Foreclosure Is The Freight Train In California
The San Francisco Chronicle reports from California. “During the recent boom, new housing got an even bigger price bump than existing ones because people often wanted the best, and, with a Icarian faith in the market’s eternal flight, buyers were willing to pay more and more to get the best. Now, with the downturn in the market, developers have scrambled to respond. The result? Some experts say that the price of a new house is now cheaper than an equivalent existing house.”
“‘I think that’s true,’ says Joseph Perkins, president and chief executive officer of the Home Builders Association of Northern California. ‘New housing is a better deal for prospective home buyers because builders are responsive to the marketplace, whereas some sellers still haven’t responded to the marketplace and they’re trying to sell their homes for prices from two years ago. But home builders need to move inventory and get on to the next project.’”
“Cheryl O’Connor, VP of Warmington Homes, which has built 300 homes in the Bay Area and Sacramento, agrees. ‘In the Bay Area, historically, new homes were priced above resale (existing homes) — but in the past couple of years, new home builders have had to be more aggressive.’”
“The result, she says, is that the price of new homes is about 10 percent less than that of existing homes with the same square footage. ‘I’ve been in the business 30 years, and I’ve never seen that before.’”
The Sacramento Bee. “Statistics released today by the Gregory Group show builders closed 2007 with just 1,320 fourth-quarter sales in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties. It was the lowest quarterly tally since the Gregory Group began counting sales in the fourth quarter of 1999. Sales for the full year were the lowest in a decade.”
“Average sales prices also fell 10 percent during 2007, adding to anxiety about a new year in which credit remains tight and recession is considered possible. The region’s fourth-quarter average sales price was $426,710. It was $474,482 the same time last year.”
“Builders reported 4,495 sales the first half of 2007. But sales fell to 2,913 in the second as tighter credit blocked many buyers, while others with good credit took deals from banks shedding newly foreclosed properties.”
“More simply waited, fearing a new home might lose value the minute they received the keys.”
“‘The thought of actually saving up a down payment, qualifying for a 30-year fixed loan I can actually afford and then buying a house that loses value is one of the scariest visions I can drum up,’ said Chad Stellmacher, a Sacramento renter.”
The Modesto Bee. “Thousands of Central Valley families are losing homes to foreclosure because: a) They lied about their incomes to secure unrealistic loans. b) Unethical loan officers took advantage of families by signing them up for risky loans they could not afford. c) Their adjustable rate mortgages are resetting, resulting in much higher mortgage bills.”
“But all of those factors might be overcome if not for plummeting property values, the experts said. ‘Foreclosure is the freight train that runs over the homeowner,’ said Jeff Schrager of the No Homeowner Left Behind nonprofit organization based in Fresno. ‘I submit that we have a local disaster here. People are losing their homes on a daily basis.’”
“Event organizers had no idea that the foreclosure crisis would become a significant theme when they began planning Thursday’s housing symposium a couple of years ago. Back then, the real estate market still was riding a wave of record property value increases. Groans rose from Thursday’s audience of several hundred when presenters spoke of stated-income loans, called by some ‘liar loans.’”
“‘Which side of the table was lying?’ asked John Olson of the Federal Reserve Bank of San Francisco, rhetorically. ‘Maybe both were. Some people inflated their incomes. Some borrowers were defrauded, with brokers writing in the incomes they wanted.’”
“Foreclosure sales throughout California reached an all-time high this week with a tenfold increase in properties sold at public auction, compared to a year ago.”
“Many economists in recent months have predicted a deepening disaster because of the 1.8 million subprime mortgages expected to reset in coming months. But Olson said the blame is shifting. ‘We’re finding that it’s not resets, but it has much more to do with declining home prices that prevent people from refinancing or selling,’ he said.”
The Daily Press. “Nearly 50 percent of the High Desert homes sold in December were owned by banks, according to new figures released Thursday.”
“‘The realty of it is that we have so many bank-owned properties, that’s what is selling because they are the least expensive,’ said Larry Trombley of Century 21 Rose Realty, who compiled the data.”
“There are many more homes than buyers, said broker Caroll Yule. Banks are now adjusting their prices in accordance with this reality.”
“‘What we’ll see in the next few months of continued adjustment is the sellers that have a strong desire to sell their homes are going to continue to price aggressively, and those will be the homes that sell,’ Yule said.”
“The median home price has been dropping by about 4 percent monthly, she said. December home prices dropped about 7 percent from November, and about 27 percent from December 2006, according to the data.”
The Record Bee. “A wave of home foreclosures has rippled across the U.S., and Lake County is not untouched. In the third quarter last year, notices of default for home owners in Lake County numbered 129, up 20 over the previous quarter.”
“That number is 92.5 percent higher than the same time last year, in which there were 67 notices, according to DataQuick.”
“According to real estate agents and industry experts, the current quandary is the result of appealing ‘teaser’ rates that led to a sharp increase in lending in 2004 and 2005. The rates reset much higher in 2006 and 2007.”
“‘The sub-prime rates, those are the key ones,’ said Middletown real estate agent Cynthia Smith. ‘People didn’t read the little writing that said in three to five years, instead of paying $2,000 per month, it’s going to be $5,000.’”
“Suddenly, buyers who would not have qualified for mortgages at the reset rates found themselves with a home they are unable to pay for or to sell, Smith said.”
“‘These are record foreclosures. If someone’s house was worth $500,000, and now it’s only worth $395,000, people aren’t going to be able to pay the $500,000 the banks are owed. The banks are putting the price on the court house steps, they’re not selling, and that means the banks are getting them back,’ Smith said.”
“While the situation is the worst she’s seen in her 10 year real estate career, Smith thinks it will pick up soon. ‘It’s one of those up and down things, we just have to ride the roller coaster.’”
The Union Tribune. “According to a DataQuick…66 ZIP code areas surveyed in the county, based on a three-month rolling average of median single-family resale home prices, have dropped from their peaks, which occurred at different times over the last four years.”
“The steepest drop has been in South County, which is down 22.3 percent. Central San Diego has fallen the least, down 6.6 percent.”
“(In) DataQuick’s worst-performing neighborhood, San Diego’s 92103 ZIP code that includes Hillcrest, Mission Hills, Bankers Hill, Park West and Middletown…prices peaked at $961,583 last February. By November, prices were down 41 percent to $567,500.”
“Area real estate agents said this is not evidence that values have collapsed in this storied collection of walkable neighborhoods but that buyers had changed their expectations. People who couldn’t afford a $1 million home simply found something more modest at a lower price.”
“In Spring Valley (ZIP code 91977), another factor may have been at work to explain its 28.2 percent price drop off the peak to $352,700.”
“Robynne Hanus of Keller Williams said a raft of investors scooped up dozens of properties during the boom, and many are now are facing defaults and foreclosures. There are nearly 300 bank-owned properties on the market, according to RealtyTrac.”
“‘There are lots of non-owner-occupied properties down there,’ Hanus said, ‘and investors are going, ‘Oh, man, I can’t get tenants for this property based on the amount I owe on the mortgage.’”
“Hanus is representing one Riverside County investor who bought a 1,580-square-foot home on San Miguel Avenue for $534,000 in late 2006 and, facing default, is hoping to arrange a short-sale at $350,000.”
“Lori Staehling, incoming president of the San Diego Association of Realtors, said the current market is filled with buyers sitting on the fence. ‘So much is driven by people’s thinking,’ she said. ‘Everybody wants to buy at the bottom of the market. But you never know what the bottom is until you’ve gone past it.’”
‘Central Pacific Financial Corp. Friday said the fourth quarter will reflect a ‘higher level’ of loan charge-offs and ‘negative’ credit migration because of continued deterioration in the housing and residential construction market in California. The company expects fourth-quarter net charge-offs of about $8.5 million to $9 million.’
In the Santa Fe news paper this week they reported, city prices down 7% in 2007, up 24% in the county. I guess the City Different is different in the County. Beautiful country! — Like Flag!
I tried to post the URL, no luck. google santafean newpaper
Santa Fe newspaper article about real estate prices here.
Mozillo gets $83 million per Bloomberg.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aRCKVghIutms&refer=home
“Mozilo is entitled to three times his annual salary and three times his average bonus over the past two years in the event of a takeover, the lender’s December 2006 regulatory filings show. His severance will probably amount to about $36 million, even without a bonus last year, said Foley. The rest would come from restricted shares, deferred compensation and a lump-sum pension payment.”
And, he’ll be able to afford a much bigger house in California in a year or two. I wonder if in the end California will vie with Florida for the meltdown capital of the housing bust.
Mozillo is the poster boy de juer for irrational exuberance. In today’s climate the flashy hare, not the steady tortoise, wins.
And you can bet that more than a few political candidates are preparing to make major hay about this.
And a campaign issue is born…
Tack onto that the next paragraph in that article:
“The boards of both companies are well within their right to question these arrangements,” because the “circumstances are flat-out egregious,” said Frank Glassner, CEO and founder of San Francisco-based Compensation Design Group. It is like “paying the captain of the Titanic buckets of money for sinking the ship.”
This is the kind of thing I was alluding to in my post the other day regarding Mozilo. He’s already built his storm cellar. Granted, his contract was signed a long time ago, but his compensation in case of a takeover is absolutely ridiculous. He knew something was on the horizon and positioned himself to come out on top (HIS top)…selling more than a million dollars worth of stock.
This guy stinks.
There is quite an interesting post in the Fortune article below from a former 1st VP at Countrywide. It’s an eye-opener. Definitely worth reading.
http://dailybriefing.blogs.fortune.cnn.com/2008/01/11/as-usual-mozilo-makes-out-at-countrywide/
BayQT~
Frankly, if BofA doesn’t want to pay him per contract, then they should decline to take the company over. As far is CFC is concerned, that’s their fault for making the agreement to begin with. Could they not have foreseen a circumstance where the company would be taken over because they were cheap, and not because they were good?
So in the event of a takeover, his “no CEO gets left behind” clause kicks in.
Nice.
Interesting use of the word “entitled”.
–
I have a simple word for Mozilo – crook. He is marrying a bigger CROOK in Ken Lewis of BoA.
Jas
‘Foreclosure is the freight train that runs over the homeowner,’ said Jeff Schrager of the NO HOMEOWNER LEFT BEHIND nonprofit organization based in Fresno.
Hahahaha!!! Whoever said here this morning “No FB Left Behind” sure got it right.
after the JT carnage it will be “no FB behind left”
“Lori Staehling, incoming president of the San Diego Association of Realtors, said the current market is filled with buyers sitting on the fence.”
This oft-repeated line from across the country has always had the same feeling as ‘It’s different here’. My guess is like New Hampshire Obama voters these fence sitters will fade like the mirage they always were, leaving people like Lori shocked, just shocked.
Yesterday in Santa Monica I watched a real estate agent removing a sign from a property on 5th Street just south of Montana Ave (a nice neighborhood.) I asked her if she sold the property and she snapped at me “No! The seller is going to rent it out and re-list it when the market picks up.” I said “Wow, she’s going to list it again in 10 years?” The agent was so angry she said “Buyers are just on the fence right now, it will pick back up this summer.”
So I said “Why didn’t you just drop the price?” This question was ignored-she slammed the door of her Mercedes and drove off like Cruella DeVille.
A little OT, but I’ve heard some here talk of picking-up used luxury cars and the like, as people like this realtwhore will be forced to try and liquidate… I dunno, I’m not sure I want a car that hasn’t seen a oil change in two years and reeks like a alley mattress because the agent had been sleeping in it for the last six months…
Rofl Next time, get it on tape pleeeease. It would completely make my day >; )
Great story…hilarious.
Wonder if it was former HBB’er lainvestor girl?
“Wonder if it was former HBB’er lainvestor girl?”
She did disappear, didn’t she? I wonder why?
She invested in property……
You know, I was wondering where she’s been lately too. LA is finally cracking. I figured she’s be doing the happy dance.
lol!
I wonder if she realized that this is now another SELLER on the fence…
I wonder whose butt will pop first.
Bingo! All that pent up supply!
LOL!
Lots of condos and townhouses for sale on 5th between Wilshire and Montana. Still, at $1.5 mil on average, they’ll take a while to sell.
Still, being generous to the REALTOR ™, maybe she’s as disgusted with the sellers refusal to lower thier price as you are, hence the hissy fit.
(Then again, this is SM, the Kingdom of Delusional.
Stupid buyers are getting in the way of her 6%…she’s got a lease on a Mercedes that’s not going to pay itself, you know)
Oh, and HUGE kudos for telling it like it is!
LOL…you have no idea how funny I find that story…
Icould: nice work!
“(In) DataQuick’s worst-performing neighborhood, San Diego’s 92103 ZIP code that includes Hillcrest, Mission Hills, Bankers Hill, Park West and Middletown…prices peaked at $961,583 last February. By November, prices were down 41 percent to $567,500.”
“Area real estate agents said this is not evidence that values have collapsed in this storied collection of walkable neighborhoods but that buyers had changed their expectations. People who couldn’t afford a $1 million home simply found something more modest at a lower price.”
WTF??? Somebody passed Doublespeak 101 with flying colors.
This one caught me too. Classic case of hear no evil, see no evil and speak no evil.
And just WTF is a “walkable neighborhood”??
BTW, in Venice do they have swimmable neighborhoods?
“And just WTF is a “walkable neighborhood”??”
Hillcrest is indeed “walkable”. You have a mix of housing and mostly service related businesses that are very pedestrian friendly. Many people can and do walk to some places here some of the time. It’s not the typical suburban area with wide streets, massive parking lots, and wide separation between homes and businesses.
The housing bust arrived just in time to prevent the addition of high rises that would have added too much density to an otherwise very livable moderate density area.
“(In) DataQuick’s worst-performing neighborhood, San Diego’s 92103 ZIP code that includes Hillcrest, Mission Hills, Bankers Hill, Park West and Middletown…prices peaked at $961,583 last February. By November, prices were down 41 percent to $567,500.”
So much for the big lie that only marginal neighborhoods will have big price declines. If areas around you are going down, you will be dragged down too.
Is that “the big lie”? There are so many these days it’s hard to keep track.
Correction…”a” big lie. I agree, it’s hard to keep track of the growing list.
If the $1 million homes aren’t selling, then doesn’t logic dictate that their prices must come down?
The bottom callers who thought they saw a light at the end of the tunnel were sadly confused.
“Foreclosure Is The Freight Train In California”
You ain’t whistlin’ Dixie! I was watching my local market wondering if the crazies calling the bottom were right because homes were disappearing off MLS searches. Then I checked the major auction houses and found them all. The best part is that they have opening bids about 50% below last years for comparable properties. My faith is restored.
I wonder if the Feb. Hudson auction in the BA is worth bothering with.
If/when you have info on that Feb auction in the BA , please list results.
Thanks.
I won’t be attending but are two sites:
http://www.hudsonandmarshall.com/calendar.asp
and
http://www.ushomeauction.com/index.php
Notice the southern CA auctions as well >; )
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The Freight Train going down hill with failed brakes. And someone shot the engineer!
Jas
Like you said, the train is going down the hill with failed brakes. It doesn’t matter if the engineer is shot or not.
Ahh…the people jumping to buy homes at 5% off bubble prices. They got creamed. And now they won’t be buying for a long time. So eliminate them from the demand equation for many years. Maybe permanently.
“The steepest drop has been in South County, which is down 22.3 percent. Central San Diego has fallen the least, down 6.6 percent.”
And they all fell by 6.6 percent or more.
For reference, the current median SFR list price for SD county on ziprealty.com is $499,900, and 6.6 percent of that is $32,993, a nice chunk of change — roughly 1/2 the median SD county hh’s annual income.
At 22.3 percent off $499,900, we are talking about $111,478 — roughly 2 times the median SD county hh’s annual income.
Order-of-magnitude estimation for SD county’s bust:
- Assume average drop of (22.3+6.6)/2
- Assume 1 m homes (for 3 m residents), with an average value of $500K
Rough estimate of order-of-magnitude of SD housing market’s aggregate “write down” =
1,000,000*500,000*(22.3+6.6)/200 = $72.25 bn
(I hope someone can find a calculation error here.)
Much rougher order of magnitude estimate for aggregate CA writedown:
Use ratio of no. of CA citizens to no. of SD citizens = 36m/3m to get:
12*72.25 = $867 bn
Sorry if this is way off the mark — I know it is different here in SD.
There are additional losses to consider for all those other RE assets out there that have fallen. We could probably have paid off the national debt with the money that was HELOC’d.
Although I don’t see a “calculation” error, I wonder if the number of homes in “South County” is roughly the same as the number in “central SD” - you have assumed this, and I guess you know whereof you calculate.
Also, you seem to have assumed that the average is the same as the median, which it can’t be, since some houses are certainly over $1M and none are below zero. But maybe the high-priced ones are holding up better (wink wink burp gurgle)
“…you have assumed this, and I guess you know whereof you calculate.”
My assumption is actually much cruder than that. I am just assuming the average loss for all SD homeowners is (22.3+6.6)/2 = 14.5 percent, which will probably be accurate at least one day during the course of the correction back to affordability. Given that Case-Shiller/S&P already has picked up an 11 percent drop for the quality-adjusted decline in San Diego home prices, this calculation seems on the right order of magnitude. I am not pretending to be precise here — just that I am getting the decimal point in the right place.
Regarding the median = mean assumption, I actually am not assuming this, but rather that the percentage change in mean market value = percentage change in median sale price (which could be the case even if median and mean differ, which they generally do since the data is right-skewed). Since sellers whose homes fell most in value are less likely to find a buyer at their 2005 wishing price, it follows that the median of homes which actually sold is likely to fall more slowly than the average. Hence assuming the decline in the average price equals the decline in the median price may in fact be conservative.
Not to want to sound gloomy or anything, but we have already gone over the reasons the median sales price is a lagging indicator of declining market values, right?
‘Everybody wants to buy at the bottom of the market. But you never know what the bottom is until you’ve gone past it.’
Definitely not interested in buying until we’ve gone past the bottom.
We know perfectly well what the bottom is! it’s when the PITI and maintenance on a hypothetical 100% financed house is less than the likely rent. No time soon, I know you agree.
Ummm, isn’t the bottom just that? The bottom?
“But you never know what the bottom is until you’ve gone past it.’
This just bullsh!t. Waddya mean you can’t time It?? Let’s see back in 1998 we had time to assess the So Cal market. Put in for job transfers that summer to the So Cal division. Rented an Apt for 3 mos and bought a new 2100 sq ft home on 10,000 sq ft lot for 230K. Closed on Nov 30th that year. Saw the tsunami coming in 2004. Searched craigslist for jobs back in Bay Area. Sold the house in early 2005 and came back north ’cause I knew I didn’t want to be in So Cal when it crashed. Now we wait and pay rent of $1165, all inclusive except phone, for a nice little cottage by the San Mateo coast. (OK so it helps to know people in town to get this great deal!) But hey we’re only 2 blocks to the ocean and 6 miles to work. Can’t beat it with a stick! Can’t time it my a$$….We’ll have PLENTY of time
I wish I had not done these calculations, as they are making my entire body tremble. Please find my mistake which added an extra zero to the right of all the numbers…
PB,
You could look at it from another view. Just think about all the $$$ those people pulled out of their houses using HELOCS.
You can despise them because they were living the high life on borrowed money, but now they’re gonna pay.
Why do you think they will pay? HC has developed a plan to save them all from their folly…
http://www.hillaryclinton.com/blog/view/?id=25248
Wow - some of those comments! These people are allowed to vote?
It looks like hyper-inflation is the only way out of the mess.
“Lori Staehling, incoming president of the SD Association of Realtors, said: you never know what the bottom is until you’ve gone past it.’”
————-
Let me clue you in Lori, the bottom IS until you’ve gone past the 5-10 Yr. LOW PLATEAU, you RE-tard.
The bottom is the thing you pass when you’re reaching down to grab your ankles.
LOL, nice one Slim
LOL
You’ll know we’re close to the bottom when nearly everyone you meet is walking with a Joshua tree limp.
‘So much is driven by people’s thinking,’ she said. ‘Everybody wants to buy at the bottom of the market. But you never know what the bottom is until you’ve gone past it.’”
Yes, people are starting to think now! No reckless “buy now or be priced out forever” mania. It has become affordability. And in a worsening economy, the potential buyers will be thinking longer and harder. Will I have a job next year? Are tax rates going to rise? Maybe I should take that supervisor job in Malaysia?
Then if you are lucky they decide to buy your clients house that has been on the market for 2 years with 20 price reductions, only to have the last 2 banks doing mortgages in the country turn the buyers down.
Sorry I’ll wait ’til it is safe to buy. I buy assets not liabilities.
Everybody have a great weekend!
Leigh, if you read this please post so I can email you and payoff our Major wager. A severe depletion of my alcohol storage. I’ll have to raise the price of milk again.
Or…
‘Everybody wants to sell at the top of the market. But you never know what the top is until you’ve gone past it.’
They know now.
Good one, john. I think I did it just this once. (But I lent most of the money. Hope I don’t have to repo. So far so good, first 15 payments were perfectly prompt.)
Who was arguing with me about LV being slow in November - fess up, you were wrong:
UPDATE 1-Nevada’s November gambling revenue falls 14 pct
http://www.reuters.com/article/marketsNews/idUSN1130822520080111
The take for casinos along the Las Vegas Strip — the heart of Nevada’s casino industry — fell by a steeper 19.1 percent to a total of $519.7 million for the month
For how long can so many sectors/segments of this economy endure double digit declines before this my-tee consumer economy passes the point of no return?
These numbers are not small by any means. Had they suddenly appeared out of the blue - say way back in 1996 - everyone would have freaked. Now the steady drumbeat seems to drown itself out.
“a 14 percent decrease from the same month a year earlier, Nevada’s Gaming Control Board said on Friday.”
Wait, didn’t I read about a month ago how Nevada’s gambling revenues are what would make Las Vegas’ housing downturn short, followed by continual appreciation after that (”everyone wants to work here”)? Where is LVLandlord when you need her?
Everyone wants to deal cards or serve food/drinks for a living?
Just there last month and was amazed at how many BIG casino hotel thingys were being built. HUGEHUGE monstrosities and I thought to myself,hmmmm wonder if they are going to finish these things on the main strip if the economy goes south?
I was there between Christmas and New Year’s. The massive 7.5B (that’s a “B”) City Center project appears to be on scheduled. However with the emphasis on condos and hotel condos and with the schedule completion in 2009, the timing looks really bad. It’s a stunning project, but I wonder how it pays for itself.
Also a couple of additional observations: The mix of tourists versus a year ago seemed to be much more heavily weighted toward foreign tourists, lots of Asians. Also on the day after Christmas sales, the Boulevard Mall (non discount) wasn’t crowded at all. No trouble finding parking. In the food court at lunch they seemed almost desperate to move food, every other place was offering samples. I also hit one of the discount malls, total zoo, even more packed than a year ago, also heavily weighted toward foreign tourists.
The indian casinos must not be doing any better. According to the LA Times, “Lawmakers also overestimated by $200 million the revenue the state would receive from Indian gambling …”
Can you explain what all the hoopla smear ads for all these Props are about?
I keep on seeing the Pachanga ads, then the Governators ads, then the ones saying ‘NO to props 94 - 98!”
I’m …..confused
What’s to get? The Indians are back for another helping of racketeer cash. They’ll keep doing it until they start losing.
Toilet Paper
http://www.thestreet.com/s/hard-to-price-paper-hampers-banks/newsanalysis/banking/10398336.html?puc=_tsccom
“Toilet Paper”
Without clicking on the link, I wonder if its abut my theory on how low the dollar can fall. There is a limit to inflation. It will never cost more than $1 to buy one square of toilet paper, because, well, you can probably guess why.
I can see toilet paper having much more value, it is softer and won’t clog the toilet. It will never fall below the value of the heat energy you get from burning it.
And, boy, was I glad to find it in stock at the grocery store! I had completely run out.
Poland, 1980’s: no TP on grocery shelves, the Russians confiscated every last zheet of it.
Read the article, guys. CDOs selling 13-19 cents on the dollar. CDOs=toilet paper, not dollars (yet).
The builders lower prices reflects the land write offs which will be reflected in lower land prices for the major employment centers of the Bay Area. Land cost is the basis for the sky high home prices.
The outer areas such as Sonoma have allready had a good hit but its only the beginning of the land write off’s. Large farmers and land owners are still trying to dump their property based on prior developmental possiblities but they are stuck with either their current farm operation or land spec or both. This is a basic problem for the farm operations in the rural area’s as they need larger and larger operations to make money or break even so they welcome the developer who buys the property at rates far above what would be considered farmland, now the farmer is stuck between the economics of American farming and a declining RE market.
“‘The thought of actually saving up a down payment, qualifying for a 30-year fixed loan I can actually afford and then buying a house that loses value is one of the scariest visions I can drum up,’ said Chad Stellmacher, a Sacramento renter.”
Hey Chad, what’s your HBB user name?
Why am I addicted to this? There will be no homes sold at meaningful prices for a few years. We’ll see a bleeding of prices…
Oh well. Its still fun to watch.
Got popcorn?
Neil
I’ll confess to keeping one eye on the HBB while I’m doing such “fun” business things as making cold calls.
I’ll be knocking on doors where folks got NOD’s this weekend myself. Should be fun.
Cold calls AND recruiting phone calls while HBB surfing for me. I am a cynic by nature, and this blog isn’t helping me find the good in people. The sense of entitlement form the masses when it comes to employment in the country is just astounding.
I agree. Watching this thing unfold makes me feel vindicated. Despite the fact that it’s a disaster in the works . . . .
Yes I still run into goober like this:
http://tinyurl.com/3xszrn
At least they only trotted out the ” no one has a crystal ball” instead of the old faithful “RE never goes down in CA”.
With all of these homes going into foreclosure, what is the general consensus of everyone about someone going through a course in home inspections and then doing inspections (not appraisals) for the homes being handed back to the bank? A growing field?
Our local community college offers such a course. I’ve been thinking of taking, just to spite that dolt who did my home inspection. What he didn’t find/neglected to tell me about cost me around $3,000 to fix.
My cousin, a former rehab-flipper, began inspecting about a year ago. His clever idea was to inspect houses that were not even on the market. “Hey, now that you’ve had your house for 15 years, wouldn’t you like to know what seriously needs fixing?” All well and good, he got a lot of business… … … but now he’s used up that source of (FL) clientele in his local area. Now he’s thinking about going to work for Philip Morris. (Slim and I will never fully stop smoking.)
“Lori Staehling, incoming president of the San Diego Association of Realtors, ‘So much is driven by people’s thinking,’ she said.
I really hate that when that happens… You know, people thinking and all. Perhaps some “edgy” buyers will show up soon!
Has Herb Gone Insane in the Membrane?
http://www.thestreet.com/s/when-herb-greenberg-guesses-its-time-to-worry/newsanalysis/media/10398245.html?
Absolutely not. There is something going on in the background. Why the hell would BAC take over Countrywide otherwise?
yeah, the Fed has to hide that they already lent US $ 51 BILLION to CFC in August and September 2007 (through a series of transactions with the FHLB’s duly reported in Bloomberg) AT UNDER MARKET RATES at a time at which CFC could not get funding anywhere nor at any price.
I suspect the “collateral” that CFC posted for the 51 BILLION advance is worth considerably less than the Fed lent them (it was their origination pipeline no doubt with other crap homeloans mixed in). Ergo, Bof A is indemnified against loss by the Fed in order to induce them to hoist this CFC pig onto their plates and thereby obfuscate the Fed blunder (and unknowable losses thereby created) in loaning 51 BILLIOn to essentially a bankrupt organization (CFC).
Ergo, B of A is indemnified against loss by the Fed in order to induce them to hoist this CFC pig onto their plates and thereby obfuscate the Fed blunder
You just have to admire the evil brilliance of that maneuver.
Peter — can you comment on the connection between the FHLB and the FED? This has my special conspiracy senser alarm going all tingly…
‘Everybody wants to buy at the bottom of the market. But you never know what the bottom is until you’ve gone past it.’
When are these morons gonna figure out that “buyers” (i.e., me) are not gonna buy until prices make sense. I’m not trying to “buy at the bottom”… I’m trying to buy what I can *afford*. I’m using the old-fashioned definition of “afford”: 30 year fixed with approx. 25% of my income going to my mortgage.
What a bunch of dunderheads these people are.
Bingo! I keep telling everyone who asks that I will buy when I can get a reasonable house for a reasonable price. Not a moment sooner. I’ll know it when I see it.
That other Dave guy advised someone 4 yrs ago(radio guy) to either rent, or buy a trailer outright, buy the land and sit on it and build as you have money to, then after it is built for cash you sell off the trailer. Cash. What you can afford.
MSM is trying to give something much more important than the financial meltdown. We need to be concerned about the criminal OJ and his latest problems.
http://biz.yahoo.com/ap/080111/wall_street.html
http://news.yahoo.com/s/ap/20080111/ap_on_re_us/oj_simpson
Was at the grocery store earlier this afternoon. The store (Fry’s) has a Chase bank branch inside, and their latest promo sign was encouraging us-all to leave debt behind. By taking out a HELOC.
I had some rude things to say to that sign as I walked past it.
“…encouraging us-all to leave debt behind. By taking out a HELOC.”
The same way lemon juice heals a paper cut?
Yeee-ouch, that hurts!
I’d rather have a lot of little unsecured debts than one big fat debt secured on my house. Never made sense to me. But then I haven’t had a lot of debt in a while, and never like some of these fools.
Slim
What Fry’s were you in? I live right by the one at 75th and Cactus which also has a Chase bank in it.
Also, if you want a dog that never barks - adopt a Greyhound! I have only heard my dog bark 3 or 4 times in 6 years. Of course I don’t leave her outside when it is cold.
Greyhounds are indeed great dogs. I wish I had the space and lifestyle to adopt one. My friend adopted one - we called it “Zero” after the dog in The Nightmare Before Christmas. I just don’t want be like my neighbors - keeping pets hostage in a high rise so they can home to someone.
A cat would like to shed on your couch. They are also delighted to chase a wine cork, pulled along by a piece of dental floss. Our Lucy is always tired from the boys and she likes indoor living.
‘Foreclosure is the freight train that runs over the homeowner,’ said Jeff Schrager of the No Homeowner Left Behind nonprofit organization based in Fresno. ‘I submit that we have a local disaster here. People are losing their homes on a daily basis.’”
Jeff, your name sounds noble. But this thing was about as easy to predict that a bull in a china shop would knock over a bunch of stuff and break it. If they lied, they deserve to be left behind and go - what a scary word - RENT.
Neil-ya, its like watching a slow speed accident, still ges your attention, there’s damage, but, no one really dies.
You know honestly, I’m really tired of being the “I told you so guy”. I switched to “wait until it really gets going”.
If you are going to keep saying got popcorn, I think I’ll add:
Got ammo?
“wait until it really gets going”
Indeed, the news is getting progressively worse, but people seem to like to tie things to a single dramatic event - and we really haven’t had one that the person on the street can identify with - it’s all been technical jargon and behind the scenes stuff to him/her. Could the CFC BK have been it? If that’s been averted then what else lurks out there to become the “event”?
I must add something to this whole CFC bailout thing: it’s kinda funny to me how people sort of take this “BAC spent $2B to buy some of CFC and then another $4B to buy the rest” as if they had lost the original $2B or something and yadda yadda yadda… in fact, they are just trying to help to unwind this whole mess of derivatives and all this leverage and all this REALLY HAIRY STUFF. The “masses” have NO idea how all this “higher math” is screwing with the mathematical abstraction that is “money” on the large scale. $2-6B here and there is sorta NOTHING in the grand scheme of all this… BAC didn’t “lose” that money - they’re trying to keep from everything going to crap and “losing”… trillions…?
A year ago its market value was $26 billion.
Now that the MSM is finally calling the RE disaster a “trainwreck”, any smart potential buyer is standing back and watching what NAR and the gang are peddling like this is real “toxic waste” .
Don’t TRY to bend my chromosomes with your overpriced radioactive POS Sellers
There are lots of non-owner-occupied properties down there,’ Hanus said, ‘and investors are going, ‘Oh, man, I can’t get tenants for this property based on the amount I owe on the mortgage.’”
Hanus, and you are surprised by this ‘as obvious as the nose on your face’ fact?
Jeff Schrager of the NO HOMEOWNER LEFT BEHIND nonprofit organization based in Fresno
How about the name, NO HOMEOWNER LEFT BEHIND AS THE STEAMROLLER COMES BY?
I like his slogan, “no homeower left behind”…
I say flush ‘em all… and cut them up with coat hangers if all they do is circle the bowl…
“No homeowner remaining”
“‘The thought of actually saving up a down payment, qualifying for a 30-year fixed loan I can actually afford and then buying a house that loses value is one of the scariest visions I can drum up,’ said Chad Stellmacher, a Sacramento renter.”
Chad, this is the normal way it’s done, and it was done this way until about 3 or 4 years ago. What we had was an anomaly.
No, even scarier is the vision of no assets, no job, no food, no house, no hope, and nobody who gives a rat’s behind about YOUR puerile entitlement mentality.
If he really feels this way, then it should be no big deal to walk away if he’s underwater. No down, no claim on the house, no govt help. It should be a simple quid pro quo.
“then buying a house that loses value”
you guys missed that part. he’s saying the thought of putting all that work in for a depreciating asset is scary. that’s the view here.
With all of the news about BoA buying Countrywide, I have been trying to figure out what to do with my money. It is currently split between ING and BoA, but I don’t know if I can trust either of them. Both have negative real interest rates and heavy exposure to mortgage fallout.
The bottom line is I need some place to put my money that is “safe” and where I can still get the benefits of online banking, bill pay, etc. I have been thinking that the smaller banks or credit unions may be the way to go. I was wondering if anyone here has any advice on credit unions and what to look for and where to find it?
Thanks in advance!
I have been thinking that the smaller banks or credit unions may be the way to go.
Something that caught my eye a while back was a little newsletter sent in the mail by Patelco (I’m a member) that said they had zero involvement with subprime mortgages.
I know my CU is very careful with money but on the other hand doesn’t pay squat in interest. Join a CU if you can for the Bill Paying but you may as well have a home safe full of cash right now.
I’m doing the same. I love my CU but their CD and savings rates are garbage. I have a good double handful of CD maturing and need to figure out where to put them. I’m sure as hell not leaving them at Downey.
I’m leaning towards Wachovia - any thoughts?
I’m with Mo Money. Keep the cash at home. Don’t trust the FDIC will bail you out when the going gets bad. I am pretty sure the FDIC is mutual agreement among banks to fund a pool to bailout individual banks that go bust. It would not surprise me to see the FDIC go under after a few MegaBanks go bust.
My financial advisor (not employed in a brokerage house) tells me your securities at a major brokerage are safe if held in your account, even if the brokerage goes bust. Hence, I leave my Australian govt bonds in the custody of Merrill Lynch (even though AUD is not as hot as it was).
I’ve split money into:
1) Treasury Direct 13-week revolving bills (~3.2% these days)
2) public employee credit union (3.3% on premier money market, 4.8% on 13 mo CD’s)
3) Everbank foreign currency CD’s (FDIC insured)
I’m not getting a great return (except on the foreign currency CD’s), but very safe.
Today, after the BofA announcement, I applied for a credit card with our CU, and we’ll cancel our frequent flyer BofA credit card as soon as the new cards arrive in the mail. We don’t carry a balance, but BofA has played games in the past (signing us up for special “insurance”, etc…) and I just don’t want to have anything to do with them, regardless of FF miles.
Keep on doing your convenience banking with B of A and put the rest of your money elsewhere.
Mozilo’s Monster Payday
“After the deal is done . . . then he can go have some fun”
http://blogs.wsj.com/deals/2008/01/11/mozilos-monster-payday/
While we were discussing an auto industry excec (I think it was Lee Iacocca), my father asked, “Why’s he being paid so much for being stupid?”
I used to ask that about Don Carty, the ex-CEO of American Airlines.
No-one deserves a Joshua Tree suppository more than this clown.
“‘The thought of actually saving up a down payment, qualifying for a 30-year fixed loan I can actually afford and then buying a house that loses value is one of the scariest visions I can drum up,’ said Chad Stellmacher, a Sacramento renter.”
- This TOTALLY defines SoCal thinking. The average CA slob feels entitled to everything now! How dare the world ask us to be fiscally responsible - no freeking way.
I think you’re reading this guy wrong. I think he’s actually one of the 1% who “gets it”…
The Daily Press. “Nearly 50 percent of the High Desert homes sold in December were owned by banks, according to new figures released “Thursday.””
Sweet! Eventually it will be almost entirely the banks setting the comps.
“Thousands of Central Valley families are losing homes to foreclosure because: a) They lied about their incomes to secure unrealistic loans. b) Unethical loan officers took advantage of families by signing them up for risky loans they could not afford.
So a) is b)?
As a local, I can tell you it was C both of the above.
I would also add “greed”. How many people in the smaller bubble towns in the San Joaquin Valley sold their 1300 sq ft 3/2 for $220k (bought for 90k) to upgrade to “El McRancho Estates”. They buy their new McMission style home for $300k, it quickly appraises for $400k as they cash out a big chunk of HELOC and then marvel at their own financial genius.
Countrywide Failed to Survive Slump
Friday January 11, 5:31 pm ET
By Alex Veiga, AP Business Writer
Housing Slump, Credit Woes Were Death Knell for Countrywide
http://biz.yahoo.com/ap/080111/countrywide_downfall.html?.v=2
When I was a pup, I took a course called Junior Lifesaving. This class included a lesson on the importance of protecting yourself when rescuing someone who’s drowning.
Quite often, the drowning person’s first reaction is to wrap his or her arms around the upper body of the rescuer, which can cause both to drown. Our instructor demonstrated this point to each of us by inviting us to jump into the pool with her.
Oh, did that lady have a bear hug! I really had to fight to break free.
This morning’s news caused me to visualize Countrywide playing the role of the drowning victim, and BofA jumping in for the rescue.
How does one build equity with negative amortization?
Sorry, that was supposed to be a reply to “takingbets” below.
TEXT-Countrywide CEO Mozilo message to employees
http://www.reuters.com/article/marketsNews/idUKN1132319220080111?rpc=44
from the text:
We have provided over 25 million families with an opportunity to have a home of their own, to build equity and to utilize that equity to educate their children and to have the best life possible in our great country. I have always been proud of the fact that we have made such a positive difference in the lives of millions of families through three generations of homebuyers.
“‘There are lots of non-owner-occupied properties down there,’ Hanus said, ‘and investors are going, ‘Oh, man, I can’t get tenants for this property based on the amount I owe on the mortgage.’”
“Hanus is representing one Riverside County investor who bought a 1,580-square-foot home on San Miguel Avenue for $534,000 in late 2006 and, facing default, is hoping to arrange a short-sale at $350,000.”
This ‘investor’ stands to lose $200k, and is looking for a short-sale to bail him out? When did lenders start negotiating short-sales for non-owner occupied? As much as I want to see the originators of loans like these burn, this guy better not just walk away with a dinged-up FICO score…
I took a drive around Riverside, CA last Friday (just to see what it was like). Wow! For Sale signs everywhere…
“took a drive around Riverside, CA last Friday (just to see what it was like). Wow! For Sale signs everywhere”
Riverside and the IE are in RE hell right now but at least the weather there is decent this time of year. Any Sellers looking to get some idiot buyers /fb’ers to jump into a false bottom this is the time to do it in the iE while the air is clear and the normally barren landscape has a temporary cover of green , which will all dissappear come March or April.
There are too many people in debt. We need to give these hard working people credit so they can get out of debt. That will be the campaign theme later this year.
It’s Hillary’s plan now…
“Jan. 11 (Bloomberg) — Democratic presidential candidate Hillary Clinton today unveiled a $70 billion plan to bolster the economy amid growing fears of a recession.
Along with spending and emergency assistance to cover rising energy costs and to help avoid foreclosures on homes, the New York senator called on Congress to be prepared to enact a $40 billion tax rebate for middle-income families if the economy continues to weaken.”
Where is David Cee to defend that witch and everything else that is socialist?
And the winner in New Hampshire was ???
The crocodile who has admirably developed acting skills, including the ability to shed tears in front of the camera.
P.S. Thanks for the fantastic verbal drum roll
:-) 
They will endlessly brainstorm in Washington and New York over how to get more loans into peoples’ hands. Later on, after great success in finding new subslime borrowers to lift the economy out of its doldrums, this new generation of ill-fated borrowers will shoulder the blame for borrowing more money than they can afford to repay from their permanent incomes.
The entire Washingron, DC crowd, the States and local gov’t’s have FAILED the American people and TAXPAYERS again.
Bubbles HELL NO..Conspiracy to Commit Corruption..Yay ~
There WERE and ARE enough Laws, Regulatory Agencies and Statutes on the Books to PREVENT these massive Fauds, Greed, Manipulations and Monopolies from the Hedge Funds, banks/lenders, REIC/NAR on down to the local greedy cities and tax assessors. That includes the corrupt Fed and it’s frigging convoluted Charter.
Where the DEVIL were all the OVERSIGHTS that we pay so dearly for with these friggin damned taxes when this disaster was brewing ?
It’s NOT like these SCAMS were hidden out of PLAIN sight like Saddam’s Magical friggin WMDS and those silly balsa wood Drones of Death.
The Federal Gov’t HAS screwed us Big Time because …WE ARE the GOV’T !!!
We, one way or another, will HAVE to PAY for ALL THIS CRAP.
“We have seen the Enemy and IT IS US” ..Pogo ?
Rant over.
Just went for groceries and gas and not responsible for spelling or typing when munching cinnomon rolls and milk.. or AT ANY other time
cinnamon
Arizona Slim - I found a course online for $700 at http://www.homeinspectioninstitute.com I called the BBB to check on the company. They were good in the BBB book.
” I found a course online for $700 at http://www.homeinspectioninstitute.com I called the BBB to check on the company. They were good in the BBB book”
I checked out that site and went thru their offerings. Pretty good price for the $700 course which gives U the basic Certificate and they say U can start immediately as a home inspector. They have 10 or more other courses as well in such areas as pest inspection, mold,frames,advanced course, foundations, ect. I gave it a good lookover as I am searching for a new line of work and this intrigues me. It can be done all online but they also have a 1-2 day field practice session which unfortunately is out in South Dakota, but would likely go out there if I choose to seriously pursue this field.
“… the price of new homes is about 10 percent less than that of existing homes with the same square footage.”
The asking price maybe, but how can a used-home seller get a buyer to cough up the funds if the buyer can just go to the nearest new development and get a warrantied house with all the perks for less $/square foot?
Looks like asking prices are still way too high.
BTW:
People are screwed.
Big V — How’s the violin market? Do you have any suggestions for finding good deals on repoed fiddles? I may buy one this year if the tax benefits look right. I freelance enough to file Sch Cs and I am wondering if this year might be a good one to take a loss due to a capital asset purchase…
My advice would be to go looking in a posh neigborhood because those are the folks who actually have something good to sell. I picked up a great 3/4-length German violin at Steven’s Violin shop in Willow Glen, San Jose. About 100 years old, “antiqued” for effect, easy to make it go. Just by hearing/playing it, I thought it would sell for about 5k. I was more than happy to buy it for 2k though, then the guy gave me some standard discount and threw in a free case.
On a related note, does anyone think that pianos will be a bargain over the next few years? I’d like to get one for my kids, and if they can be had for cheap…
This is an interesting issue because pianos are luxury goods, but not in the traditional sense. You can show off a leased Mercedes or a 4,000 sq ft McMansion, but an expensive piano just doesn’t have the same “bling” factor.
I’m sure there are a few people out there who use pianos to impress the neighbors, and there are probably some instrument lovers who have financed the Steinway they’ve always wanted with a HELOC, but I would think that most pianos are owned by people who can actually afford them. Is it possible that the used piano market won’t be hit too hard?
Violin prices, OTOH, seem to behave more like those for like objects d’ art than musical instruments. Violins are regularly sold at auction, and people even speculate in them. There should be some fantastic deals on violins in the near future.
I bought a beautiful Baldwin grand piano this past summer from an FB via Craig’s List. It’s the piano I always wanted but couldn’t afford before: got it for only $4500.
Joe —
My wife is a piano teacher. She visited a piano shop a couple of months ago, and I recall she was duly impressed with the selection (especially good-quality used piano inventory). If you have several kids and expect at least one of them to stick with piano, consider buying a Yamaha, as they are the piano world’s version of a Consumer Reports Best Buy, and they hold their value if properly cared for (kind of like a Honda automobile).
I believe lots of bubble money and home equity money has landed in the violin market in recent years, just as you suggest, particularly at the high end (old master Italian instruments). Something similar happened in the early 1990s in my former home town in the midwest. I was friends with a cellist who had a sideline as an instrument dealer (he sold me a cherished viola bow!). Once when I visited with him, he told me a fantastic tale of the Japanese investers who would fly from Tokyo to our town over the weekend, drop in on him and buy 10-20 instruments to bring back home with them and sell. The cellist in my quartet at the time had a Testore (old Italian) purchased in the early 1970s which had gone up by a factor of 10 in value during the Great Inflation (last time an academic was Fed chair in fact). I expect a similar flow of mid-tier instruments from U.S. to Chinese cities is going on as I type, as violins are a great place to stash extra Bernankes in a helicopter-drop monetary regime.
There is an upside for those seeking low-end new stringed instruments that play well (like myself), as sky-high prices spurs production, some of which is bound to be of high quality (even if not surpassing Antonio Stradivarius). Last time I was in a violin shop (last May), there were many new instruments which I would have been happy to own, but I am biding my time for reverse home-equity-wealth effect fire sale pricing.
Yamahas are particularly good if you play mostly classical–a solid, rich sound even with the smaller ones. But the Bosendorfer grand–heavenly. $50,000 the last time I looked.