We All Knew It Was Going To Happen In California
The Sierra Sun reports from California. “Since housing values went up for so long, lenders figured home buyers could keep up with mortgage payments since the equity in their homes would grow.
When housing prices went down, mortgage rates went up and homeowners were having a hard time paying mortgages they shouldn’t have received in the first place.”
“That left banks in a quandary, said Bill Ferrall, director of business relations for the Tahoe Lending Group.”
“‘One of their recourses is to foreclose, and that means they may have to improve the property if they are dealing with a disgruntled owner who might damage the home by pouring cement down the toilet or something crazy,’ Ferrall said.”
“Paul Spaulding, a Realtor in Incline, said he’s dealt with a few in the last year in Incline when homeowners go ‘upside down’ on a mortgage, meaning they cannot make payments any more.
“For Spaulding, handling these issues is still relatively new. ‘I actually wasn’t aware of it (short sales) before last year,’ he said.”
“Ferrall explained lenders are stuck because they don’t actually hold the value of the mortgage, which they sold to Wall Street investors.”
“‘The truth of it is they don’t hold the paper any more,’ Ferrall said. ‘I’d use Countrywide as an example of a lender who may have an interested seller and buyer but they aren’t in charge of the mortgage any more. So they have to go back to the guy who bought it on Wall Street to get the paper back, and by that time the buyer became tired of waiting and moved on.’”
From Portfolio. “To understand why the housing slump has been so deep and so prolonged, one could visit this California city, once called Mudville. A fast-growing bedroom community for San Francisco Bay area workers during the housing boom, Stockton stumbled badly when prices tumbled and the number of foreclosures rose.”
“Bruce Kern, a school administrator in San Joaquin County, lived in Stockton for 17 years, building up a sterling credit score and a steady record of making payments on a house he bought in 2000. After its value doubled, he refinanced.”
“That helped him put money down on a second home in 2006, for his mother who had just moved to town. His timing was terrible. He was soon paying two mortgages that had become worth much more than the houses. Neither home drew any buyers, so Kern chose to foreclose. He’s moving his family to a rented house.”
“‘I’ve always been responsible, so I thought we’d be stretched, but stretched for the right reasons,’ Kern says. ‘It didn’t go that way. It’s going to be very odd going from a homeowner to a renter. But, you know, it’s taken a whole lot of anxiety out of my life.’”
“When Tab Pestlin wife’s job relocated to the East Coast, he put his house on the market. He was surprised when his agent advised him to sell it himself. Pestlin tried, but in the end rented it out. Other neighbors have also chosen to rent rather than sell, he says, but one next door simply went into foreclosure, pulled out the appliances and walked away.”
“‘A lot of agents have pretty much given up on the situation out there,’ Pestlin says.”
“Lately there have been signs that the housing slump is spreading to nearby counties such as Sacramento and Merced, where homes for sale by banks more than doubled in May over April.”
“Martha Lucey says that when her credit-counseling company held a counseling workshop in Modesto recently, a thousand people showed up-three or four times as many as at workshops in Stockton. ‘The line was around the block and down the street,’ she says.”
From MSNBC. “Some houses have been damaged by angry, frustrated homeowners who lose their homes to foreclosure, according to Mark in Stockton, Calif., where the foreclosure rate is among the highest in the country.”
“‘This city has so many foreclosed homes that are trashed there is an ad on local TV offering up to $1,000 to people not to trash their home before they are kicked out of it,’ he wrote.”
“‘Vandals have been hitting the empty homes that have been affected by foreclosure in my area,’ wrote Gloria of Los Angeles. ‘With summer around the corner and kids out of school, I just worry about fires starting or other serious problems happening.’”
“‘My hometown is broke, and the devaluing of the property tax base is cited as one of the reasons,’ wrote Bill, form South Gate, Calif.”
“Some real estate agents report that when they do find buyers for foreclosed properties, lenders are so swamped they’re having a hard time answering the phone. One San Diego Realtor reported that agents have taken to getting up early to leave voice mail for lenders before their mailboxes fill up.”
The Ventura County Star. “Buying a home is a gamble in any market. But a Ventura home builder is trying to protect sellers from future market risk by making a bet of its own.”
“To push buyers off the fence, Row Park Associates, a California limited partnership doing business as Pacific Pointe Condominiums, is offering to protect the resale value of its new downtown Ventura condominiums for five years as part of a new financing program.”
“‘The value of the home would have to go down more than 15 percent from today’s values before our buyers would lose a dime,’ said Dawn Dyer, president of a real estate and brokerage firm representing Pacific Pointe.”
“Another 15 percent decline is unlikely, said Robert Kleinhenz, deputy chief economist with the California Association of Realtors.”
“For example, the median price for an existing, single-family detached Ventura County home has tumbled 30 percent from when it peaked at $711,000 in August 2006, to $497,000 in April, according to CAR. Condominium prices are generally lower.”
“‘I think we’re fairly close to the bottom,’ Kleinhenz said, noting that the market should be stable in five years, with appreciating values.”
“Still, the response has been lukewarm. ‘It’s not what I expected,’ said Harvey Champlin, general partner with Row Park Associates. ‘I expected a stronger positive response.’”
“Buyers have acknowledged that the incentive is a good thing, but it only has prompted one purchase, Champlin said, noting that the difficulty of securing financing seems to be an overriding factor.”
The Hollister Free Lance. “Real estate insiders say buyers are wearily reentering the market with prices too good to pass up. But after months of high foreclosure rates and dropping prices, they’re still cautious.”
“‘All that’s selling right now are good deals,’ said Roger Malech, a Realtor at Morgan Hill-based Intero Real Estate. ‘Buyers can take their time and only buy deals.’”
“Even with April 2008 median home prices in Santa Clara County down 13 percent from April 2007 to $615,000, sales volume is still down 28.3 percent from the same month last year. The median price of a Morgan Hill home in April 2008 compared to the same month a year ago was down 19.9 percent to $623,500.”
“The median price of a Gilroy home in April compared to a year ago was down 20.6 percent to $550,000. The median price of a Hollister home was down 36.3 percent to $372,500.”
“Ironically, now is the time to buy, says Susan Jacobsen, a Gilroy real estate agent. ‘I don’t know what they’re waiting for, but they’re waiting,’ she said of buyers still on the fence.”
“Up to 70 percent of South County homes with pending sales for May are foreclosed or are short sales, said Samia Reichel, assistant VP of Gilroy-based Chicago Title.”
“Jacobsen said she saw a positive change at a recent open house she held. ‘People looking seemed to be sincere,’ she said. ‘They were interested buyers.’”
“Reichel just wishes she were one of them. But after the past few months her industry experienced, she said she couldn’t afford to buy.”
“‘We all knew it was going to happen, but none of us knew that it would be this bad,’ Reichel said.”
The San Francisco Chronicle. “California home construction plunged 37 percent last month compared with year ago, as the glut of foreclosed homes and languishing real estate market dissuaded developers from breaking ground on new projects.”
“Single-family residences led the declines, dropping 52 percent from May 2007 to 3,531. ‘The turnaround isn’t here yet,’ said Alan Nevin, chief economist with the Sacramento trade group. ‘I’ve been traveling the state this month and see really no evidence whatsoever of construction.’”
“Christopher Thornberg, principal at Los Angeles consulting firm Beacon Economics, said last week that the market isn’t likely to reach bottom until at least the middle of next year. The overall Bay Area price will decline between 35 and 40 percent, about double the amount it has come down so far, he said.”
“‘When you do find bottom, you will not see prices immediately start to rise again,’ he said. ‘Housing markets don’t bounce, they splat.’”
The Sacramento Bee. “The California Building Industry reports…Yuba and Sutter counties have seen California’s steepest drop in home starts. From January through May, they’re down 77.2 percent from the same time last year.”
“The only regions close - both in the category of 70 plus percent drops - are our neighbors in Vallejo-Fairfield and Santa Rosa-Petaluma.”
“The Sacramento region (El Dorado, Placer, Sacramento, Yolo counties) has a 48 percent drop, roughly about the state average. Statewide, the BIA still predicts the fewest home starts for 2008 since it began keeping records in 1954.”
“And Monday, Alan Nevin, chief economist for the Sacramento-based home builder trade group, said prospects for ‘major recovery’ by year’s end looks less likely.”
“He put out a bullish forecast in January, saying the market would start to pick up in the second half of 2008. Now he’s scheduled a one-hour address Wednesday at the Pacific Coast Builders Conference in San Francisco. All bets are on eating crow and having to become a gloomier economist.”
‘CBIA President and CEO Robert Rivinius said that while some semblance of a housing recovery is definitely welcome, the projections for 2008 and 2009 are still extremely low and point to the need for reforms at the state and federal level to jump-start the vital housing industry.’
‘Just two years ago, a study determined that homebuilding was a $58 billion a year industry in California, employing more than a half-million people. Today, with production off by nearly two-thirds, that impact is far less and the economic impacts of the downturn are rippling throughout the economy,’ Rivinius said.’
‘Furthermore, if the current projection comes true and we build the lowest number of homes since at least World War II this year, the current increase in affordability could quickly turn around when the pent-up demand for new housing starts outweighing the supply.’
What Mr. Rivinius fails to take into account is that the Homebuilders stole demand from the future when they allowed anyone with a pulse
to get a home loan. Not only that, but by allowing unqualified people to get these toxic loans, they poisoned what would’ve been a much bigger group of potential buyers who now have to wait 5-10 years to rebuild their credit to even think about home buying again. And remember, banks are not EVER going to go back to 500 FICO score approvals. Good credit will be paramount for anyone even thinking about getting a loan going forward.
The so-called “pent-up demand” savior that the REIC complex believe as an article of faith will save the day is very limited. And now that banks are required to have some semblance of underwriting standards to put these loans of to Freddie and Fannie, the ability of those who WANT to buy at the current prices will be severely limited. There are plenty of knife-catchers that STILL believe that we’re going to have a V-shaped rebound, but the fact is, these folks will not be able to get the loans necessary to close escrow to any large degree.
Prices are still WAY out of line with historical norms and average incomes. A 40% peak to trough price decline is only the BEGINNING.
There is a problem with the ‘pent-up demand’.
Counties ‘assumed’ that the houses being built were for real people, with a small percentage set for ‘investors’. Their population counts in other words accounted for more people than actual population growth indicated.
Since they never accounted for the rampant speculation, they overestimated the population.
This ‘pent-up’ demand will definitely include people that in reality don’t exist at all.
If there’s so much pent-up demand then why does the industry need a $300bn bailout?
This pent-up demand should stop the falling prices and put an end to the avalanche of foreclosures, should it not?
AP is reporting that the bailout is picking up steam again, with bi-partisan support. It’s always bi-partisan when they do this level of damage. Sigh.
And isn’t this the bailout bill that (OMG, I can’t believe I agree with him on something) President Bush is threatening to veto?
Yes I believe so.
My hope is that maybe Bush has willingly agreed to play “bad cop” here since he’s not facing re-election. That way, all the congress critters that are up for re-election can feel free to stack this pile of sh** legislation as high as possible, knowing Bush will veto and they can all go back home talking about all the goodies they would have delivered if it weren’t for the evil Bushco Cheneyburton taking one last heartless swipe at the poor innocent populace.
If that turns out to be the case, we will have a lot to be thankful for.
My biggest fear is that this thing will get a veto-proof majority, which will mean that the inevitable will be delayed, in which case I won’t likely be buying real estate again until 2015, rather than the 2010-2011 time frame that I currently anticipate.
‘Pent-up’ demand is still constrained by the clash of fantasy list prices against a reversion to traditional lending standards (the kind that require a high probability the borrower will repay the loan).
Here is a sample of those that process ask no questions and collect:)
http://www2.tbo.com/content/2008/jun/21/oh-my—god-arrested-coke-charges/?imw=Y
But if you figured you’d have 100 buyers, and it ends up that only 85 exist, you are in trouble regardless of price.
The V shapped recovery is possible if their is enough wage inflation. Of course that means we will be killing all of our seniors in the process. Can’t see that as likely.
Anyhow a V shapped market is only possible if banks bottom out and start making crazy loans again along with getting people to sign up for crazy loans again.
Most likely indicates housing will act like it should and track inflation (or deflation) for a substantial time.
Mean time to forget one of these busts is what… 17 years or so?
This one will be much worse so figure 20+ years.
Nope, no wage inflation. Where would it even come from? the unions? A quick look at the latest UAW contracts will dispel that fantasy. Unionized airline employees have been accepting wage cuts since 2001.
The V shapers might suggest making everyone a civil servant - we could have the first economy ever entirely based on shuffling paper. The REIC after all, provides us an excellent model.
Well, the City of San Francisco is trying to be that “excellent model”…
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/03/29/MN7OVQOPK.DTL
To begin, 8,180 employees make more $100,000 per year.
Yeah, you read that right - it’s more a High End Welfare Program than a functioning city government.
SF spent (five years ago mind you, likely more now) more the $200 million on 5,000 homeless ($40,000 per annually). The homeless certainly haven’t seen that cash…
Today the city has a $6.5 billion plus budget, which is bigger than than Chicago’s, a city with 4x the population of SF.
That’s $8,125 of budget money annually per resident.
Disgusted yet?
Perhaps the civil service version of Pig Men reside right here by the aptly name Golden Gate.
It is outrageous, but San Francisco is a county too. To have a fair comparison, you’d have to add in Chicago’s share of Cook County expenses.
Fair enough…
Chicago population: 3,000,000
Cook County population: 5,300,000
Chicago budget: $5.8 billion
Cook County budget: $2.6 billion
(3/5.3)*2.6 = $1.47 billion
$5.8 billion plus $1.5 billion = $7.3 billion for City of Chicago plus Cook County obligation/portion
San Francisco budget = $8,125 per resident
Chicago budget = $7.3 billion/3,000,000 = $2,433 per resident
So, we have $8,125 versus $2,433.
And, from anecdotal evidence (perhaps some below), I would propose that Chicago is a much better run city.
*****
SURVEYS: A Chicago
A success story
Chicago has come through deindustrialisation looking shiny and confident, says John Grimond. Can other rustbelt cities do the same?
The Economist - Mar 16th 2006
APPEARANCES often deceive, but, in one respect at least, the visitor’s first impression of Chicago* is likely to be correct: this is a city buzzing with life, humming with prosperity, sparkling with new buildings, new sculptures, new parks, and generally exuding vitality. The Loop, the central area defined by a ring of overhead railway tracks, has not gone the way of so many other big cities’ business districts—soulless by day and deserted at night. It bustles with shoppers as well as office workers. Students live there. So, increasingly, do gays, young couples and older ones whose children have grown up and fled the nest. Farther north, and south, old warehouses and factories have become home to artists, professionals and trendy young families. Not far to the east locals and tourists alike throng Michigan Avenue’s Magnificent Mile, a stretch of shops as swanky as any to be found on Fifth Avenue in New York or Rodeo Drive in Beverly Hills. Chicago is undoubtedly back.
Back, that is, from what many feared would be the scrapheap. In 1980, when The Economist last published a survey of Chicago, it found a city whose “façade of downtown prosperity” masked a creaking political machine, the erosion of its economic base and some of the most serious racial problems in America.…
http://www.economist.com/surveys/displaystory.cfm?story_id=E1_VGDTQGP
“Another 15 percent decline is unlikely, said Robert Kleinhenz, deputy chief economist with the California Association of Realtors.”
“‘I think we’re fairly close to the bottom,’ Kleinhenz said, noting that the market should be stable in five years, with appreciating values.”
YOU FOOL! When California homes are about 3 times median household income rather than 6.2 times median household income as they are now, then we can all start talking about a bottom.
Keep the the popcorn popping,
Red Baron
“Ironically, now is the time to buy, says Susan Jacobsen, a Gilroy real estate agent. ‘I don’t know what they’re waiting for, but they’re waiting,’ she said of buyers still on the fence.”
If I have to see another Realturd tell me that now is a great time to buy, I may go postal. When is it NOT a great time to buy. Has anyone EVER met a Realtard that DIDN’T say that now is a great time to buy?
I’m truly hoping that these scumbags get regulated like broker-dealers. Maybe they’ll have to graduate from high school, get a GED, and stop making these asinine claims otherwise they’ll be held liable. ARGH.
Susan, you garlic smelling, don’t know it all, ironically challenged, fence watching, selling impaired agent of deception. Self-actualize into a garlic bulb and work yourself into my tomato sauce. I will appreciate you much more then.
Now, there’s a guy who really knows how to deliver an insult!
Sounds like you need to head up the 5, take a right on the 14, and don’t stop until you get to JT country. Load up on some butt skewers and the rest will just come naturally.
OK, let me give you a real-life example.
Offer me an opulent mansion for three million:
I’ll tell you ‘no, can’t afford it’.
Lower the price to 1 million. Quite the discount.
My answer:
‘No, can’t afford it’.
You get it?
It doesn’t matter how much the prices have already dropped when the vast majority of people still ‘can’t afford it’.
Don’t forget that much of the fault lies with that large portion of the MSM that still insists on qouting them as experts, and thus helping to spread their nonsense.
“…MSM that still insists on qouting them as experts…”
No kidding. Have you seen the new commercials out that suggest that realtors see things that we can’t?
First one I saw was a buying couple standing in the back door looking at the river that runs through it. Good thing their realtor was there and saved the day when he suggested that “this house might have some insurability concerns” as he daydreamed about a storm/flood.
Experts? Nah….Masters of the Obvious is more like it.
A more accurate depiction would have had the roles reversed. The buyer saying, “hm.. not sure about this place” with the realtard/realturd cheerfully pointing out, “but now’s a GREAT time to buy!”
Yes, it could have been good time to buy, but selllers are still hoping to sell their houses 50% higher than it should be.
Madam Sunan Jacobsen should be concerned about that … .
In Huntngton Beach 3+2, 1100 sq feet house is still $500,000. Untill it is around $200,000 nobody, who has higher than elementary education, will buy thouse houses.
Ah Gilroy, the home of $1 million dollar homes now discounted to $800K. Surrounded by the stink of agriculture, long commute down 101 to jobs, high percentage of mexican nationals , 1st place to get heavy smoke from the abundant fires we are having this year. Reserve me a place Susan cause I can’t get enough of those qualities.
Gilroy homes should be selling for $150K tops. Nothing there.
When home prices drop below 100 psf I will start looking.
can’t get enough of those qualities ??
Gee’s…You forgot the garlic festival !!
LaLawyer, you must educate us on the difference between a Realturd and a Realtard. If there is a difference.
One San Diego Realtor reported that agents have taken to getting up early to leave voice mail for lenders before their mailboxes fill up.
Folks, these are dark times when agents are getting up earlier.
Watch out for the alarm clock bubble!
NAR should have a commercial in the same vein as the army which goes something like…
“We leave more voice mails before 9AM than most people leave all day.”
“Ironically, now is the time to buy, says Susan Jacobsen, a Gilroy real estate agent. ‘I don’t know what they’re waiting for, but they’re waiting,’ she said of buyers still on the fence.”
They are waiting for prices to bottom out, Susan. What is it about a price collapse that is so hard for used home sales people to understand?
>> “Ironically, now is the time to buy, says Susan Jacobsen, a Gilroy real estate agent. ‘I don’t know what they’re waiting for, but they’re waiting,’ she said of buyers still on the fence.”
Even if you didn’t want to catch a falling knife, there’s nothing ironic about inability to afford a house because of unemployment, bad credit, no savings for down-payment, or low income.
Not many people can buy houses. Ginning the works with free money just made it temporarily appear like they could.
I was under the impression that garlic would ward off Landpires like Susan…
I snorted… landpires
“Not many people can buy houses.”
This is only because the prices are too high (so far)…
That’s the sentence I ruminated on after I wrote it. In reality not many people could afford to buy houses when they were at half the price (or less then half the price) that they are at now.
By the time this is over in 15 years, the only cheaper money will be available at the whim of financial centers overseas. Whatever is considered legal tender here will be inflated by an order of magnitude over what the dollar’s presently worth.
“That’s the sentence I ruminated on…”
My first guess was that “ruminated” must be a synonym for regurgitated, but then I thought, no, maybe it means defacated. And yet, it could mean urinated. But come to find out, to ruminate means to chew cud.
I’m so confused.
Susan understands the meaning of “Ironic” about as well as Alanis Morrisette does. Here’s to a black fly in her Chardonnay.
–
“‘We all knew it was going to happen, but none of us knew that it would be this bad,’ Reichel said.”
You are a liar, or an ignoramus. Only some “knew it was going to happen” and some also “knew that it would be this bad.” It is obvious that you were in the dark all these years.
Jas
“‘We all knew it was going to happen, but none of us knew that it would be this bad,’ Reichel said.”
Perfect…shows the liars that they are.
Round 47, of why you should have ZERO Dollars in American banks @ this point in time…
“That left banks in a quandary, said Bill Ferrall, director of business relations for the Tahoe Lending Group.”
“‘One of their recourses is to foreclose, and that means they may have to improve the property if they are dealing with a disgruntled owner who might damage the home by pouring cement down the toilet or something crazy,’ Ferrall said.”
From the original post:
“He put out a bullish forecast in January, saying the market would start to pick up in the second half of 2008. Now he’s scheduled a one-hour address Wednesday at the Pacific Coast Builders Conference in San Francisco. All bets are on eating crow and having to become a gloomier economist.”
Which means that his January forecast was missing one letter. It’s the letter “t”. Put it at the end of the word “bullish” and sit the letter “i” down next to it.
“‘When you do find bottom, you will not see prices immediately start to rise again,’ he said. ‘Housing markets don’t bounce, they splat.’”
Right you are, they “splat”… Please splain that to this Shill…No don’t waste your time his head is to deeply embedded up his arse.
“Another 15 percent decline is unlikely, said Robert Kleinhenz, deputy chief economist with the California Association of Realtors.”
“Splat”!
Thornberg has had some really good quotes over the years (recall January 2006: “Orange County is going to get hammered”)… but this one is one of my favorites.
Orange County will get hammered…
Hammer… Meet Orange… Splat!
(Don’t get too much pulp on your shirt.)
Later, a passerby: “Ho man, what was that in a former life?”
Sledge-o-matic
http://youtube.com/watch?v=EPrYulad8W4
SPLAT!
This is one of the few times that I feel like arguing with Ben Jones about his headline. I would’ve made the Thornberg quotation the headline. Guess it’s not sufficiently Cali-specific.
I was just thinking this flake is the ‘deputy chief’ which means there is a chief which means they have all kinds of assistants and several offices which require big bucks to run. Their minions/realtors/mind numb robots pay yearly dues to be lead by this circus of fools that say the same thing over and over again. I mean damn, are these folks so dumb that haven’t gotten the message yet. “Now is a great time to buy real estate, it doubles on average every ten years” “All real estate is local” ” Buy now or be priced out forever” Etc… I wouldn’t pay a dimes worth of dues to be feed these lines of crap. You’re more likely to get better economic advise at your local home less shelter.
Robert Kleinhenz, deputy chief economist with the California Association of Realtors.”
He’s like a Barney Fife of bad finance…
No bullets, just a bandolier full of bad ideas.
This is just wrong.
http://dealbreaker.com/2008/06/unemployed_banker_wears_mit_gr.php
and his name is Joshua…
He’s only been in the IB world for four years. Two and two so he job-hopped too. Not enough to build contacts and he definitely looks like a marginal player.
Not surprising that a marginal player is having no luck with jobs. Wall St. overhired, and now it’s payback time.
txchick,
Were you refering to the Youtube video about Kermit? If you did, your right that was so wrong. Poor green frog.
Wuz thinkin’ the exact same thing. Poor frog, as for the banker man - his brood is better off in NE anyway.
If a house price is over $600,000, the buyer has to be making over $200,000 a year.
Not many of those.
“Buyers have acknowledged that the incentive is a good thing, but it only has prompted one purchase, Champlin said, noting that the difficulty of securing financing seems to be an overriding factor.”
Difficulty securing financing? Which says what ignoramus? That despite the fact you’ve dropped 20%, your prices are still too friggin high!
How about if you rent out the rooms or B&B it? How low could you go?
…and that was BEFORE gas prices bubbled up like they have, unless of course they are working from home. <– 1/2 of 1 % maybe???
Oh, somewhere in this favored land the sun is shining bright;
The band is playing somewhere, and somewhere hearts are light,
And somewhere men are laughing, and somewhere children shout;
But there is no joy in Mudville— the real estate market has struck out.
_______________________________________________________________
“To understand why the housing slump has been so deep and so prolonged, one could visit this California city, once called Mudville. A fast-growing bedroom community for San Francisco Bay area workers during the housing boom, Stockton stumbled badly when prices tumbled and the number of foreclosures rose.”
“Ironically, now is the time to buy, says Susan Jacobsen, a Gilroy real estate agent. ‘I don’t know what they’re waiting for, but they’re waiting,’ she said of buyers still on the fence.”
We’re waiting for prices to reach 120x rent, and unlike Susan, our livelihoods don’t depend on housing sales taking place, so we can be very patient. Meanwhile we’re paying half as much in rent as FB’s of the past few years are paying for their mortgage, and we aren’t suffering declining net worths while we do it. Let’s hear it for the fence!
‘Let’s hear it for the fence!’
Ha ha, best line of the day!
Yeah, just be careful when Casey come up to bat again tomorrow. His home run might just conk you on the head.
Fences make for much more comfortable seating than do Joshua trees.
–
“Some houses have been damaged by angry, frustrated homeowners who lose their homes to foreclosure, according to Mark in Stockton, Calif., where the foreclosure rate is among the highest in the country.”
No, you dope, these are frustrated home-debtors and not homeowners. I was reading an economist’s blog and these morally bankrupt “professionals” were debating the benefits (”externalities”!) of govt promoting “homeownership.” Govt getting involved in pushing debt on households is a morally reprehensible activity. Houston, we have a bad econo-political system of the debt pushers.
Jas
“The Sierra Sun reports from California. “Since housing values went up for so long, lenders figured home buyers could keep up with mortgage payments since the equity in their homes would grow.”
No-one bothered to question how first time home buyers would then be able to get into the market. Frankly, they didn’t even care as long as they got theirs.
No one bothered asking what increasing home values had to do with non rising incomes and ability to pay. Oh yeah, the model was for you to take out a home equity loan to pay your rising payments. Duh !
Went by a REO foreclosed property this am and watched as two separate groups of people looked at the property. Neither group looked as though they could afford the property, but the second, an elderly couple had a 20 to 30 ish daughter in tow so they could be looking at buying the property for her. I asked the RE agent what the property was going for, his answer was 309K (1300 sq.ft property); same property in 2004-2005 was 649K. Property next door is a rental with two families living in it and another two houses down also has two families in it; another 4 properties within the block are also rentals. When it sells I’ll find out what is sold for but my guess is the RE agent is probably out trying to play on side against the other.
As in, if you don’t bid on this house right now, you’ll lose out to this other team? And then you’ll be renter-losers for life? Just like all of the neighbors around here?
$309K in Salinas ? As someone else said better than I can….
BWAHHAHAHAHAHAHAHA (Deep Breath) HAHAHAHAHH !!!!!(snort)
You guys have probablly already had a field day with this on another thread but I had to ad this in the CA thread anyway.
Our old friend Gary Watts is now apologizing(OCRegister todays business section).
http://lansner.freedomblogging.com/2008/06/23/real-estate-booster-apologizes-for-misreading-crystal-ball/
Turns out it was “in the bag”. Problem is, it’s on the front porch on fire.
Does anyone have and data from the San Diego RE auction at the convention center on Sunday? I’m “hella curious”!
this is funnier than sh**
http://www.portfolio.com/interactive-features/2008/06/Who-Killed-The-Economy
That was fun, but I was really hoping Cody would be the #1 cause of our economy meltdown…
Just goes to show you how people are still duped over the old fool. I took Easy Money Al and Fannie to the final two, and finally chose Fannie. 81% did the same, but only 19% voted for Bubbles Greenspan.
hey, I like Cody! He’s cute.
Kinda looks like one of the Cavemen.
I have Bush and the Realtors in a final smackdown.
I had realtors and Cioffi. Realtors won.
I couldn’t bring myself to give Bush another win at anything. But the thought of the Realtors winning was even worse.
Sorry, I had bubbles beating the realWHORES in quadruple OT on an impressive 2 point rate reduction as time expired.
I had Greeney with GW a close 2nd
I ended with China and Hedge Funds with a China winner.
I had Greenspan against Bernanke. Greenspan won
My winner is Florida condo flippers. The folks at the top can be counted on to be Bad, but the ignorance of the public at large was just too tempting to folks like my runner-up (Mozilo).
“the BIA still predicts the fewest home starts for 2008 since it began keeping records in 1954.”
Wow, yesterday, they referenced statistics going back to the 1970’s…now they’ve “discovered some from 1950’s…
Elvis, if you still out there, I hope you’re a renter.
PS, George Carlin was… renting a house… when he past along, talk about a “bitter renter”.
IIRC, the 50s were still pretty tough times in Jolly Old England. Their postwar experience was no where near as prosperous as ours. After all, Fonzie didn’t live in Manchester.
After all, American didn’t get bombed like England did during WWII.
A few years ago I read a biography of Rosalind Franklin.
She did the x-ray crystallography work which Watson & Crick “used” in 1954 to determine the double helix structure of DNA (you may know the rest of the story; it was described as a rather duplicitous act).
Brenda Maddox’ description of post-war England was something I had not expected from the book and it contrasted greatly with Franklin’s own description of her travels in the US in the mid to late 1950’s. Franklin found Americans a bit crude in a land of plenty (the food especially), and saw much better funding for scientific work here, as well (even pre-Sputnik), if I recall.
Sadly, Franklin passed before any public acknowledgement of her work.
And England did not get bombed as bad as Germany. By the latter 1950s German industry was surging - it was their “economic miracle”. Around that time they entered into the Monton Union with France - the first baby step towards the E.U.
England, OTOH, had a moribound economy. I some ways one could almost make the argument that they didn’t get bombed enough because much of their industrial infrastructure was old and left relatively untouched by The Blitz.
“‘This city has so many foreclosed homes that are trashed there is an ad on local TV offering up to $1,000 to people not to trash their home before they are kicked out of it,’ he wrote.”
Wow. There are enough incipient foreclosurees to warrant this sort of ad.
Is this what they call an ‘inflection point’? Or just a ‘Oh, Sweet Baby Jeebus this place is completely fooked’ moment?’
I can’t keep track of the nuances in distinction.
A JT can produce a pretty mean inflection point!
Especially if the JT “inflects” while it’s doing its job.
Yeah I mean that is flirting with extortion.
Give me money or I’ll trash your house!
Again I can’t see this all being the work of new entrants into loan-ownership? With as widespread as foreclosures have become and as many homes are getting trashed “I” find it hard to believe subprime borrowers can be held accountable for ALL of this behavior.
I haven’t yet understood why more lenders don’t offer people money to leave in a civilized manner. Have posted before that I have undertaken three repo’s, and that none of them required me to pay the costs of actually foreclosing. In one of these cases, I gave the FB’s $200.00 to sign a quitclaim deed and go away. The foreclosure would’ve cost ten times that. Perhaps the reason why big lenders can’t do this is, they have too much REO and don’t really want occupants to go away. Yet they could certainly save some $$$ by paying a “get out clean” bonus. (no ???)
So I visited Lake Arrowhead last weekend starting to nose around for a house. (my home burned in the fires) At anyrate, this realtor starts gvling me a line of B.S. Of course he said, prices will never crash here. I heard that everywhere I have visited. I then asked if he has seen the reo and pre-foreclosure list. He smarted off by saying “maybe you should be the real estate professional?”.He then told me the 700-900k homes have clearly come to a screaching halt in Arrowhead. But the under 400k stuff has sold.
We both agreed that this is not the bottom. I think we have a long way to go!I think I will sit on my mil of insurance dough and wait a while longer.
Arrowhead’s beautiful, but I could NEVER live there. Went up for a small claims case on behalf of my company a few weeks ago and all those switchbacks made me nauseous.
My folks bought (and sold) a vacation house in Big Bear in the 80’s. Up until the “bubble” this area has never been an easy place to sell a house.
My wife and I looked at property in Lake Arrowhead in 1995-96. The market there at that time was dead for sellers and had been for years.
Most of the homes we looked at were empty, many had never been lived in. The homes were nice and the prices on most that we surveyed were around $90.00 or less per Sq ft. Most were around 2800-4000 Sq ft and many were three story including the “kickout” (basement).
We came to find out over time, through several sources, that many of the homes in the area were being rented out to wives and girlfriends (and the children) of convicts.
This seemed to explain why the Arrowhead/Big Bear area was the number one or two release point for the local prison(s) and jails to cut loose of their former “guests” at the time.
This info along with our Arrowhead realtor telling us she was taking classes on how to get section 8 tenant’s into her own Arrowhead rentals caused us to quickly lose interest in the area.
Lake Arrowhead also didn’t have any “real” economy other than tourism and it would have been a long drive down (and up) the mountain every day to get to where the jobs are.
So my co-worker found a buyer for his cheesy condo in south OC, and says he stands to make 80k if deal goes thru——he bought the place in 2000. Lucky you, i say, you going to rent awhile and wait for things to bottom out?
Oh, no–i am putting in offer on new place tonite!
Says he hates to rent, and never mind the condo he’s selling looks just like cheesy apt. complex complete with parking lot view.
It’s like god wants you to have a big chunk of free money and you just won’t take it…
O well, I’m with George Carlin, rip: It’s all just fun to watch.
“The drought has pushed water prices on the open market to about $1,000 per acre-foot, or 10 times the amount charged by the U.S. Bureau of Reclamation, Woolf said. An acre-foot of water is equivalent to about 326,000 gallons, or as much as one to two families use in a year.”
http://www.bloomberg.com/apps/news?pid=20601109&sid=aQHnfaaeWKCs&refer=home
________________________________________________________________
What’s the value of a house, where you turn on the faucet and nothing comes out?
–
‘I don’t know what they’re waiting for, but they’re waiting,’
Why are they waiting to buy in Gilroy? You don’t know because you are a bimbo. Live with that. Apply yourself to a menial job, like picking garlic during the season, something you should be able to manage.
Jas
“offering to protect the resale value of its new downtown Ventura condominiums for five years as part of a new financing program.”
“‘The value of the home would have to go down more than 15 percent from today’s values before our buyers would lose a dime,’ said Dawn Dyer, president of a real estate and brokerage firm representing Pacific Pointe.”
“Another 15 percent decline is unlikely, said Robert Kleinhenz, deputy chief economist with the California Association of Realtors.”
Does anyone else find these paragraphs as laughable as I do? Why do people even listen to these “professionals” who clearly only have their own self-interests at heart?
“Does anyone else find these paragraphs as laughable as I do?”
Well now Hailey, I believe you already know the answer to that, but I’ll bite and answer anyway…let’s see, I think it must be…let me think…can I phone a friend?…how about ask the audience?…guess I’ve already used the 50-50, since the only two remaining answers seem to be “no” and “yes”…OK I’m going to take a wild guess…hmm…”YES!”
(Do I get my $32,000 now?)
“To understand why the housing slump has been so deep and so prolonged, one could visit this California city, once called Mudville. A fast-growing bedroom community for San Francisco Bay area workers during the housing boom, Stockton stumbled badly when prices tumbled and the number of foreclosures rose.”
There is no joy in Mudville—mighty Casey
has struck outjust lost his home to foreclosure.“so prolonged”?
One or two years is prolonged? The collective threshold for pain has never been lower.
I was just forwarded an email that is being circulated by realtors and RE attys down in South Florida. It’s embedding some video made June 17 by Chimpo Cramer saying that Florida RE would turn around and go up big from here. They’re urging everyone to forward it to buyers on the fence in S Fla because as we all know, the downturn has been “psychological.”
LOL!!!!!!!!!!!
BWAHAHAHHAHAHAHHHHHHHHHHHHHHHHHHH!!!
“It’s embedding some video made June 17 by Chimpo Cramer saying that Florida RE would turn around and go up big from here.”
Potential buyers must be flush with cash after following his Bear Stearns advice, maybe enough to buy a small decrepit outhouse in a not-so-nice neighborhood.
I watch him once in a while for sh!ts and giggles. He’s hilarious. Here’s the way I see it, you do the total opposite of what he says. His financial advice is good for one thing, a guide to what not to do.
Cramer was on Chris Mathews Show on Sunday…Called a housing market bottom and said in 9 months its going the other way…
Chapman University’s updated forecast today predicts that housing prices will decline in OC and CA by -16.1% and -23.6% in 2008 and -9.0% and -7.1% in 2009. Total decline from the peak is about -30% and that prices will be getting close to the eventual bottom.
Chapman has been more conservative than UCLA without Thornburg, but I think it is still going to be worse with peak declines of -40% to -50%.
OT… Team Dumb-Ass in D.C. has the “Bill” ready to rock N roll. White House Likes it. Oh boy!
http://apnews.myway.com/article/20080624/D91GMUSO0.html
LaLawyer, if you ask a stock broker if its a bad time to by guess what he/she will say? Ask a barber if you need a haircut or trim. Follow the money!
“Ironically, now is the time to buy, says Susan Jacobsen, a Gilroy real estate agent. ‘I don’t know what they’re waiting for, but they’re waiting,’ she said of buyers still on the fence.”
Susan, never…EVER, try to grab the guillitine before you hear the THUD!
LOL
“Jacobsen said she saw a positive change at a recent open house she held. ‘People looking seemed to be sincere,’ she said. ‘They were interested buyers.’”
I knew I shouldn’t have flashed that sincere look at her open house.
I was sincerely disgusted with the price.
Let’s all get together, tilt a few, then practice our “sin-cerity”, rent a bus and travel around to open house after open house… We can all have a ton of fun for next to nothing and stimulate the economy by fooling fools into buying. Come on people now, smile on your brother, every… you know the rest!
I’m just loving every minute more than the last.
I read
“I shouldn’t have flashed her at that open house”
“The turnaround isn’t here yet,’ said Alan Nevin, chief economist with the Sacramento trade group. ‘I’ve been traveling the state this month and see really no evidence whatsoever of construction.’”
Time to get the bloodhounds out to help look, wipe a cloth over some granite and stainless steel to help the dog with the scent. I thought I saw some construction here in the SCV, I was wrong, just a mad fb trying to get the copper pipes from the outside in.
The Sierra Sun reports from California. “Since housing values went up for so long, lenders figured home buyers could keep up with mortgage payments since the equity in their homes would grow.
————————-
Is it really possible that this was the plan - that people could “keep up with payments” because the value of the asset would increase, hence allowing ever more borrowing against it, but never relying on actual income - never actually paying down any principal but going deeper and deeper into debt forever?
Was someone with an income of $50k supposed to service mortgage payments of $5000 a month, NOT with their real income, but by taking cash-out refis against the property over and over again, maybe twice a year or more, making up some or all of the monthly mortgage payment with the continually borrowed money?
It all seems so ridiculous and insane now, but THIS is what the entire premise of the housing market and “household wealth” was built upon - fraudulent paper equity always eclipsed by massive growing debt.
I can state now that I’m a firm believer in 90% drops in housing prices in certain areas from the bubble peak - condos along the coasts going from $1 million to $100k, or tear-down inner city shacks going from $600k to $60k at best. It could even be as much as 95% to 98% off - consider a 500 square foot condo in Miami or San Diego that sold for a half-million in a building where only 20% of the units are currently paying HOA fees and the building needs two million dollars of plumbing and roof work, and the property taxes are in arrears for $200k?
Concerning California as this article does, the 15 year run-up that relied on the issuance of more debt to service debt as described above means that a almost whole generation of “home owners” there has been operating under an unsustainable model. As always, I’ll predict that CA as a whole will fare the worst of all the bubble areas, and the average decline will approach 75% before this is all over. What does that equate to - 2001 prices?
az,
I am praying you are right. That would bring housing down to the 200-300K range here in Rancho Santa Margarita. In effect, it would affordable for the 50-100K per year crowd. I would gladly pay 250K right now for a nice home with 3-4 bedrooms and 2 baths with about 1600 sq. feet, preferably on 1 level. That would put payments in the 1500/month range with another 500 for impounds, which at 2 grand fixed would be nice. I have a nice cushy goobermint job, so staying for 10 years wouldn’t be out of the question. Besides, I wouldn’t be looking to make bank with the house. Any profit years later down the road is just gravy.
is there an other type?
OCDan,
Here’s my guess with 25 years knowledge of that area:
The best that most likely is to happen in your area, sans a true “depression” in the 21st century…a 3-4 bdrm …maybe a distress sale and you “somehow” climb over the backs of “everyone else”… to “seal the deal”…$450,000 in the worst of conditions and the best of circumstances…I say that because of… the population size of “The O.C”, …the education level of the “locals”… the “smart money” piranhas that churn the waters in that territory… the proximity to ocean, mountain, “social life” and good schools across the board. That would take pricing back to around the 1992-1998 range.
By the way, renting is O.K. there right? Some nice places for around $2000.00 to $2400.00 …My daughter is just around the corner & down the hill in Old Trabuco, living in a “cottage”.
my mom owned a 4 bed 2 ba house in HB, 2 miles to the ocean, four houses from Central Park
It was appraised at 330K in 1989
Appraised at 180K a year later
I think prices in Rancho Santa Margarita (didn’t even exist when I grew up in OC) can definitely fall to your price range
Hey OC Dan:
I think you are already getting close. I think a year from now you will be good to go.
I am seeing ones in the 400Ks (Sq fT etc in your range) which used to be in the 600K’s just a year ago in RSM.
I agree.
Homes are off 33% of their peak in some cases. It’s just a matter of time and the economy returning to fundamentals now.
All over but the shouting.
Could someone crash the market over here in northcounty sd?
If houses were affordable I wouldn’t have to worrry about the sketchy stock market, I’d invest in my life.
And no, no granite counter tops.
I’m thinking formica!
Back to the 60’s.
I feel your pain, Ouro Verde. I feel like a little kid on a car trip, Are we there yet?
God I love simple math applied directly to silly home moaners…
a 100% run up in price only needs a 50% fall to return to its original price. GOT TO LOVE IT.
Is it really possible that this was the plan - that people could “keep up with payments” because the value of the asset would increase, hence allowing ever more borrowing against it, but never relying on actual income - never actually paying down any principal but going deeper and deeper into debt forever?
Apparently, there are some insane, so-called financial advisors that give this type of advice. There’a a radio guy named Ric Edelman who calls himself a financial planner broadcasting in New York City and, I guess elsewhere …
Check out his ridiculous advice regarding mortgages:
Never own your home outright. Instead, get a big 30-year mortgage, and never pay it off — regardless of your age and income.
Sacramento is already getting pretty close to 2001 prices. I sometimes check the price of the home I sold in Natomas Park in Jan. 2005 for 450k. It’s now priced on Zillow at $296k. I paid 220k for it new in Dec. 2000. I would imagine true pricing is at least $20k below the Zillow price. I just don’t know how accurate they are.
Is Natomas Park in north Natomas or south Natomas? Parts of south Natomas look like ghetto to me. The whole area is considered a flood plain and therefore not even an area I’d consider. I’m only seeing significant price drops in certain bubble areas of Sacramento such as Natomas, Elk Grove, Lincoln, etc. I’m also seeing price drops in all other communities. In my neighborhood, East Sac, sales have slowed, but the houses do sell eventually…..just watching and waiting.
Christopher Thornberg, principal at Los Angeles consulting firm Beacon Economics, said last week that the market isn’t likely to reach bottom until at least the middle of next year. The overall Bay Area price will decline between 35 and 40 percent, about double the amount it has come down so far, he said.”
I disagree with Chris Thornberg regarding the fact we will reach the bottom of the market by the middle of next year. We are 2 or 3 years from the bottom in my opinion and then the market will be flat for another 3 or 4 years at best.
I agree with you. While the outlying counties are in a nice free-fall similar to that of Southern California, the City, peninsula, and Marin have barely started to decline. It’s going to take a couple of years to bottom out even after the declines start in earnest.
But decline they certainly will - there’s no way that counties within commuting distance of San Francisco can drop 50% or more (and they’re well on their way to that) while San Francisco itself stays unscathed. The disparity will eventually be arbitraged away, to the accompaniment of the most self-entitled howling and screaming we’ll likely hear in our lifetimes.
Well when that howling is going full blast (and it has to be a loooooooooooong loud painful howl coming from the self entitled) I will cloak myself in sheep’s clothing and make my move when it’s a full moon. Whooooowooo, whooooowooo, whooooowooooooooooo.
“But decline they certainly will - there’s no way that counties within commuting distance of San Francisco can drop 50% or more (and they’re well on their way to that) while San Francisco itself stays unscathed.”
Absolutely, the lower priced outlying areas were Subprime Central, so they’ve already blown up as those loans reset after 1 or 2 years.
SF, Marin and The Peninsula, with their higher prices, are heavy AltA and Prime IO/Pay Option/NegAM ARMs for recent home purchases. I think Marin was running at about 70% ARMs for the last few years. These loans have longer resets than Subprime, e.g. 5 years for most.
Nathan, notice that Thornberg said “at least” …thus, you don’t disagree with him, you are just willing to commit yourself further than he his. He makes a lot of statements like this: “it will be AT LEAST this bad” (i.e., much worse than most others are admitting)
With YoY price drops of 15-20%, it might not take that long. From a 2005 peak and a somewhat slow 2006 drop, that would total maybe a 35-50% drop from peak, which is getting close to what I’d expect.
I have to say prices are less sticky than I thought. I couple years ago I thought that 10% YoY price drops would have been about the maximum.
Thornberg is a real sneaker. Didn’t he recently predict drops of “up to” 30%?
Is’nt that a tad unfair? Only Nostradamus or the experts paraded on CNBC can predict the exact price drop to the last percentage point and the exact minute when the bottom hits.
I suspect that Thornburg speaks much more conservatively than what he is actually thinking. I could imagine there could be a lot of good reasons for that.
ALT A tsunami is coming very soon more and more forecloseures
Not to worry, Mighty Mouse (Congress) is on the way!
“Paul Spaulding, a Realtor in Incline, said he’s dealt with a few in the last year in Incline when homeowners go ‘upside down’ on a mortgage, meaning they cannot make payments any more.
The reporter who printed this unchallenged is a f*****g idiot, and this R-E agent should lose his license if he actually said this. I’ll have some spare time sitting in airports tomorrow, so maybe I’ll fire off a letter.
Obviously, when you’re “upside down” it merely means you can’t sell your house for what you owe on it. So friggin’ what! You can keep paying for it AS YOU AGREED TO WITH A CONTRACT.. Upside-downness has no bearing on that.
Also, why isn’t anyone prosecuting people who destroy bank property (flushing concrete down the toilet, etc.)….Isn’t this bank robbery?
I’ve got a question about the house destroying owners in foreclosure.
I thought you had to have a insurance policy in effect the entire time you are there, so my question is will the damage be covered by insurance companies with the policies that are mandatory to having a mortgage.
Just wondering about how that works with a home that’s been torn apart.
I dunno about the banks, but I’m a lot sloppier with insurance enforcement than with mortgage payments. I’m always bragging about how none of my clients is in default, by which I mean, none of them is late with his/her mortgage payment. Lots of them go into technical defaults in the sense that I receive notices from their insurers that their policies have lapsed. The clients generally take care of this within a few days after the lapse. But these are clients who are actually paying the mortgage. I would think that clients who have stopped paying the mortgage would stop paying the insurance too. In fact, I have the impression that bigger lenders collect taxes and insurance directly from the borrower. No? (I’m too lazy.)
“I’ve always been responsible, so I thought we’d be stretched, but stretched for the right reasons,” Kern says. “It didn’t go that way. It’s going to be very odd going from a homeowner to a renter. But, you know, it’s taken a whole lot of anxiety out of my life.”
Heh, wait ’til the local school district eliminates his administrator’s job.
For those homeowners which still have equity left on their homes, what can they do to protect or save their equity other than selling their homes?
Nothing.