A Correction That Needed To Happen In California
ABC 30 reports from California. “You can find homes on the market that have, in just one year, dropped $100,000 in price. But realtors say those properties were way over-priced to begin with. Some of these homes have been on the market forever it seems. A year ago a three-bedroom Visalia home in a desirable neighborhood listed at $280,000. 229 days later the price has dipped to $200,000.”
“Brad Maaske, Visalia Realtor, says ‘In Visalia houses that had crept up to that $225-$240,000 range have slipped back down to the $180’s.’”
“A four-bedroom home in Fresno went for $254,000 just six months ago. This week it sold for $179,000. And one home on five acres in Sanger listed last year for about $800,000. It sold for $607,000.”
“We used to have more gentle ups and downs. This one went pkew, pkew, you know,’ he said.”
“Lennar Homes of Visalia have come down $60,000. The Lexington model cost $335,000 a year ago. It’s now $275,000 and with a quick escrow incentive. One just sold for $233,000.” Michelle Scott, Lennar Homes, says ‘We have drastic savings compared to a year ago so prices. It’s great for first-time homebuyers; people that don’t have a home to sell.’”
“Prices continue to fall but Maaske says serious home-buyers shouldn’t wait. ‘Maybe the house prices will go lower. Yeah they’re doing that and you know what they’re foolish,’ he says.”
The Recordnet. “The auction of 61 foreclosure homes in San Joaquin County last month resulted in the sale of two out of three of the homes offered in no-minimum bidding in Stockton.” Crystal Wright, spokeswoman for Hudson & Marshall, said banks have sold about 65 percent of the houses for which top bids were accepted in the auction.”
“Typically, more than 90 percent of top auction bids are accepted by highly motivated banks, with accepted bids coming in as low as 20 percent less than list prices, said Hudson & Marshall, which specializes in foreclosure-property auctions nationwide.”
“‘Banks may not have a complete understanding of the Stockton market yet, so expectations may be above what’s happening in the market,’ she said.”
“Frank Orello, a real estate agent in Stockton, said all six of his foreclosure listings in the auction were sold, but banks didn’t accept any of the top bids…with sales negotiated afterward. The accepted sales prices ranged from as low as 70 percent of list price to 91 percent of list, he said.”
“Another agent with a half-dozen listings in the auction, Cindy Mello, said not one of the bids for her listings was accepted or negotiated to a sale. ‘It says the auction doesn’t work, that it’s a marketing ploy,’ she said. ‘I don’t think the banks are ready to negotiate yet.’”
“One San Andreas bidder, Mel Schell, said his top bid of $180,000 for a house in San Andreas was rejected outright, but his agent was told that the foreclosure owner wanted to negotiate. Neither he nor his agent has heard anything more, although his agent was told that the auction company was overwhelmed by the bulk of the auctions, he said.”
The Sacramento Bee. “C.C. Myers, the contractor whose road-building exploits have become the stuff of California legend, said Friday he is working to stave off foreclosure on his Auburn area country club development.”
“Wachovia Bank, in a complaint filed Wednesday in U.S. District Court in Sacramento, alleged that Myers has defaulted on more than $61 million in loans and is seeking to foreclose on the 1,100-acre Winchester Country Club.”
“More than 110 families live in Winchester. In fact, Myers was building an 8,000-square-foot home there for himself and his wife. It was to be a showcase that drew buyers.”
“Court records show that troubles began for Myers’ development in January as defaults on principal and interest began to pile up.”
The Signal. “For the month of October, single-family home sales in the Santa Clarita Valley fell 42.3 percent when compared to last year, according to statistics released Wednesday by the Southland Regional Association of Realtors.”
“A total of 116 homes closed escrow, which is 85 sales fewer than the 201 transactions of October of 2006. Three years ago in June of 2005, the record high of 405 sales was reported.”
“In a press release, Larry Gasinski, president of the Association’s Santa Clarita Valley division, said, ‘It was inevitable that sales would slow down and prices soften. It’s a correction that needed to happen. That’s the natural outcome whenever there is an irrational expectation that prices will go up forever.’”
“Gasinski reminds people to not try to time the market and if a house is needed, to go ahead and buy it. ‘There are incredible opportunities out there now, a wide selection and attractive financing available if you have what used to be the traditional requirements — a good credit history, documentation and a reasonable down payment.’”
“Strapped homeowners could get some relief from a plan negotiated by the Bush administration to freeze interest rates on subprime mortgages. While the Santa Clarita Valley will see the effect of increased subprime rates, the Antelope Valley will be harder hit, said Jack Kyser of the Los Angeles County Economic Development Corp.”
“It was in the Antelope Valley, he said, that there was a greater instance of many affordable homes being bought, many of them likely with subprime mortgages.”
“Realtor Pam Ingram agreed that the Palmdale and Lancaster areas will be harder hit, though Santa Clarita Valley won’t be foreclosure-free. ‘
The Reporter. “Housing and mortgage professionals in Solano County saw some good in the administration’s relief package for homeowners, but many expressed concern that it might be too little, too late.”
“That could be bad news for owners of the 2,443 homes that RealtyTrac reports are in ‘pre-foreclosure’ status in Solano County. The company, which monitors real estate transactions, recorded that more than 1,000 of these homeowners received foreclosure notices in October alone.”
“Tim Kearns, owner of Fairfield-based First Priority Financial, said he’s seen more adjustable rate mortgages written in the past few years than were necessary. ‘The backlash is that lenders and investors alike will likely be much more skittish about investing in adjustable rate loans in the future,’ he said.”
“The average client doesn’t go into foreclosure because they don’t understand their loan, according to Kearns. ‘Most people had an assumption that the future was going to be better. They knew the loan would get a lot more pricey. But they thought that would be OK, because hey, real estate always goes up in value. And that’s the misnomer they were told.’”
“‘I’ve certainly heard anecdotally about people who had that opportunity in the Bay Area, to take out loans with very little paperwork,’ said Cynthia Kroll, a senior real estate economist at the University of California, Berkeley.”
“A local mortgage lender with 20 years experience in the business agreed. ‘I kind of saw this coming a couple of years ago,’ said the broker, who asked not to be named. ‘As soon as appreciation went away, the lending criteria became too easy. If you could breathe, you could get a loan.’”
The Orange County Register. “DataQuick reports this AM that home sales in the 22 business days ended Nov. 20 were 46.8% below a year ago. Prices continue to run about 8% below a year ago and 12% under the summer of 2006 peak.”
“The Fed meets Tuesday with a dormant real estate market, a slumping overall economy and curious inflationary signals (like gas prices) on its mind. Will we see another cut in the widely watched Fed Funds rate?”
“Lender Jeff Lazerson: ‘I think they will lower rates by 1% because the economy is swirling the drain, they have to do something before this turns into a depression…Specific to Orange County, our economy is generally better the rest of the nation but our property values went up much more so they have a lot more to fall if we cannot down this slippery slope.’”
“Orange County is the only major government agency in California with public money invested in controversial securities known as structured investment vehicles, or SIVs.”
“The state has stayed away from the securities. So have the treasurers of the six largest counties other than Orange. The only major county to invest in SIVs is San Diego, which never bought as much as Orange County and cleared out its last one in November.”
“‘We did not want to risk any of our assets,’ San Diego Treasurer Dan McAllister said.”
“Last week, Moody’s Investors Service said it might downgrade $105 billion in structured investment vehicles, including 11 in which Orange County has invested $460 million. A downgrade would reduce the securities’ potential sale value.”
“Treasurer-Tax Collector Chriss Street defended Orange County’s investment in this type of security, which increased during his year on the job. The investments are suffering from ‘guilt by association’ with subprime mortgages, although none of the county’s investments contain subprime mortgages, he said, adding that he’s not buying more.”
The Bakersfield Californian. “State tax officials filed a lien against David and Jennifer Crisp this week for taxes owed from 2005.”
“Separately, Cole recently transferred three southwest properties into the sole and separate ownership of his wife, Rebecca Cole. The homes are located at 5802 Laurel Canyon Drive, 1706 Sainsbury Court and 12504 Crown Crest Drive.”
“When reached by phone Friday and asked to explain the rationale behind the transfers, Cole initially said, ‘It’s none of your business.’”
“‘Eventually you guys will figure everything out,’ he continued. ‘It will be all right then,’ he said, then hung up.”
‘We used to have more gentle ups and downs. This one went pkew, pkew, you know,’ he said.’
Ah, those California RE professionals can hold their head high…
“This one went pkew, pkew, ”
Is that the sound of the Joshua tree going in?
Sorry Ben… I couldn’t resist.
Got popcorn?
Neil
OMG, look at this she-male realtor talk garbage with Peter Schiff. You have to hand it to Fox to find these kinds.
http://www.europac.net/Schiff-Fox-12-06-07_lg.asp
Where in the world did they find that woman. Lordy, what an inarticulate, illogical idiot. Nothing she said made an ounce of sense, babbling on about everything goes in cycles so we must be due for an up cycle. Yep, up for 10 Years at several 100%, down for 2 years at a few percent and we must be ready for another up cycle.
Wow…
Please allow me to translate in Joesixpack form….
“Only a fool would be able to predict the absolute top or the bottom of a housing of any real estate market, however I do think that this is such a strong point to begin and to start an upward turn in what we have done to, to our buyers.”
Translation….We have reached a bottom in the housing market, oh, and by my own analysis, I am a fool.
“I have actually been in the real estate game for 10 years and don’t let my youth, um, negate the fact of the willingness I’ve learned from the people that have gone before me.”
Translation….I think I look younger than I really am, and I know my sh*t.
I’ve done certain things to help every investor I’ve ever had, and we are seeing such large trends.
Translation…..I can show you a good time.
“I think John Templeton, who, you know is one of great, said it best when he said sell at the point of peak optimism and buy at the point of max pessimism because the consensus is always wrong.”
Translation….I am trying to work in a famous quote from a saged economist, since I don’t expect anyone to believe me, as again, I am so young.
“And only in, only, only in America, only in America, have we done things so over the top. And we as Americans do it all the time, we eat four cheese burgers, and then we go on a crash diet.”
Translation…..It is American to be an undisciplined pig.
“So in one sense, I guess I do agree with you in the sense that we over bought, and now we are doing things to bring it back to a normal level and a balance, and we need to balance what we have done.”
Translation…..I usually blow chunks after I have had to many cheese burgers.
“And we are seeing, and, and, and even in economics 101 we are tought that every thing goes in cycles.”
Translation…Today I started my cycle, and I have heard others make reference to econ 101, so I will just throw that in too.
LMAO!!!!
Sheman?????
I do think that this is such a strong point to begin and to start an upward turn in what we have done to, to our buyers.”
“what we have done to, to our buyers?” You mean blown them up ?
I don’t know how Schiff kept a straight face in the last 20 to 30 seconds or so.
The six percenter was a complete amateur.
Eat four cheeseburgers at one time ? I think this chick has deeper problems then RE.
I’m insulted for Pete’s sake!
Samson and Guydyla.
Jeesh,
Leigh
What the hell was that? That woman was a total baffoon. As Cramer would say she knew nothing. I loved how she was going to try to lecture Peter on economics.
It’s funny how Fox keeps putting these imbecile on to debate Peter Schiff. Why are these jackals always smirking and laughing when he’s making valid points? Is that some sort of debate strategy they’re teaching at the NAR these days?
Samson and Guydyla.
ROFLMAO.
“OMG, look at this she-male realtor talk garbage with Peter Schiff.”
OBJECTION! Tanya Marchiol is a Realt-Whore (TM) wearing too much makeup. But she is NOT a she-male. This is an insult to the many honest hard working she-males who meet the market demand for a popular personal service at a reasonable price.
this will probably get gonged but HERE’s a shemale!
http://www.dirtyscottsdale.com/?p=1727
Thanks chick, I think I will sign off now, and go outside and gouge my eyes out with sharp sticks.
txchick, It looks like Jim Bullock’s head (Monroe from ‘Too Close for Comform) head superimposed.
“Is that the sound of the Joshua tree going in?”
Yep, when those sharp quills start snapping off. If you shove it in fast enough it sounds like a machine gun.
Sorry Ben, I’m not sorry.
“those California RE professionals”
As we’ve said, Used House Salespeople…low barrier to entry.
“Realtor Gasinski reminds people to not try to time the market ”
ho ho and pkew pkew to you to mr realtor I’ll time the market right down through 2009
Ho Ho Ho. Read this baybee:
http://bigpicture.typepad.com/comments/2007/12/another-loan-se.html
Yep, no one really knows who owns what. Sheesh, one more aspect of a huge mess. It really is mass confusion out there in real estate land. One big free-for-all.
It is like a financial game of telephone. Can anybody say, “purple monkey dishwasher?”
OMFG - that’s so funny.
I’m tellin’ ya, NYCB. It’s starting to REALLY get to me. I mean, there’s only so much you can say about mass insanity and all the verbal diarrhea that goes along with it. I mean, I can’t even believe lawyers would bother going to court without proper documentation. What’d they think the judge was going to do? Get as confused as their clients?
If the bailout applies only to 1st lein loans, then isn’t all of Socal pretty much exempted? Who will bail out the 2nds?
“I mean, I can’t even believe lawyers would bother going to court without proper documentation.”
I can believe it - very very easily after practicng for 30 years.
The lawyers who do the foreclosure work are truly hacks. Bottom of their class, dumb as a post, take the file given to them by their client, fill out the forms……
That sort wouldn’t know how to truly prep a case and check their evidence if you gave them typed instructions.
Oh, that’s interesting… I’m wondering if the judge is under the gun from a bank herself to do that without being prompted?
No. Bankruptcy judges are US judges - and that means usually the best and the brightest.
The court will be very careful not to allow itself to be used.
Judge is handed documents saying money is owed to A. The one standing there claiming that they get the money is B. Quite reasonable for the judge to say “and who are you and what are you doing in my coutroom? I don’t see your name on any loan documents of mortgage.”
Basic primcipal - to file the motion and get the relief ask, the supposed mortgage holder has to show they are the mortgage holder.
No brainer.
I fault the idiot bankruptcy attorneys who represent the debtor for not doing something.
(Trust me -the Judge will not be thrilled with them for missing that one.)
“We used to have more gentle ups and downs. This one went pkew, pkew, you know,’ he said.”
Then: 15 ft waves
Now: 60 ft tsunami
“Orange County is the only major government agency in California with public money invested in controversial securities known as structured investment vehicles, or SIVs.”
Hasn’t Orange County been down this road before?
Yes. I still have my copy of the Register front page proclaiming OC bankrupt framed in my home office. Looks like I’m going to be able to turn it into a collection.
Gwynster,
You might be able to get a collection of California Counties. OC isn’t the only municipality to invest poorly. They just had to be audited, due to that previous bankruptcy.
What about the ones who aren’t being audited? Eventually they’ll discover how illiquid their investments are. So that ‘cushion’ they thought they had to pay salaries will not be there. So expect those counties to ‘hit a wall’ and implement mass layoffs. Probably in 2009. OC? 2008.
Got popcorn?
Neil
Add every county in Florida to your list. That FL investment pool is a disaster.
I can’t believe these dipshits did it again. I thought they would have learned from the Citron debacle. Interesting that San Diego and Orange are the only two counties caught in this in California.
Both staunch Republican counties.
I was just going to say that!
“I can’t believe these dipshits did it again.”
Are you talking about Orange County fund managers, or the American populace that has been speculating in “up-up forever” real estate?
The Orange County ‘the financial market is Jesus’ dipsh_ts lose again.
THis time around, they had the looming example of 1994 to learn from, yet they got suckered once again.
Line up for your J-Trees, dipsh_ts.
Hilarious! Mr. Crisp claims “none of yer bidness” when his fortunes fall, yet clamors & thirts for public adoration when he was on the upswing. Very hilarious, in fact, that someone who depends on getting his image out in the open as much as possible for sales ( I bet Bakersfield had to endure his face all over town with his nonstop bragging ) now whines like a baby when things go sour.
What a punk.
Hey, Aqius, wanted to thank you for your greetings the other day in the Florida thread, I was on the road and didn’t see until much later. So, a little shout-out back atchoo!
http://www.creditslips.org/creditslips/2007/12/the-sandbag-pla.html#more
The bankers are on offense against the possibility of the big cram down. Something tells me this will be an intense battle. Hillary seems to be in strong support of allowing bankruptcy judges to rewrite mortgage terms. This should be interesting to watch.
Then someone should ask her why she supported bankruptcy reform in the first place. She’s either dumb or greedy and opportunistic - neither one is good.
I vote for opportunistic. Although it is dumb to be on both sides of an issue - occasionally people notice.
Most people don’t remember what happened last week much less two years ago. The general public has the attention span of a fruitfly.
Big big donors to her first Senate campaign where the NY financial service industry.
Ergo - shecould be bought. That makes her a politician.
Now, it is better for her politically to jump on the ’save the idiots who took out the dumb loan’ bandwagon.
Since the definition of an honest politician is one who stays bought, that makes her a dishonest politican.
For the record I am againt the cram down.
As the banks forclose their recover is going to be so poor the losses will be similar.
The damage to the lending system will be permanent though? It will be lik buying in Mexico where you needed 50% down.
In both those cases the debt expansion will have stopped.
“Frank Orello, a real estate agent in Stockton, said all six of his foreclosure listings in the auction were sold, but banks didn’t accept any of the top bids…with sales negotiated afterward. The accepted sales prices ranged from as low as 70 percent of list price to 91 percent of list, he said.”
WHAT? Don’t accept the bid and then negotiate upward? F’ that! I’m sorry, the auction fee is too much anyway. Auctions should go for ~20% below market. They aren’t even willing to get down to market price!
Sure, some sellers will hold out until 2017 to get their wishing price. But for every one of those, I know six who will sell at a loss just to liberate cash and cut the alligator’s feeding expenses. (Note: I’m talking about those who can afford their 2nd and 3rd homes. I’m not talking about the majority who are going to join the Donald in BK.)
Got popcorn?
Neil
I’m throwing the BS flag on this one. When you have shills bidding this is what you get.
Rich,
You could be right. Perhaps none of the sales really went through… Were they trying to set the impression that the market clearing price was 80% to 90% of the list prices? My… that would imply that the true market clearing price is BELOW 70% of the current list prices. Bwaa haa ha! snicker…
Got popcorn?
Neil
I would love to hear from you Californians if any of your family, friends, co-workers, etc. have given you the, “you were right” speech yet. I’ve gotten it from a couple people here and we are nowhere near the meltdown stage that California is at. It would be great to get the details and how you reacted to it.
nahh no one in CA would ever admit to not knowing anything; too many big egos, snotty soccer moms, and BMW-driving- gettaouttamywayImdrivingasportscar-you-poor-ignorant-azz-and-I-own- the-road-thru-my-superior-financial-prowess-&-ability-to-pilot-this-fine- piece-of-machinery-so-the-rules-dont-apply-to-me types.
CA has wayyyyy to much ego for any come-to-jesus moments. Thats reserved for you angst ridden woody allen new york types that feel it necessary to talk about everything in excruciating detail, over n over n over until I just want to step in front of the A-Train. (is there really an A-train & not just in the song) ??
Best to you NYC boy - hopefully gave you a laugh. or 2.
LOL
Went to the Annual March of Dimes Visit the Inns in Palm SPrings the other night. What it is, starting at the Museum adults walk around the streets in the Tennis Club area looking at all the Inns that some have been here since the 20’s,Casa Cody, and Korakia etc, and others, used to be apt complexes turned into Inns. A little christmas cheer, and adults Retirees mostly walking around in the dark. Kinda funny , you have to have been here.
Anyway, a few of the “Inns” used to be dumps. Used to live near one and I complemented owners on what a good job they did in refurbishing a 50’s (dump), they said they JUST bought the place, 6 units .
@ $299 per night in season. So lets do the math…as I believe this place doesn’t pencil out. And another ex-dump, same thing, some fellas bought just this fall and Voila.. Heck maybe it does pencil out IF the place is FULL every single night of the year…but at 2006/07 prices?
I think there is still alot of de NILE folks.
PS the place next door, didn’t buy in 94 as the geezer wanted $350k for a rundown bldg. The guys that refurb the place next door said I should have bought that it appraised at 1.5. They even said, though that the place should be razed, needs all new electrical/plumbing etc. I figured in 94 it was maximum 200k.
Sheesh. Things are definitely out of hand, still.
My Father kept telling me to buy this piece of crap condo for 500k or I would be priced out forever because in 5 years it was going to be 1 million. Right now they are priced under 500k with being months on the market infact, houses in the area are edging closer to low 5’s.
Now they send me articles like this…
NEW YORK (Dec. 6) - Housing markets from Punta Gorda, Florida, to Stockton, California, will crash and suffer price drops of more than 30 percent before the housing crisis is over, a report from Moody’s Economy.com said on Thursday.
So, they think these people should be bailed out because realtors talked them into houses they can’t afford.
As far as I can tell, most people are out for their own interest. My Father wants houses to stay high and protect his “equity” and I want houses prices to fall so I can 1) buy a home for my family and have it paid off when I retire and 2) look at all those smug people and say, “I told you so.”
How sad. I’m a Dad and I own my house and I want prices to fall so that 1) my daughter will be able to afford one some day, and 2) my taxes remain reasonable.
It’s my home. I’m trying to pay it off. I would appreciate it if it didn’t inflate to such ridiculous heights so that I get taxed out of it. Actually, I would like it to go to zero, because no matter the tax mill rate, zero times whatever is still zero.
I also think it would be nice if my children could afford to purchase a house someday, and make it their home.
“So, they think these people should be bailed out because realtors talked them into houses they can’t afford.”
Should read - “They think people should be bailed out because their dumba$$ parents talked them into houses they can’t afford.”
And I say that as the daughter of a dumba$$ who talked my dumba$$ sister into buying.
Sorry Shannon, but your dad is a jerk. He doesn’t need the “equity”, he needs to pay off his house and live there. You’d think he would be more concerned that his children and grandchildren can afford houses.
LOL everyone is now “not talking about it” because we have a friend who is a broker who made 140k in 06 and is going to be lucky if he clears 25k this year. If housing values do come up accidentally, everyone looks at me and does the stressed out, thin lipped “don’t let her say I told you so” thing.
So $165K over two years still isn’t bad. Too bad he spent it all on bling
I finally have been hearing the you were right comments. Father in law said it was different here, no way were prices going to drop, but when the OC register said prices were down 8% last month, he capitulated and said I was right. Funny how I was saying that all the funny financing no doc loans were the root cause of this for the last 2 years(got this from this blog - thanks guys!).. and he didnt want to listen. Now that the paper finally prints what we have all been saying here, he finally gets it.
“Now that the paper finally prints what we have been saying here, he finally gets it.”
It’s strange how sometimes only the written word has the power to convince.
I can just hear your father-in-law saying, “I have a brilliant son-in-law named Bubble-butt.”
Most I have come in contact with now pretend they knew all this information all along. They’re all suffering memory lapses about conversations we had. Of course, they had their fingers in the ears and were going la la la when I used to talk to them, so it’s hard for them to remember what I was saying.
That is what I’m seeing as well. It was so self-evident, after the fact. I just shake my head. It is amazing how many knew the bubble would pop.
several coworkers (in northern Calif.) have said I was right, and I even won a bet from one since he finally conceded there was a bubble and it has popped (we debated the topic for the last few years)….but another just bid on a house even after I sent him here a few weeks ago….I’ve decided to hold my tongue, anyone who doesn’t get it by now is hopeless. Sold my own place in April and got out just in time thanks to what I learned here.
Nah, the FBs I know are just “vewy vewy quiiiiet” about the subject right now. But then they don’t have much time to talk because they are working a lot of overtime. One guy I have known professionally for a long time is suddenly throwing himself into his job in a way he never has before. The situation seems to have done wonders for his work ethic.
Update your blog.
Yup, the guy down the street from me who thought his house was worth 350,000 (in my neighborhood 190 or 200,000 tops) two years ago I told him no way. Now he says it’s worth 250,000 then he waits for me to agree with him (I don’t) so he’ll be dropping his price again because wishing prices are long gone. He’s not too happy about the downturn. The guy down the street has his house for sale listed at 369,000 !!! I laugh everytime I drive by it.
Close family always supported me. (I’ve been correct on other bubbles in the past.) However, some uncles and cousins still aren’t there. But I’ve kept one cousin from buying a condo.
Coworkers have gone from yelling “buy now or be priced out forever” to quietly coming up to me with bubble information. (Even if I already know it, I’ll ‘pat them on the back’ in order to help spread the news.)
What’s spreading at work is the understanding of how many coworkers are in financial trouble due to over-investment in real estate. They also understand its national (I have workers from San Diego, San Jose, LA (beach cities and Palmdale), Florida, New Mexico, DC, and a few other areas).
Some still think I’m just being ‘greedy’ and want to ’steal a home cheap’. But my answer is to honestly point out my rent and ask why would I want to risk bankruptcy buying? I also point out the corporate news releases on what jobs we’ve promised to a half dozen other states and how we cannot hire junior engineers in bubble markets…
That last bit scares the housing bulls. But its only a fact.
Got popcorn?
Neil
I haven’t gotten the ‘You were right’ speech, but my ex did ask me - point blank - “How do I get out of it?” - referring to his Florida ‘investment’ condo.
Coming from him, it’s the equivalent of ‘down on my knees begging for forgiveness for being a bonehead’ from a normal person.
I’m worried about our nephew and his wife who bought a condo in Valley Village, LA in 2004, interest only ARM. I don’t know when the reset is. I urged them not to “buy” it in 2004, but he and his parents didn’t want to hear it. It’s my husband’s family, so I keep my mouth shut. Hopefully they can afford the reset.
“if any of your family, friends, co-workers, etc. have given you the, “you were right” speech yet”
Yes, yes, yes, and yes. Unfortuenatley, it’s too late for some close friends and relatives. One pulled out $50,000 - $100,000 to “pay bills”, upgrade house (granite, etc.), and buy toys. One is already having trouble paying property taxes (they don’t do impounds), and is looking at a PRIME (no bailout) reset soon. One already hit the reset, and is now paying an extra $1000 a month (from about $2500 a month to about $3500 a month), and that could go up! One bought a condo in LA for about a half a million dollars with a down payment from his dad (he just started working in the movie/television industry!) One finished building a new house, and because he couldn’t sell the old house for the price he wanted, is renting the old house out…his first time being a landlord, and it also means that he has a rental that just barely clears PITI and maintenance, while living in a house he bought at the top of the market.
I could go on, but it’s depressing.
Fortunately, I’ve convinced quite a few people to belt tighten and live below their means recently.
When people say “you were right”, I just say “Thanks!”, and that’s the end of that conversation…unless the person is a bubblista, then we rant on for hours.
Arroyo, you must be adopted, since you don’t resemble your family.
We used to live in Socal. My inlaws still do. Naturally they are of the opinion that the areas where they live (San Diego, Newport Beach, San Marino, Manhattan Beach) will be insulated from this downturn because “it’s different there”. They just don’t get it and still think we are totally nuts for not buying a house in Phoenix although we have lived here for several years. Some months ago, one expressed interest in buying some investment land in the west valley. In my usual tactful way, I suggested that it was an insane idea and referred her to this blog. I haven’t heard a word about it since but knowing them as well as I do, I wouldn’t be surprised if she and her husband just went ahead and did it anyway.
Nycboy oh yeah. My family is glad I got rid of the “I want a house” dream. I rent a house and I’m incredibly comfortable. Finally.
When I do move from here I”m going to rent a starter mansion.
I wish we could go back to the 80’s. It was bad but it had a beginning, middle and an end.
Its more complicated now. And would you boomers agree its more frightening.
No one from SoCal, but two friends in PA have acknowledged that I was right. One is grateful because I enthusiastically convinced him not to do a flip in Tampa 2 yrs ago.
I’ve had two people tell me they were happy they didn’t buy last year when I talked them out of it, and two people who were happy they sold last year when I told them to (they were both thinking of renting out the houses.) But no “you were right” from any of them. Most people would rather think that it was their own idea.
I wrote on a thread a while back that an LA friend who had invested in REITS had divested thanks to my advice and saved 50K. He admitted that I was right.
Congrats on the “you were right”.
I have gotten a few of these in just the last two weeks…two went as far to say something like…”you saw it three years ago”…
I am in North County San Diego. When I check foreclosure.com, I am beginning to see people I know on the Preforclosure list. I don’t talk about personal finances with any friends, but I have, in a very measured way, when asked, discouraged my son and his wife from buying for the last couple of years. Every week my son thanks me.
Smart father and son who listens, a rare combination nowdays.
Back in Thousand Oaks CA my friends are so deep in the money on their homes they don’t care about “no RE crash.” Bought for 400K went to 1.2m so it goes back to 800K so what? Won’t go lower than that its not Phoenix you know where all the poor people moved to and now can’t move back. It will start going back up in a few years and blah blah. Amgen is headquartered in TO and you know everyone who works at Amgen is rich not like Countrywide just down the road…. No when and if prices go back to 2002 -2003 levels in TO then I will serve up Crow which by the way there are plenty of in that area unlike Phoenix which has Doves and Pigieons but no crows. And no I won’t be buying “no RE in Phoenix” the ecological train wreck and lesson in bad planning. Although its darn nice this time of year.
The Orange County specuvestors came to Merced to buy property in connection to the opening of the UC Merced. They suggested that I should look at selling my place shortly after the doors opened in Fall 2005. I sold my house in Spring 2006. I have to admit they were right. don’t think they had any idea how high property values would jump during that period of time.
“Frank Orello, a real estate agent in Stockton, said all six of his foreclosure listings in the auction were sold, but banks didn’t accept any of the top bids…with sales negotiated afterward”.
That statement just leaps out at you; “. . . WITH SALES NEGOTIATED AFTERWARD”. It just proves what I & many others on this blog said regarding these so-called auctions . . how they are just a sham, a ruse, to get leads on potential buyers by staging these fake auctions where the sellers have no intention of letting any property go for a bargain!
Hell, why even bother going to an ” auction ” for real estate ? It wont be sold for a good deal, that much is proven. All it does is seperate the serious buyers from the tire-kickers, which agents & banks use to their advantage.If I WAS to check out an auction I damm sure would not give out personal info for public use which WILL get me non-stop solicitatons. Maybe just release an E-Mail address. I always laugh at the manufactured reasons & false urgency used to con the average citizen out of their phone numbers.
I like to enjoy some peace in my life without the rat race following me home without an invitation. Maybe thats just me - I dunno … .
for the average joe it seems like they think if they go to an auction they are sophisticated. they think auction=lower price.
It seems like the average fool thinks that all auctions and foreclosures mean great deals. Personally, I wouldn’t touch either. You had better know what you are doing or you can really get hurt.
I wonder. Google uses auctions to sell its adwords. The winner (with the high bid) pays the second highest bid. That avoids the winners curse (and lets Google suck more money out of advertisers because the pricing is more correct). Maybe the banks are smart enough to do this.
On second thought…no.
The winner (with the high bid) pays the second highest bid.
I just woke up from a nap and brain is foggy.. correct me if i’m wrong..
Someone bids $1 on something. I like that price, so I bid $50 million and effectively end the bidding. Then i pay $1 because that was the 2nd highest bid?
nevermind .. it’s gotta be sealed bids…Yaaawn.
Well, if you and yourself are the only two bidders for an adword, its probably not worth 50 MM anyway.
i was thinking any other bidders would need to bid higher than me ($50M) and then pay the 2nd highest bid..$50M. So, practically speaking, they can’t bid.
Sealed bids on RE might work.. kinda takes all the fun out of it.
Michelle Scott, Lennar Homes, says ‘We have drastic savings compared to a year ago so prices. It’s great for first-time homebuyers; people that don’t have a home to sell.’”
OK lets wait another year and see some really good deals just getting started.
Wouldn’t that be timing the market? realtors told me you can’t do that!
Realtors ™ love to point out the risk of ‘timing the market.’
I just go, ok, I’ll join coworkers leaving to more affordable regions. They then ask about my finances… Which I always reply “I don’t matter, until the people who report to my direct reports can afford a house, my job is at risk of relocation and I don’t want to lose $100 grand in the selling process.” chuckle…
Got popcorn?
Neil
“Prices continue to fall but Maaske says serious home-buyers shouldn’t wait. ‘Maybe the house prices will go lower. Yeah they’re doing that and you know what they’re foolish,’ he says.”
Prices, schmices. I’m waiting to see how my area will shake out in terms of stability in neighborhoods. I want to see if illegals are gonna stay or go in any numbers, if the gangbangers will move on, if Florida is going to go BK, how much more pain is going to be inflicted on taxpayers, etc. In other words, price is not my only consideration. Stability of an area is a big factor with me.
Ditto, Palmetto. There may well be some serious social upheavals in the next few years.
” But realtors say those properties were way over-priced to begin with. ”
No they said buy now because prices only go up and you will priced out forever…
those properties were correctly priced for a market of frenzied buying that doesn’t exist anymore.
This is funny. Marketwatch is claiming banks are worried that FBs will “game” the system, dropping their FICOs to below 660 to get a rate freeze. Gee, why would they think that? Everyone has shown such integrity in this housing mania.
More to the point, banks and pols ought to be worried about the fallout when it becomes very clear that this is sucker bait–designed to keep those who should walk away, paying and draining what little they have.
For all the rest, Nada. I do think Bush and Paulson are playing with fire with this one…and hillary with her “high regard” for Paulson–I think they are underestimating the kind of rage they may ignite.
http://www.marketwatch.com/news/story/how-game-white-house-mortgage/story.aspx?guid=%7B9DB9CA92%2D070D%2D4F8E%2DA3A8%2DE5169D4FD359%7D
“banks are worried that FBs will “game” the system, dropping their FICOs to below 660 to get a rate freeze”
Hey, if FICO score is so important to be a criteria for the freeze, what do the banks have to complain about? Low FICO was meant to indicate high credit risk, and that’s exactly what they are going to get.
This whole debacle is getting funnier and funnier…”may you live in interesting times”. Neil, pass the popcorn.
This article was written by someone who has absolutely no idea how the FICO score system works, pure speculation by the author. Just like gaming the system to push the score up is hit and miss gaming it down could hazardous, what if you overshoot your screwed.
“A local mortgage lender with 20 years experience in the business agreed. ‘I kind of saw this coming a couple of years ago,’ said the broker, who asked not to be named. ‘As soon as appreciation went away, the lending criteria became too easy. If you could breathe, you could get a loan.’”
Late Lament, by the Moody Blues…
Breathe deep the gathering gloom,
Watch lights fade from every room.
Bedsitter people look back and lament,
Another day’s useless energy spent.
Impassioned lovers wrestle as one,
Lonely man cries for love and has none.
New mother picks up and suckles her son,
Senior citizens wish they were young.
Cold hearted orb that rules the night,
Removes the colours from our sight.
Red is grey and yellow white.
But we decide which is right.
And which is an illusion?
OVERSTOCK.COM CEO says 1929 type disaster coming!
http://www.cnbc.com/id/15840232?video=605445206
This guy’s a bad manager with a sketchy business model. Of course it looks bleak for him.
I think the guy has some balls to tell the truth about the house of cards economy.
What’s funny is his statements shocked Maria Bartiromo. He then said it’s going to get nasty. She quickly changed the subject to talking about Facebook.
He’s a moonbeam. Just ask David Rocker or Jeff Matthews.
It seems to me looking at the numbers that by the act of simply putting off the purchase of a home for a month saves (in effect earns) approximately $10,000. on an average California home. Interestingly, this is the amount many were making on the way up…
“Gasinski reminds people to not try to time the market and if a house is needed, to go ahead and buy it”
It’s like an echo, San Diego, Las Vegas, Los Angeles, Silicon Valley…
Lennar Homes of Visalia have come down $60,000. The Lexington model cost $335,000 a year ago. It’s now $275,000 and with a quick escrow incentive. One just sold for $233,000.
Yeah, ONE just sold. How many more takers will there be? Not many, I’ll bet.
What I want to know is, what are people doing in Visalia (a farm town, as far as I can tell) that would enable them to buy a $200K+ home without resorting to “creative financing”?
“Creative financing” will be a thing of the past.
As a scientist, I lived in Visalia at the height of the bubble, so I can assure you that some people easily made enough to support a $200-300K home without “creative financing.”
This is Visalia California. I lived there for 2 years and can assure you the only people that can afford that are the farm owners. Other than that, it’s a farming community and the smell of cow crap is the smell of money to these people.
Unless the give take payment in cow chips, there better be creative financing.
A scientist in Visalia? That like being a Movie Star living in anchorage.
Here’s something for you San Diego folk:
http://sandiegopredatorylending.com/
Thanks! That was VERY helpful. I went to both a real estate attorney and my tax advisor last May to get answers on these issues. I was pretty sure I wasn’t getting the right answers (I wasn’t), but I did learn enough to understand that this was complicated and that the details mattered.
There are a lot of professionals that need to get up to speed in a hurry as there will be no shortage of demand for their services with potentially big financial implications for their clients.
As best I can determine from this article, I fall in the preferred “category 4″ - no additional debt or tax hit. This should be useful should I get hit with a bill for either.
Tx your reports today are so technical. I need little jokes and sarcasm to get thru these ditties.
I have a guy friend with a 450K loan. He has no way to pay his 4500.00 a month ( lied about his income) He was hoping to sell at a profit and pay his CC’s. How can I explain to him the trouble he is headed for?
Tell him to set up a date with the lovely lady whose picture I linked above.
After said date, ask him how he feels the next morning.
Tell him to multiply that feeling x 10.
You mean the shark?
“A local mortgage lender with 20 years experience in the business agreed. ‘I kind of saw this coming a couple of years ago,’ said the broker, who asked not to be named. ‘As soon as appreciation went away, the lending criteria became too easy. If you could breathe, you could get a loan.’“
Sort of like saying, “When she quit her sex life forever, everyone wanted to marry her.”
test
“We used to have more gentle ups and downs. This one went pkew, pkew, you know,’ he said.”
What? It went what? It went ‘pkew, pkew’? Is that, like, super much a technical term?
I want to hear the sound of things falling, like in Bugs Bunny.
I actually saw this on the news, and fell out of my chair at this guy giving this quote. The reminded me of a show about lotto millionaires which included a mullet toting cracker who now thought everyone was seeking his financial advice.
Here’s the link
http://abclocal.go.com/kfsn/story?section=news/local&id=5820873
PS. It’s all in the hand motions.
“Treasurer-Tax Collector Chriss Street defended Orange County’s investment in this type of security, which increased during his year on the job. The investments are suffering from ‘guilt by association’ with subprime mortgages, although none of the county’s investments contain subprime mortgages, he said, adding that he’s not buying more.”
Ooooh. Ooooh. Not too wise a decision there, Chrissssssss. Methinks you are going to be plenty soon headed down a Street, alright. The one with the arrow pointed one way to ‘Unemploymentville.’ Or else ‘Scapegoat Ranch’.
Actually, though, I am quite surprised that Orange County is the only ‘major government agency in California with public money invested in controversial securities known as structured investment vehicles, or SIVs’.
I thought they were all stupider down there? Nope. Guess not. Only Orange County. Ooops.
OT..
Has anyone seen any houses recently that they might actually pursue?
Still WAY overpriced in FL.
Regardless of price I won’t commit myself to an area until things settle down. The housing bust could cause all sorts of local aftershocks. Different municipalities will react in different ways.
Just saw a commercial on the tube about Levitz going bankrupt. Can that be true?
You mean Levit & sons? there’s also a Levitz furniture rental place right?
Filed for Chapter 11 in October, sold in December.
http://tinyurl.com/yufu72
Hahaha…told you that CA would see big drops. I’ll make a prediction here for CA only since it’s so special. Housing will drop 70%+ or more from current prices (after they have fallen 30% this year). This should get very interesting. For people here who are sick of the obnoxious yuppies and soccer mom bimbos, this will clean them out big time. They’ll be living with Uncle Donald and Aunty Ep and their other relatives for a long time. It’ll shut up the weird Hollywood types up too…for some reason they have a holier than thou mindset. The whole state could end up looking like that Beverly hillbillies show, oh wait, parts of it already do…hhahahaha…
All I can say to the realtors and mortgage junkies and assorted yuppie types in the CA market is “BOHICA”
Two attached condos 2/2.5 in gated …signs say sale Pending/In Escrow.
Either this is a Special neighborhood.. or. the prices offered are contingent/ or low.
I can’t wait to find out.
Other 2 properties are for sale 6 mos and a recent foreclosure/guys had 7 props.??*(_)(*&#$
oopsydaisy.
“For people here who are sick of the obnoxious yuppies and soccer mom bimbos, this will clean them out big time. They’ll be living with Uncle Donald and Aunty Ep and their other relatives for a long time.”
They will still be the brats they are, raising even bigger brats.
We lived in PUD’s with the yuppies, and loathe them. We cash and carry (save up for things) type were thought of as poor trash, yet we actually had more wealth. It took us longer to make the house nice, but we had no debt, and purchased smart. No refi for our pool. We just did it slower.
Any predictions on when mortgage rates will bottom.
It’s hard to believe that people will make long term bets at these rates with a crashing dollar and US deficits, but they continue to fall.
“It’s funny how Fox keeps putting these imbecile on to debate Peter Schiff. Why are these jackals always smirking and laughing when he’s making valid points? Is that some sort of debate strategy they’re teaching at the NAR these days?”
When things get really bad and the cheerleader “experts” can’t claim things are fine anymore, who is going to be the first to have a meltdown and completely go off on Peter Schiff in a career ending performance?
One San Andreas bidder, Mel Schell, said his top bid of $180,000 for a house in San Andreas was rejected outright, but his agent was told that the foreclosure owner wanted to negotiate. Neither he nor his agent has heard anything more,…
No skin off Mr Schell’s back. The foreclosure owner, however, is still stuck with the property…