February 23, 2008

More Homes Getting Dumped Than There Is Demand For

The Mercury News reports from California. “For what one expert thought was the first time, the number of monthly foreclosures exceeded the number of monthly home sales in California in January, according to data compiled by two research companies. A Discovery Bay real estate research firm said 19,821 California homes went into foreclosure in January, representing about $8 billion in home loans. Meanwhile, DataQuick reported 19,145 home and condo sales in January.”

“‘There’s no way a market that slow can clear these kinds of foreclosures,’ said Christopher Thornberg of Beacon Economics,. ‘What that number says to me is you have more homes getting dumped on the market in terms of foreclosures than there is demand for homes.’”

The Times Herald. “More people should be able to afford a Vallejo-area home now that prices have dropped, though stricter mortgage loan requirements make it difficult, local real estate experts said.”

“Solano County’s affordability rating in February, 2005, was 13 percent, and one would have needed $100,000 annual income to qualify, according to reports at the time.”

“The California Association of Realtors latest affordability index reported that 33 percent of households could afford to buy an entry-level home statewide in the fourth quarter of 2007. That compares to 25 percent for the same period a year ago.”

“‘Prices are significantly lower than they were last year, so they’re more affordable to more people,’ said Solano Association of Realtors president Lori Collins. ‘But credit is still a huge issue. You must have much better credit and a larger down payment to qualify for a loan now.’”

The Morgan Hill Times. “It seems counterintuitive that when housing prices in the free market are falling dramatically that prices for below market rate (BMR) houses are set to increase, but that’s the situation in which Morgan Hill finds itself.”

“Because home builders are having a difficult time selling - even at reduced prices - the free market homes that subsidize the BMR homes, builders say they need a price increase for the BMR homes to make ends meet.”

“As a result, a City Council subcommittee consisting of Council members Greg Sellers and Marby Lee is recommending a price increase.”

The Press Banner. “In a year when the housing market took a considerably hit across the nation, the markets in Bonny Doon and Scotts Valley have remained relatively stable, while the San Lorenzo Valley has seen some downs and more recently some ups, local realtors say.”

“‘The lending bubble collapsed and we had a very quiet fall (season),’ realtor Ronnie Trubek said of the San Lorenzo Valley. ‘The press scared (qualified) buyers, and then the prices did fall.’”

“In mid-January, there were 143 active listings in the San Lorenzo Valley and 16 pending sales. Countywide, however, 63 single-family homes were sold in January, down from 76 in December, which was the lowest number in the past 11 years, according to Real Options Realty.”

“The market has remained fairly stable in Bonny Doon in 2007, despite the first foreclosure realtor Frank Murphy has seen in his 10-year career. ‘Most people prefer to take a financial loss by selling for less than they paid (rather than face foreclosure),’ he said. ”

The Union. “Realtors in Tahoe-Truckee say the word foreclosure has not been spoken in the area since the early 1990s - until now. ‘It is the majority of my listings,’ said Kelly Smith, a North Shore real estate broker.”

“Tahoe City broker Michael Willette said that two to three years ago people began to take advantage of an ‘option R’ mortgage. The initially low monthly mortgage payments ballooned beyond what some homeowners could afford.”

“‘These loans have been resetting with a vengeance,’ Willette said.”

The Lincoln News Messenger. “The effects of a deepening national housing slump are hitting close to home. Even Gladding, McBean, one of Placer County’s oldest businesses and a Lincoln institution since 1875, is feeling the market’s pinch.”

“‘I’ve been here since 1991, and this is the most significant downturn in our market I’ve seen in that time,’ said Bill Padavona, general manager.”

“Padavona said the clay company has seen a 60 percent to 70 percent decline in products tied to home construction, such as sewer pipes and roof tiles. Though Gladding, McBean provides products throughout the West Coast, the market is especially bad in Northern California, where ‘the market has slowed to a near standstill,’ Padavona said.”

“Construction of single-family units in the state was down 37 percent from a year ago, to 67,993, the lowest number since the 51,160 reported in 1982, the state association said.”

“That’s bad news as well for another Lincoln company, lumber supplier Sierra Pacific Industries. ‘It’s had a dramatic downward impact on lumber prices,’ said Mark Pawlicki, a spokesman for the Redding-based business. ‘Prices today go back to about 1992, the last time we had a housing recession.’”

“Average industrywide framing lumber prices were $249 per thousand board foot in January – down from $404 in January 2004, reported Random Lengths.”

From KCRA 3. “Across the country, fire investigators are looking at some homeowners in foreclosure as potential arsonists. In Modesto, Battalion Chief Hugo Patino looked over a charred and nearly destroyed home, a home that was empty and is now set for auction.”

“‘A fire in an empty house is always cause for suspicion,’ Patino said.”

“Sacramento fire investigator Steve Johnson said spite, revenge and pyromania are a few reasons for arson. But firefighters are adding desperation to that list. ‘Nationally, we’ve been told foreclosed homes have been set on fire,’ Johnson said. ‘People are thinking this is the easy way out.’”

“‘That sign in the front yard is always going to be in the back of our head going, ‘I need to really concentrate on why is this an accidental fire? To make it look like an accidental fire? And in retrospect, they are trying to burn their house down to pay it off?’ Johnson said.”

“‘If we have someone set a structure fire that’s an arson and one of our firefighters get hurt, they will be chased harder than anything that’s been chased in their whole life,’ Johnson said.”

The North County Times. “Interest rates on mortgages have increased dramatically over the last few weeks, preventing homeowners from refinancing and making it more expensive to buy a home.”

“Mortgage brokers said the jump in interest rates has caused many refinancing deals to fall through. Dave Hopkins, a broker with Rancho Financial in Rancho Bernardo, said Wednesday he had 12 customers back out of deals over the last week because of the increased interest rates.”

“The housing market this year will see more foreclosures, lower property values and — with higher interest rates — fewer sales, said Kelly Cunningham, an economist with the San Diego Institute for Policy Research.”

‘”With all these things, there doesn’t seem to be any turnaround or recovery anytime soon,’ he said. ‘(Higher interest rates) kind of prolong our housing slump.’”

“When average interest rates hit a low of 5.49 percent a month ago, it was the lowest since mid-2005, according to the bankers association. And then the Federal Reserve, the nation’s central bank, slashed its overnight lending rate by 1.25 percentage points.”

“But the Federal Reserve rate only determines the cost for banks to borrow money and does not directly change mortgage rates.”

“‘When the Fed said it was cutting rates, people had the misconception that it’s going to drop interest rates,’ said Justin Sheftell, director of sales for a mortgage brokerage in San Diego. ‘So they missed the boat and now they can’t refinance.’”

The San Gabriel Valley Tribune. “An economic stimulus package signed into law on Feb. 13 by President Bush should bring some relief to homebuyers and sellers. A portion of the package has boosted the limits for loans purchased by Fannie Mae and Freddie Mac from $417,000 to as high as $729,750 in the Los Angeles area through December 31.”

“Norman Cox, regional VP for Coldwell Banker Town & Country, said that probably won’t bring quick relief to distressed homeowners, however. ‘It’s only legislation that enables Fannie Mae and Freddie Mac to implement (higher loan limits),’ he said. ‘The indications are they aren’t really happy about doing it.’”

“Moreover, loans purchased under the new cap will likely be subject to a different set of rules and regulations, Cox said. And even if the new rules were put into place immediately those loans wouldn’t fund before July, he said, which wouldn’t help the people who need immediate assistance.”

“Robert Kleinhenz, CAR’s deputy chief economist, said today’s housing market is markedly different from recent years.”

“‘I’ve been hearing anecdotally that 25 percent of the home listings in some markets are distressed listings that are either a foreclosure or a short sale,’ he said. ‘In some markets they’re saying it’s 50 percent.’”

The New York Times. “Elizabeth and Ben Kilgore, who live in Tiburon, Calif., are back in the real estate market. All it took was a little-publicized section of the economic stimulus package President Bush signed into law last week that lowered the borrowing cost of buying a more expensive home.”

“‘This will push us into a price range that’s now financially possible,’ said Ms. Kilgore, a real estate agent in Marin County.”

“Prices have dropped 20.4 percent over the past year in Contra Costa County, east of San Francisco, and 13.1 percent in neighboring Alameda County, according to DataQuick.”

“Indeed, California is probably the state hardest hit by the housing slump. As inventories rose in most cities, the median price dropped 16.9 percent from May to December, according to DataQuick.”

“Prices are still high; A public policy advocacy group estimated that a family would need an annual income of $196,878 to afford the median-priced home in San Francisco.”

“In San Diego, real estate activity has dropped off noticeably in the past year. According to DataQuick, the number of homes sold in San Diego in January dropped 34 percent from a year ago.”

“‘The availability of jumbo loans was so easy,’ said said Jim Abbott, a real estate agent there. ‘Now they’re not, and it’s really exacerbated the problem. But I don’t think anyone is counting on it until it actually happens.’”

“Of course, prices for some houses in certain California enclaves and other luxury locations remain so stratospherically high that a change in the conforming loan limit, no matter how drastic, would have little effect.”

“‘It won’t make so much difference here,’ said Edna Sizlo, a real estate agent in Santa Barbara, Calif., where the adjacent suburb of Montecito has homes valued at a median $4.1 million, making them among the most expensive in the nation. ‘There’s nothing you can even live in for under $1 million.’”




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145 Comments »

Comment by Ben Jones
2008-02-23 12:09:11

‘the number of monthly foreclosures exceeded the number of monthly home sales in California in January’

It was just a few days ago that a similar stat came out about Las Vegas, and now its the whole state of California!

Comment by Lost in Utah
2008-02-23 12:19:24

WAHOOO!!! Spring selling season.

Comment by arizonadude
2008-02-23 14:14:14

What happened to the after super bowl crowd?

Comment by Leighsong
2008-02-23 18:17:21

Dude,

What Superbowl?

Green Bay lost - sniff.

To depressed to watch de sooper - boil.

AH…gaming,
Leigh ;)

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Comment by Tim
2008-02-23 17:05:15

I hope they are prepared to be insulted by low ball offers.

Comment by Leighsong
2008-02-23 18:21:34

fooseballs? :)

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Comment by Hondje
2008-02-23 12:29:51

Professor Bear gets credit for predicting this trend more than a year ago.

Comment by Lost in Utah
2008-02-23 12:33:13

Prof, if you read this, I have the same dang problem with my iBook keypad. I thought it was just my typing skills until I read your post the other day.

 
Comment by ex-nnvmtgbrkr
2008-02-23 16:57:24

“Professor Bear gets credit for predicting this trend more than a year ago.”

…..and for showing us his panties everytime the gov proposes a new football-humping bailout scheme (sorry Bear, couldn’t resist. You know i dig ya!)

Comment by SanFranciscoBayAreaGal
2008-02-23 20:13:27

Don’t forget Prof has that huge bottle of hand lotion on his desk ;) (I couldn’t resist also Prof)

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Comment by amy
2008-02-23 13:50:25

test

 
Comment by az_lender
2008-02-23 15:49:41

And, SD economist Kelly Cunningham says (in Ben’s post) that 2008 will bring more foreclosures, lower prices, and fewer sales. Very interesting: there will then be a LOT more foreclosures than sales. Whaddaya bet regulators will find a way to allow banks to go into the landlording biz after all.

Comment by Clair Voyant
2008-02-23 16:20:03

I’m really amazed to see these stats. We’re still early in this down cycle.

Comment by Tim
2008-02-23 16:37:19

Any predictions on how the liquidation of bank owned properties will be handled in 2010?

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Comment by Leighsong
2008-02-23 18:19:06

er…RTC?

Maybe tooooooooooooo large?

I donno!
Leigh

 
Comment by Tim
2008-02-23 19:27:01

It was my understanding that they changed the rules after that mess so it might look a little different then what happened with the savings and loans, but they will need to do something massive.

 
 
 
 
Comment by amy
2008-02-23 17:52:56

http://news.yahoo.com/s/nm/20080222/us_nm/usa_economy_stimulus_mall_dc

a new york mall is giving away $50 bills to ‘help fight the recession.’ Maybe they should increase wages instead, just MAYBE?

this is sad

Comment by Earl The Vagabond
2008-02-24 13:27:22

Let me guess.. The guy handing the money out was bald, had a grey beard and a “Hi. My name is Ben” sticker on his jacket..?

 
 
 
Comment by mikey
2008-02-23 12:34:18

“‘The lending bubble collapsed and we had a very quiet fall (season),’ realtor Ronnie Trubek said of the San Lorenzo Valley. ‘The press scared (qualified) buyers, and then the prices did fall.’”

Ben DID it! Tell his Mom Ronnie :)

Comment by Neil
2008-02-23 12:54:07

My jaw is on the floor on how bad this ’spring selling season’ is starting nationally. Yes, I realize that the weather hasn’t broken in most of the country and thus we’ll hear the NAR discuss that being another impact. But we’re not even on track to hit a 4.5 to 4.7 million home sales rate (which is the long term trendline).

I lived in the South Bay when we had the ‘week of no phone calls’ to the Realtors ™. That was a scary start to the decline. What happens if we have a national week? Month? Dare we envision a quarter?

My the bulls are getting angry! The Realtors ™ and other members of the REIC are really hitting all of the housing blogs trying to convince anyone to buy!

Got Popcorn?
Neil

Comment by Lost in Utah
2008-02-23 12:58:06

Bring ‘em on - but actually, they must be steering clear of Ben’s Blog, they know he suffers no fools (well, there may be a few of us). And yes, you’re right, things may hit even faster and harder than we had thought. Time will tell.

Comment by Michael Emmel
2008-02-23 13:19:35

Well it makes sense that this bubble will pop faster and harder since its made of of heloc’s and zero down loans. In both cases the home debtor has no skin in the game. Next the recent bubble has removed most potential buyers from the market either they are FB’s or prudent. And on top of this the baby boomers are starting to retire putting 3/2 and 4/2 SFH on the market that were occupied by 1-2 people for 15 years. And these people can afford if they are smart to undercut the current market and still make a decent profit.

Ohh and on top of this we are entering a traditional recession induced downturn coupled with overall monetary problems and peak oil.

And one more thing the savings rate is zero or negative.

So why can’t this thing blow up fast ?

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Comment by Faster Pussycat, Sell Sell
2008-02-23 13:33:22

So why can’t this thing blow up fast?

It can, and most likely, it will.

Why do you think the Secretary of the Treasury is running around with pseudo-bailouts (that can’t work) like a headless chicken?

All the balloon-juice being bandied about points to the same thing.

 
Comment by Neil
2008-02-23 15:14:30

I predicted a fast blow up a year ago. Now… I think it will be a long grind. Now, we’re seeing more and more areas suddenly drop their prices. First it was Corona CA, then Riverside and some areas of Florida… but we’ve all read the articles on MEW and the Kennedy-Greenspan correlation. Now we are seeing the end of ‘cash out’ refinancing or even selling at a huge profit.

I’m still shocked how many homes are on the market precisely two years after they bought for precisely $500k more than they bought…

This is starting to look more as what TJ predicted than what I predicted. Cest la vie.

Got Popcorn?
Neil

 
Comment by ex-nnvmtgbrkr
2008-02-23 17:04:06

“All the balloon-juice being bandied about points to the same thing.”

Who’s doing what with their balloon-juice? I either just ended up on a porno blog, or this bubble is going places I never envisioned.

 
Comment by Faster Pussycat, Sell Sell
2008-02-23 17:10:06

It’s all your fault. Once you came up with the JT, it was a direct descent into deviant debauchery.

 
Comment by ex-nnvmtgbrkr
2008-02-23 17:46:31

My wife has always told me she’s never met a person who can take a conversation to the gutter quicker than I can.

We all have our gifts.

 
Comment by aladinsane
2008-02-23 17:51:06

Gutter Logic

 
Comment by Leighsong
2008-02-23 18:29:22

Kiss her everyday NYC’boy!

Ya got a good one - and me thinks she kisses you too!

Umbellas aside,
Leigh

 
Comment by Leighsong
2008-02-23 18:34:17

Way Ooops…that was to you Ex!

(I’m sure the same applies to you too NYC’boy)!

Rats.

You are both cool guys!

Apologies for the mix-up!

Leigh - it’s all good!

 
Comment by ex-nnvmtgbrkr
2008-02-23 19:21:12

I do feel at times that NYC is the only one that gets me……(sniff)…

 
Comment by Michael Emmel
2008-02-23 20:55:57

Niel I spot checked in Irvine CA and those high priced houses are almost certainly HELOC’s gone bad. I wishing price guy would have pulled the home or lowered in small amounts. These things are going into foreclosure. A lot of the listings where underwater by 100k. The high end 2 mil l plus was a bloodbath. Those stupid prices are for the most part Hail Mary’s not wishing prices.

 
 
 
Comment by Olympiagal
2008-02-23 14:26:23

I wish they’d come on over here. I was pouting just the other day about the lack of trolls. Its been so long since I got to watch the masters deliver a good troll flensing; exeter, txchick, lad, the professor, wizard…many others too, but it’s been so long that the lovely memories have faded.
I always considered myself rather a master of quick and brutal discourse, and took pleasure in how many cruel and discomfiting points I could condense into one breath, or one paragraph, with extra points accrued if I could do it in iambic pentameter and/or use the word ‘feculent’. It’s just one of those things that come natural to me, like knitting or making good apple tarts, until some of the posters here showed me I am but a promising apprentice in the brutal discourse dept. Ah, nostalgia fills me.
Yes, a few kind and helpful souls pointed out other blogs where I could read trollishness, and I appreciated the thoughtfulness, but I don’t want to go out with other blogs. I’m not easy. At least not in the matter of blogs. Hahaha!
Anyway, how’s the song go? Where are the trolls? Bring out the trolls, well, mayyyyybeeee nexxxxt yearrrrr….

Comment by cayo_ron
2008-02-23 15:12:17

If it makes you feel better, perhaps some of us could role-play the part of trolls . . . now is a great time to buy! They’re not making any more land, you know.

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Comment by az_lender
2008-02-23 15:35:07

trouble is, cayo, i can actually see the smirk on yr face!

 
Comment by Silverback1011
2008-02-23 15:57:18

Okay, how’s this ? Buy a home now while there are plenty of choices. It’s never been a better time to buy - interest rates are historically low. Over a 10-year period, the value of real estate has historially doubled. Owning real estate is the cornerstone to building your wealth. Ask a realtor - they’ll help you make the right choice…..

How’s that ? LOLOLOLOLOLOL ?

 
Comment by SanFranciscoBayAreaGal
2008-02-23 16:06:11

Remember,

Real estate always goes up. A house is an investment. A house is good for your retirement portifolo. It’s cheaper to buy than rent.

 
Comment by Jimmy Jazz
2008-02-23 16:33:51

There’s never been a better time to troll!

 
Comment by Olympiagal
2008-02-23 21:20:48

Oh, thank you all so very much. *Emotional sniff* I can’t tell you what this means to me.

 
Comment by BKlawyer
2008-02-23 22:29:29

Seriously though, there is an argument to pit the economics of buying a home now at (hypo 5.5%) with 10% down versus a home a couple of years down the line at 20% down with 10% interest. It may, in some people’s situation, be a better deal to purchase now. PLEASE don’t flame me. I’m 5+ years as a bear and most of your are new to the argument. Duh! People need to understand the economics of the deal.

 
Comment by honolulu renter
2008-02-23 23:39:10

Creating a new client pool? I don’t think you need to. Your hands will be quite full for the next several years!

 
 
Comment by Blano
2008-02-23 16:51:11

“Feculent” is ok, but NYCB’s “bullsh*t buffet” is better.

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Comment by ozajh
2008-02-23 21:39:56

So, to use a fishing analogy, we are now trolling for trolls? :)

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Comment by RoundSparrow
2008-02-23 22:32:26

Oh, I missed this thread on Slickdeals forum. Slickdeals.net is a shopping forum. People find the best clearance deals and what not. I work computer industry and the ever constant obsolete/new model of hardware - it is a good place to hang out and find out about who has the best prices at any given time.

People were discussing refinancing, and I jumped in with housing doom and gloom. I said basically “sell now and rent” is what MOST people should do, and here is a reply I got. This was written just 3 weeks ago!

Quote:
Renting is never a better choice than buying. We have several rental homes that pay for themselves monthly and then some. Do you think that when the renters leave, they will benefit at all from the thousands of dollars they’ve paid my homes down? No, but as a homeowner, I will. Advising people to rent rather than buy is just plain irresponsible.

http://forums.slickdeals.net/showthread.php?p=9963296#post9963296

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Comment by Houstonstan
2008-02-23 13:03:42

‘the press scared buyers’…. talk about shooting the messenger.

 
 
Comment by Houstonstan
2008-02-23 13:19:18

I am not sure where to post this one but I had to go out on company business to West Indiana/Illinois border region recently.

In Indy airport, I was talking to a fellow passenger (Old lady, recently widowed) or better phrased, she was talking at me.

Without prompting she was telling me how bad things were in Terra Haute, the place where I had stayed in. She informed me that Foreclosure rate in Terra Haute was 9% (of what I don’t know) and she was buying up places.

Claimed she had bought 5 houses with chain linked fences for $20,000. Appraised (apparently) @ 110k. She was buying to let and not to flip. Having seen some of the houses in this area, she was really buying the land as the houses were small timber places. (~1000ft2 perhaps?)

The reasons for this, she added, was the closure of manufacturing companies like Pfizer and I forget the other.

She also added that farmers were also hurting in that you can drive around and see much equipment for sale. (Why farmers? I didn’t ask but perhaps it is credit related or they have ‘wrong’ crops).

Finally, she also told me a sadder side in that people being foreclosed on are dumping their dogs in the wilderness which in cold temps when I visited, was very cruel. One day was 22F in the day. The owners claim they cannot afford to keep them (Something TexasChick has commented on before) and the owners are under impression that pound requires payment to take them.

That’s all folks. Nothing to see in Middle America now move on.

Btw: If you haven’t been to Terra Haute, you’re not missing much.

Comment by amy
2008-02-23 13:47:46

I live in the bloomington-normal area of IL. Anecdotally, i’ve seen houses in Normal (about 3) get taken down off the market, and then re-listed. I’ve been watching this market since i’ve moved here last May, and i’d say that most homes that got listed end up reducing their price. There’s a house i have my eye on-all brick ranch, nice back yard, 3BR/1Ba-started at 139K now reduced to 129K. Been on the market since Oct. A lot of houses here have been on the market since Oct. a local website called brokersdiscount.com puts in the ‘input date’ of the house, which is the listing date. Realtor.com does not.

 
Comment by MeShell
2008-02-23 14:02:08

That makes me so sad, to think about those freezing cold dogs :(.

Comment by Lane from s.c.
2008-02-23 17:05:15

Yea me too. What I would like to hear is the people that did/do this got hit by a semi. I guess you call tell I`m a dog lover. We have 4 now, have rescued 2 in the last 12 months.
Lans

Comment by Lost in Utah
2008-02-23 17:20:13

NO, not a semi, that’s too fast of a way to go.

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Comment by SDGreg
2008-02-23 20:54:46

Maybe fall through the ice in the middle of a large lake. Seems more fitting and fair.

 
 
 
 
Comment by hd74man
2008-02-23 14:09:11

RE: If you haven’t been to Terra Haute, you’re not missing much.

With foreclosure’s goin’ for $20k-I sure guess the fook we’re not.

Comment by not a gator
2008-02-23 17:03:05

I was in Terre Haute for Math Camp (at Rose Hulman) in the late 1990’s and it was a really nice town. (I was going to say ‘cool’, but I just realized that it is also boring and therefore not terribly cool.)

Sad to see this happen.

Comment by 45north
2008-02-23 20:49:00

not a gator: math camp! not cool!

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Comment by az_lender
2008-02-23 21:30:45

Those who go to math camp don’t end up as FBs.

 
 
Comment by RoundSparrow
2008-02-23 21:57:48

Lots of decent towns in Indiana. Good people. Boring is underrated.

They still know how to build and assemble things there - so $20K houses may well be because construction is a lot cheaper. Farmers work long days and take pride.

Not sure about Terre Haute, but in Fort Wayne where I grew up - especially near New Haven - Amish did a lot of the construction. Very high quality work.

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Comment by GeorgeSalt
2008-02-23 15:11:19

Those farmers must not be growing corn or wheat.

Comment by RoundSparrow
2008-02-23 22:00:49

Farming business is plain hard work. Extremely difficult to make it big. yes, they are doing better with the higher prices - but that can be easily offset by a couple weak business decisions or health issues. And always strikes me that farming has a shrinking labor pool - who wants to go into farming these days? hard work, capital intensive.

 
 
Comment by Neil
2008-02-23 15:17:47

The reasons for this, she added, was the closure of manufacturing companies like Pfizer and I forget the other.

Until manufacturing gets some legs… this will just keep getting worse. Look at all of the areas that used to specialize in manufacturing getting hit!

I like to point out Florida, which used to be a ‘low cost manufacturing’ center. Those jobs left during the bubble, but no one cared as REIC jobs flooded in. Well…

The tide is going out fast and we’re going to see everyone’s swim wear!

Got Popcorn?
Neil

Comment by az_lender
2008-02-23 15:36:46

Neil, I’ve been back in Calif over a month and waiting for you to have another party. Hurry up already!

Comment by M.B.A.
2008-02-23 16:33:51

I am in LA this weekend. If you are near the SFV Maybe we can meet. I can’t get to south bay…

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Comment by M.B.A.
2008-02-23 16:35:10

I mean this coming wkend - the 28-29th

 
Comment by az_lender
2008-02-23 21:33:58

Hmm, 28-29 are a Thurs & Fri, but I could be in SFV Sunday midday or early pm if you are in a position to round up HBBers.

 
Comment by Bubble Butt
2008-02-23 22:02:03

I will be in Burbank during the week M-F if anyone is around.

 
Comment by Neil
2008-02-24 00:06:56

Someone else needs to organize. I’m crazy at work and the wife is pregnant… So sorry about that, but I’m not sure if I’d be able to set one up before May!

Got popcorn?
Neil

 
 
 
Comment by Mike
2008-02-23 16:29:42

Neil, unfortunately manufacturing in the USA isn’t going to get any legs. The difference between manufacturing costs in the USA and other countries like China and India and Vietnam (to name just a few) is so great there isn’t a snowballs chance in hell of reducing the gap.

How all of this is going to work itself out I don’t know but we have seen a sea change take place in only 20 years. All of us (I’m sure) would like to see the US regain it’s power and prestige which has been eroded over the last 20 years but which has accelerated over the last 8 years, but it isn’t going to happen. Those good paying manufacturing jobs with pension and health benefits which were the bedrock of the US standard of living in the past have gone. Forever. I hear some jobs are coming back to the US. Many of the foreign based outcall jobs (sent to places like India) are returning because it seems the time and motion study people have discovered that a US operator who speaks good english as opposed to, say, an operator in India, actually saves the company (like big health insurance companies) money because they handle the calls quicker. However, $10 an hour jobs still do not replace $60 an hour jobs in the auto industry.

Here’s a sobering thought for everyone. The US military, the US government, most States and most local US cities, buy either GM or Ford vehicles. If they bought their vehicles from Toyota or Honda (better made and more reliable vehicles sad to say) there would be NO US auto makers left.

It’s going to be interesting seeing where this all ends up but for the USA I don’t think it will end up in our favor - except for those at the top as usual.

Of course, this forms the basis of the housing problem whch few people are willing to aknowledge. That being, people making $10, $15, or even $20 an hour, cannot afford to buy $350,000 houses. Especially when their gasoline is costing them $3 or $4 gallon, their heating or air conditioner bills are going through the roof and every week their food bills are rising and property taxes are included.

Truth is, there IS no way out of this without a lot of pain. Both emotional and financial. Worse, we can only hope that China doesn’t get bored with issuing us I.O.U’s. I’ve been reading a lot of stuff from overseas concerning the US sub-prime which has badly damaged many institutions in foreign countries who invested based on Wall Street b.s. The concensus now is that Wall Street cannot be trusted in any financial dealings. That’s yet another blow to US prestige. Once other countries look upon a foreign institution as corrupt (which Wall Street is) they think twice before investing again. Even though the housing bubble crisis looks bad, I seriously think our problems have only just started.

Comment by Lost in Utah
2008-02-23 17:26:37

Excellent post, Mike.

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Comment by Neil
2008-02-24 00:14:29

Agreed, excellent.

Here’s a sobering thought for everyone. The US military, the US government, most States and most local US cities, buy either GM or Ford vehicles. If they bought their vehicles from Toyota or Honda (better made and more reliable vehicles sad to say) there would be NO US auto makers left.
I know enough who love American trucks… but $90/bbl oil is killing that market. As to quality, I have hired a few ex-automotive engineers frustrated that the big-three auto cultures couldn’t get through quality improvements.

Got Popcorn?
Neil

 
Comment by Otis Wildflower
2008-02-24 08:40:51

W. Edwards Deming.

The US automakers told him to get lost.

Toyota didn’t.

US automakers are getting exactly what they deserved for fat, dumb and lazy product development and management.

And a great book on the historical development of Ford and Nissan…

 
 
Comment by SaladSD
2008-02-23 18:28:22

Another item to ponder. These days it seems like once you hit 40 you are a target for being “right=sized,” as in fired. So, how are people supposed to make a living? since despite wishful thinking & generous helpings of Botox, we can’t stay 39 forever. Just read a recent article about how the struggling music biz is laying off their best A&R guys because anyone who has been around long enough to make a decent living is, apparently, according to the well paid CEOs, making too much. New equation: 1 talented/experienced 40-something has the same P/L value as 2-3 chickadees.

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Comment by Lip
2008-02-23 19:09:59

SaladSD,
Old farts have to work better and faster than the young folks. I get paid more but my employer is still getting a good deal because I have experience, I provide a better product, and I have the willingness to work my a$$ off.

I’m not saying that what you said isn’t true, but in an effort to keep my employment, I make sure my boss can’t afford to let me go, and so far this plan seems to be working OK.

 
Comment by cfoofmofo
2008-02-23 21:25:43

I’m on your side Lip.

I’m 52 and and the 2nd oldest person in my company besides the owner. We do over 300 million in sales annually. I have all the younger guys chasing me which only makes be better every day. Making 300k + annually, with a minority interest in the company and adding more value every day. How do I do that? I make sure I hire young talent very much smarter than I am. Learn what I can from them and stay one step ahead. It works for me.

I don’t even worry anymore. If I slip up an fail I already have what I need to retire but, I don’t plan to.

 
 
Comment by Earl 288
2008-02-23 18:58:19

TNX, Mike, Great post.

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Comment by skip
2008-02-23 19:32:16

If you want to know how this will play out, look no further to Alan Greenspan last week:

“Significantly opening up immigration to skilled workers solves two problems,” he said. The companies could hire the educated workers they need. And those workers would compete with high-income people, driving more income equality, he said.”

http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/021508dnbusgreenspan.c1d69e5d.html

income equality == $3k/yr accountant in India vs. $60k/yr accountant in Dallas. Equality == $30k/yr?? Maybe $20k/yr??
Basically, he is saying that ALL wages (except those of Wall Street geniuses and other smart Economist) must come down. Not just manufacturing ($14/hr at GM now) and high tech, but all jobs.

I am sure that this being discussed at high levels in the government and will no doubt be included with the amnesty for aliens next year (no matter who becomes president).

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Comment by Yankee Bear
2008-02-23 20:15:35

“income equality == $3k/yr accountant in India vs. $60k/yr accountant in Dallas. Equality == $30k/yr?? Maybe $20k/yr??”

Skip
you aren’t getting it. Greenspan is saying that if we let in skilled immigrants they come to US and compete on our wage basis, rather than staying in India and competing with us remotely at a $5k base. Greenspan is spot on. America is going to hell in a handbasket because we are structured to product light manufacturing workers and low end service workers. To justify our standard of living in a globally competitive economy we have to be the best educated, most sophisticated people on the planet.
Otherwise we will continue to see further erosion.

those of you who don’t think you have a big target on your back placed there by a third world worker are fools.

 
Comment by SDGreg
2008-02-23 21:33:43

Thanks Uncle Al. Anyone you don’t want to throw under the bus, @sswipe?

 
Comment by jbunniii
2008-02-23 23:00:52

He wants income equality? Is he a communist?

 
 
Comment by NotInMontana
2008-02-23 20:00:40

“That being, people making $10, $15, or even $20 an hour, cannot afford to buy $350,000 houses.”

Hell they can’t even afford $100,000 houses. There’s a huge gap there.

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Comment by SDGreg
2008-02-23 21:12:04

Excellent post. Ties in nicely with the comments by Robert Reich last week that the country faces a permanently lower standard of living unless wage issues are addressed.

“Of course, this forms the basis of the housing problem whch few people are willing to aknowledge. That being, people making $10, $15, or even $20 an hour, cannot afford to buy $350,000 houses. Especially when their gasoline is costing them $3 or $4 gallon, their heating or air conditioner bills are going through the roof and every week their food bills are rising and property taxes are included.”

Housing is reverting to the mean. But the new mean may be lower than the previous long term mean. Those projecting declines of 30 percent nationally may not be shooting low enough as those assume reverting to the previous long term mean. Falls of 75 to 80 percent in some peak bubble areas seem increasingly plausible with poorly located properties (high commuting, heating/cooling costs) disproportionately impacted.

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Comment by Bill in Carolina
2008-02-23 16:44:13

“The tide is going out fast and we’re going to see everyone’s swim wear!”

And the water’s cold this time of year, so they’ll all be in full turtle mode.

Comment by ex-nnvmtgbrkr
2008-02-23 17:16:09

Ah, hairy acorns for everyone!

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Comment by Blano
2008-02-23 18:16:33

Good God ex, good thing I just sat my beer down before reading that. Hahahahaha!!!! I think your wife is right.

 
Comment by SanFranciscoBayAreaGal
2008-02-23 20:18:30

There might be some shrinkage also ;)

 
 
 
 
 
Comment by WT Economist
2008-02-23 13:21:14

“When average interest rates hit a low of 5.49 percent a month ago, it was the lowest since mid-2005, according to the bankers association. And then the Federal Reserve, the nation’s central bank, slashed its overnight lending rate by 1.25 percentage points.”

As feared by many on this blog. By bailing out the FBs and those who lent to them, or trying to, they screw the first time buyer by creating a higher inflation premium.

Even with the increase, however, real rates are low. It is prices that are high.

Comment by REhobbyist
2008-02-23 14:23:50

Thank you Ben’s blog. I jumped on a low rate a few weeks ago after the fed’s big cut, that only lasted three hours. 4.87% on a 15-year fixed. This blog saves me a lot of money. I also should have bought gold last year when that was suggested, but I chickened out.

Comment by implosion
2008-02-23 15:30:20

REH, did you refi or buy something?

 
 
 
Comment by not a gator
2008-02-23 14:02:39

CAR is and was lying about affordability. They changed their definition of “affordable” and now they find themselves in a position where the credit markets have returned to the old definition. Despite the price drop, the proportion of households who can get a loan is NOT improving appreciably.

They made their metric useless; now they twist themselves in knots trying to explain to the press why an ‘improvement’ fails to show results.

Comment by Neil
2008-02-23 15:21:03

They should only post the Wells Fargo afford ability. Yes, its an order of magnitude less, but believable. Look, LA is getting up to 3% of the people could afford a home.

Despite the price drop, the proportion of households who can get a loan is NOT improving appreciably.
I’d counter that the proportion of households whom can qualify for a mortgage is shrinking fast! This is saving quite a few sheeple from idiot purchases.

Recessions teach some good lessons. We’re entering Ben Franklin’s school of “Dear lessons.”

Got Popcorn?
Neil

Comment by jim
2008-02-23 19:52:01

Wells fargo afford ability?

Comment by Neil
2008-02-24 00:09:11

http://www.nahb.org/page.aspx/category/sectionID=135

Its an old index.

Got Popcorn?
Neil

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Comment by not a gator
2008-02-23 14:03:56

BMR–a floor on house prices?

May they all go bankrupt!

 
Comment by Leighsong
2008-02-23 14:47:26

“‘There’s no way a market that slow can clear these kinds of foreclosures,’ said Christopher Thornberg of Beacon E
Economics,. ‘What that number says to me is you have more homes getting dumped on the market in terms of foreclosures than there is demand for homes.’”

Oversupply, underdemand, unaffordable. OK - we know!

Now spread the word Mr. Thorberg!
Leigh

Comment by az_lender
2008-02-23 15:41:46

Leigh, I wanted to read the whole article from the Mercury News, but the link didn’t seem to work for me. Does it work for you? (I know what you quoted is from Ben’s post; I’m just curious as to whether my problem is idiosyncratic.)

Comment by Central Valley Guy
2008-02-23 16:31:35

You need to copy the link and paste it in a new browser window. I had the same problem. (OR go to the SJ News Web site and navigate to it.)

 
Comment by laughing boy
2008-02-23 16:52:58

Not much more to see, but here it is.

http://www.mercurynews.com/businessheadlines/ci_8344134

 
 
Comment by Mike G
2008-02-23 21:31:57

“‘There’s no way a market that slow can clear these kinds of foreclosures,’ said Christopher Thornberg

Sure it can. You just won’t like the price at which the market clears. Drop the price enough, and you’ll see sales take off. All those long-distance commuters to SiliValley would love to live closer to work if the house prices were the same as in Hollister or Tracy.

 
Comment by az_lender
2008-02-23 22:03:49

Apropos of Calif foreclosures in general, I draw everyone’s attention to a website called YouWalkAway.com (based in Carlsbad), where they help people to feel better about doing jingle mail.

 
 
Comment by 01/20/2009 end of an error
2008-02-23 14:58:43

If they catch the people leaving the dogs out in the cold they should be given the same treatment.

As for affordable do they mean 20% down and 28% DTI. Alternatively are we talking 120X rent for infestors. If not I have a different version of affordable.

 
Comment by Mike
2008-02-23 15:51:50

When I read Ben’s blog and come to the part where a “realtorwhore” is commenting, I simply skip ahead to where someone in the know with REAL facts like Mark Pawlicki of Sierra Pacific Industries or Christopher Thornburg of Beacon Economics add to the REAL picture. However, with spring almost upon us, I’m expecting a deluge of full bore promo b.s and hype from the NAR and their, “Now is a good time to buy,” and “Interest rates are still low,” etc. However, they might have decided to eliminate the third leg of their usual sales b.s. That being, “Property prices never go down.”

Comment by pismoclam
2008-02-23 23:02:18

Kern County Assessor is lowering property assessments for people who bought in 04-07. Hovaninian is selling new mcMansions for less than $80/ft. Getting the real back in real estate. hehehehehehe

 
 
Comment by derek20la
2008-02-23 15:53:16

Hey everyone. I’ve been a long time lurker of the HBB, and I just wanted say that this site, among others such as The Oil Drum, have completely changed how I think about almost everything. So thank you for all the knowledge shared here!

Anyway, I have been trying to purchase gold and silver as I can afford it. As suggested on this site, I used Bullion Direct. While I have been completely satisfied with them, seeing as this is the CA thread, I was wondering if anyone could suggest a reputable local coin store in the Los Angeles area. Preferably in the Hollywood or downtown areas, but I don’t mind travelling a bit for good customer service. Well thanks in advance for any suggestions you guys have!
Derek

Comment by BubbleViewer
2008-02-23 17:11:51

I have always used California Numismatic Investments, located in Inglewood. I always have mine shipped, but they give good, prompt service.

California Numismatic Investments

 
Comment by Little Al
2008-02-23 17:24:08

Hey Derek,
Alhambra Coin Company on Main and Garfield in Alhambra I recommend highly. I also go to Coin Depot on D Street in La Verne. They’re good too.

Comment by Lost in Utah
2008-02-23 17:30:53

Wait till Aladinsane’s back, as I’m sure he can add to Al’s info.

Comment by aladinsane
2008-02-23 17:57:19

I never make recommdations as to where to buy precious metals.

That being said, 99% of coin dealers with a storefront location, that have been there for 10-30 years, are infinitely more honest and reputable than the scallywags on Wall Street.

Google the name of whomever you wish to deal with, to find out more.

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Comment by David
2008-02-23 19:48:58

The US Mint has a list of resellers for their american eagles.
http://www.usmint.gov/mint_programs/american_eagles/index.cfm?action=lookup

 
 
Comment by Roger H
2008-02-23 16:05:31

“The California Association of Realtors latest affordability index reported that 33 percent of households could afford to buy an entry-level home statewide in the fourth quarter of 2007. That compares to 25 percent for the same period a year ago.”

Dores this assume 20% DOWN and NO DEBT. Most of these “affordability” include these two very assumptions. How many first time buyers put down 20%? - NONE. How many first time buyers have no student loan debt, no car loan debt, no credit card debt, no divorce debt, etc? Very FEW.

Sorry folks - California is NOT AFFORDABLE by any relaistic measure.

Comment by bulwark
2008-02-23 16:21:55

CAR changed their “affordability” formula to allow “creative financing” options a couple of years ago. They did this when true affordability went down into the single digits in California, the lowest in history.

 
Comment by BubbleViewer
2008-02-23 17:13:50

Good points. My impression has been that by the time most students graduate now, they are already heavily burdened by debt from student loans. The student loan business seems right up there with the mortgage industry as far as sleazy, unethical industries go.

 
Comment by Ernst Blofeld
2008-02-23 19:28:31

Some of the numbers:
“The minimum household income needed to purchase an entry-level home at $411,170 in California in the fourth quarter of 2007 was $82,200, based on an adjustable interest rate of 6.21% and assuming a 10% down payment. First-time buyers typically purchase a home equal to 85% of the prevailing median price. The monthly payment including taxes and insurance was $2,740 for the fourth quarter of 2007.”

The problem is that first time home buyers don’t usually have an $82K income, and I doubt most have $40K for a down payment. They’re comparing the total income distribution to the housing market, not the first time buyer income and wealth distribution. They’re also assuming 40% of gross income for PITI, along with an ARM, so that if mortgage rates go up in a couple years the buyer will have no breathing room in their income for a higher payment.

 
 
Comment by Malibucreek
2008-02-23 16:45:23

Folks, I am sick of the negativity on this blog. Don’t you realize that interest rates have never been lower and prices are coming down fast?

That’s right, there’s never been a better time to buy yourself a… real estate agent!

Need some errands done? Your house redecorated? Toilets cleaned? Gutters unclogged? There’s never been a better selection of out-of-work used home salespeople, and favorable interest rates mean that you can take home a whole slew of ‘em today. For little or no money down!

Contact your local real estate office now! Don’t miss this opportunity. Buy now… because they’re not making any more real estate agents!

Comment by dutchtrader
2008-02-23 17:11:36

I much rather hire a Realtor than a migrant worker.

Comment by reuven
2008-02-23 17:54:11

Really? A Migrant worker is able to do hard work! Think a realtor can do anything other than drive around in a Lexus?

Comment by Mike
2008-02-23 18:49:34

You could be wrong on that one. The realtors I’ve had contacted (very few I must admit as I’m selective when it comes to friends) think a hard days work is keeping an appointment with a potential home buyer, spending 30 minutes showing them around, 30 minutes giving them the usual NAR b.s selling points (”There has never been a better time to buy - interest rates are very favorable - property never goes down - this area is always in great demand, etc, etc.”) then if they’ve suckered the potential client in, getting them to sign an “offer”. Total time about 1 hour. They spend more time getting their nails painted in the Korean beauty shop. Then it’s off to Nordstrom’s, etc.

I figure 5 minutes cleaning toilets or 5 minutes picking stawberries would be their maximum before quitting.

Realtorwhores are a whole parasite sub-section of society along with used car salespeople, annuity salespeople, political lobbyists, brokers, etc.

We are hearing a lot of stuff about illegals these days but I can promise you one thing, if you don’t want your strawberries costing $12 a small box and your lettuce $5 each and 1 pound of apples costing $5, a chicken costing $15, stopping illegal immigrant thing should not be on your wish list. Very few - let me undeline that - VERY, VERY FEW Americans are going to rush in and fill those fruit picking jobs or poultry factory jobs at $6 an hour (if they are lucky to find a reasonably fair employer).

The illegal immigrant problem is real enough but we should be careful not to throw the baby out with the bath water.

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Comment by skip
2008-02-23 19:43:15

We are hearing a lot of stuff about illegals these days but I can promise you one thing, if you don’t want your strawberries costing $12 a small box and your lettuce $5 each and 1 pound of apples costing $5, a chicken costing $15,

Do you have any facts to back that up or you just making up numbers?

There are plenty of companies that manage to pay their employees a decent salary & benefits, but manage to compete with companies that can’t( Costco comes to mind, they compete very well with Sam’s Club, but pay their employees better and give them better benefits).

As for fruit pickers, I believe that was the same argument that was used back in the 60’s when Ceasar Chavez was organizing. They said they couldn’t afford to provide facilities for the workers, and they needed to crap in the fields.

Couldn’t afford to stop using DDT, blah blah blah…

 
Comment by awaiting wipeout
2008-02-23 20:05:20

Ceasar Chavez was against illegals in the fields. It brought down wages. Google it.
Here’s a glance at his beliefs…
http://en.wikipedia.org/wiki/C%C3%A9sar_Ch%C3%A1vez

 
Comment by awaiting wipeout
2008-02-23 20:11:42

Ceasar Chavez was an American of Mexican decent, and was opposed to illegal immigration. Here’s a brief sampling of his belief system:
http://en.wikipedia.org/wiki/C%C3%A9sar_Ch%C3%A1vez

 
Comment by cfoofmofo
2008-02-23 22:00:49

Skip,

You don’t know what you are talking about. There is a huge difference is wage rates and the overall burden rate in getting things manufactured or picked with cross border labor.

I can’t say this without sounding arrogant, but I have been for the past ten years and will be for the next ten involved in moving manufacturing plants into Mexico.

We consistently improve pre-tax margins from negative to 6 and 7 percent for traditional manufacturing concerns. We have about 10% of our facilities at better than 10% pre-tax.

I know this does not sound like much considering the cost structures as compared to China, but it is not bad for the first step and up to this point market access has been a key. I know this can change in a heart beat.

How long this will last, as I said above, I hope about 10 more years.

PS Check with Chambers of Commerce across the country and see how many companies are establishing operations in Mexico.

We have had some companies close in Mexico and move to China as well as some companies move back to Mexico. Mattel Toys is case in point.

 
Comment by ozajh
2008-02-23 22:02:40

One problem here is the ridiculous chain markup, so the farmers themselves might be correct when they say they would be in difficulties at even slightly higher wages.

I was once (here in Australia) listening to orchardists bitching on a radio show about farmgate prices for apples, and literally got my orders of magnitude wrong when mentally translating the per-tonne price to the per-kilo price at the supermarket. I thought the total markup was 300-400%, which I though sounded OK, until I suddenly realised they were talking 30-40 TIMES.

 
 
 
 
Comment by Lionel
2008-02-23 17:16:09

We should warn California realtors not to wear their yellow jackets when out in the fields picking citrus in their new jobs, as bees are attracted to such bright clothing.

Comment by Olympiagal
2008-02-23 18:41:06

Lionel, what I like about you is your sensitive nature. Your concern for bees speaks well of you. We all have to think about the precious, darling bees.
Also, where you been? Now that I think of it, you have been absent a long time, or maybe just being stand-offish.

Comment by Lionel
2008-02-24 10:03:35

Hell, Olympiagal, I’m in grad school full time, have a half-time job on campus to pay for school and insurance, and a fulltime job as a writer, plus family obligations… no complaints though, just busy. Too busy to make it down to… was it Bakersfield or Barstow that you agreed to shoot me? I can’t recall, so I’m staying away from both.

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Comment by Lost in Utah
2008-02-23 17:32:33

OK, good salespitch, but I want an asset that goes UP in value, not Down. :)

Comment by laughing boy
2008-02-23 21:31:57

That’s funny. Somehow, I can image a Realtor going down might help the sale.

Did I just say that out loud?

 
 
Comment by aladinsane
2008-02-23 17:41:20

I used to have a wonderful Guatamalan maid that would clean our house twice a month.

She was thoroughly illegal (there goes my chances at political office)

We called her the “Queen of Clean”

I’d love to pit an out of work Realtor against her, in a clean-off.

Comment by awaiting wipeout
2008-02-23 20:18:15

We had an illegal maid who turned our $15K Conservatory Grand Piano into a vacuum bumper. She also cleaned our microwave with Lime Away and almost killed us, when we turned it on. I’ll take an American teenager at higher wages any day. English and a brain is worth the dough. But glad you found a good illegal maid.

Comment by Mike
2008-02-23 22:26:12

An American teenager who is willing to clean?! Jeez, obviously you don’t live in California.

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Comment by desertdweller
2008-02-24 00:38:54

An American teenager who is willing to clean?

Jeeze, obviously you don’t live in the USA.
Friends son’s room is so disgusting. Forget about helping around the house, ex for PC issues.

 
 
 
 
Comment by Ouro Verde
2008-02-23 18:36:01

How much does it usually cost to clean rain gutters?

Comment by ozajh
2008-02-23 22:05:18

A HECK of a lot less than repairing the damage after they back up and flood your house with the overflow.

(Trust me on this one.) :(

 
 
 
Comment by Pen
2008-02-23 17:12:26

test

 
Comment by Pen
2008-02-23 17:13:37

Hi all,

Anyone care to comment on the Massachusetts market?

Thx.

Pen

Comment by Olympiagal
2008-02-23 18:46:58

For you? You bet. I am always willing to comment on anything, and I don’t require that tedious ‘factual information’ concept, because that just interferes with my thoughts and mucks up a good theory, in my experience.
Let’s go. Okay. Umm. Massachusetts market. It sucks? Is what I’m coming up with.
Also, now that I think of it, where have YOU been lately? Playing checkers with Lionel and drinking some sort of pretentious Italian soda drink from those little cans they got?

 
 
Comment by Awaiting Bubble Rubble
2008-02-23 17:31:29

David A. Rosenberg, Chief North American economist for Merrill Lynch, is now openly predicting a 25% decline in US home prices nationwide. This likely means a 40-50% reduction in bubble areas like California. The prediction is out there and you can google for it, but it’s getting virtually no MSM attention in the US.

So when mainstream economists start acknowledging that the “natty nabobs” were dead on, does the mainstream start taking note or just bury its head deeper in the sand? I predict a panic in 2008.

Comment by Mormon_Tea
2008-02-23 20:49:30

Hi Awaiting BR,
The “nattering nabobs of negativism” that Spiro Agnew had in mind are probably mostly in nursing homes, urns, or cemetaries by now.
The economics that prevailed during the housing bubble are also dying or dead. Our government collectively knows this, and so do many of the readers of this blog. The real problem is now, that just about anything politicians can think of to “solve” the perceived “problem”, will of course, make it worse. Falling home and R.E prices are an opportunity for many. But they will also be a catalyst for a cratering economy.
The politicians, in this a presidential election year, will have a zillion proposals for “fixing” the whole thing. They may incorporate grand sounding and sweeping proposals into their speeches and campaign platforms. But as history has shown, all that will be forgotten once the election is over. The relentlesly grim facts - that the government has overspent for generations, that the people increasingly demand their bread and circuses and other entitlements, that democracies and fiat currency are among Man’s most fragile creations - will remain. They just will all be lumped into a little history lesson for your grandkids, as in - “Bush couldn’t handle it”.

Comment by Awaiting Bubble Rubble
2008-02-24 15:57:54

I was referring to the quote attributed to Alan Greenspan regarding those who were predicting a housing crash that would take down the US economy.

http://bigpicture.typepad.com/comments/2008/02/quote-of-the-da.html

This appears to be exactly what is happening. The question in my mind is how far people will take the denial. As I type, there is an open house next door ($879K 4 bedroom suburban boredom) and shiny SUVs are parked in front! I had thought anybody dumb enough to buy in this environment would no longer qualify for a loan.

 
 
 
Comment by aladinsane
2008-02-23 17:52:48

Smug does as it’s told…

“Elizabeth and Ben Kilgore, who live in Tiburon, Calif., are back in the real estate market. All it took was a little-publicized section of the economic stimulus package President Bush signed into law last week that lowered the borrowing cost of buying a more expensive home.”

“‘This will push us into a price range that’s now financially possible,’ said Ms. Kilgore, a real estate agent in Marin County.”

 
Comment by Sean in EW
2008-02-23 18:58:09

An earlier poster stated that this blog has saved/made him a lot of money. I have read this blog for a few years and have only posted once or twice. I will say that this blog has been invaluable to me. I lived in the inland empire of so cal. Sold my house in Oct/06. My house there was very small, but it has depreciated in price by approximately 135,000 since that time. At the time all of my in laws were telling me that I should rent the house out, real estate always goes up. I took a lot of hits and many folks made me question my decision, but I stuck to the guns. I had purchased a house in 05 in Eastern Washington. I told them if things wouldn’t work out in Washington that I would come back to so cal in a few years and buy a cheap house, they all laughed at me.
Thanks for the blog Ben.

PS I just hope home values stay somewhat solid here in the backwoods.

 
Comment by Ouro Verde
2008-02-23 19:08:33

I was out browsing antique/consignment stores.
I talked to a guy who just bought 150k worth of mcmansion furniture for 11 thousand dollars. It was in Craigslist for 60k.
The guy foreclosed, lost his girlfriend, lost his job.
The shop guy had to rent in a new store just to show off new stuff.
I was shaking from excitement hearing about this victim from Anahiem Hills.

Comment by peggus
2008-02-24 00:49:50

I’ve been browsing craigslist for furniture ads for a few days now. I’ve seen lots of ads that goes something like this:

“Selling , bought 2 years ago for X thousand $ from . Selling for x hundred $ because our new place is to small to accommodate it. ”

Ads like these tell a whole HB story in just a few lines.

There are some really good discounts on nice furniture out there and I expect it to get better!

 
Comment by Leighsong
2008-02-24 03:20:35

Song!

I was out and about and found myself -

in a consignment store -

Looooooking fooooooooooo sum deals -

Spot a guy down and out -

Knew I had a steal!

Gaaaaaaaaaaaave him crumbs for some old stuff -

It was his baaaaad luck.

I know the dough is better
for he’ll get it together,

But oh the fun I had that day,
Just to land the deal…deal…deal…

Aladin - ’tis original. (OK - needs work).
Leigh

 
 
Comment by 45north
2008-02-23 21:43:33

If we have someone set a structure fire that’s an arson and one of our firefighters get hurt, they will be chased harder than anything that’s been chased in their whole life, Johnson said
Wasn’t there a fire in a furniture warehouse in North Carolina where 9 firemen were killed? Kinda wondered how sympathetic police were to owner?

 
Comment by jbunniii
2008-02-23 22:44:16

Tahoe City broker Michael Willette said that two to three years ago people began to take advantage of an ‘option R’ mortgage.

Ha, I always enjoy reading the sort of blunder that can be made only by the functionally illiterate. Obviously the journalist heard someone say “option ARM mortgage,” but, being illiterate, he could only attempt to write down the sounds that he had heard.

 
Comment by Michael Emmel
2008-02-23 23:28:00

I thing I just thought about for California was Proposition 13. Basically it allowed a lot of people to retire in California who would have been driven out by property taxes in other states. I think a lot of these people are on fixed incomes and went HELOC crazy. So we may be seeing the dark side of Prop 13 finally.

 
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