You Can’t Sell Anything Right Now In California
Today’s Local News reports from California. “Ray Ellis, owner of Escondido Coin and Loan pawnshop, is used to customers coming in with rare or collectible coins for one of the four-month loans that is the industry standard. Recently, customers have been seeking larger amounts, up to $50,000, Ellis said. He said one gentleman came in with a sack of gold coins in order to pay off debts on his investment properties in Orange County.”
“The credit crunch and economic turmoil is sending bigger fish their way. ‘We’re seeing lots of people that we wouldn’t have seen before,’ said Mike Robinson, treasurer of the Collateral Loan & Secondhand Dealers Association (CLSDA) and owner of Crown Jewelry and Loan in San Diego. ‘We’re definitely seeing more affluent people coming through because I’m seeing bigger diamonds.’”
“Irene Longoria, store manager of the Oceanside Gems N’ Loans, estimates that about 30 percent of her customers are new this year. She said they’re coming from Del Mar, Solana Beach and other upscale residential areas.”
“‘We’ve had people come in with sandwich bags of jewelry. This recession is hitting everybody,’ Longoria said.”
“New customers are finding out a lot more than they bargained for at their local pawnshop. John Martin, a jewelry professional at Gems N’ Loans, which has locations in Vista and Escondido, said a woman recently expected hundreds if not thousands of dollars for the diamond ring she received as a gift, only to find out it was zirconium.”
“‘She said, ‘It’s a diamond,’ and I said, ‘It’s not,’ Martin recalled. ‘Then she said, ‘That son of a b… !’”
The North County Times. “Continuing a downward trend that began nearly two years ago, sales tax revenue in Escondido was 7.1 percent lower during the first three months of 2008 than it had been in the first three months of 2007.”
“Escondido and Carlsbad are more susceptible to economic downturns than most other cities, because most of their revenue comes from sales tax generated by auto dealers and megamalls. Such businesses tend to thrive in flush economic times but are typically hit hardest in a recession.”
“Councilman Daniels said the new numbers dash some hopes for a quick recovery. ‘This makes it clear to me that it’s premature to begin hoping for a recovery,’ said Daniels. ‘I think this is going to take longer than anyone expected.’”
The Daily Bulletin. “Recent home buyers may be distressed over slumping home values, but many can at least look forward to a reduced tax burden. Assessor’s offices in the Inland Valley’s three counties have been reviewing the value of properties purchased since 2004.”
“Since the peak of the market in 2006, median home prices have fallen 28 percent in the Riverside-San Bernardino-Ontario metropolitan area - from $400,700 to $287,100, according to the National Association of Realtors.”
“The San Bernardino County office will be reviewing all properties sold since Jan. 1, 2004, a total of 60,000 to 100,000 properties, said spokesman Ted Lehrer.”
“In Los Angeles County, officials have reviewed about 320,000 homes sold since July 1, 2004, and have reduced the assessed value of about 120,000 residences by an average of $73,000 each, said spokesman Robert Knowles.”
“‘We’re hoping it won’t have any impact,’ said John Gillison, deputy city manager in Rancho Cucamonga. ‘Over the last couple of years, the city has been experiencing about 11 percent growth in property-tax revenue. For next year, we only budgeted 3.5 percent. We were trying to accommodate the expected reassessment, as well as all the foreclosures and all the other issues, by ratcheting down to 3.5 percent.’”
“Grant Yee, Ontario finance director, believes the impact on the city’s property-tax revenue will be minimal because, he says, there has not been a lot of new residential development in the city since 2004. Yee said cities with more recent residential development such as Fontana or Highland might be hit harder by lowered property assessments.”
The Desert Sun. “The Riverside County assessor will reduce property taxes for more than 200,000 homeowners - more than one out of every four homes in the county - beginning July 7. It’s yet another side effect of the housing and economic slump in and outside the Coachella Valley.”
“Valley cities in recent years could rely on exponential growth in property tax revenues due to rapid development and skyrocketing home values. But city officials and tax-funded public agencies now face sobering new realities. ‘From last year to this year, it’s a substantial reduction,’ said county Assessor-Clerk-Recorder Larry Ward. The average home value has dropped about $40,000, Ward said in late April.”
“Among those expecting to get notice of a property assessed valuation reduction from the county is Cathedral City resident Joe DiMaggio, who said he’s a distant relative to the famous New York Yankees baseball player.”
“‘You can’t sell anything right now,’ he said. ‘Every year we turn around, (property tax) increases so much, and everything else is going up. Now (home equities) have devalued, and we’re still paying high taxes.’”
“Ward said the assessor’s office is getting 200 to 300 calls and e-mails per day from concerned property owners. ‘We’re trying to be very proactive,’ Ward said. ‘We’re making reductions pretty much across the board where warranted, whether we’ve gotten contact from a property owner or not.’”
“In 30 years of working for the county, Ward said he could not remember such a significant decline.”
“‘During the mid-90s, we had a similar situation, but it wasn’t as dramatic or as quick,’ he said. ‘It happened over two or three years. (The current situation) happened in the last 18 months.’”
“Overall, Riverside County projects growth of 1 percent this year, compared to nearly 17 percent growth last year. ‘You tighten your belt,’ county CEO Larry Parrish said. ‘We’ve had good times, so we’ll have an opportunity to do some of that.’”
The Fresno Bee. “Pity the large SUV. Once highly sought after for size and status, models like the Ford Expedition have seen sales drop 32% in the first five months of the year. Some dealerships…are refusing SUVs as trade-ins because they are worth so little, and the SUVs that do sell go at dirt-cheap prices.”
“A 2003 Ford Explorer that last year sold for about $16,000 or $17,000 is now priced at $9,999, said Rancho Grande Auto Center finance manager Gabe Martinez. ‘You’re getting a bargain,’ Martinez said. ‘It’s like houses. It’s a good time to buy.’”
The Modesto Bee. “At the end of each quarter, we ask the visiting editors to provide their opinions on a topic of their choosing. Bill Zoslocki: ‘Having spent most of my adult life in the real estate business (35 years), people approach me and ask, ‘What do you think will happen to real estate prices?’ My answer often centers on market variables, but I always include one caveat with my advice: ‘You always get what you pay for.’”
“First, properties in foreclosure and short sales (called REOs because real estate companies own the properties) are driving this market. If you have not noticed, we are in one of the strongest sales markets I have ever experienced. But this time it’s an historic buyers’ market.”
“‘For example, 606 homes were sold in Stanislaus County in May, and about 484 of those were REOs. That’s the highest number of sales since the booming days of September ‘05, a sellers’ market.’”
“‘Second, if the unemployment and interest rates remain largely unchanged, Stanislaus County is expected to have about 10,836 foreclosures through 2009. Estimating that 2,150 REOs have been sold, that leaves about 7,930 REO homes yet to be sold from July 2008 to July 2009.’”
“‘Since sales of REOs run about 450 to 500 a month, we would have a 16- to 18-month supply of REOs. So REOs should remain the driving force in the market until they run out in winter 2009 or spring 2010.’”
From KCBS.com. “A once little-known agency in bankrupt Vallejo is getting more recognition now. ‘We used to just have 10 phone calls each month, then it was 10 phone calls a day. Now, it’s up to 80 to 100 phone calls a month,’ said Carol Hardy, Interim Director (of) Vallejo Neighborhood Housing Services, an agency that works on preventing foreclosures.”
“Hardy says Vallejo has been particularly hard-hit by the foreclosure crisis. The majority of her clients were caught in the sub-prime lending web. Others, she says, simply fell behind on payments.”
“‘We actually had someone who called yesterday at 9 a.m., and her house was going on the court steps to be auctioned off at 10 a.m. That’s too late,’ said Hardy.”
The Bakersfield Californian. “Eight months after winning a house in a charity raffle, Carol Williams says the whole experience was fun but expensive. The ticket netted her a house in the northeast’s Juliana’s Garden development. At the time, the brand new house was valued at $345,000.”
“And that meant meeting some hefty tax obligations - $111,000 worth - before she could claim the deed. After the excitement of having her name called, it was time for the 57-year-old retiree to figure out how to make the windfall work financially.”
“Williams was lucky to get loans from friends for the taxes, she said. She briefly considered moving into the house she won. ‘I love the house,’ she said. ‘The kitchen was gorgeous. The master bedroom - you couldn’t ask for anything bigger.’”
“But moving would have meant homeowners association dues, new blinds and other overhead costs. In the end, she kept the television that came with the house and decided to stay put in her modest south Bakersfield home.”
“Deciding to sell the house proved tricky, because some buyers knew she had won a raffle and assumed she hadn’t paid a dime for the house. She went into escrow twice with one unsuccessful would-be buyer. Williams finally sold the house last month for $225,000, records show. She made a little profit.”
“‘People just want you to give it away,’ Williams said.”
‘Yee said cities with more recent residential development such as Fontana or Highland might be hit harder by lowered property assessments.’
These budget problems in the IE, Palm Springs and SD should put to rest the idea that houses pay for themselves. That once common line isn’t kicked around in the press much these days, but that’s all the ‘center of the universe’ people used to talk about.
Good money, Bad money…
“Ray Ellis, owner of Escondido Coin and Loan pawnshop, is used to customers coming in with rare or collectible coins for one of the four-month loans that is the industry standard. Recently, customers have been seeking larger amounts, up to $50,000, Ellis said. He said one gentleman came in with a sack of gold coins in order to pay off debts on his investment properties in Orange County.”
“Good money, Bad money …”
So, which is which?
People are selling sacks of gold coins for fiat dollars. Gold coins won’t pay the bills, fiat dollars will.
Hence, gold coins must be the bad money, fiat dollars the good money.
No?
Keep your promise sorry notes, Willy Loman.
In a few words, no, you’re wrong.
The baggies full of gold are now out of circulation. Ten years ago an ounce of gold was worth under 400 fiat dollars. Now it’s worth over 900 fiat dollars. Bad money chases good money out of circulation. Gresham’s Law.
While I’m at it, let’s not confuse depreciation with deflation. Houses are depreciating assets. During the bubble, houses appreciated faster than inflation. The fiat dollar monetary inflation is accelerating. The deflation of housing prices is accelerating. These are not mutually exclusive events. Never have been.
“The deflation of housing prices is accelerating.”
Unfortunately for the banks (and thus for us) this deflation of housing prices translates to deflation of the value of many bank’s balance sheets where the banks reserves are held in the form of mortgages. The balance sheets of these banks eventually have to be reconciled via writedowns in recognition of the deflation value of these mortgages.
Bank balance sheet writedowns translate into money taken out of circulation and out of existence which is fiat monetary deflation.
The construction loans alone are enough to sink many a bank into Davy Jones Locker, not even considering mortgages…
“The construction loans alone are enough to sink many a bank into Davy Jones Locker, not even considering mortgages …”
If you accept the truth of that statement then you must accept the truth of monetary deflation. In a fractional reserve banking system it is the reserves kept by the banks that determine the amount of loans the banks can float. Destroy these reserves and you destroy the banks along with the dollars the banks loaned into existence.
The destruction of dollars cause the remaining dollars to become scarce thus more valuable, which is what we are now seeing.
Hence, we get long lines at pawnshops with people trading stuff (including gold stuff) for dollars.
depreciation is the same thing as deflation
“The baggies full of gold are now out of circulation.”
Wrong. The seller of the gold put the gold into circulation by selling it.
“Bad money chases good money out of circulation. Gresham’s law.”
Correct. The good money is hoarded while the bad money is passed on to someone else. In this case gold must be the bad money because it is being passed on to the pawnbroker.
depreciation=deflation
Normally Bad money chases Good money out of circulation. This is reverse.
Son of a Bernanke?
“New customers are finding out a lot more than they bargained for at their local pawnshop. John Martin, a jewelry professional at Gems N’ Loans, which has locations in Vista and Escondido, said a woman recently expected hundreds if not thousands of dollars for the diamond ring she received as a gift, only to find out it was zirconium.”
“‘She said, ‘It’s a diamond,’ and I said, ‘It’s not,’ Martin recalled. ‘Then she said, ‘That son of a b… !’”
Ha, nice one
RATS!..What, my big fancy diamond is just as phony as all the hugs and warm fuzzies I used to PAY for it ?
HA HA!
ROTFL,
Until then, SHE thought she got the better end of the deal.
One Cubic Zirconium ring: $70*
“Luxury” get away romantic weekend for two: $500**
Finding out just how special you really are: Priceless
* fanciest one I saw on Amazon.com when I did a quick look, hut hey, maybe he splurged on the $90 earrings too…
** I’m assuming hotel and meals during the bubble for a weekend.
I love this one!
Got Popcorn?
Neil
“A cubic Zirconian looks just like a real diamond!” he said to her….
lol
Me thinks he didn’t even say that. I doubt he even promised to call.
Nice.
That son of a b…
Wow, what a surprise that must have been.
gullible, all she needed was a good loupe
remember the discussion by ByeFL where he maintained diamonds would be replaced by zirconiums?
all she needed was a good loupe
Clue in a gullible guy: How does a loupe tell you the difference?
use your loup (magnifier) and look at the rock from the top and see how well the facets (cuts on top of the diamond) are joined. They should be sharp, not rolled.
Look at the girdle and see if it is faceted or frosty (a clear sign it’s a diamond) or waxy and slick (an indication it’s a fake).
While you’re looking at your stone under magnification, look into your stone to see if you detect any flaws (carbon, pinpoints, small cracks). These are typically clear indications it’s the real thing since it’s very hard to put inclusions in a fake.
I once took a short correspondance course on silver and gold from the Gemological Institute, the entity that certifies Gemologists (long expensive course), the jewelry and precious metals pros. They sent me a certificate that said I had completed the long course and was now a certified gemologist, so I know all about this stuff.
Cool! Thanks for the tutorial.
I’m an EECS geek by trade. My first job out of school was working in an group that made novel electronic materials, and one of those materials was sapphire. Those guys grew 1.5 inch diameter x 4 inch long single-crystal sapphires.
It turns out that they made great lasers. But we could have made a fortune just selling them as pretty rocks.
I’d buy one, I love sapphires, hate diamonds, no color
The best part is what was left out. The mark up in diamonds is HUGE! Depending on the size of the rock, it wasn’t going to be worth that much more then CZ anyways. I don’t know why women get this irrational belief in the value of most retail jewelry.
Don’t even need a jeweler’s loupe- every fine jewelry counter has a diamond “tester” that they use when they hand you rings to look at, in case you’re inclined to pull a switcheroo, which would actually not be so hard to do with some counter folks I’ve dealt with. I asked a saleslady to test my ring this weekend, just for fun. My husband is definitely NOT a son of a _________.
what’s this…..a zirconium housing market?
Ah, diamonds and SUVs, a winning combination.
That son of a b…. use to be a real estate agent. Secretive is his trade mark.
“‘She said, ‘It’s a diamond,’ and I said, ‘It’s not,’ Martin recalled. ‘Then she said, ‘That son of a b… !’”
LOL! Sounds like they should get back together, they’re a perfect match.
Good for him! It’s not like she gives a crap about him anyway. Hope he got laid.
I read an article (from NYT, iirc) that said that synthetic diamonds are now indistinguishable from real diamonds.
Hope de Beers gets what’s coming to it.
The jewelry was as real as her love for her man… so, there you go!
Anybody from the greater San Diego area have an insight,what if any, the housing cost declines are having on Ranch Santa Fe?
I live in Encinitas, a coastal community abutting RSF. Per Foreclosure.com we have 318 foreclosure proceedings in a population of appx. 60,000. RSF has 98 foreclosure actions pending in a population of about 4,000. Not so good, eh?
Homes are not selling too easily in Rancho Sante Fe. RSF is also affected much more when the stock market takes a hit like it did the last 2 weeks. If most of your wealth is in stocks where a lot of the RSF folks have their money, that would make their houses go down much more than helicopter Ben screwing things up at the fed.
This reminds us that there are still many–maybe even half of the country–that still either believe that nothing’s wrong at all (just the price of carrying investment properties), or it’s a temporary blip, passing phase, or the minor downcycle of usual economic peaks and troughs.
And they’ll keep spending out their liquid holdings, whatever they have left, to try to continue to possess these baubles that will continue to decline in value.
That’s exactly what the banks want–bleed them dry, rather than let them walk away. Banks and Realtors will do anything keep the suckers in the game.
You’ve just explained why at some point, in the collective popular conscience at least, this will be labeled a “crash”. Sure, it’s a slow motion event to us as we’ve tried to make preparations, but to the guy on the street who will soon run out of furniture to burn (or gold to sell) it will indeed be seen as a crash.
Not to mention the fact that when a society collectively calls something a crash - it is helping to absolve itself of blame.
I was recently in Colorado working with mostly Tucsonites (Tucsonians?), and one 50-ish and reasonably well-off divorcee who recently bought a house in Tucson said she wished she had a million bucks so she could take advantage of the new bargain prices in Tucson. In just a few quick sentences I explained why prices were not a bargain in Tucson and that she would be happy in the future not to have had the extra million to invest. She accused me of being argumentative.
I think this is pretty typical.
I bet she accused her ex of being argumentative, too.
Bet she owns some zirconium to boot!
Congratulations on your new house, Paul in Jax. Hope you got it for a bargain price, and that you enjoy your yard.
Thanks - deploying some of my limited assets, like AB Dada to the 1/50th - also bought a new(er) van.
BTW, I lowballed the hell out of it, then inspected it, and then beat him down some more. You gotta know when you’re in control. His Russian wife practically cried when I said I might take out some of the hibiscus to give more room for tomatoes, which I can now grow in winter (yeah!). But he’s drawing disability and moving into a 2BR condo in Stuart that he bought for 70K or so (180 at peak), so if I were to feel bad it would have to be for his seller and not him. But I’m missing that guilt gene anyway.
way to go, Paul!! set the standard for the rest of us!
And for good measure I also copped all his furniture, including an unused bedroom set, which he was initially adamant about not including in the deal. (I’ve also got my eyes on his Russian wife. . .)
Way to go!
sounda like you dealt with casey serin
“(I’ve also got my eyes on his Russian wife. . .) ;)”
Just remember, it’s cheaper to rent than to own.
And it’s the gold he liquidates.
And probably unknown to the IRS… ie, judgment-proof wealth. I’m guessing that the gold coins came from some sort of inheritance. The idiot would have been much better getting a safe-deposit box under an assumed identity, declare BK or whatever, and then enjoy the gold a few years down the road after the dollar went to hell.
It’s even worse than borrowing from a retirement account to forestall an inevitable BK… why touch judgment-proof assets???
if i recall (too lazy to scroll) the gold was just collateral for a loan.
the gold he liquidates
At a pawn shop!!!!!!!!!!!!!
Maybe no questions asked?
I believe pawnshops have to report gold transactions over a certain dollar amount, maybe $1k.
What does it mean when you look at counties foreclosures and you see this status:
Status: Withdrawn - Bankruptcy
http://sheriff.cuyahogacounty.us/foreclosure_city.asp
Does that mean the owner of the house gets stay in it? That is what it appears to me.
Just taking a guess… the bank started foreclosure proceedings, but the “owner” filed for Chapter 13 bankruptcy, which in most cases will halt the foreclosure.
When a debtor files for bankruptcy, all lawsuits pending against the debtor are automatically stayed. A foreclosure is actually a lawsuit, so it gets stayed too.
The mortgage lender can petition the bankruptcy court for relief from the automatic stay. Since mortgage lenders are secured creditors, the bankruptcy court will almost always lift the stay and permit the foreclosure proceeding to resume.
The practical result of this is that in most jurisdictions, filing for bankruptcy will only delay foreclosure for a month or two. The length of the delay basically depends on how busy the bankruptcy court is. But this situation is so routine that even a very busy bankruptcy court will lift the stay fairly soon after the debtor has filed for bankruptcy.
There are ways to tie up foreclosure sales for longer than a couple of months, but most FB’s don’t have access to first-rate bankruptcy lawyers, or the means to afford someone really good. And even someone who is good can’t delay the foreclosure forever, or make it magically disappear. In the end, the debtor is going to lose the house. Because of this, people usually make the rational decision: let the house go and find another place to live.
Hey, anything for an extra couple of month’s free rent.
Once you hit ch 13, the court monitors income and repayment for a year. Any saving will be sucked up by creditors pronto.
Look at this one:
http://sheriff.cuyahogacounty.us/foreclosure_city.asp
This house has been in on and off foreclosed and withdrawn for 2 years. The owner had it up for sale at a ridulous price (100K over mkt) and still gets to stay happily in his house. I just dont get it.
Sale Date
Sale #
Parcel #
Location
6/2/2008
124
60127006
Brecksville
Status: Withdrawn - Bankruptcy
Case #
CV06609152
Plaintiff
TCIF REO BAR CORP C/O GMAC MORTGAGE CORPORATION
Defendant
ANDREW SOCHA, ET AL
Address
8650 WIESE RD
Description
A SINGLE BRICK DWELLING WITH ATTACHED TWO CAR GARAGE
Withdrawn
Withdrawn - Bankruptcy
Attorney
CURRY/MATTHEW/P.
Look at this one:
http://sheriff.cuyahogacounty.us/foreclosure_city.asp
Does this mean the bank bought it and bailed out the owner?
Sale Date
Sale #
Parcel #
Location
6/23/2008
137
60421015
Brecksville
Status: SOLD
Case #
CV07635447
Plaintiff
FIFTH THIRD BANK
Defendant
CHRIS J. REASONER, et al.
Address
9100 RESERVE RUN ROAD
Description
A SINGLE BRICK AND FRAME DWELLING WITH ATTACHED FOUR CAR GARAGE
Sold Amount
$450000
Purchaser &
Address
FIFTH THIRD MORTGAGE COMPANY
MADISONVILLE OPERATIONS CENTER MAIL CODE 1 M0C20 CINCINNATI OH 45227
Responsible Party &
Address
Attorney
HANSON/DAVID/
“‘Second, if the unemployment and interest rates remain largely unchanged, Stanislaus County is expected to have about 10,836 foreclosures through 2009. Estimating that 2,150 REOs have been sold, that leaves about 7,930 REO homes yet to be sold from July 2008 to July 2009.’”
“‘Since sales of REOs run about 450 to 500 a month, we would have a 16- to 18-month supply of REOs. So REOs should remain the driving force in the market until they run out in winter 2009 or spring 2010.’”
This makes the assumption that REO’s will always be in high demand. This summer buying foreclosures is the cool thing to do. As time goes by and the foreclosures keep rolling in, it’s not going to be as hip as used to be. It’s then that the real deals are going to be found.
Oh, and I can’t wait until this years foreclosure buying specuvestor becomes next years walk-away. So much fun left to be had !
Yeah, 2010 is several years to early for this correction to level out in the bubbliest areas. Particularly given that the broader economy is going in the toilet.
I used to think 2011-12 might be when things started to turn around. Now I’m thinking 2015-16. A lot depends on what happens monetarily, as a couple of years of double-digit inflation will bring nominal sales prices in line with many bubble loan balances. But I continue to doubt whether the Fed can stave off deflation.
Even if you’re well-prepared, the coming decade is going to suck. The sooner FB’s wise-up to that fact, the easier it will be to ultimately recover.
as a couple of years of double-digit inflation will bring nominal sales prices
Not if wages don’t rise.
Price inflation + flat wages = rents GO DOWN = home prices GO DOWN
That’s a likely possibility, as I actually acknowledged. Did you read the following sentence of that post or did you stop reading halfway through?
Financial analysts that I follow are anticipating a demand-collapse deep recession with major deflationary effects. The Fed may end up ‘pushing on a string’ because there will be little demand for borrowing, regardless of the interest rate.
This a a particularly dangerous type of economic situation for the US. Somewhat akin to Japan in the 90s, but it will be majorly worse here because of our more flexible labor markets. Consumer demand held up pretty well in Japan while business investment collapsed because employment didn’t take much of a hit — the business culture and societal pressures in Japan pushed companies to keep their employees on.
US businesses, as we have all seen if not experienced ourselves, will lay off employees at the drop of a hat. Every lost job is a contraction in consumer demand, which causes company revenues to decline, which causes further layoffs and contraction in demand, in a downward spiral.
Cut your expenses, save your money, keep your powder dry. The economic pain is only just beginning.
‘the assumption that REO’s will always be in high demand’
That’s a good point. As was mentioned in the Florida post, some REO flippers turn right back into foreclosures, and I expect we’ll see stories to that effect in California. And when we do, this big appetite will surely go away.
These economists have made the point over and over again that all this is happening amid decent jobs numbers. If this picture gets worse, many landlords are gonna be sitting on empty houses. The next wave of foreclosures could be even worse than the record high levels we see today.
A blurb from “Carlsbad Jim’s blog” (a North County SD Realtor):
Highly-motivated sellers, similar product-types to feed off each other, and an expanding buyer pool because prices get low enough to attract investors - of the 22 below, almost half were purchased by investors, and four paid all-cash. (The rents are $1,000 to $1,200 per month, and there is no HOA fee.)
http://www.bubbleinfo.com/journal/2008/6/29/market-clearing.html#comments
*****************************
So, what do you think will happen to rents in that area, when so many houses are coming on the rental market in the near future?
This is why we are waiting patiently. Too many optimists who think things are going to turn around on a dime and/or rents will be stable or increase in the long-run.
I think those are dangerous bets, but I’m a bear.
“‘Second, if the unemployment and interest rates remain largely unchanged, Stanislaus County is expected to have about 10,836 foreclosures through 2009. Estimating that 2,150 REOs have been sold, that leaves about 7,930 REO homes yet to be sold from July 2008 to July 2009.’”
“‘Since sales of REOs run about 450 to 500 a month, we would have a 16- to 18-month supply of REOs. So REOs should remain the driving force in the market until they run out in winter 2009 or spring 2010.’”
This looks like a best case and most unlikely scenario. Accounting for the dynamic nature of the crash and applying more likely external assumptions on factors such as unemployment and interest rates should result in much higher numbers of foreclosures that continue past 2009 and take longer to clear than 2010.
They think they’re holding a large snowball that will sit there and melt for a couple of years. What they more likely have is a large snowball that’s beginning to roll down a steep and long mountain slope, becoming much larger before becoming part of an avalanche.
This looks like a best case and most unlikely scenario.
Chuckle. So many foreclosures coming that the rate and time will grow.
Don’t forget to add further credit tightening too.
Got Popcorn?
Neil
Popcorn is going to be very expensive this year, floods Iowa, Illinois, Southern Wisconsin - I’m going for peanuts. I thinking of trying to corner the market. And you can shoot peanuts out of a slingshot. A weapon and snack.
ex-nnvmtgbrkr, I passed though douglas county today coming back to Reno from camping. Looks like some major pain there, as none of the houses that were for sale a few years ago have sold yet. The Tombstone Pizza founder who has the whole hillside north of Genoa doesn’t seem to have sold any lots in 3 yrs, unless they just haven’t been built upon. Still pretty country, but apparently not enough ex-Californians w/ buckets of money are coming in to swoop up the ah-hem, undervalued real estate
.
“We used to just have 10 phone calls each month, then it was 10 phone calls a day. Now, it’s up to 80 to 100 phone calls a month,” said Interim Director Carol Hardy.
So the monthly total went from 10 a month to 300 a month down to 100 a month? And she’s a director?
Either she has a sudden drop-off, or she can’t do basic math. No wonder we’re in the mortgage mess we’re in now. This “Director” probably couldn’t direct her poop into a toilet if she tried.
It’s Vallejo, the armpit of Western Civilization. It’s a minor miracle that a city official can speak coherently (in either English or Spanish).
a few comments onthe title ” Director “: its the new cache’ term for the american woman. it’s an upperclass title that can be used liberally to describe anything from a “director of sushi making” to “director of endowments”. todays woman must NOT be seen as just a secretary but as empowered to control her own destiny … yadda yadda … insert more new age Poperah jibberish … blah blah blah … !!
my ex-spouse listed herself as a “Director” of her own interior design home-based business. “OHH BROOOTHERRRR” was my response. obviously just a cover to take a tax loss from her husbands $70k salary @ USAA. which in Tampa is big bucks boy howdy. and sure enough, their JOINT tax returns each of the 3 years they were “in business” showed a loss of a few grand … enough to catch a nice IRS break but not enough to raise any red flags.
so whenever I see the overused term “Die-recto-or” now I also notice exactly WHAT descriptive term follows behind the title, which I’m sure annoys these wannabe social climbers as they want to pretend they are some museum matrons in a “Die-rect-or” (say it with a snotty english accent, it sounds SOOOO much better) capacity, living the life of ease, only going into the office a few hrs a day to handle the mundane but necessary tasks of giving away millions of dollars. like Melinda Gates. HILARIOUS !!!!!
whats ironic & funny as hell is that now in Hillsborough County there is a state tax warrant filed listing her & her best friend as owing the state almost $5,000 in delinquent taxes !!!
guess their tax prep person made a few mistakes .,. instant karma - heh hehe
todays woman must NOT be seen as just a secretary but as empowered to control her own destiny
— Seriously, do you and hd74 think its still 1950? Wake up, Rip Van Winkle . . . ; )
They’ve been watching too many episodes of Mad Men. And men haven’t been giving themselves salutatory titles for the past millennia?
“they” have never seen an episode of Mad Men, as “they” recognize the promos for assinine portrayal of boys-will-be-boys rat pack era. no thanks.
personally, I avoid the man VERSUS women contrats in my overall comments, but rather include both men AND women. there is plenty of BS to go around, although some of it IS gender specific, no matter what Poperah, GLAAD, MADD, NOW, or any other hyper-feminist man-hating groups proclaim.
oh yeah, include PETA & other so called “animal rescue” organizations. their pious attitudes have always struck me as counterproductive, staffed primarily by angry women with a chip on their shoulder, bristling & defensive while using the righteous anger of “rescue” as the noble shield of immunity to any critical remarks. “Why, you’re not against ANIMALS, now are you?!” (the battle cry of our women warriors.)
march on, march on in the good fight, you carrie nations of every cause. we males are just poor uninformed slobs who will never appreciate your unselfish devotion. just one request:
could you at least keep the cat hoarding down to an even dozen? the urine smell seeping outside is a horrific heavy stench. its pretty bad when the mail carrier hides her nose in her shirt on yer doorstep.
and would it kill ya to mow yer lawn once in a while. say, every other year?
Seriously, lay off the juice or you’ll just be another Sam Kinison wannabe.
geez Aqius.
It has been awhile since your last diatribe against women.
Sorry your personal experience leads you down such a negative path.
Maybe in your next life..oh well, you probably don’t believe in karma either.
Can’t we just get along.
Jeezel creezel, can’t a girl try to be funny, lighten up things a bit. Cats, carrie nation, Peta, anything else you feel like railing against? It’s not an us against them proposition, ya know.
Don’t worry about it, peaceful. Comments like this often come from personal anger. If you really want to get to the real deal, many of the upper management positions (even some first line manager spots)seem to be much more easily achieved than ‘back in the day’. At my company (a sw company in the Tri-Valley area), during the dot com years some went from individual contributors to managers and directors, just so they didn’t leave for a start-up. And that was along with huge bonuses and bigger salaries. Did they ALL really *earn* or *deserve* the new position? For some, yes; for others,it’s questionable.
Now I am not talking about ALL promotions in ALL companies. But I *do* recall that one really had to work his/her azz off ‘back in the day’ for those very rare spots. It’s quite different now.
BayQT~
What will happen to all the prop 13 beneficiaries : Will they go down also?
Under Proposition 13, the annual real estate tax on a parcel of residential property is limited to 1% of its assessed value. This “assessed value,” however, may only be increased by a maximum of 2% per year, until and unless the property is resold (not refinanced).
lets say a home was assessed at $100K way back in 1980.
If taxes were increased the maximum of 2% per year, that’s 28 years.. so the 100K assessment increased to about $174K.
(a compound interest calculator will do it)
The chances that the home reassessment would be downgraded to less than $174,000 are kinda slim.
the quote came from..
http://en.wikipedia.org/wiki/Proposition_13
Thanks for the info!! I thought I was safe in my rental since zillow said he bought in ‘98 for $475k, but alas his property taxes last year were over $8k! Can you say HELOC!! No wonder he treats us so nice!! He needs our money big time! I went out on Craigslist and looked up 4 rental homes and 3 of 4 were up to their AS**ES!! You can’t trust anyone!! Oh, well we will just have to watch him! Thanks again Ben for having this blog!! I am always learning!!
“‘She said, ‘It’s a diamond,’ and I said, ‘It’s not,’ Martin recalled. ‘Then she said, ‘That son of a b… !’”
Well, it serves her right for trying to sell a GIFT. That “SOB” probably smelled this gold-digging hag a mile away.
‘Every year we turn around, (property tax) increases so much, and everything else is going up. Now (home equities) have devalued, and we’re still paying high taxes.’”
I thought in California it didn’t work that way. The tax is based on the purchase price and only goes up a small set amount every year. If that is true, then the only way this dumbass is getting a higher property tax is because he refi’d the old loan out for a new and much larger loan.
“the only way this dumbass is getting a higher property tax is because he refi’d the old loan out for a new and much larger loan.”
Bingo.
b..b..but you’re living in CALIFORNIA. Think of all those wyld sufin’ waves and sunshine you get for..totally FREE man
I don’t believe refis reset the Prop 13 tax basis, only purchases and improvements (like adding a new bedroom or bathroom, etc.). Could be wrong, but I’ve never heard of anyone getting a higher assessment because of a refi.
I’m smiling thinking about all the sexual favors this guy got from this bimbstress for a $70 zirconium gift! Priceless, as they say!
I buy my own gems and the kicks are free.
I want my Real TV.
I thought that was hilarious, too. This harpy no doubt thought she was selling her “favors” to the highest bidder, and it turns out he got the goods for a $70 man-made rock. I doubt if there was ever a moment of true romance or affection between the two of them.
Well, I remember this sweet young couple in love- the girl flashed her 1 carat marquis in front of my face to show me how much her young man valued her, and to hear him talk at the time, he certainly did. It was a beautiful wedding; my kids were in it as ring bearer and flower girl. A few years and 1 child later, they divorced. She, being pressed for money, went to get an appraisal on the diamond, and lo and behold, it was a zirconia. Now all of this wouldn’t have been so bad, but he’d made a big deal about this “diamond” to everyone when they got engaged, and I remember him instructing me about the importance of clarity and cut and all of that bull@. He actually got a kick out of the fact that she was surprised about the diamond after they got divorced. Ha, ha he said. This man who was so much in love did not bother to tell his bride about her ring. Nice-not.
She is lucky to be rid of the liar. I remember my girlfriend’s husband hocked her ring for $50 to go to LA for the weekend and never picked it up. I thought he didn’t care about her very much to pawn it, especially for such a selfish reason. He didn’t.
The diamond in my ring came from a pawn shop, 34 years ago. Whenever I’ve had work done on it, they ask me if I want to upgrade. Never I tell them, my ring has great sentimental value.
Well, it serves her right for trying to sell a GIFT.
Why JUDGE when you don’t know the circumstances?
Yeah, of course, let’s all pile on the “hag”. Men are always nothing but honest and humane in relationships, just looking for someone to love and cherish for all time. har. They would never give fake gifts to try to seduce someone into thinking it was true love. Poor abused “SOB”. sob sob
LOL! Preach it!
But, I will have to say, if you’re not a gold digger, the odds of you getting conned by a gold digger go down. But yeah, why are women gold diggers and men are just being men???
OK, so I answered my own question.
My guess is he is an ex and now she knows why he didn’t ask her to give the ring back.
[Men] would never give fake gifts to try to seduce someone into thinking it was true love.
I doubt if either party had any illusions about true love. I’m guessing both were, at heart, opportunists and scoundrels who approached the relationship with their own cynical cost-benefit calculations. There is no correlation between the price value of gifts and true love, much as some people would like to believe otherwise. This time around, the guy scammed the woman. Next time around she’ll pick her marks more carefully.
” They would never give fake gifts to try to seduce someone into thinking it was true love.”
The very fact that men are stuck buying affection should tell you that they are not the ones upon whom the blame should rest.
It coulda been love.
And now she needs the money.
And then again, you might be right.
In the past, nothing was sacred, if the times/health dictated
funding sources.
I’m still amazed at the number of people who just don’t get it. Called on a house, just out of curiosity, $360k, which is about 2.5x 2000 prices, 30 year old house. The owner was a Baptist minister, wanting to move back home to the midwest. This guy was completely and I mean completely clueless as to what is going on, yet he seemed intelligent. I didn’t have the heart to tell him he wasn’t going home very soon unless he got a miracle.
Anybody in the Encinitas area know what’s going on with that coastal development, The Lofts at Moonlight Beach? I drive by regularly, and though the framing and flashing is finished, I haven’t seen any activity for a couple weeks. Very little info available on the internet, though did discover that the 18 units were selling for 1.5 to 2.5 million. One RE website mentioned there was a hold on one unit, but all the other units are still available. Hmmmmm…..
Salad, we are neighbors. I thought you lived downtown.
Let’s go have a salad jamroc.
OV, Where you be at?
I think banks can’t foreclose on a builder’s property if it is still under construction. Lots of stalled construction projects in my area too.
Next time you’re there, see if there are any
porta-potties. If construction stops, that’s the
first thing that leaves the site as they’re billed
weekly.
I’ll go on a porta potty quest. Follow the poop!
“This guy was completely and I mean completely clueless as to what is going on, yet he seemed intelligent.”
He’s probably not as clueless as you think. He’s just looking for a naive buyer and doesn’t want to tip off any potential buyers to the fact that the property is over priced.
Well, he seemed pretty clueless, but then, I didn’t see his church or his bank account.
After much life lessons regarding politicians and pastors/popes/preachers, I wonder if some of us would have chosen to be in these particular fields, knowing how much they make.
Just wondrin…
“Eight months after winning a house in a charity raffle, Carol Williams says the whole experience was fun but expensive[...] In the end, she kept the television that came with the house and decided to stay put in her modest south Bakersfield home.”
What I find interesting about this story is that even if you were given an house it’s hard to make money on it! This woman wasn’t greedy (despite her “giving it away” remark); she was realistic about it after doing the math.
Which means that cram-down plans to keep people in “their” “homes” (I need the lie quotes whenever I say this) are doomed. Even if you gave them the homes (but made them pay taxes on the amount given) they won’t be able to afford it.
St. Jude’s also raffles off houses. Lately, they’ve been desperately trying to ramp up ticket sales because they are only selling off a small portion of the available tickets. Their houses are usually located in one of the less-desirable areas.
It’s rather sad, but definitely shows where the housing market stands. Nobody wants these houses…even if they do “give them away”.
“If you have not noticed, we are in one of the strongest sales markets I have ever experienced. But this time it’s an historic buyers’ market.”
I guess it is different out there in Stanislaus County than in San Diego County? Either that or this used home seller does not have much experience.
A quick glance at the Dataquick five-year sales charts on p. 2 of this weekend’s San Diego Union Tribune Homes section is quite enlightening. Despite a general price decline of over 25 percent off the bubble peak (back to 2004 price levels), San Diego County homes are currently selling at below a 3000/month rate, which is more than 50 percent off the rate at which they sold during the summer season in peak bubble years (2004 and 2005). It appears we are on track for the lowest annual rate of sales in at least five years (and that is as far back as the chart goes).
Anyone know how well La Jolla is holding up lately?
I’d like to buy something there in a few years- if the price is right.
Per the May DataQUick report, La Jolla values went down -14%. IMO, prices are still too high, the area has been overbuilt in the past 20 years with some fugly faux Tuscan/Mediterranean garbage, and the traffic sucks. Other than that, a nice place to visit every couple of years.
http://www.dqnews.com/Charts/Monthly-Charts/LA-Times-Charts/ZIPLAT.aspx
Bottom, do you think it would ever go back to 90’s prices?
The part that hasn’t slid off of Mt. Soledad is holding up just fine.
The champagna is always flowing in La Jolla. It is quite gauche to speak of housing prices in La Jolla, just like it would be socially unacceptable for J6Ps to speak to each other about the amount of change in their pocket. Estates in La Jolla aren’t commoditized like game show gifts on the “price is right”, they are signature pieces of livable art that transcend the usual mundane suburban tract homes associated with the uncultured. La Jolla will hold up, just like the ladies with their silicone infused top racks and high cheek bones.
I hate to say it, but if he is putting his faith in what economists tell him, then I am wondering how reliable his call for a bottom in 2009 will prove to be.
Schwarzenegger sees end to housing woes in ‘09
By Greg Robb, MarketWatch
Last update: 1:34 p.m. EDT June 29, 2008
WASHINGTON (MarketWatch) — California Gov. Arnold Schwarzenegger said Sunday he believes his state will shake off its housing troubles by next year.
“We just have to wait until we grow our way out of the situation, and I think by next year, we will grow out of it,” Schwarzenegger said in an interview on NBC News program “Meet the Press.”
Schwarzenegger said he was shocked by the speed of the subprime mortgage crisis that froze financial markets last summer and has yet to clear up.
He said the turmoil erupted shortly after economists had assured him that the California economy and the national economy would stay on a strong growth path.
“I am as amazed as everyone else about how quickly it came,” Schwarzenegger said.
“I am as amazed as everyone else about how quickly it came,” Schwarzenegger said.
Those girly-men economists should have known better, Ah-nold. It came quickly, but it was hard and it stayed long, didn’t it?
You must have seen the governator in “Pumping Iron.”
Dark Vader knows nothing, Nothing!
We just have to wait and grow out of it?
Waiting and growing are not really compatible.
Waiting is what Citi is doing, it’s what Lehman is doing, it’s what most banks and many businesses are doing. It works OK if you have cash and your business is not highly leveraged. But it’s not working for Citi and it won’t work for California. The only growth industry I see is fire-fighting, which generates spending and income but is consuming rather than building wealth, and as such is an even less productive part of government spending than education.
California is making the problems in Florida look minor.
Ah-nold is a wishin’ and a hopin’ and sweating bullets.
By this time next year, unemployment will be much higher, mortgage interest rates will be higher,
and property values will be much lower. In other words, TODAY will look like “the good old days”. Official, undeniable, family and commerce crushing NEGATIVE economic growth is what’s ahead. Depressionville. Credit Paralysis. Bankruptcies and Bank failures. Mass Lay-offs. Stagflation and monetary debasement. Funny money that don’t buy squat. President Obama, meet President Mugabe. President Mugabe, meet President Obama.
“Irene Longoria, store manager of the Oceanside Gems N’ Loans, estimates that about 30 percent of her customers are new this year. She said they’re coming from Del Mar, Solana Beach and other upscale residential areas.”
“‘We’ve had people come in with sandwich bags of jewelry. This recession is hitting everybody,’ Longoria said.”
_______________________________________________________________
The soon to be ex-middle class is down to offing their jewelry, trying to keep up with the joneses, real or imagined.
Here’s the kicker…
A person with a sandwich bag of Gold jewelry gets about 1/2 of the meltdown value on a loan basis, and should they default on the loan by not paying it back, it’s the pawnbroker’s to keep.
A final fiscal kick in the balls, if you will.
A person with a sandwich bag of Gold jewelry gets about 1/2 of the meltdown value
I’m wondering if cash will be so needed in a year or two that that is all the collateral is really worth…
Its amazing seeing this in slow motion.
We had described this financial collapse like a mile long freight train trying to stop on iced tracks before it hits that chemical truck in the middle of the school district. I just didn’t expect to see so much detail…
Got Popcorn?
Neil
The collateral (Gold) if defaulted upon, is more than likely headed to China, Russia or somewhere in Arabia, in the form of bars made from all the wealth Americans had left over, that was easy to get to.
Wealth always returns to it’s rightful owner…
And I’m sure the gold in the baggie was that 14 carat crap, rather than true .999 gold like you get in Asia.
“One man came straight from the dentist, with gauze still in his mouth and blood on the tooth, she said.”
“We just about screamed,” Longoria said. “I told him he should have cleaned it first. We’re seeing more and more dental scrap. We now have latex gloves to handle some of the things coming in.”
WTF. I think this going just a bit too far. Please, tell he didn’t yank his tooth for the money.
A typical Gold Crown has around $40 worth of value @ meltdown, and you’d receive around $20 for something that costs around $800 to replace?
It’s no different than people stripping out copper piping in a house and rendering it useless, is it?
If someone believes “I would rather die than live like a pauper,” then it could be rational behavior to sacrifice assets to go on eating well, or driving a car, or whatever, even if it must be done on a daily basis. After a few days of this behavior, the man must either discover new methods of generating income (work) or assets (thievery), modify his belief about living as a pauper, or kill himself.
Oh, it costs waaay more than $800 for a gold crown now. You would be lucky to pay $800 with insurance.
$1,400 with insurance. ‘07, plus huge copay
“Valley cities in recent years could rely on exponential growth in property tax revenues due to rapid development and skyrocketing home values. But city officials and tax-funded public agencies now face sobering new realities. ‘From last year to this year, it’s a substantial reduction,’ said county Assessor-Clerk-Recorder Larry Ward. The average home value has dropped about $40,000, Ward said in late April.”
Using Case Schiller the number is closer to $100K - the Assessor’s offices are still inflating numbers for tax. lol The doofus residents, “my home is only down $40,000, she said condo-scendingly”
2004: Driving 40 miles each way to work at $2.25/gallon gas and your house appreciating $1000/wk.
2008: Driving 40 miles each way to work at $4.50/gallon gas and your house depreciating $1000/wk.
That about sums it up, Paul.
How do these people even have jobs?
They seem incredibly clueless
http://www.reuters.com/article/domesticNews/idUSN2829219920080629?feedType=RSS&feedName=domesticNews&rpc=22&sp=true
With four kids, retirement is not an option for Martinez. But driving more than 100 miles daily between home in the Detroit suburb of Lincoln Park and Toledo, Ohio — where GM has a job for him — is going to hurt with gas over $4 a gallon.
Moving from Detroit, one of the markets hit hardest by the ongoing housing slump, could prove impossible.
“I can’t probably sell my home for what it’s worth,” said Martinez. “I will owe more than I sell it for.”
Was at brunch today with an attorney for a law firm that does business with the Irvine Company. The attorney claims that builders aren’t going through with the options to buy land for development. Business is drying up and billable hours are becoming harder to come by. No surprise to most of us, but good to hear confirmation from the inside. Unfortunately didn’t get any other juicy bits of info, but maybe that had to do with my inebriated state.
Friar John, put down the ale.
Need much more info from attny insider!
Actually I prefer hefeweizen…those german wheat beers match my taste buds better than most beers. As for more info, I will have to use my skills of deception to coax some real dirt about O.C. real estate from said attorney. Stay tuned.
Their narrow focus of pessimism on housing suggests to me these Wall Street commentators fail to grasp the global scope of the financial challenges facing the world economy.
MARSHALL LOEB
Where will the economy go from here?
Economist Irwin Kellner shares his outlook with columnist Marshall Loeb
By Marshall Loeb, MarketWatch
Last update: 3:32 p.m. EDT June 29, 2008
…
Marshall Loeb: In a few words, Irwin, please describe our current economy. For example, a few years ago, when everything was going well, experts dubbed it the “Goldilocks Economy” — not too hot, not too cold, but just right.
Irwin Kellner: Well, you can call it the “Murphy’s Law Economy” — if anything can go wrong it will.
Q: Are we near a bottom?
A: We are bumping along a bottom. But it is really amazing that bumping along a bottom is all that’s happened, given the one-two punch that was doled out to us. I am talking, of course, about the bursting of the housing bubble, and the resulting credit crisis from the securitization of the housing market — packaging mortgages so they could be re-sold to investors.
But I don’t think the housing market has bottomed. Housing prices have farther to fall. For example, South Florida can go down another 10% to 15%, as can Las Vegas, Arizona and the whole state of California.
Back from Cali were I talked to a HR manager who asked if I owned a home in Phoenix? No I lease “good she says , because nothing is selling ” Yes its good to be renter these days. I just nodded and said “yea I guess thats right”
Maybe I’ll move back to Cali and rent because home prices are still stupid. looked at a bank owned 1962 home reduced to 559K
I like it for 300K
Hope you get the job!