A Foolish Investment In California
The Fresno Bee reports from California. “Some 40,000 to 45,000 Fresno County property owners may be in line for a break on their taxes next year, a silver lining in this deeply depressed housing market. Like their colleagues across California, officials in the county assessor’s office are flooded by requests to reduce the home value assessments that property taxes are based on. They’re getting so many requests, in fact, that they’re taking the unusual step of slashing many assessments without being asked.”
“The adjustments are too late to help with current taxes, the final payment for which is due Thursday. But they may lessen the housing slump’s sting for recent buyers like Peter Fahey, who bought a southeast Clovis home in 2005 for $315,000, only to see its value plummet.”
“Late last year, after a potential lender’s appraisal placed his home’s value at $280,000, Fahey asked for an assessment reduction. Based on recent sales of similar houses in the area, his assessment was cut even more, to $245,000, a reduction of more than 20% that should cut his tax bill by a like proportion.”
“‘Everybody makes a foolish investment at least once,’ he said.”
The San Francisco Chronicle. “As the nation’s housing market swoons, lenders are tightening their grip on their money. Last month, that credit crunch reached Brent Meyers.” “He owns a substantial investment portfolio and a million-dollar house in Moraga. He pays his bills on time and has no credit card debt. His credit score, he says, is around 800.”
“But in mid-March, Bank of America cut off his home equity credit line of a little more than $180,000, citing a decline in the value of his property. Meyers is now scrambling to come up with $75,000 to pay for a major landscaping project and is canceling other big spending plans.”
“‘My wife would like a new car, but that’s going to have to wait,’ he said. ‘We’re taking a $75,000 cash-flow hit, and I want to boost savings.’”
“As home prices started to sink…lenders including Bank of America, Washington Mutual and Countrywide Financial cut back on home equity loans to reduce their exposure to the housing market. ‘These are unprecedented market conditions,’ said Bank of America spokesman Terry Francisco.”
“Warren Leiber, Brent Meyers’ landscaping contractor, sees the spending slowdown every day. His Walnut Creek business, serves an affluent corridor from Benicia to San Ramon. A typical job comes in at $30,000 to $40,000.”
“He estimates that 80 percent of his clients used home equity loans or mortgage refinancings to pay for his services. Now, with that tap choked off, his strapped clients are backing off, knocking $10,000 or $20,000 off their work orders, if they go ahead at all.”
“‘Things started to really go south back in October,’ Leiber said. ‘We would get to the point of reviewing proposals, and people would say, ‘That’s great. Looks terrific. But it’s more than we can spend right now.’”
“‘Some of our clients have not been paying on time,’ he said. ‘I have quite a few clients who owe me various amounts of money. People have their pride. They won’t say they’re having a hard time. That’s started to concern me.’”
“When Meyers took out the credit line in November 2006, his home was valued at $1.475 million. With less than $1 million in principal outstanding on his first mortgage, he had a comfortable equity cushion to cover the line.”
“A few weeks ago, Meyers got a letter from Bank of America informing him that the line had been suspended in its entirety. When he called to ask why, he was told that his house had dropped to an estimated $1.09 million in value, which left insufficient equity to cover the line.”
“Losing the credit line is prompting him and his wife to retrench. ‘I’m going to change my spending behavior because I lost access to $180,000,’ he said. ‘We’re going to be deferring other expenditures to build a pot of money to replace what Bank of America took away.’”
“Bay Area home sales have plummeted to their lowest level in two decades, making the wait between commission checks unbearable for many agents. Bonnie Stevens, an agent in Pleasanton, began her real estate career in 1995, at the end of the market’s last down cycle.”
“‘This is actually worse than 1995. There are agents in my office who have been in the business for 30 years telling me that this is the worst they’ve seen,’ she said.”
“During her 13 years as an agent, a good year for Stevens has meant selling 15 to 18 homes. So far this year, she’s sold only one.”
“But she isn’t giving up yet, although she’s testing out a second career doing direct sales for a Los Angeles clothing company. She said she got into the clothing business because all of the fun had been zapped out of her real estate job and she was looking for something new.”
“‘I wanted to do something different that was more fun than real estate,’ she said. ‘I love real estate, but it’s really not a lot of fun right now.’”
The Monterey County Herald. “The Commons at Rogge Road was to be the model for providing low-cost homes and apartments for people priced out of a superheated Monterey County housing market. The project was praised at every juncture as it made its way through the approval process to its March 2006 unanimous blessing by Monterey County supervisors.”
“Today, the first 46 homes in the phased development are empty. They have been on the market since August. Not one has been sold. And the developers are seeking changes to the original deal designed to ensure affordability of the homes and apartments. They want the changes just to sell the homes, complete the project and avoid big losses.”
“‘We’ve already resigned ourselves that we are going to lose $2 million to $3 million, if we can get the restrictions modified,’ said William Silva, chief financial officer for Woodman Development, who bought the home sites. ‘If not, the losses will be far greater.’”
“It’s the empty homes that are the rub. And they’re why the developers are seeking project changes from the county. ‘Right now we don’t have a fighting chance in the market,’ Silva said.”
“The plan originally was to sell the homes to income-qualified buyers — families making up to 180 percent of median county income — for $273,553 to $483,517. Silva said they’ve cut prices by up to $84,000 to lure buyers, but to no avail.”
“Those one-time affordable prices — up to $300,000 below what some homes in North Salinas were selling for a couple years ago — are now bobbing on the wave of a deflated housing market, where new or foreclosed homes in the same area may be going for the same price or less, he said.”
“Buyers can now find homes in the same price ranges without those kinds of strings attached. The resale restriction is radioactive. ‘No discerning buyer in their right mind is going to buy our house, as nice as they are, with a 20-year deed restriction,’ Silva said.”
“Silva quickly denies any assertion the developers are seeking to get out from under…the provision of affordable housing. ‘That’s not what we are trying to do,’ he said. ‘Everything is work force housing now. We have prices today that match what they were a decade ago.’”
The LA Daily News. “In all the chatter these days about mortgage reform, the new rules for appraisers aren’t getting a lot of attention. But that issue gained traction after New York Attorney General Andrew Cuomo began investigating allegations of conflicts of interest, fraud and other misconduct.”
“One result is that mortgage giants Freddie Mac and Fannie Mae agreed to cooperate with Cuomo and the Office of Federal Housing Enterprise Oversight in helping regulators tighten home appraisal practices to ensure there is some independence in the process.”
“Cuomo subsequently terminated his investigation into some of the business practices at Fannie and Freddie.”
“The result is the Home Valuation Protection Code, scheduled to take effect Jan.1. It essentially tries to prevent anyone in the residential real estate food chain from pressuring an appraiser to inflate a home’s value - a not uncommon practice during the industry’s boom. The mortgage industry has until April 30 to comment on the code.”
“Ted Faravelli, executive director of the San Jose-based California Association of Real Estate Appraisers, conceded that some appraisers were pressured to value homes above the fair-market price during the housing boom.”
“‘We cannot have have future erosion in the public trust as what we do as appraisers,’ Faravelli said. ‘I think we have been tarnished. Much of it is our own fault.’”
“Faravelli also has one big problem with all this. The code doesn’t have any real punishment for breaking the rules. He said that exerting the kind of pressure mentioned in the code should be a crime.”
“‘In short, I think it’s just so much rhetoric,’ he said of the code. (But) ‘I applaud the efforts of everyone trying to find a solution.’”
The North County Times. “Real estate agents are buzzing: Homes are half-priced. There is a swarm of buyers. The housing market is starting to recover. The recovery is being driven by aggressive pricing on cheaper homes, with discounts up to 60 percent off previous sales prices.”
“The best deals, according to listing data, appear to come from areas on the outskirts of San Diego in areas such as Valley Center and Ramona and in foreclosure clusters such as Oceanside.”
“But not everyone is sold on the idea that this is a recovering housing market. Some data suggest that home prices will continue to decline: It would take more than 12 months to sell all the homes listed for sale. Foreclosures skyrocketed in 2007, and some foreclosure trackers expect even more this year than last.”
“Prices have dropped for 19 straight months, with the last four months showing some of the steepest declines.”
“All those numbers fail to faze real estate agents’ optimism because, they say, current activity will not show up in such data for another two or three months.”
“Oceanside has seen some of the county’s deepest price reductions. During the boom of the market, some neighborhoods with relatively higher crime rates saw home prices soar past $450,000. Now, some of those homes have entered, or are in danger of, foreclosure and are listed for less than $200,000.”
“Despite a price tag more befitting the Midwest than San Diego, many of the Oceanside homes struggle to sell because of the condition and location, real estate agents said.”
“Maria Lopez, a Vista agent, listed a Libby Lake-area home for $199,000 to $212,000, at least 57 percent below the last time it sold in 2007 for $490,000. Foot-high weeds blanket the home’s front and back yards. Bits of trash litter the deeply stained carpets inside. But there are no holes in the wall. This one is in good shape, Lopez said.”
“Still, the five offers she has received are all from investors, not would-be homeowners. ‘Even though there’s people who want to buy a home at this price, they don’t think it looks like this. They don’t see the value,’ Lopez said.”
“Mostly, investors will look to fix up a home and sell it for a profit. But some homes are so deeply discounted, said Brian Crisp, a San Diego broker who structures loans for investors, that investors can rent them for a profit.”
“‘My business had doubled just in this month. And I’m seeing some cash-flow potential with a lot of deals lately,’ he said. ‘But those guys (investors) are running a lot of risk because there’s so much volatility in the market. … Your exit strategy has to be really bulletproof, or you’re going to lose your shirt.’”
“Some analysts said that sellers are hesitant to reduce their asking price, meaning widespread affordability could take a long time.”
“‘Those who are paying attention and realizing that they’re not getting any offers, they’re going to figure it out and lower their price,’ said Jim Klinge, a real estate agent in Carlsbad. ‘How many sellers are willing to keep lowering their price until it sells? Maybe one out of 50.’”
Once again, the North County Times did a good job in this article of exploring the details of the price question, and it’s a good read for people trying to sort that out. I would only add this; as the landscaper is also forced to cut back his spending, and on down the food chain, lower median wages are almost certainly coming. And lots of people will likely have zero income for a while. So I expect these price-wage comparisons to be a moving target for a few years.
But unlike the MSM, I will reiterate that deflationary recessions serve a necessary function in the economy. We’ve over-allocated capital and resources to the housing sector, and this is the uncomfortable period where individuals and companies are forced to make changes. So flipping houses in Fresno, regular botox and $30,000 yard make-overs may not be as common, but perhaps that’s not a bad thing.
“We’ve over-allocated capital and resources to the housing sector, …”
Lots of pols are still working through the denial stage on this point.
Check this out http://tinyurl.com/2t9qm7 .
I don’t know if it was posted today. Read these sob stories. Warning: you may hurl. I’m surprised Mister Where Did My Credit Line Go? isn’t on here.
The interesting undercurrent to so many of those complaints is the impact of inflation.
When I look at these stories I see a bunch of people that wouldn’t have listened to any advice coming from HBBers. These people would have called us doom and gloomers, laughed at us and then made their destructive decisions without a single critical thought. Add water and you have a bunch of victims.
Just take the woman from Michigan. Her and her partner are moving to Wisconsin. She cries about the Michigan market tanking but immediately wants to buy a condo in Wisconsin. Condos in Wisconsin? WTF? Is that condo in Fond du Lac?
Looks like most of them are still eating pretty well.
My wife and I sent our non-sob story (standard HBB stuff: we’ve been saving our money to have 20% down, now these zero down fools who at least got to live in a house are begging taxpayers for a bailout, etc.) over a week ago. Late this week we actually got a request from CNNMoney.com to post our story.
We declined for obvious reasons. But I sent a nice letter to CNNMoney thanking them for having the guts to publish our story.
We have spent $5 trillion putting up McMansions and slathering cheap plastic siding on every house in the country. Good bye, America, we mourn your loss…
DP
Ben is commenting on the food chain that is the housing market. Ask the FedEx guy who delivers packages to your office: business is down. . .ask the florist: no one is buying flowers. . . ask the restaurant owner: not as many people eating out. Car dealerships are DYING here in san diego. I’ve told people this for years: last recession it was the economy that caused the housing slowdown, this time it is the housing market which is causing the recession/depression.
“ask the florist: no one is buying flowers”
You are so right. A couple of months ago I bought my wife a beautiful bouquet. I had stayed out a little later with the boys than normal so they came in handy. She put them in our prized vase and they looked beautiful. After a week they were dead. She went to rinse out the vase with hot water and the damn thing cracked. That was $600 out the window.
Now she doesn’t seem to want flowers as much. And the economy takes another hit.
NYCB, the problem is, you didn’t buy her flowers often enough. That’s why she made the mistake of applying hot water to the vase. Buy her another vase, and tell her to stick with lukewarm water. Then she can have flowers pretty often. After all, you two are Rich Tenants!
Floral? Did someone say floral? Well this is my area of work….EVERY DAY our floral nursery owner comes in and wants to know what we’ve sold. Of course he does not want to hear what we did NOT sell….7,000 cases of potted blooming that week that does NOT get better with age. I tell ya it’s DEAD out there as far as floral sales. Our owner is convinced it’s the “media” that has the consumer convinced that it’s “BAD” out there…I say it’s those letters telling them they don’t have lines of credit they thought they had and those price hikes they see everyday at the pump and at the grocery store.
It has to down to discretionary spending. People are losing their homes. Duh. I am getting tired of these people that need a reality check. Be it rentor, rentee, buyer, etcetera, ecetrera, ecetera.
Our UPS guy who never used to come before 630pm, (we are at the very end of his route, and before xmas he delivered packages to us at 10:30pm). is now coming at least an hour earlier everyday and now he has to do scheduled pickups.
Also found out they shifted a lot of drivers into Manhattan, it is finally cheaper to pay 2 ups drivers per truck then to pay all the parking tickets.
——————————————–
Ask the FedEx guy who delivers packages to your office: business is down.
If the capital re-allocation occurs efficiently. But that requires an efficient and transparent financial system. Without that, the capital and the resources don’t match up and you are left with idle workers and entrepreneurs and scared and hiding potential investors.
And hos does the US financial system look now?
“The housing market is starting to recover. The recovery is being driven by aggressive pricing on cheaper homes, with discounts up to 60 percent off previous sales prices.”
Is anyone still talking about 10 pct or even 30 pct as the maximum damage to bubble prices?
If prices are down by 60 pct, then I guess a bottom must be at hand.
– Too bad most sellers did not get the memo yet.
– Too bad not many would-be buyers are qualified to get a loan to buy, even at prices down by over 30 pct from the bubble peak.
– Too bad most qualified buyers aren’t interested in catching falling knives.
– Too bad most would-be buyers have no savings available for a down payment, right at the moment down payments have come back into style.
– Too bad that even the Fed bank chairman is dropping the ‘R’ word now, and that most folks are not interested in making big ticket purchases when job security is increasingly subject to question.
– Too bad that stocks just had a terrible quarter, suggesting another reason that nobody has the money to fund a down payment at the moment.
– Too bad that an ongoing wave of foreclosures is coming back on the market, suggesting further price reductions going forward.
– Too bad that there is still an overhang of brand new vacant homes from the building boom.
Yep — a bottom is obviously right around the corner, folks.
Sorry PB, I want it down 80% in pristine condition. I am to old and lazy to buy a redo. I’ll wait.
Me too. I will rent until they pry my rental agreement out of my cold, dead hands if necessary.
Isn’t it great? As I type this my landlord is in the yard, trimming trees and bushes, picking up debris, and hauling all of it into the alley, while I’m just lounging here on my couch with my laptop, watching him. Oh, I forgot, he’s also bleeding a couple of hundred a month on the place, since my rent doesn’t cover his mortgage (he bought in summer of 05, timing the top of the market perfectly). Nice guy with a non-working wife and a couple of kids who’s just a bit clueless about the market.
Puts a twist on the ol’ Lord of the Manor routine, eh? Remember when landlords used to stomp around their property, treating tenants like their very own serfs who were contributing to their wealth?
Oh, Piss Boy!
Frank:
I love those landlords they are the easiest to sue, “I am the master of my castle”. They are so cheap they wont pay a lawyer, so a judge will always side with the tenant.
…and pay for all of your escrow and moving fee! That is only fair as you are buying in a “falling market”.
That’s nothing, my landlord has come out of retirment taking teaching positions in Americas own war zones, inner city schools, and he’s teaching the worst of the worst in some instances. He lives in the basement apartment. I like and feel sorry for the guy.
Oh yeah, loosing 7-800 bucks a month on our unit. The upstairs unit isn’t even rented.
We might be halfway to the bottom in select FL and CA cities. The rest of America is maybe 15% of the way to the bottom.
Where is Yun, Lereah, and LAY on this. I think I’ll wait til they give me the BUY signal. Oh, they already have? You mean I can’t get a nodown unless I use my VA entitlements. What’s the matter? That’s UnAmerican. Sounds like The Magic Ne ro or the Red Queen have their hands in it. hehehehehehehe
Have a question..I know about the fact that in Florida they can obtain a deficiency judgement against you..what about if you have other property in another state..such as GA or NC that has equity..can they attach that judgement to other properties? I have someone I know who is letting her property in Fl go into a short sale.. the difference between the short sale?? and the note is about $500K…but she has a primary home with $500K of equity in another state…I told her they can go after that home…but I am not sure if I am correct. Anybody know?????
Can’t imagine that they wouldn’t since I told her that the credit reporting agency plus her tax bill in Fl has the new forwarding address out of the state…
I think maybe then can if they docket the judgment in the other state. Kind of a hassle for them though.
I would think that maybe it would be a hassle…but at the same time the “newer” house does have 500K in equity..of course the equity from house 1 was used to buy house 2..House number 2 cost in excess of 1.6 Million…with the 500K of equity…would kind of find it hard to believe that the bank would let anyone get away with it…the trail is pretty easy to follow…
Hey why not add insult to injury and let her get away with this…Its the American way today.
Stiff the bank for $500K and have your $500K “equity” protected
If it’s a short sale, then isn’t the bank letting her walk away from the remaining loan balance?
Seems to me the question is whether she’s already gotten permission for the short sale - if the bank OKs it, then I’m guessing they sign something agreeing to waive the balance. Otherwise, there’d be no point in short selling…?
Assuming this is correct, if she has 500k in equity elsewhere, then if the bank does its diligence, and the place is not in a single-form-of-action state, they should refuse the short sale offer, foreclose, and come after her.
When YoY sales of non-foreclosure properties start to increase maybe you can start talking about a recovery. That ain’t happening yet.
In this part of California prices have still not fallen far enough to be supported by incomes. There’s another wave of foreclosures coming from already-filed notices of default over the next six months, and that’s before factoring in any recession.
Perhaps we should factor future prime and Alt-A resets while we are at it. If I correctly recall the famous Ivy Zelman reset chart (cf. p. 47; caution: .pdf), we are barely past the subprime ARM reset crest at the moment, but the prime and Alt-A reset wave crests await over the next couple of years.
Some people with ARMS may be getting a break with the Fed reducing interest rates. Couldn’t some ARMs be adjusting down, not up, as a result of this? Of course, even if some were adjusting down, prices on the property are going down, too.
Bankrate.com lists the following rates as “national averages” today:
30 year fixed: 5.76%
15 year fixed: 5.32%
5/1 ARM: 5.48%
30 year fixed jumbo: 7.12%
5/1 jumbo ARM: 6.22%
If anything these seem a bit higher than they were before the Fed started slashing its rates. Mortgages interest rates are under no obligation to follow suit, and it would appear that many lenders have added a risk premium to the end user that more than makes up for their reduced borrowing costs.
“Some people with ARMS may be getting a break with the Fed reducing interest rates.”
That may help a little, but for many, the adjustment from option ARM teaser rates to fully amortizing will financially sink them with unaffordably high monthly payments, even if rates sound low by historical standards. The rates are low, but the principle balances are very high, and incomes are not catching up very quickly at the moment.
The other really big problems with ARM resets (at least for homes bought circa 2005 in bubble zones) is that the reset requires amortization of the initial debt balance — never mind if the market value of the home has subsequently dropped 30 pct or so. Would you stick around to pay off the balance on a loan whose principle balance far exceeds the value of the underlying collateral? (Not sure what I would do personally, as I have never been and hope to never be in that position.)
Actually it’s helping a great deal. I have a HELOC that is part ARM, part Fixed. I refinanced the Fixed portion to 7%/15 years (been paying 3x the minimum amount), and the ARM portion is down to 4.36%. I just might looking to refinancing the fixed portion again so I can finally get rid of this darn thing. And no, I haven’t received a letter in the mail that they’re cutting me off, but even if they did it means little to me.
According to a later Credit Suisse chart, after Ivy Zelman left there, even the subprime part of this wave has not crested yet. (Google “IMF mortgage reset chart”.) I can only suppose the chart keeps changing as new loans keep being issued?
I wonder how much of the option-ARM loans will actually make it to the reset point. I suspect that some of that wave of resets in 2010 and 2011 will be moved forward by people defaulting in 2008/2009.
“‘Everybody makes a foolish investment at least once,’ he said.”
ROFLMAO
Lets see, my biggest “foolish investment was…thinking…..thinking….nope, have not made any.
“‘My wife would like a new car, but that’s going to have to wait,’ he said. ‘We’re taking a $75,000 cash-flow hit, and I want to boost savings.’”
House ATM = cash flow, very stupid.
No wonder he thinks everyone makes a foolish investment at least once.
Moron.
“When Meyers took out the credit line in November 2006, his home was valued at $1.475 million. With less than $1 million in principal outstanding on his first mortgage, he had a comfortable equity cushion to cover the line.
A few weeks ago, Meyers got a letter from Bank of America informing him that the line had been suspended in its entirety. When he called to ask why, he was told that his house had dropped to an estimated $1.09 million in value, which left insufficient equity to cover the line.
He insists his house has not lost that much value. He’s asked the bank to reconsider. His appeal is pending.
For its part, Bank of America is reducing home equity lines for some customers ‘in areas of the country that are experiencing consistent and significant home value declines,’ Francisco said.”
*******
“He insists his house has not lost that much value.”
Could he find a buyer at the price he insists?
And, waitasecond there, BofA!!
I thought it was “different” here in the Alt-Bay Area?
“He’s asked the bank to reconsider. His appeal is pending.”
I can’t wait until he gets the letter that states, “after having reconsidered the value of your home we now believe its fair market value is $889,000.” That should make him feel good.
Hahah yea! He is probably underwater by now and should get $0 more HELOC. If he walks away, thats actually the smart thing at this point.
lol
I’m gone from amazed at these ‘equity entitlement’ stories to pure schadenfreude.
But there is a sad side. This will create rapid deflation in the economy. If the Fed tries to inflate… oil goes to $200/bbl. Don’t think that could happen? Remember when $100/bbl was impossible?
Got Popcorn?
Neil
Truth be told, the Lamorinda area (Lafayette-Moraga-Orinda)has always been high priced but most of these houses (in Moraga and Orinda) are retreads built in the 50s and 60s. At most, my guess is that the fair market value may go back down to the $600k mark. And I’m being generous. Sure, there’s the argument about the schools, neighborhoods, blah, blah….but, no, it is not “worth” what he thinks it’s worth.
“I’m going to change my spending behavior because I lost access to $180,000,” he said. “We’re going to be deferring other expenditures to build a pot of money to replace what Bank of America took away.”
What?! It’s all the bank’s fault for cutting off his neverending pot of money to play with? I feel so bad for him. NOT! Actually, if you read between the lines, he may not be as financially savvy as they are trying to make him sound. So he pays his bills on time and has no credit card debt. That’s all good. But it could be that he has no credit card debt because he was using the HELOC to pay off the CCs and draws from the HELOC for vacations, cars, landscaping, etc. Another thing I noticed is the article says on one had that he is “scrambling to come up with the $75k” to pay his landscaper….then later this this Meyers guy says that if he weren’t able to pay cash, he’d forget about the project (paraphrasing here).
So…I wonder which is it? Scrambling to get the money, or you have the money? Meyers? Anybody? (tap, tap) Is this thing on?
BayQT~
What I don’t understand is that 1) He says he has good investments 2) He says he has no credit card debt
and then 3)He got a equity line on his house 4)He was going to USE that to pay for the landscaping job…
Why would he want to pay interest on 30K if he could pay cash???? and Why is he all of a sudden concerned about saving if he was doing it all along???
Something doesn’t sound right!!!!
People LIE to reporters to show themselves in the best possible light. It’s as simple as that — and it’s why we’re forced to consider that politics and the agenda of every MSM source: they slant the story simply by the way they frame the questions, and the “angle” they go for on the story. A “tough love” angle wouldn’t play well to most of their readers/viewers, and they know it.
The Google produced a few people with the same name, but this might be him. The CEO of an entity called “the Corporation for Manufacturing Excellence.”
http://tinyurl.com/6emwsq
Uh-oh — but I’m left thinking, how’s the “substantial investment portfolio” doing? It will be harder to get someone to “reconsider” how much that’s worth.
The nuttiness of “liberating your equity” is ending. We all know an extraction is a LOAN, not free money to go redo your landscaping! Poor turd, he now has to part with real CASH, maybe it wasn’t really necessary to spend 30K on the trees
Absolutely, IBob. I get so tired of hearing about people”pulling equity out” of their house. It’s a loan, plain and simple, that must be paid back. And if this Meyers guy is savvy enough to have followed financial news over the last few years, he knows good and well that the market has changed (yes, Meyers, that means Moraga got caught with its pants down, too). Yet, he wants to challenge the bank to have them “reconsider” freezing his HELOC. Good luck with that. I’m sure spending $75k on trees, shrubs and prettifying the surroundings sounds a bit much right about now.
BayQT~
Debt=wealth
LOL…So you “lost” $180K???? Ok give me the logic in that one??? Did you have it in the stock market? Did you have it in a bank that went out of business? Did you have it robbed OUT OF YOUR HOUSE? Did you get sued and have to settle?
This is the problem with homeowners who used their homes to ‘give them the Joneses” kind of wealth, the BMW in the driveway, the plastic surgery, the hair club for men, the negative am loan that put them into a house they could never really afford..WEALTH is money you hold in your hands..Homes are not a SOURCE of wealth unless you OWN it OUTRIGHT…
This guy is the lawnmower riding “I AM IN DEBT TO MY EYEBALLS SOMEBODY HELP ME!”
LOL.
In all fairness, he’s not asking for a bailout. He’s just saying wifey isn’t getting her new car and he has to make “choices”. Even if he is treating his home like an ATM, it IS his choice.
The problem is that millions of Americans made the same choice, and once they found out their equity went upside down-they’re “walking away” from their obligations and bringing down the world financial system with them.
Hooray to BofA for cutting him off and at least making him prove he has any equity left to cannibalize. That in itself is a newsworthy sea change…
‘We’re going to be deferring other expenditures to build a pot of money to replace what Bank of America took away.’”
Even though these people appear to be able to continue without the credit line, it still reflects the wodespread attitude that HELOC was their money to spend.
“wodespread” should be “widespread”. Darned 2 finger typist.
Without the credit line I bet they can’t even afford the pot.
Tons of people literally sold the house to the bank with HELOCs.
I agree BYE the took the money and told the bank thanks for the loan but you can have the house back…
30K for landscaping…I live in a “higher end” home community..that I love..WHY?…we all get on the riding movers(have to the homes run from 2-3 acres) and cut our own lawns and on the weekends the people in the community do their own planting, weather is perfect for it now..I run right to Lowes get my spring plants for $50 bucks($60 dollars worth with my 10 dollar off coupon) and with 2 hours I have several nice flower beds. Used solar lighting(doesn’t increase my electric bill) and solar fountain for $80 bucks…(used another $10 dollar coupon)…
Out of 40 homes in the community only about 5 use landscaping service…we all have better ways to spend $200 bucks a month for ONLY cutting the lawn…
Ann, I live in the same kind of neighborhood. I do all my yard work. Last year I painted my house. Some of my neighbors thought it a great idea, guy next door told me his wife is driving him nuts to do the same. I didn’t tell him but she has been over twice to get a good look at cornices, etc and some pointers on him painting their place. He is toast.
I give you 3 cheers Hazard and I drink a toast to you with my scotch and ice in hand!
Sure that’s the only reason she’s been over twice?
Ann…OMG we are the ONLY people in our neighborhood that do our own landscaping. These people just look out their window and see it being done..while me and the ever hardworking dh are out there taking care of everything ourselves…he cuts and i plant/weed/ whatever…people in our neighborhood think we’re crazy…altho in the fall it would be nice……or after a big storm and all those branches are lying around the yard…
Plus the added benefit of bankrupting a bunch of landscaping companies that exploit illegal immigrant labor.
Hi, Cracker Jim, a little off topic, but I wanted to give you one more piece of info about Auto Train. A fellow I met on my last ride a few years ago told me that one time he decided to rent a sleeper as an upgrade to his travel package, so that he wasn’t burned out in the morning for his drive north from Lorton, VA. He said it was a waste of money, it was cramped, claustrophobic, disorienting and he didn’t sleep any better than he did in his regular seat. For what it’s worth. My advice is, if you’re not alert enough to drive in the morning, get a hotel room in the Lorton area and take a day to rest before driving on. Costs less than the sleeper upgrade, I think.
Palmetto,
Thanks for update info. I spent some time online reviewing the upgrades for sleeping arrangements and I had essentially come to the same conclusion. I will definitely plan for a recovery day but that works out OK as I want to spend a bit of time in that area anyway. I will be taking a leisurely 3 week road trip but cutting off the Fl-Va (and Va-Fl) drive time (boring, tiring interstate) sounds like a winner to me.
Thanks again for your input.
Friend of ours took a regular Amtrak train trip that was mostly overnight. She paid for sleeping accomodations and even though she’s rather short and petite, she used pretty much the same words to describe the experience. She’s also sworn off Amtrak.
This guy kills me. His house is worth “only” $1.1 million, therefore BofA is “taking away” the $180K credit line. This seems to mean that he already owes $800K or more on the house, no? Ever heard of “pay as you go,” mister?
But wait, it gets worse!
If indeed he owes $800K, then technically he’s probably underwater — as in, try to sell the palace for what you owe, Mortimer.
‘We’re taking a $75,000 cash-flow hit,
HELOC is “cash flow” now??
“Bits of trash litter the deeply stained carpets inside. But there are no holes in the wall”
Unholy
what about turds? I bet there were turds. Nothing can drive down housing prices quite like a turd can.
That guy in the SF Chron article is yet another candidate for the Real Men of Housing Bubble Genius Awards:
– seems to be confusing home equity with cash flow.
– paying $75,000 for shrubbery, and
– selling stock to do it.
The selling of stock may not be such a bad idea.
But not keeping the proceeds is.
“Real Men of Housing Bubble Genius”
*****
To be sure, there are thousands and thousands more candidates here locally.
I didn’t pay attention to the fact that he is CEO of a consulting firm. I wonder what kind of consulting he does. Who would hire him for anything after reading this foolishness? What is he qualified to run if he doesn’t understand that the HELOC should not be counted on for cash flow?
Most consultants are pretty clueless. Their primary skill is fast-talking self-promotion and their primary trait is smug arrogance. Prime FB material because they think they are never wrong.
Maybe he works for this place?
“If I weren’t able to pay cash, I would toss (Leiber) and his five-man crew out on the curb,” he said.
“I’m going to change my spending behavior because I lost access to $180,000,” he said. “We’re going to be deferring other expenditures to build a pot of money to replace what Bank of America took away.”
If this first line doesn’t win the arrogant azz comment award for the day, I don’t know what does. I read this in the paper (old person blog) this morning and about puked. As though the landscape contractor and his crew are homeless “gutter dwellers” without Meyers’ project.
Also, I think his comments are clearly intended to be a threat. “If you don’t lend me money, I’m going to stop doing projects and start saving…… and then all the little worker bees won’t have jobs. I on the other hand, will have a big pot of money they can come begging for later on down the road when they’re real hungry. Is that what you lenders want?”
Oh, and one more thing:
Hey Meyers, you’re only 40? I hope the camera adds age as well as weight, because you look to be at least 55. Skip the landscape and new car, and put on a room addition to house a treadmill.
You got me curious and I went and looked at the guy. YIKES! He’s either lying about his age or he’s aging worse than any man I’ve ever seen.
Maybe it’s the self-induced stress that’s made him look so old and fat?
Oh, my previous comment was in reference to Brent Meyers from the SF article.
Tell him to use the air brush on the photos and have another hit of botox like her Hillaryness. He can pass for 35. hehehehehehe
Hey, pismoclam, when I click on your name, I just get messages that the page can’t be found. Why is that? I am interested in yr observations since I am here on the Central Coast for the time being.
az, notify B. Jones, maybe he can help!
Visited my cousin in Ladera Ranch (south OC) yesterday, two houses on her street for sale at 200k off peak price, one for rent, and one just recently abandoned. The owner lost her job with a local housing developer, was upside down and said F it, picked up and moved back to London. Just last year these places were selling for 800k. Panic has set in behind the orange curtain.
Have you seen the looong list of foreclosures and notices of default its like 300-400 and houses for sale right now is like 900. I think the number sold was less then 100 like 40-50 so a ton of inventory.
My co-worker had their Ladera Ranch home sold for over $1M and in escrow late last year, when the buyer pulled out in December. Wonder if he came across this blog.
“During her 13 years as an agent, a good year for Stevens has meant selling 15 to 18 homes. So far this year, she’s sold only one.”
“But she isn’t giving up yet, although she’s testing out a second career doing direct sales for a Los Angeles clothing company. She said she got into the clothing business because all of the fun had been zapped out of her real estate job and she was looking for something new.”
“‘I wanted to do something different that was more fun than real estate,’ she said. ‘I love real estate, but it’s really not a lot of fun right now.’”
******
Not a lot of fun?
Always interesting when the MSM interviews the “geniuses” who have never known a downturn in their careers in real estate.
I suppose it’s not easy learning that when one rides a bubble on the way up, the downside is going to be a bitch.
“But she isn’t giving up yet, although she’s testing out a second career doing direct sales for a Los Angeles clothing company. She said she got into the clothing business because all of the fun had been zapped out of her real estate job and she was looking for something new.”
I noticed the same thing sfjack. This is another one of those bust characteristics that seldom gets talked about. Anybody that has participated in a boom knows how genuinely depressing the bust can be.
I worked for a company that lost 70% of its stock price after the tech bust and recession of 2002. The stock had soared in the five years prior. The attitude and morale is abominable. Bad times are amplified when they follow extremely good times. Even though everybody was still working and making money the whole thing was different. Then management started taking away little perks and it was a serious downer. People came into work with a completely different demeanor.
This lady is going through the same thing. Only there are two types of people that go through booms. There are those that recognize the boom and prepare for the bust and those that think the boom will go on forever. I’m guessing she is the second kind. Those people are screwed right now.
Exactly right. I also worked for a company in a similar situation back then. During the boom, I’m not going to deny this, I checked our company’s stock price almost daily, because I and hundreds of other people had stock options that we thought were going to provide the basis for a leisurely retirement within ten years. Then things turned, money stopped growing on trees, and we all snapped out of our trance. I distinctly remember the day I found out our artificial plants were leased. Some guy came into my office with a cart, picked up my plastic ficus, and wheeled it away. Then the food in the company cafeteria almost instantly went from decent to gag-inducing.
Our stock collapsed. I exercised my options before they became worthless, for less than 2% of what I once thought I’d clear. It was a hard lesson, but an invaluable one.
Got hired in the fall of 1999 and on my one-year anniversary I cashed in every stock option I could (as a late arrival, I didn’t get that many). At the time, this tech stock’s P/E was over 400. Whenever a co-worker brought up the topic of our options, I said, “Sell now, the stock will never be worth this much again.” Many of those co-workers cashed few if any of their options. One reason/excuse was they didn’t want the big tax bill!
Stock climbed even more and then started down two or three months later. It tanked completely less than six months after that, hitting a low of just 2% of its peak value. Oh, and I got laid off at about the same time along with lots of other folks. Since then the stock has recovered nicely. Now, almost seven years later, it’s at 4% of its peak value.
“Not a lot of fun”?
What, has selling real estate now become-gasp-work?
There goes 95% of the Realuhters in Santa Barbara.
The San Francisco Chronicle. “As the nation’s housing market swoons, …
Ah the MSM. I remember seeing that flim clip of the Hindenberg swooning!
But I thought the MSM had attempted to brainwash in to believing that the real estate market is all local?
“Last month, that credit crunch reached Brent Meyers.” “He owns a substantial investment portfolio and a million-dollar house in Moraga. He pays his bills on time and has no credit card debt. His credit score, he says, is around 800.””
If he’s such a tycoon, why does he have to borrow money? Is he loaded up with Bear Stearns or something?
Cash is king.
The “money” this guy he believes he owns is a matter of opinion. His opinion may be far different from those whose opinion counts the most, the ones from whom he needs to tap for cash.
When money gets tight, those with the cash call the shots.
[The LA Daily News. “In all the chatter these days about mortgage reform, the new rules for appraisers aren’t getting a lot of attention. But that issue gained traction after New York Attorney General Andrew Cuomo began investigating allegations of conflicts of interest, fraud and other misconduct.”
“One result is that mortgage giants Freddie Mac and Fannie Mae agreed to cooperate with Cuomo and the Office of Federal Housing Enterprise Oversight in helping regulators tighten home appraisal practices to ensure there is some independence in the process.”
“Cuomo subsequently terminated his investigation into some of the business practices at Fannie and Freddie.”]
You have to be careful investigating bankers and mortgage companies. Spitzer found out about that the hard way.
“You have to be careful investigating bankers and mortgage companies. Spitzer found out about that the hard way.”
Spitzer made himself vulnerable,but I have no doubt the decision to burn him was politically motivated. Handy little political weapon the banking sections of the Patriot Act.
Not to mention the wire-tapping provisions - spy on your political enemies and no deep throat will ever find out
““But in mid-March, Bank of America cut off his home equity credit line of a little more than $180,000, citing a decline in the value of his property.”
More proof we are heading into a possible depression. People have been relaying on their fake equity as “wealth” and with that cut off and house prices crashing, they are all broke.
“More proof we are heading into a possible depression. People have been relaying on their fake equity as “wealth” and with that cut off and house prices crashing, they are all broke.”
And the MSM has been relentless about calling this a Subprime Meltdown. Here’s someone with a $1M+ house and an 800 FICO score who is deemed too great a risk to have an open HELOC anymore.
Just wait ’til those AltA and Prime resets start to kick in.
His FICO is irrelevant. He has no collateral for a HELOC. The house is not worth any more than the owing on his mortgage.
““‘Those who are paying attention and realizing that they’re not getting any offers, they’re going to figure it out and lower their price,’ said Jim Klinge, a real estate agent in Carlsbad. ‘How many sellers are willing to keep lowering their price until it sells? Maybe one out of 50.’””
Doesn’t matter as most knife catchers are buying from the bank or builders anyway. Others are simply renting from FB’s who will see their bogus equity evaporate away.
‘But those guys (investors) are running a lot of risk because there’s so much volatility in the market. … Your exit strategy has to be really bulletproof, or you’re going to lose your shirt.’”
My exit strategy, mail in the keys. However a case might be made for a ‘ruined by tornado’. “How do you start a tornado”, he asked, violently rotating?
Well if they can’t buy with 0% down, most aren’t going to actually risk their own money!
“How do you start a tornado” ?
Hey, that’s pretty simple. Just blow a bubble. If you don’t believe me just ask the bubblemeister, Mr Alan ‘Spin’ Greenspan.
Ha!
““Edwin Beeks, retired from the U.S. Navy after being wounded in Iraq, picked up a four-bedroom ranch house in Lancaster, Calif., with a bid of $95,000. The previous owner paid $255,000 in 2005, borrowing 95% of the purchase price from a subprime lender.””
That is one huge haircut! How much lower will that price go? $70k? Itll become easily affordable for middle class people then
I expect to see plenty of $50k houses in many parts of Florida by 2012 
I am always wondering if the CA/FL difference in house prices is in part a direct result of the CA/FL difference in state income tax. People in CA more motivated to bury any wealth they do have, in RE, whereas in FL they are socked only with the intangible-property tax which, if it still exists, seems to be about 0.0005 of your stock/bond portfolio, so there is less pressure to hide it in RE. Someone can think of a way to test whether this is cause/effect or random coincidence.
The intangibles tax was repealed effective January 1, 2007.
Thanks. All the more reason why Floridians can afford to have actual stocks and bonds and not sink all their money in RE.
“That is one huge haircut! How much lower will that price go? $70k? Itll become easily affordable for middle class people then I expect to see plenty of $50k houses in many parts of Florida by 2012 ”
That is actually what a property should be going for in lancaster, victorville and other hi-desert areas of S CA. These places are often located way out in sparsely populated, windblasted, scorchingly hot 100% summer heat & dry, scrub-brush, rocky, barren , moonscape areas. The homestead properties and homes might be large 1-10 acres 3000-4000 sq ft ranch homes but city services/ utilities night be lacking or minimal . Plus they would be 2.5 to 3.5 hrs from LA/OC coastal job centers at normal commute drive. Fridays and pre-holidays multiply 1.5 times for above commute time. Even a cheap $100,000 home has monthly PITI of $1500-2000 + per month, depending on dwnpmt, and there are absolutely no hi-paying jobs out in the hi-desert to even support those min monthly pmts. Plus there was a ton of overbuilding out in the desert which lead to vast oversupply.
I have experienced the wind when it blows hard out in these hi-desert areas at 60-70 mph gusts and it creates quite a bit of havoc.
Lancaster has no investment possibilities in the foreseable future and prices will be rock bottom at below $100,000 for 6 -10 years.
“Comment by JP
2008-04-05 12:02:42
“And what’s been happening in Beverly Hills is apparently happening around the country. After years of steady growth, the cosmetic surgery business seems to be going through a rough patch.”
The horror! I predict a huge slowdown in sex because everyone will look so much uglier.”
Oh wow this comment made my dream come true! There are some people that just shouldn’t breed! Also the world can do without STDs and injuries. Let’s see just how shallow people are when the beauty wears off.
” Comment by NoSingleOne
2008-04-05 14:59:54
I don’t hold it against these women for getting plastic surgery. If you think about it, it is their men who only go for airbrushed, peroxidized barbie dolls with impossible anatomies who are driving this trend.
Look at all the teenage boys who mercilessly put down girls who aren’t ‘perfect’ and the only women they find attractive are touched up pictures on the Internet.
Just think just how decadent we have become as a society.”
Off topic but I had to reply. Preach it on bro! I hate shallow types like those. Personality and intellegence rule! Who cares if a person isn’t aesthetically perfect? Theres many aspects of attraction that transcend the physical.
NoSingleOne: you got that right. Men made ‘em do it. They’re not responsible for their own silly actions.
If a “regular-looking” woman is unable to find a boyfriend/husband because she looks less attractive than her peers, it makes sense that she feels presured to have plastic surgery.
Where we currently live/rent, I’ve found out that many/most (?) of the women I’ve talked to about it have had some type of plastic surgery.
You really have to have a tremendous amount of self-confidence to avoid following everyone down that path.
The more women do it, the more pressure there is for those who don’t.
Hopefully, the deflation of this credit bubble with put an end to the plastic surgery bubble as well. It would be great to see people focus on what’s important in a mate — integrity, honesty, kindness, consideration, dependability, and just a bit of physical attration to round things out.
I was just checking out some Redfin listings in my old neighborhood of Newport Beach (Westcliff area for those who know it).
There are three listings for 2-bed, 2-bath apartments on the same street where I used to rent a very similar unit. It was a perfectly pleasant place to live, and I paid a very reasonable $1350/month in 2004-2005.
These chuckleheads are trying to sell for $399.9k (cheapest) to $500k (most expensive).
Two of the three had sold in 1998 for $120k, which is more like it. The third didn’t list a 1990s sale but showed a 2006 tax assessment of $70k (even more like it) whereas the FB who’s trying to sell it now just bought it last year for over $400k. Oopsie.
There’s just an incredible number of properties for sale - the map is saturated with little green houses when you put in the ZIP code (92660).
The wishing prices remain crazy for now, but I wouldn’t be surprised if those $120k numbers are seen again by the time this thing bottoms out. The laws of supply and demand have not been repealed.
You stand correct. Expect the rent to also fall below $1k a month. Ive noticed rent in most locations is a ripoff, although usually still a much better deal than “owning” I guess those FB’s want to rent it out for the same rate as what they pay on the mortgage. Hah.
It’s only one data point, but I noticed that the apartment complex I’m living in has an identical unit to mine listed for rent, at 10% below my price. I signed a one-year lease in late November 2007. This is in Mountain View, CA.
Also, Craigslist for this area seems to be showing a greater volume of rental listings, and at slightly better prices, than in October last year, when I was last searching.
Several of my friends at other tech firms in SV have told me they have hiring freezes at the moment.
Could be the start, finally, of a slowdown in Silicon Valley. About freaking time.
“It was a perfectly pleasant place to live, and I paid a very reasonable $1350/month in 2004-2005.”
I have a bit of familiarity with newport beach and yes, that is a pretty decent rent for that area. Close to if not in the Newport beach Gold Coast, balboa Island, Balboa pennisula(thou i always felt the peninsula was really ordinary middle class folks who think k they’re rich ).
I think some of the would-be sellers on Redfin are actually insane. Check out this one’s price listing history:
2027 Commodore Rd., Newport Beach, CA 92660
6/21/07 - $1,585,000
7/25/07 - $1,499,000
9/05/07 - $1,495,000
10/02/07 - $1,535,000
10/27/07 - $1,495,000
12/07/07 - $1,439,000
1/10/08 - $1,439,900
1/16/08 - $1,439,950
2/2/08 - $1,445,000
2/11/08 - $1,385,000
3/8/08 - $1,399,900
3/10/08 - $1,399,990
3/20/08 - $1,399,900
4/4/08 - $1,399,990
Previous sale was 7/26/88 at $355k, near the top of the last bubble. How much do you reckon it’ll be worth once we hit bottom? I’m guessing not a penny more than $600k.
ZipRealty, sort by oldest listing and reduced only. Lots of stuff like this pops up. Crazy or desperate? Reality (totally) bites, so some sellers choose to stay in LA-LA land.
According to the tax records the property had a transfer on 2/20/98 for $175,000, near the bottom of the last bubble. It also shows 2 new loans on 11/16/05 for $1,000,000 and $128,000 both from Countrywide. Further searching indicates that on other properties owned (6) including Commodore over $6,000,000 (Six Million) of new loans have been obtained since 2005. All this information is on public record and believed to be correct.
Ha, $175k in ‘98! That’s only $55k more than the apartments I mentioned in the previous posting. Sometimes I forget just how cheap SoCal was in the 1990s, even though I lived there during the time (as a renter).
That was a relatively small bubble compared with the current one, and it took 8 years to reach bottom. How anyone can believe that this time will be faster - let alone in the next year or two - is beyond me. I’ve been telling people lately that my guess is 2015, and they look at me like I’m an alien.
He owns a substantial investment portfolio and a million-dollar house in Moraga.
I think his porfolio was heavily weighted with Enron, WorldCom, Global Crossing, Pets.com, and Purpletie.com stock. Couldn’t have had too much Bear-Stearns. It was still worth at least $2 a share. But that Enron
We’re going to be deferring other expenditures to build a pot of money to replace what Bank of America took away.’”
Is this fool trying to build a pot to piss in? B of A took away his pissing pot? Moraga is now out of the reach of most people for buying some POS ready to slide down a hill in a mudslide or take a shakin’ on the Hayward fault line.
Chasing the market down in Davis (from Ziprealty).
Sale History & Tax Info Sale History
06/15/2004: $1,350,000
On Market: 323 days
Price Reduced: 07/04/07 — $2,150,000 to $1,995,000
Price Reduced: 09/19/07 — $1,995,000 to $1,799,000
Price Reduced: 10/10/07 — $1,799,000 to $1,699,000
Price Reduced: 04/05/08 — $1,699,000 to $1,500,000
He’s not running fast enough. If he just runs a little faster he will catch the market…at least that’s what his used house salesperson told him.
Let him lose all his bogus equity that he never deserved. He will save a FB.
What? In Davis? Say it isn’t so. From goggling around the internet, it appears that the median household income is $40k-ish and median family income falls somewhere between $74k-82k. This city was quite rural back in the day, and also has the University of Cal, Davis, therefore a lot of students, teachers, young families and median age of 27. None of these stats spell “I can afford a $2 million home”.
BayQT~
http://money.cnn.com/magazines/moneymag/bplive/2006/snapshots/PL0618100.html
http://en.wikipedia.org/wiki/Davis%2C_California#Demographics
From the link.
Housing
City stats Best places average
Median home price $539,000 $259,566
Home price gain
(2004-2005) 19.80% 9.26%
Now, will they EVER report home price loss?
For the house in Davis. Another 50% haircut and maybe they are in the ballpark. Must be able to house a lot of students. Person buying must give up MurderBurgers ( a local hamburger joint).
http://news.yahoo.com/s/ap/20080404/ap_on_hi_te/google_photo_lawsuit;_ylt=AnCgjRrkBpa5ec940pWJuClk24cA
Some people are just so ‘BORING’ they don’t want to share what their property looks like. LOL.
From the article:
Google is not the only Web site with a photo of the Borings’ property.
The Allegheny County real estate Web site has a photo, plus a detailed description of the home and the couple’s names. Similar information, including pictures, of nearly every property in the county is on the Web site.
Moskal said the county’s image appeared to be taken from a public street. (”appeared”…uh huh)
“The county’s not trespassing,” Moskal said.
—————————————————
Yeah, and the county doesn’t have as much money as Google has either.
————————————————–
Also from the article:
The Borings paid $163,000 for the property, according to the county Web site. The county describes the home as a single-family, four-room bungalow with a full basement. The one-story frame home was built in 1916 and sits on a property that’s a little less than 2 acres.
The home is 984 square feet with a fireplace and central heat and county assessors graded it as being in “Fair” condition. The county Web site does not mention the property’s two detached garages and swimming pool, which are visible in the Google pictures and are mentioned in the couple’s lawsuit.
————————————————
We are such a litigious country.
BayQT~
Ok some anecdotal stories from SoCal:
I just got off the phone with a good friend of mine. He lives in a nice home in La Qunita built in 2003. He bought in 2004 and paid $530,000. Prices soared in his neighborhood for 2 or so yrs and peaked at about $750k for the same model. But unfortunately this was flipper haven…and he knew it. He called me today and told me he was out walking the neighborhood checking out some of the foreclosed homes up for sale. Well, he walks into a home 2 streets over - same model. used home salesguy hands him a marketing sheet - $529k. It’s been up for sale since last yr and no offers…but the salesguy tells him it will sell for no less than 5-10% off of asking. Needless to say my friend is not in a very good mood today.
My other buddy lives in North Hills. This is avg to below avg area in the SF valley. Prices skyrocketed from about $200k in 2000 to $600k+ in 2007. The house next door sold 16 mos ago for $650k. People bailed back in Dec and the house was foreclosed on last week. I walked through the home yesterday as the back door was open. Trash, clothes and mail (mainly credit card bills) everywhere. Place was a mess. They left VCRs, pictures, laundry, etc. House across the st. from this house just went into foreclosure. People lived there for a yr, put in an white iron cast fence around the place, and then bailed. My buddy thinks it was another cash out fraud scam. I asked him if he was worried about squatters? He replied:”No. Why should I be?”
http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-Hall_06bus.ART0.State.Edition1.46621f2.html
This will put a smile on your all faces. Enjoy!
http://www.washingtonpost.com/wp-dyn/content/article/2008/04/05/AR2008040502632.html?hpid=topnews
“A year ago, the Mortgage Bankers Association was thrilled to sign a contract to buy a fancy new headquarters building in downtown Washington. Interest rates were low, the group’s revenues were steady and the prospects for quickly renting out part of the structure were strong.
But since then, the association has fallen on tough times as many of the subprime mortgages dispensed by some of its members proved dicey. Borrowers discovered the loans were more costly than they had anticipated. Foreclosures soared, and cheap, inexpensive credit dried up, slowing the economy.
The result: The trade group is about to find it harder than it imagined to pay its own mortgage. “
Awesome!
I seldom agree with the American Enterprise Institute, but I just noticed a well-stated letter that one of their fellows penned to the Financial Times a few days ago:
http://www.aei.org/publications/filter.all,pubID.27750/pub_detail.asp
Sir, Katrina vanden Heuvel (Letters, March 31) quotes Nicholas von Hoffman, following the purchase of Bear Stearns, that “we are in unknown territory facing situations that have never arisen before.”
Well, no. In fact, our most recent housing bubble and current bust display all the classic patterns of recurring credit over-expansions and their painful aftermaths, as colourfully described by Walter Bagehot, Charles Kindleberger and Hyman Minsky. These include a funding panic, government interventions, the fall of the previously esteemed, the search for the guilty, and the inevitable political over-reactions.
In booms it is proclaimed that we are in a “new era”–in busts that we have “unprecedented problems”. This is merely the egocentricity of the present. It can be corrected, although it usually isn’t, by observing the patterns of financial history. As James Grant said in Money of the Mind: “Progress is cumulative in science and engineering, but cyclical in finance.” The tendency of financial markets to have to relearn the same lessons about once a decade is one of the most intriguing things about them.
Good post. But. I was born in 1945, so I’m allowed to say that the present situation is not like the other downturns that have occurred in my lifetime. It’s not exactly 1931, but I expect it to be a lot worse than 1974. “Once a decade” phrase suggests that this is (only) the equivalent of what happened in RE in the early 1990’s. It isn’t.
After looking at the 10 year chart for Microsoft, and realizing that it’s gain is under 15% for 10 years, this real estate bubble might never come back.
Oceanside = Crime by the Sea
“Oceanside has seen some of the county’s deepest price reductions. During the boom of the market, some neighborhoods with relatively higher crime rates saw home prices soar past $450,000. Now, some of those homes have entered, or are in danger of, foreclosure and are listed for less than $200,000.”
“Despite a price tag more befitting the Midwest than San Diego, many of the Oceanside homes struggle to sell because of the condition and location, real estate agents said.”
Oceanside isn’t San Diego. It’s Oceanside.
It is in San Diego County, but not in the city.
We used to live there, and can attest to the amazing price drops so far (over 50% in our last neighborhood). You could almost buy a rental there and break even, if not get a positive cash flow.
Problems is, I expect crime to get worse and incomes to decline further, making rents go down.
Oh boy, ya’ll are not gonna like this:
The Fed is blameless on the property bubble
By Alan Greenspan
Published: April 6 2008 22:03 | Last updated: April 6 2008 22:03
I am puzzled why the remarkably similar housing bubbles that emerged in more than two dozen countries between 2001 and 2006 are not seen to have a common cause. The dramatic fall in real long-term interest rates statistically explains, and is the most likely major cause of, real estate capitalisation rates (rent as a percentage of a property’s value) that declined and converged across the globe. By 2006, long-term interest rates for all developed and main developing economies declined to single digits, I believe for the first time ever.
http://www.ft.com/cms/s/0/81c05200-03f2-11dd-b28b-000077b07658.html
“But in mid-March, Bank of America cut off his home equity credit line of a little more than $180,000, citing a decline in the value of his property. Meyers is now scrambling to come up with $75,000 to pay for a major landscaping project and is canceling other big spending plans.”
“‘My wife would like a new car, but that’s going to have to wait,’ he said. ‘We’re taking a $75,000 cash-flow hit, and I want to boost savings.’”
Because obviously, it’s more important to spend $75k on landscaping than it is to make sure you have a reliable car for your wife to drive.
He didn’t say reliable he said new. My wife has our “newest” car - it’s 5 years old, but it’s more reliable than a lot of new cars. My car is 14 years old, and it’s still reliable.
We’d both “like” a new car too.
Went out today to put my campaign signs up. I tried at first to avoid sticking them up where there were a lot of For Sale or For Rent signs. I had to quickly change my mind, though, because those signs were everywhere.
What kind of an idiot buys a million dollar house and then spends more than he can afford on other bits and pieces of stupidity? $75k of landscaping? A new car? Fine, if you have the money. but if you need to borrow for these things you are in over your head and probably can’t afford the home in the first place. I bet this guy has a reset coming soon!