Getting Accustomed To Life In Slump Times In California
The Voice of San Diego reports from California. “With sales rates withering, price reductions multiplying and foreclosures mounting, the region’s housing market is getting accustomed to life in slump times. Prices for standalone resale homes in San Diego County logged an 8.3 percent drop over the year ending in August, according to the) Case-Shiller home price index. For new detached homes, the price per square foot was $262 compared to $282 a year previous, marking a 7 percent decline, according to Peter Dennehy of the Sullivan Group Real Estate Advisors.”
“‘Price per square foot has gone down pretty consistently,’ Dennehy said. ‘That doesn’t include any incentives, and they’re pretty rife in the market.’”
“‘The issue is whether the real estate market and the economy will digest these over the next year or two, or if housing market distress will bring the economy to its knees,’ said DataQuick’s often upbeat president, Marshall Prentice, in the group’s report.”
“‘Right now, most California neighborhoods do not have much of a foreclosure problem. But where there is a problem, it’s getting nasty,’ Prentice said.”
The Union Tribune. “San Diego County’s mushrooming number of foreclosures is starting to hobble homeowners associations large and small as cash-strapped owners cease paying their monthly dues.”
“Even worse, associations are facing the prospect of raising dues or levying special assessments to make up for the unpaid fees.”
“Especially vulnerable are smaller condo-conversion projects and developments in more affordable areas, such as eastern Chula Vista. ‘The problem is everyone in our association is being affected, and as we look at services we can cut, it’s going to impact our property values…We will most likely need to raise the dues for everyone to make up for the dues not being paid, so every homeowner will suffer for this’ said Jennifer Zornow, board president at a 104-unit condominium conversion project in City Heights.”
“Over the past several months, more than 20 owners there have not paid their monthly dues of $245, amounting to roughly $20,000 in lost revenue, Zornow said.”
“Attorney Jon Epsten, whose San Diego firm Epsten Grinnell (said) his firm is handling about 3,000 collections related to unpaid monthly fees, most of those in San Diego County. That’s three times more than a year ago, he noted.”
“‘It’s kind of devastating,’ Epsten said. ‘Our only remedy once the lender forecloses is to pursue the matter in small-claims court, which is often futile because the owners are nearing bankruptcy and have pulled every cent they can out of every equity source.’”
“‘I’m more nervous than I ever had been,’ said CityFront Terrace community manager Barbara Wilkinson. ‘because it used to be that the owners would talk to the board about a payment plan. But now they’re in a position where they can’t do a payment plan, so it appears it’s going south very quickly.’”
“For a small condominium complex in Imperial Beach…two of the seven homeowners have defaulted on their monthly dues of $170, said resident Mark East, a former board president. ‘The building needs to be painted, and it still has the original roof, and our checking and savings accounts are down very low,’ said East.”
“‘The association has never been in the disarray it is now, and if we want to rent or sell these units, no way will that happen,’ East said. ‘We’re all stuck in a quagmire.’”
The North County Times. “Troubles in the housing market may have scared away a developer who was planning to build Sycamore Creek Estates, a high-profile housing project on a piece of overgrown city-owned land in central Vista, city officials said this week.”
“In early October, Newport Beach-Based Pelican Properties decided not to move forward with a residential-retail project on city-owned land downtown. At that time, Pelican partner Dick Hamm said the company could have potentially made the project work in 2010, but that the sliding market made it difficult to move forward before that.”
“‘The risk is just way too high,’ Hamm said.”
The Daily Bulletin. “Affordability, mortgage gridlock and good old-fashioned reluctance on the part of buyers are the factors wreaking havoc with (Inland Empire housing) demand. The mortgage market is the biggest of the problems.”
“‘Almost all loans in California are either subprime or jumbo,’ said Steve Johnson, director of the Metrostudy’s Southern California division, ‘This source of funding either has disappeared or requirements for borrowers have changed.’”
“‘Early estimates indicate that at least 40 percent of the market used subprime or Alt-A financing,’ he said. ‘The potential for a greater number of foreclosures in the Inland Empire is significant.’”
“According to DataQuick, there were 14,755 homes listed as under construction, completed yet vacant or model homes at the end of the third quarter. That’s an 8.6-month supply of inventory on the market, and rising foreclosure numbers only exacerbate the problem.”
“‘The sheer size of the new home industry reflects a tremendous capacity that has been developed over the past five years and now must be scaled back,’ Johnson said.”
The Press Enterprise. “The housing market’s distress is reflected in soaring foreclosure activity, with a 250 percent increase reported in the Inland area in the third quarter over the same period in 2006.”
“Economists and housing experts said the (Federal Reserve’s) quarter-point cut, following a half-point cut in September, won’t be enough to revive the Inland housing market.”
“‘As recently as a couple of months ago, the Fed said they didn’t think (housing) was a problem,’ Inland economist John Husing said.”
“Chapman University economist Esmael Adibi said…many existing homeowners will no longer qualify to refinance at a better rate under tighter underwriting standards that lenders have adopted. He also said as home values continue to drop, it will be increasingly difficult for homes to appraise high enough to refinance.”
“Adibi said he expects the depressed housing market to be ‘a huge drag,’ slowing job growth and spending, ‘especially in Southern California, because we disproportionately benefited from a robust housing market and now the bust hurts us more.’”
“John Marcell, immediate past president of the California Association of Mortgage Brokers, believes the biggest obstacle is the rising foreclosure rate. ‘When investors are sitting on billions of dollars of loans that are not performing, they are not too anxious to jump back into the market and get beat up again,’ Marcell said.”
The Modesto Bee. “Whoever takes the open Modesto City Council seats up for grabs in Tuesday’s election won’t be labeled a developer’s puppet. For the most part, builders are staying on the sidelines for this election, campaign finance records show.”
“‘The presence of developers never goes away,’ said attorney Robert Farrace. ‘The thing right now is, the growth issue is less of an issue because the market is in the tank.’”
The Record Searchlight. “Homes lost to foreclosure in Shasta County increased 562 percent — from 37 to 245 — in the first three quarters of 2007 from a year ago, county records show.”
“The spike in foreclosure activity has been blamed on the meltdown of the subprime mortgage market. ‘When these loans reset, they can go to 10 or 12 percent, so their payments can go up at least 50 percent,’ said Karen Johnston of Eagle Home Mortgage in Redding.”
“Homes lost to foreclosure are reflected in recorded trustees deeds. In Shasta County, the 245 trustees deed recorded through September of this year was the most since 2000, when there were 284, the Shasta County recorder’s office reported.”
“In 1998, 314 trustees deeds were documented from January through September in Shasta County, the most for any year between 1990 and 2007.”
“What sets the current foreclosure spike apart from other years is the sharp increase in activity. Numbers peaked in 1998 after five years of steady increases, starting with 169 homes lost to foreclosure in Shasta County in 1994.”
“Homes lost to foreclosure bottomed out at 19 in 2005 — the height of the housing market.”
“Mike Van Bockern conducts public foreclosure auctions in Shasta County. Notices announcing those auctions through October have jumped 136 percent from a year ago — 273 to 645, Van Bockern said.”
“‘I think it’s a typical down cycle, but I think it’s relative to the last up cycle,’ Van Bockern said of the market. ‘Houses appreciated much faster, so just the opposite is going to happen. It will cut farther and deeper.’”
This was posted earlier in the comments, from 2005:
‘OAKLAND, Calif. - Rachael Herron’s new condo will assure her financial salvation - unless it provokes her ruin. Herron put no money down for her tidy one-bedroom, borrowing the entire purchase price of $211,000. To keep her monthly payments as low as possible, she got an adjustable-rate mortgage that won’t require her to pay any principal for three years.’
‘Thanks to her ‘interest-only’ loan, the 911 police dispatcher was able to afford, barely, her first home. She now has a stake in California’s sizzling real estate market. As her home increases in value, she plans to use some of that equity to pay down her credit cards.’
‘But Herron is also setting herself up for a day of reckoning: Nov. 1, 2007.’
‘That’s when she has to start paying off her loan principal. If interest rates are higher than when she bought her home last fall - something many economists consider probable if not inevitable - her monthly payment will increase by as much as a third.’
‘I don’t know what I’ll do,’ said Herron. ‘I’m already working overtime to pay my bills.’
walk away, no RUN…
this shitstorm is just getting underway.
Jenny: “Run, Forrest. RUN”
Coach Bear Bryant: “He must be the stupidest son-of-a-bitch alive… but he sure is fast.”
LMAO!! Nice one
‘I don’t know what I’ll do,’ said Herron. ‘I’m already working overtime to pay my bills.’
I wonder how many FB’s had this same attitude when they took out their ARM mortgage. Reset in 3 years? 5 years? That was way down the road, and they’d be rich with equity by then, wage increases, etc. Whatever.
100% sure she is handing over those keys…
I thought police dispatchers qualified for special loans (like teachers). Did she forego the benefit offered by her employer in order to take advantage of a suicide loan? Tragic.
I remember reading that article way been when. Wonder what her plans are now? She probably figured, like most, that it would all just somehow ” work out ok “.
I’ve learned the hard way many times over to not leave my future completely in the control of others, but rather try to increase my odds of success by doing everything possible to play an active role in my own destiny. After all, who cares more about yerself than you? And I always have a plan B …and C .. and D.
Old Latin Motto ; Luck Favors the Prepared.
“I thought police dispatchers qualified for special loans (like teachers).”
My teachers’ union gets me special loans… with Countrywide. Oh, baby, oh, baby, sign me up.
Dispatchers aren’t eligible for the special loans. They are only for “sworn” employees, ie; police officers. Dispatchers are “non-sworn.”
Signed, a California 911 Dispatcher
OMG, you have to read this. Note author.
http://tinyurl.com/34kh6n
Umm..I definitely missing it… What’s up with the author/story other than a melodramatic beginning to a romance novel?
The author is the subject of the article Ben quotes above, and her character is waxing dreamily about her new house…that belongs to someone else. It just doesn’t get more ironic than that.
Thanks for the clue! I totally missed it (obviously)!! ;
Comment by Jimmy Jazz
2007-11-01 15:40:40
OMG, you have to read this. Note author.
That is pretty funny…..Anyone here want to take advantage of the comments section below and ask her how that new condo is working out…?
Did it.
“Did it.”
ROTFL
Got popcorn?
Neil
Rough crowd.
Her thoughts will most likely be:
A. “Damn, those internets!”
B. “Holy sh!t, this is creepy. How do they know this?”
C. “Holy sh!t, it resets this month?!”
D. All of the above.
‘The folks over at the housing bubble blog wanted to give you a shout out and wish you well on your resetting ARM. We all REALLY enjoyed your story. Keep up the good work!’
That clown photo is scary with that comment. Kinda John Wayne Gacy.
Was I the only F’d buyer in 1990 who sold for a loss later in the 1990s in the last bubble? Stories like this about people who never learn from past bubbles really bother me. In 15 years this current bubble will be forgotten and a new series of FBs will be caught. But it seems this bubble is many times worse than the RE bubble of late 1980s. I lost only 20%, did not foreclose, and brought money to the table, keeping my credit intact. Rented ever since 1996. Many FBs in today’s market will be fence sitters in the next bubble in 15 years.
Reminds me of the song “Where have all the cowboys gone.”
So poorly written I could hardly read it. Gave up after the 4th paragraph or so. I’m sure she’ll have a romance with her condo, though. So near, yet so far, the heaving in her chest, the sweating palms, her dreams, like ashes, cease to exist.
You made it to the 4th paragraph? Very impressive.
I think Herron’s novel is good material for the Bulwer Lytton Fiction writing contest.
http://www.bulwer-lytton.com/
“It was a dark and stormy night…”
This statement is high comedy. Let’s see, how many of these lines have no chance in hell of being true? Here is a list:
Rachael Herron’s new condo will assure her financial salvation: Not!
Thanks to her ‘interest-only’ loan. Not!
She now has a stake in California’s sizzling real estate market. Not!
As her home increases in value. Not!
But Herron is also setting herself up for a day of reckoning (Happened already, she just does not know it).
If interest rates are higher than when she bought her home last fall: I’m quite sure the payment will be considerably higher once you factor in that she has a INTEREST ONLY loan and probably a teaser rate to boot.
“a stake in California’s sizzling real estate market”
Yeah like a hot potato when she can’t sell the condo with negative equity and high debt at the start of winter in a down market with lenders who won’t work with her. (I love run-on sentences)
Poor Rachel…she should have got into the romance novel competition earlier in the year. Then maybe should could have got her big book break to help her afford the higher payments. This is her web site.
It’s the FB’s who are sizzling in the frying pan
Call 911 for help
earlier…didn’t she get married?
And?
Is there a follow-up?
Confused.
Leigh
Poor Rachael also has a knitting blog. I’m no regular, but when the condo purchase posts went up I started to worry about her. But a recent story about her lost cat taking 4 months to walk home made my day, in a heartwarming kind of way.
if the bank foreclose on her property, she can always dispatch more cops to the bank
assuming the bank is local
She now has a stake in California’s Fizzling real estate market
I feel so fortunate that I just closed escrow on my home today in Orange County. I’m taking my 10 years of nicely saved equity and high tailing it out of CA. I’ll rent for the next few years and see what the market does. I feel such relief that I don’t have to watch my house go down 40 to 50% in value and cry over spilt milk
congrats man. Like winning the lottery… and having enough sense to cash in the winning ticket instead of buying 500,000 more is priceless.
I feel like I won the lottery!
[Forrest Gump referring to Apple Computer]
Forrest Gump: “Lieutenant Dan got me invested in some kind of fruit company. So then I got a call from him, saying we don’t have to worry about money no more. And I said, that’s good! One less thing.”
where r you going if out of the oc?
Destin, FL (The land of the Emerald Coast)
holy cow! You will be able to retire w/the chg in pricing!
Be careful. I’ve been watching Destin homes and condos slide too. Take your time and wait until after the fallout.
Congrats on the sale and the move!
Does anyone have info/data on the Destin/Ft. Walton Area in regards to the housing?
Congrats! I didn’t really feel okay until the check had cleared the bank. (Although mine was for much smaller amounts than I’m sure you sold for in OC.)
Got my cleared (wired) funds this morning. I’m a happy camper!
Great news, congrats. Folks next door to me are supposed to close on the sale of their condo tomorrow. They slashed the price of their place, I’m sure some of the owners here will not be too happy with that, as a new low will be set in the comps. One sale fell through due to financing not going through, supposedly this other buyer has their financing all set. Of course, it ain’t over til the fat lady sings, and the fat lady is the closing, which is supposed to take place in a couple days. We’ll see.
Hi OC!
Best to you!
Congrats…:)
Congratulations! Now you get to change your name to LeftTheOC.
Congratulations, I left the OC at the first of this month to move to Highlands Ranch, CO and we couldn’t be happier.
We bought a home for the cost of rent here at a fraction of the cost of rent in the OC.
Our cost of living is lower, we are happier. We love OC, but the prices are just too crazy to support a good quality of life for my family.
I encourage anyone who cares about quality of life to leave CA. Trust me, though CA is nice, there are PLENTY of other good places in this very BIG country that you could find good paying work and a MUCH lower cost of living.
You mean there are nice places to live that are not on the coasts? Impossible!!!
great idea! that will be my new handle “left the OC”
How about “OOTOC” - out of the OC, or “OC2CO” - from the OC to Colorado?
Congratulations!!! I closed in May and moved to a small town out of Calif and am really enjoying the lifestyle. It is really interesting to read and follow the stories of life in the fast lane in the OC. I was in the RE biz in SoCal for 25 years and haven’t missed a thing about the industry or the area. Hang on until the 8 second buzzer because it will be a wild ride.
An update from my socal local. Median wishing prices in the 93552 are now off 13.2% from peak of 425K on 12/12/05. We are now showing a current wishing price of 369K, only 60K above last month sales median of 310K.
Stubborn sellers are starting to come unstuck and will soon crumble like cookies.
What’s pathetic is when I cruise Craigslist for the Tampa area and see wishing prices in Florida as high as Cali prices. At least Cali has a prayer of getting high prices in some areas, there is NOWHERE in Florida where prices have any excuse to be like Cali, unless MAYBE Palm Beach proper. But certainly not in the Tampa Bay area.
“In 1998, 314 trustees deeds were documented from January through September in Shasta County, the most for any year between 1990 and 2007.”
So we’re already at or beating foreclosure records. Guess what? My numbers indicate we are just getting started. That number will double or triple by this time next year.
Got cash?
“San Diego County’s mushrooming number of foreclosures is starting to hobble homeowners associations large and small as cash-strapped owners cease paying their monthly dues.”
“Even worse, associations are facing the prospect of raising dues or levying special assessments to make up for the unpaid fees.”
There ya go, I was waiting to hear these stories. Condos and HOAs are going to suck big time, as the more responsible and solvent owners pay for the sins of the deadbeats. I don’t know how it is in CA, but in Florida, banks don’t have to pay the back dues of the owners they foreclosed on, nor do they have to pay any dues while they’re holding the property in foreclosure, nor can the HOA attach back dues as a lien on the property to be satisfied prior to the foreclosure sale. At least, that’s how the HOA documents were drawn in the one HOA in which I resided years ago. Here’s another major consequence of the bubble and the bust, the burden that gets placed on homeowners who do pay their dues and act responsibly. For this reason alone I wouldn’t buy in an HOA that was created after 2000. I’m sure someone will write all about how their HOA is fine and they’ve never had any trouble and everyone’s responsible, blah, blah, blah. But I’ll bet that’s the exception, not the rule and even without the bubble, this sort of thing happened. I’m sure it is far worse now.
I agree that this is going to be one of the ugly legacies of this fiasco. All those pretty green spaces, clubs, tennis courts, pools, bike paths, ect. take money to maintain, and as the condo associations and HOAs go broke, all those things will fall into disrepair. The more built in ammenities, the worse the crisis will be.
Can a condo association even declare bankruptcy?
You will not even be able to give away condos if the association does not have an adequate reserve fund.
Weren’t there $10K condos around Denver and Phoenix during the RTC auctions? Considering assessments, property taxes and difficulty of selling, a lot of condos could end up with negative fair values.
I never understood how the HOA fees were justified. I asked one developer to show me the budget of the HOA. The developers answer (and they have the accurate facts) 30% for the maintanence work, 70% for the HOA management fees.
I don’t think missing a few HOA fees will hurt the condo properties, I think it will force the fat as s HOA managers to find real work.
The HOA budget was for a single house community (not condo).
There was not much for the HOA to spend money on, yet they wanted $200/month in HOA fees.
No insurance costs
Almost No utility costs
No pool or park
The only thing to maintain was the front entrance, a few lights, and a few flowers.
“I don’t think missing a few HOA fees will hurt the condo properties, I think it will force the fat as s HOA managers to find real work.”
The residents on the board where I lived did the managing. I had my time in the barrel on that one. It sucked. Actually, the residents didn’t bother me, they just wanted someone to do the work for them and I began to feel like an unpaid servant for a lot of mouth-breathers who didn’t give a rat’s patootie if their guests tore up the place. “The Board” would fix it. I kept the bills paid and the place up to snuff, but after a while it took too much time from my work, for nothing. My only mistake was not selling while I was still on the board. After we (the board) stepped down, the mouthbreathers took over and fees skyrocketed, because of really stupid stuff like handing out deposits to deadbeat contractors who took the money and ran and never showed up to do the work, LOL! Always keep those guys on a short leash, or you’ll never see them once the get a substantial deposit.
The HOA was a semi-detached villa community, not a condo. We had a small pool, landscaping, lights, interior roadway and parking spaces, electronically gated entry, not a whole lot, but even so, things popped up like problems with trash pick up, animal control for racoons and feral cats, stuff like that. Plus we had to carry HOA insurance. Maybe we should have a weekend topic thread on HOAs and Condo associations.
Massachusetts is the only state I know of in which the HOAs have “super leins”. In IL the HOA gets in line with all the other leinholders… meaning that in this market they get nothing.
Wonder how long it will be before new HOAs start writing the bylaws and covenants to require new buyers pay X many months worth of association fees as a “security deposit”.
Kim, in a way, that’s a good idea, if the HOA is concerned about fees. It would certainly weed out deadbeats. But it might make the property less saleable. If I wanted to sell, I certainly wouldn’t vote for it. But if I wanted to stay, I probably would.
The above reasons are why lots of coops, esp. exsensive one permit only 50% financing, sometimes cash sale only. Sometimes X times the apartment price in liquid assests.
And it’s important to realize that it’s not just condos! In Florida, especially, it’s hard to buy a single family detached home that’s not under an HOA.
–
And all this while the economy is supposedly not in a recession and the employment and incomes are holding up well. God forbid we find out that the economy has entered a recession. Tomorrow’s Employment Report might get a lot of play by both sides.
Jas
Whoever wants to meet at Chevy’s in Redwood City on November 17th at 6:00 PM for an HBB party, please RSVP here.
Address: 2907 El Camino Real
Perfect. Carnitas for me at Chevy’s…
Awesome.
“‘I think it’s a typical down cycle, but I think it’s relative to the last up cycle,’ Van Bockern said of the market. ‘Houses appreciated much faster, so just the opposite is going to happen. It will cut farther and deeper.’”
It is really nice to see these kind of articles in far Northern California. Unfortunately, along the far northern California coast, the two local newspapers, The Eureka Times-Standard and the Eureka Reporter, are so enslaved to the Real Estate community for advertising that they will not allow any negative press about the real estate bubble.
A few weeks ago, an article appeared in the Reporter from Realtors stating that there is no housing bubble and while prices may go down 50% in Redding or Sacramento or San Francisco, it will never happen in Eureka because “everyone wants to live here.”
So far, they’re right in one respect: the modest 5% decline in median home prices is far lower than the rest of the state, and even to this day, I see increases in asking prices for properties that have been sitting for a long time on the MLS (inflation maybe?). Anyway, I sent in a response to the article essentially stating that the old excuses, such as “they’re not making any more land”, “everyone wants to live here,” et al, is exactly what people said in Sacramento and San Diego, and those places actually have jobs, and look at them now.
I really want to see all the public smugness in the real estate community on the North Coast go into the toilet.
Oh, and another thing about the “everyone wants to live here” myth, we have had highs only in the lower 50s the last five days and today is the first day we’ve even seen a slight peek of the sun. I really can’t imagine everyone wants to live HERE!
Then get the heck out of there.
Wait…up here in the bay area, they say everyone wants to live HERE. Now, I’m not a physicist, but we can’t all be in two places at once, right?
Well, according to the theory of quantum mechanics that I saw on PBS, it is quite possible.
Wormhole maybe?
Buy now and you will take one right in the wormhole.
LMFAO
One of newton’s laws is that action on one object will provide and equal and opposite reaction on the next. The market is like a very stretch out spring, ready to pop back into place. Sorry, I’m an Engineer.
Newton LOST his ASS in the South Sea Company Bubble(approx 20,000 Pounds=$2M todays dollars)
An expert in Physics, Math, Astrology ect., and an ANOTHER idiot in Financial Research HOMEWORK
“I can calculate the movement of the stars, but not the madness of men.”
Sounds like silly string theories.
Economists like to pretend they can calculate the madness of men.
“‘I think it’s a typical down cycle, but I think it’s relative to the last up cycle,’ Van Bockern said of the market. ‘Houses appreciated much faster, so just the opposite is going to happen. It will cut farther and deeper.’”
So in other words, Van Bockern thinks it’s an atypical down cycle? REIC propaganda makes my head spin around 360 degrees and my eyeballs roll back so only the whites are showing.
“Especially vulnerable are smaller condo-conversion projects and developments in more affordable areas, such as eastern Chula Vista.”
Look! It’s more housing-market miniaturization (microzation?). Since when has “eastern Chula Vista” been considered an area of its own? Chula Juana is Chula Juana, no matter which side of town you’re on.
I also like the marriage of “smaller condo conversions” to “devlopments”, as if those two were closely related.
Ramones ex-manager, stars’ realtor murdered, police say
http://www.cnn.com/2007/SHOWBIZ/11/01/stein.obit/index.html
That is one of the ugliest guys I’ve ever seen.
Update on the California central coast…we’ve moved into a bigger rental for the same monthly price. We heard last night that there had been an all cash offer for the house in the high $700,000s last year, but the owner didn’t accept it (holding out for more?) Just before we started renting, the house was listed for the high $600,000s, and was getting offers in the low to mid $600,000s. Now the owner is renting to us (with a 1 year lease), with the hopes of getting more when “the market returns”.
I didn’t have the heart to show him the ARM reset chart…
Do you have the ARM reset chart? I’ve been looking for it!
Go to the source:
“Mortgage Liquidity du Jour: Underestimated No More”
Credit Suisse
Zelman, McGill, Spear, Ratner
http://tinyurl.com/39ws2e
Page 47
As an update, 3 of the 4 authors of that report (Ivy Zelman, Dennis McGill, and Alan Ratner) are now at Ivy Zelman’s new company:
Zelman and Associates
http://www.zelmanassociates.com/team.aspx
Here’s the entire paper including the chart:
http://www.billcara.com/CS%20Mar%2012%202007%20Mortgage%20and%20Housing.pdf
I didn’t read the entire paper, but I saved it to my hard drive. The two things that stood out the most to me (upon quick glance) were:
1. As I suspected, there were MORE neg-am loans given out in the Alt-A category than in the subprime category
2. “Prime” loans can still be no-doc and neg-am. About 1.5 years ago on this blog, it was explained that prime is full-doc and full-am. Apparently, underwriting standards have been so completely blurred that we can’t even tell what’s prime and what’s not any more.
Thanks! I added that .pdf to my bubble article collection.
The chart’s take home message: The second tsunami wave of ARM resets does not peak until month 44 after January 1, 2007. 36 months out is January 1, 2010, and 44 months (eight months later) is thus September 1, 2010. The second wave does not die out until 60 months past January 1, 2007, which is five years, or January 1, 2012.
So I guess the housing market will come back after the Souper Bowl, in the year 2012?
According to the Mians We won’t be here to see the recovery.
But we have until December 2012 according to the Mayans so some will jump back in just in time to lose it all when the world comes to an end. So sayeth the X-Files.
Prime, sub-prime, and alt-A relate essentially to the credit history of the borrower, typically as measured by a credit score. These terms have little or nothing to do with loan terms, down payment, borrower’s ability to service the debt, and the borrower’s capital (liquid assets).
Prime loan means one thing and one thing only - it is made at a prime rate. Nothing else.
Congrats, arroyogrande! We renewed our lease this year with no rent increase. At this point, our rent is actually lower than it was in 2003 for the same amount of space (and only about 10% higher than it was in 1997). I have seen asking rents go up quite a bit on Craigslist, but in our personal renting experience, rents have increased quite minimally in the past decade (and have gone down a little for us in the past 4 years). I’m glad to see some confirmation of this in the experiences of others.
“Early estimates indicate that at least 40 percent of the market used subprime or Alt-A financing,’ he said. ‘The potential for a greater number of foreclosures in the Inland Empire is significant”
Only significant, if you consider that 40% will go into foreclosure, 58% will walk and 2% will die. The IE can go back to being a beautiful desert.
LOL!
Beautiful? You mean like Bryce, Moab, Monument Valley? I don’t think so! If god were to give the planet an enema he’d be pluggin’ the hose into the IE.
Hey ex-nnvmtgbrkr,
Do Joshua trees thrive in desert country?
A Mojave standard.
yes, but only at certain elevations, actually Joshua trees only grow in a few places on earth and at elevations from about 3000ft-5000ft. That’s it, no more no less. Also, they grow in the mojave and in parts of Israel.
“Do Joshua trees thrive in desert country? ”
Evidently there are numerous references to Joshua Trees on this blog made in a humourous light.
No problem!
Just want to add my bit on this blog to the growing lore of the Joshsua tree. There are really stately examples of Joshua trees/even JT forests, located in you guessed it, Joshua Tree National park. They seem to thrive well at alitudes of 3000-5000 ft, which is classic CA sagebrush hi-desert country with JT’s, pinion pine, assorted cactus,octotillo,and even willows in the dry washes which results in some really cool desert ‘forests’.
Now to throw darts against the idiot desert HB’ers:
The CA deserts are screaming at the lunatic builders trashing the lovely desertscapes with their crappy cheap developments. The deserts will take their revenge as the desert builders and FB’ers go broke, flee and the shoddy developments revert to windblown tumbleweed shantytowns.
From a former eco-nut and desert rat!
I’m curious what you think about moving to California… It would probably be advantageous for my wife’s career she transferred to either LA or SF - she’d be closer to her clients and she has at least 6 or 7 years of work guaranteed. As far as my career goes - well, it wouldn’t really be affected so much.
We’d rent (of course), but my real concern is whether it is worth moving there in this economic climate. I mean, we’d have jobs and money, but would there be a meltdown around us that would make it miserable?
I figure a California thread is the best place to ask this…
If you have always dreamt of living in California, what are you waiting for? You have to ask yourself, “Is this move taking me closer to my goals and dreams?” Trust your gut feelings. Then start packing… If it doesn’t work out, you can always move back to Chicago. What’s the worst that can happen? Can you live with that?
Focus on what will make you happy. Live, laugh, love…
Well the biggest thing that I have seen in recent years is the rise in crime. There has been a big impact to because of immigration as well.
I don’t think a full meltdown has occurred yet in SF or LA proper, only in the outskirts. But it’s seeping in. Come out and visit for a weekend and kick the tires. Although anecdotally, some locals here tend to daydream about Chicago, where the cost of living is 1/3 of San Francisco and you get a real city with public transportation and city government that actually works. Grass is always greener, I guess. Although the weather differential may justfy part of the huge price discrepancy…
If you and the wife will make less than 150k per year you might as well stay in Chicago…because your quality of life will probably go down not up. $150k per year and you can really enjoy the benefits of living in L.A. other than that you’ll be slugging through the trenches.
Yeah, I’ll second that. An “entry-level” place in San Francisco, which I define as a 900 sq. ft. 2-bedroom condo/apartment, currently rents for $2,500 - 3,000 per month depending on neighborhood and sells for $700K to $900K. Unless your wife is getting a 70% raise for moving out here, your standard of living will likely go down.
I am above that and by no means do I feel like I am ‘enjoying’ LA. At 150, without stretching TOO much, your 600K condo (forget about a house) is none too spectacular. Prices have to go back to 2001 to make is reasonable to live here on that income.
Love this statement a quaility of life in Chicago go to the big city to visit realtives and friends all want to get out to warm climates but they can’t?
Lets see two police chiefs have been arrested for being crooked in the last 3 months, taxes on homes for bunglow dwellings nothing lavish believe me thru the roof, had two black guys throw a orange at our car stop to talk to cop and he said sorry you were in their neighborhood?
Toll roads everywhere and lousy roads, nothing but pot holes, throw in lousy weather most of the year along with a polluted Lake Michigan and you can throw quality of life out the window>>>
California? You might as well go ahead and buy the wife fake boobs now (and no, it doesn’t matter if she already has a nice rack.)
Aw, geez, what a cynic, LOL! I haven’t been to Cali since the late 1990s, as a Floridian, the people seemed a whole lot less cranky and a lot more friendly than here, people get cranky in FLA because of the humidity. I also liked the ocean around the Carlsbad area, more fun that FLA.
CA is a big state with a very poorly run government. It’s impossible to provide a simple answer.
The taxes are high, the state is in debt, laws/restrictions cover every pimple, and the property tax system is broken (it provides a sweetheart deal to long-time owners). It is, however, home to decent weather and lots of unique/high-tech jobs. That’s the reason why I moved back here…
Every 10 years or so the economy goes down and bubbles back. Over the last 30-40 years the wealthy/anti-growth/”environmentalists” have strangled the road system and new home development. This is a root cause of the bubble/crash cycle and awful traffic.
The cost of living even when renting is quite high, and decent apartments in big cities easily cost more than a mortgage elsewhere in the country (e.g. 1 br apts for $1,200-$1,500 or more).
The quality of life depends entirely on your own values and which neighborhood you pick. An upscale region near the beach can be quite nice (with HIGH rents) while a dustbowl Inland Empire town with a 1.5 hour commute in gridlock traffic to LA is miserable.
Regarding the housing crash: I don’t expect dramatic changes in the quality of life in established neighborhoods, as they always have minimal home sales. Lots of condos may revert to apartments, which only depresses rents and improves housing overall. I do expect desolation and destruction in new developments, cheaper areas, and *all* the inland regions.
Now Nevada…I expect desolation and destruction everywhere except Lake Tahoe and small parts of the Las Vegas area…
If you’re moving from one big coastal city to another big coastal city, then the differences might not be as noticeable. But I can tell you from my perspective as someone who lived in TN before CA that the quality of life is surprisingly lower here than where I previously came.
For one, jobs that pay what would nationally be considered terrific- as in 100-150k- are more common out here. That said, the amount of income it takes to live here, even as renters is also extremely high. Me and my wife make a dual 6-figure income. Even so, we are nowhere near able to buy even a modest house here, that is unless we wanted to spend most of our income on the mortgage. Rent is considerable cheaper, but still pretty high if you want to live somewhere decent. We pay less( $1,600) because we’ve been renting the same house for 5 years. If we were to rent another in the same area, we’d be being double that. We’d be paying double. Rent for houses at least has gone up quite a bit.
Traffic is outright nasty at times, or at least 50% of the time. Commutes tend to be long. Gas prices are very high. Food is also very high.
In regards to the economy, well the economy is rather volatile. CA does have some spectacular companies that have raked in billions, but at the same time-just like the housing market- industries can implode very quickly. The workforce is fairly disposable as well, which works conveniently for many of the larger corporations who tend to use contracted labor.
Are there good things? Yes. For now, the job market is very good. The food here is fantastic. The weather is great. The economic, political, social, and ethnic diversity is perhaps the best you’ll find.
But this all comes at a price. Just be aware of it. That said, 99%b of the people who seem to migrate here are from the East Coast, which has it’s own similar problems of being overcrowded, overpriced, and in constant rat-race mode. So the differences to you might not even be that noticeable.
The GROUND moves and does the Hoky Poky on occasion…THAT’S also very noticeable
Thank you ALL for the great responses!
I would like to say that Illinois is also a very poorly run state that is heavily in debt. One big difference is that income tax is a flat 3% - everything else is taxed like crazy (we have sales tax at around 10% right now). The state, county, and city all need more money and taxes will be going up, up, up. So I’m not sure California is all that different in this regard.
We’ve got about 6 months to decide what to do so we’re in no hurry. Thanks again for the responses!
These posts are the best arguments I’ve seen yet for moving to Denver.
I moved to the Inland Empire from West Texas in June. While it’s not the height of sophistication (and I’ve never lived anywhere that would be considered the height of sophistication), it’s not as horrible as some might think. My rent is three times what it was in Texas, but I have twice the space and an attached garage. My commute is roughly five minutes longer than it was in Texas, though I live twice as far away. The biggest difference for me has been the option overload: so many places to choose from to do anything such as shopping to seeing movies to hospitals to doctors to airports. There are just so many things to do here that I don’t know if I’ll ever get it all done!
Live as close to work as you can, the commutes here will shave easily ~2 hours off your day even if you don’t live that far away.
“I’m curious what you think about moving to California…”\
Don’t buy a home yet if you do…
I personally don’t care for Chicago. But in CA, if you have a choice, avoid LA, IE, OC, and CV. Better choices would be SB or SD.
Move to San Francisco, not LA. You’ll like it - it’s a great city, as is Chicago. Just get ready for very high rents.
“‘The association has never been in the disarray it is now, and if we want to rent or sell these units, no way will that happen,’ East said. ‘We’re all stuck in a quagmire.’”
—————————————-
Uhhhh… That was the whole reason every new community in San Diego is an HOA. To keep the home values up, right? So if you can’t sell or rent the homes, then no reason to have the HOAs.
It will be a good day when I see the HOAs go the way of the dinosaurs.
“It will be a good day when I see the HOAs go the way of the dinosaurs.”
That might be one good effect of the bust, IMHO. Of course, I’ve always been more fond of the traditional neighborhood “houses on the block” type of development, where you can choose to associate with your neighbors, or not. Keep your own property tidy, etc, but according to your liking. If you want to have a baskeball hoop for the kids, no problem. One lady I spoke to who used to be sort of a HOA watchdog said that local governments love HOAs, because it adds another level of government where they don’t have to deal with internal roadways and lighting in many cases. Personally I think HOAs cause more tension among neighbors, but that’s just the way I’ve seen it. It definitely causes more tension if you know a neighbor isn’t paying his dues and you have to take up the slack.
I wonder if any of those facing foreclosure could get in on this fight
http://bloomberg.com/apps/news?pid=20601109&sid=apYzXCKprHpk&refer=home
“‘As recently as a couple of months ago, the Fed said they didn’t think (housing) was a problem,’ Inland economist John Husing said.”
Ummm. Even today they don’t think it’s their problem to solve. They are in the business of helping their buddies - banks. Since 3 months ago banks did not admit or know what kind of mess they are in, it was not a problem for Fed. Now that banks are in trouble, Fed is trying to help (!) and succeeding in not helping anyone. Housing is not on their agenda. Effect of housing on banks, yes that is on their agenda.
They are also in the business of denying any culpability for the problem.
Ripple Effect —-
“Even worse, associations are facing the prospect of raising dues or levying special assessments to make up for the unpaid fees.”
Hits other owners…. Oh the pain!!!
All these homeowners are facing lower values and cash drain…
wait till the property tax short fall is factored in as property values continue to fall…
Yep! we are looking at the Japan Style decline for some time to come…
I wonder if this will make homes in traditional, non HOA neighborhoods more desirable?
They already were by far. They usually have more land under them and are closer to stores/services/jobs…
“‘Almost all loans in California are either subprime or jumbo,’ said Steve Johnson, director of the Metrostudy’s Southern California division, ‘This source of funding either has disappeared or requirements for borrowers have changed.’”
Ding ding ding, we have a winner! Unfortunately he forgot to replace the “or” with “and”. I’m thrilled the requirements have changed to become stricter and based on fundamentals, am I the only one who thinks this way? Cheap money is (key up the music by Chicago) a hard habit to break.
Premise A: ‘Almost all loans in California are either subprime or jumbo,’
Premise B: ‘This source of funding either has disappeared or requirements for borrowers have changed.’
A and B imply C…
Conclusion C: ‘There are almost no loans being made anymore in California.’
BTW, if almost nobody can get a Jumbo loan anymore in California, then who on earth is buying now at prices north of $417,000? I frankly am puzzled that even the drastically-reduced number of sales reported is still occurring given the credit crunch. Any thoughts?
I don’t think prime borrowers asking for jumbos are getting locked out. Yes, the .75% spread between conforming and jumbo is above historical average, but it is still relatively cheap money. If you have that 20 to 30% down, good credit, and a six figure income, lenders would be pretty hard pressed to turn you down. That is, if the appraisal goes through…
Well, regardless of conforming, jumbo, 20-30% down, super dupper FICO and 6 jolly figues, you OVERPAY for a house on the downside of a BOOM and possible RECESSION and you’re still cruising for a FINANCIAL BRUISING
“If you have that 20 to 30% down, good credit, and a six figure income, lenders would be pretty hard pressed to turn you down.”
30% down on a $1m California middle-management home is $300,000 in savings to sink into your falling knife. Get real — what person who makes that kind of dough would be dumb enough to waste that much savings on a highly-leveraged bad bet at this point in the crash?
Lots of DPs (double meaning intended) north of that number up here in PDX. Equity refugees still coming and they don’t think they’ll lose anything because, of course, Portland is different from whatever they escaped.
Lateral moves with big down payments from sale of former house.
yea like taking your winnings from one casino and losing it to another.
The people who purchased my home in OC for $830K, put $200K down (HELOC money from a condo they own in Irvine), took out a $417K 1st and got a 2nd HELOC for $213K. Buyers caught a falling knife. I sold because of this blog and also believing that the the SOCAL market could come down 30 to 40% from 2007 prices.
It has been great watching the low end of the market on Ziprealty. The banks are cuting 6-8k every month. That is a true test of the market!
–
Wait until…
Chrismas Sale
Valentine Day’s Sale
Memorial Day Sale
4th Of July Sale
…
Non-stop fun and sales.
Jas
Looks like it’s a case of:
We want $600,000.
No takers.
Okay, how about $594,000.
No takers.
Mmmm. I’m shocked. How about $588,000. After all, the bottom is in.
No takers.
Anyone interest at $580,000? Wow. It’s a steal at $580,000. This property would have sold for $750,000 in 2005. It’s has granite kitchen counter tops and a stainless steel double fridge.
No takers.
What about $574,000? That’s our rock bottom price.
No takers.
Okay. Let’s get some action going! Make an offer?! Now is a good time to buy. Mortgage rates are still low. Prices can only go up from here.
Yawn. Wake me up when they are ready to take $350,000 and the bank eats the closing costs.
when they were 350 (on the way up), it still made way more sense to rent.
This is a hybrid mixture of the Dutch auction with Chinese water torture. What is a suitable moniker: Chinese torture auction?
to quote The Simpsons, an Italian-American Mexican standoff
Realistically, they would have stopped at $588K.
“We’re not just going to give it away.”
Intermission: 9 month process while it becomes a REO.
Bank Credit Officer to Realtor, “Price it at what we own it for. If it doesn’t sell in 30 days, cut the price by X%. If it doesn’t sell in 30 more, cut it by 2X% and keep doing that til it’s sold.”
Right now, coastal Cali is still somewhere in the intermission, methinks.
“With 60 percent of the county’s more than 1.1 million housing units covered by some type of homeowners association, and with mortgage defaults continuing to rise at alarming rates, the problem of shrinking revenues is expected to worsen.”
There is yet another good reason for San Diegans who are not home owners to keep throwing away their money on rent.
“With 60 percent of the county’s more than 1.1 million housing units covered by some type of homeowners association…”
What was the total number of homes destroyed in the recent San Diego fires — 1700 or so?
1700 / 1,100,000 X 100% = 0.15 percent. Sorry folks, but an injection of federal money and insurance claims payments to rebuild 0.15 percent of the housing stock will not provide a sufficient boost to the San Diego economy to offset the economic impact of a double-digit percentage drop in the value of the entire housing stock (on the order of $50bn in lost asset value by my crude calculation).
Can anyone comment on Newbury Park (near Thousand Oaks). Houses are about a million bucks that sold for 400K in 2001. I keep expecting to see a dramatic decline but I see only slight reductions if any…. Amgen and Countrypuke are having issues but no apparent real effect.
Not enough subprime or alt-A in this area - and hardly any foreclosures either. Also, most homeowners have put substantial downpayments into these houses after cashing out from the San Fernando Valley and moving west/north. Also no new construction to put downward pressure on home values.
Even if Amgen and CW both went BK, prices would probably hold at these levels indefinitely. Oxnard and Ventura might dip a bit.
Sorry John but you and I sure have opposing views on this one. This area will be a blood bath when rates adjust. I have lived in the area all my life and the only reason any of these houses went to the value they did was because even people that had higher income jobs would qualify for more loan than they could afford. There are idiots at every income level and you will see this area as no different. They higher you go the bigger the fall. No John it is not different here.
” anyone comment on Newbury Park (near Thousand Oaks). Houses are about a million bucks that sold for 400K in 2001. I keep expecting to see a dramatic decline but I see only slight reductions if any…. Amgen and Countrypuke are having issues but no apparent real effect.”
I will attempt a response, though my observations of NP are from 10 years ago when i had a delivery route in that area, as well as 1000 oaks,simi,westlake village. ect. It was and probably still is an upscale area of mainly cozy ranch houses located in nice rural-looking settings with pleasant tree-lined rustic lanes and streets. The schools looked very good and well-laid out. Horse ranches and paths were evident.
It is a very small community, what you call tucked-in, overshadowed by 1000 oaks. There were/probably stlll are, some small but modern hi-tech businesses located off the 101 if you exit going into NP. Classic bedroom leafy suburban community is what NP was and probably still is.
” anyone comment on Newbury Park (near Thousand Oaks).”
Just a follow-up: I do trash La county and the IE a lot and for good reason-they are 90% crapped out and waayoverpriced. The NP, 1000 oaks, westlake village area is one of the very few places in greater LA -ventura coastal basin region which i consider highly livable desirble communities. My obervatons based on 10 years ago-maybe things have changed a bit, especially the local industrail jobs outlook. Back in 1996-97 the 1000 oaks industial area including Amgem was growing and expanding, as well as Westlake V commercial -light indutstail parks. Lots of contruction and rapid expansion.
Counrywide has their flagship corp mega complex in Semi valley near junction of 23 and 118 but close to NP/1000 oaks . That is a hugh mega campus the size of a major university. Any bets on whether They will unload and sell of this huge corp hillside acrege,if they haven’t yet?
I can give you some information. I have a friend who was a school teacher in Thousand Oaks and her sister is a realtor. She said a lot of the people who bought properties in the area are hanging on by their finger nails. Many were yuppie types who jumped on the sub-prime bandwagon. They’ve really been getting busy with their credit cards and treating the homes like ATM’s over the past 5 years but, of course, they game has now gone and it’s pay the piper time. It’s just a matter of time. As for Amgen? They are still laying people off AND moving a lot of their operation out of California. I think CountryWide is being kept afloat by big money for one simple reason. If they go belly up it will send waves of panic through the mortgage and banking industry. I know someone who works at CountryWide and he said they are getting out of the mortgage business and will become a bank. Of course, bear in mind that the “trend” is to do away with independant mortgage brokers and that means you have to go to a bank if you want a mortgage. They already are a bank but not based in California. CountryWide has big problems with a massive amount of foreclosed property on it’s hands but, like I said, the money boys are doing everything they can to manage any damage.
ive been tracking NP for two years since I moved here.
Things are going down fast.
two years ago there were no homes under 500K. Now you will find dozens of homes below 500K
as
ive been tracking NP for two years since I moved here.
Things are going down fast.
two years ago there were no homes under 500K. Now you will find dozens of homes below 500K
as eg 692 hillcrest - below 2004 price
50 meagan pl — first 3 br 2 ba condo below 300k
441 houston dr — SFR below 400k
These are still high. wait till next year. you will get 20% reductions
Nikkei in Japan down over 300 points.
I think it’s funny to hear these people like Kudlow etc say, “The economy is fine.” But then 5 seconds later hear them saying, “The FED needs to cut rates.”
What am I missing here? If the economy is so good, then why does the FED need to keep handing them welfare checks?
Ditto. I can’t understand why the market rallies on the cuts. Isn’t a cut an admission that the economy is in trouble? I realize, of course, that the rally is forward thinking.
Having said that, it appears today’s decline right after the cut indicates investors are seeing the cut in real time for what it is and that it isn’t likely to help moving forward. I think today was a true inflection point.
“San Diego County’s mushrooming number of foreclosures is starting to hobble homeowners associations large and small as cash-strapped owners cease paying their monthly dues.”
“Even worse, associations are facing the prospect of raising dues or levying special assessments to make up for the unpaid fees.”
Damn It feels great to be a BITTER RENTER. HAHAHAHAHAHAHAHAHA!!!!!!!!!!!!!!!
suckers
Hey NAR go to hell.
You are and your ilky realtors constantly trying to tell me 2 years ago to buy or get priced out. HAHAHAHAHHAHAHAHA!
Now you better tell sellers to sell as quickly as possible before prices go lower.
Hey NAR members: Get a new job or stay unemployed forever.
This certainly can’t help.
Chrysler cuts 12,000 jobs now and another 13,000 in January. Ford is likely to follow suit with GM not far behind.
I am starting to feel really bad for Detroit. Talk about a city in the crapper.
“I am starting to feel really bad for Detroit. Talk about a city in the crapper.”
That makes me feel kind of bad, too. I just don’t know how much more that city can take. But I think Michigan as a state has a lot of potential, if you don’t mind the cold winters. It just needs some sort of new industry, it really has a lot to offer, IMHO. Plus you can’t beat the people, I love Michiganders.
Palmetto
I think I posted this the other day. China is having trouble producing enough chopsticks because they are using up all their wood for export products. Seeing as we have a lot of timber in places like Oregon - maybe Michigan can make chopsticks for the Chinese. Let me see…..all of Michigan’s big manufacturing has gone to China and Michigan can get their revenge by making chopsticks. I think it’s called globalization! (Sarcasm off) Pathetic isn’t it?
Feel bad for Michigan, and Detroit, sad, but have you ever looked at their government, oh my gosh. The mayor and city council of Detroit are a complete and corrupt joke. Until you remove the totally corrupt government, Michigan will never recover.
Thanks, Palmetto. I was born and raised in Michigan. I agree with you - once they give up on the car industry, they can recover as other industrial cities have done. I just got back from spending a week with my mom, who is losing her Ford Motor Company health insurance. Ford is switching all medicare retirees to medical savings accounts, and we’re trying to figure out the new system.
Motor city sadness.
Fidelity doing layoffs. WOW!
Just think of all the service jobs of tranferring money back and forth back and forth.
Yes, we just had some huge layoffs but I think my job is ok : )…
Local update from your roving reporter Cliss:
(reporting from Portland OR)
There seems to be quite a bit of pride and smugness about the local real estate market. This is a very upscale little community, where many homes are in the $1 M range.
Everyone I’ve spoken to seems to feel that, “yeah, there are problems but it’s in other places”. Portland will weather the storm just fine. This is just a bump in the road you watch prices will start going up again They always do. People are still buying houses here, there doesn’t seem to be any fear that the subprime cratering could spread here.
Out of all my friends, not ONE is agreeing with me. I’m the lone voice in the wilderness warning them that prices will come down.
The thing that none of them understands, is that the mortgage meltdown in CA, NV, AZ and FL will make ALL house prices come down.
Why? Because the problem is too big for just a few states. It’s going to crater the entire economy. There won’t be any “protected” enclaves.
I just heard today that CitiBank is having problems covering its cash reserves and it’s just casual Thursday???? OMG… this is Northern Rock right here Folks.
Looks like Bank of America is underwater on their Countrywide investment (they were in at $18).
It also looks that Buffet is underwater on his Bank of America investment (he bought it at $48 per share).
I’ve been wondering when to dump BRK.A. I bought it during time in the late 90s when it was down to 40K…it may be time to think about getting rid of it now.
How much exposure does the Reinsurance business have? Do any of them cover companies that supply PMI?
40-50% would be too good to hope for. I am looking for a drop, but not expecting that much. 10-20% over 5 years is what I’m expecting, personally. Anyway, congrats on your new found wealth!