Sellers Are Feeling The Pain In California
The Desert Dispatch reports from California. “In the past year, home prices have fallen dramatically in Barstow as in California as a whole. Data recently released by the California Association of Realtors shows that home sales are climbing as the median price of a single family home fell off by 40.5 percent from January 2008 to 2009. In the High Desert as it whole, prices dropped by 45.5 percent. for homeowners and people trying to sell, the drop in prices has put many of them ‘upside-down.’ Unless the bank is willing to agree to a ’short sale,’ their only option may be foreclosure.”
“That is the situation for Conrad Wytte, a Los Angeles-based landlord, who said he has been trying to sell a four-unit apartment building in Barstow for the past several months without getting more than a nibble. He bought the property more than three years ago as an investment but found himself losing money, Wytte said.”
“He bought the property for about $350,000 and currently has it listed online for $299,000. Realistically, Wytte said he doesn’t expect to be able to sell for more than about $190,000 — less than what he still owes on it.”
“For Richard West and his two adopted daughters, the rupture of the housing bubble has been a good thing. With home prices in Barstow back to the level before the housing boom, West, a retired missionary living on Social Security income, is within a few weeks of closing on the purchase of a three bedroom house with a pool for $86,000.”
“His mortgage payments will be comparable to what he currently pays in rent on a two-bedroom apartment, West said. Like many homes for sale in the current market, the house was foreclosed upon and is currently bank-owned. That meant having to do more repairs on the property himself than if he had bought from an individual homeowner, but West said the price is worth it.”
“Without the market downturn, he said, ‘I would have had to rent for the rest of my life.’”
The Desert Sun. “Riverside County’s unemployment rate for January may be well above what it was at the end of 2008, as an increasing number of residents find themselves out of work, a county official said. ‘We are seeing about double the foot traffic — 6,000 per month — in our Workforce Development centers,’ said county Economic Development Agency spokesman Tom Freeman. ‘One year ago, we saw about 3,000 job seekers per month.’”
“‘We may have more than 100,000 people unemployed. Without a doubt, construction is taking a hit, followed closely by mortgage lending and other real estate (jobs),’ Freeman said.”
The Bakersfield Californian. “Default filings in Kern set another new record in February despite moratoriums from some big lenders. Last month, 1,611 default notices were recorded here, the most recent report from the Kern County Recorder’s office shows, up from December’s previous record of about 1,550. The number was up from January’s count of 1,353 and exceeded February 2008’s tally of nearly 1,180.”
The Glendale News Press. “The number of code violations, such as unkempt landscape, incomplete construction and mounting trash, on foreclosed homes has increased throughout the city since the housing market downturn, officials said. About 80% of homes listed for sale in the Adams Hill area are in distress, said Realtor Hattie Ramirez.”
“Of 12 homes listed in the area, three were bank-owned and had foreclosed, five were under a short sale, which is pre-foreclosure, and one property was facing bankruptcy, said Ramirez, who is an association board member. Home owners lost their homes because they either bought into the properties three years ago when the market was high or refinanced their homes and took the money out from their properties, but now can’t make up difference, she said.”
“City staff try to work with property owners of foreclosed homes, department supervisor John Brownell said. But if nothing is being done to the properties, owners have two options: fix it or tear it down, he said. ‘They either have to put money into the property to make it presentable or tear it down and clear the lot,’ Brownell said.”
Bay Area Newsgroup. “Thinking about buying new home in today’s beaten-down real estate market? You could end up with as much as $18,000 in government tax credits stemming from proposals to jump-start the economy. A state tax credit worth up to $10,000 started Sunday as a way to encourage people to buy new homes.”
“‘This is something that our industry has been desiring to have for quite some time,’ said Layne Marceau, president of the Northern California division of Shea Homes.”
“The home-building industry is hoping that the tax break will prompt people to consider a new home purchase over a bargain-priced foreclosure, which accounted for 54 percent of existing home sales in January in the Bay Area. In January, only 340 new homes were sold in the Bay Area, a drop of 48.2 percent from a year ago, while the median price was $438,500, a 20.3 percent drop. (The median sale price for all homes, new and existing, was $300,000 in January, or 45.5 percent less than a year ago.)”
“Dianne Crosby, a senior loan consultant at LaSalle Financial Services in Oakland, would have liked to have seen both new and existing homes qualify for the state tax credit. ‘A pervasive source of malaise in the Bay Area real estate industry lies with the inventory of foreclosed and bank-owned properties,’ she wrote in an e-mail. ‘These homes, often in poor condition or abandoned, bring down the value of similar homes in the neighborhood and can be harder to finance because of their poor condition.’”
The Manteca Bulletin. “Thirty-five months ago only 4.8 percent of the people working and living in San Joaquin County could afford to buy a home here. Today, 66.4 of county residents can now afford to buy a median priced home taking it from one of the least affordable counties in California for housing in 2006 to the third most affordable today.”
“That is being made possible by a significant drop in median housing prices going from $435,000 in the first quarter of 2006 to $175,000 at the end of 2008 while median household income at the same time went from $57,100 per household to $61,300.”
“‘I think more and more people are getting the message that this is a good time to buy,’ said Jennifer Harnden of Coldwell Banker Crossroads Real Estate.”
“Tony and Crystal Davenport once thought homeownership was something that might occur after 10 years or so of marriage – if that. ‘Home prices in Manteca were between $400,000 and $500,000 when we first got together,’ Crystal recalled.”
“This month the couple moved into their own home on Wedgewood Way in north Manteca. Their home is costing them $40 a month more to buy that it did to rent a one-bedroom apartment for $1,025 a month previously at Paseo Villas.”
“The couple started out in December working with Realtor Tom Wilson after getting pre-approved for a loan up to $180,000 on the strength of his full-time job with Turlock Irrigation District. They made it clear that they wanted to leave wriggle room so things wouldn’t be so tight that they’d have to be even more careful on how they spent money than they currently were. That brought them to Wedgewood with a $150,000 list price.”
“They would have preferred granite counter tops in the kitchen but they figure they will get that in time and do the work themselves for a lot less money. They ended up in a mini-bidding war. They made the offer on Christmas Eve only to have Wilson call them back to let them know there was another pre-approved buyer but that buyer was maxed out. ‘We ended up getting it for just $500 more,’ Tony said.”
“‘I’m looking forward to the day in 30 years when I don’t have a housing payment,’ he said. Tony said he liked the idea of not ‘writing a check at the first of the month to send money down a hole’ and that instead they were buying something to call their own.”
“Both Crystal and Tony think that anyone that is renting should check into buying as soon as possible noting that the current prices aren’t going to last forever.”
“At the market’s peak in 2006, the median housing price hit $443,000 in Manteca or 7.1 times the city’s household median income of $62,000. Today’s median selling price so far in 2009 is $179,900 or 2.9 times the median household income.”
“”Buying a home with what seems to be non-stop bad economic news fed by cable TV channels didn’t worry the couple. ‘I figured if I lost my job I’d find some way to feed my family and (make the mortgage payments) whether it is flipping burgers, driving a diesel or whatever I needed to do,’ Tony said.”
The Sacramento Bee. “I’m back from listening to Leslie Appleton-Young, chief economist for the California Association of Realtors, who says 2009 will be grim and tough on the economy. But she adds that sales will surely boom in Sacramento, which is again affordable and a beacon for first-time homebuyers.”
“‘The great news is you guys are booming,’ she told a room of several hundred area Realtors, members of the Sacramento Association of Realtors.’Your market is clearing. Markets do clear.’”
“Median prices could fall up to 25 percent statewide, but not that far in Sacramento. It’s already taken the bulk of its hit to pricetags and moved on, she said.”
“Sellers, on the other hand, are feeling the pain. In a survey of them, the four common responses, she said, were: I can’t make my payment. I’m underwater. I need to save my money. I need to get out.”
“In a light moment she showed an editorial cartoon of a guy on a ledge ready to jump. A voice from a window says, ‘Wait, don’t jump until you hear what Alan Greenspan thinks.’ The guy on the ledge says, ‘I am Alan Greenspan.’”
“She noted that the past year has been tough on real estate agents. Membership in the CAR, which peaked at 211,000 in 2007, is projected to fall to 158,000 this year and ‘my guess is we’re going down to 135,000,’ she said. The crowd applauded.”
The LA Times. “Nearly 250 residential developments with a combined total of 9,389 houses and condominiums have been halted in California, according to Hanley Wood Market Intelligence. The units, worth close to $3.5 billion, were in various stages of development. Now, many are in bankruptcy or have been foreclosed by lenders. Developers have halted sales on an additional 370 new-home developments — about 30,000 units worth $11.9 billion. ‘It’s a sad state of affairs,’ said Greg Doyle, regional director of Hanley Wood.”
“They rip out copper wire, haul away pipes and take anything else they can steal from dozens of buildings on the site, abandoned after Irvine developer SunCal Cos. fell victim to the economy. It’s a scene not uncommon throughout California, as residential construction grinds to a halt: a rusty chain the only barrier between the community and a half-built structure in Hollywood; a bare dirt lot in Pasadena; old stoves amid the trash at the site in Oakland.”
“‘I hear hacking and see scary bonfires in the middle of the night,’ said Don Johnson, who lives near the defunct Oak Knoll Naval Medical Center in Oakland.”
From Salon.com. “Some 40 mortgage brokers and real-estate agents are gathered at the Long Beach Hyatt on a balmy Friday in January to attend a seminar conducted by broker Allen Brodetsky and local real-estate attorney Steve Vondran. The mortgage business might have collapsed, but those assembled in the glittering ballroom have each paid $195 so Vondran and Brodetsky can teach them a fresh way to make money off of other people’s debt.”
“‘The Department of Real Estate has granted brokers a whole new product line you never had before,’ says Vondran, as the Dockers- and Ann Taylor-clad crowd read from fat binders and ponder the unfamiliar terms in Vondran’s PowerPoint presentation — ‘LOAN AUDITS,’ ‘QUALIFIED WRITTEN REQUEST.’”
“Unfortunately for the borrower, however, is that the remaining debt doesn’t vanish. Those unpaid tens of thousands are waiting there to be reckoned with down the road, plus years of additional interest. ‘Isn’t that predatory lending?’ gasps one of the attendees at the Hyatt. Vondran and Brodetsky change the subject.”
“The problem is that the majority of loan mods are lousy deals for homeowners. Federal banking regulators recently determined that more than half of all mortgages that were modified by lenders in early 2008 ended up heading into foreclosure again in less than six months. Most loan modifications, in fact, dig borrowers deeper into debt.”
“Shawn Kolahi heads a fire brigade battling the inferno he helped ignite. Following Dana Capital’s business model, Kolahi’s loan modification enterprise relies on subcontractors — some 480 brokers nationwide selling its loan modification services. Some of the ‘affiliates’ appear to be in pretty desperate shape themselves in these hard times for the mortgage industry.”
“One subcontractor recently went into default on his Irvine condo after missing nearly $20,000 in mortgage payments. Kolahi’s wife, an attorney who works with Loan Processing Center to identify illegalities committed back when the borrower first got the loan, is in similar straits. She’s now heading for foreclosure on a loan for nearly $1.2 million on a home in an exclusive gated community in the Irvine hills.”
“‘Why do you think so many loan mod companies are here in Orange County?’ asks Sam Carlson brightly. ‘We’ve got cheap office space and out-of-work loan processors!’”
“Carlson and his boss Kolahi are far from the only exploding-mortgage salesmen now reinventing themselves as licensed loan doctors.”
“Mortgage industry veterans now joining the ranks of loan modification specialists don’t apologize for the products they used to sell. Ty Youngblood, a mortgage broker with 10 years’ experience who now does loan mods with state approval in foreclosure-ravaged Riverside County, says it was impossible to stay in business in Southern California unless one was willing to deal in no-doc, option ARM, cash-out and other toxic mortgages, all of which are still advertised on his Web site.”
“‘I’m just a waiter at a restaurant,’ Youngblood explains by way of metaphor. ‘I didn’t make the food. I didn’t grow the food. I’m just presenting the menu to the borrower. A T-bone steak? I’m just saying it’s on the menu. We didn’t invent these option ARMs — the banks did.’”
I’m going to be on the foreclosure trail for the next two days, so things might be running a little slow. Again, don’t believe all the hooey you are being fed. Almost all the houses I’ll be visiting are being taken back by companies that you are told are in moratoriums with foreclosures.
Well, come come, WE wouldn’t taste Foreclosure Moratoriums as “honey.” Would we? Okay, you meant J6P-FB tastes honey. Anyway, that’s interesting, the moratoriums are not even real.
No, HOOEY!
It’s a hybrid between a hoot and phooey.
Does that mean you’re start to buy, Ben?
L’AIG:
The other day, you told us all that your husband is a “professional”. I want to know — A professional what? Is your husband a man ho, L’AIG? Is he out there selling his manucha for $250k/year. Really, I wanna knkow.
“‘I’m just a waiter at a restaurant,’ Youngblood explains by way of metaphor. ‘I didn’t make the food. I didn’t grow the food. I’m just presenting the menu to the borrower. A T-bone steak? I’m just saying it’s on the menu. We didn’t invent these option ARMs — the banks did.’”
You know, the Nuremberg defense doesn’t quite fly.
1 in 5 won’t get out alive
From Yahoo:
… NEW YORK (Reuters) – One in five U.S. homeowners with mortgages owe more to their lenders than their properties are worth, and the rate will increase as housing values drop in states that have so far avoided the worst of the crisis, a new study shows
About 8.31 million properties had negative equity at the end of 2008, up 9 percent from 7.63 million at the end of September, according to the study, released Wednesday by First American CoreLogic. The percentage of “underwater” borrowers rose to 20 percent from 18 percent.
Another 2.16 million properties could go underwater if home prices fall another 5 percent, the study shows
…and the hungry beasts grab a few more pounds of FB & GF flesh, take them under and do their infamous gator “Death Rolls”
http://news.yahoo.com/s/nm/20090304/ts_nm/us_usa_mortgages_study
That post was me…without coffee
“1 in 5 won’t get out alive”
One in five not getting out alive is the _appetizer_.
The main course is still to come…
“I was only processing orders!”
“reinventing themselves as licensed loan doctors”
Heaven help us. And can you imagine a more ‘fertile’ market? Kudos to the MSM for checking in with the blogs to gauge our reactions.
Where’s Susan Powter when you need her?
This is EXACTLY why you hire the Dumbest most Clueless people you can find, so that question never comes up in their mind.
———————————————————-
“I was only processing orders!”
Okay, everybody, report to the dance floor. Our very own NYC DJ has some tasty Zydeco for all to enjoy. So, click on that link, people!
dj:
You’re a Taurus? I’m a Taurus too. We’re twins.
So, you’re Gemini’s?
IAT
How much fiduciary responsibility do mortgage brokers have to the borrower?
bluprint,
None. It’s not even implied in most states. Ever hear of a Yield Spread Premium?
Translation for the uninitiated:
Yield Spread Premium == the extra amount that the broker gets paid for suckering you into a higher-than-market interest-rate.
In other words, the more of a sucker you are, the more they get paid.
As in most business arrangements, it’s the opposite of a fiduciary duty. Caveat emptor!
Hmmm, how silly of me… I thought Yield Spread Premium = extra yield earned by buying a at-risk bond vs. buying risk-less bond, ie corporate bond yield over Treasury bond of the similar maturity.
Couger, not in the mortgage racket. Brokers’ rate sheets, issued daily by the issuing banks, are arranged by interest rate (to the borrower). The cells in the rate sheets shows the YSP - the amount the broker makes per mortgage “unit” - or the “points” - the amount the borrower has to cough up to get that rate. The term “points” has become debased to mean THE ADDITIONAL DOLLARS PER THOUSAND extorted from the borrower, which is applied to the broker as additional unguent.
You know you’re dealing with the debased usage when your “points” are quoted in round thousands. This, of course, works to the broker’s advantage. More grease for him. “Vig” is the term of art.
Your only protection in knowing the amount for which you are being fleeced is to insist on viewing the rate sheet for the bank putatively providing the funds. If the mortgage broker blanches or gives you the old verbal diahhrea treatment, walk out.
He or she may look at you in winsome manner and whine “Whatcha mean, you don’t TRRRUUUUSSSSTT me?”
As a reader of this blog, you practiced response should be a cold, if not contemptuous, stare, and a clearly stated “No.”
Oh - and before you walk out, ABSOLUTELY INSIST on getting copies of EVERYTHING YOU SIGNED. Count up the sheets before they go to the copier, and take the time to print on the top “1 of 30″, “2 of 30″, “3 of 30″, etc. They are making a minimum of $3K on the back end for a total of five hours of work. If they believe their customer is not entitled to twenty minutes to perform this basic authentication measure, eff ‘em.
At the closing, be scrupulous in comparing your real time copies to anything they purportedly authenticated. And have your OWN attorney. As you know, the lawyers linked to the realtards and the mortgage brokers are corrupt, as well. It’s a requirement of the job.
“it’s the opposite of a fiduciary duty.”
That would be a doucheiary duty.
What is a Truth in Lending form that must be signed at closing for if there is no fiduciary responsibility then? I thought that was required in all states.
“What is a Truth in Lending form that must be signed at closing for if there is no fiduciary responsibility then? ”
The Truth in Lending form is a required disclosure under the law. But it definitely does NOT imply any fiduciary responsibility on the part of the broker.
Fiduciary responsibility means a duty to do what is best for the other party. A good example is the duty a trustee has to do what is in the best interest of the beneficiary of a trust, rather than for the trustee himself.
As long as there is an obligation for transparency, that is 90% of the battle.
I believe in OR the YSP must be stated on the closing HUD statement, not sure of other states.
Another good reason to read those docs!
NSO, no doubt. Misrepresentation/fraud is serious. I think many people on this blog, however, cnofuse fiduciary responsibility with “lack of fraud”. I don’t buy all the cases where people seem to think the (in this case mortgage broker) person “owes” the buyer/borrower some loyalty or something.
Enforcing fraud is good. Forcing undo, after-the-fact fiduciary responsbility is something else all together and criminal in its own right.
They put the “douche” in fiduciary.
Oh, snap.
Doesn’t douche imply some level of cleanliness, though? I wouldn’t place them so high on the totem pole.
The slang definition of ‘douche’ implies arrogance & malice. That’s the ‘douche’ part of modern ‘fiduciaries’ IMO.
Exactly. Replace food with crack cocaine, cyanide-lace toothpaste, melamine-infused baby formula etc.
“I don’t make the formula with melamine in it! I just present it to new mothers! Just sayin’.”
I am glad that a number on this board recognized Mr. Youngblood’s preposterous argument so quickly. Now why didn’t the reporter? Or is s/he of like mind: “I just report the news. I have nothing to do with what happens…”?
On the contrary, they so desperately want to make the news. But they have a fairly narrow storyline to adhere to in most cases.
My reaction exactly. What a ho-bag.
Sheesh…the House Buffaloes are barely stampeding and heading towards the cliffs and the HBB indians are already drawing out the long knives dancing, jumping up and down CHANTING…
“T-bone, T-bone, here T-bone”
I know nothing!!
–Sgt Schultz’s defense.
Good luck to the Davenports. I hope he can keep his job and keep that house but if their income is only the $62,000 median in Manteca, a $150,000 mortgage is still too high. My niece, age 30, and her husband bought a home for $115,000 in Schenectady, NY a few years ago. They have 2 children and both work. I feel confident their income is higher than $62,000 but its a struggle. There are lots of expenses besides housing in ordinary life.
It’s a squeeze, but if we see inflation, that will become more affordable over time.
Assuming wages inflate as well.
Big “if” in my book given the number of people out of work.
Sadly, I must agree with you Jim (and Bad Chile).
While reading Eisenhower’s biography (IKE), I was struck by the TWO Federal 10% wage cuts that went through. At a minimum the pensions must be cut. If CA doesn’t cut state worker salaries, the business exodus will become a stampede.
This has years to carry through. And yea… I recall what I posted in 2005 on this happening much faster. I became more educated! Ok?
Got Popcorn?
Neil
Your are insane. Cal state workers, particularly engineers and science types, are compensated at levels well below their private sector counterparts, rarely have cost of living increases, etc. State worker salaries are not the problem, you could fire every one of us and that would solve about 10% of the budget problems.
The Cal problems are:
1. Prop 13 applied to commercial and/or non residential real estate.
2. Public spending mandates through the proposition system. (e.g. Prop1B etc).
Keep blaming these civil servants though, they’re an easy target…the cliche’ of the lazy govt worker. And once you succeed in driving anyone with skills and talents away from public sector employment (as if we don’t already have enough problems attracting engineers and scientists) then you get poor service for your tax dollars from the few who remain, along with giant workloads that then get contracted out to private sector…who fleeces the state for those “services”, and further screws the taxpayer.
Nope. Science professors at UC Berkeley get paid $200-$350k/year. That’s a state-run university.
Beginning cops in Newark get about $100k.
State workers get pensions, cheap benefits, and lots of days off. They typically can’t speak English and act really rude and stupid when you need them to do something. That’s what people notice whenever trying to get anything done, anyway.
You are right about Prop 13 being applied to commercial prop, second homes, and rental prop. I think the problems with public spending mandates would go away if weren’t for the inability of legislature to collect taxes to pay for the mandates.
CaliKali,
Puhleeze. What cloud do you live in? I really hope this was a poor attempt at humor?
Again, you are way off base. You cite the rare exception who are actually overpaid (mostly all are in the Univ system, btw) as some kind of proof positive that state workers are overpaid.
I say again, engineers, biologist, natural scientists in Cali, all make 20-30% less than their private sector counterparts. That is not cherry picking data points as you have done, that is from actual salary studies.
You can look up the salary for any state worker in California on the SacBee’s website, and I mean by individual name, not broad classes. Go nuts. But then again, it’s much easier to just cherry pick data to back your erroneous conclusions…so much easier to pick someone to blame and direct your anger upon.
Next time you spout off about how we are overpaid, you might consider the bridges and highways you drive on everyday and decide if you really want the bottom of the barrell who are willing to work for peanuts designing those structures that your life depends upon…because when you decimate a workforce (and make no mistake, that is what’s happening…the state is driving Gen Xers engineers out of their workforce by taking away the stability, security, and benefits that attract them in the first place), and then the boomers retire…good luck.
Feel free to refute any of the factual claims I made. You cannot and will not.
I’ve worked on both sides, public at all levels…city, county, state, fed as well as in the private sector. I certainly know a helluva lot more about it than you do.
Typical cycle: Start applying cuts to public sector engineers salary and/or benefits. Retirements then increase and institutional knowledge is lost as a byproduct. Workloads increase as vacant positions are cancelled (shrink workforce through attrition) and/or chronically unfilled due to recruiting problems. Younger workers bolt for private sector due to workload and broken promises/salary discrepancy. At some point, public agency is unable to perform internal engineering tasks due to lack of expertise and/or manpower. Public agency then must contract out the work to private company, and ends up paying 2x-4x what it would have cost to do it internally.
Add the fact that cutting state worker salaries by 10% across the board would amount to savings of about 1% of the budget. But by all means, keep laughing smart guy.
And don’t forget the millions lost from incorrect work and the time delays. Happened in VA. BIG mistake.
CaliKali:
I agree that not all state workers are overpaid. However, we need to acknowledge the ones that are, and cut their salaries.
BTW, engineers, scientists, and DOCTORS are also being undercut in the private sector thanks to offshoring and wage-depressive immigration. And yes, we are noticing it in the quality and safety of our technology, pharmaceuticals, medical devices, and health care. This wage depression is the reason we no longer have enough money to support high-paid state workers. So goes the theory that you don’t have to worry about offshoring as long as you work for the government.
Kudos, CaliKali.
By the way, Berkeley faculty are, on average, underpaid by 20%-40%, depending on department, compared to private and public peer institutions.
IAT
Of all the things people can hang their hopes on, hanging them on wage inflation seems the most foolhardy.
Housing always goes up
Dow always goes up
Wages always go up
So many people made so much money on all of these assumptions.
Jim
I am assuming you mean salary inflation (with high unemployment-good luck). Otherwise, it will get worse.
Well no, not in the near term. But in the long term….A mortgage fixes a large portion of your housing costs for 30 years. I certainly don’t think that it’s an optimum time to buy now. And technically, what matters isn’t WAGE inflation, it’s RENT inflation. Because you’re comparing the costs of owning with the costs of renting. And in many bubble areas, the total housing supply has greatly increased, so rents stant to decline in the near term.
I’m concerned about inflation too. Inflation always pushes prices up faster than wages, so even as debts become more affordable life does not.
Inflation = lower standard of living, that’s the whole point, it transfers wealth from the people to those with the printing press.
To me this is just another good reason to keep housing costs down and to live in as small a house as I can tolerate. Inflation will push up everything else like food, medicine, heat etc. Deflation will make debt more onerous.
There is no way around this one except to avoid over committing to real estate.
When we experience inflation, it’s going to be a painful increase in the price of imported goods. RE will probably crash even more as a result. We have piles of excess housing capacity, plus a population with a penchant for living in tents and cars.
So yeah, knifecatchers, keep counting on inflation to staunch the bleeding…
We also have an an excess of “goods” capacity. There’s not much need to import most stuff. Hence, I see no reason for hyperinflation to occur.
WHAT!?!… you mean my 2010 Fararri 550 Bachetta Whatcetta V12 5.5L, Rosso Corsa/Beige Tan, “Dream Car” is going to cost ME MO MONEY ?
“Where’s MY Renter Bailout Barney ?”
The only way imported goods go up in price, is thru tariffs. Too much cheap labor worldwide. Maybe western european goods, but they’ll have to compete.
There’s not much need to import most stuff. You left out oil. The US very much needs to import large quantities of that just to continue business as usual.
Also, many components are made overseas. Sure, some, like the semiconductor industry, are pure commodities whose prices are perpetually below cost of production (and thus keep going belly up). But globalization is here, and that risk of further dollar losses is real.
“if their income is only the $62,000 median in Manteca, a $150,000 mortgage is still too high.”
That only a hair over 2.5x income, which many here consider a good affordability standard..
Why would you consider this too high?
A 7% constant on $150,000 is about $875 per month (this should cover taxes/insurance, etc. given the conforming nature of the mortgage). $10,500 per year, or 17% of gross income. The 2.5x rule can’t be used in absence of interest rates. If the interest rate was 20%, would you still say that 2.5x was right? Or would you be then pinning your argument on how the monthly cost was greater too high at more than 30%?
I’d be shocked if that is more than renting the same house. You gotta live somewhere, might as go with the cheaper option, AND have a hedge against inflation.
Remember also, only about 50% of people in CA own their homes. The median income DOES NOT EQUAL the median income for the buying pool.
In any event, the market is speaking. Given the pace of sales, home prices have gotten cheap enough to allow buyers to buy. The biggest issue is jobs, how many are there now? And how many are still being lost?
7% seems high for today’s mortgage rates, unless your credit/income aren’t that good, and if that’s the case you shouldn’t be buying any house, period. My bro just refinanced into 4.5% and I know others are getting about 5% for purchases, with sizable down payments and hefty work history, of course.
“Without the market downturn, he said, ‘I would have had to rent for the rest of my life.’” I’m thrilled to see the media talking to those who benefit from the fall in RE prices. We’ve had far to many stories that imply that higher prices are an unqualified good and that falling prices are an unmittigated disaster. Higher prices = good for sellers, bad for buyers. Lower prices = good for buyers, bad for sellers. So basic, and yet so ignored.
His mortgage payments (for a three bedroom house) will be comparable to what he currently pays in rent on a two-bedroom apartment, West said.
Buying because it’s cheaper than renting? Why that’s so… so… unbubbly.
Again, as if I have to say this, there is more to loan-owning than your mortgage. Items that are included in many rents. You know, things like taxes, HOA, insurance, utilities, maintenance…
After the proper math is done, rent is cheap.
Ahhh, but your landlord can evict in 30 days, the banks used to take 90; now its likely to take the banks a couple of years or so. Well worth it.
Your LL still has to go through the courts if you want to fight it. And it’s 60 days in CA. You can drag it out to 6 months if you need to.
Hedge against inflation.
Or buy gold, which won’t keep you dry unless you exchange it for a house.
Not to mention those energy efficiency upgrades on your casa. Especially if it was built a few decades ago. (I’m speaking from personal experience here.)
Correct. $150,000 is too high. $100,000 with a 20% downpayment would get you to where PITI plus maintenance is comparable to rent. The tax benefits should be gravy, since they could disappear in the future.
Also, the cheaper the house, the less the tax benefits over and above the standard deduction.
“Unfortunately for the borrower, however, is that the remaining debt doesn’t vanish. Those unpaid tens of thousands are waiting there to be reckoned with down the road, plus years of additional interest. ‘Isn’t that predatory lending?’ gasps one of the attendees at the Hyatt. Vondran and Brodetsky change the subject.”
Oh, I see, if it turns out badly for the borrower it was “predatory lending.” Whatever.
“Of 12 homes listed in the area, three were bank-owned and had foreclosed, five were under a short sale, which is pre-foreclosure, and one property was facing bankruptcy,” said Ramirez, who is an association board member.
So much confusion in one sentence. Is he saying that the owners trying for a short sale have receieved a notice of default from their lenders? And how exactly does a property face bankruptcy?
In California at least, you can’t negotiate a short sale without NOD and evidence of hardship.
Why is the state involved in this? ISTM this is a simple decision on the part of the lender: bigger losses in a foreclosure or a short sale? Even with a recourse loan, your ability of make regular payments does not imply the ability to make the lender whole with $50-100k out of pocket.
They’re selling houses now in Riverside, San Bernardino now for 35K. Does anyone know what they rent for?
As for West LA, prices haven’t crashed but are slowly falling and and I see more houses for sale. However, another big change I’ve noticed, and I think the 2010 census will really show this: Americans are giving up and just leaving this area. Whites are leaving even West LA (and also Sherman Oaks), I don’t know where they are going but suddenly I’m seeing, just over the past couple years but it’s increasing, many more Mexicans, Armenians, and some other different people here. I’m just noting a major demographic change that could affect real estate prices if native-born Americans have finally given up on this area…
In other news, I’m trying to help a friend rent out her condo in Beverly Hills. I’ve reduced the asking price by a thousand dollars per month, but still no takers. They’re telling me at Westside Rentals that there are 5-6 vacancies for every renter, and people are leaving California in droves. Fortunately, it doesn’t affect me because there is still a ton of demand at the low end, and I’m low end, but it does seem to confirm what I was thinking - upper income whites are getting out of here.
lainvestorgirl: “Americans are giving up and just leaving this area. Whites are leaving even West LA (and also Sherman Oaks), I don’t know where they are going but suddenly I’m seeing, just over the past couple years but it’s increasing, many more Mexicans, Armenians, and some other different people here.”
So Americans=white ? Thanks for the laugh.
We are looking for a new place in LA around $3,000 per month and the options are terrible. People still think their crap-shack is worth $700k to $1,000k (should be $250k to $300k) and now are trying to rent these junkers for $3,000-6,000. I am sadly disappointed with the state of the LA rental market at the moment.
We have found a couple homes but most are very far away from Downtown or a decent house in a crap neighborhood.
Personally, I would wait. LA prices have barely just started to budge. Give it a year, at least. If you need to be near downtown, have you looked in Silverlake? Los Feliz? Pasadena? I have seen some decent price reductions in Culver City. Hope this helps.
Have you looked at the foreclosures?
The problem with foreclosures is that many aren’t in great shape and require a ton of sweat equity or cash. The good ones will get snapped up faster and discounted less, unless the supply greatly exceeds the demand (not if the gov’t has anything to say about it), or if the demand drops (which is a real possibility, especially in California).
Where did my post go? Anyway, go ahead, call me racist, I don’t care, this is a blog about housing values, and if demographics in an area change this much, it’s going to affect housing values. I don’t dislike Mexicans, Armenians, Persians, etc., many are nice, productive people, but as a real estate issue, I can’t think of a city in America that went up in value when all the native born citizens left and foreigners came in, can YOU?
I can’t think of a city in America that went up in value when all the native born citizens left and foreigners came in, can YOU?
Manhattan N.Y.
Any place in Hawaii.
“I can’t think of a city in America that went up in value when all the native born citizens left and foreigners came in, can YOU?”
Yeah, pretty much all of them.
Irvine, CA
Portland, OR
Silicon Valley (Chindians…)
Example 2: The whole country, circa 1500-1800 (white Europeans)
lainvestorgirl, you missed the point that Americans are of all kinds of shades. BTW, as it has been noted for many years now, the only “real” Americans are Native Americans. If we go far back enough, we all came from someplace else : )
So Americans=white ? Thanks for the laugh.
We believe that the best of America is in these small towns that we get to visit, and in these wonderful little pockets of what I call the real America, being here with all of you hard working very patriotic, um, very, um, pro-America areas of this great nation.
Fun fact: blacks outnumbered whites in colonial South Carolina.
I’ll add one more thing. Blacks outnumbered whites in colonial america. That’s why they were counted as 3/5 man in the Constitution.
That’s not why. They were counted that way so that, once the northern states accepted slavery (in a document alleging to be about freedom and justice, no less), southern slaves wouldn’t count a whole person, and thus lead southern states to outvote the northern states. In other words, this was about dividing power amongst whites. If your calculation were right, northern states would have to have miniscule white populations such that adding their number to southern whites would still leave the country with fewer whites than blacks.
IAT
lainvestorgirl: “Americans are giving up and just leaving this area. Whites are leaving even West LA (and also Sherman Oaks), I don’t know where they are going but suddenly I’m seeing, just over the past couple years but it’s increasing, many more Mexicans, Armenians, and some other different people here.”
So Americans=white ? Thanks for the laugh
….
“Americans” = white and vote Republican!!!
“…many more Mexicans, Armenians, and some other different people here.”
Truly, racism is so deeply ingrained to your thought processes.
I know people like you. I’m surrounded by neighbors who all have Obama bumper stickers on their cars, they are all leftwing and diversity loving. I don’t think Republicans can score more than 20% of the vote here
…then when the few of them who do have kids start looking around at schools, not a single one puts them in a diverse local public school. Our neighborhood school, for example, is Broadway Elementary in Venice Beach. 90291. Go ahead, look up the demographics on LAUSD’s website, I don’t think there’s a single white kid in the whole joint, and the whole neighborhood here is leftie, hip whites.
Freakin’ hypocrites.
Bingo!
It’s ok LAIG, wait until they, or one of theirs gets to meet and greet the multicultural disaster face to face.
We have imported a ton of people who harbor nothing but loathing for us and our nation.
And 50% of the population backs them up out of false white guilt.
The next few years will be a learning process.
C’mon, don’t these people even bother to notice TV and Radio touting La Raza? Do they not understand what they are dealing with?
They will soon. The ones that survive.
LAIG, didn’t you just say a couple of days ago there’s no difference between Republicans and Democrats?
I can quote your post if you’ve forgotten.
Are you trying to have it both ways, or are you just incapable of admitting the truth? Either way, I’m sure you don’t think you’re being a hypocrite, but I can’t think of a better word right now.
LAIG,
Here are the statistics on Broadway Elem.
289 students: 235 Hispanic (81.3%), 43 African American (14.9%), 10 White (3.5%), 1 Asian (.3%).
LAUSD district percentages are:
Hispanic (73%), African American (10.9%), White (8.8%), Asian (3.7%).
It is interesting to note that the Hispanic population at this school has decreased from 84.1% to its current level of 81%.
LAUSD doesn’t have a large population of White students to begin with so the low percentages of Whites at this school doesn’t seem too unusual considering the demographics.
ps - I think some ppl might be offended when all Hispanics are referred to as Mexicans. While the majority of illegal immigrants (57%) come from Mexico, Central and South American countries also account for 11% of immigrants. (Center for Immigration Studies) I think it’s interesting though that very few ppl talk about illegal immigrants from Russia, Europe and the Caribbean. Perhaps because most of these immigrants tend to be “white”. Just a thought…
Source: Eddata
http://www.ed-data.k12.ca.us/Navigation/fsTwoPanel.asp?bottom=%2Fprofile%2Easp%3Flevel%3D07%26reportNumber%3D16
LAinvestorgirl may have used those terms indelicately, but she was basically accurate. “White flight” is a term that has been around long before blogs existed, and accurately describes the demographic shift we are seeing in L.A. I indirectly participated in this process last year (though I was mainly “fleeing” the high cost of living, overcrowding, crime, pollution and traffic, not the fact many of my neighbors were non-whites).
I think the blog P.C. police here need to relax and take themselves a little less seriously. Maybe tell a racial joke or two.
I think what we’re seeing is the result of our Republican “leaders” refusing to enforce immigration law. Too many immigrants flowing in at one time (legal, illegal, and semilegal) pushes down wages, burdens the school system, and causes social unrest. This is especially true when the immigration policy favors one type of immigrant (e.g., Central and South American) over all others, which is the opposite of “diversity”. That’s why the native-born people don’t have their kids in the schools there, and that’s why they’re leaving. For the immigrants, this is business as usual — They expect their surroundings to deteriorate. It turns into a positive feedback cycle.
For the immigrants, this is business as usual — They expect their surroundings to deteriorate. It turns into a positive feedback cycle.
Which is really sad. Not that long ago, people used to immigrate here to *improve* their lives and took pride in becoming “Americanized”. Not to experience more of the same.
I’m in the hood quite a bit, and from what I can see, the blacks and Mexicans don’t appreciate diversity that much either…They’re having a race war on each other that the media refuses to report on. Many of the “gang-related” shootings you hear about are really just random shootings by black on brown, or vice-versa.
“Which is really sad. Not that long ago, people used to immigrate here to *improve* their lives and took pride in becoming “Americanized”. Not to experience more of the same.”
Testify, brothah! Nope, seems like most people who come here these days, are here for the beer.
To quote the title of that new book “It Takes A Pillage”.
“Maybe tell a racial joke or two.”
How about not? And I’ll promise not to ridicule those of you who believe in Goat Swill and Resurrections. Or have teeny peni. Or whine all week because their husband has to pay tax on his 250K+ (!) salary.
Don’t we all owe Ben the courtesy of simple human decency in our postings?
Civility of discourse is one of the things that distinguishes HBB from so many other blogs catering to the resentful, the mean-spirited, and the small-hearted. Perhaps you would be happier venting there and saving your more reasoned commentary for the thoughtful and respectful community that posts here? Please?
Agree overall, but I think we ought to include eliminating reflex, gratuitous accusations of racism while we engage in an overall lowering of the temperature.
For example, those who get enormously offended with the casual association of the term “American” with those who reside in the United States, as opposed to Central and South America–I mean, when Hamas and Iran chant “Death to America!”, I guess they’re REALLY talking about Guatemala and lower Chile, right? Gimme a break–referring to the United States as “America” is reasonable, casual speech.
Very many people on this blog appear to think that the road to success lies in the quickest, hardest, meanest skewering of one’s opponent possible. Which brings to mind the old saying, perhaps apocryphal, describing some old warhorse warrior: “Often wrong, but never in doubt”. It comes in handy.
ahansen,
I’ve known HARM for years and that’s just his sick brand of “humor”. You get used to it!
What about ALL the Armenians in Burbank/Glendale now? What has property value done since ‘06?
I like that idea…tell the “PC Police” that they need to take a break and let’s start telling racial jokes and how non-whites ruin all the good neighborhoods.
Then when the right-wingers and bigot’s feelings get hurt, tell the offenders that they are being “abrasive” and are disrupting the good vibrations and harmony of the HBB.
Yup, nice to know that the political correctness talk only swings one way on this blog…no hypocrites here.
“…and some other different people here.”
Pull your skirt down, you’re reveling yourself & Daffy thinks it’s Dessspicccaaaaaaaaaaaable!
Go ahead, call me a racist, I don’t care. From our previous home in Valley Village, I could see helicopters hovering in circles over our local high school due to massive fights between Armenian and Mexican students (fights involving hundreds of “kids”), as police cars whizzed by to break it up. But no worries, changing demographics are great, we’ll all be one politically correct happy family here.
lainvestorgirl,
Cheer up! Not all of us out here disagree with you. You have to remember that in the US today it is not PC to not be PC.
Oh no, Welsh laborers from rival towns never got into drunken, murderous fights working on the B&O. Gangs of Irish teenagers never marauded through New York City. Irish work gangs never murdered Japanese in SF race riots. Unemployed Irish immigrants never rioted when the draft squads came to Chicago.
Get a clue.
Never mind the jerks, lainvestorgirl. We who live here know exactly what you’re talking about. Additionally, anyone here who has Mexican-American friends and neighbors and in-laws knows that the old line Americans of Mexican ancestry - along with the rest of us - use the word “Mexican” to describe each succeeding wave of poverty class immigrants from Mexico. Old time Southern Californians of all ancestries simply ignore outside-our-area knuckleheads who just don’t know what they’re talking about. SoCal is probably the most SELF-segregated region of the nation, so the bleating from the more recent products of the education system…well, it just doesn’t mean much, does it? Hey, “not a gator,” did you finish that term paper on race relations in U.S. History? Sounds great, in theory. Go back to the dorm, if you want to flame again.
I don’t believe I’m a “jerk,” Alfie. My family has lived in South CA for five generations now, and are cognizant of the fact that a couple of hundred years ago, California WAS Mexico. Borders change as populations shift due to economic, geologic and political factors–as is happening now. People do assimilate as they become established. Perhaps you will too.
As for self-segregated, I don’t know where you live, but where I grew up (Palos Verdes–Mexican name, BTW, as are many of the upper-income areas of Southern CA.,) the old-line families were indeed integrated through generations of inter-marriage into wealthy land grant holders.
As for “bleating” I went to high school in PV, then onto UCLA and later, Caltech (all local) and not all that “recently” either. Attitudes such as yours were considered déclassé even then. Maybe things have changed where you live….
I, personally, find your ad hominem attack on gator’s accurate statement of historical fact most offensive, and would ask that you mind your manners at the dinner table, okay? Thank you.
“anyone here who has Mexican-American friends and neighbors and in-laws knows that the old line Americans of Mexican ancestry - along with the rest of us - use the word “Mexican” to describe each succeeding wave of poverty class immigrants from Mexico.”
Wow, an expert in race relations, who knows how Mexican-Americans, Southern Californians…as well as the “rest of us” think!
Cool, lay that magic juju on me, man! You married one and had a happy camping trip or two with another…clearly you’re “special”, since that gives you more expertise on the subject than anyone else with similar friendships and family ties.
Impressive!
Remember the rules here: always be nice to other posters…oops, that’s unless you happen to be a right-winger…then you can say pretty much anything you want.
“Wow, an expert in race relations, who knows how Mexican-Americans, Southern Californians…as well as the “rest of us” think!”
Hey, just the other day, you were enlightening us as to what Latvians/Russians/Eastern Europeans “really crave”. As opposed to what they don’t “really crave”, but merely “crave”, I guess.
Lighten up.
“Dude”,
Your response to that comment was that I had to be Latvian to discuss Latvia, and look at you now. At least I wasn’t insulting them.
Here’s something that may not have occured to you yet: The whole purpose of ahansen’s comments was to change the tone and have people lay off of the insults and demeaning generalizations.
Like I said, political correctness swings both ways. I have a right to speak my mind like everyone else. Put that in your bowl and smoke it…
Gently….carefullly….respectfully….
I don’t think your response makes much sense.
So, where did you go to med school, anyway?
I think he went to the Andrew Weill School of Naturopathy…
So, where did you go to med school, anyway?
Wow, digging through all my posts for ammunition, eh?
If you need to delve into people’s personal lives, hang out at eharmony.com or call the CIA. I’m not biting.
Actually, it was your post from a day or so ago–probably on the same day that you intuited the Latvians. Your defensive reference to your MDeity degree stood out.
Now: why are you so defensive?
(PS: when it comes to the CIA–and this is something any homegrown racist bigot Repub is taught as a pup, but don’t let the word out just yet–just because you can’t hear them doesn’t mean they’re not out there. Wheels within wheels, NSO. Wheels within wheels.)
“I, personally, find your ad hominem attack on gator’s accurate statement”
Hey, now, there’s no need to make snide remarks about homosexuals here. They should be free to choose their lifestyles.
Oh, SNORT! I’m gonna use that one, palmy.
I’m sorry my “MDeity” degree makes you feel insecure. Your problem, not mine. Take some Enzyte and buy a monster truck…that should make it all better.
Doctors orders.
Hwy.’s just having another LSD-induced flashback. Methinks he spent too much time at Woodstock.
Pay him no mind.
You should know by now diversity and tolerance only applies to different kinds of left-wing thought.
“You should know by now diversity and tolerance only applies to different kinds of left-wing thought.”
Lovely, isn’t it? Straight out of 1984.
lainvestorgirl,
As I said before all the return posts;
Cheer up! Not all of us out here disagree with you. You have to remember that in the US today it is not PC to not be PC.
I applaud laig for telling it how she sees it.
Ummm, Mexicans, Venezualans, Argentinians are native-born Americans. There’s North America and there’s South America, got it?
Hey Salad, since human life began in Africa, using your logic, wouldn’t that make us all Africans…regardless of where we were born?
My logic was based merely on looking at a map.
Stop being difficult and just admit you don’t like lainvestorgirl.
All you are doing is playing a game.
The term ‘America’ commonly refers to the United States. Native Mexicans don’t call themselves Americans. They might call themselves North Americans, but they don’t drop the ‘North’.
what? i have no feeling one way or another about LAinvestorgirl. Just commenting on what appears to be a technicality as to the term native American.
Yeah, but “America” is the nickname given to the United States of America. When people say “America”, they’re talking about us.
Amen!
The smart people see what is going to happen in California.
It is in economic chaos. The crime rate is soaring.
This summer will be hot and mean, all it will take is one “abusive” arrest and we will see a looting and riot event made up of illegals and other newly arrived guests.
The wild card is an earthquake.
The end result is that California is going to be the spark of the conflagration of our multicultural disaster.
“The smart people see what is going to happen in California.”
Not just Cali, Max. With the exception of earthquakes, I think you’ll see the same in Miami, NY, Chi-town, Houston, even in small towns. The illegals in this area have now started to prey on the elderly in one of the retirement communities near here. This multi-cultural powder keg is ready to blow. You can have a mixed race society, provided the culture and language is agreed on. Any other way never has and never will work.
“They’re selling houses now in Riverside, San Bernardino now for 35K. Does anyone know what they rent for?” -LAIG
Who cares? It’s a real good deal-o, Gonna spend the rest of their lives in San Ber’dino.
From the great Frank Zappa - San Bernadino
She lives in Mojave in a Winnebago
His name is Bobby, he looks like a potato
She’s in love with a boy
From the rodeo
Who pulls the rope on the chute
When they let those suckers go
He’s a slobberin’ drunk at the Palomino
They give him thirty days in San Ber’dino
Well there’s forty-four men
Stashed away in tank “C”
An’ there’s only one shower
But it don’t apply to Bobby
You may think they’re
Dumb an’ lonely
But you’re wrong
‘Cause their love is strong
Stacked-up hair
An’ a cheap little ring
They don’t care
‘Cause it don’t mean a thing
Looka there…
They don’t care
Best-est way that
They can feel-o
Out on the highway
Rollin’ a wheel-o
He’s her *Tootsie*
She’s for real-o
Trailer park heaven
It’s a real good deal-o
Real good deal-o
Real good deal-o
Real good deal-o
The rest of their lives
In San Ber’dino
Gonna spend the rest of their lives
In San Ber’dino
The rest of their lives
In San Ber’dino
Come on with me
Come on with me
Come on with me
Down in San Ber’dino
Just 60 miles, 60 miles
Down the San Ber’dino freeway
They got some dark green air
An’ you can choke all day
That’s right
Gonna spend the rest of their lives
Rest of their lives
Rest of their lives
Say now
Ain’t talkin’ ’bout Fontana
Ain’t talkin’ ’bout uh uh
Ain’t talkin’ ’bout uh uh
Ain’t talkin’ ’bout uh uh
Ain’t talkin’ ’bout the Redlands, no no
ZULCH is the auto works
I’m telling you
That’s where they take
All the cars that they hurt
Come on and let’s all go down to San Ber’dino
Ooo-ooo
Ooo-ooo
Ooo-ooo
Let’s go down down down
Down in San Ber’dino
Wouldja b’lieve it
San Ber’dino
San Ber’dino
(*Got to call it*)
San Ber’dino
(*C’mere*)
San Ber’dino
etc., etc., etc.
The rest of their lives
In San Ber’dino
Oh Bobby, I’m sorry you gotta head like a potato
I really am
lainvestorgirl:
“They’re selling houses now in Riverside, San Bernardino now for 35K.”
Still overpriced.
Frank Zappa had something to say about San Bernadino.
http://www.youtube.com/watch?v=WHWnZtfgFys
Blog ate two posts, Frak! Maybe 3rd time is the charm?
35k is too much for a house in San Bernadino, unless they’re,
“Gonna spend the rest of their lives in San Bernadino” - Frank Zappa
The “market will clear”? Yeah, a plugged toilet will clear too if you keep flushing it…
This housing market is getting the Roto Rooter treatment of a lifetime…
You’re better off using a closet auger on that plugged toilet.
I prefer a Joshua Tree
Sorry, but JTs don’t clear clogs as well as augers. They are, however, quite useful for other things.
Well if a TP ball is the culprit, and you let it soak for a while you can carefully fill the bowl up to the rim with water. The weight of the water will assist in driving the TP ball down the pipe. All the water will follow. But you have to manipulate the handle with a gentle touch, as you don’t want the flapper to open up all the way. Just sayin’.
“Yeah, a plugged toilet will clear too if you keep flushing it…”
In general, the 2nd flush is usually a mistake when confronted with an obvious lack of clearing…
LA-based landlord Conrad Wytte bought a 4-unit building in Barstow for about $350K in 2005 (probably, it’s hard to tell), as an investment, and expects to sell it for about $190K, “less than half what he still owes on it.”
Correction: he bought it as an ATM machine.
az_lender,
Not that there wasn’t specuvestment in virtually -all- aspects of RE but I’m more inclined to extend latitude to multi-family investors than SFH/Never Been Occupied-Flippers.
At least there’s a pretense of actually renting it out to make things pencil? True, ‘05 was very most definitely a better year to -selling- than buying but I suppose in the end we taxpayers will be subsidizing this malinvestment all the same.
He bought it for $350K and owes more than $380K. How did this happen?
It’s Barstow. He probably had to call in HazMat to clean out the meth lab.
For whatever reason, the story about the Manteca couple bothered me:
“Their home is costing them $40 a month more to buy that it did to rent a one-bedroom apartment for $1,025 a month previously at Paseo Villas.”
Does that include property taxes, insurance, maintenance and all the other fun stuff that comes with it??
““We didn’t want to raise our baby in an apartment,” Tony, 24, said.”
There are worse things in life, kid. Sheesh.
“They made the offer on Christmas Eve only to have Wilson call them back to let them know there was another pre-approved buyer but that buyer was maxed out.”
““We ended up getting it for just $500 more,” Tony said.”
Somebody somewhere is trying to hit a number.
“The Davenports quickly learned that finding the “ideal house” with desired bells and whistles for a low price wasn’t realistic.”
Somebody’s in a hurry.
“Tony said he liked the idea of not “writing a check at the first of the month to send money down a hole” and that instead they were buying something to call their own.”
Hey Tony, look at your amortization schedule. See all that interest you’re paying up front every month?? You don’t “own” any of that. You’ve just bought yourself a different landlord.
“Tony and Crystal said one of the best things besides having a place of their own that they can improve as they wish is the fact they now know what their housing costs will be each month for the next 30 years instead of worrying about rent increases.”
Don’t forget those property tax assessments, dude. I doubt they’ll stay the same the next 30 years.
“The couple appreciated their families who have helped them but especially Jeff and Tevani Liotard.”
Hmmmm, I smell downpayment assistance here.
For whatever reason this story put me in a foul mood.
Blano,
For the most part, agreed. But it’s not easy to raise a child in an apt. setting. I speak from experience. Constant turnover of people so it’s hard to get to know your neighbors. As such, you have to be on constant guard.
Of course, now that we’ve become Flipper Nation how much does Suburbia know about our “neighbors”?
Unless it’s high end, I can’t blame anyone for not wanting to live in an apt.
I raised 2 daughters in apartments - small units. And we did move a few times in their childhoods. They turned out just fine and, in fact, ours was the hang out always. We had the smallest place, yet all the kids at all ages wanted to be there. This idea that you can’t raise children in multi-family housing is total bunk. I gave up lucrative career opportunities to be home and involved with my kids. Neither of them would have traded that for a house of any size.
are they crazy,
Hey, more power to you and if-you-will-recall… I said I’ve done it myself as well. I don’t doubt your girls turned out fine, I’m just saying it’s PITA.
No need to “out thrift” anyone.
I had a little kid once.
Wow..he was a little Negative Cash Flow Machine…on wheels
Remember the good old days when it was recommended that you stretch yourself to buy your first house, because salaries always go up……..well, there you go.
Actually, I personally think they’ll be OK. I wish them well.
I think Blano analyzed the errors in the couple’s thinking quite well. Just because we’re coming to a lower price level doesn’t mean that the questionable rationales people use to buy real estate are suddenly valid. And salaries don’t always go up. Some continue to climb their respective career/wage ladders, but many others are replaced by younger, less-expensive workers or outsourced.
“Just because we’re coming to a lower price level doesn’t mean that the questionable rationales people use to buy real estate are suddenly valid.”
Agreed. Even before the bubble, people bought houses (and lots of other stuff) they couldn’t afford. It’s an emotional decision, not a sound financial one. People need to control their impulses and crunch the numbers, not listen to the danged RE ads (or misguided friends and family).
That said, and go ahead and flame me, I wouldn’t want to go back to apartment living. I sure as heck wouldn’t want to raise kids in one, either. It’s just too close to the neighbors and, since I don’t get to choose my neighbors, I’d like some distance from them. It’s not snobbery, it’s a desire for some privacy and peace.
-potential buyer:
I know you commented up above on the inflation thread, but the “stretch yourself to buy” requires on-going wage inflation on an idividual scale. However, for the past ten years we’ve experienced massive bubbles in real estated and the stock market (twice!).
Are wages the next bubble? Are wages at a “permanently high plateau”? Is it different this time? Or have wages already popped as measured by the growth in the jobless claims?
Assuming that wages are not already popped, can we even have rising wages when unemployement is rising, the stock and real estate market is declining, and there is an entire generation on the verge of retirement that has a median net worth of $80,000 (to cite a Bits Bucket thread a few days ago)?
All of which comes down an important point in all investment decisions: It’s about the future, not the past.
I agree, Blano. They are catching a knife, and should have waited another year for prices to fall another 25%. There’s too much “foreclosure mania” out there.
““We didn’t want to raise our baby in an apartment,” Tony, 24, said.”
I agree with him. Shouldn’t have had a kid.
…until he could really afford a house.
well some of us have been waiting to afford a house, and when you hit your mid 30’s you just have to go ahead with the kid, if you ever want to have one.
you don’t need a house to raise a child. Children can live in apartments or rentals. It is really ok.
Hell I see lots of people that have kids that shouldn’t have them. But I can tell you that I’m sick and tired of people saying that now because my wife and I have a kid that we “need to buy a house”. Well, why exactly? We live in a burb very close to a major city, our neighbors are nice and we know them all, and yes… we wish we had some more space but the apartment is immaculate, and rents for about half what we’d have to pay to live here to own it.
Meanwhile, our other married friends who bought into this mentality live 50 miles out from the city, have horrible commutes, never come into the city to go out because of the distance, never have the money to go out, and always complain about how mind-numbingly boring their towns are.
Who leads a better lifestyle for the kids? Who’s happier? I can tell you, we are, without a doubt.
Well, pat yourself on the back.
Nice work, brew. Well done.
In defence of Tony, and a whole bunch of other guys…..
If your wife/girlfriend/significant other of the female persuasion decides she wants to have a baby, your adamant “No” or “Not now” doesn’t mean squat. All she has to do is stop taking her birth control, and “forget” to tell you about it.
Happens all the time.
Bumper Sticker I saw today:
“DRIVER CARRIES NO CASH……HE’S MARRIED”
When I was conceived, it was in my parents’ apartment in Pittsburgh. They moved to their new house a few weeks before I was born.
Blano - it’s CA, their prop taxes will only be 1% of what they paid and no more than something like a .02% increase per annum. There was a taxpayer revolt a few decades ago, thank god, otherwise counties would be taxing homeowners beaucoup bucks in todays economic ‘crisis.’ Instead munis have to suck it up and cut the lard. The question is whether the hubby, who works for TID - is one of the muni workers who’ll be axed. Why he bought in Manteca, which is 30 minutes + from Turlock, when there are oodles of exactly equivelant houses in Turlock which are priced below Manteca prices is the real question, in my mind. If the governator gets his way and they revive the $.12 per gallon of gas surcharge as the economy continues to tank in this state hubby may regret opting for Manteca rather than Turlock.
Property tax increases are capped in CA (they can only go up by 1% per annum, forever).
And by the way, $1,065 per month on a mortgage of $150,000 (assuming they borrowed it all) is a debt constant of 8.5%. It wouldn’t surprise me if their “cost” included something other than interest. 8.5% for a conforming loan is way too high. At a minimum, there is amortization included in their number. Property taxes will be ~$125 per month (capped at increasing by about $1-2 per month per year).
And the final point. Who on this board would pay an extra $40 per month to go from (presumably older) one bedroom apartment to a (presumably newer) house? I would. And I’m guessing 95% of the people on this board would.
Is it that hard to believe that prices have fallen to a point where it makes sense to buy again?
They probably have in some places. Those places, however, are not where any of us want to live. For those who have stable jobs in the Central Valley and like it there, I say have at it, although this Depression might bring prices down further still.
Apparently the people who are buying homes in those places want to live there. The market needs something positive. Burning off of that inventory will restart home construction in those markets (at a very slow pace to begin with), but it will put some people back to work, which will be good.
I think that a lot of “those” places are still generally trending downward, but it would surprise me if they don’t bottom in 2009 sometime in those markets.
Coastal areas still have a long way to go, I definitely agree with that. I live in one of those coastal areas and don’t even have plans to LOOK at homes for a couple of years.
Yes. Rents have not hit bottom, so comparisons right now are meaningless. Mortgages are not for 12 months like most leases. Rents have lagged since most people are in long-term leases, but they will continue to go down as annual renewals come up and are negotiated. The bubble in rents was less severe, but it was there and totally unjustified by changes in salaries/wages. Only when rents adjust more will comparisons between cost to rent and cost to own be useful as a guide.
I saw countless apartment opportunities over the past several years that anticipated apartment rents going up, up, up, at rates greater than inflation.
The big problem today is that rents did not go up at anywhere close to what the investors projected (and too much debt was utilized to make the investments, but that’s a different story). In other words, I don’t think there was a rental bubble of any magnitude in most of the “bubble” housing markets, as those markets had a lot of housing inventory and everyone with a pulse could buy a home–keeping rents down.
That said, I would submit that even if rents fell by 10% over the next year (a lot), going from an older one-bedroom apartment to a newer single family home for $150 more per month is a decision most people would make. The differential in rent for a one-bedroom to a single family home is far more than that anyway, clearly making the point.
Rents have already gone down 10% in Manhattan. And we’re just at the very beginning.
“Both Crystal and Tony think that anyone that is renting should check into buying as soon as possible noting that the current prices aren’t going to last forever.”
You’re right, the current prices are not going to last forever; they are going lower! Now excuse me while I write a check that will be going “down a hole”.
I’m drinking a diet Coke. It’s going down a hole too. What a waste, huh?
“Data recently released by the California Association of Realtors shows that home sales are climbing as the median price of a single family home fell off by 40.5 percent from January 2008 to 2009.”
That 40+ percent YOY rate of decline is sure showing up a lot in California price data these days — month after month after month, in fact! The figure may be a bit misleading, as there is an asymmetry between the rate of decline and the rate of appreciation. For instance, a 40.5 percent YOY decline suffices to wipe out one year’s worth of gains at an appreciation rate of (1/(1-0.405))*100 = 68 percent.
Can any of you bubble heads tell me in how many of the bubble years California prices went up by 68 percent in one year? (My guess: 0, but please correct me if I am wrong.)
By my recollection, the peak appreciation rate during the boom in places like LA was around 23 percent annually. At this rate, one year’s decline of 40.5 percent would suffice to wipe out 2 1/2 years’ worth of frenzied froth.
159 yrs ago
Do you know what happened this week back in 1850, 159 years ago?
California became a state.
-The State had no electricity.
- The State had no money.
- Almost everyone spoke Spanish.
- There were gunfights in the streets.
So, basically, it was pretty much like California is today except the women had real breasts and the men didn’t hold hands.
Bear, I hate to break the news to you, but men showing affection toward each other (and it didn’t stop with hand-holding) was quite common in the mid-19th century. Same thing for women.
I knew that — the post was meant to be humorous, not to be taken seriously; sorry my sarcasm tags were not turned on.
I think you know what kind of “affection” is being referred to.
I am sorry California, but I had to quit you.
“…So, basically, it was pretty much like California is today except…”
The 790 mile long coastline is only …slightly…more polluted then 159 years ago…among other things.
Oh yeah, those were the golden years environmentally. Dumping raw sewage and toxic waste into the oceans. Clear-cutting the forests. Poisoning mines with arsenic and cyanide. If you think things are so bad now, there was absolutely no environmental conscience 100 years ago, just less spoilage.
“…Oh yeah, those were the golden years environmentally”
Population of California exceeds 300,000…1853
According to census.gov, the 2008 population estimate for California is: 36,756,666
But hey, California leads the nation in sales of Toyota prius…so things …overall….have to get better!
Lighten up, y’all. It was a joke. And a pretty funny one IMO.
I didnt realize homosexuality was a recently discovered life-style choice. I always thought a certain percentage of the population was historically born that way. You live and learn I guess. Or not.
Not recently discovered, but recently banned in California (at least so far as same-sex marriage goes)…
…and land was free, as long as you cleared out the Injuns and dug a well. The only thing the settlers cared about at the time was gold.
I emailed this to Ben, but believe me, you have to read (or listen to) this.
http://www.npr.org/templates/story/story.php?storyId=101386052
It’s “Revenge of the Banks”. YOUR name is on the title, so YOU are the one stuck with the house. Some of the quotes are hysterical.
It was like this in Detroit in the late 80’s too. Houses can have negative worth.
The bank only holds a lien against the property, they never owned it and don’t have to take it. Foreclosure is an option of the lender’s not the “ower’s”. How about keeping these people in their homes, let’s get on this Obama these people NEED to stay IN their homes!!!!
Great article!
Neat! If the “owner” was forced out by the Sheriff, by request of the lender — who decided to not buy the property back, I find it hard to pin the bill on the person who occupied the house.
Back by Popular Demand
It’s the Bay Area meetup. This has been delayed due to the Vegas thing, but you Bay Aryanites are starting to get antsy, so I’m setting a date. It will be Friday, April 3rd, sometime after work, somewhere in Newark (right of the 84 on the east side of the bay).
Plz e-mail me at BigVHBBatgmaildotkom if you think you can go.
Thks,
Big V
Do you actually call yourselves Bay Aryanites?!
No, Bay Aryans. I just added the “ites” for philosophical effect.
“He bought the property for about $350,000 and currently has it listed online for $299,000. Realistically, Wytte said he doesn’t expect to be able to sell for more than about $190,000 — less than what he still owes on it.”
Another Darwin Award nominee.
Me thinks he has negative equity, has no money to bring to the closing table, and has no approved short sale amount. He may be able use those good faith efforts to try to get a check from Obama and his posse for the difference. These poor, poor ppl. LOL. People attack me for being such a liberal Democat, but even I recognize Obama is a totally worthless, egomaniacal snake.
Republicans used to protect the working rich and Democrats the working poor. Now the Republicans represent the idle rich and Democrats the idle poor. Neither party seems to comprehend the importance of an independent judiciary and honest regulation.
Well said!
This is great news for those of us looking for TRUE cash-flowing, income producing properties.
This is one of the few stories I’ve heard on multi-family landlords finding reality. Specuvestors have been waaaaay overbuying thinking that plexes magically have more value to them than SFHs. I’m guessing this place in Barstow isn’t worth more than $150K when you do the math on income potential.
Hey, dummies, you still need to be able to cover your mortgage payment! (+10% for maintenance, etc, etc)
My brother was driving by the Countrywide building in San Diego this weekend and said he saw them removing the Countrywide sign…SURPRISE!
Probably replacing it with “Penny-Mac”. Seriously, that’s the name of the new company founded by former Countrywide executives to buy up mortgage paper. Supposedly Mozillo is included.
Cockroaches!
Hey guys, I’m in the market to buy in Laguna Niguel. What do you think the price per sq foot will get to there?
I’m hoping to buy a 2200 sq ft or greater house/ 3 car garage for 375k-400k. Do you think we will see these prices?
thanks
John
You’ll get it for less than that. Wait until next year before you ask that question again.
WSJ Developments
March 4, 2009, 7:01 am
More Americans Drowning in Mortgage Debt
James R. Hagerty reports:
More American homeowners are drowning in debt, according to a new research report.
Because home prices continue to drop across most of the country, the mortgage debt on about 20% of all U.S. single-family homes exceeded the estimated current value of those properties as of Dec. 31, says First American CoreLogic, a real estate information firm based in Santa Ana, Calif. That’s a situation often known as being “underwater” or “upside down.” That proportion will rise to 25% of single-family homes if prices fall another 5%, the firm said.
The problem is most acute in Nevada, where the percentage is 55%, followed by Michigan (40%), Arizona (32%), Florida (30%) and California (30%). Stripping out those five hard-hit states, the national percentage is about 14%. In New York State, the tally is just 4.7%.
Being underwater isn’t a huge problem for those who can afford their mortgage payments and don’t need to move any time soon. But it can make it difficult or impossible to refinance or sell a home. And it causes some homeowners to wonder whether they would be better off walking away from their homes and renting something similar for a much smaller monthly outlay.
I don’t know how many homes changed hands in SD on Dec 31, 2008, but the price was the best yet during the correction — $172 per square foot:
Date RPX.SD.1 RPX.SD.7 RPX.SD.28
31-Dec-08 $172.27 $187.94 $196.83
30-Dec-08 $202.31 $196.71 $198.16
29-Dec-08 $185.98 $189.82 $197.19
Prices have not touched that level since February 2002. This sucker is going down fast.
“Call me a racist, I don’t care.”
She cares so little she wrote it twice.
thanks big V, I’ll keep waiting it out.