Comments on: California Confidential: Past and Present: Where the Foreclosures Sleep: Stage 3 Tsunami Building up Again. SB 1137 Delay and Toxic Mortgages. Bank of America, Wells Fargo, and Chase get a Welcome Gift to the Golden State. http://www.doctorhousingbubble.com/california-confidential-past-and-present-where-the-foreclosures-sleep-stage-3-tsunami-building-up-again-sb-1137-delay-and-toxic-mortgages-bank-of-america-wells-fargo-and-chase-get-a-welcom/ How I Learned to Love Southern California and Forget the Housing Bubble Thu, 09 Feb 2012 06:16:36 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Sabin Figaro http://www.doctorhousingbubble.com/california-confidential-past-and-present-where-the-foreclosures-sleep-stage-3-tsunami-building-up-again-sb-1137-delay-and-toxic-mortgages-bank-of-america-wells-fargo-and-chase-get-a-welcom/#comment-35755 Sabin Figaro Wed, 22 Apr 2009 02:53:32 +0000 http://www.doctorhousingbubble.com/?p=1694#comment-35755 @Marcus Seems like all the grownups have gone away forever...all we are left with is half-empty beer bottles with cigarette butts I'm afraid. @Marcus
Seems like all the grownups have gone away forever…all we are left with is half-empty beer bottles with cigarette butts I’m afraid.

]]> By: Markus Arelius http://www.doctorhousingbubble.com/california-confidential-past-and-present-where-the-foreclosures-sleep-stage-3-tsunami-building-up-again-sb-1137-delay-and-toxic-mortgages-bank-of-america-wells-fargo-and-chase-get-a-welcom/#comment-35731 Markus Arelius Mon, 20 Apr 2009 20:53:59 +0000 http://www.doctorhousingbubble.com/?p=1694#comment-35731 Have enough for a big down payment. Prices in Lake Forest are still 5x annual salary. This makes no sense. I still rent. Just paid a bucketload of money in income taxes. Wife wants to buy. I'm trying to convince her to wait just a little bit more. It's sort of like using hand signals to tell your troops to hold their fire until the enemy is in perfect position for a devastating ambush. Now I need to tell her we're years away. Why is it everytime I finish reading your great posts about the Southern California real estate crash, I feel like it's 5:00 a.m., a massive orgy has justconcluded, the guests have all left, the place has been completely and utterly trashed, and my parents will be coming home any minute? Have enough for a big down payment. Prices in Lake Forest are still 5x annual salary. This makes no sense. I still rent. Just paid a bucketload of money in income taxes. Wife wants to buy. I’m trying to convince her to wait just a little bit more. It’s sort of like using hand signals to tell your troops to hold their fire until the enemy is in perfect position for a devastating ambush. Now I need to tell her we’re years away.

Why is it everytime I finish reading your great posts about the Southern California real estate crash, I feel like it’s 5:00 a.m., a massive orgy has justconcluded, the guests have all left, the place has been completely and utterly trashed, and my parents will be coming home any minute?

]]> By: vino_verde http://www.doctorhousingbubble.com/california-confidential-past-and-present-where-the-foreclosures-sleep-stage-3-tsunami-building-up-again-sb-1137-delay-and-toxic-mortgages-bank-of-america-wells-fargo-and-chase-get-a-welcom/#comment-35730 vino_verde Mon, 20 Apr 2009 20:39:15 +0000 http://www.doctorhousingbubble.com/?p=1694#comment-35730 I never like comparison of median income levels bc it is done on a household basis and households have been shrinking (more single familys for one), but in the spirit of the post i will tell a story. In 1973, the greatest earner in American History was Al Capone in 1927, i believe it has been a while, who earned an estimated $125 million in Income in 1973 dollars. Despite the 70's inflation this was bested finally in 1989, by Michael Milken who earned an income of $550 million in 1989 dollars by basically owning half of the junk (er, excuse high-yield) bond market. I got some hedge fund research passed to me for 2006 numbers, there were 10 hedge fund managers alone who bested this income number in 2006 and had over $900 million in freakin income. Including such notables as SAC's Cohen. aside from buying small countries or sports franchises, you cannot spend a billion dollars in net worth, the interest income alone piles up too fast to spend, and ten passed it in one year! in Income! knowing the historical numbers i am still stunned by this magnitude. Yes, Buffett and Gates probably made more in certain years, but capital gains, not Income. I never like comparison of median income levels bc it is done on a household basis and households have been shrinking (more single familys for one), but in the spirit of the post i will tell a story.

In 1973, the greatest earner in American History was Al Capone in 1927, i believe it has been a while, who earned an estimated $125 million in Income in 1973 dollars. Despite the 70′s inflation this was bested finally in 1989, by Michael Milken who earned an income of $550 million in 1989 dollars by basically owning half of the junk (er, excuse high-yield) bond market. I got some hedge fund research passed to me for 2006 numbers, there were 10 hedge fund managers alone who bested this income number in 2006 and had over $900 million in freakin income. Including such notables as SAC’s Cohen.

aside from buying small countries or sports franchises, you cannot spend a billion dollars in net worth, the interest income alone piles up too fast to spend, and ten passed it in one year! in Income! knowing the historical numbers i am still stunned by this magnitude.

Yes, Buffett and Gates probably made more in certain years, but capital gains, not Income.

]]> By: Cameron L http://www.doctorhousingbubble.com/california-confidential-past-and-present-where-the-foreclosures-sleep-stage-3-tsunami-building-up-again-sb-1137-delay-and-toxic-mortgages-bank-of-america-wells-fargo-and-chase-get-a-welcom/#comment-35715 Cameron L Mon, 20 Apr 2009 03:31:04 +0000 http://www.doctorhousingbubble.com/?p=1694#comment-35715 Nothing specific, suffice to say that when I moved to Orange County in August of 2006 I never purchased property in part because of the Lasner Blog in the OC register to wit Dr. Housing Bubble was a regular contributor. The blog is still useful though there continue to remain some RE zealots. Once the Bubble website was established it became a must read. Thank you Dr. Housing Bubble for placing so much of the current housing/economic status into perspective and being a source of information that I would simply be unable to either compile or comprehend without extensive knowledge. Well done. Pease keep the essays coming...you provide an incredibly important consumer service. Nothing specific, suffice to say that when I moved to Orange County in August of 2006 I never purchased property in part because of the Lasner Blog in the OC register to wit Dr. Housing Bubble was a regular contributor. The blog is still useful though there continue to remain some RE zealots. Once the Bubble website was established it became a must read. Thank you Dr. Housing Bubble for placing so much of the current housing/economic status into perspective and being a source of information that I would simply be unable to either compile or comprehend without extensive knowledge. Well done. Pease keep the essays coming…you provide an incredibly important consumer service.

]]> By: Jason K http://www.doctorhousingbubble.com/california-confidential-past-and-present-where-the-foreclosures-sleep-stage-3-tsunami-building-up-again-sb-1137-delay-and-toxic-mortgages-bank-of-america-wells-fargo-and-chase-get-a-welcom/#comment-35680 Jason K Sun, 19 Apr 2009 09:05:21 +0000 http://www.doctorhousingbubble.com/?p=1694#comment-35680 I guess the definition of "the bottom" can vary. Is the bottom where declines are contained "middle class" housing? Does it depend on the median price of housing in general? From a median price perspective, the rate of price declines will increase after 2011 for two specific reasons: 1. Continued global wage arbitrage 2. Age demographic shift 2011-65=1946, the year the American baby boom began. More likely than not, this age group is economically more likely to possess houses worth above $1 million. These are people who are more likely to look towards downsizing residences and may be more likely to sell due to increased health care expenses and other life necessities after retirement. With underwriting standards moving back to reality, how many houses would be up for sale above that magic number versus those who can qualify for funding? That means we are left with two possible solutions: 1. Prices will plummet at higher end housing and those who bought in early and will take their losses to access cash reserves. 2. An executive type order would be implemented mandating a price floor for houses that fit conditions x, y, and z. In the second case, we'll probably see one last refinance orgy. This time it will be in reverse mortgages. We're more likely to see a decline in house formations and it will become in vogue again for 3 generations to live under one roof. The properties will likely revert to the mortgage company as the baby boomers pass on, but as long as people continue to live longer, the decline can be smoothed out over the course of another 10-15 years. A spin-off benefit from this action would be the containment of the Social Security timebomb. I guess the definition of “the bottom” can vary. Is the bottom where declines are contained “middle class” housing? Does it depend on the median price of housing in general?

From a median price perspective, the rate of price declines will increase after 2011 for two specific reasons:
1. Continued global wage arbitrage
2. Age demographic shift

2011-65=1946, the year the American baby boom began. More likely than not, this age group is economically more likely to possess houses worth above $1 million. These are people who are more likely to look towards downsizing residences and may be more likely to sell due to increased health care expenses and other life necessities after retirement. With underwriting standards moving back to reality, how many houses would be up for sale above that magic number versus those who can qualify for funding?

That means we are left with two possible solutions:
1. Prices will plummet at higher end housing and those who bought in early and will take their losses to access cash reserves.
2. An executive type order would be implemented mandating a price floor for houses that fit conditions x, y, and z.

In the second case, we’ll probably see one last refinance orgy. This time it will be in reverse mortgages. We’re more likely to see a decline in house formations and it will become in vogue again for 3 generations to live under one roof. The properties will likely revert to the mortgage company as the baby boomers pass on, but as long as people continue to live longer, the decline can be smoothed out over the course of another 10-15 years. A spin-off benefit from this action would be the containment of the Social Security timebomb.

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