The Big ‘If’ In California
The Contra Costa Times reports from California. “Foreclosures are a third of all home sales in California as the majority of homeowners in default lost their homes in the first quarter of the year. About 68 percent of homeowners in default during the first few months of 2008 lost their homes, typically owing around $11,474 and were about five months behind when their lender started to foreclose, DataQuick reported Tuesday. There were 47,171 homes lost to foreclosure during the first quarter, the highest since DataQuick began recording data in 1988.”
“Last quarter’s total rose 48.9 percent from 31,676 in the previous quarter, and jumped 327.6 percent from 11,032 in first quarter 2007. In the last real estate cycle, trustees deeds, which is when the lender officially forecloses, peaked at 15,418 in third-quarter 1996.”
“Lending institutions sent homeowners 113,676 default notices during the January-to-March period. That was up by 39.4 percent from 81,550 the previous quarter, and up 143.1 percent from 46,760 for first-quarter 2007, the highest since DataQuick began recording defaults in 1992.”
“‘The big ‘if’ right now is whether or not the economy is in recession. If it is, the foreclosure problem could spread beyond the current categories of dicey mortgages, and into mainstream home loans,’ said Marshall Prentice, DataQuick’s president.”
“But some economists say that the economy is already affected. ‘We’re already in a recession,’ said economist Christopher Thornberg. ‘You have falling prices and so many people underwater they realize there’s no point in staying in the home and will walk away.’”
“Last quarter’s default numbers were a record in almost all of the state’s 58 counties. The only exception was Los Angeles County, which was hit hard by the recession of the early 1990s.”
The San Francisco Chronicle. “Foreclosures spiked across the Bay Area and California during the first quarter, rising more than 300 percent as home values continued to fall. Lenders took back 6,579 homes in the nine-county region during the three-month period, up from 1,493 a year ago and 4,573 in the fourth quarter.”
“In an indication that the foreclosures will continue to rise in the months ahead, mortgage defaults, the first step in the process, also climbed across the board from January to March, nearly 150 percent in the region and state. Lending institutions sent Bay Area homeowners 16,398 default notices, up from 6,730 in the year ago period and 12,704 in the preceding quarter, DataQuick said.”
The Sacramento Bee. “Banks repossessed nearly 5,300 homes in the capital region during the first three months of 2008, setting a record and pushing the region’s foreclosure tally to more than 15,300 since the beginning of 2007.”
“The number of home loan defaults also neared 10,000 during the quarter in Amador, Nevada, El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties, according to DataQuick.”
“The firm attributed foreclosures in the capital region and statewide to falling home values that have made it impossible for many to refinance or sell their homes to escape financial problems.”
“DataQuick noted that because of falling home prices only about 32 percent of those who default on their home loans are able now to save their homes. Six months ago about half were able to save their homes, the firm reported. As recently as August 2006, DataQuick said 95 percent were able to find solutions outside foreclosure.”
“Clearly the major culprit is free-falling home prices that have many people owing more than their home is worth.”
“‘Looking at the directional trend, we expect foreclosure rates in Sacramento to rise as long as house prices are declining,’ said Mark Fleming, chief economist of First American CoreLogic.”
The Union Tribune. “March was the 36th consecutive month of year-over-year increases for both home foreclosures and notices of default.”
“But DataQuick analyst John Karevoll predicted that so long as San Diego County avoids entering a recession, the rate of homeowners defaulting on their mortgages should start to level off later this year and then begin declining in 2009.”
“‘There are two scenarios,’ he said. ‘Scenario one is that the default activity is a nasty case of indigestion that has to be digested, and once it’s digested, the market will rebalance itself. Scenario number two is where we factor in the recession. If we are in a recession, it’s not indigestion anymore. Then the default acitivty will start to migrate from this pool of at-risk home loans into the more mainstream mortgages.’”
“Looked at on a quarterly basis, foreclosures between January and March of this year continued to surge, rising 60 percent compared to the final quarter of 2007. Year-over-year, the increase was 210 percent, DataQuick reported.”
“Similarly, notices of default, the first step in the foreclosure process, were also up, rising 46 percent last quarter compared to the previous quarter, and 128 percent compared to a year earlier.”
“‘The main factor behind this foreclosure surge remains the decline in home values. Additionally, a lot of the ‘loans-gone-wild’ activity happened in late 2005 and 2006, and that’s working its way through the system,’ said Marshall Prentice, DataQuick’s president.”
The North County Times. “Foreclosure notices surged past home sales during the first quarter in San Diego County, indicating that the local housing market recession will get worse before it gets better.”
“There were 8,975 notices of default in the county in the first quarter, more than 50 percent higher than the 5,888 sales, according to DataQuick.”
“In stark contrast, first quarter home sales a year ago in San Diego County more than doubled the 3,931 notices of default.”
“Mark Goldman, a real estate lecturer at San Diego State University, said the numbers indicate that banks are going to seize more properties this year than they will be able to sell. That addition to the overall housing inventory will depress prices for another year, possibly two, he said.”
“‘You have all the lack of lending programs, plus the reduction in [house] values, plus people making less money, plus four dollars a gallon for gas,’ he said. ‘What is occurring in our economy that is going to turn this around? Not anything that I’m aware of.’”
The Record Searchlight. “Commercial real estate agents like to say that retail follows the rooftops. The rooftops have practically stopped budding.”
“Redding is on track this year to record fewer than 100 housing starts for the first time since 1974. And we’re coming off 2007 when the city issued the fewest single-family-home permits since 1981.”
“Almost on cue, available retail and office space appears to be rising. Just drive around town.”
“What’s more, there are finished strip malls sitting largely vacant. Steve Mungia, commercial relationship manager for Umpqua Bank in Redding, said the eyes don’t deceive. Commercial and office real estate activity in the north state has slowed.”
“‘We’re seeing a little bit of a correction, but it’s less severe than the housing market,’ Mungia said.”
“Redding commercial real estate agent Ken Miller said retail complexes don’t happen without an anchor tenant lined up. ‘With the retail economy slowing, you see anchor tenants pulling back,’ Miller said.”
“When I featured California Espresso Cafe in an April 7 business feature, owner Christine Sullivan was candid about the challenge these tough economic times pose for retailers like herself. But Sullivan, who bought the business in October, gave me every indication that she was going to stick it out.”
“Guess not. Sullivan cut her losses and closed suddenly last week. In an e-mail to customers and friends, Sullivan said her rent went up $600, adding that ‘we seem to just keep putting more money in and not enough is coming out.’”
“Roger Lefebvre, who sold the business to Sullivan, still owns the note but wouldn’t say how much Sullivan owes him. Lefebvre has no plans to reopen. ‘It will cost too much to reopen and try to make it the way the market is going today,’ Lefebvre said.”
The Daily Bulletin. “When you’re at the bottom of the barrel, all you can do is look up, right?”
“At least that’s what Jesse Marron and Joe Rodriguez are doing. It’s no fun jump-starting a business in the middle of a recession, but these guys are crossing their fingers that hard work will pay off in the end.”
“In December, Marron and Rodriguez opened Rialto-based J & J Classics and Air Suspension, a classic car parts dealer and refurbishing/suspension service.”
“Right now, business is erratic. One week things are slow; the next week there’s an uptick, and the two entrepreneurs are trying to not turn down customers.”
“‘Friends that’ve been in this business, they’re used to making good money, and they’re feeling low because we’re in a recession,’ Marron said. ‘But us - we never knew what it was like to make big money. It’s exciting, but scary at times.’”
“‘We asked ourselves what it would take to start this shop,’ said Marron. ‘It takes money, lots of money. I took my 1968 Impala Convertible Super Sport and sold it for $22,000 to a guy from Norway.’”
“Challenges are already putting Marron and Rodriguez to the test. ‘There’s times we ask ourselves, ‘Why did we get into this?’ Marron said.”
The Mercury News. “The 17 brand new cottage-style condos near downtown San Jose were supposed to sell swiftly, especially since they were priced to be affordable to low- and moderate-income people, and the developer offers generous loan programs for first-time buyers.”
“But in the eight months since the for-sale signs went up, only one condominium has sold, even though the developer, non-profit Neighborhood Housing Services Silicon Valley, has cut prices twice.”
“Even non-profit developers who aim to provide affordable housing to the valley’s lower-income residents are getting hammered by conditions in the real estate market.”
“‘No doubt this property would have sold out in four to six months but for the subprime debacle,’ said Ed Moncrief, executive director of the developer and home-buyer assistance organization. ‘We hit the market just as the realization of some gray cloud over the future hit.’”
“Two-bedroom condos at Villa Almendra once priced at $535,000 now are offered at $450,000. The units come with new appliances, two-car garages and granite countertops.”
“But Moncrief’s group is facing stiff competition from others. Developer Barry Swenson Builder, for example, has new studio condos nearby starting at $294,000, and there are single-family houses selling for less than $450,000 in some East Side and South San Jose neighborhoods.”
“Desperate to sell, the non-profit now is willing to accept offers from any buyers, not just those who need the special loan programs. And the group will give away a 2008 Toyota Prius in a random drawing to one of the first eight buyers who close escrow before September.”
“Other affordable-housing developers in the Bay Area are hunting for buyers, too. They’re anxious to raise money to pay back their construction loans and worried about financing future projects.”
“South County Housing last weekend auctioned some of its unsold units at Forest Park, a development in downtown Gilroy. Bids started at $295,000; some townhouses were priced at $519,000 last fall.”
“‘It’s a really tough time,’ said Nancy Wright, a senior project manager for South County Housing. ‘The credit issues are so widespread, everyone is being affected.’”
“The units at Villa Almendra went up for sale in August 2007, just as the credit crunch hit Wall Street and consumers’ confidence plunged. Attendance fell at the non-profit’s once-crowded buyer orientation sessions, and by the holidays the group knew it had a problem.”
“‘It was noticeable from the silence we heard, I guess, in terms of home buyers not being there,’ Moncrief said. ‘They disappeared.’”
“Amy Flores, who paid $590,000 for her three-bedroom condo late last year, is the lone homeowner at Villa Almendra. She’s hoping the non-profit’s efforts to sell other units pays off.”
“‘It would be nice to have neighbors,’ she said.”
“The big ‘if’ right now is whether or not the economy is in recession.”
The big if isn’t an if…
And here I thought the post title was “The Big ‘F’ In California.”
From Flipping to Foreclosure. Yep, it’s a big F in CA alright.
If we are in a recession, it’s not indigestion anymore. Then the default acitivty will start to migrate from this pool of at-risk home loans into the more mainstream mortgages.
I love the way most of the ‘experts’ quoted in these articles assume that the bubble implosion and recession are somehow mutually exclusive of one another. ‘If’ a recession, then mass mortgage defaults. Not as though people being hopelessly underwater and unable to meet their (now resetting) mortgage payments might somehow contribute to or even *cause* a recession, now could it?
Even if there were no recession, let me guess. . .all those people making the MINIMUM payments on their Alt-A loans are all of a sudden gonna re-fi into fully amortizing loans before their payments reset? Not a fat chance in hell.
Why now, in the present environment, does it still seem like the people at DataQuick have yet to remove their heads from up in their asses?
And all the while Chris Thornberg keeps saying the things he’s been saying for years.
*******
“‘The big ‘if’ right now is whether or not the economy is in recession. If it is, the foreclosure problem could spread beyond the current categories of dicey mortgages, and into mainstream home loans,’ said Marshall Prentice, DataQuick’s president.”
“But DataQuick analyst John Karevoll predicted that so long as San Diego County avoids entering a recession, the rate of homeowners defaulting on their mortgages should start to level off later this year and then begin declining in 2009.”
“‘There are two scenarios,’ he said. ‘Scenario one is that the default activity is a nasty case of indigestion that has to be digested, and once it’s digested, the market will rebalance itself. Scenario number two is where we factor in the recession. If we are in a recession, it’s not indigestion anymore. Then the default acitivty will start to migrate from this pool of at-risk home loans into the more mainstream mortgages.’”
Indigestion = Soft Landing?
Sounds like another quote to be pulled up a year from now. Thanks John Karevoll for making an entertaining prediction for us to track!
San Diego avoiding a recession?
Oh, jeez, this was too easy.
See what I mean by DataQuick people with their heads up their asses?
*******
“But DataQuick analyst John Karevoll predicted that so long as San Diego County avoids entering a recession, the rate of homeowners defaulting on their mortgages should start to level off later this year and then begin declining in 2009.”
“Mark Goldman, a real estate lecturer at San Diego State University, said the numbers indicate that banks are going to seize more properties this year than they will be able to sell. That addition to the overall housing inventory will depress prices for another year, possibly two, he said.”
More foreclosures than sales, and that’s with lenders unloading foreclosed properties. How anemic are the remaining sales?
“‘You have all the lack of lending programs, plus the reduction in [house] values, plus people making less money, plus four dollars a gallon for gas,’ he said. ‘What is occurring in our economy that is going to turn this around? Not anything that I’m aware of.’”
Obviously not drinking the kool-aid. Quite the sobering, accurate, and unsurprising assessment.
Amazing stupidity! I live in a gated community in the UTC area. We have real estate agents telling us that local houses are worth $950k!?! Principal, Interest, assoc. fees & property taxes (after 20% down!!!) are about $6k/mo! The median income for a single person in San Diego is $46,000/yr. Go figure. . . They have not even put up the pinata at this party yet. . .
-
I’m sorry… but the “median” home buyer is not the one buying into the gated communities in UTC or La Jolla.
You are comparing apples to oranges here.
Matching the PITI of a house in a gated community with the median income makes little sense. Instead, try the income of the 75-90th percentile. I am sure the house would still be overpriced, but at least your argument would be on a sounder footing.
I live in UTC. Not a “gated” community, but in UTC nonetheless. The numbers pointed out do put it in a bit of perspective. It doesn’t take a lot of brainpower to extrapolate out to 110k (over twice the median) and see that the asking prices are WAY out of wack. It’s amusing, really.
Sounds like California’s sham economy continues to implode. Given their political inclinations over the last few decades, always moving in the direction of more taxes, more regulation, and less economic freedom, this is no surprise. It is likely that California will have a ten year recession (Michigan style) to adjust to the reality of their per capita income and productivity vs. the extreme overpricing of housing there.
az_owner:
I don’t think CA is alone in this debacle. It’s pretty much world-wide.
Slightly OT:
You know they’re rioting in poor countries right now for lack of food, right. Costco is starting to ration some of their food supplies in the US as well. I really don’t know what’s causing the sudden global food shortage (it’s too sudden to be explained by any of the commonly known factors), but I have a sneaking suspicion that it’s tied up with the whole economic crash.
The food shortage thing feels like a chain reaction from the rise in all commodities coupled with the ongoing currency re-balancing. The price of rice has gone nuts, but I haven’t seen a rational explanation for that - except to guess that someone (like maybe the Chinese) are quietly stockpiling it.
Do you have a reference on the Costco shortages? I haven’t noticed anything at my local Costco, except lots more Australian white wines showing up.
Here’s the Costco link:
http://www2.nysun.com/article/74994
If China is going to stockpile rice, F them. We can stockpile wheat, corn, soybeans, pork, beef, fruit, and veggies. Jerks. I’m beginning to really hate China. Really.
V,
China is our next cold war target. Instead of nukes, we’re playing with economies.
China should always have stayed a cold war target. That’s always been one of my criticisms of the PTB in the GOP. Re: China, profit became more important than people.
I hear ya, V. One of the sorriest ass days in the US was when we opened up our markets to China. Oddly enough, a family relative was with one of the first major retailers that imported Chinese products back in the 1970s. They worked on the project and travelled across China. Bummed me out. I wasn’t impressed, except for some of the down winter gear.
From Big V’s link:
“An anonymous high-tech professional writing on an investment Web site, Seeking Alpha, said he recently bought 10 50-pound bags of rice at Costco. “I am concerned that when the news of rice shortage spreads, there will be panic buying and the shelves will be empty in no time. I do not intend to cause a panic, and I am not speculating on rice to make profit. I am just hoarding some for my own consumption,” he wrote.”
That right there explains part of it. If enough people start hoarding a commodity, you can bet on shortages for some time. But as to what triggered it, I don’t know.
I wonder how much food is wasted, spoiled, and thrown in the trash by Costco customers. The quantities are often way too large us and we are a family of five. I love Costco for some thing but sometimes it is just way too much food.
Right on, Blano. There was a news story about global rising food prices (the pundits just LOVE that cutesy phrase, “the perfect storm”, look for that to be repeated ad nauseum) and the three main reasons given were climate change/global warming as it has affected crops through flood and drought, commodity speculation and the bogus ethanol promotion. Now, out of the three, two of those can be handled RIGHT NOW by our toothless legislators. First of all, trading and speculation in food commodities can be forbidden, under pain of death if necessary. (yep, some worthless piece of crap on Wall Street probably is making a ton starving out children both here and other parts of the world) and two, the energy plan that susidizes ethanol production using food sources should be cancelled immediately.
BTW, the GOP may be raging aholes (and they ARE), but the dems are far worse, IMHO, as they stand by wringing their hands, letting the agony stretch out until the election. I don’t think hardly any elected dem has any stones. At least with the reps, they let you know up front their gonna put the screws to you. dems smile and keep a jar of vaseline behind their backs.
If you know your prices, you will also find out, it’s not always cheapest price in town. Plus, quantities are sometimes too much. I don’t want to store huge amounts of products, nor do I want to tie my cash up in stuff I don’t need.
Gee V, what an accusation, don’t you read that China is having 8.6% inflation? Food shortage in China started last year, what do you eat? You don’t eat rice everyday and f**k the people whose main food is rice and are having trouble to feed themselves because of the current shortage?
And blano, yeah f**k them, you care the Chinese so much that they don’t deserve your business, or when they happen to have to eat rice, as you sometimes may need to.
Comment by rick
2008-04-22 19:54:40
“”Gee V, what an accusation, don’t you read that China is having 8.6% inflation? Food shortage in China started last year, what do you eat?”"
Nothing personal Rick - different nations, different needs.
“” You don’t eat rice everyday and f**k the people whose main food is rice and are having trouble to feed themselves because of the current shortage?”"
Anecdotal evidence - here in America - limits on food purchases (limited bulk buys, in certain areas).
“”And blano, yeah f**k them, you care the Chinese so much that they don’t deserve your business, or when they happen to have to eat rice, as you sometimes may need to.”"
Forgive my ignorance - I have no idea (and I read this statement several times, with Blano’s comment), please expound.
Curtsey,
Leigh
Seeing as we went broke fighting one cold war, I seriously doubt we are in any condition to fight another. Basically the USA and the Soviet Union engaged in a deadly game of who can outspend the other, and the big winner was the one power not playing - China.
Costco is running short because their price is 50% less then the Asian stores. 50lb in any of the local Asian supermarkets was $40 two weeks ago and going up. Costco 25lb bag was $10. They can’t keep it in-stock. I bought 2 when the brand I wanted came back in-stock. Someone else was buying 10 - she was afraid that the price would go up.
Leigh and others,
If you listen to KGO, they report that Thailand and Vietnam is not exporting rice now (they did not have a good heavest), and it is also reported in Hong Kong, which (oddly) mainly imports rice from those two countries because their rice is better.
And KGO just talked about the cause of the shortage yesterday, they thought because we use corn to burn fuel, which caused chain reaction (at least on animals that fed on corn).
The majority of rice imports in the US is from Thailand and Vietnam as well, if you look at the country of origin in Costco or other supermarkets, Chinese rice is a bit inferior to theirs.
And in Zimbabwe,where food shortages and a stolen election are now causing near-civil war, the dock workers in South Africa are refusing to unload a Chinese ship loaded with armaments for Mugabe to fight his people. The Chinese are insisting it’s just business,and demanding the weapons be unloaded.
http://www.nytimes.com/2008/04/23/world/africa/23zimbabwe.html?hp
No rice available at my Costco in Eureka, CA. Sold out.
I love flyed wice
I just hope AZ keeps taxes low to keep jobs moving here from CA.
Me too. San Diego is WAY too crowded for my tastes.
World grain and rice stocks are projected to be tight. In the US, the situation reminds me of 1972.
Say what you want about Michiganders, but, as compared to Californians, they do have a work ethic.
The perennially on-strike auto industry?
I’m from Michigan - left in 1995 for AZ.
You’re somewhat right about the work ethic, but both states suffer from a “We’ll tax, regulate, and strangle business in every way possible, then wonder why all the jobs are leaving” mentality.
Darell - Roger that on the jobs migrating across the Colorado - big growth down in Chandler near the new Intel fab.
Argh. CA has more industry than it can handle right now. AZ has a few overflow companies, that’s all. I hate to give in to a state-vs-state argument, but CA will always be more desireable than AZ.
CA is more desireable but it sure ain’t more affordable and affordabilty is what drives people & companies out of state.
“We’ll tax, regulate, and strangle business in every way possible, then wonder why all the jobs are leaving” mentality.”
Sorry, I thought that was the state motto for New York.
Love it.
From the original post:
“Amy Flores, who paid $590,000 for her three-bedroom condo late last year, is the lone homeowner at Villa Almendra. She’s hoping the non-profit’s efforts to sell other units pays off.”
“‘It would be nice to have neighbors,’ she said.”
Amy, I would love to send you some of my neighbors. Then we’ll talk about have nice having neighbors REALLY is.
Ameee, that’s my brother and his girlfriend and their 5 kids and that’s my uncle and his wife and their 4 kids and those are my cousins and their kids…….
–
I wonder how Amy will feel when she has neighbors who bought for half, say in late 2008, what she paid. They might remind her of her…
Jas
“Two-bedroom condos at Villa Almendra once priced at $535,000 now are offered at $450,000. The units come with new appliances, two-car garages and granite countertops.”
Did I read this correctly? Half a million for non-profit built affordable housing?!?!?!?!?!?
Don’t worry I’m pretty sure they got generous loans to sucker people in
apparently they got 1.
And according to the rules I am a potential “low income” buyer. Wheee !
Although a non-profit business has restrictions how and to whom they can distribute profits, they certainly do need to make a profit if they are going to stay in business.
Yes, isn’t government ‘help’ with ‘affordability’ a wonderful thing? We’ve already had multiple Wall Street bailouts, 300bps in rate cuts (and still counting) , crap MBS-for-Treasury swaps, a ‘temporary’ (LOL) $729k GSE conforming limit. I just can’t wait until we outright nationalize the entire mortgage industry and convert the NAR into a new federal department.
I can’t imagine the NAR as a federal department, it sends chils down my spine. I heard a NAR add on the radio last night, the pich line was historicly houses double in value every 10 years so buy now why they are cheap and be set for life. I no longer listen to that radio station and sent them an email to explain why.
Here outside of Sacramento, people used to line up for those “affordable homes” that are usually released at the very end.
Now sales are so slow they only hold them for a few months then open them up to the general public. I know one person who bought one in 07. The price tag was 330k but the income cap is 85k then they slap $175/mo MR on them too - ummmm how does that work?
And no she didn’t have a huge down payment - single mom working as a hairdresser.
Hmmm…
At the $85,000 income they quote in the article, this would make over 6x
earnings.
They must be kidding…
I’m moving to Cali in August for a new job, looking in the Lamorinda area. Prices don’t seem to be moving much, especially in Lafayette/Orinda. But average housing is 7-8 times income.
Anybody have any insight on these two allegedly recession proof communities?
Yeah, they’re not. Just rent a while.
I grew up in the East Bay of SF…
Lafayette, Moraga, and Orinda (”Lamorinda”) have highly rated schools, which I think is part of the home price “stickiness” problem. The housing stock nearer to the cores of the three cities are smaller, ranch-style homes built in the 1960s-1980s. I now work (and rent) in SF, and it seems like everyone in management or asiprations for same want to move out there. School district ratings are a key component. Also, you have BART (rail) and “easy” highway access. Low crime.
I like Lafayette in part because of the transportation links, and also partly because it has some nice, mature trees in many neighborhoods. Hard to come by in certain locales…
Hopefully that helps a bit.
You do realize that none of that stuff makes those nowhere towns “immune”, right?
True. I was just trying to put my two cents in. These towns are more centrally located than say, Antioch is to employment centers like SF, Oakland, or SJ.
A lot of the stickiness issue is perception of course, both on the part of would-be sellers and also aspirational buyers. You have no idea how many conversations I’ve had with my folks, my fiancee’s folks, my soon to be SIL, and my friends about the bubble generally and Lamorinda specifically. They all think that the “highly rated” school districts are one of the primary reasons behind the current prices, and that’s a good thing, I guess. They also think that we (my fiancee and I) should try to get into the mix in a few years, or sooner.
I also just like the trees.
It’s funny. Almost everyone I know identifies their own neighborhood as one with “the best schools”. For some reason, most of them also think that house prices are still going up or staying flat. Where do people get this stuff?
Not me, I live near my old High School. It sucked then and it sucks worse now. And this in an area of $800K housing.
V, I live in Davis. Don’t even get me started on the craziness of schools. Our ‘perfect’ school district is exploding from debt and compounded by families with school age children leaving the area.
Yet if you go to a school board meeting, everyone screams that their genetically superior child (yes someone actually said that) deserves to have it all - french lesson, a music program, all the sports- basically everything the school district 4 million deficit can’t cover.
It’s comical in a 60’s “the magic christian” english black comedy kind of way.
” french lesson, a music program, all the sports- basically everything the school district 4 million deficit can’t cover.”
Then tell the genetically superior parent to hire a French tutor, a music teacher, a coach, etc. Can’t afford it??Then clearly said parent is not genetically superior, and unlikely that their spawn is either. Schools teach the fundamentals…parents are there to pay for the extras.
My cousin lives there for the same reason.
And I can tell you they are like hillbillies, the nearest good restaurant is at least 20 minutes away in Oakland, same goes for Costco, etc. Need to drive 10 minutes just getting to “downtown” Orinda from the “forest”.
Their kids attend the best school in the Bay Area and goes to McDonalds when they need to “dine out”.
Orinda is richy rich. Rent a house where ever you can find a place for your dog and car.
I live right over the hills from Lamorinda in the peoples republic of Berkeley. Lamorinada will be one of the last places affected by this mess. Check the census data - the typical family income in the area is probably over 200K - there’s not much starter housing or new home construction - Most of the folks who buy there can afford it - many bought 10 and 20 years ago when the prices were still high compared to the rest of the area.
The schools consistantly rank at the top of the bay area, which probably reflects socioeconoic niche occupied by the residents more than the quality of the teaching, but the schools certaily are well funded, have good parent participation (lots of stay at home spouses) and the neighborhoods are safe, clean well tended and very very suburban. Not a bad place to live if you like that sort of stuff and can afford it.
It woild be interesting to see a profile of the duration or residency of a community. If you compared Lamorinda with stockton you’d see a larger proportion of Lamorinda folks are longer term residents as compared to many communities in the valley that sprang up out of the dirt in the last 10 years - everybody’s new there!
Check out Onboard Neighborhood Navigator.
Sorry, but the median income there is closer to $100k, which means the median house ought to be about $300-400k, about 1/2 of what it is now. Look at that, there goes that 50% number again.
“‘It would be nice to have neighbors,’ she said.”
Well, wait ’till you find out what kind of neighbors you get when you move into an “affordable” development. Unfortunately for Amy, she will be the ONLY one with the means to afford a $500k + purchase. I hope Amy likes people with mohawks.
Were you ever friends with someone with a mohawk? Someone with the courage to attach that social stigma to themselves appeals to me a lot more than some idiot driving an SUV with a trunk full of aspirational luxury goods fresh from the outlet mall.
daughter’s boyfriend had a bi-hawk when I first met him. Totally cool. they’re strange kids anyway - they like to study and do well in school. Total geeks and really funny.
I used to think people with mohawks were OK until my old landlord got one. Now, every time I see someone with a mohawk, I almost hurl.
“I hope Amy likes people with mohawks.”
Hey, you dissin’ my tribe??
“There were 47,171 homes lost to foreclosure during the first quarter, the highest since DataQuick began recording data in 1988.”
At least it is just coming off a low base.
—
CA Monthly Counties and Cities data is out:
http://www.dqnews.com/Charts/Monthly-Charts/CA-City-Charts/ZIPCAR.aspx
Summary Based on DataQuick reports of all recorded sales, SFH & Condos, New & Resales
Median For Counties & Select Cities:
Current Price $418,500
PK Price $600,000
MoM -4.3%
YoY -20.5%
From Peak -29.0%
Since Dec’05 -22.0%
Since Dec’04 -15.5%
Since Dec’03 3.7%
Since Mar’04 0.0% (Back to where they were 4 years ago!)
Since the credit crisis began in August 2007 home prices (on price per sq ft basis) are steadily dropping at 20-40% annual rates depending upon the area. There could be some leveling off in prices for few months before the second leg down takes prices down more than 50% from the peak in most areas by the year-end. CA has been in recession since July 2007 (based on employment data) and should enter depression in 2009.
Another Jump in California Foreclosure Activity:
http://www.dqnews.com/News/California/CA-Foreclosures/RRFor080422.aspx
It Is the Price Decline, Stupid! (That causes increased foreclosures).
Q: When prices are dropping at 20-40% annual rate, month after month after month, why would anyone buy and not wait for at least 6 months? Aren’t they jumping the gun with purchasing foreclosure properties when worse is yet to come?
During the bubble they were afraid that if they don’t buy the prices will go up another 20% in a year. I am just trying to understand the mindset of the buyers at this time.
Jas
I know this guy. He still thinks that everything will just be flat for a long time. Housing, stock market, gold, dollar. Everything flat. How can people look at negative numbers like this and still think that everything is/will remain flat?
He probably believes the world is flat as well.
It’s interesting to see how inconsistent this table is with the numbers reported last week, also by Dataquick, and also for the same housing types (used and new, detached and condos).
For example, last week they reported that Santa Clara County had 1105 sales in March 2008, with a median price of $620k. Now they say it was actually 789 sales, with a median price of $632k. Similarly, they had said previously that San Mateo had 438 sales at $723k median, but now they say it was 342 sales at $712.5k.
I wonder which data set is correct.
–
Both are correct. One report only covers a subset of all sales.
The smaller number of sales in the Cities and Counties table is only for the cities in a county that are part of this report. The bigger number of sales is for the whole county including the cities which are not included in the other report.
I hope that this clarifies.
Jas
Yes, it does. Thanks!
I want to report that I took a vacation day to go on a job interview (i.e., keeping up with my field), and I was APPALLED at the way this company treated me. They made me interview at a table in a hallway blocked on 2 sides by ramshackle cubicle walls. One of the people didn’t even show up to the interview because she just had more important things to do (just normal every day stuff). Another one of the people told me that anyone could do my job, but they just didn’t have time because they were focusing on more important things (this was an admin-type person). No offer of coffee or soda, although I was asked if I needed a bathroom break. The woman told me “I will make a decision on Wednesday”. It was weird. The last time I went on an interview, I was treated like a special guest, given lunch, told how important my job would be, and aksed when I needed to know about the offer.
Does this imply a worsening employment situation, or is it an isolated incident? Any other Bay Areans have a comment?
You do realize that “Dilbert” is a documentary, right?
I have recently had applications from Bay Areans (software developers) looking for work in SoCal. That hasn’t happened since the early 1990s.
But they are crying for those vesas because we don’t have enough qualified/educated people in america.
//Sarcasm off
yeah, they try and pay Admin jobs as little as possible around here. Contract positions with Temp agencies that don’t have ANY benefits are common. The carrot of permanent position is dangled quite commonly but rarely obtained. The responsibilities are large, the hours long, and you’re working for people who don’t respect you. It’s the new serfdom for clerical. One person would have a hard time making ends meet on the wages paid. Another reason I think Silicon Valley is screwed.
Imagine a 25 person engineering department with no admins - the engineers even answer their own phones. I have lived this… and it doesn’t work very well.
I realize my post was unclear. I’m not applying for an admin-type job. Rather, it was an admin-type person trying to tell me that anyone could do MY job. I think she could tell that it ticked me off.
Well, I’d say that clarifies whether or not you should work for that company.
If the company that wined and dined you before is your current employer, I’d stick with them over the jerks.
Best of luck with whatever you decided to do!
V: I think you’ll start seeing more and more of this as employers start the “you’re lucky to have a job” attitude. At least you were able to see the company for what it is before you take a job. Worst thing is when they play nice until you get there and then the worm turns.
Sounds like Russia.
Gee did you interview in So Cal? Sounds like standard operating procedure. We lasted seven years there but many other No. Cal’s we knew lasted only one. It was definately a place where a degree was a negative.
I’m moved to the Bay Area from San Diego. I think San Diego employers were acting like that in the mid 90s.
So Cal is a place where having Citizenship is a negative.
Depends on job. Many admin jobs can be outsourced as well.
Hello? What do you think?
Awesome. Tom Leykis is on the radio right now saying that morons who signed loan paperwork they didn’t understand and wanted to make an easy buck in real estate deserve to get thrown out of their houses so prices can come down to where more prudent people can afford to buy a house.
He says going bankrupt is the only way people will learn not to do this crap.
Whatever you may think of the guy, you gotta hand it him for being on the right side of this issue.
I used to listen to him on occasion a couple years ago. He was ALL about telling people to have an income property and buy stock in Home Depot…
He’s a funny guy. I wish he was still on the radio here.
You can get all of his shows on podcast from iTunes.
I used to think he must have won the genetic lottery while listening to him and his stories of how to pick up beautiful women, despite his rabble of how ‘looks don’t matter’ for men. I finally saw a picture of him one day and jeez! the guy really believes what he preaches!
I don’t know who he is, but I like the cut of his jib!
I find him to be one of the most irratitating radio personalities I have ever come across. I find him disgustingly sexist. No offense to those who listen, but the average caller seemed to have an IQ in the 50s. Lots of bitter divorced men railing about ex-wives. I am not a regular listener, his station here in LA was one that had another program that I liked.
Anyway, at least a month or so ago, he was hawking some mortgage broker business that promised too-good-to-be-true results. He lives off the last gasps of the mortgage biz and pretends his advertiser is somehow “special.” I really did not enjoy it. I found his jib misshapen and ill-rigged.
Agree with your assessment of TL. His mother must have dropped him off a cliff when he was a baby.
I don’t listen to him, but have read enough by and about him to form an opinion. He’s a loser.
Gee, I wonder if that would have something to do with the fact that in divorces, most men get treated like second class citizens in court. Alimony? WTF? You should get money in perpetuity because you became accustomed to a lifestyle that someone else’s labor provided for a time? Seriously W….T….F!?!?!
I thought women were just as capable as men and didn’t need things like this.
Or as Chris Rock said, when you go go to a restaurant you become *accustomed* to eating their food. That don’t mean they owe you a steak after you leave!
Leykis is one of the only guys I know of in mass media that speak out on behalf of the often deplorable treatment men receive in family court.
Another new record in defaults:
http://www.mercurynews.com/ci_9014879?nclick_check=1
The bottom fishers who already bought in must REALLY happy with those shrewd deals they made.
Broken link. Can you post the relevant text? Thanks!
Record number of default notices sent to county homeowners in 1st quarter
By Sue McAllister
Mercury News
Article Launched: 04/22/2008 11:31:11 AM PDT
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Apr 22:
Bay Area notices of default rise in first quarter
More homeowners in Santa Clara County faced the threat of foreclosure in the first three months of this year than at any time on record, a trend being played out across California. Statewide, the number of homes lost to foreclosure more than quadrupled in the first quarter compared to the same time last year.
Mortgage lenders sent a record 3,074 “notices of default” to homeowners in Santa Clara County in the January-to-March period, according to DataQuick Information Systems. That’s up 42 percent from the fourth quarter of 2007, and up 191 percent from the first quarter of 2007. The previous record was set in the final three months of 2007, with 2,162 notices.
Notices of default are the first step in the foreclosure process, and lenders usually send them a few months after homeowners have stopped making mortgage payments.
The rising number of defaulting homeowners indicate there’s still pain ahead for the housing market. As home prices have fallen, a smaller portion of the homeowners who face foreclosure are able to sell for enough money to pay off their mortgages.
“The main factor behind this foreclosure surge remains the decline in home values. Additionally, a lot of the ‘loans-gone-wild’ activity happened in late 2005 and 2006 and that’s working its way through the system,” said DataQuick president Marshall Prentice, in a prepared statement released with the data today.
Californians received a record 113,676 notices of default in
——————————————————————————–
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the first quarter, up 39 percent from the previous quarter, and up 143 percent from first quarter 2007.
And the number of homes actually foreclosed upon also shot into new territory, with 47,171 foreclosures recorded. A year earlier the total was less than a quarter of that, with 11,032 foreclosure documents, or Trustees Deeds, recorded.
Statewide in recent quarters, only 32 percent of homeowners who had received default notices were able to get out of foreclosure by getting up to date with their payments, refinancing, or selling their homes and paying off their loans. A year ago, 52 percent were able to stave off foreclosure, DataQuick
Mo,
Apparently people are offering .50 on the dollar so if you see a 260k forclosure go off the books, chances are good it sold for 130k to 180k. The investors are insisting on pricing in future declines or they tell the asset managers to pound sand. Then they flood the market with inexpensive rentals.
In my area, it seems like people can’t liquidate their MFRs fast enough because the current owners can’t keep them filled. So while the investors may be playing magical chairs with the available pool of renters, at least they are using some really low-priced chairs. >; )
yeah but these are $800K foreclosures and our “investors” are “snapping” them up at $700K and patting themselves on the back for getting such a “sweet deal”. They don’t pencil out as rentals unless the investor is paying part of the mortgage.
Ah, the vicious cycle, as opposed to the virtuous cycle. Negative equity begets walk-aways, which beget foreclosures selling at steep discounts, which beget lowered comps, which beget more people with negative equity, which beget more walkaways…
–
To paraphrase Galbraith: Decline in prices lead to decline in prices (he commented on the stock market bubble of 1920s with: Rise in prices led to rise in prices, a classic driver of bubbles).
Yes, California has entered the vicious cycle in housing.
Jas
California has “always” been in a vicious cycle of housing.
It’s either going up or down, and usually rather quickly.
Well… except after recessions. The it just sits there or slowly crawls out of the overshoot to the downside (yes, it even happened here in San Francisco in the early 90’s).
We’ll see how long that lasts after we get through the recession in a year or two. Or three.
I remember that and it was not pretty for my family. I also remember about the job situation, where the employers knew that they had the power and their attitude was, be happy that you are getting this interview and that you have a job at the moment.
Those times are coming back with a vengance.
The day of reckoning is coming and perhaps it is here already. It is bad for homeowners who bought in the last 2-3 years, but it might be an opportunity for new grads who wants to buy house in the future.
Or even old grads. I graduated in 2001, right when the bubble was starting to get noticable. Can you believe I’ve been waiting all this time? I’m starting to get happy.
ha hah getting happy. me too. waiting finally caused my wife to split with me and i have the Bubble to thank for it! Sadly, no house to give her. Just a Moneypit-Benz…
If that’s why she left you, catspit, then she is not very smart.
Wouldn’t be the worst thing that happened. We’ve had some new grads in this neighborhood, and you know what? They’re great kids! Lots of energy and enthusiasm. Especially when they get to work on fixing up these old houses.
Hope they don’t have mohawks. They are scary and look different.
Lip rings are OK……?
Nope, sorry. No mohawks. Our new kid homeowners look like they just stepped out of a milk and cookies commercial.
Ok. Enough of the “mohawk” already. You know what? I’ve lived an alternative lifestyle just as crazy as anyone with tats and you pick the hair color (yet I wanted to remain free of piercings and ink)- they are just as prone to being judgmental as the rest of “us”. Sometimes more so as they feel superior in their knowledge of all thing out side of the box. Hogwash. Period.
Some of them are awesome, best people you will ever know- most suck, just like all other social clicks and/or cliché’s. Hippies, goth, straight/gay, brown/white/black, you name it.
I’d like to add something here, as well. I moonlighted as a bartender last year at a dive bar in Oakland. Prior to nights when we had punk rock bands in, I have to admit I had a preconceived opinion about these kids. But I’ll tell you, of all of the different customers we had, these kids were the best tippers, had better manners and were the most fun. I mean, really. I was so pleasantly surprised. And, trust me, we were 4 and 5 deep at the bar and I hadn’t seen that many tats, piercings and mohawked hairstyles in one place, ever. (Ok, maybe except for the Folsom Street Fair in SF. Look it up if you are not familiar.) It was probably one of my best tip nights.
Understand that I am not basing my experience on the fact that it was a good tip night, but that they clearly did not fit the generalization where they are usually put. They were just young people out having fun and getting their buzz on.
Just my 2 cents.
BayQT~
Back in my younger days, I used to hang out with more “alternative” types. You’d be surprised how smart they tend to be, as a group.
If you listen to punk music, much of it is political — and they tend to nail their respective topics, even if it doesn’t sound very good.
“The firm attributed foreclosures in the capital region and statewide to falling home values that have made it impossible for many to refinance or sell their homes to escape financial problems.”
Again, how can the people in trouble refinance themselves out of trouble?
*chirp*
*chirp*
That’s right, boys and girls! Once the purchase was made, there was only one way out…foreclosure…
…or…
…you could sell to another sap that would have gone thru the same cycle of eventual foreclosure.
How could some believe that a $600K house is anywhere affordable to median home buyers?
It never was and there is nothing that can be done now to make them affordable either.
“Clearly the major culprit is free-falling home prices that have many people owing more than their home is worth.”
I continue to be amazed at the ignorance in our Country!
Falling prices are not a ‘culprit’ they are the outcome of insane and unsustainable appreciation.
Amen to your and SMF’s posts.
The cause of the foreclousures isn’t falling prices, it’s lack of affordability.
More tripe from these “expert” economists.
we know we’re in a recession.
we know it probably won’t end until housing prices are back inline with incomes.
the big IF is will gov’t meddling make it last longer or make it worse.
Oh contraire. Prez said today we are NOT in a recession. The economy has just slowed.
Be bewry bewry quiet…i’m huntin wabbits.
From the NYTimes Sunday magazine,for NEXT Sunday, on who or what caused the housing mess…guess they’re too nervous to wait 5 days…
http://www.nytimes.com/2008/04/27/magazine/27Credit-t.html?_r=1&oref=slogin
*sarcasms* Who else? Alan Greenspan duh!
Like my great aunt Maudie used to say, “Whoa, Nelly!” It’s Tuesday, so why did they put this on the Web today?!
Nice diss on Moody’s. Our man, Jim Chanos told us to short that almost a year ago.
Spike: They always put up the magazine up early in the week.
Not this early. Tuesday afternoon for Sunday? No way, usually post Friday night, Sat. morning.
So what is the conspiracy you’re alluding to? Why would they be “nervous” about publishing this article, and why would that nervousness cause them to publish it early?
–
“‘The big ‘if’ right now is whether or not the economy is in recession. If it is, the foreclosure problem could spread beyond the current categories of dicey mortgages, and into mainstream home loans,’ said Marshall Prentice, DataQuick’s president.”
Mr. Prentice, do you look at employment data? Unemployment rate is up from 4.8% to 6.2%. Usually, a 0.5% rise in the UR is a good indicator of the beginning of a recession. In July 2007 the UR had gone up by 0.6% and that is a good starting date for the CA recession.
Jas
“Mr. Prentice, do you look at employment data? Unemployment rate is up from 4.8% to 6.2%. Usually, a 0.5% rise in the UR is a good indicator of the beginning of a recession. In July 2007 the UR had gone up by 0.6% and that is a good starting date for the CA recession.”
The ‘offical’ CA UE rate of 6.2% is not getting widespread attention of the MSM. There was one day it was written up on LA times and a few other media but that was it. CA is getting hit by UE harder than nationwide, which is why national MSM is muted on it. Plus all attention seems to be on the elections.
6.2 is an alarming stat but it is even bigger , maybe real UE is 8-9% or more. CA has a disporportionate % of I/Cs in the Mort and construction industries who may not be counted as UE, as well as all those illegal construction crews now out of work. Also a large % of the ‘hidden’ job seekers may just have given up and dropped out entirely. Officially 1.13 million in CA are unemployed. IMHO another 1 million are part-time min wage marginal workers, and another 1 million have dropped out entirely and are getting by on mainly thru borrowing ,using up savings, or getting support from family .
I have a ground view insight as i am an active jobseeker and know how bad it is out there. One little Long beach local job fair with 6 employer booths had 300+ people lined up around the building for $10 security/staples clerk type jobs. Another JFair in Orange county had at least as many lining up at 10 employer booths, for comm only marketing/financial service positions and security/police recruitment jobs.
The CA EDD is absolutely swamped with UE claims.
The rising CA EU rate will be as big a factor in depressing housing prices as the foreclosures, resets, and tightening credit. When folks start worrying about job security then they panic and start unloading their properties at panic induced discounts. Add potential buyer pool shriveling up even more especially for overpriced LA homes due to economic/job insecurity.
Expensive LA coastal property sales and listings go into deep freeze , and prices start getting hammered. last half of 2008 and all 2009 I see further 20-30% price drops for all expensive La coastal zips . U can stick a fork in it!
Not dissing on this but I just had two high level job interviews and will get some offers. Not sure what industries are in recession right now.
Finance, construction and Imports.. I guess I/O are doing okay with more exports.
Re: “If we are in a Recession”.
I just listened to George W Bush this morning on the radio and he said that the US is NOT in a recession.
He’s been hanging around his Texan Oil buddies and Saudi prince buddies who are RAKING in the dough like NEVER BEFORE IN HISTORY. He deserves a nice presidential library in a US Prison when he leaves office for all of his crimes!
Sorry, I couldn’t help but inject some politics.
You, my friend, must be sane.
What kind of BS is this? This was posted on another site as the housing crisis causing rents to skyrocket. Sheesh. It almost sounds reasonable, too. Scary.
http://www.usatoday.com/money/economy/housing/2008-04-21-rent-rising-eviction_N.htm
It’s ncredible what constitues news these days. Look for any numbers you can find that makes your story sound legit and go with it. People are dumbass’s if they pay some FB’s mortgage for them in the form of rent.
I’ve read quite a few of these articles. What they’re not telling you is that they are only tracking asking rents, not actual rents. The asking rents are way up for two reasons:
1. FBs are asking for their mortgage payment.
2. Only units with correct asking prices get taken off the market (rented), which means the overpriced units continue to get factored into the average week after week, while the reasonable ones are eliminated.
Also, you’ll notice that rents only went up 3.1% last year. That’s funny, I remember last year they were projecting a 5% increase. Guess what? They’re projecting another 5% increase this year. Well, that’s not exaclty “skyrocketing”, is it?
I am highly skeptical of claims that SF rents are going up at all, given that their residential vacancy rate is in the double digits, which makes it a renter’s market. I got the SF stats from Onboard Neighborhood Navigator (Google it).
Thanks for the resource bigV.
Looking at moving up to San Jose.
James
San Jose actual (not asking) rents have been stable/falling this past year. There are a ton of condos up for rent from the FB’s that don’t want to sell.
The rental building I live in has been desperate in their advertising. They started moving in rental furniture for more temporary units. They even rented out units to the entire Cirque du Soleil troupe when they were in town.
Held my nose and went to Costco in Carlsbad today.
Everything was ten bucks.
Dried fruits and ice cream bars were thirteen bucks.
I am so sick of shopping like it’s the end of the world.
Someday I just want to buy snacks again.
Gas was only 3.79 for regular,
plus plenty of big bags of rice available.
To avoid a food shortage here, we should ban fancy eateries, empty restaraunts, and bakeries for six months.
Bars and fast food joints may stay open.
Deals in CA central valley. Party like it’s 1999.
Modesto FOR SALE
$75,000
3 Bed, 2 Bath
1,710 Sq. Ft.
0.12 Acres
Sale History
06/12/2007: $289,000 *
02/26/1999: $89,000
500 properties UNDER $150,000 in Modesto
1238 in Sacramento
Source: realtor.com
This is for lowballnick.
I posted this yesterday late on your comments about Glendale. Here you go. By the way, the house went back into escrow today (2 times in the last week and half)
I am in glendale and must DISAGREE BIG TIME:
A house 2.5 years ago listed at $959,000 sold for $1,0705,000.00.
1.5 years later, the very same house sold for $1,500,000.00.
Today, that house has a first lien of $1,000,000.00. and a second lien of $300,000.00.
The total amount owed is about $1,400,000 due to about 9 months of non-payments, property taxes paid by the bank and other costs and fees.
I made an offer on it for $975,000 2.5 years ago and at that time, it needed a new roof ($20,000 per the estimate the roofer I sent out gave me.)
This house is on the market for $1,050,000.00.
Yes, $1,050,000 (the banks are taking a bath).
I went to Countrywide to get prequalifed 3 weeks ago.
They prequalified me at $1,050,000.00, however, the house only appraised for $979,000.00 on their computer appraiser.
I told the broker I would offer $850,000 (the roof was “fixed”, however it still leaks) this house is over 3300 sq. ft. and a pool, and somewhat of a view.
The broker said the banks will not allow, and it will the foreclosure date is next month (delayed at least 4 times already.)
Even if I do not buy it, and it sells at $1,050,000.00, it will kill all the values in the area, including Burbank.
(I am a broker and I know the history of this house. I got outbid 2 years ago and have kept an eye on it as I knew the buyers were fools. I was right.)
For those of you calling me a fool for trying to buy it at $1,050,000, I could afford it and plant to live in it for the rest of my life
If you can afford it and want to hold forever then no problema.
Even so, why not rent for 2-3 years, then buy nearer to a bottom? I don’t see the reason to throw away money at this point.
I am currently renting and quite frankly am tired of renting. I am tired of the association rules.
The only thing is that I am not stupid enough to pay for a house that won’t appraise.
I will pay today’s fair value, but that is it.
8/8/2007
http://www.mountainx.com/disclaimer/comments/080807disclaimer
Affordable-housing advocates put out of work by declining home prices
(PARODY ARTICLE)
“Amidst a nationwide house price decline that threatens to restore affordability to millions of would-be homeowners, the work for affordable-housing advocates has rapidly dried up.
“We have always suspected that the time would come when house prices would drop to less absurd levels,” said Amelia Johnson, whose own home will soon face foreclosure if she is unable to secure new employment after being laid off this month from the affordable- housing nonprofit where she worked. “Maybe I should look for a job with a more reliable nonprofit, maybe something in the cure-for-cancer field, somewhere I can stay with through retirement.”
“Maybe I should look for a job with a more reliable nonprofit, maybe something in the cure-for-cancer field, somewhere I can stay with through retirement.”
Ok I give up we do have the dumbest people in the world and they will never get it.
(PARODY ARTICLE)
…
“Maybe I should look for a job with a more reliable nonprofit, maybe something in the cure-for-cancer field, somewhere I can stay with through retirement.”
…
Ok I give up we do have the dumbest people in the world and they will never get it.
I agree.
–
Q: Is median price of $300K for CA and $400K for Santa Clara County
a. Unthinkable (as too low)
b. Reasonable
c. Over-valued
d. Over-valued by a factor of 2
Because these prices are 50% off the peak prices. And they would mean loss of $2.5Tr in RRE (both owner-occupied and rentals) for the state. How many bankruptcies and foreclosures?
Jas
A statewide median of
Santa Clara County’s median house price first topped $400k in approximately December 1999, at the very zenith of the dot-com frenzy.
Median household income in 2000 was $74,335. In 2006, it was $80,838. This implies an annual income growth rate of approximately 1.41%.
Estimated population in 2000 was 1,682,585 against an estimated 2006 population of 1,731,281. Annualized growth rate: 0.48%.
In short, I see no fundamental reason for any house price growth to speak of since 1999, but if we presume a generous 3% inflation AND that the dot-com era prices were fundamentally justified, then December 1999’s $400k median translates to around $514k.
Perhaps once the crash is over and prices have stabilized, a $514k median price (in 2008 dollars) is conceivable, assuming a very strong economy similar to 1999.
But meanwhile, the median in Santa Clara has fallen 11% in the past six months (from $696k to $620k) and appears to be on a nearly vertical trajectory. I don’t think it’s going to stop at $512k.
My operating assumption is a 20% overcorrection on the way down, relative to a 3% annual growth rate from the 1997 price, which was right around $300k (averaging the monthly medians across the year). Grow that by 1.03^11 to yield $415k, knock off 20% for the overshoot, giving us a grand total of $332k in today’s dollars. So $400k in nominal dollars is actually right on track if it takes 5 years to correct and we have above-average (4%) inflation during that time.
a statewide median of less than $300k is a virtual certainty, probably by summer of 2009. I also think the $400k median for SCC is highly likely, although it will take a bit longer to get there, maybe another year, because SCC started falling so much later than the rest of the state
Target writes off 8.1% of credit card loans in March, up from 6% in Feb…
April 22 (Bloomberg) — Target Corp., the second-largest U.S. discount chain, said it wrote off 8.1 percent of its credit-card loans in March as consumers grappled with job losses and the biggest housing slump in a quarter century.
Defaults during the month totaled $55.5 million, the Minneapolis-based retailer said in a regulatory filing today. The charge-off rate was 6.8 percent in February.
Target’s credit-card performance continues to deteriorate, and the charge-offs are at the highest level since the implementation of new bankruptcy laws more than two years ago, Michael Exstein, an analyst with Credit Suisse Group in New York, wrote in a report today. Thirty-day delinquencies are at their highest rate since 2001, he wrote.
No worries, just ten days ’til the first rebates go out!
Seriously, though ~8%? This is really picking up steam.
Possible pay cuts for California statewide elected officials:
http://tinyurl.com/4ks3xp
“A state commission is considering cutting the pay of the governor, lieutenant governor, attorney general, legislators and other state elected officials. In most cases, those salaries are the highest in the nation for state elected officials, according to a survey prepared for the commission.”
“I don’t think the people would like to see all the salaries stay the same when some people are out on the streets and jobs have been eliminated,” said Charles Murray, chairman of the California Citizens Compensation Commission, which met Tuesday.
“The commission was created by voters in 1990 to decide pay and benefit levels for eight statewide elected officials, four members of the tax-collecting Board of Equalization and the 120 state legislators. It met for about 20 minutes and asked its staff for a written legal opinion on whether it could cut pay levels.”
Looks like London office rentals are about to get a lot cheeper
http://bloomberg.com/apps/news?pid=20601087&sid=avz75.O9ihzw&refer=home
My guess is housing rentals will follow, 40,000 residents laid off will be looking for cheeper places to live.
Over under on heart attacks in CA this year? I say at least 1 million, no more then 2.