Renting The Home They Had Bought In California
The Times Press Recorder reports from California. “For Don and Rebecca Spendlove, just keeping a roof over their heads has taxed their mental, emotional and physical as well as financial capabilities. The Nipomo couple have found themselves in the same situation as millions of other Americans: Their homes are worth less than they owe, their mortgage terms are crushing their finances and the specter of foreclosure is looming.”
“The Spendloves bought their modest Nipomo home in 1993 for $153,000, and for almost a decade, everything was fine. Then six years ago, their lives fell into a long downward spiral. Don was at work one night in early June 2001 when a fire broke out in the 26-acre complex housing California Giant Strawberries.”
“‘We knew he’d be out of work for a time, so we refinanced and put some money away,’ Rebecca said. ‘When that was gone, we refinanced again. We had no idea (his disability) would be a permanent situation.’”
“When the refinance terms were set, the Spendloves found their payments would jump from $1,400 a month to $2,600 a month. ‘As we were doing the paperwork, I told them the payments were too much,’ she said. ‘They said, ‘No, you’ve got the income, and you’ll be paying off your credit cards. It worked out fine on paper.’”
“The Spendloves had also asked for $4,000 from the refinancing, Rebecca said, but the company convinced them to take $35,000. As it turned out, ‘We used that money to pay the mortgage,’ she said. ‘And our credit cards all went up again,’ Don added.”
“In a bid to make ends meet, the Spendloves emptied two bedrooms and rented them out. ‘We have no life, we have no privacy,’ Rebecca said. Rebecca also started selling Avon. She sold all her jewelry. They sold everything they could on eBay and in yard sales.”
“‘We bought this house for $153,000,’ she said. ‘Now we owe $416,000. Granted, we refinanced a couple of times, but we had equity, the market was good.’”
“‘If we could sell the house, they’d get their money,’ Don said, shaking his head. ‘We’ll have to walk away. I don’t know why they can’t understand this.’”
“Just across their street, a home has sat vacant for more than a year, the yard untended, the windows coated with dust. ‘Our neighbor … just walked away,’ said Don. ‘He said, ‘I’m not paying.’ He just moved away.’”
The Contra Costa Times. “Under water. Upside down. Negative equity. No matter the terminology to describe the erosion of home equity in the East Bay, the conclusion is inescapable: A local housing sector that once was remarkable for how high it could soar has plunged into the depths.”
“About two out of three East Bay homes that were bought since 2005 are now worth less than the mortgages on the houses, according to a Zillow.com study.”
“One Brentwood resident who bought a home in the Garin Ranch section of Brentwood said he and his wife have ridden a roller coaster of home values. Robert, who asked that his last name not be used, said they have been hammered both by falling home values and rising mortgage payments.”
“‘The first year and a half, the house’s value went way up,’ Robert said.”
“In late 2004, Robert and his wife paid $524,500 for the house. Now it’s up for sale for $369,000. A lender for the house, Citibank, has begun foreclosure proceedings on the financially distressed property, county records show.”
“This definitely has a ways to go,’ said Christopher Thornberg, an economist with Beacon Economics. ‘There is no sense this is anywhere close to being over. This thing is not over by any stretch of the imagination.’”
“‘You have the walk-away issue, where people see the house is under water and they give up,’ Thornberg said. ‘People will realize over time that it is ludicrous. They will ask themselves why keep making a mortgage payment.’”
“Robert, the Brentwood resident, said he and his wife are devastated about the prospect of losing their home through the looming foreclosure. He recalls how much time they spent fine-tuning amenities for the residence.”
“‘We picked our own tile and other options,’ Robert said. ‘We loved that house. It killed us to walk away.’”
The Mercury News. “Gregg Winchester and his wife, Cynthia, made an offer on the 2,430-square-foot, four-bedroom, three-bath house the same day they saw it.
“‘We felt now was the time to purchase something for our family now that prices had come down,’ he said. The couple bought the bank-owned house for $355,000.”
“According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index…in the East Bay, 32.4 percent of residents could buy a home in the first part of 2008 as opposed to only 17.4 percent in late 2007. In San Joaquin County, it went from 16.9 percent of people to 35.5 percent, while those on the Peninsula who could afford a home rose from 7.9 percent to 12.7 percent. Solano County’s affordability rose from 20.4 percent to 35.1 percent.”
“Sean O’Toole, CEO of ForeclosureRadar in Discovery Bay, said that 22,324 homes reverted back to the bank in California in April. Of that, 954 were in Contra Costa County.”
“O’Toole, who also invests in real estate, said that the return on investment for buying distressed properties and renting them out is coming close to creating a positive cash flow. ‘We still have some people who are speculating that this is the bottom and they’ll be rich in two years, but those are the same folks who got into trouble the last time.’”
“Perhaps it’s the price drops that are tempting more buyers. Homes that previously were selling for $800,000 can now be bought around $400,000, and although inflated prices were arguably due to a housing bubble, many are still attracted to what they view as a bargain.”
“Bryce Ellsworth, a broker in Brentwood, said that homes that are priced well, especially foreclosures, receive multiple offers. And the majority buying are investors looking for positive cash flow, including himself. ‘Properties are being sold significantly below values. I think I’ll take my chances,’ he said.”
“As the housing slowdown and credit crunch metastasized through the economy, new vehicle sales in the state fell almost 19 percent in 2008’s first quarter compared to 2007’s first quarter, the California Motor Dealers Association said.”
“‘My family has owned this dealership for 71 years,’ said Bill Brunelli, director of operations at Central Chevrolet in Fremont. ‘I’ve been in the business all my life; I remember the oil embargo of the 1970s, and I’ve never seen anything like this. We used to sell 200 cars a month five years ago; now we may sell 20 or 30.’”
“‘Up until last year or so, money was much more free-flowing,’ Brunelli said. ‘Interest rates were very low, and people who typically would not have been approved for loans got approved. Just like the housing industry. If they couldn’t get a car loan they would refinance their house and buy a car.’”
“But now, Brunelli said, ‘lenders have tightened their purse strings and said, ‘No. We would have done it in those days, but that got us into trouble, so we’re not lending to that level any more.’”
From ABC 7.com. “It’s a sign of the times — some very hard times. Bankruptcy filings are up, and in Orange County they are skyrocketing. One development Eyewitness News visited in Orange County is supposed to be a sprawling collection of new houses and townhomes.”
“But the only thing sprawling these days across the empty fields are the weeds. The real estate market is withering.”
“‘You can probably drive around most of Southern California and see real estate development projects that have, frankly, just stopped,’ said bankruptcy attorney Jim Bastian.”
“Bankruptcy filings in Southern California are skyrocketing. The latest year-to-year numbers for April show bankruptcies in L.A. County are up 92 percent. In Riverside County, they’re even worse at 125 percent. In Orange County, statistics show bankruptcies are up a staggering 153 percent.”
“‘It’s going to get worse before it gets better,’ said Bastian. ‘Most of the people that I’ve talked to, and if you talk to experts in the industry, they’ll tell you it might be 2010 or 2011 before we see prices get back to where they were even three or four years ago.’”
“‘People who should not have been in this situation, where they’re buying a $400,000 or $500,000 house and having a mortgage payment of $4,000 or $5,000 per month, when they’re only making $25,000 or $35,000 a year,’ said Bastian.”
“That ultimately leads to bankruptcy court. As visits to court add up, developers work on their subtraction. Earth movers are moving nothing, new streets have no cars and housing lots have lots of nothing. What was once a real estate boom is now an unnerving silence.”
The Capitol Weekly. “The mortgage crisis hasn’t just led to a rising tide of high-profile foreclosures. It has also resulted in a near-flood of mortgage industry-related bills making their way through the Legislature.”
“Beating the deadline for bills to emerge from their house of origin, a trio of Senate bills supported by the California Mortgage Bankers Association had made it out of the Senate. Several other bills the group opposed either died or were amended.”
“Dustin Hobbs, communications director for the CMBA, said…that the subprime crisis has been somewhat overblown in the media, given that 78 percent of Californians who got subprime loans in 2005 and 2006 are still in their homes.”
“‘We don’t want to go back to the days when you had to put 20 percent down,’ Hobbs said.”
The LA Times. “Mortgage delinquencies and foreclosures reached record levels in the first three months of this year, driven higher by increasing housing woes in California and Florida, the Mortgage Bankers Assn. reported today.”
“‘The problems in California and Florida are extraordinary and they are the main drivers of the national trend,’ said Jay Brinkmann, the association’s VP for research and economics.”
“California accounts for 13% of the country’s mortgages outstanding but is responsible for 21% of the homes that entered the foreclosure process in the latest period. The number of foreclosures started was the highest since 1979, as were the percentage of homes in foreclosure and the percentage in delinquency, the association said.”
“Two years ago, Patricia Prado worried that she would never be able to buy a house. Property values in this Central Coast farm town had been rising sharply, and Prado and her husband were burdened by $18,000 in debt from their credit cards and the loan on their Jeep Grand Cherokee.”
“She got a phone call from a mortgage broker who said she had heard her tale and had a solution: a mortgage loan that required no money down. ‘She made everything sound like it was going to be wonderful,’ said Prado.”
“A few weeks later, Prado bought a $412,000 house with a so-called 80/20 mortgage. Those mortgages are actually a pair of loans — one for 80% of the purchase price and another for the remaining 20%.”
“‘In some places, where house prices were running up 20% year over year, you only needed one year of that run-up for the package to become well-collateralized,’ said Stuart Gabriel, a UCLA real estate finance expert. ‘All of that was predicated entirely on the presumption, the expectation, of a continued significant house price run-up.’”
“Property values, of course, began falling sharply last year. And that left people such as Prado, who bought near the top of the market, owing more in loans than their homes were worth. Her home is set to be sold in a foreclosure auction next week.”
“Prado acknowledged that she stated her monthly income as $7,500 on the loan application — nearly double what she was actually earning in her job. Still, she was confident the payments would not be a problem. At the time, her husband was earning $20 an hour as a carpenter as builders turned the area’s broccoli fields into housing developments.”
“By year’s end, home values had flattened out, and then began dropping. That meant Prado would not be able draw on rising equity to refinance her mortgage, as so many planned to do during the real estate boom.”
“As home values plunged, new-home building slowed and her husband lost his job in 2007. Then this year, their monthly payment shot up by $450 to $2,650 as a higher interest rate kicked in, Prado said.”
“Financially, Prado says she hasn’t really lost anything, since she put no money down to get her mortgage. She’s looking for a place to rent. Houses like hers are now renting for between $1,300 to $1,600 a month, Prado said.”
“Her biggest challenge, she said, was trying to keep her children, a 10-year-old boy and 7-year-old girl, from figuring out what happened. To soften the blow to the children, Prado said she told them that they were only renting the home they had bought. In many ways, that’s true.”
How can these reporters find people with such apt surnames?
“Financially, Prado says she hasn’t really lost anything, since she put no money down to get her mortgage. She’s looking for a place to rent. Houses like hers are now renting for between $1,300 to $1,600 a month, Prado said.”
Here’s an important development, someone who blindly contributed to the insane housing runup admitting that they really didn’t lose anything, if anything they may gain up to a year of free living waiting for the foreclosure. This is the type of “families” Senator Dodd is trying to save, the very same ones who really contributed to the whole mess. Compare that to the families who lived within their means and kept renting throughout the ordeal, they are really the ones who deserve to be compensated.
Wait 2 years and pay half that price.
And if he listens to idiots like this, he’ll make sure it continues….
“‘We don’t want to go back to the days when you had to put 20 percent down,’ Hobbs said.”
I find it hilarious that we haven’t even removed ourselves from the vortex of the credit meltdown before the cry for the return of easy money is raised in earnest.
“Words are the money of fools.”
Thomas Hobbes
Hobbes: “What do you think is the secret to happiness? Is it money, power or fame?”
Calvin : “I’d choose money. If you have enough money, you can buy fame and power. That way you’r have it all and be really happy. Happiness is being famous for your financial ability to indulge in every kind of excess.”
Hobbes: “I suppose thats *one* way to define it.”
Calvin: “The part I think I’d like best is crushing people who get in my way.”
Calvin & Hobbes
LOL. My personal fave and appropriate here to boot:
http://www.s-anand.net/calvinandhobbes.html#19930221
sleepless,
I loved Calvin & Hobbes. I really miss the comic strip.
Yo tambien. I’ll read a page of the books I have and tell myself, “okay only one more page.” 30 pages later the obsession will continue and I’ll still be telling myself the same thing….
I lived in Santa Maria during that time and prices were going down. She didn’t do her homework, or the realtor told her what she wanted to hear.
Proposal for name change:
Old name: Spendlove
New name: Spentloans
“‘We bought this house for $153,000,’ she said. ‘Now we owe $416,000. Granted, we refinanced a couple of times, but we had equity, the market was good.’”
“In a bid to make ends meet, the Spendloves emptied two bedrooms and rented them out. ‘We have no life, we have no privacy,’ Rebecca said. Rebecca also started selling Avon. She sold all her jewelry. They sold everything they could on eBay and in yard sales.”
Spendlove
Repayhate
heehee : )
They should have emptied those rooms and rented them when he lost his job instead of borrowing money. These people got 250k in loans, realized they couldn’t pay it back, and now they’re complaining? Disgusting.
Chill, puppy, chill.
Would you care to swap places with them?
Have a martini or three.
Their homes were paying their wages, with excellent benefits…
Rinse & repeat about 10 million times and you get a clue to just what a catastrafvck we are facing~
You wouldn’t know it from watching CNBC, they keep talking about how the “worst is behind us”, financials are poised for big gains, etc. And then the market goes up and, if you didn’t read websites like this or Peter Schiff’s, you’d think everything is okay.
“catastrafvck”
good word! ; )
“Rebecca also started selling Avon. She sold all her jewelry. They sold everything they could on eBay and in yard sales.”
That was stuff that should not have been bought in the first place. People think buying stuff will make them happy, but often, it just makes people more miserable.
“‘We bought this house for $153,000,’ she said. ‘Now we owe $416,000. Granted, we refinanced a couple of times, but we had equity, the market was good.’”
Yeah, man, I mean, only a couple refinancings. No big deal. Most people did five or six, we only did three!
“‘If we could sell the house, they’d get their money,’ Don said, shaking his head. ‘We’ll have to walk away. I don’t know why they can’t understand this.’”
They do understand it, Don. They understood you would lose the house the day you signed the papers.
This is the equivalent of what… 70K a year income since they took a powder in 01.
That is the additional debt divided by the number of years. Also multiplied by two since they paid zero taxes on this money.
Plus what ever disability, social security and the wifes income.
Don’t know why they guy couldn’t find another job that would allow him to work either.
And papers throw out these “victims” to us every day. Oye vey.
James,
Oy vey indeed.
Trouble is - jobs - one can do this - few can survive on the wage(s).
Sigh,
Leigh
“‘And our credit cards all went up again,’ Don added.”
Man, I hate it when that happens! Those darn credit cards, spontaneously going up and spending themselves on stuff! I mean, its not as if the Spendlove’s spending habits had anything to do with their credit cards going up or anything.
I couldn’t find the story at that first link. Looked all over..
“In a bid to make ends meet, the Spendloves emptied two bedrooms and rented them out.”
Sounds like they have unwittingly started a bed-and-breakfast business.
Perhaps a few bankers, mortgage brokers, real estate agents might feel a “little pain” sometime in the future? We will see!
I need a little assistance. I have a line on an amazing home in Greer Ranch estates in Murrieta, CA.
http://www.greerranch.org
The home is awesome and is over 3500 sq feet with a 12K lot. It has everything that my wife or I could ask for, but I am not sure about the area.
A friend of mine who works at the bank (it’s lender owned (local bank)) says that he can get the bank to sale it to me for around 250K (100K below there current asking price).
Does anyone live in this area that could provide me with some information and/or experiences?
Thanks!
Inland, I’m a little confused as to why you’d rush into buying a house in an area you’re not that familiar with. I understand the desire to buy a home, it just seems like you should spend some time there before you buy. I have friends who moved from LA to Boulder, CO last year and, against my warnings, bought a place. A few months of living in Boulder convinced them it wasn’t urban enough. Duh. They then moved to Chicago, where they rented, but still held on to the CO property as an “income” property. I’m not saying you’re as dim as my friends, but I think there’s a huge gap between the ideal of living some place and actually living there.
There’s a lot of wisdom in that post, Lionel.
Better make sure the appliances are still there, as well as anything that’s copper. Oh, just so you’re prepared, the last occupants may have expressed their fury by over-indulging in Exlax chocolate and then re-texturing the walls via high-pressure diarrhea……..so have your friend take the first look.
You might actually spend more money fixing up the place, offsetting the value of your good deal.
3500sq/ft in that soon-to-be-exurb-ghost-town?
Didn’t I read stories where people were spending a $1000 a month to keep places like that cool in the summer months?
I heard Big SUV are getting cheap too…
Seriously, Murietta/Temecula is a mess. Fraud and mounting foreclosures are pulling down the market on thousands of tract houses which were built rapidly in the past 5 years. If you’re not from the local area, keep in mind that 105+ degrees in the summer isn’t uncommon, nor are high electric bills. A commute to San Diego or LA wouldn’t be fun, especially with gas prices as high as they are now. That spacious house may cost more than you’d think. Proceed with caution.
“Didn’t I read stories where people were spending a $1000 a month to keep places like that cool in the summer months?”
I know people that don’t live as far inland and have smaller places that spend around $700 for electricity during the peak summer months so I wouldn’t think it would be a stretch to pay as much as $1000/month in July and August for that place.
Isn’t this area going to be abandoned by 2015 when we may well be rationing gasoline?
Murrietta is a disaster. Better make sure your neigbors aren’t squatters, teenage partiers or gang bangers. Other than that the house sounds great.
This might be a good deal if you were a polygamist, but otherwise, why Murrieta?
Peter Lynch had it about right.
“Buy what you know.”
true for real estate as well as securities.
But the re bottom will flatline for months, IMO.
Fortunes more likely to recover with proven stocks.
no, I ain’t making a buy recommendation on either.
for your own sanity, please don’t buy re where you are a neophyte
thereabouts.
Before I move to a neighborhood, I like to hang around at the local cafe/whatever to see what the vibe is like. If you are friendly and the people are friendly, you might be able to strike up a conversation and ask people what they like and don’t like about the area. If people aren’t friendly, there might be a reason for that.
Dude…you should wait a year befor e you buy anything…
There is a parole re-entrant house on my street and the guys that own it bought a place in Murrieta and set up another parole house there. Be very cautious about that area. As others have said, it get real hot there and it is very distant from everything else in SoCal. With every boom cycle the developers build further inland and hordes of GFs swarm to them, but when the tide turns those developments empty out and nothing sells. Where was that empty development that a studio bought and burned down for Lethal Weapon 3? Rancho Royale is what they called it in the movie.
To soften the blow to the children, Prado said she told them that they were only renting the home they had bought. In many ways, that’s true.”
The media are finally getting it. You can rent a house from a landlord or rent money from a lender. Compare rents and see which option makes sense. $400k house that rents for $1,300 a month? I don’t even need a calculator for that one.
Kudos to Peter Y. Hong at the LA Times for this one.
FWIW, Dan Gillmor, formerly of the San Jose Mercury News, was the first MSM reporter I recall who raised Cain about the bubble. It’s nice, finally, to see many more reporters getting it now, too.
Dear Prado Children:
You better sit down, kids. I’ve got some bad news to lay on you.
Your parents are freaking greedy morons, and chances are you all come from a poluted gene pool. My condolences.
Judge Smales
“You’ll get nothing and like it”
It isn’t over until the fat lady sinks…
“This definitely has a ways to go,’ said Christopher Thornberg, an economist with Beacon Economics. ‘There is no sense this is anywhere close to being over. This thing is not over by any stretch of the imagination.’”
Some smart investors say we have 2 to 3 years to go before market bottoms out.
Yep, 2010 minimum….2011 may not be worse, but won’t be better than 2010 if you have to sell a house. When you see sales picking up nicely (and sustaining/growing over time) in the most convenient locations with the best schools, that is one indicator of a bottom.
The other is when the auction prices / foreclosure / short sale prices are 80x-100x times monthly rent in suburban tract areas.
Another is when the online (today; 20 years ago it was the 2 point font RTC listings in the paper
) foreclosure listings have been shrinking in number for a year.
Of course, this time may well be a lot different than the 20th century housing busts due to the energy situation.
wow… long babble ahead.
Not sure about the timing… the cumlative damage of this bubble is incredible. Stuff has happened and we have not felt the full effect yet.
There is a second wave of resets that peak in 2010-2011 time frame that looks muderous.
The fed has compromised their balance sheet already.
The pension funds and other investments will be damaged…. taxes to bail out our seniors.
Many banks are zombies and have not booked the losses on the REO yet. Other bank failures are on the horizon.
Lots of option arms on the books; doubly disasterous. The banks book them as fully amoritizing loans. The owners are realizing they are on borrowed time till the resets. Many are hopelessly under water. Will still be trickling on to the market in -011.
Remember there is a tremendous delay between the housing becoming REO and it hitting the market. The banks are overwhelmed already and things are gaining steam. Should be fundamentally different once the government gets hold of the banks assets. The banks still have money to try to sell things and hold things; but for how long.
Finally the Mexican’s are leaving. That may indicate that population will possibly drop.
Also we have to figure on an Obama presidency. The economy is starting to recover slightly with the weak dollar. Its helping us with exports. Obama may start to tinker with trade agreements. The net effect would be agonizing to the economy.
There also is a fear of wage deflation in the US and shared by just about everyone. Basically wages going up equals inflation. Wages going down equals deflation. We are seeing some minor deflationary pressure on wages. In a lot of ways that is a non issue. Prices go down and wages go down. Prices go up and wages go up. There is a lag either way but many of the government meterics will show this as a huge negative.
I am not sure if this is totally a zero sum game on the inflation/deflation debate. Anyhow, the president/congress might take action that curtails real economic activity (bad) as people/companies have to adjust to the new situation.
It’s not true that prices go down when wages go down. Since we are now participating in the global economy, we have to compete with the rest of the world for the stuff we consume. Our lifestyles will probably be reduced. After reading the CNN article about the old man being plowed over by a Honda and then nobody helping him (just looking at him and walking away), I am inclined to believe that this society may deserve a little punishment. What ever happened to knowing what’s right and what’s wrong?
I certainly agree. Not sure if our lifestyles are being reduced. Some of our activities or lack thereof seem unhealthy.
That is horrible though. Why did people walk away?
I’ve been at situations at that enough times. I try to help. I generally fault myself on going into shock and not reacting fast enough.
I dunno… make we are becoming an evil people.
I don’t know why people walked away. A few people called the cops, so that’s comforting, but most people (not knowing whether or not help was coming), just drove around the guy or walked on by (after clearly looking right at him). I would have stayed to comfort him and made sure that the cops had been called. Also would have stood in the street to ward off any more oncoming cars. I’ve been meaning to take one of those Red Cross emergency first aid classes. Maybe if I quit my job …
That is terrible. I’m glad I don’t live there.
An old man collapsed yesterday in the Mission Valley Best Buy parking lot. Everyone stopped their cars and ran over to help him.
“Finally the Mexican’s are leaving. That may indicate that population will possibly drop.”
Not necessarily:
http://tinyurl.com/6e3q8b
“In spite of the job losses, it did not appear that foreign-born Latino workers were pulling up stakes, Kochhar said.”
“We did not find signs that they are leaving the U.S. labor market,” he said, adding that the immigrants represented in the report data were either becoming re-employed or actively seeking work.
I could also see a crowd gathered around the guy in the video. If I was driving, at that point, I might think he was being helped and keep going. Maybe.
Reports on the street here in LA are lots of Mexicans are gone.
Sure seems that way. Maybe they are relocating?
you really want to know why folks did not stop to help the old man simple in this day and age lets say you did and has a result your good will also ended up with you in court being sued, Think it doesn’t happen, it happens all the time just look around. Plus if you take any kind of redcross course they will tell you that to administer any kind of help to a person you are required to ask said person if they want your aid if you do not again you risk being sued.
C’mon Thorny, don’t sugar coat it. Give it to us straight.
Poor baby! He picked his own tiles and all.
Whatever next?
Aaw, come here sweet cuddlikins, you need a hug, don’t you?
And this is why the liberals will win this year - being a victim is in baby!
Funny, most of the ardent real estate bulls I know/knew are quite conservative.
really? Then how do they suggest cases like this be handled? Their answer will reveal if they’re truly conservative.
Their answer will reveal if they’re truly conservative.
C’mon ex-nnv, you’ve swallowed the bait hook, line and sinker. Neither party has a monopoly on smart spending. Or more appropriately, stupid spending.
Picking up politics. My understanding is that 95% of the underwater flippers (about to turn in the keys) are Democrats.
Now, now. It was the Republicans who got us into this mess, remember? I’m pretty sure pos just completely fabricated that 95% number. Methinks Repubs and Dems alike were fooled by the housing bubble.
Fool me once, shame on you, fool me twice, shame on me.
Pointing at either party misses the whole picture. You might some day understand that every politician in Washington is against us all. Throwing rocks at one party or the other plays right into their hands.
Abolish all political parties.
Testify! Most of the Democrats I know (or vote for) are far more fiscally conservative than the Republicans I know. Republicans love their CNBC get-rich-quick schemes, gov’t contracts, backroom pay-off-the-legislator deals and borrowing to the hilt.
And let’s not get me started on how the GOP has rebranded “conservative” on natural resource issues to something 180-degrees away from actual conservation.
I switched parties in ‘92 and haven’t looked back.
The “conservative” brand name has been tarnished by a bunch of greedy boobs who chant “no new taxes” while outspending the Democrats. Under GWB, they’ve also favored giving the Executive Branch way too much power, in direct violation of Jeffersonian principles.
Jefferson was the original conservative. Accept no substitutes!
Bring back the Balanced Budget Amendment!
/rant off
I was talking about conservatives, not Republicans. The two aren’t even close to going hand-in-hand these days. Most of todays Republicans are commie liberals.
How dare you! We commie liberals do a much better job of spending money than Republicans. Let’s see–can I think of something better than an unnecessary war? Hmmm. Hmmm.
Most of todays Republicans are commie liberals.
No, they are despots and religious tyrants.
“Religious tyrants,” aka people who don’t think having the high school choir sing carols in December is the first step on a slippery slope that ends with burning heathens at the stake.
Lots of chill on both sides could go a long way.
Didn’t Jefferson die broke?
True, he was a horrific money manager.
Who cares?
I’m a liberal (social liberal, fiscally tighter than a virgin @ss)
Now, it’s all about the JT, the thrusting, and the opera glasses, and I’m ready for all of the above.
Don’t keep those opera glasses to yourself. The rest of us wanna peek too.
Well, I’m happy to share them but you must pay rent.
Shocker, huh?
Same for me…favoring liberal social policy and conservative fiscal policy is consistent with being a libertarian (with a lower case “L”).
The Libertarian “Party” has been hijacked by faux conservatives who favor too much government intervention in social issues, i.e. banning gay marriage (why the state should have any interest in marriage at all is inexplicable), abortion, or promoting religion, etc.
That was my only fault with Ron Paul as a candidate. I did vote for him in the primary though.
Thank you, for making the obvious lower-case “l” libertarian argument.
Liberty ain’t worth sh*t unless you can do whatever the hell you want with other adults.
These poor victims! We really need some sort of relief package for them…
How about a mirror, one rubber glove, and some tweezers…
We’ll let them pull the thorns between JT sessions.
‘We still have some people who are speculating that this is the bottom and they’ll be rich in two years, but those are the same folks who got into trouble the last time.’”
Yep! And this is what lures them in…
‘Properties are being sold significantly below values. I think I’ll take my chances,’ he said.”….
Significantly below values? really? The artificially inflated prices of yesteryear are actual value? Okee-dokee, but I can tell you how this gamble ends right now. And yet another fool completely ignores fundamentals and market dynamics.
Has anyone seen prior bubble charts and how long it takes them to go back to their prior highs?
How long since the dot.com collapse?
That has been 8 years and we are barely halfway there.
Yet people still believe that housing will go back to 2005 prices?
Not gonna happen in our lifetime. If you want proof, just look at historical charts.
And of course, since ‘investors’ are still buying 50% or so of those ‘underpriced’ properties, the same problem is STILL occurring. Too many investors, not enough actual homebuyers.
And what will happen when these ‘investors’ realize that houses will NOT go back up to those lofty 2005 values again?
“And what will happen when these ‘investors’ realize that houses will NOT go back up to those lofty 2005 values again?”
The next leg down is the answer.
“‘It’s going to get worse before it gets better,’ said Bastian. ‘Most of the people that I’ve talked to, and if you talk to experts in the industry, they’ll tell you it might be 2010 or 2011 before we see prices get back to where they were even three or four years ago.’”
For those that think prices could sink to mid-90’s levels in the early part of the next decade, having 2004 prices in 2010-2011 seems quite optimistic. Since prices have already dropped below 2004 levels in some places and are continuing to fall sharply, it might take a highly unlikely sharp turnaround to return to 2004 price levels by 2011.
Foreclosure…walk away again. If those investors are running a break-even or less cash flow, they will walk by 2010-11.
I agree no bottom any time soon. Your forgetting the baby boomers retiring en-masse and trying to sell homes. Next you will have a lot of parents and grown children moving in together. Right now we have a density of 2.6 people if we went to 3.6 that would be 35 million more homes. I’m not saying we would go that high but consolidation of extended families will add a huge number of housing units on to the market my best guess is between 2 million and 10 million over the next 10 years. Not to mention rising death rates in the boomer population. In addition builders build they will build till they are bankrupt.
I think we are still at least 1 if not two years away from 20% down being common and eventually interest rates will go back to normal i.e around 8%.
This is the end of a thirty year boom in housing the last five years was just the blip right before the peak.
I’m 40 years old and my best guess is housing won’t return in my lifetime.
Personally I don’t plan on buying until I can pay cash and losing 50% of the home value is something I can handle.
I’d have to disagree, anyone buying now has to have put down a decent down payment, and is paying anywhere from 30-50% off peak prices, and if they’re breaking even each month then they’re at least paying off their principal, I doubt they’d walk away.
http://www.huffingtonpost.com/2008/06/05/ted-koppel-closeout-despe_n_105548.html
Anybody buying now is a fool…
Some areas have gone down 30-50%; most areas have gone down less. For those that have already dropped 50%, they’re mostly in the middle of nowhere and will probably bottom out at a 70% discount due to energy costs (heating, cooling, and driving).
..they will walk by 2010-11.
These people and others won’t just walk away from underwater houses. They’ll run. It will be kinda like the stampede start of the Boston Marathon.
BANG!!!…
“out of MY way …or I’ll Crush you”
“The Spendloves had also asked for $4,000 from the refinancing, Rebecca said, but the company convinced them to take $35,000. As it turned out, ‘We used that money to pay the mortgage,’.
If your borrowing money from your house to pay your house mortgage you’re violating the laws of time & space and a black hole forms to suck you into the forclosure universe.
Aren’t we doing sort of the same with the Federal government? We have a deficit for some time now. We are borrowing money to service our debt, and of course servicing the rebate too!
Cinch
At some point the Federal government will have to “sell the jewelry” to pay their debts, just like the Spendloves. When this happens I plan to buy Yellowstone, or maybe the Grand Canyon.
Dibs on Glacier and Crater Lake.
You guys can have the national parks if I can have Corona Del Mar.
I’ll take Yosemite. Darn sleepless, you beat me to Crater Lake.
Oh shite!! Dibs on Olympic and Redwood NPs as well.
The Feds are assuming that they too are too big to fail. I have an image forming of China showing up with a foreclosure notice along with a Sheriff to tack it up on the front doors of the White House.
Nah, the Chinese are smarter than that. They’ll simply make a phone call to the POTUS and say “by the way, we’re taking over Taiwan right now, thanks for playing!”
“‘We bought this house for $153,000,’ she said. ‘Now we owe $416,000. Granted, we refinanced a couple of times, but we had equity, the market was good.’”
“‘If we could sell the house, they’d get their money,’ Don said, shaking his head. ‘We’ll have to walk away. I don’t know why they can’t understand this.’”
Let’s do some math here. They said their payments were 1600/month. They paid that from 1993 to 2001. That’s 8 years * 1600 * 12 or
$153,500
Then in 2001 they refinanced, sending their payments to 2600/month, that’s
$218,400
They now owe $416,000! If they walk away, they’re ahead!
153,500 + 218,400 = $371900
$416000 - 371900 = $44100
They’re $44,100 ahead! And they don’t even have to pay income tax on that. That makes it eqivalent to $55,000!
So why are we feeling sorry for them?
Ok! My math is oversimplified. They paid some of this money in “more expensive” 1991 dollars.
But I didn’t correct for the tax deduction they got! I’m going to very conservatively assume that 1/2 the money went to interest. (It’s more like 80%).
$371,000 / 2 = $185950. So they were able to not get taxed on this amount of income. Let’s very conservatively assume that this tax break was worth $40,000.
So now they’re ahead $95,000!
But wait! They got to live in this house since 1993. That’s 15 years. Very conservatively, let’s assume they could have rented for $800/month. That’s $144,000 in “imputed income.”
So if they walk away from this house they would actually be $95,000 ahead, and they benefited from $144,000 in “imputed income” from the rent they could have been paying.
And, about half of this $95,000 comes from fellow taxpayers, making up the slack in taxes that these people avoided paying.
What am I missing here? Is my math wrong?
I cleaned this up a bit and sent it to that reporter:
But, reuven, you’re BLAMING THE VICTIM!!! LOL
It’s not that I don’t feel bad for them…it’s just that they did OK! They took advantage of the fact that they can “walk away” to get some free money and postpone the inevitable.
What they should have done back when they had equity–as they claimed they did–was sell the house then, find a rental for less than the mortgage, and built back a nest-egg with the tax-free capital gains from selling the house.
Why not send it to the editor, maybe they’ll print it.
These people aren’t losing a house. They are losing their income.
Good news for these ” taken advantage of” people though. They qualify for hr 3221.
Winchester Misery House?
“Gregg Winchester and his wife, Cynthia, made an offer on the 2,430-square-foot, four-bedroom, three-bath house the same day they saw it.
“‘We felt now was the time to purchase something for our family now that prices had come down,’ he said. The couple bought the bank-owned house for $355,000.”
‘Properties are being sold significantly below values. I think I’ll take my chances,’ he said.”
There we go again with some chucklehead who has convinced themselves that they “stole” a property and that it has instant equity.
Go ahead Pal, try flipping it.
Better yet: Try making it cashflow. It’s such a good idea, every investor should try it.
And then, when the rental inventory increases dramatically, another “surprising” and “unforeseen” development will occur …
Over the years, having rented a lot of places, I can’t believe how a couple of landlords I’ve run into stuck to their guns and wouldn’t rent to me for 100 bucks or so less than what they were asking; less than 10% discount. Yet these same dipsh!ts held out one or two months while the place was vacant because they didn’t want to cut me a little break, thereby foregoing 15-20% of their income. I wish all these brave new landlords lotsa luck and a Joshua Tree to boot.
Coverage from around the state: Governor declares statewide drought; Conserve, officials say; rationing looms next
http://aquafornia.com/archives/3493
The American Future
Los Angeles, Ca.
September 11, 1952
…It may not be too many years, for example, before you people of Los Angeles can get your drinking water from the sea. Already our scientists have made great progress in turning salt water into fresh.
Adlai E. Stevenson, Jr.
And well we could have.
It seems that worldwide, 12 billion gallons per day are produced this way, according to
http://en.wikipedia.org/wiki/Desalination
Many coastal communities in California are water-poor and have been for many years - Santa Barbara and the Monterey Peninsula come to mind. But the people who live in those areas prefer to get by with less water in order to discourage large-scale development.
Heck, in Malibu, the residents have voted down the construction of a sewer system several times since the 1960s. They prefer to use septic tanks and cesspools in order to prevent large-scale development. It’s pretty bad when they periodically overflow, and there is a company that specializes in pumping out septic tanks when they fill up. Sometimes, the spills just keep on coming…
As someone who knows many a conservative, I can say that most of them will read that as more left wing conspiracy meant to harness our freedoms. Kinda like this whole “global warming” thing. There ain’t no water shortage! I’m'n’a water m’damn lawn!
Conservatives are funny…
They’ve kowtowed to the evangs and their limited vision, but stubbornly deny anything Mother Nature does, despite it happening in front of their very eyes~
Thank god we have guys like Al Gore explaning the enviroment to us.
Back when I used to look at the data it was so confusing. All the atmospheric data, absorption spectrum, temperature histories…
Thankfully I found Al to tell me what was really happening.
and James loved Al Gore.
Thank God there’s someone commenting on global warming who knows the absorption spectrum from a hole in the ground.
The arrogance of people on this issue who have no clue what they’re talking about can grate a bit.
Ben,
Be honest. Some of these quotes are carefully chosen to get a response out of us. It’s just gotta be so.
We love you anyway but you’re manipulating us.
LOL
I take what I learn here as a responsibility to educate and disseminate. I go to the blogs for my local paper, the NYTimes, WSJ, and numerous other blogs (under different names, of course) to spread the HBB gospel.
Some of the quotes from FBs in the blogs are just truly priceless. They make Ben’s quotables look tame by comparison.
“At the time, her husband was earning $20 an hour as a carpenter as builders turned the area’s broccoli fields into housing developments.”
It’s Broccoli Dear.
I say it’s a housing development, and I say the hell with it.
http://cartoonbank.com/assets/1/38868_m.gif
Good. I never liked broccoli.
“Her biggest challenge, she said, was trying to keep her children, a 10-year-old boy and 7-year-old girl, from figuring out what happened.”
Why is it important that they lie to their children ? Wouldn’t it be better to break it to the kids that Mom & Dad are lousy with money and living a lifestyle based on credit with that time running out ? Better the kids know mow not expect much in future from these two neer-do-wells.
Classic!
Gracias.
I was thinking that too. They are teaching their children (who will eventually “find out”) that it’s more important to make other people think you have money than it is to be honest. Were these people hatched?
Nah. I’d bet my money that they were shat.
CNN had a front page article about 1 Million foreclosures nationwide. I think that will get a few FB’s sweating. Let the capitulation decapitate the wannabe capitalists.
the compassion on here is sometimes overwhelming…
sure they screwed up. but i’m with Buffett. For blame, you really need to look no further than the lenders. If you offer people free money, they’ll take it. These people, like many of the ones I read about, don’t seem to be asking for sympathy at all. This is what happened… we are moving on.
And if you take the money, you eventually get @n@lly-raped. That’s how the world works, sister.
Nobody ever pointed a gun to their head to sign on the bottom line. They signed on their own volition, and since we here believe in freedom, freedom means exactly what it means. The ability to do great things and the ability to f*ck up your own life.
Now that they’re getting a JT-lower-colon-cleansing job, we’re enjoying the schadenfreude.
You’d rather we dissemble? Why? It’s a f*ckload of fun.
If you don’t like it, you don’t have to hang out here. This ain’t San Francisco.
O you so tough little me all frightened. I didn’t say i didn’t enjoy it but why don’t you save the nastiness for the whiners who deserve it? like mr. picked-his-own-tile. When things like fires and health problems combine to screw people it’s a little different wouldn’t you agree?
Each circumstance is different.
Nobody here is indifferent to hardship but there’s an order of magnitude of difference between the diabetes of a Porky-pork-porkington and someone whose child at age 2 got diagnosed with diabetes. We feel for the latter. It can’t be helped.
We believe in responsibility not in foolish speculators talking up crap points about, “Oh, it’s all for the children”.
Nobody gives a flying f*ck about your children. You had the little sprogs; you pay for your own.
Oh you don’t have any kids i take it. I will tell mine you thank him in advance for paying your social security when you are decrepit old angry guy yelling at people to stay off your lawn.
LOL
You breeders are so funny especially when you lose craploads of money.
Just because you had kids doesn’t mean you deserve a break. Any FB that even suggest anything for the children is someone that should not have had children.
And as far as hiding their idiotic financial choice from “the children”, it would actually be a great lesson to let them see how living beyond your means is a dumb thing to do.
“I will tell mine you thank him in advance for paying your social security when you are decrepit old angry guy yelling at people to stay off your lawn.”
Fair enough, but they’d better thank me for subsidizing the education that ultimately allows them to pay for my decrepit old angriness.
And you’d better thank me for taking on the additional burden of your tax deductions.
Now I am getting angry.
The anti-child rhetoric on this board is sometimes frightning. Those little “sprongs” you carp about will be running the power plants, farming the fields, generating the tax revenue that will keep the infrastructure to support you in your feeble old age.
People who despise children are truly souless people who are myopic and have no understanding of systems theory.
Systems Theory?
Let’s take it outside, Kimosabe. I show you whether or not you truly understand your z-transforms.
Only those without imagination need a world full of sprogs. It will be automated with people like me doing the work of the automation.
Your sprogs are just that, sprogs. You pay for them. They’re basically worthless.
Breeder?! O i’m sorry i didn’t realize you were gay person. Not that there’s anything wrong with that.
We just don’t have any sprogs but you still lost a crapload of money, sister!
Try not to be too bitter.
well keep trying maybe you will get lucky. or your partner will. I am dedicated renter since, ah, approx. 1996, thanks.
owning was cheaper than rent at that time.
Faster,
Your pedantic ranting betrays your empty bitterness. I feel sad for you. You spout non-sequitors such as “you lost a crapload of money”, on what do you base that? Your liberal use of profanity and repeated putdowns of others demonstrates your anger at the world. Your hatred of children, which is actually hatred of humanity, belies a self absorbed worldview that borders on the sociopathic. I hope that for your sake and the sake and safety of others around you, you seek out some professional help. Let go of your anger to the world and try to be happy for what you have, not feeling the need to belittle others, hate humanity, and rage in the hopes of drowning your pain and making yourself feel better. It is sad, I pity you.
I am sure you will have another hateful and bitter retort, but it only speaks truth to what I have already said.
I hope you find peace.
It’s good for people to express their opinions on this blog, even if it is sympathy (ugh) for the FB.
But, the money was NEVER free.
Yeah, but such hard analysis never occurs to them.
The Universe™ will provide, don’t you know? All we have to do is vibrate to its vibrations and it will cough up gold coins.
C’mon, c’mon, you can hardly expect otherwise.
Well, they don’t NEED sympathy, because they LOST NOTHING. If anything, they will get to LIVE FOR FREE for 3-12 months while the bank goes through the foreclosure process. It is US who deserve sympathy. We all have been forced to waste our money on rent FOR YEARS simply becuase it was cheaper than wasting our money on the housing bubble. We are mad at the FB because they have caused us harm. If you know right from wrong (as is expected from an ADULT), then you can’t blame the bank for “convincing” you to lie, cheat, and steal.
YOu just sound jealous to me, BV. Ice cream truck came while you weren’t paying attention… These FBs are paying for their indiscretions now, but who allowed them to commit them in the first place, by not checking their stated income, etc? The bank.
If the FB are paying for their indiscretions, then why would I be jealous of them?
Anecdotal stories like this from long-lived businesses like this, tell you more about what’s really happening to our economy, vs. anything else…
Their car sales are down 85 to 90%, from 5 years ago~
“‘My family has owned this dealership for 71 years,’ said Bill Brunelli, director of operations at Central Chevrolet in Fremont. ‘I’ve been in the business all my life; I remember the oil embargo of the 1970s, and I’ve never seen anything like this. We used to sell 200 cars a month five years ago; now we may sell 20 or 30.’”
Why buy a car if you can’t afford to drive it?!?
Why does one need a car salesman?
Surely one can just read the stats online, test drive it “nearby”, and have a car delivered to one’s house with whatever one wants, right?
These crap-tacular has-been businesses are so totally f*cked, it’s not even funny.
Why do we need car salesmen??
Unfortunately, the car makers made a deal with the devil, er dealerships.
When car makers realized they needed to expand quickly to stay in business they started dealerships, but the no future car dealer wanted to put up his capital when the makers could sell their cars outside their factory gates. So the dealers said the makers could NEVER sell directly to the consumer if they wanted dealerships selling their cars.
That is how we got this mess up car selling system…True Story
“Anecdotal stories like this from long-lived businesses like this, tell you more about what’s really happening to our economy, vs. anything else…”
I agree. Our government tells us the economy is humming right along and that inflation is less in Q1 of this year than any Q1 in the past four years. But what we see is lighter traffic than at any time this decade, business off sharply in some types of businesses, and sharply higher prices for many things that people need just to get by in their day-to-day lives (food and energy).
When increasing numbers of long-standing businesses are noting sharper declines in business than in previous deep recessions, that should tell us something.
It should be obvious that adjustments made to government statistics no longer result in accurate measures of the state of the economy. It would be like deciding that it’s too hot in Phoenix in the summer, so you modify the scale on the thermometer so that highs are never more than 80 (at least not inside). The government would then explain every summer that the “core heat”, the temperature inside homes, was contained. Meanwhile, as much or more electricity is needed as before just to maintain that “core heat”.
Will it take a total financial meltdown to even consider restoring some accuracy and honesty to our financial system?
Meh….Our government is telling us those things until noon on Tuesday, January 2009. After that all will be revealed.
Dagnabit. Tuesday, January 20, 2009.
I’m sick of my company because they are getting really really mean (they’ve always been a little mean), but there are very few jobs out there right now. My industry is generally considered stable (life sciences), but there is something serious going on right now.
Awwww, poor baby. Do you need a hug?
Didn’t you save up in case the big bad boss took it all away and was all mean-sies to you?
Do you want the nice men from the goober-mint to make it all better for you?
Hugsies and Kissies.
It’s hard to save when you’re a wino with very expensive tastes.
You mean you recommend that she vibrate to the rhythms of the Universe™ and that the Universe™ will provide?
What a radical idea! I must start a religion around it.
Both of you can go to hell. I was stating on observation that seemed relevant to this blog. If I wanted to hear smart-aleck, sarcastic remarks from sexually frustrated A-holes, then I would just start working more hours.
P.S.
I have savings and a husband; that doesn’t mean that I don’t want to work, DUH!
Maybe you should howl at the moon, and see if the Universe™ can give you a discount for working more hours, and save you from having to pawn yourself down at the local joint by dancing for for sexually frustrated A-holes.
You know how it is during recessions? We feel for ya!
There’s not a whole we can do about your boss either. You should learn how to put out.
Look pussy:
I’ve just about had enough of you and your misogynistic remarks. As a woman, I have a hell of a lot more going for me than you do for yourself. I can earn money by “putting out”, by having my husband support me, OR by having a job. See, I have beauty, reproductive potential, intelligence, and an education.
What do you have? An abusive relationship with the little missus? We’ll see how long she sticks around once you lose YOUR job in this mess. There’s always another guy …
Wow, my head is spinning. Is Pussy a Dude and a DINK? Whatever he/she is, get some Xanax, pronto.
Geez, dude, what ya got stuck in yer craw tonight?
It’s worse to work for companies that are really stupid. But if your company is getting meaner, that probably means that it is getting broke. Which is not a good sign if you like getting paid.
Sometimes a recession is a good time to find a new job… The companies that are hiring are probably in pretty good shape, or at least don’t know that they are in trouble yet.
Except for the fact that you’re wasting valuable energy howling at the moon, i’d say you’re ready to start your own business.
My life sciences company had another record year last year and is on course for same this year.
Maybe you attached yourself to the wrong life science.
Your company doesn’t make silicon implants, does it?
HA! I wish; maybe I could get a discount
Insider tips, please? (and no, I don’t mean innuendo)
So, what exactly is life sciences? Is that a euphemism for drugs, I mean, pharmaceuticals?
I don’t care where you work or what your job is, if their is a boss above you, you will have to play the bull$hit games according to the bosses plan.
If you won’t play the kiss azz game the boss knows they can find others that will.
“Dustin Hobbs, communications director for the CMBA, said…that the subprime crisis has been somewhat overblown in the media, given that 78 percent of Californians who got subprime loans in 2005 and 2006 are still in their homes.”
“‘We don’t want to go back to the days when you had to put 20 percent down,’ Hobbs said.”
______________________________________________________________
“The privilege of absurdity; to which no living creature is subject, but man only.”
Thomas Hobbes
So what he’s saying is that 22% failure rate is okay against the backdrop of what, 1-2% failure rate for all loans?
Better yet, 22% in only a couple of years! A lot of those loans never even reset!
“A few weeks later, Prado bought a $412,000 house with a so-called 80/20 mortgage. Those mortgages are actually a pair of loans — one for 80% of the purchase price and another for the remaining 20%.”
The graphic that accompanies the article shows that the median household income in Santa Maria is $45,000, and 11% of residents have an education beyond high school. They also have a photo of the Prado’s house that once once deemed “worth” $412,000. Things don’t look so good for Santa Maria.
But sadly during the bubble, paying as little as $412K for a SFH would have been considered a bargain in much of California. With only 11% of Santa Maria residents having education beyond high school, I’m surprised the median income is as high as $45K, even in California.
Clearly, prices have far to fall to mesh with incomes.
although inflated prices were arguably due to a housing bubble
Arguably? Is there anyone left who will deny that it was not only a bubble, but the largest and most widespread in history?
While increasing numbers of people finally realize housing prices are falling in many areas, there’s still the belief than that the declines will end soon and prices will then go up again. I think there are many people that still have no comprehension of just how large this bubble was (largest in history) and how far and for how long prices could decline.
At some point, things will get bad enough for enough people that they’ll look for an explanation of what’s happening. That’s when they’ll finally discover the immensity of this bubble.
The Spendloves are essentially spectators in their own lives. I for one, hope that this male in the household is sterile.
Correction: I mean Robert !!
“Her biggest challenge, she said, was trying to keep her children, a 10-year-old boy and 7-year-old girl, from figuring out what happened. To soften the blow to the children, Prado said she told them that they were only renting the home they had bought. In many ways, that’s true.”
Just think, some day one of her kids could grow up to be president.
Pardons if repeat.
“Her biggest challenge, she said, was trying to keep her children, a 10-year-old boy and 7-year-old girl, from figuring out what happened. To soften the blow to the children, Prado said she told them that they were only renting the home they had bought. In many ways, that’s true.”
Just think, one of her brats could grow up to be president.
I hope their 10 year old son googles his family’s name in five years or so and finds his parents are liars.
“The Spendloves had also asked for $4,000 from the refinancing, Rebecca said, but the company convinced them to take $35,000. As it turned out, ‘We used that money to pay the mortgage,’ she said. ‘And our credit cards all went up again,’ Don added.”
“In a bid to make ends meet, the Spendloves emptied two bedrooms and rented them out. ‘We have no life, we have no privacy,’ Rebecca said. Rebecca also started selling Avon. She sold all her jewelry. They sold everything they could on eBay and in yard sales.”
“‘We bought this house for $153,000,’ she said. ‘Now we owe $416,000. Granted, we refinanced a couple of times, but we had equity, the market was good.’”
So now I guess the Congress will try to convince us all that the Spendlittles owe the Spendloves a bailout, so the Spendloves can keep right on spending other people’s money and loving it?
“Dustin Hobbs, communications director for the CMBA, said…that the subprime crisis has been somewhat overblown in the media, given that 78 percent of Californians who got subprime loans in 2005 and 2006 are still in their homes.”
Correction: 100 - 78 = 22 percent of Californians who got subprime loans in 2006 and 2006 are already out of their homes. I guess it is no big deal, Hobbs?
And how many of the remaining 78 percent are in default and won’t be in those homes someday or would already be out of those homes if not for lenders going slow on foreclosures?
How can the media possibly “overblow” what may end up being some of the highest foreclosure rates in history? One might criticize the level of coverage for sub-prime versus other aspects of the bubble, but not of the end result.
Americans saw their net worth decline by $1.7 trillion in the first quarter, as declines in home values and the stock market ravaged their holdings.
The net worth of U.S. households fell 3% to $56 trillion at the end of March, according to the Federal Reserve’s flow of funds report, which was released Thursday
http://biz.yahoo.com/cnnm/080605/060508_fundflows.html?.v=11
Now throw in inflation.
The fact that the middle class likely took a larger hit as
a higher percentage of their wealth is held in their home
and they are impacted by inflation and are hurt more by the loss of access to credit.
Looks like a stock rally.
Though it was never a good idea to count any perceived value in one’s primary residence in the household net worth figures. (I had a letter to the editor in a 2005 issue of Business Week that said just that, and I called the housing thing a “bubble”, too!
I always love how these reports gush that consumer spending is actually higher than before (always a Good Thing in their mind), but then in the next breath whisper, well, by the way, they were spending more money on gas.
“The recent declines, however, may not affect consumer spending, said Michael Englund, senior economist with Action Economics. Americans have actually spent more in recent months, particularly at the gas pump as fuel prices soar.”
Let’s see if I can pass the href test.
Real -Estate Woes of Banks Mount