They Just Wanted A Little More In California
The San Francisco Chronicle reports from California. “In eastern Antioch, 4.1 percent of all homes and condos went through foreclosure in 2007, according to DataQuick. That’s as bad as the hardest-hit neighborhood of Stockton - often cited as the foreclosure capital of California and even the nation. In eastern Contra Costa, more than 2 percent of all homes in eight ZIP codes were foreclosed on in 2007, a rate that rivals most Stockton neighborhoods.”
“‘We have one every 15 minutes including drive time,’ said Deputy Sheriff Alex Custodio, who has been doing evictions for four years. On Tuesday, the Brentwood eviction was the duo’s fifth call of the day; they had an additional dozen scheduled afterward.”
“Until recently, the vast majority were of tenants who fell behind on their rent. Only 10 percent were foreclosures. Now one-third are foreclosures. That comes to about 720 foreclosure evictions a year, or just under one-fifth of the 4,000 Contra Costa homes that went into foreclosure in 2007.”
“Doug Odom, a deputy sheriff with Contra Costa County, rapped loudly on the front door of a one-story prefabricated home in Brentwood. Odom had already been to the Brentwood house a week earlier and served former owner Ellen Anderson with a warning notice of the eviction date.”
“Looking distraught, Anderson apologized for the mess. She said she and her husband are getting a divorce and couldn’t make the monthly payment, which had risen to $4,500. The couple bought the house about 10 years ago. She said her soon-to-be-ex husband had already moved out to another house in Concord the couple had bought together.”
“She gestured at the kitchen ceiling. ‘This … all leaks,’ she said. ‘You can’t get refinanced because it’s a manufactured home. It’s 20 years old. They don’t last.’”
“In places such as Antioch, Pittsburg and Discovery Bay, homes that went for $650,000 a couple of years ago are now selling for $450,000 or so. ‘Look at this block,’ Custodio said, gesturing at a subdivision of cookie-cutter houses in Pittsburg. ‘You can see all those for-sale signs. More than likely, we’ll be out here posting them’ for a notice of eviction.”
“Custodio has seen the role real estate speculation played in fueling the foreclosures. ‘In talking to some people (being evicted) they tried to buy other property; they tried to add to their wealth by owning,’ he said. ‘People tried to capitalize on the boom when values were skyrocketing.’”
“Still, he doesn’t fault them. ‘Most folks are decent people,’ he said. ‘They just wanted a little more, but it didn’t work out for them.’”
From ABC 7 News. “The high number of home foreclosures in Vallejo is one of the reasons why the city is facing budget problems. Today, on Mare Island, homeowners in danger of losing their property are getting help from real estate experts.”
“Tonie McGee and Matthew Criswell are trying to hold onto their 1,200 square foot condo. Their adjustable mortgage just went up two points and will rise again.”
“They bought the condo eight years ago for $160,000. Over the years, they borrowed on equity and now owe $294,000. Similar condos next door won’t even sell for that much.”
“‘It’s either we’re going to afford it, we’re going to lose it, or we’ll be getting second jobs,’ says Criswell.”
The Recordnet. “When Linda and David Barnes put their north Stockton home up for sale in August 2006, the real-estate market was already slowing down. They knew that. Still, they had bought and sold two homes during their 34 years in Stockton, and things had always gone smoothly. They figured they would sell this time in a few months.”
“They listed their five-bedroom, two-and-a-half-bathroom home for $419,000. David Barnes took a company transfer to a job in Southern California…and Linda Barnes waited in Stockton for a sale. And waited. And waited - for 13 months. A sale never happened.”
“The Barneses’ house sat on the market for 13 months and received only two offers. One was so low it was insulting, at least at the time. The other looked so suspicious that their real-estate broker advised against accepting the offer, which seemed to contain an illegal kickback to the buyer. There was one tire kicker who made no offer.”
“The rest of the lookers would go through the house and then tell the Barnes’ agent, no thanks, they were actually interested in buying a less expensive foreclosure property.”
“‘It was just horrible,’ Linda Barnes said. ‘I think I spent the whole last year in a state of depression.’”
“Last September, the Barneses decided enough was enough and took the home off the market. David Barnes transferred back to Stockton. ‘No matter what, in two years we’ll definitely put it on the market again,’ Linda Barnes said. ‘We’re not expecting to get it over $400,000 again but just whatever we can get. It will be higher than we could get now. And we can get on with our lives. Now it’s just terrible timing.’”
“Traditional homes mostly have been left sitting on the sidelines, while foreclosure homes have started selling at fire-sale prices. This means that traditional homes have to be priced like a foreclosure to have any chance at all to sell, said Jerry Abbott, president and co-owner of the Coldwell Banker Grupe realty firm in Stockton.”
“‘A person trying to sell a home can’t price it separate from an REO (real estate- owned house),’ he said.”
“Art Godi, of Art Godi Realtors in Stockton, said that eight out of 10 existing-home sales these days are either foreclosures or short sales.”
“‘If you don’t need to sell, you’re better off to stand aside and letting the foreclosures clear out,’ said Mike Collins, of Collins Realty in Stockton. ‘Then we will see a significant bounce. False bottoms are getting created now by the bank-owned properties and to some extent, even by builders who are dropping prices dramatically and offering incentives to sell their properties.’”
The Modesto Bee. “More than 200 homeowners met with mortgage lenders and financial advisers Saturday in Modesto to discuss ways they can avoid foreclosure and keep their homes. Norma and Moises Robles of Riverbank were among them. They refinanced their home loan a year ago, but they didn’t understand the terms of their new adjustable-rate mortgage.”
“‘We wanted a fixed rate. We don’t know what happened. It was a bad decision we made,’ said Norma Robles. She said their mortgage broker had them sign the loan documents before reading them. ‘Sometimes, you trust people, and you don’t know what’s going to happen after that.’”
The Merced Sun Star. “A year after Juan Reyes bought a new house in Dunmore Homes’ Country Villas subdivision in Livingston, he thought his only headaches were an overflowing air conditioning valve and a bathroom door that won’t close. Now he’s got bigger worries.”
“After more than 50 years in business, Sacramento-based Dunmore has filed for bankruptcy and is liquidating its assets. In Reyes’ case, two companies have placed liens totaling $7,000 on his house.”
“That means people like Reyes, who bought his Dunmore house in February 2007 for about $400,000, find themselves cleaning up a financial mess they didn’t make. ‘Boy, that’s screwed up,’ said Reyes when he learned of the liens. ‘I feel bad for those contractors. It’s not cool. It’s bad for them, and it’s bad for us as homeowners.’”
“All told, 27 separate companies have placed liens totaling at least $1 million on more than 500 houses in Merced County, according to documents at the County Recorder’s Office.”
“At the sales office, faded flags with the Dunmore logo still wave in the wind, but a sign on the door tells whoever might stop by that the office is temporarily closed, effective last September. As Reyes put it, ‘They totally bailed.’”
The North County Times. “Julie Beck stood in a three-bedroom Oceanside house and imagined calling it home. For Beck, the recent tumble in home prices has been a cause for celebration. She had wanted a home for years but could not afford it.”
“She hopes to find a three-bedroom home and — for the first time in years — can pick from dozens priced less than $300,000.”
“Some real estate agents say lower prices have brought in new buyers, and the housing market will start appreciating by year’s end.”
“In opposition, some economists say the region’s median price, at $429,000, needs to drop and become affordable for a family making the median income, at $55,500, before the market recovers, a decline they say would take two or three years.”
“Don Stephensen has been ready to buy for years. Finally, he can afford something large enough for his family because prices in San Diego County have fallen sharply over the last two years, with the median price falling 17 percent from a peak of $517,500 in 2005 to $429,000 in January, according to DataQuick.”
“Regardless of what the housing market does, Stephensen said he is eager to buy. He wants his first home, and his daughter wants her first dog. ‘I will find a place if it freaking kills me. I will,’ he said.”
“Despite his desire to find the perfect home, Stephensen said he does feel pressure to act quickly. In the last month, interest rates dropped half a percentage point before jumping the same amount over the course of a week. This unusual volatility, Stephensen said, has spooked him.”
“One percentage point represents about $160 more in monthly payments and an extra $58,000 over the life of the loan for a $300,000 home with a 20 percent down payment.”
“Whether the housing market is at rock-bottom does not matter to Beck, the Oceanside teacher. She said she is tired of dumping $2,000 a month in rent into a property where she cannot paint the walls.”
“‘I’m not looking at a home for an investment. I’m looking at a home for a home,’ said Beck, who said she plans to keep her 4-year-old twin daughters and 8-year-old son in Oceanside schools through graduation. ‘I won’t be ready to sell for the next 12 years, so it doesn’t matter if prices drop some more.’”
The Press Telegram. “That long-sought higher conforming loan limit - $729,750 - is finally in effect for Los Angeles, Ventura and a dozen other California counties. But don’t get giddy with anticipation that it will pull the real estate market out of its 26-month funk. The slump seems to be a problem that can’t be fixed with either money or words.”
“Economist Christopher Thornberg makes the point that Fannie and Freddie have a rule that says no more than 35 percent of gross household income can be spent on the mortgage.”
“‘Forget it,’ Thornberg said of the possibility that the higher limits will provide any real help. ‘It’s Fannie’s and Freddie’s way of leveraging themselves into the jumbo (loan) market.’”
“And that, he notes, is something these two have lusted after for a long time.”
“‘In reality, the higher loan limit will enable Fannie and Freddie to play a greater role in California than they have historically,’ said Robert Kleinhenz, deputy chief economist at the California Association of Realtors. ‘That’s going to help some. How much remains to be seen.’”
“After foreclosure rates skyrocketed, the mortgage industry promised to try to work out solutions. Economist Thornberg doesn’t think much of the workout plan. Basically, there is nothing to work out.”
“‘The problem is what (some) people paid for their loan was way too much relative to what they could afford,’ he said. ‘Changing the terms of the mortgage doesn’t change the fact that they can’t afford the mortgage.’”
To their credit, the North County Times included a good deal of breakdown on affordability criteria, etc. And these rabid knife catchers should read the bit in the SFC article with the guy trying to kill himself. I’ve said it before, people make big mistakes under financial stress, and I think the REIC is should reconsider trying to shoe-horn people into loans at this stage of the game.
All these articles are about areas which don’t have jobs which support the home prices. In the core of the Bay Area, nothing seems to be dropping in price. Yet it’s not that different. Engineer couples pulling $250K per year between them can’t afford homes that are in the $750K-$1M range. Oh, wait a minute - sure they can. So is the Bay Area safe?
Dude, the median household income in San Francisco is $58,000. The median family income (i.e., two wage earners) is $68,000. San Jose is $74,000/$83,000, and Mountain View is $81,000/$99,000. Even for Mountain View, that’s only about 40% of your $250,000 income estimate. So why should the median house cost $500,000 or $600,000 or more? There aren’t that many rich people to support it.
So, no, it’s not safe.
The houses in this price range on the Peninsula or the South Bay are not NEW by any means. A 1963 3/2 rancher for 700K and you have to make 250K to qualify…forget it. You could rent something way nicer for less per month
–
” Engineer couples pulling $250K per year between them can’t afford homes that are in the $750K-$1M range. Oh, wait a minute - sure they can.”
Wait, you mean including or excluding Scam Options? Even then, what % have household income of $250K?
“So is the Bay Area safe?
Why don’t you research Santa Clara Co during the 2001-03 depression? Employment dropped 19.7%! Rents dropped 40%. CRE vacancy rate above 30%. Home prices declined while they were going up like crazy in SoCal. Many are still unemployed since 2001.
Jas
A friend of mine purchase a house in SF 1995? (Him and wifey).
Air Force General - did not sell at peak, and can’t sell now.
We keep in touch, I stay out of it.
They feel cheated!
Shoulda - coulda - woulda sold in the hight - but didn’t.
Talk about a land mine! (pun intended).
Nice people who missed the boat.
Our only response is come visit us! (They’ll be here for July 4 celebrations).
What can you do/say?
Good people, dumb $$$.
Sometimes the best thing do is just listen.
Ya just can’t make this stuff up!
Leigh
“What can you do/say?”
What I say is, if they bought in 1995, there is no reason why they “can’t” sell now. They just feel entitled to more profit than is now available. Am I wrong?
Nope.
Prices are already dropping in SF and foreclosures are rising. Wake up, dope. The coffee is burning
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Yes, in both NorCal metros reported by Radar Logic the prices are dropping fast. Here are PPSF for San Francisco:
Transaction Date PPSF
10/31/08 $436.84
01/04/08 $387.76 (latest available)
Case-Shiller and Radar Logic have built-in delays. As you can see, price is down more than 10% in slightly over two months.
Jas
Houses are still selling very fast in my area - Ingleside Terrace / Ingleside Heights in the southwest part of San Francisco. Asking prices are still obscene and sellers are getting close to or sometimes over listed price. Examples include a house on my block that sold for over listing prices - 4BR house for $1.25M (only listed for two weeks before selling). There are probably five to six houses for sale within three blocks. Another house went sale pending after a couple of weeks (they were asking ~ $1.75M).
A house across the street from me is listed is $1.299M - it last sold for $965k in Sept 2005. Owners upgraded / built out the basement so they dumped a few $$ in improvements. This is only a small 2BR house BTW. If this house sells for anything close to asking price then I won’t know what to think.
‘Most folks are decent people,’ he said. ‘They just wanted a little more, but it didn’t work out for them.’”
BS red flag call. If most people only wanted a ‘little’ more, we wouldn’t be in this mess. People got greedy, demanded (and for a while got) more and expected to get wealthy the easy way.
They expected returns that were way above normal. Where else could you find that if you spent $15K to update your house you could raise the price by $80K (Saw this in a show).
Yeah, that couple up this post that turned a $160k condo loan into a $294k loan didn’t do so for a “little more” That’s an extra $134k over eight years - where did that money go? To plaster over the shortcomings of a hyper-consumer economy, that’s where.
‘They just wanted a little more, but it didn’t work out for them.”
NO they were just greedy.
The FB got the goods, now they don’t want to pay the bill .It must of been a great cheap thrill . Reminds me of people who want to take a bus ride but don’t want to pay the fare .
Since appreciation isn’t taking care of these borrowers obligations ,the good old easy money way ,now they are victims .
I’m sorry people ,but housing boom or no housing boom ,I have never bought a house where I couldn’t make the payments, based on my income .I don’t even think I ever bought a car where I couldn’t make the payments or depended on my house to buy the car for me ,or a TV ,or whatever .
How can these people even come close to saying that the debt they took on was anywhere near manageable based on their incomes . These people did not ,and I say “did not” qualify for the loans and loan amounts they took out .People do not act like this unless they are operating on some principal that was their bail out plan ,which in this case was appreciation or selling to a greater fool .
I think the FB’s are pushing this spin about them being victims and they are really just pissed that they couldn’t refinance or sell their POS to a greater fool like the REIC told them they would be able to do .
Look, I’m sorry that FB’s believed real estate myths and the spin that was going on at the time ,and I’m sorry that the lenders allowed the borrowers to submit liar loan applications they didn’t qualify for ,but to late the horse is out of the barn .
“People got greedy,…”
I submit some of our regular posters are now falling into this trap with respect to their too-clever-by-half plan to ride gold up along the flip side of a crashing dollar to real estate riches. Groucho Marx (of “You can even get stucco” fame) made such a mistake during the Great Crash, losing his shirt on stock market investments at the same time he ridiculed those devastated by the 1930s land bust.
Where the monies to keep the gold prices going up forever will come from against the backdrop of a credit crunch which is draining funds out of businesses, city and state governments, student loans, credit cards and 401(k) plans is a mystery which I hope one of our local gold price ‘experts’ will explain.
Gold is bought with cash. The loans you mentioned are funded with credit. That’s a big difference. I don’t know of many people who fund gold purchases with student loans, credit cards and other bonds. Perhaps some hedge funds are doing that, but I doubt many. Gold will keep going up as long as the dollar keeps falling and faith in the financial system continues to plunge. If the government and Fed decided to wipe out debt through inflation, would you rather hold metals or paper? Unless you really think that we will buckle up and repay the $9 trillion in debt along with $55 trillion in unfunded entitlements, I would bet on another currency or metals.
Huh? Gold is bought with cash? Are you sure about that? Is there any way of knowing? Do you think there might be more than one hedge fund out there levered to the max buying gold and other gold stocks/indexes? Gold is a commodity just as much as housing and you know how the housing debacle is turning out…
“Is there any way of knowing?”
Go down to your local bank and ask them for a gold loan. Next, do a little research before commenting on something you know nothing about.
Learn here:
http://www.mises.org/story/2183
or here:
http://www.professorfekete.com/articles.asp
Happy reading.
People can also short gold with borrowed funds. It goes both ways. There could be as much borrowed money shorting gold right now as there is going long.
How many people shorted a house? Nobody, because you can’t directly short a house. Besides, houses were bought with 100% LTV. How much gold is bought with 100% leverage? None that I know of. If you know anyone who’s willing to loan out money at 100% leverage to speculate on commodities or securities, let me know. If you know anyone who is willing to give an option ARM loan to buy gold, let me know.
Gold is a commodity, but it can be bought with $100 or even less. The median house costs $200K. Without credit, how many people can afford a house compared to 50 shares of the gold ETF? I don’t know where you got the idea that a house is a commodity. Perhaps you’ve been listening to the realtors.
FYI - Read my post again. I did mention that some hedge funds are levered to buy gold
Suppose lots of NYC investment banks, realizing as some posters do here that the dollar is about to go into hyperflation and only gold will do well, decided to collectively borrow $200 bn and purchase gold with those moneys. Would you classify that as a cash purchase or a credit purchase?
despite official efforts to write gold out of the script of modern finance, it remains the ultimate asset into which wealth flees in effort to preserve itself in times of growing unease. the gold market is small compared to the amount of money now in the world; the potential for an immense gold bull market certainly exists.
It’s a new era now — gold prices always go up! Buy now or get priced out forever!!
Don’t you gold bugs realize how ridiculously similar you sound to the 2005 housing bulls?
no one here’s saying that gold will go up forever or that one should put all their $ in it. you may be right that gold is nearing the end of its bull market — i do not think so and have bet accordingly; time alone will tell. in any case, as a gold bull, i am always glad to hear from skeptics; means the true silly season is likely yet some ways in both time and price still before us.
PB, shouldn’t you spend your time trying to write papers, and achieve the Consolation Nobel Prize? The Economics one? It’s not even one of the original ones.
I’d leave the discussion in speculation, etc. to people who actually have real money at stake.
GS, you seem to be obsessed with gold-baiting, day after day. Why don’t you put your money where your mouth is and SHORT the shit out of it?
He’s an academic. No money to put where the mouth is.
One nice thing about having no money is that you don’t have to worry about doing dumb things with it, like catching falling knives in the gold or housing market at the moment.
FWIW, I think you make very solid points, PB.
We sold our house early (mid 2004) and missed out on an additional 19% gain. But we were able to sell in an hour, and didn’t have any hassles with selling or escrow. We were the last sellers in the neighborhood to have such an easy and quick sale.
We traded in and out of gold (GLD) since the first day GLD was traded on the open market. I sold our last position in December ‘07, and have missed out on some gains since.
IMHO, selling too soon (but almost always at a profit), has been a winning strategy for us. Gold prices are far more volatile than housing prices, and I’d hate to be on the losing side of that bet.
Agree that we need to be cautious as deflation seems to be the major undercurrent at the moment. Yes, there are hyperinflationary risks, but we have to weigh all the possibilities.
Question is, which will fall faster if we are wrong: gold or the USD? (I don’t have an answer for that, unfortunately).
I just like to question people who seem to be making dumb assumptions. Sorry if you guys don’t care for my line of questions.
Sorry, but I have this weird obsession with questioning questionable assumptions — kind of like the way that others are weirdly obsessed with hinting of their vastly superior hoards of gold or other wealth. I guess each of us is different in his own way, which makes this planet an interesting place.
I know a finance professor who has been shorting gold and going long on Citi since last year. LOL
Those academics are a funny bunch. I even heard one guy on the radio state that gold is worthless. It has no value at all. I don’t know what world he lives on, but gold has always had great value since the beginning of modern civilization. It seems like some people are in denial.
A falling dollar means that commodity prices will go up by default. Just look at the price of oil, wheat, corn, and everything else. I don’t know why it’s so difficult for some to comprehend.
PS - Houses are not commodities and even if they are, people have to be able to qualify for the credit and make the payments. Once again, what’s so difficult to understand about that?
I agree with PB AND I buy/sell gold. Gold cannot go to the sky, even if the dollar drops to zero. Gold will fall/stabilize at the point of value to barter. Hence, Gold will stabilize around 6 chickens, 3 rifles or whatever the barter of Gold bears. Gold in itself is protection against a declining curreny (maybe), but by the time the dollar is at zero, people are trading chickens and rifles, not dollars.
I’ll go one step further. You’ll never get to that point. An alternate currency will just arise.
Prices will be quoted on the black market in CAD or GBP or whatever. In Russia, back in the days, the black market operated in dollars. Same in India.
Where the monies to keep the gold prices going up forever will come from against the backdrop of a credit crunch which is draining funds out of businesses, city and state governments, student loans, credit cards and 401(k) plans is a mystery which I hope one of our local gold price ‘experts’ will explain.
I don’t know anyone who thinks gold prices will “go up forever”. However, I can answer the question of “Where the monies to keep the gold prices going up” many times in “dollars” will come from: China and India. Each of these countries’ central banks has over a TRILLION “dollars” that they don’t want and can’t get rid of any other way than by buying commodities or real money; that is, gold or silver. Do you know how much a trillion “dollars” entering the gold market would drive the gold price up? I don’t know exactly, and neither does anyone else, but I can guess that it would add at least one zero onto the end of the existing price.
If I read this correctly, it was the sheriff that was showing compassion, ‘They just wanted a little more”. And I think this is great. How often has a cop ever shown compassion?
If your job was dealing with criminals, junkies and the dregs of society, how much compassion would you show? People who complain about the cops should try riding along as an auxilary or volunteer a few times.
Agree, jerry.
Too many people here like to put down teachers, cops, firefighters, nurses, prison guards, etc. They claim they are paid too much for too little work.
If that were really true (too much $$$), why aren’t the “complainers” signing up? It’s not like a CEO’s position where you have to know somebody to get in. That’s one of the greatest aspects of public service…there are problems, no doubt, but public employees tend to be better qualified WRT experience and education than their private sector counterparts. They also need to perform in order to move up. It’s not about “who you know” until you reach the political levels.
I could not agree more. What is even funnier is my job. I am a high school guidance counselor. There are TEACHERS in my school building that are jelous of me and the other three counselors because we don’t have a room full of 30 kids, we can pee whenever we want, don’t have to make lesson plans, etc.
As for benefits? I also wonder about that too. We have excellent health benefits as public school educators. Every four years we have a new contract. Private sector people whine about our excellent benefits. They say, “we have crappy benefits, so should they. It’s the way of life”. Well, then everyone who is jelous of teachers and their fat contracts should take one of those contracts, storm into your bosses office, slam the contract on his or her desk and scream, “THIS IS WHAT I WANT!”. If you are good, they’ll give it to you. That’s the free market buddy. I am lazy, I pay someone (my union) 1% of my salary to give me a contract to my liking.
Oh, trust me. I knew NOBODY when I got this job. Suburban teaching jobs are tough to get. However, work in the inner city like me. You’ll be better off.
They say, “we have crappy benefits, so should they. It’s the way of life”. Well, then everyone who is jelous of teachers and their fat contracts should take one of those contracts, storm into your bosses office, slam the contract on his or her desk and scream, “THIS IS WHAT I WANT!”. If you are good, they’ll give it to you. That’s the free market buddy.
——————–
THANK YOU!!!
I can’t state this enough, but nobody seems to get it. The private sector employees should actually be kissing the feet of the union employees. The unions provide leverage for them to **improve** their own working conditions.
Thanks for your post!
“received only two offers. One was so low it was insulting, at least at the time. ”
LAMAO, ROTFL, BWHA-HA-HA-HA-HA-HA-HA-HA-HA-HA
HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA
HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA!
Sorry about that, but the “at least at the time part” really hit me hard. THAT IS TOO FUNNY!
Did they expect the buyer to just give their money away?
“their real-estate broker advised against accepting the offer, which seemed to contain an illegal kickback to the buyer”
SEEMED to contain a kickback?
Hint: If the offer says “I’ll pay you more than your listing price, and you give me the excess after we close, but don’t tell my lender”, then it’s an illegal kickback.
“in two years we’ll definitely put it on the market again…It will be higher than we could get now.”
There is just too much good material in this one article…must…stop…myself…
Yeah, I wish the article had included what they owe on the place. Typical, turning their lives upside-down, staying away from their grandkids, so they can milk a little more out of a buyer. In a couple of years, if the price is another 100 grand lower, do you think they’ll walk?
And what the heck is this ‘false bottom’ stuff?
Man who believe in false bottom will lose his ass. - ancient proverb
A “false bottom” is a hiding place in your suitcase.
No such thing in Real Estate…
It seems to me that you ain’t been around for a while.
I haven’t been around for awhile…
Presently in charming Oamaru, New Zealand.
It’s a late summer afternoon here.
my sentiments exactly……lmao
I love how low ball (ie current market value) offers are “insulting” to sellers, but outrageous prices were never considered insulting to buyers.
“Regardless of what the housing market does, Stephensen said he is eager to buy. He wants his first home, and his daughter wants her first dog. ‘I will find a place if it freaking kills me. I will,’ he said.”
Who’s in charge here - the dad or the kid? WTH, give the daughter the damned loan docs. At least there’s a chance she’ll read them.
‘I will find a place if it freaking kills me.’
It just might.
Many people just had to find the “right place”. Now the right place isn’t so right.
“letting the foreclosures clear out,’ said Mike Collins, of Collins Realty in Stockton. ‘Then we will see a significant bounce. False bottoms are getting created now by the bank-owned properties”
“False bottom”? I don’t think that phrase means what you think it means. False bottom implies it will go lower, and that the ‘current bottom’ is just temporary.
I’m tapping out…I’m done. There’s just too much material in this post, so many people, so little trouts.
Yeah, if the punishment was one Joshua tree enema or one trout slap per ridiculous comment, both Joshua Trees and trouts would be on the endangered species list by now.
Who’s in charge here - the dad or the kid
Never underestimated the power of a kid’s “first dog” want!
It’s right up there with “Soccer Mom’s For Higher Property Taxes.”
(snicker)
There has to be at least one accidental landlord that will allow pets in their area. For Pete’s sake - carpeting isn’t that expensive - compared to many sellers’ delusions at least.
Exactly, and the cow whose rationale for buying is that she wanted to paint her walls? Hell, I’ve painted walls in rental housing in the past, and repainted before I moved out. Got my full deposit back. Worst case, what will the landlord charge you, a couple thousand dollars? Much cheaper than buying a house that is overpriced by $100k or more.
Ben best thread ever on Cali, where do I start ? Just too many stories to comment on, insulting offer,buying more then one house it just goes on and on . OK I’ll just say HA HA HA HA HA HA !!!!
Yeah, Ben, I’ll have to agree, the stories in this post make it a classic. Just too funny. People are hurting because of their decisions, but who could make decisions (and comments…”I will find a place if it freaking kills me”) like these? When you write a book about the bubble, include these stories under the chapter “A Day in the Life of a California Bubble”.
This particular string of stories will make the Bubble “Greatest Hits”
for sure. very, very funny.
False Bottoms, insulting offers at the time, and two years getting more then now….OH MY!
I read recently that the bankrupt Dunmore Builders was sold for $500 and the buyer was to assume all liaibilities which was in the millions. I am suprised The Merced Sun Star was unaware of this transaction.
I think it’s in the article.
“Looking distraught, Anderson apologized for the mess. She said she and her husband are getting a divorce and couldn’t make the monthly payment, which had risen to $4,500. The couple bought the house about 10 years ago. She said her soon-to-be-ex husband had already moved out to another house in Concord the couple had bought together.”
Yet another story of a “homeowner” who can’t make the payment on a primary residence who, surprise, surprise, was somehow able to purchase an additional property.
HE could purchase. Doesn’t sound like she is on the hook for the mortgage where he lives. So NO, it is not “yet another story of a “homeowner” who can’t make the payemnt on a primary residence who…was somehow able to purchase an additional property.” It is the typical divorce results.
They probably split the properties - he got one, she got one. Each ended up with the mortgage on the place they got. She can’t afford hers on her income.
Fairly typical result in a divorce situtation. WIfe just ‘has to have’ the primary home - and then reality hits that it took 2 incomes and she loses it.
WIfe just ‘has to have’ the primary home - and then reality hits that it took 2 incomes and she loses it.
wow .. do you really think the typical wife is that superficial and ignorant?
Joey:
Do you really want people to anwser that question……honestly?
I’ll answer…. yes, there’s plenty of these women that my husband calls “leg shavers” for some odd reason, but it seems to apply. Their whole life is wrapped around their looks, landing a man, getting the fancy ring/wedding/house, and a couple years later the 2.5 kids. Go to college to get a MRS degree but learn nothing. They’re boring and predictable, and have nothing to talk about at social events other than Jamie/Justin did/won this or that at soccer/ballet whatever. They are defined by their house and their kids, so its no wonder they are dumped when they hit their forties. So yes, these women ARE out there, but certainly aren’t amongst my friends. And the men who marry these women are just as brainless. They are dragged around by their [blank], and want trophy wives, so they are just as guilty for seeking artificial meaning from their grand purchases.
Salad:
Good honest answer…..i see that a lot too in nyc Its amazing as a DJ how many old fogeys i see are under 40!
I may be old but i am NOT an Old Fogey!!!!
“leg shavers”, hee. Your husband is funny.
This Anderson lady doesn’t really sound like a trophy wife, to me, though? She sounds too apologetic, not entitled enough. Drinking beer in the afternoon, in a leaky manufactured home she pulled too much money out of…just sounds like another sad mess, another sad borrower (SB). She’s a country ballad.
ooh…a country ballad about a lady who cain’t shave her legs no more, since her lady schick got rusted from the leaks in her manufactured home? Hmm, it has potential. Keep an ear out for “Rusty Blades (My House is Cryin’)” on WSM, soon!
ROFLMAO!!!
I don’t believe she is getting a divorce. They bought a new property together while they didn’t sell the old one ,but oh yeah , they are getting a divorce. I don’t believe these wild ass stories because I think the FB’s are just playing games to get out of one obligation that they don’t like in favor of another one that is more attractive. She could come nowhere close to affording the original home obligation on her own ,so one must question the motives of these transactions .
You’re all missing the point - this is a ‘manufactured’ (mobile) home in a crappy area with a $4.5000 MONTHLY mortgage payment - after 10 years of occupancy.
how in the heck is the pymt still $4500 after 10yrs??
heloc heloc heloc. One of my Manufactured Home clients pays $521.82 per month on a 20-yr $50K note, has been doing so for a few years. Just two months ago asked for an additional $25K. This was one of those rare instances where I was not at all tempted to say anything besides No, No, and No. “We’ve been living on credit cards,” said the borrower. This was supposed to make me comfortable?!? If they couldn’t make $521.82/mo without the CCs, how are they going to make the $782.73/mo? Duuuhhhhh, I guess they are waiting for their Manufactured Home to improve itself. Well, they did say they improved it. Swell, I hope they enjoy it. I told them I would not be insulted if they found a different lender for the whole ball of wax, er, aluminum. Hasn’t happened. The $521.82 did arrive promptly this month, though.
I just want to post an observation. I just looked at a golf course 2 bedroom condo in Scottsdale at an open house listed for 469,000. There is an identical condo in the development going up for auction in two weeks. Starting bid 99,000. It took a lot of willpower to keep from laughing at the realtor at the open house who said the condo at 469 was a steal.
Did the mental defect happen to tell you for whom it would be a steal?
Scott,
A link for the auction?
TIA.
Ahhhh yes……the REIC is really pumping up the BS here in San Diego now for the spring. I think they are planting phony buyers for the press…only a complete idiot buyer would make any of these comments to the press…..you know….the specuvestor buyers who have been shut out of the no doc, easy money loans of the past exploding bubble. What a joke. The numbers will tell a different story. I’ll have a double bacon and cheese to go REIC.
This spring is historic as this will be the first spring that we enter when the bursting bubble cannot be denied in the nationwide mainstream conscience. The boosters are becoming less relevant by the hour now.
Hey that reminds me, now that the Super Bowl is over, where’s the bounce?
couldn’t make the monthly payment, which had risen to $4,500. The couple bought the house about 10 years ago…. “She gestured at the kitchen ceiling. ‘This … all leaks,’ she said. ‘You can’t get refinanced because it’s a manufactured home. It’s 20 years old.
Are you kidding me?!?!?!
How could you end up with a monthly payment of $4500 on a 20 year old mobile home?
“hello… Mr. Nyborg, I want to let you in on a great investment opportunity”
Glen Garry, Glen Ross, for all you movie buffs.
I paid $100 a month rent one summer at college for a mobile home, splitting a single wide with a roommate. But I was left without any equity lol
Every time I read these articles I get more and more afraid for my family. This country is loaded with irrational idiots, and I don’t feel very comfortable being around them anymore. What seems like daily shootings around the country isn’t helping one bit either. This country scares me.
No other 1st world country foolished allowed it’s citizenry the ability to easily buy concealable handguns, and we will soon learn why…
I was talking on the phone yesterday with my mom, who lives in a small town in SE Missouri. She said that the local gun shop had a “Gun of the Month” promotion, where one lucky raffle winner won a free handgun/rifle each month. The local paper always reports on who the lucky winner is and then has their picture taken with the gun. Crazy…
Nothing wrong with that!
I don’t think we are “1st world.” There was Old World, and then New World (us), then 3rd World.
AZ, the term is maybe the most misused of any term out there. This is how the terms first applied.
1st World: The U.S. and other western capitalist democracies
2nd World: The “Communist” nations at the time such as The Soviet Union, China, Cuba, etc.
3rd World: The formerly colonized nations of Africa and Asia.
When the terms were developed by some Frenchman it was actually a compliment to be called a 3rd World country. The 3rd World was going to teach the rest how great they could be once they were free of colonial shackles. Needless to say de-colonization was filled with civil wars, tyranny and poverty and being called a 3rd World nation quickly became attached to any poor or backwards nation.
So what about South America?
Yes, and in most other first world countries you can also be arrested for so-called “hate speech” and unlike slander, truth is no defense. We’re dysfunctional, to be sure, but I’ll take the USA, thank you very much.
It is still the best one by far though.
By what measures is it the “best”?
We have the most of our citizenry in jail, compared to any of our peers.
We have the most homicides, compared to any of our peers.
We have one of the lowest levels of education, compared to our peers.
Blah blah blah, are you a troll now aladin?
Take away the illegal immigrant population int U.S and Britain has a worse count per population. If the Chinese would put the prisoners in jail instead of killing them and sending their parts on tour in America, they would have a worse count.
The U.S.A has issues yes, but this is a gigantic and diverse country which causes many problems. Comparing the USA to Sweden, Japan or any other small homogenous country is a fool’s game.
There’s a world of difference between killing somebody with a handgun 10 feet away from you, vs. thrusting a knife into their belly.
One murder is done via cowardly methods, the other requires physical contact and the possibility that the knife could be used against you.
Handguns aren’t around in Japan, and you’d think that murder via knife would make up for their just 100 or so homicides by gun(including rifles and shotguns), each year.
But this isn’t so.
And it’s the same, all over the 1st world.
Handguns are the reason we have so many homicides, vs. any other 1st world country.
I realize that nothing can be done, and will leave the USA, once the carnage becomes commonplace, as our morality both financially and socially, is highly suspect.
Since when is China one of our peers?
One murder is done via cowardly methods, the other requires physical contact and the possibility that the knife could be used against you.
—————————-
Aladinsane,
Without intending to, you just made the argument IN FAVOR of handguns. Remember that guns can be used offensively and defensively.
As a woman, I LOVE guns. Why? Because it’s the only chance I have to defend myself and my family against a larger/stronger opponent. I do not want to experience hand-to-hand combat with a felon — couldn’t care less if that seems “cowardly”.
I also think santacruzsux makes an **excellent** point regarding our diverse population. When you have long-standing, stable communities where people can identify with each other, you tend to see more “community-mindedness”. There are established familial and social networks that serve as social safety nets, and there is no sense that residents feel “pushed out” of their homeland when there is no immigration (especially people who have very different customs and beliefs).
In the US, the demographic changes are constant, with one group of people taking over a particular neighborhood, only to see it shift later to some other group…always changing, and the faces/languages/customs might feel threatening or offensive to your own.
It is natural for animals (and I include humans here) to protect their territory and resources from “outsiders”. That is not a “racist” or “xenophobic” statement. It is simply a fact.
Which would you rather have if someone were breaking into your home with the intent to cause bodily harm: a phone or a gun?
Yet we are building walls to keep people out, not keep them in.
How is the US ’still the best country so far’? By Standard of Living (US = #12)? Long-term employment (US = #3)? Probability of living past 60 (US = #17)? Infant mortality rate (US = #41)?
Actually, the infant mortality rate is a little deceptive. We count *any* birth after 4 mos. as a live birth — even if the baby was born dead (as long as it wasn’t dead in the womb). Most other countries and the UN count live births only for babies born after 7 mos. — even if the baby was born alive at a shorter gestation, and then dies after birth, they don’t count it in infant mortality numbers; it’s counted as a miscarriage.
Similar to our standard of living. We get downgraded on health care, for instance, because it’s not provided through the government, even though we have the best health care system in the world.
We’re even more awesome than the numbers say!
I’ve got news for you, Dean. We may have the ‘best’ health care system in the world when judged by equipment, techniques, doctors, nurses, or whatever, but we also have the most expensive system in the world. That expense means that a very large percentage of our citizens, who do not have health insurance through their jobs (and that’s a large percentage), really cannot afford health care. I just returned from New Zealand, and although they may not have the ‘best’ system, if you have a problem it gets handled. Maybe not as quickly as in the US, but you don’t have to lose you house over an illness. It is a fact that the major reasons for foreclosure for non-payment of a mortgage are illness and job loss. Yeah, we’re awesome alright.
Don’t worry im sure the next president (Hillary or Obama) will try and fix that for you. Buy the way I still don’t understand how anyone could think the goverment can or will do anything better than private industry. Only thing that will happen if the government takes over health care is the government going bankrupt even faster. Say goodbuy to more of your paycheck.
Once again, health care is a privelege not a right. Since it is not a right, the government has no business providing it.
SteveH,
First off, my name is Deon, not Dean. I’m a chick, for crying out loud!
Second, our health care is so expensive because we subsidize the entire rest of the world. All those free drugs to Africa, all* of the pharma development, all of the equipment development, the overwhelming majority of new techniques, procedures, and diagnoses. For that matter, the superior emergency care, epidemic control, and disease prevention that we do both here (indigents, illegals, and poor folks from the elderly to college students) and abroad is something that isn’t available anywhere else. (Ever question why Canada and China had massive problems with SARS and we never had a outbreak? Crappy, disease-incubating hospitals up to the north, man. We have this little thing called “adequate sanitation” and “quarantine.”) We INVENT medical care, then we give it to the world, often for free. And our services here are available to them. When anybody needs help — dental repairs, angioplasty, cancer treatment, and knee replacements — they come here because the best they can hope for in their own countries is a waiting list. (Hint: in the early 2000s, the prime minister of Canada came here for routine heart surgery.) Of course New Zealanders don’t lose they’re homes — you just admitted they’re not getting treatments! If they had a life-threatening illness and the best they could hope for was a merciful bureaucratic action, I’m willing to bet they’d mortgage their home in a heartbeat for a chance to live.
Thirdly, before you go to far down that rosy path, the overwhelming majority of people are not losing their homes because of medical expenses. Before the mortgage crisis, only 1% of the people who filed for bankruptcy cited medical expenses as the reason. The problem is profligate spenders. There’s not a medical cause or solution to that, so quit trying to use the greatest health care system on earth (as in — the one which treats people and does it effectively) as an excuse.
This country is awesome. For the moment at least, and with room for improvement, we are the most propserous, free, independent, and optimistic country on earth. We have setbacks and problems; this economic thing is nothing to sniff at. But we have had at least four major depressions in our history and seven recessions; we’ve had 230 years of peaceful and adversarial government. More importantly, we have a cultural inheritance of being free and independent individuals.
No matter how bad it gets, I am holding out hope that we will return to our roots, and those roots are the greatest in history.
As long as the government can stay out of the way, and God willing get even more out of the way, we’ll be fine.
That said, if you don’t think this place is awesome, go back to New Zealand, Canada, or wherever else meets your standards. Negative, hate-filled, blame-someone-else people are never a solution to anything.
* I don’t literally mean all; it’s within a rounding error. Other countries do stuff, but absolutely nothing comparable to what we do, so I’m ignoring it.
So, health care is a privlege? Like, for instance, grade school education?
My general opinion is that it’s in all of our interests that each one of us has access to everything necessary to become and remain a productive member of society.
We can argue about the implementation details, but without this common ground debate is meaningless.
If grade school education were regarded as a privilege, disruptive kids could be kicked out, and those who remained afterwards would get an actual education instead of a dumbdown babysitting.
Bingo, Troy!
Deon - that was wonderful. You summed up how I feel about the U.S. Thank you.
“How is the US ’still the best country so far’?”
I judge it based on the number of whiners that, despite their complaints, find it very difficult to pick up and move to another country.
“Second, our health care is so expensive because we subsidize the entire rest of the world.”
Flat out not true.
You are subsidizing lobbyists and drug companies, insurance companies and middlemen. America is not the loser in global health (you make a lot of money from it as a country), but American citizens don’t get what they pay for.
“By what measures is it the “best”?”
It was probably a general comment…as in “off all the countries to live in, I’m glad to live in this one”.
Do either of you know of a country you would rather live in, or one that you consider best? If so, let us know.
Also, besides having friends and family here (assuming you reside in the US), why remain here? Why not try to emmigrate to the “best” country on *your* list?
Then go home…your anti-America-at-all-costs posts are frequent and tedious.
The really scarry part is that their kids are going to be tomorrow’s leaders!
I think American is riding a little bit on past steam as being the best Country ,but certainly I think we have the best Constitution and potential for people under a free market economy to get ahead,(or we use to ). What is troubling me is that our laws are not being enforced and my memory of American has always been of a time where Law and Order and individual rights was a high priority .
I don’t like the fact that the middle class seem to be going downhill financially for all the reasons that we discuss all the time . I just think Nations that have a strong middle class are somehow stronger than ones that don’t.There are a lot of problems to be solved in America right now and I believe America is a great Country and I have not given up on America.
“I think American is riding a little bit on past steam as being the best Country ,but certainly I think we have the best Constitution”
Wizard, you are wise. Your constitution is really wonderful and I think you are just going through dark days. You won’t be alone, I think!
I don’t understand the whole “best country” thing. I took crackerjim’s post as just a declaration of love for his country. There are many beautiful, wonderful (and free! yes, free!) countries in the world. I can think of about 12 countries I would be happy being plonked down in. America is one.
The idea of being anti-American is unique. Ever heard of someone being anti-Swiss or anti-Indian?
I am super grumpy with my hometown right now, but deep down I luv it.
Thank you for you warm post ella.
Best Constitution? Are you high? Electoral college? Legislatively drawn winner take all congressional districts?
3/5 of a black guy is actually a person? Hello?
They got the bill of rights correct. Almost everything else is crap.
Can you name one that has lasted longer in modern times? A similar one in ancient times? Of the things you criticize, can they be changed/have they been changed (hint–yes.)
Hard to find real high quality controlling government documents, IMHO, and I think the U.S. Constitution is one of the better ones.
“This country is loaded with irrational idiots,”
NEVER FORGET! The leader sets the tone… works for companies, wroks for families, works for the country.
Only 10 more aganizing months till Jan 20, 2009
And the only thing I hope for in this next election is that there is a decisive winner. I don’t want to hear anything about election theft or wrongdoing. We don’t need another moveon.org . Just give us a clear victor, whoever it might be of the 3.
Sorry, david cee, but Jan 20, 2009 won’t end your agony. The Democrats will never seriously cut military spending. Just like the Republicans never seriously cut entitilement spending. They are simply two facets of a larger thing - the military-industrial complex that controls this country, its press and its elections.
Do you hate Bush with a passion? You’re doing what they want you to do. The ones that hate Hillary with a passion? They’re doing what the PTB wants them to do also. Which is to always think along the lines of the two parties as the wrestling giants that control our fate. And most of the public is like the people who tune into WWF wrestling and get all excited, and shout and cheer; wanting the “bad” guy to finally get beaten by the “good” guy. You don’t need to vote for Republicans or Democrats for President anymore, you know. Diebold will spit out the answer for you later. Could it be the pink sock puppet with the sewn-on button eyes, the blue sock puppet with the sewn-on button eyes, or the black sock puppet with the sewn-on button eyes???
Oh, the suspense
Agree the D’s won’t cut mil. Agree the R’s won’t cut entitlements. Ah, but McCain, not a real R, and certainly not a D. He’ll cut entitlements or die trying. Probably the latter. I’ll vote for him and hope for the best.
“‘If you don’t need to sell, you’re better off to stand aside and letting the foreclosures clear out,’ said Mike Collins, of Collins Realty in Stockton. ‘Then we will see a significant bounce. False bottoms are getting created now by the bank-owned properties and to some extent, even by builders who are dropping prices dramatically and offering incentives to sell their properties.’”
False bottoms? This guy is delusional with his rationalization. Mortgage lending standards have corrected faster than house prices. The lower prices he’s seeing are the future, sellers just having come to grips with it yet.
His argument relies on the assupmtion that the HBs are weaker than individual FBs. That’s hilarious - after all who has been fleecing whom the past ten years? And they are writing down land and materials for the sheer fun of it?
His argument really relies on people actually wanting to live in Stockton. Nobody wants to live in Stockton, which is why the walk-away foreclosure rate is something like 40% of homes in the area.
“Some real estate agents say lower prices have brought in new buyers, and the housing market will start appreciating by year’s end.”
With more subprimes resetting thruout the year and then months of foreclosures, auctions,going to reo.Not to mention the job losses and other credit woes.
What planet is this guy on?
Same laughable Cr@p , different day…Just pathetic….
RE agents are putting on their sunglasses as they see the dollar commissions coming this spring/summer. Please don’t disappoint them. Buy . The prices are going up!
So many houses..so few bigger FOOLS.
What’s a poor knifecatcher suppoused to DO…with a friggin HOUSE ???? …like…LIVE in it ???
Sorry to go off topic, but could someone explain the following comment from Ben from this morning? (by the way, this is a sincere question, not a snarky one). Thanks.
” Comment by Ben Jones 2008-03-09 09:23:32
It could be that the reason GSE debt is being rejected is due to the new conforming limits. If Washington isn’t careful, it could be treasuries next. Every action has a reaction. IMO, the government and the Fed are not all powerful.”
Well, Ben could comment and explain it, but I think he’s pointing out the ramifications of the congressional increase in Fannie and Freddie’s loan limits.
Investors are demanding a larger interest rate for Fannie’s bonds, which is another way of saying that the investors think that the bonds are higher risk than before. One possible reason that the investors need a higher interest rate is that the larger loan limits might lead to increased rates of default.
And if Washington isn’t careful, then investors might do the same to treasuries, increasing the cost of servicing the federal debt.
(And all are reasonable statements in my opinion. The general loss of confidence in mortgage-backed securities is also a contributor to the higher interest rate.)
It means, we are effed.
thanks.
IMO, he’s referring to the fact that late last week the secondary market turned dramatically against GSE paper. The spread between 10yr treasuries and GSE backed mortgages widened to a level unseen in many years - for now, crushing the idea of cheap conforming jumbo loans.
The market’s sudden repricing of GSE risk could be a collective vote of no-confidence in the GSE’s role in taking on the higher conforming loan limit. So far. it looks possible that the GSE’s entry into this high-end market may end up raising rates for all home buyers - not just Jumbo. Exactly, the opposite of what Washington, Wall Street and the FED had in mind when they dreamed up the scheme. Therefore, the Gov and Fed are not omniscient nor omnipotent enough to control this mess.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/03/09/BUI3VFD7R.DTL
People will keep hitting the credit crack pipe until it’s totally gone. Im still seeing sfh’s in central LA going for $1mil+ easy. I still see new luxury cars lining the streets of apartment-only neighborhoods. Gas is pushing $3.50 for regular even at the cheaper stations. The dollar is tanking. This year’s gonna be one for the record books indeed!
It will be one for the record books.
Almost certainly a record for layoffs since WWII in 2008.
Oil prices? I don’t think we’ve quite it hit the peak. So another record.
J6P will buy those luxury cars as long as they can.
Got Popcorn?
Neil
“I still see new luxury cars lining the streets of apartment-only neighborhoods”
Us renters are the only ones left with any money…
Don’t be confused. Those renters can’t afford those cars either. They are overextended on their credit cars to make sure they can afford that BMW.
test
The FB’s are getting NASTY
“Some real estate agents said they have seen serious, costly damage in foreclosures, ranging from cement flushed down a toilet to holes drilled into the home’s foundation.”
A lot of tradespeople participated in this bubble - someone with that kind of knowledge could probably muss up a house pretty good. Be careful out there any lurking knife catchers.
EWJ - You need talent to create something, but any idiot can destroy it.
Currently, approximately 2% of all mortgages are in foreclosure and another 6% are delinquent. What per cent of these delinquent mortgages will be brought up to current status? 50%? 20% 10% or less?
What per cent of currently good loans will become delinquent in the next two years? 5%? 10%? 20% or more?
Under worst-case scenarios, it is not hard to foresee the possibility of a nationalization of the banking system, an end to economic freedom, and communism.
“…it is not hard to foresee the possibility of a nationalization of the banking system”
Nationalization? Try bail-out. The U.S. practices socialism stood on it’s head . Private profits - public losses.
Follow-up to my last post: I think of the three candidates Obama as president would be the least uncomfortable with the idea of the U.S. morphing into communism. I also think his supporters are probably somewhat more sanguine about such a possibility than the supporters of the other candidates.
Communism? Obama?? Huh? Did you pick a bad week to give up sniffing glue?
Under Dick Cheney I think we have moved much closer to a totalitarian form of government. Torture, phone taps, asking fireman to report suspicious persons, holding people for years with no charges, government officials having no qualms about lying to the public(how come nobody mentions the Anthrax terrorist anymore? Did we stop looking for them like we stopped looking for bin Laden??). Heck, now a days you don’t wear an American flag lapel you are labeled unpatriotic.
I think McCain is the most comfortable with the way things are going. 100 years war in Iraq, bomb Iran. He will continue the current policies.
Ironically, if Hillary becomes president. Dick Cheney will have made her the most power president since FDR.
“Under Dick Cheney I think we have moved much closer to a totalitarian form of government. Torture, phone taps, asking fireman to report suspicious persons,”
How about a $hitload of NYPD standing around at tables at the subway entrances staring at women and laughing and talking? It doesn’t make me feel any safer. It seems like a big waste of time that could catch some 19 year old co-ed with a small bag of weed but not much else.
WTF? You must be a crony of Turd Blossom, floating inane gibberish like that. Why don’t you back up your crazy talk with some facts? It’s like me saying that McCain supporters are sanguine about a Corporatist/Fascist state.
“IN an election year, Americans behave somewhat like primitive people at the time of the full moon” –Harry Truman
“Some real estate agents say lower prices have brought in new buyers, and the housing market will start appreciating by year’s end.”
These people are such scumbags, they’ll say anything to get a commission.
“lower prices have brought in new buyers” = true
“housing mkt will start appreciating by year’s end” = false
“[real estate agents] are scumbags” = true
“say anything to get a commission” = true, but what’s behind the rosy forecasts goes way beyond just this commission or that commission. I think some of them truly believe the persistence of falling RE prices is all due to negative publicity.
“‘The problem is what (some) people paid for their loan was way too much relative to what they could afford,’ he said. ‘Changing the terms of the mortgage doesn’t change the fact that they can’t afford the mortgage.’”
Changing the terms of the mortgage could bring to light how right Thorberg is on this point. You can’t take someone who was in an exotic loan (e.g. minimum monthly payment on an interest-only option ARM) and put them into a traditional loan (e.g. 30 yr fixed) at anywhere near current interest rates without making their monthly payments increase.
Good point. Thanks for that.
What kind of environment describes what we have in the US today — falling house prices, falling dollar, reducing interest rates, falling CD and other fixed income rates, but rising food prices, rising energy prices, rising commodity prices and unstable stock market? Is this deflation, inflation, stagflation?
“What kind of environment describes what we have in the US today?”
Well, I reckon if your name is either arroyogrande or Eudemon, you probably think is the best economic environment in the world.
hondje, I bet you haven’t a clue what the word *eudemon* means. Go look it up in a dictionary.
depression?
It is most certainly very depressing for a few million people so far, and I am afraid it will get to be a lot more depressing for many millions more before there is some kind of resolution.
” … I am afraid it will get to be a lot more depressing for many millions more before there is some kind of resolution.”
The 3-5-08 WSJ has a chart showing current and projected number of homeowners with negative equity.
The chart shows about seven million in 4th Quarter, 2007, peaks out at at about 13.5 million in 2nd Quarter, 2009, then slides downward to about 8 million in 4th Quarter 2010.
FWIW.
“Is this deflation, inflation, stagnation?”
It’s confusion, IMO.
Gold bugs with money are bidding up the price of gold. Commodity bulls with money, are bidding up the prices of commodities in general.
Those who sense social disruption and have the money are stocking up on food, guns and ammo.
Some of us are going to cash and plan to wait out events.
Others with money or access to money plan on jumping into stocks and real estate because prices have declined therefore the bottom must be near thus this once-in-a-lifetime buying opportunity will soon be gone hence one must ACT NOW!
As I said, confusion.
Conflagration?
The calm before the storm??
“‘I’m not looking at a home for an investment. I’m looking at a home for a home,’ said Beck, who said she plans to keep her 4-year-old twin daughters and 8-year-old son in Oceanside schools through graduation. ‘I won’t be ready to sell for the next 12 years, so it doesn’t matter if prices drop some more.’”
This is really amazing. Suppose someone stole $50,000 from her (much less than the effect of recent home price declines on many SD households since 2005). Would she be saying “it doesn’t matter”? Why is a (potential) loss on a home’s value such an inconsequential matter, given the magnitude of price declines seen lately?
Beck doesn’t know what the magnitude of the price declines are in SD PB. That is why she is out shopping for a house right now. Occasionally, one of these dimwits accidentally wanders onto the Piggington site and starts asking really stupid questions and then gets roasted after pitching a fit because no one there (other than a couple of realtards) will encourage them to go out and buy. It is quite entertaining.
Today, on Mare Island, homeowners in danger of losing their property are getting help from real estate experts
RealEstateExpert says:
- if you have equity, sell now
- if you do not, walk away
- if you are looking to buy, hold off until mortgage payments are less then rent
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“Still, he doesn’t fault them. ‘Most folks are decent people,’ he said. ‘They just wanted a little more, but it didn’t work out for them.’”
Lot of stupid people are decent people and vice versa. It doesn’t help when we have a propaganda machine whose sole purpose is to turn as many decent people into doing stupid things, e.g., speculating at the wrong time, or near the worst time for the asset class.
Jas
Nope!
They are not decent!
They are stupid greedy lowlifes who did everything they could to drive up the price of housing for everyone else. They singlehandedly ruined entire neighborhoods. They breed and infect the world with their cretin offspring.
They deserve nothing but contempt.
“Economist Christopher Thornberg makes the point that Fannie and Freddie have a rule that says no more than 35 percent of gross household income can be spent on the mortgage.”
Deja vu from the 90’s. That’s when prices started dropping in earnest because the lenders had standards again. I bought in 91, and the market dropped 4 years after that. Not making that mistake again.
Does that 35% in taxes (T) and insurance (I) or just the P&I (principal and interest)?
Either way, is 35% too high?
Is there a breakpoint? Meaning is 35% ok if you make $100K, but not if you make $50K.
I always thought 35% was more of the total debt number, rather than the frontend number.
Found the recent Jumbo Lending Letter on Fannie’s web site - kind of a tough read.
Some highlights:
Debt-to-Income Ratio - 45% maximum (includes PITI, with other debt)
Minimum FICO® Score - 660 (with 20% down-payment)
Reserves - Primary residence: two months’ payments
Jumbo (Loan Level Adjustments)
Fixed Rate .25%
ARM .75%
Fannie Mae’s Declining Markets Policy applies to mortgage loans with LTV, CLTV, or HCLTV > 75% (higher down-payment required in declining markets)
All ARMs must be qualified based on the fully amortizing payment (PITI) at the higher of the note rate or fully-indexed rate
All loans must be manually underwritten
https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0805.pdf
Still seems like anybody with a pulse could qualify for that loan, unless it requires a downpayment which wasn’t mentioned in that list.
Left that out because I couldn’t really understand it.
It looks like a minimum of 20% down for most borrowers (more in depreciating markets)
However, those with FICO scores well over 700 may get by with 10% down in some cases. Also, forget it if you’re FICO is under 660.
actually the new super-jumbo standards are so strict I can’t even qualify, which makes me happy.
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“False bottoms are getting created now by the bank-owned properties and to some extent, even by builders who are dropping prices dramatically and offering incentives to sell their properties.’”
True, whatever bottoms are being created are false bottoms and wouldn’t last for long. Falser bottoms later this year and then the bottoms that will put the falser bottoms to shame.
Great times ahead for bottom lovers.
Jas
“Great times ahead for bottom lovers.”
Like a loooooong Benny Hill episode.
“In Reyes’ case, two companies have placed liens totaling $7,000 on his house.”
I didn’t think that would be allowed. You learn something new every day, I suppose.
Jas
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“She said she is tired of dumping $2,000 a month in rent into a property where she cannot paint the walls.”
There are thousand ways to talk oneself into buying a house, Becky, I mean Julie.
Jas
“…the Barneses decided enough was enough and took the home off the market. … ‘No matter what, in two years we’ll definitely put it on the market again..”
“‘…If you don’t need to sell, you’re better off to stand aside and letting the foreclosures clear out,’ said Mike Collins, of Collins Realty in Stockton.”
pent-up supply.
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‘Changing the terms of the mortgage doesn’t change the fact that they can’t afford the mortgage.’
Viola! Why can’t Fedsters and politicians figure that out?
The foreclosure problem is a price decline problem and not one of rearranging the terms of mortgages.
Jas
Jas - we had nearly identical posts at the same time (below) Yours didn’t appear until after I posted. Hearing the twilight-zone theme in my head now.
Hey Jas, who the hell is this Viola to whom you refer?
Thornberg, “…Changing the terms of the mortgage doesn’t change the fact that they can’t afford the mortgage.’”
Yahtzee!
I would like to cut to the quick on the issue of suckers buying into this inflated housing market over the last two years.
First, I would like to say that the internet was not my first, last or primary source of information. I thought I was educating my self and staying current with what was going on by watching the cable programs, ABC, NBC and CBS news. I even supplemented this info with the info provided by the local PBS stations in SoCA.
The sad thing is that all these, imho failed to warn me of what was happening in the economy on a macroscopic level., ie., that the level of America’s debt at all levels from the individual to the FEDgovt is/was overwhelming. Every institution nor only did not report the consequences of our situation (with some rare exceptions), but they did not express concern as to the current situation and its effects on our individual lives (as we are staring to see now).
I hate to say it, however, the MSM was not screaming from the roof tops we are one step away from a financial nightmare that no one to this day is aware of.
It doesn’t help that are political leaders and FED says not to worry, all is contained.
I am afraid that the USA is totally Sc**wed, and there is nothing that we can do about it (except those on this site who have made efforts to protect themselves), except suffer.
If the times get really bad, I do not thing the rich or those who causes the mess will be able to find a place to hide.
Lost control . Man can I relate to what your saying . I just don’t think that in my lifetime I have ever seen the selling of a product (housing and credit debt )be so pushed without any challenge by the experts, or the MSM ,or the regulators ,or the politicians ,or anybody that got news coverage during the boom . I really don’t remember Real Estate sales people being quoted as “experts” so often in the news without challenge either .
My question is ….Are advertisers and product pushers (Corporations ) this powerful that even the so-called neutral journalist this black-balled and muzzled because of this power of special interest groups these days ? Look how long it even took for some truth to come out about housing problems and a possible recession .And all this talk about everybody
“missing it “,including CEO’s ,regulators ,experts ,economists ,lenders ,Greenspan ,and on and on . Have you ever seen so many people in authority “miss it ?”
I saw the handwriting on the wall by the raw data in late 2005 ,yet it took until late 2007 for a more widespread reporting on the meltdown .
I know that people on my old block started asking the question about who are these people that can afford these high prices (about late 2004). When I asked my real estate agent who are these people who would be buying my house ,that agent was stuck for a answer . Every time I tried to inquire about the current state of loans ,I got the run-a-round from the so-called professionals .At some point I told my agent that I would not tie up my house in escrow with someone that didn’t qualify and I wanted to look over the income statements of the buyer myself .As it turned out someone came in and bought the property for cash ,so a loan wasn’t involved . If it wasn’t for this blog ,it would of taken me a lot longer to find out the answers that I was seeking ,( I was retired so I wasn’t in the know about what had been going on in loan offices ).
What really scares me is this idea of a powerful groups controlling the free flow of truth and information . When I think back ,I remember that real estate commercials and housing related commercials were on all the time during the housing boom . I got sick of Di-tech commercials saying everybody was competing for my loan and Di-tech didn’t require the normal paper-work .I should of know something was up . When I saw “Flip that House “,for the first time in early 2005 ,that is when I said to myself …….”OH MY GOD…that’s where part of the housing demand is coming from …..OH MY GOD “.
“If the times get really bad, I do not thin(k) the rich or those who causes the mess will be able to find a place to hide.”
I think those guys will work their spin in such a was as to portray themselves as the good guys.
Mazillo, for example, will be protrayed as the champion of the little guy, the one who was forever locked out of enjoying the American Dream. Our hero Mazillo came to their rescue; it was “unforseen events” that screwed up the works, and Mazillo was as much a victim as anyone else.
I don’t think you looked very hard at PBS. I agree MSM was and is crap, actually worse than crap given consolidation and who owns it.
NOW on PBS did a great job educating me. I remember each of these shows. It’s what made me sell my house in 2006 and start renting.
2004 bankruptcy and the death of the middle class
http://www.pbs.org/now/printable/transcript306_full_print.html
Chris Thornberg interview 2005 – This is a great read
http://www.pbs.org/now/transcript/transcriptNOW134_full.html
The new Bankruptcy laws 2005
http://www.pbs.org/now/printable/transcriptN0W112_full_print.html
A bit more
Here’s a bit from 2003 bubble talk
http://www.pbs.org/newshour/bb/business/jan-june03/bubble_1-3.html
Here is a f
Essay on affordability and housing
http://www.pbs.org/newshour/bb/business/july-dec06/housing_10-11.html
Nice article on rolling back regulation on business and enforcement.
http://www.pbs.org/now/printable/transcript349_full_print.html
http://www.pbs.org/now/printable/transcript_rules_print.html
http://www.pbs.org/now/transcript/315.html
Thanks ,good reads measton . Goes to show that a few voices were trying to wave the red flag including Ben Jones of course .
I was at a Centex site in Woodland (near Davis, CA.) and there was a 4br, 2420 sq ft house I liked. It was:
1. Listed for 374k and 10% unadvertised discount bringing it down to about 342 - hell, make it 350k with closing costs.
2. They were willing to give 5k towards closing costs if I went with their approved mortgage provider.
http://www.centexhomes.com/Sacramento/376409_Plan.html
Apparently, they say they’re doing quite well, have a lot of deposits and so on. Of course, they’re also willing to pass on a future price reduction to me if I ink the dotted line.
I can put down 150-175k cash down and doing the math on 6% 30yr fixed mortgage + insurance + everything, it came out to around $1800/month in payments.
Right now, the rent in Davis (nearby college town) is $1000 for the CHEAPEST 2br apartment. So it would explain why people would be willing to buy at this point - they are already paying almost that much in rent!
At what point, should I put my 175k on the table and buy? I am not a flipper, we need a home.
Btw: I’d assume there are a lot of people out there right now looking at the situation the way I’m seeing it - the cost of buying a “dream home” is close to the month to month rent. From a RE perspective, can this be considered the “right time to buy”?
Now, one can say that no house in Woodland (zip = 95776) is worth 350k - it is largely a blue collar working town. I could agree with that except for that a lot of people from nearby Davis like it and see it as a means of staying close to their hometown/collegetown where they’re locked out of buying because the prices there will never drop.
So what’s the collective wisdom on this specific example?
wait. If at all possible buy in Davis, not Woodland.
Davis is Davis - no new construction, not affordable.
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AR,
BTW, I lived in Davis for a year (1978-79) during last year of my Ph.D. (my prof changed universities) and have fond memories (three knockout vet girls from San Louis Obispo as neighbors). I remember bit of Woodland.
My advice is to wait because deals will just keep on getting better and better. Don’t fall for some bounce in prices. You wouldn’t believe prices in 2010 and that includes Davis.
Jas
Jas, in what area did you get a PhD?
–
Video compression. I am the humble inventor of the basic building blocks of MPEG. It is in daily use around the world.
Some of us crackpots crank out few good ideas every now and then. Cisco’s VoIP has yours truly’ patented algorithm (owned by Cisco as I was an employee) and code. My ex-boss (and a very good friend) told me that three attempts at rewriting my code have failed (they wouldn’t work).
Jas
The flaw in your argument that “they are already paying almost that much in rent” is you discount what the $175K could be doing for you if you did not buy the house. I don’t put anything down to rent at 1500/mo and you put down $175K to buy at 1500/mo, you lose as long as 175K working in the markets or in bonds outpaces your home appreciation minus maintenance.
Good point, Wheatie. And I don’t think our prospective buyer made any allowance at all for maintenance.
In a world with no credit the man with $200K will be king.
Though to be honest I’m looking at buying in Fresno now. If I can get what is listing at $500K now at $440K, I’d move. Prices might fall on this back to $380K, but I’d rather leave $60K on the table rather than see prices head back up into the $600ks.
Best time to buy is when the flippers and speculators are out of the market entirely. 2008 certainly qualifies.
Unless you’re looking at really grand estates in Fresno (with an orchard, or course!), you’d be overpaying at $380K or $280K, and may be overpaying at $180K.
We are in recession and it will be getting much, much worse!
$380K is A LOT of money. We’re talking Fresno here (BTW, my dad lived in the Central Valley, and I’m actually in the process of selling some land there right now — so not trying to be snotty about Fresno).
AR - I would advise against it for several reasons:
1st - The zip your looking at is in free-fall (latest Yr-over-Yr median from DataQuick below)
Woodland 95695 $316,136 -11.8%
Woodland 95776 $286,000 -21.1%
2nd - Median is still way out-of-line with incomes. Median income for a household in the county is ~$44,000
3rd - Putting $175K down (51%) is alot of money (should factor in the opportunity-loss costs on that as well) Add an opportunity-loss cost on $175K at 5% to your real cost (~$8750 - ~8 months rent right there)
4th - With more conventional down-payment (10%) your montly PITI is ~$2450; which doesn’t compare favorably with current rents.
5th - The housing market is going to get much worse before it gets better - most ARM resets are still in the future.
Finally, Ask yourself, “Can I financially or emotionally handle loosing $175K?”
Thanks for that analysis! Call me stoopid or whatever, but most people, me included look at the final monthly payment esp. in the context of how much they are paying to rent and ignore all the other data (which no REA will talk about - county income etc etc).
For sure, I’m not even buying anytime before mid-2009 (if I have a job by then in the recession!!).
I wanted to get everyone’s thought on when is it the right time to buy - and apparently NOT, all factors considered, when the monthly payment on the house is very close to the rent paid.
AR - As you know, REA is not a good source of objective information. Good move though - checking out this blog. I would continually check-in with this community before making any real estate decisions.
Yep, I’ve been lurking here for all of 2007. But I’ve always tried to ask myself - “when is it a good time to buy” and answered it with “when it is slightly more than my rent” (because we all have to live somewhere). But yes, you folks are correct - I didn’t factor in that opportunity cost.
Btw, the “RE expert” friends were all saying summer of 2007 was a great time to buy. NOT!
don’t count on the builder making up the difference when the price falls, the builder will just say “I’m sorry, the language in the contract was for xxxx sf, the homes we are selling now are not comparable, they are xxxx sf smaller, and don’t come with a yard” etc. If you can get them to rewrite it $/sq ft, then its worth something, but the builders are pulling the wool over your eyes.
Just wait until 2nd quarter 2009 AT LEAST, do you really like buying depreciating assests.
AR - As you know, REA is not a source of objective information. Good move - checking-out this blog. I would be sure to check-in with this community before making any real estate decisions. (may be a duplicate post)
“when the monthly payment on the house is very close to the rent paid.”
You can’t look at it that way…at least not in a vaccuum.
If you found a $1,000,000 in the same area, and could afford to pay $1,000,000 cash, should you buy? The monthly payment (not counting taxes, etc.) would be…ZERO! Cheaper than renting!
But wait…if you invest that $1,000,000 in a treasury backed money market fund (at 2.78% yearly interest), you’d be making $27,000 a year on that money…$2316 a month.
That is an opportunity cost. Do this calculation:
(marginal) cost to own = principal payment + interest payment + property taxes + insurance payment + maintenance - tax savings
(marginal) cost to rent = rent payment - interest you make on money you would have used for down payment
I put “marginal” in there because there are still some other factors, including principal pay down (*might* be a plus for buying assuming prices are stable), standard deduction on taxes (makes renting less of minus), etc., etc., etc.
And are we talking a fixed rate loan? An ARM? An I/O ARM?
We’re talking 30 yr fixed.
Fair enough.
My whole calculation in waiting it out isn’t all that math you’ve done (yes, I know, I’m not financially smart) but the basic consumer instinct that “if i can get this for cheaper, why not?”
$175K in Aust or NZ govt bonds pays you about $10K/year
What if you have to sell ?
Most people don’t have 175K to make a down payment so right now consider that a gift to the person who buys your house.
I’m interested in buying your home at a later date for 200k.
I’ll wait and thanks for the 150k when you take a bath later.
Mark to Modesto
“More than 200 homeowners met with mortgage lenders and financial advisers Saturday in Modesto to discuss ways they can avoid foreclosure and keep their homes. Norma and Moises Robles of Riverbank were among them. They refinanced their home loan a year ago, but they didn’t understand the terms of their new adjustable-rate mortgage.”
I am still amazed at what people consider “affordable”. It’s as if they ignore all other expenses and possibilities in life and assume you can get by spending upwards of seventy-five percent of income on housing. Will this attitude change now that the home is no longer a retirement fund or an ATM? Or that credit card debt is being limited, even cut off?
Fannie and Freddie mandate 35% as the maximum mortgage cost to gross income ratio. They also require large downpayments (20%?). Ignoring that practically no one has 20% of anything lying around, who can really afford 35% of gross income these days?
Assume you earn $50k per year. You think you can afford to pay $1460 a month in mortgage? That is about fifty percent of your net income. Now start paying for gas at 75$ a week, food for you and your family, car payments, health insurance, utilities, clothes, maintenance, real estate taxes, etc. Tell how much is left over? Ten bucks? One hundred bucks? Maybe.
So now you are saving maybe $1200 a year to pay for vacations, uncovered medical bills, your kids education, and your retirement. And this is optimistic.
Tell me again how much you can really afford to buy.
You are right, LongtimeExpat. It sucks. It is hard to stay wise in an inescapable sea of fools.
Here is a story about my family that is similar to what I read here, But with a little twist. I will spare you the details since they are so similar to a lot of the other stories I have read. I live in southern California and in my family one has been foreclosed on in 2007, one is falling behind on payments and one is struggling after multiple refi-ing on a house that cost 105k originally and they now owe 650k. In all cases, my family members have hinted in roundabout subtle ways for help. But I would not nor ever intervene. They spun their own web, and even though I could and thought about it hard, I will not ever buy them out of their troubles. I am fortunate, but am frustrated by my family’s lack of good financial sense. What is troubling is I am the; grandson, son, and nephew. Is it their income or choices that got them into their mess? I would have to say their choices. I consider us middle class. I guess they just wanted to get their fair share of the american dream pie. Greed is a constant tumultuous force within us all, so I can’t really be mad at them. I just feel bad that things turned out wrong. I do sincerely want to help them though and it bugs me that I don’t. And I won’t, because I just stop and think, if something was to happen to me and I couldn’t pay my mortgage, who could I turn to for help. Nobody.
Hopefully, the recent Fed rate cuts will cause ARM rates to go down at next adjustment, a little relief at least for those still holding on.
But I wonder- is the Fed rate cutting policy going to spell long term trouble for the economy? Especially if the cuts don’t pull us out of recession (or prevent it if you believe we aren’t already in recesstion), we could have much tougher times ahead.
Up here in Canada, our RE boom is still in full swing - in fact - it’s getting worse. They are overbuilding condos like mad. I don’t know who’s going to buy them all, because generally we follow your economic swings on a time delay.
That said, our gov’ts will be bankrupt soon on ridiculous social welfare spending - including out collapsing ‘free’ healthcare system - which is not free - it is paid for by being taxed to all hell. Our healthcare system may be available to everyone, but it also happens to be absolute crap healthcare. I’d take American healthcare any day of the week.
Don’t become like Canada - we are a Stalinst, socialist state and we have zero freedom. When RE collapses, it will be even worse for us. I can’t believe people are still buying into this market - it’s absolutely absurd! $500,000 FOR A BLOODY SHOEBOX SIZED CONDO, ARE YOU KIDDING ME?