The End Is Coming In The Future For California
The LA Times reports from California. “Southern California home sales last month fell to their lowest level in more than 20 years. The $415,000 median price paid for a Southern California home was the lowest since January 2005 and about 18% below the peak median sale price reached last year, DataQuick reported. Los Angeles County median sales prices fell 12% in January from a year ago. Riverside County posted the largest price decline, falling 20% from the previous January.”
“The sharpest plunge in January home sales was 53% from a year ago in San Bernardino County, but Los Angeles County was close with a 50% decline. The average decline in the January sales total for all six counties was 45%.”
The Union Tribune. “San Diego County median home prices fell last month to their lowest level in four years with nearly half of existing homes selling at a loss in the face of mounting foreclosures, DataQuick reported.”
“‘Sales overall are ridiculously low,’ said DataQuick analyst Andrew LePage.”
“LePage said a record 34 percent of resale homes last month were previously in foreclosure and 9 percent were in default. Nearly half of all resale houses and condominiums were sold at a loss from when they were last purchased. The median loss was about 25 percent.”
“Ramsey Su, a veteran real estate agent who specialized in the foreclosure market starting in the early 1980s, said the market shows no sign of improving. Su said that in parts of Florida foreclosures are outnumbering regular sales.”
“‘I’ve never experienced that before,’ Su said. ‘How does it end? The end is coming in the future.’”
The North County Times. “Home inventory across North County ballooned in January, increasing the downward pressure on sales prices. The amount of time it would take to sell all homes posted for sale, jumped to 14 months in January, up 52 percent from nine months the same time a year ago, according to a report released Tuesday by the North San Diego County Association of Realtors.”
“The increase came from a divergence: Sales dropped to 365 in January — down from 490 a year ago — and active listings increased to 5,259 homes for sale in North County — up from 4,657 a year ago.”
“North County’s median home price of $562,500 is down 10 percent from a year ago, when the median hit $625,000, and is at its lowest mark since April 2004.”
“North County’s condominium market is also plump with inventory. It would take about a year to work through all available attached homes at January’s sales rate, the North County report by Cal State San Marcos professor Robert Brown showed.”
“And the condominium market experienced a drastic 8 percent drop in its median price in one month to $326,000 from December’s median of $355,000.’
“The number of foreclosures in Riverside County continued to rise at a meteoric pace in January, increasing the downward pressure on local home prices and flooding the regular home market.”
“Foreclosure sales hit 2,813 properties in January, up 475 percent from the same time a year ago, when 489 foreclosures sold, according to a report.”
“The increase was a 53 percent jump in just one month…just under the statewide average uptick of 55 percent. That meant that Riverside County shed its dubious distinction as the state’s foreclosure capital, ceding the title to San Joaquin County.”
The Desert Sun. “Nearly 3,000 foreclosed properties in Riverside County were sold at auction last month — a 475 percent increase over the number of repossessed properties auctioned off in the county a year ago, a real estate tracking firm reported today.”
“‘Defaults have not risen nearly as rapidly as auction sales. While certainly more homeowners are getting into trouble, the far larger issue is that fewer homeowners are able to get out of foreclosure than ever before,’ said ForeclosureRadar.com founder Sean O’Toole.”
“O’Toole said that in January, many lender-repossessed properties failed to receive reasonable bids at auction, despite ’significant discounts.’”
“He said the asking prices on 4,624 homes, or 23 percent of the 19,821 properties up for auction in the state, were reduced 30 percent to entice buyers.”
“‘The majority of these discounts are from the amount owed on an 80 percent first mortgage made in the last two to three years, meaning that many of these properties are being offered at 50 to 70 percent of their prior value,’ O’Toole said.”
The Orange County Register. “Orange County’s first luxury high-rise tower project now has its first foreclosure. A unit in one of the twin 18-story towers in Irvine has been repossessed by the lender, the first foreclosure in Marquee Park Place, according to two Web sites that track foreclosures.”
“And that’s not all. Veronica Hicks, head of brokerage Condos etc. in Newport Beach, said she is marketing a unit on the 16th story of one of the towers for $950,000 to $1.1 million, which is less than the debt owed to the bank.”
“While only two of the 232 units are under duress, a total of 42, or 18 percent, were listed for sale last week in the Southern California MLS. The towers are a little more than 2 years old.”
“Walter Hahn, a real estate economist in Irvine who has followed the project since its development, said he is not surprised about the foreclosure because builder Bosa Development did not prevent or cap sales to investors. Hahn said he believes many of the original buyers were speculators,who hoped to resell quickly.”
“‘I expect more of them to go into foreclosure,’ Hahn said.”
“Over the past six months condo foreclosures rose 321 percent vs. a year earlier in Orange County, while foreclosures on houses climbed 274 percent, DataQuick reports.”
“And foreclosures and short sales accounted for 32 percent of condos on the market last week, while 27 percent of houses, according to the math of Steve Thomas at Re/Max Real Estate Services in Aliso Viejo.”
“The unit in foreclosure at Marquee was bought in November 2006 for about $1 million. Public documents show the buyer took out a simultaneous first and second mortgage totaling the purchase price. The lender was bankrupt subprime company New Century Financialin Irvine.”
“In November 2006, the same month the buyer bought the Marquee unit, he bought a property in Rancho Santa Margarita. The $799,960 first mortgage on the Marquee unit went into default nine months later and was foreclosed upon three weeks ago.”
“Hahn said it’s unlikely the buyer had a poor credit profile typical of subprime borrowers. It’s more likely the buyer was someone who did not provide proof of income and was stretching financially with a loan that begins with a low teaser rate, he said. Such factors pushed investors into the arms of subprime lenders during the housing boom, he said.”
“Such risky loans are going bad and it’s one reason foreclosures are spiking in Orange County, Hahn said. ‘One of those eggs is hatching now, rotten eggs,’ he said.”
The Tribune. “In San Luis Obispo, even new condominiums with prices guaranteed to be lower than market rates are having a hard time selling these days.”
“Started in April 2005, Bella Montaña is a $24 million Cal Poly condominium subdivision that guarantees pricing discounts of 20 percent or more. The new 21-building condo community next to the Cal Poly campus offers prices from $323,000 to nearly $400,000 a unit.”
“But in November, the date targeted by the Housing Corp. to have sold all of its units, only 30 of its 69 condominiums had sold, said Jim Reinhart, managing director of the Cal Poly Housing Corp.”
“‘Starting in late 2006, we saw some buyers, who had put up $1,000 deposits, withdrawing their offers,’ Reinhart said. He believes the buyers were reluctant to move forward when the prices in the real estate market were declining.”
From Bloomberg. “When Mary Kamanu paid $409,000 for a house in Folsom, California, she never imagined that three years later it would be worth about 20 percent less and she would have to pay the bank more than $80,000 just to sell the place.”
“‘I’m completely upside-down on my mortgage, like a lot of people,’ said Kamanu, who wants to move 12 miles away to live with her fiancé in a suburb of Sacramento. ‘I know I’m going to have to come up with a big chunk of change.’”
“Kamanu refinanced her house in May 2007 and owes $415,000 on her mortgage. Homes in her neighborhood now sell for about $330,000, she said. The median home price in California dropped 17 percent from a year earlier in December, according to the state’s association of Realtors.”
“She said she’s willing to sell the three-bedroom, two-bath, 1,272-square foot house fully furnished and include two wide- screen televisions to entice a buyer.”
“‘I’m hearing it might be a year or two before the housing market comes back, and I can’t wait that long,’ said Kamanu. ‘I’m relying on luck, hoping that someone will come along and fall in love with the house, like I did.’”
“Thirty-nine percent of people who purchased a home two years ago already owe more than they can sell it for, according to a Feb. 12 report from Zillow.com. ‘If people owe more on their mortgage than their house is worth, a substantial number of them will give their keys back,’ said Kenneth Rosen, head of the University of California’s Fisher Center for Real Estate and Urban Economics.”
From CBS News. “For Karen Traynor, buying a condo closer to her job in San Francisco seemed like a sound financial decision. But in the last year, this home seemed to drop in value by the day - forcing Traynor to make a much more devastating decision, CBS News correspondent Sandra Hughes reports.”
“‘It would be an intentional foreclosure,’ Traynor said.”
“Her adjustable-rate mortgage will be reset in June. And although she can afford the $900 increase in payments, she doesn’t think it makes financial sense. ‘I am not doing anything illegal. I am not scamming anybody,’ she said.”
“When real estate was booming, Traynor bought her 2-bedroom condo for $505,000 after it appraised for $520,000. Although she took out a 100 percent loan, she figured she had some equity. Now, she would be lucky to unload her property for $340,000. That’s a $165,000 loss.”
“‘Everything is negotiable in business,’ Traynor said. ‘And so this is just another business decision. I just don’t see why this is anything different.’”
‘He said the asking prices on 4,624 homes, or 23 percent of the 19,821 properties up for auction in the state, were reduced 30 percent to entice buyers. ‘The majority of these discounts are from the amount owed on an 80 percent first mortgage made in the last two to three years, meaning that many of these properties are being offered at 50 to 70 percent of their prior value’
Oh dear…
Suddenly, “20% down” looks insufficient. “Oh dear” is right.
Someone should sue the shysters at DataQuick:
“The thing is we really don’t know what is going on out
there with (sales) numbers this low,” said DataQuick analyst John Karevoll. “What is happening is atypically noisy.”
“Demand might be building, and that could result in more sales this spring and possibly another price record, he said.
Another price record this spring. Right!
http://www.dailybreeze.com/ci_8251611
I think he meant “another record price decline”?
Those 50% off bears seem conservative now.
I’m a 67 % off bear.
http://malechem.blogspot.com/2007/10/in-manhattan-specifically.html
When California farts, Colorado smells it 6 months later. We hear your poot sound, next comes the aroma.
I’m a 78.63% off bear myself
” DataQuick reported… Los Angeles County median sales prices fell 12% in January from a year ago”.
LA median sfh price’s are now $458,000, and have dropped 16.7% off peak in only 5 months, a catastrophic drop . Condos are falling even steeper as LA has a huge oversupply of condos and other multi-units.
LA is in panic mode now, as the disbelievers(E,G your local realtor organizations) either bury their shrivelled heads under the sand like Ostriches or walk around in a zombie -like trance muttering things like ,’the Fed/Obama will come to the rescue’ or ‘wait till spring and price will go up 20% ‘ or some other nonsense.
Folks , LA RE is dead, dead in the water as the reality of a region which is 95% lower working class/immigrant class making $8-20 per hr butts head with the unreality of Homes 9-10 times income.
LA is in truth an ugly duckling region mostly marginal or crime- infested barrios.
RE: LA is in truth an ugly duckling region mostly marginal or crime- infested barrios.
Sounds 3rd World class to me…
I called my realtor this afternoon to tell him about the Dataquick stats and he hesitated before saying, I kid you not, “Well, the West side of L.A. is different. It won’t be affected by this since everyone wants to live here.” We make light of this constantly but it’s still astonishing to hear it day in and day out from people who should know better.
If you believe zillow.com, houses in west Torrance and Redondo Beach barely dropped in valuation from their peaks. I looked at my old neighborhood in Torrance (90503) on zillow and nothing is up for sale. Prices are in the $750,000 range. Further west near the ocean, prices look pretty much the same as they were in 2005 or 2006. WTF?
“Well, the West side of L.A. is different.”
The Westsiders are so insulated in their tiny toney insulated hoods that they cannot see beyond the 405 or south of 10 fwy. They really need to get out of their WS cubicles and take an eye opening drive thru east SFV, South & East LA, city of industry, Alameda corridor cities astride the 710, and open their eyes to the real LA . The amt of run- down ghetto housing IN LA County easily outnumbers the home on the Westside by factor of 1000, maybe 10,000.
If entire LA County drops 40-50% the Westside will fall as well, just a little more slowly and maybe less of a drop %wise . It is not as insulated as those bubble head realtor-trolls fantasize .
It’s the sun and sun glasses makes everything seem right.Don’t take them off, reality might show up!
LA east of Labrea is panicked, west of Sepulveda is still in serious denial.
Now the MSM regularly uses the word ‘crash’ despite all the cheerleading it pumped out only a year ago. I predict that by June the other c word, ‘catastrophe’ will appear in msm coverage.
Take Amtrak north from Santa Ana, through the backside of Orange and Los Angeles County, and you see a whole other world of housing.
LA east of Labrea is panicked, west of Sepulveda is still in serious denial
The ghetto makes serious intrusions into that area of zip 90019. Olympic is the hold line. South of there and east of fairfax lots of marginal areas. Also a small but possibly tumorous WS ghetto pocket from la cienega to robertson and south of 18th st down to past Venice blvd(Zip 90034)Another small ghetto pocket is Palms south of 10 fwy, which acts as a freeway ‘great wall of china’ barrier keeping this tiny slum pocket from contaminating Cheviot hills.
There are other small but festering marginal WS slum pockets i won’t mention as i do not want to invoke fear and mass hysteria among Westsiders. WS seems able to isolate these inconvenient ghetto pockets quite well. Gotta keep those WS prices stable .
WSJ calling for 40% more in CA,
http://online.wsj.com/article/SB120276871472760255.html
Sorry if this has been posted already.
“But the really bad news is that, even after a year of misery and falling prices, homes in many of these regions still aren’t cheap. They remain wildly overvalued compared to average personal incomes.”
That’s been posted already, alright. I am quite certain that I and a sizable number of other posters here have been saying this on a sporadic basis over a couple of years already.
Whoever has all the 2nd mortgages is really screwed. Zero, zip, zilch, nada.
I know several investors who buy those notes.
[snicker]
Hoz, whoever has the 2nd mortgages, is screwed, glued, and tattoed .
Ben,
Why is it that most REO’s still are way overpriced? From what little I know about banking, it is because they would rather carry a pig on paper at a higher price than to realize the loss. But what will cause reality to set in, and when? It seems so counter-intuitive for the banks to hold on when they know their assets are losing money every day. When are they going to pay the piper?
As long as the FDIC lets them slide, they won’t write the stuff down….there is serious pressure on the FDIC to allow the banks to get away with just that….you and I will pick up the tab in a few years….
Or maybe we won’t. You don’t have a crystal ball, or even much of a rational. Very little of this stuff has anything to do with FDIC. The IBs on wall street weren’t using grandma’s CD money for this, you know.
The LENDERS/servicers are holding back on cutting prices further until they are forced, in each situation. Is that surprising?
What will force them? Lack of ability to make new loans? Insolvency? Having to actually make a profit again?
Point taken Ben. I let my cynicism take over too much when I think (and write) about this stuff.
That vast majority of these crappy loans were not made by traditional “banks”. I suppose the people running the REO departments will hold on until they get fired because they didn’t dump their properties before the other REO people dumped theirs.
I guess it’s a multi-billion dollar game of chicken to see who dumps first and takes the lowest “haircut” on their REO. The problem is, the longer they wait, the worse it gets for them.
Ahem, likely to go the way of a trust to liquidate.
Resolution Trust Corporation in the ’90s.
http://en.wikipedia.org/wiki/Resolution_Trust_Corporation
WE, YOU, ME, let’s get ‘er done!
Leigh
Ben,
I respect your opinion on this. If we all think about it for a second you realize the fractional lenders have for more out there in loans then we have in deposits.
So, if things get even really ugly and they sell at 70% losses they still recover enough to cover deposits.
The multiplication factor should help protect against that, I think.
You know the market is in serious trouble when the facts on the ground look more dire than the most extreme scenarios discussed on this blog a couple of years back.
“She said she’s willing to sell the three-bedroom, two-bath, 1,272-square foot house fully furnished and include two wide- screen televisions to entice a buyer.”
Why do these people think every flippin’ person on this planet thinks big screens are cool? First thing I’d do is ask her to keep them and drop the price a few grand.
Don’t wide screens gobble a lot of electricity?
“‘I’m hearing it might be a year or two before the housing market comes back, and I can’t wait that long,’ said Kamanu. ‘I’m relying on luck, hoping that someone will come along and fall in love with the house, like I did.’”
I believe what you should be relying on is someone else’s stupidity, not luck, Karen.
“fall in love with the house”
Everyone around town knows that Karen is a love ‘em and leave ‘em type of gal. You know the word for that. It starts with SL and ends with UT.
Big screens ARE really cool. IMO, watching Discovery HD theater is the next best thing to being there. Having travelled a lot, I also really enjoy virtual travelling in the comfort of my anti-gravity chair and my favorite Pilsner. That being said, since a decent Plasma or LCD can be had for under $1,500, it is also a ridiculous way to market a $400,000 house. Give me $100,000, not $1,000 off!
1200 sq ft houses don’t have very big living rooms. Big screen tv’s and those gargantuan sectionals look absolutely retarded in small living rooms.
Too Funny Wicked!
My loving Hubby wanted a big ‘ol teevee forever.
I said, “NO, baby, it’s ugly and will mess up the feng shui of the house I so carefully designed (without said albatross litering the huge family room).
They are to expensive now sweetie, wait until we have a house with a basement, and you can have one.
See, I love my hubby, but do not like big ugly teevees.
Also, this motivated him to move to WI and we rent a house with a basement for his said big, ugly teevee that I don’t have to look at, which would greatly harm my eyes and sensibilities!
And! Look at how much money he saved! Think about how much said ugly box cost five years ago!
Woohoo!
Leigh
Leigh: I have to part company with you on this one. The flat screens take up so little space (or can hang on the wall) and like Cayo said, once you see discovery HD on one, you would be hooked. Now I don’t think you need a 50 or 60″, but a sleek little 42″ that is less than 6″ thick really becomes a piece of art when you’re seeing HD of spectacular places or animals on it. Movies are fabulous on them, also.
Yeah, but they totally dominate the room, screaming: hey, I ain’t go no real life, so I haz this virtual alter of mindless entertainment to worship.
Fight the good fight against dark, overbearing electronic furniture. I’m fighting the same one with the man now. And he doesn’t watch sports, he watches cooking shows. Does he really need to see Alton Brown’s nose hairs?
I find all TV to be time sponge. I agree with Leigh. A living room is for conversation. Throw the TV in the basement. Reality is far more exciting than anything on TV.
Hoz: I guess it depends on what you watch and how much. I’ve certainly learned a lot from watching History, Science and Discovery channels. I’ve seen some spectacular opera, music and plays, and great dramas from Britain.
“I find all TV to be time sponge.”…..Yeah, unlike your computer and this blog. Hahaha.
I love good TV and reading, and opera, and plays and live music. It’s all good if it’s good. TV is better than it’s ever been. Compare Petticoat Junction and Three’s Company with House, The Wire, X-Files, Six Feet Under and even Sarah Conners, and you’ll see what I mean.
Hey Dale!
I do take offense to that statement (but not you or your right to say so).
Are you not posting here also?
HAR!
Leigh
Yeah, sure…but if my wife wanted a big screen TV to watch while I am, I would let her have it. Stop being so selfish. Not only should you let your husband have the TV but get him a subscription to the Playboy channel while your at it.
My 800sqft apartment has two 120″ sets. I think I bought my sony crt projector for $900 6 years ago, and it can do 720p. Broadcast HD didn’t exist. I paid $300 for my bedroom projector. When I look for a house, I will be looking to sink a motorized screen into the ceiling and a 19″ computer rack in the wall for my amps and processors that I got from eBay. I’m not paying a cent for no wal-mart consumer grade TV.
I keep looking at houshold incomes to see if things are getting a little less out of whack. Still far off.
Seems like a tremendous amount of inventroy with people all thinking the same thing. I hope we get lucky.
This might be the year there isn’t a spring bounce. Then its off to deflation land.
Yeah, that was certainly a nice spring bounce in 2007.
More like a spring thud.
“Thirty-nine percent of people who purchased a home two years ago already owe more than they can sell it for, according to a Feb. 12 report from Zillow.com. ‘If people owe more on their mortgage than their house is worth, a substantial number of them will give their keys back,’ said Kenneth Rosen, head of the University of California’s Fisher Center for Real Estate and Urban Economics.”
39% Damn! Not to worry it’s all contained with those 39%. Put on your crash helmets!
Full body armour!
All these foreclosures have got to be playing havoc on the market and making it that much harder to sell homes. I saw a funny situation the other night while walking the dog- A RE agent was showing a house and the notice of default and trustees sale was still posted on the door. I’m sure that created and awkward moment for the RE agent.
What must be real challenging are new developments (I live near a few) that are not even finished with constructions, so there’s a mix of brand new homes for sale, resales, and foreclosures competing for buyers. How can anyone figure out the comps?
Ha.
The unrealtoR that I baited a few weeks ago was real mad that I thought $1 million was too much for the approximately 1400 square foot and stinky old house she was pedaling. A couple weeks ago, I noticed a “Reduced Price” rider on her for-sale sign. Funny thing is, once that rider goes up, you have to actually start reading the flyer (and tracking the asking price) to see how many reductions there have been. Well, there are now like 95 new “luxury” studio condos directly on the main street that runs parallel to my street, and 35 townhouses are being built wih gusto to arrive this spring. I’m suddenly starting to feel remorse because I just signed a new lease (on a pretty good 4/2.5 house with a sweet view) for $2400/mo. At the time, rents were actually increasing. But now there’s a 2/1 house for rent two doors down from me for $1650/mo. I really only need 2 bedrooms, so I’m half-way wishing that I hadn’t signed this other lease. Oh well, at the house I’m getting is better, but what a price difference, woo-wee. Rentals and for-sales are popping up everywhere. This is fun!
RE: How can anyone figure out the comps?
As an appraiser you always want to with the lower value indicators-no matter what the pressure
Somebody bitches-you can always “re-evaluate” the data with a low estimate.
But when you’re the high guy and something blows up-like an underwriter asking for a review appraisal-you are left out there hangin’ in the wind with no underwear on.
HD,
“But when you’re the high guy and something blows up-like an underwriter asking for a review appraisal-you are left out there hangin’ in the wind with no underwear on.”
Thank heavens I’m happily married…otherwise - er…I may thought about a - er - that’s a vision!
Shutting my eyes tight!
Leigh
“Her adjustable-rate mortgage will be reset in June. And although she can afford the $900 increase in payments, she doesn’t think it makes financial sense. ‘I am not doing anything illegal. I am not scamming anybody,’ she said.”
“When real estate was booming, Traynor bought her 2-bedroom condo for $505,000 after it appraised for $520,000. Although she took out a 100 percent loan, she figured she had some equity. Now, she would be lucky to unload her property for $340,000. That’s a $165,000 loss.”
“‘Everything is negotiable in business,’ Traynor said. ‘And so this is just another business decision. I just don’t see why this is anything different.’”
—————————-
She’s right - it’s just business. The loan contract probably very clearly specifies that the lender will foreclose on the house if she doesn’t pay, and it seems like she will now be exercising that contract option. Good for her.
Bob Toll’s daughter would tend to agree with her.
She walked away from a deposit. Not a foreclosure.
It is people like her who are hurting the credibility of America. Loan 100% and chicken out when the property prices go down. I wonder what she would have done if prices had gone up by 150,000.Business decision….my foot. These people should be forced to pay through their nose. This is capitalism at its worst.
We were stupid who did not buy the property because we knew that the prices would decline. We could have done the same thing. Have people forgotten words like ‘honesty’, ‘integrity’, ‘commitment’ and ‘responsibility’.
The bank cleary knew the rules when they made the loan - if they were foolish enough to lend 100% against a house when in the past it was never more than 80%, then they DESERVE whatever happens to them under the terms of the contract - up to and including having to foreclose and liquidate the property.
All your “forgotten words” were forgotten by the big boys first - now the little people are learning the true rules of the game too, and the big boys don’t like it. Are you a banker by any chance?
This woman isn’t getting out scot-free either - her credit will be shot for a long, long time.
az_lender agrees with az_owner !
Lenders dumb enough to lend 100% of ANYthing get what they deserve. I admit that each of the three repo’s I had to take back since 1993 involved a borrower with too little skin in the game. From these incidents I learned enough to stop making such loans, and have not repossessed anything since 2003.
It’ll be interesting to see if even 20% is enough skin to keep some recent buyers in the game.
Jimmy Jazz agrees with both of the honorable posters from AZ.
Expecting people not to walk away when faced with an enormous financial loss is just silly. Besides, the flood of jingle mail is washing away median prices to the point when I can buy soon. Happiness all around except for the poor idiot lenders. Mozillo and his friends are crying in their multimillion dollar golden parachutes.
That’s right, cayo_ron. I get 30% now.
In my experience in credit, most people honestly expect the person extending the terms of the agreement to tell them what they CAN and CANNOT afford. My experience isn’t in the housing arena, but I can assure you that most people with average to poor credit will take all that you can lend them. And they will tell all of their friends where the easy credit is available.
The problem is that this went on for so long that the Ponzi scheme is almost like a bank too big to fail. We will all probably pay the price to some extent as the PTB try their best to slowly deflate what is probably the biggest National Bubble since before the Great Depression.
I know that most would like to see it all collapse overnight, but I would much rather see a slow unraveling back to normalcy. The alternative would be too much for the economy or soft people to handle. And my job depends on those soft people to some extent.
I disagree about her credit being “shot”. I know lot’s of people who went upside down in the early 90’s here in CA and in 2-3 years they were getting a house again, just paid 50 to 75 basis points over prime rates and they were back in business. There were SO many people like that, lenders had to swallow their pride and do the deal.
I thought that after you filed for BK you can’t do it again for 7 years… So they are more willing to give you money after the BK because you HAVE to pay it back. Am I way out on a limb?
“All your “forgotten words” were forgotten by the big boys first - now the little people are learning the true rules of the game too, and the big boys don’t like it. Are you a banker by any chance?”
I understand what you are saying but one needs to watch the slope they are going down, and this won’t just stop at housing. We may be looking at a complete revamp of the credit industry which I welcome but the powers that be will end up punishing the prudent over the imprudent. Reading between the lines, if people start walking en masse, things will go much faster then any of us can imagine (think depression).
This woman isn’t getting out scot-free either - her credit will be shot for a long, long time.
I come from a family of attorneys and they always told me that that is a farce as people line up to lend them money after BK and/or they have any form of debt release. This go-around there will be so many people in the same boat and they’ll have so much property on the shelf that allowances will be made. I’m ok with that too as long as there is a moratorium that they have to put at least 30% cash to the deal, etc.
“think depression”
Methinks SR is starting to finally drift over to the dark side…
“I come from a family of attorneys and they always told me that that is a farce as people line up to lend them money after BK and/or they have any form of debt release.”
That’s right BUT only if you have a high income. Case in point; I had a friend whose Dad filed BK regularly. He’d run the bill as high as he could then declare bankruptcy. He would be offered credit right away, why? because he made good money and they knew he couldn’t file BK for 7 years.
Why should he banks care if the borrowers were gonna walk, they weren’t intending to keep the loan. They only began to care when the loans came back and bit them on the a$$.
I don’t blame her for her decision to voluntarily walk away–it’s clearly the best financial decision for her at this point. We all strive to make decisions that are in our best interest.
I blame the lenders (MBS bond investors), who were foolish enough to loan 100% and thus take all the risk. They were short-signed and they deserve to lose. Big time.
But the MBS bond investors thought they were getting AAA paper because Moody’s, Finch, and Standard&Poors said so.
If you can’t believe these rating guys, who can you believe?
The list is getting smaller every day.
Then by this line of logic, the sheeple that got in over their heads were just making a good (at the time) business decision to use the bank’s money to get into the biggest, most expensive home they could get into. Some that dove in early, and didn’t refy, were able to sell at the top and make a killing. I think cars will be next because that’s certainly paying on a depreciating asset. If enough people walk from enough debt, the recession or depression will be more severe and IMHO that is going to hurt everyone. Yeah sure you may have food stored and bought gold, but do you really want to live in a desperate society where people will do desperate things to get what they think they need? I don’t think this will be like the last depression where people supposedly helped one another. I think this will be every man for himself.
How about “ruined credit”. That will sting a bit, and the bank deserves it anyway.
Have people forgotten words like ‘honesty’, ‘integrity’, ‘commitment’ and ‘responsibility’.
First to walk were the federal “regulators”.
Then the mortgage broker walked (after taking his commission).
Then the lender walked (after selling the loan).
Then the mortgage securitizer walked (after selling to pension/hedge fund).
Then the ratings agencies walked.
Last to walk was the borrower.
“First to walk were the federal “regulators”.”
No. The first to walk were you and I who refused to take the bait!
Who is left to hold the bag, MAN?
Commonsense, the deal was that either the house goes up in value, and you flip, or the house goes down in value, and you foreclose. That was the promise of 100 % financing and interest only loans.
Now, you could HELOC to hedge your bets — you’ve extracted the money whether your house keeps going up in value or crashes and you foreclose. It’d've been a pretty aggressive play, but we’ve seen here that many people did choose that route.
The game was to steal money from investors. Not from homeowners. A lot of homeowners suffered — not least from inflated property taxes — and banks got a little confused and kept a lot of their own toxic waste, but the irresistable free money was in securitization. Homeowners were just a necessary part of the process, not intended victims.
The homeowners were definitely not victims. The ones who got 100% financing with cash back and then were able to get an inflated appraisal and get some more free HELOC money knew exactly how to rig the system and walk away with bags of cash.
The word victim should not be associated with homeowners that put up zero.
Commonsense,
it’s a matter of contract law…if she doesn’t pay, the lender will foreclose on the house. So, she’s exercising her right under the contract she signed.
Yeah, her credit will be shot for a while, but given the numbers of folks who will do this, how much will that really matter. And,
her vacant house will lower the comps, and possibly add to the deterioration of the neighborhood, but again, it’s no longer her problem. I think if she doesn’t arrange a short sale with the bank, she’s still on the hook with the IRS, but jjinla or jingle could better answer that. Her unpaid prop taxes will add to falling tax revenues, but again, no longer her problem.
You are watching the peasants use the same tactics as the Wall Street crowd, and yes, there are unpleasant effects for lots of other people, but this is the Ownership Society on the downside.
I think it will make the RE market crash harder and faster, and save us from a 10 year zombie economy a la Japan.
“You are watching the peasants use the same tactics as the Wall Street crowd, and yes, there are unpleasant effects for lots of other people, but this is the Ownership Society on the downside.”
And those peasants are proving they are no different from the thieves and liars on Wall Street - they’re just not as competent at thieving and lying.
A lying thief is a lying thief - the only difference is the size of the take.
We won’t have a zombie economy like Japan - IF we’re lucky, we’ll have a third world economy -with 95% living like third-world peasants and 5% living in gated/guarded enclaves to keep the starving rabble out - as they are now proving they deserve.
Just in from today’s faculty meeting:
Letting teachers go in San Diego this year.
HOly MOly, GIve the details on Bits tomorrow.
You know I think a lot of these people will not be saving up 10% (let alone 20%) to buy in a few years. They were probably credit disasters waiting to happen.
commonsense
oh fer crying out loud get off yer high horse already, azzhat ! you make me laugh with all yer buzzwords. and whats worse is that people like you are what’s REALLY wrong with this country ; you just cant STAND the thought of an average person turning the tables on corp america. (for a change)
I swear to god you make me so fukin angry with that elitist BS that if you said any of that crap in my presence my fist would be stopping yer face!
bet yer some finance exec who regularly thinks its yer god givin right to hold the common person to an agreement that the EFFIN BANKS will walk away from WITH NO RESERVATION AT ALL, in a New York Minute. Why is it only ” just business ” when the man sticks it to the worker but when the sheople use the same standards they catch flak? the day a corp steps up & takes the same personal responsibilty for their actions as the common man, THEN I agree with you. But dont hold yer breath, and save yer rightous indignation for the “capital cronies forum” where it is adored. In here we tend to look at the complete picture, not just the one in yer head you WISH existed.
I don’t think this is a peasants vs. Corporate America thing. If you noticed in the original post, they actually derided this as an excess of capitalism, and I would agree. Stealing, whether it is done by corporations or individuals, is wrong. Whereas walking away from your underwater condo isn’t necessarily stealing (unless she HELOC’d it), I would venture to say the greed that fueled all this flipping in the first place benefited the EFFIN banks, builders, and other “big people” a lot more than your lone urban warrior hero.
” a peasants vs. Corporate America thing “?
It could be. It really could. I think almost everyone who signed these idiot mortgages realized the consequences w/o knowing all the details. And also knew they had the final solution - just leave if things didn’t work out.
I’ve heard a lot of people say about various things (including financial) “ah, to h—l with it, if it doesn’t work I’m gone” Nothing at all different today than in the past.
I’m not at all in this situation a lot of people may find themselves in but if I were I’d do whats necessary for my survival including leaving.
Its human nature - in the end, take care of yourself.
Ouch Aquis!
I feel your anger!
I unsure how I feel - 1,000,000 FBs walking (who do have the ability to pay) x collateral damage to OUR economy?
Business decision for said person - good common sense.
I am constantly toggling with ethics, business, and outcome.
And this is not a joke - my crystal ball is really in storage! (It was a gift).
Ya just can’t make this stuff up!
Best,
Leigh
I find it amusing that some of the states with the biggest bubbles are non-recourse mortgage states (CA, AZ, FL). In other words, these are states where by law, the mortgage lender cannot go after your personal assets. What were lenders thinking? Oddly enough, TX is a recourse state, where lenders should have felt free to lend indiscriminately, and yet the TX bubble is one of the smallest around, relative to median income. When this mess is over, I suspect it’s gonna be a lot harder to borrow money for mortgages in non-recourse states. Why lend money on homes if you don’t know whether the principal will be paid back, and you can’t go after the borrower’s personal assets or income? If they ever get back to making mortgage loans in non-recourse states, the appropriate interest rate is 15%.
At least a 20% down payment just to protect against the walking away crowd.
Any corporation would do the same. If we allow the corporations to wield influence over people and government, we should not be surprised if people start acting like corporations.
corporations DO walk away, or just “let go” of employees, and corps get away with alot.
words like ‘honesty’, ‘integrity’, ‘commitment’ and ‘responsibility’ where not in the contract. This is lawyers country now, nothing you can do about it.
This is AmeriKa, this is how people get Reech. Bow down before the one you serve.
You’re going to get what you deserve. God money I’ll do anything for you.
Corporations should have thought of that before they started screwing the little guy.
I can’t wait until just WHO OWNS THESE MORTGAGES hits the clowns encouraging these people to run.
‘Oh, you mean when she walked it was my pension fund that took the hit? ‘
Karma’s a bitch!
Who Owns Your Mortgage?
According to Inside Mortgage Finance, today three out of four mortgages are packaged together and then sold to another lender, which often repackages and resells these mortgages to a variety of investors that include Wall Street banks, mutual funds, pension funds, even foreign investors.
http://abcnews.go.com/Business/Story?id=4019834&page=1
Wow. I’m really having fun today with all this great news (see my post about my LL’s letter below).
Cris:
We who encourage FB to run, not walk have already dumped our stocks. We don’t care if the investments go bad; we expected the investments to go bad; many of us are actively betting against the investments. We think it is so funly fun. FUN!
“We don’t care if the investments go bad”
Oh? Tell that to your elderly relatives living on a pension fund that’s about to go belly up because of these loser jacka$$es.
I suppose I do feel sorry for elderly people on a pension. It’s not their fault that their pension manager is stupid. I wonder if the funds will really go belly up, though. They can’t be ENTIRELY invested in MBS, can they?
These loser jackasses aren’t the problem. The loser jackasses at the ratings firms were the problems. What’s an unbelievably well-remunerated pension fund manager to do when an obviously incredibly bad idea gets a AAA rating?
I know that’s a lot of adverbs.
RE: They can’t be ENTIRELY invested in MBS, can they?
Go ask the city of Springfield, Mazz with their paltry $13 million that Merrill Lynch turned into $1.2 mil and then refunded when the political and media focus got too hot.
Big V, I am basically on your side, but consider that some so-called money-market funds are exposed to the toxic waste as well.
That is what I asked my coworkers blog, Are our pensions in good funds? Granted the co can just walk away anyway, as we have seen done with other co.s from pensions, but if we still have one, is it JUNK or in okay funds?
No One, my fellow co-workers have not said one word to that question. That is scary. Perhaps a lot of ostriches.
About the valuations and pension funds. Not sure how it works out.
The funds go way down in value but the economy deflates so costs are much lower.
I think the few conservative treasuries holding value and collecting interest will balance out a lot of the losses.
hope so. balance that is.
I am a regular guy just like everyone else and I don’t side with banks or bankers either. To hell with them.
But it is people like hers who were laughing at me when I told them two years back that their house value is going to go down. They laughed at me because I was wasting money in renting.
It is people like me who were wise enough not to overstate their income and sign these liar loans. We could have done the same thing but we didn’t.
Now government has plans bail out bankers and those being foreclosed. What about me and people like me who behaved responsibly? Shouldn’t banks and government should be helping us as well?
“But it is people like hers who were laughing at me when I told them two years back that their house value is going to go down. They laughed at me because I was wasting money in renting.”
I guess they were right all along - why shouldn’t they walk away? America is nothing but the land of lowlife lying skanks - hey, when it’s inconvenient to keep your word, just walk - it’s a ‘business decision - nothing personal.’ ‘I changed my mind.’ ‘Everyone else does it’ ‘It wasn’t my fault - it was the lenders.’
Hey, it wasn’t really even the lender’s fault - whoever was in charge of the pensions/insurance co’s/mutual funds that bought these pieces of $hit, really hold ALL the blame.
Of course, that will be small consolation to grandma/grandpa when the pension checks bounce/mutual funds go belly up.
I guess they’ll just have to go back to work. That’s what they get for NOT being lowlife, lying, skanks who walk from their obligations - otherwise they would have more cash/assets from which to draw.
Yep, the skanks who signed on the dotted line, promising to pay what they never could (or, though they can pay, just find it too inconvenient to do so now) - are virtually blameless and we should cheer/encourage/worship them for having the integrity to stand up to those who ‘took advantage’ of them.
After all, it’s just a business decision. And the lying, lowlife skanks in the boardrooms across America do it - so why shouldn’t the lying, lowlife skank citizenry do it as well?
When the $hit really starts hitting the fan, I’ll remember this thread - and how much we, as a whole, deserve exactly what’s coming to us.
“That’s what they get for NOT being lowlife, lying, skanks who walk from their obligations”
No, that’s what they get for not raising better kids.
Some of the people walk may be screwing up their own retirement.
Well it really depends on how honest she was on the original contract….
“Everything is negotiable in business”
PREDICTION ALERT!!!
At some point in the not too distant future the dim bulbs in the federal government will realize that allowing these deadbeat FBs to skate without paying taxes on short sale/foreclosure has only exacerbated the problem. Additionally in an environment of significant budget shortfalls officials will realize that there is an untapped source of revenue.
At that time congress will pass emergency legislation to reinstate these taxes retroactively by rescinding the previous legislation as if it had never existed. Then these people who made a smart “business decision” will be well and truly shafted.
Got JT?
“At that time congress will pass emergency legislation to reinstate these taxes retroactively by rescinding the previous legislation as if it had never existed.”
I am not sure this will happen (I wish it would though). The current bail-out mentality will prevail for many years, and those who have been foreclosed on will be continued to be viewed as “victims.”
My prediction is: in a couple of weeks, another bail-out proposal will be passed. It may take the form of the Gvmt mandating that credit agencies abstain from submitting negative credit information regarding those who have been foreclosed on, all under the guise that “these poor victims will otherwise not be able to find another house to buy or place to rent.” Another bail-out will be to allow capital loss deductions for primary and investment homes. I’m sure there will be more outlandish things than this, all done to try and prop up ridiculous home prices; but to no avail in the end.
“It may take the form of the Gvmt mandating that credit agencies abstain from submitting negative credit information regarding those who have been foreclosed on, all under the guise that “these poor victims will otherwise not be able to find another house to buy or place to rent.”
PLEASE DONT GIVE THEM ANY MORE IDEAS.
This might be the third year there isn’t a Spring bounce.
Inventory will bounce- I’m sure we’ll se a big upswing as we move into spring.
The inventory bounce will make kangaroos jealous.
I think you will appreciate this spring bouncy song:
“The most wonderful thing about Tiggers,
is Tiggers are wonderful things.
Their tops are made out of rubber,
their bottoms are made out of springs.
They’re bouncy, trouncy, flouncy, pouncy,
Fun! Fun! Fun! Fun! Fun!
But the most wonderful thing about Tiggers is,
I’m the only one.
Oh, III’m the only one!
Oh, the wonderful thing about Tiggers is,
Tiggers are wonderful chaps.
They’re loaded with vim and vigor.
They love to leap in your lap.
They’re jumpy, bumpy, clumpy, thumpy,
Fun! Fun! Fun! Fun! Fun!
But the most wonderful thing about Tiggers is …
III’m the only one!”
This is how “Sold” signs will feel this spring.
I first thought you were writing a satire on ‘tigger derivatives’, my bad.
“Advanced topics in the pricing of options. Detailed study of such exotics as lookback options, ladder options, tigger or knock-in options, basket options, and multi-asset options.” LOL
OK, Hoz, time for a break for you, off to the snookers parlor - LOL!!
Thursday night snooker.
Wednesday night bridge.
Wow! Snooker and bridge!
A true gentleman!
Leigh
P.S. Won’t be posting for a few days - it’s all good! Leaving tomorrow for San Antonio for a few days.
Leigh, my fair lady - to leave the warmth of Wisconsin for San Antonio! Its supposed to be above 0 tomorrow! Whee. Heat wave. I love your posts!!!!! (Multiple exclamations say you’re cool)
Leigh,
Have you been to any of the Caverns in San Antonio? We went to the Natural Bridge Caverns. It was really spectacular. I’d love to visit some of the other caverns next time I visit SA.
Hey Wicket!
So many caverns, so little time.
No to SA caves.
Yes to PA, NM, CO, WI (many underwater ones!)
AH!
Leigh
Hoz,
You are a gentleman. LOL. You give me too much credit on knowing about the pricing of options.
Everything I’ve learned about options, puts, shorting, etc.. have been from wonderful people like you, txchick and all the other knowledgeable posters.
Now I will need to go research “tigger or knock-in options.”
OT–
This week at the Santa Barbara Housing Bubble Blog: Unsold inventory at a 2006-built, seven-unit luxury condo development in downtown Santa Barbara still stands at seven. Price tag: $2.1-$2.4 million apiece. Now they’re available as rentals as well — by the month, week, or day. What’s next, hourly rates?
Saint Barbara
The developer’s initial plan was to peddle them as timeshares (a.k.a., “residence club” memberships), at about $400,000 per 1/8 fractional ownership interest in any condo unit. (They’re located about a mile from the ocean, across the street from a downtown public-parking garage.)
Saint Barbara
Hourly rates? Have I got a Tucson motel for them:
My Stay at the No-Tel Motel
Hee hee. My landlord just got his HELOC cut off. Tee hee hee tee hee. Here’s what the letter says (just the good stuff):
Dear Customer:
We are contacting you with important information regarding your home equity line of credit (HELOC). After reviewing your account, on 02-07-2008, we suspended your account from further advances.
Our decision was made in accordance with the terms of your HELOC agreement and was based primarily on a decline in the value of the property securing your HELOC, which resulted in a significant decrease in your available equity. In order to determine this, we obtained an updated home value assessment for this property.
Other contributing factors that we considered in reaching a decision on what action to take included your credit standing. After reviewing your TransUnion credit bureau report, WaMu identified the following circumstances affecting your credit:
-Serious delinquency
-Time since delinquency too short or unknown
-Proportion of balances to credit limits on bank revolving or other revolving accounts too high
-Too many inquiries in the last 12 months
The rest is just boilerplate, call us for help, etc. The address they give for “lending support” is in Australia!
Tee hee.
Reading your landlord’s mail, are you? That is truly evil .
And don’t forget “uncompassionette.”
LOL! I was wondering if anyone was going to mention that troll’s oh-so-revealing lack of literacy.
You’re right. You know what, right after I move into my new house, I think I am going to call his bank and tell them that he doesn’t live at this address. That way, they’ll stop sending his mail here and, um, disqualify him from any of those bail-out plans.
See, I’m not so evil after all.
Big V,
You are truly compassionate evil
Hee hee.
Serving your landlord a plate of justice? Yum Yum
It’s not really that funny to have a landlord who is up against the wall financially. The “serious delinquency” could be on the note for the house you’re renting, and you could end up facing the consequences: foreclosure resulting in eviction. I hate moving, so I hope my landlord doesn’t end up there.
Oh, it is. I’m already moving.
I heard on the Bloomberg news today that 25% of all foreclosures were leased out.
Good luck.
Thats funny. Screw`em, prolly heloc`ed a hummer anyway. I bet he has the whole collection of get rich quick w/RE and buy homes for 0 down and walk away with $10,000.
Funny,
Lane
RE investors are blowing up left and right here in Phoenix and I bet my LL is going to be one of them. I zillowed his home address he paid way too much for his house. Works as a Self employed “home inspector” HTF he affored a 900K house in Ahwatukee and always on vacation with his family ? Time will tell I guess?
“Her adjustable-rate mortgage will be reset in June. And although she can afford the $900 increase in payments, she doesn’t think it makes financial sense. ‘I am not doing anything illegal. I am not scamming anybody,’ she said.”
So much for honor.
Honor? You mean like the kind that the banksters, Federal Reserve and Congress showed when they created the bubble and declared the War on Savers?
There wouldn’t have been any bubble without people like her signing on the dotted line.
I don’t make excuses for reckless idiots, and I personally chose not to buy an overpriced house with on a suicide loan –despite enormous pressure from family, friends, co-workers, etc.
Even so, placing 100% of the blame on FBs is ludicrous. The system was designed to grossly misprice –if not outright ignore– risk and to reward the imprudent and reckless. And banksters act *surprised* when the FBs and speculators took the bait? Please…
Spare me the platitudes about “honor”. There is no one outside the people here, and other like-minded souls, whose hands are completely clean.
Honor? Huh?
With a 100% loan, she didn’t buy a house–she bought a long-dated CALL option on her house (plus the right to live there while determining whether it makes sense to exercise).
It’s really just that the little people are finally beginning the understand the value of derivatives!
“It’s really just that the little people are finally beginning the understand the value of derivatives!”
And the rest of us are about to be schooled in the consequences of ‘leverage’. Like some have alluded to, beware of your pension programs, there are no guarantees when TSHTF.
I guess I’m just a naive sap. I know corporations by nature are a different animal - they only care about profit. I guess I just expected that people were of a higher caliber. I’ve already heard that people work for corporations so it’s the same thing. It’s not the same to me, I do expect more from my friends and family in terms of ethics than I expect from some corporation. I guess that’s why I refused to play this whole sham game to begin with. It just seems that the responsible that didn’t buy into the whole crazy housing thing are being made out to be ignorant rubes who didn’t know how to make proper business decisions. Just seems to me we’re all going to pay in some way. Somebody has to lose and you can bet it will be the people before it will be corporations, whether it’s by layoffs, loss of pensions, runs on banks, loss of housing, increased violence and crime or just mass emotional depression.
“Somebody has to lose and you can bet it will be the people before it will be corporations, whether it’s by layoffs, loss of pensions, runs on banks, loss of housing, increased violence and crime or just mass emotional depression.”
We should cheer these people on! They’re heroes for walking! They’re ’sticking it to the man!’ They’re fighting corruption - by being corrupt! They’re fighting theft - by stealing! They’re fighting low-lifes - by going even lower!
When they’re done stealing from your pensions/mutual funds/insurance co’s and you’re broke, unemployed and homeless - you can thank them!
Hey aretheycrazy,
You lifted my spirit some time ago.
Something akin to: Leigh, it will get better.
Look for the oportunities, for there will be many.
Thanks the sane, kind words.
Best,
Leigh
What does “honor” have to do with a rationally self-interested decision allowed by the original contract? And where was the bank’s or mortgage broker’s “honor” when they started handing out $million-dollar 120% LTV NINJA mortgages with no down-payments and no income verification?
Who was the first to “lead by example” in our brave new Ponzi-conomy? The Fed? Con-gress? The banksters? The NAR?
The borrower was the last person to act dishonorably in this massive cluster-f*ck.
If it was an ordinary course allowed by the contract, it wouldn’t be reportable to credit agencies.
Everyone on HBB knows these defaults are inevitable. But it is a BIG B-I-G societal mistake to say they are justified.
No, handing out these crazy-ass loans and allowing the bubble to inflate to massive proportions was the “B-I-G societal mistake”. Walking away from them is comon sense and rational self-interest.
“Ruthless puts?” How about “ruthless lending”, or “ruthless rate cuts”?
So much for collateral.
Clearly our congress and the president have shown that if you’ve been responsible and honorable, you get screwed by thier policies that try to prop up unrealistic home pricing that stop responsible and ethical people from buying a home of their own. So screw honor and responsiblity. I’ve learned my lesson. Get whatever you can whenever you can. Honor and responsibility is a suckers bet in this country. Good for this lady, and screw the lenders, and the rest of the suckers who put honor and responsibility at the top of the list . I used to be one of those, but no more. Thx to our country leaders for opening my eyes!
Nah, I prefer to be able to sleep at night, be able to look at myself in the mirror.
If you want to give up your backbone go ahead.
OK guys, NO NEGATIVE CLUSTERING! Got that?
Here in Riverside,CA. homes are actually starting to sell a bit. Some of these larger homes are dipping down to $399,000-$450,0000 and people are actually grabbing them. Very irritating!
The banks seem to be holding out here. When do you think they’ll start to bend? They have to eventually.
Of course people are grabbing them. Do you think stupidity was outlawed just because we are in a down market? Those prices seem attractive to those who were frustrated the last couple of years. But that doesn’t mean the fundamentals have changed or that prices won’t continue to slide. Just not in a completely straight line. A little dead-cat bounce is to be expected here and there.
We are starting to see something similar in Eastern WA. THe high end homes with a bit of a builder/developer discount are showing a few pendings. HOWEVER, even after 60-90 days they are not closing. It is almost impossible to sell the current house in order to move up.
they need to go after all the people who lied on their loans apps like they went after this guy.
Man gets 90 days in jail for insurance fraud
The Bakersfield Californian | Wednesday, Feb 13 2008 11:04 AM
Last Updated: Wednesday, Feb 13 2008 11:22 AM
A 55-year-old man, who defrauded the State Compensation Insurance Fund, a workers compensation agency, out of more than $795,000, was sentenced Wednesday to 90 days in jail and three years probation.
Kern County Superior Court Judge Michael Lewis imposed the sentence on Larry Gonzales after noting that Gonzales has already paid back more than $385,000, has no criminal history and didn’t benefit personally from much of the loss.
Gonzales was also ordered to repay the rest of the amount.
“‘Sales overall are ridiculously low,’ said DataQuick analyst Andrew LePage.”
When asking prices are still ridiculously high, that’s to be expected.
“For Karen Traynor, buying a condo closer to her job in San Francisco seemed like a sound financial decision….That’s a $165,000 loss.”
Why doesn’t it make financial sense now? She can still afford it, afterall. Oh that’s right, when it’s making money it’s all hers and when it’s losing money it’s someone else’s problem. I seriously wish they would ban these people from buying any real estate again for 15-20 years.
Does non-recourse in CA mean that she won’t get a 1099 either? Please tell me that she will at least get a 1099 for this.
And weren’t some of you saying that SF wouldn’t fall?
Whether she gets 1099′ed depends on whether it was her primary residence. Congress+Bush just exempted primary residences from “phantom income”. If she lived in her condo 2 of the past 5, she shoudl be exempt. If not, she should technically be liable for it, thought he lenders may not have their sh*t together enough to actually report and send the 1099.
If the loan is non-recourse, there’s no tax liability. From the details in the article, she probably has a non-recourse loan.
For those that have recourse loans, the federal tax law changes may be helpful if the necessary conditions are met.
Merely for sake of any victims reading, I’m going to disagree. I think there is tax liability. Anyone who thinks otherwise, better ask a professional before testing it out personally.
“And weren’t some of you saying that SF wouldn’t fall?”
Actually, we don’t know where her condo is/was. There’s no doubt that parts of the Bay Area are falling (especially in the East Bay), but most of SF has not fallen as yet.
I just watched the video accompanying the story, and the condo is located in San Ramon (very East Bay and well known to be falling)
‘How does it end? The end is coming in the future.’”
For all of us.
“Kamanu refinanced her house in May 2007 and owes $415,000 on her mortgage. Homes in her neighborhood now sell for about $330,000, she said. The median home price in California dropped 17 percent from a year earlier in December, according to the state’s association of Realtors.”
I’ll bet the 4th of July party is gonna suck this year in that hood.
accidental arson….I know it is an oxymoron, but I know some are thinking of this very scenario.
Really, really hard to pull that off without leaving proof of exactly what went down. I was on a grand jury once and before we heard an arson case, beforehand the arson investigator came in and gave an overview of how an arson investigation works and how exactly they go about determining how a fire started. Fire burns upward, it leaves all its ignition evidence behind as it climbs. Jingle mail will probably not get you anything more than a second glance at your next loan app. Arson will get you 10-20.
Sun Microsystems is laying off personnel. After all the layoffs last year by Sun, I thought it would be over. This is a troubling new development.
What keeps that company in business anyway? The last time I saw a Sparc was in 1992.
maintenance contracts? I’ve seen Sun workstations quite recently, they just aren’t new ones.
Most of the high end telco servers I work with are Suns. OpenWave deploys Messaging and WAP Gateway clustered systems on the Sun platforms. These systems can and must process millions of messages and WAP requests a day. Every GSM server I ever tested against in Europe was a Sun. It’s not all maintenance.
Hoz, please elaborate. Thanks.
There are certain companies that foreshadow events because of private and government ties. Sun Microsystems is one such company. Layoffs at lumber mills and other manufacturing companies used for the domestic market are to be expected in a slow down. Layoffs at international exporters with strong ties to the government are a surprise. The Ultra Sparc T1 (Niagara) is a beautiful tool for small businesses. Why does a company with a strong name, ties, product and service layoff 100+ people, after laying off 600+ last year? I do not trade any tech stocks, I do not understand the accounting/valuation (by my standards all tech stocks are at least 100% overvalued). I am to old to wish to learn a game when there are more stocks than I will ever trade that I do understand.
I really thought the problems at Sun were last years news.
Sun is still has way to many employees and still need to cut unprofitable business units and projects. Also they probably should give in and sell some property while they are at it.
So I’d not read to much into this at least for now.
Tech is my favorite but I’m always bearish on it. Overvaluation abounds. How anyone can call Cisco, Intel or Applied Materials growth companies any more is something I can’t understand.
Hi Tx, hope you are feeling better!
Applied and Intel have an out if alt energy (solar) ramps up. Intel’s talking about it and several fabs have retooled to grow solar cells. If so, Applied can supply them.
I should chime in.
Again, I do not mean to talk at people…
I believe we are seeing another top in tech. I simply cannot get into the specifics of why I believe this is so. In my mind it has to do with revenue streams of value added information uses. Advertising is failing. Access to timely information is also trying to become a very serious premium, and the blogosphere has removed the need to access certain information streams via payments procedures.
Everybody wants to figure out how to get paid, Ebay and Craigslist is the best example of unlocking stored value, but these have a limit. When I say things such as “witness the limits of communication” it implies I believe as an individual that “on the ground” interaction is more important than the blips through a screen.
Macro is important, but the microcosm of each individual who bears the burden of seeking out information has a vast array of tools….phones, internet, newspapers, and everyday conversation…
I thought tech would lead out, but it cant because the machinations are broken on the backs of underpaid, under-educated service slaves who believed debt is wealth.. it hurts to say that, but truth hurts sometimes. IT is gonna get worse before it gets better.
Net has been this way from the beginning. They try to sell services, but thereis always someone else willing to give the services away in hopes it will bring in advertising revenue.
There are so many sites trying to sell “upgrades” and extras. People just ignore the pay services and go with free versions.
I guess the dating services do okay, because they help weed out the guys just looking for s ex.
Honestly, I have no idea why ANYONE would ever pay for porn on the net…. there is SOOOO much for free. Yet that is one of the few buinesses that rakes in the bucks.
Foundation Trilogogy!!!
Leigh
Issac Asimov rules Leigh
Here ya go guys……….for all those in the 50% off camp or the buy one get one free camp.
http://drhortonunauction.com/
Sure glad that is is different here in Oregon. Everyone here tells me they will never see the prices go down due to the urban growth boundaries. Gee, seems like we were saying the same type of thing in AZ when it seemed everyone wanted to live there in 2005.
Dam you beat me to it. Can see the line of specuvesters now. To bad 50% is still more than im willing to pay in most cases.
Celebrity Foreclosures
http://www.luxist.com/2008/02/13/former-nba-star-facing-foreclosure/
Hey Tx!
Read a few of them less than a week ago. (OK…sometimes I’m a fool for the dish!)
Dumb money going down? Fools? Get rich to quick?
I doughnut no!
Leigh
“Sprewell, now 37, was once one of the NBA’s infamous bad boys, known for choking a coach during practice.”
We lived in the Bay Area when that ugly drama played out. Now it sounds like his years of earning the multimillion dollar pay check have given way to a Tysonian adjustment period.
Couldn’t have happened to a nicer guy.
Mary Kamanu of Sacramento, ca. wants to move in with her boyfriend which means selling her over-valued home. She said she doesn’t want to wait a year or two for prices to go back up so she can sell her property and (I assume) get back what she paid instead of taking a big loss.
Mary, it isn’t going to be a year or 2 years. It’s going to be 5 to 10 years at least. In the 1990’s bust, prices didn’t START to recover until 1996/7. In boom and bust times, it usually takes 10 years before prices move again. Sometime during that 10 years, prices bottom out but buyers DO NOT rush in en-masse to scoop up “bargains”.
However, compared to this amazing bubble and incredible bust which has threatened the financial stability of the USA and other countries which got sucked into the Wall Steet Ponzi scheme, most other booms and busts was Mickey Mouse by comparison.
This is the Mother-Of-All-Busts AND, it comes at a time of scary financial un-certainty for the USA. Besides the fact that wages cannot rise too much to compensate for high property prices, there are several other busts waiting to surface right behind this one. Credit cards and consumer debt bust is next up.
Added to that we are in a period of inflation (I just bought a loaf of bread which cost $2.10 three months ago and now cost $3.10). Bahgdad Ben is denying there is inflation but evidence proves contrary to ANYTHING Bhagdad Ben says about anything these days. Inflation is rising FAST. Coupled with a recession, even if it’s mild which I don’t think it’s going to be, property prices will eventually arrive at, and remain in, the basement (with a few dead-cat bounces). That bottom will be 1999 to 2000 prices. There they will stay for a good 5 years with very little movement. Possibly even 10 to 12 years.
I’m very happy that I don’t own any property purchased between 1999 and 2007 and even happier that I didn’t buy from 2004 to 2007. Those 2004 to 2007 valuations are toast.
Inflation in the things we need e.g. gasoline, bread, healthcare, education.
Deflation in the things we want e.g. McManions, housing in general, Hummers, BMW, vacation to Mexico.
Meanwhile, we face wage stagnation.
This is the best case scenario?
Cinch
“‘I’m hearing it might be a year or two before the housing market comes back, and I can’t wait that long,’ said Kamanu. ‘I’m relying on luck, hoping that someone will come along and fall in love with the house, like I did.’”
Fall in love with, gag me with a spoon. One thing is certain, the house fell out of love with you. I guess you just found out in a case like this love is a one way feeling. Please tell me what does it feel like to pay someone to take the house off your hands?
“Love at first sight is easy. Show me love after 20 years.”
Happy Valentines Day, Mary.
“The only thing that holds a marriage together is the husband being big enough to step back and see where the wife is wrong”
Archie Bunker
Yep, she was in love until the her home price started taking a dive. What a lady!
This love at first sight for a house turns into hallway sex when the equity expansion goes into reverse.
Got that “hallway sex’ email today. lol
The problem with plans like the 30 day foreclosure moratorium, is that most of the people who are seriously behind on their mortgages simply don’t want the properties anymore. If they wanted help, they would have called their lenders already. We’re seeing more and more of this attitude, in some of the articles, lately. I think lenders are starting to realize this and it’s scaring the crap out of them. We’re at the beginning of a mass exodus of the remaining FB’s, as they seek to unload their burden.
Well, of course. The whole point of Project Lifeline or whatever it’s called is to keep a few FBs paying at some rate rather than at zero rate. Good luck with that.
Yep, trying to keep the crowd orderly as they head for the exits. The salient point, of course, is that they are headed for the exits so it probably isn’t a good idea to waste time searching in the darkened theater for that box of jujubes one has dropped on the floor under their seat.
The extra 30 days is 30 extra days to live for free, and party on.
Here’s another troll for you:
‘I can’t believe people would be happy about the mortgage crisis.’
I’m not happy about the mortage crisis, but it already happened. The mortgage crisis ran from 2003 to this past summer and consisted of lenders giving a lot of folks loans they couldn’t actually pay back.
What we are experiencing now is not a crisis but the inevitable fallout of the previous crisis.
My response is always.
1) I wish it had never happned… but since it has.
2) I’m glad it FINALLY isn’t getting any bigger. We have FINALLY peaked and started to unwind.
3) We may as well try to get SOMETHING out of all the destruction. MAYBE we will get a nation without posers, without the concept of “retail theorapy”, where people don’t believe they can borrow themselves rich, you can not buy yourself happy with debt, where people think long-term, where the most wreckless are punished BADLY for what they have done, where people return to simple values instead of judging people by what they wear, drive, drink, eat…
Where the cure to every little economic blip is not more debt, lower interest, looser lending standards.
Actually, I’m pretty happy about it. I’d be more happy about it if the free market were allowed to perform its magic, unimpeded by our dumb-butt Congress, and housing prices would fall 50% in the next couple of years. Instead, prices will fall 50% over the next decade. But, I have more staying power than these deadbeats.
“…can’t believe people would be happy…”
Quite interesting how posters here can instantaneously morph from bitter priced-out renters to happy folk. Can’t say I am that happy about the mortgage crisis myself, but I do feel mighty fortunate that I had the good fortune to foresee it and take aversive action.
I used to be a bitter renter but now, thanks to a wonderful doctor, I just take a tiny little pill everyday and I am happy about the mortgage mess!
So much better than spending my nights worrying about the people I know in trouble and knowing I can’t do a darn thing to help them.
“Orange County’s first luxury high-rise tower project now has its first foreclosure. A unit in one of the twin 18-story towers in Irvine has been repossessed by the lender, the first foreclosure in Marquee Park Place, according to two Web sites that track foreclosures.”
——————————————————————————-
Ah yes! Those beautiful(not) high-rise condo’s facing the 405 freeway with a $ 1k per month association fee and with 18% of the units for sale. I read in one of the local poapers that the Marquee Park Place towers had as many as 40% of the units empty (specuvestors?). All of the other high rise projects in the OC have come to a screeching halt!
What I really hate about all this is that these condos could have been built and sold at a reasonable price. I still don’t buy into the high costs for these projects since similar commercial construction for business rents at much lower rates. Sure they need more plumbing and more expensive interiors but is it really that expensive to build these high rise condos ?
2 words: Granite countertops.
Are you sh@tting me? $1000 HOA?
“Orange County’s first luxury high-rise tower project now has its first foreclosure. A unit in one of the twin 18-story towers in Irvine has been repossessed by the lender, the first foreclosure in Marquee Park Place, according to two Web sites that track foreclosures.”
i was often in that general area 2006-2007 and had the priviledge to see dozen’s & dozens of separate hi-rise developments going up in that area and all up & down Jamboree . Have been out of there since Oct but imagine 1/3 of those developments will be unfinished dirt plots. Lennar project off Michelson % Jamboree half finished and at a standstill . That entire hi rise commercial district of south OC was 30-40 % RE related companies & banks which explains the meltdown. Ameriquest, new century among the companys which were in that area. Too bad as that area was generally top notch developments in a generally clean corp area smashed by a RE meltdown/recessionary tornado/hurricane combo.
. Better here than LA dwtn & Platinum Anahein, two gigantic elephant dung heaps stinking to hi heaven.
And that’s not all. Veronica Hicks, head of brokerage Condos etc. in Newport Beach, said she is marketing a unit on the 16th story of one of the towers for $950,000 to $1.1 million, which is less than the debt owed to the bank.”
Veronica, is the price $950K or $1.1M. I can’t stand the tension. Or, are you ‘entertaining’ offers between that amount? I’ll give you $950. Cash. But I don’t want to be responsible for any HOA dues.
What is up with the asshats saying “seller will entertain offers between $529,000, and $599,000″? As if there’s going to be a bidding war on your POS. Tell you what, I’ll give you $199,000.
So if you offer her $1.2 million, she won’t take it?
Exactly. Why put a ceiling on it? Why not just say offers above “x”. (Not that anyone is going to offer above your wishing price anyway).
This lowlife who says she isn’t scamming anyone would have looked down her nose at anyone who did what she is doing two years ago. Amazing how the views become so much more liberal when the virus hits home.
catch any of that Santander Bank action?
I called it last night.
I dont mean to intentionally talk at people. This forum is difficult for me to work in.
Standards evolve. The new honor code involves borrowing money and not paying it back. It’s not theft when it’s a non-recourse loan.
Plenty of people are waking up and finding out that they’ve been put in boner mortgages for houses that were overpriced because the banks would lend any amount to anybody, and they’re sitting in their living rooms realizing that they’re getting screwed, and they’re not putting up with it, and they’re walking. Good for them. “Honor” is a two-way street.
It’s theft if you were fraudulent on your loan application in the first place .Oh lets just forget about the the fact that the FB got the house by fraud and now the FB is just making a business decision to exercise his right for non-recourse .Oh Brother
Robert Reich had an interesting OpEd in NYT today titled “Totally Spent,” where he basically says if we don’t raise wages for the bottom and middle, we might as well get used to a lower standard of living because our standard was all based on debt. http://tiny.cc/q5kgE
He tells it like it is. We’ve run out of ways to maintain our standard of living.
“And temporary fixes like a stimulus package that would give households a one-time cash infusion won’t get consumers back to the malls, because consumers know the assistance is temporary. The problems most consumers face are permanent, so they are likely to pocket the extra money instead of spending it.”
They might spend all or part of that money, but the only things that will keep spending going will be more credit (very unlikely to happen) or higher wages.
By the way, the president commented the stimulus plan was a “booster shot” for the economy. But the patient has cancer, you dumb$ss!
Book Review:
American Sucker, a memoir
Indeed. I just can’t wait for some smart ass mugger to start telling people he’s sticking up for their wallets, that he’s made a “Business Decision” that he needs their money more than they do.
Why not? The only practical difference between borrowing money and not paying it back and robbery is that the first is legal and the second is not.
Perhaps ti could be seen as an “investment” by the bank in the property. What else could they have been thinking when they were doing 100% interest only loans?
“the end is coming.”
Riff Raff: “Come inside.”
Audience “It’s better than coming OUTSIDE!”
Do you want her to see you … like this?
THE BUILDERS ARE PISSED because their bought and paid for legislators won’t let them write off all their huge crippling losses against forward gains(pay no taxes for years).
These ass wipe builders think it would be easy for these politicians to do without much political damage. They probably believe all Americans are the same Debt Zombie Slaves that bought their RICO-PRICE RIGGED-PONZI CRACK LOAN driven 500k= dumps! Wrong, it’s an election year you fools, be concerned about being brought up on RICO charges in trade for revenge and victimisation votes!
Quit reaching into my pocket ass holes, be happy with your millions and freedom Mr. Builders, AND WATCH YOUR BACK!
This is happening faster than I thought! Prices are starting to line up with local incomes, sure its a little farther out than prime San Diego real estate, but that will come in time:
http://sandiego.craigslist.org/nsd/rfs/573519601.html
That is an APARTMENT, not a house, not a townhouse, not a condo. Whoever converted it needs to be shot, whoever buys it is a fricking idiot that needs to be shot before they have fricking idiot children.
No doubt its a Bob Villa special, but to even see conversions at this price is something new. I wonder what the POS would have gone for in 2005, bahaha, someone took a bath.
Oceanside conversion, 272,000 in 2007, now listed at 158,000.
The satelite shot of the place on zillow shows 2 cop cars in front of the building. Maybe the last FB did get shot.
Oh and get this…280 for the HOA.
Which part, East or West of 5?
The part of Oceanside that is actually on the side of the Ocean is very nice. The other part I wouldn’t visit if you paid me.
One hopes the Chinese will see fit to nuke L.A. during their coming invasion.