55 thoughts on “WOT 2-2-2008

  1. SawItComing

    AZD,

    I think that web site perfectly exemplifies how completely out of touch, and how foolish, these people are. No wonder so many thought that trees grow to the sky. $12k/week? Insanity.

    It reminds me of the LA Olympics, when people in Santa Ana advertised extra bedrooms for $600-700 per night because all them rich fureners needs places to stay.

  2. SawItComing

    Sorry this is so long but since this is the WOT thread I feel compelled to share this with you all,

    I had the opportunity to meet and speak with Ron Paul and his wife Thursday night.

    I was invited to attend a pre-rally reception by a business associate and I almost did not go because I told him I wanted to do more research on him before I would bother voting for another Republican or, more importantly, another Texan:) It turns out RP is from PA originally.

    Certainly I don’t know how the rest of you feel, but I think this lineup of presidential candidates, now with the exception of RP, is the weakest this country has ever seen.

    As the readers of this blog know, past and current economic policy has lead to this fiasco that will unfairly affect all of us, especially the fiscally responsible.

    As part of my due diligence I researched campaign contributions vs. spending of all of the GOP candidates and was surprised to see how well RP was doing and that he was not spending more than he took in.

    Anyways, I asked him a few questions about business regulation and foreign policy and based on his quick and concise answers I can now personally attest to the fact that this guy is sharp as a tack, witty, and really knows a lot more about sound policy than any other current candidate from either party. I don’t buy into conspiracies much, but I do think that the complete and blatant lack of media coverage, including in the debates, is because the MSN is afraid of the simplicity of this guy’s message.

    His wife is also very nice. As we were entering the room, she was about 6 people ahead of me and had been separated from her husband. Since she did not have a VIP name tag she was stopped by security. She just smiled and politely said “but I’m Mrs. Paul”. A seemingly insignificant thing I know, but could you imagine how Hillary or Barbara Bush would have reacted to the same situation?

    He spoke of how the message of freedom promotes unity, at which point I began to take note of the demographic makeup of the audience. First of all the crowd was huge, spilling out into the lobby. There were people from all walks of life, lots of college kids, longhairs who held doors open for the elderly, guys that looked like lumberjacks standing alongside guys with dreadlocks, men is business attire with their wives, a group of what appeared to be Mennonites, and just plain old folks wearing their work uniforms or slacks. Pretty neat really…. And every one of them with twice the enthusiasm of the attendees of past political events I have been to, namely a GOP rally at the Westin SCP and the Clinton rally at the pacific amphitheater.

    All I can ask is before you make up your minds based on what you have heard about RP, do you own research, like what happens here on a daily basis, and then see what you think of him.

  3. phantom600rr

    Should of added the blue hat with the “C” on Bernanke! Then we’ll have Captain Crunch. lol

  4. zornundo

    I’m getting excited about a development on a property we’re looking at here in Tennessee. Numbers are quite smaller, but the feelings are the same.

    The wife and I found a property that was listed for $119,000. It was bought mid-2006 for ~$118,000. Our agent looked into it and saw that it was about to be foreclosed on. So I’m thinking they’re looking for a knife catcher. Viewed the property last Saturday and it was foreclosed on this past Thursday and put up for auction. Opening bid was ~$97,000. Nobody bid!

    1,872 sq ft, full unfinished basement with two-car garage, but it needs some updating. $97,000 is probably a steal and we could put a lot of work into the property. Unfornunately, there’s not too much to compare it against. The county is not very populated, less than 20k so there’s not too much new construction going on.

    Our agent is waiting on word from the bank about it selling and us making an offer. He suggested an opening offer of $80,000! A 33% decline from 2006. So it’s not just the HOT HOT HOT markets that are declining, but even podunk places like rural Tennessee.

  5. Mr Vincent

    Banks will always sell it “as is”, but you have a right to get an inspection. If you make an offer, make sure to put an inpsection contingency into the offer.

    I am sure there are other things to consider before signing on the dotted line for a foreclosure…I would look into other items that should be checked. Maybe get a real estate attorney.

  6. sarah

    IR-
    Thank you so much for doing this blog. I read it almost every day and really appreciate all the advice given by everyone on this blog. I would like to ask everyone’s opinion on my housing situation. My husband and I own a condominium in Rancho Santa Margarita. We purchased it in 2005 and paid $550,00 for it. It is a 3 bdrm/3bath with a nice back yard/grass,trees.patio…and it is across the street from a great school.
    We have two little boys, so it is a nice setup for the time being. We purchased the property with an $0 money down-interest only loan…which is due to reset in 2010. My husband and I both have good jobs which has helped us handle the $4,000 a month payments for this condo(1st & 2nd mortgage, property taxes and association). However, last September I began having some medical problems and had to stop working in October. Now we are living just off of my husband’s income, have a bunch of medical bills and money is very, very, tight. We had a realtor put our property on the market for a short sale and we received an offer for $450. The bank has approved the short sale but also suggested a loan modification…where they would convert our IO loan to a 30 yr fixed..raising our payment somewhat, but we would actually own the house and be paying on the principal.

    I am not sure which choice to make. We like our little condo and our neighborhood and my six year old loves his school. But, if home values are going way down…does it make sense to hold on to a condominium for half a million dollars. Will it ever be worth that much again or will we always be upside down? I am not sure when I will be able to go back to work, my medical situation is keeping me home right now and money
    is really tight. If we go through with the short sale we will get a mark on our credit, possibly have to pay taxes on the difference and I guess move into an apartment somewhere…but then may be able to purchase something in a few years at a much better price. I’m just not sure what to do…

  7. LB

    Sarah, I would sell and move on. While no one can predict where this market is going, I think that the overwhelming majority believe that is is goiing down further, probably way down. Taking the ding to your credit will hurt in the short term, however, assuming you can get back to work at some point I do not think you will have a problem getting another mortgage down the road. This will especially be true when housing prices have fallen another 20-30 percent which is my estimate.

    To answer your question, yes, you will be stuck in that condo for a very long time if you do not sell.

    Hope this helps.

  8. lawyerliz

    You don’t have to pay taxes. New law.

    Before you sell, bargain with your lender a bit more. See if they will reduce the principal for you. They’re doing it for your buyer, why shouldn’t they do it for you?

    If they don’t co-operate, and they probably won’t, sell and get it over with.

  9. vernonlee

    Sarah, I’m not in a position to advise you. But if you sell and are worried about the credit dings, think about the fact that you’ll have lots of company out there – and that FICO scores are relative measures, not absolutes. Your FICO score will reflect how your creditworthiness compares with other people in real time, not in 2003 or 2004. And banks will have to lend money to someone – and lots of someones will have experienced credit dings.

    Good luck whatever you decide to do!

  10. Jack

    The guy’s views on the gold standard and the Federal Reserve put him too far into John Birch Society territory. The guy’s nutty, but he’s pretty good at hiding it.

  11. ipoplaya

    Sell Sarah. RSM is in a freefall. Hopefully that school is Melinda Heights. I have a friend that lives very close to there, on El Guiro, and for $459K list, the bank has a 3/2.5 1500sf single family home on a 5000sf lot listed on his street:

    http://www.redfin.com/stingray/do/printable-listing?listing-id=1284392

    They paid $629K for this in 2005. At list, it is a 2003 roll-back.

    If you can move your condo for $450K, take the offer and run. Run very fast…

  12. sarah

    lawyer liz-

    Are you sure you don’t have to pay taxes on the difference in a short sale in the state of California? My sister said she saw an article in the Register recently that said California has not passed legislation on this and is not expected to do so. I was under the impression the new law made California a debt relief state and we will not get a 1099.

  13. Laura Louzader

    I really warmed to Ron Paul at first exposure, because I believe his ideas concerning fiscal management are correct.

    However, after learning of his Religious-Right views on certain social issues, I lost interest in supporting him.

    I have a hard time thinking of Ron Paul as a Libertarian, given his views on certain sensitive social issues, and his support of religion in public schools, particularly his support of teaching creationism as science.

    Too many declared Libertarians are interested only in their own freedoms, while they support restricting everyone else’s. Ron Paul is not philosophically consistant.

  14. ipoplaya

    You don’t fax to pay taxes at the Federal level on this forgiven debt. CA has not passed an equivalent law. It is Senate Bill 1055 in CA and it is still being considered, debated, etc.

    If you end up having to take a short for $350K down the line, and CA still hasn’t passed such a law, the taxable income addition will be even greater and you’ll incur an even greater tax liability as a result.

  15. ex-tangelo

    I’m undecided – and I’ve already sent in my absentee ballot and as a non-registered member of any party, I could have chosen the Democratic one, but I didn’t. I haven’t and won’t vote for anyone in this primary.

    First. Any candidate remaining in either party would be an improvement over that mouth breathing colossal screw up Bush.

    Second. I have never seen anyone get people excited like this:

    http://www.dipdive.com/

    Hol. Y. Crap.

    Anyway, my predictions are: Hillary vs. McCain in November. Hillary’s fundraising will destroy McCain’s – she’s already raised $90m to his $30m, and he’s in debt. He’s accepted federal matching funds for the general election, which means his media strategy is forced to go ‘dark’ for months until the convention. (There are ways out of it, but it depends on how bloody he and Romney get) The unassociated entities (remember Swift Boat Veterans?) will make up the difference, but Americans will say “talk to the hand” when these groups (Club for Growth, Limbaugh etc) pull out the old “Hitlery is a lesbian socialist man-hating” screechifying. No one who has been alive these past ten years has not already formed an opinion of Hillary: Her negatives are lower than McCain’s. No amount of “new” revelations will sway anyone.

    The old lines of attack against Hillary personally, and non-conservatives generally, do not work anymore. Like painting the Democratic nominee with “Tax and Spend”: In the latest debate, where Wolf Blitzer asked Hillary and Barack what would the Republicans say about them — that they would raise taxes on millions of Americans? Barack gave a “talk to the hand” response, something like “Bush raised our national debt from five to nine trillion, so I don’t think they are the ones to speak about fiscal responsibility.”

    The public drama of the election will unfold exactly the same, no matter who the candidates are. Driven by rumor, gaffe, prejudice, and massive television ad-buys.

    Ron Paul? His only constituency is message boards on the internets. He’ll have less impact than Nader or Perot or LaRouche. Same with a potential Bloomberg third-party run.

  16. Laura Louzader

    The prices are starting to drop like a decabling elevator in Chicago, as well, even though they still have quite a few stories to fall.

    New highrises in glossy, upper-bracket downtown neighborhoods are seeing massive rollbacks in prices and multitudes of foreclosures. Seems like the reason units in these buildings sold so quickly in years 2003-2006 is that speculators were buying whole blocks of them at a time, 20 or 30 at a crack.

    They are now being foreclosed and/or rented out, and in no case do the rents justify even the rollback prices.

    The rollbacks amaze even me, because these are the most desirable neighborhoods in the midwest. The average net worth of a downtown Chicago homeowner is about $10MM. Yet, a wonderful 3-story coach house, which is a very coveted type of house in this city, is being offered at $1MM, and will probably roll back to the 2004 price of $775, or even further.

    Newly-built mansions in Lakeview that formerly fetched $2MM are languishing on the market at $1.4MM. A mansion in Hinsdale that sold for $3MM at peak was foreclosed and sold at auction for $1.4, even though the place is truly a palace.

    There are just not enough people who have the incomes to support so much upper-bracket housing, so some of these places will be incredible deals- if you even have the income to maintain them at any price.

    Lower-priced properties are also rolling back substantially. A one bed on Lake Shore Drive (in Lakeview, not downtown) that would easily have sold for $250K at peak recently sold for $170K. I would almost have bought at that price, and it looks as though a flipper did, for that sale took place only a month and a half ago, and the very same unit is back on the market at $189K. I don’t believe the flipper will make out, especially since people saw the unit drop so low, and will expect still lower prices in the next few months as the construction loans expire on thousands of units and they go to foreclosure.

    So I’m waiting, even though prices are beginning to look reasonable, because I know they are not, after doing a Rent Parity test on them.

  17. ex-tangelo

    I don’t have any advice on what to do with your home, I can only offer sympathy. Your emotional state must be ragged day and night.

    Try finding a support group for people facing these decisions. There are probably message boards with people struggling with the same situation you have.

    I can’t say enough how helpful and healing it is to be able to talk to people who aren’t judgmental.

  18. ex-tangelo

    Jeeez. Some of my friends got evicted right before the ’84 Olympics so the avaricious landlords could offer high-priced short-term rentals during the games.

    I was renting in San Francisco during their bid for the 2016 Olympics, and really didn’t want SF to get it for that reason. Also the World Cup had just been at Stanford – representing a tiny fraction of the impact of a complete Olympics – and those traffic jams were chaos enough.

    Though any time you get more than three Brazilians together it’s a party. Those were the most party-like traffic jams I’ve ever been in. And the final, sudden death by shots-on-goal? I’ve got permanent hearing damage.

  19. lawyerliz

    I was referring to federal taxes. Obviously, I don’t know anything about California taxes, being a Florida lawyer.

  20. SawItComing

    So be it, at least I can say I voted in good conscience. I can no longer hold my nose to support the party. Both parties are filled with arrogance and mendacity and either candidate will be a dismal failure.

  21. SawItComing

    “..too far into John Birch Society territory.”

    Jack,

    What exactly does that mean? Please explain the goals of the John Birch Society as you understand them.

  22. IrvineRenter

    Sarah,

    Would you be content to live in this place for the next 15 years? Unless we have another bubble after this one, it will take that long for prices to rise back to where you could get out at breakeven. It will take 4-7 years just for prices to stabilize at what will probably be about $250,000 for the place you are in. From there, prices will need to double to get you back out at breakeven. Take the $450,000 and consider yourself lucky.

    You will be able to rent a similar place to what you are in now on only your husbands salary, so it will not greatly impact your lifestyle. I would not be surprised if you could find a similar unit for rent in the same school district. Everyone seems to think a rental means an apartment. This isn’t the case. There are great homes available for rent as ipoplaya’s post demostrates.

    Sell the condo and move on.

  23. No_Such_Reality

    I’m voting in the Republican primary.

    I’ll be voting Ron Paul. Do I want Ron Paul for President, not really. I want the other guys even less. My vote for Ron Paul is a message for the Republicans to field candidates that are fiscally responsible.

    Then again, I may do a write in candidate. Who would be a better Republican candidate? Barack Obama or Hillary Clinton? Would that communicate my current disgust with the religious right, war mongering, bigger government, rape the land, Republican administration?

  24. sarah

    lawyer liz-

    Sorry, I didn’t realize you were from Florida. Thank you everyone for your great advice. Yes, it is very stressful-I even went to the doctor yesterday to see about getting something to help sleep at night because I’ve been so worried about this stupid condo. My husband doesn’t read the blog becuase he is so busy with work but I will sit him down tonight and have him read your responses.

  25. Lost Cause

    “… sold at auction for $1.4, even though the place is truly a palace. ”

    Please keep reminding people here that $1.4M is not a realistic price for a tacky tract home in cookie-cutter Irvine.

  26. Lost Cause

    I cannot believe what you are paying. You can rent very nice in Irvine or HB for about half that. It will be such a burden lifted from your back. No use in sweating bullets for a condo, ever. I sweated over a house at one time, and my expenses went to about half when I sold it. The house never felt that good while I owned it.

  27. awgee

    Sarah – Federal income tax will not be assessed on forgiven debt on debt amounts used for purchase or improvements in tax year 2005. If any of your second was used for auto purchase, credit card debt payoff, vacation, etc., that portion of debt forgiveness will incur federal tax liability. There are a very few other very minor exceptions, but I doubt they apply in your case. Presently state tax liability will be incurred on forgiveness of mortgage debt and will be assessed at your marginal tax rate. Contact a tax professional before making any final decisions.

  28. ex-tangelo

    Sale History
    Zestimate: $644,000
    04/12/2007: $682,000
    07/27/1994: $232,000

    Sale History
    Zestimate®: $669,000
    06/24/2003: $545,000
    11/25/1997: $215,000
    08/03/1994: $238,000

    Sale History
    Zestimate®: $712,500
    04/14/2005: $809,500
    04/02/2003: $542,000

    Sale History
    Zestimate®: $756,000
    04/06/2005: $823,000
    04/02/2003: $603,000

    Sale History
    Zestimate: $667,500
    05/23/2007: $699,000
    05/24/2002: $502,000

  29. ex-tangelo

    Doing the Zillow invasion of privacy thing around the neighborhood…

    Sale History
    Zestimate: $644,000
    04/12/2007: $682,000
    07/27/1994: $232,000

    Sale History
    Zestimate®: $669,000
    06/24/2003: $545,000
    11/25/1997: $215,000
    08/03/1994: $238,000

    Sale History
    Zestimate®: $712,500
    04/14/2005: $809,500
    04/02/2003: $542,000

    Sale History
    Zestimate®: $756,000
    04/06/2005: $823,000
    04/02/2003: $603,000

    Sale History
    Zestimate: $667,500
    05/23/2007: $699,000
    05/24/2002: $502,000

  30. George8

    sarah:

    I’m proud of you that you have looked at this condo ownership bad timing square at the eyes. You are right about bringing your husband on board and do things that will remove the root of your financial worry. Being able to sleep at nights will do wonder to not only your health but your overall family and social life.

    Remember you are not alone in this. We’ll cheer for you and your husband.

  31. Kirk

    Ron Paul can save our economy and Mike Huckabee can save this nation’s soul! Paul/Huckabee 2008!! The American Dream Ticket!!! Even better than Bush/Cheney!!!!

  32. Adam

    Hilarious stuff. I just tried to take a look at Kirk’s site again because it has been a few months and apparently I didn’t make it in time:

    “WARNING!!!
    It is currently between the hours of 12AM and 6AM.

    On July 15th I warned people like you that if you kept ringing my site bell at this hour that I would take down the site at night.

    In order to keep the site up in case of emergencies I have tried to sleep with earplugs and have even purchased a small waterfall for my bedroom to drown out the bell’s noise. Not only did this not work, but the waterfall actually kept me up all night. I am surprised I’m even still living with all the sleep I have lost.

    So, if you just came by to ‘entertain’ yourself at this unGodly hour then congratulations! You’ve just ruined a vital lifeline for those seeking conservative guidance during the hours the anti-Christ is most active.

    If you are here because you are feeling weak under the devil’s spell and are considering abandoning President Bush and the Republicans, I am truly sorry that I am not here to help you. Please proceed immediately to Free Republic and seek assistance there.”

  33. Laura Louzader

    I predict that in coming decades, possibly the next 20 years, both of our political parties will become irrelavent, and new parties will form that more accurately reflect the concerns, and divisions, of the American population.

    It’s getting pretty difficult to fit increasingly messy and uncontainable realities into the little boxes of pre-packaged ideas that constitute the Democrat and Republican platforms.

    The American population neither wants or needs the platform of either one. We don’t want the unaffordable entitlement programs and immigration free-for-all of the democrats, and we can no longer afford the spend-but-don’t-tax and growth-through-unlimited-debt, of the Republicans.

  34. ex-tangelo

    Watching the South Carolina Demislamunistofascist primary results, I noticed that Barak Obama (who BTW, is secretly a reptilian being from the Coruscantian System and a practicing Muslim) chose Signed, Sealed, Delivered by Stevie Wonder to serve as his theme song. For those of you who are unfamiliar with this tune, it’s the kind of devil music that gets the hips a moving in such away that you’re fornicating all over the place before you even realize it.

    After hearing that, I decided to check a few of the other campaigns to see what they’re using. Surprisingly, Hillary Klinton, a known Vogonzuelan, is going with something a bit more in keeping with traditional concepts of morality. Her theme, Celine Dion’s You and I, has the opposite effect on people. Listening to it causes a man’s little soldier to crawl up inside itself and hide, thus making fornication impossible for at least a month.

    But what about our candidates, the men running to be the nominee for God’s Own Party? I’m not sure what songs they’re using, or if they’re using any at all, but I do have a few suggestions.

    Rudy Giuliani – They’re Coming to Take Me Away by Napoleon XIV. Why? Well, because, as he announced during a speech to the Coral Gables Rotary Club, he actually is Napoleon XIV.

    Mike Huckabee – Every Sperm is Sacred by Monty Python. We’d have no problem passing Huckabee’s personhood amendment to the Constitution if every American heard this song.

    Mitt Romney – The Girl from Ipanema by Antonio Carlos Jobim. Because when he passes, each one he passes goes “ahhhh.” There’s nothin’ wrong with having a president who has a purty mouth.

    Ron Paul – The Horst Wessel Song. Isn’t it time to get the government off the back of your local jackboot cobbler?

    John McCain – Bomb Iran – because he sings it from the heart.

    Heterosexually yours,
    Gen. JC Christian, Patriot

    P.S. Don’t listen to a word Cletus says. He’s a goddamned liar.
    http://patriotboy.blogspot.com

  35. buster

    Uhh…dinglewhip, isn’t voting for someone other than the candidate you really want “throwing your vote away?”

  36. Irvinewanabe

    Am I the only one that is a bit disgusted and angry by this situation?

    I have a MS in Engineering but quit working after I had my children so that I could raise them insead of the Nanny!

    I didn’t drive the Mercedes or the Escalade.

    I didn’t buy a house that I couldn’t afford.

    I didn’t get the Interest Only Loan because stuff happens!

    The Greed of people is what has us in the mess that we are in and now we have to bail all of these people out!

    I would love to get a tax break from the government on $100K of income ($550K-$450K), but because I made smart decisions I don’t get one.

    Sorry, I am angry and disgusted!!!!

  37. ipoplaya

    Yes, wanabe, you are probably the only one.

    If you are angry and disgusted by a person that bought at the wrong time and can’t foot the bill now because of medical issues keeping them from working, then frankly, you are a pretty sad and sorry individual.

    Interest-only or a regular ole loan, it doesn’t matter. You think somehow a few hundred in principal paid down each month would make a difference in this kind of situation with the equity evaporation over the past 18 months?

    Spending $550K in 2005 on a condo in RSM is not indicative of greed IMO, it seems indicative of someone wanting to buy a home for their family before they got priced out.

    I would suggest STD and LTD insurance for everyone though to avoid just this same kind of situation. If you buy based on having two income streams, insurance to protect those income streams should be factored in and purchased IMO.

  38. lorrieambrosino

    ipoplaya-

    Just wanted to say thank you again for your support. People can be very judgemental and assume things without really knowing the reality of your situation. You hit the nail right on the head-we have two little boys and were just trying to buy something small for fear we would eventually be totally priced out of the market.

    I am(or was) a teacher for Capistrano Unified working on a job share contract so I could spend most of my time with my children. My husband drives a 1999 Chevrolet and I drive a 1999 Isuzu Trooper. Enough said.

    Sarah

  39. zaleriana

    LL: “The average net worth of a downtown Chicago homeowner is about $10MM

    Look, we get it, you think that folks in the city are overpriveleged snobs. But this is absurd. It’s closer to $10,000 than $10,000,000. Maybe if you narrow it to owners of single family homes and condos with 5 or more bedrooms in 60610, you might be close, but that’s akin to saying “owners of SFRs on the UES of Manhattan”. It’s not relevant to much of anything b/c it’s such a small subset.

    Also, what do you include in “downtown” Chicago? I know many ‘burbanites who mean the entire city, or at least the entire city except the really poor neighborhoods.

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