You Can’t Fake It Any More In California
Bloomberg reports on California. “A tidal wave of anxiety is washing over America, from Wall Street’s concrete canyons to the lettuce fields of California. Liz Stevens, a 22-year real estate veteran who rose to be a regional manager for Prudential California Realty, invested $500,000 to open her own franchise in Berkeley in 2006 and hired 23 agents. On Aug. 1, she let the remaining 10 agents go and closed the doors.”
“Stevens still wonders how things went bad so quickly. ‘I’m educated, I’m intelligent,’ she said in an interview. ‘I have a business plan. These things aren’t supposed to happen to people like me. It’s very easy for me to feel ashamed.’”
The Press Democrat. “The head of a Santa Rosa financial services firm is shutting his company amid allegations he defrauded elderly investors out of millions of dollars. According to SEC filings, Gary Armitage of Healdsburg was a director in Lakeside Mortgage, an investment fund founded in 2002 that provided mortgages to builders in Northern California. Armitage put $100,000 of Lynn Luthi’s money into the fund.”
“Armitage put $400,000 of Luthi’s money into Asset Real Estate & Investment Co. ‘It’s just a bunch of worthless notes at this point,’ Luthi said. ‘It was just a Ponzi scheme where they got more and more and more investors until it blew up one day.’”
From My Fox LA. “The California economy will stay sluggish well into 2009 — characterized by falling home prices and increasing foreclosures amid continued job losses — until the struggling construction and financial sectors bottom out, according to the UCLA economic forecast released today.”
“UCLA economists had said previously that the diversified economies of Los Angeles and the Bay Area were ensuring continued job growth in the state, despite the housing downturn. But over the past three months, that situation has changed.”
“‘July’s unemployment report was, to put it bluntly, ugly,’ UCLA Anderson Forecast economist Jerry Nickelsburg wrote. ‘We think temporarily ugly, but ugly nonetheless.’”
The Union Tribune. “‘Put bluntly, housing consumers and financiers are in a state of shock,’ said David Shulman, a senior economist at the forecast. ‘Housing prices weren’t supposed to decline absent a significant decline in employment, but they have, big time.’”
The Glendale News Press. “The last remaining Guy Schmidt car dealership on Brand Boulevard has shut its doors, leaving scores of secretaries, managers and salespeople out of work. Though ‘business was terrible’ before the shop closed its doors, Schmidt sold the dealership for ‘personal reasons.’”
“Total sales for new cars and leases declined about 10% in the second quarter this year compared with the same period last year, from 2.2 million to 1.97 million, said Ron Ahlers, assistant director of finance for the city. Of taxable income for the city, that translates to a $23-million drop in sales-tax income for Glendale’s coffers, he said.”
The Manteca Bulletin. “Turn to the classified pages into today’s Manteca Bulletin. You’ll find ads for one-bedroom apartments ranging from $575 to $750 a month.”
“Now consider this: You can buy your own 528-square-foot one bedroom home with a 4,392-square-foot lot complete with car port with a three percent down FHA loan for $480.70 a month for 30 years.”
“‘It the opportunity of a lifetime for some people who otherwise would never be able to own a home,’ noted Realtor Tom Wilson of Wilson. ‘There will probably never be a better time to buy than now.’”
“The home at 413 ½ N. Grant St. is listed through Anna Anguiano of Century 21 M&M Associates for $68,900. It sold for $235,000 just over three years ago. It is one of roughly a hundred homes that are located off paved alleys in Manteca.”
From KFSN TV Fresno. “Homes selling for under 200-thousand dollars have flooded the market. We’re even starting to see the price listed outside on some real estate signs. Real estate broker Tom Avent said ‘I think probably 75-percent of the market is under 200-thousand right now.’”
“Many of these houses which sell for less than 200-thousand dollars have lost over 100-thousand dollars in value in just two years. But Tom Avent said buyers need to be patient because banks are overwhelmed by a foreclosure inventory.”
“Avent said ‘A lot of them got pre-approved a year ago and they think that they’re still good but lenders have changed their guidelines.’”
The Orange County Register. “Bob Simpson is president of IMARC , an Irvine-based company that works as an investigator for mortgage insurers seeking to understand why their mortgages went bad.”
“Q: At what point are prices going to stop falling? A: I’d ask what’s the median income in Orange County? I’d say multiply that by three or four and that’s the median home price. That’s about $300,000. Right now, anyone who bought their home since 2003 has lost money. … I’ve been on record that the median is going to return to 1999 or 2000 or worse. That’s about $300,000.”
“Q: How much fraud was there? A: I asked a friend, a good guy, ‘Have you originated an honest loan in the last five years?’ And he said: ‘The lenders deserve everything I gave them.’”
“Q: Have things changed at all? A: Mortgage lenders didn’t find religion and say we need standards. What happened is they originated so many bad loans that investors dried up. … You can’t fake it any more.”
“Two years of homeownership gains that lifted the county’s percentage of homeowners to its highest level in nearly two decades have been erased, according to the Census Bureau.”
“‘There is still a tremendous number of people who are financially exposed, and the census numbers suggest that maybe there has been only a small dent made in the number of people who’ve had to get out of their housing,’ said demographer Hans Johnson of the Public Policy Institute of California. ‘A decline of 20,000 homeowners over two years is a big decline, but how many more people are seriously at risk? You have potentially 105,000 more homeowners in San Diego who are seriously at risk.’”
“Gabe del Rio, who oversees the homeownership and lending program for the San Diego nonprofit Community Housing Works, said he’s not surprised by the statistics. His agency has been deluged with financially troubled homeowners who have seen their home values drop far below what they owe on their mortgages.”
“‘We’re seeing people losing homes by the hundreds, and that’s just our agency,’ del Rio said. ‘The old adage that you shouldn’t spend more than 30 percent of your income on housing worked 25 years ago. But it doesn’t work now when you’ve got these kinds of housing prices.’”
“Maria Ray and husband Eddie Jr., who bought their three-bedroom Spring Valley home two years ago for $475,000, were persuaded to buy after being told they could later refinance to bring down their monthly payments.”
“Instead, property values began falling, and their payments rose to more than $4,300 a month, which they have been unable to pay since June. Their house is now assessed at $325,000, and the Rays are hoping that Community Housing Works can work with their lenders so they can hold on to their home.”
“Although the couple’s income was as high as $120,000 at one time, it has since fallen because Eddie, a construction company foreman, is working fewer hours. They share their 1,400-square-foot home with three of their four children.”
“‘This is the first place we ever bought after 24 years of being married,’ said Maria, a legal support assistant for the county. ‘We worked so hard. In the beginning, when we couldn’t make our payments, we were both devastated and couldn’t sleep. We wondered, how could this happen? This agency is our last hope to save our house. If we lose our house, our credit will be ruined and it will be harder to get another house.’”
The Voice of San Diego. “In coastal Leucadia in Encinitas, eight brand new, $2 million luxury homes built with Cape Cod and other colonial touches comprise the first phase of Nantucket, a recent Barratt American housing development.”
“Next door, what was supposed to be phase two now consists of three half-finished, papered-up houses, weeds and some empty foundation slabs, surrounded by a chain-link fence.”
“‘It’s like a ghost yard,’ said John Kline, a real estate agent in Del Mar, who is trying to sell one of the houses from the first phase.”
“The development…stands as a symbol of the damage sustained by Carlsbad-based Barratt American after its bank cut off construction funding last year in the wake of the crashing housing market.”
“One of the eight 4,000-plus-square-foot houses built is now up for sale at a loss, and will soon enter the foreclosure process, said Kline, the house’s listing agent.”
“The house is a short sale, listed for $1.2 million even though his clients had a $1.5 million mortgage. A group of investors, including a Barratt employee who has since been laid off, paid about $1.9 million in December 2006 for the house.”
“A notice of default will be filed on the property within the next few weeks, Kline said, because the investors have stopped making their mortgage payments. That a foreclosure could occur in a showpiece development like this illustrates how far the trouble has reached for Barratt, and for the neighbors who paid close to $2 million each for their houses.”
“Aaron Brent and his parents work in real estate. His mom paid $2.1 million for her house, Brent said, a semicustom home near the beach. Now the house next door is for sale for more than $800,000 less than she paid.”
“‘In these places, you wouldn’t figure it would happen quite as much,’ he said Friday morning, gesturing over the fence to the half-finished houses. ‘Most of the time when this has happened, it’s out in the middle of nowhere where they have way too much land.’”
Liz Stevens, a 22-year real estate veteran who rose to be a regional manager for Prudential California Realty, invested $500,000 to open her own franchise in Berkeley in 2006 and hired 23 agents. On Aug. 1, she let the remaining 10 agents go and closed the doors.”
“Stevens still wonders how things went bad so quickly. ‘I’m educated, I’m intelligent,’ she said in an interview. ‘I have a business plan. These things aren’t supposed to happen to people like me. It’s very easy for me to feel ashamed.’”
success is no sure thing
don’t cry about. you sound like a loser if you do
in fairness to Liz, if she tries again in a few years with realistic expectations and a better knowledge of her business environment, she may succeed.
The catch is that she have to try again i.e. perseverance and/or determination
Cinch
It sounds like Liz bet everything on a business (residential real estate brokerage) that has no real barriers to entry.
It also helps to not drink the kool-aid: “These things aren’t supposed to happen to people like me”
“I have a business plan.”
Holy crap, 2006 was 1998 all over again but in just a different form. Bigger and uglier.
Gozar sure does come by these parts a whole bunch lately.
“educated and intelligent”.
She forgot “wisdom”, and that made all the difference.
“She forgot “wisdom”, and that made all the difference.”
Spot-on, which coincidently is usually mingled with patience.
Looks like Liz didn’t do her homework and went “all-in”
to her own demise.
Hopefully she’ll get to keep the Hummer though.
DOC
How does anyone get to be a “real estate veteran” at 22 years old? If she only has a high school education, then she may have been selling RE for 4 years, since you have to be at least 18. If she is educated (as she claims), then she has been doing it for a maximum of 2 years (assuming she graduated from high school at 16, immediately embarked on a 4-year program, then immediately got an RE job). If the latter is true, then someone gave her that $500k, and it wasn’t a bank.
She should be ashamed because she wasted OPM and OPJ (other people’s jobs). She, on the other hand, has lost nothing but her overinflated ego.
22 year veteran not 22 years old
I think they mean she’s been a real estate agent for 22 years.
i.e. “a 22-year real estate veteran”
Not enough coffee or too much?
“a 22-year real estate veteran” = 22 years in RE, not 22 yrs old.
““a 22-year real estate veteran” = 22 years in RE, not 22 yrs old.”
True, but 22 year veterans can still make the pipe-dream financial blunders of 22 y/olds.
DOC
A few years ago Coldwell Banker Corporate purchased at the height of the market a Prudential California Realty franchise in Long Beach, CA . They have since sold/merged with another CB franchise in the city.
Nice haircut!
I know from personal experience CB did a lot of acquisitions in the last few years that have gone very sour…..
oooh, how do you make a blushie like that?
: oops : (no spaces)
Land’s sakes, it’s hot in this here thread
thanks, V
Hey,
Sh!t happens!!
Dang!
I kick myself when I hit send before reading!
And I often do.
Rats Butt,
Leigh
Liz, your problem is that you didn’t read the HBB blog in ‘05. You would have seen it coming like my fellow bloggers did.
Exactly!
And even a non-HBB reader who stayed away from the Kool-Aid (granted, nearly impossible for those in the REIC) would have fared better.
There are thousands more like her here in the Alt-A, in all kinds of different businesses. Many of them HELOC-ed their primary or only residence in order to start out.
Oh, these next few years are going to be interesting.
I wonder if her business plan included a whole section on what to do if her basic assumptions turn out to be wrong — Plan B.
I’d dealt a while back with Tom Avent, the broker they quote in the Fresno Bee. He was a real sleeze. “You can’t get 20% off a home!” he insisted to me angrily 18 months ago. He strutted and huffed and got back into his big ‘ol guzzling truck.
; )
“That a foreclosure could occur in a showpiece development like this illustrates how far the trouble has reached for Barratt, and for the neighbors who paid close to $2 million each for their houses.”
Instead of “Be all that you can be”, we should change our motto to “Fake it ’til you make it”.
When it’s all said and done, the only real wealth left in this country will be among those who get paid in Euros, or those young enough to pick up the pieces and start over.
What did they really PAY? Seems to me that lots of folks just LOOKED well-off.
debtor’s success
“the only real wealth left in this country will be among those who get paid in Euros, or those young enough to pick up the pieces and start over.”
The euro is toasty toast just like the greenback. Canadian dollars might be worthwhile. I’m thinking yen is the winner in this.
You also neglected to mention the group that took their money off the table between ‘03 and ‘06, and have hedged it.
No fiat government paper currency isn’t constantly losing by constantly being counterfeited.
Hey, I can buy EVERYTHING and EVERYONE in the whole wide world too! Just let me know how many xerox copies of a dollar bill you would like, or perhaps you’d like me to just manually write a bunch of zeros after the bill?
The one dollar bill, the five dollar bill, the ten dollar bill, the 20 dollar bill, the fifty dollar bill, and the hundred dollar bill are all the exact same worthless piece of paper.
Or maybe you’d like me to type out some imaginary credit? Ask and ye shall receive!
1,000,000,000,000,000,000,000,000,000,000,000,000,000,000
Let me know if that’s enough.
Congratulations! And welcome to your first day as my slave!
The RMB used to be around 8 and is now at 6.83. As the creditors to the US, I’ll betchya that one of these days a dollar will only buy a couple of RMB. Don’t think you can buy RMB offshore though, other than perhaps in a Chinatown in Asia (I know you can buy RMB in Saigon).
‘Housing prices weren’t supposed to decline absent a significant decline in employment, but they have, big time.’ said David Shulman
And what does that tell you, Sparky?
Those who think employment will hold up must be the same crowd that’s keeping a vigilant lookout for wage inflation.
House prices weren’t supposed to go up faster than incomes either.
House prices appear to be directly correlated to the amount of money folks can borrow, given they can and will borrow any amount.
Just like tuition!
I would say going from under 5% unemployment to over 7.5% unemployment is significant. Just my humble opinion.
The economist sees a silver lining to every cloud. I say that’s just a early onset symptom of retinal degeneration.
There’s a silver lining to every cloud…
…even a mushroom-shaped one.
Yes, I’d agree that a 50% rise in unemployment is quite substantial, but who am I?
And we both know the numbers are higher.
Sigh,
Leigh
MACBETH: I pull in resolution, and begin
To doubt the equivocation of the fiend
That lies like truth: ‘Fear not, till Birnam wood
Do come to Dunsinane:’ and now a wood
Comes toward Dunsinane.
That’s the second time you’ve posted that, PB. You’re going senile!
“Now the house next door is for sale for more than $800,000 less than she paid.”
That’s not a haircut, it’s a decapitation.
Seriously, who in a state of mental stability thinks, they will ever see numbers like what she paid in their lifetimes? No one could honestly think that. You know she thought it would endlessly appreciate. If I were her I’d bail the hell out, and I believe in living up to my obligations.
“Now the house next door is for sale for more than $800,000 less than she paid.”
That’s not a haircut, it’s a decapitation.”
Pass the Ky Jelly please!
Decapitation and KY? Please tell me you are not thinking what I’m not thinking.
“Pass the Ky Jelly please!”
You can’t fake it anymore in California.
Luv,
Jen
A little rock and roll with KY:
http://www.youtube.com/watch?v=6k1UBhrZQLA
Jen,
Haven’t seen you posting in awhile. Hope life is treating you well.
Hello -
JB?
Nice to see you again
Don’t worry –
The Executive team is working!
Leigh
There was a phase in Nantucket,
But it appears after building it, the developers
Said they’d rather be selling buckets.
Regular or extra crispy?
Please pull up and pay at the first window…
============================================================
“In coastal Leucadia in Encinitas, eight brand new, $2 million luxury homes built with Cape Cod and other colonial touches comprise the first phase of Nantucket, a recent Barratt American housing development.”
“Next door, what was supposed to be phase two now consists of three half-finished, papered-up houses, weeds and some empty foundation slabs, surrounded by a chain-link fence.”
“‘It’s like a ghost yard,’ said John Kline, a real estate agent in Del Mar, who is trying to sell one of the houses from the first phase.”
“The development…stands as a symbol of the damage sustained by Carlsbad-based Barratt American after its bank cut off construction funding last year in the wake of the crashing housing market.”
“One of the eight 4,000-plus-square-foot houses built is now up for sale at a loss, and will soon enter the foreclosure process, said Kline, the house’s listing agent.”
There once was a house in Nantucket
But the builder decided to chuck it
The buyer said yeh, the banker said ney
and together they all said F*%#k it
There once was an Emporer Norton,
Who went with his wife out cavortin’;
They both had some gold,
And having grown old;
They decided to go out while sportin’.
There once was a fisher for bottom,
His favorite time for this, autumn,
But prices were high,
And his patience ran dry,
So he rounded up the realtors and shot ‘em.
“Keep Leucadia funky!” is the popular bumper sticker in this coastal community of Encinitas, which has been doing its best to resist the sterility of planned communities which abound in neighboring Carlsbad. Check out this local website of disgruntled SoCal natives and surfers: http://leucadia.blogspot.com/
“….Liz Stevens, a 22-year real estate veteran who rose to be a regional manager for Prudential California Realty, invested $500,000 to open her own franchise in Berkeley in 2006 and hired 23 agents. On Aug. 1, she let the remaining 10 agents go and closed the doors.”
“Stevens still wonders how things went bad so quickly. ‘I’m educated, I’m intelligent,’ she said in an interview. ‘I have a business plan. These things aren’t supposed to happen to people like me….”
I nominate Liz as the ‘Bubble Poster Child’ of the decade. Intelligent?, by 2006 any one with half a brain should have seen the bubble collapsing like the Hindenberg. She must be so full of Koolaide that she spends 23 hours a day in the ladies room.
This thing was self destructing in mid 2005, let alone 2006! Well, maybe she can apply to Paulson and Co for a refund of her 500K.
“I’m educated, I’m intelligent,’ she said in an interview. ‘I have a business plan. These things aren’t supposed to happen to people like me….”
LIke you?? So what are “you” ????? Sheesh. You ain’t nothin’ special, babe.
like the anger, Blano!
When someone tells me they’re intelligent……….
I think you get my drift.
Mike
Oh, for Pete’s sake, lady. There are plenty of educated, intelligent people who’ve written business plans for ventures that have failed.
But ponder this, Liz. Most of them aren’t so stupid that they trumpet their failures in the news media.
Well, I dunno, Paulson and Bernanke look like a couple of smacked asses right now. All over the media.
What a puke-inducing, ass-licking orgy of “We are All to Blame” going on in Washington right now. Mea culpa, now give us the money.
Ben’s right, not one thin dime of this crap will ever be paid back. Except, I’d want to write into the deal that they’ll have to keep the 7 billion up Bernanke and Paulson’s arses and dole it out to the homeboys as needed.
palmetto,
Don’t get off that too fast now? I think you’re on to something! Isn’t that what they call “the orphan’s defense”?
A minor child kills both his parents and says; “You can’t send me to prison, I’m an orphan!”
Any atty’s out there? This is what I’ve been saying about the bailout all along. Oh and FWIW thanks to all that took the time and sat on hold to say NO! to Bail-out Pahlooza! ( I realize she’s not all ‘that’ popular but Michelle Malkin did an absolutely beautifully researched piece on the connection between illegals, mort. fraud and the B-O )
Hey, DinOR, I read that piece and completely agreed with it. And, I’ve been on the horn EVERY DAY to my rep and senators. NONONO! I want to get this stinkin’ meltdown OVER, flush the crap outta the system and get on with life. BTW, there’s some capitulation on craigslist Tampa. Whatta shocker! Two overextended investors are now offering “owner financing” on their inventory of 300+ homes. I might even get me one, for myself, if it is cheap enuf.
Wow, I just have to say, this whole thing is far uglier than I ever dreamed it would be.
“‘Bubble Poster Child’ of the decade”
You must have forgotten about that lady who “invested” a cool million of inheritance in 6 houses in the SAME SUBDIVISION, in manteca, and has proceeded to lose them all.
Hands down winner, IMHO
I’ll raise you the gal who took her inheritance in Santa Cruz, cashed out, and bought a bunch of houses in Reno with 40% down. All in default now. Reminds me of J. Cash line, ‘I shot a man in Reno just to see him die’—
I stand corrected it was Reno, not “Lard”.
Read the story about “Taco Bell jeff” on the SDICA BB
probably find it on other sites as well. A bold plan to buy as many homes as he could , negitive cash flow on all of them and make it rich on ever rising home values
Whatever happened with that basket case? Last I heard (long, long ago) he was so physically ill from all of the stress of being a negative cash flow mogul that he couldn’t even function. Sad, actually.
She spent $1,000,000 on Manteca?
That’s a lot of lard.
“‘It’s like a ghost yard,’ said John Kline, a real estate agent in Del Mar, who is trying to sell one of the houses from the first phase.”
I remember Del Mar and northern La Jolla very fondly from my days as a student at UCSD. Nude hot-tubbing, bike rides up into Torrey Pines State park, watching the pervs frolic at Black’s Beach, afternoons at the County Fair, going to see the horse races with my dad, dolphins frolicking with surfers, running triathlons, mooning the Amtrak train…
I’m sad to hear it’s like a ghost yard simply because of housing prices. I had fun there for very little money.
Remember all those areas that made it nice? They’re most likely gone, with unsold “homes” where once nice scenery was available.
“mooning the Amtrak train…”
OT - I rode the train through W. Colo - E. Utah a few months ago and got mooned the entire length of the Colorado River by rafters. ROFLMAO
Thanks for the info. I’ll make sure to bring my butt-plugging gun next time I go for a train ride.
Please don’t impute such vile and uncouth behavior to northern La Jollans. The dolphins off the coast of La Jolla don’t engage in morally bankrupt acts with surfers. Talk about moral hazard! I lived in Del Mar for a year and I will attest of the nude hot-tubbing running rampant in those parts, but you could make a pretty penny cleaning spa filters cluttered with fecal matter. Del Martians aren’t particularly known for their @ss-wiping skills and let’s just leave it at that.
The OC is soooooo fooked. Overcrowded, mini-mall land deserves what it built. yuk!
BUSH to ADDRESS NATION TONIGHT ……..
For what it’s worth… EVERYONE start calling, faxing and writing to your reps!!!
Bush to address nation on FINANCIAL CRISIS (TODAY @ 6PM PST)
By Sue Chang
SAN FRANCISCO (MarketWatch) — President Bush is scheduled to give a nationally televised address on the financial crisis Wednesday night, the White House announced. Treasury Secretary Henry Paulson also has agreed to accept limits on pay packages for executives whose firms benefit from a proposed $700 billion bailout of the financial industry, the Associated Press reported.
I’m SO glad that I have something else to do at that time.
I’m SO glad that I have something else to do at that time.
Me too. Can’t put off that flossing.
’ssshrubery is due for a really really ham-fisted performance, I bet he blows it…
LOL!
Yeah and I’ve got to get those darn tires rotated.
Me too…I have a root canal scheduled
I have to rearrange my sock drawer.
I sent emails to both my senators and my congressman. I know it probably won’t do any good, but I couldn’t live with myself if I didn’t at least indicate my disgust at the Paulson “Plan”….I use the term “plan” loosely…..
I did too! As a matter of fact I called and thanked Senators right after they were interviewed or made statements opposing this Wall Street bailout.
Loretta Sanchez
Representing 47th District of California said she is hearing we the people don’t understand the “Paulson for king” bailout?
I called and let her (aid) know we are not ignorant and we DO understand (we are being robbed by Wall Street and the elite).
If they don’t pass this, the market will fall hard, but it will fall to affordable levels and lots of people will jump in. If it passes and the market rallies most experts agree it will only be temporary and we will still have to face an eventual big correction.
Me too. Wrote 2 emails and a friend wrote another. They heard from us loud and clear. It had an impact too. You could see it by the tough questions they asked.
McCain’s debate cancellation is practice for Bush’s election cancellation.
That’s what I’ve been thinking. Aladinsane must be packing his crystal ball in a lead brief case right now, preparing for his trip to “somewhere else”, wireless connection in tow.
What is this talk of Bush “canceling” the election?
Did you happen to see the Daily Show last night? He’s no longer content to be the worst president, he wants to be the last president :).
BUSH to ADDRESS NATION TONIGHT ……..
——————————————————————–
MISSIONED ACCOMPLISHED….I’ve destroyed america….now brownie, get the amero ready willya?
BUSH to ADDRESS NATION TONIGHT ……..
——————————————————————-
MISSIONON ACCOMPLISHED…..America is destroyed. Now brownie, get the amero ready willya?
Treasury Secretary Henry Paulson also has agreed to accept limits on pay packages for executives whose firms benefit from a proposed $700 billion bailout of the financial industry
Mighty generous of him. What kind of limits? “Oh, I’m sorry, we can only give a $2 million severance package instead of that $20 million dollar one. Sure, that’s double what most working people will see in a *lifetime* but I know you’ll make due somehow.”
Wonder how many “troubled firms” would take them up on the offer if the CEO and the top 5% of execs got their all their assets seized (regardless if they were held in trust or not) in order to pay back the US taxpayer for their help?
They are going to let them all have $400,000.00/yr (the same pay as the President). How does that make any sense? You defraud the United States, and your punishment is $400,000.00/yr? They should get nothing but fired. Most of them SHOULD be going to jail.
What about returning what they stole?
Going to jail for a couple of days and returning to a life
full of OUR riches is NOT justice!!!!
Don’t we peons get our homes ransacked and everything confiscated and made to pay fines for the rest of our lives and thrown in jail for the rest of our lives and made to suffer for the rest of our lives……
but then again, who’re we kidding ….
it’s been obvious for a long time who makes up the
rules….. and what’s good for us ganders has never been good for them geese!!!
I’m hoping that if a properly structured takeover occurs (Barney Frank’s plan , NOT Bush’s) that once the oversight committee examines the books, these execs *will* go to jail.
The credit default swaps are especially stunning. The housing market is a 12 trillion dollar market but the CDO market is a 62 trillion dollar market. That’s just fraud upon fraud.
I know I’ve posted this before, but PLEASE look at this video and see what you think of this guy’s bail out plan.
Jacq.
Can we assume (at this point in time) that none of what is happening in the real estate market will matter if we don’t save our economy?
http://www.fedupusa.org/
PLEASE look at the video/videos and email to ALL.
Thanks guys!!!
Dude and Jas - I saw your Monday comments on Palmdale but didn’t have a chance to reply in time.
I’m surprised to hear that the 93551 and 93552 are below 6-month supply. Supply in my neighborhood has shot up, with at least half the homes for sale being vacant foreclosures. I do know a few young professionals who have bought in the last month, as some homes in decent 93551 areas finally got into more affordable ranges. I expect the supply to climb through the winter in the 93551 and 93536 area codes. Hopefully this puts a lot of pressure on asking prices.
Sorry for not being clear in my previous post. The months of inventory decline is because the banks aren’t using MLS to market properties, and the inventory is overwhelmingly REO.
Take a drive down any street and write down some addresses of homes with signs up, then look for them on MLS.
Sales numbers have certainly increased into declining prices. When that happens in the stock market it means, LOOK OUT BELOW!
Oh ok, I see what you’re saying. Interesting that many of those REOs are not hitting the MLS. Are they listing these anywhere? I have been using Ziprealty to track my foreclosures, but those are all on the MLS. Occassionally I drive the few neighborhoods I would actually consider buying in AND that i think potentially could work into a reasonable price range (that’s why I don’t track the lake area.)
Any rule of thumb on what a reasonable offer is compared to asking price on an REO? I’ve seen a wide range, and just figured if I ever offered it’d be what I thought was good, whether it was 5% or 50% below matters not to me.
I have a couple of friends who offered full-asking price on a house in the Rancho Vista area…bank came back and said they were ‘opening a window period for all 3 offers to make their max bid before deciding.’ Of course, I doubted the three sudden offers (house had been on the market a while) and told them they were probably the only offer. They raised it anyway, got the house…
This would have been a good opportunity to *lower* the offer as some here have stated (eg. 5% automatic deduction for each additional offer on the table). That would stop this kind of monkey business pretty quick ..
Found the solution
http://www.cnn.com/2008/LIVING/wayoflife/09/24/container.homes.ap/index.html
In all seriousness, we plan to build a home with ISO shipping containers some day. It makes sense on many levels. A container-based home doesn’t have to end up looking anything like the containers they started off with, unless you wanted to (and we want it to, so ours will be a mixture of metal, wood, concrete, and lots of glass).
I’m not going to include URL since it seems to slow down posts before it shows up.
Containers are a common form of housing in Afghanistan!
Think how easy it would be to relocate.
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The latest trend for the most recent two months of data — Prices are accelerating declines in the expensive metros (SF and SJ) at 32% (much higher than earlier) and decelerating declines in cheaper metros (Sac and SD) at 10% (much lower than earlier). LA decline remains around 30-35% annual rate, the CA at 28%.
We should have a 50% decline from the peak for CA as a whole within 6-8 months. Currently, 90%+ areas have a decline of 20-60% from the peak with CA median decline at 35-36%.
Jas
You guys may think I’m crazy, but I think this house is still a little overpriced. I think that $69k outta be the price of your typical 3 bed, 1 bath house in that area. After taking into account property taxes and maintenance, this house is still more expensive than an equivalent apartment. You can’t compare a run-down shack to a luxury apartment. It should be an equivalent one.
I think Manteca will be ready next year, but we’ll have to see what happens with this financial meltdown. If it really melts, then all of our predictions will be off.
Livin’ la vida lard-o
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“The California economy will stay sluggish well into 2009 — characterized by falling home prices and increasing foreclosures amid continued job losses — until the struggling construction and financial sectors bottom out, according to the UCLA economic forecast released today.”
People need to read UCLA Andersen Forecast for CA during 2000-01 to get an idea how horrible they really are at forecasting the future. No one except one crank foresaw 20% decline in non-Farm employment (peak to trough) in Greater San Jose Area during 2001-03. Yeah, yeah, “diversified economy” mantra for CA.
Jas
We don’t have that decline now, do we? Are you saying that we have it, or that we’re going to have it? Also, who is the crank? Does his name start with a J, end with an S, and have an A in the middle?
What’s hilarious about Jas is, he constantly rails against our government and rightly so, but he’s invested in t-bills, which seems self-defeating…
I fully expect him to be the last deflationista standing.
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So far I am laughing all the way to the bank. There is no inflation in the future; it is mostly in the past and I predict outright deflation in the CPI YoY rate within a year. The biggest source of money –increase in household mortgage debt – has already dried up (growing at 0.8% in 2008Q2 and expected to be negative going forward).
Demand Destruction is in progress (e.g., gasoline demand down 8%, YoY0. Stay tuned…
Jas
It’s all about whether your wealth is Dollar-denominated or not.
the former is going to wish they were the latter, later.
I always wondered in the parable about “How a fool and his money are soon parted.” Where did the fool get the money?
problem solved.
I think both sides can be right. Dollars are doing pretty good right now, in relation to real estate. Buying power increases every day. But the PM’s are also doing well, so it super charges the returns (with a lot of risk). As the economy nose dives, the issue becomes “what will the government do?”. More than likely, reduce rates to try to stimulate the economy. This can be good for gold, and it won’t save housing. So it can be good for dollars too.
Of course, we go Argentina and all bets are off.
Housing money has dried up, but not tax money. That’s what they’re going after now. One last fix before they succumb to the light.
Read Bernanke’s speeches from 2001 and 2002 and Mr. Milton Friedman. There has been no history of deflation without an increase in interest rates - NONE, ZERO, ZILCH. If you believe the current fed is going to increase interest rates in this climate - as my Uncle Vinnie would say, “Hey ya gotta few mu dollahs ya wanna put on that?”
Really?!?
Did Friedman include Japan in his variegated examples?
Yeah, near or actual negative interest rates over there in Nippon for a long time. The “yen carry trade” comes to mind. All these bottom-up banks were riding that horse, weren’t they?
Come on Private
Pick a hard target! Clay pigeons at 25ft don’t cut it.
He’s like a zombie, I keep firing a tight circle around his misguided economic theories and he just won’t go down…
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Disgusting show of arrogance. Coming from inflationists, I am not surprised.
Jas
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I expect parts of CA to experience a 20%+ decline in non-Farm employent (not necessarily a UR of 20%) before 2010 is out. CA as a whole might get there too.
How many econ cranks are there?
Jas
Are we counting econs addicted to crank?
yes the UCLA forecast team sucks now just like they did in the 1990’s recession forecasting median home prices to be over 400K by 1995. Idiots
“Way too much land”. I love it. Like any slice of Earth not consumed by human presence is just excess. How can there ever be too much land? I understand it gets in the way of selfish, unrealistic expectations of home-price appreciation, but isn’t land a necessary component of the freaking biosphere? I just get kind of astonished when I am reminded how most people don’t even realize that the Earth cannot provide a livable environment for humans without also providing a livable environment for all the other organisms that contribute to the situation. It’s annoying.
Maybe if people would stop worrying so much about their gains in the stock market and the housing market, and start worrying about things like the availability of food, energy, clean water, and clean air, then we could actually make some progress in this society.
Slim is with ya, Big V.
You can check the progress of the stock market at work by taking a “break” and checking out a cool website.
Worrying about the other stuff requires time, effort, and well, you know, thinking. That’s all kinda hard to do.
Ooh, look, Cramer’s on. He’ll tell me what to think.
Big V,
I think Ben makes it even more simple!
“When money is cheap, we’re running out of LAND!”
( Yet when money is expensive… there doesn’t seem to be any great sense of urgency..? )
“I understand it gets in the way of selfish, unrealistic expectations of home-price appreciation, but isn’t land a necessary component of the freaking biosphere? ”
hahahaha! sniff.
“Q. What do you think of the $700 billion bailout proposal?”
“A. My impression is that no one yet has overestimated the cost of any of this. Merrill Lynch says they’re going to lose $1 billion and they lose $5 billion. No one has ever shot on the high side yet. (Fed chairman Ben) Bernanke said today that this isn’t an expenditure; this is an investment in assets and we may come out on the up side. My opinion is we have so many bad loans on our books and values are decreasing so fast that I don’t think we can cover it.”
The idea that the government might make money at some point on all of this bad debt seems like a pipe dream.
Oh but not to Bill Gross! He claims they’ll pocket 700 to 800 bps. on the spread! ( Of course all based on some Wild A$$ A$$umptions! ) but no Bill, we totally believe you!
( Yeah, no conflict of interest there! )
they will make money as soon as home prices go back up…….
and thats the problem. Will home prices go back up in the next 5-10 years ?
“Of taxable income for the city, that translates to a $23-million drop in sales-tax income for Glendale’s coffers, he said.”
Glendale might have the largest police force for a city of it’s size, in the entire country.
There’s more cops than you can shake a stick at…
Who’s gonna pay their salaries when Glendale runs out of money?
Let them eat cake!
(from one of those really excellent Armenian bakeries)
The Cuban bakery ain’t too shabby either…
“Who’s gonna pay their salaries when Glendale runs out of money?”
You’re making a good case for that cash stuff, aren’t you?
“How can there ever be too much land? I understand it gets in the way of selfish, unrealistic expectations of home-price appreciation, but isn’t land a necessary component of the freaking biosphere?”
Oh, Big V, you’re too sensible. As I read your comment I’m sure that somewhere a Realtor’s head is exploding. After all, what’s the point of land if you can’t saturate it with a bunch of tacky, overpriced McMansions?
“Now consider this: You can buy your own 528-square-foot one bedroom home with a 4,392-square-foot lot complete with car port with a three percent down FHA loan for $480.70 a month for 30 years.”
Yeah and you can buy a 4 bedroom, 1500sq ft in Detroit for a buck (now worth $0.98).
How many people want a 1 bdrm house? 5?
You know things are getting bad when D and E list celebrities are losing their homes to foreclosure. The same things have been happening to some show participants in the reality show ” The real housewives of orange county”. That is one scary show..
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Amber Frey Going Once, Twice….
Posted Sep 24th 2008 2:47PM by TMZ Staff
It’s bad enough Amber Frey’s home went into foreclosure. Know what’s worse? No one wants it, even for a bargain basement price.
Amber Frey
Just minutes ago, the house went on the auction block in Fresno, Calif., with a starting bid of $306,000. The 13 prospective bidders all passed and after four minutes the house officially went back to the bank.
Is it the tanking real estate market or Scott Peterson’s karma? We report, you decide.
http://www.tmz.com/2008/09/24/amber-frey-going-once-twice/
“You can buy your own 528-square-foot one bedroom home with a 4,392-square-foot lot complete with car port with a three percent down FHA loan for $480.70 a month for 30 years.”
Where I come from that’s called a walk in closet. Still better off renting and not being able to reach the bedroom from your front door in three steps.
I just wrote Diane Feinstein to ask her to vote no on the bailout and save my local home prices. I started the email out as such:
“I loved you as Robin Williams’ husband in the Birdcage, but you need to concentrate on your duties as a US Senator…..”
(Look up nathan lane, birdcage, and diane feinstein compare the pics and tell me I’m lying)
Prices are crashing here in Pt. Richmond. A brand new Toll Brothers home sold in early 2007 for $954M and is currently listed at $499, time on market 70 days. This is a 4/3 with harbor and city views. It’s nice but I won’t touch it because of the local school district and the fact it’s in an HOA.
Tom
“Prices are crashing here in Pt. Richmond. A brand new Toll Brothers home sold in early 2007 for $954M and is currently listed at $499″
I should say! From $954M to $499, that’s more than a 99% drop!!
Oops, yeah that’s $499M of course! I’ve tried this Feinstein reference before and no one seems to get it. I must be a crappy comedy writer because the similarity is uncanny and funny as hell! I’m surprised there’s not more references to it on the ‘net.
BTW I don’t want our house prices saved, I phrased the whole thing incorrectly. I want the house prices left alone to the market forces, not meddled with by those losers in Washington. But I guess that’s the kind of incomprehensible writing you’d expect in a post from a metallurgist/materials engineer…. I suppose I need to keep my day job!
Also, you are ALL pretty frickin’ smart and I love reading your posts (been reading for about two years).
Power to the people.
Tom
“‘We’re seeing people losing homes by the hundreds, and that’s just our agency,’ del Rio said. ‘The old adage that you shouldn’t spend more than 30 percent of your income on housing worked 25 years ago. But it doesn’t work now when you’ve got these kinds of housing prices.’”
Something tells me the “old” adage that you shouldn’t spend more than 30% of your income on housing will be making a come-back in a big way. Hardly anyone will truly qualify to pay these bubble prices without the fake prop of bubble financing.
Lisa,
And that’s what is making watching this B-O all that much harder. Have any of us once heard NAR, CAR, FAR the Mortgage Broker’s Association or ‘any’ other REIC Cartel Member step up and take accountability!? Oh HELL no!
Part of the conditions should be that all NAR members pay 1/3rd of their stupid commissions to the Fed until this thing is paid for! Mortgage broker charging 2 points on a loan? Guess what d!ckhead? We want HALF!
They’ve completely scattered like the little cock-a-roaches that they are like kids at an under-age drinking party. I can’t believe that the (2) groups that did more to create the crash than the rest of the country combined are walking away scot-free? Totally unacceptable!
Wanted to say thanks for the great Blog.
Another great montage of news that I usually don’t see anywhere else on the web.
Good read for sure!
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Folks,
What happened to the Rat (Ryan Ratcliff of UCLA Andersen Forecast)? Did I miss his comments (because I don’t recall reading in CA threads for a while)?
Jas
He and Alan Gin are presumably sharing their insights with one another these days.
UCLA report cites fallout from job losses far into ‘09
By Dean Calbreath
UNION-TRIBUNE STAFF WRITER
September 24, 2008
…
“The amount of job loss in the finance sector has exceeded our expectations,” said Jerry Nickelsburg, an economist with the forecast. “Cash-strapped financial institutions are shedding jobs as fast as they prudently can. So our overall forecast of job growth and loss has been a bit too optimistic.”
Nickelsburg added that continuing constriction in the financial industry – or higher-than-expected layoffs by state government – could darken the outlook even further.
“Unemployment is going to continue to be ugly,” he said. “The stalled California economy is simply not producing jobs required for new entrants to the labor force.”
The economic weakness will continue to be reflected in the housing market, the economists said. The forecast predicts that in 2009, the nationwide median home price will hit bottom at $205,600, a 9 percent drop from this year’s median of $225,800.
The forecast did not include projections for California home prices. But Ryan Ratcliff, a University of San Diego economist who contributed to the forecast, predicted that foreclosures will continue to dominate the state’s real estate market at least through the first quarter of next year.
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“Ryan Ratcliff, a University of San Diego economist”
The Rat moved south? Mexico is not far.
Jas
UCLA Anderson forecast is the worst one out there when it comes to forecasting the economy and home prices. They lost all creditability all long time ago.
Job losses = House losses = bk. Simple really. Where are these jobs supposed to come from? Even the burger flipping and Wal Mart greeters are getting in short supply. So with no employment how is anyone going to either continue their lifestyle or buy one of these many houses?
I don’t think many have looked past the immediate process, into the future, it looks bad, really bad.
What does Sam Waterston have to say about all this?
“Aaron Brent and his parents work in real estate. His mom paid $2.1 million for her house, Brent said, a semicustom home near the beach. Now the house next door is for sale for more than $800,000 less than she paid.”
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Isn’t it poetic justices that these RE jackasses plow their ill gotten gains from peddling used houses into buying oversized and overpriced Real Estate? I guess they do believe their own BS… It’s sort of like financial karma….
I’m blissed out…
TEST
cool is there a list of these somewhere?
Yes, perform a google search for wordpress emoticons.
Dear California,
If you want to see your future, come to Detroit. I recently moved from San Diego to Michigan. So I have have had a ringside seat thru this highest of highs and lowest of lows in this RE fiasco. House prices here dropped primarily b/c of a loss of good paying jobs, not so much b/c of fraud (although that was there as well—it’s Detroit, after all). Wait until the fraud really catches up to the market in CA, on top of pending hyperinflation and state tax increases which will certainly increase unemployment (unless CA gets a bailout from the fed, too). I saw young couples making $75k a year buying $500k homes an hour or more into the desert and then bragg to me about how much money they “made” (which of course is now gone). Painful to watch.