November 12, 2007

Priorities Have Changed In California

The Press Democrat reports from California. “‘For Sale’ signs planted in lawns along Banjo Drive mark the dashed dreams of families in this block-long stretch of two-story homes bordered by neat landscaping and walkways leading to parks and schools. Once a symbol of Sonoma County’s housing boom, Bellevue Ranch is now emblematic of hard times in neighborhoods across the region.”

“More than 20 of the 35 homes for sale in Bellevue Ranch are on the market either because banks took them back or owners must sell to avoid foreclosure.”

“Owner Maria Hernandez paid $655,000 for the four-bedroom house in November 2005, financing the entire purchase of her family’s first home. The combined monthly loan payment jumped from $3,780 to $5,058 three months ago and she hasn’t made the payment since. The house is now for sale at $489,000.”

“Two doors down, the owner bought for $590,000 in November 2006, benefiting from the first months of a countywide price decline that has continued. But they no longer can afford the payment option loan taken out to finance the entire purchase. The house is on the market for $440,000.”

“Three years after buying his Barndance Lane home three blocks away from Banjo, Gregg Groff holds out hope he won’t be forced to sell to avoid foreclosure. But with five homes for sale within a block of his house, Groff is concerned his home will go down in value to a point where he has little choice but to sell.”

“‘When the market started going south, everyone started selling. You want to run out in the street and say ‘Don’t do it’ because you know you’re going to be screwed,’ Groff said.”

“Groff has a payment option mortgage, a once-popular subprime loan. He can’t pay the $3,300 interest-only amount and makes the $1,600 minimum monthly payment, which adds to his mortgage debt. A ‘For Sale’ sign could be going up on Groff’s front lawn if prices in the neighborhood fall closer to the $545,000 he paid for the four-bedroom house.”

“He and his wife financed the entire purchase with a subprime loan. Rather than make a down payment, they put the money into landscaping, hardwood flooring, bathroom upgrades, as well as a new motorcycle and car.”

“‘We gambled because the way everything was going it seemed safe. We were riding the market,’ he said.”

“Then they refinanced into the payment option loan with a plan to make the minimum payment and build back their savings. ‘And that basically was the big mistake,’ Groff said.”

“Jesus Sandoval works two jobs to pay his mortgage, but still worries he might eventually have to move his family back into the type of moldy apartment they once called home.”

“Sandoval and his wife, Monica Gonzalez, paid $435,000 for the three-bedroom home in June 2004, taking out two loans to finance the entire purchase. Two years later, their monthly payment set to jump to $3,800, the couple needed to refinance. But interest rates had risen and there was not enough equity in the home to refinance into a single, longer-term loan with a lower rate.”

“The couple mostly makes the interest-only payment of $2,800 on the two loans. When money is tight, they pay the minimum amount of $1,200, with the difference between the two added to the mortgage balance.”

“‘If someone would have told us this could happen, maybe we don’t buy the house,’ Gonzalez said.”

“‘We are cutting down on groceries and going out. We’re going to cut on Christmas gifts. We used to have parties for birthdays. This time, just a cake and a small present,’ Gonzalez said.”

“Sandoval needed to refinance a year ago. Home values were falling and interest rates had climbed. The couple managed to refinance by taking out a riskier loan that offers different payment options, including an interest-only choice they can usually afford. But the payments have been rising, $100 every six months.”

“‘I thought it was good. Now I see this sucks,’ Sandoval said. ‘It’s more expensive. When I send just the minimum payment, the rest goes to my mortgage, so you’re going to owe more money to them. Now we’re in a really black hole and I don’t see the end.’”

“The move from a cramped apartment to a spacious town home thrilled Maria Favela and her children. But joy turned to disappointment 15 months later when the single mom was forced to sell because she no longer could afford the mortgage.”

“Favela managed the $410,000 purchase by financing the entire price, taking out two high-risk loans. Favela said she was shocked her monthly payment was $2,400 and unaware it would rise to $3,400.”

“From the beginning, Favela struggled to pay her mortgage on her $45,000 annual income. ‘It was really tight. I was using money I had in the bank. I was working a lot of overtime to make the payments,’ she said. ‘Sometimes I didn’t have a day off for a month. It was really, really hard on my family. I saw them sometimes for dinner, sometimes just bedtime and then go to work and they stay with relatives.’”

“‘My payment was so bad. I never would have done it if I had known how much the payment really was,’ said Favela. ‘I was telling everyone I was so scared. I said maybe I don’t want the house anymore.’”

Inside Bay Area. “David Newman isn’t an economist, but from his vantage point as a pawnbroker, he sees an economic underbelly most people don’t see. ‘Times are getting harder, and more people are hurting these days,’ said Newman, manager of Cash Loan Inc. pawnshop in South San Francisco.”

“Newman often sees people come in with a stack of bills that need to be paid. They’re carrying jewelry, guitars, power tools or other personal property they can pawn, and get a loan on. Many are strapped by rising gas prices, mortgage payments and other costs. They need a quick loan to help pay the PG&E bill or that expanding house payment.”

“‘Loans are definitely a little stronger these days,’ said Jacob Notowitz, a second-generation pawnbroker in Millbrae. ‘There’s a home-loan crunch, and people can’t refinance.”

“People often use his shop to get loans to make up the difference as ‘home loans re-set,’ Notowitz said.”

The San Francisco Chronicle. “In the 37 years William Horstman has been practicing in San Francisco as a therapist, he’s never seen patients spend more time worrying about their home values - and their personal sense of wealth - than they do today.”

“For people more immediately caught in the crisis, the emotional effects are intense, said therapist Vivian Hankin, a marriage and family therapist based in Berkeley. Two of her clients have moved out of the area because they couldn’t afford to keep their homes.”

“‘They were just devastated because they couldn’t keep their houses,’ she said. ‘They had to go back and find less-expensive places to live in the country. And they still have to worry about how to make it because they have to get new jobs and have to get new friends. They have to start all over again.’”

“Other clients, she said, are stuck with the dreaded double-mortgages, having bought a new house and being unable to sell their old one. ‘They’re so scrunched for money that they’re talking about being afraid to buy anything, even shop for groceries,’ she said. ‘Some are even cutting back on medications prescribed by their family doctors or psychiatrists.’”

“Many clients, she said, have dropped out of therapy because priorities have changed: ‘They have to be food, shelter, utilities, the basics. Anything beyond that isn’t possible.’”

The Los Angeles Business Journal. “For the first time since the long national housing slide began, the median price of a house that sold in Los Angeles County was lower than the same month a year before, according to new figures on home sales in October. The number of homes that changed hands plunged as well.”

“The median price dropped to $525,000, a 3.7 percent fall from October 2006 when it was $545,000 – and 9.5 percent off this September’s $580,000, according to HomeData Corp.”

“‘It is a very tenuous market and over the next few months I expect more price declines,’ said Mark Cohen, who heads the Beverly Hills-based mortgage bank and brokerage Cohen Financial Group. ‘I hope I’m wrong, but that’s the way I’d bet. A couple of deals fell out of escrow today. It’s no fun.’”

“In upper-middle-class Agoura Hills, the 91301 ZIP code had a year-over-year price decline of 13 percent to $600,000. In the City of Commerce 90040 ZIP code, one of the county’s most inexpensive, the median fell 14 percent to $389,000. Even in tony Malibu, the 90265 ZIP code saw a 31 percent price drop to $1.23 million.”

“Sales have slowed so much that it would take nearly 19 months to deplete the supply at the current rate of sales, according to the state Association of Realtors. That figure is far higher than the 7.8-month supply of a year ago.”

The Union Tribune. “Miguel Albarran’s adjustable mortgage is a ticking time bomb. Each time it goes up, he feels the pressure build on his family budget. The payment is set to rise again in December, this time by $1,100 a month, putting a potentially unbearable strain on his family of five in Vista.”

“Albarran, who makes $63,000 a year, bought his 1,550-square-foot, three-bedroom home in Vista two years ago. He paid about $478,000 and financed the purchase with a conforming first mortgage of $95,000 and a second, ‘jumbo’ mortgage of $382,000.”

“A bill already passed by the House, HR 1427, would reform Fannie Mae and Freddie Mac and allow the two to securitize loans of up to $625,000 in expensive housing markets. A similar bill has stalled in the Senate Banking Committee.”

“Robert Rivinius, CEO of the California Building Industry Association, says the stakes in this complex debate are high for California.”

“‘Homeownership in California is only 56 percent, and the rest of the nation is 69 percent,’ Rivinius said. ‘So the homeownership rate is lower than (that of) the rest of the country, and if we don’t raise the limit, things will never improve.’”

The Press Telegram. “For rent: A newly built $2.3 million, three-story home with 270-degree views of the ocean and most of the L.A. Basin. Rent, don’t sell. That’s the advice some Realtors are giving sellers who are unhappy with the lackluster offers they are getting for their homes.

” “Among the swelling sea of ‘for sale’ signs around the region, ‘for rent’ signs are popping up in growing numbers. That may be a sign that some people plan to dig in and wait out the real estate doldrums by offsetting those large mortgage payments with rental income.”

“‘In this slower market a lot of sellers are getting creative,’ said Mike Murphy, with Re/Max Realty College Park. ‘This year I’ve rented 17 houses that haven’t sold.’”

“As many as half the homes Murphy has rented were near the lower end of the market’s price range. ‘If you have a $350,000 condo and don’t need to sell it, then don’t sell it,’ Murphy said.”

“One property Murphy just put up for rent is a 4,000-square-foot home near the top of Signal Hill at 2252 Molino Ave. And a $2.3 million price tag that apparently makes buyers a bit shy.”

“Murphy has put the home up for lease for $5,500 per month. That’s probably a steal for a family with deep pocketbooks and a fear of buying in this market.”

“‘For people who don’t need to sell right now, it might be a good move,’ said Colleen Badagliacco, president of the California Association of Realtors. ‘I think you may see more of that. For some people in the marketplace, it may be a very savvy move because most communities have a shortage of quality homes for rent, so you can get a premium.’”




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255 Comments »

Comment by Pazuzu
2007-11-12 16:28:28

“…Rather than make a down payment, they put the money into landscaping, hardwood flooring, bathroom upgrades, as well as a new motorcycle and car.”

The mighty American consumer soldiers on.

Comment by ex-nnvmtgbrkr
2007-11-12 16:39:36

” A ‘For Sale’ sign could be going up on Groff’s front lawn if prices in the neighborhood fall closer to the $545,000 he paid for the four-bedroom house.”

Uh, Groff, three blocks away you have homes that originally sold for more than your house listed in the low 400’s. Hello!!!

Stick a fork in Groff, he’s done.

Comment by ozajh
2007-11-12 17:12:53

Three blocks away don’t count. RE markets are LOCAL. :D

Comment by Darrell_in _PHX
2007-11-12 17:18:18

I don’t care who ya’ are, dat dar is funny.

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Comment by peter m
2007-11-12 19:01:32

http://www.labusinessjournal.com/article.asp?aID=96854572.7722227.1551459.1400391.3397515.268&aID2=119334

Has LA finally cracked!

From LA business Journal:
“The median price dropped to $525,000, a 3.7 percent fall from October 2006 when it was $545,000 – and 9.5 percent off this September’s $580,000, according to data provided to the Business Journal by Melville, N.Y.-based HomeData Corp. homedata shows ”

LA has to drop big. The entire County way overrated ;much of it resembles tijuana, and 90% of rest of LA County homes very ordinary 2/1 or 3/2, 800-1500sq ft 50-80 yr old claps/stuccos built around-WWII.
These termite- infested bungaloo claps/plain vanilla stuccos can be well-dressed up interior/exterior with fresh paint and decor but with probable severe interior rotting wood. Paint can hide a lot but like a tooth cavity the rot is deep and unnoticed till someone takes a hammer and taps the wood and reveals the hideous cavites carved out by the termites.
This is the crap that was once ‘valued at $400.000-$500,000 in the nastiest, slimiest gang-ridden inner cesspool zips of LA such a as Compton, lynwood, sgate, wilmington, inglewood, SCentral, Eastt LA, Pomona. La Puente, Pacoima, Panorama city, Bell, huntington park, Maywood ,Cudahy, Commerce, Vernon, ,Hawthorne,, Norwalk, ad nauseum(Hiccup!).
There it is :a short list of LA’s most despicable rotten boroughs . Please wear a black baseball cap backwards , shades, black jacket and tinted lowered chevy impala and you can blend with the Homeys. Welcome to LA!

 
Comment by tarred and feathered
2007-11-12 22:10:08

L.A. may have cracked but, the man in Temecula who killed himself and four others sure did. The L.A. times article reported that his business was hurt by the housing slump.

 
 
 
Comment by Leighsong
2007-11-12 19:48:32

;)

 
 
Comment by GPBlank
2007-11-12 17:30:23

“Then they refinanced into the payment option loan with a plan to make the minimum payment and build back their savings. ‘And that basically was the big mistake,’ Groff said.”

And where are those savings?? Sorry Groff you couldn’t even make a full interest pmt - much less put something into savings.

Comment by talon
2007-11-12 20:05:41

Not to mention that, even if he was putting something away in savings, he’s still digging himself into a hole at the rate of $1500/mo with that minimum payment.

 
 
 
Comment by SKB
2007-11-12 16:29:50

“‘I thought it was good. Now I see this sucks,’ Sandoval said. ‘It’s more expensive. When I send just the minimum payment, the rest goes to my mortgage, so you’re going to owe more money to them. Now we’re in a really black hole and I don’t see the end.’”

Excuse me but the “minimum payment”, usually reminds me of the “howmuchamonth” crowd and those are the ones that also are familiar with the terms “can’t get blood out of a turnip” and “ain’t got no money”.

Who is there right mind would buy a house with the financial arrangement set up like a credit card with a “minimum payment”.

Hey, what’s in your wallet?
Nothing….

Fools. Next time get freak’n educated on the biggest purchase of your life.
I have NO empathy for people like this at all.

Comment by Big V
2007-11-12 16:40:54

I don’t believe for a minute that these people didn’t KNOW that their mortgage was getting bigger when they were only paying the neg-am payment. Wasn’t that obvious? If not, then they are too stupid to deserve the ‘prestigious’ title of “homeowner” that so many losers have attached to themselves during the past few years.

And BTW, when she says that they might not have bought had they been told that “this could happen”, I once again have to question her forthrightness. I’m absolutely positive that someone, SOMEONE, even if ony her own mind, must have posited that scenario.

Comment by Johnny B. Good
2007-11-12 17:30:58

I believe it, at least about some people. The people with bad credit or no experience with finance besides the choices offered at the ATM fell into these traps.

Those nice lenders ‘guided’ them through the process and got them loans then fully explained about all the features…..NOT.

Others, however, grabbed these loans because it was the only to get into the market, or because they thought they could flip before the crash.

The phrase been absent here for some time: “Bag full of cash and a box full of stupid.” It fits both groups.

Comment by jbunniii
2007-11-12 17:50:13

“Bag full of cash and a box full of stupid.”

If they had their OWN bag full of cash, it wouldn’t be a problem. It’s when they “borrow” (steal) other people’s cash that it becomes a big problem. Lender beware!

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Comment by Dr.Strangelove
2007-11-12 20:56:40

“And BTW, when she says that they might not have bought had they been told that “this could happen”, I once again have to question her forthrightness. I’m absolutely positive that someone, SOMEONE, even if ony her own mind, must have posited that scenario.”

Agreed.

IMO anyone purchasing in 04′ thru 06′ with an I.Q. over 80 making a home purchase DID think “what if?” (for at least a second). But they took the lazy-ass fantasy route down denial lane instead–and shut that thought down quicker than you can say Alan “frothmeister” Greenspan.

Zero accountability.

I give credit to the folks that at least say, “man, I really screwed up.” Far and few between as they are these days.

DOC

 
 
Comment by ex-nnvmtgbrkr
2007-11-12 16:43:56

I just dug how we had two examples of people moving from cramped apartments to 400K+ homes. Does that just spell it out or what?!

Comment by In Colorado
2007-11-12 17:00:11

Indeed. Out here a 400K house is where the local surgeon lives, not where some semiskilled guy who hustles at two jobs lives.

Comment by palmetto
2007-11-12 17:55:26

Exactly. And even the local surgeon here in FLA might even live in a $200,000 to $300,000 home.

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Comment by aNYCdj
2007-11-12 20:06:51

$400K is what a starter older SFH in Greenwich CT was before this boom happened…..perfect for a surgeon

Brings up an interesting point, how much did people like surgeons increase their fees to cover mortgage on their the multi million dollar homes? And did insurance companies allow this big increase in fees to pass through to keep the surgeon as a provider?

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Comment by afronin
2007-11-12 22:10:18

Private practitioners have to operate their clinics like any other profit-based business. They can’t unilaterally increase their fees without negative financial consequences. Health care networks all have set limits of benefits which are not arbitrary increased due to inept personal financial management of a few of their doctors. Consequently, why would anyone (especially if the family is on a tight budget) pay excessive co-payments out of pocket? There’s no doubt, even well-schooled “smart” people made can make very poor choices.

 
Comment by frm
2007-11-13 00:25:52

Physicians don’t set their own fees and even when they do, it doesn’t matter because the insurance company pays out at preset rates anyway. Physician incomes have been relatively flat over the years while real estate prices–and salaries in other sectors–have gone way up.

When you factor in lost income from a decade of training, rising med school costs (average student debt $120-150K), and loss of investment equity (usually can’t buy a home until done with training, unable to contribute to 401k and get matching and pension benefits), you would probably come out way ahead over a lifetime by going into IT or consulting straight out of college.

 
Comment by pismo clam
2007-11-13 14:48:05

Don’t make me cry for the over paid doctors. They knew what they were doing. If they don’t want to accept the insurance company payment then don’t accept the patient. They can make more money doing abortions at night. Oh, sorry ,they are legal now aren’t they. Or make patient copays larger. Please don’t hurt my ears!

 
 
 
Comment by Darrell_in _PHX
2007-11-12 17:06:16

Why throw your money away on rent, when you can buy for the same price (if you make the minimum payments on your Option ARM, don’t account for maintenance or repairs, and put the “tax savings” toward the payments.

Think about this scam….

You buy a $400K house. Interest is $3K a month, but you’re only making payments of $1200 a month. Take the $26K extra tax deduction at 15% and you’re making $4K a year tax savings.

IF the government passes the exception to 1099′ing debt forgiveness, you had 3 months rent paid for just on tax savings. If they don’t, you pull the “blood from a turnip” act and settle the tax for pennies on the dollar.

Comment by reuven
2007-11-12 17:22:24

This was the crux of the scam!

Bascially, during the past two years, people with NO ASSETS has the opportunity to gamble with other people’s money. And they have the nerve to complain when they “lose” (actually losing nothing.)

People who had MONEY IN THE BANK wouldn’t take these risks, for fear the banks or courts would go after them if they can’t make the payment.

Never has a Ponzi scheme been so perfectly developed! The money ultimately comes from the 20-30% of Americans who pay the majority of taxes, and have the majority of savings. Poor people get to wear the “victim” label, and the superrich who don’t pay taxes anyway look for the next scam to put over on the American Public.

Why wasn’t I flipping houses during the boom? Because, to me, a frugal person who saves as much as he can, the risk was too high. If I had nothing in the bank and no job, and someone “gave” me a 500K loan, I may have felt differently.

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Comment by hd74man
2007-11-12 18:16:56

So where the fook were all so-called BUYERS BROKERS in all these fiascos?

You know, those agents/broker who are looking out for the fudiciary interests of the PURCHASER.

Whew…between incompetent sales broker, corrupt appraiser’s in the pockets of sleazebag mortgage L/’O’s; combined with people’s laziness and/or inability to cope with reading serious financial documents…

…truely sheep to slaughter.

 
Comment by Lisa
2007-11-12 19:32:36

This was the crux of the scam!

“Bascially, during the past two years, people with NO ASSETS has the opportunity to gamble with other people’s money. And they have the nerve to complain when they “lose” (actually losing nothing.)”

Absolutely! But this is what’s propped up the economy since 9/11. Be afraid. Be very afraid.

Bush & Co. know this full well. It’s why we’re hearing the crazy bailout talk, raising the GSE limit to $1MM, etc.

 
Comment by Leighsong
2007-11-12 21:29:41

Repeat after me…

Not going to happen,

Not going to happen, (poor English), still,

NOT going to happen :)

 
Comment by Johnny B. Good
2007-11-12 22:38:34

Bush & Co. know this full well.

I don’t think they did know. That makes me even more scared.

 
 
Comment by crisrose
2007-11-12 17:33:26

Shhh!

Some here at HBB are crying tears for the ‘I live my life with my greedy/money grubbing/ debt-credit card maxed out head up my a$$’ Joe Six Pack FB’s.

Always remember, it was those in charge who hold 100% of the blame. Those who signed up for these mortgages are totally blameless - victims - naive - only wanted the American dream of owning a ‘home’ - had no idea that unskilled minimum wage workers don’t belong in a half-million dollar house - really, honestly truly planned on paying back that $500k mortgage on their salary of 9 bucks an hour at Pizza Hut…

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Comment by Vermonter
2007-11-12 17:43:01

Some here at HBB are crying tears for the ‘I live my life with my greedy/money grubbing/ debt-credit card maxed out head up my a$$’ Joe Six Pack FB’s.

Huh - I musta missed that thread.

 
Comment by crisrose
 
Comment by palmetto
2007-11-12 18:44:41

Aw, sheesh, cris, you misinterpreted the spirit of that thread. There’s a lot of so-called JSPs who aren’t FBs but are going to suffer collateral damage. They’re just trying to live life and do their jobs and raise their families.

 
Comment by Vermonter
2007-11-12 19:07:56

Wow, I did miss a really good thread. Thanks for posting.

 
Comment by crisrose
2007-11-12 20:02:35

“Aw, sheesh, cris, you misinterpreted the spirit of that thread. There’s a lot of so-called JSPs who aren’t FBs but are going to suffer collateral damage. They’re just trying to live life and do their jobs and raise their families.”

I’ve spoken to some of those who ‘just live life and raise their families’ - tried to show them what’s coming. They didn’t want to hear it - ‘American Idol’ was more important.

Doesn’t really matter - we’re all going to suffer - horribly - just some sooner than others. All that will be different is the timing.

Really, we should be thanking the FB’s for keeping the debt pyramid inflated - it gave us a few more years.

Debt pyramids inflate until they implode - period. Real estate was the only pillar holding the entire mess afloat - that’s gone now. Without hyperinflation that translates in hyperinflation in wages, there is no way to service existing debt. Hyperinflation won’t work anyway (see Zimbawbe for further).

 
 
 
Comment by SaladSD
2007-11-12 18:08:42

Not just cramped, but cramped and moldy. I used to live in an apartment which was quite roomy and freshy. If you can afford a $400,000 house, surely you can afford a nice apt.

Comment by uptown
2007-11-12 18:28:41

And if you look at craigslist, you’ll find plenty for rent.

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Comment by NYCityBoy
2007-11-12 18:33:22

God forbid they clean the f—ing place.

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Comment by phillygal
2007-11-12 18:56:30

Really, Lowe’s has a really good mildew-busting spray.

 
 
 
 
Comment by Doug in Boone, NC
2007-11-12 18:04:23

“Now we’re in a really black hole and I don’t see the end.”

It’s been speculated that black holes might be portals to other universes. If that’s true’, I wonder if the people who live in those other universes are wondering where all those green bills are coming from?

Comment by Big V
2007-11-12 18:11:00

Are you sure that’s not just a really dark shade of brown?

Comment by CHILIDOGGG
2007-11-12 23:22:36

that’s. just. wrong.

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Comment by Jason
2007-11-12 22:46:20

Actually, guys like this are EXACTLY who I have sympathy for. Did you pick up on the fact that he’s busting his hump to make the interest only payment, not just the neg-am minimum payment? Given the slime in the RE / mortgage industry is it that hard to believe that a hard working but not so financially savvy first time home buyer could be tricked into a mortgage that they didn’t understand?

Save your schadenfreude for those that deserve it. Some people were gaming the system and some got taken advantage of - Mr. Sandoval seems to be the latter, to me.

 
 
Comment by Sobay
2007-11-12 16:36:22

“Other clients, she said, are stuck with the dreaded double-mortgages, having bought a new house and being unable to sell their old one. ‘They’re so scrunched for money that they’re talking about being afraid to buy anything, even shop for groceries,’ she said. ‘Some are even cutting back on medications prescribed by their family doctors or psychiatrists.’”

- I hope that Vivian is getting her ‘fee upfront.’

Comment by John Law(Duke of Arkansas)
2007-11-12 18:18:12

homeownership has it’s privileges.

 
 
Comment by crispy&cole
2007-11-12 16:36:58

All these hispanic surnames….

Comment by hd74man
2007-11-12 18:19:33

RE: All these hispanic surnames….

Wecome to America…land of the scam…now bend over.

 
Comment by ochomepro
2007-11-12 18:22:25

you should check out Santa Ana in Orange County! 40+ months of inventory!

 
Comment by tbgpalisades
2007-11-12 21:11:44

Eat it Crispy…it’s a different [and better] world.

 
Comment by dude
2007-11-12 21:28:33

Recent immigrants are and always have been the best marks for con men. The immigrants don’t read or write English well enough to defend themselves and wrongly trust the agents to look out for their best interest.

More often than not the con men (and women) are of the same ethnicity, but one generation ahead. They speak English well enough to be in the system but also speak the immigrant’s language in order to gain the confidence of the marks.

Comment by Paul in Jax
2007-11-12 21:42:30

Evidence: Miami condo market. The first and second generation Cubans are now a minority of Latinos, but they run the show.

 
 
 
Comment by palmetto
2007-11-12 16:38:45

“Favela managed the $410,000 purchase by financing the entire price, taking out two high-risk loans. Favela said she was shocked her monthly payment was $2,400 and unaware it would rise to $3,400.”

“From the beginning, Favela struggled to pay her mortgage on her $45,000 annual income.”

How did this creature EVER think she could afford a $410,000 home? On $45,000 here in Florida, we’re talking $85,000. MAYBE $100,000. Now she’s going to end up in a favela.

Comment by Sobay
2007-11-12 16:43:09

How did this creature EVER think she could afford a $410,000 home

Palmetto, here in Socal there’s a feeling of entitlement, it is almost like ‘Dancing with the Stars.’
She saw the ‘Bling’ and went for it!

Comment by jbunniii
2007-11-12 17:53:15

What’s neat is that $400k didn’t get her anywhere near stars, unless there’s a new trend in graffiti that I am unaware of.

 
 
Comment by palmetto
2007-11-12 16:45:00

“Albarran, who makes $63,000 a year, bought his 1,550-square-foot, three-bedroom home in Vista two years ago. He paid about $478,000 and financed the purchase with a conforming first mortgage of $95,000 and a second, ‘jumbo’ mortgage of $382,000.”

And there’s another genius. I’m serious, these people don’t have the brains they were born with and their stupidity has caused a lot of misery for others. Again, on that salary, I wouldn’t dream of buying anything for more than $125,000 in FLA, and that’s stretching it.

Comment by Guest
2007-11-13 07:43:02

What I don’t get is why they would need a jumbo loan on the “second” mortgage. That amount should conform with one of the GSE loans.

 
 
Comment by John
2007-11-12 16:54:49

How did this creature EVER think she could afford a $410,000 home?

That was the NORM for CA during the last few years. An entry level worker at my organization (literally the lowest paid person here) got approved for a $425K condo. She was about 25, I’d estimate she made $40-$50K, and was thinking about quitting to get a graduate degree. She didn’t buy it and went to school.

Another guy, around 30 and higher on the pay scale, also was going to buy a $500K condo. He got well into escrow before a couple of us performed an intervention and he ran the numbers. He said it didn’t make sense when he figured out how much he’d have to *rent out* a bedroom for to cover the mortgage…

Another woman at work bought a $650K house in a dodgy neighborhood then tried to sell it inside of 6 months. She’s hanging on as far as we can tell–her mother helped on the downpayment with “liberated equity” from her own house.

Finally, another woman bought a $725K house knowing she couldn’t afford it. She said “No one ever pays off their mortgage anymore.” Well, she split the place into a duplex, sold the other half, and now has 1/2 the mortgage…

Comment by hd74man
2007-11-12 18:23:11

RE: Another woman at work bought a $650K house in a dodgy neighborhood then tried to sell it inside of 6 months. She’s hanging on as far as we can tell–her mother helped on the downpayment with “liberated equity” from her own house.

Finally, another woman bought a $725K house knowing she couldn’t afford it. She said “No one ever pays off their mortgage anymore.” Well, she split the place into a duplex, sold the other half, and now has 1/2 the mortgage…

LMAO…I’ve seen their postings on Craig’sList’s W/4/M looking for fat wallets…I mean, er…new husbands.

 
 
Comment by In Colorado
2007-11-12 17:05:24

How did this creature EVER think she could afford a $410,000 home?

This is why we left California. Even though we had an entry level house at the time (under 200K), I quickly realized that we would never be able to “trade up” without taking on tons of debt.

So we left. I found out that the current owners of of our old house in Escondido are hispanic and owe over 400K on it. I could buy a house like that here in Loveland for 150K, it would be better built and have a basement.

Comment by Tina
2007-11-12 18:27:23

“So we left. I found out that the current owners of of our old house in Escondido are hispanic and owe over 400K on it.”

What does their being Hispanic have to do with it? Really? All the stupid people I know who have gone through bankruptcy for mishandling their money, buying houses they couldn’t afford, and running up too many credit cards are white. This financial ignorance and financial mania crosses all color lines and ethnicities.

 
 
Comment by Thomas
2007-11-12 20:49:56

favela — a Rio slum, right?

Comment by NoVa Sideliner
2007-11-13 07:16:21

Nice catch!

 
 
 
Comment by Helicopter Commander Bernanke
2007-11-12 16:41:24

‘They were just devastated because they couldn’t keep their houses,’

I’ve been devastated by the stupidity, arrogance, and greed I’ve had to witness for the past four years.

Comment by ex-nnvmtgbrkr
2007-11-12 17:09:59

And this is not going to help them:

“A bill already passed by the House, HR 1427, would reform Fannie Mae and Freddie Mac and allow the two to securitize loans of up to $625,000 in expensive housing markets. A similar bill has stalled in the Senate Banking Committee.”

Okay, let’s take a look at this:

“Albarran, who makes $63,000 a year, bought his 1,550-square-foot, three-bedroom home in Vista two years ago. He paid about $478,000 and financed the purchase with a conforming first mortgage of $95,000 and a second, ‘jumbo’ mortgage of $382,000.”

So the paper unwittingly makes the suggestion that these folks will be helped by loan limit reform. USE YOUR FRIGGIN’ HEADS before you write this crap.

1. He needs a loan of at least 480K. His house at best is valued at least 5% less than what we bought it. So Fannie/Freddie is going to start doing 100%+ LTV refi’s? Not a chance!

2. Any refi is going to be full doc. 63K a year? What, $5200 a month? Okay, 480K loan amount at 6% is $2877. Throw in at least $400 for PMI ’cause he’s way over 80% LTV, add to that another $300 for taxes, another $100 for insurance. Now you’re looking at a payment pushing $3700. Assuming this chump has no other debt (not!), you’re looking at a debt-ratio of 70%. Even at it’s most lenient Fannie’s max qualifying ratio at that LTV was around 45%. No chance!! This is why loan limits won’t help.

3. Let’s say this guy get’s the loan. You think it’ll keep him stay in the house. 63K was pre-tax. This guy brings home about 4K a month. Yeah, that’s gonna do it for a guy with a $3700 house payment.

This is why I shrugg off any lame attempt by the football-humpers to bailout this problem. It’s not fixable.

Comment by ex-nnvmtgbrkr
2007-11-12 17:28:16

Sorry about the grammatical cluster-f. I was fired up.

Comment by Olympiagal
2007-11-12 17:57:27

Oh, I forgive you, I really do. Go on and speak your mind.

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Comment by hd74man
2007-11-12 18:27:24

RE: Sorry about the grammatical cluster-f. I was fired up.

…football humpers (grinning)

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Comment by Big V
2007-11-12 18:17:36

I don’t think you have him paying any principal in there, do you?

Comment by ex-nnvmtgbrkr
2007-11-12 18:41:31

Principle is there. I/O payment would be $2400. Not worth mentioning because your not going to get an I/O at that LTV.

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Comment by John Law(Duke of Arkansas)
2007-11-12 18:25:10

“This is why I shrugg off any lame attempt by the football-humpers to bailout this problem. It’s not fixable. ”

that’s why I laugh when people bash politicians when they propose a bailout. you notice how they propose something and a month later we never hear about it? it’s because the mess is so big there isn’t much to do about it. even if a few bucks is thrown towards a bailout, it’s only going to be to those who can afford a fixed rate- practically nobody.

 
Comment by peter wiener
2007-11-12 19:43:45

C’mon ex-nnvmtgbkr, don’t sugar coat it, tell us what you really think!

 
 
 
Comment by Decade Renter
2007-11-12 16:43:08

Hm. Therapy in the Bay Area to help in the housing crisis. How do you feel about that?

Comment by joeyinCalif
2007-11-12 16:52:53

“Many clients, she said, have dropped out of therapy because priorities have changed: ‘They have to be food, shelter, utilities, the basics…

it’ll be suprising.. the sorts of services and industries that will once again be considered an unnecessary luxury.. and will fall by the wayside.. Physician..err.. Patient, heal thyself.

Comment by Pelegirl
2007-11-12 23:17:36

Lol, seriously! I’ve been talking out loud with my cousin recently trying to list recession proof industries so I’am prepared if I ever get laid off. I was thinking waste disposal, anything at a hospital, water and energy utilities, hell, I can work at a gas station if I need to….people will still need gas in the car right? My cousin (who isn’t the sharpest when it comes to money) decides that if she gets laid off she’ll take out yet more student loans to go to dental hygenist school. I was just dumbfounded. The economy hits the fan and she thinks that people will be paying for dentistry? In my scenario, they are pulling their OWN teeth and only paying for food!

Lol, oh well, what can you expect from someone on debt consolidation who pitingly cries that she has no money to start a savings account while she eats a $10 lunch out at a resturant on lunch break (everyday). Oooohhh, its so nice to come here and say that things that I keep myself from saying to the FBs and debt serfs everyday!

Comment by joeyinCalif
2007-11-13 02:01:31

How about a 1-900, $1.99 a minute, Cry-on-my-Shoulder phone service for all the poor bastards that are being skinned alive by their mortgage resets, and can’t afford professional therapy.

Catch up on your reading inbetween the “Oh-my, Thats terrible! and “Wow, what a bunch of crooks!.

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Comment by Pelegirl
2007-11-13 08:01:04

Wow Joey, I think you are onto something here:) Throw in a couple minutes from a fake psychic to tell them when their house might sell and I think we have a recession proof industry!

 
 
 
 
Comment by phillygal
2007-11-12 18:59:58

I blame mom.

 
 
Comment by reuven
2007-11-12 16:44:54

“Groff has a payment option mortgage, a once-popular subprime loan. He can’t pay the $3,300 interest-only amount and makes the $1,600 minimum monthly payment, which adds to his mortgage debt. A ‘For Sale’ sign could be going up on Groff’s front lawn if prices in the neighborhood fall closer to the $545,000 he paid for the four-bedroom house.”

“He and his wife financed the entire purchase with a subprime loan. Rather than make a down payment, they put the money into landscaping, hardwood flooring, bathroom upgrades, as well as a new motorcycle and car.”

“‘We gambled because the way everything was going it seemed safe. We were riding the market,’ he said.”

I know sentiment here has shifted from blaming the buyers to blaming the banks, but c’mon! He couldn’t even afford the *interest only* payment of 3K/month.

What did he expect to happen? The money fairy come over and make his mortgage go away? (Sadly, that’s what did happen! The government has devalued our dollar–robbing money from those who save–to cover his mortgage.)

“‘We gambled because the way everything was going it seemed safe. We were riding the market,’ he said.”

“Then they refinanced into the payment option loan with a plan to make the minimum payment and build back their savings. ‘And that basically was the big mistake,’ Groff said.”

No! What he’s saying makes NO SENSE WHATSOEVER! He’ll never be able to afford this home, no matter what. The only way out for him is if he was able to sell the house in a couple of years and make a profit. There’s no way he’d EVER be able to keep a house where he can’t even make the i/o payment, under any conditions whatsoever.

Comment by Darrell_in _PHX
2007-11-12 16:53:51

He was going to sell it to a greator fool for $800K in a couple years, pocketing $250K tax free cash!

Come on man… Real estate only goes up… They aren’t making any more land… Buy now before you’re priced out (of your oppertunity to get foreclosed on) forever!

Comment by spike66
2007-11-12 17:14:27

If this guy had a brain, he would realize that the words “gamble” and “safe” cannot be used in the same sentence.
And no, my sentiments have not changed; these jackals have each individually done their part to undermine the economy…and guess who has to live with the consequences of their collective greed and lack of responsibility. All of us. So yes, I am bitter, and majorly pissed.

Comment by reuven
2007-11-12 17:17:50

Actually he didn’t gamble! He used no money of his own!

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Comment by Ben Jones
2007-11-12 17:21:12

‘I know sentiment here has shifted from blaming the buyers to blaming the banks’

You know what the sentiment is for tens of thousands? I read here much more than you, and I have no idea. Perhaps what you pick up on is the media has turned more of a spotlight on lending due to current events. Many are to blame, some more than others, IMO.

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Comment by are they crazy
2007-11-12 18:18:51

Sounds like it was a big mistake on the other thread this am to even discuss any sympathy for so many fools that played into the game. Nor was it very smart to even discuss that there were those with much more money, education and power that manipulated the system for their own benefit. Having read some of the harsh comments here, there appears to be no room to even explore how dreadful the downfall is going to be for families. And of course, I guess if you’re a renter the recession or depression won’t have any effect on you - you can just step over all those folks living on the street. Bet you won’t make that mistake again, Ben.

 
Comment by reuven
2007-11-12 18:38:14

I guess if you’re a renter the recession or depression won’t have any effect on you -

While I firmly believe that I had *nothing* to do with this mess (and that people like me will have to bear the brunt of the expense of cleaning it up), I certainly don’t think this will have no effect on me. It will have a profound effect.

 
Comment by reuven
2007-11-12 18:41:10

Oh! And I’m not a renter. I own a home in Sunnyvale, CA and land in Orange County, FL. Both paid up. And I never complained once that property values were falling.

 
Comment by ex-nnvmtgbrkr
2007-11-12 18:48:52

“And of course, I guess if you’re a renter the recession or depression won’t have any effect on you - you can just step over all those folks living on the street.”

Who said anything about stepping over them? FB’s make great pavers.

 
Comment by are they crazy
2007-11-12 19:07:40

Now that’s too funny, Ex. Love it!

 
Comment by Housing Wizard
2007-11-12 19:50:14

I blame the borrowers , I blame the lenders,builders and realtors ,I blame the appraisers ,I blame Wall Street ,I blame Greensan and BB , I blame the regulators the advertisers ,the MSM and the Rating agencies , I blame the planning commissions , and I blame anybody else I didn’t blame . I just don’t blame myself …he he

 
Comment by BKlawyer
2007-11-12 21:47:11

I’ve said this before. . . the lenders have a fiduciary obligation to the borrowers to act like a doctor. Thr Procedure, the Alternatives and the Risks. This simply was not done to the vast majority of the borrowers that I see with my BK practice. They were sold a house and a low payment. Period. A mortgage is a product, just like a hair dryer, a cell phone, a piece of chocolate. It must be fit for a particular purpose and pass all the warranty issues that products must pass. If the Barbie contains lead that poisons our kids is it an argument to say “let the buyer beware”? Full disclosure?? Good luck. I’m filing a lawsuit against a broker who only presented the clients with signature pages to the voluminous loan docs and has refused to provide the loan docs. And DON”T give me the “well, that is an exception” boloney. We gave back almost 25 houses last week! As Ben says there is plenty of blame to go around but save the warm spot in hell for the lender side. . .

 
Comment by reuven
2007-11-12 22:46:34

I wish to say, that if there’s ONE PERSON who deserves NO BLAME WHATSOEVER it’s Ben Jones!

Thanks, Ben, for letting us all rant and rave! And you did your best to warn the entire country.

 
 
 
Comment by desertdweller
2007-11-12 21:09:17

Actually feeling better myself that renting is current best value for the buck. Waiting patiently for the CA mkt to catch up..slow slow slow.. comeon sellers reduce.

 
 
Comment by ex-nnvmtgbrkr
2007-11-12 18:37:56

“What did he expect to happen? The money fairy come over and make his mortgage go away?”

Instead, the Joshua Tree fairy came over and made his hemorrhoids go away.

 
 
Comment by afronin
2007-11-12 16:45:54

I see daily validation of what’s being disseminated on this blog. I rent a 3-br home off North Gate in Colorado Springs that was taken off the market a few months ago (just one of thousands languishing on the listing in El Paso County). Just in our small 4-street subdivision, two more homes made the “For Sale” to “For Rent” conversion. I’m just a bit curious what will become of the remaining four houses currently for sale.

Comment by In Colorado
2007-11-12 17:08:27

I’m just a bit curious what will become of the remaining four houses currently for sale.

Maybe they get sucked into the void like in Poltergeist.

 
Comment by Starve_the _agents
2007-11-12 17:10:49

I like watching the signs turn from ‘for sale Or for rent’ to the pretty colors of ‘forclosure’ this time of the year. Who says California doesn’t have the four seasons?

Too bad winter is gonna last another five years on all those houses out there…

 
Comment by Vermonter
2007-11-12 17:41:34

Ha! My in-laws are an “investors” in Colorado Springs real estate. They own several houses they bought as rentals. When they got sick of playing landlords, they decided to put some of them on the market. They pulled all but 1 back off the market again because the inventory was so high.

Comment by phillygal
2007-11-12 19:06:17

When they got sick of playing landlords,

When I was younger I managed a couple dozen units. I’ve been thinking about landlording again, when real estate prices make sense. The most I can see myself keeping up with is TWO: one for me and one for the tenant next door, or downstairs. That’s really all I feel like dealing with, and I have experience. These multi-SFR holding accidental landlords are going to get to the point that they will practically give the house away. Either that or some enterprising soul will manage the places for a hefty commission.

Landlording is not for the faint of heart.

Comment by rex
2007-11-12 20:39:08

Gotta be fit for the landlording game. I tell my tenants that I was the most highly paid handyman in Denver. My friends admire me for my RE investments but I tell them “it ain’t easy”. Glad I’m almost out of the RE game.

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Comment by catspit1
2007-11-12 16:48:07

I love that people think there are all kinds of us out there who’ll rent for $5k. Bwhahahahahaaa!! Am seeing lots of these in local paper—Newport Beach/Costa Mesa. Hello, I pay $1400 for 3BR SFR. And if i could afford 5 or 6k rent, don’t you think i would’ve bought a nice house quite some time ago? Or fuggin sailed to Maui on my yacht? BAAHahhhaaa, hack, wheeze…

Comment by SanFranciscoBayAreaGal
2007-11-12 16:55:12

LOL. Did you get that hairball cleared out? ;)

 
Comment by Pelegirl
2007-11-12 23:23:56

Tell me about it. I work with someone who can only make their mortgage by renting two ROOMS in her house for $1000 a month EACH. She tried to get $1200 each believe it or not (her mortgage increased so clearly she had to raise the room rents), but obviously didn’t get it. How long can that possibly last with all the other rooms in her area going for like $500 a month? Pretty soon people are going to take the cheapest room they can find.

 
 
Comment by az_owner
2007-11-12 16:48:21

I don’t care how ugly the last few years were in Arizona - California will be 100 times worse, because the pressure has been building there for a decade. I would venture that at least 75% of CA “homeowners” are actually upside-down on their houses at real valuations.

I am seeing some stress in AZ of course, but this was a fast up/fast down kind of bubble here - maybe 25% of “homeowners” are going to get hurt to various extents. They’ll scream of course but they will be in the minority.

Based on this article, I think the FBs will be in the majority in CA, and the crazy things they will demand will cripple CA permanently. I’ve always gotten the impression that CA was about 500,000 rich people being waited on by 35,000,000 poor people. Some of those poor would actually be ok if they did not pay the California lifestyle premium, and I’m sure many of them will flee the “golden state” in the near future.

Comment by Darrell_in _PHX
2007-11-12 16:58:18

I agree… CA is fooked. More so since a lot of the AZ fooked people are actually CA fooked people. They took equity out of their homes in CA to buy investment properties in AZ.

My guess is that a good 20+% of the AZ fooked buyers are really CA fooked citizens.

Comment by Silverback1011
2007-11-12 17:15:20

Virginia is fooked too, judging by the prices I see down there when I visit my daughter. A lotta people trying to carry those $350K notes on 30-year old 2 BR condos, and $ 600,000 notes on new builds with 3 BR, 2 BA and a few stubby treelings for “landscaping”. Who ever thought the road to hell would be paved with 2 1/2 car garages ?

 
Comment by bill in Maryland
2007-11-12 18:13:26

Fook Mi and Fook Yu are both Fooked too (couldn’t resist).

Comment by ex-nnvmtgbrkr
2007-11-12 18:53:14

Oh behave…..

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Comment by uptown
2007-11-12 18:41:05

Most of the people I know in Ca have been in their houses since at least the late 90’s. It would be interesting to know the actual percentage of turnover in housing during the bubble.

Comment by Pelegirl
2007-11-12 23:27:16

Really? Most of the people I know bought at the height of the market (2004 to 2005) in the OC. And this isn’t an age thing - several of them are over 40 and had houses that they traded in for some ridiculous Mcmansion and a flat screen. I’d say a good 40 percent of the OC is completely f’ed.

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Comment by Big V
2007-11-12 23:59:39

I don’t know about the entire state, but check here for city data. Someone else posted a better site a while back, but I can’t remember what it was.

http://www.homescape.com/local

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Comment by Big V
2007-11-13 00:07:19

In my zip code, the anual turnover rate is 22.86%. Median years in residence = 2.56.

 
 
 
 
Comment by In Colorado
2007-11-12 17:12:08

I’ve always gotten the impression that CA was about 500,000 rich people being waited on by 35,000,000 poor people.

That is the text book definition of a 3rd world country.

I recall reading article a few years ago that described this very polarization in SoCal. Either you were very rich, or you were some poor slob hustling at two or three jobs to pay the mortgage (and this was before the big bubble).

Comment by cactus
2007-11-12 18:58:58

Thats about right, and alot of mental illness from folks who just aren’t cutting it but refuse to leave.

 
 
Comment by John
2007-11-12 17:15:46

I don’t care how ugly the last few years were in Arizona - California will be 100 times worse, because the pressure has been building there for a decade.

The trouble with CA is that the state has not built enough housing since the 1970s. It has created a shortage so that only old time buyers or the truly wealthy can afford to buy. Long term owners love the home shortage because it keeps their values high and they’ve got Proposition 13 tax valuations (i.e. tax assessments that rise with inflation rather than current market value). In effect, the guy who bought in 1978 may pay $500 a year while the guy who bought in 2005 next door may pay $5,000 per year.

The end result is that recent buyers in CA are doomed while those who’ve owned for 10+ years are at a huge advantage no matter what happens. Those sitting on the sidelines (renting) will be able to clean up the mess as new buyers in a few years.

Comment by climber
2007-11-12 17:44:51

If the state hasn’t built enough housing, then were is everyone living? Just curious, are a lot of people living with mom & dad? If the house is big enough is this a real problem? Does the warm climate lead to a lot of folks just sleeping outdoors or in their car?

 
Comment by IUnknown
2007-11-12 17:53:19

The question is will they want to clean up the mess… we are talking the worst public schools in the country, crime, out of control polution, out of control homelessness, extremely restrictive property rights, extremely high taxes that will most likely be raised even higher once the “poo” really starts hitting the fan, and an entirely sick “me-first” culture. Once CA loses its shiny image and people begin to see the real grime third-world like nature of the golden state… will they want to buy?

Comment by palmetto
2007-11-12 18:02:17

“Once CA loses its shiny image and people begin to see the real grime third-world like nature of the golden state… will they want to buy?”

What the heck is there in SoCal, anyway? I can maybe understand NoCal, with the tech biz, but what does SoCal really have to justify the prices? I just recently saw something about American movies being produced at a huge facility in China, so even that’s being outsourced. Although, if I was an official in Chile, I’d be jockeying for a piece of that action. Chile would be an awesome place for movie production on the cheap, they’ve got beaches, mountains, European type locales, etc.

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Comment by bill in Maryland
2007-11-12 18:20:38

Southern California has the second best climate in the U.S. Hawaii is number 1. The area from Santa Monica to the South Bay part of LA does not get mudslides, nor does it get the fires - most outsiders don’t know that, nor do they want to know that. Southern California has some of the top colleges in the United States and all sorts of jobs.

You can debate until you are blue in the face. If it’s so bad, there would not be so many people in that area.

I lived there for 3 years and will return there within a week if I had the chance.

 
Comment by Big V
2007-11-12 18:24:32

Palmetto:

NorCal is more expensive than SoCal, but neither place can justify the cost of buying RE.

 
Comment by txchick57
2007-11-12 18:25:28

So would I. I loved San Diego.

 
Comment by hd74man
2007-11-12 18:29:00

RE: What the heck is there in SoCal, anyway?

Pornography capital of the world.

 
Comment by palmetto
2007-11-12 18:36:22

I loved San Diego, too, in the 1990s. But it sure doesn’t sound like the place I visited anymore.

That’s what happens to nice places. They overpopulate, become congested and then the not so desirable aspects overcome the desirable aspects. What good are the beaches and the ocean if they become polluted and it takes forever to get from one place to another?

 
Comment by Housing Wizard
2007-11-12 20:03:38

What does California got?

Movie stars …swiming pools

 
Comment by peter m
2007-11-12 20:16:49

“Once CA loses its shiny image and people begin to see the real grime third-world like nature of the golden state… will they want to buy?”
“That’s what happens to nice places. They overpopulate, become congested and then the not so desirable aspects overcome the desirable aspects. What good are the beaches and the ocean if they become polluted and it takes forever to get from one place to another”

I can comment on LA county . Most folks who havn’ t lived or worked here less than 10+ years don’t really know the ‘real LA’.
Even if you lived all your life in SMonica /manhatten beach, or some other upscale coastal sliver without getting around the rest of LA County or sticking like glue to the main freeway arteries you can be misinformed .
Much of LA is a mess, crammned with illegals and green-card recent hispanic immigrants, or their lower/working class low-skilled ill-educated offspring . Much of LA is a badly deteriorating third world cesspool. Not just the inner city gangzones but much of rest of LA just plain drab lower -mliddle class, and traffic everywhere is an endless nightnare.
IT takes 1.5 to 2 hrs fighting traffic to travel the 35 miles from Long beach to Malibu on a summer weekend: Sm and Venice beachs all difficult of access except if you live there ; beaches are overrated and there are constant pollution shutdowns. 99.5 % of La County residents never get to malibu or closer LA beaches except 1-2 times a year :traffic is a killer going northwest or west to the LA county beachs.
The far outer fringes of LA county (excluding desert meltdown zone of Palmcaster)such as Santa Clarita for the most part; far west SFvalley areas such as agoura hills, calababas, Hidden hills,westlake village, chatsworth(basically everthing west of Topanga Canyon blvd); and the thin 2-5 mile wide thin coastal sliver which includes the Westside, is about the only places in La county which are desirable conmunities(if you can afford them). These areas are 2- 4 % of the population and less than 10 % of the LA county land area.
The rest of LA is pretty drab or third world immigrant or decaying former middle class exurb slowly becoming ghettoized.

 
Comment by SteveH
2007-11-12 23:06:24

Yeah, well I worked in Orange County on a contract engineering job for 9 months in 1990 and vowed never to go back to that state. What a total sh*thole. California sent me tax bills (I lived in Seattle) for the next three years, and tried to get me to pay registration on my car. Living down there was like living in a place that had no soul, no connection to real life, no history, and no continuity. No one knew anyone, no one had a history of living there, everyone was a temporary person, a stranger. I absolutely hated the place. When I flew back to Seattle and saw the green trees out the airplane window, tears actually came to my eyes. I’m not saying Seattle is any great shakes anymore, because it isn’t. There are too many people and too much traffic and houses cost too much. But at least there was some soul. So to say California has a good climate may be true, if you like sunshine all the time, but there is a lot more to life than climate. California is a vapid, egocentric, souless place where people live, and that’s about it. Give me rain and damp and dark anytime.

 
Comment by Judy Blue Eyes
2007-11-13 00:23:29

Well, hard to know anything about a place in nine months, dontcha think? I’m a second generation native Los Angeleno, and the first to point to its many faults. But contrary to the stereotype, there *are* friendly, sensible, non-Hollywood, down-to-earth types in L.A. There are working class folks who got into houses at the right time, and folks who are honest, regular, non-botoxed sorts here. There is beauty in LA, you just have to know where to find it. Someone once described it to me as “private, backyard” beauty. You have to know the locals, not the people who swooped in to live the Hollywood dream.
OK. Enough defending my home town. Yeah, the prices are psycho. Too many people here. Too many cars. But my people are here, and I’m Hella glad to be renting my Mission revival dream flat, with the bougenvillia (sp)spilling over the balcony. Home is more than a house.

 
 
Comment by oc-ed
2007-11-12 22:28:19

In SoCal IF you can live near the coast the weather is pert near perfect almost year round. There is a definite benevolence to the environment in contrast to Houston (sorry Lou) for example where the humidity is so bad it is like stepping into a vat of hot tapioca some days. And the bugs are minimal here in SoCal unlike so many places I have lived. The ocean and coast itself are things of beauty to behold. Fresh fruit and veggies are a walk away in many neighborhoods at the local farmers markets. No vehicle inspections. You can walk in the ocean in the morning, ski in the afternoon (if there is any snow), and have a drink in the desert for dinner.

Does all of this balance out $500,000 cookie cutter SFRs that would fetch 1/5 that in the heartland max? No, but if you are here and if you can afford it then enjoy it, save what you can and see what what falls out of the homelosers debacle. With median prices at $500+ in OC it’ll still be overpriced here after whatever the bottom is. Even if we see an overshoot of 60-70-??% we are still talking $150-200k for basic housing. That is the premium for the aforementioned climate, et al. I have no crystal ball, I’m just on the fence eating Neil’s popcorn wtaching a train wreck very carefully.

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Comment by peter m
2007-11-12 21:49:29

“The trouble with CA is that the state has not built enough housing since the 1970s”

The HB’ers put up tons of new homes out in the IE and the outer fringe deserts of cal, enough to house 3-4 million additional population . Problem is these areas are highly undesirable sh*tzones with no high paying jobs, blistering heat, arid and treeless, and long nasty gas-hogging commutes . Basically like putting up homes in the Mongolian desert.
What first drove folks to buy in the IE was cheap affordable housing under $250,000 or $300,000. When the median got to over $400,000 the disadvantages of owning in far-off Mongolian( CA) scrub desert outweighted the former benefit of cheap prices.
Problem is the desirable coastal areas are already crammed with homes packed densely like sardines , at least in LA county. Ever drive thru LA Westside or Southbay and see the densely-built urban coastal communities jam-packed with sfh’s, condos, apts, rush hr traffic.
Builders had no prohibitions or limits putting up housing in the IE/hi-desert but the jobs /industrial/ commercial infrastructures were/are not in place. Everyone wants to crowd into the coasts where the jobs are.

 
 
Comment by heloc_jock
2007-11-12 17:53:09

Your 75% number ( of CA homeowners underwater) is totally ridiculous.

But your comment that the pressure has been building in CA for a decade intrigues me. How do you get a decade? My impression is that this nonsense started around around September 2001, when the 30-year fixed rate touched below 7%, and then really got rolling in Sept 2002, when it went below 6.0%….. then subprime, interest only , neg am, liar loans, etc. etc. really blew things up…..

http://mortgage-x.com/general/historical_rates.asp

Comment by Big V
2007-11-12 18:30:58

az_owner said “at real valuations”, so I think what he really means is that 75% would be underwater if their houses dropped to bottom prices right now.

Also, that “decade” thing, that’s how long it’s been since the state began recovering from it’s last bubble burst. Prices were rising at an abnormally high rate from 1998-2001, but obviously the incline started getting a lot steeper in 2001, then again in 2003. I can’t remember the reason someone gave for the initial incline. I think it was a change in the law that allowed banks to give io loans to more people.

Comment by John
2007-11-12 19:25:36

The 1998-2001 run-up was largely driven by dot com mania in the Silicon Valley area, and probably by tech stock gains elsewhere. I lived in the SV area at the time and it was really wacky from a consumer standpoint: gridlocked freeways full of brand new BMW-Mercedes-Lexus-Audi-Porsches driven by the new interns…rents going to $2K for a basic apartment…newspaper stories about a free BMW lease as a signing bonus, etc.

Still, while the prices in 2001 were high from a historical standpoint, 2001 prices would have been easily sustainable from 2002-present due to declining interest rates.

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Comment by ochomepro
2007-11-12 18:42:04

if i remember correctly, here in Orange County prices started increasing somewhat around 1997 and by 2001 many of us in the RE industry (at least those I talked to) felt that prices were ready to stabilize or even correct downward somewhat because they had outstripped incomes and rental values were not keeping up.

but then in around 2002 God invented toxic mortgages and prices started taking off some more and increased around 20%. in 2003 toxic loans really became popular and prices in the OC increased around 38% for the year. In 2004 prices actually went down approx. 7 or 8% but then stabilized and began increasing again. Prices seem to have peaked late 2005 early 2006 and have been declining since then.

 
 
 
Comment by Darrell_in _PHX
2007-11-12 16:49:15

““Groff has a payment option mortgage, a once-popular subprime loan. He can’t pay the $3,300 interest-only amount and makes the $1,600 minimum monthly payment,”

Booked as $1700 a month profit for the bank.

“The couple mostly makes the interest-only payment of $2,800 on the two loans. When money is tight, they pay the minimum amount of $1,200,”

Booked as $1600 a month profit for the bank.

Is it any wonder that this is the second most profitable year ever for the financial companies, despite the wrote offs….

Oh, but just wait until these Option ARMS start to pop!!!! Not only will they be writing off losses on the houses, but having to back out all the booked profit as well! UGLY!!!!!

 
Comment by SanFranciscoBayAreaGal
2007-11-12 16:49:23

Hi Everyone,

OT: I just had to cash out options that were about to expire. Total amount is in the six figures. Our company uses E-trade for our stock. I want to move the money out and into safer parking places. Any suggestions for a sound bank etc. would be greatly appreciated. Thank you.

Comment by Big V
2007-11-12 16:56:43

I just opened an account at fnbodirect.com. I checked them out on the FDIC website (compared total REO, total defaults, etc/total assets to other banks out there), and they seem to be in relatively good shape. They’re paying 5.05% APY right now.

 
Comment by John
2007-11-12 17:00:28

It doesn’t matter too much if you keep the total in each bank below FDIC limits. The huge banks (BofA, Citi, Wells Fargo, etc.) are literally too big to fail.

Go to Vanguard(.com) for anything you plan to roll back into stocks/bonds/money market. They are honest and no-nonsense, with the lowest fees available.

Comment by rentor
2007-11-12 18:24:12

No institution is too big too fail. What the governments does is engineers a distressed sellout to political chronies. Chrysler happened in USA. Oil company in Russia fell out of favor with guy in Kremlin.

 
 
Comment by Mike
2007-11-12 17:06:31

Until the credit crunch clouds pass, just put it into treasury bills. You might not get rich on the interest and because you become a saver as opposed to a spender, you will get punished by Bernanke. He only looks after the crooks and con men. The interest % rate certainly will NOT keep up with true inflation numbers (as opposed to Bernanke’s fake inflation numbers) but at least you can sleep at nights. When things get better you can re-think your investment policy.

Comment by qwanta
2007-11-13 07:58:23

Well, how can you sleep at night while Bernanke inflates your savings away? Investing in treasury bills is nuts at this juncture.
If you want a safe inflation hedge, try gold or silver bullion.

 
 
 
Comment by Big V
2007-11-12 16:52:04

Oh, I almost forgot:

Who else wants to come to the Bay Area HBB party?

This Saturday, November 17th

6 PM

Chevy’s
2907 El Camino Real
Redwood City

I’ll book a table under the name “Ben Jones”, bring a table sign that says “HBB” (cryptic enough, methinks), and also bring a small elephant figurine made out of banana leaves.

So far: 8 confirmed and 1 tentative

 
Comment by Mike
2007-11-12 16:57:51

Next problem just around the corner: Streets which are only partially occupied and surrounded by empty and decaying houses. I don’t care how much a house once cost. If it’s value fell from $650,000 to $300,000 - I wouldn’t be interested in moving into an area with several abandoned houses on every street. Even if they were once (waaaay over-priced) at $650,000. An abandoned property is just waiting for vandals, bums and grafitti artists to move in no matter how much the seller is asking. As for the FB’s trying to save their so-called homes? You don’t own it. The bank owns it. It’s just an unpaid for pile of wood and bricks and the brokers gave you a mill stone to put around your neck along with the 30 year contract. FB’s need to carefully pack up their stuff and walk away. “But it means going bankrupt?!” Don’t worry. You’re going to have a lot of company in the next several years.

Comment by rentor
2007-11-12 18:25:52

I like the concept of not having neighbors. After all I always find faults with my neighbors.

 
 
Comment by Olympiagal
2007-11-12 16:59:13

“More than 20 of the 35 homes for sale in Bellevue Ranch are on the market either because banks took them back or owners must sell to avoid foreclosure.”

Fook! Fookity fook!
More than 20 of 35?!
You know, I’m *almost* beginning to suspect that this whole situation might not end so well.

Comment by Vermonter
2007-11-12 17:44:23

LOL - ya think? ;)

 
 
Comment by palmetto
2007-11-12 16:59:22

“A bill already passed by the House, HR 1427, would reform Fannie Mae and Freddie Mac and allow the two to securitize loans of up to $625,000 in expensive housing markets. A similar bill has stalled in the Senate Banking Committee.”

“Robert Rivinius, CEO of the California Building Industry Association, says the stakes in this complex debate are high for California.”

“‘Homeownership in California is only 56 percent, and the rest of the nation is 69 percent,’ Rivinius said. ‘So the homeownership rate is lower than (that of) the rest of the country, and if we don’t raise the limit, things will never improve.’”

Some HBBers may recall I posted about a conversation I had with one of the staffers who is in charge of banking and finance at the office of one of my Senators, where I asked where FHA got off backing loans of $500,000. Well, she (the staffer) practically spat out word for word everything Rivinius said, so now I know where she got the sock of crap she was giving me. Got lobbyists?

I’m not kidding, this staffer gave me a bunch of verbal diarrhea how “low and middle income” people wouldn’t be able to afford to live in certain areas if they didn’t raise the limits on the loans. “Low and middle income”. WTF? Getting $500,000 loans? I told her I didn’t consider $200,000 to $250,000 to be low or middle income. She said “Oh, that’s what you think people need to afford a $500,000.00 loan?” And then snorted at me with contempt. Well, back atcha, missy, you’re the one who deserves the contempt, getting your information from lobbyists and vested interests. Folks, many times the cockamamie laws and resolutions that you see appearing on the floor of Congress come from staffers just like the little snip I spoke to at my Senator’s office. No wonder we’re in trouble in this country.

Comment by Big V
2007-11-12 18:44:51

How did you respond to her? Did you tell her how much the payment is on a 500k loan ($3,899 +tax +insurance +maintenance)? Did you subtract that from the take-home pay of the median $50k CA income (3,333 after tax advantage), then present her with what a household has left over to pay for food, clothes, energy, education, yadda, yadda, yadda (-$566)? No wonder America has a negative savings rate. Please don’t tell me that you let this bimbo off the hook with her lame-ass “point”.

Comment by palmetto
2007-11-12 18:56:02

“Please don’t tell me that you let this bimbo off the hook with her lame-ass “point”.

She hung up on me after her snort. Said she had to go to a meeting. Probably had to tidy herself up and change her undies for the next lobbyist.

 
 
 
Comment by WT Economist
2007-11-12 17:01:22

Maria Favela. Isn’t a favela the term used in Brazil for a shantytown? Recall reading a book called Child of the Dark about a woman in Brazil named Maria who lived in one.

Comment by WT Economist
2007-11-12 17:05:48

Ah yes I was right. From an Amazon.com review.

“CHILD OF THE DARK, a book written by a Brazilian woman from the very bottom of society, is yet another kind of these rare narrations, and moreover, was one of the first to appear. Carolina Maria de Jesus, a black mother of three with a second grade education, abandoned by all the men in her life, raised her kids in one of the worst slums of Sao Paulo. She picked trash and paper to sell to junk dealers, cadged bones from a slaughterhouse to make soup, collected squashed tomatoes from behind a cannery, and scavenged thrown away food items from the garbage of richer streets. Writing a diary every day helped her to persevere through years of hardship, to escape for a few moments, her hunger, misery, and constant worry. Through a chance encounter with a journalist, her diary was eventually published and she became a celebrity in Brazil back in the early 1960s. She left her hand-to-mouth existence and moved out of the favela forever. Her book is the only one of its kind from that time. [She had a hard time coping with her new life, though, and died in poverty in 1977.]“

 
Comment by In Colorado
2007-11-12 17:06:26

That’s what they are called. In Mexico they are called “ciudaded perdidas” (lost cities).

Comment by WT Economist
2007-11-12 17:11:29

Most American’s don’t know how lucky they have it. Unfortunately, happiness seems to be deterined by relative rather than absolute prosperity. If you have less than the Joneses, or less than you used to when you were borrowing and living large, you are miserable.

The worst injuries due to the bursting bubble may be psychological.

Comment by Silverback1011
2007-11-12 17:20:33

In Michigan people are finally getting it that if they have a JOB and a ROOF over their heads and some FOOD for themselves and their kids at suppertime, they’re truly blessed. Except for heat, some clothes, a car that works, and electricity, there’s not much more they really NEED. Things are just that bad, or good, here.

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Comment by Kyle
2007-11-12 20:04:00

Except for heat, some clothes, a car that works…

In other words, a car not built by the Big 3.

 
 
Comment by palmetto
2007-11-12 17:30:58

“Most American’s don’t know how lucky they have it.”

Oh, believe me, I know how lucky I have it. Maybe I took things for granted when I wuz a pup, but the older I get, the better the America of my youth, or of even five years ago looks to me. One of the great things about this country used to be that, at least in states like FLA, you could live pretty nicely on not a whole lot of money. Modest, yes, but nicely. Not so much anymore, as thugs, illegals and creeps permeate formerly modest but pleasant neighborhoods.

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Comment by bill in Maryland
2007-11-12 18:26:31

One of the great things about this country used to be that, at least in states like FLA, you could live pretty nicely on not a whole lot of money. Modest, yes, but nicely. Not so much anymore, as thugs, illegals and creeps permeate formerly modest but pleasant neighborhoods.

I agree. I’ve seen much worse residential neighborhoods with high for sale prices and thugs wearing gang barb than what I have seen in apartment complexes as a renter. You can find peaceful upscale apartment complexes in just about any large metro area. I’m in one in Maryland. It turned out better than I hoped. And no gangs in my Phoenix apartment either.

 
Comment by Pelegirl
2007-11-12 23:57:29

The hubby and I had to move out to the Inland Empire in CA for a year for work. We found a really nice gated apartment complex that did a thorough background check and the kindest, most considerate neighbors we’ve ever experienced. Contrast that to paying $3,000 a month to live in Santa Ana in a crappy 900 square foot shack dodging bullets from gang members, mariachi music til midnight every night and getting your car broken into on a weekly basis (this was our friends who bought a place thinking it was “gentrifying”).

 
 
 
 
Comment by jbunniii
2007-11-12 18:09:37

Sure, see also the movie “City of God” from a few years back, which is set in the favelas of Rio de Janiero. Gangbangers in LA who think they’re hardasses could learn a thing or two from the boys in Rio.

 
 
Comment by SMF
2007-11-12 17:02:01

“That may be a sign that some people plan to dig in and wait out the real estate doldrums by offsetting those large mortgage payments with rental income.”

That is provided that the high prices will return sometime soon…

…sorry, will not happen in our lifetime.

Just like the .com bubble, where after 7 years of waiting, it is only 1/2 the value it used to be.

I don’t believe many will hold on to a depreciating asset for 7+ years.

Comment by Darrell_in _PHX
2007-11-12 17:17:11

NASDAQ is back 1/3rd of the 4000 point drop. (roughly 5200 to just under 1200)… (actually, if you adjust for inflation, the bottom would be something like 1350.. So we’re up 1200. less than 1/3rd of the drop).

But, that is NOT on the strength of the same stocks that had the bubble before. Much of the comeback was from new stocks introduced to the NASDAQ since the bubble. Most of the year 1999 NASDAQ stocks are LONG gone!

Comment by edgewaterjohn
2007-11-12 19:52:20

That’s a really good point Darrell. As for housing, a similar scenario might play out:

1. Builders stand at the ready to put up pristine new homes at the first viable opportunity.

2. Said HBs will build on cheap(er) land picked up during the bust.

3. In sharp contrast, existing newer houses will decay physically in the interim - along with probably many neighborhoods as well.

So, when the recovery does come along it is more likely that the houses that benefit haven’t even been built yet. Meanwhile the 2002-2007 vintage will turn decidedly sour.

Comment by Mike G
2007-11-12 20:08:18

In sharp contrast, existing newer houses will decay physically in the interim - along with probably many neighborhoods as well.

Given the slapdash, corner-cutting contruction methods used during the boom times, this is real possibility.

The other factor is the feedback effect of declining house prices on local government budgets and hence police services, in a time when the economic slowdown may result in higher crime rates. Some ‘marginal’ neighborhoods that were ‘gentrified’ in the last twenty years may decline back to their previous status. Urban renovation pioneers beware.

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Comment by Neil
2007-11-12 17:07:09

“In the 37 years William Horstman has been practicing in San Francisco as a therapist, he’s never seen patients spend more time worrying about their home values - and their personal sense of wealth - than they do today.”

“For people more immediately caught in the crisis, the emotional effects are intense, said therapist Vivian Hankin, a marriage and family therapist based in Berkeley. Two of her clients have moved out of the area because they couldn’t afford to keep their homes.”

“‘They were just devastated because they couldn’t keep their houses,’ she said. ‘They had to go back and find less-expensive places to live in the country. And they still have to worry about how to make it because they have to get new jobs and have to get new friends. They have to start all over again.’”

“Other clients, she said, are stuck with the dreaded double-mortgages, having bought a new house and being unable to sell their old one. ‘They’re so scrunched for money that they’re talking about being afraid to buy anything, even shop for groceries,’ she said. ‘Some are even cutting back on medications prescribed by their family doctors or psychiatrists.’”

“Many clients, she said, have dropped out of therapy because priorities have changed: ‘They have to be food, shelter, utilities, the basics. Anything beyond that isn’t possible.’”

Ok, obviously, those that are stressed will be the more likely to see a therapist. But did you notice something? The therapist is only bringing this up as he is losing clients!

My… I hate to say it, but this was a ‘popcorn read.’ Why worry about what one’s home is worth? LIVE IN IT! If you cannot afford to live in it, DON’T BUY IT! Oh yea, we had a mania.

Munch munch munch… my worry is how to convince my wife its ok to spend a bunch on gifts for the nieces and nephews. ;) We should only save so much towards a home/invest.

Got popcorn?
Neil

Comment by Vermonter
2007-11-12 17:53:51

My kids and I are available for adoption as neices and nephews. I have reasonably cute kids (and least cuter than me), and their photos would look very nice on your wall. We also write very nice thank you notes. ;)

Comment by Neil
2007-11-12 18:42:01

ROTFLMAO

 
 
Comment by are they crazy
2007-11-12 18:25:52

When I read the piece, my first thought was how pathetic that so many people’s self esteem is tied to materialism and consumerism. They would be fine if they could keep their stuff and keep up appearances. I guess the slogan is you are what you have.

 
Comment by hd74man
2007-11-12 18:40:18

RE: “‘They were just devastated because they couldn’t keep their houses,’ she said. ‘They had to go back and find less-expensive places to live in the country. And they still have to worry about how to make it because they have to get new jobs and have to get new friends. They have to start all over again.’”

Veterans are coming home from war missing legs, arms, hands, and sometimes their minds.

Boo-hoo..cry me a river Mr. and Ms. Funky Urban Dweller.

Comment by sf jack
2007-11-12 23:35:47

“… cry me a river Mr. and Ms. Funky Urban Dweller.”

Exactly.

Especially re: Vets coming home

And that’s one of the most entertaining terms I’ve seen here in ages!!

All kinds of people in SF try to pull off the “Funky Urban Dweller” bit. I suppose I’ve been here long enough in this city to be really tired of it.

Many of them left during the dotcom fallout, but now that kind of pervasive idiocy is back.

 
 
Comment by tarred and feathered
2007-11-12 22:37:02

food,clothing and shelter are higher priorities than self actualization

 
 
Comment by vmaxer
2007-11-12 17:18:09

“A bill already passed by the House, HR 1427, would reform Fannie Mae and Freddie Mac and allow the two to securitize loans of up to $625,000 in expensive housing markets. A similar bill has stalled in the Senate Banking Committee.”

What makes these idiots think that increasing Freddie and Fannie loan limits will help? Prices got too high relative incomes and people were given loans they couldn’t afford. Most of the FB’s won’t even be able to qualify for a conforming loan. The only people this can help are those that can actually afford a $625,000 mortgage, a very small portion of the population. This is just false hope for the FB’s, clinging on.

Comment by joeyinCalif
2007-11-12 17:33:28

The limit has been 625K for a long time in Hawaii and Alaska.. Guam? On a four-plex in Hawaii it goes up to something like $1,200,000.

Gotta agree that increasing limits won’t save FBs or increase primary market sales.. or reinflate the bubble. This much seems obvious.
So, one must assume they have something else in mind..

 
Comment by dimedropped
2007-11-12 17:35:49

I view the government like the guy whose job went away due to Fedex…..”somebody get that I’m in the zone here.” BUSY BEE!!!!!!!!!!!!!!!!!!!!!!!

 
Comment by Neil
2007-11-12 17:43:18

Most of the FB’s won’t even be able to qualify for a conforming loan.

Yep. Go ahead and raise the limit. It won’t impact a thing. In fact, it might speed things up.

chuckle…

Munch munch munch.
Give them what they want… (in this case) It would be quite the rude wake up call. But first, we get through winter. Bwaaa haaa haaa ha!

Oops, that came out loud, didn’t it? ;)

Got popcorn?
Neil

Comment by Lisa
2007-11-12 19:50:42

“Most of the FB’s won’t even be able to qualify for a conforming loan. Yep. Go ahead and raise the limit. It won’t impact a thing. In fact, it might speed things up.”

Yep indeed. A HBB’er posted last week that a big increase in the conforming limit (e.g. $1MM) would toast the jumbo market in no time flat. Why would a bank write a non-conforming jumbo loan, if conforming loans are now available for the jumbo market? So, jumbo loans up to the $1MM mark would require downpayments, debt to income ratios, full income documentation, etc. So, no more “funny stuff” over the current $417K. Hardly anyone would qualify for a jumbo loan anymore.

I know BB thinks this will “save” the market, but I think it will do just the opposite. It’s a good CYA move, however, as the FB’s probably won’t put 2 & 2 together for a while about GSE lending standards.

 
 
Comment by Johnny B. Good
2007-11-12 17:47:41

Yep…..Sentiment has shifted - the truth is revealed:

A. Housing does not always go up.

B. It turns out that they don’t need to make any more land, there’s quite a lot of it.

C. Sometimes buying now will price you IN forever.

D. Housing is not always the best investment you can make.

E. Once the saturation point is reached, increasing interest rates will only lower the price, not increase it.

F. Once you take on debt, you have to repay it. As the Mogambo Guru said, “Debt is the sticky residue left over when all the borrowed money is spent.”

G. Getting ‘teased’ by your lender with a low rate is a lot worse than getting teased by your older sibling. Remember, it’s all fun and games until someone misses a payment.

H. Paying more for a house means that you pay more for insurance and taxes, too.

I. All in all, home ownership does not live up to all the press written about it. If it costs you much more to buy than rent, then rent.

Congress is grasping at straws in an election season. Let’s see what the big topic is in 11 months. Anyone think it might be housing and the economy?

 
Comment by joe momma
2007-11-12 18:23:58

Anything being done is being done for the Wall Street Gangsters to pawn the bad loans off on the public.

As long as you always keep that in mind, following the story is easy.

 
 
Comment by Wilson
2007-11-12 17:21:42

“One property Murphy just put up for rent is a 4,000-square-foot home near the top of Signal Hill at 2252 Molino Ave. And a $2.3 million price tag that apparently makes buyers a bit shy.”

“Murphy has put the home up for lease for $5,500 per month. That’s probably a steal for a family with deep pocketbooks and a fear of buying in this market.”

Can someone explain this to me? How does this math work? How is it possible you can cover the mortgage/taxes on a $2.3 million home with $5,500?

Maybe they bought it cheap in the 80’s or 90’s? But most people who have that expensive a home, can’t afford to rent it, right?

Comment by Neil
2007-11-12 17:37:09

Didn’t you study the new math? ;)

Or did you mean the fact that payments that size might cover a $750k home?

If you really can afford a $2.3M home, you can usually afford to just hold it. The rent would be for upkeep. But wait, that might imply this market is broken to charge about 33 cents on the dollar of what the “supposed” market rent should be!

Naaa… time for more Koolaid.

Got popcorn?
Neil

Comment by joeyinCalif
2007-11-12 17:44:02

Is this another reason the high-end property values are sticky?

A family can rent out the $1.2M for-sale-home for more than they will then pay by renting something less fancy to live in.

But when you’re stuck with a $500K home, renting it and moving out of it, and finding a cheaper rental is not so easy..

Comment by jbunniii
2007-11-12 18:14:25

On the other hand, at least there’s a market for renting modest houses. How many people with the money to rent a $1.2 million house don’t already own a house of their own?

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Comment by joeyinCalif
2007-11-12 18:49:27

good point.. but on the other hand (how many hands do we got?), there have to be at least 50 modest homes for every million and up home.
Although there’s far less high-end demand, there’s also far less supply.. and the markets may even out.

 
 
 
Comment by Patriotic Bear
2007-11-12 18:29:01

Let me tell you about Signal HIll. It is about 200 acres of hills right in the middle of the slummy area of Long Beach. The 405 Freeway goes right by it. It gets better. Signal Hill is poluted with many oil pumps all over the place.

Try renting for $2,500. not $5,500. What a dumb ass.

 
 
Comment by socaljettec
2007-11-12 18:26:49

I live (and rent) in Signal Hill and there is NOTHING here worth 2.3 million. $230,000 maybe. The “view” is a joke- to the south a view of the ghetto (and a couple of miles past that a hazy view of the ocean and Queen Mary if you’re lucky)- to the north a view of the 405 and Long Beach Airport. All this for a house built on top of a hill that is perforated like swiss cheese by the oil rigs and drilling. Long Beach is a joke- this thing has a LONG way to fall yet!

 
 
Comment by downSide
2007-11-12 17:22:01

“Other clients, she said, are stuck with the dreaded double-mortgages, having bought a new house and being unable to sell their old one. ‘They’re so scrunched for money that they’re talking about being afraid to buy anything, even shop for groceries,’ she said. ‘Some are even cutting back on medications prescribed by their family doctors or psychiatrists.’”

Damn - and I thought this was going to be the great depression on prozac.

Comment by Neil
2007-11-12 17:38:17

ROTFL.

I think they’ve switched to cheaper street medications. ;)

Got popcorn?
Neil

 
Comment by joeyinCalif
2007-11-12 17:52:51

afraid to buy anything.. well, duh.
I sense serious culture shock heading down the pipeline.

Comment by phillygal
2007-11-12 19:14:42

I’m not afraid to buy anything. Today I was looking at some nice Italian cashmere sweaters on a discount website. Yes it is time for a little splurge.

he he he

Comment by joeyinCalif
2007-11-12 19:29:12

ok.. you talked me into it .. i’ve been such a freakin cheapskate lately.
Lets see.. what do i need.. nothing much.
What do I want.. hmm.. nothin much.
There’s my problem. I’m too content.

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Comment by Johnny B. Good
2007-11-12 22:35:10

Damn, Joey, get some Hummer envy, will you. It’s people like you that will sink the economy. Be patriotic, spend all your saved money and buy more stuff on credit. Why be content now when the Chinese make so much worth owning?

 
 
 
 
 
Comment by jetson_boy
2007-11-12 17:22:41

“‘They were just devastated because they couldn’t keep their houses,’ she said. ‘They had to go back and find less-expensive places to live in the country. And they still have to worry about how to make it because they have to get new jobs and have to get new friends. They have to start all over again.’”

-in other words, the dark realization probably struck them that they would’ve actually been better off if they had moved to “another part of the country” to start with rather than blowing their money on some POS in the Bay Area. Oh- the IRONY!

I’m sure there’s many a scared Berkeley/SF/Marin liberalite who’s depressed that they’re now living in areas that they loathed and despised.

Comment by Neil
2007-11-12 17:41:08

I’m sure there’s many a scared Berkeley/SF/Marin liberalite who’s depressed that they’re now living in areas that they loathed and despised.

As they say, Karma’s a bitch. I’m willing to move out of state, its a matter of convincing my wife at this point. Oh, I place a value living close to our folks: $250k premium. Yes, that is a lot of a “daycare premium,” but I’ve put a lot of thought into it and that’s what its worth. No more… No less. (But I’ll bargain shop.)

We’re about to see the Barbarians at the gates… trying to leave California!

Got popcorn?
Neil

Comment by Olympiagal
2007-11-12 18:04:26

Oh, well, Karma’s not ALWAYS a bitch. In fact, I have found her to be quite the grade A girlfriend, long as you don’t criticize her taste in boyfriends, borrow her favorite sweater too often, or choose the stupidest option of all available choices. See, karma’s a bitch if you happen to be a retard, but the rest of us are safe. All 23 of us.

 
 
Comment by climber
2007-11-12 17:53:49

That’s why companies have such a hard time recruiting in CA. You basically couldn’t pay me enough to move there. If you met my price I’d rent, bank the extra and move out as soon as I had an adequate balance in the bank.

Comment by palmetto
2007-11-12 18:17:12

“You basically couldn’t pay me enough to move there.”

Back when I was visiting SoCal during the 1990s, I thought I’d like to live there. I dug the weather and the beaches. Sandyago was rather nice, I thought. Santa Monica not too bad, either, despite the homeless. But, whee-ooo, the prices freaked the living daylights out of me, coming from FLA. However, I figured if you had a decent income for the area, it might not be too bad. But now, after reading on this blog and in other places about what’s happened to the state, it sounds like one scary, third world craphole.

 
Comment by bill in Maryland
2007-11-12 18:31:22

shoot. I paid $1000 per month rent from 2003 to 2006 a mile and a quarter from the beach in the south bay. Living was cheap and the studio was on the upper end of prices. A very nice apartment. Well worth it. I’ll do it again when the opportunity arises. I love not worrying about icy roads.

Comment by sf jack
2007-11-12 23:41:25

Icy roads? What? I could understand crime, taxes, bad schools and all that garbage.

But icy roads make life fun and interesting.

Sheesh - get out and live a little.

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Comment by are they crazy
2007-11-12 18:35:33

I guess it’s hard for people to believe that SoCal used to be paradise. It was such a great place to grow up - very cliche, surfing before school. Of course, we had a lot more freedom in those days. LA was close to beach, 1 1/2 hrs to mountains, desert, SD or SB. Rush hour was really an hour and only in some areas. The schools were actually the best in the nation and most everyone could get into a UC that cost about what community college costs today. Housing was reasonable, gas was cheap and you could grow food year round.

Comment by palmetto
2007-11-12 18:42:01

“I guess it’s hard for people to believe that SoCal used to be paradise.”

No, I believe it, I saw the tail end of it during the mid 1990s and even though I never lived there, just visited, my heart aches for the state. Heck, if I could die and come back during any time period I wanted and where I wanted, it would be Cali in the 1930s.

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Comment by Housing Wizard
2007-11-12 20:48:38

Yep ,I was around in different places in Southern California when it was paradise everywhere . They had alot of fruit trees all over the place .The freeways weren’t crowded …can you imagine . But aren’t alot of states crowded these days ?

Yep, California was the land of milk and honey . Back 50 or 60 years ago alot of property was cheap in California .You didn’t have to pay the sunshine tax back in those days . People were in a pretty good mood and very friendly in California and you had people from all over settling here .California was a trend sitter also for many years ,but I don’t know what it’s turned into now .The beaches weren’t polluted ,and you could see the stars at night . California was really a upbeat place to be ,and always interesting . All walks of life could end up at a event ,and there was always alot of events going on in California . Yep, it was paradise .

 
 
Comment by SaladSD
2007-11-12 19:00:30

If your really want to see what rampant bubble-driven development can do to a beautiful coastline then look no farther than Baja California, near Rosarito Beach. A dozen years ago we’d take road trips along the toll road, drink banana daiquris at La Fonda and admire the raw coastline bluffs with the occassional wood shack and wandering donkeys. Now the ocean is blocked from view by wall-to-wall condo city, with no development restrictions whatsover. I always loved Baja because I imagined it was what SoCal looked like 50 years ago. Baja has been ruined, unless of course you live in one of those high-end gated communities with a nature preserve.

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Comment by are they crazy
2007-11-12 21:39:50

Testify SaladSD. We used to go to Rosarito all the time even into the lat 90s. Great seafood and drinks cheap. Long stretches of beach, really nice people. Last time we went, I didn’t even recognize it.

 
 
Comment by peter m
2007-11-13 01:16:25

” guess it’s hard for people to believe that SoCal used to be paradise. It was such a great place to grow up - very cliche, surfing before school. Of course, we had a lot more freedom in those days. LA was close to beach, 1 1/2 hrs to mountains, desert, SD or SB. Rush hour was really an hour and only in some areas. The schools were actually the best in the nation and most everyone could get into a UC that cost about what community college costs today. Housing was reasonable, gas was cheap and you could grow food year round. ”

That WAS Scal /LA up to the 70’s, maybe to the end of the 70’s. I could drive up to the mts in about an hr and not worry about being shot for ‘trespassing’ on a pot plantation.
Could also ride my bike all over Scal and there were still lots of open fields , picturesque roadside farm stalls, and even the IE was largely rural citrus/ranch country even on outskirts of San bernardino City(unbelievable).
That has all changed and IMOP the great waves of illegal immigration in the 80’s all through the 90’s has been the leading cause of the deterioration of the Scal landscape. I cal this the Tijuana-sization of LA and it is real as the 5 fingers in front of you. Drive fron downtown LA along main st to slauson and turn west/east and see the devastation.. Or drive Sherman ave in SF valley from the 405 east to the 5. Or down atlantc ave from east LA south to the 105. Chances are 90% of the folks you meet are immigrant hispanics speaking little english, and you get a birdseye view of reeking slums and severe deterioration.
LA dwtn going out in a 10-20 mile radius is a third-world crapzone. Yoy can drive from bevery hills to the third -world hellhole rampart district near dwtn La in a half hr.
LA city has lost its luster long time ago. Think of it as Mexico City or Tijuana El Norte, with all the imported third-world crime, gangs and corruption .

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Comment by John Law(Duke of Arkansas)
2007-11-12 18:36:28

“I’m sure there’s many a scared Berkeley/SF/Marin liberalite who’s depressed that they’re now living in areas that they loathed and despised.”

in 3 years living in flyover country or the rusted out rustbelt will be the next hip thing.

 
Comment by tarred and feathered
2007-11-12 22:48:04

They probably moved to Central San Joaquin valley where they get zero sympathy about their situation.

 
 
Comment by Salinasron
2007-11-12 17:32:28

OT: Was in Bakersfield this past weekend and ran into a former neighbor at the market. He said that the house I sold had gone up $170K since July 2004 and in the past month had gone down $70K in value. He also said that RE in BK was toast.
One of my wife’s supervisor’s here in Salinas said that his sister is $165K under water and about to loose her house.
Gas prices may be going up but traffic between Bakersfield and the coast was very heavy on both Saturday and Sunday. Something tells me that gas will have to get to $5/gal here in CA before driving is curbed.

Comment by joeyinCalif
2007-11-12 17:56:48

they said that about $2 gas ..and $3 gas.. and $4 gas..

Comment by Vermonter
2007-11-12 18:01:07

I wonder, too, what the real “pain” point is on the price of a gallon o’ gas that will motivate the masses do something other than comment on the price.

Comment by combotechie
2007-11-12 18:33:22

As for me I’m gonna buy a locking gascap.

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Comment by Vermonter
2007-11-12 19:20:24

That sounds like the best idea…

 
 
 
 
 
Comment by Rintoul
2007-11-12 17:41:34

$655k?!?! Now *that’s* a starter home!

Comment by Professor Bear
2007-11-12 18:17:11

Sounds like a starter on the path to a future foreclosure.

 
 
Comment by Salinasron
2007-11-12 18:04:45

The People’s Bank of China increased by 50 basis points to 13.5 percent the cash reserve requirements for banks, the ninth time this year. It takes effect Nov. 26.

Comment by joe momma
2007-11-12 18:25:30

China has been way ahead of us on this bubble. They have been making real changes to avoid a disaster. Too bad I cannot say the same for our crony capitalists.

 
Comment by Big V
2007-11-12 19:02:20

Sounds like they’re finally letting their currency appreciate. That’s what BB’s been trying to get them to do for a long time.

Comment by Mike G
2007-11-12 20:16:29

That may not affect the currency, but it’s an attempt to slow their economy because inflation is taking off. They’re also observing the sub-prime meltdown and trying to rein in risk in their financial system by requiring higher reserves.

Comment by vozworth
2007-11-12 20:29:05

think, “this is so”

inflation surges, not equities….commodities..

jas has it figured right, if 110 dollar of oil fails to manifest, deflation rules the roost…thats depression, but we arent quite “being there”….

however, 110 dollar oil spells inflation of the highest order…its coming…as is 1000 dollar gold…

this is so.

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Comment by vozworth
2007-11-12 20:24:10

“HANOI, Nov 13 (Reuters) - The Vietnamese government plans to sell $1 billion of dollar-denominated sovereign bonds this month, a month later than originally planned, a Finance Ministry official said on Tuesday.

“We are planning to have a roadshow for the issue in Singapore, London and New York next week, after which the bonds will be issued shortly,” said the official, who declined to be identified. (Reporting by Nguyen Nhat Lam; Editing by Valerie Lee) ”

****************************************

everyone faces failure, all debt is toxic at this point.

 
 
Comment by Professor Bear
2007-11-12 18:15:57

“Albarran, who makes $63,000 a year, bought his 1,550-square-foot, three-bedroom home in Vista two years ago. He paid about $478,000 and financed the purchase with a conforming first mortgage of $95,000 and a second, ‘jumbo’ mortgage of $382,000.”

“A bill already passed by the House, HR 1427, would reform Fannie Mae and Freddie Mac and allow the two to securitize loans of up to $625,000 in expensive housing markets. A similar bill has stalled in the Senate Banking Committee.”

Other than encouraging more suckers like Albarran to strangle their family budgets with unrepayable mortgages, what is it a bill to enable the GSEs to securitize loans of $625,000 supposed to accomplish?

And aren’t the D-ratic Senators concerned that someone (like me) will suggest they are culpable for encouraging low income buyers to buy homes they cannot afford? The foreclosure crisis is largely due to misguided “affordable housing” policy, a pet D-ratic political cause.

Comment by Housing Wizard
2007-11-12 23:07:36

Someone should ask these lawmakers why they have and want to continue to encourage low income buyers to buy homes they can’t afford on toxic loans that cause foreclosure . The Senators seem to think that letting a low income borrower buy a home they can’t afford that somehow they are supporting the American Dream for the lower class . What a bunch of BS . The government was supporting the economy that was stimulated by real estate going up .The wealth effect from real estate was fueling alot of insustry and Wall Street .

I think the gov. wants to raise to limits to have a bagholder for the bad paper and they want a bagholder for new money loans that they think might solve the tigher money problem which was caused by investors pulling back because they got burned or fear they would get burned . Now as taxpayers we have to fear that we will get burned .

 
 
Comment by aladinsane
2007-11-12 18:26:55

“‘Loans are definitely a little stronger these days,’ said Jacob Notowitz, a second-generation pawnbroker in Millbrae. ‘There’s a home-loan crunch, and people can’t refinance.”

“People often use his shop to get loans to make up the difference as ‘home loans re-set,’ Notowitz said.”

Pawnbrokers will be more choosy about what they lend on, as too much comes in…

 
Comment by dan
2007-11-12 18:36:07

“‘We gambled because the way everything was going it seemed safe. We were riding the market,’ he said.”

Now ride the porcupine AND SMILE, you POS.

Comment by palmetto
2007-11-12 18:50:12

“Now ride the porcupine AND SMILE, you POS.”

ROTFLMAO!

 
 
Comment by joe momma
2007-11-12 18:38:41

Talk about KARMA. You read all these stories, see these people losing everything, and I cannot help but think this is a massive case of KARMA.

A morally strong country would have never stood silent while Iraq was being destroyed in the biggest war crime in my lifetime. Nope, so many people cheered for the deaths of Iraqis. In fact, these same people attacked others for pointing out this immoral act!

A country as morally corrupt as ours has this crash coming in spades. Everything is connected. The same failings that allowed us to cheer for the deaths of others also allowed us to sit silent while a madman ran this country into the ground. The same failings that led people to rip each other off blind with toxic loans. The same failings that caused people to be so greedy they didn’t bother to read the loan docs.

It’s KARMA. Sorry to say, but this is NOT the country I grew up in. It’s an embarrassment. And quite frankly, it’s hard not to conclude we have this coming.

Comment by Troy
2007-11-12 21:35:15

Dude, I was against going into Iraq before we did, but I have to admit it was a good idea on paper. Depose a detested and rather anti-American autocrat, put in some friendly secular Shia into power, open up Iraq’s fields to our oil service industry and strategic oversight, establish strategic air bases in the center of the M.E., covering Israel’s back as it were, give a local demonstration of nation-building, etc. etc.

There was a lot to like with this plan. The only problem with it was that it was launched on false pretenses, and the occupation was botched worse than if the 3 Stooges were running it.

 
Comment by dan
2007-11-12 21:51:05

Amen.

 
Comment by Housing Wizard
2007-11-12 22:04:46

What is happening now might be KARMA or CAUSE AND EFFECT , or maybe its just a comedy of errors that brought this Nation to this financial storm . Moral corruption seems to play into this housing boom and it’s amazing to me how many people were willing to commit fraud on their loan applications about income and how many people were willing to go on toxic loans . Also, I have never seen so many check and balance systems go haywire or not be present at all .

The boom started with the lower interest rates stimulating the real estate market and than its turned into a free-for-all crazy corrupt mania .When I think about 2005 when it was a common held belief that “real estate always goes up “, it’s hard to believe that people could believe this and it turned into mass criminal madness . You had a few voices like Ben Jones objecting to the bubble ,and other people who were objecting were not given much press at the time . Just all factors came together for this perfect storm of financial madness that was riddled with fraud and corruption .The fact that so many people were just waiting for a greater fool to come and buy some POS at a 20% or more profit in 6 month ,or people were waiting for a bank to give them the next injection of money by a refinance , so they could afford their house, or fund their life style ,is just crazy . On a mass level people wanted something for nothing and they actually believed that real estate would go up non-stop and some greater fool would cash them out one day .

People use to buy houses with the idea that maybe one day they could pay off the mortgage and have a paid for house when they retired or have a slight hedge against inflation .

This isn’t the same America that i grew up in either .

 
 
Comment by arroyogrande
2007-11-12 19:17:11

“Groff has a payment option mortgage, a once-popular subprime loan. He can’t pay the $3,300 interest-only amount and makes the $1,600 minimum monthly payment”

And these are the types of people that some would have us bail out with taxpayer dollars, because “otherwise financial institutions will fail and we will be plunged into a depression” (almost a verbatim quote).

At the very least, that house costs $3,300 a month just for th interest, and he is paying far less than that, taking an additional loan each month to pay the remainder…and *needs* to get bailed out, otherwise “we all lose our jobs in financial Armageddon” (again, as some bail-out proponents tell us).

Comment by arroyogrande
2007-11-12 19:21:41

“SUV’s and boats are parked in driveways where neighbors chat. ”

And one more thing…you shouldn’t be buying a boat if you can’t afford the house. And I shouldn’t have to pay for your boat *and* your house so that you can keep them boath and keep this ponzi scheme house of cards from falling.

Comment by arroyogrande
2007-11-12 19:26:23

“Groff was a move-up buyer after making a significant profit from selling a smaller home in another southwest Santa Rosa neighborhood. He and his wife financed the entire purchase with a subprime loan.

Rather than make a down payment, they put the money into landscaping, hardwood flooring, bathroom upgrades, as well as a new motorcycle and car.”

And yes, please please, PLEASE give me the pleasure of bailing out someone that made a big profit in selling their first home, and instead of using those profits to buy a home they could afford, they bought a house they couldn’t afford, and borrowed the full price to boot, and *then* used the profits from the first house to bling out the new home.

Please please PLEASE give me the pleasure of bailing these people out. Please please PLEASE.

Comment by Housing Wizard
2007-11-12 21:03:52

Doesn’t it just make you want to puke arroyogrande . All these move up buyers who should of put their equity in the move up house to keep their payment low ,went for the concept of leverage just so they could buy junk .And I can just see the self-serving loan agents or realtors talking them into going on a toxic no-down loan based on the concept of leverage . These people were counting on real estate going up and paying for a upscale lifestyle .
All this happy money really stimulated the economy and now it’s gone .

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Comment by Mo Money
2007-11-12 19:22:37

“He and his wife financed the entire purchase with a subprime loan. Rather than make a down payment, they put the money into landscaping, hardwood flooring, bathroom upgrades, as well as a new motorcycle and car.”

Tis better to have spent and lost it all than to never have spent at all.

 
Comment by Stars End
2007-11-12 19:33:00

Don’t know if this is the answer, but meebe potential buyers should be required to take an IQ test prior to purchasing?

Stars End

Comment by joeyinCalif
2007-11-12 20:18:41

one can pretty much guess the results ahead of time.. and the next step is a War on Stupidity.. complete with a Stupidity Czar.

 
Comment by arroyogrande
2007-11-12 23:36:06

“meebe potential buyers should be required to take an IQ test”

Sometimes, like when Ben Bernanke himself starts waving the “bail out troubled home purchasers” flag, I start to wonder who was the true genius…the ones who lived well within our means, or the ones who bought and spent above their means, buying toys and bling to impress their friends and relatives (”yes, we just got married, but we *need* five bedrooms”) in the hopes that the boom would go on forever, or that if anything went wrong, the government would bail them out…with our money.

Thanks, Ben Bernanke, for signaling who *you* think is the greater fool.

I can only take solace in the fact that Ben B’s plan is a drop in the bucket…how many of the troubled re-fis can afford the full payments on a jumbo loan at even conforming rates, or can qualify for their $750,000 loans using documented income? It’s a proposal to waste my tax money guaranteeing million dollar loans that use depreciating assets as collateral, all the while the housing market and the economy tanks as fast as ever. Well, at least they can get sound bites saying “at least we tried”.

I might as well send them $100 bills, so that they can burn them one at a time in front of television cameras.

 
 
Comment by Mo Money
2007-11-12 19:41:38

Homes Left Vacant in Slump Mar Neighborhoods-Audio

“They are selling everything inside — their kitchen cabinets, their toilets, their AC units … and it’s hurting the neighborhood,” Butera said. “The house now looks like a crack house — it’s missing all its windows.”

http://www.npr.org/templates/story/story.php?storyId=16052800

Comment by dan
2007-11-12 19:55:11

They leave nothing but a trail of devastation. Man, these FB’s are like a swarm of locusts.

Comment by Housing Wizard
2007-11-12 20:52:53

Remember when we use to call them the locust and we could predict the next great hot real estate investment place they would be swarming to ? I remember how we use to talk about how all these buyers were going to ruin neighborhoods once the bubble burst . It all happened .

 
 
 
Comment by Tom
2007-11-12 19:44:12

Some US Lawmakers are exerting political pressure on the Fed to cut interest rates again; in time to “save” the holiday shopping season.

One of the arguments in favor of cutting rates more is that the high price of oil and gas at the pump makes people feel that they have less to spend. That is nice to say, but oil spiked and the dollar agressively tanked after the Fed started to cut rates. This means that low rates are keeping oil prices high (and climbing).

I think that the original .50% cut was waisted. Had the Fed cut two .25% cuts, the dollar might not be as weak, inflation would be tamer and energy would be less expensive. In hindsight, the Fed probably should not have cut rates at all yet. If the Fed further cuts rates, the dollar will continue to tank, inflation will get worse, and people won’t be able to drive their cars, or heat their homes.

On the other hand, the Fed proved that by cutting rates so agressively that the Fed is easily influenced by political pressure and some market volatility, (a sign of weakness). Therefore the market will put the Fed to the test again. However any move by the Fed is disasterous and the USA could be facing Check-Mate.

Comment by neon kitty lips
2007-11-12 21:43:25

Speaking of the holiday shopping season….I went to BB&B today, you know the place with bedroom, bathroom, etc., STUFF. There is so much STUFF in there; they have these little junior size carts that still barely fit down the aisles. The pressure to buy BUY BUY is (almost) overwhelming. Not that many people, but it didn’t matter cause if you ended up in an aisle facing someone else with a cart, it was a standoff cause there is no room to turn around. Anyways, I got up to the checkout counter (I bought one thing, with a 20% off coupon) and was asked if I found everything. I told the guy the place was really packed; he said yeah, I should have seen it yesterday, there were people everywhere. I said I wasn’t talking about people, I was talking about all the STUFF, way too much STUFF, it was claustrophobic. He wouldn’t talk to me after that. Anyways, that’s my shopping story. Lots of stuff and not many shoppers.

 
 
Comment by Mo Money
2007-11-12 20:19:59

At the local consignment shop, glimpses of a region’s hardships

http://www.heraldtribune.com/article/20071111/REALESTATE/711110839

 
Comment by HK_Vol
2007-11-12 20:54:02

Let’s see.
$5,500 per month = $66,000 per year rent on a $2.3 million home.
That’s a gross yield of 2.87%
Assuming that you need a 10% gross yield to cover the mortgage, taxes, maintenance, etc. then this house is worth $660,000.
Even if you don’t get there, a 6.60% yield will probably push you close to break-even. That means this house is worth US$1,000,000.

Let’s split the difference and say the house is worth $830,000. That implies a 67% drop, or a loss of US$1.5 million.

That owner is screwed if that is what he paid for the house.
He won’t sell if for that today, but the bank might sell it for that in a couple of years……

 
Comment by joeyinCalif
2007-11-12 21:00:33

NEW YORK (AP) — About 500 unionized news writers could soon join their creative colleagues on the picket line. The writers, employees of CBS News television and radio, are expected to overwhelmingly approve a strike authorization.

News reporting needs writers? I wonder what sort of special talents it takes to properly compose things like “The weather looks like it will stay the same for a while” or “There was a fire at 323 Mayberry street this morning”.

“The weather is taking a disproportionate toll on the homeless population and there’s no relief in sight, according to a group of prominent metorologists..”

“Samantha Jones, a transsexual barmaid, lost her home in a fire this morning. Was it a hate crime?? Tune in to the Action 12, 11PM news with Dan and Carrol and find out for yourself.”

Comment by Housing Wizard
2007-11-12 22:15:22

LOL .

 
 
Comment by Mike in Pacific Beach
2007-11-12 21:45:32

I just finished watching DW-TV, basically German News in English on one of our local cable channels. Today in Germany another bank was reported to be suffering from the US Subprime meltdown. It doesn’t seem a day goes by another bank is getting hammered, surely I thought this would just be a US thing, but I was very wrong, banks in England and Germany got into the act buying this near worthless MBS crap. Did I just see E-Trade fall off a cliff today in the stock market, amazing!

Comment by Housing Wizard
2007-11-12 22:19:07

Oh, that’s going to just do wonders for public relations with other Countries when they lose billions dealing with us .

Comment by crisrose
2007-11-12 22:58:20

All part of the plan - first the Iraq war laid us out as a nation of invading, murdering, oil thieving torturers - now our greed, stupidity, laziness and outright fraud ‘takes down’ the world financial system.

The fact that the debt pyramid was going to implode anyway is beside the point. Scapegoats are needed so the men behind the curtain don’t get the blame. We - as Americans - stepped into that role quite willingly.

No one will cry tears for us when we turn into a third world hell hole filled with starving lowlifes who in truth deserve no better than what we have coming.

 
Comment by slb
2007-11-12 23:06:14

Just remember, when traveling in europe, ‘from the usa?’ ‘ No, no, I’m from canada.’
But it has to be the canadian west coast, ’cause east coast you’ll be expected to know french.

Comment by Housing Wizard
2007-11-12 23:17:50

LOL. I better learn to say ‘eh’ all the time also .

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Comment by Kyle
2007-11-12 23:22:06

If you can’t deny being from the USA, say you’re from California.
CA still has a pretty positive image in most of the world due to the entertainment industry — Hollywood, the Beach Boys, surfing, convertibles, sunshine, openness and innovation, etc. Like someone said upthread about CA in decades past. Image hasn’t caught up to reality yet.

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Comment by sleepless_near_seattle
2007-11-13 04:00:31

It does? Most Europeans I’ve met get their cues from Hollywood and think all Americans carry guns, shoot first, and ask questions later.

 
 
 
 
 
Comment by Mike in Pacific Beach
2007-11-12 22:56:12

Emerald Bay in San Diego closed its doors, another sub-prime lendar bites the dust.

 
Comment by AKron
2007-11-12 23:33:31

“‘For Sale’ signs planted in lawns along BANJO Drive mark the dashed dreams of families in this block-long stretch of two-story homes bordered by neat landscaping and walkways leading to parks and schools. Once a symbol of Sonoma County’s housing boom, Bellevue Ranch is now emblematic of hard times in neighborhoods across the region.”

I wonder if the FBs felt like they were in the movie Deliverance…

“I bet you can squeal like a pig.”
(cue the dueling banjos)…

Comment by dan
2007-11-13 09:14:58

Or;
“You sure got some mighty purdy lips”

 
 
Comment by Housing Wizard
2007-11-12 23:33:57

These loans really got crazy during the boom . Not only could a borrower put no down payment on a loan ,but they allowed people to make such low payment options that it was like they were taking out a loan every month in neg. amortizing . Who designed these loans ? Whoever designed these loans ,they didn’t know anything about risk . The whole idea for a prudent lender is to get equity paid down before circumstances cause the risk of default to increase . Thats why a seasoned loan with some equity paid down was worth its weight in gold ,in prior lending cycles ,before this crazy lending .

 
Comment by Brad
2007-11-13 01:06:38
Comment by Tom
2007-11-13 04:06:10

I’m sick of Buffet this and Buffet that. People think he will save the world and buy all this toxic crap and that just isn’t so. 99% of these are rumors that never come true.

 
 
Comment by seeya
2007-11-13 08:00:12

“‘If someone would have told us this could happen, maybe we don’t buy the house,’ Gonzalez said.”

OH MY!

 
Comment by seeya
2007-11-13 08:02:55

Buffet sold vast amounts of silver bullion just before it doubled in price!

That move has got to be just humbling for old Warren.

 
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