Raines a-gonna Fall

A Hard Rain’s a-gonna Fall — Bob Dylan

I was looking through the local rags this weekend, and I was overwhelmed by the number of “you should buy now” articles. There was one titled, “Why you’re nuts if you don’t buy now.” There is no limit to the bull$hit the real estate community can put out there. I would like to see that changed.

The sales tactics of the National Association of Realtors should be examined and potentially come under the same restrictions as securities brokers through the Securities and Exchange Commission. After the stock market crash which helped precipitate the Great Depression, Congress created the Securities and Exchange Commission to regulate the sales activities of securities brokers. There are strict regulations in place governing the representations made concerning the future performance of investment opportunities. These protections were put in place to protect the general public from the false promises made by stockbrokers in the 1920s which many naïve investors believed. The same analogy holds true for Realtors.

The National Association of Realtors has launched numerous advertising campaigns suggesting erroneously that residential real estate is a great investment and appreciation will make home buyers wealthy. The mantra of all realtors is that house prices always go up. There are currently no limits to the distortions and outright lies realtors can tell prospective buyers with regards to the investment potential of residential real estate. Buyers are already prone to believe the fallacies of unlimited riches in real estate, and these fallacious beliefs lead to housing bubbles. Realtors should be prevented from making representations concerning the investment potential of real estate. Since the regulatory framework for this kind of regulation and oversight is already in place under the auspices of the Securities and Exchange Commission, Congress would merely need to make Realtors subject to these regulations in order to solve the problem.

We really need to do this…

Today’s featured property is a high-end REO being offered for 25% off its peak purchase price — a discount greater than $250,000. Is it a good buy? Are you nuts for not buying it? IMO, this house will likely drop another $200,000 in value, depending on how quickly the crash plays out. If I am right, it is not a good time to buy. If the realtors are right, this is the bottom, and it is a great time to buy. Since I have been consistently right, and they have been consistently wrong, you can choose between an impartial observer giving advice based on detailed analysis, or you can place your faith in a group looking to profit off the transaction who have done no analysis at all. You decide.

Asking Price: $764,500IrvineRenter

Income Requirement: $191,125

Downpayment Needed: $152,900

Monthly Equity Burn: $6,370

Purchase Price: $1,040,000

Purchase Date: 11/9/2006

Address: 3 Raines, Irvine, CA 92602

Beds: 4
Baths: 3
Sq. Ft.: 2,850
$/Sq. Ft.: $268
Lot Size: 5,138

Sq. Ft.

Property Type: Single Family Residence
Style: Other
Year Built: 2002
Stories: 2 Levels
Area: Northpark
County: Orange
MLS#: P660139
Source: SoCalMLS
Status: Active
On Redfin: 2 days

Lender owned,sold in as is condition (See agent remarks please follow
directions) Hardwood flooring down stairs, upgraded kitchen with
granite counter tops. Cul de sac location.

That description must have taken all of 10 seconds to write.

As you might have guessed, this was a 100% financing deal. DB Home Lending Inc. loaned these people $1,040,000 and required no money down. Think about how insane that is. Over $1,000,000 with no personal investment? The insanity of lenders during the bubble was truly remarkable. No wonder our entire banking system is insolvent.

If this property sells for its asking price, the total loss to the bagholder who bought this mortgage will be $321,370 after a 6% commission.

What happened? I thought real estate always went up?


BTW, if you want to find out who I am, buy the ebook linked on the sidebar. My name is on the front cover.


Oh, where have you been, my blue-eyed son?
Oh, where have you been, my darling young one?
I’ve stumbled on the side of twelve misty mountains,
I’ve walked and I’ve crawled on six crooked highways,
I’ve stepped in the middle of seven sad forests,
I’ve been out in front of a dozen dead oceans,
I’ve been ten thousand miles in the mouth of a graveyard,
And it’s a hard, and it’s a hard, it’s a hard, and it’s a hard,
And it’s a hard rain’s a-gonna fall.

Oh, what did you see, my blue-eyed son?
Oh, what did you see, my darling young one?
I saw a newborn baby with wild wolves all around it
I saw a highway of diamonds with nobody on it,
I saw a black branch with blood that kept drippin’,
I saw a room full of men with their hammers a-bleedin’,
I saw a white ladder all covered with water,
I saw ten thousand talkers whose tongues were all broken,
I saw guns and sharp swords in the hands of young children,
And it’s a hard, and it’s a hard, it’s a hard, it’s a hard,
And it’s a hard rain’s a-gonna fall.

A Hard Rain’s a-gonna Fall — Bob Dylan

63 thoughts on “Raines a-gonna Fall

  1. Agent#777

    At least the Google street view seems to indicate that they did not lose this house because they overspent on their cars!

  2. billinny

    In addition to real estate brokers that need to be regulated, I’d also add the mortgage brokers. I assume the mortgage broker that placed this $1m no-money-down mortgage also was lucratively compensated and is off scot-free on this one.

  3. AZDavidPhx

    All you have to do is ask an under-water knife catcher who bought a house at this time last year amid the legions of used house peddlers proclaiming how great of a time to buy it was.

    I am convinced that Washington could be on fire with foreign invasion troops landing on both coasts and the real estate prostitutes would be greeting them at the beaches, roses in hand, to sell them beachfront property with granite counter tops.

    While flipping through channels over the weekend, I came across HGTV. I was very surprised to see that they are still showing all of the same housing pornography that programs the masses with these notions of free lunches and something for nothing. Treating houses like lottery tickets, realtors telling homeowners that the 50K they spent (out of HELOC) on kitchen renovations will add 120K to the value of the house. I sat there wondering “We have seriously learned nothing?”

    You wonder how this country is supposed to compete in the global market when it appears that all that most of us are capable of doing is installing counter tops, filling out mortgage paperwork, and selling houses to one another while a bunch of sponges take their piece of the spoils at each stage in between.

    1. MalibuRenter

      So what do you propose? Boycotting advertisers?

      This might be one of the few places where such steps might do some good. I haven’t watched HGTV in a couple of years. Who are their advertisers anyhow?

      1. AZDavidPhx

        I’m not sure what the solution to the problem is other than educating the public which is a lost cause.

        The only way I see it working itself out is to watch house prices drop. The public will come to reality when everyone has a friend or associate who lost their shirt betting on real-estate.

  4. upperlowerclass

    I heard that same “50k = 120k” statement on HGTV, many of my neighbors heard my reply…

    1. AZDavidPhx


      The key to becoming wealthy is apparantly to make yourself a middle-man in as many financial transactions as possible.

  5. Tejano

    HGTV does not date their episodes, but you can guess about where along on the bubble they were filmed by how hard they push the “strike it rich” stuff. Newer shows seem to have toned it down a notch or two.

    I would like HGTV to follow up on some of those shows where the modest income buyer gushes “it is my dream!” before signing a 100% variable mortgage with closing costs paid by the seller.

    1. AZDavidPhx

      Or at least post the addresses of these houses that they profile so we can look around the neighborhood to see what the comps are selling for these days.

  6. Surfing in Newport

    Talk about lipstick on a pig….build a box and add a little fake stone and about 1 foot of architecture…sell it for a $1 million. This has to be the worse looking new house you have profiled.

    1. rā‚¬nato

      man, get out of my head! I was thinking exactly that.

      This looks a lot like the ugly boxes which pass for homes in Maricopa, Arizona…

      1. AZDavidPhx

        The thing that gets me is HOW CLOSE they build to the other houses. The only reason anyone would ever spend 1 million dollars for a McMansion like this is because they have never had to earn a million dollars.

        It’s a lot easier to settle for less when your form of payment is a big IOU and your “costs” are watered down to a “monthly payment” and seasoned with a dash of investor’s Kool-Aid.

    2. Alan

      Plus sold “as is” and without a single interior photo. It may well be that it could fall more than the $200k that IR projects.

      Perhaps the best thing for it is to tear it down and put up something appropriately sized for the lot and done with some architectural thought. But then you’d still have all the neighboring structures around. A fantasy, but not a viable plan.

      1. Matt

        It may also be that it will get bought for more than it is worth.

        We’ve seen more than a few places bought for more than our colletive wisdom thought they were worth in the last few weeks. Doesn’t mean our insights are wrong about the value, but knife-catchers are out there.

        I’m not worried about it. A receding tide lowers all boats. Especially in master-planned Irvine, if you miss out buying 3 Raines today, you’ll be able to take advantage of the folks living in 9 Raines tomorrow.

        Without seeing the interior, who knows how much this would sell for?

        1. ipoplaya

          This will sell for more than list… A similar property on Thorn Hill, that practically backs to this house, closed a couple of weeks ago at $915K.

          1. AZDavidPhx

            Yes, but that was also before the stock market melted down.

            Will be interesting to see if it has any effect.

            This place was valued around 500K in 2002. I think it will get back around there eventually, but not right now.

            Once they start increasing the interest rates to realistic “no historic lows” – it will be the kiss of death on the prices for these types of houses.

            It’s only a matter of time.

    3. Gray

      Indeed! What an ugly piece of crap. Basically, a soap box with some add-ons that a desperate blind architect applied to it. And when he chose the color, his seeying eye dog must have yipped…

  7. biscuitninja

    “Since I have been consistently right, and they have been consistently wrong, you can choose between an impartial observer giving advice based on detailed analysis, or you can place your faith in a group looking to profit off the transaction who have done no analysis at all. You decide.”

    I would call this talking smack… but you’re right! Ha ha! šŸ˜†

    Thanks for the quote of the year. I look forward to purchasing your book and getting it signed.
    Take it easy

  8. JohnW

    As a long time veteran of the biz, I can assure everyone that the problem was in part the wild west mortgage brokers, but in whole the Realtors who pushed buyers into these homes. More often than not when I’d prequalify a buyer for “X” price, the Realtor would find someone else who would prequalify them for “X” time “X”, usually well beyond their ability to hold the property for any length of time. If you didn’t give the Agent the answer they wanted, you didn’t get any future business.

    My answers: First, no dual agency. A listing Agent cannot represent a buyer or a seller for that matter without bias towards their own pocket book. Second – Chose: either you are a certified and licensed listing Agent or a certified and licensed buyers Agent. You can’t be both. Third – no broker owned mortgage companies. The temptation is too great to help the broker over the buyer. Fourth – No stated income, no “documentation waivers” or any of the other hoo-ha that got us into the position we are in today. Fifth – 5% down, or nothing. Skin has to be in the game.

    The Realtor is the prime suspect in creating the hype that prices, like trees, grow to the sky. Their industry is self regulated whereas lenders are independently regulated. It’s time to change this and put the regulatory horse in front of the realtor cart – not the other way around as it is today.

  9. Ryreaves

    I’ve definitely seen a lot of BS on HGTV. For instance, on that show National Open House they showed 3 homes in 3 different cities for 300k 500k and a million. On that episode Los Angeles was one of the cities, for a million they showed a 3300sqft home in Santa Clarita. We all know what happened there haha, similar looking homes in that city are selling for 550k-600k. Goes to show you how stupid people are…On another show on HGTV “House Hunters” they should some moron buy a 800sqft bungalow in L.A. for 500k. I’m sure nowadays that little shack is worth 200k, I mean you have to have half a brain to spend that much on a shack. Also, how many of you have seen that Realturd commercial that says “homes double in value every 10 years 60% of a homeowners wealth comes from the homes equity.” Thats terrible, you don’t overspend on a home thinking it’ll make you rich you buy a home to live in.

  10. MalibuRenter

    Anybody looked at the Redfin neighborhood summary lately? Average Irvine listing is about $385/sqft. Average sale is about $330/sqft. The homes that are selling might disproportionately be lower end homes, or might just be the ones that are price closer to reality. http://www.redfin.com/city/9361/CA/Irvine

    While I don’t think Redfin automatically calculates it, I’ve seen a calculation for Malibu that of the homes that sold, the average is currently 28% off initial list price, and 10% off final list price. http://www.malibutimes.com/articles/2008/09/24/news/news6.txt

    The most sobering part of the Malibu listings is that peak prices were 35 times median income. List prices are now at 25 times median household income. Actual sale prices are at 14 times. In the mid 1990s, the ratio was about 6 times. List prices are at 2004 levels, but actual selling prices are at 2000-2002 levels. Even at those prices, not much was selling in later summer and early fall. Malibu has much more seasonality than most parts of CA. Nov-Jan is usually quite dead for RE sales.

  11. IrvineRealtor

    Stepping into the lion’s den

    IR – your suggestions are welcomed, but if anything, the current wording/position of the NAR is quite protective of the opposite side of this issue:

    ā€¢ Standard of Practice 10-1
    REALTORSĀ® shall not volunteer information regarding the racial, religious or ethnic composition of any neighborhood and shall not engage in any activity which may result in panic selling. REALTORSĀ® shall not print, display or circulate any statement or advertisement with respect to the selling or renting of a property that indicates any preference, limitations or discrimination based on race, color, religion, sex, handicap, familial status or national origin. (Adopted 1/94)

    As far as individual culpability goes, certainly there are plenty of directions to point blame. But to be fair there are some many good mortgage brokers, appraisers, contractors, and realtors that will continue to do business – and even flourish in tighter times.

    Those that have acted only in their own interests will be culled from the herd quickly, or have already moved on to their next flood of opportunity.

    1. AZDavidPhx

      Why are you playing the race card? I don’t get it. It seems completely irrelevant.

      Here is your reality check –

      You should be 100% neutral on economics. You have no qualifications whatsoever to give that kind of advice and you should openly admit that it would not make sense for you to even go there given all of the potential conflicts of interest that are present.

      You should not be telling anyone whether it is a great time to buy or not. You should be telling them that they need to decide whether buying a house makes sense for them given their own personal scenario and they need to evaluate their own situation and decide without you manipulating them toward the outcome that is most beneficial to you.

      I did not see one policy statement that says “Realtors shall not attempt to persuade people into buying.”

      Show me that policy, IrvineRealtor.

      1. MalibuRenter

        I concur with David. The only reason realtors are not being strung up for giving financial advice without background or the proper designations is because single family homes are not classified as securities under federal law.

        Personally, I am in favor of either having prohibitions against real estate agents giving investment advice about homes, or having the State of CA require Series 65 designation in order to do so. There would be maybe 20% of realtors who couldn’t pass the exam. I would be happy to see someone like FINRA establish a test similar to Series 65 which includes real estate.

        1. Chris

          Amen to that….especially your quote on prohibitions against RE agents giving investment advice about homes.

  12. JohnW

    I beg to differ about the bad actors being culled from the herd. Sure, when the number of licensed agents gets whacked by 2/3rd a great many of these were mortgage brokers and part time Realtors. Many of the “survivor” Realtors however have such a base knowledge of ethics and zero understanding of customer protection over commission generation, that they simply are biding their time until the next boom stumbles along.

    If you don’t believe me, stop by some of the broker preview meetings, or visit a few open houses and let the bored Realtard wax poetic about their understanding of market forces. It’s sad, swimming in pathos, and entirely avoidable by “super regulating” any survivor agents into submission.

    As to AZDavidPX, your comments have a distinct whiff of Ramen noodle goodness mixed with Kool-Aid. Perhaps this board is not for you. Try the NAR’s comment section if I may suggest an alternative for your views.

    1. AZDavidPhx

      I see how it is.

      Don’t respond to the argument that says real estate agents should acknowledge their conflicts of interests and therefore not say things like “now is a great time to buy” because it may lead people to believe that they are being manipulated or “persuaded” for the real estate agent’s financial gain.

      No, don’t bother saying why the argument is right or wrong – just say “Oh yea, that sounds like Ramen Noodle Goodness.”

      Yea, the Kool-Aid is just flowing off the taps over here.

      Thanks for the intellectual chat, JohnW. We are going to have worldwide poverty knocked out by Friday at this pace.

  13. Gordon Munster

    To David from Phoenix:

    I teach economics at the College level and I have interviewed Irvine Renter.

    His analysis of this market will be studied years from now for its prescience.

    You are quite mistaken to question his qualification to comment.

    1. IrvineRealtor

      GM – for clarification, I believe AZDavid was loosing venom at me, IrvineRealtor, and not IrvineRenter. My qualification to comment remains as dubious.

      My point was that the current language of the NAR is to protect against abuse of influence towards only the downside (panic selling), as stated in bold above. It does not address pandering to buyer fears (“you’ve got to buy now or else…”)

      mmg followed, reiterating my insinuated point, which I believe is also the point of the original day’s post that the exposure remains with the upward pressure.

      btw, JohnW – Koolaid and Ramen sounds awful, and I’m going to have to clear that with momopi.

      1. AZDavidPhx

        IrvineRealtor –

        Take the ethics pledge today that you will no longer tell people whether you believe it is or is not a good time to buy real estate or whether anybody believes it is a good time to buy real estate.

        Take the pledge to your clients that to avoid any potential conflicts of interest, you are not going to advise them on the quality of their purchase from here on out.

        Set an example for everyone else to follow.

        What do you say?

        1. IrvineRealtor

          Your proposal presupposes that I previously have been pushing anyone to buy (or sell) which is uninformed and erroneous.

          The game hasn’t changed. RE sales is a pretty straightforward career:

          Mr. and/or Mrs. buyer
          1. Why are you looking to buy/lease?
          2. Have you considered the alternatives?
          3. What specs are you looking for?
          4. The prices of recent comps for those specs are $A.
          5. Total cost of the home that you are considering, would be $B.
          6. With your financing choice, including PITIA, that breaks down to $C monthly.
          7. That is D% of your monthly gross income.
          8. What would you like to do?

          I’ll stand by that.

          The difficult part to RE is getting in front of the right number of people to ask these questions, and learning how to get honest answers when you do.

          This is why those that are doing right by their clients will continue to do well. Those that have either just been order-takers or overly self-interested will have made themselves obsolete.

          1. camsavem

            It is amazing to me that industries are no longer capable of policing themselves and just doing what is “right”.

            While being questioned by Congress, the CEO of now bankrupt Lehman Brothers, stands by himself being awared over $350,000,000.00 over the last six years………to bankrupt a company.

            He said the Board believed he was being “fairly” compensated…..

            Realtors, mortgage brokers, banks, appraisers, and insurance companies all “believed” that tear down in Santa Ana was worth 3/4 of a million dollars, and Pedro, the day laborer could afford it.

          2. AZDavidPhx

            IrvineRealtor –

            You will not take the pledge will you?

            I never presumed anything about you. I merely asked you to take the pledge. Certainly since you have not been steering people one way or another, you should not have any problem with doing it.

            But instead, you resort to smoke and mirrors Mr. And Mrs. Buyer and do not answer the question.

            Keep toting the water for your union, soldier.

          3. IrvineRealtor

            I will take your pledge, David, as soon as you take the pledge to stop beating your wife.

            Maybe you see the inherent presumption now?

            No smoke, no mirrors, no gunga din.

          4. AZDavidPhx

            False analogy, IrvineRealtor. Your wife-beater card is not going to wash.

            The pledge is not a loaded question. It presumes nothing about you. In fact it should be very easy for you to accept.

            The organization that you belong to is on record telling consumers that now is a good time to buy. I have made an argument that they should not issue such statements because it gives people the impression that the organization is attempting to persuade people for its own financial gain.

            I am asking you to take the pledge that you are not going engage in the same behavior because you have a conflict of interest.

            It’s just being intellectually honest. It does not mean you are a bad guy or a slimebag. It just means that you are honest.

            That’s it. Just admit that the conflict of interest is there and admit that people should come to you when they want to find a house but that your organization should not be attempting to manipulate them by issuing statements that claim that “now is a great time to buy”.

            I don’t understand why you are having such a hard time with it.

          5. IrvineRealtor

            The analogy was spot-on. The problem was simply that your question was perjorative in nature, and self-impugning. It was an unfair question from the start, as was my example, in return.

            I think your fair request is “Will I agree to not try to convince people that it is a good time, or a bad time to buy, and let them decide upon their own merits and situation?”

            To that – No problem. Done. I agree, wholeheartedly.

            I think if you take a look at my initial post you’ll find that I’m not carrying the torch for the NAR. It’d be much easier to let it go, post nothing, and be on my merry way if that were the case. I’m just pointing out the large obstacles in the way of making the change. Something that I thought might add to the knowledge pool here and enlighten some. Take it for that.

          6. Naive

            Wow, an honest sounding realtor in socal. For what its worth, when prices have fallen to year 2000 levels, I would like to hire you to find a good house in Irvine.

      2. MalibuRenter

        There is another reason to defend the “don’t cause panic” provisions from the NAR. Causing panic has historically been done a part of a plot to get people to sell really cheap to people the realtor knows/conspires with.

        I just love bashing the NAR, but I’m ok with that provision.

  14. Sergio

    I couldn’t agree more. Everyone across the board in every profession should be held accountable for what they advertise.

    1. Food

      Couldn’t the home buyers just sue NAR if their home price goes down in value? If not, the home owners should be allowed to do so.

      1. AZDavidPhx

        No, because the people they steer into the time bomb loans do not do their homework so it is technically their own fault.

        People like IrvineRealtor here hide behind the cloak of plausible deniability. He knows, I know it, most everyone on here knows it.

        They put the word out, embrace the hype, get the buyers all riled up and amped about housing and then they take their cut of the spoils and are off to find another buyer.

        I don’t have a problem with that as long as it’s all honest from the front. My problem is with guys like IrvineRealtor and the NAR portraying themselves a neutral consumer advocate that is looking out for consumer interests when the reality is that they are looking out for their own interests which are to get the deals closed quickly as possible whether it is in the consumer’s best interest or not.

        Like I said, I don’t care if you want to sponge off of consumers. Just don’t pose as a member of a neutral organization.

        1. Food

          Well, David from AZ. I like most of your posts. They are not only entertaining but address the problems point blank and logically.

          In this country, you can just about sue anyone for anything. The thing is that it takes some money to do so, and chances are the judge will throw it out as frivolous. However, in this case, I do not think it is frivolous. I am actually encouraging the home owners who bought at the peak to sue NAR. What do they have to lose if founding the right lawyer who sees the same ethics.

          A few months ago, NAR of southern California sent out emails to all realtors to congratulate them on the higher conformal loan. It made me sick. They were lobbying to artificially decide which neighborhood is elite and which is not. To be fair, every neighborhood should be equal. No neighborhood deserves to have higher conformal loan amount than others.

          NAR has to go down in flames along with David Diarrhea.

        2. formerbanker

          David, I appreciate your passion, but I think your angst is misdirected…why would you ever think that NAR is even pretending to be a neutral organization ? The mission statement is on the website, and it’s pretty clear: “The core purpose of the NATIONAL ASSOCIATION OF REALTORSĀ® is to help its members become more profitable and successful”. If consumers think that mission means they will get ‘neutral’ information on real estate markets and trends from NAR, then that’s just crazy (and lazy).

  15. Matt

    I’m not sure why the ethics of RE agents needs to concern us, except that the product they are brokering costs more than anything else people will buy in their lifetimes.

    I suppose I could see the argument that what havoc is wreaked in one transaction affects the value of what a person uninvolved in a given transaction holds, but that’s a basic problem in any market, it’s just magnified by the cost of goods in this market.

    I guess the analogy I’m thinking of is the next most expensive thing a person buys, cars. Inherently, people don’t trust car salesmen one bit. That market then functions pretty well.

    I wonder if the problem is rather in the brokering aspect rather than the selling aspect. We regulate the heck out of stock brokering because of huge principal-agent problems. We don’t regulate pure market sales as much because the market self-regulates to an extent.

    I dunno; this is mostly just rambling. But I wonder if that’s the crux of the problem; real estate agents are AGENTS not SELLERS.

    1. AZDavidPhx

      It’s different than the car saleman analogy because the real estate agents spread junk economics among the population.

      There is also no organized Nation Association of Car Salesmen cartel that lobbies the government to look out for its own greed-driven interests.

      They put out press releases that propogate the myth that house prices only appreciate.

      They train their clients to associate housing with investing and to ignore the actual costs.

      That’s the problem. Other than that, I agree with you.

  16. Sharkie

    Hey Irvine Renter —- I gotta throw this in here.

    OK —- to be sure:

    Up to now, as a 5-6 month avid reader of your blog, I have definitely felt that all of your assessment have been pretty straightforward conclusions, based upon some dead-on analysis of the markets, de-regulated way-too-easy credit, housing over-valuation and whatnot — I’ve followed you completely and have been inspired by your clarity.

    I will not try to poke any holes in your logic. You HAVE been completely on the money. And I would assume that you would continue to be, in forecasting continued severe devaluation of homes, if the basic rules of the financial universe stay constant.

    But what happens if the Fed and the Government succeed in flooding so much capital into the system that the floodgates of Credit open back up wide again?

    With unlimited backing of cash, as they’ve essentially stated they’ll get now, aren’t the banks once again free to lend to their heart’s content to subprime-quality buyers, at low interest rates, without any fear of dealing with the pain of defaults? After all, the Government has demonstrated now that they’ll happily just print more dollars and fill their empty bank vaults right back up again!

    So with banks loaning freely and easily again, to anybody with a pulse again, and credit being loose as can be — essentially with the dollar depreciating madly, right??? —- won’t housing prop right back up???

    I guess I’m asking about hyperinflation. Which it seems like the Government is poising everything to accelerate into with the guarantee off “unlimited cash and funding.”

    Isn’t this possible????

    Of course this speaks of a dark plan to allow the dollar to slide into COMPLETE worthless-ness, but that seems like a done deal, too.

    In short — isn’t the Government’s new stated Pledge to capitalize / nationalize the banks a severe “Game Changer” to the whole logic of a crashing housing market? A fundamental re-wiring of the basic laws of the market?

    Unlimited Cash infusions. Who wouldn’t return to loaning freely if they had unlimited cash?

    These “overpriced” houses might suddenly look like great deals once the dollar won’t buy squat anymore, when the world markets dump the diluted U.S. dollar like mad since they know our printing presses are running 24/7.

    Again — Irvine Renter — my full respect to you!!!! I just can’t quite remedy these latest currency / banking developments into the crashing housing market. It seems like loose, free amounts of rapidly-devaluing cash could start flowing again, making housing stabilize, even temporarily roar again. Assuming they start lending loose again, why wouldn’t they? Free cash from Uncle Sam to make it all better, no matter what.

    I’m just askin’.

    Sincere Thanks for your time and Kind Consideration!

    I am sure that in my passionate writing of this blog comment, I may be unaware of a critical bit of info that would temper my assumptions, please do enlighten me if this is the case.

    Crazy times.


    Mike T.
    Mission Viejo, CA

    1. nefron

      Mike, I was thinking today exactly what you are asking now. Along my questioning of the theory that prices will fall further over in the Forum, I have also been wondering if this crazy plan of the government is going to stop falling prices in their tracks.

    2. Food

      Sharkie aka Mike,

      With too much injection of money, there is a risk for the whole currency to collapse. The assholes Bernanke and Paulson are experimenting with their personal ideas in a macroscopic scale. Since there are millions of lives at stake, to me, it is best to take the safest approach. That is to do nothing and embrace a deflationary economy. Sure, a lot of irresponsible folks with no savings when out of jobs will be hurting, and some companies skating on thin ice with asset to debt ratio close to 1 or lower (such as IBM) will go under. That is just normal weeding.

      Irvine Renterā€™s analyses have been good. However, the wild cards as you have pointed out are not clear what the outcome would be.

      Paulson has 400M to 1.2B dollars worth of Goldman Sachs (GS) stocks of any sort. The way he is handling this situation exposes GSā€™s exposure in ALT-T derivatives. GS seem not to have participated the sub-prime feeding. However, when GS saw their peers loading up on sub-primes, afraid to miss the boat they chose to do so with even more toxic ALT-A. I would bet that GS would fail with Paulsonā€™s evil plan.

      I thought Greenspan was an idiot. Bernanke is a vegetable. His doctoral paper on the Great Depression could easily be concluded up after reading the first few sentences. He did not take into the account of lower food production due to the dust storm and others. I will take the chance of a chimpanzee making decisions than Bernankeā€™s stupid ones.

      I want to suggest for any government bail outs to occur the company has to declare bankruptcy first with the shareholders losing all. The directors and senior management will be sued for their evil deeds. That means financial ruins for them all. Fuck them all.

  17. nefron

    Oh, and I don’t understand why all of you are blaming only real estate agents for this mess. They are in SALES. Does a shoe salesman or a car salesman think about whether their sale is ‘appropriate’ for their customer, or whether their customer can truly afford their purchase. Stop blaming the salesman. If Americans are incapable of using their brains then they deserve what they get.

    1. AZDavidPhx

      Oh, and I donā€™t understand why all of you are blaming only real estate agents for this mess

      Your argument is a straw man.

      The actual argument that is being debated is not who caused the mess. The argument is Why are they still spouting the same junk economics that played a role in the original problem

      I propose the argument that real estate agents should not be telling people to buy houses. I have to substantiate that argument with why. All we have to do is look at the role that such behavior played in the inflation of the bubble. It does not lay blame squarely at the feet of real-estate agents. No, it identifies one problem that needs to be resolved.

      We need to discuss these problems and find solutions so that we do not repeat history.

      It’s basic problem solving. When you encounter a large problem. Break it up into sub problems and resolve them individually.


      1. nefron


        You need to direct that ‘duh’ at the people who could not afford a price prior to exotic financing, never had their salary change beyond a cost of living, and then woke up one day and could suddenly afford a $600,000 house. Did mathematics change? A dollar is a dollar is a dollar.

        Maybe they should have paid attention in math class instead of thinking they’re too cool get an education.

        Sorry, you’re advocating just more of the new American way -absolution of any personal responsibility.

        1. AZDavidPhx

          Very good. Let’s bring out the debtors prisons. People will now be held accountable.

          Is the problem solved now that we have punished the last group of greater fools that entered the market?

          Don’t we need to look at mortgage backed securities and mortgage origination?

          Don’t we need to look at the propaganda being put forth by the NAR?

          Don’t we need to ask why the government has been pushing its “ownership society” and giving home buyers tax break incentives in exchange for 30 years of slavery?

          Isn’t there more to this problem than “personal accountability” on the part of a dumb home-buyer who is for the most part responsible but drank the Kool-Aid and became the greatest fool when the music went off?

          Isn’t it a little more complex than you are giving credit?

          Think about it.

          1. nefron

            Wait a second, Dave. We weren’t talking about who gets punished over this national financial mess. We were talking about realtors’ responsibilities in selling homes.

            In a way, I do agree with you. I agree that there is shockingly little ethical/moral behavior in society these days, which certainly includes realtors. I agree, many realtors (wrongly) will say just about anything to sell a house. But really, do Americans no longer have to think independently? I had been looking for a house this summer and the agent I was using actually tried to tell me that house prices are rising. I can’t think for myself, and evaluate her comments about this exceedingly major purchase I want to make? I have no responsibility at all for this major financial decision? You bet I’m through with her.

            Yes, it is more complex than just the buyers. The mortgage originators who sold their bad mortgages should be charged with fraud, because that’s what it was. I agree with you there, there is more blame to go around. I just have no respect or sympathy for buyers who engaged in irresponsible behavior. For several generations it has been difficult to get a mortgage and buy a house. Why didn’t these buyers stop and think about why the heck they could suddenly ‘afford’ a home that they never could have afforded before? A dollar does not suddenly become worth ten dollars. In all the time that house prices have been tracked, have they never come down, but always gone up? I think people don’t want to admit their own culpability for their poor finanial decision, so they blame the realtor.

  18. CCR

    to IR/Mr Roberts: i got the ebook. 4.95$, this is cheap for the value, and considering it has likely provided quite a few people to buy at peak.

    to AzDavidPhx and IrvineRealtor, here is the REAL pledge that Irvine RE agent should do: at 4.95$, providing the ebook to their customer to read would actually be the best advice …

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