Open Thread 4-18-2009

There seems to be bullishness in the air. That tells me we are nowhere
near the bottom. Bullishness equals denial; we must go through
capitulation before this is over with.

I would like to share with you some interesting blog posts I read this week at The Housing Chronicles Blog,

SoCal home prices stabilizing? (I doubt it)

When will the housing market rebound?

San Diego Economic Forecast

Kashmir — Led Zeppelin

Oh let the sun beat down upon my face, stars to fill my dream
I am a traveler of both time and space, to be where I have been
To sit with elders of the gentle race, this world has seldom seen
They talk of days for which they sit and wait and all will be revealed

Did you see Jim the Realtor on Nightline? It is a very good story.

Do you remember my post The Fallacy of Financial Innovation? It took a while, but it appears as if Ben Bernanke has come to the same realization. In the words of Calculated Risk, Hoocoodanode?

Is this bullish? REO Drives California Home Sale Increase. I don’t think so.

I hope you all saw the great map showing the wave of unemployment over time at Slate Magazine.

Let’s not forget why REO inventory is not greater than it is: US Foreclosure Filings Jump as Moratoriums End

A possible explanation of shadow inventory from Calculated Risk: Some foreclosed homes too damaged to sell

What are you doing this weekend? It looks like beach weather out there…

55 thoughts on “Open Thread 4-18-2009

  1. OC Progressive

    To follow up on last weekend’s post about housing in markets adjacent to Orange County, here are some facts from

    The goods movement industry accounts for 14% of the payroll in the R&SB; Counties, and the jobs suck. As a caveat, there are many projections showing huge growth in this industry, but first quarter volumes through the ports have dropped by over 18.2% over the previous year.

    Unfortunately, the jobs ain’t that hot, dominated by temp agencies.

    # The warehouses of the Inland Empire form the largest single concentration of warehouses in the world. 366,000,000 sq/ft of warehouse space.
    # Riverside and San Bernardino counties lead the nation’s largest metropolitan areas in unemployment.
    # The Inland Empire has the third highest percentage of housing units in foreclosure among large metropolitan areas.
    # Only three percent of workers in blue-collar warehouse jobs earn a basic family wage.
    # 118,000 workers are employed by warehouses in the Inland Empire
    # Over 53,000 of warehouse workers are hired for part-time jobs through temp agencies.
    # Between 1990 and 2007, temporary employment in the Inland Empire grew by 575%.
    # Over 43% of all U.S. imports come through the ports of Los Angeles and Long Beach. Many of these goods are then shipped by truck or rail to warehouses and distribution centers in the Inland Empire.

    No jobs in construction, low-paying jobs in warehousing.

    Depression in the Inland Empire.

    1. Freetrader

      Well, everyone to the barricades then, OCP. Let’s eliminate all those warehousing jobs, shall we? Then things will be much better for the unskilled workers in SB and Riverside counties, I am sure.

      1. OC Progressive


        “Everyone to the barricades?” Sheesh.

        Although this information comes from a union site, as far as I can see, it’s factual, and it relates to housing prices because the real basis of housing and rental prices is ultimately income.

        I’ve heard in the past how the logistics industry was creating high-paying jobs that support the regional economy. Turns out that a very high percentage are temp jobs, where the laid-off workers don’t even qualify for unemployment benefits.

        If imports stay low, the effects are disproportionately felt in the Inland Empire, and for paycheck to paycheck workers, this translates into not being able to pay rent.

        1. Freetrader

          I too am sorry that the working folks of Inland Empire have been betrayed by The Man, but you do provide some contradictory information e.g., if only three percent of the jobs pay a ‘basic family wage’ — whatever that is — then that wouldn’t provide any basis for a decent rental market in IE, even in boom times, since presumably, all workers are either living in poverty or on some kind of government assistance. So the loss of these jobs wouldn’t seem to affect either the rental market or the o property market in IE, much less OC.

          Putting aside the union-produced agitprop though, there is both cause for concern and hope in the IE — concern because world trade has been so depressed lately, which indeed will temd to eliminate logistical jobs (especially the termporary ones) but cause for some muted hope exists, since the economy seems to be recovering faster than anticipated, and if imports rebound, those temp workers will likely be snatched up again, hopefully in the long run to permanent positions. All kidding aside, I share your concern about the economy becoming compartmentalized into a ‘professional class’ of permanent employees and a ‘laboring class’ of temporary and easily-disposed of workers. However, the situation I’ve described is what currently exists in Japan, and is the result of less flexible labor laws than we (currently) have in the States which make employers very reluctant to hire full-time, and consumer driven recoveries impossible. Our system, with all its faults, should recover faster and allow those most at risk to get back to work more quickly, ‘family wage’ or not.

          1. hormiguero

            “the economy seems to be recovering faster than anticipated”

            pass that spliff to the left, err… right, in your case…

          2. Freetrader


            We are getting way off topic, my friend.

            There are plenty of signs of hope in the economy…if you think I’m smoking drugs, then you are the one not paying attention.

            The issue at hand is how that affects RE prices in OC and Irvine. The overall economy is only an indirect input to real estate prices.

            Also, if you think you can understand my politics based on one post in a RE blog, then you are a fool.

    2. brea

      IE survived the 90s before a lot of the warehouse jobs came. More people will just have to commute now. Corona and Riverside is just not that far from any of the OC/LA jobs. We even have the Metrolink now. I drove from Perris to Costa Mesa for years back in the 80s. At least gas is now reasonable.

      Some of the high unemployment numbers in the Inland Empire is due to commuters and lost jobs in Orange County and LA County. Regardless of the jobs losses here in the IE, our prices will contribute to the pressure on prices in OC and LA. Since some buyers will commute rather than be a debt slaves, IE will bleed off some of the demand.

      1. LC

        There are basically more jobs in OC than people who live here, if you look closey at the employment stats. There are certainly many communter.

    1. Mr. B

      The time when you wake up and stop being a “chump” is when the realization occurs that 35-45 percent of your family’s livelihood every year is going in large part to subsidize make work public employee jobs, as well as free goodies for the trailer trash and illegals. The people who constitute roughly 51 percent of the electorate, pay less than 10 percent of the income tax and who vote to make sure that the situation continues – rendering your vote null and void. 😉

  2. LW

    “The unvarnished truth is what sells.” – Jim from the Nightline story. So true. (At least when it comes to people who are willing to break out of their trance of denial.) I used to work for a lawyer like that, so yes, honest realtors AND honest lawyers exist.

    What was up with that place with two bathrooms right next to each other? Odd.

    1. tlc8386

      You are right their are honest RE and lawyers even though here many of us like to rant me included. Along with the taxation issue everything is due to EXCESS–

      The bankers ect. took EXCESS in pay –billions worth and then wanted our tax dollars to save the banks–what we need is to be saved from them.

      So I can totally understand people getting angry over taxation. Even though the percentage of what we will pay in higher tax is nothing compared to say what Goldman Sachs paid at 1% while getting Tarp money and giving out millions in bennies.

      This is really where the little guy should divert his atttention to.

      And I am sure it did help the government understand that we have an unfair tax situation. The rich do get away with more along with more deductions as well as the poor getting more free stuff. And the middle class feels like they have to be the ones always paying the bills.

      We are in a trap of printing and paying higher taxes due to yet again the E word–EXCESS.

      Regulations will come into play, the rich will cry a bit longer and the poor will continue to bitch and the middle class we continue to pay for it all until this mess gets a total overhaul—and that we can all HOPE for!!!

      Obama seems to be aware of it all–and that is a first!!!!

  3. MalibuRenter

    I have been doing a back of the envelope calculation on damaged foreclosures. There are estimates of 600-700,000 “missing” foreclosures. Those are owned by the bank, but haven’t turned up on the market in 3 months.

    Let’s say every single one is damaged. Highly unlikely, but humor me for a moment. There are approximately 3.8 million homes for sale currently. Putting 20% new supply would reduce prices some. However, it would mess with the comps. There is not a bright line between moderately neglected, needs substantial repair, and bulldoze the home and start over. In OC, the bulldoze and start over homes are the ones that would mess with the comps the most. That’s because land and entitlements are so much of the price. Stated another way, prices are still far above the cost of replacement construction.

    In other places, like Palm Springs, Riverside, or Victorville, this is not the case. Many thrashed homes are approaching the “Detroit limit”. That’s where the net proceeds to the bank of selling are less than the costs of selling (e.g., commission, title insurance, unpaid taxes, HOAs). The tax assessor sales in 2014-2017 are going to be amazing. For the first time, they will include large numbers of actual houses.

    1. newbie2008

      Are the missing 600k to 700k FC concentrated in any specific location? I can see why try to sell for $10k — just let it go the the tax collector’s auction.

      The TEA protest is a good way to let them blow off steam. Other countries and political parties have riots instead. BO’s HSA report labeling dissenting opinions as right wing extremist and possible terrorist is very troubling. The mainstream media news marginalizing the protesters are adding fuel to the fire. Since IHB has disagrees with the bailouts, reinflating the housing bubble, promoting moral hazards in banking/lending, etc. that would make ….

      1. MalibuRenter

        This is just a guess, but I’ll bet they are in several types of places. 1. Areas with a lot of crime, where foreclosures get trashed and stripped quickly. Think Detroit. 2. Areas with very low home prices, where homes sell for the less than the cost of new construction. Huge parts of the Rust Belt qualify. 3. Areas which are overrun with foreclosures, and they just can’t get to them all. Think Las Vegas, Miami, Phoenix, Merced, Stockton, Palmdale, and the San Fernando Valley.

        I am unsure about some really high end abandoned homes which aren’t for sale. I’ve seen a number of them in Malibu, Calabasas, Agoura, and Topanga. They have the look of nice homes, but no one has lived there in a year or more. Dead landscaping, but no theft or damage.

        1. Geotpf

          Maybe the owners of the high end houses you are talking about want to sell but realize they can’t get what they want, so they are waiting until the market recovers (might be a long wait). Of course, I don’t understand why they don’t rent the place out in the mean time. Houses in good parts of town are very easily rented, if the price is right, and anything is more income than just letting it sit there.

      2. Woodbury Renter

        Two thumbs way up for this observation Newbie. I am also troubled by the mainstream media attacks on anyone who dares question what the annointed one and his crooked (Clintonite) cronies are doing.

    2. newbie2008

      Any 50A of real farmland with water available as FC in the inland empire? I saw some small SFU at a reasonable price, but on WTF priced farmland.

  4. Pwned

    As that Slate unemployment map shows, we’re now at the moment a lot of us bubble watchers have been waiting for for a long time. Yes, it’s scary and it’s insane that the USA got to this point. But at the same time there’s a sense of relief that we’re finally here, watching the painful process of reality’s return. This bear rally is just a phase in that shift. If we can get back to a place where median houses can be purchased by median income earners without toxic financing, where people don’t feel like they have to drive luxury SUVs to fit in, where everyone doesn’t pin all their hopes and dreams on phantom free money, then hopefully we can instead focus on innovating and improving our lives beyond material gain.

    1. IrvineRenter

      You must be feeling idealistic this morning…

      I hope you are right, and this debacle causes a real change in our society. I have my doubts…

  5. MalibuRenter

    The Housing Chronicles article you linked to says “Yet even the Case-Shiller Index is showing a flattening of price declines”

    I looked at the most recent data and this is incorrect. 8 of the 20 cities in the index are dropping at their fastest rates ever. The 20 city index itself is dropping at its fastest rate ever. Every city in the index has been dropping every month since September.

  6. Joe R

    I really don’t understand the animosoty shown here towards the “tea party” demonstrators. With the current administration continuing the foolish policies of the previous administration, and upping them some to boot, I think rational people can see a need for dissent to be aired.

    The whole idea that the tea partiers already have representation and therefore should shut up shows a fundamental misunderstanding of the situation in the American colonies, and of our current situation. In the 1700s, the British government ruled under the philosophy of mercantilism. In this, inefficient domestic industries wer propped up against foreign competitors with huge tarriffs.
    The colonists suffered under this system because
    because they were mostly engaged in
    agriculture and needed to import manufactured
    goods. We are seeing the same thing today,
    where poorly run domestic industries are being
    subsidized at taxpayer’s expense. A large bloc of the voting public has no stake in the
    private economy (or so they think), and blindly
    votes for the ones who promise the most handouts.
    never mind that the handouts are dwarfed in cost by these handouts to the rich slackers running our banking and insurance industries.

    {note to website manager:
    the typing on my screen frequently goes off screen, so that I can’t see what I’m typing!
    very annoying!}

    I didn’t go to a tea party, but I do have sympathy for the ones among them who see the errors of both major parties.

    1. Geotpf

      If you want stuff (schools, roads, police, fire, hospitals, national defense, social security, etc.), you have to pay for it via taxes. If you don’t want stuff, move somewhere where there is no stuff, like Somalia.

        1. Geotpf

          Ok, how do you plan on paying for schools, roads, police, fire, hospitals, national defense, social security, etc. without charging taxes?

          1. Woodbury Renter

            If I could pay my $50k share of taxes and stipulate that the money could only be used for schools, roads, police, fire, hospitals, national defense, social sec etc then I would not sympathize with the tea protestors. The fact however is that this money is being used to greatly expand the bureaucracy. How many czars do we need? And now the bureaucracy is so bloated that you need to hire a bureaucrat just to manage its performance? Only a life-long politico thinks in these terms. Did you see the actor from House that quit the show to take a fed gov’t job as “white house liaison to Eastern Indian Americans”. Are you kidding me? They are inventing gov’t jobs just to employ all the little political partisans. And all these jobs carry life long gov’t healthcare and pensions. This is tea that we don’t need.

      1. brea

        I was at a tax rally. I realize the need for taxes. My complaint is more taxes. We paid for all those services in the 90s. Roll those budgets back.

        Just because the state has less revenue, shouldn’t meet I have to pay more taxes. The state can do now, what they will have to do when they drive away my husband’s job and I will be paying no taxes.

        And why is it that when they run out of money, they threaten Police and Fire. Fully fund essential services and divide up what is left with other less critical services. We have been throwing money at schools for years and the results are not there. Roll it all back.

        Glad to get that off my chest!

        1. Geotpf

          Revenue comes from taxes. If tax revenue is down, you have to raise tax rates or cut services (schools, police, fire, road construction, etc.). It’s as simple as that.

          In fact, the housing meltdown is a major contributor to this. If your house is now worth a third what it was three years ago, you pay one third the property taxes. And, thanks to prop 13, the property tax revenue collected won’t be going back up when the housing market does.

  7. Newport Renter

    I didn’t get the cartoon about the checks going into the mailbox of the taxation protester. Are all those who are against excessive taxation getting social security and medicare checks? I don’t think so. Also, I assume that most people who are collecting unemployment aren’t exactly taking time out to protest excessive taxes. In fact, those that feel excessively taxed, and expecting additional taxes on the way, are probably really fed up with the extensions of unemployment payments (i.e., taxpayer dollars).

    I thought the anti-tax rallies were a fine expression of the people. No less and no more than any demonstration. Why the liberal antipathy about people not wanting to return to the days when taxes were 70 percent? The liberal anger out there is downright scary. The keys to the kingdom have been delivered to “the One” and it’s not enough? I think the libs have forgotten that 62 million people voted for “the other guy” and that this is America – -it’s OK to disagree with the current Administration’s policies. What about the 8 yeas of anger thrown at Bush? Why i that OK and this isn’t? I’m an independent and not happy with either party, but the anger on the left really amazes me. And how it creeps into an Orange County housing blog is odd…

    1. Gindy

      I get it.
      The first people to complain about being taxed are the ones who are getting the most benefits.
      My sort of rich neighbor is a perfect example. He uses the roads with his big SUV, the road crews to clear away the snow so he can get to work, the fire department and ambulance when he breathes in poison ivy fumes and sets his pond woodlands on fire, the police when his alarm goes off accidentally, and the locally excellent schools to teach his kids so they can get scholarships to private schools.
      He is also the very first one to bitch about paying too much tax when in reality he pays less than his less wealthy neighbors.
      Get it now?
      The boobs who “demonstrated” were a sham. It was damned funny to see some dope who makes less than one month’s salary of a rich puke pulling for the same puke to pay less taxes.
      I just wonder when these people will start supporting their OWN financial best interests instead of the corporate rich pukes.

  8. jimfromJaxFla

    Well said JOE R !! Yes The Errors are SO OBVIOUS…
    The powers that be want We The Sheeple to believe this is a left-right paradigm. Many of us in the Jax Fl Tea Party had signs not for or against one Party, but focusing on the real issues.. signs like, “Read the Bills” before signing, “Where’s the 12.3 trillion?” “Audit the FED”.. Anyone see the movie “The Obama Deception” ? It’s about the driving force behind the Leaders…

  9. newbie2008

    Read the Bills before signing. How novel of a concept. Should apply to the congress, senate and people taking out loans or signing contracts.

    The economic mess is a result of both greedy parties and the greedy people. It was not a true representative govt., but the best govt money could buy.

    Too bad the money that brought the govt. didn’t have the people’s best interest at hand.

  10. js


    Back to back posts. One says there is bullish sentiment and the other says things are bearish…

    which one is it smarmy blog guy?


  11. Newport Renter

    Geotpf, life isn’t that simple to break down. The protesters appear to be protesting excessive (in their view) taxation. Maybe the left isn’t angry at the right about the anti-tax rally – -maybe it’s just about not swooning for their Chosen One. I’m not sure why they thought the right would like him better after the election. Anyway, most people are fine with paying taxes for the things you mention, but when it comes to giving more money to bail out idiot bankers and Wall streeters, among others, they balk. And they have every right to express that sentiment. I like a vibrant America, and the freedom of expression is an incredible right, as long as it’s peacefully done. Only in this great country is that possible.

  12. John

    hi IR,
    I have been watching the housing in upland, claremont area and also Irvine. most of the sales are short sale or REOs and very few regular sales. Almost all regular sales are priced atleast 10% (or more) than the similar distress sale. So, do you think when these Subprime and ARM adjusted sales slow down in next 6-7 months, the market will go up because there will be more regular sales with owners not budging off their prices?

    1. IrvineRenter

      Actually, I believe the opposite will happen. I have a post coming out tomorrow about the pent-up supply caused by the foreclosure moratoria. There is no shortage of distressed homeowners, but there is a shortage of available supply due to the moratoria. That is going to change. New supplies of REO will be coming on the market starting about 6 months from now and continuing until every overextended homeowner is flushed from the system.

      1. RichW

        See my posted article below about the quantity of homes being held back by the banks. Might tie into your post.

        Thanks for the blog!

  13. Joe R

    If more taxes will solve problems, why
    not just increase the tax rate to 100%?
    I think it’s obvious why not!
    So tax rates CAN be to high. We all
    agree on that.

    Second, taxing the rich at high rates
    doesn’t seem to lead to fewer rich.
    What it does is cause money to flow
    into enterprises that shelter wealth
    against taxes, instead of enterprises
    that generate income (which pay income
    tax!) So at a certain rate it becomes
    counterproductive for the economy at
    large, and revenue shortfalls are
    made up by inflating the currency
    or massive debt, both of which hurt
    ME. So we have to figure out where
    taxation starts to fail in its goal
    of providing for the general welfare.
    Public input in the form of petition
    and protest is what a democratic
    society is all about. Legislators
    can be bought as we all know and
    cannot be left to their own devices.

    The other big issue of the tea partiers
    that their opponents in this blog seem
    to be ignoring is the bailout of badly
    managed enterprises at the expense of
    well run enterprises. Now I’ll tie
    all of this to real estate. We’re
    waiting for a house we really like to
    fall to about $400,000.(They’re currently in the high $400Ks to low $500Ks.) But if massive
    bailouts of the high end ARMs that
    are about to hit the fan this summer
    go down, and inflation takes off, this
    inevitability in a real free market
    won’t happen, and we’ll be stuck with
    worthless cash we’ve saved. And we’ll
    be stuck subsidizing spendthrifts. And
    we’ll be mad as hell.

    1. Geotpf

      If the majority of the population thinks that taxes are too high (above all other issues), clearly the Republicans (especially Ron Paul types, which are very rare) would be doing better at the polls. The whole “tea party” thing is total BS-people have the aboslute ability to vote for Republicans (and in primaries for Ron Paul types). They aren’t.

      Tax rates should not be 100%, of course. But they shouldn’t be 0% either.

      As for bailing out companies, there are two classes of firms getting a bailout, basically:

      1. Financial firms.
      2. Automakers.

      Without a functional financial system, the entire economy grinds to a halt. It came damned close. Now, I don’t like the exact way the TARP was set up, but something along those lines was needed to prevent a second great depression. Letting 50% of the banks fail in the country was not an option.

      As for the automakers, none of the tea party people seem to notice that Obama basically told them to pound sand (Bush set up the initial bailout of them). It looks like Chrysler will go POOF and GM will be reduced to a small fraction of it’s former self. They are not getting bailouts forever-right now, the government is basically facilitating an orderly wind down of Chrysler and of about half of GM.

  14. lagunalover

    The Tea Parties were not really tax revolts or anti-taxes. They were protesting exorbitant and reckless federal government spending. Both parties are guilty of spending more than we have. I attended a Tea Party and I’m no extremist or right-winger. I even read this blog!

  15. Joe R

    If I ran the tax system, I’d remove
    the income cap on the social security
    and medicare taxes, and keep the
    overall rates low. I’d also raise
    the income caps on 401k/Roth IRA/IRA
    contributions to encourage long term
    savings. Right now, high end wage
    earners pay much lower percentages for
    social security/medicare based on the
    fiction that it’s “insurance”.

    My point is that all points of view on
    the tax codes need to be aired,
    and there can be unjust and unproductive
    tax rates. People who have become
    high end wage earners shouldn’t be
    demonized, or blamed for the current
    situation. Some have done a lot of
    good for our economy and some haven’t.

    A lot of low wage earners are slackers
    who don’t deserve the handouts; but a
    lot of them are people who try their
    best, but make poor choices, or are
    people who get caught in bad situations
    beyond their control. We shouldn’t
    pin them with a label without knowing
    all the facts.

    I am suspicious of what Paulson & Co
    told us about the banking system. If
    that was the real story, why is the
    government balking at taking back TARP

  16. newbie2008

    Why doesn’t the press cover that before the elections BO was against the 2008 bailout for GB’s WS pals and for supporting the auto/union, even with the massive GS money for BO’s elections. In office, he quickly submits a request and gets even more money for his WS pals and now sticks the auto industry’s wage earners and union in back. Why all the support for bailing out WS and hate for bailing out Detroit’s wage earners? Almost no reporting on his change of tune on the AIG bonuses (it’s a contract that we can’t change) vs. the auto unions pension obligation must be reduced (too bad the pension contracts are void with bankruptcy). Pre-elections the vast majority of American in both parties were against the bailout!

    I don’t mind paying taxes, but having police, fireman, city and county administrators making $200,000 to $450,000 is excessive, even in CA.

    The typical W2 income tax payer with high income is paying too high taxes because there are very few deductions and AMT limitations on deduction, on child credit, etc. IMHO

    1. tlc8386

      Wall street had to be saved to hold up all the money market funds along with those that hold bonds and treasury bills. Total banking failure would have resulted in a massive withdrawal which was already happening. Paulson passed bills with no accountable in them just gave them the money. They took it and figure business as usual so their bonus system continued onward. The ensued speed to the problem curtailed the correct stipulations that were surely needed.
      On top of the election approaching.

      The car industry blow up would have spurred massive layoffs and melted those areas already suffering. Their excesses in benefits proved to be the downfall of competition with other car manufactures. The Unions needed to coincide some of these especially why Universal Health care is in the news. Those costs are not sustainable in today’s economy vs. other car dealers benefits effecting costs.

      So the playing field was very uneven.

      The excessive pay here in CA is due to the blow up of housing due to the builders, speculators, mortgage bankers and everyone in RE making obscene money, much of it due to commissions and deregulation in loans. This was all fed by demand.

      So to keep teachers, firemen ect. their pay had to rise in order to keep up with the environment. Excessive pay was expected to live here in Socal.

      Eventually something had to give. The more demand for higher interest bearing accounts lead to the mortgage backed securities and the funneling of selling our homes in prepackaged instruments.

      The bubble was built but not to survive. What our government had no choice was to reflate because of the parallel to Japan. The losses had to stop and be contained. So the pumping and spending.

      More job loss is not going to stop nor will housing stop correcting we are in a period where we have to reinvent ourselves, regulate where the greed took control and repair our entire financial system. New jobs will have to be envisioned people will have to change their bad behavior as well. There is much to repair. I will say Obama knows all of this and is reacting as fast as can be expected. We are lucky to have him as our president.

      1. newbie2008

        In my field the pay is only 10% to 20% more than other states (lots of unpaid overtime for my professional — salaried workers). Private industry jobs in CA are about 20% to 50% more for hourly employees and about 10% to 30% for salaried employees than in other states. That’s not enough to compensate for the higher housing cost. CA city and county workers at the very high end of the scale, while many lower scaled worker such as teacher in small farming communities are very under paid. I know one CA city are in BR where the fireman and police were at $200,000 plus and other cities likely more to follow. Local govt jobs are 40% to 500% of other states.

        If you think that over paid auto workers make US auto at a disadvantage, then over paid investment bankers should make US investment industry at a huge disadvantage.

        By the way, Japan did try to reinflate their bubble and that lead to Japan’s lost generation.
        IMHO and analysis.

  17. darms

    The funny thing (IMHO) is that for married couples making <$250,000 a year, Obama signed legislation that reduced their federal tax burden so that portion of 4/15’s ‘tea parties’ is a bit bogus. And a another frequently overlooked observation is that when a wealthy person gets a $1M taxpayer funded bailout/bonus, that same money would pay for 50 families each to receive $20K, not a lot but enough to live on for a year in most places.

  18. RichW

    Banks withholding foreclosed homes to prop sales, experts say

    05:25 PM PDT on Thursday, April 16, 2009
    The Press-Enterprise

    Lenders for months have been holding back a high volume of homes in the foreclosure pipeline that could further depress home values if they are released at once into the market, industry experts say.

    The artificially created shortage of foreclosed homes for sale comes when there is a strong resurgence of home buying, with consumers finding, often to their surprise, that they must make multiple offers to compete for a diminished supply of bargain homes.

    Meanwhile, financial institutions have been encouraged by federal and state lawmakers to slow the foreclosure process to provide more time to work with borrowers on mortgage modifications in an effort to reduce foreclosures.

    Scott Anderson, vice president and senior economist with Wells Fargo, said also by withholding a portion of foreclosed properties from the market, lenders may deliberately be preventing home prices from falling as fast as they otherwise would.

    A tally by one company that closely monitors foreclosures showed only about a third of repossessed houses are being actively marketed. If this “phantom supply” of bank-owned houses is put up for sale at once, Anderson said, it would probably prompt another steep plunge in property values.

    “The danger is this could be devastating for the banks’ balance sheets and for anyone else trying to sell a house or refinance their mortgage,” he said.

    The banks “would be crazy to flood the market and cause prices to sink. Their own assets would be worth more if they brought the foreclosures in slowly,” said John Husing, a Redlands-based economist.

    Husing has predicted Inland Southern California home prices will stop falling in the next couple of months because of shrinking inventory and growing buyer demand.

    Sean O’Toole, founder and chief executive of ForeclosureRadar, a California information Web site, said mortgage servicers have told him “They want to be careful about putting out too many properties at one time because they believe supply and demand are affecting prices.”

    The median price of an Inland house has dropped 43 percent in San Bernardino County and 39 percent in Riverside County in the past year, but the rate has slowed in recent months.

    Statistics confirm that banks are keeping foreclosed houses off the market much longer than usual, said Rick Sharga, senior vice president of RealtyTrac, a company that monitors foreclosure trends nationally.

    Sharga said RealtyTrac studied the 234,716 bank-owned California homes in its database as of the end of November and discovered that only 34 percent were advertised through the state’s dozens of multiple listing services, which is how bank-owned properties are normally marketed.

    “We were frankly stunned by that,” Sharga said. Usually repossessed houses are processed, fixed up and listed for sale within 30 days, he said.

    While the gradual release of foreclosed properties helps to prop up prices, it also could prolong the real estate recession, Anderson said.

    Other objectives the banks may have, Sharga said, include deferring accounting losses they would have to show once foreclosed properties are sold at depressed prices. Or they may be waiting to see if the federal government will offer them more money for their defaulted mortgages than they could get by selling foreclosed houses on the open market.


    1. RichW

      con’t. from previous:

      Foreclosure Hiatus

      Also, the foreclosure process has been interrupted repeatedly by federal and state moratoriums designed to encourage lenders to modify loans to help financially stressed homeowners keep their homes.

      Two large government-controlled lenders, Fannie Mae and Freddie Mac, in November imposed holiday suspensions of foreclosure-related evictions that were repeatedly extended until March 31.

      At the request of Congress, JP Morgan, Morgan Stanley, Wells Fargo, and Bank of America also agreed to suspend foreclosures of owner-occupied homes until the Obama Administration crafted a mortgage modification strategy.

      In California, legislation took effect in September that requires lenders to give borrowers 30 days notice before taking the first step toward foreclosure. And starting this summer, loan servicers in the state must delay for 90 days the foreclosure of owner-occupied homes or have a comprehensive loan modification program.

      As the moratoriums expire, the number of foreclosures is expected to spike.

      Meanwhile a surge of first-time home buyers and investors, attracted by low prices and mortgage rates and government tax incentives, are competing for a diminishing number of homes for sale.

      Buyers are snapping up foreclosed houses, many of which receive multiple offers, faster than they can be replaced by new foreclosures.

      “Sales are much higher than last year, but we are running out of houses to sell,” said Kim Kershaw, sales manager of the Corona office of Prudential California Realty and an agent who sells real-estate-owned (reo) property.


      According to the Multi-Regional Multiple Listing Service on Tuesday, there were about 21,000 homes for sale in its territory, which includes the San Gabriel Valley, South Bay and Riverside and San Bernardino counties, with the exception of Victor Valley and the Coachella Valley.

      The listing service said that is about half of the 40,000 active listings it had a year ago and the lowest number since March 2006, when the listing service did not include South Bay.

      Of the 5,600 existing homes that sold in the multiple listing service’s region last month, about 3,000 were either bank-owned or sold for less than their mortgages, underscoring the key role of foreclosures in today’s housing market.

      “At the rate they are dishing out these repos (repossessed houses) it will be years before they all sell,” said Kershaw, who claims that the banks are missing out on a great opportunity to clear out their foreclosures.

      “It is spring and we are in the big buying season. This is probably not the time to choke the market with no inventory. It is like not having iPods at Christmastime,” she said.

      1. USCTrojanCPA

        I’ll make an argument that one of the reasons why banks are releasing these REOs as fast as they used to is because they are overwhelmed by the volume of foreclosures and the fact that they are understaffed.

        1. newbie2008

          Most of the work in releasing and selling a REO is with the RE agent. I see an excess of RE agent out there looking for a sale. Maybe 1. close to zero percent govt. interest is a factor, 2. waiting for the BO/TG toxin waste auction to transfer the toxin waste from the bank to hedge funds and finally to the taxpayers.

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