A Precursor To A Healthier Market In California
The Sun reports from California. “Cora Viado came here three years ago to be closer to her son during her retirement. Now she’s moving away. Viado lives in Sierra Lakes, one of the housing developments in Fontana’s north end, which has become ground zero in San Bernardino County for home foreclosures. Viado wants to get out before it’s too late. The mortgage payments and property taxes are too high for her to keep her four-bedroom, four-bath home with cathedral ceilings.”
“A sign above her garage reads, in bright orange letters, ‘For Sale By Owner.’ She’s trying to keep the selling price low by not using a Realtor. ‘I’m going to sell this house,” she said as workmen laid new wood flooring and applied fresh paint to the walls of her house. ‘Somebody is going to buy it.’”
“The subdivision, pounded by the wind that barrels down from the Cajon Pass, was built to be the epitome of luxury. The winds are so strong, most of the ‘For Sale’ and ‘Foreclosed’ signs that hung on curbside posts in front of the two-story, sand-colored houses have been blown away.”
“Fontana resident William Bell will soon venture into the unknown as he prepares to lose his house. ‘Challenging’ ain’t the word,’ he said, trying to describe his situation. ‘I don’t know what I’m going to do. It’s stressful.’”
“Bell purchased his 1,100-square-foot house on Mango Drive for about $300,000 in November 2006, right after the housing market started to dive. He refinanced his loan in December 2006, and again in April, raising it to $400,000 and his monthly payment by almost $500.”
“‘She told us it was fixed, and it wasn’t fixed,’ he said about his broker. ‘I don’t know how she did it, but she got us to sign an adjustable (mortgage). She’s long gone now.’”
“Bell’s property was recently reassessed, and he now owes almost $400 more a month just to keep the county tax collector happy.”
“The financial industry is getting hit hard as well. Wells Fargo’s home finance arm in Diamond Bar shut its doors in December, laying off 58 workers, and JP MorganChase’s subprime lending branch in Ontario let 91 employees go during the same month.”
“Even big-name commercial developers are getting the hint it is time to scale back. Their insatiable appetite for industrial building construction has sent vacancy rates to 15percent in the Rialto, San Bernardino, Redlands, Moreno Valley and Riverside areas - a number considered unhealthy.”
“‘The reason office space was being used out here is because this is where all the housing was being built,’ said Thomascm Galvin, research associate for Colliers International in Ontario. ‘You have finance, insurance and real estate (tenants). If the real estate goes south, the finance and insurance goes south, too.’”
The Daily Bulletin. “Jane Anderson may be sitting pretty in her home, but the dried and brown front lawns surrounding her in this unincorporated area of Riverside County is a sign of many foreclosures in the community.”
“‘In the past year you’re seeing more,’ Anderson said of foreclosure and for-sale signs on homes.”
“In Eastvale, there were 1,083 housing units in foreclosure proceedings from January to November 2007, said Tom Freeman, spokesman for the Riverside County Economic Development Agency. December numbers have not yet been released.”
“The 2007 foreclosures are in sharp contrast to the 217 in 2006 in the same time span, according to Joel Cone of RealtyTrac.”
“Anderson and her husband moved into Cloverdale, the first planned development in Eastvale, in 1999. At that time there were only 200 homes, but then came Cloverdale II and what Anderson referred to as a rush of development.”
“‘I think people got caught up and wanted to buy a home,’ she said. ‘Maybe they couldn’t afford to buy one somewhere else but could here.’”
The Oroville Mercury Register. “Money and financial market watchers were reluctant to say the ‘R’ word during Thursday’s Tri County Economic Forecast Conference. While talk of a recession has bounced around, economists John Mitchell of U.S. Bancorp. and Nancy Sidhu of Los Angeles Economic Development Corp. said there are too many positive signs to conclude a recession is here.”
“Indicators of a recession include consistent and widespread economist downturns. ‘It doesn’t get more exciting than this,’ said Mitchell, pacing the BMU floor in his usual style. ‘Look at all the stuff going around. We’re in the seventh year of an upturn. The U.S. economy has been growing since 2001, even though this is the third year of a housing contraction. Credit markets are in turmoil. It’s an election year. Ag’s happy; you can tell by their smiles.’”
“‘It’s not a recession,’ said Mitchell. ‘All the data we have says we’re still growing.’”
“Sidhu pointed out there are good signs in job growth in aerospace, health services, leisure, recreation and hospitality, as well as high tech. ‘The committee that decides is still looking. But if you think we’re going to have a recession, things start declining,’ he said.”
“Sidhu calls the current period that’s aroused recession talk ‘a pause.’ ‘These numbers won’t be truth in two months,’ she said.”
The Orange County Business Journal. “With radio ads still pitching potential borrowers, Wesley Hoaglund, owner of Lenox Financial Mortgage Corp. in Irvine, is hoping to survive a market where the number of home loans being made is about half of what it was a year ago.”
“‘We’re hoping to make it through the storm,’ Hoaglund said.”
“Loans at Lenox are down 60% from a year earlier, according to Hoaglund. And subprime loans that once made up about a quarter of his business have stalled to practically none, he said.” “He’s cut his staff by about 40% to less than 100 workers. Hoaglund also has cut his advertising budget in half.”
“Lenox recently foreclosed on a Moreno Valley home for which the borrower didn’t even make the first payment. The house that initially sold for $460,000 has been declining in value and was last listed at $250,000, he said. After paying real estate agent fees, the house could bring a loss of about $150,000, he said.”
“Like Hoaglund, mortgage broker Jim Walter had about a quarter of his business from people with less than great credit. Walter, a 25-year veteran of the business, said he sees the credit collapse as a badly needed cleansing of brokers who helped fuel the mortgage bubble.”
“‘I’m glad we’re getting rid of a lot of riffraff,’ said Walter, who runs Anaheim’s Mortgage Plan.”
“Estimates by the EDD don’t become official until the federal Bureau of Labor Statistics comes out with its figures months later. In the past, the EDD has usually underestimated job growth in San Bernardino and Riverside counties.”
“BLS figures for the second quarter of 2007 show that instead of the 45,200 jobs the state agency said was gained year over year, the two-county area actually lost 3,912 jobs.”
“‘EDD data was wildly overoptimistic,’ said Redlands-based regional economist John Husing. ‘This will far exceed the worst downward revision in EDD history. It means that the Inland Empire may well have been in a job recession for all of 2007.’”
“Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., said things were definitely slowing around the state. ‘A lot of metropolitan areas are seeing very little growth,’ he said. ‘Orange County may even be in an employment recession.’”
The Fresno Bee. “Unemployment jumped to three-year highs across the central San Joaquin Valley in December, new statistics show. The poor jobs picture was echoed in Kings, Merced and Tulare counties, all of which posted double-digit unemployment rates also not matched since 2004, the department reported.”
“‘With housing, you can say that the Central Valley is the epicenter of the problem, and that’s reverberating across the economy,’ said Sharmila King, economics professor at University of the Pacific in Stockton.”
“Lauren Addison of Clovis was laid off in October from her job as an administrative assistant at an engineering firm. And she said that she was an escrow officer for 17 years before that, but can’t fall back on that job right now.”
“‘I’m about out of money,’ she said. ‘It’s tough out there.’”
The Modesto Bee. “Troy Cannon was at the downtown Modesto EDD office Friday filling out job applications. The Ceres resident has been searching for work for a year and half, after being laid off from his construction job.”
“Cannon has been told by construction firms that no one is hiring. Cannon has been applying for nonconstruction jobs, such as those at fast food restaurants. But at 42, he said, his application isn’t desirable to managers who tend to hire teenagers or senior citizens.”
“He’s been doing handyman jobs and recycling for extra cash, and his wife is training to become a truck driver. ‘I’m a jack-of-all-trades,’ he said. ‘I’m willing to do anything.’”
The Record Searchlight. “December unemployment shot up in Shasta County, reaching a 10-year high for the month, the state reported Friday. The slumping housing market continues to take its toll in Shasta County. There were 700 fewer people working in construction and real estate in December 2007, compared with a year ago.”
“Samantha Ironside, a Labor Ready customer service representative, said they have seen more people coming to ’s Lake Boulevard office to sign up for jobs. ‘We have a higher number of people than usual because they were laid off from construction jobs they usually worked,’ Ironside said.”
“Frank Strazzarino Jr., CEO of the Greater Redding Chamber of Commerce, said his members are dealing with a challenging economy. Employers are retrenching, leery to take on more employees because of the uncertain times, he said.”
“‘I think people are being careful to live within their means,’ Strazzarino said.”
The Sacramento Bee. “As elected officials from the White House to Sacramento tried Friday to revive an economy humbled by the real estate downturn, new California unemployment statistics suggest the task won’t be easy.”
“The unemployment rate in California jumped a half-point last month to 6.1 percent, the highest since 2004, officials said. The Employment Development Department said Sacramento-area unemployment moved up three-tenths of a point, to 5.9 percent.”
“‘How bad is this housing slump going to get?’ said Howard Roth, chief economist at the California Department of Finance. ‘It’s already worse than I expected.’”
“Barry Masson, an unemployed construction worker…visited EDD’s job-assistance center on 50th Street on Friday. ‘I’m grasping at all the straws I can,’ said Masson.”
“Masson was laid off last month from a seasonal job operating heavy equipment at home-building sites. ‘People are not selling homes – you know the whole story,’ he said. His unemployment benefits run out in February, he added.”
“As Sacramento struggles with a real estate slump that’s driven homeowners into foreclosure, home builders into bankruptcy and the region into a possible recession, big-time investors are smelling blood – and preparing to swoop in.”
“The arrival of the ‘bottom feeders’ doesn’t mean the downturn is over. Far from it. Most analysts still say recovery in Sacramento won’t begin until 2009 or later. But the circling of the investors, however ruthless, is a predictable and even necessary stage in the real estate cycle as the region, battered by 29 months of falling values, tries to find where the bottom is.”
“‘It’s a precursor to a healthier market,’ said Dean Wehrli of the Sullivan Group, a consulting firm that’s preparing studies for out-of-town investor groups. ‘The next step after that would be the slow beginning of a recovery.’”
“The recent interest by investors shows how bad things are in Sacramento. The sheer drop in values the past two years – more than 25 percent for houses and a stunning 80 percent for raw land, according to one estimate – has put the region on national and international investors’ radar screens.”
“But there probably won’t be a flood of quick deals. Many landowners, reeling from the sticker shock of collapsed prices, are leery of taking big losses. And potential purchasers see Sacramento as a fixer-upper, a long-term rehabilitation project that will take several years to pay off.”
“It’s all right ‘to ride the market down a little bit,’ said Ken Stevens, a Danville real estate investor who recently snapped up the unfinished Wolf Ranch Condominiums near the Cosumnes campus. ‘If you’re in it for the long haul, what’s the difference?’”
“One reason deals are slow to happen: The landowners, whether they’re bankers or builders or developers, are reluctant to swallow heavy losses. ‘I don’t have a shortage of buyers,’ said Jim Radler a Roseville land broker. ‘The problem is I don’t have any sellers … at the right price.’”
“In the Sacramento suburbs, lots worth $100,000 apiece during the boom would fetch barely $20,000 today, he said. In some parts of greater Sacramento and the Valley, lot prices have reverted to farmland values.”
“‘They’re looking at it like, ‘We want to go in and scoop up as much as we can for pennies on the dollar and then be able to just sit on it,’ said Kathryn Boyce, who follows the Sacramento market for Hanley Wood Market Intelligence.”
“‘They’re not just looking here,’ she added. ‘They’re looking everywhere: Sacramento, the Central Valley, Reno, Texas, Phoenix.’”
The Sierra Sun. “Foreclosure rates are a sure sign of a slumping housing market. And Tahoe-Truckee has recently seen a spike in defaulted home loans, as subprime loans and slumping prices catch up to some local homeowners.”
“‘I’ve been here going on 18 years and until six months ago there was no such thing [as a foreclosure market],’ said Kelly Smith, a Realtor in Carnelian Bay.”
“Smith now lists several foreclosures on his Web site, and expects defaults to become more widespread as the year progresses.”
“‘The reason that it is going to pick up is the adjustable rate mortgages … are still going to adjust,’ said Smith. Realtytrac identifies 129 properties in Truckee, Tahoe City and Kings Beach as ‘pre-foreclosure,’ ‘auction,’ or ‘bank-owned.’”
“The foreclosure rate in Tahoe and Truckee is ‘without a doubt’ the highest he’s seen in 18 years selling real estate in Tahoe, Smith said.”
“‘You have a whole collection of homes that were sold while there was a lot of credit,’ said Senior Regional Economist Cynthia Kroll of the Fisher Center for Real Estate and Urban Economics at the Haas School of Business. ‘That credit is not available anymore.’”
“Many economists, housing experts and others…expect the nation’s housing slump to drag on well into 2009. ‘It is going to be a really slow adjustment,’ said Kroll. ‘There are very few that are saying this will pick up in the spring. What happened in the credit market really pushed prices up.’”
Like I posted in the Florida thread, it isn’t fun watching these jobs go away, but it had to happen eventually. Grown men taking the jobs previously held by minors is one of the events that stuck in my head from the Texas bust.
However, it is very important to get one thing across: Attention main-stream media; this economic dislocation and the defaults are not the result of a ’subprime crisis’ or a lack of confidence. They are the result of a housing bubble that drove prices to unsustainable levels, and a correction is not only unstoppable, but is to be welcomed.
And where are those people that said we were being unrealistic:
‘In the Sacramento suburbs, lots worth $100,000 apiece during the boom would fetch barely $20,000 today, he said. In some parts of greater Sacramento and the Valley, lot prices have reverted to farmland values.’
Regarding the land price issue, several developers have defaulted on local land as their debt load was too high too sell. This land was going for $10-20k per acre just 5 years ago, and then weny to $100-150k, it had to end badly.
1031 deals on farmland have also stopped! The supposed smart money selling apartments and office buildings in So Cal was rollling over their gains into almonds, pistachios and grapes all over the south valley area - they might turn out to be the biggest fools of all..
At least they’ll have a healthy diet.
Remember reading books on farming in the great depression where farmers would burn part of their crops, despite people starving, as that was the only hope to ‘restore market prices.’
It didn’t work. Not until 1935 when enough people were back to work such that ‘normal’ prices for crops somewhat returned.
Do note: In the 1920’s, farm prices were high due to Europe rebuilding from WWI.
So if they have a high mortgage… they won’t be farming in 2010…
Got popcorn?
Neil
In the US (and Great Britain) farm prices went to rock bottom in the early 20s. Farmers had expanded and bought equipment to meet the demand during WWI.
Agriculture was ALREADY in a severe depression in 1929.
Through the Agriculture Adjustment Act of 1933, gross farm income increased 50% by 1936 but it was mainly through crop subsidies and paying farmers to reduce the over-production they had been engaged in since the end of WWI.
Despite reduced production, actual food prices did not really increase until after 1937.
If we have a favorable year for crops, I expect we’ll be seeing another grape glut. Last couple of times I have driven through Central Cali on the 101, I saw a boatload of new vines going in, and they are probably ready to produce big time by now - doesn’t it take about 5 years for a grape vine to mature?
With farmland, as with all RE, it’s when you buy and what you pay that matters. As long as the 1031 investors were paying farmland prices and not “land flipper” prices, they should be OK, no? Unless they were counting on the first year’s crop to pay the mortgage or something…
Grapes are 3-5 years to maturity depending on what kind…wine or table. There are lots of table grapes grown in the hotter areas of the central valley around Reedly, Kingsburg, Madera and Tulare for instance. Wine grapes need need some kind of night time cooling so they are generally nearer where there are gaps in the coastal range mountains or delta areas such as Lodi, Salinas, Gonzales, San Luis, Paso Robles and Santa Barbara. And a lot of wine grapes were pulled out after the last glut 4 or 5 years ago, especially Chards.
With wine grapes you can usually get your first harvest at 3 1/2 years.Although the quality will not be great.
What is it they call that grape…Thompson Worthless?
“‘She told us it was fixed, and it wasn’t fixed,’ he said about his broker. ‘I don’t know how she did it, but she got us to sign an adjustable (mortgage). She’s long gone now.’”
Signing in my sleep…
“Bell purchased his 1,100-square-foot house on Mango Drive for about $300,000 in November 2006, right after the housing market started to dive. He refinanced his loan in December 2006, and again in April, raising it to $400,000 and his monthly payment by almost $500.”
Where did the 100k go? Why do people make it sound like he’s a victim when clearly this guy made out like a bandit with a 100k windfall he’ll never have to pay back. Makes the honest people look like suckers in retrospect.
So even though prices were heading down, this idiot decided to take $100K of equity out. And while he’s whining, lets not forget he got his $100K tax free and won’t have to pay it back. Anybody else here that would whine about that kind of windfall - I sure as hell wouldn’t.
I curious to see how all of the MEW withdrawl will be taxed. As I understand it the FED, not State, tax forgiveness is only on the cost basis of the house, not the total mortgaged value. Will be interesting to see April 09 / 10. We’re just in the early innings of this thing IMHO.
Happy, my impression, too, is that, is that Fed tax forgiveness doesn’t apply to HELOCs, AND that it is only offered on a short sale - not on foreclosures.
Does anyone know this to be wrong?
Yeah, what happened to the 100K after he refinanced? He sounds like a victim and but he is not. News coverage should be more thorough.
Watching American Idol when signing loan payments doc’s probably wasn’t a good thing.
The Orange County Business Journal. “With radio ads still pitching potential borrowers, Wesley Hoaglund, owner of Lenox Financial Mortgage Corp. in Irvine, is hoping to survive a market where the number of home loans being made is about half of what it was a year ago.”
Couldn’t happen to nicer people. The biggest no-brainer in the history of Earth, right? Nice serial fee-generation racket they had going.
LOL - see my same comment below.
“The biggest no-brainer in the history of Earth”
Turns out to be one slogan that was 100% correct.
Matter over mind.
Every time I hear that guy’s voice on KNX, I want to punch my radio. Thank goodness for KCRW. I keep hoping to read that Hoagland has been carted off to jail.
“Wesley Hoaglund, owner of Lenox Financial Mortgage Corp”
Famous for his idiotic commercials during the runup - “The biggest no brainer in the history of mankind” and “we are nice people too”
every commercial break on am 570 & 640kfi still includes these advertisements here in LA. How are they still in business if all the bigger players are suffering so?
But he was so folksy on the radio, you just had to believe he wanted the best for you. Heck, you betcha, we’re in the era of folksy talk, remember?
“Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., said things were definitely slowing around the state. ‘A lot of metropolitan areas are seeing very little growth,’ he said. ‘Orange County may even be in an employment recession.’”
_____________________________________________________
Perma-bull capitulation…
said Redlands-based regional economist John Husing. ‘This will far exceed the worst downward revision in EDD history. It means that the Inland Empire may well have been in a job recession for all of 2007.’”
_______________________________________________________
Did someone hit these two clowns over the head with something?? In 2007, they did nothing but cheerlead…
Permabulls tend to traverse the housing bubble stages of grief far more slowly than permabears…
My login name was hijacked by Kudlow & Yun this morning - just trying to check my thought process…
Yun is going to speak at a RE convention next week. I asked a real estate friend of mine (yes, I still admit I know him) to look at Yun’s nose as he talks. I think it will get longer. hehehehehehe
Mother Nature’s up to her usual trix…
6 of San Diego’s freshwater reservoirs are infected with the quagga mussel, and many so far unaffected freshwater lakes in the Golden State are considering banning boats from plying their waters, which will devastate the already barely limping boating industry, in California.
Here’s comes another punch in the gut…
The zebra mussel just showed up, Her bad.
“San Justo Reservoir is closed to boating until further notice, following the recent discovery of an introduced exotic, the zebra mussel.”
“The discovery of the mussels at San Justo is especially troubling because it is a link in the enormous San Felipe Project. San Felipe is part of the U.S. Bureau of Reclamation’s statewide water distribution network and pipes link San Justo ultimately to the entire network. From there, the water network spreads across the Central Valley, into the Delta and as far north as the Cascade Range.”
http://www.pinnaclenews.com/news/contentview.asp?c=234217
Here’s an article about what the introduction of zebra mussels is doing to water fowl on the Great Lakes:
http://www.chicagotribune.com/news/chi-loons_15jan15,0,1170225.story
so sad!
Zebra mussels have been around the Great Lakes for a number of years and the area has adapted, but the price has been steep. I have fished Lake Ontario off Rochester for a number of years and zebra mussels are an issue with fishing and the intake waters of the Ginna nuclear power plant. There are options, but they are expensive:
Rensselaer Effort to ‘Pull Mussels’ at Lake George Looks Promising
http://tinyurl.com/3bs7jf
Zebra mussel facts: http://tinyurl.com/3d8o5u
Recently another invasive species, gobies, have invaded Lake Ontario and made the fishing even worse. Fishing is big business around here and zebra mussels are less a problem than gobies. These are nasty creatures, which I hope don’t make it to CA lakes:
http://tinyurl.com/36balx
Send in a crop of star fish to wipe out the muscles !!!!
I have a house boat on Mohave and I have to dive the hull every 60 days to keep all the intakes clear…I’m screwed!
“Money and financial market watchers were reluctant to say the ‘R’ word during Thursday’s Tri County Economic Forecast Conference.”
Resilient?
Fontucky Fried Chicken…
“Fontana resident William Bell will soon venture into the unknown as he prepares to lose his house. ‘Challenging’ ain’t the word,’ he said, trying to describe his situation. ‘I don’t know what I’m going to do. It’s stressful.’”
‘Fontucky Fried Chicken’
- To those unfamilar with SoCal, Fontana is a freekin armpit area that has thousands of mcmansions @ 400-500k prices. The median income for the area is probably 48k and it was propelled by 100% suicide loans.
- This will be part of the area to help the Inland Empire to rise to the top and lead the nation in forclosures. When the peak resets in June, the rising default Alt A and MEW (heloc’s) will help kick it into second gear.
“venture into the unknown” ???
Is renting unknown in Fontana?
The Fontana/Bloomington area (intersection of interstate 10 and interstate 15) has this very fine, almost powdery soil that just makes everything seem dirty and dusty…and the place seems like residential mixed with truck depot centers and automotive repair. It gives me the creeps.
Wasn’t that movie called Mad Max?
Perfect setting for Day of the Living Dead.
rent has a long way to go down in fontana. I could rent a house with an ocean view in San Diego for less than what people are asking in rancho cucamonga and fontana.
hey guys,
quick question of advice here…especially if you are on here, Tuxedo_Junction. On an earlier post today, Tuxedo wrote:
Also, most of the REOs are owned by investment trusts (securitized loans). The loan servicers, who service the REO, don’t wan’t to dispose of them because if they do they lose the servicing income. Once the investors face a significant loss of cash flow then the trustee will force the servicers to sell the REO. It’s just a matter of time.
Does anyone know how I can look out for this info? I’m looking to pick up some properties, but I only want to offer 10 to 20 percent of current list prices…I really want to find desperation in the REO holders.
Any advice (or book recommendations, etc.) would be much appreciated…
Thanks!
Wilson
I think we’d all like to pick up a 3,000 SF house in Newport Beach for $100,000, but I don’t think it’s gonna happen. Good luck with that one.
Except me. You could not drag me back to OC.
10% to 20% of former list is what crap-boxes out on the Texas Veldt went for in the RTC days. (Plus you had to be an “in” buyer to get that great deal.) You won’t see that in SoCal. If you see an REO in a good area at 10-20% of original, pre-foreclosure list think structural damage plus hazardous waste in the ground.
All good…appreciate the anecdote. Maybe wishful thinking on my part.
But what do you think triggers this wave of investors selling off? What are you looking for?
Appreciate the insights, tuxedo…
“Lenox recently foreclosed on a Moreno Valley home for which the borrower didn’t even make the first payment. The house that initially sold for $460,000 has been declining in value and was last listed at $250,000, he said. After paying real estate agent fees, the house could bring a loss of about $150,000, he said.”
Can you say ‘Cash back at Closing Mortgage Fraud?’
Lenox does not seem to be a math wiz either, consdering he is a lender. If he nets $230,000, after selling costs, the loss is $230,000. 50% decline in value.
“In the Sacramento suburbs, lots worth $100,000 apiece during the boom would fetch barely $20,000 today, he said. In some parts of greater Sacramento and the Valley, lot prices have reverted to farmland values.”
————–
In east-valley Phoenix, THIS is where the money will be made I believe.
There are 1/3 to 1/2 acre lots in “luxury” neighborhoods going for $250 to $400k right now, that I would expect will follow the same trend as these Sacramento lots. In a few years, adding nice but not extravagant 4/3, 2500 sqft houses among the McMansions in these ‘hoods should pay off nicely. Of course the CC&Rs would matter, but anything is better than a weed covered empty lot next door, and I think you could convince the existing owners. There is one ‘hood of 20 lots, about 12 houses built or in progress, and the rest for sale for “your custom luxury house”. I seriously doubt another house will get built in there for a few years.
Fontana: “The subdivision, pounded by the wind that barrels down from the Cajon Pass, was built to be the epitome of luxury.”
There are some places that should never have homes built on them and north Fontana is one of them. The winds start in October/November and las thru at least March.
It is a miserable place to live. I actually feel sorry for all those people that bought homes there in the summer. I bet no-one told them about the winds.
It can get so bad there in the winter that your skin will dry out like an orange placed on Palm Springs cement.
The pounding of the relentless wind that keeps you up at 3am wondering if the roof tiles will hold or if all those trees you planted wont be launched thru your neighbors window.
Getting anything but low growing shrubs to take hold there is a challenge.
You can tell I lived there before - in the early 90s and it was hell on earth.
I was watching some vintage circa-1950s railroad footage of Cajon Pass the other day, guess it should have stayed the way it was in those films, huh? Sure looked like a punishing environment alright.
We used to drive through that area way back when it was all ag. There were vineyards and a winery near the Glen Helen area, olive groves & eucalyptus wind breaks everywhere.
I wonder, if they didn’t build all these houses, would people not come here? Our birth rate isn’t that high even. I’m ready for some stagnation myself.
Kaiser steel had a plant in Etiwanda next to Fontana in the 60’s - because the wind would blow the smoke stack emmissions away.
I used to hunt rabbit, quail and dove in the vinyardsof Fontana and Etiwanda as a kid. It was alot of fun. Visited the Bass Pro Shop before Christmas in R. Cucamonga during one of those amazing windstorm. Created a “whiteout” condition of dust where you have to pull over to the side of the road until it passes. Tough, Tough place to live.
Does anyone remember Sam Kinison? The following is lightly edited to re-spell the F-bomb.
“You want to help world hunger? Stop sending them food. Don’t send them another bite, send them U-Hauls. Send them a guy that says, “You know, we’ve been coming here giving you food for about 35 years now and we were driving through the desert, and we realized there wouldn’t BE world hunger if you people would live where the FOOD IS! YOU LIVE IN A DESERT!! UNDERSTAND THAT? YOU LIVE IN A FSCKING DESERT!! NOTHING GROWS HERE! NOTHING’S GONNA GROW HERE! Come here, you see this? This is sand. You know what it’s gonna be 100 years from now? IT’S GONNA BE SAND!! YOU LIVE IN A FSCKING DESERT! We have deserts in America, we just don’t live in them, a$$holes!”
Apparently Americans are not as smart as Sam Kinison gave them credit for.
I don’t feel sorry for them at all. Didn’t they bother to google the neighborhood before they bought a house there?
Y’all will enjoy this piece in today’s LA Times: How We Cashed in Before the Housing Crisis”
http://tinyurl.com/37g9jt
great article, we need to see more of these in papers across the country. Especially the part about getting $ for no work in the bubble.
That article is phenomenal…
His disbelief about people wanting to buy his home with a three-foot hole in the ceiling is epic…
I think he must have been reading this blog:
“Maybe [my daughter] will remember our experience and think twice when people are again promising something for nothing, as they inevitably will.
That lesson could be more durable than all the granite counter tops, copper pipes and oak floors in the dream houses peddled in the bubble.”
“He’s been doing handyman jobs and recycling for extra cash, and his wife is training to become a truck driver. ‘I’m a jack-of-all-trades,’ he said. ‘I’m willing to do anything.’”
Unfortunately this guy is learning the hard way about globalism. No education equals no job. The situation is similar to housing, it will sell if one lowers the price enough, and he can work if he accepts a low enough salary. Droping out of high school and parting his life away, brilliant!
Ask any IT person or computer programmer and they will tell you education doesn’t do much for you in a global economy either.
Education might not, but talent does.
The proficiency level of many so-called IT people and software engineers in this area is pathetic. Education doesn’t do it, you have to “get” it, and be a professional. I have posted here before about candidates for IT jobs; who think they are worth $100K+ per year but barely have the talent to answer telephones at a help desk. So-called “professional” software engineers who expect $120K + options and can’t code their way out of a paper bag or write documentation to save their lives.
The people I know in those fields, that are really good at it, are all making bank and turning away work.
Nice one. I’m an EE who has worked in different countries and got to see a good snapshot across the world wrt employment. I don’t think it is an IT situation or an US one. I’ve seen same talent vs. salary issues in UK, Germany and US.
I’ve had highly qualified EE’s working for me who were hopeless at every task we gave them. This included one highly qualified individual who knew all the theory and formula but couldn’t apply it to anything. He was a a bachelor degree from India/ MS in US good school/ MBA in another US good school. After his MBA, he was promoted in our company to marketing position but quickly identified to be laid off in dot com bust. Having met the person, I concluded he is socialzed inept. He could not deal with a everyday discussion such as “what did you do last weekend” let alone a commerical negotiation. Besides, this person had a very annoying habit of clearing his sinuses by publicly backward snorting and swallowing. (Every 2-8 minutes).
The person managed to get back into our company and returned to engineering but in a different technology. As a manager, I inherired him. Whilst his resume was impressive, I observed it took him 4 times longer than the younger US Bachelor’s degree to do similar task but also with higher risk of ‘f’up’ with his work . Not only that but we’d paid him 40% over junior engineers. I ended up so we bottom 10′d him in the review cycle with a message of ’shake up or get out’. He got the message and switched back to the same group that originally hired him from his 1st Master’s degree. Transfered as the same pay so they overpaided him !
On other extreme, I’ve also had a technician who had more talent than most engineers on my staff. He was incredibly innovative and probably management material but just didn’t have a 4 year bachelor degree which our company requires on the managerial ladder. Nevertheless he was at top of their branch and paywise, I was shocked to see his pay+ overtime to be above most of my engineers. It showed me the con game of salary vs. wage for same job. (btw: I discussed promoting the person but he declined as he would loose money on taking a salary and HR declines as they was leary on making him ‘professional’ without qualifications even though past history he had an engineer job grade…)
Reflecting on this topic and my own work attitude, as I get older, I realize that my motivation is changing and I may be coming across as one of these over 40’s who are ‘difficult’. When I was early 20’s, I would willingly come in on weekends (during a girlfriend drought!) to try out work related projects uniterupted, take work home to read or teach myself something new like software.
In recent years, I’ve still take my laptop home and log on to continue work after eating with the family. However recently, I am in a not so ‘live to work’ position. Although I do the job quicker comapared to a newer employee, I no longer want to put in the excessive hours or have enthusiasm to put up with ‘it’s urgent’ BS when clearly it is not.
Perhaps I am burned out (and just need a break) but the customer base I service (and thus, our internal management) is high maintainance.
Last week was one new additional spreadsheet too many to maintain, so I put in for an internal job transfer to a sister business group but lower customer service maintence: same job, same money, less stress, less crap.
Uh huh……and that is why the incomes of college graduates have been FALLING the past 6 years. They are reaping the rewards of their advanced degrees and student loans.
That ‘get a degree’ may have been valid 15-20 years ago but not today. There are too many BAs and BSs and too few jobs .
They are not taking the hard sciences but short changing themselves with taking humanity and other nonsense courses theat do not prepare them for a ‘real’ job, not in government.
The idea that education equals a job is so 20th century. Wasn’t the case in the 19th and won’t be the case in the 21st. I love the fact that the great mathematicians like Gauss and Reimann (there are hundreds of examples) had to work their way into “jobs” by getting students to subscribe to their lectures - i.e., only having real knowledge and insight and total dedication made you a teacher.
Intelligence and working hard equals a job. What today passes for education ain’t worth spit.
‘There are very few that are saying this will pick up in the spring. What happened in the credit market really pushed prices up.’
What’s happening in the credit market now is really pushing prices down.
“Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., said things were definitely slowing around the state. ‘A lot of metropolitan areas are seeing very little growth,’ he said. ‘Orange County may even be in an employment recession.’”
Somebody must have L.A.C.E.D ( Los Angeles County Economic Development) this perma-bull’s serving of kool-aid?
What the Hell is an “employment recession”?
Book of Orwellians: chapter 84
John 11:35
Hahahahaha……………
OT I know but how ironical is this……………
Engagement cancelled?
Doubts Over Deal Hit Countrywide Shares
By JAMES R. HAGERTY and VALERIE BAUERLEIN
January 19, 2008; Page A3
Countrywide Financial Corp. shares dropped nearly 10% Friday amid growing investor fears that Bank of America Corp. could walk away from its agreement to acquire the struggling home-mortgage lender.
Countrywide shares were at $4.96 in 4 p.m. composite trading on the New York Stock Exchange Friday, a 12-year low, down from $5.48 Thursday and $6.33 on Jan. 11, the day plans were announced for a merger in which shareholders would get 0.1822 Bank of America share for each share in the mortgage company. Based on Bank of America’s closing of $35.97, the offer values Countrywide at about $3.8 billion, or $6.55 a share.
Countrywide’s closing price was about 24% below the offer price. On the day the deal was announced, the gap was about 10%.
Bank of America declined to comment. Countrywide representatives didn’t respond to requests for comment.
And now……….”No Rebate for You guys”
Per the WSJ today. “In addition to tax cuts, congressional Democrats say they also want spending targeted at specific groups such as the unemployed. They have also discussed denying rebates to taxpayers who earn more than $85,000 and offering them to those who don’t pay income taxes at all. Both ideas are likely to be opposed by the White House, at least initially.”
So if your mortgage application says you earn $100k, but your tax return says you earn $30k, then the government will give you free money? This is BS. If they’re giving money to people in exchange for nothing, then I want mine too. $85k in Silicon Valley is nothing.
Hey Big,
How’s that go?
Money walks and…
Snort,
Leigh
Sorry, Charlie (as in Rangel), “offering [rebates] to those who don’t pay income taxes at all” isn’t a rebate. It’s confiscation and redistribution.
“‘She told us it was fixed, and it wasn’t fixed,’ he said about his broker. ‘I don’t know how she did it, but she got us to sign an adjustable (mortgage). She’s long gone now.’”
BULLSHIT! Did the papers he signed say it was adjustable? Of course they did.
yeah every reporter writing an article on these azzholes needs to ask for the freekin loan docs.
“The subdivision, pounded by the wind that barrels down from the Cajon Pass, was built to be the epitome of luxury. The winds are so strong, most of the ‘For Sale’ and ‘Foreclosed’ signs that hung on curbside posts in front of the two-story, sand-colored houses have been blown away.”
They ain’t a woofin’ about the wind. Nobody ever lived there before besides farmers. And it’s caused by that nasty little cut through the San Gabriels called the San Andreas fault.
“the current period that’s aroused recession talk ‘a pause.’”
Bob Brinker was on the radio, telling people that the government has an obligation to help out people in foreclosure, because it’s the governemnt’s job to protect the people, and the government was lax in regulating unscrupulous mortgage brokers from putting people in loans they couldn’t afford.
To him I say:
1. If you are so concerned, form a fund to help get these people back to renting, and set their FICO scores back to what they had before they bought. Even people that bought due to pressure from unscrupulous brokers should NOT get to keep a house they can not afford…unless your main objective is (secretly) to artificially keep house prices high. Better yet, get the mortgage brokers and financial companies (and their CEOs) that profited from this together, and let THEM clean up the mess.
2. Why should I pay for the ones that got into this mess themselves, with serial teaser rate refinances, option arms to buy a much bigger house than they could afford, HELOC equity extractions to buy cars, vacations, furniture, boats, jet skis, cosmetic surgery, and to use to leverage even more “investment” real estate in other areas and inflate those areas’ prices?
Bob, is it that your stock timing model doesn’t take into account the housing mess, and now you need a way for the government to bail out the stock market? Would an “unexpected” housing/consumer led recession be a “black swan” for your timing model?
Call in the Federal Government for a “put”.
One thing this guy is forgetting to mention is that “the government” doesn’t actually have any $$ of its own. Rather, it has to collect money from “the people” in order to pay for whatever handout they may be giving. I do not feel that it’s my responsibility to help other people who are in foreclosure and have to rent. After all, I have been forced to rent this entire time, and no one is offering to help me. I need to use my money to help myself. Besides, their foreclosure will be somebody else’s good deal anyway.
Is Brinker running for office?
I’ve listened to Brinker for years. He’s all wet on housing just like “Chowderhead” is here on San Diego radio. For years they have banged the “sun tax”, “not making any more land”, Blah, Blah, Blah excuses to push buying SFRs. These guys should be pilloried for their “if you look at a statistical yearly real estate model, it always goes up” mentality. I know that this is common critique on HBB but here in San Diego (where we are the canary in the coal mine) These guys’ SOOOOOOOOOOOO fundamentally nonsensical advice have especially wreaked havoc which destroyed people’s lives. I would love to moderate a public forum/discussion between some of the experts from this blog and these local and national idiots.
Cannon should come to Vancouver BC. They are rushing to complete condos here. That is, if he can tolerate our grey skies and rain.
We picked up and sold our real estate in the Summer of ‘04, after what looked like a blowoff top to me. The prices increased like 35% from January to March alone. It was very hard moving around. We rented 3 places from FB’s and put our stuff in storage. The house we lived in was paid off, so the entire principal went into gold, silver and mining stocks. I had looked at CD’s from CFC but deemed them too risky if there were ever a run on a bank. But I’m fortunate in that I have a wife that didnt mind moving around so much with the family. We got some killer deals on rent too for some nice 6BR places. A house is just a material item. i’d be just as happy in a studio apt. Who cares. We were extremely disciplined and didn’t splurge at all on anything. I kept my 1987 Civic which I’ve had since I bought it 3 years old. No debt at all. 7 figure salary. People/family thought we were having financial problems. They were embarrassed for us that we rented. I’m contrarian all the way, so I loved the fact that we got that response. It made me feel secure about my decision. But what really motivated me was that in 2001 and 2002, I saw what Easy Al was doing and didnt want to be a victim of his mass theft of wealth.
I watched housing for a blowoff. And the foreign currency markets were in dissaray at the time with the yen strengthening. Yah, I was early, if you use the median price but only by a few months. I was early too in selling my tech in Dec. 1999 and rotating to defensives too but I’m still fortunate to be in the game.
This LA Times article is spot-on, and i like the Pimpco guy. Maybe only 5% of the population, tops, have brains and discipline together. It didnt take a genius to spot the troubles, just discipline and defying peer pressure.
But didn’t you just buy some more property in Rancho Santa Fe and in South America?
Doh!….and another potential blow-hard get’s outed. Hey, I’m as frugal as all heck, but a family man with a 7-figure salary and a 87 Civic?…that’s not thrifty, it’s called just being a f-ing idiot!……..and I’m sorry, no one with the type of job that takes in 7-figures can live low enough under the radar to raise the suspicions of friends as to whether or not your having financial trouble……oh, and only a wife who has had a frontal lobotomy would tolerate her 7-figure husband bouncing her around like Abraham and Sarah in the Promised Land. Nope, I smell bulllllllllll sh*t!
I must say, it’s hard to get by with bull sh*t on this blog.
Yeah, he’s full of more BS than a Christmas turkey.
Pah ! I have a 7 figure salary.
It simply includes 2 decimal points.
Dahlin’
I miss you sugar coat!
Smiles,
Leigh
er…
EX…that’s to you dahlin.
Leigh
What could anybody possibly DO for a 7 figure salary?, this curious mind wants to know.
Saw an interesting segment on TV last night about a new book, Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick you with the Bill).
I want to discuss rents in Silicon valley. When I first started looking around, I was scared because people were asking like $3000-$3500/mo for 3-bedroom houses (I currently rent a 2/1 house for $1735/mo). I thought the rental market must be extremely hot. However, I have observed that people are not actually getting anything close to what they’re asking. My neighbor started off asking $2500/mo for her 2/1, and is now down to $2200. I am going to take it at that price, although I think I could probably get it for $2100, but I just don’t feel like sweating it. Her house is a little more valuable than my current one because I currently have a neighbor living the mother-in-law unit behind my house, and he has possession of the back yard.
Over the past 2 months, I have looked at a lot of rentals (all crummy). At first, all the LLs acted like I had better hurry up and get in an application because I might end up homeless otherwise. However, I have already received 2 calls/e-mails back from LLs who still haven’t found a tenant. One was from an apartment complex who would give me 1st month’s rent for free and a free iPod if I would rent their townhouse.
My observation is that the rental market is beginning to come out of deep freeze, but is my no means “hot”. What do you guys think?
Rents in San Diego are edging up. Ours has been going up 5% each year since 2003. This must be a good time for landlords, since renters like us are in the market with professional jobs. We would otherwise be homeowners, but for the bubble, which we now have to patiently wait to run it’s course.
Time for you to move. Our rent is the same this year as last, and my boss (who moonlights as a landlord) claims the rental market is very soft.
I think our rent was originally under market, since I have looked around and do not see a lot more for the money. I am also concerned about private landlords given the numbers going into foreclosure, but your point is taken and if at some point things get too out of line here free market forces will prevail
Evidently the 3/2 house I rent is always $2100.00.
I live on a hill 5 minutes to ocean. Owls, coyotes, hawks, and the eternal hills cemetary is my backyard.
Tuesday is going to be rough enough.
Still too much vacant inventory around here to get wishing prices on rent…and i expect more rentals to pop up as owners of vacant houses decide to “wait it out” rather than “just give it away”.
We recently upgraded to a better rental (yard, 500 sq. ft. bigger, ocean views) for the same monthly rent.
Ok. Is now a good time to get some land and plunk a big fat triple wide down?
I can see it now. A creek, solar panels plus goats, chickens and crops.
How’s the land price over in AG? Coming down yet?
OV, haven’t been watching raw land prices very carefully, but my sense is that owners are at least willing to bargain…
There seems quite a bit more commercial RE either for sale, or vacant, or both.
And, there are are quite a lot of spec townhouses, McMansions (Pismo), and houses (Grover Beach) that used to be vacant lots, that are just sitting at wishing prices…
“Renting” is segmented in the same way as “buying is”.
BIG BUGGERS : Professional appts but caliber and positioning differs. From Yuppie pad to crack alley. Plus ,competion from below:-
SMALL BUGGERS; This is where some dynamics are happening:-
long time LLs: Fiscally conservate vs leverged , New willing LLs vs. reluctant LLs etc.
On the otherside is portrait of the now and future tenants. In past it was easier to get a no money down mortgage ( no documentation loan) that a residential lease, which did require documents. Look at it . If you have shitty credit history, it was easier to get a 1/2 million house that to get into a $1000 per month appartment.
Ironically enough, the complex had an interest in your ability to pay 3 month down the road.
Took a walk around the hood this morning (Atwater area in Los Angeles) and noted that the For Sale signs are sprouting up like jonquils in the early spring. Only, this is still winter. Guess it looks like an early spring?
In Sacramento, the inventory this winter dipped down to summer 06 levels. As of the 3rd week of Jan, inventory screaming back up. It should be a record summer, again.
“The foreclosure rate in Tahoe and Truckee is ‘without a doubt’ the highest he’s seen in 18 years selling real estate in Tahoe, Smith said.”
Back in the late 1990’s I was considering buying a place up at Tahoe, but the dom.commers had already driven the prices through the stratosphere. Does anyone have any predictions on whether Incline Village will ever again have reasonable prices in my lifetime?
nah, sorry ex-nv, no bs. i ran money for a long time in a private partnership for a large wall street firm. i retired fairly young and moved out west and manage my own PA for over a decade now. so in reality, my 7 figures is no longer “ordinary income” technically.
i’ve also was fortunated enough to invest in all rounds in one very successful public technology company as a startup. and i’ll still do private equity type investments every once in a while.
also, owning land in S. America and a home in SD are part of an entire portfolio of assets, of which, real estate represents a relatively minor part, and i should add, the smallest part.
and as a former value investor, i generally dont willingly buy depreciating assets like cars and such nor do i need to drive much, so why have a fancy car. my parents were products of the Depression and never even had cars most of their lives. And living in NYC I hardly used my car. and in our first home, we didnt buy any furniture. i relented and let the wife buy furniture after like 10 years. but she understands what is happening in the US. for instance, i wanted to put the house money in Treasuries and CDs and maybe 35% in gold related.
she said to go 100% or more if I can and that we werent aggresssive enough. ultimately, we had between 100% and 300% in gold/silver related investments at a time when metals werent doing much. she also never required a diamond ring. she also said something like, we’re not gonna stand here and take big hits because of these bureacratic idiots.
i can guarantee that we have a more modest lifestyle than most anyone. sorry, i just dont get much joy from material things. and dont forget, if you face having to put a few kids thru private grade school at $1500 per month per kid, then RSF starts to look like a real value, rather than something extravagant. and youre right, no woman would put up with being bounced around, hence, i had to bite the bullet and buy a place, against my better judgment, believe me. cheers. let’s stop complaining and getting carried away with negativity and start discussing ways to make money. i’m very positive on the opportunities available.
i broke my lease to buy. to fulfill my obligations, i found a new renter. the new family negotiated 15% lower than my rent. rents are dropping in SD, at least north county.
He’s cut his staff by about 40% to less than 100 workers. Hoaglund also has cut his advertising budget in half.”
“Lenox recently foreclosed on a Moreno Valley home for which the borrower didn’t even make the first payment. The house that initially sold for $460,000 has been declining in value and was last listed at $250,000, he said. After paying real estate agent fees, the house could bring a loss of about $150,000, he said.”
And who says there is no justice for this ‘biggest no brainer in the history of mankind’ clown. hope the storm takes him out and we don’t have to hear his dumbass voice anymore.
“‘We’re hoping to make it through the storm,’ Hoaglund said.”
I hope a very special Joshua Tree is uprooted and planted firmly up his A$$ hard. He is one of my poster boys for the bad that has happened. I also hope that the Prince of Darkness has a special eternal hot furnace reserved this ‘order a pizza no-brainer’ mortgage fraud specialist.
http://www.washingtonpost.com/wp-dyn/content/article/2008/01/18/AR2008011803592.html
Ambac’s downgrade could portend the next leg down.