It Keeps Getting Better And Better In California
The Daily Press reports from California. “First-time home buyers jumped into the local real estate market in December, pushing sales of existing homes up by 17 percent for the month and 207 percent compared to a year ago, according to new from the Victor Valley MLS compiled by Larry Trombley, an agent in Hesperia. The typical Victor Valley home sold in December was 1,905 square feet, 15 years old, selling for $140,596. In the past year, area home prices have fallen 39.6 percent and are now comparable to 2002 prices.”
“In December 3,639 homes were for sale in the Victor Valley, with 513 closing escrow. Eighty-seven percent of homes sold in December were foreclosure properties. Because there are so many foreclosures, the rising pace of sales hasn’t slowed declining prices. ‘Bargains and bargain hunters have kept this (Southern California) market alive through some of the bleakest financial news in memory,’ John Walsh, president of DataQuick, said in a recent press release. ‘There’s this renewed sense that you can score a ‘deal’ — something that had been missing for many years.’”
The Press Enterprise. “In a year of plummeting home values, Riverside County Assessor Larry Ward gave residents less time to challenge their property taxes and scant notice of the change. Ward changed the deadline midstream for taxpayers to request a decline-in-value reassessment on their homes. Some homeowners say they only learned of the new due date when their applications were rejected for arriving late.”
“Keven Lee, of Murrieta, said he filed an appeal after Ward’s office rejected his decline-in-value application. He believes his Murrieta home, purchased in 2003, was assessed at almost $90,000 more than its market value. If that’s the case, he overpaid about $1,000 in taxes in the past year, he said.”
“‘I thought that they had made a mistake,’ said Lee, of Murrieta, whose form was rejected in September for arriving late. ‘I went back and looked at the form I had sent them, and thought, ‘How could that be?’”
“Analysts say Inland housing prices have fallen more than 40 percent since their high point in 2006.”
The Recordnet. “Sales of existing homes in San Joaquin County jumped in December - typically a slow month - after a November slowdown as the prices of homes in foreclosure continued to slide. The median sales price fell to $133,000 in Stockton and $165,000 countywide.”
“‘I’m telling the guys at work it’s time to buy,’ said Tom Poust, a Stockton trucker who bought a foreclosure house at auction last year and will soon start looking for another to buy. ‘It’s cheaper to buy than to rent. It’s a terrific time to buy, and it keeps getting better and better.’”
“Foreclosures continue to dominate the existing home market, accounting for 84 percent of all December sales. That has meant steady declines in median sales prices as foreclosure asset managers continue to cut prices to try to get properties off their books. In Stockton, that has meant a 47 percent drop in prices in 12 months alone, from $250,000 in December 2007 to $133,000 last month, according to figures from the Grupe Real Estate-TrendGraphix monthly sales report, based on MLS data.”
“TrendGraphix figures date from January 2002, at the start of the last housing boom. The median sales price for Stockton that month stood at $155,000.”
“‘Median sales prices may go lower, but they can’t go much lower,’ said Mike Collins of Collins Realty in Stockton. ‘Some people pay that much for a high-end luxury car.’”
The Automotive News. “It’s a grim business being a car dealer in California these days. Metro Honda, in suburban Los Angeles, was going along fine until autumn, says General Manager John Jomehri. Sales were up 17 percent through August. Then the bottom fell out.”
“As real estate values in the state shot up this decade, owners used home equity loans to buy vehicles. ‘They were using the appreciation from home equity and walking into dealerships and saying, ‘I’m paying cash for this car,’ says Pete DeLongchamps, VP of Group 1 Automotive Inc.”
The Sacramento Business Journal. “It was a lousy Christmas for homebuilders. They sold 705 homes, about one home a month per project in the six-county region during the past three months, a record-low since The Gregory Group began tracking new-home sales in 1999.”
“The Gregory Group founder Greg Paquin noted that personal savings rates are up and that consumers aren’t buying cars or dining out as much. ‘If people aren’t buying cars, they’re not going out to eat … they’re probably not thinking about buying a new home,’ he said.”
“Paquin admitted he hasn’t been able to accurately call the bottom of the housing market, as housing sales appeared to bottom out at various points during the past two years. ‘I was joking with some people this morning that it was probably the lowest since there’s been a capital in Sacramento,’ he said of the fourth-quarter figures. ‘That’s probably not true, but the reality is no one’s buying.’”
The Record Searchlight. “A developer is going after Asset Real Estate and Investment Co. (AREI) in court for more than $3 million in unpaid rent, utilities and other costs at the firm’s former Hemsted Drive headquarters. The now-shuttered Redding-based real estate holding company sits at the heart of an alleged $250 million Ponzi scheme that allegedly has bilked thousands of senior investors out of their life savings.”
“Santa Rosa-based financial adviser Gary T. Armitage and his partner Jeff Guidi had persuaded many investors to sink their life savings into properties and corporate notes offered by AREI, promising annual returns of 8 percent or more. The firm reportedly had been losing $18 million a year while still taking on new investors.”
The Statesman Journal. “An investment vehicle that grew wildly popular in the mid-2000s helped fuel the rapid growth of Salem-based Sunwest Management Inc. But that same investment structure is now causing grief for the hundreds of people who bought interests in Sunwest’s senior living properties.”
“Payments to investors, including many in the Salem area, have been suspended because a number of Sunwest-managed properties can’t pay their bills. Foreclosures on some Sunwest properties by lenders have put the investments at risk.”
“Real estate attorneys also warn that the foreclosures will unwind the tax benefits of the so-called ‘tenant-in-common’ investments, also known as TICs. Tony Elshout, who has three Sunwest tenant-in-common investments, isn’t optimistic about a good outcome for investors. ‘I see this whole thing just blowing up,’ said Elshout, 69, a California resident and a self-employed businessman who also manages his own real estate holdings.”
“Elshout is angry and lashed out at Sunwest’s principals. ‘What they are trying to do is save their own butt. They could care less about the TIC owners,’ he said.”
From Reuters. “No. 2 U.S. homebuilder Lennar Corp again denied on Monday treating its joint ventures like a ‘Ponzi scheme’ and tried to counter the allegation by providing fresh data on those ventures. The statement came in response to accusations made last week by Barry Minkow, who had served time in prison for stock fraud but now investigates fraud. Minkow also had accused Lennar of improperly giving its chief operating officer, Jon Jaffe, a mortgage and of profiting from the now bankrupt ‘LandSource’ venture while the California Public Retirement Fund (CalPERS) lost about $1 billion.”
“In its statement, Lennar denied that it gave Jaffe a mortgage and acknowledged that Jaffe did use a line of credit secured by a mortgage to buy Lennar stock.”
“Morningstar analyst Eric Landry…deemed Minkow’s report ‘flimsy,’ and said it did not cause him to worry that he had missed signs of outright fraud on Lennar’s part; but he does think Lennar has used the joint venture structure too much for its own good.”
“‘Investors will tolerate the opaque nature of the joint venture structure when land prices are going up,’ Landry said. ‘But when land prices are going down, the company loses the benefit of the doubt.’”
The San Francisco Chronicle. “For five years, San Francisco attorney Tilden Moschetti practiced family law, but in November, he shifted his legal attention to reflect the demand in the market: personal bankruptcy filings. ‘It’s a good market to get into,’ said Moschetti. ‘Considering where things are right now.’”
“Bankruptcy attorneys, nearly put out of business by a 2005 law that made it more difficult for consumers to file, are dedicating more hours to hand holding devastated clients, compared with previous recessions.”
“‘It used to be that we’d get someone into bankruptcy so they could save their house,’ said Patrick McMahon, a San Francisco attorney for 25 years, who added that the foreclosure crisis has dashed most clients’ hopes of salvaging their home. ‘But now, I spend a lot of my time trying to convince people to let their houses go - that it’s not worth what they owe on it. They say, ‘But we’ve got a bond with our house,’ and I have to say, ‘So what. Just let … the house … go.’”
‘The now-shuttered Redding-based real estate holding company sits at the heart of an alleged $250 million Ponzi scheme…Elshout is angry and lashed out at Sunwest’s principals. ‘What they are trying to do is save their own butt. They could care less about the TIC owners,’ he said…’Investors will tolerate the opaque nature of the joint venture structure when land prices are going up,’ Landry said. ‘But when land prices are going down, the company loses the benefit of the doubt.’
It’s interesting how these ‘investors’ cry ponzi, etc, now. But the housing bubble itself could be seen as a big ponzi scheme, but with out central planning. Notice how two RE bubbles in the past collapsed amid howls of fraud; Florida in the 20’s and the South Seas bubble.
I’ll mention again to key an eye on markets like Stockton foreclosures and Sacramento’s new houses. These early birds have shown how the later markets will behave, IMO.
But the housing bubble itself could be seen as a big ponzi scheme, but with out central planning.
Sorry, Ben, I love you like a brother, but I have to part company with you on this point.
In 1997 (Clinton), we got a change in tax laws expanding the MID and 1031 Exchange to flippers, as well as the implementation of “any two will do” rule (for occupancy of investment properties). In 1999, we saw the final repeal of Glass-Steagal regulations. Congress & President also insisted that GSEs expand their share of market to “help” lower income HHs become “owners”.
Under Bush II, we saw Alan Greenspan cutting the FF rate to 1% & pimping option-ARMs. Plus, Bush’s “Ownership Society” and his laissez-faire hostility towards regulation –or ethics. All this, combined with burned speculators’ desire to recoup their Dot.com losses, led to mass marketing of option-ARMs, NINJAs, jumbo Alt-As, etc.
Central Planning may not have created 100% of the Great Housing Bubble, but the bubble undoubtedly would have been much smaller and popped much sooner without all the massive moral hazard, taxpayer underwriting and explicit encouragement by our Fearless Leaders.
What I mean is that Ponzi planned to con everybody all along. He set up the deal and ran it, knowing it would eventually collapse every step of the way.
I doubt there ever was a meeting at the Fed or in congress where it was agreed to promote a historic run up in housing prices, knowing it would eventually crash. I really do think Greenspan believed his own myths about the housing market, and almost everybody at the Fed fell in too. He simply made one of the biggest set blunders in economic history, IMO.
Now Wall Street, congress and the White House; those guys are almost all crooks, so I was calling for tar and feathers before there ever was a housing bubble.
“taxpayer underwriting” LOL!
Gee HARM, even in the middle of an alcoholic blackout ( I’m pretty sure I would have recalled something… that significant? ) Evidently not.
Like Ben I too doubt there was a specific memo circulated that stated:
“Meeting 10:00AM How to Inflate U.S and Global Housing to Ridiculous and clearly Unsustainable levels” Don’t be late!
But when two teenage boys find dad’s stash of Penthouses ( is there anything that really needs to be said? )
“Meeting 10:00AM How to Inflate U.S and Global Housing to Ridiculous and clearly Unsustainable levels” Don’t be late!
How about: “Housing Bubble Determined to Strike in U.S.?”
Point taken, Ben.
Hubris, myopia and greed at all levels of public and private sector were no doubt as big a factor as policy. It’s just that I often see regulars here (and elsewhere) pooh-poohing government policy as though it were *always* inconsequential. I believe it’s more complex than that. Sometimes, government policy isn’t a significant factor, and sometimes it is. I believe the various policies I mentioned all contributed to the Great Housing Bubble in a BIG way.
Remember: whatever you subsidize, you get more of, and whatever you tax, you get less of. Personally, I see no need for preferential tax treatment of flippers, money-renters or mortgage lenders. If you lose in a casino, you lose –period. If you lose in the housing casino, of course, you’re a “victim” deserving of special taxpayer assistance. unfortunately, I see no evidence that this prevailing attitude is changing among the general public –yet.
…the Great Housing Bubble…
I’m sure it’s been put down in words before, but I just saw it now:
GHB
Awesome.
If it was US policy that drove our housing bubble, then please account for the numerous bubbles throughout the world (including europe, asia, middle east). I don’t disagree that our policies encouraged certain foolish practices, but there was something much more visceral going on.
Almost like saying that Dutch policies were responsible for the tulip bubble. Yea they didn’t prevent it, but there had to be a strain of popular delusion that fueled it. Almost akin to mass hysteria that real estate was the only sound investment. (Maybe this stemmed from the .com bubble that destroyed the belief that stocks were a sound investment?)
I’m not sure about this one, but I think their banks were buying MBS from us, and that somehow set off this chain reaction of silly lending. Did they copy us? I’m not sure. I hope someone else knows, otherwise I will have to do some online searching to find out.
LaLawyer,
Well I’m not exactly sure how much “policy” was in place in the 1600’s but… I’ll give you my take, and remember, while there ‘is’ a certain amount of overlap with our international co-conspirators it’s hardly an identical timeline.
If you’ll recall -much- of the Realtwhore pitch throughout the bubble was that “Deep Pocketed Overseas Infestors” are “snapping up” properties in West Palm Beach, Manhattan and other “World Class Cities” like San Francisco and Ypsilanti, MI. ( Hey, whatever works right? )
So these infestors in turn share with their fellow countrymen back home what a killing they’re going to make off of those dumb Americans giving their land away! And so on and on it goes. Britons buying the hell out of Spain ( for a mere pittance ) etc.
So while it ultimately unraveled into the mess we now witness on a daily basis, it -still- started with our… unbelievably generous tax code. Remember, ALL manias start with a legitimate bull market.
I call it THE GREAT CREDIT BUBBLE.
“I’m not sure about this one, but I think their banks were buying MBS from us, and that somehow set off this chain reaction of silly lending.”
The Yen carry trade didn’t help
“Never ascribe to malice that which is adequately explained by incompetence.” Napoleon Bonaparte
I side with you Ben. Without proof positive that there was some organized effort do set up this Ponzi scheme I must ascribe it to incompetence. And as far as the street, the house and congress - crooks, all of em.
But there is one more element to account for and that is our acceptance of less than the acceptable. I believe that there has been a downward trend in the delivery of promises in terms of the quality of goods and services AND government representation. That degradation has been allowed to continue by a collective act of omission, our failure to object and/or reject shoddy workmanship, poor quality products, any absence of meaningful representation, etc. By continuing to pay for goods, services and government that no longer has value equal to the price requested, we are in effect approving of the substandard, the crooked and robbery we are being asked to participate in. This was one of the central themes in Atlas Shrugged and these days it sure seems like we are living that story. Is the only path out of this mess the one Ayn Rand put forth in Atlas Shrugged? Do we who consider ourselves creators need to step out of the game and allow it to implode upon itself? Or is there another option?
I for one am sick and tired of seeking advice and getting lies, expecting quality and receiving crap, being forced to pay for government that appears to be focused on self enrichment at the risk of destruction of the American way of life.
I no longer take my vehicles for repair, I do it myself. I minimize my taxes, consumption and everything else that is a financial outflow from me to any organized entity. I have completely lost my trust in business, service providers, and government.
I’m thinking that Ben is right about this. It was a mania. Any and all attempts to stop the mania were crushed or brushed aside by people from the left or right.
Central planning set up some of the needed conditions but people hopped on the mania bus to crazy town.
The Fed funds rate had been low before and option mortgages had been available before. But in all those financial companies the people that cried caution were ridden out. Schiff, Shiller, Ivy Zellman, Dr Doom all had to eat a lot of manure while this was building.
Hopefully, we put some curbs on abusive lending back in place to protect depositors and joesixpacks from things that are larger than themselves.
I was mad about FRE/FAN/FHA getting dragged into this. I thought they were useful programs and would have liked for them to survive. Alas, like everything else they got dragged down as well.
I’m trying not to get as extreeme as some on this board. I think we can unwind a lot of the derivatives mess, deleverage and get back to a more sustainable level. Probably means 10-20% downpayments and prices at 4x income. That ratio worked well for about 60 years. I think having some ability to have mortgages is important. Have to realize economic effort that goes into building a house is pretty large and probably should take 15 years to pay off. The guys that think cash only and no leverage. Well, it makes larger construction very unlikely and we have seen that system back in the middle ages. It wasn’t a good time.
Also like to see some moderation from the otherside where we keep throwing money at everything. Particularly healthcare and medical education. The situation is another bubble.
So, figure another couple of years and restricted lending till everything gets sorted out. There should be a sizable dip where prices undershoot. There will be some inflation but hopefully the PTB don’t panic and keep in mind the scale of the problems. Will take a while for some industries to reform.
Also expect that the BB retirements will get delayed a bit and the amount they collect on SS will be either inflation adjusted down or deflation adjusted so that its pretty miserable to try and live on the government dime. You have to figure that living on social security will be exactally like living on welfare. Look at the situation of people on welfare now, and that is what you will get if you depend on SS for your retirement. There can be no other result.
Also people planning on the widespread panic and waiting for the currency collapse. The only plans that make much sense are having some physical gold. Of course you also need guns, land for food growing, a bunker and water supply. There really isn’t anything certain if there is a collapse to you have to go on the survivalist route.
You can imagine the guys holding your gold ETF will honor their promises to show up with your bullion; but I’m going to guess that enforcement of those contracts will probably prove impossible. So, physical gold is really your only option and only useful if you don’t get pinned in someplace like California where you will be forced to trade gold for water. Good luck with that.
I’m planning on looking at some golden buying opporituities and if there is a collapse… I’ll deal with that in the unlikely event that it happens. My horizon for buying is over several years.
Should also note that in the spending category, treasury rates are in the flusher so Obama and company will have amazingly large amounts of money at their disposal. So, claims of the stimulus bankrupting us are without standing.
To ramble on futher. There are a bunch of different confusing viewpoints on here. I feel like people are confusing pricing phenomena with other economic phenomena. Oil pricing, houses, food exc. We had some strain on oil production but a lot of what happened was pricing phenomena. We built more houses than we needed. So the productive capacity is there but pricing phenomena distorted everything. Do we here about people starving or food shortages now that the commodities bubble has popped? No? We are awash in a sea of money phenomena and it may take some time for things to straighten out. Even the oil people have to realize that OPEC decided to try to lower production because they suddenly had a major over supply problem.
So, please enjoy the rest of the ride. I’d assume the opposite end of the housing mania will be the housing panic. Try your best to be in a position to take advantage of the housing panic.
good luck all.
See my 12:55:50 post above.
james,
Then why housing? Why wasn’t there a “mania” anywhere else? Why were we so single-midedly focused on real estate and why were most homes sold within 2 years of purchase?
Oh and btw, Fannie and Freddie if “dragged” into it, certainly were willing accomplices.
Housing proceded to become a mania.
Why?
Not really sure. Remember this happened in the 80s bubble and the 90s bubble.
It appealed to basic emotions. Greed. Sloth.
Easy money was being made.
And it exponentially snowballed.
Once it got going… you get the hell out of the way. We’ve been in this for a while. Remember how the trolls used to roast us. It must have been a lot worse for the people in the public eye, in the financial industry, to say anything against this.
Its never really clear why this happened. So many things enabled it. Remember that securitization was going on and the Fed doesn’t have that much to do with it. Also note plenty of the money bloggers will note the Fed lost control of rates in the middle of this. Leverage was so high already such that the central bank had little influence while prices were skyrocketing and the debt markets were bubbling.
Remember if the Fed sets rates very high then banks can raise money from debt markets to keep lending as well. The Fed isn’t all powerful in this either.
When a lot of us propose getting rid of the Fed, its to try to keep the mania from growing this large. Banks have to compete for money but doesn’t ensure that you will not have a substantial bubble. Makes it less likely, but they occured many times with out a central bank.
“Then why housing? Why wasn’t there a “mania” anywhere else? ”
Why tulips?
Why pet products sold online?
Why housing?
Because that’s where the “financial engineering” was. It could have happened elsewhere, but it didn’t. Chaos theory, simple.
Nasdaq, Dow, housing, cars, tuition, entertainment…eventually food, oil and most other commodities. Easy credit chasing the next bubble.
It HAD to be housing because that opened up the borrowing of large sums of money to literally eveyone. Not everybody could get a huge amount of margin (for no money down) with which to trade stocks. Or borrow hundreds of thousands of dollars to invest in rare paintings. Home-ownership in the name of fulfilling the american dream was the only access to large sums of money. Greedy realtors, mortgage brokers, and prop appraisers did all of the dirty work. The ‘economy’ even prospered with a huge surge in construction jobs. It was just too easy.
Housing in America was just one part of the mania. The bubble was global and involved almost every asset class.
All you had to do to get rich was borrow money in Japan and invest it in Icelandic debt, or buy crude oil futures, or trust Bernie Madoff.
Like fad diets (which are manias too), the financial engineers convinced almost everybody that what used to take years of hard work and self-discipline was really simple. All you had to do was give them your money, and they would take care of the rest.
Because that’s where the “financial engineering” was. It could have happened elsewhere, but it didn’t. Chaos theory, simple.
Back when the GHB really got started (roughly latter 2001), I’d say it was very unlikely for such a massive credit bubble to have formed *anywhere else* except housing.
Why?
What other global asset class in 2001 was large enough to potentially generate that scale of speculative retail borrowing (multiple $Trillions), plus tens of $Trillions in financial derivatives levered on top of that?
What other asset class was broadly owned by the public and also routinely securitized and traded by global financial markets?
What other asset class provided unique (one might even say “privileged”) tax status under U.S. law?
Not gold, not oil, not even Dutch tulips.
The only thing that even came close to housing’s scale at the time were the stock & bond markets –and they had just taken a serious beating from the Dot.com implosion.
Hence… the Great Housing Bubble.
Financial engineering = free loans
Anyone could get a 100% loan (or even cashback at closing). It was a lotto ticket with a win-win result:
You either sold at a profit and won, or walked away and lost nothing more than your credit score for a couple of years of free rent at a lifestyle better than you could really afford.
Here’s my theory. The investment houses that created the collateralized debt obligations (cdos) out of the mortgages available did not have enough supply to feed demand for mortgage - based securities (mbs’s) and they instituted various incentives to get more mortgages initiated. What those initiatives were, I don’t know - this is the still-uncovered fraud that is lurking below this mess.
The capital gains changes and the repeal of Glass-Steagall were key, but without the sales of mbs’s this bubble could not have expanded to the level it did.
“Elshout is angry and lashed out at Sunwest’s principals. ‘What they are trying to do is save their own butt. They could care less about the TIC owners,’ he said.”
Um, you expected something different?
The now-shuttered Redding-based real estate holding company sits at the heart of an alleged $250 million Ponzi scheme…
Ponzi Scheme.
Isn’t that like a Madoff Scheme?
“‘Investors will tolerate the opaque nature of the joint venture structure when land prices are going up,’ Landry said. ‘But when land prices are going down, the company loses the benefit of the doubt.’”
I don’t normally speak general Investorese, and am even less familiar with the Lennar subdialect, but lemme see if I can translate:
‘We don’t care if there’s cheating going on, long as we’re getting money out of it. Unless, of course, if it turns out to be US who’s getting cheated, then, hooo-boy, will be ever be sooper-dooper pis*sy!’
Is that it? Did I get it right?
Yepper.
Oh yeah, how this this ponzi scheme any different from the Maddof scheme ?
Madoff didn’t have any squirrels to feed?
Madoff didn’t have to bake any cookies?
“‘I’m telling the guys at work it’s time to buy,’ said Tom Poust, a Stockton trucker
Far from over.
Yes. From that article:
“who bought a foreclosure house at auction last year and will soon start looking for another to buy.”
And this one as well:
“There’s this renewed sense that you can score a ‘deal’ — something that had been missing for many years.”
Now, I’m all for scoring deals, but in these cases it’s obvious they are still buying on speculation that appreciation is right around the corner.
“…appreciation is right around the corner.”
They’re focusing on the depth (of prices) and not the duration (of this event).
Everyone here could probably agree that we’ve yet to see the grand “flush out” that finally puts an end to this speculation. It will, however, take lots more time.
Nothing like faith-based investing, is there? (”Appreciation is just around the corner — you’ve gotta believe!”)
Somehow he ignores that easy credit is gone and we are in a depression…. not a chance we have appreciation for several years.
Keep whistling past that graveyard, John the trucker.
I am all for these people “scoring a deal”, but are they going to be able to “score a job” that will support their 150K purchase of homes that will be worth 75k in a few months.
I wish these idiot speculators would leave the housing market alone. I want to buy a house to live in but the area I’m interested in only recently started making significant drops. The more speculators that jump back in, the longer the housing market takes to reset. I don’t particulary care if the prices stay stagnant for years to come but I don’t want to buy in a market that looks like it has a long way to drop still before it nears the bottom.
I read on Bloomberg.com last week that speculators are already creating a “shahow secondary inventory” of homes that’s going to start hitting the market as soon as prices even hint at rising. Of course this will only make any sort of recovery take even longer to happen.
Todd,
These “speculators” are doing everyone a favor. Look at the Stockton article. 87% of purchases were foreclosures. They are actually acting to reduce the median price by making sure that the large majority of purchases are at distressed pricing.
Just kick back and watch it get interesting.
I guess I was looking at it the wrong way then. I was thinking that the more houses that sell, the greater the demand, and the slower the prices drop. Perhaps I was too stuck on what I learned in my basic economics classes many years ago.
You are also right, Todd.
It is frustrating, as we are in the same boat. Every time something looks like it might be reasonably priced, about half the time, a flipper/speculator buys it.
Since housing is a basic need, I’d like to see speculative purchases/sales have very high taxes imposed to keep these idiots out of the market.
Our problem is the same— I think you’re also in the Sacramento area, Todd. Every time we go out to look at a house it goes pending two days later.
At this point, I don’t even care if the market dips after we buy, I just want the chance to actually, you know, look at a place, not schedule with our realtor to look at five houses and only get to look at two (as happened last weekend.)
One of those went pending today. The other has been on the market for over 100 days, with reason.
(For HBB people wondering, we could get close to 2000 square feet for a PITI less than our rent for our 1100 square ft apartment. And the boy really does look as though he’s going to learn to walk ASAP *shudder*.)
Idiot speculators? The timing is everything.
I am looking for a hedge against inflation, so today, what would be the best investment? I am planning to purchase a house in Sacramento this year to hedge against inflation. And I am speculating that Sacramento’s house market won’t totally crash before runaway inflation occurs. I am looking at a house that is down 60%. 2005 price $600K, 2009 price $250K. I was talking with the lady who was going to lose her house and had her entire wealth disappear with this market.
Interesting. I can see where you’re going w/ this and I don’t at all necessarily disagree? There seems to be a consensus here that runaway inflation ‘will’ at sometime very soon exist.
Always hard to time the market but usually pretty easy to “time the fundamentals”. At a 60% discount to peak, I don’t know how wrong you could go? Especially w/ a fixed rate mortgage.
250K for Sacramento? Does it have a sizable lot with beautiful views and a stream running through it that alternates between milk and honey flowing downstream? Good luck to you as long as you can afford it.
Bingo friar john. 250,000 for house in Sacramento. If the house is on the American River, maybe just maybe it’s worth it.
In California we have this wonderful Prop. 13.
When inflation hits 20% and the California house costs increase 5% per year, Prop 13 limits the property tax increase to only 2% / year. In real money the property tax decreases every year when you account for inflation.
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Friar John, your message says? (1) Sacramento is a stinkhole? (2) Sacramento has a long ways to fall?
The last time I lived in Sacramento was 20 years ago, and I now live in the Bay Area. I would be greatful for any information about Sacramento, the comparable price between Cupertino and Sacramento is 4 to 1. I can buy 4 Sacramento houses for the price of 1 Cupertino house, so of course they look like great bargins to me. I would never by another Cupertino house, Cupertino still has a long way to fall.
250k for shelter is outlandish. It makes no nevermind if it was 650k in 2005 or 250k 30 years ago. It’s time reframe our minds on reality and understand housing cost ought to be priced on the value of shelter and not implied ROI.
I’ll stand by my statement of last year that there isn’t a house on the planet worth 375k…. or even 250k in this case.
Pos, I grew up in Sacramento and currently live in Elk Grove. I would say that $250K is overpriced for most areas of Sacramento, with a few exceptions:
—Parts of Fair Oaks, particularly near the river
—Granite Bay houses that actually are big & beautiful, not McMansionite wannabe Granite Bay
—Parts of downtown, like the Fab Forties
—Anything with sizeable lots, meaning acre+
My parent’s house is on a .25 acre lot, in a well-established neighborhood. It’s about 2100 square feet, part of which is sub-code but allowed because the inspector didn’t note it when they bought (??? how could you miss seven foot ceilings???) I would say that their house isn’t worth $250K even though the house next door sold for close to $190K about a year ago, and it’s only 1300 square feet. In fact, I think the only house in the neighborhood worth $250K or better is the original farmhouse anchoring the blocks. It’s got an acre parcel and is probably 3000 square feet or better.
So it might be worth $250K but you’ll have to see the house itself to know.
These behaviors are practically clinical, like a fever. If anything they show how much wealth there is in California. Not too many middle class people here in Florida have anything in reserve for round two, but in Stockton we have truckers falling over themselves to “invest.”
Again I fear that I am perceived as the financial backstop for persons like Mr. Poust, true patriot.
Yeah…..when I need investment advise, I make a bee-line straight down to the local “Flying J”…… a veritable brain trust….
Flying-J filed for bankruptcy last month, so you will soon have one less source for investment advice…
Flying-J filed for bankruptcy last month…
You can try the Triple-T
I hear Joe the Plumber is open to giving out advice these days.
GSFixer,
LOL! We have a local trucker/distribution guy featured in the Oregonian that sold his home in Oregon City and bought another in Mt. Angel in the very fix AZtoOR describes above.
I noted on the local PDX blog that you can’t tell ‘that’ crowd a DAMN thing! Oh and now his stock portfolio is obviously taking a butt pounding as well. ( He’s now driving a school bus part time at age 66 ) Well played.
Ouch. Drivers over 60 have accident rates higher than any demo but drivers over 70 and 16 yo males.
I know prof. drivers (especially long-time) have much lower accident rates than the general public, but still, at that age physical problems begin to set it (stiff neck and diminished vision) that destroy your ability to operate a motor vehicle.
I think if you want to live in Stockton, are renting, and need a home to live in long term, it may well be a good time to buy. This area is/has taken a beating and Stockton is closer to bottom than top these days. There are nice Stockton houses going for 130K. If the home drops another 40K hitting the final bottom, so what? 40K over a 30 year fixed rate loan @5%, plus the savings on rent, it really becomes sort of silly waiting at those prices if you need a home and see something you like. Those who plan to flip, or move in next five years - then that’s another story.
‘But now, I spend a lot of my time trying to convince people to let their houses go - that it’s not worth what they owe on it. They say, ‘But we’ve got a bond with our house,’ and I have to say, ‘So what. Just let … the house … go.’”
I know of a couple undergoing a nasty divorce who are both fighting over a house neither can afford by themselves and is underwater as well. No one seems to be able to get through to them that they’ve already lost the house.
Bye Bye California dream
LOS ANGELES – Mike Reilly spent his lifetime chasing the California dream. This year he’s going to look for it in Colorado.
With a house purchase near Denver in the works, the 38-year-old engineering contractor plans to move his family 1,200 miles away from his home state’s lemon groves, sunshine and beaches. For him, years of rising taxes, dead-end schools, unchecked illegal immigration and clogged traffic have robbed the Golden State of its allure.
Is there something left of the California dream?
“If you are a Hollywood actor,” Reilly says, “but not for us.”
Why are so many looking for an exit?
Among other things: California’s unemployment rate hit 8.4 percent in November, the third-highest in the nation, and it is expected to get worse. A record 236,000 foreclosures are projected for 2008, more than the prior nine years combined, according to research firm MDA DataQuick. Personal income was about flat last year.
With state government facing a $41.6 billion budget hole over 18 months, residents are bracing for higher taxes, cuts in education and postponed tax rebates. A multibillion-dollar plan to remake downtown Los Angeles has stalled, and office vacancy rates there and in San Diego and San Jose surpass the 10.2 percent national average.
http://news.yahoo.com/s/ap/20090112/ap_on_re_us/fleeing_california
There will be hundreds of thousands of “Mike Reillys” coming to the same conclusion in the years to come.
I already know a “Mike Reilly’.
As a freelance contractor in the games industry, there was no real reason to keep up the house in Studio City. He moved lock stock and barrel last year out to a small town near Boulder, CO.
From emails with his wife it seems it was a blessed move for them.
They bought a place - with the proceeds from the LA house - with far more yard, for less money and much less urban hassle.
If the husband ever decides to go down the contracting route - we’d be out of L.A in a heartbeat.
No problem! As California tried to do in the past, just pass and “Exit Tax” sort of like an economic “Berlin Wall”. That should stop them…No?
Why doesn’t he just rent when he moves to CO? What is it with these people and always having to buy a gddmn house?
I’m seeing purchasing as cheaper than rent in many locations.
So, while appreciation may be dead for a long long while purchasing a house may not be a bad deal in some locations.
Of couse, in LA, the prices are still way too high for incomes.
When I look at searches on zipreality, the forclosures that get priced in the right range are moving and selling. Will drag on for a long while yet but its cracking in Redondo, Torrance and Manhatten Beach and Hermosa are not far behind.
Still the seige continues. A lot of starvation has happened (filppers knocked out of the market) and disease from the rotting corpses (comps setting the prices in stone putting many under water) to weaken the resistance. Hopefully we can make a good purchase in the panic that follows.
Rent is a moving target in a Depression, albiet as lethargic mover. Buying in a falling market is dangerous, even if the rent/buy ratio looks good. This week I read for the first time that rents in Phoenix are starting to fall. It has been a while since the house buy price started falling.
BTW, is a 30 year jail sentence ever a “good deal”?
So, I’m wondering, could I get some help here on my rent to own calculation?
It would cost me around $250K to get a house similar to the one I rent in the REO market.
My rent is $0.00/month.
What is my rent to own ratio?
Sounds to me like ‘The Dude Abides’
I think the places where renting is cheaper are all really far out of the way, or are seriously blighted. My only worry for these areas is that rent will be dropping this year as well.
I don’t think it’s a completely awful idea to buy something in Stockton, Modesto, Los Banos, or some of the outlying Sacramento areas right now, but only if you can do so without having to worry too much about losing your job.
you mean Buying is cheaper out in remote areas ?
I used to live in Sacramento maybe I will check it out again ? Haven’t been there since 1993.
Oops. Yes, I meant “buying is cheaper”.
“lemon groves, sunshine and beaches”
Yeah… I can kind of sign off on that but hard to attribute those quality of life issues when you’re A) working a 60 hour week to pay for that “dream” and B) stuck in traffic an add’l 15-20 hours a week.
Maybe CA hippies had it right all along?
I’ve read stories like this on and off for the last decade. They appear as headlines on Drudge or Yahoo like it’s a big deal. And I always cheer, hoping that other people get the idea and move the hell out. As I’ve said for years, California’s biggest problem is too many people.
However, one of the things they forget to mention, or like in this story, way down the page, is that most population growth in Calif. happens at the hospital. That is, more than half a million children are born every year in Calif. So, if a hundred some odd thousand people leave Calif every year, the population still grows 1+% per year.
California’s population is currently over 38 million. If we continue growing at the current rate, by the year 2030, there will be 50 million people living in California. If you think traffic is bad now, woo boy, wait for another 20 years! And one more thing to keep in mind when bad-mouthing RE - all those people are going to have to live someplace!
“And one more thing to keep in mind when bad-mouthing RE - all those people are going to have to live someplace!”
Deja vu.
“bad mouthing”
hmmm … sounds like a troll.
Overall, as a country our death rate is pretty darn close to our birth rate. As a nation our population growth hinges on importing people. Like everything else we expect someone else to do the dirty work, like having babies.
Hence, I though 500K are born every year, I’d expect a similar number die every year. Given the higher concentrations of old people here, thanks to prop13, that our death rate exceeds our birth rate.
Economics is also driving people from the state. Generally people with that kind of mobility are the kind of people you don’t want to lose. Hence the subject in this case was an engineer.
Anyhow, we had all sorts of a population boom causing the problem in housing prices. Rich Tocasano did a nice job killing that myth for San Diego. We could probably pull up similar data for all of LA.
Things I’d like to see from Obama in the old social engineering department would be to create a concentration policy in housing. So, in part to protect the enviroment and lower energy dependance. You try to do some work and make incentives to live in cities. We make peoples commutes smaller and then it lowers traffic congestion, so you can spend less on roads. It also would reduce the amount spent on fuel and we could reclaim open space. Be a nice shift in LA, if we could pull it off.
Maybe special tax rebates and other incentives for business to go back and become more centralized.
It does make us more vunerable to certain things like nuclear attacks but that is a pretty low probability event.
Social Engineering? You’re kidding right?
So you’re thinking of kind of a reverse Pol Pot. Create an urban utopia instead of an agrarian one. Nice.
Do people really clamor for their lives to be dictated and controlled from afar? Nevermind. Yes they do.
Ladies and gentlemen, freedom has left the building.
I’ve never heard anyone from California concede even the remotest possibility that the state might someday enter a period of sustained population or economic decline, much like Michigan and upstate New York have for some time. All those hypothetical future people, and the real estate appreciation they purportedly will support, are the industry’s fondest pipe dream. Let me guess: “everybody wants to live here.”
Uh…gab…the folks having the babies and the folks leaving are not the same type of folks. The folks leaving to come to places like the Research Triangle Park here in NC pay taxes. The folks having the “free” babies don’t. California is so f$$ked.
My question is what is the income disparity of the people moving out and the people moving in? From what I see living here in Long Beach the new arrivals don’t have a pot to pi$$ in. I myself am one of those people looking to get out- I’ve lived here 44 years and am just waiting for the right job to open up at the home office in GA and I am gone. My problem is I remember how nice it was here growing up- its becoming a Third World cesspool very quickly. Yeah the weather is nice, but you can’t breathe the air……..
I left almost two years ago. Upside: Our gross income dropped from $120,000/yr to $105,000/yr. My commute is now 12 minutes instead of a half hour. When I go downtown I am not harrassed every fifteen feet by some panhandling bum. My current mortgage is about half of what I paid in rent.
Downside: I don’t get to go on beach walks anymore though. I only had the time to take those once a month so big loss I figure. Wow, I forgot how many hillwilliams lived in these parts! Where the hell did all your teefers go?
I really thought California was going to be the place where I lived for the rest of my life. I miss it sometimes. The natural beauty and my friends. I do not miss the crazies, the politics, the traffic, and the hostility of the general public. California is a state for angry people now.
Just hold your hats if the Govt. changes the BK laws so judges will be able to modify RE loans!
how will that help ? Does the judge have power to reduce the principle ?
Right now, in Cal. District you can strip off a second Mtg. IF it is totally unsecured. However, there are 2 bills winding through the House & Senate to allow BK judges to write down principle & interest on mortgages. It will be very interesting to see what comes out of this legislation. Imagine what will happen to lending if your $500k loan to someone can be slashed to $100k by a judge.
.
“Imagine what will happen to lending if your $500k loan to someone can be slashed to $100k by a judge.”
As someone suggested the other day, hopefully the “new” loan will be recorded and count as a comp.
“Imagine what will happen to lending if your $500k loan to someone can be slashed to $100k by a judge”.
Yep, That’s what I’ve saying for a while. Not only will lending become a real cluster f—, I would think lenders would immediately raise mgt. lending rates way up. What other way would they respond, can’t stop lending all together. Bottom line, let the gubmint get involved and you have one hellava mess, and it will be. The housing market is toast.
“We are the government, and we’re here to help.” LOL!
80% downpayments?
“Imagine what will happen to lending if your $500k loan to someone can be slashed to $100k by a judge”.
The government will lend to those who work for it and are loyal everyone else will have to live under a bridge.
…or pay cash for a house?
…Imagine what will happen to lending if your $500k loan to someone can be slashed to $100k by a judge….
Certainly a epic increase in interest rates by lenders
to compensate for added risk.
Higher interest rates will also accelerate the downward
pressure on prices, since fewer households will be
able to finance.
If this sceaniro comes to pass, higher end real estate
(>> $1mm) will be affected especially hard.
So ironically, by “helping” the lower end market,
prices will see the biggest declines at the higher end.
I follow the high end market in South Orange County (Ca).
Will some declines of 10-15% have occured, overall
prices have remained stubbornly high to date.
This may be kicker that breaks the leg on that stool!
No offense guys but I’ve been hearing that idle threat for awhile now. NOT… that it wouldn’t make perfect sense in a normal world, but we’re not ‘there’ are we?
It looks to me like they’re planning to make federal loan programs the only game in town.. whether intentionally or unintentionally.
Other types of debt to the Federal government are exempt from discharge in BK, such as back taxes and student loans. Hey the BK judge is a Federal judge afterall, everyone else to the back of the line.
Hundreds of years in contract law goes out the window. Lenders will NOT lend you anything without a HUGE price. High interest rate, your next son/daughter, you working at their yard for the life of the Loan.
If this is the case, I can be a bank myself. I have some money left over from my trip to Vegas.
Hundreds of years in contract law goes out the window.
Sheesh. You lost that battle over a century ago. When was the first Bankruptcy statute - 1878?
Plus most states rely on the Uniform Commercial Code (UCC) for most contract law these days, and the state legislatures can freely patch it to suit themselves.
Gee, I think I can get real poor real fast if that happens :-))) A lot of other peole might think the same way…hey, america is a land of victims. Where the hell is my scotch and popcorn.
i think at the least it’d require a (US) constitutional ammendment.. If i read this correctly, there’s something in there about States not having the power to change a legal contract.
United States Constitution, Article I, section 10, clause 1.
“ No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
I think in the past, governors have taken some sort of emergency power and done it anyway. I’m not sure if this is actually legal, or if it’s merely accepted by scared people.
That obligation of contracts thing might also only apply to interstate/foreign affairs, but I guess the whole MBS thing is interstate and foreign, so maybe it does apply here.
I like how we have these little talks, then we discuss how runaway inflation will occur. So, if the goberment decides to allow judges to create deflation, and they probably will, the general goal of affordable housing will occur.
Lots of nifty deflation.
Good luck to bernake inflating his way out of that.
Some what off topic:
Thanks Helicopter Ben and your cronies at the FED, I just had a whopping
14 CENTS in interest income last month on my WAMU account. F U Guys !
HSBCdirect…..I get about 40 bucks a month.
it’s a range from 2.75 to 3.5 over the past six months.
I have an interest-bearing savings account with Bank of America that I use as a backstop for emergency or unexpected expenses; it now pays me just over 1% interest, meaning that some months I probably could find more on the beach using a metal detector for an hour. Countrywide would call me a “ThrillSaver.” Can’t wait to get my 1099-INT.
You have to get aggressive getting returns in this market. Right now I’m getting 2.8% in a MM at Zion’s Bank, and hold 13 month CDs at 5% at WaMu/Chase and at Banner Bank.
But I agree it’s stupid to hold down the Fed Funds rate. All it does is punish savers since mortage rates are more likely releated to LIBOR. Retired folks like me have received a massive pay cut due to the Fed’s meddling.
Hey Government! You want me to spend more? Then make it so I have more money to spend by RAISING interest rates.
Yes, but a decent saver might spend what? 60%, 70% of their income. That’s not good enough to keep the Pirate Stores and Candle Shoppes open. They need people who spend 110%, 120% of their income.
These trees must grow to the sky!
Banks make a lot more money borrowing at 1% and lending at 20%, then they make borrowing at 5% and lending at 10%…. And they need EVERY penny in profit they can get to cover their losses.
For the greater good, you will sacrifice your dollars (which really aren’t yours as you’re just holding them temporarily) to keep the farcical dream of something for nothing alive.
Go East Young Man
http://www.businessweek.com/ap/financialnews/D95LQ9Q00.htm
Time to move to California.
I read the same thing back in the early 1990’s Immigrants will always flow to CA for better or worse, they fear red neck states and free wheeling gun laws.
All of my foriegn born co-workers back in CA wouldn’t live anywere else. I expect the future in CA to be similair to Europe back in the 12th century very rich and very poor with lots of gated communities. Like Monety Python and the holy Grail
CA 2045 after the budget problems and new government
http://www.youtube.com/watch?v=dOOTKA0aGI0&feature=related
From the original post:
“As real estate values in the state shot up this decade, owners used home equity loans to buy vehicles. ‘They were using the appreciation from home equity and walking into dealerships and saying, ‘I’m paying cash for this car,’ says Pete DeLongchamps, VP of Group 1 Automotive Inc.”
Did anyone see something wrong with this picture?
Just “liberating” that equity. Leverage, after all, is the only way to get ahead.
Why take 72 mos. when you can have 360 mos. to pay off a periously depreciating car?
Followed quickly by the statement “It’s just great not having any car payment!”
Again, this is the consumption “cycle of dependency” that B.O ( and rank and file Americans ) will need to break. What? Are we now going so far as to say we can’t have a meaningful recovery for auto sales until home prices re-accelerate? Please tell me THAT ain’t so?
It is so… which is why we won’t have a meanigful recovery of auto (or any other retail) sales. Over the last 15 years, midian househodl income up 20% and CPI up 50%, while per household debt increased 180%, mostly through MEW.
Without the ability to get money out of their house, there will be atleast a 10% drop in retail sales, which will translate into unemployment, feeding back into a more drastic drop in retail sales…. It is a viscious negative feedback loop that can’t be broken without a massive wage increase (not happening) or restoration of peoples’ ability to spend a lot more than they make (not happening).
I think depression is baked in the cake at this point.
As you’ll recall, back in the 80’s the subprime market was nary a fraction of what it is today. Why? Well because our “hoplessly out of date tax code” didn’t encourage “Operation MEW”.
You could write off c/c’s and auto loan interest so why rob your own home? When all that changed it set us on an irreversible path we now can’t seem to get off?
Gut the MID/MEW and get back to basics.
Why take 72 mos when you can walk away from your house?
Skip,
Right, the train wreck scenario is they walk away with a “free” car. How awful could ‘that’ be?
This weekend, hubby and I were mildly interested in renting a SFR, and the broker invited us to crash another showing of the house. It is renting for $2300. So, we look, it’s fine, we go talk to Barbara the realtor to get an application. As she’s handing it over, she says, “and of course, I’ll need to come to your current house. Just to check and see that you will keep this house in good condition”
So, we left, and obviously do not intend to submit an application so that Babs can come on over to our home to see if we are good enough to rent her offering.
Has anyone ever heard of this before? or been subjected to it? I can’t even imagine that anyone would be willing to have this as a condition of renting.
yeah, I’ve hard of it. You can count on her finding a way to make regular “visits” to check the inside of the place you want to rent.
Tell her she has to pay a fee for you to run a background check on her before you let her in.
I like it!
Yes, I agree. LOL! And make sure you have a camera ready to take a picture of the dumbfounded look on her face as she realizes just how idiotic her request is.
Unbeleiveable….
Maybe you could tell her that, if she’s wiling to provide ’special’ attention to your domestic habits, then the Security Depoist on the new place needs to be waived.
After all, if she’s coming to check up on you every once in a while, you won’t be banging any holes in the walls or scuffing up the hardwood, will you?
No need for a deposit then, eh?
Is she doing this for her own voyeuristic pleasure, or has she recieved written instructions from the leasor? If the latter, get her to show them to you.
Then laugh and walk away.
This sounds like the the rental equivalent of ‘feeding the squirrels’ …
EXCELLENT advise!
Babs is not interested in examining the state of your current residence. She is attempting to scope it out to see if its worth her time to find a new tenant (your replacement) and collect a commission from your current landlord.
That, or the SFR you looked at is also for sale, and she can get a larger commission via selling it than by securing a tenant. If she can discourage qualified renters from applying, she’ll have more time to find a buyer.
Or she wants to keep it in showing condition because she really wants to sell it.
That’s so weird and obnoxious I’d consider taking the next step and setting a little trap. Let her visit. She’s sure to reveal her true motive. Then file a complaint. At the least, she lied to you.
Yes. It’s a European thing, and presupposes a long-term committment from both parties. In properties with a HOA for example, the rentor is often liable for any infractions or problems caused by the rentors. You wouldn’t rent your car to someone you didn’t know would you? Or let some yahoo and their twelve sandwich eating relations move into your garage?
If I were to rent out my home, (not bloody likely,) I would certainly want to see the current state of any prospective tenant’s dwelling. First to see if their lifestyle is compatible with my house and environs, second to see the condition of their current living space and furnishings, hence the way they treat their surroundings– how hygienic they might be, whether or not they are likely to damage my property through negligence or thoughtlessness. Third to get an idea as to what they value in their life…books? Kids? Undisclosed pets or damaging hobbies? Not all houses are throw-away crapboxes you see. Some are worthy of respect and appropriate inhabitants.
I don’t think this an unreasonable request. Alternately, the prospective landlord should be willing to allow the renters to spend a specified trial time in the house to see if it is acceptable to them as well. A lot of possible conflicts could be avoided if tenants and rentors are on the same page from the beginning.
I had a bad dream the other night and I blame you guys. It went like this:
I was driving to a near-by destination, but there were so many cars on the road that it was going to take forever to get there. I decided to park my car in a parking lot and walk through a neighborhood to get there, since that would take less time.
The parking lot and neighborhood were dark, even though it was light on the road. I got out and got my flashlight. I looked across the street and saw another parking light, dimly lit in blue light, with a redneck in it standing next to his RV, taking off his shirt and spitting. I was like “he’s no harm”, so I proceeded down the street with my flashlight.
Then I started to get a little worried because the darkness was solid and the flashlight couldn’t penetrate it. The only light I could see was the end of the flashlight glowing, surrounded by complete darkness. So I start to get spooked and turn around. That’s when I hear a rustling sound.
I point my flashlight toward the sound, but can see nothing. Then this guy says “Now you’re gonna get it”. Cheesey, I know. I didn’t come up with this, OK? I think my subconcious is about 7 years old. So anyways, this guy proceeds to tear me limb from limb. I knew I was dreaming, so I started screaming to wake myself up. Mr. Big V woke me up and I was like “whew”. I was sooooooo happy to be awake.
How did the housing bubble blog cause that whole nightmare?? Was the assailant bright orange?
I do the same thing when I have a scary dream.
I yell to wake myself up. My dogs wake up too!
I always find with dreams that its the way they make you feel that’s more important than the actual details. Some ‘good’ dreams actually fill you with dread, and some ’scary’ ones can make you feel emotionally positive.
Though this one sounds as if it scared you - maybe you’re anxious about missing something innocuous (the guy in the car park) that later turns out to be much more serious than you thought?
And, for some reason, whenever I explain a dream verbally to someone, I always find a really bad double-entendre or pun in the description.
My subconcious seems to have a really puerile sense of humour…
I think she is secretly attracted to rednecks in RVs.
The car is a physical shell she is afraid to relinquish.
The flashlight represents a phallic symbol.
The neighborhood you cannot get to represents your frustration with the housing bubble in your current area.
What your subconscious is telling you: Move to north west Arkansas
LOL!! Good one, Skip!
“What your subconscious is telling you: Move to north west Arkansas.”
Wow, no wonder you woke up screaming!
I dreamed I was a tree last night. That’s it. It wasn’t one a’ them fussy detail-laden dreams with burglars and porcupines and Big V’s in it and so on. I was just a tree and I stood there in the forest kind of creaking and groaning in the wind. I have the tree dream quite a bit.
Best. Dream. Ever.
Wait. *thinks a bit *
Okay, SECOND Best. Dream. Ever.
Hahahahaha!
But did you have a bare-foot frog-girl climbing you?
That was my nightmare after some of yesterday’s posts….
I’m worried that Olygal is gunning for me.
I dreampt I was the woodsman, and felled the gentle tree.
Best dream ever would be Bigfoot humping said tree. Nature coming together in a moss filled embrace, assuming of course the tree is a Douglas-fir.
There’s a “got wood” joke in here somewheres. Let me look for it.
There is a chapter in the book, “Stiffed: The Betrayal of the American Male” by Susan Faludi, titled Waiting for Wood. Quite the interesting chapter and well worth a read.
By the way, the Douglas-fir has those nice needles which act like combs for Bigfoot’s coat. Not that I would know anything about that, but I hear things around town.
I was like “he’s no harm”, so I proceeded down the street with my flashlight.
There are two ways to interpret this sentence. Is “harm” a proper or common noun?
“I had a bad dream the other night and I blame you guys.”
I wasn’t anywhere near your house the other night, so don’t look at me!
Your dream is much more nebulous than my pawn shop/chinese food dream, and actually scarier too. I don’t think I’ve ever had a dream where I got ripped apart. Shot, stabbed, run over, fallen, yes; but never ripped apart. (100 points to whoever guesses which of the above have actually happened to me in real life)
I hope quacker mcduckly comforted you in your hour of need.
Don’t even THINK about buying that house, Big V.
There thar be rednecks….
Help - does the increase in sales vol in victorville with 87 % of those sales foreclosures herald a bottom in housing prices ? Why or why not ?
Insufficient info.
Are the houses being bought by speculators that will be returning the houses to the market in the next few years, at what they hope will be huge profit?? If so,then no, this is not the bottom, just a delay of the bottom by still artificially high demand.
IF all the speculators have been squeezed out of the market, and the people buying the houses now plan to hold for 10+ years, either living in the houses or long-term leasing the houses at positive cash-flow with no plans for profiting on appreciation… then maybe.
December California Foreclosure Report
NOTICES OF DEFAULT NEARLY DOUBLE
California State Senate Bill 1137 Fails to Reduce Foreclosures
Discovery Bay, CA, January 13, 2009 - ForeclosureRadar (www.foreclosureradar.com), the only website that tracks every California foreclosure with daily auction updates, today issued its California Foreclosure Report for December 2008 and year-end summary.
Notices of Default have rebounded from the stall caused by California State Senate Bill 1137, which temporarily slowed foreclosures by imposing new requirements on lenders. With 42,421 filings in December, Notices of Default are back to the record levels reached in the second quarter of 2008, nearly doubling the 21,557 Notices of Default recorded in November. Notice of Trustee Sale filings were relatively flat month-over-month, however Notices of Trustee Sale are filed an average 116 days after the Notice of Default so a rebound in the coming months is likely.
the next sentence reads:
Because there are so many foreclosures, the rising pace of sales hasn’t slowed declining prices.
And add to that the fact that, due to deteriorating economic conditions, wave after wave of new foreclosures are being added to the mountain of unsold inventory..
Only after that mountain is consumed can prices stabilize, and there’s no reason to think they won’t remain stable and flat for years afterwards.
You need to know the direction of the change in inventory, not sales.
Good answer on the inventory. Still in areas like Victorville (i.e remote desert outpost) the value may in fact be headed tword zero. I fully expect plenty of ghost towns all over Cali again.
Have to look at income history for the area. If the pre-bubble income (look for 2000 stats) doesn’t support the pricing there is a good possibility we are looking at a double bottom.
Figure things settle out and when rates rise, prices will crater again. Of course the Fed and current government might drag things out for a long time with modifications, forclosure mormatoriums exc.
So this is what I think about my dream:
The car and road represent the path we are given in life; the one we readily take whether it makes the most sense or not. Everyone is taking that path and they are all stuck. I got out of my car because, yeah, I’ll say it again: I’m smarter than everyone else.
The darkness is the unknown. The redneck is the guy who is content with the darkness because he has no destination. He’s perfectly content to stand still. He has no concern for the future. I, on the other, need my flashlight (my thought process, curiosity, analysis, whatever) to help lead me through the unknown to the place I want to be. My destination right now (like most others my age) is financial security. Trouble is that no amount of thought, analysis, etc. is going to show you the way. When you think about something, all you really illuminate is your thoughts.
As soon as a person realizes that they CANNOT know the unknown, they tend to get scared and freak out and transport themselves by foot right back to their car and get right back on that road because they know exactly what will happen there, even though they also know the road will not take them where they want to go.
They guy who jumped me represents fear. That’s why I still couldn’t see him, even when he was right in front of my face. Because he doesn’t really exist outside of my own mind. It’s the fear that leads you back to the road that will really get you. Without that fear, I am free to wander around in the dark and get there or not get there. If I don’t get there, then I haven’t lost anything, because I wasn’t going to get there on the road either.
So, in short, if any of you start to have the same dream, do yourself a favor and don’t turn around, cause that’s when that guy is gonna get you.
Good analysis, Big V.
Read “The Road”. Then you’ll really have some bad dreams.
I already read it. I guess I’m too critical because I didn’t really think it was worth a Pulitzer.
anyone have any opinions on why Boston isn’t falling faster ?
trying to stop some future fb’s from buying there
imo, Boston is typical of big cities where people are willing to spend a larger percentage of their income to live in the city..
Schools, airports, hospitals, job markets, nightlife, restaurants, public transportation and so on are numerous and close at hand.
Willingness to spend say 50% or 60% of one’s income on housing will keep prices propped up.. for a while.
That’s so funny you should say that (and, yes, I was there for the boom in the 1990’s). When you called Boston a place where people pay a premium to live in the urban center, I thought of Boston in the 1980’s. Hahahaha.
One thing I have noticed is there has been some cutting back by college students, but it isn’t wholesale yet. (Note: I live in a uni town in Florida) Rental market in Boston is heavy with the students.
(For example, less students driving cars b/c of gas prices or whatever, but it’s still a heck of a lot of students driving cars. And they’re actually paying MORE rent than they did two years ago, thanks to all the market dislocations. I expect rents to plummet in ‘09-’10, but for now even with incentives they’re still higher than just a few years ago because the runup was so steep. Also, restaurants depending on rich old people spending money are hurting, thanks to stock market–strangely last year didn’t phase ‘em, maybe 14K Dow made them feel rich–but student-oriented restaurants seem unchanged for now. Bars are starting to crack a bit. We shall see.)
Also, I feel like pointing out at this juncture that while there may be a shortage relative to demand of rental units near the schools or along their bus/trolley lines (A line=route 57, hence Brighton, though there isn’t a school actually in Brighton to speak of), there isn’t actually a shortage of housing IN Boston, it’s just that some people don’t want to live in Dorchester or what have you.
And, frankly, the rents do trend a little high for shootytown or stabbyville, although I the immigrants seem to make out okay.
My sister rented in JP for a while. Rents and prices vary a LOT in that area, and it isn’t unsafe if you’re street smart. Depends on how many roommates you’re comfortable with, how much walking to bus line or train station you’re cool with. Of course, even Northeastern students probably don’t wish to commute by bus to Forest Hills and then take train 20 mins to school.
As for the Indigo Line corridor, I’ve been away for a while and I don’t know if the grand dreams of economic development along that corridor have come to fruition. Fixing stuff up was a good thing but also drove some speculation (especially Dorchester–remember the prices on Compton shacks? It was a little bit like that) and priced out many of the residents! (And where were they supposed to go? Lynn? Fitchburg? At least in Boston there are jobs. Gack, imagine commuting from Quincy to Boston to west burbs to work. Makes my old one hour train trip from Woostah to Baawston look like a dream.)
Because jobs are eaiser to replace when you live in/near a city. That’s why prices are higher. As unemployment accelerates, so will the decline in Boston house prices.
“It’s cheaper to buy than to rent. It’s a terrific time to buy, and it keeps getting better and better.’
See the contradiction in this? The “…it keeps getting better and better.” part.
Also, are rents going to stay high enough to maintain a positive cash flow?
Nope. No contradiction at all.
Why, it’s like buying JDSU at $1000, then again at $700, then $100, then $42 (guilty!), and again at $6.
I’m going to butt into the CA thread with an AZ Republic article that isn’t really AZ specific….
http://tinyurl.com/8mmehl
“As the country enters its second year of recession, often described as one of the worst since the Great Depression, experts are starting to ask whether we are in a depression again, or heading toward one.”
And…. Dianna Olik has a doozy of a blog today.
http://www.cnbc.com/id/28638551
Use imminant domain to buy up “distressed loans” from MBS pools at current market (70-50% off loan’s principal value). Then rewrite the loan at current market principal and better terms(taking a loss if needed to let the currect resident keep the house), then repackage the loan and sell it off.
The estimate the price at $50-100 billion (that is the loss on the negative terms needed to keep people in houses even at current marekt price).
WHAT????
At that kind of discount, evernyone that holds an MBS, or has counter-party risk to someone that does, it instantly insolvent. The TARP money was to PREVENT having to admit the losses, not to FORCE then to admit the losses.
IMO, this plan would instantly collapse the global financial markets.
AND, why should we eat a $50-100 billion loss to help people stay in houses that they can’t afford even at current market? You were dumb and bought more than you can afford, so it makes perfect sense that you should be able to stay there…. NOT!!!!! If you can’t afford the payments, GTFO! (get the heck out)
They can’t eminent domain the MBS pools and set a “fair-market value.” The bonds are already trading at fair market value, so the price is already established in the secondary market. Now, if they buy ‘em at market, no need to eminent domain the bonds.
Not the MBS… specific loans from the MBS. Let’s say my co-worker that is about the buy and dump owes $500K on a house now worth $350K. Well, these “housing advocates” want to buy his loan from the MBS pool, not for the $500K owed, but for the $350K the house is now worth.
Then, let’s say he can’t afford even $350K at 5%, 30 year fully amortized. Okay, we give him, say 3.5%…. Then we package up the loan and sell it off, using TARP money to cover the difference between the $350K the loan was bought for, and the “less than “$350K” it can be sold off for because of the unnaturally low interest rate.
My point is, once the bad loans begin being plucked from the MBS at 30-50% what is owed on the loans, he MBS crashes in even the pretend value, and everyone holding them or with counter-party risk to anyone holding them, is TOAST!
I just got what I consider to be a shot across the bow from Citi.
I’ve had their credit card since 1991. I haven’t ever used it to any great degree, about $100 here and there. While changing my address on my profile, I noticed they had placed an alert on the account and I should call them.
Rep says that I haven’t used it since early last year. They put an alert on the account in case I had lost it or because more of my purchases were being placed on “a competitor’s card.”
He made sure to tip-toe around the second scenario, but to me it sure sounded like, “use it or lose it.”
Wow. First I have heard of that!
Is it worth it to you (i.e. for credit score purposes) to use it once a month for a $5 purchase? Like split your grocery bill or something?
Yeah, he basically said the account was “suspended” until I contacted them.
I should’ve been a little clearer after re-reading my post. He said they weren’t sure if I’d been using another card (which led to the inactivity) or if it’d been stolen. He was implying that the first reason was okay, but they just wanted to be safe.
That’s never happened so it sure sounds like hints to use it. Yes, I will probably start making one small purchase per month, since this is the account on my credit with the most history.
Had an acct with both our names authorized. They were definitely on time and in order, being used in a small way frequently, and suddenly we get a note stating they pulled the one card, so now only one person is authorized to use that card. Ridiculous. So we just cut it up with scissors. Screw em.
Debating where the remaining TRAP money should go…
http://www.cnbc.com/id/28639888
Where it should GO? It already went to dividends and employees of the Wall Street banks and brokerages. We either give them the money to cover their 4Q losses, or they cease to exist? Is there really room to debate?
“Riverside County Assessor Larry Ward gave residents less time to challenge their property taxes and scant notice of the change. Ward changed the deadline midstream for taxpayers to request a decline-in-value reassessment on their homes. Some homeowners say they only learned of the new due date when their applications were rejected for arriving late.”
Yah, these taxing authorities are getting downright nasty in the pursuit of income. Makes me laugh.
On our local Florida news, the teachers’ union has their bloomers in a twist over the budget cuts coming down. Some local union official in a suit started bloviating about how higher taxes are needed, whining that we “can’t just cut our way out of this”. Oh, I beg to differ, Si, se puede.
Higher taxes for what? So Florida teachers can have more sex with their students? What does that make him, a pimp?
And who does he think is going to pay those higher taxes?
Here and AZ, they have already come out and said that we should not expect to see our property taxes fall.
I hear ya, that’s what’s happening here. “Assessed” values are completely out of whack. It’s ridiculous. People won’t buy at “assessed” values. I won’t. It’s wishing values, except the gov has the bully pulpit. And that’s part of the reason housing prices aren’t correcting fast enough.
Used to be, assessed values were a bit under market value. Now, it’s the other way around. Interesting.
They have a “full value”, and a limited property value…
Like this example of a guy that lives in PHX… named Darrell…
http://tinyurl.com/7×3ocq
His assed value dropped $30K, but the LPV still went up $18K….
And see that little thing called assesment ratio… that the LPV is multiplied by to get the assessed LPV… well, it is this assessed LPV that is used to set property taxes. And the tax collector can change that assessment ratio anytime they want.
Property values fall and they aren’t collecting enough taxes… hmm. Let’s just change that .10 to .15. Oh, look… now we have enough tax money to pay the bills. Problem solved.
And, no!!!! I’m not complaining about $1400 a year in property taxes. In CA, they’d be MUCH higher, along with 2x the state income tax. I’m nice and happy in my low tax state, thanks.
Good. That’s just one more straw on the camel’s back, as it walks away.
Don’t complain, FL has some of the lowest paid teachers in the country. They also have one of the worst teacher unions in the country ( worse for the teachers that is).
well, it’s not *their* grandkids in the Florida Public Schools, now is it? So why should they spend one red cent on the children of waitresses, bartenders, golf grass cutters, auto mechanics, and registered nurses?
As I flew into Palm Springs yesterday, beautiful clear and warm day, I noted all the pads, future developments that were completely without any workers, building equipment, or activity at all whatsoever. I know this area really well, all the future sites etc, and even the retail/condo development that Indian Wells was supposed to be putting up right now, is vacant/dead. Not even finishing up what was started.
Lots of chain link up around those commercial properties.
Nothing is going on here in the desert.
An interesting view from an airplane.
This time last year, year before especially it was crowded, busy, and fully of traffic and activity. Not so since year and half ago.
And you could bowl at an auto dealership. Not a single buyer to be found.
And when the wind blows all the dirt from the cleared land for future housing that won’t be built will blow up in the air and you won’t see anything. And since its the desert it will stay cleared for 100 years.
Like Phoenix
What I’m seeing a lot of is motorhomes, nicely leveld in driveways, plugged into the houses electricity. There are like 4 on my 7 mile drive to/from work, and more I’ve seen around town.
Oddly, reminds me of early 80s when my 20-something sister was living in my parents’ motorhome in their driveway…..
I just saw a mobile home plugged into a big house right around here. I heard a faint noise while I was walking my dogg and followed the blue chord. trippy. what does it mean?
It’s the government and they are spying on a house, because ET was rumored to be in the area
“TrendGraphix figures date from January 2002, at the start of the last housing boom. The median sales price for Stockton that month stood at $155,000.”
“‘Median sales prices may go lower, but they can’t go much lower,’ said Mike Collins of Collins Realty in Stockton. ‘Some people pay that much for a high-end luxury car.’”
++++++++++++++++++++++++++++++++++++++++++++++
Note to Mike: Have you ever thought high-end luxury car prices are too exorbitant? When both stockton homes and high-end luxury cars drop 35% in price, we will then be getting closer to the proverbial bottom.
“Analysts say Inland housing prices have fallen more than 40 percent since their high point in 2006.”
Radar Logic data say essentially the same in price per square foot terms for San Diego:
Date PPSF
5/2006 $355
Early 11/2008 $200
Decline in San Diego home prices through early November 2008:
(200/355-1)*100 = -43.7 pct.
Of course, this just pertains to the prices of used homes that have actually sold. Home owners are perfectly entitled to keep their list prices at levels where they will never be able to sell.
California may have a dim future
By Dan Walters
dwalters@sacbee.com
Published: Sunday, Jan. 11, 2009
Defense spending in the 1980s, high-tech startups in the 1990s and housing-fueled consumer spending in the 1990s – all were California economic bubbles that burst spectacularly, leaving recession and government deficits in their wake.
What, if anything, will come next to pull us out of recession and return California to prosperity? Some think it will be biotechnology, services to baby boomer retirees or solving global warming.
Lurking in the background, however, is a nagging worry that there won’t be anything, that the state’s endemically high costs, political dysfunction and long list of unresolved dilemmas, from transportation to water to education, have made us uncompetitive in a global economy. Just last week, a new federal survey found that California has the nation’s highest adult illiteracy rate.
We have tended to take the future for granted. No matter how moribund the economy may be at the moment, we think, we have the weather, the entrepreneurial spirit and the strategic location to regroup and prosper.
We may have. But then again, maybe we aren’t so special. Maybe we’re not immune to the societal afflictions that have beset other states. Maybe we are a rust-belt-to-be on the left coast, a Michigan with winter sunshine.
A clue to potential decline may be found in what had been one of the state’s stellar sectors in recent years, international trade. California’s airports and seaports, especially the latter, became the portal for rapidly expanding trade with Asia. The ports of Los Angeles and Long Beach became the nation’s busiest with Oakland just a few notches down the list.
At its high point, a quarter of the nation’s international cargo, imports and exports, was passing through California, including 40 percent of container traffic, despite high costs, traffic congestion and relatively inefficient cargo-handling systems.
The global recession cut into that traffic sharply, as one might expect, but California port officials are forecasting big increases when the economy improves and are planning expensive facility upgrades.
“The forecasts are hogwash,” says Jack O’Connell, an international trade expert with the University of California. He doubts whether consumer demand for Asian goods will return to former levels because of new wariness about personal debt, and he believes that competition will compel shippers to seek cheaper avenues.
Last fall, as Californians were waiting to vote for a new president and fill other offices, an election was held several thousand miles to the south, in Panama. Panamanians approved a multibillion-dollar expansion of the Panama Canal that by the middle of the next decade will allow the biggest container ships – those that have been forced to offload in California – to sail all the way to American ports on the Gulf of Mexico and Atlantic Ocean.
What has been an economic strength for California, in other words, may join a growing list of weaknesses.
I’ve heard that the Port of Philadelphia’s pretty good.
“…all were California economic bubbles that burst spectacularly, leaving recession and government deficits in their wake.”
Kinda breathtaking to look back now and see these ‘cycles’ for what they really were. So much for slow, _sustainable_ growth.
“Some think it will be biotechnology, services to baby boomer retirees or solving global warming.”
LOL. Every state has listed these 3 items as their path for future growth.
Methinks this country is in for a lowering in standard of living. Me also thinks that renewed focus will be put on removing people who don’t legally live here to return the jobs that Americans don’t want to do to Americans who decide that they would like them afterall.
(See the CNNMoney online article - “Take this job - or shove it” about people taking 50%+ pay cuts just to have a job.)
“…Americans who decide that they would like them after all.”
In 1993 near the bottom of the last big bust in socal I was 25, newly a father, newly a homeowner, and my unemployment benefit was running out fast after being laid off the previous autumn.
I confess to doing some downright un-American things. We rented 2 bedrooms to my wife’s cousin and her husband, we collected aluminum cans along the 14 to raise cash for gas, and yes; I took a job (hanging drywall at $5/hr.) that no American wanted to do. I did indeed work alongside illegals, and I only got that job because my Spanish was excellent.
When the chips are down many Americans will have a hard time competing against the immigrant populations, both legal and illegal, in the race to the bottom for labor called globalization.
Mexico is also expanding their ports to take full advantage of cheap non-union labor and NAFTA truckers. The Longshoremen in Long Beach and LA better be puttin’ some cash away cause that rainy day is just around the corner. They have no idea whats coming.
That won’t be so hot for the railroads as well, at least those depending on the transcon flows of containers.
Man, if any CA pol really cared about their state they would be doing everything possible to lower house prices - fast. They’re playing with fire. Too bad all the regular folks can’t leave and watch from a distance as the CA pols try to entice the “guest workers” to fund their pensions and benefits.
Man, if any CA pol really cared about their state they would be doing everything possible to lower house prices - fast.
—————————
Can’t be said any better. If we get asset prices down, we can use the rest of our money to bolster the real economy.
Why is nobody listening to us????
I read a large port would be constructed in Mexico for container ships and then everything shipped by rail through Texas to the midwest and beyond.
http://archive.newsmax.com/archives/articles/2006/3/23/160343.shtml
Freescale joins the list of Companies forcing workers to take unpaid time off.
Healthcare is safe? Think again. My wife works for a hospital chain. They already have a hiring freeze and raise freeze, have cut vacation hours, reduced vacation carry over, ordered drastic cuts to overtime, etc. Layoffs for non-customer facing positions tomorrow.