A Third Wave In California
The Christian Science Monitor reports on California. “California’s Central Valley already sits at the center of the housing crisis, but high prices and contracting incomes are now compounding the foreclosure problem. Homeowners have mortgages higher than their home’s value, and the payments have gotten beyond their reach, not necessarily because interest rates have risen, but because their budgets have tightened.”
“That’s what happened to Bob Scarpitto. He used to donate his time installing pools for needy families on the TV show ‘Extreme Makeover: Home Edition.’ Mr. Scarpitto’s pool business dried up last year when banks tightened home equity lending.”
“He went from a $300,000 salary to zero trying to keep the business afloat. With no income and a higher cost of living, he lost his modest home to foreclosure. He sold everything, except a prized boat, which he just put on craigslist. In April when he had to hand back the keys of his home.”
“‘I’ve lost everything. I had more when I started the business in late 2000 and I thought [then] I was taking a huge risk,’ says Scarpitto. ‘I’ve been slowly selling it off to keep afloat and try to find gainful employment.’”
“His greatest problem is the tough job market here for anyone connected to the housing sector. ‘No one wants to hire a contractor,’ he says.”
“Scarpitto’s hometown, Merced, now tops the charts with 9.3 percent of first mortgages in delinquency, according to figures from economy.com. Stockton sits at 8.6 percent and Modesto at 8.3 percent. Meanwhile, incomes in the three cities fell by around 4 percent over the past year in terms of purchasing power, according to estimates from Andrés Carbacho-Burgos, housing economist at Moody’s Economy.com.”
“The tough economy and inflation are piling onto the housing market’s woes, says Merced Mayor Ellie Wooten, who is also a real estate agent. ‘There are so many elements involved in this that realistically it’s terrifying.’”
“In Modesto, city housing official Barbara Kauss worries about a coming ‘third wave’ of foreclosures. The first wave washed over investor properties, the second - peaking in early July - wiped out recent adjustable mortgages whose rates ratcheted up.”
“A third wave, she worries, ‘will be people who just truly can’t afford the mortgage payment.’ Even for those who could have afforded it before if they had a fixed rate, ‘that’ll be the last straw: the economy,’ she adds. ‘If someone earning wages in your family was laid off, and food has gone up, and gas has gone up, there’s no more way to reach.’”
The Fresno Bee. “The number of troubled homeowners able to sell their houses for less than their debt on the property is increasing. The number of houses sold in July in Fresno and Clovis through short sales totaled 30, up from 19 in June. Short sales in just those two months topped the 46 in all of 2007, said Don Scordino, president of the Fresno Association of Realtors.”
“The story is similar in Visalia, where real estate broker Nancy Riggs said many banks are organizing short-sale divisions to handle the soaring number of requests. Riggs estimated that 17% of the 800 houses for sale in Visalia are potential short sales.”
“Whether those homes close as short sales remains to be seen. Real estate agents say the process can be difficult, time-consuming and frustrating. By some estimates, fewer than 10% of all short-sale attempts succeed, although Realtors expect that percentage to increase.”
“‘There is nothing short about a short sale,’ said Ken Neufeld, a London Properties agent who is spending a large chunk of time trying to close two of them. ‘In the two I’m working, the bank lost the offers twice.’”
“A bank often would rather work with homeowners in structuring some kind of workout or loan modification. Workouts only succeed if the borrower has a reasonable chance of recovery. ‘If there is lost income and they can’t make any type of reasonable payment, there is no conversation to be had,’ said Martha Lucey, president of a nonprofit financial counseling service in Fresno.”
“Patrick Prince of Westland Realty & Investment in Fresno, is one of the leaders in the area when it comes to short sales, completing almost 50% of those he attempts on behalf of sellers and buyers. ‘It’s changing, but I don’t know if it is for better or worse,’ he said. ‘Some banks get it and some absolutely don’t.’”
“Prince said a key is to price the property according to its value, not the loan amount. ‘If the house is worth $300,000 and the loan is $450,000, the bank only cares about the appraisal,’ he said.”
The San Gabriel Valley Tribune. “The city’s Block 36 redevelopment project proved to be another casualty of a faltering housing market. The City Council last week…terminated Block 36, a redevelopment project slated for the southeast corner of Foothill Boulevard and Azusa Avenue.”
“‘Officials from Lowe Enterprises, the Los Angeles-based developer, blamed economic conditions for halting the Block 36 project in an e-mailed statement.”
“‘We think the project we planned is the right thing for the City of Azusa and regret that we cannot move forward at this time,’ the statement read. ‘Unfortunately, the current national economic climate has made it impossible for us to obtain construction financing for a project that includes for-sale residential product.’”
“City Manager Fran Delach said Lowe had suggested making the residential units rentals, but the City Council declined the idea. ‘The general feeling was that there are a significant number of apartments in Azusa currently,’ Delach said.”
“Block 36 - also known as Azusa Village Center - would have been a mixed-use project, consisting of floor-level retail with 66 residential units above, a type of vertical building often seen in dense areas like New York City.”
The Simi Valley Acorn. “Like food pantry operators around the county and across the country, Kittie Fidermutz is being squeezed. Hit with higher food prices and fewer donations, the coordinator of Care and Share in Simi Valley has helped more than 800 new families this year.”
“‘We’re seeing people who used to donate food coming in and getting food now,’ Fidermutz said. ‘We’re getting hit really hard.”
“During the first eight months of last year, the nonprofit served 1,947 households, more than 4,700 individuals, compared to 2,762 families or nearly 7,500 people so far this year.”
The Monterey County Herald. “At least in certain markets, it’s a new world for Monterey County real estate. Becky Jones can tell by the armload of offers that a 900-square-foot Seaside home recently attracted.”
“The bank-owned property - two bedrooms, one bath on a 6,000-square-foot lot - drew 35 offers within days of being listed. The number would certainly have kept climbing, she said, except that the bank stopped taking new offers.”
“A buyer - Jones can’t disclose who it is, other than to say it’s a local resident - is now in escrow, with one of the many offers that topped the $189,000 listed price. She’s prohibited from disclosing what the top bid was until the sale is completed. But the last time the property changed hands, in December 2005, it sold for $625,000.”
“The bulk of sales right now is in the distressed housing market, and that is creating opportunities for first-time homebuyers and those previously outpriced from the region’s housing market, according to Jones.”
“But while that’s where the flurry of action is these days, Jones said it’s not just the foreclosures and the short sales that are creating opportunities. Traditional sellers have been forced by market shifts to reset price expectations. And unlike bank-owned properties, those homes have been maintained and often upgraded.”
“‘I’ve got homes right now all over the Peninsula that people are selling for less than they bought them for,’ said Jones. ‘If there’s anything good out of this, there are a lot of local people who have been saving their pennies and doing things the right way.’”
The Press Democrat. “Business confidence in the Sonoma County economy fell to its lowest level in nearly a decade, and is likely to fall further, according to a survey of local executives. It’s important to keep the survey in perspective, said Ben Stone, the board’s executive director. He noted that confidence was at an all-time high just two years ago.”
“‘We’ve been on a fantastic boom for several years,’ Stone said. ‘It’s a cycle.’”
The Napa Valley Register. “On atree-lined street in central Napa, green lawns in front of modest 1940s-era homes paint the typical picture ofmiddle class suburbia.”
“All seems in order - except for the one house with furniture dumped on the lawn and boxes of clothing and other detritus scattered on the driveway. An old garage sale sign hangs on the trunk of a shady tree, covered with a second, hastily scrawled sign that reads ‘Free.’”
“The two-bedroom, one-bath home on Pacific Street foreclosed on June 30. To a passerby, it seems the residents attempted to make few bucks as an eviction date drew near, then gave up as the deadline passed.”
“Unfortunately, the trouble isn’t isolated to Pacific Street. Over the last five months, some 209 Napa County homes went into foreclosure, according to title company reports for all county foreclosures between March 10 and Aug. 6, 2008.”
“Some of the 209 homeowners were less than $10,000 behind in payments, according to title company reports. A homeowner on Michael Lane in American Canyon was only $2,078 behind. A family on Tallac Street in Napa owed $14,242.”
“Others had fallen delinquent by staggering amounts. A homeowner on Kingsford Drive in Napa had missed payments totaling $55,530 when the lender foreclosed.” “Harrison and Kilburn avenues and Beecham Street in Napa - and Via Bellagio, Vine Terrace Way and Rio Del Mar in American Canyon - have between two and five foreclosures each.”
“Harrison and Kilburn are in Westwood. Three or four years ago, values for two- and three-bedroom, single bathroom homes in the neighborhood soared above $400,000, as many residents of the largely Latino community sought a place of their own. In Napa County, the majority of newer foreclosed homes are in American Canyon.”
“‘A huge number of the folks being foreclosed are Hispanic,’ said Stephen Cogswell, director of Fair Housing Napa Valley. Sixty percent of Hispanic home buyers in 2006 used lenders whose primary business was subprime lending, he said.”
“According to Cogswell, 2006 was the peak year for subprime loans. As these loans mature and interest rates adjust, ‘It is likely that we are only beginning to see a portion of the homes on their way to foreclosure,’ said Cogswell.”
“Many of the Napa County homeowners now in trouble paid between $300,000 and $600,000 for the homes, supporting (the observation) of Mike Silvas of Morgan Lane…that it is the first-time buyers who are most at risk.”
“The problem is particularly dramatic for American Canyon, where our numbers show as many as one in 12 homeowners are currently being, or have been, foreclosed,” said Cogswell.”
“A foreclosed home in the Rancho Del Mar neighborhood of American Canyon is just one example. Three years ago, the three-bedroom, one-bath home at 211 Carolyn Dr. sold for $465,000. The current listing price: $219,900.”
The San Francisco Chronicle. “Times are tough in the real estate market. Even in the top echelons, some properties are languishing. One Marin County Realtor is hoping to kick-start the mansion market, going after international buyers whose euros carry extra oomph here in the land of the weak dollar.”
“Luxury-home Realtor (and owner) Olivia Hsu Decker is running a swank six-day event in September for ‘ultra-high-net-worth individuals,’ mostly from overseas, to view 30 palatial estates in the Bay Area.”
“This black-tie affair is a parallel-universe version of the foreclosure bus tour, in which bargain hunters see discounted bank repos - but it’s born of the same market downturn, as these times require a little extra vigor to sell real estate even to the ultra-rich.”
“Even in this upper-crust market, ‘it’s slowed down,’ Decker admits.”
“Why? ‘Because they read the press. It’s not like they don’t have money to buy, but they’re pausing because of the press.’”
“‘When the market is good, we can sit here waiting for local people to buy; we didn’t do that much marketing out there,’ she said. ‘But now we have to (market) and also do some very interesting, exciting events to get people out here.’”
“Prospective buyers will be wined and dined by sponsors such as Bentley and First Republic Bank, and chauffeured to tour such properties as an English Tudor-style mega-mansion in Los Altos Hills ($38 million) and a Tuscan villa in Tiburon ($15 million).”
“‘These are really glorified open houses,’ Decker said, in a dry understatement.”
“For the discerning luxury home shopper, there’s plenty of room for haggling, even at the top. ‘You don’t have to wait for the seller to drop the price,’ she said. ‘If you want to pay a million dollars less, offer a million dollars less.’”
‘Just as many homeowners are walking away from houses they can no longer afford, many SUV owners are letting banks and credit unions repossess the vehicles — which results in a financial loss averaging $10,000 to $20,000 for lenders such as Kern Central, said Rangel at the credit union.’
‘SUV owners are often shocked to learn their vehicles have depreciated so quickly, said Richard del Rosario, a sales manager at Motor City Auto Center. Often their reaction is to blame the dealership.’
‘We’ve never had so many people leave our dealership so upset (with) the value of their new vehicle,” he said. “… We can’t help the fact that the market is what it is right now on new SUVs.’
‘When Joe and Iree Borges sold their house and brought a 40-foot RV in 2001, it made perfect sense. The Santa Maria couple had retired, after all, and they wanted to see the country. ‘I didn’t want to retire to mow a lawn,’ Joe Borges said.’
‘Initially the couple traveled to places like Oregon, Washington, Montana, Wyoming and South Dakota. But with the price of diesel fuel soaring to $5 a gallon, their home on wheels is parked a lot more these days. ‘If fuel prices stay the way they are right now — or even go up a little higher, as they say they may in a couple more years—I don’t know what we’re going to do,” Joe Borges said. “Because our income is fixed—that doesn’t change.’
‘After five years of record growth, RV shipments declined in 2007. And according to various reports, purchases fell about 30 percent in the first four months of this year. Brandon Meidam, general manager and partner of Frederick’s Unlimited in Paso Robles, said he thinks the market has dipped even more than that—around 40 percent to 50 percent.’
‘The sales of the big stuff has pretty much dropped off completely,” he said.’
‘Just as many homeowners are walking away from houses they can no longer afford, many SUV owners are letting banks and credit unions repossess the vehicles — which results in a financial loss averaging $10,000 to $20,000 for lenders such as Kern Central, said Rangel at the credit union.’
Proposed new dictionary entry:
jinglemobile — An automobile whose value depreciates so rapidly that the owner chooses to send the keys back to the dealer rather than continuing to pay off the loan.
inglemobile — An automobile whose value depreciates so rapidly that the owner chooses to send the keys back to the dealer rather than continuing to pay off the loan.
My brother is a volunteer fireman. He says most of the calls these days are on burned vehicles. Mostly the Ford Expeditions, Cadillac Escalades, Tahoes, Chevy trucks. Must be something in the paint that keeps Honda’s and Toyota’s from burning??
Insurance companies and lenders need to adjust for this increased risk right now. The price of owning one of those vehicles, aside from fuel, needs to go up.
That should do wonders for their already plunging resale values.
“Jingburban”,
“Jingcursion”,
“Jinglahoe”……naah, sounds more like the name of a hooker that only takes Kruggerands…….
Sorry…..I tried to, but I couldn’t resist…….
Saw an ‘05 Suburban on the local Chevy dealer’s lot last night. Probably stickered around 50g’s when new.
Today’s asking/wishing price? $14 grand.
That’s gonna leave a mark on somebody’s balance sheet.
It’s a great time to buy one if you need one……..which, I figure, is about 500 people, nationwide.
“Jinglebago”
Ok, I’m done now…..:)
2006 Ford Equity ….Cadillac Equitlade…Chevy HELOC Tahoe
But I think that auto loans are not non-recourse. They are going to come after you for the money you owe, even though you’ve returned the vehicle.
‘Initially the couple traveled to places like Oregon, Washington, Montana, Wyoming and South Dakota. But with the price of diesel fuel soaring to $5 a gallon, their home on wheels is parked a lot more these days.
Word has it that Fleetwood and Winnebago are in joint talks to develop a new 6hp RV that gets unbelievable mileage.
http://tinyurl.com/6j32c
Fleetwood and Winnebago may be selling used covered wagons and rustled horses before this mess is all over .
Circle the wagons and hide the women folk n’ kiddies boys. Thar’s a band of Arab oil sheiks on the warpath and the don’t take any prisoners
“Fredrick’s Unlimited:
“The sale of the big stuff has pretty much dropped off completely”
That’s what she said………
Frankly, those Borges look young enough to take jobs that should make up for the rise in gas. They say they’re on fixed incomes but if they really want the RV lifestyle, they may be able to make it work.
It’s not so easy for seniors to find work as you may expect, especially in places like FL. My inlaws finally unloaded their 40′ RV on their oldest son, but he can only afford to cover 1/2 of their payment, so they’re looking for work which at their ages is really hard. (62& 78)
People are scraping to make ends meet, jobs that used to go to teenagers and seniors are now being taken by unemployed of all ages.
Hubby and I contemplated RV life.
I read SIX books; of every detail, including RVing while working (not the title).
I was gung ho, but hubby, not so much. (He is mechanical engineer w/EE).
Ah - the open road with a few good skill sets may work for some!
Leigh
Couple of former neighbors moved into an RV a couple of years ago. They’ve been traveling hither and yon ever since. He has the type of work that can be done from anywhere (website programming) and she does too. (I believe she’s a freelance writer and photographer.)
They’re making it work, and from what their blog is saying, doing quite well, TYVM.
Shoulda leased the SUV, they _have_ to take it back…
(just ticked over 415k mi in the Benz.. and STILL cheaper to run with diesel than the equivalent premium-gas model..)
The next $415K is going to cost you $100K in diesel. Replace it with a small car (40 mpg) and save the (money, American trade deficite, planet, environment, global warming, Arab got you by the balls attitude, Russian bombing Georgia). I have a Land Cruiser so I should talk?
I have read ( do not rember where) that 50% of the energy that a car uses in its lifetime, will be used in its manufacturing process. I bought my last new car in 2004 that I will be keeping hopefully for a very long time, and I just bought my wife an old 300E W124 that lasts a very, very long time….
The delta cost between a new marginally more efficient car, and an older one is not as great as it is though, and will take a long, long time to make up. My 2004 gets about the same mileage as the 300, and it is 20% of the fun to drive…
BINGO.
Exactly why it usually is NOT energy efficient to buy a Prius. Sure, if your existing car is falling apart and needs replacing, go for it, buy the most energy efficient car that suits your needs.
But parking a perfectly good car to buy a new one to be “energy efficient” is crazy.
I’m deep in the heart of the Central Valley and things look dreadful as one drives up or down Highway 99, but all one sees from that perspective is just a tiny amount of the maelstrom…
I’ve driven around quite a bit of the carnage, and flew over much more of it, and it’s a disaster just waiting to happen.
It’s not as if anybody is going to “snap up” the vast hordes of unsold/foreclosed houses, as most people in the CV make around $10 an hour.
Maybe you did not hear yet about the sovereign wealth funds on the prowl for REO? Perhaps they can snap up some Central Valley bargains?
A-I watch the Valley closely, too. I agree with your comments about housing costs still being out of reach for the ag-related economy, compared to Appalachia recently in some studies.
I wondered whether 3BR, 1BA homes in the Clovis school district whose prices have dropped (these have been rentals) to $130,000ish might be wise investments. They are around 1400 sq ft., give or take. I rented a similar home five years ago there and the rent was $900.
I don’t want to be a knife catcher, but it is looking tempting. My figuring depends on how much down you pay, whether it is workable or not. Course, if the “carnage” indeed deepens, maybe it still is not time to act on some of these. Back in the go-go years, these modest homes reached $200,00 and sold for that. Looking at them intuitively, they look like they should be around $100,000? Intuition is not math or an economic trend, though. I’m not usually too far off on these things, but this collapse is one for the history books. So I have doubts.
So I would much appreciate any guidance from you or others who may have opinions.
Thanks.
Whoops, that would be $200,000…
The only saving grace of the CV, is the possibility of the SD/OC/LA/SF foreclosed upon, looking for cheaper digs.
I could imagine just average homes in the CV selling for around $50k, when the dust settles…
Couple of thoughts…
1) One problem is that oversupply will retard rental increases for the foreseeable future as well. Meanwhile, property taxes and insurance will surely increase (don’t expect the county assessor to be very generous to an out-of-town landlord).
2) Keep in mind that the mortgage is not the only expense for a landlord. Again, figure in taxes, insurance, and vacancy allowance. After covering all expenses, how much of the $900 rent can you really expect as profit? What is the opportunity cost for the downpayment and monthly payments against principal?
3) Figure out the monthly positive cash-flow for the property, multiply it by 12 and divide it by the purchase price. For example, if you pay $100k for the house, $900 rent less $800 in expenses (PITI plus opportunity cost for a 20% downpayment):
(900-800)*12/100,000 = 1.2%
A 1.2% cap rate is absurdly low for a real estate investment, especially a SFH. I don’t know any RE investor who would touch anything below 5% (and only then if there was an expectation of considerable capital gains).
In some of the more rural areas of the Central Valley, median household income is only $20-25k. That suggests a median house price of $50-62.5k, nowhere near $100k. Wait a few years for prices to come down to that level, and then run the numbers to see if it makes sense. But I’m certain that anyone buying investment properties in the Central Valley right now is going to catch a falling knife and get very badly burned.
Walt all valid points,
but..
His cap rate would be his down payment, not the purchase price. If he paid $100k cash and $100/mo in expenses (low in my opinion) his ROI would be 9.6%.
(800*12)/100,000=.096
His cost would most likely run
90 taxes
90 vacancy
120 repairs
or $400/mo dropping his ROI to 6% if bought outright. These are not numbers that i would touch unless it was a special home that would demand a premium in the future.
I heard a simple rule to calculate the worth of rental property. House value = 100 * monthly rent.
In California’s south bay, a $1,000,000 house can get $3,500 rent. The simple rule is totally broken in California, and using this the Central Valley will drop some more.
You can crunch your numbers more accurately, but you are only guessing what your future expenses will be. I like to use the simple rule, a simple and quick calculation.
My “million-dollar” home in East Bay is $2,500/mo. What a bargain!
Cap rate=NOI (net operating income)/purchase price, without regard to down payment.
The idea is if your cap rate is greater than your cost of financing, you can get positive leverage on your investment, and enjoy cash flow.
If you buy a $100k home, and rent it for $900 per month, assume a third goes to expenses (basic rule of thumb–that corresponds with your math), you are at a 7.2% cap rate ($600*12/$100k).
Not bad. I’ve seen lower cap rates, but I’ve also seen much higher.
The bigger point is that at those prices, NO NEW HOMES WILL BE BUILT. It will only be a matter of time (3-5 years) before rents, or values go up.
I am puzzled by abundant visible evidence that many vacant homes are not available for rent, but also not for sale. What are their owners thinking? Are they waiting for some kind of cargo drop of bailout monies out of Washinton-based helicopters to provide funds for future FBs to purchase their ever-vacant faux chateaus?
Another couple points that non-native central californians might not think about when investing in rental housing:
Air conditioning and landscaping costs are higher here than other parts of California and are essential in order to attract good tenants.
Older houses may not have central air and that would be something you would need to install - no, air conditioning is not required by law, but no one in the central valley is going to rent a house without air-conditioning.
milk,
not yet! revist the situation in December. Get a list of all inventory from an agent in an area that interest you. Then have the same agent run you the same list in December.
I just went back to work as an agent in stockton after doing accounting for a few years (the prices got so bad that I couldn’t in good faith put buyers into those deals). We are still on slippery downward slope, but attractive deals are coming up.
For example:
A nice home with a boat dock and deep water access, 1600 sqft. for $209k. The note the bank ate was for $480k!!!! A paymnet on this home would be around $1,500/mo and a rent would cover that, but it is in a very nice area and is a compelling argument for a renter to get off the fence and buy it.
The MLS is rife (hundreds of listing and growing) with REO that went back to the bank between $350-500k and is now listed from $150-250k.
Real rough stuff is popping up in ok areas in the $40-60k range. I am now seeing a lot of rental grade inventory coming in at 10 times rents.
From my perspective (here in Stockton CA) we have much inventory that is priced at (what I consider) value. The only question is how far will the market have to swing below that value in order to compel buyers to move? From all the horrible after taste of the bubble this may take the rest of this year, or till the end of next.. hell maybe till the end of 2010 which is when I had guessed we would be moving up. Now we might just be on the sideways phase for a couple years after 2010.. no way to tell. Just as the bubble defies logic so does the bubbles collapse.
My point is that there is plenty of RE here that would yield you 5-8% after holding cost, depending on how active you are in the rentals management. As far as I can see there are no safe investments that now can touch this with the added benefit of a bubble in that assest future off in the future (maybe next bubble will peak in 2025 =). If you had the cash and are younger than 50 you would have to make some pretty serious and obvious mistakes on your purchase here in Stockton to not make some serious return.
And this doesn’t count the rental inflation that will occur. In 15 years that $1,500 rent should be almost doubled, while here in CA your taxes will have moved little.
I would agree with you if foreclosures had peaked already. They haven’t.
Get back to me when the 3 and 12 month trend line of NOD for a given zipcode are both on the downward slope.
Is it better to look at foreclosure rates, or inventory?
Inventory has already peaked in Stockton.
Oh, and if you have the time horizon that Rich is talking about, it doesn’t matter whether you time the bottom perfectly. His whole thesis is based on buying properties that cash flow with today’s rents (which have already been effected by massive inventory).
Since you are buying at below replacement cost with rents that cash flow, you may not maximize your profit, but you won’t get hurt either.
Better to spend your time finding the right piece of property (school district, etc.) than spending your time waiting–once it becomes obvious, the best properties won’t be available to buy as an investment.
“While here in CA your taxes will have moved little.”
The budget is getting so bad that I wouldn’t count on Prop. 13 being there over the next 15 years.
I checked out CV house prices compared to incomes, and I think they’re still 20-25% overpriced. Of course, if incomes go down (which I think they will in that area), then prices will go down more. If I were you, I’d wait until the median house price reaches 3x median income, then offer 10-15% less than what you think your target house is worth and see what happens.
All… thanks for the comments and observations. My only true experience with rentals was with a former home ex-spouse and I had after said spouse finished a law degree at UF in Gainesville. I ended up with it (the dwelling), it rented and cash-flowed well from a distance, and I got rid of it after a spell.
Sure was a costly hassle taking down all those live oaks due to violent storms. Learned some lessons about liability when trees fell in neighbor’s yard.
Sorry, woodpeckers, the dead wood had to go.
Wait another year, Milk, and you’ll save a lot.
“The tough economy and inflation are piling onto the housing market’s woes, says Merced Mayor Ellie Wooten, who is also a real estate agent. ‘There are so many elements involved in this that realistically it’s terrifying.’”
I would personally find it terrifying to learn the mayor of my town is a used home sales person.
It makes Marion Barry looks good. I would much rather my mayor be a crack addict and not a bullsh*t addict.
“I would much rather my mayor be a crack addict and not a bullsh*t addict.”
Crack addicts are bullsh!t addicts, too. I’ve encountered them in many a downtown area. “Hey man, can you spare some change for some food?” Food? Yeah right jackolanternteeth.
“…….installing pools for needy families……..”
Things must be different in Cali. Only “Wanty” families get pools around here.
Yeah, the standards of poverty really have changed. The other day I saw a guy outside Circuit C*ty with a handwritten sign:
“Please help - I can only afford a 32 inch flat panel and family needs a 42 inch TV”
That’s a joke, of course, but the “pools for needy families” thing really is disgusting.
This stuff makes me start talking like “I-can-remember-when-that-wasn’t-there” guy……
Me: “I can remember when only doctors and bankers had pools….”
Kids: “Yeah, and you walked ten miles to school, uphill both ways, in six feet of snow…..”
Hell, I remember when only doctors and bankers had power windows!! Or crushed ice in the refrigerator door!!
I think a lot of people’s standards are a bit off. I know a guy who makes $40k/year in San Diego, and he thought that placed him below the poverty line. I think the real poverty line is like $20k.
Yes, but depending on the county he could possibly be eligible for Housing Assistance. If your friend lived in San Mateo County, he would be considered low income.
http://tinyurl.com/6q4b3k
Saw a sign the other day that went something like “I’m not homeless, but I need money”.
Not a joke.
Have you ever seen ‘Extreme Makeover: Home Edition’. The concept is to give some family with no savings or meaningful income a multi-million dollar McMansion filled with bling. The show is about many things - Egos, promoting Home Depot and Lowes sales, etc. Im not even sure helping needy families is even on the list. I never understand why they put all the personal crap in the houses, as if the owners had any ounce of intelligence they would sell it right away to move into a more modest home and invest the windfall. What a waste. As for that Ty Pennington model wannabe, I’ll be kind and shut up.
There was actually a story just recently about one of those Extreme Makeover families that mortgaged the house they received to start some business that failed, and got foreclosed on.
Bet that made all the volunteers feel good.
To qualify for being needy, better denounce selfishness and say you are a liberal.
horsesht.
Yes, we can always count on BillinMD to cram his ill-informed political stereotypes into every discussion.
RoboGOP strikes again.
Speaking about needy nerds, tonight check out ‘My name is Earl’ @ 10:00 pm PST. Check out their living quarters. Early Redneck. hehehehehehehe
“…….installing pools for needy families……..”
Man! Someone beat me to it. I thought swimming pools were for upper middle class to wealthy families.
Needy! No wonder taxes are high in California!
Next we’ll hear about auto mechanics who work on Hummers for needy families.
Between all the swimming pools, concrete and dead weight McMansions, I’m surprised that California hasn’t buckled and slid into the Pacific by now
A pool could be a necessity as a reservoir in CA in a couple of years.
Heard that next year will be a more normal wet winter. More water, hope mud flows don’t hurt after all the fires.
You can always put a roof on a pool, live in it and rent out the McMansion!
Bob Scarpitto “He went from a $300,000 salary to zero trying to keep the business afloat.
What a bonehead. You build pools. Did you not think a pool builder that brought in over 1/4 million dollars should be banking most ever last cent. Did you really think you would continue to make that kind of money building pools? It’s called a “fluke” Bob, look it up.
Not sure if it was the contractor or reporter who referred to $300k as his “salary,” but owner-proprietors don’t earn a salary. They (hopefully) take home profits, but an owner doesn’t receive a W2, pay FICA, etc. Nor is that income partially protected by unemployment benefits, as a salary would.
With a boat and who know what else, the guy is moron if his contracting business was his only source of income. Residential is notoriously boom-and-bust, let alone in a relatively remote and impoverished area like Merced. If he wasn’t saving for a rainy day, then shame on him.
Sounds like he got in right around the right time and made a lot of money for the first 5 or 6 years, but spent it as fast as it came in. So now, he’s nearly a decade older and has nothing to show for it–not even a marketable job skills.
Idiot.
Minor correction: you are correct, in an LLC/sole proprietorship, the owner is not allowed to draw a salary. However, the profit is taxed as earned income. You pay FICA on your tax return and are expected to pay estimated taxes quarterly if the tax due will be over $1K.
No kidding. AFAIK installing pools for most contractors ( in a non go-go boom fake economy ) is a part-time gig w/ college guys for labor during the summer. I realize this is CA but even there the guy should have been keeping up other contacts and other work.
Preferably non recreation/discretionary related. What’s funny was the guy was willing to recognize his good fortune to the degree that he should ’share’ that good fortune but evidently not smart enough to make any contingency plans? Oh and talk about misplaced charity!? Just another REIC Freak thinking this would last long enough to take them to the finish line.
He most likely was there, not to share in his good fortune but to get some free TV exposure to show off his skills as a pool installer and to bring in new customers who want to have a pool installed by the guy that was on TV.
And on top of that he lost his “modest” home. It never occurred to him to pay it off while he was pooping money.
Well YES as a matter of fact! You’ve gone and out done me again! Or at the very least salted away enough TO be able to pay it off? But he’s hanging on to the boat though ( hope it’s a “live-aboard”? )
“His girlfriend has given him a place to stay, and he’s taken up motorcycling to save on gas”
Can you imagine the pool contractor showing up on a motorcycle with a shovel strapped to the gas tank. HA
LOL
yep brings a sense of confidence to a “prospective” pool buyer.
Serfs up, hang 10
“In Modesto, city housing official Barbara Kauss worries about a coming ‘third wave’ of foreclosures. The first wave washed over investor properties, the second - peaking in early July - wiped out recent adjustable mortgages whose rates ratcheted up.”
‘If there’s anything good out of this, there are a lot of local people who have been saving their pennies and doing things the right way.’
Could it be? Could this be an agent getting as close as an agent can possibly get to admitting that her fate lies in the hands of renters and savers?
No, that’s just an echo of the long-standing chorus line, “There’s Plenty of Pent-Up Demand”. Can you sing along kids?
There’s plenty of pent-up demand,
So don’t you go get out of hand.
The loot will appear,
Now you go get in gear,
For the next great big spoiling of land!
“Luxury-home Realtor (and owner) Olivia Hsu Decker is running a swank six-day event in September for ‘ultra-high-net-worth individuals,’ mostly from overseas, to view 30 palatial estates in the Bay Area.”
“Even in this upper-crust market, ‘it’s slowed down,’ Decker admits.”
“Why? ‘Because they read the press. It’s not like they don’t have money to buy, but they’re pausing because of the press.’”
Memo to Olivia.
These “ultra-high-net-worth” foreigners may not be falling over themselves to buy over priced “palatial estates.”
They too read the papers and they didn’t become “ultra rich” by not being savy business negotiators. ‘38 million? I’ll offer 19′, might be more like it.
They don’t have money to buy. The ultra rich have been using mortgages to purchase their $38 million mansions, just like everyone else. I wonder how many banks today are willing to loan that kind of money on real estate that was probably worth $19 million about 8 years ago. The credit expansion has affected real estate of all stripes, and the credit crunch will do the same.
I admit that I am totally baffled by people that feel the need to take out a mortgage when they could outright purchase a more modest home.
The ultra-rich that I am aware of used far less leverage on a percentage basis than the low end. Most that I know of were cash buyers–any debt was not for necessity, but for personal leverage.
Ultra-high NW buyers have far more assets than they can liquidate than you can imagine.
Said another way…
If you bought a $5MM house at the peak, your net worth was very likely far greater than $1MM.
If you bought a $500k house at the peak, it is very possible that your net worth was far less than $100k.
Debt and borrowers were far more aggressive at the low end than the high end, which is why higher priced homes will be more stubborn on the way down than the lower priced homes.
Economy not so good overseas either.
Gas up
Food up
Check out the EU and Russia beginning the takeover of all europe. MMW, Putin, the new Hitler. Economy will be much different now till.
“Prospective buyers will be wined and dined by sponsors such as Bentley and First Republic Bank, and chauffeured to tour such properties as an English Tudor-style mega-mansion in Los Altos Hills ($38 million) and a Tuscan villa in Tiburon ($15 million). . . . These are really glorified open houses,’ Decker said, in a dry understatement.”
Where is the understatement? Sounds like an annoying open house to me borderlying on a time-share sales pitch on your vacation nightmare. What I dont understand is, if these ppl (the prospective buyers) really have all this money, why would they waste it on spending time with ppl they dont like trying to get a free meal out of the deal? We saw earlier that for the 800k price range you get free hotdogs, in 15 million plus you get a wined and dined and a chauffeured ride (arent these things ppl just pretending to be rich like). I would much rather eat my frozen dinner in front of the TV.
Please forgive me if I’m mistaken, but aren’t Tuscan villas located mostly in TUSCANY!
Now it refers to anything that has that nasty yellow faux paint.
I’ll be in Italy next month. I’ll check to see if they have any newly built developments called “Napa Estates,” “Sierra Highlands,” “Bodega View,” etc, etc.
Don’t forget Hollenbeck Orchards, or Boyle Heights Brisas
And I bet you could find a rental in these “Tuscan” villas, and you don’t even have to be The Maestro!!
I have a few close friends that are truly rich. Compared to my measly income with their net worth, I’m just a part-time one route paper boy. (I remember those days.
)
Anyways, they are actually very normal if you know what I mean. I mean these guys probably have over $100 Mil and can get to that cash very quickly. BUT they live like normal people. One only has one car and it is a 5 year old Infinity. And here’s the kicker, they don’t own homes. I did asked them why they don’t own and they basically said they travel quite a bit but they also said homes are not great assets. They earn alot more with other investment vehicles. They said they’ll buy a home eventually but it would more of a place to live for a long long time.
Only the “stupidly” rich buys homes over 5 Mil. Basically people that like to flaunt their riches or “vapor” riches.
My experience as well. Those who have money have it for a reason–they aren’t stupid with money.
….there’s plenty of room for haggling, even at the top. ‘You don’t have to wait for the seller to drop the price,’ she said. ‘If you want to pay a million dollars less, offer a million dollars less.’”..
Or, if you want to pay asking, the property will soon be worth a million dollars less. But who cares? It’s only money.
Gee, you mean if I want to pay a million dollars less, I . . . offer a million dollars less? They’re paying her 3-6 percent of x-million for that sage advice?
“The story is similar in Visalia, where real estate broker Nancy Riggs said many banks are organizing short-sale divisions to handle the soaring number of requests. Riggs estimated that 17% of the 800 houses for sale in Visalia are potential short sales.”
http://www.youtube.com/watch?v=zZls5ZH5ytA
This straight off the press. A friend of mine has a very good business which is actually growing (he owns a medical billing business). Has money in the bank but also had a line of credit with a major Wall Street broker ($500,000). Only $50,000 owed on the house (value was $850,00 but now probably closer to $725,000).
His wife works in a government administration job (six figure income, medical, etc). In other words, prior to this credit mess, he would be called a golden client. Today, he received a letter stating his line of credit is suspended.
In fact he had only “borrowed” $30,000 from the line of credit to buy a small van for transporting his (4) kids around. It seems he can deduct the cost, etc.
What does this mean? It appears the credit noose has really tightend on everyone. Even those who have golden credit records/history. That makes me think some bad crap is coming down the line most of us are not privy to. Maybe Alt-A eventual foreclosure numbers (when they start to reset).
Could be those “in-the-know”, like The Financial Gangsters of Wall Street a.k.a “Da Boyz”, have seen some scary future figures on future unemployment, bankruptcies and eventual nasty price declines where property is concerned. Obviously, this indicates we are nowhere near the bottom of this Greenspan inspired mess. People who hand out loans do not withdraw lines of credit if they think the economy is improving. If the economy looks like it is improving, they either do nothing (allowing current loans and lines of credit to stay where they are) or continue giving credit to those deemed “safe”.
Nouribi (who has been correct thus far) thinks we have another 30% to 40% to go in price declines and from the way the banks and others who hand out credit are tightening their loan standards, I think he might be right.
Needless to say, my friend was shocked that his credit line had been frozen. He called his broker who told him it was happening tp thousands of people and that he shouldn’t take it personally.
“Could be those “in-the-know”… have seen some scary future figures on future unemployment, bankruptcies and eventual nasty price declines where property is concerned.”
Actually, IMHO the only folks who don’t see what’s coming are those that choose willfully to deny it. Myself - I’ve had no trouble at all noticing the store closings, reading the layoff stories, tracking the declining prices, etc.
I’m assuming ,”Nouribi” is Nouriel Roubini, and not some penny-ante magician in Vegas.
Isn’t Nouribi that African President who denies that AIDS is caused by a virus and won’t tell his people to use condoms and stop raping people? Or is nouribi a type of sushi? Yeah, I think that’s it, a type of sushi.
That would be Thabo Mbeki, the current prez of South Africa.
Ah, thank you.
Let me guess, Morgan Stanley?
We (HBB) predicted correctly at least two years ago that the credit contraction was going to impact the fiscally responsible eventually. Existing credit lines cannot be used to substitute for cash savings in an emergency, because banks can and will yank them at will.
From how you’ve described them, it seems like for your friend the revoking of credit is more of annoyance then anything else. His household has stable income and a manageable debt load. In other words, he and wife are exactly the type of people whose spending will eventually help bring the economy out of recession. However, even though he was extremely unlikely to ever tap that equity line of credit, he probably feels poorer without it. So there’s a negative wealth effect (beyond the $100k of equity he’s lost in his house) that will probably drive him to curb spending over the next year or so, thereby helping to deepen and prolong the recession when multiplied out among the rest of the US’s upper-middle class not drowning in debt.
I have an emergency line. It is called a “savings account”. F-ck all these people that are pi$$ing and moaning about losing their lines of credit. I know your friend wasn’t complaining but so many are. I love it because it shows another “entitlement” to which people are no longer entitled. Saving for a rainy day means actually saving for a day when the clouds turn gray.
He can deduct his van from his taxes? I dunnoOOoo … Are you sure this guy is on the up and up?
I just can’t understand financing a vehicle over 15 or 30 years instead of 4 or 5 years…..and if he has that much in savings why not buy a good used one for cash?
You’re talking about a margin account, basically..?
And then there is Russia and its eventual takeover of the EU..
on top of our financial crisis looming.
Why is Russia bombing all the oil structures in Georgia? hmmm
So, the PTB in our country are preparing for the future.
Does anyone know what the EU’s contigency plans are for an event like this? (After all, those pipelines are for their supply.) Or, are they still too busy messing with Microsoft?
EU today is like the FB’s of 2005/06. They still don’t know they’re fooked. Where do they get most of their natural gas? How soon until winter?
Except possibly for the Baltic states, they will give up without a fight.
I’m sure Mr. Javier Solana (Mr. 666) will eventually step in when the time is right.
heh.. a takeover.. as if Russia had the power.
The EU is a fair weather friendship. If things turn nasty I expect most of the EU would willingly take sides with the Russians.
It’s NOT real money Folks, it’s just a quick n’ dirty lil ole mortgage. Step right up and sign your John Hancock to own your DreamHome…Trust me !
Wauhahahaha
Suspension of credit is one thing….but, a major bank is trying to liquidate a friend of mine’s business on trumped up ‘covenant violations etc.’ 15?+ year relationship all of a sudden:
“Yeah, pay it ALL back tomorrow or we will liquidate you. We don’t care. You uh er violated a covenant…yeah, that’s it…”
Guess what you can do about it? NOTHING.
Where do you work? What if there just physically is no company left b/c the bank decided to seize it b/c they lost cash on subprime?
This is really happening.
That’s breach-of-contract and he should sue their asses for millions.
I don’t know if your assessment of their incomes is that much on target. Medical billing is a profession that is expounded by get-rich-quick artists as a lucrative field, but is really more comparable to bookkeeping or bill collecting , income -wise. And government jobs rarely bring in 6 figures. I’d be surprised if her income is over $60,000.
Hi guys, will be here soon, I got scared away a few weeks ago by the new whatever that I couldn’t figure out how to use, but it looks like most of you are still here, so I’ll join later this eve.
Happy day!
Now if we could only get Txchick to come back to the fold.
Where’s Neil (Got Popcorn®) these days?
but it looks like most of you are still here…
indeed. Been the best seat in the house for years now.
Hey Az!
The new blog is cool, but this one is still great too!
Best,
Leigh
What new blog? Huh? (Been away for a few weeks..)
Looks around…did somebody…go somewhere ?!?!
Yes, to a dark evil place. Behave yourself or we’ll send you there too.
Hi az. Hope you’re enjoying the weather down there.
“He went from a $300,000 salary to zero trying to keep the business afloat. With no income and a higher cost of living, he lost his modest home to foreclosure. He sold everything, except a prized boat, which he just put on craigslist. In April when he had to hand back the keys of his home.”
If you’ve been making $300,000/year for say, 5 years, you should have enough money saved up to at least sit tight for a couple of years without killing yourself. (Actually, you should have been able to pay off your house.)
I’d have to do some quick math, but at $300k per year for 5 years I’m pretty sure that’s more money than I’ve made in my 20 years as an engineer. I know for sure that one year at $300k is pretty close to my first 8 years out of college.
He certainly should have been able to save up a bit. I have on way less.
I can’t imagine the pool biz having an extremely high margin. I think he’d have to sell a crapload of pools to actually net $300K.
A small family should be able to live very comfortably on $100k/year in the central valley. I don’t see why he hasn’t saved up a million bucks.
Well, he’d only take home $150 - $160K/year. Still, he should have been able to save 50K/year with no problem. If he made that for 5 years, he should have $250K. If he wasn’t an idiot, he could pay his mortgage off with that, and if him and his wife got ANY job with health insurance, they’d be able to get by!
I think you’ve got him paying too much tax, but you’re right, I dind’t factor that in. My rough estimate is that he’d take home $200k/year, not including any 401k contributions or anything like that.
The “wife” divorced him in 2005 when the boom was happening in CA and she sat back and watched him piss away every last dime he had and then some. She still has her house and money in the bank because she saw what he was doing when the reins came off and he could spend his money however he saw fit. The ex-wife has supported the kids by herself for over a year now. Right before the business went under, Bob bought a brand-new Chevy Tahoe with a $1000/mo payment. He could afford the payment, but couldn’t afford to support his kids. He is now over $25,000 in arrears.
You are absolutely right that he is an idiot. Always has been and always will be. Trust me, I was married to Bob Scarpitto for 14 years. The only good thing that came out of that marriage was two beautiful daughters. He never earned $300,000 a year. He may have spent $300,000 a year after we were divorced, but you can see where that got him. I kept the house and the equity and have a savings account because I lived with that man long enough to know that he would self-destruct in a matter of a few years without me reeling him in. He had nothing when we met. His credit was shot and he was penniless. I guess what goes around comes around. He’s right back to the place he was 20 years ago, but I think it’s worse now. He wanted to show me how famous and successful he was. It backfired on him.
A buddy who’s a major league federal law enforcement officer just told me of a 500,000 plant Marijuana bust in the Sierra foothills…
That’s a street value of One Billion Dollars, for those of you scoring @ home.
I believe that the discovery was made following the fire that burned to the west of Yosemite.
Frankly, I was wondering what was taking them so long. 500K plants is a couple zillion truckloads.
This bust was in the Southern Sierra, and the Michoacan drug cartel were the gardeners…
Anybody else craving Dorito’s right now?
That was just a public service munchie TEST NYCityBoy.
Please answer the door quickly as we knock and step away from the roach
“Over the past eight days, a federal, state and county law enforcement initiative called Operation LOCCUST has eradicated 420,000 marijuana plants here worth more than $1 billion on the street. By comparison, authorities eradicated 330,000 plants over the six-month growing season last month, said Lt. Mike Boudreaux of the Tulare County Sheriff’s Department.”
http://m.cnn.com/cnn/ne/crime/detail/151118/full;jsessionid=35148D4F21A1CA0ADD2B6F710EF35C50
_______________________________________________
Marijuana is practically legal in California already…
Legalize it, tax it, and stop these Mexican Al Capones from ruining our land, all in one fell swoop.
Win-Win
I was imagining how fun it would be if the field caught fire.
“420,000″
interesting number…..what are the odds of that?
The Cops just found a major pot field in the foothills near Palm Desert. Off of Vista Point. Remember Desi/Lucy’s “the Long Trailer”? well that is off the hwy 74 and now or was a giant field of pot.. Where is the wind blowing? darn, gotta run, get in on the fun!
I call BS on street value. I’ve known a few people who grew this stuff and the numbers tossed about in regards to profits are ridiculous. How about keeping it real? On another note, how about appreciating the fact that the money at least stays in the country instead of going overseas to some low wage growers?
SteveH:
$2k a plant is realistic, and sadly the money doesn’t stay in our country, it goes to the Mexican drug cartel, which has taken over many cities down under, and bought off the police there, lock, stock and barrel.
They really need to take marijuana off the federal narcotics list. Make it a federal crime to import or export it, or move it across state lines unless the two states have ratified a compact to allow it. And then leave it up to the individual states to decide what they want to do.
This crap is getting out of control. Violence worldwide and in our own neighborhoods and it’s all funded by the drug trade. Demand has never changed and there will always be someone willing to supply it.
Now there is an idea for raising a downpayment!!!
“A buyer - Jones can’t disclose who it is, other than to say it’s a local resident - is now in escrow, with one of the many offers that topped the $189,000 listed price.
I can believe it because the people here still believe that RE prices will go right back to their old levels a year from now. At the same time someone can go into Marina or Seaside and rent a newer place, a larger place, a nicer place for $1500 to $2000 or less. Seaside doesn’t have a lot of great looking neighborhoods.
>> He used to donate his time installing pools for needy families on the TV show ‘Extreme Makeover: Home Edition.’
They used to write science fiction shows in the 1960s about civilizations like this.
And then the Morlocks came up and really messed things up.
Better not have been the pineapple express iwas waiting on!
So, let me get this straight.
Average house is $250,000.
Banks now want 20% down.
So, you need $50,000 CASH to get into the average house.
However, the savings rate is basically $0….
Look at the people you are driving with in traffic next time you are out. Ask: “Does that person have $50,000 cash to put down on a house?”
ROFL!
People don’t even have $5,000 cash. They would rather buy a crapmobile on financing than a halfway decent used car for cash.
“[Scarpitto] went from a $300,000 salary to zero trying to keep the business afloat. With no income and a higher cost of living, he lost his modest home to foreclosure. He sold everything, except a prized boat, which he just put on craigslist. In April when he had to hand back the keys of his home.”
It seems more like the business had revenue of 300grrr to me; would he foreclose if his personal income was that high? And how many of the last 5-7 years was he making that much?
“Block 36 - also known as Azusa Village Center - would have been a mixed-use project, consisting of floor-level retail with 66 residential units above, a type of vertical building often seen in dense areas like New York City.”
HA ! HA ! HA ! I grew up in Azusa and let me tell you it aint no New York . It’s more a semi mexican third world country.
Professor Bear writes,
“Maybe you did not hear yet about the sovereign wealth funds on the prowl for REO? Perhaps they can snap up some Central Valley bargains?”
Don’t say that too loudly. Some idiot at the State Department will realize the Central Valley is the perfect place to relocate all the “Palestinians.”
High-end foreclosures:
http://tinyurl.com/6yysu4
“Called “Essencia,” the ultramodern house has six bedrooms and seven baths, a wine cellar, home theater, saltwater vanishing-edge pool, high-tech wiring and the curvilinear architectural form that Concepto Design Group specializes in. Completed in 2006, it was listed for $21.5 million and in January 2007, San Diego Magazine published a three-page spread titled “Above It All.” In June, the lender, Federal Home Loans Corp., foreclosed on the property and listed it for $12.9 million.”
That’s potentially quite a haircut.
“Maxine Gellens, a longtime La Jolla real estate agent, said high-end foreclosures are no different from those involving $200,000 starter condominiums whose values have fallen below loan balances or whose monthly payments have become unsustainable.”
“If you overextend or borrow too much, it doesn’t matter what the price of the property is, you’ll see that differential and you’re not going to be able to sell it,” Gellens said.
“DataQuick searched public records to identify the most expensive foreclosures in the county, using Zillow as well as its own findings, and came up with the 23 most expensive properties.”
“They include five properties each in La Jolla and Rancho Santa Fe, four in Carmel Valley, two each in Del Mar and Encinitas and one each in Bonita, downtown San Diego, Jamul, Point Loma and Poway.”
“The homes were purchased between August 1997 and December 2006 with prices from $635,000 to $7,450,000, according to county records.”
“A check of addresses, court records and employment data revealed that the owners included business executives, real estate experts, partnerships, a teacher and others. Most could not be reached, and none would speak on the record.”
“‘If there’s anything good out of this, there are a lot of local people who have been saving their pennies and doing things the right way.’””
Let me clarify for you, Becky, for the last 6 years, these “smart savers” you’re referring to didn’t buy because they didn’t listen to your RE bullshit.
DOC
I don’t know how long it will take, but don’t forget that when global credit and “liquidity” dry up, the good ‘ol US of A is still going to have to find someone to buy it’s bonds to cover all our debt payments. So, in addition to 20% down, the banks not wanting to lend, the banks will charging a greater premium over the 10 year T-note than they usually do, T-note yield will have to rise to attract foreign capital. This will cause the housing bust to get its final death blow just when the bottom callers think they’ve finally got it right. Remember, the Fed doesn’t control the long bill and bond rates (which affect mortgages), only the short term rate.
So, think about home prices in a setting of awful market psychology, tight credit, 20% down needed, AND a soon to be rising interest rate! You ain’t seen nothin’ yet. Think Japan style 10-20 year bust. Keep on walkin’ away and rentin’ folks…