It’s Better To Just Rip The Band-Aid Off In California
The Contra Costa Times reports from California. “Sales fell to a 20-year low in the Bay Area, but sales were hot for the foreclosure-ravaged East Bay, DataQuick reported today. While many were optimistic after a rise in sales between March and April, slow sales in high-end markets dragged down statistics. Across the nine-county region, 25.6 percent of the homes that resold had been foreclosed on at some point in the prior 12 months, up from 3.3 percent a year ago.”
“Solano County’s foreclosure resales were 57.6 percent of the resale market; in Contra Costa they were 43.3 percent and in Sonoma 26.6 percent.”
“In Bay Area neighborhoods that posted year-over-year gains in existing single-family house sales last month, more than two-thirds were in relatively affordable stretches of Contra Costa, Solano and Sonoma counties. On average, their median sale prices in May were down 24 percent from a year ago down 36 percent from their peaks. Analysis by DataQuick excluded Alameda County.”
“An average of nearly 50 percent of the resale transactions were foreclosure resales and on average, half sold for about 35 percent less than the prior sale taken from public records.”
“The median price paid for a Bay Area home was $517,000 last month, down a record 21.7 percent from $660,000 last year. The last time the median was lower than last month’s $517,000 was back in September 2004, when it was $510,000.”
The Press Democrat. “Continuing a spring surge, Sonoma County home sales rose in May and dented the supply of properties on the market for the first time since the onset of the housing slump three years ago. A turnaround could be months away, however, because the bulk of sales are in lower price ranges flooded by foreclosed homes, pulling down values in many areas.”
“‘If we didn’t have the foreclosure market, we wouldn’t have a market. We’ve got to work through at least another year of this,’ said Mike Kelly, an agent in Santa Rosa.”
“The county’s typical house sold in May for $425,000, down 26 percent from a year ago, according to The Press Democrat’s latest home sales report. Sellers of distressed properties are not moving up. Steep price cutting discourages those who would like to sell, but don’t have to, unless they have built up substantial equity.”
“That’s the tough part. It’s really narrowed the field for people who can sell their home,’ said Toni D’Angelo, an agent in Santa Rosa.”
“Rising interest rates also have diminished some of the boost expected after Congress created a new type of jumbo mortgage for Sonoma County and other high-priced areas. Interest rates on jumbo conforming loans — $417,000 to $662,500 — remain about a half-point above loans under that level.”
“‘The financing isn’t as attractive. Now someone has to really want to buy a house,’ said Maia Lomax, president of the Redwood Empire Mortgage Lenders Association.”
“The median has fallen 23 consecutive months, declining 31 percent from the market’s peak price of $619,000 three years ago.”
From Bloomberg. “The California housing market may be showing the first signs of a recovery after three years of declining sales and two years of rising foreclosures, the UCLA Anderson Forecast said today.”
“While a ‘normal’ housing market ‘is still a long way off,’ according to the report, the increase in home sales in some parts of the state is a positive sign. ‘This is the very dim flicker of the light at the end of the tunnel,’ said Ryan Ratcliff, an Anderson Forecast economist, wrote in the report.”
“In California, the ‘unprecedented speed of the price adjustment means that instead of several years of slow bleeding (like the 1990s), we have compressed the necessary adjustment into two years of intense housing pain,’ Ratcliff wrote. ‘Mom always said it’s better to just rip the Band-Aid off.’”
“The number of homes sold dropped in every California county DataQuick tracks except Riverside, where home sales increased 4.1 percent. Foreclosure sales accounted for 57 percent of Riverside’s May sales, the most of any Southern California county, DataQuick said.”
From ABC 7.com. “An economist with the (UCLA) study said while we still hear talk of a recession, California will not see the type of job loss that typically go with a national recession.”
“‘Indeed, for California this is primarily a housing-related adjustment to a very overheated speculative market. The carnage is palpable but contained,’ economist Jerry Nickelsburg of the UCLA Anderson Forecast wrote.”
“While the economic forecast remains gloomy, it will not spiral out of control, and jobs in the Southland that have been lost will be replaced, especially in areas like Orange County.”
The Press Enterprise. “California may be on the road to accomplishing a kind of economic quarantine, a report released Tuesday by a UCLA economist found.”
‘The slumping housing market is causing the state to lose construction and finance jobs. But the housing-related losses appear to be confined to housing, and that sector’s ailment is unlikely to spread to the state’s overall economy.”
“The long-term news is not good for workers who used to process mortgages and work in other financial jobs fueled by housing. Nickelsburg said these jobs, which were at the center of Orange County’s economy and had spilled over to Riverside and San Bernardino counties, are unlikely to return to their levels of two years ago.”
“Nickelsburg said it’s unlikely to see so many people working at these jobs ever again, and he wrote it might be five years before Orange County’s economy absorbs the thousands of people who no longer have jobs in mortgage offices.”
The Union Tribune. “‘The economic outlook through the end of 2009 is decidedly subprime,’ said David Shulman, a senior economist at the forecast.”
“Already, the decline in home prices has wiped out about $3 trillion in home equity nationwide and sparked at least $400 billion in foreclosure-related losses at financial firms, according to the report.”
“‘All indications seem to suggest that (the nationwide) peak-trough decline could be on the order of 25 to 30 percent,’ Shulman said. ‘Should house prices decline by 30 percent, most of the home equity of people who own homes subject to mortgages could be wiped out.’”
“‘Our home prices were just insanely high,’ said Stephen Ross, director of the Center for the Continuing Study of the California Economy in Palo Alto. ‘I absolutely agree that a 30 percent decline (from peak to trough) is quite possible. And some areas will get hit worse than others. San Diego’s already been hit pretty badly.’”
Todays Local News. “Rosita Cortizo, lead therapist in the counseling department at North County Health Services in San Marcos, is seeing an increasing number of patients who are losing jobs and homes to the faltering economy.”
“‘They see declines in internal resources,’ Cortizo said. ‘It leads to a lack of personal control. You try to restore their sense of self-control so they can move forward. But there isn’t a magic formula.’”
“Severe economic problems can ruin people, Cortizo said. It is critical to develop a plan to help people get control over their lives.”
“‘You have to identify what they need to do to get out of crisis,’ Cortizo said. ‘Losing a home isn’t going to change. So a lot of that is helping them get through the grieving process.’”
The Times Standard. “With economic factors like the housing slowdown and credit crunch taking a bite out of auto sales across the country, only the subcompact market showed growth statewide in the first quarter of 2008, according to the California New Car Dealers Association.”
“‘The magnitude and severity of the slump are eye-opening,’ the organization says on its Web site.”
“No region of the state has been hit harder than Northern California, where total new car sales are down nearly 20 percent.”
“Hiouchi resident Laura Stottrup strolled through the lines of pickup trucks at Mid-City Motorworld Tuesday afternoon. When asked if she was searching for a new car, she scoffed. ‘Shop for cars? Who can afford ‘em?’ she asked. ‘It costs $100 for half a tank of gas. I wouldn’t shop for anything right now.’”
“She was merely browsing the lot while her mother’s car — a hybrid — was being serviced inside.”
“‘People are trying to trade in their big vehicles, and dealers aren’t taking them anymore,’ said Mid-City Motor World Sales Manager John Dalton. ‘Big diesels and SUVs are coming in left and right, and we’ve had to turn people down.’”
The Daily Bulletin. “During a tightly controlled news conference Tuesday, Kevin McCarthy, CEO of PFF Bancorp, said he might be looking for a different job by year’s end.”
“McCarthy signed off on numerous loans to developers who can’t repay what they borrowed during the inflated housing-market frenzy that swept through the two-county region just a few years ago. Since then, PFF’s asset quality has deteriorated to the tune of millions of dollars.”
“‘The economy was exacerbated by subprime lending,’ McCarthy said at the Rancho Cucamonga news conference, explaining the hole PFF fell into.”
The LA Times. “When developer Empire Land sought protection in U.S. Bankruptcy Court in Riverside in April, its biggest debt by far, $5.1 million, was to PFF Bank & Trust.”
“Southern California’s oldest bank, PFF; formerly Pomona First Federal, had doubled its loan portfolio to $4 billion over the last decade, in large part by financing residential developers and builders of affordable housing in the Inland Empire.”
“Home-mortgage specialists may have been the first lenders to suffer for their roles in financing the housing bubble. But, as foreclosures rise and home prices fall, many smaller banks and thrifts that backed residential developers and home builders are watching black ink turn red and are spending uncomfortable amounts of time with regulators.”
“The financial institutions also are enduring jabs from critics who say they tossed lending standards out the window.”
“‘In the Inland Empire, we’re hearing land is going for 20 or 30 cents on the dollar’ of its appraised value when the loans were made, said RBC Capital Markets analyst Joe Morford.”
The Orange County Register. “Last week, local rates climbed to the highest level this year. The average rate for a 30-year fixed loan up to the old conforming limit of $417,000 hit 6.035 percent with a one-point fee last week - the first time in three months the average rate was above 6 percent and the highest level since December 2007.”
“Jack Kyser, chief economist with the Los Angeles County Economic Development Corp., which also monitors Orange County, said higher rates are coming just as housing sales are picking up as some buyers get deals on foreclosed properties.”
“The silver lining of record foreclosures, banks took possession of 1,131 homes last month, is that housing affordability has increased a bit in Orange County, Kyser said.”
“But if mortgage rates keep rising the affordability gains could be wiped out, he said. Home buyers looking for a place that they will live in for several years might want to take advantage of lower prices now, he said.”
“Housing prices will likely fall for the rest of the year, hurting investors looking to quickly sell, Kyser said. As for foreclosure investors, Kyser said, ‘Some will have their head handed to them on a platter.’”
“In California, the ‘unprecedented speed of the price adjustment means that instead of several years of slow bleeding (like the 1990s), we have compressed the necessary adjustment into two years of intense housing pain,’ Ratcliff wrote. ‘Mom always said it’s better to just rip the Band-Aid off.’”
——————————————————–
Brazilian waxing sounds more Californian than band-aids right now . . . : )
Man, when the same people first deny there’s a bubble for years, then call the bottom every other month (if not every other week), it just kills me to see the press reporting what they say as if it had any credibility at all.
Not a single mention of the huge wave of Alt A resets to come. Not a single mention of how many times they’ve been wrong so far in the last few years.
Makes me sad to see this on Bloomberg - to whatever extent they might have had a little more credibility in my mind, that would be zero now. Damn.
he, he…
how does it feel being treated like a mushroom?
Kept in the dark and feed bullsh*t.
lol
Not good. Gave the author a piece of my mind by email just now; guess I should be looking for a visit from the local thoughtcrime enforcement unit shortly.
Send him a Credit Sueiss ARM Reset chart with instructions to stare at it for five minutes. Everything enquiring minds need to know is displayed on that chart.
Yeah, the MSM, including Bloomberg and its proprietery terminals, has lost the collective ability to, well, think. My 25 year career in newspapers takes a break (or ends) on June 27, since I was one of McClatchy layoffs announced this week. The MSM did not invest in itself (Hello Detroit), is stymied in many cases where unions do not allow multi=tasking (Hello other manufacturing in the states)… and preys upon the “fact” or “trend” of the moment.
Most recently I have been proofreading puzzle pages and “features” (why you need a $300 kitchen range hood).
I covered farming/agribusiness most of my career.
Many of them knew to SAVE their money from good years to tide them over when weather, insects or the U.S. Trade Representative cut the value of their crops.
I used to be proud of the MSM, declining maybe 15 years ago.
But their audience is vanishing, advertising is vanishing. You end with untrained business reporters trying to make sense of historic events where they have no context.
It’s like they Jet-Ski from one “fact” to another. They can’t look deeper than Google’s first link page.
I have mixed feeling leaving the business I once loved but now causes shame.
I’m gonna go squirt some water on the outside of my house to get some daddy-longlegs. Be good for the soul.
I’m so sorry to hear about the demise of your career at McClatchy, they seemed to be one of the last MSM “good guys.” I think Bill Moyer recently did a feature on their investigative reporting which put to shame the WP and NYTimes. Problem is, people just don’t read or have any interest in learning about anything beyond acquiring a “dream house”. Hard to even tell a joke these days when you have to explain basic information. “Now, the reason this joke is funny, is, um, there’s this river, and it’s big, and it’s in Egypt”.
Milkrate, it makes absolutely no sense for an information company to get rid of someone who knows about agriculture and farming at this point in time. There is a world food crisis going on. God, this is the sort of thing that makes me believe in conspiracy theories sometimes (is the situation so bad that they don’t WANT someone who can help shed light on the situation to start poking around?). But then I remind myself that you should never underestimate human stupidity. Their loss will be someone else’s gain. Your knowledge is going to be in demand quite soon, milkrate.
Sounds like business as usual to me. Get rid of the most qualified and well paid people and replace with idiots who will do whatever you say for a third the pay. Of course they don’t want someone who can see through the bull. Just like the reporters they used for all these economic forecasts from today. No questions asked just write what the so called experts say.
Oh, Milkcrate. I share your sadness. Journalism took a huge hit after Watergate (ironically enough.) It’s all been downhill since then– despite the efforts of those of us who still believe in the tenets of the profession. Have heart. Keep posting.
Purge the spiders.
Interesting post from the inside the msm milkcrate…
I read daddy longlegs are not a true spider, 8 legs but only one body segment.
I talked to someone today that insists the resets won’t happen. The banks will be willing to put off the resets to avoid any more foreclosures.
Dumb. Banks/investors don’t make any money unless the resets happen. Might as well foreclose.
The banks must foreclose.
Look at it from their perspective as it’s all just an elaborate con game or Ponzi scheme.
They’ve squeezed as much as they possibly can from the defaulting borrower.
Time to move on to fresh meat.
…instead of several years of slow bleeding (like the 1990s), we have compressed the necessary adjustment into two years of intense housing pain
No, we’ll have 2-3 years of intense pain FOLLOWED by several years of slow bleeding. However, we’ll almost surely be stable more quickly than Japan (15 years).
It’s kind of like ripping off the Band-Aid, then shaving with a dull razor, then getting a wax job, then peeling away a layer of sunburned skin.
-John
You forgot the lemon juice and tobasco skin balm to soothe you after the peel.
how about rubbing some salt into the wound….
Don’t salt me bro!
The only reason the price adjustments appear speedy to him is that he clearly fails to recognize the depth of the ultimate price adjustment.
“The only reason the price adjustments appear speedy to him is that he clearly fails to recognize the depth of the ultimate price adjustment.”
We’re just beginning the period of steep declines for inland areas which will then spread to the coast.
Nice job Anderson fools. First put a band-aid on a bursting artery, then remove it early. Nothing like being wrong early and often.
“…we have compressed the necessary adjustment into two years of intense housing pain…”
Just another pyschobabble way of calling a bottom.
Gee he makes it sound all neat and tidy - just like a Hollywood movie. I wonder how a Californian economist would get an idea like that?
Cali sneezes and we all catch a cold - or so they say.
Cali calls bottom, ahem, and it’s soooooooo true.
“In California, the ‘unprecedented speed of the price adjustment means that instead of several years of slow bleeding (like the 1990s), we have compressed the necessary adjustment into two years of intense housing pain,’ Ratcliff wrote. ‘Mom always said it’s better to just rip the Band-Aid off.’”
HAR!
Just rip the band-aid off - that will help with the bleeding!
On a serious note, I do not want:
a run on banks;
our economy tanking;
soup lines;
Gram in another depression (bless her 91 yo soul);
Our Country to fall toooooooooooo fast.
Sigh,
Leigh
Imagine soup lines manned by the likes of the soup nazi, from Seinfeld?
Imagine soup lines manned by the likes of the soup nazi, from Seinfeld?
–
From Ratcliff files…
July 27, 2006
Tortured Logic Of a UCLA Economist On CA Housing
One Mr. Ratcliff, a UCLA economist, appeared on the boob-tube to talk about California housing. He said, “The California home prices have never declined except when the economy was in a severe recession.”
OK.
Then he continued, “Since we are not forecasting a recession, the prices should level off and remain flat.”
When was the last time that an economist, who appears on the boob-tube, did forecast a recession ahead of time? This sort of logic is ridiculous because can’t home prices go down based on their own fundamentals of supply-and-demand?
Jas
My quote of the day is:
“When more and more people are thrown out of work, unemployment results.”
- Calvin Cooledge
That’s the post hoc ergo propter hoc fallacy. All I can say is “WAM” (what a moron).
“‘The financing isn’t as attractive. Now someone has to really want to buy a house,’ said Maia Lomax, president of the Redwood Empire Mortgage Lenders Association.”
Well, sounds like there won’t be as much mortgage lending happening in your neck of the woods. In 6 months Maia will be quoted again and this time it will read “Now someone has to really NEED to buy a house”. I don’t want to rent an apartment, I need to rent an apartment. See the difference Maia?
Nobody EVER needs to buy a home. EVER. People need to sell; but there is NEVER a need to buy.
Everyone got that? Now please, someone explain this fact to all the idiot REwhores out there and I think that we may have a race to price discovery.
God, these people still think that “having a kid” or “job relocation” causes a NEED to buy. Not at all true, the only people who have any need at all are the sellers.
Oh, I wouldn’t say “not ever.” One could be said to NEED to buy a house at a time when it’s considerably cheaper than renting. And one might not be able to, because such a time would come only if credit standards were fairly stiff. We here at HBB will not be in that pickle. We will presumably keep our powder dry enough for long enough…
I’ll buy that.
More of that “If you really want it, you have to work for it” crap. Well, guess what Maia? I don’t really want it. I don’t really want it at all. My lips say no, my eyes say no, and my pores ooze “no”. How ’bout them apples?
“The median price paid for a Bay Area home was $517,000 last month, down a record 21.7 percent from $660,000 last year. The last time the median was lower than last month’s $517,000 was back in September 2004, when it was $510,000.”
We must have a hella lot of condos in the bay area then, because from the prices I’ve seen, they don’t come close to $517k unless its a foreclosure.
This includes all of eastbay/southbay/northbay slums such as richmond and hollister.
If you’re in Palo Alto, things are shiny for now, but it’s like watching the flood waters rushing down the street and saying “Never fear, I have my trusty bucket and spade!”
Yes, there are a lot of condos in the bay area. Every house for sale has to compete not only with other houses for sale, but also with a lot of condos. Some people don’t mind living in a condo.
A lot of people prefer to live in a condo….
Even most of the condos in the Bay Area are ridiculously overpriced relative to rents. Here in Marin county–the land of plenty–there are condos asking $625K that will not rent for more than $29K per year. Do the math–that’s a price/rent ratio of 21.6. Anyone who would buy a condo at that price/rent ratio is a fool. Those condos will be going for $350K-$400K in 2011.
Keep the popcorn popping,
Red Baron
No one ever says anything about Yolo County - Fremont. Is it pretty much the same?
I comment on Yolo all the time but it’s never very nice >; )
Actually I can something nice about Yolo. It’s great that this is my last week here.
Price rent ratios are down to 20.6 from 24 & change. whoohoo ……not. At least the weather is decent in Marin and the houses have at least some minimum maintenance done. I should take some picture around town showing how craptastic this place is.
Good luck with your relocation, Ms. Gwenster. Have fun!
There are a lot of $500,000 - $550,000 houses for sale in the Shoreview area of San Mateo and some down to $430,000. (The condos are still massively overpriced but are selling better than higher end homes at this point.) I wouldn’t buy over there and think they will eventually be down to $275,000 but some people might see these homes as a deal right now.
“‘Indeed, for California this is primarily a housing-related adjustment to a very overheated speculative market. The carnage is palpable but contained,’ economist Jerry Nickelsburg of the UCLA Anderson Forecast wrote.”
“While the economic forecast remains gloomy, it will not spiral out of control, and jobs in the Southland that have been lost will be replaced, especially in areas like Orange County.”
If I had a nickel for every time someone said jobs will be replaced…
“jobs in the Southland that have been lost will be replaced, especially in areas like Orange County.”
But somehow Nickelsburg fails to mention that the high paying mortgage jobs (I am assuming RE related jobs are the majority of “lost jobs” he is referring to) will be replaced by low paying jobs.
Good luck paying that $7000 mortgage with a job as a greeter at Wal Mart.
“But somehow Nickelsburg fails to mention that the high paying mortgage jobs (I am assuming RE related jobs are the majority of “lost jobs” he is referring to) will be replaced by low paying jobs.”
While there hasn’t yet been that big a net loss of jobs in San Diego County, the lost jobs (higher paying sectors) paid more than the replacement jobs (lower paying sectors). A more telling number would probably be to look at changes in total or median income.
He forgot to provide any reasoning. Oh well I guess I am asking too much.
“While the economic forecast remains gloomy, it will not spiral out of control, and jobs in the Southland that have been lost will be replaced, especially in areas like Orange County.”
Jan Pliskin, of Realty Gonecepts never knew one day she’d close on a million dollar estate with the Vanguards and the next be scrubbing their toilets.
Washington Mutual no longer doing Neg-am loans as of today:
http://biz.yahoo.com/ap/080618/washington_mutual_adjustable_mortgages.html?.v=2
“The nation’s largest thrift said it would no longer offer negative amortizing loan products, and will also end its WaMu Mortgage Plus loan.”
Barn door is officially closed. Years after the horse escaped.
Dated noted, June 18, 2008.
Good thing they waited until double digit price declines became widespread…just to be sure and all.
ROFLMAO.
Nothing like waiting until the building has burned all the way to the ground before calling the fire company. Just to be absolutely, positively SURE that it’s a total.
“‘Our home prices were just insanely high,’ said Stephen Ross, director of the Center for the Continuing Study of the California Economy in Palo Alto. ‘I absolutely agree that a 30 percent decline (from peak to trough) is quite possible. And some areas will get hit worse than others. San Diego’s already been hit pretty badly.’”
Okay. He admits prices were “insanely” high, not high, but insanely high. Wouldn’t a 30% decline still make prices at least psychotically high, maybe hysterically high? This guy is more bipolar than NYCityBoy on Bleecker street sipping from a brown paper bag, containing whiskey of course, all the while munching on some cupcakes from Magnolia’s and spilling frosting on his latest Marc Jacobs shirt.
God, what I’d do for a cupcake.
Hearing anyone associated with Palo Alto admit to anything other than “the genetic supremacy of Bay Area tech workers and their house prices” is like manna from heaven. You take what you can get.
You know, I was offered a job with a big company in the Bay Area, which I declined (both because of the cost of living, and because I really like the FL weather). However, the pay, while “high”, wasn’t even CLOSE to what it would take to live a good life in that area.
I speaking in round numbers, the position I was offered paid about 150K, with bonuses perhaps to 175K. However, that’s not even close to what it takes to buy a nice home in that area, try more like 300-400K (using traditional affordability standards).
And this was a very senior level position with a huge (and booming) technology company. How many of those positions are there in the Bay Area? I am guessing that the answer is not even close to enough to support the number of homes priced at 750K+.
Not even close.
You would be correct. A senior director at a well-paying company makes $200-250/year, and only a small percentage of people can have those jobs. Even the VPs and above are dual-incoming it to pay the bills on a nice house in a nice neighborhood. You want a mansion? Forget it! There aren’t any mansions around here because they have all been torn down and replaced with something that can actually be sold. Although I’ve heard FL is pretty corrupt, and wouldn’t want to meet a FL cop in a dark alley, you are way better off staying there. Besides, Silicon Valley is ugly.
Yup, I hear that all the time. I also meet lots of people in sales for the big companies (Symantec, VMware, MSFT, etc) that take transfers to places in the middle of nowhere so that they can keep their SillyCon Valley salaries and actually live like they are making good money. One of my buddies moved to Ohio, and, last time I visited; as far as I can tell, now owns about 1/2 the state (on a director’s salary).
When he lived in CA, he has a 2/2 in a good neighborhood and a 10 year old Volvo. Now his home is ~5000 sq/ft, on ~50-100 acres, and has 5 cars all garaged nicely in his enormous man cave/garage.
It’s amazing how different 1M dollars in in CA, as compared to 1M dollars in almost any other state in the union (I’m guessing, but I think that’s about what he paid for him place in Ohio).
He is bored out of his mind though, so if that’s any comfort to those of us living with insane home prices, I’ll at least offer that concession.
So, does he have an ax? (heeeere’s Johnnny….)
“God, what I’d do for a cupcake.”
You should let your husband know that. He’ll probably be very surprised at the ROI.
What is up with Palo Alto? Is it because of Stanford? People in Berkeley don’t have that attitude. If I had my choice of where to live in the bay area besides the City, I would always choose Berkeley over Palo Alto. Maybe that is my public UC pride talking.
Go Bears!
Go Cardinals….. the neighborhood around Palo Alto, well let’s just say they’re a little gentler than the neighborhoods around Berkeley and no East Paly ain’t that close.
I love these economists who have a blind faith in producing new jobs.
“‘Indeed, for California this is primarily a housing-related adjustment to a very overheated speculative market. The carnage is palpable but contained,’ economist Jerry Nickelsburg of the UCLA Anderson Forecast wrote.”
“While the economic forecast remains gloomy, it will not spiral out of control, and jobs in the Southland that have been lost will be replaced, especially in areas like Orange County.”
What tye of jobs? What field. What is the educational requirements? Are the Jcolleges aware so that they can set up training? If the training will be on the job, what employers. I believe that this is called imperfect or incomplete knowledge in the job market. How can the buyers and sellers in the job market make rational decisions without adequate knowledge?
So people looking for work will spend funds and time in the wrong areas to maybe train for a job that doesn’t exist? What a screwed up system.
LC,
There’s still one where I used to work in Brea. IMO the safety field has a huge need in the OC/LA area.
In addition, AZ ASSE has many openings, especially if you want to work in mine in a small AZ town.
Lip
Lip, haven’t you filled the Brea safety position yet? I must say, I was speaking generically for all those out of work looking for a job.
Personally, I suspect the insurance industry will be the next of the FIRE economy to be taken down. See what’s happening to AIG.
I think I will hide out in my concurrent situation for a while. I have got to make this work, because I do not want to be put out to pasture at 65.
lol
concurrent=current
duh
‘The slumping housing market is causing the state to lose construction and finance jobs. But the housing-related losses appear to be confined to housing, and that sector’s ailment is unlikely to spread to the state’s overall economy.”
Except for all the reduced spending on cars, boats, vacations, college educations, electronics, appliances, and home upgrades due to no more HELOC-induced spending…….except for that, things should be ok……
“Except for all the reduced spending on cars, boats, vacations, college educations, electronics, appliances, and home upgrades due to no more HELOC-induced spending…….except for that, things should be ok……”
Except for spending more on gas and food leaving even less for possible discretionary expenses that can only be covered by existing wages minus ongoing debt service payments. This should be quite a sharp contraction that appears to be starting just about now.
If the decline in summertime weekend traffic so far in San Diego is any indication, there may some shockingly sharp declines in some categories of spending following the summer. I don’t have a good sense of whether the decline is more local or tourist, but among the areas that might see sizable declines are hotels, restaurants, and retail. How long must there be deep declines in these areas before the service sectors starts shedding jobs too? That small net loss of jobs could grow much larger in the months ahead.
sdgreg, I also have been shocked by the decrease in SD traffic. Every Saturday from mid-morning to mid-afternoon traffic jams up on I5 south from Carlsbad to Del Mar without fail. This past Saturday I was expecting the mother of all traffic jams being the first weekend after most schools let out & with the US open & opening day of the del mar fair, I maintained 70mph the whole way at 1:00pm.
“‘They see declines in internal resources,’ Cortizo said. ‘It leads to a lack of personal control. You try to restore their sense of self-control so they can move forward. But there isn’t a magic formula.’”
Good luck with that. Are they talking about adults or children here? Hopefully it isn’t those boomers or else we won’t be so concerned with self-control, but more about bladder control. If so, that magic formula would be called Depends. They’re on aisle 4, next to the Spam.
Hahahahah
http://dealbreaker.com/2008/06/senator_sponsoring_mortgage_ba.php#more
When trying to avoid jail time, one’s current employment status suddenly becomes so very irrelevant.
I like the comments about Angelo’s last name. When they had the
Congessional hearings, one of the panelists (a lady) kept addressing him as “Mr. Mozlow”.
See if you can guess which comment is mine.
It is amazing how resilient the market on the peninsula has been. As far as I can see there was very little justification for the 300% increase in prices from 1999 to 2006 (look at the NASDAQ - it is still down 60% from its peak) — there must be a time when the piper must be paid - even in Palo Alto.
Just hoping that in the next two to three years I’ll be able to buy a house for the missus without feeling guilty about throwing money away.
Prices on the peninsula are absolutely coming down. Where does this myth come from that the peninsula has not dropped? Go to http://www.dqnews.com. Go to http://www.zillow.com. Go to http://www.onboardnavigator.com/webContent/OBWC_Results.aspx?AID=108. All of these sources will show you that prices on the peninsula are decreasing.
I don’t care about the proverbial neighbor who just sold his $300k house for $1MM. Of course prices haven’t gone back to 1998 levels yet. The point is that they are down from peak, and will continue to drop. The higher-end areas are getting pummeled harder and harder every day, while the lower-end areas are continuing to decline, but at a decelerating pace. That’s the system coming to equilibrium. EQUILIBRIUM is here to stay.
Data Quick LA Times zipcode chart is out.
http://dqnews.com/Charts/Monthly-Charts/LA-Times-Charts/ZIPLAT.aspx
LA is getting deflated on…
YES! Proof that Pacific Palisades isn’t “different”
You made my day Dude, thank you.
You can’t generalize about the valley Big V….I would look at zip codes to get a better picture….
Yep, it’s still beyond ridiculous in some areas - Cupertino, Palo Alto, etc. I think a lot of people are trying to get into those school districts. I don’t even bother looking at houses in those areas. Even at 50% off, they are still too expensive.
buy a house for the missus without feeling guilty about throwing money away ??
Just my opinion but it is grounded in a lifetime in the valley and my own personal experience…When I purchased my home (a very long time ago) I paid at least 25% more for it than what it was worth…Why ?…Because it was a perfect fit for my family and I new I would never leave…I am now in my 29th year in that house…Does it matter that I paid to much 29 years ago ?? Does not bother me a bit….
–
“As for foreclosure investors, Kyser said, ‘Some will have their head handed to them on a platter.’”
Jackie boy, you seem inspired. You must have been reading HBB. .
Jas
You know how I can tell the crash is sinking in? All the trolls who are showing back up. They feel threatened. But here’s my take on the psychology: People don’t want to admit that their gold-mine houses are really just shacks, but now they’re thinking “what if”. The real reason they’re trolling now is because they’re hoping that we will clarify it all for them, showing them the path so they’ll know what to do. They just can’t admit that they don’t know everything already, and that’s why they come off like trolls. We should take pity and try to help them.
Ok trolls, here what you do.
Short sale your house immediately. Just get out as fast as possible.
Sign a long term lease while working on the short sale, you will still have good credit and can get yourself moved into the new home. If you can, HELOC out every drop from the primary home, let the bank eat the loss. If you can’t short sale the home before you get settled into your rental, let it go.
Wait out the correction in your rental; plan to be there at least 2-3 years, and plan to be unable to rent anything else as credit standards everywhere will get much tougher (it will be hard to rent with a 400 FICO).
After that period of time, you should have a big nest egg again, start to poke your head up and look for houses that are priced reasonably (100/sq/ft is a starting point).
There you have it, the FB handbook, quick, easy, and thank you so much Uncle Sam for taking away that pesky “phantom income” tax on my forgiven debt. Makes the decision SO much easier.
“If you can, HELOC out every drop from the primary home, let the bank eat the loss.”
Don’t do that. For states where purchase price loans are non-recourse, doing that would make the loan recourse. Also, except when used for certain defined housing expenses, forgiven HELOC debt is taxable.
“Sign a long term lease while working on the short sale, you will still have good credit and can get yourself moved into the new home.”
That’s what I did. This is generally good advice, except in some markets the credit screeners for the big apartment complexes are now separating out foreclosures from other types of credit issues. Unless you know what kind of credit screening is being done by a prospective landlord, it’s hard to recommend a “best” course of action. What I’d recommend is to look at a few rentals and run your credit scenario by them and see what their response is. If a foreclosure isn’t a big deal to them and the rest of your credit is sound, why not sit in the eventually to be foreclosed house rent free? Save the money and pay down other debt in the interim. Don’t trash the place.
By all means, try the short sale option. However, don’t let the lender let this drag on forever. Lower the asking price enough to get an offer, then submit it to the lender. This could easily take a few months even if the lender is responsive. If a second attempt fails, I’d walk.
“In California, the ‘unprecedented speed of the price adjustment means that instead of several years of slow bleeding (like the 1990s), we have compressed the necessary adjustment into two years of intense housing pain,’ Ratcliff wrote. ‘Mom always said it’s better to just rip the Band-Aid off.’”
————————
“have compressed the necessary adjustment”? As if it is already over and done with, that’s it - let’s get back to the go-go housing bubble of 2006?
Not quite Ratcliff. California is only two years into probably ten years of “intense housing pain”. Look for ANOTHER -30% in the next couple of years, then -5% a year for another few years. Finally, at rock bottom (around 2014), you’ll see prices stabilize and remain flat for 4 or 5 years. In 2018, you’ll still be able to buy a California house for less than the 2006 peak.
California went UP, UP, UP, now it must go DOWN, DOWN, DOWN!
“In 2018, you’ll still be able to buy a California house for less than the 2006 peak.”
Let me rephrase that:
“In 2018, you’ll still be able to buy a house almost anywhere in this country, but especially in California, for less than the 2005/2006 peak.”
If your scenario plays out, it will be very hard to balance the missus’ desire to be a homoaner against the dictates of financial prudence.
az_owner is overly negative on CA. She doesn’t have any reason to believe that the bottom will not happen between 2010 and 2012.
Mayan calendar prophesy, all bets are off until after 2012.
ha, I thought “az_owner” was a guy (?)
- az_lender (not a guy)
Maybe I’m like one of those frogs that can switch from male to female and back depending on the local swamp conditions..
Anyway, contrary to Big V’s scolding, I’m actually equally negative on the whole country at this point, hence my second comment.
Consider a house anywhere that was $500k in 2006, now $350 in 2008, and soon $230 in 2010. Then as the country slumps through Barry’s Big Time Recession we see $220 in 2011, $210 in 2012, and $200 in 2013. Finally as someone (Anyone!) different takes office in early 2013, a dim but perceptable light at the end of the tunnel appears, and housing begins to appreciate at a modest 3 to 5% annual rate. After 5 years, the house is worth maybe $255k again - in 2018.
And we haven’t even had a decent earthquake yet. Wait ’til we have a good earthquake and see what that does to the prices.
Yep Dani…That would have a impact….
I’ve become attached to the duck. It has a name and a nickname.
Well, don’t leave us hanging!!
I’d love a duck as a pet.
Mr. Big V named him “Pearcey”. Yes, it’s a him. His current nickname is “Pester”.
If it looks like a duck, and smells like a duck, then… it’s Pearcey! cute name
Really enjoying the duck updates.
So egregiously OT…but keep us posted.
“The number of homes sold dropped in every California county DataQuick tracks except Riverside, where home sales increased 4.1 percent. Foreclosure sales accounted for 57 percent of Riverside’s May sales, the most of any Southern California county, DataQuick said.”
Sorry, but if home sales are declining, then a bottom is not at hand. More likely than a near-term bottom is a near-term increase in walkaway owners, whether through short-sales, foreclosures or jingle mail. It does not make sense to keep making payments on a $500,000+ alligator mortgage when the underlying asset has dropped in value by over 25 pct with no sign of near-term recovery.
Ripping off the band-aid and seeing that gangrene has set in, might require that limbs be amputated off of money trees…
‘Mom always said it’s better to just rip the Band-Aid off.’
Mom also said something about not jumping off a bridge with everyone else, but nobody listened.
moms can be wrong.. but don’t ever let them think you think so.
Dan Ariely is the Alfred P. Sloan Professor of Behavioral Economics at MIT Sloan School of Management…considered to be one of the leading behavioral economists… currently at Duke.
from wiki.. “Dan Ariely grew up in Israel after birth in New York. He served in the Israeli army and when 18 suffered third-degree burns over 70 percent of his body from an accidental magnesium flare explosion during training.”
I audio-read his book: Predictably Irrational. In the first chapter he talks about how he became interested in the subject of behavior.
Being in the hospital for years, the nurses used to yank burn patient dressings off, thinking it was more humane.
After he recovered he did studies on that and many other related things, and determined that it’s better (for the patient) to slowly, carefully peel the bandaid off.
We are so far from a bottom it’s laughable.
None of the mainstream media are talking about, in the words of OC Renter from BMIT, phantom inventory. So much REO and soon to be REO, so little actually listed - if the bank owned and about to be bank owned properties were actually counted as inventory by DataQuick or other cited sources, or listed in the MLS, which we all know they’ll be soon enough, the numbers would be spine chilling (in a good way, of course). But this might set the sheep to stampeding, so our friends in the MSM just keep reeeaal quiet-like.
Pandora’s Inventory
Has this Countrywide REO list been posted here already?, I happened upon it when I was trying to figure out what was going on with my neighbor’s house, which has been for sale for at least 8 months. The new owners closed escrow yesterday, hope they got a good price.
http://www.streamfx.com/CW/10-23-2007/REO-California39.html
“So much REO and soon to be REO, so little actually listed…”
And I can’t help but wonder how much of the financing that funded these unaffordable home purchases would get dumped on the FHA and/or GSEs if the Dodd-Frank lender bailout bill passes into law.
About 6 months ago, I talked of buying a cheap 2 or 3 year old gas guzzler suv for almost nothing in a year’s time, and here’s why…
“‘People are trying to trade in their big vehicles, and dealers aren’t taking them anymore,’ said Mid-City Motor World Sales Manager John Dalton. ‘Big diesels and SUVs are coming in left and right, and we’ve had to turn people down.’”
Yeah, I am going to buy an H2 when the real panic sets in.
Even at 10 bucks a gallon, the cost to fill up an H2 is peanuts compared to the cost to buy/maintain/insure an H2. So, I figure if I can get the buy and insure costs down enough, it might actually be cost effective to buy one.
Unfortunately, I hate SUVs, but it would almost be worth it just to see the enviro-weenies cringe when I drive around in that thing.
I want the Toyota Land Cruiser but the H2 would work as well. I hate to admit this but I like the way they look.
Toyota Land Cruiser = well built vehicle engineered for Africa, the Amazon, and Alaska.
Hummer H2 = poser piece of crap built for inner city Detroit potholes with 22″ spinner rims.
Pre 2005 Jeep Grand Cherokees aren’t bad for low buck thrills either, nor are all Jeep Wranglers.
Buy accordingly.
Toyota = yes H2 = no
I got the first year 04 unlimited wrangler..Going to swap for a new 4 door unlimited 09 in the fall
I’m looking for a SUV to use just occasionally, driving on dirt mountain roads.
Also looking to buy a Bellanca Super Viking, and prices are dropping on airplanes, but not as quick as SUV’s.
Suburu Forrester.
Not sexy, but low-profile to avoid branches, narrow base for washouts, and the best trannie, bar none. Also gets great mileage and has much better AC. Wish I’d bought one instead of the Toy Oh-no LC.
The Bellanca might have trouble in the mud, however….
Cool looking plane…I am getting ready to jump back in to flying myself but I want this; Lancair Performance Aircraft
Got speed !!!
Screw the insurance on H2 and mount a machine gun turret on the roof. No one will mess with you! Everyone will think its a tank.
lol
Even better, just go to Iraq. Drivers wanted.
enviro-weenie should be my middle name.
Hopefully we are also welcome on HBB.
(and yes I find SUVs ugly, silly and a waste at any price.)
Depends on if you use it as a Sport Utility Vehicle as apposed to taking the kids to soccer and walmart.
Enviro-weenies are fine until they start telling the rest of the world what to buy and how to live. Humm, they kind of sound like realtors.
Sorry, equating an enviro-weenie to a realtor was just wrong. I should be flogged.
Could it just be that some of these drivers are using gas prices as a cover to get out from the higher payments/insurance that go with such big vehicles?
It sure makes it easier to explain the Yaris to the neighbors - in a socially mobile sorta way.
Heard this story from a buddy in NC. Acquaintance of his bought a 2008 Yukon for $39K. Seven months later realized he couldn’t afford to operate it. Went to trade it in on a more efficient vehicle. Dealer offered $21K. Ouch.
Seven months?!?!? If he isn’t already - that guy oughta be a financial planner, since he can think about six months further out than Howmuchamonth Harry.
Rinse & Repeat this very scenario, all over the country…
“McCarthy signed off on numerous loans to developers who can’t repay what they borrowed during the inflated housing-market frenzy that swept through the two-county region just a few years ago. Since then, PFF’s asset quality has deteriorated to the tune of millions of dollars.”
But worry not, there’s $52 Billion in the FDIC kitty to pay up to $100k per insured account, and your bank oughta fail sooner than later if you catch my drift.
I don’t see what good it does to have your money in a bank that fails “sooner rather than later.” Yes, the soonest-failing will be paid with the least-debased dollars, but what are you going to do with the money, other than put it in a bank that fails later?
If your answer is T bills or something, why not do that now.
but what are you going to do with the money..
As i understand the FDIC proceedure, you won’t have the opportunity to do anything.
Without any warning, under the cover of darkness and over a weekend, the FDIC will move the failed bank’s accounts (including yours) to another bank nearby which they (the fdic) have determined is healthy and capable.
On Monday morning all is as it was.
Theoretically, with a rash of failures, there could come a point where no banks are able to absorb a newly failed bank. Not that your funds are hoplessly lost, but in this doomsday scenario it mighta been better if your bank had failed earlier in the game.
Finally someone may make some changes with AMT.
http://www.bloomberg.com/apps/news?pid=20601213&sid=aMtWj90GM458&refer=home
Republicans really need to take a look at what their representatives are doint to them. I mean do Hedge fund managers deserve to pay as little as 15% on their income while upper middle income pay more than 30% and take hits from AMT?
Louisiana Representative Jim McCrery, the ranking Republican on the panel, said it was wrong to raise taxes on financial executives to shield citizens from the AMT.
“We should not have to raise taxes to prevent a tax increase,” he said. ”
Oh I guess we should just run up the debt and let inflation tax the poor,middle and uppper middle class to make up the difference eh Jim.
The House measure would force fund executives to pay ordinary tax rates as high as 35 percent on their compensatory share of profits known as “carried interest” instead of capital gains rates as low as 15 percent.
House Republicans have objected to raising taxes as offsets to other tax reductions and have generally been outvoted in a House that Democrats control with a 235-199 majority.
In the Senate, where Democrats have only a 51-49 majority, Republicans have used procedural tactics to block legislation that would extend tax cuts and pay for them by raising other levies.
Urgency
Last year, Democrats were forced to agree to legislation sparing millions from the AMT without any offsets. The issue has more urgency this year because the three dozen business and individual tax breaks up for renewal expired Dec. 31.
The Senate has combined the AMT measure and legislation renewing dozens of tax breaks for businesses and individuals including incentives to develop wind and solar energy sources. The group of tax breaks is known as the extenders because they are short-lived and must be extended by Congress.
Senate Republicans this week for the second time blocked legislation on the combined measure because of the inclusion of tax increases, including one that would prevent hedge fund managers from deferring U.S. tax on income they earn offshore.
Can anyone tell me why they OK stimulus checks but not a reduction in the AMT???
Empirical Empire
“‘In the Inland Empire, we’re hearing land is going for 20 or 30 cents on the dollar’ of its appraised value when the loans were made, said RBC Capital Markets analyst Joe Morford.”
This is true…..
http://bloomberg.com/apps/news?pid=20601068&sid=aQ8Z4df3yJh0&refer=home
Wow a central banker that actually tells the public what to expect
Bank of England Governor Mervyn King said British living standards will slip and economic growth needs to weaken as policy makers refuse to flinch in their fight against accelerating inflation
No explanation of the reason for the problem, that would be even more interesting.
We will get our turn after the election IMO…Big Ben is going to morph into Big Volker after the first of the year….At least thats how I am betting….
I spoke with a a couple of my realtor friends who work in Long Beach, CA and they both stated the we are at the bottom because there are multiple offers on properties. I mentioned that the bottom will be in when real estate is so toxic that no one will be making offers and the banks will be begging for them. This happened in 1996 and will happen again. They look at me like I am an idiot.
I hate all realty whores, especially the fried blonde on Naples
Haiku?
Rise in Cal home sales
Flicker at end of tunnel
‘Twas oncoming train
Tell that to those two Bear Stearns investors that got the cuffs put on ‘em on their front porches in New York on rigging the bidding and inflating the forecasts of their mortgage backed funds. Doesn’t help us much, but I’ll see any payback for this *&#@ at this point.