The Abandonment of Hope
Through me the way to the city of woe,
Through me the way to everlasting pain,
Through me the way among the lost.
Justice moved my maker on high.
Divine power made me,
Wisdom supreme, and primal love.
Before me nothing was but things eternal,
And eternal i endure.
Abandon all hope, you who enter here.
Dante Alighieri -- Divine Comedy
.
Housing market bulls must abandon all hope. We are witnessing a collapse of house prices not seen since the Great Depression. There are no signs of bottoming or even a slowing of the decline at this point in time. The secondary mortgage market is in shambles; despite the best efforts of the Federal Reserve, mortgage interest rates are rising; credit is tightening; sales volumes are anemic; if it were not for the persistent talk of government bailouts, there would be no hope at all.
We need hope. Hope is as essential as food or water. Presidential candidate, Barack Obama wrote about "Hope in the face of difficulty. Hope in the face of uncertainty. The audacity of hope!" We all want a bright and hopeful future, and for people renting and saving their money, the collapse of house prices is reason to hope; however, for those who speculated on real estate; for those who are overextended on their mortgage obligations needing to refinance; for those who are depending on their home equity for a comfortable retirement; for those people, the market reality is pretty bleak, and denial and hope is all they have left.
During the Great Depression, the last time the nation witnessed house price declines on the scale we are seeing now, America turned to a new president for hope. Franklin Roosevelt gave radio addresses known as "fireside chats." He used these chats to outline his policy programs (many of which made the depression worse,) but the primary service President Roosevelt provided the nation was the dispensing of hope. There was not much the President or anyone else could do about the problems of the Great Depression, just as there is not much anyone can do about the Great Housing Bubble. Franklin Roosevelt's chats during the Great Depression and Ronald Reagan's speeches during the worst of the recession of the early 1980s gave Americans comfort and hope. If we are in a deep recession at election time (which seems likely,) our next President will be called on to do the same. The election will become less about issues and intellectual competence and more about inspiration and emotional comfort. People vote for emotional reasons; people want to believe in their leaders and be inspired by them. When Barack Obama wrote "The Audacity of Hope," he hoped to inspire a generation with his words. Given the sorry state of our national economy, Americans may turn to this man, not because he is the best qualified to be President, but because is the best at dispensing hope.
.
Asking Price: $399,900
Income Requirement: $99,975
Downpayment Needed: $79,980
Monthly Equity Burn: $3,332
Purchase Price: $470,000
Purchase Date: 9/8/2004
Address: 1608 Terra Bella, Irvine, CA 92602
| Beds: | 2 |
| Baths: | 3 |
| Sq. Ft.: | 1,146 |
| $/Sq. Ft.: | $349 |
| Lot Size: | - |
| Type: | Condominium |
| Style: | Mediterranean |
| Year Built: | 2000 |
| Stories: | Two Levels |
| Area: | Northpark |
| County: | Orange |
| MLS#: | S516093 |
| Status: | Active |
| On Redfin: | 86 days |
Great corner unit with private balcony above garage. Spacious and large living room. Custom paint, Berber carpet, & paneled flooring. No one above or below with only one shared wall. Parks and all recreation just steps away. 2-car tandem garage with lots of storage.
Love those tandem garages...not!
.
.
Look at this rollback -- 15% off a 2004 price. If this isn't hell for homeowners, I don't know what is. Price declines of this magnitude certainly cannot be inspiring much hope.
This unit was purchased in September of 2004 by a flipper using 100% financing through Accredited Home Lenders. The loan was sold off to a CDO managed by the Bank of New York Trust Company. Our flipper walked away, and the property went into foreclosure on July 12, 2007. The trustees paid $457,854, and they have been trying to sell it ever since. Apparently the trustees are not skilled at disposing real estate because we are 8 months later and this property has seen two listings and six price reductions.
Date Price
Original List $535,000
Jul 03, 2007 $519,000
Sep 27, 2007 $499,000
Sep 28, 2007 $495,000
New Listing
Dec 25, 2007 $469,900
Jan 23, 2008 $460,500
Feb 15, 2008 $439,900
Mar 20, 2008 $399,900
It is difficult to say exactly how much the CDO will lose on the deal. The trustees managing the CDO have likely been accumulating unpaid interest and fees associated with this property and added this to their basis. In other words, they probably have upwards of $550,000 tied up in the property that collateralized the original $470,000 loan. Let's assume they have a $535,000 basis based on their original asking price back in July of 2007, although it is likely much higher. If the trustees gets their asking price the total loss to the CDO bond holders will be $159,094 after a 6% commission.
Remember, this is on a 2004 purchase. When the lenders start losing this kind of money on loans they made in 2004, imagine the losses they will take on loans made later at higher prices. What is going to happen when all the 2004, 2005, 2006 and 2007 buyers -- who are currently underwater -- start walking away from their properties? This is what the people who manage our economy fear most, and it is probably what is going to happen. The losses to the lenders and to those holding their toxic waste are going to be staggering.
Prepare yourself for financial Armageddon.
That concludes another week at the Irvine Housing Blog. Come back next week as we continue chronicling ‘the seventh circle of real estate hell.’
.
.
Razors edge
Outlines the dead
Incisions in my head
Anticipation the stimulation
To kill the exhilaration
Close your eyes
Look deep in your soul
Step outside yourself
And let your mind go
Frozen eyes stare deep in your mind as you die
Close your eyes
And forget your name
Step outside yourself
And let your thoughts drain
As you go insane... [go] insane
Inert flesh
A bloody tomb
A decorated splatter brightens the room
An execution a sadist ritual
Mad intervals of mind residuals
Close your eyes
Look deep in your soul
Step outside yourself
And let your mind go
Frozen eyes stare deep in your mind as you die
Seasons In The Abyss -- Slayer
.
.
I love your website, but couldn’t let the reference to reagan’s there-there speeches in the early 1980s.
I was alive then and have no idea what you are talking about. Whenever that slack-jawed old criminal flapped his gums about anything remotely involving my well-being, I practically shat in my pajamas. The man was a shill for the bad people, plain and simple, the same shitheels who have us all by the short hairs once and for all.
Please, while you’re doing such a good job of recording current history, don’t rewrite the past. It sucked too.
My favorite GG quote is the one that nobody ever cites…“A fool and his money were lucky just to get together in the first place.“
My apologies..
I hardly ever veer off topic, but since so many others had, I couldn’t resist that one post.
Will not repeat the offense, sorry.
You’re correct- this is a real estate blog. It’s more interesting than politics at any rate.
Politics is always the same, but the situation we are in now hasn’t happened since 1930.
And I hope like hell it scares our youth into financial sobriety, just like the Great Depression did, so that there won’t be a repeat for at least another 50 years or so.
Good Grief.
Take it to the forums where offtopic posts like yours MAY find an audience. Your credibility is going to be suspect right from the start because you don’t have enough self control to stick to RE related topics on IHB.
This is a REAL ESTATE BLOG.
I here you on the fat thing. I travel a lot to Japan and China, you just don’t have the problem of somebody taking up the space for two. Of course it could be the lack of space on the trains
The well-off in the UK pay extra for private insurance as National Health is an extremely mixed bag. This is actually worse for the average professional than the system in the US. The only system I know of that provides best in class care to everyone without a huge tax hit is Japan, but with their anemic domestic consumption and high personal savings rate the govt can afford such luxuries.
Everywhere else, universal care means two things: better care for the previously uninsured, higher taxes to support it.
I actually think membership in some sort of national sporting academy with forced activity would be the best thing for our youth to guard against higher future health care expenditures. Americans are the fattest generally anywhere you go around the world. Our diet and culture of leisure is the real reason our health care costs are out of control.
If the government was really serious about reducing the pain of the bubble deflating, they would eliminate the preferential tax treat of capital gains on property sales. Or at least roll them back to the previous one time exception. That would at least reduce some of the supply.
“The richest one percent of this country owns half our country’s wealth, five trillion dollars. One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons and what I do, stock and real estate speculation. It’s bullshit. You got ninety percent of the American public out there with little or no net worth. I create nothing. I own.”
Hey, but that 2/3% must be contributing something because all the tax breaks go to them. When’s the last time that a working professional got a tax break? They even pay games with the ATM every year just to add a little more stress to our lives.
Either you force hospitals to turn away people that don’t have health insurance or can prove that they can pay, or you have universal coverage. Right now those that can pay support those that can not. So let’s spread the burden out away from companies and individuals that are responsible to everybody.
While we are on health care, why do we continue to pay the highest cost for prescription drugs when we also support through our tax dollars the R&D the discovers those drugs. Everyone say: Special Interests.
In this case I agree with Greenspan. He would have had to increase interest rates up to 8 to 9 percent to combat expected gains of greater than 10 percent per year and 100% LTV. Interest rates hurt all aspects of the economy. It would have been better to target the lending practices of 100% LTV, no doc loans and qualifying based on the teaser rate and not the APR.
Tandems are fine if you have a LIFO attitude towards your cars. But if you have a “His & Hers” attitude, it’ll be a real pain. It takes different attitudes to live in denser situations.
I agree that they are probably the wrong answer for Irvine.
“but the reality is correcting our Iraq mistake and repair our international relations requires a minor fix and correction of our attitude. Fixing our economy requires personal responsibility.“
Maybe our Iraq HALF TRILLION DOLLAR “mistake” (“clusterf**k”, in the vernacular, and not including Afghanistan), and the economy have some distant connection?
Just askin’
:o)
McCain talks the talk but doesn’t walk the walk when there’s a vote that actually matters. John McCain had the opportunity to vote against torture, but his mavericky straight-talky doesn’t extend to actually taking a stand:
http://www.nytimes.com/2008/02/13/washington/13cnd-cong.html?_r=1&hp&oref=slogin
“The Senate voted 51 to 45 on Wednesday afternoon to ban waterboarding and other harsh interrogation methods used by the Central Intelligence Agency against high-level terrorism suspects.
Mr. McCain, a former prisoner of war, has consistently voiced opposition to waterboarding and other methods that critics say is a form torture. But the Republicans, confident of a White House veto, did not mount the challenge. Mr. McCain voted “no” on Wednesday afternoon.“ (February 13, 2008)
Yeah, maybe, but Chicago political machine has some good points too.
Like my buds from Chicago tell me that when Chicago cops pull them over for speeding they can just pay the cop off but just try that in Irvine…
But in CA you pay the State off instead by going to “traffic school’
I usually don’t get a chance to read or post to this board until after everyone’s gone to sleep, so today was unusual for me.
The value one places on Obama’s relative lack of legislative experience is subjective. If time served in office were the only criteria, Biden would be the current Democratic nominee, and Bob Dole would have won the election in 1996, Gore in 2000, Kerry in 2004 ... and Nixon in 1960, and John Breckenridge in 1860.
But anyway. A corporate analogy:
Steve Jobs today is probably universally accepted “experienced” corporate leader. But in 1984 he was ousted from Apple Computer. Young guy, not very tested, tossed out by a CEO experienced in multinational corporations, because things were slowing. Now, Steve Jobs is a notoriously poor manager. He’s got a history of unethical behavior. But as a visionary, a charismatic bastard who inspires the people around him to perform technological miracles, he’s unparalleled.
Steve Jobs came back to Apple Inc. The visionary made the company a success where the experienced hand couldn’t.
A friend who was at one of the Mac World Expos said that Steve Jobs has a ‘reality distortion field’ (drinking their own kool-aid, you know, ridiculous suspension of disbelief) that pretty much every CEO has, except that for most CEOs the field ends at the tip of their nose. Steve Job’s reality distortion field encompasses the entire auditorium. Steve Jobs had everyone cheering for the Next. Best. Thing. that Apple was announcing. They were going to change the world! And you were there! At the beginning! Steve Jobs in his black turtleneck and jeans, the man, the legend, larger than life. Everyone was pumped up. Not the polite applause for the insufferale CEO mugging for an audience required to be there (“developersdevelopersdevelopers”) ... People were actually excited.
The thing Jobs was announcing? A new color for the iMac.
My friend was astonished at how Jobs could excite people over something so ... inconsequential.
But we both admitted, we’d rather work for a Steve Jobs than an experienced corporate CEO that doesn’t give a damn whether he sells soda or insurance or software. We want a CEO that inspires people to love what they do.
Because Steve Jobs doesn’t invent, design, or build an iPod or an iPhone or whatever they do next. His employees do.
I happen to think that being able to inspire people is a very important qualification for being President, as well.
Without commenting on his possession/lack of qualifications I must note a factual error: John McCain does NOT support torture, in particular does not support waterboarding, and was exorcated by other Republicans for not backing GWB on it.
Some links from googling ‘maccain torture’:
archive.newsmax.com/archives/ic/2005/11/29/100012.shtml
www.truthout.org/docs_2005/111305Y.shtml
www.cnn.com/2005/POLITICS/12/15/torture.bill
www.cbsnews.com/stories/ 2005/12/15/politics/main1129565.shtml
www.msnbc.msn.com/id/10480690/
It’s funny how the Constitution says a president only needs to be 35 years old.
I should do a post on sellers like yourself. We don’t talk about that stereotype much because it is so rare. Most homeowners are in denial and refuse to recognize what is happening all around them. Very few have the presence of mind of a trader and realize they can sell short and buy back later and make a profit. Great story. I admire those few who can put aside their emotional attachment to their house and their “investment” and sell when the market gives them maximum profit.
I have asked myself what I would do if we build another massive real estate bubble after this one. I don’t think I would sell my house as a trade, but I might sell my house and retire early to a nice rental. I doubt I would ride the depreciating asset all the way back to another trough.
I knew this post would spawn some political discussion, but it wasn’t intended to be about politics as it was about hope and despair. Don’t worry, the IHB won’t turn into a political site any time soon.
To those of you posting here who believe that Obama is innocent of associations with powerful, entrenched interests, I recommend you read everything you can find regarding Obama’s association with influence-peddlar and bribe-extortionist Tony Rezko, who is now on trial for extorting bribes in order get state contracts.
You are very naive if you believe that Obama is not beholden to entrenched powers.
Rezko is now facing charges for mail fraud and extortion, of bribes in order to influence the allocation of state contracts.
Rezko is also one of Chicago’s major slumlords, whose low-income rehabs cost millions of taxpayers dollars and are known for being very badly run and in extremely poor condition.
Rezko was, in the past, a major local entreprenuer who founded the Panda Express restaurant chain, among many other endeavors.
Obama is very closely tied to Rezko and bought his mansion in the Woodlawn neighborhood of Chicago from him, in a series of questionable transactions involving the wife of sitting IL governor Rodney Blagojevich, who is an absolute bag of filth, and who I fully expect to be indicted in the near future.
I favored the junior senator at first, but as a denizen of Chicago, I’m sickened by Chicago machine politics. Obama is very tied in with the local filthy democratic machine, and has admitted, under pressure, to having vastly underrreported the amount of money that Rezko contributed to his campaign. I am in general very sickened by Illinois politics, which are the dirtiest in the country. We make Huey Long’s Louisianna look almost clean compared.
I find it incredible that Obama can claim that he “didn’t know” that certain contributions, tens of thousands of dollars worth, were contributed by Rezko or people associated with him.
In summary, Obama has a long and cozy association with this major fundraiser, and while the senator has not been accused of any major wrongdoing, he has been less than open about his business dealings with Rezko and with the governor’s wife.
The Rezko criminal trial could not have been timed worse for Obama’s campaign, and I predict that not only will it be the beginning of the end of Blago’s career, but will cause substantial damage to Obama’s campaign.
Since he and Clinton are so close to each other in both their stated positions and their voting records, I decided to back Mrs. Clinton as the savvier, more experienced, and more knowledgeable candidate. This woman projects an air of knowing what she is doing, and she is considered by top policy people to be an expert in foriegn policy. We could do much worse than this woman, and Obama would be worse, not better. Frankly, I only supported him at the outset because it would mean more benefits for Chicago, and most of all because he seemed more reality-oriented on energy issues, which has turned out not to be the case.
You gotta work some GG into your book IR. Forget Greensplan, Jack Klugman, etc. They are already pretenders to the GG. My other faves:
“It’s not a question of enough, pal. It’s a zero sum game, somebody wins, somebody loses. Money itself isn’t lost or made, it’s simply transferred from one perception to another.“
“Ever wonder why fund managers can’t beat the S&P 500? Because they’re sheep, and sheep get slaughtered”
“We make the rules, pal. The news, war, peace, famine, upheaval, the price of a paper clip. We pick that rabbit out of a hat while everybody sits around wondering how the hell we did it. Now you’re not naïve enough to think that we’re living in a democracy, are you, Buddy? It’s the free market, and you’re part of it.“
“The richest one percent of this country owns half our country’s wealth, five trillion dollars. One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons and what I do, stock and real estate speculation. It’s bullshit. You got ninety percent of the American public out there with little or no net worth. I create nothing. I own.“
I just skip the political comments here, but it was much nicer when just coming to this blog meant I was skipping the politics.
IrvineRenter, we all have some political views, and some views about hobbies, spouses etc. No one minds when there are one or two stray and humuorous asides on one of these other topics, but witless bloviated commentary, which pretty much defines political commentary, demeans this blog. Is there any way to get this blog back to just real estate?
Well, I wouldn’t call it a behemoth… I purchased in late 2000 so despite it feeling like a bit outrageous at the time, it paled in significance to just how crazy it got. That is one reason I left - I couldn’t see how that home was worth more than half a million.
My mortgage was definitely manageable. I just felt it was time for a change of jobs and to take the money and run. I do miss the California weather, but that’s about it.
The lending standards of 20 years ago were still too loose, for it was in the early 80s that loans 4X the borrowers income werer made, and adjustable mortgages appeared during the inflationary rampage of the 1970s, when few lenders wanted to commit to fixed loans because of the upward-ratcheting interest rates.
What if we were to return to pre-1975 lending standards- at least 10% down (and mostly 20%), with loans no more than 2.5X your income?
I still maintain that no-down would have done little harm if lenders had held borrowers to 2.5X income. I have numerous acquintances who bought with no-down loans using this standard, and these people are successfully paying for their homes. They bought cheaper places than they would have with down payments, that’s all.
The bubble won’t totally unwind for a while because the lending standards are STILL too loose. FHA and VA are still approving people, low-income people, for 5X their income- a recipe for financial problems and early default, but the promise of FHA loans is drawing lots of knife-catchers. One young woman, who has no debt and a small savings account, was approved for a $150K loan even though her income is only $27K a year. This is a sensible young person, and I believe she will demure when she sees the payments and how much she will be left with at the end of the month, and maybe she will be able to find a nice older junior one bed for $75K or so after things unwind further.
But other people are taking the bait, because most citizens are financially illiterate, and also delusion prone. “If I buy it, I’ll somehow find a way to pay for it if I have to eat raman noodles for 5 years and work three jobs,“ you hear them say. They vastly overestimate their will-power and pain tolerance.
So a number of folks are making a valid point about leaving politics out of the blog posts. I agree and I apologize for my part in it. To limit the amount of politics in the blog comments going forward, I have created a politics forum. We can move the debate over there…
Easy Gordon…
Nobody is calling you a coward, buster. I just think you are naive and misrepresent the facts to suit your agenda. I didn’t raise the terrorism, bogey man. I was responding to the points that YOU made. You have the right not to care about terrorism. I happen not to share your lack of concern. If you think that makes me a fraidy-cat, so be it.
Now dammit, will you people stop baiting me into political discussions. This is a housing blog!
“His foreign policy ignorance is astounding.“
Good thing people care about foreign policy genius, or heaven forbid we might end up with a president like George W. Bush or Ronald W. Reagan for that matter. Yikes!
They rescued you from that behemoth, so of course you feel a connection to these people. But you did not force them to buy your home, they did it of their own free will, and they supposedly knew the mortgage industry. So yes, you can feel sorry for them, but in no way are you responsible for their current hardship.
We sold our house in NOVA in April 2007, just in the nick of time. I always think of the Mayflower van that moved us out here as the last ship out of Virginia.
For sure, track 7 (Last Ship, Part 2) on Rotersand’s Welcome to Goodbye is in constant rotation on my iPod.
I’m with you. I could care less about political discussions. They’re all kooks. You’d have to be a kook to want to be president.
HOPE
We need hope. Hope is as essential as food or water. Presidential candidate, Barack Obama wrote about “Hope in the face of difficulty. Hope in the face of uncertainty. The audacity of hope!”
The VP at my company does not allow anyone to use the word “hope”. For example, you cannot say to him, “I hope…“, or “We hope…“, or “Hopefully…“. There is no “hope”, there are only plans, or will. Kinda humorous, actually.
“Behind the rhetoric there is nothing. Absolutely nothing.“
Except he’s going to lower my taxes while McCaine won’t.
Unless you have information I don’t? I’m willing to listen.
I’ve always voted republican, but unless you can give me some good evidence my taxes will be lower and he won’t push another patriot act, its going to continue looking silly to push McCaine.
I completely agree Work. You won’t see my espousing my political beliefs here…. I’d hit some blogs dedicated to such if I really wanted to. Seems like the forums would be a better place to take that kind of stuff, but to each his own. I’ve got laser-like focus on Irvine RE and don’t have the time or energy to consider peripheral matters. I figure I’ll vote and that’s pretty much the most I can do in that regard…
Sorry I didn’t delete the start of one of the sentences that was going to elaborte on the Democratic candidates. I’ll keep silent in that regard.
Errr, another digression,
But none of the 3 have shown the ability (yet) to get anything done in Washington. Hillary absolutely not. McCain—does Feingold McCain even count, Obama no. That being said—Do I want an old dude with a self-professed lack of interest in domestic policy as President. No. Do I want someone who
In our freemarket system, we don’t pooh-pooh inexperience over clear vision. In fact, at least in CA, we celebrate it to a certain extent.
You have to wonder about how the lack of experience hurt Gates, Dell, Jobs, the google boys, the yahoo boys in getting things done. Certainly we’ve seen experienced CEOs fail.
All things being equal, I’d rather take a chance on a person with vision rather than settle for the same old crap. But all our respective experiences give us different ways to analyze these guys. I work in start-ups and I’m a lawyer so perhaps I’m willing to take a risk more than the average person (and I’m also inclined to look with disfavor on some of the Clinton shenanigans in the late 90s).
IMO, USA, along with our next generation, already refinanced by Bush 4 years ago to China & India & the world, the time when he was running for his 2nd term. The only reason he won it (basically Ohio) is because his housing bubble machine (i.e. Fed & AG) delays the inevitable depression.
Without Housing bubble can he be reelected & can AG earned the final term as Fed Chairman ?
There is another class of seller not often mentioned in this blog. Those of us who see the writing on the wall and sell even though we are not underwater. If someone realizes that their largest asset is going to be worth 30 or 40% less two years from now, they are likely to get rid of the asset now and buy it back at a 40% discount later. I purchased a house in ‘92 for $180k, and recently sold it even though I was not anywhere near underwater. This is real money! Why would I just sit and watch it depreciate? If you own a home now why aren’t you selling it, right NOW? I don’t know about everyone out there but $200k or $300k is a boatload of dough to me. Even though prices have come down substantially, there is much further to go. The prices we are experiencing now are the result of an uptick in forclosures, a few hedge funds collapsing, and the beginning of a liquidity crisis. What do you think will happen when the recession really starts to bite and lots of people lose their jobs? When the banks and other large financial companies are finally forced to value their portfolios or collateral to the actual market for them instead of just making something up for a valuation, they will be insolvent. The fact is, they are insolvent now, they just aren’t telling anyone. Bear Stearns went from an almost $20 billion valuation to a $250 million value (right now) to a possible negative $30 billion dollar value or worse(near future) in a very short time. Bankrupt doesn’t even begin to describe the financial damage. They are in far worse shape than bankrupt because they are leveraged. It doesn’t take much to bring you down when you are leveraged out over 30 to 1. Bear Stearns is not that different than most of the others, they just had more exposure and so their day of reckoning came sooner. Your house is going to lose a lot more value, get rid of it now. I love renting, I have more time to spend with my kids now instead of working on the house or yard.
Wow Skek, keep drinking the “keep giving up your freedom because the terrorists are lurking” Kool-Aid. Yes I make a lot of international phone calls. We run an international business. I’m an American citizen who has the right to privacy. Unless they have a compelling reason to listen and record my calls, keep the hell out. If you have a good and compelling reason, get a warrant. If you don’t have enough evidence to get a warrant, then you don’t have enough evidence to record my calls.
As to AT&T turning over my records, if you think I’m a terrorist, arrest my ass. If not, then I’m a “presumed innocent” citizen and stay out of my business. Got a warrant—go compel the records from AT&T. Can’t get a warrant, then do your job better.
I’m tired of hearing the “terrorist” card played every time somebody wants to violate my privacy or dip their hands into the public till. Sorry, the “terrorist” angle doesn’t concern me. I’m not afraid of them and couldn’t give them another thought. They want my ass—bring it on. Otherwise they can stay in their caves and plot away.
I feel sorry for you that you feel so afraid of some unknown threat that you willingly sacrafice your feedom and liberty for some false sense of security. The very term “terrorist” is coined because their tool is fear and indimidation. My ancestors built this country on guts and bravery. They were not afraid, they were not cowards and they would not be controlled by fear. I guess I’m just genetically hard-wired to carry on that tradition. I’m not a fool nor falsely proud. But to sacrafice the American ideal of freedom to anybody, for any reason, is to be a coward. And that I am not.
IMO, USA, along our next generation, already refinanced by Bush 4 years ago to China & India & the world, the time when he was running for his 2nd term. The only reason he won it (basically Ohio) is because his housing bubble machine (i.e. Fed & AG) delays the inevitable depression.
Without Housing bubble can he be reelected & can AG earned the final term as Fed Chairman ?
I been lurking on this site now for almost a year and really appreciate the insights IR, Ipop, Alan, and everyone else has been offering. The information here has made my thrifty life style a bit more bearable, and allowed me to convince my spouse to continue renting instead of becoming a knife catcher this year. This is a great blog and I enjoy reading it daily.
That being said, can we please try to stay away from politics? There are already a ton of political blogs of all stripes where partisan warfare goes on 24-7, I’d hate to see this blog goes from fascinating discourses on the Irvine real estate market to people slamming each other over presidential politics. Cheers.
Volvo is one of Ford’s most profitable divisons because their cars don’t suck and people pay a higher margin to obtain them…
I’d say that is the TRILLION dollar question ...
FH
Hey, you even got me to think two or three times about buying, and I’m pretty darn stubborn and pig-headed with regards to numbers/finances and my desire to own a bigger home…
I’ll still probably catch a knife long before you’d think it was prudent, especially if 30-year conforming jumbos get into the 6.25-6.50 neighborhood, but I’ll catch that knife armed with much better knowledge and with much more forethought (not even sure if that’s a word).
You’re a good man Charlie Brown. I hope you can keep it up. I’ve recommended this blog to countless others that you are helping to educate by the day I suspect…
Of course, the fewer buyers there are, the quicker prices fall, and we all get what we want sooner, right? Now that I think of it, you are probably just doing this to drive down prices faster so you can buy! Sneaky bastard you…
Just remember, “Greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms, greed for life, for money, for love, knowledge has marked the upward surge of mankind”.
The rationale is simple: Health care should not be treated as a commodity, to be bought and sold like pork bellies, but as a basic entitlement available to every American.
Sorry, free-marketeers, but Medicare is actually a very well-run government entitlement program.
We would have had univeral health insurance for a least the last fifty years had the Republican Party not stood in the way. And in doing so they have hurt American business and cost people their jobs. Why is Volvo one of Ford’s most profitable divisions? Because they are based in Sweden, where health care is nationalized; and therefore Ford does not have to absorb the shock of out-of-control health care costs.
The last time there was a housing bust, Texas was hit, and hit hard. Houston, Dallas, Fort Worth, and college towns like Bryan/College Station saw declines in the range of 40-50%. Of course, there was also a huge decline in oil prices then, and the TX economy was very oil oriented. The economy diversified, but now, I’m not sure if that’s a good thing.
I think the crash is going to hit just about everybody—because the credit tightening isn’t limited to the coastal areas, and very few have any downpayment money.
Three words: Cult. Of. Personality.
Behind the rhetoric there is nothing. Absolutely nothing. From a policy perspective, he is indistinguishable from any liberal senator. His foreign policy ignorance is astounding. But most importantly, he peaked too early. Obama’s momentum is already taking a nose dive.
There’s a decent chance Hillary swipes the nomination from him at the convention. And frankly, Democrats should hope she does—Obama will limp into the general election and get trounced by McCain. Jeremiah Wright has fatally wounded the Obama campaign, and that dirt is on Clinton’s hands, not McCain’s.
Maybe, but HELOC didn’t funnel money across the board, certain sectors were the primary benificaries and HELOC spending was concentrated in certain locations such as OC and not in say Texas. HELOC’s paid for things like BMW’s, at least 30% of BMW’s sold in the last 5 years were because of HELOC’s and now BMW dealers are scared as they should be. That’s why I don’t buy the global recession, I think there will be lots of pain but pain will not be distributed widley but confined to certain sectors and affect different parts of the country differently. You need to get out of OC to get some perspective, I think OC will be hit especially hard.
I too was skeptical, The difference, my dear, is not in the intelligence, which all three candidates possess, but in the charisma, which only he has. Obama is the only, only, only one who can reunite the UNITED States after these eight disastrous years.
On a more selfish note, I am in my thirties; this is my time in life, and it’s bad enough I have to listen to commercials for pills to cure the diseases of aging Baby Boomers. And I am tired of hearing about terror, fear, death, and imminent doom, all designed to cause discomfort and division. I want hope, and only Obama has the goods to do the deed. If Americans unite behind him, open their minds, and turn off the talk radio, he will do fine.
Good lord, buster. You have the right to vote for anyone you want, but at least get your facts straight.
“He won’t steal my freedom to have phone conversations without being monitored and recorded by the NSA.“
Are you making international phone calls to suspected terrorists? If so, then yes, your calls may be monitored. The nexus with the US is the fact that some of the calls may use US based switches and routers and there’s no way to filter those calls out. The terrorist surveillance program permits this. By the way, Democrat Senators were briefed on this program years ago and never said boo. Don’t flatter yourself into thinking the NSA is spying on you. You ain’t that interesting.
“He won’t steal my freedom to keep my bank records to myself without a warrant (instead of some BS “national security” letter from the Justice Department).“
Do you have any idea how difficult it is to get a national security letter approved within the Justice Department? The FBI has nearly abandoned them in favor of warrants because they are so difficult to get approved internally and they take forever. Oh, and if you are suspected mafia or drug dealer, the Feds can get your bank info without either an individual warrant or a NSL. Why should suspected terrorists have more rights than mafia or drug dealers?
“He won’t enlist powerful telecommunications companies to turn over my phone records to government spies.“
So, asking a US corporation to assist the government in tracking terrorists is a bad thing? I call that patriotism. I wish there was more of it. You think if AT&T was eavesdropping on ordinary Americans that someone wouldn’t have leaked the crap out it? It isn’t happening.
“He won’t fire Justice Department prosecutors, who need to be fair and impartial so as not to abuse their power, who won’t grant “political” favors by selective prosecution.“
Look at government corruption prosecutions during the Bush administration. Both Republicans and Democrats have and are being targeted. Duke Cunningham. Mike Carona. I’ll grant you that Gonzalez’s handling of the AUSA firings was a sorry case of partisanship and he rightly lost his job over it, but the issue is more complex than you make it out to be.
“Oh, and given what happened at the State Department TODAY, I’m sure he won’t spy into my passport activity to track where I travel.“
In all three instances, the unauthorized access was by looky-loo lower level employees. The Clinton breach occurred during a training session where employees were encouraged to look up a name to see how it’s done. It wasn’t a Bush administration conspiracy. By the way, McCain’s passport file was also compromised. And what happened today is that Condi publicized the security breach and personally apologized to Obama and Clinton.
Vote for Obama because you like his speeches, because you want national health care, because you want an immediate surrender, er, redeployment from Iraq or because you want tax increases. But don’t lie to make your point.
Don’t most HELOC reset every quarter or so? But the delta isn’t as big as the major reset from a teaser to a full ARM.
Good for you. Just make sure you don’t laugh all the way to either Countrywide or IndyMac
Mark - I agree, that’s why I back Obama. He won’t steal my freedom to have phone conversations without being monitored and recorded by the NSA. He won’t steal my freedom to keep my bank records to myself without a warrant (instead of some BS “national security” letter from the Justice Department). He won’t let my own government spy on me without a warrant. He won’t enlist powerful telecommunications companies to turn over my phone records to government spies. He won’t fire Justice Department prosecutors, who need to be fair and impartial so as not to abuse their power, who won’t grant “political” favors by selective prosecution. Oh, and given what happened at the State Department TODAY, I’m sure he won’t spy into my passport activity to track where I travel.
Mark, why don’t you tell me how McCaine’s proposed tax cuts are going to affect you…
From what I recal, he’s talking about widening the 15% bracket a bunch, and lowering taxes for the ultra rich.
Obama wants tax cuts for everyone who makes under 200k
IR is right. I hate tandem garage. Bought 2 townhomes with those (can’t afford to buy a SFH at that time….too conservative….and it’s a good thing too….sold at the right time….now a happy renter laughing all the way to the mutual fund companies and oversea banks (local banks? Fuhgetabouit)).
Luckily my wifey didn’t work and so all we have is 1 car so the tandem issue wasn’t that big of a deal.
Frankly, the tandem garages should only be built in large cities such as NYC, etc…..IRVINE? Stoooooooooooooopid.
“But the Republicans have blown their chance…“
Democracy is about voting for the least horrible candidate. The least horrible candidate for me is the one who wants to take the least amount of money from me and the least amount of freedom from me and others (these go hand-in-hand really).
Thank you for the kind words. Yes, it is very satisfying to believe my writing has convinced people who may not have understood what was happening to avoid buying in this market environment. Ever since finding this outlet, I have felt compelled to try to save people from the anguish and pain buying in a bubble would have brought them. I wrote about it in my very first post. It is something I am proud of, and when I read comments like yours and Rob Ranger’s I find all the motivation I need to keep writing.
“Or is the election just another bubble based on HOPE and good stump speeches?“
Unfortunately, This is what they generally turn out to be, and this one will probably be even more prone to emotion-based voting because people will be distraught because of the economy.
Well, it’s official. The knife catcher who bought my home near the peak of the bubble is in pre-foreclosure. Thanks to the site posted the other day I was able to look it up.
www.sitexdata.com
They did 100% financing to the tune of 670k. Both husband and wife had jobs in the mortgage industry so is it really that surprising?
My question for all of you is should I feel sorry for them?
I do feel somewhat sorry that they brought his upon themselves but I do not have any regret selling them my home. If they had not purchased mine, they would have just bought another.
Mark - I’m a devote capitalist and former Republican. But the Republicans have blown their chance by spending so far beyond our means that the deficit is ruining our country.
If the Republicans were TRUE fiscal conservatives, I’d still back them. At least the Democrats are telling us they will tax the hell out of us to spend. The Republicans just keep borrowing and borrowing to spend spend spend. People can get fired up and fight back against taxes in order to reign in spending. Sadly, nobody seems to care that the Republicans are spendaholics so long as they just put it on the Country’s credit card.
I can almost bet all that if we hit the worst recession after the world war II, the big factor for home values drop and losses would be the job loses.
Feldstein is a Harvard economics professor and former economic advisor to President Ronald Reagan, and National Bureau of Economic Research President . While answering questions from the audience, Feldstein said the downturn could be the worst in the United States since World War Two. The United States is in a recession that could be “substantially more severe” than recent ones, National Bureau of Economic Research President Martin Feldstein said.
Look here http://biz.yahoo.com/rb/080314/usa_economy_feldstein.html
Largest wave of foreclosures will result from job loses and not rate resets.
Strom - Yes, higher taxes will be the result. But it will be a net wash because we will have lower payroll costs. And, if we hit tough times and suffer some losses, the higher taxes won’t matter because we will be in the zero tax bracket.
There is of course a cost for everything. The quality of health care and the wait times are a function of the price we are willing to pay. If we’re willing as a nation to pay for top care and pay for immediate access, we will get it.
The problem now is inefficiency. My primary care physician has TWO office personnel just to handle the billings to a myriad of different insurance companies. A Harvard study showed that the private sector wasted 12% of all costs on administration while medicare spent less than 2%. A 10% greater efficiency wrings a lot of waste out of the system.
The problem is our current system rewards United HealthCare executives with multi-million dollar bonuses for denying legitimate claims for cancer treatments. If I treated my customers that way I would be bankrupt.
By eliminating insurance company profits and the associated overhead costs, we can provide a lot better health sevices to a lot more people at the same or lower costs. Why do you think the insurance companies lobby so hard against it? Do you think they REALLY believe that health care will suffer (or that the even care), or do you believe they spend millions to campaign against universal health care to protect their profits?
Don’t get me wrong, I’m totally in favor of capitalism and profits. But not at the expense of the health care for millions of Americans. Sorry, American citizens first, profits second.
You very well may be right on the timing, IR! And I don’t think (or at least i don’t hope) the crazy no doc/100% LTV + will come back in style…
What happens when inexperienced loan officers approve loans.
What happens when people with no experience become COO’s or CFO’s
No one would like to work in a company where the CEO gives good motivational talks but lacks direct experience, the competitors will eat the company alive…
Or is the election just another bubble based on HOPE and good stump speeches?
Does the ARM reset chart include HELOC loans?
If not, then that reset chart may be misleading.
The daily posts help me keep my sanity during the whole inflation of RE prices when all my friends and family were telling me I had to get in now or be priced out forever.
Congratulations on avoiding the train wreck. Hold on and hope the undercurrent doesn’t pull the rest of us down with everyone else.
Keep saving that cash.
To thine own self be true.
Yes, I want Obama to be Prez! I’m not paying my “fair share” and I “don’t deserve” to keep the money I earn.
More than 40% of my income goes to income and payroll taxes. How much more do I need to pay? How much more are you Obama/Hillary supporters willing to pay? 50%? 60%? 100?
The fact that these two think households earning more than $100K are “rich” is reason enough not to vote for either.
IR—I’m sure you’ve noticed the number of people who you have either convinced to hold off on buying a house or have reassured about not being able to “afford” a house. I imagine it is personally very satisfying for you, but I also think stories like Rob’s provide a powerful counterpoint to the analysis that you are including in your book. Have you thought about including some personal anecdotes to your book in order to add a human dimension? You could take submissions (subject to a publication waiver and consent) over in the forum section or via email. Just a thought. Even if you don’t, you (and the other IHB bloggers and frequent commenters) should be proud of the number of people you’ve directly helped—I wonder what the aggregate dollar amount in savings is? Job well done!
I think it’s really all about affordability. If you bought with a teaser and had to refi - can’t afford it, can’t make the payment. If you had to do a liar loan to quality, use your HELOC to make the mortgage payments - again, can’t afford it, can’t make the payment when the HELOC is cut off or tapped out. If you could afford it initially, then refied and/or HELOC’d and spent it, it’s possible you can’t make your new payemments, again can’t afford it and will default.
It’s not that most people who will be foreclosed on are calculating types that dec