traded on who can supply talent at the manpower meetings.)
I’m betting the fires were enough to get the momentum going further down. What retail was there in Socal? Who went home shopping for a few weekends?
Got popcorn?
Neil
housing prices in some areas here are still stubborn.
except for the builders trying their darndest to sell their subdivs..
how about this from Lennar…” if there is no flooring, you get 90k Off, if there is flooring, you get 60k off..” I hadn’t even got into the showroom door..just a lookyloo on a day off. And already I was getting a “discount”.
Yet the house next door just listed for High price.
“3. Hedge Buyers: These people can make BOTH interest and principal payments. These people are okay.”
In what sense are they OK? Just because one can make BOTH interest and principal payments does not make it a good idea, especially if your home is falling in value while you are making PITI.
Buyer #2 can’t pay his principal, so when his i/o option expires, he’s forced to sell. From the chart I posted the other day, it looks like those resets will peak in 2011, just as the subprime tide begins to wane. That will be like giving birth to the second twin when you thought you were only having one.
My mom has money saved to buy another house in her retirement. She is the only parent out of my friends who actually owns their house completely. She is not very internet savy, but she is starting to go on the internet and look at bank foreclosures now. I have a feeling there are others like her who are getting prepared for a buying frenzy when countrywide hits the fan.
Hope you will tell your mom not to act too quickly.
Does anyone know how long the entire foreclosure process is taking,
from the first missed mortgage payment to the house finally being sold by the bank?
If the FB’s really want to drag it out, they should file Chapter 13 bankrupcy. This can stall the hammer for 3 to 4 years. Freezes interest resets and stops payments. Tell the lender to allow a short sale or you’ll file 13, tell the lender to lower your payments or interest rate or both or you’ll file 13. Sounds good to me.
Does the FB still get to stay in the house during those 3-4 years while Chapter 13 is being hammered out? If there’s no blood in your turnip, why not squat until they throw your stuff on the sidewalk? Cheaper than renting, and might be well worth the hit to an already worthless FICO.
Foreclosure takes less than a yr after 3 payment missed.
At least in this neck of the woods, and that was during “good times”. Depends now, I suppose on how BUSY the banks are, and who they want to eject.
It May take longer nowadays.
Under ch 13 bankruptcy, you have to be employed and be able to pay your current mortgage and payments amounts arranged for the amount you are behind. You have 3-5 years to pay back missed payments. If you miss a payment after ch 13 is filed, then the bank can foreclose. If you can’t afford your current payment because your ARM adjusted, ch. 13 won’t prevent foreclosure. If you are behind because of an illness and couldn’t work for a few months and are now back to work, it would help you because you could spread you misses payments over 3-5 years. It is not clear from what I read, if your ARM can still reset to higher payments during your 3-5 yrs of ch 13.
It can’t.
In that case, I don’t think it will help any FB because you have to show the court that you have no $$ in order to get a BK judgement. By the time you get to the point where you’ve really used up all your $$, then your rapidly rising house payment is probably already out of the ballpark.
“…they should file Chapter 13 bankrupcy.”
Problem is that most of the scam-financing came with a second mortgage. You can’t protect your home if a second mortgage exists. Game over!
I believe it depends on state laws. Texas is said to be on the fast side.
‘That’s just astronomical,’ said Flure, a Sacramento real estate agent who markets bank repossessions. ‘There’s tons, and we’re going to see far more. It’s not going to stop for a while.’”
But…but…I don’t understand. All those smart economists said this thing was “contained.”
“Beth Flure thought last week was overwhelming when some East Coast banks sent her 11 new foreclosed houses to sell. Tuesday a Denver mortgage servicer handed her 42 houses to unload. Then came four more.”
Her motto should be: “Mortgage death? Call Beth!” Seriously, that’s a lot of listings for one agent.
Beth sure has a nose for what area of home sales to work in when the market is collapsing under a weight of foreclosures.
Comment by arroyogrande
2007-10-27 10:57:19
Nope, stupid is as stupid does… Remember, the last housing run-up (at least in Cali) peaked in the late 80’s…only about 17 years ago. Tulips, south seas, railroads, beanie babies, stocks, housing, it happens over and over and over…memory is short where greed is involved…
Haw—speaking of beanie babies, I stopped at a yard sale just the other day and they had a whole tabletop covered with the things. 25 cents apiece. No takers.
I seem to recall some woman paying, what, like 11,000 bucks or something for an elephant beanie baby? Back when they were the mania? Anyone remember that? I can’t remember the details, but something like that. I read that then and was just horrified. You know how many eyeglasses you could get on the faces of little kids in South America for that much money? A lot, that’s how many. Something of value. Little kids with good vision—there’s a nice thing. Heck, there’s probably kids out in the rural areas of the county where I live, right NOW, in the 21st century, in the USA, who could benefit from getting glasses.
I thought about that while I stood there and regarded this table full of dusty beanies. 25 cents.
No elephant ones, however.
On a happy note, I did get some very pretty vintage china plates, only 10 cents each. I’m making a mosaic. Maybe I’ll spell out ‘Greed and Stupidity Suck.’
As much as I like mosaics - keep those vintage plates intact….there’s actually a decent market for vintage tableware.
And, totally with you on the stupidity of the Beanie Babies vs helping kids in need.
I saw Anderson Cooper’s documentary on ‘60 Minutes’ about the Plumpynut campaign in Africa - $1 dollar a day pays for enough Plumpynut (a paste made of peanut butter, milk powder and vitamins) to feed a child - imagine what those $15,000 dollars for a Beanie Baby Elephant could have done in Mali or Niger?
Paying for plumpy nut will increase the survival rate of those children, so that they can then marry in their early teens and begin having their 8 children on average (both stats from the story) so that donors need to provide ever increasing amounts of plumpy nut. Invest in plumpy nut!
I’m all for helping people out, but the part of the plan that turns the situation into something sustainable with a tapering amount of aid–eventually to zero–is often lacking. Certainly no one ever talks about that part, at least not on TV.
I don’t care what people do with the chances they are given. In my observation, every bald monkey on the planet (and by this I refer to human beings, of course) will behave exactly as badly as we are let to behave, given any chance whatsoever. I don’t observe much difference in stupid choices, in any of the various colors of bald monkeys.
All I ask, is–that we be given a chance. With all opportunities available. Then, we can be a stupid hairless monkey, if that is what we choose. But we GOT A CHANCE. That’s the point. Choices. Chances. Both are super. We could always be surprised, right? Right.
I say, the bald stupid optimistic monkeys should stick together.
I forgot to add: and THEN, after the multiple chances, when it turns out that everyone else is dumb no matter what, that it is time to laugh and bounce up and down on the branch and throw stuff. Otherwise, you’ll be grouchy all the time, and that’s no fun.
Amen brother. The do-gooders always neglect to mention inconvenient truths like the impact of human overpopulation.
Sammy,
agreed, overpopulation is causing plenty of trouble, but vasectomies or condoms help here. Starving kids is not the way to go. But that’s for the plumpynut info…might make nice christmas gifts. I don’t know anybody on my list who needs more stuff—but good karma everyone can use.
Thanks Spike66,
I get tired of the Scrooge crowd around here. If for no other reason than enlighten self interest, it pays to “Do onto others, as you would have done to you.”
I get tired of the Scrooge crowd around here.
Then open your wallet. Spend your money on the downtrodden and don’t complain about us scrooges.
Infant mortality and education for women are two key factors in raising the standard of living for people in the developed world.
Actually, educating women is the key, but keeping kids from dying is a good start.
Italics OFF.
We need to invest in gene therapy. Determine at birth if the kid is going to be a lefty Democrat politician or a FB, If he is ‘off him or her’ at once.Save the planet.Get a Nobel
Sorry about the italics - it was me
I’m normally so anal about html code on this blog. Apols.
I was watching that plumpynut thing too and thought what about the other problems there? Did anyone ever think that if they can’t bring stuff to let life live there to not let it live there? How many people do you think will be living in any of the states that are going into real droughts with actual problems later on keeping water coming in? I am speaking to you water hogs, California. I don’t feel bad for those starving people the same way I wouldn’t feel bad for myself when certain areas can no longer survive in the US.
Which goes into a lot of the problems of the bubble developments. A lot of these tracts completely destroyed natural resources with no cares of 10 years into the future.
I have a feeling we will build a whole bunch of desalinazation plants before we let california be destroyed.
I get Plumpynut every time my wife leaves to visit her mother for two weeks.
I have no response to this. Other than to thank you for sharing.
Don’t mention it. If you’re interested, I could tell you how I get rid of Plumpynut. I’ve got a couple of home “remedies”.
unplumpynut
We have 2 large tubs of beanies that my daughter collected (mostly gifts), but she was a child at the time. When we packed up to move last year, she said she wanted to keep them for a few more years in hopes they could go up in value in time as retro. She wants to sell them off to give to charity.
What differentiated the value of a beanie baby, from a stuffed toy that you “won” by playing one of those amusement machines, in manipulating the claw, to grasp it?
The Beanie Baby (and the Cabbage Patch doll) were relentlessly hyped on children’s TV shows but very few were released for sale at the toy stores. This creation of demand coupled with an artificial restriction of supply drove mothers into a frenzy to get one of these dolls at any cost.
Right before Christmas thousands of dolls were taken out of storage and thrown onto the market and sold into the buying frenzy at enormous profits to the sellers.
Marketing at its finest.
How about pokemon cards - I remeber seeing some guy buying pokemon cards for $50 each - it was *rare*
There’s a ton of variations on that theme - in college friends of mine were into Magic cards. The “powerful” ones would go for close to $100. Or how about baseball cards?
One of my dream businesess involves printing pieces of cardboard that people will pay for because they are “rare.” No one throws you in jail for forgery but the act is close to the same.
I sold my magic card collection last December–about 60 cards–for just about $7,000. I don’t think they are a bubble, since they lasted more than 15 years. But I never played and the opportunity cost / insurance worry was high.
Thank God the beanie baby market is different were I live…
Buy now, or be priced out forever…….
I searched craigslist for foreclosure listings in los angeles. It looks like foreclosure agents are asking for everything… no buyers agents are welcomed, buy the house as is, and have all documentation for credit with your offer. The documentation of qualification makes sense, but cutting out all buyers with agents and selling a house as is, is a half assed effort to sell a house. It seems like they think buyers are still lining up to buy houses.
“BRs, 1.5 baths on a 6400sf lot with room to expand. 2 car garage has been converted (without permit) to huge bonus room with bathroom. Great Glendale schools. $459,900 and YOU CAN SEE IT NOW. Bank wants pre-approval letter, proof of funds, fico scores, copy of deposit check, no retrofit and SOLD AS IS, NO EXCEPTIONS. Please, BUYERS ONLY, no agents, additional photos are available.
Buyer must have own home inspection and termite completed before purchase even though seller will not make any repairs.
Call agent at 818 xxx-xxx for an appointment to see and for photos of these properties. Please, BUYERS ONLY, no agents.”
I’ll accept the their demands but I’ll offer $50,000. Today on only! I run to the bank and get a cashiers check.
Idiots. A great AD to NOT sell the house!
“Priced way below market” is another annoying BS foreclosure sales pitch.
“Foreclosure sale. Charming 1935 built home. Large rooms, fireplace, great room. Home needs TLC. Sold AS IS. Way below market.”
They forgot to list the give away price. I guess you have to call for that.
Now, how could anyone sell a home “way below market”? If it was way below market, wouldn’t people bid up the price to market price?
That’s one thing I despise, when a property is advertised but the price not listed. Only once did I call on such an ad and wow, did I ever regret it. Too long and unbelievable of a story to mention here, but talk about a realtor who was crazier than a bedbug. She admitted that she deliberately did not list the price in order to reel in prospects. So I now make it a firm policy not to pursue any ad in which a price is not listed. I’m not saying everyone who does this is a nutjob, but IMO it is a waste of time. It was for us, it was for the nutjob realtor.
Actually, when we really start getting towards the bottom foreclosures should go for quite a discount. That’s been the historical norm.
Figure the market price.
Figure out how much it would cost to bring it to upgrade it to modern standards.
Then subtract out the cost of a roof replacement (or other major repair) that wasn’t accounted for.
I agree with palmetto, don’t persue any non-published price. Heck, I’m getting bored. We might be in fear, but fear is DENIAL and crying oneself to sleep (or anger… lots of anger out there).
Its not worth considering until long after capitulation starts. Long after… e.g. despondency towards depression.
Yes, I’m big on the real estate emotions. This mania is classically following the pattern. So stand out of the way until its aged enough. Its a waste to open a fine wine at 1 year of aging, its a waste to buy a home now.
Got popcorn?
Neil
“Its a waste to open a fine wine at 1 year of aging, its a waste to buy a home now.”
Very good analogy, Neil. Yep, the bubble is bust and it’s all over but the crying. And there’s gonna be a lot of crying. There is no way housing will reinflate for a very, very long time, unless all of a sudden there is huge prosperity among the masses in the US. Not gonna happen anytime soon, IMO, but you never know.
Funny, I’m getting a bit bored, myself. Not with the blog, but with the whole bubble and bust. Bored, and disgusted by the after-effects, like the ruin of perfectly good landscape and environment by ugly tract housing, tax situations, massive illegal population dumped on the communities to take care of, along with their anchor babies and roving gangs, lawsuits, housing defects, upheaval of populations, mom and pop businesses gone, half empty schools that were built to prepare for more population that never showed, changed traffic patterns, etc.
The housing bubble bomb went off and now we’re left to handle the rubble and garbage left behind.
source: Credit Suisse…
figure1.7. Monthly MOrtgage Rate Resets.
from years 2007 to past 2015…
amazing graph of what is to come …lull in 2009 but not by much and then it goes up again..
amazing chart/graph. Alt -A and then Option Adjustable rate
I am NOT bored, nope, not one bit. I have waited for years for what is finally occurring!
I am like my little dachshund –> alert, ears tuned, eyes watching and keely interested. I am wallowing in being correct and not overextending myself to buy a POS house when all others were literally ruining their financial futures. I will profit in the long run from their foolhardiness.
Bored…Hell NO! Loving it and interested is a more apt description…
How about “market way below price”?
Now, that’s funny - brevity is the soul of wit ?
? do banks pay 5% commission to give sht away ???
East Coast banks sent her 11 new foreclosed houses to sell. Tuesday a Denver mortgage servicer handed her 42 houses to unload.
Banks *do* pay buyer agent comissions. They want the stuff cleared off. This is listing agent greed. Or perhaps, desperation.
I bet the bank would have a big problem if they knew their agent was cutting out all buyers with agents so they could take the entire commission. Sounds like a scam. I’d be pissed if I were selling and my agent was telling all the buyers with agents to go away so they could represent the buyer also.
Maybe already posted but worth reading.
Record California Foreclosure Activity
October 26, 2007
http://tinyurl.com/38ubqr
From DQNews article
“Last quarter’s default level passed the previous peak of 61,541 reached in first-quarter 1996. A low of 12,417 was reached in third-quarter 2004. An average of 34,781 NoDs have been filed quarterly since 1992, when DataQuick’s NoD statistics begin.”
Recorded Trustees Deeds
houses and condos
County/Region 2006Q3 2007Q3 %Chg
LOS ANGELES 535 3,627 577.9%
ORANGE 179 1,280 615.1%
SAN DIEGO 453 2,157 376.2%
RIVERSIDE 478 3,462 624.3%
SAN BERNARDINO 232 2,255 872.0%
VENTURA 77 454 489.6%
SOCAL TOTAL* 1,960 13,314 579.3%
SAN FRANCISCO 22 66 200.0%
ALAMEDA 115 674 486.1%
CONTRA COSTA 119 1,159 873.9%
SANTA CLARA 51 410 703.9%
BAY AREA TOTAL 449 3,242 622.0%
SANTA BARBARA 29 211 627.6%
COAST TOTAL 87 623 616.1%
SACRAMENTO 343 2,065 502.0%
SAN JOAQUIN 119 1,136 854.6%
STANISLAUS 73 752 930.1%
CENTRAL VALLEY
TOTAL* 852 6,630 678.2%
STATEWIDE 3,435 24,209 604.8%
Statewide notice of default 72,571 a record!
Source: DataQuick Information Systems
These bailouts and workouts by service agents are killing the MBS bond holders. I wonder if even agency bonds will get bought down stream. The secondary market could just blow away over this, would love to to fannie blow up.
1) Do you believe the rating on the bond?
2) How do you price a bond that the interest can be variable? (reworked) GNMA,CMO bonds are evaluated based on interest rate on the bond and avg life. Imagine those modeling people are looking for a new profession after these huge losses.
Just decided to pull up last year’s numbers from Dataquick
Sept 2006 Median Home price per sq. ft. : $397
Sept 2006 sales: 5588
Sept 2007 Median Home price per sq. ft. : $392
Sept 2007 sales: 2843
And, corrected for the seasonal changes…wait, there are no corrections, this is Sept. vs. Sept. Hmmm, how to spin this to look like housing in LA has stabilized…
As a side note, it’s interesting to note that even though the Los Angeles County price per square foot is DOWN from a year ago, the median PRICE is still UP:
Sept 2006 Median Home PRICE : $541,000
Sept 2007 Median Home PRICE : $565,000
So even though the LA County median price is still UP, the price per square foot is most definitely DOWN.
… Implying that larger houses are selling. That would make sense.
Like kind houses are down and are mirroring increases:
http://mysite.verizon.net/vodkajim/housingbubble/los_angeles.html
In the prior downturn, nominal price decreases went down about half as fast as they went up. It looks like the rate of nominal price deflation is significantly higher in the first 3.5 years (90-94) of the 7 year nominal price decline. I think we are at the equivalent to 91. Prices did go down for the next few years (94-97) but only slightly. 2004-2005 had a 25% increase and 2005-2006 had a 20% increase. Those would be the next 2 years to mirror in the graph. If the rate of decrease is half the increase then we would have a 10% decrease followed by a 12.5% decrease. So the 590k house (where the graph ends) should be 530k in a year and 465k in 2 years. That’s following the pattern of the last downturn.
Anyway, prices are falling but statistics from a large area are always misleading in some way. I’d be tempted to buy before bottom, if I though the majority of nominal price decreases had brought prices back to affordable levels for me, and what was probably left was a 5-10% decrease over a few years and I liked the house enough to stay for a long time.
Well obviously housing has stablized in LA. Look at the numbers. Less houses sold. Less people moving. More people staying. Every single for sale sign during the worst time to sell, are people just testing the market to see what kind of equity they can take out of their house.
I have to start thinking stupid so I can understand why the stock market goes up on losing $1.1B as being good news.
Stock market goes up in US dollar terms because the US dollar depreciates every day.
There were seven foreclosures in Bel-Air..
And so the mighty whales, rulers of the Sea, starve to death for the lack of the insignificant plankton..
Let them eat cake.
Let’s factor in another aspect of this bubble that the previous real estate downturn didn’t have to contend with: supersized homes and rising energy costs. During the Victorian Era, once folks realized how expensive it was to keep these drafty behemoths heated or cooled they unloaded them for more modest and efficient bungalows. Like their Victorian ancestors, McMansions will be subdivided into apartments. There goes the neighborhood…
I live in the north county area of San Diego, where any home under 2,000 sq. ft is considered a starter home. I overhear the women folk at Target discussing “zones” with their HVAC repairmen on their Crackberries. When a new development called “The Links” was built on the bluffs of Encinitas we thought the houses were apartment buildings, since they are essentially two huge houses connected by a wing. Spoke to a realtor about two years ago who said families were buying these steroid monstrosities for $2 million, and some of them were buying two or three. I asked him: Are these people dealing drugs?, there aren’t very many jobs in San Diego that can support this type of loan, even if they put 50% down. Those people live in Rancho Santa Fe, not in a subdivision. He shrugged, like this was the new normal.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/12/09/HOG00MPS6Q1.DTL
Does anyone have ideas on how to profit from this weeks MBS/CMO downgrades?
Who is the bag holder this week?
I know CFC is on crack, BZH is going BK, I need more ideas. Thx
How about Wachovia Bank - WB? They’ve been a high-flying wanna-be-like-Citi-and BofA-bank, took what now looks like a nominal write-off in their 3rd q earnings. They’re a conglomeration of an investment bank, a major money center bank, and an old-line lender, and who knows how far they’ve stretched?
Interesting that they just acquired more traditional St. Louis IB A.G. Edwards, and are essentially closing down their Richmond IB offices - which was a morph of Wheat, First Securities and and old Philly IB I can’t think of the name of into Prudential Bache and then Prudential Securities (attn. Richmond RE market: up to 3000 white-collar jobs being eliminated downtown - Wachovia was biggest employer) - kind of tells you things might have gotten a little too aggressive there.
Maybe these guys aren’t like Citi and Merrill - then again, maybe they are. Just a thought.
Watch CNBC and especially when Maria Bartiromo or Melissa Frances are hosts.
All they do is ask guests how to make money in this market.
And answers range from it is always a good time to buy global, tech, commodities or homebuilders. Just buy. Can you say car dealer, real estate agent, insurance salesman, beer company or anyone in business. Just buy something. Anything.
I know this has been of no help to you but if anyone knew what to buy they would go on CNBC.
watching and learning might be profitable..
I would like to know as well. I feel like that 50 basis point cut is going to happen. I am not going to buy CFC monday, but possibly IMB monday morning instead and sell as soon as that cut happens. Marketwatch has on their main page that 25 basis points is already priced in. The stock market is not just going to stand still that day no matter what gets announced.
I keep thinking to myself its much better to be risky with stocks right now then to just let my cash go down the drain with the lame exchange rates. I am going to Australia for Thanksgiving and am getting more upset each day that I check xe.com.
Buy Australian govt bonds for heaven’s sake. AUD is a gold play, basically, due to Australia’s exporting gold. Australian govt bonds pay slightly greater interest than US Treasuries PLUS you have the currency play. I have come to believe that the AUD/USD rise will continue so long as gold flies high. Which might not be forever.
A little off topic, but called on a house and the realtor returned our call within 8 minutes. Couldn’t get a realtor to call you back in 8 hours a year ago. She was actually appreciative that we are even interested in the property - even told us about the house will be a “little messy” as the owners are moving. (About to be foreclosed maybe?) If we like it, we will off 50% off listing which is right about the current neighborhood value from propertyshark.com (great website by the way) The area has the same median income we make. I guess it’s time for us buyers to start hammering even more on the sellers and their realtors that in a neighborhood with $70K medium income, no one will purchase the overprice home that requires a $130K income - those persons will not live in that style of neighborhood. Not to sound cruel or demeaning, but that just happens - birds of the same feather flock together. So from here on in, we will do our due diligence on each property and offer the amount according to the neighborhood not what some realtor thinks it should be.
OT: been a voyeur for 2 yrs , reading this blog everyday is equivalent to reading the USA Today 2 years in advance , now, how about those lottery numbers?
“In California, foreclosures are concentrated largely in outlying areas such as the Inland Empire, the Antelope Valley and the Central Valley.”
True that.
More Peter Schiff……….
Now here’s a clue for all FB’s. From the article………
“On housing we were once again told the problems would be contained. Such upbeat pronouncements should be wearing thin in the face of mounting evidence to the contrary. When will people begin to grasp that the trillions of dollars of mortgage loans financed by Wall Street will never be repaid in full and that the losses for lenders will be staggering?
Homeowners have lenders over a barrel, and soon all will know it. Once the government exempts forgiven mortgage debt from being treated as taxable income, defaults will become a national trend. Under normal circumstances, lenders have all the power, as 20% down payments and an ample supply of qualified buyers makes foreclosure a real threat. However, under current circumstances, it’s completely empty. Lenders can not foreclose as there are no buyers and no equity. If homeowners choose not to pay, lenders really have no choice but to renegotiate the loans. Once homeowners understand this no one will make a mortgage payment until their loan is reduced to an amount more consistent with the actual value of their home.
While homeowners themselves will experience mere paper losses, those of the lenders will be all too real. However, even with less mortgage debt, homeowners will finally wake up to the fact that their home equity is gone. Without it, much like the Chinese today, Americans will consume a whole lot less and hopefully save a whole lot more.”
http://www.321gold.com/editorials/schiff/schiff102907.html
“This beautiful (2M!!!) property has never been occupied.”
Did someone build a 2M spec house or buy one to flip? Can this be real?
Love the bimbo realtor too.
http://orangecounty.craigslist.org/rfs/461522378.html
hmm.. land contract .. so, “Dixie” is probably in a real hurry… might be under pressure to pay for the sex change operation.
So txchick57 that’s a bimbo?………sorry lady, that’s just a blond bomb out. I feel sorry for the B. Oh well, we all must do what we must do.
I love the gothic funereal furniture, despite the California location. That and the realtor who looks like a meth veteran must be doing wonders for the house sale. Not to mention the advertisement that looks like it was written by a ten-year-old.
All lies and cheats.
From Greenspan, to Bernanke, Paulson, the Wall Street bankers.
Now we have FEMA faking press conference, telling how good they are.
What’s wrong with today Americans ? Where are ethics, honor, decency?
Right. Government officials are running amok with heads of industry, while the lies flow, the debt piles on and the warzones fester. The administration and government agencies are adopting well known propaganda tactics. Yes, the only thing missing is the sense of outrage.
Italics off
Numerous mansions in Atherton are just sitting. Quite a few seem to be speculative constructions by builders. Looks like a nasty wipeout about to happen.
bulls, bears, and pigs and now the slaughterhouse is working overtime and theres pigblood everywhere:
“We borrowed demand from the future and now we’re paying for it. We sold homes in 2004 and 2005 to people who would have bought in 2007. We sold to people who shouldn’t have been buying then. - Ken Perlman, vice president of Sullivan Group Real Estate Advisors in Las Vegas.
Tell me, have the pigs stopped screaming Clarise?
I really don’t pity ANYBODY, uh, because, uh, well, I just don’t LIKE, like
people. They should all feel very bad!!!
You can’t bail out stupidity. The people with mortgage troubles knew they could afford to buy a house, no one made them sign the papers. It was clear that they could afford the house, but yet they signed their life away and not they expect the govt to bail them out, but I say “no way”….why should others that bought homes they could afford suffer. I say, if you can’t afford it … then foreclose and minimize your losses.
Nightmre of the Century:
When homes turn into ‘Beanie Babies’. The ultimate setup, the ultimate scam, and the ultimate number of people buying into it.
Someone somewhere must be proud.
There was a Mr. Ponzi who was the first known schemer who dreamed up a way to defraud people and make himself rich….until he got caught, that is.
Such unbelievable stories.
This blog has showcased such unbelievable stories about people forking over $3,000 - $4,000 - $5, 7, even as high as $9,000 to hang on to their Beanie Home. How they were able to pull it off for even a few months is beyond me. Just imagine the stomach acid that must be burning in these peoples’ guts at night, as they try to sleep and get up the next morning.
The 1st of themonth comes around awfully quick doesn’t it? And then it’s scrambling time again.
For most of these people, Foreclosure will be a blessing. These people were not investors. They didn’t know what they were doing. You can tell when you read stories like, “she got together with 3 friends and bought the house”, or “they didn’t know what their payment was going to be “, or “they had no idea the mortgage was going to go up astronomically”.
The Basics.
Contract law is not that complicated. You sit down with the buyer & the seller. You read through the contract. You ask questions. If there’s something you don’t agree with, you are allowed TO CHANGE THE CONTRACT. You can cross out stuff, you can add stuff, push it back in the buyers face and say “I WANT THIS CHANGED”. Did any of these home buyers know that???? And if the buyer doesn’t like it, YOU WALK. You stand up and leave. It’s as simple as that.
It’s just so mind boggling. This was not just 1 mortgage .
This should be elementary stuff.
Apparently not.
Good article.
http://www.koreatimes.co.kr/www/news/biz/2007/10/128_9349.html