A Bidder’s Market In California
The Press Telegraph reports from California. “It would be hard to pick the best moment from the presidential inauguration at last week’s National Association of Realtors conference in Las Vegas. Incoming NAR President Richard ‘Dick’ Gaylord, a 30-year real estate veteran, was the centerpiece of a nightlong ceremony. He officially assumed the position as head of the nation’s largest trade organization Saturday.”
“Events before and after the installation were staged in Gaylord’s grandiose multi-room suite in the top penthouse of the Venetian Hotel, where several top ranking government officials and high ranking Realtors were on hand, including heads of many of state Realtors associations and real estate top producers from Manhattan Beach to the island of Manhattan.”
“As he headed to the stage, Gaylord was treated to a standing ovation. He continues to deliver a glass-is-half-full message even in the face of the current housing market, was filled with humility and it was more of a pep talk to Realtors and a thanks to everyone.”
“Gaylord went on to hail the accomplishments made by Realtors: ‘It is Realtors who have helped raise the homeownership rate to nearly 70 percent, by advocating for laws and policies that protect private property rights and make housing more affordable and accessible.’”
“‘Dick’s a genuine guy,’ said Randy Jeffers, incoming chairman for 2008 of the Texas Realtors Association. ‘Dick Gaylord is who he is every day. If Dick tells you something you can just bank on it. You can just take it to the bank.’”
The Bakersfield Californian. “Bankruptcy filings have shot up this year as desperate homeowners scramble to elude foreclosure, local attorneys say. During the first half of the year, 530 consumer bankruptcy cases were filed in Kern County, a near doubling of the 266 cases filed during the same period in 2006, according to Bakersfield bankruptcy attorney R. Scott Bell.”
“‘Every single day, someone will come to see me because they’re starting to lose their house, they’re getting behind on their payments,’ Bell said.”
“One recent morning at the public foreclosure auctions that take place on City Hall’s steps, seven of the 18 postponed home sales were halted by bankruptcy filings. But bankruptcy will not work for every homeowner in trouble.”
“‘If you have a payment of $5,000 a month, and you cannot pay that, then a bankruptcy won’t be able to save a house,’ said Phillip Gillet Jr., a local bankruptcy attorney.”
The County Sun. “An old wooden house along Genevieve Street in San Bernardino was the scene recently of a trash pickup for tenants who lost their home to a bank foreclosure.”
“On Thursday morning, the driveway was piled up with appliances, furniture and clothes that were littered everywhere - a telltale sign of a family that recently lived there. An old gas stove with a skillet full of dust was found. In the back yard, there were mattresses, a microwave, two mangled couches and a bulky refrigerator.”
“Foreclosed homes all over the Inland Empire are turning into what Lisa Carvalho calls ‘trash-outs’ - wooden and stucco carcasses with piles of junk left behind by former tenants.”
“The High Desert offers even more interesting tales. The area is full of tract homes in subdivisions that have stacks of furniture piled inside every room, she said.”
“‘These typically look like they’re occupied, but they’re not trashed,’ she said about these homes. ‘(The owners) just walk away and wash their hands of it.’”
The Daily Press. “Despite the large number of foreclosures and other struggles associated with the housing slump, Adelanto Mayor Pro Tem Charley B. Glasper thinks that the market will soon turn and the city will experience growth.”
“‘We are only 25 percent developed. We have the land mass to expand this city to something great,’ he said. ‘One of my biggest disappointments is that we don’t have a big, family-style dining restaurant.’”
“When Glasper drives down the streets of Adelanto, he said that he cannot help but notice the number of houses that have been boarded up and wonder where the people of his community are going to find relief from their financial burdens. ”
The Orange County Register. “Home market watcher Steve Thomas in Aliso Viejo reports that the number of O.C. distressed properties for sale (as defined by homes listed by agents as foreclosures or short sales) was 3,324 last week. That’s up 265 or vs. Thomas’ last report two weeks earlier, up 8.7%.”
“As a percent of all listed homes for sale, distressed properties were 19.3% of the market vs. 17.50% two weeks earlier.”
The North County Times. “The first local foreclosures auction in several years left dozens of buyers clucking happily, but it also revealed a lot about the depth and speed of the real estate market’s tumble, buyers and agents said.”
“A couple of houses that generated suspiciously large cash kickbacks to buyers two years ago topped out at just 40 percent of their most recent sale prices. One Murrieta house whose last sale was recorded at $719,000 in March 2006 was seized by a lender in January and cleared the gavel at $305,000.”
“Carolyn Tidmus, a local real estate agent who had three listings on the block, said she suspects many of the sellers will end up rejecting the winning bids, which were typically $100,000 to $200,000 less than the amounts they had to write off as bad loans and significantly lower than she had expected.”
“‘It was very depressing,’ Tidmus said.”
“A Hudson & Marshall executive estimated that sellers will approve 75 percent of the offers from the auction, compared to 90 percent in most of the auctions it runs.” “The one earlier this month was the first to be held locally. Several real estate experts interviewed last week said it would be only a slight exaggeration to call it the tip of an iceberg.”
“At the end of last month, some 4,000 mortgages in Southwest County were in default, according to a database that covers California. Real estate experts say the vast majority of those houses will be seized by financial institutions, which are beginning to slash prices and turn to auction houses in an effort to convert real estate back into money, their core business. ”
“About 500 are due to be seized by the end of this month.”
“Lou Klein, who bought his Temecula home in 1995, was one of many who had sat pat in their own houses while watching the run-up from 2000 to 2005 with amazement.”
“‘It just went crazy,’ Klein said. ‘I think it went a little too out of whack.’”
“Klein left the auction here with two winning bids, including a $240,000 bid on an 1,800-square-foot house near Murrieta Glen Arbor Park. A woman bought the house in October 2005, borrowing for the entire $420,000 price.”
“The lender seized the house in July, listed it for a month at $345,000, and cut the price to $328,000 at the end of August before giving Hudson & Marshall a crack at it.”
“Nelson Sales and Lyn Cunningham, a local mortgage broker and real estate agent, were hoping to snag their client a house for $200,000 to $250,000. The client owed $550,000 on a house in Wildomar that probably wouldn’t sell for more than $450,000, Sales said. The client…hadn’t defaulted on the mortgage, Sales said.”
“He was hoping to convince the lender to accept less than the outstanding balance. ‘I don’t want his home to be up there,’ Sales said, gesturing toward the podium.”
“Al Rivera had recently sold his own house in Wildomar and is using the $130,000-plus in equity to make down payments on two or three less expensive houses. With new monthly mortgage payments of just $600, Rivera figured he can easily come out ahead as a landlord.”
“Rivera walked away with a winning $131,000 bid on a three-bedroom house in Sun City. It last sold for $290,000 in June 2004. ‘I thought 131 (thousand dollars) was a good deal,’ Rivera said after the auction. ‘It’s completely a buyer’s market.’”
The Reporter. “They came, they saw, they bid. And when the proverbial smoke cleared following Sunday’s housing auction, 18 new homeowners emerged victorious while their existing neighbors in a luxurious Vacaville development were somewhat less enthused.”
“‘We welcome them to our neighborhood. We’re just upset that it’s affecting our property values,’ said Kris McLean, one of the original homeowners in the upscale Meadow Woods subdivision.”
“McLean and her husband paid top dollar for their $786,000 property in April. ‘We would’ve waited, but they told us we had to … buy now,’ she recalled, addling that there was no allowance for haggling over costs.”
“At auction on Sunday, a five-bedroom dwelling initially priced at $809,900 sold for $605,000 and a similar residence previously priced at $826,900 went for $606,000.”
“Scott and Kathy Reid of Vacaville walked away empty-handed. ‘We had a figure and we stuck to it,’ Scott Reid said.” “The couple’s next move was to have some fun before resuming a housing search. ‘(We’ll) go spend the money that we didn’t spend today,’ he joked.”
“Gaylord went on to hail the accomplishments made by Realtors: ‘It is Realtors who have helped raise the homeownership rate to nearly 70 percent, by advocating for laws and policies that protect private property rights and make housing more affordable and accessible.’”
Yes, helping to artificially goose up the price of real estate to the point where true affordability (with a conventional mortgage) is now in single digits here in Cali is really something to be commended. Heckuva job there, Dicky!
“‘Dick’s a genuine guy,’ said Randy Jeffers, incoming chairman for 2008 of the Texas Realtors Association. ‘Dick Gaylord is who he is every day. If Dick tells you something you can just bank on it. You can just take it to the bank.’”
And just then Mr. Jeffers’ head exploded, his skull no longer able to contain the pressure from overwhelming congnitive dissonance.
“It would be hard to pick the best moment from the presidential inauguration at last week’s National Association of Realtors conference in Las Vegas. Incoming NAR President Richard ‘Dick’ Gaylord, a 30-year real estate veteran, was the centerpiece of a nightlong ceremony.”
Having a “Dick” a the centerpiece is oh so appropriate.
“He officially assumed the position as head of the nation’s largest trade organization Saturday.”
…..and we all know what “position” that would be. My JT’s are just twitchin’ thinking about it.
No seriously. I mean, come on. His name is not “Dick Gaylord”. If that were true, he’d be the one of the most ludicrously named people in the world.
What? Oh, it’s true?
He can always do porn if real estate doesn’t work out…
–
Is this guy utterly stupid or is he just being disingenuous? Maybe, salespersons buy each other’s BS.
Jas
This one got me:
“And it is Realtors who have promoted competition in the market by encouraging new business models and by keeping large banks out of real estate.”
Where do I start? How did that work out for the banks? Especially those new business models?
lol !! roflmao !!
It really is a set of quotes that requires no additional comments. Comedy at it’s finest!
well Dick is just a regular guy. Per the MLS in Long Beach, he’s sold 4 homes this year and still has 3 actively listed for sale.
Sassssssssssssssy
“And it is Realtors who have promoted competition in the market by encouraging new business models and by keeping large banks out of real estate.”
“It is Realtors who have helped raise the homeownership rate to nearly 70 percent, by advocating for laws and policies that protect private property rights and make housing more affordable and accessible.”
- Dick Gaylord (both quotes from the first article).
How is keeping banks out of real estate consistent with promoting competition?
And, how is housing more affordable after the stratospheric rise in prices? I seem to recall that affordability levels in LA (where Dick is from) were down to about 2% before the CAR revised its formula.
At least his first name is accurate.
I’m very, very tempted to change my username to “Dick Gaylord”.
must resist . . . must resist . . .
No, can’t.
How about “Gay Dicklord” instead?
Nobody would believe that’s a real name!
“As he headed to the stage, Gaylord was treated to a standing ovation. He continues to deliver a glass-is-half-full message even in the face of the current housing market, was filled with humility and it was more of a pep talk to Realtors and a thanks to everyone.”
I wonder if they bequeathed a participation trophy to every realtor in attendance?
I bet they were glad to see that he could “rise to the occasion”.
The realtors were paid by the clap. They may have caught it too while in Vegas.
” If Dick tells you something you can just bank on it”
Seeing the current implosion of the financial industry, I didn’t think that that statement would elicit much jubilation…
Based on Dick’s statements about “Realtors” making housing more “affordable,” I figured the reason the banks were failing was that people DID deposit Dick’s words in the bank.
I think the real quote was “the guy is a genuine dick”
Gwynster: you said, “I think the real quote was “the guy is a genuine dick”
I agree.
Dick (is?) Gay, Oh Lord! is also appropriate for the new Dick(Head) of the NAR ,the National Ass-ociation of Rats
I’m guessing I lot of posts are being eaten. I know at least 3 of mine have been munched, but I thought it was the nature of the context. (when you have a realtor quote with “Dick”, “head”, and “assumed the position”, well, I tend to get a little creative)
Wink Ex,
YOU are creative. You make me laugh.
Smiles,
Leigh
If Dick tells you something you can just bank on it. You can just take it to the bank.’”
Countrywide bank right ?
the only thing I’d add is that they should have been down at Caesar’s Palace instead of the Venetian, cause it sure sounds like Nero fiddlin’.
Yeah. But it is even better. A penthouse suite in the Venetian. And Realtors wonder where their dues go.
It’s NAR’s latest tactic: deflect concern about falling prices as people repeat the name Dick Gaylord over and over while convulsed with laughter.
Real estate is not the only asset whose price is currently getting marked to market.
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PB, this is one of your best posts ever. Knew it was yours without even looking. Wow, that bimodal distribution is really something. Guess what “profession” the favorable reviewers are engaged in.
How many of the 5-star reviews are from the “Comedy” section?
I have been hysterically laughing my way down this thread.
Too funny! Prof. Bear.
Good one, PB. You really are good at finding new ways to look at the obvious. That’s what makes you so entertaining :cool:.
My favorite (from a review written in Sept/w five stars):
Everybody who doesn’t buy now will be priced out forever. Anybody who does buy will be rewarded with a lifetime of riches, as their property will continue its 25% yearly price increase.
Renters, and anybody born in a future generation, will not be able to afford a $5,000,000 starter home in 15 years. They will live in tent cities and hondas.
This asset bubble is different from all of the others - it will never slow down or pop. The gains are permanent.
Number one son Charley, have no Glasp on situation…
“Despite the large number of foreclosures and other struggles associated with the housing slump, Adelanto Mayor Pro Tem Charley B. Glasper thinks that the market will soon turn and the city will experience growth.”
Adelanto has lots of vacant land and lots of meth labs.
What they don’t have is Water! WTF!
they’re not making any more sand are they???
They’re not making more fresh water. Time to buy Michigan property!
We have Wildomar, Adelanto, San Bernardino(City), Sun city, all mentioned on above post. Now theres a list of IE depressed RE hellholes. Throw in Banning, perris,Lake elsinore,Victorville,Menifee,hemet, hesperia(hysteria) for good measure. One dude got a 3/1 at auction for $131,000 for a Sun City home. Sun City is way out in back of beyond and is called Sun City for a reason:it is 110% baking hot 8 months of the year and a completely barren cheerless wasteland, ugly even by IE standards.
I went to Hesperia once to visit Cal Earth run by the Iranian architect Khalili. It is based on the idea of building super-adobe structures from sandbags and barbed wire. A full 3 BR house that they were building there was actually quite impressive.
But I was more struck by the contrast of the cracker-box houses going up right next to the Calearth site, which is the diametric opposite of the idea behind Calearth. Things were already getting anxious (probably it was the winter of 2005-2006 since it wasn’t too hot) with many sign twirlers standing out there in the desert sun. I couldn’t imagine living out there.
Now that just scares me to death!
Bolted out of Florida.
Meth…ew…
I’m fearless, just don’t meth me.
I am not joking.
This is what your brain looks like on drugs…image of a over fried egg…aaaaaaaaaaaaaaaaaaaaaaaaaaaaaah
I used to be on the Planning Commission for the city of Adelanto. Things did indeed look promising. However, in late 2004 I started to see the signs that this was going to be the early 90s all over again. Unfortunetly, the leaders of the city (at least at the time) weren’t so enlightened.
I recall a developer wanted to only build a cheap partially constructed road (no curbs and gutters) between two housing tracts with the promise it would be fully constructed when the in between tract was built (in a couple years). My position was that we not allow that because there was a good chance that the tract in between might not be developed for 10+ years and the city would be stuck maintaining the road which would almost surely deteroirate because of poor drainage.
All one had to do is look around the city for remains of the early 90s crash and see this was a problem. However, nobody at the time believed that would ever happen again. Ugh. So much for forward planning.
I sold my house and left in mid 2005 and by 2006, after two different owners it was in forclosure. Finally sold for less money than I sold it for in 05.
“‘These typically look like they’re occupied, but they’re not trashed,’ she said about these homes. ‘(The owners) just walk away and wash their hands of it.’”
“You just slip out the back, Jack
Make a new plan, Stan
You don’t need to be coy, Roy
Just get yourself free
Hop on the bus, Gus
You don’t need to discuss much
Just drop off the key, Lee
And get yourself free”
Paul Simon
Noice down day boss! This is starting to look like Nov. of 1997 or Nov of 2000. If they break 1420 S&P convincingly, I think it’s all clear to jump the short side for a nice ride down.
Me too, txchick.
Me short. I tried to short last time, but panicked and got out at a loss. If I hadn’t have panicked, then I would be back in the black now. Darn. If we pass 1420 (sounds like a good number), I think I’ll short some more. I hope I’m not being a fool!
Bought Calls on the VIX May ‘08 30’s. In the black and climbing as we speak. Lots of opportunity out there. We are still in the Denial phase. Next year we will be at the Fear point.
Alas, young lady you confuse me. Moi, la fromage grande?
“Your father has had his annual physical,” the Count said. “I have the report.”
“And?”
“Your father is dying.”
“Drat!” said the Prince. “That means I shall have to get married.”
50 ways to leave your lover.
She said why dont we both just sleep on it tonight
And I believe in the morning youll begin to see the light
And then she kissed me and I realized she probably was right
There must be fifty ways to leave your lover
Fifty ways to leave your lover…
Slip out the back jack….
Love that song!
McLean and her husband paid top dollar for their $786,000 property in April. ‘We would’ve waited, but they told us we had to … buy now,’ she recalled, addling that there was no allowance for haggling over costs.”
- As you can clearly see, California has the newest ‘Dumbass Ranch.’
April of 2007? They believed the hard sell and ‘no haggling’? What she is saying is that they gladly spent $3/4 million and didn’t maybe, I dont know, read the FRONT PAGE of the paper from time to time…….
Getting their financial ass handed to them is the best thing that could happen at this point - it just might better equip them to stop sleepwalking through the rest of their lives.
I don’t know whether to laugh or cry that people like this believed this kind of rhetoric only six months or so ago. It really shows the degree to which the mantra that housing is a one way bet is engrained in our society, thanks largely to what’s happened over the last few years. The level of denial over housing is still palpable.
‘We would’ve waited, but they told us we had to … buy now,
Here you go folks. The key to wealth and success. When the customer wants to wait for a better deal you “just say no…you have to buy NOW!” Disclaimer….if you are a Realtor in this market you should also be holding a loaded shotgun.
“‘Dick’s a genuine guy,’ said Randy Jeffers, incoming chairman for 2008 of the Texas Realtors Association. ‘Dick Gaylord is who he is every day. If Dick tells you something you can just bank on it. You can just take it to the bank.”
Yep, he’s the real Dick.
Lord, In the name of the Father, Son and Holy Ghost. Amen.
“‘Dick Gaylord is who he is every day. If Dick tells you something you can just bank on it. You can just take it to the bank.”
From Bens post:
The culmination of the nightlong gala came with Gaylord being called to the stage following a tribute by Congressman Adam Schiff, D-Pasadena, and Congressman Kevin McCarthy, R-Bakersfield. Gaylord was also honored at the event by Rep. Laura Richardson, D-Long Beach.
Woah. A real shiner…Why are we subjected to ….grrrrr.
It’s official, it’s now called “The Housing Bust” on the NBC Nightly News. No more happy talk in the MSM.
Yep, we’re past the denial phase. For some, they’re only into the anger phase, while others are ahead in the process and are in the bargaining phase. Depression and acceptance are still ahead.
Oh no, in LA we’re still very much in the denial phase.
EVERY For Sale sign for a house that won’t sell at a bloated price gets replaced by an equally bloated FOR RENT sign.
No kidding, on one street alone near me, there are TWO for rent signs. One 3BR was listed at $4700 for MONTHS. They just slapped a new coat of paint on, and changed the asking price to $4800. The other one, maybe 10 houses over, is a 4BR and they are asking….$10K a month. Nope, lots of denial here!
Plenty of it here in the bay area as well. Because, as we all know, “It’s different here” and “Everyone wants to live here.” But inventory is rising and prices are slowly falling now in most areas. REIC misdirection can only work for so long before it’s blatantly obvious that the emperor has no clothing.
Oh don’t be silly. Of COURSE the emperor has clothing. I mean look, he has…SHOELACES. And I believe I detect he also has…a WRISTBAND. See there, he has…a NOSE RING. Voila, fully dressed.
(Hope the not-appearing post doesn’t show up later.)
I want to say: of course the emperor has clothes. He has shoelaces. And a wristband. And even a nose ring. Voila, fully dressed.
So true… check themls.com for rentals on the westside. Same properties, many also for sale, just sit there with rents a *minimum* of $1000 of the prevailing (high) rents. I really don’t see how this can keep going, but it does… :-/
edit: $1000 *over* the prevailing… D’oh!
Granted, not every locale is the same. LA and Bay Area are trailing (as are some of the PNW areas like Seattle and Portland), and some areas are clearly out in front (most of FL, Vegas, etc.) with others somewhere in between. But, for most of the nation, the denial phase is over.
In Long beach( CA) I checked out current Auction listed(asking?) prices on realtytrac and the prices are completely insane. The banks are still listing the auctioned REO’s at near peak or close to the fraudulent zillow zestimates of $400,000 and above for 3/1′ or 3/2′, 1000-1500 sq fts in working- class or low-income hoods. Whos going to bid/buy/qualify for these properties at those prices with the recent strict lending standards. LB is strictly subprime territory-and there is virtually no hi-end market except in the 90803 zip.(LB has 11 zips). As a result LB is seeing some of the largest yoy % declines in LA County-average -15% to -20% for all eleven zips.
Long Beach is getting decimated. The local RE market here is dead in the water.
As long as banks don’t have to sell the house at a loss, they don’t have to book the loss. Right now, their books say they have assets at full value.
Welcome to Japan 1990.
de nile - the answer to the water shortage!
Same here in the Bay Area 2.0. Lots of $4,000 to $10,000 a month rentals. Lots of condo conversions that used to rent for $1,200 a month sitting empty for months at the still inflated prices of $500,000 to $700,000. Plenty of denial here as well. Even co-workers telling me the price is still going up and won’t go down in the Bay Area.
Ugh. I don’t see how people like that can possibly be an asset to any company. Blech.
My boss keeps telling me not to depress the sales force with technical details. They have to be happy and confident.
$4 to 10 Grand a MONTH?? How many rank’n'file Google employees could afford that, much less us regular scum?
HARM, you’re just regular scum?!
Dammit! I thought you were “special” scum.
Please relieve me of my rose-colored glasses.
You shack up with your ten best friends.
And throw parties every night!
A Hudson & Marshall executive estimated that sellers will approve 75 percent of the offers from the auction, compared to 90 percent in most of the auctions it runs.
Let me get this straight, there isn’t a reserve price published, the bank gets to consider the offered price at the auction and then decided on accepting it or not? I’m sure the bidder is obligated to pay the bid price no matter what.
That’s not an auction, it’s a sheep shearing.
–
“Despite the large number of foreclosures and other struggles associated with the housing slump, Adelanto Mayor Pro Tem Charley B. Glasper thinks that the market will soon turn and the city will experience growth.”
Yes, indeed. We can bank on it.
Jas
“Despite the large number of foreclosures and other struggles associated with the housing slump, Adelanto Mayor Pro Tem Charley B. Glasper thinks that the market will soon turn and the city will experience growth.”
“The name Adelanto is Spanish for progress or advance”
What a joke! The only ‘progress’ that was made was sheering off 1000’s of priceless yucca trees and sticking in overpriced cheap desert hovels so that suckered buyer’s could also get sheared . Should be renamed El Diablo.
Victorville, which i believe is spanish for victory, should be renamed Cacaville.
Should rename it ‘El Diablo’
“‘It is Realtors who have helped raise the homeownership rate to nearly 70 percent, by advocating for laws and policies that protect private property rights and make housing more affordable and accessible.’”
Do Realtors care to take any share of the blame for the foreclosure crisis? I personally think they should. The last conversation I had with a Realtor about the subject of buying a home in San Diego (in late 2004) went something like this:
She: You can get into a home with an interest-only mortgage. I will call my friend Ms. Mortgage Broker in San Diego if you are interested.
I: No thank you.
I was thinking as I was reading that quote that the new head, Dick, or shall we say Dick-Head, of the NAR might regret that little claim. With so many looking for a scapegoat for this mess, he may have just made his organization a large target.
Sure. As long as they’re taking pats on the back for “… [helping] raise the homeownership rate to nearly 70 percent, by advocating for laws and policies that protect private property rights and make housing more affordable and accessible.”, then I see no reason not to blame them for the disasterous and foreseeable consequences of their actions.
since they are professionals, they better get sued like professionals would for scamming everyone.
“make housing more affordable and accessible.’”
WTF???!! They certainly helped to make housing more accessible, but by who’s logic is such a rise in prices called affordable?
They certainly helped to make
housingbancruptcy more accessible …“affordable” = low teaser rates. He didn’t say anything about being able to KEEP the house you just “afforded”
Dick Gaylord…Did they just want to give this blog more fotter or what?
Not only is he a Dick, but he is also a Gaylord. What a delightful coincidence!
“The Smartest Guys in the Room.”
November 19, 2007
13:54 EDT GS theflyonthewall.com: Goldman Sachs-GS Global Alpha fund could end 2007 down $6B-Bloomberg
According to two investors, Goldman Sachs Group (GS) Global Alpha hedge fund may lose around $6B in assets this year, a decline of about 60%. Reference Link :theflyonthewall.com
Yes - this whole GS is great crap is nuts, the shoe has dropped on them and their hedge fund. Soon the shoe will drop on their LEvel 3 fraud accounting!
GS can short their shares then go private to avoid having to mark to market.
and yet they’re getting record bonuses
Well, what the hey, if the losers who put money into the funds want to get boned, who are we to say?
Really? Wow. That’s just wrong. Why become a shareholder in any of these companies? Time for investors to get a clue.
Precisely. I guess that’s the main reason why I really think the old stock market is overvalued. When people have been blindly buying and obviously not voting, stuff is bound to blow up.
“I guess that’s the main reason why I really think the old stock market is overvalued. When people have been blindly buying and obviously not voting, stuff is bound to blow up.”
Don’t overlook the Bernanke Fed’s political incentives to share the pain with anyone who is long $US obligations, though. If the Fed’s loyalty is to Wall Street, they will look for opportunities to dump blow up charges on Main Street, including dollar devaluation and $1m guarantees of mortgage debt that never got marked to market before J6P unwittingly found himself on the hook to pay Wall Street bankers’ year-end bonuses.
DQ zip numbers are out, see http://www.dqnews.com/ZIPLAT.shtm
My zip (93552) is back below where it was when we sold our home in 11/04. It’s all gravy from here.
“The High Desert offers even more interesting tales. The area is full of tract homes in subdivisions that have stacks of furniture piled inside every room, she said.”
“‘These typically look like they’re occupied, but they’re not trashed,’ she said about these homes. ‘(The owners) just walk away and wash their hands of it.’”
Kudos to those bloggers whom described the scene as like the aftermath of a neutron bomb. Its happening.
At work today, a scheduling meeting couldn’t be started as everyone wanted to talk Recession and high gasoline prices. People are worried. These are individuals whom… are earning great paychecks too.
I only have a few days before I update my real estate emotions on my blog, and I have to admit, its going to be a close call. (Which means hold to the previous emotional state.) I might just use Turkey day to sound out a few more…
Its getting way too interesting…
Got popcorn?
Neil
Neil, to camp on your discussion, I had a lenghty discussion with an appraiser yesterday. She’s been in the business since ‘91 or so. Said there is almost zero work except for bank appraisals on seized property. She was very negative on RE agents and brokers, saying the pressure to hit numbers a year or two ago was ‘criminal’, and said it cost her much work. Her view now? Forget NAR and CAR, California is toast.
Yes, very very interesting.
“These are individuals whom… are earning great paychecks too.”
And the irony is they’re probably a paycheck short of financial disaster. If I had a dollar for every six-figure earner I’ve seen living paycheck to paycheck, I would be doin’ just fine.
Man you aren’t kidding. I’m only about 6 months from disaster.
my wife is killing me with dumb expenditures. I don’t go out to eat, pack my lunch and spend minimal amounts.
Getting close to the divorce would be cheaper point. Real close.
Sheesh, James, I’m sorry to hear that. Do you have any mutual friends who could talk to her? This sort of thing is really hard, I know.
A bit OT, and a reposting of something earlier today, but I thought you guys might appreciate knowing your options. If you’re not happy with your current squeeze, you can always purchase a RealDoll (life-sized, anatomically correct silicon dolls shipped with a turkey baster). Bravo’s reality show “The Real Housewives of Orange County” clearly takes its inspiration from RealDolls, especially in the silicone and acrylic nail department.
RealDolls are “manufactured” to order at a warehouse in San Marcos, Calif.
http://www.sdreader.com/php/cityshow.php?id=53
Jeesus! I just heaved my dinner!
I could use one for JT practice. If I go too long between “deliveries”, I get a little rusty. Needless to say, if my aim is off things can get a little more messy than they need to be.
Watched a creepy movie on BBCA a few months ago about men that live with their dolls, take them out places and spend hours fixing them up. One guy in US just couldn’t undertand why girlfriend couldn’t get behind all of them having dinner together. I just kept yelling eeewww, my eyes, eeeewww, my eyes. And those puppies are expensive - like $5K and up.
Oops, forgot to mention you can also purchase a male RealDoll, “Charlie,” who is 5-foot-8 and weighs 125 pounds. Metal frames with joints underneath the silicone enable the dolls to be moved into various positions. For shits and giggles we can rename him Dick Gaylord.
http://www.signonsandiego.com/news/features/20071028-9999-lz1c28dolls.html
“The Real Housewives of Orange County”
OT from the realdoll stuff but back in 2005 i went to make a delivery out to Cota De Caza, the dazzling hi-end spankin new planned community just back of Rancho San Margarita which is the residential location shoot(i think) for the “Real houswives OC” show.
Anyway when i went to deliver the stuff(documents) a dazzling young blond stay- at- home housewive answered the door. And with her were her two kids. This was mid-weekday so i guess she was running a business from her home and /or her hubby was the lone breadwinner and she could stay home as this was during the height of the OC housing bubble and homes in that development were listed for around a million. She and her hubby, assuming she was married, were simply living the hi-life on supposed ample equity runup).
She was a hottie, A real-life OC trophy housewive living the dream life in the Cota De Caza.
I hope things work out for you.
James, can you get a separate checking account and separate bank/credit cards that don’t involve each other’s credit?
I’ve done that for the duration of my 20 year marriage. Saves a lot of fights.
I just picked up a really nice revenue stream today as a result of this trip. Now my husband wants to “retire” and piddle around the house all day with his various causes and hobbies. I’m looking for the trout as we speak. So it’s not just women.
“So it’s not just women.”
Heck no, it’s not just women. In two of the best marriages I know, the ladies have control of the checkbook, finances, investments, etc. The guys love it and willingly turn over their paychecks and get an “allowance”. There’s money in the bank, money coming in, no debt, etc. These are good marriages. I could never do it, though. Had to have my own accounts.
Palmetto,
My mom and dad had that arrrangement. My mom took care of all the finances, checkbook, investments, etc. My dad loved it. He knew my mom was the financial wiz and wasn’t bothered by that.
I do the finances. My husband just isn’t interested. His parents made a lot of financial mistakes - were taken in by developers and financial advisors. I just worry about what happens if I drop dead. He could lose everything. I’ve been teaching my sons about money and am considering making them the beneficiaries of my retirement accounts and life insurance.
I (wife) also handle all our money, as did my mother. No doubt the women in our family handle money better. Fortunately, DH and I have a very happy marriage & he wouldn’t want it any other way.
I also print up a financial report every week to show him what’s going on — my idea, not his. Wouldn’t want him to be clueless if something happened to me.
I’ll chime in with my two cents. See a counselor. I’ve been a handful of times, once for a family member falling off the wagon, once to discuss “life choices” (i.e., job, location, etc.) with my wife, and another few times by myself. I think the biggests benefits are learning how to communicate with someone without it resulting in a fight and having a third-party to play bad cop.
Good advice, PC!!!!
Most people find the grass is NOT greener on the other side & end up regretting their divorces. Much better to work things out instead, if at all possible…especially if kids are involved.
Hi, Al Bundy!!!
I love to shop and used to squander truly horrific amounts (of my own $$) on clothes and shoes. But now, every time I am tempted to make a dumb expenditure, I log on to this blog. Remember that TV show “Scared Straight”? Like that. Read the HBB and the desire to waste money magically disappears.
“If I had a dollar for every six-figure earner I’ve seen living paycheck to paycheck, I would be doin’ just fine.”
Amazing, isn’t it? Some of my friends up in New England used to look at me sympathetically over my “sunshine” wages, until we discussed cash in the bank. Sometimes it isn’t how much you make, it’s how much you spend.
Ya- no kiddin’. I went from making $9 an hour, to 30k a year, to 50k a year, then 100k a year. I thought I’d died and gone to heaven when I hit the 100k mark. But after doing the math, it was shocking to realize that 100k STILL didn’t afford me a basic starter home here. Prior to this, I figured everyone who made 100k were loaded, driving Porches, and living in upscale houses. I guess I was kind of unseasoned and financially ignorant.
Last year my wife also got a 6 figure job. but even now, we would be foolish to buy anything decent here. It would still mean taking more risk than I care to, which is absurd.
Looking at it that way, it makes you see how phucked California is simply because I know firsthand how many people making less than a third that I do who did buy and are now probably on their last dime. Pathetic. It gives you absolutely no strong desire to make heroic efforts financially since it seems like the cost of housing is regardless of income.
“it seems like the cost of housing is regardless of income.”
Yeah, that’s the way it is right now in many areas. It’s all this “credit”, that’s the problem. Prices wouldn’t be so high if they weren’t based on credit. It’s strangling so many people. Leased cars, leased houses, even leased furniture and appliances.
“… it seems like the cost of housing is regardless of income.”
Not for long, JB. Just hang in there.
I went from an E6 in the Navy…. which I was told was the equivelant of $30K…. got my degree and got out of the Navy. First job making $30K. Let me tell you, E6 in the Navy was MUCH better than $30K back in ‘93. Having a big chunk of the income be tax free should NOT be underestimated.
In 5 years I went from $30K to $45K then it was peak tech bubble time and it one day I went from $45K to $65K. It WAS mana from heaven. Then over the next couple years inched up to $72K.
Then came the tech wreck. 401K was my only savings, and it went virtually to $0. I had to move from CO to AZ to get a job for 10% less. I got divorced, so lost $40K equity in the house, virtually all my possesion, got stuck with $15K debt ($10K of it lawyer fees), and had to run up another $5K in debt to put first/last and furnish an apartment. I them got hit with $10K a year alimony for 5 years and $12K child support for 8.
So, $65K - $22K = $43K. But I was paying income tax on the child support so really take home was similar to $40K. That is a HUGE step down from $72K.
During the 5 years I was paying off the alimony, I ran up another $20K debt. 2 years ago I moved in with new girlfriend (no wife). She had finished her Masters 6 months before we met, but it took almost 2 years to get a job using that degree. When she did, it was a big raise, but she too is big time in debt.
So, we have a combined income of $130K - $12K my child support + $3K her child support. But we’re so deep in debt, we’re still living paycheck to paycheck. It will take us decades to dig out, assuming we don’t lose our jobs.
Are you for real?
Really puts my panties in a bunch that many civilians do not know military folk pay SSI and taxes.
And pay health care premiums. (Albeit, low ones).
Ben, forgive me.
Darrell, you are not what I consider a brother in arms.
Just stop.
Please.
Leigh
I joind the Navy in Feb 86. I aced the nuke test so got automatic push button. Somehow, despite being colorblind, I passed the halent latern test at MEPS. Push button E3 and E4 on completion of A-school.
When I got to bootcamp in Great Lakes (all Nukes went there), suddenly I couldn’t pass the falant lantern test, so got kicked out of the nuke program, but got to keep the E3. I was redesignated to Data Processor.
After boot camp I was sent to DP A school in San Diego. Couple months of school (or was it 6 weeks… yeah, 6 weeks) anyway, I was assigned to USS Hector, AR-7. That lasted 9 months until the ship went into full decomission mode. Last time I saw the Hector was in a scene from War and Rememberance.
You have to have 9 months before you can put on E4. Since my date of rank was effective back to Feb, I could take the summer test, even though I had only been in the Navy for 6 months. I passed and put on E4 less than a year after signing up.
After leaving the Hector I was assigned to USS Tarawa, LHA1. We promptly got sent to the ship yards in Long Beach for a year. By this time I was married and we got to live in some crazy nasty substandard housing.
I PNAed E5 once. Second time up I made E5. So, 2.5 years in the navy and I’m wearing E5.
After the yards we had lots of buildups and such, then went on Westpac. Summer of ‘89 while on I reupped and got assigned to shore duty in Hawaii. Started at NARDAC, (Navy Regional Data Automation Center) but they merged with NAVCAMS (Navy Communication Area Master Station) to become NCTAMS (Navy Communication and Telecomunication Area Master Station).
First time up for E6, I made it.
While in Hawaii, I went to school on nights and weekends. Earned my BCSC from Hawaii Pacific University and got out of the navy a few months later. (It was Hawaii Pacific College when I started but they bought some nursig school and renamed to university).
When I got out, I was E6 over 6 (about 6 months short of
making $2K-ish a month, but with free housing, free utilities and no out of pocket for medical I was bringing home over $1800 a month. With a wife and 2 kids, NO federal or state income tax on $24K a year. I figured the free rent was $500 a month, so figured I was making about $30K.
Then I got my first job out of the Navy making $30K a year. Suddenly I’m paying a lot more than $500 a month for rent. And utilities. And paying several thousand a year for state and federal taxes. Oh, and having to pay co-insurance and co-pays for medical.
And, taxes on that protion of my income that used to be free housing and utilities.
Instead of having $1800 a month take home after rent and utilities, I was clearing closer to $1100 a month after I paid for house and utilities.
I was SOOOOOOO much better off as an E6 over 6 than as a civilian making $30K. That only lasted 3-4 years or so. Then my raises put me above where I would have been had stayed in. by 5 years after I got out I was clearing a good $20K a year more than I would have made had I stayed in.
Back in the early days, before the closed the loophole, I tired to turn down the earned income credit since I should not have been eligable if they counted non-taxable pay. I repeatedly tried to turn down the EIC, but IRS wouldn’t let me. Later, when I was in Hawaii, they closed that loophole, and all compensation, including BAQ and VHA, or free housing had to count as income… lots of militart screamed like stuck pigs for losing the EIC. I was about the only one that thought we never should have been getting it in the first place.
Ughhhh and food stamps. When I was in, Bush Sr was running against Clinton. They had a debate in San Diego, and an E6 in uniform stands up and asks a question about military pay being so low that many members get food stamps… You PIGMAN!!!! You get food stamps ONLY because you’re in military housing and free rent and utilities don’t count as income!!! They didn’t apply the EIC patch to food stamps. However, if you were off base gettng BAQ and VHA those DID count towards getting food stamps. Uggghhhhh.. seeing a fellow seaman out there misrepresenting the facts, telling half turths, to work the system, REALLY p-ed me off.
Still doubt I’m really ex-military?
Thanks Leigh,
I distinctly remember my salary as an E3 in the Army being taxed.
Salary, yes. Housing allowance, no. Food allowance, no. Really guys, take a look at your paycheck before you call Darrell a liar. - I’m a former USAF Sgt, who didn’t get either housing or food allowance, and who’s still bitter at the overt discrimination against single people (which is why I left the military).
“At work today, a scheduling meeting couldn’t be started as everyone wanted to talk Recession and high gasoline prices. People are worried. These are individuals whom… are earning great paychecks too”
I can pretty much sniff the recession in the air. For one, i am getting lots of offers of coupon discounts for consumer items say 20% off all purchases of $100 or more at office depot, or 5% cash back if i use my WM CC for at least 5 purchases. Also, all local shops, eateries, drugstore chains, and even my local liquor mart, seem abnormally slow or dead. Might be a seasonal thing but i sniff the big-’R’ out there. Add to that $3.40 gas prices , and you have a combo of forces killing the local LB economy-which is primarily working or lower class impoverished.
I have said I am a civil engr. A rumor going around our office today was a medium sized civil engr got rid of 20 people on Friday. They have been around a very long time too. Also a homebuilder supposedly let everyone go except 4 people in the LA area and are abandoning ship and not building for 2 years. Its weird to think some of our projects are just going to stop 1/3 of the way.
“Gaylord went on to hail the accomplishments made by Realtors: ‘It is Realtors who have helped raise the homeownership rate to nearly 70 percent, by advocating for laws and policies that protect private property rights and make housing more affordable and accessible.’”
“‘Dick’s a genuine guy,’ said Randy Jeffers, incoming chairman for 2008 of the Texas Realtors Association. ‘Dick Gaylord is who he is every day. If Dick tells you something you can just bank on it. You can just take it to the bank.’”
I am not sure how adding realtor fees of 6-7% adds to housing affordability. Hopefully they were advocating decent foreclosure laws for the poor slobs to whom they sold overpriced real estate. Will realtors also be credited with the bust or do they just take credit for the boom? The Kool-Aid must have been flowing in LV.
“‘Dick’s a genuine guy,’ said Randy Jeffers, incoming chairman for 2008 of the Texas Realtors Association.’”
If you think realtors are great, you don’t know Dick.
The fact that people are still willing to pay $600K for a box in Vacaville tells me that the greater bay area still has a LONG ways to fall. That is just insanely stupid. Although not as stupid as the people who recently paid $800K to live in the same faux upper class subdivision. And you have to love the lady who would have paid less, but the builder told her she had to buy it now! Tough luck! Now bend over and accept your Joshua tree!
I hear ya - 600K for Cacaville, what a joke!
The house that’s been for sale for 6 months down the street from me (in the San Jose Rose Garden district) finally sold. The new owner thinks he got a great deal because he paid $25k less than the last comp. Mind you, the last comp was slightly less desirable because it was on the corner and got a fair amount of neighborhood traffic (connecting to the main street).
I think the guy is still a DW, but at least he’s the first to set a lower comp! Go DWs of the world!
I heard something today I didn’t think I’d hear: Kudlow actually begging the FED NOT to cut rates, and everyone on his panel agreed! Essentially everyone out there said that inflation and dollar devaluation is a real problem; yet, these very same people were screaming for a rate cut a few months ago when the DOW/SP was at a similar level. Weird!
Of course, I’m sure Bernanke is going to cut.
Yes ,I noticed the switch that Kudlow made . Apparently what Kudlow and his cheerleaders thought was going to happen didn’t happen ,or someone convinced Kudlow that lowering rates was a greater evil than raising them .
Or maybe Bernanke just hired some guy to put the heat on Kudlow. That’s what I’d do.
oh please please cut rates. I am finding it more funny as we mess this country up. my job is already screwed so why not “bail” everyone out. haha. hilarious at all of our expense.
please cut rates because that definately saves people from adjusting rates. how? I don’t know. but it just does. everyone can just refi.
Can anyone explain, how $500K POS condo with no w/d and no A/C be rented for $1600/month covering 1st mortgage?
Please help!
That doesn’t cover the 1st mortgage at all. If they got a second for $100k (20%), then their monthly on the 1st @ 6% interest is $3,111.
The interest alone on that POS is $2,000/month (Maybe $1500 after tax incentive). Then there’s HOA dues, property taxes, maintenance, vacancies, and (don’t forget) … DEPRECIATION!
PS
Is somebody actually paying that amount, or is that just the asking?
I am in the six fig salary, and still cudnt see decent savings being single and renting, and I am not big spender.
My friend, around same salary with 2 kids…. living in that POS want to upgrade to bigger house soon and rent this place for comparable rents i.e., $1600/month.
He said he HELOCd upto $500K. He is so relaxed…
How, How???? I am not good at Math!
Er…thank heavens this is a family blog…snort!
He officially assumed the position…ya, that will work out…er…fun with cut and paste!
Ya just can’t make this stuff up!
Leigh
Investor confidence circling the drain.
Gallup Organization started polling on the question in 1991, according to a Gallup survey released Monday.
And just 13% of Americans say economic conditions are positive, lowest reading for that question. In 1991, overall consumer confidence was at one of its lowest points in the past 40 years.
http://www.usatoday.com/money/economy/2007-11-19-economy-poll_N.htm?csp=1
So I have a question that i’m not sure i’ve seen anywhere yet.. if i have, apologies in advance…
Since all these banks are taking billion dollar write offs, isn’t this in essence “preemptively” discounting the housing market for years to come? Is this a dumb thought?
Think of these writedowns as a retroactive payment for last year’s humongous Wall Street bonuses.
It is part of the packaging of the securities. Back in the day lenders would sell of individual loans. Then the S&L disaster happened, and they had to package up the loans to get them sold off. That converted them from individual loans to tradeable securities.
Take 1000 loans and pool them up into a blob of loans totalling $300 million. Now assume a certain default rate.. say 5%, and assume a loss per default of something like $40K per default. That is $2 million in losses. So, you take out an insurance policy for $2 million.
Now, these loans are ARMS that start at 7%, but can jump to 12%. AND, there are pre-pay penalties preventing early loss. You’re looking at somthing like 8% return. That is a NICE rate of return.
You slice the mortgage backed security into 10,000 shares. Face value is $30K each, but with those high rate of return people are willing to bid them up to $33,000 or so.
Some of the shares you sell off to pension funds, some to insurance companies, and some you sell off to a SIV or money market account or hedge fund that you run.
Suddenly, the housing market tanks, foreclosures skyrocket, and the loss per skyrocket is WAY lorger than expected. Oh oh… That $2 million insurance policy ain’t gonna be near enough…. People wake up from the mass delusion and realize that polling than slicing in NO WAY removes the total risk of loss, and with the CRAZY lax lending standards and WAY inflated prices, the risk of loss is HUGE!!!!
People yank their money from the hedge fund. The hedge fund needs cash, so HAS to sell off its MBSs… but with the sudden realization of risk, no one is buying for NEAR face value. So, some transaction happen for…say… 80% of face value.
Now, your bank holds a lot of these securities in its off balance sheet SIVs and money market accounts. Crud. The SIVs you are carrying at $33K each, are suddenly worth $25K each.
Rules say that you HAVE to mark the MBSs to market, IF there is a market sell that you can use. So… they look at how many of their MBSs have comps… looks like those MBSs have lost $1 billion… So, you tell the press you have no more than $1 billion in losses… Ooops, in the next 3 weeks, a lot more transactions take place. Now before you close your books, you have to revalue all the MBSs again.. Crud.. Now you find that the MBSs that you hold, that HAVE comp sales have now lost $8 billion. So, you have to report an $8 billion loss. You have $100 billion more that you will eventually have to mark to market, but you sure as heck ain’t gonna admit that.
The $8 billion loss hits the news, and it is larger than the official nod and wink allowable $3 billion a quarter. Now you are fired so have to take your $100 million golden parachute and go.
Nice summary Darrell!
One correction - it’s not 80% of face value - for many of these products, if they sell at all, it’s for 10% of face value.
LA Architect, if you’re out there:
Read it and cry. I can testify that these ugly mongrels are on every street in Dallas. Oh, how I long for California.
http://www.dallasnews.com/sharedcontent/dws/classifieds/news/homecenter/realestate/stories/111907class_homecenter_trend.1af6af1d.html
txchick57- I thought I saw a similar type in Merced,Calif. It was in a development called Camelot,I kid you not.
Aren’t you supposed to hide behind turrets and shoot people?
Aren’t you supposed to hide behind turrets and shoot people?
I think those are ramparts.
and in other news, Goldman Sachs bonus pool larger than Bear Stearns market cap:
http://bigpicture.typepad.com/comments/2007/11/why-goldman-sac.html
And next year, when Goldman Sachs takes a $10B writedown on something-or-other, will they all give back the bonuses? ha ha ha
If the Goldman no-writedowns conundrum was a bit more housing-related (which doesn’t mean it’s unrelated), I would have raised it as a weekend topic suggestion.
I can’t help wondering whether we have a real ’smartest guys in the room’ situation here.
Hey Tx,
Wanna bet who is the biggest liar, liar, pants on fire?
I bet Goldman Sachs!
Ya, a real Ah! moment
Leigh
Who is going to downgrade Goldman Sachs to a sell rating?
Adelento, California ….The mayor of this High Desert town was arrested in April, 2007 along with his wife for allegedly stealing more than $20,000 from Little League coffers over three years.
1/2 down
Next
http://en.wikipedia.org/wiki/Adelanto,_California
Great depression ahead..FBs should buy tons of lubes and get ready for some hard shafting. Check what DB has to say about subprime resets in coming months.
http://bp0.blogger.com/_4Ra86EZFyus/Rz9djdHm5EI/AAAAAAAAAEo/ALHM1C2BfOU/s1600-h/DeutscheBankPage6.jpg
Guess whose working for douchebank now? Greennie. How about that?
>Comment by dude
>DQ zip numbers are out,
CONGRATS! This is the first time I’ve seen a NEGATIVE year over year median price change for LA county! YOU DID IT LA!!!
LA county Median price:
Oct 2006: $540K
Oct 2007: $525K
Also, $/Sq. Ft.:
Oct 2006: $396/sq. ft.
Oct 2007: $377/sq. ft.
4.7% drop year over year in median price per square foot in LA County…finally.
Pacific North West…batter up!
Yes! Been waiting patiently for that one, also.
IMO, when SHTF in LA (the better parts), the entire thing is burnt toast.
My friend with six figure salary with 2 kids living in this POS, want to move into bigger place “soon”, cos of street parking for 2nd car.
So want to rent this place for $1600/month which covers 1st mortgage, and he will take care of 2nd mortgage…
He HELOC’d upto $500K last year to fixed 5.75%(I dont belv)
Me making lil better than him, single and renting cannot see decent savings…..
He is so relaxed….
I am not good at Math… Am I missing something or my calculations are wrong?
Is this a joke?
You are missing something.
Assuming avg HOA dues, taxes, etc., 1,600 a month would only cover the carrying costs of about a 200K mortgage. Assuming he pulled the whole 500k out, he is losing at least $2,000 in real dollars per month. Add on that depreciation of at least 5% a year for the next 2 years (and im underestimating), and he is losing about almost 50k per year on the place. Great investment. Those 500k condo conversions amaze me. Who executes a 500k promissory note with no understanding of the economics? Yet many of these same ppl clip coupons or haggle for weeks before buying a car. Simply astounding.
I do note, however, your facts are incomplete as they did not really state what he paid for the POS. He may have paid below 200k before the boom resulting in him being in a positive cash flow situation, and then used the HELOC money to finance other ventures. In such a scenario the HELOC was merely using his home as a credit card. Note, however, he should be upside down in his mortgage as no rational person would pay more than 250k for a place that rents for 1,600 per month (and I wouldnt pay close to that), but he might be ok with that if it allowed him to zero out the balances of his credit cards which may have been carrying higher interest rates.
You are right Mike. He took about a month to make a decision to buy used car under $4000 with an inspection and took about 3-4 opinions.
But he bought this POS in a week with no inspection for $320K in 2003, and HELOCd at the peak for $500K and just recently stopped bragging how smart he is get to get into it.
Yeah he invested the HELOCd money in real estate by the way.
What baffles me is that he is sooooooo f..ing relaxed!
What baffles me is that he is sooooooo f..ing relaxed!
Ignorance is what?
// Late night contribution.
Attention all shoppers
It’s Cancellation Day
Yes the Big Adios
Is just a few hours away
It’s last call
To do your shopping
At the Last Mall
You’ll need the tools for survival
And the medicine for the blues
Sweet treats and surprises
For the little buckaroos
It’s last call
To do your shopping
At the Last Mall
We’ve got a sweetheart Sunset Special
On all of the standard stuff
‘Cause in the morning –that gospel morning
You’ll have to do for yourself when the going gets tough
Roll your cart back up the aisle
Kiss the checkout girls goodbye
Ride the ramp to the freeway
Beneath the blood orange sky
It’s last call
To do your shopping
At the Last Mall
// Steely Dan
Good one!
“As he headed to the stage, Gaylord was treated to a standing ovation. He continues to deliver a glass-is-half-full message even in the face of the current housing market,”
Unfortunately, Gaylord, you’ve apparently failed to realize–”the glass” in this particular instance–is-half-full of s**t.
DOC