It’s Going To Be A Year To Remember In California
The Sacramento Bee reports from California. “Priced out of buying a house in 2003, Santiago Avila-Gomez and Stephani Crespin rented all through the housing boom, then waited out the bust until the closing days of 2007. That’s when they finally scored the house of their dreams. The house was built in 2004 in a new community just outside the Pocket in south Sacramento. It had been repossessed by the lender and cost the married couple $214,500. The original price four years ago: $455,000.”
“The two said the bank paid their closing costs on the four-bedroom house on a 6,000-square-foot lot. It then wrote them a $4,500 check to replace the air conditioning unit that had been stolen during the year the home sat vacant.”
“In Sacramento County, 45.9 percent of December sales were properties marketed by banks and loan servicers.”
“‘What you’re starting to see right now with the foreclosure inventory swelling is the banks are getting aggressive,’ said Lincoln-based real estate agent Mike Toste. ‘They’re the ones wheeling. If all their competition is bank-owned and they drop prices 30 to 40 percent, then they’ve got to do the same thing. If they can’t sell within 60 to 90 days, they’re getting extremely hungry. I think 2008 is going to be a year to remember.’”
“The prospects for another tough year have some of 2007’s buyers already re-examining their decisions. John Reed moved to Sacramento last year from Portland. He bought a new home in West Sacramento last July.”
“‘I have a lot of second thoughts now,’ Reed said. ‘I knew the prices were dropping a little, but I didn’t expect them to go down so much. They’ve probably gone down 10 percent in six months.’”
The San Francisco Chronicle. “Bay Area median home prices and sales volumes experienced significant declines in December, according to a report released Thursday.”
“Realtor Melody Grandell has had a three-bedroom Redwood City house listed since August ‘just as the market started to tank.’ Despite cutting $149,000 off the price to its current $760,000, and investing in painting, staging and new doors, the owner has not had an acceptable offer, possibly because the home still needs some work, she said.”
“‘It seems like home buyers are waiting for the ideal property; something that doesn’t need any upgrading,’ Grandell said.”
The Mercury News. “The housing slump continued to spread throughout the Bay Area at the end of 2007, as sales dropped for the 35th month and prices fell to 2005 levels, Dataquick reported.”
“Sonoma median home prices also dropped the most, from $525,000 last year to $410,000 this year. Contra Costa dropped down 11.3 percent to $505,000, Solano County dropped 15.8 percent to $370,000 and Alameda fell 8.3 percent to $540,000.”
“In December, jumbo loans dropped 80 percent in Alameda, 78 percent in Solano, 68 percent in Contra Costa and 52 percent in San Mateo counties, said Andrew LePage, an analyst with DataQuick. ‘You just can’t ignore the incredible drop-off in jumbo loans,’ he said. ‘It’s like a switch was flicked in August.’”
“‘I think there will be more seller acceptance … starting now and in February,’ said Patrick Lashinsky, president of ZipRealty. ‘More than 50 percent of homes in Contra Costa County had price reductions. That means the seller came in too high.’”
From NBC 11. “A new movement, dubbed ‘Acorn,’ is underway to prevent buyers from scooping up the dozens of foreclosed Bay Area homes during the state’s real estate slump.”
“At an auction Thursday, protesters rallied on the steps of the Alameda courthouse bellowing, ‘No foreclosures, no bids,’ in hopes of discouraging people from purchasing the foreclosed property.”
“Alma Reyes nervously watched as her home went up for bidding after her monthly mortgage payment increased by $1,300 just six months after she had refinanced with a broker who she said never informed her of the consequences.”
“‘I don’t think it’s fair that I have to lose everything and these people have their homes in the hills and luxury cars and I am losing my house,’ Reyes said in Spanish.”
“Reyes’ home went unsold, giving her and her family a temporary furlough to stay in the house.”
The Bethel Island Press. “If the value of homes in southeast Antioch significantly plummets at the same time that the number of home-owners behind on their tax payments significantly increases, the Mello-Roos Board could find itself in the unpleasant position of foreclosing on homes in the district.”
“‘At this point it does not seem to be a realistic prospect. But you always have to plan for disaster scenarios,’ Dan Bort, legal counsel for the Mello-Roos District, told the board.”
“Prices have dropped on the homes in southeast Antioch, as they have elsewhere. Gary Agopian, who is both a new Mello-Roos board member and a real estate agent, said some homes are selling today at 2004 prices.”
“But to put that in perspective, during the height of the real estate bubble, ‘for about two or three years, we had run-ups of over 20 percent appreciation per year,’ he said.”
“‘The current housing prices would have to drop 75 percent before you ran the risk that you would hold a tax foreclosure sale and no one would come and no one would bid,’ said Bort. ‘The county’s risk is that the real estate values will go so low that it will become uneconomic to bring taxes current on the delinquent homes and the homes will simply be abandoned.’”
“‘In other words, the county would essentially be saying to the public, ‘You can have this house if you’re willing to pay the taxes on it.’ And the public would collectively be saying, ‘No thanks, it ain’t worth it.’ Currently, the county does not see that happening. But of course, conditions could change and the county could change its mind,’ he said.”
“Audience member Norma Hernandez was also concerned about the district getting bogged down in foreclosure proceedings.”
“‘Foreclosure isn’t easy,’ she said. ‘You will be in court for the rest of your life doing foreclosure. We have 1,400 homes on the block right now in foreclosure in Antioch, and that number is going to continue to grow. I suggest you watch your reserves.’”
The Santa Cruz Sentinel. “First come the foreclosures, then the lenders take ownership, and now come the auctions. Six Santa Cruz County properties will go on the block Feb. 23 in San Mateo. Locations include Aptos, Ben Lomond, Boulder Creek, Santa Cruz and Watsonville. All of these are properties taken back by the lender after foreclosure.”
“Starting bids range from $29,000 for a 320-square-foot cottage, 1513 Jackson Ave., Ben Lomond, to $269,000 for a 1,370-square-foot house at 229 Market St., Santa Cruz.”
“Are prices coming down? You betcha. The Ben Lomond property sold for $220,000 in 2005. The Santa Cruz house sold for $765,000 in 2006.”
“Year-end statistics show 2007 was brutal: 993 defaults, 506 foreclosures and 253 sales. In 2006, there were 452 defaults and 146 foreclosures; in 2005, even fewer — 333 defaults and 109 foreclosures. Liese Varenkamp, editor of the Santa Cruz Record, didn’t track foreclosure sales by county before because there were so few.”
“I don’t see any relief yet. For the first week of 2008, there were another 44 default notices — three times as many as in 2007.”
The Modesto Bee. “Dismal figures on valley real estate sales and prices released Thursday for December marked the end of a tough year for the industry, professionals acknowledged. The best they could say about 2007 was that there are a lot more affordable homes on the market now in the Northern San Joaquin Valley and interest rates are low.”
“In Stanislaus County, sales were down 38.8 percent last month compared with December 2006. San Joaquin County’s sales volume dropped 37.2 percent and Merced County’s 56.8 percent.”
“The median price for Stanislaus County homes sold last month was $281,250, while San Joaquin County’s was $320,000 and Merced County’s, $257,000. San Joaquin and Merced counties’ numbers were down from December 2006 by 24.7 percent and 21.2 percent, respectively.”
“For the year, the median price fell by $73,250 in Stanislaus County, $80,000 in San Joaquin County and $68,000 in Merced County.”
“‘Brutal. Just brutal. Short sales are what’s causing us grief,’ said Realtor Rob Ellett in Modesto, when asked to sum up 2007. ‘The good side is that prices are coming back to reality.’”
“The fallout led to sharp job losses in real estate, said Ninon Lapan-Dalman, a Realtor in Modesto. ‘I’ve seen a tremendous amount of agents get day jobs and now do real estate on the side,’ she said. ‘And I’ve seen mortgage lenders just disappear.’”
“Broker Larry Matos (said) investors must make 20 percent to 25 percent down payments. He said that keeps out speculators who pay little up front and try to sell quickly.”
“‘We’re beyond a transitional market,’ he said. ‘Buyers now are just cautious, not cautious and nervous.’”
Charlie Gasparino speculating the CFC/BA deal will not get done - due to the unwind of the ABK & MBIA…
I like Gasparino…. and he’s right…. I think the deal unwinds.
This looks huge. Hoz, what do you think??
Posted this earlier today on bits bucket: (my opinion has not changed)
“TTT Actions done to prevent a massive breakdown in the financials and reality sets in and suggests that BAC cannot afford to go through with the takeunder (not because they do not have the stock to transact, but because BAC is jeopardizing its existence). As the counterparties go under, the hedged positions of Citigroup and BAC look less hedged.
If Countrywide had been allowed to go under without any outside force acting upon it, the next banks to go would have been WAMU and then the larger banks would get clobbered Wachovia, Citigroup and BAC in short order.
For any interested parties there is a good correlation between Case-Schiller housing and the bank index. Whether it is a coincidence, je ne sais.”
Great to have a 3 hr nap! Time to go to Ashwaubenon.
That deal unwinds and housing could go from very ugly to nuclear winter. The 2007 sales drops and foreclosure rates will be remembered as the ‘good ol’ days’ when people still had hope.
when
peoplesellers still had hopeRight. I’m a buyer. I have lots of hope of lower prices!
Is there a link?
Sorry, I was watching CNBC. Maybe they have something on their website?
‘Buyers now are just cautious, not cautious and nervous.’
Meanwhile, where are sellers? Nervous, or panicked?
Sellers are “jittery”.
Buying real estate in the next 2 years, is the second worst thing you can do.
The first being “eating raw broccoli”.
The worst thing you can do, is wipe your ass with a broken beer bottle.
Profound.
Lite or dark beer?
Funny… & wierd… I’m actually wiping my ass with a broken beer bottle as I type this…. but it’s lite beer….. ummm!
Big V, I have to say I love raw broccoli (well-washed) with a dip…
Funny… & wierd… I’m actually eating broccoli as I type this…. but it’s steamed….. yum!
http://www.msnbc.msn.com/id/22712082/
hehttp://www.google.com/url?q=http://www.dqnews.com/ZIPLAT.shtm&sa=X&oi=smap&resnum=1&ct=result&cd=1&usg=AFQjCNHJX9YyoyHEVpfXxhsoZcJgDIGF0
Here we go! Ca home prices down 15%. LA down 10% .
Data quick LA Dec charts show a bloodbath in the lower butt-end zips, which are 65% Of La county and 75% of LA city. Palmdale is now close to $200,000 in some zips. The supposedly immume south Bay region, which the lying bastard South bay Association of realtors said was up 14% saw steep declines even on the pricy PV and Beach city zips.
The only LA zip showing an abnormal 20% YOY increase was zip 90011,which is the area just south of Dwtn. This is also probably the most slimiest gutted cesspool zip among the surrounding rotton s*itholes ringing La dwtn.
major fraud activity no doubt.
OK so where’s LaInvestorgal…isn’t this what she was waiting for…haven’t heard a peep from her.
LA Investor girl was always a troll. She’s embarassed to show her font here.
‘OK so where’s LaInvestorgal…isn’t this what she was waiting for…haven’t heard a peep from her.’
She’s chopping broccoli.
I like broccoli with ranch dip, I am a renter and can afford the extras in life! LOL
Broccoli good, steamed or raw. Broken beer bottles or Joshua trees from behind, not so good…
so what’s everyone doing for the recession ?
recessions are depressing
Rice. Lots and lots of rice. (brown rice…and sometimes chicken or beef too)
Beanz are good too - dried and easy to store.
A place in my neck of the woods (Portland outer reaches) went on the market for $410K yesterday. It sold 2 years ago for $310K - 2.88 acres with a 1300 SF to the studs remodel. I don’t know why it’s on the market, but I’m sure they won’t get anywhere close to $410 for it.
West side? North Plains-ish?
“what’s everyone doing for the recession”
Not much…we live WAY below our means, so not much change. We’re going to try to pick up some toys and some *assets* at discount prices…buyers of last resort and all that.
Ditto. I probably won’t buy any more toys than usual though…
About the same as usual.
Lots of fishing. Chopping my own firewood, looking for a deal on a TDI as oil goes to $135. Might pick up 40 acres on the Central Coast of CA, behind Cayucos preferably.
You better make sure you’ll have access to water. That area is severely restricted to growth because of a lack of available water.
I looked at some nice firearms the other day.
And I plan to do the same this weekend.
Although the $750 or whatever Bush is proposing isn’t going to pull this economy’s thingee out of the wringer, it will still buy a nice semi-auto.
Getting ready for the ‘early’ trout opener on the east side of the Sierras. From Independence south on hwy 395 it opens on March 1. Need more snow and rain though. Tying flies while semi reading blogs.
I sold all my equities last month and put all my taxable savings into 5% CDs. I will be planning my early retirement. 2.5 years from now, you can invest again and expect an average 10% return on the S&P and get a house that will cash flow. Sweet.
It will be great to have all the talk about how much ppl made on the sale of their home switch to how little ppl paid for theirs post burst. I would like to say I’m above all that, but I’m really not.
“2.5 years from now, you can invest again and expect an average 10% return on the S&P and get a house that will cash flow.”
In 2.5 years, we’re liable to have the real-life version of Mad Max upon us.
Plot summary for Mad Max (1979):
George Miller’s vision of an apocalyptic future set in the wastelands of Australia. Total social decay is just around the corner…
Im not saying it will be easy. Just saying those stock piling cash will be in the armed penthouse.
lol, you’ll NEED an armed penthouse.
Oh Stop it .. your making me crack up !!!
Oh how funny!!!
Looks like we might finally start spending some money.
Same here. Not lots of Rolex and luxury car-type money, but I’ll cut the skimping. That is, I’ll stop feeling guilty if I want to impulse buy a $68 sweater or drive somewhere for the weekend, or go to Applebees.
Applebees? that is a joke, right? Why nut upgrade to Olive Garden? (joke).
But…but…I used to like Applesbees. I guess I have middle class tastes. I never did understand the high-end stuff like gorgonzola and fwah Grah (fois gras).
I beg to differ on gorgonzola being “high-end.” In my book, it’s just smelly cheese…
My plans for this recession are as follows:
1. Have vacation at home so I don’t get killed by the low dollar.
2. Buy a nice house in a couple/few years
3. Get a new car for Mr. Big V
4. Watch my short position fluorish
short position in what?
skf, srs, sds, qid
I’m thinking like Big V. Our jobs are pretty recession-proof, but you never know how bad it might be. We’ll hunker down in 2008 and hope that the recession doesn’t turn into a depression.
We’re planning on doing a lot of camping. Fortunately we are renters so the camping is for fun. Also we plan to do a lot of fishing however since we are savers in addition to being renters this is also solely for recreational reasons.
Pinto beans and ham hocks, with cornbread. Yum-yum.
Montana, you need to get some collards, butter and honey for the corn bread. What say?
Having a small but lovely wedding. Not counting on big cash gifts though.
Vile: congratulations. Include the HBBers on your gift registry. I would love to go to Macys and say that I’m there to buy a gift for the Vile wedding.
“so what’s everyone doing for the recession ?
recessions are depressing ‘
I an prepared for civil insurrections, riots, and widespread looting and roaming gangbangers, with the resulting breakdown of law and order , which is the normal pattern in much of the inner LA ghettos during good times. I roam frequently in bad gutted slimy hoods, and can scope and survey the terrain and spot homeys like a reconnaisance patrol scoping for camouflaged guerrillas.
Don’t get caught in a bad LA hood after dark alone. Predators love to prey on victims in deserted dark streets and alleyways or dark shadowy crevasses in apt blds , without witnesses. Invest in a small keychain tear gas cannister you can hook around the keychain(for ladies). If U drive frequently thru questionable areas(90% of LA) get auto alarm and AAA service, and a cell phone with pre-imputed AAA number on speed dial. IF car breaks down call AAA asap- this may be a lifesaver.
I am buckling down for a severe recession, and have my truck always parked in safe, well-lighted secured area at night , and even in daylight. Expect an epidemic of Car thefts and breakins and stolen vehicles, or increases in carjacking. Already installed a auto alarm just last month and also locking bars for my steering wheel.
After reading your comment on what to do, I have a counter-suggestion: Move out of L.A.
I can’t imagine living someplace that bad.
Me, I’m stocking up on MRE’s, gasoline, ammo and toilet paper. The MRE’s I can eat, the gas I use in my motorcyle (or electrical generator when the grid crashes) the ammo to shoot Zombies in the head, and the toilet paper may become a hot ticket item for trading purposes. If nothing else, I can always use it myself. It sure beats a broken beer bottle or Josua Tree…
SubKommander Dred
RE: recessions are depressing
I think the younger and more ignorant you are-the better off you are.
I graduated from college during the ‘73/’75 bust. Built a house in the ‘80/’82 debacle; made it thru the ‘90/’91 George H. declared “non-event” because people had the capacity to re-fi their homes which kept the appraisal biz afloat; then divorced and busted in the ‘00/’01 crash.
During each recession you could just feel more and more meat coming off the mfg’ing sector bone and your paycheck kept buyin’ less and less.
Now with millions of jobs off-shored and the credit system broken and locked up-whew…there really ain’t no where to hide for this one.
It’s gonna be fookin’ nasty.
’so what’s everyone doing for the recession ?’
I’m switching to domestic wines.
We’ve got houses selling for 1/2 or even 1/3 of their 2004/5 prices, yet property owners are concerned that they believe they saw a “10% decline over the last six months”
Get a clue, people! Foreclosures and short sales will be the new comps. Sorry.
In OH foreclosures aren’t even included when they do property reappraisals for taxes.
No wonder we moved out of there in ‘95! We miss the slow pace, but there is a reason for it being slow!
It will take second sales of those foreclosed homes for people to really get a clue (then they’ll show up as “real” comps for appraisers).
A $500k home in 2005 is a foreclosure sale at $225k in 2008. That’s not a “real” comp. OK. How about when that buyer sells it for $275k in 2009. Is that a “real” comp?
The spiral downward is wicked…
“A $500k home in 2005 is a foreclosure sale at $225k in 2008. That’s not a “real” comp. OK. How about when that buyer sells it for $275k in 2009. Is that a “real” comp?”
No. When the knife catcher who bought the house at the foreclosure sale for $225k in 2008 loses his job and has to sell at a loss for $195k in 2009 - that will be a real comp.
From NBC 11. “A new movement, dubbed ‘Acorn,’ is underway to prevent buyers from scooping up the dozens of foreclosed Bay Area homes during the state’s real estate slump.”
“At an auction Thursday, protesters rallied on the steps of the Alameda courthouse bellowing, ‘No foreclosures, no bids,’ in hopes of discouraging people from purchasing the foreclosed property.”
Did I read this right? You have got to be kidding me.
Don’t these idiots realize that
(1) these houses are worth less than the loans, so the foreclosed are getting a favor; and
(2) No one will bid at the courthouse steps with or without ACORN because the minimum bid (loan amount) is more than the house is worth.
What a bunch of financial illiterates.
What a bunch of Communists.
They actually are a communist front organization. Big HC supporters too. In thier ideal world, ownership would be outlawed.
We’ll wait for confirmation…
Why I’m happy to say I’ve abandoned the Dem party. I’m keeping my dem voter registration though, so i can screw with the primary. Not that I like the repubs either, but these useless slobs are the dem party.
Pure stupidity.
But communism? LOL. Yeah, communists, that’s our real problem in 2007. If weren’t for them, their insidious Acorn movement, and water fluoridation, we’d be sitting pretty. Thankfully, we have no problem with powerful corporate interests corrupting our political process and destroying regulatory oversight of the credit/equity markets.
One moron expresses why they are protesting:
“It’s not wise to buy these homes because what you’re doing is putting these people outdoors and once you buy the home what’s [going to] happen they’re [going to] be homeless,” one protester said.
I don’t understand why these protesters don’t just let them live in their house or apartment for free while they think of other get rich quick schemes. If you have no equity you were just a renter at extremely high rates. If you just never intended to pay you were just a felon.
They get to move on with their lives, and rent for less than half the mortgage they were paying. What’s so bad with that? Many deserve so much worse.
“once you buy the home what’s [going to] happen they’re [going to] be homeless”
So…renting is not an option? They go from home debtor, straight to homeless, living on the street?
I’m projecting here, but I really think there are a percentage of these homeowers, given the size of their extended family, will have more trouble renting than they had buying during the teaser loan pandemic. It’s easy to park two cars and three pickup trucks around a SFH, but most landlords aren’t going to put up with five children and four adults kicking back in a two bedroom apartment, and if that family were to divide into two or more housing units, I’m guessing the cost-per-head would be more than what they couldn’t keep up with in the foreclosure…
In 2004, when applying for our rental, our LL called DH’s employer to verify income, called **every single** reference on our application and ran a credit check, naturally. We had to come up with about $5,000, IIRC, for deposit and first month’s rent.
At the time, “buyers” only had their credit checked and didn’t even need a penny for a down payment, as those 125% LTV loans were widely available.
Why anyone thought this could continue without any problem is entirely beyond my understanding.
“‘I don’t think it’s fair that I have to lose everything and these people have their homes in the hills and luxury cars and I am losing my house,’ Reyes said in Spanish.”
I stopped reading after “It’s not fair…”
Me to, I was so glad though to read about the couple in the first story getting a home for fair market value. That part made my day!!
Back to teaching my dogs how to get through the new dog door on our rental house. Good practice for the one we will be putting on our dream home in Florida when the new trend of pricing catches on here.
I too was happy to read about the Sacramento couple that bought at a 47% discount to original prices. They rented, saved, and then bought what they could afford. It least it sounds that way. That truly made my day. As for their neighbors who paid bubble prices, well tough $hit! I hope we see alot more of these stories.
The only problem is where they bought. South Sacramento is the new Oakland… and no I’m not being racist or exagerating. Take a drive out there some day.
I know the Pocket area, its bad, not even close to Oakland though. I used to deliver in that area back when I was in that type of work. Kudos to them though.
I thought they bought in Meadowview, not Pocket.
I would be the first to buy them a house warming present
… they deserve it!!! Good for them!
You are correct, they bought “just outside” the Pocket, I didn’t read it right.
Yeah—I’m renting here in Elk Grove (just south of South Sac), and I am appalled at the level of ghetto-ness here—-I moved from Sunnyvale to get into a house—well, I got into a house, but I don’t like what I see around me Time to invest in a couple Rottweilers.
I don’t consider the Pocket area or Elk Grove/Laguna as part of South Sac. It’s like saying the sunset district is part of Upper Haight. It really is it’s own ecology out there.
What will be interesting is what happens to the areas that were slowly gentrifying closer to the city core now that everyone is about to be very cash strapped.
“Just outside the Pocket” could be a pretty good area, depending. There are parts of the Pocket that are pretty much filled with “made-good” (read: worked hard and succeeded wildly) Asian immigrants— dentists, doctors, and the like. (For those not around Sacramento, Florin (South Sac) was the major area for Vietnamese “boat people” in Sacramento; there are still several Vietnamese-owned strawberry farms as a legacy of that time. Including the best ones.)
Reyes’ sentiments will fuel a lot of campaign rhetoric in the coming months.
Oh, that’s the reasoning? I asked below, but that was before you posted this. That’s stupid. If no one bids, the bank takes it back, kicks the people out, and sells it through their RE agent. Don’t these people understand that you can’t have what you can’t pay for? The protestors act like the debtors are being imprisoned for stealing bread to feed their starving children.
These homedebtors will be much happier renting something they can afford. Why is no one protesting the fact that I am “forced” to rent too? How annoying!!!
Agreed. I rented because I refused to pay bubble prices. It’s actually not bad. Utilities are 25% of what I paid before, and no matter what happens at my job or with the economy, I just pack up and drive off. I may owe two months rents, but thats nothing compared to carrying a house in a declining market.
Renting allowed the hubbie and I to live with walking distance to work. If we change jobs, we’ll be moving. Hard to do that with a house.
Were they protesting for affordable housing, better urban planning, and responsible local gov’t two years ago?
At least in the depression farmers who protested auctions had a case, what does this crowd do after the courthouse media show…drive home in a HELOCed BMW SUV?
ACORN? An apt name for the organization. Just a bunch of nuts.
all it will take is one digruntled protestor to fire a shot to get the whole process moved indoors behind a metal detector.
I think its inevitable. sadly
Acorns?
And not even tasty nuts, such as macadamias or walnuts or even a filbert. Acorns are nasty. I know this because I like to eat things. Now, you can make them less nasty with leaching and pounding, if you are learning how the Indians survived in the wilderness, I used to do that, but they’re still fairly nasty even so. I mean the acorns, not the protesters, of course. Although I imagine that they, too, would be slightly improved with leaching and pounding.
Acorns are only fit for squirrels — the animal which any new buyer should contractually require the seller to come back on a regular basis to feed them.
mikey might try eat just about anything that doesn’t eat him first…but after Qlympiagals tale of nasty, leaching and pounding, HOLD my share of the the ACORNS and pass the STEAK please
http://www.acorn.org/index.php?id=12076
Wow. Those acorn people kinda look like losers to me. A lot of them are really overweight, too. Maybe they could save $$ by spending less on food. That would also give them more energy so they could work more. Then they could afford to pay for their own houses so they don’t have to beg anymore.
I mean, sheesh, I can understand people protesting and asking for help during the Great Depression, but we are not there by a long shot. What will happen to this type when the economy really gets sour? Will they just die?
Nope. Just more senseless bitching about how how they support a lack of personality responsibility.
Here in Tucson, some ACORN organizers went into neighborhoods to try to organize neighborhood associations that would represent the poor. Well, there was one problem. These neighborhoods already had associations, and they weren’t too happy to hear that the ACORN people were going around saying that there were none. That put an end to that ACORN organizing strategy.
BTW, they didn’t come through my neighborhood, but if they had, I would have placed a quick call to our association president. Our prez is a veteran of the U.S. Marine Corps, and I’ll let you figure out what would happen next. Suffice it to say that ACORNs would be gone in a hurry.
Should be “personal”. I dont normally correct my many typos, but it completely changed the meaning. Proofing on blackberries is almost impossible. I usually just give up and move on.
Wow..that ACORN gang looks like they had way MORE than one too many Twinkies
Is there a link to this somewher? It makes no sense. Why don’t they want the foreclosed houses to be bought? If the houses sit on the market, the bank will buy them back, and they will be sold later through the bank’s RE agent at even lower price. What are these people trying to accomplish?
Total ignorance on the part of NBC. ACORN is not a new movement. It’s an organization that’s been around for decades:
http://www.acorn.org/
From NBC 11. “A new movement, dubbed ‘Acorn,’ is underway to prevent buyers from scooping up the dozens of foreclosed Bay Area homes during the state’s real estate slump.”
Not the same group. The protestors apparently ‘borrowed’ the name.
I found the site really offensive. Reminds me of my college days when I would date vegetarians with leather shoes and purses. Man they were so dumb and easy. I know. I know. Im starting to sound more like NYCityboy every day.
I used to see this with red paint wielding protestors around Union Square. Alligator shoes, lots of gold jewelry while protesting fur.
True. And dont get me wrong, Im not bashing liberals. I am liberal on most social issues. I just get annoyed by the ones that dont know what they’re doing and end up doing more harm than good.
Not all of them are like that. Daughter is vegitarian and doesn’t have any leather. I told her at holidays when she came to visit that she shouldn’t drive my car with its leather seats.
“ACORN leaders in 75 cities delivered letters to GMAC and affiliated lenders on Tuesday, Jan. 15, encouraging the companies, in the spirit of Dr. Martin Luther King, to work with ACORN to create a program that will help keep thousands of its borrowers from losing their homes”
WTF does MLK have to do with idiots buying inflated homes!’
Im sending a nasty email to these freeloading creeps!
I think all of should! These people need a good smacking!
“Im sending a nasty email to these freeloading creeps!”
Just one word,”Nuts!”
McAuliffe then wrote down: “To the German Commander, “Nuts!” The American Commander.”
http://www.thedropzone.org/europe/Bulge/kinnard.html
Repost from bitsbucket…
DQNews has the LA Times median price numbers for Los Angeles and other SoCal counties for December (year over year, etc.).
The damage in year over year percent declines (single family houses, median $, year over year):
Los Angeles County: -9.1%
The OC: -9.8%
Riverside County: -20.5%
San Bernardino County: -21.4%
San Diego County: -13%
Ventura County: -12.9%
Santa Barbara County: -26%
Again, these are median prices, year over year, sales mix can heavily influence the number, yada yada yada, but, like wow! Take a look at those numbers (changes from last year)…
As I have already mentioned in other posts, the 13 pct YOY drop for SD county belies the fact that price declines did not really get moving until after May 2007. Taking that into consideration would show that knives are actually falling at a much higher than 13 pct YOY rate for the time being.
Via direct observation, many houses offered at 20% off, only things that are selling are in the 40% off range.
Thanks — it sounds like it is close to time to start looking around then. Once the 40% off prices become the comps, it will be time to start looking seriously (but also adjusting any offers made downwards from 40% off peak prices to affordable prices…).
Wait for 50%+, GS. It’s coming.
I have similar observations in Ventura County. I believe prices are dropping between 1 and 2% per month at the current time and this may even accelerate when the spring inventory shows up in 60-90 days. However, the option ARM reset schedule will hit hard this year, and barring election year stalling tactics that will drive foreclosures way up here in 2009.
The argument has been that “The rich people are invincible”. That implies that high-end houses should pull the median UP, not down. If the median is down significantly, then the crash is on. I am on the edge of my seat.
I agree. The subprime implosion last year took the low end unqualified buyers out of the game. What I see in my area is that stuff priced over $1m just sits forever, and the median SFR list price was still north of $1m last time I checked.
BTW, are you in the SJSO?
No, I’m not in anything. I’m just a poser, really.
Lack of jumbo loans has apparently put a huge crimp in the high end sales, thus the median is skewed lower than it would be otherwise. I’ll wait for the Case-Shiller data to get a truer picture. Events do seem to be accelerating, however.
“Los Angeles County: -9.1%”
The three LA county areas are good barometers as they are large housing markets representing the middle end , ranging from lower -to- middle hoods but without too many ghettos nor super hi-end . Just your plain drab middle/ lower middle-working class LA hoods.
Downey 90240 17 $485 -23.4%
Downey 90241 16 $447 -35.6%
Downey 90242 18 $458 -12.4%
Van Nuys 91401 14 $650 -2.8%
Van Nuys 91405 5 $531 -5.1%
Van Nuys 91406 21 $458 -15.3%
Van Nuys 91411 5 $480 -6.8%
Whittier 90601 10 $515 -18.9%
Whittier 90602 5 $600 5.3%
Whittier 90603 8 $495 -12.2%
Whittier 90604 13 $446 -16.5%
Whittier 90605 15 $417 -14.9%
Whittier 90606 16 $400 -20.0%
The inner ghettos may collapse in smoking ruins and the hi-end coastal may bleed slow but it’s the middle areas to watch.
Big collapse here and LA is toast. Other mid areas are Glendale, torrance, Covina, Long beach, Lakewood, Carson, Cerritos,La Mirada, northridge, winnetka, reseda, granada hills, canoga park, Chatworth, burbank, basically the stable middle. If they go down hard in price then we are in depression mode.
Actually it looks as if some of them are crashing hard now, so maybe we could be in a depression already.
“‘It seems like home buyers are waiting for the ideal property; something that doesn’t need any upgrading,’ Grandell said.”
I wonder if this expectation has any connection to the $760k asking price?
When your monthly payments, after 10% down, with taxes, are over $5,000 per month, it had better be pretty close to perfect.
It is depressing, though, because houses are still selling in the bay area, with multiple bids, and ridiculous prices. There seem to be two worlds: the houses that won’t move, and the houses that are overbid, driving up the median. I guess it is because there are two types of neighborhoods in the bay area. The pretty ones with the really good schools, and the ugly ones with the really bad schools.
Yes. Your observation is 100% correct.
But when the homes in the mediocre school districts fall in price, people begin to second-guess the differential in price between the lower cost areas and the higher cost areas, placing downward pressure on higher priced areas.
Real estate IS local, but more aptly, real estate is relative. In other words, if homes in Redwood City sell for $1 apiece, home prices in Menlo Park and Palo Alto WILL be affected, regardless of the difference in school district.
People are no longer getting their wishing prices for homes. There is a West Menlo Park home on the market (and has been for several months) adjacent to a busy street, but driveway on a side street, big home, great school district, close to downtown. So far, one price reduction, still no “sold” sign.
A lower priced townhome, in the same area, also on the market for a while, didn’t sell. Now off the market. Many nicer homes I’m seeing aren’t selling for the “wish price”, so the sellers are taking them off the market and trying to rent out for very high rates. To my understanding, they’re not getting the rents either.
Stronger hands will slow the downward slide, but as long as secondary locations continue to fall in price, the “strong hands” are fighting a losing battle, IMHO.
Patiently wait for distress, patiently wait for distress. I saw a pre-foreclosure notice for an Atherton home yesterday on 2 acres. It won’t be available at a price that I could pay (because there is far more equity even at reasonable prices than the debt), but if you believe the locals, everyone living in Atherton is financially bulletproof. What happened in that case then?
I’m personally mentally gearing up for a long slide downward. I suspect we’ll make a go of it in our current rental for a couple of years, and then move into a larger place before we ultimately buy a home.
Great post. Strong denial in the higher end SV towns right now, but we’re all going to see shortly how substitutable housing offerings are. Foreclosures in Atherton? If that doesn’t say it all…
Pre-Foreclosure Notice. I’m not getting too excited yet. It could very easily be that the home is owned by some rich guy who has no liquidity and needs to wait for an open period to sell some stock to raise the money.
But still, homes on the market in good areas are sitting and not selling at the ask based on what I’m seeing.
I thought (incorrectly) that 2007 would be the year of expanding inventory in the Valley, but 2008 is looking more promising…finally.
The stronger hands are not as strong as they let on. What they don’t want you to know is they all bought with pay-option ARMS and can’t afford to pay at the reset price. They are in the process of depleting their savings, and are one job loss away from ruin.
I live in the Rose Garden in San Jose. What I see is “pretty” houses sitting on the market since March. Price reductions on some are nearing around $150,000. Still no sale.
I realize that Atherton is richer than the Rose Garden, but the people who live there *still* do not have enough $$ to pay their reset mortgage indefinitely. Furthermore, as you correctly pointed out, no one will choose a $3 million house in Atherton if they can get a similar one in Redwood City for $500k.
I agree 100%. I hear from some people that “high end homes in Woodside/Atherton, etc. are bought by people who are not effected by the finance market”. However, I personally know people who bought in those markets who were either a) enabled to do so by some knucklehead overleveraging downstream (overpaying for their prior home), or b) taking out a pay-option mortgage and overstating their income.
When I say “stronger hands”, all I mean is that they can hang on for longer than others, but not indefinitely. It just means that homes in the higher priced markets fall last and, by virtue of inflation, least in nominal terms.
Great posts…I really wonder about those ratios…I have a friend whose wife is constantly on his case about buying a home, since they just had a kid. I talked him out of buying something for a little over $1 million in San Carlos last month (just after their offer was accepted, he pulled it after I berated him for a few hours). Then he called me on Monday and said a much nicer, newer and bigger house went on the market three blocks from the original house for $100k less than the listing price of the home he offered on.
There are foreclosures seemingly popping up all over San Mateo county, just not those prime neighborhoods. But I’m really curious how that will begin to affect the ratios that folks are willing to pay.
Have you guys ever seen any documentation/statistics on such ratios?
Thanks!
Friend in Costa Mesa OC, nice area, trying to sell his 1M SFH. Now others on his street who must sell have dropped price 200K lower than his buy price in 2005. Outside of coastal OC property, this is very nice area. Even though I read the blog and know all about this, it is still a shock to watch the fall when it starts hitting the upper end like this.
Wilson,
I don’t know about the ratios, but when you need to put hard-earned down payment money into a home, or need to sell your existing before buying the new home, you pay an awful lot of attention to whether you think home prices are going down.
Lots of folks that were disbelieving us doom-and-gloomers are now seeing that we were correct. Who are they more apt to believe today, the NAR that said “home prices never fell at a national level”, or those of us who said “prices are going to fall”?
The doom-and-gloomers are starting to sound like visionaries, many in the buying mindset instantly goes to math when they begin thinking about signing a check for a couple hundred thousand.
They drop the pen when they figure out that buying a house will cost you 4x renting (losing the income on the down payment plus getting hit with taxes/insurance) AND puts 5+ years of savings at significant risk.
And those who were planning to “move up” are not immune either, since someone downstream from them has to do the same math to buy their house (or buy the house of the buyer of your house, etc.).
Plankton theory is at work right in front of our eyes…
“‘It seems like home buyers are waiting for the ideal property; something that doesn’t need any upgrading,’ Grandell said.”
IT’s the Price, Stupid. It’s the price.
I don’t know why, but this article brought a smile to my face.
““At an auction Thursday, protesters rallied on the steps of the Alameda courthouse bellowing, ‘No foreclosures, no bids,’ in hopes of discouraging people from purchasing the foreclosed property.””
I really think my prospects are going to get better in 2008.
It brought a smile to my face too. Seems like it is crashing harder and faster that I expected.
Where the Fed’s Mortgage Fix Falls Short
http://www.thestreet.com/s/where-the-feds-mortgage-fix-falls-short/markets/marketfeatures/10399438.html?puc=_tsccom
From SFGate, January 18, 2008:
Mayor Newsom announced today that due to a shortage of middle-class workers in SF, the city plans to employ schoolchildren to carry out such menial tasks as teaching, policing, firefighting, and ambulance driving. A successful pilot program at Everett Middle School in the Mission District has won over city officials who were a bit wary at first about the prospect of working schoolchildren.
Sixth grader Alicia Paulson of the Mission District’s Everett Middle School says she has very little time for her math, English, and earth science homework. However, Alicia finds that working in the school cafeteria serving food to her fellow classmates is really not that bad. “Some of my friends tease me about my new job, but it’s ok. I mean, some of them have to wake up at 4:30 to drive those big icky green trucks around the Tenderloin collecting garbage. It’s so gross!”
What is this, The Onion?
My former landlady came from a poor family. She was quite proud of recalling how the school, which recognized that she needed some help, gave her a job in the cafeteria. She ran the cash register.
“‘I don’t think it’s fair that I have to lose everything and these people have their homes in the hills and luxury cars and I am losing my house,’ Reyes said in Spanish.”
Proof of the illegals entitlement attitude. Sweetie, how about consequences for your actions. And by the way, isn’t it time you learned English?
There’s nothing in the article stating that the woman is, or ever has been, illegally in this country.
Isn’t that even worse…a legal immigrant or a native born US adult citizen that doesn’t speak English?
I know, I know, maybe she’s fluent in English and just prefers to speak Spanish…
All the American Citizen Hispanics or Perm. Residents I know, even the blue collar ones, speak English as their 1st language. There is an organization of American Hispanics “You Don’t Speak For Me”.
I use to moonlight on weekend doing residential loans. I know the mindset well.
“Alma Reyes nervously watched as her home went up for bidding after her monthly mortgage payment increased by $1,300 just six months after she had refinanced with a broker who she said never informed her of the consequences.”
The battle cry of the non-english speaking… ‘Boo hoo, nobody told me!’
IF she’s a legal and still doesn’t speak ingles, she still deserves a trout upside the head.
Naw, a waste of a good trout. She’s stupid in any language.
The fish is more deserving of respect.
You might be clued in that not everyone has the mental skills to master language. Some can not even master authoring (writing) in their native language and are perfectly decent and useful human beings.
Language is a skill or talent, and many people do not have it. Some people never understand how a computer truly works, never grasp economics, have no music ability, can’t dance.
Yes, you can learn, but it isn’t all just learning.
I’ll also add that language is only a start. Even if you know language, doesn’t mean you understand complex things like a mortgage - and not being a master of the language only worsens the situation. Many everyday people just go by what other people are doing - and it was the good old established White Americans who started this whole housing mess.
The rule of thumb is that only the illegals don’t bother to learn English. However, she might just be faking it now because she wants to claim that her broker should have given her a Spanish disclosure form.
Another confused FB who thinks they actually owned their house.
So what about those of us who live in a dinky house and drive a 13 year old car? How about the fact that the stupid behavior of borrowers has driven up house prices so that people who don’t want to be stupid can’t afford them? It’s not like people were bidding up house prices with money they already had, what exactly are these people trying to say that they have lost anyhow?
“So what about those of us who live in a dinky house and drive a 13 year old car?”
We’re the ones stuck in the middle, as always.
400 sq. ft. and no car - wage slavery is for the stoopid.
“‘I don’t think it’s fair that I have to lose everything and these people have their homes in the hills and luxury cars and I am losing my house,’ Reyes said in Spanish.”
Maybe it’s unfair that she is losing her home just a little sooner than the people in the hills with their leased luxury cars? Some of those people who she thinks are better off than she is will have their homes showing up for auction on the courthouse steps in the near future too.
“It’s not wise to buy these homes because what you’re doing is putting these people outdoors and once you buy the home what’s [going to] happen they’re [going to] be homeless,” one protester said.”
…And since when did Foreclosure automatically equate to being forced to live on the street or maybe a dumpster like this group seems to think? Sheesh.
They probably can’t afford to rent in the area… in an occupants-allowed-per-unit affordability scale…
“‘I don’t think it’s fair that I have to lose everything and these people have their homes in the hills and luxury cars and I am losing my house,’ Reyes said in Spanish.”
Someday Reyes and company will vote in a “fairness Tax” on the “rich people” who live in the hills of Ca. The numbers are in their favor and getting bigger all the time.
Since when the hell do I owe her a house? Did I divorce her at some point? If not, you’re on your own, girl.
“‘In other words, the county would essentially be saying to the public, ‘You can have this house if you’re willing to pay the taxes on it.’ And the public would collectively be saying, ‘No thanks, it ain’t worth it.’
Wow, that’s one pile of taxes. No one goes delinquent much more than 2 years without a sheriff’s sale. My taxes are $2140/yr on a $200k house. So using mine as an example, I could buy it for $4280 if it’s delinquent 2 years. Even if taxes were $20k year that would only be $40k. Must be that they’re vacant, rotting and in tear down status.
If that’s true, I’d buy every single one for the tax bill, do a fix-up (fix what’s broken, clean what’s dirty), and make a bloody fortune as a rental.
you would think, but not in antioch ca. Even though the neighborhoods are new, you would only be able to rent to section 8. Read this forum, working backwards from the last post. Not pretty.
$455K in 2004, sold by the bank for $214K? Now we’re talking! Wonder what the $/sq ft price is.
Now we are talking indeed. Congratulations to the couple on their possibly fairly priced home. It could be cheaper tomorrow, but at least they didn’t buy in 2005.
I know, good for them. It sounds like they might actually be able to afford the home too.
There need to be more of these stories in the paper to show what a housing market should look like.
On the front page of the Sacramento Bee this morning. Made me smile. He’s a lawyer, she’s a consultant. They’ve been renting and waiting, like many on this blog. Four bedroom house, new construction in 2004. Showed their smiling faces, posing in their new house on the back page. Good for them.
If it was 455 in 2004, it must have been over 600 by 2006. Pricing at 1/3 peak! Even I didn’t think things would fall so hard.
This one is being discussed on one of the local Sacramento blogs. General concensus is that the house was probably worth even less, but it’s good to see the media publishing stories about these kinds of price cuts.
At least it is a four-bedroom, not a 2-1. That at least argues for a slightly better house.
“‘Brutal. Just brutal. Short sales are what’s causing us grief,’ said Realtor Rob Ellett in Modesto, when asked to sum up 2007. ‘The good side is that prices are coming back to reality.’”
No, overpriced housing is what’s causing the grief. Short sales are the effect, not the cause. So….what? Another 15-20% until “reality”?
Well, okay, lax lending standards, low interest rates, and zero regulation are the real cause…
“The Bakersfield Californian will start outsourcing its printing operation in mid-March, eliminating 34 jobs at the newspaper’s publishing center. The Californian’s president and CEO says this decision will let the newspaper focus on news, sales and market research. The printing work will go to Nevada-based Brad Moseley Inc.”
Associated Press State & Local Wire - January 17, 2008
Just a sampling 61 Mass Layoffs this week - a new weekly high - affecting most industries
The San Diego Union-Tribune has made massive buyouts and layoffs in the last few weeks. Print newspapers are in a world of hurt.
And here is the WORST PART:
Massive amount of “intern” jobs on Craigslist and in the newspapers….totally violating minimum wage laws…and only kids, NO ADULTS NEED APPLY….
And how will the kids continue living in NYC? Trust funds? Their value is going down.
Layoffs at PETCO HQ in SD yesterday. They went private a few years ago. 2008 will be the year of layoffs around SD, many big companies are downsizing here due to the cost of living.
It had been repossessed by the lender and cost the married couple $214,500. The original price four years ago: $455,000.”–
in disguise i just think its an average sale. i mean i dont think you can compare what they bought now as opposed to what happened even 4 years ago. -but “wow” if you look at as if i bought for 215 and this thing is worth 455 right now..which is not the case..any more details on this “steal” ben?
I agree. Not a “steal”, but they can probably afford the payments, and in 5-10 years time, will likely not be underwater on the loan balance. If the home works for them for a 5-10 year timeframe and they are happy in it, good for them.
‘I’ve seen a tremendous amount of agents get day jobs and now do real estate on the side,’ she said. ‘And I’ve seen mortgage lenders just disappear.’”
Where to? Are they being teleported back to Hell to report to their real boss, the Big Evil S?
Oh, if only….
but I think she just means they’re becoming baggers at the local supermarket and maybe, if they’re lucky, baristas at the drive up espresso shack.
Despite cutting $149,000 off the price to its current $760,000, and investing in painting, staging and new doors, the owner has not had an acceptable offer, possibly because the home still needs some work, she said.”
Yeah, that must be it. She needs to invest in more paint. It can’t possibly be true that the house was wildly overpriced to begin with, … could it? … guys?
Maybe if they painted it with gold…
Someone mentioned that Zillow has gone in and bumped their estimate across the board, and I didn’t believe it until now.
My b.i.l house in LV has gone up from $750K to $799K in one month. Furthermore, the home two doors down 8078 Luna Sera has zestimate of $683K. This particular home is for sale by bank owned, and asking price of $570K, still no taker. I guess Zillow does not have any updates for Bank Owned for sale data.
2 weeks ago, the Zestimate of my house in Indianapolis was 147k, same as the tax assessed value. Now Zillow says 150k, range of 125k-159k. I’d put the value at 125k.
Indy is still cheap. $15,500 will get you a small house in a bad neighborhood.
http://www.zillow.com/HomeDetails.htm?zprop=2146916889
Indy is a good town for biz and I hope IN goes Right TO Work soon
I thought IN already was R.T.W.?
Nope. It’s very much pro-employer, but RTW hasn’t passed the legislature, nor will it go through during this session because the Dems have a majority in the House of Reps.
If you look at the Zillow discussion boards, many people are complaining that their Zestimate went way DOWN almost overnight. That happened in my case. I’m not selling, though, like most of the complainers are doing.
I love those threads! They are funny as all hell. Here’s a typical one
http://tinyurl.com/33ubx4
I tried to school ‘em a little, but the thread is a day old, so they’ll prolly never read it.
AMBAC DOWNGRADED!!!
Tipping point??
I think so…
And the Dow is dangerously close to falling under 12K. That realtor was right: 2008 will be a year to remember.
I look at that 12K level as a hard floor. If the bears manage to nonetheless penetrate it, then look out below…
Indeed. It looks like the PPT is working overtime during the last hour of trading.
Quite understandable, as it would be pretty devastating to end this week with a drop below DJIA 12K in the final hour.
No worries — their stock price is up on the news!!!
Ambac nixes stock sale, continues to evaluate options
By Greg Morcroft
Last update: 8:46 a.m. EST Jan. 18, 2008
NEW YORK (MarketWatch) — Troubled bond insurer Ambac Financial
(AMBAC Inc Last: 6.44+0.20 +3.21% 2:45pm 01/18/2008) on Friday cancelled plans to raise about $1 billion, citing current market conditions and uncertainty that the new capital would secure its AAA credit rating.
http://www.marketwatch.com/news/story/ambac-nixes-stock-sale-continues/story.aspx?guid=%7B102764B0%2D647E%2D403C%2D8E3B%2D3577F5C36CEE%7D
Some guys was on the Calculated Risk blog this weekend saying that he put his whole fortune on ABK and believed he was going to make $$$$. I will find his blog and link back. I think he is down 90% in 5 days. BAHHAHAHAHAHHA
sounds like a yahoo board
Crispy,
gotta give the guy points though, he posted last night that he was hosed on the trade big time. Admitted it and gave props to the shorts. IMO, a class act.
They’re all headed up, as of 3:15 anyways.
http://can-turtles-fly.blogspot.com/
Another sheep who thinks he’s a contrarian and (ironically) refers to Buffet in a vain attempt to justify his losing bet.
Even Jimmy-Come-Lately Cramer has denounced the financials, so the sector is officially dead.
Bond-insurer woes may trigger more write-downs
Possible loss of AAA ratings for Ambac, MBIA sparks turmoil
By Alistair Barr, MarketWatch
Last update: 2:41 p.m. EST Jan. 18, 2008
SAN FRANCISCO (MarketWatch) — Just when you thought it was over, trouble in the $2.3 trillion bond-insurance business could trigger another wave of big write-downs from banks and brokerage firms, experts said Friday.
http://www.marketwatch.com/news/story/bond-insurer-woes-may-trigger-more/story.aspx?guid=%7B590076D4%2DFB70%2D4304%2DB6B4%2DC444A554401C%7D
“Just when you thought it was over”
whoever thought that?
could someone explain the whole MBIA ABK issue to me?
is it simply that they insure bonds and they do not have enough capital to cover the claims?
I’m guessing the level of recent defaults turned out to be “worse than expected.”
Yes, and now all the people that looked at the implosion in bonds and said “thank god we have insurance!” now say “oh shit, we don’t have insurance!”
And it gets far worse than that. This is just the first part.
so buffet’s move was pretty much absolute genious.
not that it had to be proven.
Mortgages and other debt instruments are often secured by Ambac or MBIA directly or as part of a larger securitization (usually via an insurance policy, i.e., if there is a debt service shortfall on the underlying instrument they cover and in turn they get someone to agree to reimburse them), with the securitized interests in the mortgage or other debt instrument being sold by Wall Street to investors as highly rated instruments. Many purchasers are funds that have ratings requirements for what they purchase as investments.
Regulators require Ambac and MBIA to keep reserves to be able pay claims. Rating agencies also look at their reserves and capital v. expected claims to judge the risk that Ambac will not make good on its obligations for purposes of setting their rating. Real and expected claims are much larger than previously expected by the rating agency models, thus, they need more reserves to keep the ratings. They are having problems coming up with the reserves. Many of the mortage and other debt instruments were cut up so that the investment banks would keep the residual and sell weekly floaters to investors (i.e., paper bearing a 7 day variable rate), subject to the right of the holders thereof to tender back to investment banks. Guess what, they are all being tendered back to the investment banks. This prevents such banks from making money from the securitization and they are having trouble valuing these assets on their books, which they have to keep marking down (i.e., writedowns).
As these insurers lose ratings, there will be less and less market for the certificates, and the write downs will grow exponentially. This is just the beginning.
Anyone know when the adults get to run our government again? Call me old fashion but I sort of miss the 1990’s. You know, when FEMA worked, the economy was strong, gas was 99 cents, homes were affordable, and the dollar wasn’t toilet paper.
Not that is wasn’t entertaining in some strange way to watch amateurs wreck the nation, but isn’t it time to let the adults run the show again?
fema worked ?
ask folks in NC about that
no gov agency “works”
the study,meet,convene , even in Maui
but never accomplish anything
Yes, FEMA worked. Part of the reason Bush Sr. lost in 1992 was how bad FEMA screwed up Florida after Andrew hit. Clinton put a highly respected emergency relief guy in the position and EVERYONE that has any idea about FEMA said it was the best period for the agency, being staffed with excellent people from top to bottom.
These are facts, not opinions. FEMA did work at one point, and if you give any agency competent people and decent resources great things can happen. And if you don’t you get Katrina.
Yeah, right and the emergency they dealt with so wonderfully was, what exactly?
Consider the Oklahoma City bombing. Tom Feuerborne, director of Oklahoma’s Civil Emergency Management Department, can cite the events of April 19, 1995 almost down to the minute. It was 9:02 a.m. when a truck bomb ripped through the Alfred P. Murrah Federal Office Building in downtown Oklahoma City. At 9:30, Feuerborne placed a phone call to FEMA’s headquarters in Washington. At 2:05, FEMA’s advance team arrived, complete with damage assessors and members of Witt’s staff. Six hours later, at 8:10 that evening, Witt himself arrived to be briefed on the situation. By 2:30 a.m. April 20, the first of FEMA’s search and rescue teams had arrived to supplement the efforts of the Oklahoma City fire department. Says Feuerborne, “My office is very happy with the quick response of FEMA.”
I can go on if you want more education.
I think FEMA was sent to Kosovo during that time. They worked wonders there!
“The real sin, both of the Fed and of the Bush administration, was the failure to exercise adult supervision over markets running wild. ” quote from Paul Krugman NY Times.
Gingrich’s Republican Congress and a moderate (non-commie) democrat?
If Richardson had stayed in the race maybe we could have had that again in 2008. Oh well, I’ll take the Rep Congress to start with.
Would that be the same Newt that asked his wife for a divorce in the hospital while she was recovering from cancer?
People always complained about FEMA. It was always going to be reformed somehow. Then everyone forgets and are surprised when it still doesn’t work.
FEMA worked great in the 1990’s.
http://www.washingtonmonthly.com/features/2005/0509.franklin.html
With a new mandate and the staff to go with it, Witt conducted a top-to-bottom review of FEMA’s mission, its personnel, and its resources. The review brought swift changes. In its first two years, the agency shut down several unneeded field offices. It reduced internal regulations by 12 percent and drafted a plan to reduce them by 50 percent by the end of 1995. It strengthened programs that prepared states for natural disasters. And, so it could better inform state directors what aid was available, FEMA conducted the first comprehensive inventory in the agency’s history.
Recognizing the unlikelihood of a massive nuclear attack, Witt also moved the agency out of the nuclear war business, making available to natural disaster responses many of the resources the agency had accumulated in preparation for a Soviet attack. One hundred FEMA disaster specialists were freed up to deal with natural catastrophes.
Virtually overnight, the agency has developed a new reputation for quickness and efficiency. Gone are the bureaucratic swamps that the old FEMA had made its hallmark. It is telling that when state disaster officials talk about FEMA’s response time, they no longer speak in days or weeks, but in hours. They speak of phone calls, not of forms dropped in the mail.
Consider the Oklahoma City bombing. Tom Feuerborne, director of Oklahoma’s Civil Emergency Management Department, can cite the events of April 19, 1995 almost down to the minute. It was 9:02 a.m. when a truck bomb ripped through the Alfred P. Murrah Federal Office Building in downtown Oklahoma City. At 9:30, Feuerborne placed a phone call to FEMA’s headquarters in Washington. At 2:05, FEMA’s advance team arrived, complete with damage assessors and members of Witt’s staff. Six hours later, at 8:10 that evening, Witt himself arrived to be briefed on the situation. By 2:30 a.m. April 20, the first of FEMA’s search and rescue teams had arrived to supplement the efforts of the Oklahoma City fire department. Says Feuerborne, “My office is very happy with the quick response of FEMA.”
FEMA worked in the 1990’s. People conveniently forget this, but the facts are the facts.
As bad as the Oklahoma city bombing was, and assuming FEMA was wonderful in that instance, it hardly demonstrates competency on a hurricane scale disaster. Besides. if all the reforms were so effective, how is it the lifelong FEMA employees (most of whom ARE NOT politically appointed positions) who stayed on the job suddenly became totally incompetent under the new regime?
As much as I hold government employees in low regard, its hard to see how they could get WORSE in such a short period of time. Everyone knows the holdovers from administration to administration do the “heavy lifting”. Somehow we’re supposed to believe really proud, accomplished, workers became incompetent overnight?
Riiiiiight.
Good post, Joe.
One building. Whoop dee freaking do.
http://www.americanheritage.com/places/articles/web/20060905-natural-disasters.shtml
I’m no Bush apologist but Katrina ranks number 5 on this list. If you think the Clinton FEMA could have done better I sure would like to see the number of bridges you “own”.
Not to be all critical and stuff… Uhm, you compare the Oklahoma City bombing to Katrina… Responding to Katrina a massive disaster with mass displacements and resource allocations needed… OCB… you needed some ambulances and the FBI.
Nothing like Katrina happened during the reign of king Bill. He had the SUV boom and the Internet Boom and the telecom boom. There were a couple of significant hurricanes but nothing as bad as Andrew was.
So, you are comparing apples and oranges.
FEMA works but was in no way challenged then.
Not defending bush and his very poor leadership but you have to be realistic. Clinton was a joke as well.
I thought Bushie 1 did a pretty good job considering he got SL meltdown mark 1. Bushie 2 got Katrina, Sept 11 and the housing bubble.
Talk about some bad luck. And please skip the he caused any of those things stuff. He is way too dumb to have done any of this.
Took a genius like Saint Al Greenspan
10k before 13k for the dow..
No brainer. It’s in the bag.
Which reminds me, what is Gary Watts up to these days? He seems uncharacteristically silent on recent OC housing price developments.
He and Lereah are working on a book together, no doubt.
Also without much doubt will be the title along the lines of, “No One Saw it Coming” or “A Storm without Warning.”
I am taking the other side.
I expect an 8% vicious rally at this time.
Me too. At least 8%.
Bounced off the BBs and now riding the wave up.
When the peanut gallery starts calling for Armageddon . . . well, you know the rest.
I need some rest…. a weekend of debauchery faces me. Until Tuesday - Be safe all, stay away from Realtors.
Then again, the peanut gallery was calling for Armageddon in housing, and we know the rest…
I can no longer afford to ignore your great advice, Hoz. For the first time in a couple of years, I took a babystep long into U.S. stocks. (I guess that makes me a dollar-cost-average now
)
“averager”? (Not sure this is a word…)
No way.
that was responding to the guy who said 10K before 13
Almost back to 2006 prices…
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=INDU&sid=1643&dist=TQP_chart_date&freq=1&time=9
Any idiot can see at a glance that price supports of headline U.S. indexes kicked in at noon today and kept the DJIA dangling above 12K. I am looking forward to a much higher opening on Monday morning.
http://www.marketwatch.com/tools/marketsummary/
Professor. Put your money where your mouth is.
I’ll be you $1000 that the US market will not open higher on monday.
… the markets will be closed monday:)
You already won your bet before I had a chance to respond…
I am thinking today might have been a good time to buy the dip (and I did). I am following BiM in DCA going forward (but just a little bit at a time over the next 10 years…).
PB, I hate to give specific financial advice, so this is not advice… just something for you to consider: We might be heading into a prolonged bear market. Since you haven’t taken the plunge before, I would guess you’re pretty risk adverse when it comes to your savings. I think betting on a bounce here is reasonable, but if you make a nice little profit, you might want to take the money and sit on the sidelines for a while to see what sort of carnage we might be in for in the long run. Again, just something to consider.
Investing in staging?! You mean like removing some furniture, hiding the dog and dusting the fuzzies in the corners?
Yep. Gotta love those HGTV experts. Remove the furniture to make it look like the room is decent sized, and remove the animals so it doesnt smell like urine and feces.
My wife attended a PTA meeting last night (elementary school in PUSD). A bombshell was dropped on those attending: The district faces a $25m budget shortfall next year. This is roughly a 10 pct cut. For comparison, the report linked below shows the 2005-06 budget at $250m.
FYI, PUSD encompasses Rancho Bernardo (including 4S Ranch) and Poway; not sure if other San Diego county communities belong on this list.
http://www.powayusd.com/news/state-district-06-07/aboutPUSD.pdf
This is the case for the entire state. They were probably referring to the governor’s plan to cut 4 billion from education. According to the state budget website, the annual state funds for education is 40 billion.
Poor schools. You KNOW they didn’t see 4 billion in additional revenue during the boom. The whole thing is BS.
I was listening to talk radio the other night, the announcer’s rant v. education was that a lot of that money goes to non teachers, making schools top heavy - imo all gov’t could cut a chunk off the ‘top’ administration and be more efficient for it and save everyone tax dollars.
So if Gov. Terminator’s plan to cut 10% did that it would be fine - course those administative types have their tentacles so dug in there’s no prying them out.
in my county non teaching staff has grown 5-6 times faster than population
poor schools my ASSSSS
Besides, you need the administration. The truth is that CA spends like 20% less than the national average per student, and that’s BEFORE adjusting for the high cost of living here. Dude, in the Bay Area, we have teachers living in dorms, for crying out loud because they can’t even afford to rent an apartment, much less buy a house. What we need to do is modify Prop. 13 and use the revenues to spend more on education.
What they need to do is kick the illegal immigrants out. My guess is the population of CA’s public schools would drop by 30%, if not more.
Agree that we can easily cut spending by eliminating much of the administrative bulk. Fact is, most of these people are in it for political purposes and only serve to muck up the system.
Teachers, firefighters, cops, prison guards, etc. are not the problem. The problem is we have too many people trying to “manage” them.
Focus on “process” and let the system run on auto-pilot, with the admins stepping in only when necessary. And NO pet projects!!!
I would bet you they saw the 4 bill and them some. Schools always come out on top.
OK Professor:
so you spend $42-5 million or so on employee benefits (19% of 83% $250 mill))…..most people would think that is too much?
It’s the next area we have to discuss, heck they broke the union at CNN here in nyc after 9/11, CNN was losing big $$$ and employee costs were over the top.. Due to double trip pay, short turnaround….people were living in the CNN van for over a week, nobody could move the vehicle, but the people were still on the clock.
So why not civil service unions? Most big cities they are trying to extend hours or weekends, so people wont have to take time off work to go to city hall. Time shifting of work….in todays economy why do we pay extra for the graveyard shift or weekends?
And benefits, why so much? remember we renters are the end result of higher property taxes which is passed on to us with higher rents.
I live close to a high school. Just so my post doesn’t piss off those who have kids, I have 4 (all grown) sons and grand children. Of course nobody like to see cuts but I am stunned concerning the spoilt little brats I see around me. Most are driving vehicles which are mostly less than 2 years old. All have cell phones which I think might be glued to their ears. The school is constantly being maintained at great expense. A few cracks in the parking lot means a total makeover. Tut-tut, how shocking that the little princes and princess’s should have to go through the indignity of their 2 year old BMW hitting a 2″ pothole. The sports field has all the latest gizmos like an electronic score board and purpose built visitor stands. The massive lights which illuminate the feild are always on (so much for conservation or teaching the kids to conserve seeing as they are not paying for it.) The school is forever holding it’s hand out for money for this or for that. Maybe it’s about time the little prince’s and princess’s learned to go without for a change.
I hear you, Mike. My parents live two doors away from a grade school in the Philadelphia suburbs. Even though this school has bus service, most of the parents drive their kiddies to school.
My mother once asked one of them why. The reason was that little Johnny might hear bad words on the bus. My mother invited this parent to go by the school playground sometime. (Mom walks the dog by it at least once a day during the school year.) Parent would be shocked, shocked! at the language spewing out of the mouths of those kids.
Mike and Az Slim-
I hear you on the way brats are raising their brats. I was at the grade school in my PUD one day, getting info for my buyers, and one of the parents told me they they are rezoning for renters to be allowed to come to the exclusive yuppie grade school. She didn’t want her missy to mix with a socieconomic substandard child. Oh, the horror. I then told her, without her hubby, she too would be a renter. I almost lost it with her.
The grade school kids had the attitudes of their spoiled narcissistic parents. Kids don’t need fancy.
My question is - If they live so close to the school why are they even being bussed? When I was in grade school in the late 1970s, with the exception of kindergarten, we all walked to and from school all on our own. Bussed? Are you kidding me?
I used to walk to school too. I can’t even remember how many perverts attempted to offer me a ride. It’s really not safe, especially for a girl. When I was in high school, someone actually tried to grab me. I feel that my parents should have done more to protect me.
Oh, the nostalgia…..I remember those times, too. Of course, then came the 80’s, Reagan threw all the nutjobs out of the asylums, replaced the perverts in prison with drug abusers, and let the formers run the streets preying on America’s children.
Meanwhile, in FL, our Republican (!) governor Charlie Crist is proposing a 5% increase in the school budget, or an additional $400 per child. This, while we vote next Tuesday on significant cuts in property tax revenue to the state (will likely pass). Talk about la-la land!
40 million dollar budget cut for San Francisco Unified School District. Schools have already been operating on a shoe string budget. CA is fu**ed
I see the Stock price of country wide is still falling. Does that mean BOA will not infuse any more capital into Country wide even after the merger. I think BOF in their best interest will infuse large sums… Please comment
Whoops!!! Sorry, wrong bucket.
Writedowns Surpass 100B
http://blogs.wsj.com/marketbeat/2008/01/18/writedowns-surpass-100-billion/
And that is just the big banks that have the junk on their books.
How many Billions of RMBS assets are held on the books of foreign banks, global institutions, other investors?
I’m guessing global loss of balance sheet wealth so far exceeds 2x the losses noted in the article above (not to mention lost market cap of banks, bond insurers, and home builders). And I think we’re just getting warmed up–wait until consumption really falters with the option ARM resets…
Wow, Bank of America may want to offer only $5 a share for Countrywide…
http://finance.yahoo.com/q?s=CFC
That would still be a slight premium to where it closed today. I’m thinking BofA is wishing it had never even heard of CFC. Must have been a lot of nostalgic California dreamin’ locked up in those soulless Charlotte towers.
It is linked to BOFA stock price. The deal is x amt of BOFA stock.
A year to remember in California? Nah, people here suffer from chronic memory erasure….nothing is remembered for any period of time, especially the things people could learn from.
The only thing that is going to come out all this greed and stupidity is the lenders were bad people who took advantage of the victim population of California. This will prove to some the only way to prevent a future housing bubble is to never allow another house to be built in California. This will serve two benefits…keep existing housing prices high due to supply problems and more open space to protect the environment.
Am I really that off base?
No joke. I will never get over the big argument I had with a long-time-Californian neighbor back in 2004 about whether California real estate prices always go up. I finally threw in the towel in frustration.
PBear: I hope that person is still your neighbor and that you get a chance to watch them eat crow this year.
http://spokane.craigslist.org/rfs/543378004.html
Any knife catchers out there??? THIS IS A GREAT DEAL DIDN’T YOU KNOW?
WaMu Seems Ripe for Picking
http://www.thestreet.com/s/wamu-seems-ripe-for-the-picking/newsanalysis/banking/10399534.html?puc=_tscana
“A new movement, dubbed ‘Acorn,’ is underway to prevent buyers from scooping up the dozens of foreclosed Bay Area homes during the state’s real estate slump.”
“At an auction Thursday, protesters rallied on the steps of the Alameda courthouse bellowing, ‘No foreclosures, no bids,’ in hopes of discouraging people from purchasing the foreclosed property.”
all i have to say is maybe this group should have bid on the home and bought it back from the bank for! if they are so concerned about her, why wouldent they do that simple solution to get her home back for her! someone in that group needs to get some balls to really take action and put up some serious money to buy back these homes for those pour unfortunate strawberry pickers!!
Honestly…who gives a rat’s a$$ what’s going on in Sacramento???
Those of us who live here and have seen the prices jump beyond local ability to pay because of the Bay Area price refugees?
Noz: What’s up your a$$?
‘The current housing prices would have to drop 75 percent before you ran the risk that you would hold a tax foreclosure sale and no one would come and no one would bid,’ said Bort.
This is completely incoherent. Larger price drops mean MORE potential buyers, not fewer.
Last post.