Everyone Is Feeling The Squeeze In California
The Voice of San Diego reports from California. “For several months, the least expensive units for sale in La Boheme, a North Park condo project, were a handful of identically priced, one-bedroom, one-bathroom units on the third and fourth floors. But a few weeks ago, the units, priced at $183,701, gained some competition in the building, another one-bedroom, one-bathroom unit with six more square feet. It was being sold by someone who bought the condo new in 2006. The asking price: $166,000 to $168,000.”
“One price was set by the government as part of an affordable housing program. One price was set by the market. Which one is offering the lowest price? At La Boheme, it’s the market.”
“Because of government assistance and land-use regulations, about 40 of the units in the project were designated ‘affordable’ when it was built in 2006. That means their prices were, at the time, artificially lowered so that households earning under a certain income threshold could buy them and not spend more than 35 percent of their monthly income on housing costs.”
“In 2006, that formula spat out a price close to $200,000. But to try to compete in these market conditions, the builder has since had to lower the price even more.”
“Most of the market-rate units in this project once sold between $300,000 and $500,000. ‘There may have [once] been a $200,000 spread — but that spread is gone,’ said Peter Armstrong, supervising project manager for the Housing Commission. ‘They don’t have a competitive price advantage. But this dynamic is not unique to North Park or D.R. Horton.’”
“This is not the first time La Boheme has seen prices sink. In September, the builder auctioned nearly three dozen new units for discounts of about 30 to 50 percent from the original asking price. Then, some market-rate units sold less than the affordable ones were listed, about $200,000.”
“In La Boheme, the $166,000-priced unit is a short sale, a condo on the market for less than the owner owes on the mortgage, said the seller’s agent, Norma Santacruz. Her client was one of the first buyers in the building, she said, and she bought for $300,000 in 2006.”
The Union Tribune. “UCLA’s Anderson Forecast, which previously has been ahead of the curve in forecasting the downturn of the California housing market and the resulting decline in the economy, predicted yesterday that the state and nation would not fall into a recession.”
“The relatively rosy tone of yesterday’s Anderson Forecast is a marked change for the panel, which was one of the first economic groups to recognize the dangers of the housing bubble.”
“‘The data don’t yet add up to a recession, and there is nothing to challenge the basic story of sluggishness that we have had for two years. Don’t worry, be happy,’ said Edward Leamer, director of the forecast, the state’s best-known economic report.”
The Recordnet. “In the past, housing downturns have gone hand-in-hand with job losses, Leamer noted, while this time, there has been a disconnect between the housing market and employment.”
“‘The complete collapse of housing has come without a similar problem in the job market,’ Leamer said. ‘This time people are walking away from their homes not because they lost their jobs, got divorced or had health problems but only because declining home prices have turned their net worth in the house negative.’”
The Contra Costa Times. “The job losses in the state’s residential real estate sector still do not appear to be broad enough to trigger a severe economic contraction, Ryan Ratcliff, an economist with the closely watched forecast, wrote in a report.”
“California lost about 59,000 construction jobs and 32,000 credit intermediation jobs — which are primarily mortgage positions — during 2007. However, these job losses by themselves are not enough to trigger a recession, Ratcliff said.”
“‘With these two very junior partners, it’s very hard to generate recession-level losses,” Ratcliff wrote.”
The San Gabriel Valley Tribune. “‘Both statistically and conceptually, today’s economy is something new - stinky,’ economists Ratcliff and Jerry Nickelsburg wrote in their closely watched UCLA Anderson Forecast.”
“Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., agrees with the UCLA outlook. ‘We still don’t see that we are in recession. But for most people there is some extreme pain out there. It’s still going to be a very difficult year,’ he said.”
From USA Today. “Riverside, Calif., is at the heart of the state’s Inland Empire, an area that has attracted people in droves from costlier coastal areas but now ranks fourth nationally in foreclosures. Most of the housing boom, however, did not occur in the city but in communities to the east where foreclosures are mounting.”
“‘It’s having a ripple effect on our budget and city finances,’ says Riverside Mayor Ronald Loveridge. ‘Housing industry is not simply building homes. There’s less money being spent for new cars. … That’s had a powerful effect on the economy of our region.’”
“California cities rely heavily on sales tax revenues since the 1978 passage of Proposition 13, which caps real estate taxes. Riverside faces a $12 million deficit this fiscal year. ‘We handle that by essentially not filling positions,’ Loveridge says.”
“Riverside is adjusting the payment schedule of development fees to encourage construction and passed an ordinance requiring the upkeep of homes — even when in foreclosures.”
“The Press Enterprise. “What was once Kevin’s framing saw, is one of countless power tools lining the walls of Inland Jewelry & Loan in Riverside. In an economy hit hard by a housing crisis, out-of-work construction workers are pawning their tools and equipment. Some pawnshops have stopped taking tools because they have more than they can sell.”
“In a good economy, customers bring in high-class items for layaway. If it’s bad, they bring in the sentimental remains, ‘things they may not want to give up their first time around,’ said said Sam Shocket, owner of King’s Jewelry & Loans in Los Angeles.”
The Desert Sun. “Restaurant owners who’ve been in the Coachella Valley since the 1980s have seen downturns before. The waves come in 11-year cycles, they say.”
“‘Profit-wise, it’s the worst I’ve seen,’ noted George Argyros, owner of two viable mid-valley restaurants that attract families, senior citizens, service industry workers and the price-conscious travelers. ‘Everyone is feeling the squeeze.’”
“‘Right now, the industry is in a downward cycle, and we hope the bottom is going to be at the end of the year,’ said Tony Bruggemans, general manager of a Palm Springs business that his brother began in the valley 35 years ago. ‘People are watching their disposable income.’”
The Times Herald. “The Golovich family home in Vallejo survived more than 40 years of tragedy and triumph, but not the subprime mortgage crisis.”
“The El Dorado Street home is in foreclosure, said Nancy Golovich and her mother, Sheila Golovich. Everything is packed and ready to go, but just where is still unclear, the women said in an interview.”
“The home eventually went from a tiny two-bedroom to a four-bedroom, two-story affair in which the entire Golovich clan grew up, Nancy Golovich said.”
“Sheila Golovich said her husband died in 1997, and things got harder to cope with. She said she worked several jobs, including 25 years at a local mini-mart, and continued raising her five children and even some of her 10 grandchildren.”
“She refinanced the home a couple of times to get money for needed repairs, but always managed to make the payments, Sheila Golovich said. But the last loan ended up being a negative amortization loan, which only grew larger each month, and it seemed that the faster she paid, the more behind she got, she said.”
“‘About six months ago, I wound up with this loan, I don’t know how it happened, but I got so far behind there was no way to catch up,’ Sheila Golovich said. ‘I was appalled when I went into foreclosure. I’ve lived in this house since I was 19. I’m devastated.’”
“‘Everything is packed, and my daughter and her daughter found a small apartment and that’s where they are, but I’m still here. I’m staying until the bank makes me leave,’ said Nancy Golovich. ‘I keep hoping something will happen and I won’t have to leave.’”
“Sheila Golovich said she’s looking for a small place to rent and hopes to be able to send for her family, who she says she misses terribly. ‘At my age, I’m not going to buy again,’ she said. ‘But I’m strong and I’ll make it.’”
The Daily Breeze. “The slumping real estate market has brought Hawthorne’s housing boom to a standstill, interrupting plans for about 800 new luxury homes that were set to go up for sale this year.”
“Former Hawthorne Mayor Guy Hocker has canceled his plans to build about 100 single-family homes. Hocker, with a partner, bought the property about a year ago for $15 million. He received City Council approval to build the Prestige Villas in September, but, months later, he abandoned the project because of upheaval in the housing market.”
“Hocker said last week that he’s trying to sell the eight-acre parcel.”
“At the newly built gated community called Threesixty at The South Bay, the developer has stopped the sales of its 625 luxury condominiums on the site of the annexed portion of the Los Angeles Air Force Base.”
“On Monday, the development’s Web site stated: ‘Sales opportunities are temporarily unavailable while we give the market time to improve.’ The homes went on the market in October at prices from the mid-$600,000s to nearly $1 million. But all sales were canceled, and selling stopped this year.”
“A third planned housing development has also changed direction. South Bay Ford owner Gary Premeaux said he’s abandoned plans to build 164 homes at the former dealership.”
“‘I spent a ton of money to get the entitlements approved, which I got,’ he said. ‘The subprime housing problem is a cloud over everyone that’s going to be around another 12 months.’”
“City Manager Jag Pathirana said the loss of these housing developments will cause a budget shortfall for the city. ‘It is unfortunate that these projects have been temporarily halted, but this is to be expected in the current housing market,’ Pathirana said. ‘The temporary stalling of the projects will hurt the city financially.’”
“However, some projects in Hawthorne are moving forward. Fusion at South Bay, a project comprising 280 condominiums is nearly sold out, according to its advertisements. Representatives from Centex Homes, the project’s developer, did not return phone calls and e-mails.”
“A banner outside the development lists home prices beginning at $300,000, while they initially were advertised at $520,000.”
From KERO 23. “For the third time in just two weeks, authorities broke up a big party inside a recently foreclosed home. Sheriff’s deputies…arrested 16 adults for trespassing and cited 10 teens who were then released to their parents.”
“Neighbors said the home had been vacant for just a few days before the wild party. It was just two weeks ago Bakersfield Police Department officers broke up two parties at vacant and foreclosed homes. No arrests were made in either of those parties.”
From ABC 7 News. “The downturn in the real estate market means land trusts that buy and preserve open space are able to buy more land now. Since they rely entirely on donations, they can’t be as competitive when the market is hot.”
“Four thousand acres of ranch land in Contra Costa County, ranch land in Truckee and hundreds of thousands of acres of land in California have been preserved as open space through the Trust for Public Land, or TPL.”
“Reed Holderman, TPL’s western regional director says the market downturn allows them to snap up properties otherwise out of reach, like 365 acres along the Nashua River in New England, 27 acres in Portland, Oregon.”
“There, TPL paid a mere $4 million for what could have yielded around $20 million for developers who wanted to build homes. But with the housing market plummeting, the developers saw a safe out with an offer from the trust.”
“‘It’s all cash now, and when people have loans outstanding and want to move on and know that this isn’t where the market’s going, then we tend to get these better deals,’ says Holderman.”
‘The relatively rosy tone of yesterday’s Anderson Forecast is a marked change for the panel, which was one of the first economic groups to recognize the dangers of the housing bubble.’
When I first started this blog, Anderson was one of the few market doubters. It’s mystifying what has happened over there. And I don’t hope for a recession, far from it. I think it would be peachy if we could have this correction in RE and nobody gets hurt.
But I would suggest another possible interpretation of this scenario, and especially for California; how could one of the biggest booms in history not be followed by an economic downturn? And if that’s the case, prices have already made historic falls, even without a recession. This could mean that much more steep declines in housing prices are ahead, when the real slowdown occurs.
And this ones for you oaklandboy:
‘Riverside faces a $12 million deficit this fiscal year. Riverside is adjusting the payment schedule of development fees to encourage construction.’
We are entering an era of amazing desperation…
Credibility doesn’t mean much anymore, and utterances from the ivory towers of higher learning, helps soothe the masses worries, albeit on a temporary basis.
What others say
The UCLA Anderson Forecast says the economy will avoid recession. Here’s what other prominent observers have said on the topic.
* Warren E. Buffett, chief executive of Berkshire Hathaway Inc.: “By any common-sense definition, we are in a recession.”
* Lawrence H. Summers, former U.S. Treasury secretary: “We are facing the most serious combination of macroeconomic and financial stresses that the U.S. has faced in a generation — and possibly, much longer than that.”
* Jack Welch, former General Electric Co. CEO: “If I had to bet a dollar or two, I’d bet we’ll have a positive GDP in the first quarter, and the second quarter. But it certainly is a slowdown of enormous proportions from what we were experiencing.”
* Donald H. Straszheim, vice chairman of Roth Capital Partners: “It’s clear to me that the U.S. economy is in a recession.”
* David Rosenberg, Merrill Lynch economist: “According to our analysis, this [recession] isn’t even a forecast anymore, but is a present-day reality.”
LA Times
When Merrill Lynch says we are in a recession and the Anderson School says not, we have problems.
One [not so] minor point — Anderson is limited to California. The people you quote are talking about the US as a whole.
Which makes it even more comical, since Calif is obviously one of the epicenters of the housing bubble.
It’s one thing to adjust your position, and it’s another to arrogantly proclaim …
Don’t worry, be happy
Yes, why wouldn’t I be happy ? The home prices are dropping faster than anyone in REIC could have imagined/admitted.
And unless you are one of the countless people who are at risk of losing their jobs - teachers, construction workers, retail employees, mortgage brokers, bank employees etc - no need to worry. Yeah, dude, whatever.
“The home prices are dropping faster than anyone in REIC could have imagined/admitted.”
15% really is in the bag.
Like the “King of Siam”: etc, etc etc. It goes on and on. Sadly to say.
Why are you surprised by the change of tone? Anderson was bought.
“The Forecast Seminar, a quarterly forum sponsored by major corporations, state agencies, and local governments, gives members access to new developments in forecasting technology and software development. Seminar members include Western Financial Bank, Wellpoint Health Networks, Southern California Edison, State of California entities such as the Department of Finance, California Technology, Trade & Commerce Agency, and the State Controller’s office.”
UCLA Anderson School of Management
UCLA Anderson Forecast
–
“Anderson was bought.”
Yes, so were ECRI and The Conference Board that put out leading economic indicators. Their indicators scream RECESSION, RECESSION, but their economists are busy denying it.
I call these econ-meisters rogue economists.
Jas
Now all we need are some Potemkin Villages.
Hey Ben, I am here in Fantasyland. I want one of these anus miners to come to my work with me. Check to see what the attitude is, in the rosiest of all places, and then tell me we aren’t going to get a huge downturn. Jesus Christ may have walked on water but these dip$hits want even bigger miracles. They are going to be sorely disappointed.
NYCboy any comments?
In Peachtree Hills, one of the many neighborhoods of starter homes that sprouted around Charlotte this decade, 115 of the 123 homes are in foreclosure, Mitchell says.
“The 12 residents left there can’t sell their homes and now their property values have decreased,” Mitchell says. “It’s starting to be a symbol of what we don’t want to happen to Charlotte.
I know how to cut that down to $3,000,000. Someone should go ask the Riverside County Parks & Recreation Department to hand over the +/-$9,000,000 they are planning to spend at Jurupa State Park on RV camp parking and hold your hats………….
….
….
a minuature golf park……
I’m not kidding…. It went out to bid today.
“at Jurupa State Park on RV camp parking and hold your ”
That area called Jurupa is about 5% better than nearby roubidoux . It is a baking scorched barren +90 % area 8-9 months of the year, 100% bone dry with nothing to recommend it. There is a tiny shady pleasant park on northern side of Jurupa Hills but thats it.
There might however be a design by the city to put up some kind of RV park as i have no doubt that lots of former evicted or forclosed on and now homeless IE Fb’ers are probably existing in their RV ’s/ dumpy trailers day to day, and the IE will need lots of bulldozed lots converted to RV parks to stick these roving trailer gypsys.
The future demand in IE will be in cheaply manufactured prefab trailer homes plunked down on quickly bulldozed cheaply purchased lots, basially your standard run of mill trashy trailer park . Lots of acreage still available in the mostly wide open spaces of the IE .
The days of IE monstered- sized brown stuccoed red-tiled 3000-4000 sq ft energy- devouring 4-3 McMansions are over.
–
“But I would suggest another possible interpretation of this scenario, and especially for California; how could one of the biggest booms in history not be followed by an economic downturn?”
Ben,
I dug up some data for you and HBBers.
As you can see from the attached data below that the total Non-farm Employment is BELOW where it was 11 months ago and down from the peak 6 months ago. Job losses usually start several months into a recession. Also, the UR is up 1.1% from 4.8% in Nov’06 to 5.9% in Jan’08. Usually, an increase of 0.5-0.6% from the cycle lows means that the economy has entered recession.
The most likely date when CA entered recession would be Jun-Aug’07.
Jas
-x-x-x-x-x-x-x-x-x-xx-x-
January 2008 CA Employment Report
http://www.labormarketinfo.edd.ca.gov/cgi/databrowsing/?PageID=4&SubID=166
Date Total Nonfarm Payroll Civilian Unemployment Rate
Jan-08 15,150,700 5.9%
Dec-07 15,171,000 5.9%
Nov-07 15,159,600 5.7%
Oct-07 15,168,000 5.7%
Sep-07 15,169,600 5.6%
Aug-07 15,181,700 5.5%
Jul-07 15,192,700 5.4%
Jun-07 15,172,200 5.3%
May-07 15,161,700 5.3%
Apr-07 15,138,900 5.2%
Mar-07 15,178,200 5.0%
Feb-07 15,159,400 5.0%
What was very strange this morning in the San Diego paper was in one corner you had the Anderson article,But the headline was about the decline of the economy in the border area with less border crossings on both sides.The article had quotes from a Subway shop owner saying “no one is spending”.The downturn in border traffic is many reasons including less tourists going to Mexico and less legal workers coming to the US.The entire area around San Ysidro is slow.Add the forecloser rates in Chula Vista and surrounding areas and its no surprise there is a downturn.
It was just odd to have both those articles next to each other one kinda contradicting the other.
It’s pretty bad when Subway, one step above government cheese in my book, is too richly priced for the neighborhood.
I seem to recall UCLA denied the bubble for a long time, prompting Chris Thornberg to quit. Are they now reinventing history?
I could be wrong, but it was my impression that most the negative (correct, as it turns out) predictions were made by Christopher Thornburg, when he was Senior Economist for the UCLA Anderson Institute.
Once Thornburg left last year, Anderson became much more ‘blue skies and sunshine”.
Bernacke does a helicopter drop, the market zooms up and I get emails from people thinking that means all the bad times are over and I was wrong. I’m so tired of this all.
Tell them to buy and talk to you in a couple of years…
Step son bought at Fusion in Hawthorne about a year ago after I begged him not to do it. Paid $475K and now they’re selling for $300K. He doesn’t treat me like a crazy anymore.
“Step son bought at Fusion in Hawthorne about a year ago after I begged him not to do it. Paid $475K and now they’re selling for $300K. He doesn’t treat me like a crazy anymore”.
That fusion was an oddity from the getgo. Built smack along busy aviation blvd and sited right in middle of LAX -El Segundo aero-industrial zone. If u work for Boeing- Northrup u can walk to your job but other wise must be somewhat unpleasant to walk around that area with all that morning-noon rush hr traffic.
But you are one! Isn’t your first name “are” and your middle name “they” ? I admit your advice to stepson was sane tho.
Rally = YEAH!!!! We can keep hiding the insolvancy probelm for another quarter…. party on!
I’m really amazed by it all…I had someone call me today and tell me there was still money out there, they just had to find it. Yea, good luck with that…
Ya, it was awesome, I sold 1/3 of my DOW double short block yesterday at $62 and bought it back at $58. Maybe tomorrow will give me a chance to buy some more at $54 before reality sets back in again!
Truly unbelievable, the wonders of the “free-market” system!
–
“…all the bad times are over and I was wrong.”
At least for a day. You could prove to be wrong for three whole days, so be prepared.
Any time that the market approaches lows, watch above for helicopters sucking the market up.
Jas
A one day rally in the stock market solves all our structural problems ? Is this short attention span theater ? I agree with the others, respond with “If you really believe I’m wrong then buy all you can and send me your trades for future reference”.
As I understand it, banks get to “loan” the Fed their kr@p loans for up to 28 days, and in exchange the banks get Treasury bonds, which they can turn into cash. I don’t get what happens next. On the 29th day don’t the banks have to pay back the Fed in actual money? If the new money has since been lent out to J6P, then what? BTW, if I were allowed to trade my mortgage notes to the Fed in exchange for Treasuries, I would not do it. My interest rates (9% +/-) and my non-existent default rate would make the trade very unattractive to me.
OT–
The most notorious commercial-property owner and developer in Santa Barbara has lost his Hope Ranch house in foreclosure. His firm went bankrupt a year ago due to his self-dealing, unrealistic expectations, and hubris. It’s a long story. (His business partner declared personal bankruptcy last year, and he now lives in a manufactured home park.) This week at the Santa Barbara Housing Bubble Blog, Saint Barbara gets in her digs.
I thought you were talking about Michael Jackson for a minute there.
Classic! LOL.
Suggested new name: Les Miserables
“For several months, the least expensive units for sale in La Boheme, a North Park condo project, were a handful of identically priced, one-bedroom, one-bathroom units on the third and fourth floors. But a few weeks ago, the units, priced at $183,701, gained some competition in the building, another one-bedroom, one-bathroom unit with six more square feet. It was being sold by someone who bought the condo new in 2006. The asking price: $166,000 to $168,000.”
“One price was set by the government as part of an affordable housing program. One price was set by the market. Which one is offering the lowest price? At La Boheme, it’s the market.”
“Look down, look down, you will ALWAYS be a slave…”
Look down, Look down, your house has become your grave.
Actually “La Boheme” was perfect……
1. Young kids that don’t make the house payment (rent) and don’t really care.
2. Poor financial choices (drinking & dining out, yet burning books for warmth).
3. Mimi dies in the end from …… consumption.
By the time this is over the better operatic parallel will be Gotterdammerung.
There should be a caveat to that Anderson Forecast…pre/post Chris Thornburg’s employement the track record was…
Lol
I was looking for the first post to note that Chris Thornberg (or is it Thornburg? I never can remember…) was giving the group credibility.
The sheeple will never know. But UCLA is missing out on a chance. I guess they could become famous like Yale and their 1929 prediction of a permant platau…
Got Popcorn?
Neil
Mr. Chris Thornberg’s reply to the UCLA Forecast:
San Francisco Chronicle
UCLA forecast sees no California recession
Sam Zuckerman, Chronicle Staff Writer
Tuesday, March 11, 2008
…”What we have in California is a recession. We have it right now,” said Los Angeles economist Christopher Thornberg, a principal at Beacon Economics and a former UCLA Anderson Forecast staff member. “Jobs are falling. Taxable sales are falling. This is a recession.”….
http://tinyurl.com/2t6nsv
classic.
The UCLA forcast needed Thornberg more than Thornberg needed them. They actually had some credibility when he was there. Is it just me or do all these University forecasts, UCLA, UCSB, USD, all paint a rosy picture? Does anyone at these schools actually use real numbers in their forecasts or have any financial contibutors that aren’t realtors associations, lenders, apprasiers, and title companies?
“Still, economists at the UCLA Anderson Forecast caution that their outlook hinges on consumers holding up their end of the bargain by keeping their spending from falling hard. If Californians hold their consumption of goods and services steady or cut back just a bit, that could prevent a sharp downturn in the retail sector and save the state’s economy from a sustained contraction. ”
“UCLA forecasters expect California retail sales to edge up this year by a tiny 0.4 percent after adjusting for inflation. But they acknowledge it’s hard to predict how the housing bust will affect consumers, in both their wallets and their psyches. And they note there’s a significant risk that consumer spending will come in weaker than predicted. ”
“outlook hinges on consumers keeping up their end of the bargain” - WTF?
Yea, consumers should be able to keep this thing going despite $4 gallon gas, no more HELOCs, no more credit, falling home prices, food prices sky-rocketing and the CA government contracting. These guys are less credible than the FED!
Does explain their rosy outlook though; don’t say anything that might stop the sheeple from spending.
Thornberg is the good economist
Thornburg is the broke mortgage company
And Thorn-berg is a thorny iceberg, which is what we are experiencing right now.
Close friends of mine checked out the La Boheme multi-use development in North Park a couple years ago, after I picked up brochures for them at the builder’s store front sales center. Of course, prices weren’t listed and when they toured the complex were shocked at the 300K price for tiny one bedroom condos, many of which were located within the building interior, off of long dark hallways. All of the units with lofts and balconies overlooking the street had been sold. They’re still renting a cool vintage apt., and I tell them how lucky they are.
I was just by La Boheme yesterday. All of the street level commercial space on 30th intended for retail is vacant and appears to have never been occupied. The southernmost space has a sign in the window indicating that it’s to be the future home of an Italian restaurant, but still no work on the inside yet to make this happen. As most or all of the neighboring commercial space is occupied, I wonder how much they’re trying to charge in rent compared to the surrounding properties.
Gotta love all those pawn shops and check-cashing joints.
It’s not quite as grim as it once was. You now have thrown into the mix some businesses that were priced out of Hillcrest. Still, it seems like an uncomfortable mix. When there are still bars on the windows, the work’s not done. Prices went up far more than the quality of the neighborhood.
So — what’s gonna happen when the new Fannie Mae guildeline take effect tomorrow (I think)? I fear it’s just going to prop up housing prices.
Don’t you need a 35% loan-to-value ratio for Fannie or Freddie to take the loan? Most of the bad loans far exceed 35% and haven’t missed a payment!
Actually, it goes to 45% for the jumbos.
Its going to probably create a bear trap. Don’t worry. Prices will go back to sanity. But they found a million or two sheeple that needed shearing.
How will this restart construction? HELOC financing of vactions, furniture, SUVs/Trucks/’compensating cars’.
This might do a one or two month price flattening that the NAR will make look like a spike. But the side effect is that buyers who are smart and see they are priced out… they’ll vote with their feet.
And it doesn’t help one liar loan…
Got Popcorn?
Neil
Even at 45% if it’s 45%, most who needs these loans do not qualify. It’s fools gold at most.
In talking to a neighbor about a few weeks ago about a home he brought 3 years ago for a princely sum on my street… he was opining he didn’t know what to do because his payment was adjusting… I see he has it up for sale now…he’s going to have to come down a whole lot to move that…
mrincomestream. Nice to see you posting again.
Neil - it’s 45% total Debt-to-Income ratio. Also, they require 20% down (with additional requirement for depreciating markets), 2 months PITI in savings, FICO of > 660, etc.
https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0805.pdf
20% down for ARM 10% for FRM , in looking at those guidelines it will be virtually impossible to get one of those done. Although it could be done…the 0×30 for 12 months will be a challenge for most that would need this as of now…
I read this as 90% being the Max Loan-To-Value for a Fixed Mortgages (i.e. 10% down. )
The downpayment will fall between 10% and 20% depending on FICO - 20% down for FICO of 700 (less for higher FICO)
https://www.efanniemae.com/sf/mortgageproducts/pdf/jumbomatrix.pdf
No….that’s not how the down works… anything below a 660 and it’s a no go for a loan.
The downpayment doesn’t adjust with the fico…
How many people here really think that the GSE limits won’t be “adjusted for the duration of the emergency” until they are handing out taxpayer-backed liar-loans, 0-down loans, ARMS, etc? The end goal is to get housing prices back to unaffordable and rising levels so everything can get rich by drowning in debt. Having the GSE’s putting a bottom under housing prices and passing the losses to the taxpayer is a great way to do this… well, great if you’re a Pig Man on Wall Street!
Of course, Pondering is probably right. It may be only 10% down (at least for now) but then what does the following mean?
Minimum FICO® Score
LTV > 80%: 700
LTV ≤ 80%: 660
Yeah, because so many people have the down payment, credit worthiness, and income to support a $729k loan, right?
I found a chart that showed that 120K or above is the top 10% household income in LA county.
That puts a bit of perspective on how much the elevated caps will help.
Part of me is smiling.
Part of me is really scared by that statistic. If 10% earn 120k in a bubble market, what % earn 120k in a down, but inflated, market?
I still predict domestic deflation and import inflation. Not great for J6P’s standard of living…
Got Popcorn?
Neil
Good point Neil, a friend who manages a parts dept. of a large new car dealer in the valley commented to me Sunday that he’s seeing several walk-ins a day now for job apps. He used to see 1 or 2 a month. He also said they looked/acted like middle management for the most part. Not the piercing/visible tattoo/grunge type at all.
Match that with what I said about daddy day care at the malls at noon on Monday.
I agree, domestic deflation.
What will happen??? People will be turned down for too little equity and too little documentable income.
You have to have more than $100K down and more than $150K in annual income to get a $500K fully-conforming loan.
For the time being, I think those “guidelines” might change before the end of the year…..
Somebody still has to buy the MBS and if they do not fit the guidelines, no investor in her right mind is going to participate. Currently we have sent a delegation on a 10 day trip to China, Japan and others to try to get these to use some of their US dollar reserves to purchase agency MBS. The response is tepid because of the lax underwriting standards. Other than the Federal Reserve bank few wish to own garbage. The stock market may have been up today, but the agency/treasury spread narrowed by 9 bps (it widened by 200bps last 2 weeks).
Other than the Federal Reserve bank few wish to own garbage.
I have heard quite a few congressman and senators say that you and I (as the taxpayers) should own this “garbage”.
We already own the congressmen and senators and they are indeed garbage. What’s a little more garbage added to the pile. Sadly, it seems the garbage now owns us.
No house sales going on
The 1st National Bank of Your Home’s ATM, is permanently shut down
Don’t worry, be happy…
“‘The data don’t yet add up to a recession, and there is nothing to challenge the basic story of sluggishness that we have had for two years. Don’t worry, be happy,’ said Edward Leamer, director of the forecast, the state’s best-known economic report.”
1930’s: Hoovervilles
2000’s: Bush Leagues
“For the third time in just two weeks, authorities broke up a big party inside a recently foreclosed home. Sheriff’s deputies…arrested 16 adults for trespassing and cited 10 teens who were then released to their parents.”
“Neighbors said the home had been vacant for just a few days before the wild party. It was just two weeks ago Bakersfield Police Department officers broke up two parties at vacant and foreclosed homes. No arrests were made in either of those parties.”
No need to wait until the parents go out of town for the weekend, just find a vacant McMansion instead - lots of options. The vacant McMansion is the new vacant warehouse.
Du-u-u-u-ude!
I am so there….
Here’s something I started thinking of: declining housing values as a result of school budget cuts. I live in one of those whitewashed, “safe” neighborhoods with what many consider good schools. As anyone in the Bay Area knows, anything resembling a ‘good’ school- or what we who are from other states would consider normal- automatically makes homes around those schools extremely expensive because they have to make sure their precious babies get the absolute best education and will pay out the nose to do so.
That is until trouble comes along… several million dollars are being cut from the school budget. No more PE, Music, Art, or swimming programs. Something to consider is what will the effects of a less than desirable school system as a result of budget cuts have on the price of housing there and other California cities with ‘good’ schools? It’ll severely undercut the value, that’s what.
It’s a sad example, but a perfect one to illustrate that the whole RE situation in California is completely corrupt and rotten: the prices got too high, the state government bet too heavily on its success and the result is that it comes back to haunt the very people who paid so much to live in the homes near the government supported schools that in effect, their overexuberrance helped destabilize. It sucks that kids have to pay the price.
There’s still time to get away from big city America, to our forgotten small towns, where neighbors know and look out for one another, and if you pick the right place, doors & minds are never locked up.
Yes… but I grew up in one of those “forgotten towns”, as in less than 1,000 people with a narrow two lane road. Pretty nice, but there was absolutely no jobs unless you wanted to work at Wal-Mart 30 miles away.
But… I have to say that for years I’ve been entertaining the idea of saving up craploads of California dollars and moving back, buying some small house on a piece of land, and maybe have some crappy job I work at part time. Probably totally unrealistic, but unless the migrating carpetbaggers from yankeeland get there first, I’ve probably got another 5-6 years of saving to make that happen and do so comfortably.
I’ll assure you that there are plenty of good spots hidden away in the hinterlands of California, and the internet really can set you free, as long as you meet it halfway, by moving to them.
What towns are in mind?
The ones I am thinking of have grown.
As a kid I lived in a small town, after living in a more urban area, and it sucked. My dad promised me a pony. (really) Didn’t happen. My new classmates were straight out of that film River’s Edge. Rural America now has some of the highest rates of drug overdosing, so it really does depend on the “right place.” Though once you and everyone else discovers the “right place” your perfect small town will turn into just another CF with strip malls.
or a tourist spot where the median house price is $300k and the median salary is $30k.
I lived in a small town as a kid and a different small town as a young adult. The first case - no good paying jobs. My father was a consultant, so he worked from home (with a telephone as business equipment). Most people in the small town were in the tourist industry or service industry (mechanics, etc). In the second small town I lived in, the biggest employer was the US Navy. It was the highest per capita of people with Masters degrees and higher than any other town in the nation. Lots of double incomes too. This is not common in the U.S.
The big energy crisis coming up will mean doom to those who think rural will be better than urban. The livlihood of 99.99% of America’s small towns depend on the internal combustion engine, (the car-centric society, which is going to be an out-moded concept). Some of you people on this blog still do not get it. You have the meme planted in your head that we will always have abundant fossil fuels. The society of the future is urban.
Minds are locked, just not doors. IMHE
Minds aren’t locked in small towns? hahahahahahha, hahahhha, BREATHE hahahahha
I grew up in a small town in Wyoming. Believe you me, many of those minds are locked up tighter than Fort Knox. And the rural population is aging…
See how much the CTA cares for “the kids”?
Not getting your reference here - please explain further.
let me esplane 2 u.
California Teachers Association.
Don’t worry no one is laughing at your question. We assumed you were a product of the CTA, therefore incappable of satire.
I am a product of the CTA except it was in the old days with CA schools were near the top. I’m just biased because my daughter and son in law are both teachers and I know how hard they work and how much they really care about their students. I get sick of people blaming teachers for all the ills of the schools when so much of the blame, I believe, belongs on the parents and students. I’m not doubting there are bad apples, but you couldn’t pay me enough to try to teach the brats out there with their helicopter parents that think their little darlings can do no wrong. Dare to point out there’s anything wrong with their precious ones and they threaten lawsuits. Rant off. And I fully appreciate satire - the snarkier the better.
ATC, I agree with your assessment, as I see the same thing when traveling, parents that misbehave, and so to their children. Or can’t carry a decent conversation to save themselves. Education failed them cause they didn’t get it. Teachers rule IMHO. We as a society are spoiled to our detriment.Hence the ppl and their Helocs for toys etc.
I don’t doubt that your kids (and many others) are excellent teachers, but the hypocrisy cuts both ways. Blame the (corrupt) CTA for the ills of schools and you’re automatically labeled as “not caring for the kids.” Dare to point out that the (bloated) bureaucracy is structurally unsound and you’re “against teachers, firefighters and police.”
If you want a villain for school problems, don’t look to teachers (despite unions, they are not paid *nearly* enough for what they endure). Look instead to textbook companies. There’s where the real waste is.
One of the reasons I am glad to still be renting. I have a 2 year old and at some point, I’ll have to decide whether to pay higher housing costs for a good school or bite the bullet and move so that I can afford to pay for a private school.
as far as i’m concerned, the best thing about renting is i live in a great school district i’d never be able to afford to buy in. walking distance to skool even…
The phrase “good schools,” in California, has nothing to do with the actual quality of the education, and everything to do with the absence of melanin in the student body.
To clarify, that’s what people who talk about “good schools” really mean by the phrase.
With the exception of some truly dysfunctional large-district schools run by incompetents and/or dominated by a particularly thuggish teacher’s union, the quality of the instruction is pretty much comparable across the board. (I.e. you’re getting the borderline-illiterate cream of the Cal State Fullerton crop, along with a handful of smart, dedicated idealists who will mostly burn out within a few years.)
“Good schools” is simply code for “not majority-minority schools.” Conservative, liberal, whatever — when push comes to shove, they all act the same way.
What are you talking about? People who want to send their children to good schools aren’t really interested in education, they are just closet racists?
Riiiiggghht….because we all know that the schools in places like Compton Oxnard are bastions of academic excellence, centers of learning and scholarship that rival east coast prep schools like Exeter and Choate. My kids would get an EXCELLENT education at those schools. They are safe, too.
Who is the one blinded by ideology here?
Thankyou.
Spook
Shhh . . . you’re not supposed to say this out loud.
In Silicon Valley, API scores correlate to the number of Asians in a school. Caucasians pull down the scores. The API web site breaks out the score by ethnicity. In every single case I looked at, Asians outscored Caucasians. Asians have more melanin than Caucasians.
I don’t think Asians are genetically better at test taking than Caucasians, but it’s likely that the parents tend to push their children harder for cultural reasons. Also, many Asians are immigrants, and I have to think that the immigrant population tends to be the more driven set of people. The less driven folks will stay back. I have never heard an immigrant parent say “I don’t want my child to go to school XXX as it is too hard.” I have heard this from born in the US parents.
in a downturn, how many kids get pulled out of the private school and put into public school? Anyone see a private school bear market?
Home school is the new black.
Spook
Just not in Cali.
Would it be a bad thing if all public schools were closed and compulsory education eliminated?
When I taught in FL public jr high, I thought the most destructive aspect of the system was the “compulsory” attendance, which burdened the school with all kinds of disruptive 14 and 15 year olds who didn’t want to be in school at all. Let them out, I said, so that those who want to learn something will be free to do so.
Thomas is correct–the public schools in my neighborhood on the West Side are visibly filled with kids from uptown or the Bronx.
And the cops are posted by the subway stops to see they leave when school is out. No cops for the kids from all the private schools in the nabe–just the occasional mommies wearing school crossing vests to escort the kiddies safely across the avenues.
What’s neat is that those towns with the “elite” schools usually have insanely high purchase prices compared with rents, so if you have kids and are smart enough to rent, someone else pays for their education.
Happy days are here again,
The skies above are clear again,
So let’s sing a song of cheer again,
Happy days are here again.
I’m so glad the recession is over before it started.
Just for the record, however, I don’t think the Fed can spend us out of the oncoming and unfolding economic disaster. They are just paying inflated prices for junk paper and shifting the lack of reserves from the banks to themselves. How inspiring…
February NODs for Palmdale 93552 closed out at 212, just edged out by 214 in Jan and bit behind December’s all time record of 242.
There has been a floor set in the median wishing price at 300K. It hasn’t moved in a month. Those psychological barriers can be tough to breach.
I do see, however, that each new lowest priced house in my search sits on the market and is replaced eventually by an even lower priced house.
There is definitely a stand off between delusional sellers and foolish knife catchers. Who will win? The guy standing on the sidelines counting cash and munching popcorn.
ot-sorry have to rant
i am very frustrated- i am tired of living in my current rental apt.
i am looking for a place but my search is greatly hindered by the fact that i have a dog. nobody wants to rent to a pet owner even though we have 750+ credit great financials and good jobs
i am getting annoyed-cannot buy a place cannot rent a place
wtf do i do?
and then uncle ben drops a load and the market takes off
all is better in the world for a day at least
arrgh thanks any advice would be appreciated
mgnyc,
I have dogs, and live in a rental apt. Do you have dog runs in Queens?
I would network with dog owners in the neighborhood you want to move into. Find out what buildings they live in, and the landlord or prop. management’s name, then proactively visit them with your credentials and let them know that you’d like to talk to them when they have a vacancy. Also, check urbanhound.com, a nyc site for dog owners. Try posting your question there.
Here’s why so many rental property owners hesitate to rent to dog owners:
http://www.dogassault.com/
If your dog bites, maims, injures or kills someone, your landlord’s insurance policy will be targeted in the lawsuit. And, trust me, there will be a lawsuit. A big one.
Your renter’s insurance covers any damage or injury caused by your dog in NYC, which also has a “first-bite” law–essentially,the dog’s first incident is a pass. NYC has a lot of case law on dogs and dog ownership. Check it out via google.
Four dogs. One that could bite under the right circumstances. Four that could run into traffic and cause a multi-vehicle crash. $68/year for my $1,000,000 renter’s umbrella policy. Landlord does not have a thing to worry about.
I hate pet rent but that is all the rage in California.
Try renting from a real estate office.
I take a photo of my dogs with me to rent.
You tried craigslist, click on dogs?
Yes. Animals are anithema to these rental offices. And having been a landlord, I understand. But this has gone crazy. I can’t move because of my pets. Yet, I deal with many bad and dangerous things to live where I live. Yet the rules in CA are fixed.
I realy understand. No win at times. Just say It is a “deal breaker” if they won’t rent. However, they may up the deposit AND rent. Just went through it. Best of luck.
“Former Hawthorne Mayor Guy Hocker has canceled his plans to build about 100 single-family homes. Hocker, with a partner, bought the property about a year ago for $15 million. He received City Council approval to build the Prestige Villas in September, but, months later, he abandoned the project because of upheaval in the housing market.”
_________________________________________________
Unfortunately for his partner, Guy Hocker will turn into Gay Focker at midnight. Nothing like a Focker joke on a sunny day.
Beware the idle sales of March
“…What are the Idles of March? They are activities that, while they may be useful and even pleasant in their own right, tend to take us away from our writing. …” aka chores
It’s a reference to the “ides of March”: March 15th
“A third planned housing development has also changed direction. South Bay Ford owner Gary Premeaux said he’s abandoned plans to build 164 homes at the former dealership.”
“‘I spent a ton of money to get the entitlements approved, which I got,’ he said. ‘The subprime housing problem is a cloud over everyone that’s going to be around another 12 months.’”
____________________________
Pssst. Gary, over here. Let me introduce you to Alt-A, they’ll be around for another 36 months and that dark could above you, yeah, that is Zeus and his friends. They’re going to pissing on you and your plans for the foreseeable future.
“On Monday, the development’s Web site stated: ‘Sales opportunities are temporarily unavailable while we give the market time to improve.’
“Temporarily”? They also need to be introduced to Zeus and his friends
You can keep telling me we are not in a recession here in California but I don’t buy it. Furniture stores are going bankrupt, marginal businesses like Party supply stores and “scrapbooking” shops are closing up. Inflation has picked my pocket along with high gas prices, and Uncle Boob’s rate cuts has robbed me of my interest income. On the whole I’m feeling much poorer and have cut back on spending as a result. If a recession isn’t here and other people feel the way I do then it’s coming no doubt.
Testify! Anyone who fails or refuses to get more economical in his or her spending, and very quickly, will soon be toast.
Yes, I’ve got popcorn.
I declared war on useless costs two years ago. Excuse the pun, but it’s been paying off. And the IRS knows it. (I owe taxes this year.)
Ditto .. I’m saving more than 25% of my take-home pay. Feels so good too ..
And where might you be stowing your savings? Bank CDs? Treasuries? Fine art?
I am showing over 300 Mass Actions filed with the State of California since Jan 1, 2008.
9 just last week in Education, Wells Fargo (again), Patterson Vegetable, The city of Newark (what is going on there? a lot of layoffs), The city of Sacramento announced Friday it is trimming its work force by more than 9 percent. To stanch its fiscal hemorrhaging,…; IAC/InterActive Corporation, MeeVee Inc., MediaNews Group Inc., The CW Network, Llc,
PDL BioPharma Inc., Pharmacyclics Inc., Dan Gamel Inc. (BK?), Saturn of Loma Linda (BK)
Maybe not a recession, but this is getting ugly.
Ditto Ditto Mo Money.
Not only am I spending less, I’m going to go with cash, and will quit using plastic as soon as I can (it’s a hard thing to do).
I’ve been going thru Dave Rasmsey’s Financia Peace University and he says that people that use plastic (debit or credit) spend more money per purchase. Therefore when I got to 5Bucks, if I use my debit card I end up spenging $8.00 instead of $5.
Got to revisit his program.
Basically now, not doing anything daytime,nighttime that isn’t boardgames,walking,cooking at home=spaghetti, in season cheap vegetables, and library visits. And next step is to cut back on driving to gym ( need air in bike tires)-gym only $19. but considering at home videos for exercise during 120 degree heat days, phone is vonage-voip, no starbux or frills.
Good on ya. That’s huge for most people. Not necessarily here, Great.
Couple of weeks ago a friend who was operating a gift shop in San Marino closed up. Actually she was operating it with four partners. I told my friend and a couple of other partners (separately) that I thought their timing was good. Luckily they didn’t own the actual physical store, just leasing it, and the lease expired 2/29/08. Each of the persons to whom I addressed the “good timing” compliment looked very blank and said they had just not been making enough money during the previous five years to justify the time they were putting into the business. Wonder if they were really clueless and lucky, or if they had seen a slowdown recently.
I know this is a California post but I still wanted to share my last week experiences. I went around a community in this DC suburb (80 miles from DC-not really a suburb) and a lot of people are buying foreclosed homes. At least 4 houses that used to sell in 400s now listed between 250-300 are under contract. Just curious if these people are idiots or maybe it is me for not buying in the last week and waiting the thing to go further down. Uncle Ben has moved so much money that market seems to be picking up here.
And I asked a realtor how much actually it sold for and he said the list price. I don’t believe him. Is there a way to see the house sale prices for Berkely county, WV.
80 miles west of DC?
Those sound like Louden county/Sterling/Manassas prices; I think the realtor you talked to was anus mining (Thanx NYCboy)
Spook
Anus miners. I’ve learned a fab new term. Priceless. I, too, thank NYCboy for that one.
“At the newly built gated community called Threesixty at The South Bay, the developer has stopped the sales of its 625 luxury condominiums on the site of the annexed portion of the Los Angeles Air Force Base.”
I drive by this white elephant a few times a week. It’s in a no-man’s land between the El Segundo industrial area and the 405. Nearest neighbor is a sad looking hotel fronting the freeway, and a self storage place. Gee, wonder why they’re having trouble selling in such a charming location? LOL
The whole aerospace ghetto is horrible and depressing - there’s a REASON they put it inland and far from the housing near the coast. Building any residences in the aerospace ghetto is absurd, let alone “luxury” housing.
The house across the street finally sold-been on the market for 12 months. Last year it was offered for $520K and sold for
something happen to my post:
The house across the street finally sold-been on the market for 12 months. Last year it was offered for $520K and sold for
And the punchline is??
oh come on, i’m dying to know!
I’ve had a hard time posting sometimes but you take the cake.
Maybe he stroked out.
You might want to type the *words* “less than” instead of the symbol next time.
Echo…….echo………echo……..
Ok, I’m going to guess $435K
Heck, I’ll go $385K.
I have a message for Reed Holderman, TPL’s western regional director…..Mr. Holderman, shove it up your open space…
Thanks, I feel better.
Yeah. Nice sentiment. Damn those people who are trying to preserve open space!!! Give us more Los Angeles!!
“On Monday, the development’s Web site stated: ‘Sales opportunities are temporarily unavailable while we give the market time to improve.’ The homes went on the market in October at prices from the mid-$600,000s to nearly $1 million. But all sales were canceled, and selling stopped this year.”
Wow $600k plus to live in a condo in Hawthorne. Where do i sign up? What a joke. I know exactly where these places are and believe me these guys will be lucky to get $2-400k when all is said and done. Westside/South Bay still has a lot of stupid $$ and dumb people still in denial.
“Wow $600k plus to live in a condo in Hawthorne. Where do i sign up? What a joke. I know exactly where these places are and believe me these guys will be lucky to get $2-400k when all is said and done. Westside/South Bay still has a lot of stupid $$ and dumb people still in denial.”
Hawthorne has areas as bad a S Central LA. The entire city is what i call a near-ghetto. it is 70% low-income/slum apartment district. I can parse each and every building site in LA and have been out to many of them. That 360 site near LAX is a massive boondoogle and should be in the scrapheap. There has been a massive amt of speculative large scale developments going on in the general area around LAX which includes parts of hawthorne, EL segundo, REdondo beach, Playa ,which are LAX adjacent. Especially south of the airport in the open spaces between el segundo blvd and rosecrans and from sepulveda east to 405. Mostly mixed developments. They may have ocean breezes and cooler air than inland but there is no easy access to the beach from there, and the ambience is all busy beehive industrail-commercial, and horrific rush traffic.
South bay overrated and will get kicked hard just like rest of LA.
“…Randy McHaffie, right, of Moreno Valley, brings an electric drill and a gold necklace to Inland Jewelry & Loan in Riverside to arrange a loan with owner Jeff Interlicchia. For the two items, the Moreno Valley man got a four-month, 10-day loan for $30. McHaffie said he needs the money to pay off bills…”
If it has already come to this by the masses, there’s a long tough road ahead.
I mean 30 dollars… barely gets you a half a tank of gas here…if you’re hacking work tools to get too work…WTF over!!!
Exactly, Mrincome. BTW, what bills could this person be paying off w/$30? Come on, is paying the NetFlix bill for 6 months? Good grief, 30 bucks in this economy is zilcho.
$30. my gosh, you might as well keep the darn things and start working pt at McDs. or start delivering Pizza, at least in one week you will make that $30. And still have your junk to work with?
Bwaahhhaa @ netflix bill…that’s funny.
DesertDweller raises a good point. I mentioned this when I first started posting here…most people won’t look at this option because of pride or being locked out by cheap and illegal labor.
The first issue can be cured relatively easy by pulling one’s head out of their ass, the other can be solved by memorizing the ICE hotline number which I’m sure is probably a 1800 number that can be dialed from any payphone for free.
Taking those two paths…should cure all ills.
“‘Both statistically and conceptually, today’s economy is something new - stinky,’ economists Ratcliff and Jerry Nickelsburg wrote in their closely watched UCLA Anderson Forecast.”
Shill “economists” are stinky. The economy is in recession.
Now, at the count of three, everyone say it…
One, two, three: Recession!
“UCLA’s Anderson Forecast, which previously has been ahead of the curve in forecasting the downturn of the California housing market and the resulting decline in the economy, predicted yesterday that the state and nation would not fall into a recession.”
Er, weren’t these the “there is no bubble” folks?
“Both statistically and conceptually, today’s economy is something new”
Ahhhh, I remember the last “new” economy…what ever happened to that? You know, the one where P/E ratios didn’t matter, because all you needed was “eyeballs” and market share? What ever happened to that pets.com outfit?
Oh wait, wasn’t there a “Goldilocks economy” after that, highly resistant to economic shocks, and full of “soft landings”?
I *love* new economies, because they are so magical, and you get to ride pink ponies.
There IS alot of Sht floating around so there Must be ponies somewhere.
I think they’re riding pink unicorns, and we all know the dangers of riding a unicorn.
The San Gabriel Valley Tribune. “‘Both statistically and conceptually, today’s economy is something new - stinky,’ economists Ratcliff and Jerry Nickelsburg wrote in their closely watched UCLA Anderson Forecast.
I knew it was ’stinky’ more than 2 years ago before I left CA.
But the last loan ended up being a negative amortization loan, which only grew larger each month, and it seemed that the faster she paid, the more behind she got, she said.”
Sheila coined a great oxymoron here. But was probably real in this stinky type of case. What a shame. House should have been owned free and clear, and being foreclosed on.
How the hell do you lose a house you’ve had for 25 years? And just clueless - like the flying monkeys came down and stole the house right out from under her - bit mystery - has no idea how it happened. Too stupid to own a house IMHO. Need another glass of wine now.
It’s worse than that. Apparently the house was in the family for over 40 years. It should have been paid off 10 years ago. Why is there still a mortgage, and one that the family can’t pay off, at that?
About six months ago, I wound up with this loan, I don’t know how it happened…
WTF, did the flying monkeys tie her up and forge her signature on a loan?
oops.
–
“The job losses in the state’s residential real estate sector still do not appear to be broad enough to trigger a severe economic contraction, Ryan Ratcliff, an economist with the closely watched forecast, wrote in a report.”
My notes from the past…
July 27, 2006
One Mr. Ratcliff, a UCLA economist, appeared on the boob-tube to talk about California housing. He said, “The California home prices have never declined except when the economy was in a severe recession.”
OK.
Then he continued, “Since we are not forecasting a recession, the prices should level off and remain flat.”
Jas
Good find - that’s amazing.
Premise 1) Home prices only fall in a severe recession
Premise 2) We are not predicting recession
Conclusion A) Therefore, home prices will not fall.
Premise 1) Home prices are falling
Premise 2) Home prices only fall in a severe recession
Conclusion B) Thereore, we are not in a recession
Man walking along a road in the countryside comes across a shepherd and a huge flock of sheep. Tells the shepherd, “I will bet you $100 against one of your sheep that I can tell you the exact number in this flock.” The shepherd thinks it over; it’s a big flock so he takes the bet. “973,” says the man. The shepherd is astonished, because that is exactly right. Says “OK, I’m a man of my word, take an animal.” Man picks one up and begins to walk away.
“Wait,” cries the shepherd, “Let me have a chance to get even. Double or nothing that I can guess your exact occupation.” Man says sure. “You are an economist for a government think tank,” says the shepherd. “Amazing!” responds the man, “You are exactly right! But tell me, how did you deduce that?”
“Well,” says the shepherd, “put down my dog and I will tell you.”
Bravo.
“In La Boheme, the $166,000-priced unit is a short sale, a condo on the market for less than the owner owes on the mortgage, said the seller’s agent, Norma Santacruz. Her client was one of the first buyers in the building, she said, and she bought for $300,000 in 2006.”
Nice 45% drop in two years, assuming they actually manage to sell it at $166k. “Just buy something, anything, before you’re priced out forever!” Worst advice ever.
http://online.wsj.com/article/SB120527998662928743.html?mod=hpp_us_whats_news
Latest Trouble Spot for Banks: Souring Home-Equity Loans
…
Leaning on outside mortgage brokers for home-equity business was “one of the biggest mistakes we’ve made,” said Mr. Scharf. Those loans have performed worse than home-equity loans generated by J.P. Morgan.
J.P. Morgan, Wells Fargo and other banks are now backing away from brokers to focus on home-equity loans offered through their own retail branches, where customers already have a relationship with the bank. Citigroup Inc. has slashed the number of home-equity loans originated through brokers by 90%.
Meanwhile, financial institutions are refusing to provide home-equity loans to homeowners whose residences are already weighed down by big mortgages in states like California and Florida where home values are falling fast.
“This product was meant to help people do construction on their house, [and] do debt consolidation — not to take out every last dollar of equity in their home to finance a different kind of lifestyle,” Mr. Scharf said. J.P. Morgan is “rolling our changes back to represent that kind of product.”
Bottom line
Economy will not improve until people have more money to spend (After taking care of house payment/rent, car, gas, food, health care, ect).
Look at the upcoming stimulus plan. $600 bucks. If average person drives 15,000 miles a year w a car that gets 25mpg he uses 600 gallons. His gas has increased about $600 dollars over the last several years. This doesn’t even include other expenses that come before we see an increase in disposable income.
The cuts in interest rates have had minimal effects on Libor, and banks have been slashing their plans to lend. My guess is the recent 200 billion FED loans are designed to minimize this damage. Now we’ll see how many real gamblers there are in America. The Bloommberg article today on upcoming changes to bond ratings was interesting. One estimate for bond losses was 188 billion. Not far off 200 billion FED loans. The FED will allow garbage CDO collateral in essence they have become the national SIV plan to replace Paulson’s failed attempt. Banks can store all of their crap off the books at the FED allowing them to continue loaning money will little real reserve
Correction gas bill increased from $1200 a year to 2400 a year. Now if he drives an SUV in town double that.
“If average person drives 15,000 miles a year w a car that gets…”
Bwahahaha! Oh.
Oh I see you don’t live in California never mind.
‘Everyone is feeling the squeeze.’
Nicky Santoro: Listen to me Anthony. I got your head in a f*ckin’ vise. I’ll squash your head like a f*ckin’ grapefruit…
About six months ago, I wound up with this loan, I don’t know how it happened
Dumb as an ox.
The loon officer plied her with booze and sweet nothings.
Threesixty at The South Bay
Fusion at South Bay
Rule of thumb: when the developer tries to obfuscate the actual location of the building (e.g., by saying “South Bay” instead of “Hawthorne” or “South Coast Metro” instead of “Santa Ana”), hide your wallet.
There’s also something pretentious (and wallet threatening) about spelling out the address - Threesixty. Is that supposed to keep the illiterates away or something? We’re special - we don’t use numbers.
“From now on honey, we’ll be spelling everything with letters!”
Where is Gwynster?
““‘Right now, the industry is in a downward cycle, and we hope the bottom is going to be at the end of the year,’ said Tony Bruggemans, general manager of a Palm Springs business that his brother began in the valley 35 years ago. ‘People are watching their disposable income.’””
Oh I bet they are watching their disposable income…especially in the Coachella Valley there where the only people with money are the retirees. Seriously, where are the jobs in that area that support the homes prices there??? They don’t exist. That is the biggest problem with the CV.