November 7, 2008

When It Goes Bad You Dump It

It’s Friday desk clearing time for this blogger. “It has a been several years, and several real estate transactions, since Kianoush Etemadi, 57, and her daughter, Paris, 16, had a home of their own. Etemadi owned a house in Rockville, Md., until 2005, but sold it after deciding she could save money by moving into the Bethesda home of her younger sister, Azar. In 2006, with the Bethesda real estate market booming, the sisters decided to put an addition on that house, for which Azar took out a $200,000 loan; during construction, the three would live nearby in yet another house, which Etemadi bought the same year, planning to flip it, for $505,000 with no money down.”

“By 2007, however, the sisters were overextended and the market had slowed. They did not make payments for three months on Azar’s mortgage and the bank started threatening foreclosure. Kianoush, who had been struggling to keep up with the $4,700 mortgage payments for the new, temporary house, now had to begin helping her sister with her payments — especially after Azar was laid off from her job. Kianoush began working as a real estate agent. They tried for six months to sell either house, but couldn’t get even a single offer. In August, the family moved back to Azar’s house, and Kianoush focused on saving it from foreclosure. ‘I used my savings, I got help from friends, I sold all my jewelry,’ she said.”

‘Meanwhile, she stopped making payments on the house she had planned to flip, and soon received a notice of impending foreclosure from her mortgage lender. Now, she and her daughter live not only with Azar, but with three roommates that they took in to cover costs. The close quarters are particularly hard on Paris, who likes to have friends over. ‘When I remind her that somebody is sleeping in the other room or in the basement, she gets upset,’ Kianoush Etemadi said. ‘She says, This is my house! This is our house! Why shouldn’t I have fun on Friday night?’”

“Towns such as Sherborn and Concord are seeing large percentages of homes for sale being marked down, according to a new survey. The same is true for some of the hottest Boston neighborhoods in recent years, such as the South End, Charlestown, and Beacon Hill. In the current market, only sellers who have to sell, because of a job shift or change in personal circumstances, are putting their homes on the market, said Boston broker David Crowley.”

“‘The people selling now really have to sell,’ Crowley said. ‘It’s definitely different from a few years ago when people would put their house on the market and see what happens.’”

“Dr. Karyn Stern and her husband are looking in Concord. They’ve seen many homes that have been reduced in price, commonly to the $900,000s from more than $1 million. But in her view, those prices are still too high for some of the homes they have seen, many of which need extensive work and updates.”

“‘For $900,000 you are getting a little, tiny house that would be $200,000 anywhere else in the country,’ she said.”

“Timing often is the essential ingredient in any project, and Realtors and developers believe the timing is perfect to capitalize upon Toledo Bend Reservoir’s quietly growing popularity. A tall ridge with full lake view has been identified as a spot for a clubhouse and condominiums. Membership at Cypress Bend is being studied as part of the selling price of the lots. Waterfront lots will sell in the ’six figures,’ with prices yet to be determined. A waiting list for pre-sales is growing.”

“‘The interior and waterfront lots have gorgeous views. You can see Texas from most of the lots. And it’s just 10 minutes from Toledo Town, banks, groceries and restaurants,’ said Partner Virginia Burkett.”

“Springfield’s housing market has remained largely unaffected by market turbulence and could be heading for an upturn once the national market stabilizes, area Realtors say. ‘We’re not on the coast — we’re not Florida, we’re not California — where most of these speculative buys were,’ said Art Maxwell, sales manager of Coldwell-Banker Vanguard. ‘A lot of these speculative buys were secondary houses, not the buyer’s primary home. They were investment properties. And like most other investments, when it goes bad you dump it.’”

“‘People are hearing all of the national media saying it’s just desolate — that you can’t sell a house, you can’t give it away — and that’s just not true,’ said Murney Associates Realtor Rhonda Burks.”

“‘When homeowners must move out of a home…a growing number are choosing to rent [their home for sale] rather than continue reducing the price of the property until it sells,’ said Jim Merrion, regional director of the RE/MAX network in northern Illinois. ‘It is not a risk-free strategy. But if a seller thinks it is likely that home prices will rebound in the next year or two, it can be an effective way to deal with a difficult situation even if the monthly costs of continued ownership [mortgage, taxes and insurance] are more than the rent received.’”

“For example, assume a home purchased three years ago for $460,000 has a current market value of $410,000, and the homeowner’s monthly cost is $3,300. If the home can command just $2,200 a month in rent, the owner would have to pay $26,400 out of his or her own pocket over a 24-month rental period. However, if the homeowner believes the market will rebound so that the home will be worth at least $440,000 in two years, the out-of-pocket costs of renting can be recaptured when the home is sold.”

“Looking to offset rising expenses and otherwise cope with dreary economic times, those opening their homes to renters find in the process assistance in paying down a mortgage or keeping plusher lifestyles tenable, even if it means settling for a more cramped, less private existence.”

“‘It stands to reason that in an economic downturn you would see people resorting to a variety of strategies to try and make ends meet and sustain their lifestyles,’ said Michael Bernstein, provost at Tulane University, where he is also a professor of history and economics.”

“Bernstein said house sharing is commonplace in other parts of the country, where skyrocketing housing markets have long made such arrangements attractive. A former San Diego resident, Bernstein recalled residential sections of Southern California where he said it is not remarkable to find six cars in the driveway of a single-family home.”

“‘I would assume that if you look at any period of economic stress, you will see reconfiguration of living patterns along this way,’ he said.”

“The annual real estate forecast season is on, and Sacramento-area home builders caught a fresh earful of unfriendly predictions Thursday. Folsom building industry tracker Greg Paquin had these predictions: New home prices – averaging $374,000 across the region – are about as low as they can go. He said, ‘We feel we’re getting real close to the bottom in the Sacramento market.’”

“Economist Edward Leamer, director of the UCLA Anderson Forecast, said he sees not a typical V-shaped fast rebound this time, but a long bottom. ‘The news is all fear, fear fear. I call it the Paulson Panic,’ he said, criticizing the U.S. Treasury Secretary Henry Paulson, President Bush and Federal Reserve Chairman Ben Bernanke for badly frightening consumers with talk of economic collapse.”

“‘Business is booming,’ said Tabach-Bank, the CEO of Beverly Loan Co. in Beverly Hills, California. Beverly Loan is a pawnshop…that caters to people who hock Cartiers, Harley- Davidsons and Oscar statuettes when they need cash. They really need it now, Tabach-Bank said from a third-floor office, protected by bulletproof glass, off his showroom in the Bank of America building near Rodeo Drive.”

“‘I’ve never seen so many bankers, lawyers, doctors and actors’ with valuable things to pawn, he said. He pointed to an 18-carat white gold bracelet with 69 diamonds ($2,900) and an 18-carat yellow gold Rolex Yachtmaster II (’a steal’ at $18,500).”

“In downtown Los Angeles, King’s Jewelry & Loan began seeing luxury business pick up about 18 months ago when variable-rate mortgages started resetting to higher payments, said owner Sam Shocket. ‘We were seeing more Rolexes, Patek-Philippe watches, larger diamonds,’ said Shocket. ‘Instead of construction workers, we’d see major contractors,” Shocket said of his customers. ‘Instead of real estate agents, we’d see brokers. Instead of actors who played bit parts, we’d see someone you might recognize from ‘The Tonight Show.’”

“Delaware native Bill Parks opens Fox TV’s hit ‘Bones.’ Parks’ other recent big undertaking was buying a house in Los Angeles. It’s a three-bedroom, two-bath house with a guest house. He lives in the guest house and rents out the bigger house to cover the mortgage. ‘It was scary,’ he says. ‘But it was worth it.’”

“Now, he has not only his own house but, parked in the yard, a bus that’s temporarily home to ‘a couple of punk rock hippies.’ ‘I have this 45-foot, 72-passenger school bus. … It’s painted black all over, and it has a skull painted on one side. They’re waiting to convert it to biodiesel before they venture onto the road to finish their film, play music and do some tattoos.’”

“LibertyBank has sued the developer of the former Bend Trap Club property for more than $13 million, most of which was for loans made in April 2006 to purchase and develop the property. The former trap club property in southeast Bend had been approved for 220 homes, Bauhofer said. ‘By the time (the site) was completed (for homes), the market had collapsed,’ said (shareholder) Don Bauhofer. ‘There was a lot of development out there and a lot of us were building to precede sales. The value of the land dropped and the developers who were leveraged were not in the position to carry it.’”

“The median price of King County single-family homes sold in October was $392,000, down nearly 12 percent from October 2007, the listing service said. It was the largest percentage drop, year-over-year, since the market turned south two summers ago. Prices in King County haven’t dipped below $400,000 since February 2006.”

“With few exceptions, only those who absolutely must make a move now are in the market, said Kim Horn of the Horn Real Estate Group in Snoqualmie. ‘I’m working with eight sellers right now,’ Horn said, ‘None of them are selling because they want to.’”

“Falling home values have left nearly 52,000 mortgages in Minnesota in a negative-equity position, meaning the homeowner’s debt is greater than the estimated value of the property About 12 percent of the state’s mortgaged properties are ‘underwater.’”

“Walking away from a mortgage is an extreme response to being underwater that few homeowners likely would take, said said Tim Bendel, past president of the Minnesota Mortgage Association. ‘Psychologically, if you’re in a lot of financial trouble, and your house isn’t worth what you owe on it, you might feel like ‘Why should I go out of my way to make this work?’ said Bendel, who is president of a mortgage brokerage company in Prior Lake. ‘Hopefully, most won’t do that, because I think housing’s best days are still in front of it.’”

“Even though Arizona’s real estate recession feels painful today, it’s no worse than previous downturns. And the state will probably pull out of this one in the same ways it has done in the past, said Bill Gosnell, a Phoenix-based real estate investor, at a presentation Thursday night.”

“‘We are one of the top five overbuilt residential markets, which means we are becoming incredibly affordable again,’ he said. ‘We are also substantially overbuilt in office and industrial, and we are reaching similar vacancy rates as in the late 1980s. What brought us back in the 1990s was the cost of living came down because of housing, and the cost of doing business came down because of the vacancies.’”

“The same trends could help the Valley recover from its current malaise, he said. “I don’t want to sound overly optimistic. … It’s unfortunate for people who lost their houses. But the bottom line is that it is creating opportunities for others to buy these houses.’”




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68 Comments »

Comment by Faster Pussycat, Sell Sell
2008-11-07 14:22:30

We were seeing more Rolexes, Patek-Philippe watches, larger diamonds.
Patek, eh?

Well, there goes da bling! Fo’ shizzle y’all, ya can’t make this up.

 
Comment by sfbubblebuyer
2008-11-07 14:27:56

“For example, assume a home purchased three years ago for $460,000 has a current market value of $410,000, and the homeowner’s monthly cost is $3,300. If the home can command just $2,200 a month in rent, the owner would have to pay $26,400 out of his or her own pocket over a 24-month rental period. However, if the homeowner believes the market will rebound so that the home will be worth at least $440,000 in two years, the out-of-pocket costs of renting can be recaptured when the home is sold.”

And when the market finishes correcting in two years, and the house is worth $220,000 the homeowner who would have been out $50,000 will be out $266,000. (Not counting commissions.)

BRILLIANT!

Comment by SMF
2008-11-07 14:32:46

But if a seller thinks it is likely that home prices will rebound in the next year or two

Where is this still prevalent assumption that prices will go up so soon?

Just look at any bubble chart.

Hell, look at the NASDAQ bubble chart.

Year 2000 high, over 5000.

Currently it is less than 2000.

Does anyone here think we’ll see NASDAQ at 5000 anytime soon?

No?

Neither will home prices.

And the true end of this bubble will be when the majority realize this.

And then we’ll truly see what ‘giving a house away’ really means.

Comment by sf jack
2008-11-07 17:08:26

‘giving a house away’ = 2012 in Northern California

Not sure which locales, or if even one house will actually be given away, but to realtors and sellers it is definitely going to feel as if they did.

 
Comment by NYCityBoy
2008-11-07 19:12:42

“Where is this still prevalent assumption that prices will go up so soon?”

You ain’t from around here. Are you?

 
Comment by matthew
2008-11-07 22:32:43

“And the true end of this bubble will be when the majority realize this.”

Well said.. I concur completely with that statement..

 
 
Comment by Pearsey von Peepwig
2008-11-07 15:40:44

If I only have two fish in my pool, and I assume correctly that one is male and one is female, then I’d be better off letting them mate instead of eating them right off the bat. On the other hand, if I turn out to be wrong, then they will both die of old age while I starve.

Maybe I should look online for information on sexing fishes before deriving disastrous conclusions from absurd lines of thinking.

Comment by SanFranciscoBayAreaGal
2008-11-07 21:20:18

Pearsey,

I love the way you think. LOL :)

Comment by CrookCounty
2008-11-08 00:26:57

Guilty. I sentence you all to forever being priced out!

BAHAWAHAHAHAHAHAAHA

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Comment by Molly
2008-11-07 14:29:59

“The close quarters are particularly hard on Paris, who likes to have friends over…’This is my house! This is our house! Why shouldn’t I have fun on Friday night?’”

Honey, you’re not Paris Hilton, you’re Paris Nobody. Get over your self-entitled attitude now and you’ll be MUCH better off later.

Comment by DinOR
2008-11-07 15:05:41

Molly,

That jumped out at me too. The mistake was dragging a poor 16 y.o through this to begin with. HS is a time when kids could use a ‘little’ stability in their lives and a time when parents make extra efforts for kids 3-4 activities at a time.

But NO….. there was easy money to be had and the more loan paperwork w/ your name on it the more money you’ll make! What’s ironic is that I’m sure, this too was done “for the kids”. How can we hold a 16 y.o accountable for their parent’s greed?

Comment by Steve W
2008-11-07 16:08:27

Tragically, we might be seeing the parents’ personalites and traits reflected in that 16 year old. Hopefully she goes off to college, gets away from the bad apples and learns how to be more human.

Comment by NYCityBoy
2008-11-07 19:25:12

Come to NYC. Check out the 21 and 22 year old girls. A large percentage have no class, no poise and no manners. They are cell phone talking, flip-flop wearing robots that walk around with a pissy look on their face. They talk like 14 year-olds and have the maturity of 12 year-olds. We need to bring back charm school for this little misfits. I’m hoping some economic reality will bitch slap them into civility.

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Comment by MMG
2008-11-07 16:14:37

that 16 y/o will get to say that she was a product of the greater depression :lol:

Why not go rent an F’ing apt before wasting savings and good money after bad, if they were paying a mortgage, they could have afforded a very nice apt for the 2 or 3 of them with a stable environment for the Kid, idiots. :(

 
 
Comment by wmbz
2008-11-07 15:20:19

The big brats and the little brats are all having to face reality, and it’s not fair! Reality is rolling through like a steam roller and I am damn glad for it.

Comment by DinOR
2008-11-07 15:43:21

wmbz,

Good point. I’m pretty sure people that were juggling multiple homes weren’t doing a lot of “dining IN” etc. as the re-fi cash flowed for Trump wannabe’s? Everyone benefitted from the “MEW Lifestyle”.

Still, they’re the kid, you’re the parent.

 
Comment by Pearsey von Peepwig
2008-11-07 15:43:53

Reality is that a 16-year-old girl is not safe in a house with 3 roommates. Her mom is really not being good here. And where the H E double hockey sticks is her dad, anyway?

Comment by DinOR
2008-11-07 16:05:47

Pearsey,

Mom probably suspects as much but has painted herself into a corner financially to such a degree she no longer has any choice in the matter.

I realize you can’t lock ‘em up until they turn 21 but having a few friends over at her own house on a Friday eve isn’t at all unreasonable. How long will be before it’s altogether too easy just to relent and say “O.K Fine! You can go to ___ house/party”?

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Comment by Shizo
2008-11-07 17:04:28

I’d imagine her friends are in the same boat @ their homes.

 
 
Comment by Molly
2008-11-07 16:07:20

Maybe she wasn’t safe with Dad in the house, either? Just one possibility (of many). And, yeah, Paris should have a lock on her door.

Back in the dark ages, when I was sixteen, I was too busy babysitting (to make my own money) on Friday nights to worry about sleepovers. Sometimes I even had a date.

Sixteen seems too old for sleepovers - I may be out of touch, though.

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Comment by palmetto
2008-11-07 17:58:15

“Reality is that a 16-year-old girl is not safe in a house with 3 roommates.”

Running a boardinghouse used to be a time-honored way for women to make some money. It’s nothing new and children have always been exposed to potential danger from adults. Sad but true. It’s one of those “timeless” things.

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Comment by NYCityBoy
2008-11-07 19:31:56

And was that during the age of the tattooed, hip-hopping meth heads? Something tells me that during the days of Ma Bailey’s boardinghouse little Paris might have been a little bit safer. Of course it may be good training for Paris. Someday Paris may be making her living in a Hilton.

 
 
 
 
Comment by cougar91
2008-11-07 19:25:37

Ok I don’t think we should be bashing a 16 y/o girl for something her parent(s) did, she is just an innocent bystander of irresponsible financial decisions made by her parent(s). When you are of that age there are lots of peer pressure in HS and you try your best to fit in and when you see your friends having a stable housing environment you feel like you were let down and become frustrated and as a young teenager she is most likely not quite mature enough to handle it really well, you know.

While she may learn eventually to accept the situation and even learn to prosper under the situation in the future, please give her a break. Bash the adults all you want but often times kids are not mature enough to understand everything that is going wrong around them.

 
 
Comment by dwr
2008-11-07 14:34:53

I miss the old Ed Leamer, you know the one who six months or so ago was saying something to the effect of “despite all the news to the contrary, my gut feel tells me there won’t be a recession”. It was good for laughs back then, and even more so today.

How these “experts” keep their jobs is beyond me.

Comment by Big V
2008-11-07 15:46:19

yup

Comment by sf jack
2008-11-07 17:14:50

Ed Leamer and the UCLA Anderson crew wouldn’t know a recession if it hit them in the face.

And then, if the recession did hit them in the face, they’d be predicting a fast economic turnaround YEARS before it actually occurred.

And then when the economy finally got on its feet, the Anderson School would predict that this state of affairs would continue into perpetuity.

[This roughly correlates with their economic predictions for the Alt-A Bay Area during and post-dotcom through the housing bubble blowoff and insolvency crisis...]

If I was a big donor to UCLA’s business school, I’d ask for my money back.

With interest.

Comment by Central Valley Guy
2008-11-07 22:31:44

Yeah, I imagine how I feel. That’s my alma mater! What the H*** were they filling my head with?

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Comment by AnonyRuss
2008-11-07 14:38:28

“But market forces will eventually cause the real estate markets to strengthen both nationally and locally, and the Valley could be one of the top beneficiaries, he said.”

Well, yeah, eventually lots of things will occur. Could you be more specific?

“That means once the Arizona economy does turn around, it will happen fast, he predicted.”
“What brought us back in the 1990s was the cost of living came down because of housing, and the cost of doing business came down because of the vacancies.”

I guess that I better get going on buying up some stucco boxes by the end of the week. Thanks for the thorough analysis, Bill Gosnell.

Here are some adjacent article titles:

More Business
Honeywell to cut 700 jobs in Phoenix
Jobless rate bolts to 14-year high of 6.5…
New Gila River casino close to opening
Small-business loans plunge in Arizona

Comment by MightyMike
2008-11-07 17:13:55

“once the Arizona economy does turn around, it will happen fast”

This jumped out at me, too. What he says may be true, but who knows when it will happen? It could be 2012 or 2013.

Comment by denquiry
2008-11-07 22:38:04

IMO, home prices, rents, and salaries are looking to stabilize with those of Mexico’s. Dunno….just my opinion.

Comment by CrookCounty
2008-11-07 23:40:19

I see your Peso. Chop it in half. And count it as two.

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Comment by Professor Bear
2008-11-07 14:41:36

“For example, assume a home purchased three years ago for $460,000 has a current market value of $410,000, and the homeowner’s monthly cost is $3,300. If the home can command just $2,200 a month in rent, the owner would have to pay $26,400 out of his or her own pocket over a 24-month rental period. However, if the homeowner believes the market will rebound so that the home will be worth at least $440,000 in two years, the out-of-pocket costs of renting can be recaptured when the home is sold.”

How does that example pencil out for a San Diego home bought at the peak price of $517,000 currently worth $328,000? Suppose it can command $2,300 in rent (talking about the home we rent here), and it will not come back to 2005 prices until 2015 (roughly the timing of the last cycle’s round trip). Go with the monthly cost estimate of $3,300 in ownership expenses.

Then after ten years, the homeowner can sell after throwing away $120,000 (10*12*$1,000) on ownership.

Comment by Professor Bear
2008-11-07 14:54:13

P.S. $120,000 is really no big deal for wealthy San Diegans — only about two year’s worth of pretax income for the median SD household.

Comment by NYCityBoy
2008-11-07 19:38:24

Or 40 years of savings. No big deal! It should be a breeze.

Comment by Professor Bear
2008-11-07 21:31:17

Infinite years of savings, actually, if your savings are zero or negative…

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Comment by Backstage
2008-11-07 14:58:57

Just another example of throwing money away on a rental place.

Once again, the RE professionals were right.

Comment by DinOR
2008-11-07 15:18:29

Backstage,

Too funny! We really need to hone and craft that to make it the perfect NAR one-liner comeback line!

Professor Bear is right and here’s what scares me even more? On the upswing everyone was claiming “whichever” home they happened to be selling as their “primary”. NOW… as the slide continues we’ll have flocks of accidental landlords claiming that their primary home was in fact a “rental” to harvest the cap loss!

Remember, after 1997 you couldn’t show a loss on primary res.

Comment by Professor Bear
2008-11-07 16:41:56

‘…as the slide continues we’ll have flocks of accidental landlords claiming that their primary home was in fact a “rental” to harvest the cap loss!’

LOL — BwaHaHAHAHAHAHAHAAAA! and all that…

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Comment by polly
2008-11-07 17:28:39

Yeah, but will they have reported any rental income on their previous year’s tax form? You know, to sort of back up the claim.

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Comment by Arizona Slim
2008-11-07 15:23:06

Here in Tucson, there are quite a number of “accidental rentals.” And there aren’t enough tenants, accidental or otherwise, to fill them.

So, there they sit, month after month, with “For Rent” signs creaking in the breeze.

Comment by Big V
2008-11-07 15:50:45

How many accidental squatters do you think it would take to utilize all those wasted stuck-o boxes?

Comment by Shizo
2008-11-07 17:08:38

How many licks does it take to get to the center of a tootsie pop? :) Don’t know why your post made me think of that, but there you go!

Comment by SanFranciscoBayAreaGal
2008-11-07 21:25:52

I never did find out and still haven’t to this day. I end up biting the tootsie pop just before I get to the middle. :)

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Comment by Skroodle
2008-11-07 21:21:14

Bye Bye big box stores!

Big-box stores closing across West Valley

135 comments by Erin Zlomek - Nov. 7, 2008 07:36 AM
The Arizona Republic

Big-box retailers that once aggressively expanded across the West Valley while home construction was on the rise are closing en masse as the difficult economy continues to hurt business.

http://www.azcentral.com/community/glendale/articles/2008/11/07/20081107gl-bizclose1107-ON.html

 
 
Comment by Big V
2008-11-07 15:28:32

Reminder for tomorrow’s HBB get-together. Come one, come all!

Let’s meet up at LJ Quinn’s Lighthouse Pub‎ in Oakland on Saturday, November 8th at 7 PM. I will make reservations if you guys RSVP to BigVHBB at gmail dot com.

Address:
51 Embarcadero Cv
Oakland, CA 94606

Phone Number:
(510) 536-2050

Website:
quinnslighthouse dot com

See you guys,
Big V

 
Comment by Pearsey von Peepwig
2008-11-07 15:52:33

Don’t forget. Party at LJ Quinn’s lighthouse in Oakland tomorrow night. I’m getting all fluffed out just thinking about it.

 
Comment by Steve W
2008-11-07 16:00:57

Another great week! My thanks to those who support this blog. Please check back this weekend.

(proxy for Ben, after reading the posts I felt something was missing…)

thanks, ben! ;)

 
Comment by Skip
2008-11-07 16:35:53

‘The interior and waterfront lots have gorgeous views. You can see Texas from most of the lots.

I am delighted to know that a view of Texas is considered gorgeous.

Comment by DennisN
2008-11-07 19:24:36

I’ve retired to Idaho, which truly is gorgeous.

My nephew and his wife live near Dallas. At their wedding in 2006, his in-laws told me “now that you’ve been to Texas, don’t you want to MOVE here?”. It took a lot of tact to say no.

 
Comment by dc_renter
2008-11-08 07:05:22

Oh my gosh, don’t even get me started on the “hill” country.

Comment by MightyMike
2008-11-08 08:04:16

Gee, I visited the hill country a couple of years ago. It was nice. I liked visiting Fredricksburg for a day. It’s a neat town.

But you can find that kind of atititude - “now that you’ve been to Texas, don’t you want to MOVE here?” - everywhere you go. For some reason I don’t understand, people have a need to feel that they live in an area that is better than the rest of the country. It’s bizarre.

 
 
 
Comment by ex-nnvmtgbrkr
2008-11-07 16:38:40

“Economist Edward Leamer, director of the UCLA Anderson Forecast, said he sees not a typical V-shaped fast rebound this time, but a long bottom. ‘The news is all fear, fear fear. I call it the Paulson Panic,’ he said, criticizing the U.S. Treasury Secretary Henry Paulson, President Bush and Federal Reserve Chairman Ben Bernanke for badly frightening consumers with talk of economic collapse.”

Paulson Panic?!! Please tell me he was kidding. Where do they find these guys. Kids, unless you’re a basketball star, I’d rethink the UCLA option.

Comment by Professor Bear
2008-11-07 16:43:53

Amazingly, though he makes his living as an economic forecaster, he does not even seem to realize that the panic started back in August 2007, long before Paulson & Co. publicly acknowledged it.

Comment by sf jack
2008-11-07 17:18:59

Considering how long it took anyone to acknowledge anything (including the likes of Paulson and Leamer), the public has every freaking right to be panicking right now.

And well into the future.

Thanks for nothing, Ed Leamer!

Comment by Neil
2008-11-07 21:05:14

UCLA lost too much credibility when Thornberg left. How dare he warn! (I respect him as if effected his career. As I’ve noted before, I’m in a different field and my bearishness is academic. Although some coworkers are livid that their real estate empires are falling apart…)

And yea… way before 2007.

2009 will be interesting. Stocked up?

Got Popcorn?
Neil

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Comment by Professor Bear
2008-11-07 16:39:27

“Economist Edward Leamer, director of the UCLA Anderson Forecast, said he sees not a typical V-shaped fast rebound this time, but a long bottom. ‘The news is all fear, fear fear. I call it the Paulson Panic,’ he said, criticizing the U.S. Treasury Secretary Henry Paulson, President Bush and Federal Reserve Chairman Ben Bernanke for badly frightening consumers with talk of economic collapse.”

Sounds like sour grapes from someone whose forecast was way off the mark.

 
Comment by WT Economist
2008-11-07 16:58:48

“Looking to offset rising expenses and otherwise cope with dreary economic times, those opening their homes to renters find in the process assistance in paying down a mortgage or keeping plusher lifestyles tenable, even if it means settling for a more cramped, less private existence.”

More demand destruction. I’m reading about it more and more, here and elsewhere, to the point that I’m surprised those Census Bureau vacancy numbers didn’t spike even more. Maybe next year.

 
Comment by Professor Bear
2008-11-07 17:10:33

Who was it who described derivatives as “financial weapons of mass destruction”?

Berkshire Hathaway quarterly net income falls 77%
By Alistair Barr, MarketWatch
Last update: 5:49 p.m. EST Nov. 7, 2008

SAN FRANCISCO (MarketWatch) — Berkshire Hathaway reported a 77% drop in third-quarter net income late Friday as the insurance-focused conglomerate recognized more than $1 billion of unrealized derivative losses and paid hurricane claims.

Net derivative losses reached $1.26 billion in the latest period. These are unrealized losses, reflecting a decline in the fair value of credit default swap and equity index put option contracts Berkshire entered into.

“The contracts were entered into with the expectation that amounts ultimately paid to counterparties for actual credit defaults or declines in equity index values [measured at the expiration date of the contract] will be less than the premiums received,” Berkshire said.

“The contracts generally may not be terminated or fully settled before the expiration dates and therefore the ultimate amount of cash basis gains or losses may not be known for years,” it added.

Comment by combotechie
2008-11-07 17:38:00

Buffett also said derivatives, as is hell, is much easier getting into than out of.

 
 
Comment by palmetto
2008-11-07 18:00:39

“‘For $900,000 you are getting a little, tiny house that would be $200,000 anywhere else in the country,’ she said.”

Amen, sistah! Testify to the people.

Comment by DennisN
2008-11-07 19:27:49

I sold my 1,040 square foot home in San Jose for $670K in May 2006. I’m sure that it wouldn’t have sold for $100K anywhere else in the country.

Comment by palmetto
2008-11-07 20:24:27

Excellent, Dennis. My hat’s off to you! Hopefully you’re sitting pretty right about now.

Comment by DennisN
2008-11-08 02:09:28

Let’s just say upon moving out of state I no longer have to work.

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Comment by palmetto
2008-11-07 18:06:13

“But if a seller thinks it is likely that home prices will rebound in the next year or two,” …..

….we’re talking lobotomy.

Incidentally, I was making the Saturday estate/garage sale rounds over in a relatively affluent retirement community near here. Spoke to at least two people selling stuff who wanted to also sell their house, but won’t because of the market. They can’t get the money they want, or can’t get what they purchased it for. Bummer.

 
Comment by palmetto
2008-11-07 18:16:07

“Springfield’s housing market has remained largely unaffected by market turbulence and could be heading for an upturn once the national market stabilizes, area Realtors say.”

If I hear any more of this horsesh*t, I think my head’s gonna explode. How in the name of Sweet Jeebus do these folks even THINK there will be an upturn any time soon? Are they under a rock that they don’t even hear reports of massive layoffs while no jobs materialize to replace the ones that were lost? They need a serious reality adjustment. Upturn my patootie.

 
Comment by stanleyjohnson
2008-11-07 18:24:53

home prices are coming down, or appear to be coming down big time in 90274. That big hill you see between LAX and Queen Mary in long beach

4703 Ferncreek Dr, Rolling Hills Estates 90274
Status: A MLS#: S08094557 List Price: $1,749,000
List Dt: 06/30/2008 PType:SFR/A Orig. Price: $2,200,000

 
Comment by Azrenter
2008-11-08 06:58:38

Wait this isn’t enough.

 
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