Irvine Housing Blog

Countrywide keeps freezing the loans down here in San Diego:
<a href=“http://www.helocbasics.com/countrywide-heloc-loans/“ title=“Countrywide freezes 100k loans” rel=“nofollow”>

I noticed they were filming at this address the last couple days…what exactly for?

From the WSJ

“Homes in Bubble Regions Remain Wildly Overvalued”

http://online.wsj.com/article/SB120276871472760255.html

For those who think this house is fairly valued.

CDS in this context probably means cul-de-sac.

It wouldn’t be fair for me to make a dead end joke here, since the interleaved cul-de-sac pattern is not uncommon in suburbia in general.

Wow.  Nice explanation, tonye.  CapitalismWorks, you just got your ass handed to you, bud.

wow, this listing has a beautiful kitchen. so much over investment in kitchens, so much over investment in real estate, take out the ‘kitchen necessary to sell speculative crowd’ and very few people (if any) will pay this kind of money for this kind of kitchen,

“As for debt surviving BK - it generally doesn’t and there have been some recent cases where debt collectors have faced stiff judgments for doing so (including punitives and attorneys fees)“

Too true, at least regarding consumer debt.  But most people hire awful, awful bankruptcy lawyers who won’t lift a finger for anything.  So they don’t know how to deal with such collection attempts.  If you know anyone that this happens to, tell them that the best recourse is to go back to the Bankruptcy Court, even if they have to do it pro se (ie, w/o a lawyer).  Most federal judges don’t have too much tolerance for creditors violating their orders.

Well. he reached terminal velocity and he wasn’t accelerating anymore.  So maybe he realized it wouldn’t be as bad as he thought. 

A Ferrari 250GT and the Dino are still an outstanding vehicles today.  Do not think that because something is old it’s bad.

Besides, for the last ten ( fifteen ) years the germans have been making their cars porkier.

Now, if he were to think of even a Civic R or Civic S (NA), or even a 2.2 S2000….. heck, my 95 GSR had an 8100 rpm redline and the ITR had an LSD on it too… but the US CSI has even more power, an LSD. and a rifle bolt MT6 action.

So, anyone that makes points like yours or his simply is clueless about automobiles… and hey, since my wife works for one of the large ones we KNOW cars in my house.  Devoid of “ego” and value judgements, btw.  Just the facts.

FEAR NOT SCHADENFREUDEANS

If the new buyer takes out a mortgage, this place won’t sell with the HELOC still in place - it’ll have to be paid off in escrow, so the 2nd will get their money, unless the 2nd agrees to the short sale - but why would they unless they are the same as the 1st and want to get some money out?

On the other hand if it goes into foreclosure on the 1st, again the 2nd won’t bother foreclosing - they can file the NOD and start racking up all sorts of fees and interest (based on higher default rates).  Then when the 1st forecloses and wipes out the 2nd, the 2nd can go after the borrower, since it is a recourse.

Whether the 2nd goes after them or they sell the debt off and someone else goes after them, this borrower will not walk away with $100,000 free and clear - it’ll be years of painful collection attempts, unless they BK.

As for debt surviving BK - it generally doesn’t and there have been some recent cases where debt collectors have faced stiff judgments for doing so (including punitives and attorneys fees)

Gimme a break, he’s comparing a 15 yr old chassis to a brand new one. Good work, let’s make some more ridiculous comparisons while we’re here.

4) They aren’t making any more land
5) Irvine is “different”
6) Buy now or be priced-out forever!

“pent up demand”
“a two week increase in escrow openings in the Irvine”
Reminds me a story about the guy who fell off a one hundred story building and about twenty stories from the top he starts thinking, “Hey, this ain’t so bad.  Everything is gonna be just fine.“

Oh since you like Wikipeida

http://en.wikipedia.org/wiki/Honda

And here’s the full story

http://www.f1network.net/main/s169/st19511.htm
http://world.honda.com/motorsports/
http://world.honda.com/history/limitlessdreams/index.html#1950s
http://world.honda.com/history/challenge/1964formulaoneentry/index.html

And the whole thing

http://world.honda.com/history/

Now, come back and tell us the story about Audi in GP…...  Hint… do you know the meaning of the four rings? 

Does Bernd Rosemeyer ring a bell?
How about Rudi Caracciola?
Nuvolari?

Hopefully when you read and google those names you will have a much better understanding of open motorsports… not just what you’ve been rading on msnbc for the last three years.

Fair Oaks that far north is mostly rundown Hood…

I mentioned CART because Honda owned F1 in the 80s and moved to CART in the 90s because, honestly, Honda’s domination was bad for F1, Ferrari and Mad Max and Bernie.

Honda went to own CART with its engines…. the chassis were Lola, Reynard, Penske etc…. it’s a formula and Honda owned it too.

Then CART committed harakiri when Toyota started to cry.  So, the Evil Empire went to the House that Tony (the bad Tony) built.  After all seeing Honda walk all over Toyota was specially sweet from our grandstands at Long Beach.  Well, Honda moved to the IRL and spanked Toyota… so now Toyota is in NACRAP.

Then you got MotoGP… hmm…let me see…. other than The House of Desmodromic you don’t see none of the big torque, low redline Kraut two wheelers there…. do you?

OK, so let’s talk sedan racing.  The ITR/GSR-R’s owned NA.  Until AHM nixed it and went to the TSX.  Cunningham and crew did manage to get lots of points, however this year Mazda is doing very well.  Krautland?  Those 3 series are so so.

European Touring Car?  Well the Frogs are doing quite well too but the Accord R ( our TSX ) is doing very well too.  And then there’s the CTR, not a bad car at all.

ALMS/Le Mans…. OK, here we go.  Audi built a turbodiesel that’s reliable, efficient and goes the distance… but it’s a damn bore.  Rumor says the only reason they win is because the competition chokes when they catch up with them.  Diesel… cough!  cough!

So, tell me, Oh Great Automotive Sage…  Do you know what happened in Mexico City in 65?  Do you remember the McLaren and Williams cars in the 80s?

And, dude, despite the huge love that Bernie has shown to Ferrari in the last five years, it’s all gonna come down crashing one of these days.  The new engine rules for F1 are a laughing stock.  The halcyon days of F1:  the 30s with Auto Union and Alfa, the wild 50/60s with Cooper, Jim Clark, McLaren, the heady turbo years of the 80s and even the boring “single line” days of the 90s/early 00s are about to come crashing down on Grand Prix.

So I suggest that before you make such ignorant statements about openwheel motorsports you do a bit of background investigation.

Oh, btw, the current Honda team has some potential.  Assuming that Bernie doesn’t fine them again about “extra” fuel.

Who do you think made the engines for Williams for several years….Honda.

What do you recall this location in Pasadena?

http://www.redfin.com/stingray/do/printable-listing?listing-id=1248858

1711 N Fair Oaks AVE #110
Pasadena, CA 91103

Price: $589,000
Buy with Redfin and Save $11,780*
Beds:  3
Baths:  2.5
Sq. Ft.:  1,620
$/Sq. Ft.: $364
Lot Size:  2,542 Sq. Ft. 
Property Type: Townhouse, Residential
Property Style: Craftsman
Year Built: 0
# of Stories: 2
Area: Northwest Pasadena
County: Los Angeles
MLS#: 22098516
Status: Active
On Redfin: 197 days

100 to be exact

Banks exist to make money.  The are private companies subject to governmental oversight.

Credit Unions are designed to hold money in a secure way.

my phone at work got into the zombie bill collection industry somehow, and we have everything going into voice mail I take my calls on a different phone.  I guess I see why this happens now.

Definitely #6. I am convinced more and more everday that the intelligence of the average person is quite low.

Looks like the 2006 buyers bought this with a $900K first and a $225 second.  Odd that it went back to the bank at $867K.  They actually paid down their 1st somewhat in the year and half they owned it… 

Ole Fremont Investment & Loan loaned both the 1st and 2nd it appears.  HSBC owns it now.

I think that is why there seems to be this weird consensus to “just wait it out a couple of years.“... and the houses will resume their upward prices.

People who bought and held on during that period were richly rewarded by the mid 2000’s.  Anyone “brave” enough hit paydirt.

Like childbirth, you somehow wind up having a second one after “forgetting” about all the labor pain during the first one

Thank you all soooooo much for the input. I will look into other options (as in renting for a while) and check the websites for competitive rates. I just spoke to another realtor, she said she only works with prequalified buyers. I almost wanted to tell her to get a reality check, the good old days are over! Please kiss my feet for giving you a chance to make money! Another one wants me to bring in all the proofs mentioned above, AND written statements from banks to show that I have my 20% down. I feel like I’m being penalized for not jumping on the band wagon couple years ago. Thanks to all again!!

we, float in the bay, San Francisco bay, brought house in 2003 fall.
I saw two of my friends brought 1.3M houses at end of 2006 and 2007. Silicon valley is not a hard core, it is eroding in the matter of time. The reason I following here is that I plan to move down to orange, somehow, in order to change the quality of life. most people work here in high teach, sort of good paid, relatively say, double work amount. it’s truly not worth unless for green card sake. My man is too late or too old to being in tech start up game, giving room to india or chinese does all good.

One of the G’s on Fair Oaks will gladly cut it off for you. Better yet, cruise up to Farnsworth Park in Altadena sometime (where I spent many evenings playing Jungle ball). Maybe the Martin Luther King Village (the projects) or Jackie Robinson Park.

People who aren’t from Pasadena have no clue what it’s really like. It reminds me of Brentwood: Why pay big $$$ for a house in either area when you’re forced to use private schools? You think many in Brentwood or Pacific Palisades send their kids to Uni or Pali (where most students are bused in from the inner city)?

Pasadena looks nice on the surface, but scratch a little and you’d be surprised. Better yet, check the crime stats. San Marino, Arcadia, La Canada or South Pas are the only places you’d want to live in that area.

Plus, inland blows. Once I moved to the beach I realized that.

WTF happened here?  Flip gone bad?

http://www.redfin.com/stingray/do/printable-listing?listing-id=1444728

Look at the price history.

I graduated in ‘01 and I’m still here.  The liquor store accross the street on Campus drive is no longer there.  Oh and so is the Irish bar accross the bridge.  There’s a new gym, large parking structures and tons of new housing units built along Campus drive since you left.

LOL.  I am German by origin.  Ve build Ze best carz.  You can keep your tin-foil rice rockets.

“Stop being brainwashed by PR and status and go learn something for cryin’ out loud.“

Hey Moron, Honda has never done ANYTHING in F1.  Hell I could enter a Go Cart and produce a similar record.

Here is a link to the outstanding F1 records.  Please note that the word Honda is not found on the page…

http://en.wikipedia.org/wiki/List_of_Formula_One_records#Constructor_records

Considering your touting the importance of light-weight to performance, it is interested that you cite Honda’s performance in CART rather than F1 given the CART cars tend to be 30% heavier than F1 models, and are known for longer wheel bases and less maneurvability.

The NSX is an awesome f-ing car, don’t talk like that about it.  The R8 is overhyped and overpriced, although I wouldn’t kick one out of bed.  I’d rather get busy with a GTR.

I made that statement to show that you were incorrect in saying “Yeah well any $75K car today is going to lose $60K over the next 5-7 years guarenteed.“  I can find more examples if you’d like.  Ferraris and Lambos are still going for well above sticker, even used.

Cars are a consumable imo, unless you’re talking vintage/collector, and are nowhere near in the same asset class as real estate(TM).  Land doesn’t break down or go out of style.

I agree with your last sentence.

Me and IR are in different boats sunny…  I already own, so I’m in the pool already.  More like a turbluent ocean really. 

IR is safely tucked away on shore, in the comfort of his rental home, where the declines in property value only serve to benefit him.

If I was renting today, you can bet I wouldn’t dream of buying a house yet.

Is 92617 the zip code for UCI?

Duh…. there are statistics and lies.  The types of homes built there change a lot year to year.  And you can hardly call that an open market.

As the University decides to change homes, and as the homes for the professors and staff got built, it could be expected that the homes for grad students would be cheaper, eh?

I actually visited this house.  The interior is well-kept.  Unfortunately the Master Bedroom is closer to the Jamboree side.  You CAN hear the cars go by although it’s not that bad.  (Depends if you are a light sleeper).  The real issue is that if you plan on entertaining or spend time in the yard, then it’s extremely loud.  A bus passed by and it was extremely loud.

If you don’t mind having a view of Jamboree and the sound of cars wiz by when you’re gardening, then this house is good.

I decided to not make an offer.  I didn’t want to have any regrets.

I like Pasadena, but the smog is terrible up there.  When I worked at JPL I developed a nasty cough.  It kept getting worse over time and I had no clue why.

Then I got a job in Torrance and went back to the 405 shuffle.  The cough went away in three months.

Mountain wise… yes Pasadena is nestled against the mountains BUT in summer days you can’t see Mt. Wilson.  That’s how bad it can get.

Fool.

Stop being brainwashed by PR and status and go learn something for cryin’ out loud.

Honda has been in F1 since ‘65. 
Honda won the Isle of Man in the late 50s.
Honda owned CART.

The Audi R8 is a typical german vehicle, too heavy, too expensive, too complex and too fragile.

The NSX, OTOH, is one hell of a fast car.  Light, agile, quick and reliable.

Jeez, please stick to Real Estate, because when it comes to Automobildom you have been brainwashed by the Status and Marketing Depts.

I lived in Irvine while I went to UCI plus a few years after, then moved to Pasadena.  Loved loved loved Pasadena.  I live in the Bay Area now, but if I ever come back to So Cal, Pasadena is one of the few places I’d consider.

(And how sad is this—I graduated from UCI in ‘91.  More than half the neighborhoods mentioned on this blog I have to look up ‘cause I’ve never heard of them.)

Do not go to a broker!!!  You may get lucky and find one of the very few honest ones, but why take that chance?  Do the work yourself.

They really are NOT building any more. 

Que se vayan a hacer leches los perros i gatos, a mi me gustan los monos.

Any purchase made in the next 2 or 3 years is going to be at risk for further price declines. If there is any possibility you might need to move during that period, you should not buy. However, if you have a 5 year or longer time horizon, and a property can be acquired for its true breakeven rental value, you may have to endure a period of lower resale values as the market over-corrects, but you are saving versus renting, and you control your housing situation. You won’t lose unless you have to sell when values are depressed.

If you buy now, and pay more than breakeven rental value, you are bleeding cash each month versus renting, and the property resale value will fall farther and take longer to get back to breakeven. If you time horizon is long enough, you might be OK, but in the long term, we are all dead.

by contrast, whatever, my poor english

Well, I’m an immigrant and I’ve been living in the US since 2000 and thanks to the Internet it didn’t take me too much time to find out the boom/bust cycles of California and I found enough evidence to believe that this was no different.

It’s interesting to see ipoplaya is so eager to jump in the pool. In contract, I am very much enjoy this blog, have to ask IR, if there is an occasional deal around there, let’s say, 40% down from current market by this year, with interest still low, will u take off your shirt?
Don’t take personal, please, I just like to see the risk appetite everyone had right now.

I’ve read that prior to 1975 (and maybe a bit later), a wife’s income did not count towards qualifying a household for a mortgage. 

If interested in reading about the macro-economic & social effects of this policy change check out a book entitled “The Two Income Trap”

Pasadena is old money.  Irvine is new money.  That’s the way I like to compare the two.  I’d give my right testicle for a place in Pasadena.

Who the Hell buys NSXs? Honda and Sports Car don’t mix.  Period.

Now the new Audi R8 is a beautiful car.

http://www.motortrend.com/cars/2008/audi/r8/

We were talking about depreciating assets, so I think the link between losing value is a house, and losing value on am expensive car is correct, especially in terms of magnitude.  Funny thing is how people are conditioned to pay the new car premium price and take a 20% hit as soon at they drive off the lot.

Hey, I have cats and my house does not smell like pee.  The actual kitty litter box does smell like pee after they pee in it.

The comment was about not wanting to waste money on something that declines in value (I left the “investment” part out ‘cause a house is not really an “investment”).  There are very few things we spend our money on that appreciate.  The next biggest expense to your mortgage or rent, tends to be your car expense.  And every dollar you spend on your car is “throwing money away.“

Ahh, Chamonix, merveilleux, j’aime beaucoup.

Quant au chats, j’aime aussi les chats. Par contre ma femme aime les chiens… alors..

The best part is that the collectors don’t care if a judge has already cleared out the debt through bankruptcy. They’ll come after you anyway.

There was a great article on this, but I can’t seem to find it now.

Hahahahahaha.

Be assured that no lawyer will accept that deal!!

LMAO.  Check the prices on NSXes and then please repeat what you said.

Comparing houses to cars is retarded at best anyway.

Allison, why not rent a nice little place for a year and wait for prices to go down more? This would give you the luxury of time, you wouldn’t be staying with friends, and you could use the time to get a more precise feel for the area, pinpoint exactly the right neighborhood for you, and watch price trends. The price drop alone might pay for your rent this year.

I often find that people will tell you about a worthwhile expenditure that sounds justifiable.  What they don’t tell you about are the luxury vacations, new cars and dining out that they failed to cut back on before tapping credit.  You can’t tell whether someone was doing what was necessary without seeing their whole list of costs and expenses.  My guess is that they were unwilling to compromise their lifestyle and in essence were borrowing to finance that lifestyle.  Not the necessary daughter’s education.

Thanks skek.  Supposed to sign the purchase offer this afternoon. 

I am busy rounding up my FICOs, updated pre-qual, proof of funds, etc.  Going to try and make it easy for them to accept my price…

Allison,

Above all else, remember that this is the strongest buyer’s market in our lifetimes and you are in the driver’s seat.  There are hundreds of sellers chasing very few buyers and they know it.  Also, don’t let an agent pressure you, bully you or convince you that the old rules apply.  Everything that is selling today is going for well under the list price (and after multiple reductions from the original list).  Buyers can demand that the sellers pay the closing costs and buy down their interest rates.  Nearly every realtor I’ve talked to has some story about how things aren’t that bad, business as usual, great time to buy, etc. and tries to make a 2-3% discount off list price sound like the steal of the century.  Don’t buy it.  Drive a hard bargain.  If you have to buy in this market, get some downside protection baked in, because the property will continue to decline in value for at least a year or more before prices stabilize.

Best of luck.

And on a related note, belated best of luck to ipop—did you make your offer yet?

Kitties do not like change.  If you removed their cat tree they very well just might start peeing on things to alert you to their dissatisfaction.  Better not to upset the kitties.  To paraphrase the University of Maryland’s football thing, “Fear the kitties.“

IMO, forget the in-house lenders.  Too mcuh work.  Get started with a broker, direct with lender, or an maybe an internet-based lender to get an independent prequal. 

Here is one I recommend:

www.mtgcapital.com

They usually have the lowest rates around at any given time.  I will likely use them when I buy and/or refi my place.

Allison - In no way our FICO scores any kind of requirement, but sellers and realtors don’t want to waste too much time on someone that won’t get through underwriting. 

Couple of options - get yourself pre-qualified to purchase.  A prequal has almost become standard as an additional submission with an offer to purchase.  The prequal will evidence that someone has examined your scores, finanncial situation, etc. and should be willing to extend a loan to you to a certain value.

Also, you can run your credit scores yourself without having it affect the scores themselves.  I use www.truecredit.com, which is TransUnion, and re-run my scores every couple of months.  You could sign up there, run the scores yourself, and give the print-out to any interested parties if you so choose…

Newport Beach—number 11.  Of course, the high-end is immune.

People here don’t get it.  They can understand that the bubble popped.  The part they fail to comprehend is that prices will fall gradually for quite some time and even when the bottom is reached - the prices are not going to return to even today’s prices for a very long time.

The idea that they can find a “good deal” relative to last years prices is all they see.

The few that know prices are going to continue to drop say things like “well the price I am buying at is well below market value”.  They hedge their bet that the prices will not drop 30K below today’s prices.

Dumb.

Yeah well any $75K car today is going to lose $60K over the next 5-7 years guarenteed.

last time I’ll try…promise

Any clues as to why the ratio was less than 5 in 1975? I’m guessing very high interest rates that depressed housing prices even though inflation (the reason why interest rates are high) would have suggested that housing is a good hedge…at some point, you just can’t get financing and that depresses the housing prices further than they should be.

Changed browser and for some reason the post was cut off :-(

Any clues as to why the ratio was

Any clues as to why the ratio was

I am so glad I found this wonderful blog for Irvine real estate. Please help me!
I moved here from San Jose, and have been living with friends. I am ready to start looking to buy a little place of my own in Irvine. (Not in a hurry) The agents I’ve interviewed all insisted on obtaining my FICO score before taking me house hunting. I’ve already shown their lenders my tax returns and paystubs. I have proof that I have been steadily employed as a physical therapist for the past 8 years. I have 20% down payment.
I would be grateful if anyone can tell me if this FICO requirement is really necessary just to show me a few houses or are they jerking me around. I heard that running my credit will lower its score. I don’t want to run it till I am ready to make an offer. Thank you in advance.

I’ll take door (3), thank you.

Still a long way down.

Cars don’t cost $500k.  Well, not the ones most people buy.

Actually, it seems that used Ferraris are going for over sticker.  I wonder how long that will last?

A 900K house with plastic shower inserts?

For close to a million bucks I’d like to see some real craftsmanship, not just dressing and store-bought fixtures.

Anybody who buys that junk w/o collection experience + infrastructure or a willingness and ability (and cash) to run into court for everything is nuts.  Collections is a hard racket in the best circumstances, and collecting mortgage debt on sold houses is one of the worst.

Many investment “events” are generational. When a generation gets burned, it takes 15 years for a new generation of players.

IR:

As you point out with the chart in the post, it’s all part of the expected cycle—there is a repetition of the booms and busts in housing prices that has come to be relatively expected.  They feed on themselves and then burn out.  And then it happens again. 

So, the rallies aren’t aberrations any more than the declines are—it’s like the tide—the mean water level isn’t the natural state, but provides a basis to compare the highs and lows.  We just had the killer tsunami of all high tides and, again, as you point out, we should expect to overshoot “normal” low tide before things get back to “average”.  Then, it’s only a matter of time before there’s another high tide.

Yes I read that article.  Just amazing.  Then the guy says: but one of the refi’s I spend on my daughter’s education, it’s not like I was being selfish.  Not selfish, maybe, but certainly foolish.

http://online.wsj.com/article/SB120276871472760255.html

Homes in Bubble Regions
Remain Wildly Overvalued
February 12, 2008

If you own a home in a former bubble region like California or southern Florida, there’s bad news… and really bad news.

And they suggest that it is still way too early to go bargain hunting in these markets, although—of course—there is always the occasional deal around.

The bad news is fresh market data published Monday night by real-estate Web site Zillow.com. They show prices, as expected, kept slumping through the end of last year.

But the really bad news is that, even after a year of misery and falling prices, homes in many of these regions still aren’t cheap. They remain wildly overvalued compared to average personal incomes.

There is a strong long-term correlation between the two figures. And in many regions, house prices would still have to fall a very long way to get back into line.

How far?

Try around a third in Florida and Arizona—and closer to 40% in California.

Yes, from here. The long-term chart for California is shown below.

Even if house prices stabilized, it would take a decade or more for rising incomes to catch up.

The data on median house prices and per capita personal income in these states have been tracked by Karl Case, economics professor at Wellesley College. (He is one half of the duo behind the closely-watched Case-Schiller real estate index).

Professor Case’s numbers ran through the end of the third quarter. I decided to see how they might look today, using Zillow’s data for the fourth quarter.

The company hasn’t posted statewide data, but the price falls across the many cities it tracks give a pretty strong picture. From these I assumed, for the sake of calculations, that California prices fell 8% last quarter from the third quarter, a huge number by historic measures but not out of line with Zillow’s data. For Florida and Arizona I assumed declines of 5% and 5.5%. You could use other, more modest estimates for the recent declines: They won’t change the outcomes much. I also assumed personal incomes in these states rose in line with recent and historic averages.“

The results? In all three markets, the prices are well off their peaks when compared to incomes. But they remain far above historic averages.

Median prices in California peaked in 2006 at 13.3 times per capita incomes. Hard to believe, but true. They may be down now to about 11.1 times.

But that’s still way above the ground. Throughout most of the 80s and 90s they ranged between six and seven times incomes.

Just to get down to seven times incomes, prices would have to fall 37% tomorrow.

Those who bought at the peak of the cycle may be pinning their hopes instead on “incomes catching up” instead. But they had better be patient. Even if house prices stayed exactly where they are, it would take around 10 years for rising incomes to bring the ratios back into any sort of alignment.

And it would take even longer before prices started to look very cheap again.

That’s based on average personal income growth of 4.6% a year in California and Florida and 4.2% in Arizona.

Yes, these are projections and estimates. Time and chance will play their usual roles. And there will doubtless be different pictures within regions of the same state.

Nonetheless the overall picture is pretty clear. And, if you are a homeowner in any of these regions, none too appealing.

Write to Brett Arends at brett.arends@wsj.com

During college, I dated a couple of girls that were from San Marino. Absolutely loved the area. Big, beautiful homes set in the midst of wonderful picturesque neighborhoods. It’s proximity to Old Town Pasadena is nice as well.

I did notice the cat tower as the one major flaw in the photos:  the rooms are all de-cluttered, accent lights turned on, the table is set for a dinner, fresh matching towels carefully hung in the baths, but they left the cat tower in the master bed picture—they missed that one and should have removed it for the photos. 

Otherwise the photos are very well done—remember all the listings with the trash cans prominently displayed and the clutter everywhere?  Odd that they missed the cat tower.  And there should have been some seating by the outdoor fireplace, but perhaps the roar of Jamboree traffic made them not bother.

(1) There are about 8mm more people in CA than in 1990 and 14mm more than 1980. 

(2) The turnover in population (i.e., number of people who didn’t live in CA in 90 or 80) exceeds that number b/c of people leaving the state.

(3) People think that “this time will be different”, which is reinforced by the media and anecdotes about “bob and sue” who made sooo much money on their house.  The (again, anecdotal) number of people who did well (or at least okay) through the Internet bubble added to this.

(4) People think that it won’t happen to them.

(5) People have very short memories for bad things, especially if they only happened to someone else.

(6) People are dumb.

“How can people forget so fast? “

I have often asked myself the same question. I don’t have a good answer. Many of the participants of the bubble were young people who may not remember the market of the 90s, but I think a lot of it was the seductive nature of kool aid intoxication. If you were able to convince yourself the decline in the early 90s was an aberration, then you can buy into the rest of the lie. I keep trying to convince people the rallies were aberrations, but most people do not want to accept this idea.

You just got love a city that split in two during the prohibition because Pasadena was teatotlers and South Pas wanted booze.  Then I was in the city hall back in 78 and they had a photo posted of the USS Pasadena (lets see when Irvine gets a battleship named after it) and the caption read.. I quote..  USS Pasadena off to fight the “nips”  talk about policically incorrect, and in city hall too..

I grew up there. Elementary through high school, back when “Old Town” was skid row. Pasadena has very nice parts but also big ghettos. Schools were ganglands even in the 70s before the mass white flight. First place in the country with forced busing. Private schools are numerous but pricey. Pasadena Polytechnic is as good as Exeter or Andover but carries a similar price tag.

San Marino, La Canada, Arcadia or South Pas are the only places you’d really want to raise a family these days. Sierra Madre is a neat place (especially “Hippietown” in the lower canyon) but feeds into Pasadena schools.

Dead cat bounce??

This is the kind of debt that gets sold to people who attend “be a millionaire in 30 days!“ weekend seminars in a local hotel conference room.

Most of the poor saps who buy will quickly get frustrated trying to collect. They’ll give up.

The guys who hold the seminars and wholesale the bad debt to the hapless, wannabe millionaires do OK.

This already happens.  There are (indirect) securitizations of charged-off credit card accounts and auto loans.  The companies that do the collections securitize their revenue stream and use the proceed of the financing to buy more delinquent accounts. 

It’s certainly possible to get a AAA rating for the A tranche of almost any revenue stream—it’s a question of the size of the tranche.  What got goofy in the last couple of years was the CDOs of CDOs, which assembled junior pieces (i.e., barely investment-grade debt) of several issues and got AAA for too big an A tranche—part of the problem also being that for such a structure to work, the assets need to be diverse, not 50%+ junior pieces of subprime residential mortgage bonds, which was often the case. 

Rigorous credit analysis of these assets would have required re-struct