Irvine Housing Blog

Don’t forget ACORN!

The Republicans have played the “It’s Bill Clinton’s fault” meme brilliantly with respect to the housing collapse.

Going in to this election, the Republicans knew that if they took the blame for the housing bubble and the collapse of the economy, it would be an election day disaster. By making up this BS about Clinton creating the problem, they preemptively attacked, and they have had the Democrats on the defense ever since. It is brilliant politics: aggressively blame your opponent for something you don’t want to be held responsible for and deflect all criticism of your own actions that way.

The fact is that the GSEs are not responsible for the housing bubble or its collapse. Neither Clinton or Bush is responsible for the housing bubble or collapse. In fact, the GSEs were steadily losing market share to private offerings during the bubble. They reacted to this phenomenon by aggressively going out and buying more mortgages right at the peak of the bubble. This is one of the main reasons they got into so much trouble. Also, the insurance they charged for their “swaps” was too low to cover the losses of a major price crash. It was these two factors that put them out of business. Neither issue did much to create the housing bubble.

The “smoking gun” information about Clinton administration officials pressuring the GSEs to better serve the poor and minorities is typical of the conversations every administration has had wit the GSEs since they went private 40 years ago. The charters of the GSEs mandate them to provide loans for low and middle income Americans. That is one of their primary functions.

If there is one thing the Republicans can be blamed for it is a lack of Congressional oversight of the banking industry. However, with Alan Greenspan forcefully opposing it, I doubt the Congress or the administration could have accomplished much even if they wanted to. I suppose they could have forced Greenspan out and got someone in there who wanted to see better oversight, but given the prosperity of the times and the Republican philosophy concerning regulation, it is very unlikely Greenspan would have been ousted.

Texas,
You’ve mentioned something here that may be starting to change American’s view of wall street.

We learn at a young age that wall street is a great institution of capitalism. Companies can go there and raise money and every American gets to own a piece of the pie. We are told that the road to retirement security is a sure thing if we invest in stocks.

Now it seems that it is not a level playing field and the stock markets are a method for the ultra rich to siphon money away from the middle class.

I recently heard that there are about 2 trillion dollars in hedge funds, funds for the ultra wealthy.  These hedge funds have returned between 10 and 20 % for the past ten years. This year the overall return is down 8% and the participants in the funds are really upset. So what is going on here is that these funds are essentially taking all of the profits out of the market for the ultra wealthy.

When Warren Buffet goes to buy stock in Goldman, he gets preferred stock….stock with substantial liquidation preferences. If I buy stock it is common and will disappear is something goes wrong with the company.

We hear of billions of dollars in compensation and bonuses for the workers and heads of wall street. Meanwhile the gains for this investment vehicle is next to nothing…..

So it seems…..the house(wall street) always wins. This is true as long as people are willing to show up and play. There is a chance that the American public is fed up with the house always winning and may not return to wall street with their hard earned savings.

Back in the day we had separation of church and state…...

So now maybe we need separation of wall street and state…....

Given the current market perception of value, you are probably right. I think this gets down to $500k to $550k before prices bottom.

IPO, you are right about the featured property- it has to go above asking price unless everyone with bags of money in Irvine lose it in Stock market.

What is your opinion on this: http://www.redfin.com/CA/Irvine/16-NIGHT-BLOOM-92602/home/16892505

Would it get full asking price? Comp went for 558 back in May. Another one is in Escrow now. I think 500k is the right price in this market- Let me know what you think.

CZ

This property is in escrow already…

Perhaps Lasner’s post is unclear; if the prediction company is predicting those increases OVER 2008 prices, then they might be sane (4% per year)

But, as I read it, those are supposed to be the year-over-year increases that will occur in 2011 vs 2010. Making predictions for year-over-year rent increases 3 years out in a situation of MASSIVE uncertainty right now is simply guessing.

Yes.  I do. 

There is a lot of building in Shady Canyon now.  And, as I keep saying, the market I’m looking in has very little available.  Any approaching mid-$500’s for a starter home is snapped up.  I’m going to watch through the winter and see if the recession and the supposed tighter lending standards will make a difference. 

IR’s original post way back when explained that there is a normal level of inventory in a normal housing market.  But only what absolutely had to be on the market was there this past summer, and so there was not much to choose from. Even foreclosures were relatively scarce and prices remained relatively high. I think all of this talk of foreclosures flooding the market and enormous price declines has caused potential sellers to stay put, but these conditions are not true everywhere.  Consequently, neighborhoods where foreclosures are low have not seen prices decline too much.  People are not selling otherwise unless they absolutely have to and that is keeping prices higher in those areas.

> It’s scary to think these people all drive big heavy cars unsupervised.

LOL!