October 30, 2007

Super Discounts Have Had Limited Success In California

The Modesto Bee reports from California. “A buyer in the current market has several advantages, particularly if they have good credit, a sizable down payment and a willingness to shop thoroughly. When the market was at its peak, Kimiko Horiuchi avoided buying because prices were too high. Now, she and her husband are buying a 2,700-square-foot house in Patterson for $329,000.”

“She said her real estate agent told her that a few years ago the home was worth $600,000, because it’s a former model home with several upgrades.”

“‘We’re definitely getting a home for a good price,’ said Horiuchi. ‘You’re going from renting to paying on the mortgage, and if the economy comes back, then I’ll have a house that I bought for less than it’s worth.’”

“Horiuchi said she knows she may be taking advantage of someone else’s misfortune or bad loan. ‘I just feel bad that I’m taking someone’s house,’ she said.”

“Horiuchi’s house was owned by a bank, which many experts said is a niche that may allow buyers more opportunity to get homes at bargain prices. Banks don’t get involved in selling homes willingly, and those that own foreclosed properties want to quickly move them off the books, experts say.”

“That, said Michael Tedesco, a Realtor in Modesto, can make negotiations with a bank easier. ‘If buyers see something they like, they should throw an offer out there,’ he said. ‘You won’t insult the bank like you would an individual seller, and with a bank, they’re going to counter back.’”

“After two price adjustments, Realtor Ken Ernst said he still thinks the owners of a Salida home he’s listing will come out ahead. The couple bought the home when it was new, in 1994. Equity has soared since, even taking into account the recent drops, he said. The house is listed at $299,900, but the owners bought it for $133,000.”

“‘The biggest time of price depreciation has come about,’ Ernst said at an open house in September. Although they missed out on the boom, Ernst said, they will benefit because they can pay less for a new home in Manteca.”

“‘They held back during the high price time, and it definitely made a difference,’ Ernst said.”

The Orange County Register. “Metrostudy’s third-quarter look at SoCal’s new home market says Southern California recorded 8,470 single-family starts during the third quarter of 2007, a decline of 38 percent compared to the third quarter of 2006.”

“Single-family quarterly closings totaled 8,815 units, a decline of 47 percent compared to the third quarter of 2006.”

“Single-family inventory, which is composed of units under construction, finished vacant units and model homes, totaled 39,839 units at the end of the second quarter of 2007, declining by less than 1 percent to an 11.9-month supply.”

“Metrostudy’s Steve Johnson: ‘The region’s residential real estate market has been experiencing a decline that has affected all price segments. Some projects have had limited success by offering ’super discounts’ of up to 50 percent of original asking prices, even when such reductions price homes below cost. Unfortunately, the sales momentum has been short-lived, as there is no sense of urgency to buy a home.’”

The Daily News. “California faces a potentially grim economic outlook as the effects of growing foreclosures amid a faltering housing market ripple statewide, experts warned Monday.”

“Economist Ross DeVol of the Milken Institute, part of a panel examining the impact of problems in the subprime-mortgage industry, said a drop in home sales affects everything from employment and consumer confidence to retail sales and tax revenue. And he warned that if reduced consumer spending leads to a recession in California, the (problems) could spread nationwide.”

“Countrywide Financial Corp. CEO Angelo Mozilo, whose company has become a symbol for the problems in the housing market, said his firm has received no help from the government and is bearing the brunt of criticism for the current problems.”

“‘The problem we are seeing now is that first-time homebuyers can’t get into the market,’ Mozilo said. ‘This is the most expensive housing market in the country and the federal government has not done anything to help ease lending.’”

“‘Programs (like Freddie Mac and Fannie Mae) have the same limits for North Dakota as (they do) for Los Angeles. And no one here can buy a house with what they are offering,’ he said.”

“Mozilo said the problems stem from the loosened lending and credit rules in the late 1990s through 2004.”

“‘It was an easy market,’ Mozilo said. ‘People subscribed to the belief they couldn’t lose - and for a while they didn’t. Prices continued to go up. What created the problem we have now is that prices began to fall and panic set in.’”

The Mercury News. “Alameda Realtor David Gunderman said he’s seen home prices and sales soften. In general, he said, the softening market is affecting those buying homes for the first time. The reason is that lenders have tightened their lending standards.”

“‘Those people (buyers) were taking a risk, and the lender was allowing them to do so,’ he said. ‘Those people are no longer in the market, which is good, responsible lending. It got irresponsible for a while there and that’s why we’re feeling the pinch right now. It’s a correction, a necessary correction.’”

“Broker Michael Studebaker said…Harbor Bay Isle home sales were suffering.”

“The whole ‘pie’ of home sales volume has shrunk this year by more than 20 percent compared with sales in 2006, said Leslie Appleton-Young, chief economist for the California Association of Realtors. But ‘the part of the pie that’s moderate and low-end housing has shrunk even more.’ With so many sales of lower-price homes out of the picture, the median price has been bumped up artificially.”

Inside Bay Area. “Foreclosures in San Mateo County shot up more than threefold in the third quarter compared to the same time last year, and there’s no relief in sight, according to a real estate report.”

“Some 155 homes were foreclosed on countywide, up 319 percent from 37 in the third quarter of 2006, according to DataQuick.”

“‘It’s just the start of it, and it’s going to continue on through next year,’ said Geoffrey Craighead, president of the San Mateo County Association of Realtors. ‘Borrowers seem to think a magic knight’s going to come in, but then the sheriff’s knocking at the door.’”

“The local areas hardest hit are lower-end neighborhoods in places like Daly City, South San Francisco, East Palo Alto, Redwood City, Pacifica and San Mateo, Craighead said.”

“‘People forget, because it looks pretty affluent around here, but there are a lot of areas where working people are working hard to stay here,’ said Brian McNamara, a lender in Half Moon Bay. ‘They took a loan to stay, and thought they could refinance, but they can’t.’ McNamara also sees foreclosures increasing in the next year countywide.”

“Other areas were hit even harder in the third quarter by foreclosures, with Santa Clara County up 704 percent, Contra Costa County up 874 percent and Alameda County up 486 percent.”

“Home sales fell 37 percent in September in San Mateo County. With home sales slumping and appreciation flat or slipping, many first-time home buyers are trapped.”

“‘There’s never been such a lax lending market,’ said John Gieseker, a real estate broker in San Bruno. ‘With no money down and adjustable loans, there was a big danger of getting in trouble.’”

“Gieseker said the foreclosure market is mostly affecting first-time buyers. ‘Consumers saw easy money, and they flocked to it,’ said Gieseker. ‘A lot of borrowers closed their eyes and went ahead.’”

The Press Democrat. “The sluggish economy, a sharp drop in foot traffic and a pull-out by a major investor are all being blamed for the tough times facing the Town Green Village. It’s a setback for a fast-growing project that has literally transformed the face of downtown Windsor in a few short years.”

“Politicians, planners and business groups have hailed the project as a model of smart, mixed-use urban redevelopment. But ‘For Lease’ signs now litter the colorful, historically inspired storefronts, and more may be on the way.”

“‘I have been living this nightmare for 17 months,’ said Kathy Flinn, owner of Creative Wick, a create-your-own candle studio. ‘I’ve got $100,000 invested here. I can’t afford to walk away.’”

“The town, which has invested millions of in redevelopment funds in the area, encouraged rapid growth in an effort to quickly get new residents living there so the new businesses would thrive, said Debra Fudge, Windsor mayor pro-tem.”

“Orrin Thiessen, the developer and general partner of Town Green Village, said he’s built about 200 residential and commercial units in buildings along the Town Green since 2002. The first few years were fantastic, but he acknowledged the slow housing market and a recent decision by a key investor have limited his ability to extend much help to ailing retailers.”

“‘We’ve got a little bit of a double whammy going on right now,’ Thiessen said.”

“The slow housing market has hit his project harder than other developments because of the way the retail and the residential components are intermingled, he said.”

“In 2005, when Flinn was considering opening her business, she scouted out the area and thought it couldn’t miss. But Flinn hasn’t turned a profit in any of the 17 months she’s been in business. She blames a bad location and poor marketing efforts by the developers. She said there is nothing wrong with her core business model, which involves hosting parties where people pay about $12 to make their own candles.”

“The buildings are comprised of street-level shops with residential units upstairs. Neither are selling as well as they were two years ago, Thiessen said. ‘I have the buyers,’ Thiessen said. ‘I have a big list that have already picked out their condominiums, but they have to sell their homes first.’”




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236 Comments »

Comment by Ben Jones
2007-10-30 15:13:33

‘The town, which has invested millions of in redevelopment funds in the area, encouraged rapid growth in an effort to quickly get new residents living there so the new businesses would thrive, Fudge said.’

‘Small businesses began flocking to the area in 2003, and many were mom-and-pop operations without tried and true business plans, Fudge said.’

I’m not poking fun at the candle-making industry specifically, but I have been following the ‘urban living’ condo myth in this area for a while, and IMO it’s the downtown condos that didn’t have tried-and-true business plans.

Yet another housing bubble byproduct that the MSM (and a few city councils) bought hook-line-and-sinker.

Comment by crispy&cole
2007-10-30 15:17:09

Looks like she was trying to burn the candle at both ends. :)

Comment by BottomFisher
2007-10-30 19:47:45

A candle ‘accident’ waiting to happen?…… she really got burned on this deal. OMG

Comment by reuven
2007-10-31 07:51:45

You know, a fire in a candle store wouldn’t look all that suspicious!

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Comment by sleepless_near_seattle
2007-10-30 15:34:47

“Politicians, planners and business groups have hailed the project as a model of smart, mixed-use urban redevelopment. But ‘For Lease’ signs now litter the colorful, historically inspired storefronts, and more may be on the way.”
Isn’t Windsor about an hour from anything remotely considered “urban”?

“She said there is nothing wrong with her core business model, which involves hosting parties where people pay about $12 to make their own candles.”
Doesn’t that imply that the “urban” condo mess wouldn’t affect her since, surely, her impeccable marketing plan would have accounted for a lack of walk in traffic? So why is she blaming the urban condo mess?

“IMO it’s the downtown condos that didn’t have tried-and-true business plans….Yet another housing bubble byproduct that the MSM (and a few city councils) bought hook-line-and-sinker.”
You just p!ssed on the cornflakes of every “it’s different here” nouveau-Portlander.

Comment by joeyinCalif
2007-10-30 15:46:06

“..create-your-own candle studio. “I’ve got $100,000 invested here…”

“..Storybook Station bookstore..” “said Seche, who estimates she’s invested at least $250,000 in the business since July 2005 ..”

“investing $180,000 to upgrade a space for Starbucks ..”

They call it “investing”. alls i can say is wtf is in the water..

Comment by Hoz
2007-10-30 16:36:16

I suspect that the $100K, $250K and $180K are soft dollars. e.g. “My time is worth $40/hr so I worked 18 months and that is $100K invested.” $10K is enough cash to open a taqueria. ($2K if you don’t have to worry about health inspectors.)

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Comment by Hondje
2007-10-30 18:25:27

Charles Hugh Smith at oftwominds.com had a blog entry a few months ago on the huge glut of retail stores/strip malls that are probably doomed…even if we somehow manage to escape a recession.

I can’t remember the exact figure, but he mentioned that the per capita square footage of retail space in the States is 10x greater than in Western Europe.

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Comment by Houstonstan
2007-10-30 20:20:23

For weekend discussion, how about dumb biz ideas associated with Bust:

My favorite is “scrapbook” shops. wtf !

 
Comment by A Texan in Bavaria
2007-10-31 02:18:46

After working in a US military community in rural Bavaria for three years and apparently being the only young civilan American woman on post earning her own living, I’ve come to the conclusion that scrapbooking fills some of the void that the “perfect housewife” compulsion of the 50’s did - make-work to fill the time othewise idle women.

I’m too busy to spend that much time decorating a photo album - my time’s way too valuable. I guess if I didn’t have a fixed dollar value on an hour of my time, and a fixed time value for a dollar, I’d be more amenable to this sort of thing. I do like to knit, after all… but that’s cheaper and (slightly) more practical - I wear socks every day.

 
Comment by Bill in Maryland
2007-10-31 04:55:35

How about a salon for dogs? One of them is in my neighborhood in Chandler, AZ. These things are the first to go in a recession.

 
 
Comment by reuven
2007-10-31 07:53:52

There’s someone sitting on the beach, sipping a fancy drink with an umbrella in it, saying to his buddies “I got rich selling $500 worth of wax, dye, and perfume to stupid women for $100K.”

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Comment by BearCat
2007-10-30 15:50:16

Windsor is the next city north of Santa Rosa (~130,000 people) - I think it’d be too small to support downtown condos itself, but it is close to an urban area (yes, SR counts).

 
Comment by Blackbox
2007-10-30 16:37:52

yep, nothing a hug won’t take care!

Comment by ex-nnvmtgbrkr
2007-10-30 17:50:47

……or a firmly lodged Joshua tree.

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Comment by Annette
2007-10-30 16:39:42

Everywhere want to be the next New York City…there is only one NYC…

Comment by Blackbox
2007-10-30 18:20:56

Yep, its in Vegas!

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Comment by Doug in Boone, NC
2007-10-30 15:37:41

I’ve lost count of the number of new-age businesses that have come and gone during the 30-plus years I have lived in Boone.

Comment by Gwynster
2007-10-30 15:43:53

Those crafty businesses are dependant on the uppermiddle stay at home wife types. That’s a very small population to depend on even in the priceiest and most established neighborhoods. They also suck as longevity. You get in, make the money, sell the business to an unknowing knifecatcher and get out.

Comment by NYCityBoy
2007-10-30 16:14:09

I’m waiting for these boutique businesses in New York City to get clobbered. These are high-end boutiques. I figure Bleecker Street and The Meatpacking District will get destroyed during the coming real estate led downturn. California can’t have all the fun.

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Comment by Neil
2007-10-30 21:20:00

Its going to get scary. We have to see a 5% cut in spending to get to reasonable retirement savings. No way can overpriced “craft shops” survive. At least coffee is addictive. ;)

Got popcorn?
Neil

 
 
Comment by bicoastal
2007-10-30 16:29:06

Around here it is bead stores. And you’re right about the demographic. When my sister was here, we must have hit every bead store in the state of Maine.

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Comment by NYCityBoy
2007-10-30 17:14:04

I heard that you can get some good deals in Manhattan with beads.

 
Comment by SFer
2007-10-30 17:34:43

in the bead district?

 
 
Comment by pismo clam
2007-10-30 17:21:33

Didn’t the town of Windsor have a dog at the golf course, a one blue eyed sheep dog, who chased the geese who were ruining it. (Have you ever seen goose droppings or got them on your shoes?) Name of the dog, from the pound, was Bandido. I hope he doesn’t get deported.

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Comment by NoVa Sideliner
2007-10-30 17:54:53

Eh?

You get in, make the money, sell the business to an unknowing knifecatcher

My dad used to rent commercial space to people like that. Several in series. They made a pittance. It was more like this:

You get in, pay lots to set up the place, have a miserable sales result but enjoy chatting with friends and relaxing in the shop, and in the end because there’s little income to be had, you tell hubby it’s time for your next hobby. You don’t even sell up; you just fold up, and the next one just like you moves in.

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Comment by BanteringBear
2007-10-30 20:23:31

“You get in, pay lots to set up the place, have a miserable sales result but enjoy chatting with friends and relaxing in the shop, and in the end because there’s little income to be had, you tell hubby it’s time for your next hobby. You don’t even sell up; you just fold up, and the next one just like you moves in.”

These types of “business people” are highly annoying. They have seemingly endless money to blow on their “hobby”, and fake it for years until they get bored. I always wondered how those specialty shops in nowhere places like Bandon, OR were making it until I realized that profit meant nothing, as they were merely hobbies for rich wives.

 
 
Comment by are they crazy
2007-10-30 18:12:39

Gwynster: All those women that gave up professional careers to “stay at home with the kids,” have to find something to run - they’re used to being in charge and it’s not very satisfying to them to be running their households. They’re driving the schools crazy and they’re making it miserable to try to go anywhere with their strollers and screaming toddlers on the one day the nanny is off.

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Comment by AKron
2007-10-30 21:42:10

Don’t laugh. These are probably the only ‘manufacturing’ businesses (other than fast food joints) that will be operating in the U.S. in 10 years. I am guessing that the ‘make-your-own’ candle business is not likely to be shipped overseas- no self-respecting foreigner would want it. ;)

 
 
Comment by KenWPA
2007-10-30 18:35:07

Sounds to me like this town desperately needs one of those gift basket stores that puts them into big balloons.

It amazes me what some people see as a “Can’t fail Business idea.” It is usually a woman with some idea of what this town really needs….a place to buy ballet shoes and uniforms, A gift basket store, a store selling candy bouquets, etc. All of which, I have seen go into and out of business in one single retail storefront in a period of four years in a suburb of Pittsburgh, PA.

These ladies would have had to sell one of something to just about everybody in the town every year to cover their rent, utilities and help. Clueless.

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Comment by Arwen U.
2007-10-30 19:51:38

There’s a lady in our town who seems to do extremely well on children’s clothing/toys consignments. But her business model is to rent an empty space for about 6 weeks, in both the spring and the fall. It’s an addicting place to be, and she never seems to lack an empty building.

 
 
 
Comment by sweeny texas
2007-10-30 15:50:58

Boone, NC is a town located in the Blue Ridge Mountains of western North Carolina… population 13,472. Boone acquires its name from the famous pioneer and explorer Daniel Boone.”

I don’t reckon ole Daniel woulda cared for no new-age bidnesses, nohow.

Therefore, good riddance. :)

 
Comment by NYCityBoy
2007-10-30 16:17:17

Doug, you can mark Highlands off the list of places that are still blossoming. It was finally confirmed to me that the entry level market in Highlands (North Carolina mountains) is dead. Houses over $2 million are still doing well. All else is toast. That’s another friend on my list that has now come out of the denial phase. I’m suddenly sane and he’s suddenly scared. We must come up with an equation that calculates sanity (for HBBers) with fear (for everybody else).

 
Comment by jetson_boy
2007-10-30 16:40:20

ahh, yes. I remember visiting Asheville, Boone, and other small towns in NC when I lived in TN. Those areas seem to indeed have a fair share of what I’d call ” Cliche’ Hippies” who’re still doing the whole 60’s style. Lots of smelly little candle shops, greatful dead fans, and other obnoxiously worn-out johnny-come lately style hippy happenings.
The worst are the ones out here in CA. Seems like most of them are now extremely wealthy, driving Priuses, and heavily ingrained in local politics.

 
Comment by are they crazy
2007-10-30 18:17:53

That’s nothing - you ought to see what they did to Sedona. Back in the late 60’s and early 70’s it was just a small town of natural beauty. Now it’s new age city. Used to spend summers near there at camp. Slide rock was unknown and there was nothing commercial there. Going into Flagstaff was going to the big city.

 
 
Comment by sm_landlord
2007-10-30 15:41:50

These so-called “live-work” flats (actually housing over retail) are a triumph of fantasy over reality in design. We are no longer a nation of shopkeepers (if we ever were). “Clara’s Coffee Shop” will not survive against Starbuck’s. I won’t take the cheap shot at the candle shop, but it should be pointed out that a marginal business model like that cannot fund the rent in a first or second-class retail storefront, let alone the startup costs.

Of course, with redevelopment (taxpayer) dollars involved, every sort of nutty development will get built, because there is no one “watching the store” so to speak - in other words, no adult supervision, with urban planner types running the show.

I’ll stop before this turns into an R. Cote rant :-)

Comment by BanteringBear
2007-10-30 16:45:30

“We are no longer a nation of shopkeepers (if we ever were). “Clara’s Coffee Shop” will not survive against Starbuck’s.”

Not necessarily. There are still plenty of mom and pop coffee shops in WA which do an incredible business. A lot of people just say no to Starbucks.

Comment by Bluto
2007-10-30 17:24:42

true, actually the independent coffee shop on the Windsor Green appears to be doing well (hopefully Starbuck’s won’t kill them), as do nearby bar and a restaurant……however I was shocked by all the for lease and going-out-of-business-sale signs went I visited recently after being away for a six weeks or so, looks like it will be very tough to find new retail tenants.

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Comment by MacAttack
2007-10-30 18:33:33

Yes, I agree.

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Comment by AKron
2007-10-30 21:47:20

As a drinker of ‘regular joe’ (aka, no foo foo coffee for me, most of the time), I find Starbuck’s brew coffee to be horrible. I get better coffee from the corner greasy spoons. (OK, I’ll admit that the univ. cafeteria has worse coffee even than Starbucks- I think they brewed it all in 1950 to save money, and have been storing it in cisterns since then…)

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Comment by mv renter
2007-10-30 16:49:34

It used to be that the owners of the businesses lived above them. Now they want strangers to pay high prices for the privilege, and count on this purchase or rent money to fund the cost of the commercial real estate.

 
Comment by Anonymous Coward
2007-10-30 19:35:26

As with any business, a lot depends on location. And if Clara’s Coffee Shop is right downstairs, that’s who gets my business. I don’t think these live/work designs are all that bad. They will suffer from the overbuilding and overbuying just like all other real estate, but it’s not a bad direction for our country to go. One of the things that keeps me in NYC is the determination not to be dependent on a car for daily tasks. I would like to move to a smaller city, but there are few places where I could comfortably do all of my shopping/living on footpower alone. It’s not even about the availability of mass transportation, although that’s a plus. I want compact living, plain and simple.

Comment by CA renter
2007-10-31 03:50:31

Same here. I’d love to live above my workplace.

Also, as a born-&-bred suburbanite, I really long for a more compact place where you can easily get from one place to the next without making it a major excursion.

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Comment by pismo clam
2007-10-30 16:49:56

Look at all the golf courses that have gone belly up with RDA money. Slick talkers from the big city. Social engineering never works in the long run.

 
Comment by Aqius
2007-10-30 18:05:40

Flint, Michigan. 80’s.

 
Comment by MacAttack
2007-10-30 18:31:30

Ya know, those candles can be USEFUL…

 
Comment by Houstonstan
2007-10-30 20:17:54

It seems to me ,that she lived her life like a candle burning wind.
She never knew which way to turn to, when $12 came in.

Hm, perhaps there’s a song in there somewhere.

 
 
Comment by MNair
2007-10-30 15:14:26

Burn , mofos burn !! LOL !!

 
Comment by Curt
2007-10-30 15:19:15

She said there is nothing wrong with her core business model, which involves hosting parties where people pay about $12 to make their own candles.”

Hmmm, I pay about three bucks to have somebody else make them.

Comment by sleepless_near_seattle
2007-10-30 15:48:17

Yeah, it’s kinda like that “oh, sh!t” moment in the movie “Singles” where the guy is trying to sell his mass-transit idea and his girlfriend simply says, “but everyone loves their car.”

 
Comment by NYCityBoy
2007-10-30 16:20:35

She said there is nothing wrong with her core business model, which involves hosting parties where people pay about $12 to make their own candles.”

But Tom Sawyer made it work.

 
Comment by Blackbox
2007-10-30 16:21:04

well, its not here fault!
She researched and found a sure thing.
Here business model is a win win.
So clearly, someone else is to blame.
Damn developers !
Geez

 
Comment by CHILIDOGGG
2007-10-30 16:40:20

What’s so funny? Food-4-Less charges you (not me) the same prices for groceries, and makes YOU bag your items.

Comment by Blackbox
2007-10-30 18:26:02

exercise is part of a healty diet!

 
Comment by speedingpullet
2007-10-30 19:03:13

Hah - it makes me giggle, still, whenever the checkout person thanks me for packing my own groceries. I explain to them, patiently, that it’s a built-in instinct, being English, and in the UK packing your own shopping is normal.

Anway, its about twice as quick, doing your own .
Otherwise, the checkout person has to ring the stuff through, then pack it for you, while you stand around looking like someone who has lost the use of their hands….fortunately, I haven’t lost the use of my hands, yet, so packing while they’re ringing saves time - and stops the packer from putting everything into 12+ plastic bags, when two brown paper ones will do just fine.

Comment by Diamond Bob
2007-10-30 20:09:06

My wife, who is from Switzerland, used to bring two big canvas bags with her when going shopping and would pack her own groceries to save time and avoid the numerous plastic bags with two items each. They’d look at her as if she were from a different galaxie. We could learn a few things from the Europeans, I think.

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Comment by BanteringBear
2007-10-30 22:37:19

“My wife, who is from Switzerland, used to bring two big canvas bags with her when going shopping and would pack her own groceries to save time and avoid the numerous plastic bags with two items each.”

They should give her a grocery discount.

 
Comment by sparkylab
2007-10-31 01:29:52

Here’s a good one . Buying a single bottle of shampoo from the large-ish pharmacy down the road from me. The kid starts to put it in a bag but I stopped him since I had my work bag with me. As I put the bottle in my bag - he then proceeds to throw the unused store bag away. I got exasperated for a second and just gave up.

 
Comment by A Texan in Bavaria
2007-10-31 02:26:31

We get charged about 0.15 Eur per bag at grocery stores here, and you pack them yourself. Therefore, most people bring their own bags or baskets shopping. I’m sure it’s the same in Switzerland.

Going to the commissary on post is always strange, as it’s totally American-style - the baggers (work for tips only!) double-bag EVERYTHING, and there’s no charge for bags.

Result: I keep plastic bags from the commissary in my car for use at German grocery stores, because I still can’t seem to remember to bring my cloth bags with me…

(I do find myself directing the commissary baggers more than I directed baggers back in the States - must be the effect of doing it myself at German stores)

 
Comment by sleepless_near_seattle
2007-10-31 02:45:56

That’s a good one, sparky.

I never understand the people that go into a convenience store for say, a Red Bull, and accept a bag to carry it out in. Chances are they are going to open the drink in the car, so what’s the point? Aargh, for some reason that really irks me. So wasteful.

 
 
Comment by PeonInChief
2007-10-31 09:40:31

We keep a large collection of paper bags in the car and take them into the store when shopping. We then asked that all of our goods be packed into the two, three or four double bags we brought with us. DH, who bagged groceries in his youth, informs me that the reason baggers put each item in an individual plastic bag is simple: they no longer teach them how to bag groceries. They don’t even seem to know that heavy things go on the bottom. DH often has to explain how to load the bags when there are only two of them.

I wonder if it’s different in major cities, like New York and San Francisco, where many people don’t have cars and would want their groceries loaded into a single bag.

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Comment by sleepless_near_seattle
2007-10-30 15:19:44

“‘Programs (like Freddie Mac and Fannie Mae) have the same limits for North Dakota as (they do) for Los Angeles. And no one here can buy a house with what they are offering,’ he said.”

Add “Red-herring Man” to the list of Mozillo nicknames. Since when are conforming loan limits the problem?

Comment by sweeny texas
2007-10-30 16:05:41

What, exactly, is a red herring?

“A red herring is a metaphor for a diversion or distraction from an original objective.”

Well, I’m glad Wikipedia cleared THAT one up for us.

 
 
Comment by Mo Money
2007-10-30 15:23:10

“Mozilo said. ‘This is the most expensive housing market in the country and the federal government has not done anything to help ease lending.’”

How about that half point rate cut jacka$$ ?

Comment by CHILIDOGGG
2007-10-30 16:45:47

Waaaaaahhh! It’s JUST NOT FAIR! I wanna be ambassador to the Netherlands!!! I wanna I wanna I wanna!

Comment by Hoz
2007-10-30 16:55:54

I would like to be an ambassador to Estonia. So I wrote the president of the US and said I would bail the country out of the credit bubble if he would make me Estonia’s Counsel General. His reply was “what credit bubble?”

“Who comes next before the Great and Powerful Oz?”
Up stepped President Bush and said,

“The American people say that I need a brain.”

“No problem! Said the Wizard.
Consider it done.”

The Goldilocks economy - another fairy tale.

Comment by AKron
2007-10-30 21:52:28

“The American people say that I need a brain.”

Actually, he need the heart, the brain AND to be sent to Kansas. Sorta the whole Oz gang rolled into one…

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Comment by palmetto
2007-10-30 17:04:26

I am glad Mozilo’s comments were re-posted, I was gone most of the day and saw them in the Washington and Wall Street thread and nearly lost my dinner. Just reading his comments made me feel like a fungus was spreading over the computer and slime was oozing out of the screen. The arrogance is truly breathtaking and I can’t decide if he’s desperate or morally bankrupt. Probably both.

I will be calling my representatives tomorrow to make them aware of what he said. Frankly, I’m surprised that his board hasn’t given him the Stanley O’Neal treatment, only with subpoenas instead of a settlement. He belongs in the Ken Lay Hall of Fame.

Comment by combotechie
2007-10-30 17:50:23

This is the beginning of Mozilo’s spin campaign whereby he transforms from a money-hungry lying scumbag to becoming the champion of the common man.
I expect to see a lot of puff articles written about him in the coming months and a lot of TV interviews loaded with softball questions.

 
 
Comment by peter wiener
2007-10-30 22:39:17

Done nothing, yeah right!
According to Bloomberg this am (can’t post link for some reason) in aug and Sept CFC BOROWED 51 BILLION DOLLARS from 12 FH FHLBs at 4.9% when LIBOR was 5.6% and they would have to have paid 9+% to get it funded if it even could get funded.
BTW, FHLB stands for Federal Home Loan Banks which are banks extant since the GREAT DEPRESSION to foster home mortgage market stability. They went out and borrowed 143 BILLION dollars in two months in the bond market on the implied gov’t guarantee so they could lend 51 BILLION to CFC. 31 BILLION to WM and another 600 borrowers for a total drawdown of 163 BILLION dollars in two months.
And the feds have done nothing for Tangelo Mozillo and company!
Do you realize that 51 billion / 200,000 avg mtge = funding for 255,000 houses - and that’s just CFC’s borrowings.
Read the article fully, entitled U.S. Tosses Lifeline to Lenders Using Home Loan Banks (Update1) and you will see what level of immoral machinations the Fed / Treasury / gov’t will stoop to to prevent a housing crash and to socialize the losses.
I was so disturbed by what this article suggests that I have no interest in investing a single dollar in America IN ANY FASHION for the forseeable future and I’m gonna have a lot of company soon.

Comment by Van Gogh
2007-10-31 00:27:17

That is about as ugly as ugly can get and more than enough to make anyone puke. It won’t and doesn’t matter though and it won’t do anything to delay the day of reckoning as each day that goes by i hear a bigger and bigger sucking sound. The real point of recognition, i think, is well nigh upon all of us and we all should be quietly and diligently getting our ducks in a row. I have added more physical gold on (even though i have enough) as i really fear that there will be a lot of banks and financial institutions that may soon fail and i really don’t trust these guys with my money in the bank, nor do i trust any fiat governent with their phoney fiat paper and their underfunded fiat commitments and their fiat funded lies and promises.

 
 
 
Comment by joeyinCalif
2007-10-30 15:24:33

Southern California recorded 8,470 single-family starts during the third quarter of 2007, a decline of 38 percent compared to the third quarter of 2006.”

8,470 new homes.. lets see.. that makes them.. carry the 2 .. hmm.. It makes them 8,470 times more stupid than the person that knows the market doesn’t need even one more new home.

Comment by Jas Jain
2007-10-30 15:44:34


I Say: Bring on the supply!

There is nothing like excess supply to bring the prices down. I would guess that number of New SFH sold during the quarter in SoCal was close to 6,000 net of cancellations. More auctions by the builders are in order. The pipeline problem is always a serious problem during the housing bust.

Jas

Comment by Jas Jain
2007-10-30 15:55:56


“Single-family quarterly closings totaled 8,815 units, a decline of 47 percent compared to the third quarter of 2006.”

My guess was wrong. Looks like much higher number of SFH, as % of total sales, sold during the quarter. Heavy discounting does work. Sellers of the resale units are stickier with their prices.

Jas

Comment by Leighsong
2007-10-30 20:49:42
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Comment by Van Gogh
2007-10-31 00:30:49

That is really really funny. You really nailed that one……..

 
 
Comment by Mo Money
2007-10-30 15:27:28

“‘I have been living this nightmare for 17 months,’ said Kathy Flinn, owner of Creative Wick, a create-your-own candle studio. ‘I’ve got $100,000 invested here. I can’t afford to walk away.’”

If a make your own Candle store isn’t an example of a unneeded luxury item that is hardly recession proof and a poor business to be invested in I don’t know what is.

Comment by mrincomestream
2007-10-30 15:50:14

Come’on don’t be so negative…that’s what American dreams are made of these days…

Comment by NYCityBoy
2007-10-30 16:24:58

Does anybody believe that it isn’t a HELOC that funded this little boondoggle?

Comment by veloblues
2007-10-30 16:39:26

I’m with ya. And why does a candle shop need a hundred grand to get going?

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Comment by mrincomestream
2007-10-30 16:44:02

Come’on haven’t you seen the commercials…you know…the one where the waitress drives off into the sunset with the 100k+ vintage Vette. Surely that is what has happened here.

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Comment by NYCityBoy
2007-10-30 17:16:31

I agree. This stupid biyatch is probably a car thief.

 
Comment by mrincomestream
2007-10-30 18:22:54

LOL

 
 
 
 
Comment by Arizona Slim
2007-10-30 15:57:35

A hundred grand in a candle store? I could see investing that sort of money in something that creates a useful product, but sorry, there’s this thing called the electric light. It’s much easier and safer to use than a candle.

 
Comment by veloblues
2007-10-30 16:02:17

And why would it take $100k to open a candle shop? I smell a fish…

Comment by Blackbox
2007-10-30 18:24:18

Wax on……Wax off!
wow, what a business plan

Comment by veloblues
2007-10-30 20:58:14

Step One: Collect underpants

Step Two: (shrugs shoulders)

Step Three: PROFIT!

(a little South Park reference there)

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Comment by Housing Wizard
2007-10-30 19:55:27

I always thought that stupid stores, like the candle shop, was a tax write off smelly fish for some rich guy/gal. Usually candles are a side line in a store that has a bread and butter product that makes the real money ,but to make a whole business out of charging people to make candles is kinda weird . Do real working people even have the time to make candles ?Maybe there would be a market for such a thing in a retirement project as another project the retired people could do to be entertained .

 
 
Comment by boulderbo
2007-10-30 16:08:36

doggie bakeries, brutha are the wave of the future, sheez.

Comment by bicoastal
2007-10-30 16:35:28

Now those, I do buy, despite the cost. I know, I know, it’s only flour, water, and peanut butter, how can they possibly be so expensive? But I cannot bake them myself; have tried repeatedly; can’t figure out to get the biscuits hard enough so they don’t turn to crumbs in your pocket; anybody know the trick?

Comment by Vermonter
2007-10-30 17:33:12

Here’s the trick: Don’t feed your dog those silly biscuits. Your dog is a canivore and eats … drum roll please … meat. Flour and peanut butter do not fall into the category “meat”. (Although I’m pretty sure the water part is okay..) ;)

Seriously, the path of least resistance here is to just skip them. Save yourself the money and you’ll probably have a healther dog in the process.

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Comment by ex-nnvmtgbrkr
2007-10-30 16:43:39

Yeah, I saw those lame-ass stores for doggie treats pop up in our neck of the woods too. But with what’s comin’ down upon us now, instead of doggie bakeries, the new deal is “Bake Your Doggie” recipe books. Hey, they’re gonna have to fortify that Top Ramen with something.

Comment by mrincomestream
2007-10-30 16:48:13

You’re a very sick man…funny as all hell…but sick.

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Comment by NYCityBoy
2007-10-30 17:18:37

Dogs and peanut butter, the possibilities are endless.

 
Comment by ex-nnvmtgbrkr
2007-10-30 17:56:15

I’ve sought help, but to no avail.

 
Comment by sleepless_near_seattle
2007-10-30 18:15:12

I think NYCB just threw the trump card and moved solidly into first place….

 
Comment by cami
2007-10-30 18:39:52

‘It’s a cookbook!’ [Cue Twilight Zone music]

 
Comment by Hondje
2007-10-30 18:41:41

:”)

 
 
Comment by AKron
2007-10-30 21:56:38

“Bake Your Doggie” recipe books. Hey, they’re gonna have to fortify that Top Ramen with something.”

Poodles with noodles?

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Comment by mrincomestream
2007-10-31 00:41:15

LOL…

 
 
 
 
Comment by are they crazy
2007-10-30 18:21:57

Why would I fight traffic to go to some store to make candles when I can buy supplies at Michael’s and do it at home. FBs buy these huge houses with their so-called gourmet kitchens, media rooms, gyms, game rooms, spa-retreat bathrooms, etc. and then they go out to do everything.

 
Comment by BubbleViewer
2007-10-30 18:54:19

Get thee quickly to the non-discretionary part of the economy.

Comment by speedingpullet
2007-10-30 19:10:15

100K for a candle store - why on earth would she want store frontage for that? What’s wrong with doing business online?

Teh Interwebs were designed for marginal businesses. Think of the website and advertising she could have bought for 100K.
She so crazy.

 
 
Comment by Soliel
2007-10-31 16:48:27

You guys are being negative. The Body Shop, that sold natural body products was not necessary and on the high side, but it made it’s owner and her family very, very rich.

 
 
Comment by Jas Jain
2007-10-30 15:28:00


From yesterday’s comment…

M.B.A. : “Got any good price data on Sherman Oaks, Studio City and Van Nuys?”

Volume is down 50-70% from the peak. Here are prices from the Peak:

Sherman Oaks -27.7%
Studio City -10.7%
Van Nuys -14.9%

Generally, that part of the valley is following the CA trend of prices down 15% from the peak and falling. Some parts of CA, approx. 20%, are down more than 25%.

Jas

Comment by CHILIDOGGG
2007-10-30 16:56:41

Not according to Zillow - they updated their numbers 10/25/07.

Comment by plysat
2007-10-30 18:00:03

You use Zillow? To value real estate? Now *that’s* funny! For recent sales it’s of some use, but surely you don’t think “zestimates” are appraisals… do you?

Comment by 85701 is overrated
2007-10-30 22:54:34

Zillow is weird. The house I’m renting is zestimated at 340k but the two virtually identical houses on either side are 228k and 246k. Makes no sense.

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Comment by CA renter
2007-10-31 04:00:48

Jas,

That coincides with what I’ve seen there. Been watching that area very causally over the years, and we’re finally seeing prices begin to drop. Took a while, though.

 
 
Comment by wmbz
2007-10-30 15:30:41

‘I have the buyers,’ Thiessen said. ‘I have a big list that have already picked out their condominiums, but they have to sell their homes first.’”

So what you are saying is… You don’t have the buyers!

Comment by Jas Jain
2007-10-30 15:46:47


He, or she, has contingent buyers.

Jas

 
Comment by Rich
2007-10-30 16:17:53

I picked out my Corvette and it’s mine……….when I get the money and go buy it from the dealer.

 
Comment by Blackbox
2007-10-30 16:33:37

hey, no fair!
I want to pick out a condo I’ll never buy………..

 
 
Comment by Big V
2007-10-30 15:31:16

Who wants a Bay Area bubble dinner on November 17th?

Comment by MNair
2007-10-30 15:33:22

I am in LA…but my birthday is Nov 17 :)

Comment by Arizona Slim
2007-10-30 16:58:01

MNair, here’s a shout out from another November baby!

 
 
Comment by MrBubble
2007-10-30 18:07:13

I’m in if it’s not too chi-chi or bubblicious (e.g. nothing with “foam”).

MrBubble

Comment by Big V
2007-10-30 19:24:45

OK. Any recommendations on a place?

Comment by MrBubble
2007-10-30 22:49:53

I actually don’t know much about the city. I live way out in the hinterland in Bernal. If you’re looking for a decision, a friend of mine really likes an Istrian place called Albona —

http://www.albonarestaurant.com/

A little spendy and I do downscale very well. Burger and beer is good for me too, like this:

http://www.dvdbeaver.com/film/DVDReview/barfly/ttile.jpg

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Comment by Walnuts
2007-10-31 01:38:45

I want be around Nov. 17th, but I’ll be down for the next one.

 
 
Comment by housing hanky panky
2007-10-30 15:35:35

‘The town, which has invested millions of in redevelopment funds in the area, encouraged rapid growth in an effort to quickly get new residents living there so the new businesses would thrive, Fudge said.’

Oh Fudge!!!!!

Ben you’ve done it again, where do you get all these cute names :smile:

Comment by sleepless_near_seattle
2007-10-30 15:44:50

“Only I didn’t say “Fudge.” I said THE word, the big one, the queen-mother of dirty words, the “F-dash-dash-dash” word!”

- A Christmas Story, 1983

Comment by Groundhogday
2007-10-30 15:53:47

LMAO, great flick. I can still visualize the kid licking a metal flag pole.

Comment by jetson_boy
2007-10-30 16:43:19

Yup- Almost that time of year where they play 24 hours of it on A and E! Love that movie. I especially like the scene where the little brother eats like a pig at the dinner table. Classic.

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Comment by Mo Money
2007-10-30 16:01:25

He’s Blind ! I told you we shouldn’t have used lifebuoy !

Comment by sleepless_near_seattle
2007-10-30 18:54:59

“You use up all of the glue……on purpose!!”

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Comment by Saint Barbara
2007-10-30 15:40:44

OT — The Santa Barbara REIC is hoping to prop up prices by outsourcing home ownership. Was ist herauf damit? Also in this week’s post at the Santa Barbara Housing Bubble Blog: fresh inventory and median price data for the South Coast (Santa Barbara, Goleta, Carpinteria/Summerland, Montecito, and Hope Ranch).

Aufrichtig,
Saint Barbara

Comment by bicoastal
2007-10-30 16:40:05

I once met an English gazillionaire who told me he could live anywhere in the world… and picked Santa Barbara. Perhaps the realtor described in your post was at the same party!

 
 
Comment by housing hanky panky
2007-10-30 15:41:59

Can the U.S. economy pull an Indiana Jones?
Danger of recession looms, with early 2008 seen as most treacherous period.

http://www.marketwatch.com/news/story/can-economy-pull-indiana-jones/story.aspx?guid=%7B2E1BD915%2D90E2%2D4987%2D91A8%2DF23C48C77602%7D

Comment by joe momma
2007-10-30 16:19:17

It’s a great time to let the other party run the country. Why any politician would want to get stuck cleaning up this mess is beyond me.

Comment by sweeny texas
2007-10-30 18:26:51

Joe, there’s only 5 things wrong with your summation:
1. It ain’t a great time.
2. There is no “other party”.
3. Politicians don’t run shit.
4. Wall Street does, and
5. This mess is beyond cleaning up.

Otherwise, I agree completely.

 
 
Comment by Jimmy Jazz
2007-10-30 16:34:18

One factor arguing strongly against a recession is the stock market, which seems optimistic about the longer-term outlook
I think the stock market is in the “Wile E. Coyote” moment, already off the cliff but hasn’t looked down yet.

Comment by Melvin Frumph Hoppe
2007-10-30 18:04:04

the “Wile E. Coyote” moment

lmoa although it really ain’t pretty

 
 
 
Comment by txchick57
2007-10-30 15:50:49

I’m chatting with my mortgage broker pal in Marin. He informs me that Los Altos, Cupertino and Palo Alto are still strong and selling at the ask. Nice to know the Google millionaires aren’t into the Tender Vittles yet, but that’s not the market.

Comment by Jas Jain
2007-10-30 18:00:45


Quite true. Don’t forget the Applettes. Palo Alto demand is crazy.

Jas

 
Comment by Ozarkian from Saratoga, CA
2007-10-30 18:03:17

2 weekends ago I went to 3 open houses in the golden triangle in Saratoga. All 3 were vacant. And a friend has a very high end house for sale in Los Altos Hills no lookers so the price has been reduced. Another friend has a $1M shack for sale in Palo Alto.

Comment by Jas Jain
2007-10-31 08:18:22


Saratoga is doing poorly compared to PA/CU/LA this time around. It did great during 1999-2001..

Jas

 
 
 
Comment by need 2 leave ca
2007-10-30 15:54:33

Kimiko Horiuchi avoided buying because prices were too high. Now, she and her husband are buying a 2,700-square-foot house in Patterson for $329,000.”

“She said her real estate agent told her that a few years ago the home was worth $600,000, because it’s a former model home with several upgrades

Nope, nothing to worry about here. Housing always goes up.
Ladies and Gentlemen, I think we have new comps now. Boy, her neighbors that paid $600K are going to be happy.

Comment by are they crazy
2007-10-30 18:30:35

Love that “used to be” price. In six months, they’ll be whining that they can’t understand why the house won’t sell for the $379K they paid because it USED TO BE worth $600K.

Comment by Housing Wizard
2007-10-30 20:15:28

If a Realtor told me a house sold for 600k in the past ,I would say” prove it “.
The real estate market is so over supplied with very few qualified buyers that these houses/condos aren’t even moving with deep discounts . The vulture buyers will come in at some point but the regular market is just “dead. ”

Its really is a shame that up to 17 million homes are in need of end-user buyers that don’t exist . I’m telling you that the builders were buiding for speculators .I would love to see the stats the builders gave the planning commissions to justify a project ,especially the big sq footage projects .

 
Comment by ejamie
2007-10-31 07:09:51

This “used to be” mentality is the reason why there are 2 million vacant homes sitting empty right now, foreclosures increasing each month, and a slow leak to the bubble instead of a quick pop.

Past performance is no guarantee of future results, Kimiko.

 
 
 
Comment by American_Screamer
2007-10-30 15:56:39

“‘The problem we are seeing now is that first-time homebuyers can’t get into the market,’ Mozilo said. ‘This is the most expensive housing market in the country and the federal government has not done anything to help ease lending.’”

“Mozilo said the problems stem from the loosened lending and credit rules in the late 1990s through 2004.”

“‘It was an easy market,’ Mozilo said. ‘People subscribed to the belief they couldn’t lose - and for a while they didn’t. Prices continued to go up. What created the problem we have now is that prices began to fall and panic set in.’”

MO my friend, don’t you see the problem with your logic here?

Comment by Housing Wizard
2007-10-30 20:21:43

Well Mozilo ,with the prices dropping ,the 417k loan amount will be enough . Any way you look at it ,the lenders want to be able to get the government backed loans to replace the sub-prime market .
Wall Street should come up with their own version of a insured loan ,(I can’t believe I said that ).

 
 
Comment by aladinsane
2007-10-30 15:59:32

We had the most amazing lightning storm yesterday…

30 minutes of flash lightning, as if Mother Nature was turning on and off the lights 35 times times a minute~

The few lightning bolts we saw were horizontal, not vertical

And mellow yellow’s down 420, so the smoking lamp is lit…

 
Comment by need 2 leave ca
2007-10-30 16:01:09

$12 to make my own candle. I would much rather pay a couple of bucks to buy and select one of many candles at (pick one - Walmart, Target, Walgreens, Kmart, etc) for maybe $5. This woman is full of $h!t and can kiss her $100K goodbye as it is going down the
$h!tter.

Comment by Pete
2007-10-30 17:21:51

I’m trying to picture $100,000 worth of candles. Damn, that’s a lot of candles! It would take a huge warehouse to hold them all. After she sells that many, she’ll be breaking even.

 
 
Comment by need 2 leave ca
2007-10-30 16:04:50

speaking of the Joshua Tree treatment. I went to the Albuquerque airport today. On the connecting road between the freeway and the arrival/departure area, there is about a one mile long median stretch which the city has done a nice job of beautifying. There are many Joshua trees and/or cactuses there. I would love to drive along and see some of these criminals sitting there on these trees after their ‘treatment’. Would be fitting to be seen by all the folks heading into and out of the airport.

Comment by Neil
2007-10-30 21:30:51

ROTFL

I’m never going to see a Joshua tree in the same light ever again. lol.

Some really deserve it. Sadly, J6P won’t even know what we’re talking about for 18 months.

Got popcorn?
Neil

 
 
Comment by mrincomestream
2007-10-30 16:05:06

Schillers on CNBC

 
Comment by Mike
2007-10-30 16:06:44

Where will prices eventually end up? It’s an unknown but there are some pointers. For instance, many if not most,valuations were based on fraudulent appraisals. Brokers and realtors paying off the appraiser to increase the value to the numbers they wanted over and over and over again. Even if they didn’t pay off the appraiser, the appraiser knew that if they didn’t go along with the realtors or brokers request, that would probably be the last job they would get off that them.

So, we can certainly discount all and any prices from around 2003 until now. Everything. The last several years of valuations are, in a nutshell - fake.

Then, prior to 2003, there was a mini-bubble which began around 1997 until 2002/3 as opposed to a gigantic bubble later on. The mini-bubble must also deflate. Probably to around prices in 1999/2000.

The next pointer is inventory. Because of greed, we have waaaaaay too much inventory out there to sustain prices at even these lower levels and possibly even prices at 1999/2000 levels. Add to that a whole section of the population who might have been able to afford a $200,000 property even if they took a sub-prime but were way in over their heads at $400,000 are now bankrupt and dis-enchanted with property ownership. So we can knock many more numbers off the population who still think owning property is part of the American Dream.

Finally, as in all bubbles without exception, when the bubble bursts price do not return to the mean - they overshoot because the over riding factor in a post bubble atmosphere is riddled with fear.

To put it simply, it’s very doubtful if prices will reach bottom for several years. Probably between 7 to 10 years. If we head into a deeper recession than we are in at the moment and inflation eats into incomes, that number will be longer.

Comment by Big V
2007-10-30 16:22:03

Hi Mike:

I don’t think it will take nearly that long for prices to hit bottom, due to the facts that:

a) 6 out of 13 houses in the US today are being used as “investments”, not room and board by their owners, so there’s no incentive to even TRY to hold on to them.

b) Many of those investment properties were purchased using unsustainable financing. That means that a HAYOOJ number of houses must go/are going up for sale in a very short period of time.

Because of a and b, we get to:

c) The gigantic and increasing inventory will very quickly result in very steep price discounts, which will allow/entice first-time home buyers back into the market.

Of course, prices will never get back to their bubble highs (adjusted for inflation), but they will at least flatten or continue to rise with inflation by 2010, give or take a year.

Comment by CHILIDOGGG
2007-10-30 17:14:07

6 out of 13 houses in the US today are being used as “investments”.

Wow, I’ve never seen that figure before, that must be a record. What is your source?

Comment by Big V
2007-10-30 19:31:41

I got it from Gwynsters #’s below, but I guess I screwed up because these are CA #’s, not US #’s (sorry). I figure renter-occupied and empty houses are investments (not shelter for the owner):

Comment by Gwynster
2007-10-30 12:49:26
California, Period ending 6-30-06

Total housing units 13,174,781
Owner-occupied housing units 7,102,197
Renter-occupied housing units 5,049,030
Vacant housing units 1,023,554
Median value (dollars) 535,700

Total population 36,457,549
In labor force (over 16+ yrs) 18,064,498

Average household size 2.93
Average family size 3.54
Median household income 56,645
Median family income 64,563
Per capita income 26,974

Gross Rents, Median (dollars) 1,029
Source: U.S. Census Bureau, 2006 American Community Survey

For those not familiar with it, the ACS is going to replace the traditional UCS estimates.

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Comment by CHILIDOGGG
2007-10-30 20:55:26

I’m guessing that “housing units” includes apartments (and condos.)

 
Comment by Big V
2007-10-30 22:48:30

Hey Chilidoggg:

Yes, probably, but apartments are investments, and condos that are being rented out are investments too. Also, condos that are empty and on the market are not being used as a place to live, so they’re probably investments.

 
 
Comment by Housing Wizard
2007-10-30 20:39:42

Because of the over supply of houses ,I think the lenders are going to go into the rental business at some point .

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Comment by AKron
2007-10-30 22:09:31

“…I think the lenders are going to go into the rental business at some point .”

Many service agreements allow the servicer to rent out REOs, as long as that is the move that maximizes money to the trust fund (i.e. bondholders). Though most such agreements pay extra bonuses to the servicer to cover foreclosure costs and I would guess that most servicers would loathe being landlords, so I don’t see it as being common. It would amuse me, though, to see the bondholder’s bonds (if all of the underlying housing became rentals) become essentially infinite-time-to-maturity bonds paying 3% per annum. :)

 
Comment by yogurt
2007-10-30 23:26:28

If renting out the property made any economic sense, it never would have been foreclosed in the first place.

 
 
 
 
 
Comment by Jas Jain
2007-10-30 16:07:01


‘This is the most expensive housing market in the country and the federal government has not done anything to help ease lending.’

So, it is government’s job to help when housing becomes expensive, especially, ridiculously expensive? Govt. only works to screw up the economy rather than help. We wouldn’t have the mess if there were no govt. programs and GSEs.

Jas

Comment by are they crazy
2007-10-30 18:33:04

Especially when orangello’s sleazy, shading business caused the prices to go up to begin with. He never admits that his lending practices had anything to do with the run up of prices or the foreclosure mess.

 
Comment by reuven
2007-10-31 07:28:20

I can’t believe they’re that stupid to believe that “easing lending” would make prices come down! Requiring any government backed mortgage or bank that used FDIC insurance to require 20% downpayments and mortgages of no more than 3.5x income would be the best way to make housing “affordable” and stabilize the economny.

Imagine a hypothetical scenario where it was illegal to make a mortgage of more than $100K. You think Pulte wouldn’t figure out how to build and price homes for that amount?

 
 
Comment by aladinsane
2007-10-30 16:16:08

The Real HouseDives Of Orange County

“Metrostudy’s Steve Johnson: ‘The region’s residential real estate market has been experiencing a decline that has affected all price segments. Some projects have had limited success by offering ’super discounts’ of up to 50 percent of original asking prices, even when such reductions price homes below cost. Unfortunately, the sales momentum has been short-lived, as there is no sense of urgency to buy a home.’”

 
Comment by aladinsane
2007-10-30 16:17:40

Le Tan Orange really amped up the blame game today…

Took it to a new level~

 
Comment by catspit1
2007-10-30 16:18:30

Now that all we predicted a few years ago has come to pass and now that there is nothing to do but watch and wait, does anybody have any really good cocktail recipes they’d like to share? something classic yet not too complicated like a Gimlet or something maybe?

Comment by jinwnc
2007-10-30 18:33:14

When the market goes down over 200 points I celebrate with a good thick steak topped with crumpled gorgonzola cheese.
And a Heineken…

 
 
Comment by Big V
2007-10-30 16:28:07

Here’s something I’ve been thinking about:

Banks hate inflation because they only get paid based on loans given in the past.

Banks hate unemployment because it cuts off payments altogether.

Therefore, the Federal Reserve Bank must try to set monetary policy to discourage BOTH inflation and unemployment for it’s own best interests.

So … why the blind eye toward inflation? They probably want to spur wage inflation becuase today’s pay is insufficient to allow payment of mortgages, even though employment is high. In today’s paradigm, full employment might as well be full unemployment to the mortgage maker.

Unfortunately, I don’t believe that low interest rates can spur wage inflation, due to our proclivity for offshoring productive jobs. Are we really as screwed as I think we are? Someone please say it ain’t so.

Comment by Hoz
2007-10-30 16:38:41

“Banks hate inflation because they only get paid based on loans given in the past.”

Banks are 1st in line, after the government, during inflationary times and make the most moneys . Obviously the government makes the most during inflation.

 
Comment by LongIslandLost
2007-10-30 16:42:21

It ain’t so. A weak dollar will make offshoring look less enticing. That means more jobs for people here. If the dollar gets weak enough, we can’t afford Chinese stuff. So, we will manufacture it here. Next, about a billion unemployed Chinese will riot. We will be very happy that the Pacific is so wide.

Comment by Hoz
2007-10-30 17:23:15

China currently has the Yuan pegged to the dollar. So China will still manufacture. China can manufacture for less than the US and as the dollar tanks so does the Yuan. China will export more to Europe and South America as well as to the US.

The Economist magazine did an analysis of foreign trade earlier this year and they calculated a 40% drop in the dollar against the Yuan would not change the the US trade deficit. They also wrote that if the currency did devalue that much against the Yuan, it would make life miserable for Americans.

“Trade with China helps, not harms the average American. Thanks to imports from China, prices are lower and real incomes higher. Commentators often refer to the “cheap” yuan as being an unfair subsidy for Chinese exporters. But it is a moot question who exactly is subsidising whom. Not only do cheap imports subsidise American consumers, but China’s large purchases of Treasury bonds also hold down American interest rates, thereby subsidising home buyers.”

Comment by CA renter
2007-10-31 04:12:25

Thanks to imports from China, prices are lower and real incomes higher.
———————-

I disagree vehemently with this theory, popularized by “trickle-down” economists.

Why do they never consider the long-term consequences of lower wages (outsourcing) on the demand side? If our costs are going down, but wages are falling with them (perhaps even more), we are even worse off than if we’d kept manufacturing in the U.S.

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Comment by Giacomo
2007-10-30 17:31:00

As I understand it: there were those (economists) who predicted the EU would start buying dollars when the euro was $1.40. At a recent meeting, the French rep called for this support to begin, but apparently that sentiment lost out to those who wanted the U.S. to feel at little more pain.

Expect more calls for support of the dollar, as EU exports falter.

 
Comment by Houstonstan
2007-10-30 20:35:10

Heard something similar about outsourcing to India. Talent Retention, subcon quality of labor + Ruppee appreciation has made this less attractive.

 
 
Comment by Markmax33
2007-10-30 16:42:43

I think it is clear the FED has given up on inflation to try to prop up the economy. Helicopter Ben to the rescue. Do you think he ever reads this blog? I bet someone close to him does.

Comment by aladinsane
2007-10-30 16:44:21

Cagey B surely lurks amongst us, Comrades…

 
 
Comment by vozworth
2007-10-30 16:45:30

Im not so sure they care about inflation at the momment. they want inflation across the board, anything, everything is desired to go up in price.

High food costs, people scream to get higher pay to feed families.
Higher asset prices, people spend more from the wealth effect…..

its all about higher prices.

As to employment, the lower the employment number the greater the salary demanded of the educated, working, MOBLIE, compliant W-2 slaves.

So its all good, cut rates, stimulate the price mechanism across the board.

 
Comment by Bronco
2007-10-30 21:45:19

Big V, how did you like that earthquake?

Comment by MrBubble
2007-10-30 22:57:00

I felt it in Bernal,SF. On the couch and ready to ride the “elevator” down to the first floor.

MrBubble

 
Comment by Big V
2007-10-30 23:00:39

It was kinda cool once I realized that it wasn’t gonna be the big one. That’s what always freaks me out. I was also glad that my house seemed very solid. I don’t know what would happen in a 7.5, but everything held up very well at the near center of a 5.6.

Comment by Ken Best
2007-10-30 23:07:42

The TV station broadcasted a few calls. Some of the callers
are in the 20’s, said this is their first quake, scared the heck
out of them. Last major quake was in 1987.
Many of the 20’s years old FBs are feeling now both the housing quake and the earthquake. Should have listened to old timers.

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Comment by aladinsane
2007-10-30 16:30:41

“The whole ‘pie’ of home sales volume has shrunk this year by more than 20 percent compared with sales in 2006, said Leslie Appleton-Young, chief economist for the California Association of Realtors. But ‘the part of the pie that’s moderate and low-end housing has shrunk even more.’ With so many sales of lower-price homes out of the picture, the median price has been bumped up artificially.”

Did the (hyphenated-one) just try to bake the numbers in a pie?

 
Comment by HARM
2007-10-30 17:01:49

“‘The problem we are seeing now is that first-time homebuyers can’t get into the market,’ Mozilo said. ‘This is the most expensive housing market in the country and the federal government has not done anything to help ease lending.’”

And what else, praytell, SHOULD the government have done to “ease lending” that is has not already? The government thus far has:

1. Dropped short rates to 1% and held them there nearly 3 years.
2. Cut 50 bps when it should have been RAISING them to combat inflation/defend the USD.
3. Provided every conceivable preferential tax incentive known to mankind to inflate housing prices, including raising the capital gains “homestead’ exemption to $250/500K, virtually waiving the old primary residency rule (replacing it with “any 2 will do”), generously expanding the 1031 exchange to RE, etc., etc.
4. Growing the GSEs to absorb 50% of the national mortgage market and (until recently) hiking the conforming price limit every year, regardless of how working class incomes were doing.
5. Deliberate non-enforcement of mortgage fraud laws, ignoring blatant cash-back financing scams, phantom/shill bidders, lending to illegal aliens, identity theft, allowing the NAR to run a virtual information monopoly (MLS) etc., etc.
6. No application of “fiduciary” rules/SOX to mortgage brokers, lax-to-nonexistent regulation of the RE industry vs. securities.

“‘Programs (like Freddie Mac and Fannie Mae) have the same limits for North Dakota as (they do) for Los Angeles. And no one here can buy a house with what they are offering,’ he said.”

No non-rich person in L.A. can buy a house because (a) the damned prices are too high, and (b) the NINJA-ARM spigot just got turned off. $417K should be PLENTY of money to buy a run-of-the-mill middle-class house *anywhere* in the U.S. Putting taxpayers on the hook for even MORE bad loans will not make them more “affordable” –it will just prolong the inevitable bust and make the aftermath even worse than it already is.

“Mozilo said the problems stem from the loosened lending and credit rules in the late 1990s through 2004.”

“‘It was an easy market,’ Mozilo said. ‘People subscribed to the belief they couldn’t lose - and for a while they didn’t. Prices continued to go up. What created the problem we have now is that prices began to fall and panic set in.’”

I guess Tan-Man had to throw in a couple of truthful statements just to confuse people, though his dates are off –it should be “late 1990s through 2006″.

Comment by Housing Wizard
2007-10-30 20:58:35

Good post ,as usual Harm .Mozilo has been around for a long time and as long as the secondary market was buying his junk loan paper he passed on and real estate was going up ,Mozilo didn’t care about the underwriting/appraisals .Moziilo got caught holding the bag on a ton of bad paper right after he sold the bulk of his stock .
I would also like to know why Mozillo is saying in essence that the loose money came between 1990 and 2004 . I think the most fraud in lending took place between 2004 and August 2007. Does Mozillo want investigators to take their eyes off what he did to pump up his Company before he dumped his stock in 2006?

Comment by peter wiener
2007-10-30 23:29:54

Have you fellows not read the FHLB report on Bloomberg - CFC alone borrowed 51 BILLION dollars. If you calculate an average mortgage of 200K, then to CFC alone the Feds provided funding for over 250,000 homes in Aug and Sept.
Oh and by the way, they gave CFC 51 BILLION at 4.9% (they went into the bond market and in 2 months raised 143 BILLION under their implied US gov’t guarantee) and then lent out 163 BILLION to over 800 mortgsage lenders at 4.9% when LIBOR was 5.6% and their requirements I doubt could have been funded under their own credit profile at all during Aug / Sept. Btw, WM got 31 BILLION at 4.9% too!
That is also why no one went to the discount window- they got all the dough they needed from the FHLBs. The discount window lending for 2 BILLION to 4 major banks was a charade to cover what the Fed had engineered.
These are very desperate ploys that belie the Fed’s determination to halt and reverse the deflationary influence that housing’s collapse could have.
Remember, this BB schmuck fancies himself a Depression buff. Well he is going to get a first hand look at one real soon if he thinks this kind of shit is going to do anything but make the rest of the world realize that they ain’t funding no mo’ ‘Merican mortgages nohow!

Do the math!

 
 
 
Comment by RayW
2007-10-30 17:05:00

I’m sorry but I’m starting to feel redundant with my musings about the declining housing market. We looked at a house priced at $625,000 in Livermore in early August and the same house is still for sale at $559,000. A 10.6% drop in price. If we were stupid and bought, we would have lost alot of value which will take quite awhile to regenerate. And I do say “value”, not money because the house had a market “value”. Now that the market has turned the house has a different value, a lower value.

I don’t know what else to say anymore except what I say to all the people who called me a fool, bubblehead, stupid, naive and so many other things I can’t list them all. What do I say to them you may be wondering…….I politely look at them with the most dignified look I can generate and say; “Nanner, nanner, nanner! Who’s right now sucker?”

I guess I picked a bad week to quit sniffing glue.

Comment by pismo clam
2007-10-30 17:28:17

I love this blog. First we get Caddyshack quotes, then Airplane. Makes me want to go have a drink. I think I’ll have a Mudslide.

 
Comment by are they crazy
2007-10-30 18:36:43

That would be succah. I’m so glad you said that. It’s hard to resist a little victory dance to nanner nanner. A little I was right you were wrong, I was smart you were a dolt

 
Comment by reuven
2007-10-31 07:31:36

I understand your basic point, but I don’t get how you figure the home has any value (other than the scrap value of its fixtures, etc) until it has found a buyer….

Comment by RayW
2007-10-31 08:40:11

It has a value to the seller, a lower value than what he thought it was when it was first put on the market. Two price reductions are like awakenings to these people that the value they place on their asset does not necessarily equal it’s true market value.

 
 
 
Comment by Cliss
2007-10-30 17:18:00

WHAT is the deal with these “business” “start-ups”? Business which cost a fortune to start, and then they don’t make any money.

“But Flinn hasn’t turned a profit in any of the 17 months she’s been in business. She blames…”

What do people think? That it’s Kindergarten playtime? And then these “businessmen” use their homes as a Bank / Venture Capitalist to fund their own businesses, to the tune of $100,000?? I’ve read lots of examples of how people took out loans to start their business. One example was of a lady who took out a home loan to start a day care business in her home. The loan amount was $270,000. A year later the couple is in danger of losing their home because the loan was an ARM. I mean, what the hell? What does it take to start a day care? You could probably find most if not all the stuff at garage sales, or the local Goodwill. All used stuff. I mean, like the kids care if it’s new or not.

Ugly Fact.
New businesses are a Solid Gold Mine to a lot of providers. It’s actually considered a bona fide category, like senior citizens, or doctors, or CPA’s. New businesses are considered an extremely lucrative gold mine. Sell business cards, financial advice, and don’t forget Legal Advice Scare em real good You GOTTA incorporate You don’t want to lose your home do You? (as the homeowner loses his home anyway because the business cost to much to start).

Now compare that with myself.
I started a business 2 years ago. From Day One, it’s been a struggle. Every stinking penny had to be squeezed until it cried out. I printed my own business cards. Designed my own stationery. Ignored all the “scare tactics” from my “Well-wishers” who told me I must incorporate or else. Even on my business trips, I slept in the car in the beginning. Got cleaned up at the local gas station and walked in to my business appointments. I had no choice because I DESPISE DEBT. I was not willing to go into debt because 95% of all businesses fail within the first 5 years. And if mine was on the 95 side, I was NOT going to throw in the towel with a bunch of debt. My business cost me around $200.00 / month to run.

Now? If I’m lucky, I’ll make around $455,000 in the coming year. IF things go well. But even if it caves, I’ll walk away with not one stinking dime of debt.

Comment by Vermonter
2007-10-30 17:42:09

Wow - that’s awesome!!! What do you do for a business?

You may want to incorporate if you have yet, though, not because someone is going to sue, but because you can shelter some of your income from taxes, especially if you are planning plowing alot of it back into the business.

It’s not that hard to incorporate (at least in the state of VT). I did it myself without a lawyer involved. You need to read the forms carefully, but my incorporation went off without a hitch.

Comment by tuxedo_junction
2007-10-30 20:29:57

Incorporating is simple. The critical element is to maintain the corporate niceties during the life of the business. Have that annual shareholders meeting, board meeting, etc. Maintain a proper stock register. Document all meetings in the minutes book and don’t forget the corporate seal. Also, get a board resolution for major business transactions. It may seem silly, especially if you’re the sole shareholder, director, and officer, but it’s necessary to limit liability. Also, it makes it easier to sell the business in the future. All of this legal “administrative stuff” is known in the legal world as “corporate housekeeping.”

 
 
Comment by vozworth
2007-10-30 18:06:21

I guess if you could just “hire yourself” you could just kick back in the Caymans?

 
Comment by Paul in Jax
2007-10-30 19:11:05

Around $455,000? Is that like between 453 and 457? Either that or no go? Fishy post.

Comment by CHILIDOGGG
2007-10-30 21:03:36

If I’m “lucky” tomorrow night I’ll “make” about $7 million, either that or nothing, I’ll be out a dollar, but I won’t be in debt.

 
 
Comment by reuven
2007-10-31 07:44:32

What do people think? That it’s Kindergarten playtime? And then these “businessmen” use their homes as a Bank / Venture Capitalist to fund their own businesses, to the tune of $100,000?? I’ve read lots of examples of how people took out loans to start their business. One example was of a lady who took out a home loan to start a day care business in her home. The loan amount was $270,000. A year later the couple is in danger of losing their home because the loan was an ARM. I mean, what the hell?

Great point! I’ve had a small business for 5 years. I have three people working for me (one as a full-time employee, the other are bona-fide subcontractors, who take on other work as well.)

I don’t think my total out-of-pocket expenses (not including taxes, of course!), and that includes rent, equipment, business cards, PR, travel, dues, licences, etc, for the past FIVE years has even reached $100K. (Granted, I’ve only rented space for the past year or so, working out of home for the first 4.) I’m not counting direct expenses that could be passed along to clients, like traveling for them, etc.

My guess is the the 270K “daycare” woman was a scamster who thought she could get away with making a personal spending spree “business expenses”.

 
 
Comment by joe momma
2007-10-30 17:30:17

My wife had an excellent observation the other day. She was noticing the price reductions and commented about how quickly our big down payment would be destroyed. And that is the point. What took years to save would be wiped out in a matter of weeks.

We are throwing around thousands or even hundreds of thousands in price cuts, but that represents years of disciplined savings going up in smoke.

I think we’ll let someone else make burn their savings.

Comment by CA renter
2007-10-31 04:20:58

Precisely.

All of a sudden, $100,000 means something again. Funny that when it comes out of your own pocket in the form of cold, hard cash, it takes on new meaning.

NOT like the past few years when everyone was throwing around big numbers like $100,000 could be earned in a day.

Hopefully very soon, we’ll learn that a $500K house should look something like a mini-estate…even in California.

 
 
Comment by clue phone
2007-10-30 17:58:01

“offering ’super discounts’ of up to 50 percent of original asking prices”

Music to my ears! I predict that the ‘50%’ number will become lodged in popular consciousness. At first it will be “OK, prices are falling but they will NEVER fall 50%” then ultimately will become “in the great bubble of 2005 my house lost 50% of value!”

 
Comment by aladinsane
2007-10-30 18:05:13

“‘I have been living this nightmare for 17 months,’ said Kathy Flinn, owner of Creative Wick, a create-your-own candle studio. ‘I’ve got $100,000 invested here. I can’t afford to walk away.’”

Same thing happened to me with my scotch tape store.

Comment by MrBubble
2007-10-30 22:51:33

Same with Ned Flanders’ “Leftorium”

 
 
Comment by San Diego RE Bear
2007-10-30 18:18:02

Meet with a person in my profession (cannot bring myself to call her a colleague) at a conference last week. She knows I have been predicting the housing downturn for years so the first thing she has to say is how disappointed I must be that the fires are going to cause a huge spike in homes sales and prices. I just looked at her and tried to explain that losing 1600 homes was not going to have a huge effect on the 23,000 available in the county not to mention that most will be rebuilt by the owners. She got angry at that and stated that rental demand will go up which I agreed with to a point but also stated that it may go down as some people may leave (especially renters) as two major fires this close together might spook them.

When I told her I was still thinking about leaving and that between the drought and the fires Ohio was starting to look really good to me she just got in a huff and said no place was safe and that if I moved to Ohio I WOULD FREEZE TO DEATH. I am not kidding - her threat to me if I left California is that I would freeze to death.

I was born in California and love it and the people. But the sun tax has simply become too taxing. I have the advantage of having lived in Denver, Oklahoma, and Indiana and have enjoyed things about all (although like California none are perfect.) I do not understand the Californians who are so rabid about being here that they cannot see the beauty or advantages to living elsewhere. Fall colors, lots of water, a white Christmas or Chanukah, cheap and plentiful land, lower taxes (maybe) – yes, a lot of advantages to being able to live in more than one place.

Has anyone else thought of, or know of anyone else who has thought of, leaving CA because of the fires? Or am I the only person in San Diego who is tired of worrying about her pets burning to death because she is not home? :D

Comment by aladinsane
2007-10-30 18:27:32

There are many good, small places in California…

You just have to look a bit.

And from what I constantly read on here, bottom left corner pocket ones are not liked especially in the other 49, as we were the reason many places went up, that had no reason to go up, aside from us buying and raising prices. I suspect the backlash will only get worse.

If you stay in the Golden State, who is going to bag on you here?

 
Comment by Paul in Jax
2007-10-30 19:16:12

You are unlikely to freeze to death in Ohio. On the other hand, you may be shocked at the natives’ average BMI and inability to properly conjugate verbs.

 
Comment by Nozferatu
2007-10-30 19:20:58

Most places are better than California….people need to just open their eyes and accept it.

 
Comment by Annata
2007-10-30 19:38:13

Oh, man, I hope you spend some time in Ohio before you do something rash! I spent six years in the Midwest and hope never to return. I found the weather comfortable for about two weeks out of the entire year. I’ll gladly pay the sun tax! :-) But to each his own (just make sure you take OH for a test spin beforehand)…

 
Comment by sleepless_near_seattle
2007-10-30 19:44:04

I think for many people it’s about image. I’m amazed at the number of people that supposedly live in Portland “for the lifestyle” but that don’t actually practice that lifestyle. They claim to like and utilize the outdoors and yet pretty much just go to work and hang out at home. So they basically pay a premium to live an image.

If I didn’t actually practice the lifestyle I’m here for, I’d move back to Ohio in a heartbeat, where most of my family lives. Even if I didn’t have family in the Midwest, it would be a very compelling a place to me where I could have a good career and not pay a premium to live there.

Comment by Home_a_Loan
2007-10-30 19:55:55

“They claim to like and utilize the outdoors and yet pretty much just go to work and hang out at home. So they basically pay a premium to live an image.”

Sounds like people in Southern Cal. Except instead of hanging out at home they’re hanging out in their SUV on the 405 sucking engine exhaust. At least in Portland they can watch CSI.

 
 
Comment by Housing Wizard
2007-10-30 20:32:14

Maybe you could install a doggie door so the dog could escape if a fire broke out . I remember when the Northridge earthquake hit ,my dog was outside within 10 seconds .

 
Comment by Ian
2007-10-30 21:59:44

Been to indiana lately and also alabama… and it is nice

 
Comment by CA renter
2007-10-31 04:26:23

SD RE Bear,

My DH and I are both native Californians & have been seriously discussing moving. Not so much the fires directly, but the drought, overcrowding, high prices, & the fact that it is no longer the “California” that you and I likely grew up with. It is very difficult to leave, though, mostly because everything we know is here.

Would love to hear about your experiences in other states & reasons why you moved back!

Comment by San Diego RE Bear
2007-10-31 09:57:34

Hi CA Renter - e-mail me at sd.re.b@hotmail.com and I can give you more details. :)

 
 
 
Comment by aladinsane
2007-10-30 18:20:40

“‘We’ve got a little bit of a double whammy going on right now,’ Thiessen said.”

“The slow housing market has hit his project harder than other developments because of the way the retail and the residential components are intermingled, he said.”

America:

Most of my life you’ve been the most strident in hyperbole of anybody in the world, nauseating really…

Now the hyperbole in reverse, i.e.: little-teensy-weensy bit of a problem, when in reality, this gent is describing is a train wreck of 2 trains about to hit each other head on @ 50 miles an hour.

The real speed of the 2 trains hitting, is of course 100 mile an hour~

We need humility surely, but this crash course in crass is no way to come across?

Comment by Carbonator
2007-10-30 22:37:17

The real velocity of each train is 50 m.p.h. If you are talking about the force expended in the collision equalling the force of one train hitting a solid unmoveable object at 100 m.p.h., you are wrong.

Don’t worry, it’s a common misconception!

 
 
Comment by Renterfornow
2007-10-30 18:45:21

“Countrywide Financial Corp. CEO Angelo Mozilo, whose company has become a symbol for the problems in the housing market, said his firm has received no help from the government and is bearing the brunt of criticism for the current problems.”

FU Mozilla you POS!

 
Comment by Renterfornow
2007-10-30 18:46:30

Angelo keep up the whining you sack of garbage

 
Comment by Mark in San Diego
2007-10-30 18:50:05

I am from Ohio and have lived in California for 28 years, but I am am also tired of our natural and unatural disasters. Although Ohio is a bit too cold to return to, I like New Mexico and other parts of the Southwest. . .I like sun, and even though it does get cold at night, the days for retired people like me are great in New Mexico. . .I wasn’t impacted by the fires, except the smoke, but the long term water problems here could be the next disaster - was at Hoover dam a few weeks ago, and it was at record low. . .SD gets water from the Parker Dam - downstream from Hoover - NOT good!!

 
Comment by Renterfornow
2007-10-30 18:53:22

Can’t wait for countrywide to go bust. Noone will miss this slick organization. Good bye! and good riddens.

Comment by Nozferatu
2007-10-30 19:16:58

Neither can I…but the problem is for every Countrywide are 10 other companies like it. The whole corporate system and money organization on this country is corrupt. The only difference is they do it legally. So it doesn’t register as being screwed…until something like this happens…at which point no laws, no titles, no labels, no names can hide how corrupt they really are.

The ultimate thing is are these B ASTARDS going to pay for it or not? I doubt it.

 
 
Comment by GH
2007-10-30 18:55:46

and if the economy comes back, then I’ll have a house that I bought for less than it’s worth

priceless “if the economy comes back”…

 
Comment by uptick
2007-10-30 19:03:05

I guess people still trying to flip.

Sold on 04/03/2007: $365,000
Now: Cape Cod In The Heart of Fort Bragg $549,000

Comment by CA renter
2007-10-31 04:28:50

LOL!!!!

 
 
Comment by Nozferatu
2007-10-30 19:14:06

“Horiuchi said she knows she may be taking advantage of someone else’s misfortune or bad loan. ‘I just feel bad that I’m taking someone’s house,’ she said.”

Don’t feel bad Horiuchi…feel GREAT…feel good that you weren’t (I’m assuming) a greedy, oportunistic A HOLE who was trying to scre w over someone else.

Good for you.

Comment by Doghouse RIley
2007-10-30 19:29:49

Hey Kimiko, if you feel bad that you took advantage of a down market, you can send me $50K or so of that money you saved. Should make you feel a lot better.

 
Comment by BottomFisher
2007-10-30 20:53:54

Horiuchi said later after the interview ” Ok….so I lie a leettle….no sheet….it’s in my blood……but they feel a little better…..no?”

 
 
Comment by dude
2007-10-30 19:23:44

I just did my calculation of the sum total of CFC exposure to CA real estate through REO.

At 430K median last reported they have 1.5B in REO on the books. Interestingly enough, that figure isn’t increasing. The homes are losing value as fast as REO is being added.

So, no problem, right?

Comment by travanx
2007-10-31 00:00:07

That only works if those are outside of california. I really don’t think there is that much under $400k property in California. More like $650k-$2mil is more normal.

 
 
Comment by arroyogrande
2007-10-30 19:25:44

“Mozilo said the problems stem from the loosened lending and credit rules in the late 1990s through 2004…What created the problem we have now is that prices began to fall and panic set in.’””

Wait, first Mozilo says that the problems started with too-easy credit, then he says that the problem was created by housing prices not going up forever, and people hearing about it?

I think he has his tanning bed set too high, it’s fried his brain.

 
Comment by are they crazy
2007-10-30 19:48:15

This is hilarious and really snarky - the hedge fund big boys.
http://www.tiny.cc/pmHrr

 
Comment by Home_a_Loan
2007-10-30 19:53:04

Wow. 100 G’s on a candle store. Nice. That’s going to take a lot of candlestick sales to pay for. Like 100k candlesticks. That, before paying for the rent, utilities, candlewax delivery guy, etc.

 
Comment by UnRealtor
2007-10-30 20:31:31

Banks don’t get involved in selling homes willingly, and those that own foreclosed properties want to quickly move them off the books, experts say.

That’s not what I’m seeing. An REO property that needes a ton of work has been on the market for months at “full retail” price, and it was made clear the bank wants close to asking.

It’s been on the market for many, many months…

Great house, but still far too expensive.

It’s position in the marketplace and current inventory is: “delusional seller.”

Comment by uvaman
2007-10-30 22:39:38

I agree, I tried for one, slightly less than 50% of bank’s dream price… bear in mind this house while structurally sound the inside is gutted (I do mean gutted, as in no viable floors, no kitchen, and ruinous bathrooms) forget it I got a counter of 5k less from the 299k dream price… hey they can keep it on their books along with the 5k/yr taxes, and possibly some insurance (I think they need one for lookers) and slight maintenance (for the yard and such)

 
Comment by joeyinCalif
2007-10-31 00:25:05

banks are pure number crunchers.. they really don’t know squat about selling, buying, pricing, maintenance, managment… They do not want to own houses or to learn anyting about them. It’s not their line of work.

As far as them being just another delusional seller with wishing prices, I’d chalk it up to their inexperience.
This resistance will change to willingness as soon as the numbers tell them to dump properties. Banks have no illusions or feelings or emotions about property.. all they see is the color of the ink.

 
 
Comment by jbunniii
2007-10-30 20:50:50

Now, she and her husband are buying a 2,700-square-foot house in Patterson for $329,000. She said her real estate agent told her that a few years ago the home was worth $600,000, because it’s a former model home with several upgrades. ‘We’re definitely getting a home for a good price.’

I had to Google Patterson, CA. It’s in the middle of nowhere in the Central Valley. That $329k would have bought a house in the Bay Area prior to the bubble, and will likely do so again within a few years. So no, I don’t think they got a good home for the price.

Comment by joeyinCalif
2007-10-31 00:16:32

it’s a very nice little town.. It is in the middle of nowhere but not too far from somewhere.
i first went there about 20 years ago.. lots of land, lots of trees and orchards .. large houses spread far apart.. No industry to speak of although there’s the usual almonds, grapes walnuts and stuff.
I’d call it “upscale” in terms of cities like Turlock, Modesto, Tracy and Manteca.. but Patterson is still definately small potatoes.

Being adjacent to Highway 5, it’s well positioned as a near bedroom community for the Central Valley towns, and lately as a distant one to Sacramento Metro and SF bay area.

even so, when i checked prices last year i knew it was way bubbly… waaay overpriced.. still got my eye on it though..

 
 
Comment by stanleyjohnson
2007-10-30 21:32:19

Henry Gabriel Cisneros (born June 11, 1947) is an American politician, businessman, and community leader. He was the first person of Hispanic background elected as mayor of a large American city, and later served as the 10th U.S. Secretary of Housing and Urban Development from 1993 to 1997. He left public office as a result of the Henry Cisneros payments controversy, after pleading guilty to making false statements to federal officials. He is currently Executive Chairman to CityView an investment company that finances homebuilders with over 6,000 homes in its investment portfolio.
CISNEROS HENRY G
Director

Director of what you ask?

CISNEROS HENRY G: Declared Holdings
Company/Relationship Reported Shares Ownership
COUNTRYWIDE FNL CP
Director
NYSE:CFC
(historical quotes, profile, SEC, other insiders) 30-May-07 25,337 Direct
LIVE NATION, INC.
Director
NYSE:LYV
(historical quotes, profile, other insiders)

Can you say Hello?

 
Comment by Housing Wizard
2007-10-30 21:38:26

You know when Florida or Arizona went up in housing prices by 39 or 40% in 2005 ,that should of been a red flag that the market was haywire . They knew that speculators accounted for about 40% of the purchases .I think that in the future lenders are going to have to determine normal inflation rates ,and require greater down payments in any areas that inflates to fast .

 
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