There Was This Unspoken Assumption In California
The North County Times reports from California. “Rising mortgage obligations drove up personal bankruptcy filings dramatically in 2007, according to the San Diego branch of U.S. Bankruptcy Court and North County attorneys. Growing numbers of debtors will probably collapse under mortgage obligations in the next year, the bankruptcy institute said in releasing the report Thursday. North County attorneys said mortgages had been the overwhelming factor in their growing caseloads.”
“Solana Beach bankruptcy attorney Albert Gross said he had fielded a call just Friday morning from a woman whose income as a mortgage broker had fallen over the last couple of years, leaving her unable to make payments on her own condominium.”
“She moved in with her parents and found someone to live in the condo, but the rent was still $700 short of her own mortgage payment, Gross said.”
“One divorced mother owes $441,000 on her home in San Marcos, which is now valued at $430,000, according to her Chapter 7 filing on Aug. 10. She also owes $16,000 on her Scion car and $31,000 to credit-card companies.”
“One Escondido resident owes $580,000 on his house, which his Chapter 7 filing valued at $500,000 last month. He also owes $34,000 on the new Lexus he bought last January, and $30,000 on a 2006 Chevrolet Silverado that’s now worth about $10,000.”
“Many borrowers bought homes between 2004 and 2006 using adjustable-rate loans, and have seen payments increase beyond their ability to pay, San Marcos attorney Mary Cavanagh said.”
“‘There was this unspoken assumption of ‘Well, the bank wouldn’t lend me money if I couldn’t pay it back,’ Cavanagh said. ‘The number of inquiries I’ve had regarding bankruptcies has absolutely skyrocketed.’”
The Orange County Register. “Realtor/economist Gary Watts plays Eyeball ‘08, our two-week long, holiday cornucopia of opinion of how 2008 will play out for local real estate.”
“Eyeball: What’s your outlook for the O.C. housing market? Gary: My forecast for 2007 appears to have been too rosy! Everything was in place…but the buyers remained on the sidelines. I was surprised by the financial crisis…2008 could be a surprising year.”
“Eyeball: Chances we’ll see a bottom in 2008? Gary: The first question I ask my Realtor audience is: ‘how many of you have qualified buyers waiting to buy?’ Almost everyone’s hand shoots up immediately. This is called pent-up demand. As soon as the ‘fence-sitting’ buyers begin to believe the bottom is near, they will once again enter the housing market.”
“Eyeball: What events might change your outlook, pro or con? Gary: I don’t see a recession in 2008 but should the economy begin to slow down more rapidly than expected or mortgage interest rates begin to rise, that could put a damper on our housing market.”
“Troubles in the real estate market are weighing on the economic outlook for Orange County in 2008. Irvine real estate consultant Walter Hahn noted that loans due to reset will rise this year, pushing more homeowners to the brink of foreclosure.”
“‘There’s going to be more of that (this) year,’ Hahn said. ‘Then it takes eight to nine months for home resets to hit the market as foreclosures sale properties. … It’s going to drag on another two to three years.’”
“The mortgage mess in Orange County this year will continue to influence the residential rental market in several ways, says Kevin Andrade, senior managing director of Trammell Crow Residential in Costa Mesa.”
“Would-be home buyers who now can’t get mortgages will put pressure on the rental market as they look to rent instead. Meanwhile, owners of houses and condos who have gotten into financial trouble may choose to rent out their property, adding to the supply.”
“Most folks see the Federal Reserve cutting its benchmark federal funds rates further this year. But a handful of experts have mixed views about whether fixed mortgage rates will drop alongside any future Fed cuts.”
“Lou Pacific, a mortgage broker in Mission Viejo, said other factors will overwhelm any Fed cuts, including weak demand for housing and a continued risk aversion by investors in securities backed by mortgages. Investors are shying away from riskier mortgages amid rising loan delinquencies.”
“Pacific said conforming rates could hit 8 percent by February. And he sees 30-year fixed rates on jumbo loans hitting 8.75 to 9 percent by February. ‘I keep telling people 8 percent is not a bad rate,’ Pacific said. ‘People were spoiled by rates of 3 to 5 percent.’”
“Jack Kyser, chief economist with the Los Angeles County Economic Development Corp, said it’s likely O.C. will see 600 foreclosures a month, as it did in the ’90s, up from 300 to 500 in the second half of 2007.”
“‘We have to see what kind of support package, or packages, comes out of the government,’ Kyser said. ‘Most people are very unimpressed with the packages so far.’”
“To be sure, Orange County’s housing stock has increased by about 90,000 for-sale units since 1992, so the same number of foreclosures should be less of a drag on neighborhoods. However, November’s total of 1,536 homes sold was the lowest in DataQuick’s 20-year database.”
“With such slow sales, foreclosures could have a substantial impact on home prices as they collect on lender’s books as real estate owned, or REO, some experts say.”
LA Downtown News. “This year, Downtown should discover whether the housing market is still booming, or if the bubble has burst.”
“Related Cos. $3 billion Grand Avenue project has been talked about for years, and work actually started late in 2007. A formal groundbreaking is expected by March, though no date has been set.”
“With thousands of residential units under construction, the current buyer’s market will only become more pronounced in 2008. The key is how developers respond. Already, some have offered flashy incentives to potential homeowners (purchase a unit, get a car), or have turned away from sales altogether, going rental while they wait for the market to solidify.”
“In 2007, Historic Core residents and developers cheered the approval of permits for several proposed bars and restaurants. Others warned against opening such establishments near Skid Row, home to thousands of addicts.”
The Press Enterprise. “More Canadians who long have wintered in the golf communities of the Coachella Valley are buying real estate there as second homes and investments.”
“‘Our ship has come in,’ said Linda Dunlop of British Columbia. Dunlop and her husband, David Dombowsky, sold investment property in Canada and in November paid cash for a house on a golf course in Palm Desert’s Sun City. They needed $530,000 in Canadian dollars to meet the $540,000 price in American dollars.”
“It helped that the price on the house they wanted dropped about $40,000. ‘The coincidence of events motivated us to move more quickly,’ Dombowsky said.”
“Meanwhile, the California Desert Association of Realtors reports that the median price of resale homes in the Coachella Valley in November was $317,210, a 14 percent decline from a year ago.”
“Real estate agents say quite a few Canadians are holding off purchases in hope that desert home prices will fall further in the spring, when some economists predict another wave of foreclosures.”
“‘Most of the people I talk to are still looking,’ said Dennis Timmermeister, a real estate agent from Vancouver who has been shopping the desert with the hope of finding good deals for himself and some Canadian clients.”
“Many Canadians mistakenly believe that abundant foreclosed properties are for sale and have been discounted 50 cents on the dollar, Timmermeister said. The bargains are usually far less dramatic and not always where he would want to buy, he said. Timmermeister said he hopes desert real estate prices will dip further next spring.”
“Wealthy Canadians have long bought expensive desert homes, said Billy D. Lewis, an agent in Indian Wells. What is new, he said, is that middle-income Canadians, flush with equity from a skyrocketing Canadian housing market, are buying houses in the desert.”
“Lewis said they are looking for homes priced from $250,000 to $500,000 that they can live in a few months each year and then rent to other visitors.”
“Jim Anderson, a retired oil production engineer from British Columbia, moved quickly to take advantage of what could be a narrow window of opportunity. Anderson and his wife, Doreen, used proceeds from the sale of some Canadian properties to pay $377,000 cash in November for a furnished three-bedroom condo on leased Indian land in Cathedral City.”
“‘You can’t find a house in Canada on a golf course for anywhere close to the same price,’ said Anderson.”
“Anderson, who was preparing to head south from his home in Okanagan, a region halfway between Calgary and Vancouver, said that when he and his wife bought their desert home, they made certain it faced south so it is warmed by the first rays of the morning sun.”
“Anderson said they don’t plan to rent out the condo but expect lots of family members to use it. ‘If we make money on it sometime in the future, so much the better,’ he added.”
Livin’ la vida loan loco, Tijuana-adjacent style…
“One Escondido resident owes $580,000 on his house, which his Chapter 7 filing valued at $500,000 last month. He also owes $34,000 on the new Lexus he bought last January, and $30,000 on a 2006 Chevrolet Silverado that’s now worth about $10,000.”
Somebody has champagne taste and beer pocketbook.
More like a Night Train (40 ouncer) pocketbook!
does anyone who what’s up with the wall street bonuses this year? i haven’t heard much, not like last year.
Charlie Gasparino is reporting on CNBC that many traders in fixed-income at Merrill will be facing a choice of bonus or retaining job, i.e., bonus=severance pay.
The fixed is in.
dude, hope you write jingles,lyrics or sumffin for a living
I’m gainfully unemployed…
just a serial schadenworder, for the joy of it
You wouldn’t be a carpenter, by chance Al?
I’d take the bonus. I was offered a one time pension enhancement with immediate retirement or staying and taking my chances with continued employment a few years ago. I took the new pension and left but many eligible for it didn’t. A couple of months later around 1000 people were fired. So much for corporate promises.
Wall St drove the market for 2007 and received their bonus althou not as big as in the last few years. They new 2008 would tank and good by bonus. Seems this is working out as planned. 2008 will crash but the boys on Wall St have already made it! Only the poor investors don’t know they have been had.
Could be wrong, and have no source to back it up, but I seem to recall that bonuses totaled $58 billion (B as in Big) this year. Have I dis-remembered?
‘You can’t find a house in Canada on a golf course for anywhere close to the same price,’ said Anderson.’ ‘Anderson…said that when he and his wife bought their desert home, they made certain it faced south so it is warmed by the first rays of the morning sun. Anderson said they don’t plan to rent out the condo but expect lots of family members to use it. ‘If we make money on it sometime in the future, so much the better,’ he added.’
Lets see, takes cash from bubble market and then compares asking price to that market -check.
Unconcerned about negative cash flow, but admits to speculating-check.
And best of all, completely naive outsider buying the “sunny” properties- check!
I bet he fell for the one about the ones near the windmills being likely to appreciate the most. Good grief, he could have put that cash in a CD and vacationed like a king…
Yeah Ben that’s pretty funny. But you forgot the “blind and in denial, selling lies” realtor:
“What is new, he said, is that middle-income Canadians, flush with equity from a skyrocketing Canadian housing market, are buying houses in the desert.”
The Canadiens are going to save the Coachella Valley. LOL. That place was flipper/spec central 2-3 yrs ago and now will revert back to the norm - mid 90s pricing when you get a nice, 3 bedroom on the golf course condo in a nice country club for $180 - $220k. We paid $175k for our condo there in 1985 and sold 10 yrs later for $190k and struggled to do that.
There are very few well-paying jobs in the desert unless you are manufacturing meth. Also, as usual, HBs overbuilt and DID NOT learn their lesson from yrs past. Oh and there is plenty of unused desert land everywhere out there. 50% haircut for the Coachella Valley-book it.
What does one tell a couple who is dead set on buying a house in, well, anywhere, esp the IE? in the very near future.
We told them the downside and plz plz wait at least one yr..
they are not having it. They gots to have the ‘precious’.
Hey,
Milt Jones of Palm Springs Life would take offense, the P.S. is not the I.E.
I am from the I.E. and I know the I.E. and the P.S. is not the I.E.
Bear in the House
The fact that this guy is specifically buying a south-facing condo *in the effing desert* tells me he doesn’t know what he’s doing.
Catching the first rays of the morning sun may be appealing in B.C., but it gets old really fast when it’s 110+F every day in the Coachella Valley.
What a switch. I hear about how rich Californian’s are going to save Montana’s market. Now rich Canadians are going to save California’s market. The would I know is totaly upside down.
#@%#* world not would
The Canadian’s can have the valley! 90% of the valley is trailer trash.
The housing bubble has done the same thing to the Gallitan Vallley. It’s filled the valley with trailer trash without a single new trailer park.
I have no idea where you are in the IE but I would have to disagree. And compared to most of the rest of the IE most of the Valley is Bel Air.
Gallitan Valley is in Montana. Bozeman, Montana to be specific. North of Big Sky, home of the Yellowstone Club….and Ted Turner’s Flying D ranch.
When one of my sister’s bought a house in San Diego a year and a half ago, despite her living 500 miles away…
I asked her this question:
Have you never heard of motels and hotels?
hey they’re too expensive! lol
Sure, but that’s just throwing money away! LOL.
Canadian daredevils! Bravo!
Seriously, my foolish countryfolk are in for the occular penetration of their lives buying in a declining US market.
This idjit bought on native land? doesn’t that mean he only leases the land? Enlighten me.
that’s all I’m gonna do for the next few years…vacation.
My cash generates a pretty nice stream of disposable income that I readily will give to airlines, hotels, and room service. Who the hell would buy a vacation home in these times???
“‘Our ship has come in,’ said Linda Dunlop of British Columbia. Dunlop and her husband, David Dombowsky, sold investment property in Canada and in November paid cash for a house on a golf course in Palm Desert’s Sun City. They needed $530,000 in Canadian dollars to meet the $540,000 price in American dollars.”
They’ll live in it a few months a year and then rent it out! Great idea! Big demand to live in 115 deg. heat - no supply either! They might get clear as much as $10K in rent per annum! and I’m sure they’ll get a fine, very fine quality renter! These Canadians have it figured, all right!
(I can’t help but compare the sentiment “our ship has come in” to the philosophy of Hernando Cortez, who ordered his ships sunk in Veracruz after the trip over from Cuba in 1519 before marching off to conquer Mexico.)
Paul - that is exactly my question. What are these buyers going to do with the places? Clearly they did not check with a rental agent before buying, to determine how easy it is to rent for how many (and what) months and at what price. Just as clearly, the couple you mentioned will not be using the place in the summer months, but will most likely be using it during the peak rental season.
Sometimes this idiocy keeps me up at night. I just can’t imagine what life in this country will be like when all this finally comes home to roost. Sort of feels like we of Ben’s Brigade will be able to buy houses for fair prices, but it won’t be much fun because all the neighbors will be in a multi-year (at least) funk.
Yeah, chip, it keeps me up at night too.
The Husband and I were talking earlier, and opined that a lot of people would simply die of stupidity, if, by any chance, someone were to drop an EMP on Los Angeles.
OK, we have some strange conversations…
…started in part by watching a woman with not 1 but 2 trollies of groceries in our local jam-packed Trader Joes, just stand there like she’d lost the use of her hands, while the poor checkout girl packed it all up for her.
Thereby making our line the s l o w e s t in the store (I have a knack for chosing the slowest line. Its a gift, what can I say…)
She even had the temerity to tap her foot as it was being done, ‘cos the slave-labour wasn’t doing it fast enough.
And this, with 15 people behind her and no room to swing a cat.
Actually, please, someone, drop an EMP on L.A.
Maybe it will subdue my urge to kill eedjits like her.
Wonder if she was in Real Estate…
I dropped off out dried out and wilting Xmas tree at an elementary school disposal site today. Pulled up, jumped out and headed for the back of the van to open it and remove the tree. The people running the place were already there, pulling out the tree. One of them said to me ‘thanks for getting out’. Most people pulled up to this volunteer site and sat in their cars waiting for the VOLUNTEERS to unload their trees. Amazing.
It reminded me of a situation lots of years ago in southern Indiana. My brother lived there and I was visiting (passing through). Tornado hit (pretty impressive) and after everything had settled down he and I were outside trying to clear fallen limbs from the big oak tress lining the street. We were directing traffic away, because the road was blocked. Some lady pulled up, we told her you couldn’t get through, but she knew better. An hour later out she came. We laughed our asses off. But what really struck me was the number of people who stood and WATCHED as we moved branches, cut limbs, and tried to clear the road. They were all expecting to be helped, but weren’t willing to pitch in and help. I mean, I didn’t even live there but was working for the common good. I thought at the time that in a real emergency they were DOOMED. What is it with this expectation that others will do it all?
I can explain it with two words — Service Economy. Everybody thinks everybody else is here to service them.
The Canadian Snowbirds are not immue to financial stupidity either.
During the Floridia Condo/House Bust (aka RECESSION), of the 1980’s my uncle who was a winter renter, bought a very nice 3 bdrw/ lovely pool from a once properous Canadian bigtime farmer who suddenly found himself and his businesses flouldering in the Financial Dire Straits.
They played poker at the same Counrty Club and the guest RENTER had the plenty of ready CASH when nobody else did and damned near stole this guys Florida home
I had to laugh at the whole desert section because I live out here. Several huge developments are just fences around bare desert, particularly out in the University area. They built lots of businesses out there that won’t make it if the thousands of houses won’t be built. There’s rentals all over town available when there’s never been any at this time of year. I was in one of the Casinos last Sat night and it was unheard of empty - there were folks there, but not like usual on a Sat night where people stand over you waiting for a slot machine. There seem to be oodles of houses at the high end for sale in the $1 to $3 million range - more overbuilt high end luxury homes. The Sun City houses that had started in the mid $200Ks and went up to the low $400 K are back down to nearly the old prices. There may be a few Canadian knife catchers buying but I would guess they are maybe 1% of sale out here anyway. I’m sure Desert Dweller can add or has below.
Anyone who thinks that the first rays of the sun come from the south is geographically or astronomically challenged, so it’s not surprising that they’re financially dopey as well.
Actually, in Canadian summer (as well as northern US states), the first rays come from the north east. And I don’t mean just a bit north of east, the sunrise will come shooting in north-side windows at 4AM.
Does anyone else feel like we are watching the summer blockbuster movie, ala Independence Day, Armageddon, The Day After Tomorrow? Only pretty sure this one doesn’t have a happy ending with a hero rolling in to save the day.
Just bought two more ounces of gold, expensive stuff, but, it feels nice in your hand.
‘Does anyone else feel like…’
I don’t know how everyone else feels, but I know how I feel. If teh actual stability or sentiment about the stability of US dollar and assets denominated in it get awfully shaky, I do not think buying a house will be a priority for much of anyone. Pair up house prices plummeting with sentiment about the economy and jobs going down the drain and you may have a bottom forming for real estate at that point. The overdrive mechanism for investing is buy stuff when fire-sales happen. I am thinking that we will overcome a recession but it will suck along the way.
“Just bought two more ounces of gold, expensive stuff, but, it feels nice in your hand.”
An old friend passed away last summer; he was a pistol collector. He bought most of them new, and a few rare ones used, and just stashed them away. Fast forward: his wife has been selling the collection slowly, and they’re bringing in a handsome return thanks to fine record keeping; a better return than casual investing, and they always had intrinsic value.
I put some moeny down on a couple of accurized target pistols for competition a couple of months ago. They won’t be delivered until about Thanksgiving this year. I used to shoot competitively in the 80’s and want to do so again. There is also the home defense angle. I have never lost money on guns. The good ones hold their value quite nicely and at least keep up with inflation. They are also very portable…..:-) My father was a dealer/gunsmith so I have learned a bit about the business. I have 23 oz of gold,and 30 pounds of silver. I wonder how soon a lot of dealers of high end items (like guns) will take that instead of a check? Isabel.
Gold is too high right now, what guns would you recommend to buy a couple of in the $700 to $1200 price range? Looking for something usable, but good future value if well kept. Thanks.
Do ya really have that gold in your hands? Just wondering
Pent-up-fence-sitting, is my forecast.
“Eyeball: Chances we’ll see a bottom in 2008? Gary: The first question I ask my Realtor audience is: ‘how many of you have qualified buyers waiting to buy?’ Almost everyone’s hand shoots up immediately. This is called pent-up demand. As soon as the ‘fence-sitting’ buyers begin to believe the bottom is near, they will once again enter the housing market.”
Lol
Now, how many fence sitters won’t qualify by late 2008 but will after price declines in 2010?
Note: I include myself in that group and I’m happy about going through ‘the process.’ For I know where I ‘rack and stack’ among potential buyers.
What I’ve found among most fence sitters is they want to wait a year. In a year, if news is still bad, they’ll wait another year; J6P just cannot ‘delay gratification’ any longer. By 2009, they’ll be too scared to by until ~2011. Bwaaa haaa ha! oops…
The more educated are not fence sitters. They’re with me spectating. Want some popcorn? We know its a long ride. Some, like myself, had to get past the “I can buy soon” stage. Others in the bearish community were there quicker. It doesn’t matter… just wait and read about how the greedy who were going to ‘get rich’ of you buying their property are getting foreclosed upon. Or… like I posted below, moving in with mom and dad and subsidizing your rent.
Got popcorn?
Neil
My fence-sitting update: After my posts a couple of days ago expressing a desire to buy later this year but keeping in mind the wise advice of many on this site, I’m expecting to rent for at least another year. I’m keeping my eye on places right now that are listing for about $700K and hoping comparable places will list for about $600K this time next year, at which time I will start low-balling at about $450. We’ll see! In the mean time, I can’t argue with renting my sister’s guest house in Escondido for $750. Only bummer is she’ll probably send me packing around June at which time I will have to rent some cracker box somewhere for twice the price. Still beats the heck out of prices falling $4-5K a month.
Why will she send you packing? If you like the place, can you offer her a better rent and still save over moving? Or is it the intangible stuff, like she feels she needs to feed you because your family?
Well, I think she actually wants to use her guest house to have “guests” over! What a concept. She doesn’t really need the money, but I have definitely thought of offering her a lot more (this place would be a bargain at twice the price), and I could take a 2-3 day vacation when she actually wanted to have guests over. I hope I can stay here!
Cash talks. Whenever I’ve needed an extra parking space, I just posted an offer for cash each month and got plenty of takers.
Maybe for the amount you pay her, she can pay for a motel for the guests (or you) when she has them visit.
Didn’t the REIC rob the pool of many future buyers who rushed the gates and got tackled by security?
PS to aladinsane: just got the Bowie Platinum three CD set. I don’t think his music has gone out of style even after what, 30 years.
That’s a sweet trio, and he’s pretty timeless, and so revolutionary for his time…
yeah, ask your “Realtor audience”, Gary….they’re expert financial genuises!
“this is called pent-up demand”….
more like just a bunch of realtors raising their hands, silently praying that somebody, anybody, for godssake, BUY SOMETHING!
“when buyers begin to believe”….
what you mean is, as soon as you can spin enough bullshit at someone, you may get a buyer to “believe”. Cause the only way you keep your gig and all those hand raisers keep theirs, is to get buyers to “believe”
This gem was hidden in the comments of that article:
OK, the next question you might ask your realtor audience:
“How many of you sold houses in the past couple of years to people who won’t be able to make the payments?”
This is pent-up supply.
“This is pent-up supply.”
Great point. Or counterpoint.
Next question,
How much greater is the pent up supply than the pent up demand?
I’m figuring about 4X. Seriously. This hasn’t begun. Inventory is going up everywhere early this year! Normally it hits a bottom around the 8th of January, stays flat, and then hits the yearly bottom in early February and then begins the growth. But we’re off the bottom already. I cannot look everywhere, but the growth seems to be everywhere!
Note: I’m being lazy and using ziprealty. By all appearances the wheels have come off the market.
Got popcorn?
Neil
Neil…
The wheels are on, but the eCONomy is riding on rims.
Just like an el lay car chase ending…
Are we going to see a crash with the car totaled, but the spinners still shiny and spinning?
This has me highly amused. Partially as “dorags” have become very popular at work with the technicians. Why? Its a quick fun way to customize a hard hat! (Not quite the ‘gang banger’ way of wearing them…)
Like an LA car chase, it will take forever, seem like its going in slow motion, but have an inevitable end.
Got popcorn?
Neil
Does our friend Gary ask his REALTOR friends whether they know of anyone that pulled their home off the market “until things pick up”?
That is pent up supply! And I’m betting there is a LOT more pent up supply out there than pent up demand.
That’s a great point. I know a realtor who is advising all of his sellers to rent out their houses for a year or two and then put ‘em on the market. Yeah, that’ll do it! Let them decay in value another 20%. Thank you! Really.
“Solana Beach bankruptcy attorney Albert Gross said he had fielded a call just Friday morning from a woman whose income as a mortgage broker had fallen over the last couple of years, leaving her unable to make payments on her own condominium.”
“She moved in with her parents and found someone to live in the condo, but the rent was still $700 short of her own mortgage payment, Gross said.”
First… what a sob story. A mortgage broker unable to pay her mortgage. I wonder how many people she put into the same situation.
2nd… Notice that ‘She moved in with her parents.’ Why… that’s reducing demand for housing! If that trend keeps up, demand for used homes will continue to drop. snicker… Oh well, at least her penance is to subsidize a fellow renter.
Oh… this hasn’t even begun.
and what is this doing in the link: The new law, which followed an eight-year campaign by banks, retailers and credit card companies, mandates an income test to measure a debtor’s ability to repay obligations.
ANY bank/lender could have forced that at any time. They chose not too and are trying to play victim too. Grrr….
Got popcorn?
Neil
I’d like to know when that new law takes effect. Maybe I should ask a real bank. I have a loan pending, will lend $50K this week to a woman about whose income I know absolutely nothing. What I do know is, I’m getting a first deed of trust on a property for which she is paying $120K. (And that pretty much matches the “comps”) However, if I’m violating the law by not checking her income, I suppose she could weasel out of the obligation somehow. Guess I’d better check…what a GD hassle.
Lets say you max out home equity lines, buy new cars with no money down, max all credit cards out for cash, take out other loans with banks, and then simply walk away, or move to another country…What happens to these people? Are there any real consequences? What are they?
You win “saavy investor” of the year
I watched Larry King’s interview with Suze Orman. She was pretty frank about it. If the creditor has a judgment, he can go after your house if you have one; he can go after your wage and garnish them. But if you don’t have a job and don’t have a house, well there’s very little they can do.
I think in most jurisdictions, the statute of limitations for enforcing a judgment is 20 years. A long time, but you *can* outlive it.
They won’t be able to garnish the wages of people who have fled back to Colombia, Mexico, Cayman Islands, etc.
Technically, they can. They need to take their American judgment to those places, and ask the local courts to enforce the judgment. Whether they will do it depends on how often the US courts enforce their judgments.
I don’t know anything about how enforcing judgements, in the U.S. or any other country for that matter, but judging by what a great job we do of enforcing immigration laws, I’d say the chances of collecting on a deadbeat living in a foreign country are close to none.
Banks are swamped just foreclosing on people and reselling the houses. They aren’t (yet) chasing after fraud or unsecured loans because they have cut staff in order to goose profits.
JC Renter
I work in Mexico. Believe me, unless you are talking about millions of dollars there is no recourse and even then the legal fees are enough to stop anyone.
I have been able to avoid preference payments on accounts receivable from US courts day in a day out in Mexico.
Oh please! Mother of Christ.
Try it, try it once in any of the above-mentioned with your American sensibilities about how court systems works.
Just try it; do it; go on; I’ll give you my personal fortune if you know how to do it. (I’ve lived in most of those + India.)
You haven’t a clue, grasshopper!
Last month I posted link to Washington Post about real estate fraud in Northern VA, which is currently under FBI investigation. In short: there was a group of immigrants who worked as appraiser, mortgage broker, and realtor; that sold and resold houses for inflated prices. Most of the clients were immigrants, who bought and resold homes with higher value and many cases they did not make any payments. Eventually, many participants fled the country and returned to their native country in ME.
Eyeball = ocular penetration
“More Canadians who long have wintered in the golf communities of the Coachella Valley are buying real estate there as second homes and investments.”
It’s been my experience with countries, that when you start placing all of your hopes upon foreigners bailing you out of your problems, your problems tend to be unsurmountable…
I am reminded of Kenya, one of the “rich” countries of Africa, which lives on tourism. Oops, when the riots begin, the tourists stay away. The riots began last Saturday, and we were scheduled to leave Nairobi on Saturday night. We were not at all threatened, just inconvenienced by the closure of certain restaurants and certain tourist attractions. However, one of my NYC friends emailed me today saying that if our trip had been scheduled to start Jan 10 instead of December 20, we would now be cancelling it. Probably right.
Dunlop and her husband, David Dombowsky, sold investment property in Canada and in November paid cash for a house on a golf course in Palm Desert’s Sun City.
This is why so many RE punters lose money. These people hit the jackpot selling at the top of the Canadian market (right now), but couldn’t resist sinking the proceeds into a US property that has a long way to fall yet.
They just can’t quit while they’re ahead.
EH?
Listen, I’m in Toronto and i know a couple guys who have gone to FLA to tire kick condo’s, but as far as bailing out the bubble, forget it! not enough interest or $ in all of Canada to even, remotely, modestly, finitely; bail out a bubble that large!!! Sure some guys will do some cherry pickin, but it’ll be a fraction of the whole. And, it’ll only occur in a a couple of prime areas….
Besides this whole Canadian thing is a non-starter anyway, cause we have our own bubble here in Toronto, Calgary, Vancouver, hell everywhere, that is gonna blow shortly, so this theme won’t last long anyway…
“Anderson, who was preparing to head south from his home in Okanagan, a region halfway between Calgary and Vancouver, said that when he and his wife bought their desert home, they made certain it faced south so it is warmed by the first rays of the morning sun.”
Brilliant! Where I live the sun comes up in the east.
I was thinking the same thing - idiot. And southern exposure means sun beating in during the heat of the day - lots more expense to cool.
Oops, I hadn’t read this far when I posted the same thing at the bottom of one of the dialogues up above. Nota bene, in boreal winter the sun comes up somewhere south of east. But not in the south.
“Eyeball: Chances we’ll see a bottom in 2008? Gary: The first question I ask my Realtor audience is: ‘how many of you have qualified buyers waiting to buy?’ Almost everyone’s hand shoots up immediately. This is called pent-up demand….
“Eyeball: Any chance there will be any Realtwhores left after 2008? Gary: The first question I ask my Realtwhore audience is: ‘how many of you are upside down in your own mortgages and facing bankruptcy already?’ Almost everyone’s hand shoots up immediately. This is called an economic depression looming.
Alex I’ll take “What happens when a liar asks a room full of other liars a question” for $500.
“Eyeball: Chances we’ll see a bottom in 2008? Gary: The first question I ask my Realtor audience is: ‘how many of you have qualified buyers waiting to buy?’ Almost everyone’s hand shoots up immediately. This is called pent-up demand….
He forgot to elaborate: It should read:
“The first question I ask my Realtor audience is: ‘how many of you have qualified buyers waiting to buy at 50% below peak prices?’
Now that’s more like reality.
“how many of you have qualified buyers waiting to buy”…What BS…. PROVE IT realtors! Show me the money!
“With such slow sales, foreclosures could have a substantial impact on home prices as they collect on lender’s books as real estate owned, or REO, some experts say.”
When will the lenders open up those books and show us the naughty numbers?
Which lenders are still in business?
“Real” lenders (as opposed to loan originators, securitizers, etc etc) are still in business. But there are so few of us.
…don’t remember ever seeing a link to the mogambo guru here…but he is a riot, imho…
http://www.dailyreckoning.com/Writers/Mogambo/DREssays/MG010408.html
“Many Canadians mistakenly believe that abundant foreclosed properties are for sale and have been discounted 50 cents on the dollar”
Well, if they wait another 6 months, they will be.
Wait a year and those Florida condos might be discounted 70%.
Ghad… are there enough people to buy them all?
Got popcorn?
Neil
“Eyeball: What events might change your outlook, pro or con? Gary: I don’t see a recession in 2008 but should the economy begin to slow down more rapidly than expected or mortgage interest rates begin to rise, that could put a damper on our housing market.”
Gary the weatherman:
So, we can expect onshore flows of cash, but if those Santa Ana winds kick in, you can expect some burn-rate possible, on house values.
In the mail today was a flier from Chase which told me that we were pre-qualified for $417,000 30 year fixed at 6%. Everything we own, river home, ranch, commercial and residential free and clear. We have a $252k LOC at our local bank for emergency use.
Why did we get this offer? Comments please.
You’re a deadbeat. Chase isn’t making anything from you.
Now do your patriotic duty and get in debt to your eyeballs.
Ask not what you can do for your mortgage, ask what your mortgage can do for you?
the same reason im getting zero interest offers from Wells Fargo, Capital One, many assorted other credit machinations that need people to spend money….
I have not used a card for a purchase in 4 months… the desperation is intense.
I will refinance the mortgage when rates are signifiacntly lower than they are now, guess what I will never refinance, the notes are paid in full in seven years….aaahhhhh sweet relief.
ill finally be a grown man, at 42.
a paid for home with access to water.
a great garden..
a small orchard…
grown children.
a reason to help people.
no convictions…
Why did you get this offer? Because CITI can create the money out of think air and then take this loan and put it up as collateral to the Federal Reserve and borrow more at lower rates.
“Eyeball: Chances we’ll see a bottom in 2008? Gary: The first question I ask my Realtor audience is: ‘how many of you have qualified buyers waiting to buy?’ Almost everyone’s hand shoots up immediately. This is called pent-up demand.
As I fully warned EVERYONE last week that the next person to use the phrase “pent up demand” was headed for a choke hold. Well, Mr. Gary Watts (who we all know and love) is the lucky winner of ONE DEADLY CHOKE HOLD!!!!!
I was a military police officer for 2 years and I learned my techniques from active duty USMC types and retired special forces guys. Mr. Watts, I am on my way to the OC first thing tomorrow.
Please get your affairs in order……..
Dude, that’s uncool beating up on a retard. Besides, you’ll get drool all over you.
That would be excessive.
But swing by the Antelope Valley and pick up a Joshua Tree.
‘I keep telling people 8 percent is not a bad rate,’ Pacific said. ‘People were spoiled by rates of 3 to 5 percent.’”
8% isn’t a bad rate, but at these prices, how many buyers can afford the mortgage??
When I bought in ‘96, fixed rates were around 8% and adjustables were around 7%, but prices were a fraction of what they are now.
My rates started out at 10% in 1993. In the interval I have done a few at 8.5%. My latest two loans are at 9% and 10% respectively. This is subprime no doc, but low LTV. I have just called the Merrill 800 number to see if any of my borrowers is in default. Oops, a few of the payments that were due on January 1 have not been paid yet. BFD. I am still wondering if I am going to get into trouble. Only if prices fall quickly. Most of my loans mature before 2020, which also means that the amortization between now and 2012 is fairly rapid. I keep trying to argue myself into the idea that there will not be a problem. 2007 was perfect.
I love the DTLA News’ political correctness…the attempt to balance the “needs” of homeless addicts vs. everyone else in Downtown LA. Their “needs” are drugs, booze, and a sidewalk to beg & harrass, sleep, and go to the bathroom on. And there are THOUSANDS of them; other people in the country would simply not believe scenes of squalor there. How long will people pay $500K and up to live in, essentially, the slums of Calcutta? Sounds hyperbolic but trust me, no.
I was watching Suzi Ormon (I think that’s her name but I’ve seen it spelled Susi Ormond) as I was half listening to Larry King the other night. One thing she said suddenly caught my interest. She told a caller who expressed interest in buying a home now that prices had dropped, that they should continue to wait but at some point when prices have dropped even more, if they decide buying a house would then be a safe bet because they will live in it (as opposed to renting it out) she said, “If the seller want $200,000 then offer them $100,000.”
She gives a lot of good advice which I never bother to follow for various reasons (#1 Being my age and #2 I pretty much know how to handle my money) but when I do listen to her she is savvy.
The shocker for me was, here is a 100% pro-property owning guru but she obviously thinks we have a looooong way to go before the bottom. That’s interesting because her mantra is, “Buying a house is your best investment for the future.” Actually, I think it USED to be but not anymore. In the todays world where both Federal and State and local government is continually on the look out for “cash cows” they can milk, the best policy is to hide as much (liquid cash or assets) as you can away from their sticky fingers.
However, if one took her advice, even if a buyer offered $100,000 for a property listed at $200,000 and eventually settled on a price of (say) $150,000 - that’s a very nasty drop. Obviously, Suzi Ormond thinks property prices are STILL grossly over-priced.
I saw that too. I love her show. She gave a lot of plain, commom sense advices. E.g. don’t buy shit you can’t afford; pay off your credit card; save for retirement. But it’s amazing how many people has never even thought about these.
I think the spelling is Suze Ormond….?
I really like the “Can You Afford It?” section, where she rips a new one (nicely, mind) to a bunch of FB’s, who ring in to ask if they can afford to buy whatever gew-gaw they’re obsessed with at the moment.
Best one of last night was a 40-something guy, itching to buy a life-sized replica of Robbie the Robot (WTF?) for the stupendous sum of $24,500.
As he had a 10/10/80, and only $50k in savings, she pretty much read him the Riot Act.
Because, of course, being financially savvy he was going to make a downpayment and finance the rest of it….
….sigh.
Please see above for my comments on EMPs and people being too stupid to live, in general.
Not you lot, you’re all peachy keen.
But god save us from the mouth-breathers….
(PS: what on earth would you want with a life-size model of Robbie the Robot, other than the obvious, smutty, NSFW, children-cover-your-eyes reason?)
The entire show is scripted. The callers are shills.
I kinda believe that.
But it’s funny, I would have loved a life sized Robbie Robot too. When I was 7…
I would of been more impressed with Susie had she given her sage advice prior to the turn-down in real estate .In fact, I think I remember her advising people to invest in real estate prior to the real estate bust taking place . At least she is telling it like it is now .
She was one of the biggest bubble blowers out there. I remember watching her in action when I knew the bubble was out of control. She was telling everyone to invest in real estate if they could afford it. She should have said it’s out of control and be careful. Someone needs to call her on it.
> In the todays world where both Federal and State and local government is continually on the look out for “cash cows” they can milk, the best policy is to hide as much (liquid cash or assets) as you can away from their sticky fingers.
I’m just waiting for someone in Congress announcing the need for a “one time” surcharge on 401K accounts. Of course it will only be for accounts over a certain size - tax the rich you know.
Going after 401k’s won’t be hitting the rich it will be hitting the middle and uppermiddle class. The elites have between 0 and .0001% of their money in 401k’s.
It’s just like cutting taxes on dividends which benefits the top 0.1% far more than others and letting Alternative minimum tax march through the middle class.
Anyone who works for a living will get hit.
I remember her telling Casey Serin that he was incredibly bright or something. That is a tough bell to unring.
Suze Orman seems to be her preferred spelling if anyone cares.
Panic of ‘08…
(homeowners will be doing most of the panicking)
inside sellers are the weakest hands..
it aint just real estate….junk you think might be cool.
voz is hoping for a really good tiller to get the garden up quicker, I hate the shovel and pick, but they are some of my closest friends.
“Growing numbers of debtors will probably collapse under mortgage obligations in the next year, the bankruptcy institute said in releasing the report Thursday. North County attorneys said mortgages had been the overwhelming factor in their growing caseloads.”
I venture a guess that most of the sub-prime crowd already did the BK thing in the recent past. Thus, these new BK filers have to be the feared Alt-A and Prime borrowers. These two cohorts will “break the bank” as they are backbone of the consumer economy. When they eventually go under it’s game over. It’s not the toys; it’s the 3/2/2 ranch home, transportation, health-care and the college degree that’re breaking them. When those elements go by the boards — so goes their middle-class status. The incumbents will be next!
There might be an upside. At long last, they might realize that they are NOT rich and they’re not going to be. The glorious invisible hand of the laissez-faire free market flipped them the bird.
They might start to recognize the immense power which has extracted all of the GDP growth and income growth and funneled it to a tiny, already very wealthy minority.
That no, they were NOT benefitting, and that was just propagandistic BS.
At some point more realistic economics and politics might follow. But I’m worried they’ll start to blame liberals and immigrants for this too, and maybe even that old standby, dem dirty Jooz.
“2008 could be a surprising year”
Given Gary’s track record, it will be a surprising year to HIM. Will he be surprised at the “pent-up demand” for unemployment, bankruptcy attorneys, etc.?
http://lansner.freedomblogging.com/2008/01/04/realtor-watts-eyes-pent-up-housing-demand/#comments
“One Escondido resident owes $580,000 on his house, which his Chapter 7 filing valued at $500,000 last month. He also owes $34,000 on the new Lexus he bought last January, and $30,000 on a 2006 Chevrolet Silverado that’s now worth about $10,000.”
I know this is going to sound just awful, but everytime I read that passage, I don’t just snicker, or chuckle, I laugh my a** off.
I’m going to hell.
A lot of us will be joining you!
“He also owes $34,000 on the new Lexus he bought last January, and $30,000 on a 2006 Chevrolet Silverado that’s now worth about $10,000.”
I imagine the shares of General Motors Acceptance Corporation (GMAC) are way over-priced since their collateral (their automobiles) rarely last as long as their loans, and the trade-in values are among the worst in the industry.
–
‘Well, the bank wouldn’t lend me money if I couldn’t pay it back…’
I have said it before and I will say it again: The Burden is, or should be, always on the lender because it is lender’s concern, or responsibility, that the loan is paid back.
Borrowers could be desperate, or greedy if they are speculating, but lender must not be.
Jas
I agree with you on this one Jas . Buyers do not really know what they qualify for and it’s up to the underwriters/appraisers to protect the assets of the investment deposits of this Nation . Forget about commissioned salespeople being trustworthy for most part .
Also ,the way they designed these modern day mortgage loans was a joke . To qualify people on teaser rates that could go up as much as they do in a short time is a joke .That isn’t qualifying people for mortgages ,but rather it’s just contriving a way to lend to unqualified people .
As I see it ,many borrowers relied on the sales pitch that they could refinance into a better loan once the real estate went up ,but the commissioned sales people in the business should not of promised that sort of option or sold loans on that premise . Also, many borrowers committed fraud on the loan applications ,but it’s the lenders job to screen for that .It’s so stupid to give low down ,no doc.,teaser rate loans to anyone ,as the lending community did . I say ,”How dare the lenders make loans like that ‘,and how dare borrowers commit fraud in order to profit from real estate .
Meanwhile, the investment banker guiding the money flow into the open ARMs of subprime borrowers assumed “at worst I could get fired and handed a $100m+ golden parachute.”
From Gary Watts…
Why the Housing Bubble is Bogus!
Thanks!!!
–
Let me play the Eyeball’08…
““Eyeball: What’s your outlook for the O.C. housing market?”
Opposite of whatever is Gary Watts’ outlook.
Eyeball: Thanks for a concise answer.
Jas
OT…TLC is running a program called “Please Buy My House”. It’s showcasing people who have not been able to sell their houses. The first family has 2 mortgages. The one they are trying to sell was originally listed at $875k, and reduced it to $749k….it’s been 2 years. Yikes! So they are telling their sob story ( complete with having to pay 2, $5k mortgages).
I believe this has been shown before so if anyone didn’t see it the last time, tune in.
BayQT~
Escondido wasn’t such a bad town 40 years ago. Lots of room, mostly agriculture. Its a sh^thole now.
Not true. Sure, there are dodgy areas, but by and large a very nice area IMO.
So, you know how lots of these new subdivisions are built in iffy areas? Like, in Ca, how they are built on Central Valley floodplains? Apparently they have floodplains in Nevada.
“The flooded homes were mostly in newer subdivisions of the century-old agricultural town that has grown in recent decades to about 20,000 people, many whom commute to Reno.”
(It’s been raining here this weekend…)
I guess it is better to be underwater on your loan than (literally) underwater in your house?
this market is just getting crazier and crazier.
Check this out: http://www.flixya.com/photo/173755/housing_market_RIP
“Pacific said conforming rates could hit 8 percent by February. And he sees 30-year fixed rates on jumbo loans hitting 8.75 to 9 percent by February. ‘I keep telling people 8 percent is not a bad rate,’ Pacific said. ‘People were spoiled by rates of 3 to 5 percent.’”
Get real. 3 percent more interest paid on a $500,000 home loan is another $15,000 a year — nothing to sneeze at for most cash-strapped Californians who until very recently enjoyed a third income paid out of the home equity ATM machine.
As a buyer, I’m not afraid of high rates, I welcome them. Thin out the buyer pool. Prices HAVE to come down in reaction, unless present loans are made assumable or whatever.
Much better to buy in a high rate environment and catch a re-fi in the next downcycle.