October 8, 2009

Feeling A Bit Left Behind

by Englishman in NJ

I’d like to tell my house buying story to the HBB crowd, mainly because it says something quite profound about the attitude people have toward house prices and the complete lack of logic and reason they use in this matter.

I work for a very large bank in NYC, in the MBS and ABS business (eye of the storm, as it were). I got married in 2004, moved out of the Battery City apartment I was renting into a house rental in deepest, darkest NJ, close to where my wife comes from. After getting married we were considering buying. Even although I work for one of the largest mortgage lenders in the world, I decided to contact a couple of “mortgage brokers” referred to me by my in-laws. One said that given my credit and income I could get a loan for “over $2 Million” with nothing down. My income was approximately $300K per annum at that time. I went home and told my wife we were not buying for a while because something incredibly insane is going on. Later that week at a family function, a BIL tells me that I should “buy something for $700K or $800K because there is no chance you will lose anything at that price”, implying that is a “low-end” purchase. (This is a man who purchased a lake-front property, in Wayne, NJ for Christ sakes, for $1.7MM in 2004 and just had it appraise for $800K!)

That sealed it, I told my wife we were not buying for a long time. Years of happy renting go by with us saving nice chunks of cash. I do have a slightly uneasy feeling though since so many of my friends and business associates “own million dollar homes” and second and even third homes around the US. I have a feeling of being a bit left behind. I suppose I was since I had no debt of any kind, nor did my wife.

Fast forward to 2008, wife gets pregnant with twins. We need to move closer to her family since she will need a support network to give her some help. Family all lives in Pines Lake area of Wayne, considered very high-end (think The Housewives of New Jersey). Despite my reservations we really do need to buy because there are no rentals in this area. We end up buying a house for $565K that the prior owners tried to sell 18 months earlier for $750K. Hey, instant equity!!!!

I continue to be astounded just how little people understand house pricing and the value of money when it comes to buying residential real estate. My shoeshine moments came when someone tried to lend me an amount SEVEN times my income with no down payment, and my hick of a BIL (wife’s sister’s husband) tells me I can’t lose if I buy for ONLY $800K. Repeat this pattern throughout the western world - don’t even get me started about the UK, even seasoned HBB’ers might not believe what has gone on over there and even continues to go on to some extent.

I’m delighted with our purchase. A small, very manageable mortgage that can be paid off if I lose my job (a very real possibility) and close proximity to my wife’s sisters and parents, these are very nice people indeed so I’m happy to see them in our house. We now have 11 month-old twin girls and are settled in a nice house with manageable costs. Of course, I could be looking for work at any time, but at least we have budgeted sensibly and I’m blessed with a wife who is completely non-materialistic.

So, my RE story is a happy one to this point. However, let me add my voice to the chorus here about the current situation, at least here in the Northern NJ enclaves I’m now familiar with. People are still in absurd denial, massively in debt and no prospect of imminent relief. They are struggling mightily to reduce their spending, those habits are so hard to break. The keeping-up-with-the-Joneses ethos is still dominant, but trust me, many peoples lives are slowly falling apart. Heavily drinking, explosive tempers, divorces, depression, mental breakdowns are rife in our small world. It’s a tinderbox. Rinse and repeat almost everywhere, I’m sure.

So many “leading lives of quiet desperation”. I somehow think Henry David Thoreau would find great inspiration in 2009.

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Comment by desi dude
2009-10-08 08:49:29

Getting my chance be first :)
Same here on west coast, TOaks to be precise.
No of listing going down,
Whaever listed , most of it, is shortsale, no prospect of selling at the listed price.
I’ve been waiting since 2005, looks like 1 or 2 more year to go.
Wife has been with me so far on this, it appears she might have given up, and be resigned to be a renter for her life.

Called Landaldy and got the rent reduced by 150 per month

Comment by JohnF
2009-10-08 14:22:41

What part of TO desi dude?

The reason I ask is I rent near the Janns Marketplace area and the SFR’s north/east of me (up on either side of Moorpark) all go pending within a week if they are listed at less than $550,000. A few (about 10%) kick out, probably due to financing issues, but re-list and pend again right away.

The only ones that sit are the beaters that need tens of thousands in improvements just to be livable.

Comment by awaiting wipeout
2009-10-08 15:10:30

Hi fellow 1000 Oaks renters-
We’re slumming it off Erbes with the maggots as neighbors. Sold an over sized McMansion in Wood Ranch in 2005, and got stuck in waitville.

Liquifaction issues in T.O.,btw. We saw a tear down REO last week. $309,000 for a lot? lol.

Comment by CentralCoastDude
2009-10-08 16:30:56

I like that, “waitville” I too am stuck here. I bought in 05 and sold in 09….wait for it……yes, I made more than 25%!!!!

It was a fixer when I bought it in an area late to boom, so late to bust. I might move again, as there are a ton of rentals coming out. If CA stays this high, I will move out of state, CA is a disaster, not going to miss it or its bad schools and high taxes (getting higher).

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Comment by awaiting wipeout
2009-10-08 19:59:35

We’re feeling the same way about the cost of housing, betting it’s going to be a Japanese style leak, and we’re not interested in a dump for $500K. We’re cash and pink slip.

We have lived among the 3rd worlders, and we’re not impressed. Illegals (low IQ’s and immoral), H1-B and L1B’s, don’t share our unique American culture and pride. Add high taxes, over priced housing, and schools are bad. Even 1,000 Oaks (upper middle class) is seeing a decline in quality of life, big time. Don’t get me started on the parking lot freeways.

Where to go is the ? Looking for something different, but prefer a micro climate. Too much wet and snow sucks. My parents moved us to So Ca in 1963. Those years were Cali’s finest!

Comment by Bill in Los Angeles
2009-10-08 21:13:05

I dunno. I’m high IQ and immoral most likey by your standards. Not that I initiate force against anyone. But I guess that does not matter. What is morality to person A is immorality to person B.

Comment by CentralCoastDude
2009-10-08 21:32:27

May have to put up with cold and move to CO or NM. At least the air is clean, the sky is blue and the stars are out. Just make sure you home school if you choose NM.

Comment by awaiting wipeput
2009-10-09 04:45:39

Bill in Los Angeles
My illegal neighbors are all getting free money, having kids as a business, and one drives a nice Escalade. Most don’t report their under ground economy income, and use their food stamps at the Butcher. Meanwhile, many well deserving American families are playing by the rules, and can’t get help.

I’ve seen bikes stolen, Americans having their car vandalized in our complex, etc… I’m talking, real moral bankruptcy here. Not to mention their lack of consideration for others (noise at 2AM).

No kids here. You brought up clean air, wow, what a concept! I grew up in the San Fernando Valley, by CBS Studio City. Ca is living on its past allure, that’s for sure.

Comment by Charles Ponzi
2009-10-09 06:56:03

Awaiting Wipeout, the northern portion of the state of my birth, Idaho, has a very welcoming attitude towards paranoid xenophobes. You should consider moving there.

Comment by Pondering the Mess
2009-10-09 09:28:21

So, you’re saying we just “accept” the crime, filth, noise, and other crud that comes with the roving ghetto of illegals?

Have fun with being “tolerant” when it shows up on your doorstep.

Comment by desi dude
2009-10-08 16:57:55

I live in NP.
I have redfin pointing to MoorPark Ave north of Los Arboles, looking at sales in last 30 days.
I see only 30 sales and some of them seem to be foreclosures. I think I’ve some of them listed earlier on MLS. I cant be sure.
I increased the area and it shows 82 sales (3+ BR and 2+BA).

I’ll wait as long as it takes.

I did see that listing asking 209+ for REO junk :)

Comment by awaiting wipeout
2009-10-08 20:09:43

desi dude
Redfin is Ok, but I’ve got a better source for you. Trulia.com would be my choice.

Don’t ever give Realty Trac the pleasure of a 7 day trial. I did some due diligence on their billing bulling. People were dumb enough to give them their credit card #, and it was a nightmare (volume of complaints). You can’t “try” their service without your cc#. They bill under R E Promoters so people had to close their CC account to stop the issue, and get a new account #.

Comment by X-philly
2009-10-08 08:53:31

(think The Housewives of New Jersey).
Please don’t make me think on the
Real Housewives of New Jersey

‘fess up, who’s your fave?

p.s. Congrats on the twin babies!

Comment by waaahoo
2009-10-08 14:26:48

3 anecdotal stories.

1. East coast USA - Hearing a lot of “things just came to a stop” type stories from fellow builders and suppliers. Somebody told me they got a cold call from an electrician looking for work.

2. Friends in next state over RAISED their offer on a house figuring the 8k tax credit thingy would even things out.

3. A few years back was talked to a older widow who was having a house built on the water. Tried to gently warn her that time might not be right. But she had a great “custom” builder lined up, houses never went down, blah, blah, blah. Went over today at her request to look at a few jobs the builder left unfinished. House furnished down to children’s themed bedroom but looked unlived in. Why?

She can’t afford to move in without selling her condo. Million dollar house has sat empty for 2 years.

Comment by X-philly
2009-10-08 14:42:39

house on the water, where is that - Longport, Stone Harbor, Ocean City?

(IIRC you’re based at the shore, just asking unless you don’t want to get too specific.)

re: Custom built house. On that real housewives of NJ site, there was video of the “New Jerseyisms” that they uttered on the show. One of the girls said: “I can’t buy a house somebody else lived in, I shkeev that…”

She shkeevs used houses. That’s good for you and other builders, that there are real housewives of NJ who think like that. lol

Comment by DennisN
2009-10-08 15:35:25

Oy veh.

Even Queen Elizabeth II lives in a “used house”. And it was originally built by a rich guy who frittered away his fortune gambling. The house was repossessed by the government and the Royals took it over.

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Comment by Arizona Slim
2009-10-08 16:11:29

Gee, come to think of it, doesn’t the President of the United States live in a used house too? And I’ll grant you that said used house had to be gutted and rebuilt inside during the second Truman administration, but it’s still a used house.

Comment by waaahoo
2009-10-08 19:30:29

OC X philly

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Comment by Silverback1011
2009-10-09 04:34:58

What is “shkeev” exactly. Does it mean “abhor” ? Just askin’.

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Comment by X-philly
2009-10-09 06:30:39

It’s a corruption of a dialect word that Italian Americans use. I had thought it was limited to immigrants and first generation Italian-Americans, but it looks like it has stuck, and now escaped into the world at large.

It’s one of those terms that’s not directly translatable, you’re on the right track though. It can mean anything from “makes my skin crawl” to “my stomach does flip flops just thinking about it”.

And I never heard it as “shkeev” we used to say “skeev”.
But some Italian-Americans have a tendency to add the “sh” sound, particularly when articulating the word:
street. (shtreet)

Comment by Bill in Los Angeles
2009-10-08 21:16:54

My fave?

I dunno man!

I am still reeling from working in the same room alongside a little bespectacled woman who would say “swass,” “dwattah,” “wattah,” “dwog,” and so on.

I think of that when I think of NNJ. But truthfully, 1/3 of them speak that way. Lived there for five years in only ten months back in 2002/2003. Will probably live there another five years, I’m afraid.

Comment by WT Economist
2009-10-08 08:53:37

(This is a man who purchased a lake-front property, in Wayne, NJ for Christ sakes, for $1.7MM in 2004 and just had it appraise for $800K!)

I thought the entire town of Wayne was lake-front property, with boat emergency access.

Comment by Bill in Los Angeles
2009-10-08 21:21:23

Sad that Wayne is considered top-notch. I had a P.O. box there. Okay, say it, for status purposes.

I once looked for rooms for rent. A Sicilian family had a tony house in Wayne. The rooms for rent were in a basement. I checked it out. The door to the basement was in back. It was a conversion. It was okay. The only deal was that I had a laptop PC and the screendoor was unlocked! A renter was there cooking something that was aromatic. Still, I reeled from it, remembering my last experience with a roommate.

Instead of paying $500 per month cash within ten miles from work I opted for $1670 per month 30 miles from work. But that was also month to month and I at least had privacy.

BTW: Many parts of Wayne, NJ are very nice looking.

Comment by Silverback1011
2009-10-08 09:10:54

This is a fascinating post. I am constantly amazed by how inflated the prices of housing on both coasts seems to be, even now. My state, of course, now has decent houses for sale at $45K. Eventually, it, along with the other rust-belt states, will become the sensible states to retire to, or so I believe. That way, a person could have a (say) $ 300K house in Florida if they so desire, and still have a decent summer home with central air in an older neighborhood up north to flee to when the weather hits 110 degrees plus muggy. I am constantly amazed by what huge mortgages many people are willing to take on, without sufficient net worth that can be used to bail them out/pay it off in case the unforseen (job loss, illness) happens. Mortgage of $ 650K, $ 750K, $1m, and up. People who can’t make their mortgage payments unless they have TWO roommates, or someone living in their non-zoned, non-varience basement “mortgage helper” apartment like my daughter was doing. I read a horrible article (accessed thru the “news” feed on AOL ) yesterday about 4 families who have died in murder/suicides (up to and including the family dog in one case) due to the slow economy, their businesses doing only 40 % of what they ususally did, or job losses. Obviously, rationality wasn’t at the foremost in these parents’ minds. But constant worry and stress can make people do crazy things. I’ve weathered a lot of down times in my many years on the planet, and I would never let a house “kill” me due to losing it, but when parents can’t provide for their children, don’t see any way out, and have saddled themselves with unbelievable amounts of debt with the house mortgage, the new cars, the upscale furniture, and whatever else comes with that lifestyle, they seem to have lost the ability to run “what-if” scenarios, and go crazy accordingly. Almost everyone, including myself at one time or another, has borrowed money based on optimism, not pessimism. It’s better to borrow based on pessimistic futures than glowing happy ones. Thaty way the downdraft isn’t so severe should one lose their waxen Icarus wings. I’ve paid a high price for some of my experience. I don’t feel like doing it all over again because I drank a glass of “stupid” one fine morning.

Comment by X-GSfixr
2009-10-08 15:50:57

Thanks, E in NJ……..seems that some things never change.

Yeah , I can remember back in the old days, when the banks and mortgage people held their own paper, stuck close to the “3 times income formula” and had this strange requirement for the buyer to put some cash in the deal…….I think they used to call it a “down payment”.

New car loans weren’t much easier to get.

Wake up, people!! Your Real Estate Agent and your Mortgage Broker are NOT your friends!!!!! They are trying to sell you something, and they are on commission!!! The bigger amount they can con you into signing up for, the bigger their commission!!!

This stuff isn’t Theoretical Physics.

Comment by az_lender
2009-10-08 19:12:17

Silverback, it never gets to 110 near the coast of Martin, Palm Beach, Broward, and Dade counties. And there are plenty of $300K houses available there. My point is, there would be no need for a rustbelt house for summer. In fact, the hottest weather in OH and like that is probably hotter than the hottest weather in coastal FL. The Gulf Stream summer temperature is about 91, so while the summer air temperature might be 91 ALL the time, it’s never 95. You’re thinking of AZ maybe (where 110 is quite moderate).

Comment by Silverback1011
2009-10-09 04:38:22

Been to Florida in August. It was 110, although the natives kept saying it was “hot” for that time of year. The humidity was ungodly. And yes, I’ve been to Arizona over 25 times (family), and I’ve lived thru that delightful 113-114 degree heat also. I’d want a place to scoot to for the summers. If we do the two-home thing, we’ll keep our rust belt home and rent down south in the winters until we decide where we want to be, and then buy later. That being said, I’m not so sure that we’ll even want to do that.

Comment by Pondering the Mess
2009-10-08 09:12:40

Excellent post!

I understand your frustration to some extent: no wife or kids, but I live in a high-cost state filled with real estate insanity (Maryland) and I grew up in a state just as bad (New Jersey.) I’ve seen people talking about “affordable” crumbling Post-War shoeboxes for “only” $250K+, “cheap” condozes in the $300,000+ range, and so on. It is madness. People will worry about the price of gas down to the nickel or penny, but will gladly overpay for a house by hundreds of thousands of dollars in the blink of an eye.

Nearly everyone my age has bought something already. Most can’t really afford it: they are either in debt over their heads and are amazed when they have any money at the end of the month, or they as individuals make a salary well over the median HOUSEHOLD income for the area and still need a well-paid room-mate, spouse, girlfriend, etc. to make the mortgage payment on what is often an old dump. But there’s no use in pointing out this insanity to them: the doubling of real estate prices in the past 10 years without any real salary increase doesn’t make them suspicious; in their world toxic loans are great because they’ll be a V.P. in a few years, debt is wonderful because you can get stuff for free, and housing is always perfectly affordable even when it clearly isn’t.

It is infuriating since people like me were honest, saved our money, and now get cheated out of a decent place to live because we’re stucking competing with ignorant dolts who don’t mind living deeply in debt since if they get in over their heads, they’ll just get “bailed out” - or they’ll walk away. Either way, it’s more moral hazard and more meddling that reward bad behavior.

Prices here in Maryland are down maybe 10-15%, which is nothing compared to how far they need to fall. When the median household income in most areas still can’t afford a crumbling house that isn’t worth buying, the Bubble is still alive. As for me, I’ve just about had it. The housing stock in this state is terrible: there seem to be 3 choices: old dumps that are small, lack parking, central air, normal heating systems, etc. and are overpriced, modern McMansions that are grossly oversized and overpriced, and a small segment of decent houses that are always overpriced and rarely on the market (for obvious reasons.) How one of the wealthiest states in the union can have such lousy choices is beyond me, but that’s Maryland for you.

Anyway, enjoy your family: they are all worth more than any McMansion!

Comment by Jim A.
2009-10-08 12:52:08

…the doubling of real estate prices in the past 10 years without any real salary increase doesn’t make them suspicious;… The reaction seems to be either “whoppie, I’m (gonna be) rich,” or “Wait, that can’t be right….” The former is more common, but the latter has drawn many of us here.

Comment by hip in zilker
2009-10-08 13:40:33

People will worry about the price of gas down to the nickel or penny, but will gladly overpay for a house by hundreds of thousands of dollars in the blink of an eye.

Yeah, it’s funny that. $4.00 per gallon gas is a killer, but a $400,000 house or a $250,000 condo are considered normal, a $200,000 house with a little yard not a long congested drive from jobs is like a utopian dream vision that could never be. Weird.

Comment by Michael Fink
2009-10-08 19:21:56

People with a 400K home (and a 400K loan, as has become so common!) will probably pay more in INTEREST in ONE month than they pay in gas for the entire year. Certainly 2 months of just interest will cover it. And yet, we obsess endlessly about gas prices..

For lower income people, it does have a real effect. But when, sitting in the MB dealer the other day, I hear people talking getting upset at the gas mileage of an ML, I really have to wonder. You had better be making 150K+ if you’re looking at that kind of car; what frigging difference does it make if you spend another 500-1500 a year on gas?

People don’t seem to be able to comprehend numbers in a rational way, it’s my only explanation.

Comment by dc_renter
2009-10-08 20:25:52

Yep, I hear ya. I keep waiting and waiting and waiting for real estate to normalize here. Not happening. In some parts, housing has tripled in the last ten years. Coming down 10 - 15 % is meaningless. It still locks out most everybody who is fiscally responsible. Don’t get it - don’t think I ever will.

Comment by DD
2009-10-08 22:27:20

Some friends that were looking to buy before retirement and others are now saying, they will rent till the end.

Nothing is lowering fast enough, that doesn’t need to be pushed over and rebuilt bottom up.

Comment by CA renter
2009-10-09 01:20:16

We share these same frustrations. At the end of 2008, it looked like sanity was finally going to return to Southern California. The lower end had already fallen about 40-50%, and it was going to be “our” turn (middle-class house in a safe neighborhood). That’s when the PTB really threw gasoline on the fire and halted the correction in its tracks.

Now, houses are selling for darn near peak price, and we are trying to resign ourselves to renting for a long, long, long time to come.

For people who were trying to be responsible during the bubble, and not take on debt we couldn’t afford, this market is downright maddening.

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Comment by Captain Credit Crunch
2009-10-09 08:05:43

Don’t get confused by the PTB efforts and the lull we expect from the mortgage reset chart during this time. The watershed will happen 12-18 months from now.

Comment by Mike in Miami
2009-10-08 09:30:21

Nice post!
So many “leading lives of quiet desperation”.
How true! I know many here in Miami that bought houses 5 - 8 times their anual income. That was back in 2006/07. Strategic default is not an option since company money was involved after a relocation. Can’t sell, can’t default. I am thankful I didn’t step into that trap.

Comment by mikey
2009-10-08 18:11:44

Just some observations from the Milwaukee area on mikey’s travels.

My LL bought the mini-Mcmansion in the country with 20 acres a couple of months ago.
He’s with a commercial RE constuction and building outfit.

He stopped by the other evening and told me that they are laying off project superintendants on down to labor. That means he’ll be doing double duties and keeping his fingers crossed this winter. I suspect that he’ll be a little more respectful and less arrogant towards his long suffering G/F who has a secure well paying job in case the hammer drops on him :)

A friend was in town the other night on business and I took him out for a quick meal and visit at an Applebee’s near his hotel

He mentioned his job took him to a constuction site that day and he was talking to some of the guys. It was very windy and raining but here was no complaining and he said one young married guy summed it all up with this statement.

“I’m just happy to have work today!”

Applebee’s seemed busy but the assistant manager said people were asking about the “Specials” more frquently and spending less on drinks.

Comment by DinOR
2009-10-08 09:47:14

Englishmen in NJ,

While I’m glad for you, mom and the new twins, can’t say I’m as equally enthused about your livlihood. What you so quaintly describe as “the eye of the storm as it were ” is 90% of the reason we’re ‘all’ so screwed.

Hope you feel good about socking away all those bucks. Don’t worry, we’ll fill the hole you’ve left.

Comment by Pondering the Mess
2009-10-08 10:00:49

Looks like the forum ate my previous post…

Shorter version: I understand where you’re coming from; almost everyone else my age is in debt over their heads paying for a house they probably can’t really afford (or can only afford if everything goes perfectly.) In most cases, it is the usual story: two adults, EACH making over the median HOUSEHOLD income have to pool their resources to buy a house that is often old and mediocre in many ways. And then they’ll deny the Bubble - as if it makes perfect sense for housing prices in the area (Maryland) to basically double while incomes remain flat!

It has left me ticked off and disgusted with the whole process. Housing prices haven’t fallen much at all here since we’re near the “government cheese wheel” of DC. Lots of people willing to get into stupid levels of debt to buy a run down dump or a newly constructed McMansion that’ll fall apart before their ARM blows up. The lack of decent housing stock in this state - too many old dumps and new stucco crudboxes with little for sale in between - combined with the absurd prices and Bubble-worship has really worn down my interest. A decent house for a decent price simply cannot be had here.

Anyway, enjoy your family - they’re better than a McMansion any day of the week!

Comment by CA renter
2009-10-09 01:26:19

The lack of decent housing stock in this state - too many old dumps and new stucco crudboxes with little for sale in between - combined with the absurd prices and Bubble-worship has really worn down my interest. A decent house for a decent price simply cannot be had here.

This is EXACTLY what we’re seeing here in the San Diego area. It doesn’t help that many of our middle-class neighborhoods have been turned into barrios with multiple families living in SFHs and cars/trucks parked on the dirt front yards (or they just pave over the entire yard, leaving one great, big parking lot in front of these houses). Very few “middle-class” neighborhoods left. In a way, this visually shows how the middle-class has been decimated in the U.S.

Comment by Pondering the Mess
2009-10-09 09:21:09

Oh, heavens - I forgot to mention that, too.

Nothing turns one off to housing faster than discovering that the pathetic houses one can afford in older neighborhoods are rapidly being surrounded by crime, ghettos, etc. Argh!

That’s another thing about this: one buys a house for the long-term, but who here really believes that a given neighborhood that is affordable will stay middle-class over the long term?

Comment by Otto
2009-10-08 10:02:35

Great Post Englishman!
My experience is very similar to yours. Except I’m in Northern Cal.
Although prices of houses I’m interested in have not dropped yet, I sense this charade is going to end imminently.
Last weekend my wife and I looked at a reasonable house priced at 1 mill. House was a foreclosure. Realtor told us that the owner had lost his job, but get this. He was a manager at Safeway!
The level of insanity that prevailed in the recent housing market just boggles the mind.
It’s only a matter of time before the “quiet desperation” changes to the not so quiet.

Comment by az_lender
2009-10-08 19:15:10

Just appending my compliments to Englishman on his succinct and relevant story.

Comment by Skip
2009-10-08 10:09:27

How long is your commute to work?

Comment by FitzClarence
2009-10-08 10:12:47

Good post — nice to hear from someone who decided not to go with the masses and get in over their heads. You were right all along.

Interesting phrase: “shoeshine moment”. I think I know what it means, but where does it come from?


Comment by Ol'Bubba
2009-10-08 10:17:46

Shoeshine moment refers to shoe shine boys giving out stock tips in 1929. As legend has it, Joseph Kennedy, Sr. saw shoeshine boys giving stock market advice as a sign to exit the stock market before the crash.

Comment by Arizona Slim
2009-10-08 10:20:36

It comes from the days before the Great Depression. The sign that something bad was coming was when shoeshine boys were giving out stock tips. I seem to recall that was a “sell” signal to some prominent investors. But I’m willing to stand corrected on this point.

Comment by X-GSfixr
2009-10-08 15:55:28

Shoeshine boys giving stock tips = 22 year olds buying houses.

Comment by michael
2009-10-08 10:35:23

didn’t some broker before the ‘29 crash sale all his holdings after he got a stock tip from a shoeshine boy…or something like that.

Comment by Kato22
2009-10-08 10:51:34

I believe it was Joe Kennedy who said that.

Comment by bluto
2009-10-08 10:54:19

It was supposedly either Rockafeller or Kennedy.

Comment by charliegator in Gainesville, Florida
2009-10-08 12:46:44

Rockafeller said: ” I’m rich because I always sold too soon.” or something like that.

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Comment by awaiting wipeout
2009-10-08 11:02:07

I heard that shoe shine story is an urban myth about Rockerfeller or JP Morgan during the GD.

Comment by hip in zilker
2009-10-08 11:26:56

I saw a number of attributions to Joseph P. Kennedy and one to Bernard Baruch.

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Comment by hip in zilker
2009-10-08 12:26:19

…as well as to Rockefeller. Got bored before finding one for JP Morgan, but I think I’ve heard it.

That’s the way it is with a good apocryphal story.

Comment by In Montana
2009-10-08 13:46:34

don’t forget this:
“We end up buying a house for $565K”

Sounds like another happy FB to me. AND a former bankster.

Comment by oxide
2009-10-08 16:21:37

FB? He rented for quite a few years and packed away cash. He had to buy because renting wasn’t an option. His house/income is something like 1.8, well within his range. He’s in a position to pay off if he has to. I suspect his house value won’t drop too much more, or at least he won’t be underwater.

Not FB material.

Comment by VinnieTheFish
2009-10-08 15:23:55

This is what I found on Wikipedia (but who knows if you can really trust what’s on Wikipedia anymore).


The Crash

Kennedy formed alliances with several other Irish-Catholic money men, including Charles E. Mitchell, Michael J. Meehan and Bernard Smith. He helped establish the Libby-Owens-Ford stock pool, an arrangement in which Kennedy and colleagues created a scarcity of Libby-Owens-Ford stock to drive up the value of their own holdings in the stock, using inside information and the public’s lack of knowledge. Pool operators would bribe journalists to present information in the most advantageous manner. Attempts to corner stocks were made that would cause the price to go up, and bear raids could cause the price to collapse downward. Kennedy got into a bidding war seeking control of founder John Hertz’s company Yellow Cab.[5]

Kennedy later claimed he knew the rampant stock speculation of the late 1920s would lead to a crash. It is said that he knew it was time to get out of the market when he received stock tips from a shoe-shine boy.[6]

It has been noted that during the Depression Kennedy vastly increased his financial fortune by investing most of it in real estate. In 1929, Kennedy’s fortune was estimated to be $4 million (equivalent to $49.8 million today[4]). By 1935, his wealth had increased to $180 million (equivalent to $2.8 billion today[4]). According to Time Magazine, Kennedy survived the crash “because he possessed a passion for facts, a complete lack of sentiment and a marvelous sense of timing.”[7]

Comment by hip in zilker
2009-10-08 10:20:01

“When even shoeshine boys are giving you stock tips, it’s time to sell” (Joseph P. Kennedy?)
An old Wall Street saying has it that when everybody’s getting into the market and even the shoeshine boy is giving stock tips (or the barber/hairdresser or the taxi driver or the waiter or the bartender), then it’s time to sell.

Supposedly, Joseph P. Kennedy (1888-1969) knew that it was time to get out of the market in 1929 when his shoeshine boy began giving him stock tips. Contemporary citations have not been found, but the event appears in a 1965 biography of Joseph P. Kennedy.

That’s on the site you get if you google shoeshine boy stock tip. The site also has one reference attributing the statement to Bernard Baruch.

Comment by DinOR
2009-10-08 10:24:13

Not sure what’s going on here, but here we the most direct link to the debacle posting here and we’re asking if he’d like some tea?

Truly weird.

Comment by michael
2009-10-08 10:36:33

i’ms not sure i understand your sentence.

Comment by polly
2009-10-08 10:41:17

I’m baffled too.

Comment by DinOR
2009-10-08 10:52:55


Don’t be. Guy works for Mega-Bank in NYC -directly- with Mortgage Backed Securities and “Asset” Backed Securities.

Their unwinding is WHY we’re facing everything from the credit crunch, collapse of the stock market, plummeting home values ( that HE profitted from by pumping it UP! ) along w/ millions now on unemployment!

What aren’t you gettin’?

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Comment by X-philly
2009-10-08 11:29:57

I remember Englishman in NJ he used to be a regular here.

We don’t know in what capacity he worked for Megabank, he could have been CIO or Chief Diversity Officer or who knows what else. The fact that he recognized something was wrong and didn’t join the party dispels any notion that he was one of the pump and dumpers.

There are regulars here who worked in REIC related jobs that didn’t participate in the chicanery by personally inducing FBs to make a deal with the devil.

Comment by DD
2009-10-08 11:40:11

Their unwinding is WHY we’re facing everything

I got it. His industry/job is the reason, and we’re acting like he is a great guy ala very civil to someone instrumental in the WS Main St mess we have.

Stockholm Syndrome.

Comment by polly
2009-10-08 12:26:56

I am confused by your post, DinOR, not the main one. Could you correct whichever words you mistyped. I can’t figure out how to correct it myself.

I worked in a big NYC law firm doing securitization transactions for a while. Also mutual funds, corporate bonds, foreign soverign debt, convertable bonds, IPO’s, warrants, bank mergers, etc. I get that stuff and I understand the peer pressure that comes from working in that world. I lived in a rented co-op right at the Brooklyn end of the Brooklyn Bridge for a few years. Shared a car service home with a partner once. He was stunned to see that the cars parked in and around the buildings weren’t held together with spit and baling wire. There were even some nice ones. As far as he was concerned anything other than Park Slope or Brooklyn Heights in Brooklyn was reason to never carry more than $20 on your person and to fear for your life. And he was one of the nicer ones. After all, he was willing to share a car service ride home with an associate.

Comment by DinOR
2009-10-08 14:25:19


For awhile there, I ( along w/ apparently others ) just couldn’t seem to make a post ’stick’. If things seem a little disjointed, that’s probably why.

Still, I see nothing to be confused about here. Englishmen in NJ’s own words are more of confession than I could ever provide.

Comment by az_lender
2009-10-08 19:22:16

DinOR, get over it! This guy doesn’t claim that he had any responsibility for policy, nor does he appear to defend the policy. I might resent the fact that he makes $300K/yr, but that’s my petty jealousy.

Comment by DinOR
2009-10-08 10:43:50


‘Should’ read:

“but here HAVE the most direct link”

Really though, I’m quite surprised. Guy full well realizes the paper he’s peddling is nothing but toxic waste, sits on the sidelines as the world falls apart while he pockets $300k a year ( peddling toxic waste ) and then comes HERE to collect “high fives” from everybody for having been so “smart”.

Is this guy for real?

Comment by sf jack
2009-10-08 11:43:37

Any self respecting “toxic waste peddler” would surely have made more than $300K a year.

Though perhaps in 2004 it was a little more difficult; and maybe he’s not on the peddling side of things.

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Comment by X-philly
2009-10-08 11:54:37

I posted to the same effect, he could have been CIO or who knows what else.

Comment by DinOR
2009-10-08 11:57:32

sf jack,

My assessment as well. The clowns at the top of this food chain may have had that for their ‘base’ salary with bonuses that were many fold.

I just can’t imagine ‘anyone’ with a hand in that ( however indirect ) would have the brass to come to a BB touting their “judgement”? We’re aware there were lower level admin. types etc. and many probably didn’t have the slightest inkling as to ‘what’ was being peddled.

For them, I harbor no malice. To be truthful, I’ve had a number of flunky, nickel-dime mortgage brokers really, really ‘hurt’ that I refused to empathize w/ them and their ‘plight’ but this is a bit much. Sorry for the rant guys.

Comment by X-philly
2009-10-08 12:03:44

my first post was spaminated I guess…

Do you remember Englishman in NJ? He used to be a regular.

Comment by DinOR
2009-10-08 12:07:59


Can’t say as I recall? It just strikes me as being a tad trollish like posting on a Detroit Tiger fan-site saying what a great team they were this year and.. they really ‘deserved’ to have won the AL Central ( but snickering to one’s self all the while )

Why else bring up the salary? What’s the message here? There’s good money in destroying what ‘was’ the world’s largest economy?

Comment by X-philly
2009-10-08 12:46:38

I continue to be astounded just how little people understand house pricing and the value of money when it comes to buying residential real estate.

This is from his post, I’m thinking this is the message.

Why bring up the salary? If he’d posted he was approved for a 2 million dollar loan, and then added that it was 7x his salary, we’d have figured out his pay anyway.

p.s. I’m liking your baseball analogy these days…GO PHILS

Comment by Housing Wizard
2009-10-08 14:49:50

DinOr ….While I began to humanize him after he started talking about his twins and wife and everything ,I just couldn’t get pass some of the points that your bringing up ,and I wondered if it was troll bait also .

He didn’t say what exact position he held ,so I really don’t know
what part of the business he is in . Oh boy ,the trials and tribulations of a 300k salary person getting a over million dollar
house for in the 500k’s ….I hear you DinOr …..I’m just waiting for more possible details so I’m not rash in judgement ,…and I made a vowel that I wasn’t going to flame anyone for a whole week .

Comment by oxide
2009-10-08 16:26:57

Bringing up the salary is a way to judge how high he is/was at his Megabank, and therefore how close to the big decisions. $300K could very well BE lower level admin in a company like that.

And anyone who calls the place “Megabank” obviously is lacking the arrogance so common of the scheisters.

Q for our Englishman: is that $300K salary your total compensation, or is there a bonus on top of that?

Comment by gorobei
2009-10-08 18:34:08


I figure total comp.

$300K base would put him at MD level. No way would he be seriously talking to a mortgage broker after a few years in that position.

So, he’s a VP: juniorish front office or mid-career back-office.

Comment by Real Estate Refugee
2009-10-08 10:32:29

This is what I love about this blog, the people who hang out here think about what’s going on and reach thoughtful conclusions.

Oh, saw Michael Moore’s new movie the other night. Quite good. He used the Citibank memo during one segment. Wished he’d asked some of the foreclosure victims what they’d done with the money from the refinance.

He also referenced the church as well. Could have been an opportunity for one of my favorite themes in all of this “temptation”.

It’s actually in the Lord’s Prayer: “And lead us not into temptation”.

The banks tempted the American public with easy money and a lot of people bit.

Oh, I’m not religious by nature, but I think there’s a point here.

Comment by michael
2009-10-08 12:52:40

“Wished he’d asked some of the foreclosure victims what they’d done with the money from the refinance.”

that aspect alone convinces me that there is no need to watch it.

Comment by Reuven
2009-10-08 13:40:40

I’ll probably watch it, but I imagine it’s one sided. People who took on loads they couldn’t possibly afford, and lied to get them are the poor “victims”, right?

Comment by X-GSfixr
2009-10-08 15:59:54

You should have gone to see “Zombieland”. Freaking hilarious. Best movie I’ve seen all year.

Comment by hip in zilker
2009-10-08 17:34:15

I went to “Zombieland” on Saturday. I loved it too.

Did you see “Shaun of the Dead” and “Hot Fuzz?” I especially enjoyed the latter.

Comment by X-GSfixr
2009-10-08 22:23:16

Saw “Shaun of the Dead”………gave a definite understated U.K. “flavor” to the zombie movie. :)

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Comment by In Colorado
2009-10-08 10:38:50

So you make 300K working for a bank? No wonder no one wants to study engineering!

Comment by Skip
2009-10-08 12:48:13


And there’s a surplus of bank executives and a shortage of engineers. Go figure.

Comment by TCM_guy
2009-10-08 16:13:22

That is because engineers are hired for their high technical skills and engineers are so many layers removed from management so engineers cannot influence their own salaries. This credit debacle is revealing that whatever criteria is used in the hiring of banker/financial people, it certainly DOES NOT include the ability to do any critical thinking or reasoning.

I am retraining and working towards a BSEE and I know what it is gonna be like (no respect, low salary, etc.) but It is very interesting and this is what I want to do.

Comment by milkcrate
2009-10-08 10:38:53

Thoreau preferred the Outer Banks.
Coffee, please.

Comment by Molly
2009-10-08 10:43:17

This is a great guest post. It’s brief, relevant, and the main character doesn’t make me want to punch something.

Comment by DinOR
2009-10-08 10:45:31


Too late ( I already have! ) Glad everything worked out for ‘him’ though?

Comment by DD
2009-10-08 11:42:39

Yes, he “saw it” the housing prices etc. but still keeps his job making 300k and now writes a good story. Cheers Mate.

So far he is skating by but still pocketing the $ you and I are losing rapidly or have already lost in jobs etc.

Comment by In Colorado
2009-10-08 13:43:56

Can’t let that TARP money go to waste now, can we?

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Comment by eastcoaster
2009-10-08 12:30:20

I’m with DinOR on this one.

Comment by potential buyer
2009-10-08 12:41:03

I’m just jealous I don’t make $300k.

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Comment by CentralCoastDude
2009-10-08 17:01:59

Even for $300k, I would not live in Jersey.

Comment by az_lender
2009-10-08 19:28:12

“Even for $300K, I would not live in Jersey.”

LOL, CCDude. I sometimes bitch and moan about Morro Bay because I don’t find it as comfortable socially as East Coast places, but there are other good reasons for wintering on the CC and not (e.g.) in Jersey!

Comment by DinOR
2009-10-08 12:43:33


Thanks for the vote of confidence, but I’m a little disappointed there isn’t a firestorm of outrage on this one?

I realize it isn’t Ben’s practice to have guest bloggers served up as cannon fodder but here we are w/ the perfect opportunity to “tee one up” and everyone’s gone limp.

Is it possible that we have a collective “fatigue” and are desensitized to all of this?

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Comment by Housing Wizard
2009-10-08 14:53:58

I didn’t go limp DinOr ,I don’t know where my post went .

Comment by CarrieAnn
2009-10-08 15:17:03

I was going to snark on the unmaterialistic wife that’s roughing it w/the $300k guy. But thought I’d spent my flaming passes on poor ahansen (who’s posts I do enjoy)

Oooops! God forgive me. I’ve slipped.

Comment by rms
2009-10-08 11:07:15

“We end up buying a house for $565K that the prior owners tried to sell 18 months earlier for $750K.”

How many square feet does $565k buy there?

Comment by Mo Money
2009-10-08 11:30:13

About 2400 sqft, on a half acre. A colonial style if you are lucky

Comment by polly
2009-10-08 13:07:38

Half an acre in northern NJ? You sure about that. My karate teacher bought in Montclair in the early 2000s and I swear his lot was smaller than the quarter acre lot of the 1400 sq ft. house I grew up in in MA.

Comment by Rintoul
2009-10-08 11:07:59

$565k resulted in a “manageable” mortage for you? Good show!

Comment by Skip
2009-10-08 12:51:16

I’m sure he had to spend a few $$$ to fix up as well.

Comment by aNYCdj
2009-10-08 11:27:31

Remember a cheap woman is very hard to find these days.

and I’m blessed with a wife who is completely non-materialistic.

Comment by Arizona Slim
2009-10-08 16:15:07

I challenge your wife to a non-materialistic showdown ;-).

Comment by San Diego RE Bear
2009-10-08 16:37:37

Nonsense - cheap women are all over the place! It’s the thrifty ones that are hard to find!* :D

*HBB excluded of course as there are a surfeit of us here. ;)

Comment by nat
2009-10-08 12:26:25

if we are not getting raises at work and real wage is decreasing, how will the housing price go up?
if a house listed in 2005 for 750k and appraised for 500k today, can we draw a parallel that with out realwage increase, chances of 500k house going up is not realistic

Comment by ecofeco
2009-10-08 12:50:37

Good for you Englishman in NJ! Congrats on the twins. Wish you and yours health and happiness.

…which is more than I can say for the rest of those idiots.

I spent an entire decade where those people are about to go. Most of them will break. I feel compassion only for the ones who were not arrogant and find themselves in circumstance beyond their control.

The rest can enjoy the ride through hell. This whole nation could use a strong dose of reality and humility.

Comment by VaBeyatch in Virginia Beach
2009-10-08 12:57:12

I had a coworker that was a mortgage salesguy before working with me (laid off now). I brought up the bubble and he said he knew, because they’d get calls from people looking for subprime loans and they thought they were insane. Plus the ads. He said they never bothered with any of the toxic stuff or any of that, there was no need. There were plenty of people looking for normal loans with incomes.

Comment by Joel Carson
2009-10-08 13:15:55

Perhaps it is the insanity of it all that leads us to the real estate industry! People are unpredictable and therefore markets are unpredictable and therefore ANYTHING GOES. I enjoyed this piece. Thank you.

Comment by southwest guy
2009-10-08 13:18:35

Many people have little sense in this country. I was part owner in a auto dealership and countless times couples would try to lease cars at $500 or more and we would have to gently explain to them that their credit would not support such a purchase, in other words they were almost broke and still wanted a luxury car to drive.
I have neighbors who make 100k a year and own about 2 million dollars in real estate and they cry the blues that they will most likely file for bankruptcy (no kidding i say to myself).
What we need in schools is to teach basic economics that if you have $2 in your pocket why lust for a three dollar item?

Comment by aNYCdj
2009-10-08 13:30:30

Teach basic Economics…are you kidding. It was taken out of High school so people can act like this:


If there is one place a Education czar can truly be effective is in this area: make home ec, or life skills a mandatory class for graduation of high school AND college.

Comment by X-GSfixr
2009-10-08 17:14:29

When I went in to pre-qualify for a mortgage in 1999, I told them I wanted to qualify for an amount figuring on my income ONLY.

They were stunned………said they couldn’t remember the last time that someone didn’t ask to pre-qualify with both incomes, for the biggest amount they could get away with.

This was in Kansas, supposedly a “non-bubble” state.

Comment by CarrieAnn
2009-10-08 14:07:45

I thought this article about the narcissism epidemic had some important housing commentary:

“What’s an example of how narcissism can have that result?

Narcissism contributed to the economic crisis. Many people had narcissistic overconfidence [when they said], “Yeah, I can afford that million-dollar house,” and lenders said, “Sure, I know you’ll pay off that loan,” and, well, fantasy collided with reality, and the consequences have been worse for the economy than anything since the Great Depression. Obviously, there were lots of causes for that, but I think an unrecognized cause is that narcissistic overconfidence.

Narcissistic overconfidence?

There are these great studies where you bring people into the lab and ask them questions, then ask them how confident they are in their answers. Then, they bet a certain amount of money based on how confident they are. Well, narcissists are always very, very confident, so in those situations, they end up losing a lot of money because they think they’re smarter than they actually are.”


Comment by ATE-UP
2009-10-08 16:12:36

Your (I’m) so pretty, Your (I’m) so pretty…


Sex Pistols 1978

Room Full of MIrrrors

Chrissie Hynde 1984?

Comment by ATE-UP
2009-10-08 16:35:18

Your = you’re I hate it when I make that mistake. Tired. Also, I want to than you all once again, and also wolfgirl and Socaljettech who I missed, for your kind comments re Allison.

She is still in critical condition, but slowly improving.

Thank You Again, Very Much! (Allison thanks you too). :)

I may copy/paste this over on bits, so maybe wolf and Socal have a greater chance of seeing it… :)

Comment by Silverback1011
2009-10-08 17:50:49

Sorry Ate, I haven’t been able to peruse the HBB lately due to other commitments, so I am just wondering who is Allison ? Sorry to hear that anyone you care about is in critical condition, but I’m glad that she’s improving.

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Comment by Housing Wizard
2009-10-08 16:58:10

CarrieAnn………Love love love the article …course I love me more …
I’m special so special . He he he ,good article .

Back in the 50’s ,A guy named Dr. Spark started this BS with you can’t damage the little ego of the child ,and somehow the culture went to opposite extremes to offset the “seen and not heard ” generation of child rearing . I’m sure nobody gets the exact right dose of perfect
raising ,but its interesting when you start seeing trends in a certain direction .

I was always struck with how anybody could buy into the “sell to a greater fool concept “,as if screwing the other person while you gain was acceptable ,yet I think it trickled down from the BIg Boys on Wall Street ,because that is their MO 24/7 . You also see this appeal to
narcissism in advertising of products . It use to be a keep up with the Jones type hype and now it has kind of morphed into a “your special ” so buy this product type of hype in advertising .

Comment by JackO
2009-10-08 14:24:10

Folks, relax a bit, this is all just part of the children of the 60’s growing up knowing that they are entitled to the good life. You heard it all back then as the propaganda sprung into buying, and when the Credit Cards came into being!

When you had a Credit Card you didn’t need to pay cash for anything, and could buy all you wanted on credit. Ergo, you wanted more, more, more, more, of everything.

Bought my first house for $11,500, 1040sft, no builtins,no carpet, nice lot, in big tract!

If the builder had built them 4-5 years ago they would not have been able to sell them as all of the public wanted big house, all built ins, AC, etc., etc., etc., so the builders built them and we bought them. ( A generic we), but the price were driven up by the demand for the excesses, and the public wanted cheap high loans , and the government obliged them, while at the same time cutting the reviews of everything.

The OP here did what we all would do, do the job, collect the money, and then spend the money the way that he thought was wise.

I can not criticize that!

I bought this home 43 years ago and have done nothing except to maintain it! But others would have decided to take the equity an buy a bigger home with more luxuries, and I can not criticize them!

Relax, it will end one way or the other, some win , some lose, some live, some die, and it makes little difference to the rest of the world.

Propaganda can make the public believe almost anything and it takes a strong will to go against what the public thinks it wants.


Comment by Crusader
2009-10-08 15:12:30

The public wanted cheap high loans? I think it was more of the government and banks providing it and the public not objecting. No matter what it’s the individual responsibility to turn down loans that exceed a certain multiple of income AND if you can’t put 20% down.

Comment by Housing Wizard
2009-10-08 17:23:19

Crusader….People don’t turn down loans ,it’s up to the profession
to have standards that people either qualify or don’t qualify for .
You have to go back to the fact that the Loan Business is charged the duty to give good paper to the Secondary market ,and further to protect the Deposits of the Nation in regulated Banks . You wouldn’t want the bank you bank with to just let the customer decide would you ?

Now it’s not right that borrowers knowingly took loans that they knew they couldn’t afford ,(especially by exalting their income on the loan
application ),just because they were in the heat of the mania.

Comment by SanFranciscoBayAreaGal
2009-10-08 15:44:23

Don’t Stop Believin’

Just a small town girl, livin in a lonely world
She took the midnight train goin anywhere
Just a city boy, born and raised in south detroit
He took the midnight train goin anywhere

A singer in a smokey room
A smell of wine and cheap perfume
For a smile they can share the night
It goes on and on and on and on

Strangers waiting, up and down the boulevard
Their shadows searching in the night
Streetlight people, living just to find emotion
Hiding, somewhere in the night

Working hard to get my fill,
Everybody wants a thrill
Payin anything to roll the dice,
Just one more time
Some will win, some will lose
Some were born to sing the blues
Oh, the movie never ends
It goes on and on and on and on

Dont stop believin
Hold on to the feelin
Streetlight people

- Journey

Comment by oxide
2009-10-08 16:33:37

Built-ins? Very few recent homes have built-ins because built-ins don’t give you any bang for your buck. Builders opted for granite countertops and lots of empty air.

Comment by Silverback1011
2009-10-08 17:52:41

Correct, JackO. If someone was going to offer me $300K per year to do whatever he was doing, short of pulling off hit jobs or running Ponzi schemes or death camps, I’d do it also, most gladly.

Comment by Housing Wizard
2009-10-08 22:16:35

They were running ponzi-schemes …got bail out ….by all rights
this guys employer should of been insolvent 2 or 3 years ago .

Comment by Housing Wizard
2009-10-08 15:14:43

I remember when the hippies were trying to rebel against materialism and in those days materialism was more modest than today . The rebellion
got choked out of existence ,or the rebelling group had one to many LSD trips into oblivion . Goes to show you that rebelling requires that you organized and you have to be stone sober .

But,maybe had those voices of “All we need is love ” had been heard a little more ,and I’m not saying they weren’t on some level ,the bubble of all bubbles wouldn’t of happened .

Comment by CentralCoastDude
2009-10-08 17:06:03

Anybody else thinking of relocating outside the USA? I can run my business anywhere in the US time zone. Maybe it is time to move to Costa Rica.

Comment by monilynn
2009-10-08 18:54:54

Hi, CCDude. I am in NJ now and can empathize with E in NJ. I am actually thinking of relocating to Europe. Why would you be limited to this time zone? What are your resons for “bugging out”?

Comment by monilynn
2009-10-08 18:57:23

resons = reasons - my apologies

Comment by CentralCoastDude
2009-10-08 21:38:57

I am sitting on a ton of cash from my house sale and can live almost anywhere with good schools. I have lived in most of the top 10 cities in the US, time to branch out while we wait for the REC crash to find the bottom. Also, a maid 3x a week is quite appealing!

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Comment by hip in zilker
2009-10-08 22:59:30

I enjoyed living overseas. Enjoyed having household workers - maid, car washer, etc.
From my observation, one has to keep that in perspective - enjoy having your work done: ironed sheets and underwear are nice. Don’t get upset at glitches like the book you read nightly at bedtime disappearing because it got placed in kitchen cabinet with the cookbooks.
Be ready to blow off a lot of your expat cohorts’ frustration with household help - general frustrations with expat life get focused on in-home intercultural misunderstandings.

Comment by Bill in Los Angeles
2009-10-08 21:32:42

Not me.


Military (defense) is not as good as the U.S.

Bill of Rights is pioneered in U.S.

Socialized Health Insurance is in most countries, but not yet in U.S.

No VAT in U.S. Is your country doing a VAT?

Long tradition of freedom fighters. At some point in their lives, educated Americans (including first generation) read up on the philosophy of Thomas Jefferson, Tom Paine, Benjamin Franklin, and then they are hooked.

Does your potential country have a past hero on the calibre of Thomas jefferson, Thomas Paine, Lysander Spooner, Henry David Thoreau, Benjamin Franklin?

I prefer to bury my gold in the U.S. than to move outside. But I don’t mind owning stock in other nations.

The Referee is pounding the canvas and we are down. Socialism of the European variety is on top of us. the count is two.

We will be up before the count reaches 3.

Comment by X-GSfixr
2009-10-08 17:08:02

Watching the Barrett-Jackson auction on the Speed Channel…….

A bunch of guys with more money than sense, bidding ridiculous amounts on trailer-queens, while being egged on by their Hoochie-Mamas-du-Jour.

No recession in the top 5%. Party on, Garth.

Comment by CentralCoastDude
2009-10-08 17:25:41

Better returns and more fun than the stock market, ask Reggie Jackson.

sour grapes

Comment by X-GSfixr
2009-10-08 22:39:06

Saw a car similar (but not as nice/optioned) as mine sell for $22K a few nights ago. Bought mine in 1991, finished it in 2005.

(Disclaimer: you never really “finish” anything you are driving frequently…but that’s okay, I HATE trailer queens).

I could break even on it, if I sold it for 10K……..would laugh all the way to the bank if I got $15K. Trouble with selling it for fifteen, is that I know that someone would take it to the coasts and flip it $20K, with a little effort.

I’ve got two projects in storage that are in limbo right now. Have been thinking about selling my “driver” to get funds to go thru and finish BOTH of the ones I have in storage………..done/finished right, they might sell for 20-25K each or more.

Trouble is, I couldn’t replace my current “driver” for anything close to what I have in it. And my daughters would probably kill me.

Comment by awaiting wipeout
2009-10-08 18:11:18

PBS Alert Coming Oct 20th online
“The Warning”
In the devastating aftermath of the financial meltdown, FRONTLINE uncovers important clues about why it happened — and who could have prevented it.
(copy and paste)

Comment by jetson_boy
2009-10-08 18:34:59

Its funny that a 500K+ house is I guess… affordable? Its sort of no wonder NJ is emptying out like a siv. The taxes there are god-awful. I swear every relocation forum I’ve seen is full of people from NJ wanting to get the hell out of there.

Comment by Bill in Los Angeles
2009-10-08 21:26:55

Well…Also factor in the deal that about one in nine people live in NY metro, and most of that is NJ.

Tons of NJ people commute to NY every day. Faux News Network folks such as Neil Cavuto and Tracy Byrnes hail from NJ.

It is just - less expensive in NJ, compared to NY.

I commuted in a vanpool to work most of the time I lived there close to I-80. Commuter buses from Pennsylvania were our I-80 companions. People travel between three states to get to a job five days a week.

In my native California, that’s so…unheard of. Here I will say, I love L.A. I love San Francisco. I love … California.

Comment by Professor Bear
2009-10-08 18:37:27

‘One said that given my credit and income I could get a loan for “over $2 Million” with nothing down. My income was approximately $300K per annum at that time. I went home and told my wife we were not buying for a while because something incredibly insane is going on.’

Sounds like that was a pretty tough decision for you?

Comment by Professor Bear
2009-10-08 18:40:43

“We now have 11 month-old twin girls and are settled in a nice house with manageable costs. Of course, I could be looking for work at any time, but at least we have budgeted sensibly and I’m blessed with a wife who is completely non-materialistic.”

From a fellow twin parent with a (largely*) non-materialistic wife, I agree — you are blessed.

*I haven’t tested the theory yet by seeing how she would react if I quit my job and started working as a full-time volunteer.

Comment by Yankee Bear
2009-10-08 19:44:21

To DinOr and others

Do you even understand how the world around you functions? Every banker is not evil; what you imply that someone who works on wall street is somehow responsible for the current bust is just ludicrous and stands completely at odds with everything that has been documented on this blog.

The vibe of this blog I just don’t get sometimes. HBB seems all about respecting “Mr. Market” and watching Mr Market slaughter stupid FBs, yet at the same time there seems to be this yearning to stop the “evil corporations” as they offshore and cut costs.
People, welcome to the cold brutish world of capitalism. Until mommy government can come take care of all of us, we need markets to function. Yes, lots of people will make lots of money, many times seemingly undeserved. No one put a gun to anyone’s head in the current crisis, and don’t complain here about bankers just because your life choices left you in the rapidly shrinking middle class.

Comment by Housing Wizard
2009-10-08 22:06:59

Yankee Bear …It’s to bad that you don’t understand that the banks
aren’t functioning pursuant to normal capitalism ,otherwise you all would be insolvent ,and you bankers would be on the streets or in jail. Banks are being supplemented by -bail outs that the middle class you demean got extorted into giving you by the Dirty Politicians . You don’t seem to understand it either that the Godfather kept you out of jail .

What a joke that you mention “mommy government “,when
mommy government came to the Banks rescue while the middle class get screwed .

You can’t be for real,and you must be a shill . I have said it time and time again ,they should of purged dumb asses like you because you will just turn around and pull crap again on the middle class
that you blood sucked a bail out from ,after you breached your duty with protecting the deposits of the nation with your ponzi-schemes .

This is my second post ,don’t know where the other one went .

Comment by X-GSfixr
2009-10-08 22:59:54

Back when I grew up, there were certain guys that would back-stab their buddies, but do it in such a way that you couldn’t be sure that they did it, so you were hesitant to kick their a$$ in the parking lot.

Most of these guys work on Wall Street now.

And what we have now isn’t capitalism. And the “markets” are grinding to a halt, now that all the turnips in Middle Class USA have been squeezed of all their blood.

But that’s okay…….when you graduate from college and get out of your dorm room, and into the real world for a while, you will find out that chance/fate/who you know/who you blow, has as much influence on where an individual ends up on the pyramid, as their “life choices”. I’ve seen more examples of people who climbed the chain of command by their a$$-kissing skills, than by their technical or intellectual merit.

Didn’t used to be that way…….but that was back when finance was a “service industry”, before the whiz kids figured out it was more profitable to churn money, than it was to actually build/make something.

Comment by ahansen
2009-10-09 00:40:46

Dear Yankee,
This blog is a microcosm of American punditry…with all ideologies represented; sometimes within the same post. Trying to dissect everyone’s opinion du jour is what makes coming here such an intellectually rewarding/maddening experience.

But given the huge disparity between what the average American and the average “Wall Street banker” are experiencing these days, you’re probably going to encounter a certain measure of animosity if you try to use “the market” as an excuse for the obscene profits accruing from the crony capitalism of the last couple of decades.

Looking forward to reading your further commentary….

Comment by CA renter
2009-10-09 01:51:52

Until mommy government can come take care of all of us, we need markets to function.

Indeed. Why should the peons expect the govt to protect their interests, especially when the govt is so busy protecting the interests of the corporations, executives, and “capitalists”? Silly plebs!

Comment by Housing Wizard
2009-10-09 06:15:22

Ca Renter ..I wrote 2 posts to response to Yankee Bear ,but they didn’t make it no doubt because I was so angry .

“‘No one put a gun to anyone’s head in the current crisis ,and don’t complain here about bankers just because your life choices left you in the rapidly shrinking middle class . ”

Response :

(1) Middle class had no choice over bail-out’s and relief given to
the Bankers/Lenders on the taxpayers dime .Bankers would be
walking the bread-lines with their Companies insolvent ,and
it’s possible sued for breach of duty to underwrite loans in a
wide-spread ponzi scheme of marketing toxic waste CDO’s to the secondary markets . No question in a lot of cases bank employees committed out right fraud in helping consumers
fill out bogus loan applications ,or they tampered with them
on their own .

(2)Middle class was extorted into government bail-out relief ,which in large part was a Obstruction of Justice from how the chips should of fallen for Corrupt Organizations .A unbelievable price is being paid for that “moral hazard ‘.

(3) No evidence that the Middle class made a life choice to
out-source jobs ,manufacturing,and bought off Politicians
to create favorable trade policies for Industry .

(4)Post suggest that if a person wasn’t willing to engage in a
ponzi-scheme ,or become a flipper or a banker ,or play the Casino markets that crashed ,their life choices were a product of being stupid because they weren’t part of that elite group of opportunist that made money but crashed the entire system ,needing a bail out from mommy government .

(5) Suggesting that the systems failure was capitalism ,rather than the final exposure of a ponzi-scheme because of breach of laws and breach of duty to protect the deposits of the nation by bogus CDO ratings and marketing of toxic waste to the secondary market .

(6) It’s always a pity when Justice doesn’t prevail ,and it’s the Bankers/lenders /Wall Street/Industry that need the Great Middle Class to fleece ,and i’s to bad that they are fleecing them out of existence ,which isn’t the middle class life choice ,but the choice of a bunch of mad-hatter elite, that have a greed that knows no bound ,the kind of greed that can’t see that their acts will sink the entire ship .

Now I know why Jesus overturned the table in anger when he confronted the “Money Changers”.

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Comment by Michael Fink
2009-10-08 19:40:22

“One said that given my credit and income I could get a loan for “over $2 Million” with nothing down. My income was approximately $300K per annum at that time.”

Ahh, that’s nothing. When I was renting my present house; I asked the RE agent to do some looking at MTG numbers for me. The number she came back with was almost exactly 10X my (combined household) income. She said that as long as I didn’t go over 8X “it should be totally manageable). I sat, mouth agape, looking at her as if she had 3 heads. I then snatched the pen and signed the rental paperwork as fast as I could.

Also, another “ah-HA” moment came when I handed over the check for the rental. It was first, last and security; not a ton of money, but apparently, bigger than normal for the RE agent. “You know, if you were to buy this house, you won’t need to put anything at all down, you can keep this check… We might even be able to get some money out to help you remodel/upgrade!”. I almost vomited in my mouth, and threw the check at her, and got the he** out of that “crazy house”.

Fast forward 3 years. Zillow has the price of the home I rent down 225K (approaching 50% down). It would probably sell for about that today, but, once the “cash for crapshacks” goes away, I expect the market to really start to crumble down here.

This is all, BTW, in Palm Beach, FL.

Comment by knockwurst
2009-10-08 21:36:32

Bankster to public, ‘I got mine.’

English accent…’welcome to our humble abode. It only cost half a million bucks, but we call it home.’

Sure, many richer banksters made stupid decisions with their money. But a guy pulling down 300K a year for megabank was, is, and continues to be part of the problem, not the solution.

The writer was paid 6 times the average middle class wage, and 10 times what a starting teacher is paid, and for what? To enable the biggest scam in US history. And for his efforts he has bought a nice home, and since he was prudent about his investment he is testifying. Lovely.

Comment by Housing Wizard
2009-10-08 22:47:47

I agree with you ,in spite of the fact that the English dude was kinda
likable ,had a family ,and I guess in terms of being smart wasn’t about
to be a FB and buy something he couldn’t afford .

I guess it’s a rare person who would quit a job that paid good bucks
just because his employer has most likely been corrupt and certainly at the receiving end of taxpayer bail-outs .

Comment by knockwurst
2009-10-09 05:37:40

I think that’s the trick. It’s easy to vilify the “bad guys” until you meet one, and realize that those evil, terrible people have families and mouths to feed.

That said, a principle is something that usually costs you something. Every man has his price. English’s price is about $300K/year. Some folks do far worse for far less.

But it doesn’t mean that this is a guy with a half-million dollar house who works in a nasty business and is lamenting the fact that he “feels left out.”

He should be feeling left out of the 90% of the world’s population that is going hungry tonight.

Comment by Housing Wizard
2009-10-09 06:34:28

I was one of those rare birds that quit a job because I discovered corruption once ,even reported it and stomped my feet about it .
But I sleep at night . It cost me a fortune in terms of my career ,
but so be it . The people I left behind crashed and burned about 5 years later ,and a couple of them had heart attacks .

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Comment by a_brewer
2009-10-09 15:23:58

it isn’t the banker working in NY making 300K that bothered me, it was all the stories back in 2005/06 of the high school graduate lakeys working in SoCal making 2 to 3 times as much working for the likes of CountryWide and others. man o’ man why did I ever got to school and learn a useful skill set? that’s what I used to wonder, just hope home prices re-adjust soon, but that’s likely delayed with the impending 15K homebuyer tax credit coming along…ugh

Comment by Awaiting Bubble Rubble
2009-10-08 22:41:33

I think this is a great post. About to begin my fifth year of bubble sitting, I am amazed that people are still willing to pay 7X the median househould income in my area (Westlake Village, CA) for a starter home. I believe there is a huge amount of denial and insecurity among the buying population driving all of this insanity, as well as the industry lobby in Washington, DC incentivized to increase housing prices far beyond sustainable (2-4X income) levels. The most irritating thing to me, however, is that the root causes of this disaster have been ignored. Ratings agencies are still paid by those selling the securities and lending to speculators has taken off again (as the Thousand Oaks area observers above have noted). I am in touch with one who is now flipping houses again and have heard wind of bidding wars coming back in Southern California! This against a backdrop of double-digit unemployment, declining schools, a bankrupt state, and the crushing consumer debt load that will almost certainly be transferred to the taxpayers over the next five years. The author expresses amazement at the psychological disconnect in our culture and I am amazed at this too. We have reached a point where industries with powerful lobbies can create complacency with systems that are absurdly unsustainable or even foment demonstrations against reforming crazily overpriced healthcare systems. I worked in the eye of the storm during the bubble years, with the biggest lender in the country in secondary marketing, and noticed most of their workers were completely ignorant of the bubble. Now I work in healthcare and find most of those workers are unaware of the size of that lobby and how much healthcare is overpriced. Everywhere people seem content to resign themselves to a cubicle until their eyesight fails and their grandchildren grow up in exchange for fairly standard commodities like housing and healthcare. While I honestly believe healthcare research solves important problems and results in great discoveries, there is nothing about the housing industry that merits a six-figure income for any of its workers. These jobs can be done by pretty much anybody with a high school education. Driving prices to absurd levels with financial games and creating entire populations of unskilled six-figure middlemen is one thing, but convincing an entire population to fight over absurdly overpriced commodities is a very very frightening aspect of our culture. It is Orwellian and it reminds me of the certain (very high) percentage of Americans who still believe Saddam had WMDs, even after everybody involved has openly acknowledged he never did. There is something in all of this that is based on what we want or need to believe about ourselves and our institutions. We, as a culture, are very sick and our institutions are in need of drastic reforms.

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