Irvine Housing Blog

We have added a link to a PDF with a free look inside The Great Housing Bubble. It contains the table of contents, preface, introduction, the first two pages of all the chapters, the entire final chapter, the bibliography, index, and end notes.

I am going through the final approval stage with the printer, and we are preparing the websites to accept orders. Within two weeks, the book will be available in both print and ebook formats.

You know, every ER doctor and nurse will tell you that they’re on the hunt for “Some Guy”.  All day and all night long, they hear the stories of how the patient was just minding his own business when Some Guy came up and shot/stabbed/sodomized the patient without provocation.  Some Guy moved into offering business advice back in the Nineties (I worked briefly for a magazine where the publisher decided to sell it for $70,000, ten times what it was worth, because Some Guy told him that it was worth five times that), and most of us worked for companies during the dotcom years that were formed because Some Guy told the CEO that he could make a fortune by flipping businesses with no strategy and no product.

Well, it looks as if Some Guy moved into real estate, because you know perfectly well that the owners didn’t come up with that insane price on their own.  I’ll bet you $10, right now, that the owner will tell you, to your face, “I would have been happy getting back what I paid for this, but Some Guy convinced me that I could go even higher.”  I think it’s time for someone to put about thirty caps in Some Guy’s ass, before the next boom starts.

haven’t you heard, IR, the real cause of the mortgage meltdown? It’s all the fault of the Dhimmicrats, the ni&&ers;and the CRA.

See, the Dhimmicrats committed financial Affirmative Action by forcing banks to loan to poor colored folks, and once the credit standards had loosened then, why, all those upper middle class white folks in OC just couldn’t help but make the shitpile higher.

It’s not a good week unless a wingnut can blame the colored folks for something.

The home just a couple doors down is for sale for a whole lot less. This will not help our seller at all.

http://www.redfin.com/CA/Irvine/58-Cezanne-92603/home/5900826

However, I’m not sure why you would buy a house you can’t view.  Here is the description:

“09/23/2008 HOUSE STILL NOT AVAILABLE TO SHOW, BECAUSE OF UN COOPERATIVE TENANT ,and Legal issues.”

YES!!!

How about a WINDFALL PROFITS TAX on Big Finance???

Way to play the race card renato pobresito I’ve been all over the blogosphere about this and I haven’t seen what you’ve described anywhere.  Must be horrible to living in such oppression.

I guess your point is that the CRA had nothing to do with this???? Good luck with that-

If you like the video of Rep. Marcy Kaptur on today’s post, you will love this one:

http://globaleconomicanalysis.blogspot.com/2008/09/they-want-mama-to-make-it-all-better.html

I always forget that Christina Aguilera is, in fact, an amazingly talented singer.

I will try to carry the memory of her wonderful voice in my head as I wonder through the broken, empty neighborhoods of post-banking-meltdown Southern California, shooting pets and vermin for food.

This article has a comparison of the current crisis with the Titanic.  An excellent read:

“I can’t help but compare our country’s situation to the maiden voyage of the Titanic. Everyone has seen the movie, so can relate to the story. The captain (Alan Greenspan) has been handed the greatest ship (United States) ever made. It is unsinkable. The initial voyage across the Atlantic Ocean has drawn the rich elite ruling class (financers & bankers) onboard. But, the lower decks are filled with lowly peasants (Working Class) who are sneered at by those in the upper decks.”

http://seekingalpha.com/article/97517-on-board-the-u-s-s-titanic?source=email

For a jumbo loan of this size ($1.5-$2 M), is 20% down payment going to cut it any more?

$616 per square foot?  Try dividing that in half, guys, and then hope that someone is still making loans that large, and someone else is smart enough to qualify and dumb enough to buy it right now.

700 billion dollars ... you could offset 7 million short sales with up to $100,000 each.

That’s what I think we should do.

Then, the bail out package directly helps the little guy.  Thus, you would be helping people buy/sell their homes, without supporting the Wall Street fat cats directly.

A retail bail out package

“Late in the election cycle, Congress goes home to campaign, and nothing gets done. We are at that moment, and yet, despite 90% or more of the electorate being against the bailout, Congress is going to pass it, and President Bush is going to sign it into law.”

This scares me.  What will happen next? 

I wonder if people who have money in WAMU will go running to withdraw all their hard earned cash… Who goes belly up next? BofA?

“Way to play the race card renato pobresito I’ve been all over the blogosphere about this and I haven’t seen what you’ve described anywhere.  Must be horrible to living in such oppression. “

You need to look a little better. The National Review is not exactly unknown…

National Review explaining that minorities are to blame

Perhaps you owe renato an apology.

Has anybody seen a reasonable assessment of what might happen with our economy if the government does not spend all this money on bailouts?  I’m very much against this bailout in principal, but if the alternative is a complete meltdown of our financial system, then I think it needs to be done.

My hunch is that we can avoid meltdown without spending $700B.  The government can look at each individual institution as it runs out of rope and see if it needs to be bailed, and what the minimum cost would be to save what needs to be saved.

I’m very worried that this bailout isn’t going to teach any lessons.  Is anybody really going to pay a price for what has gone on the last 5-10 years?  I’m sure most of the top-level executives aren’t going to feel any pain.  Only taxpayers will eat it.

I’d really like to see some laws that allow the government to get money back from some of the executives that cashed out of these companies.

Does anybody know any websites that provide a nice summary of how members of Congress vote on this bailout plan (and other voting issues)?  I think I want to vote against everybody who votes in favor of this thing.

Ditto!
Thanks for a great job, IR.
The only thing that still amazes me (besides the arrogance of our Ben, Henry, and George towards the bailout pill) is that people are still rushing in to buy, especially here in Irvine.  Are they expecting another run-up with hefty returns in a few years?
Anyway, no matter what happens, we the taxpayers will stand by, ready to bail this group out again, as we are doing right now to the previous group.

Yes, I knew I can’t vote for all the senators, only the ones from my state.  And I probably wasn’t ever going to vote for either of them anyway.

The total value of all the mortgages in the country is estimated at $11.1 trillion.  1 percent of those are in foreclosure, with a possible two percent more headed that way.  Three percent of $11.1 trillion is $333 billion.  We could buy up all of those mortgages for less than half of the $750B that Wall Street is drooling over right now.  All of those mortgages have value, probably not less than 2/3 of their face value.  1/3 of $333B is $111B, which is what would actually be lost if we get 2/3 of the face value for those mortgages. 

From 2000 to 2006, those big Wall Street companies paid out $120B in bonuses, more than the losses they might have to absorb on all of those mortgages.

The bailout is not for those mortgages, it’s for the speculative, highly leveraged derivatives based on those mortgages.

Wouldn’t be suprised if this one takes another 500k price cut.  Sure its a beautiful house, but look how *many* are for sale in shady canyon.  I have to believe the market for 2 million dollar houses is MUCH smaller than for 1 million dollar houses, and even smaller for 3 or 4+...

thats what i was wondering. what percent of actual people in the USA are in mortgage trouble or heloc theft etc. it’s not evrey where. the map of misery proves that.

-not many of the people i know are in crisis but a few are. 10% maybe. so how is this enought the take the whole country down the shiter?

thats probable why 90% of americans are against the bail out cause only 10 % are in trouble?

now I can see how the over leveraged banks are in trouble-thats a bit different.

The flipper mentality sucks.

flip a house
-flip this corporation.
-flip the drug company.

I think the stock option mentality was bad for sure.

I mean do people want to build a real company provide a real service or product?

-ok a small rant.

Well, I’m approximating from this CNET article:
http://news.cnet.com/8301-13578_3-10051790-38.html

They are putting the total bailout at $1,800,000,000,000 when all is said and done, at a cost of $17,000 per household.

There were 126,316,181 households as of the last census. http://quickfacts.census.gov/qfd/states/00000.html

Not sure where you get your numbers, and I’m having a hard time holding all these zeros in my head, but if you think only one in ten households pays taxes, you are way off, in my opinion. (Of course, some right-wing republicans I’ve talked to online think everyone is on welfare except themselves, but I’ll give you the benefit of the doubt!)

and WAMU CEO might get 18M $.. this is just great!!!
http://money.cnn.com/2008/09/26/news/companies/fishman_wamu/index.htm?postversion=2008092614

“...despite 90% or more of the electorate being against the bailout, Congress is going to pass it…”

And hopefully we will send them all packing this November.

Clean slate for everyone.

My impression is that people are absolutely furious.

I’m not at all sure this will pass.

I am a deep skeptic of the bailout, at least the version which was initially proposed.

There are several goals of the bailout, some of them are formally stated, and some are not.

I have several deep objections:
1. The proposed bailout would be used to provide liquidity to banks and other financial institutions.  The great majority of those institutions already have access to one Fed program or another.  Banks have the regular Fed window.  Primary dealers in treasuries have the PDCF.  The Fed can make emergency loans to insurers and other institutions.  There is liquidity for just about anyone who needs it.  Cheap.  Plentiful.

I think that the Bush plan only contained carrots.  There are some massive sticks which could be wielded against banks who just sit on capital. 

2. Providing more capital to the banking system is one of the real motivations.  Unfortunately, buying up MBS which is hard to sell means buying it from either A. The exact idiots who made the bad loans.  B. The next level of idiot who purchased the MBS and believed it was a good investment, and who kept it in their portfolio even as it became clearer and clearer that defaults were going way up.  Dummies.  We don’t reimburse people who purchased stocks that go down.

You can provide new capital to the banking system in numerous ways.  I submit that actually you don’t need as large a banking system in 2009 as you had in 2006.  There should be fewer banks, fewer employees, fewer branches.  There won’t be nearly the mortgage feeding trough of 2003 to early 2007. 

The people you should give money to are the ones who didn’t screw up.  You should give money to banks that are currently doing well and have been responsible lenders.  Some of those are big, like JPMorgan.  Some of those are small, like BBT.

3. Some of the alternative proposals have to do with limiting CEO pay for anyone who sells securities to the Federal government.  I am ok with that, but I think something much more proactive would work.  I think the FDIC should be much more activist in removing management which just doesn’t get it.  They don’t have to takeover the bank, just take a look at who has poor risk controls, contributed to the bubble, and has a high chance of problems if they stay.  I am a big proponent of the Dump the Bad CEOs movement. 

4. The bailout plan is missing a group of securities which as a group are pretty low risk.  Municipalities have had their market displaced by problems with the bond insurers.  Want to make life an awful lot easier for many municipalities?  I know that the Federal Government does not currently guarantee any municipal debt, but now would be a good time to reconsider.  An alternative would be taking over the questionable bond insurers’ muni portfolios, with both the premiums and obligations.  A second alternative would be to simply backstop the bond insurers’ guarantees on munis.  This would actually be pretty cheap.  Very few munis will default, especially when compared to MBS or CDO risks.

5. The bailout plan does not seem to realize the parallels between individual homeowners and owners of mortgage backed securities.  Both of them tend to think real estate prices won’t or shouldn’t decline much more.  Both of them used to think prices would always rise.  Both of them think prices will rise in the future when the credit problems are over.

Both of them are wrong, for similar reasons.

For those of you that have a political agenda and have political glaucoma, which prevents you from seeing the whole picture, it is unfortunate that you can’t get a grip on how pervasive the economic and moral problems truly are.  There is enough blame to go around. 

The problem is not politics – it is GREED.  If you are greedy and buy things that you can’t afford or think that you are entitled to certain things and you act on your whims, YOU are the problem.  The only people that are not to blame are the INDIVIDUALS that buy things with cash, don’t overuse credit cards, save their money, and live WITHIN their means. 

If you think that these economic problems are caused by one person, one party, one administration, one reason, or one anything, then … well that’s unfortunate (and it is a good reflection on your wisdom, or lack thereof).  If there are things to point at, they are greed, feeling of entitlement, compassion, dishonesty, pride, and other character flaws.  These character flaws afflict all kinds of people, even some good people.