The New Humility Is On Display In California
The Sacramento Bee reports from California. “When home builders ruled the earth earlier this decade, a customer had to be humble. You waited in line, paid to get on eligibility lists and endured lotteries to buy houses that might jump another $5,000 if you didn’t sign now and use the builder’s lender. That was then, the old days: 2002 through 2005.”
“In a bust that has lasted three years, they have gone through phases: denial, blaming the media for messing with the heads of buyers, predicting bottom soon and laying off staff. Now a chastened industry has reached a new stage, openly acknowledging its mistakes.”
“The new humility was on display Thursday during a Sacramento-area builder seminar by San Diego-based Sullivan Group Real Estate Advisors.”
“‘We’ve effectively stolen from the future. The demand we should be having now we stole in 2005 and 2006,’ president Tim Sullivan told the industry. ‘We’re paying for the sins of our past right now.’”
The Desert Sun. “Palm Springs’ home sales during the first three months of 2008 were down 23 percent from first quarter last year. There were 9,214 homes on the market in April, according to the latest numbers from California Desert Association of Realtors.”
“In many cases, the amount of inventory would take several years to sell off at the current sales pace, Real Data’s figures show. In Palm Springs, it ranged from a low of 9.1 months worth of homes priced between $350,000 to $499,999 in 92262 to two years worth of $2 million-plus homes in the 92262 zip code.”
“In Indio, it ranged from 12 months worth of homes in 92203 that are priced between $750,000 to $999,999 to more than five years’ worth of homes priced between $1 million and $1.49 million.”
“In Cathedral City, it ranged from a low of 10.6 months’ worth of single-family homes priced between $350,000 to $499,999 to five years’ worth of homes priced between $750,000 to $999,999.”
“Local housing experts…said it is too soon to declare the housing slump is over. ‘I don’t think we can call it right now,’ said Greg Berkemer, executive VP of California Desert Association of Realtors. ‘This is a housing cycle that is different. It has different causes, it has different cures.’”
The Press Enterprise. “During last week’s public meetins’ about Fox Plaza, the Mixmaster Of Uses proposed for downtown Riverside, Kimberly Hodges, a Realtor specializing in downtown properties said m solé — a new 10-unit ‘live-work’ development ‘had officially been on the market for nearly 140 days and nothing has sold.’”
“Developer Alan Mruvka sees it differently. ‘Technically, they might still be listed, but I haven’t been trying to sell them. People want to see a finished product. I’m going to put them up for sale in about two to three weeks. That’s when the ticking clock will start.’”
“Asking price for the 2,400-square-foot office-condos ranges from $620K-$720K.”
“‘If he can sell, I can sell,’ says developer Mark Rubin, who’s building Phase 1 (141 units) of 282 condos right across the street. Prices from about $280K. Rubin hopes the market rebounds, but says he’ll rent if they don’t sell right away.’”
“Fox Plaza developer Siavash Barmand will rent his initial 40 condos if they don’t sell, too! Meanwhile, Barmand’s watching Mruvka’s live-work units to see how the market treats the first wave of new downtown housing since the Great Collapse.”
“Rubin is bullish on downtown projects. Realtor Hodges ain’t so. ‘I don’t believe we have the job infrastructure to support live-work (she lumps all proposed condos in this group). I don’t believe they will sell,’ citing a soft condo market and downtown’s historic visage. ‘Do you want to live in a historic district in something new or something old?’”
The Salinas Californian. “Last month saw 190 homes sold in the county - a 68 percent increase over March’s numbers - and the highest figure since August 2006, when 202 were sold, according to statistics from the Monterey County Association of Realtors.”
“But while the number of homes selling has rebounded lately, prices haven’t, especially in Salinas. For example, in north Salinas last month, the median sale price for a single-family home was $336,250 - a little more than half the August 2006 median price of $610,000.”
“Countywide, the average sale price fell from $946,937 to $689,950 during the same time. Sandy Haney, CEO of MCAR, said probably half of the 75 homes sold in Salinas last month were foreclosed properties. ‘Market closing remains strong because the market price went down,’ Haney said.”
“A twist in the housing market right now is that a majority of people who lost their homes to foreclosure were first-time homebuyers, Haney said, while most of those purchasing the foreclosed properties are also buying for the first time.”
From Reuters. “In some areas of California, so many foreclosed homes are available to buy on the cheap that real estate agents are discouraging prospective sellers from even putting their houses on the market.”
“Perhaps the most extreme example of this is Stockton, about 85 miles east of San Francisco, where roughly three of every four homes for sale are in or on the path to foreclosure.”
“The city’s resale market is ‘pretty much gone,’ said Cameron Pannabecker, owner of Cal-Pro Mortgage Inc.”
“‘I don’t know an agent today who would take your listing unless you’re a hard-luck case. There is just too much competition,’ Pannabecker said. Properties that at the peak of the market two years ago were selling at $500,000, or appraised at $500,000, are now selling for $200,000, he said.”
“‘Honestly, there isn’t a huge amount of difference between a foreclosed home and a regular home than the prices,’ said said John Knight, a professor of finance and real estate at Stockton’s University of the Pacific Eberhardt School of Business.”
“Distressed borrowers who manage to sell their houses are in many cases able to rent equivalent properties for about half the cost of their monthly mortgage payments. ‘I don’t know of anybody who has been foreclosed who is moving into an apartment,’ said Paul Jacobson, an associate at W.T. Hull Co.”
The New York Times. “Some of the biggest losers in the real estate slump are not purchasers of mansions they could not afford. They are buyers of second homes - or third ones, for that matter - who are sitting on a tax time bomb.”
“Two years ago, Lilia Garcia and her husband, Jesus, bought their dream house in Linden, Calif., for $535,000 and financed it in part by taking out a bigger loan backed by their previous house in nearby Stockton. They decided to hang onto the Stockton house and rent it out, believing that it would more than pay for itself and could be sold years in the future to help pay for college for their two children.”
“‘We wanted to make it an investment,’ Ms. Garcia said. ‘I should’ve sold it.’”
“The Garcias, who earn about $65,000 a year, fell behind on their payments after their tenant moved out and the interest rate on their mortgage rose, bringing their monthly payments on the rental home to nearly $2,700 a month, from less than $1,000. They view foreclosure as inevitable; they have not paid the mortgages on either house for months and now rent a home in Linden.”
“Then they discovered that they could expect a painful tax on the rental house. If the rental house sells for $160,000, which is about what they paid for it in 2003, they may still owe tax on $120,000 - the difference between the sale price and the $280,000 they borrowed against it over the years. That could mean a tax bill of more than $30,000.”
“‘I just thought we would file for bankruptcy and everything would be clear. We’d start all over again,’ said Ms. Garcia. Now she and her husband are waiting to see what price the house brings before seeking bankruptcy. ‘It’s bad.’”
From CBS 5.com. “It was one of the Bay Area’s most trusted banks. Now some consumer advocates question its lending practices in certain East Bay neighborhoods.”
“The bank was World Savings, bought by Wachovia in mid-2006. They were a popular lender. But now some advocates want to know why so many of their loans were made in some of Oakland’s low-income minority neighborhoods.”
“Welcome to zip code 94621, where homes are going vacant and residents are uneasy. ‘Our neighborhoods are becoming blight because of all the foreclosures,’ said Diane Busby.”
“‘We have quite a few foreclosures on this block,’ said Fannie Brown, who took us for a tour of her neighborhood. ‘We had older people that lived in the homes and they were here like today and tomorrow they were gone.’”
“‘When I have a caller who says I am in this negative loan. I never wanted this. When I ask them who their lender is I already almost know without fail, it’s going to be World,’ said Oakland housing advocate Maeve Elise Brown.”
“Mae Washington lives in one of the hot spot zip codes. ‘I received a letter in the mail from the lender stating that I had been pre-approved,’ she told CBS5 Investigates.”
“The loan was from World Savings, who held her mortgage at the time, but offered to refinance it with what sounded to her like a better deal: A pick a pay loan offering a lower monthly payment. ‘I was thinking that you know, it was something that was going to be good for me.’ But now? ‘I think it’s a terrible loan,’ she said.”
“Because like many others, Washington didn’t know that paying that lower minimum payment each month meant her principal loan balance would increase over time by thousands of dollars. ‘My principal went up by $20,000 to $25,000 that I owed, in a year.’ Now she says she doesn’t know if she’ll be able to keep up with her rising payments.”
“A report released Thursday by Chapman University in Orange showed consumer sentiment statewide has dropped for the third consecutive quarter.”
“The index stands at 57.6 during the second quarter of this year. It’s the lowest rating the university has reported in eight years and down from a reading of 94.4 during the third quarter of last year.”
“Riverside resident Jeff Lasman echoed some of the survey’s sentiment. He said he’s cut back on dining out and even opted for cheaper fast food rather than more expensive restaurants.”
“‘I guess I’m worried about America’s future,’ he said. ‘So many Americans have no idea how to tighten their belts.’”
The Fresno Bee. “Here’s a question for restaurateurs: Are you following the example of the Hi-Life Prime Steakhouse in Kingsburg? Just a few years ago, when housing prices seemed they’d never stop rising, racks of lamb and filet mignons were mainstays on the Hi-Life’s menu.”
“A couple of weeks ago, the restaurant stopped serving racks of lamb. Likewise, filet mignon is a thing of the past. Instead, folks are coming in for $14-$28 meals.”
“‘No one seems to miss it,’ says Hi-Life co-owner Tim Pa- shayan. ‘They’re not spending money on the $30-$40 entrées.’”
“The lower food costs — and resulting lower entrée prices — have brought in more diners, but they’ve also prompted the owners to open an extra night. They need more customers to make up for the lower prices, they say.”
“Pashayan expects other restaurants to follow suit. ‘If these restaurants here don’t change,’ he says, ‘they’re going to die.’”
The Ventura County Star. “Rather than deferring dreams, University Village in Thousand Oaks is deferring payments to help people move into the retirement community while they wait for their homes to sell. It’s a creative approach tailored to a down real estate market.”
“People can move in to a unit and enjoy all the amenities by paying the required monthly fee, but their one-time entrance fee is put on hold until their homes sell.”
“For Allan and Shirley Walter, the program meant that they didn’t have to let go of the one-bedroom residence they locked in at the pre-construction price even though it took longer than expected to sell their Spanish Hills home.”
“Walter said he lowered the price on his Camarillo home, but it was worth it because he might have lost the locked-in price at University Village. Their Camarillo house sold in October.”
“Warren Spieker III, VP of University Village Thousand Oaks, said many people who move into University Village have lived in their homes for decades and have more realistic assumptions about price. That often leads to faster sales.”
“‘These are folks not holding out for top dollar or last year’s price,’ he said.”
“If sellers hold out for an unrealistic selling price, the community can give them notice that they need to pay within a certain amount of time or move back into their homes. It lets both sides know that they’re not stuck, Spieker said.”
“Doug Michie, an adjunct professor at California Lutheran University, said every house will sell if it’s properly priced - even in the current market. The problem with a lot of sales on the market now is that a lot of people have more mortgage debt than their home’s current value, he said.”
“Many seniors are in a better position, having paid down or paid off their mortgages.”
“‘Coming out of the Depression, the children of that era are of the attitude of trying to pay their mortgage down by the time they retire,’ he said. ‘Perhaps we’re now seeing the reason why the older generation put such an emphasis on paying down their mortgage.’”
“The Walters moved into University Village in November during Thanksgiving week. ‘We’re very happy here,’ Walter said. ‘Golly, it’s so wonderful,’ his wife added.”
“‘I just thought we would file for bankruptcy and everything would be clear. We’d start all over again,’ said Ms. Garcia.
All debts must be paid by someone or some group at some point. This type of mind set pisses me off to the max! Create debt and then just pass it off, they really deserve an azz reaming.
“…they really deserve an azz reaming.”
I’m sure we have a spare Joshua Tree laying around somewhere! I agree, that attitude is disgusting. Buying a $500K+ second home on a $65K income? DiTech has it all wrong. The reality is that “people are dumb.”
apologies if my italics screwed things up for any others
Never been good at computer stuff.
The reality is that “people are dumb.”
You are correct,they are dumb and should pay for their ‘education’/mistakes. It goes against all that is right not to hold people responsible for actions. Of course this pervasive attitude that everyone is a ‘winner’ has really screwed up the system.
In the systems world, we say that “stupid should be expensive”.
And so it is.
Dumb? Let’s just say you’re making 65k, and don’t have much chance of making more than that because you’re in a relatively dead-end, salaried position. Suddenly some ass-stupid bank comes along and says “We’ll give you a no-doc loan for more money than you’ll ever be good for. Please take it and gamble on the market. It’s a coin toss: Heads you make more money than you’re ever going to make in your life, tails your credit is going to suck forever”.
Dumb? Not necessarily. One could say it’s a very, very valid gamble — as long as those doing the gambling understand the price of failure. (Which many didn’t — and yes, those people really *are* dumb). The only true jackass in the equation is the bank — who for some hilariously asinine reason thought that a “no doc” loan was anything other than throwing money out the window.
I think it needs to be said that while plenty of flippers really did think that “real estate always goes up” (and to be clear, they deserve an ass-reaming) there were plenty of others — like the fabled Mexican fruit-pickers who bought McMansions — for whom this gamble had far, far more on the upside than it did on the downside.
But many whom would have come out ahead on their bet decided to double-down instead…
Regardless who they were, greed undid them, and may their colons be filled with the splinters of a thousand Joshua trees…
I am so making that my insult of choice. Magnificent.
Well, some of these folks may actually be on the hook to the IRS for quite a while, to include wage garnishment. Lots of loan scenarios will not be forgiven and I think all of us here have grudging respect for an organization that can freeze any asset you ever even dreamed of having at the drop of a hat. It’s essentially a terrorist organization and they don’t try to hide that fact very well. I’d rather owe the mafia, at least I’d have a chance at hiding from them.
Indeed!
There are plenty that bought low, sold high and got a windfall that changed their lives forever. I would like to hear from some of them a couple of years down the line and see whether they did double down or dive back in and buy a bunch of investment properties. I wonder what percentage got and blew it.
SD_Wangenstein and I did just that. Sold our condo 11/05 for TWICE what we paid. Put the proceeds away and are awaiting the high prices in San Diego to recede. Waiting,….waiting….
Plan to wait until housing prices reach a fixed amount that hubby and I have agreed upon and then, and ONLY then, will we jump in. Of course we are using the 3X income plan to do it too! 
Stars End
I’m more sympathetic to the poor slobs who ended up getting an ARM for far more house than they could afford. In too many cases, banks and brokers were riding off their previous reputations (”trust us, we know what we are doing”), nattered about acting “in a fiduciary capability”, of being “stodgy bankers” who were “expert in risk analysis”, etc. etc. and so forth–when they should have been treated as the sleaziest of used-car salesmen. Remember, that’s how banks USED to work–20% down, analyzed any loan with the care of a proctologist (and it was as about as painful to get a loan)–how in the heck is the new buyer supposed to know that all the rules have changed and banks have no more skin in the game? So when a nice pompous banker comes along in a three-piece suit and says “trust us, we know how much house you can afford”–the buyer is going to say no? Slightly greedy, wants to be cautious, gets dazzled on one side by the real-estate broker breathing hot promises of “but real estate will only go UP!” and on the other side has Mr. Fat-Banker-With-The-Watch-Chain assuring him that yes, Indeed This Is A Prudent & Sensible Action To Do.
New HUMILITY in California or elsewhere my A$$ !
There will be NO humility until these greedy and arrogant HouseDebtors are suffering and drop their Dream Prices or go broke.
There will be NO humility until these greedy and arrogant RE agents are broke, starving and or out of the business.
There will be NO humility until bankers and lender suffer, suck up their crooked loans and take their knocks to free the Market.
There will be NO humility until these greedy spendthrift local and state property tax thieves re-assess true Fair Market Values, get a budget and live within their MEANS.
There will be NO humility until potential Buyers DEMAND fraud free, true fair market house values based on real value, jobs, wages and their local economic conditions.
New Humility HELL…these REIC and Wall Street gangsters have damned near frozen and wrecked the entire National Economy while the DC gangsters stood by with a Nod and a Wink gathering their cut.
News Flash: Thugs, gangsters and hoodlums HAVE NO HUMILITY Mr & MS America….because in their crooked rackets, REAL HUMILITY JUST DOESN’T …PAY
The reality is that “people are dumb.”
___________________________________________
and the banks are f*cking stooooopid for making loans like this. WW3 will be known as the “financial war” and america took it up the azz bigtime. I wonder. IMO, it seems as if Mexico is running our immigration policy. Are they now in control of our financial policy too?
–
When one can loan someone else’s money and then some of them counted on being bailed out by taxpayers we were inviting abuse and that is exactly what we got. Long ways to go in this game too.
Bad (financial) system guarantees bad outcomes.
Jas
Amen.
This type of mind set has been actively *encouraged* by the PTB for decades. Want to be patriotic and help the economy? Get out there and spend-spend-spend! Saving is for $uckers –the Fed has seen to that. Speculate in “hard” assets, or see your hard-earned Ameros inflated away.
They deserve the reaming alluded to, but the Times article is not entirely accurate. Assuming this couple is insolvent, that is pretty evident, they will not owe income tax on the amount of debt forgiven. The tax code always help those who pay very little tax.
Poorman,
I would beg to slightly differ. I have it on good authority that OIC ( Offer In Compromise ) is getting nigh on impossible to obtain! If you’re elderly and on fixed income they will continue to hound you w/ mailings, threats etc. but not make active attempts to collect. Probably just put a lein on your primary res.
But if you have a job and a pulse, they WILL pursue you! Anyone with a combined income of 65k won’t get “walking papers”.
And the IRS should pursue these people! And everyone like them. Bush’s “Deadbeat Specuvestor’s Tax Forgiveness Act of 2007″ was outrageous enough.
If these people don’t pay, it only means YOU have to pay more!
I’m sure you can’t get blood from a turnip but these people will be made to suffer, rest assured. Easy was yesterday. With a global conflagration to fund and our currency decimated by these clowns there’s little room for generousity.
Since we can no longer claim either of our daughters as dependents, even one of us being self-employed isn’t the help it once was. I also look for an ALL OUT attack on Schedule C and it’s part of the reason I’ve elected to get an office. I don’t want to hear about challenges to home office deductions. Life is tough enough.
The IRS doesn’t care . I know someone who paid payments for 15 or more years on taxes owning on his business in spite of the fact that his accountant and wife took off together with a bunch of the funds. Eventually he got a lawyer to get the payments reduced on the remaining amount .
Isn’t it true that if you lived in the house for 2 of the last 5 years you can claim the residential write off on capital gains?
But my real point is that if borrowers are going to be investors ,they better know all about the tax codes instead of relying on the commissioned sales people to give them true facts.
Wiz - “Isn’t it true that if you lived in the house for 2 of the last 5 years you can claim the residential write off on capital gains?”
This is being technical and you probably know it, but just in case - the house has to have been your principal residence. Snowbirds live in two homes, often six month’s each, every year. But only one of those can be the principal residence for this purpose. All states that I know of treat them the same way relative to homestead exemption.
That said, there is a huge amount of cheating. I see people here who bought a condo and kept their house. They pretend to live in the condo until three years have passed, so they can sell it and take their hoped-for gain tax free. Where I hope they get into trouble is that if they are claiming the condo, in this example, for Federal tax purposes but retaining the homestead exemption on their house for property tax and Save Our Homes purposes - in such a case they are committing fraud, in my opinion. And you’d better believe there is a lot of that going on in Florida.
Just got a OIC approved after three years from $60K to $5k - have to be aggressive - go to appeals. They try to wear you down. The lower IRS agents don’t follow the law. The formula is very simple for an OIC.
Seems everyone on this site doesn’t know about the solvency rule with forgiveness of debt. If you are insolvent you do not pay any tax.
What’s the difference between outright theft/shoplifting and running up huge CC debts then declaring BK to ‘clear things up?’
She’s got another surprise coming: Tax liabilities can only be eliminated in bankruptcy if they are over 3 years old. They are going to have to dodge collection for a while before they can get everything wiped out.
“Here’s a question for restaurateurs: Are you following the example of the Hi-Life Prime Steakhouse in Kingsburg? Just a few years ago, when housing prices seemed they’d never stop rising, racks of lamb and filet mignons were mainstays on the Hi-Life’s menu.”
I’d hate to be in the restaurant biz right now, nobody can be making money with food costs going through the roof, and customers slacking off…
It’s a 1-2 punch~
$40 entrees????? I don’t eat anywhere where two people can’t get out the door for $20 and that’s for everything!
Gotta Love Mexican food, cheap, fast, and lots of places to explore.
That’s me. I’ll take an enchilada or a good slice of pizza any day over some expensive deal.
Yep. Me and the spousal unit are heading out the door to the $6.50 Thai buffet. The place is immaculate and the food is fabulous.
Where can I find a $6.50 Thai buffet? I am saving my money to buy realestate investment sometimes in the future.
I’m usually cheaper than most of you guys… but my wife is chinese and is hopelessly addicted to sushi…(I suppose it could be worse like crack or something but it still costs a bundle). She is however a monster coupon shopper so I guess that makes up for it.
“Yep. Me and the spousal unit are heading out the door to the $6.50 Thai buffet. The place is immaculate and the food is fabulous.”
Spousal unit? WTF?!! Is that the battery powered unit, or are you into the modified version that utilizes a two-stroke weed-eater motor? Since Texans supposedly go big, my bet is on the weed-eater motor.
??? Sushi is Japanese, not Chinese…
(Actually, although I love sushi, I don’t eat much of it here in the US. After 12 years in Japan the bar has been set too high.)
Of course you only eat at places that don’t hire illegals.
Right?
The only place here in AZ that doesn’t have illegals is… my house.
Heck, the politicians even watered down last year’s “employer sanctions law” that would have suspended the business license for any company that employees illegals. They changed it to ony cover people hired since the law went into effect Jan 1.
So, you can keep the illegals you already have, just don’t hire any more, is now the official state approved legal position.
The effect of the change is to make enforcement nearly impossible. Not only do you have to prove they company didn’t run the employee through the verification database, but you have to prove they were never employeed by the company before Jan 1, 2008.
Really P…ed me off. I can’t beleive there wasn’t more citizen outrage at the change.
Oh, for sure, for sure! Don’t we all?
I wonder if that is the next shoe to drop for our unofficial ‘guest worker program’.
We know many undoc’s were employed in the housing related industries, but I think another large concentration exist in the restaurant business…
So when these jobs dry up, where will they go?
Back to Mexico, presumably…
When middle-class jobs dry up, where do we go?
‘Of course you only eat at places that don’t hire illegals.’
In Arizona? hahahaha. Where do you eat white bread?
In California even the vietnamese places have mexican waitstaff, hell most Sushi places too. It’s comical.
“Back to Mexico, presumably…
When middle-class jobs dry up, where do we go?”
As it seems in the contemporary sense, it typically involves murder-suicide events…
Coming to a school or workplace near you…
The CORPus delecti doesn’t care one bit, as it closes down employment en masse, all over the country…
There’s where your revolution gets going, but what do they protest against?
A faceless-nameless entity that exists only as a book-keeping measure?
Went to a Japanese steakhouse in Maryland and the cook guy was clearly Latino, but wearing that chef’s hat and trying to make the same stupid jokes about Japanese-style this and Japanese style that. I guess we are supposed to assume this guy is Japanese somehow. So, we started talking to him in Spanish instead of Japanese.
OK In Ca here. However I have heard the rumour that female sushi chefs hands are too warm. Hence the male latinos. I don’t care who prepares my food as long as they are clean.
Respect for any hard working and knowledgable person should always be given
wow! a Luby’s endorsement from txchick57 . . . but if you take more than one toothpick on yer way out yer not eco-friendly.
lol. I like Luby’s. But Highland Park Cafeteria is even better.
I’m all about Picadilly’s but they don’t have them up here.
that’s why we want you- a cheap chick is hard to find
Oh, brother. Touchy subject.
Last night, seven neighbors and I traipsed downtown for a rezoning hearing. It seems that this not-so-busy neighborhood restaurant needs more parking. Or so the owner and his representative claimed.
Well, we schlubs in the neighborhood pointed out the following:
1. The restaurant owner put an illegal addition onto his building. That addition ate the parking space that he now wants a zoning variance for.
2. The parking lot rarely fills up these days. I’ve been noticing this on my walks around the city park that’s just south of the restaurant. Others have also seen the same thing.
On a side note. I pass a full service car wash every day during my lunch break. Over most of this year it was full, and I mean full of very nice new cars and trucks while the fancy-dancy poodle-toting conspicuous consumer types were sitting on the benches waiting for their towel salute from the illegals so they can prance up and show everyone what a big expensive car/truck they drive. For about the last 2 to 3 weeks now I would say about 1/8 the amount of cars/trucks do I see. There is plenty of room on the benches and the parking lost where the workers park is very roomy. I don’t know if this is a seasonal thing but I doubt it.
One more thing. I ordered a bowl of fruit the other day a Carrows restaurant and it cost me $2.59. There were 4 small wedges of melon, 5 wedges of cantaloupe and 9 grapes. I could have scooped them up like m&m’s and ate them.
Ok the car wash take is probably spot on, But for about $5.00 you can buy a cantaloupe, bunch of grapes and a small melon. You now have a great fruit salad for lunch for two maybe three days. I guess I’m just cheap I pack a lunch every day and this saves me about 30 buck a week.
So where are you?
“I just thought we would file for bankruptcy and everything would be clear. We’d start all over again.”
Great mentality, Ms. Garcia. You purchase a 500K home that you clearly cannot afford with your 65K salary, and then when things don’t work out in your favor, you expect others to bear the responsibility.
I am just so thankful that the fruits of my labor will be helping the Garcia’s out.
Maybe you should go the the loan officer’s house that sold her the 1/2 million dollar loan and ask for some dough. Or the real estate agent… or the wall street geniuses…
“Great mentality, Ms. Garcia. You purchase a 500K home that you clearly cannot afford with your 65K salary..”
$65K? Under traditional lending guidelines, this person never would have been allowed to buy for more than $200K. And that’s one house per customer, please.
I’m starting to think that once we do hit bottom, we’re going to be there for a while. All of the FB’s are going to be shut out for years to come.
“‘We’ve effectively stolen from the future. The demand we should be having now we stole in 2005 and 2006,’ president Tim Sullivan told the industry. ‘We’re paying for the sins of our past right now.’”
And why should this bother me? Why should I care about a greedy thief finally paying a price unless that price isn’t enough?
They stole more than two years of demand. The impact could last a generation or more. Was it worth it?
They are still delusional.
They aren’t saying anything about pricing themselves out of the market. They think that prices will pick up right where they left off, after the “demand” for half million dollar shacks catches up with the “supply”.
They are still delusional.
You got that right! Lots of builders/developers still in the denial stage. Just look at this tool. I mean, WTF!
“Developer Alan Mruvka sees it differently. ‘Technically, they might still be listed, but I haven’t been trying to sell them. People want to see a finished product. I’m going to put them up for sale in about two to three weeks. That’s when the ticking clock will start.’”
And this may be one of the few Realtards with a brain. You hear alot of buzz in the development/planning circles about live-work units, but I just don’t see that gaining traction.
Realtor Hodges ain’t so. ‘I don’t believe we have the job infrastructure to support live-work (she lumps all proposed condos in this group). I don’t believe they will sell,’ citing a soft condo market and downtown’s historic visage.
SD Greg,
You said it man. This isn’t a simple matter of just measuring the chronology of the pilfering and letting an equal amount of time play out on the back side? If that contained the slightest element of truth we’d be through with this thing already.
They may have stolen two years of demand for purchases of primary residence, likely much more. What he neglects to say is that they also stole 10+ years of investment purchases. What was it, 40% of properties sold in 2004 and 2005 were not for primary residence?
chillidog,
Uh-huh. According to NAR’s own statistics upwards of 40% of home purchases in 2005 were “2nd” home purchases. Multiply those residences by the number of weeks per year NO ONE resides there and you have the biggest waste of resources known to mankind.
Ahem, there ARE those among us where this bodes especially well. Since I can work from anywhere and wife is set to leave workforce shortly I guess those of us in that position will have ‘the lake’ to ourselves now won’t we?
and it’s probably MUCH higher because many people lied and said their investment property was their primary residence (to qualify for even cheaper mortgages…)
reuven,
Oh… now -there’s- something I hadn’t stopped to think about? With the insane commutes people had been pulling during the boom time, I suppose anything might be believable. I personally know several people that said either they wouldn’t have qual’d or that they saved “a ton of interest”!
Please see my related post below for more nefarious activity.
–
San Jose metro, dominated by Santa Clara Co., has been holding up better than other parts of California, but finally it is yielding to 20%+ a year decline (not yet in YoY numbers). The worst YoY decline would be seen in most areas when we have data for June 2008 (the latest Case-Shiller was for March 2008). PPSF for SCC is still above $400 and I expect it to go below $200. Sacramento and nearby rural counties, as well as the central Valley, should go below $100.
We have a long ways to go down in California. Humility would be needed. The key turning point to look for is: Rents falling across the state.
Jas
Only a 6.5 % decline from the peak in Humboldt county thus far, which probably makes it the least affected of any California county [where the median is down 32 % y-o-y]. In my neighborhood where I rent, 3 homes have sold (and closed) in the past month, out of 4 listings. Only one was a foreclosure. The other is a home that is still priced above what the guy paid for it, in 2006, so he expects to make a profit. That shows you how the mentality here is. The Redwood Curtain definitely separates the realists on the other side to the fools and RE boosters on this side.
–
One of those counties that is not worth reporting by the major data sources, it seems.
Jas
It appears the market for mary jane is doing well these days.
A bloodbath is occurring up here in Sonoma County; e.g. a repo I saw recently. 3/1 in a decent neighborhood bought for $510k in 2006; bank put it on the market for $265k a few weeks ago. That’s a 48% drop. I’ve recently seen a bunch of similar repos at 40-45% down from 2005-2006 prices. There are literally hundreds of similar repos on the market right now in Santa Rosa (city population is 150,000).
I’m sure the Bay Area will start catching up with the outer lying counties in the coming year.
We’re about to move out there if anyone has a line on a 3/2 size rental house in the San Jose area. Must accept dogs.
I just turned down a job in San Jose…. good money but trying to find a good rental made the move cost prohibitive.
Newark seemed to have a few nice properties.
Surprised at how run down Sunnyvale seemed.
Silicon valley…. everything in Cali is so overhyped
“The Garcias, who earn about $65,000 a year”
Sorry, no $535K “Dream Homes” for this pay level, wasn’t this always the case ? Of course if that $535K home drops to $180K where it should be then we have “Game On” and we start selling houses again.
My own observation is that stagnant incomes were part and parcel of the real estate craze — people who could no longer improve their living standards via productive work decided to try it through RE “investment.” We have seen countless stories of that kind on this blog, and I have a number of personal acquaintances who fit the profile perfectly — average or below-average incomes, not much prospect of advancement, and RE debt at least 10x annual income. My special congratulations to persons who fit the first two of these three descriptors, and who did not fall for RE craze as the way out. My clientele all deserve my congratulations in this regard.
az_lender,
What’s more is there were so many that willingly joined these ranks! Why pester your boss for a raise when your home “Zillow’s” for another 5k a week? Why raise a fuss about the benefits package and your “new” medical plan deductibles? At this rate you’ll be OUT of the workforce before Labor Day so why worry about the “new” match on your 401k?
I absolutely agree, your description of this “core” group is spot on. And for them I wish the best of luck. But for the rest that couldn’t be bothered, shame on them.
Why do the hard thing and budget and save when you can borrow against your house or run up the credit card. And consumers are now running up the cards like crazy.
Mo Money,
Don’t get me wrong, I’m not letting employers off the hook either. Remember the objective of the employee is to do as little as possible and not get fired. The employer’s objective is to pay just enough so they come back the next day.
Sad but that’s kind of what we’ve sunk to. You’re right, what’s easier, confront your boss about the raise you were “supposed” to have already gotten… or go back to your cube farm and see how much your home has gone up in value? Oh and then run up debt accordingly!
“or go back to your cube farm and see how much your home has gone up in value? Oh and then run up debt accordingly!”
or sell your house stash the cash quite your job and move to another state and rent. then read the HBB during lunch hour in my cube because I’m still working but as little as possible just so I don’t get fired, well not really but I don’t bust it as often as I used to. I have made the fast money via my house and this working for wages is for the birds. 2.5% a year increase does that keep up with inflation? No huh.
I really hate the term “consumer”. Since all us living people consume things… food, energy, exc… its everyone.
These media assholes make it sound like there is the class of dirty people called consumers that they must guide. Or some such shit.
Its as bad as calling people “resources”.
Just another form of bullshit.
yeah, agreed. HR departments use “resources” as if we were
lumps of coal or unextruded plastic.
resource should mean skill and ideas.
sorry for the sermony tone.
“Two years ago, Lilia Garcia and her husband, Jesus, bought their dream house in Linden, Calif., for $535,000 . . . The Garcias, who earn about $65,000 a year . . . ”
I know I’m being redundant, but a half a million dollar house with a $65,000 a year income!!!!!!! Sure we didn’t have a second home to borrow from, but with a family income 50% higher than theirs we didn’t see anything above $300,000 as affordable.
I’m not sure I heard this answered adequately yet, but what were these people thinking would happen when the loan reset? Prices more than double in a few years. It’s like masses of people were acting like home prices were just going to keep going up. “Oh, it’s okay if my $1000 payment shoots up to $2700. If the payments get over our heads we can just sell the home for a $100k profit. Woo hoo! Homes are the BEST investment!”
My wife and I make double them, owe $180K on our house, and we feel stretched.
I know what you mean. We’re in a situation right now where we’re not paying anything for housing. Yet for the last several months, since my husband made a job change, we’ve had to pay our own health insurance. Monthly expenses for a family of four (two in diapers) even without health insurance is not cheap.
Figure too that these people making 65k a year –that probably works out to just above $50,000 after taxes. That’s maybe 4300-4500 a month. That’s not enough for a half a million dollar home. Not when you figure house taxes, insurance, unexpected repairs, utilities, car expenses, food . . . and you can’t afford kids on top of it.
Just think that the securitized loan was prime or Alt-A and carried a AAA credit rating. Now, what do you think the aggregate loss will be for Alt-A and prime loans originated 2004-2007?
Historically, prime and near-prime home loan losses were less than 1% (lender would recover 99%+ of principal). Wall Street marketed the junk loans based on these historic losses. What the sales reps never mentioned was that the historic results took place when home loans were underwritten on the 5 Cs of credit. After 2003 non-agency home loans were underwritten on only 1 C, character (as measured by a credit score). Accordingly, the pricing models developed for pre-2004 home loans were completely inappropriate for post-2003 home loans.
My wife and I make 5 times more than the Garcias and I feel sick to my stomach thinking of buying a house in Crazy bay area for 800K+ knowing that if one of us gets laid off, we’re toast. I won’t put my family in that position. I know many people here that bought with two incomes. If one income disappears, it’s over. These people bought a couple years ago so their Rates probably haven’t reset either and definitely sure they only make under 100K total.
Just the other day, one of my cousins called and said his company is laying him off. He was in a panick. His wife’s job is not safe either. Big mortgage payment. You can’t make that mortgage payment just by working retail or partime stuff.
If houses are around $300K or lower, then maybe you can do it with one income or work in retail until you get back to your feet. But if you have this 3K-5K mortgage every month, forget it.
Yep I’m waiting for lenders to bite the bullet and discount dual incomes for this very reason. I’d say at least 30% reduction in borrowing cap for dualies.
I make a excellent income but my wife does not work and I’d love nothing better for the DINKS to get crapped on so a high end single income household could by a house.
I don’t mind if I have to make a large down payment to qualify vs them thats fine. My payment should be at a level that both of us could work lower paying jobs and make the payment.
Next its very common for dual income families to have jobs in the same or related areas so both get hit.
Couples where both work should save invest or buy luxury items etc with the extra income or save for a larger down payment not push up house prices.
Sorry for the rant but housing prices should be based on one high income or two low incomes not two high incomes.
“It’s like masses of people were acting like home prices were going to just keep going up.”
The entire financial chaos we are witnessing today is a direct result of this mindset, every bit of it.
“I’m not sure I heard this answered adequately yet, but what were these people thinking would happen when the loan reset?”
Refi or sell at 50% profit, exactly what their realtor told them would happen in 2-3 years.
I know people were still saying this, even after 2006. But I can’t believe people really believed it! I mean, we were at point where relatively plain and dumpy homes were going for $300,000 or more. These were homes that should have been affordable for people making a below average income. But they were barely affordable by someone making an average or even above average income. And people thought these dumpy homes were going to go for $400,000 — or even $500,000 in a few years??
This is the real problem with this country:
When it comes to the economy, 47% of voters trust John McCain more than Barack Obama. Obama is trusted more by 41%. The latest Rasmussen Reports telephone survey also found that, when it comes to the War in Iraq, McCain is trusted more by 49% of voters. Obama is preferred by 37%. McCain has an even larger edge - 53% to 31%–on the broader topic of National Security. These results are little changed from a month ago.
This country has a death wish. Terminal stupidity. I guess it’s to be expected, considering how so many people act on finances, housing, etc. How can a country that paid good money for a “Pet Rock” be trusted to make sound decisions?
This country cannot. It has a death wish.
I suspect a lot of the greater trust John McCain gets re: the economy comes from him not being quite so enthusiastic as Barry about bailout out FB’s.
Most Americans aren’t in mortgage trouble, and they resent the prospect of being taxed to bail out the idiots who are. I would vote for a golden retriever over a man who threatened a mortgage bailout.
Uh, yeah. John “Phil Gramm’s my econ advisor” McCain you mean?
I’d hazard a guess few people are aware how vital Gramm (and let’s not forget old Enron Wendy) was to getting the investment banking deregulation through.
From a post on The Economist site regarding house prices falling faster than at any time in history including the Great Depression:
“I hold the newspapers and periodical responsible for exacerbating this mess. They started frightening people into not buying houses. The feeling is(I’m a realtor and deal with this every day.) that if people keep waiting they will get a better bargain on a house. Now I get buyers who have been prepped with this attitude by everything they read. The domino effect is causing economic problems and, unfortunately, one problem creates another. If the newspapers would publish optimistic information people would feel optimistic and the economy would rebound. We have to get past the fear the newspapers are creating and remember the amazing strengths of this wonderful country.”
Waah, waah…
From the quote above,
“…Now I get buyers who have been prepped with this attitude by everything they read…”
Isn’t the fact that the past buyers ‘didn’t read’ everything in front of them, at least a partial reason for this mess? …especially on closing day?
“We have to get past the fear the newspapers are creating”
Like the fear induced by slogans such as “buy now or be priced out forever”, “buy now or interest rates might go up and monthly payments go up”, “buyers retire with $600K in assets while renters retire with almost nothing”, or “if you are renting, you are throwing your money away”?
I thought that the real estate industry *loved* fear, as it was a great motivator to get people to buy.
Let’s not forget “if you wait to buy, you are probably never going to buy, and will be a renter all of your life”, or “Suzanne researched this!”
So many people are afraid that interest rates will go up.
From my POV, I hope they do as they tend to bring the purchase prices down. The lower the purchase price, the more effect those extra payments to principle have on reducing the loan balance.
“We have to get past the fear the newspapers are creating”
Dammit the emperor has clothes! Those newspapers prep people to think he is naked, if the newspapers would just tell their readers that the emperors clothes are of such quality that only worthy individuals can see them, and if we all tried really hard together to see those fine clothes, than he would look magnificent.
Signed the emperors tailor.
You left out my favorite one: “If you live in a paid-off house, you haven’t managed your money well.”
I believe that was a David Lereah quote, but I can’t be sure. It was one of those geniuses of the Housing Boom.
“From a post on The Economist site regarding house prices falling faster than at any time in history including the Great Depression:”
After rising faster and farther than any time in history with no increase in wages and an increase in supply relative to population, that shouldn’t be surprising.
“We have to get past the fear the newspapers are creating and remember the amazing strengths of this wonderful country.”
Agree with the amazing strengths of the country, one of which is the freedom to exchange information and ideas.
All the information one needs to prosper is freely avaliable to anyone who cares enough to look.
All the information one needs to prosper is freely avaliable to anyone who cares enough to look.
You just have to look past the misinformation.
Libor
Rating agencies
FED
CEO’s
Realtors
analysts
blind loyalists
Fools
ect ect
Yes, because an economy based upon trading houses and shuffling money around is eternally sustainable.
The agents held the keys to Prosperity’s Prepetual Motion Machine and we chose hard work and saving just to spite them.
“Developer Alan Mruvka sees it differently. ‘Technically, they might still be listed, but I haven’t been trying to sell them. People want to see a finished product. I’m going to put them up for sale in about two to three weeks. That’s when the ticking clock will start.’”
“Asking price for the 2,400-square-foot office-condos ranges from $620K-$720K.”
At those prices for that area, I don’t think seeing the finished product will make a difference. Maybe taking 50 to 75 percent off those prices might generate some interest. Just because you paid bubble land prices and bubble material and construction costs doesn’t mean you can recover all those costs by setting prices higher than the current market price.
Those places are either listed or not. If they are listed, you are trying to sell them. If you were serious about selling them, you would lower the list price substantially.
“‘Coming out of the Depression, the children of that era are of the attitude of trying to pay their mortgage down by the time they retire,’ he said. ‘Perhaps we’re now seeing the reason why the older generation put such an emphasis on paying down their mortgage.’”
Duh…
Yep, maybe paying off one’s debt instead of living as a wage slave to finance the bankers so they can buy a variety of yachts is a good idea! But, as long as the Fed continues its War Against Savers, Americans will continue to have no reason to save until they’ve spent every last dime that they or their children (or even their grandchildren) will ever have. Then, they’ll whine about it and demand “free stuff” from the government… argh!
Suzie Orman had a caller in this situation a couple weeks back.
The caller was mid-50s and didn’t have as much in retirement as they “should” but their house was paid for. Like $200K in savings. They were now maxing IRAs and such, trying to catch up.
Suzie said they were one of the shining stars of people she talks to. Her typical mid-’50s to early-60’s caller is someone with $200K in savings, but still has 20+ years left on a $1500 a month mortgage on a house they plan on staying in after retirement.
Suzie says, those people that plan on making their $1500 a month mortgage after retirement will need another $500K in savings to generate enough cash to pay the $1500 mortgage at 4% over inflation. OR, $1 million if they can only beat inflation by 2%.
She says, much better to put the money to the house before retirement and take the tax hit of not putting the money into IRA since you’re going to have to take the tax hit anyway when you are pulling the money back out of the IRA at an accelerated pace to make the house payments later.
This is the track I am on. 15-year mortgage that will be paid off when I’m 55. Hopefully the 5% wife and I are each putting in our 401(k) with 25% match for me and 50% match for her will be enough.
Pay off the house then rent it to yourself via imputed rent.
You’ll be the best tenant you’re likely ever to get, plus the money from the imputed rent will be tax free.
Paying down a house and being mortgage free in retirement was always the investment plan that was promoted for many of the years that I have been around .Yep, in all the years that I had homes ,I never took out equity from any property until the day I sold .If your house needed a new roof or some other emergency ,than at least you had equity to take care of it if you didn’t have the funds in savings .A prudent person would even have savings to take care of any emergency.
I don’t how how everything changed and the homes became the means to live beyond your means and buy junk ,but it created a false market .While many Corporations and borrowers and commissioned sales people benefited from this false market and false source of debt funds short term ,in the final analysis the easy money is now vanishing and people are broke and in debt up to their eyeballs .
You live on a budget that is based on your income ,IMO .Investments are a side activity that you never use to pay your regular bills ,IMO. If your smart enough to come out ahead with your investments (for retirement or for goodies ),than great .
But then you can’t bitch about the landlord not taking care of things.
Quote, “But, as long as the Fed continues its War Against Savers”. I have tried to open a savings account based on foreign currency. I find out that there are Federal laws that prevent investing in any currency except $dollars. I found that Panama, Swiss, and a few more banks are the only banks where I can invest and avoid the crash of the dollar. I think I have to smuggle the money out of the country. Saphia Loren tried to do this when the Italian currency crashed, and almost went to jail. My money is small and I am sure I don’t need to smuggle money out of this country, but this government makes me paranoid.
Everbank foreign-denomination CDs
Everbank foreign-denominated CDs
“……could be sold in the future to help pay for college…….”
My FB sister to a tee. Renting out her house in SoCal, moved to Texas, bought a McMansion out in the sticks NE of Dallas. Is convinced that the run of the mill/nothing-special-about-it/40 miles from downtown LA SoCal house will be worth a million bucks in 6-7 years, when her kids start going to college. The only thing that might save her is that the Socal house was purchased circa 1995 (from a guy who was six figures plus upside down on the property).
Real Estate always goes up…….except when it doesn’t.
Whenever I see the college rationale used, I wonder if those particular kids are even ready for college. It seems to be something the parents think they can throw money at, something you buy, not something the kids earn.
If the kids aren’t getting the right lessons from situations like these, an education has no more value than what they think they ‘bought’ it for…
The kids in question seem to be studying hard to major in “Playstation 2/Xbox”
And don’t even get me started on how unprepared they are going to be for “real life”. If their mom had her way, they would make car seats for high school kids. Gotta protect the special little angels, you see. Cause they are more special than anyone else’s kids.
This appeared to be SOP in La-La land. Just waiting to see how this plays in junior high school in Texas. I think there are a couple of kids in for a rude awakening.
But I digress………
This is a good thread started by NotInMontana - way to “think outside the box!” All these cliches about saving for the college education of those who only want to be champions of Playstation 2 or X Box! LOL. However I have met many young professionals in my engineering gigs from coast to coast and I’m happy to say I encounter some who are genuinely smarter than whips. For instance, my current leader on this project here in Maryland is about 17 years younger than me and a female. She is sharp! I think that there are smart people in every generation despite the state of the public schools.
There’s hope for America. Embers in a fireplace are either dying or ready to start the flames anew. I tend to think they are ready to start the flames anew.
There’s a right way and a wrong way to do this. My sister has “college fund” house— it’s a cabin up in the Sierras. They use it at least twice a month, having fun in summer and winter at various locations, and she doesn’t plan to sell it for another dozen years, at least— if other college fund bits pan out, she may well keep it.
So in opther words, it’s
a) a place she can afford
b) that she’s holding onto for most if not all of the life of the loan, and
c) that she’s only looking to get out roughly what she’s paid in.
No magic money or short term results, just— as she puts it— a fun way to use the savings while they make them. Nice if you can do it. (I can’t afford a primary residence!)
“Warren Spieker III, VP of University Village Thousand Oaks, said many people who move into University Village have lived in their homes for decades and have more realistic assumptions about price. That often leads to faster sales.”
“‘These are folks not holding out for top dollar or last year’s price,’ he said.”
________________________________________________________________
Older folks selling houses with huge profits built in, at whatever the market will bear, can only COMPlicate matters…
These are good numbers, approximating today’s true value: ownership of the house is approx 100% equity, 0% debt, so the price is not biased by debt payoff needs.
Great letter to the editor in the Santa Barbara News-Suppress yesterday (I just cut and pasted, you need to register on the SBNP’s website to read articles).
Hopefully this way of thinking will take over. Most of the articles in our daily rags (including the free ones competing with the SBNP) claim the government needs to do more, not less, to stop prices from falling and to bail out homedebtors (while the next page over will have an article lamenting the lack of affordable housing).
“Letters: Home buying and responsibility
Pat Marshall, Santa Maria
May 29, 2008 12:00 AM
In 1993, my wife of 38 years and I bought a house in Santa Maria where we now reside. I’ve commuted 140 miles each day, round-trip, to work in Santa Barbara since then to enable that purchase.
We did due diligence to figure out how much house we could afford and knew it couldn’t be in Santa Barbara. We read our mortgage documents and considered other expenses in owning a house, including the cost to commute.
We knew exactly what we were getting into.
We haven’t treated our equity like an ATM machine and have never missed a mortgage payment.
Where do we go to have our mortgage balance adjusted by the federal government?”
Great letter to the editor! Hopefully more and more prudent citizens will speak up. I live in a rented condo and am surrounded by a bunch of “homeowner” posers. I know because I’ve checked out their title records. 100% financing all the way! I have ZERO sympathy for all the FBs that are now getting the Joshua Tree deep and hard. The malinvestment of the past several years is sickening.
Absolutely! And what about people like me! We paid off our house in 15 years..two years ago.
Nobody in their right mind would ever suggest that the government write me a check for $100,000 on a house I own 100%.
But that’s EXACTLY what people like Barack H. Obama propose when they want to force banks to reduce the principal amount of exsitig loans.
I’m being punished for being responsible, because ultimately, I will be the one paying for these cram-downs. Where’s my cram-down!?
I hear ya! So far, the best solution I can come up with to cope is to reduce my overhead, save, and bide my time. One thing’s for sure, just hearing these campaign promises has made me seriously question the wisdom of ever buying anything other than consummables and portable property again in this country. This is especially the case in the psuedo-Soviet big cities.
That comparison fails all over the place. Typical eligible transactions involve inflated appraisals and toxic loans. Do you have both of those? Supplying an guarantee on a process for renegotiation the principal and terms between a lender and borrower is very different from what you describe. When you type EXACTLY in all caps like that you show a lot of indignation, but not a lot of accuracy.
Sorry, buy you’re the one who’s wrong. The seller got the full amount. The borrower got the benefit of the total amount of money he borrowed. Why should the BANK, unless they misrepresented or committed fraud, be left holding the bag because some lawmaker says so?
What would be so bad if Harry Howmuchamonth had to walk away from the house, instead of trying to keep him there with a cram-down. That’s sure to make house prices correct faster!
Unlike you, I want affordable housing! So I’m against forced cramdowns.
You want house prices to remain artificially inflated. You want money to be given to irresponsble investors. You don’t want affordable housing.
You’re either evil, crazy, or stupid!
“‘Honestly, there isn’t a huge amount of difference between a foreclosed home and a regular home than the prices,’ said said John Knight, a professor of finance and real estate at Stockton’s University of the Pacific Eberhardt School of Business.”
——————————————————–
Something about this strikes me as funny…
With a foreclosed house, the probability that someone has shat on the floor in recent history is markedly higher.
OT-but I love the use of the past tense of sh*t. I need to bring that into my vocabulary more.
Todays exercise students: Use *Shat* in a sentence .
“When I found out yesterday that my McMansion had dropped $200K in price I shat my pants.”
I would think, though, that will the sheer number of foreclosures on the market, the chances are still pretty slim that any shatting has taken place…
Besides, I’d take $50k+ to clean up some shat. How long could it take? (believe it or not, I’ve only cleaned up my daughter’s shat)
“Some of the biggest losers in the real estate slump are not purchasers of mansions they could not afford. They are buyers of second homes - or third ones, for that matter - who are sitting on a tax time bomb.”
How long before we see stories about rising incomes and that those rising incomes are an indication of an improving economy when in reality those rising incomes aren’t due to wages but merely reflect higher taxable income?
“‘I guess I’m worried about America’s future,’ he said. ‘So many Americans have no idea how to tighten their belts.’”
I guess they will either have to learn how to tighten their own belts, or wait for harsh economic realities to tighten their belts for them.
I’m not sure anybody under 30, actually owns a belt?
That’s exactly what I thought. Before we start belt-tightening we’ve got to pull up our pants. This thing has a long way to go…
And since it is Friday….
“Eff the Fed!”
funny! belt is only good if you want to keep your pants UP . . .
One’s legal and one’s not!
lol
PS: The stupid always pays the max for identical crimes committed the smart. imho
–
‘So many Americans have no idea how to tighten their belts.’
There is no need if one keeps on putting pounds (or dollars in debt). Easy does it until it doesn’t.
Jas
or hang yourself, though I prefer shoe strings!
lol
I guess they will either have to learn how to tighten their own belts, or wait for harsh economic realities to tighten their belts for them.
By the time they learn to tighten their belt their waste will be several sizes smaller. The belt may not have enough holes.
Going from restaurants to fast food is not the right downsizing. He should be buying bulk foods like beans, rice, canned tomatoes, olive oil. Cheaper and better nutrition.
“That’s when the ticking clock will start” ( Alan Mruvka )
O.K Alan, any time you’re ready.
Just let us know.
Not…, now?
O.K how about now?
We’re not making you nervous are we? Any time that’s good for you.
everything was fine before Pelosi decided she wanted to be a dictator.
Bad troll, I give it 1 out of 10. Go back to Fark and try your luck there.
“Distressed borrowers who manage to sell their houses are in many cases able to rent equivalent properties for about half the cost of their monthly mortgage payments. ‘I don’t know of anybody who has been foreclosed who is moving into an apartment,’ said Paul Jacobson, an associate at W.T. Hull Co.”
So much for the rents-shooting-up myth. Cheap McMansions for everyone!
If i’m a landlord, the last person I want to rent to, is somebody foreclosed upon…
Why even bother doing a TRW on them?
Perhaps the FBs Mr. Jacobson was referring to are just squatting in their foreclosed properties? Of course, if that were the case, then rents wouldn’t be *half* the cost of a mortgage payment, they would be zero.
Half of zero is still zero isn’t it, what makes you think they were paying the mortgage before being foreclosed?
If you are a former seller who is now becoming a landlord out of desperation, I think you’ll take what you can get.
“Mae Washington lives in one of the hot spot zip codes. ‘I received a letter in the mail from the lender stating that I had been pre-approved,’ she told CBS5 Investigates.”
“The loan was from World Savings, who held her mortgage at the time, but offered to refinance it with what sounded to her like a better deal: A pick a pay loan offering a lower monthly payment. ‘I was thinking that you know, it was something that was going to be good for me.’ But now? ‘I think it’s a terrible loan,’ she said.”
I’m curious: since when did people begin to believe that you could get something for nothing?
I would say around 2003
Nothing for something began last summer.
Began even before that, 1985, Dire Straits album, Money for Nothing:
I want my MTV
Now look at them yo-yo’s that’s the way you do it
You play the guitar on the MTV
That ain’t workin’ that’s the way you do it
Money for nothin’ and your chicks for free
Now that ain’t workin’ that’s the way you do it
Lemme tell ya them guys ain’t dumb
Maybe get a blister on your little finger
Maybe get a blister on your thumb
We gotta install microwave ovens
Custom kitchen deliveries
We gotta move these refrigerators
We gotta move these colour TV’s
(See the little faggot with the earring and the makeup
Yeah buddy that’s his own hair
That little faggot got his own jet airplane
That little faggot he’s a millionaire)
Gotta install microwave ovens
Custom kitchen deliveries
We gotta move these refrigerators
Gotta move these colour TV’s
I shoulda learned to play the guitar
I shoulda learned to play them drums
Look at that mama, she got it stickin’ in the camera
Man we could have some
And he’s up there, what’s that? Hawaiian noises?
Bangin’ on the bongoes like a chimpanzee
That ain’t workin’ that’s the way you do it
Get your money for nothin’ get your chicks for free
We gotta install microwave ovens
Custom kitchens deliveries
We gotta move these refrigerators
We gotta move these colour TV’s
Look a’ here
That ain’t workin’ that’s the way you do it
You play the guitar on your MTV
That ain’t workin’ that’s the way you do it
Money for nothin’ and your chicks for free
Money for nothin’ and chicks for free
Money for nothin’ and your chicks for free
Look at that, look at that
Money for nothin’ and your chicks for free
I want my, I want my, I want my MTV
Money for nothin’ and chicks for free
(Fade)
I want my, I want my, I want my MTV
Hey Gal,
I’ve noticed your “always handy with a song.” Can you guess which one that line is from?
That’s awesome to crank up on a Friday night cruisin’ the town…
Stainless steel refrigerators custom granite deliveries….
Ben,
After a little research on the Google, I found the following my Little Feat:
Dixie Chicken
– L. George, F. Martin
I’ve seen the bright lights of Memphis
And the Commodore Hotel
Where underneath a street lamp I met a Southern belle
She took me to the river, where she cast her spell
And in that Southern moonlight, she sang a song so well
If you’ll be my dixie chicken, I’ll be your Tenessee lamb
And we can walk together down in dixieland
Down in dixieland
We made all the hot spots. My money flowed like wine
Then that low down Southern whiskey began to fog my mind
And I don’t remember church bells or the money I put down
On the white picket fence and boardwalk or the house at the end of town
But boy do I remember the strain of her refrain
The nights we spent together, and the way she called my name
If you’ll be my dixie chicken, I’ll be your Tenessee lamb
And we can walk together down in dixieland
Down in dixieland
Well it’s been a year since she ran away
Yes that guitar player sure could play
She always liked to sing along
He always handy with a song
Then one night in the lobby of the Commodore Hotel
I chanced to meet a bartender who said he knew her well
And as he handed me a drink he began to hum a song
And all the boys there, at the bar, began to sing along
If you’ll be my dixie chicken, I’ll be your Tenessee lamb
And we can walk together down in dixieland
Down in dixieland.
Saw them in concert in the late 70’s.
You nailed it. Damn you’re good! I saw em in the 80’s. Missed Lowell George though.
“Then they discovered that they could expect a painful tax on the rental house. If the rental house sells for $160,000, which is about what they paid for it in 2003, they may still owe tax on $120,000 - the difference between the sale price and the $280,000 they borrowed against it over the years. That could mean a tax bill of more than $30,000.”
How did they “just discover” this? They went into business, borrowing to get the title to a $500,000+ asset. You’d think that someone who is starting a business would talk to a tax guy first!
My only hope is that our government has the balls to put people like this in jail if they don’t pay their taxes (as they would put me in jail if I decided to underpay them by $30,000 this year).
reuven,
The “mistake” ( as “I” see it ) is that they made the mistake of discussing it w/ the media. As much as it pains me to admit it… if it were me, I would have moved back to the non-dream house post haste and showed it as p-r-i-m-a-r-y residence!
Look for that to play out time and again as we welcome these folks back to the hood!
also, was all their bookkeeping so far on the up-and-up? Did they report their rental income to the IRS and the state? Did they meet all the legal requirements a landlord needs to meet?
If not, then it would be disgusting for the IRS NOT to pursue criminal charges against them.
But I’m sure their local Rep. will give them a hug and propose legislation to excuse these folks from paying taxes on this “surprise income!”
(Back during the dotcom days, Anna Eshoo wanted to get tax relief for failed dot-commers! My blood’s STILL boiling over that. Fortunately, it didn’t succeed.)
Likely as not it was rented to a family member and the rent simply went directly toward the mortgage? Probably wasn’t even a signed lease. A LOT of people do this.
What are they fretting about? There’s probably no paper trail that says they ever left and the liklihood the IRS will put together their debt forgiveness on their soon to be short sale and their “primary” is almost nil.
See, that’s what bugged me all along. This was an “honor system”.
About these “investors”?
Don’t you have to depreciate a rental property and recapture that when you sell? As well as showing rental income. And the property taxes are ususally higher or on a schedule for rental/commercial properties.
Real estate is an illiquid “investment”!
A
the difference between the sale price and the $280,000 they borrowed against it over the years. That could mean a tax bill of more than $30,000.”
Not to mention that THEY GET TO KEEP $120,000 and all they have to do is pay $30K tax….and a NY Times reporter dares to paint them in a sympathetic light?
I’m going to go vomit if I hear another story like this.
California Investors rush to lose Money in Vietnam
http://www.mercurynews.com/business/ci_9424848?nclick_check=1
Link didn’t work…
Wonder what happens to my SIL.
2003 bought a house for $140K. 3 cash-out refi later, owes $240K. So, goes and buys a new house for $200K and lets the old one go back.
To buy the new house, she had to submit lease documents showing the old was rented out (even though that was pure fraud).
So, is the loss on the old house her “primary residence” like when she bought it, or a rental property like when it went into foreclosure. How would the IRS know???
I may have to make an anonymous tip.
As for the people in the story. They got $100K, and are upset they may actually have to pay tax on that?
Give me $100K for doing nothing, and I’ll GLADLY pay the income tax on it… thank you very much!
Fun! Sen. Harry Reid on Greenspan et al in Huffingtonpost.com:
“… Asked by a Republican in the crowd whether he would be willing to personally reach out to President Bush to bridge their partisan divide, Reid responded by calling the current Commander in Chief the worst “we have ever had in the history of this country.”
Reid also lobbed some harsh rhetoric at former Fed Chairman Alan Greenspan, whom he called a “fraud,” the “J. Edgar Hoover of the financial world,” and, as he has in the past, “the biggest political hack in Washington.”
Awesome.
I’m not a big Harry Reid fan, but good to see he’s telling it with the bark off here.
160 sales in Salinas in the last month? That’s nice, but in the last WEEK there have been 80 new NODs and 30 new foreclosures. There are over 500 active foreclosures and over 1,000 NODs out. That’s over ten months of distressed properties alone.
I always hate seeing the numbers reported for Salinas, not sales but actual so called prices (sold). The problem here in Salinas is that most of the property was valued at 3X what it should have been and a lot of the property selling is still way, way too high for the neighborhood. A lot of these neighborhoods are starting to look ghetto as more property is turned into 2 or more family rentals in order to hold on to the property because the owner thinks it will go back up. There are three nearby properties that are slowly being trashed and the neighborhood is starting to look like a used car parking lot.
One fellow where my wife works thinks property will only go up (this is why property is selling here) and flew down to Pasadena to help his sister find a house because now is the time to buy. Another just bought in Bakersfield because $300K for a house was cheap and is moving as soon as school gets out. Everyone is making their judgement to buy predicated on house prices at their ‘PEAK’ pricing which is a very interesting phenomena.
“In Indio, it ranged from 12 months worth of homes in 92203 that are priced between $750,000 to $999,999 to more than five years’ worth of homes priced between $1 million and $1.49 million.”
I can’t believe anyone would pay over $1m for the entire town of Indio, let alone for a single property there.