Oh, How The Once Mighty Have Fallen
MSN Money reports on California. “The mortgage industry calls it ‘jingle mail’ — keys that arrive in envelopes from homeowners who’ve decided they’d rather walk away than fight to make impossible payments. The median first-time buyer put down less than 2% to buy a house in 2007, according to the National Association of Realtors. Many put down nothing, even borrowing to cover closing costs. ‘If you didn’t put anything down, it’s much easier to walk away,’ said John Mechem, a spokesman for the Mortgage Bankers Association.”
“In California, Ismael still lives in his four-bedroom house in Menifee, Calif., for now. But he is ready to leave. ‘The situation I am in is really ugly,’ said Ismael, who asked that his last name be omitted. ‘It’s better for me to walk away and leave the stress and everything that is involved in this home. I am about 95% sure I am walking away.’”
“Ismael bought his $370,000 home in 2005 for no money down, qualifying on his mid-$40,000s salary. He was paying $2,700 a month for an adjustable 8.25% loan.”
“Then he and his girlfriend split up, reducing his household income to a single paycheck at the same time the mortgage was adjusting upward. To add to his struggles, the value of his house dropped by $145,000.”
“Yadira Magaña in Oxnard, Calif., has a similar story. She walked away from her $585,000 home in June 2007. When she bought it, Magaña thought she had gotten a great deal. She made a $16,000 down payment on the house. But she lived there only eight months before her marriage collapsed.”
“She couldn’t afford to pay the $4,500 monthly interest-only mortgage, plus taxes and insurance separately, on her own $50,000 income. So she and her two children moved into her mother’s house.”
“In Magaña’s case, the bank declined to do a short sale. ‘I told the bank I was leaving. I couldn’t afford the home. The bank was not trying to help me or suggest different options. The only thing to do was let the home go,’ said Magaña.”
“Meanwhile, her credit rating drops every month. It’s now in the 500s, when an excellent score is 750 to 800. Her decision to walk away will be on her record for years to come. ‘I left the keys on the counter. I felt like a failure,’ she said.”
“Federal Reserve Chairman Ben Bernanke recently estimated that about 45% of foreclosures in 2007 were on private, near-prime or government-backed mortgages. And that means plenty of people who thought they were fine are facing catastrophe, never expecting that their homes would be worth less than the purchase price.”
The LA Times. “The depressed housing market appears to have another target in its sights: Irvine’s would-be Great Park.”
“Nearly three years after the city approved a massive residential and commercial development at the closed El Toro Marine base in exchange for a grand park in the heart of suburban Orange County, Irvine officials and struggling home builder Lennar Corp. are in talks about revising the landmark agreement.”
“No homes or businesses have been built. No grassy fields have been planted. In a mailer in 2003, city officials boasted that ‘children will be playing in the county’s largest sports park’ by summer 2008.”
“Most of the future park’s 1,347 acres remain off limits to the public, with a balloon ride and a visitor’s center being the only public facilities. ‘To have nothing more than a balloon and the possibility of a 27-acre park is disappointing,’ said county Supervisor Bill Campbell.”
“The key was a plan that would trade home building for parks money. Lennar would get the right to build thousands of homes as well as millions of square feet of commercial, industrial and office space on the former base. It would pay $200 million in development fees and donate the land for the park.”
“Lennar has built no homes at El Toro, despite plans to have hundreds ready this summer. And the amount of money available is only $104 million.”
“‘Some of us have felt we’ve needed a Plan B all along,’ said Don Dressler, an Irvine finance commissioner. ‘If Lennar’s position is sustained, then we’ll have to rethink the sources of funding for the park.’”
“State Assemblyman Todd Spitzer , who as an Orange County supervisor was one of the chief architects of the deal to turn El Toro into a park…blasted the city for not building recreation facilities that could be used by the public, while wasting money on ‘a ridiculous, oversized balloon and free rides.’”
“Irvine Councilwoman Christina Shea said that she was concerned about Lennar’s dedication. ‘If they cannot move forward, they need to tell us that,’ she said. ‘Negotiating terms of deals needs to stop until we know what they’re up to.’”
The Orange County Register. “Oh, how we, the once mighty, have fallen. Orange County, dead last in the jobs game. Worse than Michigan’s shattered auto-factory towns. Worse than Florida’s fizzled new villages. Worse than overbuilt, inland California.”
“The federal government’s latest local job count…found Orange County’s job market down 19,100 positions in the year ended in the third quarter. That was the biggest decline of any of the 328 large U.S. counties tracked by the Bureau of Labor Statistics.”
“A shocking comeuppance for a county that not too long ago – second quarter of 2004, to be exact – topped this very same list as the national champ in job creation.”
“You remember mid-2004, no? Local homes were appreciating at a 30 percent-a-year clip. Ameriquest, then the subprime loan king from O.C., had the cash and marketing sizzle to smack its name on a major league ballpark in Texas. ‘The O.C.’ was one of TV’s hottest shows.”
“Fast forward to early 2008. News that last year was a stinker should be, in many ways, no stunner. Who hasn’t heard of the economic pain that slumping real estate’s dished out?”
“Yet what’s so stunning with this federal jobs ranking is just how bad we now look vs. the rest of the nation’s big job markets. The powerful symbolism of the last-place finish wasn’t lost on Chapman U. econ professor Essie Adibi.”
“Our dead-last ranking, Adibi says, ’shows two things. First, we’re not what we used to be. We have to learn this. Given our costs of living here, we are becoming more like the rest of California,’ a reference to the traditionally more modest statewide economic growth.”
“Adibi continues, ‘Second, because of our proportional dependence on mortgages and construction in the boom, we’re going to get hurt more than others.’”
“Local finance bosses cut 13,000 jobs (9.8 percent loss) in a year; construction employment fell by 6,000 (5.5 percent.) Worse, this is good-paying work gone away.”
“As the slowdown simmers, Adibi hears of retailers – and landlords who house retailers – suffering whether it is directly, or indirectly, from the fallout from housing’s decline.”
“No source knows more about shopper psyche – a key local economic barometer – better than the merchant’s cash register. And retailing weakness tells Adibi that real estate’s ‘putting a damper on the entire market.’”
“The economists at Chapman got lots of grief from what now looks like an early call on this local economic reversal. Adibi notes that more than a few of his past critics, who insisted in boom times that ‘Orange County is different,’ now ask him ‘Where is the bottom?’”
“Orange County auto dealers sold $8.5 billion worth of cars in 2007, down almost $1 billion from a year ago, a new economic impact report by the Orange County Automobile Dealers said.”
“Through February, the latest figures available, new vehicle registrations in Orange County were down 24.3 percent compared to the first two months of 2007. Auto sales have been hammered by a barrage of negative news: falling home values, tightening credit, rising gasoline prices.”
“‘A lot of people want to downsize,’ said John Riashi, sales manager at Toyota of San Juan Capistrano. ‘I’ve seen people trading in an Escalade for a Prius. People traded in a Hummer for a Prius. It’s all economics.’”
‘Orange County auto dealers sold $8.5 billion worth of cars in 2007′
That’s still a heck of a lot of cars!
‘For the 22 business days ending March 26, sales for all types of Orange County home sales decreased 41.4 percent. The median sales price decreased 19.7 percent.’
‘Prices of existing homes in the Victor Valley dropped 6.1 percent last month, and most of the homes sold were foreclosures, according to a report released Thursday. Seventy-one percent of the homes that closed escrow in March were bank owned, according to Victor Valley MLS data compiled by Larry Trombley of Century 21 Rose Realty.’
‘Since March of 2007, existing home prices have slipped 37.8 percent and are on a par with home prices in 2004. The average High Desert home sold for $211,180 or $107 per square foot. For the month, one in 16 homes on the market sold.’
–
“‘Since March of 2007, existing home prices have slipped 37.8 percent…”
Metros that have been following that trajectory, based on the latest Radar Logic Data, are
San Fran, CA -44.2%
Las Vegas, NV -43.0%
Sacramento, CA -42.6%
Boston, MA -36.5%
These are NOT YoY numbers but the most recent trend in PPSF. SF metros includes many rural counties around The City.
Jas
Jas.. I always appreciate your data digs.. thanks..
“…sales for all types of Orange County home sales decreased 41.4 percent.”
This is a really dumb question, but doesn’t a big drop in sales normally portend a large price decline going forward?
Full disclosure: I have never owned or invested in real estate in The OC and have no present or future plans to do so. I merely have a passing interest in this part of the world where real estate used to always go up and price increases were always in the bag.
Sold, or financed? The point being that as this mess unwinds look for a lot of those cars to find their way back to a lender. Just like housing inventory, as those cars come back, resale values and lease risiduals will be depressed for months. OC is going to be in for a world of hurt going forward.
As a lifelong resident of orange county, born and raised here. I miss the good ole days.
I sympathize. But isn’t there something in OC that you guys can build on? I have always heard how enterprising Californians are, there must be a way to make a living out there besides selling each other real estate.
Ben: We are really no different in So Cal. All the jobs there are in other places are here, too. Every type of town is here also from 3000 population mountain towns to LA. So Cal is sort of an amalgamation of everyplace else.
I saw these OC job numbers earlier this week and was sort of shocked. 8 billion in cars suggests to me that it might be 4 billion in 2008. And for OC to drop 40% in sales from a pretty bad 2007 is big too.
But every bust ends. The question is, what now? That is the challenge these really bubbly markets face and the CA posters here are as bright as anyone.
“Adibi continues, ‘Second, because of our proportional dependence on mortgages and construction in the boom, we’re going to get hurt more than others.’”
That sounds too good to be true.
Orange county is the heart of beauty and shopping.
Everybody has big rings, big boobs, blond hair, foreign cars, gorgeous homes, and perfect mini me kids.
Now these top earning men will have to sell their own wives just to get by.
I saw that some schools in N. San Diego are no longer having yellow bus service for school kids.
Oooops
Like Vegas, the bigger they are, the harder they fall. (Ahem NYC)
NYC is looking mighty shaky these days.
Unfortunately, no hard data; just anecdotal looky-loo stuff around my nabe.
The more fake they are, the more trashed they look when the money is vaporized.
Sheesh..If these FB’s can’t find replacement “jobs” for selling each other over priced shacks, they need to get some picks and shovels and try mining for GOLD.
Huh..Ooops..The NEW precious metal for the shady element appears to be COPPER and the California Criminals appear to be doing well with minimal investment costs other than hacksaws, tennis shoes and fast feet.
Oh well…at LEAST it’s a form of Creative Startup Financing
One thing California has in abundance is natural beauty, in about 31 flavors…
This combined with the Dollar getting pummeled, offers great opportunity for the tourism industry to cater to foreigners and their needs, many of which will become repeat visitors~
Before or after they get fingerprinted like criminals?
Don’t forget the not optional mug shot…
I now travel to the EU on business 4-5 times/year because my colleagues there will no longer travel here, saying the experience is exactly like going to the Soviet Union 20 years ago.
Actually, getting into the USSR was easier when I went there in 1987. I had to apply for a visa with passport/mugshot photo attached, but I wasn’t fingerprinted nor was I interrogated at all by their customs the way we do to tourists.
Welcome to the War on Tourism.
Well, why not leave the hard entrepreneurial part to other people, and then you try and sell them real estate? Everyone has to live somewhere, and you can always peddle a dream.
Wait. What now?
OC has a lock on the cosmetic surgery business. I guess people can stand to be ugly when their finances are not looking so good these days. Home price declines = ugly people?
I spoke to a friend who has a plastic surgery/derma practice. Business in LA is down 50%. The sales reps for botox/radiesse/restalyne are not making their sales quotas and are hurting.
Her middle class patients are gone - they no longer have the money.
Expect to see lots of people who ’suddenly’ look a lot older than they used to.
LOL. The stress of stretched budgets and the inability to afford cosmetic surgeries will make people look suddenly older.
My friend’s parents (also dermatologists) are facing problems in the Bay Area.
Of course, they spent the last few years doing a gut remodel.
Now, suddenly business has dropped dead. Surprise, surprise!
The Picture of Dorian Gray.
I saw that play in pasadena. Dorian was naked. One of those gayish theatres. Mom and I were charmed!
Geeze, Faster, when you’re a doctor and your business drops dead……Lawsuit!
Sue whom?
They are dermatologists; now no clients; who will they sue?
People apparently have no skin in the game, anymore.
SteveH - Liked that
I’m all for good grooming, which used to entail going to the dermatologist for acne, and orthodontist for crooked teeth, but it’s truly bizarre when you can’t even recognize 20-something actresses because they look like androids. Plastic surgery has gone the way of tattoos, ubiquitous and down market.
Ben,
I currently work for a software company out here in orange county. In my town we also have aerospace, pipe manufacturing, electornics companies and so forth. I think the thing I miss the most was the small town feel of north orange county where brea and la habra were little towns and fullerton was kinda our big hub. Now the area is beginning to get run down and there is no more orange smell in the air. The local is different to lots of signs in languages I dont understand in La habra, buena park and anahiem.
Thats what I miss and I am going to work real hard to help my area out. We are hiring at least at my company.
I remember when Brea/LaHabra/Fullerton were smaller and friendlier. I remember marathon training in the isolated hills and oil derricks of Hacienda Heights, Rowland Heights, Diamond Bar and Olinda before the Fullerton Rd. extension opened the area to the development of McMansions. I remember when things seemed a lot more simple and real.
I admire you for digging in and trying to help. If I could stand to live there any longer, I would too.
” sympathize. But isn’t there something in OC that you guys can build on? I have always heard how enterprising Californians are, there must be a way to make a living out there besides selling each other real estate. ”
OC is a baffling Job market. There are limited hi-tech and modern corporate operations in and around the Irvine/ Lake forest corporate industrial belt, but not too many lower sweatshop/warehousing/ grimy industrial processing operations like there is in LA and the IE. Especially in the S OC, the modern corp parks are designed for hi-tech modern- type corporations. The one that comes to mind is Parker Hannafin(military).
South OC really needs to come down in housing costs to attract more hi-tech workers as it is really a clean safe , though somewhat homogenized, region and has the industrail/logistical infrastructures in place to be a SCal center for hi-tech. Maybe not close to silicon valley but there has been a nascent attempt to built up the hi-tech sector of OC,though it has a long way to go.
Northwest OC is a densely -packed crowded urban tangled zone heavily immigrant-impacted, consisting mostly of retail, malls & housing with some industrial activity along the east Anaheim/ fullerton/ placentia industrial zone, with more lower-type processing/ industrial /warehousing operations than the South OC , similar to LA/IE.
South OC commercial hi-rise office business sector had a disporportionate amt of corps devoted to REIC, thus the sharp dropoff in jobs.
OC has the highest rate of corporate fraud in the world…that place is built on scams and cons…I can’t stand OC.
There is a lot of aerospace, entertainment, shipping (long beach), tech industry out here. Resources are limited for heavy industry space though.
We have a good bit of automotive in the southbay… honda, nissan and toyota have headquarters here. Lots of people commute from southbay to north OC.
Disney is there and we have substantial torist attractions.
There is some oil industry as well.
Sorry, but Nissan relocated to TN near Nashville, announcement
was made back in 2005. Reason, SoCal’s costs were too high.
http://www.t-g.com/story/1125614.html
I thought the experts said it was different this time? You know, we aren’t as dependent on aerospace as we were in the 1980s. They forget to mention we replaced those cold war companies with companies like New Century.
I grew up mostly in Orange County. Before real estate mania and the cost of living exploded, it actually was kind of nice.
It’s nice for a change for people to stop harming themselves with body modification and cosmetic surgery. Huge waste of money too.
Didn’t OC actually have real orange trees at one time?
We had thousands of acres in orange trees around San Juan Capistrano, Irvine, San Clemente, El Toro back when I was a teen in the 70’s. Heck we had dirt roads still in some areas.
I went to grad school in the OC. I still remember the HUGE orange groves torn down to expand the shopping in Tustin.
OC went off its traditionally diversified economy and went double down on Real Estate. They will pay harder than anyone else.
But it will spawn new industries. I have no idea exactly what, but part of the California ethos is to invent a new way to make money. But that takes years.
Recessions in California are brutal. Partially due to the California tendency to go “all in” during the boom years. Usually the investment has been in industries that have long term sustainment. This time, California is in a race with Florida, the outskirts of DC for a race to who can have the greatest employment in the REIC. Oh… I excluded Las Vegas and Phoenix in that comparison. Wow… I didn’t even realize six months ago just how bad a basket case Las Vegas is going to be.
Phoenix has been the poster child for inventory. (IIRC, it peaked at 40% of employment supporting growth! Whiskey Tango Foxtrot!)
Got Popcorn?
Neil
“Yet what’s so stunning with this federal jobs ranking is just how bad we now look vs. the rest of the nation’s big job markets. The powerful symbolism of the last-place finish wasn’t lost on Chapman U. econ professor Essie Adibi.”
The OC = Black Swan Down
I had a coworker that was staffing a booth at the Orange County Boat Show last weekend. He said traffic was way off compared to last year. Not empty, just a lot less. He saw maybe one boat sale in four days, a lot less than last year. Most of what he did see selling were very small ticket items, things like t-shirts.
Those OC economic numbers seem very credible.
Flip That Yacht, anyone?
April 10, 2008, 2:08 pm
Yacht Prices Sinking Fast
An article about the Newport Boat Show by Susannah Rosenblatt in the Los Angeles Times says boat sales are still strong despite the recession.
Yacht shoppers, according the show’s producer, “are not worried about the payments on their house.” The show organizers also touted the record number and selection of boats for sale. Yet later in the article, we learn that boat prices are slipping, making it more of a buyer’s market. It mentions one megayacht whose price had been slashed by $7 million.
““Lennar has built no homes at El Toro, despite plans to have hundreds ready this summer.”
I’m confused by this statement. I was hired by an ad agency to shoot a marketing video for Lennar homes for the El Toro development about 6 months ago to promote sales. I’ve spent several days there, I’ve seen hundreds of houses and entire neighborhoods either completed or in various stages of construction complete with playgrounds and clubhouses and swimming pools. I’m aware of the delays on the grand park project and sales and prices for Lennar are horrific compared to what they were projecting back in ‘05 but unless I dreamed the whole thing up, there be homes there. I’ve read the entire LA Times article and I can’t figure out the context of that statement above.
http://tinyurl.com/5hxjh6 = Lennar Homes at El Toro
I have always heard from people in the business that former military bases are the most environmentally contaminated areas of our country. What gives with building houses & parks/playgrounds there ?
You have to sign a contract saying that you won’t grow vegetables in your yard. Seriously.
If you go to google maps. There are actually 2 military bases.
Tustin Marine Corps Air Station - lots of building
El Toro Marine Corps Air Station - nothing. The park is in El Toro.
Here is the link to google maps.
http://maps.google.com/maps?f=q&hl=en&geocode=&q=el+toro+marine+corps+air+station&sll=37.0625,-95.677068&sspn=48.909425,68.818359&ie=UTF8&ll=33.676069,-117.759705&spn=0.202281,0.268822&z=12
“I’m confused by this statement. I was hired by an ad agency to shoot a marketing video for Lennar homes for the El Toro development about 6 months ago to promote sales”
U were in the former Tustin Miltary base, which has been in full blown development since 3 years ago. The still undeveloped El toro base is farther south-down the 5 fwy. There are two former shuttered military bases in the South OC- Tustin and El Toro. Relatively close to each other less than 10 miles apart so it is easy to confuse the two .
I have been to both sites. Just north of the El Toro base there has been a large- scale mixed-use housing development called Portola. I have seen the shuttered miltary base housing units at El toro : they are in wooded areas and that entire area can and will be eventually converted to ether housing or parkland.
S OC has an over abundance of retail malls and corporate parks already and really needs more affordable housing complexes. like apts and affordable condos. A megapark would be Nice too.
Call him “Ismael?” I guess he was paying attention in Am Lit, but not Econ 101.
Yeah - I thought that was funny too. Ismael from Menifee, CA, who didn’t want to give his last name… Just how many “Ismaels” are there in Menifee? Seems if he wanted to hide his identity he probably should have hidden the blindingly identifiable first name as well!
“Yadira Magaña in Oxnard, Calif., has a similar story. She walked away from her $585,000 home in June 2007. When she bought it, Magaña thought she had gotten a great deal. She made a $16,000 down payment on the house. But she lived there only eight months before her marriage collapsed.”
“She couldn’t afford to pay the $4,500 monthly interest-only mortgage, plus taxes and insurance separately, on her own $50,000 income. So she and her two children moved into her mother’s house.”
Okay. So she goes out and gets an interest-only mortgage, and inside of a year later she’s moving in with mom because she can’t afford the house.
And I’m supposed to feel sorry for her?!?
She got exactly what she deserved.
You left out the collapsing marriage part. It’s an automatic death blow to your living situation in many cases.
There were a pair of stories where a relationship/marriage break-up ended whatever financial viability remained for the housing. I wonder if the stress of making the payments was a contributing factor in both break-ups?
It can’t have helped.
How can you have a successful relationship when you’re stressed out all the time?
Life is hard enough already. Why do people make it even harder on themselves?
I think sometimes people think buying a home or having a child will help keep a marriage together…so they take the plunge and see what happens. It’s a very bad decision but that’s what happens when people are emotional.
I recall that a few months ago (last year) there was a story about a woman who was married with 7 or 8 children. They defaulted on the mortgage, things got tough, husband bolts. (I’ll see if I can find a link.)
Definitely lots more stories like this out there that haven’t made it to the MSM.
BayQT~
The number one cause of divorce in the country is money fights and money problems — Dave Ramsey.
She is probably typical of the Harpy on the famed “Suzanne” commercial
who henpecked her husband into buying a house they couldn’t afford. A few months later he finally grows a pair after seeing what is going to happen and leaves her with the “dream House” she so badly wanted.
I second this. I too have read stories of FB wives who begged the husband to agree to catch a falling knife. After he realizes the mistake, he divorces her and lets her deal with her own house alone. Of course she can’t afford it and walks away. She loses her house anyway and her husband. She would take half his money except both of them are broke from buying the house.
Here is a clue to you: If your wife won’t stop nagging you to buy the house, offer her a choice: It’s either keep the husband and no house(for the next few years) or you can divorce the husband and buy the house on your own.
Haha, that’ll put the greedy backstabbing gold diggers in their place!
Hey FreedomLover:
How many women do you think would agree to stay with a man who won’t even put a roof over her head? She has his two kids ya know. If you think that makes her a “greedy, back-stabbing gold digger”, then I suggest you get yourself sterilized before one of them turns into your problem.
You can always rent, that’s a roof over your head. You can buy a house that isn’t 600 thousand dollars on a horrible mortgage, and that’s putting a roof over your head too.
Or, he was a typical candidate for the cover of “Midlife Crisis” magazine and jumped into another warm bed.
We just don’t know what happened to the marriage. We do know that they should never have bought that house, though.
Ah, another woman-hating comment on the blog. Where did you get your information, Mo Money? Did you hire a private investigator to figure it out? Here’s another probable scenario:
She bought the house with her filthy rich RE-investor husband, who assured her that doing anything else would amount to extreme foolishness. He reminded her that, as his wife, it was her job to have faith in him and not question his supreme decisions. Then, after they moved in, he lost his job and started drinking. After a few months of this, he got drunk one night and knocked her teeth out. He left the house because that’s what the restraining order decreed.
Your right V about not knowing the story, however women are the more likely to be the nesters.
The OC’s a great place to live….but then again it was a great place to live 10 years ago when homes were still affordable. I’m cheered by the fact that homes are dropping in price so far about $ 100k per year since 2005 - Homes that were selling 3 years ago for $ 900k are now in the $ 600k range.
Keep going.
I’m in Marin, and I remember the wall-to-wall new cars during the boom. I see far fewer brand new cars these days, unless it’s something economical like a Prius.
My SESQUINCENTENNIAL plates are a point of pride for me. Gonna be the last one on the road if I have my wish . . .
I’ve got you beat — I drive a 20-year old Honda that I bought four years ago for $1k…still has the old yellow-on-blue CA plates.
Do us a favor and retire the car so we can breath easier….give a sh*t a little about the environment for a change.
Here too Lisa and I agree w/your observations.. I will say that the commute last week (spring break) was lighter than I had expected w/all the consumer pessimism present.. figured folks would be hunkering down more and not vacationing..
–
“So she and her two children moved into her mother’s house.”
That is how the housing demand goes negative during recessions, i.e., number of Occupied Units goes down, YoY.
So, how are the builders going to work down the inventory?
By selling at a loss and adding to the inventory of Vacant Units, Year Round, in the Census data. Falling-knife-catchers are in for a rude awakening. In most areas I see no way out for rents than to go down.
Jas
In this case it may be neutral. She moved home, but where did he go? Another home purchase while credit was still good? Either way, their individual household incomes now will be less which should lead to lower prices (maybe only multiples of 5 to 1 rather than 10). Still a future problem.
“Ismael bought his $370,000 home in 2005 for no money down, qualifying on his mid-$40,000s salary. He was paying $2,700 a month for an adjustable 8.25% loan.”
This article is rich with quotes.
All I can say is ruh roh.
So $2700.00 a month plus life’s crappy bills comes out to way too much. How many other people are in this exact situation?
Barney, get back to me.
Oh… My… God.. Another one that might be tops for taking the cake.
45K salary with a 2,700 monthly loan? Oh man, that’s got to sting. That’s about… Hmm.. 65% of his take home income? Just for the LOAN. And he is almost 10X his salary to the price of the home. This is not going to end well.
Ismael, you’re only option is to get a job making 125K a year. However, I suspect, if it were that easy, you would have done it long ago!
The worst part about it is that he was relying on his GIRLFRIEND (not even wife) to make those payments.
‘I’ve seen people trading in an Escalade for a Prius. People traded in a Hummer for a Prius. It’s all economics.’”
——————————————————
The Prius is not economical. It takes 5 years to make up the additional cost of a Prius over a Corolla with the gas savings. Plus additional interest on the car loan, higher license, sales tax, insurance.
The Prius is about social status. They are changing one status symbol for another.
Sometimes it makes sense but in a lot of cases is does not. For instance, I have a paid off car that gets 20 miles to the gallon. Assume I drive 15k miles a year. At $3.50 per gallon I spend $2,625 per year on gas. Let’s say I go out and buy a new car that gets 50 miles per gallon. Not sure I can, but let’s say I can. Now I am only spending $1,050 a year in gas. So I can actually save about $1,600 on gas.
Only problem is I have to spend $30k+ to save that $1,600. And that was the best-case scenario. What would the payback period be? Try never. Add in expensive car registration, taxes and the like. It only gets worse.
This illustrates the simple truth. The best way to save money on transportation is to keep your car after you pay it off. Mine is 12 years old. Wife’s is 10. Both have been paid off forever.
Fortunately for me, the situation is even better. I only drive about 5000 miles a year. I spend less on gasoline today than I did 10 years ago, in real dollars, because I don’t have to commute (home-based business). This whole gas crisis is a non issue at my house. But if I were driving 15k miles a year, the last thing I would do is get a new car.
It never pencils out.
Why not skip buying a car like me and walk, carpool or take the bus? This is getting more common and popular as gas prices soar.
A few observations:
1)Everyone cannot get rid of their car and carpool or . . . there wouldn’t be anyone with a car for the carpool passengers to join. Carpoolers need drivers who have access to car, and we are a looong way from car-share though that may eventually be an option.
2)As car-share suggests, a lot of dislocations have to happen to make transportation work in most U.S. communities–bike lanes (with a barrier so the average commuter will feel safe enough to bike), rail, and so forth. I see no sign those changes will happen anytime soon.
3)I bike , walk, catch a bus, or, rarely, drive to work in my 20 year old car. I drive less than 5,000 miles a year, usually for social occasions. I by groceries locally at a farmer’s market or nearby shopping district, walking the groceries home.
Just a few observations on transportation and infrastructure (with a little about me tossed in).
IAT
After you get your drivers license you might feel differently.
Pennsylvania’s drivers’ licenses are way awesome compared to Florida’s, though.
I thought NW PA had its own driver’s licence and passports system.
There’s an international airport for the jetsetting crowd, and beaches with all the supermodels too, right?
I bought my Prius for under $23 k including taxes and fees. Why does everyone think that a Prius costs at least $30 k? It doesn’t! Besides, you must be aware that gas prices will not stop rising until they hit $5/gallon. Furthermore, a Prius is nicer than a Carolla, so it’s not a good comparison.
A Prius is a statement. Just like a H2 or 633 is a statement.
Get over your ego. Any modern diesel will get better fuel consumption, and is dramatically more cost-effective than a Prius over a 10 year life span. Try a Fiat Grande Punto or a VW Polo…. now that’s a statement of fiscal acuity.
the Prius can drive on toll roads like the 91 for free, so that saves an additional $5 a day and you can drive in the carpool lanes if you got one while they were still available, not to mention the Prius resale (with sticker) is much more than a corolla for LA and OC drivers. There is actually arbitrage in Prius with HOV stickers if you bring them from around the state and sell them in the LA and OC markets.
It only get more valuable as crowding increases, gas prices go up, and highway toll fees go up.
Why does everyone think that a Prius costs at least $30 k? It doesn’t!
When I bought a Prius around January 2007, I found that many Southern California dealers only had Priuses loaded to the gills with leather seating, the most expensive stereo option, navigation package, etc. Probably Priuses were in demand and this was a way for the dealers to jack up the price in response.
It took quite a bit of searching to find a Prius with a more “standard” package and without expensive trimmings. But you’re correct, V, that a standard Prius is not that expensive. I paid $25K including California sales tax, registration, everything.
I’m glad someone finally said this. I’ve even heard some numbers that call the environmentalism of a Prius into question with all the chemicals in it and extra manufacturing.
I drive a 13 year old Toyota Camry. It takes about 600 bucks of repairs a year and runs great. A car payment would suck.
You’re right. Consumerism needs “the other” to survive and it matters not what the cause behind the buying is. To that end the most economical/”green” thing for a Hummer owner to do is to minimize driving while keeping the thing until it falls apart.
Don’t worry… if it’s made by GM…. it’ll fall apart sooner… rather than later.
LOL! So true…my brother manages a GM dealership and I’ve heard too many horror stories to ever buy one of their cars.
I looked at the Prius when I bought my Honda Civic a few years back. Decided the savings in sticker price far outweighed any mileage savings. I believe this comparison would still hold up quite well, despite my weekly gas bill doubling from $20 to $40. For instance, suppose we compare over a five year time horizon (typical period of loan repayment / car ownership); the total gas bill (at current inflated gasoline prices) is 60*$40 = $2400 — just a tad shy of the price difference of maybe $15,000 between what I paid for my car versus what I would have paid for the Prius.
Oops — should have multiplied 5*52*40 = $10,400 — still cheaper to drive the Civic (but the Prius is looking a lot better!)…keep it a couple more years and you break even.
My wife and I made the same calculation last year and also bought a new Civic instead of a hybrid. We don’t rack up high mileage and I intend to keep it for at least 10 years, maybe longer.
Hi PB:
I think most people keep their cars for longer than 5 years. Today’s Japanese autos don’t start needing repairs until they’re like 10.
Oh yeah, and you also have to keep in mind that the Prius is a nicer car than the Civic. The Civic is the low-end, while the Prius is mid-tier.
And what about the environment? Doesn’t anybody care about the air we breathe?
I harbor no fantasy that my personal vehicle purchase decision will save the planet. I would not oppose a govt subsidy or tax to provide incentives for cleaner automobiles.
–
“Who hasn’t heard of the economic pain that slumping real estate’s dished out?”
UCLA Anderson School, especially, Prof. Ryan Rat-cliff. Someone needs to give them a jingle.
Jas
I don’t know if this is an old video or not but here’s Shiller on ABC News talking about the history of the housing bubble. Great cutesy cartoons for the financially unsophisticated that you can pass around to your doubting friends!
http://cosmos.bcst.yahoo.com/up/player/popup/?rn=3906861&cl=7322611&ch=4226720&src=news
Someone at ABC News is reading here!
I love that piece…
Because of the Case/Shiller index, Shiller isn’t legally allowed to give his opinion on the future of the housing market. But I think his opinion is pretty well-known if you read his words in that piece…
Nice link, San Diego RE Bear!!!!!!
I thought this was interesting
http://www.bloomberg.com/apps/news?pid=20601213&sid=akNmRzeoi5iU&refer=home
From the article,
“The bank will require borrowers in distressed markets to have higher minimum credit scores and to take on less debt in relation to the property’s value, Pope said. The new policy applies to loans that Wachovia holds on its balance sheet rather than selling to the secondary mortgage market. ”
In other words they will continue to screw over the secondary market as best they can, but for loans they keep on the books they want to make sure the sheeple will continue to pay.
I am leaning more and more into the “jingle mail is a good thing” crowd to teach these banksters a lesson since they seem to be above any jail time.
You would argue with the Pope? :O
“In other words they will continue to screw over the secondary market as best they can, but for loans they keep on the books they want to make sure the sheeple will continue to pay.”
What secondary market?? No one wants our junk mortgage paper anymore.
HaHaHa
Secondary market!
That’s really funny!
You got me there….secondary market? What was I thinking.
I was just mentioning yesterday how my mom has never complained about her pasadena property, even in the 70’s and 80’s. She has never whigged out if values tanked.
She may not even care that she never sold during this bubble.
I’ve tried to talk my mother into selling her home in the OC before she goes underwater (thanks to a 30yr HELOC on bubblicious equity she got in 2005). She just shakes her head and tells me to stop talking about it because it makes her “too depressed”.
She is planning on retiring in two years, but she won’t have any money while all of her pension and savings is going to the lender for her overly expensive “rent” masquerading as a mortgage. I’ve tried all the arguments I see you guys put forth here, but denial is a pretty powerful gulf to breach.
It’s making me depressed…seriously. I see her becoming a destitute senior because of all this housing madness, and of course I’ll have to take care of her then.
Well, I suppose you could beat her everey Sat afternoon if bad times come. Seriously though, what do you do or say to a parent over 80 whose mind is sharp, in good physical shape who just refuses to listen to reason? I’m in that same situation, just not sure what to do.
There is nothing you can do. They are irrational and they will suffer.
We are at the stage where denial gets you nowhere. Save who you can (and if it’s a parent, just prepare for them to move in with you.)
Ouch, that hit close to home!
Did she live off of her HELOC and work only part-time while you busted your hump for 50 hours a week in the office? I’m not sure a child’s responsibility to their parents means that the parent is allowed to squander their working years. And, does a child need to spend his resources on parents or kids (grandchildren)?
No, she used most of the money for ‘upgrades’ like installing hardwood floors, copper pipes, and making a lot of needed repairs. What she had left over she rolled onto her huge (pre-existing) credit card debt. Unfortunately, my deadbeat brother moved in with her at about the same time and then she maxed out her credit cards again to help him out.
My brother is younger than I am and he will have to fend for himself. My mother *might* wind up living with me, but she doesn’t want to live in Alaska during the winter so who knows. If her finances are as bad as I think they are, she may not have a choice.
Oddly enough, what she does for a living would make her MUCH more money in AK than CA…but like most people she drinks the KoolAid that paying the Sunshine tax is more important than having beneficial retirement tax laws and making a good living. She does love to come up here to go fishing in the summer, though…
I feel very blessed - all the kids are grown and the parents gone - no one to think about except myself for the 1st time in my whole life. I choose to live a small simple life and am very content.
You are blessed. Never will figure out the more, more, more attitude.
I am very happy for you too.
No, as it turns out, the middle of the North Atlantic is as far as humanly possible, excluding astronautical ventures.
She made her own bad decision and must pay the price. Don’t bail her out. You can rent a room in your house to her but she must go back to work to pay the rent and food.
My own parents refused to listen to reason and sell their house, now it lost a third of it’s value. I will let them move in with me when I relocate to NW PA, but they have to pay their share of the expenses and dad has to do the repairs.
I’m not interested in punishing my mother for her financial stupidity. I won’t bail her out, but she will be able to live with me rent free as long as she contributes what she can to the household.
Before 2002, I thought of her as a very savvy money manager, until she started relying too much on credit cards. Then, encouraged by d*ckweed financial advisers like Ric Edelman, she took out a HELOC.
Unlike a lot of the people we read about in these stories, she is still able to make her payments, but so far just barely. If her house loses another 5-10% (has lost 10-15% already), she will be underwater for sure.
CA is going to lose 60+% in real terms.
price/income and price/rent is totally out of whack.
Even if the alt-energy bubble inflates (which it will), I do not believe that is enough to bail CA out of its fairly dire straits.
10%?
BWAHAHAHAHHAHAHHHHHHHHHHH!!!
God, I wish that I could send my mother-in-law to Oil City, NW Pennsylvania. I think that such location would be as far away from me as humanly possible…..
No, as it turns out, the middle of the North Atlantic is as far as humanly possible, excluding astronautical ventures.
Apologise for the double post - no idea how that happened…
God, I wish that I could send my mother-in-law to Oil City, NW Pennsylvania. I think that such location would be as far away from me as humanly possible…..
Perhaps she could be encouraged to explore housing opportunities on Tristan da Cunha…
http://en.wikipedia.org/wiki/Tristan_da_Cunha
Unfortunately, I think most people think that way. If it’s difficult to think about it, you’re supposed to just not think about it. Thank god her retirement money is protected in a bankruptcy.
Someone at ABC News is reading HERE ?!?! Wow, really CQQL.
HEY ABC News..I WANT one of your overpaid idiot expert commentator jobs NOW !!!….WITH ALL of the perks .
I CAN’T spell, type and bearly know WHAT I’m talking about 1/2 the time and plus I’m always confused. I’d be a network HIT
I CAN’T spell, type and bearly know WHAT I’m talking about 1/2 the time and plus I’m always confused.
You’re overqualified. But a management position may suit you.
“A shocking comeuppance for a county that not too long ago – second quarter of 2004, to be exact – topped this very same list as the national champ in job creation.”
When I lived there, all the jobs were in the services sector, with very little farming and manufacturing…and that was 20 years ago. Since then, a lot of jobs have been added in financial services and housing, which has been the sectors hardest hit by the credit bubble. Many people also had jobs commuting to LA county in aerospace and now they’re being hit by the downturn in energy and aviation. The military base at El Toro is closed, so I suspect big govt spending will mostly be at UC Irvine. The luxury marketplace of the beach cities will likely also go through some hard times.
Unfortunately, a lot of people had HELOCs and therefore will be vulnerable to recourse judgments in bankruptcy.
Personal opinion…but I think OC is going to be hurt worse by the recession than most of southern CA.
What “recourse”?
Recourse is for people who have something to lose. That bankruptcy law is going to backfire. People will make sure they have no income to get out under that noose.
If they have to move in with relatives and freeload, they will, and the “cash economy” will boom.
This is all going to end very badly.
“Comment by mgnyc99
2008-04-11 05:51:54
I agree Ben
what go is dirt cheap housing if you have no job or a low paying one? you stil can’t afford one of those cheaper homes
lower housing prices is a double edged sword for many”
Because some people like me are self employed and our job is in our home office done over the internet. Others are retired. Many people when they retire cash out of their overpriced house and move to a cheaper location.
She couldn’t afford to pay the $4,500 monthly interest-only mortgage, plus taxes and insurance separately, on her own $50,000 income. So she and her two children moved into her mother’s house.”
Now maybe I am math challenged and don’t understand the new math that allows people earning about $4300 per month to make mortgage payments of $4500 and another $1000 in taxes/insurance, and still find enough money to buy the Escalades, exotic trips, fancy dinners, living necessities, etc. I thought she was a DUMBA$$, but I guess not. She gambled with the bank’s money. She lost and walks only losing $16K. Bank eats the big financial loss.
You live in CA, right?
There must be something in the water there. Never before have I met so many completely deluded people who refuse to believe in any form of fiscal sanity.
However, their date with destiny has already been pencilled into the Great Fiscal Calendar and so it shall be …
I’ve got a reverse osmosis filter, thank you.
Mike
I must be math challenged as well, I mentioned the same thing above. Something just doesn’t pencil out on this one.
She was married. Her husband had an income.
I have screamed the solution to Orange County’s problem over and over and over again until I was blue in the face.
Over on Jon’s blog, I have said the word HYDROGEN so many times I can’t even count.
How much of a complete moron does one have to be to not understand that windmills out on the ocean can create energy to be wired to a hydrogen production plants near the shore?
From there, hydrogen is produced and shipped out via tanks for consumers, and possibly pipelines.
Water vapor is the only emission in the entire chain.
So… why is Orange County NOT making hydrogen?
Perception. They all thought this ‘will pass’.
There will come a day in America, and in Orange County, when we will get our heads out of the sand, and convert to a hydrogen economy.
It will end the oil wars, it will end pollution, it will be used to power everything from houses to cars to plants.
Windmills. Hydrogen. Clean air, rivers, lakes and food.
But no.
Everything must collapse first, as it always must, before America, and Orange County changes their ways.
And of course, ‘no one saw this coming’.
I call BS.
-
BRAVO!! You, sir, are needed on Capitol Hill.
How do I vote for you?????
It’s not as easy as you think. And to get hydrogen energy, you need fossil fuels in the first place. Maybe you can use hydrogen to get more hydrogen, but the cost would be way more than fossil fuels for now.
No fossil fuel source is necessary at all.
That’s a myth the fossil fuel industry is promoting to keep you from making hydrogen.
Most hydrogen these days is being derived from nat gas- Better to just burn the nat gas directly.
Nuclear plants produce hydrogen, but Cali has banned them.
Everything is going Nuk. It’s the only clean solution. Biofuels are dead. The price of rice and every other food is rising because of biofuels.
Yes, nuk is the ultimate solution- No CO2 either.
Memo to wind/solar fans: The wind doesn’t always blow and the sun doesn’t always shine..
Drill. Don’t let the soviet retirees aka environmental wackos stop you. Build some more refineries. There is no oil shortage, just a shortage of brains. Next thing, take over Pemex by invading the Mex east coast. Screw the Canucks as well for the oil sands. Finally drop the 53 cent per gallon tax on Brazillian ethanol and stop the subsidies to the farmers to grow corn and convert to ethanol. Boy I feel better. Time to oil up the firearms and go to the range! I’ll fire a volley for Mr. Heston’s memory!
There is a large groundswell of inventors working on the hydrogen issue right now. You can crack water with as little as 1.5 volts, but the volume of gas created is dependent on many things. I have seen ionization limited when the surface area of the cathode and anode is covered with gas bubbles, but there are some promising techniques being developed. Look up Stan Meyers work and also check out all of the You Tube videos of folks cracking water to get H. Auction has it right, we need to find a way to make use of the energy in the sea water. It does cover 70% of the planet and burning it yields energy and water.
lemme try and predict a true environmentalist’s response..
“How many of Mother Earth’s sea birds will be chopped into mince meat by your windmills?? Thousands?? Ya ever think of that? No.. all you care about is cheap energy so you can drive your freakin’ cars..”
-
Evolution should provide the answer to this problem - Smarter birds who stay away from big spinning blades will soon evolve.
That’s not possible because the bird species already in exisence are divided by flying altitude. Entire species of birds will be wiped out by the windmills. Only those species (not individuals) who fly lower or higher will survive.
Design mesh protectors to encase the windmills.
They have them on fans in your house, why not windmills on the ocean?
We have huge windfarms here, have any of you even seen the damn things? They move slowly even in 55 mile an hour gusts because the gear boxes change and generate more power from more push without faster spinning. They may kill the random bird, but no more than the random bird running into a tree branch or glass building.
We need to use the tops and west/east sides of our tall buildings for solar power, use the few places in this country that are good for wind power for wind power, use geothermal in the very few places we can, build safe nuclear plants like the new ones the Japanese have invented which are earthquake proof, and drill like hell for oil.
Don’t be stupid.
Auction Heaven ~ can you please help with something? (longtime lurker here)
Saw your thing on hydrogen. The stuff would need to be compressed (or frozen and liquefied) to bring it down the densities needed to effectively transport it in tank trucks or whatever. In gaseous form, it tends to escape from everything, degrade the seals, etc.
It’s well-known that the electrolysis process takes 1.4 units of energy to make as much hydrogen as would provide 1.0 units of output energy .. or a 28% loss due to conversion factors.
Do you have a number on what percentage of the overall energy input would be needed for freezing/compressing the stuff and keeping it cold?
Thx
storage and transport are tech challenges to be worked out but cycle efficiency is not.
If you’re smart enough to know the hydrolysis efficiency you’re also smart enough to know why it is irrelevant.
Windmill farms on the ocean could be vast, and wouldn’t disturb shipping lines. They could be anchored to the ocean floor of floated.
As for the amount of energy needed for whatever form of manufacture you choose, either add or take away windmills.
imo, OC’s Fairy Godmother could bestow free gasoline to all of it’s inhabitants and they’d still be royally fooked.
Is this about energy? If a 50 cents a gallon gasoline increase breaks an area’s economy, it surely must have deeper and more serious problems.
So, I am curious as to what’s on your mind.. like how do you think hydrogen would save them?
A number of unemployed workers from the housing debacle could be used to create a hydrogen economy in California.
Basically, it would start out as a massive government works project. Kind of like the Hoover Dam. Just because something is difficult, or large in scale and complexity does not mean it shouldn’t be done.
The MAIN problem California has is that is doesn’t MAKE anything anymore.
Well, this would certainly be a way for California to start making something again. Something Californians could ship across the country… or ‘export’, shall we say.
Remember when California used to ‘export’ stuff?
The last time we exported stuff, it was Metamphetamine.
What does that say about the current state of affairs in California? It’s abyssmal.
Of course there are technical challenges with any new technology. There always are. But with hydrogen, it has already been proven by people from other countries to be a valid, non-polluting energy source.
The major auto companies are getting ready to roll out large numbers of hydrogen fuel cell cars, too.
The simple reason you don’t hear much about hydrogen production in the United States is that the fossil fuel companies don’t want you to. It’s really that simple.
Here’s a primer on the current state of the hydrogen economy, but there is much, much more documentation out there. Alot of good stuff on PBS.org, too.
As for those who say this is impossible or that’s impossible…
You may want to remember what life was like just three years ago.
Back then, if I recall correctly, 15% was ‘in the bag’.
http://www.howstuffworks.com/hydrogen-economy.htm
hmm.. govt work project. Well, i guess that if tons of jobs do evaporate as they appear destined to do, it can’t hurt.. much.
And not to be argumentative, but California accounts for 13% of the United States’ GDP… which is not bad for one state. We do produce one or two things that people want to buy..
alternative energy has been sort of a hobby of mine, and despite the (currently) huge disadvantages of all of them have I won’t say anything to discourage the many and varied attemps to make one or more of them economically viable.. So, Hydrogen? Go for it. I kinda like the biohydrogen reactor method that uses garbage and micro-bugs.
I like that idea, too.
There’s absolutley no reason in the world not to combine them, and see what works.
The trick to all of this is- just like in housing- in the psychology.
If people BEGIN thinking they really don’t need fossil fuel, then the wheels start spinning. Problem is changing the psychology, IMHO.
We’ve simply been dependent on fossil fuel so long, and conditioned to be followers, instead of critical thinkers, that much of what we do is react, rather than act.
As a result, it takes a catastrophe to get people thinking outside the box these days.
I’m not in favor of letting catastrophy happen, before creating a solution.
I’m fully aware of what’s going to happen next year, when the State of California can’t pay unemployment anymore.
It’s in times like these that Hoover Dam style projects get moving.
Believe me, the powers that be in California know we’re headed to catastrophy. They just don’t want to tell the public that because it would set off mass panic.
No one working on an airplane would ever tell you the landing gear is stuck, either. Same principle.
It’s just irritating that so much pain must happen before people act, when it’s plain and obvious where we’re going. I wish, for once, people would be smart enough to create a new path.
Instead, we all just sit around complaining, knocking each other down, as if that’s going to help. This drives me nuts. The problem is the loss of critical thinking.
Logic would tell us we need to create something new, and do it fast.
Thus, out of all the possible new ideas, I pick hydrogen.
Think about how it would revolutionize the inner cites? No more smog! Talk about raising the real estate values…wow. It would literally be a boom for the economy.
Sorry if it seems like I’m preaching, I just don’t think sitting on our hands and complaining is appropriate at this point.
We’ve all been proven correct. We were right, it was a bubble.
So, now what?
I think the flat lands of Texas, right in the middle of the country with lots of wind and no need for ocean buoys, would be a far better location for a wind farm than the OC. It would be easier to transport from Texas to the country than the OC.
Let the great alt energy bubble begin!
Hydrogen economy. There’s an oxymoron. Ranks right up there with ‘cafeteria food’.
Betamax, I’m with ya. Just want Cap’n Hydrogen to provide the rope to hang him with, is all
EROEI anyone?
There is no replacement for oil in the world economy.
If you need cheap electricity to produce hydrogen then Iceland is the place to build your plants.
Now this guy gets it. Well worth the read
Wagging The Dog
BY BRIAN PRETTI
http://www.financialsense.com/Market/pretti/2008/0411.html
Yeah, we are in a bear market in equities, but it is propped up by a War on Savers which makes going to cash look like a pretty dumb choice. If the War on Savers ended, I suppose the stock market would have to crash to earth to reflect fundamental value of companies with so much special off balance sheet hanky panky going on…
Jeepers, that’s a mouthful of an article… care to summarize a bit of it for us ?
A must watch video.
Housing Choices - AMERICA, YOU NEED TO SPEAK NOW!
http://video.google.com/videoplay?docid=1687278667310971667&hl=en
“Comment by jeff saturday
2008-04-11 05:40:26
I talked to a guy yesterday who bought a home in Port Saint Lucie FL. in 2004 ,or borrowed $300,000 on a house in 2004. He has made all his payments on time, but if the bank or the government doesn`t lower his principal he is planning to walk , because simillar homes are going for $120,000″
Wow! That much of a drop? I thought prices dropped about 40% off peak, not 60%! I think there is a very good chance he won’t get bailed out. If he gets bailed out, everyone else will demand to be bailed out, even those who can afford the mortage will stop paying because they can.
so if his hlender were to drop the principle on his loan to $120,000 and subsequently over the next 5 or 10 years his home’s value goes back up to $300,000– if he were to sell at $300,000 would he agree that his lender would get the $180,000 in appreciation that it wrote off so he could keep his house??? another question–did he commit fraud in his original loan application??
Yes, he would owe his lender that appreciation plus interest based on it. If his principle is “forgiven” he will never get to keep appreciation again. But most people can’t see this far into the future and they see it as free money and every other FB will demand their principles “forgiven” as well. Wonder what will happen when they try to sell the house 30 years from now?
Welcome to Great Depression 2.0.
The funny thing about “bailouts” is there is always the possibilites of a malfunction of some sort.
If it’s between the greedy FBs, the lowlife politicans and the taxpayers getting blood on the late great RE Golden Parachute…we all know where we want to be STANDING when it crashes through reality and splatters upon tera firma
I was reading the get your hands dirty version of the el lay times, today…
The front page had a story about monkeys in ex-Soviet Georgia, and tucked away in back pages of the 2nd section, was the little tidbit about 767 city jobs that are going to be axed, because the city of angles has run out of them.
Atypical behavior from a dying information source.
Lad, wait until you read about the yellow school buses being mothballed.
How will billions of L.A’s children even get to school?
“Orange County auto dealers sold $8.5 billion worth of cars in 2007, down almost $1 billion from a year ago, a new economic impact report by the Orange County Automobile Dealers said.”
Ever wonder why there’s oh so many new car dealers nowadays, compared to 25 years ago?
Cities embraced them, because of the sales tax element…
Lead Zeppelin
“Most of the future park’s 1,347 acres remain off limits to the public, with a balloon ride and a visitor’s center being the only public facilities. ‘To have nothing more than a balloon and the possibility of a 27-acre park is disappointing,’ said county Supervisor Bill Campbell.”
Faster Pussycat, there is something funny about CA water. I fled there to NM 2 years ago. California manufactures one thing. DUMBA$$es who think they are millionaires because they live in a house that once was worth a cool million each. And they all still think it is so. There are a ton on the windmills on I10 near Palm Springs, and more on I-580 in Livermore (Bay area). I don’t know how effective they are.
California manufactures the brightest graduates in the world.
Hey, now CA is in great shape. They have the pumped up steroids leader who publicly stated that nobody could see this financial crisis happening in housing when we have been saying this since the inception. A state of DUMBASSes (apologies for the few on this blog that are bright) led by an even bigger DUMBA$$.
Dark Vader, our governator…
Wants to spend $7 Billion on the wellbeing of convicts, as there’s no money to be made in spending it on law-abiding citizens, is there?
I wish there was no even entertaining the thought of lowering the balance owed becaused equity evaporated. If the DUMBA$$ in FL paid $300K for his POS and it is now worth $120K. He still owes $300K because that is how much money he received and spent. If he walks, he should be hit with the IRS tax and ruined credit. And same for every other person that does that, whether they can afford the payment or not.
I am amazed at the number of car dealerships also, especially in rural areas. I don’t see how so many ’survive’. I don’t know of that many people here in Albuquerque and surrounding areas making the kind of money needed to pay for those behemouths. When my 14 year old car needs replacing, I will do the same as before. Find a used car through an individual and take it to my trustworthy and competent mechanic to check it through and pay him a reasonable fee to check. Also, my paid for car will probably go another 5 years because I have a competent mechanic to keep it maintained.
Maybe this is the way to reduce the overhousing supply in the ghetto. Although not recommended.
http://news.yahoo.com/s/ap/20080413/ap_on_re_us/socal_plane_crash;_ylt=Av8SQmUUAG8yEyfDHYmOD9FH2ocA
And the brightest graduates are leaving in droves after seeing their esteemed state leader (and trickle down theory). Many decide they don’t want to pay $500K for a 800 sq ft Compton (Oakland, East Palo Alto and other garden spots) palace, complete with iron bars and high electric fence to keep out the serfs (gang hoodlums) when they can get a nice place somewhere else for a fraction of da hood price.
” ‘And the family moved out of the house before the bank began to foreclose. “I left the keys in the door, hanging in the door,” Linda said.’ ”
Linda, you could have at least tossed the keys on the roof. Shiftless mortgagor.
I grew up and got married in OC, but once I started having kids and saw what was happening to their lives, I decide to move my family out of OC and out of California. I didn’t want my kids to grow up in the plastic materialistic world of OC….everyone lives on credit and must have the best and newest of everything. Too much keeping up with the Jones that it’s destructive. There is no quality of life in OC or much of California any more. Illegals will be the only ones living in California soon with the rich in gated communities.
“Yadira Magaña in Oxnard, Calif., has a similar story. She walked away from her $585,000 home in June 2007. When she bought it, Magaña thought she had gotten a great deal. She made a $16,000 down payment on the house. But she lived there only eight months before her marriage collapsed.”
Serve’s her right for paying $585K for a place in sh&thole Oxnard…
Can’t wait for the same things to happen in the San Fernando Valley…oh boy!
One thing California has in abundance is natural beauty, in about 31 flavors…
This combined with the Dollar getting pummeled, offers great opportunity for the tourism industry to cater to foreigners and their needs, many of which will become repeat visitors~
California…beautiful? You mean the ravaged, dry mountains? The dirty, overcrowded beaches, the polluted, concrete cities, the trashy, disgusting neighbourhoods filled with people who have little to no pride in ownership?
That California?
People need to accept that California….as a State for which it was known for back the ’30’s….is done. Golden State means Golden State…when people here to be prosperous and stuff was plentiful. Now it’s a crap state.