Draining The Swamp In California
The Press Enterprise reports from California. “Moreno Valley provides a window into the turbulent housing market left in Riverside and San Bernardino counties after real estate prices collapsed. When Inland home prices hit bottom in the second quarter of last year, existing Moreno Valley homes sold at a median price of $139,226, meaning half sold for more and half for less, according to MDA DataQuick. Also, Moreno Valley was more vulnerable to foreclosures than most Inland cities because almost 10 percent of its 5,461 homes had been built in 2005 or later. That was when frenzied buying drove home prices to their peak at the same time relaxed lending standards and risky loan products enabled many people to buy houses they could not afford.”
“Bianca Ward said her parents had no way of keeping an investment home they owned in Moreno Valley after renters left a year ago and her mother’s wages at a casino were cut in half because of the poor economy. Ward said she stayed in the house for seven months without paying rent or the mortgage before moving into a home she bought for herself in Hemet. ‘I was waiting any second for the bank to knock on the door … But that didn’t happen,’ Ward said.”
“She said the bank repeatedly has delayed foreclosing on the house although her parents would like to get it over with so they can start rebuilding their credit. Meanwhile, she said, ‘no one is watering the lawn. It is probably an eyesore for the former neighbors.’”
“James Fino said he was unaware that his house was scheduled to be sold at a foreclosure auction. He said for five months he had been in a trial mortgage modification program through his lender that lowered his monthly payments by $1,000. He said he hoped that the modified loan payment would be made permanent although he had not been able to find a job since he was laid off in September 2008. Fino said he has been glad for the rainy winter because it means his weedy yard is green. He said he can’t afford to water the grass or buy fuel for the mower and the family can no longer use the community gym, boats and other recreational facilities because he has not paid the association dues.”
“When Fino and his wife bought their house four years ago for $415,000, he said they took a mortgage with monthly payments so low that the balance kept growing. ‘It was the easy way to get into a house,’ he said.”
“He had planned to refinance the loan before he would have to begin making higher principal and interest payments. He thought he would do it using the equity he would gain as the house rose in value. Instead, the value of the house plunged to about $200,000, he said. The family’s next challenge could come soon when Fino’s unemployment pay is expected to end. Maybe it will be extended once more and he will land ‘green job’ training through the State Economic Development Department, he said.”
“‘Plan B we haven’t come up with,’ he added. ‘Right now, it is a day at a time.’”
The County Sun. “Hoping preparations now will pay off during the next economic upswing, officials here are hammering out the details of a planned community on the largest piece of development land remaining in the city. The Lytle Creek Ranch Specific Plan on the north side is a 2,447-acre project between the 15 and 210 freeways that features parks, a revamped golf course, retail and more than 8,407 residential units tucked into a development that could see 25,000 new residents come into the city.”
“How much revenue the project will bring into the city’s General Fund and how soon work could start are among the questions that remain to be answered. Officials are waiting on the market to see how soon they can draw in commercial development to the project. Commercial use is vital because it helps pay for the cost of services for the new residents.”
“‘As a general rule, an all-residential (development) would generate a deficit without the commercial,’ said Robb Steel, the city’s economic development director.”
The North County Times. “As builders know better than most, the go-go 2000s are over: $10.3 billion in residential construction spending in 2005 in Riverside and San Diego counties collapsed to $1.8 billion in 2009, according to the Construction Industry Research Board. Struggling local builders and designers are lining up with outstretched arms and rolled-up sleeves for an injection of federal government construction dollars.”
“Chris Close owns Murrieta Development Co., a Temecula-based contractor that for 28 years specialized in underground work, particularly sewers and storm drains in Southwest Riverside County. But starting two years ago, Close noticed some formerly free-spending developers cutting down their projects, while others simply went under.”
“Her own business shriveled: A 150-employee firm at its peak with $50 million in income in 2007 was reduced to $17 million in 2009, and in January she reduced her work force to 30 employees. When Close told her story, she had to fight back a tear. She attended a symposium thrown last week by the California branch of the American Council of Engineering Companies in downtown San Diego. During a break, Close and her consultant stood in the lobby, trying to figure out who they could meet who might be willing to take on Murrieta Development as a subcontractor on a bid.”
“‘It’s like starting over,’ she said.”
The Union Tribune. “Real estate ‘analytics’ are Norm Miller’s thing as vice president of the CoStar Group. The company lured Miller away from his professorship at the University of San Diego last year to analyze the mountain of real estate data the company’s hundreds of researchers dig up — on condition that he could remain in San Diego. Q: From 20,000 feet up, how do you view San Diego’s current real estate market?”
“A: In the big picture, we are in one of the most highly supply-constrained markets that you tend to get on both coasts of the United States. As a result, they tend to have faster rent and price increases and faster price declines. So we end up getting a volatile market. But because we’re supply-constrained, we don’t have as much oversupply in most of the commercial real estate sectors as you have in major markets around the country. At the same time, one of the problems is we’re stuck in California. San Diego would be a great place to live if it wasn’t surrounded by California.”
The Sacramento Bee. “There was a time when California was a migration destination. With its sun-drenched coasts, dynamic economy and boundless promise, it stood as a beacon that drew people from all over the country. Today, after a decade of cascading failures and near oppressive disappointments, there’s a looming sense that California has descended into dreary mediocrity and is headed for imminent disaster.”
“2009 was the fifth consecutive year that more residents left California than moved to California from other states. ‘I hate what California has become,’ says Lisa Duerr, a state worker and California native. ‘I grew up during California’s ‘Golden Age,’ she recalls. ‘The best schools, the cutting edge of everything from culture to technology, the envy of the nation. I never imagined living anywhere else.’”
“Now, frustrated by high prices and tax dollars that support an entitlement attitude at the expense of the middle class, Duerr says, ‘I’m about 10 years from retirement and seriously considering moving out of state.’”
The LA Times. “A job fair at Six Flags Magic Mountain in Valencia, Calif., last weekend drew 1,600 people - in the rain. Universal Studios Hollywood took in more than 1,100 job applications on just one day last month. Disneyland in Anaheim, Calif., and Knott’s Berry Farm in Buena Park, Calif., have received so many job applications that they put off plans to hold jobs fairs this year. Theme parks are being flooded with applications from job seekers, as unemployed mortgage agents, sales clerks and construction workers who can’t find work elsewhere seek temporary positions that often pay little more than minimum wage.”
“‘We are getting a lot of people who, in a normal economy, would be considered overqualified,’ said Joe Selph, manager of staffing and training at Universal Studios Hollywood.”
“Dominick Muniz, 27, used to drive a forklift and work in construction. But this week, he showed up at Knott’s Berry Farm’s employment center in hopes of landing a temporary job that pays $320 to $380 a week. And he’s not picky about what kind of job. ‘I’ve got a family to feed,’ the Whittier, Calif., man said as he filled out the forms. ‘I just want to get whatever comes along.’”
The Reporter. “The long-term impact of the ongoing housing slump and its financial fallout is coming into high relief, as county governments prepare for budget shortfalls caused by declining property tax revenues. In its recently released 2009 Housing Report, the Association of Bay Area Governments noted Solano County cities may face $9 million to $12 million less in property taxes because of high foreclosure rates.”
“Four years ago, in the first quarter of 2005, Solano County had almost no foreclosures. In early 2009, 4 percent of all residential loans in the country were in some stage of foreclosure. An additional 8 percent were at least one payment behind. Both foreclosures and delinquent mortgage payment rates were the highest on record since 1972. At the same time, home prices dropped 19 percent from the previous year, the largest ever recorded year-over-year decline in housing prices, bringing the median home values back to 2002 levels, the ABAG report noted.”
“In 2009, some 58,000 properties were reassessed at lower values in Solano County and Assessor-Recorder Marc Tonnesen expects to adjust property values for about 65,000 homes in 2010. He explained that, in 2009, the county lost $4.5 billion in assessed value and is anticipating another $3 billion loss in 2010.”
“‘The homeowner gets a break, but that means less revenue for the county and the cities,’ Tonnesen said.”
“Solano County Treasurer-Tax Collector Charles Lomeli agreed. ‘The tax base from property value is a significant source of revenue,’ he explained. ‘With that revenue loss, government has to be smaller.’”
The Mercury News. “With even well-managed counties, cities and schools finding themselves in the same budget hole that has swallowed state government, California now confronts a financial crisis that may be unrivaled — though it is also maddeningly difficult to quantify. In fact, the problem is so expansive that several experts contacted by the Mercury News wouldn’t even hazard a guess. So just how broke is California?”
“So why, exactly, have budgets gone so sour in so many places? The simple answer is that local governments have been just as susceptible as state government to the ravages of the recession. Record, prolonged unemployment has sapped a key revenue stream for California’s bigger cities: sales and hotel-occupancy taxes. Building permits and housing construction have slowed to a trickle.”
“And a massive collapse in home values has triggered, for the first time under Proposition 13, a statewide reduction in property tax bills.”
The Press Democrat. “On any given day, homebuyers can chose from 1,300 houses and condominiums in Sonoma County. But just out of sight, a wave of new properties is headed toward the market. A new study estimates that Sonoma County has more than 7,000 houses and condos that will be lost to foreclosures or other distressed sales in the next few years. While these properties aren’t currently for sale, they eventually could reach the market because their owners no longer can afford them. If correct, the forecast by John Burns Real Estate Consulting would surpass the 5,600 homes already seized by banks in foreclosure proceedings over the past three years.”
“Some observers have portrayed the shadow inventory as a potential flood that could overwhelm the market. But analysts and real estate agents suggested that what lies ahead for the housing market better resembles the slow draining of a swamp, one created by years of risky loans and hyperinflated prices. ‘It’ll be 2015 or ‘16 before this thing is over,’ said James Madison, an agent who specializes in selling foreclosed homes.”
“Some fear the estimate of 7,000 homes in shadow inventory may turn out to be too low. Forrest Jinks, a principal in the Santa Rosa real estate investment company Altus Equity LLC, said government loan programs and tax credits are still allowing some buyers to purchase homes with virtually no money down. With the government incentives, buyers often purchase the most expensive place they can afford, and ‘any hiccup in their employment’ could put them into serious trouble, he said.”
“‘It was that kind of lending that got us into this trouble in the first place,’ said Jinks.”
“Dustin Hobbs, a spokesman for the California Mortgage Bankers Association, rejects any talk of a flood of new inventory. ‘I don’t see any reason and any movement to dump hundreds of thousands of properties in a short period of time,’ he said. ‘That wouldn’t help anybody.’”
“Even so, many current homeowners won’t be able to save their homes. Some agents said the banks may delay the day when they take back those properties, but that approach only postpones the day when home values rebound. ‘I hate to say it, but at some point it’s got to happen,’ said Charles Himes, director of REO services for Pacific Union International Real Estate in Santa Rosa. ‘They need to unload these properties for the market to recover.’”
The Merced Sun Star. “Tears and hugs. Both emerged in waves Friday evening at the foreclosure forum co-sponsored by the Sun-Star and Merced College. Susan Ramos said she didn’t know, when she returned from the meeting, whether her home would still be hers. Despite declaring personal bankruptcy last year, she and her family were told their house would be auctioned off at 3 p.m. Friday.
Frances J. Ward and her son Ernest King recalled the hundreds of pages of faxed material they’d been forced to send and resend to banks to try to fix their foreclosure problem. Ward said she and her husband have both suffered heart attacks during the ordeal.”
“Cristina Robles repeated the complaint that she had to ‘resend, resend, resend’ the same documents, time after time, after bank employees told her some of the pages had been lost. Melissa Franks held up a foreclosure notice she’d gotten earlier that day and how it affected her two children, one with Down syndrome. ‘I don’t want to lose our house,’ she said, beginning to cry.”
“Realtor Andy Krotik noted that the number of loan modifications has risen at one major bank to 80,000 now in process from only 1,100 in December. ‘The dirty little secret is that sometimes foreclosure is in (the banks’) interest,’ he said. Krotik, who’s been a Realtor here since 1989 and writes a real estate column for the Sun-Star, also advocated ‘putting pressure on our elected officials — that seems to be the only way.’”
“Carole McCoy, also in the audience, generated applause when she stood and said that in 33 years as a Realtor, ‘I’ve never seen anything like this — it’s criminal until we get these banks under control.’”
The Record Searchlight. “In a July 2005 Record Searchlight story headlined ‘Equity euphoria - Homeowner caution urged before cashing in windfall,’ Redding accountant Bruce Hirst warned people that treating gains in property values as added wealth can be dangerous. ‘My general piece of advice to keep in mind is just because your house has gone up in value doesn’t necessarily mean you are wealthier. The only thing that’s really happened is you got an easy way to borrow more money,’ Hirst, a CPA, said five years ago.”
“Hirst’s words proved prophetic. The housing crash has certainly tested the notion that home values can go only up and real estate is a can’t-miss investment. The boom and bust of the housing market has ripped apart communities across the country, evident in the number of foreclosures and the spike in personal bankruptcy filings. ‘I am not necessarily happy that I was proven right,’ Hirst said last week. ‘But when I think back on that, I like to have my clients have their home paid off by the time they retire, so borrowing on your home is doing the opposite.’”
“If you must tap into home equity, do it for the right reasons, noted Redding financial planner Jeff Avery. ‘Don’t use that increase in equity in that home to finance a higher standard living along the way. That is where people really got in trouble,’ Avery added.”
“Avery explains most people wouldn’t think twice about raiding their 401(k) to buy a boat or take a European vacation. ‘So why would you do that with what is in most cases the biggest investment of your life?’ Avery said.”
“Redding financial planner Vince D’Amato chuckled when he recalled at the height of the boom one client told him that real estate never goes down. ‘I wouldn’t say it’s an investment as much as it’s a place to live,’ D’Amato said of your primary residence. ‘In a sense, your house is a long-term investment.’”
“Homeowners might use the equity in their home to add an extra room, but to speculate with that money is a horrible idea, D’Amato said. ‘Leveraging your house for unnecessary things is a bad idea,’ D’Amato said.”
The Los Angeles Business Journal. “The median price of a home in Los Angeles County fell for the second consecutive month in February. The price slipped to $327,000, a drop of $15,000 from January – putting prices right back where they were in summer 2008, according to data supplied to the Business Journal by HomeData. Median condo prices fell $10,000 to $295,000. It’s the first time condos have been priced under $300,000 since May.”
“A wide swath of neighborhoods across Los Angeles County saw price drops when compared with a year ago. ‘We usually expect quiet Januaries, it’s just the way our business operates – but February is beginning to be a trend, and that could be a concern,’ said Betty Graham, president of Coldwell Banker Residential Brokerage in Los Angeles.”
“Economists believe that the government’s decision to extend an $8,000 credit for first-time homebuyers – supposed to end in November – through April 30 is having little effect. The thinking is that the credit has largely been taken advantage of by those buyers who could, though there likely will be a rush of home sales in April as the deadline nears.”
“A bigger factor influencing the market is the weak economic recovery that has failed to generate jobs, as well as housing prices many think are still too high.”
“‘If you sit back and look at it, the name of the game is still jobs,’ said Paul Habibi, who lectures at the UCLA Ziman Center for Real Estate. ‘The government intervention we’re seeing is simply giving us a softer landing; ultimately we’re all going to get to the same bottom line. We are going to hit realistic pricing, regardless of what the government does.’”
“2009 was the fifth consecutive year that more residents left California than moved to California from other states. ‘I hate what California has become,’ says Lisa Duerr, a state worker and California native. ‘I grew up during California’s ‘Golden Age,’ she recalls. ‘The best schools, the cutting edge of everything from culture to technology, the envy of the nation. I never imagined living anywhere else.’”
“Now, frustrated by high prices and tax dollars that support an entitlement attitude at the expense of the middle class, Duerr says, ‘I’m about 10 years from retirement and seriously considering moving out of state.’”
This union leech can see that SHE is part of the problem. Hey honey, what do you think the high taxes are paying for??? Public union salaries, benefits and pensions (like the one you expect in 10 years) and free-bees for the illegals.
‘The best schools, the cutting edge of everything from culture to technology, the envy of the nation. I never imagined living anywhere else’
I’ve pointed out to some I know that you could substitute Texas in all these attitudes back during the RE/oil bubble. There were TV shows about our oil people (ridiculously exaggerated, of course), we had “Americas Team” in Dallas, the best colleges money could buy. Everyone who could stand could make a damn good income. And, lots of people were getting rich, and many more were living beyond their means by borrowing.
I was there 1979-1982, and I was making a good living come to think of it. Did I get out in time?
1984 was probably the peak. A lot CA can learn about what’s to come in the Texas experience.
I moved to Austin in 1995 and the downtown was still suffering the effects of the oil crash. Hard times don’t disappear overnight.
A former boss of mine lost big-time back in the early eighties in Casper, WY, another petroleum industry center. His house lost about 50% of its equity, and he had to bring money to the closing table when he left town to climb the career ladder.
Those were the days when you actually had to *qualify* for a mortgage. Those types of people were the ones who would bring money to the table if prices went down.
Gee, just think…the govt didn’t intervene then, now did they? I wish they could stay out of the housing/mortgage market now, too.
Montana, we came to Dallas in 1982 and got out in early 1985, JUST in time. In 2004 I was surfing the listings in our old ZIP code on realtor dot com. Lo and behold, there was our house. The asking price was slightly less than our selling price 19 years earlier!
funny, I remember all the construction cranes downtown and I thought some had stopped and they were already in trouble when I left in Aug. 1982.
The arrogance of those whose economy is up.
My family had to move to Oklahoma in the deep 1970s recession. I found people there believed they were prospering because they were morally superior to people in the Northeast, not because of an oil boom.
I moved back to New York. During the 1980s boom there, when Texas and Oklahoma was down, NYC Mayor Ed Koch said NY was prospering because its people were smarter — they walk faster, talk faster, think faster. Not because of a temporary Wall Street boom.
That went bust in the early 1990s, when leaders of the “Asian Dragons,” most notably the one in Singapore, said their economies were prospering relative to the United States due to superior “Asian Values.”
When the dragons were hit by the emerging markets bust of 1997 and 1998, U.S. officials claimed that we had more innovative people (kids who didn’t bother grinding through grammer and times tables) and flexible markets with accountability, while the Asians were uncreative and had crony capitalism.
Etc, etc, etc.
lol - you mean it wasn’t TRUE??
You mean “Asian Tigers”?
Clownifornia ueber alles … (Dead Kennedys)
Yes, and the income for her pension paid by California tax payers will be spent in another state further draining CA’s economy.
The family’s next challenge could come soon when Fino’s unemployment pay is expected to end. Maybe it will be extended once more and he will land ‘green job’ training through the State Economic Development Department, he said.”
This guy has drunk so much 0bama kool-aid that I am surprised he can still stand…
I hate to break the news to Fino, but a lot of those “green jobs” involve something that he may not be used to. And that something can be summed up in two four-letter words:
H-A-R-D W-O-R-K
And, another warning: His attitude of entitlement won’t go very far on a job site. If anything, it will give his coworkers something to satirize.
If every place is going to be saved by becoming the ‘hub’ of the green industry, how many will actually be saved?
It’s not too hard to find stories of green companies already offshoring jobs, and that’s just in the past six months too.
“He said he hoped that the modified loan payment would be made permanent although he had not been able to find a job since he was laid off in September 2008. Fino said he has been glad for the rainy winter because it means his weedy yard is green. He said he can’t afford to water the grass or buy fuel for the mower and the family can no longer use the community gym, boats and other recreational facilities because he has not paid the association dues.”
This guy is just a plain lazy POS, period. He could find a job of some kind, instead sits on his punk azz and won’t even weed the damn yard. His unemployment should be cut off straight away. I can not stand pukes like this, that love to whine about their situation.
P.S. This guy is a gleaming example of why unemployment compensation should not be extended over an over again. He’s been on it since 2008!
Yes he should have the best yard in town. Wonder what he does all day.
Also, how can this loan modification word out if this guy remains unemployed . I wonder how many of the loan modifications are to
unemployed workers who are going to take a 50% salary cut?
Sits in front of the 50″ flat screen watching game shows. I’ll bet he’s not skinny either.
Quite lot of anger for someone you all really know nothing about. CA. has an unemployement rate of 12.5% officially, but we all know what that means unofficially. And I suspect that Riverside Co. really does not have much work.
Ease up a bit there folks! Not saying he deserves to have his home saved, since he can’t pay for it anyway; but have a little compassion. Just a little.
Almost as bad as the people who just “know” that all state workers are a waste of money. I know many, and they all work hard. They’re certainly not milking unemployment (even on forced furlough days).
Molly, IMO, I don’t think the problem is that all state workers are lazy (although plenty are), just that there’s so much waste built into the system to begin with.
“Carole McCoy, also in the audience, generated applause when she stood and said that in 33 years as a Realtor, ‘I’ve never seen anything like this — it’s criminal until we get these banks under control.’”
Yes - it is all the bank’s fault. Realtor’s never put anyone in a house the could not afford or helped them “fudge” applications or showed them how to take loans at 10X income or…
I have yet to meet an honest realtor, and this includes the treatment we received from family members that are realtors, and friends that are realtors.
I know one totally honest real estate agent, and
I suspect she’s a regular on this blog.
Heh, a couple weeks ago I worked with a Realtor who casually began a conversation with, “Gee if I only had $50,000 to invest, I know what I’d do with it…” I was laughing inside but I played innocent and asked, what that would be even though I didn’t give a flying’ f*ck. I listened to his inventor friend’s fabulous idea but told him wow, too bad all my dough is in retirement plans. He acted surprised I even had retirement plans. WTF? I’m 61 - ?
Realtors denigrating banks? That’s like a whore testifying against the pimp because his behavior is immoral.
That’s like a whore testifying against the pimp because his behavior is immoral.
This could happen in Brazil. (on a legal basis) Prostitution is legal.
Pimping is illegal.
Hey, that’s the mirror opposite of the U.S.! Pimping is lucrative job in the U.S., especially in the financial MSM.
“it’s criminal until we get these banks under control.”
What is this woman’s idea of “under control?” Writing down everyone’s loan by 50%?
I fear that is coming next…..savers and renters be damned……..
That could benefit us if the house value came down by 50% also.
It won’t, because they will not include these write-downs as comps (though they absolutely should!!!).
I agree that realtors are slimy, but I 100% agree with Carol that is all the bank’s fault. The banks are in control of loans, and should be vetting income.
Realtors obviously push people into more than they can afford, but so do 95% of the salespeople in the world. Be an adult and say no.
That the ‘victims’ can’t say no to realtor’s suggestions is another headscratcher in all of this.
I don’t know why but people believed the RE sales people and loan agents . They all had the same zombie like sales pitch talking points during the boom and even now . The main street media was supporting all those talking points . The tons and tons of easy money
went a long way to make it look like this was a Society Sanctioned
and Lender Sanctioned sustainable housing boom . These crazy real estate myths became truth in spite of history proving otherwise .
How much of the boom was due to the change in capital gains tax
liability changes putting people into the 2 year investment plan rather than long term ownership of a house for shelter . I guess you would call that churning .It got to the point where shelter was the last consideration in purchasing a house it seems ,and fears of getting priced out forever or not getting your share of the easy money and the leverage game or a ATM machine became to reason to buy a house .
Lets face it ,the house buying public took on the character traits of Wall Street ,and real estate became a casino .
“Some observers have portrayed the shadow inventory as a potential flood that could overwhelm the market. But analysts and real estate agents suggested that what lies ahead for the housing market better resembles the slow draining of a swamp, one created by years of risky loans and hyperinflated prices.”
Why do I have the feeling that these analysts and real estate agents are the same ones who predicted the soft-landing? They say it and the world believes them. No one ever questions by saying “Hey, now that I think about it…analysts and RE agents have been wrong every single time they’ve opened they’re mouths for the last 5 years”?
“Why do I have the feeling that these analysts and real estate agents are the same ones who predicted the soft-landing?”
Like Yogi Berra said, “”It’s déjà vu all over again.”
Shorting the housing recovery
Wednesday, March 10, 2010
There’s a rosy tint on a lot of the national economic indicators right now, but it doesn’t feel that way for many Americans. There are still six unemployed workers for every open job. In California, unemployment actually rose in January - to a record 12.5 percent, with new figures due out today.
And the housing market, which was the catalyst for 2008’s economic disaster, remains grim all over. There were nearly a million “past due” mortgages at the end of 2009 in California alone, and nearly 2 million foreclosures are predicted for California by 2012.
It’s going to be impossible for the state to make a genuine economic recovery in the face of such numbers.
So we were pleased to hear that the Obama administration is launching a program to encourage short sales, even though we’re unsure it will actually work. The program will allow owners to sell for less than they owe, and give them $1,500 to leave quickly. In exchange for eating the loss on the loan, the homeowner’s bank will receive (a rather pitiful) $1,000. The program takes effect April 5.
Short sales aren’t an ideal solution for anyone - homeowners hate leaving a home while losing their equity, and banks hate taking a loss on their loans. But short sales are far better than foreclosures. The bank doesn’t incur the fees and paperwork associated with a foreclosure. The community suffers less vandalism and despair.
…
12.5%? And that’s the COOKED figures!
How accurate is the BLS’s U6 number?
If it is truly 18%, as I read the other day (sorry, no supporting link), it seems to be uncomfortably close to the 25% that occured during the Great Depression. How did they calculate the 25% during the GD? I assume it would be similar to the way they currently calculate the U6?
Good thing we still have high housing prices to offset those high unemployment numbers.
That IS how it works, isn’t it? That’s what the PTB keep telling us: if housing prices stay unaffordably high, all will be well with the economy.
/sarcasm
IMO, if they are making a deal like this it means the banks are not holding the mortage/deed. Unsuspecting homeowners will be signing their rights away. Make the banks show they are holding the paper. It’s easily more advantageous to live 2-3 years on the bank’s nickel than taking a measly $1500.
I only see one glitch with this little “short sale” fantasy. No buyers. Okay. Two glitches. No buyers. No money.
there will always be buyers. at the right price.
We’re swamped with buyers in SD County. Problem is, there is very little inventory, and what does exist is still way overpriced.
“Dustin Hobbs, a spokesman for the California Mortgage Bankers Association, rejects any talk of a flood of new inventory. ‘I don’t see any reason and any movement to dump hundreds of thousands of properties in a short period of time,’ he said. ‘That wouldn’t help anybody.’”
What about the 2 million California homes predicted to be foreclosed by 2012? If you knew a tsunami was recently triggered by a major earthquake at sea, wouldn’t you want to move to higher ground before it hit the beach? The Lord helps best those who help themselves.
All you have to know is this:
“Moreno Valley was more vulnerable to foreclosures than most Inland cities because almost 10 percent of its 5,461 homes had been built in 2005 or later”
10% of a city was built in very few years. Those excesses don’t go away quickly at all. And it wasn’t just Moreno Valley that was overbuilt.
Did we not get the news that Miami had built twice as many condos in 10 years compared to the last 40 years?
I don’t care what anyone says, such excess inventory will NEVER end well.
“Avery explains most people wouldn’t think twice about raiding their 401(k) to buy a boat or take a European vacation. ‘So why would you do that with what is in most cases the biggest investment of your life?’ Avery said.”
lol..what?? They wouldn’t think twice about raiding the 401k..no wonder they have problems.
I thought that was supposed to be a lockbox?
I thought that was a misprint and had to read it a couple times to get it straight..
That phrase “wouldn’t think twice” tends to be most commonly used when the obvious answer is “yes”, but not necessarily.
He means most people wouldn’t think twice about raiding a 401k because the very first thought is “NO!”. It’s a bad idea.
He is cautioning people against raiding a home’s equity.
yeah he meant “wouldn’t think about…” One thing about the internet, we get to sample sh!tty writing from all over the place.
‘The government intervention we’re seeing is simply giving us a softer landing; ultimately we’re all going to get to the same bottom line. We are going to hit realistic pricing, regardless of what the government does.’
Can someone who understands the rationale please explain the strategic advantage of drowning more slowly? I’m missing it…
Can someone who understands the rationale please explain the strategic advantage of drowning more slowly? I’m missing it…
Votes. If you are the incumbent - you may still win re-election with a “soft landing”
“The government intervention we’re seeing is simply giving us a softer landing”
I thought the “soft landing” canard went away in 2008?
Why must some rationale be behind it? It’s more of a survival instinct.
It’s reasonable that anyone who stands to lose money with the bubble’s collapse would fight against it with all their power.
How does riding falling knife REO all the way to the ground help you stop losing money? Wouldn’t it be wiser to unload the falling knife onto someone else’s plate before it bottoms out?
Don’t tell me that with 2 million California foreclosures projected by 2012, you believe prices have already reached a bottom. I’m not buying it.
less damage to the psyche.
PB, my guess would be that there would be less social unrest if the masses are slowly tranquilized to death than to crush them with one heavy blow. Although I don’t think that’s their intention, just a possible benefit. I honestly think the PTB think that they can still pull this plane out of its death spiral.
‘I hate to say it, but at some point it’s got to happen,’ said Charles Himes, director of REO services for Pacific Union International Real Estate in Santa Rosa. ‘They need to unload these properties for the market to recover.’
Absoloutely right. Unfortunately, that word doesn’t mean what the wishers on Main Street, Wall Street, and 7th Street* THINK that it means.
*Location of HUD headquarters…
“San Diego would be a great place to live if it wasn’t surrounded by California.” LOL
“2009 was the fifth consecutive year that more residents left California than moved to California from other states.”
I would like to see the statistics on how many people moving out are net “TAX Payers” and how many moving in are receiving more than they are contributing….Hey, if someone is going to support you it might as well be in a nice climate.
“2009 was the fifth consecutive year that more residents left California than moved to California from other states.”
Note that this includes the bubble years when they weren’t making any more land.
I would like to see the statistics on how many people moving out are net “TAX Payers” and how many moving in are receiving more than they are contributing….Hey, if someone is going to support you it might as well be in a nice climate.
They’re not necessarily moving in from somewhere else. Most of the growth, such as it is, is births to those that are already a net drain.
Don’t forget foreign immigrants, too. That is a big part of the pie. The population in CA is growing overall.
I would love to retire in California. But the cost of living is way too high and taxes are way way way too high. So I just visit from time to time.
I left SD 3+ years ago for Hawaii, where I pay a bit less in taxes, make 25% more (hard to lure talent out here), and have a significantly better quality of life. I sold my house in SD in 04, took my 6 figure salary and near 7 figure net worth and have no intention of ever moving back - I’d rather live in another country like Costa Rica or Australia than an overcrowded third world state like Cali with 1st world prices - and I was born and raised in CA. I enjoy my brief visits, but I’m done with the place and have no desire to subsidize all the illegals and welfare types, although I subsidize a lot of the latter here in HI. The political situation is beyond insane there and while HI mirrors many of the problems in CA, all the problems are smaller by orders of magnitude here.
I’m tracking RE here and probably going to buy when things are cheap in a 2-5 years but I’m not committed to anything - I may just rent and enjoy being free and travel instead. Being under 40, single and in good health plays a big part in any decision I will make.
Are you sure you want to move to Australia? House prices here are the most expensive in the world. It’s like a continent-sized San Francisco; I’m not exaggerating. And the government is doing everything in their power (including real estate propaganda puff pieces in the newspapers, internet, and TV) to keep the bubble from popping here.
I can think of many places in CA where I can buy real estate for 1/3 the price of a comparable neighborhood here in Australia.
“At the same time, one of the problems is we’re stuck in California. San Diego would be a great place to live if it wasn’t surrounded by California.”
There are plenty of places in California that are desirable. However, being underneath a dysfunctional California government isn’t helpful. In reality, the San Diego city government is even more dysfunctional, incompetent, and corrupt. Many of the problems in San Diego are entirely self-inflicted. The problems in California just add to the burden.
Would San Diego be better off if it were in Mississippi, Alabama, Kentucky, Oklahoma, etc.? I doubt it.
San Diego has a long standing tradition of corruption way back to the C. Arnholt Smith days.
I’ll never understand how Mayor Jerry Sanders got re-elected after the Liberty Station rip off.
San Diego has always been beholden to real estate interests, going back to the late 1880s, and it’s one of the reasons, that no matter the population, it’s always been provincial. We had a couple wealthy philanthropists like Spreckles and Marston who were visionaries, but they got beat down by the C. Arnolt Smiths and the Hazards and the Fletchers, who like Ed Moses in NYC did bring infrastructure, but at a cost.
“Fletchers”
Is Nathan Fletcher a scion of that dynasty?
“San Diego would be a great place to live if it wasn’t surrounded by California.” LOL
“When Fino and his wife bought their house four years ago for $415,000, he said they took a mortgage with monthly payments so low that the balance kept growing. ‘It was the easy way to get into a house,’ he said.”
And it’s an easy way to get OUT of a house, too.
“Despite declaring personal bankruptcy last year, she and her family were told their house would be auctioned off at 3 p.m. Friday.”
Is there something inherently contradictory about declaring personal bankruptcy and having your house auctioned off?
Well the fact that they can’t make their mortgage payments even though they have already received protection from their other creditors means that they’re STILL not able to live within their means.
IIRC, the foreclosure process comes to a screeching halt if one declares bankruptcy. Might be different in different states though.
Maybe they didn’t pay property taxes or something not covered by bankruptcy protection. That auction might be a tax lien sale..?
If they listed the house in the bankruptcy and have gotten their discharge, the house goes back to the bank. So the bank can foreclose whenever it wants.
When I moved back to CA last year at the DMV I was told alot of ex-Californians were moving back things were not working out in other states for them.
Personally I liked my 3 years in Phoenix AZ turned down an offer to go to Portland OR because I though AZ was pretty nice. Finally left ahead of rumored layoffs. I always leave ahead of layoff rumors. Was let go back in 1993 in CA in the SFV during a big down turn, couldn’t find a good job for years , upsidedown on Townhome bought at the last mini-peak. So yea I’m gun shy. I rent probably never buy in CA so I can bail at will, its good to be free.
When I moved back to CA last year at the DMV I was told alot of ex-Californians were moving back things were not working out in other states for them.
This maybe answers one of the questions I’ve had. Are those that are leaving really finding better opportunities elsewhere or are they just leaving because it’s so bad here they assume it must be better elsewhere?
Many Californian’s leave CA thinking they can make their high CA wages in another state and pay 1/3rd the housing cost in the new state………they quickly find out that’s not true…….they get 1/2 the wages and although it’s a little better financially, it’s not the windfall they thought it was going to be……
We get a lot of that out here. Of course some were able to pay cash for their McMansions, only to have to commute 1 hr each way to a job in Denver. What’s amazing is that Ft. Collins keeps making those “best place to live” lists. It’s just not a “best place to work”, unless you enjoy being laid off from HP, Agilent, Intel, AMD, LSI, Adbanced Energy…the beat goes one and its seems that I-25 is a more crowded every month.
they get 1/2 the wages and although it’s a little better financially, it’s not the windfall they thought it was going to be……
Many times yes, but usually the wages are only about 15-30% less and houses, insurance, food and other things are usually a lot less.
And it depends where you live too. Here’s two “small towns” outside of major cities on Money’s 2009 list of America’s best small towns with rankings and stats.
Lenexa, Kansas suburb of KC
Money rank 26th
Median Family Income $104,351
Median Home Price $225,234
Walnut, California, Bay Area suburb
Money rank 70th
Median Family Income $104,734
Median Home Price $558,000
http://money.cnn.com/magazines/moneymag/bplive/2009/snapshots/PL0683332.html
Correction: Walnut, CA is a suburb of LA, CA not the Bay area.
I would also suspect there would be a tendency to buy the biggest house around, because it looks so “cheap” by comparison to where they came from.
Oh, and Lenexa isn’t really a small town, it’s part of a swath of seamless post-war suburbs in Johnson county Kansas. Nice enough but no Mayberry.
Oh, and Lenexa isn’t really a small town, it’s part of a swath of seamless post-war suburbs in Johnson county Kansas. Nice enough but no Mayberry.
I know. I was surprised Money Mag called it a “small town” too. That’s why I used the quotes. Walnut, CA is not a “small town” either. But I’m also surprised at the income similarity.
As many ex-Californians learned when they moved to Arizona.
I remember in 1991-1995 a lot of people I knew left CA. Many went to NV, AZ, CO, some even to MN, ID and MT. When the economy stabilized, about 90% if them returned. They all missed the CA culture and often hated the weather where they moved (too hot or too cold).
“Many Californian’s leave CA thinking they can make their high CA wages in another state and pay 1/3rd the housing cost in the new state………they quickly find out that’s not true…….they get 1/2 the wages and although it’s a little better financially, it’s not the windfall they thought it was going to be……”
Exactly right. In fact, if I had a few bucks for every person I know who’s done this I’d have…well, not enough to retire but enough for a nice long, luxurious weekend in Las Vegas.
I’m always surprised at how quickly people pick up and move someplace without doing ANY research first. For Heaven’s sake, internet research is fast and easy! Why just go stomping off blindly?
Anecdotally, it worked for me. We jumped from OC in disgust with the housing prices to a non-depressed midwestern region. Incomes nearly doubled, and considering that she worked in a non-lucrative part the housing industry in OC, we can say that our incomes are well more than double what they would be if we’d stayed. Costs for everything but flights and restaurants has gone down (great immigrant food in CA generally keeps me from being tempted by “fine dining” there). That said, I can easily see myself being seduced back to coastal living.
“When I moved back to CA last year at the DMV I was told alot of ex-Californians were moving back things were not working out in other states for them.”
I left California five times in my 20s and 30s. I moved back six times. It’s a hard place to leave!
Anecdote from OR. I have been doing a lot of driving on I-5 (not “the” 5) between Portland and Eugene lately. On each of 5 trips I count 2-5 moving vans heading south. I find it hard to believe that many are heading south to still remain in OR and assume they are headed back to CA. Not that I’m complaining or anything…
On the return trips I have counted 2 vans total heading north.
On each of 5 trips I count 2-5 moving vans heading south.
It would make sense since many California inland areas have affordable home prices now.
“When Inland home prices hit bottom in the second quarter of last year, existing Moreno Valley homes sold at a median price of $139,226, meaning half sold for more and half for less, according to MDA DataQuick.”
How do serial bottom callers know that prices won’t go still lower once government sponsored housing market life support measures are withdrawn?
….once government sponsored housing market life support measures are withdrawn?
A very tenuous assumption on your part (that they will ever be withdrawn)……….I’ll believe it when I see it…….
Here is one housing subsidy program that is about to end:
FAQs: MBS Purchase Program
The following frequently asked questions (FAQs) provide further information about the program to purchase agency mortgage-backed securities (agency MBS) that was announced by the Federal Reserve on November 25, 2008. On Wednesday, March 18, the FOMC announced the expansion of the Federal Reserve’s program to purchase agency MBS up to $1.25 trillion by the end of the year. On September 23, 2009, the FOMC announced that the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and gradually slow the pace of these purchases, anticipating they will be executed by the end of the first quarter of 2010.
This agency MBS program is managed by the Federal Reserve Bank of New York (New York Fed) at the direction of the Federal Open Market Committee (FOMC). The New York Fed selected four investment managers to help implement the agency MBS program and has since streamlined to two.
Effective February 17, 2010
General
What is the policy objective of the Federal Reserve’s program to purchase agency mortgage-backed securities?
The goal of the program is to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally.
…
And here is another:
Frequently Asked Questions
About the First-Time Home Buyer Tax Credit
The Worker, Homeownership, and Business Assistance Act of 2009 has extended the tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence. The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.
…
I moved from California to Florida in 1980. At the time, a house in California cost 2 to 3 times what it did in Florida. Guess what. It still does, and may have even gotten worse.
In 1980 the mover told me that more people had been moved out of California than in for the last 5 years. That hasn’t changed either, according to the article.
In 1980 Florida had no state income tax but California did. No change there either.
The only thing that has changed in Florida is the cost of house insurance because they’ve jacked up the cost of hurricane coverage.
As for weather, it’s warmer in Florida and I like that. Except the last two months have been so miserably cold !
I enjoyed living in California, but the reasons I left are still valid.
Husband wants to move back to Florida. We lived in Tampa in 1977. I’m giving it very serious consideration.
Long time ago, my brother rolled the cement truck with a load of cement in the mixer, got fired, went to Texas and worked as truck driver in cement trucks, came back to California in six months!
Turned out unemployment payments in California were higher than cement, or concrete, truck drivers in Texas!
“Some fear the estimate of 7,000 homes in shadow inventory may turn out to be too low. Forrest Jinks, a principal in the Santa Rosa real estate investment company Altus Equity LLC, said government loan programs and tax credits are still allowing some buyers to purchase homes with virtually no money down. With the government incentives, buyers often purchase the most expensive place they can afford, and ‘any hiccup in their employment’ could put them into serious trouble, he said.”
“‘It was that kind of lending that got us into this trouble in the first place,’ said Jinks.”
Hair-of-the-dog hangover cures can definitely lead to bad cases of the hiccups.
‘I hate what California has become,’ says Lisa Duerr, a state worker and California native.
Oh my god, the irony!
She’s probably referring to the illegal immigrants and the much lower quality of life. It has much less to do with union workers than it does with our immigration problems.
If California could get rid of the illegal immigrants, they could probably lay off at least 30% of the govt workers.
“If California could get rid of the illegal immigrants, they could probably lay off at least 30% of the govt workers.”
Even if that’s true, there’s no way they’d do it.
They won’t have a choice. Lots of stuff coming in that area, IMHO.
“Theme parks are being flooded with applications from job seekers, as unemployed mortgage agents, sales clerks and construction workers who can’t find work elsewhere seek temporary positions that often pay little more than minimum wage.”
“So, Mr. Realtor, what in your opinion would qualify you to work here as Goofy, Dumbo, or Mickey Mouse?”
Tough call, but I best fit the role of “Dumbo”.
Robb Steel - did anyone else catch this? Too rich - California, so glad I never knew ya.
Walk away from your mortgage?
Letter to the Editor
Posted: 03/10/2010 03:36:45 PM PST
Dear Editor,
I hear that one in 10 homeowners is overdue on his mortgage payments and therefore within 90 days of foreclosure. Many (most?) are “upside down” or “under water” they owe more on their mortgage than the home is worth.
Last year, the author of “Choose Foreclosure” (chooseforeclosure dot com) urged people struggling to make payments to consider foreclosure and avoid bankruptcy. When the Republicans controlled Congress a few years ago, they changed the rules so that now people who file for bankruptcy get totally screwed. Instead, the author recommends fighting back against the big banks and mortgage companies.
Apparently, many mortgages issued since 2000 contain predatory lending violations, and otherwise violate federal and/or state laws.
An economics professor at the University of Massachusetts Amherst, Nancy Folbre recently wrote about the (unlikely) possibility of wide-spread revolt. Throwing good money after a bad investment every month while slowly sinking deeper into debt does not make financial sense. However, if lots of people just stopped paying their mortgages and sent their house keys to the bank, it could force major changes in the rules of lending, mortgages, interest rates, and principal adjustments.
There is even a company that will help you through the process. Youwalkaway dot com provides details and support for a $1,000 flat fee. If you feel that you were fooled into a shady loan for an overpriced home, I recommend that you listen to this 35-minute audio. You can learn more about the company, the background of this mess, and your options from this audio segment aired last week on the Thom Hartmann show.
If you are more than 10 percent under water, you may want to consider the economic aspects of stiffing the banksters. After all, they are the ones who created this housing bubble and threatened to destroy the economy if the federal government did not bail them out. And I notice that, unlike so many un- or under-employed Americans, they have not missed a paycheck or a multi-million dollar bonus.
-Rob Means, Yellowstone Avenue
Gotta love him!
California always a subject of controversy, always will be I guess. Back in the 50’s and 60’s it was the back East relatives and friends who were just plain jealous they didn’t have the money or guts to move there.
Then in the 70′ and 80’s the ones who had guts to move there started to turn sour not on the physical place itself but the state gov’t and zoning laws which there are few ever enforced.
90’s and 2000 more people becoming disenchanted and the illegal and foreign culture are starting to really wear on the transplants.
Now it all comes down to how can I isolate myself from the total chaos of a once great place to live or do I again pull up takes if I can afford to get out and look for a better quality of life (which is shrinking in every state in the union everyday)?
We left the state 20 years ago and have never looked back, we found a little corner of the world, fortunately we are able to afford this life style most can’t and that is always the dilemma in life, you can’t always do what you want to do because circumstances dictate otherwise.
Many people in the golden state will have to learn to tough it out, if you have money then it is a no brain er you pick and chose what is best for you and happiness. Most can’t do this and for those who moved away it’s like a divorce, you really never get over it but you move on with a new mate.