Tumbling Prices A Real Possibility In California
The Sacramento Bee reports from California. “Sacramento-area home sales ticked up for the second straight month in November. But the excess supply and rising numbers of bank-owned homes continued to push down sales prices. Much of November’s slight sales increase can be traced to a rise in closings of new homes across the capital region, said DataQuick. Home builders reported 88 more closings in November than the previous month.”
“That’s a reflection of sales begun in late summer and early fall, a time when builders like K.Hovnanian boasted 47 sales in one weekend from splashy discounting efforts. But overall sales numbers are still at 1990s levels and prices have returned to 2004 levels across much of the region, DataQuick reported.”
“Sacramento County, where median sales prices of new and existing homes combined are now 18.3 percent below this time last year, is still California’s hardest-hit urban county for declining values.”
“Placer County’s median sales price for existing homes dipped to $382,000 from $400,000 in October. Sales prices in the suburban county are now down nearly 25 percent below their August 2005 peak of $505,000.”
The San Francisco Chronicle. “The Bay Area housing market showed no signs of recovery in November, with sales hobbling along at a two-decade-low pace and buyers still struggling to find mortgages.”
“A total of 5,127 new and existing houses and condos traded hands last month, down 36.2 percent from November 2006, according to DataQuick. That’s the lowest sales count for the month since at least 1988, when the firm began tracking the market. It is the 34th consecutive month of declines.”
The Recordnet. “In California, there were 39,992 foreclosure filings in November, down 21 percent from the previous month but up 108 percent from a year earlier. RealtyTrac said California cities accounted for five of the nation’s top 10 metro foreclosure rates last month.”
“Broker Steve Clark said he hasn’t seen any signs that the foreclosure scene is improving. A lot of people still come into his office hoping to list their houses in hopes of selling to avoid foreclosure, he said. Typically, though, they owe at least $100,000 more on the house than they could get for it, he said.”
“‘We can’t list it,’ he said he tells them. ‘Nobody will buy your home and help you out of this mess.’”
“There have been hardly any sales all this year, anyway, he said, adding that his office mainly handles property management for rental homes - an active scene. ‘I don’t see a change any time soon,’ Clark said. ‘It’s terrible, and I have a hard time seeing where the silver lining is.’”
From ABC 7 News. “Stockton still has the highest foreclosure rate in the country, Solano County is number six. Antioch’s been hit hard too.”
“The signs are everywhere, a lifeless lawn, a neglected tree, a drained hot tub and an empty mailbox. On all too many streets in Antioch, there’s merely a house where there used to be a home. ‘It’s sad, it’s really sad, because I’m sure when these people bought their homes, it was their dream,’ said Sonya Polk.”
“Sonya Polk has lived here four years; long enough to see a once thriving neighborhood turn strangely quiet. ‘It’s not that ‘This is a nice neighborhood, it’s quiet.’ It’s quiet because it’s empty,’ said Polk.”
“According to Realty Trac, last month in Contra Costa County, there were nearly 2,400 new foreclosure filings.”
The Ventura County Star. “Ventura County continued to grow very slowly last year, fueled by a steady increase in births coupled with an influx of foreign immigration that barely neutralized the exodus of residents to other counties and states.”
“The trend, said Bill Watkins, executive director of the UC Santa Barbara Economic Forecast Project, is a reflection of economic reality: high housing prices coupled with fewer opportunities to land a job that pays enough to afford a house.”
“‘Opportunities are declining,’ he said, noting layoffs at the county’s two largest private employers, Amgen Inc. and Countrywide Financial Corp.”
“Bob Schrader, controller at Hilford Moving and Storage in Ventura, said his industry has not benefited by the number of people leaving.”
“‘Under normal circumstances, we have more people moving in than moving out,’ he said. ‘But these aren’t normal circumstances. You’ve now got people just walking away from their homes and taking nothing with them except a few personal possessions.’”
The LA Times. “California’s population continued to grow modestly in the last fiscal year despite a significant exodus of residents to other states, according to a state report released Wednesday.”
“The annual study by the Department of Finance showed that 89,000 more people moved out of California than moved here from elsewhere in the United States. California’s population did grow in fiscal 2007, but the growth rested on births and the arrival of more than 200,000 immigrants from other countries.”
“‘If you’re someone in finance and you haven’t already been laid off…or if you’ve lost your job here and maybe your house, maybe you’re thinking that there are better prospects out there in other states,’ said Howard Roth, chief economist for the Department of Finance.”
“While the state lost many residents during the economic downturn of the 1990s, people had been steadily moving to California from other states since 1999.”
“But once the housing bubble burst, the trend reversed.”
“The story was repeated in Southern California, where every county except Riverside and San Diego saw a decrease in ‘domestic migration.’”
“The slowdown in Inland Empire growth will probably get worse next year as regional housing sales continue to slow, said John Husing, an economist who studies Inland Empire counties.”
“The number of houses sold in Riverside and San Bernardino counties in the first quarter of 2007 was about half the number sold in the first quarter of 2006, he said.”
“‘The slowdown in the housing market attacks the fundamental strength of the Inland economy,’ Husing said. ‘I personally think we’re heading into a recession here.’”
The Voice of San Diego. “The slump that has plagued the San Diego County housing market is beginning to show on the commercial side.”
“The trouble defies the industry mindset, prevalent even up until a few months ago, that commercial and residential real estate share little more than a surname, that the health of the real estate market for apartment investors, offices and industrial space would remain untouched by the housing market’s troubles.”
“‘I think we’d all like to think that the meltdown in the housing market hasn’t affected the commercial side,’ said Kraig Kristofferson, senior VP with CB Richard Ellis. ‘But the reality is people look at real estate in one big basket, often.’”
“National homebuilder Lennar, for example, recently listed 50,000 square feet of its office space for lease to other tenants in order to cut costs, said Jason Hughes, principal with local firm Irving Hughes. And then there are mortgage companies, title companies, escrow companies — going out of business or cutting back on staff, and space, he said.”
“‘It goes on and on,’ Hughes said. ‘Anyone that says that residential is not affecting commercial is nuts, because it simply is. There are a ton of tenants who are in a difficult situation because of the housing market, residential real estate offices are closing their doors. … And that’s happening at the same time as the credit crunch.’”
“With heavy losses sustained by such investors this summer due to soaring defaults on subprime and other mortgages, those investors grew skittish. Some lenders backed by them have stopped funding loans altogether.”
“‘The credit crunch has probably taken out 75 percent of buyers who were out kicking tires a year ago,’ Hughes said.”
“In another subsector of commercial real estate, values are shifting in apartment buildings after years of significant increases in prices from investors looking to convert apartments and sell them as individual condos.”
“Robert Vallera, principal with local firm Commercial Realty Advisers, referred to an apartment property about to close in El Cajon that is selling for ‘perhaps 25 percent below where it would’ve sold two-and-a-half years ago.’”
“‘Apartment prices a few years ago, mid-decade, were primarily based upon condo-conversion economics,’ Vallera said. ‘We’re seeing some properties come on the market now where the prices have made a substantial correction.’”
“‘[Would-be buyers] read the paper just like everybody else,’ said Brandon Keith, another principal with Commercial Realty Advisers. ‘If it’s their first commercial purchase, they maybe think, ‘If housing prices are going down, then maybe commercial prices will, too.’”
From Reuters. “The surge in home foreclosures in California…may help send the state’s home prices tumbling by adding properties to already swollen listings of homes for sale, said John Burns, an Irvine, California consultant to home builders.”
“‘That scenario is a real possibility. Home prices are completely out of line with people’s income,’ Burns said.”
“‘It’s a total buyer’s market,’ he said during a telephone interview with Reuters. ‘There is a tremendous number of homes for sale out there.’”
“Comerica Bank Chief Economist Dana Johnson said in a report this week the state is likely heading into a ‘multiyear period’ marked by home prices lagging national trends.”
“‘Something akin to the experience from 1989 through 1997 may re-emerge,’ he wrote.”
“Johnson noted that earlier this year California’s median home price peaked at 175 percent of the national median, a premium buyers attacked before the recent credit crunch with adjustable-rate mortgages and 100 percent financing.”
“Johnson noted that for two decades before the frantic homes market of the early 2000s, a ratio of California’s median home price and median income held to a narrow range of five to six, indicating affordability. Then speculation and lax lending, especially with subprime loans, sent the ratio soaring to 10.”
“Now only 24 percent of households in California can afford to buy an entry-level home.”
“For affordability to return to California’s housing market, its home prices must fall by at least 30 percent even after recent declines, Johnson said.”
“That is may not be out of the question given the mortgage crunch is sidelining so many prospective buyers while the backlog of homes for sale builds, Burns said: ‘There are very few people who are qualified under today’s underwriting criteria to buy an entry level home.’”
“Tumbling Prices A Real Possibility In California”
Wait until the Spring Selling Season ‘08…price appreciation will return, then you all will be sorry.
That’s right AG, Buy now or be priced in, er, I mean out forever!
I believe there will be a little dead cat bounce that will cause the housing cheerleaders to all point out how this mess is over; prices have finally bottomed out!
“Wait until the Spring Selling Season ‘08…price appreciation will return, then you all will be sorry.”
I agree. Right now, I am too busy planning my Super Bowl party to shop for a McMansion. However, as soon as it’s over, I’m buying!
*wink*
Let’s hope we can get that interest only loan.
My credit score sucks, but I’m gettin a jumbo for my dream prison right after the coin-toss.
“Wait until the Spring Selling Season 2008 — price appreciation will return, then you all will be sorry.”
__________________________________________________________
Fairy tales can come true, they can happen to you…
“Sales prices in the suburban county are now down nearly 25 percent”
I don’t really care. But when someone making 40K can buy a 400K house we have a problem. Most people are fools when making financial decisions. The present housing bubble reminds me of the tulip bubble in Netherlands in the 16030’s. You should read more about this.
For the most part, investing requires that we put up actual money that we have. Hence, we take care of investing prudently.
But here, as with many bubbles, people ‘invest’ without putting a single dime of their money. Hence, they don’t necessarily worry about the investment quality.
You hit the nail on the head! the people who will suffer losses are the ones who were foolish enough to lead the money! And that includes dollar holders all over the world.
AG, I thought it would kick off after Super Bowl, or is it the Pro Bowl? hehehehehehe
That’s what every realtor and newspaper article was saying a year ago (about waiting until Spring 2007). It didn’t happen. In fact, the market got even worse because of a jump in inventory.
“Comment by arroyogrande
2007-12-20 15:09:35
“Tumbling Prices A Real Possibility In California”
Wait until the Spring Selling Season ‘08…price appreciation will return, then you all will be sorry.”
~
Um. Your prediction may have been a bit off.
So as California goes more and more leftist/liberal/socialist, the middle class flees and is replaced by immigrants from third world countries who can’t afford to buy a house from the former residents. High taxes, crushing regulation, entrenched sense of entitlement, both in the populace and the union-run government. Interesting. Sort of sad too, since most of the coast is so beautiful. I guess in the future visiting California will be like visiting the Bahamas - nice resort areas surrounded by horrific slums.
I’m not sure I agree. I don’t think the middle class is fleeing because of politics. I think they are fleeing for lack of opportunity for decent paying jobs and houses. We have nearly the lowest property taxes in the nation and development even in outlying areas has gone gangbusters for years. Most of the job creation has either been in housing/mortgage related industries or low end service jobs. I don’t think most sheeple have no clue about politics and most only care about what’s going on in their little orbit.
‘and most only care about what’s going on in their little orbit’.
- This explains SoCal perfectly. When I hear an advertisment for any product and they mention ‘Used By Movie Stars!’ - I can not help but think of JuanJoe Sixpack and his world.
True story - I was listening the Chicago Options Exchange report two weeks ago early in the morning. They had strong ‘buys’ on beer and hops related options! because the housing market was sinking - Juan tends to increase beer consumption!
Everything that affects the sheeple’s orbit is directly related to the political climate of an area. High taxes discourage business expansion. Left-wing property use restrictions prevent factories or power plants from being built. Socialist programs (like the 7% “health care” tax proposed yesterday in CA) drain wealth and productivity from the middle and upper classses, who then take their talents and capital elsewhere. All of these things make an environment less hospitable to “jobs”, which is what Joe Shmoe needs to pay for his house, car, life.
The amazing thing is that voters in places like California, Michigan, and Massachussetts continue to vote for the same liberal politicians, then wonder why their economies are floundering, and why they have to leave to find work or to be able to start or sustain a business.
I’m standing by housing affordability and low wages for the masses as the most prominent reasons for people leaving CA. Add to that traffic/commuting, deterioration of the public schools, air quality and the fact that the misery of trying to get anywhere ruins the possibilities of all that is available. The lack of jobs is nationwide - all the higher paying manufacturing and middle class jobs are gone having little to do with taxes and more to do with companies looking for increased profits whatever the cost to society. IMHO ask the average joe on the street and the state’s attitude towards business taxes would not be mentioned very often as reasons people want to leave CA. My disclaimer is I’m basing this on SoCal.
“The amazing thing is that voters in places like California, Michigan, and Massachussetts continue to vote for the same liberal politicians, then wonder why their economies are floundering,”
Well, maybe the majority of voters these days are those clamoring for “bread and circuses”, in other words, most are not or no longer middle class, but of the subsidized class. It would be interesting to survey. And of course, those are the folks who are going to ask for all sorts of programs. There’s also middle class downward drift. I have run into a couple of people lately who are very ashamed they now have to enroll in public health programs, whereas before they had insurance. I tell them they’re taxpayers and just as entitled to the help as the illegal immigrant lady with a couple of anchor babies sitting next to them.
10-4
“if everyone votes, they vote themselves circus an bread”
last i looked massachussetts didnt vote for the clown in office right now.
California voting is “two wolves and a sheep deciding on what’s for lunch.” Actually, that goes for the rest of the U.S. too.
Yep.Voting conservative works so well for Missisippi and Alabama.
Oh for heaven’s sakes. Park your right-wing politics and look at the numbers.
The income group which has been shrinking in CA for the past few years is that $35,000 - 90,000 which are the middle and upper middle income groups.
For those groups, housing was driven to the point of being flat unaffordable (unless they took out insane mortgages which they could never pay.) The median price of a 1 bedroom apartment in LA is around $1500-1800 a month.
No housing? Time to leave.
There has been a growing trend among employers who can relocate all or part of their businesses to move completely or partially out of CA. It has NOTHING to do with land use regulation (a good thing if you don’t want a trash dump next to your house) or taxes (property low, income high but the total is no worse than anywhere else.) It has everything to do with the inability to attract and keep mid-level employees who can not afford the housing costs.
The income group that has been growing is the low income - the bottom 20%. The LA Times merely calls them ‘immigrants from other countries’ but the data shows that the primary country of origin is the one on the other side of the southern-most boundary of CA.
Yes indeed… high housing prices drove me and my SJSU BS/MBA out of California in 1994. It’s still a nice place, and maybe some day I’ll return, but not any time soon. Housing is still too expensive.
“The income group which has been shrinking in CA for the past few years is that $35,000 - 90,000 which are the middle and upper middle income groups.”
Hey that was me and I moved because of housing costs.
I even owned a house and I was locked in with prop 13. property tax. It was a Townhome however and you really never own one of those things. Might as well rent.
and yet conservative states are home to great businesses, and more businesses right? your theory has been proven false.
“and yet conservative states are home to great businesses, and more businesses right? your theory has been proven false.”
Actually… Yes. For example: TN. NC, and GA. In TN’s case, the state has a huge medical insurance industry- the largest in the country. Nashville is like the Silicon Vally of Medical Insurance and other medical related industries. Add to it’s 7 Billion dollar music industry- Country music, which is the most popular music nationally, as well as a number of recent foreign car manufacturing companies like Denso for Toyota, Nissan, which recently moved from L.A. to Smyrna, TN and the Saturn plant and you have a fairly robust economy. In fact, Both Nashville and Knoxville TN have been on the list of the best places to live AND the best places to do business.
In the case of NC, the Raleigh-Durahm Triangle along with Chapel Hill is the fastest growing tech region in the country. It also has a growing pharmaceutical industry. Bank Of America is also from NC, as well as NovoNordisk and Red Hat.
GA… well it has Atlanta which was recently mentioned as the best city for young professionals.
Anyhow, I think I made my point.
Dear AZOwner:
Please note that the California economy is better than most, and taxes here are about average (although our education spending is abysmal). The reason why high-paying jobs are so scarce (here and everywhere else in the country) is because of Republican policies that encourage US companies to hire slave workers in dirt-poor countries. The reason why we have a housing bubble is becuase of Republican monetary policies, which favor “investors” who have the inside track. Here in CA, I have had the easiest time in the world finding a job; the only problem is that house prices are too high to make it worth it, and you can thank your lovely Republican Congress and White House for that.
NAFTA was signed by a Republican President, right? Same guy who gave China “Most Favored Nation” trade status. Same guy that kept Greenspan employed. The Republican who came between Bush I and II - what was his name?
BTW, the demos are in control of Congress - have been all year. Why aren’t things getting better?
Stick to reading and comprehending the article - the middle class is fleeing California for other US states, because California is not such a great place to live anymore. And they just proposed a 7% health care tax on payrolls yesterday. I’m sure all the big employers are going to add more jobs in California now so they can pay that extra tax!
But I thank CA politicians for their ways - Chandler AZ got a $3 Billion Intel fab investment that maybe would have stayed in CA if the business climate was not so hostile there.
NAFTA was indeed signed by BC but his CONGRESS and SENATE were ALL republicans.
Gosh, let me add this up…
Hi AZOwner:
Yes, the Dems did introduce globalization, but the Repubs ran away with it, and the Dems are now working on rolling it back. If you ask me, it was a mistake to begin with, but only the Dems are working toward fixing the problem, while the Repubs have been crowing about how great it’s been for the past 8 years, even while the middle class is screaming bloody murder. Besides, when Clinton was in office, he had a Republican Congress to deal with. Baby Bush, on the other hand, was getting every thing he asked for until recently. Give the Dems more than 1 year in Congress; we’ll see what they do once they have the White House on board too. And don’t sweat the proposals too much because most of them don’t pass.
BTW republicans in the Senate have stopped legislation from passing with a record number of filibusters this year. The repubs only idea of governing seems to be to stop everything. They have been so over the top that they even filibustered a bill of their own. The gridlock in Congress is stupid and totally counter-productive. This country has serious problems that need to be resolved, including the amazingly huge debt run up by those repubs and the Shrub in the last seven years. Until both sides start acting like adults, we are doomed.
Globalization is inevitable, one way or the other. We can either have free trade, and equalize labor costs on both sides of the ocean — or we can try to create a Fortress American Economy, with our labor costs propped up with tariff barriers, in which case the rational thing for an ambitious Third Worlder to do will be to come here, thereby increasing the labor supply and decreasing the price of labor that way.
Yeah thats how we got that liberal Schwartzenegger in CA
Guess what there are alot of republicans elected to office in CA. The Coachella valley is always republican. Guess who moves here for their second homes to Vote?
People from all over the US that live in conservative states.
Maybe ya oughta call them and ask them why they back the republicans in office?
“Maybe ya oughta call them [conservative states] and ask them why they back the republicans in office?”
That question was in fact asked, and I believe the answer had to do with men marrying other men, or some such.
Former CA state librarian Kevin Starr has written an excellent 7 volume series on the history/culture/politics of California, and recently distilled these volumes into one comprehensive book, California: A History. This is essential reading for those of you who want to understand what we Californians are about. And many of those Liberal policies that are supposedly shackling business have been adopted across the nation. 1966:Auto tailpipe emission standards for HC and CO were adopted by the California Motor Vehicle Pollution Control Board. First of their kind in the nation. When I was a kid the air was so thick with brown smog from leaded gas that you couldn’t see the Disneyland Matterhorn from the I-5. We’d come home from a day at the beach and our lungs would ache. Increasing air quality standards and eliminating leaded fuel is taken for granted today. And on a nice day you can see forever.
Per US census
Top 5 states for median income - New Jersey, Maryland, Hawaii, Connecticut, New Hampshire - All Blue states
Bottom 5 - Mississippi, Arkansas, Louisiana, West Virginia, Alabama - All red states
The current crop of neoclowns in office love guys like this who don’t bother with facts.
Now you need to list top 5 most exspensive state to live and bottom 5
That’s nuts. We all need affordable health care. I’m a business owner and I already provide health care for my employees - this plan may or may not help me, but something needs to be done for the people without health care. At the very least it’ll level the playing field a little bit for me, since my competitors in the national corps like Banfield and VCA will be forced to provide health care for their employees too.
California is a great place to live and I’d never leave it.
” lowest property taxes in ” but we also have a state income tax. To compare apples to apples then you need to go state by state and compile a table of the sum of “income tax and property tax”. Correct me if I’m wrong but don’t some states have different property taxes by county or district? NM comes to mind.
Oh puleeze, NYC is the tops in taxation. We have city income tax, we have state income tax, we have the feds taking their cut, we got 8 1/2% sales tax, we got property taxes, we got…
So, go ahead, beat that.
And NYC income is highest! Therefore, taxes result in income increases - and, frankly, they do, when well -invested so as to produce high-value-added jobs.
Boy, I don’t agree at all that California has low property taxes. When I see some of the rate you guys are paying my heart skips a beat. In Washington state, to answer your question, property taxes are not a percentage of the appraised value, but are rather determined by levies in cities, counties, and the state, as well as special levy districts. The levy sets the total amount of property tax that is collected, then the tax is apportioned via the mil rate by property value. The result is that if property values rise, taxes don’t (unless new levies are voted in) but rather, the apportioned rate the owner pays is changed to reflect the varied values. For example, if house A is valued at $200k and B is valued at $400k A will pay half the tax B does. If the properties are re-appraised and A goes to $300k and B goes to $600k, the relative values are the same, A will still pay half of what B pays, but neither will pay MORE tax, only the levied amount. If one house increases in value relatively more than another, the owner will pay a larger share of the tax.
Actually a pretty good system, as there is no general increase in tax revenues with an increase in value. Having said all this, however, taxes still go up as the cities and counties ask for more and more money. At least they have to ask the voters; I have seen school funding levies fail repeatedly in Washington. I can’t believe the stories I hear about Florida, for instance, where if the value goes up the state just gets more money. That’s just insane.
But about California being a low property tax state? I don’t think so. You have property tax, income tax, sales tax, tax on retirement income even when the retiree is out of state, money grubbing vehicle registration people (who have sent me payment demands for a car I bought in California and re-registered in Washington), etc. etc. I am right now having to make some career decisions about where to work as a winemaker, and let me tell you, California, although it makes 90% of the wine in the US, is not very attractive. If (and that’s a very big if) I bought a house in Ca. I would get some instant, gigantic jump in property tax to the current level because of Prop. 13. It may be great for all the people who already own, but what a hit to buy a house. So sorry California, but I would like to keep my money.
I am right now having to make some career decisions about where to work as a winemaker
Have you checked out S. AZ south of Tucson? In the Mountains?
Who cares about property taxes when you can’t afford to buy a house anyway? We also get creamed on Federal taxes because our incomes appear to be high when compared to the national average.
9 percent state income tax…
yep! very bad if you hit the lotto
I think CA state income tax is 7%.
Big V, the reason you think that is because you’re uninformed. The tax braket that most middle-class Californians are in is 9.3%, and the top tax bracket is 10.3%.
Dear Greenlander:
I heard on NPR a few days ago that the average is 7%. I guess that includes all tax-paying earners, not just the upper echelons.
its 9.3%. (you shouldn’t look to NPR for any credible information)
the marginal rate for most is 9.3%. and it kicks in early. (wouldn’t look to NPR for any credible information)
The 9.3% hits pretty early and is high compared to other states. When you throw in the fact that AMT wipes out income and property tax deductions it makes it that much more burdensome. (Personally I do not believe you should ever be taxed on a tax so your FICA contributions which are taxed should not be.) The 10.3% is only on income over a million. Personally, I hope I get to pay that someday even if it is for the Lotto. (Of course, since I don’t buy tickets……)
We have nearly the lowest property taxes in the nation .
And where that might be? Only for the older property holders.
All new high priced homes have high property taxes.
That’s what happens when you Proposition 13 yourself in the head… another reason I bailed. How that passed in a state of 60% renters is beyond me.
Yep. the sheeple, don’t pay attention.
Worked with a person who doesn’t vote because she doesn’t care and her wealthy husband thinks that is fine.
How that passed in a state of 60% renters is beyond me.
First, that 60% figure sounds high. It is about 66% in San Francisco, but considerably lower elsewhere in California, is it not?
Second, renters are less likely to vote.
That about sums it.
“…I guess in the future visiting California will be like visiting the Bahamas - nice resort areas surrounded by horrific slums…”
In the future?!?! LOL, try in the present…
LOL, I thought the same thing.
Everyone I know that is leaving CA (LA in particular) is gainfully employed, but frankly tired of paying 3-4x what it SHOULD cost to enjoy a modest existence. Add to that gridlocked traffic even at 9pm on a weeknight, a joke of a school system where over 70% of LAUSD’s students get free lunches, private school costing $30K per kiddo, smog, and “minorities” actually comprising over 75% of the population.
As for the “low” property taxes, that only applies if you bought a loong time ago. A starter home will not only cost you over $800K on the Westside, but your taxes will approach $10K a year with all of the bond measures.
In Texas, taxes will approach 10K on a 350K house.
True, but your neighbors aren’t paying $800 a year.
Thanks to Prop 13, not only do young families have to pay 50% more of their income than their parents did to buy a house, but they also get to subsidize the entire elderly population’s tax shortfall.
Hmm, and I thought paying SSI that I will never see was already doing more than my fair share.
Thanks to Prop 13, not only do young families have to pay 50% more of their income than their parents did to buy a house, but they also get to subsidize the entire elderly population’s tax shortfall.
You are familiar with why Prop 13 came to pass, aren’t you?
You bet. I was there. Slick marketing. My landlord even gave me a $60 rebate… then three months later, raised my rent $30 a month.
The problem is, without Prop 13, honest hardworking taxpayers could be forced to move when Sally Specuvestor starts bidding up houses in the neighborhood and your “valuation” doubles. You won’t be able to pay your property tax, and you’ll have to move.
You are familiar with why Prop 13 came to pass, aren’t you?
Howard Jarvis is my parents hero. And no they pay little in the way of property tax 900 year on a house apprasied at 1M. All the old people in Thousand Oaks just think its great…. until their kids move away and leave them with wealthy foriengers for neighbors.
A 350K house in Texas is a Mansion and is worth 350K. It is owned by a 2 income earner household with a combined income well over 100K who can afford 10K in taxes.
Reuven: Can you borrow against the equity that Sally Specuvestor gave you? Yes, you can. Your house is truly worth more money.
Yes, but I wouldn’t! It’s a VERY DANGEROUS state to be in!
Are you saying that when I’m 80 and my property taxes triple because Sally Specuvestor lied on an application to get $1M finanancing interest-only on a CA bungalow that I should take out a HOME EQUITY loan to pay for my property tax?
That’s nonsense!
I don’t like debt. My primary residence (a home in Sunnyvale, CA) is 100% paid for, and I have ZERO other debt! I use credit cards, but pay back in full each month.
And, mysteriously, the Government HATES people like me, as evidenced by the current “War on Savings”
jjinla,
This is absolutely true. My wife and I left beautiful South OC in October for just these reasons. We earned nearly 200K a year and could only afford to live in a 1400/sqft townhome in a nice community called Ladera Ranch. Since we were unwilling to overpay for real estate, we had no deduction on our cost of living and the taxes in CA are terribly high. We left, took my job, $150K a year, and now she doesn’t have to work, we have more time for our family, my wife can be with our son, electricity, gas, water, most things are cheaper here in CO but interestingly we have a much higher level of service. Our HOA’s here are 60/mo and we get MUCH more than we got in Ladera where HOA’s are about 300/mo. I am moving other members of my team (work) out here in the summer, and they are taking their $100K+ jobs out of San Diego and transplanting them to CO. Quality of life is very important, and unfortunately, CA quality of life for the so called middle and upper middle class is declining rapidly. The future is not looking so good for the Golden State as there are some MAJOR structural hurdles in the future, the $14 Billion structural deficit this next year is scary and the tidal wave of illegal immigration and unskilled workers replacing these high wage mobile professionals who are leaving the state in droves only portends to a very dark future indeed. I love CA, I am saddened to see the state it is in now, I think that South OC is one of the best places in the country, but unfortunately, it is the people and opportunities as much as the climate that make a place, and CA is falling very far behind.
Metro, good to see you today.
Ladera Ranch will be ground zero in South OC for this bubble. I don’t know when you left, but last summer and fall those townhomes had more for sale/open house signs than I could read or keep up with. No wonder. I knew the HOAs were 300/month, but when I dound out that those townhomes were going for 800K and upwards I just about puked. Even you guys realized that prices like that are unsustainable!
Heck, those townhomes are nice, but shouldn’t be more than 175-200K. Yes, I know some will think that is overpriced, but the area, schools, sun tax all play into that. I am not saying we are better. Don’t get me wrong. It’s just that with all that is going on, you will pay a little bit of premium.
Also, even if the avg. HH income is 100K, homes shouldn’t be more than 300K, maybe 400K in very special circumstances. I just can’t imagine 800K around my neck for 30 years.
My sister lives in ladera, nice place. She bought her townhome in 02 for 225. At that price Ladera looks very attractive, however current pricing for that same townhome is about 350-400 (peaked at 500). Waaaay to high when combined with the HOA’s and tax (1.9%). When things get back to 02-03 pricing I will consider buying there.
Unfortunately I have a fairly lucrative job that I cant take to another state with me:(
OC metro. Are you hiring?
I like snow. I will put that on my resume!
lol
Only thing keeping me in Ca is my job. If another Univ offers me the same package I have at UC, I’m off like a prom dress.
You’re not the only one! If I did not have my government job my husband and I would leave ASAP! I don’t care about the weather and the mountains. The deterioration of the state both socially and politically is AWFUL! Plus the shallowness and coldness of the people here make it really lonely! What one will do nowadays for a stable job and money!
My wife and I left CA over a year ago. She was a tenured professor. We left for all the previously mentioned reasons. And given the condition of the state, I don’t expect the pension fund to be worth all that much by the time she plans to withdraw. For 800k, we’re building a low energy custom mansion on nearly 80 wooded acres.
OCDan, we moved out in Oct 07 and we have seen that prices in Ladera have plummetted since the summer. This past summer, many of the townhomes in Bridgepark where we lived were priced in the 500-600K range, now, they are down between 380-600 (yea, some still holding onto wishing prices that will never be met). I hope that someday prices fall back to what would be reasonable like 01/02 pricing, but I wonder what will be left of the communities afterward. High home prices hollow out communities and ecomonies as productive higher wage work “outsources” to lower cost areas, in my case CO. Highly educated mobile professionals especially younger ones will migrate as people have done for generations to find a better quality of life and more opportunity. These areas of “educated immigration” are where the next wave of growth will be over the next 20-30 years. It takes time, but I believe that. Also, the disintermediation and virtuality that modern technology provides means as time goes on, more and more people will be able to work with greater degrees of freedom and that is breaking the stranglehold that declining urban areas once held. People will always want to live in SoCal, but I think quality of life will make many younger people think long and hard. The intermountain west is beautiful and largely free of many of the stifling social/political problems affecting California. Will it stay that way, maybe, maybe not. But I think that those with the chance to move to “greener pastures” will always seek out new opportunity and a better quality of life, that is the way it has been for a long time, only time will tell.
I pray that CA works its way out of this mess, lots of people I care about there. I was born and raised in South OC. I visit about every two months, I hope to see things improve before most of what I know and love about that place is gone.
Douglas County CO is about as close to the positive attributes of SouthOC as I could find in this country (demographically). Hopefully it stays that way
“…For 800k, we’re building a low energy custom mansion on nearly 80 wooded acres…”
My that sounds tempting…
These were the exact same feelings and statements given for the exodous in the early 90’s. The real fact is that when prices (no if) collapse back to affordable levels here in CA Ma and Pa will load up the ol’ pickup and head west. Problems, YES many BIG PROBLEMS YES, but it all will boil down to RE prices. When RE falls anywhere close to a point that the $8/hr illegals can really afford it buckle your seatbelts for the next bubble.
One thing I’m starting to believe is that food inflation is going to serve CA very well. We still grow a buttload of food. With the price of vegies surpassing the previous (not to far off) past prices of meat CA does still have a lot of real economic cash generating potential, even with the BS banker economy dead.
Yeah, things will get worse, but when prices get anywhere near the states that benefitted from the CA exodous (NV, AZ, etc.) CA will boom again. Then get crazy expensive and crashe….
Wash rinse and repeat….
My, that sounds foolish………..
You’ll buy the land (if u haven’t already )for a third the cost and build for half the cost in about 12 to 18 months.
When I lived in the South Bay part of LA, I was p.o’d when my drive took longer than 15 minutes. Usually it was ten minutes to and from work. And I rented there. Who says you have to have long commutes if you live in LA?
On the other hand, if you BUY in LA, you are stuck with three terrible choices: either stay at the same job for your entire career, limit your job search to only whatever is available within a “reasonable” commute radius, or pick the best job available to you and spend half your life in the soul-destroying effort to get to and from that job.
This is reason #1 why I never bought in LA, despite living there during the cheapest years in recent history (mid 1990s). Reason #2 would be that there didn’t seem to be any reason it would get any more expensive, as people seemed to be fleeing in droves after the riots and the earthquake. I didn’t realize then how incredibly short most people’s memories are.
“So as California goes more and more leftist/liberal/socialist, the middle class flees and is replaced by immigrants from third world countries who can’t afford to buy a house from the former residents.”
Oh but they CAN as long as they live 20 to a house.
Ding, dong, meet your new neighbors! California dreamin’ at it’s best!
There ARE exactly 107 Card Carrying Leftist/ Liberal/ Socialist Card Carrying Commie Revolutionists IN the Great State of California.
Senator az_owner (R-AZ)
Ben’s Blog on Un-American Activities
How many Senator ?
302 Exactly
don’t forget Arnie , he’s GOP
so I guess I must be LP
Yep… just like Boxer… they all came from the East Coast…
FYI Barb Boxer is a New Yorker and not from California…. go figure!
GEE smarty pants AZ owner, so all the people from Illinois, Ohio, Tennessee, NY, Canada, Virginia, West VA, Kansas, Arkansas, Kentucky etc are ALL the ‘leftist leaning’. Then who is going to all those Mega churches>? and singing kumbaya to all the republicans in the OC and the rest of the state?
You need to do real research on your info, not via FAUX news.
Sheesh.
I guess it is the weather and the topography that attracts ONLY the people you think are scum. Any relatives here?
California is beautiful, and I would love to live there. But I, along with millions of others who either never moved there or are now fleeing, have decided that the political/economic climate is not worth the trouble for a few days a month at the beach. It’s too bad that this is what California is turning into, but it’s usually the result of poor government policies that discourage business investment. Which political party has been in control of California for the past few decades? Don’t assume I’m a Republican just because I point out the folly of leftist policies. Most people on this blog are above simple “yes/no” qualification of thier politics and economic outlook.
http://www.dailynews.com/ci_7764956
hohica for California
(hold on here it comes again)
Yea, that is going to get nasty very quick…you can only steal for so long. Police Ofiicer financial’s for drug and gang squads, now the mentioning of layoffs of city employee’s. Makes you wonder just how broke the City of L.A. really is…
lots of rich immigrants from third world countries as well as first world countries. Here their kids can race 200K cars around and flaunt their wealth without getting kidnaped or blown up. Like Movie stars.
AZ Owner,
I have to agree with you on this one. I’ve lived in both. Let’s look at some examples. I walk my puppy Ms Jetta past this house almost every morning. HOA $80 per month and that includes a health club, gym, Olympic swimming pool, all in a nice small town. Annual taxes are less than $4000 per year.
Anthem, AZ $569900 Short Sale! Backyard is Private Oasis!
4 BDRM/3 BATH, 3,362 square feet.
http://phoenix.craigslist.org/rfs/515010729.html
Compare that with Orange Co, Anaheim/Anaheim Hills/Yorba Linda: This house backs up to a set of railroad tracks, is across the Santa Ana River from the 91 freeway, and it’s so ugly they don’t even show the you the exterior of the house. Taxes? Mellos Roos? Earthquake Ins? Flood Ins (its in a flood plain)? Believe me, they all add up.
http://orangecounty.craigslist.org/rfs/505771045.html
$574950 YORBA SCHOOLS !!!BEST HOUSE IN THE AREA !! LOOK AT THE PICS !!
And this is just the comparison on the houses? CA is $14,000,000,000 in default this year and do you think they’re going to cut spending? Not a chance. AZ is almost $1,000,000,000 and we just found out we’re getting photo radar (the portable version) all over the state. I wonder what the CA state government is going to do.
I say all of this while at the same time I love CA.
Lip
Gosh, I sure do hope that the rest of the country feels so negatively about California so that we can be left alone to enjoy what little open space we have left along the coast. It’s terrible here, I tell you! Seriously though, the I-5 traffic in SD is pretty horrible these days, thanks to all the bubble development. I wish folks would just go back to TN or wherever they came from, where everything is so much better.
So as California goes more and more leftist/liberal/socialist, the middle class flees and is replaced by immigrants from third world countries who can’t afford to buy a house from the former residents. High taxes, crushing regulation, entrenched sense of entitlement, both in the populace and the union-run government. Interesting. Sort of sad too, since most of the coast is so beautiful. I guess in the future visiting California will be like visiting the Bahamas - nice resort areas surrounded by horrific slums.
I was born in California and live there from time to time. I simply do everything in my power to avoid taxes there. I have legal ways to do that. There are all sorts of loopholes. Even the idiot liberals in Congress do not want to pay taxes and use a lot of loopholes. Loopholes won’t go away. The sheople who do not do their own research to avoid taxes will only continue to get fleeced.
Typically, though, they owe at least $100,000 more on the house than they could get for it, he said.”
“‘We can’t list it,’ he said he tells them. ‘Nobody will buy your home and help you out of this mess.’”
Now, if only mortgage rates would go to 14% or more…then we could start a new discussion on house pricing relative to regional income.
Paging Mr. Volcker. Paging Mr. Volcker. You are wanted by a country in need of high-priced credit.
U.S. mortgage lending rates appear to have reached a permanently low plateau.
Japan lowered it’s rates to 0%. United States will do the same. 2015 your dollar will be worth 50 cents and house prices will start rising again. Own a house you lose 10K per year… own a dollar you lose 10 cents per year. Choices… choices…
“‘That scenario is a real possibility. Home prices are completely out of line with people’s income,’ Burns said.”
You had me.
“‘It’s a total buyer’s market,’ he said during a telephone interview with Reuters. ‘There is a tremendous number of homes for sale out there.’”
You lost me. How is it a buyer’s market if you just said housing prices are completely out of line with incomes? Are these people just speaking so quickly that it takes all of the journalist’s effort to write down what they are saying?
Burns is a chamelon. He was interviewed often at Jon Lansner’s OC Real Estate blog.
He typically will through a sound-bite for each type of audience without taking a position.
“For affordability to return to California’s housing market, its home prices must fall by at least 30 percent even after recent declines, Johnson said.”
Bingo. This backs up what Krugman spoke about during that Google talk. The mid 90s would be an overcorrection but still possible.
We got #s from CA DoF but I’m guessing they are worse then they are letting on as is often the case with DOF. I also think that may be overstating international inmigration.
That said, if outmigration surpasses even my dower predictions, mid 90s prices may be optimistic for places like the central and inland valley.
“I also think that may be overstating international inmigration.”
Let’s see how well that trend holds up if the Fed follows through on plans to require income verification on loan applications.
“I also think that may be overstating international inmigration.”
Exactly what does this mean? Are they counting illegals and HB-l visa holders? Refugees being resettled by the Feds? Or the Beckhams?
It won’t matter about emmigration vs. immigration since most of those coming in are not making nearly what those leaving were. Sorry, not going to be PC, here. Illegals and even many legals will not be able to afford 500K homes! Sorry, the strawberry picker’s home loanership days are over!
Raw data for 2 cohorts from 05/06 (C1) and 06/07(C2) suggest outmigration from urban centers to midwest has accelerated just like some of us here predicted. The surprise was in 06/07 when we got some families moving back into Mexico. We’ll travel all over the US to interview families to keep them in a study but no one banked on having to go to Loxicha.
We aren’t the only center seeing this
http://www.azcentral.com/arizonarepublic/news/articles/1218borderexit.html There are lots of other articles floating around.
It’s a buyers market because buyers currently have all the leverage. It’s just that there aren’t very many buyers, and they’re not buying, because of the price being out of line with income part.
Home builders’ sales price are fraudulent.
Once a low life, always a low life.
http://www.economicsbriefing.com/2007/12/home-builders-creating-phony-propped-up.html?ref=patrick.net
Oh,…..they are just getting around to figuring out that cash backs and incentives can be inflating the home values on the record and messing up the computer programs on appraisals . I ranted about this practice months ago .Interesting how the builders were paying third parties, (who were than cutting a check to the buyers).No one can say that this isn’t fraud . The investors of those loans should sue the builders .
Hoz- if you notice this, pls drop me an email. I would like to ask you something offline. (elweedz at verizon dot net).
To the rest of you, I haven’t posted in awhile on a regular basis but, still lurk everyday. I intend to start sharing some frontline stories with you on everyday FB’s. For those that don’t know, I have worked in a call center for the last 10 years doing mortgage loans (no subslime). Hear is an example of one FB denial I took an app. on. Lady is RE agent in central Florida for many decades and reminds me of that every time we talk. Her appraisal came back for 2/3 of expected value and now wants her money back on appraisal for the poor quality of work since her home is an “exclusive” nieghborhood where everyone wants to live. The kicker is the same house sold 2 houses down 8 days ago for the number she got on the appraisal. Of course, the kitchen isnt as nice so, her house is worth 100k more.
I bet she is right, don’t you know?
stainless steel appliances + granite counter tops = $100k price increase
/sarcasm off
**name change alert, formerly gwynster**
hey! I think I know that FL FB. Next time you talk to her, ask if she posts on the HGTV boards under the handle “Real Estate Lady”.
“name change alert”
Get Stucco, Auction Heaven, Gwenster…
Who’s next?
I’d change my name to Judge Smales, but that’s already taken. Maybe ‘Al Czervik’ or ‘Carl’…however, ‘Lacey Underall’ would be the best.
I’m thinking maybe it is time to give Hopeful a shot at cheering up the mood once again. Professor Bear has become so gloomy as of late that he is a bit of a killjoy.
(Don’t worry, Ben, I promise to give fair warning of any 2008 name changes…)
Bah let’s just say it needed to be done
I could change to dudette, but it would require major surgery.
I’de go with Spalding
“hey are you gonna eat your fat?”
Gwynster!!
I laughed so hard I…er…eyes leaked! (as did other orifices!)
“Zillow hurt my sale” (paraphrase)
My, my.
Girl, that was gut wrenching, belly button popping, eye leaking funny!
Ya just can’t make this stuff up!
Leigh
I’ll bet you get an earful from these clowns. I don’t think I’d stay employed long in your job - I’d pop off to them right away.
Just explain to the RE agent that you are not in the business of losing money, and that she’ll thank you for it later. Actually, no, she might complain to your boss; just make staticky noises and then hang up on her.
“‘Something akin to the experience from 1989 through 1997 may re-emerge,’ he wrote.”
No, it’s going to be worse than that…
“…worse than that…”
With bottom calling from here to eternity, no doubt.
“…worse than that…”
“With bottom calling from here to eternity, no doubt.”
hehehe……..a bummer more like it
–
“For affordability to return to California’s housing market, its home prices must fall by at least 30 percent even after recent declines, Johnson said.”
That will put 50% of the home-debtors under water. There will be “Walk Away With Us!” parades in many metros. With cheerleaders from HBB and all. Let us plan and recruit a cheerleading team.
Jas
Oh man… This reminds me of the festive environment at a certain institution in the book “Brave new world.”
Bloombert just showed a chart with JetA at about $2.75 a gallon (story FedEx). I can recall when it was $0.75. This decade!
Got popcorn?
Neil
–
Getting people out of debtors’ prison is a noble undertaking. I am sure that HBBers will be happy to lead a noble thing.
Got no popcorn!
Jas
Yes, the day Bush took office, unleaded regular was $1.099 here in Portland. How soon we forget.
I haven’t forgot.
That’s what are good friend AZ doesn’t understand
He is getting taxed to death via inflation and taxed to death via AMT, all accelerated by the current CEO of America. Hedge fund investors and billionairs get their tax breaks but upper middle class and middle class take it in the A## w AMT, inflation, and outsourcing.
ha they will be doing the “the midnight dash” more like it
“Sacramento County, where median sales prices of new and existing homes combined are now 18.3 percent below this time last year, is still California’s hardest-hit urban county for declining values.”
Yes, in my hometown things are bad, and about to get worse. Of course, this is one of the first places where the bubble hit, so we are on the lead to show the rest of the country what happens to ’special’ places.
2004 prices are already well established here, with some 2003 prices as well. Pretty soon, 2002 prices will make a comeback.
Im just northeast of you in Placer. People are starting to really worry around here. No talk anymore of “this area is special, can’t happen here” drivel. Prices are flat out dropping. Saw a house for 189K on 1.9 acres, not special by any means, but the very first “house” regardless of condition I have seen in 3 years under 200K
Sky is falling, sky is falling. Lions and tigers and bears (yeah!), oh my!
Oh, no, Portland Oregon is the new “it’s special” area. And Seattle - and I’d imagine, Charlotte. I figure we’re all about six months behind you all. And by the way, the folks in Bend are asking why you stopped selling your megamansions and moving to Bend to pay full asking price? Their 30% annual appreciation appears to have been arrested.
Arrested? Let me know when the jury’s done, the sentence is in, and I can come witness the execution.
Boy have you got that right. Portland is “so progressive” and “worldly” but they couldn’t see past their nose if they tried. Probably because most of the residents these days are 20-30 something hipster transplants who thinks bubbles are what you make in your bong. The only thing thats different here is that the unemployment numbers and housing prices will be in a downward spiral longer anyone else once people get a clue.
Good going, be sure to post when they hit last century pricing!
Bay Area home sales plunge
http://www.mercurynews.com/ci_7770358
This one seems to have the Realtors frothing at the mouth in denial.
From said article:
The report said a major cause of the lagging sales was tightened lending practices that have made it more difficult to get jumbo loans exceeding $417,000.
Those damn lending practices. Get a rope!
It’s no longer a subprime mortgage crisis. We are looking at a systemic meltdown.
I thought it was contained ?
Don’t worry, it IS contained–in all risk-pools.
Most recent spitball hawked up by Yun: It’s the Media’s fault!
http://www.kansascity.com/business/story/411041.html
….didn’t they say the same thing w.r.t. Enron? “If the media hasn’t been so nasty, we could have kept the scam going longer!”
Yun has been one of the more outspoken leaders in the housing industry to blame the media for the industry’s worse-than-anticipated performance this year. But he is hardly alone — some local builders and real estate agents think the same thing.
No Sh!t?
“Johnson noted that for two decades before the frantic homes market of the early 2000s, a ratio of California’s median home price and median income held to a narrow range of five to six, indicating affordability. Then speculation and lax lending, especially with subprime loans, sent the ratio soaring to 10.”
Realistically, California was not affordable at a price-to-income ratio of five, but it is twice as unaffordable at ten.
There was a poster on this blog a few months back who looked up median incomes (from the US Census Bureau) and median house prices (from the CAR), and found that, outside of bubble times, prices were more like 4-5 x income. I think Johnson is being a little lenient here.
well it was going to 20 until the media had to get like you know get all negative and stuff.
“there’s merely a house where there used to be a home”
I’m sorry but I take umbrage with that comment. There are a lot of houses filled with people but not a lot of houses turned into a home. You can tell the difference when you enter one that has been turned into a home, it has charm, warmth, and is a reflection of the owners.
Nice character assassination
http://www.thestreet.com/s/ceo-cayne-a-burden-to-bear/newsanalysis/banking/10395566.html?puc=_tscfoc
“depicted in media reports as an aloof, marijuana-smoking chief executive — who golfs excessively when he’s not spanning the globe to play in bridge tournaments”
Where do I sign up for that life? You can assassinate my character all you want if you give me millions to work that gig. I might even take a shot to the nuts once a year for that compensation package.
Foregive me if this is a repost, but from the “we thought we had you by the balls, but instead *you* have *us* by the balls” department:
WSJ
Now, Even Borrowers With Good Credit Pose Risks
http://online.wsj.com/article/SB119802116320237959.html
“”There’s been a change in social attitudes toward default,” (Bank of America’s) Mr. Lewis says. Bankers typically have believed that cash-strapped borrowers would fall behind on their credit cards, car payments and other debts — but would regard mortgage defaults as calamities to be avoided at all costs. That isn’t always so anymore, he says.
“We’re seeing people who are current on their credit cards but are defaulting on their mortgages,” Mr. Lewis says. “I’m astonished that people would walk away from their homes.” The clear implication: At least a few cash-strapped borrowers now believe bailing out on a house is one of the easier ways to get their finances back under control.”
…
“As a result, there is a new class of homeowners in name only. Because these people never put up much of their own money, they don’t act like owners, committed to their property for the long haul. They behave more like renters, ducking out of an onerous lease in the midst of a housing slump.”
…
“In such an environment credit scores don’t really provide a definitive gauge of how hard a borrower will work to avoid default, says Mark Zandi, chief economist of Moody’s Economy.com Inc., a West Chester, Pa., economic-research firm. A better test, he says, is how much equity owners have in their home.”
“Foregive me if this is a repost, but from the “we thought we had you by the balls, but instead *you* have *us* by the balls” department:”
Bwhahahahahahaha………..now that’s a keeper
Yeah, those rat-bast##d mortgage holders, it’s all their fault….how could we have known they would do the smart thing and walk, like
we would have done ourselves, given similar circumstances.
We just figured they would do what the sheeple usually do, and continue to throw good money after bad, on a depreciating “investment”.
This behavior only proves that the “I was too dumb to understand my mortgage” defense is a complete lie. If they’re smart enough to walk, then they knew exactly what they were doing.
The sheeple have learned the Donald Trump method of high finance, or in other words ‘he who decides to walk away can borrow again another day”
“A better test, he says, is how much equity owners have in their home.”
How about owners with negative equity?
I swear I remember a discussion where we postulated this shift roughly a year ago.
The gist was that “save the house at all costs” made sense in a world where you have equity in an asset that appreciates over time; run up the CCs and continue to pay down the mtg. But the OPPOSITE makes the most sense when you’re underwater in an asset that may continue to depreciate for years.
I’m glad to see this reality is starting to dawn on our highly-paid CEOs of lending institutions.
Yes–I also remember a thread like this. It’s interesting to watch it unfold.
Some pigmen could have saved themselves some serious grief if they’d lurked here only one short year ago.
Goes to show that FICO scores are not much different than the inflated grades they give kids so they have self-esteem. Doesn’t mean they know how to read, just as much as high FICO scores don’t mean squat if you have no cash.
Mr. Lewis says. “I’m astonished that people would walk away from their homes.”
What an idiot they did it in 1990 right there in CA, my neighbors did it, my co-workers did it, and now all have learned this new finacial planning technique, S%^t back in 2004 a realitor told me they were all going to do it if prices crashed as CA is a non recourse state. Its the end of the zero down payment 120% loan crazed borrowers causing insane inflation because they have no money in the game and never will have any money. Next bubble up please.
Bush was just on Bloomberg talking about a 3 year moratorium on taxing debt forgiveness on a foreclosure or a foreclosure. Can we say “walk and don’t look back.”
They quoted the “Six inch hooker heels” comment on the AAA bonds.
Oh… The Teamsters are suing Moody’s for giving AAA ratings to now defunct bonds. It also mentions how the rating agencies have lost their reputation.
Got popcorn?
Neil
The NAACP announced a class-action suit against mortgage brokers today, as well.
Wow. After waiting a long time (ok, half as long as some here), it seems like a tidal wave is coming down the street.
Between the bond market, law suits, and FB’s who will walk from their mortgages… I’m expecting homes sales to slow further. Home sales are broken. It hasn’t yet begun.
Got popcorn?
Neil
“Wow. After waiting a long time (ok, half as long as some here), it seems like a tidal wave is coming down the street.”
You may recall (I do!) that a year ago, a term bandied about quite often on this blog was the “coming tsunami of foreclosures”. I haven’t seen the term used in a while, but gosh darn if the bloggers weren’t friggin fortune tellers! We are in said tsunami at this point. Credit where it’s due. Not that the MSM will give any.
Oh thats so WRONG, Black people wanted their housing lottery ticket too.
I would sue because black people were targeted because they were so dumbed down in public school and graduated without having learned to use 5th grade math on a calculator.
And we should make black people stay in school 12 months a year and learn to read, write, and speak English before they Graduate, so this type of predatory behavior will never happen to them again…..come on Jesse & Al….a real solution
O.K.
I call B.S.
Tooooooooooooo many people chose N/O/O; regardless of economic standing.
Frack!
A handful of innocents; Federal Reserve policy drove this mania, IMO.
FR to the FBs; we have lost our collective minds!
Foreign investment is interesting to say the least; and telling.
Ya just can’t make this stuff up!
Leigh
damn, it’s going to be a live Wire.
Which brings a thought: From here forward, how will newly issued bonds be rated? What will potential purchasers of those bonds (mutual funds, retirement funds, etc.) do from now on to determine the true risk of a bond. They sure can’t use Moody’s, et. al.
They’ll simply rely on the analysis provided by the muni-bond sales people! How silly of you to even ask.
Maybe they could use an abacus to rate bonds. We just look at the bead patterns.
Who else here has the flu?
Clark said. ‘It’s terrible, and I have a hard time seeing where the silver lining is.’”
Hey azzwipe, I got you’re silver lining right here!
So my landlord says he wants to show my house on Friday to an 85-year-old black, female “investor” from the South. He says she earns $750,000/year in income from her investments. I ask “So she wants to be my landlord?”, and he says “Well, let’s just say that she’s not going to be living in it.” I think she’s probably a flipper who made $750,000 in income last year, and hasn’t figured out yet that she’s supposed to subtract her expenses from her income to calculate her profit.
Well, fine with me if she wants to be my landlord, even if she is a silly old coot.
“The surge in home foreclosures in California…may help send the state’s home prices tumbling by adding properties to already swollen listings of homes for sale”
MAY!? Where do they find these idiots? We’re down 20% already here in Sac.
“The annual study by the Department of Finance showed that 89,000 more people moved out of California than moved here from elsewhere in the United States. California’s population did grow in fiscal 2007, but the growth rested on births and the arrival of more than 200,000 immigrants from other countries.”
Ok, time to tank the economy, raise unemployment to 1981-82 recession levels so even “guest workers” will go home. Oh, wait… Wall Street’s already on top of that? My bad…
test
NEW YORK (Reuters) - The U.S. Justice Department is looking into possible price fixing in the chocolate industry, the Wall Street Journal reported on Thursday on its Web site.
Last month, Canadian authorities launched a similar probe into price fixing at the Canadian units of major chocolate makers Nestle SA, Cadbury Schweppes Plc, Hershey Co and Mars Inc.
A Justice Department spokeswoman contacted by Reuters had no comment….”
About friggin time the Justice department went after the real crooks. Screw gold, silver, stocks and bonds; mess with my chocolate - you’ll pay!
Unbelievable…
jaw on floor…
The economy is about to get the enema of a lifetime due to REIC fraud and they worry about 10 cents a bar for candy? Who cares! Everyone is too fat!
Ok, me and the wife love Chocolate. 
But somehow I haven’t seen any inflation above the dollar/euro correction. 
Got popcorn and chocolate?
Neil
Damn, and when those Cadbury bars are 10 for $10.00, I am sure there is a rip off in there somewhere, so I keep opening them up to taste and find out where the rip off is…still eating, I mean looking.
Chocolate..who are these nitwits?
I can tell ya for a fact that the US is allowed to put more parafin(WAX) into the USA sold chocolates thereby making them more profit, on less Real chocolate included. Fact. 4 yrs ago.
I have noticed that Ghirardelli chocolate is overly waxy. Most people swear by it.
Well that explains it! When I was in NYC I bought many different kinds of choclate (European and American brands) and they all seemed to lack cocoa. Only exception was the Lindt store at 5th av.
FDA gets into the chocolate wars:
http://tinyurl.com/yujjw8
The problem with US chocolate is the additives and fillers and too little actually cocoa. Eat some real belgin chocolate, even their cheap stuff and you’ll see a huge difference.
My family lived in Switzerland for a few years - I still do half time. After they returned, the kids refused to eat American chocolate - called it “sugary dirt”. I have to bring home quantities of the real stuff every time return.
“For affordability to return to California’s housing market, its home prices must fall by at least 30 percent even after recent declines, Johnson said.”
Let’s see. POS homes peaked at around 650K in OC CA. Currently most have lowered the median to 550K. 30% off that would be 165K bringing these P’sOS down to 385K.
CONSIDERING THEY WERE WORTH ABOUT 180K when this whole thing started just 6 years ago I’d say to any seller “stick it in your azz I ain’t paying that” “Bend over spread ‘em wide say ‘250′ and maybe we can talk.”. In the meantime bail ‘em out and sink our economy for all I care, I’m putting my money in euro.
Dec. 20 - Subprime meltdown threatens American dream in Southern California.
Homeless “tent city” grows amid ongoing subprime lending crisis that threatens middle-class.
video
reuters
http://tinyurl.com/2uxefg
Must… suppress… urge… to vomit…
That clip worked every sob-story angle possible (”homeless” renter tent city, “victim”, “losing ‘her’ house”, 2nd generation immigrant, “American Dream”, etc.) without once mentioning the possible REASONS why these people are being foreclosed on.
Nice work Reuters!
Total MSM bull doo doo.
They stated that not one resident in the “tent city” had been foreclosed on, but tied the homeless to the sub-prime mess!
It’s the price, you idiots!!!!
Then Ms. crymeariver Fernandez whining about how no matter how hard she works she can’t afford her home. It’s people like this who willing signed on the dotted line and paid too much that caused this whole “crisis”.
Thanks a lot Hoz, you just raised my BP 20 points.
That was pretty freaking bad journalism, making a connection between the tent city and rising foreclosures, when the connection doesn’t exist. Can you say YELLOW JOURNALISM?
Miss whatsyerface - are you crying because you have to rent now? BOO FRICKING HOO you sad sack victim beyatch. You still have a job by your own admission. Seriously. I and my family rent. How many tears have you *ever* shed for our renting status?
Go cry your tears where someone pretends to care. Try the tent city, maybe you’ll like it.
3 observations:
1. It looked like all those homeless people were Mexican. Maybe they’re really illegal immigrants staking out a claim.
2. It was specifically stated that not one single person in the camp is a foreclosure victim. I guess that means the foreclosure victims are, guess what, renting.
3. The interviewee thinks it’s appropriate to cry on TV because she has to rent instead of owning her house, but nobody wants to watch me cry for doing the same thing.
Impac Mortgage: $1.2B Q3 Loss.
From the article……………
Ratings agency Standard & Poor’s said on Thursday that Impac’s $6.6 billion 2006 Alt-A loans are 8.3% delinquent, making it one of the three worst-performing securities backed by Alt-A mortgages.
http://www.ocbj.com/article.asp?aID=78760993.1326694.1568307.15798702.6164866.514&aID2=120630
Alt-A loans now starting to default and make the news. 2008 is going to be interesting.
Yup. That’s what SF Jack and I are really waiting for. As soon as the Alt-As blow up, the Alt-A Bay area will go up in smoke. I predict riots.
U.S. home builders chime in with somber tone about housing market
WASHINGTON - A trade group for U.S. home builders said Thursday that the home-price free fall won’t stop until early 2009, as a lethargic economy and troubled mortgage market drop the bottom even lower.
David Seiders, chief economist for the National Association of Home Builders, said he agrees with what he called an emerging consensus about the housing market: that median U.S. housing prices will drop by 10 to 15 per cent from a peak in 2005 to its eventual bottom….
The Canadian Press
http://tinyurl.com/yteudm
Well Mr. Seiders has at least gone out a little over a year. That is a huge step. He also admits his errors about 2007’s market.
Hey, my estimate has gone out another year too.
oh 2009 is the year I predict for the greatest price decline.
After its come and gone, they we can argue of when its a good time to buy.
Got popcorn?
Neil
Anybody have any idea what’s up with CDE and HL EOB today?
These are issues I follow closely, so it bugs me when I don’t know the whyfor.
I got in small CDE yesterday at $4 and went in half way today again at $4, so don’t get me wrong, I’m a happy camper. Are we going to see major inflationary news/PM spike tomorrow?
I think the California housing market was/is much like the baseball players who used steriods. As long as they/it were on the juice the increase in performance was stagering. Now that the steriods/easy money is gone the enhanced performance has disappeared.
Say it aint so Joe….say it aint so!
And the layoffs in California keep mounting
Chas Schwab, San Francisco - “1,400, of its employees in San Francisco by allowing more employees to telecommute and by moving work — and jobs — to less expensive areas of the country”
If it were the names of several well-known high-tech companies doing this instead of Schwab, you can bet that pols in Sacramento and the South Bay would start to get mighty nervous.
not to mention commercial defaults:
Coliseum Center, 640 Hegenberger Road, Oakland, CA Retail, 70,814 square feet GCCFC 2005-GG5 LNR Partners Borrower failed to complete the second half of a reverse 1031 exchange in specified timeline. Negotiations are in process.
2238 Hyde St., 2238 Hyde St., San Francisco, CA Multifamily, 17 units LBUBS 2007-C1 Midland Loan Services Cross-defaulted with 737 Pine St. The debt service coverage is .81x. The special servicer has sent numerous unanswered e-mails requesting property performance and market conditions; these have been unanswered.
737 Pine St., 737 Pine St., San Francisco, CA Multifamily, 40 units LBUBS 2007-C1 Midland Loan Services Cross defaulted with 2238 Hyde St. The debt service coverage is .81x. The special servicer has sent numerous unanswered e-mails requesting property performance and market conditions; these have been unanswered.
2727 El Camino Real, 2727 El Camino Real, San Mateo, CA Retail, 28,927 square feet GCCFC 2005-GG5 LNR Partners This loan is crossed defaulted with Coliseum Center (above) and the borrower failed to complete the second half of a reverse 1031 exchange on that loan.
IMHO we are still in the first inning.
“…2238 Hyde St., 2238 Hyde St., San Francisco, CA Multifamily, 17 units LBUBS 2007-C1 Midland Loan Services Cross-defaulted with 737 Pine St. The debt service coverage is .81x. The special servicer has sent numerous unanswered e-mails requesting property performance and market conditions; these have been unanswered…”
There is a ton of over leveraged crap like this in L.A., a slight decrease in rents or a larger vacancy factor than usual will put a lot of property here in jeopardy and in the hands of lenders.
Off to play snooker, eat some pasty and generally overindulge. Usque ad finem.
With the moratorium Bush signed today regarding debt forgiveness on short sales, does anyone else think that Banks finally got the memo to start the serious price drops? I assume a short sale is much more palatable than a foreclosure, not only legally, but most importantly the maintaining of the asset in a suitable state for eventual resale. I hope people will post any info they have on short sale prices surpassing REOs on the downside.
I don’t know if it’s an incentive for banks, but it’s certainly an incentive for the seller. Of course, the seller can’t have any equity in the house, has to prove that they have exhausted all their resources (easy enough if you can trust someone to hold your $$ in their name), and has to show that they tried to market the house, but couldn’t get any more than $XX. I think all of the above will easily apply to many, many people in CA.
Did anyone already post Liz Ann Sonders’ take on the “teaser freezer”?
“Hope Now” == “Help Obligated People Evade Now”
http://www.schwabinsights.com/2007_12/strategy.html
Home prices are completely out of line with people’s income,’ Burns said.”
NO Kidding John.
where the F%$#@@ were you 3-4-5 years ago?
“In such an environment credit scores don’t really provide a definitive gauge of how hard a borrower will work to avoid default, says Mark Zandi, chief economist of Moody’s Economy.com Inc., a West Chester, Pa., economic-research firm. A better test, he says, is how much equity owners have in their home.”
Yeah mark, now that lenders are getting burned massively a down payment of 20-30% will be king kong in this market and prices will tumble on houses.
My neighbor in Sunnyvale CA just sold his house for $1.28M in 6 days. Zillow has it priced at $955,000. My neighbor bought it in 2003 for $620,000 but he spent an extra $110K in renovation. I am very happy for him.
1.28M ? Must be 4 or 5 strawberry pickers getting together on that one.
He lucked out. If I were him, I’d sit on the windfall. For a while.
Hey Zeb,
What’s the address? I’d like to look it up on Zillow.
Sorry Zeb, but I just looked on Zillow for all houses that have sold within the past 6 months in Sunnyvale, and only 2 have gone for more than a mil. Neither of them sold for 1.28.
Are you sure your information is correct?
Big V, sometimes it takes a couple weeks to update
yeah Yun ok….
About this tax bailout debacle.
I try to tell myself its kind of like after a disaster and everybody who lost a home qualifies for a low rate loan to rebuild. I didn’t get upset when victims rebuilt in hurricane ravaged areas so why am I now? I will try to imagine this is just another kind of loan.
Over the years I have paid huge taxes. This hurts.
I didn’t get upset when victims rebuilt in hurricane ravaged areas so why am I now? I will try to imagine this is just another kind of loan.
Because the victims of the failed levy were hurt by poor government design and planning which, unfortunately, we all have to take responsiblity for.
Except, consider this:
There’s a corner of some land I own in Florida (bought years ago, pre bubble, for next to nothing), that’s considered “wetland”. The government took my rights away because it’s “wetland” and I can’t touch it.
Not a big deal, It’s about 1 acre, 1/20th of my land.
But! It’s only wetland because the road that the Government built drains onto it. Wetland is defined by what plants are growing. So if this road wasn’t there, it wouldn’t be wetland. Old aerial photos show what it looked like pre-road.
Now, if life was fair, the entire 9th ward would now be called “wetland” and shouldn’t be able to be touched. But it’s not, because Americans decided (maybe correctly, I’m not going to judge), that it’s worth feeling sorry for those downtrodden folks, and it’s not worth feeling sorry for me.
It would have been best from a pure economic standpoint to simply build new equivalent-or-better housing for the now underwater parts of New Orleans elsewhere and leave those areas flooded. But public sentiment wouldn’t allow for it.
Hey Half Moon Bay, CA just lost a case about this same problem reuven. Tried to claim some land was wetland and it wasn’t. Due to city employee mistake, land turned into wetland. Now the city will need to pay $36 million to the developer. See link http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/18/MNFETSC0H.DTL
Yes! This was great news. My wetland actually was created before I bought the land, so I don’t have much of a case. I knew it was there.
I’m pleased to see the Half Moon Bay case turn out as it did. Other follks have gone to jail for moving dirt around their property!
My point is, if the law was applied equally to poor people in slums as it is to “wealthy” landowners governments can feel they can push around, nobody in New Orleans would be able to return to what’s *Clearly* wetland.
But the Public outcry over what happened there was so large, we had that big, messy, inefficient bailout.
What was the spending per-capita? I think it exceeded $500K. They could have built a lovely new community a little up north and let things be.
(Spending numbers here: http://www.taxpayer.net/budget/katrinaspending/index.htm
)
“Over the years I have paid huge taxes. This hurts.”
How true. And just to think: homeowners now don’t pay:
1) Taxes on mortgage interest
2) Taxes on profits from home sale
3) Taxes on proceds from a HELOC & run
I’m finding myself more and more hoping that homeowners burn in Hell. Say “hi” to Sam Kinison for me, would ya?
I’m finding myself more and more hoping that homeowners burn in Hell. Say “hi” to Sam Kinison for me, would ya?
I’m against the tax breaks on mortgage interest and home sales. I’m against the recent “Deadbeat Specuvestor Tax Relief Bill” W. signed into law.
But I’m a homeowner! In Sunnyvale, CA.
I don’t care one bit what my house is “worth” and I hated the bubble. A drop in value of 50% is fine with me. I never considered any imagined value in my house to be real.
So be careful about condeming homeowners to Hell!
The battle lines are really:
Irresponsible lenders AND deadbeat borrowers
VS
The few % of the American public that pays taxes, has no debt, and saves money each year.
Even I saw this one coming.
In a recent blog entry in Realty Check on CNBC, Diana Olick quoted a blog response from a reader.
“This is in large part due to the continued risk that has been priced into the Jumbo products by secondary capital markets, as these loans are not federally insured by the GSE’s … and thanks to the recent write downs and subprime portfolio exposure news from Fannie and Freddie, we all know what’s in store for those GSE’s on the horizon don’t we? ”
John A. ”
There is an assumption that GSE bonds are federally insured by the U.S. Treasury. However, it is my understanding that there is no explicit guarantee.
The GSE regulated, private corporation have trillion of dollars in bonds. I’ve heard $2 trillion and I’ve heard $4 trillion. Do you know the actual amount?
If Freddie and Fannie wnet under, and their bonds were liquidated at 50 cents on the dollar, the potential loss could be in the $1 trillion to $2 trillion range. The sum of all deficits since Reagan took office is only $4 trillion. $2 trillion would be $20K per U.S. household. Would the government really be able to dump that much extra money worth of treasuries into the system?
I ask for 2 reasons.
Back in July I saw risk in stocks so moved my 401(k) 100% to U.S. Treasury bond cund. I’ve done well. However, if that many extra Treasury bonds were dumped into the market at one time, it would kill the price.
I also moved my wife’s 401(k) 100% into what her 401(k) management company called “Governmebt Bond Fund”. The difference between the Treasury fund my 401(k) offers and the Government fund her 401(k) offers is that her government fund holds GSE corp. bonds. Her 401(k) actually has a lot more money than mine.
So, if Freddie and Fannie go insolvant, which I suspect they will, I could be toast either way. If the government lets them fail and doesn’t cover the bond losses, my wife’s 401(k) would take a big hit. If the govt. does cover the losses, then the govt. is selling a lot more treasuries, killing the price, and BOTH of our 401(k)s take a big hit.
I guess I would be worried about a falling dollar if I was 100% in treasuries. I have 40% of my money in Vangard us treasury money market so I think its a good deflationary bet. ” if Freddie and Fannie go insolvant ” I don’t know what other choices do you have?
Not much for my 401(k). U.S. growth, AsiaPac Growth, Global Growth, U.S. Income, U.S. bond… stuff like that.
More for my wife’s. A large variety of mutual funds, bond funds, money market, etc. Nothing that says “asset preservation” the way the govt bond fund does.
Personally, I think the U.S. dollar has bottomed. Europe and Asia will now start cutting, I think. Race to the bottom will be on! I think.
I’m really concerend with asset preservation. I know…. I know… If inflation eats the buying power than it is the same as losing. But, I’m hedged against inflation by my debt.
I can tell you what I have 100% of my 401K is in equities, half of it in overseas equities.
Non retirment mostly CD’s and treasury plus oil and minning stocks.
I’m not smart enough to time the stock market except in extreme situations like the tech bubble that was easy as was the RE bubble.
Value mutual funds tend to have large exposure to banks so I have traded my value fund for a growth fund.
Your bet is 100% on a stock market crash and maybe you will be correct?
Visiting family in Santa Cruz this week. Drove into town last night just after sunset, getting pretty dark outside. Drove past a Century 21 office on a busy thoroughway and saw a “Century 21 Santa Claus”, hands full of flyers, waving at cars in a feeble attempt to attract suckers into their office. Realtors MUST be hurting in Santa Cruz.
I have been waiting 13 years to hear those words: “It’s a buyers’ market.”