California Is Running Out Of Cash – Again
The Voice of San Diego reports from California. “Home prices in San Diego County logged a 25 percent drop from July 2007 to July 2008, according to the latest Standard & Poor’s/Case-Shiller index. That 25 percent year-over-year drop was the steepest on record. The decline returns home prices in the county to a level not seen since late summer 2003. July’s index shows housing prices are still 74 percent higher in the county than they were at the start of the decade.”
“The impact on the regional economy has been marked by significant job losses in construction, finance and real estate. The San Diego economy has been destabilized by the housing market — including that job loss, falling housing prices and foreclosures, leading to another monthly drop in the University of San Diego Index of Leading Economic Indicators, released Tuesday.”
“‘Right now there’s just so much out there in terms of inventory and foreclosures and so on that it’ll take awhile before all of this stuff is chewed up,’ said Alan Gin, USD economics professor who compiles the index.”
The North County Times. “While a historic real estate crash has reduced prices in North County, the recession also has caused an uptick in activity to city programs that make grants to first-time home buyers. To encourage homeownership, Escondido and Oceanside offer interest-free loans to low-income borrowers.”
“For James Class, Escondido’s program allowed his family to upgrade from the condominium conversions they could afford to a three-bedroom attached house sufficient for his wife and two children. Class has lost some value in his home. A nearly identical home to his across the street is on sale for $230,000, down from the $315,000 he bought his home for in August 2007.”
“Class said he was not worried because he can afford his payments and will wait until the market recovers before even considering selling. ‘It could be several years before it makes sense to move,’ he said.”
“Sales in high-end areas such as Encinitas and Carlsbad tumbled from a year ago, according to a monthly housing report by the North San Diego County Association of Realtors. And analysts said price drops are starting to accompany the sales decline in those areas.”
“‘The people who really have to sell, they’re dropping the list price by a few hundred thousand dollars,’ said Eric Elegado, a real estate agent in Mira Mesa who also specializes in Rancho Bernardo and Rancho Penasquitos. ‘As prices keep coming down and more foreclosures come on the market, you’ll see prices come down even more.’”
“While some real estate agents point to a rush of investors leading the sales bump as an indicator of a recovering market, other analysts said they foresee more turmoil in the housing market.”
“‘Last year it was awful, so it’s 9 percent above awful,’ said Bruce Norris, founder of a real estate investment firm based in Riverside that covers Southern California. ‘I would consider it fairly meaningless when saying we’re entering a healthy market. We’re not. We still have a lot of foreclosures to work through.’”
The La Jolla Light. “La Jolla has reclaimed the distinction of having the nation’s ‘priciest’ real estate, according to Coldwell Banker’s annual Home Price Comparison Index. Gregg Whitney, who along with wife Lisa have been selling homes in the Jewel for years, said that in this down housing market it is a lot tougher for sellers because people know ‘they’re getting lower valuations than they would have had two or three years ago.’”
“But on the plus side, he added, the housing crunch is ‘bringing the market to a more realistic valuation.’”
The San Diego Business Journal. “Bill Hoffman has been through a few economic cycles in his career, but the current financial morass has this veteran executive stumped. ‘This is the worst I’ve seen in my 30 years in this business. The RTC (Resolution Trust Corp.) and savings and loan era doesn’t even come close,’ said the founder and president of Trigild, a San Diego firm that manages distressed properties.”
“Eighteen months ago, the firm would receive two to four calls a month from lenders about nonperforming development projects. Today, it’s one or two calls per day. Hoffman estimates there are 1,000 detached housing sites, three-quarters of which aren’t completed; and more than 1,000 condominiums. He anticipates the latter category to double in the next few months.”
“Trigild manages projects in 15 states, mostly concentrated in California, Florida and Nevada. The work includes seven projects in Florida with 360 residential units, Hoffman said. The number of bad loans and defaults in the Sunshine State is unprecedented, he said.”
“‘There are high-rises that are virtually dark in Miami,’ he said. ‘There’s a condo project we have that had been asking between $375,000 to $400,000 per unit a year ago. Today, if we can get $200,000, we’d be a hero. But the biggest part of the problem is where are you going to get financing? Even if you put 90 percent down, it’d be tough to find a lender.’”
The Press Enterprise. “The index that measures the pace of Inland Southern California’s manufacturing sector sank to its third-lowest level ever last month. Bill Joor, co-owner of Joor Brothers Metals, a Corona fabricator that makes construction-site silos that hold cement and sand, described conditions as ‘fairly poor.’”
“‘So much of manufacturing is tied to housing, or at least a large percentage of it,’ Joor said. ‘Most of that has pulled in its horns.’”
Inside Bay Area. “The struggling economy has eroded the vitality of Bay Area auto dealerships, causing a number of them to shut their doors or shrink their operations in the past few days. In the East Bay, Silicon Valley and on the Peninsula, a string of auto dealers has gone out of business. ‘We are seeing on a weekly basis dealerships closing throughout the state,’ said Peter Welch, president of the California New Car Dealers Association.”
“‘A year to 16 months ago, probably about four out of 10 vehicle purchases were done with home-equity loans,’ Welch said. ‘Now a lot of people no longer have equity in their homes. That source of financing has gone away.’”
The Sacramento Bee. “California is running out of cash – again. Eight days after Gov. Arnold Schwarzenegger signed a new state budget to end a record 85-day standoff, the nation’s financial storm poses a new threat to the state’s ability to pay its bills. ‘It’s now very clear that the financial crisis on Wall Street is affecting California – its businesses, its citizens’ daily lives and its state government’s ability to obtain financing,’ the Republican governor said.”
The San Francisco Chronicle. “A California mortgage banker whose business failed a year ago amid the housing collapse and is facing a fraud and embezzlement lawsuit by former branch managers is now leading the industry’s effort to lobby Congress for the $700 billion Wall Street bailout.”
“John A. Courson, ran Central Pacific Mortgage out of Folsom, a suburb east of Sacramento, before it collapsed in February 2007, The Sacramento Bee reported this week. In July, he was named chief operating officer for the Mortgage Bankers Association of America in Washington, D.C., and is set to become the association’s president in January.”
“Florida branch manager Jenny Mann said she was surprised to learn that Courson found a job representing the mortgage industry before Congress. Mann alleges she lost $20,000. ‘When I saw he was appointed chief operating officer, I nearly died,’ Mann said. ‘Don’t they know he did this to us? I would have assumed he would never work in this industry again.’”
“Tracy Dearman runs a small San Francisco brokerage that was started by her grandmother on Haight Street more than 50 years ago. ‘We have seen many cycles in the real estate market, but nothing quite like this,’ said Dearman. ‘Our sales and finance have dropped significantly; I mean to a crawl.’”
“HSM has a nonprofit arm, SF Urban Community Housing, which is run by Kelly Dearman, Tracy’s sister and HSM co-owner. In operation for four years, it teaches first-time home buyers about finances. ‘If the people who are in foreclosure now had known what everyone in the classes learns, then they wouldn’t be where they are,’ Dearman said. ‘This is a good lesson that a little bit of education can’t hurt when you’re purchasing the biggest asset in your life.’”
“In August, the median price for sold homes in the city was $780,000, down 12 percent from a year earlier, according to MDA DataQuick. That was the smallest price decline of any Bay Area county. But sales are slowing more in San Francisco since it does not have a flood of bargain-priced foreclosed homes.”
“‘San Francisco is like a little island,’ Dearman said. ‘We feel (the downturn) but not to the same degree. We feel it from the standpoint of people who aren’t ready to pull the trigger. But values of homes in San Francisco are still very, very good.’”
Palo Alto Online. “So far, there’s no undercurrent of panic in the area, according to realtors. But that doesn’t mean Palo Alto won’t be affected by larger market troubles. The credit crunch could make loans harder to get and more expensive, realtors warned. But they stopped short of saying prices would ever dip.”
“Steve Bellumori, a Menlo Park-based agent, described trying to secure a loan for clients with good credit and well-appraised property. As in the past, he thought it would take three days for the bank to approve the paperwork. He was surprised when it took more than three weeks. ‘There was no risk to the lender. They just didn’t know if they wanted to lend, period,’ he said.”
“‘A year ago you could buy a house for a million dollars and put nothing down,’ said Tracie Southerland, a financial adviser, referring to the pre-mortgage-meltdown period. Now, on so-called jumbo loans of $729,000 or more, the rate has generally gone up from 20 to 25 percent down, she said.”
“As the economic environment gets a bit chillier, even local houses are taking longer to sell – up from between one and 14 days to sometimes a month or more, property brokers said. ‘Previously, if it took more than two weeks, you panicked and as an agent you said, ‘Oh my god! What’s going on?’ described Realtor Dan Dykwel.”
“What’s going on is nothing new, Bellumori added. The savings and loan crisis of about two decades ago was also caused by shoddy lending practices. ‘It’s pretty astounding. … The lending didn’t learn its lesson in the early 90s and here we are again. …Look around. Everyone wants to live better, but you can’t live only on credit,’ he said.”
The Marin Independent Journal. “Marin supervisors Tuesday authorized another $500,000 in loans to bail out a program that makes it possible for low-income residents to buy homes in Marin. So far, the authority has been forced to repurchase 11 of the program’s 316 homes, most of which are condominiums, to keep them from being sold at market-rate prices and lost to the program.”
“Peter Ramsay, who oversees the below-market-rate program for the housing authority, laid the blame for the program’s problems with lenders who provided low-income participants loans, based on their homes as collateral, which in many cases vastly exceeded the amount for which they could be sold for.”
“The latest property the authority has had to rescue from the auction block is at 51 Terrace Drive in Marin City. Supervisors Tuesday approved a loan of $169,321 for the property. The property was severely over-encumbered with loans. According to the notice of trustee’s sale, the house was used to secure more than $400,000 in loans.”
“‘The forces that were working against us were so out of control,’ Ramsay said, ‘that it’s not surprising that we have incurred one or two problems. I don’t feel we should accept reproaches for lack of vigilance because our regulation was in fact good. If the lending community had been acting responsibly, they wouldn’t have made those loans.’”
We need to bail out California. It’s too big to fail. Our nation economy is at risk if California is allowed to fail. Our 401K and our jobs will be decimated.
The loans are available for families that make less than the median income for the area. They carry no payments and are repaid when the homeowner sells the house or refinances the original mortgage.
Wow, get it while you can, home loans with no payments.
ROTFLMAO
How can they do this? I just read TFA and I, too, am incredulous.
Suppose you bought a house with a $450K loan and have a $3000/month mortgage. You Make $90K/year, more than the median income for California, and are current on your mortgage.
The deadbeat next door is behind on his $450,000 mortgage and makes 58K/year, less than the $64,000 median income for a family of 4.
He won’t have to make his payments, and gets a free mortgage payments worth $36,000/year (3,000 * 12), making his income equivalent to $94,000. But wait! That 36,000 is essentially tax free income, making it more like $101,200 (I upped the $36K by 20% to get at this number).
You have two choices! Either walk away from your house and buy the same house for $200,000, with a $1500/month mortgage…OR lower your salary, go behind on your payments, and get the same deal and CLEAN UP!
Yeah, did I hear that Ahhnold has asked Treasury for $7 billion?
Still hours to go until the debate drinkathon and i’m already hammered on undrinkable Gin…
=========================================
“‘Right now there’s just so much out there in terms of inventory and foreclosures and so on that it’ll take awhile before all of this stuff is chewed up,’ said Alan Gin, USD economics professor who compiles the index.”
Oh yeahhh! Drunk commenting @ my place…
Are you still predicting inflation/rising gold (’cause things are looking very deflationary at the moment)?
Our course is set sale for massive inflation in things we need and massive deflation in things we don’t need.
Indeflation, if you will…
Don’t you think it’s more likely that we will be hit with huge inflation for imports, but not local stuff? Gold will go up some more, but rents and house prices should decline. Locally grown food will probably continue to go up a little because of oil and water. Do you agree, Alad?
Food is going to be a problem with heavy inflation and here’s why…
When the $ gets whacked, all the foodstuffs we grow will be salable for much more money in wealthier countries, where the corporate farmers will no doubt be selling it to, in lieu of us cheapskates.
Prices of houses will probably decline along with rent, because there’s no way to export them to a higher buyer.
It’s still supply and demand. If you bail them out and build more ‘affordables’ you’ll never get out of the mess.
Inflation means more money circulating period. It does not mean high prices.
Inflation CAUSES higher prices–because there is more money in circulation chasing the same amount of goods.
There will no doubt be higher prices for goods (food, oil, etc.) we need to consume–inflation will cause this.
Will inflation counter all the dollar destruction as these securities vaporize or sell at 0.20?
It depends on the asset. Food and energy is essential and people must buy them no matter the price. McMansions, vacation homes, stocks etc are not essentials
Tanqueray?
Oh baaaaybeee!
Now you’re talking -
Rich Toscano had this write up in the VOSD:
‘The people and principles that blithely led us into this mess are absolutely the wrong people and principles to lead us out of it. Consider the following quotes.’
‘”[House] price increases largely reflect strong economic fundamentals, including robust growth in jobs and incomes, low mortgage rates, steady rates of household formation, and factors that limit the expansion of housing supply in some areas.” — Fed Chairman Ben Bernanke, Oct. 20, 2005
“[The housing downturn] looks to be a very orderly and moderate kind of cooling.” — Fed Chairman Ben Bernanke, May 18, 2006
“All the signs I look at [show] the housing market is at or near the bottom.” — Treasury Secretary Henry Paulson, April 20, 2007
“I don’t see [subprime mortgage market troubles] imposing a serious problem. I think it’s going to be largely contained.” — Treasury Secretary Henry Paulson, April 20, 2007
“Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited.” — Fed Chairman Ben Bernanke, May 17, 2007
‘The vast majority of policymakers, and Bernanke and Paulson in specific, cling to a dangerously misguided analytical framework. That is a huge problem. The best fix we could put in place for the long-term health of the economy would be to forsake the wrong and now-disproven framework and to embrace a view of the world that, while surely less appealing to quick-fix oriented politicians, is both more realistic and more focused on sustainable long-term prosperity.’
And they say I am the ‘great deceiver’.
We’ve never seen you and Paulson or Bernanke in the same room.
Hmmm….
I have my standards!!
No, you don’t. That’s what makes you what you are.
No, you’re just a good boss: you don’t step into the picture as long as your minions are getting the job done…
This post brought to you by the letter BEER and the number 6.
Only the devil can save us now…..
But….will He…..She ?
All in a sudden, P&B are the biggest Doomers on the planet.
Got Chicken Little Soup?
Ben Jones,
Also your article from the Chronicle was an absolute scream. Where else but REIC World can a guy facing a fraud investigation rise through the ranks to become MBA’s President?
Yesterday we discussed the difference between true sociopaths and everyday narcisstic people. ( Now I’m not so sure? )
But this bailout is different…they know what they are doing this time.
pressboardbox,
LOL! Reminds of a guy I used to work with. He said that drinking cost him his marriage, his job and his house ( but he was willing to give drinking a second chance! )
Go Rich!
Oy vey.
Some do not get IT.
IT is losing $$ -
IT is tearing U.S. A.part.
Yet we quibble.
…
Great rant.
…
We will survive (Jeesh, feel a song coming on here - Donna?)
Best,
Leigh
Does the Bank have the money on hand?
- I sent my wife to our local S&L to get 10k cash to keep safe at home. The bank said ‘You can have 6k’ and we will have to order the rest , come back on Thursday??? WTF!
- We have 3 bank accounts and 1 @ the credit union with about 97k. I had my wife call them all and ask if I can have my cash? Guess what, they all say ‘If we have it on hand…and we will order the rest.’
If you have a large amount of cash in a local SoCal bank you are probably screwed if you had to have cash in a crash.
We are buying a safe and I had her ‘Request’ another 15k for withdrawal….it will be ready next week.
You shouldn’t withdraw more than 10K at a time or it sets off some sort of Big Brother attention to your account (you must be a terrorist or drug dealer etc.).
I started doing the same about a year ago, and getting more than 5K at a time was a big procedure then, too, so this is not new, not that it makes you feel any more secure about your bank.
It’s a crime to take money in smaller amounts to avoid the 10k reporting. If the bank thinks you are “structuring” withdrawls to avoid setting off the 10k flag they have to report you just like they do when you do the 10k transaction.
If you’re taking out large amounts of cash the treasury will likely find out one way or the other. Because we all know only criminals use cash. I think you can thank Reagan for that one - war on drugs and all.
Hmm..
I have some vacation time coming up and really don’t feel taking a trip, so I think I’ll get up each morning, head to bank(s), withdraw $10,001 and then immediately deposit it at another bank(s). Let’s see how many times I have to rinse-lather-repeat before someone comes knocking on my door.
I think I’ll answer the door wearing a smoking jacket or something, maybe I’ll even have some coffe and donuts waiting.
More like Bush Sr. — he was the one who implemented a lot of the laws when drug dealers were walking into Miami banks and car dealerships with literal duffle bags of cash.
WaMu did that to me around 2005. I told them to give me the cash, or I would call the cops. They came up with it.
My bank called me yesterday while I was out. I was a little concerned, thought maybe someone jacked my account or something. Anyway, Union Bank is calling all their customers to ask if they have any concerns. I know I’m dating myself here but in 35 years I have never received a call from my bank. It took me a couple of minutes before it dawned on me, bank runs.
geezlouise, I was able to walk in and get 10k from the little podunk bank in the little podunk town I’m near (pop. 600 or so). What scammers. They’re probably playing poker in the afternoons at work and have it all in piles, pretending they’re rich.
Most of the retail branch banks only have a few thousand in cash on hand.
Most of the retail branch banks only have a few thousand in cash on hand.
It’s all explained here:
http://tinyurl.com/2dnj53
We’ve all thought about those clips.
I’d also like to see the clips of the Wamu commercials edited so the old guys beat the snot out of the young guy and the new way of doing things.
I don’t think its just the retail branches either.
Weird looking at that and thinking that
Hey man, not to be rude, but get a clue! Don’t be posting on internet forums about the cash pile you are about to withdraw, and the safe you’ve ordered. At least not without drawing a map to your house, credit union, etc.
Go close your account and ask to be paid in cash. If they say they don’t have it on hand, demand every nickle and dime from every drawer. Raise your voice for everyone in the lobby to hear “You mean you are out of money?” Tell them to get the cash, and you will wait in the lobby.
Alternately, allow yourself to be placated and accept a cashier’s check. Then turn around and try to cash it. When they refuse, while standing in line in front of the teller, call the police, and report them for writing hot checks. Make the police come down into the branch to take a report. Then call the press.
Timber
UK house prices have fallen for an 11th consecutive month, dropping by 1.7% in September, according to the Nationwide.
http://news.bbc.co.uk/1/hi/business/7647251.stm
Some migrants in Spain default and decamp
MADRID (Reuters) - Rodolfo Jaramillo looks around his Madrid apartment at the stacked stereo system and a picture of parakeets on the wall, and shrugs. It’s been three months since he paid a mortgage installment and he plans to return to Ecuador.
Jaramillo, 40, has lived in Spain for nine years. Over the last six months, he has lost his job in construction, his wife is stuck in Quito after her return visa was revoked and his two children, both Spanish citizens, have joined her.
http://uk.reuters.com/article/lifestyleMolt/idUKTRE49102O20081002
Jaramillo said he had no problem securing a joint mortgage with his wife and the backing of three guarantors — his brother-in-law, who sold him the flat, an aunt and a friend.
Nice BIL…!
Hopefully, the guarantors will take it in the a$$.
California, the land of Kool-Aid drinkers & HELOC Raisers…
=========================================
“‘A year to 16 months ago, probably about four out of 10 vehicle purchases were done with home-equity loans,’ Welch said. ‘Now a lot of people no longer have equity in their homes. That source of financing has gone away.’”
You know,
My parents told me a couple sage pieces of wisdom:
30 year fixed - on an affordable mortgage
Once your in - never touch your mortgage - it will get cheaper relative to the greater economy over time, and a re-fi will kill that.
Why is it so hard for the world to get that?
While I’m at it . . when will the Bernanke’s / Paulson’s of the world just admit that prices have to fall for people to start buying homes based on more traditional standards?
Why is it they believe inflating away the debt is the answer? Can someone help me understand how this is the lesser of two evils?
I don’t think that’s what they believe. Paulson has gone on record saying that a strong dollar is best long-term for the nation. He has also said that his plan should not be used to prevent foreclosures or prop up the housing market in any way. And Bernanke is really the person who popped the bubble by raising rates to begin with.
I think Paulson and Bernanke are up against a wall becuause US trade and economic policy has overcome the dollar, and there’s not much a treasurer and a banker can do about it.
Yep, they say alot of things. To bad I recharged the batteries in my bullshit tester and I now see them for what they are. LIARS
Why would a re-fi kill the cheaper payments, unless you re-fi more than the current principle?
” four out of 10 vehicle purchases were done with home-equity loans”
Automatic 40% reduction in auto sales. However, I don’t understand what a sale in the auto business really means. That is, when a person leases does that count as a sale?
Credit freeze should force prices lower on the resale market as who is going to bankroll all of those lease backs and those cars setting on the used car lots. Things are getting interesting on all fronts.
Just as people were buying more house than the could afford, they were also buying more vehicle than they could afford. I expect the response will be to keep vehicles longer and to buy less vehicle the next time.
Just as with housing, sales incentives in the past few years have scavenged future sales. It could be very ugly for the auto industry for the next 2 to 3 years.
I know a coworker nearby who did just that, heloced to reno his home, and buy/paid off the new car.
He is working double shifts cause he couldn’t sell his home 2 yrs ago. I really like this guy so I don’t say anything, but my suspicions are that he is under by now. But at least the car is paid off.
Considering that recent announcement that Ford, Chrysler and Toyota are all down by 30% or more, that “automatic 40% drop in car sales” seems to correlate well, yep!
That’s a coincidence. I heard on the radio about 2 days ago that 4 out of 10 Americans change jobs every year. I wonder if those are the same people who have been financing their lives away.
“Federal Government to California - “Drop dead!”"
another thing we called on HBB:
Wed Oct 1, 3:07 PM ET
LA MESA, Calif. - Times have been tough for banks everywhere, but a San Diego-area Wells Fargo branch had an especially difficult day this week. The branch in La Mesa was robbed twice on Monday — by two different robbers.
These robbers are idiots. Smart ones robbed the bank with NINJA loans and no jail time.
Fractional reserve banking was developed as a defense to Willie Sutton’s famous quote: “…because that’s where the money is.”
A bank robbery a couple nights ago in Del Mar, of all places. Three guys wearing those creepy Scream masks. There’s been a number of bank robberies in SD County in the last couple days. And of course, don’t forget our running body count south of the border.
The congressional “yea” voters are now openly members of the PPT. Many of them are talking about their retiree constituents who are concerned about their accounts. I wish I could replace congress with the participants of this blog.
I wanna be Sec of the Treasury. Poker chips for everybody!
OOhh who’s gonna be your president so I know how to vote.
The Sec of the Treasury is, after the bills passage tomorrow, the most powerful position in the US.
Vote For ? - He’ll place Lost in Utah - Secretary of the Treasury
A beautiful ring tone.
It’s Hoz, of course. My prez has to know Latin so he can translate the good stuff I have printed on those green bills.
Non licet omnibus adire Washingtonium. Caput inter nubilia condo.
I vote for Lost. I just want to see the word “Lost” scribbled in big letters on our FRNs.
Retiree consituents are foolish to have their money in the stock market at all. The time horizon on stocks is at least 5 years. All the literature says that. Anyone with the wherewithall to invest their money in the stock market also has the wherewithall to know what a time horizon is.
Calls/letters against the plan are still running 30:1 to 95:1, depending on the district. People are willing to watch their 401ks oscillate.
“Retiree consituents are foolish to have their money in the stock market at all. The time horizon on stocks is at least 5 years.”
Agree (that’s why my downpayment fund is in cash) - but- if you are 65, you’ll probably live to 80 or so. So at least some of the time horizon is more than 5 years, so should have some money in stocks. Maybe 35-50%, not 80% though. Particularly if you are an inflationista. If you think we are entering the greater depression though, then should be 0% stocks.
Big V,
So true, … and for the younger crowd ( where your bar tab and 401k are roughly equal amounts? ) why would YOU give a rip!?
Hell, if I was in my 20’s I’d say run that bugger down to 4K for all I care! So obviously they felt they’d have the boomers by the short and curlies.
Well, they don’t care any more either!
The La Jolla Light. “La Jolla has reclaimed the distinction of having the nation’s ‘priciest’ real estate…”
Longtime La Jollan Susana Cohen Corrigan of Prudential California Realty said the community’s “assets” speak for themselves.
“This is the best place to live by far,” she said. “Between an idyllic lifestyle, the climate, obviously, and just the beauty of the place: It feels like a community.”
+++++++++++++++++++++++++++++++++++++++++++++++
No Susana, it IS a community. While I have the stage, I want to speak about a problem in La Jolla that comes once a year. As a sitting member on the La Jolla Noise Reduction taskforce, we are getting assaulted today with the Blue Angels (of death) flying over there at the Miramar marine base. This putative “Sounds of Freedom” is causing serious quality of life issues for our residents because of their hearing aids. Even the animals are getting riled up more than usual compared to when the gardeners start up their leaf blowers. To La Jollans, the “Sound of Freedom” is when two champagne glasses are clinking together in a celebratory toast or just the regal start of a cocktail party.
“La Jolla” is a corruption of the Native American word “Woholle”, meaning hole in the mountain, referring to the caves in the north-facing cliffs next to La Jolla Cove Park.
La Jolla does not translate into “The Jewel”. Never has, never will. It means “The Hole”.
Big V, that’s interesting. I never bought the “jewel” theory, but I always suspected it had something to do with the word “Hoya” in Spanish, which means precisely “cove”. English speakers tend to pronounce the “h” as if were an English “h” (that is, not mute) , and later Spanish speakers would have reinterpreted that as a Spanish “j”. There was a lot of back and forth between Spanish and English place names. It’s an interesting, totally OT amusement. Thanks for the new theory.
friar john,
Too funny. You almost have to wonder how many in that crowd are retired senior officers? LOL! ( I guess thank God it IS only once a year )
I can really relate. I was visiting my bro in the community of Grand Junktown, CO, last weekend while these hounds of hell blasted everything and everyone for hours with their pyrotechnics, very dangerous, too, flying that low over a large town, one crash would wipe out a lot of people.
We watched the pigeons and birds freak out.
I used to have a pilot’s license, meaning I’m not against flying in general, even though God didn’t give us wings and all that, but I hate those arrogant asshats, they may be OK in person, but they sure know how to wreck the peace (and the Ozone Layer).
I hate to be forever known as the “Sound of Freedom” guy but at least these guys have skills… ( unlike ‘many’ Harley newbies ) and I know this will rub ’some’ people the wrong way but Sr. officers are ordered to do this so taxpayers can at least see where there tax dollars are going?
What “I” have ‘always’ been in favor of is opening the base to the public with a “day pass” and then letting the kids climb on the aircraft and see just how BIG they really are! ( It means a LOT more to kids to be able to sit in the cockpit than see a momentary blue streak overhead )
We did this when I was in the AF Reserve and this way people that dig aviation can see if they want to and the Air Guard makes a quick pass ( so taxpayers can see it actually flies ) and then we have cotton candy. What’s not to like?
One of the coolest friends I ever had was a WWII WASP, in her 80s, still sharp as a tack. I got an air show dedicated to her, boy was she surprised (it was a really big deal show in Podunk, Utah, LMAO). Anyway, they saluted her with an F16 flyover (OK, it was only ONE F16, but it was still a flyover, fortunately). I loved that, didn’t mind the noise at all.
Goes to show ya that it’s all relative to what role you’re playing. We humans are a complicated lot (was going to say messed up, but it sounds too, well, complicated).
Aren’t those things used to kill people with? I guess it helps to brainwash people by making them think of weapons as toys.
An effect of the housing/banking/credit crash should be more focus on defense (NJ and AK) and less on selling killing machines all over the planet in the name of defense.
I went on the “bring the family” cruise on an aircraft carrier once. I had no idea how big those jet fighters were and I used to work at a company that worked on corporate aircraft, BBJ down to the lowly Learjet.
Nothing can compare to those guys skills in landing on the deck of the carrier. You just can’t understand it until you are standing on the deck watching them. My brother said its not a landing, its a controlled crash landing.
Back to housing
If the deadbeats are allowed priciple reductions, whats to stop everyone in the US from becoming a deadbeat so they can also get a priciple reduction? I know if my neighbor did, I sure they hell would have no problem walking away unless they gave me a reduction aswell.
re: The Blue Angels
I can always count on at least one low flyby on the Thursday before the Air Show. For about 5 seconds, it sounds like it’s going to blow out the windows.
You have quality of life issues because once a year some jets fly overhead?
Sheesh, how sensitive can you get? And your are concerned that these once a year jets will “rile” up the animals?
Grow up.
–
We need Recall Schwarzenegger drive to even the score. CA has the Bubble Trouble, much more so than lesser states.
We ARE #1!
Jas
I was just reading the get your hands dirty version of the L.A. Times and they had a very downbeat article about the governator and the picture of him used in the print edition is most unflattering, as he looks pale and unhealthy.
=======================================
Credit crunch puts California governments in a corner
With credit markets all but paralyzed and state and local governments unable to borrow money, California officials joined calls Thursday for quick approval of a financial bailout plan working its way through Congress.
The warnings were stark, including suggestions that operating funds to pay state workers, teachers or even healthcare workers could dry up in the weeks ahead.
“It is daunting that California, the eighth-largest economy in the world, cannot obtain financing in the normal course of its business to bridge our annual lag between expenditures and revenues,” Gov. Arnold Schwarzenegger wrote in a letter to the state’s congressional delegation in Washington.
http://www.latimes.com/business/la-fi-calif2-2008oct02,0,4940326.story
A starved beast bites back:
http://bartlett.blogs.nytimes.com/2006/04/04/tax-cuts-dont-starve-the-beast/
Hmmm, maybe not the best time to go into California tax-free munis.
“Hmmm, maybe not the best time to go into California tax-free munis.”
+1
+100
That state is done. Stick a fork in it.
Either they raise income taxes:
..Then everyone will run for tax free status in Nevada, and more small business will start hiding sales from the goverment
Fix Prop 13;
..Landlords run for cover, sell..sell..sell, or they raise rents to cover the increase, plus less income from landords. Lose, lose for the state.
..The governator owns 1/2 Santa Monica, so no changes to Prop 13 while he lives
OR they raise sales tax
..Crook County in Illinois is a 10+% so it can be done, but I have noticed alot more empty storefronts in the last 2 months around the southwest burbs of cook county
Anyway you look at it, it is going to get alot more expensive to live in California so house prices will have to just keep on coming down and you will see less cops, firefighters, and more contract teachers instead of staff with benefit teachers.
Dallas just started a thing (IIRC)if you get in an accident and are not a resident of the city, you will get charged for any services. Whether it is your fault or not.
I am in Plano, Tx right now. Alot of the strip malls that were empty last year, are still empty this year. Hum, maybe Texas is not as different as they think. Maybe they are just a little late to the party.
I don’t care what the talking heads say on the boob tube, 700 billion ain’t going do crap to stop this fall.
–
Palo Alto Online. “So far, there’s no undercurrent of panic in the area, according to realtors. But that doesn’t mean Palo Alto won’t be affected by larger market troubles. The credit crunch could make loans harder to get and more expensive, realtors warned. But they stopped short of saying prices would ever dip.”
Sorry, Palo Alto depends on the Scam Options money and that will dry out, as in 2002 early 2003, and my forecast of 80%+ for the high priced areas stands more firmly today than any time in recent months.
Jas
A realtor friend of mine told me a couple of days ago that it’s a great time to buy in Los Altos. Apparently these areas are the last to get hit and the first to go back up. And she said the window is NOW. I told her, wait, it hasn’t gone down yet. But she said, nevertheless, it will be going up soon so now is as good a time as any.
I was left speechless. Could it really be that all that happens in the “best” areas is a point of inflexion?
–
I had visitors from Silly.con Valley (they left this morning) and one of them sold his home in Los Altos and is renting a SFH there. He is even thinking of moving into a cheaper apt in Los Altos (schools being the reason) to save on expenses.
Jas
A friend of mine lives in Woodside (laterally traded from Los Altos a couple of years back).
He petitioned to lower his property tax bill based on prices falling…he got the assessor to agree.
Not everyone believes home prices have not gone down…
Tell me what’s happening in Belmont, San Carlos, Burlingame, Mountain View and Cupertino today, and I’ll tell you what will happen in Los Altos tomorrow.
Real Estate is all local yes, but more importantly, real estate is relative. If prices are falling in “B+” towns on the Peninsula, “A” towns are sure to follow, since those with the financial discipline to save a 20-25% down payment, will also shop around. And when we see prices in other good towns continuing to fall, we’re going to sit on our hands.
I personally live in a house where my rent is ~1/3 of the cost of ownership. Why the hell would I EVER move (other than to get a bigger house)?
–
Tell me what is happening to the following Scams today and in the next 2-3 months — AAPL, GOOG, HPQ, etc. — and I will tell you what is likely to happen to home the prices in Los Altos and Saratoga in 4-6 months. Cause and effect at work. It is not rocket science.
Jas
GOOG goes from >700 last year to <400 now. There’s got to be a whole lot of unhappy (and underwater) google employees in Mt View.
…this is your captain speaking, it appears that unfortunately we’ve run out of fuel. No worries though, please make sure your seat belts are fastened…
SiliCon Valley is highly inflated to due stock options dating back to 1998-99. Many used their IPO stock to buy -overpay for homes. Fast forward today … who will pay those highly inflated Silicon Valley prices now that stock options are expensed and IPO with highly inflated valuations non-existant. Frankly I dont even know who will underwrite future IPOs since today Lehman, Merril Lynch, Bear Sterns. Not sure what will happen to Morgan and Goldman since they will become Banks and not investment brokers….
Every valley leader will say, what happen in 1999 will not happen again. If you look at incomes.. they clearly dont support such high prices….
Private equity firms will still invest in promising technology of course, but not at wildly inflated IPO prices.
All the charts that I have seen show a 5-10% drop from peak in Palo Alto (depending on how the numbers are calculated). I agree that’s less than everywhere else, but it is still a drop, and I wish people would acknowledge it. The pace is starting to accelerate, although it is still like watching toenails grow.
House prices in Cupertino is still soaring… few days back, a 1500 sq ft single family home, the listing was for $800k. there were 20 bids and a guy made a unconditional bid for $940k…. this place seem to be unaffected… any logic to this?
There is a home down the street from me in West Menlo Park that has been on the market for ~3-4 weeks+ even after a price reduction.
For every “20 bid” stories, I can show you several “been sitting on the market stories”.
Cupertino has some of the best schools around, which is a good anchor for values, and as much as it pains me to say, $800k is relatively affordable for Cupertino. Perhaps the home was listed under market to get it sold quickly? Who the hell knows.
All I know is that in times of economic stress, gravity tends to re-exert itself on most things that get too highly priced (see GOOG and AAPL).
There’s A LOT of Chinese money going into Cupertino.
And probably a lot of American technology seeping out.
Cupertino house prices are down about 12% from peak. That $940k house would have sold for $1,068,181 around this time last year.
Funny how the Marin property written about was “was severely over-encumbered with loans.”
For all the damage that was caused, they may well have said the home was “covered up with wood-destroying organisms, who now were trying to eat the concrete slab.”
;>
I suspect that they intentionally underpriced. Good strategy.
I wouldn’t say that Cupertino / Los Altos / Saratoga are soaring. But they aren’t really down much either. Los Gatos on the other hand does seem to be down maybe 10% from last year’s peak. And I have seen some foreclosures there, which is not the case in C / LA/ S.
Totally unscientific, just based on my observations.
According to dqnews (all are price per sqft, y-o-y)
cupertino is down 3.3%. Los Altos is down 12 or up 9 depending on zip. Los Gatos is flat, down 8%, or down 49% (on 5 sales, kind of bogus.) Saratoga is down 11%.
Compare these to SJ 95148, down 33.5% on 59 sales. Actually the sales count is up by 59%. Interesting. The sales volume is up in many of the relatively lower-priced parts of SJ.
i agree…a nice strategy.. to really have a list price below the market.
This is SV_Renter (used to be MD_renter). We moved out from Maryland a month ago and are renting in 95148. Not much moving around our foothills neighborhood. I think areas more to the west of the zip code are driving the sales and price declines. Things here are going down, but slowly with long time-on-market. A few foreclosures in the 1 million range. We’re renting a SFH for about 1/2 the cost of buying so no incentive to buy here unless prices drop a lot more.
I suspect fraud when I see something like this. There are at least 400 houses in San Mateo City for sale; most high-priced homes are sitting for a long time. Recently one really overpriced house in a really nice area very close to downtown sold for 1.7 million - they were asking 2 million so it was a step down but the house isn’t worth that much . The funny thing is , every time I walk by the house, it looks unoccupied and has been for several months. If someone actually bought the house, you’d think they’d have moved in by now.
I think what happened is, the developer/rehabber - it’s one of those investor makeover jobs - sold it to a friend of his so it will record as a sale, but it isn’t really sold and will go back on the market next year.
Visited Costco during lunch here in San Jose — I’ve never seen it so empty. Guess all those stock options are now worthless.
Which also explains why Palo Alto will suffer going forward. Companies will have hiring freezes, less stock options offered, benefits diminishing - there goes the ESPP. And horror of horrors, potential salary reductions. Its happening already.
Now tell me Palo Alto is OK……:-)
I’ve noticed a SEVERE disruption in the amount of stuff being hauled out of San Diego Costco’s. Used to be I would avoid going Saturday afternoon to avoid being run over by those flatbeds stacked with stuff 4feet high, not to mention check-out lines 20 carts deep. Now I have no trouble shopping in relative peace with no checkout lines whatsoever. The people who are there seem to average about 5 items only per cart.
Does this mean our obesity epidemic is on the wane?
Palo Alto itself has lost jobs from HP/Intel mid managment layoffs back 2 years ago to today old Syntex is being closed down
and 1000 positions moved to … New Jersey!
Everyone wants to live better, but you can’t live only on credit,’ he said.”
Try telling that to at least 90% of Americans….or the US government, for that matter……
I hate to say I told you so?
John Courson ( Central Pacific Mortgage ) stiffed his former employees of a failed mortgage firm out of $879,000 and now he’s going to be the Mortgage Banker Association’s C.O.O!? Oh and he’ll be their President come January. ( Can you belive this? You can’t make this stuff up )
What a fine lot. Can someone PLEASE tell me how someone that’s under investigation for fraud and embezzelment is even being -considered- for this position? He’s actively lobbying in DC for the bailout bill. Great…
This John Courson is a true bottom-feeder sociopath. Maybe someone will push him off the subway platform upon the third rail just before the speeding train finishes the job.
“‘San Francisco is like a little island,’ Dearman said. ‘We feel (the downturn) but not to the same degree. We feel it from the standpoint of people who aren’t ready to pull the trigger. But values of homes in San Francisco are still very, very good.’”
Can somebody revist this omnipotent oricle next year this time to see if she has had an attitude adjustment.
Fantasy island.
LMAO.
DE PAIN BOSS!!! DE PAIN!!!
San Diego is in a worsening recession, on the heels of a 25 pct residential real estate price decline. Sounds like there has never been a better time to rent and wait out a housing bust…
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The year in which CA is likely to declare bankruptcy?
My guess — 2013.
Jas
what do you think JJ, bail out of jumble of mutual funds including lots of foreign stuff, or just ride it out at this point? Are we nearing bottom? Well? I will need it in like 20 years…
Very unlikely… when was the last time you ever seen a
state go bankrupt???
“Very unlikely… when was the last time you ever seen a
state go bankrupt???”
LOL.
Yeah, that’s a convincing argument. I think you need to read more, perhaps open your mind some. Your future will thank you.
Umm, good question. When’s the last time you saw all of the big investment banks go belly up or get bought out? When’s the last time you saw the nation’s largest bank failure on record, preceded and followed by more all the time? Oh yeah, that’s all happened in the last couple of weeks.
Although I’m no economist and can’t predict the future, I think that circular-type thinking such as “It can’t happen now because it’s never happened before” is just moronic.
off topic question.
If I was to actually “get off of the fence” and find a home and was putting 20% plus down and only using 25% of gross for PITI, would a bank agree to not sell the loan? Meaning: I literally want the bank to hold the loan in their portfolio and be under contract to not sell it off.
Is that possible, assuming good credit, downpayment, reserves, etc.?
Who would the bank sell it too? They have to keep it.
Are you saying the secondary market is so dried up that they couldn’t sell it?
What I meant was having them not be allowed to sell it, assign it, etc. in any sort of way.
I was saying that the market is dead, but you can request whatever you want. The worst they can do is say no, and maybe roll their eyes.
If its a 30 year fixed, almost all banks sell those. Many will keep the servicing, which is most important in my mind as that is who you deal with to pay it, escrow, get a pay-off… I don’t care who owns my clients’ loans, but always want to know who is going to service them.
Foreclosure Alley
Inland Empire
KCET 8 min video
http://kcet.org/socal/
Wow, thanks a bunch, Hoz!
I need my lawn painted green!
That’s the next growth industry. All the ex candle and pirate shop owners are gonna get in on this action.
That’s kinda sad — all that nice stuff being thrown away. A thrift store would be able to make thousands on it.
Looks like a business opportunity, if you can keep up with those guys.. Just tail ‘em in a cube truck and take the choice bits they don’t want…
Dan Dykwel??, Steve Bellumori?? ( say it and think Italian)
C’mon Ben, someone’s making these names up.
“So far, the authority has been forced to repurchase 11 of the program’s 316 homes, most of which are condominiums, to keep them from being sold at market-rate prices and lost to the program.”
Let me see if i understand this correctly. The program “owns” or “looks after” a pool of low cost condos. The progam “sells” the condo to a deserving low income resident for $150,000. This resident refinances it up to $400,000. SOmetime later the resident defaults and the bank reposses the house. And the program is then reobligated to rebuy the house?
Socialism at it’s finest, unfortunatley that where america is headed. Of course it wont be called that, but what do you expect when they throw away the constitution for a 700 bil oh no it’s 850 bil now bail out.
Flippers in trouble in the East Bay. House bought for $610k a couple of years ago, now selling for $399k (buyer to complete renovations!).
http://www.zillow.com/homedetails/1371-Martha-St-Livermore-CA-94550/24949900_zpid
And Flippers still living the dream! Bought a couple of months ago for $684k, now flipping for $759k.
http://www.zillow.com/homedetails/5679-Dresslar-Cir-Livermore-CA-94550/64961426_zpid
Just like alot of used cars in my town. Sold over and over and over again. Speaking of selling, am I enslaved yet today? Or do I got a few minutes of the old stuff left?
One interesting fallout from the housing industry’s collapse has been the slowing–and in some areas, reversal–of immigration, both legal and illegal. Today’s WSJ reports (but I’ve seen it elsewhere) that the loss of good-paying construction jobs is the reason.
California can no longer afford supporting illegals. Illegals are sucking the life out of the state. CA remains unfriendly to business and many many natives are leaving the state.
How socialistic can USA get. ?
If a bank wants to borrow a “strawberry picker” 720.000$
on a 14.000$ income, on a variable rate, well then…GOOD luck.
And now, Hank & Ben want to save the “poor” banker and let all the other “cherry pickers” pay for it.
Well guess what, 700$B won’t be enough
so next step will be to use the real assets
i.e The houses that ARE paid for, as collateral for the next loanS…
And clearly, only terrorists, would try to protect the Wealth and buy Gold/Silver.
So what will the NWunORDER, do about that.
Suppress the PAPER PM prices, while there’s is very little physical metal for sale.
Sounds a lot like 1933,20,67$/oz when the USgoverment outlawed gold ownership (over 5 oz) and viola, in 1936 the NEW price was 35$.
Looks like, that in a “crisis”, they can get a way with EVERYTHING.
Damn, Mortimer…you won the bet, to turn USA into a socialistic dictatorship, and the USSR into a Capitistic Oligarchy for the Rich…
Heres 1$
I bet you 1€, that I can steal all china’s & Opec’s wealth
WITH OUT them even noticing it.
I really feel for the GOOD people in America, but all EVIL needs to win, is for GOOD people, to do..NOTHING
Mike