December 30, 2007

The Beginning Of The End Of The Great Real Estate Boom

The Santa Cruz Sentinel reports from California. “Watsonville farmworker Justino Mendoza Cortez was happy to be a homeowner, proud to be living at 64 College Road with his wife and six children. But he couldn’t afford it. When one of his loan payments jumped in May from $2,722 to $4,054 per month, he didn’t realize he had an adjustable-rate mortgage. The house he bought almost three years ago for $695,000 was sold on the steps of the county building Thursday for $522,750.”

“Now he wonders when his family will have to move and where they will go. He said he can afford about $2,000 a month.”

“More than 240 homeowners in Santa Cruz County have lost their homes this year — five times as many as in 2006 — and hundreds more are in danger of losing homes, all because they can’t afford their mortgages.”

“Vern Johnson, who has handled 900 foreclosure sales in Santa Cruz, Monterey and San Benito counties this year, said 99 percent of the homes have ended up with the lender. Most of those have been homes purchased in 2005 and 2006.”

“‘I don’t think it’s going to get better for a while,’ he said.”

“The Bush administration’s proposal to freeze interest rates for struggling borrowers starting Jan. 1 may not be much help. One of the requirements is for the borrower to live in the home, and Johnson said about half the homes he’s seen are empty. A large number, he added, are occupied by tenants rather than owners.”

“The market fell too fast for Howard Little. He leveraged the equity in his Boulder Creek home to invest in real estate, buying a rental in Sacramento. Instead of producing a steady income, the deal went into foreclosure.”

“In the summer, he put the home where he grew up on the market for $680,000; it sold for $550,000 in September.”

From BBC News. “The city of Stockton in California is at the centre of the mortgage crisis now sweeping America. But Stockton is also a place where you can really get a feel for the staggering amounts of money banks loaned during the boom - with few or no questions asked.”

“In his 25 years as an estate agent in Stockton, Kevin Moran had never seen anything like it as seemingly limitless bank loans sent house prices rocketing.”

“‘It was crazy,’ he says. ‘People felt that if they didn’t make a high enough offer on a house, it would be gone. Instead of saying ‘What do you want to do on a Saturday? Let’s go to the park’, they’d say ‘Let’s go buy a house.’”

“At the height of the buying frenzy, in 2006, Will Trawick was selling new homes for a Stockton developer. Faced with crowds of a hundred buyers, bank loans in hand, all chasing the 20 houses he might have on offer, he organised bingo-style lotteries.”

“‘We had ping-pong balls with numbers, just like you’d see on a TV show,’ Mr Trawick recalls. ‘Everybody would have a number. We’d put the ping-pong balls in, spin it and, you know ‘Number 22! Yoo-hoo!’ They’d jump up and yell, come on up and pick which home they wanted, and leave a deposit cheque.’”

“With house prices soaring, pretty well anyone who owned a home in Stockton suddenly found they had plenty of equity in their property - equity the banks were eager to convert into cash.”

“Steve Carrigan is in charge of economic development for Stockton. He says bank loans made it a party every day. ‘People went to the bank and got a loan on the increase in the price of their home. They went out and spent all that money,’ he explains.”

‘”Price of the home went up again, they went back to the bank and got another loan. They went out again and spent that money on cars and jewellery and furniture - whatever they wanted.’ With the help of the banks, Mr Carrigan says, people in Stockton ’spent their house.’”

The Record Searchlight. “The effects of a housing slump are rippling through Shasta County’s economy, with decreased retail sales, spikes in home foreclosures and bankruptcy filings, and a drop in charitable giving.”

“‘Housing is certainly the primary thing,’ said bankruptcy attorney Dennis Cowan, whose office has been swamped with financially distressed clients. He’s booked six weeks out.”

“Bankruptcy filings in Shasta County through November are up to 370, a 60 percent increase over a year ago. Homes lost to foreclosure in Shasta County increased 372 percent — from 64 to 302 — through November, county records show.”

“Debbie Groce had worked 20 years in mortgage lending before she lost her job in Redding in December 2006. At the peak of the market, Groce said she was making more than $40 an hour as a senior mortgage underwriter.”

“But Groce has been unable to find work. She said there isn’t a great need for mortgage underwriters in Redding. ‘I have always had a great job and worked all my life. … It has been a whole year, and I am losing faith,’ Groce said.”

“Jobless numbers in Shasta County have been trending up all year. In November and October, the county unemployment rate reached nine-year highs for those months.”

“Redding’s sales tax haul in the third quarter (July through September) of 2007 was down 8.26 percent. The drop extends the city’s sales tax downturn to five straight quarters, the longest slump since the early 1990s.”

“Redding real estate agent Chris Young is working with a developer who has a small subdivision in Redding that is ready to go, but the client will sit out 2008.”

“‘He doesn’t want to put up with the low-ball offers,’ Young said.”

“Redding home builder Jerry Wagar of Ochoa & Shehan expects 2008 to be a lot like 2007. ‘I don’t see any indication. To me, there are no apparent signs there will be change,’ Wagar said. ‘A lot of people are still sitting on the sidelines, waiting to see what the bottom is.’”

The Desert Sun. “The number of homes sold in November was a 2.2 percent increase over October, according to the California Association of Realtors. It’s the second month in a row where sales have gone up. But other market indicators aren’t as optimistic. The median price is down 14.2 percent from a year ago. Almost 9,200 desert homes are on the market.”

“DataQuick reported 564 homes sold in October…43 percent below last year’s numbers. DataQuick has not released November figures yet.”

“While sales increased between October and November, sales overall are down 16.8 percent from a year ago.”

“‘Two months of improvement after five months of decreases is good news,’ California Desert Association of Realtors executive VP Greg Berkemer said of the housing sales. ‘But this bottom is a bumpy trough and we don’t know if if this is a just a spike.’”

“Berkemer’s advice: ‘Sellers should remain realistic and only be in the market if they need to sell their home.’”

The Press Enterprise. “For 2008, forecasts indicate a drastic slowdown in new housing construction, says Fred Bell, executive director of the Desert Chapter of the Building Industry Association of Southern California.”

“Housing starts in the desert for next year are estimated at 1,500 to 1,800 — down from a peak of about 8,000 new starts in 2005, Bell said. ‘It kind of gives you an idea about our outlook,’ he said. ‘We’ve got to figure out a way to keep some of these builders in the game and set the stage for more robust growth in 2009.’”

“The Coachella Valley will begin 2008 with a glut of homes, both new and resale, on the market: about 8,000 to 10,000 homes instead of the 3,500 to 5,000 typically seen in a healthy market, Bell said.”

“Land prices are down about 30 percent and in some cases, finished lots are selling for about ‘50 cents on the dollar,’ Bell added.”

The San Francisco Chronicle. “It became clear this year that the real estate boom of the first part of the decade had officially gone bust as lenders tightened standards, sending sales volume skidding and squelching price appreciation. The number of homes sold fell 23 percent through November in the Bay Area’s nine counties compared with the same period in 2006, according to DataQuick.”

“‘It was the beginning of the end of the great real estate boom of the (two thousand) zeros,’ said Christopher Thornberg, a founding partner of the consulting firm Beacon Economics. ‘What you’re looking at is a meltdown in the housing market that is completely unprecedented, but completely understandable when you look at the abuses in the market in the last few years.’”

“Experts say that nowhere has the shift from boom to bust been more dramatic than in the new-home market. Developers who were dangling upgrades like free hardwood floors and fancier appliances changed their tune and instead began slashing prices by as much as $150,000 in parts of the Bay Area in 2007.”

“Markets such as Brentwood, Oakley, Antioch and Pittsburg are particularly suffering, according to Greg Paquin, who runs a consulting company that advises home builders. ‘There is an abundance of product available and prices were unsustainable and continue to be,’ Paquin said. ‘The credit situation has made it more of a challenge.’”

“While new-home developers pointed to statistics about the state’s perpetual shortage of housing as they built, the homes that went up don’t necessarily meet the region’s needs, said Beacon’s Thornberg.”

“‘Don’t confuse apples and oranges,’ he said. ‘We heard lots about the housing shortage during the boom and that had little to do with high-cost new houses and everything to do with low-rent apartments for immigrants.’”

“While 2007 slides into the record books as a real estate industry train wreck, few are predicting that 2008 will be much better.”

“‘A real recovery in the housing market is probably at least a year off,’ said Robert Kleinhenz, deputy chief economist for the California Association of Realtors. ‘The murkiest part of my crystal ball has to do with the liquidity crunch.’”

“‘People think it’s not going to hit their neighborhood, not going to hit their price point,’ said Thornberg. ‘But the reality is that it is only going to get worse in 2008.’”

The Union Tribune. “For San Diego County, 2007 was a horrible year for the real estate market, when it seemed that everything that could possibly go wrong did. As 2008 dawns, even the most optimistic economists say the housing market will continue to decline over the next six months.”

“In the past year, the median home price in San Diego County has fallen more than 11 percent. Home sales are down 26 percent. Defaults on mortgages have risen 150 percent. Residential construction permits fell more than 30 percent last year. That has put a dent in employment.”

“Between November 2006 and November 2007, 5,500 construction workers, 1,300 real estate workers and 500 mortgage and finance workers lost their jobs.”

“Many economists say that in the long run, the downturn will be good for the economy, since the high price of housing has made life unaffordable for many Californians and forced many people to look for jobs and housing elsewhere.”

“‘The quicker we have a downturn, the quicker we can get imbalances out of the system,’ said economist Christopher Thornberg.”

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Comment by Professor Bear
2007-12-30 12:50:32

“In his 25 years as an estate agent in Stockton, Kevin Moran had never seen anything like it as seemingly limitless bank loans sent house prices rocketing.”

“‘It was crazy,’ he says. ‘People felt that if they didn’t make a high enough offer on a house, it would be gone. Instead of saying ‘What do you want to do on a Saturday? Let’s go to the park’, they’d say ‘Let’s go buy a house.’”

It’s this behavior the D-ratic pols are falling all over one another to bail out with your and your children’s federal tax dollars. GRRR!

Comment by jp burns
2007-12-30 15:28:48

yea, let’s blame the Dems for this mess. The Republican admin’s trickledown, laissez-faire business policies had nothing to do with it.

Comment by Scotty
2007-12-30 21:09:50

Much of the subprime mess comes from deregulation under Republican administrations in the 80’s. Financial markets will always be driven by greed, which in many ways is a good thing (by focusing capital where it will be productive). But unchecked greed leads to things like the current crisis. A reasonable amount of wise regulation is a good thing.

The Federal Reserve is now proposing a package of reform regulation. Sample just one: lenders must verify borrowers’ assets and ability to repay loans at the regular rate, not just the teaser rate. Seems like common sense, and doesn’t seem too burdensome in terms of a new regulation. What would the housing market look like today if this regulation was in place 5 years ago? Would we have seen the same price increases if buyers needed to back up their purchases with real income?

Comment by Michael Emmel
2007-12-31 01:54:59

That’s what I like about this board it starts making people realize we fucked this up as American not Democrats are Republicans.

Comment by jerry from richardson
2007-12-30 15:48:15

Don’t forget that over 50% of people polled feel that there should be a taxpayer funded bailout. I wonder if those morons realize that they are the taxpayers who will be funding the bailout.

Comment by reuven
2007-12-30 16:48:32

Only 5% of Americans pay significant taxes. Half of Americans pay only 3% of the nations taxes, and have a tax burden of about 6% of wages.

That’s what’s wrong with America

Comment by not a gator
2007-12-30 17:52:51

Not really… if we didn’t let the good jobs go overseas and if the more “highly compensated” were taxed more aggressively (thus “de-incentivizing” the high compensation and reversing the salary arms race), then the taxes would be spread around a little better.

But as long as we live in a gilded age, even at a 10% marginal rate the very richest are going to be paying the most (in gross dollars, not in lifestyle, natch).

Such is the price of aristocracy!

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Comment by creamofthecrap
2007-12-30 18:02:28

“That’s what’s wrong with America”
Yeah, America is a rough, rough, place for the rich. But it is the most awesome place in the industrialized world for unskilled laborers.

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Comment by MacAttack
2007-12-30 19:55:03

The taxes I pay aren’t significant? Then I don’t suppose you’ll mind if I stop paying them.

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Comment by Jay_Huhman
2007-12-30 21:58:38

Payroll taxes, heavily skewed toward lower income taxpayers, contribute almost as much to federal revenue as federal income taxes.

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Comment by reuven
2007-12-30 22:46:41

Yes, and lower income taxpayers TAKE more from the system in the end, compared to how much they put in!

Comment by Sailor
2007-12-30 23:48:46

Only 5% of Americans pay significant taxes. Half of Americans pay only 3% of the nations taxes, and have a tax burden of about 6% of wages.

Who the hell is that and how do I get in that group paying 6% of wages.

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Comment by Big V
2007-12-30 17:01:13

Hi Jerry:

Has it gotten to that point already? Last year, CNN did a poll and found that around 80% were against a bailout. A few months ago, they did another poll and asked if a non-taxpayer-funded bailout was OK, and something like 47% said yes. Is the poll you reference a CNN poll too, or is it a different set of people?

Comment by pismoclam
2007-12-30 19:19:19

Those 50% of the Retards don’t read and can’t write. They are the ones we can blame for reelecting the idiots we send to Washington. Check out both Repubs and Dem presidental candidates. We even have a candidate who believes in UFOs. They don’t care how much money it will take because they don’t pay taxes, even get earned income cash back, welfare,food stamps, housing, free medical, free lawyers, It’s OPM, other peoples money. Fellow bloggers you’re paying for it. Thornburg is right. Get it over with. Bring back Volcker.

Comment by josemanolo7
2007-12-30 23:25:49

who do you think uses most of the government funded services, like legal/law enforcement services for protection of properties?

Comment by josemanolo7
2007-12-30 23:30:26

let me add some more. who do you think benefits most from having a stable social, economic, political, etc systems that we have?

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Comment by josemanolo7
2007-12-31 01:14:14

and, who do you think benefits the most from having a stable social/economic/political/etc climate in this country?

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Comment by rick
2008-01-02 21:27:16

And don’t forget that those homeowners don’t pay much federal taxes after their deductions, so renters actually are the other 50%.

Great, 50% maybe those that don’t pay, and they thinks the other 50% should pay for their bail-out.

Comment by Big V
2007-12-30 16:11:29

Hey Prof:

I went to Obama’s website, and his bailout plan actually looks like it’s not so bad. I haven’t even bothered to go to Clinton’s website because I have heard quite enough of her already on the TV and radio. She didn’t even take the time to learn about the situation before she started calling on the PTB to “save the children”.

Comment by merce
2007-12-30 18:05:22

i find these bbc stories quite amusing. the tone is always look at
those silly americans, why can’t they be more sensible.
They never point out that indebtedness and house affordability
is much worse in the UK, or that the funny money loans and flipping were/are just as prevalent.

Comment by flatffplan
2007-12-30 13:07:03

he didn’t realize he had an adjustable-rate mortgage.”
he’s lying.

Comment by Joe
2007-12-30 14:39:19

Of course he is. Does he make $200K a year. I think not. He is typical of many illegals in CA and other places. They lie, cheat, steal etc.

Comment by NYCityBoy
2007-12-30 16:01:34

I think you mean “undocumented”.

Comment by Sammy Schadenfreude
2007-12-30 17:18:34

For the sake of fairness, you should note that illegals are mercilessly exploited and ripped off by just about everyone they encounter, from the human smugglers that bring them here, to the unscrupulous employers who hire them. As far as lying, cheating, and stealing, illegals have nothing on WASPS in the financial services and real estate industries.

Comment by Satchel
2007-12-30 18:10:52

It’s true that illegals are often exploited, but they learn real fast. My brother is a cop in the suburbs of NYC. A month ago, he told me about how he arrested an illegal on some sort of misdemeanor. When they inventoried her possessions, she had $3K in cash, and 5 different NYS benefit cards (in various names, including two or three that seemed to be variants of her “real” name). Each of those cards represents a separate NYS welfare check of one type or another. Just an anecdote, I know….

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Comment by SVCAGUY
2007-12-30 18:30:58

Come come … whould the loan officer be a far bigger lier.

How about the Strawberry picker in Watsonville making 15K a year buying a 750K home… actually it was later uncovered the home was worth more like 500K… but dont let that fool you homes in Watsonville were only worth at best 250K if you factor in the long run trends. The lying cheating and stealing is far more than some illegals in CA. There are plenty of large banks that were willing to lend to openly known illegals. That is why the who notion of documenting illegals by given them drivers licenses was being pushed. Its goes straight up to the boardroom of major banks.

Comment by rick
2008-01-02 21:46:26

Good point here.

Looks like some of us are always trying to blame illegals. It does seem a lot of those with loans that must’ve been qualified through outside lie are illegals. But don’t jump so fast as they are most likely accompanied by loan agents who lied FOR them. All they needed to do was signing on the dotted line. And don’t tell me that those crook loan agents only work with illegals.

The truth is that wherever there is loopholes, there bound to be people exploiting it. And boy we all know how the government/lenders/banks/finance houses/rating agencies f**ked up this time. People have been rubbing the bank all these years and all we come up with was “blame on the illegals”.

How pathetic is this, if they want to see action against illegals take the topic somewhere else. There is nothing in this mess that is particular to illegals, same for those trying to point their fingers at Dem/Rep.

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Comment by arizonadude
2007-12-30 14:57:55

That’s what I was thinking.How do you not know the terms of your loan.If you are that stupid you should not have a house in the first place.Everyone is jumping on the ignorance band wagon now.

Comment by NYCityBoy
2007-12-30 16:04:46

I have always heard that ignorance of the law is not a valid defense. Hmmmm.

Comment by Timmy Boy
2007-12-30 16:11:00

If prices would’ve gone UP… he would’ve looked like the Mexican Donald Trump (Donolio Trumpecita)

Comment by MacAttack
2007-12-30 19:56:13

That would be Carlos Slim.

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Comment by de
2007-12-30 15:55:17

Run the numbers:

A 695K mortgage, at a little over 1%, runs about $2200 a month. The guy probably had an Option ARM and was making minimum payments until the thing was recdast because he owed over 115%

Comment by Doug-home
2007-12-30 15:58:57

And what Bank was dumb enough to believe those lies?

Comment by NYCityBoy
2007-12-30 16:14:40

In the past 5 years, all of them.

Comment by Joe Rentor
2007-12-30 16:08:13

“When one of his loan payments jumped in May from $2,722 to $4,054 per month, he didn’t realize he had an adjustable-rate mortgage. The house he bought almost three years ago for $695,000 was sold on the steps of the county building Thursday for $522,750.”

“Now he wonders when his family will have to move and where they will go. He said he can afford about $2,000 a month.”

Hmmm. His loan jumped from being $722 underwater a month to $2054 underwater a month.

I’d be wondering where that $722 is coming from when I started.

Comment by NYCityBoy
2007-12-30 16:26:03


Comment by Leighsong
2007-12-30 17:21:29

That always makes me giggle, and I have absolutely no known explanation for why!


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Comment by IUnknown
2007-12-30 19:17:20

I’m just simply amazed that a farmworker can afford $2,000 a month! I could barely afford that.

Comment by bill in Maryland
2007-12-30 13:08:13

WTF did the farmworker think? That he could afford a $695,000 house? Madre Mia! My income in 2006 was $200,000. I couldn’t even qualify for $500,000 using traditional 2.5 times income measurements! That a farmworker with 6 kids (think LOUD Mariachi music and good ol’boys leaning on pickup trucks in the front driveway drinking Bud) could be in a neighbohood where an income of $278,000 would qualify for a neighbor. It gives me the creeps. All this slumming of well-to-do priced neighborhoods is going to disappear within 5 years. I have a better class of neighbors in my large apartment complex than I would have as a homeowner today. I just want to live among college-educated responsible professionals who do not stay up all night and party but have to work 5 days a week just like normal responsible people.

Comment by jaded
2007-12-30 13:52:56

This is what is “special” about the Bay Area: homes in the inner city ghetto are about 200K for a 1 bedroom or studio, and 400K for a 3 or 4 bedroom place. Ghetto meaning gunshots on your doorstep and crack houses nearby. Sad to say, 600K in Santa Cruz gets you into the average middle class neighborhood. If you want to like in a upper middle class neighborhood, prepare to drop 900K or more. Par for the course here, and this is why California will be hit really hard by the housing crisis.

Here is a nicer home in west Oakland, a steal just under 500K: (not that safe here)

Another Bank owned fixer in East Oakland, still over 250K, and this is another unsafe neighborhood:

Here is something in an upscale neighborhood, bargain 900K:

Real estate crisis in action in Northern California, these are a few properties that have dropped a bit because of the crisis. Even households with 200K of household income struggle to get a decent home…so what about the middle class of the poorer people? If you want to live a comfortable middle class life in the bay area, 400K household income is required for a family of 4.

Comment by Doug-home
2007-12-30 15:57:25

Yes sir…. All three houses are in Oakland CA
That means AWFUL schools..
Add the cost of private school.. minimum $10000/kid

Comment by NYCityBoy
2007-12-30 16:27:47

I drove through Oakland once in 1990. I was scared $hitless. I had never seen bars on home windows before. Has it changed at all?

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Comment by jaded
2007-12-30 17:57:08

I live in Oakland. I don’t have kids. My neighborhood is great! Safe, nice restaurants, nice people, cool stuff to do, cool parks. You only hear about the crappy stuff in Oakland: crime shootings and so on. The vast majority of the city is nice, safe and full of amenities. Don’t believe the hype. That being said, Oakland has a lot of good elementary schools, but has a ways to go for exceptional high schools.

Scared after driving around: you clearly are driving around the sketchy parts of the flatlands.

But it is really too bad, the bay area is really expensive. I picked some Oakland neighborhoods, especially to show how expensive the hood is. Prices are similar for nice neighborhood across the Bay Area (except for some neighborhoods in SF and the Silicon Valley that are even more….really really expensive!)

Comment by Satchel
2007-12-30 18:19:30

I live in SF, in a fairly nice family area on the western side. Everything is obscenely expensive to buy, but renting is far far cheaper. The house I rent would sell (even today) for $1.5MM (down from its bubble peak of about $1.75MM in 2005. But rent is only $3.1K per month! That’s a reasonable deal, but not the best I’ve heard. Most rents on SFHs in the $1.2MM-1.8MM range are between $3K and $4k per month.

Comment by rms
2007-12-30 19:37:48

“I drove through Oakland once in 1990. I was scared $hitless.”

I repo’d vehicles from every ghetto around the SF bay area for five-years.

“I had never seen bars on home windows before. Has it changed at all?”

Yes, it has grown larger and more violent. Funny thing just happened too!

Comment by pismoclam
2007-12-30 21:31:53

Oakland: Only place I know with double concertina wire on top of the houses and businesses.

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Comment by laughing boy
2007-12-30 18:01:11

I live in Sf in a “upper middle class” neighborhood where homes go (went) for well over 1 mil and BMWs and Mercs are lined up down the street. We’ve had 4 murders/shootings, people defecating on our sidewalk, a crack house wedged in amongst all the newly renovated places. That’s what makes the Bay Area so special to me. People just don’t want to admit that all this crap goes on because SF is supposed to be immune to it.

Comment by Troy
2007-12-30 19:11:20

I lived in that upper-middle class area (Live Oak) of Santa Cruz 2000-2004. Prices for a decent house were $350K when I got there and $500K (and rising fast!) when I left. Then the boom hit jacking the median (which is the same as the ‘decent’, really) house up to over $700K.

Comment by MacAttack
2007-12-30 19:59:49

My experience as well, living in Santa Cruz County from 1984-1994. Got very close to buying a 1550 SF condo for 200K in late 93, then wife quit her job and we moved.

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Comment by SoBay
2007-12-30 14:11:27

‘WTF did the farmworker think? ‘

This is Juan Sixpack at his best.
The whole “We Deserve the American Dream’ entitlement was born here in California.

Comment by spike66
2007-12-30 14:29:24

California supposedly will be in a “fiscal emergency” come Jan. 1, with a budget shortfall currently at 14billion plus. This will coincide nicely with mounting foreclosures, upcoming resets in alt-A and prime mortgages, the curtailing of HELOC money, lousy retail, falling state sales tax revenues, and rising defaults in credit card securitizations. And with Arizona’s new employment laws in effect, I guess you can anticipate a rise in Mexican guests.
However, since you’re getting universal health care, courtesy of Arnie, you won’t feel the pain.

Comment by Hazard
2007-12-30 18:17:04

Universal health care - consider, many companies are dropping their share of the cost at an increasing rate. In the next few years you’ll likely be forced to pay the full load ummm maybe over $12k a year and up. Then what?

Unless, of course, you like shelling out increasing amounts of money for a rapidly deteriorating, inferior product.

Like the housing debacle, heath insurance is a ticking time bomb for many US citizens.

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Comment by Vermontergal
2007-12-30 19:50:41

Unless, of course, you like shelling out increasing amounts of money for a rapidly deteriorating, inferior product.

If I’m interpreting your post right, I think you might be missing a key point: when employers drop universal health care, health care costs will go down. The US has privately socialized medicine, which combines some of the the worst aspects of socialized and free market health care.

The phenomena of decreasing costs/low cost health care is easy to see in areas of medicine not covered by insurance. Vet care is reasonable and medicines are cheap (in some cases much cheaper than their human counterparts) because almost everyone is paying out of pocket and eliminating several layers of waste. Laser eye surgery, never covered by insurance, has come down to affordability by the masses.

I think we either need to have completely socialized medicine or have a free market system where insurance is just that: it pays for a health catastrophe. It does not pay for ongoing/regular expenses and if you do have a major issue, well you’re on the hook for some of those expenses. Obviously, I’m leaning toward free market but I’m thinking almost any other system would be cheaper than the weirdly socialized medicine we have now.

Comment by Hazard
2007-12-30 20:32:43

There is no universal health care for employers to drop. Not in the US.

There are a wide variety of private insurance companies (really, even the Blues are included) selling their products at an ever increasing price generally to US corps. These in turn offer insurance to their employees while picking up some of the cost. As the corps decrease their insurance contributions (for their employees) the employees are then forced to pay more and more and more for insurance coverage. Which covers less and less every renewal.

Take a look at what COBRA costs these days. Thats where this is headed. And then what? My original question.

Those people so adamently opposed to universal healthcare today are very rapidly going to find themselves in the same boat as those folks who currently don’t have insurance at all (simply because they can not afford it). And again, then what?

Comment by CHUCKY
2007-12-30 21:13:16

Thank you for that Vermontergal!!

Comment by measton
2007-12-30 21:40:53

You can’t have a freemarket and competition unless the consumer understands the product. So unless America is going to go out and get a degree in medicine and insurance law the freemarket system will fail.
You think doing away with preventetive health care and going with a catastrophe only insurance will save money. Try again, people will skip the flue shot and spend 3weeks in intensive care. People will skip taking their antihypertension pills and end up in intensive care. The poor will still show up in the emergency room instead of going to a primary care physician. Do you propose also that they stop regulating pharmacies and just let people buy what they want. That should make all antibiotics worthless in about a decade as everyone buys antibiotics off the shelf for the common cold. People will take medicines for diseases they don’t have, or combine drugs that shouldn’t be combined and again end up in the most expensive medical care.

The best plan is to have universal health care coverage for all US citizens that only covers treatments that provide a predetermined cost benefit analysis. Then drug companies and doctors can compete to get the cost of their treatments under that bar. If people want care above and beyond this then they can pay for a supplemental policy that covers this. This way everyone gets whats most effective at the cheapest price and when they get something that does not get covered then they know that they have only themselves to blame for not buying a supplemental policy.

Comment by Desertdweller
2007-12-30 21:47:53

getting primary residence in canada to qualify for regular healthcare. Or go to Sao Paulo or BA.

Just live here in between drs visits.

Comment by Evil Capitalist
2007-12-30 21:51:22

Vermontergal is absolutely correct. We area heading to the “stalemate” in healthcare that won’t be any different from the stalemate in this housing bubble. Producers will have inventory to move and will be lowering the prices no matter the posturing. Socialized medicine is nothing other than the government bailout of the healthcare industry.

Comment by Professor Bear
2007-12-30 14:39:57

“…born here in California.”

Enabled by plutocrats on K Street and subprime lending kingpins on Wall Street.

Comment by Jas Jain
2007-12-30 15:53:41

They were living the American dream — not only a house pays for itself, it pays for a new car and furnishing, and bigger the house you can have, by any and all means necessary, bigger the dream would be!

Now, they are living the American nightmare. Beware of dream-sellers!


Comment by ldup
2007-12-30 19:20:42
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Comment by bill in Maryland
2007-12-30 13:12:00

“‘We had ping-pong balls with numbers, just like you’d see on a TV show,’ Mr Trawick recalls. ‘Everybody would have a number. We’d put the ping-pong balls in, spin it and, you know ‘Number 22! Yoo-hoo!’ They’d jump up and yell, come on up and pick which home they wanted, and leave a deposit cheque.’”

Things would be different if the come on was: “If your number comes up on the ping pong balls, you too, can join the inmates in the debtors prison” or “if your number comes up, you too, can voluntarily become bankrupt and ruin your credit.”

Comment by New diogenes of Ca
2007-12-30 13:12:00

Um, didn’t Mr Repub., GB, promise and sign aid relief for debtors……oh, and his bulging record budgets for wars and good ol’ oil boys don’t affect our kids’ tax dollars. Only the Dems. Ha.

Comment by Ben Jones
2007-12-30 14:18:25

I’ve tried to point out that hypocracy, but you know. I give up. Both parties have already spent more than we can ever pay back. What’s the point in crying the ‘it’s for the children’ line now?

Comment by Lip
2007-12-30 14:55:37

Exactly right, both parties sold us down the river, and the only to pay it all back is with inflated dollars.

Maybe we should start a new term limit movement and I also would like to tie all future congressional retirement pay to a balanced budget. No balanced budget (with SSI included), no retirement for the plutocracy.

Comment by bill in Maryland
2007-12-30 16:04:44

Great idea. Makes too much sense because the socialists won’t implement their own demise.

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Comment by NYCityBoy
2007-12-30 16:32:05

If 613 people kick you in the nuts, is it really important to determine who kicked the hardest?

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Comment by SFBubble
2007-12-30 20:29:51

seems that term limits create a whole new type of unaccountability. Working with politicians in CA, I can tell you that most are more concerned with what they’ll do after their term expires than actually doing their job. By the time the shtf from some dumb bill they passed, their off to their next disaster and no one’s the wiser.

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Comment by Desertdweller
2007-12-30 21:51:20

So, CA pols are worse than those in other states?
Gosh, you guys today/tonight are just full of it.

How about that TX state, BIG MESS. Or say FL or comeon you guys, stop holding your nuts so tightly.

Comment by Vermontergal
2007-12-30 15:50:14

Is it any wonder that candidates like Ron Paul appeal to young voters? The Democrats and Republicans are the same - it’s 100% spending, all the time, just the projects are different. The only other difference is when the Republicans are in power they tend to cut taxes but leave the actual outgo alone.

In addition to lip’s excellent suggestions, I’m wondering if we should go ahead and conduct a systematic default on the national debt sooner, rather than later. The national debt is something like $40K per citizen and growing. Let’s control the pain instead of having it explode in our faces. There’s no happy ending here, so let’s just get on with rebuilding and prevention.

Comment by bill in Maryland
2007-12-30 17:03:10

The only thing I don’t like about default is this: I did not vote for the $trillions of dollars in programs. I did not get into uncontrolled debt. The ones who are responsible for the debt would be forgiven, and defaulting does not really ever mean the nation gets off free. Someone eventually pays the debt. The bottom line is that we lose a lot of business and trust from foreign investors. If I can find out beforehand that we’d default, I would move all my assets out of US securities and stocks and put them in international stocks and precious metals only!

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Comment by Mary Lee
2007-12-30 19:54:09

The national debt can not, and never will be, repaid. It is the money supply…..owned by the bank consortium which owns the Fed.

I’m not even interested in the debt, but boy am I riveted by the interest payments on it. Shoving money as much as possible into my Roth, not that They won’t eventually renige on that too.

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Comment by jerry from richardson
2007-12-30 15:53:19

Notice how everytime the criminals pass or sign a bill they will surround themselves with children. It reminds me of the terrorists using children as human shields. In this case, the children are supposed to protect them from being criticized for spending America into bankruptcy.

Comment by bill in Maryland
2007-12-30 16:09:50

Good point. One of the presidential candidates who wears a brassiere was the first one who pandered to “it’s for the children.” The 152,400 people who recognized that phoniness at that time did not fall for it.

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Comment by Big V
2007-12-30 16:21:28

Clinton balanced the budget, as I recall.

Comment by Ben Jones
2007-12-30 17:23:38

Balanced budget? Only if you don’t count that they were taking all the SS/Medicare money and using it like revenue. Not to mention failing to book ongoing liabilities such as entitlements. The Fed calculated total US obligations at $54 trillion in todays dollars. And we have a negative savings rate.

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Comment by bill in Maryland
2007-12-30 19:07:54

Dude, you rock!

Comment by Desertdweller
2007-12-30 21:54:11

Wasn’t the congress/senate ALL republican during that time?
So, while they were digging for all kinds of ways to hang the man, they were Newt’ing the entire country.

Comment by josemanolo7
2007-12-30 23:52:05

i think this is a good article about social security and the budget.

Comment by Leighsong
2007-12-30 17:17:13

Ben Jones is a maverick and does not give up!

Happy New Year!

Happy New Year HBBers!

Comment by wmbz
2007-12-30 13:13:24

“‘We had ping-pong balls with numbers, just like you’d see on a TV show,’ Mr Trawick recalls. ‘Everybody would have a number. We’d put the ping-pong balls in, spin it and, you know ‘Number 22! Yoo-hoo!

There you have it… Euphoria, and who would have thought it would ever end? The Sun always rises after a night at the tables.

Comment by Neil
2007-12-30 13:22:19

The Sun always rises after a night at the tables.

For some reason I think the old song “nine Coronas” is a better analogy.
They went to bed with Cristy Brinkley (a model) and wake up with a Hippo.

Got popcorn?

Comment by bill in Maryland
2007-12-30 13:29:47

Or they woke up with Billy Joel

Comment by ugh
2007-12-30 13:22:19

and the games rage on, current fb fraud:

Comment by calex
2007-12-30 14:28:32

A must read to understand the character, or the lack of character of mortgage brokers.

Comment by vmaxer
2007-12-30 15:13:29

The same scheming mentality that created the bubble will bring it down even harder. The Realtor makes a commission the mortgage broker makes a commission the FB get into a new house with a smaller mortgage, and the lender takes the loss. We should see credit markets tighten up even more as news of this scam gets out. If this becomes a popular scheme in 2008, defaults will snowball, as FB’s scramble to get new smaller mortgages and default on old larger ones. Of course everyone will think that mortgage and buying activity has picked up and therefore the worst must be over, meanwhile it’s FB’s sticking it to mortgage lenders. Will investors ever want to buy U.S. MBS bonds again? After all it’s just one scam after another, and who knows what kind of crap is packaged up in the bonds.

Comment by jerry from richardson
2007-12-30 15:58:35

The moronic mortgage brokers don’t know that they are slowly strangling themselves and have been since 2004. Pretty soon, the only loans will be coming from bank loan officers and the mortgage brokers on the streets without even an unemployment check.

Comment by julie
2007-12-30 15:57:58

I really must stop reading things like this, it turns my stomach. Things were so much nicer when I used to walk around oblivious to what was going on around me.

Comment by ldup
2007-12-30 19:10:45

that’s what i used to think too. at the beginning of my nurse anesthesia residency (1997), i would leave the lounge (full of docs watching tv…the stock market going up up and away) and i would just shake my head in disbelief. my first degree was in finance and i was no hot dog, but i knew something was very, very wrong…


Comment by josemanolo7
2007-12-31 00:00:05

you took the red pill. welcome to reality.

Comment by Big V
2007-12-30 16:29:16

If the bank gives this guy the loan, then they are STUPID. He has already proven that he will walk away from any property on which he owes $$ if the value goes down enough. Since even the mortgage brokers of the day have finally figured out that RE will only tank further, it would make NO SENSE for anyone to finance this guy’s plan. The only way he can get away with it is if he lies about owning a house already. If the bank doesn’t check, he’ll get away with it.

Comment by Shannon
2007-12-30 19:35:52

The silver lining is once this guy buys the neighbors house for 500k and walks on his on 800k obligation, he won’t be able to buy anything else for years. He thinks he is getting away with something but he’ll be stuck in that 500k house with a major ding on his credit all the while watching his 500k neighborhood go down to 300k. He really can’t beat the system. It will always catch up with you one way or another.

Comment by Big V
2007-12-30 20:11:31

You’re right, Shannon. He’ll end up with bad credit AND be stuck in an overpriced house.

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Comment by josemanolo7
2007-12-31 00:01:45

what made you think he cannot walk away from the 500k loan?

Comment by Potential Buyer
2007-12-30 20:51:06

Can someone explain to me how he can possibly get a loan? Doesn’t he have to come up with a downpayment now? When his credit report is accessed, won’t it show the debt he has on his old house? Won’t there be a debt to income discrepancy?

Comment by ugh
2007-12-30 13:23:54

Oh, and “in the long run…”

we’re all dead

Comment by SoBay
2007-12-30 13:30:44

‘”Price of the home went up again, they went back to the bank and got another loan. They went out again and spent that money on cars and jewellery and furniture - whatever they wanted.’ With the help of the banks, Mr Carrigan says, people in Stockton ’spent their house.’”

The next wave to become clear to the media / sheep will probably be the ‘Mew Pile’ - Mortgage Equity Withdraw and the abuse.

This will really piss off the public when the bailout talks flare up again.

Comment by Professor Bear
2007-12-30 14:42:29

Just wait until investigations of mortgage lending kingpins like WaMu, Fannie Mae, Freddie Mac, Countrywide, etc. get into full swing. Would you like a bailout with that subpoena?

Comment by Big V
2007-12-30 16:34:45

Would you like to place bets on how many of them flee the country before Valentine’s day?

Comment by ochomepro
2007-12-30 18:38:00

I don’t know how these lenders (and the socalled investors who bought their loans) are handling these losses. here in Orange County in southern Cal, properties that were sold for +-$600,000(basically entry level houses) with 100% financing early 2006/late 2005 are now being foreclosed on and marketed by the lenders in the $400,000 range. that’s $200,000 loss b4 commissions and closing costs.

Comment by Timmy Boy
2007-12-30 22:05:32

I know someone who sold their house to Mexican gang members (all tatted up w/ MS13 stuff) for 100% financing. They didn’t make 1 payment. Instead, they lived in the house for 9 months (free) , then stripped the house of EVERYTHING… windows, door, complete kitchen, etc.

Now it’s boarded up & on MLS for almost $250,000 less!! Even at that price.. it STILL isn’t selling…. let alone commissions, carrying costs, etc. WOW!!!

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Comment by Lostcontrol
2007-12-30 13:31:07

Houston, we have a problem-

Nouriel Roubini on Dec. 28, 2007:
“At that time – at the beginning of the housing bust – such gloomy statements were received with skepticism and derision. Too bad that this author turned out to be too optimistic, not too pessimistic, about the biggest US housing bust ever as the developments in housing, mortgages, and the financial fallout are now even worse than his most dire predictions.

Following the meltdown in new home sales - down a whopping 9% in November alone based on data published today – it is clear that this is not going to be the worst housing recession in the last 50 years as I predicted; it is rather going to be the worst housing recession since the Great Depression or, better, the worst housing recession ever in US history.”
Nouriel Roubini’s Global EconoMonitor

Comment by Lostcontrol
2007-12-30 16:14:19
Comment by dearieme
2007-12-30 13:44:42

“completely unprecedented, but completely understandable” => completely predictable.

Comment by Sammy Schadenfreude
2007-12-30 13:53:45

‘Everybody would have a number. We’d put the ping-pong balls in, spin it and, you know ‘Number 22! Yoo-hoo!

Lambs to the slaughter.

Comment by sm_landlord
2007-12-30 14:17:37

Here’s some lambs for ya:

F’d Car Buyers

Some people are soooooo stupid. Look at the sad looks on the faces of the couple in the photo…

Comment by ugh
2007-12-30 14:25:18

Awww, poor ittle kids, in over their heads just to drive a McPoS. Crystal ball says…

FC for these two, and soon.

Fark em, with a JT.

Comment by tcm_guy
2007-12-30 18:24:31

Five vehicle purchases in three years?


And here I am puttering around town in a 2001 model sedan, purchased new, with 100% down.

Don’t plan on buying new anytime soon either. Just had tires, water pump, coolant, spark plugs, and timing belts replaced earlier this year.

I am your typical mild mannered, happy go lucky, millionaire next door type, and even I DO NOT PURCHASE FIVE NEW VEHICLES IN THREE YEARS.

These people must think they are BILLIONAIRES.

Got common sense?

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Comment by wmbz
2007-12-30 14:35:01

Not to worry soon they will offer a 30 year car loan. Why not, just think how many fools would sign up for it… A new car for $19.95 a month.

Comment by spike66
2007-12-30 14:45:20

“She recently tried to refinance her mortgage, she said, but was declined because her car payments were too high. “Not one dealer ever said this was a problem. Ever. I never had a dealership say no.”

Salesmen are in business to make the sale, not to manage your budget for you. Why am I still shocked by this…that people went ahead buying cars and houses, waiting for somebody, some salesperson to say no. We have a lot of indebted children currently living in middle-aged bodies. They seem to have decided that if deficits don’t matter, debt doesn’t matter either. Article says folks routinely take 100-125% of the car value as a loan. Who knew you could do that. I am so far removed from how folks live in this country, I might as well be a Martian.

Comment by Paul in Jax
2007-12-30 15:53:52

I’m like you spike - I was clueless about the whole “Buy this, and also get extra spending money when you do,” model of buying and selling that was going on.

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Comment by edgewaterjohn
2007-12-30 16:14:42

“I am so far removed from how folks live in this country, I might as well be a Martian.”

The absolute scariest thing is that there are living, breathing people who would quickly label anyone who feels that way…a slacker.

One’s success has now become a direct function of their willingness and ability to take on debt. Disgusting.

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Comment by Anon In DC
2007-12-30 21:54:33

Yep, I don’t get this whole identity
/ self image / self worth tied to image / life style /esthetics business. Are people that duped by advertising and marketing ? Guess so.

Comment by Blacque Jacques Shellacque
2007-12-31 02:12:44

One’s success has now become a direct function of their willingness and ability to take on debt.

I must be a total failure then, my credit liability consisting solely of a $105 balance on one stinkin’ credit card.

Oh, woe is me…

Comment by Ouro Verde
2007-12-30 14:49:12

That article is an eyeopener sm.

Comment by Sammy Schadenfreude
2007-12-30 14:49:27

LOL - those two were indeed portraits in stupidity. We can no doubt count on them to spawn at least five kids to put us further down the road to IDIOCRACY.

Comment by Desertdweller
2007-12-30 22:05:07

They probably go to a MEGA church that will definitely encourage Abundance and more kids. Oh, don’ tforget to vote for the candidate WE want you to..
Taxfree status for churches…well, the pol we vote for will ignore our churches ‘indescretions’.

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Comment by combotechie
2007-12-30 15:03:51

These two remind me of fools still paying for four dollar lattes bought six years ago.

Comment by Sammy Schadenfreude
2007-12-30 15:04:23

While we’re on the subject of stupid car buyers….

Comment by edgewaterjohn
2007-12-30 15:29:22

Stories like that only make me happier that on November 10 I finally realized my goal of going car-less. Walking, biking, buses, cabs, and zipcars (hourly rental cars) are all options in my case.

Now, I fully realize that not everyone can/wants to do this, but if there’s anyone out there thinking about it - try it - you won’t be sorry. Its a great feeling and the money saved is fantastic.

Although longtime goal of mine, HBB posters warning of massive stockpiles of unwanted used cars going forward, was one reason that prompted my finally taking action.

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Comment by Vermontergal
2007-12-30 15:57:25

We can’t go carless, but we now have the opportunity to go back down to one car. I’m still working on my husband - he wants and really likes the freedom of not having to juggle schedules and the car.

On the flip side, going to 1 car affects mostly me and I’d much rather buy him or me a subsidized bus pass. I’m going to run the numbers in the next few days to show him how much the 2nd car is costing him.

If he wants to keep it, I’ll definitely respect his decision. However, it would be nice to have the money - ironically, I’d love to have it to go more places. ;)

Comment by Justin
2007-12-30 16:39:33

I do it. It’s one of the best financial decisions I have ever made. I don’t think people realize how much cars cost.

But also, it’s not possible for everyone.

Comment by Big V
2007-12-30 16:44:03

Hey John:

My hubbie and I were out for a walk last night. We saw at Honda Civic with 62 k miles on it going for only $5 k. I thought it sounded like a pretty good deal, especially for San Jose. I think now is an excellent time to buy a used car.

Comment by Paul in Jax
2007-12-30 17:18:02

I drive a lot, but for me it’s the yearly fixed cost of insurance, registration, etc. more than the gas. I’ve gone from a Dodge Caravan, a Mercedes, and a BMW motorcycle in Va. to just the van in Fla., mainly because of tax/title costs on re-registration and insurance. (But I do have 5 bikes, none of them junk. :)

Comment by not a gator
2007-12-30 18:09:08

We’re a one-car household. I bike to work when we aren’t carpooling. The car is convenient, but I like getting around on human power. Keeps me from developing a “bus driver belly” too.

It’s a ‘99 Corolla, low maint. & lots of space for friends or cargo.

I’m with you Paul–I could own a (nice, used) car tomorrow but I don’t want to pay all the insurance and taxes!

Comment by Home_a_Loan
2007-12-30 22:20:36

not a gator, that is one of the many benefits of being a saver. If you buy inexpensive used cars that you can easily afford to replace, you can forgo the comp/collision coverage that so many people *have* to pay.

Not only can you do so, but it is typically the smart thing to do, as you become your own insurance company (GEICO, if you will) and pay yourself instead of someone else.

*Note* don’t skimp on liability, however. *That*’s something you shouldn’t self-insure since your losses are not limited to the value of the car.

Comment by NYCResident
2007-12-31 01:04:04

In the early 90s I ran the numbers on buying a modest weekend house, and the cost of a car, which I would have needed. Living in the city, where the crime was higher in those days, you also had to factor in the cost of keeping a car safe in a city garage. Between the cost of a car or lease payment, insurance, garage and tax payments, the car cost nearly as much annually as a modest house! This was partly due to the fact that houses were cheaper then, and there were/are many tax deductible components of home ownership. Not to mention that it was possible to offset the cost of home ownership with some rental income. Moreover, the house, after the 1990 downturn, could be fairly predictably viewed as an appreciating asset, whereas a car is strictly a depreciating asset. Needless to say, with 20/20 hindsight, a house would have been a wise investment at the time, but I couldn’t swing both a house and a car–or so I thought 15 years ago. Had I been a little wiser then, I could have looked at getting a beat up used car, with limited insurance, kept it in the house’s garage, and taken public transit to commute to and from the city. Oh well.

Comment by B. Durbin
2007-12-31 13:56:58

Make sure you know your state’s laws on mandatory insurance before you buy, though the reputable insurance groups will automatically screen for the type of insurance you need.

Comment by reuven
2007-12-30 17:01:45

This was too funny!

How can anyone be THAT dishonest and still be Christian!!??

All any Christian has to do is say “I’m really, really, sorry, Jesus” and everything’s OK! I’m glad my religion doesn’t work like that.

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Comment by Timmy Boy
2007-12-30 17:38:03

Don’t forget to say your 5 “Hail Mary’s” as pennance.

Now… go on & have a good day!!

Comment by Paul in Jax
2007-12-30 18:19:36

I’m, like, big deal - fix the radiator and live with the damn thing. What did you expect for $1850? So you leak a little oil, and how often do you need reverse anyway? You’re poor - that’s the way life is - quit bitching.

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Comment by MacAttack
2007-12-30 20:29:24

I see folks don’t play fair in Fairplay…Bringing God into it is typical for Colorado, though…

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Comment by Ozarkian from Saratoga, CA
2007-12-30 20:42:01

Hope it’s not too late to add to this car thread.

I kept my 1986 Volvo GL for 20 years. I moved across the country and felt it couldn’t go the distance (5th gear didn’t work anymore) so I had to sell it for $600. It had 180K miles. I still miss it :-(

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Comment by Desertdweller
2007-12-30 22:06:39

… love it…
“how can they be that dishonest and still be called a christian”…

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Comment by 45north
2007-12-30 22:41:14

Sammy: deer-oh-deer

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Comment by edgewaterjohn
2007-12-30 15:04:55

How can auto sales possibly hold up in the emerging environment? What’s that inventory situation like? Anyone have any updates/info?

Comment by Frank Giovinazzi
2007-12-30 15:34:08

I posted on another string that GM has 153 days of pickup inventory.

FYI, the average new vehicle transaction price is about $27,000. Either people will start buying all smaller cars or sticker is going to have to come down., ie., no heated seats for you.

Remember when cars came without air conditioning?

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Comment by edgewaterjohn
2007-12-30 17:54:17

153 days of pickups? Uh oh.

Grew up with Beetles - no a/c and barely any heat. Pops bought ‘em after the 1968 riots made riding the bus to work tricky - he worked nightshift and drove them through the nasty late 70s winters.

Comment by Paul in Jax
2007-12-30 18:24:55

Remember when cars came without air conditioning?

But, in fairness, they had 4 large rectangular windows and 2 separate vent windows to get air in. Vehicles are now designed based on the idea that outside airflow is not important. This is true of houses as well. So living without A/C would in fact be a much greater hardship today than in yesteryear.

Comment by NotInMontana
2007-12-30 20:20:10

My first little house didn’t have A/C, but it had a steep pitched roof. So hubby put in an attic exhaust fan, sucking air from the north end vent through to the other side. Worked great, cooled the house down enough by 10 pm that you could sleep ok. That’s all I ever needed.

Comment by B. Durbin
2007-12-31 14:02:19

I remember coming home from college, driving around in the summer, and thinking, “This isn’t so bad.” Then I realized that I was in a car with AC.

Incidentally, open windows don’t do much good when the temp is 100º+. Just sayin’.

Comment by Anon In DC
2007-12-30 21:59:11

My 1st car, a Datsun B210, maybe a 1972 ? Heat was an option.

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Comment by Desertdweller
2007-12-30 22:12:35



Comment by Timmy Boy
2007-12-30 22:35:51

Funny too… because a lot of the heat just comes right off the engine…. FREE!!

Can’t believe they would charge extra for that!!

Comment by Desertdweller
2007-12-30 22:11:28

Just found a guy, sells all refurb MBz and turns them into BIO fuel cars. So cool. 40 mpg and no emissions, cheap cheap cheap and they are 30 yr old mint cars that get cheap/great gas mileage and no pollution.

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Comment by Frank Giovinazzi
2007-12-31 08:12:49

I did an article on those crazy cats from Greasecar a while back; they told me a big customer slice comes from U.S. soldiers back from Iraq.

Article link.

Comment by oxide
2007-12-30 15:18:37

When Jennifer and Bobby Post traded in their 2001 Chevy Suburban last year for a shiny new Ford F-350 turbo diesel with an extended cab, it seemed like a great deal…they couldn’t pass up a monthly payment under $700. Now they’re having regrets….

“We have no options,” she said.

Apparently a Honda Civic was not an option?

Comment by Big V
2007-12-30 16:49:10

Monthly payments under WHAT???? I have never even dreamed of taking on a car payment of that size! When I graduated from college, my old car broke down, so I had to buy a new one with a loan. I thought it was hard to cover my payment of $350/mo at that time. Who are these people who can’t seem to add, yet manage to get themselves written about in the newspaper?

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Comment by B. Durbin
2007-12-31 14:04:45

My car NOW has a monthly under $350, and we bought it new. (And intend to run it into the ground, gently; the “new” was because the model style—crossover, six seats and 24 mpg— was only a year old and we wanted to make very sure it was cared for from the start.)

Comment by Rich
2007-12-30 18:28:33

Do you know what a monster of a truck a F350 is ? These people were on drugs buying it F’ em and now live in it before the repo man gets it.

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Comment by Paul in Jax
2007-12-30 18:32:15

Hmm, obviously the Honda Civic elsewhere is not as in FL. Here, it is a low-riding death machine driven by a heavily-tattooed 20ish thug, with a $2000 chrome spoked wheel upgrade de rigeur. I would absolutely refuse to ride in one of those, much less drive one. (But that ‘93 Subaru referenced above with its bad transmission, oil leak, and a bad radiator could work in a pinch.)

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Comment by NotInMontana
2007-12-30 15:35:46

Oh, but they got the thrill of sitting up in that big-a$$ed rig and looking down on everyone!

Thanks, I’ll keep the ‘96 Sube.

Comment by bubblebee
2007-12-30 17:08:57

I’ll keep the satisfaction of no car payment.

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Comment by jerry from richardson
2007-12-30 16:06:10

That’s nothing that a nightshift at the 7-11 won’t fix. Two years working a 2nd job at a gas station will pay off the entire loan. He could even mow lawns on the weekend and she can babysit or clean houses. It will teach them a lesson for being so incredibly stupid.

Comment by bill in Maryland
2007-12-30 16:15:20

If they are unlucky enough to have those big gas hogs in 2010, they will have the displeasure of paying $5.00 per gallon for gas. World Crude oil + natural Gas liquides peaked in production in 2006. It’s going downhill from here at a faster and faster rate. The public (or media?) will notice this in 2009 or 2010.

Comment by Big V
2007-12-30 16:37:19

That guy could probably pay for his truck if he would just cut his food consumption in half.

Comment by dl
2007-12-30 16:52:58

A similar story about debt that that I saw posted on NJREReport. A couple with a $1.3m house, accumulating about $2k in debt a month. If I was in a similar perdicament I wouldn’t be able to sleep at night. I don’t understand what people like this were thinking.

Comment by not a gator
2007-12-30 18:12:16


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Comment by MD_renter
2007-12-30 17:43:59

Wow, that’s bizarre. I drive my cars into the ground. My last one was worth maybe 500 by the time I gave in and bought car number 3. Yes, car number 3, and I’m 36 years old. Why would these people need a new car “every couple of years”!

Comment by Rich
2007-12-30 18:55:34

I’m a car guy, guess what I drive ? A 1976 GMC pick up and if it wasn’t for uncle Arnie here in CA I would not have to smog it (he signed a law and stopped the rolling 30 year cut off at 1975) I buy and restore muscle cars. One time I bought a 88 Ford Taurus for $100 bucks, I fixed the headgaskets and both my boys learned to drive on it then I sold it $700 bucks. If you go to a junkyard there is a sea of Trurus’s for parts. If I didn’t work on cars I’d be broke from paying other people to fix them.

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Comment by Houston Observer
2007-12-30 20:49:20

I’m 43 and I’m still on car #2, 1990 Nissan bought used for cash in 1995. Car #1 was also a Nissan, bought used in 1986. I haven’t had a monthly car note since 1988.

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Comment by Desertdweller
2007-12-30 22:17:18

All autos have been bought as used vehicles.
Still driving the 95 ToyCam. Leaks oil, but love this car.
No payments ever.
Dont’ believe in buying brandnew just for the immediate loss of value.

Comment by Desertdweller
2007-12-30 22:01:26


Not even CA residents. So, guess there won’t be any bashing.
Middle america… same all over the country. No one escaped this entire mess, people except this crowd, fell for all the hype and made stupid decisions. You can also thank the banking industry, credit card industry…remember when USURY laws protected citizens ( who weren’t either smart enough or had enough $) and the credit corps wouldn’t give out CC to the ones who didn’t qualify. Now the laws in ALL states allow CC companies/ loans etc to go out willynilly.
Thank the congress/ senate and Pres for that one these years.

We were smart enough, but our education system has been dumbed down since the 80s. And media MSM etc has done a real fine job of making us all think WE CAN BE SOMEBODY and live in a fancy house with fancy cars and OPrah with ALL her shoes etc.
on and on and on it goes.
Plenty of “blame” to go all around.

Comment by housing hanky panky
2007-12-30 13:59:26

“‘People think it’s not going to hit their neighborhood, not going to hit their price point,’ said Thornberg. ‘But the reality is that it is only going to get worse in 2008.’”

Not going to be a happy New Year in FB land :smile:

Comment by bkiddo
2007-12-30 14:04:37

They “spent their house”. Exactly. I learned this in first grade, playing Monopoly. Mortgage was always an ugly word to me. What has happened to common sense and ethics?

Comment by Professor Bear
2007-12-30 15:17:58

Thanks for your comment. I am going to get out our Monopoly game and start playing it regularly with my kids, so they can avoid the mistakes made by 2m+ FBs who got stucco with subprime loans they cannot afford.

Comment by bkiddo
2007-12-30 15:38:42

I also remember attending my grandparents’ mortage-burning party. That was the goal, to get rid of the mortgage.

Comment by Frank Giovinazzi
2007-12-30 15:49:46

The history of Monopoly will be interesting to HBBers. Started life as The Landlord’s Game, to demonstrate how landholders impoverished tenants.

There might be an opportunity for Ben to create an HBB game, to demonstrate the pitfalls of housing speculation.

Check the wiki entry, I also listened to an interview last year with Philip Orbanes, the author of the definitive Monopoly game book, pretty cool stuff.

Comment by Ouro Verde
2007-12-30 14:27:17

“We heard lots about the housing shortage during the boom and that had little to do with high-cost new houses and everything to do with low-rent apartments for immigrants.’”

That is news to me! I thought the yuppies and the greedies needed bigger homes. I thought they were running out of land. I did not know that the reason I can’t afford a home is because we need to house our “crews”.

Comment by dan
2007-12-30 14:28:34

“Watsonville farmworker Justino Mendoza Cortez was happy to be a homeowner”

I’d be happy too if I had a crappy job picking strawberries, six kids and a stay-at-home wife YET COULD STILL MANAGE TO LIVE IN A 700K HOME.

THANK YOU Mr. Illegal Alien for helping drive-up home prices in my country. NOW GO HOME!

Comment by oxide
2007-12-30 15:26:04

Logic dictates that
1. In order to get a mortgage, you need to prove income.
2. In order to prove income, you need to have a job.
3. In order to have a job, you have to be a legal resident.

By this reasoning, every single undocumented guest should be renting in the shadows.

Comment by Annata
2007-12-30 19:04:20

Logic would also seem to dictate:
1. A lender would verify income if they want to be paid back.
2. A lender would verify employment.
3. The employer would verify that their employee has the legal right to work in this country.

4. If (1) and (2) are neglected, the lender just loses the money and that’s the end of it.

Comment by Evil Capitalist
2007-12-30 21:56:01

That presumes real estate does not always go up. Since banks were convinced RE only went up then it did not matter if the borrower defaulted - by the time the FB’s property was in banks hands, the propery could have been sold for quite a bit more money than FB owned to the bank

Comment by Desertdweller
2007-12-30 22:20:30

It doesn’t say the farmer was “illegal” . the readers today are reading INTO that article. Maybe he was, maybe he is LEGAL?

Bottom line, just a sucker or FB.

Comment by john
2007-12-30 14:34:04
Comment by Big V
2007-12-30 17:10:09

That’s the HBB favorite. If I had any gumption, I’d have it framed and send it to Ben for X-mass.

Comment by mezcal
2007-12-30 14:37:41

“Redding real estate agent Chris Young is working with a developer who has a small subdivision in Redding that is ready to go, but the client will sit out 2008.”
“‘He doesn’t want to put up with the low-ball offers,’ Young said.”

I think Mr. Young’s client is onto something here.
I believe I’ll follow his lead and sit 2008 out.

I’m tired of putting up with the wish-it-was-2005 asking prices.

Comment by txchick57
2007-12-30 14:38:30

I can’t believe you all haven’t landed on the “doesn’t want to put with low ball offers” line. That’s a good one. If he sits out 2008, what does he think he’ll get in ‘09?

Comment by Neil
2007-12-30 14:47:25

If he sits out 2008, what does he think he’ll get in ‘09?

Market value. ;)

It won’t even be worth negotiating until sellers start to understand 2005 is far in the past.

Got popcorn?

Comment by mezcal
2007-12-30 14:47:27

I’m guessing he gets forclosed!

Comment by Annata
2007-12-30 19:05:42

Well, is he not selling in 2008, or is he not building in 2008? The article didn’t make it clear.

Comment by caerbannog
2007-12-30 15:05:38

And it ain’t just houses. The LA TImes is running an article about automobile FB’s, and how many of them have been rolling over old loans into new car purchases….

Here’s a link to the article (watch the url-wrap):

Here’s the headliner image caption:

MAXED OUT: Cindy Gerhardt of Clinton, Okla., shown with her husband, Steven, and their Ford Expedition, has rolled over so much debt on vehicle purchases — five in three years — that she now owes almost $43,000 on two trucks worth no more than $29,000 and, she says, perhaps as little as $22,000.

Comment by ochomepro
2007-12-30 19:05:42

If the homebuilders were smart, they would include a large tall station wagon (SUV) or small RV as a sales perc with every new home purchased. that way when their new home gets foreclosed on, at least they can sleep in the SUV or RV

Comment by Desertdweller
2007-12-30 22:25:01

Great idea, seeing as how that industry has slowed somewhat as well. A RV garage/pad with RV or bumpout trailer.

Comment by Professor Bear
2007-12-30 15:14:32

“Alan Gin, an economist at the University of San Diego, said housing in San Diego will hit bottom during the second half of 2008 and turn up slightly in 2009.”

“Christopher Thornberg, co-founder of Beacon Economics in Los Angeles, is more pessimistic. He believes home prices and sales in San Diego and California will decline through 2009 and will not show significant improvement until 2012.”

Who seems more credible — Thornberg or Alan (”My San Diego Index of Economic Indicators has gone down every month forever, but I still foresee no recession”) Gin?

And the Wells Fargo chart (”CHANGE IN SOUTHERN CALIFORNIA HOME PRICES”) which accompanies the article seems wildly optimistic to me. It shows historical successive annual price gains of 18%, 20%, 27%, 17%, 7%, -1%, followed by projected “gains” of -10% in 2008 and -1% in 2009. The historical degree of serial correlation on the upside does not at all match the projected lack of serial correlation on the downside. It is as though a ball thrown high into the air could somehow drop ever so slightly, only to get stuck on a permanently high plateau. This certainly seems against the laws of Newtonian physics, if not the laws of economics.

Besides that, if everyone knew that a 10 percent drop in prices was forthcoming for 2008, wouldn’t it be prudent to sit on the sidelines and save yourself a $60,000 capital loss in your first year of SoCal homeownership? I would not be at all surprised if (1) a larger-than-predicted price decline occurs in 2008, and (2) the drop in 2009 is lots larger than 1 percent. Of course, if the Fed is successful in its ongoing efforts to trash the dollar in 2008 and thereafter, real price declines could be largely masked by much smaller nominal price declines.

Comment by emcee
2007-12-30 15:47:24

I don’t know … I think a waterfall is coming. This wasn’t the typical ebb and flow of a housing cycle, this was a huge honkin’ bubble, every bit as overblown as the tech bubble that preceeded it. Waterfalls follow bubbles, as night follows day. I suspect we’re looking at an “unthinkable” fall in the bubble areas in 2008.

Comment by Anon In DC
2007-12-30 22:12:10

Think you are right. I’ve posted before on some of the drops I have seen here in the Wash DC area. Condos selling two years ago for $280K, now bank owned and sitting for months at asking price of $170K. They’re really worth about $100K - $120K. Saw on craigslist yesterday a banked owned house. Sold $540K in 2006. Asking $440K. This is in Vienna, VA. (Fairfax County) House is 1960s track house on 1/4 acre. Less than 1 mile from the metro.

Comment by Big V
2007-12-30 17:16:19

Hey Prof:

My latest thinking is that the Fed is only tanking the $$ as a way to stick it to China. I don’t think the $$’s decline relative to foreign currencies will do anything to raise wages and, since houses are valued relative to local incomes (not relative to foreign currencies), that decline should do nothing to interfere with house prices.

Comment by Desertdweller
2007-12-30 22:28:18

Hey PB and Big V, if, that is the case that the US is tanking the $$ to stick it to China..then how come airlines are all going to be getting more routes starting in 08 to China?
All airlines. At least 2 new routes each from all over the US.
Just wondering out loud.

Comment by josemanolo7
2007-12-31 00:38:56

because there is a lot of passengers!

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Comment by popla101
2007-12-30 15:22:53

When one of his loan payments jumped in May from $2,722 to $4,054 per month…
“Now he wonders … He said he can afford about $2,000 a month.”

so he wasn’t able to afford his mortgage even before the ARM reset…yet still somehow got the loan

Comment by bkiddo
2007-12-30 15:42:30

upside down condos on oahu

Comment by bkiddo
2007-12-30 15:43:58

lol click on my name for the link

Comment by Shannon
2007-12-30 19:45:31

cool link. Thanks!

Comment by Desertdweller
2007-12-30 22:31:30

Cool link.

Comment by reuven
2007-12-30 16:52:58

When one of his loan payments jumped in May from $2,722 to $4,054 per month, he didn’t realize he had an adjustable-rate mortgage. The house he bought almost three years ago for $695,000 was sold on the steps of the county building Thursday for $522,750.”

“Now he wonders when his family will have to move and where they will go. He said he can afford about $2,000 a month.”

Hmmmm…he was paying $2700/month but now, with his name in the paper, he says he can only afford $2000/month.

Methinks he has a lot of off-the-books income!

But still, I’m sure Hillary and Huckabee both want to shower him with tax-break gifts.

Comment by IUnknown
2007-12-30 19:19:39

I just really want to know how a farm worker with 6 kids and a wife can afford $2,000 a month. I mean, that is probably more than the reporter who wrote this story could afford.

Comment by slb
2007-12-30 23:48:52

Anybody else curious about the “one of his loan payments…?” How many does he have?

Comment by Jas Jain
2007-12-30 17:04:39

“With the help of the banks, Mr Carrigan says, people in Stockton ’spent their house.’”

You only live once and you can only spend your house once. What the hell, why not live to the hilt, I mean spend your house to the hilt. Everyone was playing by the rules as long as the rules lasted.


Comment by Groundhogday
2007-12-30 17:20:59

Interesting news from the Bay Area. My brother-in-law put his Fremont 3/2 on the market for $988k two weeks ago and today received an offer for just over asking. Apparently there are still some fools out there that didn’t get the memo.

From what I understand this is a highly desireable neighborhood with great schools. However, he was renting the house out for $2400/mo. These houses are very, VERY poorly built. Though relatively new, there were large cracks running through the ceiling and walls (plaster/painted over for the sale). And THREE other houses on that small street have burned down in the past 4 years due to faulty wiring.

The question at this point is: will the potential buyer obtain financing for the purchase? The bubble has a long way down in the Bay Area.

Comment by Big V
2007-12-30 20:33:41

If the potential buyer does not already have financing, I doubt he/she will get it. While there may still be lots of delusional “RE investors” out there, the delusional lenders are sobering up.

BTW, Fremont is a crappy area with schools that have less murder in them than most. Also, your brother will get sued for plastering over those cracks. You might as well tell him that he’s better off fixing them.

Comment by Groundhogday
2007-12-30 20:51:45

When I worked in Palo Alto back in the 90’s, many of my co-workers who couldn’t afford the Peninsula bought in Fremont. Affordable housing for guys making $40-50k/year. Now a 3/2 Fremont tract home goes for $1million?! This is completely nuts!!!!

Comment by Blacque Jacques Shellacque
2007-12-31 02:55:19

BTW, Fremont is a crappy area with schools that have less murder in them than most.

The area pointed to by the link is in the Mission San Jose area, not far from Ohlone College - not a bad place to be if one is in Fremont.

Comment by Groundhogday
2007-12-31 11:13:48

My sister says that the Mission San Jose High School is one of the best high schools in the state of California. Apparently, that is the big draw.

Still, for $1 million, you could easily afford to send your kid to a top private school.

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Comment by vozworth
2007-12-30 17:23:37

tea leaves, teas leaves….Ive been following the Soveriegn Bank story, sold 25% to Santander as of late, insiders bailed pre-August credit crunch of a small fraction of the stock. This Bank is one of the top banks accessing credit through the Federal Home Loan Bank System, turns out… Relational Investors has a substantial stake in the bank, largest shareholder of record…. The front for a half a billion of CALPERS pension dough, anyway its been a great investment through the boom.

Recently CAPLERs made an announcement that they were “going long” in the Real Estate Area….what does this mean?

Well, IF CAPLERS who has close ties to SOV has a growing portfolio of upside down residential real estate mortgages on the books at SOV (along with other assorted Commercial Real Estate Paper that is not performing) its in the interest to shut down the CRE, slow the foreclosure process on the RRE, punish the CRE market, then later buy the now distressed CRE at firesale prices….essentially forcing Washington to deal with the krill in the residential market, while they wait in the wings salivating over the fresh kill coming up in Commercial Real Estate….

watch it happen…
SOV traded down to a low of 10 bucks, bounced to 12, headed back to 10…

Why am I talking about this, Banks are about to start going under FDIC control. Access to information, as well, as Information filtering is about to commence..

I am not a moonbat or a nutjob. I am just trying to make sense of the meltdown, and why people would do or say things that dont seem to make sense.

Comment by edgewaterjohn
2007-12-30 18:03:28

“Banks are about to start going under FDIC control.”

Does that mean produce pickers, hairdressers, and scented candle stick makers won’t be able to get 125% LTV loans anymore? One would certainly hope so - credit isn’t nearly tight enough yet.

Comment by housing hanky panky
Comment by Big V
2007-12-30 20:28:01

Strange they don’t have San Francisco on there. Looks like Bay Area, CA takes the cake, though.

2007-12-30 18:10:50

Interesting that the article says that the family can afford $2000 per month - proper planning and realistic expectations in this market will allow them to still find suitable housing. The last 10 years has given rise to a phenomenon of extremely laxed lending criteria that skewed buyer expectations. While some are calling it the end of a great housing boom, I would respond by saying that it is a return to realistic expectations and rationale decisions in the housing market.

Comment by Big V
2007-12-30 20:25:00

While there are probably plenty of 2-bedroom condos out there for $2k/mo ($325k on a 30-year fixed @ 6.5% interest), I don’t see how he can house 6 kids and 2 adults on 2k/mo in Santa Cruz.

Comment by montana jim
2007-12-30 20:19:04

“‘A real recovery in the housing market is probably at least a year off,’ said Robert Kleinhenz, deputy chief economist for the California Association of Realtors. ‘The murkiest part of my crystal ball has to do with the liquidity crunch.’”

That’s because the Fed’s future course of action is shrouded in financial misdealings…

Comment by Home_a_Loan
2007-12-30 21:46:21

I’ll tell ya, here in Costa Mesa (Orange County CA) there are some bleeping bleeped up sorry mother bleepers. There’s some serious bleeping foreclosures coming down the pipe. The bleepers with their 18 bleeping cars parked outside a bleeping 1952 bleepbox are getting bleeping hammered. The bleeping sales have bleeping stopped and prices are in a bleep-damn mother-bleeping freefall!

Comment by Joel_CA
2007-12-30 22:30:16

I have been thinking, with the dollar tanking, and the cost of oil skyrocketing, the only relief that a household can see is lower housing costs. Gas, food, healthcare, etc are all going to continue going up. Housing the the only thing that can go down and should decline

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