It’s A Strange Christmas In California
The LA Times reports from California. “Sales of Southern California houses in November fell by 43% from the year before, while median prices fell 10%. The price decline was the sharpest, and November sales level the lowest, in 20 years, according to DataQuick. The Southern California median home price of $435,000 is on par with what prices were in early 2005, or off 14% from a peak of $505,000 earlier this year.”
The Union Tribune. “San Diego County’s declining housing market marked another milestone last month, when median prices declined 15 percent from their all-time peak in 2005, a quicker and bigger drop than in the recessionary early 1990s, DataQuick reported.”
“Looking at the components of the DataQuick report, all were down from year-ago levels, with the biggest category – single-family resales – dropping to $500,000 for the first time since April 2004.”
“Anxious sellers may be more willing to accept a low offer as they ratchet down their expectations, said Jim Nelson, a Century 21-Award agent. He held the sixth open house in 60 days on a listing in Clairemont Saturday after reducing the price from $650,000 to $600,000.”
“‘Serious buyers are buying, but nobody has made an offer on ours yet,’ he said. ‘I don’t think there are light switches or buttons you can push (to prompt a sale).”
“He plans to recommend that the seller drop the price even more to the mid-$550,000s.”
“DataQuick analyst Andrew LePage said preliminary figures indicate that 22.4 percent of the 1,705 resale houses and condos sold in November had been foreclosed on. A year ago, the foreclosure segment probably amounted to only about 6 percent, he said.”
“Tim Skoglin, an agent specializing in Stonecrest Village just north of Mission Valley off Interstate 15, said the bank foreclosure property price on a two-bedroom home cascaded from $399,000 to $374,000, then to $359,000 with no takers so far.”
“‘San Diego is a bellwether for the bubble itself in prices,’ said James Diffley, group managing director of Global Insight. ‘It would be a good sign for the rest of the country if the adjustment is as we project it, another 5 percent, and not for more than that.’”
“The only unknown that could upset the calculations is the course of the general economy, he said.”
“Just two years ago, Andrea Martin would see a designer handbag or a pricey cocktail dress in a store window and buy it without a thought. ‘Now you think two or three times,’ she said.”
“The Temecula resident said the economy has her so nervous that she’s cutting back on everything.”
“Ashlee Nicolls, 30, said she will continue to buy luxury items such as the Louis Vuitton purse she was toting around as she shopped at Fashion Valley last week.”
“Nicolls and her husband just bought a house in Coronado but haven’t yet sold their current house in Kensington. That means they will have two mortgages until they can unload the old house – something that might be tricky in a struggling housing market.”
“‘My spending hasn’t slowed down at all – even though it probably should,’ she said.”
From ABC 7. “An exclusive Eyewitness News poll, conducted by Survey USA shows 24 percent of Southern Californians are done with their holiday shopping, while 31 percent are about halfway finished. Thirteen percent said they just started shopping, 18 percent have not even begun, and 14 percent said they are not going to buy anything this year.”
“According to the poll, compared to last holiday season only about 24 percent of those surveyed said they would spend more this holiday. Nearly half said they will spend less. Twenty-three percent said they will spend about the same as last year.”
“‘It’s a strange Christmas. Lot of things on people’s minds — gas prices, the word of recession, housing situation, and locally people are concerned about the Writers Guild strike taking an estimated $325 million out of the economy. That hurts,’ said Jack Kyser, a chief economist for the L.A. Economic Development Corporation.”
“To try to attract shoppers, some business, such as Toys ‘R’ Us and some Macy’s stores, are staying open until midnight until Christmas. Many are offering huge discounts. ‘I just can’t believe it. I go in, and they have it on sale right now,’ said shopper Carmen Kooiman. ‘I mean, it’s not even Christmas yet.’”
“When Hoss Ghitkammanee steps out the front door of his Palmdale home, he sees a four-bedroom house much like his own. Instead of festive holiday reindeer on the lawn, however, the place across the street is decorated with a big, red sign spiked into the dead grass, declaring that the property can be bought at an upcoming foreclosure auction.”
“Another vacant house sits at the end of the block, with an eviction notice in its window and a ‘Substandard Property’ poster stuck to the door. The surrounding streets are peppered with ‘For Sale’ signs. Ghitkammanee fears many of those homes will wind up vacant too if their cash-strapped owners don’t find buyers soon.”
“‘It’s starting to degrade,’ Ghitkammanee said of his community.”
“With less than 3% of Los Angeles County’s population, it and neighboring Lancaster account for nearly 20% of the county’s foreclosures.”
“There were 678 foreclosures in Palmdale and Lancaster in the three months ended Sept. 30, compared with 79 during the same period in 2006, according to DataQuick.”
“Ghitkammanee wonders how the value of his home will hold up. One of identical size nearby is listed for $325,000 — $60,000 less than he paid for his. An even larger foreclosed house in the neighborhood is being offered for $282,000.”
“He fears the worst is yet to come. ‘Foreclosures keep popping up,” he said. ‘This is far from over.’”
The Fresno Bee. “The number of homeowners in default is piling up so fast that real estate agents are starting to offer tours of properties that have been returned to lenders. Real estate agents Nora Hall and Terry Babcock last week led a tour of six foreclosed houses for sale in Fresno.”
“‘There are so many foreclosures out there, and it has been a mystery to buyers as to how to find them and go through the buying process,’ Hall said.”
“Foreclosures make up about 12% of the existing houses for sale in Fresno and Clovis, or more than 500 homes, said Anthony Gamber, president of the Fresno Association of Realtors.”
“‘If they are not sold within the first 30 days, lenders are looking at price reductions,’ said Greg Kosareff, a Fresno real estate agent. Kosareff said he receives foreclosure listings from three banks — and competition among them is fierce. ‘They have to get [a price] under the others,’ he said.”
“‘In the last 60 days, I’ve had two or three closings where the property was appraised for more than we sold them for and they were all REOs,’ the industry term for bank-owned properties, Kosareff said.”
“One investor, Tom Hyatt, said prices have fallen to the point where he recently bought his first house since December 2005. It wasn’t a foreclosure, but Hyatt won’t rule out buying one. He said banks, facing year-end financial quotas, are going to become even more determined to sell houses in foreclosure.”
“‘Unfortunately, I don’t know if we’ve seen the bottom of the market,’ Hyatt said.”
The Santa Cruz Sentinel. “Mortgage brokers fear a recession in 2008, according to a survey released Monday. ‘Forty-three percent of our members feel that the real estate market will not fully rebound until 2009,’ said Santa Cruz resident Pete Ogilvie, president of the California Association of Mortgage Brokers.”
“Lenders are cutting prices ‘aggressively” at foreclosure sales, according to ForeclosureRadar.com, which reported the average discount grew from $9,000 in January to $48,000 in November.”
“The Unsold Inventory Index, which measures the number of the months it would take to sell homes at current rates, is 13 months, up from 12 months in October.”
“Watsonville, hardest hit by defaults and foreclosures, had 16 sales in 90 days, a 41.6 month index.”
“So far, 916 homeowners have received a notice of default, double a year ago, according to the Santa Cruz Record, and 465 properties are in foreclosure, more than triple last year. Some 234 homes have been lost at foreclosure sales.”
“Inquiries at Flat Rate Realty are up 50 percent compared to a year ago, according to agent Karen Renbarger. The company is a full-service agency with discount pricing.”
“‘People are more price-conscious,’ said Dorothy Escobar with Flat Rate. ‘They don’t have a lot of equity, and they’re looking to save as much as they can.’”
The Marin Independent Journal. “Paul Financial Services has filed eight lawsuits in Marin Superior Court since September, saying mortgage brokers breached contracts by providing false information in order to obtain loan proceeds for their clients and profits for themselves.”
“Peter Paul, owner and founder of the firm, said…if his company faces losses because of fraud or misrepresentation, he will go to court. ‘We are attempting to enforce what we believe to be legal contracts,’ Paul said. ‘We will try to collect.’”
“Paul, a 36-year veteran of the mortgage industry, provides a variety of lending programs to high-credit borrowers through brokers, but has stopped accepting new loan applications due to the uncertainties in the market.”
“He said he has not seen so much decline in the value of housing nationwide in his career.”
“‘Money got loose and credit guidelines got loose,’ said Brenda Cantu, a broker with ProMortgage in Corte Madera. ‘For the last five years, lenders have been able to look the other way, but they’re not now. It’s unfortunate that because of the bad apples in this business, everybody is paying the price.’”
“Paul Financial, which until this year funded more than $2 billion in loans annually, has shrunk from a company with more than 200 employees to fewer than 50.”
“‘Wall Street funded half of the mortgages in the country,’ Paul said. ‘The capital markets virtually shut down.’”
“‘You can’t necessarily blame brokers,’ Paul said, adding that borrowers are given stacks of disclosure statements to sign when they close. ‘Someone chose not to read what was put in front of them.’”
“Spencer Scheer, Paul’s attorney, said fraudulent loans have been widespread in past years.”
“‘Equity covered a multitude of sins for a long time,’ Scheer said. ‘Nobody really cared if there was fraud, but when the values of assets dropped, people started looking at their contractual obligations.’”
The Gilroy Dispatch. “An embattled real estate company accused of predatory lending has shuttered its doors, becoming an additional signal of a slumping housing market.”
“On Monday, the Morgan Hill offices of Rancho Grande Real Estate looked like the properties they used to sell. The rooms were dark and bare of furniture, with only the stubs of phone cords projecting from the ground and walls.”
“At ACR Investments, a San Jose-based company owned by the same owners as Ranch Grande, work numbers were disconnected and cell phones were not answered. In addition, the company terminated its contract with its public relations firm, which knew nothing about the closure, former spokesman Juan Lezama said.”
“In Santa Clara County, only 1,200 homes were sold in November, a 40 percent decrease from the same month last year, according to DataQuick.”
“‘It’s absolutely the market,’ said Patty Filice, broker associate with Intero Real Estate Services. ‘When things were hot, people ramped up.’”
“Rancho Grande is not the only business in South County to be hit by the slump. Century 21 Premier, which had employed 90 real estate agents, hurriedly closed its doors in mid-September due to dwindling profits and a large stock of unsold homes. Alliance Title, a nationwide company that handles the financial end of closing home sales, shuttered its offices in Morgan Hill and Gilroy earlier this month, Filice said.”
“Staff at ACR Investments sold a $720,000 Hollister home with $5,200 monthly payments to two couples who made a combined $6,500 per month picking strawberries, Deputy Real Estate Commissioner Charles Koenig wrote in an accusation of wrongdoing. The company should have known that the families could not make these payments and that the home would go into foreclosure - both of which happened - Koenig continued.”
“A similar story surfaced in Gilroy, where couple Maria Alarcon Garcia and Julio Romero saw their $820,000 home go into foreclosure. Though the couple spoke only Spanish, they bought the house by signing forms in English and using the translation of Rancho Grande’s owner, Maria Avila, the couple said.”
“While the couple signed forms, Avila promised the couple monthly payments of $3,200, a tough but acceptable proposition as it constituted more than 90 percent of their income, the couple said. However, the couple saw payments of about $5,300, fell behind and watched as their credit and dreams were shredded.”
“Given the nature of the complaints, ‘One might think that it’s a good thing that they’re not operating any more,’ said California Department of Real Estate spokesman Tom Pool.”
“Anxious sellers may be more willing to accept a low offer as they ratchet down their expectations, said Jim Nelson, a Century 21-Award agent. He held the sixth open house in 60 days on a listing in Clairemont Saturday after reducing the price from $650,000 to $600,000.”
((600/650)^(12/2)-1)*100 = -38 percent annualized rate of decline. I think I will wait until after the Souper Bowl to see if the market comes back…
“reducing the price from $650,000 to $600,000.”
It looks like these idiots were so stuck on having their price begin with a 6, that that didn’t have the sense to make the price $599,999. Dropping the price below $600,000 would have gotten them more exposure do to the way searches are done and would have only been a dollar less.
“…and would have only been a dollar less.”
But that’s two to three cups of ramen. Gonna be important soon.
Can’t really blame it on the Seller. They’re ‘award winning’ Realtor is the real idiot for not understanding how their own MLS database search function works and advising their client accordingly.
Not necessarily; if you search on SD ziprealty, you can either search for $600K or less, or for $600K or more. Both searches include $600K.
You can plug in any number you want as your max price on the MLS search, and I think most people would be inclined to put in a round number. With that said, I think if he lowered the price to $500,000, he would have a lot more hits!
P B…An Oldie but Goodie, I wonder if that lady with the cupcakes up in the hills of Santa Cruz ever sold her Home she was not going to give away???
First illumination: “……after reducing the price from $650,000 to $600,000.”
“I don’t think there are light switches or buttons you can push (to prompt a sale).”
Second illumination: “He plans to recommend that the seller drop the price even more to the mid-$550,000s.”
See Jim, there is a switch….. flip it about 4 more times.
I still can’t believe that sellers in Clairmont are asking over $500,000 still. Come back to reality. That town the homes should sell for $300-350,000. Its a mostly blue collar, working class neighborhood, although I have seen many Mexican multi-families shacking up there, and generally even lower middle class moving there. The homes can’t be newer than 1950-60’s, and are going to need lots of up keep, new roofs, 21st century energy upgrade. Anyone spending $600,000 in that town is going to get burned BAD.
Exactly. I think the same thing when i see these 4 BR, 3,000 SF tract houses listed in Carmel Valley for 1.2 million. I would say for those, $750K tops in a realistic market. I think wishing prices in SD have a long way to come down still.
You have probably looked at my parent’s house! I keep telling them it is overpriced, they keep saying they will not give it away! Waiting for the forclosure thanks to HELOCs to buy other property and renovate. It is a very NICE tract home, but not a 1.2 million dollar one.
As you already know, many people see the previous sale prices as the “written in stone” value of their similar property. They see no connection to fundamentals and cannot comprehend anything else. And for whatever reason, they may think you don’t know what you are talking about.
You know how it goes: you tell them x, y, z and give them references. Then a person with real estate “knowledge” (unfortunately, the realtors) comes along and says the same thing (or possibly something different but it matches their belief), and they believe THEM rather than you.
Frustrating, but that’s how it plays out sometimes.
BayQT~
Banner day for this bubble busting bear!!!
Palmdale 93552 lowest listed 4+3 or better?
$160,500 1584 sq.ft. or $101.33/sq.ft.
I know, I know, who would want to live in that God forsaken place?
Well, that price is only 3.08 times median income for the zip, and the size of the home is above median. I’m pretty sure this home deserves it’s place at the bottom of the heap, but it will set a comp. The home I purchase will be 3 times bigger and much nicer than this one, and I will be completely satisfied if I get it for $100/sq.ft.
On the same day, the median wishing price for the same search criteria was 335K. That’s equal to the lowest since tracking began in late ’04.
Hallelujah!
And to think I don’t have any buying pressure ‘til next fall. It’s good to be the king.
Palmdale 93552 lowest listed 4+3 or better?
$160,500 1584 sq.ft. or $101.33/sq.ft
Palmdale / Lancaster are a couple of the scariest places to view. A good description might simply be ‘The Hood’.
After the the 1990 peak the area was inundated with section 8 homes. Figure in 17 years to mulitply the pain.
Hey snob, take your snobbery back to snobville. I’ve live here and there, and here is infinitely preferable in my opinion. If you really need convincing I can expand on my reasons why.
The fact that you’re vehemently defending Palmdale is, well, quite hilarious. Do you enjoy exfoliating your scrotum with a cheese grater as well?
(cue Dr. Evil)
“When I was 14, a Zoroastrian named Wilma ritualistically shaved my testicles. There is nothing like a shorn scrotum, it is quite breathtaking - I suggest you try it.”
Now that’s a visual!
WOW!
Leigh
OK, you asked for it.
#1 A family can easily live on one income here, leaving one parent available to (gasp) raise the children.
#2 Public schools here are far better than their counterpart down below.
#3 360 days of sunshine.
#4 Highly educated workforce. Military and aerospace are major employers.
#5 Due to #4 above there are still white people here.
#6 1 hour to the beach, less to skiing.
#7 While colder in the winter which gives the mild flavor of four seasons it actually doesn’t get any hotter than the west SFV.
#8 The air is noticeably cleaner here. You can see stars at night.
#9 Stereotype of the AV as “nowhere” and “BFE” persist, thus reducing the number of nimrods wishing to move here from the hell-hole that is metro LA.
ROTFL ex-nnv, that’s quite the visual…
Ok guy, I’ve visited friends in nice areas of Palmdale. There is such a thing. There will be defense related jobs out there through this whole implosion. However, you *need* to really verify how a neighborhood is doing and just as importantly, how the neighboring blocks are holding up (whom will your kids go to school with?).
There was an area of West Lancaster where I would rent a hotel room when traveling in the area. In 2004 and 2005 the neighborhoods were nice. In 2006 a group of hoodlums decided to join me for a jog (I started yelling at them by a corner where I had previously seen gun owners unloading from a hunting trip.) My point? Carefull, the neighborhoods can turn quick.
For house value, the Antelope valley turns quick. Those homes at $335k will be down at $145k soon. How do I know? I work for an ex-test pilot who almost bought months before the last downturn. Palmdale and Lancaster home prices crash at a rate I don’t believe any other area can.
That said, I’m more interested in 90275 and 90277.
Or Denver… Or DC… let’s see where the wind blows… (please, no more visuals!) 
Got popcorn?
Neil
Yeah. I don’t think Palmdale is nearly as bad as people make it out to be. I’ve seen sketchier neighborhoods all over LA and San Diego than the worst place I’ve seen in either Palmdale or Lancaster.
If I had a choice between living there or somewhere in the LA Basin, I would pick Palmdale….but I sure as hell wouldn’t commute in on the 14.
Dude -
I’m not defending the LA Basin. Quite the opposite, actually. My point is if you made the effort to leave the “Basin”, why the heck would you stop at Palmdale. If you’re gonna be a bear, be a f-n grizzly for gods sake. Grow some balls and really get out.
LOL, sorry I can’t resist….
“#1 A family can easily live on one income here.”
Especially when that income is coming from selling meth to all of your neighbors.
“…there are still white people here.”
Yes, and a huge percentage are section 8 recipients. I’d rather live next to any gainfully employed minority family than white trash.
#6 1 hour to the beach, less to skiing.
BWAHAHAHA…on what freeway and at what time?
“#9 Stereotype of the AV as “nowhere” and “BFE” persist”
Do you think that nifty 5-6 hour RT commute to any white collar job paying over $50K a year might have something to do with it?
Call me a snob, but you will never sell me on the Antelope Valley. 3% of LA’s residents live there and 20% of the foreclosures are there. ‘Nuff said!
Dude, Palmdale/Lancaster is nothing short of a real estate hellhole always has been, always will be irrelevant of the demograpics
It’s funny, today I interviewed a young person who grew up in Palmdale. She said that east Palmdale is bad, but west Palmdale prices are holding up fine (it’s different there!)
Westside is going down harder there was much more speculation there in the run up. Just look at foreclosure numbers. 78 for eastside 109 for westside today if I remember correctly.
There are 3 types of people in jail I met: from Palmdale, Lancaster, and Long Beach. Go figure.
Oh well, there are worse places, Blythe and Quartzsite come to mind then again Barstow, then again, with Cal the list can be long???
Hallelujah!
Says “Dude”
“‘It’s starting to degrade,’ Ghitkammanee said of his community.”
It’s kinda’ interesting how it all depends on which side of the coin one is on, no?
It is not snobbery. It is reality. I don’t car if you have lived there for any amount of time. When that area craters it is a lot like the Inland Empire.
You can argue ad hominem all you want, but it won’t change the reality that the ‘hood is all that will be left when this bubble bursts once and for all.
I agree it will crater like IE. The difference is there is actually industry here. There is a baseline that can be reached. What’s the baseline of the IE? What’s the baseline of OC? Disneyland?
Heh. I’m a surfer, so I can tell you for sure that the OC baseline is about 3x the income of working the non-swell producing days of the year at various odd jobs, mini-marts, or fast food joints, combined with the income from your working surf betty. If you call that 30k household, then there you have it: 90k baseline housing prices minimum
–
Hey, dude, lot of speculators built homes in Tehachapi to sell to refugees (from crime, they said) from Lancaster and Palmdale and for those who want to escape the heat from Bakersfield. Well, looks like people can’t escape as easily as thought. It is not easy to move in a falling housing market. All pathways seem to be clogged.
Jas
–
BTW, I went and talked to mom-and-pop builders during 2005 and 2006.
Also, necessary to attract Bakersfielders/ Palmdalers/Lancasterians Home Depot was built and Wal-Mart was authorized (my prediction is that Wal-Mart will pull out and sell the land at a loss).
People have the mentality that the boom would last forever.
Jas
Yes, I agree, Jas. in ways Tehachapi is a microcosm of the AV with it’s government/ag workforce and it’s out of the way location.
I’ve never said the AV won’t go down hard, in fact I’m as bearish as anyone I know. I just find it amusing that all the twerps have something bad to say when they don’t know anything about how I live nor what local conditions are on a day to day basis.
The AV is waaayyyy bigger than any single region in LA. Things are spread out here. If you don’t want to live in the hood in Palmdale it’s pretty easy to find a “good” neighborhood. I can’t say the same for Compton, and anything else in the south bay is an easy drive or busride from there.
Face it, everyone in Socal lives in the hood. Until something is done to really fight crime this will be the case.
BTW Jas, most of that was not for you, and I stick by my snobby snobville comment above for the snobs.
“Face it, everyone in Socal lives in the hood. Until something is done to really fight crime this will be the case.”
ROTFLMAO — I agree!
Here’s a conundrum: If you *had* to to live in either Lancaster/Palmdale or Bakersfield, what would you choose??
L/P - the odor isn’t nearly as bad as Bakersfield.
Hee Hee Hee! Lancaster/Palmdale - be a victim of gang violence. Bakersfield - be a victim of air pollution.
We don’t hear nearly enough about Hesperia here..
I always thought Hesperia sounded like a respiratory disease.
L/P — it’s so easy to get up into the Angeles Natl Forest.
Off topic but speaking of ANF, I am in the process of finding these mines. Anybody into hiking?
http://www.lagoldmines.com/index.php?page=356299.txt
Whichever one provides better Maui Wowie!
Help, I don’t know which.
“Here’s a conundrum: If you *had* to to live in either Lancaster/Palmdale or Bakersfield, what would you choose??”
Death!
From a guy living in the paradise of NNV that’s a suprising choice.
What is Mentone like these days? Has it been built out? I used to go through there all the time on the way to skiing (cross-country in the Los Angeles Mts.).
“From a guy living in the paradise of NNV that’s a surprising choice.”
Yeah, you got a point there, dude.
get you some ridgecrest buttermilk acres 3/2 for 80k…
even better, get a standard beach dump condo in redondo for 177k…
we will see these prices again.
only because anything above that is gonna be inflationary funny money.
Hello Dude!
I do not know your age (and I’m not asking).
I could break out into a song!!!!
America, America, God shed her grace on me!…
This is how I feel about our most beautiful land!
Cali…ah…Cali. Love the six lane highways. Picture this:
4 banger Subaru, 109 mi/hr; down San Bernardino Pass; chugging up the hill at 65 mi/hr - the year - 1987/8?
Snort! My colleague had white nuckles in the passenger seat - er…born and raised in Cali!
Woohoo!
Leigh
P.S. Patrol officer travelling in opposite direction did not even blink! It’s not like he could turn around over a cement median and say, “Ma’am, do you know how fast you were going?”
ME: “Sir, I’z da slowest! Don’t ticket me man.”
“4 banger Subaru, 109 mi/hr; down San Bernardino Pass; chugging up the hill at 65 mi/hr - the year - 1987/8?”
This is just scary. My wife and I drove down to LA in 1988- I still remember hitting the pass in our- get this- Subaru GL. Man, once the truck lanes merged into the highway, that road got really dicey… BTW, a 4 cylinder Subaru is not the best car to have in LA- going up the metered onramps, by the time you merged with traffic we were lucky to be going 40, with the pedal pushed to the floor all the way up.
“‘San Diego is a bellwether for the bubble itself in prices,’ said James Diffley, group managing director of Global Insight. ‘It would be a good sign for the rest of the country if the adjustment is as we project it, another 5 percent, and not for more than that.’”
Never mind that SD prices are dropping at double digit annualized rates of decline as I type — I am sure Global Insight is correct in assessing there is only another 5 percent down from here until the market bottoms out.
SD will lose another 5% before we go to bed tonight.
LOL
Just reading the newspaper here contributes to the price drop…
My househunting friend insists this price drop does not affect any area in SD west of I-5, such as La Jolla/Del Mar/Solana Beach. What sayest thou?
It’s different there — larger price drops are in store (at least in terms of absolute dollar amounts, if not percentages).
You know what would be even better? How about prices returning to affordable levels so people can, you know, actually buy houses to live in. What a novel idea!
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SoCal median price is down 13.9% from peak during May-Jul of 2007. The credit crunch seems to have hit hard for the past three months.
Jas
“The credit crunch seems to have hit hard for the past three months.”
Crunch + fires => reluctant buyers
You’re a poet and don’t know it.
So are you Arizona Slim
“No more rhymes now - I mean it!”
Anybody want a peanut?
But my posts show it — they’re Longfellows…
–
Sure made me laugh loudly, Prof. Thanks.
Jas
“down 14% from peak during May-July”
This period reminds me of Splash Mountain. We’re just at the point where everyone starts screaming.
capitulation is almost upon us.
“The only unknown that could upset the calculations is the course of the general economy”
Hey Diffley, give me a call. I’ll let you know where the economy is heading, straight down the crapper.
So that’s the ONLY unknown? I guess we already know about tighter lending standards and the fact that the vast majority of potential buyers has been priced out forever…until prices drop another 30-40% that is.
Nitpick: 45% price drop required for SoCal. Oh… you said ‘vast majority.’ I’m going for simply majority.
This will get scary.
Got popcorn?
Neil
“A similar story surfaced in Gilroy, where couple Maria Alarcon Garcia and Julio Romero saw their $820,000 home go into foreclosure. However, the couple saw payments of about $5,300, fell behind and watched as their credit and dreams were shredded.”
Geez, I don’t know about y’all but I rent right now and I am NOT dreaming of an $800,000 house. That’s not a dream; short of winning the lottery, that mortgage is a nightmare! (Whatever happened to starting off on the ground floor and working your way up?)
“monthly payments of $3,200, a tough but acceptable proposition as it constituted more than 90 percent of their income”
90% of your income for a mortgage payment is “acceptable”? I do not think that word means what you think it means.
Read into it a little further… that 90% is for the $3200 a month payment. So they are collectively making about $3600 a month. Which equates to roughly $43,000 a year. Or the equivalent of TWO $10hr wages!
$820,000 house? ¡Si se puede!
What kind of soulless SOB do you have to be to sell two people making 43,000 a year an $820,000 house? That realtor should go to jail.
Nonsense - “real estate only goes up!” So, in a few years, it’ll be worth $ 1.1 million, then the next folks can flip it for $1.8 million in a few more years, and so forth. Note that everyone involved will still be making $10 an hour, of course. But that’s okay, since “prices don’t matter!” Hahahaha!
I was think the same thing. “tough but acceptable proposition” WTF! Who wrote this artice!? Should be “GASTLY and UNACCEPTABLE”. idiot(s)!
If you’ll pay 5 bucks for a vente, no-fat, no whip, no fat, brown slurpee then 90% is about right.
Their monthly property tax = my monthly rent.
my monthly income = more than theirs.
sucks to be them.
Its so good to be a renter.
Julie
Hi CVG,
“Geez, I don’t know about y’all but I rent right now and I am NOT dreaming of an $800,000 house. That’s not a dream; short of winning the lottery, that mortgage is a nightmare!”
AH! Even if I won the lottery (not in my master plan, but OK), no way on earth will I ever, ever, ever purchase a $800K home!
OK - maybe if it had cabana boys in every room!
OK - no.
$200k-ish, 10 acres, 2000 sq ft ranch w/basement and mancave for hubby! (Hey, it could happen)!
Hubby is upset - reading over my shoulder - thinks I’m cheap.
I’ll be back - time to lock him in da closet. (I let him out occassionally for sunshine).
He wants to buy now. He’s bigger and stronger, but he’s unable to forge my signature - HA!
Maybe he could will the lottery if he would buy a ticket?
Snort!
Leigh
Hah! Nothing can stop the American consumer. So Superwoman stop him if you can, but if he gets his hands on kryptonite soon, the checking account crumbles.
He is strong and handsome, but I have the check book!
I’ll borrow TxChick’s large frozen trout - bang!
Fish to the head! HAR!
Thankfully, hubby fears da laser eye beams - and I spoil him rotten to boot!
Kryptonite my green eyes!
Ya just can’t make this stuff up!
Leigh
Leigh take it from me a cheap woman is worth her weight in Rhodium….($6500 per ounce)
Your hubby should consider himself the luckiest man on earth. Its so easy to wind up with a clueless airhead spendthrift excuse for a woman. We read about them every day here, must buy house must buy $500 handbag…must buy new shoes the 30 pairs i already have look so outdated
Holy cow! How late do you stay up?
Let’s remember there are clueless airhead spendthrift men that need their boy toys also.
Hello aNYCdj!
$500.00 purse!
Slap me stupid and call me silly!
I’m cute, but hey, it’s a effing purse! Diamonds don’t cost that much (well, they are not my favorite either).
Most I’d give for shoes (I love shoes) is $40.00. I said I’m cheap!
Grins,
Leigh
You are not buying the right shoes! My $300 shoes have lasted 7+years with little TLC and are 10X as comfortable as the $60-$100 crap sold at Macys and other places.
If you shop at DSW or a similar place I take it back–you can get some sweet deals there, not loose your mind and money.
I like the bit in the original post about how the poor woman now has to “stop and think” before buying the latest designer handbag/trinket, etc. Gah - the Amerikan Consumer in all its frightening glory… the horror having to THINK before buying something!
This story is different in that they knew from the start they were in trouble, even with the lowest payment they thought they were going to have. They really can’t blame anyone. $800,000 house? How in their mind did they EVER think they could afford that? I don’t feel sorry for them. Do you think they would pay $200 for a head of lettuce? No way, they aren’t that dumb.
OT–
About a year ago, one participant here at Ben’s commented that during a visit to Santa Barbara s/he had noticed some new condos under construction in the downtown shopping district (adjacent to the swishy Paseo Neuvo mall). Well, those condos are now ready for prime time, and they’re flying off the shelves! The backstory is available at the Santa Barbara Housing Bubble Blog. The Cliffs Notes version: Santa Barbara lives up to its commitment to provide affordable workforce housing to its residents.
Saint Barbara
About a year ago, one participant here at Ben’s commented that during a visit to Santa Barbara s/he had noticed some new condos…
That was me! Good memory Saint Barbara. Unbelievable that those thangs are going for over a million. Oh, well, just sit there and wait. It will get interesting.
Multiply 15% x the value of homes in San Diego County at their peak in 2005 and that equals a lot of home equity loans that will never be paid off. The next generation of 40 somethings aren’t going to be quite so pretty.
GREAT!!!!!!!!!!!!!!!!!!!!!!!!!
The way to solve the current affordibility problem is to make it harder to get a loan.
If you are a bank, we will flood you with as much money as you need. If you are a FB, you are F*^ked. But don’t worry, we will make sure the banks are solvent to foreclose on you.
Since when do you reward the drug dealer for soliciting drugs, but jail the junkie?
Strange times.
“But don’t worry, we will make sure the banks are solvent to foreclose on you.”
My take on this is, ‘We will make sure the banks are solvent so they can lend another generation of FBs the money to purchase foreclosures which have morphed into falling knives.’
It is all about helping banks stay solvent — customers be damned.
Don’t worry… It won’t make it harder to afford a home so much as it will make it harder to keep housing prices stupid-high.
No toxic loans = no housing costing 5x, 8x, or 12+x times incomes.
It seems that buying a home before the old one sells is a classic amongst FB’s.
I can think of three cases of that among people I know. And, last I heard, one bought a condo that has all sorts of problems. He’s trying to get the developer to take it back so he can move back to the neighborhood he thought he’d left.
As for the other two cases, their first houses FINALLY sold. But the strain of carrying two mortgages did not-so-nice things to their finances.
And here I sit in the Arizona Slim Ranch. Be it ever so humble, it’s where I am. And it’s where I’m going to be for a while.
I can think of a lot more than three cases.
Some friends, some just coworkers. None are doing well. Some intentionally rented out the place *knowing* they’d make a killing! (Man… I have to bite my tongue around those people.)
One coworker is in quiet desperation…. at least as far as his financial problems (I only know as his ‘friend’, who’s into schadenfreude, squeeled). The FB has been in quite a few yelling matches at work. If he wasn’t taking it out on other people I’d feel for him… cest la vie.
Got popcorn?
Neil
My neighbor decided to pursue a business opportunity in Las Vegas about 2 years ago. Being the know-it-all that I am, I suggested to wifey that with prices so high in SD it would be a great time to sell their home & not deal with being a long-distance landlord. No Go. Wife was on board, but the husband got greedy, since RE always goes up. They’ve been renting their depreciating asset (already trashed by one set of party-boy waiters, though the new renters are super nice),and bought a McMansion in Vegas. Wonder how that’s working out.
Ouch!
Forgot to mention, OC couple rented out the house while he took a relocation package to Denver. Of course they bought a home there (ok, not the worst market to buy…) But can you imagine trying to unload a home in the OC today?!?
Got popcorn?
Neil
I still don’t get this one. Why would you buy a home at all in a new community. It really takes about a year to get the lay of the land and decide where you want to live, make sure the new job works out and that you really want to stay in the location. But to buy a new home in new community before you sell the home you already own is double stupid on a stick.
“…before you sell the home you already own is double stupid on a stick.”
HAR!
Thank heavens I follow my advise!
Avert eyes when tipping liquid to face!
Dang, that was JUST funny!
Really, it’s sad. But you pushed my funny button Crazy!
Ya just can’t make this stuff up!
Leigh
P.S. Still laughing! Best to you and yours
Pleased to have given you a laugh. Just rushing around getting ready for baby and boyfriend to come in from college and feeling very happy. Best to you and the hubster, too.
Paying off mortgages on two homes may be a classic symptom of “doubling down” in gambing. Namely, if you’re convinced that housing prices are going up, you’re now doubly-leveraged to take even more advantage of the rising market.
Also, in gambling, I believe it’s called ‘chasing your losses”!
Is something nuts?
Are the central banks acting like there has been some sort of disaster helping the banks remain liquid but everyone keeps telling us everything is fine?
If the buyers can’t afford their mortgage payments, are we facing a liquidity crises or solvency crises?
Yes.
If today you can’t comprehend the scope and nature of the problem, nor can you understand the plan to deal with it, just wait until tomorrow — there will be a new characterization of the problem, and a new plan…
…we have really entered a hyper-ponzi phase of this implosion. Yes, flipping homes to pizza delivery drivers is ponzi enough, but hyper-ponzi is monster stock market rallies on the announcement of some insane “plan” or another to save the original ponzi.
It’s just so messed up I can’t even keep the story straight anymore. All I know is that tomorrow I’ll wake up, check marketwatch.com or some other useless “financial news” outlet, and find that the Europeans have loaded ten trillion onto Airbus A-380’s doing circles over London and Wall Street. Or Fannie Mae is accepting first, second or third born children in exchange for mortgage relief. Someone has to screw Playstations together. You know?
If the PTB came right out and said - “Hey, we made one whopper of a mess out there.. We are such boneheads!! We’re sorry, though, and we’ll never do it again. So is it okay if some of you only get part of your deposit/pension fund/money back? That would be a big help.” - how do you suppose J6P might react? *grin*
Not saying it’s right, just more impetus than the usual ego issues to pretend everything is a-okay.
Besides, the “it’s all okay” technique can be used in real life. Let’s say you “forgot” to patch your roof until it caved in the middle of awful storm and guests are due any minute. Don’t worry, no need to fix anything!! Just smile, casually mention there’s always 4 feet of water in the house this time of year. Serve cocktails in waders like you do it all the time. Most people will just go along with the flow. If necessary, pull the smarter and/or rich guests aside and tell them where you keep the canoe. You want to keep them away from the ones who think “darn - lost another canape to the rats - must be my fault” as it will ruin the whole party.
banks are insolvent, due to ficticious capital amongst the krill…
the krill are dying, the whales need to eat.
John Mauldin’s “Outside the Box” newsletter this week provides an interesting argument that the Fed is actually not really ADDING any liquidity to speak of. (Someone else post the link please, I’m not good at that.)
I don’t know his letter, but from the Federal Reserve’s Temporary Open Market Operations, which is where the TAF and Repo’s show up. There has been a total of $18 B added since March. This week is really interesting because of the amount due for rollover is $39 B and the amount in “New TAF” is surprise $40 B. The TAF is for 2 months.
As for the ECB injections of 350EU, this is 2 week moneys - not subject to rollover - seasonal demand. (However EU rules change in the CB all the time. This appears to be a 3/4 pt rate cut more than infusion.)
Federal Reserve Temporary Open Market
http://tinyurl.com/yn6u53
http://www.investorsinsight.com/otb.aspx
This should do it
Thanks: from here can follow links from Mauldin to Hussman to “Read More,” ending up with an elaboration of just what Hoz is saying.
“Staff at ACR Investments sold a $720,000 Hollister home with $5,200 monthly payments to two couples who made a combined $6,500 per month picking strawberries, Deputy Real Estate Commissioner Charles Koenig wrote in an accusation of wrongdoing. The company should have known that the families could not make these payments and that the home would go into foreclosure - both of which happened - Koenig continued.”
Who vote the district attorney in these places? This is outright fraud.
Another strawberry picker family making $6500/month. That sure beats $4000 Togo sandwich maker. Damn the BA people is sooooo highly paid.
“Staff at ACR Investments sold a $720,000 Hollister home with $5,200 monthly payments to two couples who made a combined $6,500 per month picking strawberries”
AAAAHAHAHAHAHAHA! Why did I even bother going to college when I could have made that kind of coin picking strawberries?
…as it constituted more than 90 percent of their income, the couple said.
Un-fookin-believable…
“A similar story surfaced in Gilroy, where couple Maria Alarcon Garcia and Julio Romero saw their $820,000 home go into foreclosure. Though the couple spoke only Spanish, they bought the house by signing forms in English and using the translation of Rancho Grande’s owner, Maria Avila, the couple said.”
“While the couple signed forms, Avila promised the couple monthly payments of $3,200, a tough but acceptable proposition as it constituted more than 90 percent of their income, the couple said. However, the couple saw payments of about $5,300, fell behind and watched as their credit and dreams were shredded.”
90% comes out to $3600 per month! This couple bought an $820,000 home, with each averaging $10hr jobs? …do they work at Togo’s too?
I’m really tired of this English/Spanish BS!
Hey, Maria Alarcon Garcia and Julio “Tonto Mayor” Romero, these are dollars not pesos, dimwits!
Hey, Maria Alarcon Garcia and Julio “Tonto Mayor” Romero, these are dollars not pesos, dimwits!
el proceso todavía no se comprende
I see the same line in stories about English speaking people, too. I’m wondering if the mortgage brokers weren’t really trying to fraud people when they use to tell people to not worry about the reset because they’ll be able to refi. Could it be they were just kool aid drinkers and really believed that stuff? It appears from the MSM that EVERYONE, including all those at the top, really believed that housing would just continue to go up forever. Even the experts are saying they had no clue, so how could we expect the strippers turned mortgage brokers to know anything more? Not saying there weren’t slimy brokers but I wonder how many were stupid instead of fraudulent.
ATC: Not saying there weren’t slimy brokers but I wonder how many were stupid instead of fraudulent.
Never attribute to malice that which can be adequately explained by stupidity. In this case, I don’t think it’s even stupidity. It’s more crowd following than anything else - you see a crowded restaurant, and assume the food must be good. Housing goes through the roof, which must mean it’s a good time to buy a house, or miss out on all the fun. Following the conventional wisdom is generally a good idea - don’t play with fire, save for a rainy day, etc. But there are exceptions, and some people failed to figure this out.
Another reality they failed to deal with is that in real estate cycles, there is nothing new under the sun. Buyers failed to appreciate this fact and hung on to a fatal thought in the investment business - “this time, it’s different”.
Make no mistake ,they were fraudulent and knew it ,and were selling the loans with the biggest commissions with no regard for the customers .
I would tend to agree except that we’re now hearing daily that none of the experts saw any of this coming If the experts couldn’t see it coming it seems unlikely that mortgage brokers would have been expected to be smarter than them. Granted, many here saw the writing on the wall, but we were all considered tinfoil hat fools waiting for the black helicopters. Maybe I’m confusing smart with clever and conniving. There’s just something here that doesn’t add up. Maybe the bigboys are lying and they knew all along it was all smoke and mirrors. Only expert I can think of that really spoke up about the pending doom was Schiller (sp?).
What doesn’t add up is that you can’t see fraud until the losses start coming in and people start defaulting on the loans . You can’t even see how bad a loan design was until the losses start coming in . Anybody with half a brain would know that all those toxic loans would be dependent on real estate going up,or borrowers getting hefty income raises every year . Liar,toxic adjustable loans became the name of the game once the sheep could no longer afford the price increases .
When real estate was going up ,the fraudulent loans were not apparent yet because the borrower already flipped the house, or the borrowers got a new refinance ,or the borrower would sell before they went into default . Some of those loans adjusted up payments were delayed while the loan was getting negative amortizing added to the loan balance ,(which was dependent on real estate going up ). Now those people are up-side -down on the loan amount .
You have to get into how real estate and loans were sold during the mania ,and the industry was selling leverage and appreciation and refinancing down the road . The Experts that were quoted half the time were the people from the real estate industry ,like the NAR ,and the other experts quoted were from industries that were tied into the advertisers .
Lets face it ,a whole lot of people where making money off of the housing boom ,including industries not real estate related because money was coming from the housing boom .
I know it’s hard to believe that a whole Nation could be so blind ,but you have to have faulty lending in order for it to happen ,just like in 1929 with the margin lending on stocks .
My friend Jim Lowell, a Boston investment adviser to private clients only, has been talking the Shiller talk for at least three years. Not the Jim Lowell who sometimes writes in WSJ (that one is “my” Jim’s son).
Stupidity knows no borders.
Oh come on you guys ,these borrowers got a big cash back check when they bought that over-price turkey of a house on their income .
Come on you guys , don’t you remember when the market started to turn ,sellers and builders were giving away cars and incentives ,and realtors were looking under rocks for any person they could find to unload high priced property by cash back fraud and the like .
Don’t let the 40k a year income borrower who goes on a 800k house ,bought between late 2005 and early 2007 ,who can’t speak English fool you . Do a investigation on the seller on that transaction ,the realtor ,the mortgage scum ,and the appraiser . Go back to around the time that the borrower bought the property and you will most likely see a big check deposited in their bank account .
Wait until the bail out callers find out how many of these deals done in 2006 were pure fraud and cash back deals . These scum victims don’t like to talk about the big check they put in their bank accounts by purchasing property . How do you think a lot of the realtors,investors and builders got out of their bag-holder positions when the market turned ?
I saw the contract……it did say ‘mucho largo grande paymentos comingo yo wayo en futuros’….or something to that effect
the thing is, they thought that meant they would be RECEIVING mucho mas grande paymentos en futuro.
Nope, check it, it said “pero, no para ti” at the end.
It’s looking a lot like 1890 at the moment…
50 years of price declines ahead before a bottom is reached?
http://en.wikipedia.org/wiki/Image:Shiller_IE2_Fig_2-1.png
Big crash after a speculation mania in 1890 . Interesting how real estate prices stayed down for about 50 years.
Well, if the initial drop happens quickly and we don’t see another housing Bubble for 50-years, that works for me. This one will be destructive enough!
If Ben B. keeps printing money the greenback will be worth what the peso is now.
“Ashlee Nicolls, 30, said she will continue to buy luxury items such as the Louis Vuitton purse she was toting around as she shopped at Fashion Valley last week.”
“Nicolls and her husband just bought a house in Coronado but haven’t yet sold their current house in Kensington. That means they will have two mortgages until they can unload the old house – something that might be tricky in a struggling housing market.”
“‘My spending hasn’t slowed down at all – even though it probably should,’ she said.”
Silly rabbit…SoCal is filled with morons like this, will go in absolute hock for insignificant trinkets.
I have seen people pratically living in cars or shelters with 500.00 dollar watches and/or bags on their arms. Kids living at home at 35 with a 1000.00 a month car lease.
I just don’t get it…what is it about this state that makes people lose their minds like that?
Silly rabbit…SoCal is filled with morons like this, will go in absolute hock for insignificant trinkets.
Yeah Ashlee, or is it Brenda? The pole is less and less kind after 30
What can you expect from someone who doesn’t know how to spell “Ashley” and doesn’t know how to spell “Nichols” ?
Sorry, sometimes I can’t help myself …
Her mother’s name is probably Dizzy.Ashlee’s mother probably has her plastic surgeon on speed dial.
Hey……I love Louis Vuitton purses…..a must have for for the parades.
Tim Skoglin, an agent specializing in Stonecrest Village just north of Mission Valley off Interstate 15, said the bank foreclosure property price on a two-bedroom home cascaded from $399,000 to $374,000, then to $359,000 with no takers so far.”
That’s a “cascade”? Bwahahaha! 399 to 299 to 199, now THAT would be a cascade. Get back to us when you have something to show us along those lines!
“My spending hasn’t slowed down at all – even though it probably should”
This Lienie’s for you! Now Prof Bear, this would be my version of the FB story “Its a Wonderful Life”
The arrogance of this stupid witch just galls me. It’s this type of person that will be the most miserable when reality catches up with her snobby little attitude. She will be one ugly bioche.
“‘There are so many foreclosures out there, and it has been a mystery to buyers as to how to find them and go through the buying process,’ Hall said.”
The NOD tacked to the front door, waist high brown weeds in the front yard and a pea green pool in the back. Yea, real tough figuring it out.
“In Santa Clara County, only 1,200 homes were sold in November, a 40 percent decrease from the same month last year, according to DataQuick.”
That’s not so bad. They could have sold only 200.
There’s a lot of “For Sale” signs out and about. I’ve even seen a few “Price Reduced” signs every now and then…
“Ten states have prepared revenue and spending projections for 2009 and
found that revenues will fall short of what is needed to support current
services. Among them are several of the nation’s largest states, including
California, which faces a projected gap of at least $9.8 billion, or nearly
10 percent of its “general fund….
State sales tax revenue has declined
because the bursting of the housing bubble has reduced sales of furniture, appliances, construction materials, and other related items. Property tax revenues have also been affected, and local governments will be looking to states to help address the squeeze on local and education budgets….”
Center on Budget and Policy Priorities
http://www.cbpp.org/12-18-07sfp.htm
Nice charts, California is a RED state - deep red - underwater red. Bleeding red ink red.
Whew. I thought you were going to show something scary!
But I see only California, New York, Florida, Massachusetts, New Jersey, Nevada, Arizona, Virginia, Minnisota, Kentuky, South Carolina, Maine, Illinois, Michigan, Oklahoma, Arkansas, and Rhode Island are in trouble. Now I see Texas, Ohio, Wisconsin, Missouri, Connecticut, and Vermount might be in trouble.
Heck, we all know Washington, Oregon, and Georgia will pull us through!
This is worse earlier than I thought it would be. I’m stopping by the k-ration store on the way home. Yikes!
Got popcorn?
Neil
For a particularly chilling effect, overlay that map on a map of state population densities. Yeah, that’s scary!
That map has me as shocked as when I found out about this bubble extending to Arkansas. Time to get another glass of wine… Its dang scary.
Got popcorn?
Neil
Posted on CR
Paul Krugman on Google@Youtube
Youtube link
http://tinyurl.com/37nd7o
71 minutes on global economy
Sorry if this is already posted……TIMBER !!!!!!!!!
Hovnanian Enterprises Reports Fiscal 2007 Results
http://biz.yahoo.com/prnews/071218/netu086a.html?.v=1
Not to worry — the following statement is all that matters in that report, as all the bad news is already priced in to their stock price (which, incidentally, went up +5.66% today):
“Projections for Fiscal 2008:
— The Company continues to project positive cash flow from operations in excess of $100 million for fiscal 2008.”
From the report…………
-canceled preferred stock dividend for all of 08.
-have to renegotiate 1.5 bil in debt since it appears they’ve violated some covenants.
Yep……it’s all good
Hovnanian’s losses quadruple
Homebuilder reports huge loss as housing downturn slugs the company.
http://money.cnn.com/2007/12/18/news/companies/hovnanian_earnings.ap/index.htm?postversion=2007121821
It’s funny how they spin their financial outlook going forward after a huge loss.
“However, after a very slow period for new sales contracts in October and November, we have experienced an improvement in sales pace during the first three weeks of December. This is encouraging given that December is historically a slower sales month,” he said.”
It kind of reminds me during the beginning of the Internet bust. These Internet companies continued to have massive losses but they spun as if there is a pot of gold at the end of the rainbow. You know how it turned out.
I am always curious why the market goes down when a company declares a profit (but it’s less than some nitwit analyst thought it should be) and the market goes up when a company declares a loss (but it’s less than some nitwit analyst thought it would be). Befuddlement is a frequent companion lately. Where is the sense these days?
Not happening with HOV - stock’s down 10% today.
These stories about the Gilroy couple and the Coronado island couple make me laugh histerically! 19 years ago there was another Real Estate bubble. You hardly ever heard of spanish speaking people getting ripped off by realtors. Were realtors not greedy back then? Only Wall street types? I doubt it. Realtors are always greedy.
It keeps astonishing me that there are bloggers here who enable the stupid buyers by declaring it’s entirely the fault of the big business and never the borrower. There is a candidate for you types: Hillary Clinton. There is a country for you: North Korea.
There was a lot of crooked dealing by the real estate industry. I will say that. But I want to also say here that there was a lot of crooked dealing by the buyers. They obviously never studied real estate, never read literature on it. The common rule of thumb is to never get a loan on a house more than 2 and a half times your income. Many people lied about their incomes to get on the greed gravy train. So there!
I shed no tears for FBs.
Both the lenders and the borrowers are to blame . The problem is the contract between the borrower and the lender . Real estate went down ,so now the borrower wants to default on the toxic loan they obtained in the name of leverage, and the lender wants the borrower to pay on the trick loan they sold when the borrower thought that real estate would always go up .
Both borrowers and lenders were counting on real estate going up ,and that is stupid . Some people just wanted a home and got a loan they could afford and I hope those borrowers aren’t harmed .
Re the Santa Cruz Sentinel’s report that the county’s Unsold Inventory Index rose from 12 mos in October to 13 mos in November.
I tried to figure out mathematically some way that the U.I.I. could rise by one month in a single month. One way I could get it to do that was by assuming that no houses at all were sold during the month. Another way is by adding to the inventory twice as many new listings as the number of sales. Any other ways? (C’mon, we have a bunch of math/stat heads here.)
Same number of sales. Listings go up by twice the number of sales, not total listings, or sales decrease by lastmonthsales/currentmonthsales.
Could it happen this way: Coming into Oct. you have (say) 120 houses for sale and sell 10, giving 12 months inventory. Suppose the next month (with 110 houses for sale) you only sell 8 houses. Then you would have 110/8 or a more than 13 months of inventory.
If NO houses sold during a month, would this mean that you had infinity months of inventory?
(Forgive double post if it turns out that way)
I was noticing Santa Cruz Sentinel’s report that Unsold Inventory Index rose from 12 mos in Oct to 13 Mos in Nov. One way this could happen would be if no houses at all were sold in Nov. Another way would be if new listings were twice as numerous as actual sales. Anyone think of any other way (c’mon math heads) ?
LOL> Dateline garden spot of the world North Hollywood where a cousin who paid $14,500 (1465sf) 1 car garage in 1954 calls me and says i’m bummed out, i just reduced my house to 450k from 550k this is not right, what can i say it is family i just took a sigh of relief and said, keep trying there is a buyer for everything in life, i just didn’t want to tell him the buyer must be deaf,dumb, and blind?
Shadow: Assuming they didn’t refi or HELOC, that’s not too shabby a profit even if it goes for $400K. I guess it’s disappointing to know that if you sold just a year ago, you would have had an extra $100K.
My mom sold her house in August 2005. Our realtor at the time told us to sell it, the market is turning. Since she’d lived in it for almost 60 years, with no 2nd ever (we didn’t have much when I was growing up), she funded herself a nice retirement. Not all realtors are/were slugs. But I think the one for the buyers was…..*smirk*
The latest stress is the couple that can’t bear to pull up to a wedding in anything but a 50k + car, God forbid they actually got sensiable and bought a Mazda or the like, it would just ruin their image with family and friends?
I wonder if BMW owners will laugh when I say their luxury cars generally come with leatherette? Seems funny to me.
I have a BMW with leatherette. it’s actually pretty nice, feels better than the leather in most domestic cars, and holds up well. 5 years old, basically looks new still. And it’s very easy to clean up, important with a child in the car. And it’s $1200 less than leather.
Normally I prefer cloth but it’s not available in the US from BMW.
OT Drive I-80 into the SF Bay Area most every day. Several brand spankin’ new commercial sites have leasing signs out front and a few are still in construction. Maybe Oops by not pre-leasing?
Except for rain today, and attendant mess, been clocking better commute times in the last month or so, too.
Hi, that’s interesting. My commute from sj/los gatos border to north SJ has gotten significantly worse recently. From 2002 to 2006, was 20 minutes to work, 20 to 40 minutes home. Now it’s 30 minutes to work, 30 to 55 minutes home. Same as 2000, but the roads have been improved since then.
Of course this week has been better as people start to take vacations.
OT.. check out Boston Legal.. subprime debacle case.
It’s definitely part of pop culture now. I believe Jim Lehrer used the now-familiar phrase “mortgage meltdown” on his news program this evening.
California Assembly approves plan to overhaul health care system
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/12/18/MNB4U06GL.DTL
The new system, which also would require voter approval, would be financed by a new tax on hospitals, an increase in the tobacco tax, billions of new federal matching funds, and a tax on employers of up to 6.5 percent of their payrolls.
Supporters say the overhaul would reduce the cost of health care because most of the estimated 6.8 million uninsured residents, who now receive care at hospital emergency rooms, would get the benefit of regular doctor visits and preventive care once they were covered.
Good luck!
Well, I was almost getting ready to swallow the poison pill of acknowledging Calif residency and paying Calif income tax, but if you Calif voters are actually going to approve this Mitt-Romney-like worst-of-all-worlds unfunded mandate on individuals, I better wait and see.
I have an idea! Maybe CA can tax people on forgiven debt (that the Feds seem tho think is some wacky fantasy income that doesn’t even count) and use that to pay for health care!
I’m all for universal health coverage. But with a 9% state income tax and a huge population, they should be ROLLING in dough already!
Let me tell you why San Diego will be toast after the elections.
Who is the biggest private employer in San Diego? SAIC. SAIC is a defense contractor who has 2 headquarters. One on the outskirts of D.C. and one in San Diego. They went public last year. To boost the stock price the CEO sent out a memo about diverging real estate holdings. Not specifically San Diego, but the writing is on the wall.
When the war ends, and defense money starts to slow, SAIC will get rid of their San Diego HQ. Lots of people will lose their good paying jobs.
So just wait, San Diego is going Tits Up when the Democrats win the White House and the war funding slowly goes away.
If you are thinking of buying in San Diego, of course wait out the 2008 ARM meltdown, well into 2009!
War funding for everybody: Cunningham, Wilkes, Blackwater, KBR
It’s a sad day when we have to count on the military industrial/ lobbyist complex for “good paying jobs”
Well, as far as foreclosures go, Costa Mesa has got 2+ months of inventory in REOs alone. There are 81 REOs according to realtytrac, and according to a realtor there were 36 sales in November. There are 550 properties for sale, down from about 590 a month ago.
And CM has shiteloads of NODs and trustee sales still going on.
SD Native.
At least San Diego has a lot of gorgeous, beach bunnies to show their TITS up at that time. LOL. It couldn’t happen to a nicer place (speaking of all of Clownifornia).
Niel-K-rations? Ya, I already stocked up on guns (not kidding, AR-15 and a MAC 10) and plenty of amo, gold and silver and all the investments are in foreign currencies. Got to look at the whole bell curve of possible outcomes, at the far end, we all saw what happened in New Orleans, if we end up with the next Depression, hell, I can exchange the guns as a downpayment on my new beach home.
Wouldn’t it be easier, if you have enough cash to emmigrate easily, to pack up and move to another country? I checked and if you have CA$800K to your name, you can move to Canada very easily. And, of course, it’s possible with less but it may take more processing.
I agree with you, it’ll get bad here. We’ve taken similar moves as you (except for the guns, I’m not good with them), and about 1/2 our savings is now with foreign countries and metals.
“San Diego County’s declining housing market marked another milestone last month, when median prices declined 15 percent from their all-time peak in 2005, a quicker and bigger drop than in the recessionary early 1990s, DataQuick reported.”
Just like the realtors said, this time is different.
I am sure you folks have seen this already, but http://www.trulia.com is now showing RaltyTrac foreclosures with loan amounts. In the three zip codes for Costa Mesa (92626, 92627, 92628) there are 131 foreclosures (including NOD) with loan amounts ranging from $18,221 to $1,586,162. This will be interesting to watch as the banks may find that the loan amounts do not dictate the value of the properties any longer.
“Ashlee Nicolls, 30, said she will continue to buy luxury items such as the Louis Vuitton purse she was toting around as she shopped at Fashion Valley last week.”
“Nicolls and her husband just bought a house in Coronado but haven’t yet sold their current house in Kensington. That means they will have two mortgages until they can unload the old house – something that might be tricky in a struggling housing market.”
“‘My spending hasn’t slowed down at all – even though it probably should,’ she said.”
Do you suppose her dreams will be shredded too? Honestly, the realtors and loan companies don’t have to do anything underhanded at all, when they are dealing with people blinded by greed, who think they are entitled to a lifestyle that they truly cannot afford.