From Economic Shock To Acceptance In California
The Union Tribune reports from California. “With thousands of homeowners struggling to avoid foreclosure, the loan-modification business has exploded in California. Complaints to the state Department of Real Estate about such businesses have risen from a handful six months ago to a total of 240 through late February. Jane Emery, who lives in the San Ysidro area, said she was tricked out of nearly $2,700 by a loan modifier who promised to resolve her mortgage problems but never contacted her lender. Emery said she stopped making her mortgage payments for five months on the advice of a licensed real estate salesman, in order to speed the modification process. When she finally called her loan servicer in December, Emery said she found out that no one had contacted the company on her behalf.”
“‘I am back to paying my mortgage, but I am out that money,’ Emery said. ‘I am in default. I could lose my home.’”
“One afternoon last summer, Marilyn Velonza sat beside friends in an elegant Chula Vista home, listening to a group of Filipino men promise to lower their staggering mortgage payments and fend off foreclosure. Velonza recalled how comfortable she felt. What she didn’t know was the man leading the presentation was a felon, recently released from prison for defrauding South Bay Filipinos of $25 million.”
“‘I asked my lender to modify my loan, but they would not do anything because I was paying on time,’ said Velonza. ‘I could not do anything, and when I heard about Amerisian, I did it right away because they said they would help me.’”
“Amerisian clients share similar backgrounds. The five individuals who spoke with the Union-Tribune are Filipinos working in low-paying jobs, often juggling multiple shifts as janitors, mechanics or receptionists. Many emigrated from the Philippines in the past couple of decades, and heard about the trusts through Filipino friends and co-workers.”
“They bought or refinanced their homes near the market’s peak, between 2004 and 2006, and in some cases, wound up with risky adjustable-rate mortgages.”
The Signal. “A recent study by the Mortgage Asset Research Institute stated fraud reports on home loans rose 26 percent nationally last year over the previous one. While the report said a large percentage of the fraud is homeowners falsifying loan-application information, there is also a growing number of ‘foreclosure prevention specialists,’ who are deceiving homeowners out of thousands of dollars and, in rare cases, even their homes - all under the guise of saving the owner’s house from foreclosure.”
“Phil Nordella of the Foreclosure Center in Newhall said homeowners shouldn’t let the prospects of foreclosure intimidate them into using a third party. Government programs aren’t so convoluted that ‘they’d have to call a third party,’ Nordella said.”
“His take is that banks aren’t too keen on working with third parties, either. Andy L., a Santa Clarita resident who was struggling to keep his home, said his bank wasn’t very helpful. ‘The bank said there’s nothing we can really do for you because you’re not delinquent,’ said Andy, who had to take a pay cut at work, which caused him to fall behind in his home payments. ‘I was trying to tell them there are problems foreseen coming.’”
“Andy took advantage of the free third-party help offered by Silver Creek Realty in Santa Clarita. ‘I understand where the bank is coming from,’ he said. ‘But there’s a lot of people out here that can still afford their homes - just not on the interest (rate) they’re in.’”
The Monterey County Herald. “The median sales price for a Monterey County home in February dropped 58.3 percent from the same month last year. Last month’s median sales price for all homes, including new and resale homes and condos, dropped to $193,750, said MDA DataQuick. The median sales price in January was $210,000; a year ago in February, it was $465,000.”
“The steep drop in the median sales price has fueled a spike in sales volume: Sales are up 137.7 percent, from 154 closed sales in February 2008 to 366 last month. The sheer numbers of foreclosures on the market are pushing listing prices down to levels one could scarcely have imagined a few years ago. As of Thursday afternoon, Becky Jones, broker associate with Shankle Real Estate, said there were 224 pending sales in East Salinas, while Monterey had 12 properties in escrow and Carmel has 18 pending sales.”
“One two-bedroom, 864-square-foot house was listed at $68,000; another single-family home in East Salinas for $49,900 was already in escrow. ‘In East Salinas, you can now buy a house for less than my car cost,’ said Jones. ‘You get into the Peninsula, you’re not seeing them at that price. If you go to Carmel and Pebble Beach, it’s a completely different thing than Salinas — they’re apples and oranges.’”
“That’s not to say there aren’t foreclosures on the Peninsula: Just this week, a bank-owned Monterey triplex was put on the market for $424,900. Jones said that listing will almost certainly receive multiple offers, which will ultimately drive up the final selling price.”
The Fresno Bee. “In Fresno County, 635 existing houses were sold, up 87.3% from February 2008. The buyers were responding to dropping home prices; the median in Fresno County fell to $127,750, down 46.8% from February 2008 and a 5.7% decrease from January, according to MDA DataQuick. Three of every four homes sold are bank-owned. Lenders are capitulating, which is driving prices down, analysts said.”
“The combination of lower prices, ample supply, motivated sellers, low interest rates and government tax credits creates an unprecedented opportunity, said Robin Kane, a housing analyst in Fresno. Except for those worried about losing their jobs in this severe economic downturn. ‘The recession is the 800-pound gorilla in the room,’ Kane said. ‘But if you have confidence in your job, the question is, ‘Why aren’t you buying a house?’”
The Merced Sun Star. “Merced County’s unemployment rate climbed again last month, to 19.9 percent. That’s up considerably from January’s 18.9 percent and the county’s year-ago unemployment rate of 13.6 percent. Joblessness here is now quickly approaching the highest level ever recorded, 21.7 percent in February 1996.”
“And only three California counties had higher unemployment than Merced in February: Colusa, Imperial and Trinity. California’s unemployment rate rose for the 11th straight month, to its highest level in 26 years. Most of the jobs lost locally last month were in the trade, transportation and utilities sectors, the EDD data show.”
“Pedro Vargas, a state labor market consultant based in Merced, said he had anticipated some gains in construction jobs. ‘It was disappointing not to see that,’ Vargas said.”
The Press Democrat. “Sonoma County’s unemployment rate jumped to 9.1 percent in February — its highest since 1983 — driven by job losses in the retail sector, state analysts said Friday.There were 8,400 fewer jobs last month than there were a year ago, a decline of more than 4 percent. Sales positions took a big hit as more stores cut staff or shut their doors in January and February. Construction, manufacturing, finance, professional services, hospitality and health care also were down from last year.”
“Sonoma County’s unemployment rate has climbed steadily as last year’s meltdowns in housing and finance spread to other industries. Construction has lost 2,200 jobs since early 2008, while manufacturing is down by 1,200. The finance sector, including banks, mortgage lenders and real estate services, lost about 700 jobs.”
“Sonoma County is seeing a change in the mix of people seeking help from its Job Link service, said Karen Fies, who heads the county’s employment and training program. ‘Last year, we had a lot of people from the mortgage industry,’ she said. ‘Now we’re seeing more blue-collar workers.’”
“Retailers overall are the county’s largest employers, providing about 30,000 jobs, said Ben Stone, director of Sonoma County’s Economic Development Board. Department store positions are down by 600 — almost 17 percent — over the past year, according to state figures. Retailing’s slump affects a variety of other businesses, including banks, wholesalers and professional services, Stone said.”
“Stone said the latest jobless numbers reflect the growing number of retail store vacancies. ‘That’s what you can see driving around,’ he said. ‘The recession is widening and deepening.’”
The Glendale News Press. “Glendale has more than a million square feet of vacant office space and Burbank may soon hit that number, with two massive developments nearing completion that have not yet been leased and could increase competition for renters, real estate managers said.”
“Entire floors of Glendale buildings have been empty for months, despite the city’s low rents and business taxes, officials said. And the city’s vacancy rates are the fourth highest in Los Angeles County, at 16.8%, according to a recent report by real estate firm Grubb & Ellis.”
“Although the amount of Glendale’s vacant office space has steadily grown in recent years, the city’s current rate of unoccupied square footage is a product of the nation’s economic recession that has been a part of the impact on local businesses, Mayor John Drayman said. ‘The corporate world is going through an economic convulsion and they are contracting some of the workforces,’ Drayman said. ‘And those feet aren’t on our sidewalk every day, buying those goods and services.’”
The Daily Bulletin. “California’s economic doomsayer had a bit rosier tone than before in his most recent trip to the Inland Empire. The prophet’s message: ‘We’re going to survive this.’”
“Even though Chris Thornberg’s forecast is grim, he brought some level-headed logic to an intellectual mix of real-estate agents, appraisers and business owners who are trying to transition from economic shock to acceptance. Thornberg, owner of San Rafael-based Beacon Economics, spoke at last week’s quarterly luncheon of the Cal Poly Pomona-based Real Estate Research Council of Southern California, a group that aggressively monitors home prices, sales, defaults and foreclosures.”
“The best dose of medicine for the real-estate industry is for home prices to keep plunging. ‘As prices continue to fall, it’s getting easier for low-income families to buy homes,’ Thornberg said. ‘It’s a matter of working through the inventory.’”
“For those thinking Wall Street’s crisis has ruined their early retirement, ‘Wall Street’s sin was making that person think they could retire early in the first place,’ Thornberg says. Wall Street is the ‘13-year-old daughter of the U.S. economy - the drama queen,’ he says.”
“‘All this crap about the credit markets ceasing to operate - it’s not true,’ Thornberg said. ‘There is still credit flowing out there.’ In fact, credit isn’t flowing to companies who shouldn’t have received credit lines in the first place. ‘Wake up - it’s not 2006 anymore,’ he said.”
“As for the now-popular principle of saving money, ‘people are doing what they should’ve done all along,’ he said.”
“‘It’s amazing the same group of people who denied there was a recession are now screaming ‘depression,’ said Thornberg. ‘Hyperbole vastly outweighs what’s realistically going on. Everyone is saying things like, ‘This is a total meltdown.’ Again, it’s all about perspective.’”
A letter to the Editor at the County Sun. “Is John Husing the Inland Empire’s Jim Cramer? Might I play a bit of Jon Stewart? Matt Wrye’s March 12 article, ‘Recovery in the cards,’ yet again uses Husing as the apparently sole voice of economic advice for the Inland Empire. Yet, current disproportionately high unemployment and housing foreclosure rates demonstrate the errors in Husing’s past assessments.”
“Husing’s 2004 report to the San Bernardino County Board of Supervisors enthused that the only path to IE development was to build and sell masses of housing and tilt-up logistics facilities. Both have made the area more ugly, utterly dependent on residents’ increased debt and more dependent upon external sources of capital, which only exports the surpluses of such development.”
“Husing says the IE now needs to find another competitive advantage and implies that capital and innovation will again come from outside the region, California or perhaps the U.S. The Sun and the Inland Empire would do well to seek other perspectives on how the region might best provide for the needs of its residents within the context of natural resources, regional opportunities and global imperatives.”
“I am not implying that John Husing did anything unethical. But he was quite incorrect. And regional power holders, for whom ‘In Husing (They) Trust’ has been their unquestioning faith, must seek multiple perspectives and look carefully at those that challenge existing preconceptions.”
Generally, I appreciate the North County Times’ reporting. They were looking at housing prices versus incomes very early. But this bit may or may not be true:
‘This house represents another huge foreclosure discount in Escondido. The bank bought this one back at the auction for $91,000, meaning an all-cash buyer could have snatched it for a penny more.’
91k was almost certainly what the loan was. And a lender isn’t going to bid it up on itself. I’m thinking there were no bidders at the auction. Here locally at least, the auctioneer will communicate the presence of bidders to the lender by phone. Then what often happens is the lender will bid more than the opening amount via the auctioneer or maybe a local attorney.
Yes, obviously, there were no other bidders. Nobodody wanted the place for $91,000.01.
Oh my gawd, they are looking at housing prices vs income? What is this world comming to? House prices were always tied to income. The gov is trying to keep house prices artificially high with your tax dollars. Instead they should let foreclosures happne and lower the price of houses with lower debt load for families. If the gov tries to pro up house prices they should artificially prop up incomes too. Without income you can’t afford a house.
91k was almost certainly what the loan was. And a lender isn’t going to bid it up on itself. It is usually the case that if the house DOES sell for more than the lender is owed*, the balance must be paid out to the (former) owner.
*of course interest and fees can mean that this amount is more than the amount borrowed.
“Pedro Vargas, a state labor market consultant based in Merced, said he had anticipated some gains in construction jobs. ‘It was disappointing not to see that,’ Vargas said.”
1. Is it the job of consultants to always have upbeat forecasts, Do any ever say “Hey, the next few months or year is going to be rough, going to lose more jobs here???”
2. How do I get one of these jobs??
“As for the now-popular principle of saving money, ‘people are doing what they should’ve done all along,’ he said.”
Belief in the Paradox of Spendthrift is alive and well at the Fed and the Treasury.
I don’t plan to going back to spending a lot of money once the economy improves. There is very little that we need and I have no intention of buying things we neither need nor want.
My wife and I feel somewhat chagrined to realize that we actually don’t want that much more than we already have. We would settle for a financially stable economy where people could focus on the things that really matter in life, rather than trying to acquire ever more toys than the neighbors have, up to the point where one needs to buy a bigger house with a bigger garage just to fit the expanded supply of stuff. I often feel envious of my father’s generation, when people owned smaller houses and spent more of their lives enjoying each other’s company at the tennis court or a barbecue cook out.
We actually have a lot more of some items than we need now. Two people don’t require anywhere near as much as six do.
Welcome to my world!
There is quite literally very little that I “want”. Sure I’d love some of those things but I don’t think I’d be willing to put up with some of the shenanigans that the average person does to actually get them.
There is a vast difference between the words “want” and “need”. Most people don’t
understand the difference.
My brother since he turned 18 and was out on his own, always asked himself, before buying, is it a want or need. I also do the same and find out the majority of the time it’s a want.
I went through a complete 180 in this regard about 10 years ago, when it dawned on me that so much of the stuff we owned was keeping us from doing the kinds of things we really wanted to do, and enjoying life the way we wanted.
I still like to own things, but only if the burden of keeping them is tiny relative to the enjoyment and benefit they provide. It’s been one of the best decisions I ever made in life.
My older brother taught me about “want” vs. “need” when I was eight or so. Mind you, he was ten.
Smart lad. He’s a rocket scientist now. (I *never* get tired of saying that!)
The only thing that my wife and I want that we don’t have is a sailboat. But due to our current schedules, we wouldn’t use one often enough to justify buying one. In the meantime, we just rent one when we want to go sailing.
I’ve got a friend that owns a boat dealership and he gives me the contact info of his recent customers that are looking to rent out their sailboats from time-to-time to help cover costs. It really works out well; we get time on a new and well-maintained sailboat for about 65-70% of the cost of renting older, well-used and poorly maintained boats from the various commercial companies around here.
I’ve got a friend that owns a boat dealership and he gives me the contact info of his recent customers that are looking to rent out their sailboats from time-to-time to help cover costs.
Well, you should go even better. Forget the friend who owns a boat dealership, and go get a friend who owns a boat.
And then you’re set, arencha.
I want an airplane, a yacht, an island getaway, a ski chalet, good quality dining, a loft in Manhattan, …
The reason I don’t have those things is because my net worth must be six times the price of all of those combined. That’s my own rule.
It’s not a vice to want more. Money is the key to more freedom.
It is a vice to spend yourself into debt and my post yesterday conveyed that most people want to display wealth to pretend that they have a lot. Humble people live well below their means.
Yep.
I love Thornberg. He’s the Will Rogers of economics.
Even better than Will Rogers, ’cause he’s cute AND mean!
I remember a month or so ago I was all in a fever to start a Chris Thornberg fan club, with giggly Japanese school-girls and everything.
I gotta find my Blackberry thingie, with my notes of what to do. Before that, I was writing notes to myself on my hands and arms and stuff, with a Bic pen. And I’m not sure that didn’t work better.
Anyway, yeah! Fan club time!
Oh, you know what, I think I dropped my Blackberry in the sea, now that I recall. I think I even complained to you all about it, when I did it. I was kayaking late at night on Totten Inlet and I leaned over to kiss the face of the moon floating upon the water, romantically, like the poet Li-Po*, and I heard a splash.
*I think Li-Po drowned as the result of his experiment. At least apocryphally. I didn’t think of that until later. Butyou know what? There should be some sort of warning label somewhere, that’s what.
He was also famous for his great love of liquor which I’m sure you appreicate.
Is that snarky? I hope so.
Is your name ‘Saul’? It seems to me that your name could well be ‘Saul’.
So ice-cold I could dunk my warm beer in it to re-chill it.
I think the Austrian School Of Economics has it clearer than Chris Thornberg of Beacon Economics:
A Recession is a liquidity issue.
A Depression is a deleveraging issue.
Chris is predicting a recovery in 2010 based on a Recession scenario.
I think this is play out for years. The Derivatives are 100’s of trillions to deleverage. Any opinions?
(I went to Beacon Econ’s site and read his March 2009 Presentation slides. I really like Chris, but I think he’s wrong on this one.)
I think this will play out for years.
“Husing’s 2004 report to the San Bernardino County Board of Supervisors enthused that the only path to IE development was to build and sell masses of housing and tilt-up logistics facilities. Both have made the area more ugly, utterly dependent on residents’ increased debt and more dependent upon external sources of capital, which only exports the surpluses of such development.”
Husing clearly missed his calling. He should have been a central banker.
This is where 1/2 of San Berandino is going to end up…if they are lucky and can find a spot by the river.
I used to water my horses there as kid a long time ago
http://www.roamingphotos.com/us/ca/victorville/mojavenarrows/
Steven Levitt would probably appreciate this touch:
The homeless life isn’t all hardship. Following my visit, the two men walked with me toward a city park, where they played golf.
Report from my Atwater neighborhood near Los Angeles.
Absolutely no for sale signs at this point. Which is a big difference from last year when there was at least one house for sale on each block.
Now though, it’s “for rent” signs on each block. I’m thinking that it breaks down like this:
(1) People who have bought another house and can’t sell;
(2) Knife catching investors;
(3) Long time experienced landlords.
The long time landlords are undercutting landlords 1 and 2 by at least 30%. Leaving 1 and 2 without tenants. Seeing first month free and “will rent to Section 8″ ads on Craigslist.
The squeeze is on and I believe getting us closer to capitulation. Not there yet, but one step closer.
This spring and into summer are going to be very interesting. Loaded up with popcorn.
Do you rent, Ms. Refugee? I can’t remember. I think you said you did. Have you asked for a decrease from your LL? Maybe you should ask for one soon.
Doing spring cleaning and preparing to move if the landlord won’t negotiate. Rents in this area are dropping off a cliff.
Also, landlords who will take a dog almost always have a loyal tenant.
Yeah, and if they’ll take a dog, tortoise, iguana, 2 cats and a couple of aquariums…………….yeah, I don’t think I’m moving soon.
Also landlords who let us paint with any color we want in the house and only raises rent because landlord insurance or taxes go up has loyal tenants.
One thing I saw in the Colorado neighborhoods I investigated a few weeks ago was very few “For Sale” signs even though foreclosure dot com and realtor dot com showed a ton of houses available. My thought was that banks are no longer putting signs outside the houses they are trying to sell.
“This spring and into summer are going to be very interesting. Loaded up with popcorn.”
Just wait until we have a hot day in July or August and the grid breaks down because of too much AC use, and watch all hell break loose. Mark my words.
Bay Area People:
Some of us will be hanging out in Newark on Friday, Arpil 3rd. It’s this semi-icky restaurant called El Burro with big tables and ample parking. But they have booze, though. The address is 3100 Newpark Mall. 6:30-ish.
Please RSVP at BigVHBB at gmail dot kom.
I finally found confirmation that there have been absolutely no sales at the newly built Lofts at Moonlight Beach in Encinitas. These million plus condos sit on a prime piece of property, with ocean views, but after my husband and I took a tour of a model unit a couple weeks ago we concluded there’s no way folks would “snap” these up, First off, you have to walk up two exterior flights of stairs from the garage to even get to the front door of your unit. Then inside, it’s another set of stairs to the kitchen. Just imagine dragging up bags of groceries like a NYC cold water flat. The first floor of the complex is retail, but there seems to be no easy access from the street, or parking.
http://www.northcountytimes.com/articles/2009/02/25/news/coastal/encinitas/za8fa3004cd448b4f88257569001d320d.txt
That’s funny, because when I looked at their site awhile back, they gave the impression that some of these were sold, and when I looked at the individual floorplans, a lot of them were marked as “reserved”. How lame of them to basically lie like that to people.
“Reserved” — translation: the realtor’s brother who’s a bagger at Ralph’s said “they’re really cool,” so the realtor puts a tag on it.
I visited Eureka Springs in Escondido about 8 months ago just for kicks to see if they lowered their prices yet (after languishing for 2 years), and the smarmy realtor said they “sold 2 that morning.” I should have said, “by that rate, you should have ‘em all sold by this afternoon.”
They finally lowered the prices another $30,000, and they’re still sitting there. I’d like to go back and ask her what happened to all the sales.
I’ve gone on the developer’s website and noticed the same thing about the “reserved” units, and local real estate blogs keep chatting it up. However, the place is completely dark at night, so I suspected something was up.
I just looked at this article on the link — the interesting thing is that the city council wants their park development fees from the BK builder, and the builder’s lender is about to be taken over by the gov’t.
Problem solved! Just have the gubmint pay the gubmint.
You guys do know that the stock market is going to go up next week, right? They are Blitzkrieging us with stimuli and bailouts. I wonder what will happen next. I feel like I’m living in a comic book right now.
We were living in a comic book called “Greenspan’s Bizarro World” until recently. A lot of folks are having trouble traversing the transdimensional portal to the other side of reality. The banks and some other industries (construction, etc.) were unable to exit the portal before overshooting, and are now whizzing past the 1930s on the way to who knows where.
But most of the economy seems to have returned from Bizarro World and is now settling in and readjusting to reality. Meanwhile, the government and big business are frantically trying to open a portal back to Bizarro World, where they were quite happy with the situation - Kryptonite made them stronger, trees grew to the sky, and “everyone” got rich.
Sadly for them, their dilithium shadow banking system has been forced out of warp by investors who are looking at real valuations rather than mark-to-magic accounting. Many people warned the starship captains that you can’t run at Warp Leverage 40 for very long, and you’ll probably blow up the ship in the process. Now we’re at Warp Leverage 1 or less, and we’ll be here for as long as it takes to replace the engines. We might have to actually land on a planet and take up farming while the new engines are built.
Back to housing, folks will just have to accept that you can’t fly a house faster then Warp Leverage 5. Not that horrible, considering that only 70 or so years ago, you couldn’t get a house past Warp Leverage 1.
Just depends how long it takes them to find out it wont work. They will eventually get it. Im looking for a new Summer low.
The five individuals who spoke with the Union-Tribune are Filipinos working in low-paying jobs, often juggling multiple shifts as janitors, mechanics or receptionists. Many emigrated from the Philippines in the past couple of decades, and heard about the trusts through Filipino friends and co-workers.”
I have a Vietnamese friend who lives in Chicago. He clued me in to a whole underground sub-rosa economy, based on cash and trust, used by many Asians in many US cities. When he sees a doctor, dentist, mechanic, or whatever, they’re always Vietnamese, and its a cash transaction that doesn’t get reported as income. Of course, the taxes that go uncollected are going to have to come from someone else, like, say, me. That’s why I have a tough time feeling sorry for people who are victimized by “affinity fraud,” since their exclusionary mindset sets them up for just such a rip-off.
With regard to the underground economy aspect, I say more power to ‘em. The less revenue this corrupt government/financial system is able to siphon off of working people, the better. Just don’t come cryin’ to me later, I don’t want to hear it.
Just don’t come cryin’ to me later, I don’t want to hear it.
Well, that’s kinda the rub, right there, innit? All these rules and laws thingies are supposed to be here so that this whole shebang is run by the ‘Rule of Law’, and not the ‘Rule of Might (or Money)’.
So with an underground economy there ISN’T anyone to run towards…
I agree Oly, I’m not an anarchist or even anything close. For there to be rule of law, the laws must have a modicum of legitimacy, and IMO our economic system is losing that quickly for the time being. In the mean time…
I don’t see the problem with keeping it small and simple, and staying under the radar, at least to a degree. Everyone has to figure out on their own how they’re going to respond to the Great Unwind. But, whatever one decides, accept the consequences of your actions, both economic and legal if you stretch things too far. Caught speeding? Pay the fine.
A lot of people want to live underground when it suits them, but still line up at the trough later. This behavior stretches across all income levels and affiliations and I have zero respect for that. (Hence, my “don’t come cryin later” remark.) I’d bet the Amerasian community is much more honest in general with their underground economy, they aren’t so steeped in our entitlement mentality. I for one respect their diligence, hard work, and genuine consideration for others that I see.
There isn’t anyone to run to these days if you’ve played by the rules. I could whine about that to no end, but as Ben always says there are far better ways to respond.
My Japanese-American friend does business with other Japanese-Americans, buys Japanese cars. Same goes with my other Asian American friends. They mostly do business with Asian-owned businesses. It’s their comfort zone. I buy Japanese cars because I like the quality. But I have an interest in German cars these days and I’m going to try before I buy, but I hear good things about Audis - from a Chinese American who loves German cars!
STRAWBERRY-PICKER ALERT!!!
The second story about the Velonzas in the Union Tribune is a jaw-dropper. I was reading the hard copy this morning; a lot of standard bubble stuff, FB’s signing over the deeds to scam artists, yada, yada, yada.
But on par with the legendary strawberry pickers, you’ll find out if you read the whole article, she’s a hospital tech and hubby is a janitor, not that there’s anything wrong with that. However, it went on to say,
THEIR MORTGAGES ON TWO HOUSES TOPPED $1,000,000!
Not much surprise that she deeded over both houses to the scam artist without even reading the contract. Then again, exactly who is the scam artist here?
Sorry, I meant to say the second story in the Union Tribune about the Velonzas, (starts out with “One afternoon last summer. . .”),
not the second story about the Velonzas.
Story should have started out with, ‘It was a dark and stormy night —. hehehehehehe
I talked to westsiderentals last week, they said they had 18K listings for rent last year, this year I think they said they have 36K. Rents are falling, which is no surprise as far as I’m concerned, they were incredibly inflated. People were paying 14 times gross annual income for apartment buildings, anticipating huge upside in rents that I could see from my own experience with my tenants, that they weren’t going to be able to get.
There are for rent signs everywhere. It’s like everyone just left. Even the roads are emptier.
I’m not sure where everyone went, but I for one will enjoy living in a slightly emptier city, even if my vacancies do take a little longer to rent out.
“I’m not sure where everyone went”
I’m guessing either back home, or somewhere where there is a better shot at real opportunity. Who knows, those two might be one and the same place for a lot of people.
“People were paying 14 times gross annual income for apartment buildings,…”
Some days, I kick myself for not unloading at 14x when I had the chance. Had I been able to preserve the value of the cash, not to mention recovering the tax hit, it would have been sweet. But it would have been a challenge to maintain the income.
I don’t see much evidence of the area emptying out, though. Quite a few of those new rentals are probably not apartments, but condos and flips - just overbuilt capacity coming on to the market.
I was driving down Burbank Blvd. in N. Hollywood, practically every building had flags, balloons, for rent signs, etc. Around here in SM/Venice, it’s definitely not as desperate, although I do notice more for rent signs, for example driving down Fourth Avenue south of Olympic down to Rose. Talk to the people at westsiderentals, though, 310-395-rent, they are happy to describe market conditions in other, less in-demand areas, and it sounds pretty ugly. They even told me — gasp — rents are falling around here!
I hear from several sources that there is a substantial increase in vacant shops along Montana blvd. Apparently Shabby Chic is closing their large shop.
This is the SAME Montana Ave that is located in the jewel of the Westside!!!!!!
It’s about time. The sheer hubris of operating a furniture store in some of the most expensive retail real estate on the West side never ceased to amaze me. Let’s face it: if the rents are so high that Starbucks and Jamba Juice can’t make a go of it, how is a furniture store going to make it? The local theory was that Rachel was spending OPM to keep it going. The Duck Blind liquor store charges a 25% premium compared to another store 5 blocks away on Wilshire.
Montana Avenue is going to get hammered. We’ll never see the Sweet 16 malt shop or a gas station come back, but the days of charging $400 for a pair of men’s corduroy pants are over. Maybe when the rents fall a bit, I’ll open a pawn shop on Montana to help the wannabes recycle their bling.
It’s true. There are for lease signs on Montana Avenue, and many of the stores that are open have big for sale signs in the windows. I for one am happy about this, I live near Montana, and Main Street, and it’s really lame to live near these great shopping areas but to not be able to buy anything because rents go for 5-6 bucks a foot, jeans are $300, graphic T-shirts are $75, and a shabby looking lawn chair is $750. It’s also nice to see that all those people north of Montana with the Obama signs on their front lawns are suffering a little, but I won’t go any further on politics today…
If rents fall and cheaper stores come in, that will be great, I can stop walking down Main St. and Montana for entertainment, while having to do my actual shopping in Fox Hills Mall!
It’s already happening in the Westside Pavilion, where there is a real bloodbath going on. Lots of vacancies, and I never thought it would happen there. But you know what, with Guess! and those assorted jewelry stores and high end boutiques gone, now we’re getting H&M and Forever 21, two low priced womens’ clothing stores, so I’m excited about that, because, you know, I’m really cheap
testing
Lost my comment.
Anyway, it’s true. Montana Av. has lots of vacancies, and the stores that are operating have big for sale signs. Personally I’m happy about it, I live near Main St., and Montana Av., and I’ve had it with $5-6 per sf rents, $300 jeans, $75 graphic t-shirts, and $750 shabby lawn chairs. It’s really lame to be able to walk to a shopping area only for entertainment, to walk around, then to do your real shopping all the way in Fox Hills Mall!
Also, I’m seeing for sale signs north of Montana. Of course, those houses are still 2, 3, 4, and 5 million bucks, but the prices are falling and inventory seems to be rising.
It’s already happening in the Westside Pavilion, we lost Guess! and a bunch of other high end boutiques, and we’re getting H&M and Forever 21, two low priced womens’ clothing stores. Never thought it would happen at the Westside Pavilion. But, I think it’s great, because, like, I’m really cheap
LOL, I had an internet customer in SM who purchased a mid-century modern credenza from me a few years ago. Even with the shipping to CA, it cost him about 1/3 of what he would have had to pay for the same thing on Montana Ave.
What is the difference between a credenza and a sideboard?
Read “the cat and the hat”.
Drove down the main drag of Oceanside this afternoon which is mostly mom & pop stores/restaurants, and every block had at least one store front vacancy.
SMlandlord, don’t kick yourself, who knows what you might have done with the money if you sold your properties, maybe you would have put it in mutual funds or whatever and lost it. Even in the bank, you’d get what, 2%, and pay ordinary income taxes on that. At least like this you have positive cash flow and maybe a little hedge if the dollar does crash. I’d say hanging onto your rentals was as good a move as any, I did it and have no regrets.
I’m guessing some people are sharing the same place to live. Kids are moving back with their parents, parents moving back with their kids, etc..
Speaking of San Francisco, I am looking at apartments up there. Well I go for the gusto. Must have garage. Must have controlled access. Must have washer and dryer inside. Must have 2 bedrooms and two bathrooms. 1100 square feet in Mission district is $3300 per month. I’ll wait awhile. I like one in Redondo Beach on the Esplanade, which is renting at $2500 for the same features. It has waterfront views. I’ll move in there before I move into San Francisco.
congrats lagirl
Wish it was getting that way were I live.
No chance of that, but rents are falling hard here too.
We got layoffs, retirements to cheaper locations and less illegals. At least in my corner of the LA SB.
I’m lucky and will skirt this round. Got a few good years of stability. Hopefully the mess will be clearing in 2015 time frame.
Also figure large numbers of people will be returning to the midwest/plains exc. Its getting really cheap out there and has to be calling to people.
Hello from Cleveland!
Yep, it’s affordable out here all right in the Midwest! And we are seeing people come back “home”. (The smartest ones cashed out of the hyper-markets at the peak (CA, MA,NY,SC and FL) and bought here with plenty of cash left over to actually save money! But it always has been affordable; we never really had a bubble since things never went so high. We’ve regressed to the mean and even below, but not as low as places that went way too high. Sure, some people HELOC’d themselves into oblivion, loans were made to people who never should have owned a hose, and McMansions sprawled into the country. (Priced out of Boston in 2000, we came here and bought less than what we could afford; 20% down, low-rate 30-year fixed, and live a simple but good life on one income in a beautiful old house in a nice, walkable community close to everything).
Parallel with the affordability, however, is the structural changes in the economy; let’s face it, we are better off than Michigan, and even Vegas and RI, but it takes a lot of gumption to make a living here, and the pain of job losses are spreading. But, again, nobody ever told me it would be easy. I grew up (in Detroit) expecting to work hard, and was taught that there is no free lunch; even if you get a “windfall” from, say, buying a house at the right time, it’s not free money. There’s a loser out there somewhere eventually, could be you, could be all of us taxpayers bailing out the free-lunch crowd, whether Wall Street or Main Street.
Recessions are never fun, but we are used to them out here. One upside is that this is a very affordable place from which to do business; we are able to work nationally and be cost-competitive. While not growing we are holding steady, just working twice as hard as we did 4 years ago to get enough business, and feel blessed to be in a position to hustle hard.
So, all you former Midwesterners, wherever ye be from, and c’mon back home. Just be ready to work hard, be creative and flexible, and help us regain our economic (non-FIRE) base.
And remember where the largest supply of fresh surface water in the world is located. They aren’t called Great Lakes for nothing.
Good wishes to all on this blog; every read is an education.
Marquis Dee
Got Water?
More on bulk sales by banks to investors, who then flip them:
http://www.builderonline.com/sales/banks-selling-properties-in-bulk-for-cheap-trends-opens-field-for-flippers.aspx
Someone’s getting kickbacks at the bank for sure.
“The combination of lower prices, ample supply, motivated sellers, low interest rates and government tax credits creates an unprecedented opportunity, said Robin Kane, a housing analyst in Fresno. Except for those worried about losing their jobs in this severe economic downturn. ‘The recession is the 800-pound gorilla in the room,’ Kane said. ‘But if you have confidence in your job, the question is, ‘Why aren’t you buying a house?’”
Because:
1. Prices (in most parts of CA) are still out of line with fundementals
2. The market (in most parts of CA) is still far from the bottom
Answer your question, you idiot?
The reason that foreclosures (and foreclosures ONLY) are selling is because THEY are priced properly for the market. (Some markets. I’m a Northern California girl. Southern’s still insane. So is the Bay.) And the further along the market goes, the better-priced the foreclosures get. We’re planning on lowballing a property that we saw yesterday because we think it’s a bit overpriced (and we’re fine with walking away if they won’t talk.) It’s also been on the market for over 200 days. I think it’s the “not been painted since it was built in the 80s” vibe it’s giving off. But hey, it’s on a nice piece of land with a crazy backyard with space for kids AND a substantial garden. And no matter where we end up, we’re planning on a primer party anyway, so hey.
NB: So very many people think they want “fixer-upper” houses and find out, once they get in there, that they 1) didn’t realize how much work that actually means, and 2) have NO talent along those lines. We’ve seen several houses with inept “upgrades”, especially shoddily-installed laminate flooring. “What do you think of this?” “I’ve seen worse. I’ve *installed* better.” We are looking for a cosmetic fixer-upper, and we’ve actually had a lot of practice in doing these kinds of jobs on friends’ and parents’ places. But I’d advise most of these people looking for sweat equity to think long and hard about the amount of work that these jobs take.
And then leave the cosmetic fixers alone long enough that the banks get desperate… *walks off, whistling innocently*
I agree with the comment that people jump into the foreclosure market with no idea as to the amount of work and money that is required.
I’m an Architect, so I have a very good idea of both the cost, money and time and I have to say that IMHO only 10% of the so-called Fixer upper Foreclosures are worth it. There was one foreclosure on Wells drive in Tarzana that was showing signs of significant slope failure, in addition to the house being trashed and the pool leaking like a sieve. After months and months it appears that some sucker bought it. There are a lot of properties like this.
This is why I cannot understand people who forego an inspection– pest, roof, etc. Some of them say “it costs too much.” Really? Too much? You give up the chance to spend a few hundred bucks to dodge spending thousands?
There was a foreclosure we backed out of because of an inspection (that a previous buyer had paid for, yay!) It said a few K in Section 1 repairs… and oh yeah, the roof should be replaced in two years. Um… that’s $5-$12K, right there. We withdrew our bid before they even had a chance to look at it.
This current one, since it hasn’t been painted in a quarter-century, it’s pretty easy to see there’s no OBVIOUS roof issue. If there were, that would be a no-go. We’ll see if we get to the inspection– our lowball may be low enough that we’ll insult them. If we do, oh well. We’ll come back to them in a few months and bid lower. (heh.)
Was that the one that showed a really lovely photo of a boarded up window and a green pool?
I’d actually kept that one on my Zip list because it was Wells Ave, and - wow- under $700K…
It went inactive after only 45 days, and I’ve been trying to find out if it was sold or relisted.
I think so, however that property was essentially worthless. You would have to spend 150-200K min to stabilize the slope. The floor plan was terrible and the pool was worthless. The property was a teardown on a bad slope.
I always check out a property prior to seeing it on http://www.navigatela.lacity.org. Any property that is listed in a landslide area I pass on.
I have just returned from visiting my folks in Zimbabwe, where I grew up. (BTW Tim Geitner was a good friend of mine as he spent some time in Zimbabwe as well). Anyway, I was trying to pry them out of there and hoping they would come and live with my family in the US. Well, they won’t have any of that thank you very much. Although they don’t have much in the way of material possesions, I don’t think you could meet a more happy couple than my folks or their friends. My dad is an Oxford trained engineer who has spent all his adult life in Southern Africa. It’s truely amazing how little you need to be happy. Whenever one of their friends gets a hamper of food (normally from a kid located in the UK or South Africa) they invite all their friends around for a giant barbeque. I witnessed their joy first hand just 2 days before I left.
On my return to the US, I felt really empty and depressed. I own a large house and in my garage you will find 3 cars. But I will never find the joy and companionship that my parents experience.
This trip really changed my outlook on life. I’ve always felt McMansions were ridiculous. Now when I see them I feel nauseous.
I think this recession is the only thing that will save the US from itself. That is, if it turns into a depression.
otto,
How nice to read your posting. Your family sounds wonderful. I hope you get to see them more often.
Otto:
Its so shameful to be the poor kid in the family, and your parents are Billion,…. no TRILLIONAIRES in Zimbabwe money
Thought you guys might be interested in this message I just got from my grocery store. I’m just giving you the first paragraph:
With all of economic turmoil of the past months, we have had a huge increase in declined credit cards among our customers. In the past month alone, we have shipped but not being paid for over $30,000 worth of food!
Hyperinflation? Ummm… No.
You get financial updates from your local grocery store?
We live in different worlds, I guess…
That’s not hyperinflation, nothing to do with the value of money. They’re talking about solvency.
Not that the macro issues are necessarily about solvency.
/snark
Must be Whole Foods.