The Thing About Bubbles Is, They Have A Habit Of Popping
The LA Times reports from California. “Effie Micheals placed her three-bedroom, three-bath South Pasadena condo on the market last August for $750,000. Great neighborhood, great school district. She figured she’d get top dollar. And why not? The Southern California property market had been minting money for years. Buy a home, sit back and let the dollars pour in.”
“It was as close as you could get to a sure thing. Kind of like buying tech stocks in the late 1990s. But the thing about bubbles is, they have a habit of popping.”
“A few months after Micheals’ condo was listed, it was reduced in price to $725,000. When that didn’t work, it was knocked down again several weeks ago to $679,000.”
“Micheals bought the nearly 1,700-square-foot condo for $675,000 in 2005. She saw it as a steppingstone to another home in the vicinity, and planned to use the cash from its appreciated value to buy something even nicer.”
“‘There was no way I thought I’d ever let my home go for less than $800,000,’ Micheals said. ‘Everyone wants to live in South Pasadena.”
“Now she figures she’ll take a loss once all the fees are taken into account when the condo’s sold at its current bargain-basement price — if it’s sold, that is. ‘It’s very disheartening,’ Micheals said. ‘I’m very upset.”
The North County Times. “San Diego posted the highest rate of home price depreciation in the nation during the fourth quarter of last year — losing more in three months than the national average of homes lost in one year, according to a housing report.”
“Home sales prices in the county dropped more than 3 percent in just one month and 9.14 percent in three months, according to December data from the Case-Shiller Home Price Index, compiled by Standard & Poor’s. The national 20-city composite lost 9.08 percent from December 2006.”
“Year-over-year, homes in all of San Diego County lost about 15 percent in value. Many real estate agents and housing analysts said in interviews that they think the price decline will continue because foreclosures have hit new highs and sales new lows.”
“‘As long as the sales are going down, that means the market sucks and there’s no bottom in sight,’ said Jim Klinge, owner of Klinge Realty in Carlsbad. ‘But really, the market’s great if you’re a seller and you’re willing to put an attractive price on it. Buyers are out there. But they don’t want to sell it. They want to goose it up 10 (percent) or 20 percent and try and hit the jackpot like they’re in the casinos.’”
“Lyle Anderson, a Poway real estate agent, said it is possible San Diego’s January numbers will post a monthly decline just as large as December’s, which would make three straight months in which homes lost more than 3 percent in just one month. If that happens, the county’s homes would lose slightly less than 12 percent in four months.”
“‘Then you’re hitting a historical number,’ he said. ‘If you were to look at the statistics … the worst we’ve had before was 11 (percent) or 12 percent — and that was for the year.’”
“Lower-end homes, defined as those priced below $431,605, have borne the brunt of housing depreciation, plummeting 23 percent in value in one year, according to Case-Shiller. The higher-end tier, homes priced above $638,891, has lost 8.6 percent in one year, the report stated.”
“‘In the boom of the market, there was not much gap between the nice homes and the fixer-uppers. That gap is back, and it’s bigger than ever,’ Klinge said. ‘It’s compelling for buyers now to wait until they get a nice deal on a screaming big house.’”
The Voice of San Diego. “National foreclosure tracker RealtyTrac reported Tuesday that San Diego County foreclosure activity rose 20 percent between December and January.”
“‘Judging from memory and so on, it’s way way way beyond what we saw before,’ said Ramsey Su, a retired real estate broker and investor who sold bank-owned properties in the 1980s and 1990s.”
“‘There still seems to be the complacency that we are in this position. Nobody seems to be concerned that this is going to hit home, hard, sooner or later. How do you handle so many foreclosures?’ he said.”
“Yamila Ayad is the president and broker of Mission Home Loans in San Marcos and a board member for a local consortium of nonprofits that hosts events for distressed homeowners. She said San Diegans, even some of the professionals attempting to curtail the spread of distress, are growing used to new records being set every month in the data.”
“‘I think that the sad thing is that we’re just not amazed anymore,’ she said. ‘I hate to say this, but we end up feeling numb, anaesthetized by the issue.’”
“In her specialty market, the corridor surrounding Interstate 15, real estate associate broker Kris Berg said she’s noticed that trend among the lower-priced homes.”
“‘Some communities are being hit more dramatically — the lower end communities, like Mira Mesa,’ she said. ‘And certainly the condo markets, regardless of their location.’”
“Berg said she is seeing buyer activity picking up, an interest level growing among people who are tired of waiting. That’s not necessarily translating into a slew of closed transactions, though.”
“‘No buyer wants to feel like they’re going to buy a house today and it’s going to be worth less tomorrow,’ Berg said.”
From NBC San Diego. “The number of foreclosures for San Diego in January was up 165 percent compared with the same period last year, according to RealtyTrac. One mortgage broker said that there are still a lot of adjustable-rate loans that will reset at higher rates in the next two years.”
“‘If people are losing their jobs or not getting the high-paying jobs they anticipated, they may not be able to make those adjusted-mortgage payments,’ CalPacific Mortgage spokesman Tom Rice said.”
“People in financial trouble aren’t the only ones going into foreclosure. There a growing number of people whose home values have dropped so sharply that they are choosing not to continue paying for the residences.”
“‘When you’re under water, what’s the upside?’ Rice said. ‘They figure that taking a foreclosure is a hit from a credit standpoint. They will walk away from it.’”
The Sacramento Bee. “As fears of falling home values continue to grip the Sacramento-area market, more home builders are offering limited protections against losses to help worried buyers sleep at night.”
“‘No one wants to purchase a home or a car or a microwave and know that two months, three months or five months later there was a better deal out there,’ said Barry Grant, Sacramento territory president for Los Angeles-based KB Home.”
“To woo anxious buyers, KB promises if it lowers prices during the three or four months between a signed sales contract and finished construction, the buyer will get the lower price. The same applies to interest rates.”
“Grant said the builder ’sporadically’ offered the guarantee in local projects last year, but ‘has made a commitment this year that we’re doing it on every built-to-order home in Sacramento.’”
“One of the Sacramento region’s leading town house and condominium builders, Reno-based Pacific West Cos., is going a step further. It’s telling customers that if they buy today and the builder drops prices before the development is finished, even as far out as two years, they’ll be reimbursed for the difference.”
“‘It becomes kind of a psychological edge. You feel comfortable with what you’re buying now,’ said Taylor Cohee, the builder’s VP for sales.”
“The deal is being offered at two of the builder’s condo communities in Folsom and El Dorado Hills, and also in Reno and Fresno. The Folsom and El Dorado Hills projects already sell in the low $200,000s.”
“Among buyers won over was Luis Gallardo. He is moving to El Dorado Hills. ‘I think it gives you some comfort level that with the economic conditions being what they are, and the housing market being what it is, that you’re not going to continue to lose more money,’ said Gallardo.”
The Santa Cruz Sentinel. “Lenders unable to sell mortgages on their books have turned conservative. Investors stuck with billions in bad loans have turned cautious. Borrowers are frustrated. Appraisers who have to calculate home values are challenged. Home sellers forced to drop asking prices are disappointed.”
“‘There’s not a lot of good news,’ said Mark Junod of First Horizon Home Loans, one of six local mortgage brokers and lenders assessing the state of the market (at a) presentation organized by the Santa Cruz Association of Realtors and Santa Cruz Home Finance.”
“Rick Campbell of Wells Fargo Home Mortgage offered a bright spot: The bank’s analysts expect to upgrade the Santa Cruz County market from ’soft’ as of Dec. 15 to ’stable’ as of Feb. 29. In contrast, Santa Clara is expected to fall from ’stable’ to ‘depressed’ and Monterey from ‘distressed” to ’severely distressed.’”
“Lenders want money down and proof borrowers can repay the loan. Credit score under 740? Expect higher interest rates. ‘A lot of people got loans that shouldn’t have gotten loans,’ said Dwayne Dawson of Washington Mutual Home Loans.”
“Borrowers had ‘no skin in the game,’ said Graham Morland of Sterling Properties, offering an opinion from the audience. ‘A majority of the short sale cases here were 100 percent financing.’”
“Campbell faulted borrowers who didn’t read their loan documents, and Junod faulted loan agents unable to explain complex loans to their clients. ‘A cleansing was needed,’ said Junod. ‘About 31 percent of loan agents are out of the business.’”
“Dawson agreed with Tai Boutell of Santa Cruz Home Finance that it’s too easy to become licensed as a lender. ‘The test is not geared to lenders,’ Dawson said. ‘I pulled out my calculator twice.’”
“Asked if struggling borrowers can get a loan modified, the lenders said: It depends. ‘Our modification department is swamped,’ said James Giuffre of Wachovia Mortgage. ‘The question is: What can you afford?’”
“Junod said lenders are looking for permanent solutions. ‘If they think it’s temporary, they won’t make adjustments,’ he said.”
The San Francisco Chronicle. “Daniel Mudd is president and CEO of Fannie Mae, the giant government-sponsored entity that, along with Freddie Mac, buys and packages billions of dollars of mortgage loans for resale in secondary markets, which helps to keep interest rates low. The following interview was edited for space and clarity.”
“Q: How did the mortgage crisis happen and who’s to blame?”
“A: For a period of time, the market grew. It grew too fast. It had a big adjustment and a period of big dislocation came in the summer, and now we are in a period of volatility and uncertainty…The market is looking to find a new level. And by the market, I mean home prices, housing starts and mortgage rates.”
“Both lenders and borrowers had a huge amount of confidence that ultimately led to overconfidence. The lack of other things to invest in caused people to invest in real estate, and a lot of the products, and I think it’s specifically pronounced in California, were designed to get monthly payments down at the beginning.”
“Q: Is there any sense of responsibility from any of the people that are involved in this, the mortgage brokers, the lending industry? We are finding evidence of fraud and lots of it.”
“A: There were instances where people got put into homes that they couldn’t stay in and it should have been known at origination that they weren’t going to be able to stay in those homes. There is responsibility there. There is liability there and there should be people prosecuted for that.”
“Q: Do you feel that 100 percent of those people should be helped out in some way? A: No. Mixed in that humongous set of almost $1 trillion dollars worth of mortgages are out-of-state investors that purchased three, four or five properties. We took a sample in Las Vegas and the problem in Las Vegas is not actually at the working-class part of the market. It’s in the second home, condominium-investor property and those are where the subprime loans are.”
“Q: There are people that are making $80,000 in homes that cost $800,000. How can you justify giving mortgages to people who don’t have the means to repay them? A: I think that putting people into homes that they can’t stay in is clearly a problem and I don’t think there is justification for it.”
“Q: Is Fannie Mae, in your opinion, backed by the full faith and credit of the federal government? A: No.”
“Q: Your lenders, your creditors are giving you a preferential rate. Do you think they think you are backed by the full faith and credit of the government?”
“A: My opinion derives from my own experience. I go out and see investors around the world. Foreign investors are lending money (for) housing in the U.S. market. So I go around and see investors and on the front page it says we are not an agency of the federal government. We are not fully backed by the federal government. When I am asked that question, the answer is no.”
‘I go around and see investors and on the front page it says we are not an agency of the federal government. We are not fully backed by the federal government. When I am asked that question, the answer is no.’
I have followed and researched this matter for a long time. The only people saying this isn’t the way things are are the ratings agencies, who we now know are largely responsible for this mess. So if the CEO of Fannie, one of the largest corporations in the world, states flat out what the actually letter of the contracts are, why on earth would we as taxpayers concede or accept that it is any different?
Some of the people that post here need to wake up, grow some backbone and stand up to this crap. And I don’t care what Moodys or Fitch or Chairman Gross at the Peoples Republic of Pimco have to say about it.
“…why on earth would we as taxpayers concede or accept that it is any different?”
What power do you suggest individual taxpayers have to do anything to stop the Congress changing the rules on the playing field? (The next election is generally a bit late to take action…)
I fail to see how a broke congress has the funds or borrowing capacity to support the GSEs. And I don’t think they need it. Did you see Fannies loss today? Over $3 billion was simply a bad bet on interest rates. And they are hedged for MBS losses.
Other than that it comes down to backbone. Government operates on a social contract. And if we are going to start ignoring contracts, we can start with the IRS.
BTW, I used to prepare taxes. Do you know what happens if you just don’t file? Not bloody much.
My younger brother, a contractor in So Cal, never filed.
Unfortunately, that means he’ll never get Social Security either. That’s actually a pretty compelling reason for Congress to keep Social Security around. It costs money, but it’s probably the biggest reason why people file taxes.
I don’t expect to ever see a penny of SS (genXer).
Bwahahahaha! Collecting Social Security. :: wipes my eyes :: I needed a good laugh. Yeah; that’s not going to happen. It’s too close to bankrupt already. I’m 27, and I know I’ll never get a red cent back; my dad’s 56, and I’ll be stunned if he gets 50 cents on the dollar. By the time he retires, I’ll bet they will have already restructured him out of the program.
Unless you’re self-employed or otherwise paid directly, you don’t have a choice about paying SoSec — even if you never paid a dime in income tax, SoSec and Medicare are deducted from your paycheck. There’s no getting out of it.
I am curious about not paying taxes, though. I am self-employed, filing quarterly, whole bit. Is there any way for me to just stop, and have them not notice? I don’t care about the morality; I just don’t want to go to prison if they catch up with me. Which is the ONLY reason I ever cut them a check.
Actually, younger bro won’t be collecting anything due to the fact that he over-dosed a few years back. Kind of his “last laugh” you might say.
“I am curious about not paying taxes, though. I am self-employed, filing quarterly, whole bit. Is there any way for me to just stop, and have them not notice? I don’t care about the morality; I just don’t want to go to prison if they catch up with me. Which is the ONLY reason I ever cut them a check.”
No, but there is a little-known section of the IRC that will allow you, in exchange for signing away any future interest in Social Security benefits, to lower your income tax.
Ok, where’s that in the code??
If one doesn’t think they’ll ever see a penny of SS, seems that might be a bet worth considering.
Wow, I am interested in that too, even though I am eligible to collect SS right now.
SS is the biggest pyramid scheme operated by government; it is just a matter of time when it will be busted. I won’t count SS will be there for my retirement.
There is no such section of the IRC. That’s just one of the things scammers claim so they can sell you a fake kit. Then you try to follow the instructions in the kit, and you get in trouble with the IRS. There is no legal way to opt out of Social Security.
Yes, there is. If you work for the State of California, the amount that would go to Social Security is kept in a private pension for you by the State separate from Federal Social Security. I don’t know about other states, though.
Today, Sen. Schumer was urging seniors who do not ordinarily file tax returns (because they have no taxable income) to make sure to file this year, because if they do not file, they will not get their share of the Bush stimulus package: 300 (600?) bucks. So, this year, if you do not file, there is a penalty.
“Do you know what happens if you just don’t file? Not bloody much.”
Sleep Well Tonight America.
Mikey filed his Income Taxes and still had to send the frigging IRS a frigging Check no matter how many different ways we figured it. Arrrrugh !!! …I wanted to go to DISNEYWORLD and see Micky. j/k
Those frigging Gov’t REPROBATES better send me a frigging Funny Money Rebate Check …IF they’re STILL in business in May
You’d better do your research on this. I looked and SSI income alone won’t qualify you for the rebate checks.
I wouldn’t give the IRS didley If I didn’t have to, including filing not required tax statements!
Trust me. I sent letters to all of my California representatives well in advance of any bailout plan becoming more common media news because frankly, I saw this coming. I received no responses, but did get several emails months later from Senator Boxter and Senator Feinstein stating that ” We must do something to help homeowners” or something along those lines.
The truth is that any or all politicians are going to jump all over the “save the homeowners” bandwagon for none other than the fact that despite the horrendous scope of the housing scandal unfolding with stories of people going bankrupt every single day, homeowners make up the majority, and unfortunately, when it comes to politics, majority tends to get you elected… most of the time anyway.
Again, 40% own outright. 30% rent. FBs don’t vote.
“FBs don’t vote”
?
is someone ghostwriting for Ben today? coments seem out of character . . .
Yeah, but a minority of home owners are FB. Most of them are happy about their recent appreciation, but aren’t married to it because they kind of realized it was BS to begin with. Besides, they also have kids, and want their kids to be able to buy a house too.
It’s an election year!!!!! Of course they are going to try and buy votes with bailouts and rebates. If this all stated going to crap after Novemeber it might be a different story and take less than a couple years to correct. But since they all want re-elected this mees is going to get worse and last longer with every dumb ass idea that gets signed into law.
The truth is that any or all politicians are going to jump all over the “save the homeowners bandwagon”…[because]…homeowners make up the majority
Democracy is two wolves and a sheep voting on what’s for lunch. Descriptive of America, especially since the early 1960s.
Exactly. And let’s not forget that the (closer to) 35% of homeowners who have their mortgage fully paid off *don’t like* to their house’s value dropping any more than the FBs. Many will support the FBs cause because they see it as being in *their* interests as well.
“Some of the people that post here need to wake up, grow some backbone and stand up to this crap”
That kind of hurt.
“One of the Sacramento region’s leading town house and condominium builders, Reno-based Pacific West Cos., is going a step further. It’s telling customers that if they buy today and the builder drops prices before the development is finished, even as far out as two years, they’ll be reimbursed for the difference.”
2 years, eh? Almost a reasonable option. Of course, they’ll stop selling your model of home and start selling a 500 sq. ft. smaller models in about 4-6 months, thus negating any more price protection you think you have.
Still, it’s getting fun to watch. Pop up some more popcorn!
When I read that I realized they are pricing in years of price declines.
Yah. The builders realize it’s years of price declines. But I still bet they get out of it by continually changing their models into smaller sq footage models every six months. That way they’re only on the hook for that 6 months of declines.
They could also do what they did where I live. The first 2 phases all the houses are 10-20 apart and the back yard are tiny. In the last phase (same size houses) the yards are so big you could fit 3 houses on the lots. They did this to keep the home prices at the same lvl as they were in 04-05. It worked to in 06 people were still standing in line to buy them….
I rent the house I live in and know for sure im paying less than half in rent than these people are paying for thier mortgage.
Reminds me of those asshats on the radio that advertise “If you find your mattress selling for less elsewhere, your mattress is FREE!” Well, I doubt they’ve ever given away any free mattresses since you will never find that “exact” same product elsewhere, since the manufacturers don’t want you to comparison shop so they rename their product differently at every store.
How did that mattress scam escape consumer protection laws for so long?
Lobbiests
Slightly OT but related, I went to a new development I’ve been following some time. They “released” the second phase about a month ago, and we went that day for laughs, and the salesbeyatch said they “sold 2 units that morning”. Funny, selling at that rate, you think you’d see a lot of construction activity on that 2nd phase. Went by there today and not a hammer in sight. Perfect weather I may add. BTW, of the 1st phase, which is actually completed, all have sold signs on them and have been completed for 3 months, yet only 2 of the 12 have any kind of activity that would suggest they’re occupied (and I am skeptical even of that).
Anyway, all that to say, I have a strong suspicion that they are either going to mothball the project altogether, or like you say, slightly reconfigure and maybe shave off 200 SF (they’re about 3,700 right now), and drop the price another 70,000, so they can save face with their previous FB’s.
I heard that one of the developments in Mountain View (OMG) is mothballing future phases right now. This is purely ‘word of mouth’, so I don’t know for sure, but that’s pretty dang prime bay area to suddenly be going tits up.
I read an article earlier about that - it’s the Mondrian develpoment by Shea Homes (151 houses I think) - located by the intersection of the Central Express Way and the 237
I beleive the article was in the SJ Merc. Shea is suspending building at both the Mt. View and Santa Clara projects.
Rumor has it that Shea is simply out of money.
Depends on where it is in Mountain View. I live in what is apparently the ghetto side - someone got shot dead on the sidewalk two blocks from my place last night. That should do wonders for real estate prices in the vicinity.
From the horse’s mouth:
Isn’t the Mondarian right across the street from the train tracks?…
Reminds me of Magrathea, where the entire planet closed up shop because the galactic economy was in the pooper, probably from all those pseudorich folks buying custom McPlanets..
Geesh, they could turn those 3,700 footers into duplexes! Problem solved…
The question is will they still around in next 2 years. What happen when the builder file BK and I am going to get in line with other creditors? No thanks. Kind of the Exxon 2.5 B judgment that Exxon fight for 20 years(?); 20% of fisherman eligible were dead already…sigh.
“It was as close as you could get to a sure thing. Kind of like buying tech stocks in the late 1990s”
BWAH-HA-HA-HA-HA-HA-HA-HA-HA-HA!
It was EXACTLY like buying tech stock in the late late late 1990s…like December, 1999. And we remember how that went.
I almost laughed myself silly when I read that comment.
People are so enamored of hitting that “sure thing home run” and living on easy street after that. And that’s what fuels these manias, and keeps them from seeing them for what they are when they ar *in* them.
Remember when everyone was trying to catch those falling knives in 2000 and 2001? I learned the hard way that a stock that used to sell for $200 is not a good deal at $20 since the price could easily slide to $10 and less.
And that’s exactly what Effie Micheals will do, hang on and screw herself all the way down….
‘It’s very disheartening,’ Micheals said. ‘I’m very upset.”
Effie is getting effed!!
Too easy. You know we were all thinking the same thing the minute we saw her name (with apologies to anyone named Effie who reads this blog who isn’t effed!)
Indeed, apologies to anyone named Effie. That effing name sucks!
Actually, Effie is just her nickname. It’s short for FB.
She should change it efme now:)
or maybe she should change it to effed.
It’s still funny though.
Hey, careful now. You’re talking about my little corner of the world! If Effie’s condo is the one I think it is, (very small town, not much for sale so it’s easy to track individual houses) she is soooooo screwed. Never gonna happen at that price. Fortress South Pasadena has finally cracked. We now have our very own short sales (2 of them) and evn a foreclosure!
Wheeee!
My “Adventures with Worldcom” circa 2000 to 2003 was the best lesson I ever had regarding stock market investing. A high four-figure “tuition” but well worth it.
Ha, you and me both! After my Worldcom tutelage, I am quick to pull the plug on anything remotely misbehaving these days. I sleep very well at night. It goes without saying that I’m also a renter.
Yup, I lost a pretty penny on Nokia, EMC, Sun Micro (!), and others. CUT down my appetite for knife-catching.
I keep 1000 shares of theglobe.com in my brokerage account as a souvenir. Current value–about $20. Purchase price—well, let’s just say a lot higher and let it go at that…
az_lender, exactly right! That is why I have been buying series I savings bonds and AAZBX earnestly most of this decade. ARR is single digit, but I humbly never expect to get rich quick.
“‘I think that the sad thing is that we’re just not amazed anymore,’ she said. ‘I hate to say this, but we end up feeling numb, anaesthetized by the issue.’”
Usually after the third or forth thrust of the JT the victim just goes limp. The mind just can’t register that amount of pain.
LMFAO
LOL.
You have a wicked wicked mind (and I love it!)
It’s really easy to tell when you’re in a bubble. Just like telling when you’re in a cloud. Sure, it’s easier to see the clouds when they are above, but when you’re driving into one, and you see it on the horizon, then all the sudden a bunch of little water droplets start condensing all over your nose and eyelashes, it doesn’t take a rocket scientist to tell that you’re damn near to being underwater.
“Everyone wants to live in South Pasadena.”
Everyone wants to own a yacht, but that doesn’t mean that everyone is qualified (money wise) to buy a yacht…or an expensive car…or a jet plane…or an overpriced house.
(Humor me…I know that not *everyone* wants to buy a yacht…but you get the point).
No they don’t! They want to live here in South Carolina. A real estate consoler told me that this past weekend, so it must be true.
I challenge you! Everyone wants to live on Sierra Avenue in San Jose.
Everyone wants to eat at Pasta Pomodoro too, though many can’t afford that now either. Bidness is way down from what i’ve seen.
“Everyone wants to live in South Pasadena.”
Dang I don’t. Am I not human? Parent’s said they were joking with the “found under a rock” thing.
My boss, who announced she was leaving out of state in June, is getting set to list her 2+1 in South Pas. She is under the same delusion (i.e., everyone wants to live in South Pas). I don’t envy her situation. She is in for a reality check.
A 2/1, eh? No doubt under 1,000 SF. Good luck with that one. So many cash rich families will pounce on that one so they can add a couple of bedrooms. Not.
Everyone wants to catch a falling knife, and live in hock to the bank, and be a wage slave for 30 years!
Yeah, that’s the ticket, yeah!
Send me the listing, LOL!
Hey LaOnlooker. As I posted above, fortress So. Pasadena has finally cracked and prices are at long last headed down. So your boss is pretty much SOL, unless she can list it for 2003/2004 price.
Trishyla
“Everyone wants to live in South Pasadena”
That includes intellectual giants such as Al Gore, Bono, Jesse Jackson, Al Scharpton, Michael Jackson, and Louis Farakkhan.
Then, no thanks…I don’t want to move to South Pasadena.
I graduated from San Marino H. S. which used to share the same school with South Pas back in the 50’s. Trust me, you don’t want to live in either place. Arrogance, conservative, alcoholism all rolled up into one smelly ball.
I live (rent) there. So Pas is just another overrated LA neighborhood. It has a different vibe than most of LA — it’s an upper-middle-class community with a very East Coast feel to it, not ostentatious like most of LA.
SoPas does have an excellent (by LA standards, anyway) public school district, but I send my kids to private schools, and so do a fair number of other people.
But physically, SoPas would be considered a lower-middle-class neighborhood in the rest of the country. About 1/3 of the housing stock is cheesy 1960’s and 70’s apartments and condos (the condos are just like the apartments, but they cost $550,000; we rent for $1250.)
The northern half of SoPas (the hills) consists of cheesy Brady-Bunch style tract homes spaced about six feet apart. Since this is LA, you can expect to pay about $800,000 for your 1,500 square foot 70’s split-level with 30 year-old shag carpeting and avocado green appliances.
The southern end of SoPas does have a bunch of nice older homes with old trees and big yards, but they are mostly Craftsmen, around 2,000 square feet or so. These things go for around $1.5mm. There aren’t really any McMansions, and certainly there aren’t any real mansions, to speak of in SoPas.
Now let’s talk about what SoPas ISN’T. It isn’t particularly beautiful. It isn’t Beverly Hills, Malibu, or Bel Air. It’s 25 miles inland from the beach. It’s bordered by the El Sereno neighborhood of Los Angeles, a third world slum, some nice neighborhoods in Pasadena, and Alhambra, a lower-middle class community of Vietnamese and Hispanic immigrants.
SoPas is NOT a rich neighborhood. Movie stars, CEOs, and successful entrepreneurs do not live there. It’s basically populated by well-educated Volvo-and-Birkenstock limousine liberals, not by Hollywood executives, Saudi princes, or famous athletes. I like living in South Pas — it certainly beats South Central — but it’s not all that.
SoPas IS, however, just as overpriced as any other LA community. I am quite certain that SoPas prices are headed for the same 65-70% that will be experienced by the rest of LA. The typical SoPas family cannot afford to pay $800,000 for a Brady Bunch tract home, or $1.5 mm for a nice older home (we certainly can’t) and prices will eventually fall to match actual affordability.
What happened to all the mansions near the Huntington Library? all these years I thought those were So Pas but maybe they’re really in San Marino.
They are in Pasadena and San Marino. Those communities really do have some magnificent houses, genuine mansions that really are of interest to rich people.
South Pasadena doesn’t really have any places like that. 75% of So Pas housing consists of 1,500 sq ft 1970’s split-levels and condos with cardboard-thin walls.
The nicest houses in SoPas are older Craftsmen. They aren’t magnificent mansions, though, just nice old houses with good-sized yards. Most of them are around 2,000 square feet. Many have been restored and are quite nice, but in the end they are ordinary houses, not mansions.
The genuine mansions in San Marino and Pasadena, OTOH — those places really are all that. Many are quite beautiful, while they are mansions they aren’t overly ostentatious. And a lot of them have libraries, tennis courts, 10 car garages, etc. Of course they cost millions, they are genuine mansions. The $500,000 1970’s condos of SoPas are a different story.
The vibe you speak of is called “old money” I believe. From a time when people didn’t go out of their way to show their wealth. That was considered bad taste and nouveau riche. Hancock Park and Bel Air, Holmby Hills and even older parts of Pacific Palisades are similar.
South Pas is just like Beverly Hills. BH is 50% mediocre apartments/condos also. Dirty little secret since everyone thinks the city stops at Wilshire.
I just can’t wait for SoPas to tank so that Caltrans can buy up the 710 route and get on with finishing the freeway. Those whining nimbys are gonna beg them to take these aligators.
One of my favorites to watch on Redfin is the $59,000,000 “mansion” near the end of the arroyo freeway.
OMG other then not being located in So CA but located in No CA, you just described Davis.
Waaaaait a minute. Yes, South Pasadena is one of the more ridiculously overpriced L.A. county neighborhoods, but it’s a lovely little city, with very few chain stores and very many beautiful neighborhoods. It also has some of the most gorgeous California architecture to be found. I can’t even afford to rent there (I live in Pasadena), but I for one would love to live in South Pasadena and so would most people I know.
I have quite a few old-lady acquaintances in South Pas. The ones who most want to live there are those who already do. They have swilled enormous amts of Kool-Aid while using reverse mtgs, HELOCs, etc etc, and subscribing to a theory that all wealth is based on RE. The most charitable wish I can send their way is that South Pas prices will decline so slowly that these people will predecease their right to occupy their houses.
I have a lot of friends at Caltech who live in South Pasadena. San Marino, Pasadena, and Altadena are all pleasant places to live if you work at Caltech, the Carnegie Institute, or JPL. I imagine the proximity of these places will propthe prices in the nicer neighborhoods up a bit, as Harvard and MIT prop up Cambridge.
Young asst prof new to CIT in 2002 asked my advice re fixed mtg or ARM. FixedfixedFIXED i told him. He was so smart he actually followed my advice. I neglected to tell him not to buy a house at all…
I agree, but how much does a professor at CalTech get paid? And Cal Tech is a very small school, there aren’t enough Cal Tech professors to support the high prices in all of those communities.
The JPL people are on the Civil Service pay scale, no? I’m sure some of the administrators in their 50’s are on the SES scale, but they aren’t in a position to buy a $1.5mm home.
It’s funny, people seem to think that professionals and people who make more than $100,000 have unlimited buying power. That just isn’t true, though. I have a glamorous professional job — I am an entertainment lawyer. Can I afford a $1.5 mm house in SoPas? No. I can’t afford an $800k house, either. Since I have student loans and a wife and two children, a $500k 2BR 1970’s condo would leave me leveraged to the hilt. If I get sick, or lose my job, or become underemployed, I’ll lose the condo in foreclosure.
Affordaibility is an issue everywhere. I am very fortunate and have a good job which pays very well. If I can’t buy one of those tract homes in SoPas, who can? There just aren’t that many CEO’s, movie stars, athletes, and rich foreigners out there, and those people live in Beverly Hills and Malibu, not in some 1970’s condo in SoPas.
Excellent points. You’re right that it is a small school, but comparatively salaries at Caltech are extremely high, and usually when people are hired there, they get a housing allowance or loan or grant, which allows them to buy into that very costly market. If not, they could not move there. Same with Carnegie (and, you’re right, JPL folks are working for the government, but they often have dual appointments elsewhere).
I totally understand your POV. I have two children who are in your income bracket in LA who are renting (not out of principle or because they read the HBB), one in artist managment and one a TV writer. I keep yammering at them both to just wait, wait, until prices fall even more, but they are both chomping at the bit to buy something. I hope they hold out at least a couple of more years…
JPL is a division of Caltech and the employees are most definitely not on the civil service payroll. The pay and benefits are very competitive with the national aerospace companies.
Funny that you mention Caltech. I used to work in ATC Caltech’s business and finance IT department, later IMSS and I can tell you most of the staff cannot afford the inflated prices in the Pas/SoPas/SanMar areas. The ones who do live in the area are on voodoo loans or bought way before any of this nonsense began.
I have a damned good idea of academic salaries (in the sciences, anyway.) Most of the top schools are pretty much competing for the same talent, and hence modulo the obvious regional cost-of-living adjustment, they are bandying the same numbers.
I assure you that faculty at Caltech could not afford Pasadena prices. Not unless they bought way before the boom.
Joe Schmoe:
I think I know you from sustainability circles. Do you live in the Valley?
I don’t, but perhaps one day we will meet one another at a HBB get-together.
JPL is a division of Caltech and their employees are not civil servants. The compensation is very competitive with major corporations. A dual income JPL couple easily can make $250,000 per year on salary alone. They can’t buy in now, but they could just a few years ago and will be able to soon. You should realize that the town with the most millionaires per capita is Los Alamos, NM where all of the Los Alamos National Lab (non civil servants) reside.
1. How many dual income couples are at JPL? A dual-income $250k couple theoretically possible, sure, but let’s actually do the math — how many are there? Most of the lawyers I know aren’t married to other lawyers. There are a few out there, of course; in fact, my wife is a lawyer. But she stays home with the kids, so we are a one-income couple. In my experience, true dual-income professional couples are very rare. They are quite common when people are in their 20’s or early 30’s, but they become a lot less common after that. Many women take stop working once they have children, and and those who do return to work frequently do so part-time or at a lower salary. The monthly payments on a 30-year mortgage, by contrast, never decrease.
2. My income isn’t that high, but it’s in the ballpark. I can’t afford a $1.5mm house in any of these communities. Using the old 3x income rule, you’d need to earn $500,000 per year to afford one of those houses. How many people, dual-income or otherwise, earn that much? But there’s also a catch — you need to earn $500k per year FOR 30 YEARS! Almost no one does that. Most people who earn really high salaries only do so for a few years in their 50’s, when their career is at its peak.
3. Finally — and this one is a little hard to explain — income stability and job security aren’t what they used to be. People get fired and laid off a lot more than they once did. My income is high right now, but it could definitely go down. All of my friends have had to take pay cuts in the past, sometimes more than one. We are talking about pay cuts of 20-40%, too, not 5%-10%. Could this happen to me? Of course. So even if I were making $500,000 per year, I’d never leverage myself to the max and buy “as much house as I can afford.” These days, that’s a recipe for suicide.
For all of these reasons, I think these areas are in for far greater declines than many people realize. That 60 year-old Boomer selling his $1.5 million middle-class house is going to have to sell it to someone like me, and there’s no way that I can afford to pay anywhere near the asking price. That’s why, IMO, 65-70% declines are coming. People really don’t understand just how little purchasing power the next generation has.
I know some highly placed talent at both Lawrence Livermore National Labs and Sandia National Labs in Livermore, CA. None of ‘em could buy right now unless they won the lotto, and all of ‘em know they’d lose their security clearance if they become over-leveraged.
they’d lose their security clearance if they become over-leveraged.
Either that or they would be investigated for suddenly having more wealth (is it from a bribe by foreign agents in exchange for national security?). The rules for clearance people may seem restrictive, but they force cleared types to be humble. The rest of the public don’t have such restrictions, no drug checks, no backround checks, so they are not discouraged to be poseurs.
Interestingly, the area around JPL (Altadena and parts of northwest Pasadena) is rife with foreclosures and distressed listings. I’ve noticed ‘open house’ signs on several occasions at the east parking lot entrance to JPL - all during workday hours. Yet this area is rarely the first choice of JPLers, who tend to prefer Glendale/LaCrescenta/Montrose/LaCanada, Arcadia/HastingsRanch(Pasadena), or Valencia.
Waiting (patiently) for the nicer areas of Pasadena, SouthPas, and (crossing my fingers) San Marino to ‘moderate in price’. Should be only a matter of time….
but are they LITTLE old ladies from Pasadena?
I’ll recycle an oldie but goodie from this very blog.
“If it floats, flies or fornicates, rent it!”
“Micheals bought the nearly 1,700-square-foot condo for $675,000 in 2005″
Oh yeah, everyone BETTER want to live in Pasadena to support that kind of price. Again, for the new folks, this kind of condo; your looking at 200K as a minimum household income, which (again, just a refresher), puts your household in about the top 2% of the entire country (don’t feel like finding the link again, it’s on WIkipedia if your interested). So, just about everyone who can afford it needs to want to live there.. And FL.. And AZ.. And SillyCon valley… And.. And…
There’s just not enough of the people who can afford these areas to populate the “everyone wants to live here” places.
It’s like if Ferrari started pumping out 2M Enzo’s a year. Sure, everyone (well, every guy) want’s one. Problem is, only about.. Oh, 1 in 100,000 can afford one. What happens? Price of Enzo’s craters.. Duh.
“Everyone wants to live in South Pasadena.”
I’m throwing the BS flag on this one, I grew up a few miles from Pasadena and if you want to live in Pasadena it’s north up by the Rose Bowl .
Rich, How could you have grown up in Pasadena, and not know that South Pasadena is an entirely different city thatn Pasadena? It’s a small town (25,000) located just, um south of Pasadena.
That’s where MIL lives. great house and fabulous gardens and terrain, but when the smog moves up the Arroyo it’s like you’re in brown clouds.
Another problem with “everyone wanting to live in Pasadena” is that everyone also wants to live in Newport, SD, Boise, etc., but you can only live in one or two places.
Pasadena is hot, smoggy, and very far from anything interesting in LA. I for one don’t want to live there, even at “normal” prices.
It’s the little old lady from Pasadena
The little old lady from Pasadena
Go granny, go granny, go granny go
Has a pretty little flower bed of white gardenias
Go granny, go granny, go granny go
But parked in her rickety old garage
Is a brand new shiny red Super Stock Dodge
And everybody’s saying that there’s nobody meaner
Than the little old lady from Pasadena
She drives real fast and she drives real hard
She’s the terror of Colorado Boulevard
It’s the little old lady from Pasadena
If you see her on the street don’t try to choose her
Go granny, go granny, go granny go
You might drive a goer but you’ll never lose her
Go granny, go granny, go granny go
Well, she’s gonna get a ticket now sooner or later
‘Cause she can’t keep her foot off the accelerator
And everybody’s saying that there’s nobody meaner
Than the little old lady from Pasadena
She drives real fast and she drives real hard
She’s a terror of Colorado Boulevard
OT–
Regarding Ben’s quote yesterday from the oft-quoted Bill Watkins (executive director, UCSB Economic Forecast Project) that home prices in Ventura County “can’t get much lower than this”: Watkins himself lives in the Ventura area, and last October he told an audience in San Francisco that a neighbor’s house has been for sale for quite a while and that he (Watkins) would give those neighbors a nickel a day if they’d agree not to lower their price.
This week at the Santa Barbara Housing Bubble Blog: asking prices for some homes in the city’s Trader-Joe-adjacent Samarkand area are crumbling — their owners anxious to sell short before they become an REO statistic. There goes the neighborhood.
Saint Barbara
and last October he told an audience in San Francisco that a neighbor’s house has been for sale for quite a while and that he (Watkins) would give those neighbors a nickel a day if they’d agree not to lower their price.
he had to be kidding, right…Was that a laugh line?
$18.25 per year that’s hardly an offer that can’t be refused.
Watkins was probably joking . . . although, come to think of it, at lecture’s end he did pass around a collection plate.
Way OT…. But please no hateration!
http://www.youtube.com/watch?v=gldETRlhiXk&eurl=http://
DAMNIT!!!……PUT IT IN THE BITS BUCKET!!….AHHHHHHHH!!….YOU SUCK!
Madre de dios
That was definitely a bitch-slappin’, if I ever saw one.
Let’s see if I can recap the slaps : called the BS on the Treasury, called the BS on the “value of the dollar”, laid the housing and Nasdaq bubble on the Fed, called the BS on CPI v/s PPI.
Wiped the smirk off that smug little snotf@ce.
Go, go, go, go, go!
Agree, that was awesome. Except for the part where BB really didn’t say why he was doing what he was doing.
And he put the housing bubble right on the Feds door, too.
What IS it? I can’t get YouTube at work. Slavedrivers!
RP to BB:
“History is against you”
“Pump pump pump”
LOL!!!
RP’s tone is hilariously and appropriately incredulous. I expect him to get up and just give BB a backhanded slap. Thanks for that!
He did manage to wipe the pompous smirk off his mug, which is pretty good sign that the needle hit a sore spot.
Paul : “If you’re supposed to contain inflation, why are consumers getting an ass raping?”
BB : “Well, if oil stays the same price, they might be able to afford some lube…..”
Paul : “Didn’t you just say that dollars being worth less outside of the US isn’t your concern? And isn’t oil bought with dollars outside of the U.S.?”
BB : “Well… okay, so no lube. Perhaps we should distribute leather straps for people to bite down on in 2008.”
LOL
It’s interesting to watch Berspanky’s response… note the long blinks, eyes closed for long periods, heavy lids. This is a clear “shut off” technique, the body trying to shut off or close out what it doesn’t want to see or face.
I’d love to play poker against the likes of Bernanke…
I could tell you what he’s holding in his hand, 9 times out of 10.
He’s a terrible terrible poker player.
‘… note the long blinks, eyes closed for long periods, heavy lids.’
What do you do for a living? If I may ask. I feel idle curiosity.
Let’s call it “family entertainment”. Studying human behavior is a big part of the job.
Let’s call it “family entertainment”. Studying human behavior is a big part of the job.
sounds like maybe …
pit boss at Circus Circus
AC Nielson or Arbitron media consultant
Chuck E Cheese Loss Prevention Agent
Disney Theme Park Imagineer
Ron: “…it destroys the incentives to save…”
There you go Ron, there’s your answer…the powers that be want us to keep SPENDING, not SAVING. Save, and the terrorists win.
“Effie Micheals placed her three-bedroom, three-bath South Pasadena condo on the market last August for $750,000. Great neighborhood, great school district. She figured she’d get top dollar. And why not? The Southern California property market had been minting money for years. Buy a home, sit back and let the dollars pour in.”
Looks like Effie has been ‘F’-d
hey guys- I have a friend who is dying to buy something in Austin tx and i need some “san diego style of evidence that now is the worst time.. fire away please
Please define “San Diego style”, ’cause my mind is going places with that one!
“San Diego style” is JT treatment, followed by a habenero salsa enema.
DOC
lmao!! DAMN GOOD!! I knew if I teed it up someone would drive it home.
H@@kers and tattoo parlors.
This the toughest nut to crack. A person who believes “It’s different here”. Just tell that person that Austin has experienced the same trauma as San Diego thus far (prices appreciated in a similar way at a similar time), that the trend can not be explained by anything other than exotic lending (same problem as San Diego), and that the definition of insanity, according to AA, is to expect a different outcome from the same behavior.
Also explain that any desirable characteristics that Austin may have are not new characteristics, so they can’t explain the new price paradigm. You have to get this person to understand that unsustainable lending, and only that, has been supporting prices in Austin. If prices haven’t gone up (although I think they have been there), that just means they would have otherwise gone down. If they only went up a little, they probably would have otherwise been flat. Look up median incomes from the Census Bureau and median house prices from the Texas Association of Realtors (TAR?), and show him the historical income-to-price ratio. Explain to him that anything outside of that is inevitably unaffordable. Explain to him the effect of high energy and food prices. BEAT IT INTO HIS HEAD. If that doesn’t work, send him to Patrick.net, then here.
One of my friends has just closed on a small place in Austin. Her report is that the prices haven’t been dropping; the stuff is just simply staying in the market longer. Also says that a lot of the areas didn’t really go up, either….so I don’t think Austin is as FUBAR as Cali or Florida are.
I guess my original post will show up later, but don’t worry, if houses are starting to sit on the market longer, then they will soon go down in price.
Austin has been behind the curve - on the way up, and now on the way down. There’s no reason to think it’s different here (though the realtor ads on the radio sure want you to think so). True, the run-up hasn’t been as big as other places, but that doesn’t mean there hasn’t been speculation here.
Where in town is your friend looking to buy, beachhunter?
I’m in Austin. Austin is generally a day late and a dollar short. We’ll hit our ceiling in late ‘09 I believe. There’s still in migration from bubble areas with cash to burn. Austin will fall hard though. Most of the newcomers are buying $500K houses not realizing they’re are looking at a 1st year tax bill of $15K+ and that bill will increase around 10% per year basically forever.
I did a lengthy reply in the Thursday BitBuckets.
“Asked if struggling borrowers can get a loan modified, the lenders said: It depends. ‘Our modification department is swamped,’ said James Giuffre of Wachovia Mortgage. ‘The question is: What can you afford?’”
___________________________________________________
Afford? I’m not familiar with this word. I haven’t heard it in the last 7 years from lending institutions. The real question for you the lender is “Can YOU afford to take the loss on tens of thousands of houses in the next few years and maintain proper capital reserves?”.
We’re so special!
He’s (Mudd) talking about many of my neighbors here in the Alt-A Bay Area.
******
“Q: There are people that are making $80,000 in homes that cost $800,000. How can you justify giving mortgages to people who don’t have the means to repay them?
A: I think that putting people into homes that they can’t stay in is clearly a problem and I don’t think there is justification for it.”
He’s obviously not a congressman. Congress has all kinds of reasons to try to keep those people in those houses and they’re not afraid to spend my money to do it.
Qualifing the obvious is a poor excuse for intelligence.
If Obama doesn’t get on the Democratic ticket, I’m writing in “Daniel Mudd”.
Here’s Hillary on the Lehrer NewsHour repeating her BS housing solution (correctly criticized by Obama, not just by Repubs)…freezing ARM rates, 90-day foreclosure moratorium. Judy Woodruff points out some say new rates will rise if Clinton’s plan is carried out. Hillary says “a number of economists” agree with her. (Who?) …Ah! suddenly she says it would be “voluntary” ?!?!?!! — so what IS she talking about!?!?! Just about as clear as her position on NAFTA (goodbadgoodbad).
Oh, VOLUNTARY? I seeeeee … So, that means that if banks don’t want to go under trying to save lying FB, then they don’t have to? Well, in that case, I’m voting for Clinton. She can institute whatever plan she wants, and then it just won’t happen. Marvelous.
“Lower-end homes, defined as those priced below $431,605, have borne the brunt of housing depreciation, plummeting 23 percent in value in one year, according to Case-Shiller. The higher-end tier, homes priced above $638,891, has lost 8.6 percent in one year, the report stated.”
And by raising the conforming limit to 3/4 million bucks is supposed to make a difference? Out of options I know, but the average J6P on his average 50/60K salary cannot pay for a mortgage at the old limit, let alone save up 40K+ for a 10% down. But he just might be able to find 20K.
The problem is price. Not a pie-in-the-sky limit.
Ohh I’m kinda happy they did this. FB’s tend to buy well over their budget and this is a good way to suck some more idiots off the street to give our strong forclosures in 2009-2010. I mean at the rate the FB’s are sending jingle mail we could run out of foreclosures too soon. You have to refill the pipeline somehow.
There are only 20 or so cities that will qualify for this program, last time I checked. Raising the conforming limit will really have very little impact.
Re: new conforming limit
Desperation anyone?
Here’s an impatient realtor in San Francisco:
“So the new conforming loan rates have been signed into law, and many of us have been waiting to see how those new guidelines will actualize themselves in the coming weeks.
Unfortunately it’s not shaping up to be much of a boost to the jumbo loan affordability, at least for the moment.”
http://www.sfhomeblog.com/blog.html
Trolled! BAM!
I harrassed ‘em too.
Desperate? In SF?
I was out to dinner on a recent Sunday with a group of friends, when some acquaintances at the table got a phone call that their bid on a house had been accepted. The real estate agent drove over and delivered the papers right then and there at the restaurant on a Sunday night. There was no, “Great, we’ll get together tomorrow morning and go over the paperwork” - it was pen in hand, sign here right now.
And they did.
I had steak for dinner. I think they had a large serving of JT.
I’d be interested to know what kind of loan they got. 30 year fixed, 20% down? Or 10% down option arm?
buyer can get cold feet and walk away within 3 days; if i am a Realtor, I will do exactly that to lock the buyer in.
“Lower-end homes, defined as those priced below $431,605…”
Yeah, lower end my @ss…what a bunch of horsesh!t. Lower end should be like $75k to $125k. I don’t know who in their right mind could consider more than $400k to be a lower-end home. Unreal.
I just shake my head when I read this stuff too. So out of touch with reality it’s mind boggling.
“‘It’s very disheartening,’ Micheals said. ‘I’m very upset.”
I’m not, I think it’s great! If I had more initiative (and a lot of bodyguards on duty), I’d schedule an interview with my local paper just to tell them how happy I am that houses are trending toward affordability again. As a matter of fact, I think it would be GRAND to call up Jerry Springer with a show idea: “I’m an HBBer and I want to tell my FB neighbor to go F***K themselves”.
“‘It’s very disheartening,’ Micheals said. ‘I’m very upset.”
Imagine if you could have a camera team show up as FBs are being escorted out by the sheriff after the lender buys back the McMansion on the courthouse steps. Guys like Micheals holding their breath until they turn blue and pass out. Call if “FBs gone wild.” I’d buy a copy. Priceless!
Got diversified assets?
Interesting…I’m watching Kutlow this afternoon and one of his guests, a former Fed guy, Wayne Angell, who in the past was calling for continued interest rate cuts, is now saying to stop cutting rates and that inflation is a serious problem. Kutlow is now also in the camp of ending the rate cuts. Funny how fast things change from Larry “cut rates” Kudlow!
Everybody wants to live in Pasadena.
I’m sure you heard my aunt is giving her Pasadena bungalow to her tenant. Now she wants to move back to Pasadena but instead of moving into her own place, she is going to buy another cottage on the same street. It’s on a heritage street.
She asked me if I want the new one when she passes, but I don’t kiss butt.
I shopped like it was 1999 today.
Costco 116.00 and Target 69.00.
It was my B day to me.
Fregans on Oprah.
Ouro Verde:
Just curious, your aunt is giving the bungalow to her tenant, or selling it?
Its a Gift. Barf.
“Among buyers won over was Luis Gallardo. He is moving to El Dorado Hills. ‘I think it gives you some comfort level that with the economic conditions being what they are, and the housing market being what it is, that you’re not going to continue to lose more money,’ said Gallardo.”
I feel sorry for this schmuck! He must be the perpetual sucker for every scam that comes along. Hey you want to buy some Nigeria lottery winnings?
I bet Donald Trump forgot to tells his millionaire students
THE RULES HAVE CHANGED
a loan for a borrower on a rental property and had 2 conditions pop up that I have never seen before…
1) Insurance MUST include coverage for lost rent for at least 6 months (from fire, damage etc)
2) Borrower must prove 2 year history of being a landlord with signed tax returns and schedule E’s
These conditions didn’t exist in January.
This was on a full doc, 760 credit score, 70% LTV no cash out loan.
Also,
FNMA will no longer allow loans for rental condos.
Purchase or Refi, doesn’t matter what your credit score is or LTV or DTI.
You also need 25%-30% down/equity to get a decent non-owner loan today. Taking cash out is also harder.
I didn’t know FNMA gave loans for investment properties! That sucks. I wish we could just get rid of them.
Saw the other day that FHA loans money to hospitals, so I guess anything is possible.
Blano,
What is the name of the Jeff Cooper DVD that you talked about in the bits and buckets?
Thank you.
My pleasure!
“Intra-Day Trading Strategies - Proven Steps to Trading Profits.”
At traderslibrary.com.
It was on sale, but may not be now.
Original lead courtesy of txchick.
I don’t see my first post, so here goes again……..
“Intra-Day Trading Strategies - Proven Steps to Trading Profits.”
At traderslibrary.com.
Original lead courtesy of txchick.
My pleasure!!
Ah, there it is.
P.S. At the time it was on sale for $29.99, but it doesn’t look like it is now.
Got it Blano.
Once again thank you and txchick.
amazon is selling it for 29.99..but both reviews are bad?
Book Link
They keep saying that prices in San Diego are dropping like a rock. That seems to not apply to land, however. Prices are still way beyond anything remotely sane in the areas I’m looking. LAND. Bare, unimproved land. Still a million plus in anyplace you’d want to build.
Different market forces. Your only buyers are developers. People who own raw land can just sit on it and let it wallow.
Prop 13 keeps the taxes low and if you missed the boat last summer, it means your greed is so high that you’ll wallow in contempt rather than sell.
I know of one very bitter Chino Dairyman who didn’t think 1 million an acre was high enough in 2006. He will shovel the shite at his dairy waiting for that price than settle for a lot less now. Except now he can’t even give it away.
Samll parcels are another story all together. Just look for all the bare land parcels in the foothills that were sold in the last 3 years that missed out. I am watching some nice sub 10 acre parcels stuck in subdivision stage with huge carrying costs and no hope of breaking even.
If you want to see a really stellar case of missing the market take a look at the mess in Azusa.
The Fleet Enema is in…
“San Diego posted the highest rate of home price depreciation in the nation during the fourth quarter of last year — losing more in three months than the national average of homes lost in one year, according to a housing report.”
My wife and I just had a menage a trois with a Hooker…
Taking a hike up to Hooker Valley & Glacier that is, looking up towards Mount Cook.
Summertime and the living is easy~
They have become, uncomfortably numb…
“Yamila Ayad is the president and broker of Mission Home Loans in San Marcos and a board member for a local consortium of nonprofits that hosts events for distressed homeowners. She said San Diegans, even some of the professionals attempting to curtail the spread of distress, are growing used to new records being set every month in the data.”
“‘I think that the sad thing is that we’re just not amazed anymore,’ she said. ‘I hate to say this, but we end up feeling numb, anaesthetized by the issue.’”
OMG. Acceptance phase? So soon?
“No one wants to purchase a home or a car or a microwave and know that two months, three months or five months later there was a better deal out there,’”
The microwave I could deal with.
This implies that prices are falling on everything, which is not true. Prices are rising on everything but houses. Houses are the only thing not to buy.
WTF I don’t know anyone who has enough money to buy cars or microwaves that appreciate in value. Of course you want a good deal but you’r not expecting to get more for it when and if you sell it.
Actually, when one purchases such items, they are typically expected to be worth much less a few months later.
OT a little, but I just saw a Wachovia ad promoting one of those “pick a payment” programs where you can choose interest only or some other option. WTF?? I’m surprised those things even exist now.
Don’t know if this was posted earlier, but this is the same woman who earlier urged banks to freeze teaser rates. She’s an idiot, and she’s in charge of the Federal response to the ongoing crisis.
FDIC gears up for bank failures as ‘problem’ banks soar
Posted Feb 26th 2008 9:58AM by Lita Epstein
Filed under: Bad news, Personal finance
FDIC Chairman Sheila Bair has been sounding alarm bells for more than a year about the hazards for banks as foreclosures increase. Now, her worst dreams may soon be reality. This morning, the FDIC released its year-end numbers and the number of “problem” institutions jumped to 76 at the end of 2007, up from 45 a year earlier — a 69% increase. At the end of the third quarter that number was 65.
As a result, the FDIC is staffing up. The Wall Street Journal reported that the FDIC is looking to bring back 25 retirees from its division of resolutions and receiverships. At the height of the savings and loans crisis in 1993, there were 572 “problem” institutions, and back then the FDIC had more than three times the number of employees it has today. So the FDIC needs to hire some new folks who can quickly get up to speed in the process of dealing with bank failures. More than 90 duty locations are listed for R&R [Resolutions and Receiverships] Specialists, but the announcement specifically indicates that the FDIC plans to rehire 25 retirees. If you’ve got the experience the pay is great: $67,836 to $180,770.
Employees hired according to the job listing will “engage primarily in resolution and receivership activities of financial institutions. They will be responsible for gathering, compiling, researching and manipulating financial data to prepare a variety of financial documents, management reports and presentations.” They must be able to “analyze financial statements, operating and project reports, cost data, managerial practices, capital and reserves, credit condition, loan file documentation, cash flows and other elements to determine the soundness of the assets held by an insured institution and determine the risks and value of the assets and liabilities.” FDIC obviously wants to hire quickly. The job listing opened on 2/20/2008 and closes on 2/28/2008.
One policy analyst from the Stanford Group told the Journal, “Regulators are bracing for well over 100 bank failures in the next 12 to 24 months, with concentrations in Rust Belt states like Michigan and Ohio, and the states suffering severe housing-market problems like California, Florida and Georgia.”
What does all this mean for you? If you have any money in a bank that is not FDIC-insured, move it to one that is. If the bank you choose is FDIC-insured, don’t panic. The FDIC steps in and makes sure you don’t lose any money. Remember that the FDIC only insures an account up to $100,000, so if you have more than that on deposit, you need to open more than one type of account in that bank or several banks. You can find out more about FDIC insurance rules on its website.
which banks are on FDIC list?
“‘As long as the sales are going down, that means the market sucks and there’s no bottom in sight,’ said Jim Klinge, owner of Klinge Realty in Carlsbad. ‘But really, the market’s great if you’re a seller and you’re willing to put an attractive price on it. Buyers are out there. But they don’t want to sell it. They want to goose it up 10 (percent) or 20 percent and try and hit the jackpot like they’re in the casinos.’”
This guy is completely incoherent. I wonder if he was actually on methamphetamines when the reporter called.
“In contrast, Santa Clara is expected to fall from ’stable’ to ‘depressed’ and Monterey from ‘distressed” to ’severely distressed.”
Heh. There’s a ton of foreclosures in North Salinas, where mortgage fraud was rife. Quite a few in Seaside, not many in Monterey, Pacific Grove, or Carmel.
““Q: How did the mortgage crisis happen and who’s to blame?”
“A: For a period of time, the market grew. It grew too fast. It had a big adjustment and a period of big dislocation came in the summer, and now we are in a period of volatility and uncertainty…The market is looking to find a new level. And by the market, I mean home prices, housing starts and mortgage rates.”
“Both lenders and borrowers had a huge amount of confidence that ultimately led to overconfidence. The lack of other things to invest in caused people to invest in real estate, and a lot of the products, and I think it’s specifically pronounced in California, were designed to get monthly payments down at the beginning.””
Politician in training… The art of murky answers.