According to the photos, they didn’t spend much of the HELOC on the house. That kitchen is definitely what the house came with when first built. Maybe a bathroom or two were redone, a grill erected in the back, and possibly some landscaping. Certainly nothing close to what they HELOCed out of the place.

What does it mean when someone carpets the garage?  Is this b/c they move another family into the home for help with the rent/mortgage?  Obviously there will be no cars parked on the carpet, right?

Anyone else totally amped at the prospect of trying out a used washlet?

At their website you can easily imagine all the users who came before you…

Oh, these comments are going to be good.  The device doesn’t spray used water on you!  And these things are expensive.  I’ve seen several of these in homes, both Anglo and Asian.  I just saw one in the Ladies’ room of a Japanese restaurant in Honolulu.  My sister tells me they’re all over Japan in public facilities.

“None of the parties to the real estate transaction believed they had any risk.”

And many of them were right.  People with no money down only had credit rating risk.  Mortgage brokers only had the risk of losing a job later.  Banks typically weren’t retaining much of their mortgage portfolio.  Credit rating agencies have in the past avoided being liable to investors the great majority of the time. 

So who got stuck?  MBS purchasers, private mortgage insurers (who I am still stunned to see in business), banks on their retained portfolios (especially HELOCs), Fannie and Freddie (though their default rate is lower than elsewhere, it’s still huge in $ terms), the FDIC, and the taxpayer.

I know a few people who saw HELOC lines being cut who took out the max under their HELOC and put it in a “safe” investment to make sure they had liquidity.  Hopefully they chose treasuries or CDs and didn’t get into the stock market.

“So who got stuck?”

The entire economy, with the tax payer at the front of the line…. paying for the collapse of debt spending.

I was impressed by that 3,211 square foot lot,and the the spaciousness of 1500 square feet of living area.

IR - your post today sounds like you actually think they may be able to stop the fall of prices - I don’t think I have heard that from you before.  Which of the numerous measures that they are trying to enact do you think might actually stop falling prices?? 

I just don’t get it - keeping housing prices high is so horrible for CA economy - one of these days businesses are finally going to see the light and get out of CA because they can’t afford employees.

Neighbourhood is an effort to sound English…making it more “classy.”  They should have called it…“Ye Olde Foreclosure Special.”

The 1970s were not the first CA housing boom.  These cycles go back to at least the 1880s, http://www.ci.south-pasadena.ca.us/library/PDFs/kurutzboomertalk.pdf.

“Soon, Southern California became like one gigantic casino as newcomers changed from buying lots to live on and farm to buying lots to sell at high profits. Speculation on real estate became rampant and spiraled out of control. With dreams of a quick profit, everyone gambled on property from the lowly hotel bellboys to doctors and ministers. Everyone seemed to be a millionaire….”

Anything sound familiar?  That was 1886.

I don’t think they can stop the price decline, but they can make it less worse than it should be. If they raise the bottom through 4% interest rates, or homebuyer subsidies, they just make the recovery weaker. Anything that supports prices just pulls demand forward and puts them into properties they can barely afford with the subsidy. I have never seen a healthy free market that required a subsidy or other price supports.

That’s because IR is really an optimist at heart…

But I am not, not one little bit. I need to be shown how Bernanke and friends are going to be able to finance all this debt they think will get us out of this mess. Somehow I don’t think it’s going to be all that easy.

I look forward to the day of sub-3x median income home prices.

That is a well-written article. I suppose I could have provided a more complete history of California land speculation, but the experience of the 19th century probably wasn’t influencing today’s buyers as much as the last 30 years were.

I was at a BIA event recently where they showed a graph of housing starts for the last 50 years. I did not realize that the early 60s had more housing starts than any time since. We built more houses in 1963 than we did at the peak of the bubble. To me is shows what happens when you introduce a number of land use controls as happened in the late 60s/early 70s. We probably would have had a real estate bubble in the early 60s had supply been limited and prices been allowed to rise.

The house/story is pretty unremarkable. 

But the “washlet”.  Oh. My. God.

As it happens, Jim the Realtor at bubbleinfo has a house where the previous owner took out the bidet and put in a non-matching tile.  Hillarious.

I am not sure whether knowledge of prior bubbles would have had any real effect on the most recent bubble.  There was a bubble in the late 1980s and early 1990s which many people in SoCal experienced first hand.  Many of the same real estate agents, etc., were involved in both bubbles.  Certainly, if that firsthand experience didn’t discourage individuals, history from the 1880s wouldn’t. 

If anything, such knowledge will inform policy debate and academic analysis.  Maybe we will ultimately find ways of reducing bubbles and their damage that don’t impair the free enterprise system.

To really stabilize prices and/or partially reflate you would need to revitalize the demand that was pulled forward during the bubble…. those who have already been foreclosed on…. you would need to wipe the slate clean… and allow them to purchase now.

The problem is that these people were never credit worthy.  It required the assumption that these people learned their lesson and will not default on all of their debt again.  If they default, then the stabilization/reflation will be temporary and the debt deflation just gets delayed to a later date.

The website is quite cheesy - they talk in inuendo that likens the product to a male enhancement pill.  Perhaps if you order in the next 5 minutes they will include the baby powder blower (a 60.00 value) free of charge.

My favorite sales pitch is how regular toilet paper “redistributes the problem” - thanks for the visual.

I have heard of these things being used in other countries but to me it seems semi-perverted,  emasculating, and impractical - but that’s just me.

Either way, I think it beautifully sums up today’s post and the other turd loans of the housing bubble; our modern day tragedy “Washlet”.  Shakespeare would be so proud.

So I guess this washlet cleans your butt and drys it?  So you don’t use toilet paper?

Jesus.

You make the assumption that the key take-a-way from a financial bubble is to not let it happen again.  Wrong.  The key take-a-way is that those who benefit greatly from the pervious bubble are actively looking for the next financial bubble.  Financial bubbles are part and parcle to capitalism.  It is how the rich get richer and the poor, poorer.

Toilets & Cressida?

MacFlush?

Much Doo-Doo About Nothing?

80-20 problem…

80% of the abuse took place in 20% of the Country, that’s what Washington doesn’t get.

What I found interesting was a recent break down of Bear Sterns Mortgage losses.  Of the $30 billion in losses at the time they went under, $12 billion was on loans out of Orange County, CA.

OC really is ground zero.

From washlet.com:

“The washlet has more in common with a laptop computer then any toilet seat you have known.”

These things sound like a tour de force of household technology. If the City of Irvine mandated these, property values just might stabilize.

Doesn’t surprise me…they say the birth of the subprime loan was in OC…

that is an amazing number Alan - and yet OC is still holding on to their high end prices while the rest of the country is floundering - there is no justice.

I wonder what the number was if you included all of So. CA!?

Unlike the borrowers that just walk away, many of the banks ended up bringing off balance sheet junk in SIVs and the like back into the bank resulting in huge losses.

So much for transferring the risk.

They didn’t spend much on the bathroom.  If your going to put in a washlet instead of going all out and adding a seperate bidet, you should at least get an electician to add an outlet behind your loo, the extension cord is tacky.

Say the washlet in the photo online for $199, list for $399.

http://www.sanicare.com/?gclid=CMjw2oGC0JgCFSMSagodBQQ01g

Not to mention they are happening more frequently and getting more extreme.  This is due in part to inflation and the dirty little secret that Americans can’t afford the “American dream”, or anything for that matter. 

I think bubbles are analogous to a sinking ship. Bubbles are nothing more than short windows for survival. Remember that scene from Titanic where the lower class passenger were following the rats to higher decks? It’s a rat race just to survive these days.

I’m just afraid of where the next bubble will occur. I have a feeling it will be alternative energy and infrastructure.  God help us when that one pops. I wouldn’t mess with such a vital industry as energy.

What is called prolonged agony—getting closer to the Japan experience.

I noticed that the washlet is installed in the powder room which I find kind of odd.  Why not install it in the master bath room.

Yes, look at what happened when they tried deregulation of the CA electric industry…we’re still paying for that mess…and I was at ground zero (utility employee)

“I have heard of these things being used in other countries but to me it seems semi-perverted,  emasculating, and impractical - but that’s just me.”

You’ve got to get out and travel more then, or at least talk to a proctologist about the applicability for hemorrhoid sufferers

I think we’ll see this.  Fannie’s been aggressive increasing the length of time necessary before they’ll purchase a new mortgage to 5 years from foreclosure.  That keeps a big portion of potential buyers (i.e. market stabilizers) out of the housing market for a long time.  If your goal is to stabilize the market, you’ll probably want to shorten that time-frame down to 1 or 2 years.  This conflicts with your goal to discourage walkers however…

Re: “Have you ever stopped to ponder the issue of moral hazard? At its most basic, moral hazard is any change in behavior that comes about when people believe their actions have no consequences.”

“Reagan taught us that deficits don’t matter.”
-Dick Cheney

Same attitude ie. deficits don’t matter - because in 4 or 8 years we’re outta here & it’s some other person’s problem…

I was involved with several large utilities during the deregulation.  It was only deregulation of one side: production and generation.  Regular retail consumers paid a fixed rate.  California’s electric deregulation was very poorly implemented.

I don’t think we will get away from bubbles.  I hope that they can be recognized more quickly and do less damage.

Bubbles have a tendency to enable or attract a lot of fraudulent activity.  I think that is one of the primary places to slow down a bubble.  Keeping leverage away is another.  Since most bubbles are built on expectations of price rises continuing for long enough to get out with a gain, being able to credibly warn people when prices or expectations of gain are very far out of line would be very valuable.  Especially if accompanied by some sort of policy change.

mav, I think you are wrong (mostly) about them being credit worthy.

maybe the sub-prime buyers weren’t, but buyers like these clearly were for the $300k loan, just not for the $600k loan.

I think it is buyers like these who we will see more of in the coming year.  half or less of the income needed for their refi’d optionARM, but perfectly fine for their 4x income purchase loan from ten years ago.

Loans on OC real estate?  Or loans originated by firms like New Century?

maliburenter, you are correct.  Very poorly implemented which made it easier to game, and led to disastrous results.  Maybe they’ll get it right next time when they try it again in another 10 years or so.

I could go on and on about this but it would take me all day!

Yes, imagine that.  Instead of toilet paper smearing residue all over your crevice and leading to skid marks in your drawers, you actually have water rinse the residue off your butt.  How backwards is that:question: 

O.K, I’m just having too much fun with the provincialism in the bidet comments

That particular moral hazard issue did not serve the Republican Congress under GWB very well. Many lifelong Republicans were disgusted with the spending and budget deficits. Hence the loss of seats in 2006 and 2008 (it wasn’t all because everyone hated Bush).

Now that everyone showed the way, it is my turn. Buy my first house at the bottom of the market. Save like crazy to get a second home to rent out. Pull out all my down payment and more with a HELOC when the next bubble hits, and yes it will happen again. Pay off the first house. Its not wrong if those are the rules. No one forced the banks to give out the money.

“If the City of Irvine mandated these, property values just might stabilize.”

And people would smell nicer too!

This is probably TMI but I have a hard time imagining water getting residue off my butt.  Probably take more like a fire hose

Plus, I kind of like skid marks in my drawers…

Low Flow Washlets - energy efficient… Add these to the “Green Energy” section of the bailout package.

The Government has chosen the powerless taxpayers to purchase as much putrid crap as Wall Street has to offer.

It only seems fitting that a “washlet” for all clause is added to the bill.

It will provide the taxpayers a way of cleaning up after the fiscal pounding that we have bent over to receive.

Hey Obama!,  We are not looking forward to this PMITA Administration

“Windows in each room”

wow…that’s something new.  I thought only prison doesn’t have window in each cell.

I am trying to help a reporter with a story on the walkaway phenomenon. If anyone reading this would like to tell their story to a reporter for the Christian Science Monitor, please email or call:

Dan Wood

danbwood@aol.com

818-905-1985

I’m totally cracking up!

I really need one of those spiffy electric toilets.

> washlet; wash-toilet. You have to check out this website. It is hilarious.

That’s awesome.  It’s the Brady Butts! 

Good God, the washlet is connected via an extension cord .  Wow some use of HELOC…

? Loves labor flushed??

I liked lighting fixtures on the ceiling too. As for “toilet cover stays” maybe I’m just germ phobic but I would pay extra to make it go. [ or maybe you use it to dry off after the washlet]

and if you pee on the cord you experience the always stimulating “frylet” experience.

I’m trying not to wrap my mind around that.  You win for the best comment.

Oh, come on.  Try the washlet, you might like it!  You can give the economy a boost while feeling sparkly clean.

BTW, this is all in good fun, ockurt

A good washlet gives you a blow dry after.

How do I know about this?  I just helped a Japanese gentleman plan a bathroom remodel, including a washlet system…I learned more about the product than I ever thought…

To IrvineRenter:

It was interesting to learn that your background is in land use planning… I have two brothers who have the same background, so I have a general understanding of zoning laws. And I argue with them from time to time, so I hope you appreciate my comments in this context.

My brothers and I grew up in Irvine and accepted the laws that protected/limited land use and also the architectural integrity of the local association. But I no longer live in Irvine, and now I’ve begun to see things from a different perspective. If homes are expensive in Irvine, why not just change the zoning laws? Why not let anyone build what they want on their land? Wouldn’t this make homes more affordable for everyone, while enriching those who already own property?

On one hand, liberalizing land use in Irvine seems like a radical concept. But, don’t most residents of Irvine subscribe to free market principles?  If so, why do they live in the most controlled environment imaginable?

This for me is the paradox of Irvine. On one hand, residents agree that free markets are good and are ideal for the economy and society. But even while they have these thoughts, the same residents allow their entire lifestyles to be artfully designed by land use planners. Everywhere they go their decisions are planned (or controlled through the constraints of land supply and land planning) ... the location of restaurants, supermarkets, etc. The government’s hand is not invisible, it is omnipresent.

So I am curious. What is preventing the residents of Irvine from transforming their properties into their highest and best use? What is preventing residents from expressing their views of free market capitalism? What keeps them from transforming their under water properties into sources of income and wealth? Shouldn’t the owners of the property you’ve profiled be able to tear that home down and turn the property (one that they OWN I might add) into a 10 unit condominium? Wouldn’t that make housing more affordable while making existing home owners more wealthy?

Thanks.

does the sound of your (or your lender’s) money being flushed down the drain sound any different on a washlet?

Or just ask yourself if you’d want to eat a restaurant that carefully cleans the plates and utensils with paper towels. 

Feel just a little dirty now?

Yes, it’s intentionally masked by the “Sound Princess” (Oto-Hime—see http://tokyo360.net/?p=16).

IR great reporting.  As for Washington making moral hazard, you’re assuming they have morals.  Republicians and Democrats in Washington have and will continue to encourage bubbles.  Look at the proposals for 4.5% 30 year loans.  They will likely require 5%, nothing down or negative down for those living in the houses.  This will cause another round of refinancing and collection of points by the banks.  Then another set of defaults, bailouts, and another set of refinancing.  I almost forget to include numerous campain contributions at each step.  The best goverment money can buy, but they’re not working for us.

IR,
What exactly is “kool aid intoxication?”  Do it refer to Jim Jones’ Kool-aid, a cheap drink to spike and pretend that it’s fine wine, or what?

I guess IR failed to **realise** that **neighbourhood** is British.

Careful, they’ll be pissed when you try to correct their English. After all, it is *English* and not “Americanish”

The answer, my friend, is “property value preservation”. Why do you think there are so many NIMBY homeowners?

If I turn my property into a brothel, I’d make more money than your 10 unit condos

That is the historical reference. It has come to symbolize the collection of erroneous beliefs embraced by participants in the housing bubble.

I think I can answer that.  I have a two-story townhouse in Anaheim with a half-bath “powder room” downstairs, and that downstairs half-bath gets most of the crapper traffic in the house; I’m downstairs most of the time, any visitor will also be downstairs, and it’s the most convenient crapper in the house.

I assume “Washlet” is Newspeak for the toilet with built-in bidet washoff like they have in high-end Japanese hotels.  Good idea, but sounds expensive.

Yeah.  Sounds like the back yard can be a Whole TEN FEET DEEP!

Finally found one to top the “plantation shtters.”