We’re Off The Cliff In California
The LA Times reports from California. “Southern California home prices are now 19% below their peak last year. Home values also plunged 19% during the last real estate bust, but that was over a six-year period ending in 1997. Prices have now fallen just as much in less than a year. Betty Palacios is trying to sell her Upland condo for $140,000, or close to 40% less than what similar units in her complex were selling for two years ago.”
“Palacios has owned her condo since 1991 but still expects to take a loss because of home equity loans and refinancings over the years. Palacio said she had received only one offer, for $90,000. ‘I’m keeping my fingers crossed’ for a higher bid, said Palacios, who has already dropped her asking price once. ‘It’s all I can do now.’”
“Billie Tircuit, 26, has already taken a hit. She bought a house in Altadena two years ago with 100% financing at the urging of her husband, a mortgage broker, she said. His income vanished with the housing crash, and the couple soon could not make their payments.”
“Tircuit split with her husband and unloaded the house last month for $455,000 — a 22% loss and less than what she owed on the property.”
“For Tircuit, the real estate crash has been painful but also an instructive lesson in practical economics. ‘We had no business buying that house,’ she said, ‘but everybody was buying a house, and the loans were there. Don’t get caught in the hype. It bit me hard.’”
The Union Tribune. “San Diego County’s housing market deepened its slump last month, with the median home price now down 20 percent from its peak in November 2005.”
“In Carlsbad, renters Bill Smith and his wife see the bursting of the real estate bubble as an opportunity to enter the housing market. Smith said he knew a major price correction was coming.”
“Former Federal Reserve Chairman Alan Greenspan ’said there was no bubble, but I had a feeling that things were going in that direction,’ Smith recalled. ‘We decided to bide our time. Sure enough, it did happen. We realized that it was the time to make our move.’”
“Smith said he recently bought a 1,190-square-foot ‘beautiful starter home’ in Oceanside for $250,000. It was a reduction of nearly $100,000 from what the previous owner paid in 2005, near the height of the housing boom.”
The Desert Sun. “A total of 2,147 homes sold in February, down from 3,057 for February 2007, while the median price of a home in Riverside County last month was $325,000, down from $410,000 in the same month a year ago, according to DataQuick.”
“‘Sales remained extraordinarily low, and a significant portion of what did sell was in areas beset by foreclosure activity,’ said Marshall Prentice, DataQuick president. ‘Mainly it’s in the inland markets, often in newer suburbs, where prices got pumped up artificially with the sort of crazy loans that no longer exist.’”
The Ventura County Star. “Ventura County sales of new and existing homes and condominiums plunged 32.8 percent in February, to 495, a record low for February. Ventura County’s median sales price was $445,000, a 23.8 percent slide from $584,000 in February 2007. The median hasn’t been as low since hitting $446,000 in March 2004 — when prices were flying up in a hot market.”
“Most homes that are selling are bank-owned, said Kay Wilson-Bolton, a foreclosure specialist and broker. Foreclosure sales comprise about 80 percent of her business.”
“With the significant spike in foreclosures, Wilson-Bolton said she’s getting about two or three bank-owned properties a week. ‘The number of foreclosures that are coming to me is accelerating,’ she said. ‘It’s about 10 times as many as there were a year ago. I don’t see any letup at all.’”
The Press Democrat. “Home prices plunged to their lowest levels in four years in February as sales slowed to a crawl in Sonoma County and across the Bay Area. Sonoma County’s median price tumbled to $400,000, down 22.3 percent from a year ago, the biggest drop in the Bay Area. It is the lowest since February 2004, when the median price stood at $390,000.”
“‘With the amount of inventory and the prices, some of these properties just seem like great bargains. I was actually hoping for a little more activity. It just didn’t happen,’ said Timothy Hedges, broker in Sebastopol.”
“More and more homeowners are handing over their keys to lenders, unable to sell their homes for enough money to pay off their loans. More than 1 in 4 homes sold in Sonoma County in February had been in foreclosure sometime in the past 14 months, according to DataQuick.”
“‘With the Federal Reserve trying to pour Drano into the lending system, it will be interesting to see how things play out if jumbo financing does come back online. Theoretically, there could be enough pent-up demand, enough catch-up activity at the high end, to result in a statistically bizarre record median home price,’ dataquick’s Prentice said.”
“‘What we’re seeing now is the final capitulation of all these people that have been holding onto these houses trying to eke out the last dollar. They’re realizing they may have to lower it to get it done. But then if they’re going to move up, that property becomes cheaper,’ said Jeff Schween, an agent in Santa Rosa.”
The Mercury News. “Two newly built homes are on the market on the same street in the same development. One is a bank-owned property offered at $1 million, and the other is listed by homeowners at $1.5 million. Guess which one received 10 offers and has a sale pending?”
“You’re right. And most of the buyers didn’t care that it was a foreclosed property.”
“‘The buy-down isn’t working, the free car isn’t working,’ said Joe Davis, a real estate agent in Pleasanton and the listing agent for the $1,074,900, five-bedroom, three-bath home. ‘Price is working, period. If there’s an REO (or bank-owned property) or short sale on your street, then consider that when you list your house.’”
“The median list price in San Francisco was $809,500, while the average REO was $616,743, a difference of 24 percent. In San Mateo, the median listing price was $799,000, and the median REO was $626,500, a 22 percent difference.”
“Differences were smaller in counties where foreclosed properties were common. Contra Costa and Alameda counties had listing prices 12 and 9 percent higher, respectively, than foreclosed properties, while hard-hit San Joaquin County actually had listing prices 6 percent below median bank-owned home prices.”
“Ed Jeffry (co-)founder of the National Association of Responsible Loan Officers, helped a client buy a home in Inglewood in Southern California, said that both she and the seller agreed to $525,000. But when it was reappraised, it was found to be worth $499,000.”
“‘It’s almost to the buyer’s advantage to cancel the sale and rent for three months,’ he said. ‘Real estate is all about making money on the buy.’”
“And many buyers are threatening to walk away from deals if they feel they are paying too much. ‘Buyers don’t mind appraisers coming in less, and sellers don’t have a choice,’ said mortgage broker Jay Damato in Walnut Creek. ‘It happened the other way, too. (In the housing boom), it would appraise for a higher price, and sellers would say, ‘Too bad, make up the difference.’”
“Mike Tabacco, a certified residential real estate appraiser in Walnut Creek, said that in some areas there are few nondistressed properties to appraise.”
“‘Since October in Antioch, there were only 13 sales in the $500,000 to $600,000 range, and nine of those were short sales and foreclosures,’ he said.”
“Davis, who also sells bank-owned properties, said that speculation fed the foreclosure market in San Ramon. The client who lost the home had bought three houses in the master-planned community of Windemere, he said.”
“While some sellers have expressed animosity at his property’s lower price, he said builders are also cutting prices and adding incentives. ‘Personally, I recommend to all my clients not to sell right now,’ he said. ‘Right now is the best time to buy.’”
The Marin Independent Journal. “The median price of a single-family home in Marin sank to $830,000 in February, but there’s no cause for concern, a real estate research firm reported Thursday.”
“Just 136 single-family homes and condominiums sold, down from 228 in February 2007 - but up slightly from 122 sales in January. The median price for a single-family home was down from $929,500 in February 2007 and $990,000 in January. In the condo market where the median price fell to $430,000 in February from $560,000 in January.”
“Broker Patti Cohn in Greenbrae, says the market has hit bottom. ‘In Marin County - without condos and without Novato - 46 percent of the properties that sold in the last 30 days sold at 98 percent of the asking price,’ Cohn said. ‘Mostly what’s happening is there is a shortage of inventory.’”
“‘Marin has nothing to worry about,’ said John Karevoll, a DataQuick analyst. Most people are just waiting this out. Once the turmoil in the jumbo loan market settles down, and we expect that to happen this month or next, then we will get a true picture.’”
From Reuters. “With home mortgage foreclosures escalating, there is a dearth of investor demand for bonds backed by many mortgages. In addition, lenders are rejecting many more borrowers and house prices are falling.”
“‘The horse is out of the barn on this cycle and recession,’ said Phil Immel, broker in Dana Point.”
“‘We’re off the cliff,’ said Immel. ‘We think we have a parachute, but we can’t find the ripcord to land safely. It really will get a lot uglier for the next year across America, and it should bottom out about a year from now.’”
Investors Business Daily. “Easy come, easy go? The housing crisis has come to this: just walking away. As home values sink, people are abandoning homes, viewing their ownership as hopeless or worthless.”
“‘They can’t refinance, because they don’t have any equity,’ said Rick Sharga, VP of RealtyTrac, ‘and they can’t sell, because values have dropped.’”
“In Stockton, Calif., a ’staggering’ 77% of homes bought a year ago are ‘underwater” with negative equity, says Stan Humphries, VP at Zillow.com. The percentage is nearly 60% in Las Vegas, above 40% in Miami and nearly 40% in Los Angeles.”
“It’s not just new owners. Plenty of people who rode the boom have spent their home equity gains. ‘People have been (cash-out) refinancing their house in order to sustain their standard of living,’ Humphries said. ‘Say they bought five years ago and have been pulling equity out of the house.’”
“Counting new delinquencies and in-process foreclosures, 7.86% of all people with a home mortgage are late on payments, said MBA Chief Economist Doug Duncan in a press briefing Thursday. ‘As equity is declining, there’s an incentive to walk away,’ he said.”
“Owners who could pay but still walk away may be contributing to an acceleration in problem loans, Wachovia’s chief risk officer, Don Truslow, said Jan. 22.”
“‘A lot of these current losses have been coming out of California,’ he said. ‘They’ve been from people (who have) otherwise had the capacity to pay but have basically just decided not to.’”
“Walkaways aren’t new. They happened amid the early-1990s swoon of prices in overheated markets such as Southern California.”
“But back then, foreclosures typically arose amid unforeseen changes in the economic condition of the borrowers, says Charles Dannis.”
“‘This time we don’t have that true economic change in the borrower’s condition,’ said Dannis, who also teaches real estate at Southern Methodist University. ‘You have a collapse of a housing market that most people really attribute to speculation, or because people are buying more house than they can afford because of the various exotic mortgage products out there.’”
‘Marin has nothing to worry about,’ said John Karevoll, a DataQuick analyst.’
Didn’t CAR get all excited when Marin went over 1 million on the median?
‘Marin has nothing to worry about,’ said John Karevoll, a DataQuick analyst.’
Marin has everything to worry about. I live there, and the debt levels are staggering. AltA Deluxe + HELOC.
Marin AKA Land Of The Smug
Well, actually, almost all of the Alt-A Bay Area is Land of the Smug.
At its most smug, The Land of the Smug extends from Bernal Heights in the City northward, roughly following Hwy-101 to Lucas Valley Road in Marin (north of San Rafeal, just past the Civic Center).
Other more smug parts of the Land of the Smug include pockets situated between Hwy-101 and I-280 as they extend southward all the way to San Jose. Smugness usually decreases as you head eastward in this zone, however, there are exceptions including such cities as Palo Alto. The Land of the Smug also extends beyond this zone eastward of 101, but really only where Genentech, Oracle, Visa and Google are located.
The only other extreme pockets include all of the City of Berkeley and some adjacent parts of municipalities on its northern border.
Also, we can not forget parts of Oakland surrounding Piedmont, and of course, Piedmont itself.
The most virulent form, of course, is in Marin, with Berkeley’s strain not far behind. The City’s strains are so variable, its very difficult to compare to those, but pockets could certainly be worse, particulary north of California Street along Fillmore, and particularly almost anywhere in the Marina District.
“Marin AKA Land of the Smug”
C’mon now kpom, be nice.
Nearly all marinites, along with 101% of ‘friscans
suffer from an extreme strain of that all-too-prevalent malady: CSC (California Superiority Syndrome.
They KNOW they are smarter, richer, wiser, more liberal and soooo much better than anyone else anywhere. They KNOW that if there was a God s/he/it would worship on their doorsteps.
And they really need those 100 or more part-time shrinks in Kentfield to polish their mirrors.
The ‘last time down’ in SLO County ( 90-96) Price went down 34.9%. What a haircut!
Technically, Marin has nothing to worry about. The banks, on the other hand, have a lot to be worried about.
Got a source on Healdsburg,Terra Linda, Marin for REOs?
The median price for a single-family home was down from $929,500 in February 2007 and $990,000 in January. In the condo market where the median price fell to $430,000 in February from $560,000 in January.”
Astonishing decline. Of course there is nothing to worry about. He must be talking about people who are not in the market at all and plan to stay put for years, heck, decades to come. haha.
Kevin Bacon in Animal House
“Everyone remain calm…”
Face it Flounder, you fvcked up…
You trusted us.
ROTFFLMFAO!
you fvcked up…
Is that, like, the Roman spelling?
Classy!
Kevin Bacon wasn’t in Animal House.
Kevin Bacon was in everything, including Animal House
“Thank you Sir, May I have another?”
kevin bacon’s been in EVERYTHING, including Animal House (band leader crushed flat on pavement after mob tramples him)
not nearly as impressive as his performance in Wild Things. as if I could recall any scene with him in it.
How about Tremors??? Huh?
McCain: Remain Calm. All’s Well…
Sen. John McCain tells the New York Times he’s very happy with his campaign for the presidency, even though he just lost his campaign manager and a senior adviser at the same time he has hardly any money in the bank.
Remember “Animal House,” when Kevin Bacon played the ROTC cadet in the homecoming parade and insisted that “all is well” as Delta House turned the parade into utter mayhem? That’s what comes to mind as McCain’s campaign seems more and more doomed
http://www.tucsoncitizen.com/blogs/index.php?blog=27&title=remain_calm_all_s_well&more=1&c=1&tb=1&pb=1
Chip Diller: Remain calm. All is well!
CAST
Robert Hoover (James Widdoes)
Kent “Flounder” Dorfman (Stephen Furst)
John “Bluto” Blutarsky (John Belushi)
Chip Diller (Kevin Bacon)
Daniel Simpson Day (Bruce McGill)
Eric “Otter” Stratton (Tim Matheson)
Donald “Boon” Schoenstein (Peter Riegert)
Dean Vernon Wormer (John Vernon)
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http://www.uselessmoviequotes.com/umq_a005.htm
Chip Diller: Remain calm. All is well!
CAST
Robert Hoover (James Widdoes)
Kent “Flounder” Dorfman (Stephen Furst)
John “Bluto” Blutarsky (John Belushi)
Chip Diller (Kevin Bacon)
Daniel Simpson Day (Bruce McGill)
Eric “Otter” Stratton (Tim Matheson)
Donald “Boon” Schoenstein (Peter Riegert)
Dean Vernon Wormer (John Vernon)
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http://www.uselessmoviequotes.com/umq_a005.htm
Well as that Greenbrae broker points out: If you don’t count condos (about 25% of the Marin market) and you don’t count Novato (maybe 20% of all listings in Marin), then everything is just fine!!!
Nice call, Mr. Smith, but you pulled the trigger too early.
We need these knife-catchers. Mr. Smith is doing a good public service by taking a decent bite out of the median index. All the knife catchers should do as much collateral damage…
Shame on the knife-catchers who only bid 30-40K under last sale…
p.s., in some parts of O’side, ’starter’ homes should be in the $60-70K range.
“Former Federal Reserve Chairman Alan Greenspan said there was no bubble, but I had a feeling that things were going in that direction, Smith recalled. . . . Smith, a Web site developer, . . . recently bought a . . . starter home.”
Many editors would have edited out negative comments from a 33 year old web designer regarding Alan Greenspan. I found the jab refreshing, and will not say anything Smith purchasing too early. He gets a free pass today.
Yeah, that’s saying something when J6P can easily make the former Fed chair look like the idiot he is/was.
leslie a-young with her famous ” wont drop X amount in my lifetime . . . “.
fair enough. I am patiently sitting on riverbank, waiting for her to float by, since according to her boasting, her lifetime must be over.
–
Hey, whatever happened to Less-lie? I miss her.
Jas
“Palacios has owned her condo since 1991 but still expects to take a loss because of home equity loans and refinancings over the years.”
That doesn’t make it a loss!!!
Exactly–that just means she chose to take all the “profit” out of the property already.
She is really dumb. She already spent her “equity” yet thinks it’s “free” money that she was entitled to!
Why just let all of that ‘cash’ just sit there in equity when you can buy sh1t with it?
The operative word being S%%T of course
She wasn’t entitled to it, but it was free money all right. Problem is she’s already spent it.
Betty Palacios is trying to sell her Upland condo for $140,000, or close to 40% less than what similar units in her complex were selling for two years ago.”
I know Upland. It is a puny nondescripit beragged little burg squeezed between claremont and Rancho Cucamonga. The last place on earth you would want to unload an albatross condo. By end of this year SFH REO fixers around that area will be going for under $200,000 for large 4-2’s on big lots, and there will be plenty of under $100,000 60-80 yr old ragged clunkers in declining hoods , of which upland has plenty.
Upland also has plenty of gang activity, a result of its close Proximiy to San bernardino Metro, the epicenter for gang activity in SB section of the IE.
Eww Not Upland..smog central. As well as gangs and congestion and there used to be a good CW dance bar..but that was so long ago.
Is that enough to redeem Upland?
There used to be a skateboard park there……
Upland used to be pretty nice before they built the Ontario Mills and extended the 210. Too bad.
The skatepark was “Pipeline” great place to ride.
“‘We’re off the cliff,’ said Immel. ‘We think we have a parachute, but we can’t find the ripcord to land safely. It really will get a lot uglier for the next year across America, and it should bottom out about a year from now.’”
That’s funny, he just described the panic that comes just after you can’t find the ripcord, which leads to the next phase…
Cratering into the ground.
In the news, there was the One guy who actually survived no parachutes deploying. Lived to jump again. For real.
I guess that is what knife catchers are today.
The most parachutists that survived w/o a chute, happened during WW2…
Something like a dozen or 2.
Falling out of B-17’s and other assorted bombers and landing “just right” in soft snow or other perfect conditions.
“While some sellers have expressed animosity at his property’s lower price, he said builders are also cutting prices and adding incentives. ‘Personally, I recommend to all my clients not to sell right now,’ he said. ‘Right now is the best time to buy.’”
You know it is time to sell when the realtors are telling you not to. It is clear that waiting a year or two or three will result in only a lower selling price in the East Bay.
I called a realtor that I trust (a bit) and he couldn’t hold back his “It’s a great time to buy” statement. I no longer trust him quite as much.
That’s like asking a used car salesman if it’s a good time to buy
Or Client 9 if it’s a good time to play hide the salami.
Or asking anyone in a gar bar if you can push in their stool.
gar = gay
“Easy come, easy go? The housing crisis has come to this: just walking away. As home values sink, people are abandoning homes, viewing their ownership as hopeless or worthless.”
——————————————————————————–
This is the big difference with this housing bust as compared to previous busts, homes are seen more as “investments” - a stock to sell out of once the value drops. I expect this mentality to push foreclosures into record breaking territory.
Could this be because the housing bubble was preceded by a stock market bubble?
They have been in record territory for some time. As have vacancies and price declines.
It’s hard for me to get a sense for this because most of the statistics I see are comparisons against just a few years earlier (which was a very bubbly period during which anyone could sell quick for a profit). You know how much higher we are v. “normal” rather than during the bubble period? I think that is the more important comparison.
Dataquick has been reporting that foreclosures are higher than ever since they started tracking, but they didn’t start tracking until like 1988, I think. Nationwide foreclosures have never been this high.
I do not blame some people who bought 2 years ago with no money down and now walking away. It is a pure gamble with zero downside (except for thrashed FICO score). Heads the buyer wins and tails they don’t lose much.
Really Zeb? Well then, tell me how you feel about folks who extracted hundreds of thousands of dollars in MEW, bought toys and stuff they could never afford otherwise, and now are saying f-it………and taking all the toys and stuff with them?
Maybe that example has nothing to do with the one you present, but I think it does. You see, there’s a little thing called morals and ethics, and the attitude you condone is exactly what’s wrong with so much today. It’s no longer about right or wrong, but whether or not one can get away with it.
Sorry, in my mind the person that goes into a purchase with the attitude you describe is an immoral ass-hole!
I concur!
Heads, you win big. Tails, you win small.
Those FB will probably sell their “toys” for pennies on the dollar so they can pay the rent, food and gas. So in a way, we win as well.
‘Those FB will probably sell their “toys” for pennies on the dollar so they can pay the rent, food and gas.’
I want another kayak, and maybe a motorcycle. No rush at all, I’m just going to leisurely wait for some FB who has to sell their toys to pay the mortgage, or get rid of everything because they got foreclosed on and have to move home to mom’s basement.
I expect to have an increasing inventory of choices coming along.
Methinks that FBs bought a buttload of crap that we don’t want or need. Taking kayaks for example, true outdoors enthusiasts tend to be financially and physically fit - traits unlike the typical FB. FBs like passive activities (TV) and kayaking ain’t passive. So, maybe you’ll get a better deal on a new one from a store going out of business?
‘So, maybe you’ll get a better deal on a new one from a store going out of business?’
A good idea, and I will keep an eye out there, too.
I got my first kayak right before Christmas a few years ago, from people who ‘needed the money for Christmas presents’. I got a screaming deal. Out here the time to shop for outdoor toys is definitely in mid and late winter. It’s been raining nonstop for weeks by then and many people have forgotten what the sun looks like and that Spring will in fact return one day. They don’t want to be outside at all, so prices on outdoor toys are waaay inexpensive.
See, I use my evolved monkey brain to remind me that I will see the sun again sometime and I’m going to want to be outside in it, and that if I save money by obtaining outside toys in a judicious way, why, that’s that much more beer and flower bulbs I can buy! It’s a little trick I do.
I want patio furniture.
I bought a foreclosure grand piano last summer, at an unbelievably good price.
I want another kayak, and maybe a motorcycle. No rush at all, I’m just going to leisurely wait for some FB who has to sell their toys to pay the mortgage
It sucks, because I was thinking about selling my motorcycle as I don’t use it that much anymore, but with the mortgage meltdown in full swing I’m sure the market is glutted (haven’t even bothered looking). Looks like I’ll be hanging onto it for another 5-6 years or however long the downturn lasts!
Yes, the motorcycle market is glutted already. I’m in the market for a Honda VFR 800 and we’re nowhere near the point where the housing market is currently at. Give it another six months. That’s when this current group of knife catchers go under (after a mere 6-12 month half life) and then the bottom really falls out of the housing market. Couple that with the banking meltdown and ensuing nuclear winter in debt financing, it will be at that point that all kinds of stuff will be had for very very cheap.
Think again. Your pension fund managers had a brilliant idea of buying these CDOs awhile back.
Cinch
heads i win, tails you lose!
I drink your milkshake.
didn’t you see the movie? or hear the million radio ads before the Oscars? It’s not “I drink your milkshake.” It’s “I DRINK YOUR MILKSHAKE!!!!!!!!!!!” in bold and 20 point type. Overacting at its finest. Jim Carey could have played that part better.
RE: Those FB will probably sell their “toys” for pennies on the dollar
The motorcycles will be kept because of their gas mileage-if paid for.
But heaven help you if you’re tryin’ to unload a $100k+ big- block Chevy powered Checkmate speedboat and the 1-ton dualie 340HP Magnum engined Dodge Quad-Cab P/U used to pull the thing.
LMAO…my, my how the worm turns.
I wouldnt do it, but I understand Zeb’s point. The mortgage brokers and banks (who later sold it) knew by offering 100% LTV loans this would be the result. That is the deal they struck. Personally, I think less than 20% down should be outlawed. I also believe, however, that both parties knew that the deal wouldnt be happening unless the buyer had no skin in the game and could dump with limited losses. It’s not like one side had hidden or secret information, and was misleading the other side. It was all on the table. The real blame belongs in the failure to regulate an obvious problem.
What are these morals and ethics of which you hyperventilate, earthling?
I agree it should be outlawed. Now we are forced to bail out the big banks or make the other banks buy the dying banks. That law should be global.
No way…its the bailouts that should be outlawed. If banks want to lend at zero down, screw ‘em…they will get what’s coming to them.
I guess 2 wrongs don’t make a right is out the window. Because the banks were willing to loan, that means it’s OK for people to borrow and spend irresponsibly and walk away from contracts and obligations. I just don’t get where this is right.
I flat out refuse to buy till it IS outlawed otherwise most will end up catching a sword between the optics. The only way to know you are getting a decent deal is for lending standards to return to historical norms. I personally think that when the banks require more skin in the game ACROSS THE BOARD - BOARDER TO BOARDER, we will see some amazing deals. Oh wait, the banks are “too big” to fail. Tell that to Bear Stearns! Oh wait, they are getting bailed out. Depression, he we come!!!
Saw it on the money channel with lots of money shuffling and the background noise was that there was a ‘run on Bear Stearns and that it held out for as long as it could’ getting a “undisclosed sum” from JPMORgan.
Couldn’t believe I heard the actual words “run on the money (BStearns)”.
Wow, we really are going to be hearing the truth
soon?
“Well then, tell me how you feel about folks who extracted hundreds of thousands of dollars in MEW, bought toys and stuff they could never afford otherwise, and now are saying f-it………and taking all the toys and stuff with them?”
Who cares? The lender takes the hit.
At least that’s how it’s supposed to work.
“Who cares? The lender takes the hit.”
You been following the bear sterns news today ? Who do you think is paying for that ?
‘Who do you think is paying for that ?’
Don’t know don’t care. Just balanced my checking account and it’s all there.
I also just balanced my checking accounts. The numbers add up but the value is less every day.
I ran a little money and metals blog for years. I tried to show people the value of diversification. USAns are probably the only people in the world that think one currency is all they should hold. It’s called ‘all eggs, one basket.’
Now, I could have put more into other currencies and done better these past couple of years, but I didn’t. It was my choice and you won’t catch me tugging on your ear about it.
BTW, that blog was free.
Americans will learn at their own expense, that there are 6 Billion other people on the planet, besides them.
Wish I had known about your prev blog.
Sounded interesting.
As one who travels for bus extensively, it has always held an interest for me when other countries economic dynamics changed.
I remember reading one of John Bogle’s books on investing and there is one part on why he though international investing was overrated. One of the reasons that he mentioned was currency risk. Why would you want to exposure yourself to foreign currency fluctuations? It was supposedly less risky to be in all dollars all the time.
Overall Bogle has a solid view on investing, but it was very strange to see such a bad gaffe. One of the primary pillars in finance is diversification, and he was so US-centric, he couldn’t see the inherent stupidity of his position.
“Who cares? The lender takes the hit.”
This is the same mentality of someone who idly watches a petty theft from Wal-Mart.
We ALL end up paying . . . in terms of higher bank fees, lower deposit rates, higher prices at Wal-Mart, etc. Businesses (including banks) are in business to make money. They don’t just take “hits” forever . . . I acknowledge that they collectively are a helluva lot smarter than I am and that they will figure out a way to make up for the “hits” they are now taking. It will come out of our hides, one way or the other.
That’s just nonsense. If I saw someone stealing I WOULD turn them in. In this case, there isn’t a damn thing I can do about it. Big difference.
Bank fees? I haven’t paid a penny of those since an employer let me in on a little secret (if you request them to be waived, they always will, if you are a good customer).
Go ahead and bend over backwards trying to make yourself a victim, but don’t include me.
I personally pay little to nothing in bank fees also, but that is not the point. Look closely at bank earnings over the last 10 years, more and more of earnings are coming from fees, not net interest income. It’s coming from somewhere, maybe not Ben Jones, but you can’t deny that fact.
And am I a victim of other people’s poor or unethical decisions, damn straight I am.
Oh. The banks got lots of origination fees over the past few years. Way beyond ATM fees.
Those fees may be drying up slightly.
Now about the bailout or what ever they are doing. Its not in an FDIC bank bailing out depositors. its an investment bank being bailed out by the Fed and JP Morgan. Private institutions.
They decide to commit suicide then its their own problem.
They only have to recover a very small amount of the asset values to cover deposits in these things. Leveraging works that way for deposits as well.
Acutal deposits on demand were leveraged very highly.
that phrase ” we all pay ” really irks me. always has. It;s just an excuse used to justify raised prices.
wel guess what, the prices would have been raised ANYWAY ! this constant sing-song ‘ we allllll pay ‘ is just BS .
We all pay for -
increased utility usage = higher rates because of building more power generators.
DECREASED utility usage = still HIGHER rates from the lack of paying customers.
higher rates for anything (cable, lectricity, etc) = for maintanence, upgrading systems.
higher rates for insurance = hurricanes, floods, whatever reason. just make one up. them get laws passed MAKING the average person to buy it. car insurance. home insurance. but let the illegals be exempt. oh sorry, they lose their car if caught without a license. big effin deal !! they donteven get arrested. but YOU & I wold be hauled downtown AND given 6 tickets cause we have an address to find us for money extraction. the whole system is rigged against the little guy.
see a pattern ?!? hmm, maybe companies will charger higher rates for whatever reason they want, just because they CAN, and insert some flimsy excuse. yeah, shocking aint it!?
so again, when I see the corporate brainwashed mantra parroted by lemmings saying ” we alllllll pay for ___________ ” it just makes me laugh all that much harder.
stupid, stupid fools.
ex-nnvmtgbrkr: “…tell me how you feel about folks who extracted hundreds of thousands of dollars in MEW, bought toys and stuff they could never afford otherwise, and now are saying f-it………and taking all the toys and stuff with them?”
Aren’t all/most/some/any MEWs recourse loans though? Won’t these ‘trophies’ be repo’d at some point when the accounting catches up, or am I way off base here? I hope these immoral a-holes get nailed to the cross.
Rob
I don’t think they’re going to repo dinners, vacations, clothes, and plasma TV’s. I would bet that 90% of the money loaned out was used to buy junk that the bank has no desire to repo.
No they won’t go after the ’stuff.’ With a HELOC, there is no purchase money lien against the things on which the money was spent.
No collections attorney is every going to go after the plasma TV or other junk like that. Not worth the cost of the effort - the legal fees to attach the plasma TV will be more than it is worth.
As far as boats, jetskis, and the other vheicl-type things the answer is a very iffy ‘maybe.’ Thing is they have to find the stuff. Not exactly like looking up DMV records to find out how many behicles they have. And again, there is the cost of trying find the bass boat, get an attachment issued and then selling it at auction. Spend $2000 -5000 in legal fees to sell a bass boat and trailer at auction for $3000? Don’t think so.
Look at it this way, all those HELOC purchases of boats/plasma TVs/plastic surgery was the trickle-down economy Reagan always promised us. FB buys overpriced house (seller/broker/bank/note holder/stockholder) gets paid; FB takes out HELOC to buy stuff (bank/retail store/plastic surgeon/bank/note holder/stock holder) gets paid. Rinse and repeat. This flush of HELOC money floated everyone’s boat, in one way or another. You couldn’t all be making the big bucks (salary/investments) without being a part of this mess.
How are you going to repo cosmetic surgery?
The worst part of all of this will be the families torn apart.
Morals are way overrated, I say. Especially when you are dealing with immoral characters anyway.
The point is THE LENDING BANK IS TO BLAME. You can’t build a successful business hoping that all your customers will behave like you want them to. Banks were stupid and they must pay for it.
I also don’t like the idea of seeing these irresponsible people getting away with this kind of behavior, but I am beginning to get used to it.
“getting used to it”
as one lobster/frog to another in a big cold pot of water..
“is it me, or is it getting hotter in here”..
Minutes later…we are all ‘Done’.
If they used a HELOC in California, that second lien holder is going to come looking for assets.
If you didn’t know, the world is full of immoral people. Leave your wallet on a bench at the park and see what happens to it. That’s basically what the banks did. They were hoping that they would be repaid instead of ensuring that they would be repaid.
I think the credit stain from walking away with the toys will be bigger than you think.
Aren’t HELOCs recourse loans?
While these guys are dealing with trashed reputations and inability to get credit; we will be able to finance new buisness and move along just fine.
Just may be personal integrity saves your ass in the not so distant future.
Not to mention, but I’m guessing that most people who took out HELOC’s did NOT pay cash for any bigger-ticket items, such as bass boats, that they could finance separately; so even if Countrywide doesn’t come after them for the bass boat, maybe Bassmaster will.
I disagree with the “immoral ass-hole” conclusion. If the loan is a recourse loan, the lender can pursue that option in court. If the loan is non-recourse, then the decision to continue paying the mortgage is a business decision, pure and simple. Morality doesn’t enter into the equation. Period.
I agree. Unlike many FBs, the banks presumably were aware of the terms of the contract and the actions available to the borrower. And yet, the banks STILL thought that no skin in the game was a good idea, essentially speculating that real estate prices could not go down.
Oops.
As long as there is no fraud it’s never immoral to take advantage of bankers or beat them at their own game.
Until I see just how much short term and long term damage this Nation wide faulty lending does to others and myself ,I’m watching and waiting for the next shoe that drops ,or maybe the next loan loss hurricane that comes into town that contorts public policy .
I have already accepted the fact that the powers don’t seem to want to go the ‘Justice ” route , so, we shall see how much damage our fellow man/women actions can have on the ones that didn’t play the gambling ,or speculator,or liar loan game ,(and that includes lenders that were gambling also ).
I think there can be a ‘Black Swan ” event in which the number of people who did something destructive can be so huge that the snowball of those acts ,can do the innocent in . A case on point was the Great Depression in which even people who were not involved with investing in the stock market were taken down and loss life savings and assets and jobs because of that crash .
As I see it, the margin calls on stock in 1929 are no different than the mortgage payment calls to pay or lender margin called between each other are no different in effect. It all has to do with leverage ,without ability to pay .
Sorry, in my mind the person that goes into a purchase with the attitude you describe is an immoral ass-hole!
I’m sure that if I offered to work for free, my employer would happily take advantage of my stupidity. Lenders were equally stupid for giving loans to people without any of the usual precautions. It’s like leaving your window open all night and then being pissed because a bat or something found its way inside.
The gamblers were amoral a*s-holes who were looking for short term gains ,including borrower and lender .I call them ” partners in crime”, set up by the cheer-leading real estate people ,who cannot be left out in the part they played .
Bottom line is that the lenders were the party that breached their duty to prevent fraud ,or liar loan applications (however some people believe that the Realtors should of prevented fraud also ). Borrowers that got talked into submitting liar loans by the REIC are the same as any party that gets talked into committing a crime ……no excuse .
Sometimes one can understand a person who is starving might commit a crime to eat (stealing some bread ),but to commit loan fraud to buy a product you didn’t need and couldn’t afford ,just to get some easy money ?
The Fed Chairman spoke about the % of loans that were first payment defaults ,which means that the powers are aware of the extent of the fraud aspect of many loans .
“The buy-down isn’t working, the free car isn’t working…Price is working, period.”
This is what we’ve been saying at HBB for quite a long time. Finally, we’re seeing sane comments like this in the MSM.
“The buy-down isn’t working, the free car isn’t working…Price is working, period.”
and
“And many buyers are threatening to walk away from deals if they feel they are paying too much. ‘Buyers don’t mind appraisers coming in less, and sellers don’t have a choice,’…‘It happened the other way, too. (In the housing boom), it would appraise for a higher price, and sellers would say, ‘Too bad, make up the difference.’”
This is what we’ve been saying at HBB for quite a long time. Finally, we’re seeing sane statements like this in the MSM.
The disparity between appraisals vs. what properties were listed at spelled the end of Tucson’s housing boom. The Daily Disappointment even ran a front-page story on this trend. And that story ran in 2005.
I’ve been tempted to hire an independent appraiser and have them “look” at a house that’s currently on the market for what I consider about 1.7 times its real value.
I wonder if I could get an appraiser to sign a contract stating that they would purchase the property they appraised (from me) for say $1000 less than the value they come up with, at my discretion for some period of time after I buy the property? I’ll bet they would be VERY conservative then!
Just like diamonds — not worth the paper they’re written on (the appraisals, not the diamonds that is). Simply a feel-good, no promises, buy the darn thing already piece of paper.
And exactly where are all those rich Canadians hiding - they were supposed to be the saviors of the desert. The sooner the sheeple get their heads out of the sand and start accepting the truth of the situation, the sooner we can move forward.
Those Canadians are busy “snapping” up properties in their own country, as they say, Canada is “different” they don’t care about America and it’s problems.
For the record…
The most Canadian flags I saw on one piece of luggage during our stay in New Zealand, was 7.
Just had a couple of “rich” Canadian acquaintances come back from buying two condos in Phoenix and boy are they glad of the “deals” they got.
Now they are out and about trying to get more pigeons into the trap for the big asshanding they are going to get as this keeps unfolding.
Knowing their background all too well, i am not at all surprised that they took the bait. Knifecatchers from everywhere and anywhere are needed to provide the grease to lubricate the “slope of hope” so these guys will be doing their jobs for the markets in Phoenix.
Knifecatchers and FB’s are nature’s way of culling the herd.
Bear Stearns KO’d by Alt-A?
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3553519.ece
Just maybe when they stop saying it’s all “subprime,” people will get it’s a much bigger problem. As long as it’s just the poor folks with their bad credit, everyone else can pretend it’s not their problem.
txchick,
You are going to love this. I was in that building this morning (pure coincidence).
It was purely surreal. Like a bad acid trip without the drugs.
Nobody jumped out of the building though. I so badly wanted to see a jumper!!!
I keep thinking about what you said awhile back about knowing where all the good street food is in NY. We need to meet up and hit the Indian places there.
Or any other cuisines you care for, or haven’t even heard about. I know you’re vegetarian but in NYC that’s not a constraint.
I’ll take you to the street cart with the Zagat’s rating. Man used to work for the Russian Tea Room. When he was asked why he quit, he said, “I’m my own boss now, I still make good food, and nobody yells at me.”
A man after my own heart.
Maybe it has spread to Alt-A, but that is where it will stop because it is contained. Contained means everyone gets spattered with feces, correct?
Is it called Alt-eh, up in the Great White North?
‘Marin has nothing to worry about,’ said John Karevoll, a DataQuick analyst.’
I’ve been reading this blog for years and this is my first post. I live in Marin and a friend of mine knows a couple that purchased a home in Ross last summer. The couples combined income is about $250K, and they bought a home for 1.8 Million with a negative amortization loan. They can only afford the minimum payment on the loan so 40K is added to principle every year. They are happy as can be with there purchase because they are sure it’s worth 2.2 Mill by now and now it will keep rising every year. All I hear form anyone around the Bay Area is how Marin is the one place that can’t drop. Anytime you have that much consensus it has to be wrong… I say give it 2-3 years and the S#@$ will hit the fan.
How much does a $2m house rent by the way? When do their neg am loans reset? They are all going to walk away and houses there will drop how much? 67%? 75%?
I think the S#@$ had hit the fan. Convince yourself by telling your friend to mark their house to market, and see if they can get $1.8 mil. Remember house prices are set at the margin i.e. at any given time only a few houses are up forsale.
Cinch
http://www.blogbythebay.com/
Look down a ways and see the recent house sales for Ross (Feb 2008).
They are all above $1.8 million, but way, way down from asking price.
Also at this blog:
“Spring has sprung, the Marin real estate market has not..
Mar 3rd, 2008 by GingerWilcox
While it is not technically spring, it sure feels like it. 73 degree temperatures and a slight burn from my open sunroof- I feel like spring has sprung. The spring real estate market may be here but Marin real estate sales activity is still surprising low. In February 2008, there were 86 single family home sales in Marin County. In February 2007, there were 141 single family Marin home sales.
Marin real estate sales volume is down almost 40%!
Interestingly enough, we have seen a resurgence of multiple offers in the last couple of weeks. Buyers are out looking for new listings. One San Rafael listing received three offers and went $100,000 over asking price! Another Marin house listed under $1,000,000 received five offers.
If the listing is old, many buyers won’t even look at it. The initial offering price is absolutely crucial. Staging and property preparation is also more important than ever. Homes that are not properly prepared are sitting on the market unless they are priced very fair.
When will the typically busy spring Marin real estate market hit?
We are still waiting!”
“I live in Marin and a friend of mine knows a couple that purchased a home in Ross last summer. The couples combined income is about $250K, and they bought a home for 1.8 Million with a negative amortization loan.”
I’m in Marin also, and this is exactly why we are toast. Under traditional metrics, a $250K/year couple should be purchasing for around $750K to $800K, not $1.8 Million. Everyone is stretched to the gills.
Just wait for the AltA and Pay Option ARMS to start resetting. That’s when the pain will become very, very visible. We’re just not quite there yet, but it sure as heck doesn’t mean it’s not dead ahead.
I’ve been to Marin, and can’t seem to wash the smug of it, off of me.
Any suggestions?
Close you eyes, click your heels together three times and say “There’s no place like home, there’s no place like home, there’s no place like home…”
Alad! (Good to see ya).
Shower?
My personal favorite is Neutrogena - ummmmm ha - clean!
Perfect shower temp (regional) between 67 and 71 - SAYz ME!
“Get the smug off me”
Er…my friend…don’t do smug.
O.K.
Redo.
Be You!
Best Always,
Leigh
Thanks Leigh…
I’ve tried to get rid of it for years, to no avail.
Alad: Try visiting Marin in 2010 and throwing it back in their faces. That oughta do it.
Lordy lordy…..took me a minute to be able to breath again when I calculated that those fools went into a 7.2 times income loan when they can’t even afford to pay the full interest!
So what if they are right and it is ‘now worth $2.2 mill? Sooner or later they are going to have start paying the full interest that is accruing and principal too.
If the option-ARM has a 115% LTV cap that means that when the interest being added to the back end brings the loan up to $2.07 mill, then loan resets and the lender wants interest and principal If the trigger is 125% LTV cap, it restes when the balance reaches $2.25 mill. They only can add unpaid interest for so long.
It will reset (and sooner than they think if since they obviously do not have any grasp of the idea of ‘compounding interest’ and that what isn’t paid runs up more interest which isn’t paid and gets added to the balance and then that amount runs up more interest…..)
If they can not afford the total interest and principal payment now, what makes them think they can afford it later?
Doesn’t matter if it “goes up in value” - they still have to pay back the $1,800,000 and whatever accruing interest they have not paid. Doesn’t matter if the place is worth $1,000,0000 or $3,000,000 - they still owe $1,800,000 and more.
And finding a buyer (a real buyer who can actually afford the place) in view of current lending guidelines and using their imaginary value will mean someone with:
20-25% down or $440,000 - 550,000 in cash
2-3 year reserves = to mortgage, taxes and insurance (thisis now being required by the mega-mortgage lenders with the best rates) and that means around another $422,000 in cash
An income so that the mortgage, taxes and insurance do not exceed 31% of gross or at minimum $545,000 a year. We are talking the top 1% in income.
Comparatively speaking, your friends are way out of their league. They are only in the top 5% of income but trying to have the house that needs the top 1% income (plus a LOT of cash for downpayments and reserves.)
Who on earth would they ever sell it to? 1% of households means finding 1 of the 1,100,000 households in all 50 states who want that house and want to buy when they want to sell. There are far more of these $2,000,000 properties out there (whether listed for sale or not) than there are buyers. My county (in the NW corner of the lower MI penninsula) has about 30 of these $2,000,000 places listed for sale - all 2nd homes designed only for the 2-3 months of summer. Bill Gates does not want all of them.
How can they only afford the minimum payment on a $250k salary?
Asuming 8.5% (the lowest I have seen on these size mortgages that have gone into foreclosure around here) that is $153,000 a year in interest. If they have $40,000 a year in unpaid interest accruing, that means they are paying $93,000 a year.
Now take an amount for taxes. I’d make a very rough guess of around $80,000 a year in federal and state taxes. (And yes, I include the mortgage interest deduction.)
Take out the utility costs (maybe $6000 a year), the real estate taxes (ouch! - here we would hit them for around $36,000 a year) and the upkeep. Probably around another $45,000 -50,000 a year if they use a lawn service and a cleaning service.
Now we are up to $140,000 a year streaming out the door on the house. Add the $80,000 tax liability. Now the total is $220,000. That leaves them $30,000 a year or $2,500 a month for food, insurance, credit cards (and I bet those are huge), car payments/leases (doubt they are driving a Ford Focus) and everything else.
Nope - they are dancing on a financial edge.
Even if they had a fixed 30 year, that is a giant-jumbo and those are closer to 8-8.75% on interest, so the payment would be over $13K a month at 8% or $158,400 a year. In the first year, that would be $143K in interest and $15K in principal. Little over a $1K a month (or only 9.3% of the monthly payment) would go to principal.
That’s something like $ 400 to $ 500 per day or something like $ 18 or so per hour for interest and property taxes and insurance under this type of scenario (without trying to be exact).
Who in their right mind would want to be a buyer of this type of deal and perhaps more importantly, who in their right mind would or could conceivably be willing to finance this kind of transaction??
Absolutely insane. There definintely is a long long way to go down in these real estate markets before any kind of semblance of real value starts to appear.
You could rent a pretty nice castle without any of the commitment headaches for 12K a month!
Ann, I’m no accountant, but if they are paying $140,000 per year in mortgage interest and property taxes, that leaves taxable income of $110,000, and that is the 25% federal tax bracket. So their state and federal taxes would be less than $40,000 this year. I’m assuming that they don’t give to charity or contribute to retirement (because they’re idiots.) They’re a great example of why mortgage interest should not be deductible - it just encourages their stupid behavior.
The deduction for mortgage interest begins to phase out after a certain income. I think it’s like $120k/year.
I thought that Marin had been dropping for quite some time now. This is confusing me. I’m too tired to check.
“Tircuit split with her husband and unloaded the house last month for $455,000 — a 22% loss and less than what she owed on the property.”
Hey look on the bright side Ms. Tricuit. You are still better off than the sap that paid the $455,000.
Yeah, she’s better off w/out the house, definitely. And w/out the husband, probably. He’s an ex-mortgage broker? Looks likely she’ll be the one paying alimony.
And she called the situation a “painful but instructive lesson in practical economics.” Some people CAN be taught.
Another proud graduate of Joshua Tree University.
“Go Fightin’ Needles!!”
From the Ventura County Star Article:
The credit crunch seems to be getting worse, not better, said Mark Schniepp, executive director of the California Economic Forecast Project in Goleta. The lingering mortgage crisis continues to make it difficult to secure a loan.
Shouldn’t that read, “The lingering mortgage crisis continues to make it difficult to secure an idiotic toxic loan”…..?
I’m sure if you have documented assets and income, a manageable DTI ratio, and are willing to put a substantial amount down, you can get a loan.
What you can’t get anymore is the “free-money” loans.
I had a car salesman, I mean ‘investor’ call me today and say with some bravado, “Well, if I can get someone to give me a house with no money down, I mean, I’ll take it.”
At the time I was thinking:
a. Well, so would I.
b. You’re a lunatic, and,
c. You’re a lunatic who didn’t get the memo.
Point is, the public does not understand the big picture. They watch Brian Williams and think, “with prices coming down, I can finally get on that road to real estate riches — after all, prices should start going up again at the end of the year.”
The funny thing here in the Alt-A Bay is that even lunatics who get the memo still think they should be able to board the train to riches in real estate.
Newsflash - Ben Bernake agrees with the HBB. I did not know Bernanke could actually talk the truth without undergoing auto-combustion.
http://tinyurl.com/329wcl
“Mortgage performance data show a strong correlation between adverse house price changes and subsequent increases in mortgage delinquency and foreclosure (Avery, Brevoort, and Canner, 2007; Gerardi, Shapiro, and Willen, 2007). Investors who purchased homes in the hope of price appreciation seem particularly likely to walk away from “underwater” mortgages. Indeed, the role of investors in the housing market has increased markedly over time. According to data collected under the Home Mortgage Disclosure Act (HMDA), lending to non-owner-occupants has risen from about 5 percent of the home-purchase loans in the mid-1990s to about 17 percent of all purchases in 2005 and 2006 (Avery, Brevoort, and Canner, 2007). Mortgage delinquencies are also tied to local economic conditions; notably, several midwestern states struggling with job losses and slow income growth have seen increased delinquencies.” - No kidding!
“The current high rate of delinquencies and foreclosures is not confined to the subprime market. In 2007, about 45 percent of foreclosures were on prime, near-prime, or government-backed mortgages. Across market segments, delinquencies are rising fastest on the more-complex loans originated over the past few years. In part, that trend seems to be due to the fact that such loans were made to borrowers in weaker financial condition. In some cases, borrowers may not have fully understood the details of their loans, including the potential for large payment increases.” - Who knew!
From Ben’s speech linked by who cares… iow - a whole lotta folks are screwed and there ain’t nuthin’ we can do except bloviate about it.
Conclusion
It is clear that rising home foreclosures and delinquencies significantly challenge many consumers and communities, and I hope I have conveyed today that the Federal Reserve is strongly committed to fully employing our authority, expertise, and resources to help alleviate their distress. We will continue to collaborate at the national, regional, and local levels with other stakeholders in the public, private, and nonprofit sectors to help to avoid preventable foreclosures and to address the consequences of the foreclosures that occur. In the longer term, through our regulations and oversight, we seek to promote responsible and sustainable lending that will allow more Americans to achieve their goal of homeownership.
I think speculators were closer to 40% of the market in 2005-2006.
The stat is that 40% of all sales in the 2004-2006 time period were (a) 2nd home buyers or (b) speculators buying to flip as the market rose.
This statistic reminds me of an analysis I found somewhere years ago that showed in late 1999 and early 2000… an increasing number of trades in a particular group of Nasdaq companies were among fewer and fewer buyers.
The assumption was that they were essentially selling a significant number of shares to one another in this subset of companies.
In April of ‘00, it all came crumbling down.
Most investors lied to their lenders and said they would be living in the property, so Bernanke still understates the problem.
poor thing, you should see the picture. A little slice of a bad part of Memphis plunked down right there in Pasadena or wherever it was…
nobody should buy a house for more than 2 to 3 times income. enough said!
The Bear Facts
http://www.portfolio.com/news-markets/top-5/2008/03/14/The-Bear-Facts/?TID=dealpartnerbadge
Bear done!!!!!
Next shoe to drop………………..
http://www.cnbc.com/id/23637255
http://www.marketwatch.com/quotes/ubs
Those were my two short picks from last early summer. What can I say . . . .
Bear done!!!
Rhymes with Verdun. That was one heck of a meatgrinder.
BofA can’t even keep their ATM’s stocked with cash.
Suspect firms at this time are:
Lehmann
Merrill Lynch
90 day correlation charts 0.85 -0.94
http://tinyurl.com/2c8gsd
My my my, Conde Nast reporters must be reading this blog. To wit (sounds like a skit on SNL):
So there’s still a glimmer of hope that we will avoid complete and utter financial meltdown?
Yes. Although that’s no reason not to stock up on canned goods.
Schniepp said. “It’s like plumbing; the pipes are all clogged.”
that explains the 28% drop in price in VC, clogged pipes
hjALmar Greenspan
“Former Federal Reserve Chairman Alan Greenspan ’said there was no bubble, but I had a feeling that things were going in that direction,’ Smith recalled. ‘We decided to bide our time. Sure enough, it did happen. We realized that it was the time to make our move.’”
“Ed Jeffry (co-)founder of the National Association of Responsible Loan Officers, helped a client buy a home in Inglewood in Southern California, said that both she and the seller agreed to $525,000. But when it was reappraised, it was found to be worth $499,000.”
There is NO home in Inglewood worth half a million dollars. For those of you who don’t know the area, it’s right by LAX airport and where the LA riots broke out. This guy is not a “responsible loan officer” he just wants to make a buck.
Isn’t Inglewood in the middle of the black-Latino gang wars?
yeah…listen to some of the rap songs by Snoop or Dr Dre. you will hear them mentioned Englewood a lot. ahem..it’s their hood.
Inglewood (may be tad better not much) right next to Watts, where riots broke out decades ago before LA riots. If you go to watts you wont believe there are places like that in America.
“there is NO home in Inglewood worth half a million dollars. For those of you who don’t know the area, it’s right by LAX airport and where the LA riots broke out. This guy is not a “responsible loan officer” he just wants to make a buck”
Inglewood has century blvd where all the cheap flophouse hooker motels are. It also has more exotic bars than any other community in LA. It is half black/ latino with maybe 5-7% white, a combustble mixture. Very corrupt police dept. There are blighted industrial pockets as well as areas of extreme poverty all over inglewood, especially in lennox 90304 which is part of Inglewood. Lennox is a wasted illegal-alien slum pocket where flippers ran wild with teardowns/quick rebuilds of apts and SFH’s, and entire city is rife with Mortgage fraud.
Inglewood is the city U have to go thru to get from south bay to west LA. There are a few isolated middle class quiet streets & pockets scattered in inglwood but i do not think any hood in this blue collarish ‘edge” city is safe.
BTW inglewood may be the most ugliest city in LA. The moving of the lakers out of the old forum did not help, and i believe hollywood park is on verge of shutting down. No one with any brains goes to inglewood for fun & entertainment, except for drug dealers and high rollers .
“National Association of Responsible Loan Officers”, right up there with “National Association of Intelligent Used House Salespeople” and “National Association of Honest Used Car Dealers”. Between the 3 of them combined, they boast a total of 5 members.
RE: This guy is not a “responsible loan officer” he just wants to make a buck.
Appraiser’s must be runnin’ real scared.
The guy tanked the deal for a crummy 5%.
5%
“It really will get a lot uglier for the next year across America.”
This is true in more than just housing. Housing is bringing down the entire economy. I work in government because my Dad always said “get a safe government job.” Well, guess what? The government here in Cali is laying off at all levels, state, county, city, school districts, etc. Thousands of teachers are getting pink slips. Luckily I am safe due to seniority.
I am also seeing people who don’t even own houses going broke due to the bad economy, again tied to housing. For example, at my bi-weekly massage appointment I noticed the day spa was dead. The masseuse started complaining about the economy and that no one is getting massages or other spa services anymore. Then I went to my chiropractor (again, th eonly person in the palce) and she was like “are you sure your kids don’t need a check-up?” This is true for many other businesses, including nail salons, hair salons, and numerous other non-essential service sector jobs. Cali is tanking big time. I’ll just keeping counting my annual raised and keep renting at 50% what I can buy for.
“Cali is tanking big time.”
Don’t worry, the tiny slice of LA roughly bounded by The SM Mountains, Western Ave, the 10 freeway, and the ocean is holding up just fine. Just ask anyone who owns or sell property there! This will be epic when it crashes here for real. Maybe in the fall?
I once read of a guy in 1929 who bragged about how smart he was because he didn’t own any stocks. Six months later he was thrown out of a job.
Nobody is going to remain unaffected by what is about to happen to our economy, homeowner or not, IMHO.
I’m in a conundrum. My husband hates it when I share sobering information about the state of our economy, says I’m Chicken Little and accuses me of going into hysteria. Yeah, my womb is talking to me…. Anyway, what’s a girl to do?
That’s OK. Ignore the “hysteria” comments, if you are able.
I have good friends here who have told me I’m Henny Penny and such. I’m changing their world view, as some of them are double-bubble riders who have lived high on the Greenspan-Bernanke put and cannot face the idea that good times might end. Or at least that the outlook is not as rosy…
And some realtor hags (in my very average San Francisco) neighborhood have advertized in our local paper, as much as 18 months ago, by basically daring all the “Chicken Littles” to buy overpriced garbage, without understanding one’s refusal to commit financial suicide.
So get used to it!
Fire the husband. Seriously.
Anyway, all these people are gonna get the cr@p smacked out of them with a trout, followed by hourly colonic cleansings with the JT.
If you want to be one of ‘em, knock yourself out.
Ask your husband for a post-nuptial agreement, and get a fancy-pants lawyer to ring your share of the finances off. See how well he responds to that!
I would conduct a credit check on him. Could be he has secret debt and spending habits that he is keeping from you.
Silda Spitzer didn’t know either.
~Misstrial
RE: Anyway, what’s a girl to do?
Get his name off “your” bank accounts and credit cards.
Not good enough. Marital debts run in common or whatever the hell the legal definition is.
I agree with the earlier poster, run a credit check on him. Hire a lawyer too.
Gosh, I didn’t mean for y’all to get out the battleships and artillary. It was more of a rhetorical question.
Tell your husband that Big V said to take a burn, and this little chickie-poo has a list of facts for him if he’s willing to calm down and be rational for once. Jeesh.
Salad honey, call me. Let’s talk!
All right, combotechie, I’ll take the bait. I have no job, no house, no stocks (well, ALMOST no stocks), and am waiting to buy a decent house when prices come down a little more. What I do have (herein lies the vulnerability) is a bunch of mortgage notes on low low end property (single lots in RV parks and a few very small houses). Also a lot of bonds issued by governments other than the US of A. My speculations could be absolutely the wrong ones; but so far, so good. I can’t say I’ll be “unaffected” by what’s going on. My gas and food cost is rising just like everyone else’s. However, I had a grandfather who became affluent during the Depression, and if I have to go meditate at his graveside, I will try to figure this thing out, as we are all trying to do. Your analysis that we are sort of all in the same boat is just too hard to accept, since we here at HBB know we don’t belong in the same boat with the FBs.
We don’t belong there, but it’s flooding. There’s only one boat. What do we do? I say throw them overboard and hop on.
well she is doing the wrong kind of massaging. The massage place around the corner from me is packed every day with AMG Benzes and Range Rovers and Porsches.
yeah she does “legit” massage, the korean places that offer “happy ending” are still doing “brisk” business and always will if Eliot Spitzer has anything to say about it.
I love this blog. It intersperses valuable financial information with totally hilarious asides. I can’t decide which I like more!
I was doing a volunteer gig a couple of weekends ago. The site where we were working didn’t have any facilities, so we were told to go to a nearby shopping center if we needed to, well, go.
After visiting the smallest room in the shopping center, I took advantage of the opportunity to look around. And was that place ever dead! I felt like I’d wandered into my own private shopping center.
“For example, at my bi-weekly massage appointment I noticed the day spa was dead.Then I went to my chiropractor”
You are one of the reasons the state is going broke. Sounds like you “injured yourself on the job” and now are taking advatage of the system. If you are paying out of pocket, then disregard. lol
lol…no injury here. I save and pay out of pocket twice a month to get a chiro adjustment and a massage, about $75 total, to combat the stress of my daily commute.
There’s a Methodist to his madness…
“‘This time we don’t have that true economic change in the borrower’s condition,’ said Dannis, who also teaches real estate at Southern Methodist University. ‘You have a collapse of a housing market that most people really attribute to speculation, or because people are buying more house than they can afford because of the various exotic mortgage products out there.’”
“true economic change in the borrower’s condition”
Impoverishment or subprime credit history — borrower’s choice.
I know a couple who live in the hills in Poway (sabre springs), San Diego. They bought at end of 2004 for around $700K 5BR 3BA, house is for sale now. Im guessing they sank in a bunch of $ for upgrades and had some interesting financing with resets hitting. They are now asking $775K
http://www.prudentialcal.com/Listing/ListingDetail.aspx?Listing=28999410
guesses what will they get?
Pretty nice. I’d offer about 350-400K since it’s in San Diego.
Poway’s not San Diego.
Seller will entertain $695,000 to $750,000..from the listing
wtf
Cinch
The locals call it Sabre Swings…. lot of spouse swapping in the ‘hood, cuz they’re so bored. No way I’d live in PowWhy. CF in the middle of no where.
A Joshua tree is my guess, in the form of a foreclosure.
Why are they selling? Job transfer? Job loss?
Is the house staged, or do they actually live in that soulless house?
They live in the house. Not sure why they are selling. I think they have decent income, one is a legal recruiter.
I know the fires last summer were very close to their house. Maybe that spooked them. But im sure they had some serious financing on this house. One of them declared bankruptcy around 2001 from a previous bad marriage/joint buisness.
Hmmm, looks like somebody got their design ideas from Home Expo. Reminds me of that creepy film, Don’t Look Now, where Donald Sutherland keeps seeing glimpses of a red cape along the Venice canals.
“In Marin County - without condos and without Novato - 46 percent of the properties that sold in the last 30 days sold at 98 percent of the asking price,” Cohn said. “Mostly what’s happening is there is a shortage of inventory.”
How convenient. This is called painting the picture the way *he* wants it to look. It helps justify his previous statement that “Marin prices are holding strong or increasing”. So then how would he explain the chart that shows there was traction lost in Marin?
BayQT~
Quick update from the Inland Empire (IE) in Southern Calif. The area is getting scarier by the day; Section 8 type housing seems to be on the increase, families continue to abandon their homes, empty houses are being abused by vandals, and the tent city in Ontario is getting bigger and bigger.
Ah, and it took a while but finally pretty much everyone I know who a year or two ago were gloating and feeling like they were real estate wizards are now acknowledging that they screwed up. More and more of them are losing their houses. A year ago they still acted like millionaires but now some are worried about having to find apartments.
For those interested or aware of the tent city in Ontario, a large percentage of the people there will be booted out starting Monday. They’re going to give wrist bands to each of the inhabitants, one color for those who “belong” to Ontario and different colors to those who don’t or can’t prove Ontario ties. At some point, if you don’t have an Ontario connection, city workers will escort you out of town.
Or at least, that’s the plan…
I prefer to call said cities:
Bush Leagues
I just helped my FB B.I.L. move back to civilzation (LA County). He found a renter (his dumb phNN, luck the renter is solid, steady guaranteed lease) so he wont have to jingle the keys until the renter leaves. His SIL had the house next door, she got a pink slip, and is praying for “his luck” at finding a reliable renter.
Of course I’m not allowed to say I told you so, so I do it here to get it out of my system.
Ha! New Highrise Townhomes
http://bigpicture.typepad.com/comments/2008/03/new-high-rise-t.html
Love it. LOL
TTYTT, I kinda like it. Nice use of colors. And very clever use of Photoshop.
It’s not Photoshop… it’s real. Sort of. It’s an outdoor theater set in Amsterdam.
http://www.snopes.com/photos/architecture/redneck.asp
Gotta love it lol
So Bear Stearns lives another day, or so.
The following thought occurs to me. If the U.S. Treasury gave Bear Stearns however much money, collected from taxpayers, there would be outrage. But in fact if the Federal Reserve takes a loss it can just print the money to pay for it. That’s “free,” right.
This could be a “pick your poison” moment.
That’s why the US dollars continue to weaken in this chaos. No way out. BB can’t really drop the short term interest rate too much as it also devalues the USD.
“The following thought occurs to me. If the U.S. Treasury gave Bear Stearns however much money, collected from taxpayers, there would be outrage. But in fact if the Federal Reserve takes a loss it can just print the money to pay for it. That’s “free,” right.”
They can……….But then watch the bond markets reaction, interest rates will go to the moon.
Mutually assured hyper-inflation is what they’ve bargained for…
Short Turcuited…
“Billie Tircuit, 26, has already taken a hit. She bought a house in Altadena two years ago with 100% financing at the urging of her husband, a mortgage broker, she said. His income vanished with the housing crash, and the couple soon could not make their payments.”
Classic! Great stuff. Other interesting thing was her age. I don’t know the ages of most mortgage brokers, but I’m suspecting that youth goes hand in hand with the loose ethics that prevailed in the industry. This story will play out many more times in the CA thread…
Youth doesn’t explain it. The loose ethics can ONLY be ordered, condoned, and perpetuated by folks in charge. That’s right, the old Baby Boomers are at it again.
What’s the word you guys like to use …”schadenfreude?” Exact same story with a couple I know. The dude was always trying to throw it in my face and make us mere mortals look inadequate to our wife’s when he was buying his gal 6 carat rings and limos every weekend to the fanciest dinners. Just checked his website and called his office, OOPS!…no more website and number disconnected. His wife just called mine to complain about the downgrade to a japanese compact car (from a Benz) and how they have “NO MONEY!!” Wahhhh….I feel so bad….not.
“‘Since October in Antioch, there were only 13 sales in the $500,000 to $600,000 range, and nine of those were short sales and foreclosures,’ he said.”
Holy hand grenades of Antioch…
Who is interested in attending an East Bay HBB party on Saturday, March 22 at El Burro Mexican joint in Newark, CA? That’s the day before Easter. Anyone who has other ideas about where to go, please let me know. If most people are more norte, for instance, we can move the party upwards. If people are OK with the place/date, then we will leave it as-is.
Garacias,
V Grande
Garacias,?
Is it byo weapon and pencils?
I would love to go if it’s in the evening. I work most Saturdays.
Evening it is! I’m thinking 7 PM.
Why in Newark? Is it to showcase the free-falling foreclosure side of the bay so peninsula residents can capture a glimpse of what’s coming our way?
No. I just moved to Newark, is all. But that whole “showcase” thing sounds pretty cool too.
(03-13) 11:00 PDT SAN FRANCISCO — Home values are eroding at an accelerating rate in the Bay Area as the credit crunch and a game of chicken between buyers and sellers pushed last month’s prices down nearly 15 percent and held the number of homes sold near a historic low….
ATTENTION BAY AREA: IT’S NOT DIFFERENT WHERE YOU LIVE. USE SAN DIEGO AS A 12 MONTH FORCAST OF WHERE YOUR HOME VALES ARE GOING.
Oops. FORECAST.
I’m so full, I couldn’t drink another sip of schadenfreude.
No really, I’ve had far too much today already.
Well, OK, maybe another small glass.
Make it a pint.
Glug, glug, glug, glug.
Aaaah, that’s refreshing.
LOL!
Yes, it’s been sweet lately, I have to agree.
Just waaan little theeen meent?
Posted this on B&B.
Could this be BB theme song? For you Mighty Mouse fans:
Mr. trouble never hangs around,
when he hears the stock market is heading south,
Here I come to save the day!
That means that Bennie Bern is on the way!
Yes sir, when there is a bailout needed,
Bennie Bern will join the fight!
In the bank or on the stock floor,
He’s got the situation well in hand!
We know that when there’s danger, we’ll never dispair;
Because we know that when there’s danger he is there…
In the bank or on the stock floor.
We’re not worrying at all
We just listen for his helicopter
“Here I come to save the day!”
That means that Bennie Bern is on the way.
When there is a bailout needed,
Bennie Bern will joint the fight
“Here I come to save the day!”
That means that Bennie Bern is on the way!
http://www.bullnotbull.com/gallery/images/g-helicopter-big.jpg
All of this support for Bear Stearns from JP Morgan and the Fed gives new meaning to the term “Bear Backing”. I suspect the San Francisco Chronicle will have this as their front page headline tomorrow…and everyone will get it.
Ah, yes…California. L.A. will have a hundreds of millions budget shortfall, the state has a tens of billions budget shortfall, and both entities are looking at whatever means necessary to raise taxes. We have undocumented aliens by the millions and gang-bangers by the hundreds of thousands. Our major cities are sanctuaries for law breakers. When the expressways are not at a standstill, they are like racetracks. Latinos and Blacks are shooting each other. It is rumored we have law enforcement, but I think they have now become “first responders.” A couple of nights ago a fifty-something lady was shot in the head (killed) while driving her car on the 10 freeway near Pomona — no apparent motive. Probably some gang banger earning his wings. Think about that the next time you are driving the freeway at night. And on and on it goes… Property values are not the biggest problem for California, just a symptom of a colossal eruption that is about to take place. Duck and cover!
When the eruption takes place, it won’t be confined to Calif. Nevada, Texas, the South, etc. will be right behind. As goes California, so goes the nation.
Whoa, now Pardner. You’re making it sound like Mad Max land out here. We have our problems, but geez louise, this aint the Tower of Inferno yet. The sun still shines, the palm trees still bend gently in the breeze.
I have been reading this blog for years, and I was one of the first to say it…when the bubble pops, watch crime go up. The stress of not having money to spend and losing your home gets to people, thus the increase in homicide rates in L.A. NOT associated with gang activity, higher incidence of road rage, arson of about-to-be foreclosed homes, etc etc. I live in a super-safe suburb, and was approached for the very first-time recently at my local grocery store by what appeared to be a latino gang-banger looking for money. It is and will get worse. You can look at the palm trees all day, just be ready to bust out the heat if someone wants your view.
who doesn’t remember the footage from the Rodney King riots of 1992?
the thing that scares me is even if you throw them in prison, the gangs run those places, they come out 10 times worse and more dangerous than before. Something like 1 out of every 100 American’s is in prison today (highest ever) its just a gangster university in there.
That reminds me of 1998 when three women driving white cars were shot on Orange County freeways when we lived down there. My husband traded cars with me for a month!
Just got a phone call from a pre-recorded message that states something to the effect of “Foreclosures are on the rise and the Federal Government wants to provide relief by offering below market rates to refinance your loan. Please press 1 for help.” So I press 1 and a guy answers asking how he may help me. I say “Yes, I’m looking to buy a home and would like a home loan with a 1% rate.” Some loud laughing/mocking noise comes from the other end and he hangs up. Why won’t anybody help me become a homeowner?
I got that phone call too, but I hung up. That’s funny.
With the Federal Reserve trying to pour Drano into the lending system
Drano is a caustic poison, right? Just checking.
““Ellis said banks may have to slash prices on homes to get them to sell.”
“may” ????
How about they “ARE” in some areas and areas they have not they will be “forced too”, given the amounts that are growing by the day.
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