Comments on: Heart of Foreclosure Darkness: Every County in Southern California is now Negative Year over Year.

By: Bob

Bob — Mon, 19 Nov 2007 03:05:04 +0000

I don’t think we’re going to have visibility on the true extent of the impact from the peak in subprime resets until Q3 or Q4 2008 at the earliest. The reset peak occurs in Q1, but it should take probably 3-9 months for this phase of the slow-motion train wreck to play through. Defaults and foreclosures don’t happen immediately when the reset occurs…and some people will find creative new ways to limp along for a while longer before things collapse under their own weight. I’m already hearing crazy stories of people taking cash advances on credit cards to make house payments, since the minimum payments on a credit card are low enough to keep things going for some time (and in the process generating a wicked negative amortization situation pushing the debt mountain up even bugger and over into the next coming implosion in the consumer credit arena). Who knows, maybe Countrywide Medical Mortgage Corp will spring up and offer reverse mortgages on your organs when the reset occurs.

Those forecasting a bottom anytime in 2008 are quite likely deluding themselves. The only way I see that happening would require a significant economic shock to bring real fear into the market and accelerate price drops towards some equilibrium between median income and median mortgage payments using traditional or possibly even more stringent loan qualification criteria. Energy prices could be that catalyst, especially if Iran blows up (figuratively speaking) but even still, I don’t see it pushing the pace of correction up enough to see dry land any time in the coming year.

By: Ms. Kukumente

Ms. Kukumente — Sun, 18 Nov 2007 05:57:00 +0000

I was raised in Los Angeles and nothing has hurt so much as this housing bubble. For the past years, I have been watching prices rise to crazy heights. I have been ridiculed by others for not taking the plunge and purchasing a home I could not afford. The truth is that I didnt want to feel panicked about money. I rent and sure our place is small but we can afford it. I could not stand being pressured by a realtor to put a bid on an over priced shack within hours of first viewing the property. I hope prices return to normal, but for all the temporary wealth that was amassed. Los Angeles still looks the same, if not worse. What happened to the money from property taxes on these inflated properties that were purchased? Where are the improvements to the Parks or at least clean up the streets!
I also read the real estate sections, and still do not see much of a price change. But I know that as Iong as I am not comfortable with the payment or the loan terms or the condition of the property, I am not going to buy it.

By: ET

ET — Sun, 18 Nov 2007 01:05:10 +0000

Southern Californian Housing Drown Fast!
At 10:40 11/17/07

A vital revised version of comment on A Real Case: Who cares about Average Price or Median Price! (II)

Sorry, my fellow agent. I made a big mistake. The unit #162 is a new listing with no pic shown. It is possible not the one mentioned in the article. So I don’t know they have an escrow, re-list as a new one, or …….

Here comes more competition: In the email, two new REOs come up in the complex;

20**2 EL TORO ROAD #162

LAKE FOREST, CA 92630

$237,500

20**2 EL TORO ROAD #219

LAKE FOREST, CA 92630

$247,900

How fast we have a very upset market here? At the moment, it shows 45% off its peak for a specific condo market in Orange county, CA.

It is possible to be oversimplied to make such a conclusion applied toward the regional situation since there is only very limited data. However, I am not going to spend my energy to do more complete study for I am not interested in the area.

[p.s. I confess there is a true reason. No free lunch. What’s in it for me? I am no longer an academic student or professor doing so- so useless studies in the Ivory Tower. I used to expect a pay check come in every month no matter what I did. Now, I am just a poor folk trying to “work for food” to feed my dog.]

In a normal market, 5 out 100 properties are on market for sale. Yes, 5% is a normal parameter. Just as LPR should be 5. No wonder everyone says “give me 5″!

We did create 19 times equity wealth in paper and theory than we should deserve in the past 4 years (95% divided by 5% is equal to 19). Be cautious that equity is not a cold hard cash! It is soft and flexible. Equity is NOT a realized gain. It is for us to fool a banker. How do we do it? By using accounting methods (see! there are possible scandal probes on GSI’s change of accounting methods in the press recently) or other ways to create a “good-looking” net asset worth (on paper) to confuse him/ her.

How do we value an equity? It depends. If the financial big VIP guys have missed in ACCURATELY evaluating it so many times in the past year, what can you expect it from me, a VSP ( very small patato or peanut)?

They said the loss would not be more than $10 billion 10 month ago. It was readjusted to $100 billion after credit crunch landed worldwide. And then step up and up. Now, a new number came out last week. A CNN report surprisingly said it could reach $2 trillion crunch (what it supposes to mean exactly?)Economist: $2 trillion lending crunch may be ahead. The episode made me drowsy.

What’s the big deal? $2 trillion is just 2.5% of our annual GMP, they said. To some guys, there is no big difference among million, billion, and trillion. Anyway it is easy for them just adding several “0″ at the end, right?

How dummy I am! Sure it is the world “Alice in Wonderland”. It was, has been and will be. Forbe is reporting Citi’s delay of releasing its ABS huge loss in timely manner may do what Enron did. Different day, Same old sh*t? Here, we have 3 of 30 in the complex (maybe more). Gee! that’s 10%, double supply over demand. It hurts! Like double Scotch, I am going to be drown. Too much pressure for a “don’t wanter’ market. Expect the price dropping crazy and faster than you think for a rough drive!

Penny for what I thought? How low I wlll be pleased to buy? Just for your reference, it may go bellow $120K in this downhill drive very soon. What is the base for my projection?

Good question! Let me quote a Stock market jargon to give you one of my 2 answers very briefly: the past performance of housing value in the complex. Make sure you know “no quarantee for the future result”.

How about the other answer? That’s the real major market force. It is so powerful to dedicate or dictate the housing trend. It seems to me all the big ABS fat cats are ready to play the game. Because whoever runs in the front, he/ she will be the winner. The market sets the rules. I hope, they are smart to know what they talked about when they mentioned it in the news two days ago. It has been said in an unnoticeable way to the publics.

But, I don’t want to say it now (why? I am not a doom-sayer). Read news and explore the meaning of the message unveiled. Use your brain powder to interpret it as you carefully read the words in between. All you need is basic knowledge of Economics and your common sense. It won’t be so hard as to foresee the next crazy move FED’s Mr. B may take.

Be your own driver! Go learn fishing, not asking a fish.

By: Lueez

Lueez — Sat, 17 Nov 2007 20:24:37 +0000

There’s many, many factors going around, each one bearing on the next, but there’s one in particular that never gets enough attention: the mainstream media’s coverage of real estate issues. Not surprising, of course, but I think it’s more than just another observation, it’s a very major part of the problem, and as discussed here. Newspapers in particular are in desperate need of ad income, so how much can they afford to offend the local RE industry? My local paper ran an article recently about a young couple buying a million dollar home — very positive on all fronts, how thrilled they were etc., like these were just average folks. It is this bizarre unreality that drives me nuts — as this blog mentions, there has been very little discussion of income relative to home prices, which seems like a real obvious oversight(!!) I see promises that real estate will eventually “trend upwards”. Well, how does that happen when it’s already grossly unaffordable, and liar loans are a thing of the past?
Speculation is the other major factor, and that hasn’t gotten enough attention either — I see a lot of focus on the human interest “sad-sack” stories, of those poor folks owing half a million or whatever, but not enough on the idiot amateur investor who scored a condo in Miami. And not enough either on how the tech stock mania carried over to the real estate mania — people who were addicted to getting rich quick.
I saw someone describe this whole phenomenon as “real estate evangelism” and in fact, there is a kind of “true believer” mindset to it, something that’s disturbing.

By: BK

BK — Sat, 17 Nov 2007 16:28:59 +0000

I recently “stumbled” on TO this site and it made me feel a whole lot better about my “common sense” instincts because for the last year, I’ve been watching the news and even talking with friends and colleagues wondering if I had lost my mind. You see, it seems most “regular” people “seemingly” can’t see the forest through the trees (probably because they believe what they hear in the media) in that there is something very wrong in a market where “average” housing costs are 7-10 times “average” incomes. I’m in Loudoun County in Northern VA (the “DC metro area”) where “average” prices are falling like large hailstones (off over 30% from their peaks and over 20% just in the last 6 months - and still falling, and here also you hear on the news every day that we are “near the bottom.” A couple of examples; 1.) a brand new 3200 SQ FT home that sold for $602K in 2004, and appraised for $800K in early-2006, is currently on the market for $541K. 2.) another brand new 2500 SQ FT home 1 block over from the previous example sold for for $503K in 2004, appraised for $740K in early-2006, went on the market in April 2007 for $659K finally sold last week for $468K in a foreclosure sale. It’s rampant everywhere folks. My boss (who has ZERO financial or real estate background) told me recently that it’s all gonna be over in February - after the holidays (although he can’t point to any justifaction of that) and I told him he’s out of his mind!

DOCTOR, THANK YOU FOR THIS TERRIFIC “TRUTH TELLING” SITE AND FOR YOUR OUTSTANDING WRITING SKILLS AS WELL! YOUR ABILITY TO PUT THESE MATTERS INTO PERSPECTIVE WITH YOUR WONDERFUL HUMOR, EXAMPLES, ANALOGIES AND ANECDOTES ALSO MAKES FOR VERY EASY AND SATISFYING READING!!!